Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_05-cv-01055/USCOURTS-cand-5_05-cv-01055-5/pdf.json

Nature of Suit Code: 442
Nature of Suit: Civil Rights Employment
Cause of Action: 28:1332 Diversity-Employment Discrimination

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United States District Court

For the Northern District of California

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ORDER GRANTING DEFENDANT EAGLE TEST SYSTEMS, INC.'S MOTION FOR SUMMARY JUDGMENT—No.

C-05-01055 RMW

SPT

United States District Court

For the Northern District of California

E-FILED on 12/21/06

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

KENNETH E. DAUB,

Plaintiff,

v.

EAGLE TEST SYSTEMS, INC., a corporation,

and LEONARD FOXMAN,

Defendants.

No. C-05-01055 RMW

ORDER GRANTING DEFENDANT EAGLE

TEST SYSTEMS, INC.'S MOTION FOR

SUMMARY JUDGMENT

[Re Docket No. 45]

Defendant Eagle Test Systems, Inc. ("Eagle") moves pursuant to Fed. R. Civ. P. 56 for

summary judgment on plaintiff Kenneth E. Daub's ("Daub") breach of contract and age

discrimination claims. Daub opposes the motion. The court has read the moving and responding

papers. For the reasons set forth below, the court GRANTS Eagle's motion for summary judgment.

I. BACKGROUND

A. The Parties

The present action is a suit by Daub for breach of contract of employment, fraud, promissory

fraud, unjust enrichment, and wrongful termination of employment based on age discrimination. 

Eagle designs, manufactures, and sells test equipment for semiconductor companies and is Daub's

former employer. Defendant Leonard Foxman founded Eagle, is the chief executive officer of

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 According to Daub's declaration, his employment was terminated December 2004, Decl. of

Kenneth Daub Opp. Def.'s Mot. Summ. J. ("Daub Decl.") ¶ 1, but in his deposition he states he was

terminated November 2004. Bohn Decl., Ex. A (Daub Depo.) at 19:10-22. 

ORDER GRANTING DEFENDANT EAGLE TEST SYSTEMS, INC.'S MOTION FOR SUMMARY JUDGMENT—No.

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Eagle, and handled sales and sales operations at Eagle prior to and, to some extent, during Daub's

employment there. Eagle's fiscal year ends September 30. Ted Foxman is Leonard Foxman's son

and serves as Eagle's chief operating officer responsible for operations, product development,

information technology, and manufacturing. In September 2003 TA Associates purchased sixty-two

and one half percent of the outstanding shares of Eagle for $95 million. Decl. of Ryan J. Larsen

Supp. Def.'s Mot. Summ. J. ("Larsen Decl."), Ex. G (McJunkin Depo.) at 34:3-13. Two officers of

TA Associates were added to Eagle's board of directors: Mike Child and Jameson Jones McJunkin. 

Id. at 27:8-16. 

Daub was hired by Eagle as Vice President of Sales on January 8, 2001. AC, Ex. 1 (Daub

offer letter) at 2; Decl. of Robert H. Bohn Opp. Def.'s Mot. Summ. J. ("Bohn Decl."), Ex. A (Daub

Depo.) at 19:10-22. He was sixty-four years old at the time. When he was first hired, Daub was

vice president responsible for world wide sales. Bohn Decl., Ex. A (Daub Depo.) at 125:8-10. 

About eight months later his role was changed to vice president of North America sales. Id. at

125:10-11. This occurred after Daub had hired a sales person for Europe and a sales person for

Asia. Id. at 125:11-14. In September 2002 Eagle changed Daub's role to vice president of western

region sales. Id. at 126:1-4. Daub's employment with Eagle was terminated December 1, 2004.1

Daub was sixty-eight years old at the time. Prior to working at Eagle, Daub worked for LTX Corp.,

one of Eagle's competitors. Id. at 30:7-8. Daub was terminated from his employment at LTX.

B. Terms of Daub's Initial Offer Letter

As stated in Eagle's employment offer letter, Daub's responsibilities included "Strategic Sales

& Marketing on World Wide Basis," "Develop 'Top Notch' Field Sales & Marketing Infrastructure,"

and "Develop Strategic Customer Alliances." AC, Ex. 1 at 2. The offer letter is dated December 27,

2000 and required acceptance from Daub by December 28, 2000. Id. at 5. The letter sets forth

Daub's compensation structure, including his eligibility for incentive bonuses and certain rights

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2

 Daub's compensation as described in the offer letter also included a pension plan into which

the company was to make annual contributions regardless of profit levels. These pension benefits

were not to vest until the fifth anniversary of employment, at which time the benefits would vest

completely. AC, Ex. 1 at 3. The company also was to make annual contributions to a profit sharing

plan and an employee stock ownership plan (ESOP), which contributions were dependent upon the

company's profit levels. Id. Benefits under the profit sharing and ESOP were not to vest until the

fifth anniversary of employment, at which time they would vest completely. Id.

3

 Exhibit A of the offer letter was not submitted to the court with the complaint. 

ORDER GRANTING DEFENDANT EAGLE TEST SYSTEMS, INC.'S MOTION FOR SUMMARY JUDGMENT—No.

C-05-01055 RMW

SPT 3

under a change of control provision.2 Daub accepted the December 27, 2000 offer in writing via a

December 28, 2000 e-mail to Leonard Foxman. Larsen Decl., Ex. H at 404 (Daub Depo. Ex. 13). 

1. Incentive Bonus–New Account Component

Daub's offer letter indicates that he would be eligible for an incentive bonus for "new

accounts." The description of this incentive bonus provides:

For each new account (account not previously doing business with Eagle Test) that

you successfully introduce to Eagle Test resulting in additional business you will

receive a bonus during the first year of that business in an amount calculated to be

equal to 2% (two percent) of the first $2.0 million of revenue received by Eagle Test.

