Day v. LSI Corp., CIV 11-186-TUC-CKJ

174 F.Supp.3d 1130

Kenneth Day, Plaintiff,

v.LSI Corporation, Defendant.

No. CIV 11-186-TUC-CKJ

United States District Court, D. Arizona.

Signed March 28, 2016

Filed March 29, 2016

James Michael Morris, Morris & Morris PSC, Lexington, KY, for Plaintiff.

Kristy Leah Peters, Littler Mendelson PC, Phoenix, AZ, Robert W. Cameron, Littler Mendelson PC, Pittsburgh, PA, for Defendant.

ORDER

Cindy K. Jorgenson, United States District Judge

Pending before the Court are the parties' Motions for Summary Judgment (Docs. 179 and 184) filed by Plaintiff Kenneth Day (“Day”) and Defendant LSI Corporation (“LSI”).¹ Responses and replies have been filed. Although the parties have requested oral argument, the parties have thoroughly presented the facts and briefed the issues. Therefore, the Court declines to set this matter for oral argument. See LRCiv 7.2(f); 27A Fed.Proc., L. Ed. § 62:367 (March 2016) (‘A district court generally is not required to hold a hearing or oral argument before ruling on a motion. ‘); 27A Fed. Proc., L. Ed. § 62:673 (March 2016) (a hearing on a summary judgment is not required by due process considerations).

I. Factual and Procedural Background

In a December 3, 2011, Amended Complaint (Doc. 74),² Day, a 57-year old Hispanic male, alleges claims of breach of contract, breach of corporate handbook policies, breach of implied covenant of good faith and fair dealing, fraud, deceit, and misrepresentation (fraudulent inducement), interference with a contractual advantage, constructive discharge, intentional and/or negligent infliction of emotional distress, discrimination, and retaliation against LSI.

During his deposition, Day summarized a May 2008 conversation he had with Philip Bullinger (“Bullinger”), LSI Executive Vice President:

Q. What specifically did Mr. Bullinger say to you in May of 2008 about an offer of employment?

A. He said something along the lines that, Ken, we are very interested in you but because of LSI politics, I'm going to be unable to make you an offer as an LSI fellow. I think I can do that, but it will take me at least six months to get that done. Would you consider an offer—or an LSI distinguished engineer—given that I will work my hardest and I am very confident that I will be able to get you there in a year.

...

Q. All right. So you knew as of May 2008 that LSI was not going to offer you a fellow position; is that correct?

A. That's correct.

Q. And you also knew that as of May 2008 that LSI was not going to offer you a vice president position; is that correct?

A. That's correct.

(Day Depo. (Doc. 203-2) 59:16–60:22).³ Day testified during his deposition that Bullinger promised him that he would be promoted to a Vice President a few months after hire. (Day Depo. 128:22–129:5). However, Day admits that he does not have anything in writing from LSI promising him that he will be made a Vice President a few months after employment. (Day Depo. 128:22–129:5). In May of 2008, Bullinger offered Day employment at LSI as a Distinguished Engineer. (Day Depo. 59:16–61:1; Bullinger Depo. (Doc. 177, Ex. H) 16:21–17:12). Day accepted this position on approximately May 18, 2008. (Day Depo. 67:23–68:24).⁴ Day's application, which was completed online and included the typed initials “KD”, included a statement that Day understood that his employment would be at will and that such status could not be changed except in writing. (Day Depo. 83:3–86:14).

LSI has adopted a plan, known as the “LSI Corporation 2003 Equity Incentive Plan” (the “Plan”), under which LSI has made all discretionary grants of stock options and restricted stock units since May 2008. (Gilbert Dec. (Doc. 177, Ex. G) ¶ 2).⁵ The Plan permits the grant of (1) stock options, and (2) restricted stock units (“RSUs”), subject to the terms of the Plan. (Gilbert Dec. ¶ 3; Plan Section 1.1). A “stock option” can be either an Incentive Stock Option or a Nonqualified Stock Option. (Gilbert Dec. ¶ 4; Plan Section 2.25). A “Nonqualified Stock Option” is an option to purchase “Shares” (defined as common stock) of LSI. (Gilbert Dec. ¶ 5; Plan Section 2.24, 2.43). A “Restricted Stock Unit” represents the right to receive one Share on a future specified date. (Gilbert Dec. ¶ 6; Plan Section 7.2). LSI uses the term “stock grant” when it grants employees the option to purchase nonqualified stock shares. (Skelton Dec. (Doc. 177, Ex. J) ¶ 6; Bullinger Dec. (Doc. 177, Ex. H) ¶ 9; White Dec. (Doc. 177, Ex. K) ¶ 7).

The Plan is administered by the Compensation Committee of LSI's Board of Directors, and all awards/grants under the Plan must be approved by the Compensation Committee, the Board of Directors, and/or an authorized delegate of the Compensation Committee. (Gilbert Dec. ¶ 7; Plan Sections 3.1–3.4). Grants of stock options and RSUs must also be evidenced by an award agreement that specifies all terms and conditions of the award. (Gilbert Dec. ¶ 8; Plan Sections 5.2, 7.3). LSI uses different award agreements for stock options and RSUs. (Gilbert Dec. ¶ 9; Plan Sections 5.2, 7.3). The Plan provides that all determinations and decisions made by the Compensation Committee, the Board, and any delegate of the Compensation Committee “shall be final, conclusive, and binding on all persons, and shall be given the maximum deference permitted by law.” (Gilbert Dec. ¶ 10; Plan Section 3.4).

