IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
BILL & MELINDA GATES FOUNDATION, ) No. 79354-3-I a Washington nonprofit corporation, ) ) DIVISION ONE Appellant/Cross-Respondent, ) ) PUBLISHED OPINION v. ) ) TODD PIERCE, ) ) Respondent/Cross-Appellant. ) )
HAZELRIGG, J. — Todd Pierce was recruited away from a high-paying
executive position with a technology company in San Francisco to become the first
Chief Digital Officer for the Bill & Melinda Gates Foundation (the Foundation). After
negotiating what the role would and, more importantly, would not be, Pierce
accepted the at-will position and moved to Seattle to begin his “far-reaching and
transformational” work. However, the job for which he bargained never
materialized and Pierce was ultimately terminated after approximately 18 months
with the charitable organization. He filed suit against the Foundation for breach of
contract, promissory estoppel, and negligent misrepresentation. After a bench
trial, the judge found for Pierce as to the breach claim and, in the alternative, on
the theory of promissory estoppel. The judge found that Pierce did not meet his
burden to prove negligent misrepresentation. Pierce was awarded damages No. 79354-3-I/2
based largely on lost wages and stock options from his prior employer, but his
request for attorney fees was denied.
The Foundation asserts that the court erred in finding for Pierce on both
breach of contract and promissory estoppel, grounding its various arguments in
the fact that Pierce was an at-will employee, and that the award for damages was
improper. It further raises due process challenges to the proceedings as a whole,
based on the manner by which the judge conducted the bench trial. Pierce cross-
appeals the court’s denial of his request for attorney fees.
The highly distinctive factual context of this case presents issues not
heretofore considered in the body of law on employment contracts in Washington.
The specific promise at the heart of the negotiations for Pierce’s employment may
well have been vague and unenforceable in other circumstances involving different
parties. However, the Foundation was uniquely situated to provide precisely the
opportunity it jointly envisioned and bargained for with Pierce, yet failed to do so.
We affirm the trial court’s ruling as to breach of contract and, as such, do not reach
the alternative basis of promissory estoppel. At-will employees may not recover
reliance damages as the trial court awarded here, but the facts of this case are
such that the court is not constrained to nominal damages typically associated with
a finding of breach of an at-will employment contract. Accordingly, we agree with
the Foundation that the trial court erred in its assessment of damages and remand
for further proceedings. While the Foundation raises serious questions as to the
manner of the judge’s questioning of the witnesses and interference with counsel’s
ability to object at trial, it fails to demonstrate prejudice and we find error was
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harmless. As Pierce did not bring a suit for wages, we affirm the court’s ruling
denying his request for attorney fees. Affirmed in part, reversed in part, and
remanded for further proceedings.
FACTS
The Bill & Melinda Gates Foundation (the Foundation) is the world’s largest
philanthropic organization. The Foundation has three trustees: Warren E. Buffett,
Melinda A. French Gates, and William Henry (Bill) Gates, III. Buffett and the
Gateses are some of the wealthiest individuals in the world; Bill Gates is the
founder of technological pioneer Microsoft, Melinda French Gates had a
distinguished career in technology and has been an advocate for diversity in that
field since her youth, with a particular focus on gender equity, and Warren Buffett
is considered one of the world’s top investors as the Chairman and Chief Executive
Officer (CEO) of Berkshire Hathaway.
The Foundation invests five billion dollars each year in charitable support,
driven by the notion that every life has equal value. The trustees of the Foundation
oversee its operations by working directly with the CEO and the Executive
Leadership Team (ELT), who direct the daily operations of each program’s
divisions: Global Health, Global Development, Global Growth & Opportunity, U.S.
Program, and Global Policy & Advocacy. Some of the projects undertaken by the
Foundation include helping improve high school graduation rates and creating
opportunity for higher education, water sanitation, vaccine development, women’s
economic empowerment, and financial services for the poor.
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Dr. Susan Desmond-Hellmann joined the Foundation as CEO in 2014.
Shortly after her arrival, she hired Leigh Morgan to assess the Foundation’s
operations. Morgan was later hired on as Chief Operating Officer (COO). Morgan
reached out to Todd Pierce for support and insight regarding Information
Technology (IT) operations at the Foundation. Desmond-Hellmann, Morgan, and
Pierce had all worked together previously at Genentech, a San Francisco
biotechnology company. When Morgan first contacted Pierce in 2014, he was a
Senior Vice President at Salesforce.com (Salesforce). Morgan explained her
tasks, priorities and the general landscape at the Foundation to Pierce and
emphasized the need to rework IT operations.
Initially, Morgan was only seeking advice and insight from Pierce, however
their discussion grew into exploring the possibility of Pierce coming to work for the
Foundation. They discussed Pierce joining as Chief Digital Officer (CDO); Pierce
made it clear that he only wanted to work for the Foundation if his job was broader
than that of a traditional Chief Information Officer (CIO). The two considered the
need to overhaul the Foundation’s IT program, implement systems upgrades, and
build a cross-Foundation digital strategy that would help with its philanthropic work.
In October 2014, Pierce visited Seattle to meet with senior leadership who
were aware of Pierce’s interest in a CDO position. At the meeting, Desmond-
Hellmann told Pierce to be sure to ask for what he wanted from the Foundation.
