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finding that, under Pennsylvania law, " broad and vague implied promise is not enough to satisfy" the promissory estoppel requirement that a promisor make a promise that he should reasonably expect will induce action or forbearance on the part of promisee
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Civil Action No. 03-3607.
May 12, 2004
MEMORANDUM AND ORDER
The plaintiff, William Ankerstjerne, filed a five count complaint against his former employer, Schlumberger, Ltd. and Schlumberger Omnes, Inc. (collectively, "Schlumberger"). He alleges that Schlumberger wrongfully failed to pay him commissions on contracts he helped the company obtain. He asserts claims of breach of contract, violations of the Pennsylvania Wage Payment and Collection Law ("PWPCL"), promissory estoppel, and unjust enrichment. He also seeks an accounting. Schlumberger has moved for summary judgment against the plaintiff on all five counts. The Court will grant the defendants' motion.
The fifth count is styled "COUNT VI" in the complaint.
I. Facts
Construing facts in the light most favorable to the plaintiff, the record reveals that the plaintiff was an employee of Alternative Resources Corporation ("ARC"), an information technology consulting company from April 1999 through December 2000. In 1999, ARC paid him a salary of $85,000 and a bonus of $19,750. In 2000, he was paid a salary of $90,000 and a bonus of $34,738.
In deciding a motion for summary judgment, the Court must view the facts in the light most favorable to the non-moving party. Josey v. John R. Hollingsworth Corp., 996 F.2d 632, 637 (3d Cir. 1993). A motion for summary judgment shall be granted where all of the evidence demonstrates that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.Pro. 56(c). The moving party has the initial burden of demonstrating that no genuine issue of material fact exists. Once the moving party has satisfied this requirement, the non-moving party must present evidence that there is a genuine issue of material fact. The non-moving party may not simply rest on the pleadings, but must go beyond the pleadings in presenting evidence of a dispute of fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986).
In December 2000, Schlumberger acquired ARC's technical consulting assets in the Northeast. Schlumberger offered the plaintiff employment at will beginning on January 1, 2001. His offer letter, which the plaintiff countersigned, specified that he would be paid a salary of $95,000 and that he would "be eligible for a performance based Management Incentive Plan bonus ranging from 0% to 45% of [his] base salary." The letter makes no mention of commissions. Defs.' App. at Ex. 10.
The plaintiff began working for Schlumberger on January 2, 2001, for Schlumberger's Northeast Technical Consulting Practice ("Northeast Region"). He reported to John Anderson, his former supervisor at ARC, who in turn reported to Colin Taylor. Sometime in the first quarter of 2001, Schlumberger finalized a transition bonus plan for former ARC employees who had joined the company.
The plan set a total target bonus rate of $42,750, which was 45% of the plaintiff's salary. According to the plan, 60% of the total bonus target would be based on "Sold Revenue," which although not defined in the plan, is agreed to mean the value of contracts executed during the plan period. The plaintiff could earn certain percentages of the $25,650 (60% of the total bonus target) if he satisfied certain Sold Revenue objectives. The plaintiff was given a Sold Revenue objective of $2,775,000. If his Sold Revenue for the plan period was below 75% of this objective, he would receive no bonus under this portion of the plan. If his Sold Revenue was between 75% and 100% of his $2,775,000 objective, he would receive a percentage of his $25,650 target incentive equal to the percentage of $2,775,000 of Sold Revenue that he was able to achieve. As the plan stated by way of example: "90% of attainment pays 90% of incentive."
The other 40% of the annual bonus target was to come from two other parts of the plan.
According to this part of the plan, attainment above 100% of the objective pays on a geometric basis wherein every 1% above the objective is paid at 2% above the target incentive. So, for example, if the plaintiff's Sold Revenue for the plan period was 105% of his $2,775,000 objective, he would be paid 110% of his $25,650 target incentive. See Defs.' App. at Ex. 8.
The 2001 transition plan did not use the term "commission." The plaintiff was paid a $38,105 bonus for 2001 under the terms of the 2001 plan. The plaintiff does not dispute the adequacy of this bonus.
