Opinion
NO. CIV. S-06-2870 LKK EFB.
January 28, 2008
ORDER
The plaintiff, Larry Worman, has brought suit against his former employer, MetLife Group, Inc., alleging that he did not receive the full compensation he was owed at the time of his termination. The defendants have moved for summary judgment on all claims. The court resolves the motion on the papers and after oral argument.
I. FACTS
The facts are undisputed unless otherwise noted.
The plaintiff was hired in November 2003 as Vice President of Marketing for the Western Region of the Wirehouse Division of Travelers Life Annuity ("Travelers"). His duties centered around supervising Regional Vice Presidents and increasing "point-of-sale" business in the western United States.
As of January 2004, the plaintiff's direct supervisor was Tom Tooley, Senior Vice President of Marketing. Mr. Tooley reported directly to Lou DiGiacomo, Vice President of Life Distributions, who reported to Ed Cassidy, President of Travelers Life Division.
The plaintiff was given sales targets in 2004 and 2005, which were calculated from the commissionable portions of the life insurance premiums for products sold by the Regional Vice Presidents who reported to him. In 2004 his sales target was $4 million and in 2005 it was $8-9 million. In 2005, the plaintiff only reached $4.5 million of his sales target.
The plaintiff's compensation plan is one of the subjects of dispute in this action. It is undisputed, however, that the plaintiff's total annual compensation in 2004 and 2005 was comprised of a base salary, a "discretionary bonus," and "monthly variable compensation." The discretionary bonus was given to the plaintiff out of a pool of funds, whose amount was unknown until the end of the year and were typically not paid until March of the following year. Mr. Cassidy had final approval of the amount of discretionary bonuses to be paid to each employee. No other manager had authority to promise an employee what the amount of his bonus would be. The amount of the discretionary bonus was based on the employee's overall job performance.
The plaintiff disputes this, to the extent that it suggests that his overall compensation package would be less than $350,000 in 2005. Statement of Genuine Issues In Opposition to Motion for Summary Judgment, ¶ 33.
In 2005, MetLife acquired Travelers. In February 2005, the plaintiff received a memo from Michael Farrell, the Senior Vice President of MetLife, which stated that employees who reached 90 percent of their sales targets would receive a "special sales incentive" of between 10-20 percent of the employee's "total monthly variable incentive compensation." The plaintiff understood this to be a retention bonus. The memo stated that the bonus was not available to managers who participated in a monthly variable incentive program. Plaintiff asserts that Michael Farrell later modified the terms of this bonus, informing plaintiff and others that the special sale incentive would be 1 percent of actual production if the sales targets were met. Statement of Disputed Facts, ¶ 68.
The plaintiff was terminated on January 31, 2006. At that time, he received as compensation for 2005 his base salary of $75,000, monthly variable compensation of $100,000, and a retention bonus of $10,000. In March 2006, MetLife paid the plaintiff a bonus of $45,598.25.
The plaintiff disputes whether this bonus should be characterized as a "year-end bonus." Statement of Genuine Issues In Opposition to Motion for Summary Judgment, ¶ 54.
At the time of termination, the plaintiff was also paid for thirteen unused vacation days. According to the plaintiff, he was owed payment for twenty unused vacation days. Statement of Genuine Issues In Opposition to Motion for Summary Judgment, ¶ 56; Statement of Disputed Facts, ¶¶ 66-67.
II. STANDARD FOR SUMMARY JUDGMENT UNDER FED. R. CIV. P. 56
Summary judgment is appropriate when it is demonstrated that there exists no genuine issue as to any material fact, and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); see also Adickes v. S.H. Kress Co., 398 U.S. 144, 157 (1970); Secor Ltd. v. Cetus Corp., 51 F.3d 848, 853 (9th Cir. 1995).
Under summary judgment practice, the moving party
[A]lways bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any," which it believes demonstrate the absence of a genuine issue of material fact.Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). "[W]here the nonmoving party will bear the burden of proof at trial on a dispositive issue, a summary judgment motion may properly be made in reliance solely on the `pleadings, depositions, answers to interrogatories, and admissions on file.'" Id. Indeed, summary judgment should be entered, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial. See id. at 322. "[A] complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial." Id. In such a circumstance, summary judgment should be granted, "so long as whatever is before the district court demonstrates that the standard for entry of summary judgment, as set forth in Rule 56(c), is satisfied." Id. at 323.
