Hoffman v. Thras.io Inc.

UNITED STATES DISTRICT COURT

DISTRICT OF MASSACHUSETTS

___________________________________

)

SASHA HOFFMAN, )

)

Plaintiff, )

) Civil Action

v. ) No. 20-12224-PBS

)

THRAS.IO INC., JOSHUA SILBERSTEIN, )

and CARLOS CASHMAN, )

)

Defendants. )

______________________________ )

MEMORANDUM AND ORDER

May 10, 2021

Saris, D.J.

INTRODUCTION

Plaintiff Sasha Hoffman worked for defendant Thras.io Inc.,

a start-up, for six months under a series of contracts that

identified her as an independent contractor. Hoffman claims that

Thras.io and its leaders, defendants Joshua Silberstein and Carlos

Cashman, induced her to work for them by repeatedly promising her

an equity grant in the company. Thras.io’s valuation has since

soared, allegedly raising the value of Hoffman’s promised equity

grant to approximately $7.5 million. Hoffman never received an

equity grant, and Defendants deny that she is owed one. Hoffman

filed claims against all defendants for misclassification as an

independent contractor in violation of Mass. Gen. Laws ch. 149,

§§ 148B and 150 (Count I), common law fraud (Count II), violation

of the Securities Exchange Act, 15 U.S.C. § 78(j)(b) (Count III),

and violation of Mass. Gen. Laws ch. 93A, § 11 (Count VI), as well

as claims against Thras.io for breach of contract (Count IV) and

promissory estoppel (Count V). Defendants now move to dismiss all

claims.

After hearing, the Court ALLOWS in part and DENIES in part

Defendants’ motion to dismiss (Dkt. 12).

FACTUAL BACKGROUND

The following facts are derived from the complaint and must

be accepted as true at the motion to dismiss stage. See Foley v.

Wells Fargo Bank, N.A., 772 F.3d 63, 71-72 (1st Cir. 2014).

I. Parties

Plaintiff Sasha Hoffman (“Hoffman”) is a former investment

banker with experience in executive management of early-stage

start-ups. She is a citizen of California.

Defendant Thras.io Inc. (“Thras.io”) acquires and optimizes

Amazon third-party businesses. It is a Delaware corporation with

its principal place of business in Walpole, Massachusetts.

Defendants Joshua Silberstein (“Silberstein”) and Carlos Cashman

(“Cashman”) are co-Chief Executive Officers, co-founders, and

members of the Board of Directors at Thras.io. At all relevant

times, Silberstein and Cashman were the only members of the Board

of Directors. Silberstein is a citizen of New York, and Cashman is

a citizen of Massachusetts. Both Silberstein and Cashman are named

in their individual capacities.

II. Pre-Contract Equity Promises

In early 2019, Defendants recruited Hoffman to work for

Thras.io in a senior management role. Because Thras.io was in an

early start-up phase at the time Defendants recruited her, they

balanced Thras.io’s inability to pay a competitive wage with the

promise of equity in the company. The promised equity was “a

critical component of persuading [her] to invest her time and

talents in Thras.io.” Dkt. 1-1 ¶ 1. She claims that the “primary

reason [she] was willing to consider working for Thras.io was

Silberstein and Cashman’s repeated assurance that she would

receive a substantial equity stake in the Company if she would

work with them.” Id. ¶ 19.

Between January and May 2019, before Hoffman signed any

documents or formally agreed to work for Thras.io, Defendants

repeatedly and explicitly promised her an equity grant of between

$1 million and $2 million based on the Q1 2019 valuation of

approximately $22 million, when Thras.io’s stock was valued at no

more than $1.00 per share. However, once Hoffman began working at

Thras.io, Silberstein and Cashman told her that all Thras.io

employees “were waiting for their equity grants because the Company

did not have a valid ‘409A valuation,’” which companies use to set

equity grant prices “in a manner that satisfies the IRS and avoids

tax liability for the employee at the time of the grant.” Id. ¶ 2;

see also id. ¶ 21. Defendants repeatedly assured Hoffman, in

conversations both before and after she started working at

Thras.io, that “(1) as soon as they had a 409A valuation, they

would issue her equity grant; (2) her grant would be ‘trued up’ to

be based on the valuation from Q1 2019; and (3) her vesting would

begin on May 1, 2019 and she would be vested based upon a 4-year

vesting schedule from that date regardless of whether she agreed

to take a long-term position at Thras.io or not.” Id. ¶ 24.

