Myers v. Avery Dennison Corp ( 1998 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
BOBBY MYERS,
Plaintiff-Appellant,
v.
No. 97-2457
AVERY DENNISON CORPORATION, a
Delaware Corporation authorized to
do business in Virginia,
Defendant-Appellee.
Appeal from the United States District Court
for the Eastern District of Virginia, at Norfolk.
Raymond A. Jackson, District Judge.
(CA-97-33-2)
Argued: May 5, 1998
Decided: September 3, 1998
Before HAMILTON and MOTZ, Circuit Judges, and
BEEZER, Senior Circuit Judge of the
United States Court of Appeals for the Ninth Circuit,
sitting by designation.
_________________________________________________________________
Affirmed in part and reversed and remanded in part by unpublished
per curiam opinion. Senior Judge Beezer wrote a separate opinion
concurring in part and dissenting in part.
_________________________________________________________________
COUNSEL
ARGUED: Thomas Scott Carnes, SYKES, CARNES, BOURDON &
AHERN, P.C., Virginia Beach, Virginia, for Appellant. Stephen
Wainger, HUFF, POOLE & MAHONEY, P.C., Virginia Beach, Vir-
ginia, for Appellee. ON BRIEF: Timothy M. Richardson, HUFF,
POOLE & MAHONEY, P.C., Virginia Beach, Virginia, for Appellee.
_________________________________________________________________
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
_________________________________________________________________
OPINION
PER CURIAM:
This appeal arises out of a breach of contract action brought by
Bobby Myers against his former employer, Avery Dennison Corpora-
tion.
I.
Between 1974 and 1995, Avery employed Myers as a machinery
salesman in the company's Labeling Machinery Division (LMD). At
the time of the events giving rise to this suit, Myers, as an LMD sales
manager, was responsible for overseeing machinery sales originating
in North America and Mexico. Myers received a base salary plus a
"tiered" percentage commission on machinery sales, with the percent-
age fluctuating as the amount of sales increased. Periodically Avery
would unilaterally restructure the commission tiers; this happened
many times after Myers joined Avery. For projects of unusual vol-
ume, resulting in atypically large commissions, Avery was known to
reduce the commission percentage paid to sales staff. On occasion,
Myers had also received a percentage commission on sales of labels
made in conjunction with machine sales.
In April 1992, Avery, through its Security Printing Division, began
negotiating with Duracell, Inc. to supply pressure-sensitive labels for
its batteries. Avery referred to this project as"T2." Myers was asked
to assist in this sales effort to develop a prototype machine that would
manufacture these labels. In late 1992, T2 began to falter, yet by
2
1993, Avery had reorganized and expanded the project, referring to
this new phase as "Darwin." Myers played a lesser role in Darwin
than he did in T2.
In November 1993, Avery executives declared Duracell a special
project meriting an alternative tiered commission for machine sales.
At the time the Duracell deal took shape, Myers was compensated
generally at 1.7% for annual machine sales up to $625,000, 3.4% on
sales from $625,000 to $1,000,000 and 5.1% after his sales rose
above the $1 million mark. For Darwin, Avery altered this scheme,
providing 4% commission on the first million dollars of Duracell
machine sales, 3% on the second million and 2% any sales above two
million. At Avery's request, Myers memorialized his agreement to
this special commission structure in a letter dated January 25, 1994.
Of a total of 36 machines sold to Duracell during Darwin, Myers
received commission on the 22 machines sold in North America and
Mexico at this 4-3-2% rate. Myers did not receive any commission on
machines sold in any other area or on any labels sold in connection
with Darwin.
Myers filed this suit against Avery, alleging that he was entitled to
a commission not at the 4-3-2% rate, but at the rate generally applica-
ble to Avery machine sales, for all machines sold to Duracell (not just
those sold in the United States and Mexico). He also alleged that he
was entitled to a commission on all label sales made in connection
with the Duracell deal. The district court granted summary judgment
to Avery, holding that Myers, pursuant to his January 25 letter, was
properly compensated at the 4-3-2% commission rate, and that this
letter entitled Myers only to compensation on machines sold in the
United States. The court also concluded that Myers was not entitled
to a commission on label sales arising from the Duracell deal.
II.
