Gregory v. Forest River, Inc. ( 2010 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 09-1256
DAVID GREGORY,
Plaintiff – Appellee,
v.
FOREST RIVER, INCORPORATED, a foreign corporation,
Defendant – Appellant.
Appeal from the United States District Court for the Northern
District of West Virginia, at Martinsburg. John Preston Bailey,
Chief District Judge. (3:08-cv-00073-JPB-JES)
Argued: December 2, 2009 Decided: March 10, 2010
Before TRAXLER, Chief Judge, and SHEDD and DAVIS, Circuit
Judges.
Affirmed in part, reversed in part, and remanded by unpublished
opinion. Judge Shedd wrote the opinion, in which Chief Judge
Traxler joined. Judge Davis wrote a separate opinion concurring
in part and dissenting in part.
Rodney Lloyd Bean, STEPTOE & JOHNSON, LLP, Morgantown, West
Virginia, for Appellant. Robert J. Schiavoni, HAMMER, FERRETTI
& SCHIAVONI, Martinsburg, West Virginia, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
SHEDD, Circuit Judge:
David Gregory was employed by Forest River, Inc. (“FRI”) as
a commissioned salesperson from 2002 until July 2007, when he
was terminated. After his termination, he brought this action
alleging that FRI violated the West Virginia Wage Payment and
Collection Act (“WPCA”), W.Va. Code §§ 21-5-1 et seq., by
failing to pay him all commissions due in a timely manner. On
the parties’ cross motions for summary judgment, the district
court granted Gregory’s motion and denied FRI’s motion, and
awarded him damages in the amount of $105,095.13 (plus
prejudgment interest). FRI now appeals, arguing that the court
erred in concluding that the WPCA is applicable and,
alternatively, that it violated the WPCA. For the following
reasons, we affirm in part, reverse in part, and remand this
case for further proceedings consistent with this opinion.
I
Summary judgment is appropriate “if the pleadings, the
discovery and disclosure materials on file, and any affidavits
show that there is no genuine issue as to any material fact and
that the movant is entitled to judgment as a matter of law.”
Fed. R. Civ. P. 56(c). The relevant inquiry in a summary
judgment analysis is “whether the evidence presents a sufficient
disagreement to require submission to a jury or whether it is so
2
one-sided that one party must prevail as a matter of law.”
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52 (1986).
We review the district court’s order granting summary judgment
de novo. Jennings v. U.N.C., 482 F.3d 686, 694 (4th Cir. 2007)
(en banc). In doing so, we generally must view all facts and
draw all reasonable inferences in the light most favorable to
the nonmoving party. Scott v. Harris, 550 U.S. 372, 378 (2007).
However, “facts must be viewed in the light most favorable to
the nonmoving party only if there is a ‘genuine’ dispute as to
those facts.” Id. at 380 (quoting Fed. R. Civ. P. 56(c)).
Although “an employer is free to set the terms and
conditions of employment and compensation,” Meadows v. Wal-Mart
Stores, Inc., 530 S.E.2d 676, 689 (W.Va. 1999), it “must pay
earned wages to its employees,” Britner v. Medical Security
Card, Inc., 489 S.E.2d 734, 737 (W.Va. 1997). Being “remedial
in nature,” the WPCA’s purpose “is to protect working people and
assist them in the collection of compensation wrongly withheld.”
Meadows, 530 S.E.2d at 686. Accordingly, it must be construed
“liberally so as to furnish and accomplish all the purposes
intended.” Id. at 688 (citation and internal quotation marks
omitted). Nonetheless, like other statutes, it must not be
construed so as to produce an absurd result. Legg v. Johnson,
Simmerman & Broughton, L.C., 576 S.E.2d 532, 538 (W.Va. 2002).
3
The WPCA applies to (among others) corporations that are
“doing business” in West Virginia, which means “having employees
actively engaged in the intended principal activity of the . . .
corporation in West Virginia.” W.Va. Code § 21-5-1(n). It
“does not establish a particular rate of pay,” Robertson v.
