Kunda v. C.R. Bard, Inc.
671 F.3d 464
4th Cir.2011Background
- Kunda, a Maryland resident, was hired by Bard, a New Jersey company, in 2001 as a sales representative and at-will employee with salary, commissions, and benefits.
- In 2003 Bard adopted the Bard Optimum Program, an elective long-term incentive plan with a New Jersey choice-of-law provision; participants defer compensation into Elective Units and receive matched Premium Units, vesting over seven years.
- Kunda participated in 2002, 2003, and 2005; she received Premium Units per Elective Unit, and some Premium Units vested early in 2002; at termination in 2008 most Premium Units were unvested and forfeited.
- The district court dismissed, applying New Jersey law, and held MWPCL not a Maryland fundamental public policy; even if Maryland law applied, the MWPCL would not render Premium Units wages.
- On appeal, the Fourth Circuit upheld NJ law, held the MWPCL is not a fundamental Maryland public policy, and found the Optimum Program’s forfeiture provision reasonable and enforceable under New Jersey law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether MWPCL is a fundamental Maryland public policy | Kunda argues MD public policy overrides choice. | Bard contends MWPCL is not fundamental. | MWPCL not a fundamental MD policy; NJ law governs. |
| Whether Premium Units are wages under NJWPL | Kunda asserts rights under MD wage law via NJ plan elements. | Premium Units are incentives, not NJWPL wages. | Premium Units are not wages under NJWPL. |
| Whether the forfeiture provision is reasonable and enforceable | Kunda relies on Rosen to challenge reasonableness. | Forfeiture is reasonable to achieve retention goals. | Forfeiture clause reasonable and enforceable under NJ law. |
| ERISA preemption and exhaustion of remedies | ERISA preemption not invoked; remedies energy. | Plan may be ERISA; exhaustion may be required. | ERISA preemption not applicable; exhaustion futile. |
| Whether unvested Premium Units become wages upon termination without cause | If MD/Wage policy applies, unvested units may be wages. | Under NJ law, they are not wages. | Not converted to wages; NJ law governs merits. |
Key Cases Cited
- Taylor v. Lotus Dev. Corp., 906 F.Supp. 290 (D.Md. 1995) (conflicts-of-law principles in contract disputes)
- Sedghi v. Patchlink Corp., 2010 WL 3895472 (D.Md. 2010) (MWPCL public policy analysis (Wisconsin not applicable))
- Medex v. McCabe, 372 Md. 28 (Md. 2008) (MWPCL not deemed fundamental policy at issue)
- Rosen v. Smith Barney, Inc., 393 N.J. Super. 578 (N.J. Super. Ct. App.Div. 2007) (forfeiture of incentives evaluated for reasonableness)
- Bethlehem Steel v. G.C. Zarnas & Co., 304 Md. 183 (Md. 1985) (public policy voids certain contract provisions)
- National Glass, Inc. v. J.C. Penney Properties, Inc., 336 Md. 606 (Md. 1994) (waiver of contractual rights under public policy)
- Jackson v. Pasadena Receivables, Inc., 921 A.2d 799 (Md. 2007) (freedom to contract governing choice of law)
- Kronovet v. Lipchin, 415 A.2d 1104 (Md. 1980) (contracting parties may designate governing law)