Allegis Group, Inc. et al v. Jordan et al

Filing 44

MEMORANDUM OPINION. Signed by Judge George Levi Russell, III on 4/17/13. (jnls, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND

ALLEGIS GROUP, INC., et al.,

:

Plaintiffs/Counterclaim
Defendants,

:
:

v.
:
JUSTIN JORDAN, et al.,
:

Civil Action No. GLR-12-2535

Defendants,
:
v.
:
DANIEL CURRAN, et al.,
:
Counterclaim Plaintiffs.
:

MEMORANDUM OPINION
THIS MATTER is before the Court on Plaintiffs/Counterclaim
Defendants Allegis Group, Inc. (“Allegis”) and Aerotek, Inc.’s
(“Aerotek”) Motion to Partially Dismiss Counterclaim Plaintiffs
Daniel

Curran,

Michael

Nicholas,

(“Plaintiffs”) Amended Counterclaim.
involves

Allegis’s

Plaintiffs

under

Plaintiffs’

Amended

decision
the

to

Incentive

Counterclaim

and

Chris

(ECF No. 35).
discontinue
Investment

alleges

Hadley’s
This case

payments
Plan

breach

of

to

(“IIP”).
contract

(Count I), violation of the Maryland Wage Payment and Collection
Law (the “Maryland Wage Act”), Md. Code Ann., Lab. & Empl. §§ 3501 et seq. (West 2013) (Count II), promissory estoppel (Count

III), and unjust enrichment/quantum meruit (Count IV).
32).

(ECF No.

Specifically, Allegis and Aerotek move to dismiss Counts

II, III, and IV.
The issues have been fully briefed and the Motion is ripe
for disposition.
(D.Md. 2011).

No hearing is necessary.

See Local Rule 105.6

As will be outlined in specific detail below, the

Court grants Allegis and Aerotek’s Motion to Partially Dismiss
because (1) the payments do not constitute “wages” under the
Maryland Wage Act; (2) Plaintiffs failed to establish a prima
facie case for promissory estoppel; and (3) Plaintiffs have not
met the prerequisite for bringing a quasi-contractual claim when
an express contract exists.
I.
Plaintiffs

are

former

BACKGROUND1
employees

of

Aerotek,

a

Maryland

employee staffing agency and wholly-owned subsidiary of Allegis.
In January 1993, Allegis implemented the Allegis Group IIP, an
investment plan that allows management and high-level employees
to acquire a financial interest in the company by promising the
employees the equivalent of company stock.
IIP

is

to

provide

a

“select

group

of

The purpose of the

management

or

highly

compensated employees . . . an incentive to promote the best
interests of the Companies, and . . . an incentive to promote

1

Unless otherwise noted, the following facts are taken from
the Amended Counterclaim and are viewed in a light most
favorable to Plaintiffs.
2

the long term economic growth of the Companies.”
Ex.

A,

at

eligible

1,

ECF

No.

employees

are

25-1).

Specifically,

awarded

“incentive

(Countercl.

under

the

investment

IIP,

units”

(“Units”), which are equivalent to a common share of Allegis
stock but do not actually grant equity in Allegis.
While employed at Aerotek, employees receive cash dividends
twice a year based on the value of their Units.

In addition,

once their employment has ended, Aerotek pays eligible employees
the principle balance of the value of their Units, known as “IIP
payments,”

which

are

distinct

from

employees receive while employed.

the

dividend

payments

Following the termination of

their employment, Aerotek makes IIP payments to former employees
as follows: five-percent of their balance is paid every quarter
for ten quarters, and then the remaining fifty-percent of their
balance is paid after thirty months.
Allegis awards Units through IIP Award Agreements, which
employees must sign each time they earn Units.
Agreements

detail

when

employees

receive

the

payments

employment has ended.

