## Facts

- A law firm hired Lawrence J. Hess as an associate attorney under a written employment agreement with a base salary, a bonus formula tied to a percentage of “fees generated,” and a requirement of 30 days’ notice before termination.
- Hess worked on medical-malpractice matters and obtained favorable settlements while employed.
- The firm’s president terminated Hess abruptly without giving the contractually required 30 days’ notice.
- After termination, the firm reassigned several of Hess’s active cases to another attorney associated with the firm as an independent contractor.
- Several reassigned cases later settled and generated fees for the firm, including at least one settlement within 30 days after Hess’s discharge.
- The firm refused to pay Hess any bonuses or fee shares tied to those post-termination settlements.
- Hess attempted to protect his claimed interest by filing attorney’s liens in Illinois state courts on some of the underlying cases; the state courts rejected the liens.
- Hess then filed a federal diversity action asserting, among other claims, (i) a claim under the Illinois Wage Payment and Collection Act (IWPCA) and (ii) a common-law breach-of-contract claim seeking compensation allegedly owed under the employment agreement.

## Issues

1. Whether Illinois state-court rulings rejecting Hess’s attorney’s liens precluded his federal contract-based claims for bonus/fee compensation under the employment agreement, including his IWPCA claim.
2. Whether summary judgment was proper against Hess on his IWPCA and breach-of-contract claims in light of the employment agreement’s compensation terms and the 30-day notice provision.
3. Whether dismissal of Hess’s remaining tort and quasi-contract claims was proper.

## Decision

- The court held that the state-court lien rulings did not decide Hess’s contractual entitlement to compensation and therefore did not bar his contract-based claims by claim or issue preclusion.
- The court reversed summary judgment on Count I (IWPCA) and Count IV (breach of contract) and remanded for further proceedings.
- The court affirmed the dismissal of Hess’s remaining claims, including tortious interference, wrongful discharge, unjust enrichment, and quantum meruit.
- Disposition: affirmed in part, reversed in part, and remanded.

## Legal Principles

- Preclusion applies only to issues actually litigated and decided (issue preclusion) or claims that constitute the same cause of action and could have been litigated between the relevant parties in the prior proceeding (claim preclusion).
- A determination that an attorney lacks a valid attorney’s lien on case proceeds does not, without more, resolve an employer–employee dispute over compensation allegedly owed under an employment contract.
- Summary judgment is improper where contract terms central to compensation are reasonably disputable and material facts remain regarding the meaning of those terms or the effect of contractual provisions such as notice requirements.
- The IWPCA enforces compensation that an employer has agreed to pay; an IWPCA claim depends on establishing a contractual entitlement to the alleged “earned” wages or final compensation.

## Conclusion

The Seventh Circuit ruled that unsuccessful attorney-lien proceedings did not preclude Hess from litigating whether his employment agreement entitled him to post-termination bonus compensation, reinstated his IWPCA and breach-of-contract claims due to unresolved contract and fact questions, and otherwise affirmed dismissal of his non-contract theories.


Hess v. Kanoski & Assocs., 668 F.3d 446 (7th Cir. 2012)