Massachusetts Law Review

Exceptions to the At-Will Employment Doctrine and Its Applicability to Employment of Minority Shareholders

Margaret H. Paget
Margaret H. Paget is a partner at Sherin and Lodgen in Boston, where she focuses on employment litigation. The author gratefully acknowledges the assistance of Matthew W. Hefferan and Brendan H. Gibbon in researching this article.

I. Introduction

What are the current common law limitations on an employer's right to terminate its "at-will" employees? "At-will" employment, as most lawyers with a cursory knowledge of employment law are aware, permits either employer or employee to terminate the relationship at any time, for any reason or for no reason at all.1 The most significant exceptions to this rule are found in state and federal anti-discrimination statutes; this article, however, addresses common law exceptions to the doctrine. Judicial treatment of these common law exceptions has continued to evolve in recent years, notwithstanding the categorical stases into which they fall: (1) breach of the implied covenant of good faith and fair dealing,2 and (2) violation of public policy. In addition to these categories, an implicit exception may arise when a close corporation employs a minority shareholder.3 Because shareholders of close corporations owe one another fiduciary duties akin to those of partners, a majority shareholder may not always terminate the minority shareholder's employment for any reason or no reason at all.4 This article summarizes the status of, and significant developments in, the recognized common law exceptions to the at-will doctrine, and the employee-shareholder's rights in close corporations.

II. Implied Covenant of Good Faith and Fair Dealing

In 1977, the Supreme Judicial Court ("SJC") recognized in Fortune v. National Cash Register Company5 that the implied covenant of good faith and fair dealing establishes a right of action by former employees seeking to collect from employers unpaid commissions or other compensation that the employees had earned but not been paid. The court held:

[w]here the [employer] seeks to deprive the [employee] of all compensation by terminating the [employment] relationship when the [employee] is on the brink of successfully completing the sale [between principal and buyer], the [employer] has acted in bad faith and the ensuing transaction between the principal and the buyer is to be regarded as having been accomplished by the [employee]. The same result obtains where the principal attempts to deprive the agent of any portion of a commission due the agent. Courts have often applied this rule to prevent overreaching by employers and the forfeiture by employees of benefits almost earned by the rendering of substantial services.6

The remedy available to an employee under this line of cases is limited; courts have ordered payment of funds deemed earned by an employee. Employees, however, are not entitled to reinstatement. For years, the case law in this area showed little development. Recently, though, aggrieved employees have attempted to rely on the implied covenant of good faith and fair dealing to assert claims for the value of stock or stock options not yet vested or awarded at the time of termination.7 In 2001, the SJC weighed in on this theory in the case of Harrison v. NetCentric Corp.8 There, the court rejected an employee's claim to recover the value of stock options that had not vested at the time of his termination. Recognizing the rule that "an employer is accountable to a discharged employee for unpaid compensation if the employee were terminated in bad faith and the compensation is clearly connected to work already performed,"9 the court found that because the employee's shares vested over time "only if he continued to be employed . . . the unvested shares are not earned compensation for past services, but compensation contingent on [the employee's] continued employment."10 The Superior Court has since applied Harrison to deny an employee's claim that her employer violated the implied covenant of good faith and fair dealing by voiding her option to purchase unvested shares when it terminated her employment.11 The Superior Court also has rejected an employee's claim for unpaid dividends, on the grounds that dividends do not represent compensation for work.12 In the case of Clemmer v. Cullinane, the court stated: "it is important to note the distinction between compensation due to a shareholder versus compensation due to an employee. For purposes of the wrongful termination claim, the only compensation that is relevant is any owed to [the employee] in his capacity as an at-will employee."13

