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Houben v. Telular Corp.

November 04, 2002

SUSAN COOPER HOUBEN, PLAINTIFF-APPELLANT,
v.
TELULAR CORPORATION, DEFENDANT-APPELLEE.



Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 97 C 1489--Ruben Castillo, Judge.

Before Posner, Diane P. Wood, and Williams, Circuit Judges.

The opinion of the court was delivered by: Diane P. Wood, Circuit Judge

SUBMITTED JANUARY 9, 2002*fn1

Susan Cooper Houben's dispute with her former employer Telular Corporation about commissions it owed her is making its second appearance before this court. The first time, we affirmed a jury's decision to award Houben $98,364 for Telular's failure to pay her commissions due under the Illinois Wage Payment and Collection Act (IWPCA), 820 ILCS 115/1, et seq., but declined to resolve whether Telular owed additional post-trial statutory penalties under IWPCA for failing to pay the judgment within 15 days after it was docketed. After this court remanded for resolution of that issue, the district court concluded that Telular was not subject to any additional IWPCA penalties and denied Houben's writ of execution, indicating without extensive explanation that "the penalty provisions of the IWPCA do not apply under the circumstances of this case." We agree, although not necessarily for the reasons the district court implied, and we therefore affirm its judgment.

I.

The facts of this case are set out in detail in our prior opinion, Houben v. Telular Corp., 231 F.3d 1066 (7th Cir. 2000). At trial, Houben pursued both state and federal claims. The jury returned a verdict in favor of Telular on the federal claims and in favor of Houben on her state claims under IWPCA on May 18, 1999. The judgment was docketed two days later, on May 20, 1999. (Although there is some confusion in the record about the choice between May 18 and May 20 for the actual date of the judgment, FED. R. CIV. P. 79(a) indicates that it is the date of docketing that counts; we therefore discuss the parties' arguments using May 20 as that date, even though the briefs refer also to May 18.) IWPCA provides that an employer who has been ordered by a court to pay wages due an employee and fails to do so within 15 days is liable for statutory penalties of 1% of the wages per calendar day of delay, with a maximum possible penalty of twice the unpaid wages. See 820 ILCS 115/14(b).

Telular filed a timely motion for judgment as a matter of law or a new trial under Rule 59, which the district court denied in open court on June 10. At that time Houben for the first time raised the issue of the possible application of § 115/14(b) and asked that Telular post a $350,000 bond to cover the judgment and accruing penalties. Five days later, Telular tendered to Houben a check for $98,364, the full amount of wages awarded by the jury. Houben refused the check, asserting that Telular had failed to make payment within 15 days of the date of judgment as required by IWPCA, and that she was therefore already owed an additional $26,557.28.

Telular then filed a motion for stay of the judgment and approval of a supersedeas bond. On June 22, the district court heard the motion and set the bond at $120,000. The court declined to rule definitively on the applicability of IWPCA's penalty provision but orally stated that, if it did apply, any further accrual of penalties would be stayed.

On November 3, 2000, this court affirmed the jury's verdict. In so doing, we noted that the dispute over the IWPCA penalty provision's applicability remained live, but that this fact did not deprive us of jurisdiction because, like attorneys' fees and postjudgment interest, the right to such a payment depended entirely on postjudgment facts. Houben, 231 F.3d at 1071. One week later Telular delivered to Houben a check for the original judgment amount plus statutory interest calculated pursuant to 28 U.S.C. § 1961. Houben accepted this check but refused to execute a satisfaction of judgment form or release Telular's appeal bond. Instead she moved for a writ of execution under Rule 69 requesting that Telular be ordered to pay her an additional $196,728. The district court found the IWPCA penalty provisions inapplicable and therefore denied Houben's motion.

II.

