Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Global Executive Management Solutions, Inc. v. International Business Machines Corp.

United States District Court, D. Oregon

May 18, 2017

GLOBAL EXECUTIVE MANAGEMENT SOLUTIONS, INC., an Oregon corporation, Plaintiff,

          Richard S. Yugler Thane W. Tienson LANDYE BENNETT BLUMSTEIN LLP Attorneys for Plaintiff.

          Clifford S. Davidson Kristen G. Hilton SUSSMAN SHANK LLP Richard I. Werder Rachel E. Epstein Donald J. Reinhard, II QUINN EMANUEL URQUHART & SULLIVAN Attorneys for Defendant.

          OPINION & ORDER


         Plaintiff Global Executive Management Solutions, Inc., (Plaintiff or GEM), brings this contract-based action against Defendant International Business Machines Corp., (Defendant or IBM), seeking payment for work performed by Richard Clyne, one of GEM's owners. Plaintiff brings claims of breach of express contract, breach of the implied duty of good faith and fair dealing, quantum meruit, promissory estoppel, accounting[1], and fraud. Defendant moves for summary judgment on Plaintiff's remaining claims.

         Plaintiff moves for partial summary judgment on three of Defendant's affirmative defenses.[2] I grant Defendant's motion as to the breach of contract claim, the implied of good faith and fair dealing claim, and the promissory estoppel claim. I deny Defendant's motion on the quantum meruit and fraud claims. I grant Plaintiff's motion on the waiver affirmative defense and deny it on the estoppel and express contract affirmative defenses.


         In addition to the named parties, this cases involves two other entities and various contractual relationships among the parties and those entities. I have set forth the factual background in a way that helps make sense of who the players are and how they are related.

         I. Clyne & Plaintiff Clyne worked for Defendant for thirty years, from 1970 to 2000. Epstein Feb. 10, 2017 Decl. ("Epstein First Decl.") Ex. E ("Clyne Dep.") 44:18-45:13; 45:21-25, 52:6-16, ECF 72.[3]Clyne and his wife incorporated Plaintiff in approximately 2001. Stewart Feb. 10, 2017 Decl. ("Stewart First Decl.") Ex. E ("Clyne Dep.") 53:12-18, ECF 77; Cline Dep./Epstein First Decl. at 58:19-23. Clyne considers himself a specialist in negotiating complicated, interesting matters. Cline Dep./Epstein First Decl. at 163:24-164:10; see also Id. at 48:2-16 (noting his management skill strengths while at IBM and that he purposefully sought out things that were "messed up" and he would "step forward"). Through GEM, Clyne provides contract negotiating services as a consultant.

         II. Defendant's GTS Division & Its Relationship with BMC

         Defendant provides IT services to clients. Epstein First Decl. Ex. B ("Stafford Dep.") 28:5-6. Global Technology Services (GTS) is a division of IBM which takes over and runs IT operations for customers. Id. at 7:24-8:1; Epstein First Decl. Ex. A ("Calo Dep.") 14:13-25.

         BMC Software, Inc., (BMC), provides software that Defendant's GTS Division uses to provide IT services to its clients. Stafford Dep./Epstein First Decl. 28:5-16. BMC has done so for about twenty years. Epstein First Decl. Ex. C ("Jones Dep.") 9:14-17. III. BMC Contracts with IBM IBM spends roughly $90 to $100 million per year with BMC, Jones Dep./Epstein First Decl. 135:25-136:3, and is one of the largest third-party suppliers IBM works with. Stafford Dep./Epstein First Decl. 28:15-16. In 2008, BMC and IBM entered into a Master Licensing Agreement (MLA) and an Outsourcing Attachment (OA) thereto ("the 2008 OA").

         In 2012 or 2013, IBM and BMC began to renegotiate the 2008 OA. During those negotiations, BMC alleged that IBM had not complied with certain provisions of the 2008 OA and claimed that IBM's total exposure as a result was roughly $1.2 billion. Id. at 136:8-17; Epstein First Decl. Ex. AA at 9. Nonetheless, IBM and BMC executed a new OA in 2013 ("the 2013 OA"), which had a "[t]otal deal value [of] approximately [$]102 million." Id. at 137:15-21; Epstein First Decl. Ex. BB.

         In 2014, IBM and BMC started the "BMC Negotiations" which, according to Defendant, were "commercial discussions" regarding IBM's desire for certain additional rights. Def. S.J. Mem. 9, ECF 71. As part of these negotiations, BMC again alleged that IBM had significant exposure, this time for alleged noncompliance with the 2013 OA. See Stewart First Decl. Exs. 50, 51, 52. The total estimated exposure for IBM was $1, 097, 846, 099. Id., Ex. 50 at 16; Stewart First Decl. Ex. D ("Jones Dep.") 21:3-4. In February-March 2015, and as discussed in more detail below, IBM brought Clyne in to help with the BMC Negotiations which concluded with a new 2015 OA executed on September 30, 2015. This lawsuit is about Plaintiff's compensation for the time Clyne spent on the BMC Negotiations.