In light of the foregoing decisions, the Superior Court's 2001 decision in Aggarwal v. Nexabit Networks, Inc.14 comes as something of a surprise. In Aggarwal, the Superior Court held that Harrison does not preclude recovery for shares where "the employee has provided past services for virtually the entire scheduled period and is terminated right before the shares which he fairly earned and legitimately expected are due to vest."15 Therefore, although the court granted summary judgment for the employer with respect to the employee's claim for shares that were not scheduled to vest for more than one year after the employee's termination, it allowed the employee to maintain his claims for shares that were scheduled to vest two weeks after his termination, and for shares that were to vest under a "stock-for-patent" plan, where there was evidence that the employee had completed all work necessary to entitle him to the award of shares.16 Thus, although Harrison suggests that employees may not maintain claims for unvested stock options or shares, Aggarwal implies this rule will not be applied woodenly and may not preclude recovery where an employee is "on the brink" of being entitled to valuable compensation in the form of options or stock when terminated.17

III. Violation of Public Policy

Massachusetts courts continue to construe the public policy exception to the at-will employment doctrine fairly narrowly, while hopeful plaintiffs continue their efforts to expand its reach. The body of law on this exception is rich with examples of employer conduct that has been held not to violate public policy and thin with examples to the contrary, especially in recent years. This exception to at-will employment prohibits an employer from terminating an employee when to do so would violate a "well-defined, clearly established public policy."18 Generally, this has been construed to prohibit the termination of an employee for asserting a legal right, for doing what the law requires, or for refusing to disobey the law.19 For example, an employer may not terminate an employee because the employee files a workers' compensation claim, fulfills her jury duty obligation or refuses the employer's directive to commit perjury.20 The courts have announced as a general rule that claims based on an employee's assertion that she was terminated because she "blew the whistle" about her employer's inappropriate practices will not support a wrongful termination claim if the matter complained about related to the internal administration, policy, and functioning of an organization.21 Thus, the SJC has dismissed a number of claims for alleged violations of public policy, including, among others: a single mother fired for refusing to work long hours,22 an employee terminated for participating in a shareholder derivative suit,23 a nurse terminated for criticizing her hospital's quality of care,24 and a spokesperson fired for publicly expressing views in conflict with the company's interests.25

In its 1994 decision in the case of King v. Driscoll, the SJC explained its view of the need to narrowly construe the public policy exception: "[t]his court consistently has interpreted the public policy exception narrowly, reasoning that to do otherwise would convert the general rule into a rule that requires just cause to terminate an at-will employee."26 In the King case, the SJC also observed that although the existence of a statute relating to the public policy at issue might guide its interpretation of the policy, "[e]ven a public policy, evidenced in a particular statute, which protects employees in some instances might not protect employees in all instances."27 Thus, for example, the court held that despite the existence of a statutory right to participate in a shareholder derivative suit, the employee fired for his participation in such a suit could not maintain a wrongful termination claim, as the statutory right did not "rise to the level of importance required to justify an exception to the general rule regarding termination of employees at will."28 Also, in order for the statutory right to give rise to a public policy exception, the court noted, the statutory right must generally arise from one's status as an employee, not as a shareholder.29 In addition, if a statute explicitly prohibits an employer from terminating an employee for exercising a statutory right and provides the employee with a statutory right of action, the court will refrain from recognizing a common law exception to the at will employment doctrine.30

For example, in 2001 the Appeals Court, in Perkins v. Commonwealth,31 rejected a plaintiff's claim alleging constructive discharge from the State Police Academy. The plaintiff claimed that the academy's requirement that she participate in rigorous exercise while she was ill violated a recognized public policy against hazing.32 Affirming the trial court's dismissal of the claim, the Appeals Court held that the anti-hazing statute upon which the plaintiff relied applies only to membership in student organizations, not to educational institutions, and that methods of police training are internal administrative matters not susceptible of claims for wrongful termination in violation of public policy.33

