Kelly v. Progressive Casualty Insurance Company

Filing 31

ORDERED that Progressive's 8 Motion for Partial Summary Judgment is GRANTED and that Kelly's 9 Motion for Partial Summary Judgment is DENIED. It is FURTHER ORDERED that count two of Kelly's petition is DISMISSED WITH PREJUDICE. Signed by Judge Lance M Africk. (gec)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
WILLIAM F. KELLY

CIVIL ACTION

VERSUS

NO. 15-4350

PROGRESSIVE CASUALTY
INSURANCE COMPANY

SECTION I

ORDER AND REASONS
The Court has pending before it cross-motions for partial summary judgment filed by
plaintiff, William F. Kelly (“Kelly”),1 and defendant, Progressive Casualty Insurance Company
(“Progressive”).2 For the following reasons, it is ordered that Progressive’s motion is granted and
that Kelly’s motion is denied.
BACKGROUND
This case arises out of the termination of Kelly’s employment as a Progressive staff attorney.3
According to count one of Kelly’s state-court petition, which Progressive removed to this Court, his
employment was terminated on the basis of his age in violation of Louisiana law.4 In addition, Kelly
alleges in count two of his petition that he is entitled to penalties and attorney’s fees as a result of
Progressive’s late payment of amounts owed to him as reimbursement for travel expenses pursuant
to Louisiana Revised Statute § 23:632. The cross-motions for partial summary judgment relate only
to count two.

1

R. Doc. No. 9.
R. Doc. No. 8.
3
See R. Doc. No. 1-2.
4
R. Doc. No. 1-2, at 3-5. The petition does not allege any violations of federal law and
consequently the notice of removal is based solely on diversity jurisdiction. R. Doc. No. 1, at 3.
2

1

There is no genuine dispute regarding the facts material to resolving the cross-motions for
partial summary judgment. Kelly was discharged on August 12, 2014.5 At the time of his discharge,
Kelly had work-related travel expenses which were unreimbursed because he had not submitted them
for reimbursement.6 The record contains an email from Kelly to Progressive dated two days after his
discharge asking, “What about my unpaid business expenses?”7 A Progressive representative
responded on August 18, 2015 that “I can submit your remaining expenses for you. Please send me
an accounting of what you are owed.”8 Plaintiff responded on the same day that “We can dot the ‘i’s’
and cross the ‘t’s’ later.”9 The only summary judgment evidence in the record establishes that Kelly
did not submit an accounting of his reimbursable expenses to Progressive and demand payment until
November 7, 2014.10
On or about May 20, 2015, after a series of additional correspondence and demands,
Progressive reimbursed Kelly for those expenses in the amount of $127.60. On the basis of that
delayed reimbursement of $127.60, Kelly demands attorney’s fees and statutory penalties in the
amount of $52,233.92.11
LAW & ANALYSIS
A.

Standard for Motions for Summary Judgment
Summary judgment is proper when, after reviewing the pleadings, the discovery and

5

R. Doc. No. 18, at 2; R. Doc. No. 13-1, at 1.
R. Doc. No. 18, at 3; R. Doc. No. 13-1, at 2.
7
R. Doc. No. 8-6, at 3.
8
R. Doc. No. 8-6, at 2.
9
R. Doc. No. 8-6, at 1.
10
R. Doc. No. 18, at 3; R. Doc. No. 8-8, at 3 (“Lastly, as I promised, I have the following
travel expenses from my last couple of weeks at Progressive.”); R. Doc. 9-2, at 3 (same exhibit).
11
R. Doc. No. 9-1, at 13.
6

2

disclosure materials on file, and any affidavits, the court determines there is no genuine issue of
material fact. See Fed. R. Civ. P. 56. “[A] party seeking summary judgment always bears the initial
responsibility of informing the district court of the basis for its motion and identifying those portions
of [the record] which it believes demonstrate the absence of a genuine issue of material fact.”
Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The party seeking summary judgment need not
produce evidence negating the existence of material fact, but need only point out the absence of
evidence supporting the other party’s case. Id.; Fontenot v. Upjohn Co., 780 F.2d 1190, 1195 (5th
Cir. 1986).
Once the party seeking summary judgment carries its burden pursuant to Rule 56, the
nonmoving party must come forward with specific facts showing that there is a genuine issue of
material fact for trial. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).
The showing of a genuine issue is not satisfied by creating “‘some metaphysical doubt as to the
material facts,’ by ‘conclusory allegations,’ by ‘unsubstantiated assertions,’ or by only a ‘scintilla’
of evidence.” Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (citations omitted).
Instead, a genuine issue of material fact exists when the “evidence is such that a reasonable jury
could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
(1986). The party responding to the motion for summary judgment may not rest upon the pleadings,
but must identify specific facts that establish a genuine issue. Id. The nonmoving party’s evidence,
however, “is to be believed, and all justifiable inferences are to be drawn in [the nonmoving party’s]
favor.” Id. at 255; see also Hunt v. Cromartie, 526 U.S. 541, 552 (1999).
B.

