The opinion of the court was delivered by: JAMES ZAGEL, District Judge
MEMORANDUM OPINION AND ORDER
In March 2001, Plaintiff Jeffrey Lillien, who had been an
in-house attorney with First Chicago and its successor, Bank One,
for over eighteen years, decided to enter the job market. By May
of that year, Lillien had received two competing offers, one from
UBS, a large multinational financial services company, and one
from Defendants Peak6 Investments, L.P. and Peak6 L.L.C.
(collectively "Peak6"), a smaller options trading firm.
Ultimately, Lillien passed up UBS's offer for a senior position
in its law department, which included a base salary of $150,000,
a guaranteed bonus of $175,000, and $150,000 of UBS stock, to
become Peak6's General Counsel. In its May 4th and May
9th offer letters, Peak6 promised to provide Lillien with a
base salary of $150,000, a discretionary bonus, and stock options
from the company's pending IPO. Lillien alleges that Peak6
principals Matthew Hulsizer and Jennifer Just also promised him
that, barring a catastrophe, he would receive a year-end target
bonus of $100,000 and roughly $500,000 worth of stock options.
Lillien alleges that Hulsizer and Just assured him, during their
negotiations, that the IPO would occur in late May or early June
and that the company was in a strong financial position. According to Lillien, these assurances
led him to accept Peak6's offer on May 9, 2001.
When Lillien started work, he realized that Peak6 was not doing
as well as he had expected. Upon starting, Lillien learned that
the IPO was postponed, Peak6's second quarter revenues were
reported as "flat," Peak6 has suffered severe financial losses in
mid-May, and Peak6's CFO had quit and had not yet been replaced.
In November 2001, Peak6 finally, after many postponements,
cancelled its plans for an IPO. In January 2002, Hulsizer and
Just fired Lillien and informed him that his year-end bonus would
be $30,000, less than a third of what Lillien expected.
Thereafter, Lillien brought this suit claiming breach of contract
and fraudulent inducement.
Peak6 now moves for summary judgment on both of Lillien's
claims. Summary judgment is proper when there is no genuine issue
of material fact and the moving party is entitled to judgment as
a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317,
322-323 (1986). In determining whether any genuine issue of
material fact exists, I must construe all facts in the light most
favorable to the non-moving party and draw all reasonable and
justifiable inferences in its favor. Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 255 (1986). A genuine issue of fact exists
only when, based on the record as a whole, a reasonable jury
could find for the nonmovant. Pipitone v. United States,
180 F.3d 859, 861 (7th Cir. 1999).
A. Lillien's Breach of Contract Claims
In Count I of his complaint, Lillien claims that he was
entitled to a pro-rated bonus in excess of $50,000 and stock
options in the amount of $500,000. Lillien bases these claims on representations made to him by Peak6 principals Hulsizer and
Just. Lillien alleges that Hulsizer assured him that he would
receive a bonus in excess of $100,000 and that both Hulsizer and
Just assured him that Peak6's IPO was a virtual certainty.
With regards to Lillien's bonus, Peak6 argues that Lillien
could not have believed Hulsizer's statements concerning the
bonus target of $100,000 constituted an offer because they ran
contrary to the terms of Peak6's written offers to Lillien. Under
Illinois law, a statement constitutes an employment contract only
if it "set[s] forth a promise in terms clear enough to cause a
reasonable employee to believe that an offer has been made."
Tatom v. Ameritech Corp., 305 F.3d 737, 742 (7th Cir. 2002)
(quoting Duldulao v. St. Mary of Nazareth Hosp. Ctr.,
505 N.E.2d 314, 318 (Ill. 1987)). "Whether a contract exists, and in
particular whether a clear and definite promise has been made,"
is a threshold issue of law for the court. Grottkau v. Sky
Climber, No. 93 C 6277, 1995 U.S. Dist. LEXIS 902 at *48 (N.D.
