Korba v. Stanley Black & Decker, Inc.
Filing
16
MEMORANDUM OPINION. Signed by Chief Judge Deborah K. Chasanow on 11/30/12. (sat, Chambers)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
:
DOUGLAS KORBA
:
v.
:
Civil Action No. DKC 12-1989
:
STANLEY BLACK & DECKER, INC.
:
MEMORANDUM OPINION
Presently pending and ready for review in this wage payment
and breach of contract case is the motion to dismiss the amended
complaint or, in the alternative, for summary judgment filed by
Defendant Stanley Black & Decker, Inc.
(ECF No. 13).
The
issues have been fully briefed, and the court now rules, no
hearing being deemed necessary.
Local Rule 105.6.
For the
following reasons, the motion – which will be construed as one
for summary judgment – will be granted.1
I.
Background
A.
Factual Background
Except
as
otherwise
noted,
the
following
facts
are
undisputed and are presented in the light most favorable to
Plaintiff Douglas Korba, the non-moving party.
In 1997, Korba
began
a
working
for
Stanley
Black
&
Decker,
Connecticut
corporation with offices in Prince George’s County, Maryland.
1
Defendant’s motion to dismiss the original complaint (ECF
No. 9) will be denied as moot.
At all times relevant to this action, Korba worked for Stanely
Black & Decker in Maryland.
Korba participated in Defendant’s
Management Incentive Compensation Plan (“MICP” or “the Plan”),
which
he
describes
performance
as
a
requirements
bonus
and
December 31 of each year.”
Korba,
bonuses
under
the
plan
goals
“based
from
January
(ECF No. 12 ¶ 10).
MICP
are
upon
typically
certain
1
through
According to
“earned
as
of
December 31,” although they are not paid out until “March or
April of the following year.”
(Id. ¶ 12).
Plaintiff avers that
although he “never went one year without receiving a payment
under the MICP” during his time with Stanley Black & Decker,
there were years “when other employees did not receive payments
under the MICP.”
(ECF No. 14-2, Korba Aff. ¶ 6).
In years
“when everyone received payments under the MICP,” Korba states
that he “consistently received higher payments” based on his
status as a “high performer.”
(Id.).
According to Plaintiff,
“the payment of his MICP Bonus was promised to him in exchange
for performance of his job.”
At
an
unknown
date,
(ECF No. 12 ¶ 7).
Stanley
Black
&
Decker
presented
Plaintiff a document regarding the MICP bonus criteria for the
period
from
Criteria”).
January
1
to
December
31,
2011
(“the
2011
MICP
This document describes the MICP as “an annual cash
award opportunity contingent upon achieving certain corporate,
divisional
and
individual
goals.”
2
(ECF
No.
12-1,
at
2).
According
to
the
2011
determined
according
corporate
objectives,
MICP
to
Criteria,
the
bonuses
following
which
accounted
were
weighted
for
to
be
criteria:
25%
of
award
determinations; divisional objectives, which accounted for 75%;
and
individual
objectives,
which
“modifier” of award amounts.
functioned
(Id.).
as
a
potential
With respect to corporate
objectives, the 2011 MICP Criteria states that the following
metrics “may” be considered:
earnings per share, cash flow,
operating margins, and working capital turns.
(Id.).
With
respect to individual objectives, the 2011 MICP Criteria states
that
an
employee’s
rating
as
“exceptional,”
“solid,”
or
“marginal” “may” result in “a discretionary premium or penalty.”
(Id. at 2, 6).
Among
other
provisions,
also states that:
the
2011
MICP
Criteria
document
(1) “[t]he Plan does not affect the terms of
any employment agreements that may exist between the Company and
any Participant” (ECF No. 12-1, at 4); (2) “[p]articipation will
be
established
Board
of
by
Directors
the
.
Plan
.
.