Louisiana Wage Payment Act
Pursuant to the Louisiana Wage Payment Act, upon discharge of an employee, the employer
3

must “pay the amount then due under the terms of employment, whether the employment is by the
hour, day, week, or month, on or before the next regular payday or no later than fifteen days
following the date of discharge, whichever occurs first.” La. Rev. Stat. § 23:631(A)(1)(a). An
employer who “fails or refuses to comply” with this provision is subject to a penalty in the amount
of the lesser of “ninety days wages at the employee’s daily rate of pay, or else for full wages from
the time the employee’s demand for payment is made until the employer” pays. La. Rev. Stat. §
23:632(A). Section 632 also authorizes an award of reasonable attorney’s fees if an employee files
“a well-founded suit for any unpaid wages . . . after three days shall have elapsed from time of
making the first demand following discharge.” Id. at § 23:632(C).
Sections 631 and 632 “are penal in nature and must therefore be strictly construed and yield
to equitable defenses.” Wyatt v. Avoyelles Parish Sch. Bd., 831 So. 2d 906, 912 (La. 2002).
Accordingly, penalties “should not be extended beyond the plain wording of the statute.” Smith v.
Coffman, 87 So. 3d 137, 152 (La. App. 2 Cir. 2012). The Louisiana Supreme Court has “further
elaborated that ‘a good-faith non-arbitrary defense to liability for unpaid wages, i.e., a reasonable
basis for resisting liability’ permits the court to excuse the employer from the imposition of
additional penalty wages.” Beard v. Summit Institute of Pulmonary Med. & Rehab, Inc., 707 So. 2d
1233, 1236 (La. 1998) (quoting Carrier v. Pee Wee’s Equipment Co., 364 So. 2d 555, 557 (La.
1978)).
C.

Analysis
Both Kelly and Progressive move for partial summary judgment as to Kelly’s claim for

penalties and attorney’s fees pursuant to § 23:632. Much of the briefing focuses on whether

4

reimbursement for travel expenses is within the scope of the Louisiana Wage Payment Statute.12 The
Court pretermits deciding that question of law because the Court is persuaded by Progressive’s
argument that, on the particular facts of this case, strict compliance with § 23:631 by Progressive was
impossible and penalties should not be imposed pursuant to § 23:632.
As explained above, § 23:631(A)(1)(a) required Progressive to pay Kelly “the amount then
due under the terms of employment . . . on or before the next regular payday or no later than fifteen
days following the date of discharge, whichever occurs first.”13 Six days after his discharge,
Progressive responded to Kelly’s inquiry about his expenses and invited Kelly to submit information
establishing the amounts of the expenses he wanted reimbursed. However, Kelly did not submit that
information and demand reimbursement until November 7, 2014, almost three months after his
August 12, 2014 discharge. Accordingly, Progressive did not know the amount to reimburse Kelly
for his travel expenses within the window for payment dictated by § 23:631(A)(1)(a), as Kelly had
not given Progressive the information it needed to make such payment, despite Progressive’s
invitation to do so.
Penalties pursuant to § 23:632(A) are not available unless the employer “fails or refuses to
comply” with § 23:631. The Court must construe these statutes strictly and consider equitable
defenses to a claim for penalties. See Wyatt, 831 So. 2d at 912. The record establishes that, through
no fault of its own, Progressive lacked the information it needed to be able to comply with § 23:631
within the time frame established by that statute. Consequently, the Court finds as a matter of law
12

R. Doc. No. 8-1, at 8-13; R. Doc. No. 9, at 5-10.
The parties have not submitted evidence establishing Kelly’s “next regular payday” or
articulated any arguments which make the date of his “next regular payday” a fact material to
resolution of these motions. Accordingly, for convenience the Court will refer to the fifteen-day
§ 23:631(A)(1)(a) period for compliance.
13

