Harney, Brian v. Speedway Superameric ( 2008 )

In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 07-3488
B RIAN H ARNEY, B RETT D EB OARD
and D ARLA G REINER, on behalf of
themselves and all others similarly
situated,
Plaintiffs-Appellants,
v.
S PEEDWAY S UPERA MERICA, LLC,
Defendant-Appellee.
____________
Appeal from the United States District Court
for the Southern District of Indiana, Indianapolis Division.
No. 05 C 1912—Larry J. McKinney, Judge.
____________
A RGUED A PRIL 18, 2008—D ECIDED M AY 30, 2008
____________
Before B AUER, F LAUM and W ILLIAMS, Circuit Judges.
B AUER, Circuit Judge. Plaintiffs brought a class action
lawsuit against their employer, Speedway SuperAmerica
LLC, alleging that the manner in which Speedway pays
and forfeits its employees’ bonuses violates Indiana’s
Wage Payment Statute and Wage Claims Statute. The
district court granted summary judgment to Speedway,
finding that Plaintiffs’ bonuses did not constitute “wages”
2 No. 07-3488
under Indiana law, and therefore the two statutes did not
apply. At best, the district court held, the bonuses were a
form of “deferred compensation,” which were forfeited
when Plaintiffs failed to meet the bonuses’ condition of
continued employment with Speedway. Plaintiffs now
appeal the district court’s grant of summary judgment to
Speedway, claiming that the district court erred in deter-
mining that the bonuses were not “wages” under Indiana
law, and that the retention element of Speedway’s bonus
programs violates Indiana law.
We have reviewed the issues addressed by the district
court and have determined that it ruled appropriately
and without error in granting Speedway’s motion for
summary judgment. Accordingly, we adopt the dis-
trict court’s thorough and well-reasoned order, dated
September 13, 2007, as our own and affirm the judgment
of the lower court on all counts. A copy of the district
court’s order is attached and incorporated herein.
Plaintiffs also move to certify certain questions of state
law to the Indiana Supreme Court, and to stay this appeal
pending a decision from the Indiana Supreme Court.
Plaintiffs contend that there is no clear controlling prece-
dent to guide the state law issues of (1) whether the
Plaintiffs’ bonuses constitute “wages” under Indiana
law; (2) whether the retention element of Speedway’s
bonus programs violates Indiana law (specifically, Indi-
ana’s Ten Day Rule) and is void as a matter of law; and
(3) whether Speedway’s bon uses constitute “present” or
“deferred” compensation.
A case is appropriate for certification where it “ ’concerns
a matter of vital public concern, where the issue is likely
to recur in other cases, where resolution of the question
to be certified is outcome determinative of the case, and
No. 07-3488 3
where the state supreme court has yet to have an oppor-
tunity to illuminate a clear path on the issue.’ ” Plastics
Eng’g Co. v. Liberty Mut. Ins. Co., 514 F.3d 651, 659 (7th
Cir. 2008) (quoting Allstate Ins. Co. v. Menards, Inc., 285
F.3d 630, 639 n.18 (7th Cir. 2002)); see also Cir. R. 52; Ind.
R.App. P. 64(A). Questions that are tied to the specific
facts of a case are typically not ideal candidates for cer-
tification. Plastics Eng’g Co., 514 F.3d at 659. Thus, if
certification would produce a fact bound, particularized
decision lacking broad precedential significance, certi-
fication is inappropriate. Id. (citing Erie Ins. Group v. Sear
Corp., 102 F.3d 889, 892 (7th Cir. 1996)).
This case hinges entirely on whether the Plaintiffs’
bonuses were “wages” under Indiana law, since Indiana
law makes clear that bonuses may be conditioned how-
ever an employer sees fit, and that these bonuses would
at best be deferred compensation subject to forfeiture. Dove
v. Rose Acre Farms, Inc., 434 N.E.2d 931, 934 (Ind. Ct.
App. 1982) (“An employee is not entitled to a bonus until
after the time stipulated in the contract for its payment,
or until other conditions designated in the contract for
its payment have been fulfilled . . .”); Montgomery Ward &
Co. v. Guignet, 45 N.E.2d 337, 339-40 (Ind. Ct. App. 1942)
(explaining that bonuses contingent on continued em-
ployment are valid and benefits of bonus are not con-
ferred upon employee unless all conditions of the bonuses
are met); Swift v. Speedway SuperAmerica LLC, 861 N.E.2d
1212, 1215-16 (Ind. Ct. App. 2007), reh’g and trans. denied
(concluding that these same bonuses were at best de-
ferred compensation but were forfeited because employee
had failed to meet the eligibility requirement of continued
employment). So, we need only decide if certification
is appropriate on the issue of whether Plaintiffs’ bonuses
constitute “wages” under Indiana law.
