Pamela Anton v. SBC Global Services, Inc. , 350 F. App'x 39 ( 2009 )

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 09a0703n.06
Nos. 08-1307, 08-1325 FILED
Oct 29, 2009
UNITED STATES COURT OF APPEALS LEONARD GREEN, Clerk
FOR THE SIXTH CIRCUIT
PAMELA S. ANTON, et al., )
)
Plaintiffs-Appellees, ) ON APPEAL FROM THE
) UNITED STATES DISTRICT
v. ) COURT FOR THE EASTERN
) DISTRICT OF MICHIGAN
SBC GLOBAL SERVICES, INC., )
)
Defendant-Appellant. ) OPINION
)
______________________________ )
Before: MOORE and ROGERS, Circuit Judges; THAPAR,* District Judge.
THAPAR, District Judge. At issue in this appeal is whether the amount that a jury awarded
two former sales representatives of SBC Global Services, Inc. (“SBC”), in sales commissions should
be lowered or reconsidered by the district court. The parties agree that after the plaintiffs, Pamela
S. Anton and Cheryl F. Snipes, helped SBC secure a contract with Colin Communications, Inc.
(“CCI”), they were owed sales commissions under an implied-in-fact contract with SBC. The
parties, however, dispute the terms of that implied-in-fact contract and, in turn, how much the
plaintiffs are owed in sales commissions for securing the CCI contract. At trial, the jury resolved
this dispute by awarding Anton $3,191,400 and Snipes $3,510,540. The district court rejected SBC’s
*
The Honorable Amul R. Thapar, United States District Judge for the Eastern District of
Kentucky, sitting by designation.
arguments, made in its two post-trial motions, that these awards should be lowered or reconsidered
as a matter of law. We affirm.
I.
SBC sells, among other things, various data products and services. Anton was an SBC sales
representative and worked on a commission basis. Snipes was a manager who managed the sales
of service contracts to certain accounts, including CCI. She also worked on a commission basis.
In 2000, Anton and Snipes worked together to secure a large services contract with CCI (the
“CCI Agreement”). While they were trying to secure this contract, various members of SBC
management implied that Anton and Snipes each would be due for a large commission. For
example, Snipes’ manager suggested that the contract was worth $200 million to $1 billion. Similar
estimations were sent out in internal SBC emails. SBC internally characterized the CCI Agreement
as a “one billion dollar agreement and/or a deal worth in excess of $1 billion.” SBC management
made comments about the large commissions the plaintiffs were going to get from the CCI
Agreement and how “rich” Anton and Snipes would be because of the commissions.
On June 29, 2000, SBC and CCI entered into the CCI Agreement. The contract required CCI
to order and have installed an increasing number of DSL lines each year for four years. This contract
was different from the previous contracts the plaintiffs sold, since CCI was not the actual end
customer. Rather, CCI, acting as a “middle man,” would find end customers for SBC’s services.
Additionally, there was a liquidated damages provision in the CCI Agreement, which seemed to limit
CCI’s liability to $15 million if CCI could not meet certain thresholds.
No one disputes that Anton and Snipes were each entitled to a commission when the CCI
Agreement was signed. The parties dispute how much the plaintiffs were each entitled. Though
2
Anton’s commission rate at the time of the CCI Agreement was 0.60 percent of a contract’s life-
cycle revenue (“LCR”)1 and Snipes’s was 0.66 percent, SBC offered the plaintiffs commissions for
the CCI Agreement under markedly different terms. On October 18, 2000, SBC notified Anton that
her commission for the CCI Agreement would be $24,000 and $1 for each DSL line installed in the
first year of the contract. Anton also got a quarter multiplier bonus at the rate of 21 percent based
on her commissions for the second quarter of 2000, including her commissions of $24,000 on the
CCI Agreement. In the alternative, SBC offered to revisit the commission calculation and consider
a commission based on the LCR. SBC calculated the LCR to be $15 million because of the
liquidated damages clause in the CCI Agreement. Under that alternative commission, SBC stated
that Anton would get $90,000. On November 13, 2000, SBC notified Snipes that her commission
for the CCI Agreement would be $12,000 and $2 for each DSL line installed in the first year of the
CCI Agreement. Similar to Anton, SBC offered to revisit the issue and consider giving Snipes her
commission based on a $15 million LCR. In that alternative, SBC stated Snipes’ commission would
be $78,000.
