Savage v. Scandit Inc.
| Decision Date | 01 May 2018 |
| Docket Number | Docket No. 45143 |
| Court | Idaho Supreme Court |
| Parties | Karen L. SAVAGE, Plaintiff-Appellant, v. SCANDIT INC., Defendant-Respondent. |
Givens Pursley, LLP, Boise, Attorney for appellant. Thomas Dvorak argued.
Hawley, Troxell, Ennis & Hawley, Boise, for respondent. Daylen John Ashby argued.
I. NATURE OF THE CASE
Karen Savage appeals the dismissal of her Idaho Wage Claim Act ("IWCA") action by the district court in Valley County. Savage brought this action against her employer Scandit Inc. ("Scandit") in November 2016 after Scandit failed to pay her over $400,000 in commissions and bonuses she claims were due by the end of October. The district court granted Scandit's motion to dismiss finding that Savage had failed to allege that she had earned the commissions as defined in the 2016 Commission Compensation Plan ("CCP") between Savage and Scandit. The district court also denied Savage's motion to amend, holding that the amendment would be futile. This case was decided upon Scandit's motion to dismiss. Consequently the facts are those set forth in the complaint and attachments.
II. FACTUAL AND PROCEDURAL BACKGROUND
Savage was employed by Scandit as a senior sales executive. In early 2016 both parties signed the CCP. On September 27, 2016, Savage coordinated a Master Software License Agreement with Amazon Services, LLC ("Amazon Agreement"). Savage's commission from the Amazon Agreement was $390,234. Savage alleges that the commission became due in late September or October of 2016. Scandit agrees that the commission was not paid during this time and agrees that at this stage Savage is entitled to the assumption that the prepayment was due. Both parties rely on section IV of the CCP, which in relevant part provides the following:
The Section continues on to discuss the criteria for a sale to be considered "booked."
Savage did not receive the payment when she alleges it was due and brought this suit seeking treble damages under the IWCA as well as contractual damages. Additionally, the contract provides for an annual quota bonus of $36,000 should her sales for the year surpass a certain quantity. The relevant section of the CCP states:
Employee will earn a bonus of USD 36,000 if the combined ACV [Annual Contract Value] of renewals and Orders equals CHF [Swiss Francs] 641,001 or more.
This threshold was crossed after Savage negotiated the Amazon Agreement. She alleges that the annual bonus became due as soon as the threshold was reached and seeks to recover treble damages for that sum as well.
After responding to the complaint, Scandit moved for the suit to be dismissed pursuant to Idaho Rule of Civil Procedure 12(b)(6) for failure to state a claim. Savage moved for leave to amend her complaint, seeking to include a variety of equitable theories. The district court granted Scandit's motion to dismiss and denied the motion to amend, holding that it would be futile. The district court held that because Amazon had not yet made payments on the agreement at the time Savage brought the suit that she had not earned the commission and was not entitled to relief under the IWCA. The district court also held that any attempt to amend the complaint would be futile on the basis that Savage could not allege that she had earned the commission prior to filing the suit. In dismissing the claim regarding the annual bonus, the district court held that the annual bonus was due at the end of the year and as such was not subject to the IWCA when the complaint was filed. Savage appealed both rulings.
III. ISSUES ON APPEAL
1. Whether the district court erred when it held that the commission fell outside of the IWCA as Savage had not yet earned the commission under the terms of her contract.
2. Whether the district court erred when it held that the annual bonus fell outside of the IWCA as the bonus was not yet due at the time the complaint was filed.
3. Whether the district court abused its discretion when it denied Savage's motion to amend her complaint finding that any such amendment would be futile.
4. Whether either party is entitled to attorney fees on appeal.
IV. STANDARD OF REVIEW
When this Court reviews an order dismissing an action pursuant to I.R.C.P. 12(b)(6), we apply the same standard of review we apply to a motion for summary judgment. A 12(b)(6) motion looks only at the pleadings to determine whether a claim for relief has been stated. On review of a dismissal this Court determines whether the non-movant has alleged sufficient facts in support of his claim, which if true, would entitle him to relief. In doing so, the Court draws all reasonable inferences in favor of the non-moving party.
