Llorens v. LexShares, Inc.

UNITED STATES DISTRICT COURT

DISTRICT OF MASSACHUSETTS

___________________________________

)

CAYSE LLORENS, )

)

Plaintiff, )

)

v. )

) Civil Action

LEXSHARES, INC., DAVID ROSNER, ) No. 24-cv-12452-PBS

and FRANK VAN LINT, )

)

Defendants. )

)

MEMORANDUM AND ORDER

December 3, 2024

Saris, D.J.

INTRODUCTION

Plaintiff Cayse Llorens, a Black male, is the former Chief

Executive Officer (“CEO”) of Defendant LexShares, Inc.

(“LexShares”). Llorens’s relationship with the board of directors

of LexShares (“Board”) soured throughout 2022, and the Board

decided to replace him at the end of the year. Llorens resigned

rather than be terminated. He then sued LexShares and Defendants

David Rosner and Frank van Lint -- the chairman of the Board and

a Board member, respectively -- alleging racial discrimination in

violation of Massachusetts General Laws Chapter 151B (“Chapter

151B”). LexShares, Rosner, and van Lint (collectively,

“Defendants”) now move to dismiss Llorens’s suit under Federal

Rule of Civil Procedure 12(b)(6).

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

Defendants’ motion to dismiss (Dkt. 8).

BACKGROUND

The complaint alleges the following facts, which the Court

accepts as true at this stage. See Artuso v. Vertex Pharms., Inc.,

637 F.3d 1, 5 (1st Cir. 2011).

Llorens graduated from business school in 2019 and founded a

private equity firm. In 2020, the firm took a majority stake in

LexShares, a litigation financing company. Llorens became the CEO

of LexShares at the time of his firm’s investment. He joined the

Board as its only Black member as well. Llorens’s employment

contract with LexShares contained a Massachusetts choice-of-law

provision. It also included a “Waiver of Statutory Limitations

Periods” provision stating:

Employee [Llorens] agrees that any claim against the

Company [LexShares] relating to the employment

relationship between the Company and Employee (including

the termination of the employment relationship) must be

brought against the Company within 180 days of the event

giving rise to the claim, or within the applicable

statutory limitations period (whichever period is

shorter) . . . .

Dkt. 9-1 ¶ 24.

In February 2022, the Board established key performance

indicators (“KPIs”) for Llorens and the two White members of

LexShares’ executive team, President Jay Greenberg and Chief

Investment Officer Max Volsky. The KPIs set metrics to measure job

performance, determine year-end bonuses, and set salaries for the

following year. Llorens, Greenberg, and Volsky had the same salary

for 2022, but Greenberg and Volsky had the opportunity to earn a

larger bonus than Llorens.

Llorens had a contentious relationship with the Board during

2022. The Board did not allow him to bring a scribe to meetings

after a thumb injury hampered his ability to type or write. Board

members also cut him off during meetings and rejected his ideas

without giving them adequate consideration. Nonetheless, Llorens

had a successful tenure at LexShares, including growing earnings

by around a third.

On November 18, 2022, Llorens attended a performance

evaluation with Rosner and van Lint, two Board members. At the

meeting, Llorens learned that the Board had changed the KPIs that

it had previously set for him. Llorens received a negative

performance review based on the new KPIs and did not earn a bonus

for 2022. The Board did not, however, change the KPIs for Greenberg

and Volsky. And even though Volsky had announced in September 2022

that he planned to leave LexShares in 2023, the Board gave Volsky

a raise, several contract concessions, and possibly a bonus for

2022.

Two weeks after his performance evaluation, Llorens proposed

amendments to his employment contract. Rosner and van Lint told

Llorens that the Board would not consider any contract amendments

because he had not added value to the company. During the meeting,

Rosner admitted that he had not read an email Llorens had sent

detailing his accomplishments at LexShares.

On December 14, 2022, Rosner informed Llorens that the Board

was looking for a replacement CEO. Llorens tendered his resignation

the next day. His last day as CEO was January 13, 2023. LexShares

replaced Llorens with a White man.

