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Sutula-Johnson v. Office Depot, Inc.

United States Court of Appeals, Seventh Circuit

June 25, 2018

Daryl Sutula-Johnson, Plaintiff-Appellant,
Office Depot, Inc., Defendant-Appellee.

          Argued November 7, 2017

          Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 15-CV-2378 - Sharon Johnson Coleman, Judge.

          Before Easterbrook, Rovner, and Hamilton, Circuit Judges.


         Plaintiff Daryl Sutula-Johnson sued her former employer, alleging that its changes to her compensation for selling office furniture breached its contract with her and violated the Illinois Wage Payment and Collection Act. The district court granted summary judgment for the employer. We affirm summary judgment for the employer on the claims for breach of contract but reverse as to the statutory claims.

         I. Factual & Procedural Background

         We start by summarizing the changes in Sutula-Johnson's compensation and then the procedural course of this lawsuit. Because we are reviewing a grant of summary judgment for the defendant-employer, we consider facts that are undisputed and give the plaintiff the benefit of conflicts in the evidence.

         A. The OfficeMax Plan

         Plaintiff Sutula-Johnson began selling office furniture more than a decade ago. She started with Boise Cascade, which then merged with OfficeMax. In 2010, OfficeMax adopted a written compensation plan that covered its furniture sales group, including Sutula-Johnson. Under that plan, OfficeMax paid furniture account executives, including plaintiff, entirely in commissions. OfficeMax paid commissions at a rate of either 27% or 20% of each sale, depending on the sale's profit. The general policy was that commissions were earned either when a customer paid or 90 days after the customer was invoiced, whichever came first. Sutula-Johnson, however, had negotiated better terms for herself. She earned commissions upon invoicing.

         OfficeMax paid commissions on a monthly basis in the second or third paycheck of the month after the commission was earned. Sutula-Johnson received commissions according to these terms throughout her employment with OfficeMax.

         B. The New Office Depot Plan

         OfficeMax and Office Depot merged in November 2013 and continued business under the name Office Depot. At first, Office Depot continued to pay Sutula-Johnson and her OfficeMax colleagues under the terms of the old OfficeMax plan. Then on July 14, 2014, Office Depot announced that it was adopting a new compensation plan that would apply to all furniture account executives effective immediately.

         Office Depot did not roll out the new plan smoothly. The July 14 announcement contained a PowerPoint presentation explaining the new compensation structure. Within a week, Sutula-Johnson received a copy of the PowerPoint presentation but not a copy of the plan itself. Sutula-Johnson—who kept notes of the roll-out and her talks with Office Depot managers-asserts that employees received an email a month and a half later saying that the new plan was available for viewing online. In reality, she testified, the plan was not available at that time. Sutula-Johnson did not receive a copy of the new plan until September 26, 2014, and her notes said that the plan was not yet accessible nationwide.

         The new plan significantly changed how Sutula-Johnson was paid and reduced her total pay. For the first time, SutulaJohnson received a combination of salary and what Office Depot called "incentive payments." The incentive payments were paid quarterly and with lower rates than the OfficeMax commissions: 13.5% or 10% instead of 27% or 20%. Office Depot set a quarterly sales target for each employee and paid 13.5% or 10% of all sales as "incentive payments," depending on whether the employee exceeded the quarterly sales target.

         The new Office Depot plan also changed when and how Sutula-Johnson earned and received her commissions. Instead of earning commissions upon customer invoicing, the plan said that she "accrued" the incentive payments upon invoicing but did not "earn" them until the day Office Depot actually paid them to her. Under the new plan, an employee who left the company lost any claim on incentive payments not yet actually paid to her. According to Office Depot, any interest the employee had in the incentive pay was not "earned or vested until payment date." According to Sutula- Johnson, Office Depot usually paid the quarterly incentive payments 45 days after the end of each calendar quarter.

         C. Sutula-Johnson's Objections

         Sutula-Johnson had earned substantial commissions under the OfficeMax plan. She quickly figured out that the new Office Depot plan would reduce her pay significantly. She immediately objected to the new plan. She initially refused to sign it and complained to management about what was, in her view, an unfair pay reduction, especially as applied to sales already in the works but not yet invoiced. Office Depot management said the new plan would still apply to her.

         Despite her objections, Sutula-Johnson continued working for Office Depot for more than another year. In early 2015, Office Depot issued a new written version of the plan with the same key terms and insisted that Sutula-Johnson sign it. She signed a form acknowledging the plan in March 2015. Later that month she filed this suit while still working for Office Depot. She resigned in December 2015.

          D. Procedural Background

         Sutula-Johnson sued Office Depot in federal court, invoking diversity jurisdiction under 28 U.S.C. § 1332(a)(1). Her complaint alleged breach of contract, unjust enrichment, and violations of the Illinois Wage Payment and Collection Act, 820 Ill. Comp. Stat. 115/1 et seq. (the "Illinois Wage Act"). She claimed that Office Depot breached its contract with her by paying her under the new compensation plan before March 2, 2015, when she signed the acknowledgment form. She also asserted that the "incentive payments" were commissions under the Illinois Wage Act and that ...

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