         IV. IBM's and Plaintiff's Contracts with APC

         A. IBM's Relationship with APC

         For consultants such as Plaintiff, IBM frequently uses a third-party staffing company named Alliance of Professionals & Consultants (APC) to hire and manage the consultant. Epstein First Decl. Ex. F ("McGauvran Dep.") 133:6-9. At the time relevant to this lawsuit, IBM and APC were parties to a "Non Technical Services Agreement, " effective November 19, 2012. Epstein First Decl. Ex. I. Under that agreement, APC provides "deliverables and services" as described in "Statements of Work" and/or "Work Authorizations" to IBM. Id. at 1. The agreement defines the relevant terms, including "deliverables, " "statement of work, " "services, " and "work authorization." Id. at, ¶ 1.

         Simultaneous with the execution of the Non Technical Services Agreement, IBM and APC also executed a "Business Services Master Statement of Work To the Non-Technical Services Agreement" (hereinafter "Master SOW"). Epstein First Decl. Ex. H. In contrast to the Non Technical Services Agreement which lacked an expiration date, the Master SOW expressly expired two years after its execution, on November 19, 2014. Id. at 1. The Master SOW incorporates the terms and conditions of the Non Technical Services Agreement. The Scope of Work section establishes that the services or deliverables required to be provided either on IBM's or IBM's Customers' premises as specified in a work authorization, are "Business Services." Id. at 1, ¶ 1. "Accordingly, APC or APC's Subtiers" were obligated to provide personnel to IBM in several service areas, including custom market research, database marketing, IT consulting, marketing consulting, operations consulting, research, strategy consulting, and more. Id. The Master SOW defines relevant terms such as "subtier, " "personnel, " "recruited personnel, " and "non-recruited personnel." Id. at 1, ¶ 2. Under the "Summary Description of Services, " APC agreed to provide either recruited or non-recruited personnel or to align with subtiers as specified in individual work authorizations issued by IBM. Id. at 2, ¶ 3.

         B. Plaintiff's & APC's Relationship

         Clyne, through Plaintiff GEM, worked for American Express for a few years from October 2010 to the end of 2013. Clyne Dep./Epstein First Decl. 29:11-22, 31:7-11. Sometime in the fourth quarter of 2013, IBM's Andrew Cohen reached out to Clyne for assistance with negotiating the "BMC Midrange contract." Id. at 103:19-25. At the time, Cohen was IBM's software manager for its American Express service account. Id. at 83:7-11; see also Epstein First Decl. Ex. K at 2 (email from Cohen bearing title Delivery Project Executive, American Express Account Integrated Technology Delivery). Cohen asked Clyne for a fee quote which Clyne provided in a November 25, 2013 email. Id. at 104:2-4, 9-11; Epstein First Decl. Ex. J. Cohen responded via email in early December, telling Clyne he needed to go through an approved staffing firm, several of which he listed in the email. Id. Ex. K. In his deposition, Clyne testified that Cohen later clarified through email or telephone that APC was the correct contracting vendor. Clyne Dep./Epstein First Decl. 117:9-14.

         On January 15, 2014, IBM's Les Bengough, who worked as the Business Services Team Lead for IBM's General Procurement office, emailed Lori Colmenero, Client Coordinator at APC, regarding the contract for Plaintiff. Stewart First Decl. Ex. 126. Bengough cc'd Clyne and IBM's Cohen. Id. Bengough told Colmenero that contact details and the statement of work for the "subject contractor, " identified as Clyne, were attached, a "cart" would follow, and to please align with APC. Id. GEM's previous quote to Cohen was attached. Id. APC's Matthew McGauvran explained that typically IBM Procurement introduces APC to an individual or company IBM wants for a specific project and then has that individual or company "align" with APC for that project. Stewart First Decl. Ex. A ("McGauvran Dep.") 12:19-21. "Alignment" means APC's hiring of the company by signing all of the documents and "all of the legal requirements to do business with APC, and therefore, IBM." Id. at 13:2-5.

         On January 28, 2014, Clyne executed a "Master Supplier Agreement" (MSA) with APC, identifying GEM as the "Supplier." Stewart First Decl. Ex. 3. Under the MSA, APC may contact the Supplier if an opportunity arises that APC believes may require the Supplier's services. Id. Another introductory paragraph makes clear that the MSA comprises a number of documents in addition to the MSA, including any statement of work referring to the MSA and accepted by the supplier and any work authorization or change order for a statement of work issued by APC. Id. "Collectively, these documents govern the relationship between Supplier and APC for any Services Supplier provides to APC or its Clients." Id. The MSA had a two-year term, with automatic renewal for successive one-year terms. Id. at 3, ¶ 5.1.

