Smith, et al. v. Unidine Corporation (Lawyers Weekly No. 12-097-17)

Nos. 2015-2667 and 2015-3417
consolidated with No. 2016-3297 1
In this action under the Massachusetts Wage Act, G.L. c. 149, §§ 148, 150 (the “Act”),
the employer, Unidine Corporation, and plaintiffs, former employees, cross move for summary
judgment. The principal issue presented is whether the former employees are entitled to recover
for the non-payment of commissions and a bonus. The employer says they are not because of the
terms and conditions of the governing agreement for calculating and paying commissions and
bonuses. The former employees assert that they should be paid the commissions as a matter of
law under the Act.2
The resolution of the motion turns on both the terms and conditions of the written
agreement regarding commissions and bonuses as well as the terms of the Act. The Act requires
1 These actions are consolidated into the lead case, Civil Action No. 2016-3297 BLS1.
The plaintiff in No. 2016-3297 is Correna Lukas. Unidine and Lukas do not move for summary
judgment in the lead case.
2 Plaintiffs also assert claims for breach of contract, breach of the implied covenant of
good faith and fair dealing, and “quantum meruit/unjust enrichment.” All claims are for nonpayment
of commissions or bonus.
the timely payment of wages. Wages include commissions “when the amount of such
commissions . . . has been definitely determined and has become due and payable . . . .” Id. The
terms of the written agreement determine what has been “definitely determined” and what is “due
and payable.”
The following facts, drawn from the parties’ Statement of Undisputed Material Facts, are
Unidine is in the business of providing dining management services to institutional
clients such as hospitals, senior living facilities, universities, etc. Unidine employs Directors of
Business Development (“DBDs”) to sell the services of Unidine and to develop and maintain
relationships with client customers as the contracts with the client customers are performed.
Plaintiffs, Donald Smith and Matthew Ales, were employed by Unidine as DBDs.3
DBDs earn a base salary and are eligible to participate in Unidine’s 2014 Sales
Commission and Bonus Plan (the “Plan”) subject to its terms and conditions. DBDs, including
Smith and Ales, acknowledge and sign the Plan each year. All of plaintiffs’ claims arise under
the 2014 Plan. The Plan applies to contracts with client customers executed in 2014.
Smith began work at Unidine on April 14, 2014, as an at-will employee, in the position of
DBD. He was paid a base salary of $ 125,000 per year, and a signing bonus of $ 25,000. Smith
was terminated from employment on May 29, 2015.
Ales began work at Unidine on January 3, 2012, as an at-will employee, in the position of
3 Signed employment letters in the record indicate that Smith and Ales were employees
at-will and that Massachusetts law governs the agreements.
DBD. His base salary was $ 80,000 per year and was increased to $ 90,000 on January 1, 2015. In
February 2015, Ales voluntarily resigned from Unidine.
The Plan
The Plan provides for the payment of commissions to DBDs subject to its terms and
conditions, based upon obtaining and maintaining for one year a new client account for Unidine.
Under the Plan, “[c]ommissions will be earned ratably over a twelve (12) month period. As such,
commissions will be paid on a monthly basis over the first year following execution (signed by
both parties) of the contract and commencement of service by Unidine.” Plan ¶ E.4 The Plan
further provides that commission payments “shall commence following the end of the first full
month of the account’s operation.” Id.
Paragraph E of the Plan lists a number of contingencies that must occur before the first
commission payment is due. Among those contingencies are the following:
– execution of a signed contract
– planning and execution of a transition meeting by the DBD with the client and
Unidine operations personnel
– development of the first Unidine invoice to the client
– “invoicing and collection of Initial Payment . . . .” Id. at ¶ E 6 (emphasis in
-completion of the Commission Worksheet and Commission Submittal Checklist.
