Rice v. Multimedia, Inc.

• Decision Date: 03 November 1994
• Docket Number: No. 24216,24216
• Court: South Carolina Supreme Court
• Parties: 2 Wage & Hour Cas.2d (BNA) 1149 James Paul RICE, Appellant-Respondent, v. MULTIMEDIA, INC., Respondent-Appellant. . Heard

Page 381

456 S.E.2d 381

2 Wage & Hour Cas.2d (BNA) 1149

James Paul RICE, Appellant-Respondent, v. MULTIMEDIA, INC., Respondent-Appellant.

No. 24216.

Supreme Court of South Carolina.

Heard Nov. 3, 1994.

Decided March 27, 1995.

William McBee Smith, Spartanburg, for appellant-respondent.

William D. Herlong, Greenville, for respondent-appellant.

CHANDLER, Chief Justice:

Appellant/Respondent James Paul Rice (Rice) and Respondent/Appellant Multimedia, Inc. (Multimedia) appeal a jury verdict awarding Rice partial recovery in his action for wages due. We affirm.

FACTS

In 1983, Rice was hired as a radio advertising salesperson for WFBC AM/FM, a division of Multimedia. In 1989, Rice also began employment as National Sales Manager for the Clemson Sports Network (CSN), another division of Multimedia. In June 1990, he was terminated.

Rice filed suit, demanding payment for commissions due on seven contracts, three of which covered local advertising for WFBC and four of which covered advertising for CSN. WFBC's employee handbook provided that sales commissions would be paid to a departing employee only for those advertisements sold by the employee and actually broadcast through the end of the month in which the employee worked his last day. Pursuant to this departure policy, Multimedia refused to pay commissions on the above seven contracts since the advertisements had not been broadcast.

Trial Court granted Multimedia directed verdict on the three contracts covering local advertising for WFBC. The jury returned a verdict for Rice on the remaining contracts for violation of the Wage Payment Act ¹, awarding damages of $16,605.45. It also found Multimedia guilty of breach of contract, but awarded no damages to Rice.

Pursuant to § 41-10-80(C) of the Wage Payment Act, Rice petitioned for treble damages and attorney's fees. Trial Court denied the petition for treble damages and awarded partial attorney's fees. Both Rice and Multimedia appeal.

ISSUES

A. Rice's Appeal:

1. Was Rice entitled to treble damages pursuant to S.C.Code Ann. § 41-10-80(C)?

2. Is Multimedia's commission policy void as against public policy?

3. Was Rice entitled to an award of full attorney's fees?

B. Multimedia's Appeal:

1. Did WFBC's departure policy apply to the four contracts covering advertising on CSN, thereby entitling Multimedia to directed verdict?

2. Was Rice entitled to recovery under the Wage Payment Act?

3. Was Rice entitled to attorney's fees?

DISCUSSION

A. Rice's Appeal

1. Treble Damages

Section 41-10-80(C) of the Wage Payment Act states:

In case of any failure to pay wages due to an employee as required by Section 41-10-40 or 41-10-50 the employee may recover in a civil action an amount equal to three times the full amount of the unpaid wages, plus costs and reasonable attorney's fees as the court may allow. Any civil action for the recovery of wages must be commenced within three years after the wages become due. [Emphasis supplied].

Trial Court declined to treble the damages, holding that the provision did not apply to employers who withhold wages in good faith. Rice contends that the treble damage provision is mandatory, not discretionary and, therefore, is not subject to any good faith exceptions. We disagree.

It is well settled that the words of a statute will be given their plain and ordinary meaning. Miller v. Doe, 441 S.E.2d 319 (1994). Here, the statute explicitly provides that the employee "may" recover treble damages. "The use of the word 'may' signifies permission and generally means that the action spoken of is optional or discretionary." State v. Wilson, 274 S.C. 352, 356, 264 S.E.2d 414, 416 (1980). Thus, by using "may", rather than "shall", the legislature has provided that the penalty is discretionary with the judge. This interpretation accords with the purpose of the Wage Payment Act, to wit: to protect employees from the unjustified and wilful retention of wages by the employer. The imposition of treble damages in those cases where there is a bona fide dispute would be unjust and harsh. See Bradshaw v. Jayco Enterprises, 212 Kan. 206, 510 P.2d 174 (1973); Klondike Industries Corp. v. Gibson, 741 P.2d 1161 (Alaska 1987).

