Grujich v. Catamaran, Inc.
Filing
78
Enter MEMORANDUM Opinion and Order Signed by the Honorable Elaine E. Bucklo on 12/12/2013. Mailed notice (jdh)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
NIKOLA GRUJICH,
Plaintiff,
v.
CATAMARAN Inc., a Texas Corporation,
Defendant.
)
)
)
)
)
) No. 12 CV 7739
)
)
)
)
)
)
MEMORANDUM OPINION AND ORDER
In this action, plaintiff Nikola Grujich asserts various
claims against defendant Catamaran Inc.,1 the successor entity
to his former employer, SXC Health Solutions, Inc.
Plaintiff
claims that SXC breached his employment contract; fraudulently
obtained plaintiff’s signature on a letter agreement purporting
to amend his employment contract; and violated the Maryland
Wage Payment Collection Law (“MWPCL”) or, in the alternative,
the
Illinois
Wage
Payment
and
Collection
Act
(“IWPCA”).
Plaintiff seeks damages, as well as rescission of the letter
agreement.
Defendant has moved for summary judgment of all of
plaintiff’s claims and to strike certain declarations on which
plaintiff relies in opposition to its motion.
Defendant has
also moved to strike plaintiff’s demand for a jury trial on any
1
Defendant Catamaran is the business entity created pursuant to
the July 2, 2012, merger of SXC and Catalyst Health Solutions,
Inc.
claims
that
survive
summary
judgment.
For
the
foregoing
reasons, I grant the motion for summary judgment in part, deny
the motion to strike plaintiff’s declarations, and grant the
motion to strike plaintiff’s demand for a jury trial.
I.
Plaintiff began working for SXC as Senior Vice President,
Business Development, on January 2, 2012, after SXC acquired
his previous employer, HealthTrans, LLC.
plaintiff
and
SXC
signed
an
On March 12, 2012,
employment
agreement
(the
“Employment Agreement”), which included provisions relating to
plaintiff’s compensation and to the severance benefits to which
plaintiff would be entitled in the event of his termination
under various circumstances.
Section
“Employee
3.2
of
Performance
the
Employment
Bonus,”
states:
Agreement,
“In
respect
captioned
of
each
calendar year falling within the Employment Period, Employee
shall be eligible to earn an incentive compensation bonus,
depending
upon
the
achievement
of
Company
and
Employee
performance objectives (the “Incentive Compensation Bonus”).
Pl.’s L.R. 56.1 Stmt., Exh. 1 (Declaration of Nikola Grujich),
2
Exh 1 [DN 62-1].2
This section goes on to explain how this
bonus would be calculated. It then provides:
Notwithstanding the foregoing, for the 12-month period
ending May 31, 2012, the Employee shall be eligible for a
bonus, based on performance, under the terms of the
HealthTran[s] LLC annual bonus plan (the “HealthTran[s]
Bonus”). The HealthTran[s] Bonus will be payable in June
2012, subject to Employee’s continued employment through
the payment date other than for Termination without Cause
or Termination Arising Out of a Change in Control.
2
Plaintiff might have facilitated citing to his evidence by
alternating between numbers and letters when attaching exhibits
that themselves have exhibits, to avoid having to cite, as I have
just done, to Exh. 1 of Exh. 1.
More importantly, plaintiff
would have been well-advised to ensure that all of the evidence
on which he relies is, indeed, to be found in the record, and
that it is easy to locate therein. His citations, for example,
to “Park Dep., 80” (Pl.’s SJ Opp. at 8, n. 12) [DN 60], and
“Plaintiff’s Dep, Exh. 30” (Pl.’s L.R. 56.1 Resp. ¶ 32) [DN 61]
are roundly unhelpful, first because they require me to crossreference the table of contents to his appendix of exhibits to
discover which exhibit filed in this case, if any, contains the
cited evidence, and second because, in these example as in
multiple others, the cited items are nowhere to be found. (To
illustrate, although both sides include excerpts of the Park
deposition in support of their L.R. 56.1 statements, neither side
includes page 80. And it appears from the record that only eleven
exhibits were marked during the course of plaintiff’s deposition,
see Deposition of Nikola Grujich at 3:12-4:10 (identifying
exhibits), Pl.’s L.R. 56.1 Stmt., Exh. 3 [DN 62-4], so
plaintiff’s citation to “Plaintiff’s Dep, Exh. 30” is a mystery.)
