IBMv.Naganayagam2017WL5633165(S.D.N.Y.2017)

InternationalBusinessMachinesCorporationPlaintiff,v.

NagaseelanNaganayagamDefendant.No.15Civ.7991(NSR).

UnitedStatesDistrictCourt,S.D.NewYork.

November21,2017.

InternationalBusinessMachinesCorporation,Plaintiff,representedbyBarbaraM.Maisto,Putney,Twombly,Hall&HirsonLLP.

InternationalBusinessMachinesCorporation,Plaintiff,representedbyStevenAndrewZuckerman,PutneyTwomblyHall&HirsonLLP&JeromePatrickColeman,PutneyTwomblyHall&HirsonLLP.

NagaseelanNaganayagam,Defendant,representedbyGayleBoone,Sumner,Schick&Pace,LLP,JoannaKaWaiChan,Cohen&Gresser,LLP,JonathanSloanAbernethy,Cohen&Gresser,LLP,JustinSumner,Sumner,Schick&Pace,LLP&SteveSumner,Sumner,Schick&Pace,LLP.

OPINION&ORDER

NELSONS.ROMÁN,DistrictJudge.

PlaintiffInternationalBusinessMachines("IBM")bringsthisactionagainstDefendantNagaseelanNaganayagarn(''Naganayagam")forbreachofcontract,allegingthatitisdue$112,260.81forthevalueofrescindedstockoptionsandequityawardspreviouslygiventoDefendant-aformeremployeeofIBM.

PresentlybeforetheCourtisPlaintiffsmotionforsummaryjudgmentandDefendant'scross-motionpursuanttoRule37oftheFederalRulesofCivilProcedureforspoliationsanctions.Forthereasonsthatfollow,Plaintiffs'motionisGRANTEDandDefendants'motionisDENIED.

BACKGROUND

I.FactualBackground

Thefollowingundisputedfactsaretakenfromtheparties'respectiveRule56.1statements, [1]affidavits,andexhibitssubmittedinsupportoftheirmotions.Disputedfactsalongwiththeallegationsmadeinthepaities'operativepleadingswillbediscussedasrelevant.

IBMisaninformationtechnologycorporationorganizedunderthelawsoftheStateofNewYork,withitsheadquartersandprincipalplaceofbusinessinArmonk,NewYork.(Defendant'sLocalCivilRule56.lCounterstatementofMaterialFacts("Def.'s56.1Reply"),1,ECFNo.62.)DefendantisaformeremployeeofIBMwhoservedasaVicePresidentintheGlobalBusinessServicesDivisionofIBMAustralia.(Id.3.)

DuringthecourseofhisemploymentatIBM,DefendantreceivedlongtermincentiveandequityawardsunderthetermsandconditionsofIBM'sLongTermPerformancePlan(the"Plan")andEquityAwardAgreementsdatedJune8,2009,June8,2010,June8,2011,andJune8,2012(collectivelythe"EAAs").(Id.5,10.)UndertheEAAs,DefendantwasgrantedRestrictedStockUnits("RSUs"),whichwerescheduledtovestonlaterdatesinaccordancewithhiscontinuedemploymentwithIBM.(Id.11.)BoththePlanandthevariousEAAsincludetermsforthepossiblecancellationandrescissionoftheawardsgrantedtoDefendant.(Id.8,14,16.)Namely,Section13(a)ofthePlanstates,inpertinentpart:

"[IBM]maycancel,rescind,suspend,withholdorotherwiselimitorrestrictanyunexpired,unpaid,ordeferredAwardsatanytimeiftheParticipant...engagesinany`DetrimentalActivity.'ForthepurposesofthisSection13,`DetrimentalActivity'shallinclude:(i)therenderingofservicesforanyorganizationorengagingdirectlyorindirectlyinanybusinesswhichisorbecomescompetitivewiththeCompany,orwhichorganizationorbusiness,ortherenderingofservicestosuchorganizationorbusiness,isorbecomesotherwiseprejudicialtoorinconflictwiththeinterestsoftheCompany.

(Decl.ofBarbaraM.MaistoinSupp.forPl.'sMot.forSumm.J.("MaistoDecl."),Ex.G,1999Long-Term1of8

PerformancePlan,at9,ECFNo.60.)

Section13(b)ofthePerformancePlanfurtherprovidesthatifaParticipant"failstocomplywiththeprovisionsof[Section13(a)]priorto,orduringtheRescissionPeriod,thenanyexercise,paymentordeliverymayberescindedwithintwoyearsaftersuchexercise,paymentordelivery."(Id.at10.)

Similarly,thevariousEAAsexecutedbyDefendantduringhisemploymentreiteratethat"IBMmaycancel,modify,rescind,suspend,withholdorotherwiselimitorrestrict[the]Award[s]inaccordancewiththetermsofthePlan,including,withoutlimitation,cancelingorrescindingthisAwardif[thePaiticipant]render[s]servicesforacompetitorpriorto,orduringtheRescissionPeriod."(Def.'s56.1Reply13.)UnderthetermsoftheEAAs,thescopeoftheRescissionPeriodisdefinedastwelvemonths.(Id.)

