Fesler v. Whelen Eng'g Co. Inc.

• Decision Date: 05 July 2011
• Docket Number: No. 3:09–cv–00167 RP–TJS.,3:09–cv–00167 RP–TJS.
• Citation: 794 F.Supp.2d 994
• Parties: David K. FESLER, Plaintiff,v.WHELEN ENGINEERING COMPANY, INC., Defendant.
• Court: U.S. District Court — Southern District of Iowa

794 F.Supp.2d 994

David K. FESLER, Plaintiff,

v.WHELEN ENGINEERING COMPANY, INC., Defendant.

No. 3:09–cv–00167 RP–TJS.

United States District Court, S.D. Iowa, Davenport Division.

July 5, 2011.

Robert Eugene Breckenridge, II, Kenneth A. Duker, Breckenridge & Duker, PC, Ottumwa, IA, for Plaintiff.Gabriel J. Jiran, Shipman & Goodwin LLP, Hartford, CT, Leonard T. Strand, Simmons Perrine Moyer, Bergman PLC, Cedar Rapids, IA, for Defendant.

ORDER

ROBERT W. PRATT, Chief Judge.

Before the Court is a Motion for Summary Judgment, filed on February 22, 2011 by Whelen Engineering Company, Inc. (“Defendant” or “Whelen”). Clerk's No. 36. David K. Fesler (“Plaintiff” or “Fesler”) filed a resistance to the Motion on March 22, 2011. Clerk's No. 43. Defendant filed a Reply on March 31, 2011. Clerk's No. 48. A hearing was held on June 22, 2011. Clerk's No. 59. The matter is fully submitted.

I. FACTUAL BACKGROUND

Defendant is a manufacturing company headquartered in Chester, Connecticut, with plants in both Connecticut and New Hampshire. Def.'s Statement of Material Facts (hereinafter “Def.'s Facts”) ¶ 1. In approximately November 1980, Plaintiff became a sales representative ¹ for Defendant following an oral conversation with Defendant's president, John Olson (“Olson”). ²Id. ¶ 2. Though there was no contract, agreement, or other documentation commemorating the relationship,³ Plaintiff claims that Olson agreed to two specific “demands”: 1) “that it was to be a ‘real’ job”; and 2) “I wanted to be told immediately if I did something wrong or something they didn't like. I did not want to be told of some shortcoming six months later or even 6 days later.” ⁴ Pl.'s Resp. to Def.'s Facts ¶ 2; Pl.'s App. at 1 (Fesler Aff. ¶ 3); Pl.'s Statement of Add'l Material Facts (hereinafter “Pl.'s Facts”) ¶ 3.⁵ At no time during this meeting, or at any other point in the parties' relationship, did Olson or any other representative of Defendant refer to Plaintiff as an “employee.” Def.'s Facts ¶ 3. Likewise, Plaintiff never made any representations to anyone at Whelen or to anyone he dealt with in his capacity as a sales representative that he was an “employee” of Defendant.⁶Id.

When Plaintiff commenced his relationship with Defendant, he received very little information about his responsibilities. Id. ¶ 4. He was assigned a territory that covered several states, including Iowa, but was not provided any training on how to operate in that territory.⁷ Id. Plaintiff was charged with the general task of promoting Whelen products and generating sales in his assigned territory.⁸ Id. ¶ 5. Other than informing Plaintiff that he would be paid on a commission basis, the terms of Plaintiff's payment were not described to him; rather, Plaintiff learned the nature of the commission structure from other sales representatives.⁹ Id. ¶ 6. Though Plaintiff occasionally received certain “override” funds from Whelen to cover office personnel or additional employees, Plaintiff only received compensation from Defendant in the form of commissions. Id. ¶ 7. Plaintiff received an IRS Form 1099 from Defendant for every year of his relationship with Defendant. Id.

In 1985, Plaintiff received a document entitled “Company Policies and Regulations for Automotive/Industrial Field Sales Representatives” (the “1985 Document”) that outlined policies and procedures applicable to sales representatives. Id. ¶ 8. After stating that “[r]evisions will be made from time to time with 90 day notice,” the first paragraph of the 1985 Document provides:

Whelen Engineering Company appoints Regional Sales Managers on a non-exclusive basis ¹⁰ to certain territories and product lines as deemed in the company's best interest. These Sales Managers, to be called Representatives herein, are hired as independent contractors, not as employees. They shall represent those product lines of the Whelen Engineering Company that are mutually agreed to by the individual product line sales managers and the Representative.

