Lelio v. Marsh USA, Inc.
Filing
61
Judge Mark L. Wolf: MEMORANDUM AND ORDER entered granting 42 Motion for Summary Judgment; adopting Report and Recommendations re 58 Report and Recommendations. (Bono, Christine)
UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
JASON E. LELIO,
Plaintiff,
)
)
V.
Civ. No. 15-10335-MLW
MARSH USA, INC.,
Defendant.
MEMORANDUM AND ORDER
WOLF, D.J.
August 14, 2017
Plaintiff Jason Lelio, a former employee of defendant Marsh
USA
Inc.
("Marsh") /
compensation.
alleges
that Marsh
owes
him
$50,000
in
Lelio has asserted claims for violations of the
Massachusetts Wage Act, breach of contract, breach of the covenant
of good faith and fair dealing, promissory estoppel, and quantum
meruit.
claims.
Marsh has moved for summary judgment on all of Lelio's
See Docket No. 42.
The case was referred to Magistrate Judge Jennifer C. Boal
for full pretrial purposes, including a report and recommendation
on any dispositive motions.
See Docket No. 24.
The Magistrate
Judge issued her Report and Recommendation on June 19, 2017.
Docket No. 58.
See
In it she recommends that the court allow Marsh's
motion for summary judgment.
The Magistrate Judge advised the parties that, pursuant to
Rule 72(b) of the Federal Rules of Civil Procedure, they had 14
days to file specific written objections to her recommendation.
Accordingly, any such objections were due by July 3, 2017. Neither
party, however, filed any objections.
Because the parties have not objected to the Report and
Recommendation, the court need not review the issues it addresses
de noyo.
Waiver of ^ novo review by failing to file proper
objections does not entitle a party to "some lesser standard" of
review.
Thomas v. Arn, 474 U.S. 140, 149-50 (1985); see also Costa
V. Hall, No. 00-12213-MLW, 2010 WL 5018159, at *17 (D. Mass. Dec.
2, 2010) ("Absent objections, the court may adopt the report and
recommendation of the magistrate judge."). However, review by the
court in such circumstances is not prohibited, and some level of
oversight, even if not ^ noyo, is encouraged.
Carlson, 812 F.2d 874, 878 (3rd Cir. 1987).
See Henderson v.
The court has reviewed
the Report and Recommendation and finds it to be thorough and
persuasive.
It is, therefore, being adopted.
In view of the foregoing, it is hereby ORDERED that:
1.
The attached Report and Recommendation (Docket No. 58)
is ADOPTED and INCORPORATED in this Memorandum.
2.
For the reasons stated in the Report and Recommendation,
Defendant's Motion for Summary Judgment (Docket No. 42) is ALLOWED.
3.
Judgment shall enter for defendant Marsh USA Inc. on all
counts.
UNITED STATES DISTRICT JUDGE
Case l:15-cv-10335-MLW Document 58 Filed 06/19/17 Page 1 of 24
UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
JASON E. LELIO,
Plaintiff,
Civil Action No. 15-10335-MLW
MARSH USA,INC.,
Defendant.
REPORT AND RECOMMENDATION ON DEFENDANT'S
MOTION FOR SUMMARY JUDGMENT
[Docket No.42]
June 19,2017
Boal, M.J.
Plaintiff Jason Lelio, a former employee of defendant Marsh USA,Inc.("Marsh"),
alleges that Marsh owes him $50,000 in compensation. Lelio has asserted claims for violations
ofthe Massachusetts Wage Act, breach of contract, breach ofthe covenant of good faith and fair
dealing, promissory estoppel, and quantum meruit. Marsh has moved for summary judgment on
all ofLelio's claims against it. Docket No.42.' For the following reasons, the Court
recommends that the District Judge assigned to this case grant Marsh's motion for summary
judgment.
I.
PROCEDURAL HISTORY
On October 30,2014, Lelio filed his complaint in Massachusetts Superior Court. Docket
No.5 at 2-11. Marsh removed the case to this Court on February 11,2015. Docket No. 1.
' On September 29,2015,the District Court referred the case to the undersigned for full pretrial
management,including report and recommendation on dispositive motions. Docket No.24.
Case l:15-cv-10335-MLW Document 58 Filed 06/19/17 Page 2 of 24
On February 18, 2015, Marsh filed a motion to dismiss the complaint. Docket No. 7.
The District Court denied the motion on September 29,2015. Docket No. 23.
On September 19,2016, Marsh filed the instant motion for summary judgment. Docket
No.42. Lelio filed an opposition on October 19,2016. Docket No.46. On November 3,2016,
Marsh filed a reply. Docket No.50.
The Court heard oral argument on June 16, 2017.
II.
FACTS^
A.
Lelio's Hire
Lelio applied to work at Marsh in or about early 2007.^ After interviewing Lelio by
phone and in-person. Financial Accounting Claims Services("FAGS")Northeast Region Leader,
Raymond Hutnik, offered Lelio a Senior Consultant position in Marsh Risk Consulting's
("MRC")FACS practice group.'^
Mr. Hutnik explained the compensation package being offered to Lelio, including a base
salary of$175,000, a signing bonus, and eligibility for annual incentive compensation that would
be based "on the group's performance and [Lelio's] performance."^ Mr. Hutnik did not provide
2 The facts are largely undisputed. Because this case is before the Court on a motion for
summaryjudgment,the Court sets out any properly disputed facts in the light most favorable to
Lelio, the non-moving party. See DeNovellis v. Shalala, 124 F.3d 298,302(1st Cir. 1997). The
facts are derived from the Final Responses to Defendant's Statement of Material Facts and
Plaintiffs Statement of Additional Material Facts in Support ofHis Opposition to Defendant's
Motion for Summary Judgment. Docket No. 53. The Court refers to Marsh's statements as
"Def. SOF;" to Lelio's Responses as "PI. Resp.;" to Marsh's replies as "Def. Reply;" to Lelio's
statements of additional facts as "PI. SOF;" and to Marsh's responses as "Def. Resp."
