Wilson v. Montgomery Ward & Co., Inc.

• Decision Date: 13 June 1985
• Docket Number: Civ. No. F 84-112.
• Citation: 610 F. Supp. 1035
• Parties: Anna WILSON, Plaintiff, v. MONTGOMERY WARD & CO., INC., Defendant.
• Court: U.S. District Court — Northern District of Indiana

610 F. Supp. 1035

Anna WILSON, Plaintiff, v. MONTGOMERY WARD & CO., INC., Defendant.

Civ. No. F 84-112.

United States District Court, N.D. Indiana, Fort Wayne Division.

June 13, 1985.

Paul O. Sauerteig, Snow & Sauerteig, Mark Paul Smith, Krueckeberg & Smith, Fort Wayne, Ind., for plaintiff.

James P. Fenton and Bert J. Dahm, Barrett, Barrett & McNagy, Fort Wayne, Ind., for defendant.

MEMORANDUM OPINION AND JUDGMENT

WILLIAM C. LEE, District Judge.

This matter is before the court for a decision on the merits following a bench trial. This case deals with the breach of an alleged oral contract and a violation of certain Indiana wage statutes, I.C. 22-2-5-1, et seq. This court, having examined and considered the entire record and having determined the credibility of the witnesses, after viewing their demeanor and considering their interests, and being duly advised, hereby enters the following Findings of Fact and Conclusions of Law pursuant to Rule 52(a) of the Federal Rules of Civil Procedure.

FINDINGS OF FACT

The plaintiff Anna Wilson ("Wilson") is a citizen and resident of Florida, although she was a citizen of Indiana at the time she filed this action. Wilson was employed by the defendant ("Wards"), an Illinois corporation, for approximately twenty-six years, from 1957 to April, 1983. In September, 1979, Wilson became the Operations Manager of the Wards store at the Northcrest Shopping Center in Fort Wayne, Indiana (the "Fort Wayne North" store). The Operations Manager is considered the "second in command" in the managerial structure of a Wards store, subordinate only to the Store Manager.

On January 20, 1983, Wards announced that it would be closing four stores, including the Fort Wayne North store. Approximately four days later, the Store Manager for the Fort Wayne North store quit, effectively leaving Wilson in charge of the management of the store.

On February 11, 1983, Wards held a meeting at its Merrillville, Indiana store. Present at the meeting were the Store and Operations Managers for the other three stores being closed, as well as Wilson, who alone represented the Fort Wayne North store management. The purpose of the meeting was to explain the many procedures for closing down a store. These procedures were outlined in a manual given to each store representative.

At the Merrillville meeting, Gerry Van Booven, then the Assistant District Manager for Wards' Chicago District, spoke to the store representatives about personnel policy during the closing process. At the time of the Merrillville meeting, there was in effect a severance policy for Wards management employees which calculated a manager's severance pay as one week's pay for each full year of service up to a maximum of thirteen week's pay. Wards desired to keep its management personnel on the job through the store closings. As an incentive to induce the Store and Operations Managers at the meeting to remain in their positions until the stores were closed, Van Booven promised that if the managers stayed on and assisted in the closing of the stores, the managers would receive "severance pay," i.e., an amount of additional compensation calculated in the same manner as severance pay. Albert Thomas Lawrence, the Operations Manager at the Lafayette, Indiana Wards store, asked Van Booven at the meeting, with Wilson in attendance, whether Van Booven meant that this offer for "severance pay" was such that even if the managers were offered another position in the company and refused to take it, those managers would still receive this additional pay. Van Booven replied affirmatively. Lawrence asked Van Booven the same question after the meeting to make sure that he understood the incentive outlined by Van Booven. In Wilson's presence, Van Booven reiterated his earlier response.

As both first and second in command, Wilson assumed several additional duties and responsibilities in the store closing process. The closing process itself required additional work to insure security over the store's assets, mark down prices and advertise close-out sales, pack and ship merchandise to other Wards stores, and to wind down the store's operations in general. In addition, Wilson played an active role in assisting the store personnel to cope with the closing, including counseling employees, sponsoring a workshop and buying materials at her own expense to assist employees in finding other employment, and calculating severance pay.

