Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_04-cv-00790/USCOURTS-cand-3_04-cv-00790-10/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Other Contract

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 Plaintiff brought the following claims under California law: (1) nonpayment of

wages in violation of “California Industrial Wage Orders;” (2) waiting-time penalties under

California Labor Code for failure to pay wages when due; (3) breach of contract for

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

LANDIS MAEZ,

Plaintiff,

 v.

CHEVRON TEXACO CORP., CHEVRON

U.S.A. INC., CHEVRON ENERGY

SOLUTIONS L.P.,

Defendants.

 /

No. C 04-00790 JSW

FINDINGS OF FACT AND

CONCLUSIONS OF LAW

This action came on for a bench trial which began on October 11, 2005 and lasted three

court days. Plaintiff Landis Maez (“Plaintiff”) appeared by his counsel, Michael Mortimer, and

Defendants Chevron Corporation, Chevron U.S. A. Inc. and Chevron Energy Solutions, L.P.

(collectively, “Chevron”) appeared by their counsel, M.D. Moyle. The Court, having considered

the trial testimony and exhibits admitted into evidence, as well as the arguments of counsel,

hereby makes the following findings of fact and conclusions of law pursuant to Federal Rule of

Civil Procedure 52(a).

Plaintiff, a former Chevron sales employee, argues that: (1) he was owed wages when he

was terminated under the company’s incentive compensation plans; (2) Chevron terminated

Plaintiff’s employment for filing grievances in breach of Chevron’s agreement not to retaliate;

(3) Chevron prematurely withdrew Plaintiff’s stock options under the Long Term Incentive

Plan; and (4) Chevron owed him $17,000 in severance pay.1

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terminating him in retaliation for filing grievances; and (4) wrongful termination in violation

of public policy. Chevron argued that Plaintiff was not a California employee, and thus, was

not subject to the protection of California law. In Plaintiff’s brief entitled “Plaintiff’s Closing

Argument and Opposition to Defendants’ Motion for Judgment as a Matter of Law”

(“Plaintiff’s Br.”), Plaintiff concedes that Arizona law, rather than California law should be

applied. Plaintiff thus contends that he is bringing claims under Arizona law. Plaintiff

further concedes that under Arizona law, he cannot bring a claim for wrongful termination in

violation of public policy. Chevron does not argue that it would be prejudiced by Plaintiff’s

purported amendments to his complaint to assert claims under Arizona law at this late stage. 

Therefore, the Court will consider whether Plaintiff has proven any claims under Arizona law

for unpaid wages or breach of contract.

2

 Chevron Energy Solutions offered two types of projects: design-build and buildown-operate. In design-build projects, Chevron would design and install the cogeneration

system and then sell the system to the customer. (Transcript, 12:19-24, 31:4-14.) In buildown-operate projects, Chevron would purchase and install the equipment, maintain

ownership over the system, and then sell the energy produced by the system to the customer. 

(Transcript, 12:25-13:4, 31:15-18.)

2

FINDINGS OF FACT

Plaintiff was employed by Chevron. Plaintiff did not reside in California or maintain a

physical office in California at any time during his employment by Chevron. (Joint Stipulation

(“Joint Stip.”), Nos. 2, 3.) Plaintiff’s employment was terminated by Chevron on December 10,

2003 by a notice Plaintiff received on November 18, 2003. (Id., No. 7.) Plaintiff alleges that

when he was terminated, he was owed wages from commissions he earned from the Spa Casino

project and two “build-own-operate” (“BOO”) Sunkist projects.2

A. 2002 Short Term Incentive Plan.

In 2002, Plaintiff was covered by Chevron’s 2002 Short Term Incentive Plan. (Id., No.

16.) In 2002, the Sunkist projects had not yet been completed and Chevron had not yet received

any revenue for the them. (Id., No. 11.) Chevron paid Plaintiff $48,614 in bonus compensation

under the 2002 Short Term Incentive Plan for the year 2002. (Id., No. 12.) Plaintiff does not

contend that he was owed any compensation under the 2002 Short Term Incentive Plan for any

projects completed in 2002. 

Plaintiff argues that his projects in the first half of 2003 were covered by the 2002 Short

Term Incentive Plan because the 2003 Incentive Plan was not implemented until July 2003. 