Pierce made three specific requests: to be the CDO, to be on the Foundation’s
ELT, and to report directly to the CEO. The Foundation agreed to the first two
requests and expressly rejected the third. Desmond-Hellmann reinforced that,
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should he join the Foundation, Pierce’s first priority would be to fix the IT systems.
The next month, Morgan emailed Pierce to indicate that Bill Gates was open to
meeting with him. Prior to meeting with Gates, Morgan emailed Pierce that the
“CDO role description is still forming” and included a draft list of accountabilities.
She also expressly requested Pierce’s input.
There had never previously been a CDO position at the Foundation. Pierce
was unable to find time to provide meaningful input on the draft of CDO
accountabilities from Morgan, but he later testified that he felt the draft was broad
enough to encompass the opportunities he had in mind. Pierce did, however,
forward some articles to Morgan about CDO positions that were beginning to
emerge in other companies and organizations. In December 2014, Morgan sent
Pierce a list of “high level job accountabilities for [the] CDO role.” Pierce knew he
would need to persuade Gates in order for the opportunity to come to fruition. The
meeting between Pierce and Gates went well, but Pierce did not make any specific
requests of commitment from Gates. The Foundation sent Pierce an offer letter in
January 2015 which he signed and returned a month later. The parties agree that
the offer letter was an enforceable contract setting forth the terms of Pierce’s
employment.
In exchange for Pierce’s employment as CDO, the Foundation agreed to
pay him a salary of $425,000 annually, a $100,000 signing bonus, retirement
contributions equal to 15% of his salary, and relocation benefits. The letter also
stated Pierce’s employment would be “‘at will’ and may be terminated by you or
the [F]oundation at any time for any reason with or without cause or advance
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notice.” Pierce accepted the position and was aware that, in doing so, he was
leaving behind unvested incentive compensation at Salesforce.
Pierce was employed at the Foundation from April 2015 to October 2016.
Pierce immediately began working on a digital strategy, in addition to the numerous
other projects the Foundation identified as priorities. In November 2015, Pierce
sent Desmond-Hellmann an email outlining his digital strategy. In response,
Desmond-Hellmann questioned his focus on new programs rather than working
with existing ones. She stressed the need for Pierce to pace himself given the
breadth of the proposal. Pierce agreed with the feedback.
In January 2016, Pierce presented his digital strategy to the ELT, which was
comprised of the presidents of the Foundation’s various program divisions. Pierce
followed up by presenting an updated digital strategy to Desmond-Hellmann in
May 2016 and identified the need for additional budget amounts for 2016 and
2017. Pierce continued to expand and work on his project, eventually hiring a
Director of Digital Platforms & Ecosystems. With Desmond-Hellmann’s approval,
Pierce worked on options for building out the Foundation’s investment
management system. In September 2016, Pierce and his IT group created a “36-
[Month] Digital Roadmap.”
During Pierce’s time at the Foundation, numerous concerns surfaced about
his leadership, team morale, and questioning the degree of Pierce’s commitment
to the Foundation. Pierce and Morgan repeatedly had communication issues due
to Pierce’s insistence on reporting directly to CEO Desmond-Hellmann, despite the
Foundation’s explicit rejection of his request on that matter during negotiations for
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the position. Prior to his acceptance of the job offer, it was made clear that Pierce
was to report to Morgan. In May 2016, Pierce again provided a presentation
directly to Desmond-Hellmann. Morgan emailed the Foundation’s Chief Human
Resources Officer and explained that she was contemplating firing Pierce based
on this conduct, which she deemed insubordinate. Morgan and Pierce met to
discuss the concerns and appeared to reach an agreement on how to move
forward. In September 2016, Pierce and Morgan met again and addressed further
concerns Morgan had regarding Pierce’s conduct. They also discussed an
investigation that was underway based on Pierce’s expense reimbursement
practices and a violent outburst with his executive assistant. Less than two weeks
later, Pierce was terminated.
Pierce filed suit in April 17, 2017, asserting claims against the Foundation
for breach of contract, promissory estoppel, and negligent misrepresentation. The
case proceeded to a bench trial where the court found for Pierce on the breach of
contract claim and, in the alternative, promissory estoppel. The court concluded
that Pierce failed to meet his burden of proof as to negligent misrepresentation.
The trial court awarded Pierce $88,104 in lost Salesforce wages and $4,547,140
in “other compensation,” the majority of which was based on stock options Pierce
received from employment at Salesforce. The Foundation now appeals. Pierce
cross-appeals the court’s denial of his attorney fee request.
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ANALYSIS
I. Breach of Contract
The Foundation first asserts that the court erred in determining that it
breached the contract with Pierce. We review questions of law de novo. Sunny
Valley Irrig. Dist. v. Dickle, 149 Wn.2d 873, 880, 73 P.3d 369 (2003). “This Court
will review only findings of fact to which error has been assigned.” In re Contested
Election of Schoessler, 140 Wn.2d 368, 385, 998 P.2d 818 (2000). “It is well-
established law that an unchallenged finding of fact will be accepted as a veri[t]y
upon appeal.” State v. Hill, 123 Wn.2d 641, 644, 870 P.2d 313 (1994). When we
review mixed questions of law and fact, this court defers to the unchallenged
findings and reviews the legal conclusions de novo. In re Marriage of Pennington,
142 Wn.2d 592, 602-03, 14 P.3d 764 (2000). In its briefing to this court, the
Foundation does not assign error to any of the 91 findings of fact. As such, we
accept all of them as verities and focus our review on the assignments of error the
Foundation did allege.