3 Def. SOF HI; PI. Resp. HI.
4 Def. SOF H 2; PI. Resp. H 2.
^Def. SOFH3;Pl.Resp.H3.
Case l:15-cv-10335-MLW Document 58 Filed 06/19/17 Page 3 of 24
any more detail regarding incentive compensation during this discussion.^
In addition to his Senior Consultant title, Lelio was given an officer title upon hire - Vice
President.' In or about 2008, Lelio was promoted to Senior Vice President.^ By 2013, Lelio had
also been promoted to a Managing Consultant position.^
On May 25,2007, Marsh sent Lelio an offer letter that outlined his $175,000 base salary
and a signing bonus. The offer letter did not reference incentive compensation and Lelio does
not recall receiving any documents relating to incentive compensation upon hire.'' The letter
did, however, direct Lelio to Marsh's intranet site for information about benefits available to
him.'^ The letter also stated: "This offer letter supersedes all prior agreements and
understandings oral or written between you and the Company."'^ On June 4,2007,Lelio signed
the offer letter and returned it to Marsh.'''
Upon hire, Lelio executed a document stating: "I acknowledge that no supervisor,
manager or other representative of MMC or Marsh has the authority to make any verbal
promises,commitments or statements of any kind regarding MMC's and Marsh's policies.
^Def. S0F^4;PI. Resp.1I4.
' SOF15;PI. Resp.^ 5; PI. SOF ^ 2; Def. Resp. 2.
Def.
^Def. SOF1I5;Pl.Resp.1|5.
^ Def. SOF ^ 5; PI. Resp. H 5; PI. SOF ^ 2; Def. Resp.^ 2.
Def. SOF H 6; PI. Resp. H 6; PI. SOF H 3; Def. Resp.13.
"Def. SOF 17; PI. Resp.17.
'2 Def. SOF 118; PI. Resp. H 8.
'2 Def. SOF II68; PI. Resp. H 68.
Def. SOF II15; PI. Resp. H 15.
Case l;15-cv-10335-MLW Document 58 Filed 06/19/17 Page 4 of 24
procedures or any other issues that are legally binding on MMC and/or Marsh."'^
Lelio accessed Marsh's intranet site numerous times throughout his employment,
including when he signed up for benefits, completed his self-evaluations and reviewed Mr.
Hutnik's evaluations of his performance.^^ Included among such information on Marsh's
intranet site is a document entitled. Compensation At Marsh, A Guide For Colleagues
("Compensation Guide"), which details the compensation available to Marsh employees.
While the Compensation Guide is updated regularly, its description ofincentive compensation
remained materially the same throughout Lelio's employment.'^
The 2013-2014 Compensation Guide's section on "Components of Total
Compensation" states that Marsh employees are eligible for various types ofincentive
compensation, including Discretionary Bonuses, Sales Compensation, and Long-Term
Incentive.'^ With respect to Discretionary Bonus(referred to as "ICP"), the Compensation
Guide states:
Given that the ICP is directly related to the performance of Marsh, bonuses
will increase or decrease from year to year and are,therefore,a true example
of variable pay
[R]eceiving a bonus one year doesn't necessarily mean
you will receive one in the following year. In other words,bonuses are truly
'5 Def. SOF ^ 67; PI. Resp.167.
Def. SOF H 9; PI. Resp. 119.
Def. SOF H 10; PI. Resp.110.
Def. SOF H 11; PI. Resp. H 11. While Lelio does not dispute that the Compensation Guide's
description ofincentive compensation remained materially the same throughout his employment,
he also states that "the equivalent Compensation Guide for managers did materially change
during the same time" and "Lelio was not privy to such changes." PI. Resp. H 11. However,the
record cites by Lelio do not actually support his statements.
Def. SOF II12; PI. Resp. H 12; s^ also PI. SOF H 7; Def. Resp. H 7.
Case l:15-cv-10335-MLW Document 58 Filed 06/19/17 Page 5 of 24
discretionary.^®
With respect to Long Term Incentive (referred to as "LTI"), the Compensation Guide
states:
Long-term incentive plans are designed to reward a colleague's potential success
as well as assure the company's longer-term business goals are achieved. The Long
Term Incentive Plan(LTIP)provides awards to key colleagues whose contributions
today can impact Marsh's future success.... LTIP awards are 'vested' or earned
over a period oftime, usually over 3 to 4 years from the date of the grant.^'
Marsh's Compensation Guide stated that incentive compensation, including both ICP and
LTI, was entirely discretionary.^^
Marsh also produced a guide entitled "2013- 2014 Compensation at Marsh: A Guide for
Managers."^^ Lelio maintains that he did not receive a copy of this guide.^'* The Guide for
Managers stated that "[o]ver the next few years in order to meet our challenging growth
initiatives there will be a shift in the pay mix from short-term to more long-term incentives for
many of our highest performing senior leaders."^^ The corresponding section in the
Compensation Guide did not contain this language.^®
B.
The MRC 2008 Compensation Plan Presentation
In February 2008, Lelio attended a presentation at which MRC's goals relating to ICP for
2® Def. SOP II13; PI. Resp.113.
Def. SOP ^ 14; PI. Resp.114;PI. SOP 1^18-9; Def. Resp.
