23-55273
9th Cir.May 1, 2024Background
- Jonathan Abed sued Vyaire Medical, Inc., his former employer, for unpaid bonuses under two incentive plans (VIP and Bold Plan) implemented after phasing out an old plan (MIP).
- The original MIP bonus plan included a requirement that employees be employed at payout to receive a bonus; the new VIP and Bold Plan documents provided to Abed did not mention this requirement at rollout.
- Vyaire claimed the continued employment requirement applied to the new plans; however, formal governing documents with such provisions were provided only after Abed already began performance.
- Abed resigned in November 2020, before either bonus was paid and without receiving his bonuses; he argued unilateral contracts were formed without the employment continuation provision.
- The district court granted summary judgment for Abed sua sponte, finding new unilateral contracts were created and continued employment requirements were unconscionable. Vyaire appealed.
- The Ninth Circuit affirmed in part (owing Abed the bonuses) and reversed in part (no willful failure to pay wages under § 203(a)), remanding for recalculation of damages and fees.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Existence of enforceable unilateral | Company communications/rollout created new unilateral | No new promises; bonus plans incorporated old plan's continued | Unilateral contracts were formed |
| contracts for bonuses | contracts (not referencing continued employment requirement) | employment requirement; new plan documents included provision | sans continued employment provision |
| (disclosed later) | |||
| Requirement of continued employment for | Plans lacked explicit requirement for employment at payout | Employees should have known requirement carried over, or | Plans did not include continued |
| bonus vesting | requirement included in later-disclosed documents | employment requirement | |
| Statutory penalties for willful failure | Failure to pay bonuses upon termination was willful | Good faith dispute existed over plan terms and bonus vesting | No willful failure; no statutory |
| to pay wages (Cal. Lab. Code § 203(a)) | penalties under § 203(a) | ||
| Unconscionability of continued | (Not addressed, as court found the provisions were not part | Continued employment requirement (if present) not unconscionable | Court declined to reach this issue |
| employment provision | of the contract) |
Key Cases Cited
- Sateriale v. R.J. Reynolds Tobacco Co., 697 F.3d 777 (9th Cir. 2012) (explains unilateral contract formation through performance, especially in context of employment offers)
- Asmus v. Pacific Bell, 23 Cal. 4th 1 (Cal. 2000) (sets precedent for when employment policies become binding unilateral contracts)
- Lucian v. All States Trucking Co., 116 Cal. App. 3d 972 (Cal. Ct. App. 1981) (employee begins performance sufficient to accept unilateral contract if terms are clear at offer)
- Hill v. Walmart Inc., 32 F.4th 811 (9th Cir. 2022) (good faith defense can defeat claim for willful failure to pay wages under Cal. Lab. Code § 203(a))