III. The Consulting Agreements

Hoffman began working for Thras.io in May 2019. She signed a

“Consulting Agreement” for a trial period from May 1, 2019 to July

31, 2019. Silberstein signed the Consulting Agreement on behalf of

Thras.io. Hoffman later signed three additional “Consulting

Agreements” extending her work term in August, September, and

October 2019. Silberstein signed the August and September

Consulting Agreements, and Danny Boockvar, Thras.io’s President,

signed the October Consulting Agreement. Each of the Consulting

Agreements designated her as an independent contractor. At the

same times, Hoffman also signed a non-disclosure agreement that

designated her as an employee. Each Consulting Agreement contained

the following integration clause:

Entire Consulting Agreement. This Consulting Agreement

(including any exhibits, schedules and other documents

referred to herein) contains the entire understanding

between the parties hereto with respect to the subject

matter hereof and supersedes any prior understandings,

agreements or representations, written or oral, relating

to the subject matter hereof.

Dkts. 13-1 at 6, 13-2 at 6, 13-3 at 6, 13-4 at 6. Further, each

Consulting Agreement contained the following modification clause:

Modification, Amendment, Waiver or Termination. No

provision of this Consulting Agreement may be modified,

amended, waived or terminated except by a prior

instrument in writing signed by the parties to this

Consulting Agreement. No course of dealing between the

parties will modify, amend, waive or terminate any

provision of this Consulting Agreement or any rights or

obligations of any party under or by reason of this

Consulting Agreement.

Id.

Defendants required Hoffman to devote her full-time efforts

to Thras.io. She was unable to pursue any outside opportunities

while working for the company, and she operated as a member of

Thras.io’s senior management team. At no time during her employment

by Thras.io from May to October 2019 did Hoffman perform work for

any other entity. Hoffman used a company email address and a

company computer, had keys to the company offices in Boston and

New York, participated in senior management meetings, and often

worked more than forty hours per week.

Each time Hoffman extended her work term and signed a new

Consulting Agreement, Defendants promised her that she would

receive her equity grant as soon as a valid 409A valuation for the

company came through, and her decision to continue working for

Thras.io was based primarily on these promises. By August 2019,

Hoffman became aware that other employees had received their equity

grants. When she confronted Defendants about this, they told

Hoffman that it would be “‘easier’ to roll the grant into her long-

term contract or provide it at her departure from the Company.”

Dkt. 1-1 ¶ 52. Defendants “specifically and explicitly committed

to Ms. Hoffman that she would receive this equity regardless of

whether she took on a long-term role with the Company.” Id.

IV. Post-Departure Equity Promises

In October 2019, the parties agreed that Hoffman would not

take on a permanent role at Thras.io and that her employment would

end on October 31, 2019. Hoffman met with Silberstein on October

30, 2019, when they agreed that Thras.io would grant her $1.2

million in equity over a four-year vesting schedule based on the

Q1 2019 valuation of the company. Because Hoffman worked for

Thras.io for six months, her grant entitled her to $150,000 in

Thras.io equity pegged to the Q1 2019 valuation. Silberstein

repeated at the October 30 meeting that Hoffman would be provided

with her equity as soon as the company had a valid 409A valuation

and that Thras.io would “true up” the grant to ensure she received

the full value of the equity promised to her. Id. ¶ 60.

Silberstein and Cashman repeatedly acknowledged the promised

equity in writing in emails to Hoffman. For example, a January 7,

2020 email from Silberstein states, “Once the valuation is

completed, we’ll know what the strike price is for the updated

shares, and can explore how much impact that has on the overall

grant.” Id. ¶ 68. A March 15, 2020 email from Silberstein similarly

states, “[We] now need to wait until we conclude the new financing

before we can issue new options/shares. . . . [T]he bottom line is

that if I were to issue you options right now you’d potentially

have a significant tax liability if the strike price turned out to

be lower than where the 409(a) eventually places the valuation.”

Id. ¶ 69. An April 10, 2020 email from Silberstein states, “The

grant will be pegged to the fmv at the time we discussed it, not

the 409(a). . . . We can discuss true-up mechanics… there is more

than one way to accomplish that.” Id. ¶ 70. And an April 14, 2020

email from Silberstein states, “The quantum of shares won’t change.

