Court Opinion

ID: 771036
Source: CourtListenerOpinion
Date Created: 2012-04-18 10:44:42+00
Date Added: 2024-06-11T17:55:54.842173
License: Public Domain

231 F.3d 1066 (7th Cir. 2000)
Susan Cooper Houben, Plaintiff-Appellee/Cross-Appellant,v.Telular Corporation, Defendant-Appellant/Cross-Appellee.
Nos. 99-2734 & 99-2892
In the  United States Court of Appeals  For the Seventh Circuit
Argued May 18, 2000Decided November 3, 2000

Appeals from the United States District Court for the Northern District of Illinois, Eastern  Division.  No. 97 C 1489--Ruben Castillo, Judge.[Copyrighted Material Omitted][Copyrighted Material Omitted]
Before Posner, Diane P. Wood, and Williams,  Circuit Judges.
Diane P. Wood, Circuit Judge.

1
This case  is principally about the commissions  Susan Cooper Houben claimed she earned  working as the director of corporate  development for Telular Corporation, a  manufacturer of coupling devices for  telephones and cellular radios. Houben's  employment with Telular came to a rather  abrupt end around the same time that she  sought to take a second maternity leave,  and she later sued for damages under a  number of theories. Five claims went to  trial, and a jury awarded Houben $98,364  in damages on two of them. Both sides  have appealed, Telular from the denial of  its motions for summary judgment,  judgment as a matter of law, and a new  trial, and Houben from the grant of  summary judgment in Telular's favor on  two of her fraud claims. We find no  reversible error in any of the district  court's rulings and therefore affirm  across the board.

2
* Houben became director of corporate  development for Telular in 1994. The next  year Telular asked her to head the  "Motorola Account Team" and focus her  energies on selling Telular products to  Motorola. As director of corporate  development, she was a salaried employee;  in her new sales position, however, her  compensation changed to a mix of salary  and commissions. In August 1995, Houben  received a memorandum explaining her new  compensation package. In addition to her  base annual salary of $75,000, she was  eligible to receive monthly sales  commissions, an annual bonus, and stock  options. The memo described monthly sales  commissions as follows

3
#2 Monthly Sales Commission

4
Your monthly sales commission will equal  one percent of all Motorola generated  revenues attributed to the Motorola team.  Unless specified differently in writing  the Telular team will be credited with  80% of Motorola revenues with the  remaining 20% being credit [sic] to the  geographic field organization where the  equipment was installed.

5
The maximum amount you can earn from  monthly commissions in any one fiscal  year is $90,000. Should such a cap be  invoked and should you continue to excel  in generating revenue above and beyond  the point where the cap takes effect,  management will recognize such  performance when considering the amounts  to be granted under items #3 [annual  bonus] and #4 [stock options].

6
An April 19, 1995 memorandum titled  "Managing House Account" describes the  general operation of Telular's commission  plan, including Telular's policy on  revenue sharing: "Telular is prepared to  pay up to 3% of sales revenue whether  that revenue be generated by the  geographic field sales force or the  Corporate Development staff. . . ." The  memorandum went on to explain how the 3%  of sales revenues would be allocated  among various Telular teams. Neither the  general April 1995 memorandum nor  thespecific August 1995 memorandum to  Houben define the term "revenues."

7
During Houben's tenure, Motorola was  competing for a large order from the  telecommunications agency in Hungary.  Houben and her team worked to have  Telular selected as Motorola's supplier  for the deal. For three months of the  time leading up to Telular's selection as  the supplier (from May 27 to August 21,  1995, to be exact) Houben was out on  maternity leave; even then, however, she  remained in touch with her team, speaking  with them over the telephone and at her  home.

8
The efforts of Houben and her team paid  off, as the Hungarian supply contract  eventually went to Telular. In the fall  of 1995, Telular announced the news that  Motorola had agreed to purchase $100  million in Telular products to service  the Hungarian deal. (The full $100  million in sales never materialized, but  Telular eventually shipped $8.586 million  of product to Motorola in 1996 and  $21.190 million in 1997.) On January 4,  1996, Houben informed Telular that she  was pregnant and would be taking a second  maternity leave in August of that year.  Later that month Houben was told she was  being fired; her employment was  terminated on February 2.

9
Houben never received commission  payments related to the sales  attributable to the Motorola deal in  Hungary. Even though the initial purchase  order did not issue until March 1996--  after Houben had been terminated and left  Telular--she nonetheless believed that  she was entitled to commission payments  on the sales that were actually made,  because she and her team were responsible  for securing the underlying deal.

