Mauricio Aguilar v. Husco International, Inc. , 361 Wis. 2d 597 ( 2015 )

2015 WI 36
SUPREME COURT OF WISCONSIN
CASE NO.: 2013AP265
COMPLETE TITLE: Mauricio Aguilar, Dave Hughes, Daniel Radmer,
Byron Slagle, Duaine Wagner and Michael Vinsant,
Plaintiffs-Appellants-Cross-
Respondents,
v.
Husco International, Inc.,
Defendant-Third-Party
Plaintiff-Respondent-Cross-Appellant-
Petitioner,
v.
International Association of Machinists and
Aerospace Workers, District No. 10,
Third-Party
Defendant-Appellant-Cross-Respondent.
REVIEW OF A DECISION OF THE COURT OF APPEALS
(Reported at 354 Wis. 2d 526, 851 N.W.2d 802)
(Ct. App. 2014 – Published)
PDC No: 2014 WI App 64
OPINION FILED: April 1, 2015
SUBMITTED ON BRIEFS:
ORAL ARGUMENT: February 3, 2015
SOURCE OF APPEAL:
COURT: Circuit
COUNTY: Milwaukee
JUDGE: Dominic S. Amato
JUSTICES:
CONCURRED:
DISSENTED:
NOT PARTICIPATING:
ATTORNEYS:
For the defendant-third-party plaintiff-respondent-cross-
appellant-petitioner, the cause was argued by John C. Schaak,
with whom on the briefs was Jeffrey Morris, John C. Schaak, and
Quarles & Brady LLP, Milwaukee.
For the plaintiffs-appellants-cross-respondents and third-
party defendant-appellant-cross-respondent, the cause was argued
by Nathan D. Eisenberg, with whom on the brief was Frederick
Perillo, Yingtao Ho, and The Previant Law Firm, S.C., Milwaukee.
2
2015 WI 36
NOTICE
This opinion is subject to further
editing and modification. The final
version will appear in the bound
volume of the official reports.
No. 2013AP265
(L.C. No. 2008CV1395)
STATE OF WISCONSIN : IN SUPREME COURT
Mauricio Aguilar, Dave Hughes, Daniel Radmer,
Byron Slagle, Duaine Wagner, and Michael
Vinsant,
Plaintiffs-Appellants-Cross-
Respondents,
v. FILED
Husco International, Inc.,
APR 1, 2015
Defendant-Third-Party Plaintiff-
Respondent-Cross-Appellant-Petitioner, Diane M. Fremgen
Clerk of Supreme Court
v.
International Association of Machinists and
Aerospace Workers, District No. 10,
Third-Party Defendant-Appellant-
Cross-Respondent.
REVIEW of a decision of the Court of Appeals. Reversed and
remanded.
¶1 N. PATRICK CROOKS, J. This wage claim case began
when a union-initiated complaint was filed with the Department
of Workforce Development on behalf of Thomas Kieckhefer and
No. 2013AP265
similarly situated production and maintenance employees at Husco
International, Inc. The complaint alleged Husco owed the
employees wages for 20-minute meal breaks. Such breaks had
been unpaid; the union had previously agreed to that in every
collective bargaining agreement (CBA) negotiated since 1983 at
the company's Waukesha plant. This had the effect of workers
having a shorter work shift than they would have if the schedule
complied with the regulation on unpaid meal breaks (a work shift
of eight hours and 20 minutes rather than eight hours and 30
minutes). As it turns out, this provision was in conflict with
a state regulation1 that requires employers to pay employees for
meal breaks that are shorter than thirty minutes.
¶2 The DWD regulation specifically allows employers and
unions with a CBA to request a waiver from the State for shorter
unpaid meal breaks,2 but no such request was submitted in this
1
Wisconsin Admin. Code § DWD 274.02 (2006) states, "The
employer shall pay all employees for on-duty meal periods, which
are to be counted as work time. An on-duty meal period is a meal
period where the employer does not provide at least 30 minutes
free from work." All references to the Wisconsin Administrative
Code are to Wis. Admin. Code (2006).
2
Wis. Admin. Code § DWD 274.05 states that, with exceptions
that are not applicable here,
[W]here a collectively bargained agreement exists, the
department may consider the written application of
labor and management for a waiver or modification to
the requirements of this chapter based upon practical
difficulties or unnecessary hardship in complying
(continued)
2
No. 2013AP265
case. After the conflict with the regulation was discovered,
the practice was ended.
