David Tanzer v. MyWebGrocer, Inc., Richard E. Tarrant, Jr. and Jeremiah F. Tarrant , 203 A.3d 1186 ( 2018 )

NOTICE: This opinion is subject to motions for reargument under V.R.A.P. 40 as well as formal
revision before publication in the Vermont Reports. Readers are requested to notify the Reporter of
Decisions by email at: JUD.Reporter@vermont.gov or by mail at: Vermont Supreme Court, 109
State Street, Montpelier, Vermont 05609-0801, of any errors in order that corrections may be made
before this opinion goes to press.
2018 VT 124
No. 2017-193
David Tanzer Supreme Court
On Appeal from
v. Superior Court, Chittenden Unit,
Civil Division
MyWebGrocer, Inc., Richard E. Tarrant, Jr. March Term, 2018
and Jeremiah F. Tarrant
Helen M. Toor, J. (summary judgment); Robert A. Mello, J. (final judgment)
Karen McAndrew and Kendall Hoechst of Dinse, Knapp & McAndrew, P.C., Burlington, for
Plaintiff-Appellee/Cross-Appellant.
Bridget C. Asay of Stris & Maher LLP, Montpelier, and Jerome F. O’Neill of Gravel & Shea, PC,
Burlington, for Defendant-Appellant/Cross-Appellee MyWebGrocer, Inc.
PRESENT: Reiber, C.J., Skoglund, Robinson, Eaton and Carroll, JJ.
¶ 1. CARROLL, J. This case arises from a dispute between an employer,
MyWebGrocer, and an employee, David Tanzer, regarding the payment of phantom shares
MyWebGrocer promised in an agreement between the parties. MyWebGrocer appeals the trial
court’s decision on summary judgment finding that MyWebGrocer breached this agreement, a jury
verdict finding that the company breached the covenant of good faith and fair dealing, the jury’s
damages awards, and a post-verdict order awarding Tanzer attorney’s fees in connection with the
litigation between the parties. Tanzer appeals the trial court’s post-verdict decision on attorney’s
fees as well, arguing that the court erroneously limited the amount of fees that he could collect.
Tanzer also appeals the trial court’s decision on summary judgment that the amount he was due
under the phantom share plan did not fall within the definition of wages for purposes of Vermont’s
wage statutes. We reverse the trial court’s decision regarding whether MyWebGrocer breached the
parties’ agreement and vacate the jury’s verdict and damages awards in connection with Tanzer’s
claim that MyWebGrocer breached the covenant of good faith and fair dealing. We also reverse the
trial court’s decision at summary judgment on Tanzer’s statutory claim and conclude that the value
of the phantom shares falls within the relevant statutory definition of wages. We need not address
the court’s post-verdict decision regarding whether Tanzer could collect attorney’s fees.
I. Factual and Procedural Background
A. The Parties and the Phantom Share Plan
¶ 2. MyWebGrocer is a company that provides web-based e-commerce systems for
grocery stores nationwide. Richard Tarrant and Jeremiah Tarrant are officers of the company.
MyWebGrocer hired David Tanzer in 2000 and he served as the company’s principal database
architect until his employment was terminated in 2008. MyWebGrocer was organized as an LLC
during the entirety of Tanzer’s employment. As part of Tanzer’s compensation package, he was
given membership in the company’s phantom share plan. Tanzer’s phantom share agreement
provided that his phantom shares would vest at a rate of 1/36 per month after successful completion
of an initial post-employment probation period. He also received lump sum phantom share awards
that vested over a specified period of years, and, for a period of his employment, also received vested
phantom shares per pay period in lieu of a portion of his salary.
¶ 3. A phantom share plan gives employees a financial stake in the employing enterprise.
In the context of a corporation, “[p]hantom stock is the grant of a right to the appreciation in the
corporation’s stock, with a fixed exercise date and method of calculation.” 5A Fletcher Cyclopedia
of the Law of Corporations § 2137.20 (2018). The same principle applies to a phantom share plan,
with the distinction that the value of an interest in a phantom share plan is tied to a distributional
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interest in an LLC, rather than the value of stocks. In contrast to an options plan, neither phantom
stock in a corporation, nor a phantom share in the distributional interest of an LLC, dilutes ownership
of the business entity as a whole. Id.; 18B Am. Jur. 2d Corporations § 1692 (2018) (“A phantom
stock plan is a bonus plan intended to give the management of a closely held corporation a financial
interest in a company without giving them an equity interest in the corporation.”).
¶ 4. Several versions of MyWebGrocer’s phantom share plan were introduced in the trial
court and are part of the record on appeal, including plans from 2000, 2001, 2005, 2008, and 2009.
When Tanzer’s employment with MyWebGrocer was terminated in 2008, he was told that he had
103,576 vested shares in the plan. Tanzer was also given a summary of the phantom share plan from
the year 2000 and a summary version of the plan dated February 21, 2008. While some of the plan
language varied across iterations, each version of the plan included a provision stating that a change
in the control of the company would trigger conversion of vested phantom shares into a distributional
interest in the company. Each plan provided a formula by which such a distributional interest would
be calculated; each plan after 2000 included a separate provision stating that the plan’s administering
committee had the authority to issue phantom shares but that the total phantom shares issued could
not exceed ten percent of the company’s overall distributional interest. Each version of the plan also
included a provision stating that the plan would be amended if MyWebGrocer converted from an
LLC to a corporation other than through holding an initial public offering (IPO), and provided a
means for converting the distributional interest associated with vested phantom shares to shares of
stock in the event of an IPO.
¶ 5. In 2009, in anticipation of a $13,000,000 investment, MyWebGrocer converted from
an LLC to an entity incorporated under the laws of Delaware. At the time of the conversion,
MyWebGrocer amended the phantom stock plan, changing the formula included in prior plans for
calculating the value of the distributional interest of the phantom shares to a formula calculating the
value of the phantom shares in terms of common stock ownership. The 2009 plan also capped the
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number of phantom shares at the number of vested shares at the time of corporate reorganization—
a total of 2,544,160 vested phantom shares. When converted using the 2009 plan’s formula, the
phantom shares were equivalent to 254,416 shares of common stock.1 The former owners of
MyWebGrocer, now shareholders in the newly formed corporation, held the remaining shares in the
company, a total of 2,250,001 shares of common stock. Just after the corporate conversion,
MyWebGrocer issued 785,462 shares of preferred stock to the investor, thereby diluting the
percentage of the company owned by common stockholders and members of the phantom share
plan, although not diminishing the value of their respective stocks and shares.
