SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK -------------------------------------- X SCOTT KINGSTON, an individual, ANDRE : TEMIDIS, an individual, and MICHAEL LEE, an individual, : vs. Plaintiff, INTERNATIONAL BUSINESS MACHINES CORPORATION, a New York Corporation, : : : INDEX No. SUMMONS Defendant. -------------------------------------- X To the above-named DEFENDANT: INTERNATIONAL BUSINESS MACHINES CORPORATION, 1 New Orchard Road, Armonk, New York 10504-1722: You are hereby summoned to answer the complaint in this action and to serve a copy of your answer, or, if the complaint is not served with this summons, to serve a notice of appearance, on the Plaintiff s attorney within 20 days after the service of this summons, exclusive of day of service )or within 30 days after the service is completed if this summons is not personally delivered to you within the State of New York); and in case of your failure to appear or answer, judgment will be taken against you by default for the relief demanded in the complaint. The basis of venue is that DEFENDANT transacts business in this County; and (b) the conduct and acts of DEFENDANT complained of herein occurred in all or in substantial part in New York County. 1 of 18
Executed at Randolph, New Jersey Dated: July 6, 2018 RAFKIN ESQ. 1201 SUSSEX TURNPIKE, SUITE 102 RANDOLPH, NJ 07869 (973) 891-3370 By: /s/ Seth A. Rafkin Matthew E. Lee* N.C. State Bar No. 35405 Jeremy R. Williams* N.C. State Bar No. 48162 WHITFIELD BRYSON & MASON, LLP 900 W. Morgan Street Raleigh, NC 27603 Telephone: 919-600-5000 Facsimile: 919-600-5035 matt@wbmllp.com jeremy@wbmllp.com Attorneys for Plaintiffs * to be admitted pro hac vice -2-2 of 18
SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK -------------------------------------- X SCOTT KINGSTON, an individual, ANDRE : TEMIDIS, an individual, and MICHAEL LEE, an individual, : vs. Plaintiff, INTERNATIONAL BUSINESS MACHINES CORPORATION, a New York Corporation, : : : INDEX No. COMPLAINT FOR RETALIATION AND FAILURE TO PAY WAGES Defendant. -------------------------------------- X PLAINTIFFS Scott Kingston, Andre Temidis, and Michael Lee hereby assert as their complaint against DEFENDANT INTERNATIONAL BUSINESS MACHINES CORPORATION as follows: NATURE OF THE CASE 1. This case seeks to hold Defendant International Business Corporation ( IBM ) accountable for retaliating against three of its managers, Plaintiffs Scott Kingston, Andre Temidis and Michael Lee. Plaintiffs only transgressions were that: (1) they followed the law (and IBM policy) by not capping the sales commissions payments to their sales representatives, something IBM policies did not authorize them to do; and (2) they tried to prevent IBM from discriminating against an African American sales representative by not paying him a large commission when it had previously approved payments to white sales representatives under the same circumstances. 2. When Plaintiffs opposed IBM s senior management s efforts to pay an African American sales representative less in commissions than what it paid to a white colleague, IBM quickly launched an investigation into unrelated matters. IBM then turned around and fired each 3 of 18
of the Plaintiffs. The reason IBM gave was that, seven months earlier, Plaintiffs had committed a fireable offense when they followed IBM policy (and the law) and didn t cap or limit commission payments to other white sales representatives -- payments that were reviewed and approved by IBM itself. Adding insult to injury, IBM demanded that at least one of the Plaintiffs pay back their own earned commissions and then refused to pay both Plaintiffs Kingston and Temidis the full amount of their Q1 2018 earned compensation. JURISDICTION & VENUE 3. This Court has jurisdiction over this matter and venue is proper in this County because the conduct and acts of Defendant complained of herein occurred in all or substantial part in this County. PARTIES 4. Plaintiff Scott Kingston is a resident of the State of Washington. He was employed as a Business Unit Executive for IBM, where he worked for more than 17 years. 5. Plaintiff Andre Temidis is a resident of the State of New York. He was employed as a Manager, Eastern Region Software Sales for IBM, where he worked for more than 16 years. 6. Plaintiff Michael Lee is a resident of the State of Texas. He was employed as a NA IOT Channel Technical Executive for IBM, where he worked for over 30 years. 7. Defendant IBM is a corporation formed under the laws of the State of New York with executive offices in this County and its headquarters in the State of New York. GENERAL ALLEGATIONS 8. In the first half of 2017, IBM sales representatives, led by a sales representative named Nick, closed a large software sales licensing deal, with revenue to IBM valued in the tens -2-4 of 18