However, Anton and Snipes believed that their commissions would be based on a $1.08
billion LCR and their respective commission rates of 0.60 percent and 0.66 percent. With that in
1
LCR is the product of three things: (1) the number of months in the contract’s term, (2) the number
of lines, and (3) the monthly fee per line. Some at SBC called the LCR the “potential” or “projected”
value of the contract. Generally, SBC’s Contract Information Management Group made the initial
calculations of the LCR. The commissions were calculated “on contract,” meaning commissions
were earned and paid immediately after the contract was executed. The amount of revenue actually
received by SBC as a result of the contract was irrelevant to calculating the LCR. While other
contracts the plaintiffs secured contained liquidated damages clauses, these clauses did not affect
how the LCR was calculated.
3
mind, Anton expected roughly $6 million in commissions for the CCI Agreement and Snipes roughly
$6.6 million. Thus, the plaintiffs rejected SBC’s commission decisions.
In letters to the plaintiffs, SBC justified the commissions that they offered the plaintiffs by
citing the terms of its Sales Compensation Plan and the associated Administrative Guidelines
(collectively referred to as “the Plan”). In particular, SBC noted a provision in the Plan which states
that its Sales Compensation Team (“SCT”) will “determine the commission payment” for contracts
with an LCR greater than $2 million. Since it was undisputed that the LCR at issue was larger than
$2 million, SBC argued that the large sales provision gave the SCT discretion to determine the
amount of commissions to which the plaintiffs were entitled for the CCI Agreement. In essence,
SBC claimed that under the Plan’s large sales’ provision it was not required to apply the plaintiffs’
commission rates to the contracts’ LCRs.
Subsequently, Anton and Snipes individually filed lawsuits in October of 2000, but the
district court consolidated their cases for pre-trial proceedings and trial. On October 6, 2004, the
district court granted summary judgment for the defendant on all of the plaintiffs’ claims except the
breach of implied contract claim. The implied contract claim went to trial in August 2007.
At trial, the parties stipulated to many facts. Most importantly, the parties stipulated to the
existence of an implied-in-fact contract that required both Anton and Snipes to be paid some
commissions based on the CCI Agreement. Thus, the dispute at trial boiled down to what the terms
of that implied-in-fact contract were, and what commissions the plaintiffs were owed under those
terms for their work in securing the CCI Agreement. Following a 12-day jury trial in August 2007,
SBC filed a motion for judgment as a matter of law. The district court denied the motion. The next
4
day, on August 28, 2007, the jury returned a verdict in favor of the plaintiffs. Anton was awarded
$3,191,400 and Snipes was awarded $3,510,540.
Following trial, SBC filed a renewed motion for judgement as a matter of law or, in the
alternative, for a new trial. SBC also filed a motion for remittitur. Both motions were denied and
now form the basis of this appeal.
II.
