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SJC-12291

ANDREW SEGAL vs. GENITRIX, LLC, & others.1

Suffolk. September 5, 2017. - December 28, 2017.

Present: Gants, C.J., Lenk, Gaziano, Lowy, Budd, Cypher, 

& Kafker, JJ.

Massachusetts Wage Act. Limited Liability Company. Agency, 

What constitutes. Practice, Civil, Instructions to jury.

Civil action commenced in the Superior Court Department on 

February 23, 2009.

The case was tried before Paul D. Wilson, J., and a motion 

for a new trial was heard by him.

The Supreme Judicial Court granted an application for 

direct appellate review.

Thomas H. Dupree, Jr. (Matthew S. Rozen, of the District of 

Columbia, Peter M. Durney, & Julianne C. Fitzpatrick also 

present) for H. Fisk Johnson, III, & another.

Timothy J. Wilton (Kathy Jo Cook also present) for the 

plaintiff.

Jonathan A. Karon, Thomas R. Murphy, Matthew J. Fogelman, &

Danielle Jurema Lederman, for Massachusetts Academy of Trial 

Attorneys, amicus curiae, submitted a brief.

 

1 H. Fisk Johnson, III; Stephen Rose; William Freund; Fisk 

Ventures, LLC (Fisk); Jeffrey D. Pellegrom; Metalox, LLC; and 

Johnson Keland Management, Inc., The Family Office.
2

Ben Robbins & Martin J. Newhouse, for New England Legal 

Foundation, amicus curiae, submitted a brief.

KAFKER, J. A jury found the defendants, H. Fisk 

Johnson, III, and Stephen Rose, two former board members and 

investors in Genitrix, LLC (Genitrix or company), personally 

liable under G. L. c. 149, § 148 (Wage Act), for failing to pay 

wages owed to the former president of Genitrix, Andrew Segal. 

The defendants moved for judgment notwithstanding the verdict 

and a new trial. Both motions were denied, and the defendants 

appealed. We granted the defendants' application for direct 

appellate review and conclude that the Wage Act does not impose 

personal liability on board members, acting only in their 

capacity as board members, or investors engaged in ordinary 

investment activity. Rather, to impose such liability, the

statute requires that the defendants be "officers or agents 

having the management" of a company. G. L. c. 149, § 148. The

defendants were not designated as company officers and had 

limited agency authority. Indeed, the only officer having the 

management of the company was the plaintiff, not the defendants. 

We therefore conclude that there was insufficient evidence to 

satisfy the statutory requirements and reverse the denial of the 

motion for judgment notwithstanding the verdict.2

 

2 We acknowledge the amicus brief submitted by the 

Massachusetts Academy of Trial Attorneys, in support of the 
3

1. Background. Because the defendants contend that the 

trial judge erred in denying their motion for judgment 

notwithstanding the verdict, we construe the facts in the light 

most favorable to the plaintiff. See O'Brien v. Pearson, 449 

Mass. 377, 383 (2007). In 1997, representatives for Johnson 

contacted Segal about investing in Segal's cancer research. 

Segal and Johnson agreed to form a biotechnology startup company

with Segal serving as president and chief executive officer 

(CEO) and Johnson providing initial funding. Stephen Rose was a 

representative for Johnson, and spoke to Segal on Johnson's 

behalf during their negotiations over the formation of the 

company. The company, Genitrix, was established as a Delaware 

limited liability company (LLC) headquartered in Boston.

Segal transferred his intellectual property rights to the 

company in exchange for a substantial equity interest. Johnson 

also received a substantial equity interest in return for his 

initial investment in the company. Segal and Johnson each had 

authority to appoint two board members to Genitrix's four-member 

board of representatives, and both could remove and replace 

their representatives with or without cause. Most board 

decisions required a seventy-five per cent majority to pass. 

Johnson served on the board for only the first year of the 

 

plaintiff, and the amicus brief submitted by the New England 

Legal Foundation, in support of the defendants.
4

company. Rose was appointed as one of Johnson's board 

representatives in 1999 and remained a Johnson board member 

until the company's dissolution. Johnson indicated to Segal 

that Segal should contact Rose about any financing issues, 

stating that Rose "speaks for" Johnson.

As a condition of Johnson's investment in the company, he 

insisted Segal sign an employment agreement with Genitrix. The 

agreement provided that Segal would serve as the president and 

CEO of the company, with the "duties, responsibilities and 

authority" commensurate with those positions, such as

"conducting the [c]ompany's business, research and development," 

and managing its "finances and other administrative matters, 

subject to the overall direction and authority of [its]

[b]oard." The agreement further provided that "[a]t any time 

after the second anniversary . . . , the [c]ompany, with the 

approval of at least [fifty per cent] of the [board], may 

replace [Segal] as chief executive officer." If no suitable 

replacement CEO could be found within fifteen months who

seventy-five per cent of the board could agree upon, the Johnson 

board members were authorized to appoint a new CEO.3

The employment agreement contained terms for Segal's 

 

3 In 2003, upon Fisk becoming a shareholder of Genitrix, LLC 

(Genitrix), board members designated by Johnson and Fisk were 

those authorized to appoint a new chief executive officer (CEO) 

pursuant to this provision.
5

removal as an employee that were different from the terms for 

his removal as CEO. Under the employment agreement, Segal's 

"[e]mployment [p]eriod" could be terminated in one of three 

ways: (1) resignation; (2) removal for cause approved by fifty 

per cent of the board; or (3) removal without cause approved by 

seventy-five per cent of the board. The agreement stated, "Upon 

termination of the [e]mployment [p]eriod, [Segal] shall not be 

entitled to receive his [b]ase [s]alary or any fringe benefits 

for periods after the termination of the [e]mployment [p]eriod." 