Llorens filed a charge of racial discrimination against

Defendants with the Massachusetts Commission Against

Discrimination (“MCAD”) on September 11, 2023. He withdrew his

charge in March 2024 and then filed suit five months later.

LEGAL STANDARD

To survive a motion to dismiss, a complaint must allege “a

plausible entitlement to relief.” Bell Atl. Corp. v. Twombly, 550

U.S. 544, 559 (2007). “While a complaint attacked by a Rule

12(b)(6) motion does not need detailed factual allegations, a

plaintiff’s obligation to provide the grounds of his entitlement

to relief requires more than labels and conclusions, and a

formulaic recitation of a cause of action’s elements will not

do.” Id. at 555 (cleaned up). This standard requires a court to

“separate the complaint’s factual allegations (which must be

accepted as true) from its conclusory legal allegations (which

need not be credited).” Kando v. R.I. State Bd. of Elections, 880

F.3d 53, 58 (1st Cir. 2018) (quoting Morales-Cruz v. Univ. of P.R.,

676 F.3d 220, 224 (1st Cir. 2012)). The court must then determine

whether the factual allegations permit it “to draw the reasonable

inference that the defendant is liable for the misconduct alleged.”

Germanowski v. Harris, 854 F.3d 68, 72 (1st Cir. 2017) (quoting

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)).

In addition to the well-pleaded allegations in the complaint,

a court evaluating a motion to dismiss may consider certain

extrinsic documents, including those “the authenticity of which

are not disputed by the parties” and “documents central to the

plaintiff’s claim.” Newman v. Lehman Bros. Holdings Inc., 901 F.3d

19, 25 (1st Cir. 2018) (quoting Freeman v. Town of Hudson, 714

F.3d 29, 36 (1st Cir. 2013)). The parties agree that the Court may

consider Llorens’s employment contract and his MCAD filings in

connection with the motion to dismiss.

DISCUSSION

I. Statute of Limitations

Defendants first argue that Llorens’s claim is time-barred

because he failed to file his MCAD charge and lawsuit within the

180-day limitations period set forth in his employment contract.

An individual seeking to bring an employment discrimination claim

under Chapter 151B normally must file a “charge[] with MCAD within

300 days of experiencing the adverse action alleged.” Rae v. Woburn

Pub. Schs., 113 F.4th 86, 99 (1st Cir. 2024); see Mass. Gen. Laws

ch. 151B, § 5. After waiting at least 90 days for a response from

MCAD, he may then file suit in court. See Mass. Gen. Laws ch. 151B,

§ 9; Rae, 113 F.4th at 99. Any “Chapter 151B claim must be filed

in court within three years of the adverse employment action.”

Rae, 113 F.4th at 99; see Mass. Gen. Laws ch. 151B, § 9. Llorens

alleges that he suffered multiple adverse employment actions

within 300 days of the filing of his MCAD charge on September 11,

2023, and within three years of the filing of this lawsuit. These

actions include being told on November 18, 2022, that the Board

had revised his KPIs, the resulting denial of a bonus, and the

subsequent Board decision to replace him as CEO in mid-December

2022.

