Weiss v. DHL Express, Inc.

United States Court of Appeals
For the First Circuit

Nos. 12-1853
12-1864

JEREMY M. WEISS,

Appellee/Cross-Appellant,

v.

DHL EXPRESS, INC.,

Appellant/Cross-Appellee.

APPEALS FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS

[Hon. William G. Young, U.S. District Judge]

Before

Howard, Stahl, and Thompson,
Circuit Judges.

Richard B. Lapp, with whom Camille A. Olson, Kristin G.
McGurn, Jeffrey M. Burns and Seyfarth Shaw LLP were on brief, for
appellant.
Paul F. Kelly, with whom Segal Roitman, LLP was on brief, for
appellee.

June 3, 2013
 HOWARD, Circuit Judge. Jeremy Weiss was a rising star at

DHL Express, Inc. ("DHL") until his termination in September 2009,

ostensibly for his failure to properly investigate, document, and

ameliorate the misconduct of an employee under his supervision. The

termination occurred just months before Weiss was to receive a

$60,000 bonus. Weiss filed suit in Massachusetts state court to

recover the bonus on the grounds that he was terminated without

good cause, which under the terms of the bonus plan entitled him to

a full payout. He asserted breach of the implied covenant of good

faith and fair dealing, detrimental reliance, unjust enrichment,

and violation of the Massachusetts Wage Act. DHL removed the case

to federal court on diversity grounds. The court allowed a single

cause of action to go to the jury--a "straightforward" breach-of-

contract claim. The jury found for Weiss. DHL's main claim on

appeal is that the court erroneously allowed the jury to

independently determine whether good cause existed for Weiss's

termination because the bonus plan reserved this determination for

a committee of the company. In his cross-appeal, Weiss challenges

the grant of summary judgment to DHL on his Wage Act claim and the

denial of his attorney's fees. We reverse the jury verdict and

affirm the summary judgment order.

I.

The relevant facts are undisputed. In 2004, DHL, an

international express mail services company, acquired Airborne

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Express, a package delivery company operating in the United States.

Weiss, who had been employed at Airborne Express since 1996,

continued his employment at DHL as District Sales Manager for

downtown Boston. He was promoted within a year to the post of

Regional Sales Director in charge of overseeing a number of sales

districts in the Northeast, including Brooklyn, New York. The

following year, DHL named him "Regional Sales Director of the

Year." Weiss was then elevated to the position of Director of

National Accounts in August 2007. He remained in that position

until his termination two years later.

A. The Bonus Plan

In December 2007, DHL informed Weiss that it had selected

him to participate in the company's "Commitment to Success Bonus

Plan" (the "Plan"). Under the Plan, Weiss became eligible for a

$60,000 service-based bonus if he remained with the company through

the end of 2009, and a $20,000 bonus if DHL met its performance

objectives in 2009. The Employment Benefits Committee (the

"Committee") of the company was given broad authority to administer

the Plan:

The Committee shall have full power and discretionary
authority to interpret the Plan, make factual
determinations, and to prescribe, amend and rescind any
rules . . . and to make any other determinations and take
such other actions as the Committee deems necessary or
advisable in carrying out its duties under the Plan. Any
action required of the Committee under the Plan shall be
made in the Committee's sole discretion and not in a
fiduciary capacity and need not be uniform as to
similarly situated individuals. The Committee's

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 administration of the Plan, including all such rules and
regulations, interpretations, selections, determinations,
approvals, decisions, delegations, amendments,
terminations and other actions, shall be final,
conclusive and binding on the Company, the Participant,
and any other persons having or claiming an interest
hereunder.

The Committee could delegate its functions to a subcommittee or to

one or more individuals. It also reserved the right to amend or

terminate the Plan.

In October 2008, Weiss received notice that "some

adjustments to the Plan" were made "in order to better reflect our

changing work environment." Under the amended Plan, Weiss was

still eligible to receive $80,000, but no portion of it was tied to

the company's performance. Instead, the entire bonus was now

contingent on continued employment through the end of 2009, with

Weiss's performance remaining "in good standing." The first

installation of $20,000 was payable in January 2009 and the

remaining $60,000 in January 2010. In the event that DHL

terminated him "without cause" and eliminated his position, Weiss

would receive the full payout upon termination. If he voluntarily

left DHL or if terminated for "good cause" prior to the payment

dates, he would be ineligible for the bonus.

DHL paid Weiss the first installment of the bonus in

January 2009. When he was terminated in September 2009, DHL

refused to pay the remaining $60,000 on the basis that his

termination was for good cause.

