Global Exec. Mgmt. Solutions, Inc. v. Int'l Bus. Machs. Corp.

• Decision Date: 18 May 2017
• Docket Number: No. 3:16–cv–00370–HZ,3:16–cv–00370–HZ
• Parties: GLOBAL EXECUTIVE MANAGEMENT SOLUTIONS, INC., an Oregon corporation, Plaintiff, v. INTERNATIONAL BUSINESS MACHINES CORPORATION, a New York corporation, Defendant.
• Court: U.S. District Court — District of Oregon

260 F.Supp.3d 1345

GLOBAL EXECUTIVE MANAGEMENT SOLUTIONS, INC., an Oregon corporation, Plaintiff,

v.INTERNATIONAL BUSINESS MACHINES CORPORATION, a New York corporation, Defendant.

No. 3:16–cv–00370–HZ

United States District Court, D. Oregon.

Signed May 18, 2017

Richard S. Yugler, Thane W. Tienson, LANDYE BENNETT BLUMSTEIN LLP, 1300 S.W. Fifth Avenue, Suite 3600, Portland, Oregon 97201, Attorneys for Plaintiff.

Clifford S. Davidson, Kristen G. Hilton, SUSSMAN SHANK LLP, 1000 S.W. Broadway, Suite 1400, Portland, Oregon 97205–3089, Richard I. Werder, Rachel E. Epstein, Donald J. Reinhard, II, QUINN EMANUEL URQUHART & SULLIVAN, 51 Madison Avenue, 22nd Floor, New York, New York 10010, Attorneys for Defendant.

OPINION & ORDER

HERNANDEZ, District Judge:

Plaintiff Global Executive Management Solutions, Inc., (Plaintiff or GEM), brings this contract-based action against Defendant International Business Machines Corp., (Defendant or IBM), seeking payment for work performed by Richard Clyne, one of GEM's owners. Plaintiff brings claims of breach of express contract, breach of the implied duty of good faith and fair dealing, quantum meruit, promissory estoppel, accounting¹ , and fraud. Defendant moves for summary judgment on Plaintiff's remaining claims.

Plaintiff moves for partial summary judgment on three of Defendant's affirmative defenses.² I grant Defendant's motion as to the breach of contract claim, the implied of good faith and fair dealing claim, and the promissory estoppel claim. I deny Defendant's motion on the quantum meruit and fraud claims. I grant Plaintiff's motion on the waiver affirmative defense and deny it on the estoppel and express contract affirmative defenses.

BACKGROUND

In addition to the named parties, this cases involves two other entities and various contractual relationships among the parties and those entities. I have set forth the factual background in a way that helps make sense of who the players are and how they are related.

I. Clyne & Plaintiff

Clyne worked for Defendant for thirty years, from 1970 to 2000. Epstein Feb. 10, 2017 Decl. ("Epstein First Decl.") Ex. E ("Clyne Dep.") 44:18–45:13; 45:21–25, 52:6–16, ECF 72.³ Clyne and his wife incorporated Plaintiff in approximately 2001. Stewart Feb. 10, 2017 Decl. ("Stewart First Decl.") Ex. E ("Clyne Dep.") 53:12–18, ECF 77; Cline Dep./Epstein First Decl. at 58:19–23. Clyne considers himself a specialist in negotiating complicated, interesting matters. Cline Dep./Epstein First Decl. at 163:24–164:10; see also id. at 48:2–16 (noting his management skill strengths while at IBM and that he purposefully sought out things that were "messed up" and he would "step forward"). Through GEM, Clyne provides contract negotiating services as a consultant.

II. Defendant's GTS Division & Its Relationship with BMC

Defendant provides IT services to clients. Epstein First Decl. Ex. B ("Stafford Dep.") 28:5–6. Global Technology Services (GTS) is a division of IBM which takes over and runs IT operations for customers. Id. at 7:24–8:1; Epstein First Decl. Ex. A ("Calo Dep.") 14:13–25.

BMC Software, Inc., (BMC), provides software that Defendant's GTS Division uses to provide IT services to its clients. Stafford Dep./Epstein First Decl. 28:5–16. BMC has done so for about twenty years. Epstein First Decl. Ex. C ("Jones Dep.") 9:14–17.

III. BMC Contracts with IBM

IBM spends roughly $90 to $100 million per year with BMC, Jones Dep./Epstein First Decl. 135:25–136:3, and is one of the largest third-party suppliers IBM works with. Stafford Dep./Epstein First Decl. 28:15–16. In 2008, BMC and IBM entered into a Master Licensing Agreement (MLA) and an Outsourcing Attachment (OA) thereto ("the 2008 OA").

In 2012 or 2013, IBM and BMC began to renegotiate the 2008 OA. During those negotiations, BMC alleged that IBM had not complied with certain provisions of the 2008 OA and claimed that IBM's total exposure as a result was roughly $1.2 billion. Id. at 136:8–17; Epstein First Decl. Ex. AA at 9. Nonetheless, IBM and BMC executed a new OA in 2013 ("the 2013 OA"), which had a "[t]otal deal value [of] approximately [$]102 million." Id. at 137:15–21; Epstein First Decl. Ex. BB.