The agreement also specified Segal's salary for the first two 

years of his employment. Afterward, his salary was to be 

determined by a vote of seventy-five per cent of the board, and 

was "payable in regular installments in accordance with 

[Genitrix]'s general payroll practices."4 The employment 

agreement identified Johnson as a third-party beneficiary, and 

authorized him to "enforce the [c]ompany's rights under the 

terms of this [a]greement." Any amendment or waiver of a 

provision in the employment agreement required written consent 

from Genitrix, Segal, and Johnson. At no point did Johnson 

exercise his rights, including termination rights, pursuant to 

this agreement.

 

4 Andrew Segal's base salary was $75,000 per year until 

July, 2003. At that time, the board members of Genitrix 

approved a resolution to increase his salary to $150,000 per 

year.
6

In 2003, Johnson began funding Genitrix through Fisk 

Ventures, LLC (Fisk), an entity owned entirely by Johnson and 

Rose.5 Fisk became the largest shareholder of Genitrix, and 

gained the authority to appoint a fifth member to the board. 

Thereafter, Johnson and Fisk's combined equity in Genitrix

exceeded fifty per cent. Fisk and Johnson's board 

representatives, taken together, constituted sixty per cent of 

the board. Although their representatives comprised a majority 

on Genitrix's board, they were still short of the seventy-five 

per cent threshold required to pass most board resolutions.

Genitrix never employed more than five full-time employees. 

As the president and sole officer, Segal was responsible for all 

day-to-day operations. He supervised the laboratory and 

directly managed human resources. He was in charge of 

fundraising and generating new capital. Segal also handled the 

company's payroll. As the only individual with authority to 

"physically sign checks on the Genitrix bank accounts," he wrote 

checks for employee wages. When Genitrix began using a company 

called Paychex to handle its payroll, Segal still had to order 

each payroll individually, including for himself. However, 

Segal did need board approval for numerous actions, including 

"material personnel practices or policies," hiring and firing of 

 

5 Johnson owned over ninety per cent of Fisk, and Rose owned

the remainder.
7

employees earning $45,000 or more, setting compensation for

officers and employees other than Segal, and acquiring debt or 

equity in the company.

On March 23, 2006, Segal informed the board that the 

company was running out of funds to pay its employees. He told 

the board they would need to lay off at-will employees the 

company could not afford to pay, so as to avoid liability under 

the Wage Act. A few days later, Rose told Segal that Fisk would 

not invest more money in Genitrix if Segal continued to control 

the management of the company.6 Fisk did subsequently invest

additional money in Genitrix on April 6, 2006, but unlike prior 

investments, Rose earmarked that investment for specific 

purposes: payroll, expenses necessary to comply with covenants 

in the LLC agreement, and the repair or replacement of a 

centrifuge. All subsequent Fisk investments were also earmarked 

for specific purposes, such as patent fees and other employees'

salaries. Segal voted in favor of each board resolution 

authorizing Genitrix to accept these investments.

At the start of 2007, Genitrix was still short on money and 

struggling to make payroll. Segal stopped taking his salary in 

January, 2007. He testified that he did so to help the company 

 

6 Segal was no longer CEO of the company after 2006. 

Segal's testimony does not provide an explanation for this 

change. Rose testified that Segal resigned to prevent the board 

from reducing his board seats.
8

afford to pay Elihu Young, its last remaining employee other 

than Segal. Segal explained he "was put in a position where 

[he] felt [he] had to not pay [him]self." When pressed about 

who made that decision, Segal testified, "Given the box I was 

in, I did." Segal later suggested to the board that he was no 

longer paying himself. On February 23, 2007, he stated, "Even 

without disbursing my salary, it is unlikely that we will be 

able to pay . . . Young for more than [two] more pay periods," 

and proposed that the company sell its laboratory equipment and 

lay off Young to cut costs. Rose believed Young was 

"extraordinarily valuable to the company," as the only one who 

knew "how to make the [company's cancer-fighting] molecule." 

Rose responded that "given [Young's] importance to the company, 

he should not be let go without giving the board a full 

opportunity to meet and discuss this issue in detail. 

Liquidating assets is an important issue as well." The Johnson 

board members did not agree to either proposal. Instead, Rose 

directed Fisk to invest enough money in Genitrix to pay Young's 

salary for another month.

Despite Segal opting to not pay himself, by mid-2007

Genitrix was again unable to afford to pay even Young. On May 

17, 2017, Johnson's board members finally agreed to lay off 

Young, voting in favor of a board resolution to terminate 

Young's employment. A week later Fisk invested additional money 
9

in Genitrix for the purpose of paying Young's remaining salary.

When Young left, Young closed the company's laboratory.

At this point the company was out of money and apparently 

deadlocked on even how to conduct board business. Rose and the 

Johnson board members wanted to hold board meetings, but Segal 

wanted to conduct board business using electronic mail (e-mail) 

messages so that everything would be in writing. As a result of 

the deadlock and the financial condition of the company, Rose 

filed a petition for the judicial dissolution of Genitrix on 

behalf of Fisk in June, 2007. The petition was filed in 

Delaware, where Genitrix was incorporated. Segal was a named 

party to the Delaware dissolution proceeding because he was 

still the president of the company.