The exercise price will, but it should amount to a rounding error

in the long run. We can discuss what protections are appropriate

to keep your economics unaffected.” Id. ¶ 71. On June 5, 2020,

Silberstein expressly confirmed the terms of the equity grant to

Hoffman in a telephone call.

V. The Dispute

On July 27, 2020, Thras.io’s general counsel sent an email to

Hoffman stating, “Since the time of your original conversations

with Josh [Silberstein], we have decided against affecting ‘true-

ups’ such as you are suggesting.” Id. ¶ 73. By that time, the

company’s valuation had skyrocketed to upwards of $1 billion. Given

the significant increase in Thras.io’s valuation since Q1 2019,

Hoffman’s equity grant, if “trued-up,” is now worth approximately

$7.5 million.

Hoffman alleges that, in addition to its failure to provide

the promised equity grant, Thras.io did not provide her with

unspecified “customary benefits of employment received by other

Thras.io employees” because of her designation as an independent

contractor. Id. ¶ 77.

On November 20, 2020, Hoffman filed her complaint in Norfolk

County Superior Court. On December 15, 2020, Defendants removed to

this Court. Defendants now move to dismiss all counts for failure

to state a claim.

MOTION TO DISMISS

I. Legal Standard

A Rule 12(b)(6) motion is used to dismiss complaints that do

not “state a claim upon which relief can be granted.” See Fed. R.

Civ. P. 12(b)(6). To survive a Rule 12(b)(6) motion to dismiss,

the factual allegations in a complaint must “possess enough heft”

to state a claim to relief that is plausible on its face. Bell

Atl. Corp. v. Twombly, 550 U.S. 544, 557 (2007). In evaluating the

motion, the Court must accept the factual allegations in the

plaintiff’s complaint as true, construe reasonable inferences in

the plaintiff’s favor, and “determine whether the factual

allegations in the plaintiff’s complaint set forth a plausible

claim upon which relief may be granted.” Foley, 772 F.3d at 71

(cleaned up). On a motion to dismiss, courts generally may consider

“only the complaint, documents attached to it, and documents

expressly incorporated into it.” Id. at 72.

II. Analysis

a. Misclassification (Count I)

Under Massachusetts law, an employer who both “fails to

properly classify an individual as an employee” under the statutory

test and “fails to comply, in any respect,” with one of several

listed provisions is subject to liability.1 Mass. Gen. Laws ch.

149, § 148B(d).

1 The Massachusetts Attorney General has described those statutes

as:

• The wage and hour laws set forth in M.G.L. c. 149.

• The minimum wage law set out in M.G.L. c. 151, s. 1A,

1B, and 19; 455 CMR 2.01, et seq.

• The overtime law set forth in M.G.L. c. 151, s. 1,

1A, 1B, and 19.

• The law requiring employers to keep true and accurate

employee payroll records, and to furnish the records

to the Attorney General upon request as required by

M.G.L. c. 151, s. 15.

• Provisions requiring employers to take and pay over

withholding taxes on employee wages. M.G.L. c. 62B.

• The worker’s compensation provisions punishing

knowing misclassification of an employee. M.G.L. c.

152, s. 14.

Office of the Attorney General, “An Advisory from the Attorney

General’s Fair Labor Division on M.G.L. c. 149, s. 148B,” Advisory

2008/1, at 4 (footnote omitted), https://www.mass.gov/doc/attorney

-generals-advisory-on-the-independent-contractor-law; see Mass.

Gen. Laws ch. 149, § 148B(d).

Defendants argue that Hoffman has not stated a plausible claim

under § 148B(d) because (1) equity grants do not constitute “wages”

under the Mass. Gen. Laws ch. 149 and (2) she has not alleged

sufficient facts to support a claim of withheld employee benefits.

The Wage Act requires timely payment of wages earned by an

employee. Mass. Gen. Laws ch. 149, § 148. It defines “wages” to

include “holiday or vacation payments due to an employee under an

oral or written agreement” and certain “definitely determined”

commissions. Id. The term “wages” is not otherwise defined. When

analyzing the term “wages” under the statute, “courts have been

reluctant to extend its reach beyond the wages, salary, holiday

pay, vacation pay, and definitely determined commissions which the

statute expressly mentions.” Roma v. Raito, Inc., No. 1:13-CV-

10297-LTS, 2015 WL 1523098, at *7 (D. Mass. Mar. 31, 2015). Courts

have refused to adopt “a broad definition of wages” because the

Act’s purpose is to prevent the unreasonable detention of wages.