The Plan recognizes that the DBD has a continuing interest in the successful performance
of the contract. For example, the Plan allows the company to terminate commission payments if
the customer fails to pay any Unidine invoice or accrues an account receivable in excess of the
payment terms. Also, if the new account is terminated prior to the completion of twelve (12)
4 This quotation is from the Plan executed by Smith. The Plan executed by Ales is slightly
different. It states “[c]ommissions will be earned and paid ratably over a twelve (12) month
period as described in this section.”
months of commission payments, “any commission payments made will be returned to the
company over the same number of months as paid as well as any bonus payments. During this
period, in the event the Director of Business Development leaves the company for any reason,
any commission and/or bonus balance due the company will be due immediately to the company
and may be used to off-set any compensation due.” Id.5 Moreover, both Smith and Ales testified
in their depositions to the effect that they worked closely with the operations staff and maintained
contact with the customer as part of their jobs.6
Finally, the Plan provides that “[t]o be eligible for Commission Payment or bonus the
participant must be employed by Unidine at the time the Commission Payment or bonus is
processed and paid as described in paragraph E – Commission Payment.” Plan, ¶ B.
With respect to the payment of either a quarterly or annual bonus, the Plan is sparse. In
two paragraphs, reference is made to another, unspecified, “plan” which appears to include goals
for revenue to be generated by the DBD (although there is no definition of how the revenue
targets are set or calculated). If the DBD exceeds the goals by certain percentages (e.g., 125%,
150%, 200%), the DBD is “eligible” for payment of the bonus. The Plan does not explicitly
reserve any discretion to the company or its officers as to whether the revenue goals were met or
5 The application of this provision requiring return of commissions is subject to the
discretion of the officers of the company.
6 In particular, Ales testified that maintaining relationships was “part of my job” and gave
the example of going to the location of a customer (Three Pillars) and staying there for two
months to “smooth things out” when operations were going poorly.
Facts With Respect to Smith
Smith’s sole claim is that he is owed a commission7 with respect to a single customer,
Southeast Missouri Hospital. It is undisputed that Smith was responsible for the sale of services
to the hospital and that he worked to get the operations team set up to have a successful and
smooth start-up and launch. The hospital signed a contract with Unidine on November 24, 2014,
but dining services were not commenced until March 22, 2015. The hospital paid the initial
advance payment on March 24, 2015, and paid the first monthly invoice under the contract on
April 20, 2015. After Smith’s employment was terminated8 on May 29, 2015, Unidine sent Smith
a check in an amount (Smith concedes) that represents the value of two months of commission
payments (April and May). No further commissions were paid to Smith. Accordingly, Smith’s
claim in this lawsuit is for commissions that he alleges would have been paid to him in the ten
months after his termination. In his memorandum in opposition to Unidine’s motion for summary
judgment (and in support of his cross-motion for summary judgment), Smith states “[w]hile
Smith was not employed at the time his commission payment was due, all other contingencies
were satisfied.” Plaintiffs’ Memorandum, p. 10.
Facts With Respect to Ales
Ales claims that he is owed commissions with respect to five (5) client customers of
Unidine. Ales also asserts that he is owed a bonus under the Plan for the year, 2014. The five
7Smith makes no claim for an unpaid bonus.
8 Unidine states that Smith was terminated because Smith failed to pursue a business
opportunity for the company and because of Smith’s weak sales pipeline and disagreements with
senior management. Smith contends that he was not given any reason for his termination. In any
event, Smith does not allege that the termination of his at-will employment was wrongful or
motivated by bad faith.
customers are Wellspring, Cedarbrook, Bethesda, Three Pillars and Presence Health. Unidine
concedes that Ales performed some work to obtain each of these accounts. The undisputed facts
regarding each of the customers, however, are the following.
Wellspring. The contract between Wellspring and Unidine was entered into on
September 30, 2015. Ales voluntarily left the employment of Unidine seven months earlier, on
February 18, 2015. No commission was paid to Ales.
