Byrne v. Hayes Beer Distributing Company

• Decision Date: 04 December 2018
• Docket Number: No. 1-17-2612,1-17-2612
• Citation: 122 N.E.3d 753,428 Ill.Dec. 492,2018 IL App (1st) 172612
• Parties: James BYRNE, on Behalf of Himself and All Employees of Hayes Beer Distribution Company, Plaintiffs-Appellees, v. HAYES BEER DISTRIBUTING COMPANY, Defendant-Appellant.
• Court: United States Appellate Court of Illinois

2018 IL App (1st) 172612

122 N.E.3d 753

428 Ill.Dec. 492

James BYRNE, on Behalf of Himself and All Employees of Hayes Beer Distribution Company, Plaintiffs-Appellees,

v.HAYES BEER DISTRIBUTING COMPANY, Defendant-Appellant.

No. 1-17-2612

Appellate Court of Illinois, First District, Second Division.

Opinion filed December 4, 2018

JUSTICE HYMAN delivered the judgment of the court, with opinion.

¶ 1 Hayes Beer Distributing Company (Hayes) supplies beer and other beverages to retail stores. Hayes adopted a policy of deducting money from its delivery drivers' commissions for beer that stayed on the shelf too long and became stale. James Byrne, a delivery driver, filed a complaint with the Illinois Department of Labor (Department) arguing that Hayes's "stale beer" policy violates section 9 of the Illinois Wage Payment and Collection Act (Wage Act) ( 820 ILCS 115/9 (West 2016) ), which requires that employees agree to any wage deductions in writing at the time the deduction is made. The Department found that the underlying issue arose out of an interpretation of the parties' collective bargaining agreement (CBA), and thus, the Department did not have jurisdiction, as it was preempted by section 301 of the federal Labor Management Relations Act (LMRA) ( 29 U.S.C. § 185 (2012) ).

¶ 2 Byrne filed a complaint for administrative review in the circuit court of Cook County. The court granted Byrne's petition, finding the Department's decision to dismiss his claim was "clearly erroneous," because the underlying issue involved the legality of the wage reduction under the Wage Act, which did not require interpreting the CBA, and thus, was not preempted by section 301. Hayes filed an interlocutory appeal arguing (i) Byrne's wage claim does not require interpretation of the CBA, and (ii) Illinois law allows employees to contract around the no-deduction provision in the Wage Act.

¶ 3 We agree with the circuit court and affirm the court's order remanding the case for additional proceedings.

¶ 4 Background

¶ 5 Hayes, a beer distribution company, and the International Brotherhood of Teamsters Union No. 703 entered into a CBA covering delivery drivers. Article 12 of the CBA describes the drivers' commission pay structure. Hayes compensates drivers for each case delivered to stops on a driver's route and provides for deductions from commission payments for a driver accepting a bad check or counterfeit currency or a cash shortage.

¶ 6 Article 13 of the CBA states that a driver's duties include "[c]hecking all code dates and rotating all stock to insure product freshness." According to Hayes, the Illinois Liquor Control Commission regulations mandate rotating products, as do its own distribution agreements with brewers. Those agreements provide that Hayes cannot sell outdated consumable products. To monitor driver rotation of product, Hayes's outside sales representatives periodically check the expiration date on the beer bottles and cans at retail customer sites. When a sales representative discovers beer has remained on the shelf beyond the expiration date, the sales representative removes the beer from the shelf and gives the driver who services that location a report detailing the date of discovery and the quantity of stale beer. Hayes considers the removal of stale beer a return of the product and deducts the cost of the stale beer from the driver's wages for the pay period in which it discovered the stale beer. If the driver removes the beer from the shelf before the expiration date and returns it to the distribution center, Hayes does not deduct the cost from the driver's wages.

¶ 7 Hayes says its policy of deducting commission for stale beer is a reasonable measure to comply with the Illinois Liquor Control Commission regulations, which are intended to ensure "the health, safety, and welfare of the People of the State of Illinois." Hayes also contends stale beer deductions are rare and average between 1 to 2% of a driver's gross wages, with an average charge of $15 per case. According to Hayes, drivers are aware of the amounts deducted, and the CBA contains a grievance procedure should an employee not agree with the deduction policy or a deduction. Nothing in the CBA directly addresses adjustments for stale beer, and nothing in the record shows that Byrne or other drivers consented to Hayes deducting money from their pay for the cost of the stale beer. Hayes does not claim that drivers signed a valid assignment or wage deduction order or otherwise voluntarily consented to the pay deductions.

¶ 8 The Department notified Hayes it had received a complaint that Hayes was not complying with the Minimum Wage Law ( 820 ILCS 105/1 et seq. (West 2016) ) and that the Department would be investigating Hayes's pay practices. The complaint, which had been filed by Teamsters Local No. 703, alleged that Hayes's deductions from drivers' commissions, especially the deduction for stale beer, often resulted in hourly income for drivers of less than that required by the Minimum Wage Law.

