United States District Court, D. Minnesota
Todd D. Auge, Plaintiff,
Fairchild Equipment, Inc., Defendant.
ORDER ON CROSS MOTIONS FOR SUMMARY JUDGMENT
WILHELMINA M. WRIGHT UNITED STATES DISTRICT JUDGE
lawsuit alleging breach of an employment contract and failure
to pay wages, Plaintiff Todd D. Auge and Defendant Fairchild
Equipment, Inc. (Fairchild), cross-move for summary judgment.
(Dkts. 40, 46.) For the reasons addressed below,
Fairchild's motion is granted and Auge's motion is
a Wisconsin corporation that operates material-handling
equipment dealerships, hired Auge as a “field sales
manager” for industrial cleaning equipment at its
Burnsville, Minnesota, dealership in April 2013. At the start
of his employment, Auge received a written commission plan
from Fairchild titled “2013 Pay Program, ” which
Auge signed on April 22, 2013. The purpose of the 2013 Pay
Program was “to outline the commission and compensation
arrangements” between Auge and Fairchild “for as
long as [Auge] remains a salesperson of Fairchild
Equipment.” Among other things, the 2013 Pay Program
addresses vacation time and certain business expenses that
Fairchild would reimburse. As relevant here, the 2013 Pay
Program also provides that Auge would receive commissions as
• Sale of New Equipment to be paid at 30% of gross
• Sale of Used Equipment to be paid at 6% of sell price.
. . .
• Sale of short term rental will be paid at 6% of the
monthly billing of all rentals directly sold by the sales
. . .
• Aftermarket commissions will be paid on the Rental,
Parts and Service volume at the rate of 3% of the monthly
revenue on any new customer for the Calendar year of 2013.
The commission rate will drop to 1% on the years after the
• Sale of JCB products with full involvement 10% of the
• Sale of JCB products with Partial involvement 5% of
the [gross profit]
• Sale of JCB products resulting from a lead you
2013 Pay Program does not define when a “sale”
received training in or about August 2016 pertaining to the
sale of JCB products. Auge contends that he became an
authorized JCB sales representative for Fairchild at that
time and that his manager orally promised Auge that he would
be paid a 30% commission on Fairchild's gross profit from
all JCB products that Auge sold. Fairchild and Auge's
manager dispute these assertions.
months later, Auge prepared a document titled “JCB
Order Form, ” dated February 14, 2017, that pertains to
JCB equipment ordered by a Fairchild customer, Birds Eye
Foods, for $2, 038, 500. The JCB Order Form states that the
equipment would be invoiced to the customer on April 28,
2017, and shipped to the customer on May 26, 2017. Under the
terms of the transaction, a third party, JCB Finance,
purchased the equipment from Fairchild. JCB Finance, in turn,
would lease the equipment to Bird Eye Foods for three years.
At the end of the lease term, Birds Eye Foods would have the
option to purchase the equipment for $1, 350, 720. As part of
this transaction, Fairchild agreed that if Birds Eye Foods
does not purchase the equipment at the end of the
lease, JCB Finance can sell the equipment to another third
party. Under the agreement, if JCB Finance sells the
equipment for less than $1, 350, 720, Fairchild will pay JCB
Finance the difference up to $115, 503.66 (the Residual
Hold). Fairchild told Auge in May 2017 that, although
Fairchild would not immediately recognize as profit the
Residual Hold amount and an additional “warranty
exposure” amount of approximately $41, 000 (the
Warranty Reserve), Auge would be eligible for commission on
the Residual Hold and Warranty Reserve amounts in three years
when Fairchild recognizes this portion of the profit. After
these terms of the transaction were finalized, the equipment
was shipped to Birds Eye Foods in June 2017.
in or about March 2017, Auge received a new written
commission plan from Fairchild titled “2017 Pay
Program, ” which Auge signed on March 28, 2017. The
2017 Pay Program commenced on April 1, 2017, and provides, in
relevant part, that Auge would receive “25% of the
gross profit on JCB new equipment sold through December
31st, 2017, ” and that Auge would receive a
commission on a rental purchase option (RPO) agreement only
in the event that the agreement results in an equipment sale.
