809 F.2d 377 (7th Cir. 1987), 85-1710, Jackman v. WMAC Inv. Corp.

Docket Nº85-1710.
Citation809 F.2d 377
Party NameJohn JACKMAN, Plaintiff-Appellee, v. WMAC INVESTMENT CORPORATION, Defendant-Appellant.
Case DateJanuary 09, 1987
CourtUnited States Courts of Appeals, Court of Appeals for the Seventh Circuit

Page 377

809 F.2d 377 (7th Cir. 1987)

John JACKMAN, Plaintiff-Appellee,

v.

WMAC INVESTMENT CORPORATION, Defendant-Appellant.

No. 85-1710.

United States Court of Appeals, Seventh Circuit

January 9, 1987

Argued Dec. 13, 1985.

Rehearing Denied Feb. 20, 1987.

Page 378

Gilbert W. Church, Foley & Lardner, Leonard G. Leverson, Milwaukee, Wis., for defendant-appellant.

Terry E. Nilles, Gibbs, Roper, Loots & Williams, Milwaukee, Wis., for plaintiff-appellee.

Before CUMMINGS and CUDAHY, Circuit Judges, and ESCHBACH, Senior Circuit Judge.

ESCHBACH, Senior Circuit Judge.

This diversity case concerns the interpretation under Wisconsin law of a stock incentive plan for employees. Plaintiff brought suit to recover money which he claimed was due to him under the plan. Defendant had refused to pay, arguing that plaintiff had forfeited his rights under the plan by leaving the company. Ruling on a motion in limine, the trial court interpreted the plan to provide that plaintiff was entitled to the payments he sought and held that defendant could not introduce parol evidence that the parties intended differently in making the plan. Agreeing that the ruling effectively determined the outcome of the case, the litigants entered into a stipulation to avoid the need for trial and to enable defendant to appeal. The stipulation provided that if the court's ruling on the motion in limine was correct, judgment should be granted to plaintiff. The stipulation did not settle the additional issue of whether plaintiff should also be granted attorney's fees under the Wisconsin Wage Claim statute, leaving that issue for the court to decide. The trial court entered judgment for plaintiff on the basis of the stipulation and granted attorney's fees to plaintiff. We have jurisdiction under 28 U.S.C. Sec. 1291.

Defendant advances two arguments on appeal. Defendant asserts error in the district court's ruling that the defendant could not present extrinsic evidence or argument concerning the parties' intent in entering into the stock incentive plan. Defendant also argues that the district court erred in awarding attorney's fees under the Wisconsin Wage Claim statute, both by treating the award as mandatory, where the statute makes it a discretionary decision, and by failing to give an adequate basis for the award. For the reasons stated below, we will affirm on both the granting of the motion in limine and the award of attorney's fees.

I.

The essential facts are undisputed. Plaintiff John Jackman was employed by defendant MGIC Investment Corporation (which has since changed its name to WMAC Investment Corporation) as a vice president. In early 1981, his 1980 job performance evaluation was negative and he was told to look for another job. During the rest of 1981 MGIC gradually removed virtually all his job responsibilities. Jackman repeatedly requested a new job within MGIC. Toward the end of the year MGIC offered and he accepted a new job as vice

Page 379

president of a subsidiary, at about one half his former salary.

Jackman retained his rights in MGIC's "1979 Restricted Stock Performance Plan" ("1979 Plan"). Under the 1979 Plan, participant employees were awarded "Restricted Stock" of MGIC. The stock remained "restricted," meaning the employee's rights in it did not vest until the end of a period set by the company at the award of the stock, the "Restricted Period." If the employee was fired or quit, he forfeited all rights in stock that had been awarded to him that was still restricted.

An exception to the complete forfeiture rule was that if the termination was due to the employee's death or retirement, a portion of the stock, corresponding to the part of the "Restricted Period" for that stock that had elapsed, vested and the remaining portion was forfeited. For example, an employee might receive 200 shares of restricted stock in August, 1975, with a "Restricted Period" of four years. If he was still with the company in August 1979, the stock would become unrestricted, meaning he would now own 200 shares of common stock. If he left the company before August of 1979, for any reason other than death or retirement, he would forfeit the stock. If he retired in August of 1977, halfway through the "Restricted Period," he would receive 100 shares and forfeit his rights in the other 100. Holding restricted stock, then, was an incentive for the employee to remain with the company. Jackman had a total of 900 shares of such restricted stock at the time of the events discussed here.

On December 13, 1981, MGIC announced that it would be acquired by Baldwin-United Corporation ("Baldwin"). The merger was completed on March 2, 1982.

After the announcement of the merger but before its consummation, Baldwin announced a replacement stock plan, the "1982 Deferred Compensation Plan" ("1982 Plan"), that would take effect upon the consummation of the merger. The 1982 Plan was substantially similar to the 1979 Plan, with the following differences. Under the 1982 Plan, participants would receive cash rather than stock upon the vesting of restricted stock. The 1982 Plan also introduced a feature advantageous to participants, the "Non-Forfeiture Termination."

"Non-Forfeiture Termination"--means the termination of a Participant's employment with the Company, Baldwin-United or any Baldwin-United subsidiary or parent immediately after which termination the Participant is not an employee of the Company, Baldwin-United or any Baldwin-United subsidiary or parent, if such termination is (1) as a result of the death or permanent disability of the Participant, (2) made by the Participant's employer other than for cause, or (3) made by the Participant as a result of a material diminution by the Participant's employer in the Participant's job responsibilities.

A participant whose employment ended through a "Non-Forfeiture Termination" did not forfeit his rights in any restricted stock, as he would have under the 1979 Plan for any termination other than one due to his death or retirement. In fact, the vesting was accelerated, and the employee...

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