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Gately v. Mortara Instrument, Inc.

United States District Court, D. New Hampshire

August 9, 2017

Stephen Gately, Plaintiff
Mortara Instrument, Inc., Defendant Opinion No. 2017 DNH 154



         Plaintiff, Stephen Gately, filed this suit asserting claims arising out of his employment by the defendant, Mortara Instrument, Inc. (“Mortara” or the “Company”). Gately advances claims for breach of contract, promissory estoppel, violation of the New Hampshire Consumer Protection Act (“CPA, ” or the “Act”), negligent/fraudulent misrepresentation, violation of the Whistleblower Protection Act, wrongful discharge, and for payment of wages. Mortara has moved to dismiss Gately's breach of contract, promissory estoppel and CPA claims. The motion is denied in part, and granted in part.


         When ruling on a motion to dismiss under Fed.R.Civ.P. 12(b)(6), the court must “accept as true all well-pleaded facts set out in the complaint and indulge all reasonable inferences in favor of the pleader.” SEC v. Tambone, 597 F.3d 436, 441 (1st Cir. 2010). Although the complaint need only contain “a short and plain statement of the claim showing that the pleader is entitled to relief, ” Fed.R.Civ.P. 8(a)(2), it must allege each of the essential elements of a viable cause of action and “contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face, ” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citation and internal punctuation omitted).

         In other words, “a plaintiff's obligation to provide the ‘grounds' of his ‘entitlement to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). Instead, the facts alleged in the complaint must, if credited as true, be sufficient to “nudge[] [plaintiff's] claims across the line from conceivable to plausible.” Id. at 570. If, however, the “factual allegations in the complaint are too meager, vague, or conclusory to remove the possibility of relief from the realm of mere conjecture, the complaint is open to dismissal.” Tambone, 597 F.3d at 442.

         “Under Rule 12(b)(6), the district court may properly consider only facts and documents that are part of or incorporated into the complaint; if matters outside the pleadings are considered, the motion must be decided under the more stringent standards applicable to a Rule 56 motion for summary judgment.” Trans-Spec Truck Serv., Inc. v. Caterpillar Inc., 524 F.3d 315, 321 (1st Cir. 2008) (citing Garita Hotel Ltd. Partnership v. Ponce Fed. Bank, F.S.B., 958 F.2d 15, 18 (1st Cir. 1992)). “When ... a complaint's factual allegations are expressly linked to - and admittedly dependent upon - a document (the authenticity of which is not challenged), that document effectively merges into the pleadings and the trial court can review it in deciding a motion to dismiss under Rule 12(b)(6).” Id. (quoting Beddall v. State St. Bank & Trust Co., 137 F.3d 12, 16-17 (1st Cir. 1998) (additional citations omitted).


         Accepting the allegations in the amended complaint as true, the relevant facts appear to be as follows. Mortara, a diagnostic cardiology company based in Wisconsin, manufactures patient monitoring devices that are sold worldwide. Stephen Gately, a New Hampshire resident, worked as a sales executive in the field of medical devices (specifically, acute care monitoring devices) for more than a decade.

         In the spring of 2016, Gately accepted a position with General Electric as a Senior Account Manager, covering all GE healthcare divisions, including its acute care patient monitoring division. Prior to accepting the position at GE, Gately interviewed with several potential employers, including Mortara. After accepting the position with GE, Gately contacted Mortara's Chief Operating Officer, Brian Brenegan, to withdraw his candidacy. Brenegan asked Gately to first speak with Mortara's president, Justin Mortara, about working for Mortara instead of GE.

         Two days later, Justin Mortara and Gately spoke by telephone. They discussed the Company and its ambition to enter the acute care patient monitoring market. Intrigued, Gately agreed to visit Wisconsin to tour the Company's operations, and meet Justin Mortara and the Company's other executives in person.

         During his visit, Gately spoke extensively with Mortara executives about his potential role at the Company. When Gately explained to Justin Mortara that penetrating the acute care patient monitoring market would require an investment of between $15 million and $20 million over several years, Justin Mortara responded that the Company was prepared to make that investment, and wanted Gately to spearhead those efforts.

         The next morning, Gately spoke with Brenegan. Gately expressed his misgivings about working with some of the individuals at the Company, but Brenegan assured him that his concerns would not be a problem because employee roles were changing within Mortara. Brenegan then asked Gately what it would take for Gately to turn down the position at GE, and come to work for Mortara.

         Excited by the prospect of building an acute care patient monitoring division within Mortara, Gately attempted to negotiate a pay package with Brenegan that would take into account any reputational damage he might suffer as a result of withdrawing from the job he had accepted with GE. Gately and Brenegan ultimately agreed upon a pay package that would guarantee Gately compensation of $250, 000 for each of his first two years of employment at Mortara, plus performance incentives and benefits. They also agreed that Gately would work from his home in New Hampshire. Gately left Wisconsin with a commitment that he would soon receive an offer letter from Mortara, setting out the terms of his employment agreement.

         Six hours later, Mortara sent Gately an offer letter dated May 2, 2016. Written by Mortara's Human Resource Director, the letter described the terms of Gately's employment package. It read, in part:

In this role, your annual base salary will be $150, 000, with a commission plan designed to generate variable compensation of $100, 000 annually, which will be guaranteed for the initial twelve months of your employment by means of a non-recoverable monthly draw. For months 13-24, your variable compensation plan, again targeted to achieve $100, 000 on an annual basis, will be paid to you by means of a monthly recoverable draw. You will also receive a $650 per month car allowance, which will be added as taxable income to your bi-weekly paycheck. Mortara will reimburse basic expenses for your home office, and normal out of town business expenses, including vehicle gas reimbursement.
Mortara Instrument has a Phantom Stock Plan which is a deferred compensation vehicle designed for management leadership personnel to share in the growth of the company. Based on the importance of your role in the organization, you will be eligible for consideration to be brought into this plan.

Compl. ¶ 18.

         The May 2 letter did not explicitly state that Gately's anticipated employment would be “at-will.” While the letter described Gately's variable compensation for months 13-24 as a “monthly recoverable draw, ” Brenegan subsequently assured Gately that his variable compensation for that period was guaranteed at a minimum of $100, 000. Brenegan further explained to Gately that the phrase “recoverable draw” meant that Gately would be eligible to “recover” additional variable compensation based on a commission schedule, assuming his sales during the period ...

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