# U ni te d S ta te s Co ur t of A pp ea ls For the Eig hth Circu it

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No. 1 1- 26 66

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Dav id K. Fesl er

ll ll ll ll ll ll ll ll ll ll l Pla in ti

ff - App el la nt

v.

W he le n En gi ne eri ng Co m pa ny, Inc.

ll ll ll ll ll ll ll ll ll ll l Defe nd

an t - Ap pe ll ee

__ __ __ __ __ __ App eal fro m

Uni te d S ta te s Di st ric t Co ur t fo r th e So ut he rn Dis tri ct of I owa - Dav en po rt

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Su bm it te d: Marc h 1 3, 2 01 2 Fil ed : Au gu st 16 , 20 12

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Befo re WOL LMAN, COLLOTON , and BENTON, Circu it Ju dg es

.

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COLLOTON, Ci rcu it Ju dg e.

Dav id K. Fes le r su ed Whe le n Eng in eeri ng Co m pa ny, In c. (“ W he le n” ) fo r br each of co nt ract

. The di st ric t co ur t gr an te d su m m ary jud gm en t fo r W h e l e n , a nd 1

Fes le r ap pe al s. We affir m

.

The Hon or ab le Ro be rt W

. Prat t, Uni te d St at es Dis tri ct Ju dg e fo r th e So ut he rn 1 Dis tri ct of I owa

.I.

In Octo be r 19 80 , F es le r be ga n wor ki ng as a sa le s rep res en ta ti ve fo r W he le n,

a m an u f a c t u rin g co m

pa ny he ad qu art ered in Ch es te r, Co nn ect ic ut

. Jo hn Ols on , th e
pr es id en t o f W he le n, h ire d F es le r ba se d o n a n o ral co nv ers at io n, an d F es le r di d n ot
si gn an y co nt ract , ag reem en t, or ot he r do cu m en ta ti on rel at ed to hi s rel at io ns hi p wit h

W he le n.

As a sa le s rep res en ta ti ve , Fes le r was res po ns ib le fo r p ro m ot in g an d se ll in g W he le n au to m ot iv e, in du st ria l, an d pu bl ic warn in g pr od uc ts in hi s as si gn ed te rri to ry

. The te rri to ry in it ia ll y in cl ud ed Mi nn es ot a, Io wa, Neb ras ka

, an d Kan sa s. Neit he r Ols on no r ot he r W he le n of fic ia ls de sc rib ed to Fes le r th e te rm s of hi s pa y m e n t as a

sa le s rep res en ta ti ve , ot he r th an th at he wou ld be pa id on a co m m is si on ba si s. Fes le r le arn ed th e na tu re of th e co m m is si on st ru ct ur e fro m ot he r sa le s rep res en ta ti ve s. His

co m m is si on was ba se d on a pe rcen ta ge of sa le s in h i s te rri to ry , in it ia ll y se t at ni ne
pe rcen t. Eve ry y ear o f Fes le r’s rel at io ns hi p wit h W he le n, W he le n is su ed Fes le r an IRS Fo rm 10 99 for hi s co m

m is si on pa y m en ts

.

Fro m th e be gi nn in g of hi s rel at io ns h ip wit h W he le n in 19 80 un ti l

ap pr ox im at el y 19 88

, Fes le r de po si te d hi s co m m is si on co m

pe ns at io n in to an acco un t
fo r Dan R. Fes le r & So n, In c. F e sl er th en rece iv ed a pa y ch eck fro m th at acco un t,
wit h al l ta x wit hh ol di ng s, un em pl oym en t, an d wor ke r s ’ co m pe ns at io n ta xe s pa id
th ro ug h Dan R. Fes le r & So n, In c. In 19 88

, Fes le r fo rm ed a ne w co rp or at io n na m ed

Dav id Kim m

Fes le r, LTD, and th erea fte r rec ei ve d h is pa y ch eck s fr om th at en ti ty.