¶ 6. MyWebGrocer entered a merger agreement in 2013, which triggered a cashout of the
phantom shares. The value of the phantom shares was calculated using the 2009 plan’s formula for
valuation. MyWebGrocer offered Tanzer $538,667.45 for the phantom shares he had accrued during
his employment. He was also offered $50,885.81 from a $16,500,000 escrow account that the parties
to the merger had created by agreement and that would be paid out if certain conditions were met.
Tanzer disputed MyWebGrocer’s valuation of the phantom shares, arguing that the plan provided
that phantom shareholders collectively would receive ten percent of the total merger consideration
upon payout and that MyWebGrocer’s valuation gave phantom shareholders between seven and
eight percent of the merger consideration. After back and forth between the parties and the parties’
attorneys, MyWebGrocer offered to settle the dispute with Tanzer. Tanzer did not accept the terms
of the proposed settlement and instead filed a complaint in the superior court’s civil division.
B. The Trial Court Proceedings
¶ 7. Tanzer’s initial complaint included four counts, each essentially premised on
Tanzer’s argument that MyWebGrocer had undervalued his phantom shares. To that end, Tanzer’s
1
The reduction from 2,544,160 vested phantom shares to 254,416 shares of common stock
was the result of a ten-percent reverse share/stock split which applied to the distributional interests
in the company as well.
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complaint alleged that (1) MyWebGrocer breached its contractual obligations to Tanzer by failing
to pay him the total due under the phantom share plan, (2) the company breached the covenant of
good faith and fair dealing by “engaging in conduct intended to deny him the benefit of his bargain
with” MyWebGrocer, (3) the company was unjustly enriched by its failure to pay Tanzer the total
due for his phantom shares, and (4) MyWebGrocer violated Vermont’s wage law by witholding
Tanzer’s “deferred compensation” in the form of the total value of his phantom shares and by
requiring Tanzer to sign a release as a condition of receipt of the value of his phantom shares. In
connection with these claims, Tanzer sought compensatory damages, statutory double damages for
the alleged violation of Vermont’s wage law, attorney’s fees, punitive damages, costs and interest,
and injunctive relief precluding MyWebGrocer from releasing escrowed funds pending resolution
of the dispute with Tanzer.
¶ 8. MyWebGrocer’s answer set forth several affirmative defenses and raised six
counterclaims against Tanzer, including breach of contract, breach of the duty of loyalty, unfair
competition, two allegations of unjust enrichment, and breach of the duty of good faith and fair
dealing. Tanzer later amended his initial complaint to add a count based on promissory estoppel.
He amended his complaint again to clarify the relief sought for his claims, seeking compensatory
damages including attorney’s fees, double statutory damages and attorney’s fees for the alleged
Vermont wage law violation, punitive damages, and costs and interest.
¶ 9. The parties filed cross motions for summary judgment. Tanzer sought summary
judgment for breach of contract and for his claim that MyWebGrocer violated Vermont’s wage and
compensation law by withholding the total amount due to him for his phantom shares.
MyWebGrocer sought summary judgment on all of its claims against Tanzer.
¶ 10. The court ruled in Tanzer’s favor on his claim for breach of contract and on each of
MyWebGrocer’s counterclaims against him. The court ruled in MyWebGrocer’s favor on Tanzer’s
statutory claim. Regarding Tanzer’s contract claim, the court concluded that the 2008 phantom share
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plan given to Tanzer at the time of his termination was the controlling agreement between the parties
regarding valuation of Tanzer’s phantom shares. The court read the 2008 plan to set the total number
of phantom shares awarded at ten percent of the company’s value at the time of payout of the shares,
regardless of the intervening corporate reorganization and the plan’s provision permitting
amendment of the plan upon reorganization. The court further concluded that post-incorporation
issuance of new stock had diluted the ownership interests of all shareholders, including the phantom
shareholders, such that the phantom shareholders’ stake in the company was less than ten percent
when the value of the phantom shares were paid out. Accordingly, the court concluded that
MyWebGrocer had undervalued Tanzer’s phantom shares and breached the phantom shares
agreement between the parties.
¶ 11. Concluding that Tanzer’s alternate claims against MyWebGrocer for unjust
enrichment and promissory estoppel were premised on the same underlying facts as his contract
claim, the court ruled that these two claims were moot. Regarding Tanzer’s statutory claim for
wages, the court concluded that the phantom shares “were more like a lottery ticket than a debt.”
The court understood the phantom shares to be essentially valueless unless a triggering event
occurred, and thus not within the scope of Vermont’s wage and compensation law. The court
accordingly granted summary judgment for MyWebGrocer on this claim.
¶ 12. The court read MyWebGrocer’s counterclaims against Tanzer as premised on the
argument that Tanzer improperly used his special expertise to gain concessions from MyWebGrocer
during his employment with the company. Concluding that as a matter of law such an argument
could not support an action for breach of contract, breach of the duty of loyalty, unfair competition,
unjust enrichment, or breach of the duty of good faith and fair dealing, the court granted summary
judgment on each of these claims in Tanzer’s favor. The court’s decision on summary judgment left
a single claim alive—Tanzer’s claim against MyWebGrocer for breach of the covenant of good faith
and fair dealing, the basis of which concerned not only MyWebGrocer’s failure to pay him the
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amount he claimed was due, but also MyWebGrocer’s conduct in connection with the payout and
the dispute which followed.
¶ 13. Following discovery and several motions between the parties, a five-day jury trial on
the covenant of good faith and fair dealing claim commenced on March 20, 2017. Before the trial
began, MyWebGrocer filed a motion to exclude the use of or any reference to the court’s summary
judgment decision in Tanzer’s favor on his breach of contract claim. Tanzer argued in response that
he intended to rely on the substance of that decision to support his claim for breach of the covenant
of good faith and fair dealing. The court concluded that it would “likely be necessary to reference
previous court rulings to give the jury necessary background information and assist in the orderly
presentation of evidence” but that prior rulings could not be used to influence the jury one way or
another. The court ruled that it would instruct the jury at the start of trial that a breach of contract
claim had already been decided in Tanzer’s favor and stated that it would consider a limiting
instruction regarding prior rulings.
¶ 14. The jury found in Tanzer’s favor on his covenant of good faith and fair dealing claim.
Tanzer was awarded $100 for emotional distress, $300,000 in compensatory damages other than
emotional distress, and $750,000 in punitive damages. These awards were in addition to the amount
awarded on Tanzer’s breach of contract claim as a result of the court’s decision on summary
judgment.
