PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

THOMAS VARGHESE, Dr., 

Plaintiff-Appellee,

v.

HONEYWELL INTERNATIONAL,  No. 04-2271

INCORPORATED; HONEYWELL

TECHNOLOGY SOLUTIONS,

INCORPORATED,

Defendants-Appellants. 

Appeal from the United States District Court

for the District of Maryland, at Baltimore.

William M. Nickerson, Senior District Judge;

Alexander Harvey, II, Senior District Judge.

(CA-01-3348-WMN)

Argued: May 25, 2005

Decided: September 14, 2005

Before MOTZ and GREGORY, Circuit Judges, and

HAMILTON, Senior Circuit Judge.

Affirmed in part, reversed and vacated in part, and remanded in part

by published opinion. Judge Gregory wrote the majority opinion, in

which Judge Motz concurred in Parts I and II and Senior Judge Hamilton concurred in Part III. Judge Motz wrote a separate opinion dissenting from Part III. Senior Judge Hamilton wrote a separate opinion

dissenting from Part II.B. 
COUNSEL

ARGUED: Michael L. Banks, MORGAN, LEWIS & BOCKIUS,

L.L.P., Philadelphia, Pennsylvania, for Appellants. Eric Kenneth

Bachman, WIGGINS, CHILDS, QUINN & PANTAZIS, P.C., Washington, D.C., for Appellee. ON BRIEF: Kathy B. Houlihan, Christine

B. Cox, MORGAN, LEWIS & BOCKIUS, L.L.P., Washington, D.C.,

for Appellants. Timothy B. Fleming, WIGGINS, CHILDS, QUINN

& PANTAZIS, P.C., Washington, D.C., for Appellee.

OPINION

GREGORY, Circuit Judge: 

Dr. Thomas Varghese brought suit against Honeywell International

Inc., and Honeywell Technology Solutions, Inc.,1 alleging, among

other things, that Honeywell violated Maryland law when it failed to

pay him separation benefits and terminated his right to exercise previously granted stock options. A jury returned a verdict for Dr. Varghese on both of these claims, granting Dr. Varghese $337,000 on his

stock options claim and $25,571.73 on his separation pay claim. The

damages granted to Dr. Varghese on his stock options and separation

pay claims were enhanced under the Maryland Wage Payment and

Collection Law ("MWP&CL"). Honeywell challenges this result on

two grounds. First, Honeywell argues that the stock options were not

wages, and therefore not covered by the MWP&CL and subject to an

enhancement. Second, Honeywell argues that the separation pay

claims are preempted by ERISA. 

1Defendant Honeywell International, Inc. ("Honeywell"), is a Maryland corporation founded in 1985. It was re-formed in 1999 through its

merger with AlliedSignal Inc. Defendant Honeywell Technology Solutions, Inc., formerly Allied Technical Services Corporation ("ATSC") is

a wholly owned subsidiary of Honeywell. AlliedSignal purchased

Bendix Field Engineering Corporation in 1993. Honeywell, Honeywell

Technology Solutions, Inc., and all predecessor entities are hereinafter

referred to as "Honeywell." 

2 VARGHESE v. HONEYWELL INTERNATIONAL
We find that Honeywell’s ERISA preemption argument is not

properly before us. However, because we find that the stock options

are not in fact "wages" as that term is defined by the MWP&CL, we

reverse in part the judgment of the district court, vacate in part the

jury’s award to Dr. Varghese, and remand to the district court for

redetermination. 

I.

Dr. Varghese began his employment with Honeywell International

Inc.’s predecessor, Bendix Field Engineering Corp., as a Field Engineer in 1983. The terms of Dr. Varghese’s employment offer provided

him with a monthly salary, a travel and relocation allowance, and various fringe benefits then available to other comparable employees. In

early 1998 Dr. Varghese requested, and was granted, a one year

unpaid leave of absence to pursue an advanced degree in the executive management program at the Massachusetts Institute of Technology Sloan School of Management. At the time of his leave of

absence, Dr. Varghese was a Senior Principal Engineer, a salary band

4 level employee. Although Honeywell paid Dr. Varghese’s tuition

for the management program and agreed to make every effort to reinstate him to his position or to a comparable position at the end of his

leave of absence, the company informed Dr. Varghese that it could

not guarantee that he could return to active employment with Honeywell. 

Upon the completion of the executive management program in

May of 1999, Dr. Varghese requested reinstatement with Honeywell.

However, due to substantially changed business conditions, Honeywell did not offer Dr. Varghese a position. On August 21, 1999, Dr.

Varghese sent a letter to Honeywell stating: "If there are no opportunities within ATSC, despite waiting for more than 3 months now

since the original communication, I am only left with the option of

asking for termination of my employment and earned severance." J.A.

361. On October 7, 1999, Honeywell informed Dr. Varghese "that

due to current business conditions we are unable to identify a suitable

position to which you can be reinstated at this time and have taken

action to terminate your employment with ATSC effective May 31,

1999." J.A. 205. On that same day, Honeywell’s human resources

department completed the necessary paperwork to terminate Dr. VarVARGHESE v. HONEYWELL INTERNATIONAL 3
ghese’s employment. Importantly, Honeywell classified Dr. Varghese’s termination as "voluntary." 

During his sixteen-year tenure at Honeywell, Dr. Varghese

received 4800 stock options through four separate stock option grants.2

Under the Honeywell compensation system, all executive-level

employees (i.e., those classified by the corporation as salary band 5

or above) automatically received annual option grants. For nonexecutive employees (i.e., salary band 4 and below), of which Dr.

Varghese was one, option grants were discretionary awards. In granting these awards, Honeywell considered "the duties of the employees

and their present and potential contributions to the Company’s success." J.A. 188. Importantly, on appeal, Dr. Varghese does not contend that he was ever promised the stock options in question. 

After his termination, Dr. Varghese set out to obtain his earned

severance benefits and to exercise his stock options. Dr. Varghese’s

options had fully vested at the time of his termination, entitling him

to exercise any or all of them by purchasing the shares at the strike

price.3 Dr. Varghese attempted to exercise his options in October and

November of 1999. However, because Dr. Varghese’s termination

was classified as "voluntary" rather than as a "reduction-in-force" he

had only three months to exercise his options from his date of termination.4

 Because Honeywell backdated Dr. Varghese’s termination to

May 31, 1999, the options had already expired when Dr. Varghese

attempted to exercise them. 

2On July 31, 1992 and July 30, 1993, Honeywell granted Dr. Varghese

1600 options. On July 29, 1994, Honeywell granted Dr. Varghese 1000

options. Finally, on July 19, 1996, Honeywell granted Dr. Varghese 600

options. 

3A "strike price" is the fixed price at which the owner of a stock option

can purchase the underlying security. Where the market value of the

underlying security is higher than the "strike price" at which an employee

may purchase the security, the option holder may profit from the exercise

of the options. 

4Under the terms of the stock option plan, if Dr. Varghese’s termination had been classified as a "reduction in force," he would have had

three years from his date of termination to exercise his options. 

4 VARGHESE v. HONEYWELL INTERNATIONAL
Additionally, the classification of Dr. Varghese’s termination as

"voluntary" meant that he was not entitled to separation pay. Under

Honeywell’s separation plan, separation pay was an element of the

Salaried Employees Benefit Plan, applicable to salaried employees

otherwise eligible to receive such benefits. Critically, while employees whose separation from the company was due to a "reduction-inforce" were eligible for severance benefits, those who voluntarily separated unrelated to any reduction in force were not. Therefore,

because Honeywell coded Dr. Varghese’s termination as "voluntary,"

he was not considered eligible for severance benefits. When no action

was taken pursuant to Dr. Varghese’s requests to obtain his accrued

separation benefits and to exercise his stock options, he brought the

instant suit. Through a series of amended complaints Dr. Varghese

alleged various claims, including the violation of Title VII of the Civil

Rights Act of 1964, the Age Discrimination in Employment Act, the

Employee Retirement Income Security Act of 1974 ("ERISA"), and

the MWP&CL. 