4 No. 07-3488
Our analysis in this case involves the interpretation of a
specific bonus program of a single Indiana employer as
applied to Plaintiffs’ particular factual circumstances. It
is difficult to see how the determination of these employ-
ees’ personal circumstances could have a far-reaching
precedential effect for others. As the district court’s opin-
ion makes clear, the Indiana Supreme Court has pro-
vided guidance on when bonuses constitute “wages”
under Indiana law. Because Plaintiffs are merely seeking
a determination that their bonuses constitute wages,
this case is not appropriate for certification.
We affirm the district court’s grant of summary judg-
ment to Speedway and deny Plaintiffs’ request for certi-
fication.
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
INDIANAPOLIS DIVISION
BRIAN HARNEY, BRETT DEBOARD, and )
DARLA GREINER, on behalf of themselves )
and all others similarly situated, )
Plaintiffs, )
)
vs. ) 1:05-cv-1912-LJM-WTL
)
SPEEDWAY SUPERAMERICA, LLC, )
Defendant. )
ORDER ON MOTION FOR SUMMARY JUDGMENT
This cause is before the Court on Defendant’s, Speedway SuperAmerica, LLC (“Speedway”),
Motion for Summary Judgment (Docket No. 22). Plaintiffs, Brian Harney (“Harney”), Brett DeBord
(“DeBord”)1, and Darla Greiner (“Greiner”) (these defendants collectively, “the Managers”), filed
this lawsuit in state court before it was removed to this Court pursuant to the Class Action Fairness
Act of 2005. The Managers seek to recover on behalf of themselves and all others similarly situated
pursuant to Indiana’s Wage Claims Statute (Indiana Code § 22-2-9-1 et seq.) and Wage Payment
Statute (Indiana Code § 22-2-5-1 et seq.) for allegedly unpaid bonuses and wages.2 The parties have
fully briefed the issues and this matter is now ripe for ruling.
For the reasons stated herein, the Court GRANTS Speedway’s motion.
1
It appears from the parties’ briefs that Mr. DeBord’s name was incorrectly spelled in
the caption. The Court will use “DeBord” in this Order.
2
Because she was not involuntarily terminated, Greiner is only seeking relief under the
Wage Payment Statute. See Pls.’ Sur-Reply at 2, n.1.
I. BACKGROUND
The Managers are all former employees of Speedway whose employment ceased on October
11, 2005. Harney began employment in April 2004, and was an assistant store manager at the time
that he was fired. DeBord began employment in March 2001, and was also an assistant manager at
the time he was fired. Greiner began employment on December 17, 1996. She was a store manager
at the time that her employment ceased and, unlike the other two plaintiffs, she chose to quit her
employment.
During their employment, the Managers were paid on a weekly basis. They were also eligible
for certain bonuses under programs established by Speedway. The different potential bonuses were
outlined in detail in Speedway’s Operations Manual and depended on the employee’s classification
during a particular month and quarter. One of the bonus programs was the Store Manager Bonus
Program, which permitted store managers to earn monthly bonuses based on monthly performance
objectives for their individual stores. Managers would earn bonus credits that could later be
converted to cash payments. The bonus was contingent on several factors, such as meeting sales and
operation goals. In addition, in order to receive this type of bonus, a store manager had to be
employed on the last day of the second month after the bonus credits were earned. Speedway
reserved the right to “amend, suspend, terminate, or change” the program at any time. See Seidel
Aff., Exs. A-B.
The second type of bonus program was the Associate/Lead Assistant Manager Bonus
Program. Similar to the Store Manager Bonus, receiving this type of bonus had an employment
requirement attached to it. Specifically, in order to receive this bonus, Speedway’s policy required
that an employee be employed as the associate/lead assistant manager on the first day of the month
2
and employed at the end of the second month following the month in which the bonus was earned.
Like the Store Manager Bonus Program, Speedway reserved the right to “amend, suspend, terminate,
or change” the Associate/Lead Assistant Manager Bonus Program at any time. See Seidel Aff., Exs.
D-E.
The third and final type of bonus program was the Customer Satisfaction Rewards Program.
This type of bonus was paid on a quarterly basis to assistant managers based on monthly objectives
for their individual stores. Like the Store Manager Bonus, an employee would receive credits that
could later be converted for a cash payout. Bonus credits were earned monthly if the assistant
manager was employed on the first day of the month in which the credits were earned. Further, each
credit would be given the value of $1.00 if the employee was still employed by Speedway on the last
day of the second month after the end of the calendar quarter. Like the other types of bonuses,
Speedway reserved the right to “amend, suspend, terminate, or change” the Customer Satisfaction
Rewards Program at any time. See Seidel Aff., Exs. F-G.
