MEMORANDUM AND ORDER

SARIS, C.J.,

I. INTRODUCTION

This case stems from Plaintiff Michael Smith's 47-day employment at Zipcar, the Boston-based car sharing company. While Plaintiff was negotiating his executive compensation package, which included stock options, Zipcar was contemplating a possible merger with Avis Budget Group (Avis). When the merger later went through, the stock options became worthless. After his employment terminated, Plaintiff brought this action alleging, among other things, that Zipcar engaged in fraud and negligent misrepresentation by failing to disclose the merger talks, and that Zipcar breached his employment contract by failing to award him appropriate severance.

Defendant moved for summary judgment on all claims1 (Dkt. No. 94). After hearing (Dkt. No. 124), Defendant's motion for summary judgment is ALLOWED IN PART and DENIED IN PART.

II. FACTUAL BACKGROUND

The facts are construed in the light most favorable to Plaintiff.

A) Employment Negotiations

In September 2012, Zipcar set out to find a new "Executive Vice President, Technology." It retained an executive search firm, which recruited Smith. Then employed by Disney, Smith had previously worked for such blue-chip technology companies as Microsoft and Google. Over the course of fall 2012, Plaintiff met with Zipcar's then-CEO Scott Griffith and other senior executives. Impressed with Smith's qualifications, Zipcar made him an employment offer on November 15, 2012. This initial offer, however, was not to Smith's liking. In negotiations with the company's Human Resources Director, he sought enhanced stock options and a "Chief Technology Officer" (CTO) title. A new offer was made on November 27; this too was rejected, and the negotiations pressed on.

On December 11, Zipcar sweetened its offer, and Smith accepted. The final compensation package featured a grant of 105,000 options, to vest over a four-year period. The package also included an annual salary of $290,000; an annual bonus equal to fifty percent of salary; a $25,000 relocation stipend; and, eligibility for additional stock options at Zipcar's discretion.

Under the Employment Agreement, Smith was an at-will employee. His contract provided for severance payments under two scenarios. If Smith resigned for "Good Reason" or was fired without cause before a "Change of Control," he would receive 6 months' salary, or $145,000. If, however, he resigned for Good Reason or was terminated without cause after a Change of Control, he would receive a year's salary, plus his targeted bonus, amounting to 1.5 years of pay, or $435,000. "Change of Control" was defined, in relevant part, as "the sale of all or substantially all of the capital stock." Exh. 14. Good Reason was defined, in relevant part, as "a material adverse change in your office, duties, salary, benefits or responsibilities made without your prior written consent." Id. Under the contract, Smith was required to "set forth in specific detail the facts supporting" his reasons for separating. Id. If Zipcar adequately "cured" those issues within 30 days, then Smith would be deemed to have resigned without Good Reason.

B) The Merger

Unbeknownst to Plaintiff, at the time he accepted the CTO job, Zipcar was in discussions with several different companies about financing options. Some of these corporate suitors simply wanted to make an equity investment in Zipcar; others wanted to buy the company outright. On November 17, two days after Plaintiff was first offered employment, Avis sent a letter to Zipcar expressing its interest in acquiring the company. At the same time that Plaintiff was negotiating his compensation package, Zipcar's lawyers and investment bankers were performing due diligence on Avis,2 as well as nine other companies: two executed confidentiality agreements, and seven others showed informal interest. On December 31, 2011, twenty days after Smith's employment agreement was signed, Zipcar and Avis signed a merger agreement.

The following morning, on New Year's Day, Zipcar CEO Scott Griffith reached out to Plaintiff to inform him of the deal. Plaintiff was surprised, but reaffirmed his enthusiasm for the CTO opportunity and his intent to commence employment on January 21. Plaintiff began work as planned. Concurrently, he engaged in discussions with Corbis, a Seattle-based technology company, about employment opportunities there.

When Plaintiff asked Griffith how the potential deal would affect his stock options, Griffith assured him that Avis would craft an alternative, comparable long-term incentive package ("LTIP"). To further assuage Smith's concerns, Zipcar offered to amend his employment contract to enhance the post-Change in Control severance to 24 months' salary. Counterproposals were exchanged in mid-February but an agreement was not reached. Frustrated that details of the alternative package had yet to materialize, and apparently unsatisfied with the enhanced severance offer, on March 5, 2013, Plaintiff gave notice of his intent to terminate his employment for Good Reason. Under the terms of his Employment Agreement, this triggered the 30-day cure period. In an e-mail to Griffith, Plaintiff avowed a desire to continue working at Zipcar during the cure period and a hope that the LTIP issue would be resolved. He wrote:

Exh. 36 (emphasis added). Zipcar, however, terminated Plaintiff's employment on March 8, 2013. Plaintiff responded four days later by filing this lawsuit. In April 2013, Smith commenced employment at Corbis, though he separated from the company six months later.

