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Ayala v. Cyberpower Systems (USA), Inc.

United States District Court, D. Minnesota

March 21, 2017

Daniel Ayala, Plaintiff,
CyberPower Systems (USA), Inc., Defendant.

          Dwight G. Rabuse, Esq. and DeWitt Mackall Crounse & Moore, S.C., counsel for plaintiff.

          Amy B. Conway, Esq., Daniel Oberdorfer, Esq. and Stinson Leonard Street LLP, counsel for defendant.


          David S. Doty, Judge United States District Court

         This matter is before the court upon the motion for summary judgment by defendant Cyber Power Systems (USA), Inc. Based on a review of the file, record, and proceedings herein, the court grants the motion.


         This dispute arises out of CyberPower's termination of plaintiff Daniel Ayala's employment on February 4, 2015. CyberPower hired Ayala in July 2006 as Vice President Worldwide Channel. Rabuse Aff. Ex. V, at 26. Ayala was responsible for value-added resellers (VAR) sales. R. Lovett Dep. at 27:12-23. At the time, Robert Lovett was President and Chair of CyberPower, and his son Brent Lovett was the company's operations manager. Id. at 21:6-13, 26:11-12. Ayala reported directly to Robert Lovett. Id. at 28:2-3. Ayala resided in Illinois and commuted to CyberPower's offices in Minnesota every other week and in the interim traveled elsewhere to visit customers. Ayala Dep. at 82:13-18.

         On July 10, 2006, Ayala signed an agreement acknowledging that he was an at-will employee. Rabuse Aff. Ex. V, at 24-25. He also acknowledged that any changes to his at-will status “must be in writing.” Id. at 24. In January 2007, Ayala signed another acknowledgment stating that “no manager, supervisor or representative of the Company, other than the President or Vice President, has any authority to enter into any agreement guaranteeing employment for any specific period of time” and that “any such agreement, if made, will not be enforceable unless it is in writing and signed by both parties.” Id. at 22.

         Between 2006 and 2012, Ayala performed well and VAR sales grew exponentially. R. Lovett Dep. at 30:23-31:11. CyberPower promoted Ayala and increased his compensation several times during that period. Id. at 30:12-22; see Rabuse Aff. Ex. V, at 13, 14, 16, 18. On at least two such occasions, CyberPower reiterated Ayala's at-will status: “This agreement does not create a vested right to any term of employment or otherwise change the fact that you remain ‘employed at will.'” Rabuse Aff. Ex. V, at 15, 19.

         In 2012, Robert Lovett decided to retire as president of CyberPower and began the process of finding a replacement. R. Lovett Dep. at 32:9-17. In April 2012, Ayala expressed his interest in the position and implied that he would leave CyberPower if he was not chosen to succeed Robert Lovett. Rabuse Aff. Ex. F. Ayala was not seriously considered for the position, however, because he “had a very difficult time with people.” R. Lovett Dep. at 33:9-19. Robert Lovett specifically noted that Ayala could become “autocratic” thereby “creat[ing] dysfunctional communication tension, argumentative behavior, pushy monolog, and periodic lapses in judgment.” Conway Aff. Ex. D, at 1. Robert Lovett ultimately chose Brett Lovett to replace him. R. Lovett Dep. at 33:20-25. Robert Lovett asked Ayala to stay at CyberPower to mentor his son and offered him a promotion and an increased compensation package. Ayala Dep. at 72:20-24. The parties agreed that Ayala would become the Executive Vice President Americas & General Manager LATAM (Latin America) and would receive an increase in annual base pay from $270, 000 to $400, 000. The salary increase appears to have been effective as of September 12, 2012, but the parties continued to negotiate other aspects of Ayala's compensation. See Rabuse Aff. Ex V, at 12. Ayala wanted to have an agreement in place that would ensure him a consistent commission formula going forward. Ayala Dep. at 79:19-80:11.

         It appears that over the next few weeks Ayala and Robert Lovett spoke several times about Ayala's compensation. See id. at 81:4-84:22. On October 22, 2012, Ayala sent Robert Lovett an email entitled “Comp Memo, ” which attached a proposed “compensation agreement” setting forth a calculation for determining Ayala's compensation above his base salary of $400, 000. Conway Aff. Ex. F. It is undisputed that Ayala drafted the document. The proposed agreement states that the “plan will remain in place until sales reach $150 million USD on a calendar year for all territories and VAR team assigned accounts.” Id. at 2. It did not explicitly address Ayala's at-will status. See id.

         On October 28, Ayala sent Robert Lovett a follow-up email attaching his notes recalling the parties' negotiations and a copy of the proposed agreement. Id. Ex. G. The notes set forth the parties' specific negotiations as to financial terms but do not mention any change to Ayala's at-will status. See id. at 3-4. Robert Lovett responded later that day stating that he had “issues signing such a long term employment contract, this will need to be run past our outside accounting firm and legal assistance.”[1] Id. Ex. H. The next morning, according to Robert Lovett, he told Ayala that the agreement was for compensation purposes only. R. Lovett Dep. at 21:11-22. Ayala testified that Robert Lovett told him to “make sure that this is not interpreted as a multiyear agreement.” Ayala Dep. at 90:16-18. Ayala then modified the agreement and sent the new version to Robert Lovett with the following notation:

Please see attached. I modified paragraphs 6 and 7. Please feel free to modify as you see fit. The agreement is for compensation purposes and by no means a multiyear contract.

         Conway Aff. Ex. I. Paragraph 7 of the compensation agreement reads:

Employment terms. The above-mentioned agreement outlines the new salary and bonus structure to remain in place until $150 million USD is reached. It is not a multiyear commitment or employment contract for either party.

Id. at 3.[2]

         In January 2013, Ayala sent an email to both Lovetts asking them to sign the agreement even though “[f]or all practical purposes” it was already in place. Id. Ex. J, at 1. Ayala said that he wanted to “ensure that the sales comp. plan” would remain in place until CyberPower achieved “$150 million in sales.” Id. Although the date is unclear, the Lovetts ultimately signed the agreement. Id. Ex. E.

         In May 2013, the parties signed a relocation expense agreement under which CyberPower agreed to finance a portion of Ayala's purchase of a condominium in Minneapolis. Id. Ex. K. CyberPower committed to pay Ayala $100, 000 over a three-year period ending on June 1, 2015. Id. The parties expressly ...

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