InJuneof2013,theRSUsawardedtoDefendantinJuneof2009,2010,2011,and2012vestedandwerereleasedintoDefendant'sMorganStanleySmithBarneyaccount.(Id.17-20.)Asaresult,Defendantrealizedgainstotaling$112,260.81.(Id21.)

Subsequently,DefendantvoluntarilyresignedfromIBMonMarch31,2014.(Id23.)OnApril7,2014—roughlyoneweekafterhisresignationfromIBM—DefendantbecaineemployedbyComputerScienceCorporation("CSC")asVicePresident,GeneralManager,andManagingDirectorforitsAustralia/NewZealandRegion.(Id24.)CSCisaninformationtechnologycorporationthatprovidesservicesincludingapplicationmanagement,infrastructure,businessconsulting,technologyandsystemsintegrationandenterpriseresourceplanningtoclientsinthebanking,healthcare,andinsuranceindustries.(Id.25.)

InconnectionwithhisemploymentforCSC,Defendantacceptedthewrittente1msofanofferletterdatedFebruary27,2014(the"OfferLetter").(Id33.)ThisOfferLetterincludedanon-competeprovision,underwhichDefendantagreedthathe"wouldnotcompetewithCSCbyjoiningIBM."(Id.37,MaistoDecl.,Ex.0,OfferLetter,at2.)Further,theOfferLettercontainedanindemnificationprovision,statingthat"CSCwillindemnify[Defendant]foranylossinIBMequityvalueresultingfromviolationof[his]non-competitionagreementwithIBM."(Id35.)

II.ProceduralBackground

PlaintiffinitiatedthisactionbyfilingtheComplaintonOctober09,2015,seekingtoenforcethetermsofthecontractandrescindtheaforementionedpecuniarygainsawardedtoDefendant.Specifically,PlaintiffarguesthatCSCandIBMarecompetitors,makingDefendant'semploymentwithCSCa"detrimentalactivity"underthete1msofthePlan.(Compl.36-37,ECFNo.1.)

OnFebruary24,2016,thisCourtissuedadiscoveryplanandreferredthiscasetoMagistrateJudgeLisaMargaretSmith.(CivilCaseDiscoveryPlanandSchedulingOrder,ECFNo.25;OrderReferringCasetoMagistrateJudge,ECFNo.24.)Shortlythereafter,Defendantservedhisfirstsetofinterrogatoriesandrequestsforproductionofdocuments,whichincluded"requestsforalldocumentsrelatingtoDefendant'semploymentwithIBM,Defendant'sdeparturefromIBM,anddocumentsrelatingtoDefendant'sdefenses."IBMv.Naganayagam,No.15-CV-7991(NSR)(LMS),slipop.at2(S.D.N.Y.Dec.09,2016).IBMproducedcertaindocuments,butotherwisebroadlyretortedthatthedocumentrequestswere"vague,ambiguous,undulyburdensomeandoverbroad."Id.

InJuneof2016,DefendantwasdeposedbyPlaintiffscounsel.(Decl.ofJustinV.SumnerinOpp.toPl.'sMot.forSumm.J.("SumnerDecl."),Ex.C,NagaseelanDep.,June29,2016,ECFNo.63.)Duringhisdeposition,Defendantdescribedworkingon"strategicbusinesspaper[s]"inwhichIBMidentifiedtheirmarketplacecompetitorsduringhisemployatIBM.(Id.at101:4-25.)DefendantclaimedthesestrategicplansomittedanymentionofCSCasanIBMcompetitorinAustraliaandNewZealand.Id.WhileDefendantadmittedhedidnotpossessthesedocuments,hetestifiedtotheirexistenceandassertedthattheyareinIBM'spossession.(Id.)

InJulyof2016,Defendant'scounseldeposedIBMemployeeLisaCaldwell.(SumnerDecl.,Ex.H,LisaCaldwellDep.,July11,2016.)Duringherdeposition,Caldwelltestifiedthatwhileshewas"sure"shehadsentandreceivedemailsregardingDefendant'sdeparturefromIBM,no"hold"waseverplacedonheremailsorotherdocuments.(Id.at27:8-28:22.)Similarly,duringadepositionheldonJuly26,2016,anotherIBMemployee-SudhirMattoo,theHumanResourcesLeaderinDefendant'sdivisionatIBM-testifiedthathewasneveraskedtoretainemailshesentorreceivedaboutDefendant'sdeparturefromIBM.(SumnerDecl.,Ex.F,SudhirMattooDep.43:3-7,July26,2016.)

OnAugust4,2016,PlaintiffsubmittedalettertothisCourtseekingleavetofileamotionforsummaryjudgment.(ECFNo.33.)Theverynextday,Defendant'scounselindicatedtheirintentiontoproceedwithamotionforspoliationsanctionsrelatingtoIBM'sallegedfailuretopreservee-mailsrelevanttothepresentlitigation.(ECFNo.34.)