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B. The Termination

In 2007, while Weiss was still Regional Sales Director,

DHL shifted the Brooklyn district to another Regional Sales

Director, Christopher Cadigan. Following the organizational

change, Cadigan informed Weiss that Sergio Garcia, a sales

representative in Brooklyn, had incorrectly set up rates on a

customer account. Weiss and Cadigan discussed the billing issue

with their boss, Vice President of Sales David Katz, and Garcia's

supervisor, District Sales Manager Michael Gargiles. They agreed

that Cadigan would work with Garcia to fix the issue. Although he

no longer had oversight over Garcia, Weiss was in the Brooklyn area

on other business and offered to speak to him.

At that meeting, which Gargiles also attended, Weiss

warned Garcia that his conduct could result in disciplinary action,

including termination. He also instructed Garcia to work with the

pricing team to correct the billing issue. Weiss followed up with

Katz and Cadigan, informing them of his warning to Garcia. Although

the company handbook for managers provided that verbal warnings

must be documented, Weiss was unaware of the policy. Neither he

nor Gargiles documented the warning to Garcia, nor did they inform

the human resources department of the warning.

Several months later, Cadigan received a customer

complaint regarding one of its competitors receiving "shockingly

low" DHL rates. Cadigan conducted an investigation and found that

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several sales representatives in Brooklyn had extended unauthorized

rates to certain customers by circumventing company procedures. He

reported this to Vice President of Sales Jonathan Routledge

(apparently Katz's successor). Routledge and Cadigan interviewed

a group of six representatives, including Garcia, about using so-

called "rogue" rates. Three representatives resigned rather than

face disciplinary action. As there was no concrete evidence

linking Garcia to the dishonest activities, he only received a

three-day suspension (which the human resources department

apparently rescinded as unauthorized) and then was transferred to

the sales district in Long Island. Weiss, who at this time was

Director of National Accounts, was involved neither in Cadigan's

investigation nor in the decision to discipline Garcia.

The unauthorized practice of selling "rogue" rates

continued in the New York area. In October 2008, the company's

loss prevention department launched an investigation into the

matter and discovered that the scheme had resulted in a

multimillion-dollar loss to DHL in 2008 alone. During the course

of the investigation, Fraud Manager Scott Kamlet interviewed

Cadigan and Routledge and learned about their 2007 investigation of

the very same issue. He then gathered information implicating

Garcia in the unauthorized practice and attempted to interview him.

After Garcia refused to cooperate, Kamlet recommended that he be

terminated. In his recommendation, Kamlet stated that Garcia had

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received a verbal warning from Weiss in 2007 for similar

unauthorized actions and that it was Kamlet's belief that Garcia's

supervisors did not know the extent of Garcia's misconduct at the

time of this warning.

Kamlet's recommendation apparently was not enough for

Garcia to lose his job. In April 2009, Weiss received a customer

complaint alleging that Garcia was asking customers to pay

kickbacks in exchange for receiving preferential shipping rates.

The customer threatened to go public with the information. Weiss

immediately forwarded the complaint to his superiors. A few days

later, Garcia resigned.

DHL responded to the allegation by retaining attorney

Kenneth Thompson to conduct an investigation. In addition to

confirming the kickbacks allegation, Thompson also found that

Garcia and several other representatives in Brooklyn had engaged in

various improper sales practices during the preceding years,

including while Weiss was in charge of the district. Specifically,

Thompson reported that the billing issue that precipitated Weiss's

verbal warning to Garcia involved an unauthorized shipping rate

extension. Thompson informed DHL of Weiss's "management failures"

relating to his oversight of Garcia, including his failure to

properly discipline Garcia in 2007, to document the 2007 verbal

warning, to consult the human resources and security departments

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about the verbal warning, and to further investigate Garcia's

conduct to determine of the scope of the misconduct.

At the conclusion of the investigation, Michael Berger,

Weiss's supervisor at the time, informed Weiss that DHL was

terminating his employment. The termination letter stated that

Weiss was terminated for "just cause" because the results of the

Thompson investigation "present[ed] a picture of significant

management failures" while Weiss was Regional Sales Director in

charge of the Brooklyn district "and thereafter." Berger was

unaware of those failures until the Thompson investigation. When

Weiss asked who made the decision to fire him, Berger told him,

"it's above me."

Upon termination, Weiss did not receive the $60,000 bonus

that he was set to receive in four months. DHL's General Counsel

John Olin, who was the head of the Committee in charge of

administering the Plan, testified that this was because Weiss was

terminated for "good cause," which under the terms of the Plan made

him ineligible for the bonus.

