Little v. Ussc Group, Inc.

• Decision Date: 13 December 2005
• Docket Number: No. Civ.A. 05-1244.,Civ.A. 05-1244.
• Citation: 404 F.Supp.2d 849
• Parties: Ray W. LITTLE, and LTS, Inc. Plaintiffs, v. USSC GROUP, INC., and Christian Hammarskjold, Defendants.
• Court: U.S. District Court — Eastern District of Pennsylvania

404 F.Supp.2d 849

Ray W. LITTLE, and LTS, Inc. Plaintiffs, v. USSC GROUP, INC., and Christian Hammarskjold, Defendants.

No. Civ.A. 05-1244.

United States District Court, E.D. Pennsylvania.

December 13, 2005.

Julie A. Uebler, Uebler Law, Plymouth Meeting, PA, for Plaintiffs and Counter Defendant.

Richard A. Gaffin, Miller Canfield Paddock & Stone PC, Grand Rapids, MI, Morton F. Daller, Daller Greenberg & Dietrich, Conshohocken, PA, for Defendants.

Joseph F. Kampherstein, III, Daller Greenberg & Dietrich, Conshohocken, PA, for Defendants and Counter Claimants.

MEMORANDUM

ROBERT F. KELLY, District Judge.

This is a sales commission contract case. Ray Little ("Little") is the owner of LTS, Inc. ("LTS"), an independent sales representative firm. Little and LTS ("Plaintiffs") sued Defendants USSC Group, Inc. ("USSC") and its owner, Christian Hammarskjold ("Hammarskjold"), for allegedly failing to pay commissions, interfering with Plaintiffs' prospective relationship with a new entity, and violating Pennsylvania's Wage Payment and Collection Law. Defendants have filed a motion for summary judgment on all of Plaintiffs claims. For the following reasons, Defendants' motion for summary judgment is granted in part and denied in part.

I. RELEVANT BACKGROUND

USSC is a corporation located in King of Prussia, Pennsylvania, that manufactures and sells seats to the bus, train, auditorium and education markets. Hammarskjold is USSC's president and sole owner. In August 1998, USSC retained Little as an independent sales representative. Little is a Canadian citizen who lives within an hour and half to two hour drive of Toronto.

A month after USSC retained Little, USSC expressed immigration related-concerns over Little's ability to travel freely between the United States and Canada. USSC wanted Little to create a corporate entity. Little agreed and formed LTS in September, 1998 as a Canadian corporation. Little is the sole owner and employee of LTS. However, Little claims that he was an employee of USSC despite his independent contractor label. He had USSC business cards that identified him by his name and title as "Ray W. Little — Sales." The cards did not identify LTS. Furthermore, he claims that USSC group used Little's home address for any business it had with LTS.

On January 1, 2003, USSC and LTS entered into a Representative Agreement ("the Agreement") that superseded the August 1998 agreement. The Agreement states that it is "by and between USSC Group ... and LTS Inc." (Defs.' Mot. for Summ. J. Ex. 4 at 1). The Agreement governed the relationship between LTS and USSC, including how commissions were paid, expenses were reimbursed, and terminations were carried out. The Agreement also contains an integration clause, stating that the Agreement "constitutes the entire agreement between the parties...." (Id. at ¶ 8B).

On July 23, 2004, Hammarskjold, USSC's Director of Sales Rick Klotz ("Klotz"), and Beth Haley from USSC's human resources department met with Little. They questioned him about his reimbursement requests for June 24th and June 25th in which he stayed in a Toronto hotel with a female friend. After listening to Little's answers to their questions, Hammarskjold and Klotz asked Little to leave the room so they could speak in private. When Little returned Hammarskjold terminated him for engaging in "conduct harmful to the company." (Little Dep. Tr. at 117). According to Little, Hammarskjold explained his definition of "harmful conduct" when he told Little, "You were bopping your girlfriend on the company dime." (Id.).

Defendants' current motion expands on Hammarskjold's explanation and presents a more detailed list of Little's faulty reimbursement requests that, to them, constituted "conduct harmful to the company." Little sought reimbursement for: personal cell phone calls, including calls to his girlfriend (Id. at 70-72); cell phone minutes consumed while calling a date line (Id. at 107-08); hotel rooms in the Toronto area where his girlfriend would visit him (Id. at 83-86; Defs.' Ex. 5-11); and meals for his girlfriend and himself. (Id. at 96, 99). According to Defendants', Little also attached the same phone bill to two different expense reports and submitted incorrect meal reimbursement requests. (Id. at 78-79; Defs.' Ex. 5).