Equally unhelpful is plaintiff’s citation to certain documents
only by Bates number. See Pl.’s L.R. 56.1 Resp. ¶ 32 (citing to
“CAT01619”). As the Seventh Circuit’s oft-cited observation goes,
“[j]udges are not like pigs, hunting for truffles buried in [the
record],” Gross v. Town of Cicero, Ill., 619 F.3d 697, 702 (7th
Cir. 2010) (second alteration in original). I may ignore any
facts “that lack direct citation to easily identifiable support
in the record.” Id.
3
It is undisputed that defendant paid plaintiff a bonus for
“the 12-month period ending May 31, 2012,” but plaintiff claims
that he is entitled to more than he received.
Article
termination
V
of
and
the
Employment
defines
six
Agreement
“Triggering
relates
Events”
to
whose
occurrence would cause plaintiff’s employment to terminate.
These
include,
among
others,
“Termination
by
the
Company
Without Cause,” and “Termination Arising Out of a Change of
Control.”
Section 5.2, captioned “Rights Upon Occurrence of a
Triggering Event,” sets forth the benefits to which plaintiff
is entitled pursuant to the various Triggering Events.
Section
Severance
5.2(c)
Benefit”
establishes
and
provides
the
that
“Change
these
of
become
Control
payable
following a “Change of Control,” which Section 5.4(e) defines
as follows:
A “Change of Control” shall be defined under this
Agreement to mean any of the following occurrences:
…
(ii)
The shareholders of SXC Health Solutions
Corp. approve a merger, and such merger is completed,
consolidation, recapitalization, or reorganization of SXC
Health Solutions Corp. or the Company, a reverse stock
split of outstanding voting securities, or consummation of
any such transaction if shareholder approval is not sought
or obtained, other than any such transaction that would
result in at least 75% of the total voting power
represented by the voting securities of the surviving
entity outstanding immediately after, and as a result of
such transaction, being Beneficially Owned by at least 75%
of the holders of outstanding voting securities of SXC
Health
Solutions
Corp.
immediately
prior
to
the
4
transaction, with the voting power of each such continuing
holder relative to other such continuing holders not
substantially altered in the transaction.
…
Id.
In April of 2012, SXC senior executives announced that SXC
would
merge
with
anticipation
of
Catalyst
this
Health
transaction
Solutions,
(the
LLC.
“Merger”),
In
senior
executives of SXC, including plaintiff, were requested to sign
a
letter
agreement
dated
April
16,
2012
(the
“April
16
Letter”), acknowledging that “the Merger shall not be deemed to
constitute a Change in Control for purposes of the Employment
Agreement.”
Plaintiff executed the April 16 Letter on April
24, 2012.
On
June
25,
2012,
plaintiff
was
informed
that
his
employment would be terminated on July 2, 2012, which was the
Merger’s effective date.
agreement
consistent
provisions
in
with
Section
SXC offered plaintiff a separation
the
5.2(b)
“Termination
of
the
Without
Employment
Cause”
Agreement.
Plaintiff claims, however, that he is entitled to the greater
Change of Control Severance Benefit pursuant to the Termination
Arising
Out
of
a
Change
of
Control
provisions
in
Section
5.2(c).
Section
“Complete
6.4
of
the
Understanding.”
Employment
This
Agreement:
5
Agreement
section
is
provides
captioned
that
the
supersedes
“any
and
all
prior
agreements
and
understandings relating to the employment of Employee by
Company,
including
without
limitation
any
prior
compensation plans or compensation agreements entered into
between Employee and the company. Specifically, and other
than as expressly provided for herein, this agreement
replaces, in its entirety Employee’s Health Tran[s]
employment agreement dated November 11, 2011….”
Id.
Plaintiff asserts that defendant breached the Employment
Agreement by paying him a bonus that was less than he was
entitled to under Section 3.2, and by refusing to pay him the
Change of Control Severance Benefit under Section 5.2(c).
