Gerhardt v. Sunrise Foods International Inc.

Background

Kristina Gerhardt alleged that Sunrise Foods International (USA) Inc., her former employer, failed to pay her a bonus after she resigned. She began working for Sunrise in November 2019 and was responsible for building a food-grade vegetable-oil sales program. Her employment contract provided a calculated bonus for Organic Crude Oil Derivatives products and described bonuses for all other products as discretionary.

The contract excerpt in the complaint stated that the bonus pool for Organic Crude Oil Derivatives products would be calculated using a formula based on invoiced sales from July 1 through June 30. It also stated that distribution within the team would be determined by the Director of Oils with approval from the Vice President of Food Ingredients. The court noted that it had only an excerpt of the contract, not the full agreement.

Gerhardt alleged that Sunrise changed how it treated bonuses for non-organic oils between August and November 2022. She also alleged that, after the other oil-sales team member resigned in June 2024, Sunrise told her that she would receive the full bonus pool instead of an adjustment to her annual salary. Gerhardt resigned effective March 7, 2025, and alleged that Sunrise then told her she would receive no bonus for fiscal year 2025. She made a timely demand for payment in April 2025 and later sued in Minnesota state court. Sunrise removed the case to federal court.

The complaint asserted seven claims, including a Minnesota Payment of Wages Act claim, breach of contract, unjust enrichment, promissory estoppel, sex discrimination, whistleblower retaliation, and reprisal. Sunrise’s partial motion to dismiss challenged only Count 1, the wage claim.

Legal standard

The court reviewed the claim under Federal Rule of Civil Procedure 12(b)(6), which asks whether the complaint states a legally plausible claim for relief. At this stage, the court must accept the complaint’s factual allegations as true and interpret them in Gerhardt’s favor.

The Minnesota Payment of Wages Act addresses wages or commissions that were actually earned but unpaid when an employee is discharged or resigns. The court explained that the Act generally governs when an employer must pay compensation, rather than independently creating a right to compensation that does not arise from a contract or another legal authority.

Court’s analysis

Sunrise advanced two arguments. First, it argued that Gerhardt’s bonus was discretionary and therefore was not earned wages under the Act. Second, it argued that Gerhardt could not have earned a fiscal-year 2025 bonus because she resigned before the fiscal year ended and before the bonus could be calculated.

The court rejected the first argument at the pleading stage. Although Gerhardt alleged that Sunrise treated non-organic-oil sales as discretionary, the complaint also indicated that she was the only member of the oil-sales team during the relevant period and that she sold Organic Crude Oil Derivatives products covered by a calculated bonus provision. The court therefore concluded that Gerhardt had adequately alleged that at least some of her bonus was non-discretionary.

The court also reasoned that the contract language did not clearly give the directors discretion to award Gerhardt nothing from the bonus pool when she was the entire team. In addition, Gerhardt alleged that Sunrise promised she would receive the full bonus pool of eligible revenue. Accepting that allegation as true, the court concluded that the alleged promise could have overridden any discretionary language in the contract.

The court rejected Sunrise’s argument that the bonus was necessarily unearned because Gerhardt left before the fiscal year ended. The contract excerpt did not expressly say that an employee had to complete the fiscal year to qualify for the bonus, and the court found the language ambiguous about when the bonus was earned and became fixed. Because ambiguous contract language generally cannot be resolved on a motion to dismiss, that ambiguity independently supported denying Sunrise’s motion.

The court also held that Gerhardt’s allegation about Sunrise’s promise to pay the full bonus pool adequately pleaded an agreement that could have replaced or supplemented the contract language. The court emphasized that it was not deciding whether the allegation would survive discovery or whether Gerhardt would ultimately prove when the bonus was earned.

Disposition

The court DENIED Defendant Sunrise Foods International (USA) Inc.’s Partial Motion to Dismiss, Docket No. 13. The denial concerned Count 1, Gerhardt’s Minnesota Payment of Wages Act claim. The opinion did not resolve Gerhardt’s other six claims or determine whether she will ultimately recover the bonus.