Swafford v. International Business Machines Corporation

Filing 97

Order by Judge Lucy H. Koh Granting in Part and Denying in Part 82 Motion for Summary Judgment.(lhklc3S, COURT STAFF) (Filed on 10/11/2019)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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SAN JOSE DIVISION

United States District Court
Northern District of California

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DAVID SWAFFORD,

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Plaintiff,

Case No. 18-CV-04916-LHK
ORDER GRANTING IN PART AND
DENYING IN PART DEFENDANT’S
MOTION FOR SUMMARY
JUDGMENT

v.

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INTERNATIONAL BUSINESS
MACHINES CORPORATION,

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Re: Dkt. No. 82

Defendant.
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Plaintiff David Swafford (“Swafford”) brings the instant lawsuit against Defendant

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International Business Machines Corporation (“IBM”). Before the Court is IBM’s motion for

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summary judgment. Having considered the parties’ briefs, the relevant law, and the record in this

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case, the Court GRANTS in part and DENIES in part IBM’s motion for summary judgment.

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I.

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BACKGROUND
A. Factual Background
Swafford is a resident of Santa Clara County, California and a software sales representative

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at IBM since 2009. ECF No. 71 (“SAC”) ¶¶ 7, 13. IBM is a New York corporation with its

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principal place of business in the state of New York. Id. ¶ 8. Swafford’s compensation as an IBM

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Case No. 18-CV-04916-LHK
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION FOR SUMMARY
JUDGMENT

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sales representative consisted of a base salary plus commissions. ECF No. 91-3 (“Swafford

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Depo.”) at 48:8–11, 151:11–17. This case concerns Swafford’s commission payments (also

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referred to as “incentive payments”) and IBM’s commission plan and policies.

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1. Facts Related to IBM’s Commission Payments.

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Swafford had a written commission plan known as the Incentive Plan Letter (“IPL”) for
the second half of 2016 that covered the sales period from July 1, 2016 through December 31,

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2016. ECF No. 83-7 (“IPL”). The IPL provided that Swafford’s sales quota for the second half of

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2016 was $512,600. IPL at 2. The IPL also provided information about Swafford’s commissions.

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First, the IPL provided that, without an IPL in place, an employee is “not eligible to

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receive any related incentive payments.” Id. The IPL also defined the “Plan” as the incentive plan

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information contained in the IPL and at IBM’s Worldwide Incentives Workplace website. Id.
Second, the IPL provided that IBM had the right to make changes to incentive payment

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rates or quotas. Id. at 3. The IPL stated:

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Right to Modify or Cancel: The Plan does not constitute an express or implied
contract or a promise by IBM to make any distributions under it. IBM reserves the
right to adjust the Plan terms, including, but not limited to, changes to sales
performance objectives (including management-assessment objectives), changes to
assigned customers, territories, or account opportunities, or changes to applicable
incentive payment rates or quotas, target incentives or similar earnings opportunities,
or to modify or cancel the Plan, for any individual or group of individuals, at any
time during the Plan period up until any related payments have been earned under
the Plan terms. Managers below the highest levels of management do not know
whether IBM will or will not change or adopt any particular compensation plan; they
do not have the ability to change the Plan terms for any employee; nor are they in a
position to advise any employee on, or speculate about, future plans. Employees
should make no assumptions about the impact potential Plan changes may have on
their personal situations unless and until any such changes are formally announced
by IBM.

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Id.
Third, the IPL provided that IBM could change incentive payment calculations resulting
from errors. Id. The IPL stated:

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Case No. 18-CV-04916-LHK
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION FOR SUMMARY
JUDGMENT

Adjustments for Errors: IBM reserves the right to review and, in its sole discretion,
adjust or require repayment of incorrect incentive payments resulting from
incomplete incentives processes or other errors in the measurement of achievement
or the calculation of payments, including errors in the creation or communication of
sales objectives. Depending on when an error is identified, corrections may be made
before or after the last day of the full-Plan period, and before or after the affected
payment has been released.

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Id.

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The IPL also provided that IBM may review significant transactions:

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Significant Transactions: IBM reserves the right to review and, in its sole
discretion, adjust incentive achievement and/or related payments associated with a
transaction which (1) is disproportionate when compared with the territory
opportunity anticipated during account planning and used for the setting of any sales
objectives; or for which (2) the incentive payments are disproportionate when
compared with your performance contribution towards the transaction.

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Id. at 4.
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Finally, the IPL explained how incentive payments are earned under the Plan:
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Full-Plan Earnings: Regardless of your start date, your incentive payments are
earned under the Plan terms, and are no longer considered Plan-to-Date advance
payments, only after the measurement of complete business results following the end
of the full-Plan period or (if applicable) after the measurement of complete business
results after the date you left the Incentive Plan early. Incentive payments will be
considered earned only if you have met all payment requirements, including: (1) you
have complied with the Incentive Plan, the Business Conduct Guidelines and all
other applicable IBM employment policies and practices; (2) you have not engaged
in any fraud, misrepresentation or other inappropriate conduct relating to any of your
business transactions or incentives; (3) and the customer has paid the billing for the
sales or services transaction related to your incentive achievement.

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Id.
Despite the IPL, IBM repeatedly made representations that Swafford’s commissions would

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be uncapped. In particular, Swafford regularly received PowerPoint presentations, which IBM

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called “education” for IBM employees, that described the terms of the commission plans. See

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Swafford Depo. 81:8–20; ECF No. 83-23 (“2H 2016 PowerPoint presentation”) at 1. These

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PowerPoint presentations stated that commissions for IBM sales people were uncapped. See

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Swafford Depo. 79:1–13.

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Case No. 18-CV-04916-LHK
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION FOR SUMMARY
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During the second half of 2016, Swafford received and reviewed a PowerPoint

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presentation entitled “Our Purpose, Values & Practices” relating to “Your 2016 Incentive Plan”

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(the “2H 2016 PowerPoint presentation”). 2H 2016 PowerPoint presentation at 1. The 2H 2016

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PowerPoint presentation stated that it served as “the primary 2016 education for IBM sales

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employees. It provides the information you need to understand your 2016 plan.” Id. The 2H

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2016 PowerPoint presentation also stated four times that “payments” and/or “earnings

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opportunit[ies]” are “uncapped.” Id. at 10, 11, 14, 15. When Swafford reviewed the 2H 2016

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PowerPoint presentation, Swafford understood these statements to mean that his commissions

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would be uncapped, and that “when you’re uncapped, there’s no limit to what you can earn.”
Swafford Depo. at 78:19–20. The 2H 2016 PowerPoint presentation did not reference any of the

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Northern District of California

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disclaimer provisions contained within the IPL. See 2H 2016 PowerPoint presentation.

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Swafford’s former second line manager, Richard Wirtenson (“Wirtenson”), testified that IBM did

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not cap commissions in order to incentivize sales representatives to sell as much as they can. ECF

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No. 83-5 (“Wirtenson Depo.”) at 96:3–6.

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2. The Sabre and Oracle Deals.

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In 2016, Swafford worked on behalf of IBM to close two major deals for IBM products

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and services with Oracle (“Oracle Deal”) and Sabre (“Sabre Deal”). Wirtenson Depo. at 103:13–

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24, 104:1–15. Swafford testified that these deals were each challenging because Oracle was a

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competitor of IBM, Swafford Depo. at 103:17–25, and because Sabre had been considering

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moving away from IBM products, Swafford Depo. at 119:17–25, 120:1–3. During the relevant

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time period, Swafford’s first line manager was Mark Briggs (“Briggs”), and Swafford’s second

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line manager was Wirtenson. ECF No. 91-1 (“Martinotti Depo.”) at 19:1–16. Briggs testified that

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Swafford performed exceptionally well in closing these deals for IBM. ECF No. 83-2 (“Briggs

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Depo.”) at 78:15–16 (“Dave did an outstanding job closing multiple large transactions.”).

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3. Swafford’s Allegations that IBM Capped His Commissions.

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As a result of the Oracle and Sabre Deals, Swafford far exceeded his $512,600 quota for

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Case No. 18-CV-04916-LHK
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION FOR SUMMARY
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the second half of 2016. Indeed, Swafford’s revenue credit across all of the deals that he closed in

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the second half of 2016, including the Oracle and Sabre Deals, was approximately $4,983,275.

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Wirtenson Depo. at 35:9–13. On the basis of these amounts, Swafford’s commission payment

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amount for the second half of 2016 was initially calculated to be $950,997.64. Id. at 34:1–2, 8–

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20; Swafford Depo. 176:15–20.

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Ordinarily, this commission payment would have been given to Swafford in January 2017.

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Swafford Depo. at 53:15–18. However, because Swafford exceeded his quota for the second half

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of 2016 by more than 400%, Swafford’s commission payment amount triggered an internal

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review. Martinotti Depo. at 18:19–25, 19:1–25, 22:1–24. In particular, Swafford’s commission
triggered an automatic review by his first and second line managers, Briggs and Wirtenson, as

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well as his third line manager, Don Leeke (“Leeke”). Id. at 22:1–25, 23:1–5. Swafford had

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previously been subject to automatic review on the basis of large commission amounts that

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Swafford received in 2015. Swafford Depo. at 51:18–20. However, Swafford had believed that

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the purpose of this review was to “make sure a contract is signed, the amounts are correct, and—

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you know, and no decimal points missing, no approvals missing.” Id. at 51:20–23.

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On January 12, 2017, IBM’s commissions team in Brazil sent a request to Briggs to review

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and approve Swafford’s achievement and commission payment amounts. ECF No. 83-8 at 3.

