IBM's Motion for Judgment on the Pleadings - Part 2

Defendant International Business Machines Corporation (IBM) submits this Reply Memorandum in response to plaintiff's opposition to IBM's Motion for Entry of Judgment on the Pleadings. With his opposition, plaintiff has tendered an Amended Complaint asserting two additional causes of action (unjust enrichment and quantum meruit) as well as the original two claims for breach of contract and in tort. IBM urges that its motion be granted and that plaintiff's Motion for Leave to Amend be denied. The new legal theories proffered in the Amended Complaint are just as defective as the original theories.

All four of plaintiff's causes of action interpret the IBM Suggestion Plan as giving rise to a promise or at least creating a legitimate expectation that IBM would pay for all suggestions that IBM used or appeared to use. See Amended Complaint par. 7 (hereafter Am. Comp.). Plaintiff's allegation that IBM's enrichment was unjust and inequitable rests on this claim. See Id. par. 25. So does his quantum meruit theory. See Id. par.. 29. The same is true of his original breach of contract and negligent misrepresentation claims. Id. pars. 32, 36.

The issue posed by IBM's motion is whether the Suggestion Plan brochure, when read as a whole including its many clear disclaimers, negates any such legitimate expectation. The language of the brochure is not in dispute; the only question is 9

the legal effect of the undisputed written terms, a question of law for this Court. University Nat'l Bank v. Wolfe, 279 Md. 513, 369 A.2d 570, 575-76 n.7 (1977) ("When writings alone evidence a contract, it is for the court to construe the writings and determine whether there was a contract, and, if so, what that contract was."); Metropolitan Life Ins. Co. v. Promenade Towers Mut. Hous. Corp., 84 Md. App. 702, 581 A-2d 846, 853 (1990), affld, 324 Md. 588, 597 A.2d 1377 (1991). Maryland courts respect such disclaimers and enforce them, as do other courts that have considered employee suggestion plans. These courts agree that plaintiff cannot evade the disclaimers simply by repackaging or relabeling his cause of action. Therefore, IBM is entitled to judgment on the pleadings on all four counts.

Plaintiff fails to address the key disclaimers noted in IBM's opening brief. He does so even though Maryland cases, including at least one he cites, focus on the language of disclaimers and where they are placed within the document. See Haselrig v. Public Storage, Inc., 86 Md. App. 116, 585 A.2d 294, 300 (1991). He ignores the disclaimer found in the very first section of the brochure: "If the suggestion is published or used, the decisions of the company shall be final, binding and conclusive as to the amount of the cash award, if-any . . . . Am. Compl. Ex. A par. 1.0 (emphasis added). He ignores the . disclaimer in the last section of the brochure: "No action which IBM takes, including implementation of an identical or similar solution, shall be deemed to constitute an agreement to pay for a suggestion." Id. par. 1.12 (emphasis added). He ignores the disclaimer at the very end of the brochure: "Any decision of the company concerning the terms or administration of the Plan . . . shall be final, binding and conclusive, and is within its sole discretion." Id. And he ignores several other disclaimers found in the brochure. See Mem. in Support of Def.'s Mot. for Judgment on Pleadings 2-4 (hereafter Opening Br.).

Instead of facing up to the disclaimers, plaintiff cites extrinsic evidence and other language in the brochure that might--if viewed in isolation from the disclaimers--support his claims:

1) He notes that during one decade IBM awarded nearly $60 million for suggestions, and that IBM has awarded $90,237.00 to plaintiff alone for fourteen other suggestions. Mem. of 3

Points and Authorities in Opp. to Def.'s Mem. in Support of Def.'s Mot. for Judgment 2-3 (hereafter Br. in Opp.). The fact that IBM made some awards on some occasions in the past cannot override the clear intent of the disclaimers. In the disclaimers, IBM reserved the right not to make awards for any particular suggestions.

2) He quotes the following language from the brochure: "If all eligible conditions are met and your suggestion is adopted for implementation, it can earn you a cash award from $50 to $150,000.pars. Id. at 3-4 (quoting Am. Compl. Ex. A par. 1.3). He implicitly interprets the phrase "can earn you" as "will earn you," failing to note that the two phrases are very different.