The rule that the courts will decline to extend the public policy exception to matters deemed internal to an employer's business administration or organization has proved difficult to apply and has produced varying results that seem difficult to reconcile. In keeping with the view that the public policy exception does not apply to an employer's internal policies and procedures, in 2001, the Appeals Court affirmed dismissal of an employee's claim that she was terminated in retaliation for her complaints to the state's Office for Children and Department of Social Services about her employer's handling of adoption placements.34 The court found that because the plaintiff's complaints concerned the employer's internal policies and procedures, they failed to trigger the public policy exception.35 Cases invoking the public policy exception and based on an employee's complaints about an employer's internal policies and procedures have not, however, been altogether unsuccessful. Employees may maintain such claims where the act complained of involves criminal conduct on the part of the employer.36 Similarly, the courts have allowed claims by employees terminated for performing "important public deeds," such as cooperating in an investigation, even though the law did not require it.37

Apart from those cases involving criminal conduct on the part of an employer, it is difficult to predict which claims will be viewed as relating solely to an employer's internal administration versus those that raise a public policy concern that entitles an employee to protection from termination. In 1994, the Appeals Court in Mistishen v. Falcone Piano Company, Inc.38 denied recovery to an employee who claimed that his employer violated public policy by terminating him for complaining about his employer's deceptive business practices.39 The court reasoned that the claim failed because there was no allegation that the employer's "wrongdoing put the consumer in harm's way or otherwise presented a threat to public health or safety."40 More recently, however, the Superior Court in the case of Frost v. TGI Friday's denied an employer's motion to dismiss a wrongful termination claim brought by a bartender who claimed he was terminated for having told a customer that the restaurant did not have hot water and that he did not want to serve the customer on unsanitary dishes.41 The court in the TGI Friday's case attempted to distinguish Mistishen on the grounds that although the complaint related to the employer's internal procedures, the alleged wrongdoing might also pose a threat to public safety.42 The Superior Court also recently held that an employee's termination for threatening to "blow the whistle" on his employer's suspicious loan activities fell within the public policy exception.43 The court again distinguished the deceptive business practices involved in Mistishen as not having had a "significant impact upon the general public," while in contrast, "the effect of improprieties in the lending practices of financial institutions can have a profound effect beyond the institution's own customers."44 It is difficult to reconcile the cases, all of which allege concerns about what appear to be problematic practices by an employer. If the courts view improprieties in a financial institution's lending practices as a matter that significantly impacts the public, why not provide the same protection to an employee who raises concerns about the placement of children into adoptive homes?

Overall it appears that the courts will be more sympathetic to public policy claims by so-called "whistleblower" employees, even if the employee's complaint relates to internal policies or procedures, as long as the conduct about which the employee has complained is either potentially criminal, poses a specific threat to public health or safety, or has a significant impact on the general public.45 Nonetheless, as the above cases show, the courts have not drawn any clear line between an employee's complaints about threats to public health and safety and those that, while amounting to the performance of "appropriate, socially desirable duties,"46 are not regarded as significant enough in social impact to trigger a public policy exception to the at-will employment doctrine.

IV. Wrongful Termination of Minority Shareholders of Close Corporations

A. Terminating the Minority's Employment as a 'Freeze-out' Tactic

Claims brought by minority shareholder-employees of close corporations against the majority alleging the majority's breach of fiduciary duty, have been the source of continuing litigation since the SJC's 1975 decision in Donahue v. Rodd Electrotype Co. of New England, Inc.47 Terminations of employee-shareholders of close corporations to deprive them of the value of their shares or a return on their investment, known as "freeze-outs," have been held to violate the fiduciary duties that shareholders owe to one another in closely held corporations.48 Freeze-out claims involving the termination of the minority shareholder's employment represent a hybrid of employment and corporate law, and give rise to an implicit exception to the at-will employment doctrine.49 In a recent case brought by a shareholder-employee who alleged that her termination violated both the majority's fiduciary obligations to her and the implied covenant of good faith and fair dealing, the Superior Court observed that analysis of the two claims overlapped: "Similar to the issue of legitimate business purpose [an element of the breach of fiduciary duty claim], a material issue to a claim of a breach of the covenant of good faith and fair dealing is whether the conduct of the party under scrutiny injured or destroyed the right of the other party to receive the benefits of the contract."50

