Appellate Brief (in "plain" English)

Keith Gibby was an IBM employee and manager for approximately ten years through 1994. During Gibby’s employ, IBM had in place a "Suggestion Plan" (hereinafter to be referred to as the "Plan") that allowed employees to earn between $50 and $150,000 for ideas submitted under the Plan if the suggestion saved IBM money. The amount of money to be paid the employee "is determined...during a set period of time after implementation". The Plan established a set criteria for submittal of ideas to which IBM conformed. Gibby submitted four groups of suggestions to IBM which saved IBM millions of dollars; yet IBM arbitrarily refused to compensate Gibby whatsoever.

Gibby was an IBM Manager in 1989-90 and also a non-manager suggestion evaluator and Plan presenter from 1984-93. As such, he had access to several other documents including the Manager's Manual, Suggestion Plan Presentation Guide for Managers and Evaluator's Guide to Suggestions. Each of these documents reinforced Gibby’s understanding that IBM would pay money to employees for valuable suggestions if the suggestion saved IBM money; in fact, during the course of his employ with IBM, Gibby submitted fourteen other suggestions to IBM which were implemented by IBM, and was paid $90,237 in awards for these suggestions exactly as prescribed for in the Plan guidelines. These fourteen suggestions are not the subject of this case. However, Gibby submitted four groups of additional suggestions which were also implemented by IBM for which Gibby has not been compensated pursuant to the Plan. These suggestions are the subject of this dispute.

The pertinent language of the Suggestion Plan, the Manager’s Manual, the Evaluator’s Guide to Suggestions and the Suggestion Plan Presentation Guide for Managers follow.

In light of the fact that Gibby’s four groups of ideas were actually implemented by IBM, resulting in a savings to IBM of several million dollars, it is clear that Gibby followed the applicable criteria to be entitled to compensation pursuant to the Plan. Despite the Plan's promise that an award is calculated if: 1) all eligibility criteria are met; 2) value "is determined...after implementation [assessing IBM's savings]"; 3) the Plan's clear minimum and maximum award parameters are between $50 to $150,000; and, 4) the statement of intent is to award ideas, IBM refused to pay Gibby what he was due for his creative and valuable ideas.

Moreover, the Plan was provided to and relied upon by Gibby to his detriment as IBM falsely and in bad faith failed and refused to abide by the Plan's implied duty of good faith to pay Gibby.

In this case, Gibby basically asserts that the Amended Complaint properly alleges causes of action under Maryland law, the law applicable to this case. Specifically, during Gibby’s employ with IBM, Gibby provided IBM with four extremely valuable suggestions which have saved IBM millions of dollars since their implementation. Since Gibby has not been compensated for his suggestions, he contends that IBM has been unjustly enriched. He further contends that the United States District Court for the District of Maryland (hereinafter to be referred to as the "Trial Court") erred as a matter of law in granting IBM’s Motion for Judgment on the Pleadings (hereinafter to be referred to as IBM’s "Motion to Dismiss"), at the same time refusing to admit Gibby’s Amended Complaint, which clearly contained the necessary elements to recover on a claim for Unjust Enrichment and Quantum Meruit. Specifically, Gibby has pled that he rendered valuable services to IBM by developing four suggestions and submitting them to IBM who accepted and implemented them. Gibby has alleged that he reasonably expected to be compensated for his suggestions because the disclaimer (relied upon so heavily by the Trial Court) is patently ambiguous. Further, any examination of the purported disclaimer is irrelevant to this cause of action. (See below for discussion on IBM’s supposed "disclaimer".)

Alternatively, Gibby asserts that the Trial Court erred as a matter of law in granting IBM’s Motion to Dismiss because Gibby also sufficiently alleged the necessary elements for breach of contract. Gibby has alleged that IBM’s Suggestion Plan constituted an offer for a unilateral contract of which Gibby accepted and that IBM subsequently breached. Specifically, Gibby provided four sets of suggestions to IBM which were implemented by IBM and saved IBM millions of dollars. Gibby argues that he is therefore entitled to reasonable compensation which IBM has refused to pay in breach of its unilateral contract. Gibby further argues that, although said unilateral contract (i.e., the Suggestion Plan) disclaims the obligation to pay for Gibby’s services (by providing IBM with the sole discretion to determine the cash amount to which Gibby would be entitled), this disclaimer is ineffectual and ambiguous. Moreover, Gibby claims that even if the disclaimer is effectual, IBM abused its discretion by acting in bad faith and refusing to pay Gibby a reasonable sum for his several million-dollar suggestions.

