David Lawson v. Sun Microsystems, Incorporate , 791 F.3d 754 ( 2015 )

In the
United States Court of Appeals
For the Seventh Circuit
Nos. 13-1502 & 13-1503
DAVID LAWSON,
Plaintiff-Appellee/
Cross-Appellant,
v.
SUN MICROSYSTEMS, INC.,
Defendant-Appellant/
Cross-Appellee.
Appeals from the United States District Court
for the Southern District of Indiana, Indianapolis Division.
No. 1:07-cv-00196-RLY-MJD — Richard L. Young, Chief Judge.
ARGUED JANUARY 9, 2014 — DECIDED JUNE 30, 2015
Before MANION and SYKES, Circuit Judges, and GRIESBACH,
District Judge.*
*
Of the Eastern District of Wisconsin, sitting by designation.
2 Nos. 13-1502 & 13-1503
SYKES, Circuit Judge. David Lawson sold computer mainte-
nance and support services for StorageTek, Inc., mostly to large
corporations. He was paid a base salary and commissions on
his sales under an annual incentive plan promulgated by the
company. Sun Microsystems, Inc., acquired StorageTek in
August 2005. At the time Lawson was working on a large sale
to JPMorgan Chase & Co., but the deal did not close until
March 2006. If StorageTek’s 2005 incentive plan applied,
Lawson would earn a seven-figure commission, perhaps as
high as $1.8 million. If instead the sale fell under Sun’s 2006
incentive plan, his commission would be far less—about
$54,000. Sun determined that the 2006 plan applied and
tendered the lower commission. Lawson refused it and sued
for breach of contract and violation of Indiana’s Wage Claim
Statute. He argued that the 2005 plan continued in effect
through at least March 2006, when the JPMorgan Chase deal
was finalized.
The district court rejected the statutory wage claim but
submitted the contract claim to a jury, which found in favor of
Lawson and awarded $1.5 million in damages. Sun appealed,
and Lawson cross-appealed to challenge the district court’s
ruling on the statutory claim.
We reverse and remand with instructions to enter judgment
for Sun. The sale did not qualify for a commission under the
terms of the 2005 plan. Although the original plan documents
said the plan would remain in effect until superseded by a new
one, a September 2005 amendment set a definite termination
date for the plan year: December 25, 2005. To earn a commis-
sion under the 2005 plan, sales had to be final and invoiced by
Nos. 13-1502 & 13-1503 3
that date. Because Lawson’s sale wasn’t finalized and invoiced
until March 2006, Sun is entitled to judgment as a matter of
law. This conclusion necessarily defeats the cross-appeal.
I. Background
The parties’ briefs are laden with inscrutable acronyms and
sales jargon specific to StorageTek and Sun. We will simplify
where possible, but some peculiar terms are unavoidable.
StorageTek was a technology company specializing in data
storage. The company sold hardware and software used to
back up and recover data stored on centralized servers. It also
provided maintenance and support services for its products
and similar products sold by third parties. Many of its custom-
ers were large corporations.
Lawson worked for StorageTek as a Services Sales Execu-
tive II. In that position he sold computer maintenance and
support contracts to customers in a defined territory. At the
time in question, he was paid a base salary of $75,000 plus
commissions on his sales.
A. StorageTek’s Incentive Plan
Every year StorageTek issued three documents that defined
Lawson’s compensation for that year. The first, called a “Sales
Executive Incentive Plan,” explained the compensation plan’s
general terms and conditions, including the terms under which
sales would qualify for commissions. The second document,
the “Incentive Plan Administration Document” or “IPAD,”
4 Nos. 13-1502 & 13-1503
explained how commissions would be calculated and also
contained additional terms and conditions applicable to
StorageTek’s North America sales territory. Finally, the “Quota
Document” detailed Lawson’s individualized sales goals and
expected commissions.
The first of these documents incorporated the other two by
reference, so together the three documents constituted
Lawson’s entire compensation agreement. The documents
specified that Lawson’s employment was at will. We’ll refer to
the plan documents collectively as the “incentive plan” (or just
the “plan”) unless the context requires otherwise.
