In the
United States Court of Appeals
For the Seventh Circuit
No. 10-3166
JILL L. T REAT and C ODY W. T REAT,
Plaintiffs-Appellants,
v.
T OM K ELLEY B UICK P ONTIAC GMC, INC.,
d/b/a K ELLEY S UPERSTORE , and K ELLEY
A UTOMOTIVE G ROUP, INC.,
Defendants-Appellees.
Appeal from the United States District Court
for the Northern District of Indiana, Fort Wayne Division.
No. 08-cv-00173—William C. Lee, Judge.
A RGUED JANUARY 18, 2011—D ECIDED JULY 13, 2011
Before T INDER and H AMILTON, Circuit Judges, and
M URPHY, District Judge.
H AMILTON, Circuit Judge. Jill and Cody Treat sued their
employer, Tom Kelley Buick Pontiac GMC, Inc., and its
The Honorable G. Patrick Murphy of the Southern District
of Illinois, sitting by designation.
2 No. 10-3166
parent dealership group for failure to pay them their
correct wages under Indiana state law. The question
presented by this appeal is whether the Treats properly
brought their claims under the state’s Wage Payment
Statute, Ind. Code § 22-2-5-1 et seq., or whether their
claims against Kelley arose under a different Indiana
wage recovery law, known as the Wage Claims Statute,
Ind. Code § 22-2-9-1 et seq. The district court concluded
that the Treats erroneously brought their claim under
the Payment Statute rather than the Claims Statute.
Because the Treats had not filed their claim according
to the procedure required under the Claims Statute, the
court granted summary judgment to Kelley. Treat v.
Tom Kelley Buick Pontiac GMC, Inc., 710 F. Supp. 2d 762
(N.D. Ind. 2010), and 710 F. Supp. 2d 777 (N.D. Ind. 2010).
We agree with the district court and affirm its judgment.
I. Facts and Procedural Background
Reviewing the district court’s decision to grant sum-
mary judgment to the defendants, we take all facts in
the light reasonably most favorable to the plaintiffs as the
non-moving parties. See Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 255 (1986). The facts material to this appeal
are undisputed. Defendant-appellee Tom Kelley Buick
Pontiac GMC runs a used car dealership in Fort Wayne,
Indiana, as part of a group of dealerships known
as the Kelley Automotive Group. Plaintiff Jill Treat
began working at the dealership on July 3, 2006 as Assis-
tant Co-Director of the Special Finance Department. She
persuaded the head of the department to hire her son,
No. 10-3166 3
plaintiff Cody Treat, who began work in the Special
Finance Department on July 10, 2006. The Treats’ employ-
ment with Kelley did not last long, however. Both were
fired on October 12, 2006.
Following the termination of their employment, the
Treats filed a complaint in federal court alleging a
variety of federal and state claims against Kelley. The
district court granted Kelley’s summary judgment
motion on all of the Treats’ claims, exercising supple-
mental jurisdiction over the matters of state law.
The Treats appeal only one of their substantive
claims. They argue that the district court erred by dis-
missing their claim for unpaid wages brought under
the Indiana Wage Payment Statute. They also contend
that the district court abused its discretion by striking
portions of Jill Treat’s affidavit and attached documents,
but we do not reach this issue. We conclude the Treats
failed to take the necessary steps to pursue a claim
under the correct Indiana state law.
II. Discussion
We begin by reviewing the two Indiana wage recovery
statutes: the Payment Statute and the Claims Statute.
Both of these statutes, and questions about their applica-
tion, have received substantial attention from the
Indiana state courts. Although both provide the same
remedy for similar wrongs, they require distinct pro-
cedural steps before such a remedy may be granted.
The question of which statute applies controls the
4 No. 10-3166
outcome here, so we excerpt the relevant provisions
at length.
The Treats brought their suit under Indiana Code § 22-2-
5-1 et seq., entitled “Frequency of Wage Payments,” which
we refer to as the Wage Payment Statute. This statute
provides in relevant part:
Payment; voluntarily leaving employment
Sec. 1. (a) Every person, firm, corporation, limited
liability company, or association, their trustees, lessees,
or receivers appointed by any court, doing business
in Indiana, shall pay each employee at least semi-
monthly or biweekly, if requested, the amount due
the employee. . . .
