Meson v. GATX Technology Services Corp.

PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

RONALDA MESON, 

Plaintiff-Appellant,

v.

GATX TECHNOLOGY SERVICES

CORPORATION; GATX FINANCIAL

CORPORATION,  No. 06-1942

Defendants-Appellees,

and

EPLUS GROUP, INCORPORATED,

Party in Interest.



Appeal from the United States District Court

for the District of Maryland, at Greenbelt.

Deborah K. Chasanow, District Judge.

(8:04-cv-03806-DKC)

Argued: September 25, 2007

Decided: November 16, 2007

Before WILLIAMS, Chief Judge, DUNCAN, Circuit Judge, and

T. S. ELLIS, III, Senior United States District Judge for the

Eastern District of Virginia, sitting by designation.

Affirmed by published opinion. Judge Duncan wrote the opinion, in

which Chief Judge Williams and Senior Judge Ellis concurred.

COUNSEL

ARGUED: James Earl McCollum, Jr., College Park, Maryland, for

Appellant. Robert J. Kriss, MAYER BROWN, L.L.P., Chicago, Illi-

2 MESON v. GATX TECHNOLOGY SERVICES

nois, for Appellees. ON BRIEF: Michael E. Geltner, GELTNER &

ASSOCIATES, P.C., Washington, D.C., for Appellant. Lauren R.

Noll, MAYER BROWN, L.L.P., Chicago, Illinois, for Appellees.

OPINION

DUNCAN, Circuit Judge:

Ronalda Meson ("Meson") was employed as a regional sales man-

ager and sales representative with GATX Technology Services Cor-

poration ("GTS"), a corporation specializing in leasing information-

technology equipment. Her employment with GTS ended in June

2004 when the corporation’s assets were sold. Shortly thereafter,

Meson filed a complaint against her former employer and its parent

corporation, GATX Financial Corporation (collectively, "GATX"),

alleging seven claims stemming from her termination. Meson subse-

quently consented to the dismissal of three of these claims, and

GATX moved for summary judgment on the remaining four. The dis-

trict court granted GATX’s motion and entered final judgment in its

favor on all counts. Meson appeals the court’s judgment on her claims

for breach of contract; violation of the Maryland Wage Payment and

Collection Law, Md. Code Ann., Lab. & Empl., §§ 3-505, 3-507.1

("Maryland Wage Law"); and violation of the federal Work Adjust-

ment and Retraining Notification Act ("WARN Act" or "the Act"), 29

U.S.C. § 2101 et seq. For the reasons that follow, we affirm.

I.

Meson began working for GTS when it purchased the lease portfo-

lio of her former employer, El Camino Resources, Ltd., in 2001.

Meson was an at-will employee. She managed two employees at her

small GTS office in Falls Church, Virginia, but her duties involved

significant travel. In her role as regional manager, Meson reported to

GTS’s Tampa, Florida headquarters.

As a sales representative, Meson had the opportunity to earn com-

missions, in addition to receiving her base pay and management com-

pensation. Under GTS’s Sales Commission Plans ("Plans"),1 a sales

1

Three Commission Plans were issued during Meson’s tenure. The

parties concede that the Plans do not meaningfully differ for purposes of

MESON v. GATX TECHNOLOGY SERVICES 3

representative could earn Gross Margin Commissions by arranging

and completing Gross Margin Commission Events ("Commission

Events") on the leases in her portfolio. Commission Events consisted

of various transactions that resulted in the generation of a positive

Gross Margin, or profit. Examples included lease renewal, lease

extension, equipment sale, and lease termination. A portion of the

expected Gross Margin Commission, labeled the Lease Origination

Commission, was paid to a sales representative at the start of a lease.2

When a Commission Event occurred, GTS would calculate the

Gross Margin generated on the lease.3 The sales representative would

then receive the Gross Margin Commission (equal to approximately

twenty-five percent of GTS’s profit on the transaction) less the Lease

Origination Commission already paid. If the Lease Origination Com-

mission exceeded the value of the Gross Margin Commission, the dif-

ference was deducted from the sales representative’s commission

account. The Plans stipulated that the sales representative had to be

employed on the date commissions became payable, and

"[r]esignation or termination [would] result in the forfeiture of any

further commissions as of the last date of employment." J.A. 287.

