Raymond Brown, on behalf of Himself and All Others Similarly Situated v. Bucher and Christian Consulting, Inc., d/b/a BCforward

                                                                             FILED
                                                                      Nov 01 2017, 6:03 am

                                                                          CLERK
                                                                      Indiana Supreme Court
                                                                         Court of Appeals
                                                                           and Tax Court




ATTORNEY FOR APPELLANT                                    ATTORNEYS FOR APPELLEE
Ronald E. Weldy                                           Michael A. Blickman
Barker Hancock & Cohron                                   Paul C. Sweeney
Noblesville, Indiana                                      Derek R. Molter
                                                          Justin P. Spack
                                                          Ice Miller LLP
                                                          Indianapolis, Indiana



                                           IN THE
    COURT OF APPEALS OF INDIANA

Raymond Brown, on behalf of                               November 1, 2017
Himself and All Others Similarly                          Court of Appeals Case No.
Situated,                                                 49A04-1611-PL-2564
Appellants-Plaintiffs,                                    Appeal from the Marion Superior
                                                          Court
        v.                                                The Honorable Michael D. Keele,
                                                          Judge
Bucher and Christian                                      Trial Court Cause No.
Consulting, Inc., d/b/a                                   49D07-1604-PL-12518
BCforward,
Appellee-Defendant



Baker, Judge.




Court of Appeals of Indiana | Opinion 49A04-1611-PL-2564| November 1, 2017                    Page 1 of 16
[1]   Raymond Brown appeals the trial court’s order granting the motion for partial

      judgment on the pleadings filed by Bucher and Christian Consulting, Inc.,

      d/b/a BCforward (BCforward), on Brown’s claims under the Wage Payment

      Statute.1 Brown argues that the trial court erred by finding as a matter of law

      that he is not entitled to seek damages for salary-based wages or commission-

      based payments under the Wage Payment Statute. Finding no error, we affirm.


                                                     Facts
[2]   On December 9, 2013, BCforward hired Brown as a consultant pursuant to an

      employment agreement. During Brown’s tenure with BCforward, the company

      paid him an annual salary of approximately $36,000. Brown was entitled to

      additional compensation as follows: he was eligible to receive “Incentive

      Compensation”2 or sales commission,3 each of which was calculated and paid

      monthly, and each of which were paid forty-five days after the calendar month

      in which they were earned. For the first six months of his employment, he was

      guaranteed a minimum monthly Incentive Compensation payment of $500.


[3]   On March 1, 2016, Brown quit his employment with BCforward. On March 28,

      2016, Brown filed a class action complaint against BCforward under the Wage




      1
          Ind. Code § 22-2-5-1 et seq.
      2
       Incentive Compensation was calculated based upon the monthly gross profit made by the resources
      managed by Brown. Appellant’s App. Vol. II p. 94-95.
      3
       The percentage of sales commission to which Brown was entitled also depended on the amount of monthly
      gross profit made by the resources managed by Brown. Appellant’s App. Vol. II p. 87.

      Court of Appeals of Indiana | Opinion 49A04-1611-PL-2564| November 1, 2017                  Page 2 of 16
Payment Statute, arguing that BCforward failed to pay its employees their

salary-based wages within the timeframe mandated by Indiana’s Ten-Day

Rule.4 Individually, Brown also filed claims that BCforward failed to pay him

all commissions earned following his voluntary termination of employment and

thereby (1) violated the Wage Payment Statute and (2) breached its contract

with him. On May 24, 2016, BCforward filed a motion for partial judgment on

the pleadings, arguing in relevant part as follows:


       • No actionable Wage Payment Statute claims exist because all wages
         have been paid to Brown; and
       • The Incentive Compensation and commission payments do not qualify
         as wages under the Wage Payment Statute.

On August 22, 2016, the trial court granted BCforward’s motion. In relevant

part, it found and held as follows:


            1.         It is undisputed that Brown received all of his salary from
                       [BCforward]. Therefore, Plaintiff holds no basis for Count
                       I of his lawsuit because (a) there exist no unpaid wages;
                       (b) attorney’s fees and liquidated damages are only
                       recoverable under the current version of the Wage
                       Payment Statute in a claim for unpaid wages; and,
                       (c) retroactive [a]pplication of the Wage Payment Statute,
                       as revised, stands warranted.


