FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

BRUCE P. PAOLINI, 

Plaintiff-Appellant,

No. 03-35724 v.

D.C. No. ALBERTSON’S INC.; PLAN 

ADMINISTRATOR, of Albertson’s CV-02-00041-BLW

amended and restated stock-based OPINION

incentive plan,

Defendants-Appellees. 

Appeal from the United States District Court

for the District of Idaho

B. Lynn Winmill, District Judge, Presiding

Argued February 22, 2005

Submitted March 16, 2005

Submission Vacated August 10, 2005

Submitted April 6, 2007

Seattle, Washington

Filed April 6, 2007

Before: Betty B. Fletcher and Ronald M. Gould,

Circuit Judges, and Samuel P. King,* District Judge.

Opinion by Judge B. Fletcher

*The Honorable Samuel P. King, Senior United States District Judge

for the District of Hawaii, sitting by designation. 

3945
COUNSEL

Bruce P. Paolini, Pro se, Virginia Beach, Virginia, plaintiffcounterdefendant-appellant, 

J. Walter Sinclair, Harry S. Chandler, & Wade L. Woodard,

Stoel Rives LLP, Boise, Idaho, for defendantPAOLINI v. ALBERTSON’S INC. 3947
counterclaimant-appellee Albertson’s, Inc., and defendantappellee the Plan Administration of Albertson’s Amended and

Restated Stock-Based Incentive Plan. 

OPINION

B. FLETCHER, Circuit Judge: 

Bruce P. Paolini (“Paolini”) appeals the district court’s

grant of summary judgment to the defendants—Paolini’s former employer Albertson’s, Inc. and the Administrator of

Albertson’s, Inc.’s Stock-Based Incentive Plan (the “Plan

Administrator”), (collectively “Albertson’s”). 

I.

Paolini was an employee of Albertson’s for seventeen

years. He advanced to the position of Senior Vice President

of Labor Relations and Employment Law. During Paolini’s

time at Albertson’s he received several thousand stock

options. The options were issued pursuant to the Albertson’s

Amended and Restated 1995 Stock-Based Incentive Plan (the

“Plan”). According to the Plan, a “Change in Control” at the

company accelerated the vesting of the stock options. 

It is undisputed that in March 2001 Albertson’s adopted

new Corporate Governance Guidelines, and that, pursuant to

the Guidelines, the Board of Directors reduced its size. Six

directors resigned in June 2001. That month Albertson’s also

announced a significant restructuring plan that was to include

store closures, division consolidations, and process streamlining. 

Paolini communicated to the company that he believed

these changes amounted to a change in control, and he

attempted to exercise his stock options based on accelerated

3948 PAOLINI v. ALBERTSON’S INC.
vesting, under Section 13(a) of the Plan. The Plan Administrator denied his request on the grounds that the events did not

constitute a change in control as defined by the Plan. 

Soon after Paolini raised the issue of a change in control

and the attendant accelerated vesting of stock options, he left

his employment at Albertson’s. The parties dispute the factual

circumstances of his departure. 

On January 31, 2002, Paolini initiated this suit, challenging

the Plan Administrator’s decision and alleging that he had

been wrongfully terminated. Albertson’s counterclaimed for

monies due under a promissory note. The district court

granted summary judgment in Albertson’s favor. 

Paolini’s appeal raises three issues. First, he argues that

summary judgment was improper because material, disputed

facts remain as to whether certain events which occurred in

2001 accelerated the vesting of certain stock options he possessed. Second, Paolini contends that the district court erred

when it determined that, as a matter of law, he had not been

wrongfully discharged. Paolini maintains that he was wrongfully terminated in violation of Idaho’s wage laws, public policy, and the covenant of good faith and fair dealing. Finally,

Paolini argues that the district court erred when it granted

summary judgment to Albertson’s on its counterclaim, holding that he owed Albertson’s the principal and interest due on

a promissory note that had been extended to him. Because we

find that none of these arguments has merit, we affirm the district court’s ruling. 