In April 2004, GATX announced its plan to sell the assets of GTS

to CIT Corporation ("CIT"). Employees were informed that unless

offered positions with CIT, they would be paid only through July 25,

2004. Meson was not offered a position, and her employment thus

ended when the asset sale closed on June 30, 2004. In response to

Meson’s request, GTS informed her that she would receive "no bonus

payment related to [her] lease portfolio." J.A. 308.

On December 2, 2004, Meson filed a complaint against GATX in

the U.S. District Court for the District of Maryland alleging: (I)

breach of contract for failure to pay all compensation due; (II) viola-

this appeal. We therefore refer to the 2004 Plan.

2

The Lease Origination Commission was generally equal to one per-

cent of the original equipment cost.

3

The Plans included a different Gross Margin calculation method for

each type of Commission Event, generally trying to capture GTS’s profit

on the lease.

4 MESON v. GATX TECHNOLOGY SERVICES

tion of the Maryland Wage Law; (III) refusal to pay severance; and

(IV) violation of the WARN Act, 29 U.S.C. § 2101 et seq.4 The dis-

trict court applied Maryland law, the law of the forum, as neither

party presented facts sufficient to justify application of any other

state’s law.5 The court granted summary judgment on all Counts and

entered final judgment in favor of GATX on August 1, 2006. As to

Meson’s breach of contract claim regarding sales commissions (Count

I), the court found that Meson was not entitled to these commissions

because the asset sale was not a Commission Event.6 With respect to

Count II, the court found that Meson could not invoke the Maryland

Wage law because GATX did not meet the law’s definition of

employer. As to Count IV, the court found Meson’s Falls Church,

Virginia office, her fixed place of work, to be her "single site of

employment." Because that office had fewer than fifty employees, the

district court decided that Meson was not entitled to the protections

of the WARN Act. Meson appeals the judgment on Counts I, II, and

IV.

We review de novo the district court’s grant of summary judgment

in favor of GATX, viewing the facts in the light most favorable to

Meson. See United States v. Diebold, Inc., 369 U.S. 654, 655 (1962);

LeBlanc v. Cahill, 153 F.3d 134, 148 (4th Cir. 1998). Summary judg-

ment is proper only where "there is no genuine issue as to any mate-

rial fact" and GATX is "entitled to judgment as a matter of law." See

United States v. Ringley, 985 F.2d 185, 186 (4th Cir. 1993) (citing

Fed. R. Civ. P. 56(c)).

4

Meson originally alleged seven counts, but later agreed to the dis-

missal of three.

5

As a federal court sitting in diversity, the district court was obliged

to apply Maryland law, including its choice of law provisions, unless

another state’s law was clearly applicable. See Hitachi Credit Am. Corp.

v. Signet Bank, 166 F.3d 614, 623-624 (4th Cir. 1999). Neither party

challenges the district court’s choice of law decision on appeal; thus, we

too apply Maryland law.

6

Count I also included a claim concerning Meson’s management com-

pensation. She does not pursue this portion of Count I on appeal.

MESON v. GATX TECHNOLOGY SERVICES 5

II.

Meson’s argument regarding her entitlement to Gross Margin

Commissions (Count I) has mutated on appeal. In the district court,

she argued that the asset sale to CIT was itself a Commission Event.

Meson has since abandoned that position. Her sole argument now is

that she is entitled to commissions under the performance prevention

doctrine ("prevention doctrine"), a common-law principle of contract

law, because the asset sale prevented her from completing Commis-

sion Events on the leases in her portfolio. Application of the preven-

tion doctrine to the facts of this case constitutes a mixed question of

law and fact, Moore Bros. Co. v. Brown & Root, Inc., 207 F.3d 717,

724 (4th Cir. 2000), which we review by inspecting factual findings

for clear error and examining de novo the legal conclusions derived

from those facts, U.S. Dep’t. of Health & Human Servs. v. Smitley,

347 F.3d 109, 116 (4th Cir. 2003).

In support of her argument, Meson relies on this court’s articula-

tion of the prevention doctrine in the seminal case of Fuller v. Brown:

"[I]f [one party to a contract] is himself the cause of the failure of per-

formance, either of an obligation due from him or of a condition upon

which his liability depends, he cannot take advantage of the failure."7

15 F.2d 672, 677 (4th Cir. 1926) (quoting 2 Williston on Contracts

¶ 677).

