Court Opinion

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Date Created: 2011-02-07 03:13:01+00
Date Added: 2024-06-11T15:10:56.272680
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UNITED STATES COURT OF APPEALS
                            UNITED STATES COURT OF APPEALS
                    FOR THE FIRST CIRCUIT
                                FOR THE FIRST CIRCUIT
                                         

Nos. 95-1690
 95-1913

                      SCOTT P. HAMMOND,

            Plaintiff, Appellee, Cross-Appellant,

                              v.

                 T.J. LITLE & COMPANY, INC.,

            Defendant, Appellant, Cross-Appellee.

                                         

         APPEAL FROM THE UNITED STATES DISTRICT COURT

              FOR THE DISTRICT OF MASSACHUSETTS

         [Hon. Zachary Karol, U.S. Magistrate Judge]
                                                               

                                         

                            Before

                      Cyr, Circuit Judge,
                                                    
                Bownes, Senior Circuit Judge,
                                                        
                  and Stahl, Circuit Judge.
                                                      

                                         

Anthony M.  Feeherry,  with  whom  Paula M.  Bagger  and  Goodwin,
                                                                              
Procter & Hoar were on brief for appellant.
                      
Michael J. Liston with  whom Glass, Seigle  & Liston was on  brief
                                                                
for appellee.

                                         

                        April 30, 1996
                                         

          BOWNES, Senior Circuit  Judge.  This appeal  arises
                      BOWNES, Senior Circuit  Judge.
                                                   

out of a dispute over the compensation terms of an employment

contract.      Appellee/Cross-Appellant   Scott  P.   Hammond

("Hammond")   filed   suit  after   he   was  discharged   by

Appellant/Cross-Appellee T.J.  Litle  & Company,  Inc.  ("the

Company"),  alleging that  the Company  had breached  certain

terms  of his employment contract  entitling him to shares of

stock  in the Company, and the implied covenant of good faith

and  fair dealing.  After a bifurcated trial in which certain

issues  were decided by the jury and others by the magistrate

judge,   the  Company  appeals   and  Hammond  cross-appeals.

Finding no error, we affirm.

                        I. BACKGROUND

          In the  spring of  1986, Thomas J.  Litle ("Litle")

was starting up the Company and Hammond was about to graduate

from  the Harvard  Business School.   On  May 4,  1986, Litle

orally  offered Hammond  the  position of  Vice President  of

Finance  and  Administration,  with  a  compensation  package

including a current annual cash salary  of $45,000, the right

to purchase a  maximum of 100 shares of  non-voting founders'

stock in the  Company at  a subscription price  of $1.00  per

share, and deferred  compensation of $10,000  per year to  be

converted to additional shares  of stock at Hammond's option.

Hammond  accepted the  package  with the  understanding  that

there would  be further negotiation regarding  both a vesting

                             -2-
                                          2

schedule for the  100 shares  and the  repurchase rights  the

Company  would  have  with  respect  to  vested  shares  upon

termination of his employment.  

          Hammond began employment  with the Company  on June

9, 1986.  In July of 1986, the Company's outside counsel sent

Hammond, at his request,  a draft Stock Restriction Agreement

and  a draft  Repurchase Agreement.   Hammond  then  met with

Litle  to discuss the  draft agreements and  requested a more

favorable  vesting  schedule for  his  100  shares than  that

reflected in  the draft Repurchase Agreement.   Litle agreed,

approving the change  with a handwritten note.   According to

the  vesting schedule  thus agreed  upon, 16%  of the  shares

would vest on March 31,  1987, 2% would vest each  month from

April 1, 1987 through  February 28, 1990, and 14%  would vest

on March  31, 1990.  Litle and  Hammond agreed that the draft

agreements were acceptable  in all other respects.  In August

of 1986, outside counsel  prepared and sent Hammond execution

copies   of  the   agreements.    The   Repurchase  Agreement

incorporated  the  new  vesting   schedule,  and  the   Stock

Restriction  Agreement  provided  that  a  stockholder  whose

employment was terminated "for  cause" was required to tender

his  vested  shares to  the  Company for  repurchase  at fair

market value.  

          In September of 1986, Hammond and Litle met for the

purpose of executing the agreements, but Hammond unexpectedly

                             -3-
                                          3

requested  a  number of  substantive changes.   Based  on his

belief that  the  parties had  completed negotiations,  Litle

rejected Hammond's  proposed changes and  the agreements were

not signed.

          In a letter to Hammond  dated March 31, 1987, Litle

took the  position that agreement  had not  yet been  reached

regarding  Hammond's stock  participation.    Hammond  became

upset  and refused  to report  for work  until the  issue was

settled.  At a meeting on April 14,  1987, Litle told Hammond

that  he could acquire a  maximum of 66  2/3 shares of stock,

that  25% of  the shares  would vest  on each  anniversary of

Hammond's employment  date of June  9, 1986, and  that before

half of  the shares (33 1/3) would begin to vest according to

that  schedule, Hammond  would have  to meet  certain as  yet

undefined performance standards.   Hammond  became angry  and

refused to accept  the changes.  In a letter to Hammond dated

April 17, 1987, Litle  memorialized the same terms, chastised

Hammond for his recent behavior, warned him that a recurrence

would be deemed a  tender of resignation that  would probably

be accepted, but encouraged him to attempt to redeem himself.

The  new terms also were  confirmed in a  letter from General

Manager Bruce  Alemian ("Alemian") to Hammond  dated July 13,

1987.  The evidence was  in dispute regarding whether Hammond

ever accepted the new  terms.  The Company contended  that he

did  by reporting to work  and tendering a  check for $66.67.

                             -4-
                                          4

Hammond contended that he continued to  insist on 100 shares,

and  tendered $100 but paid $66.67 because that was all Litle

would accept.  

          At  a meeting  in December  of 1987,  Hammond again

complained that  he believed he  was entitled to  acquire 100

shares.  In an effort to settle matters, Alemian gave Hammond

a  positive performance  review and  offered him  the  33 1/3

performance shares if he would relinquish his claim to a full

100  shares.  Hammond refused and Litle withdrew the offer of

the performance shares.   On  January 27,  1988, Hammond  was

terminated. 

