Janee' Wolf v. IDA Marketing Services, Inc. ( 2013 )


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  •                                                                FILED
    MAY 02, 2013
    In the Office of the Clerk of Court
    WA State Court of Appeals, Division III
    IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
    DIVISION THREE
    JANEEWOLF,                                  )           No. 30245-8-111
    )
    Respondent,      )
    )
    v.                                  )
    )
    IDA MARKETING SERVICES, INC., a              )
    Washington corporation; JUSTIN               )
    BRUNSON and CHRISTINE BRUNSON,               )
    husband and wife, individually and the       )
    marital community composed thereof,          )
    )           UNPUBLISHED OPINION
    Defendants,      )
    )
    TORRY WEBB and BRENDA WEBB,                 )
    husband and wife, individually and the       )
    marital community composed thereof,         )
    )
    Appellants.       )
    KORSMO, C.J. -IDA Marketing Services Inc. terminated Ms. Janee Wolfs
    employment without paying approximately six months of wages. She successfully sued
    IDA, officers Torry Webb and Justin Brunson, and their respective marital communities.
    Finding no reversible error, we affirm and award respondent her attorney fees.
    No. 30245-8-111
    Wolfv. IDA Marketing Servs., Inc.
    FACTS
    Throughout 2008, IDA was in the process of hiring its management and
    developing materials for the sales force that it hoped to hire once it opened for business.
    IDA president Scott Richey hired Ms. Wolf to be vice president of AIREs (Awards,
    Incentives, Recognition, and Events). Ms. Wolf started work on March 3, 2008, and
    immediately began developing IDA's incentives program as well as the operations
    manuals for its sales force. She was treated as an employee: she worked over 40 hours
    per week, had a cubicle, a computer, remote access to work from home, an IDA e-mail
    address, keys and the security code to the office, accrued leave, and was permissively
    representing the corporation in transactions with third parties.
    However, Ms. Wolfhad not signed any employment documents and did not have
    written documentation of her salary. She and Mr. Richey discussed an annual salary of
    $60,000 ($5,000 per month) and Mr. Richey also discussed that same figure with Mr.
    Webb. Mr. Webb later testified that he never discussed a $60,000 cash salary with Ms.
    Wolf. Instead, Mr. Webb testified in his deposition that he had actually agreed to pay
    Ms. Wolf $5,000 worth of stock options per month in compensation for her prelaunch
    services. Ms. Wolf testified, however, that they had agreed to a salary of$5,000 per
    month in cash, and that stock options would be added to the compensation package once
    2
    No. 30245~8~III
    Wolfv. IDA Marketing Servs., Inc.
    options became available. Despite these discussions, Ms. Wolf never received a
    paycheck or stock options for her services during this time period.
    After nearly six months of work, Cameron Hysjulien, IDA's general manager,
    came to Ms. Wolfwith an employee packet and welcome letter from Justin Brunson that
    noted Ms. Wolfs start date as September 1 rather than March 3. Ms. Wolfwas not the
    only employee to receive belated hiring documents. IDA's other initial employees and
    contractors did not receive hiring packets until months after they started drawing
    paychecks. Justin Brunson spent July and August 2008 creating employee files for
    several people who had started working for IDA months earlier; the belated
    documentation appeared to be standard operating procedure for IDA.
    A week after Ms. Wolfs "official" start date, IDA opened for business. Ms. Wolf
    then started receiving regular paychecks from IDA commensurate with a $60,000 annual
    salary. On November 26,2008, Mr. Webb met with Ms. Wolf to tell her she was being
    laid off. During that meeting, Mr. Webb allegedly acknowledged that IDA owed her
    $30,000 in back pay and also allegedly promised to double that amount to $60,000-a
    full year's salary.
    Ms. Wolf continued to wait for her back pay, but none ever arrived. In April
    2009, Ms. Wolf set up a meeting with Mr. Webb to discuss her back pay. The two met
    on April 9, along with Ms. Wolfs husband and Mr. Webb's executive assistant. During
    3
    No. 30245-8-111
    Wolfv. IDA Marketing Servs., Inc.
    this meeting, Mr. Webb promised to pay Ms. Wolf in cash, stock options, or any mix of
    the two that she chose, and he told her to get back to him with a decision after she took
    some time to think about it. It is unclear whether the amount that Mr. Webb agreed to
    pay during this meeting was $30,000 or $60,000.
    The following day, Ms. Wolf memorialized the meeting in an e-mail to Mr. Webb.
    The e-mail summarized the alleged agreement of the parties that she had agreed to work
    for $5,000 a month plus stock options and that Mr. Webb had agreed to pay $60,000
    divided evenly in cash and stock options and that Mr. Webb had said it would take
    between 90 and 120 days for IDA to pay the cash.