Thro ug h hi s own co m

pa ny, D av id Kim m Fes le r, LTD, Fes le r op erat ed an of fic e, hi red em

pl oyees, an d pa id fo r th e ex pe ns es in cu rred in pr om ot in g an d se ll in g W he le n pr od uc ts

. Fes le r was res po ns ib le fo r se tt in g up th e of fic e an d pa y in g fo r of fic e su pp li es an d eq ui pm en t. Fes le r ha d to pa y fo r so m e sa m pl e W he le n pr od uc ts , al th ou gh W he le n pr ov id ed hi m ot he r sa m pl es at no co st

. Fes le r’s em pl oyees were

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-em

pl oyed by Fes le r’s co m

pa ny, an d al l pa y m en ts an d wit hh ol di ng s were m ad e by hi s

co m pa ny. Wh e l e n oc cas io na ll y pr ov id ed Fes le r an ad di ti on al co m m is si on
pe rcen ta ge , ba se d on sa le s in th e reg io n, to co ve r pe rs on ne l exp en se s. W he le n als o
pa id fo r Fes le r’s lo dg in g an d gr ou p m eal s i f h e at te nd ed a sa le s m eet in g or tra de
sh ow, al th ou gh Fes le r co ve red hi s o wn t rav el ex pe ns es

.

Thro ug ho ut hi s te nu re as a sa le s rep res en ta ti ve , W he le n pr ov id ed Fes le r wit h

a se rie s of do cu m en ts th at ou tl in ed th e po li ci es an d pr oc ed ur es ap pl ic ab le to sa le s
rep res en ta ti ve s. The do cu m en ts , is su ed in 19 85

, 19 94

, an d 19 95

, al l id en ti fie d sa le s
rep res en ta ti ve s a s “ in de pe nd en t co nt ract or s, no t em pl oyees,” an d st at ed th at th ey
were ap po in te d o n a “ no n- ex cl us iv e” ba si s to cert ai n te rri to rie s an d pr od uc t li ne s. The 19 95 po li cy do cu m en t, whi ch su pe rs ed ed th e 19 85 an d 19 94 po li ci es , pr ov id ed
th at sa le s rep res en ta ti ve s “ sh al l pa y fo r th ei r own ex pe ns es , in su ran ce, tra ns po rta ti on

an d ot he r tra ve l or liv in g exp en di tu res ,” an d are “ res po ns ib le for th e pa y m en t of all
of hi s/ he r own ex pe ns es , w h i c h in cl ud e, bu t are no t li m it ed to : ta xe s, wor km an ’s

co m pe ns at io n, ret ire m en t pl an , he al t h i n s u r an ce, et c.” The po li cy al so in cl ud ed

nu m ero us req ui rem en ts ap pl ic ab le to sa le s rep res en ta ti ve s, in cl ud in g th at th ey wor k
wit h W he le n to de te rm in e whi ch tra de sh ows to at te nd

, m ak e two an nu al vi si ts to th e W he le n pl an t fo r an an nu al sa le s m eet in g an d a two -d ay tra in in g se ss io n, m ai nt ai n a

se pa rat e W he le n te le ph on e li ne , co nt act th e W he le n pl an t o n c e p er da y to ob ta in

m es sa ge s a n d r e p o rt on act iv it ie s, res po nd to cu st om er co m pl ai nt s an d co or di na te

se rv ic e o r res ol ve pro bl em s, an d c ol le ct in fo rm at io n o n c om pe ti to rs ’ act iv it ie s.

The 19 95 po li cy al so co nt ai ne d th e fo ll owi ng pr ov is io ns co nc ern in g te rm in at io n:

I.p. TERM INATION

I.p.1 W he le n Eng in eeri ng res erv es th e rig ht to te rm in at e po rti o n s of
te rri to rie s o r in di vi du al pr od uc t li ne s o f a g iv en Aut ho riz ed Man ag in g Sal es Rep res en ta ti ve s.

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. p

. 2 Eve ry effo rt wil l be m ad e to pr ov id e warn in gs of an Aut ho riz e d

Man ag in g S al es Rep res en ta ti ve ’s fai li ng s.

