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Pierce v. PrimeRevenue, Inc.

United States District Court, D. Kansas

October 12, 2017

Terry Pierce, Plaintiff,
v.
PrimeRevenue, Inc., et al., Defendants.

          MEMORANDUM AND ORDER

          J. THOMAS MARTEN, JUDGE.

         According to his Amended Complaint (Dkt. 14), Terry Pierce worked as a salesman for PrimeRevenue, a supply chain funding facilitator. Pierce alleges that, in their efforts to market the sale of PrimeRevenue, two officers of the company discharged him in order to prevent him from obtaining promised commissions and exercising stock options. Count 1 of the complaint seeks recovery against PrimeRevenue, David Quillian and B.J. Bain for breach of contract and violation of provisions in the Kansas Wage Payment Act (KWPA), K.S.A. 44-323, 44-315(h). Count 2 alleges the three defendants breached duties of good faith and fair dealing. Count 3 seeks recovery from the company for the value of plaintiff's services. Count 4 alleges that Quillian and Bain tortuously interfered with his compensation agreements with PrimeRevenue.

         The defendants have moved to dismiss Counts 2, 3, and 4. They argue that Pierce was an at-will employee, and therefore he can have no claim under Kansas law for any lack of fair dealing or tortious interference. They argue any quantum meruit claim is preempted by the KWPA, K.S.A. 44-313. For the reasons provided herein, the court hereby grants the defendants' motion.

         The relevant compensation agreements provide:

Nothing in the [Commission Compensation Policy] Plan, or the fact of any person's participation herein, shall be construed to create or imply any contract of employment or guaranteed income for any period between PrimeRevenue, Inc. and the employee. All employees expressly recognize that their employment with PrimeRevenue, Inc. is and remains on an “at will” basis.

         Similarly, Subsection 2(d) of the stock option certificate issued to Pierce provides:

(d) No Right to Employment or Other Relationship. Nothing in the Plan or this Stock Option Agreement shall confer on Optionee any right to continue in the employ of, or other relationship with, the Company, or any Parent or Subsidiary, or limit in any way the right of the Company, or any Parent or Subsidiary, to terminate Optionee's employment or other relationship at any time, with or without cause.

(Emphasis in original.)

         Pierce was an at-will employee of PrimeRevenue. Under Kansas law, “the duty of good faith and fair dealing is implied in every Kansas contract except employment-at-will contracts.” First Nat'l Bank of Omaha v. Centennial Park, 48 Kan.App.2d 714, 729, 303 P.3d 705 (2013).

         In addition to this general rule, the defendants invoke Deeds v. Waddell & Reed Inv. Mgmt. Co., 47 Kan.App.2d 499, 509, 280 P.3d 786, 794 (2012) for the proposition that Kansas law would not recognize similar claims, observing:

the Kansas Supreme Court has consistently emphasized [that] the public policy must be clearly declared by the state constitution, a state statute, or a court decision, and that the policy must be so definite that its existence isn't subject to substantial doubt. If this were not the case, the employment-at-will rule that lies at the heart of Kansas employment law would become the exception, not the rule.

         As the plaintiff correctly points out, in this portion of the opinion the court was not addressing a claim for breach of good faith in order to recover the amount of previously-earned commissions. Rather, the plaintiff in Deeds presented a retaliatory discharge claim, based on the termination itself. See Id. (plaintiff “argues ... an employer cannot fire an employee to avoid paying a commission that has already been earned [or] to prevent the employee from earning additional commissions”) (emphasis added)).

         However, the plaintiff's further suggestion that Deeds actually supports his claim is equally misplaced. The Court of Appeals concluded that the at-will employment doctrine could be avoided only “when some clear Kansas public policy requires it, ” which was not the case here because “[i]f the commissions have already been earned, they are still owed to the employee and may be recovered by him.” Id. The plaintiff seizes on this last sentence as support for Count 2.

         But, again, Deeds was a retaliatory discharge action, and involved no claim of breach of duties of good faith and fair dealing. The opinion provides nothing to support the idea that a claim for breach of the duty of good faith and fair dealing is the proper vehicle for recovery of the previous-earned commissions. A discharged employee can (as Pierce has claimed here in Count 1) recover the valued of earned compensation by contractual or statutory claim. A claim for breach of duty of good faith and fair dealing is not simply superfluous, it has no foundation in Kansas law. See Estate of Draper v. Bank of America, ...


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