Aguilar v. Husco Int'l, Inc.

• Decision Date: 01 April 2015
• Docket Number: No. 2013AP265.,2013AP265.
• Citation: 863 N.W.2d 556,361 Wis. 2d 597
• Parties: Mauricio AGUILAR, Dave Hughes, Daniel Radmer, Byron Slagle, Duaine Wagner, and Michael Vinsant, Plaintiffs–Appellants–Cross–Respondents, v. HUSCO INTERNATIONAL, INC., Defendant–Third–Party Plaintiff–Respondent–Cross–Appellant–Petitioner, v. International Association of Machinists and Aerospace Workers, District No. 10, Third–Party Defendant–Appellant–Cross–Respondent.
• Court: Wisconsin Supreme Court

361 Wis.2d 597

863 N.W.2d 556

Mauricio AGUILAR, Dave Hughes, Daniel Radmer, Byron Slagle, Duaine Wagner, and Michael Vinsant, Plaintiffs–Appellants–Cross–Respondents

v.HUSCO INTERNATIONAL, INC., Defendant–Third–Party Plaintiff–Respondent–Cross–Appellant–Petitioner

v.International Association of Machinists and Aerospace Workers, District No. 10, Third–Party Defendant–Appellant–Cross–Respondent.

No. 2013AP265.

Supreme Court of Wisconsin.

Argued Feb. 3, 2015.

Decided April 1, 2015.

For the defendant-third-partyplaintiff-respondent-cross-appellant-petitioner, the cause was argued by John C. Schaak, with whom on the briefs was Jeffrey Morris, John C. Schaak, and Quarles & Brady LLP, Milwaukee.

For the plaintiffs-appellants-cross-respondents and third-party defendant-appellant-cross-respondent, the cause was argued by Nathan D. Eisenberg, with whom on the brief was Frederick Perillo, Yingtao Ho, and The Previant Law Firm, S.C., Milwaukee.

Opinion

N.PATRICK CROOKS, J.

¶ 1 This wage claim case began when a union-initiated complaint was filed with the Department of Workforce Development on behalf of Thomas Kieckhefer and similarly situated production and maintenance employees at Husco International, Inc.The complaint alleged Husco owed the employees wages for 20–minute meal breaks.Such breaks had been unpaid; the union had previously agreed to that in every collective bargaining agreement (CBA) negotiated since 1983 at the company's Waukesha plant.This had the effect of workers having a shorter work shift than they would have if the schedule complied with the regulation on unpaid meal breaks (a work shift of eight hours and 20 minutes rather than eight hours and 30 minutes).As it turns out, this provision was in conflict with a state regulation¹ that requires employers to pay employees for meal breaks that are shorter than thirty minutes.

¶ 2 The DWD regulation specifically allows employers and unions with a CBA to request a waiver from the State for shorter unpaid meal breaks,² but no such request was submitted in this case.After the conflict with the regulation was discovered, the practice was ended.

¶ 3 In response to the complaint on the matter, a DWD Equal Rights Division Labor Standards Bureau investigator reviewed information submitted by both sides in the matter.He then rendered a written decision stating that the Department would not seek collection of back wages on the grounds that the factors favoring a waiver were present in this case(specifically, that the parties to the CBA had agreed to the provision and that there was no evidence that the shorter meal breaks jeopardized the life, health, safety or welfare of employees).When the investigator's decision was appealed, DWD Equal Rights Division Labor Standards Bureau issued a letter representing the “final determination in this matter.”That determination affirmed the decision not to seek back pay.A request for reconsideration was denied; the letter denying the reconsideration request, issued by the bureau director for the Labor Standards Bureau of the DWD Equal Rights Division, stated that “the union on behalf of its members can bring lawsuit against Husco in civil court” pursuant to Wis. Stat. § 109.11.

¶ 4 As permitted by that statute, six Husco employees brought suit in circuit court³January 28, 2008, on behalf of themselves and others similarly situated, seeking back pay for unpaid breaks taken during the two-year period preceding the filing of their complaint.⁴The complaint noted that plaintiffs had “exhausted all available administrative remedies under Chapter 109 of the Wisconsin Statutes.”When the circuit court denied both parties' summary judgment motions, the parties sought interlocutory appeal.The court of appeals⁵ held that the matter was appropriate for summary judgment and granted summary judgment to the plaintiffs, reasoning that the CBA could not trump the DWD meal-break regulation.Husco petitioned this court for review, which we granted.

