Eye doctor cannot sue under Wage Act after practice breakup.

Byline: Pat Murphy

Following the breakup of his Plymouth practice, an ophthalmologist could not proceed with a claim for treble damages under the Wage Act for amounts allegedly due pursuant to the terms of his shareholder agreement with his partners, the Appeals Court has decided.

The plaintiff argued that he had a Wage Act claim for amounts due under a profit-sharing clause in the shareholder agreement he had with his former colleague, the defendant.

But a unanimous Appeals Court panel disagreed, reversing an award of treble damages in the amount of nearly $1.3 million.

"[I]t is clear that the distributions under paragraph V(a) of the stock agreement are not 'wages' within the scope of the Wage Act," Judge Gabrielle R. Wolohojian wrote for the panel. "Most fundamentally, they are not compensation from an employer to an employee, but rather profit distributions to shareholders to which they are entitled because of their ownership interest in the corporation, not because of their employment."

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O'Connor, et al. v. Kadrmas, Lawyers Weekly No. 11-138-19 (30 pages)

THE ISSUE: Could an ophthalmologist, following the breakup of his practice, proceed with a claim for treble damages under the Wage Act for amounts allegedly due pursuant to the terms of his shareholder agreement with his colleagues?

DECISION: No (Appeals Court)

LAWYERS: Brian H. Lamkin of Manchell & Brennan, Norwood (plaintiff)

Timothy J. Perry of Perry, Krumsiek, Boston (defense)[/box]

Professionals take heed

Defense attorney Timothy J. Perry credited plaintiff's counsel for constructing a "creative argument" for the recognition of a Wage Act claim. Perry said the Appeals Court's decision to overturn the lower court was important because most law firm, accounting and medical practices operate under a business model similar to the one his client used for his ophthalmology practice.

"The trial court found that these profits that were being divided were 'akin to a commission' because they were tied to the income that each partner brought in," Perry said. "But that's like in most law firms where the rainmakers get a bigger share of the profits."

Perry said he hoped O'Connor would dissuade Superior Court judges from entertaining similar creative arguments in the future.

"What occurred here is that a $400,000 dispute over profits became a $1.2 million judgment, which with attorneys' fees and interest tacked on, was going to become a more...