Finally, Gibby asserts that the Trial Court erred as a matter of law in granting IBM’s Motion to Dismiss because Gibby sufficiently alleged the necessary elements for negligent misrepresentation.

What follows is the detail of Gibby’s dispute against IBM....

In evaluating IBM’s Motion to Dismiss, the Appellate Court must review the facts contained in the pleadings and their attachments, and do so in a light most favorable to Gibby. That is, factual allegations in Gibby’s pleadings are taken as true for the purpose of ruling on IBM’s Motion to Dismiss.

On appeal, the Appellate Court stands in the shoes of the Trial Court and must determine whether the Trial Court erred as a matter of law when it granted IBM’s Motion to Dismiss and concluded that Gibby failed to state causes of action for which relief may be granted based upon Unjust Enrichment, Quantum Meruit, Breach of Contract and/or Negligent Misrepresentation. In order to make such determination, the Appellate Court must accept the allegations of Gibby’s Amended Complaint as true, (i.e., that Gibby submitted suggestions which he claims to have submitted; that the submissions met the requirements of the Plan; that IBM adopted the suggestions thereby making millions of dollars; and that IBM refused to pay Gibby for his suggestions). Thus, when viewing these allegations in the light most favorable to Gibby, the Appellate Court must decide whether Gibby stated claims for Unjust Enrichment, Quantum Meruit, Breach of Contract, and/or Negligent Misrepresentation for which relief may be granted. If the Appellate Court applies said standard, it must reverse the Trial Court’s decision to grant IBM’s Motion to Dismiss and remand this case back to the Trial Court for trial on the merits.

Gibby’s Count I in his Amended Complaint states a common law claim for unjust enrichment. He provided IBM with four sets of collective suggestions and IBM took them and made and saved money by using these suggestions. IBM forcefully argued in its Motion to Dismiss that Gibby has no contract rights under its "Suggestion Plan" to any monetary or other relief. The Trial Court erroneously agreed without addressing whatsoever Gibby’s specific cause of action for unjust enrichment, which clearly has separate and distinct elements from the cause of action for breach of contract, all of which were properly alleged. Instead, the Trial Court’s decision with respect to the unjust enrichment and quantum meruit claims were based upon Gibby’s cause of action for breach of contract. In other words, the Trial Court basically lumped all of the claims into the breach of contract claim and stated that, since Gibby did not state a cause of action for breach of contract, the other claims failed as well. This means, the Trial Court failed to address the merit of Gibby’s separate claims, and thus, erred as a matter of law in granting IBM’s Motion to Dismiss.

The necessary allegations that Gibby had to assert in his claim of unjust enrichment were as follows:

1) a benefit was conferred upon IBM by Gibby;

2) appreciation or knowledge by IBM of the benefit;

Contrary to IBM’s assertion argued in the Trial Court, to establish a claim for unjust enrichment, Gibby does not have to allege or show that he had a legitimate expectation to claim compensation. Such an allegation or showing is only necessary to establish a claim for quantum meruit. Thus, the purported disclaimers expressed in IBM’s Suggestion Plan are irrelevant to Gibby’s cause of action for unjust enrichment because it is independent of any contractual limitations imposed by the Plan. The Trial Court clearly erred as a matter of law by holding that the disclaimer barred Gibby’s claim for unjust enrichment since Gibby’s state of mind regarding compensation has no bearing in properly pleading this claim (emphasis added).

Unjust enrichment is defined as the "unjust retention of a benefit to the loss of another, or the retention of money or property of another against the fundamental principles of justice or equity and good conscience . . . Unjust enrichment of a person occurs when he has and retains money or benefits which in justice and equity belong to another." The doctrine of unjust enrichment applies where the defendant, upon the circumstances of the case, is obliged by ties of natural justice and equity to refund the money. Accordingly, a person/entity who has been unjustly enriched at the expense of another is required to make restitution to the other party. Again, an individual is not required to show that he reasonably believed that he would be compensated in order to sufficiently plead a cause of action for unjust enrichment.