3) He notes that the plan gives IBM "sole discretion and final, binding, and conclusive [authority] in all matters pertaining to award[s] calculations." Id. at 3 (quoting Am. Compl. Ex. A par. 1.4). He also notes that "[if] all eligibility criteri[a] have been met and the suggestion is to be implemented, an award is calculated based upon tangible savings or intangible value to IBM." Id. (quoting Am. Compl. Ex. A par. 1.9). These statements do not address how to reach a decisions to make an award. They appear in section 1.4 of the brochure, which is entitled "How [a]wards [a]re [c]alculated." Id. (quoting Am. Compl. Ex. A par. 1.9). They relate to how awards are to be calculated, not whether an award is appropriate.

4) He notes that "[t]he basic intent of the Suggestion Plan is to award ideas." Id. at 3-4 (quoting Am. Compl. Ex. A par. 1.8). The phrase "basic intent" is precatory language, exactly the opposite of a specific, binding promise that creates legal obligations.

5) He quotes similar precatory language about the intent of the plan from the IBM Manager's Manual and Evaluator's Guide. Id.. at 4-6. Yet he fails to note that these documents are designed for use by evaluators, rather than by those submitting suggestions.

6) He never quotes any language stating that IBM shall make an award, will make an award, or must make an award, because the documents contain no such language.

In short, plaintiff never comes to grips with the specific, clear disclaimers throughout the Suggestion Plan brochure. IBM never made any "agreement to pay for a suggestion," and thus plaintiff could not legitimately expect that IBM had committed to pay him. Am. Compl. Ex. A par. 1.12. As we show below, the conclusion that IBM made no promises or commitments is fatal to plaintiff's case.

II. IBM WAS NOT UNJUSTLY ENRICHED BECAUSE ITS SUGGESTION PLAN BROCHURE DISCLAIMED ANY PROMISE OR COMMITMENT TO PAY

To establish a claim for unjust enrichment, plaintiff must show not merely that the defendant realized a benefit, but that it did so unjustly. Br. in Opp. 9-10; Bennett Heating & Air Conditioning, Inc. v. NationsBank, 103 Md. App. 749, 654 A.2d 949, 956-57 (1995), affld in relevant part, 342 Md. 169, 674 A.2d 534, 540 (1996). Plaintiff claims injustice because, he says, he expected compensation. But he never explains why his expectation had any legitimate basis given the stark, clear, undisputed language of the whole brochure. Plaintiff's expectation had no legitimate basis, because IBM disavowed any "agreement to pay for a suggestion" even if it used that suggestion. Am. Compl. Ex. A par. 1.12; see supra Section I.

None of the unjust-enrichment cases cited by plaintiff involved a disclaimer of a promise. For example, Matarese involved an express promise to pay one-third of an invention's value, a promise that was unenforceable solely because there was no proof that the agent-promisor had authority to bind his principal. Matarese v. Moore-McCormack Lines, Inc., 158 F.2d 631, 632-33 (2d Cir. 1946). The court used unjust enrichment to cure this technical defect in the proof, rather than stitching together a new contract out of whole cloth.

Indeed, one of the Maryland cases cited by plaintiff undercuts his argument. In Mass Transit, the MTA solicited bids to build a rail station. Mass Transit Admin. v. Granite Constr. Co., 57 Md. App. 766, 471 A.2d 1121 (1984). One of the bidders, Granite, relied on the oral statement of an MTA employee that Granite would not be responsible for relocating a nearby gas line, and lowered its bid accordingly. However, the bid contract stated: "Oral explanations or instructions will not be binding." 57 Md. App. 766, 471 A.2d at 1127. When Granite was required to move the gas line, it sued for unjust enrichment to recoup the cost of that work. The court held that, given the disclaimers, Granite had no right to rely on the oral explanation, and directed the lower court to enter judgment in favor of MTA. 57 Md. App. 766, 471 A.2d at 1127-29. The court explained that where the disclaimers allocate risks between the parties, a plaintiff cannot circumvent those disclaimers by claiming in quantum meruit or unjust enrichment:

57 Md. App. 766, 471 A.2d at 1126 (quoting with approval Industrial Lift Truck Serv. Corp.. v. Mitsubishi Int'l Corp., 432 N.E.2d 999, 1002 (Ill. App. Ct. 1982)).