“Employment contracts are governed by the same rules as other contracts.”
Kloss v. Honeywell, Inc., 77 Wn. App. 294, 298, 890 P.2d 480 (1995). The law
recognizes two types of contracts: bilateral and unilateral. Cook v. Johnson, 37
Wn.2d 19, 23, 221 P.2d 525 (1950). A bilateral contract is one where the parties
exchange promises. Govier v. N. Sound Bank, 91 Wn. App 493, 499, 957 P.2d
811 (1998). Here, neither party disputes that they entered into a written bilateral
contract on February 15, 2015 when Pierce signed the offer letter from the
Foundation.
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Pierce argues, as he did in the trial court, that the Foundation did not uphold
its end of the contract and breached by not providing him with the CDO position as
promised. This is not a case where the focus of our analysis rests on an
employee’s termination, but is instead one that hinges on whether Pierce was
provided the position for which he bargained. As such, one of the key facts before
us is Pierce’s express rejection of a CIO role that would center on IT work.
Pierce left his lucrative job as an executive at Salesforce and relocated in
order to accept the newly-created CDO position at the Foundation. Further, the
findings by the trial court establish that although “Bill Gates understood the CDO
role, others at the Foundation did not” and “Morgan did not lay the groundwork for
a CDO to succeed.” The court concluded that the Foundation offered “that the
CDO position would be far-reaching and transformational and, importantly, not the
role of a glorified IT operations manager[,]” but the Foundation advances the
position that any such offer is not enforceable. We disagree. The findings and
conclusions from the trial court, testimony, and hundreds of exhibits made clear
that this promise was well established and that Pierce relied on it in his acceptance
of the CDO role at the Foundation.
A CDO is a new position that companies and organizations around the world
are beginning to utilize. The role of a CDO has been viewed within the technology
and business world as the executive position to bridge technology and market,
while driving digital strategy and initiatives to fundamentally shift a business or
organization.1 In particular, discussion surrounding the emerging CDO position
1 Nicholas D. Evans, The evolving role of the Chief Digital Officer, CIO (Sep. 14, 2017), https://www.cio.com/article/3224478/the-evolving-role-of-the-chief-digital-officer.html
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signals that it is much broader than a CIO and likely could subsume the need for
a CIO entirely.2
Morgan attempted to engage Pierce in defining what a CDO would be at the
Foundation, but by his own admission, he did not participate in that critical stage
of the process beyond sharing articles about CDO positions with other
organizations. Ultimately, Morgan drafted the following accountabilities for the new
role:
Build and implement an enterprise-wide digital strategy that harmonizes across divisional and program-team boundaries to solve shared, large-scale problems relevant to our mission Partner with ELT members to ensure that we have a dashboard approach to utilizing key metrics across multiple foundation teams Set a vision for more innovative use of big data, predictive analytics, novel IT and social networking platforms, cloud-related data sharing, GIS modelling, and other digital modalities Be a thought-leader with the co-chairs, foundation and program leaders, anchor partners, other key stakeholders Facilitate experimentation, cross-program collaboration and knowledge sharing on digital/technology-related strategies Transform the foundation IT organization into a high-performing, nimble, innovative, and lean organization Partner with Co-chairs, ELT, and programs to drive for tangible, measureable results in foundation-wide digital strategies
In Washington, we follow the objective manifestation theory of contracts in
which “we attempt to determine the parties’ intent by focusing on the objective
manifestations of the agreement, rather than on the unexpressed subjective intent
of the parties.” Hearst Cmmnc’ns, Inc. v. Seattle Times Co., 154 Wn.2d 493, 503,
2 Robert Berkman, The Emergence of Chief Digital Officers, MIT Sloan Management
Review (April 29, 2013), https://sloanreview.mit.edu/article/social-business-helps-usher-in-new- executive-the-cdo/ Irving Wladawsky-Berger, Why CIOs May Morph Into the Chief Digital Officer, Wall Street Journal (November 18, 2012 8:11AM ET), https://blogs.wsj.com/cio/2012/11/18/why-cios-may- morph-into-the-chief-digital-officer/
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115 P.3d 262 (2005). However, in determining the parties’ intent, context matters
and informs the objective manifestations of the agreement. See Id. at 502-503.
The present context of the agreement between Pierce and the Foundation is
exceedingly unique in that both parties are high-level innovators in their respective
fields and the resources available for the implementation of this newly-created role
at the Foundation likely do not exist within most other organizations. These
realities necessarily establish the framework upon which our review is conducted.
The trial court found the Foundation breached the contract by not providing
Pierce the CDO position that he was promised. There was conflicting testimony
as to how Pierce’s time at the Foundation unfolded. The trial court found that there
was no question Gates understood what a CDO would do at the Foundation.
However, it also found that Morgan failed to lay the groundwork or facilitate the
necessary transition to truly allow Pierce to fit within the Foundation’s existing
organizational structure as CDO. When Pierce arrived at the Foundation, he was
immediately met with resistance from the present staff and internal organizational
structures. This was demonstrated by Finding of Fact 50, wherein the court found
that “Pierce had concerns that the Foundation was not committed to or prepared
for the expanded, outward-facing CDO role he had been promised.” Nonetheless,
Pierce appears to have tried to make the new position work.
