PITTSBURGH LOGISTICS SYSTEMS, INC. v. FRANTZEN
Filing
31
MEMORANDUM OPINION re 13 Motion to Dismiss for Failure to State a Claim by JOE BIELAWSKI, GREG BURNS, PITTSBURGH LOGISTICS SYSTEMS, INC. and 18 Motion to Dismiss for Failure to State a Claim by JOE BIELAWSKI, GREG BURNS. PITTSBURGH LOGISTICS SYS TEMS, INC.'s 13 Motion to Dismiss the Counterclaims will be GRANTED IN PART and DENIED IN PART, and JOE BIELAWSKI and GREG BURNS' 18 Motion to Dismiss the Third-Party Complaint will be DENIED as more fully stated in said opinion. Signed by Judge Christy Criswell Wiegand on 1/17/2023. (jmm)
Case 2:22-cv-01050-CCW Document 31 Filed 01/17/23 Page 1 of 16
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA
PITTSBURGH LOGISTICS SYSTEMS,
INC.,
2:22-CV-01050-CCW
Plaintiff and Counter Defendant,
v.
JACOB FRANTZEN,
Defendant, Counter Claimant, and
Third-Party Plaintiff,
v.
GREG BURNS and JOE BIELAWSKI,
Third-Party Defendants.
MEMORANDUM OPINION
Before the Court are two Motions to Dismiss—one seeking a dismissal of Defendant Jacob
Frantzen’s Counterclaims, which is filed on behalf of Plaintiff Pittsburgh Logistics Systems Inc.
(“PLS”) and Third-Party Defendants Greg Burns and Joe Bielawski, see ECF No. 13, and another
seeking a dismissal of Mr. Frantzen’s Third-Party Complaint, which is filed on behalf of Mr. Burns
and Mr. Bielawski, see ECF No. 18. For the reasons that follow, the Motion to Dismiss the
Counterclaims will be GRANTED IN PART and DENIED IN PART, and the Motion to Dismiss
the Third-Party Complaint will be DENIED.
I.
Background
The following facts are taken from the Counterclaims and Third-Party Complaint, which
the Court takes as true for the purpose of ruling on the instant Motions to Dismiss.
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On July 2, 2018, Mr. Frantzen received a written offer of employment to work as the
Director of Intermodal & Drayage for PLS—a company that offers logistic services. ECF No. 7
¶¶ 7, 11, 50. He alleges that he received this offer from Mr. Burns, the CEO of PLS, and Mr.
Bielawski, the COO of PLS. Id. ¶¶ 45–48. While the offer included an annual salary, the terms
also included a commission structure that would pay Mr. Frantzen “5% of all PLS Intermodal new
revenue in 2018 and 2019 Intermodal Team (paid quarterly).” ECF No. 14-1 at 7 (emphasis
added). On July 27, 2018, Mr. Frantzen signed a written contract that incorporated the terms of
the offer of employment. See generally id. Mr. Frantzen asserts that he would not have left his
previous employer “but for the[] commission terms” in his offer letter. ECF No. 7 ¶ 10.
Mr. Frantzen began working for PLS in July of 2018. Id. ¶ 11. Shortly after he started,
however, Mr. Frantzen alleges that PLS began paying him a reduced commission on the net
profit—rather than on revenue. Id. ¶ 13. In addition, Mr. Frantzen alleges that PLS modified the
commission structure further by capping the net profit at 20% of the transaction, even though the
total net profit of a single transaction could exceed this percentage. Id. ¶ 13.
When Mr. Frantzen complained about the “bait and switch,” PLS purportedly refused to
honor the commission structure set forth in the offer of employment. Id. ¶ 14. Mr. Frantzen asserts
that from June 2018 until December 2019, he should have received over $150,000 in commission
but, to date, he has not received the full amount per the terms of the contract. Id. ¶¶ 16–17.