Administrator”
may
at
any
time
suspend, or terminate the Plan” (id. at 5);
(id.);
elect
(3) “[t]he
to
amend,
and (4) “[a]wards
will be forfeited for voluntary termination or termination with
cause prior to the payment date” (id. at 4).
The document
further states that all awards under the MICP are “Subject To
The Terms And Conditions As Included In The MICP Plan Document”
3
(id. at 3), although Plaintiff contends that he never received a
copy of the MICP Plan Document (ECF No. 14-2, Korba Aff. ¶ 3).
According to Plaintiff, he became eligible for a $50,000
bonus
under
performance
the
in
2011
2011.”
MICP
(ECF
Criteria
No.
12
“based
¶ 6).
upon
Before
his
job
Plaintiff
voluntarily resigned from Stanley Black & Decker on January 14,
2012, he requested payment of his bonus.
Stanley Black & Decker
refused to pay him any amount, even though Plaintiff contends
that, as of the date of his resignation, he “had completed all
requirements for payment of his MICP Bonus, achieved all of the
goals required by the plan and earned his bonus.”
(Id. ¶ 9).
Additionally, “other eligible recipients” apparently did receive
2011 MICP bonuses from Stanley Black & Decker in March 2012.
(Id. ¶ 14).
B.
Procedural Background
On May 14, 2012, Korba filed a complaint against Stanley
Black & Decker in the Circuit Court for Prince George’s County,
Maryland, asserting one count for breach of contract and one
count for violation of the Maryland Wage Payment and Collection
Act, Md. Code. Ann., Lab. & Empl. §§ 3-501 et seq. (“MWPCL”).
(ECF No. 2).
In addition to contractual damages, Korba seeks
attorneys’ fees and treble damages pursuant to the MWPCL.
July
3,
2012,
Defendant
removed
the
action
to
this
asserting diversity jurisdiction under 28 U.S.C. § 1332.
4
On
court,
(ECF
No. 1).
filed
One week later, on July 10, Stanley Black & Decker
a
motion
to
dismiss
Fed.R.Civ.P. 12(b)(6).
Defendant
choice
of
contended
law
Plaintiff’s
(ECF No. 9).
that
provision
the
MICP
that
complaint
pursuant
to
Among other arguments,
Plan
requires
Document
it
to
be
contains
a
construed
according to Connecticut law, barring Plaintiff’s MWPCL claim.
(ECF No. 9-1, at 6-9).
On July 25, Plaintiff filed an amended
complaint as a matter of course, see Fed.R.Civ.P. 15(a)(1)(B),
adding a new count for violation of the Connecticut wage payment
law, Conn. Gen. Stat. §§ 558 et seq.
(ECF No. 12).
On August
8, Stanley Black & Decker filed a motion to dismiss Plaintiff’s
amended complaint or, in the alternative, for summary judgment.
(ECF No. 13).
NO.
14),
to
On August 27, Plaintiff filed an opposition (ECF
which
he
attached
Defendant timely filed a reply.
II.
an
affidavit
(ECF
No.
14-1).
(ECF No. 15).
Standard of Review
Because both parties rely on matters outside the pleadings,
Defendant’s motion will be treated as one for summary judgment.
See Walker v. True, 399 F.3d 315, 319 n. 2 (4th Cir. 2005); Offen
v. Brenner, 553 F.Supp.2d 565, 568 (D.Md. 2008).
Summary judgment may be entered only if there is no genuine
issue as to any material fact and the moving party is entitled
to judgment as a matter of law.
Fed.R.Civ.P. 56(a); Celotex
Corp. v. Catrett, 477 U.S. 317, 322 (1986); Emmett v. Johnson,
5
532
F.3d
291,
297
(4th
Cir.
2008).
Summary
judgment
is
inappropriate if any material factual issue “may reasonably be
resolved in favor of either party.”
Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 250 (1986); JKC Holding Co. LLC v. Wash.
Sports Ventures, Inc., 264 F.3d 459, 465 (4th Cir. 2001).
