Opinion
No. 02 Civ. 9061 (TPG).
March 17, 2005
OPINION
Plaintiff Marcel Arrouet is suing defendant Brown Brothers Harriman Co. for unpaid compensation from 2001. Plaintiff claims that defendant breached his employment contract (1) when it paid him less end-of-year compensation than he was due under the contract; (2) when it arbitrarily and unfairly reduced plaintiff's end-of-year compensation for 2001; and (3) when it split the commissions for two accounts on which plaintiff worked. This Court dismissed plaintiff's other claims in an opinion dated September 8, 2003. Defendant now moves for an order for summary judgment dismissing plaintiff's remaining claim pursuant to Fed.R.Civ.P. 56. Plaintiff opposes the motion on the ground that material issues of fact remain to be decided.
Defendant's motion for summary judgment is granted.
FACTS
Plaintiff was hired by BBH in 1978 as an institutional salesman. At that time, plaintiff did not receive a written description of the terms of his employment. Instead, plaintiff was told that his annual compensation would consist of a salary and a discretionary end-of-year bonus. Plaintiff was employed under the original compensation arrangement until 1993. In early 1993, BBH told plaintiff that his annual compensation would consist of a fixed salary plus end-of-year compensation equal to a twenty percent commission. There was no written confirmation. Plaintiff was employed under the 1993 compensation arrangement until 1998. In early 1998, BBH told plaintiff that his annual compensation would consist of a fixed salary plus an amount of end-of-year compensation. The end-of-year compensation was to be calculated on the following sliding scale:
20 percent of the first $500,000 in commissions, 25 percent of the next $250,000 in commissions, 30 percent of the next $250,000 in commissions, and 35 percent of any commissions in excess of $1,000,000.
Again, there was no written confirmation. The parties dispute whether the additional end-of-year compensation was a guaranteed commission or a discretionary bonus. Plaintiff claims that the end-of-year compensation was a guaranteed commission. However Geoff Mills, one of plaintiff's supervisors at BBH, testified in his deposition that during this time "the management retain[ed] the ability to obviously penalize or augment someone's salary on the basis of their citizenship, corporate citizenship." At the end of 2000, BBH paid plaintiff an extra $20,000 in addition to the amount of end-of-year compensation calculated using the above formula.
It is undisputed that plaintiff was employed under the 1998 compensation arrangement until the end of 2000. Kathryn George, another of plaintiff's supervisors, testified that she notified plaintiff in early 2001 that his annual compensation would consist of a salary and a discretionary bonus. George further testified that plaintiff was told at that meeting that "citizenship" issues would be taken into consideration in determining the amount of bonus compensation. Plaintiff acknowledged that his commission from 2001 was subject to reduction due to citizenship issues. Plaintiff admitted that his supervisor had the discretion to withhold all of plaintiff's commissions from 2001 if he was dissatisfied with plaintiff's performance.
Q: You knew that you were subject to discretionary fines, weren't you?
A: Yes.
Q: You knew that as early as February 28, 2001?
A: Correct.
Q: In fact, you knew that from the meeting you had with Kathryn George and Geoff Mills that there would be a change in your commission for 2001 which was that it would be subject to discretionary fines; am I correct?
A: Yes, but they did not change the sliding scale.
Q: The prior year in 2000 there were no discretionary fines, were there?
A: No.
Q: In 2001 if Geoff Mills didn't like the way you were doing your business, he had the discretion to fine you?
A: Yes.
Q: And to take all your commissions away, right?
A: Yes.
Plaintiff also admitted that he received emails during 2001 advising plaintiff that the amount of his end-of-year compensation would be determined in the discretion of plaintiff's supervisor.
Q: You did in fact receive through the year 2001 a number of e-mails from Geoff Mills discussing citizenship issues, didn't you?
A: Yes.
Q: You received a number of e-mails advising you that he would punish people through the bonus?
A: Yes.
Q: If they were not good citizens; isn't that true?
A: Yes.
Q: To the extent that you did not perform well during 2001 your bonus would be reduced because of citizenship issues, right?
A: No.
Q: Isn't it true that you received a number of e-mails from Geoff Mills telling you that if you were not a good citizen —
A: Yes.
Q: — he would punish you by virtue of reducing your bonus?
A: Yes.
Q: So under those circumstances if you were not a good citizen you could get less than what you anticipated; isn't that correct?
A: Yes.