(Transcript, 315:24-316:9.) The 2002 Short Term Incentive Plan provides that it is “[e]ffective

January 1, 2002 through December 31, 2002.” (Ex. 52.) Plaintiff testified that was never told

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that the 2002 Short Term Incentive Plan was extended to cover projects completed in 2003. 

(Transcript, 316:17 – 317:4.) Plaintiff did not present any evidence of specific projects in 2003

that were covered by the 2002 Short Term Incentive Plan or evidence as to what damages he

alleges he incurred under this plan. With respect to the Spa Casino project, the parties

specifically stipulated that Plaintiff earned compensation under the 2003 Incentive Plan. (Joint

Stip., No. 17.)

B. 2003 Incentive Plan and Payments.

The 2003 Incentive Plan provides that: 

For Booked Projects, seventy-five percent (75%) of the incentive based on the Projected

Gross Margin will be paid out once Chevron ES has received at least 20% of the total

sales price in cash. The balance of the incentive based on Final Gross Margin will be

paid after project closeout. A Scorecard Factor based on the 2003 year-end Chevron ES

Scorecard results will be paid out quarterly with a 0.9 Scorecard Factor. If at year-end

we have met or exceeded the Scorecard Goal, the proper adjustments will be made at

that time. 

This incentive plan will be applied to projects booked on or after January 1, 2003

through December 31, 2003... .

Rules of the Road:

1. No project will be “booked” and counted toward incentive without a fully

executed contract, completed cover sheet ... and the receipt of at least

20% of the total sales price in cash. Projects must be funded/financed for

incentive to be paid. Chevron ES reserves the right to withhold incentive

until payment is made, as well as adjust incentive for cost of money.

2. Incentive will be paid based on Projected Gross Margin once at least 20%

of the Booked Revenue is collected in cash. The balance of incentive

adjusted for Final Gross Margin will be paid at project close out. 

Payment will be made as follows:

• 75% paid once at least 20% of Booked Revenue has been received

by Chevron ES

• 25% paid after Project Close-Out, adjusted for Final Gross Margin

3. Incentive will be paid quarterly approximately 8 weeks after the financial

close of the fiscal quarter in which the above referenced payment is

received or the project is completed.

...

9. Matters such as disputes or challenges to the program or requests for nonstandard treatment, shall be directed to the Incentives Committee for

resolution. All decisions by the Incentives Committee shall be final.

...

12. .... Incentive will be paid out quarterly with a 0.9 Scorecard Factor. If at

year-end we have met or exceeded the Scorecard Goal, the proper

adjustments will be made at that time.

(Ex. 206.)

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By the time Chevron gave Plaintiff the 2003 Incentive Plan, the Sunkist projects had not

yet been implemented or become operational. (Joint Stip., No. 4.) Chevron calculated any

compensation owed to Plaintiff under the Sunkist projects pursuant to the 2003 Incentive Plan. 

(Id., No. 18.) 

Plaintiff contends that the total sales price for the two Sunkist Projects was $28.5

million, and thus, that 20 percent of this amount would have been close to six million. 

(Transcript, 334:16-21.) Plaintiff conceded that Chevron has not yet received the threshold 20

percent of the total sales price from these projects. (Id., 334:22-25.) In fact, Plaintiff testified

that Chevron had received only a couple of hundred thousand dollars by the date Plaintiff was

terminated on December 10, 2003. (Id., 291:1-8.) Plaintiff further conceded that pursuant to

the written terms of the 2003 Incentive Plan, Plaintiff is not due any compensation for the

Sunkist projects. (Id., 335:1-2.) Plaintiff also testified that he would not be eligible to receive

compensation for revenue Chevron received after his employment terminated. (Id., 97:2-22.)

The 2003 Incentive Plan provides that any disputes or challenges to the amount of

incentive payments “or requests for non-standard treatment, shall be directed to the Incentives

Committee for resolution.” (Ex. 206). The Plan further provides that “[a]ll decisions by the

Incentives Committee shall be final.” (Id.) With respect to the Sunkist projects, the Incentives

Committee decided it would pay Plaintiff a total of $40,157. The Incentives Committee further

found that Plaintiff had been paid $23,192 for the Sunkist Projects as part of his 2002 STIP, and

thus was owed only $16,965. (Exs. 29, 257; Transcript, 420:12-24.) Plaintiff received a check

for $16,965 from Chevron in September 2004. (Transcript 150:6-8.)

