Financial Analysis of Wrongful Termination: Joseph Kidwell
Berg, M. Douglas, Stretcher, Robert, Journal of the International Academy for Case Studies
The primary subject matter of this case concerns the valuation of economic damages incurred by Mr. Joseph Kidwell upon his wrongful termination from Gilad Lexus of Billings, Montana. A secondary issue examined involves brand specific knowledge which is not transferable to the selling of other automobiles. The course has a difficulty level appropriate for the advanced undergraduate or first year masters students, practicing HR managers or those seeking to become forensic economists. The case is designed to be taught in one and a half class hours and is expected to require two hours of outside preparation by students.
Joseph Kidwell, a talented sales manager for a Lexus dealership, was terminated for refusing to call the police and report a car as being stolen. It was later found that an employee had borrowed the car without permission, but Joseph had already been terminated. Joseph brought a lawsuit against the dealership for wrongful termination, the details of which are presented in this case. The reader is tasked with analyzing the economic loss suffered by Joseph due to the termination.
Joseph Kidwell grew up in Billings, Montana. He graduated from the local high school in 1998 and went to work for Gilad Lexus in October of the same year. Joseph enjoyed his job selling cars. He had a real fascination with the Lexus brand of automobiles and spent hours each day improving his stock of knowledge about the cars.
Two years after starting his j ob with Gilad Lexus, Joseph married his high school sweetheart, Jennifer Paulson. A year later they had their first child, Ryan. It was time to move out of the apartments and into a home of their own. They built a new home in a subdivision close to the dealership. Jennifer joined a number of civic organizations in an effort to integrate the family into the social fabric of the community.
In July of 2003, Joseph and Jennifer had their second child, Lisa. Luckily, Joseph's career at Gilad had been progressing. The existing Sales Manager of the dealership retired in August, and the General Manager, Mike Neddlemeyer, thought Joseph was the perfect choice to fill the opening. The duties of a Sales Manager include supervising the sales staff, directing the advertising, and running the sales department in such a way as to maintain the customers' perception of the Lexus way of doing things.
MANAGEMENT STRUCTURE AND COMPENSATION
The management structure of each Lexus dealership consists of a general manager with a sales manager and a service manager reporting to the general manager. Depending on the size of the dealership, there may be assistant sales and service managers. The general manager of the Gilad dealership, Mike Neddlemeyer, liked Joseph and trained him in the Lexus way of doing things. Lexus dealerships attempt to differentiate themselves from competing car brands by offering a distinctive style of service and attention to detail. It takes time and effort to learn this way of doing things. Joseph excelled in his job.
His compensation as Sales Manager consisted of a $25,000 base salary plus 2 percent of gross sales. In 2003 his total compensation consisted of $130,411. Through the dealership, Joseph was able to purchase health insurance for his family at a group rate of $400 per month. Gilad Lexus offers a defined contribution retirement plan for it's employees. The dealership matches 50% of an employee's contributions to a 401k account up to a maximum of 3% of the employee's total compensation. Joseph made sure that he contributed 6% of his income to his 401k so that he was able to get the maximum 3% match.
EVENTS LEADING UP TO THE TERMINATION
In January of 2006, Mr. Neddlemeyer retired. The owners of the dealership appointed Jack Maguire as the new General Manager. From the outset, Mr. Maguire gave the impression of a person unsure of himself. …