Aeschliman v. Dealer Marketing Services, Inc. et al

Filing 22

ORDER & OPINION granting 8 Motion to Dismiss for Failure to State a Claim Or Alternatively to Strike. This case is REFERRED back to Magistrate Judge Schanzle-Haskins for further pretrial proceedings. Entered by Judge Joe Billy McDade on 5/29/2015. (RK, ilcd)

E-FILED

Friday, 29 May, 2015 10:18:54 AM
Clerk, U.S. District Court, ILCD

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF ILLINOIS
PEORIA DIVISION
STEVE AESCHLIMAN,
Plaintiff,
v.
DEALER MARKETING SERVICES,
INC., and Illinois Corporation, and
JOHN PALMER,
Defendants.

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Case No. 14-cv-1448

OPINION & ORDER
This matter is before the Court on the Defendants’ Partial Motion To Dismiss
For Failure To State A Claim Or Alternatively To Strike (Doc. 8). The motion is
fully briefed and ready for decision. For the reasons stated below, the motion is
GRANTED.
FACTUAL BACKGROUND1
Plaintiff Steve Aeschliman was employed by Defendant Dealer Marketing
Services, Inc. (“DMS”), of which Defendant John Palmer is the owner and chief
executive officer. Plaintiff sued DMS and Palmer in Illinois state court alleging
state law claims of breach of contract and violation of the Illinois Wage Payment
and Collection Act, 820 Ill. Comp. Stat. § 115/1 et. seq., and a federal claim of
violation of the Employee Retirement Income Security Act of 1974 (“ERISA”), 29
These facts are taken from the First Amended Complaint (Doc. 18) and are
assumed to be true for the purpose of adjudicating the motion sub judice.
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U.S.C. § 1001 et. seq. Since an ERISA claim arises under federal law, Defendants
removed the entire civil action from the Circuit Court of Tazewell County, Illinois to
this Court pursuant to 28 U.S.C. § 1441 on the basis of federal question jurisdiction.
On April 4, 2015 Plaintiff was given leave to file an amended complaint and did so
two days later. Defendants now seek to dismiss portions of Counts III and IV of the
First Amended Complaint that allege violations of the Illinois Wage Payment and
Collection Act, or alternatively, to strike certain paragraphs. Although the motion
to dismiss sub judice was filed before the First Amended Complaint was filed, the
nature of the motion was still relevant such that the Magistrate Judge allowed
Defendants to revive their motion to dismiss as it applies to Counts III and IV of the
First Amended Complaint.2 (Doc. 16).
LEGAL STANDARDS
A motion under Rule 12(b)(6) challenges the sufficiency of the complaint to
state a claim upon which relief may be granted.” Hallinan v. Fraternal Order of
Police of Chicago Lodge No. 7, 570 F.3d 811, 820 (7th Cir. 2009). “In evaluating the
sufficiency of the complaint, [courts] view it in the light most favorable to the
plaintiff, taking as true all well-pleaded factual allegations and making all possible
inferences from the allegations in the plaintiff’s favor.” AnchorBank, FSB v. Hofer,
649 F.3d 610, 614 (7th Cir. 2011). “To survive a motion to dismiss, the complaint
must contain sufficient factual matter, accepted as true, to state a claim to relief
that is plausible on its face.” Indep. Trust Corp. v. Stewart Info. Servs. Corp., 665

Local Rule 7.1(E) allows for a defendant to revive a motion attacking an original
pleading within 14 days of the filing of an amended pleading.
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F.3d 930, 934–35 (7th Cir. 2012) (citing Ashcroft v. Iqbal, 556 U.S. 662 (2009))
(internal quotation marks omitted).
DISCUSSION
As an initial matter, Plaintiff contends that the Court should deny the motion
outright because it is allegedly untimely. The instant motion purports to be made
under Federal Rule of Civil Procedure 12(b)(6) in so far as it requests the Court to
dismiss portions of Counts III and IV and Rule 12(f)(2) in the alternative, in as
much as it asks the Court to strike certain material from the First Amended
Complaint (Doc. 18). A motion asserting a defense under Rule 12(b)(6) “must be
made before pleading if a responsive pleading is allowed.” Plaintiff points out that
Defendants have already brought a Rule 12(b) motion and should therefore be
barred from bringing another under Rule 12(g), which provides a party that makes
a motion under Rule 12 must not make another motion under it raising a defense or
objection that was available to the party but omitted from its earlier motion except
as provided in Rule 12(h)(2) or (3). Plaintiff’s argument is not really based on the
timeliness of the instant motion; it is based upon the motion being illegitimately
successive under Rule 12(g). In any event, Plaintiff has ignored that the instant
motion is a revived motion to dismiss and therefore is to be treated as a first 12(b)
motion against the First Amended Complaint (Doc. 18) rather than a successive
12(b) motion against the original Complaint (see Doc. 1). Therefore, the Court will
reach the motion’s merits.
Counts III and IV of Plaintiff’s First Amended Complaint allege Defendants
violated the Illinois Wage Payment and Collection Act (the “Wage Act”) by failing to

