Stiffler v. Hydroblend, Inc.

172 Idaho 630

535 P.3d 606

Pat STIFFLER, an individual, Plaintiff-Appellant,

v. HYDROBLEND, INC. doing business as HB Specialty Foods, a business corporation, Defendant-Respondent,andJohn Doe Corporations I-V, Defendants.

Docket No. 49933

Supreme Court of Idaho, Boise, June 2023 Term.

Opinion Filed: September 8, 2023

Hepworth Law Offices, Boise, for Appellant. Jeffrey Hepworth argued.

Hawley Troxell Ennis & Hawley, LLP, Boise, for Respondent. Tyler Anderson argued.

BRODY, Justice.

This case concerns a wage claim dispute between Pat Stiffler and his previous employer, Hydroblend, Inc. After a dispute arose concerning incentive pay on an allegedly miscoded account, Stiffler filed a complaint for unpaid wages, breach of contract, retaliation, and wrongful termination. The proceedings culminated with two orders from the district court that (1) awarded summary judgment to Hydroblend concerning treble damages, (2) concluded multiple issues were governed by an arbitration provision in Stiffler's employment agreement, and (3) denied summary judgment where disputed facts remained at issue. Stiffler appeals the district court's decisions, arguing that he is entitled to treble damages on all wages under Idaho's Wage Claim Act, as well as severance pay under his 2019 employment contract. Stiffler also argues that the district court erred by compelling arbitration of some of his claims. For the following reasons, we affirm in part and reverse in part.

I. FACTUAL AND PROCEDURAL BACKGROUND

A. Stiffler's Employment with Hydroblend

For over ten years, Stiffler was employed by Hydroblend, Inc. ("Hydroblend"), a Nampa corporation that is involved in the food industry. Most recently, Stiffler served as a vice president of strategy and growth for the company.

For purposes of calculating revenue and expenses, Hydroblend's accounting system codes customer accounts and business lines generally as "diversified business" or "house accounts" (also known as "core accounts"). In 2019, Stiffler entered into a new employment contract with Hydroblend (the "2019 Contract"), which provided compensation in the form of annual base pay plus commission-based incentive pay accrued as a percentage of revenue earned on diversified business accounts assigned to Stiffler. Incentive pay was to be calculated and paid quarterly, with final yearly incentive pay, if any, to be payable some time prior to March 1 of the year after it became due. The 2019 Contract also specified that Hydroblend's accounting system assigns codes to accounts and business lines, and was "determinative as to whether related income/expenses is considered Diversified Business."

In October 2019, Stiffler began working with Diversified Foods & Seasonings, LLC ("DFS"). DFS was an existing customer previously assigned to another Hydroblend salesman, but was eventually assigned to Stiffler sometime later that year. DFS was entered into Hydroblend's accounting system as a core account, yet Hydroblend paid Stiffler quarterly incentive pay on the account. This assignment is important because there is conflicting evidence in the record as to how the DFS account should have been coded. Some evidence suggests that DFS was meant to be coded as diversified business, which would entitle Stiffler to incentive pay pursuant to his 2019 Contract. Other evidence suggests that DFS was supposed to be coded as a "house account" or "core account," as it was assigned, upon which no commissions would be paid. Nonetheless, Stiffler received incentive pay for the DFS account for the first three quarters of 2020.

In late 2020, Hydroblend informed Stiffler that it wished to enter into a new employment contract with him. Stiffler rejected the first proposal, but executed the second proposed contract after "much discussion" with Hydroblend. This employment agreement became effective January 1, 2021 (the "2021 Contract"), and contains an integration provision that expressly states that the 2021 Contract constitutes the entire agreement between the parties as of the effective date of the agreement and that it supersedes and replaces all prior agreements:

On the Effective Date of this Agreement, this Agreement will supersede and replace all prior agreements between the parties hereto, whether in writing or otherwise, relating to the subject matter hereof. On the Effective Date of this Agreement, this Agreement will contain the entire agreement of the parties, and no representations, inducements, promises, or agreements, oral or otherwise, not embodied herein, will be of any force or effect.

