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Serabian v. Sap America, Inc.

United States District Court, D. Massachusetts

February 23, 2018

SAP AMERICA, INC., Defendant.


          Denise J. Casper United States District Judge.

         I. Introduction

         Plaintiff Steven Serabian (“Serabian”) has filed this lawsuit against Defendant SAP America, Inc., (“SAP”) alleging failure to pay wages in violation of the Massachusetts Wage Act (“Wage Act”), Mass. Gen. L. c. 149, § 148 (Count I), breach of contract (Count II), breach of the implied covenant of good faith and fair dealing (Count III), retaliatory termination in violation of the Wage Act, Mass. Gen. L. c. 149, § 148A (Count IV), and unjust enrichment (Count V).[1] D. 1-2. Defendants have moved for partial summary judgment, seeking dismissal of Counts III and IV in full and portions of Counts I and II. D. 41 at 1. For the reasons stated below, the Court DENIES IN PART and ALLOWS IN PART the motion for partial summary judgment.

         II. Standard of Review

         The Court grants summary judgment where there is no genuine dispute as to any material fact and the undisputed facts demonstrate that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). “A genuine issue is one that can ‘be resolved in favor of either party' and a material fact is one which ‘has the potential of affecting the outcome of the case.'” Gerald v. Univ. of P.R., 707 F.3d 7, 16 (1st Cir. 2013) (quoting Pérez-Cordero v. Wal-Mart P.R., Inc., 656 F.3d 19, 25 (1st Cir. 2011)). The movant bears the burden to demonstrate the absence of a genuine issue of material fact, Carmona v. Toledo, 215 F.3d 124, 132 (1st Cir. 2000), and they do so “by citing specifically to materials in the record or by ‘showing that the materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact.'” Colón-Fontánez v. Municipality of San Juan, 660 F.3d 17, 27 (1st Cir. 2011) (quoting Fed.R.Civ.P. 56(c)(1)). If the movant meets their burden, the non-moving party “must, with respect to each issue on which she would bear the burden of proof at trial, demonstrate that a trier of fact could reasonably resolve that issue in her favor.” Borges ex rel. S.M.B.W. v. Serrano-Isern, 605 F.3d 1, 5 (1st Cir. 2010). “Neither party may rely on conclusory allegations or unsubstantiated denials, but must identify specific facts derived from the pleadings, depositions, answers to interrogatories, admissions and affidavits to demonstrate either the existence or absence of an issue of fact.” Magee v. United States, 121 F.3d 1, 3 (1st Cir. 1997). The Court “view[s] the record in the light most favorable to the nonmovant, drawing reasonable inferences in his favor.” Noonan v. Staples, Inc., 556 F.3d 20, 25 (1st Cir. 2009).

         III. Factual Background

         The following facts are drawn from the parties' statements of material facts, D. 42; D. 47, and are undisputed unless otherwise noted.[2]

         SAP is a corporation that sells “software and services to its customers for managing accounting, distribution, human resources and manufacturing functions, ” and “On Premise” and “Cloud” software are two major product categories of SAP's sales. D. 42 at 4; D. 47 at 20. Serabian was hired as an at-will employee on or about February 14, 2011 with the title Customer Relationship Management (“CRM”) Sales Specialist, Line of Business Solutions. D. 42 at 4; D. 47 at 21. His compensation was set to include both a fixed salary and “variable compensation component” (i.e., commissions based on a percentage of his software sales). D. 42 at 4; D. 47 at 21.

         A. Serabian's 2011 Compensation

         Serabian's 2011 compensation was governed by a 2011 Compensation Package, which included the following provision: “[s]pecialist plan is subject to North America Operating Income Capped Funding.” D. 42 at 5; D. 47 at 21. SAP states that this provision, known as the “Funding Factor, ” authorizes SAP to cap total commissions if they exceeded the amount SAP budgeted for a particular year and, therefore, adjust commissions for salespersons on a percentage basis. D. 42 at 5. Serabian disputes the details of the Funding Factor because SAP's production of the 2011 Compensation Package lacks the attachment regarding the “Capped Funding Methodology.” D. 42-6 at 10; D. 47 ¶¶ 1-2; D. 47 at 22. It is undisputed, however, that SAP applied the Funding Factor to 2011 commissions, resulting in a $93, 512 adjustment for Serabian's 2011 commissions. D. 42 at 5; D. 47 at 22. Serabian disputes that this adjustment was appropriate under the Funding Factor plan. D. 47 at 22. Because SAP had already paid Serabian part of this amount as of the Funding Factor calculation date, SAP then informed him that they would subject $45, 037 of his commissions to a “clawback” or “setoff from future commissions.” D. 42 at 5; D. 47 at 22.