In late 2001, Dallas County, Texas, issued a request for proposals seeking bids for outsourcing its information technology needs. Schlumberger's West Region decided to submit a bid ("Dallas County project"). The plaintiff was assigned as the bid manager over a team that included two sales representatives, Eric Frazier and Chris Campbell, and approximately 30 other people. Nominally, at least, this was a region outside of the Northeast Region.
The bid proposal was submitted in December 2001 and in May 2002, Dallas County executed a contract with Schlumberger. The contract specified that Dallas County would pay $37.5 million over five years with two option years at $7.5 million a year. After execution of the contract, the plaintiff requested a commission on the project but was refused. A member of Schlumberger's upper management told the plaintiff that he was not eligible for a commission because he was not in a sales position and that only sales people got commissions. A different member of Schlumberger's upper management testified that it was his understanding that the plaintiff did not get a commission or bonus because the revenue generated by the contract did not go to the Northeast Region as required by the 2002 Bonus plan.
The 2002 bonus plan based bonuses on two factors: the Northeast Region's financial performance and the employee's completion of his personal objectives. The plaintiff was eligible for a target bonus of 20% of his salary, which in 2002 had been raised to $97,900. Thus, his target bonus was $19,580. Half that amount was based on whether the Northeast Region achieved certain revenue targets for 2002. The other half was to be based upon his meeting his personal objectives. As with the 2001 transition plan, there is no explicit mention of commissions. See 2002 Bonus Plan, Defs.' App. at Ex. 13.
The Northeast Region did not achieve its revenue targets, so that half of the bonus was not awarded to the plaintiff in 2002. He did, however, receive a $6,853 bonus for 2002.
In contrast, the incentive compensation program for sales personnel at Schlumberger expressly refers to a "Commission Program" and is structured very differently from the bonus plans that applied to the plaintiff. See Defs.' App. at Ex. 9.
There is some dispute as to when the plaintiff was informed of the terms of the 2002 bonus plan. For the purposes of this motion, the defendants accept that the plaintiff was not presented with all of the terms of the plan until October 2002.
In August 2002, Lee County, Florida issued a request for proposals similar to that of Dallas County. In September 2002, the plaintiff was assigned as bid manager with Chris Campbell as the sales representative. The plaintiff claims that he had at first refused to do the job. But shortly after the assignment, he discussed his compensation with Schlumberger Vice-President, Rusty Petree. During this conversation Petree made what the plaintiff argues was a promise that he would be compensated for his work on both the Dallas County and Lee County projects in accord with the terms of his 2001 transition plan. The plaintiff then agreed to work on the Lee County project.
The Lee County bid was submitted around November 2002. Lee County accepted the bid and entered into a contract with Schlumberger worth $32 million over five-years with an option to extend the contract two-years for another $13 million. The contract was executed in December 2002. Lee County Contract, Defs. App. at Ex. 25.
Neither Dallas County nor Lee County were part of Schlumberger's Northeast Region for the purposes of the 2002 bonus plan. In accord with the terms of their Commission Program, the sales representatives on the Dallas County and Lee County projects received a commission of approximately $100,000 for each project, essentially one-tenth of the amount plaintiff seeks.
II. The Plaintiff's Claims
The plaintiff claims that the 2001 transition plan's terms applied to work he did on the Dallas County, Lee County, and other projects in 2002. The plaintiff claims that the total value of these contracts is $110 million dollars and that under the terms of the 2001 transition, he is entitled to 2% of that figure or $2,200,000.
In his response brief, the plaintiff argues for the first time, that a third project, the Naval Inventory Control Project, should figure into the calculations for his commissions. The latter contract was executed in 2002, was worth $9,372,834, and appears to be in the Northeast Region. However, there is no record evidence that plaintiff worked on this project in anyway, or that, as he claims, it was not factored into the determination of whether the Northeast Region met its revenue target or not.
He claims that the defendants breached their contract, namely, his 2001 bonus compensation plan, which the plaintiff claims applied to all or most of 2002. In the alternative, if no enforceable contract is found, the plaintiff argues that promissory estoppel and/or unjust enrichment entitles him to that amount. He also claims he is entitled to an accounting at law.
