Mishkin v. ICON PLC

• Court: District Court, D. Arizona
• Decided: January 30, 2025
• Docket: 2:24-cv-01423
• Status: Unknown

Opinion

1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA

9 Gita Mishkin, No. CV-24-01423-PHX-KML

10 Plaintiff, ORDER

11 v.

12 Pharmaceutical Research Associates Incorporated, 13 Defendant. 14 15 This case concerns a soured employment relationship. Plaintiff Gita Mishkin 16 formerly worked for Defendant Pharmaceutical Research Associates, Inc. (“PRA”) where 17 her compensation included incentive-based commissions for meeting sales goals. After 18 PRA repeatedly changed her goals, Mishkin resigned and filed this complaint seeking 19 commissions she believes she is owed. Her complaint is dismissed in part. 20 I. Background 21 In approximately 2010, Mishkin began working as a Business Development 22 Director with PRA. Part of her compensation in that role included incentive-based 23 commissions for meeting sales targets. (Doc. 11 at 3.) In May 2023, PRA provided 24 Mishkin a compensation plan that set new sales targets. (Doc. 11 at 3.) This plan purported 25 to take effect retroactively to January 1, 2023, impacting commissions Mishkin had already 26 earned. (Doc. 13-1 at 4.) According to Mishkin, the changes were made in order to “take 27 clients and revenue away” from her because she was already “on track to earn a large 28 commission for her work.” (Doc. 11 at 3.) Neither party has explained how commissions 1 were calculated before May 2023. 2 The May 2023 plan stated it would “remain in effect until modified or canceled at 3 the sole discretion of [PRA].” (Doc. 13-1 at 4.) The plan provided that commissions were 4 “earned only when the sale is confirmed by sales management as being complete,” and 5 would be paid out between 75 and 90 days after the close of the quarter in which they were 6 earned. (Doc. 13-1 at 4.) Commissions would be paid only if the participant was “employed 7 by [PRA] at the time of payment.” (Doc. 13-1 at 5.) The plan claimed it was “not a contract 8 of any kind” and PRA “reserve[d] the right in its absolute discretion to change at any time 9 the . . . commission rates, bonus standards or any other performance standards applicable 10 to the participant.” (Doc. 13-1 at 5.) 11 The plan provided commissions that “accrued under a prior year plan” but for which 12 payment had been “deferred to a future date” would be “calculated per the payment terms 13 of the previous plan.” (Doc. 13-1 at 5.) If Mishkin met 90 percent of her sales goal for Q3, 14 she could expect to be paid commissions deferred from previous quarters. (Doc. 11 at 4.) 15 The text of the plan does not explain how commissions would be “deferred.” The complaint 16 also does not explain whether there is a difference between “deferred compensation” and 17 “deferred commissions” or if Mishkin is using the terms interchangeably. 18 Mishkin alleges she was “exceeding her goal and on track to earn a large 19 commission for her work” under the terms of this plan. (Doc. 11 at 3.) But in late August 20 2023, PRA provided Mishkin with another commission plan that would require her to meet 21 “even higher revenue target[s]” in Q3 or Q4 to receive “any of her deferred compensation.” 22 (Doc. 11 at 3.) If she did not achieve the revenue targets, Mishkin’s deferred commissions 23 would be forfeited. (Doc. 11 at 3.) Mishkin alleges her sales goals were modified “to take 24 clients and revenue away from [her]” when she “was exceeding her goal and on track to 25 earn a large commission for her work.” (Doc. 11 at 3.) 26 By September 1, 2023, PRA sent Mishkin a spreadsheet showing she had reached 27 98 percent of her quarterly goal with one month remaining and was “on track to exceeding 28 her Q4 revenue goal.” (Doc. 11 at 3–4.) But five days later, PRA gave Mishkin the “New 1 2023 Alignment.” The alignment attributed many of her sales, which previously counted 2 towards her revenue targets, to other sales associates, primarily men. (Doc. 11 at 4.) 