When Employee Misconduct Becomes Marketplace Deception: Court Clarifies Chapter 93A's Reach

In CMTA, Inc. v. Dussault, the U.S. District Court for the District of Massachusetts addressed the scope of Chapter 93A liability arising from allegations that a senior employee secretly performed competing engineering work while still employed and around the time of his departure. CMTA alleged that its former partner and office co-manager, Joseph Dussault, used company resources, confidential information, and CMTA branding to perform outside work for third parties and affiliated entities, diverted business opportunities CMTA expected to receive, and concealed that conduct from the company. CMTA asserted that this pattern of conduct constituted unfair and deceptive acts under Chapter 93A, § 11, while Dussault moved to dismiss on the grounds that Chapter 93A does not apply to employer–employee disputes and that the alleged conduct was not sufficiently egregious as a matter of law.Other allegedly associated defendants moved to dismiss as well.

The court began its analysis by reaffirming a core defense principle: Chapter 93A generally does not apply to disputes arising out of the "ordinarily cooperative" employment relationship, and the "intra-enterprise doctrine" continues to bar Chapter 93A claims based on internal workplace misconduct alone. However, the court emphasized that this doctrine has limits. Where a complaint plausibly alleges that an employee stepped outside the employment relationship and engaged in secret competition, diverted corporate opportunities, or misused the employer's identity and resources to obtain personal commercial benefit, the conduct may move into the commercial marketplace and fall within the statute's reach. Accepting the allegations as true at the pleading stage, the court concluded that CMTA had sufficiently alleged more than a routine employment dispute, particularly given the alleged use of CMTA letterhead, email accounts, software licenses, and client relationships to secure and perform work for non-CMTA entities.

At the same time, the decision reflects meaningful limitations on Chapter 93A liability from a defense standpoint. The court dismissed all Chapter 93A and related tort claims against peripheral individual defendants, rejecting efforts to impose liability based on association, speculation, or alleged conspiracy without concrete allegations of knowing and active participation in unfair or deceptive conduct. The court reiterated that Chapter 93A liability is individualized and does not attach merely because a defendant worked on overlapping projects or had a business relationship with an alleged wrongdoer. Ultimately, the court allowed the Chapter 93A claim against the former employee to proceed past the motion-to-dismiss stage while dismissing claims against others, underscoring both the continuing vitality of early dismissal defenses and the litigation risk posed when alleged misconduct plausibly crosses from internal employment issues into deceptive marketplace behavior.

Key Takeaways

1. Chapter 93A still does not cover ordinary employment disputes. Courts will continue to apply the intra-enterprise doctrine to bar Chapter 93A claims based solely on internal workplace misconduct or breach of employment duties, but may allow claims to continue if conduct outside the relationship is alleged.

2. Risk increases when conduct moves into the marketplace. Allegations of secret competition, diversion of corporate opportunities, misuse of company branding or resources, or misleading third parties about who is performing the work may take a dispute outside the employment relationship and into Chapter 93A territory.

3. Active participation matters for third parties. Peripheral individuals and affiliated businesses may successfully defeat Chapter 93A claims where plaintiffs rely on speculation or association rather than concrete allegations of knowing, unfair, or deceptive conduct.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.