Under the 2017 Pay Program, “[c]ommissions are
considered earned in the month that equipment is actually
shipped to customer site and signed off as received by
customer.” And the 2017 Pay Program, like the 2013 Pay
Program, also delineates vacation time and certain business
expenses that Fairchild would reimburse.
resigned from his employment on July 5, 2017, by sending an
email to his supervisor with the subject line “I quit,
7.5.17 Todd Auge” and nothing in the body of the email.
That same day, Auge parked his company truck at
Fairchild's Burnsville dealership and locked the keys and
a resignation letter inside. Approximately three weeks later,
Fairchild direct deposited into Auge's bank account a
commission payment of $30, 908.13, which included a 25%
commission payment for the JCB equipment transaction
involving Birds Eye Foods. This payment included a commission
on the Residual Hold and Warranty Reserve amounts, contrary
to what Fairchild had told Auge would occur. Shortly
thereafter, Auge's former manager called Auge and advised
him that the direct deposit had been miscalculated and would
be corrected. Fairchild reversed the $30, 908.13 direct
deposit the next day and reissued a commission payment of
$14, 134.16 based on a corrected gross profit amount that
excludes the Residual Hold and Warranty Reserve amounts.
commenced this lawsuit against Fairchild in Minnesota state
court on November 16, 2017. Fairchild removed the case to
this Court shortly thereafter. Count I of the complaint
alleges breach of contract. Count II alleges failure to pay
wages, a violation of the Minnesota Payment of Wages Act,
Minn. Stat. §§ 181.03, 181.14. In support of these
claims, Auge alleges that, because Fairchild owed him a 30%
commission on the full amount of the JCB equipment
transaction with Birds Eye Foods, Fairchild underpaid him for
this transaction by $58, 900.06. Auge also alleges that
Fairchild failed to pay him commissions on 10 other equipment
transactions, including five RPO transactions, as well as
commissions on parts and service sales. And Auge seeks
compensation for his unused vacation time that had accrued on
the date of his resignation and unreimbursed business
expenses of $400. Auge also seeks penalties, attorneys'
fees, and costs pursuant to the Minnesota Payment of Wages
Act. See Minn. Stat. § 181.171, subd. 3.
and Fairchild cross-move for summary judgment on both counts
of Auge's complaint. Summary judgment is proper when,
viewing the evidence in the light most favorable to the
nonmoving party and drawing all reasonable inferences in that
party's favor, there is “no genuine dispute as to
any material fact” and the moving party is
“entitled to judgment as a matter of law.”
Fed.R.Civ.P. 56(a); see also Windstream Corp. v. Da
Gragnano, 757 F.3d 798, 802-03 (8th Cir. 2014). A
genuine dispute as to a material fact exists when “the
evidence is such that a reasonable jury could return a
verdict for the nonmoving party.” Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). To defeat
a motion for summary judgment, the opposing party must cite
with particularity those aspects of the record that support
any assertion that a fact is genuinely disputed. Fed.R.Civ.P.
56(c)(1)(A); accord Krenik v. Cty. of Le Sueur, 47
F.3d 953, 957 (8th Cir. 1995). The Court addresses in turn
each count of Auge's complaint.
Breach of Contract (Count I)
parties contend that they are entitled to summary judgment on
Auge's breach-of-contract claim. It is undisputed that
Minnesota law governs this claim. The elements of a
breach-of-contract claim under Minnesota law are “(1)
formation of a contract, (2) performance by plaintiff of any
conditions precedent to the right to demand performance by
the defendant, and (3) breach of the contract by
defendant.” Toomey v. Dahl, 63 F.Supp.3d 982,
997-98 (D. Minn. 2014) (quoting Park Nicollet Clinic v.
Hamann, 808 N.W.2d 828, 833 (Minn. 2011)). To recover,
the party alleging breach also must have suffered damages as
a result of the breach. See Gen. Mills Operations, LLC v.
Five Star Custom Foods, Ltd., 703 F.3d 1104, 1107 (8th
Cir. 2013) (applying Minnesota law). When reviewing
contractual language, Minnesota courts seek to determine the
intent of the parties. Caldas v. Affordable Granite &
Stone, Inc., 820 N.W.2d 826, 832 (Minn. 2012).
alleges that Fairchild breached the 2013 Pay Program and the
2017 Pay Program by failing to pay him the correct commission
amounts for the JCB equipment transaction with Birds Eye
Foods and several other transactions that occurred in 2016
and 2017, as well as payments for unused accrued vacation
time and business expense reimbursements. For the pending
motions for summary judgment, Fairchild assumes without
conceding that the 2013 Pay Program and the 2017 Pay Program
are valid and enforceable contracts, not simply employment
policies. But Fairchild argues that it has breached neither
the 2013 Pay Program nor the 2017 Pay Program. The Court
addresses in turn each alleged breach.
Commission on JCB Equipment Transaction with Birds Eye
contends that he is entitled to receive a 30% commission on
Fairchild's gross profit with respect to the JCB
equipment transaction with Birds Eye Foods. According to
Ague, Fairchild committed two breaches with respect to this
commission payment: first, by paying him a commission of 25%
instead of 30%, and second, by excluding the Residual Hold
amount of $115, 503 and the Warranty Reserve amount of $41,
000 from its calculation of gross profit on this transaction.
Applicable Commission Rate
first argues that Fairchild owed him a 30% commission on the
JCB equipment transaction with Birds Eye Foods. Fairchild
contends that the 25% ...