Little disagrees and presents a different story. According to Little, he was surprised to be fired for engaging in "conduct harmful to the company," but he had an inkling that he was going to be fired. Notably, Little does not dispute that he submitted the expense reports Defendants allege. He argues that the offending expense reports were either proper or, if harmful to the company, too old to use as the basis for terminating him on July 23, 2004. Little concedes that submitting a reimbursement request for cell phone minutes consumed while calling a date line was grounds for his termination. However, when it happened, USSC and Little came to an understanding that Little would never submit another improper expense report again. In fact, after reprimanding Little, Defendants agreed not to put the incident on Little's permanent record. Perhaps because there was no permanent record of the incident, the parties cannot remember when this incident occurred. Hammarskjold could not remember if it happened a year ago or two years before July 23, 2004. (Hammarskjold Dep. Tr. at 108).

Little states that every other reimbursement request was both reasonable and necessary business expenses. He argues that his girlfriend's involvement is irrelevant because the cost to the company was the same. Both parties agree that the hotel did not charge more for accommodating two people rather than one. Little asserts that he made a reasonable amount of personal phone calls and meal requests while traveling and argues that who he called or ate with is irrelevant. Any other incorrect reimbursement request error, he states, was a mistake and while he admits he should not have been reimbursed for it, he does not think he should have been fired for an honest mistake.

As stated above, Little claims to have had an inkling that he would be terminated before July 23, 2004. He based this belief on USSC's repeated requests for contract negotiations. According to Little, after signing the January 1, 2003 Agreement, USSC wanted to decrease the base salary and commission percentage LTS received. Klotz had presented Little with new versions of the existing Agreement that Little refused to sign. During the months prior to being terminated on July 23, 2004, Little claims to have earned $110,836.25 in commissions, but was paid a total of $18,955.15 by USSC in August 2004. Defendants assert that they are not required to pay the commission because of the Agreement's termination "for cause" provision.

By terminating the contract on July 23, 2004 without paying the commissions allegedly earned, Plaintiffs contend that Defendants breached the January 1, 2003 Agreement. They believe they are entitled to the outstanding commissions earned prior to July 23, 2004 in the amount of $91,881.10 regardless of whether they were terminated "for cause." Plaintiffs also believe that they were not fired "for cause" and, pursuant to the "without cause" clause in the Agreement, USSC was required to provide 30 days notice of termination during which Plaintiffs would continue to be paid their salary and commissions. Therefore, Plaintiffs argue that Defendants must also pay LTS and Little 30 days base salary and commissions on sales that were booked between July 23, 2004 and August 23, 2004. Plaintiffs also allege that by refusing to pay the commissions earned, Defendants violated Pennsylvania's Wage Payment and Collection Law.

Defendants argue that not only was the firing "for cause," but also that Plaintiffs' right to compensation, including previously earned commissions, was extinguished on July 23, 2004. Defendants also argue that Plaintiffs are not entitled to protections of Pennsylvania's Wage Payment and Collection Law.

II. STANDARD OF REVIEW

Pursuant to Rule 56(c) of the Federal Rules of Civil Procedure, summary judgment is proper "if there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law." FED. R. CIV. P. 56(c). Essentially, the inquiry is "whether the evidence presents a sufficient disagreement to require submission to the jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The moving party has the initial burden of informing the court of the basis for the motion and identifying those portions of the record that demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). An issue is genuine only if there is a sufficient evidentiary basis on which a reasonable jury could find for the non-moving party. Anderson, 477 U.S. at 249, 106 S.Ct. 2505. A factual dispute is material only if it might affect the outcome of the suit under governing law. Id. at 248, 106 S.Ct. 2505.

To defeat summary judgment, the nonmoving party cannot rest on the pleadings, but rather that party must go beyond the pleadings and present "specific facts showing that there is a genuine issue for trial." FED. R. CIV. P. 56(e). Similarly, the nonmoving party cannot rely on unsupported assertions, conclusory allegations, or mere suspicions in attempting to survive a summary judgment motion. Williams v. Borough of W. Chester, 891 F.2d 458, 460 (3d Cir.1989)(citing Celotex, 477 U.S. at 325, 106 S.Ct. 2548 (1986)). Further, the nonmoving party has the burden of producing evidence to establish prima facie each element of its claim. Celotex, 477 U.S. at 322-23, 106 S.Ct. 2548. If the court, in viewing all reasonable inferences in favor of the non-moving party, determines that there is no genuine...