Court Opinion

ID: 3001754
Source: CourtListenerOpinion
Date Created: 2015-09-24 20:20:20.479975+00
Date Added: 2024-06-11T11:45:46.661045
License: Public Domain

In the
 United States Court of Appeals
               For the Seventh Circuit
                          ____________

No. 07-3488
B RIAN H ARNEY, B RETT D EB OARD
and D ARLA G REINER, on behalf of
themselves and all others similarly
situated,
                                              Plaintiffs-Appellants,
                                 v.

S PEEDWAY S UPERA MERICA, LLC,
                                                Defendant-Appellee.
                          ____________
             Appeal from the United States District Court
     for the Southern District of Indiana, Indianapolis Division.
              No. 05 C 1912—Larry J. McKinney, Judge.
                          ____________
       A RGUED A PRIL 18, 2008—D ECIDED M AY 30, 2008
                          ____________

 Before B AUER, F LAUM and W ILLIAMS, Circuit Judges.
  B AUER, Circuit Judge. Plaintiffs brought a class action
lawsuit against their employer, Speedway SuperAmerica
LLC, alleging that the manner in which Speedway pays
and forfeits its employees’ bonuses violates Indiana’s
Wage Payment Statute and Wage Claims Statute. The
district court granted summary judgment to Speedway,
finding that Plaintiffs’ bonuses did not constitute “wages”
2                                                No. 07-3488

under Indiana law, and therefore the two statutes did not
apply. At best, the district court held, the bonuses were a
form of “deferred compensation,” which were forfeited
when Plaintiffs failed to meet the bonuses’ condition of
continued employment with Speedway. Plaintiffs now
appeal the district court’s grant of summary judgment to
Speedway, claiming that the district court erred in deter-
mining that the bonuses were not “wages” under Indiana
law, and that the retention element of Speedway’s bonus
programs violates Indiana law.
  We have reviewed the issues addressed by the district
court and have determined that it ruled appropriately
and without error in granting Speedway’s motion for
summary judgment. Accordingly, we adopt the dis-
trict court’s thorough and well-reasoned order, dated
September 13, 2007, as our own and affirm the judgment
of the lower court on all counts. A copy of the district
court’s order is attached and incorporated herein.
  Plaintiffs also move to certify certain questions of state
law to the Indiana Supreme Court, and to stay this appeal
pending a decision from the Indiana Supreme Court.
Plaintiffs contend that there is no clear controlling prece-
dent to guide the state law issues of (1) whether the
Plaintiffs’ bonuses constitute “wages” under Indiana
law; (2) whether the retention element of Speedway’s
bonus programs violates Indiana law (specifically, Indi-
ana’s Ten Day Rule) and is void as a matter of law; and
(3) whether Speedway’s bon uses constitute “present” or
“deferred” compensation.
  A case is appropriate for certification where it “ ’concerns
a matter of vital public concern, where the issue is likely
to recur in other cases, where resolution of the question
to be certified is outcome determinative of the case, and
No. 07-3488                                                 3

