Ross v. Ligand Pharmaceuticals, Inc.
| Decision Date | 21 December 2006 |
| Docket Number | No. 4190.,4190. |
| Citation | 639 S.E.2d 460 |
| Court | South Carolina Court of Appeals |
| Parties | Richard ROSS, Respondent, v. LIGAND PHARMACEUTICALS, INC., Appellant. |
Joseph D. Thompson, III, Lydia B. Applegate, of Charleston, for Appellant.
Donald Higgins Howe, Robert J. Wyndham, of Charleston, for Respondents.
Ligand Pharmaceuticals, Inc. appeals the circuit court's order awarding wages, treble damages, and attorney's fees to Richard Ross for Ligand's breach of an employment contract, violation of the South Carolina Payment of Wages Act, and violation of public policy. We affirm.
In October 1998, Ligand offered Ross a position as a Senior Oncology Specialist (SOS). The offer provided a starting salary of $7,166.67 per month and participation "in the 1998 Sales Force Incentive Plan based upon achievement of pre-agreed impact goals and/or sales objectives." The offer further provided that "[a]ny additions or modifications to these terms would have to be in writing and signed by [Ross] and the Company President." Ross accepted the offer and began work with Ligand on November 3, 1998.
Initially, Ross did not participate in a sales incentive plan because Ligand did not have an approved product for distribution; instead, Ross participated in a Management by Objective Plan that presumably provided for incentives based on non-sales related criteria. Sometime in 1999, Ligand's first product was approved. Subsequently, Ross began participating in the 1999 Sales Force Incentive Compensation Plan (1999 Plan) that permitted him to earn up to thirty-five percent of his salary. The 1999 Plan based compensation on a mathematical formula applied to sales each quarter.
Throughout his employment with Ligand, Ross participated in yearly compensation plans similar to the 1999 Plan. In 2001, however, Ligand changed the plan to provide compensation based on trimester sales. In addition, Ligand altered the compensation plan to provide: "In order to be eligible for the trimester incentive compensation payout, [an employee] must be employed at the time the trimester sales incentive compensation payouts are distributed." These changes were included in the incentive plans for 2001, 2002, and 2003.
In April of 2002, Ligand promoted Ross to Regional Business Manager (RBM). The promotion allowed Ross to participate in the Oncology Regional Business Managers Plan (RBM Plan). The RBM Plan provides: "The Incentive Plan payout will be paid following the conclusion of each trimester period according to the following estimated schedule:
Trimester 1 Payout June 30, 2003
Trimester 2 Payout October 31, 2003
Trimester 3 Payout February 28, 2004."
The "target dates" for the RBM Plan mirrored the scheduled payout dates for the 2001 and 2002 incentive plans.
Ross resigned from Ligand on October 15, 2003. Ross's resignation was effective forty-five days after August 31, 2003, the date the second trimester of 2003 ended. Ligand distributed the payouts for the second trimester of 2003 sometime after November 15, 2003. Ligand declined to pay Ross the incentive plan payout of $12,000 for the second trimester of 2003 because the RBM Plan required that a person must be employed by Ligand, in good standing, at the time the incentive compensation checks were distributed.
Thereafter, Ross filed an action against Ligand alleging the refusal to pay the incentive payout breached the employment agreement and violated the South Carolina Payment of Wages Act. The circuit court held the RBM Plan violated sections 41-10-30, 41-10-40, 41-10-50, and 41-10-100 of the South Carolina Code (Supp.2005) and public policy. The court also held Ligand breached the employment agreement. The circuit court awarded Ross $36,000 as treble damages pursuant to section 41-10-80 of the South Carolina Code (Supp.2005), attorney's fees totaling $18,000, and costs in the amount of $837.60. This appeal followed.
"In an action at law, on appeal of a case tried without a jury, the findings of fact of the judge will not be disturbed upon appeal unless found to be without evidence which reasonably supports the judge's findings." Townes Assocs., Ltd. v. City of Greenville, 266 S.C. 81, 86, 221 S.E.2d 773, 775 (1976). The trial judge's findings are equivalent to a jury's findings in a law action. Id.