I.p.3 If, in th e op in io n of th e M a n a ge m en t of W he le n Eng in eeri ng Co m pa ny, an Aut ho riz ed Man ag in g Sal es Rep res en ta ti ve ha s no t m et
ge ne ral go al s as de ta il ed

, su ch Aut ho riz ed Man ag in g Sal es Rep res en ta ti ve m ay be pu t on “ no ti ce” (i.e . p ro ba ti o na ry pe rio d) up to 6 m on th s th at m an da te s im pr ov ed pe rfo rm an ce. At th e en d of the ti m e pe rio d, if rev is ed ta rg et s an d go al s are no t m et , th en th e Co m pa ny wil l,
at it s op ti on , ei th er ag gr es si ve ly lo ok fo r a rep la cem e n t Aut ho riz ed Man ag in g Sal es Rep res en ta ti ve or may e le ct to no ti fy th e Aut ho riz ed Man ag in g S al es Rep res en ta ti ve of t erm in at io n.

I.p.4 If t e r mi n a ti on is op te d, co m m is si on pa y ou t wil l co nt in ue on an y

or de r bo ok ed be fo re th e effe ct iv e te rm in at io n da te an d in vo ic ed

su bs eq ue nt ly.

I.p.5 If it i s fo un d t ha t t he Aut ho riz ed Man ag in g Sale s Rep res en ta ti ve ha s so ld or co nv ert ed a cu st o mer t o b uy a co m pe ti to r[’] s pr od uc t, it is
gr ou nd s fo r im

m ed ia te ter m in at io n.

I.p.6 Co nd uc t th at co ul d ha rm th e rep ut at io n of th e co m pa ny co ul d al so be gro un ds for im m ed ia te ter m in at io n.

On Ju ly 11

, 20 07

, W he le n Vice Pres id en t Ph il Kur ze in fo rm ed Fes le r th at hi s rel at io ns hi p wit h W he le n wou ld en d on J u l y 3 1

, 2 0 07

. Kur ze to ld Fes le r th at th e

co m pa ny was go in g in a di ffer en t di rect io n, an d th at Fes le r di d no t f i t i nt o th at
di rect io n. Kur ze se nt Fes le r a fo ll ow- up le tt er, fo rm al ly st at in g th at Fes le r’s se rv ic es

as a sa le s re pr es en ta ti ve were t erm in at ed

.

O n J u ly 8, 20 09

, Fes le r su ed W he le n in th e Io wa Dis tri ct Co ur t fo r J o h n s o n Co un ty. W h e l e n r e mo v ed th e act io n to fed eral co ur t. Fes le r fil ed an am en de d

co m pl ai nt on Ja nu ary 6, 20 10

, a l l e g i n g on e co un t of br each of co nt ract

. Fes le r al le ge d th at he was an em pl oyee of W he le n, t h a t t h e 19 85

, 19 94

, an d 19 95 po li cy

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-do cu m en ts crea te d a un il at eral co nt ract of em p l o y m en t, an d th at W he le n br each ed
th at un il at eral co nt ract of em pl oym en t by te rm in at in g hi m wit ho ut jus t cau se an d by
fai li ng to pr ov id e hi m wit h no ti ce of su bs ta nd ard pe rfo rm an ce an d an op po rtu ni ty to

cu re.

W he le n m ov ed fo r su mm a r y jud gm en t, arg ui ng (1 ) th at Fes le r was an in de pe nd en t co nt ract or an d no t an em pl oyee of W he le n, (2 ) th at ev en i f Fes le r was

an em pl oyee, hi s em

pl oym en t was at -wil l be c a u se he di d no t ha ve a co nt ract of

em pl oym en t wit h W he le n, an d (3 ) th at ev en if th e writ te n po li ci es were su ffi ci en t to

co ns ti tu te a un il at eral co nt ract of em pl oym en t, Fes le r ha s no t de m on st rat ed a br each
of an y pr ov is io n. The di st ric t co ur t gr an te d su m m ary jud gm en t in fav or of W he le n. The co ur t ru le d (1 ) th at no reas on a b l e jury co ul d co nc lu de th at Fes le r was an
emp l o yee of W he le n, (2 ) th at ev en as su m in g th at Fes le r co ul d be cl as si fie d as an

em pl oyee, th e writ te n po li ci es were no t su ffi ci en tl y de fin it e to co ns ti tu te a un il at eral

co nt ract of em

pl oym en t, an d (3 ) th at ev en as su m in g th at t h e writ te n po li ci es

co ns t i tu te d a co nt ract of em pl oym en t, no reas on ab le jury co ul d fin d a br each of

co nt ract

.

