Pfs Distribution Co. v. Raduechel
| Decision Date | 09 August 2005 |
| Docket Number | No. CIV.4:04 CV 10329.,CIV.4:04 CV 10329. |
| Citation | 387 F.Supp.2d 1020 |
| Parties | PFS DISTRIBUTION COMPANY and Pilgrim's Pride Corporation of Delaware, Inc., Plaintiffs, v. Darrell RADUECHEL, Barry Spain and D & B Solutions, Inc., Defendants. |
| Court | U.S. District Court — Southern District of Iowa |
William Lynch Schaller, John M. Murphy, Ethan A. Berghoff, Baker & McKenzie LLP, Chicago, IL, Michael W. Thrall, Nyemaster, Goode, West, Hansell & O'Brien, P.C., Des Moines, IA, for Plaintiffs: PFS Distribution Company and Pilgrim's Pride Corporation of Delaware, Inc.
Gordon Fischer, Bradshaw, Fowler, Proctor & Fairgrave, P.C., Des Moines, IA, for Defendants: Darrell Raduechel, Barry Spain and D & B Solutions, Inc.
Mark D. Walz, Stanley J. Thompson, Davis, Brown, Koehn, Shors & Roberts, P.C., Des Moines, IA, for Defendants: MidwestOne Bank & Trust, Steven P. Hicks and John Pothoven.
Megan M. Antenucci, David L. Phipps, Whitfield & Eddy, P.L.C., Des Moines, IA, for Defendants: Richard R. Donohue.
Glenn L. Smith, Kami M. Lang, Finley, Alt, Smith, Scharnberg, May & Craig, P.C., Des Moines, IA, for Defendants: Theobald, Donohue & Thompson, P.C.
On or about February 7, 2005, plaintiff PFS Distribution Company ("PFS") filed a motion to dismiss defendant Raduechel's counterclaim. Defendant Darrell Raduechel resisted the motion February 24, and plaintiff filed a reply memorandum on March 8, 2005.
In addition, on April 19, 2005, Raduechel filed a Rule 11 motion for sanctions. PFS resisted the motion on May 6, 2005. Both motions are fully submitted.
The facts leading up to this action were set forth in detail in this Court's August 11, 2004 Order granting plaintiff's motion for a preliminary injunction, and need not be repeated here. Subsequent to the Court's Injunction Order, on January 17, 2005, defendant Darrell Raduechel filed a four-count counterclaim seeking funds he claimed PFS owed him as a bonus for fiscal year 2004.1 Count I of the counterclaim alleges PFS' failure to pay to pay his bonus violated the Iowa Wage Payment Collection Act, ("IWPCA"), Iowa Code §§ 91A.1 et seq. In count II of the counterclaim, Raduechel contends PFS' failure and/or refusal to pay the 2004 bonus breached unspecified oral contracts. Count III alleges PFS' refusal to pay the bonus breached a written contract signed by the parties in 2003, the Sales/Distribution Branch Incentive Plan ("the Incentive Plan"). Lastly, count IV sets forth a cause of action for promissory estoppel.
PFS now moves to dismiss all counts pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure.
This Court cannot dismiss any count in Raduechel's counterclaim pursuant to Federal Rule of Civil Procedure 12(b)(6) unless it appears beyond doubt he can prove no set of facts that would entitle him to relief. Rosenberg v. Crandell, 56 F.3d 35, 37 (8th Cir.1995) (quoting Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)). "`The issue is not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims ...'" Rosenberg, 56 F.3d at 37 (quoting Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974)). In determining whether to grant a motion to dismiss, a court should examine the claim in the light most favorable to the nonmoving party, and should construe all allegations contained in the claim as true. Kohl v. Casson, 5 F.3d 1141, 1148 (8th Cir.1993). A court should grant a motion to dismiss "`as a practical matter ... only in the unusual case in which a [claimant] includes allegations that show on the face of the [claim] that there is some insuperable bar to relief.'" Frey v. City of Herculaneum, 44 F.3d 667, 671 (8th Cir.1995) (quoting Alexander v. Peffer, 993 F.2d 1348, 1349 (8th Cir.1993)).
Count I of Raduechel's counterclaim alleges that PFS' decision not to pay Raduechel a bonus for fiscal year 2004 violated the IWPCA. See Counterclaim at ¶¶ 2-5. This statute was enacted "to facilitate the collection of wages owed to an employee." Phipps v. IASD Health Services Corp., 558 N.W.2d 198, 201 (Iowa 1997). The Iowa Supreme Court has held, and PFS does not dispute, that a bonus falls within the statutory definition of "wages." See, e.g., Runyon v. Kubota Tractor Corp., 653 N.W.2d 582, 585 (Iowa 2002) (citing Dallenbach v. Mapco Gas Products, Inc., 459 N.W.2d 483, 488 (Iowa 1990)).
