Opinion ID: 4513983
Heading Depth: 2
Heading Rank: 2

Heading: Breach of the Retention Agreement

Text: Ryniewicz alleged that Clarivate breached the Retention Agreement by withholding payments due her under the Retention Agreement. Although Ryniewicz did not attach the Retention Agreement to her Amended Complaint, her claim of breach of contract concerns the Agreement, which is referenced throughout that Complaint and is attached to Clarivate’s Second Motion to Dismiss. “In evaluating a motion to dismiss, we ‘may consider the complaint and any exhibits attached thereto, public records, items appearing in the record of the case and exhibits attached to defendant’s motion to dismiss so long as they are referred to in the complaint and are central to the claims contained therein.’” Luis v. Zang, 833 F.3d 619, 626 (6th Cir. 2016) (quoting Kreipke v. Wayne State Univ., 807 F.3d 768, 774 (6th Cir. 2015)). It is therefore proper for us to refer not only to the Amended Complaint but also to the Retention Agreement itself when reviewing de novo the district court’s order dismissing the breach of contract claim. -3- No. 19-1161, Ryniewicz v. Clarivate Analytics
The Amended Complaint did not challenge the legality of Ryniewicz’s termination without cause. But since termination without cause was addressed in the district-court order dismissing the action, as part of the breach-of-contract claim on appeal, and in Ryniewicz’s opposition to Clarivate’s Second Motion to Dismiss, we consider it when relevant to the issue of the alleged withholding of payments under the Retention Agreement. Ryniewicz submits that her termination without cause constituted a breach of the Retention Agreement by Clarivate and therefore relieved her of any obligation to perform conditions precedent to her payments under the Retention Agreement. The Retention Agreement sets forth conditions under which Ryniewicz may be terminated. First, the Agreement specifies that “[t]hrough the date that you may begin employment with a purchaser of the Business, you will continue to be employed by a subsidiary of Clarivate Analytics under the terms of your offer letter . . . except as modified herein.” Ryniewicz did not bring claims under her original offer letter of hiring, only under the Retention Agreement. Second, the Retention Agreement provides that “[t]he Clarivate Analytics subsidiary that employs you may in its sole discretion determine that your services are no longer required prior to the change in control.” By the terms of the Retention Agreement, Ryniewicz’s employment was at will prior to the sale of Master Data Center. Ryniewicz was terminated before any sale of the business occurred. To make it even more clear that Ryniewicz could properly be terminated without cause, the Retention Agreement details the benefits and pay to which Ryniewicz would have been entitled if terminated “other than for cause during the Transition Period” (emphasis added), subject to -4- No. 19-1161, Ryniewicz v. Clarivate Analytics certain conditions precedent. It also specifies that if Ryniewicz was terminated for cause, she would receive no benefits or pay under the Agreement: If [Ryniewicz] fail[s] to honor any of the commitments set forth in this [Retention Agreement] or under any of [her] other agreements with and/or obligations to Clarivate Analytics, … in addition to the other remedies that may be available to Clarivate Analytics, [her] employment may be terminated for cause and [she] will forfeit all payments, benefits and the Retention Bonus under this [Retention Agreement] and will not be eligible for severance. Finally, the Retention Agreement clarifies that Ryniewicz would not be entitled to the Retention Bonus “[i]n the event no change in control has occurred by September 13, 2018, but [her] employment with a subsidiary of Clarivate Analytics has been terminated, for any reason, prior to September 13, 2018” (emphasis added). Ryniewicz submits that her termination without cause constituted a breach of the Retention Agreement on Clarivate’s part and therefore excused her performance under the Agreement. However, the plain language of the Retention Agreement specifically supports the right of her employer to terminate her, be it with or without cause. Pennsylvania law controls the Retention Agreement. As noted by the Supreme Court of Pennsylvania, “[a]n employee will be entitled to bring a cause of action for a termination of [an at-will employment] relationship only in the most limited of circumstances where the termination implicates a clear mandate of public policy in this Commonwealth.” McLaughlin v. Gastrointestinal Specialists, Inc., 750 A.2d 283, 287 (Pa. 2000). Ryniewicz did not raise any such public-policy claims. Therefore, her performance under the Retention Agreement is not excused on account of an alleged breach of contract by Clarivate that terminated Ryniewicz without cause.