Units
for

will

vest,

vested

The IIP Award
and

Units

state
once

that
their

They also indicate that Unit payments are

treated as income for the purposes of federal and state income
tax

withholding,

Contributions Act.

and

withholding

under

the

Federal

Insurance

The IIP Award Agreements further acknowledge

that, although Aerotek “anticipates that the federal income tax
3

consequences

.

.

.

are

as

described,

the

Internal

Revenue

Service is not bound by such description and the Company does
not guaranty the federal income tax treatment of the award.”
(Countercl. Ex. B, at 3, ECF No. 25-2).
Lastly,

the

IIP

Award

Agreements

condition

payment

upon

compliance with Section 9 of the IIP, stating that “the terms
and conditions set forth in Section 9 of the [IIP] are material
and essential terms of your award of Units and your eligibility
to receive payment for any vested Units.”

(Id. at 2).

Section

9 of the IIP restricts employees from competing with Allegis and
its subsidiaries, or soliciting Allegis’s clients for a 30-month
period and within a 250-mile radius of the office where the
employees last worked.

Compliance with these post-employment

restrictions is the only limitation placed upon the payment of
vested Units.

Otherwise, IIP payments begin immediately after

one’s employment has ended.
As director-level employees, Plaintiffs participated in the
IIP

and

Aerotek.

were

awarded

Units

based

on

their

employment

with

During their employment, Plaintiffs signed multiple

IIP Award Agreements and received biannual dividend payments for
their Units.

At some point during their employment, Plaintiffs

allegedly were told the IIP payments represented compensation
earned as part of their compensation packages.
were

promoted

to

their

director-level
4

When Plaintiffs

positions,

they

faced

potential pay cuts that Allegis and Aerotek allegedly stated
would be offset by the IIP payments.

Moreover, Allegis and

Aerotek allegedly used increases in Units as a reason not to
provide higher bonuses and pay increases for certain positions.
Between

September

2011

and

Plaintiffs resigned from Aerotek.

April

2012,

each

of

the

Under the IIP, Mr. Curran was

scheduled to receive $196,470 in IIP payments at the time he
resigned.

Similarly,

Mr.

Nicholas

was

scheduled

to

receive

$138,268, and Mr. Hadley was scheduled to receive $498,414.
During

their

exit

interviews,

Kim

Despaux,

a

human

resources employee for Allegis, informed Plaintiffs they would
receive a package of documents necessary to receive the postemployment

IIP

payments.

Mr.

Curran

received

his

packet,

completed the documents, and received two IIP payments of $8,851
each.

When he did not receive his third IIP payment, Mr. Curran

contacted Ms. Despaux.
Jeff

Reichert,

from

Ms. Despaux informed Mr. Curran that

Allegis’s

legal

department,

halted

the

payments and did not provide a reason for doing so.
Mr. Nicholas also received the packet and completed the
necessary documents.

He received one IIP payment of $6,195.

When he did not receive his second IIP payment, Mr. Nicholas
contacted
stopped

Ms.

the

Despaux

payments

and

was

without

also

told

that

explanation.

Mr.

received the packet of necessary documents.
5

Mr.

Reichert

Hadley

never

Like Mr. Curran and

Mr. Nicholas, Ms. Despaux told Mr. Hadley that Mr. Reichert,
without explanation, put his payments on hold.

Although Ms.

Despaux told Plaintiffs to contact Mr. Reichert directly, Mr.
Reichert did not respond to any of Plaintiffs’ inquiries.
On August 23, 2012, Allegis, Aerotek, and Teksystems, Inc.2
brought

suit

in

this

Court

against

Plaintiffs,

and

Justin

Jordan, Ana Neto Rodrigues, and Alexander Ferrello,3 alleging,
among other things, breach of their employment agreements and
breach

of

the

IIP

Plaintiffs

filed

contract,

Award

violation

estoppel,

and

an

Agreements.

Amended
of

unjust

On

Counterclaim,

the

Maryland

enrichment/quantum

January

22,

alleging

Wage

Act,

meruit.