Opequon Motors, Inc., 519 S.E.2d 843, 849 (W.Va. 1999); instead,
it “controls the manner in which employees in West Virginia are
paid wages,” and it imposes on employers “an obligation to pay
employees’ wages in a timely manner.” Gress v. Petersburg
Foods, LLC, 592 S.E.2d 811, 814 (W.Va. 2003). Pertinent to this
case, the WPCA requires a corporation to pay its discharged
employee’s wages (which includes commissions) in full within 72
hours, see W.Va. Code §§ 21-5-1(c), 21-5-4(b), and a corporation
that fails to adhere to this requirement “shall, in addition to
the amount which was unpaid when due, be liable to the employee
for three times that unpaid amount as liquidated damages,” W.Va.
Code § 21-5-4(e). 1 An employer cannot contravene any WPCA
provision by private agreement. See W.Va. Code § 21-5-10.
1
The Supreme Court of Appeals of West Virginia has stated
that the WPCA “has long confounded attorneys and courts alike.”
Meadows, 530 S.E.2d at 687. We note in this regard that the
phrase “doing business in this state” appears in § 21-5-3(a),
which generally requires wages to be paid every two weeks, but
it does not appear in § 21-5-4(b), which requires post-discharge
wages to be paid within 72 hours of the discharge. Despite the
omission of the phrase from § 21-5-4(b), we believe that the
section must be read as if the language is included therein;
(Continued)
4
II
FRI, which is headquartered in Elkhart, Indiana,
manufactures and sells worldwide a variety of products,
including recreational vehicles, campers, cargo trailers,
commercial vehicles, boats, buses, and manufactured houses. In
1996, FRI established a “Commission Payment Policy” (“the CPP”)
which provides:
Commissions will be paid only on units that have been
invoiced for the current month.
Commissions will be paid no later than 30 days after
the close of the month.
Any units in the process of being credited and re-
billed will be paid in the month when the final
invoice is processed.
If a sales person leaves the employment of Forest
River, they will be paid 50% of any order that is
logged in and not yet invoiced. Forest River reserves
the right to hold this last check until the final unit
is invoiced to the original dealer. If for some
reason the order does not go to the original dealer,
then no commission will be paid on that order.
Also, Forest River will hold this last check to assure
that any prior commission-paid units are not returned.
If any units are returned, the original commission
paid will be deducted [from] this last check.
otherwise, the statute would lead to the absurd result that only
employers “doing business” in West Virginia must pay wages to
current employees on a biweekly basis but any employer must pay
wages within 72 hours of terminating an employee.
5
J.A. 116. FRI amended the CPP in 2005 by specifying: “[A]ll
commission will be paid on shipped units at the end of every
month. No longer will commission be paid on invoicing.” J.A.
118.
FRI hired Gregory as a fulltime salesperson in 2002. At
that time, he lived in Indiana, and his sales territory included
several eastern states (including West Virginia) and part of
Canada. With FRI’s approval, he moved to West Virginia in 2004
and continued to service the same sales territory, working out
of his home. Gregory was aware of and signed a copy of the
unmodified CPP during his employment.
In December 2006, FRI circulated a memorandum (“the pay-
date memo”) to its commissioned salespeople stating that the
company’s “goal” continued to be paying commissions on the third
Friday after month-end. FRI set forth the 2007 commission pay
schedule in this memorandum.
FRI terminated Gregory’s employment on July 13, 2007. At
that time, FRI was paying him commission calculated at 1.7% of
his sales. Pursuant to the pay-date memo, FRI paid Gregory his
June commission as scheduled on July 20, 2007. 2 Thereafter, FRI
paid Gregory commissions for the months of July-November (“the
2
Gregory was allowed to take a $1,000 weekly draw that was
offset by his commissions. On July 13 and 20, Gregory was paid
his weekly draw.
6
post-discharge commissions”) on the dates scheduled in the pay-
date memo; thus, FRI paid Gregory commissions on August 17 (July
commission), September 21 (August commission), October 19
(September commission), November 16 (October commission), and
December 21 (November commission). Pursuant to the CPP, FRI
reduced the post-discharge commissions by 50%.
In this lawsuit, Gregory does not appear to contest the
fact that he was aware of FRI’s policies or that he was paid all
commissions due him under the terms of FRI’s payment policies.