Defendants claim that Llorens’s employment contract shortened

these statutory deadlines to 180 days. In general, “Massachusetts

law permits contractually shortened limitations periods so long as

they are ‘reasonable’ and ‘not contrary to other statutory

provisions or to public policy.’” Machado v. System4 LLC, 28 N.E.3d

401, 414-15 (Mass. 2015) (quoting Creative Playthings Franchising,

Corp. v. Reiser, 978 N.E.2d 765, 767 (Mass. 2012)). The

Massachusetts Supreme Judicial Court (“SJC”) has held, however,

that “an employment contract containing an agreement by the

employee to limit or waive any of the rights or remedies conferred

by [Chapter] 151B is enforceable only if such an agreement is

stated in clear and unmistakable terms.” Warfield v. Beth Israel

Deaconess Med. Ctr., Inc., 910 N.E.2d 317, 325 (Mass. 2009); see

id. at 326 (“[A] private agreement that purports to waive or limit

-- whether in an arbitration clause or on some other contract

provision -- the employee’s otherwise available right to seek

redress for employment discrimination through the remedial paths

set out in [Chapter] 151B, must reflect that intent in unambiguous

terms.”). A contractually shortened limitations period to bring a

Chapter 151B claim is an agreement to limit the employee’s rights

under the statute. Thus, the 180-day limitations period in

Llorens’s employment contract is enforceable with regard to his

Chapter 151B claim only if the shortened period clearly and

unmistakably applies to such claims.1

To clearly and unmistakably apply to Chapter 151B claims, a

contract must, at minimum, state that the relevant waiver or

limitation applies to discrimination claims. Compare Joulé,

Inc. v. Simmons, 944 N.E.2d 143, 152 n.15 (Mass. 2011) (holding

that an arbitration clause clearly and unmistakably applied to

Chapter 151B claims where it covered “disputes between [the

employee] and [the employer] . . . relating to [her] employment

and/or termination of [her] employment (which includes without

1 Defendants assert that “Massachusetts courts consistently enforce

mutual agreements to shorten” the 300-day deadline to file an MCAD

complaint in connection with a Chapter 151B claim. Dkt. 9 at 7.

The only case they cite for this proposition, though, is one from

this district enforcing a contractually shortened limitations

period with regard to a federal employment discrimination claim

rather than a Chapter 151B claim. See Morales v. Fed. Express

Corp., 610 F. Supp. 3d 317, 323-25 (D. Mass. 2022).

limitation, claims of discrimination, harassment, hostile work

environment, retaliation, or other wrongful termination claims”

(emphasis omitted)), with Warfield, 910 N.E.2d at 328 (reaching

the opposite conclusion where “there [was] nothing in the

arbitration clause or elsewhere in the agreement stating that any

claims of employment discrimination by [the plaintiff were]

subject to arbitration”). A contractual provision does not clearly

and unmistakably apply to Chapter 151B claims if it merely

references disputes relating to “employment” or the “termination

of employment” without any further specificity. See Warfield, 910

N.E.2d at 324 n.11; see also Minkina v. Frankl, 16 N.E.3d 492, 499

(Mass. App. Ct. 2014) (explaining that Warfield “directly

overruled [the Massachusetts Appeals Court’s] rejection of the

requirement of a specific reference to discrimination claims”).

The language in Llorens’s employment contract does not

satisfy this standard. The contract imposes a 180-day limitations

period for “any claim against the Company [LexShares] relating to

the employment relationship between the Company and Employee

[Llorens] (including the termination of the employment

relationship).” Dkt. 9-1 ¶ 24. This provision does not

specifically mention claims of discrimination and, thus, does not

clearly and unmistakably apply to Chapter 151B claims. Llorens’s

Chapter 151B claim is not time-barred.

II. Chapter 151B Claim Against LexShares

Defendants next argue that Llorens has not plausibly alleged

a claim of racial discrimination against LexShares under Chapter

151B. A discrimination claim under Chapter 151B has “four elements:

membership in a protected class, harm, discriminatory animus, and

causation.” Verdrager v. Mintz, Levin, Cohn, Ferris, Glovsky &

Popeo, P.C., 50 N.E.3d 778, 793 (Mass. 2016) (quoting Lipchitz v.

Raytheon Co., 751 N.E.2d 360, 368 (Mass. 2001)). To establish a

prima facie case of discrimination, an employee must show “that

‘(1) he is a member of a class protected by [Chapter] 151B; (2) he

performed his job at an acceptable level; [and] (3) he was

terminated’ or otherwise subjected to an adverse employment

action.” Id. (second alteration in original) (quoting Blare v.

Husky Injection Molding Sys. Bos., Inc., 646 N.E.2d 111, 115 (Mass.

1995)); see Diaz v. City of Somerville, 59 F.4th 24, 28-29 (1st

Cir. 2023). “It is not necessary to plead facts sufficient to

establish a prima facie case at the pleading stage,” but “the

elements of the prima facie case . . . are part of the background

against which a plausibility determination should be made.”