Id. at 3. 

2. Incentive Bonus–Stock Purchase Component

The description of the incentive bonus also provides that Daub may use his incentive bonus

to purchase Eagle stock held by Foxman, subject to certain conditions:

A Bonus Plan as shown in "Exhibit A" attached. Bonus earned with this portion of

compensation may be used to purchase stock according to conditions as outlined in

Exhibit B. Note: This compensation is subject directly to the Employee's willingness

to enter into non-compete, non-solicitation, and performance agreements to be

determined by mutual consent of Company and Employee. 

Id. at 3-4. 

A form of an "Incentive Bonus/Stock Option/Restriction/Non-Compete Agreement" among

Daub, Eagle, and Leonard Foxman ("Incentive Bonus Stock Option Agreement") is attached as

Exhibit B to the December 27, 2000 offer letter.3

 Id. at 6-17. This form of agreement describes the

arrangement as "a bonus arrangement coupled with an obligation to purchase certain shares of the

common capital stock of the Company." Id. at 6 ¶ B. Under the arrangement, Eagle and Leonard

Foxman would agree to grant to Daub "the right and option to purchase from Foxman . . . on the

terms and conditions hereinafter set forth" a maximum number of 230.24 shares of stock owned by

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ORDER GRANTING DEFENDANT EAGLE TEST SYSTEMS, INC.'S MOTION FOR SUMMARY JUDGMENT—No.

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SPT 4

Leonard Foxman, subject to certain adjustments. Id. at 7 ¶ 4.1. The conditions of the stock purchase

include (1) Daub's agreement to "terminate all other bonus and/or bonus agreements between

himself and the Company, if any," id. at 6 ¶ D; see also id. ¶¶ C; id. at 7 ¶ 3.2, and (2) Daub's

agreement to a two year covenant not to compete following termination of employment with Eagle. 

Id. at 14 ¶¶ 7.1-7.2. Further, section 4.2 of the form of agreement provides that the arrangement

may be deemed to have been automatically exercised under certain circumstances:

Daub hereby accepts the foregoing option and agrees with Foxman and the Company

that he will automatically be deemed to have exercised the option to purchase the

Option Shares to the extent that the purchase price for the Option Shares (as

determined below) shall be equal to the lesser of forty (40%) percent [sic] of the

Bonus or the purchase price for the number of Option Shares at any time remaining

available to be purchased without further notice (the "Annual Purchase"). However,

in no event, shall Daub have an option to purchase . . . in excess of the Maximum

Number of the Option Shares unless otherwise agreed by the Company and Foxman.

Id. at 7-8 ¶ 4.2. 

3. Recruiting Bonus

To the extent Daub introduces candidates that Eagle hires for the positions of sales manager

at Eagle's Chicago facility, design engineer, or applications engineer, his offer letter provides for a

bonus of $10,000 for the sales manager position and $5,000 for the other positions at the one year

service anniversary of the hired candidate. Id. at 4. No bonus is due if the candidate leaves for any

reason prior to the one year service anniversary. Id. 

4. Change of Control Provision

Daub's offer letter also sets forth a change of control and severance benefits provision. For

purposes of the provision, change of control is defined as "a change of majority ownership or

material change of corporate form which results in the establishment of a board of directors and

places decisions regarding the operation of daily business matters and personnel management with

the resulting corporate form." Id. at 4. The provision provides that in the exclusive event of a

change of control an employee terminated without cause shall be entitled to certain severance

benefits, including an amount equal to the employee's annual base salary. Id. 

C. Compensation Terms Pursuant to September 20, 2002 Letter

According to Eagle, upon Daub's change in role to vice president of western region sales

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4

 Eagle notes that the letter contained a typo and the payment was intended to be on December

15, 2003 since the bonus was intended to be based on the corporate profits for the fiscal year

beginning October 1, 2002 and ending September 30, 2003. Daub argues that because he was paid

on December 15, 2003, he was paid a year late. Regardless, an obvious typographical error does not

create a genuine issue of material fact as to any of plaintiff's claims.

ORDER GRANTING DEFENDANT EAGLE TEST SYSTEMS, INC.'S MOTION FOR SUMMARY JUDGMENT—No.

C-05-01055 RMW

SPT 5

Eagle restructured Daub's compensation package. Specifically, an unsigned September 20, 2002

letter from Leonard Foxman indicates that in the new role (1) Daub is to report to Dave Miller who

formerly reported to Daub, (2) Daub is to supervise the three western area account managers, and

(3) Daub is to oversee the Eagle sales accounts in the western region and develop new accounts. 

Larsen Decl., Ex. H at 399 (Daub Depo. Ex. 4). According to the letter, Daub continues to be

eligible for the pension plan, profit sharing plan, and ESOP. Id. at 400. Daub is to receive the same

annual base salary and the same change of control provision applies. Id. at 400, 402-03. In addition,

Daub's incentive bonus starting October 1, 2002 would consist of three components. Id. at 401. 

First, Daub would be eligible to receive an incentive bonus of 10% of the total commissions paid to

western region account managers under Daub's direction in his new role, to be paid quarterly. Id.

Second, Daub would be entitled to an incentive bonus of 3% of the commissions paid to

representatives of Syntek-Pacific Northwest, to be paid quarterly. Id. Third, Daub would be eligible

to receive 0.3% of overall corporate profits (net of all operating costs) "for the fiscal year beginning

on October 1, 2002" and is to be paid on December 15, 2002.4

 Id. The letter states that it replaces

and supersedes all previous offers, written, verbal, or implied. Id. at 403. 

Daub disputes that the September 20, 2002 letter restructured his compensation package, and

contends that he never saw the letter and it "first turned up after [his] termination." Bohn Decl., Ex.