            2.         As a matter of law, the commissions paid to Brown . . . fail
                       to qualify as wages under the Wage Payment Statute
                       because (a) they are contingent on factors outside the



4
    I.C. § 22-2-5-1.


Court of Appeals of Indiana | Opinion 49A04-1611-PL-2564| November 1, 2017           Page 3 of 16
                       employee’s control; (b) commissions hold no relation to
                       the time worked by the employee; (c) the commissions
                       were not paid on a regular periodic basis for regular work
                       done by the employee; and, (d) employees received the
                       commissions in addition to the wages. Since the
                       commissions fail to qualify as wages under the Wage
                       Payment Statute, Brown fails to state a claim in Count II
                       of the Complaint.


      Appellant’s App. Vol. II p. 10-11. The trial court dismissed Brown’s class

      action claims under the Wage Payment Statute; his individual claim for breach

      of contract is still pending before the trial court. Brown now appeals.


                                    Discussion and Decision
[4]   Brown argues that the trial court erroneously ruled as follows: (1) under the

      Wage Payment Statute, an employee is only entitled to damages and attorney

      fees for unpaid wages, and Brown’s wages are not unpaid; and (2) Brown’s

      commission payments do not qualify as wages under the Wage Payment

      Statute.


                                      I. Standard of Review
[5]   A motion for judgment on the pleadings under Indiana Trial Rule 12(C) tests

      the sufficiency of a claim or defense presented in the pleadings and should be

      granted “only where it is clear from the face of the complaint that under no

      circumstances could relief be granted.” Veolia Water Indianapolis, LLC v. Nat’l

      Trust Ins. Co., 3 N.E.3d 1, 5 (Ind. 2014). We base our ruling solely on the

      pleadings and accept as true the material facts alleged in the complaint. KS&E

      Court of Appeals of Indiana | Opinion 49A04-1611-PL-2564| November 1, 2017    Page 4 of 16
      Sports v. Runnels, 72 N.E.3d 893, 898 (Ind. 2017). We apply a de novo standard

      of review to a trial court’s ruling on a motion for judgment on the pleadings. Id.


[6]   We also apply a de novo standard of review to issues of statutory interpretation.

      Id. If a statute is clear and unambiguous, we put aside canons of statutory

      construction and require that words and phrases be taken in their plain,

      ordinary, and usual sense. Id. at 898-99.


                                  II. Wage Payment Statute
[7]   The general rules set forth by Section 1 of the Wage Payment Statute are as

      follows: (1) every employer shall pay each employee at least semimonthly or

      biweekly; and (2) payment shall be made for all wages earned to a date not

      more than ten business days prior to the date of payment (the “Ten-Day Rule”).

      Ind. Code § 22-2-5-1. Section 2 sets forth the penalties for employers who

      violate Section 1.


          A. Count I: Class Action Claim For Untimely Paid
                               Wages
[8]   Brown concedes that BCforward paid him all salary-based wages he was owed

      before the lawsuit was even filed. Nevertheless, he sued BCforward, alleging

      that there were some occasions during his employment when the calendar was

      such that BCforward’s bimonthly pay schedule resulted in the payment of

      Brown’s wages slightly outside Section 1’s Ten-Day Rule.




      Court of Appeals of Indiana | Opinion 49A04-1611-PL-2564| November 1, 2017   Page 5 of 16
                       1. Retroactive Application of Section 2
[9]    In this case, while Brown alleges that BCforward did not comply with the

       Section 1 Ten-Day Rule during his employment there, it is undisputed that he

       has received all salary-based wages he is owed. The trial court found that

       because he has been paid all salary-based wages, he is not entitled to seek

       damages pursuant to Section 2.


[10]   As we consider under what circumstances a claimant under the Wage Payment

       Statute is entitled to damages and attorney fees, we must first determine which

       version of the statute applies in this case. The version of Section 2 of the Wage

       Payment Statute in place during the first one and one-half years of Brown’s

       employment with BCforward stated as follows:


               Every [employer] who shall fail to make payment of wages to
               any such employee as provided in section 1 of this chapter shall,
               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.


       I.C. § 22-2-5-2 (2014). This Court interpreted the prior version as allowing

       employees to recover attorney fees and liquidated damages for late-paid wages,

       even if the employees had received all the wages to which they were entitled

       Court of Appeals of Indiana | Opinion 49A04-1611-PL-2564| November 1, 2017   Page 6 of 16
       before filing suit. E.g., Valadez v. R.T. Enters., Inc., 647 N.E.2d 331, 333 (Ind.

       Ct. App. 1995).


