Erdman v. Fleetcor Technologies, Inc.

          ORDER

          LOUISE W. FLANAGAN, UNITED STATES DISTRICT JUDGE

         This matter comes before the court on defendant's motions for summary judgment (DE 49), and to exclude the expert testimony of Brian Foley (DE 61), together with plaintiff's motion to amend his complaint (DE 78). The motions have been fully briefed by the parties. In this posture, the issues raised are ripe for ruling. For the reasons that follow, defendant's motion for summary judgment is granted, defendant's motion to exclude the expert testimony of Brian Foley is denied as moot, and plaintiff's motion to amend is denied.

         STATEMENT OF THE CASE

         Plaintiff initiated this action against his former employer on November 16, 2016, alleging breach of contract, violation of the North Carolina Unfair and Deceptive Trade Practices Act (“UDTPA”), N.C. Gen. Stat. § 75.1-1 et seq., fraud, breach of fiduciary duty, and violation of the North Carolina Wage and Hour Act (“NCWHA”), N.C. Gen. Stat. § 95-25.1 et seq.. Defendant had purchased the business enterprise unit of plaintiff's original employer, Telenav, Inc. (“Telenav”), in which plaintiff worked (“Telenav Enterprises”). Plaintiff seeks damages and lost benefits arising from defendant's alleged breach of an offer setting out plaintiff's employment terms. Defendant denies any liability.

         The case proceeded through discovery largely without incident, subject to four agreed upon time extensions, and a consent protective order. The single contested issue in discovery, raised by defendant, concerned conduct of the deposition of Ronald Clarke (“Clarke”), defendant's chief executive officer (“CEO”). Clarke was allowed to be deposed under conditions set by the court.

         Following discovery, defendant filed the instant motion for summary judgment, seeking judgment in its favor on all of plaintiff's claims. Defendant relies upon testimony of current and former employees, including Clarke; Crystal Williams (“Williams”), senior vice-president of human resources; Jeff Lamb (“Lamb”), plaintiff's first supervisor who eventually left defendant's employ; and Paul Citarella (“Citarella”), plaintiff's second supervisor. Defendant also relies upon plaintiff's deposition testimony and written discovery responses.

         In addition to documentary evidence, plaintiff relies in opposition upon much of the same testimony as defendant, together with the testimony of Alissa Vickery (“Vickery”), defendant's senior vice-president of accounting and controls, and John Young (“Young”), a Telenav Enterprises employee who agreed to work for defendant after the Telenav Enterprises acquisition. Additionally, plaintiff relies upon expert testimony of Brian Foley (“Foley”), which defendant seeks in separate motion now before the court to exclude on grounds that such testimony is neither reliable nor helpful as required by Federal Rule of Evidence 702.

         Plaintiff also relies upon evidence discovered in another case removed to the United States District Court for the Northern District of California on November 8, 2016. The case was initiated against defendant by other former Telenav Enterprises employees (“Chen case”). There, Naidong Chen (“Chen”) and Kumar Manindra (“Manindra”) raised claims similar to those presently before the court.^[1] Like with plaintiff, Chen and Manindra alleged that defendant promised performance stock options and bonus compensation, but neither received the promised incentives following acquisition of Telenav Enterprises. Plaintiff relies in this case upon testimony taken in the Chen case from Williams, Lamb, Clarke, Chen, and Manindra.

         On January 15, 2019, several weeks after the motions for summary judgment and to exclude Foley's testimony become ripe for decision, and long after the deadline had expired for any motion to amend the pleadings, plaintiff filed the instant motion to amend his complaint. Incorporating arguments and theories raised for the first time in plaintiff's response in opposition to defendant's motion for summary judgment, plaintiff seeks to allege the existence of a second stock option contract and breach thereof. Defendant protests this motion as untimely and prejudicial.

