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Scribner v. Worldcom, Inc.

249 F.3d 902 (9th Cir. 2001)

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Scribner v. Worldcom, Inc.

United States Court of Appeals for the Ninth Circuit

249 F.3d 902 (9th Cir. 2001)

Facts

Beginning in 1994, Donald Scribner (plaintiff) was the vice president of the operator-services division of WorldCom, Inc. (WorldCom) (defendant). WorldCom granted Scribner stock options that were to vest at a future date. According to WorldCom’s stock-option plan (Plan) and stock-option contract with Scribner, his stock options were to immediately vest if WorldCom terminated his employment without cause. Neither the Plan nor the contract defined “without cause.” The Plan gave WorldCom’s board of directors (Board) broad discretion to determine whether a termination was with or without cause. In 1996, WorldCom terminated Scribner’s employment as a result of WorldCom’s sale of the operator-services division. Because the purchaser wanted to hire the essential employees who were in charge of the division, including for Scribner’s position, WorldCom agreed to terminate those employees. Scribner believed his termination was without cause and sought to exercise his stock options. Although WorldCom did not terminate Scribner based on his performance, WorldCom considered Scribner’s termination to be for cause for the purposes of the stock-option contract. Scribner sued WorldCom, and the district court granted summary judgment in favor of WorldCom. Scribner appealed.

Rule of Law

Issue

Holding and Reasoning (Trott, J.)

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