Anderson v. Etherwan Systems, Inc.
MEMORANDUM OPINION. Signed by Judge George Levi Russell, III on 1/17/2023. (bas, Deputy Clerk)
Case 1:22-cv-00890-GLR Document 19 Filed 01/17/23 Page 1 of 12
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
ETHERWAN SYSTEMS, INC.,
Civil Action No. GLR-22-890
THIS MATTER is before the Court on Defendant EtherWAN Systems, Inc.’s
(“EtherWAN”) Motion to Dismiss (ECF No. 8). The Motion is ripe for disposition, and no
hearing is necessary. See Local Rule 105.6 (D.Md. 2021). For the reasons set forth below,
the Court will grant the Motion in part and deny the Motion in part.
Plaintiff David Anderson worked for EtherWAN as a sales associate for over three
years. (Compl. at 1, ECF No. 1). He was hired in September 2018, and in addition to his
annual salary, EtherWAN agreed to pay Anderson a bonus based on the revenue he
generated for EtherWAN (the “Bonus Plan”). (Id. ¶ 7). The Bonus Plan provided that an
employee must be employed at the time of the bonus distribution to receive the bonus
payment. (Id. ¶ 8).
Unless otherwise noted, the Court takes the following facts from the Complaint
(ECF No. 1) and accepts them as true. See Erickson v. Pardus, 551 U.S. 89, 94 (2007).
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Anderson claims that near the end of 2021, he was entitled to receive his biggest
bonus yet during his tenure with EtherWAN, around $40,000. (Id. at 1, ¶ 9). The 2021
bonuses were scheduled to be paid on February 18, 2022, (id. ¶ 10), but Anderson claims
that EtherWAN precipitously terminated Anderson beforehand to avoid paying him, (id.
¶¶ 11–12). EtherWAN, on the other hand, claims that Anderson was terminated for
violating its IT policy (the “IT Policy”) that prohibited forwarding work-related emails to
one’s personal email address. (Id. ¶ 12). Anderson requested a copy of the email, but
EtherWAN refused to provide “support” for its decision to terminate him. (Id. ¶ 13).
Further, EtherWAN refused to pay Anderson the bonus he earned in 2021 because he was
fired before the distribution of bonuses. (Id. ¶ 14).
Anderson claims that EtherWAN’s Director of Sales, his supervisor, “insisted that
he execute numerous documents . . . that included material misstatements, some of which
were to be utilized to bid government contracts.” (Id. ¶ 23). Anderson refused to sign,
though, and claims that is the true reason for his termination. (Id. ¶ 24). Anderson states
that his termination was in violation of a public policy in Maryland “against asserting
material misstatements and in ensuring that employees received all wages earned in a
timely manner.” (Id. ¶ 27).
On April 12, 2022, Anderson filed his Complaint (ECF No. 1). In his Complaint,
Anderson alleges violation of the Maryland Wage Payment and Collection Law
(“MWPCL”) (Count I) and wrongful discharge (Count II). (Id. at 2–5). Anderson seeks
compensatory damages, liquidated damages, treble damages, punitive damages, attorneys’
fees and costs, and pre- and post-judgment interest. (Id. at 4–5).
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On June 24, 2022, EtherWAN filed a Motion to Dismiss (ECF Nos. 7–8). Anderson
filed an Opposition on July 22, 2022, (ECF No. 12), and EtherWAN filed a Reply on
August 8, 2022, (ECF No. 17).
