Wilson v. Career Education Corporation
Filing
41
MEMORANDUM Opinion and Order. Signed by the Honorable Geraldine Soat Brown on 4/13/2012. Notice mailed by judge's staff (ntf, )
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
RILEY J. WILSON,
on behalf of himself and all others
similarly situated,
Plaintiff,
v.
CAREER EDUCATION
CORPORATION,
Defendant.
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No. 11 C 5453
Magistrate Judge Geraldine Soat Brown
MEMORANDUM OPINION AND ORDER
Before the court is the motion of defendant Career Education Corporation (“CEC”) to dismiss
plaintiff Riley J. Wilson’s (“Wilson”) complaint. [Dkt 18.] Oral argument was held on the motion
on March 6, 2012, and the court accepted supplemental briefing from the parties thereafter. [Dkt 37,
38, 39.] Wilson alleges that CEC failed to pay bonuses to him and other similarly situated
employees under a supplemental compensation plan it instituted. CEC argues that the plain language
of the plan permitted CEC unilaterally to terminate or amend it for any reason and in its sole
discretion, and that Wilson was not entitled to any compensation after CEC chose to exercise that
option. Because the terms of the plan unambiguously provided CEC the right to terminate it at any
time, and because Wilson cannot maintain a claim for quasi-contract relief in the alternative, the
motion is granted.
1
BACKGROUND
Wilson brought this putative class action suit alleging that CEC failed to pay him and all
other similarly situated employees certain bonuses he alleges they earned. CEC operates about 11
for-profit postsecondary schools variously located in about 25 states. (Compl. ¶ 3.) [Dkt 1.] Wilson
worked for CEC from about October 6, 2008 through May 18, 2011 at Le Cordon Bleu culinary arts
college, located in Mendota Heights, Minnesota. (Compl. ¶¶ 2, 6, 17.) He began as a high school
admissions representative, and sometime in 2010 became an inside sales admissions representative.
(Id. ¶¶ 6, 14.) In both positions, his job involved recruiting high school students to attend Le Cordon
Bleu. (Id. ¶¶ 6, 7, 12-14.)
As an admissions representative, Wilson participated in the Admissions Representative
Supplemental Compensation Plan (“ARSC Plan” or “Plan”). (Id. ¶¶ 7, 9.) The ARSC Plan provided
that admissions representatives who exceeded minimum quarterly thresholds (known as “Minimum
Performance Goals”) of students they enrolled in a CEC school became “eligible” to receive a bonus
of $400 for each additional student over the minimum number when those students met certain
conditions. (Compl. ¶ 10; Def.’s Mot., Decl. Jackie Barry, Ex. B at 1, 4 (“Plan”).)1 Those conditions
included (but were not limited to) the following: (1) the student successfully completed either his
or her academic program or one academic year of the program, whichever is shorter; (2) the student
attained one of these benchmarks within a nine-month “Evaluation Period” (which began six months
after the end of the quarter during which the student started attending the school and ended fifteen
1
Wilson did not attach a copy of the ARSC Plan to his complaint. CEC has submitted a
document entitled “Supplemental Compensation Plan for Admissions Representatives” for the
calendar year 2010, which states it is effective “for the 2010 calendar year only.” (Plan at 1).
Wilson agrees this was the operative document at issue during that time period. (Pl.’s Resp. at 4.)
2
months after the student started attending the school); and (3) the student attained one of those
benchmarks prior to the resignation or termination of the admissions representative. (Compl. ¶ 10;
Plan at 1, 2, 4.)
The Plan specifically provided the following language as to when bonuses were “earned”:
The admissions representative will earn supplemental compensation of $400 for each
such student beyond the thresholds specified in the representative’s Minimum
Performance Goals for number of graduates or number of students who complete one
academic year of their program (“MPG Threshold”). The earned supplemental
compensation will be paid on a monthly basis, after the end of each month during the
evaluation period, unless otherwise required to paid sooner under applicable law.
...
