Zandier v. Babcock, Civil Action No. 2:13-cv-459-JFC

• Decision Date: 23 February 2015
• Docket Number: Civil Action No. 2:13-cv-459-JFC
• Parties: FRANK ZANDIER, Plaintiff, v. BABCOCK & WILCOX CONSTRUCTION CO. INC., et al., Defendants.
• Court: U.S. District Court — Western District of Pennsylvania

FRANK ZANDIER, Plaintiff, v. BABCOCK & WILCOX CONSTRUCTION CO. INC., et al., Defendants.

Civil Action No. 2:13-cv-459-JFC

UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA

February 23, 2015

Chief District Judge Joy Flowers Conti

MEMORANDUM OPINION

CONTI, Chief Judge.

Plaintiff Frank Zandier ("Zandier") commenced this civil action against his former employer, Babcock & Wilcox Construction Co. Inc. ("BWCC" or the "Company"), and P.W. Waanders ("Waanders"), its former vice-president and general manager (collectively, "defendants"),¹ asserting breach of contract and promissory estoppel claims as well as alleged violations of Pennsylvania's Wage Payment and Collection Law ("WPCL"), 43 PA. STAT. §§260.1 et seq., based upon defendants' failure to pay certain bonus monies which Zandier believes he was entitled to receive.² Pending before the court is defendants' motion for summary judgment (ECF No. 42) on all counts in the amended complaint (ECF No. 13). For the reasons that follow, defendants' motion will be granted in part and denied in part.

I. Factual Background³

BWCC is headquartered in Barberton, Ohio, and provides construction services to utility and industrial customers. (CCSMF ¶ 1.)⁴ BWCC is one of several subsidiaries of Babcock & Wilcox Power Generation Group, Inc. ("BWPGG"), which in turn is part of The Babcock & Wilcox Company. (Id.)

Zandier was employed by BWCC from July 1998 until his retirement on January 31, 2012. (CCSMF ¶¶ 8-9.) From at least April 1, 2009, through the date of his retirement, Zandier held the pay grade designation for Project Manager 4. (Id. ¶12.) As of April 1, 2010, Zandier's salary was $4,627 per pay period, or $111,048 annually, and this was also his salary when he retired. (Id. ¶¶ 13-14.)

During times relevant to this litigation, Zandier worked in BWCC's Pittsburgh office. (Amended Compl. ¶14, ECF No. 13.) In the course of his employment, Zandier reported to Operations Manager Tom Brauchle ("Brauchle") and later, Jeff Hines ("Hines"), who replaced Brauchle as operations manager in June or July 2008. (CCSMF ¶¶ 10, 15.) The operations manager in turn reported to BWCC's Eastern Division operations manager (also referred to as "Regional Manager"). (Id. ¶15.) Brad Bradford ("Bradford") served as BWCC's Eastern Division operations manager until the end of 2007 or the beginning of 2008, at which time Bradford was replaced by Ken Wasilewski ("Wasilewski"). (Id. ¶ 4.) The Eastern Division operation manager in turn reported to BWCC's vice-president and general manager. (Id. ¶15.)Mike Morash ("Morash") served as vice-president and general manager of BWCC until Waanders took over that position on July 1, 2007. (Id. ¶ 2.)

A. The Project Team Incentive Plans

At various times during Zandier's employment, BWCC participated in a Project Team Incentive Plan ("PTIP"), which was essentially a bonus plan tied to the completion of eligible construction projects. (CCSMF ¶¶ 7, 16.) The PTIP began on or about September 30, 2001, and applied to a number of BWPGG's subsidiaries, including BWCC. (Id. ¶ 17.) The PTIP operated as follows: (1) construction projects were selected for participation in the program; (2) select employees assigned to those projects were made eligible for the PTIP; (3) the Company forecasted an expected profit on the project; (4) if the actual profit was higher than forecasted, a portion of the excess profit was used to fund a bonus pool; and (5) eligible employees were paid a bonus from that pool. (Id. ¶ 18.)

In an internal email dated September 3, 2006, BWCC's parent company, BWPGG, announced to certain high level administrators of its subsidiaries its intention to implement certain changes to the PTIP. (Defs.' Ex. O at 1-3, ECF No. 45-15.)⁵ The changes included three major differences between the PTIP as previously administered (hereafter, the "Old PTIP") and the program as it would be administered in the future (hereafter, the "New PTIP"). (Id.) First, the size of the bonus pool was changed: whereas under the Old PTIP, the bonus pool was 10% of the excess profit, the New PTIP limited the bonus pool to 5%. (CCSMF ¶ 28.) Second, the salary caps on PTIP bonuses were changed: while the Old PTIP capped the bonus payable at 100% of the employee's salary, the New PTIP cap ranged from 20% to 50% of the employee'ssalary; in Zandier's case, the applicable cap under the New PTIP was 40% of his annual salary. (Id.) Third, a change was implemented relative to the availability of discretionary bonuses under the Salaried Employee's Incentive Plan ("SEIP"): whereas the Old PTIP had forbidden payment of a discretionary SEIP bonus for employees receiving a PTIP bonus in the same year, the New PTIP allowed employees to receive both a PTIP bonus and a discretionary SEIP bonus in the same year. (Id.)