    Mr. Webb and IDA never responded to the e-mail. However, when Ms. Wolf later
    filed a wage complaint with the Department of Labor & Industries (Department), IDA
    produced a copy of minutes that were allegedly prepared by Mr. Webb's executive
    assistant following the April 9 meeting. These minutes acknowledge that Mr. Webb
    agreed to pay Ms. Wolf the back wages based on a $60,000 per year salary, split however
    she wanted, and that she requested an even split between cash and stock options. The
    minutes also do not specify how much Mr. Webb agreed to pay in back wages and said
    that Ms. Wolf would only receive the cash election upon IDA becoming profitable and
    that it was subject to the approval of IDA's board of directors. Ms. Wolf, however, had
    never seen a copy of these minutes prior to the Department's claim investigation and
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    No. 30245-8-III
    Wolfv. IDA Marketing Servs., Inc.
    questioned their authenticity. It is unknown when these minutes were drafted and if they
    were subsequently edited. 1
    Ms. Wolf ultimately withdrew her wage claim and brought suit after mediation
    efforts facilitated by the Department reached an impasse. After a three-day bench trial,
    Benton County Superior Court found that (1) Ms. Wolf was an employee from March
    through September 2008, (2) IDA owed her wages in the amount of $5,000 per month
    during this time period, (3) the amount should be doubled and IDA's officers held
    personally liable because they willfully withheld the wages, (4) a bona fide dispute did
    not exist regarding the wages owed, and (5) Ms. Wolfwas entitled to attorney fees and
    costs under RCW 49.48.030 and RCW 49.52.070. The Webbs timely appealed to this
    court.
    ANALYSIS
    The Webbs present four issues on appeal. First, they contend that the trial court
    erred by (1) awarding Ms. Wolf attorney fees under RCW 49.48.030, (2) finding that the
    officers willfully withheld the wages, (3) refusing to allow the Webbs to introduce copies
    of Ms. Wolfs and Mr. Richey's depositions at trial, and (4) not granting their motion for
    a new trial. We address these issues in that order.
    1 The reference to approval by IDA's board of directors was also odd because IDA
    admittedly never had a board of directors.
    5
    No.3024S-8-II1
    Wolfv. IDA Marketing Servs., Inc.
    RCW 49. 48. 030
    RCW 49.48.030 provides for mandatory attorney fees and costs in any civil suit in
    which an employee recovers more in withheld wages than what the employer admits to
    owing. Throughout the course of litigation, the Webbs admitted to owing Ms. Wolf
    $30,000. Ultimately, the trial court found that IDA and its officers owed her $30,000.
    Thus, the Webbs contend that Ms. Wolf received exactly, and not more than, what IDA
    and its officers admitted to owing.
    However, this argument neglects the fact that IDA and its officers only admitted to
    owing $30,000 in stock options, not cash. These stock options never existed, and there
    was no reason for anyone at any point to believe that these stock options would ever
    exist. Accordingly, IDA and its officers never admitted to owing anything more than a
    nonexistent asset. Considering that the trial court found that IDA and its officers owed
    '"
    Ms. Wolf$30,000 in cash as opposed to $30,000 worth of a nonexistent asset that had no
    real value, the trial court did not err by awarding Ms. Wolf reasonable attorney fees and
    costs under RCW 49.48.030.
    The Webbs also argue Ms. Wolf was not entitled to fees and costs under this
    statute because she received a judgment for less than what she claimed was owed. At
    trial, Ms. Wolf demanded the $30,000, plus the additional $30,000 that Mr. Webb
    allegedly promised during her exit interview, but Ms. Wolf did not obtain the full amount
    6
    No. 30245-8-111
    Wolfv. IDA Marketing Servs., Inc.
    requested. However, the plain language of the statute requires payment and fees without
    reference to the amount demanded by the employee. The exception to RCW 49.48.030's
    fee shifting provisions only applies when the employee recovers as much as or less than
    what the employer admits to owing: "PROVIDED, HOWEVER, That this section shall
    not apply if the amount of recovery is less than or equal to the amount admitted by the
    employer to be owing for said wages or salary." RCW 49.48.030. The statute does not
    contain a corresponding exception for when the employee recovers less than what she
    claims she is owed. Accordingly, the trial court did not err by awarding mandatory
    attorney fees and costs under RCW 49.48.030.
    RCW 49.52.070
    The Webbs next take issue with the trial court's application ofRCW 49.52.070,
    specifically its finding that IDA and its officers willfully withheld wages with intent to
    deprive. RCW 49.52.070 creates civil liability for "[a]ny employer and any officer, vice
    principal or agent of any employer who shall violate any of the provisions of RCW
    49.52.050(1) and (2)." The relevant provision is RCW 49.52.050(2), which makes it
    illegal to "[w ]ilfully and with intent to deprive the employee" fail to pay "any part of his
    or her wages." In such case, they shall be liable "for twice the amount of the wages
    unlawfully rebated or withheld by way of exemplary damages, together with costs of suit
    and a reasonable sum for attorney's fees." RCW 49.52.070.