After cross motions for summary judgment, the following claims

remained: 1) that Honeywell violated ERISA’s notice requirements

by not responding to Dr. Varghese’s fall of 1999 requests for information about his 401K plan until mid-2000, thereby breaching its fiduciary duty;5

 2) that Honeywell’s failure to pay Dr. Varghese

separation pay constituted a breach of contract in violation of Maryland common law and the MWP&CL;6

 3) that Honeywell breached

its contractual obligations by retroactively terminating Dr. Varghese’s

right to exercise his stock options in violation of Maryland common

law and the MWP&CL; and 4) that an enforceable contract existed

between Dr. Varghese and Honeywell under Honeywell’s supplemental savings plan. 

5This issue was not presented to the jury because under ERISA a

claimant may not insist upon a jury trial. See Phelps v. C.T. Enterprises,

Inc., 394 F.3d 213, 222 (4th Cir. 2005) 

6The district court granted Honeywell’s summary judgment motion on

Dr. Varghese’s ERISA claim for separation pay, ruling that Honeywell’s

separation plan was not a plan covered by ERISA. This ruling, in combination with the denial of summary judgment on Dr. Varghese’s state law

separation claims, stands as an implicit rejection of Honeywell’s summary judgment argument that ERISA preempted Dr. Varghese’s state

law claims. 

VARGHESE v. HONEYWELL INTERNATIONAL 5
These four claims proceeded to trial. At the end of Dr. Varghese’s

case in chief, Honeywell moved for Judgment as a Matter of Law

("JMOL") pursuant to Fed. R. Civ. P. 50(a)(1) arguing: 1) that a contract for supplemental severance pay never existed; 2) that the stock

options in this case do not constitute "wages" under the MWP&CL;

and 3) that Honeywell did not breach the stock options contract.7 The

district court granted the Rule 50 motion with regard to the supplemental severance claim and denied it in all other respects. 

On March 26, 2004 the jury returned a verdict for Dr. Varghese,

awarding him $337,000 on the stock options claim, $25,571 on the

separation pay claim, and $6,711 in prejudgment interest.8 Finally, on

September 3, 2004, the district court entered an order finding that

Honeywell had in fact violated ERISA § 502(a)(1)(A), and awarded

Dr. Varghese an additional $2600.00. 

From these decisions, Honeywell brings this appeal.

II.

A.

Honeywell first challenges the district court’s denial of its motion

for judgment as a matter of law on Dr. Varghese’s stock option claim.

Under Fed. R. Civ. P. 50(a)(1), "[i]f during a trial by jury a party has

been fully heard on an issue and there is no legally sufficient evidentiary basis for a reasonable jury to find for that party on that issue, the

court may determine the issue against that party." Fed. R. Civ. P.

50(a)(1). We review the denial of a motion for judgment as a matter

of law de novo, viewing the evidence in the light most favorable to

7Honeywell argues that it also raised the issue of whether separation

pay was subject to the MWP&CL. However, such a contention is not

supported by the transcript of the JMOL hearing at trial. 

8These damages were enhanced by the MWP&CL. Specifically, under

§ 3-507.1 of the MWP&CL, if "a court finds that an employer withheld

the wage of an employee in violation of the subtitle and not as a result

of a bona fide dispute, the court may award the employee an amount not

exceeding 3 times the wage, and reasonable counsel fees and other

costs." MD Code Ann., Lab. & Employ., § 3-507.1(a) (2004). 

6 VARGHESE v. HONEYWELL INTERNATIONAL
the nonmovant, and "draw[ing] all reasonable inferences in her favor

without weighing the evidence or assessing the witnesses’ credibility." Ocheltree v. Scollon Prod., Inc., 335 F.3d 325, 331 (4th Cir.

2003) (quoting Anderson v. G.D.C., Inc., 281 F.3d 452, 457 (4th Cir.

2002)). Judgment as a matter of law is proper only if "there can be

but one reasonable conclusion as to the verdict." Id. (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986)).

B.

In its challenge to the district court’s denial of its JMOL motion,

Honeywell argues that the stock options were not "wages" as that

term is defined by the MWP&CL because Dr. Varghese was never

promised stock options as remuneration for his labor. As such,

Honeywell contends that the jury’s award of enhanced damages for

breach of the stock option contracts under the MWP&CL was

improper. We agree.9

Pursuant to the MWP&CL:

each employer shall pay an employee or the authorized representative of an employee all wages due for work that the

employee performed before the termination of employment,

on or before the day on which the employee would have

been paid the wages if the employment had not been terminated. 

MD Code Ann., Lab. & Employ., § 3-505 (2004). The statute defines

"wages" as "all compensation that is due to an employee for employment." Id. at § 3-501(c)(1). According to § 3-501(c)(2), the term

"wage" includes "a bonus," "a commission," and "a fringe benefit."

Id. at § 3-501(c)(2). Critically, § 3-501(c)(2)(iv) additionally defines

"wages" as "any other remuneration promised for service." Id. at § 3-

501(c)(2)(iv) (emphasis added). 

9Honeywell also contends that the stock options did not constitute

"wages due" to Dr. Varghese under the MWP&CL. Because we agree

with Honeywell that the stock options awarded to Dr. Varghese were not

"wages" as that term is defined by the statute, we do not reach this argument. 

VARGHESE v. HONEYWELL INTERNATIONAL 7
The Maryland Court of Appeals encountered this provision of the

MWP&CL in Whiting-Turner Contracting Co. v. Fitzpatrick, 783

A.2d 667, 669 (Ct. App. Md. 2001). Joe Fitzpatrick was hired by

Whiting-Turner in 1997, and it was agreed that his compensation

would consist of a weekly salary "and, after two years of employment

and depending upon the profitability of the company, profit sharing."

Id. When Fitzpatrick informed a company vice-president that he was

considering leaving the firm in late 1998 and inquired about the status

of his profit sharing bonus, the vice-president responded: "I have a

profit sharing check for you in my pocket. All you have to do is tell

me you are staying." Id. Fitzpatrick resigned that next Monday, prior

to reaching two years of employment with Whiting-Turner. Id. When

he was not given a profit sharing bonus, he brought suit. Id.

Interpreting the MWP&CL, the court held that "the wages which

an employee is due, and which must be paid on termination of

employment, consist of all compensation, and any other remuneration, that the employee was promised in exchange for his work." Id.

at 671-72 (emphasis added). Specifically, the court found that "§ 3-

501(c)(2)(iv) serves two functions: it makes clear both that the listed

forms of remuneration are simply examples, by the use of the phrase

‘any other remuneration,’ and that the ‘other remuneration’ that may

be included in—in order to be considered—wages must have been

‘promised for service.’" Id. at 672. The court stated:

reading the statute as including a bonus as wages only when

it has been promised as part of the compensation for

employment is logical and makes good common sense. The

conditions of employment are determined in advance of the

employment. What, if anything beyond the basic salary, the

employee will receive is a matter for discussion, consideration and agreement. If a bonus is to be made part of the

wage package, it can be negotiated and included in what has

been promised. . . . Once a bonus, commission or fringe

benefit has been promised as a part of the compensation for

service, the employee would be entitled to its enforcement

as wages. 

