Birnbach v. Antenna Software, Inc.

Filing 24

Judge F. Dennis Saylor, IV: MEMORANDUM AND ORDER entered granting defendant's 13 motion to dismiss (Cicolini, Pietro)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
_______________________________________
)
DAVID BIRNBACH,
)
)
Plaintiff,
)
)
Civil No.
v.
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14-11651-FDS
)
ANTENNA SOFTWARE, INC.,
)
)
Defendant.
)
_______________________________________)
MEMORANDUM AND ORDER ON
MOTION TO DISMISS
SAYLOR, J.
This case involves a dispute arising out of a termination of employment. Plaintiff David
Birnbach alleges that his former employer, defendant Antenna Software, Inc., failed to pay
commissions and severance owed to him when he was terminated by the company. The
complaint alleges claims under the Massachusetts Wage Act and for breach of contract, unjust
enrichment, quantum meruit, and wrongful termination. Jurisdiction is based on diversity of
citizenship.
Defendant has moved to dismiss, in part, Counts 1, 2, and 3 of the amended complaint.
Plaintiff does not oppose the motion as to the commission-related portions of Counts 1 and 3, but
opposes the motion as to Count 2. For the reasons set forth below, the motion will be granted.
I.

Background
The following facts are presented as stated in the complaint.
David Birnbach is a citizen of Massachusetts. Antenna Software, Inc., is a Delaware

corporation with a principal place of business in New Jersey.

In August 2003, Vaultus Mobile Technologies, Inc., a mobile software company, hired
Birnbach as Senior Vice President of Sales and Marketing. Birnbach signed an employment
agreement that provided that “[i]n the event that your employment is terminated by the Company
without Cause . . . , you shall be entitled to be continued to be paid your then current salary for a
period of three (3) months following such termination, as and when the same would otherwise
have been payable to you (the ‘Severance Period’).” In 2004, Vaultus promoted Birnbach to
Chief Executive Officer.
On March 29, 2010, Antenna Software, Inc., acquired Vaultus. Vaultus became a
wholly-owned subsidiary of Antenna Software, operating under the name Antenna Vaultus. The
Chief Executive Officer of Antenna Software offered to pay Birnbach more favorable terms for
commissions than the company’s standard commission plan in order to induce him to remain
with the company. Birnbach agreed to become Vice President of Sales for Antenna Vaultus
under the terms of the “David Birnbach Salary and Sales Incentive Compensation Plan.” (See
Compl., Ex. A). The Compensation Plan provided, among other things, for twelve weeks of
severance pay at 100 percent of base salary and six months of health care coverage in the event
that Antenna Software terminated Birnbach’s employment without cause. It also included rates
for commissions and provided that Antenna Software would pay him commissions “even if
[Birnbach] is involuntarily terminated.” (Compl., Ex. A at 3).
From March 29, 2010, to April 4, 2011, Birnbach closed a number of deals, the total
contract value of which was approximately $5.9 million.
On April 4, 2011, executives from Antenna Software informed Birnbach that it was
terminating him without cause. According to the complaint, Birnbach was very close to closing

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a lucrative deal with PNC Bank on which he had worked for five months. Within weeks of
Birnbach’s termination, Antenna Software did in fact close the deal.
On June 29, 2011, Birnbach, through his attorney, sent a letter to Antenna Software’s
CEO requesting payment of wages owed to him. From June 2012 to September 2013, Birnbach
received monthly commission checks from Antenna Software that totaled $39,982.97. However,
Antenna Software did not pay any severance, and Birnbach has calculated that it still owes him
$399,551 in commissions.
On April 2, 2014, plaintiff Birnbach submitted a complaint for unpaid wages with the
Office of the Attorney General, and filed a complaint in this Court against defendant Antenna
Software. On April 29, 2014, he filed an amended complaint.
On May 13, 2014, defendant moved to dismiss Counts 1 and 3 as they relate to
commissions from the PNC Bank deal, which plaintiff does not oppose, and Count 2, which
plaintiff opposes.
II.