¶3 In response to the complaint on the matter, a DWD
Equal Rights Division Labor Standards Bureau investigator
reviewed information submitted by both sides in the matter. He
then rendered a written decision stating that the Department
would not seek collection of back wages on the grounds that the
factors favoring a waiver were present in this case
(specifically, that the parties to the CBA had agreed to the
provision and that there was no evidence that the shorter meal
breaks jeopardized the life, health, safety or welfare of
employees). When the investigator's decision was appealed, DWD
Equal Rights Division Labor Standards Bureau issued a letter
representing the "final determination in this matter." That
determination affirmed the decision not to seek back pay. A
request for reconsideration was denied; the letter denying the
reconsideration request, issued by the bureau director for the
Labor Standards Bureau of the DWD Equal Rights Division, stated
therewith. If the department determines that in the
circumstances existing compliance with this chapter is
unjust or unreasonable and that granting such waiver
or modification will not be dangerous or prejudicial
to the life, health, safety or welfare of the
employees, the department may grant such waiver or
modification as may be appropriate to the case.
3
No. 2013AP265
that "the union on behalf of its members can bring lawsuit
against Husco in civil court" pursuant to Wis. Stat. § 109.11.
¶4 As permitted by that statute, six Husco employees
brought suit in circuit court3 January 28, 2008, on behalf of
themselves and others similarly situated, seeking back pay for
unpaid breaks taken during the two-year period preceding the
filing of their complaint.4 The complaint noted that plaintiffs
had "exhausted all available administrative remedies under
Chapter 109 of the Wisconsin Statutes." When the circuit court
denied both parties' summary judgment motions, the parties
sought interlocutory appeal. The court of appeals5 held that the
matter was appropriate for summary judgment and granted summary
judgment to the plaintiffs, reasoning that the CBA could not
trump the DWD meal-break regulation. Husco petitioned this
court for review, which we granted.
3
Milwaukee County Circuit Court, the Honorable Dominic
Amato, presiding.
4
The meal break provision was first included in the 1983-
1985 CBA and continued in each of the subsequent agreements,
including the 2006-2010 CBA. Under Wis. Stat. Chapter 111,
Employment Relations, "Back pay liability may not accrue from a
date more than 2 years prior to the filing of a complaint with
the department." Wis. Stat. §111.39. The complaint was filed
on January 28, 2008, claiming back pay that was accrued after
January 28, 2006.
5
Aguilar v. Husco Int'l, Inc., 2014 WI App 64, ¶11, 354
Wis. 2d 526, 851 N.W. 802.
4
No. 2013AP265
¶5 We agree with the court of appeals that summary
judgment is appropriate.6 All parties stipulate that there are
no disputed facts material to the issue, and there exists no
evidence in the record to the contrary.7 The starting point of
our analysis, because this case involves a CBA and a dispute
between labor and management, is to resolve the question of
whether federal preemption applies to the plaintiffs' claim. If
plaintiffs' claim involves the interpretation of a CBA, this
case is controlled by §301 of the Labor Management Relations
Act, 29 U.S.C. § 185, which governs "[s]uits for violation of
contracts between an employer and a labor organization
representing employees[.]" Because of the interest in uniform
law in this area, "federal law is clear that, where there is a
sec. 301 claim, federal substantive law (irrespective of the
forum) must control. Teamsters Local v. Lucas Flour Co., 369
U.S. 95 (1962), rules out the application of incompatible state
6
Lewis v. Physicians Ins. Co. of Wis., 2001 WI 60, ¶9, 243
Wis. 2d 648, 627 N.W.2d 484 ("This case is before us on a grant
of summary judgment. Because the parties have stipulated to the
facts, this appeal only raises a question of law, which we
review de novo.").
7
Id.