Q: Isn't that discretionary it would leave it up to Geoff Mills to decide whether or not you were a good citizen and what your commissions were going to be?
A: Yes.
Plaintiff testified that he was aware of the standards for good citizenship as early as March 8, 2001. Plaintiff also testified that he had a conversation with George in 2001 about his drinking problem, during which he promised her that he would not drink at lunch in the future. Plaintiff testified that, despite this promise, he did have at least one drink at lunch on certain occasions, and that he later admitted that to George. Plaintiff was aware this was a citizenship issue. Plaintiff further testified that he did not always comply with the proper technique for writing up direct interviews, and that his supervisors had expressed their dissatisfaction in this regard. Plaintiff testified that he had submitted inaccurate expense accounts, and had been subsequently reprimanded by Mills. Finally, plaintiff testified that he was aware that proper record keeping and submission of expense accounts were critically important citizenship issues in 2001.
Plaintiff's deposition testimony is contradicted by plaintiff's affidavit submitted in opposition to defendant's motion for summary judgment. In his affidavit, plaintiff stated that (1) he did not violate BBH's citizenship rules, (2) he generally complied with the proper technique for writing up direct interviews, and (3) he did not continue to drink during the workday.
On the subject of split commissions, it is undisputed that defendant split the commissions earned in 2001 on both the Alliance Capital and UBS Global Asset Management accounts evenly between plaintiff and another employee. There does not appear to be any written agreement memorializing defendant's policy on splitting joint accounts or setting forth plaintiff's right to commissions on such accounts. Plaintiff admitted that defendant had the authority and discretion to assign accounts as it wished and to divide accounts among salespeople as it considered appropriate. Plaintiff specifically testified that his supervisor's possessed the discretion to decide the commission split on the Alliance Capital account, and that the commissions on the Alliance Capital account had been split in 2000 as well. Plaintiff testified that he was notified by defendant as early as January 2001 that those accounts had been designated shared accounts and that he would be splitting credit for the commissions on those accounts with another employee. Plaintiff also testified that he continued working throughout 2001 with the knowledge that Alliance Capital and UBS Global were shared accounts.
Plaintiff received end-of-year compensation in the amount of $200,000 for 2001. Plaintiff claims that he is entitled to an additional $270,171.00. This is the additional amount plaintiff claims he would have received if his end-of-year compensation had been calculated using only the formula that was used to calculate his end-of-year compensation for 1998 through 2000, and if he had received 100% of the commissions earned on accounts that he shared with another BBH employee in calculating his 2001 end-of-year compensation.
DISCUSSION
Summary judgment may not be granted unless "the pleadings, depositions, answers to interrogatories, and 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 a judgment as a matter of law." Fed.R.Civ.P. 56(c). Rule 56(c) requires summary judgment be entered "against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). In reviewing the record, this court must assess the evidence "in the light most favorable to the party opposing the motion, and resolve ambiguities and draw reasonable inferences against the moving party." Frito-Lay, Inc. v. LTV Steel Co. (In re Chateaugay Corp.), 10 F.3d 944, 957 (2d Cir. 1993). However, a party may not create an issue of fact by submitting an affidavit in opposition to a summary judgment motion that contradicts the affiant's previous deposition testimony. Bickerstaff v. Vassar College, 196 F.3d 425, 455 (2d Cir. 1999). Therefore, this court will consider plaintiff's affidavit only to the extent that it does not contradict plaintiff's deposition testimony.
An employee is an at-will employee if the employment contract does not establish a fixed duration. Sabetay v. Sterling Drug, 69 N.Y.2d 329, 333 (N.Y. 1987). Since plaintiff does not allege that his employment was for a fixed duration, he was an at-will employee at all relevant times. The employer may unilaterally change the terms of at-will employment, and the employee's continued employment is deemed consent to the new terms. See, e.g., Kempf v. Mitsui Plastics, Inc., 96 Civ. 1106 (HB), 1996 WL 673812, at *6 (S.D.N.Y. Nov. 20, 1996); Bottini v. Lewis Judge Co., 621 N.Y.S.2d 753, 754 (3d Dept. 1995).