Cases from other jurisdictions confirm that, when a contract claim under a suggestion plan is unenforceable, a plaintiff cannot as a matter of law recover under an unjust enrichment theory. See, e.q:., Alderton v. Armco, Inc., No. CA8407-076, 1985 WL 6152, at *3 (Ohio Ct. App. Feb. 19, 1985) (per curiam) (affirming grant of summary judgment) (attached as Ex. C to Opening Br.); Calkins v. Boeing Co., 506 P.2d 329, 332 (Wash. Ct. App. 1973) (same); see also Lisec v. United Airlines, 85 Cal. App.3d 969, 979, 149 Cal. Rptr. 847, 854 (Ct. App. 1978) (directing entry of judgment notwithstanding verdict); Davis v. General Foods Corp., 21 F. Supp. 445, 446 (S.D.N.Y. 1937) (entering judgment on the pleadings). Even one of the cases relied on by plaintiff recognizes that there can be no unjust enrichment claim based on a suggestion plan that reserves unfettered discretion to an employer. Osborn v. Boeing Airplane Co., 309 F.2d 99, 102 (9th Cir. 1962).

In short, plaintiff cannot repackage his claim as one for unjust enrichment to circumvent the terms of the Suggestion Plan brochure. In light of the brochure's clear and undisputed terms, any enrichment was not unjust.

To recover in quantum meruit, plaintiff must prove that he had a legitimate basis for expecting payment for his suggestions and that IBM had notice of that expectation. See Waco Scaffold & Shoring Co v. 425 Eye St. Assocs., 355 A.2d 780, 783 (D.C. 1976), cited with approval in Br. in Opp. 14-15. But the Suggestion Plan brochure, read as a whole, supplies no legitimate basis for expecting payment, and certainly not one that would put IBM on notice. On the contrary, the disclaimers expressly disavow any "agreement to pay for a suggestion" even if that suggestion is implemented. Am. Compl. Ex. A par. 1.12; see supra Section I.

Quantum meruit is unavailable as a matter of law where the parties have an employment agreement but have failed to enter into an additional agreement for royalties for an invention. First Nat'l Bank v. Burton, Parsons & Co., 57 Md. App. 437, 470 A.2d 822, 826 (1984). Though the parties in Burton had agreed to negotiate contracts for royalties on top of the employee's salary, they never did so. 57 Md. App. 437, 470 A.2d at 829. The court held that the inventor could not raise a claim in quantum meruit, because the agreement to negotiate a royalty contract was too vague to be enforceable. Therefore, the employee was restricted to his salary under the employment contract. "(The employee] may not have received as much compensation as he deserved, but he received that for which he contracted. He cannot use quantum meruit to obtain more." 57 Md. App. 437, 470 A.2d at 830. See also Opening Br. 6-7; Calkins, 506 P.2d at 331 (analogous facts).

The instant case presents even more compelling facts. Here, plaintiff was a regular IBM employee who was paid for providing services to the company. The suggestion plan brochure failed to create an additional obligation, not because of some technical defect or oversight, but rather by design. While plaintiff may have hoped to receive more than his base salary for his suggestions, he had no contractual right to more. He cannot use quantum meruit to transmute an intentionally unenforceable representation into the equivalent of a binding contract.

Cases from other jurisdictions confirm that employees cannot circumvent suggestion plan disclaimers by suing in quantum meruit (also known as implied-in-fact contracts). One case cited by plaintiff notes that such implied-in-fact contracts "will not be implied in terms inconsistent with intentions clearly expressed nor in the face of a conclusive manifestation that no contract was intended." Osborn, 309 F.2d at 102. Thus, if the plaintiff in Osborn had been unable to enforce the suggestion plan as a contract, he would likewise have been unable to recover in quantum meruit. See Id.. Cf. Lisec, 85 Cal. App.3d at 979, 149 Cal. Rptr. at 854 (holding that where there is no contract, gratuitous decision to compensate some suggestions-through suggestion plan "does not create a legal obligation of any kind").

The cases cited by plaintiff do not show that he had a legitimate basis for expecting payment, a basis that would put IBM on notice. One merely addressed when a quantum meruit action accrues after a client terminates an attorney's contingent-fee contract. Skeens v. Miller, 331 Md. 331, 628 A.2d 185, 191 (1993). Another affirmed a judgment for a defendant, finding that the circumstances did not put the defendant on notice of the contractor's expectations. Waco, 355 A.2d at 783 (noting that 10 -

"there was no showing of an understanding between the parties"). A third, Mass Transit, as noted above, stated that as a matter of law, claims for unjust enrichment and quantum meruit will not lie when the parties have already allocated their risks in a contract. Mass Transit, 57 Md. App. 766, 471 A.2d at 1126.

