Treat v. Tom Kelley Buick Pontiac Gmc Inc.

646 F.3d 487

161 Lab.Cas. P 61,168

17 Wage & Hour Cas.2d (BNA) 1608

Jill L. TREAT and Cody W. Treat, Plaintiffs–Appellants,

v.TOM KELLEY BUICK PONTIAC GMC, INC., d/b/a Kelley Superstore, and Kelley Automotive Group, Inc., Defendants–Appellees.

No. 10–3166.

United States Court of Appeals, Seventh Circuit.

Argued Jan. 18, 2011.Decided July 13, 2011.

Ronald E. Weldy (argued), Attorney, Weldy & Associates, Indianapolis, IN, Jack R. Rochyby (argued), Attorney, Rochyby Law Office, Fort Wayne, IN, for Plaintiffs–Appellants.Bonnie L. Martin (argued), Brandon M. Shelton, Attorneys, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., Indianapolis, IN, for Defendants–Appellees.Before TINDER and HAMILTON, Circuit Judges, and MURPHY, District Judge.^*HAMILTON, Circuit Judge.

Jill and Cody Treat sued their employer, Tom Kelley Buick Pontiac GMC, Inc., and its parent dealership group for failure to pay them their correct wages under Indiana state law. The question presented by this appeal is whether the Treats properly brought their claims under the state's Wage Payment Statute, Ind.Code § 22–2–5–1 et seq. , or whether their claims against Kelley arose under a different Indiana wage recovery law, known as the Wage Claims Statute, Ind.Code § 22–2–9–1 et seq. The district court concluded that the Treats erroneously brought their claim under the Payment Statute rather than the Claims Statute. Because the Treats had not filed their claim according to the procedure required under the Claims Statute, the court granted summary judgment to Kelley. Treat v. Tom Kelley Buick Pontiac GMC, Inc., 710 F.Supp.2d 762 (N.D.Ind.2010), and 710 F.Supp.2d 777 (N.D.Ind.2010). We agree with the district court and affirm its judgment.

I. Facts and Procedural Background

Reviewing the district court's decision to grant summary judgment to the defendants, we take all facts in the light reasonably most favorable to the plaintiffs as the non-moving parties. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The facts material to this appeal are undisputed. Defendant-appellee Tom Kelley Buick Pontiac GMC runs a used car dealership in Fort Wayne, Indiana, as part of a group of dealerships known as the Kelley Automotive Group. Plaintiff Jill Treat began working at the dealership on July 3, 2006 as Assistant Co–Director of the Special Finance Department. She persuaded the head of the department to hire her son, plaintiff Cody Treat, who began work in the Special Finance Department on July 10, 2006. The Treats' employment with Kelley did not last long, however. Both were fired on October 12, 2006.

Following the termination of their employment, the Treats filed a complaint in federal court alleging a variety of federal and state claims against Kelley. The district court granted Kelley's summary judgment motion on all of the Treats' claims, exercising supplemental jurisdiction over the matters of state law.

The Treats appeal only one of their substantive claims. They argue that the district court erred by dismissing their claim for unpaid wages brought under the Indiana Wage Payment Statute. They also contend that the district court abused its discretion by striking portions of Jill Treat's affidavit and attached documents, but we do not reach this issue. We conclude the Treats failed to take the necessary steps to pursue a claim under the correct Indiana state law.

II. Discussion

We begin by reviewing the two Indiana wage recovery statutes: the Payment Statute and the Claims Statute. Both of these statutes, and questions about their application, have received substantial attention from the Indiana state courts. Although both provide the same remedy for similar wrongs, they require distinct procedural steps before such a remedy may be granted. The question of which statute applies controls the outcome here, so we excerpt the relevant provisions at length.

The Treats brought their suit under Indiana Code § 22–2–5–1 et seq. , entitled “Frequency of Wage Payments,” which we refer to as the Wage Payment Statute. This statute provides in relevant part:

Payment; voluntarily leaving employment

Sec. 1. (a) Every person, firm, corporation, limited liability company, or association, their trustees, lessees, or receivers appointed by any court, doing business in Indiana, shall pay each employee at least semimonthly or biweekly, if requested, the amount due the employee....

