Izzo v. Moore Wallace NA, Inc
Filing
61
MEMORANDUM OF DECISION AND ORDER denying 54 Motion for Summary Judgment, Signed by Judge Dominic J. Squatrito on 5/17/11. (Blue, A.)
UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT
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PAUL IZZO,
Plaintiff,
v.
MOORE WALLACE NORTH AMERICA,
INC., and DAVID LABROAD,
Defendants.
No. 3:08-CV-00163 (DJS)
MEMORANDUM OF DECISION AND ORDER
The plaintiff, Paul Izzo, brings this action against the
defendants, Moore Wallace North America, Inc. (“Moore Wallace”),
and David LaBroad, alleging common law breach of contract and
violation of Connecticut wage laws.
pursuant to 28 U.S.C. § 1332.
Jurisdiction is invoked
The defendants now move for
summary judgment on all claims.
For the following reasons,
their motion (dkt. # 54) is DENIED.
I. BACKGROUND1
Izzo is a sales professional residing in Newtown,
Connecticut.
Moore Wallace is a Delaware corporation having its
principal place of business in Illinois which operates a
commercial printing facility known as “Andrews Connecticut” in
1
Unless otherwise noted, the following is drawn from the parties’
submissions relating to the motion at bar.
1
Manchester, Connecticut.
LaBroad is the President of Andrews
Connecticut.
On September 28, 2004, Izzo entered into a written
employment Agreement with Moore Wallace (the “2004 Agreement”)
by which he became an Account Executive (i.e., a sales
representative) at Andrews Connecticut.
With respect to his
compensation, the 2004 Agreement provides as follows:
You will be paid a monthly salary of $20,000 for the
first nine months, based on gross sales of $2 million
during the first full year of employment.
After nine months (on or about July 23, 2005) we will
review your sales to-date.
At that point we will
You
determine an equitable draw against commission.2
will earn commissions according to the Moore Wallace
commission plan in effect at that time.
At the end of your first year with the company, we
will reconcile sales & commissions earned, with a
possibility of payout of further monies earned. (You
will be paid in accordance with the payroll practices
and commission plan of Moore Wallace, as they may
change from time to time.)
(Dkt. # 55-3, ¶ 3.)
With respect to timing, the 2004 Agreement
provides as follows:
Your employment will commence on October 18, 2004 . .
. .
From the date of your hire to July 17, 2005, neither
you nor we may terminate this agreement except for
cause.
After July 17, 2005, it is expressly agreed
and understood that your employment with Moore Wallace
is to be at will . . . .
2
“Draw against commission” refers to the advance payment of a
salesperson’s anticipated commission-based earnings. The amount “drawn” by
the salesperson is determined on the basis of prior sales performance and is
subsequently adjusted to account for commissions actually earned.
2
(Dkt. # 55-3, ¶¶ 1, 5.)
Finally, the 2004 Agreement contains
the following:
You will be assigned the accounts set forth on the
attached Exhibit A for at least the first year of your
employment (unless your employment is terminated
sooner under the terms of this Letter Agreement),
subject to management’s discretion to remove you from
one or more of those accounts for a material failure
to satisfactorily service one or more of those
accounts.
(Dkt. # 55-3, ¶ 1.)
Exhibit A to the 2004 Agreement — labeled
“Paul Izzo Account List” — lists several organizations,
including “Time Warner & Time Consumer Marketing & Time Customer
Service, Tampa, FL.”
(Dkt. # 55-3, p. 5.)
As agreed, Izzo first reported to work on October 18, 2004.
That same day, he was informed that he would not be permitted to
solicit any business from Time Warner, Time Consumer Marketing,
or Time Customer Service (collectively, “Time Warner”).
He
protested on several occasions, but was never subsequently
permitted to seek business from Time Warner.
Over a year later, on October 23, 2005, Izzo and LaBroad
signed a document captioned “Amendment to September 27, 2004
Letter Agreement between Paul Izzo and Moore Wallace” (the “2005
Amendment”).
(Dkt. # 55-5, p. 2.)
The 2005 Amendment: (1)
extended the period during which Izzo would be paid a monthly
salary of $20,000 untied to his sales performance from July 23,
3
2005, to December 31, 2005; and (2) deleted Exhibit A to the
2004 Agreement.
(Dkt. # 55-5, p. 2.)
From 2005 to 2008, Izzo successfully solicited business
from Metropolitan Life Insurance Company (“MetLife”) and Vonage.