5
No. 2013AP265
law and mandates that federal law must prevail in a sec. 301
case . . . ."8
¶6 The test for whether a plaintiff's state-law claim is
a Section 301 claim is whether resolving the case "requires the
interpretation of a collective-bargaining agreement."9
Applying that test to these facts, we conclude that federal
preemption does not apply to plaintiffs' claim because this
dispute requires no interpretation of the CBA. Case law is
quite clear that "not every dispute concerning employment, or
tangentially involving a provision of a collective-bargaining
agreement, is preempted by § 301."10
¶7 Having ascertained that state law governs the claim
before us, we turn to the substantive question: Are the
employees entitled, under Wis. Admin. Code DWD § 274.02, to back
pay for the unpaid meal breaks in this case? Plaintiffs pursued
this claim in circuit court after exhausting their
administrative remedies, so we have the benefit in this case of
the agency's interpretation of DWD § 274.02, its own regulation,
8
Int'l Ass'n of Machinists & Aerospace Workers, IAM Local
437 v. U.S. Can Co., 150 Wis. 2d 479, 487, 441 N.W.2d 710
(1989).
9
Miller Brewing Co. v. DILHR, 210 Wis. 2d 26, 39, 563 N.W.
460 (1997) (quoting Lingle v. Norge Div. of Magic Chef, Inc.,
486 U.S. 399 (1988)).
10
Id.
6
No. 2013AP265
which is given "controlling weight" if it is "reasonable and
consistent with the meaning and purpose of the regulation."11 We
conclude that the Department's interpretation and decision not
to seek recovery of back pay in this case is reasonable and
consistent with the purpose of the regulation because the
regulation's purpose is to protect the life, health, safety, and
welfare of the employees, and to accommodate reasonable
departures from the rule on meal break length where, under a
CBA, labor and management have agreed on that issue.
¶8 We therefore reverse the court of appeals and remand
for entry of summary judgment in favor of Husco.
I. FACTS & PROCEDURAL HISTORY
11
The level of deference we grant in this situation has
been compared to the "great weight" deference sometimes applied
to an agency's statutory interpretations.
[F]or an agency's interpretation of its own rules or
regulations, if the interpretation is reasonable and
consistent with the intended purpose, we generally
apply either "controlling weight" or "great weight"
deference. However, despite the difference in
terminology, the deference we give to an agency
interpretation of its own rules is similar to the
great weight standard applied to statutory
interpretations. Both great weight deference and
controlling weight deference turn on whether the
agency's interpretation is reasonable and consistent
with the meaning or purpose of the regulation or
statute.
DaimlerChrysler v. Labor & Indus. Review Comm'n, 2007 WI 15,
¶15, 299 Wis. 2d 1, 727 N.W.2d 311, opinion clarified on denial
of reconsideration, 2007 WI 40, ¶15, 300 Wis. 2d 133, 729 N.W.2d
212 (internal citations omitted) (emphasis added).
7
No. 2013AP265
¶9 There is no dispute on the central facts: that for
decades, the union and Husco agreed, via the CBA, to unpaid meal
breaks shorter than 30 minutes; that DWD § 274.02 allows parties
to a CBA to obtain a waiver for such a practice; and that no
such waiver was obtained. From 1983 through 2007, successive
CBAs between Husco and District No. 10 of the International
Association of Machinists and Aerospace Workers Union (District
10) provided that meal breaks would be unpaid and last 20
minutes. All parties agree that these were the terms of the CBA
in effect during the relevant period.
¶10 Following the discovery, in late 2006, that DWD
§ 274.02 was in conflict with the CBA provision, District 10
sent a letter to Husco asserting that Husco was required to pay
employees for the unpaid breaks notwithstanding the CBA. Husco
instead proposed that Husco and District 10 jointly seek a
waiver from DWD to resolve the matter. District 10 declined to
do so unless Husco gave the employees new, additional monetary
concessions in return, such as cash payments or reinstatement of
employee pensions. Husco declined to do so. When the parties
were unable to reach a resolution, Husco unilaterally extended
8
No. 2013AP265
employee meal breaks to 30 minutes, ending the practice of the
shorter unpaid meal breaks on October 2, 2007.12
¶11 In the meantime, District 10 had filed its complaint
with DWD on February 9, 2007. In a July 16, 2007, letter, the
DWD notified the union that the DWD would not seek back pay for
the following reasons. It said even though the 20-minute unpaid
breaks were technically violations of the code, it would be
unreasonable to grant back pay because the breaks had posed no
health or safety concerns, the statute permits waivers in
circumstances such as these, and the employees had enjoyed other
benefits in exchange for the agreement to have the short unpaid
meal periods. The union sought review of the decision and
received a final determination from the agency that no back pay
would be sought. The union requested reconsideration, and the
Department "reaffirm[ed] the earlier final determination."