For the next two years Segal actively opposed the 

dissolution. In July, 2007, he brought counterclaims in that 

proceeding against the defendants for breach of the LLC 

agreement, breach of the implied covenant of good faith and fair 

dealing, breach of fiduciary duties, and tortious interference 

with his employment agreement. Segal did not bring a 

Massachusetts Wage Act claim in those proceedings.7

As the dissolution proceedings continued, Segal did some 

other work as president, including paying patent annuity fees

 

7 Given the result we reach here, we need not address the 

issue of claim preclusion.
10

and protecting the work associated with those patents, securing

directors' and officers' insurance, and making necessary tax

filings. Segal testified that he continued to work for the 

company during this time, despite no longer taking a salary, 

because he thought he "would eventually get paid." He believed 

that when the company sold its patents, "that money would go, at 

least in part, to pay [him]."

Both Young and Segal raised the issue of unpaid wages with 

the board. A few months after Segal stopped paying himself, he 

informed the board that he was no longer taking a salary. In 

late 2007, months after he left Genitrix, Young threatened to 

bring a Wage Act claim against the company for outstanding 

unpaid wages. In March, 2008, Rose directed Fisk to invest 

enough money in Genitrix to compensate Young for his unpaid

wages, and in return Young signed an agreement releasing 

Genitrix, its board members, and its agents from liability.

Rose did not, however, direct Fisk to invest money in Genitrix 

toward Segal's salary.

Segal and Rose continued to argue over whether Segal was 

owed wages, and whether those wages should take priority over 

other company expenses, such as patent fees. On February 19, 

2009, Segal sent an e-mail message to Rose stating, "The 

[c]ompany owes me wages and benefit expenses. I cannot agree to 

any arrangement that does not respect that claim." Rose 
11

responded, "It is not appropriate to subordinate new funds to 

whatever claims that you may believe you have. . . . So, if you 

can't have first priority, you think that the company's 

intellectual property rights should simply expire?"

In early 2009, Segal filed suit against Rose and Johnson in 

Massachusetts under the Wage Act for unpaid wages from 2007 to 

2009. Around the same time, the Delaware Court of Chancery 

ordered Genitrix's dissolution and appointed a liquidator to 

conduct the dissolution and winding up of the company's affairs.

As part of the dissolution, the liquidator auctioned off 

Genitrix's intellectual property. Fisk submitted the winning 

bid of $300,000 even though Johnson's board representatives had 

said Genitrix was worth over $15 million three years earlier.

Segal submitted a proof of claim to the liquidator for back 

pay in June, 2009, but that claim was denied. Segal appealed 

from the denial to the chancellor, who dismissed the claim as 

moot in October, 2010, because the company did not have enough 

money to satisfy Segal's claims.

The defendants moved for summary judgment in the 

Massachusetts Wage Act suit, and a Superior Court judge granted 

the motion in 2013, finding that the defendants did not "have 

the management" of the company under the Wage Act. The Appeals 

Court, in a memorandum and order pursuant to its rule 1:28,

reversed and remanded the grant of summary judgment on the Wage 
12

Act claim, holding that our decision in Cook v. Patient Edu, 

LLC, 465 Mass. 548, 556 (2013), which found the manager of an

LLC liable under the Wage Act, raised a genuine issue of 

material fact as to whether the defendants could be held liable 

under the Wage Act. See Segal v. Genitrix, LLC, 86 Mass. App. 

Ct. 1103 (2014).

At trial the jury were instructed that the "duty to pay 

wages extends to the president and treasurer of a corporation 

and any officers or agents having the management of such 

corporation, which includes an LLC, such as Genitrix." More 

specifically, the jury were instructed that a "person qualifies 

as an agent having the management of such corporation if he

. . . 'controls, directs, and participates to a substantial 

degree in formulating and determining policy of the corporation 

or LLC.'" The jury went on to find both defendants individually 

liable under the Wage Act. Segal filed a timely notice of 

appeal, and we granted Johnson and Rose's application for direct 

appellate review. On appeal, the defendants argue, inter alia, 

that there was insufficient evidence to find Wage Act liability

and, alternatively, that the judge erred in his instructions to 

the jury about the Wage Act.

2. Discussion. a. The statutory language and legislative 

history of the Wage Act. The Wage Act requires employers to 

compensate their employees for earned wages as set out in G. L. 
13

c. 149, § 148. An employer who violates § 148 may be sued by

the aggrieved employees. G. L. c. 149, § 150. Section 148 

defines "employer" as a "person having employees in his [or her] 

service." G. L. c. 149, § 148. For corporations, such persons 

are the "president and treasurer of [the] corporation and any 

officers or agents having the management of such corporation,"

in addition to the corporation itself. Id. The statute does 

not include board directors or investors in its definition of 

"employer." See id. As explained below, we consider the

omission of directors and investors to be significant. If 

personal liability is to be imposed on these defendants, who 

served as directors and investors, it must be because they meet 

one of the express categories of corporate actors identified by 

the Legislature: the president, treasurer, or officers or 

agents having the management of the company. Such officers or 

agents have assumed and accepted individual responsibility for

the management of the corporation, justifying the imposition of 

personal liability for Wage Act violations.

Both parties agree that neither defendant was ever 

president or treasurer of Genitrix. Indeed, the plaintiff in 

this case was president of Genitrix. The defendants were also 

not officers of Genitrix. Accordingly, they could only be found 

liable if they were "agents having the management" of Genitrix

under the statute.
14

In determining the meaning of "agents having the 

management" of the company, we examine the statutory language 

and legislative history, as well as our case law. DiFiore v. 

American Airlines, Inc., 454 Mass. 486, 490-491 (2009), quoting 

Industrial Fin. Corp. v. State Tax Comm'n, 367 Mass. 360, 364 

(1975) ("We look to the intent of the Legislature 'ascertained 

from all its words construed by the ordinary and approved usage 

of the language, considered in connection with the cause of its 

enactment, the mischief or imperfection to be remedied and the 

main object to be accomplished, to the end that the purpose of 

its framers may be effectuated.' . . . In addition, our respect 

for the Legislature's considered judgment dictates that we 

interpret the statute to be sensible, rejecting unreasonable 

interpretations unless the clear meaning of the language 

requires such an interpretation"). The plain language of the 

provision indicates two important requirements: the defendant 

must both be an agent and have the management of the company. 

