IBM is settling out of court with a former salesman who sued the company because he wasn’t paid all the commission he said he was owed for helping assemble a $19 million software licensing deal with Branch Banking & Trust.
Attorneys for Bobby Choplin, a former Triangle-based salesman for IBM, on Tuesday notified the federal judge who was to preside over the trial that the two sides had instead agreed to settle the case.
Terms will remain undisclosed because the agreement will include a confidentiality provision, said Matt Lee, one of Choplin’s lawyers.
But “we can tell you that it was settled to the parties’ mutual satisfaction,” Lee said.
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The trial was scheduled to begin on July 18, if U.S. Senior District Court Judge Carlton Tilley rejected IBM’s attempts to get the case tossed out of court. Choplin’s lawsuit claimed that IBM had among other things broken North Carolina’s Wage and Hour Act by reducing his commission payment. IBM argued it hadn’t done anything wrong because the six-month incentive contracts it signs with salespeople allow it to adjust commission payments.
There was no dispute about the fact that IBM lowered the commission it paid Choplin for the BB&T deal in 2015, giving him $296,568 less than he reckoned was due.
IBM paid him $348,487 in commission for the BB&T deal, versus the $645,056 IBM’s in-house commission calculator suggested would come Choplin’s way for his contribution to the sale.
Disputing IBM’s claims that it had an unfettered right to adjust commission payments, Choplin’s lawyers pointed to documents that indicated company officials were telling salespeople they could earn “uncapped” commissions if they worked harder to close deals.
Choplin’s lawyers had also secured copies of emails from a company vice president, Randolph Moorer, who told subordinates in IBM’s Mid-Atlantic software sales force that IBM had to “maintain an affordable expense posture on each transaction” by limiting commission payments to about 10 percent of a deal’s value.
That amounted to a cap on commissions, Choplin’s lawyers said.
“IBM was simply reducing the commissions it was obligated to pay in order to meet a previously undisclosed budget,” they wrote in their trial brief. “The Wage and Hour Act does not permit this type of conduct by employers.”
IBM’s designated lead witness, finance manager Rick Martinotti, sat for a deposition in October and repeatedly denied there was a budget on commissions. He said the 10 percent mark was only a guideline and that Moorer had been “sloppy with his language” to say otherwise.
IBM is tough to fight in court, said Steve Groetzinger, a former IBM salesman who says he was laid off because of his age.
“Most people who work at IBM on a daily basis say IBM is a law firm that happens to own an IT company,” Groetzinger said in an interview with The News & Observer earlier this year. “They’ve got lawyers everywhere. Trying to sue them on an [equal-employment opportunity] complaint or sue them for back commission in my opinion is not worth the trouble. Maybe somebody can win this, but they’re going to make it expensive, they’re going to make it difficult.”
The same legal team — Lee, Jeremy Williams and Mark Sigmon — is representing two other men who were part of IBM’s Triangle sales force in 2015 and have sued about commission reductions that year.
Those lawsuits, on behalf of Tom Stephenson and Paul Vinson, remain pending. Stephenson alleges IBM shorted him about $600,000 on the BB&T deal and on another with LabCorp. Vinson alleges he lost $177,720 after securing an $11 million deal with Delta Air Lines.
Lee said the team “still feel[s] strongly about the case from the perspective of the other plaintiffs we represent” though it’s “not exactly seeing eye to eye with IBM on the applicability of” the evidence from Choplin’s case to the other two lawsuits.
Martinotti told lawyers last year IBM held back a combined $43.4 million in prospective commissions in 2013, 2014 and 2015, while paying out more than $100 million. Almost half of the hold-backs, $20.3 million, happened in the first half of 2015.