22 Def. SOP II65; PI. Resp. H 65.
23 PI. SOP nil; Def. Resp.
24PI. SOPH 12.
25 PI. SOP n 13; Def. Resp.113.
26 PI. SOP n 14; Def. Resp. H 14.
8-9.
Case l:15-cv-10335-MLW Document 58 Filed 06/19/17 Page 6 of 24
performance year 2008 were discussed ("2008 Presentation").^^ The PowerPoint slides detailing
the presentation, which Lelio received and reviewed during his employment,included a chart
that provided for a guaranteed minimum ICP for several positions, including senior consultants.^^
Managing consultants were not among those guaranteed a minimum bonus in the 2008
Presentation.^^ During 2008, Lelio was a Senior Consultant; by 2013, Lelio had been promoted
to Managing Consultant.^®
The 2008 Presentation materials stated that they set forth "general guidelines only, and
management[had] complete discretion to allocate Discretionary Bonuses[ICP] in a way that
depart[ed] from these guidelines."^' The materials also directed employees to Marsh's intranet
site for addition information about incentive compensation.^^ The presentation materials also
stated that the 2008 Presentation was "[e]ffective for calendar year 2008.""
The PowerPoint was entitled "MRC 2008 Bonus Program Overview," and at the top of
several slides in large bold text were the words"MRC 2008 Bonus Plan.
The materials stated
that bonus eligibility would depend on MRC achieving performance goals set for 2008 and that
Def. SOFII16; PI. Resp. 16; see also PI. SOP ^ 4; Def. Resp.^ 4.
28 Def. SOF II17; PI. Resp. H 17.
29 Def. SOF H 17; PI. Resp.^17.
"
Def. SOF HI8; PI. Resp.118.
"Def. SOF H 19; PI. Resp. H 19.
"
Def. SOF H 20; PI. Resp. H 20.
"
Def. SOF H 21; PI. Resp. H 21.
Def. SOF H 22; PI. Resp. H 22.
Case l:15-cv-10335-MLW Document 58 Filed 06/19/17 Page 7 of 24
incentive compensation relating to performance year 2008 would be paid by March 15, 2009.^^
Lelio testified at deposition that the 2008 Presentation was not a contract and that he did
not know if the guidelines detailed therein had ever been applied.^^
C.
Marsh's Incentive Compensation Practices
During Lelio's employment,then-FACS Global Leader Kevin McCarthy was responsible
for allocating and distributing year-end compensation awards for the FAGS group across the
United States.^' Toward the end of each calendar year, Mr. McCarthy created a spreadsheet
listing all FAGS employees and their performance data, including billed hours, revenue
generated, annual performance ratings, and prior year compensation awards.^^ Mr. McCarthy
would then receive an estimate of how much money would be allocated to the salary,IGP and
LTI pools^^ at year end.'*®
Relying on these estimated pools, Mr. McCarthy, Mr. Hutnik and then Growth Leader of
FAGS,John Albrecht("FAGS Leadership") would propose compensation awards for FAGS
employees, including any salary increase,IGP and/or LTI.^* In doing so,FAGS Leadership
exercised wide discretion — in addition to the quantitative performance data outlined in the
35 Def. SOF123;PI. Resp.123.
36 Def. SOF H 69; PI. Resp.f 69.
37 Def. SOF H 24; PI. Resp.^ 24.
38 Def. SOF ^ 25; PI. Resp. H 25.
3^ Marsh uses the term "pool" to refer to the sum of money available for each compensation type.
Def. SOF ^27; PI. Resp.127.
Def. SOF ^ 26; PI. Resp. H 26.
Def. SOF % 28; PI. Resp.^ 28.
Case l:15-cv-10335-MLW Document 58 Filed 06/19/17 Page 8 of 24
spreadsheet, the managers also considered qualitative factors, such as the employee's initiative,
enthusiasm, and future potential."*^ No arithmetic calculations were used to arrive at the
proposed compensation figures."*^
FAGS Leadership thereafter met to discuss and finalize the proposed awards, during
which it was not uncommon for such proposals to increase or decrease.'*'^ Changes to proposed
compensation were also made for reasons outside FACS Leadership's controL^^ For example.
Marsh occasionally sets "salary caps," barring managers from increasing the salaries of"highly
compensated" employees (e.g., employees making $200,000 or more)."*^ The salary threshold for
determining which colleagues were "highly compensated" varied from performance year to
performance year."^'
Marsh also typically set minimum LTI award amounts (e.g., no less than $50,000)."^^
These salary caps and LTI minimums were often not communicated to FACS Leadership until
after they had made their initial round of compensations proposals, necessitating revisions to
such proposals."*^
In or about mid-to-late January ofeach year, Mr. McCarthy would receive notice ofthe
Def. SOF H 29; PI. Resp.129.
Def. SOF II30; PI. Resp.^ 30.
44 Def. SOF ^31; PI. Resp. II31.
45 Def. SOF II32; PI. Resp. H 32.
46 Def. SOF ^ 33; PI. Resp.^ 33.
47 Def. SOF H 34; PI. Resp.134.
48 Def. SOF H 35; PI. Resp. H 35.
49 Def. SOF ^ 36; PI. Resp. H 36.
Case l:15-cv-10335-MLW Document 58 Filed 06/19/17 Page 9 of 24
actual amounts in his compensation pools. Depending on the accuracy ofthe initial pool
estimates, the final pool information could result in additional revisions to the proposed
compensation awards.^' Once FAGS leadership had finalized its proposed compensation awards,
Mr. McCarthy would submit such proposals to then-Global Head of FACS,Ken Giambagno,
who would make further revisions before sending the information further up the chain, ultimately
to Marsh senior leadership for final approval.^^ Once senior leadership approved the figures, Mr.
