Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_06-cv-01205/USCOURTS-caed-2_06-cv-01205-1/pdf.json

Parties Involved:
Aaron Beckman
Plaintiff
Umpqua Bank
Defendant

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IN THE UNITED STATES DISTRICT COURT 

FOR THE EASTERN DISTRICT OF CALIFORNIA 

AARON BECKMAN 

 Plaintiff, 

 v. 

UMPQUA BANK and DOES 1 through 

20, inclusive, 

 Defendants. /

No. Civ. S-06-1205 RRB GGH 

Memorandum of Opinion

and Order

Aaron Beckman (“Beckman”) filed an action against his 

former employer Umpqua Bank (“Umpqua”) alleging that Umpqua 

failed to pay him for wages that he earned selling loans. 

Umpqua now moves for summary judgment on the ground that Beckman 

is not entitled to the relief his seeks because such 

compensation was an “incentive bonus” that Umpqua was 

contractually permitted to allocate at its discretion. For the 

reasons stated below, Umpqua’s motion is GRANTED.1

 

1 Inasmuch as the Court concludes the parties have submitted 

memoranda thoroughly discussing the law and evidence in support 

of their positions, it further concludes oral argument is 

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I. BACKGROUND 

 Beckman is a former Business Development Officer of Umpqua 

who specialized in the marketing and sale of Government 

Guaranteed Loans, such as Small Business Administration Loans. 

Pl.’s Separate Stmt. of Undisputed Facts (“UMF”) ¶¶ 2-3, In Opp. 

to Def.’s Mtn. for Summary Judgment (“MSJ”). Beckman began 

working for Umpqua in mid-2004 when Umpqua merged with his then 

employer, Humboldt Bank. Pl.’s UMF ¶ 2. 

 In January 2005, Beckman and Umpqua entered into a new 

compensation plan whereby Beckman agreed to receive a salary 

plus an “incentive bonus.” Pl.’s UMF ¶ 4. As part of this new 

compensation plan, Beckman agreed to the terms of Umpqua Bank’s 

Incentive Plan (“Incentive Plan”),2

 which expressly superseded 

any prior compensation plans. Pl.’s UMF ¶ 4. 

 

neither necessary nor warranted with regard to the instant 

matter. See Mahon v. Credit Bureau of Placer County, Inc., 171 

F.3d 1197, 1200 (9th Cir. 1999)(explaining that if the parties 

provided the district court with complete memoranda of the law 

and evidence in support of their positions, ordinarily oral 

argument would not be required). As a result, the oral argument 

presently scheduled for August 22, 2007, at 10:00 a.m., is 

hereby VACATED. 

2 The Incentive Plan is titled “Umpqua Bank Incentive Plan 

Terms & Conditions.” Exh. 3, attached In Support of Def.’s MSJ. 

The stated purpose of the plan is to “drive and reward 

performance that ensures Umpqua Bank delivers outstanding 

customer service, products and financial results.” Id. 

According to Umpqua, the plan “established an incentive schedule 

that compares favorably to industry standards and ensures the 

Bank’s ability to attract and retain highly productive 

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Under the new Incentive Plan, Beckman was eligible to 

receive a quarterly “incentive bonus.” Pl.’s UMF ¶ 5. His 

eligibility for this bonus, and the amount thereof, was based on 

a variety of factors and payable at the sole discretion of 

Umpqua’s Incentive Plan Administrators. Pl.’s UMF ¶ 6; Exh. 3, 

attached In Support of Def.’s MSJ.3

 The Administrators of the 

Incentive Plan are: Umpqua’s Chief Executive Officer, his 

executive designee, and the Senior Vice President of Human 

Resources. Pl.’s UMF ¶ 6; Exh. 3, attached In Support of Def.’s 

MSJ. 

 On August 18, 2005, Beckman resigned from Umpqua and joined 

a competitor, the day after Umpqua made an incentive payout for 

the second quarter of 2005. Pl.’s UMF ¶¶ 2, 11-12. Beckman 

 

Employee’s” by “recognize[ing] and reward[ing] them based on 

production and pricing.” Id. 