Standards of Review
The purpose of a Rule 12(b)(6) motion is to “test the sufficiency of a complaint,”
not to “resolve contests surrounding the facts, the merits of a claim, or the applicability of
defenses.” King v. Rubenstein, 825 F.3d 206, 214 (4th Cir. 2016) (quoting Edwards v. City
of Goldsboro, 178 F.3d 231, 243 (4th Cir. 1999)). A complaint fails to state a claim if it
does not contain “a short and plain statement of the claim showing that the pleader is
entitled to relief,” Fed.R.Civ.P. 8(a)(2), or does not “state a claim to relief that is plausible
on its face,” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007)). A claim is facially plausible “when the plaintiff
pleads factual content that allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.” Id. “Threadbare recitals of the elements of
a cause of action, supported by mere conclusory statements, do not suffice.” Id. Though
the plaintiff is not required to forecast evidence to prove the elements of the claim, the
complaint must allege sufficient facts to establish each element. Goss v. Bank of Am.,
N.A., 917 F.Supp.2d 445, 449 (D.Md. 2013) (quoting Walters v. McMahen, 684 F.3d 435,
439 (4th Cir. 2012)), aff’d, 546 F.App’x 165 (4th Cir. 2013).
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In considering a Rule 12(b)(6) motion, a court must examine the complaint as a
whole, accept the factual allegations in the complaint as true, and construe the factual
allegations in the light most favorable to the plaintiff. See Albright v. Oliver, 510 U.S. 266,
268 (1994); Lambeth v. Bd. of Comm’rs of Davidson Cnty., 407 F.3d 266, 268 (4th Cir.
2005). But the court need not accept unsupported or conclusory factual allegations devoid
of any reference to actual events, United Black Firefighters v. Hirst, 604 F.2d 844, 847 (4th
Cir. 1979), or legal conclusions couched as factual allegations, Iqbal, 556 U.S. at 678
(quoting Twombly, 550 U.S. at 555).
Ordinarily, a court may not consider extrinsic evidence when resolving a Rule
12(b)(6) motion. See Chesapeake Bay Found., Inc. v. Severstal Sparrows Point, LLC, 794
F.Supp.2d 602, 611 (D.Md. 2011). But this general rule is subject to several exceptions.
First, a court may consider documents attached to the complaint, see Fed.R.Civ.P. 10(c),
as well as those attached to the motion to dismiss, so long as they are integral to the
complaint and authentic, see Blankenship v. Manchin, 471 F.3d 523, 526 n.1 (4th Cir.
2006). Second, a court may consider documents referred to and relied upon in the
complaint—“even if the documents are not attached as exhibits.” Fare Deals Ltd. v. World
Choice Travel.com, Inc., 180 F.Supp.2d 678, 683 (D.Md. 2001); accord New Beckley
Mining Corp. v. Int’l Union, United Mine Workers of Am., 18 F.3d 1161, 1164 (4th Cir.
1994). Third, a Court may consider matters of public record. Philips v. Pitt Cnty. Mem.
Hosp., 572 F.3d 176, 180 (4th Cir. 2009). In the event that any of these properly considered
extra-pleading materials conflict with the “bare allegations of the complaint,” the extra4
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pleading materials “prevail.” Fare Deals, 180 F.Supp.2d at 683; accord RaceRedi
Motorsports, LLC v. Dart Mach., Ltd., 640 F.Supp.2d 660, 664 (D.Md. 2009).
Violation of the MWPCL
Anderson alleges a claim for a violation of the MWPCL for non-payment of his
$40,000 year-end bonus tied to his sales. (Count I). “[T]he MWPCL represents a strong
public policy of Maryland,” and “seeks to provide a vehicle for employees to collect, and
an incentive for employers to pay, back wages.’” Blanch v. Chubb & Sons, Inc., 124
F.Supp.3d 622, 630, 634 (D.Md. 2015). The MWPCL “requires employers, upon the
termination of an employee’s employment, to pay that employee ‘all wages due for work
that the employee performed before the date of termination of employment.’” Provident
Bank of Md. v. McCarthy, 383 F.Supp.2d 858, 860 (D.Md. 2005) (quoting Md. Code Ann.,
Lab. & Empl. (“LE”) § 3-505). “Wage includes a bonus, commission, fringe benefit or any
other remuneration promised for service.” Id. (citing Whiting-Turner Contracting Co. v.
