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HUNTER v. H. D. LEE CO.

February 11, 1983

GENE C. HUNTER, Plaintiff,
v.
H. D. LEE COMPANY, INC., Defendant.



The opinion of the court was delivered by: MUNSON

HOWARD G. MUNSON, C.J.

MEMORANDUM-DECISION AND ORDER

 Plaintiff is a former employee of defendant H.D. Lee Co., Inc. and has commenced this action for commissions claimed to be due and owing as a result of his work as a salesman. Plaintiff's employment was terminated in March of 1980, though the parties dispute the effectiveness of the alleged "termination notice" claimed to have been mailed to plaintiff. The gravamen of plaintiff's complaint is that prior to his termination in March of 1980, he had written orders for $1,300,000.00 for which commissions were due and owing. In addition, plaintiff has asserted claims for such prospective damages as loss of future income, reputation, and moving expenses.

 Presently before the Court is defendant's motion to dismiss that part of the complaint seeking damages in excess of commissions on sales allegedly made by plaintiff and shipped within 60 days of his termination, and for an order dismissing plaintiff's claim for fraud on the ground that it was not pled with sufficient particularity. In addition, defendant has moved to strike part of the complaint on the ground that it contains redundant causes of action and that such redundancy is prejudicial to defendant. Inasmuch as the Court has been presented with submissions beyond the pleadings, the Court will treat defendant's motion to dismiss as one for summary judgment pursuant to Rule 56. See Fed. R. Civ. P. 12(b). Before reaching the viability of plaintiff's claims, this Court must first address the choice of law issue.

 CHOICE OF LAW

 Jurisdiction in this case rests on diversity of citizenship, and, therefore, the Court must apply the substantive law of the forum state, including the conflict of law rules. See Klaxon v. Stentor Elec. Mgf. Co., 313 U.S. 487, 85 L. Ed. 1477, 61 S. Ct. 1020 (1941); Erie R.R. v. Tompkins, 304 U.S. 64, 82 L. Ed. 1188, 58 S. Ct. 817 (1938). Thus, the conflict of law rules of New York are applicable. Peckham v. Lindner, No. 79-CV-84, slip op. at 3 (N.D.N.Y. June 25, 1980). Under these rules, a New York court is required to apply the law of "the jurisdiction which, because of its relationship or contact with the occurrence or the parties has the greatest concern with the specific issue raised in the litigation." Babcock v. Jackson, 12 N.Y.2d 473, 481, 191 N.E.2d 279, 283, 240 N.Y.S.2d 743, 749 (1963).

 In the present case, however, there is an express choice of law provision contained in the contract between the parties. Paragraph 26 of the agreement between plaintiff and defendant provides that "[t]his agreement, including any revisions, additions, and supplements hereto, shall be deemed to have been made and at least partly performed in the State of Kansas and shall be governed by and construed in accordance with the laws of that state." Therefore, the intention of the parties must be given great weight by this Court. Haag v. Barnes, 9 N.Y.2d 554, 560, 175 N.E.2d 441, 444, 216 N.Y.S.2d 65, 69 (1961); 19 N.Y. Jur. 2d, Conflict of Laws, § 33 (1982).

 Under New York law, contracting parties may provide for the application of a particular state's law as long as the contract bears a reasonable relationship to the state whose law is chosen and the application of that law does not offend fundamental public policy of New York. A.S. Rampell, Inc. v. Hyster Co., 3 N.Y.2d 369, 382, 144 N.E.2d 371, 380, 165 N.Y.S.2d 475, 486 (1957) (citing Compania De Inversiones Internacionales v. Industrial Mtge. Bank, 269 N.Y. 22, 26, 198 N.E. 617, 618, 101 A.L.R. 1313; Dougherty v. Equitable Life Assur. Soc., 266 N.Y. 71, 80, 193 N.E. 897, 899); Gambar Enterprises Inc. v. Kelly Services, Inc., 69 A.D.2d 297, 303, 418 N.Y.S.2d 818, 822 (4th Dep't 1979); see also R-T Leasing Corp. v. Ethyl Corp., 494 F. Supp. 1128, 1131 (S.D.N.Y. 1980); Fleischmann Distilling Corp. v. Distillers Co. Ltd., 395 F. Supp. 221, 229 (S.D.N.Y. 1975)(collecting cases). Thus, the Court must examine the contacts between the contract and the state whose law was chosen, Kansas.

