Comin v. International Business Machines Corporation

Background

Mark Comin sued his former employer, International Business Machines Corporation (IBM), on behalf of a proposed class. He asserted claims under California Labor Code Section 2751, California’s Unfair Competition Law (UCL), and for breach of contract.

Comin alleged that IBM paid sales representatives through salaries and commissions but did not provide a written commission contract meeting Section 2751’s requirements. The incentive-plan letters IBM provided stated that they were not express or implied contracts or promises to pay commissions. Comin also alleged that IBM failed to pay him the full commissions on three sales, including one instance in which IBM retroactively reduced credited commissionable revenue by 90 percent.

The proposed class consisted of California IBM employees covered by a commission incentive plan. A proposed subclass consisted of employees who were not paid commissions according to their personalized rates.

Labor Code Section 2751 claim

The court concluded that Comin plausibly alleged a violation of Section 2751 but held that the statute does not create a private right of action. The court relied on the 2011 repeal of California Labor Code Section 2752, which had expressly authorized a civil action and provided for triple damages. The court rejected Comin’s argument that the repeal of the private right to sue was a drafting mistake that the court could correct using legislative history.

The court held that Section 2751 itself does not establish an employee’s right to sue. It noted that a remedy might be available under California’s Private Attorneys General Act and that a Section 2751 violation may serve as the basis for a UCL claim. The court dismissed Count Two with prejudice.

Unfair Competition Law claim

The court denied IBM’s request to dismiss the UCL claim. To state a UCL claim, Comin had to plausibly allege an unlawful, unfair, or fraudulent business practice, plus an injury involving lost money or property caused by that practice.

The court found these requirements satisfied at the pleading stage. Comin alleged that IBM did not provide the required written commission agreement, refused to pay commissions on the ground that it was not contractually obligated to do so, and failed to pay the full commissions due on specific sales. The court held that these allegations plausibly showed economic injury caused by IBM’s conduct. It also noted that a violation of Section 2751 could serve as the unlawful basis for a UCL claim even though Section 2751 did not itself authorize a private lawsuit.

Proposed class definition

The court denied IBM’s request to strike the proposed class definition under Federal Rule of Civil Procedure 12(f). The court concluded that a challenge to whether a proposed class is defined too broadly is better addressed during proceedings on class certification under Rule 23, rather than at the pleading stage.

Requests for injunctive and declaratory relief

Comin acknowledged that, as a former IBM employee, he lacked standing to seek an injunction or declaratory judgment. The court therefore struck those requests for relief.

Jury-trial demand

The court deferred ruling on Comin’s jury-trial demand. It stated that the UCL claim is equitable and does not itself create a constitutional right to a jury trial, but Comin also asserted a breach-of-contract claim in the alternative. The court reserved the jury-trial issue for further consideration after the case developed.

Disposition

The motion to dismiss was granted as to the Labor Code claim and that claim was dismissed with prejudice. The motion was denied as to the UCL claim. The challenge to the proposed class definition was denied because the issue was better suited to the Rule 23 stage. The requests for injunctive and declaratory relief were stricken, and the jury-trial issue was deferred.