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Briggs approved of the amounts. Id. at 2–3. On January 16, 2017, the commissions team then

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sent a request to Wirtenson to review and approve the amounts. Id. at 2. Wirtenson also approved

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of the amounts. Id. at 1. Finally, the commissions team sent a request to Leeke to review and

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approve the amounts. Id.

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Leeke expressed concern about the size of the proposed commission payment. ECF No.

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83-9 at 2. Leeke requested confirmation of the underlying figures as well as “a short business

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justification to support results and payout.” Id. Briggs responded and provided additional

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information about the relevant transactions, and Briggs also indicated that “[t]hese wins were all

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led by and closed by Dave Swafford.” Id. at 1. Leeke continued to express concern, however.

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Case No. 18-CV-04916-LHK
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION FOR SUMMARY
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Leeke contacted several other IBM employees and opined that the proposed commission payment

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amount to Swafford was “insane” relative to the industry baseline. Id. Laurie Evans (“Evans”),

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another IBM executive, agreed with Leeke that the proposed amount was “way too steep of a pay

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out,” and asked whether IBM had caps. ECF No. 83-10 at 1; Martinotti Depo. at 62:3–4.

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Leeke requested a copy of Swafford’s IPL and asked whether it contained “a cap or

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language that allows for management limit on payout” because the proposed commission payment

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to Swafford seemed “excessive.” ECF No. 83-11 at 2. Another IBM employee directed Leeke to

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the IPL Adjustments for Error and Significant Transactions provisions and said that “these are 2

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paragraphs that address this.” Id. at 1. Leeke then suggested that IBM reset Swafford’s quota to
“around $4M,” which would have the effect of reducing Swafford’s achievement to “roughly

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250% attainment and a great payout but obviously less than what is below.” Id.

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Evans informed Leeke that another IBM employee had told Evans that “IBM does not cap

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IQPs (!),” and Evans therefore suggested that Leeke “check with HR and Legal” before

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proceeding. ECF No. 83-12 at 1. However, Leeke testified that Leeke believed “IBM can cap”

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individual commissions, so long as IBM did not cap an employee’s overall earnings. ECF No. 91-

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2 (“Leeke Depo.”) at 31:8–11, 98:11–18.

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Eventually, Leeke did not approve of the proposed commission payments to four IBM

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employees: Swafford, two other sales representatives on Swafford’s team, and their first line

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manager, Briggs. ECF No. 83-14 at 1. On February 15, 2017, Leeke informed Wirtenson and

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several other IBM employees that Leeke was uncomfortable paying Swafford and the other

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members of Swafford’s team commissions greater than 250% of their quotas. Id. Leeke indicated

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that he arrived at this conclusion because Leeke did not believe that the quotas for these

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employees “accurately represented the yields we expect from our partner/channel teams,” and

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because Leeke did not believe the “team moved mountains for this attainment.” Id. Wirtenson

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expressed concern about Leeke’s decision. Id. According to Wirtenson, if “the team knew they

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would get capped at 250%, we would have probably book [sic] $5M less,” and Wirtenson worried

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that he would “lose a few good people over this.” Id.
Wirtenson wrote to Leeke to persuade him not to go forward with the plan to limit

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Swafford and the other members of his team to 250% of their quotas. ECF No. 83-15 at 1.

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Wirtenson argued that if Leeke intended to proceed with his approach, however, “a better way

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would be to have a hard cap in the IPL’s.” Id.

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On February 23, 2017, Briggs sent Swafford an email with the subject line, “2016

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Commissions Cap,” in which Briggs informed Swafford that Swafford’s commission would be

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“capped at 250% of plan.” ECF No. 83-32 at 1.
Briggs also sent a similar email to another member of Swafford’s team who would be

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impacted by Leeke’s proposal. See ECF No. 83-22 at 3. Briggs copied Wirtenson and Scott

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Kingston (“Kingston”), another second line manager, on both of these emails. ECF Nos. 83-32 at

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1, 83-22 at 3. Kingston had overall responsibility for IBM’s embedded software sales program in

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North America. Wirtenson Depo. at 121:3–18. Kingston responded to Briggs and complained

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that Leeke’s approach would lead to a “loss of a sense of integrity” on the part of IBM. See ECF

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No. 83-22 at 3. Kingston explicitly worried that reducing commission payments to Swafford’s

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team would “undermine [IBM’s] own promise” to the IBM sales representatives. Id. at 2. In

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particular, Kingston asserted that to “change the plan after the game is over is not fair, and no one

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can rationalize it otherwise honestly.” Id. at 1. Kingston strenuously argued that IBM should not

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go forward with Leeke’s proposal or engage in arbitrary capping in general: “Plus it’s just not an

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honorable way for a [sic] ethical company to react. I believe in honest, fairness, and integrity. We

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have a team that believes in us. If we don’t handle this better, none of them will trust us again. We

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need to reconsider this.” Id. at 2.

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In March 2017, Wirtenson proposed three alternative approaches that would result in

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Swafford’s receipt of a larger commission than Leeke had proposed. ECF No. 83-17 at 4.

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Wirtenson testified that he made these suggestions because Wirtenson “didn’t think that 250

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percent, which was called a cap, was fair,” and Wirtenson “was trying to come up with something

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ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION FOR SUMMARY
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that [he] believed was more in the line with what [he] thought Dave [Swafford] should earn.”

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Wirtenson Depo. at 174:14–19. Of these options, Wirtenson proposed that IBM “deal cap” the

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Oracle and Sabre Deals “at 150% of [Swafford’s] quota.” ECF No. 83-17 at 4. Wirtenson

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explained that if Leeke still believed that the resulting payment to Swafford “is too rich, we could

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cap all of his deals individually at 100% of his quota, which would probably knock the payment

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down another 100K.” Id. Leeke ultimately approved Wirtenson’s suggestion to “deal cap” the

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Oracle and Sabre Deals at 150% of Swafford’s quota. Id. at 3. Accordingly, Swafford was

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ultimately paid $709,679.13 in commissions for the second half of 2016, not the $950,997.64 that

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had been initially calculated before the reductions.1 Id. at 1.
On May 1, 2017, Swafford wrote an email to Wirtenson in which Swafford requested an

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explanation for why Swafford was not fully paid for the Oracle and Sabre Deals. ECF No. 83-31

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at 2. Wirtenson replied that Wirtenson had “made the recommendation to Don [Leeke] that we

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pay on all other deals 100% but CAP the Oracle and Sabre transactions at 150% of your quota on

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each.” Id. at 1. Wirtenson said that this explained the reduction in Swafford’s commissions for

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the Oracle and Sabre Deals. Id. Wirtenson and Briggs both testified that they had never before

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seen a reduction of commissions in similar circumstances at IBM. Wirtenson Depo. 138:8–21;

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Briggs Depo. 44:17–20.

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B. Procedural History
Swafford filed his initial complaint against IBM on August 14, 2018, which alleged that

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IBM owes him unpaid commissions related to the Oracle and Sabre Deals. ECF No. 1.

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Swafford’s initial complaint asserted claims for: (1) breach of oral and/or implied contract; (2)

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quantum meruit; (3) unjust enrichment; (4) fraudulent misrepresentation; (5) negligent

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misrepresentation; (6) violation of the California Labor Code; (7) violations of the California

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The $709,679.13 figure suggests that the Oracle and Sabre Deals were actually each set at 200%
of Swafford’s quota, not 150% of Swafford’s quota, as Leeke and Wirtenson had intended.
Wirtenson Depo. at 209:23–24, 210:1–4. Wirtenson testified that this miscalculation likely
resulted from the language barrier between Wirtenson and the IBM commissions team in Brazil.
Id. at 212:5–15.
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Unfair Competition Law (“UCL”), Cal. Bus. & Prof. Code § 17200; and (8) punitive damages. Id.
On October 19, 2018, IBM moved to dismiss Swafford’s initial complaint. ECF No. 24.

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On November 2, 2018, Swafford filed his first amended complaint. ECF No. 32. As a result, the

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Court denied as moot IBM’s motion to dismiss Swafford’s initial complaint on November 12,

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2018. ECF No. 39.
In his November 2, 2018 amended complaint, Swafford asserted claims for: (1)

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“[v]iolation of California Labor Code”; (2) violations of the UCL, Cal. Bus. & Prof. Code §

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17200; (3) fraudulent misrepresentation; (4) negligent misrepresentation; (5) quantum meruit; (6)

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unjust enrichment; and (7) punitive damages.
On November 16, 2018, IBM moved to dismiss Swafford’s first amended complaint. ECF

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Northern District of California

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No. 42. On April 17, 2019, the Court issued an order granting in part with prejudice, granting in

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part without prejudice, and denying in part IBM’s motion to dismiss Swafford’s first amended

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complaint (“Order on the Motion to Dismiss”). ECF No. 69.
On May 16, 2019, Swafford filed his second amended complaint (“SAC”). ECF No. 71

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(“SAC”). In the SAC, Swafford asserts claims for: (1) violations of the UCL, Cal. Bus. & Prof.

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Code § 17200; (2) fraudulent misrepresentation; (3) negligent misrepresentation; (4) quantum

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meruit; (5) unjust enrichment; and (6) punitive damages. SAC ¶¶ 55–105. IBM answered the

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SAC on May 28, 2019. ECF No. 74.

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IBM filed the instant motion for summary judgment on July 25, 2019. ECF No. 82

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(“Mot.”). Swafford opposed the motion for summary judgment on August 21, 2019, ECF No. 83

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(“Opp.”), and IBM replied on September 5, 2019, ECF No. 85 (“Reply”). Further, on September

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30, 2019, IBM filed a statement of recent decision in support of the motion for summary

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judgment. ECF No. 93.

