Seattle Professional Engineering Employees Ass'n v. Boeing Co.

• Decision Date: 31 August 1998
• Docket Number: No. 40426-1-I,40426-1-I
• Court: Washington Court of Appeals
• Parties: , 4 Wage & Hour Cas.2d (BNA) 1609 SEATTLE PROFESSIONAL ENGINEERING EMPLOYEES ASSOCIATION, an unincorporated voluntary association; Victoria Beach, William Osborn, Todd Ritcheson and Brandt Castleton, individuals, on behalf of themselves and all persons similarly situated, Appellants, Department of Labor & Industries of the State of Washington, Appellant, v. The BOEING COMPANY, Respondent.

Page 214

92 Wn.App. 214

963 P.2d 204, 4 Wage & Hour Cas.2d (BNA) 1609

SEATTLE PROFESSIONAL ENGINEERING EMPLOYEES ASSOCIATION, an unincorporated voluntary association; Victoria Beach William Osborn, Todd Ritcheson and Brandt Castleton individuals, on behalf of themselves and all persons similarly situated, Appellants Department of Labor & Industries of the State of Washington, Appellant, v. The BOEING COMPANY, Respondent.

No. 40426-1-I.

Court of Appeals of Washington Division 1.

Aug. 31, 1998.

As Amended on Denial of Reconsideration Oct. 6, 1998.

James H. Webster, Lynn D. Weir, and Richard P. Blumberg of Webster, Mrak & Blumberg, Seattle, Jeff B. Kray, Olympia, for Appellants.

Philip S. Morse, Karen P. Kruse, Perkins Coie, Seattle, for Respondent.

Douglas E. Smith, Lane, Powell, Spears, Lubersky, Seattle, Amicus Curiae on behalf of Washington Retail Association.

COLEMAN, Judge.

This class action challenged the Boeing Company's long-standing practice of requiring newly hired employees to attend an unpaid orientation prior to reporting for their first day of work. The plaintiffs asserted that the orientation, itself, was work and that Boeing was required to remunerate the employees at their contract rate for the time they spent at the orientation. After reviewing extensive written materials, the trial court ruled on both parties' motions for partial summary judgment, and both parties now appeal. Included in the trial court's order were rulings that: (1) attendance at orientation was "work;" (2) the plaintiffs were not entitled to a remedy based on a contract or quasi-contract theory but that they were covered by the minimum wage acts of Oregon, Washington, and Pennsylvania; (3) the rate of compensation owed the employees for attending the orientation was the statutory minimum wage not their contract wage; (4) compliance with the minimum wage statutes is measured hour by hour, not by workweek; and (5) a three-year statute of limitation period is applicable to a Washington Minimum Wage Act (MWA) claim.

Boeing does not challenge the Superior Court's conclusion that attendance at orientation constituted work. Our review is limited, accordingly, to addressing the issues raised by the parties.

After careful consideration, we find that the trial court was correct in dismissing the plaintiffs' contract and quasi-contract claims and in applying a three-year statute of limitation to the plaintiffs' statutory wage claims. However, the trial court erred as a matter of law by concluding that the plaintiffs were entitled only to the statutory minimum wage, not their normal wage, for the time they spent at the required orientation.

Up until the filing of this lawsuit, Boeing did not pay newly hired workers for attending a company required "pre-employment" orientation. ¹ At the time the plaintiffs attended orientation, they had accepted Boeing's offer of employment but had yet to begin the duties for which they were hired. The employment agreements between Boeing and the plaintiffs consisted of Boeing documents offering employment and confirming the employees' acceptance of employment. Within these documents, a sign-up date informed the employee when to attend orientation, and a start date identified the date the employee was to begin performing the specific tasks for which he or she was hired. The correspondence was clear that Boeing did not consider the employees to be on the payroll until the start date.

Because this is an appeal of a summary judgment order, our review is de novo. Mountain Park Homeowners Ass'n v. Tydings, 125 Wash.2d 337, 341, 883 P.2d 1383 (1994). We first address the assignments of error relating to the trial court's dismissal of the plaintiffs' contract claims. We then address the court's rulings on the plaintiffs' statutory wage claims.

Contract Claims:

The plaintiffs first argue that the employment agreement provision calling for orientation to not be compensated was the result of a mutual mistake and that the contracts should be reformed. A mutual mistake occurs "when the parties, although sharing an identical intent when they formed a written document, did not express that intent in the document." Halbert v. Forney, 88 Wash.App. 669, 674, 945 P.2d 1137 (1997).