Gibby has sufficiently alleged all of the elements of an unjust enrichment claim. First, he conferred a benefit upon IBM. As prescribed in the IBM Suggestion Plan guidelines, Gibby provided IBM with four collective sets of stellar ideas (according to the Amended Complaint) saving it millions of dollars. IBM, on the other hand, disputes the value of Gibby’s ideas asserting that said ideas had already been submitted by others or were "predated". This is a dispute of fact which may not properly be decided on IBM’s Motion to Dismiss.

Second, IBM had knowledge of the benefit conferred upon it by Gibby (i.e., his ideas were implemented and saved IBM millions of dollars). According to the allegations of Gibby’s Amended Complaint which must be deemed as true, Gibby provided IBM with those ideas in writing.

Third, IBM accepted and retained the ideas Gibby provided under such circumstances as to make it inequitable for IBM to retain and use these ideas without paying Gibby their reasonable value. Again, the ideas were implemented and saved IBM millions of dollars. Clearly, it is inequitable for IBM to entice employees to provide their ideas saving IBM millions of dollars with promises of compensation and yet arbitrarily take the ideas without compensation.

Thus, since Gibby sufficiently pled the necessary allegations to pursue a claim for unjust enrichment, the Trial Court erred as a matter of law in granting IBM’s Motion to Dismiss, and this Honorable Appellate Court must reverse said decision and remand this matter back to the Trial Court for a hearing on the merits.

Gibby, as a result of the foregoing, is entitled to "damages" or restitution under his unjust enrichment claim. In determining damages under an unjust enrichment claim, the measure of damages is the gain to IBM, not the loss by Gibby. The restitution claim is not aimed at compensating the plaintiff, but at forcing the defendant to disgorge benefits that would be unjust for him to keep. IBM has benefited in the millions of dollars saved from the ideas conferred upon it by Gibby.

IBM is likely to propose several defenses to Gibby’s unjust enrichment claim. It will argue that unjust enrichment does not apply because Gibby officiously thrust his ideas upon IBM. Officiousness is defined as the "interference in the affairs of others not justified by the circumstances under which this interference takes place". In this dispute, IBM did its level best to get its employees, including Gibby, to make suggestions by actively soliciting their ideas per its written Plan. Additionally, it is clear from the facts of record that a jury could determine that what Gibby provided to IBM in terms of intellectual property (ideas) enriched IBM and that it would be inequitable for IBM to retain those benefits simply because there was a lack of a contractual understanding.

IBM will also argue that Gibby is restricted to "contract" remedies. This argument will fail as a matter of law because, under IBM's theory (as stated in its Motion to Dismiss), there is no enforceable contract. In IBM’s Motion to Dismiss, IBM heavily relies upon another non-IBM suggestion plan case which held that "No legal agreement existed between the parties since the promise of the employer was illusory and payment for suggestion was absolutely within the discretion of the employer."

Even if a contract did exist between the parties, a claim for unjust enrichment, as opposed to quantum meruit, is nonetheless viable. The possible existence of an express contract is not fatal to a claim of unjust enrichment. The same would not be true for a quantum meruit claim. Unjust enrichment and quantum meruit are two separate legal claims in Maryland.

In general, courts attempt to protect an idea-bearing party from a defendant who takes the idea and seeks to manipulate the benefit of the bargain to their sole advantage for their unjust enrichment. Therefore, Gibby is entitled to relief under his unjust enrichment claim if the facts are as he has alleged. He will need to prove that his ideas came first and were adopted by IBM and that IBM benefited in some substantial way from them. If he comes forward with such proof, his measure of damages will be the reasonable value of those ideas to IBM. Accordingly, the Trial Court erred as a matter of law in granting IBM’s Motion to Dismiss, and this Honorable Appellate Court must reverse and remand this matter.