If the moving party meets its initial responsibility, the burden then shifts to the opposing party to establish that a genuine issue as to any material fact actually does exist.Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986); see also First Nat'l Bank of Ariz. v. Cities Serv. Co., 391 U.S. 253, 288-89 (1968); Secor Ltd., 51 F.3d at 853.
In attempting to establish the existence of this factual dispute, the opposing party may not rely upon the denials of its pleadings, but is required to tender evidence of specific facts in the form of affidavits, and/or admissible discovery material, in support of its contention that the dispute exists. Fed.R.Civ.P. 56(e); Matsushita, 475 U.S. at 586 n. 11; see also First Nat'l Bank, 391 U.S. at 289; Rand v. Rowland, 154 F.3d 952, 954 (9th Cir. 1998). The opposing party must demonstrate that the fact in contention is material, i.e., a fact that might affect the outcome of the suit under the governing law, Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Owens v. Local No. 169, Ass'n of Western Pulp and Paper Workers, 971 F.2d 347, 355 (9th Cir. 1992) (quoting T.W. Elec. Serv., Inc. v. Pacific Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir. 1987)), and that the dispute is genuine, i.e., the evidence is such that a reasonable jury could return a verdict for the nonmoving party, Anderson, 477 U.S. 248-49; see also Cline v. Indus. Maint. Eng'g Contracting Co., 200 F.3d 1223, 1228 (9th Cir. 1999).
In the endeavor to establish the existence of a factual dispute, the opposing party need not establish a material issue of fact conclusively in its favor. It is sufficient that "the claimed factual dispute be shown to require a jury or judge to resolve the parties' differing versions of the truth at trial."First Nat'l Bank, 391 U.S. at 290; see also T.W. Elec. Serv., 809 F.2d at 631. Thus, the "purpose of summary judgment is to `pierce the pleadings and to assess the proof in order to see whether there is a genuine need for trial.'" Matsushita, 475 U.S. at 587 (quoting Fed.R.Civ.P. 56(e) advisory committee's note on 1963 amendments); see also Int'l Union of Bricklayers Allied Craftsman Local Union No. 20 v. Martin Jaska, Inc., 752 F.2d 1401, 1405 (9th Cir. 1985).
In resolving the summary judgment motion, the court examines the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any. Rule 56(c); see also In re Citric Acid Litigation, 191 F.3d 1090, 1093 (9th Cir. 1999). The evidence of the opposing party is to be believed, see Anderson, 477 U.S. at 255, and all reasonable inferences that may be drawn from the facts placed before the court must be drawn in favor of the opposing party, see Matsushita, 475 U.S. at 587 (citing United States v. Diebold, Inc., 369 U.S. 654, 655 (1962) (per curiam)); See also Headwaters Forest Def. v. County of Humboldt, 211 F.3d 1121, 1132 (9th Cir. 2000). Nevertheless, inferences are not drawn out of the air, and it is the opposing party's obligation to produce a factual predicate from which the inference may be drawn. See Richards v. Nielsen Freight Lines, 602 F. Supp. 1224, 1244-45 (E.D. Cal. 1985), aff'd, 810 F.2d 898, 902 (9th Cir. 1987).
Finally, to demonstrate a genuine issue, the opposing party "must do more than simply show that there is some metaphysical doubt as to the material facts. . . . Where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no `genuine issue for trial.'"Matsushita, 475 U.S. at 587 (citation omitted).
III. ANALYSIS
The plaintiff has brought five causes of action, all of which are premised on the allegations that he was not paid, at the time of his termination, his full compensation for 2005 nor the value of the unused vacation days he had accrued. For the reasons provided herein, the court grants the defendant's motion in part.
A. Claims Related to Value of Plaintiff's 2005 Compensation
As described above, the plaintiff's annual compensation was comprised of three parts. First, he had a base salary of $75,000. Second, he had a "monthly variable compensation." The plaintiff was guaranteed that the monthly variable compensation would be at least $100,000 per year, pro rated into monthly payments. Third, the plaintiff's annual compensation also included a "discretionary bonus," which all parties agree was based at least to some extent on the plaintiff's performance. In addition to these three elements of his compensation, the plaintiff alleges that he was also owed a "Special Sales Incentive," which he characterizes as a retention bonus, pursuant to representations made by Michael Farrell, the Senior Vice President of MetLife.