Ligand argues the trial judge erred in finding Ligand violated sections 41-10-30 and 41-10-40 of the South Carolina Payment of Wages Act. We disagree.
Section 41-10-30 provides, in relevant part:
(A) Every employer shall notify each employee in writing at the time of hiring of the normal hours and wages agreed upon, the time and place of payment, and the deductions which will be made from the wages, including payments to insurance programs. The employer has the option of giving written notification by posting the terms conspicuously at or near the place of work. Any changes in these terms must be made in writing at least seven calendar days before they become effective. This section does not apply to wage increases.
S.C.Code Ann. § 41-10-30 (Supp.2005) (emphasis added).
At trial, Ligand argued the establishment of the "target dates" in the RBM Plan sufficiently complied with the time and place of payment requirements of section 40-10-30. The trial judge found Ligand violated section 41-10-30's requirement to provide the date and place of payment because the estimated schedule and "target dates" in the RBM Plan did not provide a time for payment as required by the Payment of Wages Act. We find sufficient evidence supports this finding. The RBM Plan provides incentive payouts will be paid according to an estimated schedule with payment on the "target date." In addition, payouts are contingent upon an employee such as Ross being "employed at the time the [payouts] are distributed." Ligand admitted the employee must be employed on the date it ultimately issued the checks, not on the "target date." Ligand testified:
Q: And as I understand your position, the policy of Ligand is in order to get your incentive compensation payment for a particular trimester, you had to be employed when Ligand wrote the check?
A (Ligand): That is correct.
Ligand added the estimated payment schedule serves "no purpose, whatsoever, other than guidance to the field." Moreover, the record demonstrates Ligand frequently distributed incentive payout checks after the date listed in the estimated schedule—with four of the previous ten payments being distributed after the "target date."
We agree with the trial judge's determination that Ligand fails to satisfy the statutory requirements of section 40-10-30 because Ligand provided employees with no time certain for when payment would occur. Ligand admitted the key to receiving the earned bonus was the date it arbitrarily selected for distribution of the checks not the "target dates" from the estimated schedule provided to Ross. Providing estimated payment dates that serve "no purpose whatsoever" and are dependent upon employees being employed at the time payouts are distributed, whenever that may be, clearly does not provide notice of "time and date of payment." Accordingly, we affirm the trial judge's finding that the RBM Plan violates section 41-10-30.
Ligand also relies on Rice v. Multimedia, Inc., 318 S.C. 95, 456 S.E.2d 381 (1995), in support of its argument that the RBM Plan complied with the time and place mandates of section 40-10-30. In Rice, an employee sought payment for commissions due on advertising contracts under the Payment of Wages Act. Id. at 95, 456 S.E.2d at 381. The parties had a contract providing that sales commissions would be paid to a departing employee only for those advertisements sold by the employee and actually broadcast in the month in which the employee left the company. Id. at 96, 456 S.E.2d at 382. When the employer refused to pay certain commissions after Rice left the company, Rice sued arguing the departure policy was void as against public policy. Id. at 100, 456 S.E.2d at 384. The supreme court disagreed and found the agreement enforceable. Id. The court found the agreement was "not arbitrary nor does it violate any law," because the agreement was customary to the industry and provided a valid economic purpose—"to ensure that the salesperson gives continuing service to the client after the sale[.]" Id.
We find the factual scenario in this matter distinguishable from Rice for three reasons. First, unlike the agreement in Rice which was challenged on the ground of public policy rather than because of any violation of the Payment of Wages Act, we have found Ligand's policy violated both sections 40-10-30 and 40-10-40 of the Act. Second, the RBM Plan serves no legitimate purpose, whereas the policy in Rice had a clear, legitimate economic purpose; even Ligand admitted its policy serves "no purpose whatsoever." And third, the Rice agreement was not arbitrary as it established, in clear terms, the time certain for payment of the commission. In our case, the time for payment was entirely dependent upon Ligand's arbitrary decision of when to issue the commission check to Ross, whenever that date may be, and was not based on any economic reason. In other words, the policy in Rice merely established the manner the company would pay admittedly owed commissions, whereas Ligand, under its policy, would not even admit the commissions were due to Ross unless he was employed by Ligand when it ultimately decided...
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