¶ 15. After the trial concluded, Tanzer filed a motion requesting attorney’s fees in addition
to the awards he received in connection with the contract and covenant of good faith and fair dealing
claims. The court ordered that Tanzer could collect attorney’s fees in connection with some of
MyWebGrocer’s conduct during the course of the litigation, which the court found was dishonest
and done in bad faith. Tanzer was not permitted, however, to collect attorney’s fees in connection
with MyWebGrocer’s litigation positions, including fees expended in defense against
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MyWebGrocer’s initial counterclaims. The court deferred determination of the actual amount of
attorney’s fees that could be collected until after an appeal to this Court.
¶ 16. Both parties now appeal. MyWebGrocer appeals the court’s decision finding in
Tanzer’s favor on the contract claim, as well as the jury decision finding for Tanzer on the covenant
of good faith and fair dealing claim, the jury’s awards of compensatory and punitive damages, and
the court’s post-trial decision permitting Tanzer to recover attorney’s fees. Tanzer appeals the trial
court’s decision on summary judgment in MyWebGrocer’s favor on his claim that MyWebGrocer
violated Vermont’s wage and compensation law by withholding the amount Tanzer was due under
the phantom share plan. Tanzer also appeals the court’s post-trial decision permitting him to recover
attorney’s fees for some, but not all, of MyWebGrocer’s litigation conduct. We address each of
these issues in turn.
II. The Breach of Contract Claim
¶ 17. This Court reviews summary judgment decisions de novo, and applies the same
standard as the trial court. “The court shall grant summary judgment if the movant shows that there
is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of
law.” V.R.C.P. 56(a). The question presented here relates solely to the meaning of MyWebGrocer’s
phantom share plan, and whether the plan promised members ten percent of the equity of the
company at the time that phantom shares were paid out, regardless of the company’s organization
as an LLC or a corporation. We interpret contract provisions “to give effect to the intent of the
parties as that intent is expressed in their writing.” Hamelin v. Simpson Paper Co., 167 Vt. 17, 19,
702 A.2d 86, 88 (1997). “When the contract language is clear, the intent of the parties is taken to
be what the agreement declares.” Id. We conclude that there is no genuine dispute in this case: each
pre-2009 version of MyWebGrocer’s phantom share plan expressly contemplates the plan’s
amendment upon MyWebGrocer’s reorganization into a corporation in a manner other than by
holding an IPO; the pre-2009 plans’ share valuation formula became essentially meaningless upon
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the company’s reorganization as a corporation; and the 2009 plan amendment, undertaken when the
company reorganized into a corporation, is consistent with the pre-2009 plans’ conversion of
phantom shares in the event of an IPO. Accordingly, we reverse the trial court’s decision on this
issue.
¶ 18. The trial court’s decision began with consideration of which iteration of the phantom
share plan applied to Tanzer, and concluded that the February 2008 plan MyWebGrocer gave Tanzer
after his termination controlled. Tanzer argues on appeal that the court correctly concluded this was
the applicable plan. MyWebGrocer, by contrast, argues that the result in this case is the same
regardless of which plan applied. We agree with MyWebGrocer—whether the February 2008 plan
was controlling at the time of Tanzer’s termination does not control the eventual valuation of
Tanzer’s, or other employees’, phantom shares in the company. Thus, we will assume, without
deciding, that the February 2008 phantom share plan was effective at the time of Tanzer’s
termination. But as we explain more fully below, this does not translate into a valuation of Tanzer’s
phantom shares according to a formula in the 2008 plan or as a percentage valuation based on his
proportional interest in ten percent of the value of MyWebGrocer as a whole at the time shares were
paid out.
¶ 19. Four provisions of the February 2008 plan are relevant here:
4.2 Number of Shares Awarded. The maximum number of Phantom
Shares that may be awarded under this Plan shall be determined by
the Committee, provided, however, that the maximum number of
Phantom Shares to be awarded under this Plan shall represent a ten
percent (10%) Distributional Interest in the Company.
...
5.2 Change in Control of the Company. In the event of a Change in
Control of the Company, each Phantom Share credited to the Phantom
Share Account of a Participant shall immediately prior thereto or
coincident therewith be converted into a Distributional Interest in the
Company pursuant to the following formula:
X ÷ N * 10% = Membership Interest
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Where X = The number of outstanding Phantom Shares credited to
the Participant’s Phantom Share Account as of the date of such sale
and N equals the maximum number of Phantom Shares that may be
awarded under this Plan.
For purposes of illustration, on the date of a Change in Control a
Participant has received Awards of 20,000 Phantom Shares and the
maximum number of Phantom Shares in the Plan is 2,500,000, the
Participant’s Phantom Shares would be converted into a .08%
Distributional Interest (20,000 ÷ 2,500,000 * 10% = 0.08%).
5.3 Initial Public Offering. In the event that the Company will be
reorganized as a corporation for the purpose of becoming publicly
traded on an established securities exchange, each Phantom Share
credited to the Participant’s Phantom Share Account shall
immediately prior thereto or coincident therewith be converted into a
Distributional Interest in the Company pursuant to the formula
specified in Section 5.2. The Participant’s Distributional Interest shall
then be converted into a sufficient number of shares of the common
stock of the Company that will provide each Participant with the same
ownership interest in, and rights to share in the profits of and
distributions from the Company as would have been attributable to
such Participant’s Distributional Interest.
For purposes of illustration, on the date of the initial public offering a
Participant had received Awards of 20,000 Phantom Shares, and the
maximum number of Phantom Shares in the Plan is 2,500,000, the
Phantom Shares would be converted into a .08% Distributional
Interest (20,000 ÷ 2,500,000 [*] 10% = .08%). If there were
25,000,000 shares of common stock of the Company outstanding on
the date of the conversion of the Company from a limited liability
company to a corporation, the Participant would, thus, receive 20,000
shares of common stock of the Company.
...
5.5 Conversion of the Company to a Corporation. This Plan shall be
amended by the Committee if the Company, other than as
contemplated in Section 5.3, converts from a limited liability
company to a corporation so that the conversion of Phantom Shares
shall be to common stock of the Company and not Distributional
Interests.