(b) Payment shall be made for all wages earned to
a date not more than ten (10) business days prior to
the date of payment. However, this subsection
does not prevent payments being made at shorter
intervals than specified in this subsection, nor repeal
any law providing for payments at shorter intervals.
However, if an employee voluntarily leaves employ-
ment, either permanently or temporarily, the em-
ployer shall not be required to pay the employee an
amount due the employee until the next usual and
regular day for payment of wages, as established by
the employer. If an employee leaves employment
voluntarily, and without the employee’s whereabouts
or address being known to the employer, the
employer is not subject to section 2 of this chapter
until:
No. 10-3166 5
(1) ten (10) business days have elapsed after
the employee has made a demand for the wages
due the employee; or
(2) the employee has furnished the employer
with the employee’s address where the wages
may be sent or forwarded.
Ind. Code § 22-2-5-1.
If an employer fails to make payment of wages in
accordance with this chapter, then the employer must,
as liquidated damages for such failure, pay to such
employee for each day that the amount due to him
remains unpaid ten percent (10%) of the amount due
to him in addition thereto, not exceeding double the
amount of wages due, and said damages may be
recovered in any court having jurisdiction of a suit to
recover the amount due to such employee, and in
any suit so brought to recover said wages or the
liquidated damages for nonpayment thereof, or both,
the court shall tax and assess as costs in said case
a reasonable fee for the plaintiff’s attorney or attorneys.
Ind. Code § 22-2-5-2.
Kelley argues, and the district court held, that the
Treats should have proceeded under Indiana Code § 22-2-
9-1 et seq., entitled “Wage Claims,” which we refer to as
the Wage Claims Statute. This statute provides in
relevant part:
Discharge of employee; unpaid wages; payment;
labor disputes
6 No. 10-3166
Sec. 2. (a) Whenever any employer separates any
employee from the pay-roll, the unpaid wages or
compensation of such employee shall become due
and payable at regular pay day for pay period in
which separation occurred . . . .
Disputes; payment of amount agreed upon
Sec. 3. In case of a dispute over wages, the employer
shall give notice to the employee of the amount of
wages which he concedes to be due, and shall pay
such amount, without condition, within the time
fixed by this chapter, but the acceptance by the em-
ployee of any payment made under this chapter
shall not constitute a release as to any balance of his
claim.
Ind. Code §§ 22-2-9-2 and -3.
When such a dispute arises between an employer and
a fired employee, the Claims Statute makes it the “duty
of the [Indiana] commissioner of labor to enforce and to
insure compliance with the provisions of this chapter, to
investigate any violations of any of the provisions of
this chapter, and to institute or cause to be instituted
actions for penalties and forfeitures provided under this
chapter.” Ind. Code § 22-2-9-4(a). The commissioner
may refer claims to the state attorney general, who may
then initiate a civil action on behalf of the claimant or refer
the claimant to an attorney. See Ind. Code § 22-2-9-4(b).
Under the Claims Statute, claimants are entitled
to recover liquidated damages and attorney fees as set
forth in Ind. Code § 22-2-5-2, the same provision that
allows for recovery under the Payment Statute. Thus,
No. 10-3166 7
although the ultimate remedy under either statute is the
same, a claimant under the Claims Statute must proceed
through the Indiana commissioner of labor, who has the
duty of investigating a claim and instituting an action
on behalf of a claimant, whereas the Payment Statute
permits a claimant to bring his or her own claim in
“any court having jurisdiction.” Ind. Code § 22-2-5-2.
The Treats argue that they properly filed their com-
plaint in the district court rather than with the commis-
sioner of labor because, they maintain, their claims are
governed by the Payment Statute. We disagree. The
language of the Indiana Code suggests, and the Indiana
state courts have repeatedly confirmed, that the Pay-
ment Statute provides an avenue for relief to employees
seeking unpaid wages who voluntarily leave their em-
ployment or who remain employed and whose wages
are overdue. The Claims Statute, on the other hand,
applies to employees seeking unpaid wages after their
employer has fired them. Here, all agree that the termina-
tion of the Treats’ employment was involuntary. The
Treats’ claims therefore arise under the Claims Statute.