of millions of dollars (the SAS Sale ). Nick was paid the commissions he was owed, in excess of $1,000,000. 9. Just a few short months later, IBM sales representatives, led by a sales representative referred to in this complaint as J, closed another large software licensing deal, with revenue to IBM again valued in the tens of millions of dollars (the HCL Sale ). Like Nick, J had earned over $1,000,000 in commission from this sale. Unlike Nick however, J was only paid approximately $200,000 by IBM. The only difference between them? J was African-American. IBM s Sales Representative s Compensation 10. IBM s sales representatives are generally compensated in a similar way: a base salary comprises a portion of their compensation, and commissions make up the rest. 11. IBM promises its sales representatives that their commissions are uncapped, meaning the bigger the deal the representative closes, the more the representative can make. 12. IBM even encourages its sales representatives to close large deals in excess of their quota through the use of accelerators. Simply put, IBM provides a multiplier on quota attainment over 100%, such that sales in excess of quota enable sales representatives to earn more in commissions per dollar of sales than they would have been able to earn for each dollar of sales below 100% quota attainment. 13. IBM communicates the uncapped nature of sales representative s commissions to its representatives in writing through PowerPoint presentations, emails, and orally through its management at sales conferences and in one-on-one meetings. 14. Sales representatives are advised that their commissions will be paid in accordance with these promises, and will only be adjusted to correct errors in the sales representative s quota or territory. -3-5 of 18
15. IBM reaffirms this to its managers through the following guidance: Conditions that may lead to an adjustment include the need to correct errors or the need to balance with employee s contribution to the success of a large sales transaction (which criteria must be clearly provided to Commissions team). Adjustments must not be done only as a ceiling or cap on the total earnings allowable to employees. 16. In other words, IBM s official policies provide that sales representatives commissions may be adjusted to correct errors, but their commissions may not be arbitrarily capped for the purpose of limiting the employee s earnings. IBM s Review Process of Commissions on Large Deals 17. When large deals are closed, or when a sales representative significantly exceeds his quota, IBM reviews the deal for inaccuracies. 18. This process entails several levels of review by various IBM managers and executives. It also includes approval by the IBM Center of Excellence which is the final approval layer at IBM for commission payments. 19. First, the sales representative s first line manager would need to review the deal s specifics for accuracy, particularly the sales representatives quota, territory, and recognized revenue. Typically, the sales representative s second line manager double checks this same information. Assuming no errors were found by either manager that warranted an adjustment of the commissions, it would then go to an IBM executive for approval, before being transferred to the Center for Excellence for final sign off prior to payment. 20. As part of the review process, the managers are sent authorization emails that contain the following language: Your role as a manger is to validate the accuracy of the territory and quota for each seller on an IQP. Seller commissions for these plans are uncapped, and are paid based on -4-6 of 18