 

3 The Incentive Plan, expressly states that: “[f]inal 

determination of goal attainment, including both individual and 

company performance, and approval of any payment awards made 

under the plan are subject to the discretion of the CEO, his 

executive designee and the SVP of Human Resources, the 

Administrators of the plan.” Exh. 3, attached In Support of 

Def.’s MSJ. The Incentive Plan also states that: “[t]he 

Administrators have full power and authority to select 

participants from among those eligible, to determine the size 

and timing of individual awards, to terminate or modify any plan 

or payout amount, and to adopt and revise such rules and 

procedures as they deem necessary.” Id. Finally, the 

Incentive Plan states that it: “can be amended, suspended or 

terminated at any time by the Administrators. Umpqua Bank 

reserves the right to modify, suspend, change the size of the 

award or terminate any incentive plan or an individual award at 

any time.” Id.

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purposely timed his resignation in this manner because he knew 

that, under the express terms of the Incentive Plan, employees 

were not eligible for an incentive payout if they were not 

employed on the day a payout was made, even if they had worked 

during the entire performance period. Pl.’s UMF ¶¶ 7, 10 & 12.4

 In September 2005, Beckman contacted Umpqua and requested 

that it make an exception to the terms of the Incentive Plan by 

paying him an incentive bonus for loans that he worked on during 

his employment but that closed after his resignation. Pl.’s UMF 

¶ 13. Umpqua declined Beckman’s request. Pl.’s UMF ¶ 14. On 

April 5, 2006, Beckman filed the instant action alleging the 

following claims: (1) breach of California Labor Code §§ 201 and 

203; (2) breach of contract; and (3) violation of California 

Business and Professions Code § 17200. Pl’s UMF ¶ 15. 

II. DISCUSSION 

Umpqua argues that each and every claim alleged by Beckman 

fails as a matter of law because the compensation he seeks is an 

incentive bonus that was payable at its sole discretion. 

Beckman’s claims are addressed individually below. 

 

4 The Incentive Plan expressly states that in order for an 

employee to be eligible for an incentive payout, he or she “must 

be employed by the Bank on the date of incentive payout, even if 

the associate was employed during the entire performance period 

. . .” Exh. 3, attached In Support of Def.’s MSJ. 

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A. Legal Standard 

 Federal Rule of Civil Procedure 56(c) provides for summary 

judgment when “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 

judgment as a matter of law.” Fed.R.Civ.P. 56(c). 

B. Labor Code Violations 

Umpqua argues that this claim fails as a matter of law 

based on the plain language of the Incentive Plan. 

 “If an employee not having a written contract for a 

definite period quits his or her employment, his or her wages 

shall become due and payable not later than 72 hours thereafter, 

unless the employee has given 72 hours previous notice of his or 

her intention to quit, in which case the employee is entitled to 

his or her wages at the time of quitting.” Cal. Lab. Code § 

202(a). “‘Wages’ includes all amounts for labor performed by 

employees of every description, whether the amount is fixed or 

ascertained by the standard of time, task, piece, commission 

basis, or other method of calculation.” Cal. Lab. Code § 

200(a).5

 

5 “If an employer willfully fails to pay, without abatement 

or reduction, in accordance with Sections 201, 201.5, 202, and 

205.5, any wages of an employee who is discharged or who quits, 

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 Bonus incentive plans are considered wages within the 

meaning of Labor Code § 200. Neisendorf v. Levi Strauss & Co.,

143 Cal.App.4th 509, 522 (2006).6 In California, “once a bonus 

has been promised as part of the compensation for service, and 

the employee fulfills all the agreed-to conditions, the promised 

bonus is considered wages that must be paid.” Id. “California 

courts have consistently characterized bonus . . . plans as 

constituting an offer of the stated benefits in exchange for the 

service of an employee, and upon the employee’s completion of 

the required services in accordance with the terms of the plan,

a binding contract is formed under which the employer is 

obligated to deliver the promised benefits.” Neisendorf, 143 

Cal.App.4th at 523 (italics in original). Thus, Beckman’s 

eligibility for a bonus payment is properly determined by the 

 

the wages of the employee shall continue as a penalty from the 

due date thereof at the same rate until paid or until an action 

therefor is commenced; but the wages shall not continue for more 

than 30 days.” Cal. Lab. Code § 203. 