II.

Fes le r arg ue s th at th e di st ric t co ur t erre d in ho l d i n g th at no reas on ab le jury

co ul d co nc lu de th at he was an em pl oyee of W he le n. Th e u lt im at e is su e o f whe th er

an in di vi d u a l is an em

pl oyee or in de pe nd en t co nt ract or is a qu es ti on of la w, an d it

m ay be res ol ve d on su m

m ary jud gm en t if th ere is no ge nu in e is su e of m at eri al fact

. Se e Ler oh l v. Fri en ds of Min n. Si nf on ia
, 3 2 2 F

. 3 d 48 6, 48 8 (8 th Ci r. 20 03 ). W e

co ns id er th e qu es ti on of em pl oym en t s t a t us de no vo

. Bir ch em v. Kn ig ht s of
Co lu mbu s , 11 6 F .3d 31 0, 3 13 (8t h C ir. 1 99 7)

.

Und er Io wa la w, th e fo ll owi ng fact or s are rel ev an t in de te rm in in g whe th er an in di vi du al is an em

pl oyee or an in de pe nd en t co nt ract or : (1 ) th e in di vi du al ’s rig ht to

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-co nt ro l th e ph y si cal co nd uc t and pr og res s of the wor k, ex cep t as to fin al res ul ts ; (2)

whe th er th e in di vi du al was on th e em pl oyer ’s p a yr o ll ; (3 ) th e m et ho d of pa y m en t,
whe th er by ti m e or by job ; (4 ) th e in di vi du al ’s ob li ga ti on to fu rn is h ne ces sa ry to ol s,

su pp li es , an d m at eri al s to acco m pl is h th e wor k; (5 ) th e ex is te nc e of a co nt ract fo r th e
pe rfo rm an ce by a pe rs on of a cert ai n pi ece or ki nd of wor k at a f i x e d pr ic e; (6 ) th e in de pe nd en t na tu re of th e in di vi du al ’s bu si ne ss ; (7 ) th e in di vi du al ’s em pl oym en t of

as si st an ts , wit h th e rig ht to su pe rv is e th ei r act iv it ie s; (8 ) th e ti me f o r w hi ch th e in di vi du al is em

p l o ye d ; (9 ) whe th er th e wor k is pa rt of th e reg ul ar bu si ne ss of th e

em pl oyer; an d (1 0) th e in te nt of th e pa rti es

. Io wa Mu t

. I n s

. C o

. v. McCa rt hy

, 57 2

N.W .2d 53 7, 54 2- 43 (Io wa 19 97 ). The pr im ary fo cu s, ho wev er, is on “ th e ex te nt of

co nt ro l by th e em

pl oyer ov er th e de ta il s of th e al le ge d em pl oyee’s wor k.” Id

. at 54 2.

Mo st of th es e fact or s weig h he av i l y i n f a vo r of fin di ng th at Fes le r was an in de pe nd en t co nt ract or fo r W he le n. Fes le r was on th e pa y ro ll of hi s own in de pe nd en t
bu si ne ss , Dav id Kim m Fes le r, LTD, no t on th e pa y ro ll of W he le n. W he le n pa id hi m

co m m is si on s ba se d on s a l e s in hi s te rri to ry , no t on th e am ou nt of ti m e he wor ke d.
Thro ug h hi s in de pe nd en t bu si ne ss , Fes le r hi red

, pa id

, an d su pe rv is ed em pl oyees, fu rn is he d hi s own of

fic e eq ui pm en t an d s u p pl ie s, an d pa id fo r hi s own tra ve l

ex pe ns es , ta xe s, wor k ers ’ co m pe ns at io n, an d in su ran ce, as req ui red by th e 19 95

po li cy do cu m en t. Alt ho ug h Fes le r cl ai m s he di d no t in te nd to be an in de pe nd en t

co nt ract or , Whe le n in te nd ed fo r Fes le r an d al l ot he r sa le s rep res en ta ti ve s to be
in de pe nd en t c o n tra ct or s, as ev id en ced by th e ex pl ic it refe ren ces to sa le s
rep res en ta ti ve s as “ in de pe nd en t co nt ract or s, no t em pl oyee s” in the pol ic y doc um ents