achievement results as determined by the respective territory and quotas, so it is critical to ensure this is correct. 21. In other words, first and second line managers only role in the authorization process is to ensure that the sales representative s territory and quota were appropriate. 22. Following the review process, if no errors are found by the managers, then commissions payments automatically flow to the sales representatives. If the sales representative achieved in excess of 250% of his quota, approval by an IBM executive above the second line manager is required before the commissions payments are to be made to the sales representative. Two Large Deals Were Closed By Sales Representatives in 2017, Leading to Two Sales Representatives Each Being Owed Over $1,000,000 in Commissions 23. IBM breaks up its sales periods into half year segments. In the first half of 2017, a significant deal was closed for the sale of IBM products and services that was worth tens of millions of dollars in revenue to IBM (the SAS Sale ). 24. Based on the terms of his commission plan, the primary sales representative responsible for closing the SAS Sale (identified in this complaint as Nick) was entitled to a sales commission in excess of $1,000,000. 25. As a result of this deal, Nick achieved nearly 2,000% of his quota. 26. In addition to Nick, a sales representative named William also exceeded his quota, achieving nearly 600% of his quota, and was owed approximately $172,000 in commissions payments. 27. During the course of the commission review process for the SAS Sale, each of the Plaintiffs was required to review the quotas, territory, and recognized revenue for certain members of the relevant sales force team based on IBM s commission payment policy. Each of the Plaintiffs ultimately found no errors in the quotas, territories, or recognized revenue for Nick and William. -5-7 of 18
Accordingly, they expected both of these sales representatives to be paid in full based on three key factors: (1) there were no errors in the sales representative s territory or quota; (2) the IBM no capping policy, and (3) the law. 28. The no capping policy is a written IBM policy that states that IBM will not cap or otherwise limit the amount a sales force member earns in commission compensation. No capping means that IBM will not limit the commission amount if, for example, the commission amount exceeds a certain dollar amount. The law, of course, also requires that amounts earned under a given compensation policy must be paid in full. 29. Notably, Plaintiffs review for the SAS Sale commissions were only one part of the process required for payment to issue. Indeed, the Plaintiffs did not even have ultimate authority to approve the payment since Nick and William had achieved more than 250% of their respective quotas. As a result, Nick s commissions were, in turn, reviewed and ultimately approved by other executives higher up in the IBM sales organization. Ultimately, the IBM Center of Excellence has the final word on approval of specific sales commission amounts. Nick s commissions, reviewed by Plaintiffs and which were, or per IBM policies should have been, approved by more senior executives, were ultimately adopted and approved by the Center of Excellence and the payments issued to the deserving sales force members. Nick and William were paid the full amount of his commissions. 30. Similarly, Plaintiffs review for the SAS Sale commissions were only one part of the process required for payment to issue. Due to the high achievement by William, Plaintiff Lee received an email from an employee with the IBM Center of Excellence who informed him that: Bob s [Mr. Lee s boss] approval is required for XaaS achievements above 150% and other achievements above 250%. -6-8 of 18
31. Following this email, Bob told Plaintiff Lee that only a percentage of the commissions should be paid to William and requested that he discuss this with Mr. Kingston. 32. Mr. Lee and Mr. Kingston were not aware of any IBM policies that permitted them to arbitrarily adjust William s commissions so Mr. Lee emailed the IBM Center of Excellence regarding the matter. 33. He received a response to his request, which informed him that IBM s policies did not permit an arbitrary adjustment of a sales representative s commissions. Mr. Lee was told that if a sales representative s territory and quota are correct, their commissions cannot be adjusted. 34. Accordingly, Mr. Lee, after consultation with Mr. Temidis, confirmed that William s quota and territory were correct and the payment ultimately flowed in full to William. 