Brandy L. Walczak v. Labor Works-Fort Wayne, LLC, d/b/a Labor Works

FOR PUBLICATION
ATTORNEYS FOR APPELLANT: ATTORNEYS FOR APPELLEE:
PHILIP J. GIBBONS, JR. F. LARKIN FORE
ANDREW G. JONES
Gibbons Jones, P.C.
Fore Miller & Schwartz
Louisville, Kentucky FILED
Indianapolis, Indiana Mar 05 2012, 9:38 am
MICHAEL T. YATES
RYAN S. ROSS CLERK
of the supreme court,
More Miller Yates & Ross court of appeals and
tax court
Fort Wayne, Indiana
IN THE
COURT OF APPEALS OF INDIANA
BRANDY L. WALCZAK, Individually and on )
behalf of those similarly situated, )
)
Appellant, )
)
vs. ) No. 02A04-1109-PL-509
)
LABOR WORKS-FORT WAYNE, LLC, )
d/b/a LABOR WORKS,
)
Appellee. )
APPEAL FROM THE ALLEN SUPERIOR COURT
The Honorable Stanley A. Levine, Judge
Cause No. 02D01-1002-PL-31
March 5, 2012
OPINION - FOR PUBLICATION
FRIEDLANDER, Judge
Brandy L. Walczak, on behalf of herself and all others similarly situated, appeals the
trial court’s grant of summary judgment in favor of Labor Works – Fort Wayne, LLC (Labor
Works) in her action for unpaid wages. Walczak frames the issue in this dispute as one of
standing, i.e., whether she has standing to sue for improper payroll deductions and unpaid
wages under Ind. Code Ann. § 22-2-5-1 et seq. (West, Westlaw through end of 2011 1st
Regular Sess.) (the Wage Payment Statute) and I.C. § 22-2-6-1 et seq. (West, Westlaw
through end of 2011 1st Regular Sess.) (the Wage Deduction Statute). We address the
following related but different issue: Did the trial court have subject-matter jurisdiction over
Walczak’s lawsuit?
We reverse and remand with instructions.
The relevant facts are that Labor Works is a company that provides temporary day-
laborer services to businesses in the Fort Wayne area. Those businesses communicate to
Labor Works that they will need a certain number of laborers on specified days to perform
specified tasks. In order to meet the need for laborers, Labor Works selects persons who
have appeared at its facility on the day in question, having already completed certain steps to
become eligible to accept an assignment for work. These steps include: (1) the completion
of a pre-employment form, providing information such as work history and hours of
availability, (2) submit to an interview with a Labor Works representative; and (3) sign forms
pertaining to (a) Labor Works’s substance-abuse policy, (b) agreements that the applicant
will reimburse Labor Works in the event the employee loses or destroys work equipment
provided by Labor Works, and (c) the applicant’s agreement to pay transportation costs to
and from work sites in the event that the applicant uses Labor Works transportation.
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After passing Labor Works’s vetting process, applicants appear at Labor Works’s
facility in the morning, where they might receive a work assignment, although none is
guaranteed. The assignment is good for one day only and the applicant is paid for work at
the end of the day on which it was performed.
Beginning on December 20, 2009, and continuing until March 9, 2010, Walczak
sought work through Labor Works on a sporadic basis. Of relevance in this appeal, she was
hired by Labor Works to work on January 27, 2010. She did not seek work on January 28,
but did report to Labor Works on January 29. No work was offered to her on that day. She
did not seek work again at Labor Works until February 2. Meanwhile, on February 1, 2010,
Walczak filed a lawsuit on behalf of herself and others similarly situated against Labor
Works alleging violations of the Wage Payment Statute and the Wage Deduction Statute.
On October 22, 2010, Labor Works filed a motion for summary judgment. Citing I.C.
§ 22-2-9-2 et seq. (West, Westlaw through end of 2011 1st Regular Sess.) (the Wage Claims
Statute), Labor Works contended that Walczak did not have a right to file her lawsuit and
that the court did not have jurisdiction over her claim. The Wage Claims Statute states, in
relevant part, as follows:
Whenever any employer separates any employee from the pay-roll, the unpaid
wages or compensation of such employee shall become due and payable at
regular pay day for pay period in which separation occurred: Provided,
however, [t]hat this provision shall not apply to railroads in the payment by
them to their employees.