2of8

OnAugust29,2016,DefendantrequestedthatPlaintiffproducealldocumentsthatevidence,relate,orreferto:"(1)IBM'sstrategicbusinessplansfortheAustraliaandNewZealandmarketsbetweenJanuary1,2013andJune1,2015,(2)companiesIBMidentifiedascompetitorsfortheAustraliaandNewZealandmarketsbetweenJanuary1,2013andJune1,2015,(3)[Defendant's]defensethatCSCisnotacompetitorofIBMforthepurposesofIBM'sLongTermPerformancePlan."Naganayagam,15-CV-7991(NSR)(LMS),slipop.at3(internalquotationmarksomitted).IBMobjectedtotherequestforproduction,arguingthatDefendant'srequestwasuntimely,disproportionatetotheneedsofthecase,andsoughttheproductionofprivileged,highlyconfidentialandproprietarymaterial.Id.

OnOctober31,2016,Defendantfiledamotiontocompelproductionof"IBM'sstrategicplansforAustraliaandNewZealand,e-mailsrelatedtoDefendant'sdeparturefromIBMthatwerereferencedInLisaCaldwell'sdeposition,alistofDefendant'saccounts,andDefendant'sowne-mailsfromthecourseofhisemploymentatIBM."Idat5.Plaintifffiledanoppositiontothemotiontocompelreiteratingitsaforementionedobjectionsandarguingthatbasedonthetestimonyofthedeponentsandanapparentconcessionofdefensecounselduringapriorconference,itwassettledthatIBMandCSCarecompetitors-renderingtherequestedmaterialirrelevant.Idat5-6.

JudgeSmithissuedanOpinionandOrderonDecember9,2016,denyingDefendant'srequesttocompeltheproductionofbothhisownemailsandclientaccountinformationaswellasLisaCaldwell'semails,findingthatDefendanthadfailedtoestablishtherelevanceofthesematerials.However,JudgeSmithruledthatPlaintiffwasrequiredtoproducethestrategicplansgeneratedbyIBMdelineatingtheircompetitors.Id.at9.

InaletterdatedDecember30,2016,PlaintiffscounselinformedMagistrateJudgeSmiththatdespitediligenteff01is,IBMwasunabletolocatethestrategyplansdescribedbyDefendantinhisdeposition.(Pl.'sDisc.Resp.toDecisionandOrder("Pl.'sDiscoResp."),ECF.No.57).Plaintifffurtherasse1iedthatneitherLisaCaldwell-Defendant'simmediatesupervisorduringhisemploymentatIBM—norRandyWalker—theIBMexecutiveheadingtheglobalAsiaPacificbusiness—hadanyrecollectionofsuchstrategyplans.Id.

PlaintifffiledthepresentmotionforsummaryjudgmentonJanuary20,2017(ECFNo.58.)OnJanuary27,2017,Defendantfiledacross-motionforspoliationsanctions.(ECFNo.70.)TheComtnowconsiderseachmotioninturn.

SPOLIATION

DefendantrequeststhattheCourtissueanadverseinferenceandimposeothersanctionsagainstPlaintiffforspoliationofelectronicallystoredinformation("ESI"),includingemailsrelatingtoDefendant'sdepa1turefromIBMandotherinternaldocuments.Specifically,DefendantasksthisCourttoenteranorder"(1)establishingthat,atthetimeof[Defendant's]departurefromIBM,IBMdidnotview[CSC]asacompetitorofIBMintheAustralia/NewZealandmarket;[and](2)requiringIBMtoreimburse[Plaintifl]forthecosts,includingattorneys'feesincunedinmaking[thepresent]Motion."(Def.'sMem.Supp.ofMot.SpoliationSanctions("Def.'sMot.Spoliation")at1,ECFNo.75.)PlaintiffopposesDefendant'smotion,arguingthatDefendanthasprovidednoevidenceofspoliationandhasfailedtoestablishtherelevanceoftheallegedlyspoliatedevidence.(Pl.'sMem.inOpp'ntoMot.forSpoliationSanctions("Pl.'sOpp'n")at1-2,ECFNo.73.)

TheCourtfindsthatDefendanthasnotestablishedaclaimofspoliationandthatsanctionsagainstPlaintiffareunwarranted.

I.ApplicableLaw

"Spoliationisthedestructionorsignificantalterationofevidence,orfailuretopreservepropertyforanother'suseasevidenceinpendingorreasonablyforeseeablelitigation."InreTerroristBombingsofUS.EmbassiesinE.Africa,552F.3d93,148(2dCir.2008)(internalquotationmarksomitted).Typically,toestablishaclaimforspoliationsanctions,amovingpartymustshow"(1)thatthepartyhavingcontrolovertheevidencehadanobligationtopreserveitatthetimeitwasdestroyed;(2)thattherecordsweredestroyedwithaculpablestateofmind;and(3)thatthedestroyedevidencewasrelevanttotheparty'sclaimordefensesuchthatareasonabletrieroffactcouldfindthatitwouldsupportthatclaimordefense."Kravtsovv.TownofGreenburg,No.10-CV-3142(CS),2012WL2719663,at*5(S.D.N.Y.July9,2012) (quotingResidentialFundingCorp.v.DeGeorgeFin.Corp.,306F.3d99,107(2dCir.2002)).Notably,afindingofnegligenceorgrossnegligenceissufficienttosatisfythe"culpablestateofmind"requirementforspoliationunderSecondCircuitprecedent.SeeResidentialFunding,306F.3dat108 .

