Barton v. Hewlett-Packard Co.
| Decision Date | 09 December 2014 |
| Docket Number | Civil Action No. 13-554 |
| Court | U.S. District Court — Western District of Pennsylvania |
| Parties | CARL J. BARTON, Plaintiff, v. HEWLETT-PACKARD COMPANY, Defendant. |
MEMORANDUM AND ORDER
Plaintiff Carl J. Barton ("Plaintiff") filed the instant lawsuit in the Court of Common Pleas of Allegheny County asserting a breach of contract action under Pennsylvania law for failure to pay incentive compensation. (Doc. 1-2). Defendant Hewlett-Packard Company ("Defendant"), properly removed the case to federal court on the basis of diversity jurisdiction pursuant to 28 U.S.C. § 1332(a)(1). (Doc. 1). Presently pending before the Court is the Defendant's Motion for Summary Judgment (Doc. 19), which, for the reasons stated below, will be granted.
Defendant is a global technology company that provides a full array of technology-related products and services, including information technology and enterprise software. (Doc.36 at ¶ 1).2 Plaintiff began working for Vertica Systems, Inc. ("Vertica"), an analytical database software company, in February 2011 as a sales representative, and his territory included several Midwestern states, including Michigan. (Id. at ¶¶1-2). Shortly thereafter, Defendant acquired Vertica, and Plaintiff became a salesperson for Defendant assigned to the same Midwestern territory. (Id. at ¶ 3).
Plaintiff was issued a "Sales Letter" at the end of April 2012, effective February 1, 2012, which set forth the parameters upon which his incentive compensation calculation would be based. (Doc. 22-1 at p. 2; Doc. 36 at ¶ 5). Plaintiff's prorated quota for fiscal year 2012 was $1.3 million. (Doc. 22-1 at p. 2; Doc. 36 at ¶ 7). Plaintiff's quota was set based on a multitude of factors, including an analysis of what had been sold in the territory previously, what his "pipeline" looked like, and his skill set. (Doc. 36 at ¶ 7). If Plaintiff matched his quota, he would be paid a 6.52% base commission rate up to the quota amount, resulting in a sales commission of approximately $84,760. (Id. at ¶ 8). Plaintiff's Sales Letter also included accelerated commission rates, ranging from 7.82% to 18.25% if he exceeded his quota amount. (Id. at ¶ 9).
Plaintiff's Sales Letter expressly incorporated, through an electronic link, Defendant's Global Sales Compensation Policy, which stated, inter alia:
HP reserves the right to adjust or cancel the terms of Sales plans, or Sales letters with or without notice at any time, including but not limited to adjusting accounts, goals/quotas, target incentive amount (TIA) or to address changing or unforeseen business conditions or to correct administrative errors. HP also reserves the right to change or discontinue this Policy, with or without notice, at any time.
(Doc. 22-1 at p. 3; Doc. 22-2 at p. 6). Plaintiff's Sales Letter contained similar language:
HP reserves the right to adjust the terms of the Sales Plan or to cancel at any time. To the extent allowed by law, the various components of your compensation are subject to change in accordance with the governing policies described above.
Defendant's Global Sales Compensation Policy included a Management Incentive Performance Review ("MIPR") policy. (Doc. 22-2 at p. 22). The stated purpose of this policy was "to evaluate Sales employee performance significantly above quota or for the evaluation of credit for 'large' deals." (Doc. 22-2 at p. 22). The MIPR provided, in pertinent part that:
[A] management review may occur for large transactions, including groups of related transactions. The Sales employee should have no expectation of receiving incentive payments in connection with these large transactions where the credit is disproportionate to the employee's assigned quota or to the employee's contribution toward the sales transactions, as determined in the sole discretion of HP. ...
(Id.). Plaintiff's Sales Letter tracked this policy language, stating:
HP reserves the right to review and in its sole discretion adjust incentive payments associated with large transactions for which the incentive payments are disproportionate when compared with the employee's assigned quota or contribution toward the transactions.
(Doc. 22-1 at p. 3). It is the Defendant's application of the MIPR policy that is the crux of the instant dispute.