"Freeze-out" claims typically arise in the employment context when the majority shareholder terminates the minority shareholder's employment, thereby depriving the shareholder of the benefits of his ownership interest in the corporation (including the benefits usually associated with employment).51 In Wilkes v. Springside Nursing Home, Inc., for example, the majority shareholders were held to have breached their fiduciary obligations to the minority shareholder when they terminated the minority shareholder's employment to pressure him into selling his shares at less than fair value.52 As the SJC recognized in Wilkes, "[t]he denial of employment to the minority at the hands of the majority is especially pernicious in some instances. A guaranty of employment with the corporation may have been one of the basic reasons why a minority owner has invested capital in the firm. . . . The minority stockholder typically depends on his salary as the principal return on his investment, since the earnings of a close corporation are distributed in major part in salaries, bonuses and retirement benefits."53

To state a claim for breach of fiduciary duty arising from the termination of one's employment under a "freeze-out" theory, the minority shareholder must be employed by a close corporation.54 In Donahue, the SJC held that a close corporation is "typified by: (1) a small number of stockholders; (2) no ready market for the corporate stock; and (3) substantial majority stockholder participation in the management, direction and operations of the corporation."55 Often times, a close corporation functions like a partnership.56 Although "[a] close corporation is usually a small enterprise, É the amount of a corporation's assets, the scope of its operations, the number of persons it employs, or the volume of its sales does not determine whether it is 'close.'"57 A shareholder-employee in a close corporation "typically depends on his salary as the principal return on his investment, since the 'earnings of a close corporation . . . are distributed in major part in salaries, bonuses and retirement benefits.'"58 "Freeze-out" tactics, in addition to their economic impact, also deprive the minority shareholder of an opportunity to participate in the corporation's management.59

B. Duty of Utmost Good Faith and Loyalty

In Massachusetts, shareholders of close corporations owe one another a fiduciary duty of the "utmost good faith and loyalty."60 They "may not act out of avarice, expediency or self-interest in derogation of their duty of loyalty to the other stockholders and to the corporation."61 This does not, however, mean that majority shareholders have no discretion to govern the corporation's internal affairs, extending to the authority to hire and fire. The shareholders' fiduciary duties to employee-shareholders, therefore, must be balanced against the employer-shareholders' right to manage the corporation's affairs. Thus, Massachusetts courts recognize that the majority shareholders of close corporations "must have a large measure of discretion, for example, in declaring or withholding dividends, deciding whether to merge or consolidate, establishing the salaries of corporate officers, dismissing directors with or without cause, and hiring and firing corporate employees."62

C. Legitimate Business Purpose for Adverse Employment Actions Against Minority

When a majority shareholder terminates the employment of a minority shareholder, "it must be asked whether the controlling group can demonstrate a legitimate business purpose for its action."63 In a burden-shifting analysis reminiscent of the McDonnell-Douglas64 burden-shifting framework used to assess claims of employment discrimination, once the majority shareholder demonstrates a legitimate business purpose for the minority's termination, "it is open to [the] minority stockholder[] to demonstrate that the same legitimate objective could have been achieved through an alternative course of action less harmful to the minority's interest . . ."65 Accordingly, "courts must weigh the legitimate business purpose, if any, against the practicability of a less harmful alternative."66 Whether an employer has demonstrated a legitimate business purpose for its adverse employment action against a minority shareholder is a question with which the courts have struggled, and which typically involves a case-by-case assessment of facts.67 The starting point for this analysis is the established principle that in managing a close corporation, the controlling group must have some room to maneuver in establishing business policy, including the hiring and firing of employees.68 The application of this analysis however, has led to varying outcomes.

