A sales manager was fired before he could collect a $60,000 bonus. Did the company owe it to him?

What happened. “Jordan” became a district sales manager for DHL Express, Inc., an international shipping company, in 2004. In August 2007, he was promoted to director of national accounts. Later that year, DHL selected Jordan to participate in a bonus plan that provided a $60,000 bonus if he remained with the company through the end of 2009 plus a $20,000 bonus if the company met its 2009 objectives. The plan stipulated that DHL’s employee benefits committee had “full power and discretionary authority to interpret the Plan, make factual determinations, and to prescribe, amend and rescind any rules” and that the committee’s decisions were “final, conclusive and binding.”

In October 2008, the plan was amended to make the entire bonus contingent on continued employment “in good standing” through the end of 2009. It also provided that if DHL terminated Jordan without cause, he would remain eligible for the bonus, while termination for good cause would render him ineligible.

In January 2009, Jordan received a customer complaint alleging that “Luke,” a Brooklyn sales representative, was offering clients preferential shipping rates in exchange for kickbacks. Jordan referred the matter to his superiors. Their investigation uncovered a history of improper sales tactics dating back to the time when Jordan managed the Brooklyn district. In fact, investigators found that Jordan had disciplined Luke for using unauthorized rates in 2007 without documenting the incident or consulting human resources and security as required by company protocol.

As a result, Jordan was terminated for “significant management failures” in September 2009. The company had paid the $20,000 installment on his bonus in January, but refused to pay the $60,000 balance because he was terminated for cause.

Jordan sued for breach of contract. A jury found for Jordan and awarded the full bonus. Both parties appealed.

What the court said. The 1st Circuit Court of Appeals, which covers Maine, Massachusetts, New Hampshire, and Rhode Island, overturned the verdict, finding that the plain language of the bonus plan clearly designates the benefits committee as “the sole arbiter of whether a Plan participant is terminated for good cause.” The court concluded that “[n]either we nor the district court can rewrite the contract to take away the Committee’s discretion and empower the jury to decide whether [Jordan] was terminated for good cause.” Weiss v. DHL Express, Inc., 1st Cir., No. 12-1853, 1864 (6/3/13).

Point to remember. Companies can retain “sweeping authority” to make decisions so long as their benefit plans provide for it in plain, unambiguous language.