A (Daub Depo.) at 127:7-10. He argues, instead, that around September 2002 when his role was

changed to vice president of western region sales Ted Foxman verbally informed him only that he

would begin receiving an additional compensation element based on a percentage of commissions

earned by account managers in the western region. Bohn Decl., Ex. A (Daub Depo.) at 125:11-

128:11. However, Daub acknowledges that Eagle changed his title, gave him new business cards

and told him to focus on the Western Region. Pl.'s Opp. Def.'s Mot. Summ. J. at 5:23-24. He also

admits he received commission payments under a new structure.

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ORDER GRANTING DEFENDANT EAGLE TEST SYSTEMS, INC.'S MOTION FOR SUMMARY JUDGMENT—No.

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SPT 6

D. Ageist Comments

About two years into Daub's employment at Eagle Leonard Foxman commented that Daub is

"made up of cuts and jumpers." Bohn Decl., Ex. A (Daub Depo.) at 17:24-18. According to Daub,

cuts and jumpers are "modifications to a circuit board to make it function correctly." Id. at 20:13-16. 

Daub contends that Leonard Foxman made the comment in a derogatory manner and "kind of in a

slanderous way of an age issue." Id. at 20:9-10. On another occasion, in response to Daub's

recommendation of a former colleague who had since retired from Schlumberger for a sales position

at Eagle, Leonard Foxman stated words to the effect that "if he's been retired from Schlumberger,

he's too old to be effective at Eagle." Id. at 21:1-8. After a meeting, Leonard Foxman made a

comment to Daub that all of Daub's contacts are retired, which Daub submits is untrue. Id. at 22:21-

22. When Ted Foxman decided to terminate the employment of an employee under his indirect

supervision he stated to Daub (1) the employee is too old to be effective at Eagle, (2) it would cost

the company a lot of money if the employee's employment was not terminated before his fifth year,

and (3) the employee was not generating enough business. Id. at 38:11-19, 39:1-25. Next, a former

employee who was in a restaurant with Leonard Foxman and Daub testified that Foxman stated to

Daub "Ah, we're too old for this, huh, Ken? We're getting too g------ old for this. I'm too old for

this s---. . . . You're too old for this c---, too." Bohn Decl., Ex. 4 (Thomas Mordue Depo.) at 41:10-

19. Finally, in terminating his employment, Leonard Foxman sent a memorandum to the company

characterizing Daub's termination of employment as a retirement without Daub's consent. 

II. ANALYSIS

A. Legal Standard

Summary judgment is proper when the pleadings, discovery, and affidavits 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. 56(c). Material facts are those which may affect the outcome of the

case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute as to a material fact is

genuine if there is sufficient evidence for a reasonable jury to return a verdict for the non-moving

party. Id. In a motion for summary judgment, the court draws all reasonable inferences that may be

taken from the underlying facts in the light most favorable to the nonmovant. Matsushita Elec.

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5

 Plaintiff's argument that the court's consideration of the offer letter in a motion to dismiss

was erroneous is not supportable. Plaintiff's pleadings relied upon the offer letter, and the letter was

attached as an exhibit to plaintiff's complaint. 

ORDER GRANTING DEFENDANT EAGLE TEST SYSTEMS, INC.'S MOTION FOR SUMMARY JUDGMENT—No.

C-05-01055 RMW

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Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). A party moving for summary

judgment who does not have the ultimate burden of persuasion at trial has the initial burden of

producing evidence negating an essential element of the non-moving party's claims or showing that

the non-moving party does not have enough evidence of an essential element to carry its ultimate

burden of persuasion at trial. Nissan Fire & Marine Ins. Co. v. Fritz Cos., 210 F.3d 1099, 1102 (9th

Cir. 2000). If the moving party carries its burden of production on the motion, "the nonmoving

party must produce evidence to support its claim or defense. If the nonmoving party fails to produce

enough evidence to create a genuine issue of material fact, the moving party wins the motion for

summary judgment." Id. at 1102-03 (citations omitted).

B. Breach of Contract Claim

As an initial matter, plaintiff again argues that Daub's employment with Eagle was not at-will

and the court's October 19, 2005 order Denying in Part and Granting in Part Defendants' Motion to

Dismiss erred in ruling that Daub was an at-will employee. Plaintiff did not file a motion for

reconsideration. Moreover, plaintiff's argument that the offer letter included conflicting provisions

because it contained the terms "at-will" and "for cause" is without merit. The offer letter plainly

states that Daub's employment is at-will and the term "for cause" is defined solely in the context of

the change in control provisions.5

 Plaintiff's failure to acknowledge the plain text of the offer letter

does not create a genuine issue of material fact.

The parties do not dispute that Daub's breach of contract claim based upon the offer letter is

governed by the laws of the state of Illinois. See AC, Ex. 1 at 5. To establish a breach of contract, a

plaintiff must establish the following elements: "(1) the existence of a valid and enforceable

contract; (2) performance by the plaintiff; (3) breach of contract by the defendant; and (4) resultant

injury to the plaintiff." Zirp-Burnham, LLC v. E. Terrell Assocs., Inc., 356 Ill. App. 3d 590, 600

(2005) (citation and quotations omitted).

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 Daub contends that he was not paid for bonuses owed to him for Eagle's fiscal year 2004 and

for commissions for Eagle's fiscal year 2003 and 2004. Daub Decl. ¶¶ 3-4. 

ORDER GRANTING DEFENDANT EAGLE TEST SYSTEMS, INC.'S MOTION FOR SUMMARY JUDGMENT—No.