         STATEMENT OF THE UNDISPUTED FACTS

         Around 2010, plaintiff was hired by Telenav to serve as vice-president of sales. (Erdman Dep. (DE 52-1) 27:22-23). Within several weeks he became responsible for marketing, product development, and customer support. (Erdman Dep. (DE 52-1) 27:23-28:1). During his employment with Telenav, plaintiff petitioned his employer to form a business unit called Telenav Enterprises to focus on mobile applications targeting business consumers. (Erdman Dep. (DE 52-1) 28:5-13, 28:22-29:1). Plaintiff supervised 70 to 85 people. (Erdman Dep. (DE 52-1) 35:9-12).

         Defendant, through Lamb, hired Telenav Enterprises to build a mobile application. (Erdman Dep. (DE 52-1) 36:10-22). During this time, plaintiff and Lamb had the opportunity to work closely together, and conversations between the two about the wealth Lamb had acquired working for defendant encouraged plaintiff to solicit the sale of Telenav Enterprises to defendant. (Erdman Dep. (DE 52-1) 35:17-37:1). Lamb related that defendant wanted to acquire Telenav Enterprises to grow defendant's telematics business and develop mobile applications. (Erdman Dep. (DE 52-1) 37:22-38:12, 40:20-22).

         Plaintiff was the conduit between defendant and Telenav Enterprises in negotiating the deal overall, including compensation for employees hired to work at Telenav Enterprises post-acquisition. (Erdman Dep. (DE 52-1) 39:22-40:2). Plaintiff and Lamb decided which Telenav Enterprises employees should receive job offers, and together they extended offers or delivered severance notices. (Erdman Dep. (DE 52:1) 44:2-22). Plaintiff reviewed the offer letters defendant created in advance to make sure the salary was consistent with their Telenav Enterprises compensation. (Erdman Dep. (DE 52:1) 39:13-40:2).

         Plaintiff was offered the position of senior vice-president of mobile solutions by offer letter dated March 11, 2013. (Erdman Dep. (DE 52-1) 51:9-12; see Offer Letter (DE 68-4) at 1). Defendant promised that plaintiff “will be eligible to earn up to 50% of [his] annualized base salary in a bonus.” (Offer Letter (DE 68-4) at 1). Defendant also promised stock options, providing that plaintiff “will be awarded 15, 000 of FleetCor Performance Stock Options. We will work together to establish the performance criteria over the next month. These options require board approval which we will seek as soon as administratively practical.” (Offer Letter (DE 68-4) at 1). Plaintiff and Lamb were supposed to negotiate the performance criteria. (Erdman Dep. (DE 51-2) 71:11-18; Williams Dep. (DE 52-5) 37:4-12). Plaintiff did not negotiate any changes to the language of his offer letter, executed on March 12, 2013. (Erdman Dep. (DE 52-1) 54:1-17; Offer Letter (DE 68-4) at 2).

         Within a month after executing his offer letter, plaintiff met with Lamb to consider more particularly performance goals for his bonus compensation and stock option. (Erdman Dep. (DE 52-1) 71:19-72:12). Plaintiff recalls Lamb represented that plaintiff's performance goals “were in good shape, ” and “if not formally approved they would be approved.” (Erdman Dep. (DE 52-1) 72:20-23). Plaintiff's tentative stock option vesting criteria for his first year of employ focused on achieving 2013 budgeted earnings before interest, taxes, depreciation and amortization (“EBITDA”). (Erdman Dep. (DE 52-1) 73:9-13; see Williams Dep. (DE 52-5) 45:6-21, 60:2-23). In July 2013, Lamb told plaintiff that his stock option criteria had not been approved. (Lamb Dep. (DE 68-9) 81:13-22).

