718 F.3d 39
1st Cir.2013Background
- Weiss, a DHL executive, was terminated in September 2009 after a period of investigation into management failures.
- DHL amended the Commitment to Success Bonus Plan in October 2008, decoupling the bonus from performance and tying it to continued employment, with repayment if terminated for good cause.
- The Plan gives the Employment Benefits Committee broad discretionary authority to interpret the Plan and make final determinations; its decisions are final and binding.
- DHL terminated Weiss for “good cause” based on a Thompson investigation into Garcia and Brooklyn district issues, and Weiss did not receive the remaining $60,000 bonus.
- Weiss sued in Massachusetts state court for the unpaid bonus and other claims; DHL removed to federal court and prevailing on summary judgment for Wage Act claim while the jury trial addressed the breach-of-contract issue.
- The district court initially allowed a jury to decide good cause despite the Plan reserving that decision to the Committee; the district court later granted Weiss a verdict on breach-of-contract which the court of appeals reversed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Who determines good cause under the Plan? | Weiss: Plan ambiguity allows jury review. | DHL: Committee sole arbiter of good cause. | Committee has sole authority; jury cannot decide good cause. |
| Is the Plan ambiguous about the good cause determination? | Weiss argues tension between original and amended Plan. | Plan language unambiguously vests authority in Committee. | No ambiguity; Committee's determination controls. |
| Did Weiss abandon the covenant claim by not appealing? | Weiss may pursue covenant claim. | Weiss abandoned by not challenging. | Weiss abandoned the covenant claim. |
| Is the Massachusetts Wage Act claim viable for this bonus? | Bonus could be wages if earned. | Bonus contingent on continued employment and Committee finding; not earned. | Summary judgment for DHL; not wages under Act. |
Key Cases Cited
- FDIC v. Singh, 977 F.2d 18 (1st Cir. 1992) (contract read together; ambiguity rules rule in favor of clear terms)
- Ayash v. Dana-Farber Cancer Inst., 822 N.E.2d 667 (Mass. 2005) (implied covenant can be breached outside express terms)
- Weems v. Citigroup Inc., 900 N.E.2d 89 (Mass. 2009) (discretionary bonus with vesting contingent on employment not wages)
- Boston Police Patrolmen's Ass'n v. City of Boston, 761 N.E.2d 479 (Mass. 2002) (wages? statutory goal to prevent unreasonable detention of wages)
- Kirkley v. F.H. Roberts Co., 167 N.E. 289 (Mass. 1929) (contract interpretation when amendments not material)
- Nolan v. CN8, 656 F.3d 71 (1st Cir. 2011) (employer as sole arbiter can extinguish contractual rights)