3 Because PRA did not also adjust Mishkin’s sales targets, Mishkin “suddenly was well 4 below the 90% threshold necessary to retain her deferred commissions from prior 5 quarters.” (Doc. 11 at 4.) Mishkin argues the changes were intended to “deprive [her] of 6 her already-earned commissions.” (Doc. 11 at 4.) 7 In response to the new alignment, Mishkin requested that PRA provide her “the 8 amount earned,” but PRA “ignored or avoided explaining the sudden changes.” (Doc. 11 9 at 4.) Mishkin alleges the commissions she seeks were paid to male employees. (Doc. 11 10 at 4.) After PRA refused to pay Mishkin the commissions she requested, she submitted a 11 notice of resignation on September 11, 2023, effective September 22, 2023. (Doc. 11 at 5.) 12 Mishkin filed her original complaint in state court but amended after the case was 13 removed. (Doc. 11.) The amended complaint alleges six claims: violations of the Equal 14 Pay Act (EPA); bad faith failure to pay wages under the Arizona Fair Wages Act (AFWA); 15 breach of contract; wrongful termination under the Arizona Employment Protection Act 16 (AEPA); breach of the implied duty of good faith and fair dealing; and unjust enrichment. 17 After PRA moved to dismiss all claims, Mishkin sought leave to file an amended complaint 18 that alleged additional facts in support of her EPA claim, eliminated her breach-of-contract 19 claim, and clarified her requested relief. (Doc. 30-1.) 20 Mishkin’s proposed amended EPA count does not state a claim for relief, so her 21 request to amend that claim (Doc. 30) is denied. Mishkin has abandoned her breach-of- 22 contract claim so it is dismissed without leave to amend. That leaves four claims as to 23 which Mishkin opposes PRA’s motion to dismiss: AFWA, wrongful termination under 24 AEPA, breach of the implied duty of good faith and fair dealing, and unjust enrichment. 25 PRA’s motion to dismiss those claims is granted in part and denied in part. (Doc. 13.) 26 II. Standard 27 “To survive a motion to dismiss, a complaint must contain sufficient factual matter, 28 accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 1 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) 2 (internal citations omitted)). This is not a “probability requirement,” but a requirement that 3 the factual allegations show “more than a sheer possibility that a defendant has acted 4 unlawfully.” Id. A claim is facially plausible “when the plaintiff pleads factual content that 5 allows the court to draw the reasonable inference that the defendant is liable for the 6 misconduct alleged.” Id. “[D]etermining whether a complaint states a plausible claim is 7 context specific, requiring the reviewing court to draw on its experience and common 8 sense.” Id. at 663–64. 9 III. Equal Pay Act 10 Mishkin claims PRA violated the EPA by crediting sales she completed to male 11 employees and paying them her commissions as a result. (Doc. 11 at 5.) The EPA requires 12 a plaintiff show “employees of the opposite sex were plausibly paid different wages for 13 equal work.” Thurston v. W. All. Bank, No. CV-23-01097-PHX-DLR, 2024 WL 961433, 14 at *3 (D. Ariz. Mar. 6, 2024). This requires a plaintiff to allege the jobs required “equal 15 skill, effort, and responsibility, and [were] performed under similar working conditions.” 16 29 U.S.C. § 206(d)(1). A plaintiff need only show the jobs were “substantially equal,” not 17 necessarily “identical.” Freyd v. Univ. of Oregon, 990 F.3d 1211, 1220 (9th Cir. 2021). 18 PRA moved to dismiss the EPA claim based on Mishkin’s failure to identify 19 comparable male employees. (Doc. 13 at 4.) Mishkin then moved to amend her complaint 20 to allege facts regarding four male employees who had the same skills, responsibilities, 21 education, and prior experience. (Doc. 30-1 at 6.) In opposing that motion, PRA argued 22 amendment would be futile because none of the four males was an appropriate comparator. 