Court Opinion

ID: 213378
Source: CourtListenerOpinion
Date Created: 2011-03-28 16:53:39+00
Date Added: 2024-06-11T17:28:15.313332
License: Public Domain

NOT PRECEDENTIAL

                       UNITED STATES COURT OF APPEALS
                            FOR THE THIRD CIRCUIT

                                      No. 10-1229
                                     _____________

                                LEE A. DONALDSON;
                                  JOHN CAPUANO,
                                           Appellants

                                            v.

                          INFORMATICA CORPORATION;
                               PAUL J. HOFFMAN

On Appeal from the United States District Court for the Western District of Pennsylvania
                           District Court No. 2-08-cv-00605
                 District Judge: The Honorable Donetta W. Ambrose

                   Submitted Pursuant to Third Circuit L.A.R. 34.1(a)
                                  January 24, 2011

    Before: FUENTES and CHAGARES, Circuit Judges, and POLLAK, Senior District
                                  Judge ∗

                                 (Filed: March 28, 2011)

                                     _____________

                                       OPINION
                                     _____________

FUENTES, Circuit Judge.

∗
 Hon. Louis H. Pollak, Senior Judge, United States District Court for the Eastern District
of Pennsylvania, sitting by designation.

                                            1
       Appellants, Lee Donaldson and John Capuano, appeal from a grant of summary

judgment in favor of defendant Informatica Corporation (“Informatica”). Appellants

brought claims for breach of contract, detrimental reliance, quantum meruit, and violation

of Pennsylvania’s Wage Payment and Collection Law, 43 Pa. Stat. § 260.1 on the ground

that they were entitled to certain commissions as set forth in Informatica’s compensation

plan. Donaldson also brought a per se defamation claim pursuant to 42 Pa. Cons. Stat. §

8343(a) against Informatica’s Executive Vice President of Worldwide Field, Paul

Hoffman. 1 For substantially the same reasons discussed by the District Court in its well-

reasoned memorandum opinion, we will affirm. 2

                                              I.

       Because we write only for the parties, we will discuss the facts and proceedings to

the extent necessary for resolution of this case. This case arises out of a dispute over the

meaning of Section F of the 2008 Worldwide Incentive Compensation Terms &

Conditions (“WICTC”), which governs the terms of employee commissions at

Informatica. Section F of the WICTC sets forth the rules that apply when an account is

transferred from one sales team to another, as occurred in this case. Section F provides:

             Where there is a transfer of an account between salespersons,
             typically at the start of the fiscal, the account may be subject to
             a “hold” by the prior salesperson. Quota, commission and/or
             bonus credit for transactions closed within three months of the
             transfer date will be given 100% to the prior salesperson for

1
  Plaintiffs have not appealed the District Court’s grant of summary judgment in favor of
Informatica on plaintiffs’ claims of detrimental reliance, quantum meruit, and violation of
Pennsylvania’s Wage Payment and Collection Law.
2
  The District Court had jurisdiction over this matter pursuant to the diversity jurisdiction
statute, 28 U.S.C. § 1332. We have jurisdiction pursuant to 28 U.S.C. § 1291.

                                              2
              the account. If applied, the same splits will apply up the
              management chain. After the three month period from the
              transfer date has passed, the New Account owner will receive
              100% quota and/or bonus credit.

              In some cases when there is a transfer of an account between
              salespersons quota, commission and/or bonus credit may be
              split on transactions closed within three months of the transfer
              date as follows, subject to the Quota Allocation guidelines in
              Section F above:

              [setting forth specific commissions splits]

              . . . After the three month period from the transfer date has
              passed, the New Account owner will receive 100% quota
              and/or bonus credit.

              All holds and/or splits require the approval of the Vice
              President, Sales in each territory affected or the Executive
              Vice President, WorldWide Field Operations.

Donaldson v. Informatica Corp., No. 08-605, 2009 WL 4348819, at *8-9 (W.D. Pa.

2009).

         At the summary judgment stage, plaintiffs argued that the WICTC required

Informatica management to grant all hold requests when an account intended for transfer

qualified as an “active opportunity,” meaning that the deal was likely to close within

ninety days. Accordingly, Donaldson and Capuano submitted that they were entitled to

100 percent of the commission from a second Dell sale that took place in 2008. 3 In

         3
         In 2006, plaintiffs asked for, and received, a one-year “hold” on the Dell account,
entitling them to 100 percent of the commission on any sales to Dell that they closed in
2007. Although one Dell deal closed in 2007, plaintiffs were unable to complete a
second sale to Dell within the year. Plaintiffs sought to extend the “hold” on the Dell
account through 2008, in order to receive the full commission from the second Dell sale,
but Informatica denied that request. Plaintiffs subsequently agreed to receive 25 percent
of the commission of that sale.

                                              3
support of this position plaintiffs relied almost exclusively on Section F of the WICTC,

which they argued was “clear, unambiguous, and susceptible to only one meaning,” i.e.,

that an original account holder has the right to subject an active opportunity when the

account is being transferred to another sales team. Id. at *9. In the alternative, plaintiffs

urged the District Court to find that Informatica had violated its obligation to use its

discretion to grant hold requests in good faith.

       In granting summary judgment in favor of Informatica, the District Court agreed

with plaintiffs that the “contract language at issue is clear and unambiguous.” Id. at *10.