After the filing of the lawsuit, but before the cure period was set to end, the Zipcar-Avis deal closed on March 14, 2013. Zipcar is now a wholly-owned subsidiary of Avis.

C) LEGAL STANDARD

Summary judgment is appropriate when there is "no genuine issue as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). To prevail on a motion for summary judgment, the moving party must demonstrate that there is an "absence of evidence supporting the non-moving party's case." Sands v. Ridefilm Corp., 212 F.3d 657, 660 (1st Cir.2000) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)). The burden then shifts to the non-moving party to set forth specific facts showing that there is a genuine issue of material fact for trial. Quinones v. Houser Buick, 436 F.3d 284, 289 (1st Cir.2006). A genuine dispute exists where the evidence is "sufficiently open-ended to permit a rational factfinder to resolve the issue in favor of either side." Nat'l Amusements, Inc. v. Town of Dedham, 43 F.3d 731, 735 (1st Cir.1995). A material fact is "one that has the potential of affecting the outcome of the case." Calero-Cerezo v. U.S. Dep't of Justice, 355 F.3d 6, 19 (1st Cir.2004).

In deciding a motion for summary judgment, the Court must view the facts in the light most favorable to the non-moving party, and draw all reasonable inferences in their favor. Sands, 212 F.3d at 661. The Court is required to "determine if there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party." Id. (quotation marks omitted). A party cannot avoid summary judgment by merely relying on "conclusory allegations, improbable references, and unsupported speculation." Fennell v. First Step Designs, Ltd., 83 F.3d 526, 535 (1st Cir.1996) (quotation marks omitted); see also Conward v. Cambridge Sch. Comm., 171 F.3d 12, 18 (1st Cir.1999) (refusing to "indulge rank speculation or unsupportable hyperbole" at the summary judgment phase).

D) DISCUSSION

A) Fraud and Deceit/Misrepresentation (Counts I and II)

The thrust of Plaintiff's fraud and misrepresentation claims is that Zipcar engaged in fraud3 when it failed to disclose the merger discussions with Avis while it was negotiating Plaintiff's compensation. Zipcar counters that it was under no duty to disclose the potential acquisition.

Under Massachusetts law, the tort of fraud requires proof that "(1) the defendant made a misrepresentation of fact; (2) it was made with the intention to induce another to act upon it; (3) it was made with the knowledge of its untruth; (4) it was intended that it be acted upon, and that it was in fact acted upon; and (5) damages directly resulted therefrom." Equip. & Sys. For Indus., Inc. v. Northmeadows Constr. Co., 59 Mass.App.Ct. 931, 798 N.E.2d 571, 574 (2003).

In the absence of an affirmative misrepresentation, an action for fraud requires "both concealment of material information and a duty requiring disclosure." Sahin v. Sahin, 435 Mass. 396, 758 N.E.2d 132, 138 n. 9 (2001); Hinchey v. NYNEX Corp., 144 F.3d 134, 145 (1st Cir.1998). Under Swinton v. Whitinsville Sav. Bank and its progeny, the "rule of nonliability for bare nondisclosure" is well-settled in Massachusetts. 311 Mass. 677, 42 N.E.2d 808, 809 (1942) (finding the seller of a home not liable for fraud for failing to disclose a termite infestation the seller knew about when the transaction was made at arm's length). Defendants cannot be found liable for "concealment in the simple sense of mere failure to reveal, with nothing to show any peculiar duty to speak." Id. at 808.

Massachusetts courts generally rely on the Restatement (Second) of Torts § 551 to determine the circumstances giving rise to a duty to disclose. See, e.g., Nota Constr. Corp. v. Keyes Assocs., Inc., 45 Mass.App.Ct. 15, 694 N.E.2d 401, 404-05 (1998) (denying summary judgment on plaintiff-subcontractor's claim that defendant-architectural firm had a duty to disclose subsurface ledge at elementary school construction site). One such circumstance is a fiduciary relationship between the parties. See, e.g. Urman v. S. Bos. Sav. Bank, 424 Mass. 165, 674 N.E.2d 1078, 1081 (1997); Swinton, 42 N.E.2d at 808 (noting the absence of a "fiduciary relation between the parties" in finding no liability for nondisclosure). Employers, however, owe no fiduciary duty to employees. Estate of Moulton v. Puopolo, 5 N.E.3d 908, 921, 467 Mass. 478 (2014).