In Wilkes, the SJC held that the majority shareholders failed to show a legitimate business purpose for removing the plaintiff, Wilkes, from the company's payroll and refusing to reelect him as a salaried officer and director.69 The court found "no showing of misconduct on Wilkes's part as a director, officer or employee of the corporation which would lead [the court] to approve the majority action as a legitimate response to the disruptive nature of an undesirable individual bent on injuring or destroying the corporation."70 The court further observed that "Wilkes had always accomplished his assigned share of the duties competently, and that he never indicated an unwillingness to continue to do so."70 Accordingly, the SJC held that such evidence defeated the possibility that the termination of the plaintiff's employment served a legitimate business purpose.72

Similarly, in Hallahan v. Haltom Corp.,73 the Appeals Court considered whether two majority shareholders had a legitimate business purpose for terminating the two minority shareholders. The corporation was formed when four individuals entered into a joint venture to establish a drinking and eating establishment called the Quarter Deck Lounge.74 Each founder was issued an equal amount of stock in the new enterprise, and was to serve as a director of the corporation.75 The plaintiffs, two of the four original shareholders, also agreed to work as bartenders.76 The defendants, who later obtained slightly more than half the shares, claimed they had received complaints about the plaintiffs' bartending and terminated their employment and removed them from the board of directors. The Appeals Court found that "[t]he peremptory discharge of the Hallahans without warning, when compensation as employees was the principal benefit which they could hope to enjoy from the enterprise, is short of [the fiduciary duties owed to plaintiffs]."77 The court further held that the majority's "peremptory seizure of control without warning had no legitimate business purpose."78

On the other hand, majority shareholders can, and often do, meet their burden of showing a legitimate business purpose for terminating a minority shareholder's employment. For example, the Superior Court has upheld the termination of an employee-shareholder as legitimate where the employee had neglected his duties and disrupted company business.79 In another case, the trial court found that a majority shareholder's decision to terminate an employee-shareholder to reduce competition among remaining employees served a legitimate business purpose.80 The Superior Court also has held that bringing in a new management team to save a failing corporation and, at the same time, altering a minority shareholder's employment responsibilities to better suit the company's needs, served a legitimate business purpose,81 and has found that a shareholder's decision to terminate his relationship with his partner due to the partner's failure to perform his job duties satisfactorily served a legitimate business purpose.82

A failure by the majority to show a legitimate business purpose for the decision to terminate a minority shareholder's employment does not guarantee success to the aggrieved employee-shareholder. For example, in Merola v. Exergen Corp., the SJC held that the plaintiff, a vice president and minority shareholder of a close corporation, failed to establish a sufficient basis for a breach of fiduciary duty claim despite the fact that there was no legitimate business purpose for his termination by the majority shareholders.83 The SJC described the Wilkes case as a situation where the corporation's practice of distributing earnings into employee salaries, made the minority shareholder dependent on his salary as the principal return on his investment and was such that "employment with the corporation would go hand in hand with stock ownership."84 In contrast, in the Merola case, the SJC determined that investment in the stock of the corporation, which had been made available to the employee after he began working, was not tied to the shareholder's employment "in any formal way" and that there was "no evidence that any other stockholders had expectations of continuing employment because they purchased stock."85 Therefore, the court held that "[a]lthough there was no legitimate business purpose for the termination of the plaintiff, neither was the termination for the financial gain of [the majority shareholder] or contrary to established public policy. Not every discharge of an at-will employee of a close corporation who happens to own stock in the corporation gives rise to a successful breach of fiduciary duty claim."86

D. Consideration of Less Harmful Alternatives

Once a majority shareholder establishes some legitimate business purpose for employment decisions that adversely affect a minority shareholder, the burden shifts to the minority employee-shareholder to show that "the same legitimate objective could have been achieved through an alternative course of action less harmful to the minority's interest."87 It appears that minority shareholders will often be given substantial protection by the courts even if there is a legitimate business purpose for their termination. Recently, in Leslie v. Boston Software Collaborative, Inc., the Superior Court held that the majority shareholder breached its fiduciary duties to the minority shareholder by failing to consider and attempt less harmful alternatives to termination of the minority shareholder's employment and removal from the board of directors, notwithstanding the proven shortcomings in the employee-shareholder's job performance.88 The Superior Court observed that the employee was "hardly a model employee" and that his termination would have been justified but for his status as a shareholder. Nevertheless, the court held that the majority breached its fiduciary obligations to the plaintiff by failing to consider and implement less harmful alternatives to the termination of his employment and removal from the board of directors.89