[11]   In 2015, however, the General Assembly amended this section, which now

       provides as follows:


               Every [employer] who shall fail to make payment of wages to
               any such employee as provided in section 1 of this chapter shall
               be liable to the employee for the amount of unpaid wages, and the
               amount may be recovered in any court having jurisdiction of a
               suit to recover the amount due to the employee. The court shall
               order as costs in the case a reasonable fee for the plaintiff’s
               attorney and court costs. In addition, if the court in any such suit
               determines that the [employer] that failed to pay the employee as
               provided in section 1 of this chapter was not acting in good faith,
               the court shall order, as liquidated damages for the failure to pay
               wages, that the employee be paid an amount equal to two (2)
               times the amount of wages due the employee.


       I.C. § 22-2-5-2 (current version) (emphasis added).


[12]   Our Supreme Court has explained the rules regarding retroactive application of

       statutes as follows:


               The general rule is that unless there are strong and compelling
               reasons, statutes will not be applied retroactively. An exception
               to this general rule exists for remedial statutes, i.e. statutes
               intended to cure a defect or mischief that existed in a prior
               statute. Ultimately, however, whether or not a statute applies
               retroactively depends on the Legislature’s intent. That is, when a
               remedial statute is involved, a court must construe it to “effect
               the evident purpose for which it was enacted[.]” Accordingly,
               remedial statutes will be applied retroactively to carry out their


       Court of Appeals of Indiana | Opinion 49A04-1611-PL-2564| November 1, 2017   Page 7 of 16
               legislative purpose unless to do so violates a vested right or
               constitutional guaranty.


       Bourbon Mini-Mart, Inc. v. Gast Fuel & Servs., Inc., 783 N.E.2d 253, 260 (Ind.

       2003) (internal citations omitted). We must determine, therefore, whether the

       2015 amendment of Section 2 constitutes a remedial statute that should be

       applied retroactively.


[13]   The primary changes made to Section 2 as a result of the 2015 amendment can

       be summarized as follows:


           • Employers are liable to employees for violations of Section 1 for unpaid
             wages due, attorney fees, and court costs.
           • Liquidated damages are additionally available only if, in violating
             Section 1, the employer was not acting in good faith. Under such
             circumstances, the employee is entitled to liquidated damages totaling
             two times the amount of wages due.

       It is apparent that in effecting these statutory changes, the legislature intended

       to cure the defect or mischief that existed in the prior statute that permitted

       exorbitant recovery in cases in which there were no actual unpaid wages and

       where the employer acted in good faith. For example, if an employer

       mistakenly delays payment of an employee’s salary by a minimal amount of

       time and corrects that error as soon as the employee brings the error to the

       employer’s attention, the employer no longer faces the possibility of a

       substantial liquidated damages penalty.


[14]   We also note that the Wage Payment Statute is a penal statute because it

       imposes a penalty beyond the actual amount of unpaid wages owed. GHPE
       Court of Appeals of Indiana | Opinion 49A04-1611-PL-2564| November 1, 2017   Page 8 of 16
       Holdings, LLC v. Huxley, 69 N.E.3d 513, 518 (Ind. Ct. App. 2017). There is a

       presumption that an amendment removing or diminishing a penalty, such as

       the 2015 amendment of the Wage Payment Statute, will apply even to conduct

       that predates the amendment. See Landgraf v. USI Film Prods., 511 U.S. 244,

       270-71 (1994) (observing that “at common law a contrary rule applied to

       statutes that merely removed a burden on private rights by repealing a penal

       provision (whether criminal or civil); such repeals were understood to preclude

       punishment for acts antedating the repeal”) (emphasis original). Given the

       remedial nature of the 2015 amendment and the penal nature of the Wage

       Payment Statute, we can only conclude that the 2015 amendment may be

       applied retroactively.


[15]   Brown argues that applying the current version of the statute retroactively is

       prohibited because it violates a vested right or constitutional guarantee. We

       disagree. The liquidated damages provision, as well as the attendant court costs

       and attorney fees, is punitive in nature, and there is no vested right to

       prejudgment punitive damages. Cheatham v. Pohle, 789 N.E.2d 467, 471-72

       (Ind. 2003). Consequently, there is no bar to the retroactive application of the

       Wage Payment Statute, and the trial court did not err in this regard.


                                         2. “Unpaid Wages”
[16]   Having concluded that the trial court did not err by retroactively applying the

       current version of the Wage Payment Statute, we must next determine whether,




       Court of Appeals of Indiana | Opinion 49A04-1611-PL-2564| November 1, 2017   Page 9 of 16
       as the trial court concluded, Brown is precluded from recovery because his

       wages are not unpaid.


[17]   As noted above, Section 2 of the Wage Payment Statute states that an employer

       who violates Section 1 (by making insufficient or untimely salary payments to

       its employees)


               shall be liable to the employee for the amount of unpaid wages,
               and the amount may be recovered in any court having
               jurisdiction of a suit to recover the amount due to the employee.
               The court shall order as costs in the case a reasonable fee for the
               plaintiff’s attorney and court costs. In addition, if the court in
               any such suit determines that the [employer] . . . was not acting
               in good faith, the court shall order . . . liquidated damages . . . .