An employee is considered to have “earned” supplemental compensation under this
Plan for the evaluation period during which his/her employment ends if, as of the
employee’s termination date, the employee has exceeded his/her MPG Threshold for
that evaluation period for students who have successfully completed either their
academic program or one academic year of their program. The employee will only
be entitled to supplemental compensation under this Plan based on those students
who have successfully completed their academic program or one academic year of
their program, whichever is shorter, as of the employee’s termination date, and not
for any students who successfully complete their academic program or one academic
year of their program after the employee’s termination date.
(Plan at 1, 2.) Given these requirements, bonuses were not earned until a number of months after
the quarter in which the student initially enrolled.
The ARSC Plan also contains the following clause:
If CEC determines at any time that this Plan should be modified due to the
requirements or standards of the U.S. Department of Education or any state agency
or accrediting commission, then CEC may be obligated to modify this Plan. CEC
reserves the right to terminate or amend the terms of this Plan at any time, for
regulatory compliance purposes or for any other reason that CEC determines, in its
sole discretion. Any interpretation of any provision of this Plan or of any regulatory
authority may be made by CEC in its sole discretion.
(Plan at 3 (emphasis added).)
3
In a memo to its admissions representatives and advisors dated December 9, 2010, CEC
announced it was ending the ARSC Plan pursuant to a federal regulation from the U.S. Department
of Education that would become effective in 2011. (Compl. ¶¶ 19, 20; Def.’s Mot., Barry Decl., Ex.
C.) CEC announced it would pay bonuses under the Plan as they came due through February 28,
2011, but not thereafter. (Id.) Although not stated in the notice, Wilson asserts the regulation at
issue became effective on July 1, 2011. (Compl. ¶ 20.) Wilson does not dispute the validity of the
regulation or that it would prohibit CEC from paying bonuses under the ARSC Plan as of July 2011.
(Compl. ¶¶ 34-36; Pl.’s Resp. at 4 [dkt 23].) Rather, Wilson’s position is that the regulation did not
require CEC to terminate bonus payments that were “in the pipeline” before December 9, 2010 but
that would have come due sometime between March 1 and June 30, 2011 if the students met all the
applicable criteria. Wilson resigned from CEC on May 18, 2011. (Compl. ¶¶ 16, 20, 34.)
Wilson brings a two-count complaint alleging: (1) breach of contract and (2) implied contract
and unjust enrichment, individually and on behalf of a class of CEC admissions representatives
operating under the same or similar plans. Wilson asserts that he is entitled to a total of
approximately $9,200 in unpaid bonuses under the Plan for the time period of March through May
2011. (Compl. ¶¶ 34, 35.) This total represents 23 students that Wilson enrolled while the Plan was
in effect but who did not meet the other conditions until March, April, or May 2011. (Id.)2 Wilson
estimates similar damages to the proposed class in this time period would total in excess of $5
million. (Id. ¶ 37.)
2
Wilson also alleges that as of the last day of his employment, May 18, 2011, he was owed
$8,400 for 21 students who had qualified as of that date. (Compl. ¶ 17.)
4
LEGAL STANDARD
“To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted
as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 129
S. Ct. 1937, 1949 (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “When there
are well-pleaded factual allegations, a court should assume their veracity and then determine whether
they plausibly give rise to an entitlement to relief.” Iqbal, 129 S. Ct. at 1950. As the Seventh Circuit
has stated:
A complaint will withstand a motion to dismiss [under Rule 12(b)(6)] if it provides
a short and plain statement of the claim showing that the pleader is entitled to relief
that is also sufficient to provide the defendant with fair notice of the claim and its
basis. In order to demonstrate that he is entitled to relief, however, the pleader must
show through his allegations that it is plausible, rather than merely speculative, that
he is entitled to relief.
INEOS Polymers, Inc. v. BASF Catalysts, 553 F.3d 491, 497 (7th Cir. 2009) (citations and quotations
omitted).
In ruling on a motion dismiss, the court may also consider documents, such as contracts, that
are referenced in the complaint, so long as they are concededly authentic and central to the plaintiff’s
claims. Tierney v. Vahle, 304 F.3d 734, 738 (7th Cir. 2002). “The court is not bound to accept the
pleader’s allegations as to the effect of the exhibit, but can independently examine the document and
form its own conclusions as to the proper construction and meaning to be given to the material.”
