2008 D e c i sion s O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit 10-2-2008 

# P anett a v . SAP Ame ric a Inc P r e c e de nt i al or N on-P r e c e de nt i al : N on-P r e c e de nt i al D ocke t N o . 07-2180

F o llow thi s and a dd it ion al work s at : http://d i git alc ommon s .l a w . vi ll anova . e du/thir dc ir c uit_2008

Thi s de c i sion i s br ou ght t o you for f r e e and ope n a c c e s s b y the O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit at V i ll anova U nive r sity S choo l of L a

w Di git al Reposit ory

. It h as be e n a c c ept e d for inclusion in 2008 D e c i sion s b y an authori z e d a dmini s tr at or of V i ll anova U nive r sity S choo l of L a

w Di git al Reposit ory

. F or mor e inform at ion, p le as e c ont a ct Be n j amin . C arl s on@l a

w . vi ll anova . e du . Re c omme nde d C it at ion
" P ane tt a v . SAP Ame rica Inc " (2008). 2008 D e cisio n s . P ape r 423. http://d i git alc ommon s .l a

w . vi ll anova . e du/thir dc ir c uit_2008/423NOT P RE CE DE NT I AL U N I TED STA TES C O U RT O F A PPEA LS F O R T H E T H IR D C IR C U IT

__________ N o. 07- 2180

_________ L A R R Y P A N E T T A , i ndi vi dual l yand on beha l f of a l l other s s i m i l ar l ys i tuat ed,

A ppel l ant

v. S A P A M E R IC A , IN C ., M A T T H E W IA C O V IE L L O , C O U R T N E Y D E P E T E R , P A T R IC IA L A V A N , E S Q U IR E , BI L L M c DE RMOT T a n d T E RR Y W. L AUDAL

O n A p p ea l from the U n it ed S tat es D istri ct C o u rt f o r th e E a ste rn D istric t o f P e n n sy lv a n ia ( D . C . N o. 05- cv- 04511) D i s tr i ctJ udge: H on. L aw r ence F. St engel

Subm i t t ed underT hi r d C i r cui tL A R 34. 1( a)

on A pr i l 11, 2008 B efor e: SM I T H , H A R D I M A N and R O T H , C i r cui tJ udges

( O pi ni on fi l ed: O ct ober2, 2008)

O P I N I O NSA P’ s s al es compensa t i on pl ans for2000, 2001, 2002, and 2003–i n eff ectfr om 1 January1 thr ou gh D ecem ber 31 o f t ho se r espect i ve y ears –calcul at ed co m m i ssi on s as a per cent age of

t ot al s al es r evenue gener at ed bythe l i cens i ng deal s thata s ol ut i ons engi neer f a c ili tate d , w ith su c h c o m m iss io n s n o t ea rn e d u n til th e y e a r th a t th e sa les c o n tra c ts w ith cus t om er s w er e exe cut ed. H ow ever , i n 2004, the new annual s al es compensa t i on pl an s i gni fi cant l ychange d t he comm i s s i on s tructur e thathad bee n i n eff ectdur i ng 2000- 2003 byadopt i ng a var i abl e i ncent i ve pl an thatpai d bonus es on per form ance r atherthan a c o m m is s io n b a s e d o n a s tr a ig h t p e rc e n ta g e o f s a le s re v e n u e . 2 RO TH , C i r cui tJ udge: T hi s appea l conce r ns the pr opr i etyof the U ni t ed St at es D i s tr i ctC our t ’ s or der d e n y in g p lain tiff

L a rryP a n e tta’s re q u e st f o r le a v e to a m e n d h is c o m p lain t to a d d a c laim
o f u n ju st e n ric h m e n t/q u a n tu m m e ru it. W e c o n c lu d e th e re w a s n o a b u se o f d isc re tio n in d e n y in g s u c h re q u e s t, a n d s o w e w ill a f f ir m th e ju d g m e n t o f

th e D is tr ic t C o u rt . I . BA CKGROUND B e c a u se w e w rite p rim a rilyf o r th e p a rties w h o a re f a m ili a r w ith th is c a se , w e o n ly bri efl yreci t e t he fa ct s. Panett a w or ked as a s ol ut i ons engi neerw i th SA P A m er i ca, I nc. , fr om 1995 t o 2004
a n d w a s p a rt o f

a te a m th a t g e n e ra te d s a le s to p ro s p e c tiv e s o f tw a re lic e n s in g c u s to m e rs . D ur i ng the cour s e of hi s empl oym entw i th SA P, Panett a ea rned a ba s e s al aryand w as el i gi bl e t o earn comm i s s i ons w hi ch w er e det erm i ned bas ed on s al es compensa t i on pl ans pr om ul gat ed bySA P on an annual bas i s . Pr i ort o 2004, Panett a w or ked t o devel op a 1 l i c e ns i ng de a l w i th the U ni t e d St a t e s Pos t a l Se r vi c e ( U SPS) . I n 2 00 4, SA P a nd U SPS3

