Klauber v. VMware, Inc.

80 F.4th 1

Brian KLAUBER, Plaintiff, Appellant, v. VMWARE, INC., Defendant, Appellee.

No. 22-1417

United States Court of Appeals, First Circuit

August 11, 2023

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS [Hon. F. Dennis Saylor, IV, U.S. District Judge]

David P. Angueira, with whom Swartz & Swartz, P.C. was on brief, for appellant.

David L. Schenberg, with whom Mark H. Burak, Laurielle M. Howe, and Ogletree, Deakins, Nash, Smoak & Stewart, P.C. were on brief, for appellee.

Before Kayatta, Selya, and Howard, Circuit Judges.

SELYA, Circuit Judge.

Plaintiff-appellant Brian Klauber strives to persuade us that the district court erred in entering summary judgment in favor of his quondam employer, defendant-appellee VMware, Inc. (the Company), with respect to his contention that he was wrongfully deprived of hundreds of thousands of dollars in commissions allegedly due to him both under the Massachusetts Wage Act, see Mass. Gen. Laws ch. 149, § 148, and under the common law. After first upholding the district court's application of Federal Rule of Evidence 408 and thus confirming the dimensions of the summary judgment record, we turn to the meat of the district court's thoughtful rescript and affirm its entry of summary judgment on all of the plaintiff's claims.

I

We briefly rehearse the relevant facts and travel of the case.

A

The Company is a computer software firm. The plaintiff worked there — in different sales roles — for about six years between July of 2012 and September of 2019. While employed at the Company, the plaintiff's compensation comprised a combination of a base salary plus commissions.

The commission arrangement lies at the epicenter of this appeal. The plaintiff's commissions were governed by two integrated agreements. The first was an individualized commission plan, which set the plaintiff's standard commission rates, compensation targets, and product quotas. The second was a set of terms and conditions applicable to the plaintiff's commission plan.¹ The Company periodically revised and reissued these agreements and — each time a revised agreement emerged — the plaintiff signed it (thereby confirming his agreement to the revised terms and conditions).

The Company's fiscal year (FY) spanned the period from February of the preceding year through January of the listed year. The terms and conditions relevant to the contested commissions were the versions in effect during the second half of FY 2018 and the second half of FY 2019. Except where otherwise noted, the relevant language remained essentially the same across the different versions.

The terms and conditions stipulated that a commission was only considered "earned" once three requirements had been satisfied. We summarize them succinctly.

The starting point, of course, is that the employee must have "[a]ccepted his or her [c]ompensation [p]lan." Next, the employee must have had "eligible [q]uota [a]chievement." Finally, a "Plan Reconciliation, including but not limited to the review of any transactions deemed to be Exception Transactions, splits, and other Adjustments, [must have] been completed by [the Company], analyzing all commissionable events, draws, [c]ommissions paid, and factors affecting Variable Compensation." Plan Reconciliation was, in a nutshell, the process through which the Company determined whether and how much to adjust commissions for Exception Transactions — Company parlance for atypical transactions.

The first two requirements are not in issue here, so we train the lens of our inquiry on the third requirement. As already noted, the terms and conditions specifically authorized adjustments to commissions for Exception Transactions. The terms and conditions included examples of transactions that would be deemed Exceptions: the top ten customer deals within a quarter²; transactions in which the value exceeded the employee's assigned quota; certain transactions valued over $2,000,000; transactions with "atypical management involvement," including transactions with limited involvement by the employee; and transactions "that contain[ed] non-standard terms or [were] atypical or extraordinary for some other reason."

If a transaction was deemed to be an Exception Transaction by the Company, according to these descriptive specifications, the head of worldwide sales (in FY 2018) or the head of the sales compensation committee (in FY 2019) could, in his or her "sole discretion," authorize adjustments to any commissions claimed with respect to that transaction. The commission schedule set by an employee's individualized commission plan served as the baseline, and any adjustments were determined on a case-by-case basis.

In FY 2019, the terms and conditions were augmented to add a "Large Deal Review Policy." The added policy stated that a review similar to that employed for Exception Transactions would be conducted on deals valued at $10,000,000 or more. Any resulting commission adjustments would require approval by the sales compensation committee.

