Linkevich v. Smithfield Foods, Inc.
| Decision Date | 19 February 2021 |
| Docket Number | C.A. No. 20-022 WES |
| Citation | 520 F.Supp.3d 150 |
| Court | U.S. District Court — District of Rhode Island |
| Parties | Richard LINKEVICH, Plaintiff, v. SMITHFIELD FOODS, INC., et al., Defendants. |
Charles S. Kirwan, Kirwan Law, Mark P. Gagliardi, Law Office of Mark P. Gagliardi, Providence, RI, for Plaintiff.
Andrea R. Calem, Pro Hac Vice, Hunton Andrews Kurth LLP, Washington, DC, Kimberlee W. DeWitt, Pro Hac Vice, Hunton Andrews Kurth LLP, Richmond, VA, Jonathan R. Shank, Jackson Lewis P.C., Boston, MA, for Defendants.
Defendants move for judgment on the pleadings, arguing that all claims in Plaintiff's Complaint are based on a statute under which such claims are barred. In response, Plaintiff seeks to amend his complaint to reconfigure his claims and advance a different theory of the case. For the reasons set forth below, both Defendants’ Motion for Judgment on the Pleadings, ECF No. 14, and Plaintiff's Motion for Leave to File Second Amended Complaint ("Motion to Amend"), ECF No. 20, are DENIED.
According to the Complaint (which facts are assumed to be true for purposes of Defendants’ Motion, see Shay v. Walters, 702 F.3d 76, 79 (1st Cir. 2012) (citation omitted)), Plaintiff Richard Linkevich worked for Defendants Smithfield Foods, Inc. and Smithfield Packaged Meats Sales Corp. (collectively "Smithfield") as their East Coast Regional Sales Manager from 2006 until 2018. First Am. Compl. ¶ 7, ECF No. 4. In each of those years, the terms of Linkevich's employment were governed in part by Smithfield's "27-Paycheck Annual Total Compensation Contracts." Id. at ¶ 77. Each year, the contract provided that Plaintiff would receive 26 biweekly base-salary payments followed by a substantial 27th payment, the amount of which was set in advance as a percentage of his annual base salary. Id. at ¶¶ 78, 93. This final paycheck was contingent both on Smithfield reporting a specified minimum operating profit for the year and on Linkevich reaching or exceeding a predetermined sales goal that year. Id. at ¶¶ 78, 92; see also Fiscal Year 2018 Sales Incentive Plan, ECF No. 5. Additionally, the contract stated that Smithfield "w[ould], in its sole discretion, make all determinations regarding whether all qualifiers h[ad] been achieved." Fiscal Year 2018 Sales Incentive Plan 2. Linkevich was paid this 27th paycheck following each of his first twelve years at the company. First Am. Compl. ¶ 80.
Linkevich reached his sales goals for the 2018 year, but Smithfield did not pay him the 27th paycheck, calculated at a sum of $50,365.20. Id. at ¶ 109. "[A]ll other employees" received their final paychecks that year, and Linkevich is not aware of any instance in which an employee did not receive the 27th paycheck after reaching sales goals. Id. at ¶¶ 86, 107. Linkevich claims that Smithfield has therefore defaulted on its contractual wage payment obligations in violation of the Rhode Island Payment of Wages Act ("RIPWA") and breached the covenant of good faith and fair dealing. Id. at ¶¶ 41-47.
Smithfield filed the instant Motion for Judgment on the Pleadings, arguing that the 27th paycheck represented a discretionary bonus – not wages - and that the action therefore cannot be brought under RIPWA. See Mem. Supp. Mot. J. Pleadings 1, ECF No. 15. After several extensions, Linkevich responded by filing the instant Motion to Amend in an attempt to address the perceived deficiencies of the First Amended Complaint, ECF No. 4.
A motion for leave to file amended pleadings should be freely granted when justice so requires. Fed. R. Civ. P. (15)(a)(2). However, such a motion should be denied as futile when the amended complaint could not survive a motion to dismiss. Glassman v. Computervision Corp., 90 F.3d 617, 623 (1st Cir. 1996).
When considering a motion for judgment on the pleadings, the Court "take[s] the well-pleaded facts and the reasonable inferences therefrom in the light most favorable to the nonmovant." Kando v. R.I. State Bd. of Elections, 880 F.3d 53, 58 (1st Cir. 2018) (citation omitted). Facts drawn from documents "fairly incorporated" in the pleadings and facts "susceptible to judicial notice" may be considered. Id. (citation and quotation omitted). The motion should be granted "only if the properly considered facts conclusively establish that the movant is entitled to the relief sought." Id. (citation omitted).