Id. at 672. Because the compensation package made no provision for

a bonus given before the end of two years, any such bonus would

8 VARGHESE v. HONEYWELL INTERNATIONAL
have been merely a gift or a gratuity that Fitzpatrick was not entitled

to, and therefore not a "wage" covered by the MWP&CL. See id.

The Maryland Court of Appeals soon had opportunity to apply this

holding in Medex v. McCabe, 811 A.2d 297 (Md. Ct. of App. 2002).

There Timothy McCabe, a former sales representative for Medex,

brought suit against Medex seeking to recover wages and incentive

fees (i.e., commissions) under the MWP&CL. Id. at 300. McCabe

earned a salary of $49,000.00 plus incentive fees. Id. According to

McCabe’s employee manual, "[p]ayment from all Company incentive

compensation plans is conditional upon meeting targets and the participant being an employee at the end of the incentive plan (generally

the fiscal year) and being employed at the time of actual payment."

Id. McCabe resigned his position after the end of the fiscal year, but

prior to the time of actual payment. When Medex refused to pay the

incentive fees, McCabe filed suit. Id. at 301. 

The Medex court began by stating that the exchange of remuneration for an employee’s work is the critical inquiry in the determination of whether compensation constitutes a wage. Id. at 302. "Where

the payments are dependent upon conditions other than the employee’s efforts, they lie outside of the definition." Id. According to the

Medex court, this situation was distinguishable from the requested

accelerated bonus in Whiting-Turner which was not "promised for

service" because: 

the incentive fees were related directly to sales made by the

employees during a defined fiscal year. McCabe had performed all the work necessary to earn the fees, and Medex

had registered the sales. In the terminology of the incentive

plan itself, some of the incentive fees "begin to earn" at

meeting 80% of a target goal, while another "[i]ncentive

begins" upon the sale of certain goods.

Id. at 302-03 (emphasis added). Because the incentive fees were part

of McCabe’s promised compensation for work performed, and

because McCabe had performed all the work necessary to earn the

fees, the court held that they were "wages" to which McCabe was

entitled. See id. at 301, 303.

VARGHESE v. HONEYWELL INTERNATIONAL 9
Reading the MWP&CL and Maryland case law10 on this issue, it

is clear that for a form of compensation to constitute "wages" under

the MWP&CL, and therefore be subject to the MWP&CL enhanced

damages provisions, the employee must have been promised the particular form of compensation as remuneration for his labor. The

Whiting-Turner court’s interpretation of § 3-501(c)(2)(iv) is critical in

that regard. According to Whiting-Turner, § 3-501(c)(2)(iv) sets forth

the general governing principle that remuneration can only constitute

wages where it is promised for service. See Whiting-Turner, 783 A.2d

at 672. §§ 3-501(c)(2)(i)-(iii) merely put forth a non-exhaustive list of

examples that can meet that criteria. See id. The Whiting-Turner court

emphasized this point when it stated that "reading the statute as

including a bonus as wages only when it has been promised as part

of compensation is logical and makes good common sense." Id. As

such, even if the stock options in this case were a "fringe benefit," or

a "bonus," they still must have been promised to Dr. Varghese as

remuneration in order to qualify as "wages."

Dr. Varghese contends that because the options were granted as

remuneration for service, they constitute "wages."11 We recognize that

10Dr. Varghese cites much external authority to support his proposition

that the stock options in this matter constitute wages under the

MWP&CL. However, we do not believe that any of these cases are particularly helpful on this issue. In Scully v. U.S. Wats, Inc., 238 F.3d 497

(3rd Cir. 2001), and Reiger v. Rhone-Poulenc Roer, Inc., Civ. A. No. 93-

4821, 1995 WL 395948, at *6-7 (E.D. Pa. June 30, 1995), the equivalent

Pennsylvania statute does not use the term "promise" to define wages.

That statute defines "wages" as including "all earnings of an employee,

regardless of whether determined on time, task, piece, commission, or

other method of calculation. The term ‘wages’ also includes fringe benefits or wage supplements whether payable by the employer from his

funds or from amounts withheld from the employees pay by the

employer." 43 Pa. Stat. Ann. § 260.2a (1992). Similarly, the Colorado

Wage Claim Act section defining "wages" interpreted in Montemayor v.

Jacor Communications, Inc., 64 P.3d 916 (Colo. Ct. App. 2002), did not

employ language similar to the "promise" language employed by the

MWP&CL. 

Because "wage" is explicitly defined differently by the Maryland statute at issue, these cases do not mandate a different result here. 

11Honeywell contests this, arguing that the options were based an

employee’s future potential to contribute. Appellant’s Brief 19. 

10 VARGHESE v. HONEYWELL INTERNATIONAL
stock options are commonly used as compensation tools. We further

recognize that the grant of stock options in this matter was, in all likelihood, at least partially remuneration for Dr. Varghese’s past performance. However, mere remuneration, while necessary, is not

sufficient to prove that a particular form of compensation constituted

"wages" under the MWP&CL. Under Maryland law, the test to determine whether a particular form of compensation constitutes "wages"

under the MWP&CL contains a promise element as well. Thus, the

issue before us is whether these particular stock option grants were

promised to Dr. Varghese as remuneration for his efforts in his

employment agreement.12

Whiting-Turner and Medex focused on the existence of an employment agreement laying out the terms of compensation to establish the

existence, or non-existence, of a "promise." In Whiting-Turner, the

court explicitly noted that "[h]ad the respondent been with the petitioner for two years when the decision was made to offer him a bonus

and had the financial condition of the petitioner justified it, there

would be no doubt of the respondent’s entitlement . . . because sharing in the profits of the company after two years was promised as part

of the respondent’s compensation package." Id. at 673 (emphasis

added). Because the parties did not agree to an accelerated bonus, any

such accelerated bonus could not constitute "wages" under the

MWP&CL. 

By contrast, in Medex, where "Medex represented these incentive

fees as a portion of the employee’s ‘Total Target Cash Compensation,’" and represented that the "incentive fees were supplemental to

the fixed salary as a combined measure of compensation," the court

found that the incentive fees constituted "wages" under the

MWP&CL. Medex, 811 A.2d at 306 (emphasis added). There, the satisfaction of three conditions, agreed upon at that outset of the employment relationship, provided a measurable benchmark to determine

whether one was entitled to receive incentive compensation. See id.

The record in this case is unequivocal that no such promise, outright or conditional, existed. As an initial matter, we note that Dr.

Varghese repeatedly testified that Honeywell never promised him

12This includes any legal cognizable amendments to this agreement. 

VARGHESE v. HONEYWELL INTERNATIONAL 11
stock options as a part of his compensation package.13 Further, Dr.

Varghese’s employment documents that set forth his compensation

package made no explicit mention of stock options. Although the

"Salaried Employees Compensation Agreement" makes clear that Dr.

Varghese’s compensation package includes any additional compensation comparable employees may be entitled to, the "Total Compensation and Incentive Pay" summary document makes clear that band 4

employees "may" also be included in the annual incentive plan, and

"may" receive stock option grants.14 Read together, these documents

show that while Dr. Varghese was eligible to receive stock options,

at no point was he entitled to them. 

13During his deposition, Dr. Varghese testified as follows: 

"Q: You weren’t guaranteed stock options in any given year, were

you? 

A: I was not guaranteed a stock option, but it was customary practice

that if you’re involved in winning contracts, from the precedence that

was established, I was eligible for stock options in 1998." 

J.A. 247-48 (Deposition Transcript of Thomas Varghese, February 12,

2003). 

At trial, Dr. Varghese testified as follows: 

"Q: Dr. Varghese, did you have any promise that you would receive

stock options as part of your compensation at Allied Signal?" 