 Here, defendant is a Kansas Corporation with headquarters in Merriam, Kansas and employs sales representatives in 220 territories covering the United States.Salaries and commissions for all sales personnel are paid from company headquarters in Merriam, Kansas. All orders are submitted by sales representatives to the Kansas office and then orders are shipped from one of the two distribution centers in either Lenexa, Kansas or Nashville, Tennessee. Finally, all questions dealing with company policy, customer service, merchandising, and advertising are handled at company headquarters in Merriam, Kansas.

 As to plaintiff's association with defendant, plaintiff asserts that he was hired in 1977 as a sportswear salesman for the greater Pittsburgh, Pennsylvania area and that his territory included parts of West Virginia and Ohio. Plaintiff also submits that he relocated his family to Pennsylvania after all of the contract negotiations took place in New York. Moreover, plaintiff notes that when he was given special recognition for his sales abilities, the letter came from Lee management in New York. Lastly, plaintiff contends that he often had business meetings with company representatives in New York, Pittsburgh, and Cleveland.

 In the Court's view, there are sufficient ties between plaintiff's contract with defendant and the state of Kansas to warrant application of that state's law. While it is true that plaintiff's contract appears to be a standard form contract used for all sales representatives, there is no evidence to even suggest that it was not freely entered into. Plaintiff has not claimed that he was coerced into signing the agreement and there has been no proof offered that he did not understand the ramifications of the contractual provision at issue. At best, defendant was in a superior bargaining position vis-a-vis plaintiff. Clearly, the law will not strike down a contract merely because one party was in a better bargaining position than the other. Accordingly, the Court finds that paragraph 26 of the contract should be given effect and that the law of Kansas should be applied. As to the claim that Kansas law violates fundamental public policy, this will be examined in light of the individual claims.

 PLAINTIFF'S CLAIMS

 Plaintiff's complaint contains six causes of action, namely, breach of contract, quantum meruit, fraud, improper termination, and two inconsistent counts requesting an accounting and future commissions. These last two counts are inconsistent in that they request commissions for all sales from plaintiff's termination date to the date of the commencement of this action, however, the amount demanded in count five is at a rate of 5%, while the amount demanded in count six is 4.1%. The Court is at a loss to explain the discrepancy in commission rates and plaintiff has offered no explanation for it. Defendant's summary judgment motion seeks to eliminate plaintiff's claims in counts one, three, four, five and six that ask for damages in excess of commissions payable for orders shipped within sixty days following plaintiff's termination. In support of its motion, defendant points to paragraph 20 of the contract which restricts post-termination payments to this sixty day time period.

 The law in Kansas is clear that "in the absence of a contract, express or implied, between an employee and his employer covering the duration of employment, the employment is terminable at the will of either party." Johnson v. National Beef Packing Co., 220 Kan. 52, 54, 551 P.2d 779, 781 (1976)(citing Johnston v. Farmers Mutual Ins. Co., 218 Kan. 543, 545 P.2d 312 (1976); Lorson v. Falcon Coach, Inc., 214 Kan. 670, 522 P.2d 449; May v. Santa Fe. Trail Transportation Co., 189 Kan. 419, 370 P.2d 390; Swart v. Huston, 154 Kan. 182, 117 P.2d 576; and 53 Am. Jur. 2d, Master and Servant, § 43 pp. 117-18). And, "[o]ne whose employment is terminable at will . . . has no enforceable claim ...


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