Ryniewicz claims that her termination without cause constituted a breach of the Retention Agreement by Clarivate and therefore relieved her of her performance of conditions precedent to -5- No. 19-1161, Ryniewicz v. Clarivate Analytics payments under the Retention Agreement. But because her termination without cause was already specifically contemplated by the Retention Agreement, such termination cannot now be claimed to constitute a breach of that Agreement. See Part III.B.1 supra. Ryniewicz’s performance of conditions precedent to payments under the Retention Agreement—maintaining confidentiality of the potential sale as well as signing a separation agreement and a general release of claims against Clarivate—is therefore not excused. Furthermore, other conditions precedent to such payments were not satisfied either, as detailed below, and Ryniewicz would not have been entitled to payments under the Retention Agreement notwithstanding her performance. Under the Retention Agreement, Ryniewicz could have been entitled to the following payments: (1) a Retention Bonus of $150,000; (2) an Annual Incentive Plan award; (3) Severance Pay equal to 26 weeks’ pay; and (4) various health and outplacement benefits, for which Ryniewicz did not bring a claim. The Retention Agreement also sets forth several conditions to payments. First, the Retention Agreement specifies that “except as otherwise provided in this letter, the payments, benefits, and Retention Bonus described in this letter will be subject to your continued employment through the end of the Transition Period.” The “Transition Period” is defined as “the date of the change in control and 6 months thereafter.” A “change in control” is further defined as “the completion of a sale or other disposition of all or substantially all of the operations of the Business ….” The individual terms are further defined, but since the sale of Master Data Center never occurred, Ryniewicz was not employed through the end of the Transition Period. She was therefore not entitled to payments under the Retention Agreement unless otherwise specified therein. Second, payments under the Retention Agreement were subject to Ryniewicz’s “maintaining in strict confidence the contents of this [Retention Agreement], information related -6- No. 19-1161, Ryniewicz v. Clarivate Analytics to the potential sale of the Business and the change-in-control process (other than disclosures permitted by Clarivate Analytics).” Clarivate claims that Ryniewicz disclosed such confidential sale process information in her public court filings. Although disclosure of this information may well be deemed materially relevant to Ryniewicz’s pursuit of claims of breach of contract and defamation, and the action was not filed until 2.5 months after Ryniewicz’s termination without payments under the Retention Agreement, we do not need to address the issue of breach of confidentiality, since the failure of other conditions precedent is already fatal to Ryniewicz’s breach-of-contract claim. Third, the payment mechanics of the Retention Bonus and the Annual Incentive Plan award both hinged on the date of a change in control. Fifty percent of the $150,000 Retention Bonus was to be paid within thirty days of the closing of the transaction that resulted in a change in control of Master Data Center. The remaining fifty percent was to be paid within thirty days of the six-month anniversary of the closing. The Annual Incentive Plan award was to be prorated through the change-in-control date and stated that “[t]he timing of this payment will be dependent on the terms of the transaction.” Thus, the plain language of the Retention Agreement makes it clear that both payments were contingent on the closing of the sale—which never occurred. Additionally, the Retention Agreement specifies that in case of termination “other than for cause during the Transition Period,” the payments of the Retention Bonus and the Annual Incentive Plan award were to be made in accordance with the paragraphs describing payment mechanics—and again, those hinge on the closing date of the sale that never occurred. Fourth, in case of termination “other than for cause during the Transition Period” and “provided that [Ryniewicz] ha[s] been in compliance with the conditions set forth in this letter,” the payments of the Severance Pay, Retention Bonus, Annual Incentive Plan award and other -7- No. 19-1161, Ryniewicz v. Clarivate Analytics benefits are “subject to the