United States District Court, W.D. Pennsylvania
JOY FLOWERS CONTI, Chief District Judge.
Plaintiff Frank Zandier ("Zandier") commenced this civil action against his former employer, Babcock & Wilcox Construction Co. Inc. ("BWCC" or the "Company"), and P.W. Waanders ("Waanders"), its former vice-president and general manager (collectively, "defendants"),  asserting breach of contract and promissory estoppel claims as well as alleged violations of Pennsylvania's Wage Payment and Collection Law ("WPCL"), 43 PA. STAT. §§260.1 et seq., based upon defendants' failure to pay certain bonus monies which Zandier believes he was entitled to receive. Pending before the court is defendants' motion for summary judgment (ECF No. 42) on all counts in the amended complaint (ECF No. 13). For the reasons that follow, defendants' motion will be granted in part and denied in part.
I. Factual Background
BWCC is headquartered in Barberton, Ohio, and provides construction services to utility and industrial customers. (CCSMF ¶ 1.) BWCC is one of several subsidiaries of Babcock & Wilcox Power Generation Group, Inc. ("BWPGG"), which in turn is part of The Babcock & Wilcox Company. (Id. )
Zandier was employed by BWCC from July 1998 until his retirement on January 31, 2012. (CCSMF ¶¶ 8-9.) From at least April 1, 2009, through the date of his retirement, Zandier held the pay grade designation for Project Manager 4. (Id. ¶12.) As of April 1, 2010, Zandier's salary was $4, 627 per pay period, or $111, 048 annually, and this was also his salary when he retired. (Id. ¶¶ 13-14.)
During times relevant to this litigation, Zandier worked in BWCC's Pittsburgh office. (Amended Compl. ¶14, ECF No. 13.) In the course of his employment, Zandier reported to Operations Manager Tom Brauchle ("Brauchle") and later, Jeff Hines ("Hines"), who replaced Brauchle as operations manager in June or July 2008. (CCSMF ¶¶ 10, 15.) The operations manager in turn reported to BWCC's Eastern Division operations manager (also referred to as "Regional Manager"). (Id. ¶15.) Brad Bradford ("Bradford") served as BWCC's Eastern Division operations manager until the end of 2007 or the beginning of 2008, at which time Bradford was replaced by Ken Wasilewski ("Wasilewski"). (Id. ¶ 4.) The Eastern Division operation manager in turn reported to BWCC's vice-president and general manager. (Id. ¶15.) Mike Morash ("Morash") served as vice-president and general manager of BWCC until Waanders took over that position on July 1, 2007. (Id. ¶ 2.)
A. The Project Team Incentive Plans
At various times during Zandier's employment, BWCC participated in a Project Team Incentive Plan ("PTIP"), which was essentially a bonus plan tied to the completion of eligible construction projects. (CCSMF ¶¶ 7, 16.) The PTIP began on or about September 30, 2001, and applied to a number of BWPGG's subsidiaries, including BWCC. (Id. ¶ 17.) The PTIP operated as follows: (1) construction projects were selected for participation in the program; (2) select employees assigned to those projects were made eligible for the PTIP; (3) the Company forecasted an expected profit on the project; (4) if the actual profit was higher than forecasted, a portion of the excess profit was used to fund a bonus pool; and (5) eligible employees were paid a bonus from that pool. ( Id. ¶ 18.)
