United States Court of Appeals
For the First Circuit
No. 10-1124
IN RE: CITIGROUP, INC. CAPITAL ACCUMULATION PLAN LITIGATION
JEROME RENAUDIN; STEVEN RODEMER,
Plaintiffs, Appellants,
v.
CITIGROUP GLOBAL MARKETS INC.; SMITH BARNEY INC.; CITIFINANCIAL
INC.; CITIGROUP INC.; TRAVELERS GROUP INC.; SALOMON SMITH BARNEY
HOLDINGS INC.; SALOMON SMITH BARNEY INC.; PRIMERICA FINANCIAL
SERVICES, INC.,
Defendants, Appellees,
ABC CORPS 1-100; JOHN DOES 1-100,
Defendants.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Nancy Gertner, U.S. District Judge]
Before
Torruella, Boudin, and Lipez, Circuit Judges.
Bruce Nagel and Nagel Rice, LLP on brief, for appellants.
Thomas J. Dougherty, William P. Frank, David S. Clancy, Kara
E. Fay, Nicholas L. Leitzes, and Skadden, Arps, Slate, Meagher &
Flom LLP on brief, for appellees.
July 13, 2011
LIPEZ, Circuit Judge. This appeal involves two groups of
former employees of Salomon Smith Barney and its predecessors and
affiliates who, like many similarly situated plaintiffs before
them, participated in a deferred compensation plan known as the
Capital Accumulation Plan (CAP). For the most part, the
plaintiffs' claims rehash unsuccessful claims brought by the
plaintiffs in In re Citigroup, Inc. Capital Accumulation Plan
Litigation, 535 F.3d 45 (2008). The notable difference between the
two cases -- namely, the applicable state law in the 2008 case was
that of Florida and Georgia, while in this case it is the law of
Colorado and Louisiana -- does not change our view of the merits of
those claims. In a well-reasoned and thorough order, the district
court granted summary judgment for the defendants on all of the
claims against them. See In re Citigroup, Inc. Capital
Accumulation Plan Litig., No. 00-cv-11912-NG (D. Mass. Jan. 6,
2010). Relying on our previous In re Citigroup decision and the
district court's able and convincing opinion, we summarily affirm.
I.
Under the terms of the CAP, the employees elected to
receive portions of their earned commissions in the form of
Citigroup stock, received at a 25% discount and on a tax-deferred
basis. The stock was subject to a two-year vesting period1 during
1
The plaintiffs participated only in the voluntary payroll
program, which had a two-year vesting period. The district court
held, and the plaintiffs do not contest, that the plaintiffs lack
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which the employees were restricted from transferring their shares
but were entitled to direct the shares' vote and receive regular
dividends or dividend equivalents. If the employee resigned before
the vesting period elapsed, she forfeited the restricted shares as
well as any compensation that was set aside to purchase those
shares. Further details regarding the CAP and the terms of the
plaintiffs' participation in it are set forth in the district
court's opinion.
Rodemer, who represents a class of Colorado plaintiffs,
alleged that the CAP's forfeiture provision violates the Colorado
Wage Claim Act (CWCA), Colo. Rev. Stat. § 8-4-103. Renaudin, who
represents a class of Louisiana plaintiffs, alleged that the
forfeiture provision violates Louisiana's labor statute, La. Rev.
Stat. Ann. §§ 23:631(A)(1)(a), 23:634(A). Both plaintiffs also
brought claims for breach of their employment contracts, breach of
the CAP contract, conversion, and unjust enrichment. In addition,
Renaudin asserted claims based on the non-payment of interest on
the money withheld before stocks were purchased.2 Both plaintiffs
also requested that the district court certify questions of state
law to the Colorado and Louisiana Supreme Courts. The parties
standing to challenge the non-voluntary bonus program, which had a
vesting period of three years.
2
The defendants also asserted counterclaims, which the
district court deemed moot in light of the summary judgment order.
Those counterclaims are not a subject of this appeal.
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filed cross-motions for summary judgment, and the district court
entered judgment against the plaintiffs on their claims.
II.
A. Statutory Claims
1. Colorado Wage Claim Act
We agree with the district court that the CAP does not
violate the CWCA because the statute does not require payment of
wages or compensation "until such amount is earned, vested, and
determinable," Colo. Rev. Stat. § 8-4-101(8)(a)(I). Under the
terms of the CAP documents, the Colorado plaintiffs had not
"earned" either the full rights to the stock or the amount of the
commissions used to purchase the stock, as Rodemer contends,
because they had agreed to accept compensation in the form of CAP
stock, and their rights to that stock did not fully vest for two
years. The cases Rodemer cites were all analyzed correctly by the
district court and do not support his position given the facts of
this case.