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1. Incentive Bonus–New Account Component

Plaintiff's claim that Eagle breached the compensation provisions of his offer letter rests on

his contention that Leonard and Ted Foxman verbally promised that "new accounts" for purposes of

computing Daub's incentive bonuses are not limited to "accounts not previously doing business with

Eagle," as stated in Daub's offer letter.6 Eagle argues that there is no genuine issue of material fact

as to the definition of "new accounts" for purposes of computing bonuses to which Daub was

entitled while employed at Eagle. Daub does not dispute that his offer letter defines a "new account"

for purposes of computing his incentive bonus as an "account not previously doing business with

Eagle Test"). AC, Ex. 1 at 3. However, Daub argues that Leonard and Ted Foxman verbally

promised him that the definition of "new accounts" for purposes of computing his incentive bonus

would include getting certain existing customer's new products on an Eagle tester. Bohn Decl., Ex.

A (Daub Depo.) at 82:4-83-6. In support, plaintiff testifies that such a verbal promise was made

after he received his offer letter on December 27, 2000 and before he accepted it on December 28,

2000. 

Eagle points to Daub's written acceptance of the December 27, 2000 offer letter. 

Specifically, when Daub accepted the December 27, 2000 offer in writing the day after receiving it

as requested by Eagle, he did not indicate that the definition of "new account" was no longer as

described in the written offer letter. Larsen Decl., Ex. D (Daub Depo.) at 82:4-83:19, 87:4-12;

Larsen Decl., Ex. H at 404-05 (Daub Depo. Ex. 13). Rather, Daub indicated, without qualification,

his acceptance of the December 27, 2000 letter, which was attached to his acceptance. Larsen Decl.,

Ex. H at 404-05 (Daub Depo. Ex. 13). There is no reference to any verbal promise or discussion

revising the definition of "new accounts" as stated in the offer letter, or any written revision made to

the offer letter. Id., Larsen Decl., Ex. D (Daub Depo.) at 83:13-19. Even viewing these facts in the

light most favorable to plaintiff, the court does not find that there is a genuine issue of material fact

that the definition of "new accounts" for the purpose of computing Daub's incentive bonus is other

than as stated in the written offer letter accepted by Daub. Daub cannot alter the definition of "new

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 In addition, plaintiff quotes only a portion of section 4.2 in his opposing brief, leaving out the

express condition that triggers automatic exercise in the contract clause. Pl.'s Opp. Def.'s Mot.

Summ. J. at 18:15-23. Although plaintiff argues that he "gave express written consent for the

company to automatically exercise the stock option purchases," plaintiff offers no evidence that

Incentive Bonus Stock Option Agreement which contains the automatic provision was ever

executed. Therefore, plaintiff's argument that the provision reflects Daub's express written consent

is without merit.

ORDER GRANTING DEFENDANT EAGLE TEST SYSTEMS, INC.'S MOTION FOR SUMMARY JUDGMENT—No.

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accounts" by showing that some different meaning was discussed before the employment offer was

accepted, particularly given that the letter contained an integration clause. See Weber v. DeKalb

Corp., Inc., 265 Ill. App. 3d 512, 518 (1994).

2. Incentive Bonus–Stock Purchase Component

Plaintiff argues he is entitled to 4% of the issued capital stock of Eagle pursuant to the

Incentive Bonus Stock Option Agreement attached to his initial offer letter. Eagle argues that there

is no genuine issue of material fact as to the existence of a valid, enforceable contract pursuant to

which Daub has owed any right to purchase stock under an Incentive Bonus Stock Option

Agreement. In particular, Eagle submits that Daub never executed the Incentive Bonus Stock

Option Agreement, a form of which was attached to his offer letter. Plaintiff does not dispute that he

did not sign an Incentive Bonus Stock Option Agreement, but rather argues that his offer letter

provides that the stock purchase option would be automatically exercised. Pl.'s Opp. at 6:3-5. 

Plaintiff's contention is misleading as the offer letter does not so provide and his claim is not

otherwise supported by the evidence submitted by plaintiff in opposition to the motion for summary

judgment.

The provision for automatic purchase is not in the offer letter as plaintiff states in his

opposing brief, but rather is a provision of the Incentive Bonus Stock Option Agreement (see AC,

Ex. 1 at 7-8 ¶ 4.2).7

 Absent an executed Incentive Bonus Stock Option Agreement, the automatic

purchase provision is not valid and enforceable. To the extent plaintiff relies on the terms in the

form of agreement attached to the offer letter, the court does not find the unexecuted form of the

agreement to represent a valid, enforceable contract. Moreover, the automatic purchase provision in

section 4.2 of the Incentive Bonus Stock Option Agreement provides for automatic exercise only

where the purchase price falls within specific levels: 

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 Notably, Daub argues that he was paid commissions one year late based on a date in the

September 20, 2002 letter. He also argues that he is owed commissions under a provision in the

September 20, 2002 letter because Eagle terminated his employment on December 1, 2004 so that he

would not receive about $140,000 in bonuses and $1 million in commissions because he is entitled

to an annual commission based on corporate profits to be paid on December 15th of each year. Pl.'s

Opp. Def.'s Mot. Summ. J. at 8:18-21. According to the terms of the letter, Daub was to be paid the

commission based on Eagle's corporate profit "for the fiscal year beginning on October 1, 2002" and

is to be paid on December 15, 2002. As Eagle contends, the terms of this commission is

unambiguous that it is only for the fiscal year beginning October 1, 2002 (and ending September 30,

2003), rather than an annual commission.

ORDER GRANTING DEFENDANT EAGLE TEST SYSTEMS, INC.'S MOTION FOR SUMMARY JUDGMENT—No.