These four provisions lay out the essential mechanics of the 2008 phantom share plan. First, under
Section 5.2, vested phantom shares shall be paid out upon a change in control of the company, an
event separately defined in the plan as either “a change in the ownership of the Company” or “a
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change in the ownership of a substantial portion of the Company’s assets.” Under Section 4.2, the
total number of phantom shares awarded to the group of share recipients is left to the discretion of
the plan’s administering committee, but the value of that total number equals ten percent of the
distributional interest in MyWebGrocer. The value of each individual phantom share under this plan
is calculated according to Section 5.2’s formula, which, as with the bulk ten-percent interest of the
phantom shareholders as a group, is given in terms of distributional interest. As noted above,
MyWebGrocer was organized as an LLC during the course of Tanzer’s employment. Thus, had a
change in control occurred during Tanzer’s employment, the formula in Section 5.2 of the February
2008 plan would have had meaning, as it translated vested phantom shares into a proportional
distributional interest in ten percent of the company’s total distributional interest.
¶ 20. Sections 5.3 and 5.5, on the other hand, provide for the possibility that MyWebGrocer
could reorganize as a corporation. Section 5.3 addresses the specific conversion of phantom shares
into common stock in the event of an IPO. The timing of Section 5.3’s conversion is significant for
the analysis here. Before the company converts from an LLC to a corporation, or at the time of
conversion, each phantom share is converted into a distributional interest according to Section 5.2’s
formula. Thus, the ten-percent total distributional value of all phantom shareholders is calculated
before or at the time of conversion to a corporation, as is the proportional interest in that ten percent
accorded to each individual phantom shareholder. After this initial conversion, each shareholder’s
proportional share of the distributional interest is converted into an equivalent proportional interest
in the total equity, or stock, of the newly formed corporation. In this way, each phantom shareholder
has, at the time of incorporation, the same interest in the company as the shareholder had before
incorporation, and the ten-percent bulk interest of the phantom shareholders as a group promised in
Section 5.2 is maintained at the time of incorporation. After this conversion, the IPO is held, and
newly issued shares in the company are offered on a securities exchange. The equity interest held
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by participants in the phantom share plan at the time of incorporation is thus diluted immediately
after conversion and valuation of the phantom shares.
¶ 21. Under Section 5.3 a phantom shareholder’s individual interest in the company is
converted into common stock. That is, the phantom shareholder does not simply receive a payout
for the value of the interest held in the company, as is the case for a distributional interest payout
under Section 5.2. Rather, the shareholder’s phantom shares are converted into an equity interest in
the company based on ownership of actual shares of stock. Section 5.3 thus necessarily requires a
fixed calculation of the total number of shares of stock that exist in the company. Without a fixed
number, the ten-percent interest of the phantom shareholders could not be calculated such that
ownership of actual shares could be transferred to individual phantom shareholders.
¶ 22. Finally, Section 5.5 expressly states that the phantom share plan’s calculation formula
will be amended if the company incorporates other than through an IPO. A provision permitting
such an amendment allows the plan to accommodate the different financial and equity interests in
an LLC and a corporation. On one hand, an LLC calculates its members’ stake in the entity in terms
of a distributional interest. “Distributional interest” is a term of art that describes the financial value
of an interest in an LLC. 11 V.S.A. § 4001(8) (“ ‘Distribution’ means a transfer of money or
property from a limited liability company to a member in the member’s capacity as a member or to
a transferee of the member’s distributional interest.”); id. § 4001(9) (“ ‘Distributional interest’
means the right of a member or transferee to receive a distribution from a limited liability
company.”). On the other hand, a corporation’s financial and equity interests are founded on stock
ownership. A formula, such as that in Section 5.2 of the February 2008 plan, converting phantom
shares into a distributional interest in MyWebGrocer as an LLC would be essentially meaningless
for purposes of computing the stock-based valuation of those same phantom shares within a
corporate structure. Section 5.5 gets around this problem by permitting amendment of the plan to
account for a shift in the company’s organization.
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¶ 23. As contemplated by Section 5.5, MyWebGrocer amended the phantom share plan in
2009 when the company incorporated. The company did not hold an IPO, nor did a change in control
of the company occur at this time. Thus, neither Section 5.2 nor Section 5.3 came into play—
phantom shares were not actually converted to common stock as they would have been following an
IPO, and shareholders were not paid out as they would have been in the event of a change in control.
¶ 24. Three provisions of the 2009 amended phantom share plan are relevant here:
Section 4.2 Number of Shares Awarded. The number of Phantom
Shares that have been awarded under this Plan is 2,544,160. No
further awards of Phantom Share[s] shall be made.
...
Section 5.2 Change in Control of the Company. In the event of a
Change in Control of the Company, each vested Phantom Share
credited to the Phantom Share Account of a Participant shall be
converted into one-tenth (1/10th) of one Share.
Section 5.3 Initial Public Offering. In the event that the Company
becomes publicly traded on an established securities exchange (an
“Initial Public Offering”), each vested Phantom Share credited to the
Participant’s Phantom Share Account shall be converted into one-
tenth (1/10th) of one Share.
Section 4.2 of the 2009 amended phantom share plan capped the total number of phantom shares at
the number of vested shares granted to phantom shareholders at that time. Section 5.2 provided a
conversion formula by which phantom shares would be converted to actual shares of MyWebGrocer
upon a change in control of the company. Applying this formula, 254,416 total shares of
MyWebGrocer were essentially held in reserve for dispensation to phantom shareholders upon a
change in control of the company. Other shareholders held 2,250,001 shares in the company, which,
unlike the phantom shares at the time of incorporation, represented an actual equity interest in the
company. Thus, at the time of incorporation, just over ten percent of the company’s equity was
effectively held in reserve for the phantom shareholders. Section 5.2’s conversion formula likewise
applies under Section 5.3, and thus the phantom shares held in reserve post-incorporation would be
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converted into actual shares under the same formula if MyWebGrocer held an IPO. As mentioned
above, upon incorporating, and after the 2009 plan fixed the total number of phantom shares, and by
extension, the total number of shares of stock in the company, MyWebGrocer issued 785,462 new
shares of preferred stock to an investor, thereby diluting the equity interests of all previous
shareholders, including the phantom shareholders.
¶ 25. Tanzer argues that each iteration of MyWebGrocer’s phantom share plan provided
that, upon a change in control of the company, phantom shares would be converted “to a fixed
percent of the equity of the company.” This argument reads Sections 4.2, 5.2, and 5.3 of the February
2008 plan to control the percentage of equity interest granted to phantom shareholders regardless of
whether the company remained an LLC or converted to a corporation, and, therefore, essentially
reads out Section 5.5’s provision permitting amendment of the plan upon incorporation. We
disagree with Tanzer’s interpretation for the following reasons.