II.

In granting Albertson’s motion for summary judgment, the

district court agreed with the Plan Administrator’s determination that Paolini’s stock options did not vest in 2001,1

 as do

we. 

1Paolini contests the deferential standard applied by the district court in

its review of the Plan Administrator’s decision. We need not determine

PAOLINI v. ALBERTSON’S INC. 3949
[1] The relevant contractual clause—Section 13(c) of the

Plan—provided:

“Change in Control” shall mean the occurrence in a

single transaction or series of transactions of any one

of the following events or circumstances . . . (ii)

merger, consolidation, or reorganization of the Company where 20% or more of the incumbent directors

of the Company are changed. 

Paolini argues that “20% or more of the incumbent directors

. . . changed” in 2001. This, however, is irrelevant, because

Paolini has not alleged facts that would constitute a “merger,

consolidation, or reorganization,” as required by Section 13(c).2

III.

Paolini claims that he was wrongfully discharged in retaliation for asserting that he and others were entitled to accelerated vesting and for acting to exercise his stock options. He

argues this was a violation of Idaho’s wage laws, public policy, and the covenant of good faith and fair dealing. 

whether this standard was proper, however, because we affirm, upon de

novo review, the substance of the Administrator’s decision. We find that

Paolini has not raised a genuine triable issue as to whether a “Change in

Control” occurred in 2001. 

2We understand the Plan’s requirement of a change of 20% or more of

the incumbent directors to supply a modifier, but not a definition, for the

term “reorganization.” We rely on the commonly understood definition of

“reorganization” in a corporate context. See, e.g., 19 Am. Jur. 2d Corporations §§ 2306 (citing, for example, People ex rel. Barrett v. Halsted Street

State Bank, 14 N.E.2d 872, 877 (Ill. App. Ct. 1938)), 2309; 15 Fletcher

Cyclopedia of the Law of Private Corporations §§ 7201, 7202, 7205,

7215-16 (2006); see also Whicher v. Delaware Mines Corp., 15 P.2d 610

(Idaho 1932). 

3950 PAOLINI v. ALBERTSON’S INC.
A.

Because resolution of Paolini’s wrongful discharge claims

as related to Idaho’s wage laws and Idaho’s public policy

presented matters of first impression under Idaho law, we certified the following questions to the Idaho Supreme Court: 

1. Can stock options be wages under Idaho Code

sections 45-601(7) and 45-613? If so, is it a factual

issue as to whether the stock options were issued as

wages, to be resolved by a factfinder? 

2. If an employer fires an employee for trying to

exercise his right to the receipt of wages, has the

employer violated the public policy exception to atwill employment? 

Paolini v. Albertson’s, Inc., 418 F.3d 1023, 1024 (9th Cir.

2005) (“Paolini I”). 

[2] The Idaho Supreme Court granted our request and provided its answer in Paolini v. Albertson’s Inc., 149 P.3d 822

(Idaho 2006) (“Paolini II”). The court held in Paolini II that

stock options do not constitute wages under Chapter 6 of Title

45 of the Idaho Code. Id. at 825.3

[3] As we noted in Paolini I, “if stock options are not

wages then no triable issue of fact exists for the wrongful discharge claims under Idaho’s wage law.” 418 F.3d at 1026.

Since the Idaho Supreme Court held that stock options are not

wages, we must affirm the district court’s dismissal of

Paolini’s claim that he was terminated for pursuing a wage

3Because the court held that stock options are not wages, it concluded

that our second question was moot. Accordingly, the court did not consider whether an employee’s attempt to exercise his right to the receipt of

wages is protected such that firing an employee for those actions would

violate the public policy exception. 

PAOLINI v. ALBERTSON’S INC. 3951
complaint, in violation of Idaho Code § 45-613. Cf.

Reinkemeyer v. SAFECO Ins. Co. of America, 166 F.3d 982,

984 (9th Cir. 1999) (“We are bound by the answers of state

supreme courts to certified questions . . . .”). 