         A non-compete provision in the MSA states as follows:

If APC introduced Supplier to the Client, Supplier agrees not to establish or attempt to establish a sales relationship or provide Services, directly or indirectly, to the Client except through APC during the Term of the Master Supplier Agreement and for a period of one (1) year, thereafter. APC will be deemed to have introduced Supplier to the Client unless Supplier can demonstrate that Supplier provided services to the Client, directly or indirectly, during the twelve months before the date Supplier first submitted candidates to the Client through APC. If You provide, directly, or indirectly, any Services in violation of the Master Supplier Agreement to the Client, Supplier must pay to APC a "Finder's Fee" equal to thirty percent (30%) of all billings for Services or thirty percent (30%) of the annual salary for personnel provided as a permanent placement.

Id. at 3, ¶ 3.4. A separate section addresses "Confidentiality Obligations." Id. at 6, ¶ 9.

         Also on January 28, 2014, Clyne signed a "Statement of Work Master Supplier Agreement" (hereinafter "the GEM SOW"). Epstein First Decl. Ex. M. It begins by stating that the GEM SOW "describes the specifics of the work assignment for the Client Engagement referenced below." Id. "APC's Purchase Order is your authorization that the Client has accepted the Professional listed below and Your authorization for Your Personnel to begin work and invoice APC." Id. GEM is identified as the Supplier with Clyne identified as the Account Manager. Id. "IBM (Business Services)" is identified as the Client. Id. Clyne's title is "Negotiator" and he had a $220 per hour billing rate. Id. The estimated start date is February 3, 2014. Id. Under "Additional Engagement Information, " a description of the work is provided: "Negotiating BMC Midrange servers renewal. Includes prep, due diligence, internal support meetings, vendor negotiations, & travel." Id. at 2.

         The next day, January 29, 2014, Clyne signed a "Confidentiality, Non-Solicitation and Non-Compete Agreement for Supplier Professional" ("January 2014 Confidentiality/Non-Compete Agreement"). Epstein First Decl. Ex. N. This agreement requires GEM to keep confidential any Client information provided during GEM's engagement with APC. Id. at 1, ¶ 1.3. It also includes another non-compete provision in which Clyne agreed that during the term of employment with APC and for six months thereafter, he would not directly or indirectly solicit or accept a contractual or consulting engagement or employment on a full or part-time basis for similar services with any APC Client. Id. at 3, ¶ 3.1.

         On January 30, 2014, APC Account Manager McGauvran emailed Bengough with IBM Procurement to tell him that GEM was now aligned with APC as a Business Services supplier and that Clyne would provide the services which were identified in the GEM SOW. Stewart First Decl. Ex. 126. McGauvran said the start date was "ASAP, " expenses were "[a]ctual and "[r]easonable, " and APC could "provide these services at a bill rate of $226.60 per hour." Id.

         Troy Roberts is APC's President. Stewart First Decl. Ex. B ("Roberts Dep.") 6:13-14. He explained that typically at the beginning of an APC engagement, there is a Statement of Work stating what is going to be provided for a given role. Id. at 34:7-9. When IBM has specific services it wants to procure from the resource it wants to engage, IBM Procurement works out "the deal" and then contacts APC and asks APC to engage that supplier. Id. at 35:14-36:8. Roberts explained that while the Statement of Work specifies what the person is going to do, a purchase order is the actual work authorization to perform the work. Id. at 74:7-14. Usually IBM issues a purchase order to APC and then APC issues a purchase order to its supplier. Id. at 113:7-11.

         On February 3, 2014, IBM issued a Purchase Order to APC for Clyne's services. Stewart First Decl. Ex. 12. The next day, APC's McGauvran sent Clyne an email telling him "your PO arrived this morning" and further, that it was created with 900 hours of funding and an additional 100 hours of overtime funding at the same rate. Epstein First Decl. Ex. 0; see also Stewart First Decl. Ex. 13 at 2 (APC Purchase Order dated Feb. 18, 2014 showing GEM as the vendor, the start date as February 5, 2014, the total number of hours as 1000 (900 "ST" and 100 "OT"), at a unit price of $220 for a total of $220, 001, with the extra single dollar allowed to "Exp"). In response to McGauvran's request that Clyne confirm his start date, Clyne responded that he was going to start work that day. Id.

         Operating under these particular agreements (the MSA, the GEM SOW, the January 2014 Confidentiality/Non-Compete Agreement, the Purchase Order from IBM to APC, and the Purchase Order from APC to GEM), Clyne performed work for IBM. He negotiated the American Express BMC midrange server contract. Clyne Dep./Epstein First Decl. 145:8-21; Epstein First Decl. Ex. Q at 1-5 (showing hours spent by Clyne between February 5, 2014 and April 4, 2014 on BMC Midrange Agreement).