AsofDecember1,2015,however,FederalRuleofCivilProcedure37(e)wentintoeffect,therebyimpactingwhenacourtmayimposesanctionsforthelossordestrnctionofelectronicallystoredinformation("ESI").Rhodav.Rhoda,No.14-CV-6740(CM),2017WL4712419,at*2(S.D.N.Y.Oct.3,2017).Specifically,

3of8

"TheAdvisoryCommitteeNotesonsection(e)(2)ofthenewRule...makeclearthatthenewRule37rejectscasessuchasResidentialFundingCorp.v.DeGeorgeFinancialCorp.,306F.3d99(2dCir.2002),thatauthorizethegivingofadverseinferenceinstrnctionsonafindingof[mere]negligenceorgrossnegligence.Inotherwords,thenewRule37(e)ovenulesSecondCircuitprecedentonthequestionofwhatstateofmindissufficientlyculpabletowarrantanadverseinferenceinstrnctionwhenelectronicallystoredevidenceismissing."

Id.(quotingThomasv.Butkiewicus,No.3:13-CV-747(JCH),2016WL1718368,at*7(D.Conn.Apr.29,2016) .

"Now...aCourtmaynotissueanadverseinferenceinstructionunlesstheCourtfinds`thatthepartyactedwiththeintenttodepriveanotherpartyoftheinformation'suseinthelitigation.'"BestPayphones,Inc.v.CityofNewYork,No.1-CV-3924(JG)(VMS),2016WL792396,at*4(E.D.N.Y.Feb.26,2016)(quotingFed.R.Civ.P.37(e)(2)).ThisnewstandardforadverseinferencesinthecontextofESIwas"developedonthepremisethataparty'sintentionallossordestructionofevidencetopreventitsuseinlitigationgivesrisetoareasonableinferencethattheevidencewasunfavorabletothepartyresponsibleforloss,"whereasthenegligentlossofsuchevidencedoesnot.Fed.R.Civ.P.37(e)advisorycommittee'snoteto2015amendment.Indeed,astheAdvisoryCommitteeNotesforRule37elaborate,"[i]nformationlostthroughnegligencemayhavebeenfavorabletoeitherpatty,includingthepattythatlostit,andinfeningthatitwasunfavorabletothatpartymaytipthebalanceattrialinwaysthelostinformationneverwouldhave."Id.

Rule37(e)does,however,permitcourtstoimposelessseveresanctionsorcurativemeasuresif:(1)ESIislost"becauseapartyfailedtotakereasonablestepstopreserveit,"(2)theESI"cannotberestoredorreplacedthroughadditionaldiscove1y,"and(3)thecourtfinds"prejudicetoanotherpartyfromthelossoftheinformation."IdEvenoncetheserequirementsaresatisfied,acourtmayonlyemploymeasures"nogreaterthannecessarytocuretheprejudice."Fed.R.Civ.P37(e).

AlthoughthemorelenientsanctionsstandardunderRule37(e)didnotgointoeffectuntilafterPlaintifffiledtheComplaintinthepresentaction,[2]theamendedRule37(e)canapplyretroactively.Indeed,ChiefJusticeRobertsincludedanOrderwhentransmittingthenewRuletoCongressexplainingthat"theforegoingamendmenttoFederalRulesofCivilProcedureshalltakeeffectonDecember1,2015,andshallgovern...insofarasjustandpracticable,allproceedingsthenpending."Rhoda,2017WL4712419,at*2(quoting2015U.S.Order0017).

ThisSupremeCourtOrder"create[d]apresumptionthatanewrnlegovernspendingproceedingsunlessitsapplicationwouldbeunjustorimpracticable."CAT3,LLCv.BlackLineage,Inc.,164F.Supp.3d488,496(S.D.N.Y.2016);seealsoRhoda,2017WL4712419,*2("[A]CourtmustapplythenewversionofRule37(e)unless,asapreliminarymatter,itconcludesthatitwouldbeunjustorimpracticabletodoso.").

Here,theCourtfindsthatitwouldbeneitherunjustnorimpracticabletoapplythenewversionofRule37(e).AlthoughtheComplaintwasfiledtwomonthspriortotheeffectivedateofthenewRule,theissueofspoliationdidnotariseinthepresentactionuntilJulyof2016—wellaftertheenactmentofthenewRule.Further,thepresentmotionforspoliationsanctionswasfullybriefedandsubmittedinJanuaryof2017(ECFNo.70),morethanafullyearafterthenewRulecameintoeffect.Bothpatties,therefore,hadampleopportunitytobriefthespoliationissueunderthenewRule.