Weiss v. DHL Express, Inc., 718 F.3d 39, 47 (1st Cir. 2013) (citing

Bos. Police Patrolmen’s Ass’n, Inc. v. City of Boston, 761 N.E.2d

479, 481 (Mass. 2002). In keeping with this narrow purpose, the

Supreme Judicial Court has held that a discretionary stock bonus

contingent on continued employment until the vesting period was

not covered by the Wage Act. See Weems v. Citigroup, Inc., 900

N.E.2d 89, 94 & n.10 (Mass. 2009). One court has held that an

equity grant is not a “wage.” See Sterling Rsch. Inc. v.

Pietrobono, Civ. Action No. 02-40150-FDS, 2005 WL 3116758, at *14

(D. Mass. Nov. 21, 2005) (holding that equity “intended as a salary

substitute that was earned over time and was part of his incentive

compensation bonus” was not a wage (cleaned up)). Here, the

material terms of the alleged grant of equity were not negotiated

until the end of the alleged employment. Based on these

allegations, this Court holds that Hoffman has not made a plausible

claim that the equity grant was a “wage” under the Wage Act.

In conclusory fashion, Hoffman also alleges that she did not

receive any of the customary benefits of employment received by

other Thras.io employees. Hoffman’s specific allegation that

Defendants deprived her of employee benefits including health

insurance and the employer share of her payroll taxes and that

they violated the overtime requirements of Mass. Gen. Laws. ch.

151, § 1A was raised for the first time in her opposition.

The Court ALLOWS the motion to dismiss as to Count I with

respect to the equity grant. However, Hoffman may move to amend

her complaint to provide more specific factual allegations

regarding the alleged denial of benefits and violation of overtime

requirements.

b. Common Law Fraud (Count II)

Massachusetts common law fraud requires (1) “a false

representation of a material fact,” (2) “made with knowledge of

its falsity,” (3) “for the purpose of inducing a party to act

thereon,” and (4) “that the party relied upon the representation

as true and acted upon it to its detriment.” CardiAQ Valve Techs.,

Inc. v. Neovasc, Inc., 57 F. Supp. 3d 118, 123 (D. Mass. 2014)

(citing Slaney v. Westwood Auto, Inc., 322 N.E.2d 768, 779 (Mass.

1975)). The party alleging fraud “must state with particularity

the circumstances constituting fraud or mistake.” Fed. R. Civ. P.

9(b). In other words, “the pleader usually is expected to specify

the who, what, where, and when of the allegedly false or fraudulent

representation.” Alternative Sys. Concepts, Inc. v. Synopsys,

Inc., 374 F.3d 23, 29 (1st Cir. 2004).

Defendants argue that Hoffman has failed to allege an

actionable misstatement with sufficient particularity. Further,

they claim that the Consulting Agreement’s integration clause

forecloses Hoffman’s fraud claim because she negotiated and

voluntarily signed the contract, which specifically addressed her

compensation. Dkt. 13 at 18 (citing Starr v. Fordham, 648 N.E.2d

1261, 1268 (Mass. 1995)). The Supreme Judicial Court has held that

“[a]n integration clause in a contract does not insulate

automatically a party from liability where he induced another

person to enter into a contract by misrepresentation.” Starr, 648

N.E.2d at 1268; see also Shawmut-Canton LLC v. Great Spring Waters

of Am., Inc., 816 N.E.2d 545, 549 (Mass. App. Ct. 2004) (“[I]n

cases of fraudulent inducement, relief is not barred by an

integration clause, even where the parties are sophisticated and

their bargaining powers are equal.”). However, where a contract is

fully negotiated and signed, a plaintiff may not raise as

fraudulent “any prior oral assertion inconsistent with a contract

provision that specifically addressed the particular point at

issue.” Starr, 648 N.E.2d at 1268 (citation omitted).

Hoffman has pleaded the elements of common law fraud with

sufficient particularity. The complaint details specific

statements made by Silberstein promising her equity, indicates the

time and place of those statements, and explains why the statements

were fraudulent at the time. For example, in August 2019, Hoffman

alleges other Thras.io employees received their equity grants

while contemporaneously Silberstein was falsely telling Hoffman

that he could not issue her equity grant because the company lacked

a valid 409A valuation. There is no provision in the consulting

agreement that specifically addresses the grant of equity.