23 According to PRA, the males had received their commissions because they were still 24 employed on the day the commissions were paid but Mishkin was not. (Doc. 32 at 4.) 25 Mishkin argues the males’ employment status is irrelevant but does not explain why. 26 (Doc. 33 at 2–3.) 27 Mishkin does not allege the male employees resigned before the payment date and 28 still received commissions. She focuses on language in the May incentive plan stating that 1 commissions accrued under a prior plan “will be calculated per the payment terms of the 2 previous plan,” but nowhere addresses whether she or the males were still employed at the 3 75-days-after-close-of-quarter at which the incentive plan forecasted commissions being 4 paid. (Doc. 13-1 at 4.) She argues the male comparators “had the exact same job” (Doc. 33 5 at 2), but holding “the exact same job” while employed is not relevant to the crucial issue 6 of employment on the date the commissions were paid. In other words, Mishkin does not 7 allege facts showing the males performed under similar conditions because she did not 8 work until the payment date and could not have been paid. Hodge v. Tucson Med. Ctr., No. 9 CV 04-723-TUC-FRZ, 2006 WL 8441214, at *7 (D. Ariz. Aug. 10, 2006). Despite 10 attempting to plead this claim three times, Mishkin has not provided facts addressing it. 11 Her proposed amendment is therefore futile and her motion to amend is denied. Cervantes 12 v. Countrywide Home Loans, Inc., 656 F.3d 1034, 1041 (9th Cir. 2011) (“[A] district court 13 may dismiss without leave where a plaintiff's proposed amendments would fail to cure the 14 pleading deficiencies and amendment would be futile.”). PRA’s motion to dismiss 15 Mishkin’s EPA claim is granted without leave to amend. 16 IV. Arizona Fair Wages Act 17 Mishkin claims PRA’s failure to pay her the commissions she demanded violated 18 AFWA. (Doc. 11 at 6.) AFWA requires an employer to pay “all wages due the employees 19 up to that date” on “each of the regular paydays.” A.R.S. § 23-351(C). AFWA defines 20 wages as “nondiscretionary compensation due an employee in return for labor or services” 21 which an employee has a “reasonable expectation to be paid.” A.R.S. § 23-350(7). 22 PRA argues Mishkin’s commissions are not wages because the statute does not 23 cover discretionary income or deferred commissions and Mishkin resigned before any 24 payment was due. (Doc. 13 at 10–12.) “Bonuses are non-discretionary only when an 25 express or implied contract establishes that an employer is required to pay them.” Heimer 26 v. Price, Kong & Co., No. 1 CA-CV 07-0643, 2008 WL 5413368, at *4 (Ariz. Ct. App. 27 Dec. 30, 2008); see also Schade v. Diethrich, 760 P.2d 1050, 1061–62 (Ariz. 1988) (“While 28 the amount was subject to computation, the obligation to pay was absolute, not 1 discretionary.”) Bonuses that are subject to “arbitrary” and “subjective” factors, on the 2 other hand, are “discretionary” under AFWA. Corbin v. GoDaddy.com, Inc., No. CV-10- 3 1313-PHX-GMS, 2011 WL 814752, at *3 (D. Ariz. Mar. 2, 2011). PRA argues it retained 4 “absolute discretion” to change the terms of the performance standards but did not have 5 discretion to withhold commissions if the standards were met. (Doc. 13 at 11.) Neither 6 party addresses how this partial discretion fits within Arizona law. 7 As to whether AFWA encompasses deferred compensation, PWA’s motion also 8 misses the mark but again Mishkin provides no meaningful response. PRA cites Nevins v. 9 Upward Foundation to argue deferred compensation does not fall under the definition of 10 “wages” under AFWA. (Doc. 13 at 12. (citing Nevins v. Upward Found., No. CV-11- 11 00563-PHX-NVW, 2011 WL 2600587, at *3 (D. Ariz. June 30, 2011).) But multiple 12 