                    II. PRIOR PROCEEDINGS

          In a Second Amended Complaint, Hammond alleged that

the Company had breached that part of his employment contract

entitling  him to acquire shares  of stock in  the Company by

breaching  the  implied  covenant  of  good  faith  and  fair

dealing,  terminating his  employment  because he  refused to

accept  Litle's unilateral alteration of his contract rights,

refusing  to issue  him  the 100  shares  due him  under  the

agreement, and  refusing to  issue him additional  shares for

deferred compensation.  

          By  agreement  of   the  parties,  the  trial   was

bifurcated  into a jury phase and a jury-waived phase.  Phase

I was tried to a jury in June, 1994.  The issues for the jury

were:  (1) whether Hammond and the Company had entered into a

                             -5-
                                          5

contract entitling Hammond to  acquire company stock; and (2)

if so, how many  shares Hammond was entitled to  receive upon

termination of  his employment.   Through answers  to special

questions  submitted by  the court, the  jury found  that the

parties  had entered  into a  contract and  that Hammond  was

entitled to 48 shares.  

          Phase II was  tried to the court in December, 1994,

in  order  to  resolve  two remaining  issues:    (1) whether

Hammond had an obligation to offer the 48  shares back to the

Company for repurchase;  and (2) whether  the Company had  an

obligation to issue 5 additional shares to Hammond in lieu of

deferred compensation.  On June 7, 1995, the magistrate judge

issued a memorandum of  decision, answering both questions in

the negative.

                       III. DISCUSSION

          The Company appeals  the jury's determination  that

Hammond was entitled to 48 shares, and the magistrate judge's

determination  that Hammond  had no  obligation to  offer the

shares   back   for  repurchase.      Hammond  cross-appeals,

challenging  the  magistrate  judge's  conclusion   that  the

Company  need  not  issue  him shares  in  lieu  of  deferred

compensation.  

          A.   The Jury's Determination That 
                                                         
               Hammond Was Entitled To 48 Shares
                                                            

          The jury, answering special questions  submitted by

the court,  found that  Hammond and  the Company  had entered

                             -6-
                                          6

into an agreement  in May  of 1986 entitling  Hammond to  100

shares  of the  Company's stock  upon  his acceptance  of the

Company's offer  of employment;  that this contract  was last

amended  in the summer of 1986; and that Hammond was entitled

to 48  shares of  stock as  of the  date  his employment  was

terminated.1

          The  Company  concedes that  there  was evidentiary

support for the jury's determination that a  contract for 100

shares was formed in May of 1986 and was last modified by the

vesting  schedule  agreed upon  in  the summer  of  1986, but

contends that  there was  no evidence to  support the  jury's

finding that Hammond was entitled to 48 shares.  

          The court had instructed the jury that if it  found

(as it  did) that a contract for 100 shares was formed in May

of 1986 and  that it was last amended in  the summer of 1986,

then it  should  determine  the number  of  shares  to  which

Hammond was entitled according  to one of three alternatives:

First, the jury could award Hammond at least 36 shares, which
                 

represented the number of shares that had vested between June

of  1986  and January  31,  1988,  according  to the  vesting

schedule reflected  in the  execution copy of  the Repurchase

                    
                                

1.  Hammond had  argued that the contract  was never modified
after May  of 1986 so that he was entitled to all 100 shares.
The  Company had argued that no contract was ever formed, but
that if there was a contract, it was last amended in April of
1987  as reflected in Alemian's letter of July 13, 1987.  The
jury rejected these alternatives.

                             -7-
                                          7

Agreement  prepared  in August  of 1986.2   Second,  the jury
                                                              

could  award Hammond 100 shares if it found that the contract

contained  an implied  term that  Hammond would  have a  fair

opportunity to earn all  100 shares and that the  Company had

breached  that term  by firing  him without  cause.3   If the

jury  found that  there was  such an  implied term,  but that

there was  cause for  terminating Hammond,  then he would  be

entitled to only  36 shares.4   Third, the  jury could  award
                                                 

Hammond some number  of shares  greater than 36  if it  found

that  he was an at-will employee who could be terminated with

or without  cause; that  the Company terminated  him "without

cause or in bad faith for the purpose of  preventing him from

                    
                                

2.  According to  that vesting schedule, 16  shares vested as
of March 31, 1987, and 2 additional shares vested for each of
the next  10 months through Hammond's  termination on January
31, 1988, for a total of 36 shares.

3.  This instruction  was based on Anthony's  Pier Four, Inc.
                                                                         
v. HBC Assocs.,  583 N.E.2d  806 (Mass. 1991),  in which  the
                          
Supreme Judicial  Court stated that "the  implied covenant of
good  faith and  fair  dealing provides  'that neither  party
shall  do anything that will have the effect of destroying or
injuring the right of  the other party to receive  the fruits
of the contract.'"  Id. at 820 (citations omitted).
                                  

4.  The court defined "cause," consistent with the definition
set  forth in Goldhor v.  Hampshire College, 521 N.E.2d 1381,
                                                       
1385  (Mass.  App. Ct.  1988), as  meaning  that "there  is a
reasonable basis for the employer to be dissatisfied with the
employee's   performance,  entertained  in  good  faith,  for
reasons  such as  lack of  capacity or diligence,  failure to
conform to usual  standards of conduct, or  other culpable or
inappropriate behavior, or  grounds for discharge  reasonably
related,  in the employer's honest judgment,  to the needs of
the  business .  .  . [w]hether  or  not you  agree  with the
employer's judgment."