The central question on this appeal is whether the district court was required to apply the penalty provision of the IWPCA, § 115/14(b), or if the statute was inapplicable for one reason or another. The district court thought that § 115/14(b) did not apply "under the circumstances of this case." It explained that Telular "has promptly complied with all the final rulings which established the amount of plaintiff's disputed wages at both the trial and appellate levels well within the time period provided by IWPCA," and that "[n]othing in the record supports a finding that defendant should be penalized under IWPCA." Houben disputes both of those conclusions in her appeal: first, she claims that the time for Telular's payment began to run on the day the original final judgment was docketed, which was May 20, 1999 (not May 18), and that Telular failed to pay within the required time of that date; second, she argues that the statute does not contain any implicit requirement of bad faith on the part of the defendant and thus it does not matter whether the court thought Telular deserved punishment or not. Telular responds that the Illinois statute cannot be applied in a federal court in any event, because under the doctrine of Erie R.R. v. Tompkins, 304 U.S. 64 (1938), and subsequent cases, it conflicts with federal statutes and rules governing when a judgment creditor is entitled to demand payment. Secondarily, it argues that the district court correctly ruled that § 115/14(b) was inapplicable according to its own terms.

Although, as we explain below, it is quite clear that Telular would not be liable for additional penalties if the normal rules for the payment of federal judgments apply, the parties dispute whether Telular owes extra penalties under state law. If it does not, then there would be no conflict in any event between federal law and state law, and we would be spared the need to decide which body of law governs. We therefore begin with a closer look at § 115/14(b), which reads as follows:

Any employer who has been ordered by the Director of Labor or the court to pay wages due an employee and who shall fail to do so within 15 days after such order is entered shall be liable to pay a penalty of 1% per calendar day to the employee for each day of delay in paying such wages to the employee up to an amount equal to twice the sum of unpaid wages due the employee.

Illinois courts have indicated that the purpose of this provision is to ensure that employees who win wage cases receive timely and complete payment of the amounts due without retaliation or foot-dragging by employers. Doherty v. Kahn, 682 N.E.2d 163, 173 (Ill. App. Ct. 1997).

In order to achieve this goal, the statute adopts a strict definition of what counts as "timely" payment: it means payment within 15 days after the Director of Labor or a court has ordered payment. In this case, Telular offered payment to Houben more than 15 days after the original final judgment was docketed on May 20, 1999. Under Houben's interpretation of the rules, Telular had until June 4 (counting from May 20) to pay her; instead, it tendered payment on June 15, which was 11 days late if the clock began on May 20. Telular had also, however, filed a timely motion on June 1, 1999, for either judgment as a matter of law under FED. R. CIV. P. 50(b) or a new trial under Rule 59; that motion was docketed on June 2. The district court denied that motion in open court on June 10. If June 10 is the date to be used for purposes of § 115/14(b), then Telular's June 15 payment was comfortably within the 15-day period mandated by the statute. At the hearing where the post-trial motions were denied, Houben's counsel stated that the plaintiff was taking the position that the date of judgment governed and that statutory penalties were accruing under the IWPCA. It is also worth noting that Telular's tender occurred five days after that announcement.

From the brief comment in the district court's order to which we referred earlier, it seems that the court may have believed that the relevant starting point in federal court for the IWPCA was the date on which a timely motion under Rules 50 and 59 was denied. This may be why the court thought that Telular had complied with all final rulings well within the time periods provided by the statute. The date on which timely post-trial motions are resolved is the date on which a federal judgment becomes final for other purposes, most importantly taking an appeal to the proper court of appeals, see 28 U.S.C. § 1291 and FED. R. APP. P. 4, and so this might have seemed the most logical way to interpret the various rules to the district court. It also appears that the court believed that there was an equitable element to the IWPCA penalty scheme.

The latter position, however, has not been endorsed by the Illinois courts. In the only case to address this very issue, the Illinois Appellate Court held that "[t]o assert a claim for interest penalties, all that need be shown is that there is an order for back wages issued . . . by a court and that the amount due has not been paid." Miller v. Kiefer Specialty Flooring, Inc., 739 N.E.2d 982, 989 (Ill. App. Ct. 2000). If the correct reference date was May 20, 1999, then as far as the IWPCA was concerned all Houben had to show was that she did not have the money in hand as of June 4, and the penalties would begin accruing; willfulness or its lack on Telular's part was irrelevant. If this had been an Illinois court, Miller also indicates that May 20 was the ...


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