In an internal email dated September 3, 2006, BWCC's parent company, BWPGG, announced to certain high level administrators of its subsidiaries its intention to implement certain changes to the PTIP. (Defs.' Ex. O at 1-3, ECF No. 45-15.) The changes included three major differences between the PTIP as previously administered (hereafter, the "Old PTIP") and the program as it would be administered in the future (hereafter, the "New PTIP"). (Id. ) First, the size of the bonus pool was changed: whereas under the Old PTIP, the bonus pool was 10% of the excess profit, the New PTIP limited the bonus pool to 5%. (CCSMF ¶ 28.) Second, the salary caps on PTIP bonuses were changed: while the Old PTIP capped the bonus payable at 100% of the employee's salary, the New PTIP cap ranged from 20% to 50% of the employee's salary; in Zandier's case, the applicable cap under the New PTIP was 40% of his annual salary. (Id. ) Third, a change was implemented relative to the availability of discretionary bonuses under the Salaried Employee's Incentive Plan ("SEIP"): whereas the Old PTIP had forbidden payment of a discretionary SEIP bonus for employees receiving a PTIP bonus in the same year, the New PTIP allowed employees to receive both a PTIP bonus and a discretionary SEIP bonus in the same year. (Id. )
The September 3, 2006, email announcement indicated BWPGG's intent "to implement the plan changes with new contracts entered on or after October 1st ." (Defs.' Ex. O at 3, ECF No. 45-15.) To prevent issues of unfairness from arising in connection with the transition to the New PTIP, BWPGG advised that "projects already released prior to the effective date" of October 1, 2006, would be "subject to the existing program rules." (Id. )
Included in the same September 3, 2006, email string was a notification to Morash that BWCC was henceforth "suspend[ed]... from participating in the PTIP on any new contract bookings entered after this notification." (Defs.' Ex. O at1, ECF No. 45-15.) The directive was reportedly given because BWCC "had not made its forecast in eleven quarters" and BWPGG management felt that it was "inappropriate to be paying the rewards associated with [the PTIP] until that situation turned around" ( id. ); however, BWCC was advised that it could "request reinstatement in the program after re-establishing minimally acceptable financial performance." (Id. )
Shortly after the Old PTIP had been suspended, a replacement PTIP was in draft form. (CCSMF ¶ 22.) As of November 2007, however, a successor plan to the Old PTIP had not been finalized, and there was uncertainty throughout the remainder of 2007 about which projects would be covered. (Id. ¶ 23.) On September 3, 2008, a draft of the New PTIP was circulated to key decision-makers, including Waanders, who by that time had replaced Morash as BWCC's vice president and general manager. (Id. ¶ 24.) The revised plan was finally approved on May 25, 2009, when the vice president and general manager of BWPGG's Fossil Power Division ("FPD") signed off on it. (Id. ¶ 25.) Although not formally approved until May 25, 2009, the New PTIP was made effective retroactively to October 1, 2006. (Id. ¶ 26.)
On or about May 16, 2007, Zandier signed PTIP initiation forms relative to two projects commissioned by Allegheny Energy. One form related to the Fort Martin FGC Project ("Fort Martin"), and the other form related to the Hatfield Ferry FGC Project ("Hatfield"). (CCSMF ¶30.) Both forms were signed by Bradford, and both forms listed the "participant's share" as "10%, " meaning that Bradford was recommending that Zandier receive 10% of any bonus pool funds that might ultimately be allocated to BWCC upon completion of the projects. (Defs.' Ex. I, ECF No. 45-9; Defs.' Ex. J, ECF No. 45-10; CCSMF ¶57.)
At the time that he signed these forms, Zandier was given a copy of the Old PTIP by Brauchle, who remarked, "Here's the PTIP program." (Pl.'s Dep. 66:3; id. at 64-66, 142, ECF No. 45-1; Defs.' Ex. H, ECF No. 45-8.) Section II of the document, entitled "Plan Elements, " provided (among other things) that the "bonus pool will be defined as 10% of the improvement in the booked profit on the selected projects." (Defs.' Ex. H at 1, §II, ECF No. 45-8.) Section III of the document, "Plan Administration and Payment Determination, " provided that "[i]ndividual payments will be capped at 100% of the employees' base salary at the time of payment." (Id. at 2, §III.) The plan also included a disclaimer, which provided: "The Company would expect to continue to administer this plan indefinitely; however, because future conditions cannot be foreseen, the company reserves the right to amend, suspend or terminate the plan at any time." (Id. at 3, §V.)
On or about June 25, 2007, Bradford sent paperwork, including Zandier's PTIP initiation forms, to Morash for the purpose of seeking application of the PTIP to the Fort Martin and Hatfield projects. (CCSMF ¶32.) When first initiated by Bradford, the Fort Martin and Hatfield projects were "erection only" projects. (CCSMF ¶ 36.) An "erection only" project means that BWCC is the only BWPGG subsidiary that has a contract with the customer for work, and that work is the construction of a power plant. (Id. ¶ 37.) By contrast, a "delivered and erected" ("D&E") project would involve BWPGG's Fossil Power Division ("FPD") performing the "delivery" part of the job, i.e., the material supply component. (Id. ¶ 38.) With D&E projects, the extra profit bonus pool is calculated by first combining the profit for both BWCC and FPD, and then splitting the pool 50/50 between BWCC and FPD. (Id. ¶¶ 39-40.) The accounting group takes the information provided to it, merges the profits of the two divisions, reconciles the numbers, and then calculates payments in accordance with PTIP rules before forwarding the figures to upper management for approval. (Id. ¶ 42.) Although initially designated "erection only" projects, the Hatfield and Fort Martin projects subsequently became D&E projects involving both BWCC and FPD. (Id. ¶ 43.)
