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Feeney v. Wave Systems Corp., et al. (Lawyers Weekly No. 12-173-16)

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COMMONWEALTH OF MASSACHUSETTS
SUFFOLK, ss. SUPERIOR COURT
SUCV2015-01938-BLS2
GERARD T. FEENEY,
Plaintiff
vs.
WAVE SYSTEMS CORP., WILLIAM M. SOLMS, & WALTER A. SHEPHARD,
Defendants
MEMORANDUM OF DECISION AND ORDER
ON PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT AND
ON DEFENDANTS’ MOTION FOR PARTIAL SUMMARY JUDGMENT
This is an action alleging a failure to pay accrued vacation time in violation of the Massachusetts Wage Act, G.L.c. 149 §148. Plaintiff, a former Chief Financial Officer for Wave Systems Corp. (Wave), has sued not only Wave but two of its officers, CEO and President William M. Solms and CFO Walter A. Shephard. Wave is in bankruptcy, so the claims against it are stayed. Now before the Court are plaintiff’s Motion for Summary Judgment and defendants’ Motion for Partial Summary Judgment. This Court concludes that both motions must be DENIED, except as to the issue of notice raised by the defendants’ motion.
Although certain facts in the summary judgment record are undisputed, the record also contains many fact disputes on critical issues. Briefly summarized, the record reveals the following. When Feeney was first hired by Wave in June 1998, the terms of his employment were set forth in an Employment Agreement. In addition to salary, Feeney was entitled to four weeks of vacation “in accordance with such executive benefit plans and policies as have been or may be established by Wave.” Upon termination, Feeney was entitled to be paid for all vacation
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accrued as of the date of termination. In 2002, however, Wave issued an Employee Handbook which capped vacation pay at a total of 320 hours. There is a dispute of fact as to whether this applied to Feeney.
Plaintiff relies heavily on the affidavit submitted by Wave’s former CEO Stephen Sprague in which Sprague states that he decided in or around 2004 not to apply the vacation cap in the Employee Handbook and to permit employees to accrue their vacation time without limitation. However, Solms has submitted a competing affidavit which states that the Handbook controlled and that a vacation cap has been and continued to be applied to employees, including executives like Feeney. Although plaintiff correctly notes that Solms joined the company only in October 2013 and therefore would have no personal knowledge about company policies before that date, there is other evidence in the summary judgment record which backs him up. Specifically, Kathleen Donovan, who worked in the Human Resources Department at Wave and was Wave’s Controller during the relevant time period, states in an affidavit that Sprague never informed her that he was changing what was contained in the Employee Handbook and that it was her understanding that a cap applied. Emails dated in 2007 and 2008 by other employees in the Human Resources Department also suggest that a cap was in effect. At the very least, this evidence raises a question as the credibility of Sprague’s claim, and credibility questions are clearly not appropriate for summary judgment.
In their cross motion, the defendants argue that Shepard should be dismissed as a named defendant since he became CFO of the company after plaintiff received notice of termination and did not participate in formulating or implementing Wave’s vacation policy. The Wage Act imposes personal liability on the “president and treasurer of a corporation and any officers or agents having the management of such corporation…” G.L.c. 149 §148. Wage was hired to
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replace Feeney as CFO, beginning work at the company on April 8, 2014, nine days after Feeney received a notice of his termination. Feeney’s last day of work was April 30, 2014. Although the case against Shephard does indeed appear to be weak, this Court concludes that there are disputes of fact as to Shephard’s duties and as to the role he played in the decision not to pay Feeney for accrued vacation.
As to the second issue raised by the defendants’ motion (which plaintiff does not appear to contest), this Court agrees with the defendants that the March 31, 2014 email to Feeney informing him of his termination constituted written notice as required by his employment agreement.
SO ORDERED.
__________________________________
Janet L. Sanders
Justice of the Superior Court
Dated: December 12, 2016
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Posted by Massachusetts Legal Resources - December 30, 2016 at 6:31 pm

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