III. The Summary Judgment Motion
The defendants move for summary judgment on all of the plaintiff's claims. The defendants argue that by its plain terms, the 2001 transition plan does not apply to work done in 2002, dooming the plaintiff's breach of contract and PWPCL claims. They argue further that the oral promise upon which the plaintiff's promissory estoppel claim is based is too indefinite and that the plaintiff cannot establish the requisite detrimental reliance. They argue that the plaintiff's unjust enrichment claim fails because there is no evidence that Schlumberger wrongfully secured a benefit, and that the circumstances do not warrant an accounting.
A. Breach of Contract
At issue is whether the terms of the 2001 transition plan applied to work the plaintiff did in 2002.
At oral argument, the plaintiff conceded that if the 2002 bonus plan applies to all of 2002, there is no breach of contract. Apr. 29, 2004, Hr'g. Tr. at 23.
The transition plan states in bold print that the plan period is January 1, 2001, through December 31, 2001. The plan explicitly provides specific dates for the Sold Revenue Target as follows:
Objective Total Value
1. NE Technical Consulting Sold Revenue Target (01/02/01-12/31/01) $2.775 MM
2001 Transition Bonus Plan, Defs.' App. at Ex. 8.
The plan also provides a list of deliverables and objectives with specific times by which they were to be achieved. These times ranged from the end of the second quarter of 2001 to the end of the fourth quarter of 2001. Finally, the plan required the plaintiff to acknowledge, among other things, that he received "THE CORPORATE INCENTIVE PROGRAM FOR THE YEAR 2001. . . ."
Determining whether contract terms are ambiguous is a question of law for the Court to decide. Terms are ambiguous if they are reasonably susceptible of different constructions or appear capable of being understood in more than one sense. If contract terms are found to be unambiguous, they are to be given their plain meaning. See St. Paul Fire Marine Ins. Co. v. Lewis, 935 F.2d 1428, 1431 (3d Cir. 1991).
The language in the contract relating to its duration is unambiguous because it is not reasonably susceptible of different constructions or of being understood in more than one sense. The plain language of the plan states that the plan applies only to work done in 2001.
The plaintiff argues that despite its plain terms, the 2001 transition plan applied to contracts that closed in 2002, because (1) he did not get the 2002 bonus plan until October 2002 and (2) his then supervisor John Anderson told him that he (Anderson) "assumed that until the compensation plan was put into place, that the compensation plan that is in place stood." Ankerstjerne Dep. Tr. at 111.
For his first argument, the plaintiff relies on Kirk v. The Jerrold Corp., 332 F. Supp. 247, 249 (E.D. Pa. 1971), a case from this court that held that "where a person is hired for a definite term at an agreed rate and continues in the employment after the term without any new agreement, the presumption is that the same rate is to be continued." This rule, however, applies only to those situations where the term of employment is in fact a fixed term and the parties have not, at the time of making the contract, provided for a payment contingency beyond the term fixed by the contract. In Kirk, the court held that the rule was not applicable because the plaintiff and defendant had an ongoing employment relationship. Id.
As in Kirk, Ankerstjerne and Schlumberger envisioned an open-ended relationship. Kirk cannot, therefore, be used to extend, as a matter of law, the transition plan's applicable period beyond December 31, 2001.
The Court is not persuaded by the plaintiffs' second argument. Anderson's "assumption" that the 2001 plan would apply until the 2002 plan issued cannot reasonably be taken as record evidence that there was a binding agreement that the 2001 plan applied to work done between January and October 2002.
The plaintiff's reliance on Skodnick v. Rand McNally Co., No. 87-0077, 1987 WL 28091 (E.D. Pa. Dec. 14, 1987), is not persuasive. According to Skodnick, employers cannot unilaterally change the terms of an employment contract and have it apply retroactively. The reasoning of Skodnick applies here only if one assumes that the 2001 plan or something other than the 2002 bonus plan was in place between January 2002 and October 2002.
The Court will grant summary judgment for the defendants on the breach of contract and PWPCL claims.