Rodríguez-Reyes v. Molina-Rodríguez, 711 F.3d 49, 54 (1st Cir.

2013); see Germanowski, 854 F.3d at 72.

Llorens has plausibly alleged the elements of a prima facie

case of discrimination. He pleads that he is Black and that he was

successful during his tenure at LexShares. His complaint also

describes multiple adverse employment actions that he allegedly

suffered. See Yee v. Mass. State Police, 121 N.E.3d 155, 161-62

(Mass. 2019) (explaining that adverse employment actions include

“effects on working terms, conditions, or privileges that

are . . . substantial enough to have materially disadvantaged an

employee” (first quoting King v. City of Boston, 883 N.E.2d 316,

323 (Mass. App. Ct. 2008); then quoting Psy-Ed Corp. v. Klein, 947

N.E.2d 520, 530 (Mass. 2011))). Defendants do not develop the

argument that the belated change to Llorens’s KPIs -- and the

accompanying negative performance review and denial of a year-end

bonus -- did not constitute an adverse employment action. See

Boutin v. Home Depot USA, Inc., 490 F. Supp. 2d 98, 107 (D. Mass.

2007) (listing an action “that affects ‘ . . . bonuses’” as an

example of an adverse employment action (quoting Swallow v. Fetzer

Vineyards, 46 F. App’x 636, 646 (1st Cir. 2002))). And although

Defendants contend that Llorens’s resignation prevents him from

advancing a termination-related claim, the complaint supports a

reasonable inference that, for all intents and purposes, LexShares

fired Llorens when Rosner informed him that the Board was seeking

a replacement CEO. See Edwards v. Commonwealth, 174 N.E.3d 1153,

1167 (Mass. 2021) (holding that a plaintiff showed an adverse

employment action where the record indicated that she “was fired

and that her letter of resignation was merely an attempt to save

face professionally”).

Moreover, the complaint supports a plausible inference that

these adverse employment actions resulted from racial

discrimination. Llorens alleges that the Board did not similarly

change the KPIs of the two White men on the executive team, Volsky

and Greenberg. He also alleges that while the Board refused to

entertain any amendments to his contract, it gave Volsky a raise

and various contract concessions even after Volsky announced that

he would be leaving the company. These comparator allegations

suffice at this stage to render plausible the claim that LexShares

changed his KPIs, gave him a negative performance review, denied

him a bonus, and then terminated him as a result of discriminatory

animus. See, e.g., Dexter v. Dealogic, LLC, 390 F. Supp. 3d 233,

241 (D. Mass. 2019) (denying a motion to dismiss an employment

discrimination claim based on the plaintiff’s plausible comparator

allegations). Defendants protest that Llorens served in a unique

position as CEO and, thus, that Volsky and Greenberg are not fair

comparators, but the Court cannot resolve this fact-intensive

argument on a motion to dismiss. See Trs. of Health & Hosps. of

City of Bos. v. Mass. Comm’n Against Discrimination, 871 N.E.2d

444, 451 (Mass. 2007) (explaining that the test for comparator

evidence “is whether a prudent person, looking objectively at the

incidents, would think them roughly equivalent and the

protagonists similarly situated” (quoting Dartmouth Rev. v.

Dartmouth Coll., 889 F.2d 13, 19 (1st Cir. 1989))).

Defendants argue that Llorens has failed to state a claim of

racial discrimination because he does not allege that LexShares

replaced him as CEO with a similarly qualified person. While the

SJC has previously included this element in its prima facie case

standard, see McKenzie v. Brigham & Women’s Hosp., 541 N.E.2d 325,

327 (Mass. 1989), it has not done so in more recent decisions. See

Verdrager, 50 N.E.3d at 793; Bulwer v. Mount Auburn Hosp., 46

N.E.3d 24, 32-33 (Mass. 2016). Regardless, the absence of an

allegation that Llorens was similarly qualified to the White CEO

who replaced him does not undermine the plausible inference of

racial discrimination that arises from LexShares’ different

treatment of the White executives.