where the state supreme court has yet to have an oppor-
tunity to illuminate a clear path on the issue.’ ” Plastics
Eng’g Co. v. Liberty Mut. Ins. Co., 514 F.3d 651, 659 (7th
Cir. 2008) (quoting Allstate Ins. Co. v. Menards, Inc., 285
F.3d 630, 639 n.18 (7th Cir. 2002)); see also Cir. R. 52; Ind.
R.App. P. 64(A). Questions that are tied to the specific
facts of a case are typically not ideal candidates for cer-
tification. Plastics Eng’g Co., 514 F.3d at 659. Thus, if
certification would produce a fact bound, particularized
decision lacking broad precedential significance, certi-
fication is inappropriate. Id. (citing Erie Ins. Group v. Sear
Corp., 102 F.3d 889, 892 (7th Cir. 1996)).
   This case hinges entirely on whether the Plaintiffs’
bonuses were “wages” under Indiana law, since Indiana
law makes clear that bonuses may be conditioned how-
ever an employer sees fit, and that these bonuses would
at best be deferred compensation subject to forfeiture. Dove
v. Rose Acre Farms, Inc., 434 N.E.2d 931, 934 (Ind. Ct.
App. 1982) (“An employee is not entitled to a bonus until
after the time stipulated in the contract for its payment,
or until other conditions designated in the contract for
its payment have been fulfilled . . .”); Montgomery Ward &
Co. v. Guignet, 45 N.E.2d 337, 339-40 (Ind. Ct. App. 1942)
(explaining that bonuses contingent on continued em-
ployment are valid and benefits of bonus are not con-
ferred upon employee unless all conditions of the bonuses
are met); Swift v. Speedway SuperAmerica LLC, 861 N.E.2d
1212, 1215-16 (Ind. Ct. App. 2007), reh’g and trans. denied
(concluding that these same bonuses were at best de-
ferred compensation but were forfeited because employee
had failed to meet the eligibility requirement of continued
employment). So, we need only decide if certification
is appropriate on the issue of whether Plaintiffs’ bonuses
constitute “wages” under Indiana law.
4                                               No. 07-3488

   Our analysis in this case involves the interpretation of a
specific bonus program of a single Indiana employer as
applied to Plaintiffs’ particular factual circumstances. It
is difficult to see how the determination of these employ-
ees’ personal circumstances could have a far-reaching
precedential effect for others. As the district court’s opin-
ion makes clear, the Indiana Supreme Court has pro-
vided guidance on when bonuses constitute “wages”
under Indiana law. Because Plaintiffs are merely seeking
a determination that their bonuses constitute wages,
this case is not appropriate for certification.
  We affirm the district court’s grant of summary judg-
ment to Speedway and deny Plaintiffs’ request for certi-
fication.
                              UNITED STATES DISTRICT COURT
                              SOUTHERN DISTRICT OF INDIANA
                                  INDIANAPOLIS DIVISION

BRIAN HARNEY, BRETT DEBOARD, and                   )
DARLA GREINER, on behalf of themselves             )
and all others similarly situated,                 )
                Plaintiffs,                        )
                                                   )
       vs.                                         )        1:05-cv-1912-LJM-WTL
                                                   )
SPEEDWAY SUPERAMERICA, LLC,                        )
         Defendant.                                )

                    ORDER ON MOTION FOR SUMMARY JUDGMENT

       This cause is before the Court on Defendant’s, Speedway SuperAmerica, LLC (“Speedway”),

Motion for Summary Judgment (Docket No. 22). Plaintiffs, Brian Harney (“Harney”), Brett DeBord

(“DeBord”)1, and Darla Greiner (“Greiner”) (these defendants collectively, “the Managers”), filed

this lawsuit in state court before it was removed to this Court pursuant to the Class Action Fairness

Act of 2005. The Managers seek to recover on behalf of themselves and all others similarly situated

pursuant to Indiana’s Wage Claims Statute (Indiana Code § 22-2-9-1 et seq.) and Wage Payment

Statute (Indiana Code § 22-2-5-1 et seq.) for allegedly unpaid bonuses and wages.2 The parties have

fully briefed the issues and this matter is now ripe for ruling.

       For the reasons stated herein, the Court GRANTS Speedway’s motion.

       1
          It appears from the parties’ briefs that Mr. DeBord’s name was incorrectly spelled in
the caption. The Court will use “DeBord” in this Order.
       2
       Because she was not involuntarily terminated, Greiner is only seeking relief under the
Wage Payment Statute. See Pls.’ Sur-Reply at 2, n.1.
                                       I. BACKGROUND

       The Managers are all former employees of Speedway whose employment ceased on October

11, 2005. Harney began employment in April 2004, and was an assistant store manager at the time

that he was fired. DeBord began employment in March 2001, and was also an assistant manager at

the time he was fired. Greiner began employment on December 17, 1996. She was a store manager

at the time that her employment ceased and, unlike the other two plaintiffs, she chose to quit her

employment.