35. Later in 2017, another large software licensing deal closed (the HCL Sale ). Like the SAS Sale, the HCL Sale was worth tens of millions of dollars in revenue to IBM. Again, Plaintiff Kingston was involved in the process of determining the relevant sales commissions. Following the same protocol and adhering to IBM s no capping policy and the law, Plaintiff again expected the relevant sales representatives to be paid their full commission amounts. One of those commissions was a commission in excess of $1,000,000 due to an African American man on the IBM sales force, who is identified in this complaint as J. 36. Like the SAS Sale, J s first line manager, and his second line manager (Mr. Kingston), found no errors in his quota or territory and thus expected full payment of his commissions would flow to J. 37. This time around, however, Plaintiff s reviews drew the attention and ire of IBM executives higher up in the commission approval hierarchy. In particular, the Chief Financial Officer of a particular IBM unit, Brian Mulada (based in IBM s New York offices), decided that -7-9 of 18
J s commission was simply too high. Specifically, he communicated that J s commission would account for more than 10% of the sale revenue, an internal benchmark IBM executives use as a commissions budget, unbeknownst to sales representatives and their managers. As a result, he said IBM would not be paying J his full commission. His determination was communicated to Plaintiff Kingston through another executive, Rose Nunez (also based in IBM s New York offices). No basis in IBM policy or law was provided to Plaintiffs to justify this decision. 38. In his conversation with Ms. Nunez, Mr. Kingston raised the point that IBM s decision to arbitrarily limit J s commissions payments was inconsistent with the million dollar commission paid to Nick just a few months prior. They specifically discussed whether an error had occurred with respect to Nick s commission payment, and Ms. Nunez confirmed Nick was paid appropriately after consultation with other executives. Plaintiffs Raise the Issue of Discrimination and Policy Violation 39. Plaintiff Kingston and Temidis were disturbed by IBM s new-found position. Plaintiff Kingston repeatedly explained to more than one IBM executive that it would be wrong to reduce any portion of J s commission because, among other things, it would be discriminatory as well as violate the no capping policy. Plaintiff Kingston asked for IBM to put its position regarding J s commission in writing. IBM refused. 40. Kingston discussed the issue and his position with Plaintiff Temidis. Plaintiffs are informed and believe the IBM executives were aware from discussions with Plaintiff Kingston that the three Plaintiffs were discussing the issue amongst themselves and that they all held the same views expressed to IBM by Plaintiff Kingston. -8-10 of 18
IBM Retaliates and Puts Plaintiffs Under Investigation 41. IBM then transferred Plaintiff Kingston to a new manager. Kingston immediately explained the situation to his new manager and his view that IBM s decision would violate the policy and be discriminatory. Still, nothing changed. 42. In January of 2018, IBM advised Plaintiff Kingston that it had, in fact, capped the commission payable to J, withholding more than 80% of the uncapped amount of commissions he earned. 43. In his seventeen and a half years as an IBM manager, this was the first time Mr. Kingston had one of his sales representative s commissions arbitrarily capped by IBM in conflict with IBM s written no capping policy. Indeed, he had never been advised of a way that he could adjust the commissions of a sales representative when there were no errors in the sales representative s quota or territory. 44. Then, still in January of 2018, Plaintiffs became aware that IBM had launched a purported investigation. Each Plaintiff was interviewed by IBM s investigator. At first, Plaintiff Kingston thought IBM was finally taking the complaint about discrimination seriously and investigating the issue of reducing J s commission. IBM, however, had a very different agenda. The investigation was, in fact, focused on IBM s new-found contention that Plaintiffs engaged in misconduct by not limiting the payment of commissions to white sales employees in connection with the SAS Sale that had occurred seven months earlier as described above -- commissions that multiple levels of IBM executives and its Center of Excellence approved. In short, IBM decided that the right way to cure underpayment to an African American employee was not to pay him the correct amount, but to blame Plaintiffs for not ensuring that IBM also paid white employees incorrectly as well. -9-11 of 18
