Kulinski v. Medtronic Bio-Medicus, Inc.

• Decision Date: 02 May 1997
• Docket Number: BIO-MEDICU,INC,Nos. 95-3682,95-3803,s. 95-3682
• Citation: 112 F.3d 368
• Parties: 134 Lab.Cas. P 58,264, 21 Employee Benefits Cas. 2243, 3 Wage & Hour Cas.2d (BNA) 1637 James M. KULINSKI, Appellant, v. MEDTRONIC, Appellee. James M. KULINSKI, Appellee, v. MEDTRONIC, Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 368

112 F.3d 368

134 Lab.Cas. P 58,264, 21 Employee Benefits

Cas. 2243,

3 Wage & Hour Cas.2d (BNA) 1637

James M. KULINSKI, Appellant, v. MEDTRONIC BIO-MEDICUS, INC., Appellee.

James M. KULINSKI, Appellee, v. MEDTRONIC BIO-MEDICUS, INC., Appellant.

Nos. 95-3682, 95-3803.

United States Court of Appeals Eighth Circuit.

Submitted Oct. 23, 1996.

Decided May 2, 1997.

Stephen Paul Kelley, argued, Minneapolis, MN (Joanne H. Turner, Minneapolis, MN, on the brief), for appellant.

Jeffrey John Keyes, argued, Minneapolis, MN (Jay W. Schlosser, Minneapolis, MN, on the brief), for appellee.

Before BRIGHT and MURPHY, Circuit Judges. ^*

BRIGHT, Circuit Judge.

James M. Kulinski brought this state law breach of contract action against Medtronic Bio-Medicus, Inc. (Medtronic). The district court dismissed Kulinski's action pursuant to Minnesota's statute of limitations for wage claims, Minn.Stat. § 541.07(5)(1990). Kulinski appealed and Medtronic filed a protective cross-appeal arguing that Kulinski's claim was precluded by res judicata. We reversed the dismissal of Kulinski's claim but affirmed the denial of Medtronic's cross-appeal. Kulinski v. Medtronic Bio-Medicus, Inc., 108 F.3d 904 (8th Cir.1997). Medtronic then filed a petition for rehearing by this panel as well as a suggestion for rehearing en banc. We granted the petition for rehearing by the panel and vacated the panel's original opinion, thereby rendering the request for a rehearing en banc moot.

On rehearing by the panel we again agree with the district court's conclusions that the Minnesota statute of limitations, Minn.Stat. § 541.07(5)(1990), applies and again affirm the dismissal of Medtronic's cross-appeal. However, we certify to the Minnesota Supreme Court, pursuant to Minn.Stat. § 480.061 (1996), the question of the district court's rejection of the application of the savings statute, Minn.Stat. § 541.18 (1990), to the facts of this case.

BACKGROUND

Kulinski worked for Bio-Medicus, Inc. (Bio-Medicus) as its national sales manager. In January 1990, Kulinski executed a change-of-control termination agreement (CCTA), or "golden parachute" agreement, with Bio-Medicus. This CCTA entitled Kulinski to a lump sum payment as severance if his employment terminated or was otherwise detrimentally affected as the result of a hostile takeover of Bio-Medicus. In June 1990, Kulinski signed a second CCTA that entitled him to severance benefits if his employment terminated or was detrimentally affected as the result of a friendly merger.

In September 1990, Bio-Medicus merged with Medtronic, Inc. to form Medtronic Bio-Medicus, Inc. (Medtronic). Kulinski refused the merged entity's offer of a two-year position at a reduced salary. Kulinski resigned and notified Bio-Medicus and Medtronic, Inc. that he experienced a "change of control termination" under the second CCTA. Bio-Medicus rejected Kulinski's request for his lump sum severance payment.

Kulinski brought his first action against Medtronic on February 26, 1991, asserting a claim under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. §§ 1001-1461 (1988 & Supp. III 1991), for breach of the CCTA. Both parties and the district court agreed that federal question jurisdiction existed under ERISA. Kulinski did not bring any pendant state law claims at this time. After a bench trial, the district court awarded Kulinski $254,566 in severance pay, in addition to attorney's fees, costs, and prejudgment interest.

Medtronic appealed without challenging the application of ERISA. This court held, sua sponte, that no ERISA plan existed and, therefore, the district court lacked subject matter jurisdiction. Kulinski v. Medtronic Bio-Medicus, Inc., 21 F.3d 254, 258 (8th Cir.1994). We vacated the judgment for Kulinski and remanded the case with instructions to dismiss for lack of subject matter jurisdiction. Id. Kulinski then moved to amend his ERISA complaint to allege a state law breach of contract claim under diversity jurisdiction. The district court denied Kulinski's motion and dismissed the case with prejudice.

Kulinski appealed that decision on July 18, 1994. This court upheld the district court's decision to dismiss Kulinski's ERISA action with prejudice. Kulinski v. Medtronic Bio-Medicus, Inc., 60 F.3d 830 (8th Cir.1995) (per curiam) (unpublished).