                             -8-
                                          8

getting  his shares;"  and  that "some  additional amount  of

shares was intended to compensate Mr. Hammond not for further

services  to be  performed after  January 31,  1988, but  for

having accepted employment  with the Company  back in May  or

June  of  1986  [and]  foregoing  other  possible  employment

opportunities."5

          The Company contends that  the jury must have based

its verdict  on the third alternative  under the instructions

since  it awarded Hammond neither 36 nor 100 shares, but that

there  was no evidence that any number of shares was intended

to compensate  Hammond  for  accepting  employment  with  the

Company and  foregoing other opportunities.   The Company did

not  object to the instruction that invited the verdict of 48

shares, and explicitly does not quarrel with that instruction

on appeal.  It concedes that  it forfeited its right to a new

trial by not moving for one in the district court pursuant to

Fed.  R.  Civ. P.  59(a),  but  asks that  we  remand  to the

district  court with  instructions to  enter judgment  for 36

                    
                                

5.  This  instruction  was  based on  Massachusetts  case law
applying  the implied covenant of good faith and fair dealing
to  allow recovery  of compensation  already earned  where an
employer terminates an at-will employee  in bad faith for the
purpose  of depriving  him  of  compensation already  earned,
e.g.,  Cataldo v.  Zuckerman,  482 N.E.2d  849 (Mass.  1985);
                                        
Fortune v.  Nat'l Cash Register  Co., 364 N.E.2d  1251 (Mass.
                                                
1977), or  without cause and  not in  bad faith but  with the
effect of  depriving  the employee  of  compensation  already
earned,  Gram v. Liberty Mut. Ins. Co., 461 N.E.2d 796 (Mass.
                                                  
1984);  Gram v. Liberty Mut.  Ins. Co., 429  N.E.2d 21 (Mass.
                                                  
1981). 

                             -9-
                                          9

shares.    As  Hammond  correctly points  out,  however,  the

Company also forfeited its right to a judgment for other than

48  shares by  failing to  raise the  issue in  a motion  for

judgment as a matter of law.  Fed. R. Civ. P. 50(a), (b).  

          It  is  beyond  peradventure   that  in  order   to

challenge the sufficiency of the evidence on appeal,  a party

must first have  presented the claim  to the district  court,

either  by moving for judgment as a  matter of law before the

case  is submitted to the jury and renewing that motion after

the  verdict, Fed. R. Civ. P. 50(a),  (b), or by moving for a

new trial  pursuant to Fed.  R. Civ.  P. 59.   See Scarfo  v.
                                                                         

Cabletron  Sys., Inc.,  54  F.3d 931,  948  (1st Cir.  1995);
                                 

Velazquez v. Figuero-Gomez, 996  F.2d 425, 426-27 (1st Cir.),
                                      

cert. denied, 114  S. Ct.  553 (1993); La  Amiga del  Pueblo,
                                                                         

Inc. v. Robles, 937 F.2d 689, 691 (1st Cir. 1991); Pinkham v.
                                                                         

Burgess,  933  F.2d 1066,  1070  (1st Cir.  1991);  Jusino v.
                                                                         

Zayas, 875  F.2d  986, 991-92  (1st  Cir. 1989);  Wells  Real
                                                                         

Estate, Inc. v. Greater Lowell Bd. of Realtors, 850 F.2d 803,
                                                          

810  (1st   Cir.),  cert.   denied,  488  U.S.   955  (1988).
                                              

Otherwise, we  have  no decision  of  the district  court  to

review,  and will not review  the weight of  the evidence for

the first time on appeal.  La Amiga, 937 F.2d  at 691; Wells,
                                                                        

850  F.2d at  810.   The  Supreme  Court has  stated that  an

appellate  court is  "without  power to  direct the  District

Court to  enter judgment  contrary to"  the verdict absent  a

                             -10-
                                          10

Rule 50 motion in the district court.  Cone  v. West Virginia
                                                                         

Pulp & Paper Co., 330 U.S. 212, 218 (1947). 
                            

          Here, the Company did  not bring the asserted error

to  the  district  court's  attention  in  any  way.    After

Hammond's  case but before the close of all the evidence, the

magistrate  judge  informed  counsel   that  he  intended  to

instruct the jury that  it could award Hammond any  shares it

found were  intended as  consideration for his  accepting the

Company's  offer if it also  found that the  Company acted in

bad  faith  or without  cause  in discharging  Hammond.   The

Company  argued at that point  that there was  no evidence to

support such an instruction but never renewed the argument by

objecting to the instruction after it was given, or by moving

for  judgment as a matter of  law or for a  new trial on that

basis.6  At the close of all the evidence, the  Company moved

for judgment as a matter of  law, but argued only that  there

was  insufficient evidence  that a  contract to  purchase 100

shares of stock was  ever formed, or  that if a contract  was

formed,  it was  the one  for 66  2/3 shares  memorialized in

Alemian's letter to Hammond dated July 13, 1987.  

                    
                                

6.  We do  not mean to imply  that a failure to  object to an
instruction bars our  review of a  claim of insufficiency  of
the evidence if the appellant has moved in the district court
                           
for judgment  as a matter  of law or  for a  new trial.   See
                                                                         
Boyle  v. United  Technologies  Corp., 487  U.S. 500,  513-14
                                                 
(1988); St.  Louis v. Praprotnik,  485 U.S.  112, 120  (1988)
                                            
(plurality  opinion of  O'Connor,  J., joined  by  Rehnquist,
White and Scalia, JJ.).

                             -11-
                                          11

          We do not think that this  motion reasonably can be

read  as encompassing  the argument  that no  reasonable jury

could  return  a verdict  including  any  shares intended  as

consideration  for Hammond's  accepting the  Company's offer.

See Wells, 850 F.2d at 810  (motion for judgment as a  matter
                     

of law must "be made with sufficient specificity to allow the

district judge  to understand  precisely why the  evidence is

insufficient" and "[a]ppellate review may be obtained only on

the specific ground stated in the motion").  Even if it could

be so read, it would not help the Company because  it did not

renew the  motion after  the verdict.   See  Fed. R.  Civ. P.
                                                       

50(b); Velazquez, 996 F.2d at 426-27.   
                            

          The Company complains that  it could not have moved

for judgment as a matter of  law on the grounds asserted here

because the standard requires that the evidence be "such that

a  reasonable person  could be  led to  only  one conclusion,

namely that the  moving party  is entitled to  judgment as  a

matter of law."   Johnson v. Nat'l Sea  Prods., Ltd., 35 F.3d
                                                                

626,  630  (1st Cir.  1994).   The  Company asserts  that its

argument that the jury could not as a  matter of law conclude

that  Hammond was entitled to  48 shares was  not amenable to

that  standard because  the jury  could have  reached several

conclusions --  that Hammond  was entitled  to 8.34,  16, 36,

66.67 or 100 shares.  