In St. Vincent Hospital and Health Care Center, Inc.
v. Steele, 766 N.E.2d 699, 705 (Ind. 2002), the
Indiana Supreme Court taught that the two statutes
apply to different, mutually exclusive categories of claim-
ants — those fired by their employers, and those who
left voluntarily or are still employed. Dr. Steele filed a
complaint suing his employer for violating the Pay-
ment Statute by failing to pay him the full amount of
compensation due under the parties’ agreement. Through-
out the dispute and the subsequent litigation, Dr. Steele
8 No. 10-3166
remained an employee of St. Vincent. The court found
that because Dr. Steele was a current employee at the
time of the wage dispute, he proceeded correctly under
the Payment Statute. The court explained:
The Wage Claims Statute references employees who
have been separated from work by their employer
and employees whose work has been suspended as
a result of an industrial dispute. I.C. § 22-2-9-2(a)(b).
By contrast, the Wage Payment Statute references
current employees and those who have voluntarily
left employment, either permanently or temporarily.
I.C. § 22-2-5-1(b).
766 N.E.2d at 705. Although this pronouncement from
the court was not central to its holding in that case, it
was a clear indication of the Indiana Supreme Court’s
view. Our job in this case is to apply the state law as
we predict the state supreme court would. See Lewis v.
Methodist Hospital, Inc., 326 F.3d 851, 856 (7th Cir. 2003).
Following Steele, the Indiana Court of Appeals has
applied and interpreted the two statutes and the state
supreme court’s language in several decisions. One
favors the Treats’ position and the others weigh against
it. The Treats rely on McCausland v. Walter USA, Inc., 918
N.E.2d 420 (Ind. App. 2009), in which the plaintiff filed
a complaint against his employer for violations of both
the Payment Statute and the Claims Statute. First,
McCausland claimed that his employer failed to timely
pay him sales commissions, bonuses, and vacation pay
throughout the course of his employment as required
by the Payment Statute. Second, he claimed that the
No. 10-3166 9
employer failed to pay him earned sales commissions
following his termination, so that he was also entitled
to damages under the Claims Statute for those wrongs.
The Court of Appeals affirmed the trial court’s
summary judgment in favor of the employer. In a foot-
note, the court explained:
Walter [the employer] claims that McCausland may
not bring any claims under the Wage Payment
Statute because he was fired. However, McCausland’s
claims concern the alleged untimely payment of
commissions, bonuses, and vacation pay that he
received while still employed with Walter and
unpaid commissions he did not receive after his
termination. Therefore, we conclude that he
properly brought claims under both the Wage
Payment Statute and the Wage Claims Statute.
918 N.E.2d at 424 n.2. We agree with the Treats that
the statutes are ambiguous as applied in a case like the
Treats’ that combines claims that arose both during
employment and after firing. If the McCausland footnote
were the only solid evidence of Indiana law, it would
carry more weight. But the McCausland footnote did not
cite or address the Indiana Supreme Court’s dictum in
Steele. Several other Court of Appeals decisions have
followed the Steele dictum, and one specifically rejected
the McCausland footnote.1
1
The McCausland footnote might be distinguished on a
narrow factual basis because the claims that arose during
employment in that case were only for late payment, not for
(continued...)
10 No. 10-3166
In Gavin v. Calcars AB, Inc., 938 N.E.2d 1270 (Ind. App.
2010), a former employee filed a complaint against his
employer after he was fired. Relying on the Indiana
Supreme Court’s guidance in Steele, the Court of Appeals
determined that when a claimant “brings a wage
dispute after being involuntarily terminated . . . he must
bring his claim under the Wage Claims Statute.” 938
N.E.2d at 1271. The court declined to follow the
language in the McCausland footnote and concluded
that the plaintiff’s claim was barred as a matter of law
because he did not file his complaint with the state com-
missioner of labor as required by the Claims Statute. See
id. at 1271-72.
The Court of Appeals applied the same reasoning
in Hollis v. Defender Security Co., 941 N.E.2d 536 (Ind.
App. 2011), in which Hollis had been fired and then
sued his employer for violating the Payment Statute
by failing to pay agreed wages in a timely fashion.