The September 3, 2006, email announcement indicated BWPGG's intent "to implement the plan changes with new contracts entered on or after October 1^st [2006]." (Defs.' Ex. O at 3, ECF No. 45-15.) To prevent issues of unfairness from arising in connection with the transition to the New PTIP, BWPGG advised that "projects already released prior to the effective date" of October 1, 2006, would be "subject to the existing program rules." (Id.)

Included in the same September 3, 2006, email string was a notification to Morash that BWCC was henceforth "suspend[ed] ... from participating in the PTIP on any new contract bookings entered after this notification." (Defs.' Ex. O at1, ECF No. 45-15.) The directive was reportedly given because BWCC "had not made its forecast in eleven quarters" and BWPGG management felt that it was "inappropriate to be paying the rewards associated with [the PTIP] until that situation turned around" (id.); however, BWCC was advised that it could "request reinstatement in the program after re-establishing minimally acceptable financial performance." (Id.)

Shortly after the Old PTIP had been suspended, a replacement PTIP was in draft form. (CCSMF ¶ 22.) As of November 2007, however, a successor plan to the Old PTIP had not been finalized, and there was uncertainty throughout the remainder of 2007 about which projects would be covered. (Id. ¶ 23.) On September 3, 2008, a draft of the New PTIP was circulated tokey decision-makers, including Waanders, who by that time had replaced Morash as BWCC's vice president and general manager. (Id. ¶ 24.) The revised plan was finally approved on May 25, 2009, when the vice president and general manager of BWPGG's Fossil Power Division ("FPD") signed off on it. (Id. ¶ 25.) Although not formally approved until May 25, 2009, the New PTIP was made effective retroactively to October 1, 2006. (Id. ¶ 26.)

On or about May 16, 2007, Zandier signed PTIP initiation forms relative to two projects commissioned by Allegheny Energy. One form related to the Fort Martin FGC Project ("Fort Martin"), and the other form related to the Hatfield Ferry FGC Project ("Hatfield"). (CCSMF ¶30.) Both forms were signed by Bradford, and both forms listed the "participant's share" as "10%," meaning that Bradford was recommending that Zandier receive 10% of any bonus pool funds that might ultimately be allocated to BWCC upon completion of the projects. (Defs.' Ex. 1, ECF No. 45-9; Defs.' Ex. J, ECF No. 45-10; CCSMF ¶57.)

At the time that he signed these forms, Zandier was given a copy of the Old PTIP by Brauchle, who remarked, "Here's the PTIP program." (Pl.'s Dep. 66:3; id. at 64-66, 142, ECF No. 45-1; Defs.' Ex. H, ECF No. 45-8.)⁶ Section II of the document, entitled "Plan Elements," provided (among other things) that the "bonus pool will be defined as 10% of the improvement in the booked profit on the selected projects." (Defs.' Ex. H at 1, §II, ECF No. 45-8.) Section III of the document, "Plan Administration and Payment Determination," provided that "[i]ndividual payments will be capped at 100% of the employees' base salary at the time of payment." (Id. at 2, §III.) The plan also included a disclaimer, which provided: "The Company would expect to continue to administer this plan indefinitely; however, because future conditions cannot beforeseen, the company reserves the right to amend, suspend or terminate the plan at any time." (Id. at 3, §V.)

On or about June 25, 2007, Bradford sent paperwork, including Zandier's PTIP initiation forms, to Morash for the purpose of seeking application of the PTIP to the Fort Martin and Hatfield projects. (CCSMF ¶32.) When first initiated by Bradford, the Fort Martin and Hatfield projects were "erection only" projects. (CCSMF ¶ 36.) An "erection only" project means that BWCC is the only BWPGG subsidiary that has a contract with the customer for work, and that work is the construction of a power plant. (Id. ¶ 37.) By contrast, a "delivered and erected" ("D&E") project would involve BWPGG's Fossil Power Division ("FPD") performing the "delivery" part of the job, i.e., the material supply component. (Id. ¶ 38.) With D&E projects, the extra profit bonus pool is calculated by first combining the profit for both BWCC and FPD, and then splitting the pool 50/50 between BWCC and FPD. (Id. ¶¶ 39-40.) The accounting group takes the information provided to it, merges the profits of the two divisions, reconciles the numbers, and then calculates payments in accordance with PTIP rules before forwarding the figures to upper management for approval. (Id. ¶ 42.) Although initially designated "erection only" projects, the Hatfield and Fort Martin projects subsequently became D&E projects involving both BWCC and FPD. (Id. ¶ 43.)

On August 24, 2011, payouts under the PTIP were approved for the Fort Martin and Hatfield projects. (CCSMF ¶ 52.) There is no dispute that BWCC ultimately administered the bonus payments for these projects under the New PTIP, rather than under the Old PTIP.

With respect to the Fort Martin project, the forecasted or booked profit was $18,476,000. (CCSMF ¶ 53.) The actual profit upon completion of the project in 2011 was...