United States District Court, W.D. Washington, Seattle
QL2 SOFTWARE, LLC, a Delaware limited liability company, Plaintiff,
THOMAS LAVEAU, an individual, Defendant.
ORDER ON CROSS-MOTIONS FOR SUMMARY JUDGMENT
P. DONOHUE, UNITED STATES MAGISTRATE JUDGE.
INTRODUCTION AND SUMMARY CONCLUSION
QL2 Software, LLC (“QL2” or
“plaintiff”) seeks a declaration that its former
employee, defendant and counter-claimant Thomas Laveau
(“Mr. Laveau” or “defendant”) no
longer has any right, title or interest in a profit-sharing
plan for Incentive Unit Members of QL2 (the “Incentive
Units”) or any right to commissions or bonus payments
following the termination of his employment on May 15, 2017.
Dkt. 1 at 5. Mr. Laveau asserts numerous counterclaims
against QL2, which ultimately ask the Court to find that he
did not forfeit his Incentive Units when he was involuntarily
terminated, and that he is entitled to further commissions
based upon payment received by QL2 following his termination.
Dkt. 47 at 2. The parties have filed cross-motions for
summary judgment. Dkt. 35; Dkt. 44. After careful
consideration of the parties' motions, the governing law
and the balance of the record, the Court GRANTS QL2's
motion for summary judgment, Dkt. 44, DENIES Mr. Laveau's
motion for partial summary judgment, Dkt. 35, and DISMISSES
this action with prejudice.
Mr. Laveau's Employment and Compensation Package at
August 2004, Mr. Laveau began working for QL2 and its
predecessor, QL2 Software, Inc., as the sales director for
its European branch, QL2 Europe Limited (“QL2
Ltd.”), based in the United Kingdom. Dkt. 25 at ¶
5 (Mr. Laveau's Counterclaims); Dkt. 35-2 (Laveau Decl.)
at ¶ 5. QL2 Software, Inc. was a software development
company specializing in real-time search technology and
analytical tools marketed towards business enterprises.
Id. During his thirteen years of employment with the
QL2 organization, Mr. Laveau worked in various capacities for
the QL2 sales department, including expanding the sales reach
of airline and travel-related business. Id. at
of his compensation, Mr. Laveau received 100, 000
fully-vested shares of QL2 Software, Inc. stock, which QL2
Software, Inc.'s managers represented to be worth
approximately 2.5% of the company. Dkt. 25 at ¶ 7; Dkt.
35-2 (Laveau Decl.) at ¶ 6. When QL2 Software, Inc.
filed for bankruptcy in January 2010, substantially all of
its assets were transferred to Copernicus Holdings, LLC, as
part of a plan of reorganization approved by the United
States Bankruptcy Court for the Western District of
Washington. The company underwent a two-step merger pursuant
to the plan, with the surviving entity being the plaintiff,
QL2 Software, LLC. Dkt. 45 (Hale Decl.) at ¶ 3.
prior to this merger, during QL2 Software, Inc.'s
bankruptcy, Charles Hale (who is now the President of QL2
Software, LLC) offered to purchase all of Mr. Laveau's
shares in QL2 Software, Inc. for $20, 000. Dkt. 25, Ex. A at
2. Mr. Laveau agreed, and entered into a written agreement on
May 5, 2010 to exchange the shares for $20, 000 cash prior to
QL2 Software, Inc.'s merger with QL2 Software, LLC.
Id. See also Dkt. 46 (Bugbee Decl.), Ex. A (Laveau
Dep.) at 131:1-132:11; Dkt. 35-2 (Laveau Decl.) at ¶ 10.
the bankruptcy and merger, Mr. Laveau continued in his role
with the sales department of QL2 Ltd. He also negotiated for,
and was granted, 150 Incentive Units in QL2 Software, LLC,
which were fully vested on September 1, 2010. Dkt. 25 at
¶ 24. Mr. Laveau did not consult with an
attorney regarding the terms of the Incentive Unit Grant
Agreement. Dkt. 35-2 (Laveau Decl.) at ¶ 18.
Mr. Laveau did engage in an email exchange about the
Incentive Units with several members of QL2 management,
including Mr. Hale, Mr. Hill, and his immediate supervisor
Mr. Campbell, Mr. Laveau asked whether his wife would inherit
his Incentive Units if he were to die. Dkt. 35-2 (Laveau
Decl.) at ¶ 28. Mr. Hill responded, “The answer to
your question is that the interests are fully vested, but
they go away if you leave the company for any reason
(including death).” Id. at ¶ 29. When Mr.
Campbell commented that “I truly agree that if I was to
walk away then I walk away from equity, ” but that he
believed death was “an extraordinary event that
warrants special treatment, ” Mr. Hill responded that
“I think we agree that death is a special circumstance
that probably warrants special treatment of some kind.”
Id. at ¶¶ 30-31. However, QL2 did not
ultimately agree to any kind of modification or amendment to
the Operating Agreement, or any sort of key man insurance.
Id. at ¶ 31. See also Dkt. 35, Ex. 12
(May 26, 2012 email exchange among Mr. Hale, Mr. Hill, Mr.
Campbell, and Mr. Laveau).
Laveau's receipt and ownership of the Incentive Units was
subject to the Incentive Unit Grant Agreement (“Grant
Agreement”). Dkt. 25, Ex. B at 4. Pursuant to the Grant
Agreement, all the terms and conditions in QL2's Amended
and Restated Limited Liability Agreement (the
“Operating Agreement”) were “incorporated
into [the] Grant Agreement in their entirety.”
