David Lawson v. Sun Microsystems, Incorporate
791 F.3d 754
7th Cir.2015Background
- Lawson, a StorageTek sales executive, sold services to JPMorgan Chase; StorageTek had a 2005 incentive plan defining when commissions vest (must be executed and invoiced during the plan year).
- Sun Microsystems acquired StorageTek on August 31, 2005; Sun amended the 2005 plan on September 1, 2005 to convert StorageTek to Sun’s fiscal calendar and expressly end StorageTek’s 2005 plan year on December 25, 2005.
- The JPMorgan Chase transaction began as new business (Enterprise Support Services) but post-acquisition much work related to Sun products and was treated as renewal business by Sun.
- Sun internally recorded the sale as final on March 16, 2006 and issued the first invoices March 23, 2006; Sun paid Lawson a small recoverable draw but refused the large commission Lawson sought under the 2005 plan.
- Lawson sued for breach of contract and for unpaid wages under Indiana’s Wage Claim Statute; at trial a jury awarded $1.5 million on the contract claim, but the district court entered judgment for Sun on the statutory claim. Sun appealed and Lawson cross-appealed.
Issues
| Issue | Plaintiff's Argument (Lawson) | Defendant's Argument (Sun) | Held |
|---|---|---|---|
| Applicability of 2005 incentive plan to JPMorgan sale | The plan language is ambiguous; the plan said it "will remain in effect until a subsequent plan… becomes effective," and Sun did not deliver the 2006 plan until March 17, 2006 — so 2005 plan should govern the March 2006-close sale | The September 1, 2005 amendment fixed the 2005 plan year end as December 25, 2005 and the 2005 plan requires execution and invoicing by end of plan year; sale was finalized and invoiced in March 2006, so 2006 plan controls | Held for Sun: 2005 plan unambiguously required all eligibility by plan-year end (Dec. 25, 2005); JPMorgan sale did not qualify under 2005 plan |
| Waiver / preservation of contract-interpretation argument on appeal | Sun waived the argument by not pressing it in a Rule 50 motion at trial | Sun preserved the purely legal contract-interpretation issue at summary judgment; purely legal questions need not be re-raised in Rule 50 | Held for Sun: no waiver; appellate amplification of a preserved legal issue permitted |
| Role of extrinsic evidence (course of dealings, communications, refusals to sign) | Extrinsic evidence and course of conduct show Sun intended to honor 2005 plan for Lawson’s deal | Contract language is unambiguous; when clear, extrinsic evidence is inadmissible to create ambiguity | Held for Sun: plan language clear; extrinsic evidence irrelevant |
| Wage-claim statutory remedy under Indiana law | Commission was wages owed under Indiana Wage Claims Statute | Because commission claim fails on contract grounds, statutory wage claim also fails | Held for Sun: statutory claim fails because no entitlement to commission under 2005 plan |
Key Cases Cited
- Yee v. City of Escondido, 503 U.S. 519 (1992) (preserved claims may be supported by new arguments on appeal)
- Rapold v. Baxter Int’l Inc., 718 F.3d 602 (7th Cir. 2013) (standard of review for Rule 50 de novo)
- May v. Chrysler Grp., LLC, 716 F.3d 963 (7th Cir. 2013) (Rule 50 judgment standard discussion)
- Chemetall GmbH v. ZR Energy, Inc., 320 F.3d 714 (7th Cir. 2003) (distinguishing pure questions of law from sufficiency-of-evidence Rule 50 preservation)
- BKCAP, LLC v. CAPTEC Franchise Trust 2000-1, 572 F.3d 353 (7th Cir. 2009) (Indiana law: unambiguous contract is construed as written)
- Whitaker v. Brunner, 814 N.E.2d 288 (Ind. Ct. App. 2004) (unambiguous contract language is conclusive)
- Allen Cnty. Pub. Library v. Shambaugh & Son, L.P., 997 N.E.2d 48 (Ind. Ct. App. 2013) (contracts read as a whole; ambiguity requires reasonable differing interpretations)
- Four Seasons Mfg. v. 1001 Coliseum, LLC, 870 N.E.2d 494 (Ind. Ct. App. 2007) (prefer interpretation that harmonizes contract provisions)
- Hepburn v. Tri‑Cnty. Bank, 842 N.E.2d 378 (Ind. Ct. App. 2006) (courts should not add terms not placed in contract by parties)
- Colonial Penn Ins. Co. v. Guzorek, 690 N.E.2d 664 (Ind. 1997) (court’s interpretive power does not extend to changing contract terms)