The Foundation takes issue with the court’s description of the promised job
in the conclusions of law; that “the CDO position would be far-reaching and
transformational.” It argues, among other things, that such terms would be too
vague to be enforceable. However, the Bill & Melinda Gates Foundation is the
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largest charitable foundation in the world, with trustees and a platform that provide
access to resources to securely anchor such an offer well within the realm of
possibility. Beyond providing the expansive financial assets to implement the
visions and strategies described in the CDO accountabilities, the Foundation is
uniquely situated to provide a CDO with opportunities to collaborate with decision-
makers and leaders of industry across the globe.
Two of the Foundation’s key arguments are that Pierce’s job responsibilities
could be modified by his supervisor at any time due to his status as an at-will
employee and that there is no duty of good faith and fair dealing in the context of
at-will employment. However, when considering that assertion within the
framework of a bilateral contract such as this one, this latter argument in particular
is incorrect. “There is in every contract an implied duty of good faith and fair
dealing. This duty obligates the parties to cooperate with each other so that each
may obtain the full benefit of performance.” Badgett v. Sec. State Bank, 116 Wn.2d
563, 569, 807 P.2d 356 (1991). This duty does not require a party to accept a
material change to the contract terms; “it requires only that the parties perform in
good faith the obligations imposed by their agreement.” Id. While the Foundation
is correct that it retained the ability to modify Pierce’s job duties because of his
status as an at-will employee, what they could not do, based on the duty of good
faith and fair dealing, was fundamentally change what it meant to be the CDO of
the Bill & Melinda Gates Foundation. To do so would render that fundamental
promise illusory.
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We acknowledge what, on cursory review, could appear to be a conflict in
Washington law as to the duty of good faith and fair dealing in contracts that
provide for employment at-will.3 We understand the body of case law to reflect a
rather simple principle: there is no duty of good faith and fair dealing as to
termination of at-will employment. By accepting at-will employment, the parties
have expressly bargained away any right to good faith and fair dealing with regard
to a decision to terminate the employment. However, as to the other terms and
conditions of employment, our case law is clear that a duty of good faith and fair
dealing does apply. See also Badgett, 116 Wn.2d at 569.
The unchallenged facts found by the trial court indicate the breach occurred
in November 2015 when Morgan would no longer allow Pierce to perform his end
of the bargain. “In late November 2015, Pierce took his vision for the Foundation’s
digital transformation to CEO Desmond-Hellmann during a semi-regular ‘one-on-
one’ meeting.”4 This meeting offended Morgan to the point that she chastised
Pierce for insubordination. In Finding of Fact 60, trial court determined that from
that point forward “Morgan began a sustained campaign to frustrate Pierce’s efforts
to fulfill the broader CDO role.”
3 Some Washington cases appear to indicate that at-will employment provides no implied duty of good faith and fair dealing. See Thompson v. St. Regis Paper Co., 102 Wn.2d 219, 685 P.2d 1081 (1984) (finding no duty of good faith and fair dealing as to termination for at-will employment); See also Bakotich v. Swanson, 91 Wn. App. 311, 957 P.2d 275 (1998) (declining to extend a duty of good faith and fair dealing as to at-will employee’s termination). Other cases plainly declare employment contracts are to be treated like all other bilateral contracts, which implicitly includes a duty of good faith and fair dealing. See Comfort & Fleming Ins. Brokers, Inc v. Hoxsey, 26 Wn. App. 172, 176, 613 P.2d 138 (1980) (“A contract for employment is subject to the same rules that govern the construction of other contracts.”); See also Rehkter v. State Dept. of Soc. and Health Servs., 180 Wn.2d 102, 323 P.3d 1036 (2014) (finding DSHS violated its duty of good faith and fair dealing in the performance of a specific term of its contracts with providers). 4 Finding of Fact 57.
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At oral argument before this court, the Foundation reinforced that they do
not dispute any of the findings of fact from the trial court and agreed that we are to
accept them as verities on appeal. Instead, the Foundation only challenges the
conclusions of law which flow from those findings. The trial court’s findings
establish that after the November 2015 meeting, Pierce was not able to perform
his promised role as CDO and was actively prevented from doing so by the
Foundation, through Morgan. Pierce was consistently told to scale back and focus
on IT. Further, the trial court found those that hired Pierce should have helped him
push his digital vision forward and work to break down internal resistance, but
“Morgan did nothing of substance to advance the CDO role across the organization
or look for ways to push or advocate for genuine cross-programmatic collaboration
or, better yet, accountabilities for such work.” The trial court’s determination that
the Foundation breached its contract with Pierce on November 30, 2015 by not
providing him with the job he was promised was a proper conclusion based on the
facts adduced at trial.
Evidence supports the trial court’s ruling that the parties had a meeting of
the minds and did objectively manifest their intent regarding the agreement as to
what Pierce’s CDO position would be. The facts of this case support the court’s
conclusion that the Foundation kept Pierce employed in the CDO position following
the November 30, 2015 meeting, but frustrated his ability to perform the job for
which he had contracted. The Foundation’s failure to cooperate establishes a
breach of its duty of good faith and fair dealing. As expansive as the language
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was that conveyed the promise, the Foundation was uniquely situated to provide
exactly that which it offered, but failed to do so.
II. Promissory Estoppel
The Foundation next argues the trial court improperly found for Pierce on
an alternative theory of promissory estoppel. We agree that a party may not
recover for both breach of contract and promissory estoppel.