Moore Wallace, however, “split” Izzo’s commissions for these
sales and paid a portion to two other Moore Wallace sales
representatives associated with the same clients.
Izzo
protested on several occasions and filed a complaint with the
Connecticut Department of Labor.
He then brought this action.
II. ANALYSIS
A. Jurisdiction over LaBroad
As a preliminary matter, Izzo appears to invoke diversity
pursuant to 28 U.S.C. § 1332 as the basis for subject-matter
jurisdiction over all of his claims.
Izzo is a Connecticut
citizen, and thus properly invokes diversity jurisdiction over
Moore Wallace, a Delaware corporation headquartered in Illinois.
Izzo’s pleadings, however, are silent as to LaBroad’s
citizenship, specifying only his role as President of Moore
Wallace’s Connecticut-based printing facility.
Diversity jurisdiction can exist “only if diversity of
citizenship among the parties is complete, i.e., only if there
is no plaintiff and no defendant who are citizens of the same
State.”
Wisconsin Dept. of Corrections v. Schacht, 524 U.S. 381
(1998).
Thus, “‘[w]hen a plaintiff sues more than one defendant
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in a diversity action, the plaintiff must meet the requirements
of the diversity statute for each defendant or face dismissal.’”
Bounds v. Pine Belt Mental Health Care Resources, 593 F.3d 209,
215 (2d Cir. 2010) (quoting Newman-Green, Inc. v. AlfonzoLarrain, 490 U.S. 826, 829 (1989)) (emphasis intact).
The party
invoking diversity jurisdiction “bears the burden of
demonstrating that the grounds for diversity exist and that
diversity is complete.”
Herrick Co., Inc. v. SCS
Communications, Inc., 251 F.3d 315, 322-23, (2d Cir. 2001).
Here, Izzo’s pleadings fall short of meeting this burden with
respect to LaBroad.
Rule 12(h)(3) of the Federal Rules of Civil Procedure
generally mandates dismissal where subject-matter jurisdiction
is determined to be lacking.
Fed. R. Civ. P. 12(h)(3).
See
Durant, Nichols, Houston, Hodgson & Cortese-Costa P.C. v.
Dupont, 565 F.3d 56, 62 (2d Cir. 2009) (“If subject matter
jurisdiction is lacking and no party has called the matter to
the court’s attention, the court has the duty to dismiss the
action sua sponte.”).
Rule 21, however, “allows a court to drop
a nondiverse party at any time to preserve diversity
jurisdiction . . . provided the nondiverse party is not
‘indispensable’ under Rule 19(b).”
CP Solutions PTE, Ltd. v.
General Electric Co., 553 F.3d 156, 159 (2d Cir. 2009) (citing
Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826, 832
5
(1989)).
See Fed. R. Civ. P. 21, 19(b).
Here, the parties’
submissions do not address the questions raised by these rules.
Accordingly, the Court invites further briefing addressing the
basis, if any, for subject-matter jurisdiction over Izzo’s claim
against LaBroad.
B. Summary Judgment
Rule 56 of the Federal Rules of Civil Procedure provides
that “[t]he court shall grant summary judgment if the movant
shows that there is no genuine dispute as to any material fact
and the movant is entitled to judgment as a matter of law.”
Fed. R. Civ. P. 56(a).
Thus, on a motion for summary judgment,
the Court must “determine whether, as to any material issue, a
genuine factual dispute exists.”
Kaytor v. Electric Boat Corp.,
609 F.3d 537, 545 (2d Cir. 2010); Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 248 (1986).
A fact is “material” if it
“might affect the outcome of the suit under the governing law,”
and a dispute as to a material fact is “genuine” if “the
evidence is such that a reasonable jury could return a verdict
for the nonmoving party.”
Liberty Lobby, 477 U.S. at 248;
Fincher v. Depository Trust and Clearing Corp., 604 F.3d 712,
720 (2d Cir. 2010).
Where the material facts are not genuinely
disputed, the Court must also determine whether they entitle the
movant to judgment as a matter of law under the controlling
substantive standards.
Celotex Corp. v. Catrett, 477 U.S. 317,
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322-23 (1986); Kaytor, 609 F.3d at 545.
In making these determinations, “the court should review
all of the evidence in the record.” Reeves v. Sanderson Plumbing
Products, Inc., 530 U.S. 133, 150 (2000); Kaytor, 609 F.3d at
545.
In so doing, “the court must draw all reasonable
inferences in favor of the nonmoving party, and . . . may not
make credibility determinations[,] weigh the evidence,” or
otherwise “resolve disputed questions of fact.”