Moreover,theapplicationofthenewRuletothepresentactionwouldnotmeaningfullyprejudicePlaintiffnorDefendant.WithregardtoPlaintiff,"becausetheamendment[toRule37(e)]isinsomerespectsmorelenientastothesanctionsthatcanbeimposedforviolationofthepreservationobligation,thereisnoinequityinapplyingit[retroactively]."CAT3,164F.Supp.3dat496 .WithregardtoDefendant,thenewRuledoesnotprecludeMr.NaganayagamfrompursuingotheravenuesofreliefagainstIBM'sallegednegligentspoliationofevidence;namely,lessseveresanctions.SeeFed.R.Civ.P.37(e).ThisCourt,therefore,findsthespoliationstandardsforESIunderRule37(e)applicableinthepresentaction.

II.Discussion

Asaninitialmatter,amendedRule37(e)onlyallowsforadverseinferencesanctionswherethenon-movantactedintentionallytodepriveanotherpartyuseoftheESIduringlitigation.Fed.R.Civ.P.37(e).EvenassumingthatPlaintiffdidfailtopreserverelevantevidence,DefendantmerelyallegesthatPlaintiffactednegligentlyratherthanintentionally.(Def.'sMot.Spoliation,at1.)Accordingly,thisComtfindsthatDefendantisnotentitledtoanadverseinferenceunderRule37(e).

ThisCourtalsofindsthatlessseverespoliationsanctionsaresimilarlyunwarranted.Rule37(e)permitscourtstoimposesanctionsotherthanadverseinferenceswhereESIislost"becauseapartyfailedtotakereasonablestepstopreserveit,anditcannotberestoredorreplacedthroughadditionaldiscovery."Fed.R.

4of8

Civ.P.Rule37(e).Suchsanctionsmayonlybeimposed,however,"uponfindingprejudicetoanotherpaityfromlossoftheinformation."Id.

Defendanthasfailedtodemonstratethatsuchprejudiceexistsinthepresentcase.WhileRule37(e)doesnotnecessarilyplacetheburdenofprovingordisprovingprejudiceonanyparticularparty,requiringthemovingpartytoproveprejudicemaybereasonableinsituationswhere"thecontentofthelostinformationisfairlyevident,theinformation[]appear[s]tobeunimportant,ortheabundanceofpreservedinformation[]appearssufficienttomeettheneedsofallparties."Fed.R.Civ.P.37(e)advisorycommittee'snoteto2015amendment.

Here,thecontentoftheallegedlyspoliatedemailsanddocumentsisfairlyevident—orcouldhavebecomeevidentwithrelativelylittleeffort-yetDefendanthasfailedtoestablishhowhehasbeenprejudicedbytheirallegedloss.Duringherdeposition,LisaCaldwell,whoseemailsareatthecenterofDefendant'sspoliationclaims,merelystatedthatshehadsentandreceivede-mailcorrespondencerelatingtoDefendant'sdeparturefromIBM.(SumnerDecl.,Ex.H,LisaCaldwellDep.27:8-28:22).AsUnitedStatesMagistrateJudgeLisaMargaretSmithaptlynotedinherDecember9,2016DecisionandOrder,"[d]espiteDefendant'sabilitytodeposeCaldwellregardingthecontentofthesee-mails,DefendanthasfailedtoprovidetheComtwithanydepositiontestimonybyCaldwelltotheeffectthatthee-mailscontaineddiscussionsofwhetherIBMandCSCarecompetitors."Naganayagam,No.15-CV-7991(NSR)(LMS),slipop.at10.Withoutsuchtestimony,Defendantfailstoestablishhoworwhytheallegedspoliationoftheseemailsisprejudicialtohim.Thus,theimpositionofspoliationsanctionsinconnectionwiththeseemailsisunwarranted.

Defendantsimilarlyfailstoshowhowtheallegedspolil\tionofhisownemailsandaccountlistsfromhistimeasanIBMemployeeprejudiceshim.DefendantclaimsthatthelistofhisformerIBMaccounts"wouldshowwhetherIBMandCSCcompeteunderthePlanbyallowingthepartiestoexaminewhetherornottheseclientaccountswereservicedorcouldbeservicedbyCSC."(Def.'sMot.Spoliation,at10.)ThePlanatissueinthiscase,however,isfarbroaderthanDefendantsuggests;PlaintiffneednotshowthatCSCcompetedwithIBMonDefendant'sspecificaccountstobeentitledtorescission.Rather,thePlanallowsPlaintifftorescindDefendant'sawardsfor"therenderingofservicestoanyorganization...whichisorbecomescompetitivewith[IBM]."(MaistoDecl.,Ex.G,1999Long-Te1mPerformancePlan,at9.)Therelevantquestioninthisactionis,therefore,whetherCSCandIBMarecompetitorsgenerally.InformationregardingDefendant'sspecificaccountsisimmaterialtothisactionandthisCourtfindsthatDefendantsufferedfromnoprejudicefromitsabsence.

Likewise,DefendantalsofailstoestablishthattheallegedspoliationofIBM's"strategicplans"forNewZealandandAustraliaprejudicedhiminanyway.JustasPlaintiffneednotdemonstratethatCSCservicedDefendant'sformerIBMclients,neithermustPlaintiffshowthatCSCandIBMarecompetitorsintheNewZealandandAustraliamarketsspecifically.Evenifsuchplansdidindeedexist,DefendantneverthelessfailstoshowhowtheywouldberelevanttoPlaintiff'sbroaderbreachofcontractclaim.