Hutnik and Mr. Albrecht communicated the compensation awards to their direct reports, such as
Lelio.^^
D.
Lelio's ICP For Years 2007-2012
Marsh awarded Lelio ICP awards for performance years 2007 through 2012 in the
following amounts: $3,000(2007); $25,000(2008); $15,000(2009); $25,000(2010),$30,000
(2011); $40,000 (2012).^"^ Lelio did not receive any LTI awards from 2007-2012.^^
Lelio did not know what his incentive compensation awards would be for performance
years 2007 through 2012 until Mr. Hutnik met with Lelio to communicate such awards in mid-to
late February of each year.^^ Lelio does not know how his incentive compensation awards for
these years were determined, including whether any calculation was used to arrive at the
50 Def. SOF H 37; PI. Resp.^ 37.
51 Def. SOF 138;PI. Resp.138.
52 Def. SOF 139;PI. Resp.139.
53 Def. SOF 140; PI. Resp.140.
54 Def. SOF 141; PI. Resp.141; PI. SOF 115; Def. Resp.115.
55 Def. SOF 142; PI. Resp.142.
56 Def. SOF 143; PI. Resp.143.
Case l:15-cv-10335-MLW Document 58 Filed 06/19/17 Page 10 of 24
flgures.^^ Lelio does not know how his ICP awards compared to awards given to other FAGS
employees, or whether his FAGS colleagues received ICP or LTI awards during his
employment.^®
E.
Lelio's 2013 Incentive Compensation And Resignation
Lelio maintains that 2013 was a "banner year" for him.^' In early 2014, when Marsh was
contemplating its compensation awards, Raymond Hutnik shared an email, written by Lelio,
summarizing his achievements for the year. In that email, Hutnik remarked that it is a
"reasonably accurate reflection of his year and supports a place among the short list oftop
performers."^® Lelio's performance rating for 2013 was a 4 on a scale of5, with 5 the highest
ranking.^^
On February 18, 2014, Mr. Hutnik informed Lelio of his compensation awards for
performance year 2013.®^ Lelio received a $10,500 salary increase in 2014. ^ Lelio was also
awarded incentive compensation in the amount of$60,000, $10,000 of which was a cash ICP
award immediately payable and $50,000 of which was LTI,to be paid as restricted cash vesting
one third annually over the following three years.®^
Def. SOF TI44; PI. Resp. H 44.
58 Def. SOF H 45; PI. Resp.145.
59 PI. SOFFIT.
®®P1. SOF HIT.
PI. SOF H 25; Def. Resp.^ 25.
62 Def. SOF ^ 49; PI. Resp.^ 49.
63 Def. SOF ^ 50; PI. Resp.^ 50.
64 Def. SOF II51; PI. Resp. T|51;s^ Mso PI. SOF ^ 35; Def. Resp.^ 35.
10
Case l:15-cv-10335-MLW Document 58 Filed 06/19/17 Page 11 of 24
Lelio had sought an LTl award for performance year 2013.^^ Lelio fell into the "highly
compensated" category in 2012,and therefore did not receive a salary increase for 2013.^^ As a
result, Mr. Hutnik advocated for Lelio to receive a mid-year (or,"off-cycle")raise in 2013,
without success.^'' Instead, Lelio was informed that he would be eligible for LTI for
performance year 2013.^® Lelio emailed Mr. Hutnik on January 14,2014 to remind him ofthis,
stating: "I did not get a raise during the normal review period [in 2012] and was told I was
approved for an *off cycle' raise, but it was turned down by the last approver. Instead, I was told
that I would be eligible for the LTIP compensation program."^^
As stated in the Compensation Guide, incentive compensation at Marsh can take a variety
offorms, including ICP and LTI.''® While Lelio first received an LTI award for performance
year 2013, LTI was routinely awarded to FAGS employees during Lelio's employment."''
Because LTI is awarded in minimum amounts (e.g., $50,000 in 2013), typically only those
employees with higher salaries and receiving larger incentive compensation awards receive
LTV^
On or about February 24, 2014, Marsh emailed Lelio his LTI award grant package, which
Def. SOF H 52; PI. Resp.^ 52.
Def. SOF ^ 53; PI. Resp. H 53.
Def. SOF H 54; PI. Resp. H 54.
Def. SOF TI55; PI. Resp.^ 55. Lelio "disputes" this fact but his response does not actually
contradict it. Instead, Lelio argues facts outside the scope of Marsh's statement. PI. Resp. U 55.
Def. SOF ^ 56; PI. Resp. H 56.
Def. SOF 146; PI. Resp.^ 46.
■" Def. SOF ^ 47; PI. Resp. H 47; s^ also PI. SOF ^ 18; Def. Resp. H 18.
^2 Def. SOF ^ 48; PI. Resp. ^ 48.
11
Case l;15-cv-10335-MLW Document 58 Filed 06/19/17 Page 12 of 24
included an "overview" brochure outlining the LTI award, the complete terms and conditions of
the LTI award, and a restrictive covenant agreement("RCA")7^ The RCA included client,
prospective client, and employee non-solicitation provisions identical in scope and duration to
the Non-Solicit Agreement Lelio executed upon hire. The RCA did not include a non-compete
provision.'^'* The email directed Lelio to review these documents, which were posted on Marsh's
intranet site, and,if he wished to accept the LTI,click the "accept" button on the site.''^ Lelio's
2013 LTI award was expressly conditioned on his continued employment and execution ofthe
RCA.''^ Lelio does not recall reviewing any of the LTI documents, but acknowledges he did not
accept the LTI award.^'
Lelio maintains that a change was made in bonuses from cash payments to LTI awards,
subject to vesting periods, in order to retain employees at risk of leaving Marsh for competitors,
including Lelio.^^
Sometime after February 18,2014, Lelio complained to McCarthy about the transition
from cash bonuses to LTI awards.''^ On July 2, 2014, Lelio resigned.®® By email to Marc Allen,
Marsh's Global HR Leader, Lelio requested that the "balance of[his] incentive compensation"
Def. SOFII57; PI. Resp. H 57.
