Fairmont Tool, Inc. v. Davis

• Decision Date: 22 November 2021
• Docket Number: 20-0684
• Parties: FAIRMONT TOOL, INC., Petitioner v. Adam J. DAVIS, Individually and on Behalf of Those Similarly Situated, Respondent
• Court: West Virginia Supreme Court

868 S.E.2d 737

FAIRMONT TOOL, INC., Petitioner

v.Adam J. DAVIS, Individually and on Behalf of Those Similarly Situated, Respondent

No. 20-0684

Supreme Court of Appeals of West Virginia.

Submitted: October 6, 2021

Filed: November 22, 2021

J. Robert Russell, Esq., David L. T. Butler, Esq., Shuman McCuskey Slicer PLLC, Morgantown, West Virginia, Counsel for the Petitioner.

James B. Stoneking, Esq., Jonathan R. Marshall, Esq., Bailey & Glasser LLP, Charleston, West Virginia, Matthew B. Hansberry, Esq., Hansberry Law Office, PLLC, Bridgeport, West Virginia, Counsel for the Respondent.

HUTCHISON, Justice:

In this appeal from the Circuit Court of Marion County, we consider a series of orders entered under the West Virginia Wage Payment and Collection Act, W. Va. Code § 23-5-1 to - 18 ("the WPCA"). The Legislature designed the WPCA to require an employer to regularly pay employees their full wages and restrict an employer's ability to withhold a portion of employees’ paychecks. In this appeal, we examine one such heavily regulated withholding: the authorized wage assignment. For an employee to properly assign wages to an employer, the WPCA specifies that there must be a writing that meets a list of conditions, and in the absence of any one of these conditions the assignment is invalid and unenforceable. For instance, the writing must identify the total amount due to and collectible by the employer through withholdings. The writing must contain statements that the assignment will not be in effect for more than one year and that three-fourths of the employee's wages are exempt from the assignment. And, the writing must show the assignment was accepted and signed by the employer. See W.Va. Code § 21-5-3(e) (2021). Prior to June 17, 2021, the WPCA also required written assignments to be notarized. See W.Va. Code § 21-5-3(e) (2008, 2015, and 2018).

In the instant case, an employer made withholdings from the wages of its employees that met the WPCA's definition of an assignment, but never procured from its employees a writing that complied with the conditions set in the WPCA. After an employee filed a class-action suit to recoup those withholdings, the employer entered into a written agreement stipulating to the method the circuit court would use to calculate certain damages if the circuit court declared the withholdings violated the WPCA. Thereafter, the circuit court entered an order finding the employer liable for violating the WPCA. In light of the stipulations on damages, the circuit court later entered orders that awarded the employees the wages improperly taken from their paychecks, liquidated damages, attorney's fees, and costs. The employer now appeals the circuit court's orders.

As we discuss below, we find no error and affirm the circuit court's rulings.

I. Factual and Procedural Background

Defendant Fairmont Tool, Inc., provides services to the oil and gas industry, often at the well pads of clients. Because of the hazardous nature of the work, the company requires employees to wear special equipment such as fire-retardant uniforms and safety boots. Fairmont Tool employs between 75 and 120 workers, depending on market demand. Plaintiff Adam J. Davis began working for Fairmont Tool in 2014 but, on January 3, 2017, Fairmont Tool terminated him from his employment.

On May 31, 2017, the plaintiff filed this lawsuit against Fairmont Tool. The plaintiff contended that Fairmont Tool unlawfully reduced his wages and the wages of other similarly situated employees, and he asked that the circuit court certify a class action. Specifically, he alleged that Fairmont Tool, in the five years prior to the filing of the complaint, had improperly taken assignments in the form of paycheck deductions¹ for uniforms, boots, tools and other protective equipment in violation of the West Virginia Wage Payment and Collection Act ("the WPCA").²

Fairmont Tool quickly admitted to making reductions to employees’ paychecks. In an interrogatory, the plaintiff asked whether Fairmont Tool had subjected employees’ pay to deductions for uniforms, boots, or other protective equipment in the five years prior to the filing of the complaint. On August 21, 2017, Fairmont Tool answered that it

has and does make certain deductions from some of its employees’ paychecks where the employees have voluntarily agreed to participate in a uniform service provided by a third-party vendor or have voluntarily charged boots or tools on Defendant's account, and with Defendant's consent, from a third-party vendor.