10
Houben filed suit in March 1997. In  addition to alleging federal claims under  Title VII, the Pregnancy Discrimination  Act, and the Family and Medical Leave  Act, she alleged various state law claims  related to the breach of her employment  contract (e.g., breach of written  employment agreement, fraud, accounting,  etc.). In the end, only the three federal  claims and the state claims for breach of  employment contract and commissions under  the Illinois Wage Payment and Collection  Act (IWPCA), 820 ILCS 115/14, went to  trial. The jury returned a verdict in  favor of Telular on the federal claims  and in favor of Houben on the state law  claims, awarding her damages totaling  $98,364.

II

11
Before turning to the merits of the two  appeals, we must discuss an issue  concerning our appellate jurisdiction.  One of the theories under which Houben  proceeded, and for which the jury awarded  her damages, arose under the IWPCA. Under  that statute, an employer who is ordered,  either by the Illinois Department of  Labor or a court, to pay wages due an  employee and fails to do so within an  allotted time, is liable for statutory  penalties of 1% per calendar day of  delay. 820 ILCS 115/14(b). After the  district court denied Telular's post-  trial motions, including a motion to set  aside the IWPCA award, Houben argued that  Telular owed her statutory penalties  because it had failed to pay its damages  immediately. The district court did not  resolve the question of Telular's  liability for penalties; instead, it  imposed a supersedeas bond of $200,000 on  Telular. Telular responded with a motion  to stay judgment and for a revised  supersedeas bond, requesting a ruling  that the IWPCA penalty provision did not  apply to this case. Again the district  court declined to rule on this issue, but  it stayed any penalties from accruing.

12
Normally the failure to rule on an issue  would deprive this court of jurisdiction,  as we have jurisdiction only over final  judgments of the district courts, 28  U.S.C. sec. 1291, which means that all  issues in the litigation must be  resolved. Alternatively, the district  court may enter a Rule 54(b) judgment if  there has been a final resolution of one  or more (but not all) claims, allowing  the parties to appeal from those parts of  the judgment while allowing the district  court and the parties to continue working  on the remaining issues in district  court. See, e.g., Union Oil Co. v. John  Brown E&C, 121 F.3d 305, 310-12 (7th Cir.  1997); King v. Gibbs, 876 F.2d 1275, 1277  (7th Cir. 1989).

13
Even without a Rule 54(b) order,  however, there are narrow circumstances  in which the existence of unresolved  issues in the district court does not  defeat the finality of the judgment. The  most well known of these is the  collateral issue of attorneys' fees,  where the failure to issue a final order  on fees does not mean that appellate  jurisdiction is lacking over the merits  appeal. Budinich v. Becton Dickinson &  Co., 486 U.S. 196, 200-01 (1988) (a  post-judgment award of attorneys' fees is  separate from the judgment on the merits  for purposes of 28 U.S.C. sec. 1291 and  appeals can be taken separately from  each). Whether penalties under the IWPCA  should be treated the same way as fees is  the question now before us.1

14
There are important functional  similarities between the IWPCA penalties  and attorneys' fees. Like fees, IWPCA  penalties "cannot be quantified until the  entry of final judgment. So, if the  pendency of such a claim prevented the  judgment from becoming final, it could  never become final." Alonzi v. Budget  Constr. Co., 55 F.3d 331, 333 (7th Cir.  1995). See Budinich, supra; Patzer v.  Board of Regents of the University of  Wisconsin System, 763 F.2d 851, 859 (7th  Cir. 1985) (same). An outstanding request  for costs similarly does not defeat  finality. See Wielgos v. Commonwealth  Edison Co., 892 F.2d 509, 511 (7th Cir.  1989). Furthermore, unlike a subject like  prejudgment interest, which must be  resolved before the judgment and  incorporated into the judgment, see  Osterneck v. Ernst & Whinney, 489 U.S.  169, 175-76 (1989), penalties under the  IWPCA do not belong in the judgment. They  relate instead to the collection proceed  ings; indeed, a right to IWPCA penalties  may never even arise--a right to such a  payment depends entirely on post-judgment  facts. We conclude that the unresolved  nature of the IWPCA question does not  defeat our appellate jurisdiction, see  generally 15B Wright, Miller & Cooper,  Federal Practice and Procedure 2d sec.  3915.6, at 347-49 (1992), and we  therefore proceed to the merits of the  appeal and cross-appeal.

