Sastre v. Cessna Aircraft Co. ( 1999 )

F I L E D
United States Court of Appeals
Tenth Circuit
UNITED STATES COURT OF APPEALS
DEC 21 1999
TENTH CIRCUIT
PATRICK FISHER
Clerk
LUIS SASTRE,
Plaintiff-Appellant,
v. No. 98-3330
CESSNA AIRCRAFT COMPANY, (D.C. No. 96-CV-1456-MLB)
(D. Kan.)
Defendant-Appellee.
ORDER AND JUDGMENT *
Before BALDOCK, EBEL, and KELLY, Circuit Judges.
Plaintiff Luis Sastre appeals the district court’s grant of summary judgment
in favor of Defendant Cessna Aircraft Company on his claims of breach of
implied duty of good faith, forfeiture, and unconscionability. We exercise
jurisdiction pursuant to 18 U.S.C. § 1291, and affirm.
I.
*
This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. The court
generally disfavors the citation of orders and judgments; nevertheless, an order
and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.
Plaintiff Luis Sastre was a Latin American sales representative for Cessna’s
Citation jet aircraft until his termination, allegedly for filing false travel expense
reports. Two documents, (1) the Statement of Understanding and (2) the annual
Citation Marketing Sales Compensation Plan, contained the terms of Sastre’s
employment. The Statement of Understanding provided that Sastre was an
employee at will. The Compensation Plan, which Cessna presented to Sastre
unilaterally, provided that a sales representative earns his commission for the sale
of an aircraft in two halves: he earns the first, the advance commission payment,
when the Citation Marketing Division Administration (“Marketing”) accepts the
sale, and the second, the delivery commission payment, when Cessna delivers the
aircraft to the customer. Finally, the Compensation Plan unambiguously provided
that if a marketing representative were no longer an employee at the time
Marketing accepted the sale or Cessna delivered the aircraft, the employee would
not receive the advance or delivery commission, respectively.
At the time Cessna terminated him, Sastre had already arranged the sale of
several aircraft for which he had not yet earned the commissions, either because
Marketing had not yet accepted the sales, or because Cessna had not yet delivered
the aircraft. Sastre sued Cessna to recover these commissions, alleging (1) breach
of an implied covenant of good faith, (2) forfeiture, and (3) unconscionability.
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Cessna filed a motion for summary judgment, which the district court granted.
Sastre appeals.
II.
We review the district court’s grant of summary judgment de novo,
applying the same legal standard as the district court. See Anderson v. Coors
Brewing Co., 181 F.3d 1171, 1175 (10th Cir. 1999). Summary judgment is
appropriate if no genuine issue of material fact exists. See Fed. R. Civ. P. 56(c).
We view the evidence and draw inferences therefrom in the light most favorable
to the nonmoving party. See Anderson, 181 F.3d at 1175.
A. Breach of the Implied Covenant of Good Faith
Sastre argues that the district court should have read an implied covenant of
good faith into the Compensation Plan. The Compensation Plan provided that a
sales representative did not earn advance and delivery commissions until
Marketing had accepted the sale and Cessna had delivered the aircraft,
respectively. Cessna prepared a new Compensation Plan every year and presented
it to its employees unilaterally.
Under Kansas law, personnel rules that are unilaterally issued by the
employer are not part of the employment contract and therefore cannot be the
basis of an implied covenant of good faith. See Buckley v. Keebler Co., 1998 WL
314566, at *4 (10th Cir. 1998) (unpublished decision); Bartholomew v. City of
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Burlington, Kansas, 5 F. Supp.2d 1161, 1171 (D. Kan. 1998); Kastner v. Blue
Cross and Blue Shield of Kansas, Inc., 894 P.2d 909, 917 (Kan. App. 1995).
Therefore, the district court correctly refused to imply a covenant of good faith on
the basis of the Compensation Plan.
B. Forfeiture
Sastre next argues that the Compensation Plan effects a forfeiture in
violation of Kansas law because it provides that a marketing representative does
not receive the advance or delivery commission until Marketing accepts the sale
or Cessna delivers the aircraft to the customer, respectively.
The Kansas Wage Payment Act, Kan. Stat. Ann. §§ 44.313-327, provides
that terminated employees are entitled to collect all of their “earned wages,” id. at
§ 44.315(a), including commissions, see id. at § 44.313(c). However, an
employment contract may create a condition precedent to the employee’s earning
of wages. See Weir v. Anaconda Co., 773 F.2d 1073, 1084 (10th Cir. 1985);
Smith v. MCI Telecommunications Corp., 755 F. Supp. 354, 358 (D. Kan. 1990);
Weinzirl v. Wells Group, Inc., 677 P.2d 1004, 1008 (Kan. 1984). A condition
precedent is
something that is agreed must happen or be performed before a right
can occur to enforce the main contract. It is one without the
performance of which the contract entered into between the parties
cannot be enforced. A condition precedent requires the performance
of some act or happening of some event after the terms of the
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contract, including the condition precedent, have been agreed on
before the contract shall take effect.
Weinzirl, 677 P.2d at 1008.
The Compensation Plan creates two conditions precedent to a marketing
representative’s receipt of the advance and delivery commissions: first,
Marketing must accept the transaction, and second, Cessna must deliver the
aircraft to the customer. In addition, in order to receive the commissions, a sales
representative must be an employee at the time the conditions precedent are
satisfied. Because Sastre had not yet satisfied the conditions precedent when he
was terminated, he had not yet “earned” his commissions under Kan. Stat. Ann. §
44.315(a). Therefore, the district court correctly found that the Compensation
Plan did not effect a forfeiture under the Kansas Wage Payment Act.
C. Unconscionability
Sastre finally argues that the Compensation Plan was unconscionable.
Under Kansas law, a contract is unconscionable if it meets the following factors:
1. The use of printed form or boilerplate contracts drawn
skillfully by the party in the strongest economic position, which
establish industry wide standards offered on a take it or leave it basis
to the party in a weaker economic position;
2. a significant cost-price disparity or excessive price;
3. a denial of basic rights and remedies to a buyer of
consumer goods;
4. the inclusion of penalty clauses;
5. the circumstances surrounding the execution of the
contract, including its commercial setting, its purpose and actual
effect;
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6. the hiding of clauses which are disadvantageous to one
party in a mass of fine print trivia or in places which are
inconspicuous to the party signing the contract;
7. phrasing clauses in language that is incomprehensible to a
layman or that divert his attention from the problems raised by them
or the rights given up through them;
8. an overall imbalance in the obligations and rights imposed
by the bargain;
9. exploitation of the underprivileged, unsophisticated,
uneducated and the illiterate; and
10. inequality of bargaining or economic power.
Wille v. Southwestern Bell Tel. Co., 549 P.2d 903, 906-07 (Kan. 1976) (citations
omitted).
Sastre has not shown, either in the district court or on appeal, that the
Compensation Plan was a contract. Even if the Compensation Plan is a contract,
it is not unconscionable: factors 1-3 and 7-9, regarding consumer transactions,
are not applicable, and Sastre has not presented evidence that supports a finding
of unconscionability under factors 4 (penalty clauses), 5 (circumstances of the
contract’s execution), or 6 (hidden language or fine print). The evidence
supporting factor 10, that Cessna’s unilateral presentation of the Compensation
Plan to Sastre demonstrated disparate bargaining power, is not alone enough to
raise an issue of material fact regarding unconscionability. Accordingly, the
decision of the district court is
AFFIRMED.
Entered for the Court,
Bobby R. Baldock
Circuit Judge
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