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Benchmark Electronics, Inc. v. Myers

United States District Court, D. Maryland, Southern Division

December 3, 2019

BENCHMARK ELECTRONICS, INC., Plaintiff,
v.
NICK MYERS, Defendant.

          MEMORANDUM OPINION

          GEORGE J. HAZEL UNITED STATES DISTRICT JUDGE

         Plaintiff Benchmark Electronics, Inc. brought this action pursuant to the Federal Arbitration Act (“FAA”), 9 U.S.C. §§ 1 et seq., to vacate a final arbitration award in favor of Defendant Nick Myers. ECF No. 1. Defendant has filed a Motion to Dismiss, ECF No. 6, and a Motion to Confirm Arbitration Award, ECF No. 7. Plaintiff opposed those motions and filed a Cross-Motion for Summary Judgment. ECF No. 14. Also pending are Defendant's Motion to Seal Exhibits to his Motion to Confirm Arbitration Award, ECF No. 8, Motion to Strike Plaintiff's Cross-Motion for Summary Judgment, ECF No. 20, and Motion to Seal Exhibits to Reply in Support of the Motion to Strike, ECF No. 26, and Plaintiff's Motion to File Under Seal Exhibits to Cross-Motion for Summary Judgment, ECF No. 16.[1] No hearing is necessary to resolve the pending motions. See Loc. R. 105.6 (D. Md. 2016). For the following reasons, Defendant's Motion to Dismiss is denied, Defendant's Motion to Confirm Arbitration Award is granted, and Plaintiff's Cross-Motion for Summary Judgment is denied. Defendant's Motion to Strike Plaintiff's Cross-Motion for Summary Judgment is denied, and the various sealing motions are denied.

         I. BACKGROUND

         A. Factual Background

         On September 21, 2016, Defendant Nick Myers accepted a position as Segment Vice President, Defense with Plaintiff Benchmark Electronics, Inc. ECF No. 15 at 62.[2] The offer letter stated that Defendant's base salary would be $220, 000 and he would receive $80, 000 in restricted stock options. ECF No. 15 at 61. The offer letter also described two bonus plans for which Defendant would be eligible. The Sector Vice President Business Development Initiative Plan (“Sector Vice President bonus plan”) would provide, based on meeting a sector bookings target, a bonus potential of 50% of the base salary, and the Long-Term Incentive Plan (“LTIP”) would provide a bonus potential of 40% of the base salary, with vesting requirements. Id. By accepting the position with Plaintiff, Defendant forfeited certain compensation benefits from his previous employer, BAE Systems, where he was Vice President of Business Development and Strategy. ECF No. 8-2 at 2.

         In addition to the offer letter, Defendant signed a Confidential Information, Proprietary Rights and Arbitration Agreement (“Agreement”). ECF No. 7-4. The Agreement provided that the parties would resolve any disputes or claims arising from, concerning, or relating to the employment relationship through final and binding arbitration. Id. The Agreement also contained provisions stating that the parties were “giving up their normal rights of appeal following the rendering of a decision except as applicable law provides for judicial review of arbitration proceedings, ” and that “[a]ll information regarding the dispute or claim or mediation or arbitration proceedings, including the mediation or arbitration award, will not be disclosed by [the parties] or any mediator or arbitrator to any third party without the written consent of [the parties] or unless otherwise permitted or required by applicable law, as determined by the arbitrator.” Id.

         After Defendant officially began his employment with Plaintiff in October 2016, it became apparent that the Sector Vice President bonus plan was still in development and did not yet exist. ECF No. 8-2 at 14-18. Plaintiff also provided misinformation regarding how the sector bookings target would be measured for the purpose of calculating Defendant's 2016 bonus and whether the 2016 bonus would even be based on sector bookings, as was stated in the offer letter, or whether it would be based on corporate performance instead. ECF No. 8-2 at 18-21. On February 18, 2017, Defendant submitted his resignation because he felt Plaintiff could not be trusted, and he eventually accepted a position with his old employer, BAE Systems, at a reduced salary and with a less generous compensation package than the one he had prior to departing. ECF No. 8-3 at 6-7. Plaintiff never paid Defendant his 2016 bonus because he resigned before the vesting period was complete. ECF No. 8-2 at 21-22.

         On September 25, 2017, pursuant to the parties' Agreement, Defendant filed an arbitration demand against Plaintiff before the American Arbitration Association (“AAA”). ECF No. 8-4. He asserted claims for breach of contract, intentional misrepresentation, negligent misrepresentation, and violation of the Maryland Wage Payment and Collection Law (“MWPCL”), Md. Code Ann., Lab. & Empl. § 3-501 et seq. based on Plaintiff “intentionally inducing [him] to resign from his position as Vice President Business Development and Strategy at BAE with promises that his acceptance of a position at [Plaintiff] would enable [him] to earn much higher compensation package than his prior employment if his Sector met certain objectives. [Plaintiff] refused to compensate [him] after meeting the targeted objectives.” ECF No. 8-4 at 2-3.

