Vonachen v. Computer Associates Intern., Inc.

Page 129

524 F.Supp.2d 129

Frank William VONACHEN, Plaintiff, v. COMPUTER ASSOCIATES INTERNATIONAL, INC., Defendant.

Civil Action No. 05-12054-JLT.

United States District Court, D. Massachusetts.

December 14, 2007.

Denzil D. McKenzie, McKenzie & Associates, P.C., Boston, MA, for Plaintiff.

David J. Santeusanio, Paul G. Lannon, Jr., Holland & Knight, LLP, Boston, MA, for Defendant.

MEMORANDUM & ORDER

TAURO, District Judge.

Plaintiff Frank Vonachen brings claims against Defendant Computer Associates, his former employer, alleging two violations of the Massachusetts Wage Act and a breach of the covenant of good faith and fair dealing. Presently at issue is Defendant's Motion for Summary Judgment [# 19] and Plaintiff's Motion for Summary Judgment [# 25]. After considering the submissions of the parties, and holding a hearing on November 20, 2007, Defendant's Motion is ALLOWED and Plaintiff's Motion is DENIED for the following reasons.

Factual Background

Defendant Computer Associates ("CA") hired Plaintiff Frank Vonachen ("Vonachen") as an at-will sales executive in August of 2001.¹ CA sent to Vonachen for his review and acceptance two documents that would govern his compensation: CA's Incentive Compensation Plan ("Compensation Plan") and CA's Wealth Enabling Plan ("WEP").²

The Compensation Plan "sets out the general rules for the payment of commissions that are earned by all CA employees and contractors engaged in the sale of CA's products," and is published by CA annually.³ The Compensation Plan in effect at the time contained numerous provisions granting CA significant discretion in adjusting compensation.⁴

The WEP sets out commission rates and sales quotas for employees, and is published by CA biannually.⁵ The WEP in effect at the time set Vonachen's base salary at $85,000, and established a total sales quota for Vonachen of $7,000,000.⁶ Vonachen accepted these plans by checking the "Accept" box on the electronic versions sent to him.⁷

Pursuant to those plans, Vonachen and other sales executives were paid commissions on any sales made by their respective sales teams. Vonachen was on the Fidelity sales team, along with two other sales executives and a sales manager — Brian Pallotta ("Pallotta").⁸

In December 2003, the Fidelity sales team booked a $35,000,000 order with Fidelity that had a initial "booking value" ("BV") — calculated using Generally Accepted Accounting Principles-of approximately $15,135,000.⁹ To calculate the team's compensation on the sale, CA adjusted the booking value and resultant commissions.¹⁰ In the process of doing so, CA management exchanged various email communications and documents regarding the level of adjustment.¹¹ CA notes, and these communications confirm, that CA management relied in part on the "Single Transaction Limit" clause in the Compensation Plan to adjust the booking values on the transaction. The clause is located in a section of the contract entitled "By Policies and Adjustments," and reads as follows:

2.4.2 Single Transaction Limit

No Commissions shall be payable to an Exec[utive] in excess of 150% of such Exec[utive]'s annual quota if such Commission is the result of a Transaction (or series of Transactions within a twelve month period) with a single Customer. Any exception to the foregoing limit must be approved in writing by the CFO and Executive Vice President of Sales.¹²

Eventually, CA applied the Single Transaction Limit to all members of the Fidelity team.¹³ Utilizing the provision and the sales quotas, CA calculated the adjusted booking value for Vonachen and the two other executives to approximately $8,000,000.¹⁴ CA then used the $8,000,000 figure to calculate commissions on the sale, which resulted in Vonachen receiving approximately $290,000, and the other two executives receiving about $282,000.¹⁵ Without any adjustment to the booking value by CA, two of the executives, including Vonachen, would have received about $528,000 each, with the third executive receiving about $515,000.¹⁶

At a meeting during January 2004, George Fischer ("Fischer"), Senior Vice President and Area Manager of CA, informed the Fidelity sales team of the adjusted level of commission payments on the 2003 sale as a result of the adjusted booking values.¹⁷ Fisher allegedly told the team that "two million dollars [in commissions for the entire team] was too much and caused him to wonder what his superiors would think about such high levels of commission.¹⁸ In addition, Fischer told the team that "commissions are not considered a lottery."¹⁹

Vonachen allegedly asked Pallotta, the Fidelity team's sales manager, "for an explanation behind the decision to cap the commission."²⁰ Vonachen alleges that Pallotta responded, "You made a lot of money. You should be happy you have a job. Keep your mouth shut."²¹ Pallotta denies that Vonachen complained to him about the decision and denies making these alleged comments.²² For purposes of summary judgment, however, the court accepts (1) that Vonachen complained to Pallotta and (2) that Pallotta made these comments.

