Bill & Melinda Gates Found. v. Pierce

• Decision Date: 16 November 2020
• Docket Number: No. 79354-3-I,79354-3-I
• Court: Washington Court of Appeals
• Parties: BILL & MELINDA GATES FOUNDATION, a Washington nonprofit corporation, Appellant/Cross-Respondent, v. Todd PIERCE, Respondent/Cross-Appellant.

475 P.3d 1011

BILL & MELINDA GATES FOUNDATION, a Washington nonprofit corporation, Appellant/Cross-Respondent,

v.Todd PIERCE, Respondent/Cross-Appellant.

No. 79354-3-I

Court of Appeals of Washington, Division 1.

FILED November 16, 2020

Robert Bertelson Mitchell Jr., Patrick Michael Madden, G. William Shaw, Ryan James Groshong, K&L Gates LLP, 925 4th Ave. Ste. 2900, Seattle, WA, 98104-1158, Shelby Renee Stoner, Attorney at Law, 4155 Bluff St. Ne, Bainbridge Is, WA, 98110-3202, for Appellant.

Rebecca Jane Roe, Lindsay L. Halm, Richard L. Anderson, Schroeter Goldmark Bender, 810 3rd Ave. Ste. 500, Seattle, WA, 98104-1657, for Respondent.

PUBLISHED OPINION

Hazelrigg, J.

¶1 Todd Pierce was recruited away from a high-paying executive position with a technology company in San Francisco to become the first Chief Digital Officer for the Bill & Melinda Gates Foundation (the Foundation). After negotiating what the role would and, more importantly, would not be, Pierce accepted the at-will position and moved to Seattle to begin his "far-reaching and transformational" work. However, the job for which he bargained never materialized and Pierce was ultimately terminated after approximately 18 months with the charitable organization. He filed suit against the Foundation for breach of contract, promissory estoppel, and negligent misrepresentation. After a bench trial, the judge found for Pierce as to the breach claim and, in the alternative, on the theory of promissory estoppel. The judge found that Pierce did not meet his burden to prove negligent misrepresentation. Pierce was awarded damages based largely on lost wages and stock options from his prior employer, but his request for attorney fees was denied.

¶2 The Foundation asserts that the court erred in finding for Pierce on both breach of contract and promissory estoppel, grounding its various arguments in the fact that Pierce was an at-will employee, and that the award for damages was improper. It further raises due process challenges to the proceedings as a whole, based on the manner by which the judge conducted the bench trial. Pierce cross-appeals the court's denial of his request for attorney fees.

¶3 The highly distinctive factual context of this case presents issues not heretofore considered in the body of law on employment contracts in Washington. The specific promise at the heart of the negotiations for Pierce's employment may well have been vague and unenforceable in other circumstances involving different parties. However, the Foundation was uniquely situated to provide precisely the opportunity it jointly envisioned and bargained for with Pierce, yet failed to do so. We affirm the trial court's ruling as to breach of contract and, as such, do not reach the alternative basis of promissory estoppel. At-will employees may not recover reliance damages as the trial court awarded here, but the facts of this case are such that the court is not constrained to nominal damages typically associated with a finding of breach of an at-will employment contract. Accordingly, we agree with the Foundation that the trial court erred in its assessment of damages and remand for further proceedings. While the Foundation raises serious questions as to the manner of the judge's questioning of the witnesses and interference with counsel's ability to object at trial, it fails to demonstrate prejudice and we find error was harmless. As Pierce did not bring a suit for wages, we affirm the court's ruling denying his request for attorney fees. Affirmed in part, reversed in part, and remanded for further proceedings.

FACTS

¶4 The Bill & Melinda Gates Foundation (the Foundation) is the world's largest philanthropic organization. The Foundation has three trustees: Warren E. Buffett, Melinda A. French Gates, and William Henry (Bill) Gates, III. Buffett and the Gateses are some of the wealthiest individuals in the world; Bill Gates is the founder of technological pioneer Microsoft, Melinda French Gates had a distinguished career in technology and has been an advocate for diversity in that field since her youth, with a particular focus on gender equity, and Warren Buffett is considered one of the world's top investors as the Chairman and Chief Executive Officer (CEO) of Berkshire Hathaway.

¶5 The Foundation invests five billion dollars each year in charitable support, driven by the notion that every life has equal value. The trustees of the Foundation oversee its operations by working directly with the CEO and the Executive Leadership Team (ELT), who direct the daily operations of each program's divisions: Global Health, Global Development, Global Growth & Opportunity, U.S. Program, and Global Policy & Advocacy. Some of the projects undertaken by the Foundation include helping improve high school graduation rates and creating opportunity for higher education, water sanitation, vaccine development, women's economic empowerment, and financial services for the poor.