Included within Plaintiff's Midwestern sales territory was General Motors Corporation ("GM"). (Doc. 36 at ¶ 20). In April 2011, Plaintiff met with certain GM employees to set up a "proof of concept" ("POC") to show those employees how Vertica software worked. (Id. at ¶ 22). Plaintiff indicated that from April 2011 through April 2012, he communicated with GM employees numerous times in person, over the telephone, and by email attempting to promote Vertica software and services to GM. (Id. at ¶ 23). In early March 2012, Plaintiff forecasted approximately $1,000,000 in sales to GM for fiscal year 2012. (Id. at ¶ 26). Around this sametime frame, Plaintiff was planning a meeting at GM and asked Colin Mahony ("Mahony"), the General Manager of Vertica, to make a presentation to GM with respect to Vertica's capabilities. (Id. at ¶¶ 27-28; Doc. 22-15 at p. 9). Michael Barton ("Barton") (no relation), Plaintiff's immediate supervisor, thought the meeting was important because it was with decisionmakers, and a chance for Vertica to "move beyond sort of education to maybe really doing a transaction." (Doc. 36 at ¶ 29). Plaintiff was of the view that he was "ready to close a deal at General Motors." (Doc. 30-7 at p. 6, Mahony Dep. at p. 54). Mahony, however, had a different view following the GM presentation, and testified that after leaving the meeting he felt "there was [no] opportunity there" and that the meeting had been a waste of his time. (Doc. 22-15 at pp. 10, 14).
Historically, GM had a contractual relationship with Electronic Data Systems Corporation ("EDS") to perform a wide array of services to address GM's information technology ("IT") needs. (Doc. 36 at ¶ 36). Following its acquisition of EDS in 2008, Defendant continued to provide IT services to GM. (Id.). Randy Mott ("Mott") was Defendant's Chief Information Officer ("CIO") until he left this position and became GM's CIO in February 2012. (Id. at 34). In late March 2012, Mott decided to terminate Defendant's IT contract with GM, and informed Defendant's senior executives of this at a meeting on March 26, 2012. (Id. at ¶ 39). At this same meeting, Mott announced that as part of its insourcing strategy, GM proposed to buy Defendant's entire suite of software products. (Id. at ¶ 40). Mott proposed a five-year, unlimited enterprise-wide licensing agreement ("ELA") for these software products, which allowed a customer to use the software anywhere and to store unlimited amounts of information. (Id.). Vertica was included among the list of software products in GM's initial offer. (Id. at ¶ 44). After learning of the ELA possibility from Mott, Defendant instructed allindividual software salespersons, including Plaintiff, to stop their individual sales efforts at GM so as to not interfere with the ELA negotiations. (Id. at ¶ 53).
Defendant subsequently formed a team to negotiate an ELA with GM executives. (Id. at ¶ 41). The lead negotiator for Defendant was Dan Stoks ("Stoks"), its software field sales leader for the Americas, assisted by Todd Rotger ("Rotger"), the GM Global Account Manager, Jon Stevenson ("Stevenson"), Rotger's supervisor, Rob Hughes ("Hughes"), the GM Account General Manager, and Bill Veghte ("Veghte") and George Kadifa ("Kadifa"), who were corporate vice presidents in charge of Defendant's software during different portions of fiscal year 2012. (Id. at ¶¶ 42-43). It is undisputed that Plaintiff was not a part of the ELA negotiation team, nor did he ever have any interaction with Mott, the GM decision-maker. (Id. at ¶¶ 54-55).
On April 17, 2012, Plaintiff was asked by Rotger to quote a price for Vertica software to be included in the ELA transaction with GM. (Doc. 30-9 at ¶ 8). According to Plaintiff, he reached out to his sales management team, including Barton, Mahony, and Ed Fillipine ("Filippine") regarding the "pricing and structuring" of the deal. (Id. at ¶ 12). Following ongoing discussions with the sales management team, Plaintiff was of the view that he developed the pricing model that was ultimately utilized by the ELA negotiation team, resulting in an additional $6.2 million in revenue for Defendant. (Id. at ¶¶ 28-29).
Defendant and GM ultimately entered into an across-the-board software ELA with GM, with the Vertica software priced at $8.28 million. (Doc. 36 at ¶ 52). The GM ELA was one of the largest, if not the largest, deal in Defendant's software history. (Id. at ¶ 59). It is undisputed that the $8.28 million sale of Vertica was the largest sale of Vertica software at that time, and Plaintiff does not dispute that it was a "large transaction." (Id. at ¶¶ 59-60). It is further undisputed that Defendant invoked the MIPR policy in order to determine how much salescommissions would be paid to salespersons who had GM in their sales territory. According to Defendant, the decision was made to invoke the MIPR policy due to the unique nature of the ELA transaction. (Doc. 22-19 at pp. 18, 23).
On November 2, 2012, Hans-Peter Klaey ("Klaey"), Defendant's global field sales leader, notified Defendant's sales force that it would apply its MIPR policy. (Doc. 22-7 at p. 2). Klaey, along with, inter alia, Kadifa and Mahony, were part of a team tasked with developing the criteria for the incentive pay. (Doc. 22-19 at pp. 18-19). Klaey's email stated, in pertinent part:
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