Gibby’s Amended Complaint sufficiently alleges a cause of action under the theory of quantum meruit. Gibby has alleged the necessary allegations that must be pled on a claim for said cause of action which are as follows:

Gibby has alleged sufficient facts to make out each element in a quantum meruit action. First, valuable services were rendered in the form of an idea. Second, the services were rendered to IBM directly on its Suggestion Plan form. Third, IBM accepted the ideas of Gibby, implemented them and saved money as a result (i.e., millions of dollars). Fourth, Gibby reasonably expected to be paid for the service/ideas, especially in light of the parties’ prior course of dealing wherein Gibby was paid over $90,000 for fourteen other suggestions. Obviously, Gibby would not have continued to submit ideas without the expectation that he would continue to be compensated for them. Moreover, there is no evidence that Gibby’s suggestions were a gift to IBM. IBM induced its employees to come forward with ideas and stated that they would be paid upon the implementation of the idea. Any language in the Plan alleged to constitute a disclaimer on the payment of compensation is patently ambiguous given the prior course of dealing between IBM and Gibby, the large monetary range of compensation (i.e., $50 to $150,000) and the language of the Plan itself.

In determining damages under the quantum meruit theory, the measure of recovery is the gain to IBM, not the loss by Gibby. Here, the amount of recovery is a share of the amount of savings gained by IBM as a result of Gibby's ideas. Assuming, for the sake of argument that there is no contract (as IBM argued extensively in its Motion to Dismiss), Gibby’s recovery is not capped by the $150,000 figure prescribed in the employee Suggestion Plan documents. Again, the Trial Court erred as a matter of law in granting IBM’s Motion to Dismiss, and this Honorable Appellate Court must reverse and remand this matter back to the Trial Court for a hearing on the merits.

Through its Suggestion Plan, IBM made an offer for a unilateral contract to Gibby. A unilateral contract is one where only one party makes a promise and is subject to a legal obligation. The other party may accept an offer for unilateral contract in exchange for performance or forbearance according to the terms of the offer. The presence of unilateral contracts pervades employment law and has formed an exception to the employment-at-will doctrine, particularly in cases involving employee handbooks.

IBM argued in its Motion to Dismiss that Maryland courts would follow several out-of-state cases (non-IBM) from California and Washington. IBM therefore suggests that no contract was formed. Gibby vehemently disagrees with this contention.

As far as unilateral contracts are concerned, Maryland law provides some relevant case law: Written policy statements and other policy directives become contractual obligations when, with knowledge of their existence, employees rely on those statements containing palpable promises, and accordingly perform or forbear to their detriment. Moreover, it is for a jury to determine if a contract was disclaimed. Thus, to create contractual obligations under Maryland law:

The purpose of allowing policy directives and statements is to protect the legitimate expectations of the employees who justifiably rely on the policy statements.

In this case, IBM has not put forth a broad statement of policy, but rather establishes a specific plan for benefits. Specifically, Par. 1.0 of IBM's "[P]lan provides a set of procedures for evaluating ideas and rewarding those who submitted them". Further, Par. 1.9 of the Plan provides for specific, objective procedures for application of benefits, and Par. 1.3 of the Plan states that "[I]f all eligible conditions are met and your suggestion is adopted for implementation, it can earn you from $50 to $150,000". Par. 1.7 sets forth what types of suggestions can earn awards. Moreover, the entire Suggestion Plan brochure was intentionally distributed to Gibby, and Gibby submitted his ideas as required by the Plan. Further, Gibby had submitted fourteen prior suggestions over many years for which he was paid $90,237. Thus, a course of dealing between the parties was clearly established.

All of the language in the Suggestion Plan, the Manager's Manual and the Evaluator's Guide show that a reasonable person could only conclude that IBM would pay money for ideas that have value. The clear intent is seen in the initial introductory language of the Suggestion Plan setting forth that IBMers have earned over $60 million in awards over many years, as well as other statements in the Plan setting forth that awards can be earned from $50 to $150,000. Further and most importantly, Par. 1.9 states that ". . . if all eligibility criteria have been made . . an award is calculated. . .". Any reasonable person would interpret all of the above language to mean that, depending on the value of the suggestion, IBM would pay them a reasonable award within this range. IBM does not in any manner qualify the Suggestion Plan’s compensating intent by stating, "If you provide us an idea that saves us money, you may not get an award at all"; rather, the Plan strongly implies that the award will be in a monetary range if the suggestion saves IBM money. The fact that the word "can" is used in Par. 1.3 of the Plan eminently implies that one will get an award if one saves IBM money; at best the phraseology used is patently ambiguous, especially read together with Par. 1.9 which states that if all eligibility criteria are met "an award is calculated".