As a general matter, StorageTek’s incentive plan imposed
three basic requirements for a sale to qualify for a commission:
(1) the sale must be for “Enterprise Support Services” or
“Remote Managed Services”; (2) the contract must meet
StorageTek’s revenue recognition standards; and (3) the sale
must be final and the customer invoiced for the transaction.
The sale at issue here initially pertained to Enterprise Support
Services, a term with its own technical meaning. With some
exceptions, these were contracts to support third-party (not
StorageTek’s) software and equipment.
This litigation concerns the 2005 incentive plan. To receive
commission credit for new business under the terms of that
plan, a new contract had to be executed and invoiced during
StorageTek’s 2005 fiscal year, which was calendar year 2005.
The plan also awarded commissions for contracts executed
before calendar 2005 but invoiced on “January 1, or later in
2005.”
Nos. 13-1502 & 13-1503 5
Renewal business was treated differently under the plan.
StorageTek did not compensate renewed contracts as gener-
ously as new contracts. The company parceled out its existing
service contracts between its sales executives by territory. Sales
executives could claim commissions for renewals of the
contracts assigned to them in their annual incentive plans.
If a sales executive thought a certain sale deserved special
treatment, the executive could file a written request with the
company’s North America Incentive Plan Committee, with
copies to local management. The committee would review the
request and notify the sales executive of its decision.
StorageTek’s 2005 incentive plan closed with this section,
the meaning of which is central to this case:
This Plan is effective as of January 1, 2005, re-
gardless of the specific date of publication or
distribution, and supersedes all prior Plans,
provisions, precedents, compensation arrange-
ments, memoranda and incentive programs. It
will remain in effect until a subsequent plan, or
amendment to the Plan, becomes effective. All sales
eligible for quota credit under this Plan, or any
amendment, by the end of the fiscal year 2005
will be payable under this Plan. Sales not eligible
will be payable under the Plan in effect at the
time quota credit is earned. Incentives are not
earned and are not wages until all requirements
under this Plan, the Quota Document, the IPAD [the
Administrative Document] and any amendments to
6 Nos. 13-1502 & 13-1503
these documents have been met as determined solely
by the Plan Administrator.
(Emphases added.)
B. Pursuit of JPMorgan Chase; the Sun Acquisition
Lawson started pursuing JPMorgan Chase as a customer in
2004, and by 2005 he was dedicating a significant amount of
time to closing a deal. In June 2005 JPMorgan Chase solicited
a bid from StorageTek for computer maintenance services.
Although the parties had a preexisting contractual relationship
to service StorageTek products, the June 2005 Request for
Proposal involved computer maintenance services for
non-StorageTek products, so this was new business unrelated
to the prior contract. In other words, in StorageTek’s sales
taxonomy, JPMorgan Chase’s Request for Proposal sought
“Enterprise Support Services.” Lawson spearheaded
StorageTek’s response.
Importantly, however, a large percentage of the new
services contained within the Request for Proposal involved
servicing Sun’s products. Prior to Sun’s acquisition of
StorageTek in August 2005, IBM had subcontracted with Sun
to provide JPMorgan Chase with global support for Sun
products. This agreement, called a “Statement of Work,”
originally covered the period between February 1, 2003, and
January 31, 2006. Sun and IBM extended the arrangement
through December 31, 2009, pursuant to an amendment to the
Statement of Work executed on March 15, 2005. Despite this
extension, in June 2005 JPMorgan Chase issued a separate
Nos. 13-1502 & 13-1503 7
Request for Proposal inviting Sun to bid directly (not through
IBM) for the business covered by the Statement of Work. Jim
Whaley, a Sun sales executive, took the lead in coordinating
the response and submitted a bid on Sun’s behalf.
On June 2, 2005, Sun announced that it was acquiring
StorageTek. This announcement prompted Lawson to e-mail
his supervisor, Paul Heidkamp, to ask how the acquisition
would affect his commission on the JPMorgan Chase deal.
Heidkamp responded that he needed more information and
would get back to him. On August 31 Sun acquired
StorageTek.
After the acquisition JPMorgan Chase asked Sun to com-
bine the StorageTek and Sun bids. From the standpoint of
Lawson’s commission, the takeover dramatically changed the
significance of the deal. As we’ve noted, a substantial portion
of the JPMorgan Chase work involved maintaining Sun
products—business that would have been new to StorageTek.
