BOTSFORD, J.
This case involves bitter litigation spanning more than a decade. It raises the question, among others, whether actions taken by an employer against a former employee may violate G. L. c. 151B, § 4(4) and (4A), sections of the antidiscrimination law that respectively prohibit retaliation and interference with a protected right. On this question, we conclude that an employer or other person may be liable to a former employee under these sections for retaliatory or interfering conduct that occurs after the employment relationship has terminated. We defer all discussion of the additional issues raised until later in this opinion.
b. Facts. Klein, Maxwell Schleifer, and a third man founded Psy-Ed in 1969. In 1971, Psy-Ed began publishing Exceptional Parent (EP), a magazine for families of children with disabilities and special health care needs; Klein and Schleifer served as copublishers. In the early 1990's, Psy-Ed began to have financial problems, and in 1993, Valenzano was approached to evaluate Psy-Ed as an investment opportunity. He decided to invest, and brought in about forty other investors. In the resulting restructuring of the company, Psy-Ed bought Schleifer's shares, Klein remained with the company and became editor-in-chief of EP, Valenzano joined Psy-Ed as president, chief executive officer, a member of the company's board of directors (board), and publisher, and the company opened a second office in New Jersey in addition to its original Massachusetts office. At various times after 1993, the third-party defendants, Kenneth Rossano, Dr. David Hirsch, Robert Striano, Donald S. Chadwick, and Robert K. Hopkins, served as members of the board. During Klein's employment as editor-in-chief, there were disagreements between him and the board.
From 1993 until 1996, Schive worked for Psy-Ed in the Massachusetts office, first as an assistant editor of EP and later as associate editor. Schive, who is deaf, required certain accommodations to be provided by her employer, including an interpreter
Klein was informed in June, 1997, that his employment contract with Psy-Ed was due to expire on June 30, and that it would not be renewed.
His proxy fight lost, Klein entered into negotiations with representatives of Psy-Ed for a complete and permanent separation from the company. Valenzano began negotiating with third-party defendant C. Kenneth Mehrling to arrange financing for the acquisition of Klein's shares. On March 27, 1998, Klein, Psy-Ed, and Valenzano executed a settlement agreement that included a mutual release of all claims (settlement agreement). Under the terms of the settlement agreement, Klein received an initial payment of $45,000, and a promissory note specifying sixteen quarterly payments of $13,797.19, for a total of
On October 6, 1997, without Valenzano's knowledge and while the negotiations over buying out Klein's Psy-Ed shares were in process, Klein signed a second affidavit in connection with Schive's MCAD charge against Valenzano and Psy-Ed. In his second affidavit, which was filed with the MCAD, Klein stated that after preparing his June, 1997, affidavit, he had become aware of and dissatisfied with the company's response to Schive's charge, as well as the manner in which his earlier affidavit had been characterized in that response. Klein also stated in the second affidavit that after completing the first affidavit, he had been reminded of certain incidents by former members of the Massachusetts staff.
In September, 1999, Valenzano became aware of Klein's second affidavit in the Schive MCAD matter. He became aware as well that a former Psy-Ed sales and marketing contractor, Lawrence Qualiano, also had signed an affidavit in support of Schive's claim. At the next formal meeting of Psy-Ed's board of directors, held on September 30, 1999, the directors
On December 2, 1999, the MCAD issued a probable cause determination in Schive's favor on her complaint.
c. Prior proceedings. As just stated, Psy-Ed and Valenzano filed their action against Klein and Schive in December, 1999. In response, Klein counterclaimed against Psy-Ed and Valenzano and brought a third-party complaint against Rossano and the other members of the board.
In 2002, Klein filed a separate complaint against Psy-Ed and Valenzano alleging retaliation in violation of G.L. c. 151B, § 4(4) and (4A) (§ 4[4] and [4A]) (2002 action). In response, Psy-Ed and Valenzano counterclaimed, alleging breach of contract and fraud. On December 1, 2003, a Superior Court judge allowed Klein's motion to dismiss the counterclaims because in the 1999 action, Psy-Ed and Valenzano's attempt to add a breach of contract claim had been dismissed as untimely, and the allegation of fraud arose out of the same transaction as the barred breach of contract claim.
By the time of trial, in June, 2006, no claims remained in Psy-Ed's and Valenzano's 1999 action against Schive, and only one claim, for defamation, remained against Klein.