V. Conclusion

Massachusetts courts have not wavered from the well-established rule that an at-will employee may be terminated for any reason or no reason at all and is not entitled to compensation or reinstatement unless the employee can show that the termination violates the implied covenant of good faith and fair dealing, a well-defined and clearly established public policy or the fiduciary duties owed to the employee as a minority shareholder of a close corporation. Faced with these cases, Massachusetts courts have attempted to balance an employer's right to manage its own enterprise against competing social values, including fairness to individual employees, and, in some cases, protection of the public good. The tension between these goals, and the strong appeal of certain "whistle blowing" claims has created some uncertainty in the law, but properly leaves opportunities for aggrieved employees to seek protection from the courts in appropriate cases.

End Notes

1. Upton v. JWP Businessland, 425 Mass. 756, 757 (1997).[back]

2. King v. Driscoll, 424 Mass. 1 (1996) (dismissing plaintiff's claims on remand for failure to present evidence he was denied compensation for work performed).[back]

3. Wilkes v. Springside Nursing Home, Inc., 370 Mass. 842, 851 (1976) (finding breach of fiduciary duty by majority shareholders in terminating employment of minority shareholder in a close corporation).[back]

4. Id.; Donahue v. Rodd Electrotype Co. of New England, Inc., 367 Mass. 578, 586 (1975) (discussing indicia of a typical close corporation).[back]

5. 373 Mass. 96 (1977).[back]

6. Id. at 105 citing Restatement (Second) of Agency § 454, and Comment a (1958).[back]

7. See, e.g., Goodrich v. CML Fiberoptics, Inc., 2000 WL 1273342 (Mass. Super. 2000) (Fecteau, J.) (holding that employee may be entitled to pro rata share of stock options that had not vested at time of termination).[back]

8. 433 Mass. 465 (2001).[back]

9. Id. at 473 (emphasis supplied).[back]

10. Id.[back]

11. LaButti v. Intellisense Corp., Memorandum and Decision on Motion to Dismiss, No. 01-4802 (Mass. Super. 2002) (Brady, J.).[back]

12. See Clemmer v. Cullinane, 2002 WL 1923868 (Mass. Super. 2002) (Kearn, J.). See also H&R Block Mortgage Corp. v. White, 2001 WL 1809809 at *4 (Mass. Super. 2001) (Lauriat, J.) (claims for unvested stock options not actionable pursuant to implied covenant of good faith and fair dealing).[back]

13. Clemmer, 2002 WL 1923868 at *3.[back]

14. 2001 WL 34032503 (Mass. Super. 2001) (Burnes, J.).[back]

15. Aggarwal, 34032503 at *9 citing Fortune v. National Cash Register Co., 373 Mass. 96, 105 (1977).[back]

16. Id. at *5-6 citing Fortune, 373 Mass. at 105.[back]

17. Id.[back]

18. See Enright v. Special Adoption Services, Inc., 52 Mass. App. Ct. 1102 (2001).[back]

19. See Upton, 425 Mass. at 757 (1997), and cases cited.[back]

20. See id.[back]

21. See King, 418 Mass. at 583, and cases cited.[back]

22. See Upton, 425 Mass. at 758.[back]

23. See King, 418 Mass. at 583.[back]

24. See Wright v. Shriners Hosp. for Crippled Children, 412 Mass. 469, 473 (1992).[back]

25. See Korb v. Raytheon Corp., 410 Mass. 581, 584 (1991).[back]

26. King, 418 Mass. at 582 (internal citations and quotations omitted).[back]

27. Id. at 584.[back]

28. Id.[back]

29. Id.[back]

30. See id. at 584 n. 7, citing Mello v. Stop & Shop Cos., 402 Mass. 555, 557 (1988) ("A basis for a common law rule of liability can easily be found when the Legislature has expressed a policy position concerning the rights of employees and an employer discharges an at-will employee in violation of that established policy, unless no common law rule is needed because the Legislature has also prescribed a statutory remedy.").[back]

