David Longaker v. Boston Scientific Corporation
715 F.3d 658
8th Cir.2013Background
- Longaker signed a 3-year Employment Agreement with Boston Scientific in Oct 2009 guaranteeing base salary and base commissions unless terminated for specified reasons; Minnesota law governs contract disputes and Minnesota is the forum, while Longaker worked in California.
- Longaker filed for Chapter 7 bankruptcy on Sep 30, 2010, and Boston Scientific terminated him on Oct 1, 2010.
- In Feb 2011, Longaker sued in CA state court for breach of contract, good faith and fair dealing, and CA retaliation; case was removed to N.D. Cal. and venue was challenged due to the forum clause.
- In Jan 2012, Longaker refiled in D. Minnesota asserting breach of contract and adding MHRA retaliation; Boston Scientific moved to dismiss under Rules 12(b)(1) and 12(b)(6) arguing lack of standing, estoppel, and statute of limitations.
- Near the motion hearing, discussions arose about amending the complaint to plead CA law retaliation; the district court noted amendment would require leave and a proper amended complaint, which Longaker did not file.
- The district court held the guaranteed payments were property of the bankruptcy estate under 11 U.S.C. §541 and thus Longaker lacked standing; the MHRA retaliation claim was dismissed as lacking standing and time-barred.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to sue on breach of contract | Longaker contends he had a present interest in the guaranteed payments. | Boston Scientific argues the payments were property of the bankruptcy estate. | Longaker lacked standing; guaranteed payments were estate property. |
| Applicability of 11 U.S.C. §541(a)(6) earnings exception | The guaranteed payments are post-petition earnings for post-petition services. | §541(a)(6) applies only to earnings for services actually performed post-petition. | §541(a)(6) does not apply; payments are estate property based on pre-petition past. |
| MHRA retaliation claim viability | MHRA claim should survive; amendment possible. | No amendment sought; standing/limitations defeat the claim. | MHRA retaliation claim dismissed for lack of standing and time bar. |
| Right to amend the complaint | Requested leave to amend during hearing. | Amendment requires a proper amended complaint; not provided. | District court did not abuse in denying leave to amend; no amended complaint filed. |
| Effect of termination on prevention doctrine (dissenting view) | Termination could be inequitable under prevention doctrine; salary/commissions should remain assets. | Majority applies doctrine narrowly or not at all. | Dissent would apply prevention doctrine to preserve post-petition earnings for Longaker. |
Key Cases Cited
- Wick (In re Wick), 276 F.3d 412 (8th Cir. 2002) (estate includes contingent pre-petition interests; post-petition labor may affect vesting)
- Ryerson (In re Ryerson), 739 F.2d 1423 (9th Cir. 1984) (contract value payments contingent on pre- and post-petition services; pro rata allocation)
- Parsons (In re Parsons), 280 F.3d 1185 (8th Cir. 2002) (earnings exception narrowly construed; post-petition earnings must be tied to post-petition services)
- Stevenson v. Stevenson Assocs. (In re Stevenson Assocs.), 777 F.2d 415 (8th Cir. 1985) (prevention doctrine applied in bankruptcy; equitable misconduct consideration)
- Crotty v. Minn. Dev. Auth., 356 N.W.2d 45 (Minn. 1984) (prevention doctrine hinges on culpable conduct and performance hindrance)
- Nodland v. Chirpich, 240 N.W.2d 513 (Minn. 1976) (application of prevention doctrine in contract disputes)
- Segal v. Rochelle, 382 U.S. 375 (1966) (broad purpose of bankruptcy estate and 541(a))
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) (standing requires injury in fact; traceability and redressability)
- Andrews v. Riggs National Bank (In re Andrews), 80 F.3d 906 (4th Cir. 1996) (fresh start concept; petition date demarcation)