Cedarbrook. While Cedarbrook entered into a contract with Unidine on September 22,
2014, the Cedarbrook facility that was the subject of the contract had not been built. Unidine
began to provide dining services at Cedarbrook on August 10, 2015, six months after Ales left
Unidine. At the time of Ales’ resignation, Cedarbrook had not made its initial payment under the
contract, a first invoice had not been developed and Ales had not completed a transition meeting
or commission worksheet. No commission was paid to Ales.
Bethesda. Bethesda entered into a contract with Unidine on September 30, 2014. Unidine
began providing services on October 18, 2014. Ales earned his first commission on this account
for the month of December 2014. He was also paid a commission on this account for the month
of January 2015. Ales resigned from employment on February 18, 2015, and was not paid a
commission for February or any subsequent month.
Three Pillars. This contract was entered into on February 20, 2014. Services began on
May 1, 2014. Ales was paid his first commission on this account in June 2014. He continued to
receive commission payments through January 2015. When Ales resigned in February 2015, he
was not paid commissions for February or any subsequent month.
Presence Health. Unidine entered into a dining service contract with Presence Health on
January 20, 2014. Ales began receiving commissions on this account in April 2014, and was paid
commissions earned for the months of April through November 2014. In 2014, Presence Health
fell behind on payments owed to Unidine under the contract. Pursuant to paragraph E of the Plan,
commissions were suspended in December 2014 and January 2015 (“Commission Payment shall
terminate at the earlier of any of the following events: . . . 3. Non-payment of any Unidine
invoices by the client during the twelve (12) month term of the Commission Payment.”).
Commission payments did not resume before Ales resigned. No commissions were paid to Ales
on this account after November 2014.
Ales also claims that he earned a bonus in 2014 under the terms of the Plan that was not
paid by Unidine. The dispute on this issue is whether Ales should receive credit for the sale of
the Presence Health account in the calculation of total sales to determine whether a bonus is
owed. Ales admits that without credit for the Presence Health account against his 2014 sales
plan, he does not qualify for any quarterly or annual bonus in 2014. According to the Affidavit of
Steven Servant, Unidine’s Senior Vice President, he informed Ales that the Presence Health sale
would not count toward Ales’ bonus eligibility in 2014. Servant avers that he made that decision
“pursuant to the discretion given me under the Plan.” Servant Aff. ¶ 42. Ales admits that he did
not include the Presence Health sale on his internal monthly reports of business sold in 2014, at
the direction of Servant. Ales denies, however, that he was told that Presence Health would not
be counted for purposes of his bonus calculation.
In sum, Smith seeks payment of commissions in the amount of $ 44,424. Ales seeks
payment of commissions in the amount of $ 139,412, and payment of a bonus for 2014 in the
amount of $ 30,000. To the extent the non-payment of the amounts is found to be in violation of
the Act, any award is subject to automatic trebling, and an award of reasonable attorney fees.
Summary judgment is appropriate where there are no genuine issues of material fact and
the moving party is entitled to judgment as a matter of law. Mass. R. Civ. P. 56(c); Cassesso v.
Commissioner of Corr., 390 Mass. 419, 422 (1983). In this case, the parties cross-move for
summary judgment. Accordingly, both sides assert that there are no disputes of fact
material to the resolution of the motions.
I. Wage Act Claims
The Wage Act, G. L. c. 149, § 148, requires employers to pay employees all earned wages
on a weekly or bi-weekly basis.9 Massachusetts courts generally recognize that the purpose of
this statute is to prevent the unreasonable detention of earned wages by employers. Weems v.
Citigroup, Inc., 453 Mass. 147, 150 (2009). The Wage Act does not, however, define the term
“wages.” Thus, courts have considered various kinds of compensation to determine whether the
compensation should be held to be a “wage” under the Act.