Rather, he contends that the policies themselves violate the
WPCA regarding the timing and amount. Ruling on the arguments
presented in the parties’ summary judgment motions, the district
court concluded that (1) the WPCA applies to Gregory’s discharge
and (2) notwithstanding its payment policies, FRI violated the
WPCA by failing to pay Gregory the full amount of his
commissions in a timely manner. Based on these rulings, the
court awarded Gregory damages in the amount of $105,095.13 (plus
prejudgment interest).
The court broke the damages total into two parts. The
first part consists of $30,137.13 in liquidated damages for
Gregory’s June commissions, which represents three times the
amount of his full June commissions. The second part consists
of $74,958 in unpaid commissions and liquidated damages for the
post-discharge commissions. As to this second group, the court
7
concluded that FRI was not entitled to reduce the post-discharge
commissions by 50% (as it had done pursuant to the CPP);
further, the court noted that although the post-discharge
commissions were arguably due within 72 hours of Gregory’s
discharge, they were due in any event (under FRI’s method of
calculation) within 72 hours of the end of each month during
July-November.
III
On appeal, FRI primarily argues that the district court
erred in applying the WPCA because it is not incorporated,
licensed, or headquartered in West Virginia, and it does not
transact business in the state. We disagree.
As noted, the WPCA applies to corporations that are “doing
business” in West Virginia, which means “having employees
actively engaged in the intended principal activity of the . . .
corporation in West Virginia.” W.Va. Code § 21-5-1(n).
Unquestionably, Gregory was actively engaged in FRI’s intended
principal activity (i.e., sales) in West Virginia. Between 2004
and 2007, he worked from his West Virginia home as an FRI
salesman, servicing West Virginia as well as other locations.
Therefore, FRI falls within the plain terms of the WPCA.
FRI urges us to limit the scope of § 21-5-1(n)’s “doing
business” language by reading it in pari materia with W.Va. Code
8
§ 31D-15-1501, which is part of the West Virginia Business
Corporation Act and which is titled “Authority to transact
business and jurisdiction over foreign corporations.” That
section provides that “[a] foreign corporation may not conduct
affairs in [West Virginia] until it obtains a certificate of
authority from the Secretary of State,” and it sets forth a non-
exclusive list of activities “that do not constitute conducting
affairs within the meaning” of the statute. W.Va. Code § 31D-
15-1501(a) and (b). It further sets forth a list of activities
for which a foreign corporation “is deemed to be transacting
business” in West Virginia, and it mandates that a foreign
corporation is deemed to agree that service of process on the
Secretary of State, in certain circumstances, “has the same
legal force and validity as process duly served on that
corporation in this state.” W.Va. Code § 31D-15-1501(d) and
(e).
Because we find that § 21-5-1(n) is plain and unambiguous,
there is no reason for us to look to § 31D-15-1501 or elsewhere
to attempt to ascertain its meaning. As the Supreme Court of
Appeals of West Virginia has explained:
The rule of in pari materia means that [s]tatutes
which relate to the same subject matter should be read
and applied together so that the Legislature’s
intention can be gathered from the whole of the
enactments. It must be remembered that the rule of in
pari materia is a rule of statutory construction and
9
is only utilized where there is some ambiguity in a
particular statute. . . .
Furthermore, to say that because several statutes
relate to the same subject, they must always be read
in pari materia is an oversimplification of the rule.
First, it is apparent that what is meant by statutes
relating to the same subject matter is an inquiry that
is answered by how broadly one defines the phrase
“same subject matter.” Second, the application of the
rule of in pari materia may vary depending on how
integral the statutes are to each other. The rule is
most applicable to those statutes relating to the same
subject matter which are passed at the same time or
refer to each other or amend each other. A diminished
applicability may be found where statutes are self-
contained and have been enacted at different periods
of time. Finally, a related statute cannot be
utilized to create doubt in an otherwise clear
statute.
Berkeley County Pub. Serv. Sewer Dist. v. West Va. Pub. Serv.