Calculations for each of these bonuses was completed by Speedways’s corporate office and
then reviewed by region, district, and store managers. According to Speedway, the process of
calculating and reviewing the bonuses typically took more than ten calendar days to complete.
Paychecks were then mailed to the stores on Wednesdays following the end of a pay period. The
Managers contend that they were not paid these bonuses in a timely fashion under the Wage Payment
and Wage Claims Statutes because they were not paid within ten calendar days of being “earned.”
See Complaint, ¶¶ 31-33. They also assert that they were not paid all wages that were “due and
owing” in a timely fashion after their separation from employment. See Complaint, ¶¶ 34-35. With
the exception of the bonus payments that the Managers contend that they are entitled to receive, there
3
does not appear to be any dispute that Speedway timely-issued checks on October 19, 2005, for
payment of the Managers’ regular earned wages, including accrued but unused vacation pay, after
the Managers’ separation. See Seidel Aff., ¶¶ 12, 27-29, 47-50, 53-56 and Exs. C, H, and I.
II. SUMMARY JUDGMENT STANDARD
As stated by the Supreme Court, summary judgment is not a disfavored procedural shortcut,
but rather is an integral part of the federal rules as a whole, which are designed to secure the just,
speedy, and inexpensive determination of every action. See Celotex Corp. v. Catrett, 477 U.S. 317,
327 (1986); United Ass’n of Black Landscapers v. City of Milwaukee, 916 F.2d 1261, 1267-68 (7th
Cir. 1990), cert. denied, 499 U.S. 923 (1991). Motions for summary judgment are governed by Rule
56(c) of the Federal Rules of Civil Procedure, which provides in relevant part:
The judgment sought shall be rendered forthwith if the pleadings, depositions,
answers to interrogatories, and admissions on file, together with the affidavits, if any,
show that there is no genuine issue as to any material fact and that the moving party
is entitled to a judgment as a matter of law.
Summary judgment is the "put up or shut up" moment in a lawsuit. Johnson v. Cambridge
Indus., Inc., 325 F.3d 892, 901 (7th Cir. 2003), reh'g denied. Once a party has made a
properly-supported motion for summary judgment, the opposing party may not simply rest upon the
pleadings but must instead submit evidentiary materials that “set forth specific facts showing that
there is a genuine issue for trial.” Fed. R. Civ. P. 56(e). A genuine issue of material fact exists
whenever “there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for
that party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). The nonmoving party bears
the burden of demonstrating that such a genuine issue of material fact exists. See Matsushita Elec.
4
Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986); Oliver v. Oshkosh Truck Corp., 96
F.3d 992, 997 (7th Cir. 1996), cert. denied, 520 U.S. 1116 (1997). It is not the duty of the court to
scour the record in search of evidence to defeat a motion for summary judgment; rather, the
nonmoving party bears the responsibility of identifying the evidence upon which he relies. See
Bombard v. Fort Wayne Newspapers, Inc., 92 F.3d 560, 562 (7th Cir. 1996). When the moving party
has met the standard of Rule 56, summary judgment is mandatory. See Celotex, 477 U.S. at 322-23;
Shields Enters., Inc. v. First Chicago Corp., 975 F.2d 1290, 1294 (7th Cir. 1992).
In evaluating a motion for summary judgment, a court should draw all reasonable inferences
from undisputed facts in favor of the nonmoving party and should view the disputed evidence in the
light most favorable to the nonmoving party. See Estate of Cole v. Fromm, 94 F.3d 254, 257 (7th
Cir. 1996), cert. denied, 519 U.S. 1109 (1997). The mere existence of a factual dispute, by itself,
is not sufficient to bar summary judgment. Only factual disputes that might affect the outcome of
the suit in light of the substantive law will preclude summary judgment. See Anderson, 477 U.S. at
248; JPM Inc. v. John Deere Indus. Equip. Co., 94 F.3d 270, 273 (7th Cir. 1996). Irrelevant or
unnecessary facts do not deter summary judgment, even when in dispute. See Clifton v. Schafer, 969
F.2d 278, 281 (7th Cir. 1992). “If the nonmoving party fails to establish the existence of an element
essential to his case, one on which he would bear the burden of proof at trial, summary judgment
must be granted to the moving party.” Ortiz v. John O. Butler Co., 94 F.3d 1121, 1124 (7th Cir.