In his order, the trial judge indicated a hearing would be held to determine damages with respect to those counterclaims on which he had found liability. However, the trial judge retired before holding such a hearing. As we explain in more detail below, a different Superior Court judge (posttrial judge) held a nonevidentiary hearing on damages on January 4, 2008. On March 13, 2009, she awarded Klein $125,000 in emotional distress damages in connection with his claims of abuse of process and tortious interference with contractual relations, $124,174.71 plus prejudgment interest in connection with the unpaid principal on the promissory note, $510,960.23 in attorney's fees, and $17,002.50 in costs. The same day, she awarded Schive $125,000 in emotional distress damages, $443,040.95 in attorney's fees, and $20,407.65 in costs. In Schive's case, judgment entered against Psy-Ed and Valenzano, the only defendants named in her counterclaims. All amounts due to Klein, however, were awarded and assessed jointly and severally against Psy-Ed, Valenzano, and four of the six third-party defendants: Hirsch, Striano, Chadwick, and Mehrling.
Before us are multiple appeals. Psy-Ed and Valenzano appeal
2. Retaliation. a. Generally. Both Schive and Klein claim they were the victims of retaliation in violation of G. L. c. 151B.
As with the word "retaliation," courts have adopted "adverse employment actions" as shorthand for the actions of an employer that may violate § 4(4) and (4A). See, e.g., Mole v. University of Mass., supra at 592 n.14, 594 (defining "adverse actions" by quoting § 4[4] and [4A], then relying on shorthand "adverse employment actions" later in decision). Like "retaliation," however, "adverse employment action" appears nowhere in the statute.
Perhaps because of the term "adverse employment action," confusion has arisen as to whether conduct challenged as retaliatory must target a current employee in order to fall afoul of § 4(4) and (4A).
Where the alleged retaliatory act is the filing of a lawsuit, however, the scope of § 4(4) and (4A) are bounded by State and Federal constitutional rights to seek judicial resolution of disputes. See Sahli v. Bull HN Info. Sys., Inc., 437 Mass. 696, 700-701 (2002) (Sahli). But the "right to petition is not ... an absolute right." Id. at 702. The filing of "sham" or "baseless" litigation, as distinct from "unsuccessful but reasonably based suits," is not a constitutionally protected right.
b. Schive's claim of retaliation. In reviewing a judge's decision after a jury-waived trial, "we accept the judge's findings of fact as true unless they are clearly erroneous" but "scrutinize without deference the legal standard which the judge applied to the facts." Kendall v. Selvaggio, 413 Mass. 619, 620, 621 (1992). With respect to Schive's claim of retaliation, we conclude that the trial judge applied the proper legal standards to the facts, and that his factual findings were not clearly erroneous.
The judge properly outlined the elements of unlawful conduct under § 4(4). Relying on Sahli, 437 Mass. at 702-704, he identified the dividing line between "[b]aseless" or "sham" litigation, which is not protected by the First Amendment to the United States Constitution, and those "reasonably based but unsuccessful lawsuits" that are constitutionally protected and so cannot constitute a violation of § 4(4) or (4A). He correctly pointed out that, while a causal connection must be established between protected conduct and adverse action, that connection may be shown either directly or by inference. Where the link is inferentially shown by closeness in time between an adverse action and the conduct that apparently triggered it, he stated, the triggering conduct need not be the initial filing of the complaint.
The judge ruled that Schive engaged in legally protected conduct by bringing her discrimination claim with the MCAD. He further ruled that the 1999 action
c. Klein's claim of retaliation. As noted in Part 1(c), supra, the motion judge entered summary judgment on Klein's claim for retaliation on the ground that the retaliatory acts he alleged "occurred over two years after the employment relationship between the parties terminated." Because, as we have concluded,
3. Abuse of process. As noted above, the trial judge found in favor of Klein and Schive on their respective counterclaims of abuse of process, brought in both instances against Psy-Ed and Valenzano. The elements of an abuse of process claim are "that `process' was used, for an ulterior or illegitimate purpose, resulting in damage." Millennium Equity Holdings, LLC v. Mahlowitz, 456 Mass. 627, 636 (2010) (Millennium). To sustain the claim, "the fact finder must find that process was used `to accomplish some ulterior purpose for which it was not designed or intended, or which was not the legitimate purpose of the particular process employed.'" Id., quoting Quaranto v. Silverman, 345 Mass. 423, 426 (1963). Filing a groundless claim is not an element of the tort, but it is relevant, because it may "tend[] to show that the process was used for an ulterior purpose." Fishman v. Brooks, 396 Mass. 643, 652 (1986). However, the ulterior purpose element is not satisfied merely by a showing that a person commenced litigation knowing it was groundless. Beecy v. Pucciarelli, 387 Mass. 589, 596 (1982).
