McCleary v. Wells Fargo Sec., L.L.C.

• Decision Date: 17 March 2015
• Docket Number: No. 1–14–1287.,1–14–1287.
• Citation: 29 N.E.3d 1087
• Parties: Thomas S. McCLEARY, Plaintiff–Appellant, v. WELLS FARGO SECURITIES, L.L.C., Defendant–Appellee.
• Court: United States Appellate Court of Illinois

29 N.E.3d 1087

Thomas S. McCLEARY, Plaintiff–Appellant

v.WELLS FARGO SECURITIES, L.L.C., Defendant–Appellee.

No. 1–14–1287.

Appellate Court of Illinois, First District, Second Division.

March 17, 2015.

DeGrand & Wolfe, P.C., of Chicago (Luke DeGrand, Tracey L. Wolfe, of counsel), for appellant.

DLA Piper LLP, of Chicago (Rachel B. Cowen, of counsel), for appellee.

OPINION

Justice PIERCE

delivered the judgment of the court, with opinion.

¶ 1 Plaintiff, Thomas McCleary, appeals the dismissal of his amended complaint under section 2–615 of the Code of Civil Procedure

(Code) (735 ILCS 5/2–615 (West 2012) ). McCleary's amended complaint alleged claims for breach of contract, violation of the Illinois Wage Payment and Collection Act (Act) (820 ILCS 115/2 (West 2012) ) and unjust enrichment. We find plaintiff's amended complaint pled sufficient facts that, if proven, would entitle him to relief. Therefore, we reverse the judgment of the circuit court and remand the cause for further proceedings.

¶ 2 BACKGROUND

¶ 3 Plaintiff's complaint against his former employer, defendant Wells Fargo Securities, L.L.C., seeks payment of an earned bonus he reasonably expected that defendant awarded to similarly situated employees. Defendant moved to dismiss the complaint pursuant to section 2–615

of the Code arguing that, pursuant to its bonus plan, it had full discretion to deny plaintiff a bonus and that plaintiff had not pursued all internal procedures to dispute defendant's decision. The circuit court allowed the parties to conduct limited discovery related to the motion to dismiss. Thereafter, with leave of court, plaintiff filed an amended complaint. We restate the following factual allegations that are relevant to the issues on appeal.

¶ 4 In October 2010 plaintiff was hired by defendant as a director of sales. As part of his compensation, he was eligible to participate in the “Wells Fargo Securities Group Bonus Plan” (Plan). In July 2012,¹ his job was eliminated for reasons unrelated to his performance. There is no dispute that his termination did not affect his eligibility under the Plan.

¶ 5 The Plan's stated purpose was to, inter alia, “attract, retain, motivate and reward eligible team members (‘Participants') for their successful efforts and significant contributions” to the achievement of defendant's annual financial goals and to ensure that participants comply with “all rules, laws, regulations and procedures” applicable to their job and “strive[ ] to appropriately reward [p]articipants for their achievements.” Other than Plan participants, “[n]o other individual shall have rights to incentive compensation under this Plan.” In order to qualify for a bonus under the Plan, certain factors existed and participants had to satisfy stated job-related factors. These factors included: achievement of corporate and practice group financial goals, a participant's performance ratings, compliance with the terms of the Plan, and execution of a trade secret agreement. The Plan was effective through December 31, 2012 and the participant was required to be employed on the date of the bonus payment, unless the participant's employment was terminated in a qualifying event. A participant “whose employment was terminated prior to the end of the Performance Period, due to a qualifying event * * * may be considered for a prorated award” if the participant “(1) performed services in an eligible position for at least three calendar months during the Performance Period and (2) met some [or] all of his/her performance objectives.” The Plan further provided that the notice period in the “Salary Continuation Pay Plan” would be included in determining whether services were performed “for at least three calendar months during the [p]erformance [p]eriod.” Incentive goals and incentive opportunity would “generally be pro-rated.”

¶ 6 Once the plan administrator was authorized by corporate management to create a bonus pool, “annual awards under the Plan [were] made in the sole and absolute discretion of the Plan Administrator.” Those awards could be “adjusted or denied for any reason,” including the failure to meet performance goals and adhere to company policy. Further, “[t]here [was] no guarantee that a bonus of any amount will be awarded to any [p]articipant.” The administrator “ha[d] full discretionary authority to administer and interpret the plan.” The Plan included specific criteria for the creation of a bonus pool for each work group and delineated a formula for determining which employees qualified for a bonus. Participants wishing to dispute their award were directed to attempt to resolve the dispute with their unit manager. If the dispute was not resolved, then the participant could request review by the plan administrator.