A: No Promise." 

Q: I’m sorry? 

A: I did not have any promise, written promise. 

Q: Did anyone ever guarantee you stock options? 

A: No, there’s no guarantee." 

J.A. 457-58 (Transcript of Thomas Varghese Trial Testimony, March 24,

2004). 

14We note here that the operative language used in the "Total Compensation and Incentive Pay" summary document, namely the word "may,"

is markedly different from the language employed by the contract in

Medex, which speaks about fees being "earned" and incentives "beginning." See Medex, 811 A.2d at 302-03. In Medex, McCabe "earned" the

incentive fees and was therefore entitled to them. See Medex, 811 A.2d

at 302-03. 

12 VARGHESE v. HONEYWELL INTERNATIONAL
Importantly, no document or testimony sets forth any conditions

that, once satisfied, would convert mere eligibility to entitlement. In

Medex, the "incentive fees ‘beg[a]n to earn’ at meeting 80% of a target goal." Medex, 811 A.2d at 302-03. There, meeting [sales] targets

constituted a measurable benchmark, by which an employee could

demonstrate that he was entitled to the incentive fees at issue.15 Here,

there were no such conditions or measurable benchmarks. No matter

what Dr. Varghese did in his professional capacity, Honeywell always

retained the discretion to not nominate Dr. Varghese to receive stock

options. In fact, Honeywell could have nominated the entire company

except Dr. Varghese and been in complete compliance with Dr. Varghese’s employment contract. This is exemplified by the fact that Dr.

Varghese only received four stock option grants during his sixteen

years at Honeywell. Such discretion counsels against construing the

stock option grants at issue as "wages." An employer cannot decide

to not pay an employee the "wages" that employee has earned. Nor

can an employer claim that earned "wages" have somehow expired

based on the reason it terminated an employee.16 The fact that Honeywell could always decide to simply not grant Dr. Varghese stock

options, coupled with the fact that the stock options expired upon an

employee’s voluntary termination, counsels against defining the stock

option grants in this case as "wages." 

Finally, we would note that the mere fact that the stock options

were granted does not convert them from a form of a gratuity or

reward to "wages" that must be paid. Under that logic, any and all

forms of compensation, once granted, would constitute "wages."

Maryland law applies a much narrower brush, defining wages as compensation promised to an employee as remuneration for that employee’s labor. As such, it is possible for additional compensation to be

granted without it being termed a "wage." The Maryland courts have

explicitly focused on the idea that "the conditions of employment are

determined in advance of the employment." The universe of what is

promised as a "wage" for each individual employee is defined by all

15Similarly, in Whiting-Turner, two years and company profitability

provided a means of measurement. See Whiting-Turner, 783 A.2d at 669.

16However, this is exactly what would happen under the stock options

contract, under which all stock options granted to any employee terminated for cause expired on the date of termination. 

VARGHESE v. HONEYWELL INTERNATIONAL 13
the documents constituting the employment agreement and setting

forth the terms of the employment relationship. "Wages" are not

defined ex post facto, viewing the actual grant as the penultimate indication of whether a form of compensation constitutes a "wage." The

grant of a form of compensation not contained in the employment

agreement is not a "wage" because it was not promised. The

MWP&CL protects the proper expectation of promised remuneration.

Where there is no promise, there can be no proper expectation. Defining "wage" as the Maryland courts have advances that goal. 

Because the facts of this case reveal no such promise, outright or

conditional, nor show the existence of any measurable benchmark by

which Dr. Varghese could demonstrate that he was entitled to receive

stock options, we find that the options in this case were not "wages"

under the MWP&CL and therefore were not subject to the

MWP&CL’s enhanced damages provisions. 

III.

Honeywell next argues that the district court erred when it denied

summary judgment on Dr. Varghese’s state law separation pay claims

because its separation plan is covered by ERISA which preempts state

law. In response, Dr. Varghese argues that Honeywell’s ERISA preemption argument is not properly before this Court because, under

Chesapeake Paper Products Co. v. Stone & Webster Engineering

Corp., 51 F.3d 1229 (4th Cir. 1995), we do not review pre-trial denials of summary judgment after a full trial and final judgment on the

merits. Honeywell counters that because this appeal centers around a

legal issue, a motion for judgment as a matter of law was not the

proper avenue for such a challenge. Therefore, Honeywell argues that

this appeal of the district court’s pre-trial denial of summary judgment

is properly before this court. We do not find Honeywell’s argument

convincing. 

In Chesapeake, we held "that this Court will not review, under any

standard, the pretrial denial of a motion for summary judgment after

a full trial and final judgment on the merits." Id. at 1237. In that case,

Stone and Webster ("S&W") moved the district court for partial summary judgment, requesting that "the court rule as a matter of law that

the rights and liabilities of the parties were governed by the Engineer14 VARGHESE v. HONEYWELL INTERNATIONAL
ing Contract, as amended on January 16-17, 1992, by Amendment #1

. . . ." Id. at 1231. The district court denied this motion, and proceeded

to trial on the proper interpretation of the contract. Id. at 1233. After

Chesapeake’s case in chief, the district court denied S&W’s motion

for judgment as a matter of law and the jury ruled in favor of Chesapeake. Id. at 1233. 

We began our analysis of S&W’s appeal by noting that eight circuit courts had recently adopted the rule that the denial of summary

judgment is not reviewable on appeal after a full trial on the merits.

Id. (citing Watson v. Amedco Steel, Inc., 29 F.3d 274, 277-78 (7th Cir.

1994); Black v. J.I. Case Co., 22 F.3d 568, 570-72 (5th Cir. 1994);

Johnson Int’l Co. v. Jackson Nat’l Life Ins. Co., 19 F.3d 431, 434 (8th

Cir. 1994); Lama v. Borras, 16 F.3d 473, 476 n. 5 (1st Cir. 1994);

Whalen v. Unit Rig, Inc., 974 F.2d 1248, 1250-51 (10th Cir. 1992);

Jarrett v. Epperly, 896 F.2d 1013, 1016 (6th Cir. 1990); Locricchio

v. Legal Services. Corp., 833 F.2d 1352, 1358-59 (9th Cir. 1987);

Glaros v. H.H. Robertson Co., 797 F.2d 1564, 1573 & n. 14 (Fed. Cir.

1986)). Next, we rejected the "contention that our review should

depend on whether the party claims an error of law or an error of fact"

because: 1) all summary judgment decisions are legal decisions

because they do not rest on disputed facts; and 2) this court should

not "engage in the dubious undertaking of determining the bases on

which summary judgment is denied and whether those bases are

‘legal’ or ‘factual.’" Id. at 1235. We continued on to note that:

Reviewing a pretrial denial of summary judgment after a

full trial is inappropriate because the denial was based on an

undeveloped, incomplete record, which was superceded by

evidence adduced at trial. Even when the pretrial record and

the trial testimony are identical, a judgment after a full trial

is superior to a pretrial decision because the factfinder’s verdict depends on credibility assessments that a pretrial paper

record simply cannot allow. 

Id. at 1236 (citations omitted).

We further found that bifurcating summary judgment decisions is

unnecessary because a party "has adequate remedies other than seeking review of the denial after a full trial." Id. at 1236. First, the party

VARGHESE v. HONEYWELL INTERNATIONAL 15
may move for a judgment as a matter of law under Fed. R. Civ. P.

50 and then seek appellate review of the motions if they are denied.

Id. at 1236. Importantly, we stated that "a party may appropriately

move for judgment as a matter of law on discrete legal issues" even

where the legal issue may not be entirely dispositive of a claim or

defense. Id. at 1236 (emphasis added). Additionally, we noted that a

party may "move the court to certify the denial for interlocutory

appeal pursuant to 28 U.S.C. § 1292(b)." Id. at 1237. As a result, we

concluded that we would not review a pretrial denial of a motion for

summary judgment after a full trial and final judgment on the merits.