¶ 9 Thereafter, the Department notified Hayes's attorney it had transferred the investigation to the wage claim specialist in the Fair Labor Standards Division. About a week later, James Byrne, a delivery driver for Hayes, filed a separate claim with the Department on behalf of himself and similarly situated employees, alleging Hayes's practice of deducting money from employees' pay for stale beer violated section 9 of the Wage Act ( 820 ILCS 115/9 (West 2016) ), which requires employees agree to a wage deduction in writing at the time of the deduction.

¶ 10 A notice of noncompliance with the Minimum Wage Law ordered Hayes to pay $64,451.65 in wages, the stale beer deductions. Hayes requested a review arguing (i) it paid drivers covered by the audit above the minimum wage, even after stale beer deductions, (ii) the motor vehicle exemption of the Minimum Wage Law exempts its drivers, and (iii) section 301 of the LMRA preempts application of the Minimum Wage Law to the deduction practice.

¶ 11 An administrative law judge's order held Hayes had not violated the Minimum Wage Law and dismissed the investigation, making Hayes's request for review moot. The order stated, however, that the question of whether Hayes may make deductions for stale beer, which "contains a unionized atmosphere and is governed by a collective bargaining agreement" remained open and would move forward under the Wage Act.

¶ 12 The Department then dismissed Byrne's Wage Act claim, finding that the Department did not have jurisdiction to determine whether drivers gave a voluntary deduction because doing so would require interpreting the CBA, thereby intruding into an area preempted by section 301 of the LMRA ( 29 U.S.C. § 185 (2012) ).

¶ 13 Byrne filed a complaint for administrative review of the Department's dismissal of his claim, which the circuit court granted, remanding for further proceedings before the Department. The court acknowledged the principle stated in Atchley v. Heritage Cable Vision Associates , that "Section 301 preempts claims directly founded on or ‘substantially dependent on analysis of a collective-bargaining agreement.’ " 101 F.3d 495, 498 (7th Cir. 1996) (quoting Caterpillar Inc. v. Williams , 482 U.S. 386, 394, 107 S.Ct. 2425, 96 L.Ed.2d 318 (1987) ). The court concluded that "[t]his is plainly not such a case."

¶ 14 The court also observed that even if it was to interpret the CBA, it could not ignore the employees' alleged statutory right to consent to pay deductions. "Simply put, the claim here is not founded upon the parties' collective bargaining agreement, and the same need not be interpreted to resolve the matter." Hayes filed a petition for leave to file an interlocutory appeal under Illinois Supreme Court Rule 306(a)(6) (eff. July 1, 2017).

¶ 15 Analysis

¶ 16 Standard of Review

¶ 17 Both parties assert we should review the court's decision for an abuse of discretion. But, under the administrative review law, we review the decision of the agency, not the decision of the circuit court. 735 ILCS 5/3-101 (West 2016) ; Provena Covenant Medical Center v. Department of Revenue , 236 Ill. 2d 368, 385-86, 339 Ill.Dec. 10, 925 N.E.2d 1131 (2010). And the standard of review of an administrative agency decision depends on whether the question presented is one of fact, one of law, or a mixed question of fact and law. All American Title Agency, LLC v. Department of Financial & Professional Regulation , 2013 IL App (1st) 113400, ¶ 26, 373 Ill.Dec. 867, 994 N.E.2d 636. We review factual questions under the manifest weight of the evidence standard and review questions of law de novo . Danigeles v. Illinois Department of Financial & Professional Regulation , 2015 IL App (1st) 142622, ¶ 69, 397 Ill.Dec. 207, 41 N.E.3d 618. We review mixed questions of law and fact under the clearly erroneous standard of review. All American Title Agency, LLC , 2013 IL App (1st) 113400, ¶ 26, 373 Ill.Dec. 867, 994 N.E.2d 636. "A decision will be deemed clearly erroneous when the reviewing court is left with the definite and firm conviction that a mistake has been made." Id.

¶ 18 The administrative law judge's order dismissing Byrne's complaint involved mixed questions of law and fact, which we review for clear error. Hayes contends the ALJ order was clearly erroneous because (i) Byrne's claim involves interpreting the CBA, which triggers preemption under section 301 of the LMRA, and (ii) Illinois law permits employees to contract around the no-deduction provision in the Wage Act.

¶ 19 LMRA Preemption

¶ 20 Section 301 of the LMRA grants federal district courts exclusive jurisdiction over a state law claim when resolution depends on interpreting the terms of a CBA. Allis-Chalmers Corp. v. Lueck , 471 U.S. 202, 210-211, 105 S.Ct. 1904, 85 L.Ed.2d 206 (1985). This promotes consistent resolution of labor disputes by authorizing federal courts to forge a body of federal law for the enforcement of CBAs. Lingle v. Norge Division...