388 F. Supp. 3d 1071
D. Me.2019Background
- Fairchild Equipment (employer) hired Todd D. Auge as a field sales manager in 2013; Auge signed a 2013 Pay Program and later a 2017 Pay Program that governed commissions and other pay terms.
- 2013 Pay Program set various commission rates (including JCB product commissions) but did not specify when commissions are "earned." 2017 Pay Program (effective April 1, 2017) set 25% commission for JCB new equipment and expressly states commissions are earned when equipment is shipped and signed off.
- Auge prepared a February 14, 2017 order for $2,038,500 JCB equipment sold to Birds Eye Foods; invoicing/shipment occurred in June 2017 after the 2017 Pay Program took effect; transaction included a residual hold and warranty reserve not recognized as profit until later.
- Auge resigned on July 5, 2017. Fairchild initially direct-deposited $30,908.13 (including commissions on residual/warranty amounts), then reversed it and reissued $14,134.16 excluding those amounts, citing correction.
- Auge sued for breach of contract and violations of the Minnesota Payment of Wages Act, seeking unpaid commissions (including on the Birds Eye deal and multiple RPOs), unused vacation pay, expense reimbursement, penalties, and fees. Both parties moved for summary judgment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether 30% or 25% commission applied to Birds Eye JCB sale | Auge: he earned 30% under 2013 Pay Program because sale was "completed" Feb 14, 2017 | Fairchild: commission governed by 2017 Pay Program (25%) because commissions are earned on shipment/invoice in June 2017 | Court: 25% under 2017 Pay Program (no genuine dispute) |
| Whether residual hold/warranty reserve must be included in gross profit for commission | Auge: residual and warranty amounts are part of gross profit and should be commissioned now | Fairchild: those amounts were not recognized as profit until later; 2017 Pay Program allows adjustment and re-examination | Court: exclusion was consistent with 2017 Pay Program and communications; no breach |
| Commissions for RPO transactions and other disputed sales/parts & service | Auge: earned commissions on five RPOs and other transactions booked before 2017 Pay Program | Fairchild: RPOs pay commission only if option exercised (sale); some transactions occurred after resignation or yielded no profit; parts/service commissions ceased in late 2016 | Court: no commissions owed — RPOs not sold before resignation; undisputed routine changes and lack of profit preclude recovery |
| Wage-act claims (Minn. Stat. §§ 181.14, 181.03) for unpaid commissions and post-resignation payment changes | Auge: Fairchild failed to timely pay earned commissions and unlawfully altered payment methods/timing after resignation | Fairchild: paid/tendered amounts it believed due; revisions corrected administrative error and predated resignation; statutory safe-harbor for tender applies | Court: Summary judgment for Fairchild on both statutory claims — tender/settlement and no unlawful alteration after resignation |
Key Cases Cited
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (summary judgment standard)
- Caldas v. Affordable Granite & Stone, Inc., 820 N.W.2d 826 (Minn.) (contract interpretation seeks parties' intent)
- Staffing Specifix, Inc. v. TempWorks Mgmt. Servs., Inc., 913 N.W.2d 687 (Minn.) (ambiguous contract terms and extrinsic evidence)
- Guercio v. Prod. Automation Corp., 664 N.W.2d 379 (Minn. Ct. App.) (when extrinsic evidence is conclusive court may decide meaning)
- Toyota-Lift of Minn., Inc. v. Am. Warehouse Sys., LLC, 886 N.W.2d 208 (Minn.) (statutory tender limits wage-act penalties)
- Beatty v. N. Cent. Cos., 170 F. Supp. 2d 868 (D. Minn.) (at-will employee compensation can be adjusted)
- Pershern v. Fiatallis N. Am., Inc., 834 F.2d 136 (at-will employee commission principles)
- Karlen v. Jones Lang LaSalle Ams., Inc., 766 F.3d 863 (8th Cir.) (expectation of future commission can be lost upon termination)