Deeds v. Waddell & Reed Inv. Mgmt. Co.

Decision Date04 May 2012
Docket NumberNo. 104,949.,104,949.
Citation280 P.3d 786,47 Kan.App.2d 499
PartiesCharles P. DEEDS, Appellant, v. WADDELL & REED INVESTMENT MANAGEMENT COMPANY, Appellee.
CourtKansas Court of Appeals

OPINION TEXT STARTS HERE

Syllabus by the Court

1. Kansas law recognizes the tort of retaliatory discharge when an employee is terminated for filing a wage claim under the Kansas Wage Payment Act, K.S.A. 44–313 et seq. This tort may arise in advance of actual filing of the wage claim if the employee complains to the employer and that complaint is sufficiently clear and detailed for a reasonable employer to understand it, in light of both content and context, as an assertion of rights protected by the Kansas Wage Payment Act and a call for the protection of those rights under the Act.

2. Under the facts of this case, in which the employee was unaware of the Kansas Wage Payment Act and made equivocal statements to the employer about what action he was requesting regarding his compensation, the employee did not sufficiently invoke the protection of the Kansas Wage Payment Act to be able to bring a retaliatory-discharge claim.

3. Kansas law does not recognize a tort of retaliatory discharge when an employee is terminated in an attempt to avoid paying the employee a commission, even if the commissionhas already been earned. Nor does Kansas recognize a tort of retaliatory discharge when an employee is terminated to prevent the employee from earning future commissions.

Donald N. Peterson, II, and Sean M. McGivern, of Withers, Gough, Pike, Pfaff & Peterson, LLC, of Wichita, for appellant.

Jeffrey D. Hanslick, James D. Griffin, and Curtis R. Summers, of Husch Blackwell Sanders LLP, of Kansas City, Missouri, and Jennifer Lepentis, senior counsel, of Waddell & Reed Financial Services, Inc., of Overland Park, for appellee.

Before BRUNS, P.J., LEBEN and STANDRIDGE, JJ.

LEBEN, J.

In 2007, Waddell & Reed fired Charles Deeds from his position as a sales marketing executive. A year later, Deeds filed an administrative claim (still pending) under the Kansas Wage Payment Act seeking more than $1 million in commissions he said he had earned that hadn't been paid to him. In 2009, Deeds sued Waddell & Reed, alleging that it had fired him in retaliation for exercising his rights under the Kansas Wage Payment Act.

But a person can't be fired in retaliation for exercising rights under the Kansas Wage Payment Act unless the employee has given some indication that he or she is acting under its provisions. Here, Deeds complained about changes in the compensation system but was personally unaware of the Kansas Wage Payment Act and never suggested he was making a claim under its provisions. The equivocal statements Deeds made to his employer are not enough to support a lawsuit alleging that he was fired for exercising rights under the Kansas Wage Payment Act.

Deeds attempts to create other exceptions to the Kansas employment-at-will rule, under which the employer usually can fire an employee at any time for any reason. These attempts fail because Deeds has not cited a clear Kansas public policy to support his position, a requirement for an exception to be made. Deeds also attempts to use the equitable claim of unjust enrichment to proceed in court on his claim for commissions—arguing that Waddell & Reed received an unfair benefit by retaining the commissions, so Deeds should be compensated—but that is contrary to the longstanding rule that an equitable claim is not available when a legal remedy exists. Since Deeds is seeking the same recovery in his administrative claim under the Kansas Wage Payment Act, his equitable claim fails. The district court granted summary judgment to Waddell & Reed, and we find that its judgment was proper.

Factual Background

Waddell & Reed hired Charles Deeds as vice president of marketing and client service for the Southeast region in 1998. There was no employment contract that specified the duration of Deeds' employment, and the parties agree that Deeds was an at-will employee of Waddell & Reed, so the company was free to end Deeds' employment at any time. Deeds started with a base salary of $77,000, plus commissions based on sales production and ongoing client servicing. The commissions for selling new accounts were 20 percent of revenues in the first year, 10 percent in the second year, 5 percent in the third and fourth years, and 2.5 percent for each year following, which was termed a “trailer” commission. The commission was capped at $50,000 per account per year. The parties disagree about whether Deeds still must be employed by Waddell & Reed to earn the trailer commission.

Waddell & Reed changed the commission schedule effective July 1, 2005. The new schedule phased out the trailer commission so that it no longer would be paid after July 1, 2007. Deeds testified that he believed he had earned these commissions at the time of sale and would be paid these commissions every year as long as the account remained with Waddell & Reed.