I.C. § 22-2-9-2(a). Moreover, I.C. § 22-2-9-4 (West, Westlaw through end of 2011 1st
Regular Sess.), provides that actions brought under the Wage Claims Statute must be
resolved as follows:
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It shall be the duty of the commissioner of labor to enforce and to insure
compliance with the provisions of this chapter, to investigate any violations of
any of the provisions of this chapter, and to institute or cause to be instituted
actions for penalties and forfeitures provided under this chapter. The
commissioner of labor may hold hearings to satisfy himself as to the justice of
any claim, and he shall cooperate with any employee in the enforcement of any
claim against his employer in any case whenever, in his opinion, the claim is
just and valid.
Pursuant to this provision, only the Commissioner of the Department of Labor (the DOL)
may investigate and initiate such claims against the employer. Labor Works contended in its
motion that Walczak did not have standing to file the lawsuit in the Allen Superior Court
because the claim arose under I.C. § 22-2-9-4, pursuant to which she was required to file her
claim with the DOL. This, in turn, was based upon the claim that Walczak was “separated
from the pay-roll” within the meaning of I.C. § 22-2-9-2 at the time she filed her complaint.
In summary, there are two separate statutes that govern actions to recover unpaid wages.
One, the Wage Payment Statute, applies to current employees and employees who
voluntarily leave employment, either temporarily or permanently. See St. Vincent Hosp. &
Health Care Ctr., Inc. v. Steele, 766 N.E.2d 699 (Ind. 2002). The other, the Wage Claims
Statute, governs actions involving employees who were involuntarily separated from
employment at the time the claim was filed. The parties agree that this appeal turns upon the
determination of which statute applies to Walczak.
We note first Walczak’s argument that the Wage Claims Statute applies only in cases
where the claimant was fired (or whose work was suspended due to a labor dispute).
Because Walczak was not “fired” in the traditional sense of that term, so the argument goes,
then the Wage Claims Statute does not apply. The trial court rejected this argument in
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granting summary judgment in favor of Labor Works. We decline to address this argument,
however, because we conclude that this matter must first be submitted to the DOL for
resolution.
In Reel v. Clarian Health Partners, Inc., 917 N.E.2d 714 (Ind. Ct. App. 2009), trans.
denied, three former employees, on behalf of themselves and other employees involuntarily
separated from their former employer, filed a proposed class action against their former
employer alleging the employer did not timely pay paid-time-off wages as required by the
Wage Claims Statute. The employer filed a Trial Rule 12(B)(1) motion to dismiss their claim
for lack of subject matter jurisdiction on grounds that the Wage Claims Statute required that
their cause must first be submitted to the DOL. This court affirmed, holding that a claim
arising under the Wage Claims Statute must first be submitted to the DOL before the
aggrieved part is entitled to file a lawsuit in court. The court stated, “because these proposed
class members did not first pursue administrative proceedings, the trial court did not have
subject matter jurisdiction over their purported wage claims.” Id. at 720.
Similarly, in Hollis v. Defender Sec. Co., 941 N.E.2d 536 (Ind. Ct. App. 2011), trans.
denied, a former employee brought an action against his former employer on behalf of
himself and others alleging that his former employer had violated the Wage Payment Statute
by failing to pay agreed wages in a timely fashion. The employer filed a motion to dismiss
the claim on grounds that the employee had failed to exhaust his administrative remedies.
The dispositive issue in that case was whether the claim was properly designated as arising
under the Wage Claims Statute or the Wage Payment Statute. The trial court granted the
motion, concluding that the claim arose under the Wage Claims Statute. The pivotal
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determination in that case was that “an employee’s status at the time he or she files the claim
is the relevant inquiry in determining whether to proceed under the Wage Payment Statute or
the Wage Claims Statute.” Hollis v. Defender Sec. Co., 941 N.E.2d at 540. Based upon this
determination, we held: “Instead of submitting his claims to the DOL, as required by Wage
Claims Statute, [he] improperly filed a complaint based on the Wage Payment Statute.
Because [he] did not allege any Wage Claims Statute violations and submit his claims to the
DOL, the trial court properly dismissed [his] claims.” Id.Reel and Hollis indicate that the failure to file with the DOL a claim that properly
belongs under the Wage Claims Statute divests the trial court of subject-matter jurisdiction.