Standard of Review
On a motion to dismiss for failure to state a claim upon which relief can be granted, the

Court “must assume the truth of all well-plead[ed] facts and give plaintiff the benefit of all
reasonable inferences therefrom.” Ruiz v. Bally Total Fitness Holding Corp., 496 F.3d 1, 5 (1st
Cir. 2007) (citing Rogan v. Menino, 175 F.3d 75, 77 (1st Cir. 1999)). To survive a motion to
dismiss, the complaint must state a claim that is plausible on its face. Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007). That is, “[f]actual allegations must be enough to raise a
right to relief above the speculative level, . . . on the assumption that all the allegations in the
complaint are true (even if doubtful in fact).” Id. at 555 (citations omitted). “The plausibility

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standard is not akin to a ‘probability requirement,’ but it asks for more than a sheer possibility
that a defendant has acted unlawfully.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting
Twombly, 550 U.S. at 556). Dismissal is appropriate if the well-pleaded facts of the complaint
do not “possess enough heft to show that plaintiff is entitled to relief.” Ruiz Rivera v. Pfizer
Pharm., LLC, 521 F.3d 76, 84 (1st Cir. 2008) (quotations and original alterations omitted).
III.

Analysis
The parties here dispute a single issue: whether the severance pay that defendant

allegedly owes plaintiff constitutes a “wage” or “commission” under the Massachusetts Wage
Act, Mass. Gen. Laws ch. 149, § 148.
The Wage Act provides that a worker discharged from employment must be paid in full
on the date of his termination. Mass. Gen. Laws ch. 149, § 148. The statute applies not only to
“wages,” which includes vacation and holiday payments, but also to “commissions” that are
“definitely determined” and “due and payable.” Id. The term “wages” is not defined by the
statute. However, to qualify as “wages,” the amounts in question must be “earned,” which is to
say that they must be “acquire[d] by labor, service or performance.” Massachusetts State Police
Commissioned Officers Ass’n v. Com., 462 Mass. 219, 226 (2012) (quoting Awuah v. Coverall N.
Am., Inc., 460 Mass. 484, 492 (2011)).
“The basic purpose of the act is to prevent the unreasonable detention of wages.” Weems
v. Citigroup Inc., 453 Mass. 147, 150-51 (2009) (internal quotation and citation omitted). An
employer who violates the Wage Act is subject to potential civil and criminal penalties,
injunctive relief, damages, treble damages, and attorney’s fees and costs. Mass. Gen. Laws ch.
149, §§ 27C, 148, 150.

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The Massachusetts Appeals Court has twice held that severance payments do not fall
within the ambit of the Wage Act. First, in Prozinski v. Ne. Real Estate Servs., LLC, the
Massachusetts Appeals Court found that the statute referred only to vacation pay, holiday pay,
and “definitely determined” commissions, not to “severance.” 59 Mass. App. Ct. 599, 603
(2003). It also held that severance pay was “not earned but contingent upon severance” and that
the Legislature did not intend through the Wage Act to protect “professionals enforcing their
asserted contract rights.” Id. Second, in Platt v. Traber, the court reiterated those conclusions,
relying on its reasoning in Prozinski to affirm the Superior Court’s dismissal of a Wage Act
claim for unpaid severance. 85 Mass. App. Ct. 1114, at *1 (2014) (unpublished).
Other courts, albeit ones that did not address claims for severance, have cited Prozinski
approvingly. See Weiss v. DHL Exp., Inc., 718 F.3d 39, 47-48 (1st Cir. 2013) (addressing claim
for unpaid bonuses but remarking that “courts have held that various forms of compensation fall
outside of the scope of the Wage Act”); Weems v. Citigroup Inc., 453 Mass. 147, 150-51 (2009)
(addressing claim for unpaid bonuses but noting that “[o]ur appellate courts have held that the
act does not cover contributions to deferred compensation plans or severance pay”).
Furthermore, the holding of Prozinski has been applied by other judges within this district to
preclude severance-based claims. See Discipio v. Anacorp, Inc., 831 F. Supp. 2d 392, 396 (D.
Mass. 2011) (“[S]everance pay is not covered by the Wage Act according to prevailing state
law.”).1