2013,

breach

of

promissory
Allegis

and

Aerotek now move to dismiss Plaintiffs’ Counterclaim as to the
Maryland Wage Act (Count II), promissory estoppel (Count III),
and unjust enrichment/quantum meruit (Count IV) claims.
II.
A.

DISCUSSION

Standard of Review
To

survive

a

Federal

Rule

of

Civil

Procedure

12(b)(6)

motion, the complaint must allege facts that, when accepted as

2

Teksystems, Inc., also a wholly-owned subsidiary of
Aerotek, is not a party to Plaintiffs’ Amended Counterclaim and
does not participate in Allegis and Aerotek’s Motion to
Partially Dismiss.
3
Mr. Jordan, Ms. Rodrigues, and Mr. Ferrello are former
employees of Aerotek. They did not join Plaintiffs in filing a
counterclaim against Allegis and Aerotek, and do not participate
in this matter.
6

true, “state a claim to relief that is plausible on its face.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 570 (2007)) (internal quotation
marks omitted).

A claim is plausible on its face when “the

plaintiff pleads factual content that allows the court to draw
the reasonable inference that the defendant is liable for the
misconduct alleged.”

Id. (citing Twombly, 550 U.S. at 556).

Legal conclusions or conclusory statements do not suffice and
are

not

entitled

to

the

assumption

Twombly, 550 U.S. at 555).

of

truth.

Id.

(citing

Thus, the Court “must determine

whether it is plausible that the factual allegations in the
complaint

are

enough

speculative level.”

to

raise

a

right

to

relief

above

the

Monroe v. City of Charlottesville, 579 F.3d

380, 386 (4th Cir. 2009) (quoting Andrew v. Clark, 561 F.3d 261,
266 (4th Cir. 2009)) (internal quotation marks omitted).
In determining whether to dismiss, the Court must examine
the complaint as a whole, consider the factual allegations in
the complaint as true, and construe the factual allegations in
the light most favorable to the plaintiff.

Lambeth v. Bd. of

Comm’rs of Davidson Cnty., 407 F.3d 266, 268 (4th Cir. 2005);
Albright v. Oliver, 510 U.S. 266, 268 (1994).
Lastly, as the basis of this Court’s jurisdiction is in
diversity of citizenship, the Court must follow the principles
set forth in Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938).
7

The Court is obligated to apply Maryland law to questions of
substantive law.

Ellis v. Grant Thorntnon LLP, 530 F.3d 280,

287 (4th Cir. 2008); Wells v. Liddy, 186 F.3d 505, 527–28 (4th
Cir. 1999).
B.

Analysis
1.

Maryland Wage Act

In Count II, Plaintiffs allege that Allegis and Aerotek
violated the Maryland Wage Act when they failed to make IIP
payments

to

employment.

Plaintiffs

following

the

termination

of

their

The Maryland Wage Act requires employers to pay an

employee “all wages due for work that the employee performed
before the termination of employment.”

Md. Code Ann., Lab. &

Empl. § 3-505(a).
As a preliminary matter, the Court must determine whether
the IIP payments constitute “wages” under the Act.

The Act

defines “wage” as “all compensation that is due to an employee
for employment.”

Id. § 3-501(c)(1).

include

commissions,

bonuses,

remuneration

promised

for

Among other things, wages

severance

service.”

pay,

Id.

§

and

“any

other

3-501(c)(2);

see

Stevenson v. Branch Banking & Trust Corp., 861 A.2d 735, 749
(Md.Ct.Spec.App. 2004) (finding that the Act covers “a severance
benefit

that

is

based

on

the

length

and/or

nature

employee’s service, and promised upon termination”).

8

of

the

Allegis and Aerotek argue the IIP payments are conditioned
on compliance with Section 9, the non-compete provision of the
IIP, and thus do not constitute wages.

Plaintiffs argue the IIP

payments qualify as wages under the Act because the Units were
awarded during the course of their employment and were based on
their work performance.