Rosenblum v. Travelbyus.com Ltd., 299 F.3d 657, 662 (7th Cir. 2002) (quoting Charles Alan Wright
et al., Federal Practice and Procedure: Civil 2d vol. 5 § 1327 at 766). However, if documents
further “outside the pleadings” are considered by the court, the motion must be treated as one for
summary judgment. Fed. R. Civ. P. 12(d).
5
Here, Wilson did not attach any exhibits to his complaint, but CEC has submitted relevant
portions of the ARSC Plan as well as the December 9, 2010 memo, both of which were discussed
in the complaint. (Def.’s Mot., Barry Decl., Ex. B, C.) Wilson impliedly conceded the authenticity
of these documents by citing them in his response. (Pl.’s Resp. at 2-4.) The court will therefore
consider both of those documents along with all of Wilson’s well-pleaded factual allegations in
resolving the motion.
DISCUSSION
I.
Jurisdiction.
As a preliminary matter, the court addresses the issue of its subject matter jurisdiction over
this case. The court has an independent obligation to ensure its jurisdiction is secure, whether or not
the issue is raised by the parties. Carroll v. Stryker Corp., 658 F.3d 675, 680 (7th Cir. 2011). A
federal court has diversity jurisdiction over all civil actions between citizens of different states so
long as the matter in controversy exceeds $75,000, exclusive of interest and costs. 28 U.S.C. §
1332(a). Federal diversity jurisdiction also exists when the matter in controversy exceeds $5 million
and is a “class action” in which any member of the class is a citizen of a state different from any
defendant. 28 U.S.C. § 1332(d)(2). A “class action” is defined as one “filed under rule 23 of the
Federal Rules of Civil Procedure.” 28 U.S.C. § 1332(d)(1)(B).
Wilson is a citizen of Minnesota and CEC is a Delaware corporation with its principal
executive offices in Schaumburg, Illinois; therefore, the diversity of citizenship requirement is met.
6
(Compl. ¶¶ 2, 3.)3 Wilson brought this case as a putative class action and filed a motion to certify
a class, which was stayed pending the outcome of the present motion. [Dkt 29, 34.] While Wilson’s
complaint pleads damages estimated at over $5 million for the putative class, he individually alleges
damages of only $9,200. (Compl. ¶¶ 35, 37.) Thus, whether the court has jurisdiction depends on
whether the existence of a proper class is a prerequisite to subject matter jurisdiction under §
1332(d)(2). That is, does the court have the jurisdiction to make a substantive ruling (as here on a
motion to dismiss) before it has determined that a class may be certified under Rule 23?
The Seventh Circuit recently answered that question by holding that jurisdiction under
§ 1332(d)(2) does not depend upon certification because “jurisdiction attaches when a suit is filed
as a class action, and that invariably precedes certification. . . . That needn’t imply that unless the
class is certified the court loses jurisdiction of the case.” Cunningham Charter Corp. v. Learjet, Inc.,
592 F.3d 805, 806 (7th Cir. 2010). Therefore, it is sufficient that Wilson filed this case as a class
action with damages allegedly exceeding $5 million, and federal jurisdiction is secure.4 The parties
consented to magistrate judge jurisdiction. [Dkt 25.]
II.
Choice of Law.
The Plan does not contain a choice-of-law provision, and the parties dispute what law should
3
Wilson actually pled that he is a “resident of Minnesota.” (Compl. ¶ 4.) “Domicile,” not
residency, is the standard for citizenship. Heinen v. Northrop Grumman Corp., 671 F.3d 669, 670
(7th Cir. 2012). Domicile is “the state in which a person intends to live over the long run.” Id.
(citations omitted). From the allegations of the complaint that Wilson resides in, and worked for
CEC in, Minnesota, the court concludes that he is domiciled in that state. CEC does not contest
those allegations.