Fitzpatrick, 783 A.2d 667 (Md. 2001)); LE § 3-501(c). The Maryland Court of Appeals has
developed a bright-line test for what constitutes wages, which “provides that only when
wages have been promised as part of the compensation for the employment arrangement
and all conditions agreed to in advance for earning those wages have been satisfied” is the
employee entitled to payment. Blanch, 124 F.Supp.3d at 635 (quoting Catalyst Health Sols.
v. Magill, 995 A.2d 960, 969 (Md. 2010)). “[W]hat is due an employee who terminates
employment with an employer are wages for work performed before termination, or all
compensation due to the employee as a result of employment including any remuneration,
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other than salary, that is promised in exchange for the employee’s work.” Whiting-Turner,
783 A.2d at 671. “Contractual language between the parties cannot be used to eliminate
the requirement and public policy that employees have a right to be compensated for their
efforts.” Blanch, 124 F.Supp.3d at 630 (quoting Medex v. McCabe, 811 A.2d 297, 304
EtherWAN argues that Anderson’s claim fails because he did not satisfy all
conditions precedent to the Bonus Plan before it was due. (Mem. L. Supp. Mot. Dismiss
[“Mot.”] at 7, ECF No. 8). Specifically, EtherWAN argues that the Bonus Plan includes
language stating that an employee must “be employed by EtherWAN System Inc. at the
time of bonus distribution to receive [the] bonus payment(s).” (Id. at 8; 2021 Bonus Plan
at 12, ECF No. 8-1). 2 EtherWAN contends that Anderson was terminated before the
distribution date for the year-end bonus and thus he was ineligible to receive it under the
terms of the Bonus Plan. (Mot. at 8). Anderson responds that he met all relevant conditions,
meaning those he needed to complete to earn his bonus, but claims that the condition that
Rather than filing the exhibits to their Motion as separate attachments, EtherWAN
combined its exhibits as one filing. Thus, the electronic document accessible at ECF No.
8-1 contains several exhibits. The Bonus Plan may be found at p. 2 of ECF No. 8-1.
Citations to page numbers refer to the pagination assigned by the Court’s Case
Management/Electronic Case Files (“CM/ECF”) system.
Further, the Court notes that Anderson objects to EtherWAN’s inclusion of the
Bonus Plan because it is outside the scope of his Complaint. (Opp’n at 2). Although
Anderson did not attach the Bonus Plan to his Complaint, the Court may consider it because
it was referred to and relied upon in the Complaint. See Fare Deals Ltd., 180 F.Supp.2d at
683; (Compl. ¶ 8 (“In addition to paying Plaintiff his annual salary, Defendant agreed to
pay Plaintiff a bonus based upon the revenue he generated for Defendant (the “Bonus
Plan”))). The Court does not need to refer to any of EtherWAN’s other exhibits to resolve
the Motion before it. (See ECF No. 8-1 at pp. 6–18).
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he remain employed to receive certain wages is void against public policy under Medex v.
McCabe, 811 A.2d 297 (Md. 2002). (Resp. Mot. Dismiss [“Opp’n”] at 5, ECF No. 12-1).
At bottom, the Court finds that Anderson has stated a claim for violation of the MWPCL.
EtherWAN argues that Anderson is not entitled to his year-end bonus as a matter of
law under Blanch v. Chubb & Sons, Inc., 124 F.Supp.3d 622, 635 (D.Md. 2015), and
Whiting-Turner Contracting Co. v. Fitzpatrick, 783 A.2d 667 (Md. 2001). (Mot. at 7–8).
The Court disagrees that Blanch or Whiting-Turner require it to dismiss Anderson’s claim.
In Blanch, this Court reviewed on reconsideration its grant of summary judgment in
favor of the employer over plaintiff’s claims for an unpaid performance bonus and profit
sharing under the MWPCL following his termination. 124 F.Supp.3d at 626, 628. The
employer argued that profit-sharing payments do not qualify as wages because they were
based in part on criteria independent of the employee’s performance, namely, “business
unit . . . performance,” and thus were not wages under the MWPCL. Id. at 635–36. The
Court explicitly declined to accept the employer’s argument and found that profit-sharing
can qualify as wages, clarifying that payments “which are merely offered as a gratuity,
revocable at any time before delivery, and not promised for service, do not qualify as wages
under the Wage Law.” Id. at 636 (quoting Aronson & Co. v. Getridge, 957 A.2d 125, 137–
38 (Md.Ct.Spec.App. 2008)).