The facts in Fuller present a paradigm of the circumstances in

which the prevention doctrine has been found to apply. The employer

there promised to pay an employee a share of the profits on each ship

the company manufactured and sold. These "bonuses" were condi-

tioned upon the employee rendering satisfactory service until the

completion of all twelve ships contemplated by the contract. Id. at

675. Upon completion of each of the first six ships, the employer paid

the employee fifty percent of the bonus due on the particular ship and

retained the other fifty percent. The employee was to receive the

remainder, as to each ship, upon completion of the twelfth ship. Id.

7

Fuller applied North Carolina, not Maryland, law. At oral argument,

however, the parties agreed that there is no meaningful difference

between the Fourth Circuit’s application of the prevention doctrine in

Fuller and the doctrine’s application in Maryland courts.

6 MESON v. GATX TECHNOLOGY SERVICES

After the tenth ship was completed, the employer closed the shipyard.

Id. at 677. The employer also refused to pay the employee the

retained portions of his bonuses, which the employee then sued to

recover. Id. Finding in favor of the employee, this court held that the

completion of twelve ships merely fixed the time of payment. Id. at

677, 678. The court went on to note, moreover, that even if the com-

pletion of all twelve ships were considered a condition precedent to

payment, "the failure to complete them cannot avail the defendant, as

defendant itself was responsible for the failure." Id.

The few cases in which Maryland courts have found the prevention

doctrine applicable involve facts similar to those in Fuller. Singer

Construction Co. v. Goldsborough, 128 A. 754 (Md. 1925), is repre-

sentative of such limited circumstances. In Singer, a broker was

employed to sell properties for a real estate corporation. The broker

"found and presented to the [corporation], within the time specified,

a purchaser who was able, willing and ready to buy upon the terms

specified." Id. at 758. The corporation, however, declined to make the

sale and sold the property to another party. Id. The corporation also

refused to pay the broker a commission, which the broker then sued

to recover. The Court of Appeals of Maryland held that although the

defendant had the power to decline to sell the property, "[w]here the

agent has done all he undertook to do, and procured a buyer as con-

templated, he may not be deprived of his right to remuneration" sim-

ply because the corporation refuses to complete the sale. Id.

Invoking the prevention doctrine, Meson contends that Commis-

sion Events would have occurred on her leases but for the asset sale,

and since GATX was responsible for that sale, GATX must compen-

sate her for the commissions that she would have otherwise gener-

ated. Meson’s argument fails for several reasons. First, the differences

between the facts in Fuller and Singer and those in this case are both

significant and readily apparent. In Fuller, the employee was seeking

the remainder of a bonus he had already earned. The ships in issue

were already completed and had already generated a profit. Similarly,

in Singer, the broker had already "furnished the act requested (i.e., the

procuring of a purchaser), upon which a promise to pay commissions

arose." 128 A. at 758. Here, Meson is trying to recover commissions

that she did not earn, based on events which never occurred.

MESON v. GATX TECHNOLOGY SERVICES 7

It is undisputed that no Commission Event, as defined by the Plan,

occurred with respect to any of the leases for which Meson seeks

recovery. Nor does Meson identify any specific leases that were in the

midst of a Commission Event or for which she had even arranged

such an event. She merely predicts that some leaseholders would have

chosen to renew their leases without further action on her part. Such

speculation is insufficient. To recover under the prevention doctrine,

Meson must have at least arranged a Commission Event, while

employed, and presented a willing and able leaseholder, with only

GATX’s inability or unwillingness to complete the event preventing

her from consummating the transaction. See Singer, 128 A. at 758. As

GATX correctly asserts, preventing Meson from attempting to earn

commissions is not the same as preventing her from receiving com-

missions that she has already earned by completing the work neces-

sary under the Plans.