1996), cert. denied, 519 U.S. 1115 (1997).
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III. DISCUSSION
This case involves claims under two different statutory provisions. Therefore, as an initial
matter, it is necessary to lay out the differences between the two.
The Wage Payment Statute, Indiana Code § 22-2-5-1 et seq., provides employees the right
to receive wages in a timely fashion. See St. Vincent Hosp. & Health Care Ctr., Inc. v. Steele, 766
N.E.2d 699, 703 (Ind. 2002). The Wage Payment Statute requires that an employer pay its
employees’ wages within ten days of the date that they are earned and provides for damages against
those employers who fail to do so. See Ind. Code §§ 22-2-5-1 and -2; Naugle v. Beech Grove City
Schs., 864 N.E.2d 1058, 1066-69 (Ind. 2007). By its terms, it only applies to current employees or
those who voluntarily terminate their employment. See Ind. Code § 22-2-5-1; Steele, 766 N.E.2d
at 705.
The Wage Claims Statute, Indiana Code § 22-2-9-1 et seq., describes how disputes about the
amount of wages due are resolved and requires that unpaid wages or compensation of a discharged
employee are “due and payable at regular pay day for the pay period in which separation occurred.”
See Ind. Code § 22-2-9-2-(a); Steele, 766 N.E.2d at 704. Unlike the Wage Payment Statute, the
Wage Claims Statute only applies to employees who have been discharged or suspended from work
because of an industrial dispute. See Steele, 766 N.E.2d at 705.
Based on the differences in these two statutes, it is clear that Greiner’s claims arise only
under the Wage Payment Statute because she voluntarily terminated her employment with Speedway.
In fact, she has now conceded as much. See Pls.’ Sur-Reply at 2, n.1. With respect to Harney and
DeBord, both of whom were discharged, the answer cannot be so easily categorized. However, the
6
Court concludes that (1) their claims for bonuses that they did not receive are governed by the Wage
Claims Statute, and (2) those bonuses that they did receive while still employed, but which were paid
outside of the ten-day period, are governed by the Wage Payment Statute.
Regardless of which statutory provision applies, it is clear that the Managers are not entitled
to the unpaid bonuses. A condition for receiving those bonuses was continued employment, and it
is undisputed that none of the Managers satisfied that criteria. Thus, even if the unpaid bonuses are
“wages,” the Court agrees that, at best, they are deferred compensation and therefore subject to
forfeiture. See Swift v. Speedway SuperAmerica LLC, 861 N.E.2d 1212, 1215-16 (Ind. Ct. App.
2007), reh’g and trans. denied (concluding that bonuses under Store Manager Bonus Program were
wages that could be forfeited and that plaintiff was not entitled to receive them because she had
failed to meet the eligibility requirement of maintaining employment).3 Because the Managers failed
to meet the eligibility requirements for the unpaid bonuses, they are not entitled to receive them.
Accordingly, the Managers claims for unpaid bonuses are DISMISSED with prejudice.
The final question to resolve is whether the Managers are entitled to damages for the failure
of Speedway to pay bonuses within the ten-day period while the Managers were still employed. The
answer depends on whether the bonuses are “wages.” At first blush, Swift suggests that they are
wages because it concluded that bonuses under the Store Manager Bonus Program were deferred
compensation. However, Swift merely discussed the differences between present compensation and
deferred compensation; it did not undertake an analysis about whether the bonuses are truly
3
The program appears to be exactly the same as one of the programs involved in this
case.
7
considered “wages” under the Wage Payment Statute or the Wage Claims Statute. Thus, the Court
does not find Swift compelling or persuasive on that issue.
To resolve this dispute, the Court is guided by precedent from the Indiana Supreme Court.
The Indiana Supreme Court has stated that “[a] ‘bonus’ is a wage ‘if it is compensation for time
worked and is not linked to a contingency such as the financial success of the company.’”
Highhouse, M.D. v. Midwest Orthopedic Inst., P.C., 807 N.E.2d 737, 740 (Ind. 2004) (quoting Pyle
v. Nat’l Wine & Spirits Corp., 637 N.E.2d 1298, 1300 (Ind. Ct. App. 1994). See also Herremans v.
Carrera Designs, Inc., 157 F.3d 1118, 1121-22 (7th Cir. 1998) (cited with approval by Highhouse
for the proposition that pay based on profits rather than a claimant’s own time, effort, or product was
not a wage); Manzon v. Stant Corp., 138 F. Supp. 2d 1110, 1113 (S.D. Ind. 2001) (cited with
approval by Highhouse for the proposition that a bonus based on a financial target and achieving
“individual personal objectives” was not a wage). Based on this definition, the Indiana Supreme
Court concluded that a bonus payment tied to an employer’s overall operations was not a wage. See
Highhouse, 807 N.E.2d at 740.