45. Plaintiffs cooperated with the interviews. They advised the investigator of IBM s no capping policy and names of other executives who were involved in the SAS Sale commission approvals. Plaintiffs did not hear anything further from IBM or the investigator. 46. Then on April 16, IBM executives based out of IBM s New York offices advised each of the Plaintiffs that they were being fired. The reason? Failure to reduce commissions paid to white employees on the SAS Sale. When Plaintiffs protested and asked the IBM executives how they could be terminated for following IBM s written policy; how they could be terminated when they did not approve the payments or even have the authority to approve the payments, but only reviewed the specifics of the deal for accuracy; how they could be terminated when multiple layers of more senior executives and the Center of Excellence approved the payments? All of their questions were met with the same response from the IBM executives: no comment. IBM Refuses to Pay Kingston and Temidis Earned Commission Compensation 47. In its final blow, IBM then sought to claw back commission compensation paid to the Plaintiff Kingston earlier in the year by sending him a letter after he was terminated that requested he repay $1801.07 that IBM claims it had overpaid him. This was surprising to say the least to Mr. Kingston because IBM in fact owes him $125,425 in commissions from the first quarter of 2018. Similarly, Mr. Temidis is owed approximately $251,699.28 in commissions. 48. Sales managers, such as Plaintiffs Kingston and Temidis, earn commissions based on the sales closed by the sales representatives who work under them. It is common that at the end of each quarter many deals have minor accounting adjustments to accurately reflect the revenue attributed to sales representatives. 49. In the situation of Mr. Kingston and Mr. Temidis, after they were wrongfully terminated on April 16, 2018, many adjustments were made to the deals closed by Mr. Kingston -10-12 of 18
and Mr. Temidis sales representatives in the first quarter of 2018, while Plaintiffs were still employed by IBM. 50. The result of these adjustments led to increased revenue that should have been attributed to both Mr. Kingston and Mr. Temidis. Based on their respective quotas, and commissions formulas, these adjustments had the effect of increasing the commissions earned by both Mr. Kingston and Mr. Temidis. 51. IBM has failed to pay these earned commissions to Mr. Kingston and Mr. Temidis. FIRST CAUSE OF ACTION RETALIATION IN VIOLATION OF NEW YORK LABOR LAW 215 52. Plaintiffs hereby incorporate by reference herein the allegations of each of the preceding paragraphs. 53. Plaintiffs engaged in protected activity of which Defendant was aware, namely, that Plaintiffs opposed Defendant s decision to deny earned commission payments to an employee because it was improper under the Company s policy and the law. 54. Plaintiffs suffered an employment action that disadvantaged Plaintiffs, in particular the termination of their employment. Defendant further retaliated against Plaintiffs by demanding Plaintiffs repay earned commission and refusing to pay Plaintiffs their full commission for the first quarter of 2018, an obvious punitive measure and one that also violates of New York Labor Law. 55. A causal connection exists between Plaintiffs protected activity and Defendant s actions against them. The close temporal proximity and Defendants own statements indicate that Plaintiffs were fired because they complained about Defendant s decision to deny earned commission to their sales employees. 56. Accordingly, Plaintiffs are entitled to compensatory damages, liquidated damages and attorneys fees and costs. -11-13 of 18