SBC argues that the jury’s verdict should be reversed because a reasonable jury would have
applied its interpretation of the implied-in-fact contract. SBC is incorrect. When viewing the
evidence in the light most favorable to the plaintiffs, see Sniecinski v. Blue Cross & Blue Shield of
Mich., 666 N.W.2d 186, 192 (Mich. 2003) (holding that evidence and all legitimate inferences are
viewed in the light most favorable to the nonmoving party), sufficient evidence existed to sustain
the jury’s interpretation of the contract and, in turn, its verdict, see Toth v. Yoder Co., 749 F.2d 1190,
1194 (6th Cir.1984) (stating that under Michigan law, a judgment as a matter of law may be granted
only if “reasonable minds could not differ as to the conclusions to be drawn from the evidence”
(citing Gilham v. Admiral Corp., 523 F.2d 102, 109 (6th Cir. 1975))).2
A. SBC’s Discretion for Large Sales
SBC argues that under the terms of the implied-in-fact contract with the plaintiffs it had
discretion to set the commission for large sales at a rate different from the commission for smaller
2
In a diversity case, we apply state law—in this case Michigan law—to determine the standard of
review for a motion for judgment as a matter of law. Ridgway v. Ford Dealer Computer Servs., Inc.,
114 F.3d 94, 97 n.3 (6th Cir. 1997) (noting that Sixth Circuit precedent conflicts with other circuits
and some leading treatises which apply federal law for the standard of review).
5
sales. The jury, however, determined otherwise, and its determination was supported by evidence
presented at trial.
Under Michigan law, the terms of an implied-in-fact contract are “determined by [the
parties’] conduct or other pertinent circumstances surrounding the transaction.” Kingsley Assocs.,
Inc. v. Moll PlastiCrafters, Inc., 65 F.3d 498, 504 (6th Cir. 1995) (citing Erickson v. Goodell Oil
Co., 180 N.W.2d 798 (Mich. 1970)). “In deciding whether there was mutual assent to [an implied
contract term], [Michigan courts] use an objective test, ‘looking to the expressed words of the parties
and their visible acts.’” Rowe v. Montgomery Ward & Co., Inc., 473 N.W.2d 268, 273 (Mich. 1991)
(emphasis in original) (citations omitted). In this case, to determine whether there was assent to a
term, the jury had to look at how a reasonable person in Anton’s and Snipes’s position would have
interpreted SBC’s statements or conduct. Rood v. General Dynamics Corp., 507 N.W.2d 591, 598
(Mich. 1993) (“In deciding whether a party has assented to a contract, we follow the objective theory
of assent, focusing on how a reasonable person in the position of the promisee would have
interpreted the promisor’s statements or conduct.” (citation omitted)).
In this case, the parties’ conduct and the circumstances surrounding the transaction
demonstrate that the jury had a reasonable basis to conclude that the implied-in-fact contract did not
give SBC discretion over the amount of commissions. In particular, this is established by three
pieces of evidence: prior commissions for contracts (i.e., course of dealing evidence), the Plan’s
terms themselves, and the statements of SBC management.
1. Prior Commissions
Before the CCI Agreement, SBC had paid the plaintiffs’ commissions based on each signed
contract’s LCR, including three such contracts with CCI. Anton never had a commission lowered.
6
Thus, it was completely reasonable for her to assume, and a jury to conclude, that her commission
for the CCI deal would be calculated exactly as it had been in the past.
With respect to Snipes, however, SBC contends that at the very least Snipes understood that
not all contracts were paid pursuant to their LCRs’. SBC points out that its Sales Compensation
Team reviewed two of Snipes’s “large sales” and, in one case, made a “downward adjustment” to
the LCR calculation. SBC’s argument fails because a jury could reasonably conclude that Snipes
saw the Sales Compensation Team’s review as merely a means to verify that commissions were
calculated correctly for large contracts—not to give SBC discretion over commissions for large
contracts.
Indeed, in the case where SBC made a downward adjustment, it did so because the LCR was
incorrectly calculated, not because it was exercising its discretion to reduce the commission. Laura
Pike, Associate Director of Compensation at SBC, testified that SBC lowered that commission
because a portion of the signed contract, equipment sales, was not eligible for compensation. Pike
further testified that SBC often gave commissions pursuant to LCR even when it reviewed large
sales. Thus, it was reasonable for a jury to conclude that Snipes understood that SBC’s review of
large sales was to check for errors in the calculations of commissions—not to give SBC discretion
to reduce the commissions.
SBC cites Dyer v. Michigan Department of State Police, 326 N.W.2d 447 (Mich. Ct. App.