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II.

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LEGAL STANDARD
Summary judgment is proper where the pleadings, discovery, and affidavits show that

there is “no genuine dispute as to any material fact and [that] the movant is entitled to judgment as
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Case No. 18-CV-04916-LHK
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a matter of law.” Fed. R. Civ. P. 56(a). Material facts are those which may affect the outcome of

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the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute as to a material

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fact is genuine if there is sufficient evidence for a reasonable jury to return a verdict for the

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nonmoving party. See id.
The Court will grant summary judgment “against a party who fails to make a showing

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sufficient to establish the existence of an element essential to that party’s case, and on which that

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party will bear the burden of proof at trial[,] . . . since a complete failure of proof concerning an

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essential element of the nonmoving party’s case necessarily renders all other facts immaterial.”

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Celotex Corp. v. Catrett, 477 U.S. 317, 322–23 (1986). The moving party bears the initial burden
of identifying those portions of the record that demonstrate the absence of a genuine issue of

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material fact. Id. The burden then shifts to the nonmoving party to “go beyond the pleadings, and

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by [his] own affidavits, or by the depositions, answers to interrogatories, and admissions on file,

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designate specific facts showing that there is a genuine issue for trial.” Id. at 324 (internal

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quotations omitted).

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For purposes of summary judgment, the Court must view the evidence in the light most

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favorable to the nonmoving party; if the evidence produced by the moving party conflicts with

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evidence produced by the nonmoving party, the Court must assume the truth of the evidence

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submitted by the nonmoving party. Leslie v. Grupo ICA, 198 F.3d 1152, 1158 (9th Cir. 1999).

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The Court’s function on a summary judgment motion is not to make credibility determinations or

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weigh conflicting evidence with respect to a disputed material fact. T.W. Elec. Serv. v. Pac. Elec.

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Contractors Ass’n, 809 F.2d 626, 630 (9th Cir. 1987).

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III.

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DISCUSSION
As discussed above, in the SAC, Swafford asserts claims for: (1) violations of the UCL,

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Cal. Bus. & Prof. Code § 17200; (2) fraudulent misrepresentation; (3) negligent misrepresentation;

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(4) quantum meruit; (5) unjust enrichment; and (6) punitive damages. SAC ¶¶ 55–105.

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IBM argues that IBM is entitled to summary judgment on each of the foregoing claims.
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Mot. at 15–23. First, IBM argues that Swafford’s fraudulent misrepresentation claim fails because

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Swafford has failed to show that a reasonable jury could find that IBM’s statements were false,

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that IBM intended to deceive Swafford, or that Swafford reasonably relied on the allegedly

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fraudulent statements. Id. at 12–19. Second, IBM argues that Swafford’s negligent

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misrepresentation claim fails because Swafford cannot establish that a reasonable jury could find

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that IBM’s statements were false or that Swafford reasonably relied on the allegedly fraudulent

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statements. Id. at 19. Third, IBM argues that Swafford’s quantum meruit and unjust enrichment

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claims fail because of the “clear disclaimers in IBM’s commission plans,” and because Swafford

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cannot show that Swafford had a reasonable expectation of additional commissions or that the
commissions Swafford received were insufficient. Id. at 19–21. Fourth, IBM argues that

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Northern District of California

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Swafford’s unfair business practices in violation of California’s UCL, Cal. Bus. & Prof. Code §

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17200, claim fails because it is derivative of Swafford’s other insufficient claims and because IBM

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satisfied California Labor Code Section 2751. Id. at 21–23. Fifth, and finally, IBM argues that

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the Court should grant summary judgment on Swafford’s claim for punitive damages because the

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punitive damages claim is derivative of Swafford’s fraudulent misrepresentation claim. Id. at 23–

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IBM also argues more generally that IBM is entitled to summary judgment on the basis of

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three cases from this district. Mot. at 12–14. The Court begins by analyzing these three cases.

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The Court then addresses in turn IBM’s motion for summary judgment as to each claim alleged by

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Swafford below. For the reasons given below, the Court GRANTS in part and DENIES in part

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IBM’s motion for summary judgment.

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A. The Three Cases IBM Cites From this District Do Not Entitle IBM to Summary
Judgment.

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As an initial matter, IBM cites three cases from this district that IBM argues entitle it to
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summary judgment in the instant case: Pfeister v. IBM Corp., 2017 WL 4642436 (N.D. Cal. Oct.
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16, 2017); Kemp v. IBM Corp., 2010 WL 4698490 (N.D. Cal. Nov. 8, 2010); and Schwarzkopf v.
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IBM, Inc., 2010 WL 1929625 (N.D. Cal. May 12, 2010). According to IBM, these cases
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demonstrate that “the disclaimers in the IPLs are enforceable and enable IBM to make adjustments

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to commission payments.” Mot. at 12. IBM suggests that the Court should “dismiss Plaintiff’s

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claims in their entirety” on the basis of these cases. Id. at 14. Swafford disagrees. Swafford

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argues that these cases involved different claims and facts from the ones in the instant case, and

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that they are therefore distinguishable. Opp. at 15–17. The Court agrees with Swafford. The

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three cases cited by IBM are highly distinguishable from the instant case, and they do not entitle

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IBM to summary judgment.

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The two most recent cases cited by IBM, Pfeister, 2017 WL 4642436 (N.D. Cal. Oct. 16,

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2017), and Kemp, 2010 WL 4698490 (N.D. Cal. Nov. 8, 2010), exclusively concerned breach of
contract and labor code claims that are not at issue in the instant case. See Pfeister, 2017 WL

11

United States District Court
Northern District of California

10

4642436, at *5 (explaining that plaintiff alleged claims for breach of contract, and under

12

California Labor Code §§ 202 and 204); Kemp, 2010 WL 4698490, at *4 (explaining that plaintiff

13

alleged claims under California Labor Code §§ 221, 1174.5, 1199, and 2699). Neither case

14

concerned any allegation of misrepresentation by IBM whatsoever, much less the specific alleged

15

misrepresentations in the instant case. For this reason, Judge William Alsup of the United States

16

District Court for the Northern District of California recently rejected the relevance of these two

17

decisions in a case that involved claims similar to the instant case. See Beard v. IBM Corp., 2019

18

WL 1516592, at *4 n.2 (N.D. Cal. Apr. 7, 2019) (rejecting the relevance of Pfeister and Kemp

19

because “[n]either of these decisions address allegations regarding statements made by IBM’s

20

managers or in IBM’s PowerPoint presentations”). The Court agrees that these two cases do not

21

support IBM’s motion for summary judgment in the instant case.

22

The third case cited by IBM, Schwarzkopf v. IBM, Inc., 2010 WL 1929625 (N.D. Cal. May

23

12, 2010), did involve a claim for fraudulent misrepresentation. However, in the instant case, the

24

Court previously addressed and distinguished Schwarzkopf in its Order on the Motion to Dismiss.

25

ECF No. 69 at 15. Unlike the instant case, the sole alleged fraudulent misrepresentations in

26

Schwarzkopf came from the plaintiff’s managers, and the Schwarzkopf court concluded that these

27
28

12
Case No. 18-CV-04916-LHK
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION FOR SUMMARY
JUDGMENT

1

managers lacked the intent to defraud the plaintiff based on the managers’ efforts to ensure that the

2

plaintiff received full commissions. See Schwarzkopf, 2010 WL 1929625, at *14 (explaining that

3

because the “managers in question emailed upper management in an effort to confirm” that

4

plaintiff would be paid full commissions, the managers lacked intent to defraud). As discussed

5

below, however, in the instant case, Swafford has established a genuine issue of material fact with

6

respect to whether IBM possessed an intent to defraud Swafford. See infra Part III.B.3.
Accordingly, the Court concludes that the three cases from this district that IBM cites do

7
8

not entitle IBM to summary judgment.2 The Court therefore proceeds to consider whether IBM is

9

entitled to summary judgment based on the arguments IBM raises against Swafford’s individual

10

claims. The Court considers these claims in turn.

United States District Court
Northern District of California

11

B. There is a Genuine Issue of Material Fact with Respect to Whether IBM Committed
Fraudulent Misrepresentation.

12
Swafford brings a claim for fraudulent misrepresentation. SAC ¶¶ 68–78. For the
13
elements of fraud, the Court looks to state law. Kearns v. Ford Motor Co., 567 F.3d 1120, 1126
14
(9th Cir. 2009). In California, the elements of fraud are: (1) a misrepresentation; (2) made with
15
knowledge of its falsity (scienter); (3) with the intent to defraud, i.e., to induce reliance; (4) which
16
did induce reasonable reliance; (5) causing damages. Id. (citation omitted).
17

As an initial matter, Swafford’s fraudulent misrepresentation claim is based on two

18
different categories of statements made by IBM. The first category of statements consists of
19
20
21
22

representations made in “PowerPoints, which, [sic] IBM sent to Mr. Swafford to explain his
commissions for the 2H 2016 sales period.” SAC ¶ 69. The second category of statements
consists of “the statements by IBM executives and Managers that commissions would not be
capped [that] were made directly to Mr. Swafford at the beginning of each sales period.” Id.

23
24
25
26
27
28

2

IBM briefly argues that these three cases are consistent with a case from the Central District of
California, Gilmour v. IBM Corp., 2009 WL 8712153 (C.D. Cal. Dec. 16, 2009). However,
Gilmour is inapposite because it exclusively concerned a claim for breach of contract and a claim
under California Labor Code § 221, neither of which are at issue in the instant case. Gilmour,
2009 WL 8712153, at *2–3.
13
Case No. 18-CV-04916-LHK
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION FOR SUMMARY
JUDGMENT

With respect to the second category of allegedly fraudulent statements, in Swafford’s

1
2

opposition to IBM’s motion for summary judgment, Swafford “voluntarily withdraws any claims

3

based on such oral representations.” Opp. at 16 n.11. Accordingly, the Court GRANTS IBM’s

4

motion for summary judgment on Swafford’s fraudulent misrepresentation claim to the extent that

5

the claim is based on oral statements uttered by IBM executives and managers.