B

Against this backdrop, we turn to the transactions that undergird the plaintiff's claims.

1. In FY 2018, the Company closed a deal with DXC Technology Corporation (DXC). That deal was one of the most munificent that the Company had ever consummated: it was worth over $130,000,000. The plaintiff's role involved educating the customer and answering technical questions about the Company's products. He claims that he should have been paid a commission of $32,124.99.

The head of worldwide sales designated the deal an Exception Transaction because it was one of the top ten deals in the quarter, there was heavy senior-management involvement and limited involvement of many lesser employees (including the plaintiff), and the deal was structured in an unorthodox fashion. The Company then determined, through Plan Reconciliation, that the plaintiff had not been a core member of the sales team and that his limited involvement necessitated a severe commission adjustment. As a result, his commission was reduced to zero.

2. In FY 2019, the Company closed a deal with Barclays Bank (Barclays) worth between $40,000,000 and $50,000,000. With respect to this deal, the plaintiff was the Company's "landed representative" in North America (which meant that he was responsible for helping to manage relationships and sell products to the financial services industry in North America). The deal was designated by the Company as both a "Large Deal" and an Exception Transaction because, among other things, it exceeded certain employees' assigned quotas. At the end of the line — through Plan Reconciliation — the Company determined that the plaintiff's commission should be adjusted downward based on his limited role in the deal: he had joined the team as landed representative just three months before the transaction closed (after most major negotiations had transpired), and he had not been present with the core deal team in London. Accordingly, his commission — which the plaintiff asserts should have been in the amount of $429,153.57 — was scaled back to $208,721.58.

C

The plaintiff was displeased with these commission adjustments, but he did not complete the Company's internal dispute resolution process with respect to either of them. Instead, he resigned in September of 2019 and — the following month — he brought suit against the Company in a Massachusetts state court. He asserted claims for nonpayment of wages under the Wage Act, breach of contract, unjust enrichment, and quantum meruit. Citing the parties' diverse citizenship and the amount in controversy, the Company removed the action to the United States District Court for the District of Massachusetts. See 28 U.S.C. §§ 1332(a), 1441(a).

After discovery closed, the Company moved for summary judgment across the board. The plaintiff opposed the motion. At that point, the Company moved to strike certain portions of the plaintiff's opposition, and the plaintiff objected to that motion.

The district court granted in part and denied in part the Company's motion to strike. See Klauber v. VMware, Inc., 599 F. Supp. 3d 34, 37 (D. Mass. 2022). Thereafter, the court granted the motion for summary judgment. See id. The court held that the terms and conditions ancillary to the plaintiff's commission plan were enforceable under Massachusetts law. See id. at 48. It then held that the commissions that the plaintiff claimed he was owed were not "wages" within the meaning of the Wage Act and, thus, not subject to the Act's protections. See id. With respect to the breach of contract claim, the court held that the terms and conditions allowed the commission adjustments. See id. And, finally, the court determined that the plaintiff had no claim for relief under theories of unjust enrichment and/or quantum meruit because there was a valid contract between the parties. See id. at 48-49.

This timely appeal followed.

II

In this venue, the plaintiff challenges the district court's partial grant of the Company's motion to strike. He also challenges the district court's entry of summary judgment on his various claims. We address these challenges separately.

A

We start with the plaintiff's evidentiary challenge. He submits that the district court erred in granting in part the Company's motion to strike certain portions of his response to its motion for summary judgment. We think not.

We "review the district court's evidentiary rulings made as part of its decision on summary judgment for abuse of discretion." Hoffman v. Applicators Sales & Serv., Inc., 439 F.3d 9, 13 (1st Cir. 2006). " 'Abuse of discretion' is a phrase which sounds worse than it really is." Aggarwal v. Ponce Sch. of Med., 745 F.2d 723, 727 (1st Cir. 1984) (quoting In re Josephson, 218 F.2d 174, 182 (1st Cir. 1954)). In the ordinary course, we "will not find an abuse of discretion unless perscrutation of the record provides strong evidence that the trial judge indulged in a serious lapse in judgment." Hoff...