Before we reviewed that appeal, however, Kulinski filed a new action against Medtronic in federal district court based on diversity jurisdiction. Kulinski raised the state law breach of contract claim that the district court previously dismissed by rejecting Kulinski's motion to amend his first (ERISA) action. Medtronic moved to dismiss this second action pursuant to Fed.R.Civ.P. 12(b)(6) on the grounds of res judicata and the statute of limitations. The district court held Medtronic's motion under advisement pending Kulinski's appeal.

After Kulinski lost his appeal, the district court granted Medtronic's motion to dismiss Kulinski's state law action as barred by Minnesota's statute of limitations for wage claims, Minn.Stat. § 541.07(5). The court, however, rejected Medtronic's argument that res judicata precluded Kulinski's action. These appeals followed.

DISCUSSION

Kulinski raises three issues on appeal. Kulinski first argues that his claim is not barred by the statute of limitations because he is not bringing a claim for "wages" for purposes of Minn.Stat. § 541.07(5). Kulinski also argues that, even if the statute applies, his claim is not subject to the statute of limitations because the claim is saved under Minn.Stat. § 541.18 (1990). In the alternative, Kulinski seeks equitable relief from the statute of limitations. In addition to contesting Kulinski's appeal, Medtronic argues that Kulinski's claim is precluded by res judicata. We review the district court's dismissal of Kulinski's complaint de novo, Carney v. Houston, 33 F.3d 893, 894 (8th Cir.1994), and presume all of Kulinski's factual allegations as true. Miree v. DeKalb County, Georgia, 433 U.S. 25, 27 n. 2, 97 S.Ct. 2490, 2492-93 n. 2, 53 L.Ed.2d 557 (1977).

I.

According to Minn.Stat. § 541.07(5), an action shall be commenced within two years if it is:

For the recovery of wages or overtime or damages, fees or penalties accruing under any federal or state law respecting the payment of wages or overtime or damages, fees or penalties except, that if the employer fails to submit payroll records by a specified date upon request of the department of labor and industry or if the nonpayment is willful and not the result of mistake or inadvertence, the limitation is three years. (The term "wages" means all remuneration for services or employment, including commissions and bonuses and the cash value of all remuneration in any medium other than cash, where the relationship of master and servant exists ...)[.]

Id.

It is undisputed that the time allotted in § 541.07(5) expired before Kulinski filed this diversity action. Nearly four years passed between Medtronic's alleged breach of contract in 1990 and the filing of Kulinski's second action in 1994. Kulinski, however, argues that § 541.07(5) is not applicable because he does not bring a claim for "wages" within the meaning of that section. Instead, Kulinski argues that his action is covered by Minnesota's six-year statute of limitations for actions based "[u]pon a contract or other obligation, express or implied, as to which no other limitation is expressly prescribed...." Minn.Stat. § 541.05, subd. 1(1) (1990). We disagree.

Although it appears that no Minnesota court has specifically addressed whether wages under § 541.07(5) include severance benefits, Minnesota courts consistently hold that "all damages arising out of the employment relationship are subject to [§ 541.07(5) ]." Stowman v. Carlson Companies, Inc., 430 N.W.2d 490, 493 (Minn.Ct.App.1988) (applying Portlance v. Golden Valley State Bank, 405 N.W.2d 240, 243 (Minn.1987)); see also Levin v. C.O.M.B. Co., 441 N.W.2d 801, 804 (Minn.1989) (unpaid commissions due pursuant to an employment contract); Portlance, 405 N.W.2d at 243 (wrongful discharge based on an oral contract of employment allegedly modified by an employees' manual); Worwa v. Solz Enters., Inc., 307 Minn. 490, 238 N.W.2d 628, 631 (1976) (contractual wage claims); Roaderick v. Lull Eng'g Co., 296 Minn. 385, 208 N.W.2d 761, 762-63 (1973) (commission or bonus payments); Kohout v. Shakopee Foundry Co., 281 Minn. 401, 162 N.W.2d 237, 239-40 (1968) (accrued but unpaid vacation pay); Kletschka v. Abbott-Northwestern Hosp., Inc., 417 N.W.2d 752, 755 (Minn.Ct.App.1988) (salary increases and "adjustment of all fringe benefits"); cf. Adamson v. Armco, Inc., 44 F.3d 650, 652-53 (8th Cir.) (construing Stowman to conclude that Minnesota courts construe § 541.07(5) broadly), cert. denied, 516 U.S. 823, 116 S.Ct. 85, 133 L.Ed.2d 42 (1995). The Minnesota Supreme Court has also explicitly recognized the "broad definition of wages stated in [§ 541.07(5) ]...." Roaderick, 208 N.W.2d at 763.

In light of the consistently broad construction given to § 541.07(5), we affirm the district court in considering Kulinski's claim as one within the general concept of wages. ¹ The district court did not err in applying the two-year limitation under § 541.07(5).

II.

Kulinski argues that even if the statute of limitations applies, his claim is "saved" by Minnesota's savings statute:

Except where the uniform commercial code otherwise prescribes, if judgment be recovered by plaintiff in an action begun within the prescribed period of limitation and such judgment be afterward arrested or reversed on error or appeal, the plaintiff may begin a new action within one year after such reversal or arrest.

Minn.Stat. § 541.18 (1990). This statute, virtually unchanged since its enactment in 1851, is rarely utilized and is not interpreted by any appellate court. Furthermore, no legislative history is available. The district court considered the savings statute ...