Court File and Parties

COURT FILE NO.: CV-15-520617 DATE: 20170727 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Jacob Whiteley, Plaintiff AND: Wipro Limited and Wipro Technologies Canada Ltd., Defendants

BEFORE: Justice Edward P. Belobaba

COUNSEL: Jennifer Heath and David Witkowski for the Plaintiff / Moving Party Christopher McLeod and Jill Snelgrove for the Defendants / Responding Parties

HEARD: April 3 and June 6, 2017 and written submissions

Summary Judgment

[1] Jake Whiteley worked hard to land a $119 million sales contract from Innovapost [^1] for his employer Wipro, an IT solutions company based in Bangalore, India. He thought he was entitled to a significant bonus under the company’s Sales Incentive and Large Deal Bonus Plan (“Incentive Plan”). No such bonus was paid. Mr. Whiteley resigned and commenced litigation. He brings this motion for summary judgment to recover the $185,948 in bonuses that he says are owing.

[2] Both sides agree that this claim for unpaid compensation can be adjudicated summarily. For my part, I required some additional evidence about the defendant’s policies and practices in awarding incentive bonuses and I directed a mini-trial that involved two witnesses and was completed in half a day. With the benefit of the mini-trial, I agree with counsel that the matter is amenable to summary judgment.

[3] The Incentive Plan for fiscal year 2013-14 provided that sales incentives and bonuses (as described in more detail therein) would be payable at year-end “on actual deals contracted with the customer,” that is on “committed orders.” It was therefore not unusual to see sales people scrambling at year-end to conclude and process order bookings.

[4] That’s what happened here.

[5] The issue, in a nutshell, is whether the entire $119 million Innovapost deal was a contracted deal and committed order as of the March 31, 2014 fiscal year-end.

Background

[6] Wipro won the RFP competition on the Innovapost deal and the parties entered into a Master Services Agreement (“MSA”) on December 6, 2013. The plaintiff wanted to make sure that his hard work on this project would qualify for a large year-end bonus. He persuaded Innovapost to execute an amendment to the MSA on March 31, 2014 (“the MSA Amendment”) thinking that this additional document would make clear that the Innovapost deal had been “actually contracted with the customer” by the March 31 year-end.

Decision

[7] Unfortunately for the plaintiff, the MSA Amendment did not achieve the intended result. The overall MSA, even as amended, continued to provide that it was only on the signing of a Statement of Work (“SOW”) that Innovapost became contractually obliged to Wipro. Of the nine SOWs referred to in the MSA, only one - valued at just under $19 million - had actually been executed by March 31, 2014 and the plaintiff received the appropriate incentive payment for this first SOW. The remaining SOWs were negotiated and finalized by others and signed by Innovapost in the months following the plaintiff’s departure from the company. Because these subsequent SOWs were not “actually contracted with the customer” by fiscal year-end, they do not qualify for the bonus payments provided under the defendant’s Incentive Plan.

[8] The plaintiff’s motion for summary judgment [^2] is dismissed.

Analysis

[9] The core problem with the plaintiff’s claim is in the failure to understand the overall framework of the Innovapost deal and in particular the relationship between the general MSA and the more specific SOWs. The evidence suggests that this kind of MSA/SOW framework is common in many large IT services projects.

The MSA

[10] The MSA sets out an over-arching framework agreement that, in essence, is relatively one-sided and very much favours the IT customer. The supplier of the IT services agrees to provide these services at the pre-agreed prices set out in the MSA if and when the customer decides to place a purchase order. Until there is an actual purchase order there is no commitment on the part of the customer to buy anything. The purchase order is the executed SOW and the purchaser only becomes contractually obliged to pay for the services when the SOW is agreed to and signed by both parties.

[11] Put bluntly, the MSA establishes a commercial relationship in which the IT customer says to the IT services provider: “you’re bound by your promised prices but we’re not bound to buy anything at your promised prices unless and until we both sign the SOW.”

[12] Section 3.3 of the MSA sets out the “you’re bound by your promised prices” component of this relationship. The provision obliges Wipro (the “service provider”) to enter into “one or more SOWs for all services for which the Service Provider was selected under the RFP on terms and conditions that are no less favorable to Innovapost than those set out in [Wipro’s] Response [to the RFP] ” (emphasis added.). A fixed price ceiling is thus set in place.

[13] Section 14 of the MSA sets out the “but we’re not bound to buy anything until we sign a SOW” component of the relationship. Sections 14(1) and (2) make clear that there is no promise of exclusivity to Wipro and no minimum purchase commitment:

14.1 No Exclusivity. Innovapost’s retainer of the Service Provider to provide the Services is not exclusive. Innovapost will be entitled to contract with other Persons, at its sole discretion, at any time, for the performance of any part of the Services to be provided hereunder, or for similar services…”

14.2. No Minimum Commitment. Notwithstanding anything else in this Agreement … [and] except as may be expressly set out in Schedule 1.3 (SOWs Agreed to by the Parties), Innovapost makes no commitment to order or accept delivery of any particular services or any minimum…quantity of services, or to spend any amount hereunder.

[14] As the above provision makes clear, the only exception to the ‘no purchase commitment’ is whatever is “expressly set out in Schedule 1.3.” Schedule 1.3, mirroring the language in section 1.3, provides that if a SOW listed in Schedule 1.3 has been “agreed to and signed by the Parties” then that particular SOW “will be attached to this Schedule 1.3 and form part of this [MSA] Agreement.”

[15] In other words, the key provisions in the MSA – sections 3.3, 14, 1.3 and Schedule 1.3 – provide, in combination, that only a SOW signed by Innovapost will bind Innovapost. It follows from this that the only “actual deal contracted with the customer [Innovapost]” by March 31, 2014 was the SOW that was executed on December 31, 2013. The plaintiff was eligible to receive an end-of-year incentive payment for this first SOW and he was paid accordingly.