4
Although the complaint was filed as a putative class action, because a class has not yet been
certified, only Wilson’s individual claims are addressed here.
7
apply. CEC argues that Minnesota law should govern, while Wilson argues for Illinois law. (Def.’s
Mot. at 5-6; Pl.’s Resp. at 6-8). However, both parties also agree that under either state’s law, the
standards are substantively similar and the outcome of the motion would ultimately be the same.
(Def.’s Mot. at 8 n. 3; Pl.’s Resp. at 7; Def.’s Reply at 9-11 [dkt 24].)
Generally speaking, in a case over which a court has diversity jurisdiction, it applies the
forum state’s choice-of-law rules to determine which state’s substantive law should govern. Hinc
v. Lime-O-Sol Co., 382 F.3d 716, 719 (7th Cir. 2004). For a court sitting in Illinois, that would mean
applying the “most significant contacts” test. Id. However, such a determination is unnecessary
when the outcome under either state’s law would be the same. “[B]efore entangling itself in messy
issues of conflict of laws[,] a court ought to satisfy itself that there actually is a difference between
the relevant laws of the different states.” Barron v. Ford Motor Co. of Canada, Ltd., 965 F.2d 195,
197 (7th Cir. 1992). Where the parties have not identified a conflict, the court generally applies the
law of the forum state. See Kochert v. Adagen Medical Intl., Inc., 491 F.3d 674, 677 (7th Cir. 2007).
As the following analysis demonstrates, the result would be the same under either Illinois or
Minnesota law. Therefore, the court need not reach the choice-of-law issue for the purposes of
deciding this motion.
III.
Wilson cannot maintain a claim for express breach of contract (Count I).
Under either Illinois or Minnesota law, the elements required to establish a breach of contract
claim are: (1) the existence of a valid and enforceable contract; (2) performance of the contract by
the plaintiff; (3) breach of contract by the defendant; and (4) a resulting injury to the plaintiff. Priebe
v. Autobarn, Ltd., 240 F.3d 584, 587 (7th Cir. 2001) (citing Hickox v. Bell, 552 N.E.2d 1133, 1143
8
(Ill. App. 5th Dist. 1990)); Parkhill v. Minn. Mut. Life Ins. Co., 174 F. Supp. 2d 951, 961 (D. Minn.
2000). For the purposes of this part of the motion, the court will assume that the Plan constituted
a valid contract.5 However, Wilson’s claim must still be dismissed because the facts pled do not
establish that CEC breached the contract.
The primary goal of contract interpretation is to determine and enforce the intent of the
parties. Thompson v. Gordon, 948 N.E.2d 39, 47 (Ill. 2011); Motorsports Racing Plus, Inc. v. Arctic
Cat Sales, Inc., 666 N.W.2d 320, 323 (Minn. 2003). Where an unambiguous document plainly sets
out the parties’ intent, it governs the interpretation. Thompson, 948 N.E.2d at 47, Motorsports
Racing Plus, 666 N.W.2d at 323. On the other hand, if an ambiguity exists within the four corners
of the contract, it may need to be resolved through the introduction of extrinsic evidence. Thompson,
948 N.E.2d at 47; Blackburn, Nickels & Smith, Inc. v. Erickson, 366 N.W.2d 640, 643 (Minn. App.
1985). The question of ambiguity is one of law, but resolution of the parties’ intent by reference to
extrinsic evidence is one for the finder of fact. Blackburn, Nickels & Smith, 366 N.W.2d at 643.
5
CEC argues that the Plan is not an enforceable contract because the reservation of
discretion to terminate it at any time meant that any promise of a bonus was “illusory,” i.e.,
unenforceable. (Def.’s Mot. at 8; Def.’s Suppl. Br. at 1-3 [dkt 39].) In some instances, courts have
held that an employee bonus plan that gives the employer the unilateral right to modify or terminate
it at any time and for any reason is not an enforceable contract. See Tatom v. Ameritech Corp., 305
F.3d 737, 742-44 (7th Cir. 2002); Rudolph v. Intl. Bus. Mach. Corp., No. 09 C 428, 2009 WL
2632195 at *3-4 (N.D. Ill. Aug. 21, 2009) (collecting cases); Grenier v. Air Express Intl. Corp., 132
F. Supp. 2d 1198, 1201-02 (D. Minn. 2001) (collecting cases); Brozo v. Oracle Corp., 324 F.3d 661
(8th Cir. 2003). A compensation plan must contain a clear promise of a bonus to be enforceable, and
this does not happen when the employer reserves the right to cancel the entire program at any time.
