Hill v. Garda CL Nw., Inc.

191 Wash.2d 553

424 P.3d 207

Lawrence HILL, Adam Wise, and Robert Miller, on their own behalves and on behalf of all persons similarly situated, Respondents/Cross-Petitioners,

v.GARDA CL NORTHWEST, INC., f/k/a At Systems, Inc. a Washington Corporation, Petitioner/Cross-Respondent.

No. 94593-4

Supreme Court of Washington.

Oral Argument Date: February 27, 2018

Filed AUGUST 23, 2018

Clarence M. Belnavis, Catharine M. Morisset, Fisher & Phillips LLP, 1201 Third Avenue, Suite 2750, Seattle, WA 98101-3274, Rochelle Yvonne Nelson, Skellenger Bender PS, 1301 5th Avenue, Suite 3401, Seattle, WA 98101-2630, Alexander A. Wheatley, Attorney at Law, 111 SW 5th Avenue, Suite 4040, Portland, OR 97204-3643, for Petitioner.

Daniel Foster Johnson, Breskin Johnson & Townsend, PLLC, 1000 Second Avenue, Suite 3670, Seattle, WA 98104, Adam J. Berger, Schroeter Goldmark & Bender, 810 3rd Avenue, Suite 500, Seattle, WA 98104-1657, for Respondents.

Patrick Michael Madden, K&L Gates LLP, 925 4th Avenue, Suite 2900, Seattle, WA 98104-1158, for Amicus Curiae (King County).

Katherine Eileen Cameron, Fair Work Center, 5308 Martin Luther King Jr. Way S, Unit 10, Seattle, WA 98118-6307, Jeffrey Lowell Needle, Attorney at Law, 705 2nd Avenue, Suite 1050, Seattle, WA 98104-1759, for Amicus Curiae (Washington Employment Lawyers Association).

GORDON McCLOUD, J.

¶ 1 Garda CL Northwest Inc. operates an armored transportation service and requires its drivers and messengers to remain constantly vigilant while working. Specifically, Garda requires those employees to maintain vigilance when they take lunch breaks while on the job. The Court of Appeals ruled that this constant vigilance policy deprived the employees of a meaningful meal period, as guaranteed under WAC 296-126-092. That court also ruled that this policy violated the Washington Minimum Wage Act (MWA), chapter 49.46 RCW.

¶ 2 Under Washington law, an employer who violates the MWA owes its employees double exemplary damages unless certain exceptions apply. RCW 49.52.050, .070. One exception is for wage claims over which the employer and employees have a " ‘bona fide’ " or " ‘fairly debatable’ " dispute, meaning a dispute that is both objectively and subjectively reasonable. E.g., Wash. State Nurses Ass'n v . Sacred Heart Med. Ctr., 175 Wash.2d 822, 834, 287 P.3d 516 (2012) (internal quotation marks omitted) (quoting Morgan v . Kingen, 166 Wash.2d 526, 534, 210 P.3d 995 (2009) ; Schilling v . Radio Holdings, Inc., 136 Wash.2d 152, 161, 961 P.2d 371 (1998) ). The first question in this case is whether Garda carried its burden¹ of showing a fairly debatable dispute over whether the employees waived their state law right to meal periods in their collective bargaining agreements (CBAs). Answer & Cross-Pet. for Review at 18. The second question is whether the plaintiffs can recover both prejudgment interest under RCW 19.52.010 and double exemplary damages under RCW 49.52.070 for the same wage violation. Id. at 18-20.

¶ 3 We hold that Garda has failed to prove a bona fide dispute based on waiver. We also hold that aggrieved workers may recover both double exemplary damages under RCW 49.52.070 and prejudgment interest under RCW 19.52.010 for the same wage violation. We therefore reverse and remand to the Court of Appeals for further proceedings consistent with this opinion.

FACTS AND PROCEDURAL BACKGROUND

¶ 4 Garda operates an armored transportation service delivering currency and other valuables throughout Washington State. Typically, two Garda employees, a driver and a messenger, guard these valuables during transport. To ensure the safety of those employees and their cargo, Garda requires its drivers and messengers to remain vigilant at all times—even when they take rest breaks and meal periods.² Opening Br. of Appellant Garda at 7 ("acknowledg[ing] that because of the nature of the work—transporting Liability [ (valuables) ] in an armored truck and carrying firearms—its crew must exercise some level of alertness at all times outside a Garda facility").

¶ 5 Plaintiffs Lawrence Hill, Adam Wise, and Robert Miller are former Garda drivers and messengers. They argue that Garda’s policy of prohibiting drivers and messengers from taking vigilance-free rest breaks and meal periods violates WAC 296-126-092 (guaranteeing workers rest breaks and meal periods) and RCW 49.46.020 of the MWA (entitling employees to compensation for all hours worked). Clerk’s Papers (CP) at 2753-61, 3304-08. They filed a lawsuit on behalf of themselves and a class of similarly situated Washington drivers and messengers for compensation for these missed rest breaks and meal periods. CP at 3-8. They requested compensatory damages under RCW 49.46.040, exemplary double damages under RCW 49.52.070, and prejudgment interest under RCW 19.52.010.

