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JOY v. HAY GROUP INC.

March 30, 2004.

LYNN A. JOY, Plaintiff;
v.
HAY GROUP, INC., a Delaware corporation, and HG (BERMUDA) LIMITED, a Bermuda limited liability company, Defendants



The opinion of the court was delivered by: RONALD GUZMAN, District Judge

MEMORANDUM OPINION AND ORDER

In this diversity case, Lynn Joy has sued Hay Group, Inc. ("HGI"), a Delaware corporation, and HG (Bermuda) Limited ("HGB"), a Bermuda limited liability company, for breach of contract, violation of the Illinois Wage Payment and Collection Act, 820 ILL, COMP. STAT. 115/1 et seq., violation of the Attorneys' Fees in Wage Actions Act, 705 ILL. COMP. STAT. 225/1, and for a declaratory judgment pursuant to 28 U.S.C. § 2201 regarding her rights after termination with regard to IIGB. Pending before the Court are the parties' cross — motions for summary judgment and Plaintiff's motions to strike. For the reasons provided in this Memorandum Opinion and Order, the Court: (1) grants in part and denies in part Plaintiff's motion to strike portions of HGI's LR 56.1 submissions; (2) denies Plaintiff's motion to strike HGB's LR 56.1 submissions; (3) denies Plaintiff's motion for summary judgment; (4) grants HGI's summary judgment motion; and (5) grants HGB's summary judgment motion. Page 2

Facts*fn1

  On April 26, 1996, HGI, a Delaware corporation based in Philadelphia, Pennsylvania and doing business in Illinois, hired Hay, a resident of Illinois, as a Senior Consultant in HGI's Executive Compensation Practice pursuant to an offer letter signed and agreed to by Joy ("Offer Letter"), (Pl.'s LR 56.1(a)(3) ¶¶ 1, 2, 11.) The Offer Letter provided for a guaranteed bonus for fiscal year 1996 of $69,750. (Pl.'s Ex. A, Letter from HGI to Hay of 4/26/96 ("Offer Letter") ¶ 2.) Thereafter, her bonus payments were to be as follows:
Each Fiscal Year (beginning October 1), you and I will agree on an Annual Performance Plan with defined objectives and potential incentive payouts based on your responsibilities as a Senior Consultant in the Executive Compensation Practice. Your total annual incentive target will be equal to 60% of your base salary for al] future years; and the range around your incentive target will vary from 30% to 100% of your base salary.
(Id.) Although not guaranteed, the Offer Letter contemplated that Hay would consider Joy for Partnership after she completed one year of employment. (Id. ¶ 4.) Further, the Offer Letter provided that if HGI "decided to end your employment for reasons other than cause, the severance package will equal one year of base salary plus health benefit continuation." (Id. ¶ 5.) The Offer Letter also stated: "The terms and conditions of Hay's employment offer to you are contained in this letter. As we have agreed, this employment offer will apply for the duration of your employment with the Hay Group," (Id. ¶ 6.)

  In or around October 1998, Joy was nominated and elected to the partnership of HGI. (Def. HGI's LR 56.1(a)(3) ¶ 16.) On January 1., 1999, Joy's base salary was raised to $210,000,00. (Id.) Page 3

  On October 1, 1999, Joy began an authorized leave of absence for family reasons, (Id. ¶ 24.) In March 2000, she returned to work one day per week, (Id) On September 1, 2000, one month prior to the end of fiscal year 2000, she returned to work full time, (Id) Joy received no bonus payment for fiscal year 2000, but she did not complain or object. (Id. ¶ 25.) Upon Joy's return from leave, Joy's supervisor suggested to IIG1 upper management that her billable requirement be adjusted to reflect the unique circumstances resulting from her leave in September 2000, but his suggestion was rejected. (Pl.'s LR 56.1(b)(3)(B) ¶ 10.)