6

 Under Labor Code § 200, wages are defined to include 

commissions. “‘Commission wages are compensation paid to any 

person for services rendered in the sale of such employer’s 

property or services and based proportionately upon the amount 

or value thereof.’” See Ramirez v. Yosemite Water Co., Inc., 20 

Cal.4th 785, 803 (1999) (quoting Cal. Lab. Code § 204.1). 

Although an employee’s sales commissions are “wages,” 

contractual terms must be met before an employee is entitled to 

a commission. Steinhebel v. Los Angeles Times Communications, 

126 Cal. App. 4th 696, 705 (2005).

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specific terms of the bonus plan and general contract 

principles. Id. 

 Here, Beckman argues that he is entitled to a percentage of 

the loans he sold that closed after his resignation because such 

compensation constitutes unpaid wages. Beckman argues that 

Umpqua purposefully characterized such compensation as a bonus, 

instead of a commission, in order to create a forfeiture of 

earned wages. The court disagrees. 

 The undisputed evidence demonstrates that Beckman knew that 

the compensation plan offered by Umpqua superseded any prior 

compensation plans and that his eligibility for an incentive 

bonus under that plan was determined at the sole discretion of 

Umpqua’s Administrators based on a variety of factors, including 

his performance, the financial performance of Umpqua and the 

general banking market. Pl.’s UMF ¶¶ 4-7. It is also 

undisputed that Beckman knew at the time he signed the Incentive 

Plan that he was only eligible for an incentive bonus for a 

given performance period if he was employed on the date of the 

bonus payout for that period. Pl.’s UMF ¶¶ 7, 10. Finally, it 

is undisputed that Umpqua has never paid an incentive bonus, in 

whole or part, to any individual that was not employed by Umpqua 

on the date of the bonus payout. Pl.’s UMF ¶ 9. 

 Based on the foregoing, the court concludes that Beckman is 

not entitled to the compensation he seeks. This is because 

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Beckman failed to complete all the agreed-to conditions, in 

accordance with the terms of the Incentive Plan, to make him 

eligible for an incentive bonus for loans closing after his 

resignation. Notably, Beckman was not employed on the date of 

the incentive payout for the third quarter. Therefore, pursuant 

to the plain terms of the Incentive Plan, Beckman was not 

eligible for an incentive bonus for loans closing during that 

period, i.e., loans closing after his resignation. See Lucian 

v. All States Trucking Co., 116 Cal.App.3d 972, 974-75 (1981) 

(granting summary judgment in favor of an employer against 

several employees who sought bonus payouts after voluntarily 

resigning before the end of the year, where a written employment 

plan provided for a bonus to be payable at the end of the year, 

but specified that employees who voluntarily left the company 

before the bonus determination date would not be entitled to the 

bonus). 

Accordingly, because Beckman is not entitled to the 

compensation he seeks, Umpqua did not fail to pay earned wages 

in violation of the Labor Code. 

 With respect to Beckman’s argument that he is entitled to 

the compensation he seeks because it is a commission, the court 

rejects this argument. The plain language of the Incentive Plan 

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states that incentive payouts are discretionary7 and subject to 

adjustment based on a variety of factors, including an 

employee’s performance, the financial performance of Umpqua and 

the general banking market. As such, Beckman’s incentive 

payouts were not based proportionately upon the percentage of 

loans sold. Therefore, because Beckman was not entitled to a 

certain percentage of the loans he sold, the incentive payouts 

are not accurately characterized as a commission.8 Moreover, 

even assuming the incentive payouts are characterized as a 

commission, Beckman is not entitled to the compensation he seeks 

because the terms of the Incentive Plan expressly condition an 

incentive payout on an employee being employed on the day of the 

incentive payout. See Steinhebel, 126 Cal.App.4th at 705 

(noting that while an employee’s sales commissions are “wages,” 