In
addition, plaintiff claims that defendant fraudulently induced
him to sign the April 16 Letter by promising him that doing so
would not jeopardize his rights under the Employment Agreement,
then asserting the April 16 Letter as a basis for refusing to
pay him the Change of Control Severance Benefit.
Finally,
plaintiff argues that he is entitled to a trial on his claim
for
payment
of
earned
wages
under
Maryland’s,
or,
alternatively, Illinois’ wage payment statute.
II.
Summary
depositions,
judgment
answers
is
to
appropriate
when
interrogatories,
“the
and
pleadings,
admissions
on
file, together with the affidavits, if any, show that there is
no genuine issue as to any material fact and that the moving
party is entitled to judgment as a matter of law.” Fed.R.Civ.P.
6
56(c). The moving party bears the burden of demonstrating an
absence of genuine issue of material fact. Celotex Corp. v.
Catrett,
477
U.S.
317,
323
(1986).
“This
burden
has
two
distinct components: an initial burden of production, which
shifts to the nonmoving party if satisfied by the moving party;
and an ultimate burden of persuasion, which always remains on
the moving party.”
Id. at 330.
The movant’s ultimate burden is a stringent one: If “there
is any evidence in the record from any source from which a
reasonable inference in the nonmoving party’s favor may be
drawn,” summary judgment is inappropriate.
(citations
and
alterations
omitted).
Id. at 331 n. 2
Anderson
Lobby, Inc., 477 U.S. 242, 255 (1986).
v.
Liberty
Nevertheless, when the
movant meets its initial burden of production by identifying
materials in the record that support a judgment in its favor,
the
nonmoving
party
may
not
rest
on
mere
allegations
or
denials, but “must set forth specific facts showing that there
is a genuine issue for trial.” Celotex, 477 U.S. at 322 n. 3.
In
determining
construe
the
whether
evidence
nonmoving party.
a
in
triable
the
light
dispute
most
exists,
favorable
I
to
must
the
Adickes v. S.H. Kress & Co., 398 U.S. 144,
157 (1970).
A. Plaintiff’s Contract Claims
7
Contract interpretation is ordinarily a matter of law, and
if its terms are unambiguous, its meaning is a question for the
court.
Brooklyn Bagel Boys, Inc. v. Earthgrains, 212 F.3d 373,
378, n. 1 (7th Cir. 2000).
The parol evidence rule “generally
forbids the use in evidence of a prior or contemporaneous
agreement or terms not included in the [c]ontract.”
380.
But
admitted
under
to
Illinois
discover
law,
the
contract is ambiguous.”
extrinsic
parties’
evidence
genuine
Id. at
“can
intent
be
when
a
Id.
Change of Control Benefits
Defendant raises three arguments for summary judgment of
plaintiff’s
claim
that
defendant
breached
the
Employment
Agreement by failing to pay him benefits set forth in the
Termination Arising Out of a Change of Control provisions:
First, that the best evidence available of pre- and post-Merger
ownership of defendant’s stock establishes that no Change of
Control occurred, and that plaintiff has presented no evidence
to the contrary.
Second, that even if the Merger resulted in a
redistribution of defendant’s stock ownership that otherwise
would
have
met
the
Employment
Agreement’s
definition
of
a
Change of Control, the April 16 Letter expressly amended the
Employment
Agreement
to
carve
the
Merger
out
of
that
definition.
And third, that regardless of whether the Merger
amounted
a
to
Change
of
Control,
8
plaintiff
was
terminated
before the Merger, rather than “following” it, so he is not
entitled to Change of Control Severance Benefits in any event.
The thrust of defendant’s first argument is that even
assuming Catalyst shareholders acquired thirty-three percent of
the equity in SXC as a result of the Merger, many of these
Catalyst
shareholders
already
owned
SXC
stock
before
the
Merger, so their acquisition of additional SXC shares effected
no
change
in
SXC’s
ownership.
Defendant
calculates
that
because of the “substantial overlapping ownership of shares by
large shareholders on both sides of the Merger,” the vast
majority
of
SXC’s
post-Merger
shareholders—at
least
86.1
percent—were “legacy” SXC shareholders, i.e., they owned stock
in SXC before the merger.