Comm’n, 512 S.E.2d 201, 208-09 (W.Va. 1998) (internal
punctuation altered and citations omitted); see also In re Greg
H., 542 S.E.2d 919, 923 (W.Va. 2000) (stating that where the
legislature defines a statutory term, “such definition is
ordinarily binding upon the courts and excludes any meaning that
is not stated”).
Apart from the foregoing, we are not persuaded that § 31D-
15-1501 would in any event be relevant to an interpretation of
§ 21-5-1(n). In Kimball v. Sundstrom & Stratton Co., 92 S.E.
737 (W.Va. 1917), the court considered whether a foreign
corporation was “doing business” in West Virginia for purposes
of a statute that granted a lien in favor of employees for the
10
value of their labor against corporations that were “doing
business” in the state. The corporation had contracted to
construct railroads in West Virginia; after completing its
contracts, it kept on the payroll two employees who generally
took care of the plant and property. Eventually, the employees
sought to establish a lien against the corporation for unpaid
wages.
Although the facts of that case are dissimilar to this
case, two points are instructive. First, the court declined to
give the statutory language “doing business” a narrow
construction. See id. at 739. Second, in considering cases
that the corporation argued to support its position that it was
not “doing business” in the state, the court indicated its
disapproval of looking at other areas of law to ascertain the
meaning of the “doing business” language in the context of
workers’ rights. Specifically, the court stated:
Most of the cases we find, relating to this subject,
involve questions of taxation, jurisdiction by legal
process, and the right of foreign corporations to do
business in the state, and are unlike the case we have
here, involving the right of employees or workmen,
performing work or labor, to liens therefor upon the
property of a corporation, and to the benefits of the
statute.
Id. We believe that FRI’s attempt to read § 21-5-1(n) in pari
materia with § 31D-15-1501, which has a very different purpose,
runs afoul of both of these aspects of the holding in Kimball.
11
IV
FRI also argues that even if the WPCA applies, the district
court erred by holding that its commission payments to Gregory
violated the act. As noted, the WPCA requires a corporation to
pay its discharged employee’s wages in full within 72 hours, and
a corporation that fails to adhere to this requirement “shall,
in addition to the amount which was unpaid when due, be liable
to the employee for three times that unpaid amount as liquidated
damages.” W.Va. Code § 21-5-4(e).
In holding that FRI violated the WPCA, the court concluded
that FRI’s commission payment policies (which control the amount
and timing) contravene the act and, therefore, FRI’s reliance on
them is unavailing. With this holding, the court found the June
commission payment to be untimely because FRI did not pay
Gregory within 72 hours of his termination. The court found the
post-discharge payments (1) to be untimely because they were not
paid within 72 hours of the end of the month in which they were
earned and (2) to be less than was owed because FRI reduced them
by 50% pursuant to the CPP. In our view, the court is partially
correct.
As noted, the WPCA regulates the timing of payment of
wages. However, it does not regulate the amount of wages, and
it does not establish how or when wages are earned. Rather,
these are matters that arise from the employment agreement.
12
See, e.g., Saunders v. Tri-State Block Corp., 535 S.E.2d 215,
219 (W.Va. 2000) (holding in a WPCA case that the amount of the
plaintiff-employee’s damages for unpaid commissions was to be
determined by the documents establishing the employment
relationship); Meadows, 530 S.E.2d at 689 (holding in a WPCA
case that fringe benefits, which are a form of “wages” under the
WPCA, are set by the employment agreement).
In this case, it appears to be undisputed that the
employment agreement between FRI and its salespeople, manifested
in the CPP (as modified), established that commissions would be
paid on shipped units. Moreover, the employment agreement also
established that when a salesperson left employment with FRI,
FRI would pay the salesperson 50% of the commission on any order
that is logged in and not yet shipped. 3 These provisions do not
contravene any provision of the WPCA. Instead, they merely
establish the amount of commissions and when they are earned.
Viewing the record in this light, we hold that FRI violated
the WPCA by failing to pay Gregory his June commissions (which
were earned on units that shipped during June) within 72 hours
of his termination. Further, we hold that FRI violated the WPCA
3
To the extent (if any) that FRI’s rationale for the 50%
reduction is relevant, we note that FRI presented evidence that
its salespeople’s duties extend beyond delivery of the sold
product. Obviously, a salesperson who is no longer employed
cannot perform these ongoing duties.