Consistent with the Suggestion Plan, the language in the Manager's Manual and the Evaluator's Guide also strongly suggests that an employee will be granted an award if an idea is submitted that saves IBM money. Specifically, The Manager’s Manual states, "The IBM Suggestion Plan provides a way of rewarding employees for suggestions which are implemented". The Evaluator’s Guide states, "A vital program since 1928, the Plan provides cash awards to employees for ideas of value, ideas that work". It further provides, "A tangible savings award is granted... when cash savings or cost avoidance results from implementation of the specific solution made in a suggestion...".

The totality of the above facts indicates that a unilateral contract existed because IBM communicated the specific offer to Gibby, who accepted by submitting his ideas according to the established guidelines. Gibby’s ideas were submitted according to the Suggestion Plan guidelines with the expectation that he would be compensated for their use, based upon the reasonable cost savings to IBM; yet, he was never paid.

IBM asserts that there was no contract between IBM and Gibby; however, IBM’s Suggestion Plan is written in the form of an offer to pay cash awards for the use of an employee's idea. For example, the Suggestion Plan states that "[t]he idea that crossed your mind--the impression you had--might just be worth something to IBM, and you". The statement is almost a classic formulation of an agreement to contract. Effectively, the Suggestion Plan brochure is stating that "one hand washes the other" or, more crassly, "do something for me and I'll make it worth your while". To reiterate, the Suggestion Plan must be read and understood as a reasonable person would have understood it. The test of true interpretation of offer and acceptance is not what the party making it thought it meant but what a reasonable person in the position of the party accepting it would have thought it meant. When read in that fashion, the IBM Suggestion Plan documents can only be understood as being an offer of a unilateral contract.

IBM further argues in its Motion to Dismiss that it has unlimited discretion in granting an award. As will be set forth below, however, said argument is without merit because said discretionary language must be deemed unenforceable by this Appellate Court as IBM did not act in good faith. Gibby’s dispute is that IBM, in bad faith, chose to award him nothing despite his submission of numerous cost-saving ideas that saved IBM multi-millions of dollars. In this regard, the Trial Court erred as a matter of law in granting IBM’s Motion to Dismiss, and this Honorable Appellate Court must reverse and remand this matter to the Trial Court for a hearing on the merits.

Maryland recognizes that employers may protect themselves from contract claims arising from employment polices and directives if they sufficiently disclaim contractual intent. The cases are clear in stating that contractual intent must be "expressly disclaimed" (i.e., the language of disclaimer must be clear and conspicuous).

Further, the Court of Special Appeals of Maryland held in another case (non-IBM) that two attempted disclaimers of contractual privity (i.e., to disclaim a party’s interest in certain property) in an employee handbook were not sufficient, as a matter of law, to disclaim contractual intent. The court held that disclaimers must be "clear and unequivocal". In this case, an employer cited two "disclaimers" in its employee handbook in support of its argument that it had disclaimed contractual privity. The disclaimers stated:

Despite the attempted disclaimer language, which had been placed under the heading captioned "Employment Relationship", the court held that privity was not disclaimed. The court stated that the efficacy of the disclaimer was a matter for the jury, not the court, to decide. The court reasoned:

In Gibby’s dispute, this Appellate Court must find that the Trial Court erred as a matter of law by examining the specific language in the Plan. There are clearly two separate statements made by IBM. The disclaimer in Par. 1.0 states that:

Yet Par. 1.9 clearly states:

The latter clause clearly leads a reasonable person to only one conclusion -- that compensation will be paid if all eligibility criteria are met and the suggestion is implemented. If read together with Par. 1.0 and Par. 1.3 allowing cash awards from $50 to $150,000 (not $0 to $150,000) the language at best creates an ambiguity.