“A party opposing a properly supported motion for summary
judgment ‘may not rest upon the mere allegations or denials of
[his]
pleadings,’
but
rather
must
‘set
forth
specific
showing that there is a genuine issue for trial.’”
facts
Bouchat v.
Baltimore Ravens Football Club, Inc., 346 F.3d 514, 522 (4th Cir.
2003) (quoting former Fed.R.Civ.P. 56(e)).
proof . . . will
not
suffice
to
prevent
“A mere scintilla of
summary
judgment.”
Peters v. Jenney, 327 F.3d 307, 314 (4th Cir. 2003).
“If the
evidence is merely colorable, or is not significantly probative,
summary judgment may be granted.”
249–50 (citations omitted).
Liberty Lobby, 477 U.S. at
At the same time, the facts that
are presented must be construed in the light most favorable to
the party opposing the motion.
Scott v. Harris, 550 U.S. 372,
378 (2007); Emmett, 532 F.3d at 297.
III. Analysis
A.
At
applies.
Choice of Law
the
outset,
Defendant
the
parties
argues
that
dispute
which
Connecticut
law
state’s
applies
law
by
virtue of a choice of law provision in the MICP Plan Document.
6
(ECF No. 13-1, at 6-11).
Plaintiff counters that Maryland law
governs
received
because
he
never
a
copy
of
the
MICP
Plan
Document and therefore cannot be bound by its choice of law
provision.
(ECF No. 14-1, at 2-3; ECF No. 14-2 ¶ 3).
Plaintiff
also argues that he never had an opportunity to bargain with
Stanley Black & Decker regarding “any of the terms of the MICP,”
such that the MICP “is essentially, a contract of adhesion.”
(ECF No. 14-1, at 3).
As set forth below, Plaintiff’s claims
fail regardless of whether Maryland or Connecticut law applies.
Therefore, the choice of law issue need not be resolved.
B.
Statutory Wage Payment Claims
Defendant first contends that Plaintiff’s statutory claims
fail
because
MICP
bonuses
are
not
“wages”
as
defined
by
Connecticut or Maryland law given that Stanley Black & Decker
had complete discretion regarding whether to make any awards
under the Plan.
(ECF No. 13-1, at 15, 20).
Korba, in turn,
argues that he completed all requirements to earn his bonus
under the 2011 MICP Plan Criteria when the fourth quarter of
2011 ended, at which point Stanley Black & Decker no longer had
discretion as to whether or not to pay him.
5-7).
(ECF No. 14-1, at
Defendant is correct because bonuses are not recoverable
as “wages” under either Maryland or Connecticut law if they are
awarded at the sole discretion of the employer.
7
Connecticut’s wage payment statute requires an employer to
pay a terminated employee’s “wages” within a certain period of
time, the length of which depends on whether the employee’s
termination was voluntary.
“Wages”
are
defined
as
See Conn. Gen. Stat. Ann. § 31-71c.
“compensation
for
labor
or
services
rendered by an employee, whether the amount is determined on a
time, task, piece, commission or other basis of calculation.”
Id.
§
31-71a(3).
Under
the
Connecticut
Supreme
Court’s
interpretation of this definition, compensation must meet three
requirements to be classified as “wages”:
“(1) the award of
compensation must be non-discretionary, (2) the amount of the
compensation must be non-discretionary, and (3) the amount of
the
bonus
must
be
dependent
on
the
employee’s
performance.”
Datto Inc. v. Braband, 856 F.Supp.2d 354, 271 (D.Conn. 2012)
(synthesizing
decisions).
a
trio
of
recent
Connecticut
Supreme
Court
Thus, a bonus that is required to be awarded by an
employment contract and that is calculated based on a precise
formula
set
forth
in
such
an
agreement
constitutes
“wages.”
Ass’n Resources, Inc. v. Wall, 298 Conn. 145, 177-78 (2010).
By
contrast, bonuses are not “wages” when they are awarded at the
sole discretion of the employer as part of a stand-alone, opt-in
bonus
plan.