Accordingly, defendant reasons,
SXC’s ownership did not “change” by twenty-five percent or
more,
the
minimum
required
to
trigger
Change
of
Control
Benefits.3
In support of this argument, defendant cites “information
from
Thomson
Reuters,
a
third-party
financial
markets
information company, regarding the equity ownership positions
of institutional shareholders.”
Def.’s L.R. 56.1 Stmt. 33.
3
At
The Employment Agreement identifies this minimum change
requirement through negative implication, defining a Change of
Control as a merger or other reorganization, “other than any such
transaction that would result in at least 75% of the total voting
power represented by the voting securities of the surviving
entity” to remain unchanged before and after the transaction.
(Emphasis added).
9
his deposition, John Perkins, defendant’s Vice President of
Investor Relations and Business Development, explained that he
downloaded data from the Thomson Reuters “portal” about SXC’s
stock ownership as of June 30, 2012, and about Catalyst’s stock
ownership
as
of
March
31,
2012.
Perkins
Def.’s L.R. 56.1 Stmt., Exh. I [DN 54-9].
Dep.,
23:3-24:17,
Perkins testified,
I merged the data, organized it by firm name, calculated
based on the terms of the transaction and conversion rate
per share of Catalyst to SXC to figure out what the ending
SXC post-merger shareholder list and ownership is. Then I
was able to compare that to the pre-merger SXC shareholder
list to identify the potential new holders to SXC through
the transaction of the merger with Catalyst.
Id. at 28:19-29:3.
page
summary
This analysis culminated in Perkins’s one-
report
(the
“Perkins
Report”),
which
Perkins
testified supports the conclusion that 86.1 percent of SXC’s
shares
post-Merger
were
not
owned
by
“new”
shareholders.
Perkins concedes, however, that the report also reflects that
“the voting power of legacy SXC shareholders relative to other
legacy SXC shareholders changed as a result of the merger.”
Perkins Dep., 133:11-24.
Plaintiff argues that the Perkins report is hearsay, and
that in any event, it does not establish that no Change of
Control occurred.
Plaintiff insists that the report is “based
on the wrong underlying data,” and that because the information
“is presented on an intermixed Firm basis and does not show the
Funds that actually owned the shares,” it does not identify the
10
“Beneficial Owners” of the shares, as it must for purposes of
determining whether the Merger meets the Employment Agreement’s
definition of a Change of Control.
Plaintiff also seizes on
Perkins’ acknowledgment that the Merger effected a change in
the
relative
voting
power
of
legacy
SXC
shareholders—an
independent basis for finding a Change of Control under the
Employment Agreement.
Defendant is not entitled to summary judgment based on its
putative evidence that no Change of Control occurred.
To
begin, defendant does not meaningfully respond to plaintiff’s
hearsay challenge but merely asserts, in the most conclusory
fashion, that the Thomson Reuters’ data “is admissible as a
business record under Fed. R. Evid. 803(6) and/or under Fed. R.
Evid. 703 per Mr. Perkins’ testimony.” Def.’s Reply at 7 [DN
63].
Defendant has made no effort to establish, however, that
the Thomson Reuters data qualifies as a business record.
Rule
803(6) provides that
[a] memorandum, report, record, or data compilation, in
any form, of acts, events, conditions, opinions, or
diagnoses, made at or near the time by, or from
information transmitted by, a person with knowledge, if
kept in the course of a regularly conducted business
activity, and if it was the regular practice of that
business activity to make the memorandum, report, record
or data compilation, all as shown by the testimony of the
custodian or other qualified witness, or by certification
that complies with Rule 902(11) [or] Rule 902(12)
11
is admissible at trial, even when introduced for the truth of
the matter asserted.
Thanongsinh v. Board of Educ., 462 F.3d
762, 775-75 (7th Cir. 2006) (emphasis added).
not
identified
anyone
familiar
with
Defendant has
the
record-keeping
practices of Thomson Reuters, or anyone with personal knowledge
of how the data were gathered, compiled, or kept, much less has
it offered the affidavit of such a person to establish that the
records
have
considered
“sufficient
reliable.”
indicia
Id.
of
at
trustworthiness
777
(citation
to
be
omitted).