The plaintiff understood the importance of the signed SOW

[16] I find on the record before me that the plaintiff understood that incentives would not normally be triggered until signed SOWs were in place. I point to the following items of evidence.

[17] Item one. On March 13, 2014, in an email to Mr. Pandurangam, his colleague and manager, the plaintiff advised that he was working [on the MSA Amendment] “to place all pricing under the DC General Services SOW” – that is, to put all of the pricing in one document. The plaintiff believed that placing all pricing into a single document would trigger incentive payments on the overall deal. He wanted to discuss “this approach” with Mr. Pandurangam. More to the point, he noted that he was concerned that “Finance” would require signed SOWs before triggering the sales incentives:

[I] would like to discuss with you on ensuring Wipro Finance is on board with this approach and that they will support it and not state that because other SOWs haven’t been signed off we can’t recognize the order value etc. I am concerned this will be a roadblock to us.

[18] Item two. On March 25, 2014, as year-end was approaching, the Trace Help Desk (the company’s order booking help desk) sent out an email reminder that, “The cut-off date for considering all your Order Bookings in Trace CRM is 4th April, 2014 ... Please note that all Orders with SOW signed on or before 31st March, 2014 … will be considered for Q4 (2013-2014) Incentive calculation.”

[19] Item three. The plaintiff admitted on cross-examination that he was indeed concerned in advance of the March 31, 2014 deadline that Finance would require signed SOWs for incentive purposes.

The MSA Amendment

[20] These concerns explain the MSA Amendment that Innovapost signed on March 31, 2014, the last day of the fiscal year. The plaintiff relies almost completely on this document as support for his incentive payment claim. Unfortunately for the plaintiff, the MSA Amendment did not achieve the plaintiff’s objective.

[21] As the MSA Amendment itself explains, it created “a new separate document for Fees” whereby “each respective SOW will reference to this new appendix”. The document set out an updated price list for the services that Innovapost could purchase from Wipro. But there was nothing in the MSA Amendment that altered the key provisions of the MSA or that changed the basic “you’re bound but we’re not bound” commercial relationship.

[22] To repeat, the March 31, 2014 Amendment simply updated the fixed pricing and placed it into a single document. Nothing in the MSA Amendment changed the basic framework and bound Innovapost to purchase any services from Wipro. The parties still had to execute the SOW.

The emails to Mr. Pandurangam

[23] Even if Mr. Pandurangam encouraged the plaintiff with the MSA Amendment effort and promised his support, the Incentive Plan made clear that the final decision about “an order booking achievement” would be made jointly by the SBU Head [^3] and the CFO. A lower level manager had no authority to approve incentive payments and the plaintiff knew this – recall again his March 13 email to Mr. Pandurangam expressing concern about whether Finance would be “on board” with the MSA Amendment approach or would require signed SOWs.

Two common sense questions

[24] The plaintiff accepted in his evidence that an executed SOW was not guaranteed; that most of the remaining SOWs, many with multiple versions, were still a ‘work in progress’ as of March 31, 2014; and that two of the SOWS weren’t even drafted as of April 15, 2014. Indeed, Innovapost and Wipro spent months negotiating and finalizing the eight remaining SOWs after the MSA Amendment had been signed. The obvious question then is this: Why would Innovapost and Wipro spend months negotiating and finalizing the eight remaining SOWs if a fully binding purchase commitment had already been agreed to in the MSA Amendment? This does not make sense.

[25] The plaintiff also accepted in his evidence that the terms of the SOWs took precedence over the terms of the MSA and that any of these terms, including pricing, could be modified in a SOW. The second obvious question is this: Why would Wipro consider the MSA Amendment to be an actual and committed deal and pay bonuses based on its pricing and overall value when the subsequent SOWs could alter this pricing and overall value? This also does not make sense.

[26] In my view, this evidence about subsequent conduct and the reach of the SOW reinforces the plain language interpretation of the MSA and the determinative role of the signed SOW.

Conclusion

[27] I find on the evidence before me, including the evidence from the mini-trial, that the only portion of the Innovapost deal that qualified for end-of-year incentives was the first SOW dated December 13, 2013. No further “order booking” incentive payments or bonuses are owing to the plaintiff.

[28] Given this finding, there is no need for me to consider the “18 per cent margin” issue or the large deal discretionary bonus. The former is moot and the latter is available only on deals larger than $100 million and clearly does not apply on the facts herein because the only SOW executed by year-end had a $19 million monetary value.

Disposition

[29] The plaintiff’s motion for summary judgment is dismissed.

[30] If the parties are unable to resolve the costs payable, I would be pleased to receive brief written submissions – from the defendant within 21 days and from the plaintiff within 21 days thereafter.

[31] My thanks to counsel on both sides for their assistance and for their helpful written submissions.

Justice Edward P. Belobaba Date: July 27, 2017

Footnotes

[^1]: Innovapost is the IT services provider for Canada Post. The plaintiff refers to the deal as the “Canada Post deal”. I will continue to use the “Innovapost” moniker. [^2]: Strictly speaking, the motion herein is for partial summary judgment, focusing only on the claim relating to the non-payment of the “order booking” incentive. The plaintiff is also seeking a much smaller payment (about $10,000 according to para. 35 of his affidavit) for non-payment of the “revenue booking” incentive. If the former is dismissed then the latter will fall within the jurisdiction of the Small Claims Court. In any event, only the order booking incentive claim is before the court. [^3]: I assume this means “Sales Business Unit Head”.