In the May 16, 2008, offer letter to Day, LSI stated that it would recommend that its Board of Directors approve the grant to Day of a 40,000 Share stock option, as well as a grant of 10,000 RSUs, in each case pursuant to the terms of the Plan.⁶ (Gilbert Dec. (Doc. 177, Ex. G) ¶ 11, Ex. 2). Day began working for LSI on or around June 23, 2008 as a Distinguished Engineer in the Strategic Planning & Architecture Department of LSI's Engenio Storage Group (“ESG”) located in Wichita, Kansas. (Day Depo. 70:9-22, Ex. 1). The parties did not enter into a written employment contract. (Day Depo. 91:3-6).

The Compensation Committee of the Board of Directors granted Day a 40,000 Share stock option on August 19, 2008 and 10,000 RSUs on August 20, 2008, in each case pursuant to the terms of the Plan. (Gilbert Dec. ¶ 12). Day executed a “Notice of Grant of Stock Option Award under the LSI Corporation 2003 Equity Incentive Plan” with regard to the 40,000 Share stock option. (Gilbert Dec. ¶ 13, Ex. 3). Day executed a “Notice of Grant of Restricted Stock Unit Award under the LSI Corporation 2003 Equity Incentive Plan” with regard to the 10,000 RSUs. (Gilbert Dec. ¶ 14, Ex. 4). The Vice President—Law for LSI, Jonathan Gilbert, stated that, because the stock option grant was different than the RSU grant, Day was required to execute the two separate notices. (Gilbert Dec. ¶ 15).

On or about January 26, 2009, Day was promoted to the position of Senior Director, reporting to Bullinger. (Day Depo. 113:12–114:17; Bullinger Depo. 24:7-16). Stan Skelton (“Skelton”), Day's supervisor when he was a Distinguished Engineer, was not involved in Day's promotion. (Bullinger Depo. 95:2-10).

Bullinger asserts that, on or about January 26, 2009, he informed Day that he would be granted a 30,000 Share stock option in connection with his promotion to Senior Director. (Bullinger Dec. ¶ 4; Bullinger Depo. 106:14–112:25; Huck Dec. ¶ 2). Because Skelton was Day's supervisor during the previous seven months and was responsible for Day's performance appraisal, Skelton also communicated the salary and stock option award Bullinger had decided on in connection with Day's promotion to Senior Director. (Bullinger Depo. 95:11–96:16; 105:6–106:13; 106:14–112:25). A Human Resource document indicates “30,000 shares [were] granted for [Day's] promotion.” (Day MSJ Statement of Facts (Doc. 185) (“SOF”), Ex. A). A January 26, 2009, Salary Change Notice references a promotion for Day, with a Stock Award of 30,000 Shares. (Day Mtn. for Sanctions Statement of Facts (“SOF”) (Doc. 187-8) p. 4).⁷

Day asserts that his Exhibit A also shows that Bullinger sent a request to LSI Director Peggy Huck (“Huck”) and others identifying a need for a 30,000 stock grant for Day. (Day MSJ SOF 1409-1411, Ex. A). Exhibit A documents refer to Day's promotion and 30,000 Shares. (Id. ) An email from Greg Heubel, Jr. (“Heubel”) under the subject of “Day_Justification_Recommendation_ Worksheet.xls” states:

Per Phil's request, attached is the promo justification worksheet for Ken Day. Please review the comp recommendation/analysis.

Phil, please complete and return the justification tab. Shooting for an effective date of 1/26 for all approvals. Also notice I'm recommending a 30k stock grant. Need Cindy's guidance, assuming everyone is ok with that, whether we should enter that in the system or take out the current grant and do the whole promo action outside the system.

Phil, given the reorg and Viking, are there any other “exception-based” promos with obvious scope increases that you are thinking of? We can't open the flood gates, but we need to properly compensate people for their new roles.

(Day MSJ SOF, Ex. C). Compensation Analyst Principal Cindy Rice (“Rice”) responded to the email, asking if an HRD was done for Day's promotion and asking if the HRD went to specified persons. (Id. ). Huebel responded that the completed justification worksheet had been completed by Bullinger and that he believed Huck was going to send the HRD for processing. (Id. ). On February 3, 2009, Rice further responded, stating that “the 30k stock grant was already included in the recent SF system and on the stock report Judy prepared for the upcoming CC/BoD meeting.” (Id. ). In response to Rice's email, Vice President of Human Resources Jon Gibson stated that he “was aware of this and approved it.” (Id. ). Day asserts that this email trail establishes a January 2009 HRD document existed that established a separate January 2009 30,000 promotion stock grant that is separate from the March 2009 performance related stock option.

LSI Human Resources Director Ian White (“White”) testified that, depending on the...