SECOND CAUSE OF ACTION RETALIATION IN VIOLATION OF THE NEW YORK STATE HUMAN RIGHTS LAW (N.Y. EXEC. 296 ET SEQ.); AND THE NEW YORK CITY HUMAN RIGHTS LAW (ADMIN. CODE OF THE CITY OF NEW YORK 8-107 ET SEQ.) 57. Plaintiffs hereby incorporate by reference herein each of the allegations of preceding paragraphs. 58. Plaintiffs engaged in protected activity. They opposed discriminatory treatment by IBM, namely its decision to apply the no capping commission policy to white sales employees but refusing to apply the no capping commission policy to an African American sales employee. 59. Defendant was aware of this protected activity. 60. Thereafter, Defendant took adverse action against the Plaintiffs by terminating the Plaintiffs employment, demanding Plaintiffs repay earned commissions and refusing to pay Plaintiffs their full commission for the first quarter of 2018, an obvious punitive measure and one that also violates of New York Labor Law. 61. A causal connection exists between Plaintiffs protected activity and the adverse action taken by the Defendant. Among other things, the purported investigation and subsequent termination of Plaintiffs employment was prompted by and followed shortly after Plaintiffs protected activity. 62. Plaintiffs suffered emotional distress and humiliation as a result of Defendant s conduct. Defendant s conduct was engaged in with malice or reckless disregard for Plaintiffs rights. Accordingly, punitive damages are warranted. 63. As a result of Defendant s conduct, Plaintiffs have suffered and are entitled to recover damages, including lost back wages and benefits, lost future earnings and benefits, compensatory damages for emotional distress, punitive damages, and attorneys fees and costs. -12-14 of 18
THIRD CAUSE OF ACTION FAILURE TO PAY WAGES PURSUANT TO NEW YORK LABOR LAW 193, 198(1-a) 64. Plaintiffs hereby incorporate by reference herein the allegations of each of the preceding paragraphs. ( NYLL ). 65. Defendant was Plaintiffs employer within the meaning of New York Labor Law 66. Defendant unlawfully deducted Plaintiffs wages by failing to pay Plaintiffs all of their earned commissions for Quarter 1 of 2018. Earned commissions are wages within the meaning of the NYLL, and the failure to pay wages, including earned commissions, is an improper deduction under the statute. 67. As a result of Defendant s conduct, Plaintiffs have suffered and are entitled to recover damages including all wages unlawfully deducted, and liquidated damages in amount equal to 100% of the wages Defendant failed to pay pursuant to NYLL 198(1-a). PRAYER FOR RELIEF WHEREFORE, PLAINTIFFS hereby pray for judgment against DEFENDANT on all causes of action and for recovery as follows: 1. Pursuant to the First Cause of Action: a. Lost back wages and benefits in an amount to be proven at trial; b. Lost future earnings and benefits in an amount to be proven at trial; c. Emotional distress damages in an amount to be proven at trial; d. Liquidated damages pursuant to statute; e. Prejudgment interest; f. Attorneys fees and costs; and -13-15 of 18
g. For such other relief as the Court may deem just and proper. 2. Pursuant to the Second Cause of Action: a. Lost back wages and benefits in an amount to be proven at trial; b. Lost future earnings and benefits in an amount to be proven at trial; c. Emotional distress damages in an amount to be proven at trial; d. Punitive damages in an amount to be proven at trial; e. Prejudgment interest; f. Attorney s fees and costs; and g. For such other relief as the Court may deem just and proper. 3. Pursuant to the Third Cause of Action: a. Lost commission wages; b. Liquidated damages pursuant to statute; c. Prejudgment interest; d. Attorneys fees and costs; e. For such other relief as the Court may deem just and proper. -14-16 of 18
Executed at Randolph, New Jersey Dated: July 6, 2018 RAFKIN ESQ. 1201 SUSSEX TURNPIKE, SUITE 102 RANDOLPH, NJ 07869 (973) 891-3370 By: /s/ Seth A. Rafkin Matthew E. Lee* N.C. State Bar No. 35405 Jeremy R. Williams* N.C. State Bar No. 48162 WHITFIELD BRYSON & MASON, LLP 900 W. Morgan Street Raleigh, NC 27603 Telephone: 919-600-5000 Facsimile: 919-600-5035 matt@wbmllp.com jeremy@wbmllp.com Attorneys for Plaintiffs * to be admitted pro hac vice -15-17 of 18
JURY DEMAND Plaintiffs demand trial by jury on all claims. Executed at Randolph, New Jersey Dated: July 6, 2018 RAFKIN ESQ. 1201 SUSSEX TURNPIKE, SUITE 102 RANDOLPH, NJ 07869 (973) 891-3370 By: /s/ Seth A. Rafkin Matthew E. Lee* N.C. State Bar No. 35405 Jeremy R. Williams* N.C. State Bar No. 48162 WHITFIELD BRYSON & MASON, LLP 900 W. Morgan Street Raleigh, NC 27603 Telephone: 919-600-5000 Facsimile: 919-600-5035 matt@wbmllp.com jeremy@wbmllp.com Attorneys for Plaintiffs * to be admitted pro hac vice -16-18 of 18