Arizona courts have found AFWA covers deferred compensation. See Thompson v. 13 StreetSmarts, Inc., No. CV-10-1885-PHX-LOA, 2011 WL 2600744, at *18 (D. Ariz. June 14 30, 2011), report and recommendation adopted, 2011 WL 13416556 (D. Ariz. Aug. 10, 15 2011) (“Plaintiff was an ‘employee’ of Defendants and his salary and deferred 16 compensation constitutes “wages[.]”); Fire Sec. Elecs. & Commc’ns Inc. v. Nye, No. CV- 17 23-02730-PHX-DLR, 2024 WL 3345375, at *2 (D. Ariz. July 9, 2024) (denying dismissal 18 of AWFA claim for deferred compensation). Mishkin’s claim is therefore not foreclosed 19 as a matter of law. 20 Nonetheless, the complaint does not make clear which commissions are the basis 21 for the AFWA claim. Mishkin seems to be arguing the commissions are those based on 22 “her performance in Q3, and in prior quarters.” (Doc. 11 at 4.) But it is undisputed that 23 Mishkin resigned before the end of Q3, meaning she was not employed on the date payment 24 of those commissions would have occurred. And the complaint does not identify when the 25 commissions from “prior quarters” should have been paid. Without alleging those facts, 26 Mishkin could not have had a reasonable expectation that she would receive those 27 commissions because the terms of the compensation plan required that she remain 28 employed by the commission payment date. Wedel v. Olympian Worldwide Moving & 1 Storage, Inc., No. 1 CA-CV 23-0482, 2024 WL 1406140, at *3 (Ariz. Ct. App. Apr. 2, 2 2024) (concluding employee had no reasonable expectation of payment when he was not 3 employed when commissions became payable). 4 Mishkin argues the requirement that she be employed on the payment date does not 5 apply because the deferred commission payments were governed by the terms of the plans 6 they were earned under. (Doc. 26 at 5.) But she does not allege those compensation plans 7 differed in the requirement that she remain employed or even what the terms of any of 8 those plans were. The AFWA claim is dismissed with leave to amend. 9 V. Arizona Employment Protection Act 10 Mishkin also argues she was constructively discharged in violation of AEPA after 11 she demanded payment of her commissions. (Doc. 11 at 7.) Because she resigned, Mishkin 12 alleges her constructive discharge constituted a wrongful termination. See Peterson v. City 13 of Surprise, 418 P.3d 1020, 1023 (Ariz. Ct. App. 2018) (“[C]onstructive discharge may 14 transform a resignation into a discharge.”). AEPA provides for wrongful termination 15 claims where “(1) a discharge is in violation of an employment contract; (2) a discharge 16 violates an Arizona statute; or (3) a discharge is in retaliation for the employee’s assertion 17 of certain rights protected by state law.”1 Guernsey v. Elko Wire Rope Inc., No. CV-21- 18 00848-PHX-DJH, 2023 WL 5348567, at *2 (D. Ariz. Aug. 21, 2023); A.R.S. § 23-1501. 19 A claim for constructive discharge requires allegations of (1) “objectively difficult 20 or unpleasant working conditions” or (2) an employer’s “outrageous conduct,” such as 21 “threats of violence” that “would cause a reasonable employee to feel compelled to resign” 22 under the AEPA. A.R.S. § 23-1502(A). Mishkin’s current complaint only alleges PRA 23 “fail[ed] to pay her earned wages despite her repeated requests for such payment.” (Doc. 11 24 at 7.) But the “fact that an employee is faced with an inherently unpleasant situation or that 25 his or her choice is limited to two unpleasant alternatives” does not make the decision to 26 resign involuntary. Pearlmutter v. Cnty. of Coconino, No. CV-19-08344-PCT-DJH, 2022

