Business

The line of IBM salespeople suing the company over their pay just got longer

Three former managers say IBM fired them because they spoke up against cutting a black software-sales rep’s commission.
Three former managers say IBM fired them because they spoke up against cutting a black software-sales rep’s commission.

A group of Raleigh-based attorneys is helping two more IBM salesmen sue the company over allegations it shortchanged them when it was time to hand out commissions for landing major software deals.

The new lawsuits attacking the company’s business practices are pending in California and Georgia, and parallel both the strategy and factual claims of a trio of cases lawyers Matt Lee, Jeremy Williams and Mark Sigmon lodged against IBM for clients in North Carolina.

Their California client, David Swafford, alleges that IBM shorted him $249,675 in commissions for sales he made in 2016 to, among others, Oracle and Sabre. He sued in federal court on Aug. 14.

In Georgia, former IBMer Cameron Middleton similarly contends that the company kept $836,003 of what it owed him after he signed Delta Air Lines to a software deal. He sued in state court on July 27, but IBM had the case moved to federal court on Aug. 3.

Both lawsuits cite evidence Lee, Williams and Sigmon turned up while representing Bobby Choplin, a Triangle-based former IBM sales staffer who settled his own lawsuit against the company in July.

They say the deposition testimony of IBM’s own executives shows the New York company has a practice of capping commission payouts on large deals, despite in-house promises that earning opportunities were uncapped.

Had Swafford or Middleton known they wouldn’t be paid what was promised, they could have looked for another job that didn’t cap commissions, according to the two lawsuits.

Middleton is the second Lee/Williams/Sigmon client to sue IBM over its handling of the Delta Air Lines deal. The other is Paul Vinson, who has been waiting his turn for a federal judge in North Carolina to hear his claim that the company didn’t pay $177,720 it owed him for his part in landing an $11 million sale.

IBM’s practice when multiple salespeople work on a deal is to figure out the relative contributions of each and weight commissions accordingly.

Middleton said the company initial credited him with generating $8.7 million of the Delta sale, and shortchanged him by later reducing his credit to $1.4 million.

That potentially disadvantaged not only Middleton, but anyone else who worked on the Delta sale. IBM “did not credit any other sales representative with the remaining” $7.3 million in revenue, Middleton’s lawsuit said.

The lawyers also borrowed from yet another lawsuit against IBM, one where they’re representing former managers who say the company fired them because they objected to reducing the commission paid to a black software salesman.

The managers told a state court in New York that IBM’s marching orders to them were to adjust payouts only as needed to correct errors or to “balance [an] employee’s contribution to the success of a large” sale. Adjustments were not supposed to be “done only as a ceiling or cap on the total earnings allowable to employees.”

Middleton’s and Swafford’s lawsuits echo that allegation.

IBM’s defense in Choplin’s case and other cases like it has pointed to the wording of the incentive payment plans every salesperson signs, which stipulates that the company can adjust payouts as it likes.

That has typically been good enough to knock out breach-of-contract claims. But in Choplin’s case, the lawyers argued that IBM had also run afoul of North Carolina’s Wage and Hour Act plus common-law strictures against “unjust enrichment,” fraud and negligent misrepresentation. IBM employs thousands at its corporate campus in Research Triangle Park.

Swafford’s lawsuit echos the Choplin strategy by invoking California state law, including one on “unlawful contracts” that frowns on contracts written “to exempt anyone from responsibility for his own fraud.”

And both he and Middleton allege unjust enrichment, fraud and negligent misrepresentation.

They further invoked “quantum meruit,” a doctrine alluding not to the physics of small particles but, according to the Cornell Law School, the Latin for “as much as he has deserved” and the proper compensation for same.

Ray Gronberg: 919-419-6648, @rcgronberg
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