                             -12-
                                          12

          The Company misreads  our statement in the  Johnson
                                                                         

case.  A party may move for judgment as a matter of law on an

issue by issue basis; it does  not have to be all or nothing.

See Fed. R.  Civ. P. 50(a)(1).   The Company knew  before the
               

case went  to the  jury, when it  first should have  made the

argument  it   now  presses,  that  the   magistrate  judge's

instruction  would allow the jury to find that some number of

shares was intended as consideration for Hammond's acceptance

of the Company's offer.   The Company could have  argued then

and  after the verdict, as it has here, that the evidence was

legally  insufficient to support such a finding.7  By failing

to do so, it forfeited the claim.

          We therefore review only  for plain error resulting

in  a manifest miscarriage of justice, see Simon v. Navon, 71
                                                                     

F.3d 9, 13  (1st Cir. 1995),  and find that  there was  none.

"It is fundamental  to our system of jurisprudence that, when

the evidence as a  whole can plausibly support more  than one

view  of  a  situation,  '[j]urors, using  common  sense  and

collective experience assess credibility and probability, and

proceed to  make evaluative  judgments, case by  case.'"   La
                                                                         

Amiga, 937 F.2d at 691 (citations omitted).  Though we see no
                 

evidence  of  an  explicit  agreement  that  12  shares  were

                    
                                

7.  The  Company also could  have moved for a  new trial or a
remittitur under  Fed. R. Civ. P.  59 on that basis.   See 11
                                                                      
Charles A. Wright  et. al, Federal Practice and  Procedure   
                                                                      
2805, 2815 (1995).

                             -13-
                                          13

intended  as  consideration   for  Hammond's  accepting   the

Company's offer of employment, there was evidence that before

accepting the  offer, Hammond  discussed with Litle  how much

compensation he would  need to forego  his other offers,  and

that his  almost exclusive concern regarding compensation was

shares of  stock, not cash  salary.  Alternatively,  the jury

may simply have  found that  a contract was  formed and  last

amended in the summer  of 1986, but that neither  the minimum

of 36 shares nor  the maximum of 100 shares  was appropriate.

We doubt that  such an  outcome constitutes error  at all  in

this particular case,  and it  clearly does not  amount to  a

manifest  miscarriage  of justice.    We  therefore will  not

disturb the verdict, particularly  because the Company failed

to  preserve the  argument  for appeal.    See Braunstein  v.
                                                                         

Massachusetts Bank & Trust Co., 443 F.2d 1281, 1285 (1st Cir.
                                          

1971).  

          B.   The Magistrate Judge's Determination
                                                               
               That Hammond Had No Obligation To Offer
                                                                  
               The Shares Back For Repurchase
                                                         

          After Phase  II of the trial,  the magistrate judge

found,  based on the evidence and the jury's finding that the

parties had  reached agreement  regarding vesting  during the

summer of 1986, that the parties had reached agreement at the

same time on all essential terms regarding stock restrictions

and repurchase rights, that those terms were reflected in the

execution  copies  of the  Repurchase  and Stock  Restriction

                             -14-
                                          14

Agreements  prepared  by  the  Company's outside  counsel  in

August  of 1986, and that the parties deemed execution of the

final  versions  of  the  written agreements  to  be  a  mere

formality and  not a condition to the  effectiveness of their

agreements.    The  Stock Restriction  Agreement  provided in

relevant part that:

          [i]n the event the Corporation terminates
          the  employment  of  the Stockholder  for
          cause, the Stockholder shall  within five
          (5)  days after such termination offer in
          writing  all of the  Shares then owned by
          him . . . to the Corporation for purchase
          at [fair market value].

The  magistrate judge concluded  that Hammond had  no duty to

offer his shares  back to the Company  for repurchase because

although the  Company had offered evidence  showing "at most,

that [it] had grounds to terminate Hammond for cause," it had

"not . . . in fact opted to do so."8  

          Alemian,  who  made   the  decision  to   terminate

Hammond,  testified that he  decided to fire  Hammond in part

because he had not completed the monthly financial statements

                    
                                

8.  The magistrate judge correctly  ruled that the Statute of
Frauds, U.C.C.     8-319,  did  not bar  enforcement  of  the
repurchase  provision  of  the  Stock  Restriction  Agreement
against Hammond.   Hammond  stated in  his pleadings that  an
oral  contract was formed in May  of 1986 for the purchase of
100 shares  of  stock and  testified that  he understood  the
contract to  be  subject  to  further  negotiation  regarding
vesting   and  stock   restriction  issues;   the  repurchase
provision  therefore  was  an  integral part  of  a  contract
Hammond admits was made and  that he sought to enforce.   See
                                                                         
Mass.  Gen. L.  ch. 106,    8-319(d).   The Company  does not
contend that the Statute  of Frauds would prevent enforcement
of any part of the contract against it.

                             -15-
                                          15

for September through December of 1987, but primarily because

of  his inability to overcome his negative feelings about the

stock  situation.    Alemian  testified  that  Hammond's  own

motivation  and ability  to motivate  others had  suffered in

April of  1987 when  Litle first  proposed the  reduced stock

package,  but that  he  was able  to function  properly after

Litle  warned him.   In  December of  1987, Alemian  began to

observe  the same frustration  in Hammond.   He explained the

basis of his decision to discharge 

                             -16-
                                          16

Hammond on January 27, 1988, as follows:

          I felt that he was never going to be able
          to   get   beyond  his   frustration  and
          disagreement with the contractual change,
          and that that ultimately was impacting on
          his  ability to perform in the company at
          the level that  one would  expect from  a
          CFO  and  one  of   three  or  four   top
          management  people  in the  organization.
          Much of  that performance would  not only
          relate  to  specific  duties,   but  also
          projections   to   the   rest    of   the
          organization and setting . . . a positive
          tone in the company.   I just didn't feel
          that he  could get beyond that, and that,
          in fact, the  company's well-being  would
          be jeopardized at that point if I allowed
          the situation to go forward.