       I.C. § 22-2-5-2. In other words, the employee is entitled to file a lawsuit to

       recover the amount due to him as well as his costs and fees incurred in the

       litigation. Under certain circumstances, he may also be entitled to liquidated

       damages.


[18]   In this case, Brown has conceded that there are no wages due to him by

       BCforward. Instead, he alleges that BCforward at times paid his salary on a

       timeframe exceeding the Ten-Day Rule. The plain, ordinary, and usual

       definition of “unpaid” is “not paid.” Merriam-Webster Dictionary, at

       https://www.merriam-webster.com/dictionary/unpaid. While it may be the

       case that BCforward occasionally paid Brown’s wages on a schedule that

       exceeded the Ten-Day Rule, it is undisputed that the company did, in fact,

       ultimately pay his wages. We cannot conclude that this scenario equates to the

       Court of Appeals of Indiana | Opinion 49A04-1611-PL-2564| November 1, 2017   Page 10 of 16
       “unpaid wages” referred to in Section 2; nor can we conclude that Brown is

       entitled to maintain a lawsuit “to recover the amount due to” him, as there is

       no amount that is, in fact, due. I.C. § 22-2-5-2; see also City of Lawrence Utils.

       Serv. Bd. v. Curry, 68 N.E.3d 581, 587 (Ind. 2017) (explaining that the purpose of

       the Wage Payment Statute “is to prevent employers from stealing their

       employees’ wages and profiting from their labor”). As liquidated damages are

       “[i]n addition” to the employee’s recovery of unpaid wages, attorney fees, and

       court costs, the plain statutory language signifies that if one is not entitled to the

       latter, one may not seek the former. As a result, we find no error in the trial

       court’s conclusion that because Brown has no unpaid wages, as a matter of law

       his claim for costs, fees, and liquidated damages under the Wage Payment

       Statute must fail.5


       B. Count II: Individual Claim for Unpaid Commissions
[19]   In addition to his class action claim for unpaid wages, Brown filed an

       individual claim alleging that BCforward violated the Wage Payment Statute by

       failing to pay him all commissions earned after he left his employment.

       Clearly, unlike Count I, this count includes a claim that the commissions were

       “unpaid,” but we must determine whether the commission payments

       constituted “wages.”




       5
        Because we affirm the trial court on this basis, we need not consider Brown’s argument regarding the trial
       court’s observation that other purported class members whose employment was involuntarily terminated are
       not entitled to file claims under the Wage Payment Statute.

       Court of Appeals of Indiana | Opinion 49A04-1611-PL-2564| November 1, 2017                     Page 11 of 16
[20]   In Bragg v. Kittle’s Home Furnishings, Inc., this Court considered whether

       commissions are “wages” pursuant to the Wage Payment Statute. 52 N.E.3d

       908 (Ind. Ct. App. 2016), reh’g denied, trans. denied. After a lengthy and

       thorough discussion of relevant precedent, this Court examined the following

       factors in determining whether the commissions at issue qualified as wages:

       (1) whether the commission is easily calculated and paid within ten days after it

       was earned; (2) whether the commission is linked to a contingency outside the

       employee’s control; (3) whether the commission is linked to the amount of time

       the employee worked; (4) whether the commission was paid on a regular basis

       and whether the amount of commission payments could vary widely from

       month-to-month; and (5) whether the commission was paid in addition to the

       employee’s salary. Id. at 921, 925-27 (citing to Thomas v. H & R Block E. Enters.,

       Inc., 630 F.3d 659, 664 (7th Cir. 2011), for factors).


[21]   Here, Brown’s compensation began with a guaranteed annual salary of

       approximately $36,000. From December 9, 2013, through February 28, 2015,

       he was eligible to receive monthly Incentive Compensation payments on top of

       his salary. Those payments were “based on the Gross Profit generated by the

       Resources [that Brown was] responsible for generating in each calendar

       month.” Appellant’s App. Vol. II p. 94. The following factors played a role in

       calculating Incentive Compensation:


               • “Gross Profit” was defined as “the difference between the amount
                 billed to the client for the work completed by the resource minus the
                 fully-burdened cost of the resource to [the Company]. This shall
                 include, but not [be] limited to, allocations for benefits, taxes, and