31. 52 Mass. App. Ct. 175 (2001).[back]

32. See Perkins at 176.[back]

33. Id. at 180.[back]

34. Enright, 52 Mass. App. Ct. at 1102 ("In our view, this case is controlled by Mello v. Stop & Shop Cos., 402 Mass. 555, 560-61 (1988), and its progeny, which hold that the public policy exception to the general rule of at-will employment does not apply when an employee is terminated for complaining about an employer's internal policies and practices.").[back]

35. See id.[back]

36. See Shea v. Emmanuel College, 425 Mass. 761, 762-63 (1997) quoting Smith v. Mitre Corp., 949 F.Supp. 943, 950 (D.Mass. 1997).[back]

37. See Wright, 412 Mass at 477 (Liacos, J., dissenting), quoting Flesner v. Technical Communications Corp., 410 Mass 805, 810-11 (1991).[back]

38. 36 Mass. App. Ct. 243 (1994).[back]

39. See Mistishen, 36 Mass. App. Ct. at 246.[back]

40. Id.[back]

41. See Frost v. TGI Friday's Inc., 2001 WL 1852227 at *2 (Mass. Super. 2001) (Fabricant, J.).[back]

42. See id.[back]

43. DiGaetano v. Lawrence Firefighters Federal Credit Union, 2002 WL 31667318 *7 (Mass. Super. 2002) (Houston, J.).[back]

44. Id.[back]

45. Public employees enjoy broader protections for whistle blowing activities than do employees in the private sector. The Massachusetts Whistleblower Statute, enacted in 1993, provides remedies, subject to certain conditions, for public employees who have been retaliated against for disclosing, threatening to disclose, objecting to or refusing to participate in "any activity, policy or practice which the employee reasonably believes is in violation of a law, or a rule or regulation promulgated pursuant to law, or which the employee reasonably believes poses a risk to public health, safety or the environment." Mass. Gen. Laws ch. 149, § 185(b) (2003). The statute also states that "[n]othing in this section shall be deemed to diminish the rights, privileges or remedies of any employee under any other federal or state law or regulation, or under any collective bargaining agreement or employment contract," but also states that instituting a private action in accordance with the statute is a waiver by the plaintiff of "the rights and remedies available to him, for the actions of the employer, under any other contract, collective bargaining agreement, state law, rule or regulation, or under the common law." Mass. Gen. Laws ch. 149, § 185(f) (2003). See also Holden v. Worcester Housing Authority, 1995 WL 809991 *2 (Mass. Super. 1995) (Toomey, J.) ("Although the statute has no retrospective effect, its enactment does demonstrate that the protection of whistleblowers is a recognized public policy.").[back]

46. Wright, 412 Mass. at 474 (rejecting public policy violation claim of nurse terminated for internal complaints about hospital's quality of care, when care complained about was not considered to be abuse, neglect, mistreatment, or physician incompetence), quoting Smith-Pfeffer v. Superintendent of the Walter E. Fernald State Sch., 404 Mass. 145, 150 (1989) (rejecting violation of public policy claim of employee of public facility for the mentally retarded terminated for opposing management restructuring plan).[back]

47. 367 Mass. 578 (1975).[back]

48. See Wilkes v. Springside Nursing Home, Inc., 370 Mass. 842, 851 (1976) (finding breach of fiduciary duty by majority shareholders in terminating employment of minority shareholder in a close corporation).[back]

49. See Brighton v. Resource Management, Inc., 2001 WL 1249331 *3 (Mass. Super. 2001) (Fecteau, J.) (denying summary judgment on employee-shareholder's claim that termination violated both the implied covenant of good faith and fair dealing and fiduciary duties owed to her).[back]