As referenced above, “commissions” are specifically recognized as being covered by the
Act. G.L. c. 149, § 148, ¶ 4. Thus, commissions must be timely paid to an employee “when the
amount of such commissions, less allowable or authorized deductions, has been definitely
determined and has become due and payable.” Id. To be “definitely determined” a commission
must be “arithmetically determinable.” Wiedmann v. The Bradford Group, Inc., 444 Mass. 698,
708 (2005). Commissions are “due and payable” when “any contingencies relating to their
9 The Wage Act includes some exceptions to this general requirement, e.g., executive and
professional employees may request payment on a monthly basis.
entitlement have occurred.” McAleer v. Prudential Insurance Co. Of Am., 928 F. Supp. 2d 280,
288 (D. Mass. 2013)(quoting cases). Accordingly, a court applies the terms of the contract to
determine whether the commission is “definitely determined” and “due and payable.” Gallant v.
Boston Executive Search Assoc., Inc., 2015 WL 3654339, *7 (D. Mass. 2015).
A bonus that is discretionary or contingent upon the employee remaining with the
company for a defined period of time has been held not to be a wage under the Act. Weems, 453
Mass. at 153-154, citing Harrison v. Net Centric Corp., 433 Mass. 465, 466, 473
(2001)(compensation that vests over time is not earned until contingency of continued
employment is met); see also Sheedy v. Lehman Bros. Holdings Inc., 2011 U.S. Dist. LEXIS
131003 (D. Mass. 2011) (where bonus payment is contingent upon continued employment,
payment is not a “wage” under the Act).
A. Claim by Smith
Smith sold services to Southeast Missouri Hospital which made him eligible to receive
commissions. In fact, Unidine paid Smith the commissions owed for the two months following
the date when the commissions first became due and payable. At that point, Smith’s employment
with Unidine was terminated for reasons unrelated to Southeast Missouri Hospital.
Smith argues that commissions are due and payable to him for the following ten months
of the contract with Southeast Missouri Hospital even though he was no longer employed by
Unidine and could no longer provide any ongoing maintenance of the relationship between
Unidine and Southeast Missouri Hospital. He contends that the provision of the Plan that makes
a person ineligible to receive commissions after his employment is terminated is a “special
contract” that is prohibited by the Act. He relies on a recent case decided by the United States
District Court, applying the Act: Israel v. Voya Institutional Plan Services, LLC, 2017 WL
1026416 (D. Mass. 2017). In Israel, the Court granted summary judgment in favor of the
employee holding that commissions earned under the terms of a plan cannot be withheld based
upon the contract provision requiring the employee to be employed at the time of payment.
Unfortunately for Smith, the facts in his case are significantly different than the facts of
Voya. The key finding in Voya was that the commissions were “definitely determined” and “due
and payable” for past services provided before the termination of employment. Id. at *7. That the
commissions were not paid (as opposed to payable) at the time of the employee’s termination of
employment was because of the plan’s provision mandating payment following the third month
“after the month that production activity occurred.” Id. at *2. Thus, the Court found that the Act
prohibits a contract provision that would relieve an employer of the obligation to pay an earned
commission based solely on whether the employee remained employed on the date the company
elects to issue payment. In contrast to Voya, Smith’s claim fails because the commissions he
seeks were not earned and therefore were not “due and payable.”10
The Plan provides that commissions are earned ratably over a twelve month period. The
dictionary meaning of “ratably” is “apportioned.” Webster’s Ninth New Collegiate Dictionary
(1991). Giving the words of the contract their common sense meaning, it is beyond argument
that commissions were “earned” by the DBD each month as he performed or was available to
perform services in aid of the contract. This reading is consistent with the testimony of Smith and
10 Likewise, Perry v. Hampden Engineering Corp., 90 Mass. App. Ct. 1109 (2016) (Rule
1:28 Memorandum and Order), relied upon by plaintiffs, is inapposite. The commission payment
recovered in Perry was earned, and thus due and payable, prior to the date of termination of
Ales as to their ongoing obligations to the client customers. Likewise, Unidine’s Senior Vice
President (Steven Servant) described in his affidavit the ongoing responsibilities of a DBD as the
reason for requiring the commissions to be earned ratably over the twelve month period. Finally,
the Plan’s terms regarding the suspension of commissions when the client customer fails to pay
invoices and the possible retrieval of paid commissions if the new account is terminated during
the twelve month period further support the conclusion that commissions are earned each month
when, with the ongoing maintenance by the DBD, the customer account is fully performing.