¶12 The plaintiffs then brought suit in state court
pursuant to Wis. Stat. § 109.03(5), which authorizes such
claims: parties may choose to pursue administrative remedies and
then file in civil court if necessary, or they may bring the
12
The company's right to act unilaterally to alter the meal
breaks was disputed by the union and was resolved through
arbitration pursuant to the CBA. That dispute is not relevant
to the issues before us.
9
No. 2013AP265
claim directly to civil court.13 Husco then successfully removed
the action to federal court on the grounds that plaintiffs'
claim required interpretation of the CBA and was thus subject to
Section 301 preemption. Husco raised affirmative defenses of
unjust enrichment, equitable estoppel, waiver, and failure to
mitigate damages. Husco also filed a third-party claim against
District 10 seeking indemnification for any wage liability on
the grounds that the union had breached its contractual duty of
good faith and fair dealing, and on grounds of unjust enrichment
and promissory estoppel.
¶13 The case proceeded in federal court for a time, and
the United States District Court for the Eastern District of
13
Wisconsin Stat. § 109.03(5) states:
Each employee shall have a right of action against any employer for the full amount of
the employee's wages due on each regular pay day as provided in this section and for
increased wages as provided in s. 109.11 (2), in any court of competent jurisdiction. An
employee may bring an action against an employer under this subsection without first
filing a wage claim with the department under s. 109.09 (1).
(Emphasis added.) See also German v. Wis. Dep't of Transp., Div. of State Patrol, 2000 WI 62,
¶10, 235 Wis. 2d 576, 612 N.W.2d 50. In this case the Husco employees opted to file a wage
claim with the Department and exhausted administrative remedies within the Equal Rights
Division of the Department of Workforce Development. (Claims involving unemployment
insurance, worker's compensation, and employment discrimination may be appealed to the Labor
and Industry Review Commission; however, LIRC's jurisdiction does not extend to wage claims.
See Wis. Admin. Code § LIRC 1.01.)
Wisconsin Stat. § 227.52 also provides a mechanism for judicial review of certain administrative
decisions; a DWD decision on wage claims such as this one does not fall into any of the
categories excluded from judicial review in that statute. Plaintiffs in this case did not bring their
claim under Wis. Stat. § 227.52; they brought the claim under Wis. Stat. § 109.03(5).
10
No. 2013AP265
Wisconsin certified it as a class action. But the district
court ultimately remanded the case to state court on its own
motion, holding that, contrary to Husco's contention,
plaintiffs' claim was not a Section 301 claim. Consistent with
its ruling in a contemporaneous case with virtually identical
facts, the district court ruled that there was no basis for
federal jurisdiction.14
¶14 Its analysis focused on the two objectives for federal
law preemption of state law in labor disputes: to keep states
from "purport[ing] to determine the meaning of collective-
bargaining agreements" and to keep plaintiffs from "bypass[ing]
arbitration over a claim for breach of the agreement."15 It
observed that "[t]his claim is not one in which state law
purports to determine the meaning of terms in the CBA. Nor does
plaintiffs' right to relief depend on establishing a breach of
the CBA."16 It noted that in the absence of original federal
subject matter jurisdiction conferred by a Section 301 claim, it
had no authority to hear the case and that it had therefore also
been without authority to certify the case as a class action.
14
Aguilar v. Husco Int'l, Inc., No. 2:08-cv-0015-LA,
unpublished slip op. at 2 (E.D. Wis. August 11, 2011).
15
Id. at 3.
16
Id. at 4.
11
No. 2013AP265
¶15 Back in state court, in Milwaukee County Circuit
Court, the parties stipulated to having the case certified as a
class action. All parties stipulated that there were no
material factual disputes and the matter was appropriate for
summary judgment; nevertheless, the circuit court denied summary
judgment motions from all parties on the grounds that there
existed material factual disputes requiring credibility
determinations.17
¶16 All parties sought interlocutory review of the circuit
court's order. On review, the court of appeals held that the
matter was ripe for summary judgment.18 It reversed the circuit
court's denial of summary judgment to the employees and granted
summary judgment to the employees on the wage claim on the
grounds that "absent a waiver from the DWD, Husco cannot
circumvent its statutory obligation to compensate the employees
for breaks under 30 minutes."19 It held that Husco's third-party
claim against District 10 had to be dismissed given that it
17
The circuit court reasoned that there was a material
issue of fact as to whether each member of the class made an
intentional, knowing, voluntary, and understanding waiver of his
or her rights. As noted above, we agree with the court of
appeals that there is nothing in the record on which to base a
finding that disputed facts existed that precluded summary
judgment.