See G. L. c. 149, § 148; Milford v. Boyd, 434 Mass. 754, 757

(2001) ("In interpreting a statute, . . . none of its words is 

to be regarded as superfluous").

The language, "agents having the management of such 

corporation," should also be read in the context of the language 

it follows. DiFiore, 454 Mass. at 491 ("Where possible, we 

construe the various provisions of a statute in harmony with one 
15

another, recognizing that the Legislature did not intend 

internal contradiction"). The statute begins with express 

reference to the president and treasurer, two high level 

officers in the corporation with individual responsibility for 

its over-all management, particularly its financial affairs. 

See Lydia E. Pinkham Med. Co. v. Gove, 303 Mass. 1, 9 (1939) (as 

treasurer and assistant treasurer of company, defendants had 

duty to protect company's finances and disburse them as directed 

by president or directors). After expressly including these two 

positions, it refers to officers or agents having the management 

of the corporation. Not all officers or agents are included,

just those, like the president or treasurer, having the 

management of the corporation. Some management responsibility 

is not the same as "the" management of the corporation.

Wiedmann v. The Bradford Group, Inc., 444 Mass. 698, 712 (2005)

("Merely holding a managerial position over some branch, 

division, or office of a corporation does not, by itself, mean 

that that manager has the 'management' of the 'corporation' as a 

whole"). We therefore understand the Legislature to impose 

personal liability for Wage Act violations on the president and 

treasurer of the corporation and on other officers or agents who 

may not hold these titles, but who have assumed and accepted as 

individuals significant management responsibilities over the 

corporation similar to those performed by a corporate president 
16

or treasurer, particularly in regard to the control of finances 

or payment of wages.

This interpretation is also supported by the legislative 

history. As we discussed in Cook, 465 Mass. at 552, the Wage 

Act was passed in 1879, and originally applied only to 

municipalities employing "laborers." See St. 1879, c. 128. 

Over time, the Wage Act expanded to include specific industries, 

until it was eventually amended to cover all private employers. 

See id.; St. 1935, c. 350.

In 1932, a provision was added to the Wage Act to address 

corporate violations of the statute, imposing personal liability 

on "any officer thereof responsible for such violation." St. 

1932, c. 101. At this point the statute was confined to a 

select group of company officers responsible for the Wage Act 

violation. Neither board members, investors, nor other 

corporate actors were referenced. In 1935, the statutory 

language was replaced with the modern wording, which imposes 

liability on the "president and treasurer of a corporation and 

any officers or agents having the management of such 

corporation." See St. 1935, c. 350.

The primary change to the wording of the corporate 

liability provision in 1935 was the addition of per se 

individual liability for a company's president and treasurer,

two of the corporation's highest-level officers who had assumed 
17

and accepted individual responsibility for the company's overall financial management. In addition to expressly including 

these two positions, the 1935 amended language refers to 

officers or agents of the corporation, but, as explained above,

not all officers or agents were included, only those, like the 

president or treasurer, having "the management" of the 

corporation. The reference to "officers or agents having the 

management" harkens back to the original wording from 1932, 

which imposed personal liability on the officers who were 

"responsible for such violation" of the Wage Act. The

particular statutory focus on the payment of wages is also 

evident from the purpose of the Wage Act.8 The Wage Act was 

enacted to "protect wage earners from the long-term detention of 

wages by unscrupulous employers." Cook, 465 Mass. at 552, 

quoting Melia v. Zenhire, Inc., 462 Mass. 164, 170 (2012).

b. The novel questions presented here. We begin with the 

recognition that this case is quite unusual and removed from the 

 

8 The focus on the payment of wages is particularly clear in 

the language governing G. L. c. 149, § 148, violations in the 

public sector:

"Every public officer whose duty it is to pay money, 

approve, audit or verify pay rolls, or perform any other 

official act relative to payment of any public employees, 

shall be deemed to be an employer of such employees, and 

shall be responsible under this section for any failure to 

perform his official duty relative to the payment of their 

wages or salaries, unless he is prevented from performing 

the same through no fault on his part."
18

core concerns of the Wage Act. An employee may always sue the 

president and treasurer of a company for unpaid wages. The Wage 

Act imposes categorical liability on a company's president and 

treasurer, and under Massachusetts law, corporations are 

required to elect a president and treasurer. G. L. c. 149, 

§ 148. G. L. c. 156D, § 2.05. The plaintiff here, however, is 

the president and sole officer of the corporation and thus the 

only person expressly identified by virtue of his title as 

responsible for Wage Act violations. He was also specifically 

and exclusively charged with the management of the finances and 

the payroll function in his employment agreement. He also made 

the decision not to pay himself. As we consider whether the 

defendants were agents having the management of the company for 

the purposes of imposing personal liability under the Wage Act, 

we must carefully separate Segal's officer and agency powers, 

and his actions, from those of the defendants.

We must also for the first time apply the definition of 

"agents having the management of the corporation" to board 

members or investors. None of our previous cases involved 

attempts to impose liability on board members or investors. Nor 

did any of those cases require us to define the term "agent."

In Wiedmann, 444 Mass. at 711, liability was imposed on the 

president of the company and another individual who the 

defendants "admit[ted] ran the company." However, with regard 
19

to a third individual who was a manager in the company, we held

that he lacked "the" management of the corporation as a whole, 

as he was not a higher-level executive, that is "someone who 

controls, directs, and participates to a substantial degree in 

formulating and determining policy of a corporation." Id. at 

711-712. Thus, in Wiedmann we only had to focus on the 

management part of the test of "agents having the management of 

such company." In Cook, 465 Mass. at 554, we had an even 

narrower question to answer, which was whether LLCs should be 

treated the same as other corporations for Wage Act purposes. 