In Apache East, Inc. v. Wiegand, 119 Ariz. 308, 580 P.2d 769 (Ct.App.1978), the Court of Appeals of Arizona reached the same conclusion that an employer is not liable for penalties under a wage payment statute when there is a good faith dispute between employee and employer. ² We find the language of Apache East compelling here:

As a policy matter this appear just to all parties. If there is a dispute over unpaid wages the employer acts at his peril and the court in its discretion may award treble damages when the withholding was unreasonable and there was no good faith wage dispute. However, there are some wage disputes when the issue may involve a valid close question of law or fact which should properly be decided by the courts. We do not believe the legislature intended to deter the litigation of reasonable good faith wage disputes; we do believe the legislature intended to punish the employer who forces the employee to resort to the court in an unreasonable or bad faith wage dispute.

119 Ariz. at 312, 313, 580 P.2d at 773, 774.

Such an interpretation accords with precedent holding that the employer is protected from penalties if there is a good faith dispute over wages allegedly due. In Wynne v. Seaboard Air Line Railway, 96 S.C. 1, 79 S.E. 521 (1913), an action for wages under § 3812 of the Civil Code of 1912, the Court implied a good faith provision into the statute and held that an employer should not be penalized under the statute for failure to pay wages upon assertion of a valid defense to payment. Similarly, in Linder v. Paramount Acceptance Corp., 291 S.C. 539, 354 S.E.2d 567 (Ct.App.1987), an action for wages under the former § 41-11-170 (now repealed and replaced by the Wage Payment Act), the employer was permitted to assert the affirmative defense of a good faith dispute.

Rice cites Prevatte v. Asbury Arms, 302 S.C. 413, 396 S.E.2d 642 (Ct.App.1990), in which the Court of Appeals construed similar language in the Landlord and Tenant Act as mandatory, not discretionary. Since the Landlord and Tenant Act is of quite different subject matter than the Wage Payment Act, Prevatte is not controlling here. See Spartanburg County v. Arthur, 180 S.C. 81, 185 S.E. 486 (1936) (Court should interpret statute based on similar language in other statutes dealing with same or similar subject matter).

We hold that the treble damages provision of § 41-10-80(C) is not mandatory. Here, Trial Court, finding no evidence that Multimedia acted intentionally or in bad faith, refused to award treble damages. We find no abuse of discretion in this ruling.

2. Public Policy

Rice contends that WFBC's departure policy, whereby a departing employee is entitled to commissions only for advertisements sold and actually broadcast prior to leaving, is void as against public policy. He argues that the departure policy violates the Wage Payment Act since it determines, by private agreement, what wages are "due" under the Act. We disagree.

"A sound public policy requires the enforcement of contracts deliberately made, which do not clearly contravene some positive law or rule of public morals.... Courts should not annul contracts on doubtful grounds of public policy. In such matters it is better that the legislature should first speak." Warren v. Pilgrim Health & Life Ins. Co., 217 S.C. 453, 456, 60 S.E.2d 891, 893 (1950) (quoting Crosswell v. Conn. Indemnity Assoc., 51 S.C. 103, 28 S.E. 200 (1897)). An employee and employer can set forth by contract the terms for payment of commissions. Moss v. Porter Brothers, Inc., 292 S.C. 444, 357 S.E.2d 25 (Ct.App.1987).

Here, Multimedia explained that its departure policy is fairly standard in the broadcast advertising business. In order to ensure that the salesperson gives continuing service to the client after the sale, the commissions are withheld until the advertisement is actually broadcast.

Multimedia's departure policy establishes the manner in which it will pay sales commissions. It is not arbitrary nor does not violate any law. Accordingly, we agree with the Trial Court that it is not void as against public policy.

3. Attorney's Fees

Rice petitioned the trial court for attorney fees in the amount of $64,000. The trial court limited the amount of attorney's fees to $32,100 since Rice prevailed only in part. See Baron Data Systems, Inc. v. Loter, 297 S.C. 382, 377 S.E.2d 296 (1989). Rice contends that this was error. We disagree.

Here, the trial court thoroughly addressed each of the Baron factors in determining the award of attorney's fees. We find no abuse of discretion.

B. Multimedia's Appeal

1. Directed Verdict

Multimedia contends that Rice was an employee of WFBC at all times and, therefore, was subject to its departure policy concerning commissions on all the contracts. It argues that it was entitled to directed verdict on the four contracts Rice negotiated for CSN advertising. We disagree.

It is well settled that in considering a ...