Reeves, 530
U.S. at 150; Kaytor, 609 F.3d at 545.
1. Breach of Contract
Izzo alleges that Moore Wallace breached the 2004 Agreement
in two ways:
First, by barring him from soliciting business
from Time Warner, and second, by failing to pay him the full
commissions associated with his sales to MetLife and Vonage.
In
support, he argues that the 2004 Agreement expressly assigned
him the Time Warner account for at least the first year of his
employment, subject only to management’s discretion to remove
him for a material failure to satisfactorily service that
account, and that no such failure occurred.
He further argues
that by “splitting” the commissions associated with his sales to
MetLife and Vonage, Moore Wallace failed to pay him “according
to the Moore Wallace commission plan” as was required by the
2004 Agreement.
7
Moore Wallace now argues that it is entitled to summary
judgment with respect to the alleged breach of contract because
Izzo “cannot prove that he suffered any damages as a result of
the Time Warner issue,” and because Izzo “suffered no damages”
as a result of the MetLife and Vonage commission splits.
# 55, pp. 11-15, 18-19.)
(Dkt.
These arguments, however, rest on the
mistaken premise that actual damages are an “essential element[
] for a cause of action based on breach of contract.”
55, pp. 11-12.)
(Dkt. #
To the contrary, actual damages are not
essential to establishing liability for breach of contract under
Massachusetts law.3
See Davidson Pipe Supply Co., Inc. v.
Johnson, 14 Mass. App. Ct. 518, 520, 440 N.E.2d 1194, 1195
(1982) (“If the plaintiff cannot show that it is entitled to any
damages, the defendant would still be liable for nominal damages
if the plaintiff can prove that the defendant committed a breach
of an employment agreement.
Once a breach is established, the
plaintiff is entitled ‘to at least nominal damages in an action
at law . . . regardless of his ability to prove substantial
damages.’”
(quoting Rombola v. Cosindas, 351 Mass. 382, 384,
3
The 2004 Agreement expressly provides that it is to be construed in
accordance with Massachusetts law. (Dkt. # 55-3, ¶ 10.) A district court
sitting in diversity applies the choice of law rules of the state in which it
is located. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487 (1941);
Bakalar v. Vavra, 619 F.3d 136, 139 (2d Cir. 2010). Connecticut law “give[s]
effect to an express choice of law by the parties to a contract provided that
it was made in good faith.” Elgar v. Elgar, 238 Conn. 839, 848, 679 A.2d
937, 942 (1996). See Reichhold Chemicals, Inc., v. Hartford Accident &
Indemnity Co., 252 Conn. 774, 788, 750 A.2d 1051, 1059 (2000) (Connecticut
law favors the enforcement of contractual choice of law provisions).
Massachusetts law therefore governs.
8
220 N.E.2d 919 (1966) (citation omitted)); Damiano v. National
Grange Mut. Liability Co., 316 Mass. 626, 629, 56 N.E.2d 18,
20 (1944) (“When a contract has been broken by a defendant, the
plaintiff ‘is entitled to a verdict for nominal damages for the
breach, if nothing more.
For every breach of a promise made on
good consideration, the law awards some damage.’” (quoting Hagan
v. Riley, 79 Mass. (13 Gray) 515, 516 (1859))).4
Moore Wallace
can be held liable for breach of contract without regard to
whether Izzo proves actual damages, and thus is not entitled to
summary judgment on the ground that Izzo “suffered no damages.”
Accordingly, Moore Wallace’s motion for summary judgment must be
denied to the same extent.
Moore Wallace further argues that it is entitled to summary
judgment with respect to the alleged breach of contract because
“commission splits are a regular practice at Moore Wallace,” and
because Izzo “voluntarily agreed” to the MetLife and Vonage
commission splits.
(Dkt. # 55, pp. 15-18.)
Both points appear
intended to establish that Izzo was indeed paid in accordance
with the Moore Wallace commission plan to which the 2004
Agreement refers.
Both points, however, explicitly invite the
4
The same principle applies under Connecticut law. See News America
Marketing In-Store, Inc. v. Marquis, 86 Conn. App. 527, 535, 862 A.2d 837,
842-43 (2004) (“If a party has suffered no demonstrable harm . . . that party
may be entitled . . . to nominal damages for breach of contract.”), aff’d,
276 Conn. 310, 885 A.2d 758 (2005). See, e.g., Lydall, Inc. v. Ruschmeyer,
282 Conn. 209, 919 A.2d 421 (2007) (plaintiff “could point to no pecuniary
damages” but was nonetheless deemed “entitled to nominal damages of $1 under
its breach of contract claim.”).
