United States District Court, D. New Hampshire
J. McAULIFFE UNITED STATES DISTRICT JUDGE.
Thompson brings this action against his former employer, Paul
G. White Tile Company (“WTC”), seeking damages
for wrongful termination (count one) and unlawful non-payment
of wages (count two). See generally N.H. Rev. Stat. Ann.
(“RSA”) ch. 275. WTC moves to dismiss both claims
advanced in Thompson's complaint, saying they fail to
state the essential elements of viable causes of action. See
Fed.R.Civ.P. 12(b)(6). Specifically, WTC asserts that: (a)
Thompson's wage claim is barred by the statute of frauds;
and, therefore, (b) “if there is no basis, due to the
application of the statute of frauds, for the [wage claim],
there can be no wrongful termination claim springing from
it.” Defendant's Reply Memorandum (document no. 6)
at 4. For the reasons discussed, defendant's motion to
dismiss is denied.
of Review 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).
construing the factual allegations of the complaint in
Thompson's favor - as the court must at this juncture -
the relevant background is as follows. In August of 2016, WTC
hired Thompson as the Division Manager of its Newmarket, New
Hampshire division. The terms of his employment contract were
oral; they were not reduced to writing. He alleges that he
was promised an annual base salary of $185, 000 plus a
“commission of 10% of the gross profits made by the
Newmarket division.” Complaint at para. 6. While the
precise conditions under which Thompson's commission
would be earned (and paid) are unclear, it is fair to infer
that the parties contemplated paying Thompson his commission
on an annual basis. So, for example, he would be paid for the
commission earned during fiscal year 1 at some point in year
2 (after the company's gross profits for year 1 had been
fully calculated). The court will also assume that the terms
of Thompson's employment agreement with WTC provided
that, should his employment terminate for any reason (whether
initiated by him or by WTC), Thompson would be entitled to
ten percent of the gross profits earned by the Newmarket
division proportional to the time worked in that year. So, if
he quit or was fired prior to the close of a fiscal year, he
would nevertheless be entitled to a prorated share of 10
percent of the gross profits earned by his
complaint does not discuss what, if any, commission Thompson
earned (or was paid) for his work during 2016. The problems
between the parties seem to have arisen toward the end of
2017. Thompson says he and WTC disputed the amount to which
he was entitled for that year, and he ultimately agreed to
accept (and WTC paid him) $20, 000. Toward the end of 2018,
he claims the parties again disputed how much commission he
had earned for that year. And, says Thompson, in order to
avoid paying him any commission at all for that year, WTC
unlawfully terminated his employment on December 29, 2018.
WTC did not pay him a commission for 2018 and, according to
Thompson, it also failed to properly pay the salary he earned
during his final weeks of work at the company.
asserts that both of Thompson's claims - that is, his
wage claim and his wrongful termination claim - are barred by
New Hampshire's statute of frauds. See RSA 506:2. Broadly
speaking, the statute of frauds renders oral contracts that
cannot be performed within one year unenforceable.
parties agree that Thompson was an employee-at-will.
Typically, at-will employment agreements can be terminated by
either party for any lawful reason (or without reason) at any
time. Such agreements may, then, be completed without breach
within one year. Consequently, it is well established that
at-will employment agreements are not subject to the statute
of frauds. See, e.g., Toomire v. Town & Country
Janitorial Servs., 2002 DNH 034, 2002 WL 140648, at *7
(D.N.H. Jan. 31, 2002); Ives v. Manchester Subaru,
Inc., 126 N.H. 796, 799 (1985).
says WTC, its (alleged) promise to pay Thompson an annual
commission of ten percent (10%) of the company's gross
profits is within the scope of the statute of frauds.
According to WTC, because Thompson's commission could
only be calculated at some point after the close of each
fiscal year, that calculation necessarily could not be
completed within one year of the date on which the parties
entered into their employment agreement.
A bonus or incentive compensation payable to Plaintiff based
upon the full calendar year profitability for 2017, from an
agreement entered in August 2016, could only be calculated
after December 31, 2017. This is 18 months after hire. The
calculation of the annual profitability for 2018, which could
not be performed until after December 31, 2018, is even more
attenuated -  months after the oral promise.
Memorandum (document no. 4) at 8.
the lack of evidence concerning the details of Thompson's
employment agreement with WTC - in particular, the conditions
under which he would earn his commission - it cannot be
determined that his complaint fails to state a viable claim.
Typically, the statute of frauds does not apply to oral
commission agreements with employees at will when those
agreements contemplate payment of commissions earned during
the period of employment. That is true even if payment of the
commission may be made beyond one year. So, for example,
under New York's statute of frauds:
[W]hen the employment relationship is terminable within a
year and the measure of compensation has become fixed and
earned during the same period, the sole obligation to
calculate such compensation will not bring the contract