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Daub hereby accepts the foregoing option and agrees with Foxman and the Company

that he will automatically be deemed to have exercised the option to purchase the

Option Shares to the extent that the purchase price for the Option Shares (as

determined below) shall be equal to the lesser of forty (40%) percent [sic] of the

Bonus or the purchase price for the number of Option Shares at any time remaining

available to be purchased without further notice (the "Annual Purchase"). However,

in no event, shall Daub have an option to purchase . . . in excess of the Maximum

Number of the Option Shares unless otherwise agreed by the Company and Foxman.

AC, Ex. 1 at 7-8 ¶ 4.2. Even assuming the Incentive Bonus Stock Option Agreement was executed,

there is no evidence supporting that the automatic exercise provision was triggered by the condition

precedent set forth in the contract. 

In addition, there is no evidence that Daub has performed under the agreement. For example,

an express term of the Incentive Bonus Stock Option Agreement is that Daub forego all other bonus

plans. Daub does not dispute that he received some incentive bonus payments throughout his

employment at Eagle. In addition, according to the form of agreement, Daub also had to agree to a

two year covenant not to compete in exchange for the stock purchase. In sum, the court finds that

there is no genuine issue of material fact as to the existence of an agreement under which Daub

exercised his right to purchase Eagle stock pursuant to an Incentive Bonus Stock Option Agreement

or as to Daub's performance thereunder. 

Defendant also argues that Daub's compensation structure was revised via a September 20,

2002 letter from Leonard Foxman which, inter alia, added a commission component and deleted the

option to purchase stock using earned incentive bonuses. Plaintiff contends he never accepted or

signed the agreement with his new compensation structure and, therefore, it is not valid and his

initial offer letter continued to be operative through the date his employment was terminated.8

Under Illinois law, plaintiff need not have accepted or signed the letter revising his compensation

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 To the extent plaintiff's argument is premised on his contention that his employment was not

at-will, see Pl.'s Opp. at 18:7-10, the court has already concluded that his employment arrangement

is at-will. See supra section II.B. To the extent plaintiff relies upon an excerpt from the Incentive

Bonus Stock Option Agreement that provides "[this instrument] may not be changed orally but only

by an agreement in writing signed by the party against whom enforcement of any waiver, change,

modification, extension, or discharge is sought," AC, Ex. 1 at 16, the provision in the Incentive

Bonus Stock Option Agreement is clearly applicable only to that agreement and not to the separate

offer letter. The Incentive Bonus Stock Option Agreement form attached to the offer letter as an

exhibit merely showed the Incentive Bonus Stock Option Agreement available to Daub if he chose

to execute it. 

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structure. Specifically, "[w]hen an employment agreement is terminable at will, it may be modified

by the employer as a condition of its continuance." Schoppert v. CCTC Int'l, Inc., 972 F. Supp. 444,

447 (N.D. Ill. 1997). "This right to modify unilaterally at-will employment terms applies to

modifying compensation terms." Geary v. Telular Corp., 341 Ill. App. 3d 694, 698 (2003) (internal

quotations and citations omitted). The at-will employee's continued performance serves as both

acceptance and consideration of the modification to the contract: 

Because the continuation of an at-will relationship cannot be taken for granted, if one

party proposes a change to the terms of the contract and the other party nonetheless

continues to perform as usual, the modification to the contract is deemed to be

effective. The continued performance is seen as both acceptance and consideration.

Schoppert, 972 F. Supp. at 447; see also Geary, 341 Ill. App. 3d at 698 ("When an at-will employee

continues to work after a change in commission plan, he is deemed to have accepted the change.")

(citation omitted).9

In Schoppert, the employer unilaterally announced a change in commission structure and

began paying under the new structure. Schoppert, 972 F. Supp. at 447. The plaintiff employee

objected and complained about the new commission structure, but nevertheless accepted payments

thereunder. Id. The court found that the plaintiff's "continuing to work over two and one half years

while receiving commissions under the new structure must be seen in legal terms as an acceptance of

the [commission change], grudging and protest-filled as that acceptance may have been." Id. On the

other hand, the court concluded that an issue of fact was raised as to the effectiveness of another

unilateral compensation change made by the employer. Id. at 449. In that situation, the employer

proposed the change in a letter to the plaintiff employee seeking the employee's acceptance by

signature. The employee never signed the letter. In addition, the employer continued to operate

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10 Finally, to the extent plaintiff argues he never saw the letter, he does not dispute that he

started receiving commissions which he had never received before. In addition, defendant offers

evidence that Daub received a copy of the September 20, 2002 letter in his e-mail inbox based on the

back up copy of Daub's computer drive made at the time Daub left Eagle. See Adam J. Plummer

Decl. Supp. Def.'s Mot. Summ. J. ¶¶ 2-8. According to the back up copy of Daub's e-mail inbox, a

January 31, 2003 e-mail from Ted Foxman to Daub with the September 20, 2002 letter attached was

marked as read. Id. ¶ 9. 

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under the old compensation plan while continuing negotiations with the plaintiff. Id. 

Here, the September 20, 2002 letter sought to inform Daub of the new structure of his

compensation plan in connection with the change in his role to vice president of western region

sales. Larsen Decl., Ex. H at 399-403 (Daub Depo. Ex. 4). It did not seek Daub's acceptance or

signature, and stated: "This offer supersedes all previous offers or arrangements, whether written or

verbal." Id. The new compensation structure became effective with the next fiscal year beginning

October 1, 2002. The record indicates that Daub began receiving commissions which resulted from

the new compensation plan, and were not based on his previous compensation structure. Decl.

