Leslie v. Boston Software Collaborative, Inc.

14 Mass. L. Rptr. 379 (2002)

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Nature of the Case

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Facts

In 1993, Khayter (D), Goulart (D) and Leslie (P) entered into a simple partnership known as Boston Software Collaborative (BSC). In September of 1994, the partnership business was incorporated. Until at least April 26, 2000, P was an employee of BSC. Until June 12, 2000, he held the positions of treasurer and a director, and he has at all times been an approximately one-third shareholder. Khayter (D) has been the president and chief executive officer of BSC, and at all times has been a director and an approximately one-third shareholder. Goulart (D) at all times has been the clerk of BSC, and he assumed the role of treasurer in June of 2000. He also at all times has been a director and an approximately one-third shareholder. The corporate records are incomplete. Even the exact number of shares outstanding and the identity of all the shareholders is not without its uncertainty. BSC has been a closely-held corporation. There is no ready market for the BSC stock; and there is substantial majority shareholder participation in the management, direction, and operations of the corporation. All of the shareholders until P's termination in June of 2000, were employees; and Khayter (D), Goulart (D) and P were, until that same time, the only directors. BSC provides technical services in software engineering by its employees, including the principals, and by independent consultants to outside customers in need of such services for special projects. Clients are billed on hourly rates, and much of the work is performed physically at client sites. Up until early 1999, the great bulk of the compensation was allocated based upon the billings for their services. From 1995 through 1998, the total revenues brought to BSC on time and materials billing for each of the three principals were: Khayter--$788,497; Goulart--$889,565; and Leslie--$296,749. In late 1998, the principals agreed to change to a compensation scheme that essentially equalized their total compensation without reference to billable hours, as well as their distribution. Each was to be paid at a rate of about $157,000 per year, before any distributions. Ds insist that this plan was only to stay in effect for about six months until the company was sold. P felt under-compensated. Ds felt that they worked harder, billed more and were technically much more proficient. A number of employees complained that P spent too much time working on personal matters while at the office. Three key employees threatened to quit BSC because of their concerns about working with P. The company not having been sold, Ds were anxious to return to the former time-and-materials, hourly billing method of compensation. P considered leaving but decided to stay. P discussed this with another BSC employee. P sent an email wherein he said his wife reserved the right to shoot Ds for the aggravation P had to go through. Ds took the threat seriously because P had a permit to carry a firearm and apparently did so from time to time and brought it to work. Ds put P on unpaid administrative leave. P claims it was a 'joke.' Ds presented a separation agreement to P. They offered P severance of 10 weeks pay, or less if he got another job before that. Ds offered consulting work if BSC choose to do so. P did not accept the proposal. Ds then used their positions as directors to remove P. Ds voted P out. Shortly after P was terminated at BSC, Ds increased their personal compensation by almost the amount previously being paid in compensation to P. As a result, they each started earning at a rate of approximately $240,000 per year. Ds also included themselves in the employee bonus plan. As a result, they each received an additional $45,000. P sued Ds in part for wrongful termination, failing to pay dividends and the freeze out P.