Subsequently, Computer Associates underwent a major reorganization of its sales department, including the creation of geographic sales territories and account director positions to service larger accounts.²³ Bernadette Nixon, CA's Regional Manager of New England, headed a team responsible for assigning sales executives to territories and appointing account directors.²⁴ As part of the reorganization, CA reassigned Vonachen from the Fidelity sales team to a geographic territory — Northwestern Massachusetts.²⁵ Vonachen had asked to be considered for an Account Director position, but Nixon declined to offer him the position.²⁶ CA announced the new assignments in April of 2004, and on May 3, 2004, the day that the new territories went into effect, Plaintiff resigned to accept a job with Microsoft.²⁷

Plaintiff advances three counts: (I) a violation of the Massachusetts Wage Act for failure to pay the commissions owed to him;²⁸ (II) a retaliation claim under the Massachusetts Wage Act for an alleged constructive discharge;²⁹ and (III) breach of the common law covenant of good faith and fair dealing for an alleged constructive discharge.³⁰ Plaintiff seeks a judgment awarding unpaid commissions, lost back pay, front pay, lost benefits and pre-judgment interest.

Procedural Background

On September 14, 2007, Defendant moved for Summary Judgment on Counts I, II and III.³¹ On September 17, 2007, Plaintiff moved for Summary Judgment on Count I only.³² The Parties subsequently filed oppositions to the respective motions. On November 20, 2007, this court held a hearing and took the motions under advisement.

Discussion

A. Legal Standard for Summary Judgment

A court may grant summary judgment when the moving party has shown "that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law."³³ The court must examine the facts in the light most favorable to the non-moving party, resolving any reasonable inference in that party's favor.³⁴ A court may enter summary judgment when a plaintiff fails to show sufficient evidence to establish an essential element of his case on which he bears the burden of proof at trial.³⁵ In addition, "conclusory allegations, improbable inferences, and unsupported speculation" are insufficient to establish a genuine issue of fact for trial.³⁶

B. Count I. Wage Act Claim: Commissions from the 2003 Fidelity Transaction³⁷

There is no genuine issue of material fact as to Count I, because the relevant inquiry solely involves the terms of the Compensation Plan agreement. Consequently, this is a question of law for the court to resolve, and Vonachen's Wage Act claim for additional commissions fails as a matter of contract law.

1. CA's Discretion to Adjust Booking Values and Commissions

Numerous provisions in the Compensation Plan in effect at the time gave CA the express and broad discretion to adjust booking values on sales and, commission payments to sales executives.

First, CA explicitly had significant discretion to adjust booking values, which were, in turn, used to calculate commissions. These provisions included the following:

• Reductions to BV

In determining BV for purposes of Commissions payable under this Plan, CA reserves the right to consider all factors reflected in a given Transaction, and adjust BV accordingly....³⁸

• "By Adjustments" will mean those adjustments made by CA in its sole discretion to Booking Value for any CA products, services, maintenance, or anything else discounted, forgiven, canceled or deferred in connection with a particular Transaction or a related series of Transactions....³⁹

Second, CA explicitly had broad discretion to adjust commission payments. These provisions included the following:

No Commissions Payable Under Plan

CA reserves the right to determine in its sole and absolute discretion whether the requirements for payment of Commissions hereunder have been satisfied and its decision will be final and binding on all parties....⁴⁰

... CA has sole and absolute discretion in determining whether the business circumstances of any Transaction justify the payment of a commission advance hereunder....⁴¹

Third, CA explicitly had wide-ranging discretion with respect to compensation in general. Such provisions included the following:

In the event of a conflict between the Plan and any other document, or a question of interpretation arising therefrom, decisions by CA Executive Management responsible for the applicable business organization concerning the Plan or the interpretation of any of its terms and conditions, including the applicability of any term or condition to specific situations, and the award, payment, withdrawal and conditioning of commission advances and all other forms of compensation or advance payment will be final and binding on all affected parties.⁴²

The above provisions of the...