Moreover, as plaintiff points out, Change of Control Benefits
are triggered by changes to the “beneficial” ownership in SXC
stock, and defendant has offered no evidence that the ownership
data
Perkins
downloaded
from
the
Thomson
Reuters
portal
reflects which entities “Beneficially Owned” SXC’s stock, as
that term is used in the Employment Agreement.
Defendant’s
support.
invocation
of
Rule
703
is
equally
without
Although defendant has apparently identified Perkins
as an expert witness in this case, it is clear that plaintiff
intends to challenge Perkins’ qualifications to testify as an
expert on the topic(s) for which he is designated.
Whether
Perkins will ultimately be allowed to offer expert testimony is
an
issue
current
for
another
record
day.
provides
In
an
the
meantime,
insufficient
12
however,
foundation
the
for
concluding that the Thomson Reuters data is admissible under
Rule 703.
It is no answer to observe, as defendant repeatedly does,
that it is plaintiff who bears the burden of showing that a
Change of Control occurred.
That may be true at trial, but it
does not excuse defendant from either its initial burden of
production or its ultimate burden of persuasion at summary
judgment.
See Celotex, 477 U.S. at 330.
Defendant insists
that plaintiff’s evidence is inadequate to raise a genuine
factual
dispute,
arguing
that
statements
SXC
made
in
SEC
filings a month before the Merger was consummated, including
that “SXC shareholders and former Catalyst stockholders would
own approximately 67% and 33% of the outstanding shares of SXC
common stock, respectively,” were merely forward looking, and
that, in any event, those statements did not account for the
fact that institutional investors held stock in both companies.
Defendant is free to argue, at trial, that these shortcomings
prevent plaintiff from establishing that a Change of Control
occurred.
unless
At this stage, however, plaintiff bears no burden
defendant
first
identifies
admissible
evidence
affirmatively showing that it is entitled to judgment.
Defendant’s second argument is also flawed.
asserts
Agreement
that
to
the
April
exclude
the
16
Letter
Merger
13
amended
from
the
the
Defendant
scope
Employment
of
that
agreement’s Change of Control provisions.
I agree that the
April 16 Letter on its face purports to do just that.
with
plaintiff,
however,
that
the
April
16
I agree
Letter
is
unenforceable for lack of mutual consideration.
“Consideration consists of some detriment to the offeror,
some benefit to the offeree, or some bargained-for exchange
between them.”
Doyle v. Holy Cross Hospital, 708 N.E.2d 1140
(Ill. 1999). Defendant argues that plaintiff benefitted from
the
April
16
Letter
because
he
“stood
to
be
appreciably
enriched, and was appreciably enriched” by it, noting that
plaintiff
“directly
enjoyed”
a
post-Merger
value of shares he held in Catalyst.
increase
in
the
Defendant also insists
that “the prospect of gains in Plaintiff’s equity options [in
SXC],” and “the material benefit of continuing employment” from
the date of his signature through his termination amount to
additional
consideration.
These
arguments
do
not
survive
scrutiny.
Defendant
points
to
no
evidence
that
plaintiff
ever
thought about—much less “bargained” for—any of these putative
benefits
as
exchange
for
things
his
of
value
he
would
or
might
agreement
to
relinquish
receive
rights
previously cemented under the Employment Agreement.
he
in
had
The April
16 Letter does not even contain common boilerplate language
acknowledging that the agreement was supported by “good and
14
valuable consideration.”
Cf. Urban Sites of Chicago, LLC v.
Crown Castle USA, 979 N.E. 2d 480, 486 (Ill. App. Ct. 2012)
(consideration
sufficient
as
a
matter
of
contractual acknowledgment of sufficiency).
authority
supporting
the
notion
that
some
law
based
on
If there is any
unexpected
or
fortuitous benefit a contracting party realizes as a tangential
result
of
considered,
his
agreement
ex
post,
to
abandon
sufficient
his
rights
consideration
may
for
be
that
agreement, defendant has not identified it.
