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Martignetti v. International Business Machines, Inc.

United States District Court, D. Maryland

September 30, 2019




         Plaintiff Richard S. Martignetti (“Plaintiff” or “Martignetti”) alleges that his former employer, Defendant International Business Machines Corporation (“Defendant” or “IBM”), unlawfully capped his commissions on sales of IBM products despite IBM's representation that his commissions were potentially limitless. Martignetti's Amended Complaint (ECF No. 12) brings four counts, as follows: a claim arising from the alleged violation of the Maryland Wage Payment and Collection Law (“MWPCL”), Md. Code Ann., Lab. & Empl. §§ 3-501, et seq. (Count I); fraud (Count II); negligent misrepresentation (Count III); and unjust enrichment (Count IV).

         Now pending is Defendant IBM's Motion to Dismiss (ECF No. 14). The Incentive Plan Letter issued by IBM to Martignetti indicates that IBM retained broad discretion to modify or cancel commission payments for any individual. (Am. Compl. Ex. B, ECF No. 12-3.) This disclaimer vitiates Martignetti's claims under the MWPCL and the common law. Accordingly, Defendant IBM's Motion to Dismiss (ECF No. 14) is GRANTED. This action is DISMISSED WITH PREJUDICE in its entirety.


         In ruling on a motion to dismiss, the factual allegations in the plaintiff's complaint must be accepted as true and those facts must be construed in the light most favorable to the plaintiff. Wikimedia Found. v. Nat'l Sec. Agency, 857 F.3d 193, 208 (4th Cir. 2017) (citing SD3, LLC v. Black & Decker (U.S.) Inc., 801 F.3d 412, 422 (4th Cir. 2015)). This Court may also consider documents attached to a motion to dismiss so long as they are “integral to the complaint and authentic.” Thompson v. United States, RDB-15-2181, 2016 WL 2649931, at *2 n.4 (D. Md. May 10, 2016), aff'd 670 Fed.Appx. 781 (4th Cir. 2016) (citations omitted). Martignetti worked for IBM between 2005 and June 2018 as a commissioned salesperson and a sales manager. (Am. Compl. ¶ 7, ECF No. 12.) While employed at IBM, Martignetti earned a base salary and additional incentive compensation in the form of a commission or bonus. (Id. at ¶ 8.) In this lawsuit, Martignetti alleges that IBM failed to pay him in accordance with an incentive plan effective as of January 1, 2017.

         I. The Commission Plan.

         In January 2017, IBM assigned Martignetti to sell IBM's “Software as a Service” (“SaaS”) products and services. (Id. at ¶ 12.) For this project, Martignetti managed and supported a team of seven salespeople. (Id. at ¶ 13.) The commission structure for SaaS sales were set forth in a six-month commission plan effective January 1, 2017 (“the Plan”). (Id. at ¶ 14.) The Plan was described in a PowerPoint presentation titled “Your 2017 Incentive Plan.” (Am. Compl. Ex. A, ECF No. 12-2.)

         The PowerPoint detailed how commissions were to be made. Under the Plan, Martignetti received commissions at a lower rate until he sold enough products and services to meet an assigned sales quota. (Id. at ¶ 15.) IBM assigned Martignetti a sales quota of $5, 019, 158.00 and a “Target Incentive” of $77, 878.00. (Id. at ¶ 17.) For each 1% of the quota up to 100%, Martignetti earned 1% of his Target Incentive. (Id. at ¶ 18.) For each 1% of the quota between 100% and 200% of the $5, 019, 158.00, he earned 3% of his Target Incentive. (Id. at ¶ 19.) For each 1% of quota above 200%, he earned 2% of his Target Incentive. (Id. at ¶ 20.) For purposes of the plan, Martignetti fell into a category of employees referred to as “Software Solution sellers without dedicated XaaS element.” (Id. at ¶ 24.) The PowerPoint slide describing the plan terms applicable to this group indicated that “earnings opportunity is uncapped.” (Id. at ¶¶ 25-26.) In other words, Martignetti could earn a potentially unlimited amount of commissions. (Id. at ¶ 26.)

         In connection with the commission plan, Martignetti was asked to sign an Incentive Plan Letter (“IPL”) dated May 25, 2017. (Id. at ¶ 14; Am. Compl. Ex. B, ECF No. 12-3.) The IPL contained a number of disclaimers which reserved IBM's right to modify payments under the Plan, modify the Plan terms, or cancel it entirely. These provisions are set forth in the IPL as follows:

Right to Modify or Cancel: The Plan does not constitute an express or implied contract or promise by IBM to make any distributions under it. IBM reserves the right to adjust the Plan terms, including, but not limited to, changes to sales performance objectives, assigned territories or account opportunities, applicable incentive payment rates or similar earnings opportunities, or to modify or cancel the Plan, for any individual or group of individuals, including withdrawing your accepted Incentive Plan Letter if your incentive eligibility status changes.

(Id. at ¶ 29.)

         The IPL contained a provision which reserved IBM's right to adjust incentive payments associated with certain transactions:

Review of a Specific Transaction: If a specific customer transaction has a disproportionate effect on an incentive payment when compared with the opportunity anticipated during account planning and used for the setting of sales objectives, or is disproportionate compared with your performance contribution towards the transaction, IBM reserves the right to review and, in its sole discretion, adjust the incentive achievement and/or related payments.

(Id. at ¶ 32.)

         Another provision made clear that IBM could adjust payments based on its review for errors:

Adjustments for Errors: IBM reserves the right to review and, in its sole discretion, adjust or require repayment of incorrect incentive payments resulting from incomplete incentives processes or other errors in the measurement of achievement or the calculation of payments, including errors in the creation or communication of sales objectives. Depending on when an error is identified, corrections may be made before or after the last day of the full-Plan period, and before or after the affected payment has been released.

(Id. at ¶ 31.)

         Finally, the IPL explained when incentive payments are earned under the plan:

Earnings: Incentive payments you may receive for Plan-to-Date achievement are a form of advance payment based on incomplete business results. Your incentive payments are earned under the Plan terms, and are no longer considered Plan-to-Date advance payments, only after the measurement of complete business results following the end of the full-Plan period. (Or, if applicable, after the date you left the Incentive Plan early.) Incentive payments will be considered earned only if you have met all payment requirements, including: (1) you have complied with the Incentive Plan; (2) you have not engaged in any fraud, misrepresentation or other inappropriate conduct relating to any of ...

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