RESEARCH TRIANGLE PARK – IBM is headed to the courtroom via Zoom for a remote trial on April 5, 2021 as the defendant.
The case, Scott Kingston vs. International Business Machines Corp., case number 2:19-cv-01488, in the U.S. District Court for the Western District of Washington, moves to trial after Judge Marsha Pechman denied IBM’s motion for a summary judgment on all of Kingston’s claims, on March 1.
Kingston alleges he was terminated by IBM in retaliation for protesting IBM’s decision to cap the commission of a Black employee on a large deal weeks after the company paid a white employee in full on a similarly sized deal.
In a statement, IBM defended its actions.
“Mr. Kingston’s termination by IBM was lawful. IBM does not condone race or age discrimination, or any other forms of discrimination,” n IBM spokesperson told WRAL TechWire. ” The allegations in this complaint are false and have no foundation in facts, and IBM will defend itself vigorously against these claims.”
Kingston’s attorney, Matthew Lee of the firm Whitfield Bryson ays the prosecution plans to prove the company cannot articulate a reason for firing Kingston that is consistent with the company’s policies.
In a filing regarding the case, Kingston, is described as a manager of a team that sold embedded solutions agreements that permit customers to use IBM’s software tools in customer products. Kingston is described as a second-line manager, with the direct supervisory responsibilities for two first-line managers, who in turn supervised sales representatives Nick Donato and Jerome Beard.
Kingston’s team brought in $162 million on a fiscal year target of $111.6 million and were paid through a commissions program called the individual quota plan, or IQP, the filing states. Additionally, according to the court filing, IBM’s policies barred capping commissions for anyone working under an IQP.
Within a few weeks, the team closed three deals, the filing describes. In the first, Kingston’s team was asked for help closing a deal with SAS Institute, and Kingston and his first line manager assigned the deal to Donato. “After the deal with SAS closed, there was confusion regarding who would be paid,” the filing reads, and eventually Donato would earn a commission of $1.6 million, working on the deal for 10 days, due to the company’s commissions formula because it was more than 2,000 percent of the SAS quota which prior to the deal was set at zero.
In the second and third deals, closed by Beard, who is Black, commissions were capped at less than 15 percent, which the filing describes as “a multi-million dollar reduction.”
“In both cases, Beard’s commissions were capped at the insistence of Brian Mulada, the VP, CFO, and COO of IBM’s Cognitive Solutions Group,” the filing reads. “Rose Nunez, IBM’s Director of Channel Management, emailed Mulada and Johnson with her recommendation that Beard’s commissions be ‘capped’ at between 200 and 250 percent of his sales quota,” the filing continues.
According to the filing, Johnson responded by informing Nunez that IBM does not cap commissions and “that ‘setting a pre defined cap is not consistent with the design and terms within our plane [sic].’” referencing the court case Beard v. Int’l Bus. Machines Corp., No. C 18-06783 WHA, 2020 WL 1812171, at *4 (N.D. Cal. Apr. 9, 2020) (citations omitted).
Nevertheless, Beard’s commissions were capped, while Donato kept his. Beard later filed suit, alleging fraud and racial bias in the workplace, which would result in a settlement agreed to by the parties, according to a Bloomberg Law report. In that case, United States District Judge William Alsup mostly denied IBM’s motion to toss the discrimination and fraud lawsuit in April 2020, putting the case on the path to trial until the company chose to settle, reported WRAL TechWire in June of 2020.
Regarding the commissions, Kingston stated in a court deposition that he immediately told Nunez that capping Beard’s commission “was a violation of the company’s policies and potentially the laws,” and complained about the “incongruity” of capping Beard when Donato had recently received an uncapped commission.
In Kingston’s deposition, he describes on that call that he “pointed out the possibility of racial discrimination and the fact that it was an appearance that would be hard to overlook, given that Nick Donato was white and Jerome Beard was black.”
Kingston was later terminated. Kingston alleges he was terminated in retaliation for protesting the company’s decision to cap the commissions for Beard despite not capping the commission on the SAS deal on which Donato assisted.
“IBM has therefore yet to articulate a reason for terminating plaintiff that is consistent with its own policies,” wrote Pechman in denying IBM’s request for a summary judgment.
“This was a confused process where plaintiff — who followed IBM’s written policies to the letter —was terminated for failing to violate those policies,” she added, concluding that “a reasonable fact-finder could determine that IBM’s proffered reasons for terminating plaintiff are pretextual.”
Kingston also believes age discrimination may have played a role in his termination, according to the court filings. The U.S. Equal Employment Opportunity Commission has previously found IBM as having engaged in systematic age discrimination between 2013 and 2018.
In that letter, EEOC said the analysis showed that between those years, it was primarily older workers (85.85 percent) in the total potential pool of those considered for layoff, reported WRAL TechWire in Sept. 2020.
It’s also not the first time IBM has been accused of capping or unfairly limiting commissions of its own salespeople. In May 2020, the U.S. Fourth Circuit Court of Appeals vacated a dismissal granted to IBM in November 2018, first reported in The Register.
Fessler alleged that IBM unlawfully “capped” his sale commissions after repeatedly telling him his earning potential would be uncapped, reported WRAL TechWire when the dismissal was vacated.
In one instance, Fessler closed a deal with the US Customs and Border Protection agency for $5,200,000 in late December 2017. Fessler expected his commissions on this to be paid at the end of February 2018, which he ultimately did not receive.