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pay Plaintiff certain final compensation that he is owed. Plaintiff alleges he was
employed under the terms of an agreement he attached to his First Amended
Complaint (Doc. 18-1). The term of employment provided in the agreement began on
January 1, 2014 and was due to expire on January 1, 2019. (Doc. 18-1 at 2).
Plaintiff alleges he was terminated without cause in either September or October of
2014 and is due salary for every month for which he would have been paid under
the agreement.
Section 2.1 of the agreement deals with compensation and provides that
Plaintiff was to be paid a “Monthly Guaranteed Salary in the amount of Twelve
Thousand Dollars ($12,400.00)” a month.3 (Doc. 18-1 at 1). It goes on to state
In the event Employee’s employment with the Company is terminated
during a calendar month, employee’s Salary shall be prorated on the
basis of the ratio that the number of days worked bears to the total
number of working days (which shall be deemed to refer to the days of
Monday through Friday, except legal holidays) in such month.
(Doc. 18-1 at 1). It should be noted that the above quoted provision applies to
termination without regard to whether such termination is with or without cause.
Section 3 of the agreement also purports to deal with termination and it provides
that Plaintiff should expect payment of all Guaranteed Salary within sixty days of
termination. Apparently, Plaintiff interprets the term “all Guaranteed Salary” that
appears in section 3 of the agreement to mean his complete monthly salary
throughout the entire term of his employment agreement. Defendants apparently
interpret the term “all Guaranteed Salary” to mean only salary earned as of the

The Court will assume the larger value, twelve thousand four hundred, is the
correct amount since the agreement goes on to provide that such monthly payment
would be made in two installments of six-thousand two hundred dollars per month.
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date of termination. Therefore, the Defendants interpret the term “monthly
guaranteed salary in the amount of $632,400” in the First Amended Complaint as a
request for “unpaid future wages” that are not recoverable under the Wage Act
under recent Illinois case precedent.
In the recent case of Majmudar v. House of Spices (India), Inc., an Illinois
appellate court explained that “[t]he purpose of the [Wage] Act is to provide
employees with a cause of action for the timely and complete payment of earned
wages or final compensation.” 1 N.E.3d 1207, 1210 (Ill. App. Ct. 1st Dist. 2014)
(emphasis added). The court recognized that under the Wage Act, terminated
employees can seek “final compensation,” which is defined as “wages, salaries,
earned commissions, earned bonuses, and the monetary equivalent of earned
vacation and earned holidays, and any other compensation owed the employee by
the employer pursuant to an employment contract or agreement between the 2
parties.” 820 Ill. Comp. Stat. § 115/2 (2015). The Majmudar court held that “unpaid
future compensation for the remainder of a terminated contract where there is a
question as to whether the employee was terminated for cause did not fall under the
Wage Act’s definition of ‘final compensation.’” 1 N.E.3d at 1216. It further held the
defendant could not have violated the Wage Act even though it did not pay the
plaintiff unpaid future compensation for the remainder of the plaintiff's terminated
contract. Id. The Majmudar court reasoned that:
“[o]nce plaintiff's employment was terminated, so was the agreement,
particularly because there was a question at the time of termination as
to whether plaintiff was terminated for cause. Then, it necessarily
follows that at the time of termination defendant owed plaintiff no
further compensation pursuant to the contract as ‘final compensation,’

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because defendant was no longer receiving anything in exchange for
that compensation and believed it had terminated plaintiff for cause.”
Id. at 1211.
Majmudar forecloses Plaintiff’s Wage Act claims as to unpaid future
compensation under the agreement.4 But Plaintiff contends Majmudar should not
be applied here because that court focused on a finding that “there was no
severance agreement or any equivalent right on the part of the plaintiff to recover
the balance of his salary upon being terminated other than for cause.” (Doc. 11 at 8).
Plaintiff argues the Court should instead apply Elsener v. Brown, 996 N.E.2d 84 (Ill.
App. Ct. 2nd Dist. 2013), because the Elsener court did not hold that unpaid future
compensation was unattainable for a terminated employee under the Wage Act and,
according to Plaintiff, Elsener’s facts are more analogous to the facts here.
Plaintiff is correct that the Elsener court did not hold that unpaid future
compensation was unattainable for a terminated employee under the Wage Act, but
the issue was never under consideration by the court. The Elsener defendant
challenged the Wage Act’s application to individual persons as opposed to entities
and upon other grounds not relevant here. 996 N.E.2d at 98-104. The court failed to
even comment on the question of whether a terminated employee could recover
unpaid future compensation under the Wage Act.