         He also worked on projects called "IBI Due Diligence"/"IBI Renewal Negotiations, " "BMC PCP Compliance Issue, " and "BMC MF Renewal"/"BMC mainframe renewal." Epstein First Decl. Ex. Q at 5-34. The bulk of this work was performed in 2014 with some hours performed into May 2015. Id. As Clyne testified in deposition, after the success of the midrange server contract, Cohen was "absolutely delighted" and asked him to negotiate the IBI renewal. Clyne Dep./Epstein First Decl. at 146:12-17. These were different negotiations than the BMC midrange negotiation but Clyne still submitted his time through APC because the work was still related to American Express. Id. at 146:18-25. Clyne explained that even though this next project was not BMC, because the arrangement with Cohen was for American Express only and IBI was the next such contract, he had no problem continuing to negotiate under the documents he had with APC. Id. at 147:3-24. Cohen and Nancy Bakarich, whom Clyne stated were both with IBM's software team/American Express, also asked him work on the BMC PCP Compliance Issue. Id. at 150:13-18. The GEM SOW was not amended to reflect the BMC PCP Compliance Issue project and Clyne does not recall getting a new statement of work for the IBI project. Id. at 149:8-12; 150:19-23.

         V. Clyne/GEM's Efforts to Secure Additional IBM Work

         In a July 2014 email exchange with APC's McGauvran, Clyne told McGauvran that his "PO isn't half consumed for this year and it looks as if a major negotiation will be required to be completed before the end of the year (possibly consuming the remaining 500 hours in this year's PO by IBM)." Epstein First Decl. Ex. R. There's also subsequent years which I will be talking to Andrew [Cohen] about . . . re: if IBM has interest in a multi-year contract or not." Id.

         Shortly thereafter, Clyne discussed the status of "this year's PO" with Cohen and his need to engage senior executives about a multi-year contract for negotiating large or difficult contracts. Epstein First Decl. Ex. S. Clyne also mentioned that he expected to raise his hourly rate for "AMEX (and now IBM)" to his new "discounted" rate of $280 per hour. He added that this new proposed rate was negotiable if IBM was wiling to commit to a multi-year contract which guaranteed at least 1, 800 hours annually. Id.

         In August 2014, Clyne also contacted APC's McGauvran to inquire about other client opportunities through APC. Epstein First Decl. Ex. G. He also told McGauvran that he was making calls elsewhere in IBM to see if there was interest in picking up the PO and to issue a 2015 PO. Id. In deposition, Clyne was asked to explain the statement that he was making calls elsewhere in IBM to see if there was an "interest in picking up this PO and issue a 2015 PO." Clyne Dep./Epstein First Decl. 168:3-6. Clyne testified that he meant "[j]ust what it said." Id. 168:7. He then went on:

The PO is an American Express PO, and since I had been informed there would be no additional work forthcoming that there may be somebody that wanted to use the hours that were on the PO or whatnot.
It would take a transfer. It's a very involved process, I'm told, but again, it was exactly the same vein. It's if somebody has another account, if somebody had another account, it may be - again, I'm not familiar with procurement's procedures in this whole process, but it's possible that it just may be easier for somebody that has negotiating skills to just call up Andrew Cohen and say reassign the PO to me.

Id. at 168:7-22.

         In early September 2014, Clyne emailed Cohen to mention again that he was going to raise his rates for the following year but still offering "various rates and payment options, in different contractual constructs, for IBM to consider and decide upon this fall for extending services beyond the end of the year." Epstein First Decl. Ex. T at 4. He asked Cohen if Cohen had any interest in receiving proposals for his services beyond the fourth quarter of 2015. Id.

         Cohen responded by confirming interest in retaining Clyne to help negotiate some of our "key, large SW contracts with 2015/16 expiration dates, " but noted the "intense focus" by IBM on expenses and stated it could be difficult to get approval for an increased rate. Id. at 3. Nonetheless, Cohen asked Clyne to forward any proposals for engagement beyond 2014. Id.

         Clyne followed up with an October 1, 2014 email to Cohen with three proposals, one of which, "Option 3, " suggested a payment structure where Clyne would receive 3.75% of all savings/cost avoids achieved. Id. at 1. This option would require minimum vendor contract values or claims of at least $100, 000, 000 per year before negotiations for each of two years. Id. Under Option 3, Clyne would pay all travel expenses. Id. In deposition, Clyne testified that Cohen responded to Option 3's contingency arrangement by indicating that it might be something to consider some day, but "given the climate now . . . we could never accept that now." Clyne Dep./Epstein First Decl. 82:14-83:6 (noting that this was the "gist" of Cohen's response).