  HG1 has a Senior Incentive Plan ("SIP"), which is also known as the Hay Group Senior Executives' Profit Sharing Plan ("SEPS") (collectively "the Plan"), under which the Chairman of HGI's Board of Directors with the advice of the Board has discretion to interpret the Plan and make all determinations necessary for the administration of the Plan. (HGI's LR 56.1(a)(3) ¶ 18.) The Executive Committee of the Board determines eligibility and awards bonuses in accordance with the Executive Committee's perception of the participant's ability to contribute to HGI's long — term profit and growth objectives, (Id ¶ 19.) Payment of bonuses under the Plan was conditioned on the participant's remaining employed with HGI through the end of the applicable award period. (Id ¶ 21.) The award period under the Plan coincides with HGI's fiscal year, which runs from October 1 to September 30. (Id ¶ 20.) Joy disputes that her bonus payments are governed by the Plan and argues that the terms and conditions of her employment are governed solely by the Offer Letter. (See Pl.'s LR 56.1(b)(3)(A) ¶ 17.)

  On March 22, 2001, Matthews sent Joy a summary of her SIP and related incentive information for fiscal year 2001. (Def. HGI's LR 56.1(a)(3) ¶ 26.) The summary stated that incentive opportunities under the 2001 SIP consisted of three components: (1) performance of the Page 4 United States operations; (2) worldwide profit share; and (3) a discretionary component allocated by the Executive Committee based on individual performance. (Id) The summary also provided that the Chief Executive, Chris Matthews, would have discretion to withdraw all three elements of a participant's opportunity if he or she did not perform at the level expected of a participant. (Id ¶ 27.)

  In Spring 2001, Webb Bassick, Joy's supervisor, took her on a business development trip to Texas and told her to help him respond to a proposal for Cooper Industries that was generated as a result of the trip. (Id ¶ 29.) Bassick criticized Joy for her failure to follow up on the Cooper proposal, and he eventually gave the project to someone else. (Id.) On May 23, 2001, Bassick stated to another HGI executive that "[t]hings are not progressing well with [Joy]," and that he had "written [Joy] out" of projects because of her failure to follow up on them. (Id) He stated: "1 think we are at the point where I need to be very directive in terms of [Joy's] performance, or lack thereof, and a time period for turning it around." (Id)

  On August 20, 2001, HGI gave Joy a written performance warning, which she signed to acknowledge her receipt and understanding of the notice, regarding her "continuing performance issues" relating to billing and utilization, i.e., the percentage of time she spent on billable work, (Id ¶ 32.) The warning stated: "[Y]our utilization rate is 13.1% and your billings are $117,300. This performance is unacceptable for someone at your level. As a Partner, you should be at a utilization rate of 40% and have annualized billings of $475,000." (Id ¶ 33.) Joy was given ninety days to raise her billing level to a reduced annualized rate of $398,000 and was warned that failure to do so could result in termination, (Id ¶¶ 34, 35.) Page 5

  During the ninety — day period ending in November 2001, Joy attained her billable hours, (Id. ¶ 36.) However, Joy subsequently failed to attain the 40% utilization rate requirement in December (she attained a, 9% rate) and January (8.4% rate) and concedes that her annualized billable time was below $398,000 after November 2001, but she argues that she felt she was not required to maintain the utilization rate or annualized billable standard beyond the ninety — day performance warning period. (Id. ¶ 36; see Pl.'s LR 56.1(b)(3)(A) ¶ 36;*fn2 Joy Dep. at 144:7-10, 146:8-10.)

  On February 25, 2002, Joy received a second performance warning that stated she had not sustained acceptable billable hours and utilization rates since November 2001. (HGI's LR 56.1(a)(3) ¶ 38.) The second warning stated:
Effective immediately, you are being placed on notice and given thirty (30) days to achieve the business target associated with your role, including getting your utilization level to 40% with annualized personal billings up to an annualized rate of $398,000.
. . . . If you are unable to achieve these performance levels within the next 30 days, or if you achieve but fail to sustain these performance levels, then further disciplinary action will be considered, up to an [sic] including termination of employment.
(HGI's Ex. H.) Joy made handwritten changes to the warning to reflect her understanding from her own records of what utilization rates and billable hours she had attained as well as what she believes should have been expected of her. (Id; HGI's LR 56.1(a)(3) ¶ 39;*fn3 Joy Dep. at 157:9-163:7.) She Page 6 wrote on the warning memorandum provided to her that her utilization targeted goal should have been 33% instead of the 40% that HGI had required and stated that her actual fiscal year to date utilization rate was 19.8%, instead of the 19.4% figure as stated in the warning, (Id. at 163:3-8; HGI's Ex. H.) She wrote on the warning memorandum that her billings for that time period were $81, 221.50 (which calculates to $240,818 annualized) and not the $78,922 ($234,000 annualized) figure provided by HGI. (HGI's LR 56.1(a)(3) ¶ 40; HGI's Ex, H.)