¶ 26. First, although the February 2008 plan grants phantom shareholders ten percent of
the company’s distributional interest, this is not plainly equivalent to ten percent of the company’s
equity, or stock, if the company is reorganized as a corporation. “Distributional interest” is a term
of art used to describe the monetary payments made to a member in an LLC. 11 V.S.A. § 4001(9).
Had the parties intended for § 5.2 to govern the phantom share payout in the event of a change of
control in the company if it later converted to a corporation, they would have used a term consistent
with that intention, such as “equity” or “stock.”
¶ 27. Second, the 2008 plan, and each preceding iteration of the plan, permitted amendment
of the plan in the event that MyWebGrocer reorganized as a corporation other than through an IPO.
Even assuming that this provision related solely to the plan’s formula for valuation of phantom
shares, the 2009 amendment altered the phantom shares calculation to maintain the ten-percent
equity of phantom shareholders upon corporate organization. This is consistent with Section 5.3 of
the 2008 plan and that Section’s formula for conversion of phantom shares to stock in the event of
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an IPO. The phantom shares conversion set out in Section 5.3 of the February 2008 plan preserves
ten percent of the interest in the company at the instant of conversion for phantom shareholders, but
this ten percent is more or less immediately diluted. Section 5.3 plainly contemplates a timeline
wherein phantom shares convert to common stock such that phantom shareholders keep the same
proportional interest in ten percent of the corporation’s stock that they would have had in the LLC’s
distributional interest, and that conversion is immediately followed by an IPO in which new shares
are issued for sale on a securities exchange. Thus, even though phantom shareholders would hold
ten percent of the equity in the company at the instant of incorporation, that percentage would be
immediately diluted as a result of the issuance of preferred stock. This is essentially what happened
here. MyWebGrocer amended the phantom share plan to set aside ten percent of the stock issued
upon incorporation for Tanzer and other phantom shareholders, and MyWebGrocer then issued new
shares in the company just as it would have done in an IPO.
¶ 28. Common law offers no protection against the dilution of equity interests, so anti-
dilution protection must be provided by contract. M. Kahan, Anti-Dilution Provisions in Convertible
Securities, 2 Stan. J. L. Bus. & Fin. 147, 148 (1995). The trial court read Section 4.2 of the 2008
plan as, essentially, an anti-dilution provision, a conclusion that Tanzer reiterates on appeal. But
this conclusion relies on a construction that equates a ten-percent distributional interest with ten
percent of the stock issued by a corporation, ignoring the plain meaning of both Sections 4.2 and 5.3
in the 2008 plan. Therefore Section 4.2 cannot be read as an anti-dilution provision and, absent any
other anti-dilution provision in the phantom share plan, the common law rule permitting dilution
controls. “Contracts . . . are enacted against a background of common-sense understandings and
legal principles that the parties may not have bothered to incorporate expressly but that operate as
default rules to govern in the absence of a clear expression of the parties’ intent that they not govern.”
Wal-Mart Stores, Inc. Assocs. Health & Welfare Plan v. Wells, 213 F.3d 398, 402 (7th Cir. 2000).
Here, the parties’ intent regarding treatment of the phantom shares upon incorporation associated
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with an IPO is set forth in Section 5.3 of the 2008 plan. That Section does not provide for payout of
the phantom shares, but rather their conversion into actual shares of stock in the newly formed
corporation—shares that are subject to immediate dilution pursuant to the IPO. Therefore, Section
4.2’s payout provision cannot be read to guarantee a fixed ten-percent interest in MyWebGrocer
despite the company’s reorganization.
¶ 29. Given that the dilution that actually occurred here is consistent with the dilution
contemplated in Section 5.3 of the 2008 plan, we cannot say that the 2009 plan reduced the interests
of phantom shareholders impermissibly. Accordingly, we cannot conclude that MyWebGrocer
breached the phantom share agreement with Tanzer by offering to pay him the value of his phantom
shares as calculated under Section 5.2 of the 2009 plan. We therefore reverse the trial court’s
decision granting Tanzer summary judgment on his breach of contract claim against MyWebGrocer.
¶ 30. The court concluded that the resolution at summary judgment in favor of Tanzer on
his contract claim rendered Tanzer’s alternate claims for unjust enrichment and promissory estoppel
moot. Neither party had moved for summary judgment on those two claims, and neither party has
appealed that specific decision. Nonetheless, because we reverse the trial court’s decision on the
contract claim, we necessarily also reverse the trial court’s decision on the unjust enrichment and
promissory estoppel claims.
III. The Breach of the Covenant of Good Faith and Fair Dealing Claim
¶ 31. Our decision on Tanzer’s breach of contract claim controls the outcome of several of
the remaining issues on appeal, beginning with the jury verdict on Tanzer’s claim that
MyWebGrocer breached the covenant of good faith and fair dealing and the jury’s awards to Tanzer
related to that claim. We conclude that allowing the jury to consider the court’s decision on summary
judgment clouded the evidence presented to the jury regarding Tanzer’s breach of covenant claim
and therefore vacate the jury’s verdict on this claim.
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¶ 32. The covenant of good faith and fair dealing is implied in every contract. Carmichael
v. Adirondack Bottled Gas Corp. of Vt., 161 Vt. 200, 208, 635 A.2d 1211, 1216 (1993). Thus, “[a]
cause of action for breach of the covenant of good faith can arise only upon a showing that there is
an underlying contractual relationship between the parties, but breach of that underlying contract is
not necessary before bringing a tort action under the covenant.” Monahan v. GMAC Mortg. Corp.,
2005 VT 110, ¶ 54, n.5, 179 Vt. 167, 893 A.2d 298 (citation omitted). We have explained that the
covenant acts to protect the parties to a contract, and to ensure that they “act with faithfulness to an
agreed common purpose and consistency with the justified expectations of the other party.”
Carmichael, 161 Vt. at 208, 635 A.2d at 1216 (quotation omitted). The covenant’s protection does
not extend simply to actions taken in fulfillment of a contract, but also actions taken in terminating
a contract and winding up the contractual relationship between the parties. Id. at 210, 635 A.2d at
1217. The covenant likewise “covers not only contract performance, but also contract enforcement,”
including “settlement and litigation of contract claims and defenses.” Langlois v. Town of Proctor,
2014 VT 130, ¶ 61, 198 Vt. 137, 113 A.3d 44 (quotation omitted). The covenant of good faith and
fair dealing “is violated by dishonest conduct such as conjuring up a pretended dispute, asserting an
interpretation contrary to one’s own understanding, or falsification of facts.” Id.