       During their employment, the Managers were paid on a weekly basis. They were also eligible

for certain bonuses under programs established by Speedway. The different potential bonuses were

outlined in detail in Speedway’s Operations Manual and depended on the employee’s classification

during a particular month and quarter. One of the bonus programs was the Store Manager Bonus

Program, which permitted store managers to earn monthly bonuses based on monthly performance

objectives for their individual stores. Managers would earn bonus credits that could later be

converted to cash payments. The bonus was contingent on several factors, such as meeting sales and

operation goals. In addition, in order to receive this type of bonus, a store manager had to be

employed on the last day of the second month after the bonus credits were earned. Speedway

reserved the right to “amend, suspend, terminate, or change” the program at any time. See Seidel

Aff., Exs. A-B.

       The second type of bonus program was the Associate/Lead Assistant Manager Bonus

Program. Similar to the Store Manager Bonus, receiving this type of bonus had an employment

requirement attached to it. Specifically, in order to receive this bonus, Speedway’s policy required

that an employee be employed as the associate/lead assistant manager on the first day of the month

                                                 2
and employed at the end of the second month following the month in which the bonus was earned.

Like the Store Manager Bonus Program, Speedway reserved the right to “amend, suspend, terminate,

or change” the Associate/Lead Assistant Manager Bonus Program at any time. See Seidel Aff., Exs.

D-E.

       The third and final type of bonus program was the Customer Satisfaction Rewards Program.

This type of bonus was paid on a quarterly basis to assistant managers based on monthly objectives

for their individual stores. Like the Store Manager Bonus, an employee would receive credits that

could later be converted for a cash payout. Bonus credits were earned monthly if the assistant

manager was employed on the first day of the month in which the credits were earned. Further, each

credit would be given the value of $1.00 if the employee was still employed by Speedway on the last

day of the second month after the end of the calendar quarter. Like the other types of bonuses,

Speedway reserved the right to “amend, suspend, terminate, or change” the Customer Satisfaction

Rewards Program at any time. See Seidel Aff., Exs. F-G.

       Calculations for each of these bonuses was completed by Speedways’s corporate office and

then reviewed by region, district, and store managers. According to Speedway, the process of

calculating and reviewing the bonuses typically took more than ten calendar days to complete.

Paychecks were then mailed to the stores on Wednesdays following the end of a pay period. The

Managers contend that they were not paid these bonuses in a timely fashion under the Wage Payment

and Wage Claims Statutes because they were not paid within ten calendar days of being “earned.”

See Complaint, ¶¶ 31-33. They also assert that they were not paid all wages that were “due and

owing” in a timely fashion after their separation from employment. See Complaint, ¶¶ 34-35. With

the exception of the bonus payments that the Managers contend that they are entitled to receive, there

                                                  3
does not appear to be any dispute that Speedway timely-issued checks on October 19, 2005, for

payment of the Managers’ regular earned wages, including accrued but unused vacation pay, after

the Managers’ separation. See Seidel Aff., ¶¶ 12, 27-29, 47-50, 53-56 and Exs. C, H, and I.

                          II. SUMMARY JUDGMENT STANDARD

       As stated by the Supreme Court, summary judgment is not a disfavored procedural shortcut,

but rather is an integral part of the federal rules as a whole, which are designed to secure the just,

speedy, and inexpensive determination of every action. See Celotex Corp. v. Catrett, 477 U.S. 317,

327 (1986); United Ass’n of Black Landscapers v. City of Milwaukee, 916 F.2d 1261, 1267-68 (7th

Cir. 1990), cert. denied, 499 U.S. 923 (1991). Motions for summary judgment are governed by Rule

56(c) of the Federal Rules of Civil Procedure, which provides in relevant part:

       The judgment sought shall be rendered forthwith if the pleadings, depositions,
       answers to interrogatories, and admissions on file, together with the affidavits, if any,
       show that there is no genuine issue as to any material fact and that the moving party
       is entitled to a judgment as a matter of law.