After the acquisition, however, it was classified as renewal
business because Sun was already providing the services under
the IBM Statement of Work.
Sun’s revised merged bid contained three components.
First, Sun offered to combine and continue services it was
already providing under the IBM Statement of Work and
StorageTek’s prior contract with JPMorgan Chase. Second, Sun
offered to partner with UNISYS to service products made by
other computer manufacturers, such as Hewlett Packard,
Compaq, Dell, and IBM; this work would be new business for
Sun. Third, Sun offered to provide maintenance services for
JPMorgan Chase’s mainframe computer systems.
8 Nos. 13-1502 & 13-1503
Whaley (from Sun) and Lawson (from StorageTek) spear-
headed the joint proposal, which Sun submitted to JPMorgan
Chase on October 11, 2005. Whaley died shortly thereafter, and
Martina Caldara, who had worked on Sun’s pre-merger bid,
filled his position.
In addition to changing the significance of the JPMorgan
Chase deal, Sun’s takeover of StorageTek altered the terms of
Lawson’s incentive plan. On September 1, 2005, Sun amended
the plan to specifically address the effect of the acquisition.
Whereas StorageTek used the calendar year as its fiscal year,
Sun’s fiscal year began on June 26. The September 1 amend-
ment explained that StorageTek would convert to Sun’s fiscal
year, with the transition to take place on December 25, the end
of Sun’s second fiscal quarter. To effectuate the conversion, the
amendment specifically stated that “the current incentive plan
year for StorageTek will end December 25, 2005.”
Sun continued to pursue the JPMorgan Chase deal through
the fall of 2005, and Lawson again tried to ascertain how the
acquisition would affect his incentive compensation. In
November 2005 he e-mailed Woody Wall, a Sun manager,
asking about the split between his commission and Whaley’s.
Wall assured Lawson that the company would “do the right
thing for this transaction” and asked him to explain his
concerns.
The day after this exchange, Peter Orr, who had been
Whaley’s supervisor, e-mailed Tom Kelley, Sun’s Vice Presi-
dent of North American sales, explaining that Lawson’s
situation was “unique” and attempting to determine how his
commission on the JPMorgan Chase deal should be treated.
Nos. 13-1502 & 13-1503 9
Lawson received a copy of the e-mail but does not recall
receiving any response.
On December 8 Lawson again e-mailed Heidkamp asking
whether the 2005 compensation plan would extend beyond the
new year or if a new plan would be forthcoming. Heidkamp
responded that the “comp plan should stay the same.”
Heidkamp also e-mailed Phil Auble, Sun’s Incentive Plan
Administrator, asking for a special “exception” for Lawson’s
commission on the JPMorgan Chase sale. Additional exchanges
between Lawson, Heidkamp, and other Sun supervisors
throughout the month of December did not reach a consensus
on how Lawson would be compensated for his work on the
deal.
Sun’s second fiscal quarter ended on December 25. The next
day Sun sent Lawson a letter informing him that “[a]s of
December 26, 2005, you will transition to [Sun’s] Data Manage-
ment Group Global Storage Sales Compensation Plan.” The
December 26 letter stated that Lawson would receive a copy of
the plan and an individual goal sheet “[o]n or about
January 15, 2006.” The letter also assigned Lawson a new title:
“Sales Specialist 1, DMG Sales.” Lawson countersigned the
letter, indicating that he received and understood it. Sun did
not send him a copy of the new incentive plan until March 17,
2006.
In the meantime, the JPMorgan Chase deal remained in
limbo. JPMorgan Chase continued to study Sun’s October 11
bid and asked for a $7 million price reduction for the Sun/IBM
component. On December 15, 2005, Lawson sent a detailed
10 Nos. 13-1502 & 13-1503
e-mail to Sun management proposing a strategy for persuading
JPMorgan Chase to accept the deal.
JPMorgan Chase ultimately accepted only the first part of
Sun’s October 11 bid—the component consisting of the joint
Sun/IBM proposal and continuation of the services StorageTek
had previously provided. JPMorgan Chase and IBM executed
a “Letter of Authorization”—essentially an agreement to
negotiate in good faith toward a final agreement or amend-
ment of the Statement of Work by January 30, 2006. The final
amendment wasn’t issued until September 29, 2006, but in the
interim the parties issued several letters of intent in which IBM
agreed to continue to work under the amendment to the
Statement of Work. Because JPMorgan Chase only accepted the
first component of the bid, the deal did not result in new
business to Sun or StorageTek. On March 16, 2006, Sun
internally recorded the sale as final, and on March 23, 2006,
issued the first invoices for the work.