Def. SOF ^ 58; PI. Resp. H 58.
Def. SOF H 59; PI. Resp.^ 59.
Def. SOF II74; PI. Resp. T| 74;^also PI. SOF 138.
Def. SOF ^61; PI. Resp. 1161.
7®S^P1.SOF tH 19-24.
PI. SOF H 36; Def. Resp. H 36.
®® Def. SOF H 62; PI. Resp. H 62.
12
Case l:15-cv-10335-MLW Document 58 Filed 06/19/17 Page 13 of 24
be paid fortwith.^^ Marsh declined to pay any such compensation.^^
III.
ANALYSIS
In this action, Lelio seeks to recover the $50,000 in LTI he was awarded, but did not
receive, in 2014. He argues that sometime in late 2013 or 2014, Marsh realized that Lelio,
among other key employees, was a high risk for departure. Docket No.46 at 3. Therefore,
according to Lelio, Marsh decided to try to "lock down" employees by changing the
compensation structure. Id Instead of paying his incentive compensation in a lump sum cash
award, as it had done in previous years. Marsh awarded $50,000 out of his total $60,000
incentive compensation as LTI. Id Such an LTI award required Marsh to execute certain
restrictive covenants as well as remain employed for another three years. Id In Lelio's view
this constituted a "retroactive" change to his compensation. Id at 5. For the reasons set forth
below, however,the Court finds that Lelio's theories are unavailing and Marsh is entitled to
summary judgment on all of Lelio's claims.
A.
Standard OfReview
Summary judgment is appropriate "if the movant shows that there is no genuine dispute
as to any material fact and the movant is entitled to judgment as a matter oflaw. Fed. R. Civ. P.
56(a). "A dispute is 'genuine' if the evidence about the fact is such that a reasonable jury could
resolve the point in the favor ofthe non-moving party." Sanchez v. Alvarado, 101 F.3d 223, 227
(1st Cir. 1996)(quotations and citations omitted). A material fact is one which has "the potential
to affect the outcome ofthe suit under the applicable law." Id (quotations and citations
omitted).
PI. SOFII39; Def. Resp.139.
82 PI. SOF 140; Def. Resp. H 40.
13
Case l:15-cv-10335-MLW Document 58 Filed 06/19/17 Page 14 of 24
The moving party bears the initial burden of establishing that there is no genuine issue of
material fact.
Celotex Corp. v. Catrett. 477 U.S. 317,323(1986). If that burden is met, the
opposing party can avoid summary judgment only by providing properly supported evidence of
disputed material facts that would require trial.
id at 324. "[T]he non-moving party 'may
not rest upon mere allegation or denials of his pleading,"' but must set forth specific facts
showing that there is a genuine issue for trial. LeBlanc v. Great Am.Ins. Co.,6 F.3d 836,841
(1st Cir. 1993)(quoting Anderson v. Liberty Lobbv.Inc..477 U.S. 242,256(1986)).
The court must view the record in the light most favorable to the non-moving party and
indulge all reasonable inferences in that party's favor. See O'Connor v. Steeves,994 F.2d 905,
907(1st Cir. 1993). However,"[a]s to any essential factual element of its claim on which the
nonmovant would bear the burden of proof at trial, its failure to come forward with sufficient
evidence to generate a trialworthy issue warrants summaryjudgment to the moving party." IiLre
Spigel 260 F.3d 27,31 (1st Cir. 2001)(citation omitted). "If, after viewing the record in the
non-moving party's favor, the Court determines that no genuine issue of material fact exists and
the moving party is entitled to judgment as a matter oflaw,summary judgment is appropriate."
Walsh V. Town ofLakeville. 431 F. Supp. 2d 134,143(D. Mass. 2006).^^
Lelio cites to Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 151 (2000), for the
proposition that "the Court must ignore all evidence favoring the Defendants that a jury might
not believe -such as evidence provided by witnesses who are biased, interested, or whose
credibility is tainted." Docket No.46 at 3(emphasis in original). According to Lelio,this Court
must disregard the affidavits offered by Marsh because they come from interested employees.
Id. The First Circuit, however, has rejected this reading of Reeves. "At summary judgment we
need not exclude all interested testimony, specifically testimony that is uncontradicted by the
nonmovant." Dennis v. Osram Svlvania. Inc.. 549 F.3d 851,856(1st Cir. 2008)(citation
omitted). Here, the material facts are largely undisputed. Not only has Lelio failed to offer
evidence to contradict Marsh's statement of undisputed facts, but has admitted virtually all
statements offact submitted by Marsh.
14
Case l:15-cv-10335-MLW Document 58 Filed 06/19/17 Page 15 of 24
B.
Lclio's Breach Of Contract Claim Fails As A Matter Of Law
Marsh argues that Lelio's breach ofcontract claim fails because he cannot demonstrate
that Marsh breached any contractual obligations to him in connection with his 2013 incentive
compensation. Docket No.43 at 11-12; Docket No. 50 at 3-10. This Court agrees.