BecauseDefendantwasnotprejudicedbytheabsenceoftheallegedlyspoliatedevidence,Defendant'smotionforspoliationsanctionsisdenied.

SUMMARYJUDGMENT

TheCourtnextconsidersPlaintiff'smotionforsummaryjudgment.PlaintiffcontendsthatDefendanthasfailedtoraiseanygenuineissueofmaterialfactregardinghisallegedbreachofthePlanandEAAs.DefendantarguesthatthelanguageofthePlanissusceptibletodifferentinterpretationsandthatafactualdisputeexistsastowhetherDefendant'ssubsequentemploymentwithCSCentitlesPlaintifftorescindhisequityawards.

ThisCourtfindsthatthereisnogenuinedisputeofmaterialfactregardingDefendant'sbreachofthePlanandEAAs,andgrantsPlaintiffsmotionforsummaryjudgment.

I.StandardonMotionforSummaryJudgment

A"comtshallgrantsummaryjudgmentifthemovantshowsthatthereisnogenuinedisputeastoanymaterialfactandthemovantisentitledtojudgmentasamatteroflaw."Fed.R.Civ.P.56(a).Themovingpartybearstheinitialburdenof"demonstrat[ing]theabsenceofagenuineissueofmaterialfact."CelotexCorp.v.Catrett,477U.S.317,323(1986) .Ifthemovingpmtyfulfillsitspreliminaryburden,theonusshiftstothenon-movingpartytoidentify"specificfactsshowingthatthereisagenuineissuefortrial."Andersonv.LibertyLobby,Inc.,477U.S.242,248(1986) (internalcitationandquotationmarksomitted).

Agenuinedisputeofmaterialfactexistswhen"theevidenceissuchthatareasonablejurycouldretmnaverdictforthenomnovingparty."Id.;accordBennv.Kissane,510F.App'x34,36(2dCir.2013) (surnm.order).

5of8

Cou1tsmust"constru[e]theevidenceinthelightmostfavorabletothenon-movingpartyanddraw[]allreasonableinferencesinitsfavor."Fincherv.DepositoryTrust&ClearingCorp.,604F.3d712,720(2dCir.2010)(internalquotationmarksomitted).Thepartyasse1tingthatafactisgenuinelydisputedmustsupporttheirasse1tionby"citingtoparticularpmtsofmaterialsintherecord"or"showingthatthematerialsciteddonotestablishtheabsence...ofagenuinedispute."Fed.R.Civ.P.56(c)(1)."Statementsthataredevoidofanyspecifics,butrepletewithconclusions,areinsufficienttodefeataproperlysupportedmotionforsummaryjudgment."Bickerstaffv.VassarColl.,196F.3d435,452(2dCir.1999) .

Inthecontextofcontractdisputes,summaryjudgmentmaybegranted"whenthecontractuallanguageonwhichthemovingparty'scaserestsisfoundtobewhollyunambiguousandtoconveyadefinitemeaning."ToppsCo.v.CadburyStaniS.A.IC.,526F.3d63,68(2dCir.2008).Whetherthete1msofacontractareambiguousorunambiguousisaquestionoflawforthecourttodecide.Revsonv.Clinique&Clinique,P.C.,221F.3d59,66(2dCir.2000).Evenwhereacourtfindsthecontractuallanguageambiguous,suuunaryjudgmentmaynonethelessbeappropriate"iftheambiguitiesmayberesolvedthroughextrinsicevidencethatisitselfcapableofonlyoneinterpretation,orwherethereisnoextrinsicevidencethatwouldsupportaresolutionoftheseambiguitiesinfavorofthenon-movingparty'scase."Topps,526F.3dat68 .

II.Discussion

A.BreachofContract

ThisCourtfindsthatPlaintiffhassatisfieditsburdenofshowinganabsenceofagenuinedisputeofmaterialfactregardingDefendant'sbreachofthecontract.ToestablishaprimafaciecaseforbreachofcontractunderNewYorklaw,aplaintiffmustpleadandprove"(1)theexistenceofanagreement,(2)adequateperformanceofthecontractbytheclaimant,(3)breachofcontractbytheaccused,and(4)damages."Int'lBus.MachinesC01p.v.UnitedMicroelectronicsCorp.,No.16-CV-5270,2017WL3972515,at*6(S.D.N.Y.Sept.7,2017)(quotingStadtv.FoxNewsNetworkLLC,719F.Supp.2d312,318(S.D.N.Y.2010) ).Thepartyasse1tingabreachofcontractclaimbearstheburdenproofastoallelements.BartonGip.,Inc.v.NCRCorp.,796F.Supp.2d473,498(S.D.N.Y.2011).