exec ut ed a s oftw ar e l i cens i ng contr actw or th appr oxi m at el y$14 m i l l i on. B eca us e s uch
con tractw as exe cut ed

i n 2004, the t erm s and condi t i ons of the 2004 s al es compensa t i on p lan g o v e rn e d P a n e tta’s c o m p e n sa tio n f o r h is w o rk o n th e U S P S c o n tra c t. In a d d iti o n to r ece i vi ng hi s bas e s al aryof appr oxi m at el y$115, 000, Panett a w as pai d a bonus i n the amount of $12, 400. H ad the U SPS contr actbeen e xecut ed ata t i m e w hen anyof the pr e2004 compensa t i on pl ans w er e i n eff ect , Panett a w oul d have r ece i ved a c om m i s s i on of
a p p ro x im a te ly $ 2 5 0 ,0 0 0 . Panett a br oughts ui ti n t he U ni t ed St at es D i s tr i ctC our tforthe N or thern D i s tr i ctof C al i forni a aga i ns tSA P and fi ve i ndi vi dual SA P corpor at e exe cut i ves . I n i t , he cl ai m ed th a t h e w a s n o t p a id th e p ro p e r c o m m is s io n f o r h is e f f o rt s in c lo s in g th e U S P S c o n tr a c t. A ft erthe ca s e w as tr ans ferr ed t o the East ern D i s tr i ctof Penns y l vani a, Panett a fi l ed an amended compl ai nt , w hi ch i ncl uded a br eac h of contr actcl ai m , new cl as s act i on al l egat i ons , and cl ai m s underPenns y l vani a l aw . Panett a s oughtl eave t o fi l e a s econd
am end ed co m plai nt, at t em pti ng t o ex pan d h i s cl ass act i on al l egati on s t o en com pass a br oadergr oup. D i s coverycl os ed on M ar ch 15, 2006. O n A pr i l 7, 2006, the courtgr ant ed defe ndant s ’ m ot i on t o s tr i ke Panett a’ s cl as s al l egat i ons , deni ed Panett a’ s m ot i on forl eave t o fi l e a s econd a m ended c om pl ai nt , and di r ect ed Panett a t o fi l ed an a m ended c om pl ai nt in a c c o rd a n c e w ith th e o rd e r. N o tw ith sta n d in g th e e x p re ss d ire c tio n o f th e D istric t C o u rt, Panet t a fi l ed a s econd a m ended c om pl ai nton A pr i l 18 and aga i n on A pr i l 19, 2006,
w hi ch adde d a new cl ai m forunj us tenr i chment/ quantum m erui t . O n J une 7, 2006,M or eover , forthe fi r s tt i m e on appe al , Panett a as s ert s a new equi t abl e es t oppel 2 cl ai m , neveras s ert ed bef or e the D i s tr i ctC our t , w i th r egar d t o the 2003 s al es compensa t i on pl an i n w hi ch he s t at es thathe w as “j us t i fi ed i n r el y i ng on the bel i ef that th e te rm s o f

th e 2 0 0 3 C o m p e n s a tio n P la n w o u ld a p p ly to h is w o rk in s e c u ri n g th e . . . U SPS contr actforD efe ndantSA P. ” B eca us e i ti s w el l r ecogni zed that“fa i l ur e t o r ai s e an 4 defe nd ants again m ov ed to stri ke P anett a’s cl ass al l egati on s as w el l as the u njust
enr i chment/ quantum m erui tcl ai m . O n J une 22, 2006, the D i s tr i ctC our tgr ant ed d ef en d an ts’ m o ti o n . P an ett a f il ed a m o ti o n fo r reco n side rati o n o f th e Ju n e 2 2 o rde r, w h ich th e D istri ct C o u rtd en ied. In it s o rde r, the D istri ct C o u rtalso d en ied P an ett a’s req u est t o ad d an u n

just en ri ch m en t/ q u an tum m eru itclaim to h is co m p lai n t. T h e c o u rt concl uded thatPanett a had c aus ed undue de l ayi n br i ngi ng the cl ai m , the cl ai m w as l egal l yfut i l e, and def

endant s w oul d s uffe rundue pr ej udi ce. O n J ul y14, 2006, the defe ndant s fi l ed a mot i on fors um m aryj udgm enton the tw o r emai ni ng cl ai m s – br eac h of contr actand vi ol at i on of Penns y l vani a W age Paym entand C ol l ect i on L aw ( W PC L ) , 43 Pa. C . S. § 260. 1 et

