United States District Court, E.D. North Carolina, Western Division
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
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