Fowler v. Sectigo, Inc.

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MICHAEL FOWLER, Plaintiff v. SECTIGO, INC., Defendant.

Civil Action No. 24-00936 (JKS)(SDA)

United States District Court, D. New Jersey

August 14, 2024

NOT FOR PUBLICATION

OPINION

Hon Jamel K. Semper, United States District Judge

The current matter comes before the Court on Defendant Sectigo Inc.'s (“Sectigo” or “Defendant”) motion to dismiss Count II of Plaintiff Michael Fowler's (“Fowler” or “Plaintiff”) Complaint pursuant to Rule 12(b)(6). (ECF 10.) The Court reviewed all submissions in support and in opposition and decided the motion without oral argument pursuant to Federal Rule of Civil Procedure 78 and Local Civil Rule 78.1. For the reasons set forth below, Defendant's motion is GRANTED.

I. FACTUAL AND PROCEDURAL BACKGROUND^[1]

Sectigo is a corporation formed under the laws of Delaware with a principal place of business in Roseland, New Jersey. (ECF 1-1, Compl. ¶ 7.) The corporation “and its predecessors are and have been in the business of providing identity and trust assurance services on the internet.”

(Id.) Fowler is an individual residing in the Borough of Roseland in Essex County, New Jersey. (Id. ¶ 6.) Sectigo employed Fowler for over twenty years until his separation with the company in August 2023 (Id. ¶¶ 2, 8.) Prior to the separation, Fowler held the position of President of Partners and Channels, managing approximately 50% of the company's revenue. (Id. ¶ 8.)

On August 7, 2023, Sectigo notified Plaintiff of his termination. (Id. ¶ 9.) In connection with Plaintiff's termination, the parties negotiated a Separation Agreement (the “Agreement”), which Plaintiff signed on August 25, 2023. (Id. ¶ 13; ECF 10-3, Exhibit 1 at 1.) The Agreement incorporated a preexisting confidentiality agreement dating back to February 1, 2019, which contained a nationwide non-compete provision for one year. (ECF 1-1, Compl. ¶ 54.) It also was set to provide the Plaintiff a Separation Payment (“Severance”) totaling $187,500.00, paid out in eighteen semi-monthly payments. (Id. ¶ 13.)

To date, Plaintiff has not received any portion of the Separation Payment. (Id. ¶ 3.) After Sectigo failed to pay the first installment of the Separation Payment due on September 8, 2023, Plaintiff inquired five days later on September 13 as to its status because he believed the nonpayment was the result of an administrative payroll issue. (Id. ¶¶ 14-15.) On September 15, Julie Gettys (“Gettys”), Sectigo's Chief Human Resources Officer, notified Plaintiff via e-mail that Sectigo was awaiting the ability to access his last computer. (Id. ¶ 16.) On November 3, Gettys notified Plaintiff that the severance package was under review because the company property on his laptop that was required to be returned was deleted from the computer. (Id. ¶ 17.) On November 7, Gettys notified Plaintiff that he breached the Agreement and could not receive the Severance because he failed to return company documents and property and when he returned his company-issued laptop to Defendant, it was reset to factory settings, or “wiped clean.” (Id. ¶¶ 3, 18; see ECF 10-3, Exhibit 1 at 4.) Plaintiff attests that all documents are available to Defendant on its servers and the “wiping” of the laptop constitutes “a mere technical breach of the Agreement.” (ECF 1-1, Compl. ¶¶ 22, 24.) Plaintiff and Sectigo met to sign an additional declaration as a condition to the payment of the Separation Payment, which would require the former to attest that “(a) he was not in possession of any of Sectigo's proprietary or confidential information (the “Sectigo Information”), (b) he did not and will not use any Sectigo Information after his termination, (c) he would continue to honor his post-employment obligations, and (d) he would let Sectigo know where it could find its own confidential information.” Id. ¶ 28.) The draft certification purportedly included “draconian terms” potentially triggering the payment of Sectigo's attorneys' fees, the option for Sectigo to repurchase Plaintiff's equity units at a substantial market value discount, and a caveat indicating the Separation Payment would be paid out over a year, rather than nine months. (Id. ¶¶ 30-31.) Plaintiff rejected this certification and filed the instant suit to enforce his rights. (Id. ¶¶ 31-33.)

Plaintiff initially filed his Complaint in the Superior Court of New Jersey, Law Division, Essex County on January 22, 2024. (See Compl.) Defendant timely removed the case to the District Court pursuant to 28 U.S.C. §§ 1441(a) and 1446. (ECF 1.) The Complaint asserts four counts: (I) Breach of the Agreement, (II) Violation of the Wage Payment Law (“WPL”), (III) Conversion, and (IV) Declaratory Judgment. (ECF 1-1, Compl.) On Count II,^[2] Plaintiff alleges Defendant owes Plaintiff $375,000.00 in liquidated damages, plus interest, costs, and attorneys' fees, in addition to the $187,500.00 sought on Count One. (Id. at 12.)