Additional terms of the 2021 Contract pertinent to this appeal are those involving severance, compensation, and resolution of claims. Any severance was to be paid as follows: "25% of the amount of Severance will be paid within ten (10) days of Employee's last day of work, with the remaining 75% paid in twelve (12) equal monthly installments every month thereafter." This severance-pay provision in the 2021 Contract is the same as the provision in the 2019 Contract. Similar to the 2019 Contract, compensation consisted of annual base pay and incentive pay, though under the 2021 Contract Stiffler's incentive pay became capped and was calculated as a percentage of revenue earned on "strategic account customers."

The 2021 Contract also contains a mediation and arbitration clause that did not exist in the 2019 Contract. The mediation and arbitration clause in the 2021 Contract reads as follows:

6.1.1 Mediation. In the event of any controversy or claim arising out of or relating to this Agreement, or a breach thereof, the parties hereto shall first attempt to settle the dispute by mediation. The party seeking to mediate any controversy or claim arising out of or relating to this Agreement shall give the other party advance written notice of its intent to mediate, and such written notice shall describe in detail the alleged controversy or claim at issue. Mediation shall be held in Ada or Canyon County, Idaho, within sixty (60) days of the notice described in the preceding sentence. Mediation hereunder shall be administered by the American Arbitration Association under its Mediation Rules. If settlement is not reached at mediation, any unresolved controversy or claim shall be settled by arbitration as set forth in Article 7.01(b) below.

6.1.2 Arbitration. Any dispute, controversy or claim arising out of or relating in any way to this Agreement, including, without limitation, any dispute concerning the construction, validity, interpretation, enforceability or breach of this Agreement, that is not settled via mediation shall be exclusively resolved by binding arbitration upon a party's submission of the dispute to arbitration. The demand for arbitration shall be made within a reasonable time after mediation. Arbitration hereunder shall be administered by the American Arbitration Association under its Commercial Arbitration Rules.

The number of arbitrators shall be one. The place of arbitration shall be Boise, Idaho, and all parties hereto consent to jurisdiction in said city and state. Judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. This agreement to arbitrate shall be specifically enforceable, and either party may apply to any court with jurisdiction for interim or conservatory relief, including, without limitation, a proceeding to compel arbitration.

Notably, "Article 7.01(b)," mentioned in the first paragraph, is not present in the 2021 Contract, but an arbitration provision still follows the mediation section.

B. Termination and Litigation

In January of 2021, Hydroblend's executives met, in part, to discuss reconciliation of the company's accounts. At that time, executives learned that Stiffler had been receiving incentive pay on the DFS account, but, as of that meeting, the company had not yet paid Stiffler any 2020 Quarter 4 incentive pay. Because DFS was coded as a core account—and not a diversified business account—in Hydroblend's accounting system, Hydroblend decided not to pay Stiffler incentive pay under the 2019 Contract for the DFS account. Hydroblend explained the decision to Stiffler on January 22, 2021. About two weeks later, on February 5, Stiffler's lawyer sent Hydroblend a letter demanding (1) payment of the 2020 Quarter 4 incentive pay due under the 2019 Contract and (2) rescission of the 2021 Contract. Hydroblend received the letter on February 8. The letter instructed all communications regarding legal matters to be directed solely to Stiffler's counsel, but stated Stiffler would continue to report to work.

On February 10, Hydroblend responded through counsel, indicating that no incentive pay was due and declining Stiffler's request to rescind the 2021 Contract. Counsel for Stiffler replied in a letter dated February 16, stating Hydroblend's letter refusing to pay the Quarter 4 incentive pay constituted termination without cause, and demanding payment of severance pay by February 20. No demand for incentive pay was made at this point other than a statement that legal action would be pursued with respect thereto. Stiffler filed a complaint the same day. On February 18, Hydroblend sent a letter confirming Stiffler's employment was at an end, and tendered base salary earned through February 1, 2021, along with Stiffler's final yearly incentive pay (the 2020 Quarter 4 payment). At no time before the initiation of this suit did either party make any attempt to resolve the dispute through mediation or arbitration.

Stiffler's complaint against Hydroblend raised claims for unpaid wages, breach of contract, wrongful termination, and a request to rescind the 2021 Contract. Stiffler alleged that "Hydroblend effectively terminated [him] without cause as of February 10, 2021." Two weeks later, Stiffler filed an amended complaint that asserted the same claims but included a demand for severance pay plus treble damages. Hydroblend filed a motion to dismiss and compel arbitration as to...