. Onl y two fact or s weig h ag ai ns t in de pe nd en t co nt ract or st at u s

. Fes le r was a sa le s
rep res en ta ti ve fo r W he le n fo r ne a r l y twen ty-sev en y ears , an d Fes le r’s

wor k— pr om ot in g an d se ll in g W he le n p r o d u c t s— was arg ua bl y pa rt of th e reg ul ar bu si ne ss of Whel en

.

Fes le r’s pr im ary co nt en ti on is th at al th ou gh he op erat ed hi s own in de pe nd en t
bu si ne ss , W he le n ex erci se d si gn ifi can t co nt r o l o v er th e de ta il s of hi s act iv it ie s.

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-W he le n req ui red Fes le r to pr ov id e week ly it in erar ie s of his pl an ne d acti vi ti es in hi s

te rri to ry , to pu rs ue reco m m en de d sa le s le ad s an d rep or t th e res ul ts to W he le n wit hi n th irt y da y s of recei vi ng th e le ad s, to m ak e da il y co nt act wit h W he le n, and pr om pt ly

to ret ur n te le ph on e cal l s f ro m W he le n m an ag em en t. On oc cas io n, W he le n al so di rect ed th e hi rin g of add it io na l pe rs on ne l an d ga ve ap pr ov al fo r th e hi rin g of so m e

st aff. And whi le Fes le r ge ne ral ly co ul d se le ct hi s own of fic e lo cat io n, W he le n twi ce

to ld Fes le r to m ov e hi s offi ce— on ce ou t of his fat he r’s of fic e, whi ch was a W he le n di st rib ut or sh ip , and on ce o ut of h is pe rs on al res id en ce.

W he le n di d ex erci se so m e co nt ro l ov er Fes le r’s wor k, bu t th e li m it ed de gr ee of di rect io n ev id e n c e d he re di d no t m ak e Fes le r an em pl oyee. So m e co nt ro l is

pe rm it te d “ so as to en ab le [th e co m pa ny] to se e to it th at th e fin al res ul t co nt em pl at ed by the arra ng em en t was accom pl is he d.” La Fleu r v. La Fleu r , 45 2 N.W .2d 40 6, 4 10 (Io wa 19 90 ); se e a ls o Mer ed it h Pub l’g Co

. v. Io wa Emp’t Se c. Co mm’n , 6 N.W .2d 6, 10 -1 1 (Io wa 19 42 ). Fes le r ge ne ral ly was ab le to pe rfo rm hi s wor k— pr om ot in g an d

ge ne rat in g sa le s of W he le n p r o d u c t s —i n th e m ean s an d m an ne r th at he sa w fit

. W he le n di d no t co nt ro l th e “ m et ho ds

, de ta il s, an d pa rti cu la rs ” of Fes le r’s wor k, so as

to gi ve ris e to a rel at io ns hi p of em pl oyer an d em

pl oyee. La Fleu r , 45 2 N.W .2d at 41 0.
Co ns id eri ng th e co m

bi ne d weig ht of

th e rel ev an t fa ct or s, we ag ree wit h th e di st ric t

co ur t as a m at te r of

law t ha t Fe sl er was an in de pe nd en t co nt ract or

.

Bec au se Fes le r is an in de pe nd en t co nt ract or an d no t an em pl oyee, t he po li cy do cu m en ts co ul d no t ha ve crea te d a un il at eral co nt ract

. Se e And er so n v. Dou gl as &

Lo mas on Co

. , 54 0 N.W .2d 27 7, 2 8 2 ( Io wa 19 95 ). The di st ric t co ur t th us pr op erl y di sm is se d F es le r’s cl ai m

for bre ach of c on tra ct

.

* * *

The jud gm en t o f th e d is tri ct co ur t i s af fir m ed

.

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