THUREEN v. COMPUTER SCIENCES CORPORATION

Filing 22

MEMORANDUM OPINION SIGNED BY HONORABLE TIMOTHY J. SAVAGE ON 11/9/16. 11/9/16 ENTERED AND COPIES E-MAILED. (va, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
SHERI L. THUREEN

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:
:
:
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v.
COMPUTER SCIENCES
CORPORATION

CIVIL ACTION

NO. 15-4292

MEMORANDUM OPINION
Savage, J.

November 9, 2016

Sheri Thureen has sued her former employer, Computer Sciences Corporation
(“CSC”), claiming it did not award her shares of stock to which she is entitled under a
stock award agreement.

She asserts causes of action for breach of contract and

violation of the Pennsylvania Wage Payment and Collection Law (“WPCL”). Moving to
dismiss the complaint, CSC primarily argues that Thureen waived her right to sue for
breach of contract in the agreement, and payments under the award do not constitute
wages for purposes of the WPCL.
Applying principles of contract interpretation, we find that the agreement’s
language covering waiver of the right to sue is ambiguous and must be construed
against CSC.

The ambiguity raises a question regarding the parties’ reasonable

expectations. We also conclude that Thureen has stated a cause of action for violation
of the WPCL. Even if the parties had agreed to the waiver of the right to sue, the waiver
is unenforceable as to the WPCL claim. Therefore, we shall deny CSC’s motion to
dismiss the complaint.
Background
Thureen was hired by CSC in 1997. During her career there, she was promoted

several times, ultimately achieving the position of “President of UK and Ireland Health
Care of CSC” in April, 2011.1 In 2014, after being diagnosed with cancer, she took a
one-year medical leave of absence. On February 2, 2015, she requested an extension
of her leave, using accrued sick and vacation time.2 CSC refused her request. Instead,
it terminated her employment.
In the meantime, on June 2, 2012, CSC had granted Thureen 6,222 restricted
stock units (“RSUs”) to vest in stages over three years provided specified earning
targets were met.3 The Award Agreement granting the RSUs contained a multiplier
provision. It provided that if earnings-per-share reached or exceeded $3.36 in the third
fiscal year, Thureen would receive 12,444 shares.

In the event of termination for

disability, the award would be pro-rated.4 Both at the time of Thureen’s termination and
at the end of fiscal year 2015, CSC’s profits exceeded the earnings-per-share threshold.
The parties dispute whether Thureen was entitled to the benefit of the multiplier.
She had already received 3,111 vested shares for fiscal years 2013 and 2014. After her
termination, she was awarded an additional 2,937 shares, which represented a pro-rata
distribution for the final year.

CSC did not apply the multiplier.

CSC argues that

because she was terminated before the end of fiscal year 2015, she was entitled only to
a pro-rata distribution and the multiplier did not apply.
Thureen insists she is entitled to a full, rather than a pro-rated, distribution

1

Compl. (Doc. No. 1) ¶ 25.

2

Id. ¶¶ 44–46; Mot. to Dismiss (Doc. No. 10-1) at 3.

3

Compl., Ex. A (Doc. No. 1-1), App’x C. The Award Agreement and her official notification letter
are attached to the complaint.
4

Id. § 4(b)(i).
2

because her accrued vacation and sick leave extended her employment through the
end of fiscal year 2015.5

She contends the multiplier applies because the earnings-

per-share goal had been met at the time of her termination.
Standard of Review
When considering a motion to dismiss for failure to state a claim under Federal
Rule of Civil Procedure 12(b)(6), all well-pleaded allegations in the complaint are
accepted as true and viewed in the light most favorable to the plaintiff. Powell v. Weiss,
757 F.3d 338, 341 (3d Cir. 2014).

The complaint must contain a “short and plain

statement of the claim showing that the pleader is entitled to relief,” Fed. R. Civ. P.
8(a)(2), giving the defendant “fair notice of what the . . . claim is and the grounds upon
which it rests.” Erickson v. Pardus, 551 U.S. 89, 93 (2007) (quoting Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 555 (2007)). Although this standard “does not require ‘detailed
factual allegations’ . . . it demands more than an unadorned, the-defendant-unlawfullyharmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly,
550 U.S. at 555).
To survive a motion to dismiss, the complaint must plead “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). The plaintiff must allege
facts that indicate “more than a sheer possibility that a defendant has acted unlawfully.”
Id.