However, the court found that the contract unambiguously “provides that holds are

permissive and require executive approval.” Id. at *11. The District Court wrote:

              I disagree with Plaintiffs, however, that anything in Section F
              of the WICTC even remotely suggests, let alone plainly and
              unambiguously states, that a salesperson is entitled to subject
              any “active opportunity” for a sale within a transferred
              account to a hold or that Informatica management must grant
              such a hold request. To the contrary, the first sentence of
              Section F plainly states that “[w]here there is a transfer of an
              account between salespersons, ... the account may be subject
              to a hold by the prior salesperson.” It is beyond dispute that
              “may” is a permissive, not mandatory, term. See, e.g., Source
              Search Techs., LLC v. Lending Tree, LLC, No. 04-4420, 2007
              WL 1302443, at *8 (D.N.J. May 2, 2007) (contrasting
              permissive “may” and “can” with mandatory “must”).
              Similarly, the last sentence of Section F plainly states that
              “all holds and/or splits require the approval of the Vice
              President, Sales in each territory affected or the Executive
              Vice President, Worldwide Field Operations.” WICTC,
              App’x 2, § F (emphasis added). This sentence further
              demonstrates that holds are not automatic and that
              salespersons do not have a unilateral right to a hold.

                                              4
Id. at *10.

       The District Court also rejected plaintiffs’ good faith argument, finding that the

implied requirement that parties perform their duties in good faith may not be “used to

override an express contractual term.” Id. (citing Northview Motors, Inc. v. Chrysler

Motors Corp., 227 F.3d 78, 91 (3d Cir. 2000)). That is, the good faith duty could not be

used to “read into the contract a mandate that Informatica approve any hold requested.”

Id. To the extent that the plaintiffs argued that the defendant acted without the requisite

good faith in denying their hold request, the court found that plaintiffs “have not pointed

to any record evidence from which a reasonable jury could conclude that Informatica

violated any implied duty of good faith in this case.” Id. at *13.

       The District Court also granted summary judgment on Donaldson’s defamation

claim, which arose out of an email Executive Vice President Hoffman sent to several

Informatica executives. The parties agree that the e-mail was “conditionally privileged”

under the law, meaning that “the speaker and recipient share a common interest in the

subject matter and both are entitled to know about the information.” Foster v. UPMC

South Side Hosp., 2 A.3d 655, 663 (Pa. Super. Ct. 2010). Thus, in order to set forth a per

se defamation claim under Pennsylvania law, Donaldson needed to show that privilege

was abused, meaning that the statement was: (1) “actuated by malice or negligence”; (2)

“made for a purpose other than that for which the privilege is given”; (3) “made to a

person not reasonably believed to be necessary for the accomplishment of the purpose of

the privilege”; or “(4) includes defamatory matter not reasonably believed to be necessary

for the accomplishment of the purpose.” Elia v. Erie Ins. Exchange, 634 A.2d 657,

                                              5
661 (Pa. Super. Ct. 1993). In a per se claim, Donaldson also needs to allege “general

damages, i.e., proof that one’s reputation was actually affected by defamation or that one

suffered personal humiliation.” Joseph v. Scranton Times L.P., 959 A.2d 322, 344 (Pa.

Super. Ct. 2008).

       After considering the case law, the District Court rejected Donaldson’s allegations

that Hoffman acted maliciously, finding that the evidence did not raise a “jury question as

to malice.” Informatica, 2009 WL 4348819, at *16. The court also concluded

Donaldson had not established harm to his reputation and thus his claim failed as a matter

of law.

                                            II.

       We exercise plenary review over the District Court’s grant of summary judgment,

and “we assess the record using the same summary judgment standard that guides the

district courts.” Gardner v. State Farm Fire and Cas. Co., 544 F.3d 553, 557 (3d Cir.

2008). That is, summary judgment is appropriate “if the movant shows that there is no

genuine dispute as to any material fact and the movant is entitled to judgment as a matter

of law.” Fed. R. Civ. P. 56(a).

       Although plaintiffs argued in the District Court that the WICTC is an

unambiguous contract, they now argue for the first time on appeal that the WICTC is an

ambiguous contract. They identify several terms in the contract, including “hold” and

“transfer,” that are not defined, and further argue that several provisions of Section F may

be subject to several interpretations and ask that we remand this case to permit the

District Court to consider extrinsic evidence relevant to interpreting the WICTC. We will

                                             6
decline to remand this matter. After a careful review of the record and the parties’

arguments, we find no basis for disturbing the District Court’s reasoning. The plain

language of Section F clearly states that a “hold” is permissive, and we are not persuaded

otherwise.

       Plaintiffs’ second argument on appeal is that the District Court erred by declining

to apply the implied covenant of good faith concluding that there were no disputes of

material fact relating to whether Informatica acted in bad faith by declining plaintiffs’

hold request. We will also affirm the District Court’s grant of summary judgment as it

relates to this claim. It is true that the implied covenant of good faith imposes a duty of

good faith and fair dealing in every contract. In this case, Informatica executives had the

discretion to decide whether to award a second hold. Plaintiffs have failed to provide any

evidence showing a genuine issue of material fact pertaining to Informatica’s alleged bad

faith in denying plaintiffs this discretionary action.

       Finally, we will also affirm the District Court’s summary judgment order as it

pertains to Donaldson’s defamation claim. Donaldson has conceded that Hoffman’s

January 16, 2008 e-mail was conditionally privileged. After a careful review of the

record and the parties’ arguments, we agree with the District Court that Donaldson has

failed to identify a genuine material factual dispute relating to Hoffman’s intent. In

addition, for the reasons set forth in the District Court opinion, we also agree that

Donaldson has failed to allege general damages and therefore his claim must fail.

                                             III.

       For the reasons above, we will affirm.

                                               7