N. CARLTON TILLEY, JR., Senior District Judge.
Plaintiff James C. Branyon, Jr. has sued his former employer, Defendant Phoenix Business Consulting, Inc. ("Phoenix"), for violations of the North Carolina Wage and Hour Act ("Wage and Hour Act") and seeks to recover, among other relief, commissions he believes he is owed under three purported contracts — the First Anvil Contract, the Second Anvil Contract, and the Grain Craft Contract. (
Branyon was a sales associate with Phoenix from late 2005 or early 2006, when Phoenix merged with Branyon's previous employer, until his termination on December 31, 2015. (James C. Branyon, Jr. Dep. 14:22-25, 25:1-3 (May 2, 2017) [Doc. #42-1]; Richard Michael Very, Jr. Dep. 135:18-22 (May 3, 2017) [Doc. #42-2].)
Effective January 1, 2009, Branyon operated under a compensation plan ("2009 Compensation Plan"), according to which the parties agreed he would receive a commission of nine percent of Phoenix's gross sales for accounts assigned to him. (Branyon Dep. 44:2-20, 46:7-18; Very Dep. 79:3-9, 94:8-18; Ex. 3 to Branyon Dep. [Docs. #42-3, #48-3].) The 2009 Compensation Plan reads, in part, "9% Commissions on All Work @ $135/hour or higher up to $2.5 Sales". (Ex. 3 to Branyon Dep.)
In 2010, Anvil International, LP ("Anvil"), a BPCS services client of Phoenix, decided to transition to new software, prompting Phoenix to undertake efforts to sell Anvil its new software. (Branyon Dep. 28:14-25.) After Phoenix successfully did so, it bid on the project to implement the software at Anvil's facilities by offering consulting services. (
Nine days after the MSA was executed, on October 12, 2011, Very emailed Branyon on the subject of "Anvil Commissions". (Ex. 5 to Branyon Dep. [Docs. #42-5, 48-5].) The email reads, in relevant part,
(
In February 2013, a subcontractor, Kim Swartz, began servicing Anvil under the MSA. (Branyon Dep. 82:18-83:25; Very Dep. 161:13-16.) On October 1, 2013, Branyon emailed Very the following:
(Ex. 6 to Branyon Dep.) Branyon was being paid nine percent of Swartz's net sales. (Very Dep. 94:19-22.) Very responded to Branyon's email as follows:
(Ex. 6 to Branyon Dep.) Although Branyon does not recall an e-mail response to Very, his overall response remained the same — disagreement that he was to be paid commission on net sales by subcontractors. (Branyon Dep. 76:11-20; Very 95:11-13.)
On May 27, 2016, Branyon filed suit against Phoenix alleging that it violated the North Carolina Wage and Hour Act by failing to pay him commissions earned under the 2009 Compensation Plan "related to the First Anvil Contract, the Second Anvil Contract, and the Grain Craft Contract." (Compl. ¶ 55.) Branyon seeks commissions owed during his term of employment, as well as those he believes are due from services provided under the MSA after his termination.
North Carolina recognizes commissions as wages that are protected under the Wage and Hour Act and related regulations promulgated by the North Carolina Department of Labor.
Employers may modify wages, but they must "[n]otify employees, in writing . . ., at least 24 hours prior to any changes in promised wages." N.C. Gen. Stat. § 95-25.13(3). However, "[w]ages computed under a . . . commission . . . policy or practice which does not establish specific earning criteria [such as a policy that the employee earn commissions of xx% on all `sales' (where sales are not defined by the employer)] cannot be reduced or eliminated as a result of a change in policy or practice." 13 N.C.A.C. 12.0307(e). On the other hand, if the commission policy or practice establishes a specific earning criteria, "the employee is entitled to the . . . commission . . . earned under the original policy through the effective date of the change and is entitled to the . . . commission . . . earned under the new policy from the effective date forward, so long as the earning criteria are met under both policies."
The employer's policy or practice relating to commissions must address "[u]nder what conditions and in what amount . . . commissions . . . will be paid upon discontinuation of employment." 13 N.C.A.C. 12.0307(d)(2). An employee "whose employment is discontinued for any reason shall be paid all wages due". N.C. Gen. Stat. § 95-25.7. "Wages based on . . . commissions . . . shall be paid on the first regular payday after the amount becomes calculable when a separation occurs."
Phoenix first moves for summary judgment on Branyon's claim of commissions owed under the First Anvil Contract because there is no competent evidence of a "First Anvil Contract" and, even if there were, any claim under it would be barred by the statute of limitations. Branyon does not respond to Phoenix's statute of limitations defense and, by failing to do so, concedes the issue.
According to the Complaint, Branyon "secured a contract between Anvil and Defendant under which Defendant would provide Anvil services at the rate of $180.00 per hour (the `First Anvil Contract')", but Phoenix did not list this contract on Branyon's commission statement because Very claimed the margins were too low. (Compl. ¶¶ 21, 22.) During his deposition, Branyon explained that "First Anvil Contract" refers to services provided to Anvil during the early part of the software implementation process, but that "[a]t this point, I don't even know what they are. I've never seen them." (Branyon Dep. 62:9-63:4.) He clarified that "[t]here's not a contract — set contract between any of the companies, but there were services provided that were never commissioned." (
"Summary judgment is appropriate when, viewing the facts in the light most favorable to the nonmoving party, `there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law,' Fed. R. Civ. P. 56(a)."