In a deposition, the president of Fairmont Tool also admitted the company made deductions from employees’ pay for "boots," "uniforms," and other merchandise. During discovery, the company produced spreadsheets documenting hundreds of deductions from employees’ paychecks for uniforms and "MDSE (Merchandise)."

Also on August 21, 2017, Fairmont Tool responded to the plaintiff's request for production of documents. The plaintiff asked Fairmont Tool to produce, for the five-year period preceding the filing of plaintiff's complaint, "a complete copy of all written wage assignments" permitting Fairmont Tool to make deductions from its employees’ paychecks for uniforms, boots, tools, or other merchandise. Fairmont Tool responded, "None."

Nine months later, Fairmont Tool amended its response to the plaintiff's request for production of documents. The company asserted that the deductions were not "an assignment of wages pursuant to the West Virginia [Wage] Payment and Collection Act. Consequently, it is the position of Fairmont Tool, Inc. that it does not possess any ‘written wage assignments’ with regard to its employees." However, Fairmont Tool then provided forty documents, each signed by a different employee between February 2015 and October 2017 and titled "Wage Deduction Authorization Agreement," which said:

I understand and agree that my employer, Fairmont Tool (the Company), may deduct money from my pay from time to time for reasons that fall into the following categories: ...

3. Installment payments on items purchased on my behalf by the Company (e.g. boots) or cash advances given to me by the Company; and, if there is a balance remaining when I leave the Company, the balance of such purchases or advances[.]

None of these forty writings was signed by the plaintiff; none contains language saying the agreement will not be in effect for more than one year; none specify the total amount to be collected by the employer; none say that three-fourths of the employee's paycheck will be exempt from deductions; none are signed by a representative of Fairmont Tool; and none are notarized.

On April 25, 2018, after substantial negotiation between counsel for the parties, a document was filed with the circuit court titled "The Parties’ First Set of Stipulations." The stipulations were signed that same day by counsel for the plaintiff and for Fairmont Tool. In this document, Fairmont Tool admitted that in the five years between July 1, 2012, and July 31, 2017, it had deducted money directly from employees’ paychecks to cover boots, uniforms, tools and other merchandise described by Fairmont Tool as "MDSE."

In the stipulations, the parties preserved their rights to argue whether the deductions from the employees’ paychecks were unlawful assignments of wages under the WPCA. However, and important to this appeal, the stipulations contain the parties’ agreement as to how the circuit court would calculate damages, if the circuit court determined that the deductions were unlawful wage assignments. The parties’ agreement provides that if the circuit court found that Fairmont Tool was liable for any "reductions to wages that occurred during the period from July 1, 2012, through June 10, 2015," then the circuit court would award liquidated damages "in the amount of three times each such reduction to wages" for that time period. Further, if Fairmont Tool was liable for any "reductions to wages that occurred during the period from June 11, 2015, through July 31, 2017," then the parties agreed that the circuit court was required to award liquidated damages equal to two times the reduction to wages that occurred in that time period. Finally, the parties stipulated that if Fairmont Tool were found liable, then the circuit court could award the plaintiff his attorney's fees and costs.

After agreeing to the stipulations, Fairmont Tool hired new counsel who promptly moved to withdraw from or rescind the agreement. The circuit court denied the motion. Fairmont Tool asked the circuit court to reconsider its ruling, but the circuit court ruled that no basis for a motion to reconsider exists under the law and that no good cause existed to disturb its prior ruling.

The plaintiff filed a motion for class certification. After briefing and argument by the parties, the circuit court entered orders conditionally certifying a class of current and former employees of Fairmont Tool. The class was defined as:

For the period from July 1, 2012, through July 31, 2017: All persons currently and/or formerly employed by the Defendant Fairmont Tool, Inc. in West Virginia who are not shareholders of Fairmont Tool, Inc. and who had their wages owed by Fairmont Tool, Inc. reduced by Fairmont Tool, Inc. relative to uniforms, model uniforms, and/or purchases categorized by Fairmont Tool, Inc. as MDSE, inclusive of, but not limited to, the purchase of boots and tools.

After mailing notices to prospective class members, 136 members agreed to join the class; 43 current and former employees declined to join.

The plaintiff subsequently moved for partial summary judgment. On June 21, 2019, the circuit court entered an order granting that motion with regard to the liability of Fairmont Tool. The court noted that the WPCA requires employers to pay employees their full wages, but it permits employees to assign a part of their wages to an employer if the assignment meets certain narrow, clearly defined conditions. In that regard, West Virginia...