Title: Segal v. Genitrix, LLC
Citation: N/A
Docket Number: SJC-12291
State: Massachusetts
Issuer: Massachusetts Supreme Court
Date: December 28, 2017

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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 over-
all 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 over-
all 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 cost-
cutting 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 seventy-
five 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.