The PWPCL does not create an independent right of compensation. It merely provides statutory remedies if an employer breaches a contractual obligation to pay wages.DeAsencio v. Tyson Foods, Inc., 342 F.3d 301, 309 (3d Cir. 2003). Because the Court will grant summary judgment in favor of the defendants on the breach of contract claim, it will also grant summary judgment on the PWPCL claim.
B. Quasi-Contract Claims
The plaintiff asserted a claim for promissory estoppel and a claim for unjust enrichment. The Court will grant summary judgment against the plaintiff on both claims.
1. Promissory Estoppel
The elements for a promissory estoppel/detrimental reliance claim are: (1) the promisor made a promise that he should reasonably expect will induce action or forbearance on the part of the promisee, (2) the promisee actually took action or refrained from taking action in reliance on the promise, and (3) injustice can be avoided only by enforcing the promise. Edwards v. Wyatt, 335 F.3d 261, 277 (3d Cir. 2003).
A broad and vague implied promise is not enough to satisfy the first element. C K Petroleum Prods., Inc. v. Equibank, 839 F.2d 188, 192 (3d Cir. 1988). The requisite promise has to be as definite as those required for enforceable contracts. The promise must be certain and explicit enough so that the full intention of the parties may be ascertained to a reasonable certainty. See, e.g., Morris v. Ace Medical Co., 1996 WL 69400, *4, *9, No. 95-1271 (E.D. Pa. Feb. 16, 1996).
Pennsylvania courts typically apply the doctrine to enforce those promises that would otherwise have formed a contract had there been consideration. See, e.g., Holewinski v. Children's Hosp. Of Pittsburgh, 649 A.2d 712, 714 ( Pa. Super. 1994).
The plaintiff claims that Schlumberger's then Vice-President of Public Sector, Rusty Petree, and the plaintiff's direct supervisor, John Anderson, had promised that the plaintiff would be paid commissions on the Dallas County and Lee County projects. The defendants have accepted, for the purposes of their motion, the plaintiff's version of the promise made by Rusty Petree, which is as follows:
The defendants, nevertheless, point out that in his deposition, Petree denied ever having told the plaintiff that the plaintiff would get commissions for the Dallas County or Lee County projects. The plaintiff does not cite where in the record Anderson made such a promise. The plaintiff testified only that Anderson told him that he (Anderson) "assumed" the old plan would continue until replaced. Indeed, in the above cited portions of the plaintiff's deposition, he admits that only Petree told him that Lee County would be taken into account in determining his compensation under the bonus plan.
Q: And what was your discussion with Rusty Petree on that issue?
A: . . . Rusty expressed to me that it was ridiculous that I was not compensated for Dallas County and that the geographical region where I was working had absolutely nothing to do with it and that he would get it taken care of. He also told me that Lee County would be taken care of as per the terms of my compensation plan and that there was no issue there and he was going to confirm with Sanjaya Sood. He then responded to me via e-mail confirming the fact that Sanjaya Sood cleared me to do Lee County and stated that he was going to speak with Bill Coats who is the new I [sic] general manager of the entire Northeast region about settlement on — or his words were making me whole on Dallas County.
Q: Did he tell you that Sanjaya Sood had said that you would be compensated under your bonus plan for your work on Lee County or did he simply say that you're cleared to work on the project?
A: Two halves of the conversation. He told me that he was going to speak to Sanjaya Sood about being compensated for Lee County and working on the project even though it's for a different group within my region. And when he responded to me he simply stated that he had spoke [sic] with Sanjaya Sood and I am cleared to do the project. I made the assumption that was based on our initial conversation. That that was the answer to the initial conversation.
Q: But he didn't say anything about the compensation issue when he reported back to you in his discussion with Sanjaya Sood?
A: He already told me I was going to be paid for Lee County. There was — it was just a matter of confirming it with Sanjaya. It wasn't — it was not presented to me as he was asking for permission.
Q: Just answer. If you can just answer my question.
A: I am trying.
Q: All I am asking you is, when he reported back to you to tell you about his conversation with Sanjaya Sood, did he say anything about your compensation or bonus plan?
A: No, he did not.
Q: Other than the discussion with Mr. Petree in which I guess Mr. Fraizer was a witness to —
A: Yes.