5

that Progressive is entitled to an equitable good-faith defense under these specific facts.14
Accordingly, § 23:632 does not mandate penalties under the circumstances of this case and summary
judgment should be granted in favor of Progressive and against Kelly.
Kelly’s argument in favor of imposing a penalty on Progressive impermissibly goes “beyond
the plain wording of the statute.” Smith, 87 So. 3d at 152. Essentially, he argues that because he
demanded reimbursement from Progressive and Progressive did not pay until over ninety days later,
he is entitled to the maximum penalties allowable by § 23:632. A careful examination of the
interplay between the applicable statutes demonstrates why this argument fails.
Section 23:631(A) obligates the employer to pay amounts due at the time of discharge within
fifteen days following discharge. This obligation to pay “actual wages due is not dependent on the
employee making a demand for payment.” See Schuyten v. Superior Sys., Inc., 952 So. 2d 98, 105
(La. App. 1 Cir. 2006) (emphasis added). Only after an employer has “fail[ed] or refuse[d] to comply
with” § 23:631 do penalties become available pursuant to § 23:632(A), although a demand for
payment by the employee is required to trigger the penalties. See id. (explaining that “a demand for
payment is one of the requirements for recovery of penalty wages under” § 23:632). Pursuant to this
framework, a demand for payment is necessary to recover penalties pursuant to § 23:632(A), but it
14

The Court is not persuaded by Kelly’s arguments that Progressive should have done more
than it did. Kelly asserts that Progressive “did not tell him that there was limited time” to submit his
requests for reimbursement. R. Doc. No. 14, at 6. However, Kelly cites no authority holding that an
employer must warn an employee of the possibility that failure to inform the employer of expenses
the employee had incurred at the time of discharge might preclude the availability of penalties
pursuant to § 23:632. Furthermore, the Court rejects, as factually unsupported, Kelly’s implication
that Progressive “set up procedural pitfalls seeking to avoid the penalty provided by the statute.”
R. Doc. No. 14, at 7. Progressive expressly told Kelly that it would submit his expenses for him if
he provided an accounting. R. Doc. No. 8-6, at 2. Having failed to take advantage of that offer until
months later, Kelly’s complaints about lacking direct access to the reimbursement system after his
discharge rings hollow.
6

is not sufficient; the demand must be for an amount which an employer owed but did not pay within
fifteen days of discharge in violation of § 23:631. Nothing in the plain language of either statute
suggests that an employee’s demand made for payment of an amount that only became due after
discharge can result in an award of penalties; that is, failure to pay upon demand is an insufficient
basis for penalties without an underlying violation of § 23:631 violation.
The undisputed summary judgment record demonstrates that Kelly demanded an amount that
he was owed, but not an amount that Progressive had already failed to pay in violation of § 23:631.
Rather, Kelly demanded an amount that only became payable when Kelly told Progressive, in
conjunction with his demand, how much he claimed in reimbursement. Although the Court certainly
does not condone Progressive’s delay in reimbursing Kelly for his expenses, the undisputed facts of
this case fall outside the scope of the statutory framework established by the Louisiana Legislature.
Likewise, although imposing penalties might be consistent with the underlying purpose of the
statutes as Kelly contends,15 it is not authorized by the plain language of the statutes.
The cases cited by plaintiff do not dictate a penalty award based on a demand for payment
of amounts which could not have been paid during the fifteen-day § 23:631 window. In Jeansonne
v. Schmolke, the employer owed the employee fixed and undisputed amounts at the time of her
discharge, as well as amounts that only became due after her discharge. See 40 So. 3d 347, 353, 361
(La. App. 4 Cir. 2010). Jeansonne cannot be read as holding that penalties must be awarded based
on a failure to pay amounts which only become due after the fifteen-day time for payment set forth
in § 23:631(A). Likewise, in Bannon v. Techeland Oil Corporation, the date of demand triggered
the calculation of penalties for late payment of wages which were already undisputedly fixed and
15

R. Doc. No. 9-1, at 5-6.
7

owed and had not been paid within the applicable time period after discharge. See 17 So. 2d 921, 922
(1944). Finally, the Louisiana Supreme Court’s summarization of the elements of a claim for
penalties in Becht v. Morgan Building & Spas, Inc., does not expand the scope of § 23:632(A) as
Kelly suggests. See 843 So. 2d 1109, 1112-13 (La. 2003) (explaining that penalties were owed
because the employer did not pay amounts due upon employee’s resignation “within the fifteen day
period proscribed by” § 23:631).
Plaintiff concedes that his claim for attorney’s fees is contingent on his claim for penalties.16
Accordingly, Progressive is entitled to partial summary judgment dismissing the entirety of count
two of Kelly’s petition.
CONCLUSION
IT IS ORDERED that Progressive’s motion is GRANTED and that Kelly’s motion is
DENIED.
IT IS FURTHER ORDERED that count two of Kelly’s petition is DISMISSED WITH
PREJUDICE.
New Orleans, Louisiana, December 24, 2015.
________________________________
LANCE M. AFRICK
UNITED STATES DISTRICT JUDGE

16

R. Doc. No. 9-1, at 13 (“Accordingly in the event the Court agrees with Plaintiff that
Progressive is liable for the penalty provided by 23:632, Progressive is also liable for attorney’s
fees . . . .”).
8