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Court to weigh competing evidence in order to resolve genuinely
disputed questions of material fact, precluding present
disposition as a matter of law.
Accordingly, summary judgment
must be denied with respect to Izzo’s breach of contract claim.
2. Connecticut Wage Laws
Izzo brings separate Connecticut wage law claims against
Moore Wallace and LaBroad.
Specifically, he alleges that by
failing to pay him the full commissions associated with his
sales to MetLife and Vonage, Moore Wallace violated the
provisions of Connecticut General Statutes § 31-71b (dkt. # 42,
¶ 47), and LaBroad, in his individual capacity, violated “§§ 3171 et seq.” (dkt. # 42, ¶ 58).
Connecticut General Statutes §
31-71b(a), in relevant part, provides that “[e]ach employer . .
. shall pay weekly all moneys due each employee on a regular pay
day . . . .”
Conn. Gen. Stat. § 31-71b(a).
Section 31-71e
further provides:
No employer may withhold or divert any portion of an
employee’s wages unless (1) the employer is required
or empowered to do so by state or federal law, or (2)
the employer has written authorization from the
employee for deductions on a form approved by the
[Labor] commissioner, or (3) the deductions are
authorized by the employee, in writing, for medical,
surgical
or
hospital
care
or
service,
without
financial benefit to the employer and recorded in the
employer’s wage record book, or (4) the deductions are
for contributions attributable to automatic enrollment
. . . in a retirement plan . . . .
10
Conn. Gen. Stat. § 31-71e.5
An express private right of action
exists to enforce these provisions.
See Conn. Gen. Stat. § 31-
72 (“When any employer fails to pay an employee wages in
accordance with the provisions of sections 31-71a to 31-71i,
inclusive, . . . such employee . . . may recover, in a civil
action, twice the full amount of such wages, with costs and such
reasonable attorney’s fees as may be allowed by the court . . .
.”).
Thus, an employee may proceed against an employer that
withholds or diverts commission-based compensation due, but only
if the employer’s withholding or diversion also violates an
existing agreement with respect to the employee’s compensation.
See Mytych v. May Dept. Stores Co., 260 Conn. 152, 162, 793 A.2d
1068, 1073 (2002) (“[T]he wage statutes, as a whole, do not
provide substantive rights regarding how a wage is earned ;
rather, they provide remedial protections for those cases in
which the employer-employee wage agreement is violated.”
(emphasis intact)); Weems v. Citigroup, Inc., 289 Conn. 769, 784
n.16, 961 A.2d 349, 358 n.16 (2008).6
5
“Wages” are defined as “compensation for labor or services rendered by
an employee, whether the amount is determined on a time, task, piece,
commission or other basis of calculation.” Conn. Gen. Stat. § 31-71a(3).
6
To the extent that a basis for jurisdiction over LaBroad exists, he is
personally subject to § 31-72 liability. See Butler v. Hartford Technical
Institute, Inc., 243 Conn. 454, 463-64, 704 A.2d 222, 227 (1997) (“an
individual personally can be liable as an employer pursuant to § 31-72,
notwithstanding the fact that a corporation is also an employer of the
claimant, if the individual is the ultimate responsible authority to set the
hours of employment and to pay wages and is the specific cause of the wage
violation
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Here, Moore Wallace and LaBroad argue that they are
entitled to summary judgment because all wages actually due to
Izzo pursuant to the 2004 Agreement, as modified by the 2005
Amendment thereto, “were paid.”
(Dkt. # 55, pp. 24-25.)
As
explained above, however, genuine disputes of material fact
preclude disposition as to whether Izzo was paid in accordance
with the Moore Wallace commission plan to which the 2004
Agreement refers.
The same factual disputes thus also
necessarily preclude disposition as a matter of law with respect
to Izzo’s wage claims.
Accordingly, summary judgment must also
be denied as to the same.
III. CONCLUSION
For the foregoing reasons, the defendants’ motion for
summary judgment (dkt.# 54) is DENIED in its entirety.
The
Court invites further briefing, to be filed no later than June
30, 2011, limited to the basis, if any, for its subject-matter
jurisdiction over Izzo’s claim against defendant David LaBroad.
SO ORDERED this 17th day of May, 2011.
__________/s/DJS____________
DOMINIC J. SQUATRITO
UNITED STATES DISTRICT JUDGE
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