The next disputed issue is whether Hoffman has alleged

sufficient facts to support reasonable reliance on the

representations. Specifically, Defendants point to the language in

the agreement as contradicting the alleged oral promises of equity

“in return for [Hoffman’s] work.” See Dkt. 1-1 ¶ 1. However,

Hoffman plausibly alleges she reasonably relied on oral and written

promises of an equity grant memorialized by a series of emails

which arguably created a new contract or modification of the old.

With all reasonable inferences drawn in Hoffman’s favor, the

complaint “sets forth a plausible claim upon which relief may be

granted” on a claim of fraudulent inducement of consulting

contracts. Foley, 772 F.3d at 71 (cleaned up). The Court DENIES

the motion to dismiss as to Count II.

c. Violation of the Securities Exchange Act, 15 U.S.C.

§ 78j(b) (Count III)

Section 10(b) of the Securities Exchange Act of 1934 states:

It shall be unlawful for any person, directly or

indirectly, by the use of any means or instrumentality

of interstate commerce or of the mails, . . . [t]o use

or employ, in connection with the purchase or sale of

any security . . . any manipulative or deceptive device

or contrivance in contravention of such rules and

regulations as the Commission may prescribe.

15 U.S.C. § 78j(b). A plaintiff bringing a securities fraud claim

under Section 10(b) and Rule 10b-5 must comply with the pleading

requirements of the Private Securities Litigation Reform Act

(PSLRA), 15 U.S.C. § 78u–4. The First Circuit has held that the

PSLRA “d[oes] not alter this circuit’s rigorous reading of the

standards for pleading fraud.” Aldridge v. A.T. Cross Corp., 284

F.3d 72, 78 (1st Cir. 2002) (stating that a plaintiff must specify

time, place, and content of allegedly misleading statements and

factual support for their fraudulence). “If the plaintiff brings

his claims on information and belief, he must set forth the source

of the information and the reasons for the belief.” Id. (cleaned

up). “Even under the PSLRA, the district court, on a motion to

dismiss, must draw all reasonable inferences from the particular

allegations in the plaintiff’s favor, while at the same time

requiring the plaintiff to show a strong inference of scienter.”

Id. Scienter for a federal securities claim may be proved by

indirect evidence and may include extreme recklessness. In re

Cabletron Sys., Inc., 311 F.3d 11, 38 (1st Cir. 2002).

Defendants argue that under Blue Chip Stamps v. Manor Drug

Stores, 421 U.S. 723, 730-31 (1975), Hoffman is not a “purchaser”

of securities and thus has no right of action under Section 10(b).

Hoffman responds that she “purchased” equity in Thras.io with her

labor, giving her a right of action under Section 10(b) as the

Supreme Court recognized in The Wharf (Holdings) Ltd. v. United

Int’l Holdings, Inc., 532 U.S. 588, 590-91, 596 (2001).

The Wharf governs here. As the Supreme Court explained, “Blue

Chip Stamps . . . involved the very different question whether the

Act protects a person who did not actually buy securities, but who

might have done so had the seller told the truth.” Id. at 594. By

contrast, the Supreme Court held the plaintiff in The Wharf that

alleged it specifically bargained for an option in exchange for

providing services was “not a potential buyer; by providing Wharf

with its services, it actually bought the option that Wharf sold.”

Id.; see also Wortley v. Camplin, 333 F.3d 284, 294 (1st Cir. 2003)

(“When the defendant makes a specific promise, as part of the

consideration for the transfer of securities, to perform an act,

while intending not to perform the act, this may constitute a basis

for a fraud finding.”).

Some courts have held that grants of stock to persons who

were already employed were not purchasers because they did not

independently bargain for the stock. See Fraser v. Fiduciary Tr.

Co. Int’l, 417 F. Supp. 2d 310, 318 (S.D.N.Y. 2006) (finding that

an employee who received a grant of stock as part of his

compensation through a restricted stock award program did not

qualify as a “purchaser”); In re Cendant Corp. Sec. Litig., 81 F.

Supp. 2d 550, 556 (D.N.J. 2000) (“When an employee does not give

anything of value for stock other than the continuation of

employment nor independently bargains for stock, there is no

purchase or sale of securities.” (cleaned up)). Where there is a

bargained for exchange of services for securities, “the abuse

potential and proof problems inherent in suits by investors who

neither bought nor sold, but asserted they would have traded absent

fraudulent conduct by others” are of less concern. See The Wharf,

532 U.S. at 595 (holding that oral purchases fall within the scope

of the Act) (cleaned up).