C. The Court Proceedings

Weiss sued DHL over the unpaid bonus, alleging that he

was entitled to payment because his termination was without good

cause.1 He asserted four claims for relief: (1) non-payment of

1
Weiss also sought six-months' severance pay. On appeal, he
does not press any claims related to the severance pay.

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wages in violation of the Massachusetts Wage Act, see Mass. Gen.

Laws ch. 149, § 148; (2) violation of the implied covenant of good

faith and fair dealing; (3) detrimental reliance; and (4) unjust

enrichment. The district court granted DHL's motion for summary

judgment on the Wage Act claim, ruling that the bonus was not

"wages" within the meaning of the Act.

After Weiss presented his evidence at trial, the court

announced that only a "straightforward" breach-of-contract claim

would go to the jury.2 The court then directed a verdict in favor

of DHL on the remaining claims. Weiss did not object to the

recasting of his contract claim or the directed verdict, and he

does not challenge either that action or the directed verdict on

appeal.

The court instructed the jury that the key issue was

whether Weiss was terminated without "good cause" because, if so,

DHL breached the Plan by not paying him the bonus. DHL objected on

the ground that the Plan reserved the good cause determination for

the Committee. The court acknowledged that the Plan "has the

language in it" reserving for the Committee decisions "about

2
The parties dispute whether the district court converted the
good faith and fair dealing claim or the detrimental reliance claim
into the breach-of-contract claim. The court indicated at one
point that it was treating Weiss's detrimental reliance claim as a
claim for breach of contract, and it later stated that "subsumed
within the good faith and fair dealing claim is the breach-of-
contract claim." The issue is of no consequence to our disposition
of this appeal.

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performance and the like." But because the Plan uses the words

"good cause," the court explained, it was for the jury to decide

whether the termination was without good cause, regardless of the

Committee's nomenclature. So instructed, the jury found for Weiss.

After the court denied DHL's motion for judgment as a matter of law

without comment, DHL filed this timely appeal.

II.

A. The Breach-of-Contract Claim

DHL maintains that the Plan gives the Committee the sole

and exclusive authority to determine whether good cause existed for

a participant's termination, and that in this instance the

Committee so determined. Accordingly, DHL argues, it is entitled

to judgment as a matter of law because there could be no breach of

contract under the undisputed facts. Weiss retorts that it was for

the jury to decide whether Weiss's termination was for good cause

because the Plan is ambiguous as to whether the Committee retained

such authority.

It is unclear from the record whether the district court

agreed that the Plan is ambiguous in this regard. In any event,

the court submitted the good cause determination to the jury and

denied DHL's Rule 50 motions. Our review of a denial of a Rule 50

motion for judgment as a matter of law is de novo. Tapalian v.

Tusino, 377 F.3d 1, 5 (1st Cir. 2004).

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 We begin by reviewing long-standing principles of

contract law.3 Interpretation of a contract is ordinarily a

question of law for the court. Seaco Ins. Co. v. Barbosa, 761

N.E.2d 946, 951 (Mass. 2002). "[W]hen several writings evidence a

single contract or comprise constituent parts of a single

transaction, they will be read together." FDIC v. Singh, 977 F.2d

18, 21 (1st Cir. 1992). Absent an ambiguity, the court interprets

a contract "according to its plain terms," Den Norske Bank AS v.

First Nat'l Bank of Bos., 75 F.3d 49, 52 (1st Cir. 1996), in a

manner that gives reasonable effect to each of its provisions, J.A.

Sullivan Corp. v. Commonwealth, 494 N.E.2d 374, 378 (Mass. 1986).

"A contract is not ambiguous simply because litigants

disagree about its proper interpretation." Singh, 977 F.2d at 22.

Ambiguity arises only if the language "is susceptible of more than

one meaning and reasonably intelligent persons would differ as to

which meaning is the proper one." S. Union Co. v. Dep't of Pub.

3
Both parties cite Massachusetts law as governing the
interpretation of the Plan, even though the Plan's choice-of-law
provision states that it is to be construed in accordance with
Florida law. "Generally, where the parties ignore choice of law
issues on appeal, we indulge their assumption that a particular
jurisdiction's law applies." New Ponce Shopping Ctr., S.E. v.
Integrand Assurance Co., 86 F.3d 265, 267 (1st Cir. 1996); see
Lluberes v. Uncommon Prods., LLC, 663 F.3d 6, 23 (1st Cir. 2011).
In any event, the result would not vary even if Florida law were
controlling, as we construe the Plan using general principles of
contract law.

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Utils., 941 N.E.2d 633, 640 (Mass. 2011) (internal quotation marks

omitted). There is no ambiguity in the instant contract.