A. IBM's Suggestion Plan Brochure Cannot Be Construed Am a Binding Offer to Enter Into a Unilateral Contract

Under Maryland law, employee handbooks and brochures can in certain circumstances create contracts. But as plaintiff notes, a brochure is not a contract unless it contains "a promise, made to each employee, of a definite and specific benefit." MacGill v. Blue Cross, 77 Md. App. 613, 551 A.2d 501, 503 (1989) (affirming grant of summary judgment). The promise must also be "capable of objective application in discrete cases." Id. Applying these principles, the MacGill court held that as a matter of law, "(Personnel policies that specifically prescribe and limit the procedures that an employer must use in filling vacant positions, but do not prescribe with whom they are to be filled, do not" create contracts. 77 Md. App. 613, 551 A.2d at 504. The same is true here: the IBM Suggestion Plan specifically prescribes and limits the procedures for evaluating suggestions, but does not prescribe which ones merit rewards. See supra Section I. Thus, it does not create a contract.

Even where there would otherwise be a contract, Maryland law recognizes that disclaimers, as a matter of law, may dictate a conclusion that no binding contract was ever formed. One employee handbook, for example, contained the following sentence: "Finally, this handbook does not constitute an express or implied contract." Castiglione v. Johns Hopkins Hosp., 69 Md. App. 325, 517 A.2d 786, 788 (1986). The court affirmed the entry of summary judgment against an employee's contract claim based on the manual, noting that as a matter of law the employee had no right to rely on the manual: "Justifiable reliance is precluded where, as in the case at hand, contractual intent has been expressly disclaimed." 69 Md. App. 325, 517 A-2d at 794; accord Bagwell v. Peninsula Reg'l Med. Ctr., 106 Md. App. 470, 665 A.2d 297, 308-09 (1995) (affirming entry of summary judgment); Fournier v. USF&G, 82 Md. App. 31, 569 A.2d 1299, 1304 (1990) (same).

Plaintiff resists this conclusion by trying to reinterpret discretionary language as a binding promise to pay. He claims, for example, that the statement that a suggestion "can earn you from $50 to $150,000" does not mean what it says. "The fact that the word can, is used does not imply (that the employee may not get an award] at all but implies that you will get an award if you save IBM money; at best the phraseology used is patently ambiguous." Br. in Opp. at 20 (emphasis added). In other words, according to plaintiff, "can" does not mean "can"; it is so ambiguous that it may mean "will." This argument is specious, and of course is based on one phrase looked at in isolation from the disclaimers.

Plaintiff also cites to several inapposite cases. In one, the court refused to grant summary judgment because it found two disclaimers in an employment manual to be unclear. The first disclaimer said that the employment relationship was "'predicated' on an at-will basis" rather than that it was at will or shall be at will. Haselrig, 86 Md. App. 116, 585 A.2d at 300-01. In contrast, the IBM Suggestion Plan disclaimers are unambiguous. The second disclaimer in Haselrig was unclear because it was placed in the probationary section of the manual, implying that it was applicable only to probationary employees. 86 Md. App. 116, 585 A.2d at 301. In contrast, the IBM brochure has explicit disclaimers at the beginning and end of the manual and at several points in between. See supra Section I.

Another case cited by plaintiff, Osborn, is likewise distinguishable. In that case, the suggestion plan provided that the employer's decisions were "final and conclusive as to the person entitled to a cash award and the amount of such award-" 309 F.2d at 100. The court reversed summary judgment for the employer because the plaintiff had submitted his suggestion before the plan came into effect. He was therefore not bound by the limitations in the plan, and could recover for unjust enrichment or on an implied-in-fact contract theory. Id. at 101-02. As an alternative holding, the court found that the language of the plan was ambiguous. Id. at 102-03. The same employer later amended its plan to make its decisions "final and conclusive as to the amount of a cash award, if any, and the person or persons entitled thereto, and all other matters concerning the suggestion." Calkins, 506 P.2d at 330. This amended Boeing plan has been held to be unenforceable as a contract as a matter of law. Id. at 331-32 (affirming summary judgment).

Plaintiff recognizes that the Calkins case strongly supports IBM's position. He acknowledges that the court's holding hinged on a change in wording from "the amount of the cash award" to "the amount of the cash award, if any." Br. in Opp. at 25 n.2. He tries to distinguish Calkins by claiming: "In the instant case IBM did not use the language 'if any.'" Id. Plaintiff is mistaken. As IBM pointed out in its opening brief, the disclaimer in the very first section of the brochure provides: "If the suggestion is published or used, the decisions of the company shall be final, binding and conclusive as to the amount of a cash award, if any, and the person or persons entitled to the award, and all other matters concerning the suggestion and its publication and use." Am. Compl. Ex. A par. 1.0 (emphasis added). The IBM plan's language tracks the words that the Calkins court found to be dispositive.