[4] For the same reason, we affirm the district court’s dismissal of Paolini’s claim that his termination was contrary to

Idaho’s “public policy exception” to the at-will employment

relationship. Cf. Edmondson v. Shearer Lumber Products, 75

P.3d 733, 737 (Idaho 2003) (“[A]n employer may be liable for

wrongful discharge when the motivation for discharge contravenes public policy.”). If, as the Idaho Supreme Court concluded, stock options are not wages, Paolini’s assertion of his

entitlement to the options is not protected as a matter of public policy. See, e.g., id. at 738-39 (holding that the exception

does not include protecting an employee’s constitutional right

of free speech). Paolini has not raised any genuine issue of

fact with regard to any other ground for applying the public

policy exception. 

B.

[5] According to the Idaho Supreme Court, at-will employees are afforded an implied covenant of good faith and fair

dealing. See Mitchell v. Zilog, Inc., 874 P.2d 520, 526 (Idaho

1994); Metcalf v. Intermountain Gas Co., 778 P.2d 744, 749

(Idaho 1989). 

The implied-in-law covenant of good faith and fair

dealing protects the rights of the parties to an agreement to receive the benefits of the agreement that

they have entered into. . . . A breach of this covenant

occurs when a party takes any action which ‘violates, nullifies, or significantly impairs’ the rights or

benefits due under the existing contract. 

Parker v. Boise Telco Fed. Credit Union, 923 P.2d 493, 501

(Idaho Ct. App. 1996) (quoting Metcalf, 778 P.2d at 749).

3952 PAOLINI v. ALBERTSON’S INC.
Continued employment, of course, does not itself constitute a

benefit inherent in an express or implied at-will agreement.

Id.

[6] Paolini argues that Albertson’s breached the covenant

of good faith and fair dealing by firing him for trying to exercise his stock options. However, as of the summer of 2001,

the stock options were not benefits due Paolini, and he possessed no right to exercise the options at that time. Therefore,

Paolini was not denied “rights or benefits due,” and we affirm

the district court’s determination that no breach occurred. 

IV.

The following facts are undisputed: while employed by

Albertson’s, Paolini invested on margin in Albertson’s stock.

The value of the stock fell. Albertson’s Credit Union issued

several margin calls. Paolini borrowed money—

approximately $560,000 in total—from Albertson’s to cover

the margin calls. 

Paolini signed a promissory note for an initial loan from

Albertson’s on November 8, 1999. This original note was due

February 3, 2000. Albertson’s lent money to Paolini on three

subsequent occasions, and the due date for the entire loan was

extended to February 1, 2001. 

Two days before Paolini signed the fourth and final loan

agreement, he sent a letter to the company outlining a repayment schedule. The letter suggested a repayment date of January 1, 2002. However, the fourth loan agreement—which

Paolini signed two days after sending the letter—states a due

date of February 1, 2001. 

After Paolini commenced the instant action, Albertson’s

filed a counterclaim, arguing Paolini owes the company the

balance due (that is, the full principal and accumulated interest) on the promissory note lent to cover the margin calls on

PAOLINI v. ALBERTSON’S INC. 3953
his stock. Paolini counters that the loan was contingent on his

continued employment and, because he separated from

Albertson’s before the note was due, he is not liable for the

balance. Paolini further argues the note created a limitation on

the at-will employment relationship and that Albertson’s violated the note by firing him. 

[7] There is no genuine issue of material fact presented

here, nor legal error in the district court’s disposition of the

promissory note claim. The due date of the loan is determinative. Although Paolini’s letter proposed a later due date, he

signed a final agreement on September 13, 2000 that provides

a due date of February 1, 2001. The loan was therefore due

before Paolini separated from Albertson’s, and the subsequent

conflict between the parties has no effect upon the promissory

note. We affirm the district court’s grant of summary of judgment to Albertson’s on this counterclaim. 

AFFIRMED.

3954 PAOLINI v. ALBERTSON’S INC.