       Summary judgment is the "put up or shut up" moment in a lawsuit. Johnson v. Cambridge

Indus., Inc., 325 F.3d 892, 901 (7th Cir. 2003), reh'g denied.           Once a party has made a

properly-supported motion for summary judgment, the opposing party may not simply rest upon the

pleadings but must instead submit evidentiary materials that “set forth specific facts showing that

there is a genuine issue for trial.” Fed. R. Civ. P. 56(e). A genuine issue of material fact exists

whenever “there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for

that party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). The nonmoving party bears

the burden of demonstrating that such a genuine issue of material fact exists. See Matsushita Elec.

                                                  4
Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986); Oliver v. Oshkosh Truck Corp., 96
F.3d 992, 997 (7th Cir. 1996), cert. denied, 520 U.S. 1116 (1997). It is not the duty of the court to

scour the record in search of evidence to defeat a motion for summary judgment; rather, the

nonmoving party bears the responsibility of identifying the evidence upon which he relies. See

Bombard v. Fort Wayne Newspapers, Inc., 92 F.3d 560, 562 (7th Cir. 1996). When the moving party

has met the standard of Rule 56, summary judgment is mandatory. See Celotex, 477 U.S. at 322-23;

Shields Enters., Inc. v. First Chicago Corp., 975 F.2d 1290, 1294 (7th Cir. 1992).

       In evaluating a motion for summary judgment, a court should draw all reasonable inferences

from undisputed facts in favor of the nonmoving party and should view the disputed evidence in the

light most favorable to the nonmoving party. See Estate of Cole v. Fromm, 94 F.3d 254, 257 (7th

Cir. 1996), cert. denied, 519 U.S. 1109 (1997). The mere existence of a factual dispute, by itself,

is not sufficient to bar summary judgment. Only factual disputes that might affect the outcome of

the suit in light of the substantive law will preclude summary judgment. See Anderson, 477 U.S. at

248; JPM Inc. v. John Deere Indus. Equip. Co., 94 F.3d 270, 273 (7th Cir. 1996). Irrelevant or

unnecessary facts do not deter summary judgment, even when in dispute. See Clifton v. Schafer, 969
F.2d 278, 281 (7th Cir. 1992). “If the nonmoving party fails to establish the existence of an element

essential to his case, one on which he would bear the burden of proof at trial, summary judgment

must be granted to the moving party.” Ortiz v. John O. Butler Co., 94 F.3d 1121, 1124 (7th Cir.

1996), cert. denied, 519 U.S. 1115 (1997).

                                                 5
                                         III. DISCUSSION

          This case involves claims under two different statutory provisions. Therefore, as an initial

matter, it is necessary to lay out the differences between the two.

          The Wage Payment Statute, Indiana Code § 22-2-5-1 et seq., provides employees the right

to receive wages in a timely fashion. See St. Vincent Hosp. & Health Care Ctr., Inc. v. Steele, 766
N.E.2d 699, 703 (Ind. 2002). The Wage Payment Statute requires that an employer pay its

employees’ wages within ten days of the date that they are earned and provides for damages against

those employers who fail to do so. See Ind. Code §§ 22-2-5-1 and -2; Naugle v. Beech Grove City

Schs., 864 N.E.2d 1058, 1066-69 (Ind. 2007). By its terms, it only applies to current employees or

those who voluntarily terminate their employment. See Ind. Code § 22-2-5-1; Steele, 766 N.E.2d

at 705.

          The Wage Claims Statute, Indiana Code § 22-2-9-1 et seq., describes how disputes about the

amount of wages due are resolved and requires that unpaid wages or compensation of a discharged

employee are “due and payable at regular pay day for the pay period in which separation occurred.”

See Ind. Code § 22-2-9-2-(a); Steele, 766 N.E.2d at 704. Unlike the Wage Payment Statute, the

Wage Claims Statute only applies to employees who have been discharged or suspended from work

because of an industrial dispute. See Steele, 766 N.E.2d at 705.