Plaintiff's primary argument is that defendant is liable for a half-truth. In some circumstances, uttering a half-truth may be tantamount to a falsehood. Swinton, 42 N.E.2d at 808; see generally Restatement (Second) of Torts § 551(2)(b) (1977) (providing that a party is under a duty to disclose "matters known to him that he knows to be necessary to prevent his partial or ambiguous statement of facts from being misleading"). In Maxwell v. Ratcliffe, for example, the Supreme Judicial Court held that real estate brokers who represented that a cellar was dry were liable for misrepresentation, reasoning:

356 Mass. 560, 254 N.E.2d 250, 252 (1969); see also Damon v. Sun Co., 87 F.3d 1467, 1479 (1st Cir.1996) (when asked about environmental contamination of a gas station and surrounding property, seller was under a duty to avoid half-truths when the facts were susceptible to actual knowledge).

More on point, in Golber v. BayBank Valley Trust Co., the plaintiff-investor expressly asked the defendant-bank about the relationship between a bank official and a small business seeking capital, and the banker reassured the investor about the status of the company. When the plaintiff later learned that the company was in an undisclosed "workout" status at the bank, the court upheld a jury verdict that the bank's failure to disclose the company's financial troubles was a misleading half-truth, even though it was not the bank's practice to disclose that information. 46 Mass.App.Ct. 256, 704 N.E.2d 1191, 1194 (1999) (negligent misrepresentation). Note that, in Golber, Damon, and Maxwell, the plaintiffs made an express inquiry about an issue or condition that was met with an incomplete or misleading response.

When a "seller knows of a weakness in the subject of [a] sale and does not notify the buyer of it," the non-disclosure does not rise to the level of fraud. Greenery Rehab. Grp., Inc. v. Antaramian, 36 Mass.App.Ct. 73, 628 N.E.2d 1291, 1294 (1994); see also Solomon v. Birger, 19 Mass.App.Ct. 634, 477 N.E.2d 137, 142 (1985) ("There must be some affirmative act of concealment" to bring an action for fraud). This holding is particularly applicable where there is a negotiation and agreement between "sophisticated businessmen" represented by counsel. Lily Transp. Corp. v. Royal Instit. Servs., 64 Mass.App.Ct. 179, 832 N.E.2d 666, 685 (2005) (observing that the "restricted circumstances" giving rise to tort liability for misrepresentation are not present where both plaintiff-transportation company and defendant-laundry service were "active and experienced" negotiators); see also Rohm and Haas Elec. Materials, LLC v. Elec. Circuits Supplies, Inc., 759 F.Supp.2d 110, 121 (D.Mass.2010) (finding no liability for non-disclosure in negotiation between plaintiff, a "large, sophisticated [electronics manufacturer] with legal counsel" and defendant-distributor).

So the question is whether Plaintiff's insistence on the inclusion of stock options in his executive compensation package triggered a duty on Zipcar's part to disclose the fact that the options might be worthless if the potential merger went through. In Plaintiff's view, this omission is an actionable half-truth. Defendant puts great weight on the fact that Plaintiff never asked about a potential acquisition, that he was a sophisticated businessman represented by counsel, that the negotiations were at arm's length and that he never asked about a potential merger, even though he was savvy enough to have asked another company with which he was interviewing about potential acquisitions.

Zipcar contends that the SEC rules governing merger negotiations, its internal Insider Trading Policy, Code of Business Conduct and Ethics, and the Confidentiality Agreement executed with Avis all precluded Zipcar from disclosing the information to Smith. It is unlikely that any of the policies would have prevented Zipcar from disclosing the truth with an appropriate nondisclosure agreement. If asked, another option was to say "no comment." However, here, Plaintiff never asked, and no misleading misstatement or half-truth about the preliminary merger discussions was made. As the Supreme Court has observed in a similar context, "Silence, absent a duty to disclose, is not misleading under Rule 10b-5." Basic Inc. v. Levinson, 485 U.S. 224, 239 n. 17, 108 S.Ct. 978, 99 L.Ed.2d 194 (1988) (discussing the materiality standard in the context of preliminary merger discussions). See also Vladimir v. Bioenvision Inc., 605 F.Supp.2d 473, 485 (S.D.N.Y.2009) (holding that a corporation has no specific duty to disclose merger negotiations under SEC rules until a merger agreement is signed).