¶ 33. A breach of the covenant may be shown by evidence that a party to a contract acted
in such a way as to “violate[] community standards of decency, fairness or reasonableness,
demonstrate[] an undue lack of diligence, or [take] advantage of [other parties’] necessitous
circumstances.” Monahan, 2005 VT 110, ¶ 3. A party may collect punitive damages under the
covenant where the party can show that the other party acted with actual malice. Id. ¶ 54 n.5.
“Actual malice may be shown by conduct manifesting personal ill will, evidencing insult or
oppression, or showing a reckless or wanton disregard of plaintiff’s rights.” Id. ¶ 4. Where a party
alleges both breach of contract and breach of the implied covenant of good faith and fair dealing,
dual causes of action are permitted only where the different actions are premised on different
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conduct—“we will not recognize a separate cause of action for breach of the implied covenant of
good faith and fair dealing when the plaintiff also pleads a breach of contract based upon the same
conduct.” Id. ¶ 54, n.5 (emphasis in original); see Ferrisburgh Realty Inv’rs v. Schumacher, 2010
VT 6, ¶ 26, 187 Vt. 309, 992 A.2d 1042.
¶ 34. As we have explained, whether conduct breaches the covenant is a question of fact
that depends heavily on the context of the conduct alleged to have breached the covenant.
Carmichael, 161 Vt. at 209, 635 A.2d at 1217. So a jury instruction concerning a breach of the
covenant will list few “precise analytical elements,” but will instead ask the jury to determine
whether, given the surrounding context of the alleged conduct, that conduct constitutes a breach. Id.
¶ 35. The problem in this case arises from the context-dependent nature of an action for
breach of the covenant. Although the court’s written decision on summary judgment was not
admitted into evidence, the court did instruct the jury that the court had previously decided a breach
of contract claim in Tanzer’s favor. The court also permitted witness testimony regarding
MyWebGrocer’s phantom share plans, dilution of the phantom shareholders’ stake in the company,
and the different amounts payable to Tanzer under the parties’ warring interpretations of the
phantom share plan and the court’s decision in Tanzer’s favor on the plan interpretation.
¶ 36. For example, during MyWebGrocer’s cross examination of Tanzer, the following
exchange regarding MyWebGrocer’s pretrial attempt to settle the dispute with Tanzer occurred:
Attorney: And MyWebGrocer has tried to resolve this case with you,
has it not?
Tanzer: I would strongly disagree with that.
Attorney: Would you agree with me that in March of 2014, that
MyWebGrocer made an offer to you—
Tanzer: Um-hum.
Attorney: —through your attorney—
Tanzer: Um-hum.
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Attorney: —to pay you the—to keep the amount you already had—no
question about that—to pay you another fifty thousand dollars and to
pay you your attorneys’ fees, to date?
Tanzer: That was two hundred thousand dollars below the amount that
was clearly delineated, in the phantom share plan, owed to me. I
didn’t consider that to be a valid offer.
Attorney: Okay. That was before there was a decision as to whether
or not that phantom share plan should be read the way that you believe
it should be read?
Tanzer: Well, so here we have a problem.
Attorney: Excuse me. My question is—
Tanzer: Um-hum.
Attorney: —you interpreted the plan that way and eventually, the
court did agree with you?
Tanzer: Absolutely, it did.
Attorney: That’s no question, okay.
MyWebGrocer’s settlement attempt followed the company’s intial offer to pay Tanzer in accordance
with the amount due under Section 5.2 of the 2009 phantom share plan, which we have decided here
was the correct amount due under the parties’ agreement. Tanzer’s claim for breach of the covenant
was premised in part on his argument that MyWebGrocer unreasonably delayed litigation between
the parties. And in response to that argument, MyWebGrocer attempted to elicit testimony that it
had tried to settle the parties’ dispute pretrial, but in eliciting that testimony, Tanzer also testified as
to the court’s decision finding that his interpretation of the phantom share plan was correct and the
substantial sum of money at issue under the different plan interpretations. In this way, the summary
judgment decision on the breach of contract claim clouded the issues in the breach of covenant claim.
¶ 37. The parties’ alternate interpretations of the phantom share plan came up again during
Tanzer’s cross examination of Jeremiah Tarrant, one of the named defendants and a MyWebGrocer
corporate officer. Here, Tanzer’s attorney states the amount that Tanzer would have been due under
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the 2008 plan if that plan’s ten-percent distributional interest payable to phantom shareholders upon
a change in control of the company was equivalent to a ten-percent equity interest post-incorporation
and controlled the amount due to Tanzer. The exchange is as follows:
Attorney: Because if you had paid him under the 2008 plan, you would
have paid him the 734,000 plus the 69,000 that [Tanzer’s attorney]
asked for, wouldn’t you?
Tarrant: No. That’s not accurate.
Attorney: What’s inaccurate about that?
Tarrant: Your statement was—he got treated the same as everybody,
ourselves included. Everybody was handled identically.
Attorney: So you mean you cheated everybody else as well? You
short changed them?
Tarrant: No, I wouldn’t cheat anybody.
Attorney: Okay. Thanks, that’s all I have.
This exchange seems to invite the jury to conclude that MyWebGrocer breached the covenant of
good faith and fair dealing based on MyWebGrocer’s failure to pay Tanzer the amount the court
incorrectly concluded he was due under the 2008 phantom shares plan. Again, in this way, the
court’s summary judgment decision on Tanzer’s breach of contract claim was interwoven with the
remainder of the evidence before the jury and likely affected the jury’s verdict on Tanzer’s claim for
breach of the covenant of good faith and fair dealing.
¶ 38. The court’s instructions to the jury included a limiting instruction—that although the
court’s prior ruling regarding interpretation of the phantom share plan should be assumed correct,
“that ruling [had] nothing whatsoever to do with . . . the entirely separate claim of whether the
defendant, MyWebGrocer, breached the implied covenant of good faith and fair dealing.” The court
also correctly instructed the jury regarding the implied covenant of good faith and fair dealing—
“that MyWebGrocer made an implied promise not to do anything to destroy or impede Mr. Tanzer’s
ability to get the benefits of his agreement with MyWebGrocer under the phantom share plan” and
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that “bad faith implies an intention to mislead or deceive another, or a neglect or refusal to fulfill
some duty or other contractual obligation not prompted by an honest mistake or disagreement.” But
the jury was also asked to draw inferences within the context of the entire field of evidence presented,
including testimony such as that included above regarding the parties’ different interpretations of
the phantom shares plan. The court’s summary judgment decision on the breach of contract claim
thus colored the background of the breach of the covenant claim and filled in at least part of the
context within which the jury made its decision. Because the summary judgment decision was
incorrect, and the context of the covenant claim was accordingly incorrect, the jury’s verdict cannot
stand.
