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Baker v. Internap Network Services Corp.

September 23, 2010

DIXIE L. BAKER, PLAINTIFF,
v.
INTERNAP NETWORK SERVICES CORPORATION, DEFENDANT.



The opinion of the court was delivered by: Matthew F. Kennelly, District Judge

MEMORANDUM OPINION AND ORDER

Dixie Baker has sued Internap Network Services Corporation, her former employer, to recover commissions she claims she earned from sale of content delivery network services on three accounts. Baker was paid commissions on those accounts, but at a lower rate than she claims was agreed upon. Internap admits that it gave Baker a document establishing a default formula for commission calculations but argues that it had the discretion to reduce individual commission payments under the terms of a larger commission plan that applied to all sales employees. Baker seeks to recover unpaid commissions under three theories: first, based on what she claims was an implied-in-fact contract between her and Internap that she would be paid according to the formula (count 1); second, on a theory of unjust enrichment in the event Internap was not contractually obligated to follow the formula (count 3); and third, under the Illinois Sales Representative Act (count 2).

Internap has filed a counterclaim seeking to recover the amount it paid Baker on one of the accounts in question. It contends the contract with that customer later fell through and that Internap did not receive payment.

Internap has moved for summary judgment on all of Baker's claims, and Baker has moved for summary judgment on Internap's counterclaim. For the reasons stated below, the Court grants summary judgment in favor of Internap on Baker's Illinois Sales Representative Act claim but otherwise denies the motions for summary judgment.

Background

VitalStream, Inc. hired Baker as a sales representative in September 2006. Baker's job at VitalStream was to sell content delivery network (CDN) services. CDN services include live and on-demand streaming video sent over the Internet to computers and mobile devices. In February 2007, Internap acquired VitalStream. Baker continued to work for Internap after the acquisition, though the nature of her position changed. At VitalStream she had been in charge of her own accounts, but after the acquisition she became an "overlay specialist" who did not have her own accounts but supported other sales representatives by providing information and sales expertise concerning CDN services.

Baker's compensation at both VitalStream and Internap included commissions she earned for sales. Shortly after the Internap acquired VitalStream, Internap gave Baker a compensation schedule that included a formula it would use to calculate her commissions (the 2007 CDN plan). Baker received commissions according to this formula for most sales she made on behalf of Internap.

In July and August 2007, Baker and several other Internap employees worked on three large accounts that yielded big contracts. Baker's commissions on these accounts would have been very large had they been calculated according to the formula in the 2007 CDN plan. Internap, however, adjusted the commissions downward, and Baker received roughly ten percent of what she would have earned had Internap followed the formula in the 2007 CDN plan. Baker complained to her supervisor and to an Internap vice president, but she received no additional commission payments. Baker continued to work for Internap until April 2008, when she resigned after a corporate reorganization.

Baker claims that her commission arrangement with Internap constituted an implied-in-fact contract. In count 1, she alleges that Internap breached that contract when it deviated from the commission formula to calculate her commission for the three accounts in question. In the alternative (count 3), she alleges that even if Internap was not contractually obligated to pay her according to the formula, it was unjustly enriched when it paid her the lower commissions, and she is therefore entitled to recover the full amount she claims. Finally, in count 2, Baker alleges that Internap's actions violated the Illinois Sales Representative Act, 820 ILCS 120/2, under which a company must pay an independent sales representative all owed commissions within thirteen days of the termination of a contract with that representative.

Internap contends that the 2007 CDN plan it gave Baker was only one part of a larger commission plan. It claims that the broader commission plan, which is described in a multiple-page document, applied to all Internap employees who were paid on commission (the 2006 Commission Plan). That plan, which Internap insists applied to Baker, states that the company reserves the right to adjust or reduce any individual commission payment.

Internap denies that had a contractual obligation to pay Baker according to the commission formula from the 2007 CDN plan for the three accounts in question, because the 2006 Commission Plan gave it the discretion to reduce those awards as it saw fit. Internap also argues that it was not unjustly enriched by its decision to reduce the commission awards and that the amount it gave Baker on those accounts reflected the actual value she contributed to those sales. Finally, it argues that Baker does not qualify as a sales representative under the Illinois Sales Representative Act.

Internap has also counterclaimed, seeking to recover the commissions it paid Baker on one of the accounts in question. That account fell through after Baker left Internap, and Internap made all current employees return the commissions they had been paid on the account. Internap now seeks to recover the commissions it paid Baker on the account pursuant to the terms of a charge-back provision included in both the 2006 Commission Plan and the 2007 CDN plan.

Each party has moved for summary judgment on the opposing party's claims. For the reasons stated below, the Court grants summary judgment in favor of Internap with regard to count 2 of ...


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