As Plaintiffs note, Maryland courts

recognize that the Act extends to pay “that represents deferred
compensation

for

work

performed

during

the

employment.”

Stevenson, 861 A.2d at 749.
Those payments, however, are recoverable under the Act only
if

the

payment

performed

before

is

based

his

solely

employment

on

the

ended.

work
See

the
id.

employee
at

750–51

(finding that termination compensation did not constitute wages
under the Act when the payment agreement contained a non-compete
clause); see also Makowski v. Bovis Lend Lease, Inc., No. RDB
10-1844, 2011 WL 1045635, at *10 (D.Md. Mar. 17, 2011) (same).
Indeed, the bright line rule of the Court of Appeals of Maryland
makes clear that “when a payment is exchanged as remuneration
for

an

employee’s

work

but

also

subject

to

any

additional

unfulfilled promises or conditions, the payment falls outside
the definition of ‘wages.’”

Makowski, 2011 WL 1045635, at *8

(citing Catalyst Health Solutions, Inc. v. Magill, 995 A.2d 960,
969 (Md. 2010)) (emphasis in original); see Medex v. McCabe, 811
A.2d 297, 302 (Md. 2002) (“When the payments are dependent upon
9

conditions other than the employee’s efforts, they lie outside
of the definition [of wages].”).

The IIP payments thus do not

constitute wages.
To

be

eligible

for

the

IIP

payments,

the

IIP

Award

Agreements required Plaintiffs to refrain from competing against
Allegis and Aerotek within 250 miles for 30 months following the
termination of their employment.
32).

Moreover,

the

IIP

(Am. Countercl. ¶ 19, ECF No.

Agreements

explicitly

state

that

employees “shall be entitled to receive payment for the Units
only to the extent that . . . [they] have complied with and
fulfilled all of the terms of the [IIP].”
1).

(Countercl. Ex. B, at

Although Plaintiffs earned the Units during the course of

their employment, the IIP Award Agreements state that payment is
contingent

upon

Section 9.

(Id. at 2).

Section
exchange
stating

9

for
that

compliance

confirms
unfulfilled
employees

with

that

the

IIP

IIP,

payments

conditions
must

and

comply

specifically,

are

offered

in

following

employment,

with

non-compete

its

provision “[t]o earn and become entitled to receive payment for
Units,” that Allegis and Aerotek are only obligated to make IIP
payments once the employee complies with Section 9, and that
“[t]he terms and conditions set forth in this Section 9 are
material

and

(Countercl.

Ex.

essential
A,

at

4,

terms

of

6).

As

10

any
a

award

result,

of

the

Units.”

IIP

Award

Agreements are not solely based on the work Plaintiffs performed
before the termination of their employment and do not constitute
wages

under

the

Wage

Act.

Plaintiffs

thus

do

not

state

a

that

can

be

plausible claim for relief under the Act.
Plaintiffs
easily disposed.

proffer

two

additional

arguments

First, Plaintiffs argue the IIP payments are

wages because the IIP Award Agreements characterize IIP payments
as income and compensation for tax purposes.
however, is misplaced.

This argument,

The IIP Award Agreements note that their

characterization is only advisory and that “the Internal Revenue
Service is not bound by such description and the Company does
not guaranty the federal income tax treatment of the award.”
(Countercl.

Ex.

B,

at

3).

Nonetheless,

the

IIP

Award

Agreements’ advisory characterization of IIP payments as income
is irrelevant to the Court’s determination under the Wage Act.
Second, Plaintiffs contend that the IIP payments are not
contingent upon post-employment conditions because Aerotek began
making

payments

employment.

to

Plaintiffs

during

the

course

of

their

Plaintiffs, however, either confuse or blur the

distinction between the two payments offered and the payments at
issue

here.

