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Johnson v. Figgie Int'l





Appeal from the Circuit Court of Lake County; the Hon. William D. Block, Judge, presiding.


Plaintiff, Charles E. Johnson, filed a complaint for declaratory judgment, seeking to recover deferred bonus payments, as outlined in a written compensation plan, from defendant, Figgie International, Inc., Rawlings Sporting Goods Division (Rawlings). The plaintiff moved for summary judgment seeking the relief requested in the complaint. The trial court granted summary judgment to plaintiff, finding that the compensation plan constituted a written contract which clearly and unambiguously stated the basis for an employee's compensation and thus refusing defendant's extrinsic evidence submitted in response to the motion for summary judgment. On appeal, this court in Johnson v. Figgie International, Inc., Rawlings Sporting Goods Division (1985), 132 Ill. App.3d 922, 477 N.E.2d 795, reversed, holding that the written compensation plan could not represent an integrated agreement and remanded the cause, directing the lower court to consider defendant's extrinsic evidence. On remand, the same judge again found for plaintiff, striking the extrinsic evidence submitted by defendant and ruling that the compensation plan contained the entire agreement between the parties regarding bonus payments. The judge found that under the unambiguous terms of that agreement, plaintiff was entitled to his deferred bonus payments. Defendant appeals from this judgment.

In this court defendant contends: (1) that the trial court erred in disregarding this court's prior decision in this case which required the trial court to consider the parol evidence submitted by defendant, especially when the evidence clearly mandates reversal of the trial court's judgment, and (2) that the forfeiture provisions of the bonus plan did not constitute an unconscionable penalty. Plaintiff cross-appeals, contending that the trial court erred in denying plaintiff's prayer for attorney fees.

At the bench trial, plaintiff testified that at the time he began working for defendant in March 1980, the terms of his employment were explained orally and in writing. The portion of his employment agreement which was written constituted the compensation program in existence at the time. The 1982 compensation plan which plaintiff received at defendant's 1981 sales meeting replaced the prior bonus or commission plan. The new plan was explained at the meeting by Stan Morrison, who stood at the front of the meeting room where plaintiff could see and hear him clearly. Plaintiff was present for the entire discussion of the bonus compensation plan.

Plaintiff related that he did not remember whether Morrison utilized a flip chart to explain the plan. He did remember that Morrison discussed each provision of the plan on a point-by-point basis and that Morrison described the new bonus program. In talking about the provisions of the plan, Morrison explained that the plan offered the sales force an opportunity to make more money. To the best of plaintiff's knowledge, Morrison did not say anything about the forfeiture aspects of the plan.

Plaintiff stated that on June 1, 1983, he resigned from Rawlings to pursue a "better opportunity." Before he gave notice to defendant, he spoke with Dick Roche, a fellow salesman, and Dan Olson regarding the forfeiture aspects of the 1982 bonus plan. Roche indicated that the 25% matching incentive (provided in paragraph E of the plan) would be forfeited if plaintiff left but that he did not think the 75% ceiling portion (provided in paragraph D of the plan) would be. Plaintiff also had a conversation with Dick Davis, the regional sales manager for defendant, during which Davis informed plaintiff that if he left Rawlings, he would forfeit all of his deferred compensation, including the 75% ceiling portion.

At the close of plaintiff's testimony, plaintiff rested and defendant made a motion for a directed verdict which was denied.

Six witnesses testified on behalf of defendant. Randall Kirby, Donald Kirsch, Daniel Olson, Richard Roche, and Richard Davis, current employees of defendant, were all present at the 1981 sales meeting for Stan Morrison's introduction and explanation of the 1982 compensation plan. Each witness received a copy of the plan and recalled that Morrison explained the program. Morrison used a flip chart at the meeting to explain the plan, going through the plan "point by point." Both Kirby and Kirsch recounted that Morrison explained to the salespeople that if they left for any reason before either the 75% ceiling portion or the 25% matching incentive funds were paid, they were not going to receive that money; they would simply lose it. The portions of the provisions of the compensation plan which dealt with the 75% ceiling and the 25% matching incentive funds stated:

"D. 75% Ceiling

A salesman [sic] total bonus paid in any one calendar year may not exceed 75% of his salary for that particular compensation year. However, the excess bonus will be deferred over the following two (2) years. This will help the salesman achieve a steady growth in income.

E. Matching Incentive

In addition each year 25% of the salesman's bonus will be matched and then placed in a deferred program. This deferred compensation will be paid in three (3) subsequent equal installments. Should the salesman leave Rawlings he will forfeit any further payments on the deferred bonus program."

Daniel Olson stated that Morrison told the salespeople that upon termination with Rawlings, quitting or being let go, they would forfeit any deferred bonuses or commissions. To the best of Olson's memory, Morrison indicated that upon leaving the company an individual forfeited both types of deferred bonuses, the 75% ceiling and the 25% matching incentive. On cross-examination, the court asked Olson how sure he was that Morrison specifically stated that the 75% ceiling fund specified in paragraph D of the compensation plan would be forfeited. Olson replied that he could not specifically say that Morrison indicated the funds provided in paragraph D would be forfeited but that he left the sales meeting presuming that the forfeiture applied to all bonuses.

Both Roche and Davis testified that they had conversations with plaintiff regarding the forfeiture provisions at the time plaintiff informed them that he was quitting his position with Rawlings. Roche recalled that plaintiff asked him how he interpreted the forfeiture clause of the compensation program. Roche told plaintiff that he was certain the 25% matching incentive would be forfeited but he was uncertain regarding the "balance of that particular paragraph." Roche advised plaintiff to consult a lawyer. Davis related that he discussed the forfeiture aspects of the compensation plan with plaintiff, telling plaintiff that he hated to see plaintiff "walking away from that much money."

Roche also testified that at the sales meeting Stan Morrison explained the provisions of the bonus compensation plan but Roche did not have any specific recollection of what it was Morrison definitely said about the plan. Davis recalled that Morrison said if you leave Rawlings you forfeit your bonus, but Davis could not recall if Morrison specifically indicated what portion of the bonus would be forfeited.

Stan Morrison, a former employee of defendant and the sales planning manager for defendant at the time of the 1981 sales meeting, was largely responsible for putting together the new 1982 compensation plan. Morrison testified that under the former compensation plan, Rawlings was losing about one-third of its salesmen per year which, in turn, was affecting the company sales, morale, and any consistencies in defendant's training program. Morrison put together a compensation plan which would provide bonuses comparable to those of other salespeople in the market place. At trial Morrison went through the various provisions of the plan, pointing out that the purpose of paragraph D of part II, the 75% ceiling provision, was to build a program which would enable a salesperson to "make progressive income" rather than paying him everything [his entire bonus] in one year. Paragraph E, the 25% matching incentive provision, was designed to build future funds, to give stability to an individual's income, and to give an individual incentive to stay with Rawlings.

Morrison stated that during the 1981 annual meeting, he specifically held a meeting just for the marketing staff wherein he presented the compensation plan. Morrison related that the plan was distributed to the salespeople. Using a flip chart, Morrison went through the written document and then went back through it giving examples to show the difference between what an individual would have made under the previous compensation plan and what he would have earned under the new plan. Morrison testified that when he discussed part II of the plan, which dealt with bonuses, he went into each paragraph in detail. Morrison stated that parts of paragraphs D and E, the 75% ceiling portion and the 25% matching incentive portion, were reprinted on the same page of the flip chart and discussed at the same time since deferred compensation was new to the salespeople. Morrison recounted that he explained "very strongly" to the salesmen that if they left ...

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