Further support for Gibby’s position is seen in several other cases (non-IBM). In one, the court held that the employer’s summary judgment (i.e., a "motion to dismiss") was improper in a breach of contract action involving an employee’s claim under a suggestion plan, despite the existence of an explicit "finality" provision giving a company unfettered discretion in determining the amount of an award, if any, under a suggestion plan. The court stated there are several exceptions to the rule that finality provisions are enforceable. These include whether or not:

Thus, the court allowed the employee’s claims to go forward for breach of contract holding that the employer's failure to follow its own rules of its suggestion plan fell within these exceptions. Additionally, the court allowed employee's claims for quantum meruit to go forward as well.

The same logic applies here as IBM did not follow the rules of the Plan, which stated "if all eligibility criteria are met and the suggestion is implemented an award is calculated. . ." (Par. 1.9 of the IBM Suggestion Plan). Accordingly, under this case precedence, Gibby’s dispute must be allowed to go to the jury. The Trial Court failed to address any of this case precedence.

In Gibby’s dispute, he clearly alleged in his Amended Complaint for breach of contract that IBM failed to make its decision within the framework of the Plan by repeatedly denying Gibby’s requests for payments. IBM’s alleged denials were based upon its contention that Gibby’s suggestions were "predated," the suggestion involved subjects "periodically examined by management" or dealt with a "subject in the maturing process". Gibby has alleged that such contentions by IBM are patently false and that IBM did not follow the terms of its own Plan. Further, in the Amended Complaint, Gibby has alleged IBM acted in bad faith. Accordingly, Gibby’s claims must be allowed to go forward as these allegations are all factual disputes to be decided by a jury. The Trial Court erred as a matter of law in granting IBM’s Judgment on the Pleadings, and this Honorable Appellate Court must reverse and remand this matter for a trial on the merits.

Maryland Courts follow this reasoning of implying good faith in contractual undertakings and emphasize the importance of good faith in the bargaining process. The Court of Special Appeals held in another case (non-IBM) that "in cases where an employer has contracted to do something that requires it to exercise its discretion, it must exercise its discretion in good faith". In other words, the court held that, despite an employer's assertion that they retain discretion in resolving contract language, this discretion is not unfettered, but is constrained by good faith (stating that although at-will employment situations--which by definition are not contracts--do not include aspects of good-faith, other contracts do).

Admittedly, the IBM Suggestion Plan documents tepidly suggest that the decision as to the amount and whether to pay compensation is discretionary with IBM. Yet, the latter interpretation is clearly ambiguous and contrary to the parties’ prior course of dealing. This fact, however, is insufficient to win the day for IBM because here, in the context of the entire Plan which is brimming with offers of money for ideas, any disclaimer of the Plan’s enforceability must make clear that even excellent, "million dollar" ideas can be taken and implemented by IBM without payment, not just the paltry ideas. The disclaimer is clearly ambiguous on its face and cannot be enforced for this reason alone, notwithstanding IBM's bad faith in the transaction.

The real question at issue is whether a reasonable person reading the IBM Suggestion Plan documents would have so understood the documents as an offer to contract or whether the reasonable person would have felt that contractual liability would be disclaimed. More to the point, would a reasonable person have interpreted the IBM Suggestion Plan documents to mean that IBM reserved the right to withhold any compensation at all for the very ideas it solicited even if the use of those ideas were enormously beneficial to IBM? Obviously, Gibby contends that a reasonable person would only believe that IBM must award money for a cost-saving idea. Further support for this contention is the parties' own course of dealing over several years. As stated above, Gibby submitted fourteen previous suggestions for which he was paid $90,237. And when the terms of a contract are ambiguous or vague the court can look to the course of dealing between the parties to determine intent.

Assuming that there is an element of good faith implied into this Plan, then IBM breached its contract with Gibby. Gibby reasonably accepted the offer to contract by submitting the four collective sets of ideas described in his Amended Complaint. Despite the retention of the discretion to make a reasonable award, the obligation of good faith prevented IBM from using that discretion as it did.