III
A. Telular Appeal

15
The jury found that Telular breached its  contract with Houben and that it had  violated the IWPCA for failing to pay her  the commissions to which she was  entitled. The jury was instructed that it  could find for Houben on the breach of  contract claim if the contract provided  that commissions were earned as soon as a  conditional sales agreement was entered  into or if it concluded that the contract  entitled Houben to commissions if she was  the "procuring cause" of the sales to  Motorola. Telular challenges both  theories on appeal.

16
Telular contends that the district court  erred in not finding as a matter of law--  in either its motions for summary  judgment or judgment as a matter of law--  that under the language of the Telular  commission plan, Houben was not entitled  to a commission for her work on the  Hungary Motorola project. Telular first  argues that the court should have found  that the commission plan was unambiguous,  and that it clearly barred Houben's  claim. It thinks this turns on the  meaning of the term "revenue," which it  then argues can only be interpreted as  "income received after product was  shipped." Alternatively, it argues that  even if the term "revenue" in the  commission plan is ambiguous, the  extrinsic evidence so overwhelmingly  supported Telular's interpretation that  the court should have found it to be the  only one supported by the facts. Finally,  it urges that even under Houben's  interpretation of the commission plan, no  event giving rise to a right to  commissions occurred during Houben's  tenure at Telular, because no orders were  received during that time period, and  that this fact alone should have  precluded her claim.

17
We begin with the well-accepted  principle that when contract construction  is at issue, the question whether  contractual terms are ambiguous or not is  a question of law for the court to  decide. See, e.g., Independent  Construction Equipment Builders Union v.  Hyster-Yale Materials Handling, Inc., 83  F.3d 930, 932 (7th Cir. 1996). (We note  that the allocation of responsibilties  between judge and jury is a question of  federal law, see Mayer v. Gary Partners &  Co., 29 F.3d 330, 333-35 (7th Cir. 1994),  even though it is uncontested that the  substance of this contract is governed by  Illinois law.) If the contract is  ambiguous, the proper construction of the  contract's terms--that which accords with  the intent of the parties--is a question  of fact, and we may turn to extrinsic  evidence to determine the intent of the  parties. See Rossetto v. Pabst Brewing  Co., 217 F.3d 539, 542 (7th Cir. 2000);  see also C.A.M. Affiliates, Inc. v. First  Am. Title Ins. Co., 715 N.E.2d 778, 782  (Ill. App. Ct. 1999).

18
Although as we noted, the parties have  argued about the meaning of the term  revenue in these instruments, we believe  that debate misses the central point  here. Telular is not really arguing about  the meaning of the term "revenue" in  itself; its point has to do with the  questions of who is entitled to a  commission and at what time is that right  earned. The written instruments offer no  guidance on either point.

19
The silence of the contract requires us  to turn to the extrinsic evidence, as we  did in Rossetto, supra. The evidence of  Telular's long-standing practice  indicates that commissions were earned on  revenues actually generated from products  shipped. Houben has no quarrel with this  interpretation. She does not claim, for  example, that she is owed commissions on  the announced potential sales of $100  million on the Motorola Hungary project;  instead, she claims only commissions  based on the sales that actually went  through. Granting that Telular indeed  earned money from the Hungarian project,  the only dispute is about what events  entitled Houben to commission payments,  when those events occurred, and whether  such events had to occur during the time  of her employment in order for her to  receive a commission for those sales.  Telular contends that all of the  extrinsic evidence demonstrates that  under the commission plan, commissions  were not earned until the product was  shipped. It then concludes that because  no products for the Motorola Hungary  project were shipped during the time that  Houben was still employed with Telular,  she earned no commissions for that  project.

20
Even if we assume that the event  triggering a right to a commission was  the shipment of the product, there was  sufficient evidence for the jury to  conclude that the commission was  attributed to the salesperson or team  responsible for the sale at the time the  deal was struck, not at the time of  shipment. The evidence does not  demonstrate that commissions were as a  matter of practice no longer attributable  to the employee who did the legwork on  the sale simply because she left the  company, was fired, or moved to a  different job within the company between  the time the sale was closed and the  shipment of the product. One Telular  executive testified that "when the deal  is struck, you make your decision then as  to who the commissions--who is entitled  to commissions; but you physically don't  pay the money until cash is received." In  addition, although Telular normally did  not pay a commission on a sale until it  had the money from the sale in hand,  there were exceptions to this practice.  Indicating that it regarded the right to  the commission as having accrued, even if  the money had not yet been paid out,  Telular allowed salespersons to take out  advances on expected commissions in order  to ease their cash flow. The company  treated the advance like a loan and  deducted it from the salesperson's  eventual commissions; if the salesperson  was terminated before the commission came  through, however, the advance would be  forgiven. To similar effect (though also  susceptible to interpretation in  Telular's favor), when Telular was  downsizing and asking people to leave,  the company paid the person "half  thecommissions he would have been  entitled to" as a type of severance  package.