Chevron initially calculated that 75 percent of the incentive payment for the Spa Casino

project was $2465. (Ex. 207; Transcript, 584:10-12.) At the time Chevron made this

calculation, Chevron estimated that the margin for this project would be 13 percent, which is

less than the required percent under the 2003 Incentive Plan. (Ex. 207.) The Incentives

Committee made an exception for this project to pay Plaintiff 75 percent of the incentive

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3

 Plaintiff argued that “[i]n September 2003, the Incentive Committee ruled that all

[commercial and industrial facility] projects with more than 10% margin would qualify for

2003 Incentive Compensation.” (Plaintiff’s Br. at 14.) For support, Plaintiff points to his

testimony that at a sales meeting in mid-September 2003, the new Chief Operating Officer of

Chevron Energy Solutions, John Mahoney, told him that “because [commercial and industrial

facility] projects are not as lucrative as some of the demand side promise (sic), there was a

blanket dispensation for [commercial and industrial facilities]. Anything over 10 percent

qualified for margin reimbursement, and that was reflected in my Spa Casino template. 

(Transcript, 153:14-19.) The Court finds Plaintiff’s testimony that the Incentives Committee

agreed to a blanket exception to provide incentive compensation for all projects with a

margin of at least 10 percent to not be credible. 

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payment multiplied by the 0.9 scorecard factor. (Transcript, 582:11-21.)3 In September 2003,

Chevron paid Plaintiff $2,218.56 for the Spa Casino project. (Joint Stip., No. 5.) In March

2004, Chevron paid Plaintiff $245.51, which equals the remaining 10 percent of the first 75

percent of the projected commission for the Spa Casino project. (Id., No. 6.) When the Spa

Casino project was completed and all of the costs were considered, the margin on the project

was 14.1 percent. (Transcript, 286:6-9.)

C. Severance Pay.

When Plaintiff was terminated, Chevron offered Plaintiff a severance payment of

$17,000 for executing a release of claims. Plaintiff did not execute the release. Chevron did not

pay Plaintiff the $17,000 severance pay. (Joint Stip., No. 20.)

D. Stock Options.

Plaintiff received stock options under Chevron’s Long Term Incentive Plan (“LTIP”) in

2001, 2002, and 2003. (Joint Stip., No. 22; Exs. 62, 76, 98.) Chevron granted Plaintiff 1000

stock options on October 31, 2001, all of which were vested by the time Plaintiff was terminated

on December 10, 2003. (Ex. 98.) On June 26, 2002, Chevron granted Plaintiff 1000 options,

one-third of which had vested by the time Plaintiff was terminated. (Exs. 62, 98.) On June 25,

2003, Plaintiff was granted 1,200 stock options, but none of these had vested by the time he was

terminated. (Ex. 76.) Plaintiff did not exercise any vested options on or before March 10, 2004. 

(Joint Stip., No. 23.) When Plaintiff checked the status of his stock options in April 2004, he

observed that he no longer had any options remaining. (Transcript, 325:15-23.) 

The Long Term Incentive Plan provides:

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Upon Termination of employment for reasons other than (a) death, (b)

Disability, or (c) termination of employment (i) at or after age 50 and upon

completing ten Years of Service, (ii) at age 65 pursuant to the

Corporation’s mandatory retirement policy or (iii) following a Change in

Control under circumstances which cause the Optionee to become eligible

for severance pay under the applicable executive severance programs

maintained by the Corporation, vested Stock Options may be exercised

within 90 days from the date of terminate (but in no case later than ten

years from the date of grant.)

(Ex. 12.) Jeffrey Morris Jacobs, the Senior Vice-President of Chevron Energy Solutions,

testified that there is information relating to stock options on Chevron’s website indicating that

if a former employee fails to exercise his or her stock options with 90 days of termination, the

stock options are lost. (Transcript, 565:19-566:6.) 