1982), for the proposition that no implied right is created based on custom where there is a
conflicting express policy of the employer. In Dyer, the question was whether police officers could
use work vehicles for personal use since they had been allowed to in the past even though an express
policy prohibited such use. See id. at 449-50. The court found that the previous personal use did
7
not affect the binding nature of the express policy for two reasons: (1) the rights and duties of the
parties were “not regulated by implication [but rather] they are controlled by the express terms of
the official policy statements” and (2) the consent to use the vehicles for personal use was given by
supervisors who went beyond their authority. Id.
The instant case is distinguishable. First, no express contract exists. In fact, the parties have
stipulated that they have agreed to an implied-in-fact contract. Therefore, unlike in Dyer, the parties
here are regulated by implication—not necessarily the express terms of the Plan. Additionally, SBC
itself established the custom of calculating sales commissions based on each contract’s LCR. SBC
has not argued that there was improper consent to the payment terms of previous contracts. The
terms of the policy in Dyer clearly prohibited personal use of the work vehicles, whereas here the
terms of SBC’s Plan have two possible interpretations. Thus, the reasoning in Dyer does not support
SBC’s position.
SBC also cites Jensen v. IBM Corp., 454 F.3d 382 (4thCir. 2006), to support its position that
custom should not be a basis for determining the terms of the implied-in-fact contract. Jensen is
inapposite since it does not address whether custom could be a basis for construing the terms of an
implied-in-fact contract.
In short, SBC provides no Michigan law that illustrates why custom or course of dealing
evidence should not govern the implied contract at issue here. Thus, the custom and course of
dealing evidence introduced in this case supports the jury’s conclusion that SBC did not have
discretion over the size of commissions.
2. The Plan’s Terms
8
SBC maintains that all of the previous commissions were consistent with the Plan’s terms
and, hence, its terms or, stated more accurately, SBC’s interpretation of the Plan’s terms governed
the commissions for the CCI Agreement. SBC fails to demonstrate that a reasonable jury must
conclude that the plaintiffs had knowledge of the large sales provision in the Plan. However, even
if the plaintiffs were aware of its terms, SBC fails to show that a reasonable jury must conclude that
the plaintiffs assented to SBC’s interpretation of the provision.
There were ample facts in the record from which the jury could reasonably conclude that
Anton was unaware of the large sales provision, and thus, could not have assented to it. SBC argues
that Anton should have been aware that she was bound to the Plan’s terms because her June 10,
1999, offer letter refers to it. The letter, in part, states:
In addition to your base salary, you will participate in the GBS 1999 Solutions
Consultant-Data Compensation Plan (your manager will provide details of the plan
administration).
Anton requested the Plan from her manager at the time, but there is no evidence that she received
the Plan. When she asked for the Plan, her manager told her that her commissions were paid based
on LCR. No one told her that large sales would be compensated differently.
SBC also claims that Anton accessed the database containing the Plan right before the CCI
Agreement was signed and, thus, was aware of its terms. But Anton testified that she only accessed
the database to get pricing information and was unaware that the Plan’s compensation terms were
also there. Further, SBC points out that it emailed “compensation banners” to sales employees,
which contained a link to the Plan. This is the strongest evidence that could show Anton was aware
the Plan could be accessed electronically. Still, there was no proof that Anton received these emails.
Moreover, SBC did not require the plaintiffs to sign a statement acknowledging receipt of the Plan,
9
as had been the practice in years before their employment and since the CCI Agreement. This fact
provides further support that SBC has failed to show that a reasonable jury must find that Anton had
knowledge of the Plan’s terms.
With respect to Snipes, the evidence showed that she at least had some knowledge of the
Plan’s terms and how to access them. Unlike Anton, Snipes acknowledged that she accessed and
viewed the Plan on Lotus Notes in March 2000 before the CCI Agreement was signed. She “breezed
through the [Plan]” but testified that she did not come across the large sales provision. In addition,
unlike Anton, Snipes acknowledged receiving the compensation banner emails that had links to the
Plan. Thus, a reasonable jury must conclude that Snipes had at least some knowledge of the Plan
and its terms—clearly more than Anton. Nonetheless, given that the Plan’s terms were sufficiently
vague and the other evidence in the plaintiffs’ favor, Snipes’ mere knowledge of the Plan’s terms
is not enough to overturn the jury’s verdict.