Hegel v. Brunswick Corp., No. 09 C 882, 2011 WL 1103825 at *6 (E.D. Wis. Mar. 23, 2011); Rakos
v. Skytel Corp., 954 F. Supp. 1234, 1238 (N.D. Ill. 1996).
Wilson addresses some of these cases and argues they are distinguishable on the facts
because the bonus plans there either expressly granted the employer the right terminate them
retroactively or were discretionary as to the amount of the bonus. (Pl.’s Suppl. Br. at 3-4.) [Dkt 38.]
In any event, it is unnecessary to decide that issue here, because Wilson has not established the
breach element and thus cannot maintain his express breach of contract claim on that basis.
9
To determine whether the terms of a contract are ambiguous, the court must ascertain
whether it is reasonably susceptible to more than one interpretation. Thompson, 948 N.E.2d at 47;
Hilligoss v. Cargill, Inc., 649 N.W.2d 142, 148 (Minn. 2002); Blackburn, 366 N.W.2d at 643. The
court considers the plain words of the contract taken in the context of the document as a whole,
giving effect to all provisions. Thompson, 948 N.E.2d at 47; Motorsports Racing Plus, 666 N.W.2d
at 323-24. The fact that the parties disagree about the terms of the contract in hindsight, or that it
does not expressly address a certain point, does not automatically render it ambiguous. Knudsen v.
Transport Leasing/Contract, Inc., 672 N.W.2d 221, 223 (Minn. App. 2003); Fleet Bus. Credit, LLC
v. Enterasys Networks, Inc., 816 N.E.2d 619, 629 (Ill. App. 1st Dist. 2004).
Wilson argues that the termination clause “is silent on retroactivity,” and so it unambiguously
allows CEC to terminate the Plan only “prospectively.” (Pl.’s Resp. at 9.) By this, he means that
CEC was obligated to pay bonuses for students who the admissions representatives had enrolled but
who had not met all of the other Plan criteria at the time it was terminated, and who later went on
to meet those criteria. (Id. at 8-9.) Alternatively, Wilson argues that the clause is ambiguous
because it does not expressly say whether it will apply to these “in the pipeline” students, and
extrinsic evidence is necessary to interpret the Plan. (Id. at 9-10.) CEC, on the other hand, argues
the clause unambiguously allowed it to end any bonus payments which employees had not yet earned
(because the students had not met all the conditions) at the point it chose to terminate the Plan in
December 2010, although it voluntarily continued to pay bonuses through February 2011. (Def.’s
Mot. at 7-8; Def.’s Reply at 2-4.)
The termination clause at issue in the Plan is unambiguous. It is true that the termination
clause does not expressly state that it will apply to what Wilson calls “in the pipeline payments.”
10
However, when read with the Plan as a whole, it is clear that interpreting the termination clause as
CEC did is consistent with the other Plan terms. Wilson does not dispute that CEC reserved the
unilateral right to terminate the Plan at any time and for any reason. The exercise of that right would
necessarily cut off eligibility for bonus payments that had not yet been earned at the time of
termination. That includes bonuses for enrolling students in a CEC school who had not yet met the
other conditions of the Plan. Despite Wilson’s characterization that the termination applied
“retroactively” to those students, it was not, in fact, retroactive because under the Plan’s terms,
Wilson had not yet earned those bonuses. As CEC observes, “Wilson does not allege that CEC
failed to pay bonuses for students who successfully completed their academic programs during
evaluation periods before CEC terminated the Plan. Rather, he has alleged only that he was not paid
for bonuses he might have earned between February 28, 2011 and June 30, 2011 had the Plan not
been discontinued.” (Def.’s Suppl. Br. at 3 (emphasis in original, footnote omitted).)