Under Massachusetts law,^"^ in order to succeed in his breach of contract claim, Lelio
must show that(1)the parties reached a valid and binding agreement with regard to incentive
compensation;(2) Marsh breached the terms ofthat agreement; and(3)Lelio suffered damages
as a result ofthe breach. Michelson v. Digital Fin. Servs.. 167 F.3d 715,720(1st Cir. 1999)
(citing Coll V. PB Diagnostic Svs.. Inc., 50 F.3d 1115, 1122(1st Cir. 1995)).
Contract interpretation is a question oflaw for the court. Weiss v. DHL Exp.. Inc., 718
F.3d 39,44-45 (1st Cir. 2013)(citing Seaco Ins. Co. v. Barbosa,435 Mass. 772(2002)).
"[W]hen several writings evidence a single contract or comprise constituent parts ofa single
transaction, they will be read together." Id at 45 (quoting FDIC v. Singh, 977 F.2d 18,21 (1st
Cir. 1992)). "Absent ambiguity, the court interprets a contract according to its plain terms, in a
manner that gives reasonable effect to each of its provisions." Id (internal quotations and
citations omitted).
"A contract is not ambiguous simply because litigants disagree about its proper
interpretation." Id (citing Singh. 977 F.2d at 22). "Ambiguity arises only if the language 'is
susceptible of more than one meaning and reasonably intelligent persons would differ as to
which meaning is the proper one.'" Id (citing S. Union Co. v. Pep t ofPub. Utils.. 458 Mass.
Both parties have cited to Massachusetts law in their papers. Where the parties have agreed as
to the choice oflaw, courts are "free to 'forego an independent analysis and accept the parties'
agreement.'" Hershev v. Donaldson. Lufkin & Jenrette Sec. Corp.. 317 F.3d 16, 20(1st Cir.
2003)(citation omitted).
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812(2011)).
Identification ofthe relevant contract and its terms has been a moving target throughout
this litigation. In his opposition to Marsh's motion to dismiss, Lelio stated that his claims were
not based on the Compensation Guide and moved to strike the Compensation Guide from
consideration by the District Court. Docket No. 12 at 1,3-4. Indeed, he stated that he did not
know the Compensation Guide existed and never saw it prior to Marsh filing its motion to
dismiss. Id. at 3. In his sworn answers to interrogatories, Lelio pointed to the 2008 Presentation
as the basis for his contract claims. See Docket No. 50-2 at 9. Later, during his deposition, Lelio
stated that he did not believe that the 2008 Presentation was a contract but rather that he was
relying on statements made to him by Mr. Hutnik.
Def. SOF
63,69; PI. Resp.
63,69.
Lelio still has not clearly identified the contract at issue here. In his opposition to
Marsh's motion for summary judgment, Lelio first states that the Compensation Guide,"[t]aken
together with the conversations with Hutnik, the 2008 PowerPoint Presentation, and Marsh's past
practices... make up the terms and conditions of his employment compensation." Docket No.
46 at 6. However, he later states that "the structure of Lelio's compensation should be
interpreted solelv from the 2013-2014 [Compensation Guide]." Id at 8(emphasis added). At
oral argument, Lelio's counsel also suggested conduct on the part of Marsh formed part ofthe
contract.^^ Lelio's shifting arguments are fatal to his breach ofcontract claim because he fails to
In all likelihood because of Lelio's failure to specifically identify the alleged contract and its
terms and his reliance at least in part on oral statements. Marsh argues that Lelio's claims are
barred by the statute offrauds. Docket No.43 at 10-11. Lelio has failed to address this
argument in his opposition to Marsh's motion for summary judgment. Because the Court has
concluded that Lelio's breach ofcontract claims fails in any event, it is not necessary to address
whether the Statute of Frauds also bars Lelio's claims.
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meet the most basic element ofsuch a claim -identifying with specificity the nature and terms of
his alleged contractual agreement with Marsh. Dovle v. Hasbro. Inc.. 103 F.3d 186, 194-195 (1st
Cir. 1996)("It is essential to state with substantial certainty the facts showing the existence of
the contract and the legal effect thereof.")(internal quotations and citation omitted).
Even assuming that the relevant contract is comprised of Hutnik's representations, the
2008 Presentation, and the Compensation Guide, Lelio has failed to point to any evidence to
create a triable issue offact that any such agreements were breached. Lelio has failed to identify
any specific promise by Hutnik that was breached.
Def. SOF ^ 64; PI. Resp. 64. He has
also failed to point to any specific term either in the 2008 Presentation or the Compensation
Guide that was breached. The 2008 Presentation does not guarantee him any incentive
compensation at all. To the extent that the 2008 Presentation refers to guaranteed minimum
bonuses, those guarantees applied only to Senior Consultants. Def. SOF ^ 17; PI. Resp.^17. By
2013, Lelio was no longer a Senior Consultant, but had been promoted to Managing Consultant.
Def. SOF f 18; PI. Resp. ^18. Therefore, Lelio cannot rely on the 2008 Presentation to support
his claim for breach of contract with respect to payment of incentive compensation in 2013.
Similarly, Lelio has failed to identify in what way the Compensation Guide was
breached. The Compensation Guide does not contain any agreement or promise to award
incentive compensation at all, never mind in any particular amount or any particular form. Def.
SOF ^ 13; PI. Resp.^ 13. Rather, the Compensation Guide makes it clear that incentive
compensation is "truly discretionary." Id The Compensation Guide also makes clear that Marsh
may choose to grant employees LTI awards, which "are 'vested' or earned over a period oftime,
usually over 3 to 4 years from the date ofthe grant." Def. SOF ^ 14; PI. Resp. TI14. Thus,
Marsh acted consistent with the terms ofthe Compensation Guide when it awarded Lelio
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$10,000 in a cash ICP award as well as a $50,000 LTI award that would vest over a period of
three years.