         In December 2014, Clyne emailed Cohen to state that APC had confirmed that Clyne's PO had been extended by IBM in October and that 1, 200 additional labor hours were added. Epstein First Decl. Ex. V. As a result, there were approximately 1, 350 hours remaining to be "consumed on the current PO[.]" Id.; see also Clyne Dep./Epstein First Decl. 190:8-9 (Clyne stating in deposition that did not know why he wrote 1, 350 hours instead of 1, 297 hours). He also committed to not raising his IBM hourly rate for 2015 after all. Epstein First Decl. Ex. V. VI. Clyne's February - March 2015 Conversations with Patterson and Calo.

         Continuing his quest for additional work, in February 2015, Clyne emailed Richard Patterson, a former IBM colleague. Epstein First Decl. Ex. X. Patterson is the General Manager for GTS Infrastructure Services for IBM's GTS Division. See Stewart First Decl. Ex. 217. Clyne hired Patterson thirty years earlier but had not spoken to him for about twenty years. Clyne Dep./Epstein First Decl. 195:3-11.

         In the email, Clyne told Patterson that he had negotiated software contracts at "GTS' American Express Account for 11 years now." Epstein First Decl. Ex. X at 1 (noting this occurred for IBM from 2004 to 2010, for American Express from 2010 to 2014, and then again for IBM from February 2014 to the present). He suggested that GTS was not "achieving anywhere near what it could if it skillfully negotiated and effectively managed the negotiating process, for software agreements, at its SO accounts." Id. Clyne opined there were "profound" possibilities for dramatically reducing overall delivery costs. Id. He noted that he had an open PO with IBM at the American Express account today, but it was limited in hours and "further restricted in its use due to the cost reduction measures currently applicable to contractors." Id. He told Patterson that Cohen was his assigned IBM manager. Id. Clyne summarized his achievements for IBM in the prior year and offered to discuss an approach that would be, "considering the above, " of no risk to IBM. Id. He asked Patterson to meet him in person at Patterson's convenience to discuss. Id. In a post-script, he added that he did not believe it best for Patterson to share the email with IBM Procurement until after the two had met. Id. at 2.

         Patterson understood Clyne's email as "reach[ing] out regarding work he was doing at American Express, and an opportunity . . . to apply what he had done at American Express more broadly for GTS." Stewart First Decl. Ex. I ("Patterson Dep.") 16:25-17:5. Patterson wrote back to Clyne, stating he would be glad to have a conversation and further, that he knew that the "GTS team at AMEX saw value in the role you played." Stewart First Decl. Ex. 212. He suggested talking on the phone. Id.

         Patterson and Clyne spoke on February 18, 2015. Clyne Dep./Epstein First Decl. 209:25-210:5; Stewart First Decl. Ex. 219 at 2. Clyne told Patterson that GTS was "leaving money on the table" in negotiating with software vendors like BMC. Id. at 207:5-10; see also Epstein First Decl. Ex. D ("Patterson Dep.") 19:14-18. Clyne told Patterson he had "hours left on his PO." Patterson Dep./Epstein First Decl. 19:17-28. They talked about the opportunity to "apply" Clyne to a "broader set of software discussions" and not just "to Amex." Id. at 19:19-21. They discussed "how to . . . work with [Clyne] on the software negotiations." Id. at 20:14-17.

         Clyne and Patterson also spoke about whether there were alternate ways to pay or "compensate around negotiating software contracts." Id. at 20:21-25. This included the possibility of a contingency arrangement. Clyne Dep./Epstein First Decl. 210:24-25. According to Clyne, Patterson inquired if Clyne would be willing to perform his services under a "bounty agreement." Id. at 210:17-20. Clyne clarified whether Patterson meant a contingency agreement. Id. at 201:21-25; see also Id. at 211:2-25. Clyne indicated that he was "heading that way anyway, which I was, with the no risk[.]" Id. at 212:2-4. Patterson recalled a conversation about a contingency fee, but said it was not specific and was part of a "brainstorming set of conversations." Patterson Dep./Stewart First Decl. 21:20-25. Because the GTS Division was looking at alternative ways to save money on non-labor, the timing was right. Id. at 22:10-23:2. They discussed "a percentage fee or something around how to pay for this particular part of negotiating." Id. at 21:5-8. Patterson did not recall using the word "bounty fee" but remembered that a contingency fee was part of the conversation. Id. at 29:4-11.

         Patterson told Clyne that negotiations for software contracts were not in his area anymore but he agreed to introduce him to Yvonne Calo because this was her responsibility. Id. at 19:23-20:2. Calo is IBM's Vice-President of Resiliency and Infrastructure Delivery within the GTS Division. Calo Dep./Epstein First Decl. 6:24-7:2; 15:2-7. Software and hardware as non-labor-related costs were part of her responsibilities. Patterson Dep./Stewart First Decl. at 20:6-8. Patterson told Clyne that he was confident Clyne could help out, there were some people he wanted to talk to, and that he would get back to Clyne within a week. Clyne Dep./Epstein First Decl. at 209:7-13; 211:8-11.