 

7 Indeed, the incentive payouts were determined by Umpqua’s 

Administrators who were vested with the “full power and 

authority to select participants from among those eligible, to 

determine the size and timing of individual awards, to terminate 

or modify any plan or payout amount, and to adopt and revise 

such rules and procedures as they deem necessary.” Exh. 3, 

attached In Support of Def.’s MSJ. Beckman acknowledges that 

the Administrators have exercised their discretion to adjust 

bonuses up or down or to completely withhold a bonus. Pl.’s UMF 

¶ 8. 

8 There are two essential requirements for a compensation 

scheme to be deemed “commission wages”: (1) the employee must be 

involved principally in selling a product or service, rather 

than making or providing the product or service; and (2) the 

amount of payment must be a percent of the price of the product 

or service. Wayne v. Staples, Inc., 135 Cal.App.4th 466, 478 

(2006).

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contractual terms must be met before an employee is entitled to 

a commission). 

 For these reasons, the motion is granted with respect to 

this claim. 

C. Breach of Contract 

 Umpqua argues that this claim fails as a matter of law 

because Beckman failed to demonstrate a breach of the Incentive 

Plan. 

 To state a cause of action for breach of contract, a 

plaintiff must plead the following elements: (1) the existence 

of a contract between the parties; (2) the plaintiff’s 

performance or excuse for nonperformance; (3) the defendant’s 

failure to perform (breach); and (4) resulting damages. Careau 

& Co. v. Security Pacific Business Credit, Inc., 222 Cal. App. 

3d 1371, 1388 (1990). 

 Here, Beckman’s breach of contract claim is premised on 

Umpqua’s alleged failure to pay commissions for loans closing 

after his resignation. Because the unambiguous terms of the 

Incentive Plan require Beckman to be employed on the date of the 

incentive payout in order to be eligible for an incentive bonus, 

Umpqua did not breach the Incentive Plan as Beckman was not 

employed on the date of the bonus payout for the performance 

period in which the loans at issue closed. 

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 For these reasons, the motion is granted with respect to 

this claim. 

D. Business & Professions Code § 17200 

 Umpqua argues that Beckman’s § 17200 claim fails as a 

matter of law because there is no underlying unlawful act to 

support this claim. 

 Business and Professions Code § 17200 prohibits: any (1) 

unlawful, (2) unfair, or (3) fraudulent business practice or 

act. See People ex rel. Bill Lockyer v. Fremont Life Ins. Co.,

104 Cal.App.4th 508, 515 (2002). “With respect to the unlawful

prong, ‘[v]irtually any state, federal or local law can serve as 

the predicate for an action’ under section 17200.” Id. (italics 

in original). “[I]n essence, an action based on . . . section 

17200 to redress an unlawful business practice borrows 

violations of other laws and treats these violations, when 

committed pursuant to a business activity, as unlawful practices 

independently actionable under section 17200 et seq. and subject 

to the distinct remedies provided thereunder.” Id. (quotation 

marks omitted). 

 Here, because Beckman’s § 17200 claim is premised on 

Umpqua’s alleged failure to pay him earned wages in violation of 

substantive provisions of the Labor Code, it fails as a matter 

of law. See Steinhebel, 126 Cal.App.4th at 712 (while an 

employer’s policy or practice that violates the Labor Code may 

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also be held an “unlawful business practice” under § 17200 et 

seq., where an employer’s policy is lawful and permissible, 

there is no basis for relief under the unfair competition law). 

 For this reason, the motion is granted with respect to this 

claim. 

III. CONCLUSION 

 For the above stated reasons, the court grants summary 

judgment. 

IT IS SO ORDERED. 

 ENTERED this 24th day of August, 2007. 

 s/RALPH R. BEISTLINE 

 United States District Judge 

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