Id.; see Benner v. Nationwide Mutual Ins. Co., 93 F.3d 1228, 1233

(4th Cir. 1996) (citing Chesapeake for the proposition that "[b]ecause

there was a full trial and final judgment on the merits, we may not

review the district court’s pretrial denial of summary judgment"). 

In the instant case, Honeywell moved for summary judgment prior

to trial on all of Dr. Varghese’s claims, including the issue of whether

Honeywell’s failure to pay Dr. Varghese separation pay constituted a

breach of contract in violation of Maryland common law and the

MWP&CL. At the summary judgment hearing, Honeywell argued

that these claims were preempted by ERISA. For example, the following exchange took place between the court and defense counsel:

The Court: Well leaving aside the question of futility, but if

he can assert this claim under ERISA, isn’t his breach of

contract claim preempted? . . . 

Ms. Weiss: Yes. The separation pay is preempted by

ERISA, because it deals with a welfare benefit program for

the plaintiff. So that therefore it is preempted by ERISA,

and he has not exhausted any administrative remedies under

ERISA to obtain a separation pay.

J.A. 318. In ruling on Honeywell’s summary judgment motion, the

district court noted that "plaintiff seeks a recovery of separation or

severance pay both under ERISA and under Maryland common law.

If plaintiff were entitled to recover separation pay under ERISA, his

claim under state law would presumably be preempted." J.A. 58. Ultimately, the district court denied Honeywell’s summary judgment

motion on the Maryland common law and MWP&CL separation pay

16 VARGHESE v. HONEYWELL INTERNATIONAL
claims, allowing them to go to trial, and granted Honeywell’s motion

for summary judgment on Dr. Varghese’s ERISA separation pay

claim, ruling that Honeywell’s separation plan was not subject to

ERISA.17 At the close of Dr. Varghese’s case in chief, Honeywell

moved for JMOL, but it did not raise the ERISA preemption argument. After a full trial on the merits the jury returned a verdict for Dr.

Varghese and the court entered a final judgment on September 3,

2004. 

Here, Honeywell seeks appellate review of a district court’s denial

of summary judgment after a full trial and final judgment. However,

under binding circuit precedent, this is exactly the type of situation in

which appellate review is not available. Recognizing this problem,

Honeywell attempts to extricate itself from underneath the Chesapeake umbrella. Specifically, Honeywell argues that the ERISA preemption issue was not raised in its JMOL motion because such

motions challenge the sufficiency of the evidence presented by an

opposing party at trial. As such, Honeywell contends a JMOL motion

was not the appropriate avenue for its legal challenge and that appellate review of the pretrial denial of summary judgment is therefore

proper. 

However, these arguments were addressed in Chesapeake. Again,

we expressly rejected "the contention that our review should depend

on whether the party claims an error of law or an error of fact." Chesapeake, 51 F.3d at 1235. In fact, we stated that although a dichotomy

between reviewing denials of summary judgment based on an erroneous legal conclusion and those based on an erroneous factual determination "is supported by the reasoning in Holley [Holley v. Northrop

Worldwide Aircraft Serv., 835 F.2d 1375, 1378 (11th Cir. 1988)] . . .

we decline to follow Holley and therefore need not describe specific

circumstances in which this Court would review the denial of summary judgment after trial." Id. at 1235 n.8. In other words, the Chesapeake Court did not need to discuss "specific circumstances" because

there are none. The express rejection of Holley, a case that supported

such a dichotomy, makes that point clear. At no point does the opinion suggest otherwise. 

17As was previously noted, this ruling inherently addressed Honeywell’s ERISA preemption argument. 

VARGHESE v. HONEYWELL INTERNATIONAL 17
We recognize that several other circuits have taken a different

approach on this issue, allowing appeals from a denial of summary

judgment after a trial where the summary judgment motion raised a

legal issue and did not question the sufficiency of the evidence. See,

e.g., Pavon v. Swift Transp. Co., 192 F.3d 902 (9th Cir. 1999); Rekhi

v. Wildwood Industries, Inc., 61 F.3d 1313 (7th Cir. 1995). However,

as the Seventh Circuit noted in Chemetall GMBH v. ZR Energy, Inc.,

320 F.3d 714, 721 (7th Cir. 2003), their approach simply conflicts

with our own. There, the Seventh Circuit expressly noted the disagreement stating: "[t]he Fourth Circuit, however, has rejected any

distinctions between factual and legal issues like the one we drew in

Rekhi, holding that in either case, review of the district court’s denial

of summary judgment is barred after trial." Id.

In Chesapeake, we concluded that we would not review a district

court’s pretrial denial of summary judgment after a full trial and final

judgment on the merits. See Chesapeake, 51 F.3d at 1237; see

Rhoades v. Federal Deposit Insurance Corp., 257 F.3d 373 (4th Cir.

2001); Benner v. Nationwide Mutual Ins. Co., 93 F.3d 1228 (4th Cir.

1996). After the denial of Honeywell’s summary judgment motion,

there was a full trial and final judgment on the merits. Honeywell had

the option to move for judgment as a matter of law (the denial of

which we will review), arguing that ERISA preempted Dr. Varghese’s state law separation pay claims. As we noted in Chesapeake,

"a party may appropriately move for judgment as a matter of law on

discrete legal issues." Id. at 1236 (emphasis added). Although Honeywell moved for judgment as a matter of law, they did not so move on

this issue and therefore failed to preserve it for appeal. Therefore,

binding circuit precedent mandates that the appeal be dismissed.18

IV.

Given our finding that the stock options in this case did not constitute "wages" as that term is defined by the MWP&CL, we reverse in

18Of course, this outcome does not address the merits of Honeywell’s

preemption claim. However, this Court has often applied procedural

rules in criminal matters where a person’s life is literally at stake and not

reached the merits of the claim. The instant matter is no different. 

18 VARGHESE v. HONEYWELL INTERNATIONAL
part the judgment of the district court, vacate in part the jury award

to Dr. Varghese, and remand to the district court for redetermination.

AFFIRMED IN PART, REVERSED

AND VACATED IN PART, AND

REMANDED IN PART

DIANA GRIBBON MOTZ, Circuit Judge, concurring in part and dissenting in part: 

I concur in Parts I and II of Judge Gregory’s opinion for the court,

holding that the stock options Honeywell granted to Dr. Varghese did

not constitute "wages" under the Maryland Wage Payment & Collection Law, Md. Code Ann., Lab. & Employ., § 3-501 et seq. (2004)

("MWP&CL" or "the Act"). However, because I believe that Honeywell’s argument that ERISA preempts Dr. Varghese’s state law separation pay claim is properly before us, I respectfully dissent from Part

III. 

I.

I agree with Judge Gregory’s analysis and resolution of Dr. Varghese’s stock option claim. In interpreting the MWP&CL’s definition

of "wages," the Maryland Court of Appeals has focused on whether

the options were promised as remuneration for services rendered. See

Whiting-Turner Contracting Co. v. Fitzpatrick, 783 A.2d 667, 671-72

(Md. 2001) ("[T]o be wages [within the statute], the payment must

have been promised to the employee as compensation for work performed."); see also Medex v. McCabe, 811 A.2d 297, 302-03 (Md.

2002). 