Plaintiff also cites Raybestos-Manhattan Inc. v. Rowland, 460 F.2d 697 (4th Cir. 1972), but that case did not involve any disclaimers. In Raybestos, an employee submitted an invention to his employer pursuant to a suggestion plan. The employer acknowledged the suggestion and began to invest "considerable expense" and manpower in experimenting, testing, and redesigning the invention. Id. at 698-99. Without formally withdrawing his suggestion, the employee filed for a patent and tried to market the idea on his own. Id. at 699. Applying South Carolina law to these unusual-facts, the court found that the employee had breached his contract. Id. at 700. The court recognized that there could be a contract "subject, of course, to all of the provisions of the suggestion system." Id. Nothing in that court's opinion suggests that the provisions of the suggestion system included any disclaimers akin to the disclaimers in IBM Suggestion Plan. Thus, Raybestos is inapposite.

Indeed, another of the cases cited by plaintiff on the contract issue supports IBM's position. It holds that suggestion plans that expressly make performance optional or express an intent not to be bound do not give rise to binding contracts. Lone-Star Steel.Co. v. Scott, 759 S.W.2d 144, 152 (Tex. App.-Texarkana 1988, writ denied). The suggestion plan language in that case gave the employer final discretion over the plan's terms and administration. Id. at 151. At that point, there was no binding contract. However, subsequently the company ran a newspaper ad stating: "Cash awards will be paid for all suggestions adopted." Id. at 152 (emphases added by court). Based on this new and unqualified language, the court found that there was an enforceable contract. Id.

Alternatively, plaintiff urges that IBM's disclaimer of contractual intent was ineffectual because the company acted in bad faith. See Br. in Opp. at 23. But where there is no contract, as a matter of law there can be no implied covenant of good faith. See Suburban Hosp., Inc. v. Dwiggins, 324 Md. 294, 309, 596 A.2d 1069, 1077 (1991) (directing entry of judgment in favor of employer); Hrehorovich v. Harbor Hosp. Ctr., Inc., 93 Md. App. 772, 614 A.2d 1021, 1033 (1992) (affirming dismissal of complaint).

B. Even If There Was A Contract, IBM Has Acted Within Its Sole Discretion to Make Final, Binding, and Conclusive Decisions

In his Amended Complaint, Plaintiff adds several new conclusory allegations that IBM acted in bad faith. Am. Compl. Pars. 13, 16, 20, 30. But these allegations are futile because, even if the Suggestion Plan was a contract, it gave IBM "sole discretion" to make decisions that are "final, binding and conclusive." Id. Ex. A par. 1.0, 1.1, 1.4, 1.12. An employer is required to act in good faith only "where its manual-generated policy requires the employer to act in good faith.,' Elliott v. Board of Trustees of Montgomery- County Community College, 104 Md. App. 93, 655 A.2d 46, 54 (1995). "Only in instances when the employer's policy promises a good faith application [and the employer acts in bad faith] would such an issue result in a triable action." Id. Nothing in the IBM Suggestion Plan "promises a good faith application." On the contrary, the repeated disclaimers show that IBM's discretion was to be sole, complete, and unfettered. See Stewart v. IBM, No. CV-94-052-H-RMH, slip op. at 16-18 (D. Mont. July 24, 1995) (holding that clear words of IBM's Suggestion Plan disclaimed any implied contractual duty of good faith as a matter of law, and therefore granting summary judgment) (attached as Ex. B to Opening Br.). In short, IBM had no contractual duty restricting the exercise of its sole discretion. Therefore, there can be no "triable action."

Plaintiff's argument to the contrary rests mostly on a handful of non-Maryland cases, none of which involved disclaimers akin to those found in the IBM Suggestion Plan. See Br. in Opp. 24-27; e.g., Osborn, 309 F.2d at 102-03 (recognizing duty of good faith because disclaimers were ambiguous). Maryland courts, however, enforce exculpatory clauses and finality provisions in the context of contracts for arbitration. See Opening Br. 12-13. The only ground for challenging the merits of a Maryland arbitrator's decision is fraud. See Opening Br. 13. Thus, Maryland courts would follow the majority of other jurisdictions, which refuse to review the exercise of an employer's final, binding, and conclusive discretion absent fraud. See Opening Br. 10-12.