6

The Court proceeds to analyze IBM’s motion for summary judgment on Swafford’s

7

fraudulent misrepresentation claim to the extent that the claim is based on the statements contained

8

within the 2H 2016 PowerPoint presentation.3 As discussed above, the 2H 2016 PowerPoint

9

presentation stated four times that “payments” and/or “earnings opportunit[ies]” are “uncapped.”
2H 2016 PowerPoint presentation at 10, 11, 14, 15. Further, the record indicates that these

11

United States District Court
Northern District of California

10

statements or similar ones appeared in other PowerPoint presentations over the years. Swafford

12

Depo. 79:1–13.
IBM argues that IBM is entitled to summary judgment on Swafford’s fraudulent

13
14

misrepresentation claim because Swafford has failed to create a genuine issue of material fact

15

sufficient to show: (1) that IBM’s challenged statements were false; (2) that IBM possessed the

16

intent to defraud Swafford; and (3) that Swafford reasonably relied on the challenged statements.

17

The Court addresses each argument below.
1. There Is a Genuine Issue of Material Fact with Respect to Whether IBM’s
Statements Were False.

18
19

As discussed above, under California law, the first element of a claim for fraud requires
20
that the statement at issue be false. Kearns, 567 F.3d at 1126. Whether a statement is indeed false
21
is a question of fact under California law. See, e.g., Intrieri v. Superior Court, 117 Cal. App. 4th
22
23
24
25
26
27
28

3

It is unclear whether Swafford’s fraudulent misrepresentation claim is based solely on the
statements contained within the 2H 2016 PowerPoint presentation, or whether it is based on
similar statements contained within previous PowerPoint presentations as well. See SAC ¶ 69
(outlining fraud claim based on “the PowerPoints” used “to explain [Swafford’s] commissions for
the 2H 2016 sales period”). However, Swafford focuses exclusively on the 2H 2016 PowerPoint
presentation in his opposition to IBM’s motion for summary judgment, so the Court also focuses
on this single PowerPoint presentation in analyzing the propriety of summary judgment. See, e.g.,
Opp. at 17–24 (describing statements made in “the PowerPoint”).
14
Case No. 18-CV-04916-LHK
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION FOR SUMMARY
JUDGMENT

1

72, 87 (2004) (explaining that whether statements at issue “were false is a triable question of

2

material fact”).

3

IBM argues that “[w]ith respect to the statements contained in the PowerPoint, Plaintiff

4

cannot show that the statements were false.” Mot. at 15. Specifically, IBM argues that the

5

allegedly fraudulent statements in the 2H 2016 PowerPoint presentation can only be read to

6

indicate “that IBM does not cap sales representatives’ overall commissions or earnings.” Id.

7

(emphasis added). Thus, IBM could adjust a sales representative’s commission on individual

8

transactions such as the Oracle and Sabre Deals. Id. Accordingly, IBM claims that the allegedly

9

fraudulent statements in the 2H 2016 PowerPoint presentation were true and consistent with the

10

United States District Court
Northern District of California

11

reduction of Swafford’s commissions for the Oracle and Sabre Deals in the instant case. Id.
Swafford disagrees. First, Swafford argues that evidence in the record suggests that the

12

allegedly fraudulent statements in the 2H 2016 PowerPoint presentation meant that IBM could not

13

adjust or cap a sales representative’s commission on individual transactions such as the Oracle and

14

Sabre Deals. Opp. at 17. Second, Swafford argues that even if the allegedly fraudulent statements

15

in the 2H 2016 PowerPoint presentation were construed in the way IBM argues, there is still a

16

genuine issue of material fact with respect to whether the statements were false. Opp. at 19–21.

17

The Court agrees with Swafford. The Court concludes that the meaning of the statements

18

contained within the 2H 2016 PowerPoint presentation is disputed, and some witnesses understood

19

these statements to mean that IBM could not adjust or cap a sales representative’s commission on

20

individual transactions such as the Oracle and Sabre Deals. Therefore, there is a genuine issue of

21

material fact with respect to the falsity of those statements. Accordingly, the Court need not reach

22

Swafford’s alternative argument that even assuming IBM’s interpretation of the 2H 2016

23

PowerPoint presentation’s language is correct, there would still be a genuine issue of material fact

24

with respect to falsity.

25
26
27
28

Numerous witnesses testified that IBM “caps” earning payments and earning opportunities
whenever it reduces the amount an employee would earn on individual transactions, like the
15
Case No. 18-CV-04916-LHK
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION FOR SUMMARY
JUDGMENT

1

Oracle and Sabre Deals. Swafford understood the 2H 2016 PowerPoint presentation’s language in

2

this way. See Swafford Depo. at 75:18–76:12; Briggs Depo. at 43:16–18. Leeke, Swafford’s third

3

line manager, also seemingly understood the language this way, and claimed that IBM in fact

4

imposed “cap[s] based on a deal.” See Leeke Depo. at 30:17–21.

5

Further, although Briggs testified that Briggs currently agrees with IBM’s interpretation of

6

the allegedly fraudulent statements in the 2H 2016 PowerPoint presentation, Briggs also explained

7

that Briggs did “[n]ot necessarily” disagree with Swafford’s interpretation of the language. Briggs

8

Depo. at 43:19–20. In fact, Briggs testified that Briggs himself previously shared Swafford’s

9

interpretation of the meaning of the references to “uncapped” in the 2H 2016 PowerPoint
presentation, but that Briggs’s own view subsequently changed only upon a conversation with

11

United States District Court
Northern District of California

10

management. See id. at 38:8–11. In his testimony, Briggs ultimately described “capped” as a

12

“weird word,” with a definition that depends in part on “how my mind works versus someone

13

else’s mind.” See id. at 39:4–6, 43:20–22.

14

Finally, in the emails exchanged between IBM employees in the course of deliberations

15

over whether to reduce Swafford’s commissions for the Oracle and Sabre Deals, IBM employees

16

directly referred to the contemplated reductions of Swafford’s commissions as “caps.” See, e.g.,

17

ECF 83-17 at 4. Indeed, Wirtenson told other employees that the reductions that IBM ultimately

18

imposed on Swafford’s commissions for the Oracle and Sabre Deals “essentially capped the (2)

19

deals.” Id. at 2. Later, when Wirtenson informed Swafford of what had happened to the Oracle

20

and Sabre Deals, Wirtenson said that IBM had decided to “CAP the Oracle and Sabre transactions

21

at 150% of your quota on each.” ECF No. 83-31 at 2.

22

In short, there is a genuine issue of material fact with respect to the meaning of the 2H

23

2016 PowerPoint presentation’s guarantee of “uncapped” payments and earning opportunities. In

24

similar situations, and faced with conflicting evidence of this nature, California courts have

25

allowed questions of statements’ falsity to go to a jury. For instance, in Intrieri v. Superior Court,

26

117 Cal. App. 4th 72 (2004), the California Court of Appeal considered the operator of a nursing

27
28

16
Case No. 18-CV-04916-LHK
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION FOR SUMMARY
JUDGMENT

1

home’s statements that the nursing home was “secure” and accessible only by “authorized

2

persons.” 117 Cal. App. 4th at 87. The Intrieri court declared that there was conflicting evidence

3

about the accuracy of these statements. See id. Accordingly, the Intrieri court concluded that

4

because these statements were at least “arguably false,” the question of whether they amounted to

5

misrepresentations should therefore survive summary judgment. See id.; see also Ohio Six Ltd. v.

6

Motel 6 Operating L.P., 2012 WL 12886208, at *11 (C.D. Cal. Nov. 16, 2012) (holding that

7

because a party “raised triable issues of fact as to whether a misrepresentation was made,”

8

summary judgment was improper).

9

The instant case is similar. Because there is conflicting evidence about the meaning and
accuracy of the 2H 2016 PowerPoint presentation’s assurances of “uncapped” payments and

11

United States District Court
Northern District of California

10

“uncapped” earning opportunities, there is a genuine issue of material fact concerning whether the

12

statements were false under California law. The Court therefore concludes that IBM is not entitled

13

to summary judgment on Swafford’s fraudulent misrepresentation claim on the basis of falsity.

14

The Court proceeds to consider whether IBM is entitled to summary judgment on this claim

15

because IBM did not possess the intent to defraud Swafford.

16

2. There Is a Genuine Issue of Material Fact with Respect to Whether IBM Intended
to Defraud Swafford.

17
IBM also argues that there is no genuine issue of material fact with respect to whether IBM
18
made any allegedly false representations with an intent to defraud Swafford. In particular, IBM
19
20
21
22

claims that the disclaimers contained within the incentive plan letter (“IPL”) for the second half of
2016 “foreclose [Swafford’s] argument that IBM intended to deceive him regarding the payment
of his commissions.” Mot. at 16. Swafford responds by arguing that “there is plenty of evidence,
direct and circumstantial,” that could support a finding that IBM intended to defraud Swafford.

23
Opp. at 23.
24
The Court agrees with Swafford. There is sufficient evidence in the record to create a
25
genuine issue of material fact with respect to whether IBM intended to deceive Swafford.
26
27
28

California law requires that a misrepresentation be made “with intent to defraud.” See
17
Case No. 18-CV-04916-LHK
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION FOR SUMMARY
JUDGMENT

1

Kearns, 567 F.3d at 1126. This element “can be satisfied by circumstantial evidence.” Moses v.