We concluded they should, and reversed the allowance of a motion 

to dismiss based on the corporate structure of the LLC. Id. at 

556.

How the statutory definition of "agents having the 

management of such corporation" would apply to board members and 

investors is by no means obvious. A board generally acts 

collectively, not individually. Estate of Moulton v. Puopolo, 

467 Mass. 478, 487-488 (2014). Also a board ordinarily sets 

policy and oversees management but does not perform the 

management function itself. See Boston Athletic Ass'n v. 

International Marathons, Inc., 392 Mass. 356, 365 (1984). See 

also Harhen v. Brown, 431 Mass. 838, 844 (2000). Investors may 

exercise significant financial control over a company through 

their power over their investments, but they are generally 
20

acting as outsiders, not managers or agents of the corporation. 

With these overarching considerations in mind, we turn to the 

application of the phrase "agents having the management" of the 

company to board members and investors in general and, more 

specifically, Johnson and Rose.

c. Requirement that the defendants be agents. Section 148 

does not define "agent," but we assume the Legislature intended 

to give the term its ordinary common and corporate law meaning. 

See Goodrow v. Lane Bryant, Inc., 432 Mass. 165, 170 (2000). At

common law, an agency relationship exists where "there is mutual 

consent, express or implied, that the agent is to act on behalf 

and for the benefit of the principal, and subject to the 

principal's control." Theos & Sons, Inc. v. Mack Trucks, Inc., 

431 Mass. 736, 742 (2000). See Fergus v. Ross, 477 Mass. 563, 

566 (2017); Restatement (Second) of Agency § 15 (1958). In the 

context of corporate law, an executive officer is generally

considered an agent of the company, because he or she acts on 

the corporation's behalf, subject to the corporation's control, 

as exercised through the board of directors. See Restatement 

(Second) of Agency § 14C comments a, b (1958). By contrast, 

"[n]either the board of directors nor an individual director 

. . . is, as such, an agent of the corporation." Id. at § 14C.

This is because the board of directors, acting as a whole, is 

generally not subject to another's control. Id. at § 14C 
21

comment a. "An individual director, as such, has still less 

resemblance to an agent than has the board as a body. He [or 

she] has no power of his [or her] own to act on the 

corporation's behalf, but only as one of the body of directors 

acting as a board. Even when he [or she] acts as a member of 

the board, he [or she] does not act as an agent, but as one of 

the group which supervises the activities of the corporation." 

Id. at § 14C comment b.9 See Estate of Moulton, 467 Mass. at 

487.

Likewise, investors in a company are ordinarily not 

considered agents of the company. Much like board members, 

investors invariably exercise some control over the businesses 

they invest in. See United States v. Bestfoods, 524 U.S. 51, 72 

(1998). However, exercising one's rights as an outside investor 

is separate and distinct from being an agent of the corporation. 

1 W.M. Fletcher, Fletcher Cyclopedia of the Law of Corporations

§ 30, at 100 (rev. ed. 2015) ("The mere fact that one is a 

shareholder or a majority or principal shareholder gives the 

individual no authority to represent the corporation as its 

agent in dealing with third persons" [footnote omitted]). 

 

9 The Restatement (Second) of Agency § 14C (1958) is more on 

point in these circumstances than Restatement (Third) of Agency 

§ 1.01 comment f(2) (2006). This court has also recently relied 

on the Restatement (Second) of Agency in Estate of Moulton v. 

Puopolo, 467 Mass. 478, 487 (2014).
22

Investors are acting on their own behalf, not that of the 

company. Neither the common understanding of the word "agent,"

nor its use in the Wage Act, encompasses ordinary investors or 

investment activity. This court accordingly will not attribute 

to the Legislature an intent to "alter the normal rules of 

corporate law . . . in the absence of plain or necessarily 

implied intent to change the pre-existing law." Leonard v. 

McMorris, 63 P.3d 323, 327 (Colo. 2003). See Scott v. NG US 1, 

Inc., 450 Mass. 760, 769 n.16 (2008) (reading legislative intent 

in G. L. c. 21E to avoid "doing violence to bedrock principles 

of corporate law"). If the Legislature intended for the Wage 

Act to reach investors and investment activity, it would have 

done so explicitly. See Seagram Distillers Co. v. Alcoholic 

Beverages Control Comm'n, 401 Mass. 713, 720 & n.11 (1988) 

(declining to disregard corporate form where statute did not 

clearly mandate it).

This is not to say that an individual director or investor

can never be personally liable as an agent of the company. 

Rather, individual directors or investors may still be 

considered agents of the corporation if they are empowered to 

act as such, but any agency relationship stems from their 

appointment as an agent, not from their position as a director

or investor. Restatement (Second) of Agency at § 14C comment b. 

For example, an individual director or investor could be 
23

appointed as an agent if the board exercised "its express or 

implied power to confer authority upon [the individual] to act 

for the corporation," or if the individual was appointed as an 

executive officer. Id. This does not mean that an individual 

director is immune from any Wage Act liability unless the board 

has passed an official board resolution appointing that director 

as an agent of the company. An agency relationship can arise 

from either express or implied consent. Theos & Sons, Inc., 431 

Mass. at 742. If, for example, a particular board member had 

been empowered to act individually as the functional equivalent 

of the president or treasurer of the corporation, that board 

member would be liable for Wage Act violations. Cf. Estate of 

Moulton, 467 Mass. at 489 ("There is no allegation that the 

directors undertook any action without a formal board meeting or 

vote, nor is there any allegation that any individual director 

attempted to usurp the power of the board . . .").