Alemian further  testified that  other  than the  performance

problems stemming from the dispute  over the shares of stock,

Hammond's performance had been fully adequate, and that if he

did not believe that Hammond was  of value to the Company, he

would not  have  attempted  to  settle the  matter  on  prior

occasions.9

          Alemian  and  Hammond  both  testified  about  what

Hammond  was told when he was terminated on January 27, 1988.

Alemian  testified  that  after  he  told  Hammond  that  his

employment was terminated  as of that date, Hammond  asked if

it was because  of his performance, and  Alemian replied that

                    
                                

9.  The Company  also presented the testimony of three of its
employees describing deficiencies in Hammond's management and
accounting methods,  but  these witnesses  were  lower  level
employees who took no  part in the decision to  fire Hammond,
and  most of  what  they described  was  not observed  by  or
communicated to Hammond's superiors.  

                             -17-
                                          17

"it was not."   Rather,  he "told him  that the  relationship

issues between he [sic]  and the chairman of the  company Tim

Litle  had  reached a  point in  my  mind where  the conflict

between the two was  in the way of the  continued development

of the company."  Alemian testified  that he "did not say  to

him that he was  being terminated for cause," and  that Litle

had  not instructed  him to  tell Hammond  that he  was being

terminated for cause.  

          Hammond  testified that after  Alemian said that he

was  terminated, he said, "I  presume this has  nothing to do

with my  performance, it's  because I'm not  agreeing to  the

stock  cut," and  Alemian responded,  "Yeah,  that's correct,

it's not your performance,  it's the fact that you  have this

dispute  with  the  chairman  of the  company  and  it  can't

continue  and you've  got to  go.   We can't  get rid  of the

chairman of the company."  

          Based   on   the   foregoing   evidence    of   the

circumstances   surrounding    Hammond's   termination,   the

magistrate judge stated:

          [W]hether or not the Company  had grounds
          to  terminate  Hammond  for   cause,  and
          whether or not  its decision to terminate
          Hammond, although not communicated to him
          at  the  time  of  termination,  was  the
          result  of  its  disappointment with  his
          performance,  the   Company  deliberately
          chose  not to  attempt  to  exercise  its
          right  to  terminate  Hammond for  cause.
          Instead,  no  doubt  with  the   hope  of
          avoiding  an immediate  confrontation, it

                             -18-
                                          18

          elected to exercise its alternative right
          to terminate him without cause.  

          In addition  to the fact that  Alemian specifically

told  Hammond that he was not being terminated because of his

performance,  the magistrate  judge  relied on  a letter  the

Company sent to  Hammond on  February 19, 1988.   The  letter

confirmed events regarding his  termination but gave "no hint

that Hammond was terminated for cause."  Although Hammond had

not tendered his  vested shares to  the Company, the  Company

did not demand that he do so in the letter or otherwise.  The

letter stated that the Company was exercising its  "right" to

purchase Hammond's  unvested shares and enclosed  a check for

those shares, but said only that it was "prepared" to discuss

repurchasing his vested shares and invited Hammond to contact

the Company "if" he  wished to discuss such repurchase.   The

magistrate   judge  found   that  the   "precatory  language"

regarding  the vested shares in  a letter sent  19 days after

the  effective date  of Hammond's  termination could  "not be

squared with the  Company's present  contention that  Hammond

had a  duty to offer  his shares  to the Company  within five
                                                                         

days  of his  termination."   Finally,  the magistrate  judge

relied on the fact that  the Company's by-laws permitted  the

Board of  Directors to  remove an  officer  "with or  without

cause," but if  removed for  "cause," the officer  was to  be

given  notice and  opportunity to  be heard  by the  Board of

                             -19-
                                          19

Directors, and Hammond was not given notice or an opportunity

to be heard.  

          The Company  appeals the magistrate  judge's ruling

that  Hammond  was not  terminated  for  cause, claiming  two

alternative errors  of law.   The  Company argues  that under

Massachusetts law it is the objective existence of cause, and

not the reason the employer communicates to the employee upon

termination, that controls  the determination of whether  the

employee  was  discharged  for  cause.    Alternatively,  the

Company contends that if what the employer tells the employee

does  control, then  the magistrate  judge applied  an overly

narrow  definition of  "cause" by  relying only  on Alemian's

denial  that  he  was   terminating  Hammond  for  inadequate

performance, and ignoring that Alemian also told Hammond that

he was being terminated  because of his "relationship issues"

with  Litle.   Hammond responds  that the  magistrate judge's

determination that the Company chose not to terminate him for

cause  was  a  finding of  fact  with  ample  record support.

Though  the magistrate  judge's conclusion  was a  finding of

fact, the issues  the Company raises question whether,  in so

finding, the magistrate judge considered the wrong factors or

misdefined "cause"  as a  matter  of Massachusetts  law.   We

address these claimed errors of law de novo.  Juno SRL v. S/V
                                                                         

Endeavour, 58 F.3d 1, 4 (1st Cir. 1995).
                     

                             -20-
                                          20

          The   Company  principally   relies  on   Klein  v.
                                                                         

President  and Fellows  of  Harvard College,  517 N.E.2d  167
                                                       

(Mass. 1987),  for its  contention that  it is  the objective

existence  of  cause, and  not  what the  employer  tells the

employee upon termination, that controls the determination of

whether the employee was discharged for cause.  In Klein, the
                                                                    

trial court found  that the dean had terminated the plaintiff

as  if she were an  at-will employee who  could be discharged

for any reason within  a three-month probationary period, but

that she had an employment agreement for a definite period of

time and therefore could  be terminated only for cause.   Id.
                                                                        

at  169.  According to  the trial court, her termination as a

probationary  employee   therefore  was   a  breach   of  her

employment contract.   The  Supreme Judicial  Court reversed,

ruling that  the plaintiff's dismissal  was for  cause.   The

plaintiff,  who was an  administrative director  at Harvard's

school  of  public  health,  had  strained  and   acrimonious

relationships with faculty members  and had been evaluated by

them  as being unhelpful, difficult  to work with  and a poor

administrator.    Id. at  168.    The  dean terminated  Klein
                                

because   of  her   poor  performance   and  a   particularly

disparaging  memorandum  she had  written  about  one faculty

member.  Id.  Although the dean did not  recite those reasons
                       

in  his  formal  letter  of termination  (stating  only  that

"regretfully, we  have to  terminate your services"),  he did

                             -21-
                                          21

discuss  them with  Klein in  a meeting  four days  before he

issued the letter.  The court stated:

          The   important   point   is   that   the
                                             
          plaintiff, notwithstanding  the letter of
          dismissal,  knew  why her  employment was
                                                               
          terminated.  .   .  .  Any   notions  the
                                
          plaintiff might have entertained that she
          was   doing   her  work   diligently  and
          competently  and  that  her  conduct  was
          appropriate were  reasonably dispelled on
          March 24th,  when the  dean met  with her
                                                               
          and  discussed  her  job performance  and
                                                               
          "ill-considered"   memorandum    to   the
                                                               
          executive committee.
                                         

Id. at 170 (emphasis added).  
              