What is most important for the purposes of this appeal is that the result depends on the court's determination as to how a reasonable person would have understood a plan's language. The same reasoning should apply here. If the language of the Plan clearly disclaimed contractual intent, then Gibby might not have submitted ideas that saved IBM millions of dollars. However, he did submit ideas and thus accepted IBM’s offer.

Thus, it was particularly inappropriate to dismiss Gibby’s Amended Complaint by granting IBM’s Motion to Dismiss. The language of the IBM Suggestion Plan is unclear and ambiguous in its attempt to state that, even if an idea is used and generates tremendous savings, IBM reserves the right to take the idea, implement it, and pay nothing at all to the submitter of the idea. IBM must prove that a reasonable person would understand and interpret its Plan in order to prevail. Clearly, this is a jury question, and the Trial Court thus erred as a matter of law by granting IBM’s Motion to Dismiss, and this Honorable Appellate Court must reverse and remand this matter for a trial on the merits.

According to IBM, it reserved the right not to make any award to Gibby for his ideas, even though the ideas were very profitably used by IBM. Nonetheless, good faith frequently operates as a limitation on the exercise of rights or discretion that a party may have under a contract. Therefore, in applying the obligation of good faith to any particular contract or set of circumstances, the question is what conduct (although perhaps permitted by the literal terms of the contract) is nevertheless excluded by the obligation to act in good faith or not to act in bad faith.

Indeed, Maryland and other jurisdictions are in line with the viewpoint of contract law scholars and contract law doctrine which states that there is an implied obligation of good faith and fair dealing in all contracts. This obligation requires that the parties will "refrain from doing anything which will destroy or injure the other party's right to receive the fruits of the contract".

The precise requirements of good faith are difficult to specify in advance. Frequently, "good faith" is defined by discussing what it is not (i.e., by giving examples of bad faith). Thus, contract law doctrine discusses the concept as follows: The phrase "good faith" is used in a variety of contexts, and its meaning varies somewhat with the context. More specifically, contract law doctrine explains:

As the foregoing statement suggests, the essence of the implied obligation of good faith is the protection of the reasonable expectation of the parties, which includes a reasonable interpretation of the terms of the bargain.

As one legal scholar has noted, the obligation of good faith is especially important in cases where the realization of one party's expectations is dependent on the other party.

Another legal scholar observed that applying the doctrine of good faith "requires a better understanding of the contractual expectation interest...".

In IBM’s Motion to Dismiss, IBM emphasized language from the IBM Suggestion Plan to the effect that, if an idea is used, the decision as to the amount of the award "if any" lies in the sole discretion of IBM. IBM's language is not as clear to the reasonable reader as IBM wishes. The IBM Suggestion Plan leads the reader to believe that IBM would, in good faith, pay for the ideas it uses. For instance:

The language is unclear simply because it does not say what IBM wishes it to say. To reiterate, IBM argues that it was under no obligation to pay Gibby for its use of the submitted ideas, no matter how beneficial the ideas were to IBM. However, IBM does state a minimum payment for its Plan awards (i.e., $50). The reservation of discretion could only be understood by a reasonable person to mean that, if an implemented idea had little or no utility or little measurable economic benefit, it may only merit a $50 award, but if it saved IBM millions of dollars it would merit an award of $150,000, the maximum allowable under the Plan.

Any reasonable person reading the IBM form would not have concluded that if they submit an idea to IBM which created great profit (perhaps a million dollars) for the company, they would have no right to compensation from IBM. The IBM Suggestion Plan documents must be read as any reasonable person would read them (i.e., with the notions of good faith in mind). No reasonable person reading the Suggestion Plan with good faith in mind would think that the Plan allows IBM to simply appropriate a million-dollar idea without any remuneration to the submitter. Gibby's expectation was that he would be compensated for the use of his ideas if they proved to be greatly beneficial to IBM. Someone in Gibby’s position would believe that IBM promised them substantial compensation if it used an idea that resulted in great profits. The ideas Gibby submitted allegedly saved IBM millions of dollars; it was an abuse of the discretion reposed in IBM for IBM to have refused to compensate Gibby altogether. The obligation of good faith, when measured by the expectation of Gibby, requires that he be compensated for the use of his ideas. If he is not, then he will be deprived of the benefit of the bargain he made with IBM.

