Erdman v. Life Time Fitness, Inc.

• Decision Date: 25 August 2009
• Docket Number: No. A08-1993.,A08-1993.
• Citation: 771 N.W.2d 58
• Parties: Sarah ERDMAN, individually and on behalf of others similarly situated, Respondent, v. LIFE TIME FITNESS, INC., Appellant.
• Court: Minnesota Court of Appeals

771 N.W.2d 58

Sarah ERDMAN, individually and on behalf of others similarly situated, Respondent, v. LIFE TIME FITNESS, INC., Appellant.

No. A08-1993.

Court of Appeals of Minnesota.

August 25, 2009.

Nicole T. Fiorelli (pro hac vice), Dworken & Bernstein Co., L.P.A., Painesville, OH, and Steven E. Ness, Business Law Center, PLC, Bloomington, MN, for respondent.

Douglas R. Christensen, Michael J. Wahoske, Zeb-Michael Curtin, Dorsey & Whitney LLP, Minneapolis, MN, for appellant.

Considered and decided by HALBROOKS, Presiding Judge; TOUSSAINT, Chief Judge; and WILLIS, Judge.

OPINION

WILLIS, Judge.^*

This appeal is taken from an order denying a motion by appellant Life Time Fitness, Inc. (Life Time) for summary judgment dismissing a certified class claim asserted by respondent Sarah Erdman under the Minnesota Fair Labor Standards Act (MFLSA). The district court concluded that a bonus plan allowing payroll deductions for bonus amounts advanced but not earned precluded Life Time from claiming exemptions from the MFLSA as a matter of law. Because we conclude that the district court erred in interpreting the MFLSA, we reverse and remand for entry of judgment in favor of Life Time.

FACTS

Erdman and the class members were employed by Life Time in positions that Life Time treated as exempt from the requirements of the MFLSA. They earned base salaries and were eligible for annual bonuses based on the financial performance of various segments of the company. Although bonuses were not calculated finally until the end of the year, they received regular bonus advances based on year-to-date results. Life Time's written bonus plan provided that deductions could be made from base-salary payments to recover amounts advanced based on year-to-date results but not ultimately earned based on the year-end results. Life Time made deductions in accordance with this language in the bonus plan during four pay periods in November and December 2005. Although Erdman and other class members suffered deductions to the regular pay received in those particular workweeks, by year end they had received their full base salary plus the bonus actually earned for that year.

In March 2007, Erdman commenced this action against Life Time, asserting violations of the MFLSA.¹ The district court certified a class, and the parties brought cross-motions for summary judgment. The district court denied Life Time's motion for summary judgment, and granted Erdman's motion as to liability, reasoning that the bonus plans precluded Life Time from claiming exemptions from the MFLSA for the entire time period that they were in effect. The district court reserved for trial the issues of damages (calculation of overtime), attorney fees, costs, and willfulness. On Life Time's motion, the district court certified the summary-judgment order as presenting questions that are important and doubtful, and Life Time appeals.

ISSUE

Did the district court err by denying Life Time's motion for summary judgment?

ANALYSIS

An order denying a motion for summary judgment is appealable if the district court certifies that the questions presented are "important and doubtful." Minn. R. Civ.App. P. 103.03(i). This court independently reviews whether the questions are important and doubtful. Siewert v. No. States Power Co., 757 N.W.2d 909, 914 (Minn.App.2008). We recently addressed the standard to be applied:

To be doubtful, a question need not be one of first impression, but it should be one on which there is a substantial ground for a difference of opinion. A question is important if it has statewide impact, will likely be reversed, is dispositive of potentially lengthy proceedings, and will impose substantial harm if wrongly decided by the district court. Among these factors, significant weight attaches to whether reversal would terminate potentially lengthy proceedings.

Id. at 914-15 (internal quotations and citations omitted).

Because the district court did not identify in its order the questions certified, we issued an order construing the district court's order to adopt three lengthy questions articulated in Life Time's proposed order. Erdman has asked us to reconsider that construction, and she proposes alternative, equally lengthy, wording. We need neither iterate the competing formulations of the questions posed nor choose between them. The parties essentially agree that the issues for this court's consideration are: (1) does the Minnesota Payment of Wages Act, Minn.Stat. §§ 181.01 to .171 (2008) (PWA), specifically Minn.Stat. § 181.79, apply to Life Time's conduct in this case; (2) if so, are the class members limited to a remedy under section 181.79, or do they also have a remedy under the MFLSA, Minn.Stat. §§ 177.21 to .35 (2008); and (3) if recovery is available under the MFLSA, what is the scope of that remedy.