Meson’s argument also fails to recognize that the Lease Origina-

tion Commissions she received at the start of the leases fully compen-

sated her for her completed performance. As Meson did not

consummate any Commission Events, GTS could not determine

whether or not these originated leases generated a profit. Thus, she

was not paid any Gross Margin Commissions, but she was also not

required to repay any Lease Origination Commissions.

Moreover, specific Plan provisions prevent Meson from recovering

commissions on these facts. Under the Plans, to be entitled to com-

missions she must have been employed at the time of the Commission

Events; here, she was not. Meson tries to argue that such provisions

are unenforceable under Maryland law, but this argument is also

unavailing. The authority on which she relies for such a proposition

holds only that if a commission has already been earned, a require-

ment that an employee be employed on the day it becomes payable

is unenforceable. See Medex v. McCabe, 811 A.2d 297, 303-05 (Md.

2002). Again, under this reasoning as well, Meson’s failure to achieve

a Commission Event prior to her termination precludes recovery.

Finally, it bears repeating that Meson was an at-will employee who

could have been terminated at any time. It flies in the face of the doc-

trine of at-will employment to suggest that GATX was required to

maintain her employment until a Commission Event occurred, or

8 MESON v. GATX TECHNOLOGY SERVICES

compensate her for the lost opportunity. When GATX sold the assets

of its leasing business, an action Meson admits it was permitted to

take, it would certainly have had an obligation to compensate her for

events already consummated. But Meson presents no basis for her

argument that she was impermissibly prevented from earning specula-

tive future commissions. As the prevention doctrine is inapplicable on

these facts, we affirm the district court’s grant of summary judgment

in favor of GATX on Meson’s breach of contract claim for failure to

pay sales commissions.8

III.

Meson’s final argument is that she is entitled to recovery under the

WARN Act, 29 U.S.C. § 2101 et seq. Resolution of this issue requires

us to determine Meson’s "single site of employment" for WARN Act

purposes. As none of the relevant facts are in dispute and this deter-

mination turns on statutory interpretation, we review the district

court’s decision de novo. UMW v. Martinka Coal Co., 202 F.3d 717,

720 (4th Cir. 2000).

The WARN Act was enacted in 1988 to provide notice of sudden,

significant employment loss so that workers could seek alternative

employment and their communities could prepare for the economic

disruption of a mass layoff. Bader v. N. Line Layers, Inc., 2007 U.S.

App. LEXIS 21645 (9th Cir. Sept. 10, 2007); 20 C.F.R. § 639.1(a).

The Act requires certain employers to provide affected employees

with sixty-days notice of a plant closing or "mass layoff." 29 U.S.C.

§ 2102(a). An employer who fails to provide this notice is liable to

each affected employee for backpay, benefits, and attorney’s fees. 29

U.S.C. § 2104(a). The statute defines "mass layoff" as a reduction in

8

Meson argues in Count II that the district court erred in finding the

Maryland Wage Law inapplicable to her Gross Margin Commission

claim. The Maryland Wage Law mandates that an employer pay an

employee all wages due for work performed prior to termination and pro-

vides for treble damages for violations. Md. Code Ann., Lab. & Empl.

§§ 3-505, 3-507.1. Meson contends that the law allows her to pursue tre-

ble damages against GATX for failure to pay the commissions she

sought. By Meson’s own admission, since we have decided that she is

not entitled to additional commissions, we need not reach this issue.

MESON v. GATX TECHNOLOGY SERVICES 9

work force at a "single site of employment" that affects at least thirty-

three percent of the employees and a minimum of fifty employees in

a thirty-day period. 29 U.S.C. § 2101(a)(3). Thus, an employee who

had a fixed workplace where fewer than fifty individuals suffered an

employment loss would seem, on the face of the statute, outside of the

protections of the WARN Act. Meson nevertheless claims that under

Department of Labor regulations she is entitled to WARN Act cover-

age, because GTS’s Tampa, Florida headquarters, and not her Vir-

ginia office, is her "single site of employment."