¶ 5We agree with the court of appeals that summary judgment is appropriate.⁶All parties stipulate that there are no disputed facts material to the issue, and there exists no evidence in the record to the contrary.⁷The starting point of our analysis, because this case involves a CBA and a dispute between labor and management, is to resolve the question of whether federal preemption applies to the plaintiffs' claim.If plaintiffs' claim involves the interpretation of a CBA, this case is controlled by § 301 of the Labor Management Relations Act,29 U.S.C. § 185, which governs “[s]uits for violation of contracts between an employer and a labor organization representing employees[.]”Because of the interest in uniform law in this area, “federal law is clear that, where there is a sec. 301 claim, federal substantive law (irrespective of the forum) must control.Teamsters Local v. Lucas Flour Co.,

369 U.S. 95, 82 S.Ct. 571, 7 L.Ed.2d 593(1962), rules out the application of incompatible state law and mandates that federal law must prevail in a sec. 301 case....”⁸

¶ 6 The test for whether a plaintiff's state-law claim is a Section 301 claim is whether resolving the case“requires the interpretation of a collective-bargaining agreement.”⁹Applying that test to these facts, we conclude that federal preemption does not apply to plaintiffs' claim because this dispute requires no interpretation of the CBA.Case law is quite clear that “not every dispute concerning employment, or tangentially involving a provision of a collective-bargaining agreement, is preempted by § 301.”¹⁰

¶ 7 Having ascertained that state law governs the claim before us, we turn to the substantive question: Are the employees entitled, under Wis. Admin. CodeDWD § 274.02, to back pay for the unpaid meal breaks in this case?Plaintiffs pursued this claim in circuit court after exhausting their administrative remedies, so we have the benefit in this case of the agency's interpretation of DWD § 274.02, its own regulation, which is given “controlling weight” if it is “reasonable and consistent with the meaning and purpose of the regulation.”¹¹We conclude that the Department's interpretation and decision not to seek recovery of back pay in this case is reasonable and consistent with the purpose of the regulation because the regulation's purpose is to protect the life, health, safety, and welfare of the employees, and to accommodate reasonable departures from the rule on meal break length where, under a CBA, labor and management have agreed on that issue.

¶ 8We therefore reverse the court of appeals and remand for entry of summary judgment in favor of Husco.

I.FACTS & PROCEDURAL HISTORY

¶ 9 There is no dispute on the central facts: that for decades, the union and Husco agreed, via the CBA, to unpaid meal breaks shorter than 30 minutes; that DWD § 274.02 allows parties to a CBA to obtain a waiver for such a practice; and that no such waiver was obtained.From 1983 through 2007, successive CBAs between Husco and DistrictNo. 10 of the International Association of Machinists and Aerospace Workers Union(District 10) provided that meal breaks would be unpaid and last 20 minutes.All parties agree that these were the terms of the CBA in effect during the relevant period.

¶ 10 Following the discovery, in late 2006, that DWD § 274.02 was in conflict with the CBA provision, District 10 sent a letter to Husco asserting that Husco was required to pay employees for the unpaid breaks notwithstanding the CBA.Husco instead proposed that Husco and District 10 jointly seek a waiver from DWD to resolve the matter.District 10 declined to do so unless Husco gave the employees new, additional monetary concessions in return, such as cash payments or reinstatement of employee pensions.Husco declined to do so.When the parties were unable to reach a resolution, Husco unilaterally extended employee meal breaks to 30 minutes, ending the practice of the shorter unpaid meal breaks on October 2, 2007.¹²

¶ 11 In the meantime, District 10 had filed its complaint with DWD on February 9, 2007.In a July 16, 2007, letter, the DWD notified the union that the DWD would not seek back pay for the following reasons.It said even though the 20–minute unpaid breaks were technically violations of the code, it would be unreasonable to grant back pay because the breaks had posed no health or safety concerns, the statute permits waivers in circumstances such as these, and the employees had enjoyed other benefits in exchange for the agreement to have the short unpaid meal periods.The union sought review of the decision and received a final determination from the agency that no back pay would be sought.The union requested reconsideration, and the Department “reaffirm [ed] the earlier final determination.”

¶ 12The plaintiffs then brought suit in state court pursuant to Wis. Stat. § 109.03(5), which authorizes such claims: parties may choose to pursue administrative remedies and then file in civil court if necessary, or they may bring the claim directly to civil court.¹³Husco then successfully removed the action to federal court on the grounds that plaintiffs' claim required interpretation of the CBA and was thus subject to Section 301 preemption.Husco raised affirmative defenses of unjust enrichment, equitable estoppel, waiver, and failure to mitigate damages.Husco also filed a third-party claim against District 10 seeking indemnification for any wage liability on the grounds that the union had breached its contractual duty of good faith and fair dealing, and on grounds of unjust enrichment and promissory estoppel.

¶ 13The case proceeded in federal court for a time, and the United States District Court for the Eastern District of Wisconsin certified it as a class action.But the district court ultimately remanded the case to state court on its own motion, holding that, contrary to Husco's contention, plaintiffs' claim was not a Section 301 claim.Consistent with its ruling in a...