Cohan v. Medline Industries, Inc.

170 F. Supp. 3d 1162, 2016 WL 1086514, 2016 U.S. Dist. LEXIS 35862
CourtDistrict Court, N.D. Illinois
DecidedMarch 21, 2016
DocketCase No. 14 C 1835
StatusPublished
Cited by13 cases

This text of 170 F. Supp. 3d 1162 (Cohan v. Medline Industries, Inc.) is published on Counsel Stack Legal Research, covering District Court, N.D. Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Cohan v. Medline Industries, Inc., 170 F. Supp. 3d 1162, 2016 WL 1086514, 2016 U.S. Dist. LEXIS 35862 (N.D. Ill. 2016).

Opinion

MEMORANDUM OPINION AND ORDER

John Robert Blakey, United States District Judge

This is a purported class action concerning the Defendants’ allegedly improper payment of commissions to their salespeople. Plaintiffs allege: (1) violation of the Illinois Wage Payment and Collection Act (the “IWPCA” or the “Act”) on behalf of a putative national class; and (2) violation of several state wage payment statutes on behalf of a putative multi-state class. As to the state wage payment statutes, the individual Plaintiffs allege claims under the New York Labor Law (Cohan) and California Labor Code (Schardt). The Court stayed proceedings on class certification to allow for resolution of the parties’ cross-motions for summary judgment on the individual Plaintiffs’ claims. [88], [92], As explained below, Defendants’ motion for summary judgment is granted and Plaintiffs’ motion is denied.

Prior to discussing the factual background underlying this dispute, and in order to focus the background section on the relevant issues, the Court briefly sets out the parties’ general positions. There are two principal disputes here: (1) Did the Plaintiffs perform sufficient work in Illinois for the Act to govern their claims; and (2) Did the commission payments at issue violate the Act, the California Labor Code, or the New York Labor Law. As to the first issue, Plaintiffs spent a number of days in Illinois each year for training and promotional meetings. They claim this was sufficient to trigger the Act. Defendants disagree.

[1165]*1165As to the second issue, the wage payment statutes invoked by Plaintiffs do not create independent rights, but instead create a cause of action against employers who fail to pay the wages and commissions they agreed to pay in their employment agreements. The parties disagree as to what commissions the Plaintiffs were entitled to under the agreements here. According to Plaintiffs, they were entitled to commissions based solely on their accounts with sales growth; and accounts where sales declined should not have been factored into their commissions. Plaintiffs’ argue that commissions should have been calculated as follows:

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On the other hand, Defendants argue that the parties agreed to a commission calculation based on the subtraction of sales declines from sales growth. Once that calculation was completed, the commission amount was then computed based upon the amount of growth that exceeded the amount of decline. Defendants argue that commissions were appropriately calculated as follows:

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Plaintiffs claim that Defendants’ deductions from their “sales growth” based upon the decline in sales for certain accounts was an illegal deduction from commissions that they had already earned under their employment agreements. Defendants disagree. Crucial to this Court’s analysis, then, is a determination of how the parties agreed to calculate commissions and when those commissions were “earned.”

I. Background1

Defendant Medline Industries, Inc. is a privately held manufacturer and distributor of healthcare supplies in the United States. PSOF ¶ 5. Both Medline Industries and its subsidiary, Defendant MedCal Sales LLC, have their corporate headquarters in Mundelein, Illinois. PSOF ¶¶ 5, 6. With respect to the issues addressed in this Opinion, there are no material distinctions between Medline Industries and MedCal Sales. The Court will thus use the [1166]*1166term “Medline” to refer to either or both entities. Medline employed outside salespeople from around the country as sales representatives in their Advanced Wound Care (“AWC”) division. PSOF 15. Salespersons in the AWC division were assigned a geographic territory, and were responsible for selling AWC products to new or existing clients within that territory. DSOF ¶ 6. The named Plaintiffs, David Cohan (“Cohan”) and Susan Schardt (“Schardt”), were each employed as sales representatives in the Defendants’ AWC division. PSOF ¶¶ 1, 3. Cohan, a New York resident, sold Defendants’ products throughout New York. Id. at ¶ 2. Schardt, a California resident, sold Defendants’ products in a territory that included California, Nevada and Hawaii. Id. at ¶ 4.

a. Cohan’s Employment with Medline

Cohan began working with Medline as a salesperson in the company’s General Line division. DSOF ¶23. He served in that capacity from 1992 to 2006. Id. Cohan’s employment as an AWC salesperson in the General Line division was governed by a March 25,1999 “Employment Agreement.” Id. at ¶24. The Court will refer to that contract as the “Cohan 1999 Agreement.” As a General Line salesperson, Cohan was paid a variable commission on every sale, based on profitability, with a bonus based on growth. Id. at ¶ 25. The Cohan 1999 Agreement contained the following provisions:

[1167]*1167[[Image here]]

Cohan transitioned to work as a salesperson in the AWC division in December 2007. DSOF ¶ 22. He stayed in that position until his resignation in July 2013. Id. Cohan’s transition to the AWC division was governed by a November 26, 2007 “Agreement Regarding Continued Employment.” Id. at ¶ 26. The Court will refer to that agreement as the “Cohan 2007 Agreement.” The Cohan 2007 Agreement amended the Cohan 1999 Agreement, such that the 1999 Agreement remained in effect as amended. The 2007 Agreement included the following provisions:

[1168]*1168[[Image here]]

b. Schardt’s Employment with Medline

Schardt worked as a salesperson in Medline’s AWC division for approximately thirteen years, from February 2001 through her termination in July 2014. DSOF ¶ 54. Schardt’s employment with Medline was governed by a February 19, 2001 “Employment Agreement” with Med-line Industries, Inc. (the “Schardt 2001 Agreement”), and a February 10, 2006 “Employment Agreement” with MedCal Sales, LLC (the “Schardt 2006 Agreement”). Id. at ¶ 57. Plaintiffs agree that Schardt’s two agreements are substantially identical, and the Court will refer to the agreements collectively as the “Schardt Agreements.” [93] at 4. With only minor differences between them, the Schardt Agreements included the following provisions:

[1169]*1169[[Image here]]

Apart from those agreements, in May 2001 Schardt received a memo from then Vice President of AWC Sales, Chris Simpson (“Simpson”), explaining that a compensation plan was going to be “unveiled” during the upcoming Division Sales Meetings, and that the new plan included payment of commissions tied to growth. DSOF ¶ 61.

c. Annual Compensation Plans

In addition to the above employment agreements, Medline’s AWC division released Compensation Plans for its salespeople on a yearly basis that described how commissions would be calculated during that year. PSOF ¶ 20. Those compensation plans were reviewed for the upcom[1170]*1170ing year at promo meetings typically held in December or January. Id. The Compensation Plans from 2004-2007 specify that commissions “are based on monthly sales growth and profitability.” [95] at Exs. 1-2.

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Cite This Page — Counsel Stack

Bluebook (online)
170 F. Supp. 3d 1162, 2016 WL 1086514, 2016 U.S. Dist. LEXIS 35862, Counsel Stack Legal Research, https://law.counselstack.com/opinion/cohan-v-medline-industries-inc-ilnd-2016.