The Indiana Supreme Court further illustrated the practical reasons why a bonus tied to other
contingencies is not a “wage.” Specifically, unlike wages, such bonuses often cannot be calculated
within a short period of time after services are performed. See id. Finally, while the court cautioned
that an employer cannot escape the law by obtaining an agreement from an employee that wages will
not be paid within the statutorily-prescribed time period, it noted that the employment contract called
for annual payments. See id. According to the Highhouse court, this fact lent support to the view
that the parties recognized that frequent bonus calculations and payment would be difficult, if not
8
impossible. See id. In other words, this circumstance underscored that the parties themselves did
not consider the bonus to be a wage.
Based on Highhouse, the Court concludes that the bonuses involved in this case are not
“wages” under the Wage Payment Statute or Wage Claims Statute. The bonuses were each
contingent on factors other than time worked. For example, the Store Manager and the
Associate/Lead Assistant Manager Bonuses were based, in part, on meeting sales and operation
goals. Similarly, bonuses under the Customer Satisfaction Rewards Program were dependent on
factors beyond an employee’s individual performance. Moreover, entitlement to the bonuses was
explicitly conditioned on maintaining employment for a period of time. Indeed, this condition made
it impossible to calculate the bonuses at the time that the bonus credits were “earned” because this
condition had not yet been satisfied. Finally, because each bonus program explained when the bonus
payments would be made, the parties should have been aware that payments were not like regular
wages and that calculations would be difficult to make. As in Highhouse, this circumstance further
illustrates that the bonuses were not “wages.” Accordingly, in light of all of the foregoing, the Court
finds that the bonuses at issue in this case were not “wages” within the meaning of the Wage
Payment Statute or Wage Claims statute.
The Court’s conclusion is not altered by the recent decision in Reel v. Clarian Health
Partners, Inc., --- N.E.2d---, 2007 WL 2481792 (Ind. Ct. App. Sept. 5, 2007). There, Clarian had
a policy of paying terminated employees their “paid time off” wages (“PTO wages”) some fourteen
days after paying the terminated employees their final regular wages. As the court discussed, the
PTO wages were “wages”under Indiana law, and the employees’ right to the wages had vested. Reel,
---N.E.2d ---, 2007 WL 2481792, *4-5. Thus, because the PTO wages were wages under the statute
9
and the employees had a vested right to them, Clarian could not vary from the payment terms
provided by law. Id. at *5.
Unlike the plaintiffs’ PTO wages in Reel, the bonuses in this case were not wages under
Indiana law. Moreover, unlike the timing of payments in Reel, the timing for paying of bonuses in
this case was in part due to the fact that entitlement to the bonuses was conditioned on maintaining
employment. Rather than being a matter of necessity or expediency, conditioning the payment on
continued employment serves Speedway’s interest in retaining quality managers and avoiding
turnover and the cost of hiring or retraining replacement managers. In short, Reel is distinct and the
Court declines to apply it to this case. The bonuses were not wages and the Managers are not
entitled to damages for alleged late payments of them. Accordingly, the Managers’ claims for
damages are DISMISSED with prejudice.
As a final matter, because the Court has dismissed all of the Managers’ claims, the pending
Motion for Class Certification (Docket No. 14) is now moot. Therefore, the Court DENIES as
MOOT that motion.
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IV. CONCLUSION
For the foregoing reasons, Defendant’s, Speedway SuperAmerica, LLC, Motion for Summary
Judgment (Docket No. 22), is GRANTED. Plaintiffs’, Brian Harney, Brett DeBord, and Darla
Greiner, claims are DISMISSED with prejudice.
In addition, Plaintiffs’ Motion for Class Certification (Docket No. 14) is DENIED as
MOOT.
IT IS SO ORDERED this 13th day of September, 2007.
_____________________________________
LARRY J. McKINNEY, CHIEF JUDGE
United___________________________________
States District Court
Southern District
LARRY of Indiana CHIEF JUDGE
J. McKINNEY,
United States District Court
Southern District of Indiana
Electronically distributed to:
Ronald E. Weldy William R. Groth
ABRAMS & WELDY FILLENWARTH DENNERLINE GROTH & TOWE
weldy@abramsweldy.com wgroth@fdgtlaborlaw.com
Geoffrey S. Lohman
FILLENWARTH DENNERLINE GROTH & TOWE
glohman@fdgtlaborlaw.com
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