Other than the stipulation that Plaintiff did not exercise any of his Chevron stock options

on or before March 10, 2004, Plaintiff did not submit any evidence indicating his history of

exercising stock options. Nor did Plaintiff present any evidence demonstrating: (1) when he

would have exercised these options, (2) what the value of the stocks were at that time, or (3)

what the exercise prices were for his vested options.

E. Grievances.

Plaintiff filed formal grievances under Chevron’s STEPS program on October 22, 2003

and November 18, 2003. (Joint Stip. No. 24.) The STEPS program provides, among other

things, that an employee filing a grievance will not be subject to retaliation. (Joint Stip. No. 25.)

Chevron presented credible evidence demonstrating it terminated Plaintiff as part of a

layoff, rather than in retaliation for any grievance he filled. Chevron acquired Viron in 2003. 

As result of the acquisition, Chevron conducted a reorganization and eliminated certain

positions. (Transcript, 238:3-240:20.) Chevron decided that it would shift its focus from

commercial and industrial facilities to Viron’s focus on public sector projects. (Id., 357:19-

359:5.) In line with this shift in focus, Chevron was no longer going to provide capital to invest

in on-site generation projects. (Id., 359:6-13.) In light of the fact that the company did not

have the resources or the interest to proceed with on-site generation projects, also referred to as

BOO projects, and that Plaintiff had primarily focused on BOO projects, Plaintiff’s direct

supervisor, Puneet Verma, ranked Plaintiff last out of five sales employees. (Id., 465:14-

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466:25.) In November 2003, Chevron laid off Plaintiff as part of its reorganization. (Exs. 213,

222; Transcript, 360:18-23, 363:3-10.)

CONCLUSIONS OF LAW

Plaintiff failed to demonstrate under Arizona law that Chevron owes Plaintiff additional

incentive payments either under the 2002 Short Term Incentive Plan or the 2002 Incentive Plan,

or that Chevron unlawfully delayed paying Plaintiff wages he was owed when his employment

was terminated. 

A. 2002 Short Term Incentive Plan.

Although Plaintiff argues that the 2002 Short Term Incentive Plan applied to his projects

in the first half of 2003, the 2002 Short Term Incentive Plan ended on December 31, 2002. (Ex.

52.) Plaintiff did not present any evidence demonstrating that Chevron extended the 2002 Short

Term Incentive Plan into 2003. Accordingly, the Court concludes that Plaintiff failed to

demonstrate that Chevron owed Plaintiff additional compensation under the 2002 Short Term

Incentive Plan.

Moreover, even if the Court could find that Plaintiff demonstrated the 2002 Short Term

Incentive Plan extended to cover projects in the first half of 2003, Plaintiff failed to present any

evidence from which the Court could determine what damages, if any, were incurred. See

Graham v. Asbury, 112 Ariz. 184, 185, 540 P.2d 656, 657 (Ariz. 1975) (plaintiff bears burden

of proving damages). The Court thus finds in favor of Chevron and against Plaintiff as to

Plaintiff’s claims for additional compensation under the 2002 Short Term Incentive Plan.

B. 2003 Incentive Plan.

Plaintiff argues that Chevron failed to pay him the full amount of incentive

compensation for the Sunkist projects and the Spa Casino project. The 2003 Incentive Plan

provides that Chevron is not obligated to pay any incentive payments unless the margin on the

project is at least 25 percent and until Chevron receives at least 20 percent of the sales price. 

(Ex. 206). If there is any dispute or challenge to the incentive payment or if an employee

requests non-standard treatment, the Incentives Committee has the ultimate authority to resolve

such issues. (Id.) 

