Sands v. Menard Inc, 2008AP1703.

Decision Date21 July 2010
Docket NumberNo. 2008AP1703.,2008AP1703.
Citation787 N.W.2d 384,2010 WI 96
PartiesDawn M. SANDS, Plaintiff-Respondent,v.MENARD, INC., Defendant-Appellant-Petitioner.
CourtWisconsin Supreme Court

COPYRIGHT MATERIAL OMITTED

For the defendant-appellant-petitioner there were briefs by Beth Ermatinger Hanan, Shawn K. Stevens, and Gass Weber Mullins LLC, Milwaukee, and Webster A. Hart, Terry L. Moore, and Herrick & Hart, S.C., Eau Claire, and oral argument by Beth Ermatinger Hanan.

For the plaintiff-respondent Charles K. Maier, Daniel R. Shulman, Julie L. Boehmke, Jeremy L. Johnson, and Gray Plant Mooty Mooty & Bennett, P.A., Minneapolis, Minn., and John P. Richie and Richie Wickstrom and Wachs, LLP, Eau Claire, and oral argument by Daniel R. Shulman.

An amicus curiae brief filed by William F. Bauer and Coyne, Schultz, Becker & Bauer, S.C., Madison, and Byron F. Egan and Jackson Walker L.L.P., Dallas, Tex., on behalf of Byron F. Egan, Pro Hac Vice.

MICHAEL J. GABLEMAN, J.

¶ 1 This is a review of a published decision of the court of appeals 1 affirming an arbitration award that, among other things, ordered Dawn Sands' reinstatement to her position as Vice President and Executive General Counsel following her wrongful termination from Menard, Inc. (Menard). Menard has refused to reinstate Sands and challenges the reinstatement award on multiple grounds. The root of Menard's challenge is that the attorney-client relationship between Menard and Sands has been so irretrievably damaged that the panel exceeded its authority by ordering reinstatement.

¶ 2 We agree with Menard that the panel exceeded its authority. An arbitration panel exceeds its authority when its award violates strong public policy. An attorney owes a fiduciary duty of loyalty to her clients, a duty so replete in our cases and in the Rules of Professional Conduct as to be axiomatic. Such a duty is deeply rooted in our laws and embodies the strong public policy of the State of Wisconsin. In this case, we conclude that by accepting reinstatement, Sands would be forced to violate her ethical obligations as an attorney. Thus, we vacate the panel's award of reinstatement on the grounds that it is void as a violation of strong public policy. Under the applicable employment discrimination laws, front pay is a substitute for reinstatement. Accordingly, we vacate the panel's award of reinstatement and remand to the circuit court to determine an appropriate award of front pay.

I. BACKGROUND

¶ 3 Dawn Sands is a 1993 graduate of the William Mitchell College of Law. In 1998, John Menard,2 founder and president of Menard, approached Sands, the sister of his then-girlfriend Debra Sands, about working for Menard's legal department. John Menard told Sands he was dissatisfied with the performance of the legal department in general, and of David Coriden, Vice President and General Counsel, specifically.

A. Sands' Tenure at Menard

¶ 4 On June 1, 1999, Sands began working in a newly-created position at the corporate legal office of Menard. John Menard asked Sands to assess and oversee the in-house legal department,3 including Coriden, and to create a title that reflected this oversight. Sands adopted the title of Executive General Counsel. In addition to her legal duties, Sands operated as the spokesperson for Menard, handling inquiries from the media and generally acting as a public representative for the company.

¶ 5 Based on her pre-hire discussions and agreement with John Menard, Sands expected to begin working at Menard with a salary of $56,000 per year. On her first day at Menard, Sands learned that she was required to punch a clock and would be paid by the hour at a rate of $26.92 ($55,993.60 annually, plus overtime). With this hourly rate, Sands could earn up to $40.38 per hour for overtime (at time-and-a-half) and an additional $2.50 per hour for weekend hours worked.

¶ 6 On August 17, 1999, just months after Sands began working at Menard, Coriden was terminated following a disagreement with John Menard. Sands then assumed all of Coriden's duties while continuing to oversee Menard's in-house legal department. At the time of his termination, Coriden was paid a yearly salary of $104,999.96, plus a bonus. Shortly after Coriden's termination, John Menard told Sands, [I]f you are here in a year, wouldn't you like to be making over a hundred thousand? If you are you will be.”

¶ 7 In June 2001, after working for Menard for two years without any pay increases, Sands made verbal and written requests to John Menard to raise her salary to $70,000 per year. Menard responded by increasing her wage to $30.92 per hour (a $4.00 per hour raise), or $64,313.60 per year without overtime, effective July 29, 2001.

