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FELDMAN v. U.S. SPRINT COMMUNS. CO.

June 7, 1989

LARRY FELDMAN, Plaintiff,
v.
U.S. SPRINT COMMUNICATIONS CO., Defendant



The opinion of the court was delivered by: BROTMAN

 Plaintiff was a major account representative for defendant and earned most of his salary on commission. He has brought this action seeking compensation for defendant's alleged breach of various compensation plans. Presently before the court are defendant's motion for summary judgment and plaintiff's cross-motion for summary judgment. For the reasons set forth below, the court will grant in part and deny in part each of the motions.

 I. FACTS AND PROCEDURE

 Under the 1986 Plan Feldman earned a base salary plus a percentage of his customers' total usage billed on the second invoice after the sale. Feldman's monthly sales quota was $ 7,000; if he exceeded it, he received thirty-two percent of the revenues billed for the second month of use, and if he did not, he received twenty-eight percent of the revenues billed for the measuring month. The 1986 Plan capped monthly commission earnings at $ 40,000. In addition, the 1986 Plan provided, "Participants who terminate employment with US SPRINT will receive base salary through their date of termination, and any commissions earned on complete orders submitted through the date of termination." The 1986 Plan also specified that "US SPRINT has the right to change the Plan in any manner whatsoever at any time."

 The terms of the 1987 Plan were substantially similar to those of the 1986 Plan. In addition to a base salary, a major account representative earned

 
commissions based on the aggregate amount of second invoiced revenue from their sales, at the rate of:

  Less than $ 7000 28% $ 7000 and above 32%

 Those commissions were to be paid as follows:

 
Earned commissions will normally be paid with the last payroll check in the month following the second invoiced revenue measurement. The maximum amount of commission that will be paid to any participant in this plan, in any month, is capped at $ 40,000.

 The 1987 Plan further provided that "terminated participants of The Plan (voluntary or involuntary) will be eligible for commissions paid, and commissions earned during their month of termination." The general provisions of the 1987 Plan included the following:

 
US Sprint reserves the right to modify, or terminate this plan at any time . . . Any modification(s) of this plan, and/or institution of a new commission plan shall be effective on such date as shall be stated in such modification(s), and/or new commission plan, whether or not the affected participant has received prior notification thereof.

 In late 1986 Sprint experienced difficulties with its billing system and was unable to generate timely invoices. Because the 1986 Plan was keyed to revenue received by Sprint from a customer's second invoice, Sprint was unable accurately and timely to calculate sales commissions for its employees. To "ensure an even flow of commission earnings while [Sprint] continue[s] to iron out existing back office operational bugs in the Order Entry and Billing systems," Sprint instituted ICS in November 1986. ICS operated simultaneously with the 1986 Plan and later with the 1987 Plan by providing an alternative method for calculating commissions:

 
The basis for the Interim Commission Support system is an estimated "Revenue Factor" (Attachment A) that each of your orders should generate, in their second billing month. A total Commissionable Revenue (arrived at by multiplying the number of products sold times the revenue factor) will be used to calculate minimum earned commissions. This minimum will be compared against actual commissions earned, based on actual revenue billed that month. You will be paid the higher of the Interim system, or the actual. This commission calculation and comparison will be made each month, and you will always receive the larger commission amount.

 Under the Sprint commission plans, a major account representative would receive a commission approximately four months after a sale. If the billing system were fully functional and the product could be installed without delay, the representative would make a sale in month 0, Sprint would install the product in month 1, the customer would receive its first invoice in month 2 and its second invoice in month 3, and the commission would be paid in month 4. Under ICS, the representative would receive either the estimated commission or actual commission in month 4. However, the ICS plan also recognized that

 
There may be some instances that require adjustments to the commissions paid under the Interim Commission Support system. These will be handled in basically the same method that is used today. You have the responsibility to justify those adjustments, supply the supporting information, and get this signed off through your sales management organization. Then your Division ...

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