Actions under the Wage and Hour Act must be brought within two years of the employer's failure to pay the earned wage. N.C. Gen. Stat. § 95-25.22(f). The 2009 Compensation Plan states that Branyon's "[c]ommissions [are] [e]arned after client payment received and [p]aid at next Commission Payment Cycle". (Ex. 3 to Branyon Dep.) Fees for services under the SWAs were to be invoiced weekly and were payable forty days after receipt of the invoice. (MSA Ex. 4 to Very Dep.) Once the invoice is paid, Phoenix would calculate Branyon's commission and include it in the "very next payment cycle" "which is a month." (Very Dep. 187:23-188:2.) As a result, the statute of limitations for a claim of commissions due would begin to run approximately seventy-seven days after the services were rendered. According to Branyon, the services under the First Anvil Contract for which he alleges he is owed commissions were provided in 2011; yet, he filed the instant action on May 27, 2016, well after the statute of limitations period. As a result, Phoenix's motion for summary judgment on the claim for commissions owed under the First Anvil Contract is granted.
Next, Phoenix moves for summary judgment on the claim for commissions owed under the Second Anvil Contract because there is no competent evidence in support of the claim and, even if there were, the claim is barred by the statute of limitations and not supported by the allegations in the Complaint.
As above, Branyon does not respond to Phoenix's statute of limitations defense and has, therefore, conceded the issue.
In his Complaint, Branyon alleges that "Anvil later executed another contract with Defendant (the `Second Anvil Contract') according to which the billing rate exceeded $180.00 per hour." (Compl. ¶ 26.) Allegedly, Phoenix refused to pay Branyon commission "on the total sales" because the margins were too low. (
For commissions due from May 27, 2014 onward for services provided by Swartz, Phoenix argues that it has paid Branyon in accordance with "his 2009 Comp Plan, as modified in 2011." (Mem. of Law in Supp. of Def.'s Mot. for Summ. J. at 21.) Yet, there are genuine disputes of material facts surrounding this proposition. For example, there are genuine disputes as to (1) whether the October 12, 2011 email noting the "need to discuss" commissions paid for third-party services and "suggest[ing]" commissions based on net profit margins suffices as written notice of a change in promised wages in order to modify the 2009 Comp Plan, (2) whether the October 12, 2011 email effectively changed Phoenix's policy on commissions, (3) whether Branyon earned his commissions on Swartz's services at the time the MSA was executed, when Anvil was invoiced, when Phoenix received payment from Anvil, or some other time, and (4) whether Branyon is entitled to commissions on services Swartz provided under the MSA after the date of Branyon's termination. (
Therefore, Phoenix's motion for summary judgment on the claim for commissions owed under the Second Anvil Contract is granted to the extent Branyon seeks commissions due before May 27, 2014 for Swartz's services, but denied to the extent he seeks commissions due on May 27, 2014 onward for her services.
Phoenix also challenges any argument that Branyon makes of entitlement to commissions for services provided to Anvil after his termination by all third parties, not just Swartz. Phoenix's primary contention is that Branyon did not allege entitlement to these commissions in his Complaint and first raised the claim in a Motion to Compel Discovery filed on the last day of the discovery period. (Mem. of Law in Supp. of Def.'s Mot. for Summ. J. at 26-27.) Branyon does not address this challenge, but does advance an argument in support of entitlement to these commissions. (
In his Complaint, Branyon specifically alleges that he was owed commissions for services provided under the First and Second Anvil Contracts. (Compl. ¶¶ 20-29.) He also alleges that the 2009 Comp Plan does not require him to forfeit commissions upon termination. (
Had Branyon discovered evidence in support of a claim for commissions on services provided by others after his termination, he needed to seek leave to amend his Complaint. "[I]t is well established that a plaintiff may not raise new claims after discovery has begun without amending his complaint."
It is not enough that Branyon specifically alleged commissions due under the First and Second Anvil Contracts and the Grain Craft Contract and then alleged more generally that, upon information and belief and subject to discovery, he is owed additional wages. A plaintiff may not "use that general language to bootstrap new specific allegations and a new claim into the complaint at summary judgment."
Here, Branyon did not seek leave to amend his Complaint to add a claim for commissions on services performed for Anvil after his termination by consultants other than Swartz. He may not now use his brief in opposition to Phoenix's motion for summary judgment to assert such a claim.
Phoenix also seeks summary judgment on Branyon's claim for commissions on services provided under the Grain Craft Contract because Branyon cannot provide legally competent evidence to support the essential elements of the claim. (Mem. of Law in Supp. of Def.'s Mot. for Summ. J. at 27-28.) He testified during his deposition that he assumed Phoenix had secured a contract with Grain Craft but admitted that he did not know that to be the case. (Branyon Dep. 95:8-17.) In his Response Brief, Branyon acknowledges that based on a September 8, 2015 email from Very, he believed there were sales to Grain Craft for which he was not paid. (Resp. in Opp'n at 8.) However, "[i]n Discovery, . . . it became apparent that there were no additional sales". (
Finally, Phoenix seeks attorney's fees pursuant to N.C. Gen. Stat. § 95-25.22(d) which provides that "[t]he court may order . . . reasonable attorneys' fees to be paid by the plaintiff if the court determines that the action was frivolous." (Mem. of Law in Supp. of Def.'s Mot. for Summ. J. at 28-29.) Phoenix argues that Branyon's Wage and Hour Act claim is frivolous because (1) not only are commissions under the First Anvil Contract time-barred, but Branyon admitted that the claim is based on assumptions, (2) Branyon was made aware in September 2015 that there was no Grain Craft Contract, and (3) clear legal authority contradicts Branyon's arguments in support of commissions under the Second Anvil Contract. (
For the reasons stated herein, IT IS HEREBY ORDERED that Defendant Phoenix Business Consulting, Inc.'s Motion for Summary Judgment [Doc. #40] is DENIED IN PART AND GRANTED IN PART. It is denied in part as to the portion of the Wage and Hour Act claim seeking commissions due on May 27, 2014 onward under the Second Anvil Contract for services provided by Kim Swartz. It is otherwise granted.