Having reviewed the record, briefs, and relevant case law, and hav-
ing the benefit of oral argument, we conclude that the district court's
ruling as to the commission percentage to which Myers was entitled
on machines sold during the Darwin project was correct. Myers
agreed in writing to the special 4-3-2% compensation structure and is
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bound by that agreement. Accordingly, we affirm the judgment as to
this claim, on the reasoning of district court.
III.
However, disputed issues of material fact preclude the grant of
summary judgment to Avery at this time on the two remaining claims.
The first of these is Myers' contention that, regardless of which tiered
structure applies, he is entitled to a commission on machines sold out-
side of his geographic region. Avery maintains that because sales staff
received machinery commission incentives based on the geographical
location of the sale and these machines were sold outside of Myers'
region, Myers was not entitled to commissions on these sales. The
district court apparently found the company's argument persuasive.
Although the court did not directly address this issue, it found that in
paying Myers a commission on six (of the 22) machines sold in Mex-
ico, Avery paid him "more than that to which he was entitled." The
district court seemed to believe that the undisputed evidence revealed
that Myers' January 25 memorandum covered only the 16 machines,
which as of that date, the parties anticipated would be sold in the
United States.
We can find nothing in the record that mandates this conclusion.
Nowhere in the January 25 letter is Myers' commission limited to
machines sold in a certain region. Rather, the letter states that:
[o]n the first one million dollars of business [Myers'] incen-
tive will be 4%. On the next one million dollars of business
the incentive will be 3%. On all subsequent million dollar
incremental business the payout will be 2%.
(Emphasis added). Thus, the letter is ambiguous as to what exactly
constitutes "business" generated by the Duracell deal.
Furthermore, sufficient credible evidence exists to raise a genuine
issue of fact as to whether "business" was limited to machines sold
in the United States. Tom Hampton, LMD's general manager, testi-
fied in his deposition that at the time the letter was drafted, "no one
knew exactly how many machines" would be sold and, thus, how
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many machines for which Myers would receive a commission. Myers
also stated in an affidavit that on at least four separate occasions prior
to the Duracell deal, he had received commissions on machines sold
outside his geographic area, indicating that Avery's practice was to
compensate salespersons for machines sold outside the area for which
they were responsible.
As to Myers' remaining contention -- that he is entitled to a com-
mission on labels sales -- both parties agree that Myers' compensa-
tion for labels sales is governed by a written memorandum, dated
May 17, 1994, entitled "SSE Label Compensation Program." See
Appellant's Brief at 14, Appellee's Brief at 26. The memorandum
states that it "formalize[s] the definition and procedure for the 1%
commission that will be paid to you [LMD machine salespersons] for
label sales," which includes "new label business sold in conjunction
with a pressure sensitive labeling machine." (J.A. 60 OO) (Emphasis
added). The memorandum further states, in pertinent part, that to
receive compensation:
[The machinery salesperson] must be actively involved with
the Label salesperson in selling the total system to an
account [and] . . . .
The attached "System Sales Qualification" form must be
completed and returned to the appropriate Division.
Avery asserts that it is entitled to summary judgment because this
compensation plan does not apply to any label sales made as a result
of joint sales efforts between LMD machinery salespeople and a label
salesperson in the Security Printing Division, the division credited
with selling Duracell labels. More specifically, Avery asserts that the
uncontroverted deposition testimony of the memorandum's drafter,
Ralph Torres, demonstrates that this compensation plan applied only
to joint sales made between LMD salespeople and labels salespeople
in the following Avery divisions: Decorative Technologies, Durables
and Automotives, and Pharmaceuticals. Torres explained that this is
so because the memorandum was addressed to the heads of each of
these named divisions and not to the head of the Security Printing
Division.
5
Yet the May 17 memorandum itself does not provide that it covers
only sales of labels made as part of a joint effort between LMD
machinery salespeople and labels salespeople in one of the above enu-
merated divisions. Rather, the memorandum seems to"formalize" the
procedure for paying commission on LMD "label sales" generally.
Moreover, in addition to naming the heads of the divisions enumer-
ated above, the memorandum is also addressed to"Label Salesfor-
ces." As Myers argues, possibly a factfinder would infer that this
memorandum governs all sales made by LMD machinery salespeople
in conjunction with any of Avery's "Label Salesforces," including the
Security Printing Division's. Accordingly, we cannot say, as a matter
of law, this memorandum does not encompass sales made by LMD
machinery salespeople with label salesforces in the Security Printing
Division.