There is no mystery, however, to defendant’s failure to
cite
authority
for
its
argument
that
plaintiff’s
continued
employment amounts to adequate consideration for amending the
Employment Agreement.
plaintiff’s side.
On that issue, the law is firmly on
See Doyle, 708 N.E. 2d at 1146 (rejecting a
similar argument, noting that the “illusion (and the irony) is
apparent: to preserve their right under the economic-separation
policy, the plaintiffs would be forced to quit”); Robinson v.
Ada S. McKinley Community Services, Inc., 19 F.3d 359, 364 (7th
Cir. 1994) (continued work must be a “bargained for exchange”
to be consideration for modifying employment contract).
Because none of defendant’s arguments persuades me that
plaintiff’s agreement to be bound by the April 16 Letter was
supported by adequate consideration, I conclude that defendant
cannot rely on that Letter to establish that plaintiff waived
15
any
rights
he
otherwise
had
pursuant
to
the
Employment
Agreement.
Defendant’s
final
argument
on
the
Change
of
Control
issue—that plaintiff was terminated “before” the Merger rather
than “following” it—is belied by the record and merits no
further discussion.
For all of these reasons, I conclude that defendant is not
entitled to summary judgment of plaintiff’s claim for Change of
Control
Severance
Benefits
as
set
forth
in
the
Employment
Agreement.
The HealthTrans Bonus
Defendant likewise is not entitled to summary judgment of
plaintiff’s claim that he was underpaid his bonus pursuant to
the provisions of Section 3.2.
plaintiff’s
entitlement
to
The provisions setting forth
the
“HealthTran[s]
Bonus”
are
ambiguous on their face, and the evidence of their meaning is
conflicting.
Defendant argues that the Employment Agreement makes clear
that
any
bonus
was
wholly
discretionary,
and
reasons
that
because SXC was free to withhold plaintiff’s bonus entirely,
plaintiff
cannot
insufficient.
challenge
any
amount
he
received
as
But Section 3.2 nowhere states that plaintiff’s
bonus is “discretionary.”
While that is the meaning defendant
ascribes to language stating that plaintiff “shall be eligible”
16
for a bonus (emphasis added), defendant’s interpretation is not
beyond dispute.
basis
for
For one, Section 3.2 explicitly identifies the
determining
plaintiff’s
eligibility:
his
“performance, under the terms of the HealthTran[s] LLC annual
bonus plan (the ‘HealthTran[s] Bonus’).”
Yet, as defendant is
quick to point out, “no document exists that is called the
‘HealthTrans bonus plan’ or bears any like title.”
Mem., 9 [DN 53].
Def.’s SJ
But the contracting parties presumably meant
something by the reference to the “HealthTran[s] Bonus.”
And
indeed, Illinois courts generally avoid construing contracts in
a way that renders any of its terms nugatory.
See Korte &
Luitjohan Contractors, Inc. v. Thiems, 887 N.E.2d 904, 908
(Ill. App. Ct. 2008 (“a fundamental rule of linguistics and
contract law is that every word should be given meaning.”)
The
parties’ specific reference to the “HealthTran[s] bonus plan,”
coupled with their omission of any document or additional terms
defining the terms of such a plan, are the kind of “yawning
void…that cries out for an implied term” and requires recourse
to
extrinsic
evidence
to
ascertain
the
parties’
intent.
Moriarty v. Svec, 164 F.3d 323, 330 (7th Cir. 1998)(original
ellipsis).
To
support
his
interpretation
that
the
“HealthTran[s]
Bonus” referred to in Section 3.2 was mandatory once certain
objective criteria were met, plaintiff points to a spreadsheet
17
that both he and Robert Shofi, HealthTrans’s former Senior Vice
President of Human Resources, testify sets forth the terms of
the “HealthTran Bonus” at the time plaintiff entered into the
Employment Agreement.
Shofi states that he “was the person who
individually designed and had primary responsibility for the
HealthTrans
Bonus
Plan
after
2008,”
and
explains
that
“[p]ursuant to the HealthTrans Bonus Plan, Mr. Grujich was
entitled
to
receive
a
bonus
based
exclusively
upon
financial results of HealthTrans for the fiscal year.”
the
Pl.’s
L.R. 56.1 Stmt., Exh. 2 at ¶¶ 5-6 [DN 62-3].