Further, Lelio does not dispute that the LTI award was contingent on him remaining
employed at Marsh for three years and subject to other restrictions, which he did not meet. Def.
SOF ^ 51; PI. Resp.^51. Accordingly, Lelio has failed to point to any evidence that Marsh
breached any agreements between them.
Lelio argues that Marsh "retroactively" changed its compensation policies by awarding
the bulk of his 2013 incentive compensation as LTI. Docket No.46 at 5, 8-9. To support this
argument, Lelio relies on the following statement in the managerial counterpart to the
Compensation Guide,"Compensation at Marsh: A Guide for Managers," which states that "over
the next few years ... there will be a shift in the pay mix from short-term to more long-term
incentives for many of our highest performing senior leaders." Id at 8. However, Lelio has not
pointed to any evidence that this was a change in policy. At oral argument, Lelio referenced a
series ofemails that discussed forms of compensation. Docket Nos. 45-11,45-12,45-13,45-14.
Such discussions themselves, however, are not the proper basis for a breach of contract claim.
As discussed above, the Compensation Guide was always clear that incentive compensation may
take a number offorms, including ICP and LTI,that the amount ofsuch awards is wholly within
Marsh's discretion, and that what an employee receives in one year in no way indicates what he
or she will receive in a later year. Def. SOF
12-14; PI. Resp.
12-14. Although Lelio had
not received an LTI award in years prior to 2013, other employees had, and the terms ofthe
Compensation Guide made clear that Marsh had discretion in doing so. Def. SOF
46-47; PI.
Resp. TITI46-47; Docket No.44-9 at 7-9. Thus, there is no evidence in the summary judgment
record that Marsh retroactively altered its compensation policies.
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Accordingly, the Court finds that there is no triable issue offact with respect to Lelio's
breach of contract claim.
C.
Lelio Cannot Prevail On His Wage Act Claim Because
Incentive Compensation Is Not a Wage Under The Act
Lelio's failure to show any evidence that Marsh failed to pay him incentive compensation
to which he was entitled necessarily defeats his Wage Act claim. In addition, Marsh argues that
Lelio cannot prevail on his Wage Act claim because the undisputed facts show that his incentive
pay did not constitute wages under the Wage Act. Docket No. 43 at 12-14. The Court agrees.
The purpose ofthe Wage Act is "to prevent the unreasonable detention of wages."
Weems v. Citieroun. Inc.. 453 Mass. 147,150(2009)(citations omitted). To that end, the Wage
Act requires the prompt payment of"wages earned" on pain ofcivil and criminal penalties,
treble damages, and attorney's fees. Weiss. 718 F.3d at 47(citing M.G.L. c. 149,§§ 148,150).
"While the Act makes clear on its face that holiday pay, vacation pay, and definitely determined
commissions fall within its protections, the term 'wages' is not otherwise defined." Id
The Supreme Judicial Court("SJC")has held that discretionary bonuses are not wages
within the meaning ofthe Wage Act. See Weems.453 Mass, at 153-154. Similarly, the First
Circuit has held that a bonus with the contingency ofcontinued employment was not a wage
under the Wage Act. Weiss. 718 F.3d at 47-48. Here, Lelio's LTI award was both wholly
discretionary and contingent on his continued employment at Marsh. Def. SOF
74; PI. Resp.
14, 51,65,
14,51,65, 74. Accordingly, the Court finds that Lelio's claim for the payment
of the $50,000 LTI is outside the scope ofthe Wage Act.
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D.
Lelio Cannot Maintain A Claim For Breach OfThe Covenant
Of Good Faith And Fair Dealing Because He Voluntarily Resigned
At oral argument, Lelio stated that he did not oppose the entry ofsummary judgment
against him on this claim. In any event, summary judgment should be granted on the merits. To
prevail on a claim for breach ofthe covenant of good faith and fair dealing in the employment
context, the plaintiff must establish(1)status as an at-will employee;(2)termination of
employment;(3)termination without"good cause" or in "bad faith;" and (4)termination with the
purpose of depriving the employee of benefits to which he is entitled. Vonachen v. Computer
Associates Inter.. Inc.. 524 F. Supp. 2d 129,137(D. Mass. 2007)(citations omitted). Such a
claim is generally referred to as a Fortune claim.
Fortune v. Nat'l Cash Register Co.. 373
Mass. 96(1977). Here, Lelio cannot show that he was terminated because it is undisputed that
he voluntarily resigned. Def. SOF 62; PI. Resp.^ 62;s^ also Docket No.46 at 10.
Lelio acknowledges that he that he does not have a Fortune claim because he was not
terminated. Docket No.46 at 10. Rather, he argues that he was deprived of compensation for
work already performed. Id In other words, Lelio argues that Marsh's "retroactive" change to
its compensation practices was in bad faith and,therefore, breached the covenant of good faith
and fair dealing. Id In so doing, he cites to Avash v. Dana-Farber Cancer Institute. 443 Mass.
367(2005).
Docket No.46 at 11. Avash. however,is inapposite. Avash addressed the
Fortune doctrine as applied to the hospital-physician employment relationship. Specifically, the
SJC stated that:
In the specific context ofa physician-hospital employment relationship, we
have assumed (but not yet decided) that a physician whose staff privileges
have been terminated by a hospital may assert a claim of breach of the
implied covenant of good faith and fair dealing against the hospital based
on its alleged bad faith failure to follow its own bylaws. Such a claim would
premised on the hospital's breach ofits promise,implicit in the employment
relationship, to abide by its own bylaws in its conduct toward its physicians.