On August 24, 2011, payouts under the PTIP were approved for the Fort Martin and Hatfield projects. (CCSMF ¶ 52.) There is no dispute that BWCC ultimately administered the bonus payments for these projects under the New PTIP, rather than under the Old PTIP.
With respect to the Fort Martin project, the forecasted or booked profit was $18, 476, 000. (CCSMF ¶ 53.) The actual profit upon completion of the project in 2011 was $29, 212, 342, resulting in a profit improvement of $10, 736, 342. (Id. ¶ 54.) Applying the terms of the New PTIP, BWCC calculated a bonus pool consisting of 5% of the profit improvement; with a positive adjustment for business development, which resulted in a total net bonus pool of $563, 658. (CCSMF ¶ 55; Defs.' Ex. U at 2, ECF No. 45-21.) Because Fort Martin was a D&E project, BWCC and FPD split the net bonus pool equally, making BWCC's share of the net bonus pool $281, 829. (CCSMF ¶ 56.) In August 2011, Zandier was allocated 10% of this amount or $28, 183. (CCSMF ¶ 58.)
The forecasted or "booked" profit for the Hatfield project was $25, 343, 000. (CCSMF ¶ 59.) The actual profit upon completion in 2011 was $40, 229, 873, resulting in a profit improvement of $14, 886, 873. (Id. ¶ 60.) Applying the terms of the new PTIP, BWCC calculated a bonus pool of $744, 344, which was subsequently adjusted downward to reflect a net bonus pool of $707, 127. (Id. ¶¶ 61-62.) Because Hatfield, like Fort Martin, was a D&E project, the net bonus pool was split evenly with FPD, resulting in a net bonus pool share of $353, 563.50 for BWCC. ( Id. ¶ 63.) Zandier was allocated a 10% share of these funds or $35, 356.35. (Id. ¶ 64.)
Under the terms of the New PTIP, Zandier's PTIP payments in any given year were capped at 40% of his salary. (CCSMF ¶ 66; Defs.' Ex. P at 4, §II, ECF No. 45-16.) Applying this provision, BWCC awarded Zandier a total of $44, 419.20 ( i.e. 40% of his $111, 048 annual salary) in September 2011 for his participation in the Fort Martin and Hatfield projects. (CCSMF ¶ 69.) Of this amount, $28, 183 represented Zandier's PTIP payment for the Fort Martin project and $16, 236.20 represented Zandier's PTIP payment for the Hatfield project. (Defs.' Ex. V, ECF No. 45-22.)
Zandier was anticipating a higher PTIP payout in accordance with the terms of the Old PTIP and, following his receipt of the payments, he made inquiries about the program. (Zandier Dep. 73:9-74:1, 74:19-75:7, ECF No. 45-1.) He claims it was at this point, sometime in the fall of 2011 toward the end of his employment, that he first learned about the changes to the PTIP that the Company had formally adopted in May 2009. (Zandier Dep. 52:5-55:4, 55:13-24, 66:4-13.) Zandier claims he was never shown or advised about the September 3, 2006, email announcing changes to the plan and suspending BWCC from participation in the Old PTIP. (Id. at 53:22-54:4, 57:17-59:13.) In addition, he was never given any copy of the plan other than the Old PTIP document provided to him in May 2007. (Id. at 62:4-5.) Zandier argues that BWCC breached its contractual obligations to him when it paid his PTIP bonus under the new plan rather than under the old one.
B. The Salaried Employees Incentive Program
At times relevant to this lawsuit, BWCC maintained a plan known as the Salaried Employees Incentive Plan ("SEIP"). (CCSMF ¶ 7.) The SEIP was a corporate yearly bonus program paid to salaried employees of BWPGG, including employees of BWCC. (CCSMF ¶70.) SEIP bonuses were payable on or about March 15 of each year for the previous calendar year. (Id. ¶ 71.) The plan included a discretionary component as well as a nondiscretionary component. (Id. ¶ 72.) All employees who earned a SEIP bonus got the nondiscretionary payment. (Id. ¶ 73.) Supervisors were responsible for allocating SEIP bonuses. (Id. ¶ 74.)