         Patterson introduced Clyne and Calo during a February 25, 2015 phone call. Clyne Dep./Epstein First Decl. 213:3-15. Patterson told Calo and Clyne during the call that Clyne had had success with American Express and Patterson thought there was a "potential opportunity to leverage Rick more broadly in negotiating, . . . similar contracts for the broader IBM." Patterson Dep./Stewart First Decl. 65:3-16. After Patterson said that BMC was "particularly problematic, " Patterson left the call which Calo continued. Clyne Dep./Epstein First Decl. at 213:3-25.

         Calo remembers learning nothing from Patterson before the call other than that the call was with someone who might help with software negotiations. Stewart First Decl. Ex. H ("Calo Dep.") 21:7-10; 22:4-9. Calo felt that she needed to introduce Clyne to Joe Dzaluk who "owned all software negotiations at the time, not just BMC." Id. at 27:18-24. In a March 6, 2015 email, Calo wrote to Clyne that she and Dzaluk wanted to look at current contracts and agreements like BMC to determine if there were any opportunities to negotiate savings, and further, that she and Dzaluk would like to take Clyne through the current agreement and issues with BMC and get Clyne's perspective. Stewart First Decl. Ex. 183 at 2. She asked Dzaluk to forward material to Clyne to review in advance of a meeting. Id. at 3; see also Calo Dep./Stewart First Decl. 34:19-20 (Calo stating that in March 2015 she asked Dzaluk to brief Clyne on the BMC work). At that point, Clyne started work on the project. Id. at 35:5-16; see also Stewart First Decl. Ex. 48 at 2 (time sheet by Clyne showing start date of March 10, 2015 on "BMC w/Yvonne Calo, Joe Dzaluk, John Stafford").

         VII. Compensation and Terms of Employment

         Calo was unable to recall specifics about the discussions among Patterson, Dzaluk, herself, and others, regarding bringing Clyne on to assist with the BMC Negotiations and thus, there is no testimony from her about discussions regarding Clyne's compensation at the start of his work on the BMC Negotiations. Calo Depo./Stewart First Decl. 28-35. From the earlier electronic meeting notice she received from Patterson, Calo knew that Clyne was "already in IBM with access and an ID" which meant to her that he was "through IBM, a contract and on our books." Id. at 36:7-18. She does not remember discussing Clyne's existing status with Patterson or anyone else. Id. at 36:19-37:6. She does not remember asking Clyne about his status. Id. at 37:7-10. It was not until after the BMC Negotiations had concluded and a new BMC agreement Dated: September 30, 2015 that she inquired of Clyne about what contract he had. Id. at 37:16-22. She did not ask previously because he was "already on the books, available with hours and excess time to provide counsel and help on another project, and so he was assigned accordingly." Id. at 37:21-38:3. Although she could not remember who had told her that Clyne was available with "extra cycles to help with our software negotiations, " she assumed it was Patterson. Id. at 38:4-15. She made no inquiry about Clyne's number of available hours between the day of the call with Patterson in February 2015 and September 30, 2015; she did nothing to increase the hours for the project; she did not inquire if Clyne was adding his hours or submitting his hours. Id. at 39:16-40:5. She believed these issues were the responsibility of Clyne's first-line manager who was Cohen and then Jeromy Smith.[4] Id. at 40:7-11.

         Calo described the usual process of hiring a contractor as receiving resumes and candidates from IBM Procurement with IBM Procurement "on-board[ing]" the selected candidate to make sure everything is in place. Id. at 44:2-15. Calo did not go through the usual process in bringing Clyne on because he was "already on the books." Id. To her, because Clyne had an ID, he "[t]herefore had a contract." Id. at 44:16-17. She did not know if Clyne's current contract applied to the work he would perform for her. Id. at 44:18-45:6. She knew he was assigned to American Express which uses BMC so she knew he had knowledge of BMC and that he had done BMC work specific to the American Express account. Id. at 45:12-14.

         On March 6, 2015, John Stafford, the GTS Division employee in charge of the software spending component of the services provided by the GTS Division, emailed Clyne to introduce himself as being on Dzaluk's team, inquired if Clyne needed information in advance of the meeting, and offered to discuss the status of the current dispute and BMC's overall contract structure. Epstein First Decl. Ex. Y; Stafford Dep./Epstein First Decl. 7:14-17, 7:24-8:7, 10:12-15. Clyne responded by identifying what he needed and then raised the issue of a non-disclosure agreement (NDA) by stating that he already had a signed NDA "regarding all matters having to do with IBM" and so would treat IBM documents appropriately as to their high confidentiality restrictions. Id. A few days later, Stafford emailed IBM's in-house counsel Thom Hagen and Anthony Gargano to tell them about bringing Clyne on to "take a more active role in leading the business aspects of any negotiation/settlement" and to inquire whether, because Clyne was a contractor, there was anything special that needed consideration. Epstein First Decl. Ex. JJ at 2. He noted Clyne's statement that Clyne already had a NDA in place. Id.

