Dodge v. CDW Government, Inc. ( 2011 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 10-1406
APRIL M.A. DODGE,
Plaintiff - Appellee,
v.
CDW GOVERNMENT, INCORPORATED,
Defendant - Appellant.
Appeal from the United States District Court for the Eastern
District of Virginia, at Alexandria. Anthony J. Trenga,
District Judge. (1:09-cv-00528-AJT-IDD)
Argued: January 25, 2011 Decided: March 9, 2011
Before MOTZ and WYNN, Circuit Judges, and Irene C. BERGER,
United States District Judge for the Southern District of West
Virginia, sitting by designation.
Reversed by unpublished per curiam opinion.
John Kuropatkin Roche, PERKINS COIE LLP, Washington, D.C., for
Appellant. Paul A. Prados, DAY & JOHNS, PLLC, Fairfax,
Virginia, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
April M.A. Dodge brought this breach of contract action
against CDW-Government, Inc. (“CDW-G”) for unpaid commission.
After a bench trial, the district court awarded judgment on one
claim to Dodge. For the reasons that follow, we reverse.
I.
The parties do not dispute the relevant facts.
In February 2003, Dodge began work as an at-will technology
sales account manager for CDW-G. When Dodge joined CDW-G, she
received a document entitled “Welcome to the CDW-G Account
Management Team” (hereinafter “Welcome Document”), which
specified that Dodge’s commission level “adjusts based on
ongoing adjusted average gross profit dollars.” In the Welcome
Document, CDW-G described the salary and commission it intended
to pay Dodge but expressly cautioned that the Welcome Document
did “not constitute or represent any contractual commitments.”
The Welcome Document explained that the “[f]ull details of all
CDW-G information” were set forth in the “CDW Sales Guidelines
and Procedures” (hereinafter “Handbook”), a copy of which Dodge
received at that time.
Like the Welcome Document, the Handbook disclaimed any
intention by CDW-G to enter into a contract. Indeed, at the
very outset, the preface of the Handbook stated that its
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“contents . . . are presented as a matter of information only
and do not create a contract.” The Handbook further declared
that “[n]one of the . . . benefits described in this or any
other handbook are intended to . . . confer any rights or
privileges,” including any right to “remain employed by CDW
. . . at any level of compensation.” The main text of the
Handbook went on to state that “Account Managers are paid on the
Account Manager Commission Matrix.” That matrix, in turn, set
forth various commission levels corresponding to levels of
experience and gross profit figures. Additionally, the Handbook
explained that CDW-G tracked sales on a monthly basis and paid
commissions each month based on the previous month’s sales.
In July 2004, Dodge participated in a meeting in which Max
Petersen, CDW-G’s Senior Vice President of Sales, gave a
Powerpoint presentation entitled “2004 Federal Comp Plan
Update.” At that meeting, Petersen presented a “new federal
matrix” designed to “simplify” the old matrix and “motivate”
CDW-G’s salesforce. This new matrix, like the old matrix set
forth in the Handbook, consisted of a table of commission rates
pegged to various experience levels and gross profit figures.
Petersen did not expressly reference the Handbook’s previous
disclaimers, nor did the Powerpoint presentation contain any
disclaimers of its own. Following the Powerpoint presentation,
Dodge received a copy of the new federal matrix.
3
On or about September 30, 2004, Dodge secured two purchase
orders from the Defense Contract Management Agency. The first
order involved the Agency’s agreement to purchase $1.6 million
of BlackBerry devices (“BlackBerry Sale”) from CDW-G, and the
second involved the Agency’s agreement to purchase $2.56 million
of computer monitors (“Monitor Sale”) from CDW-G. Very soon
thereafter, on November 24, 2004, CDW-G shipped and invoiced the
Blackberries; the next month it paid Dodge a 19% commission on
that sale. Before doing so, CDW-G reduced by $60,000 the
“adjusted gross profit” figure used to calculate Dodge’s
commission; the reduction assertedly reflected the contributions
of another CDW-G employee.
CDW-G did not begin to ship the Monitors until at least
late April 2005. According to the matrix distributed at the
2004 presentation, Dodge should have received a 19% commission
on the Monitor Sale. Instead, CDW-G paid her only a 10%
commission (in three monthly installments) totaling $81,727.
Had CDW-G paid her at the 19% rate, Dodge would have received an
additional $76,689.
On May 16, 2008, Dodge sued CDW-G for breach of contract,
seeking unpaid commissions on both the BlackBerry Sale and the
Monitor Sale. After a bench trial, the district court held that
the 2004 Powerpoint presentation qualified as a binding contract
offer to pay Dodge a 19% commission on future sales.
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Accordingly, the district court found for Dodge with respect to
the Monitor Sale and awarded her $76,689 in damages. The
district court concluded that Dodge’s claim pertaining to the
BlackBerry sale was time-barred.
Only CDW-G appeals. Thus, only the Monitor Sale is at
issue before us. We review the district court’s factual
conclusions for clear error and its legal conclusions de novo.
See Roanoke Cement Co. v. Falk Corp., 413 F.3d 431, 433 (4th
Cir. 2005).
II.
CDW-G maintains that its representations to Dodge regarding
her commission do not set forth an offer giving rise to a
binding contract. 1 According to CDW-G, it had no contractual
obligation to pay Dodge any commission at all, including the 10%
commission that it ultimately did provide her in connection with
the Monitor Sale.