The test for mutuality of mistake as stated in section 152 of the Restatement (Second) of Contracts consists of three parts. First, the mistake must pertain to a basic assumption upon which the contract is made. Second, the mistake must have a material effect on the agreed exchange of performances. Third, the mistake must not be one where the party adversely affected by the mistake bears the risk of loss. Washington has adopted these tests. See Childers v. Alexander, 18 Wash.App. 706, 709, 571 P.2d 591 (1977) (mutual mistake may be applied only where the mistaken fact was the underlying basis of the entire bargain and, when discovered, the essence of the agreement is destroyed). Our Supreme Court has also adopted the Restatement's definition of mistake, which is "a belief not in accord with the facts." Simonson v. Fendell, 101 Wash.2d 88, 91, 675 P.2d 1218 (1984) (citing Restatement (Second) of Contracts § 151 (1981)).

The record is clear that Boeing never intended to pay for orientation nor was it aware that some of the plaintiffs may have expected to receive compensation for attending orientation. In this case, there was no mistake of fact.

"The Restatement recognizes that such mistakes can include a misunderstanding of the law, since the law in existence at the time of the making of the contract is part of the total state of facts at that time." ² Halbert, 88 Wash.App. at 674, 945 P.2d 1137 (footnote omitted). Here, both sides apparently were mistaken that attendance at orientation was legally classified as work. The plaintiffs argue that this mistake justifies the use of reformation. Yet, reformation is justified only if the parties' intention was identical at the time of the trans- action and the written agreement does not express that intention. Childers, 18 Wash.App. at 710, 571 P.2d 591. Courts are not at liberty, under the guise of reformation, to rewrite the parties' agreement and "foist upon the parties a contract they never made." Childers, 18 Wash.App. at 711, 571 P.2d 591 (quoting Dan B. Dobbs, Handbook on the Law of Remedies, § 11.6, at 746 (1st ed.1973)).

As previously stated, it was clear that Boeing did not intend to pay for attendance at orientation because it did not believe that the activities conducted at the orientation constituted work. Thus, neither the trial court nor this court is in a position to rewrite the parties' intent by rewriting the contracts.

The plaintiffs alternatively assert that the portion of the contract that requires attending orientation prior to being placed on the payroll should be partially rescinded because it violated the public policy contained in state wage and hour laws that requires compensation for all time worked. Where an employer and employee "attempt to make a contract of employment in violation of the clearly expressed provision of the statute, the natural right of the employer and the employee to contract between themselves must, ..., yield to what the legislature has established as the law." Pillatos v. Hyde, 11 Wash.2d 403, 407, 119 P.2d 323, 137 A.L.R. 839 (1941); see also McDonald v. Wockner, 44 Wash.2d 261, 272, 267 P.2d 97 (1954) (agreement to forgo compensation owing under a union contract is void as to public policy); Motor Contract Co. v. Van Der Volgen, 162 Wash. 449, 454, 298 P. 705, 79 A.L.R. 29 (1931) ("agreement to waive rights involving a question of public policy is void").

The trial court correctly identified the problem with partial rescission in this case by noting that rescinding only the portions of the employment agreements concerning unpaid orientation would not by itself result in a separately enforceable contract. Once the erroneous provisions are stricken, the agreements still contain fixed starting dates

for employment that do not encompass

atten- dance at orientation. As is the case with reformation, we are not at liberty, under the guise of construing the contract, to disregard contract language or revise the contract. Rones v. Safeco Ins. Co. of Am., 119 Wash.2d 650, 654, 835 P.2d 1036 (1992); Wagner v. Wagner, 95 Wash.2d 94, 101, 621 P.2d 1279 (1980).

The plaintiffs urge this court to adopt a broader interpretation of the court's power to partially rescind a contract. According to the plaintiffs, where partial enforcement would serve the ends of justice, the court should not be limited to rescinding a provision based on its mechanical divisibility. ³ See Wood v. May, 73 Wash.2d 307, 313, 438 P.2d 587 (1968). However, mechanical divisibility remains the rule rather then an exception. Our courts have applied the more generous interests of justice test only to cases involving noncompetition clauses. See Wood, 73 Wash.2d at 314, 438 P.2d 587. We decline the invitation to extend this analysis to other aspects of employment contracts.

In addition, as previously stated, the plaintiffs' public policy justification for requesting partial rescission relies on the statutory requirement that employees receive compensation for all work. Since the plaintiffs rely on the MWA, RCW Ch. 49.46 as the basis for invalidating this provision of the contract, we first look to the statute for an appropriate remedy.

The presence of a statutory remedy is also important in reviewing the plaintiffs' claim for restitution. Only where there is not a complete and adequate remedy at law should the court look to equity. Galladora v. Richter, 52 Wash.App. 778, 786, 764 P.2d 647 (1988); Orwick v. City of Seattle, 103 Wash.2d 249, 252, 692 P.2d 793 (1984). As a result, the plaintiffs' claim for restitution needs to be addressed only if the MWA fails to provide an adequate and complete legal remedy. We do not address the plaintiffs' claim for restitu- tion...