Knott v. Timothy O'Brien, LLC

• Docket Number: 2022AP1872
• Decision Date: 21 December 2023
• Parties: David Knott, Plaintiff-Appellant, v. Timothy B. O'Brien LLC, Defendant-Respondent.
• Court: Wisconsin Court of Appeals

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David Knott, Plaintiff-Appellant,
v.
Timothy B. O'Brien LLC, Defendant-Respondent.

No. 2022AP1872

Court of Appeals of Wisconsin, District IV

December 21, 2023

This opinion will not be published. See WIS. STAT. RULE 809.23(1)(b)5.

APPEAL from a judgment of the circuit court for Dane County No. 2020CV367: MARIO WHITE, Judge. Affirmed.

Before Blanchard, Graham, and Nashold, JJ.

Per curiam opinions may not be cited in any court of this state as precedent or authority, except for the limited purposes specified in WIS. STAT. RULE 809.23(3).

PER CURIAM.

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¶1 David Knott appeals a judgment that was entered in favor of his former employer following a jury trial on Knott's claim that he was wrongfully discharged in violation of public policy. On appeal, Knott takes issue with two aspects of the jury instructions. First, he contends that the circuit court erred when it declined to add language to the standard instruction that would have instructed the jury to apply the "substantial factor" standard when assessing causation. Second, he asserts that the court erred when it declined to instruct the jury on the purportedly preclusive effect of a final administrative agency determination about his claim for unemployment compensation benefits. We reject Knott's arguments and affirm the judgment.

BACKGROUND

¶2 Knott was employed as a wellness consultant at a nutrition store called Apple Wellness from 2013 until 2017. At all pertinent times, Apple Wellness was owned by Timothy B. O'Brien LLC, which was in turn owned by Timothy and Rebecca O'Brien.^[1] Apple Wellness terminated Knott's employment in February 2017, allegedly because he "engaged in a pattern of time clock manipulation."

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¶3 Knott contends that this alleged reason for his discharge was merely pretextual, and that the real reason Apple Wellness terminated his employment was that he filed a wage complaint with the state department of workforce development (DWD) several months prior to his termination. Based on this theory, Knott initiated this action in the Dane County Circuit Court, alleging that his discharge violated a fundamental and well-defined public policy. See Brockmeyer v. Dun & Bradstreet, 113 Wis.2d 561, 574, 335 N.W.2d 834 (1983) (providing a narrow exception to the employment-at-will doctrine, under which employees who are terminated in violation of certain fundamental and well-defined public policies may bring civil actions for wrongful discharge against their employers). Knott's case ultimately proceeded to a two-day jury trial, and the following facts are derived from the testimony and exhibits presented at trial.

¶4 As noted, Knott began working for Apple Wellness in 2013. During his employment, Knott was paid a base salary plus commissions. For purposes of wage laws governing overtime pay, Apple Wellness classified Knott as being exempt from overtime pay requirements.

¶5 According to the O'Briens, Knott was frequently tardy for his shifts. In 2016, Apple Wellness implemented a new policy that required its employees to clock in and out using computer software, and to be clocked in at least five minutes prior to the start of any shift.

¶6 Knott's annual performance review was scheduled for November 14, 2016. That morning, Knott accessed his time entries from his home and reviewed his work history. At trial, Knott testified that, in the course of this review, he discovered "extreme errors" in his recorded times, including dates when he had failed to clock out entirely, and he made retroactive changes to roughly twenty

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different time entries that he had recorded throughout the year. Knott testified that, in making these adjustments, he attempted to accurately reconstruct the hours that he worked by referencing other data points that were recorded in Apple Wellness's computer system. However, it is undisputed that Knott added clock-in and clock-out times on several holidays that he undisputedly did not work.

¶7 The parties disagree about whether Knott disclosed the adjustments he made to the O'Briens during his November 2016 performance review. Knott testified that he immediately informed them of the adjustments, which indicated he had worked more than 150 hours of overtime, and that the O'Briens "passed right over it." By contrast, the O'Briens denied that he disclosed the adjustments during his performance review; they instead contended that they did not discover the adjustments until several months later.