Loretta Aidkonis Supp. Mot. Summ. J. ("Aidkonis Decl.") ¶¶ 7-9. Daub began receiving these

commissions after September 2002. Larsen Decl., Ex. D (Daub Depo.) 127:11-19. The factual

record does not indicate that Daub refused the commission payments under the new compensation

structure, objected to his new title or the instruction to focus on the western region or otherwise

stopped performing. Therefore, applying Schoppert, plaintiff's continuing to work and accepting of

payments under the new compensation structure constitutes legal acceptance of the new

compensation structure.10

3. Recruiting Bonus

Daub contends he is owed bonuses for introducing job candidates. However, as Eagle

argues, Daub points to no evidence that any such bonus was earned by Daub in accordance with the

terms of the recruiting bonus in his offer letter. Daub contends only that he "introduced such

candidates but was never given any documentation with such bonuses ever being paid" without

naming specific candidates and the status of such candidates' employment with Eagle on their one

year service date. This is insufficient to support a claim that any recruiting bonus is owed, and

nothing in the record creates a genuine issue of material fact that such amounts are owed to Daub.

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11 Defendant argues that it has produced its board minutes in discovery. Defendant further

argues that although plaintiff indicates that he has filed a motion to compel the board minutes,

defendant was never served with such a motion, nor is such a motion reflected on the docket for the

present action. According to the docket, on October 25, 2006 plaintiff's filed a motion to compel

responses to certain interrogatories and requests for documents, set for hearing before the magistrate

judge on November 29, 2006. See Docket Nos. 41, 42, 43. However, that motion to compel does

not include any requests for board minutes. 

12 Plaintiff omits the requirement "and places decisions regarding the operation of daily

business matters and personnel management with the resulting corporate form" in arguing that the

evidence supports that there was a change of control. 

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4. Change of Control Provision

Plaintiff also contends that there is a genuine issue of material fact regarding whether he

should have received severance benefits after his termination based on the change in control

provision in his offer letter. Specifically, he contends there is an issue of fact whether there was a

change in control when TA Associates purchased sixty-two and one half percent of Eagle's

outstanding capital stock and whether the termination of his employment without cause was a result

of the change of control. Plaintiff offers no support for this claim, contending instead that he is not

able to show what documents support this claim at this time because, although he has requested

minutes of the meetings of the board of directors with references to Daub or his position from

defendant, he has not received such documents. See Pl.'s Opp. at 16:27-17:2.11 

Pursuant to the change in control/severance benefits provision in Daub's offer letter, "in order

to protect the Employee's interests in the event of such a change [in control], the Company shall

offer 'Severance Benefits' to the Employee in the event that Employee's employment is terminated as

a result thereof." AC, Ex. 1 at 4. A change in control is defined as "a change of majority ownership

or material change of corporate form which results in the establishment of a board of directors and

places decisions regarding the operation of daily business matters and personnel management with

the resulting corporate form." AC, Ex. 1 at 4.12 Defendant points to, inter alia, the deposition

testimony of Jameson Jones McJunkin, one of the TA Associates representatives on Eagle's board of

directors.

According to McJunkin, he never recommended that Daub's position or responsibilities be

changed or that Eagle terminate Daub's employment. Larsen Decl., Ex. G (McJunkin Depo.) at

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13 It is unclear from McJunkin's deposition testimony whether Ted Foxman informed only

McJunkin or the entire board that he was terminating Daub's employment.

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33:23-34:2; 40:14-18. Although TA Associates held sixty-two and one half percent of the capital

stock of Eagle, voting on company matters was not weighted according to the amount of share

ownership of the board members. Id. at 35:9-13. Rather, TA Associates "has a history of being the

minority investor in the founder-owned companies." Id. at 35:13-15. Its philosophy is to "not

interfer[e] with the day-to-day management of the company." Id. at 35:17-18. McJunkin further

testifies that Ted Foxman had commented to him that Daub was not performing well relative to

expectations and that he had had a conversation with Daub to make that clear. Id. at 41:1-11. 

Subsequently, Ted Foxman informed McJunkin that Eagle was terminating Daub's employment.13

Id.

Based on this factual record, there is no genuine issue of material fact as to whether TA

Associates's investment in Eagle resulted in a change of control as defined in Daub's offer letter. 

There is evidence that Eagle never placed decisions regarding Eagle's day to day business matters

and the management of personnel with the new corporate form, and no evidence showing that the

new board took over management of the day to day business and personnel matters. The evidence

shows that Daub's employment was terminated for performance related reasons approximately

fourteen months after TA Associates's investment in Eagle. In addition, the evidence indicates that

the decision to terminate Daub's employment was made by the Foxmans with no input from the TA

Associates representatives serving on Eagle's board. There is no evidence that gives rise to an

inference that Daub's employment was terminated "as a result" of any purported change in control. 

C. Age Discrimination Claim

Eagle moves for summary judgment of Daub's claim that his employment was terminated on

the basis of his age in violation of the Fair Employment and Housing Act ("FEHA"). Under FEHA,

"[a] discharge is not 'on the ground of age' . . . unless age is a 'motivating factor' in the decision. 

West v. Bechtel Corp., 96 Cal. App. 4th 966, 978 (2002). "[A]n employee claiming discrimination

must offer substantial evidence that the employer's stated nondiscriminatory reason for the adverse

action was untrue or pretextual, or evidence the employer acted with a discriminatory animus, or a

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combination of the two, such that a reasonable trier of fact could conclude the employer engaged in

intentional discrimination."

1. Evidence of Pretext

"California has adopted the three-stage burden-shifting test established by the United States

Supreme Court for trying claims of discrimination, including age discrimination, based on a theory

of disparate treatment." Guz v. Bechtel Nat'l, Inc., 24 Cal. 4th 317, 354 (2000). The three-stage

burden-shifting test set forth in McDonnell Douglas Corp. v. Green, 411 U.S. 792, 802-05 (1973),

provides that once plaintiff has set forth a prima facie showing of discrimination, the burden shifts to

the defendant to "articulate some legitimate, nondiscriminatory reason" for the employment decision

at issue. "Then, in order to prevail, the plaintiff must demonstrate that the employer's alleged reason

for the adverse employment decision is a pretext for another motive which is discriminatory." 