Pl.'s App. at 56. The 1985 Document also outlined the commission structure, and provided that sales representatives “shall pay for their own expenses, insurances, transportation and other travel or living expenditures,” and are “responsible for arranging for payment of their own taxes, workman's compensation or any retirement or profit sharing plans as they deem necessary.” Id. Moreover, the 1985 Document contained numerous requirements applicable to sales representatives, including among other things, that they attend Annual Sales Managers Meetings, visit the Whelen factory at least one other time during the calendar year, reply to forwarded leads within 30 days, contact the factory at least once per day,¹¹ respond to messages from Whelen immediately, maintain a separate Whelen phone number, and assist in collection problems and in updating certain lists. Id. at 54–62. Regarding termination, the 1985 Document provided:

4. If in the opinion of the management of Whelen Engineering Company, a review of the Representative's performance indicates that sales volume, goals, territory coverage, customer contact, or product line involvement is not satisfactory, then the management may elect to implement “notice” or “termination” procedures on some or all of these areas being covered. If such steps are taken, they will follow procedures outlined in Paragraph 37.

...

37. Whelen Engineering company reserves the right to terminate portions of territories or individual product lines of a given Representative. Every effort will be made to provide prior warnings of a representative's failings. If in the opinion of the Management of Whelen Engineering Company a Representative has not met general goals as detailed in paragraph 4, such Representatives will be put on “notice”, i.e., probationary period of up to 6 months that mandates improved performance. At the end of this time period, if revised targets and goals are not met, then the Company will, at its option, either aggressively look for a replacement Representative or may elect to notify the Representative of termination.¹²

Id. at 56–57, 62.

In September 1987, Plaintiff received a letter from Whelen's Vice President, Charles Phelps (“Phelps”), informing him that sales representatives promoting automotive and industrial sales, such as Plaintiff, would no longer be promoting the outdoor warning line of products. Def.'s Facts ¶ 14. Plaintiff has testified that this letter essentially “fired” him from his position as an automotive and industrial sales representative, but that Phelps subsequently approved Plaintiff as a representative for Whelen's outdoor warning line of products. See id. ¶ 15; Pl.'s Resp. to Def.'s Facts ¶ 15; Pl.'s App. at 7 (Fesler Aff. ¶ 22). Plaintiff also continued to promote automotive products, despite Phelps' letter.¹³ Def.'s Facts ¶ 15. In April 1994, however, Whelen Vice President Howard Berke (“Berke”) sent Plaintiff a letter terminating him, without any sort of probationary period, from representation of Whelen's automotive products, effective May 31, 1994. Id. ¶ 18. Thereafter, Plaintiff continued to represent only Whelen's outdoor warning line of products. Id. Whelen Vice President Phil Kurze (“Kurze”) oversaw Plaintiff in this position.¹⁴

In September 1994, Plaintiff received a document entitled “Regional Sales Manager Policy” (the “1994 Policy”) that was applicable to Plaintiff's role as a representative for Whelen's outdoor warning product line. Id. ¶ 20. Like the 1985 Document, the 1994 Policy states in the very first section that “Whelen Engineering appoints Regional Sales Managers on a non-exclusive basis” and that “Sales Managers (or Representatives) are hired as independent contractors, not as employees.” ¹⁵ Pl.'s App. at 82. Also like the 1985 Document, the 1994 Policy stated that Regional Sales Managers were responsible for their own expenses, would be paid on a commission basis, and were subject to certain requirements and restrictions, such as visiting Whelen's plant, maintaining communication, and obtaining approval before selling competing products. See generally Pl.'s App. at 82–87. The final section of the 1994 Policy provided:

I.p. TERMINATION

I.p.1 Whelen Engineering reserves the right to terminate portions of territories or individual product lines of a given Regional Sales Manager.

I.p.2 Every effort will be made to provide warnings of a Sales Managers's failings.

I.p.3 If, in the opinion of the Management of Whelen Engineering Company, a Regional Sales Manager has not met general goals as detailed, such Regional Sales Manager may be put on “notice” (i.e. probationary period) up to 6 months that mandates improved performance. At the end of the time period, if revised targets and goals are not met, then the Company will, at its option, either aggressively look for a replacement Regional Sales Manager or may elect to notify the Regional Sales Manager of termination.

I.p.4 If termination is opted, commission payout will continue on any order booked before the effective date and invoiced subsequently.

I.p.5 If it is found that the Regional Sales Manager has sold or converted a customer to buy a competitors [sic] product, it is grounds for immediate termination.

I.p.6 Conduct that could harm the reputation of the company could also be grounds for immediate termination.

Pl.'s App. at 87. A policy very similar to the 1994 Policy was distributed in 1995 (the “1995 Policy”). The 1995 Policy was virtually identical to the 1994 Policy, including in its “termination” section; however, the 1995 Policy substituted the term “Authorized Managing Sales Representative” for the term “Regional Sales Manager.” ¹⁶ Def.'s Facts ¶ 21; Pl.'s App. at 88–94.

In a telephone conversation on July 11, 2007, Kurze informed Plaintiff that the relationship between Whelen and Plaintiff would terminate effective July 31, 2007. Def.'s Facts ¶ 23. Kurze made no mention of Plaintiff's performance in this conversation;...