Hisle v. Todd Pacific Shipyards Corp., No. 73357-1.

• Court: United States State Supreme Court of Washington
• Writing for the Court: FAIRHURST, J.
• Citation: 93 P.3d 108,151 Wash.2d 853
• Parties: Jerry L. HISLE, Michael D. Nicholas, Dale A. Riccetti, Jerry Roth, Ron L. Shoup, individually, and on behalf of the class they represent, Respondents, v. TODD PACIFIC SHIPYARDS CORPORATION, a Delaware corporation, Petitioner.
• Decision Date: 24 June 2004
• Docket Number: No. 73357-1.

93 P.3d 108
151 Wash.2d 853

Jerry L. HISLE, Michael D. Nicholas, Dale A. Riccetti, Jerry Roth, Ron L. Shoup, individually, and on behalf of the class they represent, Respondents,
v.
TODD PACIFIC SHIPYARDS CORPORATION, a Delaware corporation, Petitioner

No. 73357-1.

Supreme Court of Washington, En Banc.

Argued October 30, 2003.

Decided June 24, 2004.

93 P.3d 110

Talmadge & Stockmeyer, Philip Talmadge, Tukwila, for Petitioner

Karr Tuttle Campbell, Richard Omata, Jennifer Burkhardt, Seattle, Bruce Heller, Seth Berntsen, Seattle, for Respondents.

FAIRHURST, J.

In this case, we determine that Washington's Minimum Wage Act (MWA), ch. 49.46 RCW, applies to a collective bargaining agreement (CBA) containing a one-time retroactive payment based on an hourly wage of actual hours worked, and that this lawsuit is not preempted by section 301 of the Labor Management Relations Act of 1947, Pub. Law No. 101, ch. 120, 61 Stat. 136 (1947) (LMRA), codified at 29 U.S.C. § 185(a), or barred by res judicata. We affirm the Court of Appeals and grant respondents costs and attorney fees.

I. FACTS

Petitioner, Todd Pacific Shipyards Corporation, constructs and repairs marine vessels. Respondents, Jerry L. Hisle, Michael D. Nicholas, Dale A. Riccetti, Jerry Roth and Ron L. Shoup are employees of Todd (hereinafter collectively Hisle). Todd and Puget Sound Metal Trades Council (PSMTC), a union representing Todd's employees, entered into a CBA covering all production, repair, and maintenance performed at Todd's Seattle facility. In February 1996, Todd and PSMTC commenced negotiations for a CBA to succeed the one due to expire later that year. After the Todd employees rejected three different agreements proposed by Todd and the unions representing its employees,¹ Todd and PSMTC referred the matter to an arbitrator. Based upon a stipulation by Todd and PSMTC, the arbitrator authorized one of the agreements that the Todd employees previously rejected.² The agreement contained the following provision:

Wage and Fringe Increase Effective 8-1-98 $.61/hour Wage/Fringe

This increase will be applied to all Schedule "A" rates listed above except Firewatch.

Retroactive payments of $.60 for each non-Washington State Ferry Project attendance hour from August 1, 1996 until the execution date of the contract (less applicable employee deductions) shall be made to all non-Washington State Ferry Project

93 P.3d 111

employees that were actively employed on the execution date of the contract or had seniority rights as of the execution date of the contract.

Clerk's Papers (CP) at 232. Todd issued checks to eligible employees at the rate of $.60 per attendance hour³ without regard to whether the hours were regular or overtime.

Two hundred Todd employees (including the named respondents in this case) then filed a complaint against PSMTC and Todd in the United States District Court seeking to nullify the CBA. Adams v. Puget Sound Metal Trades Council, AFL-CIO & Todd Pac. Shipyards Corp., No. C98-0205R (hereinafter Adams). The first cause of action asserted that PSMTC "violated membership ratification requirements of applicable union constitutions and by-laws" when it submitted to the arbitrator a CBA that the employees previously rejected, and that Todd knew or should have known that PSMTC exceeded its authority in submitting the agreement. CP at 21. The second cause of action asserted that PSMTC (or PSMTC's actions) breached its duty of fair representation.

Todd counterclaimed, alleging that if the employees prevailed, it was entitled to repayment of all wage increases and benefits it had paid under the new CBA. Similarly, PSMTC's answer asserted that the Todd employees were estopped from nullifying the new CBA because they had already received material benefits thereunder. PSMTC and the Todd employees signed a settlement agreement and release whereby the employees agreed to dismiss with prejudice the "Action, and all claims or other causes of action asserted therein," CP at 140, PSMTC agreed not to ratify an agreement without the approval of Todd's employees, and both PSMTC and Todd's employees agreed to release "all claims, demands, liabilities, and causes of action of every kind stemming from or any way related to the claims raised in this Action." CP at 141. In response to the settlement, Todd dismissed its counterclaim.