¶6 Dr. Susan Desmond-Hellmann joined the Foundation as CEO in 2014. Shortly after her arrival, she hired Leigh Morgan to assess the Foundation's operations. Morgan was later hired on as Chief Operating Officer (COO). Morgan reached out to Todd Pierce for support and insight regarding Information Technology (IT) operations at the Foundation. Desmond-Hellmann, Morgan, and Pierce had all worked together previously at Genentech, a San Francisco biotechnology company. When Morgan first contacted Pierce in 2014, he was a Senior Vice President at Salesforce.com (Salesforce). Morgan explained her tasks, priorities and the general landscape at the Foundation to Pierce and emphasized the need to rework IT operations.

¶7 Initially, Morgan was only seeking advice and insight from Pierce, however their discussion grew into exploring the possibility of Pierce coming to work for the Foundation. They discussed Pierce joining as Chief Digital Officer (CDO); Pierce made it clear that he only wanted to work for the Foundation if his job was broader than that of a traditional Chief Information Officer (CIO). The two considered the need to overhaul the Foundation's IT program, implement systems upgrades, and build a cross-Foundation digital strategy that would help with its philanthropic work.

¶8 In October 2014, Pierce visited Seattle to meet with senior leadership who were aware of Pierce's interest in a CDO position. At the meeting, Desmond-Hellmann told Pierce to be sure to ask for what he wanted from the Foundation. Pierce made three specific requests: to be the CDO, to be on the Foundation's ELT, and to report directly to the CEO. The Foundation agreed to the first two requests and expressly rejected the third. Desmond-Hellmann reinforced that, should he join the Foundation, Pierce's first priority would be to fix the IT systems. The next month, Morgan emailed Pierce to indicate that Bill Gates was open to meeting with him. Prior to meeting with Gates, Morgan emailed Pierce that the "CDO role description is still forming" and included a draft list of accountabilities. She also expressly requested Pierce's input.

¶9 There had never previously been a CDO position at the Foundation. Pierce was unable to find time to provide meaningful input on the draft of CDO accountabilities from Morgan, but he later testified that he felt the draft was broad enough to encompass the opportunities he had in mind. Pierce did, however, forward some articles to Morgan about CDO positions that were beginning to emerge in other companies and organizations. In December 2014, Morgan sent Pierce a list of "high level job accountabilities for [the] CDO role." Pierce knew he would need to persuade Gates in order for the opportunity to come to fruition. The meeting between Pierce and Gates went well, but Pierce did not make any specific requests of commitment from Gates. The Foundation sent Pierce an offer letter in January 2015 which he signed and returned a month later. The parties agree that the offer letter was an enforceable contract setting forth the terms of Pierce's employment.

¶10 In exchange for Pierce's employment as CDO, the Foundation agreed to pay him a salary of $425,000 annually, a $100,000 signing bonus, retirement contributions equal to 15% of his salary, and relocation benefits. The letter also stated Pierce's employment would be " ‘at will’ and may be terminated by you or the [F]oundation at any time for any reason with or without cause or advance notice." Pierce accepted the position and was aware that, in doing so, he was leaving behind unvested incentive compensation at Salesforce.

¶11 Pierce was employed at the Foundation from April 2015 to October 2016. Pierce immediately began working on a digital strategy, in addition to the numerous other projects the Foundation identified as priorities. In November 2015, Pierce sent Desmond-Hellmann an email outlining his digital strategy. In response, Desmond-Hellmann questioned his focus on new programs rather than working with existing ones. She stressed the need for Pierce to pace himself given the breadth of the proposal. Pierce agreed with the feedback.

¶12 In January 2016, Pierce presented his digital strategy to the ELT, which was comprised of the presidents of the Foundation's various program divisions. Pierce followed up by presenting an updated digital strategy to Desmond-Hellmann in May 2016 and identified the need for additional budget amounts for 2016 and 2017. Pierce continued to expand and work on his project, eventually hiring a Director of Digital Platforms & Ecosystems. With Desmond-Hellmann's approval, Pierce worked on options for building out the Foundation's investment management system. In September 2016, Pierce and his IT group created a "36-[Month] Digital Roadmap."

¶13 During Pierce's time at the Foundation, numerous concerns surfaced about his leadership, team morale, and questioning the degree of Pierce's commitment to the Foundation. Pierce and Morgan repeatedly had communication issues due to Pierce's...