These cases indicate that, while it is crucial that the benefit at issue

is remuneration for work performed, it is equally crucial that the compensation was "promised as part of the compensation for employment." Whiting-Turner, 783 A.2d at 672. Moreover, Whiting-Turner

holds that this promise must be included in the compensation package. See id. (asserting that the compensation to be paid is a matter

"for agreement in advance of the employment or to become a part of

the undertaking during the employment"). 

VARGHESE v. HONEYWELL INTERNATIONAL 19
Dr. Varghese does not contend that Honeywell promised to grant

him stock options as part of the employment agreement negotiated

and agreed upon either in advance of or during the tenure of his

employment. Indeed, he admits that Honeywell never promised him

options. Consequently, because a promise to grant stock options was

not part of the "conditions of employment," id., Dr. Varghese’s

options do not constitute "wages" under the MWP&CL. 

Thus, Judge Hamilton’s contention that, "once Honeywell actually

granted Dr. Varghese the stock options with the concomitant promises

that he could exercise them . . . , Dr. Varghese’s right to exercise

those options . . . constituted ‘remuneration promised for service,’"

post at 29, though interesting, misses the mark. Because the grant of

stock options was "not a part of the compensation package promised,"

Whiting-Turner, 783 A.2d at 673, the mere fact that the options, once

granted, could be exercised in accordance with their terms does not

convert them into "wages" under the MWP&CL. Indeed, because all

stock options include a "promise" that they can be exercised in accordance with their terms, the position advocated by the dissent would

transform every grant of stock options by an employer to an employee

— no matter how unexpected and voluntary — into "wages" under

the Act. This result "would read out of the statute the words ‘promised for service.’" Id. at 672. Controlling precedent from Maryland’s

highest court prohibits this interpretation. 

II.

I disagree, however, with the conclusion in Part III of Judge Gregory’s opinion that binding circuit precedent, specifically Chesapeake

Paper Products Co. v. Stone & Webster Engineering Corp., 51 F.3d

1229 (4th Cir. 1995), forecloses our review of the district court’s

rejection of Honeywell’s ERISA preemption defense at the summary

judgment phase. In so holding, the majority ignores the critical differences between Chesapeake and the case at hand. Thus, rather than

simply following the entirely proper rule we adopted in Chesapeake,

the majority imprudently expands that rule. The important policy justifying the Chesapeake rule provides no support at all for this expansion. For these reasons, I would join most of our sister circuits in

rejecting such an expansion. 

20 VARGHESE v. HONEYWELL INTERNATIONAL
In Chesapeake the district court denied Stone & Webster’s motion

for summary judgment on a contract claim because it found that

Chesapeake had presented sufficient evidence to create "genuine

issues of material fact regarding the formation of the contract and ultimately the proper interpretation of what one finds to be the contract

between the parties." Id. at 1233 (internal quotation marks omitted).

The case proceeded to trial, which concluded with a verdict for Chesapeake. Without filing Rule 50 motions for judgment as a matter of

law, Stone & Webster sought review of the summary judgment denial

on appeal. In refusing to review that ruling, we reasoned that

"[r]eviewing a pretrial denial of summary judgment after a full trial

is inappropriate because the denial was based on an undeveloped,

incomplete record" that was examined not to "settle or even tentatively decide anything about the merits of the claim," but only to

decide whether or not "the case should go to trial." Id. at 1236 (internal quotation marks and citations omitted). Permitting appellate

review of a summary judgment denial in such circumstances would

"deprive a party of a jury verdict after the evidence was fully presented, on the basis of an appellate court’s review of whether the

pleadings and affidavits at the time of the summary judgment motion

demonstrated the need for a trial." Id. at 1237 (internal quotation

marks and citation omitted). Thus, once a trial has occurred, a party

must make an appropriate Rule 50 motion to preserve a challenge on

appeal to the sufficiency of the evidence. See id. at 1236. 

This is a sound rule, which, as we noted in Chesapeake, many of

our sister circuits have adopted. See id. at 1234. The majority, however, apparently concludes that Chesapeake holds that an appellate

court can never review a district court’s denial of summary judgment

after a full trial. But Chesapeake does not hold this; indeed, it clearly

implies the contrary. The Chesapeake court carefully noted that it did

not need to describe the "specific circumstances in which this Court

would review the denial of summary judgment after a full trial." Id.

at 1235 n.8. Such a notation would be unnecessary if no such "circumstances" existed. 

A case, like the one at hand, in which the sole basis of the district

court’s denial of summary judgment was rejection of a purely legal

defense — here preemption — obviously presents such a "circumstance." The evidentiary concerns discussed in Chesapeake are simply

VARGHESE v. HONEYWELL INTERNATIONAL 21
not at issue when a party seeks to reassert on appeal a legal defense

that the court below rejected at the summary judgment stage. 

The Seventh Circuit made precisely this point in Rekhi v. Wildwood Industries, Inc., 61 F.3d 1313 (7th Cir. 1995). There the defendant argued that summary judgment was appropriate because another

legal defense — res judicata — barred the plaintiff’s claim. The

Rekhi court recognized that if a trial court denied summary judgment

merely on the ground that the nonmoving party had presented sufficient evidence to take the case to trial, it would be unjust for an appellate court to review that denial after "the plaintiff went on to present

at trial enough evidence to show that he [was] entitled to win his

suit." Id. at 1318. However, the court went on to explain that there is

no unfairness in allowing a party to reassert on appeal a legal defense

rejected as a basis for summary judgment (e.g., res judicata, statute

of limitations, immunity, preemption) because by definition a legal

defense provides a basis to avoid liability for an otherwise meritorious

claim. Id. Even when a plaintiff has sufficient evidence to escape

summary judgment and proceed to trial, a legal defense may entitle

a defendant to the award of summary judgment. A subsequent trial

verdict for the plaintiff does not change that fact. 

As Judge Posner explained in Rekhi, "[t]he injustice would be" to

deny the party moving for summary judgment on the basis of a legal

defense the opportunity to reassert that defense on appeal because

"most defenses . . . would have no function if all [they] did was bar

meritless suits." Id. Accordingly, a defense must "remain[ ] available

. . . even when the plaintiff, having survived summary judgment, goes

on to win a judgment on the merits." Id. (citing cases). "Defenses are

not extinguished merely because" they are "denied at the summary

judgment stage." Id. Rather, "[i]f the plaintiff goes on to win [at trial],

the defendant can reassert the defense on appeal." Id.

For this reason, many of our sister circuits, including five of the

eight on which we relied in Chesapeake, have specifically refused to

extend the Chesapeake rule the way the majority does here. Indeed,

they allow review of the denial of summary judgment if the denial

was based on a pure question of law, rather than a determination as

to evidentiary sufficiency. See, e.g., Rothstein v. Carriere, 373 F.3d

275, 284 (2d Cir. 2004) ("A critical distinction exists between sum22 VARGHESE v. HONEYWELL INTERNATIONAL
mary judgment motions raising the sufficiency of the evidence to

create a fact question for the jury and those raising a question of law

that the court must decide. Where a motion for summary judgment

based on an issue of law is denied, appellate review of the motion is

proper even if the case proceeds to trial and the moving party fails to

make a subsequent Rule 50 motion.") (internal quotation marks omitted); Chemetall GMBH v. Zr Energy, Inc., 320 F.3d 714, 719 (7th Cir.

2003); Pavon v. Swift Transp. Co., 192 F.3d 902, 906 (9th Cir. 1999);

White Consol. Indus. v. McGill Mfg. Inc., 165 F.3d 1185, 1189-90

(8th Cir. 1999); McPherson v. Kelsey, 125 F.3d 989, 995 (6th Cir.

1997); Ruyle v. Continental Oil Co., 44 F.3d 837, 841-42 (10th Cir.