requirements in paragraph 5 that [Ryniewicz] enters into and do[es] not revoke a separation agreement and general release.” Ryniewicz does not allege that she signed a separation agreement or a general release of claims against Clarivate and its subsidiaries; in fact, Clarivate asserts that Ryniewicz never executed these required additional documents. So, this condition precedent was not satisfied either. Fifth, Clarivate “reserve[d] the right to unilaterally amend or modify the terms of this [Retention Agreement] if it determine[d], in its sole discretion, that external changes or other nonrecurring or unanticipated business conditions have materially affected the fairness of the terms or have unduly influenced the ability to meet them.” Clarivate alternatively claims that it determined in its sole discretion the discovery of a $12 million accounting error to be an unanticipated business condition that materially affected the fairness of the terms of the agreement or its ability to meet them, thus allowing Clarivate to unilaterally modify the terms of the Retention Agreement and withhold payments to Ryniewicz thereunder. Sixth, as set forth in Paragraph 6 of the Retention Agreement,“[i]n the event no change in control has occurred by September 13, 2018, but [Ryniewicz’s] employment with a subsidiary of Clarivate Analytics has been terminated, for any reason, prior to September 13, 2018, [Ryniewicz] will not be entitled to receive the Retention Bonus or any portion of the Retention Bonus.” Ryniewicz was terminated on January 26, 2017, hence well before September 13, 2018, and was therefore not entitled to any portion of the Retention Bonus. Not only was payment of the Retention Bonus conditioned on the sale of Master Data Center, but also it was conditioned on the sale by a date certain. However, had Ryniewicz remained employed as of September 13, 2018, in spite of no closing having occurred, she would still have been entitled to fifty percent of the -8- No. 19-1161, Ryniewicz v. Clarivate Analytics Retention Bonus within thirty days of September 13, 2018.1 But there was one caveat: the sale still had to be under contemplation at that time. The last clause of Paragraph 6 of the Retention Agreement deals a fatal blow to Ryniewicz’s claims for payment thereunder: “Other than the obligations set forth in this paragraph, in the event that Clarivate Analytics terminates its process to sell all or substantially all of the Business, this [Retention Agreement] will be null and void . . . . ” If Clarivate decided to continue the process later, it may, “in [its] sole discretion,” replace the current Retention Agreement “by a new arrangement to be determined at such time.” To support her defamation claim, Ryniewicz quotes several statements that the sale of Master Data Center was “called off” as early as mid-December 2017 by the parent company of Clarivate. Accepting Ryniewicz’s allegations as to defamation as true, it therefore follows that the Retention Agreement is null and void, except for Paragraph 6, which allows survival of only the partial Retention Bonus payment provision in the amount of fifty percent, provided that Ryniewicz was still employed on September 13, 2018. But by her own admission, Ryniewicz was terminated on January 26, 2018. The Retention Agreement is therefore null and void in any event and Ryniewicz is not entitled to any payments under it. Thus, regardless of other considerations, Ryniewicz failed to allege satisfaction of the conditions precedent for payments contained in the Retention Agreement, including the sale of Master Data Center, continued and uninterrupted efforts of Clarivate to sell Master Data Center, and her own maintenance of confidentiality as well as execution of the separation agreement and of a general release. She also failed to show how a breach of contract by Clarivate arose out of the termination of her employment without cause, thus allegedly excusing her performance of 1 Paragraph 6 of the Retention Agreement states in relevant part: “In the event no change in control has occurred by September 13, 2018, but you continue to be employed by a subsidiary of Clarivate Analytics as of this date you will be entitled to receive half or fifty percent (50%) of the Retention Bonus less applicable deductions and withholdings.” -9- No. 19-1161, Ryniewicz v. Clarivate Analytics conditions precedent for payments. Consequently, Ryniewicz failed to state a plausible claim for breach of contract.