          Thus, Klein  stands for the proposition  that, when
                                 

an employee  may only  be terminated  for cause, whether  the

employer so informs the  employee plays a decisive role  in a

court's  later  determination  of  whether  the  employee was

discharged for  cause (unless,  of course, the  stated reason

was a pretext).   We  think that the  same principle  applies

where, as here, an employee  may be terminated without cause,

but  other rights  and duties  under the  employment contract

depend  on whether the employee is terminated for cause.  The

interpretation of  Massachusetts  law sought  by the  Company

would allow an  employer to enter into an employment contract

spelling out  rights  and duties  that hinge  on whether  the

employee is terminated for cause, then tell the employee that

he  is not being terminated for cause, then seek the benefits

of a  termination  for cause  by  articulating cause  as  its

                             -22-
                                          22

reason in any ensuing  litigation.  As Klein  indicates, that
                                                        

is not the law.  

          The Company  urges that Cort  v. Bristol-Myers Co.,
                                                                        

431 N.E.2d  908 (Mass.  1982), also supports  the proposition

that its stated reason for terminating Hammond is irrelevant.

In  Cort, the  plaintiffs, who  were at-will  employees, were
                    

fired  after  they  refused  to  answer  part  of  a  company

questionnaire which they regarded as  invading their privacy.

Although the plaintiffs' performance records were  good, they

were  notified  that  they  were being  discharged  for  poor

performance.  Id. at 909.  The plaintiffs then sued, claiming
                            

that they were  terminated in bad faith  because the employer

gave a  pretextual reason for discharging them,  and that the

real reason -- their refusal to complete the questionnaire --

was  contrary to  public policy.   Id. at  911.   The Supreme
                                                 

Judicial Court  held  that "an  at-will  employee  discharged

without  cause  does  not  have a  claim  for  damages simply

because  the  employer  gave  him  a  false  reason  for  his

discharge,"  id., and  that firing  the plaintiffs  for their
                           

incomplete answers to the questionnaire violated no principle

of public policy.  Id. at 912.  The court explained, however,
                                 

that the fact  that an employer gave a false  reason would be

relevant  if by  giving  it the  employer  was attempting  to

conceal its  real reason for  discharge and  the real  reason

violated public policy.  Id. at  911 n.6.  Thus, according to
                                       

                             -23-
                                          23

Cort,  an employer's  stated  reason is  irrelevant where  no
                

consequences flow from  either the real reason or  the stated

false reason.   But  where, as  here, consequences  flow from

whether the termination was  for cause, the employer's stated

reason is determinative, assuming it is not pretextual.

          The  Company contends  that King  v. Driscoll,  638
                                                                   

N.E.2d  488 (Mass.  1994), also  supports its  position.   In

King, the  employer's real and stated  reason for terminating
                

King  was that  he participated  in a  shareholder derivative

suit  against the company.  Id. at 491.  The Supreme Judicial
                                          

Court  reversed the  trial  court's ruling  that this  reason

violated public policy.  Id. at 492-93.  It  upheld the trial
                                       

court's conclusion that the employer had not violated its by-

laws by not providing  King notice and a hearing  as required

in  a  termination for  cause,  because  King was  terminated

without  cause.   Id.  at 495.    The court  rejected  King's
                                

contention that the legitimate business reasons the  employer

proffered at trial showed  that he was terminated for  cause,

finding  that the  employer  likely would  not have  advanced

those  reasons but for King's claim that he was terminated in

violation of public policy.  Id. 
                                           

          King   hardly   supports  the   Company   where  it
                          

articulated Hammond's poor performance  as the reason for his

discharge, not when it let him go, but after he filed suit 10

months later.  True,  Litle discussed performance issues with

                             -24-
                                          24

Hammond in September of  1986, April of 1987, and  October of

1987, but those problems  centered primarily around the stock

dispute and there  was ample evidence that  Alemian and Litle

nonetheless  valued  Hammond  as  an employee  and  that  his

performance improved after  he was warned.   When Hammond was

terminated in  January of 1988, Alemian  affirmatively stated

that his performance was  not the reason.  As  the magistrate

judge  stated, "there was no evidence that, when the boom was

actually lowered,  the Company advised Hammond that he was in

fact being terminated for cause."  Assuming the Company could

have terminated Hammond  for cause,  it chose not  to act  on

that  basis,  and   cannot  erase  the  choice   it  made  by

articulating different reasons in the course of litigation. 

          That   brings  us  to   the  Company's  alternative

argument  --  that  if  the  employer's  stated  reason  does

control, the magistrate judge defined "cause" too narrowly by

relying  only on  Alemian's denial  that performance  was the

basis  for his  termination, and  ignoring that he  also told

Hammond that  the reason  was his "relationship  issues" with

Litle, which  the Company  contends also  constitutes "cause"

under Massachusetts law.  "Cause" for termination includes:

          (1)  a  reasonable  basis   for  employer
          dissatisfaction with a[n] . . . employee,
          entertained  in  good faith,  for reasons
          such  as lack  of capacity  or diligence,
          failure to conform  to usual standards of
          conduct,    or    other    culpable    or
          inappropriate  behavior,  or (2)  grounds
          for discharge reasonably related,  in the

                             -25-
                                          25

          employer's honest judgment, to  the needs
          of  his business.    Discharge for  "just
          cause" is to be contrasted with discharge
          on  unreasonable grounds  or arbitrarily,
          capriciously, or in bad faith.