2

Harward, 2014 WL 12577167, at *15 (N.D. Cal. May 27, 2014); see also Santoro v. Carbone, 22

3

Cal. App. 3d 721, 727 (1972) (“Since direct proof of fraudulent intent is often impossible, the

4

intent may be established by inference from acts of the parties.”).

5

In the instant case, there is sufficient evidence in the record to establish a genuine issue of

6

material fact concerning whether IBM intended to defraud Swafford. The Court previously held

7

that Swafford plausibly alleged IBM’s intent to deceive by pointing in part to the fact that “IBM

8

would be unable to recruit good sales representatives if IBM informed sales representatives that

9

their commissions would be capped.” ECF No. 69 at 12. There is now evidence in the record to
support this allegation. In particular, when Wirtenson learned of Leeke’s initial proposal to reduce

11

United States District Court
Northern District of California

10

Swafford’s commissions, Wirtenson explicitly worried that IBM would “lose a few good people

12

over this.” ECF No. 83-13 at 1.

13

Additionally, Wirtenson explained that if Leeke reduced the commissions, “we would have

14

probably book [sic] $5M less,” which suggests that Wirtenson viewed the promise of uncapped

15

commissions to be strong motivation for employees. Id. This, too, is relevant circumstantial

16

evidence that supports the existence of intent to defraud on the part of IBM. See Beard, 2019 WL

17

1516592, at *5 (upholding allegation of intent to defraud concerning commission program that

18

“was highly motivating to sales representatives and incentivized them to pursue large deals despite

19

long hours and repeated out-of-town travel”).

20

Further, there is evidence in the record that IBM employees considered IBM’s behavior in

21

reducing the commission payments to be dishonest. Indeed, in February 2017, Scott Kingston, an

22

IBM second line manager with overall responsibility for IBM’s embedded software sales program

23

in North America, emailed Wirtenson and Briggs to complain that Leeke’s proposal to reduce

24

commission payments would lead to a “loss of a sense of integrity” on the part of IBM. ECF No.

25

83-22 at 3. Kingston explicitly worried that reducing commission payments to Swafford’s team

26

would “undermine [IBM’s] own promise” to the IBM sales representatives. Id. at 2. In particular,

27
28

18
Case No. 18-CV-04916-LHK
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION FOR SUMMARY
JUDGMENT

1

Kingston asserted that to “change the plan after the game is over is not fair, and no one can

2

rationalize it otherwise honestly.” Id. at 1. Kingston strenuously argued that IBM should not go

3

forward with Leeke’s proposal or engage in arbitrary capping in general: “Plus it’s just not an

4

honorable way for a [sic] ethical company to react. I believe in honest, fairness, and integrity. We

5

have a team that believes in us. If we don’t handle this better, none of them will trust us again. We

6

need to reconsider this.” Id. at 2.
IBM’s arguments to the contrary are unpersuasive. First, IBM cites Jensen v. IBM, 454

7
8

F.3d 382 (4th Cir. 2006). IBM argues that Jensen “addressed this very situation” and forecloses

9

Swafford’s ability to prove intent to defraud. Mot. at 16–17. However, Jensen is inapposite.
Jensen only involved a breach of contract claim in which intent to deceive was not an element.

11

United States District Court
Northern District of California

10

454 F.3d at 386. In Jensen, the Fourth Circuit held that the IPL disclaimers rendered IBM’s

12

actions permissible under the alleged contract. Id. at 389. Jensen said nothing, however, about

13

intent to defraud.
Second, IBM cites Vinson v. IBM, 2018 WL 4608250 (M.D.N.C. Sep. 25, 2018), and

14
15

Schwarzkopf v. IBM, 2010 WL 1929625 (N.D. Cal. May 12, 2010), for the proposition that the

16

IPL’s disclaimers foreclose “the argument that IBM intended to deceive him regarding the

17

payment of his commissions.” Mot. at 16. However, the section of Vinson that IBM cites

18

discusses only breach of contract. Id.; Vinson, 2018 WL 4608250, at *5. To the extent that the

19

Vinson court actually discussed intent to defraud in the context of PowerPoint statements similar

20

to the ones in the instant case, the Vinson court upheld the plaintiff’s allegation notwithstanding

21

the IPL’s disclaimers. Id. at *10. Accordingly, Vinson cuts against IBM’s argument in the instant

22

case.

23

Schwarzkopf is also inapposite. Unlike the instant case, the sole alleged fraudulent

24

misrepresentations in Schwarzkopf came from the plaintiff’s managers, and the Schwarzkopf court

25

concluded that these managers lacked the intent to defraud the plaintiff based on the managers’

26

efforts to ensure that the plaintiff received full commissions. Schwarzkopf, 2010 WL 1929625, at

27
28

19
Case No. 18-CV-04916-LHK
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION FOR SUMMARY
JUDGMENT

1

*14. However, in the instant case, as outlined above, Swafford has identified evidence in the

2

record that supports intent to defraud on the part of IBM.

3

IBM broadly argues that the fact that IBM disclosed the disclaimers in the IPL precludes

4

any finding of intent to defraud. Mot. at 16. The Court already rejected this argument. As the

5

Court previously held, and as other courts have held in similar situations, “the IPL disclaimers do

6

not reveal IBM’s motivation for informing sales representatives in the PowerPoint presentation . . .

7

that commissions were uncapped.” ECF No. 69 at 12; see also Fessler v. IBM, 2018 WL

8

6220209, at *6 (E.D. Va. Nov. 28, 2018) (“But these [IPL] disclaimers do not reveal IBM’s

9

motivation for informing salespeople that commissions were uncapped.”). The fact that IBM
provided Swafford with the disclaimers in the IPL does not mean IBM lacked an intent to defraud.

11

United States District Court
Northern District of California

10

Accordingly, the Court concludes that there is a genuine issue of material fact as to

12

whether IBM possessed an intent to defraud Swafford when IBM stated in the 2H 2016

13

PowerPoint presentation that “payments” and “earning opportunit[ies]” were uncapped. The

14

Court proceeds to consider whether there is a genuine issue of material fact as to whether

15

Swafford reasonably relied on these statements.

16

3. There Is a Genuine Issue of Material Fact with Respect to Whether Swafford
Reasonably Relied on IBM’s Statements.

17
IBM argues that even if a jury could find that the allegedly fraudulent statements in the 2H
18
2016 PowerPoint presentation were false and made with the intent to defraud Swafford, there is no
19
genuine issue of material fact that could show that Swafford reasonably relied on these statements.
20
Mot. at 17. IBM claims that the IPL, and particularly the Significant Transactions provision
21

contained within it, should have clarified for Swafford the fact that Swafford’s commissions could

22
be reduced. Id. IBM also argues that the record demonstrates that Swafford was fully aware of
23

the fact that Swafford’s commissions in the second half of 2016 would be reviewed and

24
potentially reduced. Id. at 17–18.
25
Swafford responds by arguing that the applicability of the Significant Transactions
26
provision is irrelevant to whether Swafford reasonably relied on the allegedly fraudulent
27
28

20
Case No. 18-CV-04916-LHK
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION FOR SUMMARY
JUDGMENT

1

statements. Opp. at 23. According to Swafford, if the allegedly fraudulent statements in the 2H

2

2016 PowerPoint presentation and the IPL provisions were inconsistent, Swafford should not have

3

been expected to understand as a matter of law that the IPL controlled. Id. at 22.

4

The Court agrees with Swafford. There is sufficient evidence in the record to establish a

5

genuine issue of material fact with respect to whether Swafford reasonably relied on the allegedly

6

fraudulent statements in the 2H 2016 PowerPoint presentation.

7

Under California law, “the reasonableness of the reliance is ordinarily a question of fact.”

8

Guido v. Koopman, 1 Cal. App. 4th 837, 843 (1991). Indeed, California courts have repeatedly

9

held that “[e]xcept in the rare case where the undisputed facts leave no room for a reasonable
difference of opinion, the questions of whether a plaintiff’s reliance is reasonable is a question of

11

United States District Court
Northern District of California

10

fact.” Alliance Mortgage Co. v. Rothwell, 10 Cal. 4th 1226, 1239 (1995) (quoting Blankenheim v.

12

E.F. Hutton & Co., 217 Cal. App. 3d 1463, 1475 (1990)); see also Beard, 2019 WL 1516592, at

13

*4 (“It will be a question of fact for the jury whether reliance was reasonable.”). Notwithstanding

14

this case law, IBM asserts that in the instant case, “any reliance on any alleged false statements

15

[was] unreasonable as a matter of law” on the part of Swafford. Mot. at 19.

16

As an initial matter, IBM points to the fact that Swafford was required to read and review

17

the IPL, which contained the Significant Transactions provision. According to IBM, this

18

provision should have alerted Swafford to the fact that “IBM could review his commissions on

19

significant transactions and that his commissions were not earned until any review was complete.”

20

Mot. at 17. As the Court outlined above, however, there is sufficient evidence in the record to

21

support the conclusion that the allegedly fraudulent statements in the 2H 2016 PowerPoint

22

presentation were false and inconsistent with the IPL disclaimers such as the Significant

23

Transactions provision. See supra III.A.1. In light of this fact, and as the Court previously

24

explained in its Order on the Motion to Dismiss, “IBM should not be allowed to make inconsistent

25

representations and then insist that, as a matter of law, its sales representatives were incorrect to

26

rely on IBM’s representations.” ECF No. 69 at 13.