  Joy failed to achieve the performance goals set forth in the second warning. (HGI's LR 56.1(a)(3) ¶ 41.) Joy achieved billable hours at a level within a few thousand dollars of the annualized billings required in the second warning. (Pl.'s LR 56.1(b)(3)(B) ¶ 5.) She states that HGI's internal network failed to provide the level of client billable work needed to enable plaintiff to reach the billings set forth in the August 2001 and February 2002 warnings. (Id ¶ 7,)

  On April 9, 2002, Gene Bauer, HGI's Managing Director for the Western United States, met with Joy and informed her in writing that her employment was being terminated for cause and stated that she was being terminated due to performance goals that were not achieved. (HGI's LR 56.1(a)(3) ¶ 42; Joy Dep. at 189:15-17.) Joy received all of her salary for work performed through April 9 and all of her accrued vacation pay. (HGI's LR 56.1(a)(3) ¶ 43.) Joy received no severance and no incentive payment or bonus for fiscal year 2002, (Id. ¶ 45.)

  With regard to motion for summary judgment as to HGI, Joy argues she is entitled to severance pay equal to one year of salary and health benefits as a result of her termination. She argues that she was guaranteed a bonus of at least 30% of her salary and that she is entitled to the Page 7 difference between 30% of her salary ($63,000) and the bonus she actually received for fiscal year 2001 ($36,000). She also avers she is entitled to a pro rata share of her bonus for the six months she worked for HGI in fiscal year 2002, or 30% of $105,000 (six months of her $210,000 annual salary), which is approximately $31,500, In addition, she states she is entitled to attorney's fees pursuant to the Attorneys Fees in Wage Actions Act, 705 ILL. COMP. STAT. 225/1. HGI has cross — moved arguing that Joy is not entitled to severance, health benefits, any additional bonuses, or attorney's fees.

  With regard to her motion for summary judgment as to HGB, Joy seeks a declaratory judgment that HGB's non — competition provision in the Shareholders Agreement is unenforceable as a matter of law and that her termination and/or subsequent employment cannot justify any loss or diminution of her rights under the HGB Shareholders Agreement. HGB has cross — moved arguing lack of personal jurisdiction over HGB,*fn4 improper venue, lack of ripeness of her claim for loss/diminution of her rights under the Shareholders Agreement, and enforceability of the non-competition clause.

  DISCUSSION

  Pursuant to Federal Rule of Civil Procedure the court may grant summary judgment "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). When considering the evidence Page 8 submitted by the parties, the court does not weigh it or determine the truth of asserted matters. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). All facts must be viewed and all reasonable inferences drawn in the light most favorable to the non — moving party. NLFC, Inc. v. Devcom Mid — Ant., inc., 45 F.3d 231, 234 (7th Cir. 1995). "If no reasonable jury could find for the party opposing the motion, it must be granted." Hedberg v. Ind. Bell Tel. Co. Inc., 47 F.3d 928, 931 (7th Cir. 1995).

 I. HGI and Joy's Cross — Motions for Summary Judgment Regarding Severance and Bonus

  Before discussing the merits of the cross — motions, the Court addresses Joy's motion to strike paragraphs 17-19, 23, 27-29, 31-32, and 50 of HGI's LR 56.1(b)(3)(A) submissions in response to her motion for summary judgment. The motion is granted as to paragraphs 18, 28, 29, 31, and 32 and those statements of fact arc deemed admitted. The motion is denied as to paragraphs 17, 19, 23, 27, and 50 because they contain proper denials and arc ...


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