On June 22, 2022, PLS sued Mr. Frantzen in state court for violating the confidentiality,
non-compete, and non-solicitation provisions of his employment contract when he allegedly began
working for a competitor. ECF No. 1-2 ¶¶ 27–44. Subsequently, Mr. Frantzen removed the case
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to federal court pursuant to 28 U.S.C. §§ 1441, 1446.1 See generally ECF No. 1. On August 25,
2022, Mr. Frantzen filed his Answer and Counterclaims, setting forth four state-law claims: a
breach of contract claim against PLS (Count One); a breach of the implied covenant of good faith
and fair dealing claim against PLS (Count Two); an unjust enrichment claim against PLS (Count
Three); and a claim alleging violation of the Pennsylvania Wage Payment and Collection Law
(“WPCL”) against PLS, Mr. Burns, and Mr. Bielawski (Count Four). See generally ECF No. 7.
PLS moved to dismiss the Counterclaims pursuant to Federal Rule of Civil Procedure 12(b)(6).
ECF Nos. 13 &14.
Mr. Frantzen also brought a one-count Third-Party Complaint against Mr. Burns and Mr.
Bielawski, alleging a violation of the WPCL (Count One). See generally ECF No. 9. Mr. Burns
and Mr. Bielawski moved to dismiss that claim. ECF No. 18. Both Motions have been fully
briefed, see ECF Nos. 14, 19–23, and are now ripe for adjudication.
II.
Legal Standard
A motion to dismiss under Rule 12(b)(6) tests the legal sufficiency of a claim. In reviewing
a motion to dismiss, the court accepts as true the pleading’s factual allegations and views them in
the light most favorable to the party making the claims. See Phillips v. Cnty. of Allegheny, 515
F.3d 224, 228 (3d. Cir. 2008); 1600 Walnut Corp. v. Cole Haan Co. Store, 530 F. Supp. 3d 555,
558 (E.D. Pa. 2021). Although a complaint or counterclaim need not contain detailed factual
allegations to survive a motion to dismiss, it cannot rest on mere labels and conclusions. Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 555 (2007); 1600 Walnut Corp., 530 F. Supp. 3d at 558. That
is, “a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at
1
This Court has subject-matter jurisdiction over this action, specifically diversity jurisdiction pursuant to 28 U.S.C. §
1332, because Mr. Frantzen is an Illinois resident, PLS is a Pennsylvania corporation, and the amount in controversy
is more than $75,000 in damages. ECF No. 1-2 ¶¶ 1–3, 44, 50, 59; see also ECF No. 30.
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555. Accordingly, “[f]actual allegations must be enough to raise a right to relief above the
speculative level,” id., and be “sufficient . . . to ‘state a claim to relief that is plausible on its face,’”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). “The plausibility
standard is not akin to a ‘probability requirement,’ but it asks for more than the sheer possibility
that a defendant has acted unlawfully.” Id. (quoting Twombly, 550 U.S. at 556).
The United States Court of Appeals for the Third Circuit has established a three-step
process for district courts to follow in analyzing a Rule 12(b)(6) motion:
First, the court must “tak[e] note of the elements a [party] must plead
to state a claim.” Second, the court should identify allegations that,
“because they are no more than conclusions, are not entitled to the
assumption of truth.” Finally, “where there are well-pleaded factual
allegations, a court should assume their veracity and then determine
whether they plausibly give rise to an entitlement for relief.”
Burtch v. Milberg Factors, Inc., 662 F.3d 212, 221 (3d Cir. 2011) (quoting Santiago v. Warminster
Twp., 629 F.3d 121, 130 (3d Cir. 2010)). That said, under Rule 8’s notice pleading standard, even
after the Supreme Court’s decisions in Twombly and Iqbal, a party need only “allege sufficient
facts to raise a reasonable expectation that discovery will uncover proof of her claims.” Connolly
v. Lane Constr. Corp., 809 F.3d 780, 788–89 (3d Cir. 2016) (finding that “at least for purposes of
pleading sufficiency, a complaint need not establish a prima facie case in order to survive a motion
to dismiss”).
III.
Discussion
A.
The Motion to Dismiss the Counterclaims
Mr. Frantzen’s Counterclaims are state-law claims arising from a contractual dispute.
These claims are all governed by Pennsylvania law per the terms of the contract itself and because
the parties agree that Pennsylvania law applies. ECF No. 14-1 ¶ 11; see Commonwealth Cap.