         Dr. Andrée Y. McKissick (the “Arbitrator”) presided over a bifurcated arbitration proceeding; she issued a liability award on July 9, 2018 and a damages award on January 3, 2019. ECF Nos. 8-2, 8-3. In the liability award, the Arbitrator found that Plaintiff had committed intentional misrepresentation, negligent misrepresentation, and breach of contract and had violated the MWPCL. ECF No. 8-2 at 24. Specifically, she found that Plaintiff had made contradictory and false representations about the existence of the Sector Vice President bonus plan and the basis for Defendant's 2016 bonus, Plaintiff had breached its contract with Defendant with respect to the calculation of his 2016 bonus, and, under the MWPCL, Plaintiff owed Defendant his 2016 bonus notwithstanding his 2017 resignation. Id. at 15, 16, 21, 22.

         The Arbitrator separately awarded Defendant a total of $1, 383, 736.15 in damages. ECF No. 8-3 at 16. First, she awarded compensatory damages of $660, 047.00 based on the difference between Defendant's BAE Systems compensation package prior to leaving for Benchmark and his compensation package when he returned to BAE Systems. Id. The Arbitrator determined that Defendant was entitled to these compensatory damages because, “much akin to constructive discharge in analysis, ” Plaintiff's intentional misrepresentation, negligent misrepresentation, breach of contract, and violation of MWPCL caused Defendant to lose trust in the company. Id. at 9-10. “This was emotionally undermining for him, notwithstanding the higher amount of income that was offered but contradicted verbal assertions. Applying this standard to any claimant who was defrauded through concealment and misrepresentation as well as the usage of falsehood, that claimant would not choose to stay with such a company. Thus, the reasonable person would choose to cut his economic losses and leave this employment.” Id. at 10.

         In addition to compensatory damages, the Arbitrator awarded punitive damages of $660, 047.00, as well as treble damages of $63, 642.15 under the MWPCL based on the bonus Defendant should have received for the work he performed for Plaintiff in 2016. Id. at 16. She declined to award attorney fees or prejudgment interest. Id. On February 6, 2019, the Arbitrator also declined Defendant's request for post-judgment interest. ECF No. 15-5.

         B. Procedural Background

         On January 25, 2019, Plaintiff filed a Complaint to Vacate Final Arbitration Award (“Complaint”) in this Court with respect to the damages award. ECF No. 1. On April 8, 2019, Defendant filed a Motion to Dismiss, ECF No. 6, and a Motion to Confirm Arbitration Award, ECF No. 7. On May 3, 2019, Plaintiff filed an opposition to Defendant's Motion to Dismiss, ECF No. 13, and a consolidated Cross-Motion for Summary Judgment and Opposition to Defendant's Motion to Confirm Arbitration Award (“Plaintiff's Cross-Motion for Summary Judgment”), ECF No. 14. On May 17, 2019, Defendant filed a Motion to Strike Plaintiff's Cross-Motion for Summary Judgment (“Motion to Strike”), ECF No. 20, and a consolidated opposition to Plaintiff's Cross-Motion for Summary Judgment and reply in support of his Motion to Confirm Arbitration Award, ECF No. 22. On May 31, 2019, Plaintiff filed a reply in support of its Cross-Motion for Summary Judgment, ECF No. 23, and an opposition to Defendant's Motion to Strike, ECF No. 24. Defendant filed a reply in support of his Motion to Strike on June 7, 2019. ECF No. 25.

         The parties have also filed several sealing motions. Defendant filed a Motion to Seal Exhibits to his Motion to Confirm Arbitration Award (“Defendant's First Motion to Seal”) on April 8, 2019. ECF No. 8. Following Defendant's lead, Plaintiff filed a Motion to Seal Exhibits to its Cross-Motion for Summary Judgment on May 3, 2019. ECF No. 16. On June 7, 2019, Defendant filed a Motion to Seal Exhibits to his reply brief in support of his Motion to Strike (“Defendant's Second Motion to Seal”). ECF No. 26. The sealing motions are unopposed.

         II. DEFENDANT'S MOTION TO DISMISS

         Defendant contends that Plaintiff's Complaint must be dismissed pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6) because the case was filed in violation of the Agreement's confidentiality clause, is prohibited by the defense of arbitration and award, fails to comply with the FAA, is untimely, and fails to include any legal authority.

         A. ...


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