Here,thereisnodisputethatDefendantreceivedequityawardsunderPlaintiffsLong-TermPerformancePlanandvariousEAAsexecutedthroughoutthecourseofhisemploymentwithIBM.(Def.'s56.1Reply21.)NeitherisitdisputedthatDefendantreceivedgainsequaling$112,260.81asaresultoftheseagreements—whichPlaintiffhassincesoughttorescindandDefendanthasrefusedtoreturn.Id.Plaintiff,therefore,hassuccessfullyestablished(1)theexistenceofanagreement,(2)performanceofitsobligationsundertheagreement,and(3)possibledamages.TheonlyremainingissueiswhetherDefendant'ssubsequentemploymentwithCSCandrefusaltoreturnhisequityawardsconstitutesabreachunderthetermsofthePlan.

ThisCourtfindsthatitdoes.

Section13(b)ofthePlanentitlesPlaintifftocancelorrescindawardswherethebeneficiaryengagesinany"DetrimentalActivity."(MaistoDecl.,Ex.G,1999Long-TermPerformancePlan,at9.)Theagreementdefines"DetrimentalActivity"asincluding"therenderingofservicesforanyorganizationorengagingdirectlyorindirectlyinanybusinesswhichisorbecomescompetitivewith[IBM],orwhichorganizationorbusiness,ortherenderingofservicestosuchorganizationorbusiness,isorbecomesotherwiseprejudicialtoorinconflictwiththeinterestsoftheCompany."Id.

DefendantcontendsthatthescopeofthePlan'snon-competelanguageissusceptibletodifferentinterpretations.Specifically,DefendantmaintainsthatwhilePlaintiffcharacterizestheprovisionasbroadandallinclusive,theterm"competitivewith"isundefinedandcouldbereadmorenarrowly.(Def.'sMem.Opp.Pl.'sMot.Summ.J.("Def.'sOpp.")at15,ECFNo.64.)Therelevantinquiry,Defendantargues,shouldnotbewhetherCSCandIBMarecompetitorsgenerally,butratherwhether"CSCandIBMcompeteforthe[specific]servicesthat[Defendant]renderedintheAustralia/NewZealandmarketwhilehewasemployedatIBM."(Id.)Defendantassertsthatthisallegedambiguityinthecontractuallanguagecreatesanissueoffactthatmaynotberesolvedthroughsummaryjudgment.(Id.)

Plaintiffcountersthat"DetrimentalActivity"isanunambiguouslydefinedterminthecontractas"competitioninthebroadestsensewithnoservicelimitationsorgeographiccarveouts."(Pl.'sReplyMem.Supp.Mot.Summ.J.,at6,ECFNo.66.)ThisCourtagrees.

ThelanguageofthePlanandsubsequentEAAsexecutedbetweenPlaintiffandDefendantisclearandunambiguous;anycompetitiverelationshipbetweenCSCandIBMsufficestowanantrescissionofDefendant'sequityawards.ThePlan'slanguageisbroadandevincesanintentiontocovertherendering

6of8

ofanyservicestoanentitythatis"competitivewith"orothe1wise"prejudicialto"or"inconflictwith"theinterestsofIBM.ThePlandoesnotrequirethepa1ticipant'sspecificservicesforsuchcompaniestobedetrimentaltoIBM.Rather,thegenerallycompetitiverelationshipbetweenIBMandthenewemployerisenoughtowanantrescissionofawards.

Presently,thereisnodisputethatIBMandCSCcompete.Duringhisdeposition,DefendanthimselftestifiedthatCSCandIBMare,infact,competitors"forsomeservices."(MaistoDecl.,Ex.D,NayagamDep.55:20-25.)Similarly,defensecounselconcededduringaconferencebeforethisCourtthatIBMandCSCarecompetitorsinmanyareas.(MaistoDecl.Ex.N,Sept.21,2016Tr.pp.18-19.)Indeed,CSC'semploymentlettertoDefendantincludesanoncompeteprovisionthatspecificallynamesIBMasacompetitor.(MaistoDecl.Ex.0.)BecauseitisundisputedthatCSCandIBMarecompetitorsinmanyrespects,therearenotriableissuesoffactinthiscase.Defendant'ssubsequentemploymentwithIBM'scompetitor,regardlessofthespecificfunctionsDefendantperformedforIBMorCSC,constitutes"detrimentalactivity"underthePlan.Accordingly,PlaintiffhasmeetitsburdenofdemonstratingthatDefendantindisputablybreachedtheircontractualagreement.

B.EnforceabilityoftheContract

HavingfoundthatDefendantindisputablybreachedhisagreementwithIBM,theCourtnowturnstotheenforceabilityofthePlan'snon-competeprovisions."NewYorkcouttshavegenerallyconcludedthatrestrictivecovenantsinemploymentcontracts—suchasnon-compete,non-solicitation,andnon-recruitmentclauses-mustbesubjectedtoheightenedjudicialscrutinysincetheypotentiallyimpingeonindividualagencyandanemployee'sabilitytomakealiving."OliverWyman,Inc.v.Eielson,No.15-CV-5305(RJS),2017WL4403312,at*5(S.D.N.Y.Sept.29,2017).Onenotableexceptiontothisrigorousscrutiny,however,istheemployeechoicedoctrine.Int'lBus.MachinesCorp.v.Smadi,No.14-CV-4694(VB),2015WL862212,at*3(S.D.N.Y.Mar.2,2015).