Given the
company’s
the
financial
results,
“the
calculation
of
bonus
[was] a mathematical exercise.” Id. at ¶ 17.
Although defendant has moved to strike portions of Shofi’s
declaration on the grounds that they contain hearsay and are
not based on Shofi’s personal knowledge, defendant does not
raise these challenges with respect to paragraphs five or six,
quoted above, and the challenges are without merit with respect
to paragraph seventeen.
of
Shofi’s
factual
declaration
dispute
Employment
over
Agreement,
Because I conclude that these portions
are
the
I
sufficient
meaning
need
not
of
to
raise
Section
consider
a
3.2
genuine
of
the
whether
the
additional evidence plaintiff proffers in support of his claim
for unpaid bonus payments withstands defendant’s evidentiary
challenges.
18
B. Plaintiff’s Fraud and Rescission Claims
The
fraud
theory
that
emerges
both
from
plaintiff’s
amended complaint and from his opposition to defendant’s motion
is that plaintiff was misled into relinquishing his rights
under the Employment Agreement by agreeing to sign the April 16
Letter.
Because I conclude, however, that the April 16 Letter
is unenforceable, plaintiff cannot establish that he suffered
any damages as a result of the alleged fraud.
For at least
this reason, he is not entitled to a trial on this claim.4
Furthermore, I agree with defendant that plaintiff has not
identified sufficient evidence to enable a reasonable factfinder to conclude that anyone acting on defendant’s behalf
made a knowingly false statement of material fact, or that
plaintiff reasonably relied, to his detriment, on any such
statement.
These are necessary elements both of plaintiff’s
fraud claim and of his claim for rescission.
See Davis v. G.N.
Mortg. Corp., 396 F.3d 869, 881-82 (7th Cir. 2005) (setting
forth elements of common law fraud); 23-25 Bldg. Partnership v.
Testa Produce, Inc., 886 N.E.2d 1156, 1164 (Ill. App. Ct. 2008)
4
In his opposition to defendant’s motion, plaintiff disavows any
claim that defendant defrauded him with promises of future
employment.
See Pl.’s Opp. at 11 (calling this theory a
“misstate[ment]” of his fraud claim,” and insisting that “[w]hile
it is true that SXC intentionally misled Mr. Grujich into
believing that he would not be terminated as a result of the
Merger, this is not the basis of his fraud claim.”)
19
(elements of equitable claim for rescission on the basis of
fraud and misrepresentation).
The allegedly false statements on which plaintiff bases
his fraud claim are: “(1) the April 16 Letter needed to be
signed so as not to disrupt the Merger negotiations; (2) the
Merger would not be a Change of Control as defined in the
Employment Agreement; and (3) the April 16 Letter would not
amend or reduce his rights under the Employment Agreement or be
used against him.”
claim
for
Pl.’s Opp. at 11 [DN 60].
rescission
misrepresentations.
rests
on
these
Plaintiff’s
same
alleged
Plaintiff identifies no evidence, however,
to suggest that any SXC employee who allegedly made these
statements knew or believed at the time that they were false.
Moreover, the only act plaintiff claims he took in reliance on
the statements was to sign the April 16 Letter, from which no
injury can flow as a matter of law.
defendant’s
motion
for
summary
For all of these reasons,
judgment
is
granted
as
to
plaintiff’s claims for fraud and rescission.
C. State Wage Payment Claims
Defendant seeks summary judgment of plaintiff’s claims
under Maryland’s, or, alternatively, Illinois’, wage payment
statutes
on
the
following
grounds:
First,
that
Maryland’s
statute is inapplicable because 1) SXC was an Illinois employer
that paid plaintiff from Illinois; 2) plaintiff filed suit in
20
Illinois; and 3) the Employment Agreement contains a choice-oflaw provision stating that Illinois law governs “without regard
to
any
choice
of
law
or
conflicts
of
law
rules
or
provisions…irrespective of the fact that Employee may become a
resident of a different state.”
Pl.’s L.R. 56.1 Stmt., Exh. 1,
Exh. 1 at Section 6.1 [DN 62.1].
