Frey v. Workhorse Custom Chassis, LLC

In January 2003, Thomas Frey (plaintiff) resigned as an employee of Workhorse Custom Chassis, LLC (Workhorse) (defendant). Frey claimed he was orally promised a bonus for 2002 if Workhorse’s earnings before interest, taxes, depreciation, and amortization (EBITDA) for that year exceeded $39.1 million. Frey believed the EBITDA target was met, but when he asked Workhorse’s CEO about the bonus in the spring of 2003, Frey received a letter from the CEO in response stating that Frey had forfeited his eligibility for the bonus when he ended his employment with Workhorse. The CEO’s letter did not address whether the EBITDA target for the bonus was met. Frey sued Workhorse, claiming Workhorse’s failure to pay the bonus was a breach of contract, and was awarded a jury verdict of $225,000. Workhorse moved for judgment as a matter of law, arguing that Frey failed to prove that Workhorse’s 2002 EBITDA exceeded $39.1 million. Workhorse pointed to its 2002 audited financial statements, which showed EBITDA of only $37.6 million. The completion of these financial statements was delayed for many months—long after Frey left Workhorse—and a witness for Workhorse conceded that the EBITDA amount reflected in the financial statements had a margin of error of up to 5 percent, which in the case of an increase of that magnitude would have been enough to surpass the $39.1 million threshold for the bonus. Had that occurred, many other Workhorse employees besides Frey would have been entitled to a bonus.