Donaldson v. Shapemix Music, LLC

31 Mass. L. Rptr. 580
CourtMassachusetts Superior Court
DecidedDecember 11, 2013
DocketNo. SUCV201202620E
StatusPublished

This text of 31 Mass. L. Rptr. 580 (Donaldson v. Shapemix Music, LLC) is published on Counsel Stack Legal Research, covering Massachusetts Superior Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Donaldson v. Shapemix Music, LLC, 31 Mass. L. Rptr. 580 (Mass. Ct. App. 2013).

Opinion

Troy, Paul E., J.

INTRODUCTION

In this action, the plaintiffs, Nicholas Donaldson (“Donaldson”), Justin Crosby (“Crosby”), and Shawn Conte (“Conte”), seek unpaid wages from their former employer and supervisors, the defendants, Shapemix Music, LLC (“Shapemix”), Colin Owens (“Owens”), Mike Sepso (“Sepso”), and Greg Chisholm (“Chisholm”). In their verified complaint, the plaintiffs allege a violation of the Massachusetts Wage Act, G.L.c. 149, §§148 and 150 (Count I), breach of contract against Shapemix only (Count II), services sold and provided against Shapemix only (Count III-A), fraud, deceit, and misrepresentation (Count III-B), quantum meruit (Count IV-A), and a violation of G.L.c. 93A (Count IV-B).3

The defendants now move to dismiss Counts III-A, III-B, IV-A, and IV-B for failure to state a claim. Additionally, the defendants move to dismiss the complaint in its entirely on the grounds that there is no individual liability under the Wage Act where the employing entity is organized as a limited liability company (LLC).4 Sepso and Chisholm also move to dismiss the complaint in its entirety for lack of personal jurisdiction pursuant to Mass.R.Civ.P. 12(b)(2). For the following reasons, the motion is DENIED in part and ALLOWED in part.

BACKGROUND

In 2010, Owens, Sepso, and Chisholm created Shapemix, an LLC organized under the laws of Delaware, and listed themselves as the sole “Managers” in the LLC documents. Shapemix’s business involves developing software that would allow the lawful manipulation of commercial music, including through “Apps” for Apple products. At different points in 2010 and 2011, Shapemix hired Donaldson, Crosby, and Conte as Lead Audio Engineer/Developer, Director of Audio Production, and Content Manager, respectively, for which they all received hourly compensation. The plaintiffs all left Shapemix between February and May 2012. The plaintiffs allege that Shapemix failed to pay their wages in full. They also allege that Shapemix misrepresented its prospects for obtaining more financing in order to induce the plaintiffs to continue working without pay. Additional facts, as alleged in the complaint, will be incorporated into the discussion below.

ANALYSIS

I. Standard of Review

In assessing the sufficiency of a complaint in the context of a motion to dismiss, the allegations, as well as such inferences as may be drawn therefrom in the plaintiffs favor, are to be taken as true. Blank v. Chelmsford Ob/Gyn, P.C., 420 Mass. 404, 407 (1995). The claimant must allege facts “plausibly suggesting ... an entitlement to relief,” and the complaint must possess enough heft to “show that the pleader is entitled to relief. ” Iannacchino v. Ford Motor Co., 451 Mass. 623, 636 (2008), quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557 (2007). Facts alleged in the complaint “must be enough to raise a right to relief above the speculative level... [based] on the assumption that all the allegations in the complaint are true (even if doubtful in fact).” Bell Atl Corp., 550 U.S. at 555. A plaintiff “has a relatively light burden to carry to maintain [a] complaint, and doubt as to whether a particular claim can be proved is not a proper basis for dismissing a complaint under rule 12(b)(6).” Ciardi v. Hoffman-La Roche, 436 Mass. 53, 65 (2002).

II. Massachusetts Wage Act, G.L.c. 149, §§148, 150 (Count I)

The defendants argue that they cannot be held individually liable under the Wage Act because Shapemix is organized as an LLC. While the defendants’ motion was pending, however, the Su[582]*582preme Judicial Court rejected this argument and held that individual liability is permitted for LLCs, just as it is permitted for corporations. Cook v. Patient Edu, LLC, 465 Mass. 548, 554 (2013). The Court explained that:

[b]ecause a manager or other officer or agent of an LLC, limited liability partnership, or other limited liability business entity may be a “person having employees in his service,” and thus may be civilly or criminally liable for violations of G.L. c. 149, §148, if he “controls, directs, and participates to a substantial degree in formulating and determining policy” of the business entity, see Wiedmann v. The Bradford Group, Inc., 444 Mass. 698, 711 (2005), the claims against [the LLC managers] should not have been dismissed.

Id. at 556. Therefore, the defendants’ arguments on this point are rejected.

III. Sufficiency of Allegations

The defendants next argue that, even if the Wage Act applies, the complaint still must be dismissed against the individual defendants because the plaintiffs do not allege sufficient facts to show that any of the individual defendants “controls, directs, and participates to a substantial degree in formulating and determining policy” of Shapemix. Cook, 465 Mass, at 556. This argument is without merit.

In the complaint, Owens, Sepso, and Chisholm, are identified as Managers of Shapemix and as the Chief Product Officer, Chief Executive Officer, and Chief Operating Officer, respectively. Further, the complaint alleges that:

Owens, Sepso, and Chisholm were regularly engaged in all facets of employee and payroll matters, having full knowledge of the same, authorization, and ability to direct and control, and joint and/or severally making all determinations, decisions, representations, and promises related to employment matters and the payment of wages.

Complaint ¶74. Additionally, the individual defendants are listed in the LLC documents as the sole Managers of Shapemix. Therefore, the plaintiffs have aptly pled that these defendants had sufficient “control” of Shapemix to potentially be liable for violations of G.L.c. 149, §148. See Cook, 465 Mass, at 556.

IV. Personal Jurisdiction

The defendants next argue that Massachusetts does not have personal jurisdiction over Sepso and Chisholm, because they reside in New York and worked in Shapemix’s New York Office. The plaintiffs argue that they sufficiently pled personal jurisdiction in the complaint by alleging that:

Defendants Sepso and Chisholm regularly traveled to Massachusetts once or twice a month, working in and from the Shapemix Office, and while there engaged in the day to day operation of Shapemix, as well as determining and discussing Shapemix strategy and direction and seeking third party funding, investors, and working capital.

Complaint ¶73.

“[JJurisdiction over a corporation [or other entity] does not automatically secure jurisdiction over its officers, ... or employees.” Morris v. UNUM Life Ins. Co. of Am., 66 Mass.App.Ct. 716, 720-21 (2006). “Rather, the question of personal jurisdiction over [officers or employees] is to be decided on the basis of the nature and extent of their individual contacts with Massachusetts.” Id. “Although the plaintiffs eventually will need to prove personal jurisdiction ‘by a preponderance of the evidence at an evidentiary hearing or at trial,’ at the pleading stage all that is required is a prima facie showing.” Cannonball Fund, Ltd. v. Dutchess Capital Mgmt, LLC, 84 Mass.App.Ct. 75, 99-100 (2013), quoting Cepeda v.

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31 Mass. L. Rptr. 580, Counsel Stack Legal Research, https://law.counselstack.com/opinion/donaldson-v-shapemix-music-llc-masssuperct-2013.