In the instant case, neither defendant was appointed as an 

executive officer. The LLC agreement provided that "[u]nless 

delegated by the [b]oard, all management powers over the 

business and affairs of the [c]ompany shall be exclusively 

vested in the [b]oard." Those management powers, particularly 

over the payment of wages, were in turn expressly delegated to 

Segal, not individual board members. The agreement also 

expressly stated that investors did not have agency authority. 
24

The agreement specified that "[n]o [m]ember in his or her 

capacity as a [m]ember shall have any power to represent, act 

for, sign for or bind the [c]ompany or make any expenditures on 

behalf of the [c]ompany."10

There was, however, one express delegation of power to the 

defendants. The employment agreement between Segal and Genitrix 

named Johnson, as the investor, as a third-party beneficiary. 

It expressly stated that Johnson "may enforce the [c]ompany's 

rights under the terms of this [a]greement." Thus, Johnson was 

empowered to act as Genitrix's agent to enforce Segal's 

employment agreement, including the termination provision which

allowed the "[b]oard with the approval of at least [fifty per 

cent] of the [r]epresentatives" to terminate Segal's employment

for cause. Additionally, Johnson's e-mail message to Segal 

stating that Rose "speaks for" Johnson, and Segal's testimony 

that Johnson was referring to financial matters, allows for a 

reasonable inference that Rose was Johnson's agent. Whatever 

agency powers Johnson had, Rose essentially shared.

In sum, Segal, the president and the only officer of the 

 

10 The limited liability company (LLC) agreement defined

"[m]embers" as "Segal, [i]nvestor [Johnson], the [o]ther 

[i]nvestors and any [p]erson who becomes a substituted or 

additional [m]ember as herein provided and who is listed as a 

member of the [c]ompany in the books and records of the 

[c]ompany, in such [p]erson's capacity as a member of the 

[c]ompany."
25

company, had significant officer and agency authority. In 

contrast, the defendants had limited express agency authority, 

all of which related to the power to terminate Segal.

d. Requirement that the defendants have the management of 

the company. The question then becomes whether the defendants'

limited agency powers, analyzed in the context of the over-all 

corporate structure, made either or both defendants agents 

having the management of the company. We conclude that the 

agency authority here was insufficient to make the defendants 

individually or collectively "agents having the management of 

such corporation."

i. Johnson's authority to enforce the employment 

agreement. As the sole officer of Genitrix, specifically 

charged with "management of the [c]ompany's . . . finances and 

other administrative matters," including the human resources and

payroll functions, Segal, not the defendants, had all of the 

express officer and agent authority over the management of 

Genitrix.

During most of this time period, Segal was not only the 

sole executive but also the only employee; he was also the only 

individual with authority to sign checks on behalf of the 

company, and he was exclusively in charge of payroll. The 

defendants had no agency authority in this area. Segal 

testified that he affirmatively decided to stop paying himself 
26

due to lack of funds. When asked at trial who instructed the 

payroll company, Paychex, to stop paying him, Segal testified,

"Well, I didn't tell them not to pay me. I just didn't tell 

them to pay me." The decision was not made by Johnson or Rose, 

as they were not empowered to do so.

In contrast to Segal's wide-ranging powers over management 

as the sole officer of the company and its designated authority 

for payroll, Johnson's management powers as an agent derived

only from his authority to "enforce the [c]ompany's rights under 

the terms" of Segal's employment agreement. The right to fire 

Segal for cause, and select his successor if no suitable person 

satisfactory to seventy-five per cent of the board could be 

identified in fifteen months, does not, by itself, render 

Johnson an agent having the management of the corporation. This 

right gave Johnson some leverage over Segal, but not the overall management of the financial and payroll function of the 

company as required by the Wage Act.

The other significant powers the defendants had as board 

members and investors were distinct from the agency powers 

provided in the agreement. As explained above, the board's 

powers are neither agency powers nor powers entrusted to 

individual board members. Collective board oversight and 

control over management, finances, and policy is not oversight 

and control by individual board members. See Estate of Moulton, 
27

467 Mass. at 487 ("Adoption of corporate policies is achieved by 

a vote of the board of directors as whole, acting as the 

corporation . . . and cannot be accomplished in the ordinary 

course by any individual director"). The individual board 

members are not acting as the board's agents in the exercise of 

this board function. The statute specifically imposes personal 

liability on those who have assumed individual responsibility as 

officers or agents. It does not impose individual liability on 

board members, acting as board members, or outside investors 

overseeing their investments. This distinction reflects the 

Legislature's intention to exclude the ordinary performance of 

board or investor responsibilities, including board or investor

oversight of management and the policymaking and financial 

controls associated therewith, from personal liability under the 

Wage Act. Personal liability, particularly for board members, 

in corporate law is the exception, not the rule. See G. L. 

c. 156D, § 8.30 (c) ("A director is not liable for any action 

taken as a director, or any failure to take any action, if [the 

director] performed the duties of his [or her] office in 

compliance with this section"). See also Sagalyn v. Meekins, 

Packard & Wheat Inc., 290 Mass. 434, 438 (1935) ("The management 

of the corporation is vested commonly in the board of directors.

Their action taken in good faith, even though wanting in sound 

judgment, does not involve them in personal liability"). The 
28

individuals targeted by the Wage Act reflect this careful 

consideration by the Legislature, particularly given that 

violations of its provisions may give rise to criminal as well 

as civil liability. G. L. c. 149, § 150 (authorizing 

"indictment against any person for a violation of [§] 148").