         Hagen responded that it was "probably fine" but he wanted to see the NDA. Id. Clyne then asked McGauvran for a "soft copy of the IBM NDA" that he signed "during the onboarding process last February[.]" Epstein First Decl. Ex. KK at 2. McGauvran responded by asking Clyne what was going on and if there was anything "we" should be aware of. Id. McGauvran attached a copy of the MSA Clyne executed in January 2014 which included non-disclosure language. Id. Clyne responded that there was an "expanded assignment with IBM" which needed a "full IBM NDA" which Clyne was certain he had completed, meaning a stand-alone NDA for IBM. Id. He wondered whether the existence of the document "here" (presumably referring to the MSA McGauvran attached to his email), which referenced a separate NDA, meant that "APC had no such document on hand (executed by me)?" Id. McGauvran responded that he was glad to hear that a project was in the works. Id. McGauvran attached something that is not named in the email but which Defendant identifies as the January 2014 Confidentiality/Non-Compete Agreement. Id.; Def. S.J. Mem. 12. McGauvran stated that he did not have a stand-alone document. Id. If the client was requesting one, he wrote, it could be added to Clyne's documents in APC's system. Id. Clyne thanked McGauvran, suggested that the agreement McGauvran provided was the document he was remembering, and asked if it was alright to send it on to IBM legal. Epstein First Decl. Ex. DDD. McGauvran responded that it was fine to send it. Id.

         On March 12, 2015, Clyne forwarded the agreement to Hagen. Epstein First Decl. Ex. LL at 2. Hagen responded by noting that this was fine "as to your confidentiality commitment to APC, " but he still asked for the "APC-IBM agreement for this engagement" so that Hagen could confirm the confidentiality terms between IBM and APC. Id. at 1. He noted that because Clyne had been engaged as a consultant for some time and APC and IBM had a longstanding relationship, then this was likely already in place, but he wanted to make sure given the "highly confidential and sensitive nature of this particular engagement." Id. Clyne responded that he would follow up with APC. Id.

         On March 17, 2015, Clyne forwarded Hagen an email containing substantive information on the current IBM/BMC contract issues and adding a post-script to tell Hagen that Clyne had not yet heard back from APC regarding additional documents to support the NDA. Epstein First Decl. Ex. MM at 1. Clyne believed that what he had, which contained specifics regarding restrictions handling "APC's client's (IBM) materials" and other confidential data in the engagement, was sufficient to "cover all necessary bases required[.]" Id. He asked Hagen if it would be easier to sign a "vintage, off the shelf, all encompassing IBM NDA" and satisfy the requirement that way. Id.

         The next day, March 18, 2015, Hagen wrote Clyne, stating there should be no need to sign anything new. Epstein First Decl. Ex. EEE. Hagen stated that he did not want to "disrupt your status as a contractor by having you start signing docs" with IBM directly. Id. Thus, he asked Clyne to "circle back" to APC. Id. He thought it would be easy for APC to send over its signed NDA with IBM so "we can close the loop." Id. Clyne responded that he thought IBM's American Express office took care of it last year and that he would check with them and get back to Hagen. Id.

         On April 21, 2015, Stafford emailed Clyne to follow-up about obtaining the APC-IBM NDA for "this engagement." Stewart First Decl. Ex. 54 at 4. Clyne wrote back to Stafford, with a cc to Gargano, and stated: "At this point, it's very possible that this particular engagement will not go through my 'pass through' vendor, APC. I think it's just simpler, as I suggested to Thom [Hagen], that I just execute a new NDA directly with IBM." Id. He then asked Gargano if Gargano could provide one. Id.

         Gargano responded with an email asking Clyne why he believed "that's the case?" Id. at 3. Gargano then wrote: "As I'm sure you are aware, we need to engage your services through IBM procurement." Id. Clyne then wrote back to Gargano with a cc to Stafford:

I will contact APC once again, since they are my vendor/employer of record as I speak, and have them call you directly regarding the NDA I signed with them in February 2014, which is supposed to have covered all confidentiality requirements re: IBM IP required protections while I worked for IBM. (If, in the future, that situation should change re: APC, I'll alert you immediately to the change and the need to sign a new NDA.). Since APC is unaware of this possibility, I would appreciate it if you limit your conversation with them to satisfying IBM's immediate requirements regarding the current NDA of record that APC had me sign specifically for IBM and why it was not sufficient to meet IBM's requirements, despite APC being an IBM procurement approved supplier for IBM, and presumably well versed on required NDA's for their "on boarding process."