SBC responds that the plaintiffs’ subjective interpretations of the Plan are not relevant here
since the terms are clear and unambiguous. See L & S Bearing Co. v. Morton Bearing Co., 93
N.W.2d 899, 901 (Mich. 1959) (“In Michigan the law is clear that where a written contract is not
ambiguous the intention of the parties as expressed on the face thereof must be followed . . . .”). In
other words, SBC argues that knowledge of the terms is enough to bind the plaintiffs since the terms
are unambiguous. But the large sales provision3 merely states that sales with an LCR greater than
$2 million will be “reviewed by the BCS Sales Compensation Team (SCT) to determine the
3
SBC also cites a clause in the Plan that states that its Sales Compensation Team can “[r]esolve any
and all sales credit . . . situations.” Like the large sales provision, this clause is ambiguous. After
reading this clause, a reasonable person would not necessarily conclude that SBC had discretion to
reduce the plaintiffs’ commissions for large contracts.
10
commission payment.” Even if a reasonable person read this provision, she could come to the
conclusion that SBC reviewed large contracts to ensure correct calculations of commissions—not
to devise a new commission scheme.
Based on Jensen, SBC argues that the parties’ implied-in-fact contract cannot conflict with
an express policy of SBC—i.e., the Plan. On the surface, Jensen has similar facts to the case at hand,
but the material facts are distinct. Similar to Anton and Snipes, the plaintiff in Jensen felt that he
was under-compensated for a large contract that he secured for IBM. 454 F.3d at 385-86. He did
not agree with his sales commissions, which were a smaller percentage than what he had previously
received and, hence, filed suit against IBM. Id. at 386. Like SBC, IBM alleged that it treated large
sales differently. Id. Jensen based his contract claim, in part, on a “glossy brochure” that IBM
provided and “his employee quota letter.” Id. at 386. In addition, he pointed out the higher
commission rates he had received on smaller contracts.
In the instant case, Anton and Snipes have not alleged that the terms of the implied-in-fact
contract come from SBC documentation, like the plaintiff in Jensen did. There, the Jensen court
stated that the plaintiff could not use only the sections of an employer’s policy that he agreed with
and disregard those sections that were not in his favor. Id. at 389-90. To that end, IBM’s policy
expressly stated that it was making no offer and incorporated by reference provisions that mentioned
its intention to limit commissions for large sales. Id. at 387-89. Here, there is no express contract,
11
but rather a question over the terms of an implied contract.4 The plaintiffs do not argue that the Plan
should decide the terms. SBC does. Hence, the facts of Jensen are materially different.
Separately, SBC argues, based on Mannix v. County of Monroe, 348 F.3d 526 (6th Cir. 2003),
that “reasonable notice” was sufficient to bind Anton and Snipes to its interpretation of the Plan.
Specifically, SBC contends that having the Plan on an electronic Lotus Notes database was sufficient
to bind Anton and Snipes to its interpretation of the Plan’s terms. Mannix, however, was a legitimate
expectation case and, thus, the terms were decided based on an employer’s promises to the workforce
in general; the instant case is one of implied-in-fact contract and thus the terms are decided based
on what Anton and Snipes reasonably believed them to be in light of SBC’s statements and
conduct—not necessarily SBC’s promises to the entire workforce. See Novak v. Nationwide Mut.
