Rice Lake Harley Davidson v. State Labor & Indus. Review Comm'n

• Decision Date: 16 September 2014
• Docket Number: No. 2014AP13.,2014AP13.
• Citation: 855 N.W.2d 882,357 Wis. 2d 621
• Parties: RICE LAKE HARLEY DAVIDSON, Petitioner–Appellant–Cross–Respondent, v. STATE OF WISCONSIN LABOR AND INDUSTRY REVIEW COMMISSION, Respondent–Respondent, Diane Mack, Respondent–Respondent–Cross–Appellant.
• Court: Wisconsin Court of Appeals

357 Wis.2d 621

855 N.W.2d 882

RICE LAKE HARLEY DAVIDSON, Petitioner–Appellant–Cross–Respondent^†

v.STATE OF WISCONSIN LABOR AND INDUSTRY REVIEW COMMISSION, Respondent–RespondentDiane Mack, Respondent–Respondent–Cross–Appellant.

No. 2014AP13.

Court of Appeals of Wisconsin.

Submitted on Briefs Aug. 19, 2014.

Opinion Filed Sept. 16, 2014.

On behalf of the petitioner-appellant-cross-respondent, the cause was submitted on the briefs of Michael D. Schwartz and Brandon M. Schwartz of Schwartz Law Firm, Oakdale, MN.

On behalf of the respondent-respondent-cross-appellant, the cause was submitted on the briefs of Peter J. Fox of Fox & Fox, S.C., Monona.

On behalf of the respondent-respondent, the cause was submitted on the brief of David C. Rice, assistant attorney general, and J.B. Van Hollen, attorney general.

Before HOOVER, P.J., STARK, J., and THOMAS CANE, Reserve Judge.

Opinion

STARK, J.

¶ 1 Rice Lake Harley Davidson appeals a circuit court order affirming a decision of the State of Wisconsin Labor and Industry Review Commission(LIRC).LIRC concluded Rice Lake Harley violated the Wisconsin Fair Employment Act (WFEA) by engaging in wage discrimination against its former employee, Diane Mack, on the basis of sex.

¶ 2 On appeal, Rice Lake Harley argues: (1) Mack's wage discrimination claim was time barred because it was not filed within 300 days after the alleged discrimination took place; (2) LIRC's decision that Rice Lake Harley discriminated against Mack was not supported by credible and substantial evidence; and (3) Mack is not entitled to attorney fees because she is not a prevailing party.We conclude Mack's wage discrimination claim was timely, pursuant to our decision in Abbyland Processing v. LIRC,206 Wis.2d 309, 557 N.W.2d 419(Ct.App.1996).We further conclude credible and substantial evidence supports LIRC's decision that Rice Lake Harley discriminated against Mack on the basis of sex.In addition, we conclude Mack was entitled to recover reasonable attorney fees.We therefore affirm as to all issues raised in Rice Lake Harley's appeal.

¶ 3 Mack cross-appeals, arguing the circuit court erroneously exercised its discretion when it awarded her only two-thirds of the attorney fees she requested.We agree with Mack that the court erroneously exercised its discretion.We therefore reverse in part and remand with directions that the court award Mack the full amount of her requested attorney fees.

BACKGROUND

¶ 4 Rice Lake Harley hired Mack to work as a motorcycle salesperson on July 9, 2003.Her employment was terminated on February 9, 2009.Mack filed a complaint with the Equal Rights Division of the Wisconsin Department of Workforce Development on March 23, 2009, alleging Rice Lake Harley unlawfully terminated her employment on the basis of sex.Mack also alleged Rice Lake Harley discriminated against her on the basis of sex by paying her less than a male colleague, Harold Dodge.Under the WFEA, it is unlawful for any employer to terminate an individual from employment or to discriminate against an individual in compensation based on the individual's sex.Wis. Stat. §§ 111.321,111.322(1),111.325,111.36(1)(a).¹

¶ 5 The Equal Rights Division issued an initial determination on August 18, 2009, finding no probable cause to believe Rice Lake Harley terminated Mack's employment on the basis of sex, but finding probable cause to believe Rice Lake Harley discriminated against her in compensation.Mack did not challenge the no-probable-cause finding regarding her unfair termination claim.On November 22, 2010, a hearing on Mack's wage discrimination claim was held before an administrative law judge (ALJ).The following facts are taken from the hearing transcript and exhibits.

¶ 6 Before being hired at Rice Lake Harley, Mack had worked for two years as the manager of a bar in Menomonie, making ten dollars per hour plus tips.She had owned and ridden a motorcycle for about two years, but she was not a member of any motorcycle club.She had never before lived or worked in Rice Lake.

¶ 7Aaron Miley, the general manager of Rice Lake Harley, hired Mack and set her starting salary at about $28,000 per year.The owner of Rice Lake Harley, Chris Brekken, was not involved in those decisions.In addition to selling motorcycles, Mack's duties at Rice Lake Harley included tracking inventory and completing financing applications for customers.In September 2004, Mack's annual salary increased to about $34,000.