1994).1

Here, we need not go so far as to allow review of all questions of

law decided at summary judgment, and I see no reason to adopt this

view in the case at hand. But see supra note 1. I would hold, however,

that when, as here, a district court denies a motion for summary judgment based entirely on a legal defense, a subsequent trial does not

eliminate the movant’s right to assert that defense on appeal. Substantial authority supports appellate review in these circumstances, see,

e.g., Rekhi, 61 F.3d at 1318 (res judicata); Ruyle, 44 F.3d at 841-42

(collateral estoppel); see also Paschal v. Flagstar Bank, FSB, 295

F.3d 565, 571-72 (6th Cir. 2002) (statute of limitations); Lenz v.

Dewey, 64 F.3d 547, 550 (10th Cir. 1995) (qualified immunity), and

the majority has failed to cite a single case that rejects it. Certainly

the rule articulated in Chesapeake does not prohibit (nor does the

dicta in that case counsel against) such review. Indeed, as many of our

1Although some dicta in Chesapeake disapproves the reasoning in

these cases, see Chesapeake, 51 F.3d at 1235-36, contrary to the suggestion in Chemetall, 320 F.3d at 721, Chesapeake’s actual holding does not

prohibit such a rule. Chesapeake involved the review of a denial of summary judgment on the ground that the plaintiff had presented sufficient

evidence to go to trial. See id. at 1233. While defendant Stone & Webster

"claim[ed] that its motion sought partial summary judgment on a discrete

legal issue, . . . in actuality, its motion sought resolution of the conflicting factual inferences from the competing contract documentation on the

central issue of which document governed the rights and liabilities of the

parties." Id. at 1235. Thus, despite its dicta, the holding in Chesapeake

would not prevent us from adopting in a future case the view espoused

by many of our sister circuits. 

VARGHESE v. HONEYWELL INTERNATIONAL 23
sister circuits have held, the rationale for the Chesapeake rule simply

does not support the unwise and unjust expansion of that rule articulated by the majority.2

HAMILTON, Senior Circuit Judge, concurring in part and dissenting

in part: 

While I fully agree with the holding in Part III of Judge Gregory’s

opinion that Honeywell is not entitled to appellate review of the judgment below with respect to Dr. Varghese’s state law separation pay

claims, I strongly disagree with the holding in Part II.B. of Judge

Gregory’s opinion that Dr. Varghese was not entitled to enhanced

damages under the Maryland Wage Payment and Collection Law (the

MWP&CL), Md. Code, Labor & Employment, §§ 3-501 to 3-509,

with respect to his stock option claims. Accordingly, I concur in Part

III of Judge Gregory’s opinion, but dissent from Part II.B. of that

opinion, concurred in by Judge Motz. I would affirm the judgment

below in toto.

I.

The operative stock option plan in this case declared as follows:

The Company desires to attract and retain the best available talent and to encourage the highest level of performance by its employees. By affording employees the

opportunity to acquire an equity interest in the Company

and by providing them incentives to put forth maximum

efforts for the success of the Company’s business, the Plan

is expected to contribute to the attainment of those objectives.

2Refusing Honeywell the right to assert its legal defense on appeal

works a particular injustice because its preemption defense is, in fact,

meritorious. ERISA does preempt Dr. Varghese’s state law severance

pay claim because Honeywell’s separation plan requires an ongoing

administrative scheme not triggered by a single one-time event but by the

termination for one of three reasons of any salaried employee. See, e.g.,

Fort Halifax Packing Co., Inc. v. Coyne, 482 U.S. 1, 14 n.9 (1987);

Bowles v. Quantum Chem. Co., 266 F.3d 622, 631-33 (7th Cir. 2001)

(and the cases cited therein). 

24 VARGHESE v. HONEYWELL INTERNATIONAL
(J.A. 187). With regard to stock option granting decisions, the same

plan provided that Honeywell’s Management Development and Compensation Committee (the Committee) would "base its selection of

award recipients, among other things, on the duties of the employees

and their present and potential contributions to the Company’s success." (J.A. 188). In this vein, the record contains the trial testimony

of Honeywell Executive Compensation Analyst Katherine Behre

(Behre) to the effect that an employee at Dr. Varghese’s level, i.e.,

band four, is nominated for a stock option grant based upon two factors: (1) the employee’s performance and (2) as an inducement to the

employee’s future contributions to the company. Similarly, Mary

Neville, a twenty-year veteran of Honeywell who served as Honeywell’s Human Resources Manager at all times relevant to this appeal,

testified at trial that stock option grants depended upon employee performance and the potential for future contributions to the company.

She also confirmed that "[s]tock options are in the nature of compensation, . . . whether you’re a band 4, band 3, band 2." (J.A. 474). 

Notably, the record also contains the Honeywell created document

entitled "Our Pay Philosophy." (J.A. 626). The document states that

employees in positions below band 5 may receive stock option grants

separately from bands 5 and 6 through its broad-based stock-option

program. Further, under the subheading "Why we use options," the

document expressly provides: 

Our stock price is the ultimate indicator of the value of our

company and its potential. The market rewards results, not

just effort. Our long-term incentive ties your actions to

achievement of our business strategy over time as evidenced

by stock price performance. With stock options, there are no

entitlements, no guarantees and no rewards for maintaining

the status quo. Stock options provide a highly leveraged pay

opportunity. As shareholder value increases, so will the

value of your options. 

(J.A. 627) (emphasis added). Under the subheading "Our Stock

Option Philosophy," the same document goes on to state:

Guidelines for stock options are determined each year based

on a review of competitive-positioning and the value of an

option at that point in time. 

VARGHESE v. HONEYWELL INTERNATIONAL 25
Your individual award level continues to be linked directly

to the results of the Management Resource Review (MRR)

process. Your award reflects your position as a key member

of the leadership team and your potential to be a significant

contributor going forward. Think about stock options as a

look ahead: Top performers with the most significant potential receive the greatest number of options.

Id.

The Committee granted Dr. Varghese stock options on four separate occasions. Specifically, the Committee granted Dr. Varghese

stock options on July 31, 1992, July 30, 1993, July 29, 1994, and July

19, 1996. 

The record facilely supports the reasonable inference that Dr. Varghese performed his job duties at Honeywell with distinction in the

one year periods immediately preceding each of these stock option

grants. For example, the record contains two glowing performance

reviews for two of the option grant periods. The first is for the period

beginning July 1991 and ending July 1992. The second is for the

period beginning August 1992 and ending October 1993. In both

reviews, Honeywell rated Dr. Varghese’s overall performance during

the respective rating periods as "Outstanding." (J.A. 175, 181).

According to the performance review forms, such a rating meant that

"[m]ajor job responsibilities were exceeded in all areas. Established

objectives that stretched employee performance were achieved or

exceeded. Overall performance was clearly exceptional." (J.A. 172,

178). 

To its credit, Honeywell makes no disparaging statements in this

appeal regarding Dr. Varghese’s job performance while at Honeywell.

Similarly, Honeywell does not take issue with the statement in Dr.

Varghese’s appellate brief that his job performance was excellent during the years for which Honeywell granted him the stock options.1

1

If the record below contains performance reviews for the other two

option grant periods, the parties did not see fit to include them in the

joint appendix for our consideration. 

26 VARGHESE v. HONEYWELL INTERNATIONAL
Based upon the series of stock option grants, at the time of his

involuntary termination of employment in 1999, Dr. Varghese had the

vested right to purchase 4,800 shares of Honeywell stock at prices

established at the time of the respective grants. Soon after receiving

notice of his termination, Dr. Varghese wrote several letters to

Honeywell asking to exercise his stock options. Honeywell subsequently informed Dr. Varghese that his options had expired because

it deemed his termination to have been voluntary. Honeywell does not

challenge on appeal the jury’s finding that it had misclassified Dr.

