AWN



The Honorable Susan K. Serko
Hearing Date: August 2, 2019
Hearing Time: 9:00 a.m.

IN THE SUPERIOR COURT OF THE STATE OF WASHINGTON
IN AND FOR THE COUNTY OF PIERCE

MICHEAL W. GARWICK and MATTHEW No. 18-2-09076?3
A. GRANSTROM, individually and on behalf
of all those similarly situated, PLAIN MOTION FOR PARTIAL
SUMMARY JUDGMENT
Plaintiffs,
v.
VETERANS INDEPENDENT

ENTERPRISES OF WASHINGTON, a
Washington public bene?t corporation,
DONALD HUTT, an individual, and GARY
PETERSON, an individual,

Defendants.

 

I. RELIEF REQUESTED

 

Plaintiffs seeks an order ?nding that late payment of wages is willful Withholding and that
Class 1 Plaintiffs are owed exemplary damages under the Washington Wage Rebate Act 
RCW 49.52, for wages paid late as well as prejudgment interest from the time the wages were due
until the time they were paid. Plaintiffs also seek an order ?nding that the time Class 1A employees
were permitted by Defendants to work without pay performing commercial activities is compensable
under the Washington Minimum Wage Act RCW 49.46 and awarding back wages,
exemplary damages and prejudgment interest. In addition, Plaintiffs seek an order ?nding that the

deductions taken from Class 2 members wages ?nancially bene?tted Defendants and were therefore

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unlawful under WRA and/or MWA and awarding back wages in the amounts unlawfully deducted
plus exemplary damages and prejudgment interest. Lastly, Plaintiffs seek an order that Donald Hutt
and Gary Peterson are employers under MWA and WPA and for that reason and other reasons are

personally, jointly and severally liable for all damages awarded.

II. STATEMENT OF FACTS

A. Class Members and Stated Mission and Vision of Defendant Veterans
Independent Enterprises of Washington.

The stated mission of Defendant Veterans Independent Enterprises of Washington
is to ?Provide work opportunities, housing and supportive services to Veterans with
disabilities, in transition ?om homelessness, incarceration and/or economically disadvantages
situations?. vision is ?Ensure transitioning and/or displaced Veterans receive support in
their efforts to become See Pizl Dec]. Ex. A. The class representatives
Michael Garwiek and Matthew Granstrom, as well as a majority of the certi?ed class members in
this case came to VIEW as vulnerable individuals in need of work opportunities, housing and

support services.

B. Members of Certified Class 1 were paid late on several occasions starting
February 20, 2018 and continuing through May 10, 2019.

The payroll cycle at VIEW is long-established. Wages for work performed from the ?rst
of the month to the ?fteenth of the month are paid no later than the twentieth of that month.
Wages for work performed from the sixteenth through the end of the month are paid no later than
the ?fth of the following month. If the ?fth or the twentieth fall on a holiday or weekend, the
payroll date is moved to the business date prior to the scheduled payroll date. See Pizl Bed. 112,
Ex. B. Defendants have admitted to paying employees late due to ?nancial difficulties. See Pizl
Dec]. 113, Ex. C. The business records, such as bank statements and cancelled checks, indicate

that Class 1 members were paid after the long-established pay dates. See Pizl Decl. 114, Ex. D.

C. Certified Class 1A members were permitted or by Defendants to work without
pay performing tasks related to commercial operations.

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It is undisputed that Defendants, immediately following laying them off, permitted Class
1A members to volunteer and that they worked without pay performing tasks normally
performed by paid employees in its commercial operation. Regardless of what was verbally
articulated by management and board, volunteering wasn?t truly optional. A reasonable
inference is that in order for them to go back on payroll when VIEW regained its ?nancial
stability, they needed to volunteer. Also, for many of them, VIEW also controlled their housing
and it can be inferred that they needed to volunteer or be homeless. It is undisputed as to the
hours worked as the business records, volunteer logs, detail the dates and times worked by each

class member. See Pizl Dec]. 115, Ex. E.

D. For their ?nancial benefit, Defendants deducted amounts for rent, program
fees and housing fees from the wages of Class 2 members.

Class 2 members are individuals that came to VIEW as part of its primary mission and
program. Many were homeless, transitioning from incarceration, suffering from drug and
alcohol addictions and were very much in need of work opportunities, housing and support
services that VIEW advertised. It is undisputed that when Class 2 members were place into
program, hired and placed in housing, VIEW presented them with forms authorizing
deductions from each of their wage checks for program fees, housing fees and rent and that Class
2 members signed them. It is clear that the money deducted ?nancially bene?tted Defendants as
the forms indicate that the deductions are for ?operating expenses?. See Pizl Dec]. 116, Ex. F.

111. EVIDENCE RELIED 0N

This Motion relies on the Declaration of James B. Pizl, the exhibits thereto and the records
and pleadings on ?le in this matter.