“[T]he doctrine of promissory estoppel does not apply where a contract
governs.” Spectrum Glass Co., Inc. v. Public Util. Dist. No. 1 of Snohomish County,
129 Wn. App. 303, 317, 119 P.3d 854 (2005). Here, “[t]he Court concludes that
the Foundation’s job offer and Pierce’s acceptance of it constitutes and
enforceable contract.” However, the court went on to conclude “[e]ven if the
Foundation’s offer is unenforceable as a matter of contract law, Pierce establishes
all elements of a claim for promissory estoppel.” These contradictory conclusions
of law are mutually exclusive. See Id. The trial court found facts that established
that a contract existed, which appropriately support its conclusions of law on that
issue. It is improper for a party to recover on the basis of two mutually exclusive
theories. We therefore strike the conclusion of law finding promissory estoppel
and decline to substantively reach the assignment of error on this issue as the
contract between Pierce and the Foundation governs.
III. Damages
The Foundation avers that even if it is found to have breached the contract
with Pierce, the court erred in its award of damages.
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This court reviews de novo the question of whether damages were proper
for Pierce’s cause of action. Ford v. Trendwest Resorts, Inc., 146 Wn.2d 146, 152,
43 P.3d 1223 (2002). We review a trial court’s evidentiary rulings on damages for
abuse of discretion. Bakotich, 91 Wn. App. at 314. “The burden of proof is on the
party seeking damages.” 224 Westlake, LLC v. Engstrom Prop., LLC, 169 Wn.
App. 700, 729, 281 P.3d 693 (2012).
A. Expectation and Reliance Damages
“Washington law is clear on the parties’ rights under an at-will employment
contract after employment begins: Generally, an employee cannot recover
damages when terminated from at-will employment.” Bakotich, 91 Wn. App. at
315. “[L]ost earnings cannot measure damages for the breach of an employment
at-will contract because the parties to such a contract do not bargain for future
earnings. By its very nature, at-will employment precludes an expectation of future
earnings.” Ford, 146 Wn.2d at 157. “[A]n at-will employment contract anticipates
that the employer may repudiate at any time without ramification.” Bakotich, 91
Wn. App. at 316. In Bakotich v. Swanson, the court made clear that, for these
same reasons, damages would also be improper under a theory of promissory
estoppel in the context of at-will employment. Id. at 319-20.
Ford v. Trendwest Resorts, Inc. involved an employee who was terminated
for suspicion of drinking on the job. 146 Wn.2d at 150. The employer then agreed
that if the employee completed a counseling program, he would be rehired as an
at-will employee in a position equal to the one which he previously held. Id. After
the employee signed up for a counseling program, he called to determine his new
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work schedule. The employer informed him that he could not return to the same
position, but could work in a much less lucrative position. Id. After a trial, the jury
determined that the employer had breached its contract to rehire the employee
and awarded both “past economic damages” and “future economic damages.” Id.
at 151. Our Supreme Court took up the case to “determine whether lost earnings
are an appropriate measure of damages when an employer breaches a contract
to hire an at-will employee.” Id. at 152. The Court concluded that the employee
had no reasonable expectation of future earnings due to his at-will status and
reversed and remanded for entry of an award for only nominal damages. Id. at
158. It is noteworthy that the Supreme Court in Ford stated that Bakotich reached
the right conclusion for the wrong reason; specifically that anticipated earnings are
highly speculative, but also that, fundamentally, the parties do not bargain for
future earnings in the context of at-will employment. Id. at 157.
Bakotich is more analogous to the present case as it involved an employer
luring a prospective employee away from his current position to begin employment
as the manager of an outlet the employer hoped to open. However, the outlet
never manifested so there was no new position for the employee after he left his
prior employment. 91 Wn. App. at 313. The trial court prevented the employee
from presenting any evidence of damages, which included evidence of loss of
earnings, future earnings, and loss of pension and benefits. Id. at 314. Division
Two of this court found the exclusion of that evidence was proper due to the
speculative nature of such calculations and the fact that the prospective
employment was at-will. Id. at 314, 316.
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Here, the damages awarded to Pierce are all predicated on exactly the sort
of calculations rejected in both Ford and Bakotich. The court based the award on
loss of the higher wage from Pierce’s employment at Salesforce, along with stock
options that were part of his compensation there. This was fundamentally an
improper measure as Pierce would have lost the higher wage and stock options
from Salesforce even if the CDO role at the Foundation became exactly what he
had envisioned. Any entitlement to that compensation had long since dissipated
by the time the Foundation breached the contract with Pierce, roughly seven
months into his employment there. As such, there is no causation to tie such
damages to the breach found by the trial court. Because the trial court concluded
that Pierce’s employment was at-will, there was no bargain for future earnings or
job stability under Washington case law. Ford would suggest a result of only
nominal damages. 146 Wn.2d at 152.
Another noteworthy consideration in our review of the damages awarded is
that Pierce had full knowledge of what he was foregoing in terms of future salary
or stock options by accepting this at-will position with the Foundation as the job he
left at Salesforce was also at-will. During the negotiations, Pierce had the
opportunity to request a term for reimbursement for the stock options he was
foregoing, generally or specifically in the event of termination during a set period,
if he had so desired. In Bakotich, the potential employee was never even given
the opportunity to attempt the job he was offered and the court still rejected
damages. Here, Pierce was employed for nearly 18 months with the Foundation
and provided all the compensation he bargained for during that time. Washington
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courts have rejected the assertion that reliance damages would be proper in the
context of at-will employment. See Ford, 146 Wn.2d at 155-58; See also Bakotich,
91 Wn. App. at 316-17. Following that precedent, we agree with the Foundation
that the damages awarded to Pierce were erroneously calculated.