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Id at 386(emphasis added; internal citations omitted). The SJC went on to assume that the
hospital violated the implied covenant of good faith and fair dealing when it restricted the
plaintiffs privileges without first notifying her of her right to request a hearing. Id at 388. The
SJC nevertheless found against the plaintiff because she had offered no evidence that she
suffered a compensable loss as a result ofthe breach. Id Thus, Avash does not apply to the
facts of this case.
In any event, Lelio has presented no evidence that Marsh deprived him ofany income he
reasonably earned or to which he was entitled. As discussed above, there is no evidence in the
record to support his argument that Marsh retroactively changed his compensation or that it
violated the terms ofthe Compensation Guide. Instead, the evidence shows that incentive
compensation was always wholly within Marsh's discretion, including the option of granting LTI
awards. Def. SOF ^ 65; PI. Resp.% 65. Once granted, the LTI award vested over time only if he
continued to be employed; thus, the unvested LTI is not compensation for past services, but
compensation contingent on his continued employment. See, e.g.. Harrison v. NetCentric Corp..
433 Mass. 465,473(2001)(unvested shares not compensation for past services); McCone v.
New England Tel. and Tel. Co.. 393 Mass. 231, 234-235 (1984)(rejecting plaintiffs argument
that because promotion and increase in salary and benefits was based on past performance, it was
earned compensation for past work). The fact that, in granting LTI, Marsh may have been
motivated by a desire to incentivize Lelio to remain at Marsh does not change the outcome when
Marsh had the unfettered discretion to grant no ICP or LTI at all.
Accordingly, the Court finds that Marsh is entitled to summary judgment in its favor on
Lelio's claim for breach of the covenant of good faith and fair dealing.
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E. By Failing To Address His Promissory Estoppel And Quantum
Meruit Claims. Lelio Concedes That Dismissal OfThose Claims Is Warranted
In his memorandum,Lelio has failed to address Marsh's arguments that it is entitled to
judgment as a matter oflaw on Lelio's promissory estoppel and quantum meruit claims. As
such, these claims are deemed waived.
Borees ex rel. S.M.B.W. v. Serrano-Isem. 605 F.3d
1,6(1st Cir. 2010)(by failing to develop argumentation with respect to defendant's liability,
plaintiffs waived their claim); Redondo-Borees v. United States Deo't of Housing and Urban
Dev.. 421 F.3d 1,6(1st Cir. 2005)(citation omitted)("Few principles are more sacrosanct in this
circuit than the principle that 'issues averted to in a perfunctory manner, unaccompanied by
some effort at developed argumentation, are deemed waived.'").
At oral argument, Lelio's counsel conceded that summary judgment should be granted on
the promissory estoppel claim but not the quantum meruit claim,for which he offered only an
oral defense. In any event, the summary judgment record does not support either claim. First, in
order to establish a promissory estoppel claim, Lelio must show that "(1)a promisor makes a
promise which he should reasonably expect to induce action or forbearance of a definite and
substantial character on the part of the promisee,(2)the promise does induce such action or
forbearance, and(3)injustice can be avoided only by enforcement ofthe promise." Conte v.
Bank of America. N.A.. 52 F. Supp. 3d 265,269(D. Mass. 2014)(quoting Carroll v. Xerox
Corp.. 294 F.3d 231, 242(1st Cir. 2002)). There is no evidence in the record of any promise that
would entitle Lelio to receive the $50,000 LTI award without any contingencies. He has also
pointed to no evidence of any action or forbearance induced by any promise.
Finally, Lelio has not shown a triable issue offact that he is entitled to recover in
quantum meruit. In order to recover under a theory ofquantum meruit, Lelio must show that(1)
it conferred a reasonable benefit upon Marsh;(2)Marsh accepted the services with the
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reasonable expectation of compensating Lelio; and(3) Lelio provided the services with the
reasonable expectation ofreceiving compensation. Backman v. Smimov. 751 F. Supp. 2d 304,
314(D. Mass. 2010)(citation omitted). The summary judgment record conclusively establishes
that Lelio was not entitled to the LTI award unless he signed certain restrictive covenants and
remain employed for three years but Lelio did not sign the covenants and resigned before the
award vested. Def. SOF
51,61,62, 74; PI. Resp. HTj 51,61,62, 74.
Accordingly, the Court finds that Marsh is entitled to summary judgment on Lelio's
promissory estoppel and quantum meruit claims.
IV.
RECOMMENDATION
For the reasons stated herein, this Court recommends to the District Judge to whom this
case is assigned that he grant Marsh's motion for summary judgment.
V.
REVIEW BY DISTRICT JUDGE
The parties are hereby advised that under the provisions ofFed. R. Civ. P. 72(b), any
party who objects to these proposed findings and recommendations must file specific written
objections thereto with the Clerk of this Court within 14 days ofthe party's receipt ofthis Report
and Recommendation. The written objections must specifically identify the portion ofthe
proposed findings, recommendations, or report to which objection is made, and the basis for such
objections.
Fed. R. Civ. P. 72. The parties are further advised that the United States Court
of Appeals for this Circuit has repeatedly indicated that failure to comply with Fed. R. Civ. P.
72(b) will preclude further appellate review ofthe District Court's order based on this Report
and Recommendation. See Phinnev v. Wentworth Douglas Hosp.. 199F.3d 1 (IstCir. 1999);
Sunview Condo. Ass'n v. Flexel Int'l. Ltd.. 116 F.3d 962(1st Cir. 1997); Paeano v. Frank. 983
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F.2d 343 (1st Cir.1993),
/s/ Jennifer C. Boal
JENNIFER C. BOAL
United States Magistrate Judge
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