IV. STATEMENT OF ISSUES

1. Should this Court ?nd that on multiple occasions, Defendants failed to pay
members of Class 1 on the long-established, regularly scheduled pay dates and if so, should the

Court ?nd that under the WRA, late payment of wages constitutes willful withholding and award

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QUILUJNHODOOQONM-BUJNHO

 

 

exemplary damages and reasonable attorney?s fees and costs to Class 1 members for all incidents
of late payment of wages?

2. Should this Court ?nd that deductions taken from the wages of Class 2 members
?nancially bene?tted defendants and if so, should the court ?nd that those deductions were
unlawful under WRA and award back wages in the amount of the unlawful deductions, exemplary
damages, prejudgment interest and reasonable attorney?s fees?

3. Should this court ?nd that when Class 1A members were permitted to work
following layoffs, the hours were compensable under MWA and award back wages, exemplary
damages, prejudgment interest and reasonable attorney?s fees.

4. Should the Court ?nd that all Gary Peterson and Donald Hutt are employers
pursuant to MWA and WRA and for that reason and other reasons are jointly and severally liable
for all wages, exemplary damages, prejudgment interest and attorney?s fees and costs awarded.

V. ARGUMENT
A. Summary judgment standard.

This Court should grant summary judgment when there is no genuine issue of material
fact and the moving party is entitled to judgment as a matter of law. CR 56(0); Ranger Ins. Co.

v. Pierce County, 164 Wn.2d 545, 552, 192 P.3d 886 (2008). Summary judgment is designed to
do away with unnecessary trials when there is no genuine issue of material fact. LaPlante v.
State, 85 Wn.2d 154,158, 531 P.2d 299 (1975). material fact is one upon which the outcome
of the litigation depends.? Jacobsen v. State, 89 Wn.2d 104, 108, 569 P.2d 1152 (1977); Tran v.
State Farm Fire and Cas. Co., 136 Wn.2d 214, 223, 961 P.2d 358 (1998). The Court may decide
questions of fact as a matter of law when reasonable minds could reach but one conclusion. Ra??
v. County of King, 125 Wn.2d 697, 703-704, 887 P.2d 886 (1995).

When opposing a summary judgment motion, the non-moving party may not rely on bare
allegations in the pleadings, but must set forth speci?c facts showing a genuine issue of material

fact exists for trial. Baldwin v. Sisters Providence in Wash, Inc., 112 Wn.2d 127, 132, 769 P.2d

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298 (1989). The non-moving party cannot create genuine issues of material fact by ere
allegations, argumentative assertions, conclusory statements, and speculation.? Greenhalgh v.
Department of Corrections, 160 Wn. App. 706, 714, 248 P.3d 150 (2011). Nor can the non-
moving party create an issue of material fact by ?ling an af?davit that contradicts the party?s
prior sworn statements without explanation. Safeco Ins. Co. v. McGrath, 63 Wn.App, 170, 174-
175, 817 P.2d 861 (1991). A non-moving party?s self-serving statements of conclusions and
opinions are insuf?cient to defeat a summary judgment motion. Grimwood v. University of
Puget Sound, Inc., 110 Wn.2d 355, 359-361 (1988). If the non-moving party fails to show the
existence of an element essential to his or her case and on which the plaintiff will bear the burden
of proof at trial, then the moving party is entitled to judgment as a matter of law. YOung v. Key
Pharmaceuticals, Inc., 112 Wn.2d 216, 225, 770 P.2d 182 (1989).

B. The Washington Minimum Wage Act and Wage Rebate Act are Remedial
Statutes and Must Be Liberally Construed in Favor of Employees.

Washington State has a ?long and proud history of being a pioneer in the protection of
employee rights.? Drinkwitz v. Alliant Inc., 140 Wn.2d 291, 300, 996 P.2d 582 (2000).
Remedial statutes protecting employee rights must be liberally construed. Internat'l Ass ?11 of ire
Fighters, Local 46 v. City of Everett, 146 Wn.2d 29, 35, 42 P.3d 1265 (2002). A liberal
construction requires that the coverage of the statute's provisions ?be liberally construed [in favor
of the employee] and that its exceptions be narrowly con?ned.? Peninsula Sch. Dist. No. 401 v.

Pub. Sch. Employees, 130 Wn.2d 401, 924 P.2d 13 (1996).

C. Late payment of wages gives rise to a cause of action under WRA if willful.
Defendants actions in paying employees late was willful and therefore, Class 1
members are entitled to recover exemplary damages and prejudgment
interest.

An employer shall pay all wages owed to an employee on an established regular pay day
at no longer than payment intervals. WAC 296-128-035. ??Delayed? payment of wages
beyond the time frame set forth in WAC 196-128-035 does give rise to employer liability under
WRA but only where such delay is ?willful? . . Champagne v. Thurston County, 163 Wash.2d

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69,90, 178 P.3d 936 (2008) (Finding that delayed payment did not give rise to exemplary
damages only because it was not willful).