In those cases, however, the ruling under review was a dismissal for want of subject-matter
jurisdiction. In this case, we review a grant of summary judgment on grounds that the claim
should have been brought under the Wage Claims Statute and therefore that the trial court
lacked subject-matter jurisdiction in this action. There is authority for the proposition that a
case that should properly have been brought under the Wage Claims Statute, but was not,
may be resolved in the manner it was here, i.e., via summary judgment. See Gavin v. Calcars
AB, Inc., 938 N.E.2d 1270, 1272 (Ind. Ct. App. 2010) (having determined that the appellant’s
claim should have been submitted to the DOL, the court stated, “his complaint is barred as a
matter of law), trans. denied. See Ind.Code § 22–2–9–4. The trial court did not err when it
entered summary judgment in favor of [the employer]”). Which approach is appropriate
here?
We have received some guidance on this question in Johnson v. Celebration
Fireworks, Inc., 829 N.E.2d 979 (Ind. 2005). In Johnson, Celebration Fireworks, Inc., a
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fireworks seller, brought an action against the State Fire Marshal requesting, among other
things, a permanent injunction and declaratory judgment to prevent the Fire Marshal from
requiring certificates of compliance for each of the seller’s alleged “wholesale” locations.
The Fire Marshal is charged by statute with the responsibility of regulating the sale of both
legal and restricted fireworks, including the issuance of retail sales permits and wholesale
certificates of compliance. Pursuant to Ind. Code Ann. § 22-11-14-5 (West, Westlaw through
end of 2011 1st Regular Sess.), a wholesaler of restricted fireworks must pay a $1,000 annual
fee to operate in Indiana. The Fire Marshal had consistently interpreted this provision to
require payment of the $1,000 fee for each wholesale location a fireworks wholesaler
operates within the state. By 1994, Celebration Fireworks had opened ninety-six retail
locations in the state, and from 1991-94 paid the assessed $1000 fee per location. In 1995,
however, Celebration tendered only one fee payment of $1000, designating that payment as
pertaining to its central warehouse. Celebration claimed that its retail locations were not
“wholesale” locations within the meaning of I.C. § 22-11-14-5 and therefore that it was not
required to pay fees with respect to those facilities.
Without seeking available administrative review of the Fire Marshal’s interpretation
of I.C. § 22-11-14-5, Celebration filed a lawsuit seeking, among other things, (1) a refund for
fees it had paid in previous years for all but its central warehouse, (2) permanent injunctive
relief; and (3) a declaratory judgment concerning the proper interpretation of I.C. § 22-11-14-
5. The trial court issued a temporary restraining order enjoining the Fire Marshal from
seizing any fireworks on the basis of Celebration’s failure to obtain Certificates of
Compliance for each of its locations where restricted fireworks were sold. The State appealed
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and this court reversed. See Boatwright v. Celebration Fireworks, Inc., 677 N.E.2d 1094(Ind. Ct. App. 1997). We remanded the case for a resolution of its remaining issues.
On remand, following a bench trial, the trial court entered judgment in favor of
Celebration for $302,000. The Fire Marshal and the State appealed the judgment, contending
that the trial court had no subject-matter jurisdiction over the matter because Celebration had
failed to exhaust its administrative remedies. This court affirmed the judgment on grounds
that exhaustion of remedies was not required because compliance would be futile, “and there
is doubt as to the availability of an administrative remedy.” Johnson v. Celebration
Fireworks, Inc., 829 N.E.2d at 982. The Supreme Court granted transfer, addressing
primarily the question of whether the exhaustion of remedies was required under those
circumstances. The court noted its decision in Indiana Dep’t of Envtl. Mgmt. v. Twin Eagle
LLC, 798 N.E.2d 839 (Ind. 2003) that exhaustion is not required “‘[t]o the extent the issue
turns on statutory construction, [and] whether an agency possesses jurisdiction over a matter
[as that] is a question of law for the courts.’” Johnson v. Celebration Fireworks, Inc., 829
N.E.2d at 983 (quoting Indiana Dept. of Envtl. Mgmt. v. Twin Eagle LLC, 798 N.E.2d at 841-
42). The Supreme Court determined that this court was incorrect in holding that the Fire
Marshal’s authority under I.C. § 22-11-14-5 was a question of statutory construction and thus
a pure question of law, which relieved Celebration from the obligation to exhaust its
administrative remedies. The Supreme Court determined instead that the question of whether
Celebration’s ninety-six retail locations were “wholesale” locations within the meaning of
I.C. § 22-11-14-5 was a question of fact properly resolved through the administrative
process. See Johnson v. Celebration Fireworks, Inc., 829 N.E.2d 979. We conclude that the
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same result obtains here.
