Court Opinion

ID: 5704395
Source: CourtListenerOpinion
Date Created: 2022-01-12 15:45:03.681487+00
Date Added: 2024-06-11T08:40:23.571251
License: Public Domain

Tom, J.P. (dissenting).
Plaintiff worked for defendant from May 1993 until his termination on June 28, 2002. The complaint describes the nature of his position with Goldman Sachs as “salesperson” and reveals that he worked with defendant’s “Private Client Services (PCS) Group,” which is “responsible for developing and managing relationships with wealthy individuals and family groups for the purpose of helping them build and protect their financial assets through equity, fixed income and alternative investments.” The complaint adds that plaintiff had “lead responsibility for advising and managing the assets of a very prominent New York family that was a key client of the firm.” After Goldman terminated plaintiff, it refused to pay his accrued but unvested interest in company stock and stock options acquired under the firm’s stock incentive plan.
The complaint states four causes of action arising out of *75plaintiff’s termination, alleged to be the result of disability discrimination. At issue on this appeal is the first cause of action arising under Labor Law article 6. It alleges that Goldman made unlawful deductions from the “wages” (Labor Law § 190 [1]) plaintiff earned as a “commission salesman” (Labor Law § 190 [6]), in violation of Labor Law § 193, and that the firm failed to timely pay commissions, both during the course of plaintiffs employment and after his termination (Labor Law § 191 [1] [c]; [3]).
During the time period covered by the complaint, Goldman’s “compensation program for PCS professionals” provided for remuneration based on two components, “commissions,” which are not contested in this action, and “equity-based.” It is plaintiffs position that the equity-based component is includable in his earned commissions and comes within the statutory definition of “wages” (Labor Law § 190 [1]). Goldman maintains that the equity-based component is merely a discretionary payment under an incentive compensation scheme and that plaintiff, a highly paid executive, is removed from the protection of Labor Law article 6 by the exception provided in Labor Law § 190 (6) for persons serving in an executive, managerial or administrative capacity.
A December 1999 memorandum issued by Goldman states that while the commission component was to be earned and paid monthly, the equity-based component was to be “paid under, and subject to the terms and conditions of, the Firm’s equity programs.” Under the pertinent plan, a portion of the employee’s “Target Total Compensation” (an estimate of annual earnings calculated from year-to-date commissions earned by the employee) would be allocated to the equity-based component on a monthly basis. The Target Total Compensation amassed during the year would then be used to determine both the number of restricted stock units or RSU’s (each equivalent to one share of Goldman stock) and the number of stock options the employee was eligible to receive. Plaintiff asserts that “the equity-based held back portions of [his] 2000, 2001, and 2002 compensation are ‘wages’ due to him under Sections 191 and 193” of the Labor Law.
Simultaneously with its answer, Goldman moved to dismiss plaintiffs first cause of action based upon the documentary evidence (CPLR 3211 [a] [1], [5], [7]). In support of its motion, Goldman submitted the award agreements, award summaries and employee signature cards in connection with the awards of RSU’s and stock options for the fiscal years 2000 and 2001.
*76Supreme Court granted the motion and dismissed the first cause of action without reaching the question of whether the disputed equity-based compensation comprises “wages” under the Labor Law. The court reasoned that because plaintiff “exercised independent judgment in advising his clients, and managing their accounts,” he falls within the statutory exclusion for “an employee whose principal activity is of a supervisory, managerial, executive or administrative nature” (Labor Law § 190 [6]). Thus, the court concluded, plaintiff is not included within the class of persons protected by Labor Law article 6.
A cause of action is subject to dismissal based upon documentary evidence of record if it “ ‘conclusively establishes a defense to the asserted claims as a matter of law’ ” (Held v Kaufman, 91 NY2d 425, 431 [1998], quoting Leon v Martinez, 84 NY2d 83, 88 [1994]). On its motion, Goldman contended that the contested sums are not “wages,” that plaintiff is an “executive” and that plaintiff has no contractual right to the RSU’s and stock options under the firm’s stock incentive plan.
In the cases cited by Goldman in support of its contention that plaintiff is an executive, the issue was generally decided by reference to the underlying contract of employment (e.g. Gottlieb v Kenneth D. Laub & Co., 82 NY2d 457, 462 [1993] [“contractually due remuneration”]; Taylor v Blaylock & Partners, 240 AD2d 289, 292 [1997] [claimed status of commissioned salesperson inconsistent with employment contract]). Since no employment contract has been furnished, the capacity in which plaintiff was hired (whether as a “salesperson” or an “executive”) cannot be ascertained, and further proceedings are required to determine plaintiffs employment status (cf. Conticommodity Servs. v Haltmier, 67 AD2d 480, 482 [1979]).
