A judge has slammed the door on a pitched class action brought by a pair of salespeople who claimed Illinois wage laws entitled them to more money than they received from the medical equipment supplier that employed them because, they said, the company used both sales declines and increases to calculate their commissions.
U.S. District Judge John Robert Blakey granted summary judgement March 21 against plaintiffs David Cohan, of New York, and Susan Schardt, of California, in their dispute with their former employer, Mundelein-based Medline Industries Inc.
Cohan and Schardt attempted to gain class action status for their lawsuit, in which they claimed they were cheated out of money that was due to them because of the way Medline calculates commissions. According to the lawsuit, Medline’s salespeople are paid for year-over-year sales growth, calculated by subtracting the current month’s sales from sales made in the same month the previous year. All accounts, those with positive sales growth and those with negative growth, are added together before being plugged into the commission formula.
Cohan and Schardt argued that it is unfair to subtract sales declines from a salesperson’s overall commission. Instead, they propose, accounts that lost money year-over-year should count as zeroes, and only positive numbers should be added together and inserted into the formula.
The pair claimed violation of the Illinois Wage Payment and Collection Act (IWPCA) on behalf of a national class of potential plaintiffs, as well as violations under New York and California labor laws. Though neither employee spent more than a few days a year in Illinois, and then only for meetings, they claimed the IWPCA should apply because their contracts with Medline purportedly stated the laws of Illinois would be used to determine all disputes.
In granting summary judgment against the plaintiffs, Blakely said case law has established that the IWPCA only applies to employees doing a majority of their work in Illinois. But even if it applied to Cohan and Schardt, he wrote, they still would have lost the case. He also found no evidence Medline violated the New York or California laws.
“Even if the Court were to find that the Act applied to Plaintiffs, it would nonetheless find that Defendants did not violate the Act,” Blakey wrote. “The principal purpose of the Act is to ensure that employers honor the wage and payment terms of their employment agreements … it does not, however, confer rights to compensation that are absent from the employee’s contract or employment agreement.”
According to court documents, both Cohan and Schardt admitted that they knew and understood exactly how their commissions were calculated years before their employment with Medline ended.
In Cohan’s case, the commission structure was explained in employment agreements dated 1999 and 2007. He objected to the structure several times before his employment with the company ended in 2013, proposing to senior officers in the company that the declines be “zeroed out” instead of factored in to commissions, and was told “no,” court documents state. Schardt’s experience was similar. Her employment agreement was dated 2001, and she brought up the commission structure to supervisors multiple times before her employment ended in 2014, court documents said. During the years they were employed, both plaintiffs also received two monthly reports that detailed that month’s commission and showed the subtraction of sales declines.
The fact that Cohan and Schardt continued to work for Medline for years after demonstrating such an understanding of the commission structure implied an acceptance - however grudging - of the structure, the court wrote.
“Plaintiffs have provided no evidence that they were entitled to a commission calculation that ignored negative sales growth. Instead, the evidence shows that they assented to the opposite approach,” the judge wrote.
The plaintiffs were represented in the case by the firm of Caffarelli & Associates, of Chicago.
Medline was represented by the firm of Littler Mendelson, of Chicago.