27 1 PRA argues Mishkin cannot bring a claim under AEPA because AFWA provides an exclusive remedy. (Doc. 13 at 14.) But unlike the subsection PRA cites, Mishkin brings 28 her claim under a different subsection of AEPA and is not limited to remedies under AFWA. Cf. A.R.S. § 23-1501(A)(3)(c)(ii) with A.R.S. § 23-1501(A)(3)(b). 1 WL 2176501, at *5 (D. Ariz. June 16, 2022). Her proposed amended complaint adds the 2 naked allegation that PRA’s failure to pay her wages “create[ed] intolerable working 3 conditions and financial stress[.]” (Doc. 30-1 at 9.) This threadbare recitation of an element 4 necessary for constructive discharge does not survive a motion to dismiss. See Iqbal, 556 5 U.S. at 678. 6 Mishkin points to two out-of-circuit cases to support her argument that a “reduction 7 in salary or wages” creates “intolerable working conditions.” (Doc. 26 at 11.) But one case, 8 Brown v. Kinney Shoe Corporation, actually determined that a reduction in salary did not 9 meet the threshold for constructive termination. 237 F.3d 556, 566 (5th Cir. 2001). The 10 other, Logan v. Denny’s, Inc., found that “disparate treatment, slanderous statements made 11 to her by coworkers and managers,” and a demotion “from server to busboy”—not a salary 12 reduction alone—constituted constructive discharge. 259 F.3d 558, 569 (6th Cir. 2001). 13 Mishkin has already amended her complaint and her proposed second amended 14 complaint unsuccessfully attempted to correct her pleading deficiencies. Because 15 Mishkin’s allegations again do not rise to the level of “objectively difficult or unpleasant 16 working conditions” or “outrageous conduct,” her wrongful termination claim is dismissed 17 without leave to amend. 18 VI. Breach of Good Faith and Fair Dealing 19 Although she has voluntarily dismissed her breach-of-contract claim (Doc. 26 at 2, 20 8; Doc. 30-1 at 7), Mishkin argues PRA breached the covenant of good faith and fair 21 dealing implied in the May 2023 compensation plan because PRA “unilaterally reduced 22 her compensation” by changing her sales goals after she had already made substantial 23 progress in reaching them. (Doc. 11 at 7–8.) Mishkin explains this “claim is pled in the 24 alternative” to her “claim for failure to pay wages.” (Doc. 26 at 13.) 25 PRA argues the claim for breach of the covenant of good faith and fair dealing must 26 be dismissed because the underlying contract, i.e., the compensation plan, could be 27 cancelled unilaterally. (Doc. 13 at 8.) According to PRA, any agreement that may be 28 unilaterally canceled is void. (Doc. 13 at 8 (citing Shattuck v. Precision-Toyota Inc., 1 588 P.2d 1332, 1334 (1977)).) But PRA fails to acknowledge that “interpretations that 2 render contracts void . . . are highly disfavored.” Thomas v. Shields, No. CV-22-00257- 3 TUC-JCH, 2022 WL 16745335, at *3 (D. Ariz. Nov. 7, 2022). Instead, Arizona courts 4 “interpret a contract whenever reasonable and possible in such a way as to uphold the 5 contract.” Circle K Procurement & Brands Ltd. v. Goli Nutrition Inc., No. CV-23-01417- 6 PHX-DJH, 2024 WL 1639143 (D. Ariz. Apr. 16, 2024) (quoting Shattuck, 588 P.2d at 7 1334 (1977)). And courts have found that an employer operating under a commission plan 8 that grants it the unilateral power to cancel cannot use that discretion in an “arbitrary, 9 unreasonable or oppressive” manner. Marciniak v. Veritas Techs. LLC, No. CV-20-01979- 10 PHX-SMB, 2021 WL 1627250, at *4 (D. Ariz. Apr. 27, 2021); see also Staren v. Clarivate 11 Analytics (US), LLC, No. CV-23-02091-PHX-DWL, 2025 WL 40767, at *7 (D. Ariz. Jan. 12 7, 2025) (“[E]ven textually unbounded grants of discretion [must] be exercised in a good- 13 faith, non-arbitrary, and non-oppressive manner.”). 14 But even so, Mishkin has not meaningfully responded to PRA’s argument; instead, 15 she merely argues she is entitled to plead in the alternative. (Doc. 26 at 13.) She has 16 nowhere explained what factual allegations support a breach of the obligation of good faith 17 and fair dealing in the parties’ employment relationship nor why PRA’s treatment of the 18 contract was not in good faith or arbitrary. (Doc. 11 at 7–8.) Accordingly, this claim is 19 dismissed with leave to amend. 