Respondents and 877 other like-situated employees worked overtime hours during the period covered by the retroactive payment, August 1, 1996, and the execution date of the CBA. Hisle brought this action against Todd in King County Superior Court alleging that Todd's failure to pay time and one-half for overtime hours violated the MWA and sought class certification. The parties mainly disagreed about the characterizations and/or effect of the retroactive payment. Todd argued that it and PSMTC, as the parties to the CBA, intended the retroactive payment to be a ratification inducement⁴ and that no overtime pay was due because the MWA does not apply to a ratification inducement. Hisle argued that regardless of the retroactive payment's characterization, the MWA overtime provisions applied to the retroactive payment as a matter of law because it was tied to hours worked.

Both parties moved for summary judgment. The trial court rejected Hisle's motions for class certification and summary judgment and granted Todd's motion for summary judgment. It also dismissed Hisle's lawsuit with prejudice, finding that it was preempted by section 301 of the LMRA, and barred by res judicata and the Adams settlement agreement.

Hisle appealed and the Court of Appeals reversed the trial court orders on the competing summary judgment motions. Hisle v. Todd Pac. Shipyards Corp., 113 Wash.App. 401, 54 P.3d 687 (2002). The Court of Appeals

93 P.3d 112

found the MWA entitled Hisle to overtime pay for the retroactive period, id. at 421-26, 54 P.3d 687, found that the case was not preempted by section 301 of the LMRA, id. at 417-20, 54 P.3d 687, or barred by res judicata. Id. at 410-14, 54 P.3d 687. The Court of Appeals also remanded the motion for class certification and awarded Hisle attorney fees on appeal. Id. at 427, 430, 54 P.3d 687.⁵

We granted Todd's motion for discretionary review. Hisle v. Todd Pac. Shipyards, Corp., 149 Wash.2d 1017, 72 P.3d 761 (2003). We affirm the Court of Appeals on all three issues and award Hisle attorney fees.

II. STANDARD OF REVIEW

This court reviews summary judgment orders de novo, performing the same inquiry as the trial court. Kruse v. Hemp, 121 Wash.2d 715, 722, 853 P.2d 1373 (1993). In conducting this inquiry, this court must view all facts and reasonable inferences in the light most favorable to the nonmoving party. City of Lakewood v. Pierce County, 144 Wash.2d 118, 125, 30 P.3d 446 (2001). Summary judgment is proper where there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. CR 56(c). "A material fact is one upon which the outcome of the litigation depends, in whole or in part." Barrie v. Hosts of Am., Inc., 94 Wash.2d 640, 642, 618 P.2d 96 (1980).

III. ANALYSIS

A. The Overtime Provisions of the MWA Apply to the Retroactive Payment Contained in the CBA Signed by Todd and PSMTC

Whether the MWA applies to retroactive payments contained in collective bargaining agreements is an issue of first impression in Washington. Hisle, 113 Wash.App. at 429, 54 P.3d 687. Consistent with Washington's status as a pioneer for protection of employee rights, Drinkwitz v. Alliant Techsystems, Inc., 140 Wash.2d 291, 300, 996 P.2d 582 (2000), the MWA provides that "no employer shall employ any of his employees for a work week longer than forty hours unless such employee receives compensation for his employment in excess of the hours above specified at a rate not less than one and one-half times the regular rate at which he is employed." RCW 49.46.130(1). "Regular rate" is "the hourly rate at which the employee is being paid, but may not be less than the established minimum wage rate." WAC 296-128-550. This court found that the legislature "intended to allow a broad and flexible interpretation of the term [regular rate] so long as the purposes of the Washington Minimum Wage Act are satisfied." Inniss v. Tandy Corp., 141 Wash.2d 517, 532, 7 P.3d 807 (2000). Although employees and employers may not bargain away these minimum requirements, they are free to bargain collectively "in order to establish wages or other conditions of work in excess of the applicable minimum." RCW 49.46.110. Wages are defined as "compensation due to an employee by reason of employment." RCW 49.46.010(2).

To support their opposing positions, both Todd and Hisle cite Minizza v. Stone Container Corp., a Fair Labor Standards Act of 1938 (FLSA), 29 U.S.C. §§ 201-219, case.⁶ Minizza v. Stone Container Corp. Corrugated Container Div. E. Plant, 842 F.2d 1456 (3rd Cir.1988). Todd argues that Minizza explains that the purpose of the retroactive payment supersedes the manner in which it is calculated. Pet. for Review at 10. Hisle argues that Minizza explains that payments tied to hours worked are subject to overtime requirements. Answer to Pet. for Review at 13.

Minizza involved a ratification inducement of two lump sum payments ($750 and $500). Minizza, 842 F.2d at 1458. To be eligible for the first payment, an employee had to have

93 P.3d 113

active employee status for three months prior to the payment. Id. To be eligible for the second payment, an employee had to have such status for six months prior to the payment. Id. Because the payments were not tied to hours worked or services rendered, the Minizza court found that the payments were not made as compensation for hours of employment which satisfied the 29 U.S.C. § 207(e)(2) exception. Id. at 1462. Therefore, overtime did not apply. Id.

Minizza is not directly on point because it limited itself to its facts, id. at 1463, involved lump sum...