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Glass v. Kemper Corp.

January 12, 1998




Appeal from the United States District Court for the Northern District of Illinois, Eastern Division.

No. 95 C 3178 James H. Alesia, Judge.

Before Posner, Chief Judge, and Manion and Diane P. Wood, Circuit Judges.

Posner, Chief Judge.

Argued September 19, 1997

Decided January 12, 1998

This diversity suit charges breach of an employment contract and related violations of rights conferred by the common law of Illinois, and also violation of Illinois' Wage Payment and Collection Act, 820 ILCS 115. The district court dismissed the statutory claim, holding the wage payment act inapplicable to the facts alleged in the complaint, 920 F. Supp. 928 (N.D. Ill. 1996), and granted summary judgment for the defendants on the remaining counts, holding that there was no contractual or other basis for the plaintiff's common law claims. 949 F. Supp. 1341 (N.D. Ill. 1997).

The dismissal of the statutory claim was clearly correct. The act "applies to all employers and employees in this State." 820 ILCS 115/1. The plaintiff is not, and at no time relevant to this suit was he, a resident of Illinois. Nor did he perform any work in Illinois; all the work that he did for the defendants was done in Spain. Although the employer defendants have their principal places of business in Illinois, and are therefore "employers . . . in this State," we do not think the statute has an extraterritorial reach. Its evident purpose is to protect employees in Illinois from being stiffed by their employers; to this end it imposes heavy sanctions on employers who fail to pay wages that have accrued. 820 ILCS 115/14; Mueller Co. v. Department of Labor, 543 N.E.2d 518, 521 (Ill. App. 1989). It is inconceivable that the framers of the statute meant to extend its protection to employees abroad, who would usually not even be U.S. citizens, let alone residents of Illinois. Even federal statutes presumptively lack extraterritorial reach. EEOC v. Arabian American Oil Co., 499 U.S. 244, 248 (1991).

True, the Illinois statute authorizes the state's department of labor to make agreements with other states by which Illinois will enforce those states' wage payment acts against employers in Illinois of those states' residents in exchange for reciprocal enforcement by those states of Illinois' act against employers of Illinois residents in those states. 820 ILCS 115/7. But this provision does not help Glass. It suggests that Illinois' law does not protect even its own residents when they are working in another state. This makes it highly unlikely that it would protect a resident of another state who is working in a foreign country--especially since a state's attempt to regulate a transaction wholly in foreign commerce would violate the "negative" commerce clause. "A state cannot regulate sales that take place wholly outside it." In re Brand Name Prescription Drugs Antitrust Litigation, 123 F.3d 599, 613 (7th Cir. 1997). See also Healy v. Beer Institute, 491 U.S. 324, 336 (1989); Brown-Forman Distillers Corp. v. New York State Liquor Authority, 476 U.S. 573, 581-84 (1986); National Solid Wastes Management Ass'n v. Meyer, 63 F.3d 652, 656-61 (7th Cir. 1995); K-S Pharmacies, Inc. v. American Home Products Corp., 962 F.2d 728, 730 (7th Cir. 1992).

We move on to the contract claim. Although the evidence bearing on the question whether the plaintiff had a contract with the defendants is almost entirely documentary, he is correct to point out that when the existence of a contract depends on inference from a series of documents, the inference is to be drawn by the trier of fact. Coplay Cement Co. v. Willis & Paul Group, 983 F.2d 1435, 1438-39 (7th Cir. 1993); Western Industries, Inc. v. Newcor Canada Ltd., 739 F.2d 1198, 1205 (7th Cir. 1984); Meyers v. Selznick Co., 373 F.2d 218, 222-23 (2d Cir. 1966) (Friendly, J.). Summary judgment on the contract count was proper therefore only if no reasonable judge or jury could infer from the evidence that there was a contract. So let us see.

Gregory Glass, the plaintiff, is a real estate developer who in 1992 was hired by one of the defendants, The Prime Group, Inc., to manage the development of a retail shopping mall in Barcelona. The land for the mall was owned by a Spanish company, Kepro, that was indirectly controlled by Prime. The mall project itself was financed by defendant Kemper Corporation, which was granted an option to buy a controlling interest in Kepro. The terms of Glass's employment were set forth in a letter agreement of October 1, 1992, signed by an official of Prime on behalf of both Prime and Kepro. The letter specified an annual salary of $360,000 and extensive fringe benefits. Although the letter recites that the proposal in it is subject to ratification by the boards of directors of Prime and Kepro, the proposal was never submitted to either board, yet the defendants concede that it was a binding contract; and they honored its terms.

In May of 1994 Kemper, which now had three seats on the six-member board of directors of Kepro, including the chairman's, assumed control of the mall project and placed a Kemper vice-president, Michael Oberst, in charge. Kemper was eager to retain Glass and the four other Americans who were employed on the project. It directed Oberst to work out new contracts with the five "expatriates" that would keep them with the project; the agreement of October 1, 1992, with Glass, and, we assume, the parallel agreements with the other four expatriates as well, were terminable by either party on thirty days' notice. Oberst wrote Glass, who responded in June with a set of proposed terms for a new contract for himself and the others. Oberst responded with his own set of terms, which included increasing Glass's annual salary to $400,000. Although the response contained the notation "Revised terms and conditions to be approved by Kemper/Kepro Board," Oberst told Glass that Kepro's chairman had given him full authority to make all decisions necessary to the management of the project. Formally, Glass remained employed by Prime, but it was understood that his "real" employer was Kemper and Kepro; none of the negotiations over his continued employment were with Prime.

After further oral and written exchanges, Oberst on September 14 sent Glass and the other expatriates a "summary of expatriate compensation and benefits." The cover memo states that a summary of the compensation and benefits "being 'offered' to you" is enclosed and that the terms in the summary have been "approved by Kemper and will formally be ratified at next week's Kepro Board Meeting. Your respective 'deals' will be incorporated into a formal employment agreement that is now being drafted by a law firm in Chicago. It goes without saying that each of you will have the opportunity to review the respective drafts of the employment agreement as soon as I receive a 'working copy' worthy of your attention." The summary that was enclosed, it should be noted, was a summary not of an actual employment agreement but merely of the salary and other benefits that Oberst proposed to include in the agreements.

Glass wrote Oberst on September 16 expressing satisfaction with the "new compensation/benefit package" and adding, "I have worked for months without a formal contract and have had no problems. This outline will do just fine until such time as we can get the form in place for everyone."

Kepro's board did not discuss Oberst's proposal at the September 21 meeting. Glass was fired on October 20, for reasons that are in dispute and ...

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