United States District Court, D. Oregon
GLOBAL EXECUTIVE MANAGEMENT SOLUTIONS, INC., an Oregon corporation, Plaintiff,
INTERNATIONAL BUSINESS MACHINES CORPORATION, a New York corporation, Defendant.
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
OPINION & ORDER
A. HERNANDEZ, UNITED STATES DISTRICT JUDGE
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, and fraud. Defendant moves for summary
judgment on Plaintiff's remaining claims.
moves for partial summary judgment on three of
Defendant's affirmative defenses. 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.
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.
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.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.
Defendant's GTS Division & Its Relationship with BMC
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.
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
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.
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
IBM's and Plaintiff's Contracts with APC
IBM's Relationship with APC
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.
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.
Plaintiff's & APC's Relationship
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.
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.
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.
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
Id. at 3, ¶ 3.4. A separate section addresses
"Confidentiality Obligations." Id. at 6,
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.
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.
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
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.
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.
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).
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
Clyne/GEM's Efforts to Secure Additional IBM Work
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.
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.
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.
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.
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.
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).
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.
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.
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.
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.
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.
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.
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.
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.
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").
Compensation and Terms of Employment
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. Id. at
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.
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
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.
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.
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
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.
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
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
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
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."
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.
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
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, ...