The determination of whether, when she filed her complaint in the instant action,
Walczak was separated from the payroll by Labor Works within the meaning of the Wage
Claims Statute is a question of fact, not a matter of statutory interpretation. See id. We also
note in support of our decision this court’s recent decision in Outboard Boating Club of
Evansville, Inc. v. Indiana State Dep’t of Health, 952 N.E.2d 340 (Ind. Ct. App. 2011). In it,
the appellant, a camping facility, argued that it was not subject to the Indiana State
Department of Health’s (ISDH) jurisdiction over campgrounds and thus that it need not resort
to administrative procedures before presenting the question to the court in a lawsuit. We held
that there was no abstract question of law concerning the ISDH’s general authority to
regulate campgrounds. Rather, we observed, the argument against exhaustion was that “the
particular facilities at issue are not subject to the ISDH’s regulatory jurisdiction over
campgrounds. This question of jurisdiction over a particular site is precisely the type of fact
sensitive issue the Twin Eagle court concluded should be resolved in the first instance by the
administrative agency.” Id. at 345. Similarly, in this case the argument is that the wage
claims of Walczak in particular, and perhaps day-laborers as a group,1 are not subject to the
1
We note in this regard that the parties focused much energy below and in their appellate briefs on the
relevance of Walczak’s status at Labor Works on the day the instant complaint was filed, i.e., February 1,
2010. If we understand the gist of the arguments, it would appear that Labor Works more or less concedes
that if Walczak had filed her complaint on a day that she worked at, and therefore drew a paycheck from,
Labor Works, the claim could properly have been filed under the Wage Payment Statute (e.g., Walczak’s
“status on this date is the dispositive issue before this Court”). Appellee’s Brief at 21. We find much merit to
Walczak’s contention that tethering the viability of a claim under the Wage Payment Statute to something as
ephemeral as whether a day-laborer worked on a particular day would lead to “absurd result[s].” Appellant’s
Brief at 10. It seems to us that, in view of the purpose of the Wage Claims Statute, day-laborers such as
Walczak, whose employment is transitory by definition, can be deemed to be in the category of “separated
from the payroll” on any given day, regardless of whether they happened to work that day. See Lemon v.
Wishard Health Servs., 902 N.E.2d 297, 301 (Ind. Ct. App. 2009) (“[t]he purpose of Indiana Code section 22–
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DOL’s oversight. We believe that, as in Outboard Boating Club of Evansville, Inc. v.
Indiana State Dep’t of Health, 952 N.E.2d 340, this is precisely the type of fact-sensitive
inquiry that should be resolved in the first instance by the administrative agency.
In so holding, we are mindful of the value of requiring the completion of
administrative proceedings before resorting to judicial review, viz., (1) avoiding premature
litigation; (2) the compilation of an adequate record for judicial review; and (3) utilization of
agency expertise in a given field, see, e.g., Indiana Dep’t of Envtl. Mgmt. v. Twin Eagle LLC,
798 N.E.2d at 845 (“Twin Eagle may be correct that the particular waters at issue are not
subject to regulation, but the proper forum to address this fact sensitive issue is through the
administrative process. We therefore defer to the administrative process to determine whether
potentially dispositive factual circumstances exist here”), and (4) affording agencies the
opportunity and autonomy to correct their own errors.
We conclude that the question of whether Walczak was involuntarily separated from
the payroll within the meaning of the Wage Claims Statute is a question of fact that should
have been submitted to the DOL. Therefore, the trial court lacked subject-matter jurisdiction
over Walczak’s claims until the DOL had made a determination on that question. See Hollis
v. Defender Sec. Co., 941 N.E.2d 536 and Reel v. Clarian Health Partners, Inc., 917 N.E.2d
714. Accordingly, we reverse the grant of summary judgment in favor of Labor Works and
remand this cause to the trial court with instructions to dismiss Walczak’s complaint. See
2–9–4 … is to create a barrier to claims to be filed in court. The statute makes it clear that a claim must work
its way through the proper channels—the DOL and, if need be, the Attorney General—before it may be
brought into court”), trans. denied.
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Hollis v. Defender Sec. Co., 941 N.E.2d 536 and Reel v. Clarian Health Partners, Inc., 917
N.E.2d 714.
Judgment reversed and remanded with instructions.
RILEY, J., and MATHIAS, J., concur.
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