Finally, our corporate statutes as a matter of course 

impose management oversight responsibility on boards. See, 

e.g., G. L. c. 156D, § 8.01 (b): "All corporate power shall be 

exercised by or under the authority of, and the business and 

affairs of the corporation shall be managed under the direction 

of, its board of directors, subject to any limitation set forth 

in the articles of organization . . . ." Therefore, if board 

members, acting as board members, were to be considered agents 

of the company and their normal oversight responsibility were

deemed to be "the management of the company," then they would

always be agents having the management of the company. If that 

were the case, the Legislature would not have omitted board 

members and directors from the definition of corporate 

employers, as they would essentially have per se liability for 

every Wage Act violation.

ii. Rose and Johnson's particular board activities. At 

trial, Segal pointed to the behavior of Rose and Johnson's other 

board representatives, as well as Rose's communications on 

behalf of Johnson's representatives, as evidence of the 
29

defendants acting as agents having the management of the 

company. In particular, he emphasized that Rose and the other 

Johnson board representatives refused to authorize Segal's costcutting proposal to terminate the last employee other than Segal 

and to sell the company's laboratory equipment. This decision, 

according to Segal, limited Genitrix's ability to pay Segal.

As evidenced by Rose's response to Segal, the termination 

of the only employee who knew how to make the company's molecule 

and the sale of the company's laboratory equipment were not the 

type of ordinary personnel or financial decisions left to 

individual managers. They obviously rose to the level of board 

consideration. That being said, corporate boards are regularly 

required to make difficult decisions that have an impact on the 

company's finances; indeed, that is an important part of their 

responsibility as a board. Such decisions, however, are not the 

acts of individual board members as agents and do not impose 

personal Wage Act liability.11 We discern nothing exceptional in 

these board activities that would render Rose or Johnson 

individually liable under the Wage Act as agents having the 

 

11 We note that even within the regular confines of board 

activity, Rose could not control the board. To the contrary, 

the board was deadlocked. The Johnson board representatives 

constituted sixty per cent of the board, short of the seventyfive per cent majority required to pass most board resolutions. 

Segal and his other representative constituted the remaining 

forty per cent.
30

management of the corporation. See Estate of Moulton, 467 Mass. 

at 489.

iii. Rose's investment activities. To prove that Rose 

acted as an agent having the management of Genitrix, Segal 

relied heavily on the conditions Rose imposed on new infusions 

of capital by Fisk. In 2006, as Genitrix was running out of 

funds, Segal sought more money from Fisk. Rose informed Segal 

that Fisk would not invest more money in Genitrix if Segal 

remained in control. Thereafter, Rose restricted Fisk's new 

investments to fund specific expenses, as decided by Rose. By 

2007, Genitrix was so financially strapped that it needed more 

outside investment to fund its existing operations, including 

payroll. It was during this time period that Segal worked 

without pay.

As explained above, investors invariably exercise some

control over the businesses in which they invest, particularly 

when that business is failing and seeking new funds from these

investors. See Bestfoods, 524 U.S. at 72 (activities consistent 

with investor status include monitoring corporation's 

performance and supervising corporation's finance and capital 

budget decisions). But exercising one's rights and leverage as 

an investor over infusions of new money are separate and 

distinct from being an agent having the management of the 

corporation that is seeking the additional financing.
31

Investment restrictions limited to the use of new monies are not 

management direction and control over existing resources. See

generally Scott, 450 Mass. at 766.

Fisk was a separate company from Genitrix. Fisk was not 

responsible for Genitrix's payroll; Genitrix was. Fisk had no 

contractual or other obligations to make these payments. As 

Fisk's representative, Rose undoubtedly had significant power 

over new investments in Genitrix, and how that money was spent,

but his exercise of that power was not as an agent having the 

management of Genitrix. In fact, the LLC Agreement expressly 

prohibited the defendants from exercising agency authority on 

behalf of the company in their role as investors. It was Segal, 

not Rose, acting as the agent of Genitrix in these negotiations 

for infusions of new money from Fisk. Segal, as a board member, 

also voted in favor of each board resolution to accept capital 

from Fisk, including the conditions imposed on those monies. 

Finally, Rose imposing terms and conditions on new outside 

investment is not the same as Rose managing the company. We 

therefore conclude that Rose's actions conditioning Fisk's 

infusions of new capital into Genitrix do not prove he was an 

agent having the management of Genitrix.12

 

12 No arguments have been made on appeal raising questions 

whether Rose's twin roles as a Fisk investor and Genitrix board 

member presented issues regarding his exercise of his fiduciary 

duty of loyalty or care to Genitrix. Furthermore, at least 
32

In sum, neither board members nor investors are officers or 

agents having the management of the company for Wage Act 

purposes unless they are so empowered by the corporation. Here,

the person expressly designated as an officer or agent of 

Genitrix, particularly in regard to the payment of wages, was 

the plaintiff, Segal, not the defendants Rose or Johnson. In 

this context, neither Rose's ordinary board activities on behalf 

of Genitrix, his investment activities on behalf of Fisk, nor

his actions as Johnson's agent, alone or in combination, 

rendered either him or Johnson personally liable for any Wage 

Act violations as agents having the management of Genitrix. 