Further, undisputed evidence reveals that the odds of the Avis deal going through were still unknown at the time of Smith's employment negotiations. Zipcar produced admissible evidence that Griffith thought the Avis deal was only 20 percent likely to go through, and there were other suitors, including two that penned formal letters of intent. In fact, Griffith thought the more likely scenario was an equity investment, which would have increased the value of the options. The undisputed facts are that the merger discussions were at the due diligence stage at the time the employment agreement was signed. Avis's firm offer to purchase Zipcar was not made until December 22, 2012, and even at this later stage, Zipcar was still engaged in parallel discussions with Investor A.

The Court concludes that no reasonable juror could find Zipcar's failure to disclose the merger negotiations is actionable under the Swinton line of cases. In light of the inchoate nature of the negotiations with Avis, plaintiff's sophistication and, most importantly, his failure to ask expressly about a potential acquisition, Defendant's motion for summary judgment as to Counts I and II of the Complaint is ALLOWED.4

B) Breach of Contract and the Covenant of Good Faith and Fair Dealing (Counts II and V)

Plaintiff contends that Zipcar's decision to terminate him was made in bad faith, in violation of the covenant of good faith and fair dealing.

Massachusetts treats the duty to exercise good faith as an "implied term or condition" of every contract. Cadle Co. v. Vargas, 55 Mass.App.Ct. 361, 771 N.E.2d 179, 183 (2002); Restatement (Second) of Contracts § 205 (1981). "Good faith and fair dealing is the understanding between the parties 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." Tufankjian v. Rockland Trust Co., 57 Mass.App.Ct. 173, 782 N.E.2d 1, 5 (2003) (citations omitted) (internal quotations omitted).

Smith argues that he had "Good Reason" to give a notice of termination because the pending Avis deal was poised to wipe out the value of his options, and that he was planning to work for the foreseeable future so that Zipcar could cure its failure to provide him with the promised alternative LTIP. In his eyes, the early termination was a deliberate effort to rob him of the "fruits of the contract" — to wit, the more generous severance triggered after a Change of Control. Med. Air Tech. Corp. v. Marwan Inv., Inc., 303 F.3d 11, 23 (1st Cir.2002) (quoting Uproar Co. v. Nat'l Broad. Co., 81 F.2d 373, 377 (1st Cir.1936)) (internal citations omitted).

Zipcar responds that it had the prerogative to terminate Smith, an at-will employee, at any time, with or without cause. It argues that Smith was properly terminated before the Change of Control, and that Zipcar did not have to wait for the 30-day cure period to run its course. Zipcar further argues that the opportunity to cure is an "employer's right, not its legal obligation." Dkt. No. 116 at 13. While Zipcar did not have a contractual obligation to wait 30 days to terminate Smith, Zipcar was under a duty not to terminate him in bad faith. In his e-mail triggering the cure period, Smith said that he intended to continue working during the cure period. Zipcar casts doubt on the sincerity of that statement, noting that the day after Smith gave notice, he zipped over to Seattle, where Corbis is based and where Smith lived before commencing work at Zipcar. Discovery also revealed that Smith represented to Corbis that he was available to work starting March 1.

As the non-moving party, the Court must draw all reasonable inferences in Plaintiff's favor. On the record, there is sufficient evidence that he intended to continue working at least through the cure period and perhaps beyond, if the LTIP concerns were addressed to his liking. Whereas the Avis deal was still tenuous in December when the Employment Agreement was signed, by March 8, when Zipcar terminated Smith, the deal was less than a week from closing. Griffith did express some concern about "cultural mis-match" and Smith's "personal (stylistic) behaviors that may be signals of a lack of engagement," Exh. 37, but a reasonable juror could conclude that Zipcar breached the covenant of good faith and fair dealing by terminating him precipitously rather than giving him the LTIP Zipcar promised, or letting the Change of Control provisions kick in.5

With regard to Counts III (breach of contract — failure to award severance) and V (breach of the covenant of good faith and fair dealing) of Plaintiff's Complaint, Defendant's motion for summary judgment is DENIED.