Ins. Co., 599 N.W.2d 546, 550 (Mich. Ct. App. 1999) (stating that a legitimate expectations claim
rests on “the employer's promises to the work force in general-for example, promises contained in
a company handbook-rather than on promises made to an individual employee” (citing Nieves v. Bell
Indus., Inc., 517 N.W.2d 235 (Mich. Ct. App. 1994); Dolan v. Cont’l Airlines/Cont’l Express, 563
N.W.2d 23 (Mich. 1997))). Thus, Mannix is inapplicable.5
4
SBC believes that Brozo v. Oracle Corp., 324 F.3d 661 (8th Cir. 2003) also assists it in arguing that,
when an express policy is in place, an employee cannot, as a matter of law, recover commissions on
a theory that is contrary to that policy. The question in Brozo was whether the contract terms were
ambiguous. Id. at 665. Brozo is inapposite because it is not clear that an express policy was in place
at SBC. The question before the jury here was what terms the plaintiffs reasonably believed they
assented to based on SBC’s statements and conduct. Thus, the inquiry here is broader than that in
Brozo. Also, unlike the policy in Brozo, the Plan’s large sales provision is ambiguous, as the
plaintiffs’ and SBC’s interpretations of the provision are both reasonable.
5
SBC also asserts, based on Grow v. General Products, Inc., 457 N.W.2d 167 (Mich. Ct. App. 1990),
that general circulation of the Plan was enough to bind Anton and Snipes to the terms. In Grow, the
employer sent a memo around that stated employment was at-will. Id. at 168. While Grow involved
a claim for an implied contract for just cause employment, it nevertheless involved a different
inquiry than the instant case. For the same reasons that Mannix is inapplicable, Grow is also
12
SBC counters that Mannix is applicable since it cites Rowe, which involved an implied-in-
fact contract claim. But Rowe is distinguishable from the instant case as well. The question in Rowe
was “whether an employer's oral statements and written policy statements created an employment
contract terminable only for cause.” Rowe, 473 N.W.2d at 269-70. Under Michigan law, there is
a presumption that employment is at will. Id. at 271-72. The presumption can be overcome if there
is an express contract stating otherwise or if there is proof of a “promise implied in fact” stating
otherwise. Id. at 271. The plaintiff in Rowe believed that the employer’s oral statements amounted
to a contract to terminate only for just cause. Id. at 272.
While the court in Rowe applied the same test the jury did here, see id. at 273, Rowe is
distinct for three reasons.6 First, the employee in Rowe had to overcome the presumption of
employment at will. Here, there is no presumption that SBC’s interpretation of the Plan should
apply. Rather, the parties have agreed that there is an implied-in-fact contract and the terms are in
dispute. Second, Anton and Snipes are relying on more than oral statements; they also have course
of dealing evidence in their favor. There was no course of dealing evidence in Rowe. Finally, SBC’s
attempt to analogize the Plan to the handbooks sent to employees in Rowe fails. Unlike the plaintiff
in Rowe, Anton may have not received the Plan. See id. at 276 (mentioning that “the last handbook
which plaintiff received clearly set forth an employment-at-will policy”). In addition, the plaintiffs
here could have reasonably interpreted the Plan differently than SBC did. As has been discussed,
inapplicable.
6
The first two reasons that distinguish Rowe also serve to further distinguish Mannix from the instant
case. Specifically, the plaintiff in Mannix similarly had to overcome a presumption of employment
at will, and he had no course of dealing evidence to support his claim. In the instant case, there is
no similar presumption at issue and the plaintiffs have significant amounts of course of dealing
evidence in their favor.
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the plaintiffs had a reasonable basis for concluding that SBC merely reviewed large contracts to
ensure that commissions were calculated correctly—not to reduce or adjust the commissions scheme
for the contracts. On the other hand, the handbooks in Rowe clearly stated that employment was at
will, so that was the only reasonable interpretation of the handbooks. Id. at 270. Ultimately, Rowe
is distinct from the instant case.