C. The Dispute Over Lawson’s Commission
As the JPMorgan Chase sale was being finalized, Lawson
continued to pursue his commission. On February 22 he
requested a “max-draw” on his compensation—a request that
the company front his anticipated commission. For the next
several weeks, Sun management tried to determine the
appropriate commission for the sale. Lawson argued that the
JPMorgan Chase work should be classified as Enterprise
Support Services under the 2005 StorageTek plan because
that’s what it was when he started pursuing the deal more than
a year earlier. New contracts for Enterprise Support Services
Nos. 13-1502 & 13-1503 11
received the highest percentage commission under the 2005
plan because they constitute new business to the company.
With an agreed annual price of $21.2 million for the JPMorgan
Chase’s U.S. business and another $6.8 million for its world-
wide business, Lawson’s commission under the 2005 plan
would exceed $1.8 million.1
While these discussions were ongoing, Sun paid Lawson
$17,000 on his draw request, fully recoverable if the company
later determined that the commission was not owed. Sun
management ultimately rejected Lawson’s request to treat the
JPMorgan Chase deal as Enterprise Support Services under the
2005 plan. In light of the Sun/StorageTek merger, the sale was
not new business, so the company concluded that the higher
commission would be an improper windfall to Lawson. Sun
said it would treat the sale as an assigned renewal contract
under the 2006 plan, triggering a substantially lower commis-
sion.
On March 17 and again on March 23, Sun e-mailed Lawson
a copy of the 2006 incentive plan (technically called the “Data
Management Group Sales Compensation Plan”). The plan itself
was dated March 13, 2006, and was retroactively effective to
December 26, 2005. On April 4 Lawson received his goal sheet,
which contained his individual sales targets for the year.
Lawson refused to sign it, fearing that doing so would preju-
dice his claim to a larger commission for the JPMorgan Chase
1
This figure included a multiyear incentive, which could be awarded to a
sales executive for securing contracts of two or more years. Without that
incentive Lawson’s commission would be about $1.5 million.
12 Nos. 13-1502 & 13-1503
deal. On May 12 Sun e-mailed Lawson a revised goal sheet,
which treated the JPMorgan Chase sale as an assigned renewal
and awarded a commission of $54,300. Lawson declined it and
refused to sign the goal sheet.
Lawson thereafter retained counsel and on June 2 made a
final demand for a commission for the JPMorgan Chase sale
under the terms of the 2005 StorageTek plan. Sun declined to
pay the demand. In October 2006 Lawson was laid off in a
reduction in force.
D. Litigation History
Lawson sued Sun in Indiana state court alleging claims for
breach of contract, quantum meruit, and violation of the
Indiana Wage Claims Statute, IND. CODE §§ 22-2-9-1 et seq.
(authorizing recovery of penalty damages and attorney’s fees).
Sun removed the case to federal court, see 28 U.S.C. §§ 1332(a),
1441(a), and filed a counterclaim alleging that Lawson violated
the Illinois and California eavesdropping statutes by secretly
recording several telephone conversations with Sun employees
during the dispute over the commission.
Sun moved for summary judgment, and the district court
granted the motion in part. The judge held that relief under
quantum meruit was barred because the parties had an express
contract. The judge also held that the eavesdropping counter-
claim could not proceed because Indiana law applied (not the
law of Illinois or California). Neither side challenges these
rulings, so we’ll say no more about them. The judge denied
summary judgment on the contract and statutory wage claims,
Nos. 13-1502 & 13-1503 13
finding the plan documents ambiguous and a trial necessary to
determine liability.
The case was tried to a jury, which found Sun liable for
breach of contract and awarded $1.5 million in damages. On
the statutory claim, however, the judge changed his mind and
entered judgment for Sun as a matter of law, see FED. R. CIV.
P. 50(a), holding that Lawson’s commissions were not “wages”
under the Indiana statute. The judge rejected Sun’s Rule 50(b)
motion for judgment as a matter of law on the contract claim
and entered final judgment on the jury’s verdict. Both sides
appealed.