Indeed,

Aerotek

made

dividend

payments

Plaintiffs while they were employed with the company.

to

The IIP

payments, however, are distinct post-employment payments that
are contingent upon compliance with Section 9.
11

The dividend

payments are separate and have no bearing on the determination
that the IIP payments are not wages under the Maryland Wage Act.
Accordingly, Plaintiffs have failed to state a claim upon
which

relief

may

be

granted,

and

Count

II

of

their

Amended

Counterclaim is dismissed.
2.

Promissory Estoppel

Plaintiffs

allege

that

Allegis

and

Aerotek

“promised

[Plaintiffs] the vested IIP payments as part of the compensation
for their services and compliance with the IIP,” upon which they
relied

to

their

detriment.

(Am.

Countercl.

¶¶

56,

59).

Specifically, Plaintiffs argue Allegis and Aerotek represented
the IIP payments as compensation that offset potential pay cuts
when Plaintiffs were promoted to director-level positions.
To state a claim for promissory estoppel or detrimental
reliance under Maryland law, Plaintiffs must show: (1) a clear
and definite promise by Allegis and Aerotek; (2) a reasonable
expectation by Allegis and Aerotek that the promise will induce
action or forbearance by Plaintiffs; (3) the promise induces
actual and reasonable action or forbearance by Plaintiffs; and
(4) a resulting detriment to Plaintiffs that can only be avoided
by enforcement of the promise.

Pavel Enters., Inc. v. A.S.

Johnson Co., 674 A.2d 521, 532 (Md. 1996) (citing Restatement
(Second) of Contracts § 90(1) (2012)).

12

Plaintiffs pled neither a clear and definite promise by
Allegis and Aerotek, nor a reasonable expectation by Allegis and
Aerotek that their promise will induce action or forbearance,
other

than

those

employment.

required

to

receive

IIP

payments

after

As previously explained, the IIP Award Agreements

clearly and definitively promise IIP payments if the employee
complies with Section 9 of the IIP.

The IIP Award Agreements

provide that employees are entitled to receive IIP payments upon
the termination of their employment, but “only to the extent
that . . . [the employee] ha[s] complied with and fulfilled all
of

the

terms

of

the

[IIP],”

and

that

the

employee

“acknowledge[s] and agree[s] that the terms and conditions set
forth in Section 9 of the [IIP] are material and essential terms
of [the] award of Units and [the employee’s] eligibility to
receive payment . . . .”

(Countercl. Ex. B, at 1–2).

Section 9

requires an employee to promise that he will not compete with
Allegis

or

its

subsidiaries

for

thirty

months

following

the

termination of his employment “to earn and become entitled to
receive payment for the Units . . . .”

(Countercl. Ex. A, at

4).
In fact, IIP payments are so intertwined with Section 9
that

the

return

to

IIP
the

Award

Agreements

Company

any

and

provide
all

that

amounts

employees
that

“shall

[they]

have

received or otherwise are entitled to receive with respect to
13

the [IIP payments]” should Section 9 be invalidated by a court
of

competent

jurisdiction.

(Countercl.

Ex.

B,

at

2–3).

Considering that Plaintiffs “received and signed multiple [IIP]
Award Agreements . . . over a period of years,” it would be
unreasonable for Plaintiffs to conclude otherwise, or to act in
accordance thereof, despite any subsequent oral assertion to the
contrary.

See Pratt v. BAC Home Lending Servicing, LP, No. 12-

cv-00368-AW,

2012

(finding

unreasonable

it

WL

1565232,
for

at
a

*5

(D.Md.

mortgagor

Apr.

to

30,

continue

2012)
making

reduced-rate payments in reliance of a contract despite clear
contractual language to the contrary).
Plaintiffs, however, argue they can rely on Allegis and
Aerotek’s oral assertions because the IIP Award agreement is
ambiguous
argue

as

the

payments

to

several

agreements

constitute

material

are

terms.

ambiguous

wages,

when

as

the

commence,

and

whether

the

merger

Agreement

incorporates

the

entirety

Specifically,
to

of

whether

the

to

right

clause

they

payments

in

the

IIP
the

IIP.