Hoffman has alleged Defendants promised her security in

exchange for her provision of consulting services while secretly

intending not to perform this act. At this early stage of

litigation, these allegations support the inference that she was

a “purchaser” of securities by providing her work in exchange for

a bargained for equity grant. Defendants’ motion to dismiss is

DENIED as to Count III.

d. Breach of Contract (Count IV)

Defendants argue that the Consulting Agreement’s integration

and modification clauses prohibit Hoffman from claiming that an

enforceable oral agreement, made either before or after she signed

the Consulting Agreement and its extensions, existed as to the

equity grant. Moreover, they deny that Hoffman has alleged a

written modification to the Consulting Agreement. Finally, they

argue that the alleged equity grant is unenforceable as a matter

of law because Delaware law requires that the issuance of stock be

in writing and approved by the board of directors, and Hoffman has

not alleged sufficient facts to meet those requirements. See Del.

Code Ann. tit. 8, § 157(a)–(b); see also First Marblehead Corp. v.

House, 473 F.3d 1, 6 (1st Cir. 2006).

Hoffman responds that the equity grant is unaffected by the

integration clause because it constitutes a “wholly separate,

independent contract and not an amendment of the Consulting

Agreement.” Dkt. 19 at 20 (citing Dkt. 1-1 ¶¶ 58-61). She also

argues it is void as against public policy because she was mis-

classified as an independent contractor. Alternatively, Hoffman

argues that the modification clause does not necessarily bar oral

modification of the Consulting Agreement under Massachusetts law,

and that the emails constitute a written modification. Finally,

Hoffman argues that her equity grant was either approved or

ratified by Thras.io’s board of directors – which consisted only

of Silberstein and Cashman.

The complaint has alleged sufficient facts to plausibly

overcome the modification clause. “[A] provision that an agreement

may not be amended orally but only by a written instrument does

not necessarily bar oral modification of the contract.” Geis v.

Nestlé Waters North America, Inc., 321 F. Supp. 3d 230, 243 (D.

Mass. 2018) (quoting Cambridgeport Sav. Bank v. Boersner, 597

N.E.2d 1017, 1022 (Mass. 1992)). “Whether an oral modification

occurred can be inferred from the conduct of the parties and from

the attendant circumstances of the case.” Id. (cleaned up). The

proponent of the oral modification must present evidence “of

sufficient force to overcome the presumption that the integrated

and complete agreement, which requires written consent to

modification, expresses the intent of the parties.” Id. (cleaned

up). Here, Hoffman has alleged a repeated course of communications

with Silberstein confirming the terms of her equity grant. She has

also alleged multiple promises by both Silberstein and Cashman

through emails. These allegations are sufficient to overcome this

presumption.

The harder question is whether Delaware law compels

dismissal. Pursuant to Delaware law, “every corporation may create

and issue . . . rights or options . . . such rights or options to

be evidenced by or in such instrument or instruments as shall be

approved by the board of directors.” See Del. Code Ann. tit. 8,

§ 157(a). Delaware law requires that “commitments regarding the

issuance of stock must be approved in writing by the board of

directors” to be effective. Grimes v. Alteon, Inc., 804 A.2d 256,

258 (Del. 2002); see Del. Code Ann. tit. 8, § 157(b). “Delaware

courts have adhered to statutory requirements respecting stocks

when denying claims for equitable relief — even in situations when

that might generate an inequitable result.” First Marblehead

Corp., 473 F.3d at 6 (cleaned up). This law is not ironclad as

Delaware courts in certain circumstances recognize narrow

exceptions. Id. at 7. One court has “considered extrinsic evidence

in determining whether a grant of stock options complied with

section 157(b).” Feldman v. Cutaia, 956 A.2d 644, 662 n.67 (Del.

Ch. Ct. 2007), aff’d, 951 A.2d 727 (Del. 2008). But see CertiSign

Holding, Inc. v. Kulikovsky, C.A. No. 12055-VCS, 2018 WL 2938311,

at *17–19 (Del. Ch. Ct. June 7, 2018) (unpublished) (finding “total

failure to comply with any aspect of Sections 157(a) and (b)”

despite emails between the necessary parties expressing agreement

to grant of options).