    7
    No.30245-8-III
    Wolfv. IDA Marketing Servs., Inc.
    '''The question of whether the employer willfully withheld money owed ... is a
    question of fact; our review is limited to whether there was substantial evidence to uphold
    the court's decision.'" Wash. State Nurses Ass 'n v. Sacred Heart Med. Ctr., 
    175 Wn.2d 822
    , 833-34,
    287 P.3d 516
     (2012) (alteration in original) (quoting Lillig v. Becton-
    Dickinson, 
    105 Wn.2d 653
    , 660, 
    717 P.2d 1371
     (1986». If the wages are unpaid, "only
    two instances negate a finding of willfulness: (1) 'the employer was careless or erred in
    failing to pay' or (2) 'a bona fide dispute existed between the employer and employee
    regarding the payment of wages.' " Id. at 834 (internal quotation marks omitted) (quoting
    Morgan v. Kingen, 
    166 Wn.2d 526
    ,534,
    210 P.3d 995
     (2009». "A bona fide dispute is a
    'fairly debatable' dispute over whether all or a portion of wages must be paid." 
    Id.
    (internal quotation marks omitted) (quoting Schilling v. Radio Holdings, Inc., 
    136 Wn.2d 152
    , 161,
    961 P.2d 371
     (1998». "The burden falls on the employer to show the bona fide
    dispute exception applies." 
    Id.
    The Webbs argue three payment issues were "fairly debatable." They contend that
    bona fide disputes existed over (1) Ms. Wolfs employment status, (2) the fonn of
    compensation owed, and (3) the amount owed.
    Regarding the first issue, Ms. Wolf must be a current or former employee in order
    to bring a claim under RCW 49.52.050 and .070. These statutes use the same meaning of
    8
    No.30245-8-III
    Wolfv. IDA Marketing Servs., Inc.
    "employee" as that found in RCW 49.12.005(4).2 It states: "'Employee' means an
    employee who is employed in the business of the employee's employer whether by way
    of manual labor or otherwise." Thus, RCW 49.52.070's provisions for fees, costs, and
    doubling of damages do not apply if there is a bona fide dispute "over whether an
    employment relationship exists." Schilling, 
    136 Wn.2d at 161
    .
    The Webbs contend that IDA's president, Mr. Richey, did not have authority to
    hire Ms. Wolf because he was himself an independent contractor. However, it has long
    been held that a person cloaked with apparent authority can hire persons reasonably
    relying on that authority and bind the company in a wage claim. Schoonover v. Carpet
    World, Inc., 
    91 Wn.2d 173
    , 178-80, 
    588 P.2d 729
     (1978). Furthermore, considering the
    way in which IDA treated Ms. Wolf as an employee from day one (giving her keys,
    setting her up with a work station, and accruing leave), we cannot say that the trial court's
    finding lacked substantial evidence.
    Next, Mr. Webb asks us to hold that a bona fide dispute over the form of
    compensation creates a bona fide dispute over the payment of wages. This is a question
    of first impression, but we doubt that even a bona fide dispute over the form of
    compensation is a proper basis for denying fees and exemplary damages under RCW
    49.52.070. "A bona fide dispute is a 'fairly debatable' dispute over whether all or a
    2 See RCW 49.48.082(5) (defining employee).
    9
    No. 30245-8-II1
    Wolfv. IDA Marketing Servs., Inc.
    portion of wages must be paid." Wash. State Nurses Ass 'n, 
    175 Wn.2d at 834
     (internal
    quotation marks omitted) (quoting Schilling, 
    136 Wn.2d at 161
    ). By these terms, this
    exception only applies to disputes over the amount of compensation owed rather than the
    form of compensation. Regardless of the fonn of compensation, the fact remains that
    IDA and its directors willfully refused to compensate Ms. Wolf for six months of work.
    To allow an employer to so easily defeat RCW 49.52.070's doubling and attorney fee
    provisions over a matter offonn would defeat the legislature's remedial intent. See
    Flower v. TR.A. Indus., Inc., 
    127 Wn. App. 13
    ,35, 111 PJd 1192 (2005) ("this provision
    must be construed liberally in favor of the employee as a remedial statute to protect
    employee wages and assure payment").
    Finally, the Webbs argue that a bona fide dispute existed over the amount owed.
    Ms. Wolf argued throughout trial that Mr. Webb promised her $60,000 in compensation
    (a full year's pay) during her exit interview on November 26,2008. Ultimately, the trial
    court found against Ms. Wolfs position-finding that the only real agreement was for
    $30,000 (six months' salary at $5,000 per month). The fact that the Webbs prevailed in
    part on the amount owed shows that the question of $60,000 was fairly debatable.