Pleading only “facts that are ‘merely consistent with’ a defendant’s liability” is

insufficient and cannot survive a motion to dismiss. Id. (citing Twombly, 550 U.S. at
557). With these standards in mind, we shall accept as true the facts as they appear in

5

Compl. ¶¶ 45, 49.
3

Thureen’s complaint and draw all possible inferences from those facts in her favor.
Analysis
CSC contends Thureen waived her breach of contract claim in the Award
Agreement. It relies upon Section 18(k) which provides that “no claim or entitlement to
compensation or damages shall arise from forfeiture of the Award resulting from
termination of the Employee’s employment by the Employer or Company (or an
Subsidiary) for any reason whatsoever . . . .”6 Thureen argues that this provision does
not apply because her claim does not arise from forfeiture of her award.
Resolution of the disagreement depends on whether Section 18(k) is interpreted
broadly or narrowly. The expansive interpretation, urged by CSC, is that the award
recipient gives up any and all claims arising from the loss of the award “resulting from
termination . . . for any reason whatsoever.”

The narrow reading, advanced by

Thureen, limits the waiver to claims arising “from forfeiture of the Award.”

The

conflicting interpretations are created by the language of the provision itself. Thus, we
must apply rules of contract interpretation.
The primary task in contract interpretation is determining the intent of the parties.
Am. First Fed. Credit Union v. Soro, 359 P.3d 105, 106 (Nev. 2015).7

When the

contract language is clear and unambiguous, the court construes the contract as a
matter of law. Davis v. Beling, 278 P.3d 501, 515 (Nev. 2012). On the other hand,
where the contract is ambiguous, it is for the fact finder to ascertain the parties’ intent.
Anvui, LLC v. G.L. Dragon, LLC, 163 P.3d 212, 216 (Nev. 2007). In determining the
6

Compl., Ex. A § 18(k).

7

The Award Agreement states that it shall be construed and enforced in accordance with Nevada
law. Id. § 19. Thus, we apply Nevada law.
4

meaning of a provision, effect must be given to all the provisions in the contract. Bielar
v. Washoe Health Sys., Inc., 306 P.3d 360, 364 (Nev. 2013); see also Ringle v. Bruton,
86 P.3d 1032, 1039 (Nev. 2004) (“In determining the parties’ intent, the trier of fact must
construe the contract as a whole, considering of the contract’s subject matter and
objective, the circumstances of its drafting and execution, and the parties’ subsequent
conduct.”).
Merely because the parties interpret the contract differently does not mean it is
ambiguous. Galardi v. Naples Polaris, LLC, 301 P.3d 364, 366 (Nev. 2013). Only
where different constructions are reasonably capable of more than one understanding is
a contract ambiguous. Am. First, 359 P.3d at 106; see also Galardi, 301 P.3d at 366.
Where a term is ambiguous, it is construed against the drafter. Am. First, 359 P.3d at
106 (quoting Anvui, 163 P.3d at 215–16).
Applying these principles, we conclude that Section 18(k) is ambiguous. It is
capable of two reasonable interpretations. One is that it bars suit only where the claim
is based on the forfeiture of the award. The other precludes all actions, no matter the
basis.
The narrow interpretation of Section 18(k) bars a claim against CSC when the
employee forfeits the award as provided in the Agreement. When Section 18(k)
references forfeiture, the only provision that informs the application of Section 18(k) is
Section 6. There is no other provision defining forfeiture.
Section 6, entitled “Recoupment and Forfeiture,” provides that “[i]f the Employee
breaches any of the covenants of Section 6(b)(i), (ii) or (iii) hereof prior to the Settlement

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Date for the RSU, the RSU shall be terminated and forfeited.”8

Events triggering

forfeiture are the disclosure or use of confidential information; solicitation of CSC’s
employees, clients and prospective clients; and participation in activity in competition
with CSC.9
CSC does not argue that any of these grounds justifying forfeiture are present.
Indeed, CSC acknowledges Thureen’s right to an award under the Agreement. It does
not assert that she forfeited the award by breaching the Agreement. In fact, CSC made
a pro-rata distribution for the period that Thureen was employed in FY2015.
After Thureen had exhausted her medical leave, CSC refused to allow her to use
accrued vacation and sick leave.