The WARN Act itself does not define "single site of employment."

However, the Secretary of Labor, pursuant to her authority, has pro-

mulgated interpretive regulations. 29 U.S.C. § 2107. These regula-

tions are entitled to "controlling weight unless they are arbitrary,

capricious, or manifestly contrary to the statute." Chevron, U.S.A.,

Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 844 (1984).

Meson invokes 20 C.F.R. § 639.3(i)(6) ("subpart (6)" or the "provi-

sion") of the WARN Act regulations, which states:

For workers whose primary duties require travel from point

to point, who are outstationed, or whose primary duties

involve work outside any of the employer’s regular employ-

ment sites (e.g., railroad workers, bus drivers, salespersons),

the single site of employment to which they are assigned as

their home base, from which their work is assigned, or to

which they report will be the single site in which they are

covered for WARN purposes.

Meson filed an uncontested affidavit—essentially quoting the

provision—stating that she "traveled a lot from point to point" and

that her primary work was done outside of the Virginia office. J.A.

480. She thus claims that subpart (6) applies and, accordingly, her sin-

gle site of employment is determined by the second clause of the pro-

vision. Meson further asserts that this second clause is written in the

disjunctive, and because she received work assignments from, and

reported to, officials at the Tampa headquarters, the Tampa office

should be considered her single site of employment for WARN Act

purposes. Appellant’s Br. at 25-27 (citing Ciarlante v. Brown & Wil-

liamson Tobacco Corp., 143 F.3d 139, 145-47 (3d Cir. 1998) (apply-

10 MESON v. GATX TECHNOLOGY SERVICES

ing subpart (6) in this "disjunctive" manner in a case involving

salespersons who worked primarily out of their homes and cars)).

GATX contends, however, that subpart (6) does not apply because

Meson had a fixed place of work, and even if it does apply, the Vir-

ginia office, as Meson’s "home base," is her "single site of employ-

ment" under the Act. The Department of Labor regulations do not

address the apparent inconsistency that arises in the case of an

employee whose duties require travel, as described in subpart (6), but

who also has a fixed place of employment that appears to take her

beyond the scope of the provision. Faced with this discrepancy, we

conclude, consistent with the courts which have construed subpart (6)

in the most closely analogous contexts, that it does not apply on these

facts.

Although subpart (6) could be read literally to cover almost any

employee who leaves her office, we believe it was intended to apply

only to truly mobile workers without a regular, fixed place of work.

A close scrutiny of the provision’s language supports this conclusion.

The terms "travel . . . from point to point," "outstationed," and "home

base," all connote the absence of a fixed workplace. See Ciarlante,

143 F.3d at 146 (defining "home base" as "a site that the employee

visits during the course of a typical business trip"); Bader, 2007 U.S.

App. LEXIS 21645, at *13 ("The term [outstationed] most logically

connotes a situation where employees live for a short period of time

at a certain site, departing for home when the work is done."). The

examples provided in subpart (6) also support this view. Bus drivers

and railroad workers have no fixed workplace or office. Indeed, their

jobs are characterized by travel and mobility. Although the provision

includes "salespersons" as examples, the context suggests that this

reference is to traveling salespersons who work primarily out of their

homes or cars, rather than those who work out of fixed offices.

The commentary to the WARN Act regulations confirms our inter-

pretation. The Department of Labor explains that subpart (6) was

included in the definition of "‘single site of employment’ . . . [i]n

order to cover [the situation of railroad industry maintenance crews

who have no home base] and the situation of outstationed workers

and traveling workers who report to but do not work out of a particu-

lar office . . . ." Commentary to Worker Adjustment and Retraining

Notification Act, 54 Fed. Reg. 16042, 16051 (April 20, 1989)

MESON v. GATX TECHNOLOGY SERVICES 11

(emphasis added). The commentary goes on to refer to subpart (6) as

"that part of the regulation relating to mobile workers." Id. (emphasis

added).

