Pease v. Technologies

GREGORY D. PEASE, Plaintiff, v. FARO TECHNOLOGIES, Defendant.

CIVIL ACTION NO. 15-3586

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA

February 22, 2016

OPINION

Slomsky, J.

I. INTRODUCTION

Before the Court is Plaintiff Gregory D. Pease's Motion for Leave to File an Amended Complaint. Plaintiff seeks to assert the following causes of action against his former employer, Defendant FARO Technologies: (I) Wrongful Discharge with Specific Intent to Harm; (II) Wrongful Discharge in Violation of Public Policy; (III) Breach of Contract; and (IV) a violation of the Pennsylvania Wage Payment and Collection Law, 43 Pa. Cons. Stat. § 260.1 et seq. Because the Court finds that Plaintiff's claims for wrongful discharge fail for futility reasons, the Court will deny Plaintiff's Motion for Leave to File an Amended Complaint as to these Counts, but will grant the Motion as to the remaining two causes of action. The original Complaint contained only a claim for wrongful discharge with specific intent to harm.

II. FACTS AND PROCEDURAL HISTORY

a. Factual Background

Defendant FARO Technologies ("Defendant" or "FARO") offered Plaintiff Gregory D. Pease ("Plaintiff" or "Pease") the position of Director of Engineering, Laser Tracker, by letter dated July 25, 2011 (the "Offer Letter"). The Offer Letter contains the following language regarding "Compensation":

Base

Your annual base salary shall be $130,000, paid bi-weekly. Your status is exempt.

Bonus

You will be eligible for an annual discretionary* bonus of up to 20% of your annual base earnings. The bonus payout will be based upon individual, departmental and overall company performance. Bonus is based upon the calendar year and will be prorated for actual months worked during a given year. Bonuses are paid after the books are closed for the preceding year. Bonus eligibility is also based upon the satisfactory completion of a mandatory 90-day introductory period. Therefore you must begin work on or before September 30 in order to be eligible for bonus in a given year.

*Note: Bonuses are discretionary in that company performance is the first factor considered in determination of bonus amounts. Bonuses may be cut or eliminated at any time depending on the Company's financial performance during the period of consideration.

(Doc. No. 17-3 at 2.) The Offer Letter also provides: "Please note that this is an offer of employment and not an employment contract, and you will be required to sign a Patent & Confidentiality Agreement and Non-Competition Addendum." (Id. at 3.) Plaintiff signed and accepted the Offer Letter, and was employed by Defendant in his assigned position from August 15, 2011 to December 20, 2013, when he was terminated. (Doc. No. 17-2, ¶ 6.)

In 2013, Defendant issued a document entitled "Short Term Incentive Plan 2013." (Doc. No. 17-2, ¶ 10.) According to the Proposed Amended Complaint, this document "purported to impose additional terms, conditions and/or qualifications respecting the payment of the bonus and/or eligibility for the bonus," but because the terms therein were "not part of the Offer Letter, they were null and void and of no effect to the extent that they were inconsistent with the terms, conditions and qualifications respecting the payment of the bonus and eligibility for the bonus set forth in the Offer Letter." (Doc. No. 17-2, ¶ 10.) Although Defendant claims that it relied, inpart, on the Short Term Incentive Plan 2013 for denying the bonus payment, the Proposed Amended Complaint puts this reliance in issue here. Thus, the crux of Plaintiff's claim is that he was denied payment of his earned bonus for 2013, and that the decision to terminate him was made with the specific intent to avoid payment of the bonus.

b. Procedural History

Plaintiff initiated this action in the Court of Common Pleas of Chester County on January 9, 2015. (Doc. No. 1.) The initial Complaint asserted a claim for wrongful discharge with specific intent to harm only. (Doc. No. 1.) On June 26, 2015, Defendant removed this case to this Court on the basis of diversity of citizenship jurisdiction pursuant to 28 U.S.C. §§ 1332 and 1441. (Doc. No. 1.) On July 2, 2015, Defendant filed a Motion to Dismiss the Complaint. (Doc. No. 6.) Plaintiff filed a Response in Opposition to the Motion (Doc. Nos. 9, 10), and Defendant filed a Reply (Doc. No. 11). The Court held a hearing on the Motion to Dismiss on September 17, 2015. (Doc. No. 13.) For reasons stated by the Court at the hearing, Plaintiff was granted permission to file a Motion for Leave to File an Amended Complaint (Doc. No. 14), which he filed on October 7, 2015. (Doc. No. 17.) Defendant filed a Memorandum of Law in Opposition to Plaintiff's Motion arguing that amendment would be futile. (Doc. No. 18.) This latter motion is now ripe for a decision.