Deeds complained about the 2005 commission change to Waddell & Reed's management at least five times. Deeds first complained to Nikki Newton, his supervisor, about what he perceived to be the retroactive nature of the change; Deeds felt that Waddell & Reed was changing an existing compensation agreement. Later in 2005, Deeds complained to Newton's supervisor, John Sundeen, and said he didn't believe “it was right” to change the commission structure. Deeds complained to Sundeen and Newton again in 2006. Later, Deeds admitted he didn't know what the law was under the Kansas Wage Payment Act at the time of these complaints. When Newton asked Deeds what he wanted, Deeds answered, “A fair compensation plan or return of those trailer commissions.” In early 2007, Deeds said Newton told him he would take Deeds' request to management and get back to him.

Waddell & Reed fired Deeds on April 9, 2007. Newton told Deeds that Waddell & Reed decided not to change the commission schedule, so the company terminated Deeds' employment because management knew Deeds wasn't going to be happy about the decision. Newton assumed Deeds' largest account and received its commissions. About a year after Deeds was fired, he filed a wage claim under the Kansas Wage Payment Act with the Kansas Department of Labor for more than $1 million. In 2009, a hearing officer denied Deeds' wage claim. An administrative review of the hearing officer's order was pending as of July 2010.

In 2009, Deeds brought claims against Waddell & Reed under four theories related to his termination and commissions: retaliatory discharge, wrongful discharge, prevention, and unjust enrichment. The district court granted Waddell & Reed's motion for summary judgment August 2, 2010. Deeds has appealed to this court.

ANALYSIS
I. Deeds Has Not Established Factual Support for a Retaliatory–Discharge Claim under the Kansas Wage Payment Act.

Deeds' first legal claim is a common-law claim regarding his discharge from Waddell & Reed that he alleges came in retaliation for exercising his rights under the Kansas Wage Payment Act, K.S.A. 44–313 et seq. The district court granted summary judgment to Waddell & Reed because no Kansas appellate court had recognized a retaliatory-discharge claim related to the exercise of Kansas Wage Payment Act rights. But the Kansas Supreme Court recognized that cause of action in Campbell v. Husky Hogs, 292 Kan. 225, Syl. ¶ 1, 255 P.3d 1 (2011). So the question before us is whether Deeds has provided sufficient factual support to make such a claim.

We first briefly review the rules we must apply to determine whether Deeds has presented a sufficient claim. Questions of law, “including those at the heart of summary judgment decisions,” are subject to unlimited review on appeal. Thomas v. Board of Shawnee County Comm'rs, 293 Kan. 208, 221, 262 P.3d 336 (2011). Summary judgment is appropriate when there is no genuine issue as to any material fact and when a party cannot prevail as a matter of law even when the court, as required, looks at all facts and inferences that may be reasonably drawn from the evidence in the party's favor. When opposing a motion for summary judgment, an adverse party must come forward with evidence to establish a dispute as to a material fact. In order to prevent summary judgment, the facts subject to the dispute must be material to the conclusive issues in the case. Osterhaus v. Toth, 291 Kan. 759, 768, 249 P.3d 888 (2011). On appeal, the same rules apply. So this court looks at the evidence in a light favorable to Deeds and requires Deeds to come forward with evidence to establish a dispute as to a material fact. Summary judgment must be denied if reasonable minds could differ as to the conclusions drawn from the evidence, 291 Kan. at 768, 249 P.3d 888, but a party can't avoid summary judgment on the mere hope that something may develop later at trial. U.S.D. No. 232 v. CWD Investments, 288 Kan. 536, 559, 205 P.3d 1245 (2009).

Let's start by considering what facts have been established, keeping in mind that we must take the facts in the light most favorable to Deeds. Deeds complained at least five times about the change in the commission schedule that phased out the annual 2.5 percent trailer commission for accounts sold before July 1, 2005. Deeds said that Waddell & Reed had broken its contractual agreement with him, though he never suggested a violation of the Kansas Wage Payment Act since he had no knowledge of its provisions until much later. At one point, when Deeds' supervisor asked what Deeds wanted, Deeds replied, “A fair compensation plan or return of those trailer commissions.”

Eventually, Waddell & Reed chose to fire Deeds. According to Deeds, his supervisor told him, “Chuck, I've taken your compensation complaint to management. They have determined not to respond. They know because they're—theythey have determined because you will not be happy [with] their response, that we will—we are going to terminate your employment...

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