3. SBC Management’s Statements
The statements of SBC management, before the CCI Agreement was signed, also support the
plaintiffs’ interpretation of the contract’s terms. While Anton and Snipes were closing the CCI
contract, various members of SBC management implied that Anton and Snipes would be due for a
large commission. For example, Snipes’ manager suggested that the contract was worth $200
million to $1 billion. Similar estimates were sent out in internal SBC emails. Likewise, SBC
management made comments about the large commissions the plaintiffs were going to get from the
CCI Agreement and how “rich” they would be. These statements did not put the plaintiffs on notice
that they were going to receive only $12,000 and $24,000, respectively, for a billion dollar contract.
Ultimately, these statements further support the conclusion that the jury reached a reasonable verdict.
B. Mutual Assent
SBC also contends that the district court should be reversed as a matter of law because there
was no evidentiary basis to find that SBC mutually assented to the terms the plaintiffs assert. SBC
misinterprets Michigan law in this regard.
SBC claims that it did not provide “expressed words” or “visible acts” that could result in
the plaintiffs’ interpretation of the contract. See Rood, 507 N.W.2d at 598. While SBC may not
have subjectively believed it assented to those terms, that is not the test under Michigan law when
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deciding the terms of an implied-in-fact contract. After considering the parties’ “expressed words
. . . and their visible acts,” the jury had to “ask whether a reasonable person could have interpreted
the words or conduct in the manner that is alleged [by the plaintiffs].” Id. Given how the previous
commissions were paid, the Plan’s vague terms, and the statements of SBC management, SBC did
provide “expressed words” or “visible acts” to support the jury’s verdict.
At the same time, SBC also asserts that the plaintiffs’ subjective belief of the contract terms
is irrelevant. Again, SBC misstates the law. It is true the plaintiffs’ subjective beliefs themselves
cannot dictate the terms of the implied-in-fact contract; however, since their beliefs were reasonably
grounded in SBC’s statements and conduct the jury could use the plaintiffs’ beliefs to construe the
terms of the implied contract.
C. The Effect of the CCI Agreement’s Terms
SBC asks the Court to look to the terms of the contract with CCI when deciding whether the
jury’s awards should be lowered or reconsidered by the district court. Specifically, SBC argues that
the CCI Agreement was unique because it was “wholesale” and CCI was not the end customer of
SBC’s services. Thus, the course of dealing evidence that involved “standard” contracts was
irrelevant. In the alternative, SBC believes that the LCR calculation should be capped at $15 million
in light of a liquidated damages clause in the CCI Agreement. Both of these arguments lack merit.
1. The “Wholesale” Nature of the Contract and Actual Revenue Earned by SBC
SBC contends that the CCI Agreement was different from the “standard” contracts that Anton
and Snipes had secured in the past, and thus, the course of dealing evidence is irrelevant here. The
contract is apparently a “wholesale” contract since SBC is not selling directly to the end customer.
Rather, CCI is selling the services to end customers and will be more like a “middle man” for SBC.
15
Because of the “wholesale” nature, SBC argues that the actual revenue earned by the contract should
be a factor in the commissions’ calculations. Even if the course of dealing evidence was not applied,
the other evidence shows that a jury could reasonably conclude that the plaintiffs should not be paid
differently for this contract. No statements by SBC’s management to Anton or Snipes imply that this
contract or other “wholesale” contracts would be commissioned differently. In addition, the Plan
does not state that “wholesale” contracts will get lower or different commissions than “standard”
contracts. Similarly, none of Anton and Snipes’ previous commissions were paid based on the actual
revenue the underlying contract earned. Their commissions were calculated when the sale was
executed–often before SBC knew what revenue would be earned. Moreover, the jury’s verdict is
reasonable even if the course of dealing evidence is not considered.