¶8 During the performance review, the O'Briens also provided Knott with a proposed new employment contract. One provision in the contract provided that, to the extent he was not clocked in five minutes before the start of his scheduled shift more than four times in a month, "[a]ny late occurrence [thereafter would] result in a $35 fine for each occurrence, to be taken from [Knott's] bonus for that month." Knott did not agree to those terms, which, he contended, violated state wage laws.

¶9 In early December 2016, Apple Wellness informed Knott that, based on his tardiness, it would deduct $105 from a discretionary bonus. Several days later, Knott initiated the first of four administrative claims with DWD that pertained to his employment. These claims are: the claim that he filed in response to the $105 deduction; a subsequent claim that was part of the same DWD file and related to his entitlement to overtime wages; a claim for unemployment

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compensation benefits that he filed following the February 2017 termination of his employment; and ultimately, a complaint alleging employment discrimination in violation of the Wisconsin Fair Employment Act.

¶10 In this first claim, which we refer to as the "improper deduction claim," Knott alleged that the deduction from his bonus violated WIS. STAT. § 103.455 (2021-22)^[2] (providing that an employer cannot make any deductions from an employee's wages for loss or faulty workmanship without a court order or the employee's consent). A DWD investigator determined that the deduction constituted an illegal withholding of wages.^[3]

¶11 In early January 2017, Knott emailed the same DWD investigator who handled the improper deduction claim to raise a number of additional issues pertaining to his employment. These issues included questions about his status as an employee who was exempt from overtime pay requirements and his possible entitlement to overtime pay. We refer to Knott's subsequent claim for unpaid overtime wages as the "overtime claim," and collectively to the improper deduction and overtime claims, which were handled as part of the same DWD file, as the "wage complaint."

¶12 In response to Knott's overtime claim, the investigator asked Apple Wellness for additional information about Knott's hours, pay structure, and duties. It appears that shortly thereafter, Apple Wellness acknowledged that Knott was entitled to some overtime pay and the DWD investigator facilitated a resolution

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between the parties regarding the amount Knott was entitled to receive based on the overtime hours that he worked.

¶13 Meanwhile, in the course of investigating the number of hours that Knott had worked, the O'Briens reviewed Knott's recorded time entries for the prior year. It was at that point, according to the O'Briens, that they discovered the numerous retrospective adjustments that Knott had made to his time clock entries just before his annual performance review.

¶14 The O'Briens confronted Knott about these adjustments on February 16, 2017. Knott testified the interaction was "incredibly brief and "very aggressive." According to Knott, he explained that he had made the adjustments to correct errors, and only to the extent that he could match the adjustments to other data points, but the O'Briens "essentially" told him that his reason for making the adjustments did not matter. Apple Wellness terminated Knott's employment later that day for "falsifying time records."

¶15 Shortly after his discharge, Knott filed a claim for unemployment compensation benefits ("the unemployment claim"). Apple Wellness opposed Knott's entitlement to benefits, alleging that he had been discharged based on "misconduct" or "substantial fault" in connection with his employment.^[4] An investigator issued an initial determination finding that Knott was entitled to benefits, which Apple Wellness appealed. Following an evidentiary hearing,

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DWD issued a final determination finding, among other things, that Apple Wellness did not prove that Knott "falsified any records" and, therefore, his conduct did not constitute "misconduct" or "substantial fault." The O'Briens did not seek judicial review of DWD's final determination, which we discuss in greater detail below.

¶16 Knott also filed a discrimination complaint with DWD's equal rights division ("the discrimination complaint"). He alleged, among other things, that Apple Wellness terminated his employment because he "previously filed a wage and hour complaint," and that this constituted discrimination in violation of Wisconsin's Fair Employment Act, WIS. STAT. § 111.322(2m)(a). The DWD investigator who was assigned to the case issued an initial determination, which found no probable cause that Apple Wellness violated the Fair Employment Act when it terminated Knott's employment. Among other things, the DWD investigator determined that Apple Wellness "articulated [a] legitimate nondiscriminatory reason[] for the ... discharge"-namely, Knott's alteration of his time records-and that Knott had not "provided information sufficient to show these reasons to be [a] pretext for discrimination based upon the wage complaint." Knott did not appeal or seek judicial review of the dismissal of his discrimination claim.

¶17 Knott then filed the circuit court case that is the subject of this appeal. In his complaint, Knott alleged that O'Brien had wrongfully discharged him in violation of the public policy evinced...