Relying on the standard for the separate tort of malicious prosecution laid out in Beecy v. Pucciarelli, the trial judge erred in this case in equating the ulterior purpose element with an improper motive of vexation, harassment, or annoyance. See id. at 594 n.9. In an abuse of process claim, in contrast to a claim for malicious prosecution, such a motive does not alone suffice to show ulterior purpose.
The trial judge determined that the primary reason, and ulterior motive, for Valenzano's filing the abuse of process claim against Schive was to retaliate for her initiating and pursuing the MCAD proceedings. Immediately before stating this conclusion, the judge quoted Schive's contention that the company and Valenzano brought the lawsuit against her in order to discourage her from pursuing her pending MCAD claims, to distract her from the MCAD claims and impose legal costs on her, and to induce her to abandon her claims. The purpose articulated by Schive qualifies as an effort to obtain a collateral advantage. See Millennium, supra at 640, 642 (upholding judgment on abuse of process claim where motive in bringing separate action against attorney was desire to remove attorney as wife's divorce counsel). However, the judge did not indicate whether he was adopting or rejecting Schive's position.
With respect to Klein, the judge's findings do not clearly identify what, if any, ulterior purpose and collateral advantage Psy-Ed and Valenzano sought to gain in bringing suit against Klein. The judge stated Valenzano testified that he brought the lawsuit because he "expected to bring into one point of justice the unbelievably frivolous charges of the MCAD complaint against me" and that he "wanted to have some kind of resolution... with a man who had essentially defrauded us." The desire to litigate a dispute, by itself, does not translate into an ulterior purpose for bringing the action, even when, as here, many of the claims were groundless. See Ladd v. Polidoro, 424 Mass. 196, 199-200 (1997). As with Schive, we must vacate the judgment on Klein's abuse of process claim and remand for further review in light of the proper standard for abuse of process.
4. Tortious interference with contract. The trial judge found that Valenzano and the members of Psy-Ed's board who were third-party defendants tortiously interfered with Klein's contract with the company. To prevail on a claim of tortious interference with a contract, a plaintiff must establish "(1) he had a contract with a third party; (2) the defendant knowingly induced the third party to break that contract; (3) the defendant's interference, in addition to being intentional, was improper in motive or means; and (4) the plaintiff was harmed by the defendant's
a. Valenzano. The judge began his analysis of Klein's claim against Valenzano by stating the legal proposition that "a defendant may be liable for his intentional interference with the performance of his own contract with the plaintiff." The judge then concluded that Klein's settlement agreement with Psy-Ed, an agreement to which Valenzano was a party,
The judge's threshold premise—that a party can tortiously interfere with a contract to which he is a party—is an incorrect statement of the law. See Harrison v. NetCentric Corp., 433 Mass. 465, 476 n. 12, 477-478 (2001) (party to contract cannot be held liable for intentional interference with that contract).
The trial judge made no findings on this issue, or on the antecedent issue whether, when Psy-Ed's board voted to suspend payments on the promissory note, this action in fact caused a breach by Psy-Ed of the contract that the note represented.
b. Third-party defendants. The board members who are third-party defendants argue that the trial judge's factual findings reflect the absence of actual malice on the part of all members of the board other than Valenzano. See Blackstone, supra at 260-261. We agree.
The judge stated that the board's minutes indicated the board's decision to stop payment was due to Klein's unwillingness to sign a settlement agreement with Qualiano. The judge describes
On appeal, Klein argues the directors adopted and participated in Valenzano's vengeful campaign. For evidence he cites Rossano's testimony the board was "adamant" in its decision to discontinue payments on the note; Klein argues this means the board members failed to manifest objectivity or independence of thought. Klein also states they "flouted" the advice of Rossano, a decision that ultimately exposed the company to litigation expenses greatly in excess of the note's outstanding principal. Even if, as Klein suggests, the board's course of action was ill considered or short sighted, Klein's arguments simply fail to demonstrate "a spiteful, malignant purpose." The judgment against the members of the Psy-Ed board other than Valenzano on Klein's claim for tortious interference with contract cannot stand.