At any point that CEC exercised its right to terminate the Plan, there were likely to be some
students already enrolled who might have later earned an admissions representative a bonus if the
Plan was still in place at that time. But the terms of the Plan are clear that CEC could terminate it
at any time and for any reason, and it cannot be read to require ongoing payments after termination
occurred and the Plan was no longer in effect. Although Wilson argues that his work was done when
a student enrolled (Pl.’s Suppl. Br. at 2), all the conditions necessary to entitle him to a bonus were
not satisfied until the student met all the criteria set forth in the Plan. Thus, under the facts Wilson
has pled, he cannot state a claim for breach of contract.6
6
In his supplemental brief, Wilson cites Quiello v. Reward Network Estab. Servs., Inc., 420
F. Supp. 2d 23 (D. Conn. 2006) to illustrate the “fallacy of retroactive termination.” (Pl.’s Suppl.
Br. at 2-3.) However, Wilson’s reliance on that case is misplaced. In Quiello, the court held that
11
For the first time in his responsive brief to CEC’s motion, Wilson takes the position that CEC
violated an implied duty of good faith and fair dealing in terminating the Plan in the manner it which
it did. (Pl.’s Resp. at 11-14.) Wilson asserts that CEC’s actions “arbitrarily declared it would no
longer make the promised payments . . . in effect stopping the game (which it had started) while there
was still time on the clock.” (Id. at 13.) Under Illinois law, an implied duty of good faith and fair
dealing is read into every contract. Tatom, 305 F.3d at 745. When one party to a contract is vested
with discretion, “it must exercise that discretion reasonably and with proper motive, and may not do
so arbitrarily, capriciously or in a manner inconsistent with the reasonable expectations of the
parties.” Interim Health Care of N. Ill., Inc. v. Interim Health Care, Inc., 225 F.3d 876, 884 (7th Cir.
2000).
Minnesota law does not read this implied duty into every employment contract. See Brozo,
324 F.3d at 667 (applying Minnesota law); Hunt v. IBM Mid America Employees Fed. Credit Union,
384 N.W.2d 853, 858 (Minn. 1986) (declining to apply this duty in employment contracts). Whether
Minnesota courts would read a duty of good faith into a bonus plan like the one here is not entirely
clear, but ultimately it is a moot point for the purposes of deciding this motion.
The facts set forth in Wilson’s complaint do not support a claim that CEC did not act in good
the employer could not impose a new commission rate on sales generated by a program that the
plaintiff had previously put into place with the promise of a different commission rate. Quiello, 420
F. Supp. 2d at 33. However, the court explicitly noted that it was entitlement to the commission
rate, but not the actual commission itself, that vested at the time the employee put the program into
place. Id. It was undisputed that the commission itself was not actually earned until a sale was made
under the program. Id. at 31. The rationale in Quiello might apply to this case if CEC had changed
the bonus rate from $400 to some other figure for students Wilson had already enrolled. But that
would only become an issue at the point Wilson actually earned the bonus for those students.
Because CEC’s termination of the Plan only applied to as yet unearned bonuses, it was not a
“retroactive” action at all.
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faith. Wilson admits that CEC’s termination of the Plan was triggered by a federal regulation
prohibiting such bonuses. Wilson’s only complaint is that CEC terminated it earlier than required.
However, in doing so, CEC took an action expressly authorized by the Plan. In fact, CEC voluntarily
offered a “grace period” of sorts in which it continued to pay bonuses for three months after the Plan
termination was announced. Wilson’s argument that the decision was not made in good faith
because the admissions representatives had already begun performance is also inconsistent with the
terms of the Plan, which provide that a bonus is not yet earned at that point.
For the foregoing reasons, Count I of Wilson’s complaint must be dismissed for failure to
state a claim.
IV.
Wilson cannot maintain a claim for a quasi-contract remedy (Count II).