¶ 39. This is not to say that Tanzer may not be able to pursue a claim for breach of the
covenant of good faith and fair dealing. Tanzer presented evidence beyond that relating to the breach
of the contract between the parties, and the conduct alleged to underpin Tanzer’s contract and
covenant claims does not completely overlap.
¶ 40. As noted above, the covenant covers not just contract fulfillment, but also contract
enforcement, including settlement and litigation. Langlois, 2014 VT 130, ¶ 61. Even so, there is a
distinction between litigation conduct that violates the covenant and litigation conduct that is an
aggressive prosecution or defense. Litigation conduct that reflects dishonesty—“such as conjuring
up a pretended dispute, asserting an interpretation contrary to one’s own understanding, or
falsification of facts”—violates the covenant of good faith and fair dealing. Id. Litigation conduct
falling below this high bar does not. Because we are remanding Tanzer’s covenant claim, we need
not consider the trial court’s decisions in the first trial regarding whether particular acts alleged by
Tanzer as violating the covenant fell within the umbrella of litigation conduct suggesting dishonesty.
Nevertheless, we emphasize that any litigation conduct alleged to have breached the covenant must
fall within the narrow scope of dishonest conduct.
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¶ 41. We likewise need not consider MyWebGrocer’s arguments related to the jury’s
damages awards or the parties’ arguments related to whether Tanzer could recover attorney’s fees.
Any damages awards that may follow a new trial on the covenant claim will need to be considered
in light of the evidence presented in a new trial. It nonetheless bears repeating that a party may only
pursue punitive damages on a breach of the covenant claim when the party has presented evidence
that the other party acted with actual malice—as “shown by conduct manifesting personal ill will,
evidencing insult or oppression, or showing a reckless or wanton disregard of plaintiff’s rights.”
Monahan, 2005 VT 110, ¶ 4 (quotation omitted). Any request for attorney’s fees will also need to
be considered in light of the evidence presented in a new trial. Though here again, we emphasize
that attorney’s fees are only recoverable upon a showing of bad faith litigation conduct. See id.
¶¶ 76-80. As we explained in In re Gadhue, “where the wrongful act of one person has involved
another in litigation . . . or has made it necessary for that other person to incur expenses to protect
his interests, litigation expenses, including attorney’s fees, are recoverable.” 149 Vt. 322, 327, 544
A.2d 1151, 1154 (1987) (quotation omitted).2
IV. The Statutory Claim
¶ 42. This brings us to the final issue on appeal. Tanzer argues that MyWebGrocer violated
Vermont statutes governing the payment of wages, 21 V.S.A. §§ 341-348, when the company did
2
Because we are vacating the jury’s verdict, we also need not consider MyWebGrocer’s
argument that Tanzer’s trial counsel impermissibly inserted her own testimony into the record during
her cross examination of a MyWebGrocer witness leading to prejudice to MyWebGrocer’s defense.
Professional Rule of Conduct 3.7 recognizes the possible prejudice inherent in permitting an attorney
to give testimony in a proceeding in which the attorney represents a client. As the comment to the
Rule states: “Whether the tribunal is likely to be misled or the opposing party is likely to suffer
prejudice depends on the nature of the case, the importance and probable tenor of the lawyer’s
testimony, and the probability that the lawyer’s testimony will conflict with that of other witnesses.”
Comment, V.R.Pr.C. 3.7. In this case, MyWebGrocer argues that Tanzer’s attorney effectively
testified regarding settlement negotiations between the parties through the questions she asked
MyWebGrocer’s witness during cross examination. We need not fully address this here, but we do
note that Rule 3.7 counsels strongly against permitting an attorney to ask a witness questions that
introduce the attorney’s personal knowledge of the subject of the witness’s testimony.
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not pay him the amount Tanzer claimed was due under the phantom share agreement. The trial court
granted summary judgment to MyWebGrocer on this claim, concluding that the payment due under
the phantom share agreement was uncertain—“more like a lottery ticket than a debt”—and thus did
not fall within the definition of wages. We disagree, and therefore reverse.
¶ 43. Wages are defined as “all remuneration payable for services rendered by an
employee, including salary, commissions, and incentive pay.” Id. § 341(5). We have not previously
considered whether payout of phantom shares according to the kind of agreement in play here falls
within the scope of wages for purposes of this statutory scheme. We have held that the purpose of
Vermont’s wage statutes “is to ensure that workers are paid in a timely manner.” Stowell v. Action
Moving & Storage, Inc., 2007 VT 46, ¶ 8, 182 Vt. 98, 933 A.2d 1128. We have also explained that
the wage statutes, “[a]s remedial statutes, . . . must be liberally construed.” Id. The question
presented here is one of statutory interpretation, and our review of statutory language is de novo.
State v. Love, 2017 VT 75, ¶ 9, __ Vt. __, 174 A.3d 761. When we construe a statute, we begin
with the plain language of the statute. Id. If the plain language does not speak to the question
presented, we look to the legislative purpose behind the statute. Id.
¶ 44. The statutory definition of wages is broad, though it is not without parameters. In
other contexts, we have defined wages as earnings. Perrault v. Chittenden Cty. Transp. Auth., 2018
VT 58, ¶ 18, __ Vt. __, 192 A.3d 381; Quinn v. Pate, 124 Vt. 121, 124, 197 A.2d 795, 797 (1964).
The definition of earnings is likewise broad—“earnings are something earned as compensation for
labor or the use of capital, a broader definition than the conventional definition of wages, which are
ordinarily defined as amounts of money paid daily or weekly for labor.” Perrault, 2018 VT 58, ¶ 18
(quotations omitted). We relied on this definition of wages in Stowell, and it guides our analysis in
this case. 2007 VT 46, ¶ 10. The precise question before us, then, is whether payout of Tanzer’s
phantom share award qualifies as compensation earned through Tanzer’s service to MyWebGrocer.
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¶ 45. Other states that have considered similar questions have identified two factors as
relevant to this question: (1) whether the compensation at issue is awarded because of the
employee’s service, or because of the growth and financial success of the employer, and (2) whether
the employer has discretion regarding whether to award the compensation. See, e.g., Weems v.