Ill. Jan. 24, 1995). Absent a "clear promise," summary judgment
must be granted. Stacey v. Insurance Corp. of Ireland,
545 N.E.2d 221, 224 (Ill.App. Ct. 1989).
Thus, it is my job to determine whether Hulsizer's statements
concerning the $100,000 target bonus were part of the offer
extended to Lillien. To support his claim that the statements
were, in fact, part of that offer, Lillien cites Tidwell v.
Toyota Auto Mart, Inc., 375 N.E.2d 540 (Ill.App. Ct. 1978),
which held that plaintiffs were entitled to an orally set bonus
despite the fact that they had signed a form categorizing the
bonus plan as discretionary. Id. at 541. While Tidwell does
bear certain similarities to this case, key differences exist,
which make it inapplicable. In Tidwell, the court found, from
the wording of the signed bonus form, that the discretionary language dealt with the dealership's decision to
enroll an employee in its bonus plan and not with the amount of
the bonus. Id. at 543. In this case, the language of Lillien's
offer letters leads to the opposite conclusion. Both the May
4th and May 9th offer letters stated that Lillien would
be "eligible for a year-end discretionary bonus . . . distributed
based on both the profitability of the company and [Lillien's]
contribution to the company's success." Unlike the bonus form in
Tiswell, Peak6's offer letter guaranteed Lillien's enrollment
in the bonus program but stated that the bonus amount was
discretionary. Another key difference between Tidwell and this
case is the nature of the respective plaintiffs' employment
contracts. Unlike Lillien who received two written offers of
employment, the plaintiffs in Tidwell were employed under an
oral contract. Thus, it was somewhat more reasonable for the
Tidwell plaintiffs to equate oral statements made by the
defendant as part of their overall employment contract.
Peak6's May 9th offer letter to Lillien detailed all the
basic terms of his employment (it listed his start date, salary,
pay dates, bonus, stock options, 401(k) plan, health insurance,
and vacation), clearly stating the bonus was discretionary.
Viewed in light of the explicit nature of the offer letters, a
reasonable person, let alone an experienced lawyer like Lillien,
could not have interpreted Hulsizer's statements as an offer of a
target or minimum bonus. Furthermore, the overall circumstances
surrounding the offer would not have led a reasonable employee to
conclude that the target bonus was part of Peak6's offer. During
the same conversations in which Hulsizer allegedly promised
Lillien a target bonus of $100,000, he also told Lillien that his
bonus could be $0 or $1M depending on the company's performance,
indicating again the bonus was discretionary. Additionally,
Lillien contacted the Manager of Human Resources and inquired
about setting out a specific bonus amount in the offer letter
itself. She told Lillien that Peak6 did not put specific bonus targets in writing. Given that the offer
letters and Human Resource Manager's statements were wholly
contrary to establishing a set bonus, Hulsizer's statements
indicating that Lillien's bonus would most likely be $100,000 are
not enough to bind Peak6. Creswell v. Bausch & Lomb, Inc., No.
85 C 5822, 1986 U.S. Dist. LEXIS 17414 at *17 (N.D. Ill. Nov 20,
1986) (employer's oral prediction on plaintiff's otherwise
discretionary bonus was not sufficient to bind the company.).
Since Hulsizer's statements could be reasonably found to change
the discretionary nature of Lillien's bonus, I find that summary
judgment is appropriate.
2. Lillien's Stock Options
With regard to the promised stock options, Peak6 argues that it
was not contractually obligated to provide Lillien with stock
options because its promise was based on a condition precedent,
the planned IPO, which never occurred. Under the prevailing
Illinois law, "if the condition [precedent] remains unsatisfied,
the obligations of the parties are at an end." Lyntel Products,
Inc. v. Alcan Aluminum Corp., 437 N.E.2d 653, 657 (Ill.App. Ct.
1981); See Also Albrecht v. North Am. Life Assurance. Co.,
327 N.E.2d 317, 319 (Ill.App. Ct. 1975). When Lillien accepted
Peak6's job offer, he was fully aware that no stock plan existed
and that any future stock plan would be contingent on a
successful IPO. Peak6's May 4th and May 9th offer letters
clearly stated that Lillien would receive stock ...