The plain language of the Plan designates the Committee

as the sole arbiter of whether a Plan participant is terminated for

good cause. The original Plan document makes clear that it is for

the Committee to determine bonus eligibility and to construe the

Plan's terms. The Plan specifies that the Committee "shall have

full power and discretionary authority" to make determinations

under the Plan and that its decisions regarding "rules and

regulations, interpretations, selections, determinations,

approvals, decisions, delegations, amendments, terminations and

other actions, shall be final, conclusive and binding." In short,

as the Plan administrator, the Committee was given broad

discretionary authority to determine all matters pertaining to the

Plan, including whether a participant qualified for payment.

The amendment to the Plan neither trumps the Committee's

sweeping authority nor creates an ambiguity in this regard. By its

express terms, the amendment only made "some adjustments" to the

Plan, namely to provide that the bonus was no longer tied to the

company's performance but only to continued service and to permit

a participant terminated without good cause to receive the payout.

The amendment did not purport to modify the Committee's role in any

way. Because the modifications were not "so material and so

extensive" as to establish a substitute contract, the terms of the

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original Plan document that were not expressly modified remain in

effect. Kirkley v. F.H. Roberts Co., 167 N.E. 289, 290 (Mass.

1929); see McKinley Invs., Inc. v. Middleborough Land, LLC, 818

N.E.2d 627, 629 (Mass. App. Ct. 2004). Interpreting the original

Plan document and the amendment as a single agreement, as we must,

it becomes plain that the contract is susceptible only to one

plausible construction: whether Weiss was terminated without good

cause and thus remained eligible for the bonus was a decision

within the ambit of the Committee's sole and final decision-making

authority.

Weiss argues that the Plan is ambiguous because the

amendment provides for the good cause determination but is silent

about who decides, whereas the original Plan document addresses the

Committee's decision-making authority but not the good cause

protection. According to Weiss, this "tension" between the two

documents could plausibly suggest that the employer and not the

Committee is to determine whether a participant is terminated for

good cause, in which case the jury could review the employer's

decision. We disagree. The provision designating the Committee as

the sole and final authority on decisions of this type is broad

enough to encompass the good cause determination. And nothing in

the amendment suggests that someone other than the Committee would

make such decisions. Hence, the two documents are not incongruous.

The only plausible construction of the Plan as a whole that gives

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reasonable effect to the provisions in both writings is that the

Committee's decision-making authority extends to this eligibility

determination.

Simply put, under the Plan, the Committee was free to

deny Weiss the bonus if, in its sole judgment, his employment was

terminated for good cause. Cf. Nolan v. CN8, 656 F.3d 71, 82 (1st

Cir. 2011) (Selya, J., concurring) (where the employment agreement

designated the employer as "the sole arbiter of whether the

plaintiff's actions reflected unfavorably on [the employer's]

interests or reputation (and, thus, warranted termination)," the

plaintiff's contractual right to continued employment was

extinguished when the employer exercised its prerogative). Neither

we nor the district court can rewrite the contract to take away the

Committee's discretion and empower the jury to decide whether Weiss

was terminated for good cause.

The only relevant question regarding Weiss's breach-of-

contract claim, then, is whether the Committee determined that

Weiss was terminated for good cause. There is no room to doubt

that it did so.4 Olin, the head of the Committee, testified

4
The district judge acknowledged as much when DHL moved for
judgment as a matter of law at the close of the evidence, stating,
"if I were to give [the contract] language full force and effect,
I'll say this on the record, [DHL] should get judgment as a matter
of law because [its] people have been clear that in their judgment"
there was good cause to terminate Weiss. It is unclear from the
record why the judge decided not to give effect to the contract
language.

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unrebutted that, as permitted under the Plan, the Committee

delegated to DHL's management its authority to determine whether

good cause existed for a Plan participant's termination. DHL's

executives testified, again unrebutted, that they decided to

terminate Weiss because of his management failures in overseeing

Garcia.

That effectively ends the matter. The Committee's

determination that Weiss was terminated for good cause made him

ineligible for the bonus, precluding his breach-of-contract claim.

Accordingly, we reverse the judgment against DHL.5

This outcome is not unfair, as Weiss urges. Weiss was a

handsomely compensated employee in a significant position at DHL.