According to an internal corporate document submitted to "SEIP Allocation Managers" in February 2012, "SEIP is a hybrid plan combining profit-sharing and discretionary bonus principles." (CCSMF ¶ 78; Defs.' Ex. N at 1, ECF No. 45-14.) While all service-eligible employees share the nondiscretionary awards, "[t]he discretionary amounts... are intended to be awarded disproportionately to the people who exceed goals and contribute the most to [the] operating unit's success." (Id. ) Managers were directed to "ensure that higher rewards go to employees whose position and performance really make a difference to the company's profitability." (Id. ).
According to the 2011 SEIP guidelines:
[d]iscretionary amounts are to be differentiated between employees. Higher rewards are to go to employees who have made a difference to the company's profitability and who are higher performers. Discretionary amounts are intended to be awarded disproportionately to the people who exceed goals and contribute the most to the operating unit success.
(Defs.' Ex. N at 2, ECF No. 45-14; see CCSM ¶ 78.)
For his work during the calendar years 2004 through 2010, Zandier was generally awarded SEIP benefits in an amount ranging from $3, 762 to $7, 424. (Defs.' Ex. GG at 4, ECF No. 51-1.) The one exception was 2005, for which Zandier was not awarded any SEIP monies. (Id. ) For the year 2011, which was his last full year of employment with BWCC, Zandier was paid only $1, 538, representing the nondiscretionary portion of his SEIP award; he was awarded nothing for the discretionary component. (CCSMF ¶79, Defs.' Ex. FF, ECF No. 45-32.) Zandier's overall performance rating for 2011was 3.96, indicating that he generally "exceed[ed] requirements." (Pl.'s Ex. C at 3, ECF No. 47-3.) Hines testified that Zandier was "very much a part" of the Company's effort that year to secure a project in Berlin, New Hampshire, known as the "Berlin" project. (Hines Dep. 20:13-21:4, ECF No. 45-3.) To that end, Hines commented on Zandier's performance evaluation that Zandier's "efforts in the past year related to the Berlin project were critical to the ultimate success of that effort.... Its [sic] clear his contribution to our EPC proposal effort were [sic] significant and we can clearly benefit from his participation on future, similar efforts." (Pl.'s Ex. C at 3, ECF No. 47-3.) Nevertheless, Hines testified that Zandier's retirement in January 2012 had a bearing on his SEIP award for 2011 and outweighed his performance evaluation for purposes of the discretionary component. (Hines Dep. 18:23-19:7, ECF No. 45-3.) Zandier contends that BWCC breached its contractual obligations to him by denying him a discretionary SEIP award.
C. The Voluntary Reduction in Force Plan
In October 2009, BWCC's parent corporation announced a need to reduce the size of its salaried work force due to "economic conditions and the continued decline in new bookings for [BWPGG]." (Defs.' Ex. L at 1, ECF No. 45-12.) To facilitate the reduction, BWCC, through BWPGG, offered a Voluntary Reduction in Force ("VRIF") option to employees ages 60 and older who would have had at least five years of employment with the Company by the end of 2009. (CCSMF ¶¶ 7, 81.) Because Zandier fit these criteria, the VRIF option was offered to him. (Id. ¶ 82.) Under the terms of the VRIF option, employees who volunteered for the reduction in force would receive enhanced severance benefits, including severance pay equal to six months of the employee's salary, which was not normally offered in the case of a voluntary termination of employment. (Id. ¶ 81; see Defs.' Ex. L at 1, ECF No. 45-12.)
As of October 2009, Zandier anticipated that his PTIP award on the Fort Martin and Hatfield projects would be near the amount of his salary ($116, 402) or possibly more. (Zandier Dep. 20:1-7, 131:17-25, ECF No. 45-1.) He ultimately declined the VRIF option based on the mistaken belief that, if he exercised that option, he would lose his eligibility for the PTIP bonus money. (Id. at 49:23-50:2, 50:18-21.) Zandier formed this impression from language in the Old PTIP document that was given to him, which provided that "[a] participant who is laid-off or elects normal retirement will receive a pro-rata share of the bonus if the project earns a bonus, " while "[a] participant who is terminated for cause or resigns (prior to the end of the project) will forfeit any portion of an unpaid bonus." (Defs.' Ex. H at 2, ECF No. 45-8.) In addition, the PTIP initiation forms he signed in May 2007, provided that "[t]ermination of employment (other than lay-off) will automatically terminate participation in this plan and result in forfeiture of any share in the bonus pool." (Defs.' Ex. I, ECF No. 45-9; Defs.' Ex. J, ECF No. 45-10; see CCSMF ¶ 88.) Zandier acknowledges that no one ever told him that participating in the VRIF would render him ineligible for the PTIP, and ...