27
28

21
Case No. 18-CV-04916-LHK
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION FOR SUMMARY
JUDGMENT

1

Indeed, IBM does not assert that the IPL was a binding contract or that the IPL’s

2

statements should be legally privileged above the statements in the 2H 2016 PowerPoint

3

presentation in any way. Further, the fact that Swafford was required to read the IPL is irrelevant.

4

While Swafford was indeed required to sign off on the IPL, Swafford was also required to review

5

and sign off on the 2H 2016 PowerPoint presentation. See 2H 2016 PowerPoint presentation at 18

6

(“When you accept your letter you will also again be asked to confirm that you completed your

7

incentive plan education here on Incentives Workplace.”). In fact, the record contains affirmative

8

evidence that in the case of a conflict between the IPL and the statements in the 2H 2016

9

PowerPoint presentation, IBM employees would reasonably understand that the statements in the
2H 2016 PowerPoint presentation control. Swafford points to the fact that the 2H 2016

11

United States District Court
Northern District of California

10

PowerPoint presentation expressly indicates that the 2H 2016 PowerPoint presentation itself “is

12

the primary 2016 education for IBM sales employees.” Id. at 1 (emphasis added).

13

IBM also mischaracterizes the significance of Swafford’s apparent knowledge of the

14

review process. The record indicates that IBM previously reviewed Swafford’s commissions in

15

2015. Mot. at 17. Although Swafford was ultimately paid his full commissions in 2015, IBM

16

nonetheless claims that this previous process put Swafford “on notice that his commissions on

17

large deals were subject to review by IBM.” Id. at 17–18. However, Swafford testified that

18

Swafford believed that the review was strictly for the purposes of determining that all of the

19

relevant transactions underlying the commissions were “clean.” See Swafford Depo. at 129:14–

20

15. Specifically, Swafford assumed that the purpose of the review “was to fix errors,” and to

21

“make sure a contract is signed, the amounts are correct, and—you know, and no decimal points

22

missing, no approvals missing.” See id. at 51:18–23. In short, Swafford apparently believed that

23

the purpose of the automatic internal review was to fix clerical errors associated with the

24

underlying transactions. See id.

25
26
27
28

Finally, IBM cites Fessler v. IBM Corp., 2018 WL 6220209 (E.D. Va. No. 28, 2018), and
Middleton v. IBM Corp., 2019 LEXIS 61308 (N.D. Ga. Jan. 2, 2019), for the proposition that
22
Case No. 18-CV-04916-LHK
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION FOR SUMMARY
JUDGMENT

1

“disclaimers in the IPL foreclose reliance on any alleged statements to the contrary contained

2

outside the IPL.” Mot. at 18. The Court previously squarely rejected the applicability of these

3

two cases. In its previous Order on the Motion to Dismiss, the Court explained that “Fessler is

4

inconsistent and conclusory because the Fessler court simultaneously found that the IPLs were not

5

a contract, but nonetheless the IPLs’ statements bound the plaintiff as a matter of law.” ECF No.

6

69 at 15. Further, the Court explained that Middleton “is distinguishable because the Northern

7

District of Georgia emphasized that under the law of its circuit, ‘a disclaimer can render reliance

8

unreasonable as a matter of law and, here, the IPL is wrought with disclaimers that bar Plaintiff

9

from claiming justifiable reliance.’” Id. These two decisions remain inapposite for the same

10

reasons that the Court articulated in its Order on the Motion to Dismiss.4
Accordingly, the Court concludes that there is a genuine issue of material fact with respect

United States District Court
Northern District of California

11
12

to whether Swafford reasonably relied on the allegedly fraudulent statements in the 2H 2016

13

PowerPoint presentation. Because there are multiple genuine issues of material fact, the Court

14

DENIES IBM’s motion for summary judgment on Swafford’s fraudulent misrepresentation claim.

15

The Court proceeds to consider whether summary judgment is appropriate with respect to the

16

negligent misrepresentation claim.

17

C. There Is a Genuine Issue of Material Fact with Respect to Whether IBM Committed
Negligent Misrepresentation.

18

IBM also moves for summary judgment on Swafford’s claim for negligent

19
misrepresentation. California recognizes a claim for negligent misrepresentation, which, unlike
20
fraudulent misrepresentation, allows recovery in the absence of scienter or intent to defraud. Los
21
22
23
24
25
26
27
28

In a separate statement of recent decision, IBM also directs the Court to a “per curium [sic]
decision of the United States Court of Appeals for the Eleventh Circuit, in the case titled
Christopher Middleton v. IBM, Case No. 19-11824, affirming the District Court’s dismissal of
Middleton’s Amended Complaint.” ECF No. 93. However, the Eleventh Circuit’s unpublished
Middleton decision is inapposite for the same reason that the district court’s decision is: the
Eleventh Circuit relies on the principle under Georgia law that “the mere presence of a disclaimer,
regardless of whether or not the plaintiff saw it, can render reliance unreasonable.” Middleton v.
IBM, 2019 WL 4724477, at *3 (11th Cir. Sept. 26, 2019) (cleaned up). Because the instant case is
not governed by Georgia law, the Eleventh Circuit’s unpublished decision is similarly inapposite.
23
4

Case No. 18-CV-04916-LHK
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION FOR SUMMARY
JUDGMENT

1

Angeles Unified School Dist. v. Great American Ins. Co., 49 Cal. 4th 739, 750 n.5 (2010). The

2

elements of negligent misrepresentation are: (1) the misrepresentation of a past or existing

3

material fact, (2) without reasonable ground for believing it to be true, (3) with intent to induce

4

another’s reliance on the fact misrepresented, (4) reasonable reliance on the misrepresentation, and

5

(5) resulting damage. Nat’l Union Fire Ins. Co. of Pittsburgh, PA v. Cambridge Integrated Servs.,

6

171 Cal. App. 4th 35, 50 (2009).

7

IBM argues that Swafford’s negligent misrepresentation claim fails for two of the reasons

8

that IBM argues Swafford’s fraudulent misrepresentation fails: Swafford has not identified a

9

genuine issue of material fact with respect to whether the statements in the 2H 2016 PowerPoint
presentation were false, or whether Swafford reasonably relied on them. See Mot. at 19. Because

11

United States District Court
Northern District of California

10

the Court has concluded that Swafford has indeed established genuine issues of material fact with

12

respect to these two elements, the Court also DENIES IBM’s motion for summary judgment on

13

Swafford’s negligent misrepresentation claim. The Court proceeds to consider Swafford’s claims

14

for quantum meruit and unjust enrichment.

15
16

D. There Is a Genuine Issue of Material Fact with Respect to Whether IBM Is Liable for
Quantum Meruit and Unjust Enrichment.
Next, IBM argues that IBM is entitled to summary judgment on Swafford’s claims for

17
quantum meruit and unjust enrichment. In particular, IBM claims that Swafford is entitled to
18
summary judgment on these claims because Swafford cannot show that Swafford reasonably
19
expected compensation beyond what Swafford ultimately received. Mot. at 20. IBM also argues
20
that IBM paid Swafford enough money in commissions in the second half of 2016 to bar a finding
21
of unjust enrichment, and IBM claims that other courts have rejected quantum meruit and unjust
22
enrichment claims in similar circumstances. Id.
23
Swafford responds that Swafford can point to a reasonable expectation of additional
24
compensation. Opp. at 25. Swafford also responds by arguing that the fact that IBM paid
25
Swafford a lower sum for commissions in the second half of 2016 is not a defense to the unjust
26
enrichment claim, and Swafford distinguishes the case law that IBM cites. Id.
27
28

24
Case No. 18-CV-04916-LHK
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION FOR SUMMARY
JUDGMENT

1

The Court agrees with Swafford’s arguments. There is a genuine issue of material fact

2

with respect to whether Swafford reasonably relied on the allegedly fraudulent statements

3

contained within the 2H 2016 PowerPoint presentation. Further, the money that Swafford

4

received in the form of commissions in the second half of 2016 is not a defense to the quantum

5

meruit and unjust enrichment claims. Finally, the case law that IBM cites to argue that summary

6

judgment is appropriate is distinguishable.

7

Quantum meruit (or quasi-contract) “is an equitable remedy implied by the law under

8

which a plaintiff who has rendered services benefitting the defendant may recover the reasonable

9

value of those services when necessary to prevent unjust enrichment of the defendant.” In re De
Laurentiis Ent. Grp. Inc., 963 F.2d 1269 (9th Cir. 1992). To prevail on a claim for quantum

11

United States District Court
Northern District of California

10

meruit, Swafford must show: (1) that he performed certain services for IBM; (2) that the services

12

were rendered at IBM’s request; and (3) that they are unpaid. Summit Estate, Inc. v. Cigna

13

Healthcare of Cal. Inc., 2017 WL 4517111, at *11 (N.D. Cal. Oct. 10, 2017) (citations omitted).

14

Under California law, quantum meruit also requires evidence of a plaintiff’s reasonable

15

expectation of receiving compensation for services rendered. See Huskinson & Brown v. Wolf, 32

16

Cal. 4th 453, 458 (2004) (“To recover in quantum meruit, a party need not prove the existence of a

17

contract, but it must show the circumstances were such that ‘the services were rendered under

18

some understanding or expectation of both parties that compensation therefor was to be made.’”

19

(citations omitted)).