20 VII. Unjust Enrichment 21 Finally, Mishkin claims PRA was unjustly enriched by failing to pay her deferred 22 and Q3 commissions. She explains this claim is also pleaded in the alternative in the event 23 the “claims for failure to pay wages . . . and breach of the implied covenant of good faith 24 and fair dealing . . . are dismissed.” (Doc. 26 at 14.) Unjust enrichment requires plaintiff 25 show (1) an enrichment, (2) an impoverishment, (3) a connection between the enrichment 26 and impoverishment, (4) a lack of justification for the enrichment and impoverishment, 27 and (5) the absence of a remedy provided by law. Ideasolv LLC v. Geante Rouge SARL, 28 No. CV-21-01905-PHX-MTL, 2022 WL 3042858, at *4 (D. Ariz. Aug. 2, 2022). PRA 1 argues Mishkin does not plead an enrichment that was unjust because it was entitled to 2 modify the terms of the compensation plan at its discretion. (Doc. 13 at 16.) 3 The two cases PRA cites in support of its argument are inapposite. In both instances, 4 the court analyzed whether a party could state an unjust enrichment claim when a contract 5 governed the conduct of the parties. See Seaboard Sur. Co. v. Grupo Mexico, S.A.B. de 6 C.V., No. 06-CV-0134-PHX-SMM, 2009 WL 4827029, at *12 (D. Ariz. Dec. 15, 2009) 7 (“[I]f there is ‘a specific contract which governs the relationship of the parties, the doctrine 8 of unjust enrichment has no application.”) (quoting Trustmark Ins. Co. v. Bank One, Ariz., 9 N.A., 48 P.3d 485, 491 (Ariz. Ct. App. 2002)). But here, PRA has argued the compensation 10 plan was not a contract for purposes of moving to dismiss Mishkin’s other allegations. 11 PRA’s attempt to treat the compensation plan as a contract when it suits PRA’s 12 interests fails. (See Doc. 13 at 16.) Arizona law permits a plaintiff to pursue an unjust 13 enrichment claim as an alternative theory of recovery to a breach-of-contract claim, subject 14 to a single recovery. Lopez v. Musinorte Ent. Corp., 434 F. App’x 696, 699 (9th Cir. 2011). 15 Here, Mishkin has abandoned her breach-of-contract claim so only one recovery is 16 possible. And “an ‘absence of justification’ is all that is required to satisfy the ‘unjust’ 17 component of unjust enrichment under Arizona law”). Perez v. First Am. Title Ins. Co., 18 810 F. Supp. 2d 986, 993 (D. Ariz. 2011). 19 Mishkin alleges PRA received the benefit of sales that would have obligated PRA 20 to pay her hundreds of thousands of dollars in commissions and unjustifiably changed the 21 terms of her compensation plan in a way that prevented her from receiving those 22 commissions after she had earned them. Therefore, PRA’s motion to dismiss Mishkin’s 23 unjust enrichment claim is denied. 24 Accordingly, 25 IT IS ORDERED the Motion to Dismiss (Doc. 13) is GRANTED IN PART AND 26 DENIED IN PART. The Equal Pay Act claim, breach of contract claim, and AEPA claim 27 are DISMISSED WITHOUT LEAVE TO AMEND. The AFWA claim and breach of 28 good faith and fair dealing claim are DISMISSED WITH LEAVE TO AMEND. 1 IT IS FURTHER ORDERED the Motion for Leave to Amend (Doc. 30) is 2|| DENIED. 3 IT IS FURTHER ORDERED if plaintiff wishes to file an amended complaint, she must do so no later than February 14, 2025. If an amended complaint is filed, defendant 5 || shall respond to that complaint by the deadline established by the Federal Rules. If plaintiff 6 || does not wish to file an amended complaint, no later than February 5, 2025, she shall file a statement to that effect. If plaintiff files a statement that she does not wish to file an 8 || amended complaint, defendant shall file its answer to the remaining claim no later than 9|| February 14, 2025. 10 Dated this 30th day of January, 2025. 11 12 é V4) hy Va ny G / .

Honorable Krissa M. Lanham 14 United States District Judge 15 16 17 18 19 20 21 22 23 24 25 26 27 28

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