    However, the fact still remains that no bona fide dispute existed regarding whether
    IDA and its officers owed Ms. Wolf the $30,000 ultimately awarded. The Webbs
    conceded that IDA owed Ms. Wolf $30,000 and gave no justification for withholding that
    10
    No. 30245-8-III
    Wolfv. IDA Marketing Servs., Inc.
    money. Under these facts, IDA and its officers plainly acted'Wilfully and with intent to
    deprive;' Accordingly, the trial court acted properly when it applied the penalty and fee
    shifting provisions ofRCW 49.52.070.
    Admissibility ofDeposition Testimony
    The Webbs sought to introduce copies of the depositions of Ms. Wolf and Mr.
    Richey, but the trial court denied admission because the Webbs did not present sealed
    copies of the depositions. They had attempted to obtain sealed copies of the depositions,
    but the reporting company reportedly refused to provide the copies because the Webbs
    were not attorneys.
    Appellants argue that under ER 1003, a"duplicate is admissible to the same extent
    as an original unless (1) a genuine question is raised as to the authenticity of the original
    or (2) in the circumstances it would be unfair to admit the duplicate in lieu of the original:'
    Ms. Wolf did not raise a genuine question of authenticity, nor argue that it would be
    unfair under the circumstances to admit the duplicates. Her lawyer simply said that he
    did not know how a duplicate could be admitted. CR 30(t)(l). We need not consider the
    interplay between ER 1003 and CR 30(t)(1), because any error here was harmless.
    Evidentiary error''is not reversible error unless the court determines that, 'within
    reasonable probabilities, had the error not occurred, the outcome of the trial would have
    been materially affected:' State v. Wilson, 
    144 Wn. App. 166
    , 178, 
    181 P.3d 887
     (2008)
    11
    No. 30245-8-111
    Wolfv. IDA Marketing Servs., Inc.
    been materially affected. '" State v. Wilson, 
    144 Wn. App. 166
    , 178, 181 P Jd 887 (2008)
    (internal quotation marks omitted) (quoting State v. Smith, 
    106 Wn.2d 772
    , 780, 
    725 P.2d 951
     (1986)). Admission of Ms. Wolfs deposition would not have changed the outcome
    of the trial. The Webbs wanted to admit part of the deposition because Ms. Wolfsaid
    that she did not remember a meeting where her compensation was discussed. However,
    further questioning showed that Ms. Wolfjust did not remember the meeting the way that
    Mr. Webb remembered it. There is no argument or indication that Ms. Wolfs trial
    testimony contradicted her deposition testimony. Thus, admission of the testimony
    would not have changed the outcome of the trial.
    Mr. Richey's deposition was still inadmissible irrespective of whether the copy
    should have been admitted under ER 1003. Mr. Richey did not testify at trial, and under
    ER 804 the party seeking to introduce an absent witness's prior testimony bears the
    burden of explaining why the witness is unavailable to testify. The record contains no
    evidence indicating an explanation for Mr. Richey's absence. Thus, the deposition was
    properly excluded.
    Accordingly, the trial court's refusal to admit the deposition copies does not
    require reversal.
    12
    No.30245-8-II1
    Wolfv. IDA Marketing Servs., Inc.
    Motion/or New Trial
    The Webbs timely moved for a new trial under CR 59, arguing that they were
    prejudiced by the reporter's undue withholding of Mr. Richey's deposition transcript.
    We review this ruling for abuse of discretion. Mega v. Whitworth College, 
    138 Wn. App. 661
    ,671, 
    158 P.3d 1211
     (2007).
    Because the deposition was inadmissible per ER 804, as previously noted, the trial
    court could not have abused its discretion.
    Attorney Fees
    Finally, both sides request attorney fees and costs on appeal. Ms. Wolf requests
    additional fees under RAP 18.9(a) sanctioning the Webbs for their frivolous appeal. The
    Webbs did not prevail and are not entitled to their fees. As an employee who has
    prevailed in her wage claim, Ms. Wolf is entitled to reasonable attorney fees and costs on
    appeal under RCW 49.48.030 and RCW 49.52.070. Dice v. City ofMontesano, l31 Wn.
    App. 675, 693, 
    128 P.3d 1253
     (2006). However, this appeal was not frivolous and we
    decline to award additional fees as sanctions under RAP 18.9(a).
    The judgment of the trial court is affirmed.
    l3
    No.30245-8-III
    Wolfv. IDA Marketing Servs., Inc.
    A majority of the panel has determined this opinion will not be printed in the
    Washington Appellate Reports, but it will be filed for public record pursuant to RCW
    2.06.040.
    I         Korsmo, C.J.
    WE CONCUR:
    14