Weems
v.
Citigroup,
(2008).
8
Inc.,
289
Conn.
769,
782
Treatment of bonuses under Maryland’s wage payment statute
is much to the same effect.
Pursuant to the MWPCL:
[E]ach employer shall pay an employee or the
authorized representative of an employee all
wages due for work that the employee
performed
before
the
termination
of
employment, on or before the day on which
the employee would have been paid the wages
if the employment had not been terminated.
MD Code Ann., Lab. & Employ., § 3-505(a) (2004).
The statute
defines “wages” as “all compensation that is due to an employee
for employment.”
Id. § 3-501(c)(1).
The term “wage” includes
“a bonus,” “a commission,” “a fringe benefit,” or “any other
remuneration promised for service.”
added).
Id. § 3-501(c)(2) (emphasis
Importantly, not all bonuses are “wages.”
The Maryland
Court of Appeals has held that a bonus constitutes “wages” for
purposes of the MWPCL “only when it has been promised as part of
compensation.”
Whitting-Turner Contracting Co. v. Fitzpatrick,
366 Md. 295, 305 (2001) (emphasis added) (profit-sharing bonus
did not constitute “wages” because it was not promised as part
of the employee’s compensation package for the time period in
question).
A bonus that is awarded at the discretion of the
employer is “merely a gift, a gratuity, revocable at any time
before delivery” and is not covered by the MWPCL.
Id. at 306;
see also Varghese v. Honeywell Int’l, Inc., 424 F.3d 411, 420
(4th Cir. 2005) (Maryland law) (former employee’s stock options
were not “wages” payable under the MWPCL because the employer
9
“always retained the discretion” not to award them); Mazer v.
Safeway, Inc., 398 F.Supp.2d 412, 426 (D.Md. 2005) (bonus was
not “wages” because it was not “promised” given that the former
employee “did not know whether he would ever receive a bonus”).
Thus,
under
irrelevant
both
whether
discretionary
bonus
Maryland
an
and
employee
when
his
Connecticut
may
be
employment
law,
eligible
ends.
it
is
for
a
Rather,
the
critical question is whether an employee is entitled to a nondiscretionary bonus at the time of his termination based on a
contractual
obligation
or
binding
promise
undertaken
by
his
employer.
Applying these principles here, bonuses under the MICP are
not “wages” under either Maryland or Connecticut law because
they
are
Decker.
awarded
at
the
sole
discretion
of
Stanley
Black
&
In his amended complaint, Plaintiff generally alleges
that he was “promised” payment of an MICP bonus “in exchange for
performance of his job.”
(ECF No. 12 ¶ 7).
Yet the only
document that Plaintiff cites to as evidence of his entitlement
to a $50,000 bonus for 2011 establishes that Stanley Black &
Decker always retained discretion as to whether to award bonuses
under the MICP.
Specifically, the 2011 MICP Criteria document
states that Stanley Black & Decker’s Board of Directors “may at
any time elect to amend, suspend, or terminate the Plan.”
No. 12-1, at 5) (emphasis added).
10
(ECF
Under the section titled
“Eligibility,” the 2011 MICP Criteria document also states that
“[p]articipation will be established by the Plan Administrator”
and that “[t]he Plan does not affect the terms of any employment
agreements
that
Participant.”
MICP
bonus
may
exist
(Id. at 4).
in
2011
was
between
the
Company
and
any
Thus, Korba’s eligibility for an
at
sole
discretion
of
the
Plan
Administrator and was not required by any contractual provision
of an employment agreement.
Moreover, the 2011 MICP Criteria document notes that all
awards are subject to the terms and conditions included in the
MICP Plan Document, an authenticated copy of which Defendant
attaches to its motion.
makes
the
explicit,
(ECF No. 13-4).
discretionary
stating
that
nature
a
of
The MICP Plan Document
MICP
subcommittee
of
bonuses
even
Stanley
more
Black
&
Decker’s Board of Directors has “sole discretion” to make “final
and binding” decisions regarding (1) whether to “grant Awards”;
(2) “the persons to whom and the times or times at which Awards
shall be granted”; and (3) “the terms, conditions, restrictions
and performance criteria . . . relating to any Award.”
