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Lewitton v. ITA Software

September 29, 2008


The opinion of the court was delivered by: Judge Robert M. Dow, Jr.


Before this court is Plaintiff Derek Lewitton's ("Lewitton" or "Plaintiff") motion for summary judgment [22] on his breach of contract claim against Defendant ITA Software, Inc. ("ITA" or "Defendant"). For the reasons set forth below, Plaintiff's motion [22] is granted.

I. Background

A. Local Rules on Summary Judgment

In ruling on a motion for summary judgment, the Court takes the relevant facts from the parties' respective Local Rule 56.1 ("L.R. 56.1") statements. The Court resolves all genuine factual ambiguities in Plaintiff's favor (see Foley v. City of Lafayette, Ind., 359 F.3d 925, 928 (7th Cir. 2004)), and takes no position on whose version of disputed factual matters is correct.

L.R. 56.1 requires that statements of facts contain allegations of material fact and that factual allegations be supported by admissible record evidence. See L.R. 56.1; Malec v. Sanford, 191 F.R.D. 581, 583-85 (N.D. Ill. 2000). The Seventh Circuit repeatedly has confirmed that a district court has broad discretion to require strict compliance with L.R. 56.1. See, e.g., Koszola v. Bd. of Educ. of the City of Chicago, 385 F.3d 1104, 1109 (7th Cir. 2004); Curran v. Kwon, 153 F.3d 481, 486 (7th Cir. 1998) (citing Midwest Imports, Ltd. v. Coval, 71 F.3d 1311, 1317 (7th Cir. 1995) (collecting cases)). Where a party has offered a legal conclusion or a statement of fact without offering proper evidentiary support, the Court will not consider that statement. See, e.g., Malec, 191 F.R.D. at 583. Additionally, where a party improperly denies a statement of fact by failing to provide adequate or proper record support for the denial, the Court deems that statement of fact to be admitted. See L.R. 56.1(a), 56.1(b)(3)(B); see also Malec, 191 F.R.D. at 584. The requirements for a response under Local Rule 56.1 are "not satisfied by evasive denials that do not fairly meet the substance of the material facts asserted." Bordelon v. Chicago Sch. Reform Bd. of Trs., 233 F.3d 524, 528 (7th Cir. 2000). Finally, the Court disregards any additional statements of fact contained in a party's response brief rather than in its statement of additional facts. See, e.g., Malec, 191 F.R.D. at 584 (citing Midwest Imports, 71 F.3d at 1317).

B. Pertinent Facts

The facts pertinent to the Court's consideration of Plaintiff's motion for summary judgment are largely undisputed, at least for present purposes. Defendant ITA is an airline information technology and services provider. Pl. SOF ¶ 7. In April 2005, ITA hired Plaintiff as Vice President of Sales. Id. ¶ 9. Immediately prior to his employment with ITA, Plaintiff had worked at United Airlines as Director of Distribution Strategy and Planning. Id. ¶ 10. Shortly before Plaintiff began working for ITA, the company announced that it expected to undertake a "general rollout" of a new product called IU, which was expected to offer full service booking and reservations functionality, including e-ticketing, post-ticketing operations such as refund and exchange, integration with mid-office and back-office applications, and an innovative user interface for quick implementation. Id. ¶¶ 16-17.

On April 14, 2005, ITA sent a letter to Plaintiff that contained an offer of employment.*fn1 Pl. SOF ¶ 19; Def. Resp. SOF ¶ 19. Plaintiff executed the employment letter on that same day.

Id. Among other things, the letter stated that "[ITA] will grant [Lewitton], subject to the approval by the ITA Board of Directors, qualified stock options to purchase up to 200,000 shares of ITA common stock, pursuant to ITA's Stock Option Plan." Pl. SOF ¶ 24. ITA's Board of Directors subsequently approved the stock options grant at $10 per share to Plaintiff as provided in the agreement. Id. ¶ 25. The letter also stated that "[t]hese options will vest as follows in equal monthly installments of 5,556 shares each, on the anniversary of your employment for the next three years, except that the first twelve months of options will all vest at your one-year anniversary." Id. ¶ 29. The letter further included a clause stating that "up to 150,000 of Lewitton's options will be subject to forfeiture based upon the company's achievement of certain revenue goals as well as your own achievement of performance objectives, as follows: (1) 10,000 options will be retained for each $10 million dollars of ITA's gross revenues for the 12-month period from June 1, 2006 through May 31, 2007 (the 'Assessment Period')." Id. ¶ 32. The letter also provided that "in the event the Company's development schedule for 1U is materially deferred from the schedule presently contemplated, the Assessment Period will be deferred accordingly -- i.e., if the development schedule were to be delayed by two months, the Assessment Period would be August 1, 2006 through July 31, 2007." Id. ¶ 33. Finally, the letter includes the following provision: "This letter is intended to be an integrated agreement and supersedes all prior agreements, understanding or negotiations, written or oral, relating to the subject matter of your employment with ITA (other than any non-disclosure agreements between you and ITA). No amendments or modifications may be made to the terms of this letter except in writing." Id. ¶ 35; Def. Resp. SOF ¶ 35.

ITA admitted in its answer to Plaintiff's complaint that "the development of 1U did not proceed in the manner contemplated by Defendant and Plaintiff on April 14, 2005." Pl. SOF ¶ 36. ITA also has acknowledged that "the program development that was originally envisioned for 1U was significantly scaled back and eventually only such work as was necessary to preserve ITA's significant investment in 1U continued." Id. ¶ 37.

The employment letter provided that either Plaintiff or ITA could terminate Plaintiff's employment "at any time" and that "[a]t the time of any termination * * * all rights to unvested stock options will terminate and the disposition of all vested but unexercised options will be subject to the Stock Option Plan. This means that if termination occurs within the first year, all stock options will be forfeited." Ex. B to Pl. Compl. Plaintiff's employment at ITA ended after 25 months on May 31, 2007. Pl. SOF ¶ 23. During his employment, ITA's Board of Directors took no action to affect the forfeiture of any stock options granted to Plaintiff. Id. ¶ 44. On or before August 17, 2007, Plaintiff exercised stock options to the fullest extent permitted by ITA, purchasing 34,722 shares of ITA common stock. Id. ¶ 47. The dispute giving rise to this litigation is Plaintiff's assertion that he is entitled to purchase 104,178 additional shares of ITA common stock pursuant to the terms of the employment letter executed on April 14, 2005. Id. ¶ 49.

Plaintiff filed a Verified Complaint for Declaratory Relief on July 16, 2007, in the Chancery Division of the Circuit Court of Cook County, Illinois. On July 26, 2007, Defendant removed this action from state court to the Northern District of Illinois. In his complaint, Plaintiff claims that as of the termination date of his employment with ITA, he had vested rights to exercise options to purchase 138,889 shares of ITA common stock at $10 per share,*fn2 because 5,556 shares vested after each of the 25 months that he was employed by the Defendant. Plaintiff therefore seeks a declaration that he has the right to purchase an additional ...

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