Accordingly, we conclude that the evidence at trial was 

insufficient to establish the defendants as liable under the 

Wage Act, and the trial judge erroneously denied the defendants'

 

under Delaware law, LLCs may limit fiduciary duties. Del. Code 

Ann. tit. 6, § 18–1101(c) ("To the extent that . . . a member or 

manager or other person has duties [including fiduciary duties]

to a limited liability company or to another member or manager 

or to another person that is a party to or is otherwise bound by 

a limited liability company agreement, the member's or manager's 

or other person's duties may be expanded or restricted or

eliminated by provisions in the limited liability company 

agreement . . ."). As the Delaware Court of Chancery judge 

explained, "the Genitrix LLC [a]greement eliminates fiduciary 

duties to the maximum extent permitted by law by flatly stating 

that members have no duties other than those expressly 

articulated in the [a]greement. Because the [a]greement does 

not expressly articulate fiduciary obligations, they are 

eliminated." We also note that it is not at all uncommon for 

investors to have seats on the boards of the companies in which 

they invest. Indeed, they often insist on it.
33

motion for judgment notwithstanding the verdict.

e. Jury instructions. The defendants also advance a 

number of other arguments relating to the trial judge's denial 

of their motion for a new trial. We need not address these 

arguments in light of our conclusion that the judge erred in 

denying the defendants' motion for judgment notwithstanding the 

verdict.13 However, given our analysis above, and the need for 

clarity in future cases, we address whether the jury 

instructions were appropriate as to the meaning of "agents

having the management of such corporation" under the Wage Act. 

We conclude that they were not.

At trial, the jury were not instructed on agency, except 

insofar as it related to the question whether Rose acted as 

Johnson's agent. Instead, jurors were instructed that "a person 

qualifies as an agent having the management of such corporation 

if he . . . 'controls, directs, and participates to a 

substantial degree in formulating and determining policy of the 

corporation or LLC.'" The trial judge erred in giving this 

instruction, as the language was taken out of context from our 

prior cases and causes confusion, particularly when the 

defendants are board members and investors. See Cook, 465 Mass. 

at 556; Wiedmann, 444 Mass. at 711.

 

13 We note in particular that the briefing and record are 

incomplete on the complicated issue of claim preclusion.
34

In Wiedmann, supra, as explained above, the defendants were 

a company's president and treasurer, another individual who 

admitted to running the company, and the general manager of an 

office. The language quoted from the Wage Act was used to 

determine whether an office manager satisfied the requirement of 

"having the management" of the company. Id. We were not tasked 

with differentiating the authority of board members or 

investors, or defining the contours of agency. Indeed the 

agency status of the manager in Wiedmann was not at issue, just 

the extent of his management powers. The issue of agency was 

also not raised in Cook, supra; the only pertinent question 

there was whether the Wage Act could impose personal liability 

in the context of an LLC. The agency issues and the potential 

liability of board members and investors were, however, 

presented in the instant case and required more complete jury 

instructions.

The defendants made a motion in limine requesting three 

instructions on agency, all of which were denied. First, they 

sought an instruction that "agents having the management of such 

corporation" referred to agents who do not hold the formal title 

of president or treasurer, but whose actual responsibilities are 

functionally equivalent to those of a corporate president or 

treasurer. Second, they requested an instruction defining how 

an agency relationship is created. Third, they asked for an 
35

instruction that outside board directors who are not officers or 

employees of the company are not agents unless specifically 

appointed as such.

We believe instructions clarifying these distinctions were 

required in the instant case to avoid confusion about the 

difference between the powers and responsibilities of board 

members, investors, and "agents having the management of such

corporation." The jury should have been instructed that there 

are two important requirements to being an officer or agent

having the management of the company. The defendant must be an 

agent or officer, and must have the management of the company. 

To further define the meaning of "officers or agents having the 

management" of the company, the jury should have been instructed 

that the Wage Act imposes liability on the president and 

treasurer of the corporation and on other officers or agents who 

may not hold these titles but whose significant management 

responsibilities over the corporation are similar to those 

performed by a corporate president or treasurer, particularly in

regard to the control of finances or the payment of wages. This 

instruction, and not the language from Wiedmann, 444 Mass. at 

711, should be given, as it properly defines the meaning of 

"officers or agents having the management" of the company and 

avoids confusing a manager's responsibilities with management 

oversight by a board or financial control over investments by an 
36

outside investor.

In cases involving Wage Act claims against board members, 

the jury should also be instructed that "[n]either the board of 

directors nor an individual director . . . is, as such, an agent 

of the corporation." Restatement (Second) of Agency § 14C. An 

individual director may become an agent if he or she is also 

appointed as an agent, but no agency relationship arises from 

his or her position as a director, in and of itself. Id. at 

§ 14C comment b. For example, an individual director could be 

appointed as an agent if the board exercised "its express or 

implied power to confer authority upon [the individual] to act 

for the corporation," or if the individual was appointed as an 

executive officer. Id. Additionally, the jury should be 

instructed that the collective powers of the board to control 

management or set policy are separate and distinct from the 

powers of individual board members. See Estate of Moulton, 467 

Mass. at 487.

In cases involving Wage Act claims against investors, the 

jury should be instructed that an outside investor, acting in 

his or her capacity as an investor, is not an agent of the 

company. See 1 W.M. Fletcher, Fletcher Cyclopedia of the Law of 

Corporations § 30, at 100. An outside investor may become an

agent, if the board, exercising its express or implied powers,

confers authority upon the investor to act for the corporation, 
37

or if the investor is appointed as an executive officer. Cf.

Restatement (Second) of Agency at § 14C comment b. The jury 

should be further instructed that the exercise of ordinary 

financial control over an investment does not give an investor

the management of the company in which he or she invests. An 

investor may, for example, impose conditions on the use of the 

money invested, such as targeting it for particular 

expenditures, without having the management of the company. See 

generally Scott, 450 Mass. at 766.

3. Conclusion. For the foregoing reasons, we reverse the 

denial of the defendants' motion for judgment notwithstanding 

the verdict, and remand to the Superior Court for entry of 

judgment for the defendants.

So ordered.