Summary
The Michigan Supreme Court addressed a certified question concerning the mental state required to obtain double damages under the Michigan Sales Representative Commission Act. It held that the statute requires only a principal's purposeful failure to pay a commission when due, and does not require bad faith or malicious intent.
Topics
Practice areas
Questions Presented
- What mental-state standard does the Michigan Sales Representative Commission Act require before double damages may be awarded for a principal's failure to pay commissions when due?
- Does the statute require proof of bad faith or otherwise recognize a good-faith defense to double damages?
- May legislative history or the punitive nature of the statutory damages remedy override the statute's clear text?
Holdings
- MCL 600.2961(5)(b) requires only that the principal purposefully or deliberately fail to pay a commission when due. It does not require proof that the principal acted in bad faith or knew that the commission was legally owed.
- Legislative history and the punitive character of the SRCA's double-damages provision cannot be used to add a bad-faith requirement to clear statutory language.
Key quotations
“We have accepted the certification and hold that the plain language of the statute requires only that the principal purposefully fail to pay a commission when due.” (468 Mich. at 110-111)
“Therefore, under the clear language of the statute, if a principal deliberately fails to pay a commission when due, it is liable for a double-damages penalty under the statute, even if the principal did not believe, reasonably or otherwise, that the commission was owed.” (468 Mich. at 114)
“The clear and unambiguous language of the statute penalizes intentional failure to pay, without regard to the motivation of the principal.” (468 Mich. at 118-119)
Factual background
Kenneth Henes served for several years as Continental Biomass Industries' sales representative under an exclusive territory covering Michigan and several neighboring states. After Henes's services ended in May 1998, he claimed unpaid commissions on four sales. Continental refused payment because it believed the contract did not entitle Henes to the commissions. A federal jury found that all four commissions were owed and that Continental intentionally failed to pay three of them when due.
Procedural history
Kenneth Henes sued Continental Biomass Industries in federal court to recover unpaid sales commissions and statutory double damages. A federal jury found that Continental owed four commissions and intentionally failed to pay three of them. The federal trial court denied Continental's postjudgment motion challenging the jury instruction defining the intent required under the statute. During Continental's appeal, the Sixth Circuit certified the statutory-interpretation question to the Michigan Supreme Court, which accepted certification and answered it before returning the matter to the Sixth Circuit.
Remand instructions
Having answered the certified question, the Michigan Supreme Court returned the matter to the United States Court of Appeals for the Sixth Circuit for further proceedings as it deemed appropriate.