Citigroup, Inc., 961 A.2d 349, 357 (Conn. 2008); Truelove v. Ne. Capital & Advisory, Inc., 738
N.E.2d 770, 771-72 (N.Y. 2000); Coen v. SemGroup Energy Partners G.P., LLC, 2013 OK CIV
APP 75, ¶ 21, 310 P.3d 657. For example, in Truelove, a New York court held that an employee’s
bonus, which “if paid, w[ould] reflect a combination of the individual’s performance and Northeast
Capital’s performance,” did not fall within a statutory definition of wages, which was similar to
Vermont’s. 738 N.E.2d at 771-72 (alteration in original) (quotation omitted). The court explained
that the bonus was “in the nature of a profit-sharing arrangement and [was] both contingent and
dependent, at least in part, on the financial success of the business enterprise.” Id. at 772. The
amount of the bonus was not fixed, but rather depended on the financial success of the company.
Just as importantly, the terms of the bonus distribution in the employee’s compensation agreement
stated that bonuses would be paid at the employer’s discretion and the employee forfeited the right
to any distributed bonus upon ceasing employment with the company. Id. at 771-72. The Truelove
claimant had resigned before payment of the bonus, and thus, though the bonus was scheduled to be
paid, the company had discretion to cancel payment. The bonus did not fall within the statutory
definition of wages because payment of the bonus was tied to the company’s financial success as
much as the employee’s contributions to the company, and payment of the bonus was in the sole
discretion of the employer.
¶ 46. The Connecticut Supreme Court followed Truelove’s reasoning in Weems to
conclude, similarly, that employee bonuses did not fall within the statutory definition of wages. 961
A.2d at 356. In that case, the corporate defendant paid portions of employee bonuses in restricted
stock in the company. And as in Truelove, the relevant compensation agreement between employees
24
and the company provided that bonuses were awarded at the discretion of the company and
employees forfeited bonuses upon ceasing employment with the company. Id. at 353. The
Connecticut court adopted Truelove’s statement that the relevant wage statutes, “ ‘in expressly
linking earnings to an employee’s labor or services personally rendered, contemplate[d] a more
direct relationship between an employee’s own performance and the compensation to which that
employee is entitled.’ ” Id. at 356 (quoting Truelove, 738 N.E.2d at 770). On the other hand,
“bonuses that are awarded solely on a discretionary basis, . . . not linked solely to the ascertainable
efforts of the particular employee, are not wages.” Id. at 357.
¶ 47. An Oklahoma court employed similar reasoning in Coen in deciding whether
phantom units, paid out upon a change in control of the company, qualified as wages under an
Oklahoma law analogous to Vermont’s wage statutes. The court held that they did not for three
primary reasons. 2013 OK CIV APP 75, ¶ 23. First, the plan under which the phantom units were
issued was an incentive compensation plan that the court concluded was meant to increase the
performance of both the company and individual employees, thus the award of phantom units did
not depend solely on the employee’s performance. Id. ¶ 22. And to the extent that an award under
the plan was based on the employee’s performance, any award was linked to the employee’s future
performance, not to services the employee had already rendered to the company. Id. Second, the
plan under which units were issued reserved discretion in plan administrators regarding whether to
award phantom units until the units had vested. Id. And finally, phantom units, like the phantom
shares in this case, were payable only upon a change in control of the company. Id. ¶ 23. In other
words, whether the phantom units were payable at all depended entirely on factors outside of an
individual employee’s control.
¶ 48. With a single caveat, we find the reasoning of these courts persuasive. Vermont’s
wage statutes are directed at “ensur[ing] that workers are paid in a timely manner.” Stowell, 2007
VT 46, ¶ 8. Thus, the statutes govern an employer’s duty to pay an employee wages that are actually
25
due; the way in which wages may become due is beside the point. That is, if a payment falls within
the definition of wages for purposes of the wage statutes, the triggering event that renders that
payment due is irrelevant. We accordingly find the Oklahoma court’s final argument unpersuasive.
And thus, in this case, the fact that the phantom share plan predicated any payment on a change in
control of MyWebGrocer is not relevant to consideration of whether, once the phantom shares were
actually payable, the amount due under the phantom share plan met the definition of wages.
¶ 49. That said, the core reasoning of Truelove, Weems, and Coen is otherwise in
agreement with our definition of wages as earnings and the remedial purpose of Vermont’s wage
statutes. And here, we conclude that the phantom share payout satisfies the necessary criteria for
wages.
¶ 50. It is undisputed that Tanzer received phantom shares as part of his compensation
package. Shares vested at a set rate during Tanzer’s employment, they were given in bulk
installments, and, for a period of time during Tanzer’s employment, he received phantom shares in
exchange for a reduced salary. Like the bonus plans at issue in Truelove and Weems, the actual
monetary value of the phantom shares was tied to MyWebGrocer’s financial success, but unlike the
bonus plans at issue in those cases, Tanzer’s receipt of the phantom shares upon a change in control
of MyWebGrocer was tied neither to Tanzer’s service to the company nor to MyWebGrocer’s
financial success. That is, payout of the phantom shares did not directly depend on MyWebGrocer’s
growth, but rather on the occurrence of a specified triggering event. Although the occurrence of that
triggering event, a change in control of the company, did in this case flow from the financial success
of the company, the plan itself did not predicate a change in control upon growth of the company.
Thus, we cannot say that payout of the phantom shares was linked solely to the success of
MyWebGrocer, and characterizing the phantom shares as incentive pay would accordingly go too
far. Rather, payout under the phantom share plan was guaranteed simply on a change in control,
regardless of the causes of that change in control. And once a change in control occurred,
26
MyWebGrocer had no discretion under the phantom share plan to decline to pay Tanzer or other
phantom shareholders the value of their phantom shares. For these reasons, we conclude that the
value of Tanzer’s phantom shares meets the definition of wages for purposes of Vermont’s wage
statutes. We accordingly reverse the trial court’s decision on summary judgment and remand for
further proceedings consistent with this opinion.
The trial court’s summary judgment decision on the breach of contract claim is reversed.
The trial court’s summary judgment decisions on the unjust enrichment, promissory estoppel, and
wage statute claims are reversed and remanded for proceedings consistent with this opinion. The
jury’s verdict on the breach of the covenant of good faith and fair dealing claim is vacated.
FOR THE COURT:
Associate Justice
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