4).
Combined,
these
provisions
unequivocally
(Id. at
establish
that
awards under the MICP are “awarded solely on a discretionary
basis,” Zeems, 289 Conn. at 782, and were not “promised” as part
of
Korba’s
employment
agreement,
11
Whitting-Turner,
366
Md.
at
305,
belying
Plaintiff’s
unsupported
allegations
to
the
contrary.
Korba’s argument that his 2011 MICP bonus somehow became
non-discretionary at the conclusion of 2011 also is unavailing.
As Plaintiff notes, the 2011 MICP Criteria document does state
that “[a]wards will be determined as soon as practical after
[Defendant’s] Q4 and total year results are released in January.
We expect payment of awards to occur in March or April following
the plan year.”
(ECF NO. 12-1, at 6).
Contrary to Plaintiff’s
argument that “[i]f goals are met [as of December 31, 2011],
employees are paid,” this provision does nothing to convert the
payment of MICP bonuses from being discretionary to mandatory.
At
most,
this
clause
sets
a
cut-off
date
for
determining
Stanley Black & Decker employee’s eligibility for an award.
a
It
does not establish that Korba became entitled to an award at the
end of 2011 given that, “at any time,” Defendant’s Board of
Directors had the discretion to “amend, suspend, or terminate
the Plan.”
(ECF NO. 12-1, at 5).
In light of this discretion,
and because Plaintiff does not point to any other facts that
would
allow
reasonable
Plaintiff
promised
a
a
jury
$50,000
to
MICP
conclude
bonus
that
in
Defendant
exchange
for
performing his job duties during 2011, “there c[ould] be no
proper
expectation”
of
payment
Varghese, 424 F.3d at 420.
12
by
Korba
when
he
resigned.
Because Stanley Black & Decker always retained discretion
as to whether to award an MICP bonus to Korba, Plaintiff’s claim
under the Connecticut wage payment statute fails as a matter of
law.
Plaintiff’s
MWPCL
documents
that
Korba
allegation
that
Defendant
count
likewise
relies
on
fails
directly
“promised”
him
exchange for his job performance in 2011.2
an
because
the
contradict
his
MICP
bonus
in
Defendant therefore
is entitled to summary judgment on both of Plaintiff’s statutory
wage payment claims.
C.
As
Breach of Contract Claim
to
Plaintiff’s
breach
of
contract
claim,
Defendant
contends that Stanley Black & Decker never extended a definite
offer for the payment of a bonus to Plaintiff and therefore no
valid
contract
Connecticut law.
was
ever
formed
under
(ECF No. 13-1, at 21-24).
either
Maryland
or
Korba rejoins that
the MICP became “a contract for payment” at the end of 2011, at
which point he had “achieved the necessary targets to establish
his right to be paid his bonus.”
2
(ECF No. 14-1, at 9).
Here
In light of these conclusions, Defendant’s alternative
arguments as to why Plaintiff’s statutory claims must fail –
including (1) that MICP bonuses are based primarily on corporate
earnings rather than individual performance; (2) that the amount
of MICP bonuses is indeterminate and discretionary; and
(3) that, in any event, Plaintiff did not meet the MICP’s
requirement that he be employed on the date when MICP awards are
paid – need not be reached.
13
again,
Defendant’s
position
has
merit
because,
under
both
Connecticut and Maryland law, a discretionary bonus plan does
not give rise to an enforceable contract.
Under Connecticut law, in order to establish a claim for
breach of contract, a plaintiff must show “the formation of an
agreement, performance by one party, breach of the agreement by
the other party and damages.”
Conn.App.
773,
780–81
Bross v. Hillside Acres, Inc., 92
(2006).