          Based on the differences in these two statutes, it is clear that Greiner’s claims arise only

under the Wage Payment Statute because she voluntarily terminated her employment with Speedway.

In fact, she has now conceded as much. See Pls.’ Sur-Reply at 2, n.1. With respect to Harney and

DeBord, both of whom were discharged, the answer cannot be so easily categorized. However, the

                                                   6
Court concludes that (1) their claims for bonuses that they did not receive are governed by the Wage

Claims Statute, and (2) those bonuses that they did receive while still employed, but which were paid

outside of the ten-day period, are governed by the Wage Payment Statute.

        Regardless of which statutory provision applies, it is clear that the Managers are not entitled

to the unpaid bonuses. A condition for receiving those bonuses was continued employment, and it

is undisputed that none of the Managers satisfied that criteria. Thus, even if the unpaid bonuses are

“wages,” the Court agrees that, at best, they are deferred compensation and therefore subject to

forfeiture. See Swift v. Speedway SuperAmerica LLC, 861 N.E.2d 1212, 1215-16 (Ind. Ct. App.

2007), reh’g and trans. denied (concluding that bonuses under Store Manager Bonus Program were

wages that could be forfeited and that plaintiff was not entitled to receive them because she had

failed to meet the eligibility requirement of maintaining employment).3 Because the Managers failed

to meet the eligibility requirements for the unpaid bonuses, they are not entitled to receive them.

Accordingly, the Managers claims for unpaid bonuses are DISMISSED with prejudice.

        The final question to resolve is whether the Managers are entitled to damages for the failure

of Speedway to pay bonuses within the ten-day period while the Managers were still employed. The

answer depends on whether the bonuses are “wages.” At first blush, Swift suggests that they are

wages because it concluded that bonuses under the Store Manager Bonus Program were deferred

compensation. However, Swift merely discussed the differences between present compensation and

deferred compensation; it did not undertake an analysis about whether the bonuses are truly

        3
            The program appears to be exactly the same as one of the programs involved in this
case.

                                                  7
considered “wages” under the Wage Payment Statute or the Wage Claims Statute. Thus, the Court

does not find Swift compelling or persuasive on that issue.

       To resolve this dispute, the Court is guided by precedent from the Indiana Supreme Court.

The Indiana Supreme Court has stated that “[a] ‘bonus’ is a wage ‘if it is compensation for time

worked and is not linked to a contingency such as the financial success of the company.’”

Highhouse, M.D. v. Midwest Orthopedic Inst., P.C., 807 N.E.2d 737, 740 (Ind. 2004) (quoting Pyle

v. Nat’l Wine & Spirits Corp., 637 N.E.2d 1298, 1300 (Ind. Ct. App. 1994). See also Herremans v.

Carrera Designs, Inc., 157 F.3d 1118, 1121-22 (7th Cir. 1998) (cited with approval by Highhouse

for the proposition that pay based on profits rather than a claimant’s own time, effort, or product was

not a wage); Manzon v. Stant Corp., 138 F. Supp. 2d 1110, 1113 (S.D. Ind. 2001) (cited with

approval by Highhouse for the proposition that a bonus based on a financial target and achieving

“individual personal objectives” was not a wage). Based on this definition, the Indiana Supreme

Court concluded that a bonus payment tied to an employer’s overall operations was not a wage. See

Highhouse, 807 N.E.2d at 740.

       The Indiana Supreme Court further illustrated the practical reasons why a bonus tied to other

contingencies is not a “wage.” Specifically, unlike wages, such bonuses often cannot be calculated

within a short period of time after services are performed. See id. Finally, while the court cautioned

that an employer cannot escape the law by obtaining an agreement from an employee that wages will

not be paid within the statutorily-prescribed time period, it noted that the employment contract called

for annual payments. See id. According to the Highhouse court, this fact lent support to the view

that the parties recognized that frequent bonus calculations and payment would be difficult, if not

                                                  8
impossible. See id. In other words, this circumstance underscored that the parties themselves did

not consider the bonus to be a wage.