20

In California, “unjust enrichment is not a standalone cause of action.” In re Safeway Tuna

21

Cases, 2016 WL 3743364, at *1 (N.D. Cal. July 13, 2016). However, the Ninth Circuit has

22

previously recognized that “[w]hen a plaintiff alleges unjust enrichment, a court may ‘construe the

23

cause of action as a quasi-contract claim seeking restitution.’” Astiana v. Hain Celestial Grp.,

24

Inc., 783 F.3d 753, 762 (9th Cir. 2015) (quoting Rutherford Holdings, LLC v. Plaza Del Rey, 223

25

Cal. App. 4th 221 (2014)). In its order denying IBM’s motion to dismiss, the Court construed

26

Swafford’s unjust enrichment claim as a quasi-contract claim seeking restitution. Order at 17.

27
28

25
Case No. 18-CV-04916-LHK
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION FOR SUMMARY
JUDGMENT

1

The Ninth Circuit has explained that unjust enrichment and restitution “describe the theory

2

underlying a claim that a defendant has been unjustly conferred a benefit through mistake, fraud,

3

coercion, or request” or a situation where “restitution require[s] a party to return a benefit when

4

the retention of such benefit would unjustly enrich the recipient.” Astiana, 783 F.3d at 762

5

(quotation marks and citations omitted).

6

The Court considers IBM’s arguments for summary judgment on these claims in turn.

7

First, IBM points to the fact that quantum meruit in California requires a showing of a

8

reasonable “understanding or expectation” on the part of Swafford that additional compensation

9

would be conferred for his efforts. Mot. at 20. According to IBM, because Swafford cannot point
to a genuine issue of material fact that Swafford reasonably relied on the allegedly fraudulent

11

United States District Court
Northern District of California

10

statements contained within the 2H 2016 PowerPoint presentation, Swafford cannot fulfill this

12

requirement. Id. However, the Court previously concluded that Swafford has indeed identified a

13

genuine issue of material fact as to reasonable reliance. See supra Part III.B.3. Thus, IBM’s

14

argument fails.

15

Second, IBM points to the fact that IBM paid Swafford “over $700,000 in commissions for

16

the second half of 2016,” including “full commissions for other deals that closed during the

17

second half of 2016.” Mot. at 20. IBM argues that these other payments preclude Swafford from

18

proving that IBM received an unjustly conferred benefit at Swafford’s expense, as required for

19

Swafford to succeed on the quasi-contract claim seeking restitution. Id. IBM is incorrect.

20

As outlined above, Swafford has identified genuine issues of material fact that IBM

21

committed fraudulent misrepresentation and thereby wrongly enriched itself by withholding

22

commissions on the Oracle and Sabre deals. The amount of money that Swafford did receive in

23

the form of commissions across all of the transactions in the second half of 2016 is irrelevant.

24

Indeed, under the California law of restitution, “[t]he emphasis is on the wrongdoer’s enrichment,

25

not the victim’s loss.” County of San Bernardino v. Walsh, 158 Cal. App. 4th 533, 543 (2007);

26

see also Brooks v. Motsenbocker Advanced Developments, Inc., 2008 WL 2826392, at *8 (S.D.

27
28

26
Case No. 18-CV-04916-LHK
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION FOR SUMMARY
JUDGMENT

1

Cal. July 21, 2008) (“If Defendants deceived Plaintiffs into performing work in connection with

2

the promotion and sales of the Product and Finish Coat, Defendants would be unjustly enriched if

3

the 10% commission promised to Plaintiffs went into Defendants’ pockets.”). IBM cites no case

4

law in support of its position to the contrary. Because Swafford has shown genuine issues of

5

material fact that IBM fraudulently misrepresented the nature of the commissions and thereby

6

enriched itself at Swafford’s expense, Swafford’s restitution claim is not suitable for summary

7

judgment. See Beard v. IBM, 2019 WL 1516592, at *6 (N.D. Cal. Apr. 7, 2019) (holding that

8

because a plaintiff “sufficiently alleged that he provided IBM with a benefit for which he was not

9

fairly compensated,” dismissal of unjust enrichment claim was inappropriate).

10

Finally, the case law that IBM cites in general support of its position is inapposite. IBM

United States District Court
Northern District of California

11

points to five cases: Snyder v. IBM, No. 1:16-cv-03596-WMR, 2019 U.S. Dist. LEXIS 66583, at

12

*13-16 (N.D. Ga. Mar. 18, 2019); Morris v. IBM Corp., No. 1:18-cv-0042-LY, 2018 U.S. Dist.

13

LEXIS 222568, at *9-11 (W.D. Tex. Nov. 29, 2018); Middleton, 2019 U.S. Dist. LEXIS 61308, at

14

*15-17; Fessler, 2018 U.S. Dist. LEXIS 202725, at *13-15; and Pero v. IBM Corp., No. 12-CV-

15

07484 (KM), 2014 U.S. Dist. LEXIS 2461 (D.N.J. Jan. 2, 2014). First of all, as a general matter,

16

none of these cases involved claims for quantum meruit or restitution under California law.

17

Second, as IBM itself concedes, the cases that IBM cites rely on the “disclaimers in IBM’s

18

commission plans” for the proposition that IBM employees were on notice that their commissions

19

could be reduced. Mot. at 20; see, e.g., Snyder v. IBM, 2019 U.S. Dist. LEXIS 66583, at *15

20

(“Here, the plain terms of Plaintiff’s IPLs foreclose any reasonable expectation that he would a

21

[sic] specific amount of commissions.”). However, as explained above, in the instant case,

22

Swafford has established a genuine issue of material fact as to reasonable reliance notwithstanding

23

the language in the IPL. See supra Part III.B.3. Third, and relatedly, only two of the decisions

24

cited by IBM address statements similar to the ones contained within the 2H 2016 PowerPoint

25

presentation: Middleton, 2019 U.S. Dist. LEXIS 61308, at *15-17, and Fessler, 2018 U.S. Dist.

26

LEXIS 202725, at *13-15. As the Court previously explained, and for the reasons previously

27
28

27
Case No. 18-CV-04916-LHK
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION FOR SUMMARY
JUDGMENT

1
2

stated, “Fessler and Middleton are not persuasive.” ECF No. 69 at 15; see supra Part III.B.3.
The Court concludes that Swafford has established a genuine issue of material fact with

3

respect to his claims for quantum meruit and unjust enrichment. Accordingly, the Court DENIES

4

IBM’s motion for summary judgment on these claims. The Court proceeds to consider Swafford’s

5

claim for violation of the UCL.

6
7
8
9

E. There Is a Genuine Issue of Material Fact with Respect to Whether IBM Violated the
UCL.
IBM argues that IBM is entitled to summary judgment on Swafford’s claim under
California’s UCL, Cal. Bus. & Prof. Code § 17200, et seq. The UCL creates a cause of action for
business practices that are (1) unlawful, (2) unfair, or (3) fraudulent. Each “prong” of the UCL

10
provides a separate and distinct theory of liability. Lozano v. AT & T Wireless Servs., Inc., 504

United States District Court
Northern District of California

11
12
13

F.3d 718, 731 (9th Cir. 2007). Swafford’s UCL claim is based on all three prongs.
IBM moves for summary judgment on Swafford’s UCL claim in its entirety because IBM
asserts that, to the extent Swafford’s UCL claim is derivative of Swafford’s other claims,

14
Swafford cannot establish an underlying unlawful, unfair, or fraudulent practice. Mot. at 21–23;
15
16
17

see Cel-Tech Commc’ns., Inc. v. L.A. Cellular Telephone Co., 20 Cal. 4th 163, 180 (1999)
(explaining that the UCL effectively “‘borrows’ violations of other laws and treats them as
unlawful practices that the unfair competition law makes independently actionable.”). The Court

18
discusses each prong below.
19
20

1. There Is a Genuine Issue of Material Fact with Respect to Whether IBM Violated
the Unfair and Fraudulent Prongs of the UCL.

21

Swafford’s UCL claim under the unfair and fraudulent prongs relies on his

22

misrepresentation and quantum meruit/unjust enrichment claims. Specifically, Swafford alleges

23

that IBM knowingly misrepresented to Swafford the uncapped nature of his sales commissions

24

and that IBM willfully failed to pay all earned commissions to Swafford. SAC ¶¶ 59-60.

25
26
27
28

“A business practice is unfair within the meaning of the UCL if it violates established
public policy or if it is immoral, unethical, oppressive or unscrupulous and causes injury to
28
Case No. 18-CV-04916-LHK
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION FOR SUMMARY
JUDGMENT

1

consumers which outweighs its benefits.” McKell v. Wash. Mut., Inc., 142 Cal. App. 4th 1457,

2

1473 (2006). In determining whether a practice is unfair, California courts examine the practice’s

3

impact on its alleged victim and balance that impact against the reasons, justifications, and

4

motives of the alleged wrongdoer. Id. To state a claim under the fraudulent prong of the UCL,

5

plaintiffs must prove “actual reliance on the allegedly deceptive or misleading statements,”

6

Kwikset Corp. v. Superior Court, 51 Cal. 4th 312, 326 (2011), and that “the misrepresentation was

7

an immediate cause of the injury-producing conduct,” In re Tobacco II Cases, 46 Cal. 4th 298,

8

326 (2009).

9

IBM’s sole argument for summary judgment on Swafford’s UCL claim under the unfair
and fraudulent prongs is that “Plaintiff’s claims for fraudulent and negligent misrepresentation and

11

United States District Court
Northern District of California

10

quantum meruit and unjust enrichment fail.” Mot. at 21. However, the Court has concluded that

12

there are genuine issues of material fact precluding summary judgment on these claims. See supra

13

Parts III.B, C, D. Accordingly, the Court DENIES IBM’s motion for summary judgment on

14

Swafford’s UCL claim under the unfair and fraudulent prongs. The Court proceeds to consider

15

whether summary judgment is appropriate with respect to Swafford’s UCL claim under the

16

unlawful prong.

