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Balch v. Oracle Corp.

United States District Court, D. Maryland

November 15, 2019




         Presently pending and ready for resolution in this employment contract case are the petition to vacate arbitration filed by Plaintiff David Balch (ECF No. 1), the cross motion to confirm arbitration award filed by Defendant Oracle Corporation, (ECF No. 7), and the joint motion to seal filed by both parties, (ECF No. 4). The issues have been fully briefed, and the court now rules, no hearing being deemed necessary. Local Rule 105.6. For the following reasons, the petition to vacate will be denied, and the motion to confirm will be granted, as will the motion to seal.

         I. Factual and Procedural Background[1]

         Plaintiff David Balch joined Oracle Corporation (“Oracle”) in 2005. (ECF No. 1-1, at 200). For the next ten years, he worked in Oracle's National Security Group as a Vice President of Software Sales. (Id.). In 2014, Mr. Balch announced that he planned to retire at the end of the year. (Id.). Mr. Balch's boss, Glen Dodson, requested that Mr. Balch stay on to close a large government contract that would come to be known as the “Mega Deal.” (Id., at 201). Mr. Balch agreed, and instead of retiring, signed onto a new contract, known as the Fiscal Year 2015 Individualized Compensation Plan (“the 2015 Compensation Plan”). (Id., at 203). The terms of that contract - which form the basis of this dispute - are discussed at length below. Mr. Balch ultimately closed the Mega Deal, earning Oracle about $150 million in revenue. (Id., at 201).

         Several months later, after following through on his plans to retire, Mr. Balch received a bonus pursuant to the 2015 Compensation Plan. Oracle's ultimate bonus payment for the Mega Deal amounted to only $904, 908, well shy of the $3, 950, 454 which Mr. Balch believed he was owed. (Id., at 14). Pursuant to the 2015 Compensation Plan, Mr. Balch issued a Demand for Arbitration to both Oracle and Mr. Dodson. (ECF No. 1-1, at 200).

         Arbitration ensued before a single arbitrator (“The arbitrator”). (Id., at 200). After a Motion to Dismiss Demand for Arbitration, the arbitrator dismissed Mr. Dodson from the case, and discovery - complete with several depositions - commenced. (Id., at 203). Following discovery, both Mr. Balch and Oracle filed motions pursuant to JAMS Rule 18, which the arbitrator treated as motions for summary judgment under Fed.R.Civ.P. 56. (Id.). An oral hearing was conducted.

         The arbitrator ruled for Oracle on both the remaining counts in Mr. Balch's Demand. In so doing, The arbitrator determined that 1) there were no material facts in dispute that would require a hearing on the merits, 2) Oracle did not breach Mr. Balch's 2015 Compensation Plan by its decision not to pay him a larger bonus, and 3) Oracle did not violate the Maryland Wage Payment and Collection Law (“MWPCL”) by breaching either the 2015 Compensation Plan or by failing to pay Mr. Balch wages which were “due” to him. (Id., at 203-04).

         Mr. Balch filed a Petition to Vacate Arbitration Award in the Circuit Court for Howard County, Maryland, which Oracle removed to this court on May 8, 2019. (ECF No. 1). A week later, Oracle filed its motion to Confirm Arbitration Award. (ECF No. 7).

         II. The Award

         Primarily at issue in the award was the interpretation of the 2015 Compensation Plan. This contract was made up of two documents: the “Fiscal Year 2015 Incentive Compensation Plan” (“the Incentive Plan”), (ECF No. 3, at 98) and the “FY15 Incentive Compensation Terms & Conditions” (“the Terms and Conditions”), (Id., at 112-207). The former purported to contain an individualized means of calculating Mr. Balch's bonus payments, while the latter described “the generally applicable provisions” of Oracle's compensation plans which would also apply to Mr. Balch.

         The text of Mr. Balch's 2015 Compensation Plan contained one significant difference from his plan for 2014: in 2014, Mr. Balch's Incentive Plan capped Mr. Balch's bonus at 250% of a measure referred to as Mr. Balch's “Annual Target Variable” - essentially a target for the revenue Mr. Balch was expected to generate. (ECF No. 1-1, at 206). The 2015 Incentive Plan had no such cap, arguably suggesting - at least in Mr. Balch's reading - that he would be owed a potentially far greater bonus were he to exceed his Annual Target Variable of $301, 636. (Id., at 211). In his Demand, and in his subsequent motion for summary judgment, Mr. Balch contended that the removal of the cap - and the likely subsequent receipt of a far greater bonus as a result of the Mega Deal - induced him to stay on in 2015. (Id., at 35-36).

         The arbitrator determined that Mr. Balch was wrong for two reasons. First, he determined that “[t]here [was] no evidence that Oracle intentionally singled out Mr. Balch to receive an uncapped FY 2015 Compensation Plan. One might speculate that the company uncapped his plan as a reward for postponing his retirement. Such a theory would be mere speculation[.]” (Id., at 215). The arbitrator determined this by reference to virtually every piece of evidence in the arbitral record, including the deposition testimony of numerous Oracle executives. (Id., at 212-18).

         Second, the arbitrator carefully parsed the language of the contract to determine 1) that provisions in those documents “authorized Oracle to impose a cap on Mr. Balch's FY 2015 bonus plan when correcting an Administrative Error, ” and 2) that the failure to include a bonus cap constituted an “Administrative Error” under the contractual definition of that term. (Id., at 211-12). In both cases, he cited liberally and accurately from the contract, referencing virtually every relevant clause of the contract in the process.

         As to the MWPCL claim, the arbitrator devoted eight pages to a thoughtful analysis of relevant Maryland law. (Id., at 218-26). In so doing, he discussed the handful of precedents the parties had raised, ultimately concluding that a few were apposite, a few were not, and one, Hausfeld v. Love Funding Co., 131 F.Supp.3d 443 (D. Md. 2015), “is wrong” and “misse[d] the point that” the other cases had raised regarding similar compensation language. The arbitrator concluded that the language in the 2015 Compensation Plan comported with the contractual language analyzed in a line of Maryland cases “that deal[] with plan documents that authorize the employer to modify a bonus plan at any time before the bonus is paid, ” and thus that Mr. Balch's bonus was not a “wage.” (ECF No. 1-1, at 218, 225).

         III. Standard of Review

         Review of an arbitrator's award is severely circumscribed; indeed, the scope of review is among the narrowest known at law because to allow full scrutiny of such awards would frustrate the purpose of having arbitrations at all - i.e., the quick resolution of disputes and the avoidance of the expense and delay associated with litigation. See Apex Plumbing Supply, Inc. v. U.S. Supply Co., Inc., 142 F.3d 188, 193 (4th Cir. 1998). If there is a valid contract between the parties providing for arbitration, and if the dispute resolved in the arbitration was within the scope of the arbitration ...

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