II. Discussion
Sun argues that Lawson’s contract claim fails as a matter of
law because the 2005 incentive plan expired on December 25,
2005, and the JPMorgan Chase sale was not finalized and
invoiced until March 2006. Lawson counters that the plan
documents are ambiguous and the evidence at trial was
sufficient for a reasonable jury to conclude that Sun intended
the 2005 plan to remain in effect through at least March 2006.
In his cross-appeal Lawson challenges the district court’s ruling
on his statutory claim for unpaid wages.
We review the district court’s Rule 50(b) rulings de novo.
Rapold v. Baxter Int’l Inc., 718 F.3d 602, 613 (7th Cir. 2013).
Judgment as a matter of law is proper if “a reasonable jury
would not have a legally sufficient evidentiary basis to find for
the party on that issue.” FED. R. CIV. P. 50(a)(1); see also May v.
14 Nos. 13-1502 & 13-1503
Chrysler Grp., LLC, 716 F.3d 963, 970 (7th Cir. 2012). The parties
agree that Indiana law applies.
A. Waiver
As a preliminary matter, Lawson argues that Sun waived
its primary legal argument about the interpretation of the 2005
plan by failing to raise it at trial in a motion for judgment as a
matter of law under Rule 50(a) or in a posttrial motion under
Rule 50(b). We disagree.
At the summary-judgment stage, Sun specifically argued
that the 2006 incentive plan—not the 2005 plan—controlled as
a matter of law. The district court found the plan documents
ambiguous and allowed the contract claim to proceed to trial.
Sun’s argument about the proper interpretation of the plan is
more elaborate on appeal than it was in the district court, but
no rule prohibits appellate amplification of a properly pre-
served issue. See Yee v. Escondido, 503 U.S. 519, 534 (1992)
(“Once a … claim is properly presented, a party can make any
argument in support of that claim; parties are not limited to the
precise arguments they made below.”).
Nor was Sun required to renew all the legal arguments it
made at the summary-judgment phase when challenging the
sufficiency of the trial evidence under Rule 50(a) and
Rule 50(b). As a general matter, we do not review a decision
denying summary judgment once the case has proceeded to
trial; summary judgment relies on evidentiary predictions,
which are unnecessary once a jury has found the actual facts.
Chemetall GmbH v. ZR Energy, Inc., 320 F.3d 714, 718 (7th Cir.
Nos. 13-1502 & 13-1503 15
2003). And although a Rule 50 motion ordinarily is required to
preserve a challenge to the sufficiency of the trial evidence, id.at 718–19, questions of contract interpretation are different.
They involve pure questions of law unrelated to the sufficiency
of the trial evidence, so it’s not necessary for summary-
judgment losers to relitigate purely legal issues of contract
interpretation in a motion under Rule 50(a) or (b).2 Id. at
718–20.
Sun’s principal argument on appeal raises a purely legal
question of contract interpretation: Based on the language of
the plan documents, does StorageTek’s 2005 incentive plan
apply to the JPMorgan Chase sale? Sun preserved this issue at
the summary-judgment stage. And because it has no bearing
on the sufficiency of the trial evidence, Sun did not need to
raise it again in its Rule 50(a) and (b) motions. The argument
was not waived.
B. The 2005 Incentive Plan Does Not Apply
Under Indiana law “[t]he unambiguous language of a
contract is conclusive upon the parties to the contract and upon
2
There’s a split of authority on this point, as we noted in Chemetall GmbH v.
ZR Energy, Inc. 320 F.3d 714, 719 (7th Cir. 2003) (citing Chesapeake Paper
Prods. Co. v. Stone & Webster Eng’g Corp., 51 F.3d 1229, 1239 (4th Cir. 1995));
see also Ji v. Bose Corp., 626 F.3d 116, 127–28 (1st Cir. 2010) (refusing to
recognize an exception for purely legal claims). The Supreme Court did not
resolve the question in Ortiz v. Jordan. 131 S. Ct. 884, 892 (2011) (refusing to
address whether a qualified-immunity defense based purely on a legal
question needed to be renewed in a posttrial Rule 50 motion).