Corp. v. Getronics, Inc., 147 Fed. App’x 253, 254–55 (3d Cir. 2005) (requiring federal courts
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sitting in diversity to apply the law that the parties “explicitly or implicitly” have chosen). PLS,
Mr. Burns, and Bielawski seek to dismiss all four Counterclaims. See generally ECF No. 14.
1.
Mr. Frantzen Has Plausibly Alleged a Breach of Contract Claim
The Court will address Mr. Frantzen’s breach of contract claim (Count One) and breach of
the implied covenant of good faith and fair dealing claim (Count Two) together. See ECF No. 7
¶¶ 7–29. For both claims, Mr. Frantzen argues that PLS breached the terms of the contract and the
covenant of good faith and fair dealing by paying 5% commission only on the net profit, rather
than on revenue. PLS asserts that no breach occurred because the contract allowed PLS to modify
the commission structure “at management’s discretion.” ECF No. 14 at 2. PLS also requests that
the standalone claim of breach of the covenant of good faith and fair dealing be dismissed because
Pennsylvania does not recognize it as an independent cause of action.
The Court agrees with PLS that Count Two, for breach of an implied covenant of good
faith and fair dealing, must be dismissed insofar as it is brought as a standalone claim. In
Pennsylvania, a breach of the implied covenant of good faith cannot be pleaded independently
from a breach of contract claim. Davis v. Wells Fargo, 824 F.3d 333, 352 (3d Cir. 2016). Such a
claim “is subsumed in a breach of contract claim” given that the obligation to act in good faith is
inherent in a contract. Id. (quoting Burton v. Teleflex Inc., 707 F.3d 417, 432 (3d Cir. 2013)); see
Somers v. Somers, 613 A.2d 1211, 1214 (Pa. Super. 1992). Therefore, the Court will dismiss
Count Two as an independent cause of action with prejudice because amendment would be futile.
See Lake v. Arnold, 232 F.3d 360, 373 (3d Cir. 2000) (“While [Federal Rule of Civil Procedure
15] requires that leave to amend should be ‘freely given,’ a district court has the discretion to deny
this request if . . . the amendment would be futile . . . .”). That said, the Court will incorporate Mr.
Frantzen’s arguments related to good faith and fair dealing into the analysis of his breach of
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contract claim at Count One. See Davis, 824 F.3d at 352 (doing same); Tubman v. USAA Cas.
Ins., 943 F. Supp. 2d 525, 529 (E.D. Pa. 2013) (doing same).
Mr. Frantzen has, however, adequately pled a breach of contract claim in Count One.
Under Pennsylvania law, a party alleging breach of contract must show that (1) a contract between
the parties existed; (2) a breach of a contractual duty occurred; and (3) it resulted in damages.
Ware v. Rodale Press, Inc., 322 F.3d 218, 225 (3d Cir. 2003) (applying Pennsylvania law). The
parties agree that a contract between the parties existed, but dispute whether PLS breached a
contractual duty.
To determine what contractual duties PLS owed, the Court will begin by examining the
contract itself.2 As compensation, the contract provided Mr. Frantzen a base salary and a
commission structure that should have constituted “5% of all PLS Intermodal new revenue in 2018
& 2019 Intermodal Team (paid quarterly).” ECF No. 14-1 at 7 (emphasis added). Mr. Frantzen
alleges that upon beginning his employment with PLS, he was paid a reduced commission rate,
limited to the net profit. ECF No. 7 ¶¶ 8, 13. In addition, Mr. Frantzen alleges that PLS capped
the net profit at 20% of the transaction, despite no mention of a cap in his contract. Id. ¶ 13.
Rather than disputing these allegations, PLS argues that it had no contractual duty to pay
him the commission structure outlined in the contract, given that two provisions provided PLS
unilateral discretion to alter compensation. First, the contract stated that the “compensation,
benefits, and job responsibilities are more fully described in an offer letter of employment, and the
The contract was not attached to the Counterclaims but was attached to PLS’ Motion to Dismiss. Although Rule
12(d) limits when a court may rely on documents outside the pleadings in ruling on a motion to dismiss, a court may
consider “an undisputedly authentic document that a [party] attaches as an exhibit to a motion to dismiss if the [claims
at issue] are based on the document.” In re Donald J. Trump Casino Sec. Litig. – Taj Mahal Litig., 7 F.3d 357, 368
n.9 (3d Cir. 1993) (quoting Pension Benefit Guar. Corp. v. White Consol. Indus., 998 F.2d 1192, 1196 (3d Cir. 1993));
see also Spizzirri v. Zyla Life Scis., 802 Fed. App’x 738, 739 (3d Cir. 2020) (“[A] court may consider . . . documents
integral to or explicitly relied upon in the complaint without converting the motion to dismiss into a motion for
summary judgment.”). Therefore, because the contract between PLS and Mr. Frantzen is integral to the claims in this
case, the Court will consider it at this preliminary stage.