Our view of subpart (6) is consistent with the few other courts that

have construed the provision in the context of an employee who has

an undisputed fixed place of work. When interpreting a similar term

in the Family Medical Leave Act, the Tenth Circuit concluded that

subpart (6) does not govern such employees. See Harbert v. Health-

care Servs. Group, Inc., 391 F.3d 1140, 1152 (10th Cir. 2004). That

court reasoned (1) that all three employee examples listed in the pro-

vision do not have a fixed place of work; (2) that the agency referred

to the provision as "that part of the regulation relating to mobile

workers;" and (3) for employees with a fixed workplace there is no

reason to believe that the Department of Labor would have chosen

another single site. Id.; see also Moore v. On-Line Software Int’l, Inc.,

No. 92 CD 1563, 1993 WL 244902, at *5 (N.D. Ill. Apr. 13, 1993)

(finding the "only logical conclusion" to be that subpart (6) did not

apply to a regional sales manager and sales representative with a "reg-

ular employment site").

When faced with more loosely analogous facts, some courts, how-

ever, have chosen to look directly to subpart (6) to determine whether

an employee or group of employees qualifies for WARN Act cover-

age without lingering on the overarching statutory construct. These

courts ascertain (1) whether the alleged "single site of employment"

was the employee’s home base; (2) whether the employee’s work was

assigned from that location; or (3) whether the employee reported to

that site. If the site advanced by the employee satisfies any of the

three inquiries and the other WARN Act criteria are met, that

employee is entitled to the WARN Act’s protections. See, e.g., Bader,

2007 U.S. App. LEXIS 21645, at *12-13 (taking this approach despite

opining that subpart (6) may not actually apply to small groups of

construction workers and project managers working at sites across the

country); Ciarlante, 143 F.3d at 145-46 (applying the provision in this

manner in a case involving traveling salespersons); Teamsters Local

Union 413 v. Driver’s, Inc., 101 F.3d 1107, 1109-11 (6th Cir. 1996)

(using this approach in a case involving truck drivers).

Notwithstanding this alternative approach, we find that the pur-

poses of the WARN Act, the provisions’s language, and the Depart-

12 MESON v. GATX TECHNOLOGY SERVICES

ment of Labor commentary make it plain that subpart (6) was not

intended to cover employees like Meson. Meson was not a "mobile

worker": she "work[ed] out of a particular office" in Falls Church,

Virginia and also managed the two other employees in that office.

Though she traveled to visit clients in her region and reported to offi-

cials located at the Tampa office, her position was similar to that of

most other branch managers who receive work assignments from, and

report to, their company’s headquarters. Were we to construe subpart

(6) to apply on these facts, every such regional manager or chief exec-

utive could claim the corporate headquarters—in lieu of the office she

manages—as her "single site of employment." See Moore, No. 92 C

1563, 1993 WL 244902, at *5 (N.D. Ill. Apr. 13, 1993). We do not

believe that Congress or the Department of Labor intended the provi-

sion to possess such a potentially limitless scope.

Finally, we note that the minimal impact on the Falls Church com-

munity also militates against a finding that the WARN Act’s purposes

would be served by applying it to Meson. See Wiltz v. M/G Transport

Servs., Inc., 128 F.3d 957, 963 (6th Cir. 1997) (stating that the "ab-

sence of community impact cuts against a finding of ‘single site’").

As we have discussed, the WARN Act was enacted, in part, to pre-

pare communities for the economic disruption of a mass layoff. See

20 C.F.R. § 639.1(a). There was no such layoff here. In fact, Meson’s

job loss was the only one suffered by this Virginia community as a

result of the asset sale. Congress’s decision to target only those

employment losses affecting a minimum of fifty employees in one

locale supports our conclusion that subpart (6) does not apply on

these facts. We therefore find that Meson’s "single site of employ-

ment" under the WARN Act was the GTS office in Falls Church, Vir-

ginia. As this office, comprised as it was of only three individuals, did

not have the requisite number of affected employees to trigger appli-

cation of the WARN Act, we affirm the district court’s grant of sum-

mary judgment in favor of GATX on this issue.

IV.

For the reasons stated herein, the judgment of the district court is

AFFIRMED.