The Proposed Amended Complaint is attached to Plaintiff's Motion for Leave to Amend as Exhibit A. (Doc. No. 17-2.) As noted above, Plaintiff seeks to add the following causes of action: (I) Count I: Wrongful Discharge with Specific Intent to Harm; (II) Count II: Wrongful Discharge in Violation of Public Policy; (III) Count III: Breach of Contract; and (IV) Count IV: a violation of the Pennsylvania Wage Payment and Collection Law, 43 Pa. Cons. Stat. § 260.1 et seq. As noted, Plaintiff will be allowed to proceed in the Amended Complaint with Counts III and IV only.

III. STANDARD OF REVIEW

Federal Rule of Civil Procedure 15(a)(2) provides that after a responsive pleading has been filed, "a party may amend its pleading only with the opposing party's written consent or the court's leave. The court should freely give leave when justice so requires." Amendments to a complaint pursuant to Fed. R. Civ. P. 15 are "liberally granted" and "rest within the sound discretion of the trial court." Massarsky v. Gen. Motors Corp., 706 F.2d 111, 125 (3d Cir. 1983); see also Foman v. Davis, 371 U.S. 178, 182 (1962). "If the underlying facts or circumstances relied upon by plaintiff may be a proper subject of relief, he ought to be afforded an opportunity to test his claim on the merits." Foman, 371 U.S. at 182. However, a motion to amend a complaint should be denied where the proposed amendment would be futile. A claim is futile under Fed. R. Civ. P. 15 "where the amendment would not withstand a motion to dismiss." Massarsky, 706 F.2d at 125; see also Jablonski v. Pan Am. World Airways, Inc., 863 F.2d 289, 292 (3d Cir. 1988); Smith v. Am. Red Cross, 876 F.Supp. 64, 67 (E.D. Pa.1994).

When considering state law claims, the Court must "apply state law as interpreted by the state's highest court in an effort to predict how that court would decide the precise legal issues . . ." Dick v. Healthcare Risk Solutions, LLC, Civil Action No. 08-2497, 2008 WL 4682621, *2 (E.D. Pa. Oct. 21, 2008) (quoting Gares v. Willingboro Twp., 90 F.3d 720, 725 (3d Cir. 1996)).

IV. ANALYSIS

A. Plaintiff Will Be Granted Leave to File a Claim for Breach of Contract

Plaintiff seeks to assert a claim for breach of contract related to Defendant's failure to pay Plaintiff a prorated bonus for the year 2013 pursuant to the Offer Letter. Plaintiff's proposed cause of action states:

35. The Offer Letter created a contract between [Plaintiff] and [D]efendant that was incidental or collateral to his at-will employment with [D]efendant. Pursuant to that contract, [Plaintiff] was entitled to a prorated annual bonus regardless of the alleged justification for his termination.

36. By failing to pay [Plaintiff] the prorated annual bonus to which he was entitled, Defendant breached the contract created by the Offer Letter.

(Doc. No. 17-2, ¶¶ 35, 36.)

Defendant argues that allowing this cause of action to stand would be futile for the following reasons: (1) the Offer Letter is not a contract, and states "Please note that this is an offer of employment and not an employment contract . . .;" (2) the language in the Offer Letter is not sufficiently definite to form a contract, and states that bonuses are "discretionary" and "may be cut or eliminated at any time;" (3) Plaintiff was an at-will employee and, as such, Defendant was free to change his compensation at any time, and Defendant's "Short Term Incentive Plan 2013" imposed additional terms and conditions to Plaintiff's compensation, under which Plaintiff is not eligible for a bonus¹; and (4) Plaintiff does not cite any cases that support his claim, and if "routine offer letters are contracts, they will both lose their usefulness and the courts will be swamped with litigation over them." (Doc. No. 18 at 10-13.) Defendant additionally contends that Plaintiff "concedes that he would not be eligible for any bonus under FARO's Short Term Incentive Plan."² (Doc. No. 18 at 12.) Defendant's arguments are without merit at this stage of proceedings for the following reasons.

Under Pennsylvania law, the elements of a cause of action for breach of contract are: (1) the existence of a contract, including its essential terms; (2) a breach of the duty imposed by the contract; and (3) damages resulting from the breach. See McShea v. City of Philadelphia, 995 A.2d 334, 340 (Pa. 2010). Moreover, an employer "can create a unilateral contract by offering additional terms of employment conditioned upon the employee's continued performance of his job." Pilkington v. CGU Ins. Co., No. CIV. A. 00-2495, 2000 WL 33159253, *6 (E.D. Pa. Feb. 9, 2001) (citations omitted). This may be "characterized as a modification of the at-will employment relationship . . . [or] a contract incidental or collateral to at-will employment." Id. Under such a contract, "[a]n employer who offers various rewards to employees who achieve a particular result or work a certain amount of overtime, for example, may be obligated to provide those awards to qualifying employees, although retaining the right to terminate them for any or no reason." Id. Bonus incentive programs may constitute such unilateral contracts. Id. at *7.

Offer letters may be...