13
by failing to pay Gregory his full July commissions for units
that shipped (and were thus earned) by July 13, 2007, within 72
hours. We do not agree with FRI that its commission payment
schedule (as reflected in the CPP and the pay-date memo) relates
to when commissions are earned; rather, it simply establishes
when they are to be paid. Because the WPCA mandates payments of
earned wages within 72 hours of discharge, FRI’s reliance on the
payment schedule, and its consequential payment of the June
commissions and the early July commissions more than 72 hours
after termination, runs afoul of the WPCA.
However, we hold that FRI did not violate the WPCA with
respect to any commissions based on units that shipped after
July 13, 2007. FRI could not have paid those commissions within
72 hours of Gregory’s termination because they were not earned
at that time under the terms of the parties’ employment
agreement. Moreover, contrary to the district court’s holding,
nothing in the WPCA supports the conclusion that those payments
had to be made within 72 hours of the beginning of each month.
Rather, the WPCA is silent regarding this circumstance. 4
4
We emphasize that our ruling is based on the specific
facts and arguments before us. Thus, we need not decide what
remedies might be available if an employer (unlike FRI)
unreasonably held wages that were earned at some point after the
termination. Moreover, we have no occasion to consider whether
FRI’s practice of paying commissions on a monthly basis accords
(Continued)
14
Further, FRI’s reduction of post-discharge commissions by 50%
accords with the employment agreement existing between FRI and
its salespeople.
V
Based on the foregoing, we affirm in part, reverse in part,
and remand for further proceedings consistent with this opinion.
AFFIRMED IN PART,
REVERSED IN PART,
AND REMANDED
with the requirement of § 21-5-3(a) that an employer must
generally pay wages that are due every two weeks.
15
DAVIS, Circuit Judge, concurring in part and dissenting in part:
Unlike the majority, I find that Forest River, Inc. (“FRI”)
violated West Virginia law when it paid Gregory one-half of his
standard wages for the sole reason that FRI fired him. On this
issue alone, I respectfully dissent.
As the majority notes, the West Virginia Wage Payment and
Collection Act (“WPCA”) does not regulate the amount of wages
and does not establish how or when wages are earned. Maj. Op at
12. But the WPCA does require employers to pay its employees
“in full” for work performed, W.Va. Code § 21-5-4(b), and
forbids employers from creating contracts that permit them to
pay less than that amount. W.Va. Code § 21-5-10. The applicable
provision states:
Except as provided in section thirteen, no provision
of this article may in any way be contravened or set
aside by private agreement, and the acceptance by an
employee of a partial payment of wages shall not
constitute a release as to the balance of his claim
and any release required as a condition of such
payment shall be null and void.
W.Va. Code § 21-5-10 (emphasis added). Thus, under West
Virginia law, if Gregory completed his work selling the RVs
under contract, FRI cannot change his compensation merely
because they fired him. But FRI does exactly that in its
16
Commission Payment Policy (“CPP”). Thus, as applied to the
facts in this case, FRI’s CCP policy violates the WPCA. 1
1
FRI argues that the WPCA only precludes agreements under
which employees forfeit their statutory right to wages they have
earned – and whether the employee has earned the wage or not
depends on the employer/employee contract. Appellant’s Br. at
37 (citing Meadows v. Wal-Mart Stores, Inc., 530 S.E.2d 676, 689
(W. Va. 1999), and Gress v. Petersburg Food LLC, 592 S.E.2d 811,
815 (W. Va. 2003)). The majority accepts these arguments in
part, relying on the same cases. These arguments fail, however,
because they assume that the relevant contract is valid, and
here, the contract is invalid because it violates the WPCA by
deducting half of an employee’s compensation merely because an
employee has been fired.