18
Aguilar, 354 Wis. 2d 526, ¶11.
19
Id., ¶14.
12
 No. 2013AP265
depended substantially on interpretation of the CBA and was
therefore preempted by Section 301. The parties petitioned and
cross-petitioned for review, and we granted both the petition
and the cross-petition.
II. STANDARD OF REVIEW
¶17 This court applies the same summary judgment standards
as the circuit court, pursuant to Wis. Stat. § 802.08(2) and
Bell v. County of Milwaukee, 134 Wis. 2d 25, 30, 396 N.W.2d 328
(1986). Summary judgment is appropriate when there are no
issues of material fact and only a question of law is presented.
Id. As to the first question concerning the application of
federal labor contract law, "[t]he pre-emptive effect of § 301
is a question of law." Miller Brewing Co. v. Dep't of Indus.,
Labor & Human Relations, Equal Rights Div., 210 Wis. 2d 26, 33,
563 N.W.2d 460 (1997). As to the second, in which we review a
decision of the DWD concerning DWD §274.02, the standard is well
established:
[F]or an agency's interpretation of its own rules or
regulations, if the interpretation is reasonable and
consistent with the intended purpose, we generally
apply either "controlling weight" or "great weight"
deference. However, despite the difference in
terminology, the deference we give to an agency
interpretation of its own rules is similar to the
great weight standard applied to statutory
interpretations. Both great weight deference and
controlling weight deference turn on whether the
agency's interpretation is reasonable and consistent
13
No. 2013AP265
with the meaning or purpose of the regulation or
statute.
DaimlerChrysler v. Labor & Indus. Review Comm'n, 2007 WI 15,
¶15, 299 Wis. 2d 1, 727 N.W.2d 311, opinion clarified on denial
of reconsideration, 2007 WI 40, ¶15, 300 Wis. 2d 133, 729 N.W.2d
212 (internal citations omitted). Further, an interpretation
that is subject to such deference needs to "merely be reasonable
for it to be sustained." Harnischfeger Corp. v. Labor & Indus.
Review Comm'n, 196 Wis. 2d 650, 661, 539 N.W.2d 98 (1995). "An
administrative agency's interpretation of its own rules is
controlling unless plainly erroneous or inconsistent with the
language of the rule." State v. Busch, 217 Wis. 2d 429, 441,
576 N.W.2d 904 (1998).
III. SECTION 301 PREEMPTION
¶18 As noted above, the first question our analysis must
answer when we are presented with a labor dispute is whether, as
to plaintiffs' claim, federal law preempts state law. As noted
above, this court set forth the rationale and framework for
Section 301 preemption in Miller Brewing, 210 Wis. 2d at 35-40:
[Section] 301 pre-emption preserves the central role
of arbitration in labor disputes, by ensuring that
employees exhaust the grievance procedures set forth
in a [CBA] before bringing a claim in court. . . .
[Section] 301 pre-emption ensures that common terms in
collective bargaining agreements are not given
different interpretations in different
jurisdictions . . . .
Miller Brewing, 210 Wis. 2d. at 37 (internal citations omitted).
To accomplish its purposes, Section 301 is given "unusual pre-
14
No. 2013AP265
emptive power." Livadas v. Bradshaw, 512 U.S. 107, 122 n.16
(1994). Conversely, preemption does not apply where its
application would not accomplish those purposes: "[W]hen the
collective bargaining agreement is merely a tangential
consideration in the resolution of an otherwise independent
state law action or where resort to its provisions is merely pro
forma, we can say with confidence that such consultation does
not trigger § 301 preemption." Loewen Group Int'l Inc. v.
Haberichter, 65 F.3d 1417, 1422 (7th Cir. 1995). The test is
therefore whether the state law claim "requires the
interpretation of a collective bargaining agreement." Miller
Brewing, 210 Wis. 2d at 39.
¶19 That test is clear and its application here is
straightforward. Federal preemption does not apply to
plaintiffs' claim because this dispute requires no
interpretation of the CBA. Though Husco won removal to federal
district court on the grounds that plaintiffs' claim was subject
to Section 301 preemption, it no longer makes that argument.