Undertheemployeechoicedoctrine,"NewYorkcouttswillenforcearestrictivecovenantwithoutregardtoitsreasonablenessiftheemployeehasbeenaffordedthechoicebetweennotcompeting(andtherebypreservinghisbenefits)orcompeting(andtherebyriskingforfeiture)."Id(citingLucentev.Int'lBus.MachinesCorp.,301F.3d243,254(2dCir.2002) .Tobeapplicable,theemployeemusthavelefthisemploymentvoluntarilyandhisformeremployermusthavedemonstratedits"continuedwillingnesstoemploythepartywhocovenantednottocompete."Id

Here,thereisnodisputethatDefendant"voluntarilyresignedfromIBMonoraboutMarch31,2014."(Def.'s56.1Reply23.)Additionally,DefendanthimselftestifiedduringhisdepositionthatRandyWalker,hissupervisoratIBM,expressedadesiretomatchCSC'sofferandkeepDefendantatIBM.(SumnerDecl.,Ex.C,NagaseelanDep.86:15-87:11.)IBM'swillingness-eveneagerness-tocontinueemployingDefendantisclear.Thus,Defendantwasclearly"affordedthechoiceofcontinuingtoreceiveawardsbyrefrainingfromcompetingwithIBM,orforfeitingthemonetaryvalueofAwardsbyrefrainingfromcompetingwithIBM,orforfeitingthemonetaryvalueoftheawardsbycompetingwithIBM."Smadi,2015WL862212,at*3.Assuch,therescissionofDefendant'sawardsispermittedundertheemployeechoicedoctrine.BecausePlaintiffhasestablishedabreachofanexisting,enforceableagreement,thisComtgrantssummaryjudgmentinfavorofPlaintiff.

C.Attorneys'Fees

Lastly,theComtturnstotheissueofwhetherPlaintiff,havingprevailedonitsmotionforsummaryjudgment,isentitledtoattorneys'fees."AlthoughthegeneralruleinAmericancourtsisthattheprevailingplaintiffmustbearhisownfeesinacontractaction,"ParkerHannifinCorporationv.NorthSoundProperties,No.10-CV-6359(MHD),2013WL3527761,at*1(S.D.N.Y.July12,2013),"[u]nderNewYorklaw,acontractthatprovidesforanawardofreasonableattorneys'feestotheprevailingpartyinanactiontoenforcethecontractisenforceableifthecontractuallanguageissufficientlyclear."NetJetsAviation,Inc.v.LHCCommc'ns,LLC,537F.3d168,175(2dCir.2008) .

Here,Plaintiffisentitledtoreasonableattorneys'fees.Section15(1)ofthePlanstatesthat"[i]ntheeventthataParticipantortheCompanybringsanactiontoenforcethetermsofthePlanoranyAwardAgreementandtheCompanyprevails,theParticipantshallpayallcostsandexpensesincunedbytheCompanyinconnectionwiththataction,includingreasonableattorneys'fees."(MaistoDecl.,Ex.G,LongTermPerformancePlan,at11.)Thus,thePlancontainsaclearandunambiguousfee-shiftingprovision,thelikesofwhichhavebeenfoundvalidandenforceableunderNewYorklaw.See,e.g.,PakerHannifinCorp.v.N.SoundProperties,No.10-CV-6359(MHD),2013WL1932109,at*10(S.D.N.Y.May8,2013).ThisComt,therefore,findsthatPlaintiffisentitledtorecoverreasonableattorney'sfeesassociatedwiththisaction.

7of8

©2018eDiscoveryAssistantLLC.NoclaimtooriginalU.S.GovernmentWorks.

CONCLUSION

Fortheforegoingreasons,Defendant'smotionforspoliationsanctionsisDENIEDandPlaintiffsmotionforsummaryjudgmentisGRANTED.

TheClerkoftheComtisrespectfullydirectedtoterminatethemotionsatECFNos.58and70.PlaintiffisdirectedtoprovidetheComtandopposingcounselanaffidavitwithcontemporaneoustimerecordsinsuppmtofitsrequestforattorneys'fees.ThepartiesshouldnotifytheCourtonorbeforeDecember11,2017iftheyhavereachedanagreementregardingattorneys'fees.Ifthepartiesareunabletoreachanagreementbythatdate,thematterwillbereferredtotheHonorableLisaMargaretSmithforahearing.

SOORDERED:

[1]TheCourtnotesDefendant'sletterdatedJanuary24,2017requestingthattheCourtdisregardPlaintiffsReplytoDefendant'sRule56.1CounterstatementofMaterialFacts.BecausethefactsderivedfromPlaintiff'soriginalRule56.1StatementofFacts,Defendant'sCounterstatementofFacts,andtheparties'exhibitsweresufficienttoreachadecisioninthismatter,theCourtdoesnotaddresstheproprietyofPlaintiff'ssubsequentsubmission.

[2]PlaintifffiledtheComplaintonOctober09,2015-nearlytwomonthspriortotheeffectivedateofRule37(e).(ECFNo.1).

EndofDocument.

8of8