Hernandez v. Precision Drywall, Inc.
| Decision Date | 31 October 2011 |
| Docket Number | 65453-5-I |
| Court | Washington Court of Appeals |
| Parties | ISAIAS RAMIREZ and MARIO HERNANDEZ, on behalf of themselves and all others similarly situated, Respondents, v. PRECISION DRYWALL, INC., a Washington corporation, Defendant, JAMES LEA, individually, and the marital community of JAMES LEA and JANE DOE LEA; DENNIS LEA, individually, and the marital community of DENNIS LEA and JANE DOE LEA; and KELLY WASKIEWICZ, individually, and the marital community of KELLY WASKIEWICZ and JOHN DOE WASKIEWICZ, Appellants. |
UNPUBLISHED OPINION
James Lea, Dennis Lea, and Kelly Waskiewicz appeal from the judgment entered on jury verdicts finding that they, officers of Precision Drywall, Inc., are liable for violations of certain wage and hour laws. They additionally appeal from the trial court's grant of partial summary judgment in favor of the Precision Drywall workers who brought this class action lawsuit.
Because the trial court applied an incorrect definition of "employer" in determining on partial summary judgment that James Lea, Dennis Lea, and Kelly Waskiewicz are individually liable for improper deductions from employee wages, we vacate the portion of the subsequently-entered judgment awarding damages based upon the unlawful wage deductions. However, we determine that the other claims of error asserted on appeal are without merit. Accordingly, we affirm the remainder of the judgment.[1]
This case involves egregious violations of our state's overtime compensation and wage deduction laws for which a jury awarded more than $4.1 million to an aggrieved class of drywall construction workers. The class includes more than 300 current and former employees of Precision Drywall, Inc. The trial court entered the $4.1 million judgment on the jury's verdicts against Precision Drywall and three of its corporate officers, James Lea, Dennis Lea, and Kelly Waskiewicz.
Brothers James Lea and Dennis Lea are the sole owners of Precision Drywall, Inc., each owning 50 percent of the corporation's stock.[2] During the relevant period, James Lea acted as the corporation's president and was "responsible for running Precision Drywall's business." Report of Proceedings (RP) at 1576. He managed the corporation's finances and determined its compensation policies, including the policy whereby Precision Drywall workers were paid based only on the square footage of drywall installed and finished, rather than on the number of hours that they worked. Dennis Lea acted as the corporation's vice president and "help[ed] run the business, " including by managing the finances and determining how workers were paid. RP at 1680. He knew that the workers were paid by square footage of drywall installed and that the hours that they worked were not tracked.
Waskiewicz James Lea's daughter, acted as the corporate secretary and treasurer until late 2008, after this lawsuit was filed. She was then removed from her position as an officer of the corporation because James Lea "said it was best, " though none of her duties changed. RP at 1214. Waskiewicz was the primary personnel official, as she was responsible for maintaining the employment records, processing payroll signing payroll checks, and handling payroll deductions. She "touch[ed] every one of the timecards that [came] into the office, for purposes of payroll processing." RP at 1550. Only Waskiewicz and the Lea brothers had authority to sign checks on behalf of the corporation. She was also responsible for signing a variety of official documents on the corporation's behalf.
The case commenced on August 1, 2008, when Isaias Ramirez and Mario Hernandez filed a proposed class action lawsuit on behalf of a class of drywall construction workers (referred to herein as the workers) against Precision Drywall, the Lea brothers, and Waskiewicz, alleging that the defendants had failed to record and pay employees for overtime work, failed to provide employees with rest and meal breaks, and made unlawful deductions from employee wages.