(b) Payment shall be made for all wages earned to a date not more than ten (10) business days prior to the date of payment. However, this subsection does not prevent payments being made at shorter intervals than specified in this subsection, nor repeal any law providing for payments at shorter intervals. However, if an employee voluntarily leaves employment, either permanently or temporarily, the employer shall not be required to pay the employee an amount due the employee until the next usual and regular day for payment of wages, as established by the employer. If an employee leaves employment voluntarily, and without the employee's whereabouts or address being known to the employer, the employer is not subject to section 2 of this chapter until:

(1) ten (10) business days have elapsed after the employee has made a demand for the wages due the employee; or

(2) the employee has furnished the employer with the employee's address where the wages may be sent or forwarded.

Ind.Code § 22–2–5–1.

If an employer fails to make payment of wages in accordance with this chapter, then the employer must,

as liquidated damages for such failure, pay to such employee for each day that the amount due to him remains unpaid ten percent (10%) of the amount due to him in addition thereto, not exceeding double the amount of wages due, and said damages may be recovered in any court having jurisdiction of a suit to recover the amount due to such employee, and in any suit so brought to recover said wages or the liquidated damages for nonpayment thereof, or both, the court shall tax and assess as costs in said case a reasonable fee for the plaintiff's attorney or attorneys.

Ind.Code § 22–2–5–2.

Kelley argues, and the district court held, that the Treats should have proceeded under Indiana Code § 22–2–9–1 et seq. , entitled “Wage Claims,” which we refer to as the Wage Claims Statute. This statute provides in relevant part:

Discharge of employee; unpaid wages; payment; labor disputes

Sec. 2. (a) Whenever any employer separates any employee from the pay-roll, the unpaid wages or compensation of such employee shall become due and payable at regular pay day for pay period in which separation occurred....

Disputes; payment of amount agreed upon

Sec. 3. In case of a dispute over wages, the employer shall give notice to the employee of the amount of wages which he concedes to be due, and shall pay such amount, without condition, within the time fixed by this chapter, but the acceptance by the employee of any payment made under this chapter shall not constitute a release as to any balance of his claim.

Ind.Code §§ 22–2–9–2 and –3.

When such a dispute arises between an employer and a fired employee, the Claims Statute makes it the “duty of the [Indiana] commissioner of labor to enforce and to insure compliance with the provisions of this chapter, to investigate any violations of any of the provisions of this chapter, and to institute or cause to be instituted actions for penalties and forfeitures provided under this chapter.” Ind.Code § 22–2–9–4(a). The commissioner may refer claims to the state attorney general, who may then initiate a civil action on behalf of the claimant or refer the claimant to an attorney. See Ind.Code § 22–2–9–4(b).

Under the Claims Statute, claimants are entitled to recover liquidated damages and attorney fees as set forth in Ind.Code § 22–2–5–2, the same provision that allows for recovery under the Payment Statute. Thus, although the ultimate remedy under either statute is the same, a claimant under the Claims Statute must proceed through the Indiana commissioner of labor, who has the duty of investigating a claim and instituting an action on behalf of a claimant, whereas the Payment Statute permits a claimant to bring his or her own claim in “any court having jurisdiction.” Ind.Code § 22–2–5–2.

The Treats argue that they properly filed their complaint in the district court rather than with the commissioner of labor because, they maintain, their claims are governed by the Payment Statute. We disagree. The language of the Indiana Code suggests, and the Indiana state courts have repeatedly confirmed, that the Payment Statute provides an avenue for relief to employees seeking unpaid wages who voluntarily leave their employment or who remain employed and whose wages are overdue. The Claims Statute, on the other hand, applies to employees seeking unpaid wages after their employer has fired them. Here, all agree that the termination of the Treats' employment was involuntary. The Treats' claims therefore arise under the Claims Statute.

In St. Vincent Hospital and Health Care Center, Inc. v. Steele, 766 N.E.2d 699, 705 (Ind.2002), the Indiana Supreme Court taught that the two statutes apply to different, mutually exclusive categories of claimants—those fired by their employers, and those who left voluntarily or are still employed. Dr. Steele filed a complaint suing his employer for violating the Payment Statute by failing to pay him the full amount of compensation due under the parties' agreement. Throughout the dispute and the subsequent litigation, Dr. Steele remained an employee of St. Vincent. The court found that because Dr. Steele was a current employee at the time of the wage dispute, he proceeded correctly under the Payment Statute. The court explained:

The Wage Claims Statute references employees who have been separated from work by their employer and employees whose work has been suspended as a result of an industrial dispute. I.C. § 22–2–9–2(a)(b...