310 P.3d 657
Okla. Civ. App.2013Background
- Plaintiffs, executives of SemGroup or its affiliates, sued SemGroup Energy Partners and related entities for wage and breach of contract claims arising from the phantom unit Incentive Plan.
- The trial court awarded $933,000 in liquidated damages and $86,424 in contract damages, plus an attorney's fee award for Plaintiffs, and both sides appealed.
- A change of control on July 18, 2008 vested all phantom units; delivery was due within 60 days, but the plan administrators later withheld units from Plaintiffs not in the favored group.
- SemGroup filed for bankruptcy on July 21, 2008; the SEC filing suspension contributed to delays in issuing units, which were distributed starting September 2009 at lower unit prices.
- Plaintiffs argued the phantom units were wages under Oklahoma law and that Defendants breached the Plan and Agreement by delaying delivery; Defendants argued no employer-employee relationship and discretionary nature of the awards barred wage status.
- On rehearing, the court affirmed in part, reversed in part, and remanded for damages recalculation and to address fees; the wage claim was ultimately rejected while breach of contract was affirmed with remand for damages.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are phantom units wages under the Act? | Plaintiffs: units are wages for labor performed. | Defendant: units are discretionary incentives not tied to wages. | Not wages under the Act. |
| Did termination exist to satisfy wage claim elements? | Plaintiffs: termination occurred when employment ended post-change in control. | Defendant: termination not proven; change in control not equivalent to termination. | Insufficient evidence of termination; wage claim reversed. |
| Did Defendant breach the Plan by failing to deliver units within 60 days after vesting? | Failure to deliver within 60 days breached the contract and caused damages. | Board discretion allowed withholding absent guarantees and due to compliance concerns. | Yes, breach; contract damages affirmed; discretionary defense rejected. |
| Were Plaintiffs entitled to liquidated damages under the wage claim? | Wage damages payable for late payment under the Act. | Wage claim lacked eligibility; liquidated damages should be denied. | Liquidated damages award reversed. |
| Is Plaintiffs' attorney's fee award proper? | Fees recoverable as prevailing wage claim and contract action. | Fees improperly awarded since wage claim failed and contract damages insufficiently tied to labor. | Attorney's fees reversed; American Rule preserved. |
Key Cases Cited
- Bradley v. Clark, 1990 OK 73, 804 P.2d 425 (Okla. 1990) (fact-finder deference on findings of fact when no jury)
- Leatherman v. Freeman, 1954 OK 5, 266 P.2d 473 (Okla. 1954) (standard for review of legal questions)
- Arrow Tool & Gauge v. Mead, 16 P.3d 1120 (Okla. 2000) (de novo review for statutory construction)
- SCS/Compute, Inc. v. Meredith, 864 P.2d 1292 (Okla. Civ. App. 1993) (strict construction of attorney fee statutes)
- Fackrell v. American Nat'l Bank, 2005 OK CIV APP 37, 116 P.3d 201 (Okla. Civ. App. 2005) (standard of review for bench trials in civil matters)
- Sides v. John Cordes, Inc., 1999 OK 36, 981 P.2d 301 (Okla. 1999) (weight of evidence in nonjury trials)
- Baker v. Tulsa Bldg. & Loan Ass'n, 1936 OK 568, 179 Okla. 432, 66 P.2d 45 (Okla. 1936) (vesting and property rights in contracts)
- Kluver v. Weatherford Hosp. Auth., 1993 OK 85, 859 P.2d 1081 (Okla. 1993) (fee awards and wage claim considerations)
- ABC Coating Co., Inc. v. J. Harris & Sons Ltd., 1987 OK 125, 747 P.2d 271 (Okla. 1987) (labor/services analysis for fee entitlement)