21
In short, although the evidence in  Houben's favor was not overwhelming, it  was enough for a reasonable jury to  conclude--as this one did--that Houben  was entitled to a commission on those  sales she helped to procure even though  she was no longer employed by Telular at  the time the products were shipped. We  therefore find that the district court  did not err in denying Telular's motions  for summary judgment and judgment as a  matter of law, nor did it abuse its  discretion in denying Telular's motion  for a new trial.

22
We would reach the same result under the  procuring cause doctrine, which entitles  a party "to commission on sales made  after termination of a contract if that  party procured the sales through its  activities prior to termination." Hammond  Group, Ltd. v. Spalding & Evenflo Cos.,  69 F.3d 845, 850 (7th Cir. 1995), quoting  Scheduling Corp. of Am. v. Massello, 503  N.E.2d 806, 809 (Ill. App. Ct. 1987).  "The purpose of this rule is to protect a  salesperson who is discharged prior to  the culmination of a sale, but after he  or she has done everything that is  necessary to effect the sale." Furth v.  Inc. Publ'g Corp., 823 F.2d 1178, 1180  (7th Cir. 1987), citing Schroeder v.  Meier-Templeton Assocs., Inc., 474 N.E.2d  744, 750 (Ill. App. Ct. 1984). Telular  argues that Houben should not have been  able to present the "procuring cause"  theory to the jury, because the procuring  cause doctrine is unavailable if the  parties have specifically contracted  about when commissions were to be paid.  See Scheduling Corp., 503 N.E.2d at 809.  As explained above, however, the parties  to this contract did not specifically  contract as to when commissions were to  be paid, given the silence of the  contract regarding the accrual of the  right to a commission and the timing of  commission payments.

23
On the merits, Telular contends there  was insufficient evidence for the jury to  find that Houben was the "procuring  cause" of Telular's sales to Motorola on  the Hungary project. Telular argues that  no firm commitment from Motorola was  received during Houben's tenure, and that  Houben was only a minor participant in  the actual sales effort, as her duties  were largely administrative.

24
The jury was not compelled to see things  as Telular now portrays them. Although  Motorola placed no actual purchase order  during Houben's tenure, Telular did win  the competition to be Motorola's supplier  on the deal and it publicized that fact  several months before Houben's departure.  One Telular executive testified that  Telular's "victory" in the Motorola  Hungary deal constituted a "firm order": "You would never go public like this  [with a press release] if you didn't  believe [the order] was firm." Telular's  argument that Houben was a minor  participant in the sale runs up against  the fact that the company created a  special sales team to focus on the  Hungary deal and placed Houben at its  head. She may not have been the  salesperson on the ground in Hungary, but  she was responsible for overseeing the  work of the sales team and figuring out  how to position Telular to get the  contract.

25
Ultimately, whether Houben was the  procuring cause of the Motorola Hungary  sales was a question of fact to be  decided by the jury. Again, although the  evidence was not overwhelming, it was  sufficient for a reasonable jury to find  that Houben deserved credit--and a  commission--for the sale under Illinois's  procuring cause doctrine.

B.  Houben Cross-Appeal

26
On her cross-appeal, Houben argues that  the district court erred in granting  summary judgment for Telular on her fraud  and constructive fraud claims. Briefly,  the basis for those claims was as  follows, taking the facts in the light  most favorable to Houben. At the same  time as Telular announced the first  Motorola contract for the Hungary deal,  it secretly decided not to continue  employing an in-house sales force, but  instead to outsource the sales function  and to stop paying commissions to its  sales people. It also decided to downsize  its workforce more generally. In  furtherance of this plan, it terminated  its relationship with an outside  consultant that had administered its  computerized commission payment system.  In November 1995, one of Houben's  subordinates asked her what was afoot,  because he had seen troublesome documents  on another person's desk. When Houben  inquired, however, her supervisor told  her (up through mid-January 1996) that  "nothing will change." Houben continued  to perform her job on that assumption.