         Serabian requested information from SAP regarding the payment of his 2011 compensation several times in 2012. D. 42 at 9-10; D. 47 at 29-30. He also requested information from SAP many times in 2012 and 2013 regarding those years' commissions. D. 42 at 10; D. 47 at 29-30.

         B. The 2013 Special Performance Incentive (“SPIFF”)

         In March 2013, Serabian joined a new “indirect sales team” at SAP called the “SWAT” team. D. 42 at 5; D. 47 at 22. SAP created the SWAT team to “drive Cloud software sales following [SAP's] acquisition of a Cloud software company.” Id. According to SAP, the SWAT team “was not directly responsible for closing deals, but was to monitor deals of a certain type and work with individual direct sales representatives to assist them in closing deals.” D. 42 at 5. Serabian disputes this characterization. D. 47 at 23; D. 47 ¶ 21. SAP states that Serabian was given his compensation plan in writing in fall 2013. D. 42 at 6. Serabian disputes this point, stating that “[a] portion of Serabian's compensation was reduced to writing, and that is set forth in the 2013 plan.” D. 47 at 23. Serabian contributed to a large transaction with Ernst & Young in or about September 2013 (the “Ernst & Young deal”). D. 42 at 6; D. 47 at 24.

         SAP occasionally offers Special Performance Incentives, or “SPIFFs, ” as “additional variable compensation incentives outside of employee compensation plans.” D. 42 at 6; D. 47 at 23. SAP states-and Serabian disputes-that SAP “requires that all SPIFFs be documented in writing, ” and that SPIFFs are “time-bound, product-specific, and typically apply to a subset of SAP's sales team.” Id. SAP relies upon an affidavit by Keith B. Hontz, who was Vice President and Manager of the SWAT team in 2013, in support of this point. D. 42 at 6; D. 42-1 ¶ 6. According to SAP, SAP offered a two percent SPIFF in 2013 to Direct Sales Team members for On-Premise software sales that “specifically provided” that the SPIFF applied only to direct sales team members, rendering SWAT team members ineligible for the SPIFF. D. 42 at 6. In support, SAP submits an October 30, 2013 email that contains an attachment announcing a Two Percent SPIFF that would apply to “[a]ll eligible quota carriers on the 2013 Cloud Bonus Plan able to sell solutions from the extended OnPremise and Cloud customer sales bag in 2013.” D. 42-11 at 2, 7. The document states that it “applies ONLY to direct sales teams and [is] NOT intended for the indirect teams.” D. 42-11 at 5.

         Serabian disputes that the Two Percent SPIFF did not apply to him. D. 47 at 24. He states that “SAP announced the SPIFF for all ‘CRM OnPremise' sales at a meeting in June/July 2013, ” pointing to his own deposition for support, in which he stated that “Joe Fuster, who ran CRM sales I believe either globally or for North America, told CRM sales force that they were offering a special incentive, a SPIFF of 2 percent for on-premise software deals that were sold.” D. 42-3 at 20-21; D. 47 at 24; D. 47 ¶ 14. Serabian also presents a November 2013 email from Hontz providing his compensation for the third quarter of the fiscal year and stating that “[p]er Roger Martin, the 2% SPIFF for CRM On Premise is being handled independently and he will follow up on those payments later.” D. 47 ¶ 21; D. 48-12 at 4.

         C. Fall 2014 and Serabian's Termination

         In September 2014, SAP decided to merge its CRM software sales team with its Hybris sales teams the following January. D. 42 at 6; D. 47 at 24. This transition would require merging certain CRM roles with Hybris roles. D. 42 at 7; D. 47 at 25. On September 17, 2014, Jeff Moses, a Senior Vice President of Sales at SAP, informed the Human Resources department that a reduction-in-force in North America would be necessary by the end of 2014 to facilitate the merger. D. 42 at 7; D. 47 at 24-25. SAP needed to eliminate five CRM account executive positions and close three open positions, for a total of eight positions eliminated nationwide. D. 42 at 7; D. 47 at 25. SAP selected three divisions-the Northeast, Strategic ...

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