Therefore, under the Plan governing the payment of commissions to both Smith and Ales
a commission is not earned when the DBD is no longer employed. Because there is no earned
commission after the termination of employment, a commission is not “due and payable” as
required for recovery of an unpaid commission under the Act.11 In the case of Smith, that means
that he is not entitled to the commission payments sought in his complaint. Summary judgment
dismissing Smith’s complaint is required.
B. Claim by Ales
Ales claims commissions are owed to him with respect to five client customers. Three of
those customers (Bethesda, Three Pillars and Presence Health) present the identical legal issue
discussed above with respect to Smith. That is that commissions were paid to Ales by
Unidine for the period of time before he terminated his employment. Thus, Ales was paid
11 Unidine advances the additional argument that commissions for months after the
termination of employment of a DBD are also not “definitely determined” as required by the Act.
The argument is based on the possibility that the client customer may change its food
requirements, eliminate a facility or otherwise take steps to reduce its invoice from Unidine. If
the amount collected from the client customer changes, then the commission changes. I view this
as further evidence in support of the conclusion that commissions are earned by the DBD each
month he performs services.
commissions for what he earned. He seeks, however, to be paid for commissions for the time
after he stopped performing services to Unidine and its client customers when he left the
employment of Unidine. Because such unpaid commissions were not earned and, therefore, not
“due and payable” there can be no recovery under the Act.
Ales’ claims for commissions with respect to Wellspring and Cedarbrook also fail. In
both cases, no commissions were earned even for the time before Ales left the company because
the Plan required an executed contract and the commencement of services before a commission
could be earned. Unidine did not have a contract (in the case of Wellspring) and did not begin to
provide services (in the case of Wellspring and Cedarbrook) until after Ales left employment.
Accordingly, Ales’ claims for commissions under the Act must be dismissed.
II. Claims for Breach of Contract, Implied Covenant of Good Faith and Fair Dealing and
Quantum Meruit
A. Commissions
The conclusion that commissions were not earned and due and payable to Smith and
Ales under the terms of the Plan necessarily resolves plaintiffs’ claims for breach of contract. If
commissions were not owed to Smith and Ales under the contract terms of the Plan, there also
cannot be a claim for breach of the implied covenant of good faith and fair dealing because to
allow such a claim would be, in effect, to re-write the partes’ contract. The implied covenant in
every contract protects the parties’ reasonable expectations under the contract but does not
“create rights and duties not otherwise provided for.” Bohne v. Computer Associates Intern. Inc.,
514 F. 3d 141, 143 (1st Cir. 2008), quoting Uno Restaurants, Inc. v. Boston Kenmore Realty
Corp., 441 Mass. 376, 385 (2004). Similarly, “[r]ecovery in quantum meruit presupposes that no
valid contract covers the subject matter of a dispute. Where such a contract exists, the law need
not create a quantum meruit right to receive compensation for services.” Boswell v. Zephyr
Lines, Inc., 414 Mass. 241, 250 (1993).
Smith makes clear in his Third Amended Complaint that he does not allege wrongful
termination of his employment. He avers that “while not terminated in bad faith, [he] was not
terminated with good cause.” Id. at ¶ 45. Moreover, the application of the implied covenant of
good faith and fair dealing as described in Gram v. Liberty Mutual Ins. Co., 391 Mass. 333. 335
(1984) protects only an employee’s right not to be deprived of compensation for past services.