Varghese’s termination, and thus had impermissibly refused to allow

him to exercise his fully vested stock options. Rather, Honeywell

challenges Dr. Varghese’s qualification for enhanced damages under

the MWP&CL for its actions in this regard. 

For his part, Dr. Varghese acknowledged at his pretrial deposition

and at trial that, in contrast to a band 5 or 6 employee, as a band 4

employee, he had no guarantee that Honeywell would grant him stock

options in any given year. Rather, he only had the potential for such

a grant. Dr. Varghese also testified at trial that Honeywell never

promised that it would actually grant him stock options as part of his

compensation. However, it is undisputed from the record that, as a

band 4 employee, he would be eligible for the discretionary grant of

stock options. 

II.

With the preceding factual background and procedural history in

mind, I turn now to analyze whether the right to exercise the stock

options granted Dr. Varghese in accordance with the terms of the

operative stock option plan constitutes "wages" under the MWP&CL.

Specifically, the MWP&CL provides: "Each employer shall pay an

employee . . . all wages due for work that the employee performed

before the termination of employment, on or before the day on which

the employee would have been paid the wages if the employment had

not been terminated." Md. Code, Labor and Employment, § 3-505.

MWP&CL § 3-507.1 creates a private right of action to recover for

violation of MWP&CL § 3-505:

[I]f an employer fails to pay an employee in accordance

with . . . § 3-505 of this subtitle, after 2 weeks have elapsed

VARGHESE v. HONEYWELL INTERNATIONAL 27
from the date on which the employer is required to have

paid the wages, the employee may bring an action against

the employer to recover the unpaid wages. . . . 

Md. Code, Labor and Employment, § 3-507.1(a). The enhanced penalty provision of this section provides:

If, in an action under subsection (a) of this section, a court

finds that an employer withheld the wage of an employee in

violation of this subtitle and not as a result of a bona fide

dispute, the court may award the employee an amount not

exceeding 3 times the wage, and reasonable counsel fees

and other costs.

Id.

The MWP&CL defines "wage" broadly and specifically identifies

a non-exclusive list of compensation categories as wages for purposes

of the MWP&CL:

(1) "Wage" means all compensation that is due to an

employee for employment. 

(2) "Wage" includes: 

(i) a bonus; 

(ii) a commission; 

(iii) a fringe benefit; or 

(iv) any other remuneration promised for service.

Md. Code, Labor and Employment, § 3-501(c). In Whiting-Turner

Contracting Co. v. Fitzpatrick, 783 A.2d 667 (Md. 2001), the Court

of Appeals of Maryland made clear that MWP&CL § "501(c)(2)(iv)

serves two functions: it makes clear both that the listed forms of

remuneration are simply examples, by the use of the phrase ‘any other

remuneration,’ and that the ‘other remuneration’ that may be included

28 VARGHESE v. HONEYWELL INTERNATIONAL
in—in order to be considered—wages must have been ‘promised for

service.’" Whiting-Turner, 783 A.2d at 672.

Of course, the posture of this case on appeal requires that we view

the evidence in the record in the light most favorable to Dr. Varghese

and draw all reasonable inferences from that evidence in his favor.

Ocheltree v. Scollon Prod., Inc., 335 F.3d 325, 331 (4th Cir. 2003).

Under this dictate, the record supports the reasonable inference that

Honeywell granted Dr. Varghese the stock options at issue in significant part because he had performed his job in an exceptional manner

in the immediately preceding years.2 In other words, Dr. Varghese

had performed his job at Honeywell during those years in a manner

that was not required of him; in a manner which exceeded the status

quo by a wide margin.

Based upon Whiting-Turner, 783 A.2d at 667, Medex v. McCabe,

811 A.2d 297 (Md. 2002), and Dr. Varghese’s admission at trial that

Honeywell never promised to grant him stock options, Honeywell

argues that prior to the actual grants of the stock options at issue, such

stock options and/or the right to exercise them did not qualify as "remuneration promised for [Dr. Varghese’s] service." Md. Code, Labor

& Employment, § 3-501(c)(2)(iv). However, once Honeywell actually

granted Dr. Varghese the stock options with the concomitant promises

that he could exercise them in accordance with the terms of the operative stock option plan, Dr. Varghese’s right to exercise those options

in accordance with the terms of the operative stock option plan constituted "remuneration promised for service," id., and thus wages under

the MWP&CL. Part II.B. of Judge Gregory’s opinion, as concurred

in by Judge Motz, overlooks the reality that the facts of this case,

when properly viewed, fall squarely within the language of the

enhanced damages provision of the MWP&CL.

The fact that Honeywell granted Dr. Varghese the stock options for

service that he was not erstwhile required to perform is critical to the

analysis, because the promised right to exercise the stock options is

2Even Part II.B. of Judge Gregory’s opinion, as concurred in by Judge

Motz, recognizes "that the grant of stock options in this matter was, in

all likelihood, at least partially remuneration for Dr. Varghese’s past performance." Ante at 11. 

VARGHESE v. HONEYWELL INTERNATIONAL 29
then not a mere gratuity, but "remuneration promised for service."

Md. Code, Labor & Employment, § 3-501(c)(2)(iv). As the Maryland

Court of Appeals declared in Whiting-Turner, "[o]nce a bonus, commission or fringe benefit has been promised as a part of the compensation for service, the employee would be entitled to its enforcement

as wages." Whiting-Turner, 783 A.2d at 672. 

Here, viewing the evidence in the record in the light most favorable

to Dr. Varghese, which we are required to do, Dr. Varghese’s right

to exercise the stock options granted him by Honeywell was promised

by Honeywell as part of the compensation for Dr. Varghese’s exceptional service, and therefore, constituted wages under the MWP&CL.

Accordingly, I would hold that the district court did not err in refusing

to grant Honeywell’s motion for judgment as a matter of law with

respect Dr. Varghese’s claim for enhanced damages under the

MWP&CL. 

One final and crucial point: The fact that the respective stock

option grants post-dated Dr. Varghese’s beyond-the-status-quo service during the years immediately preceding those grants is neither

foreclosed by the language of the MWP&CL nor Maryland case law.

Viewing the evidence in the light most favorable to Dr. Varghese, one

can draw the reasonable inference that prior to the time of even the

first stock option grant to Dr. Varghese, Honeywell had promised, as

part of Dr. Varghese’s total compensation, that once it granted him

stock options based upon his beyond-the-status quo service to the

company, he could exercise those options in accordance with the

terms of the operative stock option plan. The key fallacy in Judge

Gregory’s analysis in Part II.B., as concurred in by Judge Motz, is his

unwillingness to draw this reasonable inference, which by precedent

he is bound to do. Of course the opposite inference is the one that is

unreasonable—Honeywell set up a detailed employee stock option

plan, placed great emphasis on the plan’s purpose to encourage the

highest level of performance by its employees, but did not intend the

promise that granted stock options could be exercised in accordance

with the operative stock option plan to constitute part of the employee’s total compensation for employment. Plainly stated, Judge Gregory and Judge Motz’s view of the evidence on this point fails to

afford Dr. Varghese the benefit of viewing the evidence in the record

30 VARGHESE v. HONEYWELL INTERNATIONAL
in the light most favorable to him and drawing all reasonable inferences therefrom in his favor. 

In sum, I would affirm the judgment below in toto. Accordingly,

I concur in Part III of Judge Gregory’s opinion, but dissent from Part

II.B., as concurred in by Judge Motz.

VARGHESE v. HONEYWELL INTERNATIONAL 31