Sands v. Menard, Inc.

• Decision Date: 26 March 2013
• Docket Number: No. 2012AP286.,2012AP286.
• Citation: 2013 WI App 47,831 N.W.2d 805,347 Wis.2d 446
• Parties: Dawn M. SANDS, Plaintiff–Appellant–Cross–Respondent, v. MENARD, INC., Defendant–Respondent–Cross–Appellant.
• Court: Wisconsin Court of Appeals

347 Wis.2d 446

831 N.W.2d 805

2013 WI App 47

Dawn M. SANDS, Plaintiff–Appellant–Cross–Respondent,

v.MENARD, INC., Defendant–Respondent–Cross–Appellant.

No. 2012AP286.

Court of Appeals of Wisconsin.

Submitted on Briefs Feb. 26, 2013.

Opinion Filed March 26, 2013.

On behalf of the plaintiff-appellant-cross-respondent, the cause was submitted on the briefs of John P. Richie of Richie Wickstrom and Wachs, LLP, Eau Claire; and Charles K. Maier, Daniel R. Shulman, Julie L. Boehmke and Jeremy L. Johnson of Gray, Plant, Mooty, Mooty & Bennett, P.A., Minneapolis, MN.

On behalf of the defendant-respondent-cross-appellant, the cause was submitted on the briefs of Michael J. Modl of Axley Brynelson, LLP, Madison; Stephanie L. Finn of Herrick & Hart, S.C.; and Michael D. Freeborn, Brian P. Norton and Michael P. Kornak of Freeborn & Peters LLP, Chicago, IL.

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

CANE, J.

[347 Wis.2d 453]¶ 1 This case is before us for the second time. In a previous appeal, we affirmed a circuit court judgment confirming an arbitration award that ordered Menard, Inc., to reinstate its former employee, Dawn Sands, to her previous position with the company after an unlawful termination. The supreme court reversed our decision, concluding that reinstatement was an inappropriate remedy under the circumstances. The court remanded the case to the circuit court with directions to determine an appropriate front pay award, in lieu of reinstatement. On remand, the circuit court refused to take any additional evidence on the issue of front pay. In addition, the court summarily denied Menard's two Wis. Stat. § 806.07(1)(h)¹ motions, which sought relief from the judgment confirming the arbitration award. Based on the record before the arbitration panel, the court awarded Sands $603,333 in front pay. It also awarded her $576,469 in attorney fees. Sands appeals, and Menard cross-appeals.

¶ 2 We conclude the circuit court properly denied Menard's first Wis. Stat. § 806.07(1)(h) motion, but it erred by refusing to consider Menard's second § 806.07(1)(h) motion. At a minimum, the court should have determined whether Menard's second motion was brought within a reasonable time, and whether the allegations in the motion, if true, would have entitled Menard to relief. If so, the court should have held a hearing to determine the truth or falsity of Menard's allegations. Accordingly, we reverse the judgment awarding Sands front pay and attorney fees, and we remand for the circuit court to consider the merits of Menard's second § 806.07(1)(h) motion.

[347 Wis.2d 454]¶ 3 Because we reverse and remand for consideration of Menard's second Wis. Stat. § 806.07(1)(h) motion, it is arguably unnecessary for us to address the parties' remaining arguments. However, because the parties raise issues that will arise on remand if the circuit court denies Menard's§ 806.07(1) motion, we choose to address them in the interest of judicial efficiency. Specifically, both parties argue the circuit court erred by failing to hold an evidentiary hearing on the issue of front pay. In the event the circuit court grants Menard relief under § 806.07(1)(h), this issue will be moot. But, if the court denies Menard's second § 806.07(1)(h) motion, we agree with the parties that the court should hold an evidentiary hearing on the amount of front pay to which Sands is entitled. At that hearing, both Sands and Menard may present any evidence relevant to determining an appropriate front pay award.

¶ 4 In addition, Menard challenges the circuit court's attorney fee award. We reject Menard's argument that Sands is not entitled to attorney fees because she was not a “prevailing party” in Menard's appeal to the supreme court. Nevertheless, we agree with Menard that the circuit court used an improper method to calculate the amount of attorney fees Sands could recover. The court's attorney fee award therefore constitutes an erroneous exercise of discretion.

BACKGROUND ²

¶ 5 Menard hired Sands as its “executive general counsel” in 1999. Sands worked in Menard's in-house legal department until March 2006, when Menard terminatedher employment. After her termination, Sands maintained that Menard had paid her less than comparable male employees, in violation of the Equal Pay Act,³ and had retaliated against her for asserting her right to equal pay, contrary to the Equal Pay Act, Title VII of the Civil Rights Act of 1964,⁴ and the Wisconsin Fair Employment Act. ⁵ Settlement discussions failed, and the parties agreed to submit Sands' claims to binding arbitration.