¶ 8 In February 2004, Brekken hired Dodge as a sales manager at Rice Lake Harley at an annual salary of $56,000.²Dodge had lived in Rice Lake for over thirty years, was a longtime owner and rider of Harley–Davidson motorcycles, and was president of the local Harley Owners Group.Brekken testified he believed Dodge's experience with motorcycles and reputation in the local Harley community would attract customers to Rice Lake Harley.Brekken further asserted Dodge “was hired for more than just being a sales manager”—he was “an overall advisor[,]”“goodwill ambassador,” and “advocate” for the dealership.

¶ 9 Before being hired at Rice Lake Harley, Dodge was employed as a quality manager at Rice Lake Weighing Systems.Brekken testified he knew Dodge was involved in the ISO certification process at Rice Lake Weighing Systems, and he hired Dodge in part so that Dodge could help one of Brekken's other companies maintain its ISO certification.³Brekken testified he set Dodge's annual salary at $56,000 to match what Dodge was making at Rice Lake Weighing Systems.

¶ 10 Dodge ultimately failed to meet Brekken's expectations as sales manager.Consequently, in January 2005, Patrick Sterling was hired as sales manager, at an annual salary of $52,000.However, Dodge continued to work at Rice Lake Harley as a motorcycle salesperson and continued to receive an annual salary of $56,000.

¶ 11 In February 2006, Mack's salary decreased to about $24,000 per year plus commissions, and Dodge's salary decreased to $36,400 per year plus commissions.Mack's salary was raised to $27,040 per year plus commissions on March 20, 2007, and it remained at that level until her discharge.Kris Glinski, a male salesperson hired by Rice Lake Harley on March 17, 2007, was also paid $27,040 per year plus commissions.

¶ 12 Mack initially testified she did not know “for certain” that Dodge was making more money than her until after she filed her employment discrimination complaint.However, Mack later conceded she was told when Dodge was hired in February 2004 that he would receive double her pay.Mack testified she did not complain about the wage disparity while employed at Rice Lake Harley because she was afraid of losing her job.

¶ 13 Following the administrative hearing, Rice Lake Harley filed a brief arguing Mack's wage discrimination claim was untimely under Wis. Stat. § 111.39(1), which gives the Department of Workforce Development authority to “receive and investigate a complaint charging discrimination ... if the complaint is filed with the department no more than 300 days after the alleged discrimination ... occurred.”Rice Lake Harley argued the 300–day limitations period began to run in February 2004, when Rice Lake Harley made the decision to pay Dodge more than Mack and Mack “knew or reasonably should have known of the wrong that was committed against her.”Mack's wage discrimination complaint was not filed until March 23, 2009—over 300 days after February 2004.

¶ 14 The ALJ rejected Rice Lake Harley's argument, reasoning Mack's complaint was timely under the paycheck accrual rule set forth in the federal Lilly Ledbetter Fair Pay Act of 2009(Ledbetter Act).Pursuant to the Ledbetter Act,

[A]n unlawful employment practice occurs, with respect to discrimination in compensation in violation of this subchapter, when ... an individual is affected by application of a discriminatory compensation decision or other practice, including each time wages, benefits, or other compensation is paid, resulting in whole or in part from such a decision or other practice.

42 U.S.C. § 2000e–5(e)(3)(A).Thus, under the Ledbetter Act, “each paycheck that stems from a discriminatory compensation decision or pay structure is a tainted, independent employment-action that commences the administrative statute of limitations.”Noel v. The Boeing Co.,622 F.3d 266, 271(3rd Cir.2010).The ALJ determined Mack's complaint was timely “[u]nder the measurements of timeliness adopted in the [Ledbetter Act]” because it was filed within 300 days after Mack received a paycheck resulting from an allegedly discriminatory compensation decision.

¶ 15 The ALJ further concluded Rice Lake Harley violated the WFEA by discriminating against Mack in compensation on the basis of sex from January 2005, when Sterling replaced Dodge as sales manager, until February 2009, when Mack's employment was terminated.As a remedy, the ALJ awarded Mack the difference between her compensation and the average compensation received by Dodge and Glinski from March 23, 2007—two years before her complaint was filed—until February 9, 2009—the date her employment was terminated.⁴The ALJ also awarded Mack two-thirds of the attorney fees and costs she requested, or $26,235.The ALJ reasoned a one-third reduction in the fee award was appropriate because Mack failed to recover the entire amount of back pay she requested.

¶ 16 Rice Lake Harley petitioned for review of the ALJ's decision, which LIRC subsequently affirmed.However, LIRC rejected the ALJ's reasoning on the timeliness issue, stating the ALJ's reliance on the Ledbetter Act was “erroneous and should be clarified.”LIRC explained:

The fact that the [Ledbetter Act] was passed, in itself, does not change the interpretation of the WFEA.There is no ipso facto incorporation of the Federal Civil Rights Act in the [WFEA].Wisconsin courts must construe Wisconsin statutes as it is believed the Wisconsin legislature intended, regardless of how Congress may have intended comparable statutes.[L

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