2
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Company may change them from time to time.” ECF No. 14-1 ¶ 1. Second, Mr. Frantzen’s offer
of employment included a provision that “[c]ompensation and benefits are subject to change at
management’s discretion.” Id. at 7. PLS maintains that these two provisions gave it unilateral
authority to modify the commission structure. Elsewhere, however, the contract specified, “This
Agreement . . . cannot be modified, changed, waived or terminated except by a writing signed by
the Company and [Mr. Frantzen].” ECF No. 14-1 ¶ 15. Mr. Frantzen argues that, although PLS
had discretion to change his compensation, such change needed to be in writing and signed by both
parties to take effect. ECF No. 20 at 4–5.
The Court concludes that both of these interpretations are reasonably grounded in Mr.
Frantzen’s employment agreement, such that the agreement is ambiguous. Com. ex rel. Kane v.
Univ. of Pittsburgh Med. Ctr., 129 A.3d 441, 463 (Pa. 2015) (“A contract’s terms are considered
ambiguous if they are subject to more than one reasonable interpretation when applied to a
particular set of facts.” (cleaned up)). In Pennsylvania, there is a preference to interpret ambiguous
provisions in a way that gives “a reasonable, lawful, and effective meaning to all [contractual]
terms” rather than rendering a provision “unreasonable, unlawful, or of no effect.” Id. at 468
(quoting Restatement (Second) of Contracts § 203 (Am. L. Inst. 1981)). The competing provisions
here, however, which simultaneously provide PLS with the discretion to alter compensation but
also require any changes be made in writing and signed by both parties, cannot be interpreted
without rendering some term ineffective. In such circumstances, more specific provisions “are
more likely to express the meaning of the parties” than more general provisions. PBS Coal, Inc.
v. Hardhat Min., Inc., 632 A.2d 903, 906 (Pa. Super. 1993) (applying the Restatement (Second)
of Contracts § 203 (Am. L. Inst. 1981)). Thus, the more specific provision allowing PLS to make
changes to an employee’s compensation overrides the more general provision requiring signatures
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by both parties to effectuate changes to the contract. There is, however, no language in the
discretionary provisions that details how PLS should exercise its discretion (whereas, the other
provision requires any change be made in writing). Therefore, the ability to alter compensation
does not eliminate the requirement that such a change be provided in writing. Considering PLS
has not provided any indication of how it enacted the change to Mr. Frantzen’s commission
structure, the Court finds that Mr. Frantzen has plausibly alleged that PLS breached a contractual
duty.
Mr. Frantzen has also plausibly alleged a breach of the duty of good faith. Employers, no
less than other contracting parties, have an obligation to act in good faith to perform contractual
duties. Somers, 613 A.2d at 1214. Good faith is defined as “honesty in fact in the conduct or
transaction concerned.” Somers, 613 A.2d at 1213 (cleaned up). A party breaches the covenant
of good faith and fair dealing if there is, among other things, an “evasion of the spirit of the
bargain.” Somers, 613 A.2d at 1214 (citing Restatement (Second) of Contracts, § 205 cmt. d (Am.
L. Inst. 1981)).
Mr. Frantzen argues that PLS acted in bad faith by first luring him away from his previous
employer with a generous commission structure but then refusing to pay in accordance with these
terms. ECF No. 7 ¶¶ 23–29. PLS relies on Third Circuit caselaw that found that the duty to act in
good faith “is not divorced from the specific clauses of the contract and cannot be used to override
an express contractual term.” ECF No. 14 at 12 (quoting Northview Motors, Inc. v. Chrysler
Motors. Corp., 227 F.3d 78, 91 (3d Cir. 2000)). PLS does not, however, point to any express
change in Mr. Frantzen’s commission structure, only its ability to change said terms, making this
holding inapplicable. Otherwise, PLS’ argument would essentially render it impossible for PLS
to ever breach the contract for disputes related to compensation.