50. See id.[back]

51. See id.[back]

52. See Wilkes, 370 Mass. at 851.[back]

53. Id. at 849 (internal quotes omitted).[back]

54. Donahue, 367 Mass. at 586. [back]

55. Id.[back]

56. Id. [back]

57. F. Hodge O'Neal & Robert B. Thompson, O'Neal's Close Corporations § 1.03 (3d ed. 1992). [back]

58. Wilkes, 370 Mass. at 851 (quoting 1 F.H. O'Neal, Close Corporations § 1.07 (1971)).[back]

59. See id., 370 Mass. at 849; D.K. Moll, Reasonable Expectations v. Implied in-fact Contracts: Is the Shareholder Oppression Doctrine Needed?, 42 B.C. L. Rev. 989, 1015-16 (2001) (discussing shareholder employee's interest in participating in management of the close corporation).[back]

60. Donahue, 367 Mass. at 593.[back]

61. Id. [back]

62. Wilkes, 370 Mass. at 851 (finding majority shareholders attempted to freeze out minority shareholder by terminating his employment).[back]

63. Id. at 852. [back]

64. McDonnell Douglas Corp. v. Green, 411 U.S. 792, 802-05 (1973).[back]

65. Wilkes, 370 Mass. at 851-52.[back]

66. Id. at 852.[back]

67. See e.g., Brighton, 2001 WL 1249331 at *2 (denying summary judgment on freeze-out claim because of material issues of fact regarding legitimate business purposes and less onerous alternatives); Crowley v. Polar Corp., 1995 WL 808723 *1-2 (Mass. Super. 1995) (Rup, J.) (denying summary judgment due to material issues of fact regarding defendant's offered legitimate business reasons for plaintiff's termination and plaintiff's suggested reasons); Leslie v. Boston Software Collaborative, Inc., 2002 WL 532605 (Mass. Super. 2002) (van Gestel, J.). [back]

68. See Leslie, 2002 WL 532605 at *7 (Mass. Super. 2002) (van Gestel, J.) ("[T]he duties placed on shareholders in a close corporation are not meant to impose a straitjacket on legitimate corporate activity," citing Zimmerman v. Bogoff, 402 Mass. 650, 657 (1988) (stating that Donahue did not intend to place a "strait jacket" on legitimate business activity)).[back]

69. Wilkes, 370 Mass. at 852.[back]

70. Id.[back]

71. Id.[back]

72. Id. at 853.[back]

73. 7 Mass. App. Ct. 68 (1979).[back]

74. Hallahan, 7 Mass. App. Ct. at 69.[back]

75. Id.[back]

76. Id. [back]

77. Id. at 70-71. [back]

78. Id.[back]

79. Pulsifer v. Bitflow, Inc., 2001 WL 170453 at *19 (Mass. Super. 2001) (McHugh, J.) (holding that there is "no legal requirement to keep a disruptive or idle employee on the payroll").[back]

80. TenPas v. Boger, 1994 WL 879756 at *4 (Mass. Super. 1994) (McHugh, J.).[back]

81. Rubin v. Household Commercial Financial Services, Inc., 1996 WL 1186917 at *17 (Mass. Super. 1996) (Moriarty, J.) (finding that defendant majority shareholders proffered a legitimate business purpose in reorganizing corporation and placing plaintiff in a position that better suited his talents). [back]

82. Malter v. Eldh, 1994 WL 902953 at *4-5 (Mass. Super. 1994) (Rouse, J.) (finding legitimate business purpose in one partner's decision to terminate his relationship with his partner due to the partner's breach of fiduciary duty).[back]

83. Merola v. Exergen Corp., 423 Mass. 461, 466 (1996).[back]

84. Id. at 464-65, quoting Wilkes, 370 Mass. at 853.[back]

85. Id. at 465.[back]

86. Id. at 466.[back]

87. Wilkes, 370 Mass. at 852.[back]

88. Leslie v. Boston Software Collaborative, Inc., 2002 WL 532605 (Mass. Super. 2002) (van Gestel, J.).[back]

89. Id. at *7-8.[back]

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