In moving to dismiss this count, PFS argues that under the terms of the Incentive Plan, PFS retained the right to deny Raduechel a bonus if PFS believed Raduechel's job performance was unsatisfactory, and/or that his attitude was not in the company's best interest. Paragraph (1) of the Incentive Plan's "General Provisions and Conditions" provides as follows:
A participant whose general job performance is unsatisfactory, or whose managerial attitude is not in the best interest of the Company, will normally not receive incentive payment at the rate indicated. When and if such reductions are necessary, the degree of reduction will be determined by the appropriate officer of the Company, and under extreme conditions the payment may be reduced to zero.
Exh. B to Counterclaim at 3, ¶ 1. PFS contends that this paragraph vested PFS with complete discretion to deny Raduechel any bonus money, and that PFS' decision is non-reviewable by this Court. See, e.g., Vigoro Indus., Inc. v. Crisp, 82 F.3d 785, 791 (8th Cir.1996) ().
In Vigoro, which involved facts remarkably similar to the present case, the plaintiff corporation brought a multi-count action against its former general manager and others alleging the former manager wrongfully solicited the plaintiff's customers and established a competitive enterprise while under the plaintiff's employ. Id. at 787-88. As in the present case, the defendant filed a counterclaim against the corporation, alleging he was wrongfully denied bonus money under a written incentive plan. Id. at 791. This incentive plan included language allowing the corporation to deduct from the manager/defendant's annual bonus "amounts Management deems appropriate as a penalty for mismanagement of total assets of the Farmarket." Id. When the manager/defendant left to form his competing business, the corporation relied on this language to deny a bonus for the year in which the manager/defendant resigned. Id.
Following a one-week bench trial, the district court found in favor of the corporation on the claim of breach of the manager/defendant's duty to the corporation, but also awarded the manager/defendant a lesser amount on his counterclaim for the denied bonus money. Id. at 787. On appeal, the Eighth Circuit affirmed the award in favor of the corporation for breach of duty, but reversed the amount entered on the manager/defendant's counterclaim. As explained by the court: "When a contract term leaves a decision to the discretion of one party, that decision is virtually unreviewable." Id. at 791; see also Brozo v. Oracle Corp., 324 F.3d 661, 667 (8th Cir.2003) ().
This Court sees no significant basis on which to distinguish Vigoro from the facts in the present case. Similar to the language in Vigoro, which authorized "management" to deduct amounts deemed "appropriate" for mismanagement of company funds, see id. at 791, the Incentive Plan authorizes an "appropriate [PFS] officer" to reduce the rate of Raduechel's bonus if his "general job performance is unsatisfactory, or [his] managerial attitude is not in the best interest of the Company." Exh. B to Counterclaim at 3, ¶ 1. The "appropriate officer" may also reduce the bonus to zero under "extreme conditions." Id. Clearly, the "appropriate [PFS] officer" has complete discretion in making a reduction under either of the above clauses. There is no mechanism by which Raduechel, the "participant," may challenge the officer's decision. See id.2
Admittedly, both Brozo and Vigoro cited an exception to the general rule of non-reviewability in the case of fraud, bad faith or gross mistake of judgment. See Brozo, 324 F.3d at 667; Vigoro, 82 F.3d at 791. Nowhere in his counterclaim does Raduechel allege that PFS' conduct in denying him a bonus rose to this level, however. Nor does he suggest the language of the Incentive Plan is in any way ambiguous. See City of Marshall, Minnesota v. Heartland Consumers Power Dist., 384 F.3d 517, 519 (8th Cir.2004) () (quoting Brozo, 324 F.3d at 667).3
Raduechel attempts to survive dismissal by arguing it is unclear whether an appropriate PFS officer in fact made the decision to deny his bonus, noting the letter informing him he had been denied a bonus was signed only by Jane T. Brookshire, senior vice president of human resources for PFS' parent company. See Exh. A. to Counterclaim. Raduechel also contends that he should be allowed to develop the record to establish that his conduct was not, in fact, "extreme."
As for Ms. Brookshire's alleged authority, the very fact PFS has moved to dismiss the counterclaim establishes that the "appropriate officer" made, or at least ratified, the decision to deny a bonus. With regard to the latter argument, the Incentive Plan leaves to PFS' sole discretion whether certain conduct is "extreme." Exh. B. to Counterclaim at 3, ¶ 1. Under Vigoro, this decision is "virtually unreviewable." Vigoro, 82 F.3d at 791.
Lastly, Raduechel argues that, in its August 11, 2004 Preliminary Injunction...
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...582, 585 (Iowa 2002) (citing Dallenbach v. Mapco Gas Prod., Inc., 459 N.W.2d 483, 488 (Iowa 1990)); see also PFS Distrib. Co. v. Raduechel, 387 F.Supp.2d 1020, 1022 (S.D.Iowa 2005). We must examine the terms of the employment contract to determine if Guerrero was improperly denied a bonus. ......