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Only a single decision, from the Superior Court, has held that the Wage Act encompasses severance-based
claims. See Juergens v. Microgroup, Inc., 2011 WL 1020856, at *2 (Mass. Super. Jan. 28, 2011). That court noted
that Prozinski had relied on the holding of Commonwealth v. Savage, 31 Mass. App. Ct. 714, 716 (1991), in support
of the proposition that courts should narrowly construe the Wage Act, and that the Supreme Judicial Court later
overruled Savage in Wiedmann v. Bradford Group, Inc., 444 Mass. 698, 703-04 (2005). The Juergens court
therefore reasoned that it should construe the statute less narrowly so as to include severance pay. 2011 WL

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Those holdings are controlling on this Court. Accordingly, a claim for unpaid severance
is not cognizable under the Wage Act.
Plaintiff nonetheless argues that his severance pay qualifies as “wages” under the
statute—specifically, a “commission” that was “due and payable” and “definitely determined.”
Mass. Gen. Laws ch. 149, § 148. Plaintiff asserts that his severance met those two components
because (1) the two conditions of involuntary termination and without cause had been satisfied
and (2) the amount of twelve weeks’ salary at 100 percent base pay was definitively known.
That argument is premised on the contention that the nature and purpose of a particular form of
remuneration, not the label applied to it by the employer, determines whether it is covered by the
statute. See Weems, 453 Mass. at 153-54 (explaining that the “operative fact here is that bonus
awards under these programs are discretionary, not because they are labeled bonuses, but
because the employers are, apparently, under no obligation to award them”); see also Weiss v.
DHL Exp., Inc., 718 F.3d 39, 47-48 (1st Cir. 2013) (considering whether bonus payments qualify
as “earned” wages or “commissions”).
It is certainly true that labels are not determinative. But even accepting that proposition,
the plaintiff must nonetheless prove that the severance payment was “wages.” To do so, he must
do more than satisfy the “due and payable” and “definitely determined” conditions. Not all
remuneration that an employer provides its employees is a “wage.” Roche v. Morgan Collection,
Inc., 882 F. Supp. 2d 247, 255 (D. Mass. 2012). To the contrary, the Wage Act requires that

1020856, at *2.
Plaintiff here raises the same argument. However, the Platt decision recently affirmed the principle that the
Wage Act does not cover severance, and this Court accordingly will not follow Juergens. 85 Mass. App. Ct. 1114,
at *1.

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wages be “earned” to merit protection. Mass. Gen. Laws ch. 149, § 148; see Weems, 453 Mass.
at 154; Prozinski, 59 Mass. App. Ct. at 603. Here, although part of an employment agreement,
the severance pay that plaintiff and defendant agreed to was a contractual obligation, not a
“wage” that had been acquired by virtue of plaintiff’s “labor, service, or performance.”
Massachusetts State Police Commissioned Officers Ass’n, 462 Mass. at 225; see Prozinski, 59
Mass. App. Ct. at 603-04. While plaintiff may seek recourse through a claim for breach of
contract, the Legislature did not seek to provide an additional cause of action under the Wage
Act. Id. at 604. The fact that severance is, in other contexts, considered wages is not dispositive.
See United States v. Quality Stores, Inc., 134 S. Ct. 1395, 1395, 1405 (Mar. 25, 2015) (holding
that severance payments are taxable wages under the Internal Revenue Code); Ruzicka v.
Comm’r of Dep’t of Employment & Training, 36 Mass. App. Ct. 215, 219-20 (1994) (holding
that severance payments disqualify a person from receiving unemployment benefits). The plain
language of the Wage Act itself controls and precludes plaintiff’s claim here.
IV.

Conclusion
For the foregoing reasons, defendant’s motion to dismiss is GRANTED.

So Ordered.

/s/ F. Dennis Saylor
F. Dennis Saylor IV
United States District Judge

Dated: June 26, 2014

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