The Court therefore denies the motion to dismiss with regard

to LexShares.

III. Chapter 151B Claim Against Rosner and van Lint

Finally, Defendants contend that Llorens has failed to

adequately allege that Rosner and van Lint violated Chapter 151B.

Certain provisions of Chapter 151B allow for liability against

individuals in addition to employers. See Verdrager, 50 N.E.3d at

793; Thomas v. EDI Specialists, Inc., 773 N.E.2d 415, 417 (Mass.

2002). In particular,

individuals, whether supervisors, fellow employees, or

third parties, also may be held liable by provisions

that forbid ‘any person . . . to . . . interfere with

another person in the exercise or enjoyment of any right

granted or protected by this chapter,’ [Mass. Gen. Laws

ch. 151B, § 4(4A)], and that prohibit ‘any person,

whether an employer or an employee or not, to aid [or]

abet . . . the doing of any of the acts forbidden under

this chapter.’ [Mass. Gen. Laws ch. 151B, § 4(5)].

Verdrager, 50 N.E.3d at 793 (first, second, and fourth alterations

in original).

An individual violates § 4(4A) if he “interfere[s] with [the

plaintiff’s] rights in deliberate disregard of those rights,’

which requires a showing of ‘an intent to discriminate.’”

Cocuzzo v. Trader Joe’s E. Inc., __ F.4th __, __ (1st Cir. 2024)

[2024 WL 4799281, at *9] (quoting Coogan v. FMR, LLC, No. 15-cv-

13148, 2018 WL 4405614, at *10 (D. Mass. Sept. 17, 2018)); cf.

McLaughlin v. City of Lowell, 992 N.E.2d 1036, 1058 n.34 (Mass.

App. Ct. 2013) (explaining that Ҥ 4(4A) is best understood as a

device through which an individual falling outside the scope of

the definition of ‘employer’ may otherwise be liable for conduct

which the antidiscrimination statute aims to prevent”). An aiding

and abetting claim under § 4(5) requires proof “(1) that the

defendant committed ‘a wholly individual and distinct wrong . . .

separate and distinct from the claim in main’; (2) ‘that the aider

or abetter shared an intent to discriminate not unlike that of the

alleged principal offender’; and (3) that ‘the aider or abetter

knew of his or her supporting role in an enterprise designed to

deprive [the plaintiff] of a right guaranteed him or her under

[Chapter] 151B.’” Lopez v. Commonwealth, 978 N.E.2d 67, 82 (Mass.

2012) (first and second alterations in original) (quoting

Harmon v. Malden Hosp., 19 Mass. Discrimination L. Rep. 157, 158

(1997)).

Llorens does not specify which provision of Chapter 151B he

alleges Rosner and van Lint violated, but his complaint does not

state a plausible claim under either theory of individual

liability. Most of the allegations in the complaint regard

decisions made by the Board as a whole. As to the individual

defendants specifically, the complaint alleges that Rosner

admitted on multiple occasions to disregarding Llorens’s emails

and proposals; that Rosner and van Lint informed Llorens of various

Board decisions and delivered his performance evaluation; that

Rosner excluded Llorens from compensations conversations; and that

Rosner and van Lint threatened to cancel a meeting with a

prospective buyer because Llorens planned to bring a scribe. These

allegations do not support a plausible inference that Rosner and

van Lint personally acted with intent to discriminate on the basis

of race, which is a necessary element for liability under either

§ 4(4A) or § 4(5).

The Court therefore allows the motion to dismiss with regard

to Rosner and van Lint. This decision is without prejudice to the

filing of an amended complaint with additional factual allegations

to establish a plausible claim against Rosner and van Lint under

Chapter 151B.

ORDER

Accordingly, Defendants’ motion to dismiss (Dkt. 8) is

ALLOWED as to Defendants David Rosner and Frank van Lint without

prejudice to filing an amended complaint within 30 days. The motion

to dismiss is otherwise DENIED.

SO ORDERED.

/s/ PATTI B. SARIS

Hon. Patti B. Saris

United States District Judge