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The covenant of good faith requires that, when exercising discretion in modifying a
contract, a party must do so reasonably. See Clemenete v. Allstate, Ins., No. 2:22-CV-00056CCW, 2022 WL 17976324, at *5 (W.D. Pa. Dec. 28, 2022). While courts have recognized that
employers have discretion to change an employee’s compensation, this “does not relieve an
employer of its contractual obligation to provide the compensation promised in return for an
employee’s services.” See Braun v. Wal-Mart Stores, Inc., 24 A.3d 875, 942 (Pa. Super. 2011).
In fact, where discretionary changes to compensation have been upheld, the employers had some
intention to pay what it originally promised. See, e.g., Hicks v. Global Data Consultants, LLC, -- A.3d ---, 2022 WL 3148810, at *2, *8 (Pa. Super. 2022) (allowing a discretionary change in
compensation when an employer had paid the original commission structure for three years). In
this case, Mr. Frantzen has alleged that, from the outset, PLS did not pay him according to the
original terms of the contract. This assertion suggests that PLS acted unreasonably in exercising
its discretion because it had no intention to pay Mr. Frantzen the promised commission structure.
If true, which the Court must assume at this stage, Mr. Frantzen has plausibly alleged a breach of
the implied covenant of good faith and fair dealing to support his breach of contract claim.
Accordingly, for the foregoing reasons, PLS’ Motion to Dismiss the breach of contract claim
(Count One) will be DENIED.
2.
Mr. Frantzen Has Not Plausibly Alleged an Unjust Enrichment Claim
As Count Three of his Counterclaims, Mr. Frantzen brings an unjust enrichment claim in
the alternative against PLS. PLS argues that this unjust enrichment claim should be dismissed
because Mr. Frantzen has not met either limited circumstance in which a litigant is allowed to
bring an unjust enrichment claim as an alternatively pleaded claim.
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In Pennsylvania, it is well-established that an unjust enrichment claim is “inapplicable
when the relationship between the parties is founded on a written agreement or express contract.”
Hershey Foods Corp. v. Ralph Chapek, Inc., 828 F.2d 989, 999 (3d Cir. 1987) (quoting Benefit Tr.
Life Ins. v. Union Nat’l Bank, 776 F.2d 1174 (3d Cir. 1985)). A plaintiff may plead unjust
enrichment in the alternative only if “(i) the contract at issue covers only a part of the relationship
between the parties, or that (ii) the existence of a contract is uncertain or its validity is disputed by
the parties.” Vantage Learning (USA), LLC v. Edgenuity, Inc., 246 F. Supp. 3d 1097, 1100 (E.D.
Pa. 2017) (footnote omitted). Because Mr. Frantzen argues that only the first exception applies,
the Court will limit its analysis to this exception.
According to PLS, Mr. Frantzen cannot meet the first exception because the contract
represented the entirety of the relationship between the parties. See ECF No. 14 at 14. As support,
PLS notes that the contract explicitly states, “This Agreement constitutes the entire agreement
between the parties.” ECF No. 14-1 ¶ 15. Mr. Frantzen responds that, although the contract
covered 2018 and 2019, he continued working for PLS until November 30, 2021, and therefore, it
does not cover the entirety of their employment relationship. ECF No. 20 at 11. According to Mr.
Frantzen, because he continued working past 2019, he “is seeking not only lost commissions for
2018 [and] 2019, but for 2020 and 2021 as well.” Id. The claim for 2020 or 2021 commissions,
however, is absent entirely from his pleadings. See ECF No. 7 ¶¶ 30–38. As part of his unjust
enrichment claim, he requests commissions only “[f]rom June 2018 until December 2019.” Id. ¶¶
34–35. Because the Court accepts as true only those factual allegations in the pleadings, see
Phillips, 515 F.3d at 228, Mr. Frantzen’s new request for commissions from 2020 and 2021 cannot
be considered, and he cannot support an unjust enrichment claim in the alternative.