Alternatively, Avery argues that even if this memorandum applies
to label sales made in conjunction with Darwin, Myers is ineligible
for the 1% commission because he failed to fill out and submit a
"System Sales Qualification" form required under the May 17 memo-
randum. Although Myers admits that he did not submit this form, he
asserts that this is not fatal to his claim and nothing in the record con-
clusively demonstrates that it is. The May 17 memorandum does not
specify a time by which the form must be filed, or that failure to sub-
mit the form results in denial of a commission. Torres stated in depo-
sition that occasionally salespersons had submitted these forms "after
the fact," i.e., after the labels were sold and shipped, and they were
nonetheless entitled to commission. Myers testified that label forms
were often filed after the label sales were completed and that there
was no firm deadline for filing. Thus, we cannot conclude, as a matter
of law, that failure to submit this form deprives Myers of the claimed
commissions.
Finally Avery argues that Myers was not "actively involved" in the
"total sales" made during Darwin project as required pursuant to the
May 17 memorandum, and thus, is not entitled to label compensation.
Myers admits that he played a lesser role in the Darwin phase as com-
pared to the T2 phase, but nonetheless asserts that he was sufficiently
active in selling the "total system" to warrant a label commission. The
record lends some support to this contention. After all, Myers' partici-
pation in the Duracell project (whether in the Darwin or T2 phase)
6
was "active" enough to receive commissions on the machine sales.
Indeed, according to Hampton, Myers was "actively involved" in
"working with . . . Duracell" during the T2 phase. Moreover, the
record reflects that Myers' participation extended well into the Dar-
win phase. Bill Kennerly, an Avery executive instrumental to Darwin,
testified in his deposition that the T2 team had not been "disbanded"
but "expanded" to accommodate the additional personnel required to
execute the Darwin project and that even during this expansion,
Myers remained the only salesperson on the team, staying "in contact"
with Duracell staff through the spring of 1994. Accordingly, a dis-
puted issue of material fact exists as to whether Myers was "active"
enough to warrant compensation under the memorandum, and so
summary judgment in Avery's favor as to this claim cannot stand.
IV.
In sum, we affirm the district court's grant of summary judgment
to Avery Dennison Corporation on the commission rate claim. As to
the other two issues, we reverse and remand for further proceedings
consistent with this opinion.
AFFIRMED IN PART AND REVERSED
AND REMANDED IN PART
BEEZER, Senior Circuit Judge, concurring in part and dissenting in
part:
I concur in the opinion of the court, except for Part II. In Part II,
the court adopts the reasoning of the district court and holds that
Myers is bound by the written agreement for a reduced commission
rate. I respectfully dissent.
To decide Avery's motion for summary judgment, the district court
properly assumed that Myers' right to his standard 5.1% commission
on machinery sales had already vested when Myers agreed to the 4-
3-2% reduced commission structure. Avery could not have unilater-
ally reduced Myers' commission rate once Myers' right to his com-
mission had vested. See Progress Printing Co., Inc. v. Nichols, 244
Va. 337, 340-41 (1992).
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The district court determined, however, that the 4-3-2% commis-
sion agreement was a superseding contract based on an offer, accep-
tance and valid consideration. The district court concluded that
"consideration for the agreement is clearly exhibited in the commis-
sion payments" Myers ultimately received. That conclusion is in
error. "[A] new promise, without other consideration than the perfor-
mance of an existing contract in accordance with its terms, is a naked
promise without legal consideration therefor[e] and unenforceable."
Seward v. New York Life Ins. Co., 154 Va. 154, 168 (1930). As con-
sideration for the 4-3-2% commission agreement, Avery promised
only to pay a portion of the commission already owed to Myers under
the standard 5.1% commission agreement. Because the 4-3-2% agree-
ment was not supported by valid consideration, it was not a supersed-
ing contract, and Myers is entitled to enforce the standard commission
agreement.
I would reverse the decision of the district court on this issue and
remand for the trier of fact to determine whether Myers' right to the
5.1% commission had actually vested at the time the 4-3-2% agree-
ment was reached.
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