Wilson alternatively pleads a count for implied contract and unjust enrichment, stating that
the Plan gave rise to an implied contract and that CEC was unjustly enriched by withholding bonus
payments for work Wilson had already performed. Generally, a claim for unjust enrichment arises
when the plaintiff has conferred a benefit on the defendant which the defendant accepts, and
retention of the benefit by the defendant without payment to the plaintiff would violate fundamental
principles of justice, equity, and good conscience. See Bd. of Mgrs. of Hidden Lake Townhome
Owners Assoc. v. Green Trails Improvement Assoc., 934 N.E.2d 636, 644 (Ill. App. 2d Dist. 2010);
ServiceMaster of St. Cloud v. GAB Business Servs., Inc., 544 N.W.2d 302, 306 (Minn. 1996); Acton
Constr. Co. v. State, 383 N.W.2d 416, 417 (Minn. App. 1986) (stating that elements of quasicontract are “a benefit conferred upon the defendant by the plaintiff, appreciation by the defendant
of such benefit, and acceptance and retention by the defendant of such benefit under such
13
circumstances that it would be inequitable for him to retain it without paying the value thereof”).
An unjust enrichment action allows a court to impose a quasi-contract in the absence of an express
agreement to prevent a party from unjustly benefitting at the expense of another. See id.; Village of
Bloomingdale v. CDG Enters., Inc., 752 N.E.2d 1090, 1101-02 (Ill. 2001). Damages in an unjust
enrichment claim are measured by the defendant’s gain, not the plaintiff’s loss. Bd. of Mgrs., 934
N.E.2d at 644.
Wilson cannot maintain a claim for unjust enrichment if the agreement between the parties
is laid out in an enforceable written contract. Unjust enrichment is based on an implied contract, and
the theory does not apply where there is an express contract that governs the relationship of the
parties. Id.; M.M. Silta, Inc. v. Cleveland Cliffs, Inc., 616 F.3d 872, 880 (8th Cir. 2010) (applying
Minnesota law). A party to a contract cannot use an equitable doctrine to set aside the unambiguous
terms of the parties’ agreement.
Wilson’s unjust enrichment claim appears to gain some traction from CEC’s argument that
the Plan is not an enforceable contract because the reservation of discretion to terminate it rendered
any promise of additional compensation an illusory one. (See n. 5, supra.) But even assuming,
arguendo, that the Plan is not an enforceable contract, Wilson does not establish a quasi-contract
claim because CEC did not unjustly benefit at Wilson’s expense. CEC was not unjustly enriched
by work Wilson performed but for which he never received a bonus if the Plan did not guarantee him
a bonus in the first place. See Chambers v. Metro. Prop. & Cas. Ins. Co., 351 F.3d 848, 855 (8th
Cir. 2003) (holding an employer was not “enriched” by benefits to which an employee was not, as
a matter of law, entitled). Wilson’s expectation of a bonus was based only on the Plan, which could
be terminated in CEC’s sole discretion. It cannot then be said that CEC was unjustly enriched by
14
doing so.
Furthermore, an employer is “well within its rights to retain the benefit of employees’
services for which the company paid a regular salary,” and it is not inequitable to do so even if the
employees “worked extra hard” because the potential for a bonus existed. Hegel, 2011 WL 1103825
at *9. Recruiting students was part of Wilson’s job description for which he received a salary, with
or without the potential for a bonus. The supplemental compensation contemplated by the Plan was
an incentive to motivate employees like Wilson to recruit more students. That Wilson may have
recruited additional students because the potential for a bonus existed in the future does not mean
that CEC’s conduct in exercising its right to end that bonus plan was inequitable. Therefore, Count
II of Wilson’s complaint must be dismissed.
CONCLUSION
For the foregoing reasons, Wilson’s complaint is dismissed for failure to state a claim. It
does not appear that there is any amended complaint Wilson could file to state a valid claim.
However, he is given until May 10, 2012 to move for leave to file an amended complaint. If he does
not file such a motion by that date, the case will be dismissed with prejudice.
IT IS SO ORDERED.
__________________________________________
GERALDINE SOAT BROWN
United States Magistrate Judge
DATED: April 12, 2012
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