16 Nos. 13-1502 & 13-1503
the courts.” Whitaker v. Brunner, 814 N.E.2d 288, 293 (Ind. Ct.
App. 2004) (quotation marks omitted). Extrinsic evidence of the
parties’ intent is permitted only when the contract is ambigu-
ous or uncertain in its terms, in which case the question of the
parties’ intent is one for the fact finder. Trustcorp Mortg. Co. v.
Metro Mortg. Co., 867 N.E.2d 203, 212 (Ind. Ct. App. 2007). But
“[i]f the contract language is clear and unambiguous, the
document is interpreted as a matter of law without looking to
extrinsic evidence.” BKCAP, LLC v. CAPTEC Franchise Trust
2000-1, 572 F.3d 353, 359 (7th Cir. 2009) (Indiana law). “A
contract is not ambiguous merely because the parties disagree
as to its proper construction; rather, a contract will be found to
be ambiguous only if reasonable persons would differ as to the
meaning of its terms.” Allen Cnty. Pub. Library v. Shambaugh &
Son, L.P., 997 N.E.2d 48, 52 (Ind. Ct. App. 2013) (quoting
Vincennes Univ. v. Sparks, 988 N.E.2d 1160, 1165 (Ind. Ct. App.
2013)).
The relevant language in the 2005 incentive plan is not
ambiguous. As amended on September 1, 2005, the plan fixed
a clear and definite expiration date for the plan year:
December 25, 2005. More specifically, the September 1 amend-
ment stated that “StorageTek has adopted Sun’s fiscal calendar
for incentive compensation purposes. Sun’s … second fiscal
quarter (Q2) ends December 25, 2005. Therefore, the current
incentive plan year for StorageTek will end December 25,
2005.”
Lawson resists the force of this explicit termination date by
invoking the provision we have block-quoted above, which
states (among other things) that the plan “will remain in effect
Nos. 13-1502 & 13-1503 17
until a subsequent plan, or amendment to the Plan, becomes
effective.” In Lawson’s view this provision conflicts with the
fixed expiration date specified in the September 1 amendment,
creating an internal ambiguity. The district court agreed,
denied summary judgment, and allowed Lawson to present
extrinsic evidence at trial bearing on Sun’s intent that the plan
continue beyond the termination date.
That was a mistake. Contractual phrases are not read in
isolation; rather, the contract must be read as a whole. Allen
Cnty. Pub. Library, 997 N.E.2d at 52. Moreover, Indiana courts
prefer “an interpretation of the contract that harmonizes its
provisions, as opposed to one that causes the provisions to
conflict.” Four Seasons Mfg. v. 1001 Coliseum, LLC, 870 N.E.2d
494, 501 (Ind. Ct. App. 2007). Read holistically and harmo-
nized, these provisions are not in tension with each other.
As we’ve noted, Lawson’s argument relies heavily on the
concluding paragraph in the unamended 2005 plan, which we
have quoted in full above. That paragraph contains the
following key terms: (1) the 2005 incentive plan is exclusive,
i.e., it’s the only compensation plan in place for StorageTek’s
2005 fiscal year; (2) the plan is effective January 1, 2005, even if
published later; (3) the plan supersedes any previous plan and
continues in effect until a subsequent plan or amendment
becomes effective; and (4) the only sales eligible for commis-
sion credit under the 2005 plan are those meeting all plan
requirements by the end of fiscal year 2005. The September 1
amendment substituted Sun’s fiscal year for StorageTek’s and
fixed a definite termination date for StorageTek’s then-current
plan year: December 25, 2005.
18 Nos. 13-1502 & 13-1503
Read together, these provisions unambiguously establish
that to qualify for commission credit under StorageTek’s 2005
plan, a sale must meet all eligibility requirements by the end of
the plan year, that is, by December 25, 2005. The JPMorgan
Chase sale plainly did not qualify.
Lawson proposes an alternative interpretation: Although
the plan year ended on December 25, 2005 (by virtue of the
language in the September 1 amendment), the plan itself
continued in effect beyond that date until a new plan became
effective. And because Sun did not transmit the 2006 plan to
him until March 17—the day after Sun internally recognized
the JPMorgan Chase deal as final (on March 16)—he is entitled
to a commission under the 2005 plan.