27
In order to establish fraud under  Illinois law, a plaintiff must prove that  (1) defendant made a false statement; (2)  of material fact; (3) which defendant  knew or believed to be false; (4) with  the intent to induce plaintiff to act;  (5) the plaintiff justifiably relied on  the statement; and (6) the plaintiff  suffered damage from such reliance.  Williams v. Chicago Osteopathic Health  Sys., 654 N.E.2d 613, 619 (Ill. App. Ct.  1995); Dresser Indus., Inc. v. Pyrrhus  AG, 936 F.2d 921, 934 (7th Cir. 1991).  "Promissory fraud" is a false  representation of intent concerning  future conduct, such as a promise to  perform a contract when there is no  actual intent to do so. Doherty v. Kahn,  682 N.E.2d 163, 176 (Ill. App. Ct. 1997).  As a general rule, promissory fraud is  not actionable in Illinois unless the  promise is part of a "scheme" to defraud.  Id.

28
In granting Telular's motion for summary  judgment, the district court reasoned  that Houben had failed to present any  facts demonstrating that Telular intended  to defraud her. In particular, Houben  presented no evidence that when Telular  promised her that she would receive sales  commissions the company in fact had no  intention of making those payments.  Houben argues that Telular's decision to  restructure its sales operation and stop  paying commissions to its salespeople  provides the missing evidence of  Telular's intent to defraud her. She also  points to company managers' reassuring  statements that "nothing would change" as  further proof of a fraudulent scheme  designed to induce her to continue  working despite the planned changes in  sales force structure and compensation.

29
Like the district court, we find that  Houben's evidence was not enough to  create a jury issue on either the  question of Telular's fraudulent intent  or the "scheme to defraud" requirement of  promissory fraud. Evidence  regardingTelular's decision not to pay  commissions relates to events beginning  in October 1995--after the commission  plan was released in April 1995 and after  Houben's individual compensation memo was  drafted in August 1995. The comment that  "nothing would change" seems to be no  more than the general sort of platitude  that company managers are prone to utter  when a workforce is being restructured.  It cannot be stretched into evidence of a  fraudulent scheme. And even if the  comments could be seen as the kind of  intentional and false statements of  material fact Illinois requires, Houben's  claim would also fail because she has  offered no evidence of any reliance on  those statements.

30
Houben's constructive fraud theory was  also properly rejected. Constructive  fraud "is a breach of a legal or  equitable duty that the law declares  fraudulent because of its tendency to  deceive others, irrespective of the moral  guilt of the wrongdoer." Beaton &  Associates, Ltd. v. Joslyn Mfg. & Supply  Co., 512 N.E.2d 1286, 1291 (Ill. App. Ct.  1987). An essential element of the claim  is "a breach of duty, especially  fiduciary duty." Kohler v. Leslie  Hindman, Inc., 80 F.3d 1181, 1188 (7th  Cir. 1996). Such a breach can be shown  where there is great inequality between  the parties. See In re Estate of  Neprozatis, 378 N.E.2d 1345, 1349-50  (Ill. App. Ct. 1978). But the mere breach  of an employment contract is insufficient  to give rise to a claim of constructive  fraud. See Gross v. University of  Chicago, 302 N.E.2d 444, 453-54 (Ill.  App. Ct. 1973) (employer/employee  relationship does not create fiduciary  duty on the part of the employer). Houben  argues that constructive fraud  nonetheless applies because Telular was  clearly dominant in the relationship: the  company had "superior knowledge" and  "overmastering influence." See Mitchell  v. Norman James Constr. Co., 684 N.E.2d  872, 879 (Ill. App. Ct. 1997). At bottom,  however, Houben's case is  indistinguishable from any other case in  which an employer allegedly breached an  employment contract. She offers no legal  authority that would justify treating  this breach (assuming that is how it  should be viewed for these purposes)  differently from any other breach. We  therefore find that the district court  correctly granted summary judgment on  this claim.

31
*  *  *  *

32
The judgment of the district court is  AFFIRMED.

Notes:

1
 For the sake of completeness, we note that the  district court's decision not to rule on Telular-  's argument that the IWPCA does not apply to this  case may leave open the question whether the  IWPCA was pre-empted by federal laws governing  the payment of judgments, such as 28 U.S.C. sec.  1961 and Fed. R. Civ. P. 62(d). In light of our  ruling here that this entire subject is a collat-  eral issue analogous to attorneys' fees, we leave  consideration of that question to the district  court in future proceedings. We express no opin-  ion on the question whether Telular has properly  preserved such an argument, or if it was waived,  as that too is better addressed by the district  court in the first instance and it has not been  briefed in this court.