United States Court of Appeals
For the First Circuit
No. 06-1745
JOHN P. BOHNE,
Plaintiff, Appellee,
v.
COMPUTER ASSOCIATES INTERNATIONAL, INC.,
Defendant, Appellant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. William G. Young, U.S. District Judge]
Before
Boudin, Chief Judge,
Selya and Stahl, Senior Circuit Judges.
Brigitte M. Duffy, Jennifer A. Serafyn and Seyfarth Shaw LLP
on brief for appellant.
John P. Bohne on brief pro se.
February 1, 2008
Per Curiam. On August 19, 2002, John Bohne was
terminated--allegedly for a violation of company rules--from his
job as a sales executive for Computer Associates International.
That termination formed the basis for a diversity lawsuit, filed by
Bohne in the federal district court in Massachusetts, asserting
various causes of action--state and federal, common law and
statutory--against Computer Associates.
Of these claims, only one survived summary judgment and
reached trial: Bohne's argument that he was entitled to a
commission on a sale he had arranged prior to his termination. He
contended that under Massachusetts law, his at-will employment
contract included an "implied covenant of good faith and fair
dealing" that entitled him to the commission, even though no
commission was due to him under the terms of his contract.
After a three-day trial, the jury returned a verdict for
Bohne; the special verdict form revealed that the jury had rejected
one, but accepted the other, of the two theories of liability
charged by the district judge. The former claim was that the
termination had been made in bad faith in order to deprive Bohne of
his commission; this is a theory well established under
Massachusetts law. Fortune v. Nat'l Cash Register Co., 364 N.E.2d
1251, 1257 (Mass. 1977). But the jury rejected this claim on the
merits, presumably because it thought that Bohne had not proved the
forbidden motive for his discharge. This is not surprising because
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under the terms of the contract, discussed below, firing Bohne
would not automatically or necessarily deprive him of commissions
for sales already transacted.
The claim that the jury accepted and on which it based
the judgment for Bohne was an alternative theory submitted to it by
the district judge. This theory permitted the jury to determine
that the provision of the contract under which Bohne was denied
compensation was itself unlawful. Computer Associates now appeals,
arguing that the district judge incorrectly instructed the jury and
should have granted its post-trial motion for judgment as a matter
of law as to the theory. See Bohne v. Computer Assocs. Int'l,
Inc., 445 F. Supp. 2d 177, 184 (D. Mass. 2006). This presents a
question of Massachusetts law, which we consider de novo. Salve
Regina College v. Russell, 499 U.S. 225, 231 (1991); SEC v. Happ,
392 F.3d 12, 19, 28 (1st Cir. 2004).
Under the sales compensation plan that governed Bohne's
employment, an employee was contractually entitled to a sales
commission so long as, inter alia, payment from the sale was
received by Computer Associates within 90 days of coming due;1 but
if the employee was terminated, he would not be owed any
commissions on sales for which payment was not received within 30
1
If payment was received between 90 and 180 days after coming
due, the employee would receive only half of the otherwise
applicable commission; after 180 days, payment of any commission
would be in the sole discretion of the management.
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days of the termination. The contested jury instruction, delivered
over defense objection, asked the jury to determine whether this
latter plan provision--pursuant to which Bohne lost the disputed
commission--was "so unfair as to violate the general covenant of
good faith and fair dealing."
We can find no basis in Massachusetts law for such an
instruction. The doctrine of good faith and fair dealing "concerns
the manner in which existing contractual duties are performed,"
Eigerman v. Putnam Invs., Inc., 877 N.E.2d 1258, 1265 (Mass. 2007),
not the lawfulness of the agreement itself. It constrains a
party's discretion so that "the objectives of the contract [are]
realized," but does not "create rights and duties not otherwise
provided for." Uno Rests., Inc. v. Boston Kenmore Realty Corp.,
805 N.E.2d 957, 964 (Mass. 2004). Ensuring that a party does not
act to undermine the goals of the contract is one thing; holding
the contract unlawful on its face is another.