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Accordingly, based on the factual allegations in the Counterclaims, the Court finds that the
contract represents the entirety of the relationship between the parties, and PLS’ Motion to Dismiss
the unjust enrichment claim will be GRANTED. The Court will dismiss the unjust enrichment
claim without prejudice, and Mr. Frantzen will be granted leave to amend to address this deficiency
in his pleadings.
3.
Mr. Frantzen Has Plausibly Alleged a WPCL Claim Against PLS
As with the previous claims, Mr. Frantzen’s claim under the WPCL (Count Four) is also
predicated on the allegation that PLS failed to pay the full commission owed. The WPCL provides,
Every employer shall pay all wages, other than fringe benefits and wage
supplements, due to his employes on regular paydays designated in advance by the
employer. . . . All wages, other than fringe benefits and wage supplements, earned
in any pay period shall be due and payable within the number of days after the
expiration of said pay period as provided in a written contract of employment or, if
not so specified, within the standard time lapse customary in the trade or within 15
days from the end of such pay period.
43 P.S. § 260.3(a). The WPCL offers a statutory remedy for employees to receive any wages or
compensation improperly withheld by their employers. Grimm v. Universal Med. Servs., Inc., 156
A.3d 1282, 1290 (Pa. Super. 2017). If an employer breaches a contractual duty to pay, courts can
enforce the terms of the contract under the WPCL. See Weldon v. Kraft, Inc., 896 F.2d 793, 801
(3d Cir. 1990) (“The contract between the parties governs in determining whether specific wages
are earned.”).
First, PLS argues that the WPCL claim should be dismissed because the unpaid wages are
almost entirely time barred. The Third Circuit recognizes that the statute of limitations is properly
raised at the motion to dismiss stage when it is “apparent on the face of the [pleadings]” that the
claim is brought outside the statute of limitations. Robinson v. Johnson, 313 F.3d 128, 135 (3d
Cir. 2002) (quoting Bethel v. Jendoco Constr. Corp., 570 F.2d 1168, 1174 (3d Cir. 1978)).
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Although a breach of contract claim has a four-year statute of limitations in Pennsylvania, see 42
P.S. § 5525, the WPCL has a three-year statute of limitations, see 43 P.S. § 260.9a(g). Mr.
Frantzen filed his Counterclaims on August 25, 2022, so he has only plausibly alleged damages
after August 25, 2019 for the purposes of his WPCL claim.
Mr. Frantzen, however, argues that he is entitled to payments “due and payable” before
this date because the continuing violation doctrine applies. He relies on Third Circuit caselaw that
relaxes the statute of limitations for “most federal causes of action” when a violation is part of the
same continuing practice and as long as the final violation falls within the applicable limitations
period. ECF No. 20 at 14 (quoting Brenner v. Loc. 514, United Bhd. of Carpenters & Joiners of
Am., 927 F.2d 1283, 1295 (3d Cir. 1991)). This doctrine applies to federal causes of actions—
which the WPCL is not—and, furthermore, a court within this district has already declined to
extend this doctrine to a WPCL claim. See Mullin v. Int’l Bhd. of Teamsters Loc. 249, No.
2:03CV1445, 2006 WL 840342, at *3 (W.D. Pa. Mar. 28, 2006) (McVerry, J.) (finding the
continuing violation doctrine inapplicable under the WPCL because paychecks are “more
analogous to a discrete act . . . rather than an ongoing pattern of discrimination or mistreatment”
(internal quotation marks omitted)). The Court is persuaded by this reasoning, and similarly
concludes that the statute of limitations applies, even at this stage.
Since Mr. Frantzen’s
commissions were paid quarterly, he has plausibly alleged damages for the final two quarters of
2019, but he has not plausibly alleged damages prior to this period under the WPCL.
Second, PLS argues that a WPCL claim is predicated on a breach of contract claim, and
given the discretionary provisions, Mr. Frantzen cannot establish that he was contractually entitled
to any unpaid commission. The Court has already rejected this argument. Because the Court is
allowing the breach of contract claim to proceed, Mr. Frantzen has plausibly alleged that he was
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contractually entitled to unpaid wages. Accordingly, the WPCL claim against PLS survives for
amounts due after August 25, 2019.
4.