There are several problems with this interpretation. First,
the 2005 plan unequivocally states that “[a]ll sales eligible for
quota credit under this Plan, or any amendment, by the end of
fiscal year 2005 will be payable under this Plan.” (Emphasis
added.) Another provision makes it clear that new contracts
must be invoiced during the 2005 fiscal year to receive commis-
sion credit:
Both contract execution and initial invoicing must
occur during the StorageTek Fiscal Year to count as
Comp Revenue, unless determined otherwise in
StorageTek’s sole discretion. If a contract is fully
executed prior to January 1, 2005 and not in-
voiced until January 1, or later in 2005, it will
count as Comp Revenue under this Plan.
(Emphasis added.)
Nos. 13-1502 & 13-1503 19
Moreover, the 2005 plan is explicit that “[s]ales not eligible
[under this plan] will be payable under the Plan in effect at the
time quota credit is earned.” This provision contemplates the
likelihood that sales may be in progress in 2005 but not
finalized and invoiced until later, and specifically provides that
quota credit for these sales is awarded under the terms of the
plan in effect when credit is earned—i.e., under a successor
plan, not the 2005 plan. In other words, sales in progress but
not yet invoiced when the 2005 plan year expires are not
grandfathered into the 2005 plan. Finally, Sun’s 2006 incentive
plan, though dated and delivered to Lawson on March 17,
2006, was made fully retroactive to December 26, 2005.
If more were needed to demonstrate the flaws in Lawson’s
interpretation, the 2005 plan specifically required that sales
executives submit all payment requests for 2005 commissions
no later than 30 days after the close of the 2005 fiscal year. That
requirement would be impossible to fulfill for sales still in
progress and not yet invoiced when the fiscal year expired.
In short, Lawson’s proposed interpretation cannot be
reconciled with key plan requirements for commission eligibil-
ity. To the contrary, accepting Lawson’s interpretation would
require us to rewrite the most important terms of the compen-
sation plan to make the JPMorgan Chase deal qualify for
commission credit without fulfilling any of the requirements
necessary to earn a commission under the 2005 plan. That, by
definition, makes Lawson’s proposed interpretation an
unreasonable one. See Hepburn v. Tri-Cnty. Bank, 842 N.E.2d
378, 384 (Ind. Ct. App. 2006) (explaining that Indiana courts do
not “add provisions to a contract that were not placed there by
20 Nos. 13-1502 & 13-1503
the parties”); Colonial Penn Ins. Co. v. Guzorek, 690 N.E.2d 664,
669 (Ind. 1997) (“[T]he power to interpret contracts does not
extend to changing their terms.”).
In addition to these intratextual difficulties, the compensa-
tion plan as written is not readily amenable to judicial gap-
filling. As we’ve explained, the plan treated new and renewal
business differently. New business received the highest
commission; renewal contracts received no commission unless
specifically assigned to a sales executive as part of his revenue
quota, and these commission rates were lower than for new
business. If the 2005 plan continued beyond fiscal year 2005
and covered sales finalized and invoiced in 2006, vexing
questions would arise about how to calculate commissions.
Business might be considered new in 2005 (and therefore
compensable at the highest rate) but not new in 2006, when the
commission is actually earned. Commissions based on 2005
assigned renewals likewise could have a different status in
2006—including, for example, a reduced commission rate if the
profitability of a deal declined over time. This interpretive
difficulty bolsters our conclusion that Lawson’s preferred
reading of the plan is not a reasonable one.
The parties spill a lot of ink debating Lawson’s status as an
at-will employee; the meaning of Sun’s December 26, 2005
letter; the effect of Lawson’s refusal to sign his 2006 goal sheet
(and revised goal sheet); and the parties’ course of conduct in
late 2005 and early 2006 as the negotiations over the disputed
commission unfolded. Because the plan language is not
ambiguous, this extrinsic evidence simply drops out of the
case. The trial was unnecessary.
Nos. 13-1502 & 13-1503 21
In sum, the JPMorgan Chase sale unambiguously did not
qualify for a commission under the 2005 plan. And because
Lawson was not entitled to a commission under the 2005 plan,
his claim for unpaid wages under the Indiana Wage Claims
Statute necessarily fails.
Accordingly, we REVERSE the district court’s judgment and
REMAND with instructions to enter judgment for Sun.