“[I]n the absence of prevailing authority from the state’s highest court, federal
courts ought to give great weight to the holdings of the state’s intermediate
appellate courts and ought to deviate from those holdings only when there are
persuasive indications that the highest court of the state would decide the case
differently from the decision of the intermediate appellate court.” Allstate Ins. Co. v.
Menards, Inc., 285 F.3d 630, 637 (7th Cir. 2002). The Court finds no indications that
the Illinois Supreme Court would decide the issue any differently than the
Majmudar court.
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However, the Elsener court made two factual findings that are of particular
relevance here because they were critical to the Elsener court’s decision to uphold
the defendant’s liability (imposed after a bench trial) and they were identified by
the Majmudar court as reasons to not apply Elsener to the facts in that case. 996
N.E.2d at 88;1 N.E.3d at 1208-09. First, the agreement at issue in Elsener had an
explicit provision that entitled a terminated employee “to the remaining amount of
his base salary [$85,000] through expiration of the Contract Term if he is
terminated not for cause.” 996 N.E.2d at 88. Second, the appellate court specifically
mentioned that the defendant never disputed at trial that Elsener’s termination
was not for cause or that severance pay was owed. Id. at 92. Thus, Elsener could sue
under the Wage Act to recover the sums there because his contract specifically
provided that upon his termination he became entitled to his entire salary through
the expiration of the employment contract. The contract at issue in Majmudar did
not contain a similar provision.1 N.E.3d at 1208-09. The Court is of the opinion that
the contract in this case also lacks a similar provision to the one in Elsener and
therefore the facts of this case are more similar to the facts in Majmudar.
There is no provision in the employment agreement here that unambiguously
entitles Plaintiff to his entire salary through the expiration of the employment
contract upon his termination as there was in Elsener. The agreement provides that
when an employee is terminated (for or without cause), the employee’s “Salary”
“shall be prorated on the basis of the ratio that the number of days worked bears to
the total number of working days. . . in such month.” (Doc. 18-1 at 1).

The

agreement also fails to define the term “Salary” on its own. However, this provision

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appears in the same paragraph identifying the Plaintiff’s “Monthly Guaranteed
Salary” as twelve thousand four hundred dollars. The reasonable interpretation of
this provision is that upon termination, the employee is entitled to the twelve
thousand four hundred dollars multiplied by the ratio of days worked to work days
left in the month. The section of the agreement stating an employee terminated
without cause is to be paid “all Guaranteed Salary” within sixty days of termination
(Doc. 18-1 at 3) should be taken to mean the salary guaranteed in section 2.1
(twelve thousand four hundred dollars multiplied by the ratio of days worked to
work days left in the month) within sixty days of termination.
The Wage Act allows recovery of wages and salary earned and “any other
compensation owed the employee by the employer pursuant to an employment
contract or agreement between the 2 parties.” Elsener had a contract that
unambiguously entitled him to a severance package consisting of “the remaining
amount of his base salary [$85,000] through expiration of the Contract Term….”
996 N.E.2d at 88. Majmudar had no severance package in his contract. Similarly,
Plaintiff has no severance package in his agreement with Defendants.
Majmudar’s rule is clear: future unearned compensation cannot be reached
through use of the Wage Act. Only when the parties have unambiguously agreed to
convert future unearned compensation into severance pay can a plaintiff seek to
recover such compensation under the Wage Act. Based upon this Court’s reading of
the agreement, no such severance provision is present and therefore, Majmudar
forecloses Plaintiff from using the Wage Act to recover the future unearned
compensation he alleges he is owed.

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CONCLUSION
For the reasons stated above, Defendants’ Partial Motion To Dismiss For
Failure To State A Claim Or Alternatively To Strike (Doc. 8) is GRANTED. The
portions of Counts III and IV of Plaintiff’s First Amended Complaint seeking to
recover “monthly guaranteed salary” for the “51 months” remaining on Plaintiff’s
contract at the time of his termination as “final compensation” under the Illinois
Wage Payment and Compensation Act are dismissed under Federal Rule of Civil
Procedure 12(b)(6).
This case is REFERRED back to Magistrate Judge Schanzle-Haskins for
further pretrial proceedings.
IT IS SO ORDERED.

Entered this 29th day of May, 2015.

s/ Joe B. McDade
JOE BILLY McDADE
United States Senior District Judge

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