       Based on Highhouse, the Court concludes that the bonuses involved in this case are not

“wages” under the Wage Payment Statute or Wage Claims Statute. The bonuses were each

contingent on factors other than time worked.          For example, the Store Manager and the

Associate/Lead Assistant Manager Bonuses were based, in part, on meeting sales and operation

goals. Similarly, bonuses under the Customer Satisfaction Rewards Program were dependent on

factors beyond an employee’s individual performance. Moreover, entitlement to the bonuses was

explicitly conditioned on maintaining employment for a period of time. Indeed, this condition made

it impossible to calculate the bonuses at the time that the bonus credits were “earned” because this

condition had not yet been satisfied. Finally, because each bonus program explained when the bonus

payments would be made, the parties should have been aware that payments were not like regular

wages and that calculations would be difficult to make. As in Highhouse, this circumstance further

illustrates that the bonuses were not “wages.” Accordingly, in light of all of the foregoing, the Court

finds that the bonuses at issue in this case were not “wages” within the meaning of the Wage

Payment Statute or Wage Claims statute.

       The Court’s conclusion is not altered by the recent decision in Reel v. Clarian Health

Partners, Inc., --- N.E.2d---, 2007 WL 2481792 (Ind. Ct. App. Sept. 5, 2007). There, Clarian had

a policy of paying terminated employees their “paid time off” wages (“PTO wages”) some fourteen

days after paying the terminated employees their final regular wages. As the court discussed, the

PTO wages were “wages”under Indiana law, and the employees’ right to the wages had vested. Reel,

---N.E.2d ---, 2007 WL 2481792, *4-5. Thus, because the PTO wages were wages under the statute

                                                  9
and the employees had a vested right to them, Clarian could not vary from the payment terms

provided by law. Id. at *5.

       Unlike the plaintiffs’ PTO wages in Reel, the bonuses in this case were not wages under

Indiana law. Moreover, unlike the timing of payments in Reel, the timing for paying of bonuses in

this case was in part due to the fact that entitlement to the bonuses was conditioned on maintaining

employment. Rather than being a matter of necessity or expediency, conditioning the payment on

continued employment serves Speedway’s interest in retaining quality managers and avoiding

turnover and the cost of hiring or retraining replacement managers. In short, Reel is distinct and the

Court declines to apply it to this case. The bonuses were not wages and the Managers are not

entitled to damages for alleged late payments of them. Accordingly, the Managers’ claims for

damages are DISMISSED with prejudice.

       As a final matter, because the Court has dismissed all of the Managers’ claims, the pending

Motion for Class Certification (Docket No. 14) is now moot. Therefore, the Court DENIES as

MOOT that motion.

                                                 10
                                    IV. CONCLUSION

       For the foregoing reasons, Defendant’s, Speedway SuperAmerica, LLC, Motion for Summary

Judgment (Docket No. 22), is GRANTED. Plaintiffs’, Brian Harney, Brett DeBord, and Darla

Greiner, claims are DISMISSED with prejudice.

       In addition, Plaintiffs’ Motion for Class Certification (Docket No. 14) is DENIED as

MOOT.

       IT IS SO ORDERED this 13th day of September, 2007.

                                          _____________________________________
                                          LARRY J. McKINNEY, CHIEF JUDGE
                                          United___________________________________
                                                 States District Court
                                          Southern District
                                                LARRY       of Indiana CHIEF JUDGE
                                                         J. McKINNEY,
                                                United States District Court
                                                Southern District of Indiana

Electronically distributed to:
Ronald E. Weldy                                   William R. Groth
ABRAMS & WELDY                                    FILLENWARTH DENNERLINE GROTH & TOWE
weldy@abramsweldy.com                             wgroth@fdgtlaborlaw.com

                                                  Geoffrey S. Lohman
                                                  FILLENWARTH DENNERLINE GROTH & TOWE
                                                  glohman@fdgtlaborlaw.com

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