Kieron Sweeney v. Visalus Inc
334509
| Mich. Ct. App. | Dec 19, 2017Background
- ViSalus, a multi-level marketing company, contracts with independent promoters (IPs) who earn commissions from personal sales and their downline. Kieron Sweeney became an IP in 2010 and in 2013 transferred his personal account to his corporation, 0730985 B.C., Ltd.
- In Sept. 2013 ViSalus suspended Sweeney and froze his account amid allegations he solicited downline members for other ventures; ViSalus later decided to terminate the IP agreement after Sweeney threatened litigation during reinstatement negotiations.
- Plaintiffs sued for breach of the IP agreement and unjust enrichment, seeking commissions accrued during suspension and after termination.
- ViSalus moved for summary disposition arguing (a) its 2010 "just-cause" limitations were superseded or subject to a best-judgment reservation in the Manuals, (b) the 2013 corporate transfer replaced prior protections, and (c) its determination of unethical conduct is preclusive.
- The trial court granted summary disposition to ViSalus based on the Manuals’ "best judgment" clause and later awarded ViSalus case-evaluation sanctions; the Court of Appeals affirmed in part, reversed in part, vacated sanctions, and remanded for further proceedings limited to pretermination commissions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether ViSalus’s "best judgment" reservation precludes judicial review of its termination decision | The 2010 Terms limited termination to policy violations and promised just-cause protection; Thomas is distinguishable or dicta | The Manuals reserve ViSalus’s right to use its best judgment to decide unethical conduct and termination, so courts cannot second-guess its determination | Held: The best-judgment language gives ViSalus sole authority to determine unethical conduct; summary disposition proper on this ground |
| Whether ViSalus effectively terminated without written notice as required by the Terms | Written notice was required; absence of written notice invalidates termination and entitles plaintiffs to commissions | Plaintiffs had actual notice and treated termination as effective; they did not act inconsistently with being terminated | Held: Plaintiffs had actual notice and acknowledged termination; written notice requirement was not fatal |
| Entitlement to posttermination commissions (procuring-cause) | Plaintiffs contend procuring-cause doctrine entitles them to ongoing commissions from downline sales | Agreement expressly terminates "any further payments" upon violation/termination; contract is not silent so procuring-cause inapplicable | Held: Contract unambiguously cut off further payments on termination; procuring-cause does not apply |
| Entitlement to pretermination commissions accrued during suspension | Plaintiffs contend commissions accrued during suspension (before termination) are owed | ViSalus argues termination made payments retroactive to the date of violation | Held: Material factual dispute exists about when the violating conduct occurred (suspension vs. threat of litigation); summary disposition improper as to pretermination commissions — remand for factfinding |
Key Cases Cited
- Thomas v. John Deere Corp., 205 Mich. App. 91 (Mich. Ct. App.) (reservation of sole authority to determine cause precludes judicial review)
- Lowrey v. LMPS & LMPJ, Inc., 500 Mich. 1 (Mich.) (summary disposition standard)
- Toussaint v. Blue Cross & Blue Shield of Mich., 408 Mich. 579 (Mich.) (just-cause employment enforceable; parties may contract for job security)
- Quality Prod. & Concepts Co. v. Nagel Precision, Inc., 469 Mich. 362 (Mich.) (modification/waiver of written-contract provisions requires mutual assent)
- KBD & Assoc., Inc. v. Great Lakes Foam Techs., Inc., 295 Mich. App. 666 (Mich. Ct. App.) (procuring-cause rule for posttermination commissions)
- Rood v. General Dynamics Corp., 444 Mich. 107 (Mich.) (evidence required to establish a just-cause contractual expectation)