¶ 8 Over the next several years, Sands made repeated requests to John Menard for a pay raise. In one written request dated November 24, 2004, Sands requested a pay increase to $56.59 per hour, the equivalent of $117,707 per year. The memo explained that this proposed figure was based on Coriden's salary at the time of his termination in 1999, plus cost of living increases he would have received were he still employed at Menard. In the memo, Sands stated that she was “doing at least an equal level of work” as Coriden had done. Sands never received a second pay increase.

¶ 9 On March 18, 2005, Sands received an e-mail from Chief Operating Officer Charlie Menard stating that she was eligible for a bonus to be paid in 2006 if she signed an employment agreement and was evaluated by the “9-Block” evaluation system.4 In late 2005, evaluation surveys on Sands were completed, but Sands never received the results or final report due to her termination.5

B. Sands' Termination

¶ 10 On January 11, 2006, Sands received an e-mail from Jessica Bierman of the corporate human resources office advising that Charlie Menard wanted a job description to include with a new compensation agreement. Several e-mails were exchanged between Sands, Charlie Menard, and Bierman, including an e-mail from Sands to Charlie Menard dated January 20, 2006, which stated, “Not only do I WANT to get paid more, but, in point of fact, I MUST be paid more (in both cash as well as bonus) if you intend to avoid a lawsuit.”

¶ 11 In a meeting on that same day, Sands provided Bierman a binder that included a job description, a comparison of compensation packages with other high-level private sector executives around the country and her male comparators within Menard, a copy of Sands' November 24, 2004, memo to John Menard requesting a pay raise, and an Equal Employment Opportunity Commission Publication entitled “Facts About Compensation Discrimination.” During the meeting, which lasted approximately 90 minutes, Sands reviewed the binder with Bierman. Sands stated that she believed she had grounds for a lawsuit because she was not receiving pay equal to Coriden or other top executives within Menard, including the chief information officer and the chief financial officer, all of whom were men.6

¶ 12 After her meeting with Sands, Bierman gave the binder to Charlie Menard and told him about their meeting. Later that afternoon, Charlie Menard approached Sands and asked, [H]ow dare you threaten a Menard?” Sands responded that she was not trying to threaten the company; she was “just trying to point out a legal reality” and explained that she believed she had a valid legal claim against Menard.

¶ 13 A little over six weeks later, on Monday, March 6, 2006, Charlie Menard entered Sands' office with a proposed employment contract. The contract included a wage of $30.92 per hour and an unspecified bonus to be paid in March and July of 2007. Sands told Charlie Menard that this was the same wage she had received for approximately five years. Charlie Menard then wrote “$50,029.98” on a Post-it note and affixed it to the second page of the contract, stating that this was the bonus she would receive if she continued to work for Menard for another year. Sands responded, “I've been sitting here working my butt off and I get nothing. I just get all these promises.... [W]hat is that, just a big lie to make me keep working?” Charlie Menard shrugged and said, “Worked, didn't it?” Sands replied that as a 43-year-old woman with no one else to rely on, she needed to be concerned about her retirement. Charlie Menard responded, [W]hy don't you get married like every other girl?” Sands countered, “Charlie, you understand there is a law called the Equal Pay Act?” Charlie Menard then told Sands that she would be unsuccessful at Menard if she continued to threaten the company with lawsuits, and asked if she was planning to sign the contract. Sands replied that she did not know and was going to think about it.

¶ 14 On Thursday and Friday of that week (March 9 and 10, 2006), Sands went to Chicago on business for Menard. The following Monday, March 13, 2006, Sands returned to the office and found a memo from Charlie Menard dated Thursday, March 9, 2006, in her in-box. In the memo, Charlie Menard communicated his belief that Sands was not likely to accept the proposed contract, that an agreement on compensation might not be possible, and that she should suggest some ways to professionally dissolve their relationship.7 Sands viewed this as a threat to her job and did not immediately respond. Later that evening, Charlie Menard sent a follow-up e-mail to Sands, requesting that she respond to the memo. Sands replied that she would work on his request and get back to him.

¶ 15 According to the arbitration panel, on the evening of Tuesday, March 14, 2006, Sands was preparing for a meeting in her office when John Menard stepped in. “This isn't working, is it,” he said. “I'm sick to death of your not getting back to Charlie and you don't respond and your threats.” John Menard then instructed Sands to work out an agreement with Charlie Menard by the end of business the next day or she would be “all done.” Then he left her office.

¶ 16 Moments later, John...

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