¶ 7 Although the Plan could be amended, suspended or terminated at any time, no such change “shall adversely affect a [p]articipant's earned award under the Plan prior to the effective date of the amendment, suspension or termination, unless otherwise agreed to by the [p]articipant.” Any amendment that materially altered the terms of the Plan “shall be announced on or before the effective date of the change.” The Plan provided that “it is not an employment contract” and “[n]o rights in the Plan may be claimed by any person whether or not she/he is selected to participate in the Plan.” Lastly, the Plan provided that if “a court of competent jurisdiction determine[d] that a Plan provision is illegal or void, the remaining provisions shall be legally enforceable.”

¶ 8 At the time of his termination, plaintiff was informed by an agent of defendant that his termination did not disqualify him from participation in the Plan and, if a 2012 bonus pool was created, he would be included. Prior to his termination, plaintiff's performance met or exceeded the legitimate expectations for his position and he met the necessary standards set forth in the plan to qualify for a 2012 bonus. A bonus pool was created and other similarly situated employees were paid performance bonuses for the 2012 calendar year. Plaintiff, who no longer worked for defendant at the time of the bonus awards, was not awarded a performance bonus under the Plan.

¶ 9 Plaintiff requested an internal company review of defendant's decision. In response, defendant informed plaintiff that although plaintiff was eligible under the Plan, in deciding whether to award a bonus, defendant retained “absolute discretion” to determine a bonus award based on a “number of factors” and ultimately determined that plaintiff would not receive a 2012 bonus payment. Despite several requests by plaintiff and his counsel, defendant did not identify the factors that influenced its decision. The Plan did not include any internal procedure for disputing defendant's decision, so plaintiff filed this suit to collect payment under the Plan. Subsequent to filing the instant action, defendant explained in sworn testimony that it did not award plaintiff a bonus because, after his termination, defendant decided that “any employee in the Markets Division displaced prior to May 31, 2012 would not be paid any bonus because such employees had not contributed sufficiently to the overall bonus pool as a result of working less than half of the year.”

¶ 10 Plaintiff alleged that the Plan provided that it was “legally enforceable” and the failure to include him in the bonus pool and pay him a prorated bonus for the 2012 performance year was a breach of the parties' agreement, including “the prohibition on unannounced and retroactive amendments” as well as the obligation of good faith and fair dealing. Plaintiff also alleged that defendant's failure to pay the bonus violated the Act (820 ILCS 115/2 (West 2010)

) and also constituted unjust enrichment for wrongful retention of his bonus compensation.

¶ 11 In response to the amended complaint, defendant filed a section 2–615

motion to dismiss. Defendant argued that plaintiff's claims fail because they all rest on the premise that plaintiff has a legal right to a bonus under the Plan. The Plan made it clear that the bonus would be awarded in the sole and absolute discretion of the plan administrator and, therefore, any claim based on plaintiff's allegations was “foreclosed as a matter of law.”

¶ 12 Plaintiff responded arguing that defendant's motion ignores the well-pled facts alleged in the complaint that: plaintiff was a Plan participant; his employment was terminated by a qualifying event; he worked for at least three months in the 2012 calendar year; according to its terms the Plan was “legally enforceable” and prohibits retroactive amendments; a 2012 bonus pool was created; and 2012 bonuses were paid to similarly situated employees, however plaintiff was denied a bonus because the Plan was amended after his termination to require six months' employment with the firm and this evidences bad faith in defendant's decision to deny plaintiff a bonus. Plaintiff also argued that he sufficiently alleged a right to a bonus that can be determined based on information uniquely within the possession of defendant regarding the number of participants, experience and other factors.

¶ 13 On April 15, 2014, after hearing, the circuit court granted defendant's motion to dismiss with prejudice. The circuit court found that the language of the Plan gave defendant the “absolute discretion to determine whether a bonus should be awarded and, if so, the amount, ultimately undermines the claim here on all counts.” This timely appeal followed.

¶ 14 ANALYSIS

¶ 15 A section 2–615

motion to dismiss tests “the legal sufficiency of a complaint based on defects apparent on its face.” Pooh–Bah Enterprises, Inc. v. County of Cook, 232 Ill.2d 463, 473, 328 Ill.Dec. 892, 905 N.E.2d 781 (2009). When the legal sufficiency of a complaint is challenged, we take all well-pled facts as true, draw all reasonable inferences from those facts in favor of the plaintiff and determine whether the allegations,...