Then, CSC terminated her because she was

medically unable to continue working. Her departure was due to her disability.
An employee’s termination due to disability calls for a pro-rata distribution, not a
forfeiture of the award. Section 4(b)(i) provides “the Company shall settle the unvested
portion of the RSUs in full by delivering a pro-rated amount of the Target Units in
accordance with Section 2, with such pro-ration based on the Employee’s Period of
Service during the applicable performance period.”
The broad interpretation of Section 18(k) bars any “claim or entitlement to
compensation” arising out of termination “for any reason whatsoever.” That section
contains an internal conflict. Other language in the provision appears to limit the waiver
to “forfeiture,” which implicates Section 6(a)(ii). As we have learned, that section limits
forfeiture to specified conduct.

8

Id. § 6(a)(ii).

9

Id. § 6(b).
6

The conflict would not exist had CSC not used the word “forfeiture” in Section
18(k). Had the provision been drafted differently, ambiguity could have been avoided.
For example, if CSC intended to preclude any and all lawsuits, it could have drafted the
provision to read: “no claim or entitlement to compensation or damages with respect to
the Award resulting from termination . . . for any reason whatsoever.”
Instead, it inserted the words “claims arising from forfeiture.”

It did not.

Had it not injected

forfeiture into the section, there would be no ambiguity.
Given the ambiguity, we cannot construe the provision as a matter of law. It is
for the fact finder to determine the parties’ intent. Therefore, we shall not dismiss
Thureen’s breach of contract claim.
Pennsylvania Wage Payment and Collection Law
CSC argues that the Pennsylvania Wage Payment and Collection Law does not
apply because the shares were not compensation. It relies on the characterization in
the Award Agreement that the stock grants were not “compensation of any kind.”10
The WPCL “provides employees a statutory remedy to recover wages and other
benefits that are contractually due to them.” Braun v. Wal-Mart Stores, Inc., 24 A.3d
875, 953 (Pa. Super. 2011) (quoting Oberneder v. Link Comput. Corp., 696 A.2d 148,
150 (Pa. 1997)), aff’d, 106 A.3d 656 (Pa. 2014). “Wages” include equity interests that
are offered to an employee for any reason related to employment. Hartman v. Baker,
766 A.2d 347, 353 (Pa. Super. 2000) (citing Bowers v. NETI Techs., Inc., 690 F. Supp.
349, 353 (E.D. Pa. 1988)). Thus, benefits, not just wages, are protected by the WPCL.
The award was a benefit intended to ensure continued employment with the

10

Id. § 18(g).
7

company and to reward the employee for her performance contributing to the
company’s success.

The award was calculated based on CSC’s performance.

Thureen’s official award notification explains that the “awards are designed to support
our immediate turnaround and long term business objectives, create enhanced
incentives and rewards for sustained levels of performance, and more closely align the
interests of our management team with those of our shareholders.”11 It was an earned
benefit.
Contrary to its current position, CSC did consider the award compensation. As
revealed in the email notifying Thureen of the stock award, Lisa Goldey of Human
Resources referred to the award as an “important component of [Thureen’s] FY2013
total direct compensation package.”12
Because Thureen’s award was a benefit related to her employment, she has
stated a claim under the WPCL. Furthermore, even if the waiver in Section 18(k) barred
her action on the contract claim, it cannot preclude her claim under the WPCL. Rights
under the WPCL cannot “be contravened or set aside by private agreement.” 43 Pa.
Cons. Stat. § 260.7. Consequently, an employer and an employee may not waive an
employee’s WPCL rights. See O’Donnell v. LRP Publ’ns, 694 F. Supp. 2d 350, 358–59
(E.D. Pa. 2010). Because Thureen’s award was a benefit covered by the WPCL and
could not be waived, she has stated a cause of action under the WPCL.
Sufficiency of Complaint
CSC argues that the complaint is insufficient to state a cause of action because it

11

Compl., Ex. B (Doc. No. 1-2).

12

Id.
8

does not specifically identify the breached provisions of the Award Agreement. The
Agreement itself is attached as an exhibit to the complaint.

The allegations read

together with the attached agreement state a cause of action for breach of contract and
violation of the WPCL.
Conclusion
Because a fact finder must determine whether the parties intended to preclude all
claims arising out of a dispute over entitlement to an award in the event of termination,
we cannot dismiss Thureen’s contract cause of action as a matter of law. Because the
stock award is compensation for the purposes of the WPCL, Thureen has stated a
cause of action under the WPCL. Therefore, we shall deny CSC’s motion to dismiss.

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