         Defendant's stock option vesting decisions are governed by an Equity Compensation Plan (“Plan”), which vests defendant's compensation committee (“Committee”) with total discretion to determine stock option grants, criteria, and vesting. (Plan (DE 68-18) at 20-21). Typically, Clarke makes recommendations about granting or vesting stock options to the Committee, and the Committee decides whether to approve, reject, or modify the recommendation. (Clarke Dep. (DE 52-7) 21:6-18). Although the Committee has the power to grant stock options or set vesting criteria on its own initiative, to Clarke's knowledge it has not been done without a recommendation first being put forward by him or Williams. (Clarke Dep. (DE 52-7) 21:16-23, 23:2-18). On April 25, 2013, the Committee granted plaintiff an option for 15, 000 shares of defendant's stock. (Committee (DE 68-17) at 1, 3; see Williams Dep. (DE 52-5) 43:5-15). The option “[was] granted upon the standard grant terms set forth in the Company's forms of option grants under the [Plan], as modified to include performance criteria . . . .” (Committee (DE 68-17) at 1). The Committee approved plaintiff's option grant without established vesting criteria in order to lock in the earliest and most beneficial stock price for plaintiff. (Clarke Dep. (DE 52-7) 29:17-21; 35:18-36-7).

         Ultimately, the Telenav mobile application development efforts were unsuccessful in Clarke's view due to poor reception by consumer end users. (Clarke Dep. (DE 52-7) 49:2-6, 51:2-4, 67:17-68:13). As a result, Clarke did not propose performance criteria to the Committee. (See Clarke Dep. (DE 52-7) 38:1-22, 49:2-18, 98:11-23). However, in spring 2014, the Committee approved a recommendation by Clarke to vest plaintiff in 25% of the shares covered by option grant due to the achievement of plaintiff's tentative performance criteria for 2013. (Lamb Dep. (DE 52-6) 66:6-21; Williams Dep. (DE 52-5) 45:9-17, 61:2-62:3).

         In April 2014, Lamb reached out to plaintiff and told him that he was unable to secure approval for 50% vesting, as he had hoped, because Clarke only supported 25% vesting. (Erdman Dep. (DE 52-2) 107:20-108:19; see Lamb Dep. (DE 52-6) 106:4-24). Plaintiff objected to this, but Lamb said “Ron makes the decisions” and “that's how it works.” (Erdman Dep. (DE 52-2) 108:7-1 0). Following subsequent conversations with Lamb in May 2014, plaintiff made several attempts to reach out to Williams in order to determine his performance criteria for his stock option. (See, e.g., Erdman Dep. (DE 52-2) 110:23-111:15; 2/24/15 Email (DE 68-5) at 3). During these conversations, plaintiff sought information on his performance vesting criteria, and he suggested to Williams that Telenav Enterprises employees have their stock incentives converted to time based options. (2/24/15 Email (DE 68-5) at 3).

         Plaintiff obtained a bonus each year he worked for defendant. (Erdman Dep. (DE 52-3) 154:13-19, 166:1-11, 169:16-18). He worked for defendant until his position was terminated on April 12, 2016. (Termination Letter (DE 68-16) at 1). Plaintiff received an option certificate for 3, 750 shares with his termination letter. (Termination Letter (DE 68-16) at 3).

         Additional facts pertinent to the instant motions will be discussed below.

         DISCUSSION

         A. Standard of Review

         Summary judgment is appropriate where “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). The party seeking summary judgment “bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of [the record] which it believes demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).

         Once the moving party has met its burden, the non-moving party must then “come forward with specific facts showing that there is a genuine issue for trial.” Matsushita Elec. Indus. Co. Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986) (internal quotation omitted). Only disputes between the parties over facts that might affect the outcome of the case properly preclude the entry of summary judgment. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986) (holding that a factual dispute is “material” only if it might affect the outcome of the suit and “genuine” only if there is sufficient evidence for a reasonable jury to return a verdict for the non-moving party).

         “[A]t the summary judgment stage the [court's] function is not [itself] to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial.” Id. at 249. In determining whether there is a genuine issue for trial, “evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in [non-movant's] favor.” Id. at 255; seeUnited States v. Diebold, Inc., 369 U.S. 654, 655 (1962) (“On summary judgment the inferences to be drawn from the ...