Id. at 2. Clyne asked Gargano to let him know if any issues remained after Gargano talked to APC. Id. Gargano responded by noting that IBM had Clyne's NDA with APC which Hagen reviewed and they did not need another one. Id. However, he wanted to see APC's agreement with IBM which he assumed Clyne would not have. Id. He asked Clyne who in IBM engaged his services so "we, " referring to IBM, could "chase this down via IBM procurement?" Id. Clyne responded with the name "Lisa M. Fawcett" and included her IBM email address. Id. at 1. He stated that she was the one responsible for ensuring that all "on boarding documents necessary to work for IBM were provided by APC." Id.

         Although Gargano had communicated with Clyne regarding the NDA, he and Clyne did not discuss Clyne's compensation. Stewart First Decl. Ex. G ("Gargano Dep.") 24:24-25:14. Gargano was unaware of any issues pertaining to Clyne's compensation until October 2015. Id. at 25:22-26:11. Gargano did not know if a new "scope of work" was provided to Clyne for the BMC Negotiations, even though commonly, an individual in IBM Procurement or the employee who actually requested services would prepare such a scope or statement of work. Id. at 154:21-156:17. He never asked APC to prepare a statement of work for Clyne's BMC Negotiations work. Id. at 156:18-21. He never asked someone else to ask APC to prepare such a statement of work. Id. at 156:22-25.

         On April 20, 2015, the day before this April 21, 2015 email exchange started by Stafford and continuing between Gargano and Clyne, Clyne had emailed Calo with the subject line of "BMC IBM Attorney-Client Privileged, " (hereinafter "the April 20, 2015 email"). Stewart First Decl. Ex. 121. This email was cc'd to Patterson. Id. at 1. Clyne wrote:

We should probably have a 30 minute call either Wednesday late afternoon or Thursday, your time, to checkpoint on a few things, as your schedule permits.
While I assume that Joe [Dzaluk] has kept you up-to-date re: goings on with BMC, it is safe to say that the "rubber's going to hit the road" in the next 5-6 weeks (re: resumed negotiations - see below) as to whether or not an "amicable" resolution with BMC can be reached to end all their claims while significantly improving on the onerous terms of IBM contained in the current OA re: our business going forward. [the "see below" refers to the forward of an email sent to Dzaluk, Stafford, and Gargano appearing below the text to Calo]; [remainder of paragraph deleted because refers only to substance of negotiations not relevant to the summary judgment motions].
Also, in my initial email to, and subsequent discussion with, Rich [Patterson], I committed to a "zero risk" compensation arrangement for IBM if I should be tasked beyond the [American Express] account. We talked about a "bounty" or "success fee" payment approach, which I embraced totally (and was moving to anyway). I was to get back to Rich with some possibilities, but I have been totally consumed with this project since I engaged - and, not until now have I given consideration to what hopefully would be viewed by IBM as a very attractive rate/no risk payment arrangement.
[paragraph deleted because concerns information about what others charge and customary industry fees].
Having said all that, as you know, BMC's $ demands for all issues, pending renewals and purchases, based on the current MLA pricing and their non-compliance contentions, is beyond profound. By the end of this week, IBM will need to set the total maximum payment(s), plus any conditions, terms and other modifications it seeks (i.e. the minimum acceptable settlement parameters) for me to negotiate, resuming next week. What I propose is the following:
If at least the minimum combination of acceptable aggregate payments, compliance fees, terms, conditions and other modifications to the existing contract is achieved, then my "success fee" is 1.20% of the difference (i.e. reduction) from BMC's total price demand for all issues, in aggregate and the final total price negotiated - again, as long as it is at or below the target established as acceptable by IBM management. There would be no other fees (e.g. travel) involved. Regardless of the reduction amount achieved, this would ensure more than an 80 to 1 return on my cost vs. the actual $ reductions realized. Payment terms helpful to IBM can be discussed as well.
If, on the other hand, the targeted payment limits, terms, conditions, other modifications are not achieved, then there is no fee whatsoever. (Not for the over 300 hours already worked, not for the travel already completed (and to be taken each week) or any other expenses going forward. $0. charge. (Obviously I haven't invoiced anything).
The only stipulation, as with all negotiations, is that we identify which among the various objectives are "must haves" and which are viewed as "nice to haves". Also, where appropriate, I assume there will be a few acceptable "must have" alternatives. Success = achieving all "must haves." When we talk, you can let me know your thoughts, or an email beforehand would be welcome. We should close on something before next week. A verbal agreement is fine with me for now (Rich said he'd trust you with his bank account -:-) ... that's all I need, then. (re: verbal).
If you could have your [administrative assistant] send me an invite for a time that works for you, ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.