Wallis v. J.R. Simplot Co., 26 F.3d 885, 889 (9th Cir. 1994). In a summary judgment motion, "[i]f a

rational trier of fact could, on all the evidence, find that the employer's action was taken for

impermissibly discriminatory reasons, summary judgment for the defense is inappropriate." Id.

Here, defendant appears to concede that plaintiff has established a prima facie case. See

Def.'s Mot. Summ. J. at 14-19. Rather, defendant argues that Eagle terminated Daub's employment

due to his poor performance and Daub has not offered evidence that this reason is pretextual. Eagle

points out that it had twice reduced Daub's responsibilities, namely, from overseeing world wide

sales, to North America sales, and then only to sales in the western region, due to lack of

performance. Larsen Decl., Ex. E (Leonard Foxman Depo.) at 97:8-99:10. In the latest reduction of

responsibilities, Daub began reporting to a salesperson who had previously reported to Daub. 

Larsen Decl., Ex. F (Ted Foxman Depo.) at 60:6-19, 61:1-62:2; Larsen Decl., Ex. D (Daub Depo.) at

117:2-16, 150:9-15. In opposition, plaintiff argues that he has established a prima facie case of age

discrimination. However, plaintiff does not offer sufficient evidence that the legitimate,

nondiscriminatory reason offered by defendant is pretextual. To the extent the defendant articulates

legitimate, nondiscriminatory reasons, "a plaintiff cannot defeat summary judgment simply by

making out a prima facie case":

The plaintiff must do more than establish a prima facie case and deny the credibility

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14 Harris' role and relationship to Daub is unclear from the deposition testimony excerpt

submitted in support of Daub's opposition to defendant's motion for summary judgment.

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of the defendant's witnesses. In response to the defendant's offer of

nondiscriminatory reasons, the plaintiff must produce specific, substantial evidence

of pretext. In other words, the plaintiff must tender a genuine issue of material fact as

to pretext in order to avoid summary judgment.

Wallis, 26 F.3d at 890 (citations and internal quotations omitted). 

To support that defendant's articulated nondiscriminatory reason was pretext, plaintiff

contends that his good performance is evidenced by the increase in Eagle's sales during his

employment from $23 million in 2001 to over $111 million in 2004. Daub Decl. ¶ 5 ("as Vice

President of Sales and Marketing for Eagle Test Systems, I was instrumental in increasing sales

from $23 million in 2001 to over $111 million in 2004"). Daub offers the testimony of Thomas

Mordue, formerly employed at Eagle as director of Asian sales and strategic accounts manager for

Northern California. Bohn Decl., Ex. 4 (Mordue Depo.) at 13:4-8. Mordue testified that he had

worked with Daub for twelve and a half years at LTX prior to working at Eagle, and then worked

with Daub for over a year at Eagle. Id. at 44:12-17. He testified that Daub is always at work first in

the morning and the last to turn off the lights, that "[h]e tracks every detail," "[h]e helped me with

everything I needed," "[h]e led by example," and "[h]e's the sales VP in the industry." Id. at 44:24-

45:9. Daub also offers the deposition testimony of Mike Harris, who first met Daub in May 2006.14

Bohn Decl., Ex. 2 (Harris Depo.) at 29:6-20. Harris testifies that he had heard that Daub "was a

legend in the field" and "was the sales guru" at LTX and "was very good at his job." Id. at 29:6-20. 

The testimony which Daub points to is insufficient to raise a genuine issue that defendant's

articulated reason that Daub was terminated for his poor performance at Eagle was pretextual. 

Mordue was not even employed at Eagle during the last year and one-half or so of Daub's

employment. Further, Mordue's testimony about Daub's performance was limited to the help Daub

provided Mordue and Daub's record keeping. It did not include anything about Daub's overall

performance, his maintenance of old clients or development of new ones. Moreover, evidence in the

record indicates that Len Foxman had complained about Daub's performance prior to termination of

his employment. According to David Miller to whom Daub reported during some portion of his

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15 Miller was formerly employed at Eagle as director of North American sales and eastern

region manager.

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employment15, Len Foxman complained to him that Daub was not effective, was not hiring new

people fast enough, and was not bringing in new accounts. Bohn Decl., Ex. 3 (Miller Deop.) at

55:9-56:16. Harris did not even meet Daub until May of 2006, approximately two years after Daub's

employment at Eagle had ended.

2. Evidence of Employer Acted With A Discriminatory Animus

Defendant's argument that the evidence does not support a showing that the decision to

terminate Daub's employment was motivated by discriminatory animus is twofold. First, defendant

argues that although plaintiff has pointed to purportedly ageist comments, such comments do not

overcome the "same actor presumption" that there is no discriminatory motive. Second, defendant

contends that those purportedly ageist comments were stray remarks insufficient to show that age

was a motivating factor for termination of Daub's employment. 

In California, "where the same actor is responsible for both the hiring and the firing of a

discrimination plaintiff, and both actions occur within a short period of time, a strong inference

arises that there was no discriminatory motive." Horn v. Cushman & Wakefield Western, Inc., 72

Cal. App. 4th 798, 809 (1999). Although the passage of time generally would attenuate this

presumption, under California case law, four years is still considered a short time and "is not so long

a time as to attenuate the presumption." Id. (holding that five years is a relatively short time and not

so long as to attenuate the presumption). Here, the parties do not dispute that Leonard Foxman

made the decisions to hire Daub and to terminate Daub's employment. Daub was sixty-four years

old at the time he was hired, and sixty-eight when his employment was terminated four years later. 