On April 13, 1983, the Fort Wayne North store closed. At that time, Bob Baker, the Area District Manager, offered Wilson a position as Customer Service Manager at Ward's store in Skokie, Illinois. Wilson refused the position, and Baker then informed Wilson that she would receive no severance pay because she had been offered another position in the company and had refused to take it. However, Pat Niedermeyer, the Personnel Supervisor at the Fort Wayne North store, and Betty Berry, the Sales Manager at the store, were both asked whether they would want to transfer to another store, turned down the opportunity, and yet received full severance pay. In the case of Betty Berry, Bob Baker told her that Wards had a position available, but she told him she was not interested in transferring to another store.

The parties stipulated at trial that the amount of money due under the severance pay formula for Wilson is Six Thousand Nine Hundred Fifty Dollars ($6,950.00).

CONCLUSIONS OF LAW

At the close of the plaintiff's evidence, Wards moved for an involuntary dismissal under Federal Rule of Civil Procedure 41(b). The motion was renewed at the close of all the evidence. The motions were taken under advisement, and the court begins by ruling on this motion.

A. Motion for Involuntary Dismissal

Rule 41(b) allows a defendant, at the close of the plaintiff's evidence, to "move for a dismissal on the ground that upon the facts and the law the plaintiff has shown no right to relief." Wards here attacked Wilson's Wage Statute claim under I.C. 22-2-5-1, et seq. by arguing that the statute does not apply because it is intended only to require semi-monthly payment of wages. Wards attacks the breach of contract claim by arguing that no contract was formed because (1) Wilson did not give additional consideration, and (2) the statute of frauds bars the contract claim because the written severance policy should control the payment of severance pay.

Indiana Wage Statute

Plaintiff sues under I.C. 22-2-5-1. That statute provides that

Every person, firm, corporation, or association ... whatsoever doing business in this state shall pay each employee thereof at least semi-monthly or bi-weekly, if requested, the amount due each employee. ...

Failure to pay employees in this manner activates the penalty provisions of I.C. 22-2-5-2, which allow an employee to recover his unpaid wages plus a penalty of up to double the amount of unpaid wages, as well as attorney fees and costs.

I.C. 22-2-5-1, et seq. is a penal statute which, being in derogation of the common law, must be strictly construed. Palmer v. Stockberger, 135 Ind.App. 263, 193 N.E.2d 384, 387 (1963). A close examination of the language of the statute makes clear that it is concerned with the time of payment of wages. Its thrust is to create a statutory requirement that wages be paid semi-monthly or bi-weekly if so requested by the employee. This limited scope becomes more evident when one considers the remainder of the statute, which sets out when an employer need pay wages due after the employee terminates his employment. Thus, the statute under which Wilson sues is one designed to insure the regularity and frequency of wage payments.

The court concludes that Wilson's claim under the statute for the unpaid amounts promised at the Merrillville meeting fails for at least three reasons. The first is that the amount promised was not "wages" within the meaning of I.C. 22-2-5-1. Wilson has argued repeatedly that the amount promised is a wage because it falls within the broad definition of "wages" set out in I.C. 22-2-9-1, which defines the term as "all amounts at which the labor or service rendered is recompensed, whether the amount is fixed or ascertained on a time, task, piece or commission basis, or in any other method of calculating such amount." However, I.C. 22-2-9-1 does not purport to define the term for all Indiana wage statutes; in fact, it is part of an Act dealing with wage claims that was passed in 1939, while the Act which created I.C. 22-2-5-1 was passed in 1933. Wilson's counsel mistakenly believes that these two statutes are somehow related simply because they appear together in the statute book. In fact, I.C. 22-2-9-1 specifically limits the definitions to the 1939 Act.

Rather, the "wages" contemplated by I.C. 22-2-5-1 are something akin to the wages paid on a regular, periodic basis for regular work done by the employee—the paycheck which compensates for the work done in the previous two weeks. Here, Wilson seeks something far different. The promise made by Van Booven was for an amount above and beyond the regular paychecks Wilson received; it was a kind of bonus offered as an incentive to stay on until the store closed. It was measured in an unconventional way—based on years of service—which had no relation to the time worked (thirteen weeks' pay for nine weeks of work). It is more appropriate to view the promise of the Merrillville meeting as a promise to pay a "bonus"—something extra—in return for staying on and closing the stores. The court in Die & Mold, Inc. v. Western, 448 N.E.2d 44, 47-48 (Ind.App. 1983), a case repeatedly cited by Wilson, found that a bonus is not "regular compensation." The court therefore concludes that Wilson's Wage Statute claim must fail because wages are not involved here.

The second rationale for rejecting the claim lies in the fact that, even if the promised payment is a wage under I.C. 22-2-5-1 or the expansive definition proffered by Wilson, it...