The district court correctly noted that the quoted
provision was not enacted until 2003, after Rodemer sued and well
after his resignation. However, Colorado courts had come to the
same conclusion at least by 1990. See Barnes v. Van Schaack
Mortg., 787 P.2d 207, 209 (Colo. App. 1990) ("The Wage Claim Act
. . . applies only to compensation that has been earned under the
employment agreement," which includes compensation that "is vested
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pursuant to an employment agreement at the time of an employee's
termination."); Rohr v. Ted Neiters Motor Co., 758 P.2d 186, 188
(Colo. App. 1988) (explaining that "wages or compensation" under
the CWCA must be "'both vested and determinable as of the date of
termination'" (quoting Hartman v. Freedman, 591 P.2d 1318, 1321
(Colo. 1979))).
2. Louisiana Labor Statute
Similarly, the CAP does not violate the Louisiana labor
statute, which requires that employers pay discharged employees
"the amount then due under the terms of employment." La. Rev.
Stat. Ann. § 23:631(A)(1)(a). As explained by the district court,
according to the terms of the CAP documents, the stock was not
"then due" at the time the Louisiana plaintiffs resigned. The
appellees also did not "require" the plaintiffs to sign contracts
calling for forfeiture of wages upon resignation, which is
forbidden by Louisiana statute. See id. § 23:634(A). Rather, the
CAP was made available to the plaintiffs as a benefit of
employment, and they were free to reject that benefit.
B. Common Law Claims
The appellants' common law claims were also properly
rejected by the district court.
1. Breach of Employment and CAP Contracts
As the district court found, with respect to the breach
of employment contract claims, the appellants' agreement to
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participate in the CAP program modified any prior employment
contract. We reached that conclusion in In re Citigroup, based on
equivalent documents, and our conclusion is as true under Colorado
and Louisiana law as it is under Florida and Georgia law. See In
re Citigroup, 535 F.3d at 57 ("[T]he . . . election by appellants
to participate in the CAP served as a formal modification of th[e]
terms [of the commission grids]."); Bonvillain Builders, LLC v.
Gentile, 29 So.3d 625, 631 (La. Ct. App. 2009) ("A contract may be
modified only by mutual consent."); Colowyo Coal Co. v. City of
Colorado Springs, 879 P.2d 438, 443 (Colo. App. 1994) ("The
consensus of both parties is required in order to modify or to
supplant a valid contract."). By signing the Restricted Stock
Award Agreement and the election form, the appellants "indicate[d]
[their] assent to the unambiguous terms of the CAP contract." In
re Citigroup, 535 F.3d at 57.
The argument that the modification was invalid for lack
of consideration also fails. As we explained in In re Citigroup,
the brokers received "substantial consideration" for the
modification, including a reduced price for Citigroup stock,
federal tax deferral, and the opportunity to vote their shares and
receive dividends before the restriction period lapsed. See id. at
57-58.
The CAP contract does not violate the public policy of
either Colorado or Louisiana as expressed in their wage statutes.
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See In re Citigroup, Inc., No. 00-cv-11912-NG, at 36-39. Moreover,
the states' aversion to forfeiture is not an absolute bar to such
contractual terms. Colorado upholds such provisions so long as
they are not ambiguous, see Cooley v. Big Horn Harvestore Sys.,
Inc., 813 P.2d 736, 749 (Colo. 1991), and Louisiana upholds them
absent some additional element of unfairness, see Morse v. J. Ray
McDermott & Co., 344 So. 2d 1353, 1359 (La. 1977). The CAP
contract is neither ambiguous nor unfair. See In re Citigroup, 535
F.3d at 55-56.3
2. Conversion
Because the appellees did not violate any contract, the
conversion claims also fail. As the district court explained, the
actions that the appellees took allegedly depriving the appellants
of ownership or control of their property were done in accordance
with the CAP contract, and thus were not wrongful. See, e.g., New
Orleans Jazz & Heritage Found., Inc. v. Kirksey, 40 So.3d 394, 405
(La. Ct. App. 2010) (explaining that conversion requires a
"wrongful exercise or assumption of authority over another's goods"
(emphasis added)); Carder, Inc. v. Cash, 97 P.3d 174, 183 (Colo.
