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State v. YP Advertising & Publishing LLC

United States District Court, D. Connecticut

March 1, 2017

STATE OF CONNECTICUT, COMISSIONER OF LABOR, SCOTT D. THE LABOR COMMISSIONER, Plaintiff,
v.
YP ADVERTISING & PUBLISHING LLC, Defendant.

          RULING ON MOTION TO REMAND AND FOR SUMMARY JUDGMENT

          MICHAEL P. SHEA, U.S.D.J.

         Invoking a state statute governing the payment of wages, the Connecticut Labor Commissioner sued in state court to collect commissions that YP Advertising & Publishing LLC (“YP) allegedly owes its two former employees for sales they made before leaving YP, but for which it received payment after they left. YP removed the case to this Court, arguing that this Court has federal question jurisdiction because the case requires it to interpret a collective bargaining agreement (“CBA”) between YP and the former employees' union, and thus is “completely preempted” by section 301 of the Labor-Management Relations Act, 29 U.S.C. § 185 (“LMRA”). That provision confers jurisdiction on federal courts in certain suits involving CBAs, even when the complaint makes no mention of the CBA or federal law. YP also moves to dismiss or, alternatively, for summary judgment, arguing that the commission dispute asserted in the complaint falls within the binding grievance and arbitration provisions of the CBA and that the former employees failed to exhaust those remedies.

         I agree with YP on both counts. Resolution of this dispute would require “substantial interpretation” of the CBA and thus, under the complete preemption doctrine applicable in LMRA cases, the complaint raises a federal question even though it is pled as a violation of state law. The Labor Commissioner's motion to remand [ECF No. 18] the case to state court is therefore DENIED. In addition, the dispute over commissions raised in the complaint plainly falls within the CBA's grievance and arbitration provisions, and there is no evidence in the record that the former YP employees have exhausted the CBA's remedies. YP's motion for summary judgment is therefore GRANTED. YP's alternative motion to dismiss under Rule 12(b)(6) is DENIED as moot.

         I. Factual Background

         A. The Complaint's Allegations

         YP “employed Victoria M. Schneider from August 8, 2005 through August 19, 2014, and Diane P. Soreca from February 2007, through May 8, 2015.” (ECF No. 1 at 6.) “Victoria Schneider and Diane Soreca filed complaints with the [Commissioner] on March 5, 2015, and September 1, 2015, respectively, seeking assistance in obtaining payment from [YP] for unpaid wages.” (Id.) “Upon investigation of said complaints, the [Commissioner]… determined that [YP] owe[d] wages to Victoria Schneider in the total amount of $25, 508.78 and Diane Soreca in the total amount of $18, 905.43, consisting of, inter alia, commissions on sales by them prior to their terminations but paid by customers after their termination.” (Id. at 7) The Labor Commissioner alleges that YP owes Schneider and Soreca unpaid wages in the combined amount of $44, 414.21. “By authority of Conn. Gen. Stat. § 31-72, the [Commissioner] seeks to collect double damages….together with reasonable attorney's fees, costs and interest from the date the payments should have been received from [YP].” (Id.)

         B. The CBA

         YP provides advertising services and products to businesses, and employs a team of sales representatives to sell its products and services to existing and prospective customers. (ECF No. 1 at 44-45, 73.)

         Although the complaint makes no reference to a CBA, YP filed a CBA between YP Connecticut Information Services LLC and the Communication Workers of America (the “Union”) with its removal papers, and the Labor Commissioner does not dispute its authenticity or applicability in this case.[1] (ECF No. 18 at 1-2.) Nor does the Labor Commissioner dispute that Schneider and Soreca were YP sales representatives and members of the Union at the relevant times. (ECF No. 14 at 1.)[2] The CBA, dated April 8, 2012, governed the terms and conditions of Schneider's and Soreca's employment, including wages and commissions. The CBA makes the Union “the sole bargaining agent in all matters pertaining to rates of pay, wages, hours and working conditions for all [of YP's sales representatives].” (ECF No. 7 at 25.)

         The CBA contains detailed and complex rules regarding sales representatives' compensation, including commissions. (ECF No. 7 at 54-81.) Section 1 of Article XXV provides for the calculation of the sales representatives' commissions based on rate tables and “Commissionable Business, ” which is defined as “the monthly revenue value of the business accounts assigned to [the sales representative], accepted by the Company, published in each applicable Company product, and sold by a commissioned [sales representative].” (ECF No. 7 at 54.) “To be considered Commissionable Business, ” “(1) [t]he advertising item must be sold by the [sales representative] on an account assigned to him/her, ” and “(2) [t]he account/advertising item must be accepted by the Company, and the advertising item must be published in the applicable Company product and … meet Company standards and specifications.” (Id.) “[C]ommissions are not due and payable until all of [the Commissionable Business] criteria have been met.” (Id. at 71-72.) Until commissions are earned, any commission payments made to employees under the CBA “are advances to be applied against employees' future earned commissions.” (Id. at 72) Therefore, “[a]ll references to commissions in [the CBA] are to commission advances until the commissions become earned.” (Id.) Under the CBA, advances are paid on a biweekly basis in accordance with the following schedule:

(i) “Milestone 1: 40% of the total commission due will be paid in the next pay period after the sale is closed;”
(ii) “Milestone 2: 15% of the total commission due will be paid in the next pay period once the Billing Milestone Date (“BMD”) is met. The Customer must be 90 days or less past due on their account at BMD in order for this payment to be released;”
(iii) “Milestone 3: 30% of the total commission due will be paid if the customer is 90 days or less past due on their total account on the next pay period end that falls after 120 [days] has elapsed from the [BMD];”
(iv): “Milestone 4: The final 15% of the total commission due will be paid if the customer is 90 days or less past due on their total account 240 days after the [BMD];” and
(v) “Once an account reaches 540 days from the [BMD], any unreleased commissions are forfeited.”

(Id. at 66-67.) The BMD is defined as:

The date any item that is part of the [Next Issue Service Delivery] for the current year canvass/cycle is considered ready to bill. This is the earlier of the Internet Live Date or the Effective Bill Date. This date becomes the baseline to calculate future milestone dates for that customer. This date will be locked and never move to a later date as long as the item actually bills on that date (i.e., does not “wash”). This date could move earlier if an early-up billing item was sold as subsequent activity.

(Id. at 56.)

         The CBA further provides:

If an employee has not earned all commission advances at the time the employees' employment with [YP] terminates, either voluntarily or involuntarily, [YP] is authorized to deduct the unearned portion of the commission advances from the employee's final pay check.

(Id. at 73.) The CBA prohibits such deductions if the sales representative was “service pension eligible and retire[d] from the business with a service pension”; such a sales representative is entitled to ...


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