Goldhor v.  Hampshire College,  521 N.E.2d 1381,  1385 (Mass.
                                         

App. Ct. 1988) (citations omitted).  

          We think that the  magistrate judge well understood

that this definition embraces reasons other than performance,

and so  instructed the jury.  See note 4, supra.  Rather than
                                                           

misperceiving the  meaning  of cause,  the  magistrate  judge

obviously found that  the only basis  for cause supported  by

the  evidence was  inadequate performance, stemming  from the

stock dispute or otherwise, but that the Company specifically

eschewed  that  as its  reason.  According  to Alemian's  and

Hammond's testimony, Hammond was terminated, at best, because

he had "relationship issues" with Litle, or at worst, because

he refused to accept  the reduced stock package.   The latter

reason could well be viewed as a termination in bad faith for

the  purpose of depriving Hammond  of shares to  which he was

entitled, which,  of course, does not  constitute just cause.

And  according  to  our   reading  of  Massachusetts  law,  a

"relationship  issue"   is  not,  without  more,   cause  for

termination.  

          The Company  cites Klein and Goldhor  in support of
                                                          

its contention  that when an  employee holds a  managerial or

supervisory  position, a "relationship issue" or "personality

                             -26-
                                          26

conflict" may properly  be considered cause for  termination.

The Company mischaracterizes Klein  as so holding because the
                                              

employee in  that case  was terminated for  poor performance.

In Goldhor, the  director of a  research center at  Hampshire
                      

College had an  intense difference of opinion  with a tenured

professor about how funds  were to be raised for  the center.

Goldhor, 521  N.E.2d at  1383.  This  led to  a public  power
                   

struggle,  with  each  demanding  that the  other  leave  the

center, and  the president of  the college deciding  that the

director would have to leave since the professor was tenured.

Id.  at 1383-84.   The Massachusetts Appeals  Court held that
              

the trial court improperly directed a verdict for the college

because it did not follow termination procedures contained in

the employee manual.  Id. at  1382.  The court indicated that
                                    

if  the issue  of "just  cause" was  reached on  retrial, the

plaintiff's   conflict  with  the   professor  would   be  an

appropriate consideration, but did not indicate that it would

be  controlling.   Id.  at 1385.    Moreover, in  contrast to
                                 

Goldhor, Hammond's  disagreement with Litle was  not over how
                   

any aspect of the  business was run, but concerned  the terms

of  his employment  contract.   As  already noted,  Hammond's

resistance  to what  he  believed  to  be  a  breach  of  his

employment contract could not  be considered "just cause" for

his termination.  That  aside, the conflict in this  case had

not  risen to  the  level, as  in  Goldhor, where  Litle  and
                                                      

                             -27-
                                          27

Hammond  could  not  continue to  work  together.   As  Litle

testified, he had no intention of terminating Hammond and did

not call  for his termination, but  simply accepted Alemian's

recommendation  that  he be  terminated.    Finally, we  note

(though the  magistrate judge  did not  mention it)  that the

jury's  finding  that  Hammond  was  entitled  to  48  shares

necessarily included  a finding  that the  Company terminated

Hammond  either without cause or in bad faith for the purpose

of preventing him from getting his shares.

          In  sum, we  think  the magistrate  judge correctly

found  that the  only  reason the  Company  may have  had  to

terminate  Hammond   that  amounted   to  just  cause   under

Massachusetts law  was Hammond's  performance, that  it chose

not to  terminate him for  that reason  and told him  so, and

that he therefore had  no obligation to sell his  shares back

to the Company.

          C.   The Magistrate Judge's Determination That
                                                                    
               The Company Had No Obligation To Issue
                                                                 
               Hammond   Shares   In    Lieu   Of    Deferred
                                                                         
Compensation
                        

          In  their joint  pretrial  memorandum, the  parties

stipulated that  Hammond had a contractual  right to convert,

at his option, his  accrued deferred compensation into stock,

and that if he properly exercised his option, he was entitled

to 5 shares.  The issue for Phase II of the trial was whether

Hammond properly  exercised his option by  filing his lawsuit

10  months   after  his  employment  was   terminated.    The

                             -28-
                                          28

magistrate  judge ruled  that Hammond  had not  exercised his

option  within a  reasonable time  by  filing his  lawsuit 10

months after  his discharge, that  even then the  prayers for

relief in  Hammond's complaint did not  constitute an attempt

to exercise his option, and that  he had failed to carry  his

burden of proving that  it would have been futile  to attempt

to  exercise  his  option  at  or  nearer  the  time  he  was

terminated.  

          Hammond  first  claims  that the  magistrate  judge

erred  as a  matter  of law  in  construing the  contract  as

requiring him to exercise his option during his employment or

within  a reasonable time of his termination.  He claims that

the time frame for the exercise of his option was  as long as

his  compensation remained  deferred.   Because there  was no

explicit agreement between the parties as to when Hammond was

required to  exercise  his conversion  right, the  magistrate

judge was called upon to decide whether  Hammond exercised it

within  a "reasonable  time."   See Bushkin Assocs.,  Inc. v.
                                                                         

Raytheon  Co., 815  F.2d 142,  146 (1st  Cir. 1987)  ("when a
                         

contract is silent as to time, the term shall be a reasonable

time based on  all the relevant evidence.").   The magistrate

judge's determination that he  did not was a finding  of fact

subject  to the clearly erroneous standard of Fed. R. Civ. P.

52(a).      See,   e.g.,   Crellin   Technologies,   Inc.  v.
                                                                         

Equipmentlease Corp.,  18 F.3d  1, 9  (1994) (what amount  of
                                

                             -29-
                                          29

time  is  reasonable  in  a  particular case  is  a  "classic

example"  of a decision that  the law leaves  to the district

court); Flagship Cruises, Ltd. v. New England Merchants Nat'l
                                                                         

Bank, 569 F.2d 699, 702 (1st Cir. 1978) ("The  reasonableness
                

of a period of time except as to extremes would seem  to be a

classic  issue for the trier of  fact."); Cataldo, 482 N.E.2d
                                                             

at 857  n.20 (question  whether buyback option  was exercised

within  a  reasonable time  "was  peculiarly  appropriate for

decision by  the factfinder").  Hammond argues that in making

that  factual determination,  the magistrate  judge impliedly

interpreted  the  contract to  require  him  to exercise  his

option within a reasonable time of his employment rather than

at any time while the compensation remained deferred.   This,

Hammond argues, was a question of law, Fashion House, Inc. v.
                                                                         

K Mart Corp., 892 F.2d 1076, 1083 (1st Cir. 1989), subject to
                        

de novo review.  
                   