The parties have since shifted their focus to the applicability
15
No. 2013AP265
of preemption to Husco's equitable defenses20 and to Husco's
third-party claim against District 10 for indemnification.
Given our resolution of the case on other grounds, it is
unnecessary to reach either of those issues.
¶20 In this case, the claim is that employees are
entitled to back pay under DWD § 274.02. The CBA permitted
unpaid meal breaks that were 10 minutes shorter than the
regulation requires for unpaid meal breaks. There is no
assertion that the CBA's terms were violated or that the CBA
itself requires that Husco pay employees for the meal break
time. There is no dispute about any of the terms of the CBA,
nor is there any dispute about the interplay between the CBA and
the regulation that requires us to define and put a value on any
other benefits employees received under the CBA. The sole
question is whether the DWD's interpretation of its own rule was
20
In general, a defense that implicates federal preemption
cannot serve as the basis for original federal court
jurisdiction; such jurisdiction is based on whether the claim
itself arises under federal law. However, when Congress has
completely preempted a given area of state law, the complete
preemption exception permits recharacterization of a plaintiff's
state law claim as a federal claim. Bruneau v. Federal Deposit
Ins. Corp., 981 F.2d 175, 179 (5th Cir. 1992). As to whether a
defense requiring interpretation of a CBA is sufficient to
compel § 301 preemption such that federal law governs the claim,
there is a circuit split in federal courts. See Schacht v.
Caterpillar, 503 U.S. 926, 927 (1992) (J. Blackmun dissenting)
(noting the split over whether a claim can be preempted by a
defense requiring interpretation of a CBA).
16
No. 2013AP265
reasonable. Answering that question does not require the court
to construe any of the terms of the CBA. It is, in the words of
Miller Brewing, a "dispute concerning employment" that
"tangentially involv[es] a collective bargaining agreement."
Miller Brewing, 210 Wis. 2d at 39. There is therefore no
requirement that federal law govern our analysis.
IV. DWD'S INTERPRETATION OF ITS OWN REGULATION
¶21 "Under the authority of § 103.02 the DWD has
promulgated an administrative rule requiring employers to pay
employees for on-duty meal periods. Wis. Admin. Code § DWD
274.02(3)." German v. Wisconsin Dept. of Transp., Div. of State
Patrol, 2000 WI 62, ¶10, 235 Wis. 2d 576, 612 N.W.2d 50. Given
that this case presents an agency's interpretation of its own
regulation, the question we next address, applying the
appropriate standard of review, is whether the DWD decision in
this case is "reasonable" and "consistent with the purpose of
the regulation."
¶22 The regulation that we are concerned with, DWD
§ 274.02, states that meal breaks of under 30 minutes cannot be
unpaid. In interpreting its regulation, the DWD also took into
consideration DWD § 274.05, which permits waivers for the meal-
break rule for parties to a CBA.
¶23 Wisconsin Admin. Code § DWD 274.02 states, "The
employer shall pay all employees for on-duty meal periods, which
are to be counted as work time. An on-duty meal period is a meal
17
No. 2013AP265
period where the employer does not provide at least 30 minutes
free from work."
¶24 Wisconsin Admin. Code § DWD 274.05 states that, with
exceptions that are not applicable here,
[W]here a collectively bargained agreement exists, the
department may consider the written application of
labor and management for a waiver or modification to
the requirements of this chapter based upon practical
difficulties or unnecessary hardship in complying
therewith. If the department determines that in the
circumstances existing compliance with this chapter is
unjust or unreasonable and that granting such waiver
or modification will not be dangerous or prejudicial
to the life, health, safety or welfare of the
employees, the department may grant such waiver or
modification as may be appropriate to the case.
¶25 The DWD interpretation of DWD 274.02 in this factual
situation focused on the availability of the waiver and the lack
of any prejudice to the life, health, safety, or welfare of the
employees. The record contains three documents from DWD: the
initial determination by an investigator, the agency's final
determination, and a letter reaffirming the final determination.
¶26 The initial decision of the DWD Labor Standards
Investigator is dated July 15, 2007.21 This letter to counsel
regarding the employee's back-pay claim against Husco states
that the investigator has "reviewed all of the information
provided by both sides in this matter." It briefly recites the
evidence the investigator has considered and cites to the
21
The DWD case number for this case, Thomas Kieckhefer v.