IIP

IIP

Award

The

Court

disagrees.
First, as previously explained, the IIP Award Agreements do
not represent IIP payments as income except for tax purposes.
Second, the agreements clearly state that IIP payments commence
following

the

termination

of

employment

and

continue

periodically so long as the employee complies with Section 9.
14

Lastly, the IIP Award Agreements incorporate every aspect of the
IIP, providing: “This Agreement is intended to conform in all
respects with, and is subject to all applicable provisions of,
the

[IIP],

which

is

incorporated

herein

by

reference.

Inconsistencies between the Agreement and the [IIP] shall be
resolved

in

accordance

with

(Countercl. Ex. B, at 4).

the

terms

of

the

[IIP].”

The IIP and IIP Award Agreements are

thus unambiguous, and it is unreasonable for Plaintiffs to rely
on subsequent oral statements.
Accordingly, Plaintiffs have not sufficiently pled a claim
for promissory estoppel and the motion to dismiss as to Count
III must be granted.
3. Unjust Enrichment/Quantum Meruit
Plaintiffs contend that they may bring a claim for unjust
enrichment and quantum meruit if this Court finds the IIP Award
Agreement unenforceable.

Unjust enrichment and quantum meruit

are quasi-contractual claims.

Cnty. Comm’rs of Caroline Cnty.

v. J. Roland Dashiell & Sons, Inc., 747 A.2d 600, 607 (Md.
2000).

Under Maryland law, quasi-contractual claims are not

actionable

when

an

express

contract

exists

between

parties that covers the subject matter of the claim.

the

two

Id.; see

also Swedish Civil Aviation Admin. v. Project Mgmt. Enters.,
Inc.,

190

internal

F.Supp.2d
quotation

785,
marks

792

omitted).
15

(D.Md.

2002)

(citations

Here,

the

IIP

and
Award

Agreement is an express contract that covers the disbursement of
and conditions placed upon the IIP payments.

Plaintiffs have

neither questioned its existence nor its legality.
Nonetheless, Plaintiffs also argue they may allege unjust
enrichment/quantum

meruit

as

an

alternative

and

inconsistent

legal theory to their breach of contract claim under Federal
Rule of Civil Procedure 8(d).

Plaintiffs, however, are barred

from alleging unjust enrichment/quantum meruit as an alternative
theory

when

there

is

an

express

evidence of bad faith or fraud.

contract

and

there

is

no

See Doll v. Ford Motor Co., 814

F.Supp.2d 526, 551 (D.Md. 2011) (sustaining alternative breach
of contract and unjust enrichment claims under Rule 8(d) when
the plaintiff adequately pled a claim for fraud).

Because an

expressed contract exists that covers the subject matter of this
claim and Plaintiffs have not also alleged fraud, their claim
for unjust enrichment/quantum meruit will be dismissed.4

4

In their Amended Counterclaim, Plaintiffs allege that
Allegis and Aerotek’s acceptance of their service made it
inequitable for Allegis and Aerotek to retain the benefit of
their service without paying the IIP payments.
Allegis and
Aerotek argue the IIP payments were not for services rendered,
but rather were an incentive to promote the best interest and
the economic growth of the company. In light of the fact that
Plaintiffs may not raise a claim for unjust enrichment or
quantum meruit here, it is unnecessary for the Court to address
these arguments.
16

III. CONCLUSION
For

the

Defendant’s

foregoing

Motion

to

reasons,
Partially

it

Dismiss

Counterclaim (ECF No. 35) is GRANTED.
Plaintiffs’
Order

Amended

follows,

and

Counterclaim
a

is

ordered

Plaintiffs’

that

Amended

Counts II, III, and IV of

are

preliminary

hereby

dismissed.

Scheduling

A

Order

separate
will

be

issued.
Entered this 17th day of April, 2013

/s/
____________________________
George L. Russell, III
United States District Judge

17