¶ 6 On October 19, 2007, the arbitration panel found in favor of Sands. It awarded her $267,108 in back pay, and an equal amount of liquidated damages. ⁶ Sands was also awarded $100,000 in compensatory damages for emotional distress, $900,000 in punitive damages, and $129,120.25 in attorney fees.

¶ 7 In addition, the panel ordered Menard to reinstate Sands to her former position within thirty days. Sands had asked the panel to award two years' front pay, rather than reinstatement. In fact, in a brief to the panel, she stated that “no reasonable person would entertain reinstatement as a possibility” under the circumstances. The panel conceded that the hostility between Sands and Menard weighed against reinstatement, and it acknowledged that “[w]hether to award reinstatement or front pay to Sands is a difficult decision.” Nonetheless, the panel ultimately determined reinstatement was appropriate, on the ground that reinstatement “is the favored remedy under the law.” The panel also noted that failure to reinstate Sands would “in some sense, reward the company for its mistreatment of her and ... send the wrong message to company employees who otherwise might be inclined to make meritorious complaints about unlawful conduct occurring within the company.”

¶ 8 Menard paid Sands the damages and attorney fees awarded by the arbitration panel. It refused, however, to reinstate her. Sands subsequently moved the circuit court to confirm the arbitration award. Menard, in turn, moved to vacate the award. In addition to challenging the award as a whole, Menard specifically attacked the reinstatement provision. The circuit court confirmed the award.

¶ 9 Menard then appealed, challenging only the panel's decision to award reinstatement. This court affirmed, concluding the panel's reinstatement order rested on substantial authority and the panel did not manifestly disregard the law. See Sands v. Menard, Inc., 2009 WI App 70, ¶¶ 10–11, 318 Wis.2d 206, 767 N.W.2d 332.

¶ 10 Our supreme court subsequently reversed, holding that the arbitrators exceeded their authority by ordering reinstatement. See Sands v. Menard, Inc., 2010 WI 96, ¶ 2, 328 Wis.2d 647, 787 N.W.2d 384. The court reasoned that, “by accepting reinstatement, Sands would be forced to violate her ethical obligations as an attorney.” Id. Consequently, the order reinstating her was “void as a violation of strong public policy.” Id. The court therefore vacated the reinstatement award, as Menard had requested. Id. However, the court also accepted Sands' argument that, if the court found reinstatement improper, it should “remand for an award of front pay to effectuate the panel's clear intention to make the successful plaintiff whole.” Id., ¶¶ 67–68. The court explained:

The panel made clear that it was going to award either front pay or reinstatement (“Whether to award reinstatement or front pay to Sands is a difficult decision.”). In order to make Sands whole in accord with the intentions of the arbitration panel, we vacate the award of reinstatement and remand to the circuit court for a determination on the equities of an appropriate front pay award.

Id., ¶ 69.

¶ 11 On remand, Menard submitted a “position statement” to the circuit court. Menard alleged it had recently discovered evidence that Sands engaged in misconduct during her tenure at Menard, and had Menard known about the misconduct, it would have fired her. Specifically, Menard asserted Sands violated the company's internal policies by “secretly negotiating a deal with a third-party company, Sourcing Solutions, LLC, to help it sell hundreds of millions in product to Menard[.]” As part of that deal, Sands and her sister, Debra, would have received fifty percent of the gross margin of Sourcing Solutions' sales to Menard.⁷ Menard also asserted that Sands violated her duties as an attorney by failing to reveal certain misconduct Debra allegedly committed while negotiating a deal between Menard and MH Equity Managing Member, LLP. Finally, Menard alleged Sands failed to inform it that her law license was temporarilysuspended in 2001 for failure to pay her annual dues.

¶ 12 Menard contended that, “had Menard management been aware of this misconduct ... Menard would have discharged Sands.” Menard therefore argued its “after-acquired evidence” of misconduct should bar Sands from receiving any front pay. In addition, Menard argued Sands was barred from receiving front pay because she had failed to mitigate her damages. Menard asked the court to schedule an evidentiary hearing on these issues.

¶ 13 Sands opposed Menard's attempts to introduce after-acquired evidence of misconduct and evidence that she failed to mitigate her damages. However, she too asked the court to hold an evidentiary hearing on the issue of front pay. Sands sought to introduce evidence that: (1) she had intended to work for Menard until age seventy-two, and she would have done so but for her unlawful termination; (2) it is common for management-level employees to remain employed at Menard for long periods of time; and (3) Menard's actions, including its refusal to reinstate Sands, irreparably harmed her career and prevented her from obtaining other employment. Based on this evidence, Sands argued she was entitled to front pay until she reached age seventy-two. In response, Menard noted that Sands had requested only two...