Husco International, Inc., is Equal Rights Division Case
200700593.
18
No. 2013AP265
regulation. It states, "It is not disputed that the parties
failed to request a waiver from the department under DWD 274.05.
However, that is a technical violation of the code." After
noting that there was no reason to think that the agreement
"jeopardized the life, health, safety or welfare" of the
employees and that the meal-break length had been a part of "the
give and take of collective bargaining," the decision concluded,
"Based on my review of this matter, the factors required to
approve a waiver or modification of DWD 272.02 are present in
the facts of this case." The letter advised of the availability
of administrative review.
¶27 The agency's final determination, dated September 17,
2007, is a letter from Labor Standards Bureau Director Robert S.
Anderson to plaintiff's counsel in response to the request for
administrative review. The letter makes the following
statements:
- "This letter constitutes the department's review of the
initial determination and final determination in this
matter."
- "You have appealed the initial determination with respect
to the department's decision not to collect any back
wages for the workers."
- "The department believes that collecting unpaid wages for
the meal periods in question would result in an unjust
enrichment of the workers in this case.
. . . Consequently, the department reaffirms its
19
No. 2013AP265
position not to seek collection of any back wages in this
case."
¶28 The final determination was affirmed by a third
letter, also signed by Director Anderson and dated October 8,
2007, which states that it is a response to counsel's request
for the Department to "reconsider its final determination" in
the case. This letter states, "On behalf of the department I am
reaffirming the earlier final determination. . . . The
department therefore is hereby closing its case in this matter."
The letter also observed that Wisconsin statutes provide the
option to bring civil suit against the employer.
¶29 We first address the parties' disagreement about
whether the DWD decision constitutes the kind of agency decision
that is accorded deference.
¶30 At the circuit court summary judgment motion hearing,
the circuit court asked the parties for their positions on the
significance of the DWD decision. Plaintiffs' counsel agreed
with the characterization that "what the DWD did here is not
binding on the court." Counsel for Husco acknowledged that the
DWD decision was not "binding on the court" and stated its
position as being that DWD's interpretation of rules was
"controlling." Husco did not take the position that plaintiffs
"are precluded from bringing a claim." No party asserts that
the DWD decision is "binding" on this court.
¶31 The correct question is not whether the DWD decision
is binding; there is no authority for the proposition that an
agency interpretation of its own rules is binding on a court.
20
No. 2013AP265
The correct question is whether there is an agency
interpretation of its own regulations, and if so, whether that
interpretation is reasonable and consistent with the purpose of
the regulation, and, therefore, entitled to controlling weight
deference.
¶32 Plaintiffs dispute the characterization that there is
an agency decision in this case that should be accorded
deference. Plaintiffs cite to Building Trades Council v.
Waunakee Community School District, 221 Wis. 2d 575, 585 N.W.2d
726 (Ct. App. 1998), for the proposition that "[o]pinions by a
single agency employee are not an official interpretation by the
agency and are not entitled to any deference from the Court."
Resp. Br. at 26. In that case, a party sought to obtain "great
deference" to the propositions in two letters it had obtained
from state employees for use as evidence to bolster its open
records request. Id. at 588. The letters were not decisions
from prior proceedings in the case, and the court noted that the
first document was "not at all the type of contested-case agency
decision to which . . . courts will traditionally accord some
degree of deference[,]" and the second was "no more than a
statement of the writer's understanding of a position taken by
another state agency." Id. at 588-589. In contrast, the DWD
decision at issue in this case was quite clearly the result of a
contested process and involved the submission of evidence and
arguments by both parties. The DWD issued what it deemed "the
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department's review of the initial determination and final
determination in this matter."22
¶33 The other cases Plaintiffs cite for the proposition
that discretionary agency decisions are not "final agency
decisions subject to judicial review" are likewise inapplicable
and unpersuasive. See Wis. Environmental Decade v. Public
Service Comm'n, 93 Wis. 2d 650, 659, 287 N.W.2d 737 (1980)
(determining that an order denying a petition for an
investigation did not qualify as an administrative decision for
purposes of judicial review under Wis. Stat. Chap. 227); Tyler
v. State Dept. of Public Welfare, 19 Wis. 2d 166, 119 N.W.2d 460
(1963) (holding that there was no legal right to court review of
parole board decision because there is no legal right to release
on parole); and Wisconsin Professional Police Ass'n v. Public
Service Comm'n, 205 Wis. 2d. 60, 555 N.W.2d 179 (1996)
(reviewing a discretionary decision by the Commission "under the
arbitrary and capricious standard").