Under Virginia law, which the parties agree governs this
dispute, a promise to pay commissions can form a unilateral
contract even when made to at-will employees. See Hercules
1
CDW-G alternatively contends that it modified the terms of
any contract prior to Dodge’s performance, and that Dodge’s
claim regarding the Monitor Sale is time-barred. Because we
hold that CDW-G had no contractual obligation to pay Dodge any
commission, we do not reach these arguments.
5
Powder Co. v. Brookfield, 53 S.E.2d 804, 808 (Va. 1949). But
not every statement professing an employer’s future intention to
pay benefits commits that employer to a binding contract. See
Jensen v. IBM Corp., 454 F.3d 382 (4th Cir. 2006). To the
contrary, a statement constitutes a contract offer only if it
“manifest[s] a willingness to enter into a bargain.” Id. at 388(internal quotation omitted). Thus, we held in Jensen that
IBM’s “Software Sales Incentive Plan,” which pegged employees’
commissions to their ability to meet sales quotas, did not set
forth an offer providing the basis for a binding contract but
instead “announced a policy of payment in which [IBM] reserved
discretion to itself to make the payment.” Id. at 384, 388. In
doing so, we observed that IBM’s disclaimer -- stating in part
that “this program does not constitute a promise by IBM to make
any distributions under it” -- “manifested [IBM’s] clear intent
to preclude the formation of a contract.” Id. at 388 (emphasis
omitted).
Here, the district court acknowledged that CDW-G’s Handbook
contained similar disclaimers and so did not establish the basis
for a contract. 2 The court nonetheless found for Dodge, holding
2
In her appellate brief, Dodge made a passing attempt to
characterize the Handbook’s disclaimers as insufficient. She
also contended at oral argument that the Handbook’s statement
that account managers are “guaranteed” a certain “minimum
commission level” overrides those disclaimers. We reject these
(Continued)
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that the Handbook’s disclaimers “did not insulate CDW-G from the
contractual consequences” of the “unqualified federal matrix”
later presented to Dodge the 2004 Powerpoint presentation.
We disagree. At the time of the 2004 presentation, the
Handbook’s disclaimers governed CDW-G’s payment of commissions,
and nothing said at the 2004 presentation eroded the force of
those disclaimers. The Powerpoint presentation on which Dodge
relies -- articulating CDW-G’s “new federal matrix” -- merely
set forth a numerical table of commission rates beside bulleted
explanations of those rates. This new matrix altered only the
old matrix contained in the Handbook; it evinced no intent to
transform CDW-G’s commission policy from a non-binding
informational statement into a contract offer.
To be sure, the 2004 Powerpoint presentation never
expressly repeated the Handbook’s disclaimers. Such repetition
was unnecessary, however, because the 2004 presentation
functioned not as an independent offer but as a modification of
the Handbook. Indeed, CDW-G called its new commission matrix a
“sales plan update,” and the Powerpoint presentation made
explicit that the “new federal matrix” on which Dodge relies
arguments. The Handbook contains numerous explicit disclaimers
making clear that its description of CDW-G’s commission policy -
- including use of the term “guaranteed” -- qualified as
“information only” and did “not create a contract.”
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simply replaced the “old” matrix contained in the Handbook. The
“sales plan changes” that resulted in the new matrix were just
that -- “changes” to the sales plan articulated by the Handbook.
The district court’s statute of limitations analysis
provides additional support for this conclusion. In rejecting
Dodge’s Blackberry claim as untimely, the court found that the
2004 presentation formed an oral, rather than written, contract
subject to a stricter three-year statute of limitations, because
“to understand the parties’ rights and obligations . . . one
needs to rely on agreements and understandings other than those
set forth in the written federal matrix” (emphasis added). In
fact, these necessary written “agreements and understandings”
reside largely in the Handbook and the Welcome Document, which
explain CDW-G’s basic commission policy and outline crucial
details such as the timing of payments and the mechanics of
gross profit calculation. As such, interpretation of the 2004
Powerpoint presentation necessitates reference to the Handbook;
only when combined with the Handbook does that presentation form
a complete policy. The 2004 presentation thus functions as a
modification to the Handbook’s terms rather than a free-standing
contract offer. See Fitzgerald v. Southern Farm Agency, 94 S.E.
761, 762 (Va. 1918) (noting that a company’s change to its
broker’s commission was “not a new contract, but a modification
of the original agreement” (internal quotation omitted)).
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Because the 2004 presentation only modified the terms of
the Handbook, the Handbook -- as modified by the presentation --
continued to govern CDW-G’s commission payments. See Warren v.
Goodrich, 112 S.E. 687, 694 (Va. 1922); Carnes Co. v. Stone
Creek Mech., Inc., 412 F.3d 845, 853 (7th Cir. 2005). And
nothing in the 2004 presentation purported to alter the
Handbook’s disclaimers or the non-binding nature of CDW-G’s
projected commission rates. The 2004 presentation therefore
“did not amount to an offer to enter into a contract, but the
announcement of a nonbinding intention.” Jensen, 454 F.3d at
390. Although CDW-G’s failure to make good on that professed
intention may hamper its efforts to attract and motivate sales
managers like Dodge, and may even give rise to a claim based on
quantum meruit, see, e.g., Mongold v. Woods, 677 S.E.2d 288, 292
(Va. 2009), it does not constitute a breach of contract.
III.
For the foregoing reasons, the judgment of the district
court is
REVERSED.
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