II. LEGAL STANDARD

Federal Rule of Civil Procedure 12(b)(6) governs motions to dismiss for “failure to state a claim upon which relief can be granted[.]” For a complaint to survive dismissal under the rule, it must contain sufficient factual matter to state a claim that is plausible on its face. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is facially plausible “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft, 556 U.S. at 678. Although the plausibility standard “does not impose a probability requirement, it does require a pleading to show more than a sheer possibility that a defendant has acted unlawfully.” Connelly v. Lane Const. Corp., 809 F.3d 780, 786 (3d Cir. 2016) (internal quotation marks and citations omitted). As a result, a plaintiff must “allege sufficient facts to raise a reasonable expectation that discovery will uncover proof of [his] claims.” Id. at 789.

In evaluating the sufficiency of a complaint, district courts must separate the factual and legal elements. Fowler v. UPMC Shadyside, 578 F.3d 203, 210-11 (3d Cir. 2009). Restatements of a claim's elements are legal conclusions, and therefore, not entitled to a presumption of truth. Burtch v. Milberg Factors, Inc., 662 F.3d 212, 224 (3d Cir. 2011). The Court, however, "must accept all of the complaint's well-pleaded facts as true." Fowler, 578 F.3d at 210. Even if plausibly pled, however, a complaint will not withstand a motion to dismiss if the facts alleged do not state "a legally cognizable cause of action." Turner v. J.P. Morgan Chase & Co., No. 14-7148, 2015 LEXIS 185621, at *2 (D.N.J. Jan. 23, 2015).

III. ANALYSIS

A. WPL: N.J. Stat. Ann. § 34:11-4.2

Count II of Plaintiff's Complaint is a Wage Payment Law (“WPL”) claim for the alleged failure of Defendant to pay Plaintiff wages pursuant to N.J. Stat. Ann. § 34:11-4.10(c). (ECF 1-1, Compl. ¶ 42.)

Unless an exception applies, the WPL requires that “every employer shall pay the full amount of wages due to his employees at least twice during each calendar month.” N.J. Stat. Ann. § 34:11-4.2. Accordingly, the failure of an employer to pay the full amount of agreed-to wages to an employee may allow the latter to recover the full amount of wages due plus liquidated damages “not more than 200 percent of the wages lost or of the wages due, together with costs and reasonable attorney's fees as are allowed by the court.” N.J. Stat. Ann. § 34:11-4.10(c).

The WPL defines wages as “the direct monetary compensation for labor or services rendered by an employee, where the amount is determined on a time, task, piece, or commission basis excluding any form of supplementary incentives and bonuses which are calculated independently of regular wages and paid in addition thereto.” N.J. Stat. Ann. § 34:11-4.1(c). Sectigo argues that the Separation Payment, in the form of severance, is not “wages” as defined under the plain meaning of the statute. (ECF 10-1, Def. Br. at 5.)

The New Jersey Supreme Court has yet to interpret whether the statute would include such payment under its formal definition of wages. Accordingly, this Court is tasked with evaluating how the New Jersey Supreme Court would ultimately rule on this question of statutory interpretation and law. Bernard v. Cosby, 648 F.Supp.3d 558, 565 (D.N.J. 2023) (citing Roma v. U.S., 344 F.3d 352, 361 (3d Cir. 2003)).^[3] The plain language of the statute indeed provides instructive language as to how to interpret the statute. Additionally, federal courts' interpretation of the state law, state intermediate appellate decisions, and other persuasive material guide the Court. Id. at 565-66 (citing Spence v. ESAB Grp., Inc., 623 F.3d 212, 216-17 (3d Cir. 2010)); see also Fink v. Ritner, 318 F.Supp.2d 225, 228 (D.N.J. 2004) (“A court will consider the New Jersey legislature's purpose for enacting such a statute, as well as how the New Jersey courts have interpreted and applied the statute.”).^[4]

Plaintiff proffers two arguments. First, Plaintiff contends that the Severance Payments are properly considered wages under the WPL. (ECF 18, Pl. Opp. at 7.) Second, in the alternative, Plaintiff contends that his adherence to the non-compete obligation set forth in the Separation Agreement is a “service” for purposes of the WPL, one for which the Plaintiff has not been paid, and that the Separation Payments are the primary consideration for the non-compete. (Id. at 1213.)

B. Severance under the WPL

The WPL's statutory language in N.J. Stat. Ann. § 34:11-4.2 “clearly indicates that ‘wages' are payments promised in advance of the services performed and paid promptly, or at least intended to be paid promptly after services are rendered. Retroactive payments do not fit into ...