Last month, the Montgomery County Court of Appeals affirmed an employer’s summary judgment on a claim for unpaid sales commissions. Brown v. Fukuvi USA Inc., 2022-Ohio-1608. The plaintiff alleged that he had been verbally promised sales commissions before accepting the job in 2006. His offer letter – which he signed -- said that a commission structure would be discussed later, and it was. However, they could never come to an agreement on a salary and commission structure. Instead, the employer kept his salary in place and eventually raised it several times before he finally sued in 2019. The courts found that there was never a meeting of the minds or agreement on the details of a commission structure and, therefore, the employer was not obligated to pay any commissions.
To be enforceable, contracts must be definite and
certain. An agreement to agree is only
enforceable if it is sufficiently definite to be enforced. “When the terms of a
contract are not sufficiently definite, the contract is unenforceable. . . . ‘The terms of a contract are reasonably
certain if they provide a basis for determining the existence of a breach and
for giving an appropriate remedy.’ ””
The plaintiff’s offer letter offered a salary until 2007 and then a
reduced salary with a commission – the details of which were to be
discussed. The details were never
mutually agreed to and his salary remained unchanged. “[N]o specific amount of commission or bonus
was outlined. Furthermore, details were to be discussed at some future date,
with no indication of what those details would be.”
The plaintiff
contends that he was told when he signed the Offer Letter that “his commission structure would operate in the same manner as the prior sale representative, which was a percentage on sales over an initial threshold or goal.” . . . However, taking this statement at face value, it was made by a [HR] person who lacked authority to authorize payment of commissions; it was also inconsistent with the letter, which said that details would be discussed later. When “later” came, [the company president] elected not to pay commissions due to the severe financial position of the company, and this was communicated to [him]. At that point, if [he] were dissatisfied with the situation, he could have left the company. Instead, he chose to stay. Notably, his salary was not decreased to the considerably lower level mentioned in the Offer Letter.
“Here, the parties may have envisioned a commission and
bonus structure, but the details were left to future discussion. Consequently,
there was no enforceable promise.”
The court refused to find enforceable details from a
commission policy document which the plaintiff had found in his predecessor’s
files and which he claims had been referenced during his employment
discussions. The court refused to incorporate
them into the offer letter without more evidence. There was no evidence that the company had
provided the policy to the plaintiff during their negotiations or were part of
or intended to be part of his offer letter.
The document did not even indicate who prepared it.
The Court also rejected his claims for promissory estoppel, negligent
and fraudulent misrepresentations and unjust enrichment on the grounds that they
were time barred by the then six-year (and now four-year) statute of
limitations. It rejected his argument
that the failure to pay commissions constituted a continuing violation because (1)
the Supreme Court of Ohio had taken the position that courts are reluctant to
apply this doctrine outside the civil rights context; (2) “continuing
violations are distinguished from ‘continuing effects of prior violations’; in
this context, ‘ “ ‘ “[a] continuing violation is occasioned by continual
unlawful acts, not continual ill effects from an original violation” ’ ” ’ ”;
and (3) the lack of authority in Ohio extending this doctrine to breach of
contract cases.
The Court also
rejected his equitable estoppel claim because none of his allegations were
sufficient to show that the company prevented him from filing suit earlier. Indeed,
a person of reasonable intelligence would have been on notice years earlier of
his need to file suit.
Finally, the plaintiff could not show that he had not been paid
his wages under Ohio’s prompt payment act because there was no underlying obligation
to pay him commissions.
NOTICE: This summary is designed merely to inform and alert
you of recent legal developments. It does not constitute legal advice and does
not apply to any particular situation because different facts could lead to
different results. Information here can change or be amended without notice.
Readers should not act upon this information without legal advice. If you have
any questions about anything you have read, you should consult with or retain
an employment attorney.