Based on the award agreements submitted by Goldman, plaintiff’s right to receive the RSU’s and stock options is predicated upon his continued employment on the date the respective interests are transferrable. The issue, however, is not whether the contract contains a forfeiture provision but whether that provision is enforceable (see Mirchel v RMJ Sec. Corp., 205 AD2d 388, 389 [1994]), a determination that depends on whether plaintiffs accrued interest in the RSU’s and stock options constitutes “wages” within the ambit of Labor Law § 190 (1) or “incentive compensation—such as a bonus” (Marsh v Prudential Sec., 1 NY3d 146, 154 [2003], citing Truelove v Northeast Capital & Advisory, 95 NY2d 220, 224 [2000]).
*77In Truelove, the Court of Appeals stated the factors that exempted the employee’s incentive compensation from the Labor Law’s protection:
“The terms of defendant’s bonus compensation plan did not predicate bonus payments upon plaintiffs own personal productivity nor give plaintiff a contractual right to bonus payments based upon his productivity. To the contrary, the declaration of a bonus pool was dependent solely upon his employer’s overall financial success. In addition, plaintiff’s share in the bonus pool was entirely discretionary and subject to the non-reviewable determination of his employer” (95 NY2d at 224).
Under Goldman’s incentive plan, by contrast, the amount of extra compensation is determined by the employee’s productivity, as measured by the amount of commission income earned in preceding months. Furthermore, whether payments under the plan are discretionary or mandatory cannot be discerned from the documentary evidence (see e.g. Weiner v Diebold Group, 173 AD2d 166, 167 [1991]). The annual award statements recite that incentives are awarded pursuant to Goldman’s stock incentive plan, the terms of which are incorporated by reference. Although it might be dispositive, the stock incentive plan is not contained in the record, and the effect of its provisions cannot otherwise be determined (cf. D'Amato v Morgan Stanley Dean Witter Discover & Co., 268 AD2d 392 [2000]; Matter of Markby v PaineWebber Inc., 243 AD2d 311 [1997]). Thus, Goldman has failed to submit documentary evidence that clearly negates an essential element of plaintiffs cause of action so as to warrant its dismissal (Kliebert v McKoan, 228 AD2d 232 [1996], lv denied 89 NY2d 802 [1996]; Weiner, 173 AD2d at 167).
In Truelove, the compensation scheme at issue was held to be an incentive plan based on two factors: (1) payment of the bonus was “entirely discretionary” and (2) payment was not predicated on the employee’s “own personal productivity” but “solely upon his employer’s overall financial success” (Truelove, 95 NY2d at 224). The criterion the majority purports to read into the case— that the value of the income payable under the plan be ascertainable based on the employee’s performance—is simply not to be found in the Court of Appeals’ exposition.
Truelove is factually distinguishable from the matter at bar, which meets neither of the enumerated factors. Here, the employee’s share of the bonus pool is based directly upon his *78projected commissions during the year; thus, the second factor (compensation unrelated to personal productivity) is absent. Moreover, the documentary evidence fails to establish that payment is either discretionary or wholly contingent on the company’s financial performance; thus, on this record, the first factor (discretionary and contingent payment) is also lacking. Even if it is assumed that Goldman will ultimately be able to prove that payment of the bonus is “both contingent and dependent, at least in part, on the financial success of the business enterprise” (id.), the facts of this case present a novel question: Where the employee’s share of a contingent bonus pool is determined by the employee’s performance, does the compensation represent wages or an incentive?
The majority speculates, based on missing documentary evidence (Goldman’s stock incentive plan), that the amount of the bonus pool is dependent upon the firm’s financial performance and concludes that, for this reason alone, the compensation cannot be considered wages. However, to warrant judgment in its favor, it is essential that the documentary evidence clearly negate an essential element of the cause of action (Kliebert, 228 AD2d at 232). Having identified no documentary evidence showing that payment of the claimed compensation is contingent on the firm’s financial results, Goldman has failed to conclusively establish its defense (Held, 91 NY2d at 430-431), even assuming that the applicable law has been correctly construed by the majority.
Goldman moved for dismissal on the record which, as noted, is deficient in a material respect, and the firm’s argument that the subject equity awards are not “wages” is unsupported by reference to any New York case. Whatever might be said of the “unmistakable implication” that the compensation at issue is not “wages,” extrapolated by the majority from Truelove, its disposition is based on facts not in evidence because the provisions of Goldman’s stock incentive plan are unknown.
Accordingly, the motion to dismiss plaintiffs first cause of action under Labor Law article 6 should be denied and the first cause of action reinstated.
Gonzalez and Sweeny, JJ., concur with Friedman, J.; Tom, J.P., and Catterson, J, dissent in a separate opinion by Tom, J.P.
Order, Supreme Court, New York County, entered October 6, 2004, affirmed, without costs.