The majority reasons that this court must prioritize the
employer’s policy over the WPCA, but these cases provide scant
support for that approach. Further, both cases address fringe
benefits, which are controlled by a different statutory
provision from that related to wages. In Meadows, the highest
court in West Virginia addressed whether WPCA requires employers
to pay employees unused sick leave or vacation pay in the same
manner as wages, regardless of the terms of the applicable
employment policy, upon separation from employment. The court
found that it does not, instead holding that the specific
provisions concerning fringe benefits of the applicable
employment policy determine whether the fringe benefits at issue
are included in the term “wages” under the WPCA. Meadows, 530
S.E.2d at 690, 217.
In Gress, the court held that before a fringe benefit is
payable to an employee, it must have accrued and that accrual is
defined by the employer’s policy. Gress found that a
consistently applied unwritten employment policy (that an
employee may only take vacation in five-day increments after
each full year of employment and that the employer would not pay
employees for partial weeks of unused vacation at the time of
discharge) could support an employer's defense against a WPCA
suit employees knew about the unwritten policy Gress, 592 S.E.2d
at 814-15.
Again, these cases are distinguishable because they address
fringe benefits, and the WPCA uses different language for fringe
benefits and wages. Employers may withhold fringe benefits if
they have not “accrued” or “vested,” but they may not do the
same with wages. W. Va. Code, § 21-5-1(c).
17
The majority argues that FRI is entitled to determine how
and how much to pay its employees, and clearly, as a general
matter, that is true. But FRI’s method of payment is not immune
from the WPCA, and the company should not be permitted to use
its policy to circumvent the law.
Under the WPCA, if Gregory completed his responsibilities
as a salesperson prior to his termination, then Forest River
cannot decrease his wages by 50% for any reason, including the
reason relied on in this case – that the company fired him.
Likewise, if Gregory failed to complete his work, then
presumably FRI can compensate him accordingly. 2 See Britner v.
Madical Security Card, Inc., 200 W. Va. 352 (1997) (rejecting a
challenge to the WPCA from an employer that attempted to
contract around W. Va. Code 21-5-10). It does not matter if
this 50% decrease is rooted in malice or based on a written
policy, under the WPCA; if the decrease is solely because
Gregory was fired, it is illegal.
2
Because we are concerned about whether FRI is failing to
compensate its employees for fully-performed work, we do care
about whether a salesperson’s duties extend beyond the delivery
of the sold product. These subsequent duties simply do not
exist. Cf. Maj. Op. at 13 n.3. It appears that the only task
required of Gregory after he made a sale was to compare the
original order to the confirmation order generated by the
corporate office, a de minimus task at best, and one possibly
completed by Gregory prior to his termination. J.A. 81-82.
18
FRI claims that the 50% decrease was because Gregory did
not complete his work on the sales that shipped after his
termination. The evidence in the record, however, makes it
clear that this is not true because Gregory did fulfill his job
responsibilities prior to his termination with respect to his
sales. Gregory’s boss, Kevin McArt, testified that Gregory’s
responsibilities entailed “[i]n general terms, to close open
distribution points and solicit orders.” J.A. 69. McArt
further testified that other FRI employees handle tasks
subsequent to the actual sale, tasks such as the processing,
scheduling, coordinating, shipping, invoicing and delivery of
the product. J.A. 80-83, 90-91. The point is further evidenced
by the fact that FRI did not pay the remaining 50% of Gregory’s
commission to any other salesperson or employee at FRI.
Appellee’s Br. at 33-35. Thus, the company earns a windfall
when a commission-based employee such as Gregory is terminated.
The reality is, at least at FRI, that after the sale is
submitted by the salesperson, the salesmen’s job is over. 3
3
FRI claims that it pays departing employees only 50% of
their compensation because salespeople who leave the company are
not present to perform “the many duties associated with seeing a
sale through to shipment.” Appellant’s Br. at 33. This argument,
however, is conclusively refuted by McArt’s testimony.
Moreover, FRI failed to identify any of these “many duties” in
its brief or at oral argument. Lawyer argument should not be
accepted as a substitute for probative evidence.
19
Thus, under the WPCA, Gregory is entitled to his full wages
for his work, notwithstanding his former employer’s attempt to
contract around the law of West Virginia. As the district court
concluded, FRI should have paid him this money “in full.” W.
Va. Code 21-5-4(b). Accordingly, I would affirm the judgment in
its entirety.
20