The plaintiff testified in his deposition that he conceived of his compensation structure as having two components: his base salary and his monthly variable compensation, and that the latter was comprised of a fixed sum of $100,000 divided monthly plus a year-end bonus (the discretionary bonus). Deposition of Larry Worman ("Worman Depo.") 66:1-67:7.
The parties do not dispute that the plaintiff was entitled to and received his $75,000 base salary in 2005. They do not dispute that he received $100,000 in "monthly variable compensation" that year, as well. Finally, they do not dispute that he received $45,598.25 in March 2006, although the parties do dispute whether this was the discretionary bonus or the Special Sales Incentive/retention bonus.
The plaintiff's position is that the defendant, through its agents, promised that his total compensation was to be at least $350,000, and his claims are premised on the fact that his compensation fell short of this. He alleges that he was made to believe that the three elements of his compensation package (base salary, monthly variable compensation, and discretionary bonus) would be at least $350,000 in 2005, and that it could be even more than that based on the plaintiff's performance and the amount of money available for bonuses at the end of the year. For this reason, the plaintiff explains that he understood that the bonus was only "discretionary" in the sense that it would be at least $175,000 ($350,000 minus the $75,000 base salary minus the $100,000 monthly variable compensation) but that the defendants had discretion to make the bonus even more than that amount.
The plaintiff has presented admissible evidence that he was promised that his compensation would total at least $350,000, meaning that his discretionary bonus would be at least $175,000. The plaintiff testified that he was told by Tom Tooley and Lou DiGaicomo that his total compensation would be a minimum of $350,000 and that the year-end discretionary bonus would be calculated to guarantee the plaintiff at least this amount. See,e.g., Worman Depo. 58:6-15, 67:8-68:2, 72:14-73:3, 167:8-168:1. Tom Tooley testified that when explaining to the plaintiff what his compensation would be for 2005, the plaintiff was told "Here is what we are going to get you this year," referring to the total of $350,000. Deposition of Tom Tooley ("Tooley Depo.") 82:3-83:6. The discretionary bonus would be used to ensure that the plaintiff's total compensation reached $350,000. Id. at 85:20-23. If the plaintiff exceeded his sales goals, however, he could have received an even greater compensation. Id. at 86:2-7.
Additionally, the amount of the bonus is not so vague as to be unenforceable as a term of the contract. See Rochlis v. Walt Disney Co., 19 Cal. App. 4th 201 (1993). The plaintiff alleges that by the terms of his contract, the bonus was to be at least $175,000 and that he therefore is entitled to this amount. This is a legally viable position.
The plaintiff also has shown that a reasonable jury could find that Travelers' agent or apparent agent assured him that his compensation plan would be as he describes it in his complaint. A plaintiff may recover against a principal for acts performed by the principal's apparent agent only when the plaintiff's belief of that person's agency was reasonable, due to some act or omission by the principal, and when the plaintiff's belief was not negligent. Cal. Civil Code § 2317; Hill v. Citizens Nat. Trust Savings Bank, 9 Cal. 2d 172, 175-76 (1937). Here, the plaintiff does not dispute that he did not know whether Mr. Tooley or Mr. DiGiacomo had the authority to guarantee the amount of the discretionary bonus. See Undisputed Facts ¶ 58. Notwithstanding this, the plaintiff also has presented deposition testimony that other employees of Travelers at MetLife, including Ed Cassidy, Mike Farrell, Andrew Aiello, and Paul LaPiana, informed the plaintiff that they were aware of what his compensation plan had been under Travelers and that he would be paid in accordance with it in 2005. Worman Depo. 108:7-110:15, 111:18-112:4, 118:6-119:12, 124:16-125:1, 128:12-129:6, 131:12-132:1, 143:7-143:17. Based on this, a jury could reasonably infer that even if Mr. Tooley and Mr. DiGiacomo did not have authority to make promises on Travelers' or MetLife's behalf, that they were simply describing the details of the compensation plan that Mr. Cassidy, Mr. Farrell, Mr. Aiello, and Mr. LaPiana had promised to the plaintiff. A jury could also reasonably conclude that as the President of Travelers Life Division, Senior Vice President of MetLife, and MetLife managers, respectively, Mr. Cassidy, Mr. Farrell, Mr. Aiello, or Mr. LaPiana had the authority or apparant authority to take actions that would bind the principal, Travelers and MetLife. See Cal. Civil Code § 2317; Hill, 9 Cal. 2d at 175-76.
