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Tech Giant IBM Can’t Defraud Salesperson by Capping Commissions

Tech Giant IBM Can’t Defraud Salesperson by Capping Commissions

A salesperson’s claims of fraud against the tech giant IBM were reinstated recently by the U.S. Fourth Circuit Court of Appeals – despite language in the commission plan document that stated IBM reserved the right to adjust the plan’s terms.

In Fessler v. IBM, 959 F.3d 146 (4th Cir. 2020), the U.S. Fourth Circuit Court of Appeals (which includes Maryland) ruled that the salesperson could proceed on his claims for fraud and unjust enrichment, based on numerous PowerPoint presentations and management representatives stating that the commissions were uncapped.

The Fourth Circuit held that a jury could find that IBM made inconsistent representations, given the salesperson’s past dealings with IBM, and it was reasonable for the salesperson to rely on statements made in the PowerPoint presentation or those made by IBM executives. Although the plan contained a disclaimer that IBM reserved the right to adjust the plan, the Fourth Circuit expressly stated that “a contractual disclaimer of reliance is not a prophylactic against a claim of fraud.”

If you are seeking advice, assistance and representation because your employer is not honoring its representations – whether in writing or orally – about your compensation, the attorneys at Lebau & Neuworth are experienced in handling all type of compensation cases. For a consultation, contact us at 888-456-2529 or lebauneuworth.com/contact-us.

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