The Counterclaim Against Mr. Burns and Mr. Bielawski is Dismissed
on Procedural Grounds
The Court will now address the portion of the Counterclaim brought against Mr. Burns and
Mr. Bielawski. Mr. Frantzen filed a Counterclaim and a Third-Party Complaint against Mr. Burns
and Mr. Bielawski, asserting an identical claim under the WPCL. Federal Rule of Civil Procedure
13 requires that a counterclaim—either compulsory or permissive—be brought “against an
opposing party.” See Fed. R. Civ. P. 13(a)–(b). By contrast, Federal Rule of Civil Procedure 14
allows a party to bring a third-party complaint against “a nonparty.” Fed. R. Civ. P. 14(a)(1).
Although Rule 14 is written with indemnification in mind, the purpose of “Rule 13 and 14 [is] to
adjudicate all related claims in one proceeding.” Earle M. Jorgenson Co. v. T.I. U.S., Ltd., 133
F.R.D. 472, 474 (E.D. Pa. 1991). Here, neither Mr. Burns nor Mr. Bielawski were an opposing
party such that a counterclaim pursuant to Rule 13 could have been brought against them. Thus,
the Third-Party Complaint against them—which in any case is substantively duplicative of the
Counterclaim—is the appropriate procedural vehicle for Mr. Frantzen’s claim. See Walton v.
Eaton Corp., 563 F.2d 66, 70 (3d Cir. 1977); cf. Reynolds v. Rick’s Mushroom Serv. Inc., No.
Civ.A. 01-3773, 2006 WL 1490105, at *6 (E.D. Pa. May 26, 2006) (dismissing with prejudice a
claim improperly brought pursuant to Rule 13). For these reasons, the Court will dismiss with
prejudice the sole count in the Counterclaims against Mr. Burns and Mr. Bielawski.
IV.
The Motion to Dismiss the Third-Party Complaint
In the Third-Party Complaint, Mr. Frantzen brings a single claim against Mr. Burns and
Mr. Bielawski, as corporate managers of PLS, for a violation of the WPCL, seeking unpaid
commission from July 2018 until December 2019. ECF No. 9 ¶¶ 21–22. Mr. Burns and Mr.
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Bielawski argue that, even if the WPCL claim is allowed to proceed against PLS, the WPCL claim
should be dismissed against them for three reasons.3 See generally ECF No. 19; ECF No. 14 at
19–20.
First, Mr. Burns and Mr. Bielawski argue that managerial liability “is contingent on the
corporation’s failure to pay debts that it owes.” ECF No. 14 at 19 (quoting Belcufine v. Aloe, 112
F.3d 633, 639 (3d Cir. 1997)); ECF No. 19 at 10–11. According to Mr. Burns and Mr. Bielawski,
because PLS is solvent, there is no need to keep Mr. Burns and Mr. Bielawski in the case. This
argument, at least at this early stage, is not persuasive. For one thing, the Third Circuit in
Belcufine, which Mr. Burns and Mr. Bielawski rely on, dismissed a WPCL claim against the
corporate managers at the summary judgment stage, not the motion to dismiss stage. See Belcufine,
112 F.3d at 635, 639. In addition, Belcufine stands for exactly the opposite proposition from what
Mr. Burns and Mr. Bielawski rely on it for. The Third Circuit found that it was appropriate to
dismiss the corporate managers only when the corporation was insolvent—not when the
corporation is solvent—because any outstanding payments would be subject to bankruptcy rules
and regulations. Id. at 639. Otherwise, the Third Circuit explained, liability for corporate
managers while a company is solvent is appropriate because it incentivizes the company to pay
employees while there are still funds to do so. Id. at 639–40. Therefore, the Court will not dismiss
claim against Mr. Burns and Mr. Bielawski on these grounds.
Second, according to Mr. Burns and Mr. Bielawski, Mr. Frantzen has not plausibly alleged
that Mr. Burns and Mr. Bielawski were active decisionmakers for the purposes of the WPCL. ECF
3
Mr. Burns and Mr. Bielawski have presented duplicative arguments for this second WPCL claim—a statute of
limitations defense and a claim that the discretionary ability to change compensation absolves them of liability. The
Court adopts its previous holdings in its analysis of Count Four of the Counterclaims. Mr. Frantzen has plausibly
alleged damages from August 25, 2019 onward for a WPCL claim, and without a written modification to his
commission structure, the WPCL claim cannot be dismissed because compensation could change at PLS’ discretion.