Because plaintiffs were not denied compensation for past services under the terms of the Plan,
their claims for commissions alleging breach of contract, breach of the implied covenant and
quantum meruit fail.
B. Ales’ Claim for Bonus
At oral argument, counsel for Ales stipulated that Ales’ claim for an unpaid bonus does
not arise under the Wage Act. Instead, he maintains this claim under theories of breach of
contract, breach of the implied covenant of good faith and fair dealing, and quantum meruit.
Unlike the claims for unpaid commissions, Ales’ claim for an unpaid bonus raises a
genuine issue of material fact that precludes summary judgment. The fact issue presented is
whether, in the calculation of the bonus for 2014, Ales was entitled to have the company include
the revenue received from the Presence Health account. Unidine admits that if the Presence
Health contract had counted towards Ales’ sales quota, he would have been eligible to receive
bonus payments under the Plan. Unidine argues, however, that its management determined that
Presence Health should not be counted in the bonus calculation and that Ales was so informed.
Ales disputes that he was told that Presence Health would not be counted in his bonus
calculation. In his affidavit, Ales states that “I had no reason to believe that Presence Health
would not be counted towards my bonus threshold.”
Unidine argues that it had the discretion under the Plan to determine which accounts
would be counted for purposes of calculating a DBD’s bonus. When asked at oral argument to
identify the provision in the Plan upon which Unidine relies for such discretion, Unidine’s
counsel pointed to ¶ R:
Amendments, Revisions and Interpretation of the Plan: The President & CEO
of Unidine is the sole interpreter and arbitrator of the general and specific
provisions of the Plan and has the right to amend, withdraw, and modify The [sic] Plan at any time without notice.
As can be seen, this paragraph does not give Unidine the explicit discretion to refuse to pay a
bonus that was otherwise earned under the Plan. To the extent ¶ R attempts to reserve to
management the right to “interpret”, “withdraw” or “modify” the Plan, such power must be
viewed in the light of the implied covenant of good faith and fair dealing inherent in every
The Plan states that DBDs will be “eligible” for quarterly and annual bonus payments by
achieving 100% or more of a certain amount. While not explicitly stated, the amount which is the
base for calculating the bonus appears to be the “gross operating budget” for the client customer.
The Plan states that “[o]nly signed, opened accounts, including add-ons, will count toward
achievement of plan for both quarterly and annual bonuses.” Plan ¶ L. Other then those
conditions, the Plan says nothing further about how the client customer’s “gross operating
budget” is calculated or attributed to a DBD. In sum, the summary judgment record is
insufficient to determine, as a matter of law, whether Ales earned a bonus. Ultimately, whether
Ales is entitled to a bonus will depend on the parties’ understanding of the terms of the Plan and
the reasonable expectations of the parties as to how the bonus calculations were to be made.
Summary judgment must be denied with respect to Ales’ claim for a bonus based on breach of
contract and breach of the implied covenant of good faith and fair dealing.12
Unidine’s motion for summary judgment will be ALLOWED, in part, and DENIED, in
part. The motion is ALLOWED (a) to dismiss all claims by Smith in Civil Action No. 2015-
2667,13 and (b) to dismiss the Wage Act claim and all other claims for unpaid commissions by
Ales in Civil Action No. 2015-3417. The motion is DENIED with respect to the claim by Ales
for an unpaid bonus based upon breach of contract and the implied covenant of good faith and
fair dealing. Plaintiffs’ cross-motion for partial summary judgment is DENIED.
By the Court,
Edward P. Leibensperger
Justice of the Superior Court
Date: July 25, 2017
12 Ales’ bonus claim based on quantum meruit must be dismissed because the claim is
governed by contract principles. York v. Zurich Scudder Investments, Inc., 66 Mass. App. Ct.
610, 619 (2006).
13 Final judgment may enter in Civil Action No. 2015-2667, all claims having been

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