B. Measure of Damages and Valuation
The Foundation further argues that even if damages were proper in the
context of at-will employment, the evidence does not support the amount of
damages awarded here. The amount of damages awarded under a specific
measure is a discretionary determination for the trier of fact, provided it falls within
the range of relevant evidence. Womack v. Von Rardon, 133 Wn. App. 254, 262,
135 P.3d 542 (2006). The case at hand calls for both a temporal analysis of
damages and careful assessment as to value.
An essential first step for a trial court when considering damages in this sort
of employment litigation, particularly where the position is new or unsettled, is to
make a factual determination as to a reasonable period of time for transition and
attempted performance before finding that a breach has occurred. See Barrett v.
Weyerhaeuser Co. Severance Pay Plan, 40 Wn. App. 630, 638, 700 P.2d 338
(1985) (affirming trial court’s factual determination that three days in a new position
was too limited to justify a finding that new duties were unreasonable). It is
reasonable that there would be an initial period of time where the position is fleshed
out in more detail or significant time is spent on training and orientation rather than
the defined job duties, particularly when the position itself has never existed within
the organization. Here, the court reasonably determined that there was a period
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of time where the CDO role was understandably in flux and, later, a finite point
when the Foundation breached. This is critical because Pierce is not entitled to
damages for the period of time he was employed with the Foundation before the
breach. See Bakotich, 91 Wn. App. at 316-17. Neither is he entitled to damages
after termination because he was an at-will employee. Id. at 315. Pierce may only
recover for the period of time between the breach and termination, therefore this
factual determination is not only proper, but fundamental to establishing the
necessary framework for the inquiry into damages.
Finding of Fact 81 states that, “starting by at least November 30, 2015,
Morgan failed to cooperate with Pierce in good faith to realize the CDO opportunity
during his employment or seek modification of the parties’ deal when there was
still an opportunity to mitigate harm.” The court further explained its assessment
of the time period leading up to breach in Conclusion of Law 105: “Morgan’s earlier
failure to take any action on the Clarity recommendations or otherwise set up the
CDO role for success are troubling, but the Court cannot say with certainty that
Morgan actively frustrated Pierce’s purpose prior to his November 2015 meeting
with the CEO.” The court may award Pierce damages only for the period from
November 30, 2015 when the breach occurred up to October 10, 2016, when he
was terminated.
Only after determining the temporal aspect of the claim for damages does
the court turn to valuation. Here, the evidence to support the award of damages
was primarily Pierce’s testimony after the judge specifically asked him to evaluate
the amount and establish a value as to his stock options from Salesforce. Some
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documentary exhibits were also submitted on this issue, including some basic
spreadsheets created by Pierce. During his testimony, Pierce used language like
“hypothetically” when he explained how he had loosely calculated the stock value.
In addition to lacking a proper basis in the law, the evidence underlying the court’s
calculation of damages was insufficient to support the amount awarded.
The Foundation is correct that these valuations are complex and of the sort
that commonly involve expert testimony. See Aubin v. Barton, 123 Wn. App. 592,
98 P.3d 126 (2004). However, these more specific questions as to the value of
the Salesforce stock are beyond the proper inquiry as to the scope of damages
owed to Pierce because the court erred in awarding reliance damages. “[T]he
general measure of damages for breach of contract—which is applicable to
employment contract cases—is that the injured party is entitled (1) to recovery of
all damages that accrue naturally from the breach, and (2) to be put into as good
a position pecuniarily as he would have been had the contract been performed.”
Knox v. Microsoft, 92 Wn. App. 204, 208-09, 962 P.2d 839 (1998). “The measure
of damage in any particular case will depend upon the facts in that case.”
Dunseath v. Hallaur, 41 Wn.2d 895, 904, 253 P.2d 408 (1953). Washington law
generally directs that the proper measure of damages is nominal, however the
facts of the case at hand are such that we are not so constrained. The context
and parties are unique and the stakes high, therefore we find it proper to look
beyond nominal damages.
It is not just that the Foundation is the preeminent entity of its sort in the
world, but also that it achieves its results from successful innovation and mastery
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of a digital landscape. The Foundation functions at this unusually high level, in
part, because it is able to recruit exceptional talent, not only due to the expanse of
its resources, but also because of the professional network to which it is privy.
Such access is substantially attributable to the prestige of the Trustees and of other
front runners of various industries who they have brought into the Foundation. As
set out above, the breach here occurred by not providing Pierce the position for
which he bargained and the opportunities that flow from such a cutting-edge
position within a leading organization in the field of global philanthropy. The
assessment of damages here rests on a determination of the value of this “far-
reaching and transformational” job; what is the inherent value of having this highly
specialized role at this precise charitable foundation guided by these particular
leaders of industry? The damages to Pierce stem from the impact on his
marketability. He cannot necessarily expect another high level CDO position
because he wasn’t doing that work at the Foundation, so the trial court must
determine the value of that rather ephemeral loss.