¶ 6 The trial court certified the plaintiff class (hereafter "Plaintiffs"). CP at 932-34. It then ruled that WAC 296-126-092 granted Plaintiffs the right to vigilance-free rest breaks and meal periods, CP at 3352-53, and that this was made especially clear by the 2011 decision in Pellino v . Brink’s Inc., 164 Wash. App. 668, 267 P.3d 383 (2011). CP at 3810-11. Pellino held that a similar constant vigilance policy used by one of Garda’s competitors, Brink’s Inc., violated WAC 296-126-092. Pellino, 164 Wash. App. at 694-96, 267 P.3d 383. It therefore granted summary judgment to the Plaintiffs on the issue of liability. CP at 3352-54. A bench trial followed on the issue of damages and double damages.

¶ 7 The Plaintiffs sought double damages pursuant to RCW 49.52.050 and .070. Those statutes say that employers who intentionally underpay employees must pay exemplary double damages. Garda opposed double damages. Garda argued that there was a bona fide dispute over the workers’ entitlement to vigilance-free rest breaks and meal periods for four reasons³ and that such a dispute constitutes a defense to double damages under RCW 49.52.050 and .070. Garda also argued that even if there were no bona fide dispute, the workers knowingly submitted to the violation—another statutory defense to double damages. CP at 3447-48.

¶ 8 The trial court rejected Garda’s arguments and granted the Plaintiffs prejudgment interest and double damages for their missed rest breaks and meal periods, starting two weeks from the date that Pellino was issued. CP at 3810, 3821. The trial court held that Garda did not have the requisite intent to deprive the workers of their rest breaks and meal periods earlier because prior to Pellino it was fairly debatable whether WAC 296-126-092 required vigilance-free rest breaks and meal periods. CP at 3811.

¶ 9 Garda appealed several issues concerning liability.⁴ It also appealed the award of double damages but only as to the meal period violations (not the rest break violations). Lastly, Garda appealed the Plaintiffs’ recovery of both prejudgment interest and double damages for the same violations.

¶ 10 The Court of Appeals affirmed the trial court’s rulings on liability. Hillv.Garda CL Nw., Inc., 198 Wash. App. 326, 343-59, 394 P.3d 390 (2017). But it reversed the trial court’s award of double damages for meal period violations and reversed portions of the prejudgment interest award regarding rest break violations because the Plaintiffs also recovered double damages for those violations. Id. at 363-66, 394 P.3d 390. The Court of Appeals explained that Garda had established its statutory, bona fide dispute defense because the law was not that clear about whether meal periods could be waived in a CBA. Id. at 363, 394 P.3d 390. The Court of Appeals did not address whether Garda had established the bona fide dispute defense on the other issues Garda claimed were debatable: Federal Aviation Administration Authorization Act of 1994 (FAAAA) preemption, Labor Management Relations Act of 1947 (LMRA) preemption and individual waiver. Id. at 363-64, 394 P.3d 390. Nor did it address Garda’s statutory defense that the workers willfully submitted to the violation. Id. at 364, 394 P.3d 390.

¶ 11 Garda petitioned this court for review and the Plaintiffs cross-petitioned. We denied Garda’s petition but granted Plaintiffs’ cross-petition on the issues of double damages and prejudgment interest. Hill v . Garda CL Nw., Inc., 189 Wash.2d 1016, 403 P.3d 839 (2017).

ANALYSIS

I. Garda Failed To Carry Its Burden of Showing the Statutory Bona Fide Dispute Defense to Double Damages Based on Waiver

A. Under RCW 49.52.052 and .070, an Employer Is Liable for Double Damages for Wage Violations Unless It Carries the Burden of Showing That a Statutory Defense Applied

¶ 12 The trial court’s decision that Garda violated WAC 296-126-092 and is liable to the Plaintiffs for wage violations under the MWA is not before this court. The question for us relates solely to Garda’s liability for double exemplary damages under RCW 49.52.050 and .070.

¶ 13 Under those statutes, an employer who "pay[s] any employee a lower wage than the wage such employer is obligated to pay such employee" "shall be liable ... to judgment for twice the amount of the wages unlawfully ... withheld by way of exemplary damages, together with costs of suit and a reasonable sum for attorney’s fees" if the employer withheld the wages (1) "[w]ilfully and [ (2) ] with intent to deprive the employee of any part of his or her wages" and (3) the employee did not "knowingly submit[ ] to such violations." RCW 49.52.050(2), .070.

¶ 14 The standard for proving willfulness is low—our cases hold that an employer’s failure to pay will be deemed willful unless it was a result of " ‘ "carelessness or err[or]." ’ " Wash. State Nurses Ass’n, 175 Wash.2d at 834, 287 P.3d 516 (quoting Morgan, 166 Wash.2d at 534, 210 P.3d 995 (quoting Schilling, 136 Wash.2d at 160, 961 P.2d 371 ) ); see also RCW 49.52.080 (presuming willfulness). But an employer defeats a showing of willful deprivation of wages if it shows there was a "bona fide" dispute about whether all or part of the wages were really due. S...