Id. By entering into the Grant Agreement, Mr. Laveau
indicated that he “acknowledges receipt of, and
understands and agrees to, [the] Grant Agreement and the
Operating Agreement.” Id.
Operating Agreement provides that Incentive Units are
“equity interests” or “profit
interests” in QL2, which are “subject to . . .
forfeiture.” Dkt. 25, Ex. C at ¶ 3.3(a)-(b). Most
significantly in this case, the Operating Agreement provides
that “[u]pon an Incentive Unit Member ceasing to
provide services as an employee, consultant or advisor to the
Company and its Subsidiaries for any reason, including death
or disability, any Incentive Units held by such person
immediately shall be forfeited to the Company and neither
such Person nor such Person's estate or executor shall
have any further rights with respect to such Incentive
Units.” Id. at ¶ 3.3(d). However, Mr.
Laveau asserts that he “had no reason to believe that
QL2 believed that they had the ability to cause forfeiture of
my Incentive Units by terminating my employment with
QL2.” Dkt. 35-2 (Laveau Decl.) at ¶ 22. Mr. Laveau
asserts that if he had understood that QL2 believed it had
the power to erase his equity, he would have objected to such
an equity plan, because it would have provided no sense of
financial security. Id.
Mr. Laveau's Move to California
first counterclaim, Mr. Laveau asserts that “in late
2014, QL2 management asked Laveau to transfer to the United
States to work as the vice president of international sales.
To induce him to accept this transfer, QL2 represented to
Laveau that his Incentive Units would remain intact and that
he would retain the same compensation of a base salary with
quarterly commissions upon transfer.” Dkt. 25 at ¶
9. Mr. Laveau further represents that he “reasonably
took QL2 at its word and accepted the transfer offer, leaving
the United Kingdom for employment in California in January
argument on June 27, 2018, however, Mr. Laveau retreated from
this version of the facts, and acknowledged that it was
actually Mr. Laveau who approached QL2 to request the
transfer to California. See also Dkt. 46 (Bugbee
Decl.), Ex. A (Laveau Dep.) at 15:6-25. Emails exchanged
between Mr. Laveau and his wife, as well as Mr. Laveau and
his supervisor QL2 Chief Strategy Officer Paul Campbell,
reflect that Mr. Laveau's decision to relocate to
California was personal, based largely upon his family's
desire to be close to his wife's family. Dkt. 45, Exs.
In fact, prior to approaching QL2 about the move, Mr. Laveau
and his family had already applied for and received green
cards from the United States. Dkt. 46, Ex. A (Laveau Dep.) at
63:13-19. Mr. Laveau's green card was issued in January
2014, and he testified that he and his family needed to move
by mid-2015 before his green card expired. Id. at
Mr. Laveau's email correspondence with his supervisor,
Mr. Campbell, does not reflect a request or suggestion by QL2
that Mr. Laveau should relocate in 2014 for the benefit of
the company. Mr. Laveau stated, “As we have discussed
over the past year, my goal was to move with QL2 to the U.S.
. . . this seemed to be a proposition attractive to the
company and to me.” Dkt. 45, Ex. B at 6. However, Mr.
Laveau noted that he had recently sensed resistance by the
company to his request, noting that “such a move now
seems unpalatable to QL2 and, based upon my understanding of
your position on some of the remuneration points thus far,
less attractive to me.” Id.
Campbell responded, “Yes, having your talent applied on
this side of the globe is an attractive proposition but this
means we then create a challenge for us in EMEA.”
Id. He further explained, “I would not say
it's unpalatable for us but you have to agree that it
creates a challenge for us in EMEA. Mind you, it's not a
challenge that we cannot deal with if you decide to move to
the US.” Id. He later reemphasized QL2's
willingness to accommodate Mr. Laveau's desire
to move: “You have been building EMEA for over 8 years
so moving to the U.S. will create a challenge for us to solve
once you move. As I said above, it's a challenge that we
are happy to undertake in support of your move.”
Id. He later noted, “I'm sure we can work
out some arrangement that supports, first and foremost, your
family needs and secondarily QL2's needs.”
Id. at 7. Mr. Laveau left the United Kingdom to
continue his employment for QL2 from a home office in
California in January 2015. Dkt. 25 at ¶ 9.
Mr. Laveau's Involuntary Termination on May 15,
Laveau entered into two consecutive one-year written
compensation agreements in 2015 and 2016. These agreements
provided that in addition to his base salary and Incentive
Units, Mr. Laveau was entitled to commissions which were
calculated and paid out at the end of each financial quarter.
Dkt. 25 at ¶ 10. When it came time to negotiate a 2017
compensation plan, QL2 declined to formalize the agreement in
writing, but orally represented that the 2016 compensation
plan would be renewed with the same terms. Id. at
¶¶ 36-37. Thus, it is undisputed that the 2016
written compensation plan was extended, and still in effect
when Mr. Laveau's employment was terminated.
2017, QL2 sold off the entirety of the airline portion of its
business, in which Mr. Laveau primarily worked, to a
competitor, Infare. Id. at ¶ 11. Just prior to the
company-wide announcement, Mr. Laveau was informed that his
employment with QL2 would cease as of May 15, 2017, but he
would begin employment with Infare in the same sales capacity
he had previously occupied with QL2. Id. at ¶
39. QL2 then terminated Mr. Laveau as an employee on May 15,
2017. Id. at ¶¶ 11, 38-39. On May 22,
2017, Mr. Laveau learned that as a result of his termination,
QL2 had extinguished his Incentive Units - which he believed
to have been worth at least $1 million - pursuant to the
Operating Agreement. Id. at ¶¶ 11,
38-39. At ...