He accepted the terms of the Plan that gave the Committee

unfettered discretion in matters such as the eligibility decision

at issue here. The preclusion of his breach-of-contract claim,

moreover, does not mean that Weiss had no recourse but to bow his

head and accept the Committee's decision. As Weiss recognized

early in the game, Massachusetts law implies in every contract a

covenant of good faith and fair dealing. Ayash v. Dana-Farber

Cancer Inst., 822 N.E.2d 667, 683 (Mass. 2005). A party may breach

5
Given our disposition, we need not address Weiss's claim
that the district court erred in denying his motion for attorney's
fees and expenses. Nor do we reach DHL's alternative arguments
that there was insufficient evidence to support the jury verdict
and that the court's mid-trial claim conversion was unfairly
prejudicial.

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the covenant without breaching any express term of the contract.

See Fortune v. Nat'l Cash Register Co., 364 N.E.2d 1251, 1255-56

(Mass. 1977). In his complaint, Weiss asserted a claim for breach

of the covenant. We pass no judgment on the viability of the

claim, however, because it is not before us. When the district

court discarded the good faith and fair dealing claim, leaving only

a "straightforward" breach-of-contract claim, Weiss did not object.

And he does not argue on appeal that the covenant claim remains.

We therefore have no choice but to conclude that Weiss has

abandoned the claim.6 See United States v. Zannino, 895 F.2d 1, 17

(1st Cir. 1990).

B. The Wage Act Claim

In his cross-appeal, Weiss challenges the grant of

summary judgment to DHL on his claim under the Massachusetts Wage

Act, Mass. Gen. Laws ch. 149, § 148. He assigns error to the

district court's ruling that the bonus at issue did not constitute

"wages" under the Act. We review the grant of a motion for summary

judgment de novo, taking the record evidence in the light most

favorable to Weiss as the nonmoving party and drawing all

reasonable inferences in his favor. Arroyo-Audifred v. Verizon

Wireless, Inc., 527 F.3d 215, 217 (1st Cir. 2008).

6
Even if the district court converted the detrimental
reliance claim and not the covenant claim, the outcome remains the
same. The district court directed a verdict in DHL's favor on all
remaining claims, an order that Weiss does not appeal.

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 The Wage Act requires prompt payment of "wages earned" on

pain of civil and criminal penalties, treble damages, and

attorney's fees. Mass. Gen. Laws ch. 149, §§ 148, 150. While the

Act makes clear on its face that holiday pay, vacation pay, and

definitely determined commissions fall within its protections, the

term "wages" is not otherwise defined. Id. § 148. In refusing to

adopt a broad definition of wages covered under the Act,

Massachusetts courts speak of the Act's purpose--"to prevent the

unreasonable detention of wages." Bos. Police Patrolmen's Ass'n,

Inc. v. City of Bos., 761 N.E.2d 479, 481 (Mass. 2002); see Weems

v. Citigroup Inc., 900 N.E.2d 89, 94 n.10 (Mass. 2009)

(distinguishing the narrow purpose of the Wage Act from broader

remedial statutes like the state Equal Pay Act, where the term

"wages" has been interpreted as encompassing all potential sources

of pay). In keeping with this narrow purpose, courts have held

that various forms of compensation fall outside of the scope of the

Wage Act. See Weems, 900 N.E.2d at 94 (discretionary stock bonus

contingent on continued employment until vesting period not covered

by the Act); Bos. Police, 761 N.E.2d at 481 (contributions to

deferred compensation plans outside of the scope of the Act);

Prozinski v. Ne. Real Estate Servs., LLC, 797 N.E.2d 415, 419-21

(Mass. App. Ct. 2003) (severance pay not "wages" under the Act).

The Weems decision is particularly instructive. The

certified question before the Supreme Judicial Court was whether a

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bonus paid in form of restricted stock was covered by the Wage Act.

The bonus was discretionary and an employee who received it would

forfeit the award in the event of termination, either voluntary or

for cause, prior to the vesting date. Weems, 900 N.E.2d at 94.

The court seized on the fact that the bonus "was not only

discretionary, but it also had an important contingency attached to

it"--the recipient's continued employment. Id. Thus, those

recipients who left their employ prior to the vesting date were not

deprived of "wages" within the meaning of the Wage Act. See id.

Like the unvested shares of stock in Weems, the bonus in

Weiss's case was contingent on either continued employment, with

his performance remaining in good standing, or the Committee's

determination that his termination was without good cause. The

Committee determined, in its sole discretion, that Weiss was

terminated for good cause prior to the payment date. The bonus was

therefore never "earned" because neither contingency occurred.

Because DHL was under no obligation to pay the bonus, Weiss was not

deprived of wages that he earned. We affirm the grant of summary

judgment in DHL's favor.

III.

For the aforementioned reasons, we reverse the judgment

for Weiss on the breach-of-contract claim and remand for entry of

judgment in DHL's favor. We affirm the grant of summary judgment

to DHL on the Wage Act claim.

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