2. The Liquidated Damages Clause
In the alternative, SBC asserts that the LCR should be calculated based on the CCI
Agreement’s $15 million liquidated damages clause. SBC contends that the contract’s potential
value should not be the basis for any calculation of damages since CCI was not liable for this
amount. However, when SBC paid the plaintiffs their commissions for signed contracts prior to the
CCI Agreement, it never took into account the contracts’ liquidated damages clauses. Additionally,
SBC never had considered what amount the customer was actually liable for, or if the revenue
projections were speculative. Even looking at the terms of the Plan, as SBC repeatedly urges us to
do, no mention is made of: (1) how a liquidated damages clause affects sales commissions or (2)
how the speculative nature of revenue projections affects sales commissions. In other words, neither
the parties’ course of dealing nor the language of the Plan makes a liquidated damages clause a factor
16
in LCR calculations. Consequently, the jury acted reasonably in concluding that the liquidated
damages clause should play no role in calculating the plaintiffs’ commissions.
D. Motion for Remittitur
SBC also appeals the district court’s denial of its request for remittitur. In reviewing the size
of jury verdicts, we apply federal law. See Donovan v. Penn Shipping Co., Inc., 429 U.S. 648, 649-
650 (1977). Thus, we review the denial of a motion for remittitur for abuse of discretion, and we
view the facts in the light most favorable to the plaintiffs since they prevailed at trial. Mid-Michigan
Computer Sys., Inc. v. Marc Glassman, Inc., 416 F.3d 505, 509 (6th Cir. 2005). As part of this
request, SBC again asks that the commissions be calculated based on the liquidated damage clause
(thereby limiting the LCR of the CCI Agreement to $15 million), or in the alternative, for a partial
new trial on damages. For the reasons provided above, this argument lacks merit. In addition, in
its motion for remittitur, SBC argues the jury’s award was speculative. Once again, SBC is
incorrect.
First, using the potential value of the contract is a reasonable interpretation of the implied
contract between SBC and the plaintiffs. While the plaintiffs must prove their breach of contract
damages “with reasonable certainty” and without speculation or conjecture, it is not necessary that
they do so with “mathematical precision.” Hofmann v. Auto Club Ins. Ass'n, 535 N.W.2d 529, 554-
55 (Mich. Ct. App. 1995) (citing S.C. Gray, Inc. v. Ford Motor Co., 286 N.W.2d 34 (Mich. Ct. App.
1979); Sutter v. Biggs, 139 N.W.2d 684 (Mich. 1966); Godwin v. Ace Iron & Metal Co., 137 N.W.2d
151 (Mich. Ct. App. 1965)). Still, under Michigan law, the jury’s inquiry here was what Anton and
Snipes reasonably believed the terms of the implied-in-fact contract were, and, on that basis, what
commissions are owed to them for the CCI Agreement. There is evidence supporting the conclusion
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that the parties agreed to large commissions. Such an agreement does not make the jury award
unreasonable. The plaintiffs presented evidence that the contract could be valued as high as $1.08
billion. Most significantly, SBC stipulated that the contract was internally characterized as a “one
billion dollar agreement and/or a deal worth in excess of $1 billion.” SBC has not demonstrated how
the commissions were speculative, only stating that there was only a possibility that CCI would order
$531 million worth of orders. Thus, SBC cannot fault the jury since SBC agreed to a contract that
allowed for commissions based on projections—not actual revenue.
Further, SBC argues that a reasonable jury could not find the LCR to be $531 million
because, to do so, a jury would need to assume a steady monthly growth of orders. SBC contends
that the testimony and evidence did not support such a conclusion, or—in its own words—the use
of a “straight line” economic model. SBC believes that the evidence was not sufficient since it did
not address the “critical factors” to make use of such evidence. SBC is wrong, as there was
significant evidence that did support the jury’s verdict. There were several witnesses who stated that
the value of the CCI Agreement was between $200 million and $1 billion. As has been mentioned,
SBC stipulated that internally the CCI Agreement was characterized as a billion-dollar agreement.
The test before us is whether the jury was reasonable in concluding that the agreement was valued
at $531 million. There was evidence that SBC believed the agreement to be worth around $1 billion
and that, in previous agreements involving the plaintiffs, these types of projections formed the basis
of their LCR calculations. Therefore, the district court did not abuse its discretion in denying the
SBC’s motion for remittitur.
III.
For the foregoing reasons, we affirm.
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