C) Negligent Misrepresentation (Count VI)

Plaintiff argues that Zipcar promised to provide him with an alternative long-term incentive plan, which was a negligent misrepresentation. This issue was poorly briefed and was not argued at the hearing. Under Massachusetts law, a defendant is liable for negligent misrepresentation when (1) in the course of his business, (2) he supplies false information for the guidance of others (3) in their business transactions (4) causing and resulting in pecuniary loss to others (5) by their justifiable reliance on the information, and that he (6) failed to exercise reasonable care or competence in obtaining or communicating the information. DeWolfe v. Hingham Ctr., Ltd., 464 Mass. 795, 985 N.E.2d 1187, 1192 (2013). A speaker is not liable simply because his predictions about future events do not pan out; the law merely requires that he "speak in good faith and without consciousness of a lack of any basis for belief in the truth or accuracy of what he says." Fox v. F & J Gattozzi Corp., 41 Mass.App.Ct. 581, 672 N.E.2d 547, 588 (1996) (quoting Restatement (Second) of Torts § 552(a) comment a (1997)).

With this standard in mind, I find that no reasonable juror could conclude that Zipcar is liable for negligent misrepresentation. There is no evidence that Griffith provided false information when he promised to provide an LTIP. There was no promise as to the precise timetable. He has testified that he intended to provide Smith with an alternative LTIP, and indeed employees of a comparable rank ("senior team") as Smith were awarded incentive packages in April 2013, roughly a month after the Avis deal closed. Dkt. 117 at 73. Smith points out that it took longer than that for Zipcar to finalize the alternative pay for at least one employee, the Chief Marketing Officer. But there is no dispute that similarly situated executives were awarded new LTIPs.

Summary judgment is therefore ALLOWED as to Claim VI of the Complaint.

D) Damages on Failure to Award Options (Count IV)

With respect to the breach of contract claim, defendant asserts that it is entitled to summary judgment on plaintiff's demand for damages based on an estimate of the value of his unvested Zipcar stock options, which Plaintiff puts at $1,575,000. Plaintiff asserts these damages for his fraud and misrepresentation claims, as well. In calculating this figure, he assumes that (a) he would have stayed at Zipcar for 6 years, allowing his 105,000 shares to fully vest; (b) he would be awarded a bonus 80,000 shares each of the six years; and (c) the stock price of Zipcar would increase every year, ultimately tripling in value.6

As a threshold matter, plaintiff never signed a stock option agreement with Zipcar. The treatment of options in the event of a separation is not comprehensively discussed within the four corners of Plaintiff's Employment Agreement. Instead, it makes reference to a "stock option agreement," which Plaintiff and Zipcar never executed. Exh. 16. The employment contract, however, does indicate that:

Exh. 14.

Even if the options contract had been properly executed and Board approval granted, many courts have concluded that assigning a value to unvested stock options is an exercise in uncertainty. See Baccanti v. Morton, 434 Mass. 787, 752 N.E.2d 718, 726 (2001) (in a divorce proceeding, observing that one of a distinguishing characteristics of options is the "uncertainty of their value"); Fisher v. Fisher, 564 Pa. 586, 769 A.2d 1165, 1169 (2001) (putting a dollar figure on unvested stock options is "impermissibly speculative" because "it is absolutely impossible to predict with reliability what any stock will be worth on any future date"); Kinsey v. Cendant Corp., 521 F.Supp.2d 292, 308 (S.D.N.Y.2007) (rejecting damages claim for stock options as "too speculative"); Ott v. Alger Mgmt. Inc., 2012 WL 4767200, at *8 (S.D.N.Y. Sept. 27, 2012) (stating that an at-will employee's breach of contract claim for unvested stock options is too speculative because it was unclear whether plaintiff would still be employed by defendant on the date the options vested). Plaintiff's reliance on Scully v. US WATS, Inc., 238 F.3d 497, 510 (3rd Cir.2005), is misplaced because the options had vested, and the damages calculation was based on the value of options at the time of defendant's breach of contract.

Here, plaintiff cites no expert evidence to support his claim for damages based on the value of the unvested stock options. In light of the speculative nature of the requested damages, Defendant's motion for summary judgment is ALLOWED as to Count IV.

E) ORDER

The Court ALLOWS Zipcar's motion for summary judgment (Dkt. No. 94) on Claims I, II, IV, and VI, and DENIES the motion as to Claims III and V.