17
18
19

2. There Is a Genuine Issue of Material Fact with Respect to Whether IBM Violated
the Unlawful Prong of the UCL.
The unlawful prong of the UCL prohibits “anything that can properly be called a business
practice and that at the same time is forbidden by law.” Cel-Tech Commc’ns., Inc., 20 Cal. 4th at

20
180. In the instant case, Swafford alleges that IBM violated the unlawful prong of the UCL by
21
22

violating “California Labor Code Sections 200, 201, 202, 204, and 2751 and the applicable
Industrial Welfare Commission Wage Orders.” SAC ¶ 58.

23
IBM argues that summary judgment is appropriate with respect to UCL violations
24
premised on violations of California Labor Code Sections 200, 201, 202, and 204 because
25
Swafford has presented no evidence that these provisions apply in the instant case. Mot. at 22–23.
26
27
28

Swafford concedes that summary judgment in IBM’s favor is appropriate with respect to IBM’s
29
Case No. 18-CV-04916-LHK
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION FOR SUMMARY
JUDGMENT

1

alleged violation of the UCL on the basis of these provisions. Opp. at 28 n.20. Accordingly, the

2

Court GRANTS IBM’s motion for summary judgment with respect to Swafford’s UCL claim

3

insofar as the claim is premised on IBM’s violations of California Labor Code Sections 200, 201,

4

202, and 204.

5

IBM also argues that IBM is entitled to summary judgment on Swafford’s UCL claim

6

insofar as the claim is premised on IBM’s violation of California Labor Code Section 2751.

7

According to IBM, the IPL satisfies the requirements of California Labor Code Section 2751

8

because it sets forth the manner in which commissions are calculated and paid, because both

9

Swafford and IBM endorsed the document, and because Swafford has not offered evidence that

10

United States District Court
Northern District of California

11

Swafford was harmed by the alleged violation. Mot. at 23.
In response, Swafford claims that the IPL is not a contract and therefore cannot satisfy the

12

requirements of California Labor Code Section 2751. Swafford also argues that the IPL violates

13

the requirements of California Labor Code Section 2751 because IBM did not actually sign the

14

IPL. Opp. at 27.

15

For the reasons stated below, the Court agrees with Swafford that the IPL is not a contract

16

and that the IPL therefore cannot satisfy the requirements of California Labor Code Section 2751.

17

Accordingly, the Court need not reach Swafford’s argument that IBM did not sign the document

18

for the purposes of the statute.

19

California Labor Code Section 2751 dictates that “[w]henever an employer enters into a

20

contract of employment with an employee for services to be rendered within this state and the

21

contemplated method of payment of the employee involves commissions, the contract shall be in

22

writing and shall set forth the method by which the commissions shall be computed and paid.”

23

Cal. Lab. Code § 2751(a). In the instant case, the record is clear that Swafford was employed by

24

IBM and the “contemplated method of payment” of Swafford in his role at IBM involved

25

commissions. See, e.g., Swafford Depo. at 52:12–19 (outlining the process whereby Swafford

26

received commissions from IBM). Thus, the requirements of California Labor Code Section 2751

27
28

30
Case No. 18-CV-04916-LHK
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION FOR SUMMARY
JUDGMENT

1
2

clearly apply to Swafford.
IBM argues that IBM complied with the requirements of California Labor Code section

3

2751. According to IBM, “Plaintiff’s IPL is in writing, explained how his commissions were paid,

4

and was signed by Plaintiff, as Plaintiff admitted, thus meeting the requirements of § 2751.”

5

Reply at 11–12. However, California Labor Code Section 2751 specifically demands that a

6

“contract” satisfy the requirements outlined by the provision. Cal. Lab. Code § 2751(a). It is

7

undisputed that the IPL is not a contract. See, e.g., ECF No. 69 at 13 (“IBM repeatedly states that

8

the IPL is not a contract and that the IPL does not create any obligations for IBM.”). Thus, the

9

IPL cannot satisfy the requirements of California Labor Code Section 2751. See Piccarreto v.
Presstek, LLC, 2017 WL 3671153, at *2 (C.D. Cal. Aug. 24, 2017) (“California Labor Code

11

United States District Court
Northern District of California

10

Section 2751 requires that whenever an employer enters into a contract of employment with an

12

employee, the employer must provide a written contract to the employee if the employee’s

13

payment involves commissions for services rendered in California.” (emphasis added));

14

Abrishamcar v. Oracle Am., 2018 Cal. Super. LEXIS 4155, at *4 (Apr. 4, 2018) (explaining that

15

Section 2751 requires that a “fully signed contract must be given to the employee”).

16

IBM cites a single case for the proposition that, notwithstanding the clear language and

17

import of California Labor Code Section 2751, employers may fulfill the terms of the provision

18

without a contract. However, that case, Keenan v. Cox Comms. Cal., LLC, 2019 U.S. Dist. LEXIS

19

121819, at *25–26 (S.D. Cal. July 22, 2019), stands for no such proposition. The Keenan court

20

simply dismissed the plaintiff’s claim under California Labor Code Section 2751 because the court

21

determined that “any monetary remedy for violation of section 2751 is available only in the form

22

of penalties under PAGA,” which the plaintiff had not brought in that case. Id. at *27. The mere

23

fact that the Keenan court used the word “agreement” instead of “contract” in the course of

24

arriving at an unrelated conclusion is meaningless. In any event, even if the statute were not clear,

25

California law dictates that “statutes governing conditions of employment are to be construed

26

broadly in favor of protecting employees.” Murphy v. Kenneth Cole Prods., Inc., 40 Cal. 4th

27
28

31
Case No. 18-CV-04916-LHK
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION FOR SUMMARY
JUDGMENT

1

1094, 1103 (2007). The Court concludes that the IPL cannot satisfy the requirements of California

2

Labor Code Section 2751.
Accordingly, the Court DENIES IBM’s motion for summary judgment with respect to

3
4

Swafford’s UCL claim insofar as the claim is premised on IBM’s alleged violation of California

5

Labor Code Section 2751.5 Finally, the Court proceeds to consider Swafford’s claim for punitive

6

damages.

7

F. There Is a Genuine Issue of Material Fact with Respect to Whether Swafford Is
Entitled to Punitive Damages.

8
9

Finally, IBM argues that IBM is entitled to summary judgment on Swafford’s claim for
punitive damages because it is derivative of Swafford’s fraudulent misrepresentation claim. See

10
Mot. at 23. Swafford acknowledges that his claim for punitive damages is derivative of his

United States District Court
Northern District of California

11
12
13

fraudulent misrepresentation claim. Opp. at 28. However, because the Court denied IBM’s
motion for summary judgment on Swafford’s fraudulent misrepresentation claim in the instant
Order, the Court also DENIES IBM’s motion for summary judgment on Swafford’s punitive

14
damages claim.
15
IV.

CONCLUSION

16
For the foregoing reasons, the Court rules as follows on IBM’s motion for summary
17
judgment:
18

•

To the extent the fraudulent misrepresentation claim is based on the oral statements by

19
20
21
22
23
24
25
26
27
28

In his opposition, Swafford suggests that “this Court can and should grant summary judgment to
Swafford under Rule 56(f)” for Swafford’s claim under the unlawful prong of the UCL. Opp. at
28. Under Federal Rule of Civil Procedure 56(f)(1), a Court may grant summary judgment for a
nonmovant after giving notice and a reasonable time to respond. Grants of summary judgment to
a nonmoving party, however, are “generally disfavored, because they risk depriving a losing party
of adequate notice and opportunity to oppose summary judgment.” Mikkelsen Graphic
Engineering, Inc. v. Zund Am., Inc., 541 F. App’x 964, 972 (Fed. Cir. 2013); see also Kassbaum v.
Steppenwolf Prods., Inc., 236 F.3d 487, 494 (9th Cir. 2000) (explaining that “great care must be
exercised to assure that the original movant has had an adequate opportunity to show that there is a
genuine issue and that his [or her] opponent is not entitled to judgment as a matter of law”).
Because the parties’ briefing focused only on the issue of the IPL’s relevance to California Labor
Code Section 2751, the Court DENIES Swafford’s request for summary judgment under Rule
56(f).
32
5

Case No. 18-CV-04916-LHK
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION FOR SUMMARY
JUDGMENT

IBM executives and managers, the motion for summary judgment is GRANTED;

1
2

•

To the extent the fraudulent misrepresentation claim is based on the statements

3

contained within the 2H 2016 PowerPoint presentation, the motion for summary

4

judgment is DENIED;

5

•

DENIED;

6
7

•

•

United States District Court
Northern District of California

The motion for summary judgment on the UCL claim based on the unfair and
fraudulent prongs is DENIED;

10
11

The motion for summary judgment on the quantum meruit and unjust enrichment
claims is DENIED;

8
9

The motion for summary judgment on the negligent misrepresentation claim is

•

The motion for summary judgment on the UCL claim based on the unlawful prong to

12

the extent the unlawful prong is predicated on violations of California Labor Code §§

13

200, 201, 202, and 204 is GRANTED;

14

•

The motion for summary judgment on the UCL claim based on the unlawful prong to

15

the extent the unlawful prong is predicated on a violation of California Labor Code §

16

2751 is DENIED;

17
18

•

The motion for summary judgment on the punitive damages claim is DENIED.

IT IS SO ORDERED.

19
20
21
22

Dated: October 11, 2019
______________________________________
LUCY H. KOH
United States District Judge

23
24
25
26
27
28

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Case No. 18-CV-04916-LHK
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION FOR SUMMARY
JUDGMENT