Breach of Contract
To prevail on a claim for breach of contract under New York law, a plaintiff must show (1) the existence of a contract, (2) performance by the plaintiff, (3) a breach by the defendant, and (4) damages resulting from that breach. Terwilliger v. Terwilliger, 206 F.3d 240, 246 (2d Cir. 2000). An employee cannot establish that an employer breached a contract to pay a particular amount of bonus compensation where the employer retains discretion regarding the amount of bonus compensation to be awarded. See Namad v. Salomon, Inc., 74 N.Y.2d 751, 753 (1989); see also Welland v. Citigroup, Inc., 00 Civ. 738 (NRB), 2003 WL 22973574, at *15 (S.D.N.Y Dec. 17, 2003). The evidence shows that the end-of-year compensation paid to plaintiff was essentially a bonus. Plaintiff claims that the contract governing his employment in 2001 was the same contract that governed his employment in the previous three years, and that his end-of-year compensation was to be determined by a formula. Defendant claims that the contract governing plaintiff's employment in 2001 differed from the earlier contract — the amount of end-of-year compensation was subject to its discretion, rather than determined by a formula.
Plaintiff testified that he was aware as early as February 28, 2001 that the amount of his end-of-year compensation for 2001 would be subject to his supervisors' discretion. Plaintiff also testified, somewhat contradictorily, that he was told that the prior formula for determining end-of-year compensation remained in effect. Plaintiff does admit, however, that Mills possessed the discretion to take away all of plaintiff's commissions, thus potentially reducing plaintiff's end-of-year compensation for 2001 to zero. Even if plaintiff could prove that his end-of-year compensation was to be based on a formula, plaintiff has conceded that his supervisors possessed the discretion to reduce his end-of-year compensation based on his behavior. It is indisputable that plaintiff was told by BBH in early 2001 that his supervisors possessed discretionary control over the amount of plaintiff's end-of-year compensation for 2001. Since plaintiff continued in defendant's employ, he is deemed to have accepted that new term. Defendant did not breach plaintiff's employment contract because it possessed the discretion to determine plaintiff's end-of-year compensation for 2001.
Arbitrary, Capricious, or Bad Faith Calculation of End-of-Year Compensation
Plaintiff alternatively argues that defendant breached the contract when it improperly exercised its discretion and reduced the amount of plaintiff's end-of-year compensation for 2001. Plaintiff's complaint does not mention this theory, and plaintiff did not state at his deposition that this was one of his claims. However, plaintiff's opposition to summary judgment focuses primarily on this theory. Plaintiff's argument is premised on the assumption that defendant had the discretion to reduce his end-of-year compensation for 2001 only if plaintiff violated the citizenship rules. Plaintiff also assumes that defendant had a duty not to act arbitrarily, capriciously, or in bad faith in exercising its discretion. Plaintiff claims that he did not violate the citizenship rules, and that defendant therefore acted arbitrarily, capriciously, or in bad faith when it reduced the amount of his end-of-year compensation. It is doubtful whether defendant owed such a duty to plaintiff. See Sathe v. Bank of New York, 89 Civ. 6810 (LBS), 1990 WL 58862, at *4 (S.D.N.Y. May 2, 1980) (finding no good faith requirement where employer possessed the discretion to give no bonus at all). But even if this court were to assume that defendant did owe plaintiff such a duty, it is clear that defendant did not act arbitrarily, capriciously, or in bad faith in exercising its discretion to reduce plaintiff's end-of-year compensation.
Plaintiff's deposition testimony reveals that plaintiff was made aware of the standards for good citizenship in early 2001, but that plaintiff's behavior in 2001 did not conform to those standards. Plaintiff also admitted that defendant was aware that plaintiff's behavior had not lived up to the standards for good citizenship. It is indisputable that defendant did not act arbitrarily, capriciously, or in bad faith when it exercised its discretion in determining plaintiff's end-of-year compensation for 2001.
The Alliance Capital and UBS Global Accounts
Plaintiff claims that the Alliance Capital and UBS Global commissions were owed in their entirety to plaintiff. Plaintiff conceded that he was notified in early 2001 that those accounts had been designated shared, and that he would not receive credit for 100% of the commissions earned on them. Plaintiff also testified that defendant had the authority to assign accounts as it wished. It is undisputed that plaintiff continued in BBH's employ, and he is therefore deemed to have accepted these terms. Defendant therefore did not breach any contract when it exercised its discretion and failed to give plaintiff credit for 100% of the commissions earned on the Alliance Capital and UBS Global accounts.
CONCLUSION
For the reasons stated above, defendant's motion for summary judgment is granted.
SO ORDERED.