s eq. T h e D istric t C o u rt g ra n ted su m m a ryju d g m e n t to th e d e f e n d a n ts o n M a rc h 3 0 , 2 0 0 7 . P a n e tta a p p e a le d . I I . DI S CU S S I ON O n appea l , Panett a r eques t s thatw e vac at e the D i s tr i ctC our t ’ s M ar ch 30, 2007, o rde r. H o w ev er, he raises n o arg u m en t on ap p ea l dispu ti n g the c o u rt ’s gra n t of su m m ary jud g m en t i n fa v o r of

d ef en d an ts on h is brea ch o f c o n tr ac t and W P C L claim s. R athe r, P anett a argues t hat the D i stri ctC ou rterr ed w hen i tdis al l ow ed h i s unjust
e n r i c h m e n t/ q u a n tu m m e ru i tc l a i m . O u rs c o p e o f r e v i e w i s l i m i t e d a c c o r d i n g l y. 2iss u e in th e d istric t co u rt c o n stitu tes w a iv e r o f th e a rg u m e n t[ ,]” w e c o n c lu d e th a t P a n e tta h a s w a iv e d th is p a rt ic u la r c la im a n d w e d o n o t a d d re s s it. G as s v. V i r gi n I s lands Tel e. C or p. , 3 1 1 F .3 d 2 3 7 , 2 4 6 (3 d C ir . 2 0 0 2 ) ( c ita tio n s o m itte d ). 5 W e have j ur i s di ct i on overthi s appea l pur s uantt o 28 U . S. C . § 1291, and w e r evi ew a d is tr ic t c o u rt ’s d e n ia l o f le a v e to a m e n d a c o m p la in t f o r a b u s e o f

d is c re tio n . See O r an v. Staf f ord , 2 2 6 F .3 d 2 7 5 , 2 9 0 -9 1 (3 d C ir . 2 0 0 0 ). A fter a p artyh as a m en d ed it s p lead ing o n ce as a m att er o f c o u rse, a d istri ct co u rt m ayden ya requestfor l eave to am end i f t he record show s any of the fol l ow i ng: ( 1) “undue de l ay , bad fa i th ordi l at orym ot i ve on the partof the movant , ” ( 2) “r epea t ed f a ilu re to c u re d e f

icie n c ies b ya m e n d m e n ts p re v io u slya llo w e d ,” (3 ) “ u n d u e p re ju d ice to the oppos i ng partybyvi r tue of a l l ow ance of the amendm ent , ” or( 4) “fut i l i tyof amendm ent [. ] ” Fo rm a n v . D a v is , 3 7 1 U .S . 1 7 8 , 1 8 2 (1 9 6 2 ); see al so F ED . R. C IV . P. 1 5 (a )(2 ) (p ro v id in g th a t a “ c o u rt sh o u ld f re e lyg iv e lea v e ” to a p a rtyto a m e n d its
c o m p la in t “ w h e n ju s tic e s o re q u ir e s ” ). H e re , the D istric t C o u rt d id n o t ab u se its d isc re tio n in d e n y in g P a n e tta’s re q u e st to a d d a n u n

ju s t e n ri c h m e n t/q u a n tu m m e ru it c la im to h is c o m p la in t. For m an , 371 U . S. at 182. T he r ecor d es t abl i s hes undue del ayon the partof Panett a i n br i ngi ng the cl ai m and pr ej udi ce t o the def

endant s had the cl ai m been pe r m i t t ed. I n part i cul ar , w e ar e not persuaded byP anett a’s con t enti on that he w as onlyaw are of t he av ai l abil i tyof an un j ust enr i chment/ quantum m erui tcl ai m aft erthe cl os e of di s covery . R ather , w e agr ee w i th t he D i s tr i ctC our tthats uch cl ai m w as know n t o Panett a ea r l yon i n the l i t i gat i on beca us e the6

c a u s e o f a c tio n a ri s e s o u t o f

th e s a m e s e t o f

f a c ts a s th e b re a c h o f

c o n tr a c t c la im . M or eover , al l ow i ng Panett a t o as s erta new cl ai m ats uch a l at e s t age i n the l i t i gat i on w oul d depr i ve the def

endant s of di s coveryorr equi r e them t o r epea tpr oces s es thatw er e

a lr e a d yc o m p le te . See e
. g. , Jos ey v . John R. H ol l i ngs w or th C or

p. , 996 F. 2d 632, 642 ( 3d C ir . 1 9 9 3 ). I I I . CO NC L US I ON B a s e d o n th e f

o re g o in g , w e w ill a f

f ir m th e ju d g m e n t o f

th e D is tr ic t C o u rt .