¶34 Unlike those examples, this case involves two parties
represented by counsel who prepared information and submitted it
for review to the agency investigator. The plaintiffs appealed
and later requested reconsideration from the agency. The facts
22
Plaintiffs compare these letters to the affidavit of
Robert Anderson, prepared for this litigation after he left the
DWD and after litigation started, that Husco relied on as
evidence that the waiver would have been granted if requested.
Our decision is based on the agency's determination as
represented in the Sept. 17, 2007, letter and not on the
contents of the Anderson affidavit.
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No. 2013AP265
were limited and undisputed. There is no question that the
regulation was promulgated by DWD and no question that it is the
agency charged with administering and resolving employment
disputes. We therefore treat the DWD decision as one by an
agency interpreting its own rules. As noted above, the standard
we employ when reviewing an agency's interpretation of its own
rules is that it is due controlling weight. This recognizes the
expertise and experience of DWD in both legal questions raised
by employment disputes and technical matters such as formulas
for back-pay calculations. See Kuhnert v. Advanced Laser
Machining, Inc., 2011 WI App 23, ¶12, 331 Wis. 2d 625, 794
N.W.2d 805 (stating that "the department's methodology for
calculating . . . overtime pay is entitled to great weight
deference. . . . [N]either the statutes nor the administrative
code define 'regular rate of pay' or the appropriate method for
calculating it.")
¶35 The facts set forth above show the text of the
regulations and the reasoning of the Department. The DWD
decision rests in large part on the investigator's determination
that the failure to obtain the waiver that would have satisfied
the regulation was "a technical violation" that did not warrant
awarding back pay because "the factors required to approve a
waiver or modification of DWD 272.02 are present in the facts of
this case."
¶36 We cannot say that the decision not to pursue an award
of back pay is unreasonable. As noted above, the "controlling
weight" given to an agency's interpretation of its own
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No. 2013AP265
regulations is the equivalent of the "great weight deference"
given in some circumstances to an agency's interpretation of a
statute. We have explained how great that weight is:
[T]he important difference between great weight and
due weight deference [is that] a more reasonable
interpretation overcomes an agency's interpretation
under due weight deference, while under great weight
deference, a more reasonable interpretation will not
overcome an agency's interpretation, as long as the
agency's interpretation falls within a range of
reasonableness.
UFE, Inc. v. LIRC, 201 Wis. 2d 274, 288, 548 N.W.2d 57 (1996).
To find for Plaintiffs, we would have to take the position that
in spite of the fact that there was no violation of the CBA (the
terms of which they agreed to); no allegation of risk to
workers' life, health, safety or welfare; and no likely
alternative to simply adding ten minutes to the lunch break (and
as a result, imposing a longer workday)——which is exactly what
later happened——it is outside the range of reasonableness for
DWD to deny back pay and deem the violation to be technical. In
fact, simply put, DWD's determination is reasonable.
¶37 Nor can we say that it is contrary to the purpose of
the regulation. Where the regulation contains an exemption that
applies under specific circumstances and the exemption may be
granted in the Department's discretion, the regulation's purpose
is served where the Department has made such a determination.
¶38 We therefore reverse the court of appeals and remand
for entry of summary judgment in favor of Husco.
V. CONCLUSION
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No. 2013AP265
¶39 Plaintiffs pursued this claim in circuit court after
exhausting their administrative remedies, so we have the benefit
in this case of the agency's interpretation of DWD § 274.02, its
own regulation, which is given "controlling weight" if it is
"reasonable and consistent with the meaning and purpose of the
regulation." We conclude that the Department's interpretation
and decision to deny recovery of back pay in this case is
reasonable and consistent with the purpose of the regulation
because the regulation's purpose is to protect the life, health,
safety, and welfare of the employees and to accommodate
reasonable departures from the rule on meal break length where,
under a CBA, labor and management have agreed on that issue.
¶40 We therefore reverse the court of appeals and remand
for entry of summary judgment in favor of Husco.
By the Court.—Reversed and remanded.
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