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No. 14 at 19–20; ECF No. 19 at 11. The WPCL imposes liability on “any agent or officer.” 43
P.S. § 260.2a. However, courts have narrowed the scope of liability by requiring evidence that the
agent or officer an “active role in decision making.” Int’l Ass’n of Theatrical Stage Emps., Loc.
Union No. 3 v. Mid-Atl. Promotions, Inc., 856 A.2d 102, 105 (Pa. Super. 2004) (quoting Mohney
v. McClure, 568 A.2d 682, 686, aff’d 604 A.2d 1021 (Pa. 1992)). To satisfy this requirement, a
party could, for example, show that an individual engaged in “corporate decision-making or
corporate advisement on matters of pay or compensation.” Hirsch v. EPL Techs., Inc., 910 A.2d
84, 88 (Pa. Super. 2006) (quoting Mid-Atl. Promotions, Inc., 856 A.2d at 106).
That said, such evidence is not required at this early stage. See, e.g., Mohney, 568 A.2d at
683, 686 (deciding this at summary judgment); Hirsch, 910 A.2d at 86–87 (deciding this after
trial); see also Hansen v. McKivigan, No. 07-885, 2007 WL 9797474, at *2 (W.D. Pa. Aug. 16,
2007) (Ambrose, C.J.) (declining to apply the holding in Hirsch at the motion to dismiss stage).
Rather, the standard for a 12(b)(6) motion is whether a claim is plausible on the face of the
pleadings. Iqbal, 556 U.S. at 678. Here, Mr. Frantzen has alleged that Mr. Burns and Mr.
Bielawski are principal members of PLS, respectively, the CEO and COO. ECF No. 7 ¶¶ 3–4;
ECF No. 9 ¶¶ 2–3. Furthermore, Mr. Frantzen has stated that Mr. Burns and Mr. Bielawski
provided the original offer of employment, which outlined his base salary and commission
structure. ECF No. 7 ¶¶ 45–47. Given these factual allegations, it is plausible on the face of the
pleadings that Mr. Burns and Mr. Bielawski were active decisionmakers.
Finally, Mr. Burns and Mr. Bielawski argue that imposing managerial liability under the
WPCL without evidence that they were involved in the non-payment of wages violates the Due
Process Clause of the Fourteenth Amendment. ECF No. 19 at 11–12. The only support for this
proposition is a non-binding district court case from the Southern District of Florida which does
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not examine the WPCL or involve managerial liability at all. See id. (quoting Osorio v. Dole Food
Co., 665 F. Supp. 2d 1307, 1332 (S.D. Fla. 2009)). Osorio held that a law establishing an
“irrebuttable presumption” of causation was a “manifest denial of due process.” Osorio, 665 F.
Supp. 2d at 1333. By contrast, the WPCL does not impose an “irrebuttable presumption” that the
corporate managers are liable. See generally 43 P.S. § 260.1 et seq. The WPCL merely serves as
a vehicle for an employee alleging unpaid wages to bring a case before a court. Oberneder v. Link
Comput. Corp., 674 A.2d 720, 721 (Pa. Super. 1996). The employee still must prove his case by
a preponderance of the evidence. This does not rise to a violation of Due Process. Accordingly,
Mr. Burns’ and Mr. Bielawski’s Motion to Dismiss the Third-Party Complaint will be DENIED.
V.
Conclusion
For the reasons set forth above, PLS’ Motion to Dismiss the Counterclaims is GRANTED
IN PART and DENIED IN PART as set forth in the accompanying order, and Mr. Burns’ and Mr.
Bielawski’s Motion to Dismiss the Third-Party Complaint is DENIED. Mr. Frantzen is granted
leave to amend Count Three of his Counterclaims.
Mr. Frantzen shall file any amended
counterclaim on or before January 31, 2023.
DATED this 17th day of January, 2023.
BY THE COURT:
/s/ Christy Criswell Wiegand
CHRISTY CRISWELL WIEGAND
United States District Judge
cc (via ECF email notification):
All Counsel of Record
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