          Recognizing    that    the    magistrate    judge's

determination that  Hammond did  not act within  a reasonable

period was a finding  of fact that contained a ruling of law,

we find that the  magistrate judge erred neither as  a matter

of law nor  as a matter of fact because  the ruling was well-

supported  by  the  "nature  of the  contract,  the  probable

intention  of  the  parties  as  indicated  by  it,  and  the

attendant circumstances."  Charles River Park, Inc. v. Boston
                                                                         

Redevelopment Auth., 557 N.E.2d 20, 32 (Mass. App. Ct. 1990).
                               

                             -30-
                                          30

Hammond's  right  to convert  his deferred  compensation into

stock, as  memorialized in  various documents (most  of which

Hammond himself  drafted), was described  as the "employee's"

option or choice.  Hammond urges that when he was terminated,

he was  in the  position of  a non-employee  investor holding

convertible debt  keyed to the  period during which  the debt

remained outstanding.   This  is so,  he argues, because  the

Company's position was that he would not receive his deferred

compensation until  the Company  achieved a better  cash flow

situation.    Although  that  may  have  been  the  Company's

position  with   regard   to   paying   cash   for   deferred
                                                        

compensation, nothing  in the record indicates that Hammond's

option  to  convert  deferred  compensation  into  stock  was

similarly contingent.  Even more to the point, nothing in the

record  indicates that  the  Company intended  that a  former

employee  could turn a  simple deferred employee compensation

arrangement  into a  right to  purchase stock  at a  very low

price  at some time in  the indefinite future  when the stock

became far more valuable.  As the magistrate judge found, the

stock valuation rate  at the time Hammond was  terminated was

such  that the shares he  would have received  were worth far

less than the  deferred compensation of  $16,000 to which  he

was  entitled.10   The testimony  at trial  demonstrated that

                    
                                

10.  Hammond  could convert  his  deferred compensation  into
stock at a "price  equal to the stock's fair  market value at
the time the deferred compensation was earned," but the price

                             -31-
                                          31

other employees regarded as  laughable the notion that anyone

would elect  to accept stock in lieu of cash in March of 1988

when  the Company  began paying  deferred compensation.   The

magistrate judge  correctly keyed  the  reasonable period  of

time to Hammond's employment.

          Hammond  also claims  that  the magistrate  judge's

failure to  find as  a matter of  fact that  the Company  had

repudiated  his  contractual right  to  convert  his deferred

compensation into  stock, thus relieving  him of any  duty to

exercise his  option, was clearly erroneous.   Repudiation by

one party relieves the  other party from further performance,

but  such repudiation  "'must be  a definite  and unequivocal

manifestation  of  intention [not  to  render performance].'"

Thermo  Electron Corp.  v.  Schiavone Constr.  Co., 958  F.2d
                                                              

1158,  1164 (1st  Cir.  1992) (quoting  4  Arthur L.  Corbin,

Corbin on  Contracts     973, at  905-06  (1951));  see  also
                                                                         

Restatement (Second) of Contracts   250 cmt. b (1981). 

          The magistrate judge did not err in failing to find

that  the  Company repudiated  the  contract.   When  Alemian

terminated Hammond  on January  27, 1988, he  offered Hammond

deferred compensation at  a minimum rate of  $2,000 per month

to be  paid in  cash as  soon as  the Company  had sufficient

                    
                                

would be "no less  than the latest price paid  by investors."
The latest price paid  by investors in early 1988  was $3,000
per share,  which apparently  was more than  it actually  was
worth at the time.    

                             -32-
                                          32

funds, but Hammond did not say at that point  that he elected

to exercise  his option to receive  the deferred compensation

in the  form of  stock.   Alemian followed  up with  a letter

dated  February 19, 1988, in which he stated that the Company

was  "prepared  to   discuss  .  .  .   payment  of  deferred

compensation," and asked Hammond to contact him if  he wished

to discuss it.   Hammond did not respond.   Hammond complains

that  Alemian did not  mention his right  to convert deferred

compensation to stock at his exit interview or in the letter,

but that does not  mean that the Company repudiated  its duty

to  honor that right.   It was Hammond's  option to exercise,

and Hammond made no effort to  do so until 10 months after he

was terminated.  

          Because the magistrate judge did not err in finding

that  10   months  from  Hammond's  termination   was  not  a

"reasonable time,"  we need  not decide whether  he correctly

found  in  the  alternative  that the  prayer  for  relief in

Hammond's  complaint did  not constitute  an exercise  of his

option,  or whether  the Company  later  repudiated Hammond's

right  to convert  deferred  compensation into  stock in  the

course of this litigation.

          One matter remains.  Shortly  before oral argument,

Hammond moved  this Court for  leave to file a  motion in the

district court pursuant to Fed. R. Civ. P. 60(a) to correct a

purported  omission  in  the   judgment,  to  wit,  that  the

                             -33-
                                          33

magistrate  judge  ordered  only  that the  Company  was  not

required to issue shares in lieu of deferred compensation but

failed  to order  the  Company to  pay  Hammond his  deferred

compensation  in  cash.     The  motion  was  denied  without

prejudice to reconsideration by the panel hearing the merits.

We deny the motion because Hammond did not seek the relief of

being paid  his  deferred  compensation in  cash.    This  is

because whether the Company owed it in cash was not at issue.

As the magistrate judge  found, the Company admitted that  it

owed Hammond  the deferred compensation, and  the Company has

stated that it stands ready to pay Hammond $16,468.30 in cash

as soon as this appeal is decided.  

          For all  of the foregoing reasons,  the judgment is

affirmed.  The parties shall bear their own costs of appeal.
                    

                             -34-
                                          34