A talisman of a unilateral contract is that only one party is bound. Here, Gibby was not bound to submit an idea. If he did, however, and IBM used it, then a contract between the parties arose. The obvious question here is what were the terms of payment for the use of the idea. Gibby submits that, while IBM retained the discretion as to the amount of reasonable payment, IBM did not retain the discretion to refuse to pay Gibby anything for his ideas that saved IBM millions of dollars. Doing so would constitute misappropriation, and the Plan cannot reasonably be interpreted in that way. Thus, it was a breach of the obligation of good faith for IBM to have exercised its discretion in the manner it did. IBM's discretionary language is unenforceable because of its failure to act in good faith. The Trial Court erred as a matter of law in granting IBM’s Motion to Dismiss, and this Honorable Appellate Court must reverse and remand this matter for a hearing on the merits.

Contrary to IBM’s contention that Gibby is improperly trying to repackage his contractual argument in tort (i.e., a private or civil wrong or injury, other than a breach of contract), "[t]ort liability can be imposed upon contractual privity or its equivalent." A liability in tort may arise from the breach of a duty owed under the terms of the contract. Because IBM did not properly disclaim its offer for unilateral contract, it may also be liable in tort for its representations.

In Maryland, the elements of a claim for negligent misrepresentation are as follows:

In evaluating IBM’s Motion to Dismiss in a light most favorable to Gibby, Gibby’s pleadings adequately state a claim for this tort. That is, factual allegations in Gibby’s pleadings are taken as true for purposes of ruling on IBM’s Motion to Dismiss.

In short, Gibby properly pled the first element of the tort of negligent misrepresentation. Gibby pled that IBM represented to him that he would be paid for his ideas if the ideas met the necessary criteria. Taking the facts alleged in the pleadings in a light most favorable to Gibby, Gibby reasonably believed that IBM would evaluate and pay him for use of his four collective sets of ideas, which he contends, IBM implemented. IBM has refused to pay Gibby according to its established award methodology, despite his requests for payment.

Gibby sufficiently pled the second element of his tort claim, as is evident from both the pleadings and the Plan itself (i.e., coupled with the Suggestion Plan itself and IBM’s representations). IBM solicited suggestions from its employees and included a monetary enticement. IBM specifically sought reliance on the offer of payment in order to elicit suggestions.

Gibby properly pled the third element of his tort claim. The first line of IBM’s Plan proves that IBM reasonably knew that Gibby and other IBM employees would rely on the Plan and submit ideas. The Plan's introductory sentence states as follows: "Since it was established in 1928, IBM's Suggestion Plan has been good for both the company and the employees who submitted useful ideas....I encourage you to look for better ways to run the business and to submit your ideas.". Indeed, since 1928, IBM has known that employees rely on the Plan's representation, and surrender their ideas according to the Plan's representations of payment. The Amended Complaint clearly articulates the various ways Gibby relied on the Suggestion Plan's representations.

Finally, the pleadings properly plead the fourth and fifth elements of the tort and assert that Gibby justifiably relied upon IBM's statement of payment and suffered damages as a result of said statement. Indeed, Gibby was justified in his reliance and expectation of payment because IBM itself established a range of payments made -- from $50 to 150,000-- giving Gibby the expectation that he would be awarded something. Further, Gibby’s prior course of dealing with IBM, as well as the dealings of IBM in its payment of over sixty million dollars to other employees pursuant to the Plan, led him to this conclusion as well. Instead, Gibby surrendered his valuable ideas and was not paid. Taking all of the averments made by Gibby in a light most favorable to him makes it clear that, as a matter of law, he has sufficiently pled a claim for Negligent Misrepresentation. The Trial Court erred as a matter of law in granting IBM’s Motion to Dismiss, and this Honorable Appellate Court must reverse and remand this matter for a trial on the merits.

For all of the above reasons, Gibby respectfully requests this Court reverse and remand this matter to the trial court for a trial on all four Counts of the Amended Complaint.