On October 23, 2009, the workers filed a motion for partial summary judgment, seeking an order establishing that the defendants had violated certain wage and hour laws. They alleged, among other such violations, violations for unlawful deductions from their wages for tool expenses.[3] Specifically, the workers alleged that Precision Drywall, the Lea brothers, and Waskiewicz were liable for violations of Washington Administrative Code (WAC) 296-126-028, which limits an employer's authority to make wage deductions from an employee's wages.[4] They contended that the Lea brothers and Waskiewicz were individually liable for the violations because they meet the definition of "employer" set forth in the Washington Minimum Wage Act (MWA), chapter 49.46 RCW, which provides that "employer" includes "any person or group of persons acting directly or indirectly in the interest of an employer in relation to an employee." RCW 49.46.010(4).[5]
The trial court granted the workers' motion in part. The court ruled that the Lea brothers and Waskiewicz were individually liable "as employers and officers of a closely held corporation" for the violations found by the court "because they each acted directly or indirectly in the interest of employer . . . Precision
Drywall . . . in relation to the [workers]." Clerk's Papers (CP) at 575. The trial court further found that the defendants had violated WAC 296-126-028 by "deducting from the wages of [the workers] the costs of tools without advance written authorization, for deriving a financial benefit from those deductions, and for failing to furnish [the workers] with statements itemizing those deductions openly and clearly." CP at 575. Although the workers had additionally sought an order that the violations alleged had been committed willfully—thus establishing that they were entitled to exemplary damages pursuant to RCW 49.52.050 and RCW 49.52.070[6]—the trial court determined that material facts were in dispute regarding the willfulness of the violations found. Thus, the court reserved for trial the issue of damages, including whether exemplary damages were warranted due to willful commission of the violations.
The case thereafter proceeded to trial during a five-week period in March and April 2010. The workers presented to the jury issues beyond those set forth in their prior motion for partial summary judgment. In addition to the claim for unlawful tool deductions, the workers asserted, pursuant to the MWA, a claim for failure to pay overtime wages and pursuant to the industrial welfare act (IWA), chapter 49.12 RCW, a claim for failure to provide rest breaks. The workers also alleged that the defendants—Precision Drywall James Lea, Dennis Lea, and Kelly Waskiewicz—had committed the alleged violations willfully, thus warranting the imposition of exemplary damages pursuant to RCW 49.52.070.
At the close of the evidence, the jury was instructed as to the trial court's ruling on partial summary judgment that the Lea brothers and Waskiewicz were individually liable for the tool deduction violations and that Precision Drywall was also so liable. The jury was further instructed that it was required to accept that ruling as true. Because, with regard to the workers' wage deduction claim, the trial court reserved for trial only the issue of willfulness and damages the jury was asked, as to that claim, only whether the defendants had "violate[d] Washington law by willfully deducting tool expenses from the wages of [the workers]." CP at 584 (emphasis added).
Because the overtime wage claim and the rest period claim were not before the trial court on partial summary judgment—and, thus, no preliminary ruling as to liability for such violations had been made—the jury was asked, as to each defendant, both whether the defendant was liable for the violation and whether the defendant had committed the violation willfully, thus entitling the workers to exemplary damages. For instance, with regard to the overtime wage claim, the jury was first asked, "Did [the defendant] violate Washington's overtime compensation laws with respect to the Class members?" CP at 580-81. Then, the jury was asked, again as to each defendant individually, "Did [that defendant] willfully fail to pay overtime compensation to Class members?" CP at 580-81. The jury was instructed to answer the second question as to each claim only if it had answered the first question in the affirmative. In order to determine that any defendant had committed either violation, the jury was additionally instructed that it must find that the defendant was an "employer" of the workers.
After deliberating, the jury found that Precision Drywall and the Lea brothers had, in violation of our state's overtime compensation law, willfully failed to pay overtime compensation to the workers. Although the jury found that Waskiewicz had violated the overtime compensation law, it found that she had not done so willfully. Because the trial court had ruled on partial summary judgment that all of the defendants were liable for violating the wage deduction law, the only question before the jury with regard to that claim was whether they had done so willfully. The jury found that Precision Drywall and the Lea brothers had willfully made the unlawful wage deductions, but it found that Waskiewicz had not. Finally, the jury found in favor of all defendants on the rest period violation claim.
The jury's verdicts determined the workers' damages to be $1, 036, 143.83 for unpaid overtime wages and $14, 493.45 for unlawful wage deductions. The trial court subsequently entered a judgment on the verdicts, awarding to the workers (1) the actual damages found by the jury for the overtime and wage deduction claims; (2) exemplary...
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