In Whiting-Turner, the employee had agreed to be compensated through a “weekly
salary and, after two years of employment and depending upon the profitability of the
company, profit sharing.” 783 A.2d at 669. The employee left before hitting the two-year
benchmark and his employer initially withheld his bonus check. Id. The District Court for
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Baltimore County, Maryland ordered the employer to pay the bonus and the Circuit Court
affirmed. Id. The employer appealed and filed a petition for writ of certiorari to the
Maryland Court of Appeals. Id. The court reversed the lower courts’ orders for the
employer to pay the bonus. Id. at 673. The court stated that “the wages which an employee
is due, and which must be paid on termination of employment, consist of all compensation,
and any other remuneration, that the employee was promised in exchange for his work.”
Id. at 671–72. Stated differently, “to be wages, [as] included within the statute, the payment
must have been promised to the employee as compensation for work performed.” Id. at
672. Thus, the court held that a bonus can be wages under the statute if it is negotiated and
included as part of the wage package. Id. But the court found that the bonus check was paid
in advance of the employee hitting two years with the company, and thus it was “merely a
gift, a gratuity, revocable at any time before delivery.” Id. at 673. The court found that the
timing of the employee’s departure was dispositive in making its decision, though:
Had the respondent been with the petitioner for two years when
the decision was made to offer him a bonus and had the
financial condition of the petitioner justified it, there would be
no doubt of the respondent’s entitlement, that he would have
earned the distribution in this case. That is so because sharing
in the profits of the company after two years was promised as
part of the respondent’s compensation package.
The Court is unconvinced that either Blanch or Whiting-Turner require it to reject
Anderson’s claim for his year-end bonus—indeed, each case supports a finding that the
year-end bonus does qualify as wages under the statute. The cases stand for the proposition
that bonus payments that are made as gifts or gratuities and not as part of a wage package
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do not qualify as wages under the statute. See Blanch, 124 F.Supp.3d at 636; WhitingTurner, 783 A.2d at 673. The opposite conclusion should be reached here, where Anderson
executed the 2021 Bonus Plan covering “a bi-weekly salary, quarterly and a year-end bonus
potential” with EtherWAN that explicitly provides that Anderson could “earn a year-end
bonus up to $120,000 for sales ranging between 3% Growth and 150% of Plan.” (Bonus
Plan at 2 (emphasis added)). Thus, the bonus payment appears, at least at this early stage,
to be part of a negotiated agreement regarding Anderson’s compensation package tied in
some part to his sales performance and not a mere gratuity or gift.
Moreover, EtherWAN’s argument that Anderson is ineligible for the payment
because he was not employed at EtherWAN at the time of distribution fails. (Mot. at 7). As
Anderson raises, Medex v. McCabe, 811 A.2d 297 (Md. 2002), is instructive. There, the
Court of Appeals considered an employee’s claim for unpaid incentive fees after his
employment was terminated. Id. at 300. As is the case here, the employer argued that under
the employment contract and incentive plan, “to be eligible for the incentive fees, the
employee must still be employed at the date of payment.” Id. at 302. Thus, the employer
contended that the employee was not entitled to payment. Id. at 303. The court emphasized
the public policy interests of the MWPCL and held that “[c]ontractual language between
the parties cannot be used to eliminate the requirement and public policy that employees
have a right to be compensated for their efforts.” Id. at 304. This is because “a contract
conflicting with public policy set forth in a statute is invalid to the extent of the conflict
between the contract and that policy.” Id. Accordingly, “an employee’s right to
compensation vests when the employee does everything required to earn the wages,” and
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mere continuation of employment is an insufficient condition for payment where it
conflicts with the MWPCL’s policy interests. Id. at 305. Further, Maryland gives “equal
protection to all departed employees,” whether they left voluntarily or involuntarily. Id.;
see LE § 3-505. Therefore, EtherWAN’s contractual provision requiring continued
employment to receive payment is invalid as it conflicts with the reasoned policy
considerations of the MWPCL. To the extent Anderson performed the work needed to earn
the year-end bonus, he is entitled to it.
