Reference no: EM131868340

Citynet, LLC, established an employee incentive plan “to enable the Company to attract and retain experienced individuals.” The plan provided that a participant who left Citynet’s employment was entitled to “cash out” his or her entire vested balance. (When an employee’s rights to a particular benefit become vested, they belong to that employee and cannot be taken away. The vested balance refers to the part of an account that goes with the employee if he or she leaves the company.) When Citynet employee Ray Toney terminated his employment, he asked to redeem his vested balance, which amounted to $87,000.48. Citynet refused, citing a provision of the plan that limited redemptions to no more than 20 percent annually. Toney filed a suit in a West Virginia state court against Citynet, alleging breach of contract. Citynet argued that the plan was not a contract but a discretionary bonus over which Citynet had sole discretion. Was the plan a contract? If so, what was the consideration?