Q: — did anyone else at Schlumberger ever tell you that the Lee County project would be taken into account in determining your compensation under your bonus plan?
A: The conversation — no, not specifically.
Ankjersterne Dep. 151:6-154:5, Defs.' App. at Ex. 3.
The plaintiff also cites to the deposition testimony of Eric Fraizer, who was on the phone call in which Petree made his alleged promise, to bolster his claim that a definite enough promise was made to the plaintiff. Neither version of the promise indicates how much the plaintiff would be paid, by whom he would be paid, how payment was to be calculated, or when the plaintiff would be paid.
According to the plaintiff, Petree told the plaintiff that "it was ridiculous that the plaintiff was not compensated for Dallas County;" and that he, Petree, "would get it taken care of" and that "Lee County would be taken care of as per the terms of [his] compensation plan." In Fraizer's version, Petree allegedly said "You are going to get paid for Dallas County." Neither version specifies when or how much the plaintiff would get paid for Dallas County or Lee County, let alone that he would be paid anything close to $2,200,000 for both projects. The oral promise is too indefinite to support the plaintiff's promissory estoppel claim. See CK, 839 F.2d at 192 (implied promise to "administer the main checking account of [plaintiff] in the normal, banking fashion" too indefinite); Engstrom v. John Nuveen Co., Inc., 668 F. Supp. 953, 961-62 n. 3 (E.D. Pa. 1987) (a promise to "receive excellent treatment in salaries, bonuses and promotions" found too indefinite).
Even if the promise had been definite enough, there is nothing in the record to indicate that there was detrimental reliance on the part of the plaintiff. There is no record evidence that by working on the Lee County project the plaintiff had to forgo working on some other project that would have given him a larger bonus. Even if there had been evidence of some detriment, the plaintiff's reliance on the assurances of a person who was not in his chain of command was not reasonable. This is especially true in light of the fact that Schlumberger had previously told him that he was not eligible for commissions. Furthermore, the plaintiff sent an email to Petree after the alleged promise had been made that strongly suggests that the plaintiff himself realized that the issue of compensation had not been finalized. See Defs.' Br. App. at Ex. 24 ("I am concerned that I am in a similar boat here with Lee County and, . . . I would like to get the ball rolling as to our final discussions for a final resolution once and for all.").
It is not clear that such a showing would be a sufficient detriment. Courts have found that refraining from pursuing other employment opportunities altogether is not a sufficient detriment to support a promissory estoppel claim. See, e.g., Jayne v. The Archdiocese of Philadelphia, No. 93-4039, 1994 WL 112212, *3-*4 (E.D. Pa. Mar. 25, 1994).
2. Unjust Enrichment
To sustain a claim of unjust enrichment, the plaintiff has to show that the defendants either wrongfully secured or passively received a benefit that would be unconscionable for the defendants to keep without compensating the plaintiff. Hershey Foods Corp. v. Ralph Chapek, Inc., 828 F.2d 989, 999 (3d. Cir. 1987).
The only possible benefit the defendants may have wrongfully secured or passively received was the plaintiff's work on the Dallas County and Lee County contracts. Schlumberger, however, paid the plaintiff a base salary of $97,900 and bonus of $6,853 in 2002 for working on teams that secured those contracts. The plaintiff does not contend that these amounts were inconsistent with the 2002 Bonus plan. The plaintiff has not shown that he provided the defendants with anything more than the work he was hired to do.
The Court therefore grants summary judgment in favor of the defendants on both quasi-contract claims.
C. Accounting Claim
The plaintiff had not specified what type of accounting he was seeking in his complaint. The defendants had assumed he sought an equitable accounting. The plaintiff concedes that he is not entitled to an equitable accounting. He argues, instead, that he is entitled to a legal accounting. Under Pennsylvania law, there can be no legal accounting unless the defendant has breached a valid contract it had with the plaintiff. See Haft v. United States Steel Corp., 499 A.2d 676, 677-78 (Pa.Super. 1985).
Because the Court finds that the defendant has not breached its contract with the plaintiff, the plaintiff is not entitled to a legal accounting.
An appropriate order follows.