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McGillivray v. Wells Fargo & Co. Salary Continuation Pay Plan

United States District Court, D. Minnesota

July 18, 2017

Todd McGillivray, Plaintiff,
The Wells Fargo & Company Salary Continuation Pay Plan, Defendant.

          Katherine L. MacKinnon and Sarah J. Demers, Law Office of Katherine L. MacKinnon PLLC, for Plaintiff.

          Steven L. Severson, Faegre Baker Daniels LLP, for Defendant.


          SUSAN RICHARD NELSON, United States District Judge


         This matter comes before the Court on the parties' cross-motions for summary judgment. (See Pl.'s Mot. for Summ. J. [Doc. No. 24]; Def.'s Mot. for Summ. J. [Doc. No. 15].) For the reasons that follow, the Court denies both motions without prejudice, and remands the matter to Defendant for further proceedings.


         A. The Parties

         Plaintiff Todd McGillivray worked for Wells Fargo Insurance Services USA, Inc. (“WFIS”) from 1990 until his position was terminated on May 3, 2014. (See Compl. [Doc. No. 1] ¶¶ 2, 16.) At the time he was let go, McGillivray served as the Senior Commercial Sales Executive in WFIS's Virginia, Minnesota office. (See Id. ¶ 2.) By all accounts, McGillivray was a successful insurance salesman. In 2013, for instance, he was responsible for $655, 170 in revenue for WFIS-nearly 97% of the total amount generated by the Virginia office. (See Lindevig Decl. [Doc. No. 18], Ex G at ¶ 669.) McGillivray's success was reflected in his compensation, and in his final years with WFIS he routinely received more than $200, 000 in commissions.[1]

         WFIS-a non-party to this suit-is an affiliate of Wells Fargo & Company (“Wells Fargo”). As such, WFIS is a “Participating Employer” in the Wells Fargo & Company Salary Continuation Pay Plan (the “Plan”). (See id., Ex D. §§ 2.1, 2.19, 3.1.) The Plan serves to provide salary continuation pay-ranging from 1.5 to 16 months' worth of covered pay-to eligible participants who face job changes or displacements. (See id., Ex. D, Art. I; Ex. E at 2, 8.) Such “Qualifying Events, ” as defined by the Plan, include job loss, material changes in work location, or a reduction in base pay. (See id., Ex. D §§ 2.23, 2.26.) The Plan also provides for several types of “Disqualifying Events, ” however, that render a participant immediately ineligible for salary continuation pay. (See Id. § 3.2.) As relevant to this dispute, a Disqualifying Event occurs when:

[T]he Participating Employer enters into a corporate transaction with another company (including a transaction where another company acquires all or any portion of the assets, stock or operations of the Participating Employer), and pursuant to the terms of the transaction, the Participant is either continuously employed or offered continued employment with the other company whether or not the Participant accepts or declines the offer.

(Id. § 3.2(e) (emphasis added).) The Plan Administrator has further defined an “offer of continued employment” to exist where a job offer meets four minimum criteria:

1. Recognition of service credit with Wells Fargo prior to the transfer (the “Service Credit Requirement”);
2. A benefit package that is similar to the benefit package provided by Wells Fargo prior to the transfer (the “Benefits Requirement”);
3. A work location that is comparable to the one the employee had with Wells Fargo prior to the transfer (the “Work Location Requirement”); and
4. A base salary (or base pay rate) at least equal to the employee's base salary (or base pay rate) with Wells Fargo prior to the transfer (the “Pay Requirement”).

         (Lindevig Decl., Ex. F (the “Plan Interpretation”).)

         B. The USI Transaction

         On January 22, 2014, WFIS entered into an Asset Purchase Agreement (“APA”) with USI Insurance Services LLC (“USI”), pursuant to which USI agreed to acquire a number of Wells Fargo's insurance office locations. (Lindevig Decl., Ex. G at ¶ 393.) One of the forty-two offices originally covered by the deal was the Virginia, Minnesota office where McGillivray worked. (See Id. at WF517.) As part of the USI transaction, WFIS negotiated terms that ensured USI would provide job offers to WFIS employees whose positions would be eliminated as a result of the sale. (See Id. at WF436.)

         McGillivray was duly offered a position with USI by letter dated March 20, 2014. (See generally Lindevig Decl., Ex. I.) The offer letter included an Employment Agreement which outlined the new position's responsibilities, compensation structure, and benefits. (See id.) Although similar in some respects to McGillivray's position and compensation with WFIS, the USI Employment Agreement did contain several notable differences, the materiality of which will be discussed below. First, although McGillivray would be entitled to the same employee benefits as similarly situated USI employees, these benefits were both less substantial and more costly than what McGillivray had received at WFIS. (See Lindevig Decl., Ex. I at ¶ 154-55; Ex. O at ¶ 75-76.) Indeed, by McGillivray's own calculations, the difference in cost alone was more than $600 per month. (See id., Ex. O at ¶ 75.) Second, although USI promised that McGillivray's new position would be based at an office with a “Comparable Commute”[2] to that required by his WFIS employment, it could not provide definitive notice as to where that office would be located. (See id., Ex. I at ¶ 144.) Third, USI retained the right to unilaterally change the terms of the Employment Agreement. (See Id. at WF154.) In contrast, McGillivray's contract with WFIS could not be changed without both parties' consent. (See Demers Decl. [Doc. No. 27], Ex. 1 at ¶ 218.)

         The biggest difference between the USI and WFIS contracts, however, came in the compensation structure, which for both companies was tied to commissions on sales. In general, USI's Employment Agreement provided for substantially lower commissions, as illustrated in the following chart:

Sale Type

Commission at USI

Commission at WFIS

New Business



Renewal Business



Special Personal Lines

40% new lines, 0% on renewals


Surety Bonds



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