“[U]nder
appropriate
circumstances statements in an employee handbook or manual may
give rise to an implied contract between an employer and its
employee.”
(1989).
Christensen v. Bic Corp., 18 Conn.App. 451, 457
Statements regarding an employee bonus plan cannot,
however, form the basis of an enforceable contract where its
terms give the employer discretion as to whether to award a
bonus at all.
Borden v. Skinner Chuck Co., 150 A.2d 607, 611
(Conn. Super. 1958).
In Borden, a group of employees cited an
employee handbook as the source of their employer’s contractual
obligation to pay a year-end bonus.
The relevant provision in
the handbook stated that it had been customary for the company
to make a year-end payment to employees for over a decade, but
noted that “[t]he amount of such payment, if any, depends upon
the earnings available from operations, and is entirely at the
discretion of the Board of Directors.”
Id. at 609.
The court
held that the inclusion of this discretionary language, combined
14
with other circumstances, meant that “some further declaration
or
action”
was
required
on
“definite offer” to exist.
the
part
of
the
Id. at 610-11.
employer
for
a
“Without an offer to
start with, there obviously could be no contract.”
Id. at 611;
see also Christensen, 18 Conn.App. at 457 (“‘[A] promise must be
sufficiently
understand
certain
what
in
the
its
terms
promisor
to
enable
undertakes.’”
the
court
(quoting
1
to
S.
Korbaton Contracts (3d ed.) § 24)).
Likewise in Maryland, to succeed on a breach of contract
claim, a plaintiff must prove that the opposing party owed a
contractual obligation and breached that obligation.
NationsBank, N.A., 365 Md. 166, 175 (2001).
legal
principles
recognize
that
no
Taylor v.
“Longstanding . . .
enforceable
contractual
obligation is created when an employer offers employees a bonus
for
doing
pursuant
that
to
which
the
an
terms
employee
of
the
is
already
engagement
required
of
to
do
employment.”
Windesheim v. Verizon Network Integration Corp., 212 F.Supp.2d
456, 462 (D.Md. 2002) (citing Johnson v. Schenley Distillers
Corp.,
181
Md.
31
incentive
plan
“reduce,
modify,
(1942)).
bestowed
recover
Thus,
in
Windesheim,
the
employer
with
the
or
withhold
incentive
where
an
discretion
to
pay”
for
any
appropriate reason, the plan did not constitute an offer to
enter
into
a
binding
contract
Windesheim, 212 F.Supp.2d at 462.
15
for
payment
of
a
bonus.
In his amended complaint, Plaintiff alleges that he and
Stanley Black & Decker “entered into an agreement, for payment
by Defendant to Plaintiff of his MICP Bonus, payable upon []
completion of all requirements and goals.”
(ECF No. 12 ¶ 20).
In his opposition, Korba points to both the 2011 MICP Criteria
document and the MICP Plan Document as the source of Black &
Decker’s contractual obligation to pay him a bonus.
(ECF No.
14-1, at 9-10).
As discussed above, however, both of these
documents
clearly
establish
unlimited
discretion
under the MICP.
neither
document
that
regarding
Stanley
whether
Black
to
award
&
Decker
any
has
bonuses
Hence, under both Maryland and Connecticut law,
can
be
construed
as
a
definite
offer
by
Defendant to pay Plaintiff an MICP bonus for 2011 or any other
year.
and
Because a contract cannot exist without a definite offer
because
establishing
Plaintiff
an
does
express
or
not
cite
implied
to
any
contract
other
source
between
him
as
and
Stanley Black & Decker, Defendant is entitled to judgment on
Korba’s breach of contract claim.
IV.
Conclusion
For the foregoing reasons, the motion to dismiss or, in the
alternative,
for
summary
judgment
Black & Decker will be granted.
filed
by
Defendant
Stanley
A separate order will follow.
/s/
DEBORAH K. CHASANOW
United States District Judge
16
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