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The Spa Casino project was never estimated to and did not actually reach the threshold

25 percent margin. (Ex. 207, Transcript, 286:6-9.) Chevron did not receive 20 percent of the

sales price on the Sunkist projects when Plaintiff an employee. (Transcript, 291:1-8, 334:22-

25.) The evidence demonstrates, and Plaintiff does not contend otherwise, that under the

written terms of the 2003 Incentive Plan, Chevron was not obligated to pay Plaintiff any

incentive compensation. Although the Incentives Committee made discretionary decisions to

pay Plaintiff some compensation for these projects, Plaintiff failed to demonstrated that the

Incentives Committee was obligated to pay Plaintiff a certain amount or that Chevron ever

entered into a binding agreement to pay Plaintiff an amount other than what was required by the

2003 Incentive Plan. 

Moreover, to the extent the Incentives Committee decided to provide Plaintiff some

compensation for these projects, Chevron paid Plaintiff such amount. Accordingly, Plaintiff

failed to show that he was owed any wages for the Spa Casino or Sunkist projects and thus, did

not demonstrate that Chevron breached any agreement to pay Plaintiff compensation. See

Graham, 112 Ariz. at 185, 540 P.2d at 657 (plaintiff bears burden of proving the existence of

the contract and its breach). Accordingly, the Court finds in favor of Chevron and against

Plaintiff as to Plaintiff’s claims for additional compensation under the 2003 Incentive Plan.

C. Breach of Contract: Retaliation.

With respect to Plaintiff’s claim that Chevron terminated him because he complained

about he incentive payments in violation of an agreement not to retaliate, the Court concludes

that the evidence demonstrates Chevron terminated Plaintiff as part of a layoff and

reorganization, not in response to any complaints or grievances Plaintiff filed regarding his

wages. Accordingly, the Court finds that Plaintiff failed to demonstrate causation and thus,

enters judgment in favor of Chevron on this claim. See Graham, 112 Ariz. at 185, 540 P.2d at

657 (plaintiff must prove damages resulting from a breach of contract). 

D. Severance Pay.

Plaintiff argues that Chevron owes Plaintiff $17,000 in severance pay. It is undisputed

that when Plaintiff was terminated, Chevron offered Plaintiff a severance payment of $17,000

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for executing a release of claims. However, Plaintiff did not execute the release. (Joint Stip.

No. 20.) “To bring an action for breach of the contract, the plaintiff has the burden of proving

the existence of the contract, its breach and the resulting damages.” Graham, 112 Ariz. at 185,

540 P.2d at 657. Because Plaintiff did not sign the agreement, Plaintiff failed to demonstrate an

agreement to pay severance existed. Accordingly, the Court finds for Chevron and against

Plaintiff on Plaintiff’s claim for severance pay.

D. Stock Options.

Finally, Plaintiff argues Chevron wrongfully terminated his vested stock options. The

Long Term Incentive Plan provides that Plaintiff had 90 days from the date of his termination to

exercise his vested stock options. (Ex. 12.) Moreover, Mr. Jacobs testified that Chevron’s

website explained that the failure to exercise vested stock options within 90 days of termination

would result in losing the options. It is undisputed that Plaintiff did not exercise his options

within the requisite 90 days. 

However, even if Plaintiff could have demonstrated that Chevron was not entitled to

terminate his vested stock options after 90 days, Plaintiff has not met his burden to provide

evidence from which the Court may calculate damages. See Graham, 112 Ariz. at 185, 540

P.2d at 657 (plaintiff bears burden of proving damages for breach of contract claim). Plaintiff

did not submit any evidence indicating his history of exercising stock options. Nor did Plaintiff

present any evidence demonstrating: (1) when he would have exercised these options, (2) what

the value of the stocks were at that time, or (3) what the exercise price was for his vested

options. 

Plaintiff argues that the Court should provide him equitable relief by issuing an

injunction requiring Chevron to return the vested stock options. However, where damages

would be adequate to provide compensation, the Court may not issue an injunction. See

Cracchiolo v. State, 135 Ariz. 243, 247, 660 P.2d 494, 498 (Ariz.App.1983). Here, had Plaintiff

provided evidence from which damages may have been determined, the Court could have

calculated damages. Thus, the Court could have awarded damages adequate to compensate

Plaintiff if he had met his burden to present evidence of his damages. Accordingly, the Court

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finds in favor Chevron and against Plaintiff on his breach of contract claim as to the stock

options. 

CONCLUSION

For the foregoing reasons, the Court finds in favor of Chevron and against Plaintiff on

all claims. 

IT IS SO ORDERED.

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Dated: May 11, 2006 

JEFFREY S. WHITE

UNITED STATES DISTRICT JUDGE

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