At oral argument, the Foundation claimed Pierce was provided everything
he was owed in compensation, however our inquiry as to proper damages does
not end there. In this case, we do not simply look to the paychecks earned for time
spent at work, for the Foundation is correct as to that point. The breach here is
more complex and conceptually expansive. The proper measure of damages
owed to Pierce, given the nature of the Foundation’s breach, is that of the
difference in value between the job he was promised and the job he was provided
after his late November 2015 meeting with Desmond-Hellman when the court
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determined Morgan began to actively frustrate Pierce’s purpose. Unfortunately,
there is no evidence of the value of either of those roles in the record before us,
nor the difference between them. While Pierce attempted to demonstrate the value
of Salesforce compensation he abandoned when he took the role at the
Foundation, that was not the proper inquiry.
We recognize this calculation will be complex, however countless attorneys
have ably proved monetary value to juries and trial judges for seemingly intangible
damages. See, E.g., Kirk v. Wash. State Uni., 109 Wn.2d 448, 746 P.2d 285
(1987) (affirming $353,791 damages award for pain and suffering to twenty-year-
old cheerleader who sustained permanent elbow injury during unsupervised
cheerleading practice); Jones v. Rumford, 64 Wn.2d 559, 392 P.2d 808 (1964)
(affirming $500 damages award for nuisance due to odor and flies from chicken
breeding plant next door to plaintiff); Bunch v. King County Dept. of Youth Servs.,
155 Wn.2d 165, 116 P.3d 381 (2005) (affirming award of $260,000 for non-
economic damages in employment discrimination suit). We are confident that the
same can be done here. Evidence for this sort of inquiry will likely include experts
in the field and comparisons of employment opportunities; while it is certainly a
difficult task, it is not an insurmountable one. The current record of the evidence
presented to the trial court is insufficient to establish the proper damages award in
line with this opinion. Having established the correct inquiry as to loss, an
exceedingly unique opportunity to hold a specialized and innovative role within one
of the world’s foremost philanthropic foundations, the parties now must assess its
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monetary value. We remand for recalculation of damages consistent with this
opinion.
IV. Fair Trial
The Foundation argues it was deprived of a fair trial before a neutral
arbitrator when the judge interjected during the bench trial and took control of the
court room at numerous times. It further avers the court prevented it from making
objections, in violation of ER 614(c).
A fundamental liberty interest protected by the due process clause of both
the Fourteenth Amendment and article I, section 3 of the Washington Constitution
is the right to a fair trial. Estelle v. Williams, 425 U.S. 501, 503, 96 S. Ct. 1691, 48
L. Ed. 2d 126 (1976); State v. Davis, 141 Wn.2d 798, 824, 10 P.3d 977 (2000). “A
fair trial in a fair tribunal is a basic requirement of due process.” In re Murchison,
349 U.S. 133, 136, 75 S. Ct. 623, 99 L. Ed. 942 (1955); State v. Moreno, 147
Wn.2d 500, 507, 58 P.3d 265 (2002). Normally, a trial court may ask questions of
the witnesses without violating the due process right to a fair trial. ER 614(b);
Moreno, 147 Wn.2d at 509-11.
A. Judicial Participation in Witness Testimony
Here, the court did ask numerous questions of both parties’ witnesses
throughout the trial. A bench trial puts “unique demands” on the judge presiding,
“requiring them to sit as both arbiters of law and finders of fact.” State v. Read,
147 Wn.2d 238, 245, 53 P.3d 26 (2002). ER 614 expressly allows for the court to
call witnesses and to question them, though such questioning is expressly limited
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by the state constitution’s prohibition on judicial comment on the evidence. W ASH.
CONST. art. IV, § 16. Judicial comment on the evidence is naturally less of a
concern in the context of a bench trial, however, as where the facts in a case are
“passed upon by the trial judge alone, [the judge] may be presumed to have
disregarded all improper and incompetent evidence.” Whiting v. City of Seattle,
144 Wn. 668, 675, 258 P. 824 (1927). This presumption in favor of the trial judge
is a guiding principle for our analysis of this issue.
The Foundation argues that the judge usurped the role of counsel by
actively examining witnesses and otherwise directing testimony, but in the context
of a bench trial, the judge was also the finder of fact and such inquiry is proper
under ER 614(b). “In a case without a jury, the judge has much broader discretion
to question a witness.” 5A Wash. Prac., Evidence Law and Practice § 614.5 (6 th
ed.). While the court’s participation in testimony here was extensive, much of the
direction by the judge was to avoid repetition or move past topics she, as the trier
of fact, felt needed no further exploration. “Trial judges have wide discretion to
manage their courtrooms and conduct trials fairly, expeditiously and impartially . .
. . We, therefore, review a trial judge’s courtroom management decisions for abuse
of discretion.” In re Marriage of Zigler and Sidwell, 154 Wn. App. 803, 815, 226
P.3d 202 (2010) (internal citations omitted). Particularly in a bench trial, this may
manifest as a more active role in directing witness testimony for the sake of
efficiency.
The Foundation further avers that, at times, the judge testified either by
answering questions from counsel before the witness could respond, or framing
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her questions in a way that ventured into testimony. ER 605 states, “[t]he judge
presiding at the trial may not testify in that trial as a witness. No objection need be
made in order to preserve the point.” Again, while the court’s involvement was
pervasive, such that the experienced practitioners here may well have perceived
it as invading their respective roles in the proceedings, many of the excerpts from
the trial transcripts cited demonstrate that the judge was summarizing prior
testimony. Heavy handed as it may have been, the court may operate its
courtroom with justice and efficiency in mind.