There is no dispute that Leonard Foxman is eight years younger than Daub. When Daub's role was

changed to vice president of western region sales, his prior role of vice president of North America

was filled by the promotion of a sixty year old sales person. Larsen Decl., Ex. D (Daub Depo.) at

117:2-16; Aidikonis Decl. ¶ 13. Although Daub points to remarks made by Foxman, at least one of

those remarks was directed at both Foxman and Daub together, namely, "Ah, we're too old for this,

huh, Ken? We're getting too g------ old for this." Based on the factual record, the evidence of ageist

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remarks tendered by Daub does not overcome the same actor presumption of no discriminatory

motive. Cf. Buhrmaster v. Overnite Transp. Co., 61 F.3d 461, 464 (6th Cir. 1995) (observing that

"[i]n discrimination cases where the employee's class does not change, it remains possible that an

employer who has nothing against women per se when it hires a certain female will have nothing

against women per se when it fires that female, regardless of the number of years that pass.")

Similarly, the allegedly ageist comments that plaintiff points to fail to demonstrate that

Leonard Foxman's decision to terminate his employment was motivated by age animus. First, only

one comment appears to be directed toward Daub, namely, that Leonard Foxman stated Daub is

made up of "cuts and jumpers." This comment was made about two years prior to the date Foxman

terminated Daub's employment. Second, as noted above, another comment was directed toward both

Foxman himself and Daub. The record does not establish that this comment was made close to the

date Daub's employment was terminated. See Horn, 72 Cal. App. 4th at 810 (citing Smith v.

Firestone Tire and Rubber Co., 875 F.2d 1325, 1330 (7th Cir. 1989) (holding that "stray

remarks, . . . when unrelated to the decisional process, are insufficient to demonstrate that the

employer relied on illegitimate criteria, even when such statements are made by the decision-maker

in issue")). Third, the comment made by Leonard Foxman about one year before Daub was let go

that a sales manager candidate was too old to be effective at Eagle if he was retired from

Schlumberger is of marginal relevance and does not suggest that Daub was fired because of his age. 

The comment more likely reflects the reality that someone who had worked for years for another

company and chose to retire was not likely to still have sales contacts and the desire to make him a

promising candidate for a position at another company. See Birbeck v. Marvel Lighting Corp., 30

F.3d 507, 512 (4th Cir. 1994). Further, the comment was remote in time to Daub's employment

termination. Id.

Daub also argues that Eagle had terminated other employees based on age. Pl.'s Opp. at 9:9-

16. First, David Miller, a sales manager, was terminated from employment after four years at Eagle,

prior to his pension vest date. Bohn Decl., Ex. 3 (Miller Depo.) at 34:18-20. Miller was about

sixty-two years old when his employment was terminated. Miller testified that Leonard Foxman

promised him four weeks of severance pay when his employment was terminated, but never paid the

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severance. Id. at 38:6-18; 39:20-21. Second, according to Daub's deposition testimony, Ted

Foxman asked Daub to terminate Blaser's employment for lack of performance. Bohn Decl., Ex. 1

at 38:11-19. Blaser worked at Eagle for five years and was sixty-five years old at the time his

employment was terminated. Id. at 38:20-21. Blaser reported to Miller and Milller's boss was Ted

Foxman. Id. at 40:5-8. Ted Foxman commented to Daub that Blaser "is too old to be effective at

Eagle Test Systems." Id. at 38:15-17. In addition, Daub testified that Ted Foxman asked him to

terminate Blaser's employment prior to Blaser's fifth anniversary because "it would cost the

company a whole lot of money if we didn't get him out of here before his fifth year." Id. at 39:11-

17. 

However, these facts are not sufficient to show the existence of age animus or that Eagle's

termination of Daub's employment was motivated by discriminatory animus based on age. Although

Daub testified that Ted Foxman, not Leonard Foxman, commented that Blaser was too old to be

effective at Eagle, Daub also testified that Ted Foxman asked him to terminate Blaser for lack of

performance. Id. at 38:11-12. In addition, Daub testified that on at least on three prior occasions,

Ted Foxman had complained of Blaser's performance to Daub, expressing concerns that he was not

getting a full day's work out of Blaser and that Blaser was not generating enough business. Id. at

40:9-17; 41:20-23. 

Daub's contention that there is age animus on Eagle's part because it purportedly aims to

terminate employees' employment prior to the vesting of benefits on their fifth anniversary, such as

in Miller's case, is not persuasive. According to the record, the pension, profit-sharing, and ESOP

benefits offered by Eagle did not vest based on the age of an employee, but rather on the fifth

anniversary of employment regardless of age. Moreover, Daub testified that Blaser's employment

was actually not terminated until four months after the conversation between Ted Foxman and Daub,

and after Blaser's fifth anniversary and the vesting of his benefits. Id. at 42:1-25. Further, in Daub's

case, Eagle characterized Daub's firing as a retirement and amended its ESOP plan to permit Daub to

vest even though he had not met the five year vesting period. 

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ORDER GRANTING DEFENDANT EAGLE TEST SYSTEMS, INC.'S MOTION FOR SUMMARY JUDGMENT—No.

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III. ORDER

For the foregoing reasons, the court GRANTS Eagle's motion for summary judgment.

DATED: 12/21/06

RONALD M. WHYTE

United States District Judge

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ORDER GRANTING DEFENDANT EAGLE TEST SYSTEMS, INC.'S MOTION FOR SUMMARY JUDGMENT—No.

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Notice of this document has been electronically sent to:

Counsel for Plaintiff:

Robert Herbert Bohn Snr. bbohn@bohnlaw.com 

Counsel for Defendants:

Ryan James Larsen ryan.larsen@kattenlaw.com 

Counsel are responsible for distributing copies of this document to co-counsel that have not

registered for e-filing under the court's CM/ECF program.

Dated: 12/21/06 SPT

Chambers of Judge Whyte

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