       Court of Appeals of Indiana | Opinion 49A04-1611-PL-2564| November 1, 2017   Page 12 of 16
                 overhead. The calculation of the fully-burdened cost and Gross Profit
                 shall be made at the sole reasonable discretion of [the Company].” Id.
               • The percentage of Gross Profit paid to Brown as Incentive
                 Compensation “shall vary based on the classification of the type of
                 resource placement being made. This classification will be made in
                 the sole and reasonable discretion of [the Company].” Id.
               • That percentage also varied “based on the volume of the Gross Profit
                 generated by [the employee] in a given month, and calculated
                 separately between Competition and Non-Competition
                 classifications. As the Gross Profit increases to each stratum shown
                 [in the agreement], the incentive percentage earned will increase, as
                 applied to Gross Profit dollars exceeding that threshold and through
                 the next threshold only.” Id.

       When Brown became an account manager on March 1, 2014, he also became

       eligible to potentially receive monthly sales commission payments on top of his

       salary, as well as Incentive Compensation if he exceeded sales performance

       expectations. Id. at 82. His commission payments were tied to his own

       performance, the company’s performance, and the performance of independent

       consultants. Brown was not guaranteed Incentive Compensation or

       commission payments on any set schedule, and could go months without

       earning any such payments if his projects did not produce a sufficient gross

       profit.6


[22]   Turning to the Bragg factors, we must first consider whether these payments

       were easily calculated and paid within ten days of when they were earned. The




       6
        The one exception to this setup was during his first six months in a job role, when he was guaranteed
       payments of at least $500 per month. We will address these guaranteed payments below.

       Court of Appeals of Indiana | Opinion 49A04-1611-PL-2564| November 1, 2017                     Page 13 of 16
       payments were based, in part, on gross profit, which was calculated on a

       monthly basis. Therefore, the payments were not necessarily paid or calculated

       within ten days of when they were earned.


[23]   Second, we must consider whether the payments were linked to any

       contingencies outside Brown’s control. We find that they were. Specifically,

       the Incentive Compensation was linked to expenses borne by BCforward,

       including taxes and overhead, as well as the classification of the type of

       resource placement being made, which was solely determined by BCforward.

       And commission payments were linked to, among other things, the

       performance of the company, independent consultants, and age of accounts

       receivable.


[24]   Third, we must consider whether the payments were linked to the amount of

       time Brown worked. We find that they were not. Simply working for a week,

       or a month, was not enough to earn Incentive Compensation or commission

       payments. Instead, he was required to complete sales and turn a gross profit for

       the company.


[25]   Fourth, we must consider whether the payments were made on a regular basis

       and whether the amount of those payments could vary. While BCforward set up

       a monthly schedule for the payment of Incentive Compensation and

       commissions, Brown was not guaranteed any payments at all. Indeed, he could

       theoretically have gone months without earning any such payments if his

       projects did not produce a sufficient gross profit. And as a result, the amount of


       Court of Appeals of Indiana | Opinion 49A04-1611-PL-2564| November 1, 2017   Page 14 of 16
       his Incentive Compensation and commission payments could have varied

       widely. Finally, it is undisputed that both Incentive Compensation and

       commission payments were in addition to Brown’s annual salary.


[26]   Brown argues that because he was guaranteed a monthly Incentive

       Compensation payment of $500 for the first six months of a job role, all he had

       to do to earn these payments was show up to work for those six months;

       consequently, he insists that these guaranteed payments constituted wages.

       Brown waived this argument because he failed to raise it to the trial court. He

       argues that the issue was not presented because “BCforward failed to inform the

       Trial Court that any of the commissions at issue were guaranteed.” Reply Br.

       p. 18. But his own employment contract contains the provisions regarding

       these guaranteed payments, meaning that he had this information in his

       possession from the start. E.g., Appellant’s App. Vol. II p. 95 (employment

       agreement including “Incentive Guarantee Period” and bearing Brown’s

       signature). It was his responsibility, not BCforward’s, to raise this argument.

       He failed to do so, and has waived it.


[27]   All of the Bragg factors weigh in favor of concluding that these payments were

       not wages pursuant to the Wage Payment Statute. Brown argues that Bragg was

       wrongly decided, but we decline his invitation to revisit its analysis and

       holding. We find that the trial court did not err by finding that the Incentive

       Compensation and commission payments made by BCforward to Brown were

       not wages pursuant to the Wage Payment Statute. In sum, the trial court did

       not err by granting BCforward’s motion for partial judgment on the pleadings.

       Court of Appeals of Indiana | Opinion 49A04-1611-PL-2564| November 1, 2017   Page 15 of 16
[28]   The judgment of the trial court is affirmed.


       Bailey, J., and Altice, J., concur.




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