An assignment of error claiming that the judge’s conduct at trial prevented
a litigant from the basic right to a fair trial is serious one. While the Foundation
went to great lengths to count the number of interjections by the judge and set
them out in a grid attached to their briefing on appeal, they failed to put forth similar
effort to demonstrate the prejudice that may have resulted from this conduct or
otherwise explain how this constitutes an abuse of discretion under the highly
deferential standard. As such, we find no error on this matter.
B. Counsel’s Ability to Object
The Foundation’s claim that it was denied a fair trial also rests on the
assertion that the court prevented it from objecting during proceedings. ER 614(c)
states “[o]bjections to the calling of witnesses by the court or to interrogation by it
may be made at the time or at the next available opportunity when the jury is not
present.” As explained above, in the context of “a bench trial, there is even a more
‘liberal practice in the admission of evidence’ on the theory that the court will
disregard inadmissible matters.” State v. Jenkins, 53 Wn. App. 228, 231, 766 P.2d
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499 (1989) (quoting State v. Miles, 77 Wn.2d 593, 601, 464 P.2d 723 (1970)).
Though we are skeptical of the court’s approach to addressing the Foundation’s
attempts to object, the Foundation utterly failed to identify any harm stemming from
this directive.
There is nothing in the record to demonstrate later attempts by the
Foundation’s trial counsel to preserve their intended objections; for example, by
filing written objections the next day or seeking to make an offer of proof. Part of
its argument rests on claims of hostility from the trial court judge. However, once
removed from the heat of battle as it were, the Foundation does not identify in its
briefing to this court objections it would have made, but for the trial judge, or
evidence that was improperly admitted in the absence of those intended
objections. This court, for obvious reasons, takes seriously claims that a trial court
judge would prevent a litigant from making objections on the record, but we cannot
engage in any meaningful inquiry if the party alleging such error fails to identify
how their strategy was impacted or otherwise demonstrate resulting harm.
The Foundation moved for a new trial or, in the alternative, reconsideration
soon after the conclusion of proceedings. Pierce argues in briefing that this motion
arrived shortly after the publication of a case from this court addressing similar
interjections in a bench trial by the same judge. However, the record before us
does not include a response from Pierce, transcripts, or indications that argument
was taken. We have only the motion, its appendices and the court’s ruling denying
the motion. The Foundation’s motion largely mirrors its argument on this matter in
its briefing on appeal; while it points out the conduct to which it assigns error, the
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Foundation fails to establish prejudice. When a claim as serious as this is raised
on appeal, the party bringing the challenge bears the responsibility to demonstrate,
or at least allege, the specific harm that ensued from the judge’s conduct. In light
of the presumptions in favor of the trial judge in the context of a bench trial, the
deferential abuse of discretion standard of review on appeal and the absence of a
showing of prejudice, we find no error.
V. Cross-Appeal of Denial of Attorney Fees
Pierce cross-appeals the court’s denial of his request for attorney fees at
the conclusion of trial. Our court applies a two-part review of attorney fee awards.
Gander v. Yeager, 167 Wn. App. 638, 647, 282 P.3d 1100 (2012). First, we review
de novo whether a legal basis exists for awarding attorney fees by statute, under
contract, or in equity. Id.; Niccum v. Enquist, 175 Wn.2d 441, 446, 286 P.3d 966
(2012). We then apply an abuse of discretion standard to a decision to award or
deny attorney fees and the reasonableness of any such attorney fee award.
Gander, 167 Wn. App. at 647; Freeman v. Freeman, 169 Wn.2d 664, 676, 239
P.3d 557 (2010); Rettkowski v. Dep't of Ecology, 128 Wn.2d 508, 519, 910 P.2d
462 (1996).
Here we must first determine whether RCW 49.48.030 provides a basis for
attorney fees. The relevant portion of RCW 49.48.030 states: “[i]n any action in
which any person is successful in recovering judgment for wages or salary owed
to him or her, reasonable attorney’s fees, in an amount to be determined by the
court, shall be assessed against said employer or former employer.” The trial court
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properly determined that this was not a suit for wages, but instead for breach of
contract and promissory estoppel.
There is no question that Pierce was paid the salary owed to him during his
time with the Foundation. “RCW 49.48.030 authorizes an award of attorney fees
for employees who must sue in order to collect wages owed from their employers.”
Int’l Union of Police Ass’n, Local 748 v. Kitsap County, 183 Wn. App. 794, 798,
333 P.3d 524 (2014). “[T]he statute has been construed to include awards that
were not for wages for work actually performed, but rather, money due by reason
of employment.” Gaglidari v. Denny’s Rest., Inc., 117 Wn.2d 426, 449, 815 P.2d
1362 (1991). Here, as the court’s order denying fees explains, the only reason
“wages” are even at issue is because the award for damages was predicated on
what Salesforce would have paid Pierce as opposed to what the Foundation did
pay him during the same time. As explained in Section III, this was not the proper
measure of damages, but even if the correct analytical framework had been used,
this is not an instance where Pierce was owed wages for work completed or work
he was further contracted to do. The court properly denied Pierce’s request for
attorney fees.
Affirmed in part, reversed in part, and remanded for further proceedings
consistent with this opinion.
WE CONCUR:
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