Hoffman has alleged that the stock grant was evidenced by a

string of emails approved by both members of the board of

directors, which consisted of only Cashman and Silberstein. While

the caselaw interpreting Delaware law suggests that a mere exchange

of emails will not suffice, this issue is better reviewed on a

full record to determine whether there is an unambiguous written

instrument approved by both board members. See Anderson v. Dobson,

627 F. Supp. 2d 619, 627 (W.D.N.C. 2007) (finding as a matter of

law that stock was not validly issued under Delaware law where

“the only possible written instrument evidencing the issuance”

were meeting minutes “so ambiguous as to the issuance of these

particular shares that they cannot qualify”) (cleaned up).

Defendants’ motion to dismiss is DENIED as to Count IV.

e. Promissory Estoppel (Count V)

Defendants argue that Hoffman fails to state a claim for

promissory estoppel because her alleged reliance on Silberstein’s

oral statements was unreasonable as a matter of law. While the

Consulting Agreement arguably contradicts the alleged oral

promises of equity “in return for [Hoffman’s] work,” Dkt. 1-1 ¶ 1,

the agreements do not address the issue of equity. Reliance on the

emails cited in the complaint and others allegedly in Defendants’

sole possession and control was not as a matter of law

unreasonable. The Court DENIES the motion to dismiss as to Count

V.

f. Violation of Mass. Gen. Laws ch. 93A (Count VI)

Defendants argue that Hoffman alleges no more than a simple

breach of contract, which cannot support a Chapter 93A claim.2

Hoffman responds that “[c]onduct violates Chapter 93A when

defendants act in disregard of a known contractual obligation and

in order to secure benefits for themselves.” Dkt. 19 at 26 (citing

Anthony’s Pier Four Inc. v. HBC Assocs., 583 N.E.2d 806, 821 (Mass.

1991); Arthur D. Little, Inc. v. Dooyang Corp., 147 F.3d 47, 55-

56 (1st Cir. 1998)).

Chapter 93A declares unlawful any “unfair or deceptive acts

or practices in the conduct of any trade or commerce.” Mass. Gen.

Laws ch. 93A, § 2. To prevail on the Chapter 93A claim, Hoffman

must prove that Defendants “committed an unfair or deceptive trade

practice and that [Hoffman] suffered a loss of money or property

as a result.” Bowers v. Baystate Techs., Inc., 101 F. Supp. 2d 53,

54–55 (D. Mass. 2000) (citing Alan Corp. v. Int’l Surplus Lines

Ins., 823 F. Supp. 33, 43 (D. Mass. 1993)). To this end, Hoffman

must demonstrate that Defendants’ actions “fell ‘within at least

the penumbra of some common-law, statutory or other established

concept of unfairness,’ or were otherwise ‘immoral, unethical,

2 If the Court determines that Hoffman is an employee, Chapter

93A is inapplicable. See Manning v. Zuckerman, 444 N.E.2d 1262,

1266 (Mass. 1983).

oppressive or unscrupulous.’” Id. at 55 (quoting PMP Assocs., Inc.

v. Globe Newspaper Co., 321 N.E.2d 915, 917 (Mass. 1975)).

Breach of contract, without more, does not amount to a 93A

violation. Monotype Imaging Inc. v. Deluxe Corp., 883 F. Supp. 2d

317, 323 (D. Mass. 2012). “In some cases, however, the facts giving

rise to a breach of contract claim will also give rise to a Chapter

93A claim” if “some level of bad faith [is] present.” Id. A

contract dispute can give rise to a 93A claim, for example, if

there is evidence that the breaching party acted with an “ulterior

motive.” Framingham Auto Sales, Inc. v. Workers’ Credit Union, 671

N.E.2d 963, 965 (Mass. App. Ct. 1996).

The question is whether Hoffman’s allegations that Defendants

promised her an equity grant they never intended to deliver

supports the inference that Defendants strung her along in bad

faith. Hoffman pleaded that Defendants told her that her equity

grant was delayed because Thras.io could not issue equity grants

without a valid 409A valuation, while providing other employees

with their equity grants at that time. Assuming that she is not an

employee, the Court concludes Hoffman’s allegations are enough to

state a plausible claim that Defendants acted with an “ulterior

motive” in violation of Chapter 93A. See id. Accordingly, the Court

DENIES Defendants’ motion to dismiss as to Count VI.

ORDER

Defendants’ motion to dismiss (Dkt. 12) is ALLOWED without

prejudice to amendment as to Count I and DENIED as to Counts II-

VI.

SO ORDERED.

/s/ PATTI B. SARIS

Hon. Patti B. Saris

United States District Judge