In response to Defendants’ Motion for Judgment on the Pleadings, Plaintiff attempts to alter course by framing his claim as one based on a theory of quasi-contract. See Mot. to Amend 4.1 However, this amendment would not provide Plaintiff with any additional protection. In general, quasi-contract claims only exist where there is no contract concerning the issue. See J. Bowers Constr. Co. v. Gilbert, 18 N.E.3d 770, 774 (Ohio Ct. App. 2014) ; see also Bloomgarden v. Coyer, 479 F.2d 201, 210 (D.C. Ct. App. 1973) ().
Rhode Island cases have also supported this proposition. In one case, a construction contract with defined terms of payment came under fire when changing conditions at the construction site unexpectedly raised the construction company's expenses. Fondedile, S.A. v. C.E. Maguire, Inc., 610 A.2d 87, 90-91 (R.I. 1992). When the construction company sued for its extra costs, the court held that the quasi-contract claim failed because the plaintiff did not "confer a benefit on [the] defendants for which [the] defendants did not bargain," suggesting that the existence of a prior bargain can negate a quasi-contract claim. Id. at 97. Here, the fact that there was a pre-existing contract regarding the payment of the 27th paycheck precludes any quasi-contract claim.
Thus, the Motion to Amend must be denied as futile, and the Court will analyze the Defendants’ Motion for Judgment on the Pleadings using the First Amended Complaint, ECF No. 4.
Smithfield argues the First Amended Complaint fails to state any claim upon which relief can be granted because RIPWA excludes bonuses from the scope of the statute. See Mem. Supp. Mot. J. Pleadings 4-5. This argument boils down to two assertions: (1) that Plaintiff's complaint alleges only claims under RIPWA and (2) that the 27th paycheck is a bonus and therefore unactionable under RIPWA. The first of these assertions is false, and the second concerns a factual issue that cannot be settled at this juncture.
In his First Amended Complaint, Linkevich includes a common law claim for breach of the covenant of good faith and fair dealing. First Am. Compl. 47-48. Under Rhode Island law, a breach of the covenant of good faith and fair dealing can be established based on a defendant's exercise of a discretionary term in a contract. See Ross-Simons of Warwick, Inc. v. Baccarat, Inc., 66 F. Supp. 2d 317, 329 (D.R.I. 1999) ; Town of Narragansett v. Palmisciano, 2006 WL 3290846, at *5 (R.I. Sup. Ct. 2006). As such, Smithfield's first assertion is incorrect; Linkevich does not solely allege claims under RIPWA. Therefore, even if the Motion for Judgment on the Pleadings were successful, it would fail with regards to the breach of covenant claim.
However, most of Linkevich's claims do rely on RIPWA, so Smithfield's contention regarding the scope of the statute must be evaluated. RIPWA provides a cause of action to employees who have not been paid wages by their employers. See R.I. Gen. Laws § 28-14-20(b). An employee who prevails in such an action is entitled to recover two times the wages owed. Id. § 28-14-20(d). The definition of wages includes commissions. See R.I. Gen. Laws § 28-14-1(4). Agreements "relating to the payment of any bonus[,]" though, are not subject to the protections of the Act. Id. § 28-14-9. Smithfield argues that the payments at issue in this case are bonuses and therefore not actionable under RIPWA. Mem. Supp. Mot. J. Pleadings 1, 4-5.
Rhode Island courts apparently have not addressed the definition of "bonus" under § 28-14-9. See Mem. Supp. Mot. J. Pleadings 4 ("Defendants have been unable to locate any Rhode Island cases discussing R.I.G.L. § 28-14-9 ...."). "Where a federal court must interpret an area of unsettled state law, its task is to forecast how the highest court of that state would decide the issue." Torres–Negron v. Rivera, 413 F. Supp. 2d 84, 85 (D.P.R. 2006) (citing In re Boston Reg'l Med. Ctr., Inc., 410 F.3d 100, 108 (1st Cir. 2005) ). This inquiry entails "consult[ing] the types of sources that the [Rhode Island Supreme Court] would be apt to consult, including analogous opinions of that court, decisions of lower courts in the state, precedents and trends in other jurisdictions, learned treatises, and considerations of sound public policy." Butler v. Balolia, 736 F.3d 609, 613 (1st Cir. 2013).
Black's Law Dictionary defines a "bonus" as a Bonus, Black's Law Dictionary (11th ed. 2019). The 27th paycheck program, which the Complaint portrays as part of Linkevich's expected yearly compensation, falls outside of the definition of "bonus." See First Am. Compl. ¶ 19 ().
In the same vein, persuasive authority demonstrates a trend towards distinguishing between discretionary bonuses, which are additional compensation that the employer has no obligation to pay, and non-discretionary incentive payments, which are more akin to earned wages than bonuses, and which the employer must...
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