In 2014, IBM and BMC started the "BMC Negotiations" which, according to Defendant, were "commercial discussions" regarding IBM's desire for certain additional rights. Def. S.J. Mem. 9, ECF 71. As part of these negotiations, BMC again alleged that IBM had significant exposure, this time for alleged noncompliance with the 2013 OA. See Stewart First Decl. Exs. 50, 51, 52. The total estimated exposure for IBM was $1,097,846,099. Id. , Ex. 50 at 16; Stewart First Decl. Ex. D ("Jones Dep.") 21:3–4. In February–March 2015, and as discussed in more detail below, IBM brought Clyne in to help with the BMC Negotiations which concluded with a new 2015 OA executed on September 30, 2015. This lawsuit is about Plaintiff's compensation for the time Clyne spent on the BMC Negotiations.

IV. IBM's and Plaintiff's Contracts with APC

A. IBM's Relationship with APC

For consultants such as Plaintiff, IBM frequently uses a third-party staffing company named Alliance of Professionals & Consultants (APC) to hire and manage the consultant. Epstein First Decl. Ex. F ("McGauvran Dep.") 133:6–9. At the time relevant to this lawsuit, IBM and APC were parties to a "Non Technical Services Agreement," effective November 19, 2012. Epstein First Decl. Ex. I. Under that agreement, APC provides "deliverables and services" as described in "Statements of Work" and/or "Work Authorizations" to IBM. Id. at 1. The agreement defines the relevant terms, including "deliverables," "statement of work," "services," and "work authorization." Id. at, ¶ 1.

Simultaneous with the execution of the Non Technical Services Agreement, IBM and APC also executed a "Business Services Master Statement of Work To the Non–Technical Services Agreement" (hereinafter "Master SOW"). Epstein First Decl. Ex. H. In contrast to the Non Technical Services Agreement which lacked an expiration date, the Master SOW expressly expired two years after its execution, on November 19, 2014. Id. at 1. The Master SOW incorporates the terms and conditions of the Non Technical Services Agreement. The Scope of Work section establishes that the services or deliverables required to be provided either on IBM's or IBM's Customers' premises as specified in a work authorization, are "Business Services." Id. at 1, ¶ 1. "Accordingly, APC or APC's Subtiers" were obligated to provide personnel to IBM in several service areas, including custom market research, database marketing, IT consulting, marketing consulting, operations consulting, research, strategy consulting, and more. Id. The Master SOW defines relevant terms such as "subtier," "personnel," "recruited personnel," and "non-recruited personnel." Id. at 1, ¶ 2. Under the "Summary Description of Services," APC agreed to provide either recruited or non-recruited personnel or to align with subtiers as specified in individual work authorizations issued by IBM. Id. at 2, ¶ 3.

B. Plaintiff's & APC's Relationship

Clyne, through Plaintiff GEM, worked for American Express for a few years from October 2010 to the end of 2013. Clyne Dep./Epstein First Decl. 29:11–22, 31:7–11. Sometime in the fourth quarter of 2013, IBM's Andrew Cohen reached out to Clyne for assistance with negotiating the "BMC Midrange contract." Id. at 103:19–25. At the time, Cohen was IBM's software manager for its American Express service account. Id. at 83:7–11; see also Epstein First Decl. Ex. K at 2 (email from Cohen bearing title Delivery Project Executive, American Express Account Integrated Technology Delivery). Cohen asked Clyne for a fee quote which Clyne provided in a November 25, 2013 email. Id. at 104:2–4, 9–11; Epstein First Decl. Ex. J. Cohen responded via email in early December, telling Clyne he needed to go through an approved staffing firm, several of which he listed in the email. Id. Ex. K. In his deposition, Clyne testified that Cohen later clarified through email or telephone that APC was the correct contracting vendor. Clyne Dep./Epstein First Decl. 117:9–14.

On January 15, 2014, IBM's Les Bengough, who worked as the Business Services Team Lead for IBM's General Procurement office, emailed Lori Colmenero, Client Coordinator at APC, regarding the contract for Plaintiff. Stewart First Decl. Ex. 126. Bengough cc'd Clyne and IBM's Cohen. Id. Bengough told Colmenero that contact details and the statement of work for the "subject contractor," identified as Clyne, were attached, a "cart" would follow, and to please align with APC. Id. GEM's previous quote to Cohen was attached. Id. APC's Matthew McGauvran explained that typically IBM Procurement introduces APC to an individual or company IBM wants for a specific project and then has that individual or company "align" with APC for that project. Stewart First Decl. Ex. A ("McGauvran Dep.") 12:19–21. "Alignment" means APC's hiring of the company by signing all of the documents and "all of the legal requirements to do business with APC, and therefore, IBM." Id. at 13:2–5.

On January 28, 2014, Clyne executed a "Master Supplier Agreement" (MSA) with APC, identifying GEM as the "Supplier." Stewart First Decl. Ex. 3. Under the MSA, APC may contact the Supplier if an opportunity arises that APC believes may require the Supplier's services. Id. Another introductory paragraph makes clear that the MSA comprises a number of documents in addition to the MSA, including any statement of work referring to the MSA and accepted by the supplier and any work authorization or change order for a statement of work issued by APC. Id. "Collectively, these documents govern the relationship between Supplier and APC for any Services Supplier provides to APC or its Clients." Id. The MSA had a two-year term, with automatic renewal for successive one-year terms. Id. at 3, ¶ 5.1.

A non-compete provision in the MSA states as follows:

If APC introduced Supplier to the Client,

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