The Court notes that EtherWAN raises a new argument in its Reply. (Def.’s Reply
Mem. L. Sup. Mot. Dismiss [“Reply”] at 8–9, ECF No. 17) (arguing that Anderson’s claims
fail because he was never “promised” the year-end bonus payment). “The ordinary rule in
federal courts is that an argument raised for the first time in a reply brief or memorandum
will not be considered.” Clawson v. FedEx Ground Package Sys., Inc., 451 F.Supp.2d 731,
734 (D.Md. 2006). The rule exists to avoid prejudicing the opposing party as it may not
have the opportunity to respond to the added argument. Id. As such, the Court will not
Accordingly, the Court will deny EtherWAN’s Motion as to Count I.
Finally, Anderson raises a claim for wrongful discharge. (Count II). “The tort of
wrongful discharge is an exception to the well-established principle that an at-will
employee may be discharged by his employer for any reason, or no reason at all.” Miller
v. U.S. Foodservice, Inc., 405 F.Supp.2d 607, 610 (D.Md. 2005). “[T]o establish wrongful
discharge, the employee must be discharged, the basis for the employee discharge must
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violate some clear mandate of public policy, and there must be a nexus between the
employee’s conduct and the employer’s decision to fire the employee.” Id. (quoting
Wholey v. Sears Roebuck, 803 A.2d 482, 489 (Md. 2002)). An employee asserting
wrongful discharge “must specifically identify the clear mandate of Maryland public policy
that was violated by his termination.” Szaller v. Am. Nat’l Red Cross, 293 F.3d 148, 151
(4th Cir. 2002). “[T]here must be a preexisting, unambiguous, and particularized
pronouncement, by constitution, enactment or prior judicial decision, directing,
prohibiting, or protecting the conduct in question” so that the matter is not one of conjecture
or interpretation. Miller, 405 F.Supp.2d at 610 (quoting King v. Marriott Int’l, Inc., 866
A.2d 895, 903 (Md.Ct.Spec.App. 2005)).
EtherWAN argues that Anderson has failed to identify a public policy that he alleges
EtherWAN violated or establish a nexus between his conduct and EtherWAN’s decision
to fire him. (Mot. at 9–10). Anderson responds that the MWPCL reflects a public policy in
favor or ensuring that an employee receive wages, but that it does not provide a civil
remedy for termination as a means to avoid paying wages. (Opp’n at 6). Thus, Anderson
contends that he can plead a claim for wrongful discharge as there is no appropriate civil
remedy under the MWPCL. (Id.). The Court agrees with EtherWAN and will dismiss the
Anderson did not raise a specific public policy in his claim for wrongful discharge
in his Complaint. (See Compl. at 4–5). Instead, he states only that “Maryland law
recognizes a public policy against asserting material misstatements and in ensuring that
employees received all wages earned in a timely manner.” (Id. ¶ 27). Thus, his arguments
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in Opposition do not track his allegations as pleaded. Moreover, he fails to “plead with
particularity the source of the public policy” allegedly violated by his termination. See
Terry v. Legato Sys., Inc., 241 F.Supp.2d 566, 569 (D.Md. 2003). Anderson has therefore
failed to meet a threshold requirement for his claim. Accordingly, the Court will grant
EtherWAN’s Motion as to Count II.
For the foregoing reasons, the Court will grant Defendant EtherWAN’s Motion to
Dismiss (ECF No. 10) as to Anderson’s claim for wrongful discharge (Count II) but will
deny it as to his claim for violation of the MWPCL (Count I). A separate Order follows.
Entered this 17th day of January, 2023.
George L. Russell, III
United States District Judge
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