In support, defendant cites
Kunda v. C.R. Bard, Inc., 671 F.3d 464, 467-68 (4th Cir. 2011)
for the proposition that “Maryland employers may have their
employees execute employment agreements designating governing
law
other
than
substantial
that
of
relationship
Maryland,
between
so
the
long
as
parties
there
and
the
is
a
state
whose laws govern and the application of those laws would not
contravene fundamental Maryland public policy.”
The Kunda court applied Maryland law to the question of
which
state’s
however,
law
because
governed
plaintiff
the
filed
plaintiff’s
suit
in
claims.
Illinois
Here,
and
my
jurisdiction is based on diversity, I apply Illinois’ choiceof-law rules. “When a federal court hears a case in diversity,
it does not necessarily apply the substantive law of the forum
state; rather, it applies the choice-of-law rules of the forum
state
to
determine
which
state’s
substantive
law
applies.”
Auto-Owners Ins. Co. v. Websolv Computing, Inc., 580 F.3d 543,
547 (7th Cir. 2009) (citing Klaxon Co. v. Stentor Elec. Mfg.
21
Co., 313 U.S. 487, 496 (1941)).
Defendant’s reliance on Kunda
is thus unhelpful.
Plaintiff’s
response,
however,
is
less
helpful
still,
making the sweeping statement, unsupported by any authority,
that the choice-of-law provision in the Employment Agreement
does not preclude the application of another state’s statutory
law.
Determining which state’s law applies to non-contractual
claims asserted in conjunction with contract claims governed by
a choice-of-law provision is a notoriously complex task, and
the parties’ cursory treatment of the issue is insufficient to
allow me to resolve it with confidence.
While their failure on
this front is mutual, the burden at this juncture rests with
defendant.
Accordingly, I decline to foreclose plaintiff’s
claim under the Maryland statute at this stage.
Defendant
likewise
fails
to
persuade
me
that
it
is
entitled to summary judgment of plaintiff’s Illinois statutory
claim.
Defendant argues that plaintiff is not entitled to
recovery under the Illinois Wage Payment and Collection Act
because the additional compensation he seeks—both as a Change
of Control Severance Benefit and as a HealthTrans Bonus—does
not
qualify
as
“earned”
under
the
statute.
This
issue
is
inappropriate for resolution as a matter of law, however, in
22
view of the factual disputes that preclude summary judgment of
plaintiff’s underlying contractual claims.
D. Plaintiff’s Jury Demand
Defendant has moved to strike plaintiff’s jury demand,
asserting that none of his claims entitles him to a jury.
In
response, plaintiff concedes that several of his claims must be
tried before the court, but he argues that he is entitled to a
jury
on
his
fraud
claim
and
on
his
statutory
claim
under
Maryland law.
For the reasons explained above, plaintiff’s fraud claim
does not survive summary judgment.
As for his Maryland Wage
Act Claim, I agree with defendant that the parties’ mutual
waiver, in Section 6.7 of the Employment Agreement, of “any
right to trial by jury that the Employee or [defendant] may
have concerning any matter relating to this Agreement” is broad
enough to encompass this claim.
law
governs
the
issue,
Even assuming that Maryland
nothing
in
plaintiff’s
response
persuades me that this broad contractual waiver is inconsistent
with Maryland law.
That Maryland law “provides a right to a
jury trial for claims brought under” the Maryland statute, as
plaintiff argues, does not compel the conclusion that this
right cannot be waived, nor do the cases plaintiff cites so
hold.
23
III.
For the foregoing reasons, defendant’s motion for summary
judgment
is
granted
in
part.
Judgment
is
entered
in
defendant’s favor on plaintiff’s claims for rescission (Count
II)
and
fraud
(Count
III).
Defendant’s
motion
to
strike
plaintiff’s declarations is denied to the extent it seeks to
strike paragraph seventeen of the Shofi Declaration, and is
otherwise
denied
as
moot.
Defendant’s
motion
to
strike
plaintiff’s jury demand is granted.
ENTER ORDER:
_____________________________
Elaine E. Bucklo
United States District Judge
Dated: December 12, 2013
24
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