## Facts

- Panera implemented a compensation program to recruit and retain general managers by offering a large one-time bonus.
- Managers signed employment agreements incorporating a compensation plan that made the bonus payable about five years later, with the amount tied largely to restaurant profitability in the final two years.
- Eligibility required the manager to remain employed as a qualifying general manager when the bonus became payable.
- In 2010, Panera decided to impose a $100,000 cap on the bonus; in 2011 it notified managers the cap would take effect in January 2012.
- In 2014, managers who participated in the program sued, alleging Panera breached their agreements by unilaterally capping bonuses that were originally uncapped under the profitability-based formula.
- Panera asserted defenses including oral novation, waiver, estoppel, and commercial frustration, and challenged class certification.

## Issues

1. Under Missouri law, did the bonus plan operate as an offer for a unilateral contract that became irrevocable once managers began performance, barring Panera from later imposing a $100,000 cap for managers already performing?
2. Did any reserved right to modify or terminate the bonus plan permit Panera to impose the cap on managers who had begun performance?
3. Did Panera establish novation, waiver, estoppel, or commercial frustration as defenses to breach?
4. Did Rule 23 permit class treatment despite Panera’s claim that individual questions about when each manager began performance defeated commonality/predominance?

## Decision

- The Eighth Circuit affirmed the district court’s certification of a class of approximately sixty-seven managers and its grant of summary judgment for the managers on breach of contract.
- The court held the bonus arrangement was an offer of a unilateral contract under Missouri law.
- The offer became irrevocable once each manager began performance; therefore, Panera could not impose the cap as to managers who had started performing under the offer.
- The court rejected Panera’s defenses of novation, waiver, estoppel, and commercial frustration.
- The court held the district court did not abuse its discretion in maintaining class certification because the core liability question was common and the record supported that class members had begun performance.

## Legal Principles

- Under Missouri law, an employer’s bonus plan may constitute an offer to form a unilateral contract.
- A unilateral contract offer becomes irrevocable once the offeree begins performance; after performance begins, the offeror may not unilaterally revoke or materially modify the offer as to that offeree.
- Continued at-will employment, without more, does not supply consideration sufficient to support an alleged oral novation modifying an existing contractual right.
- Waiver requires a clear, intentional relinquishment of a known right; continued work after notice of an adverse change does not, by itself, establish waiver or equitable estoppel.
- Foreseeable business risks and increased costs ordinarily do not satisfy the requirements for commercial frustration excusing performance.

## Conclusion

The court held that Panera’s promised bonus terms were enforceable as unilateral contract offers that became irrevocable once managers began performing, making a later-imposed $100,000 cap ineffective for those managers; it also affirmed class certification and classwide summary judgment for breach of contract.


Boswell v. Panera Bread Co., 879 F.3d 296 (8th Cir. 2018)