App. 2003) ("Conversion is any distinct, unauthorized act of
3
Although it appears that the Restricted Stock Award
Agreement (RSAA) signed by Rodemer and Renaudin was shorter than
the one quoted in In re Citigroup, the language considered in that
case appears in the prospectus, to which the RSAA explicitly
refers.
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dominion or ownership exercised by one person over personal
property belonging to another." (emphasis added)).
3. Unjust Enrichment
The appellants' unjust enrichment claims fail because
neither Colorado nor Louisiana recognize a claim for unjust
enrichment where a valid contract exists that covers the same
subject matter. See, e.g., Jorgensen v. Colo. Rural Props., LLC,
226 P.3d 1255, 1259 (Colo. App. 2010) ("[A] claim for unjust
enrichment may not be asserted if there is a valid contract
covering the subject matter of the alleged obligation to pay.");
Andrews v. Barham, 975 So. 2d 825, 828 (La. App. Ct. 2008)
("[B]ecause a contract existed . . . unjust enrichment is [not]
available as a theory of recovery."). The same principle exists
under Florida and Georgia law, and was applied in In re Citigroup,
535 F.3d at 59, 62.
4. Failure to Pay Interest
The district court did not err, as the appellants
maintain, by dismissing Renaudin's claims based on failure to pay
interest on the money set aside to purchase Citigroup stock.4 The
CAP documents do not provide for payment of interest, and thus
failure to pay interest was not a breach of contract. See In re
4
Although the appellants' brief states that the court erred
with respect to these claims in both the Colorado and Louisiana
actions, Rodemer's complaint did not allege any claims based on
failure to pay interest. The motion for summary judgment also does
not refer to such claims.
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Citigroup, Inc., No. 00-cv-11912-NG, at 42-43; see also In re
Citigroup, 535 F.3d at 61 n.15 (rejecting appellant's claim for
failure to pay interest on diverted income because he "has not
cited any language or provision in any of the CAP documents
indicating that a participant is entitled to such interest" and any
claim based on another source of law fails because "he has not set
forth any statute or other legal support for this entitlement").
Renaudin makes no more than a passing attempt to
challenge the dismissal of his claims that the failure to pay
interest constituted conversion or unjust enrichment. Because the
argument is entirely undeveloped, it is waived. See United States
v. Zannino, 895 F.2d 1, 17 (1st Cir. 1990).
C. Certification
We decline to exercise our discretion to certify any
questions of state law to the supreme courts of Colorado and
Louisiana.5 The state law at issue, as described above, is
"'sufficiently clear to allow us to predict its course,'" and thus
certification is inappropriate. The Real Estate Bar Ass'n for
5
The Colorado Supreme Court "may answer questions of law
certified to it" by this court if the questions of law "may be
determinative of the cause then pending in the certifying court and
as to which it appears to the certifying court there is no
controlling precedent in the decisions of the Supreme Court."
Colo. R. App. P. 21.1(a). Similarly, the Louisiana Supreme Court
may accept certified questions of law "which are determinative of
[a pending] cause" if "there are no clear controlling precedents in
the decisions of the supreme court of [Louisiana]." R. Sup. Ct.
La. XII(1).
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Mass., Inc. v. Nat'l Real Estate Info. Servs., 608 F.3d 110, 118
(1st Cir. 2010) (quoting Ropes & Gray LLP v. Jalbert (In re Engage,
Inc.), 544 F.3d 50, 53 (1st Cir. 2008)). As we have explained in
the past, "[c]ertification of questions of local law from one court
to another is, by its very nature, a cumbersome and time-consuming
process" that "stops a case in its tracks, multiplies the work of
the attorneys, and sharply increases the costs of litigation."
González Figueroa v. J.C. Penney P.R., Inc., 568 F.3d 313, 323 (1st
Cir. 2009). As in our previous In re Citigroup opinion, the state
supreme courts "have not addressed the precise questions before us
today, [but] the state law on these issues is clear and well-
established." 535 F.3d at 62. Given the clarity of the state law,
we decline to impose the burden of certification on the litigants,
the state courts, and the legal system.
III.
For the foregoing reasons, we summarily affirm the
decision of the district court. See 1st Cir. Loc. R. 27.0(c).
So ordered.
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