Plaintiff has not sought to distinguish the Maryland cases cited in IBM's opening brief, nor the non-Maryland cases that confirm their approach. Nor has plaintiff tried to explain why Maryland courts would now change their hands-off approach to reviewing exercises of discretion. In neither his original Complaint nor in the recently tendered Amended Complaint has plaintiff tried to plead fraud at all, let alone to plead it with the specificity required by the Federal Rules of Civil Procedure. See Fed. R. Civ. P. 9(b).

Plaintiff cannot establish that IBM is guilty of negligent misrepresentation, because he cannot prove that IBM made a false statement of fact. See Ward Dev. Co. v. Ingrao, 63 Md. App. 645, 493 A.2d 421, 425-26 (1985). The disclaimers discussed in Section I gave plaintiff fair warning that IBM was not bound to pay him for his suggestions even if it implemented them. Two of the cases cited by plaintiff recognize that, as a matter of law, plaintiff's untenable contract claim cannot be salvaged by relabeling it in tort: "Any duty to compensate an employee for suggestions can only come from the terms of the employee suggestion plan-" Didley v. General Motors Corp., 837 F. Supp. 535, 541 (W.D.N.Y. 1993) (dismissing negligence claims on suggestion plan for failure to state a claim); see Hrehorovich, 93 Md. App. 772, 614 A.2d at 1034 (affirming motion to dismiss because employee's "negligence claim cannot survive the collapse of his employment contract claim"); see also Stewart, slip op. at 18-19 (entering summary judgment).

Plaintiff fails to respond to IBM's argument that Maryland law enforces agreements that limit tort liability. Nor does he respond to IBM's argument that he has shown no justifiable reliance upon the alleged misrepresentation. See Ward, 53 Md. App. 645, 493 A.2d at 425-26. As Maryland courts have recognized, "[j]ustifiable reliance is precluded where, as in the case at hand, contractual intent has been expressly disclaimed." Castiglione, 69 Md. App. 325, 517 A.2d at 794; accord Bacrwell, 106 Md. App. 470, 665 A.2d at 308-09; Fournier, 82 Md. App. 31, 569 A.2d at 1304. Because plaintiff's reliance in the face of disclaimers was not justifiable, he cannot recover in tort.

Finally, plaintiff undercuts his own claim of misrepresentation by acknowledging that for fourteen of his other suggestions, IBM awarded him a total of $90,237.00. Am. Compl. par. 7. Thus, it is not true that when IBM made the statements in the plan brochure, it "had no intention to fairly and reasonably compensate plaintiff." Am. Compl. par. 36. In other words, plaintiff's assertion that he was paid on fourteen separate occasions undercuts his conclusory allegation that IBM never meant to pay him. Therefore, plaintiff has failed to state a claim for negligent misrepresentation.

Each of the four causes of action set forth in the Amended Complaint rests on an alleged breach of a promise or failure to honor a legally justifiable expectation. IBM's Suggestion Plan brochure expressly disclaimed all promises and commitments. The words of the disclaimers are clear and undisputed, and the legal effect of these words is a matter of law for this Court to decide. Maryland, law respects such disclaimers. IBM's enrichment, if any, was not unjust, as plaintiff had fair warning. IBM was not put on notice that plaintiff legitimately expected payment, and so there can be no claim for quantum meruit. IBM never made an offer that ripened into a contract. And IBM never misrepresented that it would make awards for all suggestions that it used; indeed, the brochure clearly states the contrary. Therefore, IBM respectfully asks this Court to enter judgment on the pleadings in favor of IBM.

Respectfully submitted this 11th day of December, 1996,

Michael S. Horne

Maryland Trial Bar No. 04012

Stephanos Bibas

COVINGTON & BURLING

1201 Pennsylvania Avenue, N.W.

P.O. Box 7566

Washington, DC 20044-7566 (202) 662-6000

Attorneys for Defendant

International Business Machines

Corporation

Of Counsel:

Theresa K. Mohan

International Business

Machines Corporation

44 South Broadway

White Plains, NY 10601

(914) 288-4325

I hereby certify that on this llth day of December, 1996, I caused to be mailed, first class, postage prepaid, a true and correct copy of the foregoing Reply Memorandum in Support of Defendant's Motion for Judgment on the Pleadings to counsel for plaintiff:

Bruce M. Bender

VAN GRACK, AXELSON & WILLIAMOWSKY, P.C.

110 N. Washington Street

5th Floor

Rockville, Maryland 20850

Gary H. Simpson

LAW OFFICES OF GARY H. SIMPSON

9505 Kingsley Avenue

Bethesda, Maryland 20814