Hammer v. Ribi , 162 Idaho 570, 573, 401 P.3d 148, 151 (2017) (internal quotations and citations omitted).
V. ANALYSIS
The district court dismissed Savage's IWCA claim seeking damages for an unpaid commission holding that under the terms of the contract Savage had not yet earned the commission and the IWCA did not apply to future wages. Wages are defined under the IWCA as "compensation for labor or services rendered by an employee, whether the amount is determined on a time, task, piece or commission basis." I.C. § 45-601(7). Employers are required to pay all wages due to their employees at least once every month. I.C. § 45-608(1). Employees who are harmed by an employer's failure to comply with the IWCA may file a complaint with the Department of Labor or bring a lawsuit seeking damages. I.C. §§ 45-608, 45-615. An employee who prevails in a suit under the IWCA is entitled to attorney fees and treble damages of the wages found "due and owing." I.C. § 45-615.
While employers are required to pay wages monthly, the employer and employee have a great deal of freedom to determine how that compensation will be paid.
Bakker v. Thunder Spring-Wareham, LLC , 141 Idaho 185, 190, 108 P.3d 332, 337 (2005). The IWCA requires "an employer only to pay a minimum wage for all hours worked and to pay employees at least monthly." Id. "Beyond that, the Wage Claim Act does not place any limitations on the ability of the employer and employee to contract for the terms of the employee's compensation." Id. In Bakker , a real estate agent sought to recover treble damages under the IWCA for commissions he argued he was owed under the law. Id. The Court recognized that a real estate agent generally is entitled to a commission when he or she finds a ready, willing, and able buyer to purchase property. However, the contract between Bakker and his employer required him to be employed at closing in order to receive the commission. Id. In finding for the employer, the Court stated "[a]s long as the employer is meeting the minimum wage requirements of state law, further compensation is subject to negotiations between the employer and employee." Id.
The district court held that the IWCA did not apply on the basis Savage's claims were for prepayments of future wages that she had not yet earned according to her contract. Future wages are not subject to the mandatory trebling provision of the IWCA. Moore v. Omnicare, Inc. , 141 Idaho 809, 819, 118 P.3d 141, 151 (2005). In distinguishing between future wages and those subject to the IWCA, this Court often looks to whether the employee is entitled to the wages for services rendered or whether there is more they must do in order to be entitled to the wages. See id. ; see also Nettleton v. Canyon Outdoor Media, LLC , 163 Idaho 70, 408 P.3d 68 (2017). In Nettleton , this Court vacated the grant of summary judgment in favor of an employee for unpaid commissions. See Nettleton , 163 Idaho at 71, 408 P.3d at 69. The employee alleged he was owed a commission for the rent of a billboard. Id. at 71–72, 408 P.3d at 69–70. The employer argued that the employee was not yet entitled to the commission as he was required to service the client account on an ongoing basis throughout the contract before he was entitled to the commission. Id. at 74, 408 P.3d at 72. In vacating the grant of summary judgment and remanding the case, this Court noted that there was a question of material fact as to whether the employee was entitled to the commission at the time he brought the suit. Id. If the employee was entitled to the commission at the time he brought the suit it would fall under the IWCA, if there was more that he was required to do then it would not. Id. In this case, so far as the record is concerned, Savage had no further duties to perform with regard to the agreement with Amazon. She had done what she was hired to do.
Savage alleges in her complaint that under the terms of the CCP she was entitled to payment of the commission at the time she filed her suit. The CCP is incorporated into the complaint and may be considered. Idaho Wool Growers Ass'n, Inc. v. State , 154 Idaho 716, 723, 302 P.3d 341, 348 (2012).
Section IV of the CCP addresses the payment of...
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