Consequently, the court denies the defendants' motion for summary judgment for the plaintiff's first, third, fourth, and fifth causes of action insofar as they allege that the plaintiff was entitled to but not paid the discretionary bonus of at least $175,000.
B. Claims Related to the 2005 Special Sales Incentive/Retention Bonus
In his first cause of action, the plaintiff alleges that he was not paid the retention bonus he was promised. He appears to incorporate this allegation in his third and fifth causes of action as well. In his opposition brief, however, the plaintiff concedes that he was paid the retention bonus, in the amount of $45,598.65. Therefore, the court grants the defendants' motion as to the plaintiff's first, third, and fifth claims insofar as they allege that he was not paid the retention bonus.
C. Claims Related to the Payment of Unused Vacation Time
The plaintiff also brings his first, third, fourth, and fifth causes of action premised on the allegation that he had accrued twenty vacation days by the date of his termination, had used none, and was only paid for thirteen. To support this allegation, the plaintiff offers his deposition testimony that he felt he was entitled to ten days per year of vacation time, and that he took no vacation days in 2004 and 2005. Worman Depo. 181:8-182:1.
This suffice to show that there is a genuine issue of material fact on this question. The plaintiff has presented admissible evidence — his testimony — that he was not paid fully for the vacation days he had accrued. Although the defendants offer contrary evidence in the form of the testimony of James Boylan that the plaintiff was only due payment for thirteen days, this does not show that there is no genuine issue of material fact on this issue. See Defendant's Separate Statement of Undisputed Facts, ¶¶ 55-57. Put plainly, the plaintiff has presented evidence that would permit a jury to find in his favor. This is all that is required. See First Nat'l Bank, 391 U.S. at 290.
Accordingly, the court denies defendant's motion as to the plaintiff's first, third, and fourth claims insofar as they allege that the plaintiff was not paid the vacation time he was owed.
The court grants the defendant's motion as to the plaintiff's fifth cause of action in section V.E, infra.
D. Plaintiff's Second Cause of Action for Quantum Meruit
In his second cause of action, the plaintiff alleges that he was entitled to compensation for the reasonable value of the work he performed for the defendant on the theory of quantum meruit. Quantum meruit is a measure of recovery for one who has rendered services to another, so that he may recover the reasonable value of his services. Its purpose is to prevent unjust enrichment.Palmer v. Gregg, 65 Cal. 2d 657, 660 (1967); Day v. Alta Bates Medical Center, 98 Cal. App. 4th 243, 248 (2002). It is not a means for recovery when a contract exists between the parties, as it cannot be a vehicle for changing or supplying terms of a contract. Maglica v. Maglica, 66 Cal. App. 4th 442, 451 (1998);Hedging Concepts, Inc. v. First Alliance Mortgage Co., 41 Cal. App. 4th 1410, 1419 (1996).
The plaintiff presents this cause of action in the alternative, in the event that the factfinder determines that a contract did not exist between the plaintiff and defendant. The defendant, however, concedes the existence of a contract but only disputes its terms. Consequently, this cause of action is not viable as a matter of law. The court grants the defendant's motion as to the plaintiff's second claim.
E. Plaintiff's Fifth Cause of Action Under California Labor Code Section 203
Under California Labor Code section 203, a plaintiff is awarded an amount equal to his daily wages for up to thirty days after his termination, if his employer had wilfully failed to pay him his wages at the time of termination. Imposition of this penalty is not proper if the employer's failure to pay wages was not "willful," but was the consequence of a good faith dispute that any wages were due. 8 Cal. Code Regs. § 13520.
Here the plaintiff has adduced no evidence that the defendant withheld wages from him wilfully, within the meaning of section 203, or for any reason beyond a good faith dispute about the amount of compensation that was due. For this reason, the defendant's motion must be granted as to the plaintiff's fifth cause of action.
F. Plaintiff's Claim for Punitive Damages
The plaintiff concedes that punitive damages are not an available remedy for his causes of action. The defendant's motion is granted as to the plaintiff's claim for punitive damages.
V. CONCLUSION
As described herein, the defendant's motion for summary judgment is GRANTED IN PART and DENIED IN PART.
IT IS SO ORDERED.