March 01, 2006
Discretionary Bonus Not Too Indefinite to Enforce
The 1915 New York case of Varney v. Ditmars is a casebook classic, holding that the promise of a discretionary bonus to an at-will employee is too indefinite to enforce. But a New York judge has just held that a promise to pay an associate "up to ten percent" of the fees generated from business she brought to the firm is definite enough to withstand summary judgment.
In the decision, associate Leah Guggenheimer alleged that she joined Bernstein Litowitz Berger & Grossman at a lower salary than that paid by competitive firms, in reliance on the class-action firm's "express promise" to give associates a share of the fees generated by cases they brought in. Guggenheimer says she brought in more than $2 million in fees, but was offered only a "token" $50,000 bonus.
Manhattan judge Bernard Fried denied Bernstein's motion to dismiss, holding that the promises made to Guggenheimer could have amounted to "oral contract agreeing to exercise that discretion in plaintiff's favor." The New York Law Journal recounts the story here.
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