Massachusetts law recognizes other doctrines that concern
the enforceability vel non of contractual terms. For example, a
judge can make a legal determination that a contract is
unconscionable--if "the sum total of the provisions of a contract
drive too hard a bargain," Waters v. Min Ltd., 587 N.E.2d 231, 234
(Mass. 1992). Or a contract or contractual provision can be held
unlawful because it is found to violate public policy. A.Z. v.
B.Z., 725 N.E.2d 1051, 1058 (Mass. 2000).
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But under neither doctrine is a jury entitled to
determine that a contract is unenforceable because it is unfair.
Zapatha v. Dairy Mart, Inc., 408 N.E.2d 1370, 1375 (Mass. 1980);
Green v. Richmond, 337 N.E.2d 691, 695 (Mass. 1975). Allowing a
jury to pass on the lawfulness of contractual terms could raise
serious problems in assuring the stability and predictability of
contractual arrangements. In any event Massachusetts law does not
provide for the jury to decide that a contract provision is itself
"so unfair as to violate the general covenant of good faith and
fair dealing."
Bohne did not ask the district judge to strike down the
termination provision as unlawful under established Massachusetts
doctrines governing illegality; and it is unlikely that any such
argument could succeed on these facts. The Massachusetts Supreme
Judicial Court (SJC) has tested for "reasonableness" forfeitures
that are triggered when employees go to work for competitors, but
only by analogy to non-compete covenants, which have anti-
competitive effects not implicated here. See Cheney v. Automatic
Sprinkler Corp., 385 N.E.2d 961, 966 (Mass. 1979); Struck v.
Plymouth Mortgage Co., 605 N.E.2d 296, 298 (Mass. 1993).
In all events under the contractual provisions that
applied in this case the termination of an employee for cause did
not itself forfeit commissions already earned; it was only if the
purchase price remained unpaid for 30 days after the termination
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that the commission was cancelled. There were also time limits for
those who remained employed, and the difference in treatment is
plausibly explained by a desire to close the books on discharged
employees. We understand that the district judge considered the
theory on which Bohne prevailed to be a logical extension of
Fortune, but "[i]f Fortune is to be extended, this is a matter for
the Massachusetts courts and not for us." Sargent v. Tenaska,
Inc., 108 F.3d 5, 10 (1st Cir. 1997). Accordingly, the only theory
on which Bohne prevailed cannot support the judgment, which must
therefore be vacated.
To avoid confusion in future cases, we note that Bohne
did not seek an instruction based on the Massachusetts SJC's
decision in Gram v. Liberty Mut. Ins. Co., 429 N.E.2d 21 (Mass.
1981). Gram extended the Fortune doctrine to require employers who
terminate "without good cause"--even though without bad-faith
intent--to pay any compensation clearly related to employees' past
services, even if not yet contractually due. Id. at 28-29. So (in
theory) a lawsuit might fail under Fortune yet succeed under Gram--
e.g., if the employee was fired for a baseless reason--although
Massachusetts case law has interpreted "good cause" very liberally
in favor of employers, e.g., York v. Zurich Scudder Invs., Inc.,
849 N.E.2d 892, 899-900 (Mass. App. Ct. 2006).
But Bohne has waived this potential claim by failing to
raise it. That he proceeded pro se might entitle him to some
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lenience in construing arguments that he did make, but we cannot
order a new trial on a potential claim that was not raised either
in the district court or even on appeal. As it happens, it is far
from clear that a claim based on Gram could succeed where (as here)
the at-will contract includes an explicit forfeiture clause,2 and
anyway Bohne made no serious attempt at trial to demonstrate that
his discharge was without good cause.
The judgment is reversed and the case remanded for entry
of judgment in favor of Computer Associates. Each side shall bear
its own costs on this appeal.
It is so ordered.
2
The SJC has reserved that question, Gram v. Liberty Mut. Ins.
Co., 461 N.E.2d 796, 798 (Mass. 1984), and has emphasized that the
good faith covenant "is only as broad as the contract that governs
the particular relationship." Ayash v. Dana-Farber Cancer
Institute, 822 N.E.2d 667, 684 (Mass. 2005); see also Moriearty et
al., 45 Mass. Practice--Employment Law § 3.3, at 166-67 (2003)
(noting that parties can arguably bargain around the Gram
extension, though presumably not around bad faith proper).
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