941 N.E.2d at 537. Hollis argued that the Payment
Statute applied because he sought payment only
for violations that occurred while he was an em-
ployee. Looking to Steele, the Court of Appeals rejected
Hollis’s reasoning: “Based on [Hollis’s] proposed ap-
plication of the statutory framework, an involuntarily
separated employee would have to file a complaint
1
(...continued)
underpayment, but neither the statutory language nor the
court’s opinion indicates that such a distinction should carry
any weight.
No. 10-3166 11
based on the Wage Payment Statute for alleged violations
that occurred prior to the separation and then submit
a separate claim with the DOL under the Wage Claims
Statute for alleged violations that occurred during
the final pay period.” Id. at 539. “It also seems that
[Hollis’s] interpretation would remove all but the last of
an involuntarily separated employee’s claims from the
purview of the Department of Labor.” Id. The Hollis
court concluded that an employee’s status at the time
the claim is filed determines whether the employee
must proceed under the Payment Statute or the Claims
Statute, and the court upheld the trial court’s dismissal
of claims of the fired Hollis under the Payment Statute.
See id. at 540; see also Quimby v. Becovic Management
Group, Inc., 946 N.E.2d 30, 33-34 (Ind. App. 2011)
(affirming judgment in favor of employer where em-
ployee, who voluntarily left her employment, had already
recovered for her lost wages through the department
of labor even though she could have brought her claim
in court under the Payment Statute); E & L Rental Equip-
ment, Inc. v. Bresland, 782 N.E.2d 1068, 1070 (Ind. App.
2003) (holding that employee who quit voluntarily
should have brought his claim under the Payment
Statute rather than the Claims Statute). The plaintiffs in
Hollis and Gavin petitioned the Indiana Supreme Court
for transfer. After consolidating their claims for review,
the court denied both petitions on June 22, 2011.
To support their position that the employment status
of an employee at the time a wage claim arises, that is,
when the discrepancy in pay arises, determines which
statute should apply, the Treats also rely on two federal
12 No. 10-3166
decisions, Anderson v. Northeast Otolaryngology, P.C., 2006
WL 2331142, at *2 (S.D. Ind. Aug. 10, 2006), objections
overruled, 2006 WL 3487333 (S.D. Ind. Dec. 1, 2006), and
Harney v. Speedway SuperAmerica, LLC, 2007 WL 2710824,
at *3-*5 (S.D. Ind. Sept. 13, 2007), but neither counters
the weight of the Steele dictum and the other Indiana
Court of Appeals decisions.
The issue in Anderson v. Northeast Otolaryngology
was whether the plaintiff had filed her wage claims
within the statute of limitations. See 2006 WL 2331142,
at *2. The case sheds no light on the issue in this case. In
fact, the plaintiff in Anderson had filed a complaint with
the commissioner of labor and was proceeding properly
under the Claims Statute, as is evident from the com-
plaint in the case. See Complaint, Docket Entry No. 1,
Cause No. 1:06-cv-0037 (S.D. Ind. Jan. 10, 2006).
The Treats’ reliance on Harney v. Speedway SuperAmerica,
LLC is also misplaced. The plaintiffs in that case were
store managers who claimed that they were paid bonuses
too late under both the Payment Statute and Claims
Statute. The district court granted summary judgment
to the employer on the merits, but also stated in dictum
that claims for bonuses that the fired Harney plaintiffs
did not receive before being fired were governed by
the Claims Statute, while those paid when the plaintiffs
were still employed, though past the time due, would be
governed by the Payment Statute. See 2007 WL 2710824,
at *3. In light of the ambiguity in the statutes, the dis-
trict court’s dictum in Harney is a reasonable way to
interpret them in a case mixing pre-firing and post-firing
No. 10-3166 13
claims. But in light of the more recent Indiana Court of
Appeals decisions and the Indiana Supreme Court’s
decisions to deny review, our best prediction at this
point is that the Indiana Supreme Court would agree
with Hollis and Gavin and the district court’s analysis in
this case. The Treats’ claims for unpaid wages here fell
under the Wage Claims Statute. They cannot recover
under the Wage Payment Statute on the claims for
unpaid wages they brought after they were fired.
The district court’s judgment is A FFIRMED.
7-13-11