We agree that the issues raised here are important and doubtful for a number of reasons. First, a reversal of the district court's decision would end this litigation. Second, wage-and-hour claims are becoming more common in both state and federal courts. Third, the Minnesota Supreme Court has addressed the MFLSA in just one case, Milner v. Farmers Ins. Exch., 748 N.W.2d 608 (Minn.2008). There, the supreme court issued two rather limited holdings that are not relevant here. Milner, 748 N.W.2d at 615, 618. Neither the supreme court nor this court has addressed the impact of deductions from pay on an employer's ability to claim exemption from the act. Fourth, the Milner court declined to rely on federal precedent construing the Fair Labor Standards Act, 29 U.S.C. §§ 201-19 (2006) (FLSA), thereby creating a particular need for caselaw construing the MFLSA. See id. at 614. And finally, while the Milner decision recognizes a relationship between the MFLSA and the PWA, id. at 617, the effect of that relationship on the issues raised in this case is unclear.

This court considers two questions on appeal from summary judgment: (1) whether there are any genuine issues of material fact and (2) whether the lower court erred in the application of law. State by Cooper v. French, 460 N.W.2d 2, 4 (Minn.1990). If there are no genuine issues of material fact and the appeal turns on purely legal issues, our review is de novo. Progressive Specialty Ins. Co. v. Widness ex rel. Widness, 635 N.W.2d 516, 518 (Minn.2001). The interpretation of a statute is an issue of law, subject to de novo review. Milner, 748 N.W.2d at 613.

When interpreting statutes, our goal is to give effect to the legislature's intent. Id. When the language of a statute is clear, we apply its plain meaning. In re Buckmaster, 755 N.W.2d 570, 576 (Minn. App.2008) (citing Minn.Stat. § 645.16 (2006)). Agency rules also should be construed according to their plain meaning. See, e.g., St. Otto's Home v. Minnesota Dep't of Human Servs., 437 N.W.2d 35, 40 (Minn.1989) (explaining that no deference is owed to agency interpretation of unambiguous regulation).

"While statutory construction focuses on the language of the provision at issue, it is sometimes necessary to analyze that provision in the context of surrounding sections." Am. Family Ins. Group v. Schroedl, 616 N.W.2d 273, 278 (Minn. 2000); see also Baker v. Ploetz, 616 N.W.2d 263, 269 (Minn.2000) (observing that statutory sections within an act should be construed in light of each other). We may also appropriately consider the language of other statutes that address the same subject matter. Milner, 748 N.W.2d at 617.

Determining the viability of the certified class claim requires us to determine the application, if any, of the PWA and the MFLSA to the payroll deductions alleged. In relevant part, the PWA requires an employer to obtain written authorization from an employee before making deductions from the employee's wages for "lost or stolen property, damage to property, or to recover any other claimed indebtedness." Minn.Stat. § 181.79, subd. 1. The statute also provides that an employee who has suffered unauthorized deductions may recover in a civil action twice the amount of the unauthorized deduction. Id., subd. 2.

The MFLSA establishes minimum wage and overtime-pay requirements for employees covered by the act. Milner, 748 N.W.2d at 611. The MFLSA does not directly address deductions from wages, but it does exempt from overtime-pay requirements individuals who are "employed in a bona fide executive, administrative, or professional capacity." Minn.Stat. § 177.23, subd. 7(6). The act itself does not define employment in a "bona fide executive, administrative, or professional capacity," but it does authorize the Minnesota Department of Labor and Industry to promulgate rules to carry out the purposes of the act. Minn.Stat. § 177.28. Under those rules, individuals are employed in executive, administrative, or professional capacities if they perform certain types of duties and are paid a salary, which is defined to mean that an employee "is guaranteed a predetermined wage for each workweek." Minn. R. 5200.0211. See Minn. R. 5200.0190 (defining employment in executive capacity to require payment of a salary), .0200 (same for administrative capacity), .0210 (same for professional capacity). Thus, deductions are relevant because it is a defense to a claim for overtime pay under the MFLSA that an employee is exempt from the act, and improper deductions from pay may prevent an employer from claiming that an employee is exempt.

As noted above, in Milner, the court recognized a relationship between the MFLSA and the PWA:

While the MFLSA addresses minimum wage and hour standards, the PWA addresses how often wages must be paid and establishes penalties for wages that are paid late.... Thus, together, these acts provide a comprehensive statutory scheme for wages and payment in Minnesota and should be interpreted in light of each other.

748 N.W.2d at 617.

Having considered the statutory framework, we now turn to the certified questions. Because our resolution...