5. Chapter 93A. The trial judge found in favor of Valenzano, Psy-Ed, and the third-party defendant board members on Klein's counterclaim alleging a violation of G.L. c. 93A, § 11. Section 11 covers "individuals acting in a business context in their dealings with other business persons and not to every commercial transaction whatsoever." Manning v. Zuckerman, 388 Mass. 8, 10 (1983). It does not provide a remedy for disputes arising out of an employer-employee relationship, see id. at 15, or for disputes that "occur within a single company." Szalla v. Locke, 421 Mass. 448, 451 (1995). The facts as found by the judge adequately support his conclusion that the dispute arose out of a private transaction between the Psy-Ed board and Klein in his role as a former employee and shareholder of the company. Klein's efforts to describe the dispute as commercial in nature are contradicted by the fact that, despite the complex entanglement of the parties in this case, the context in which they were operating was a single business enterprise. See Newton v. Moffie, 13 Mass.App.Ct. 462, 466-467 (1982) (G.L. c. 93A, § 11, intended to apply only to dealings between legally separate "persons" engaged in arm's-length transactions, not to dealings between members of single
6. Psy-Ed's and Valenzano's counterclaims against Klein. As noted previously, after Klein filed his separate action for retaliation against Psy-Ed and Valenzano in 2002, his motion to dismiss Psy-Ed's and Valenzano's counterclaims alleging breach of contract and fraud was allowed because, in 2001, Psy-Ed's and Valenzano's efforts to amend their own complaint to raise these same claims against Klein had been denied as untimely under the applicable tracking order.
The allowance of Klein's motion to dismiss the counterclaims was error. The denial in 2001 of the motion to amend Valenzano's and Psy-Ed's complaint had no bearing on Psy-Ed and Valenzano's right to bring timely counterclaims to Klein's separate complaint.
7. Damages. In his order, the trial judge stated that a hearing would be held to determine damages on Klein's and Schive's successful counterclaims. After the trial judge retired, the posttrial judge held a status conference on March 21, 2007, and a nonevidentiary hearing January 4, 2008. She awarded damages on the basis of that conference and hearing and her review of
a. Award of damages to Schive for emotional distress. The posttrial judge awarded Schive damages for emotional distress on the basis of the judge's review of Schive's trial testimony and the trial judge's finding that "Schive credibly testified that she suffered emotional distress on account of [Psy-Ed's] and Valenzano's lawsuit." The posttrial judge detailed the evidence presented at trial concerning Schive's emotional injuries and awarded damages in the amount of $125,000. Where Psy-Ed and Valenzano challenge the award only fleetingly and without any critique of the methodology for calculating the amount,
c. Attorney's fees. Psy-Ed and Valenzano contest the posttrial judge's awards of attorney's fees, challenging, among other claimed errors, the lack of an evidentiary hearing. An evidentiary hearing on attorney's fees is not always required, especially when the award of fees is being considered by the judge who presided over the trial. Cf. Matter of the Estate of King, 455 Mass. 796, 805-806 (2010). In this case, fees were awarded without an evidentiary hearing by a judge who did not preside at trial, despite some indication at trial and in the trial judge's ruling that a further evidentiary hearing was anticipated. Furthermore, in calculating and adjusting the "lodestar" figure in order to determine Schive's attorney's fees, the posttrial judge relied on the affidavit of an expert witness who did not testify and whom Psy-Ed and Valenzano had no opportunity to cross-examine. In the circumstances, the posttrial judge erred in declining to hold at least a limited evidentiary hearing on the issue of attorney's fees. On remand, the award of attorney's fees to Schive may also need to be adjusted if she does not pursue or in any event does not prevail on her abuse of process claim.
The award of attorney's fees to any party must be tied to specific claims and supported by findings that are adequately supported by the record. With respect to Klein, in light of the conclusions we have reached concerning his substantive claims, we vacate the award of attorney's fees and costs.
8. Conclusion. We affirm the decisions with regard to liability
We vacate the judgments in favor of Klein on his counterclaim of abuse of process against Psy-Ed and Valenzano, and on his counterclaim of tortious interference with contract against Valenzano. We reverse the judgment in favor of Klein on his counterclaim of tortious interference with contractual relations with respect to the third-party defendants. We affirm the judgment in favor of Valenzano, Psy-Ed, and the third-party defendants on Klein's counterclaim alleging a G. L. c. 93A, § 11, violation. We vacate the grant of summary judgment in favor of Psy-Ed and Valenzano on Klein's retaliation claim and the judgment of dismissal with respect to Psy-Ed's and Valenzano's counterclaims against Klein for breach of contract and fraud.
Finally, with the exception of the award to Schive of emotional distress damages, which, as noted above, we affirm, we vacate all other awards of damages, attorney's fees, and costs. We remand the case for further proceedings consistent with this opinion.
So ordered.