A willful withholding is ?the result of knowing and intentional action and not the result of
a bona ?de dispute.? Wingert v. Yellow Freight Sys., Inc. ,146 Wn .2d 841 849, 50 P.3d 256 (2002).
A bona ?de dispute is a fairly debatable disagreement over whether an employment relationship
exists or whether all or a portion of the wages must be paid. Schilling v. Radio Holdings, Inc. 136
Wn.2d 152, 161, 961 P.2d 371 (1998). Failure to pay wages due to ?nancial inability to do so
constitutes willful withholding with the meaning of RCW 49.52.070. Id.

Determining willfulness is a question of fact reviewed for substantial evidence. Pepe v.
University of Washington, 121 Wn.2d 479, 490, 852 P.2d 1055 (1993). ?However, where no
dispute exists as to the material facts, the court may dispose of such questions on review of
summary judgment.? Champagne, 163 Wn.2d at 81?82, 178 P.3d 936. Here, not only did the
Defendants admit the late payment in answers to interrogatories, the Defendants? business records
clearly establish that employees were paid late. See Pizl Decl. 11113-4, Ex. The Defendants?
only justi?cation for paying employees late was ?nancial dif?culty or inability to pay on time due
to cash ?ow issues, which is not a valid defense against exemplary (double) damages under WRA.
Shilling, 136 Wn.2d 152 at 166.

Business records indicate that the paychecks due on February 20, 2018 
March 5, 2018 May 18, 2018 August 20, 2018 
September 5, 2018 October 5, 2018 January 4, 2019 
January 18, 2019 March 5, 2019 and April 19, 2019 
were paid late. See Pizl Decl. 114, Ex. D. Class 1 Plaintiffs are therefore entitled to exemplary
damages totaling $148,334.31. Prejudgment interest is also applicable from the time between

the date each payroll was due until it was paid totaling $681.31. See Pizl Decl. 114, Ex. D.

D. Work performed by Class 1A members was subject to the MWA and this court
should award back wages at the applicable minimum wage for all hours

worked.
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Unless an exemption applies, employers must pay wages to employees who they suffer or
permit to work. RCW 49.46.120. Exemptions under the MWA are narrowly construed.
Drinkwitz, 140 291, 301, 996 P.2d 582 (2000). The employer bears the burden of showing
that exemption applies. Id. at 304.

Here, Defendants may try to claim an exemption under RCW 49.46.010 . .engaged
in the activities of a nonpro?t organization where the employer-employee relationship does not
in fact exist or the services are rendered However, it is disingenuous to claim
the employer-employee relationship does not exist when it existed both before the layoffs and for
almost all of the individuals that volunteered, it existed afterward when VIEW was able to pay
employees again. Also, there is a question about whether the services were actually rendered
gratuitously. ?Many of these individuals depended on VIEW for their housing. It is impossible
that Class 1A members volunteered in a truly gratuitous manner, since, for most of them, their
housing was in jeopardy if they didn?t.

It is also helpful to look at Federal guidance as it relates to volunteering, speci?cally U.S.
Department of Labor, Wage and Hour Division Fact Sheet Pizl Dec]. 117, Ex. G.

Although the Fair Labor Standards Act and the Washington Minimum Wage Act
are not identical, Washington courts look to the FLSA for guidance in interpreting the
MWA where the provisions of the two acts are similar. Drinkwitz, 140 Wn.2d at 300; Mitchel v.
PEMCO Mutual Insurance Co., 134 Wn.App. 723, 730, 142 P.3d 623 (2006).

The spirit of the exemption from the minimum wage, either MWA or FLSA, is that the
activities must be for the organizations? charitable purpose. ?Individuals may [freely] volunteer
time to religious, charitable, civic, humanitarian, or similar non-pro?t organizations as a public
service and not be covered by the FLSA [or Individuals generally may however,

volunteer in commercial activities run by a non-pro?t organization such as a gift shop.?1 Emphasis

 

1 U.S. Department of Labor Wage and Hour Division Fact Sheet 

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added. While VIEW doesn?t have a gift shop, it does have a commercial production line where it
re?1rbishes respirators, works with adhesives and performs other activities for Boeing and other
customers. During the time in question, Class 1A members worked on the commercial production
line, not for any charitable, civic, humanitarian or similar purpose.

Taking the reality of the situation and the reasonable inference that most of the Class 1A
members either anticipated that they would have their paid jobs back when VIEW became solvent
or they feared for their housing, it is clear the work was not done freely and voluntarily. In
addition, considering the work that was performed was for commercial production lines
and not for its charitable purpose, coupled with exemptions to MWA needing to be narrowly
construed as well as the Defendants? inability to meet their burden of proving the exemption, the
court must conclude that the work performed was subject to MWA and award back wages and
prejudgment interest. The failure to pay wages was clearly willful (discussed previously) since
there is no fair debate or bona ?de dispute about whether wages were due. Consequently,
exemplary (double) damages are also applicable.

Defendants kept ?volunteer logs? to detail all the hours worked. See Pizl Dec]. 115, Ex. E.
Per the logs, from February 28, 2018 through March 28, 2018, Class 1A members worked a total
of 913.59 hours. Applying the applicable minimum wage during that time of $11.50 per hour to
each shift worked yields a total of $10,506.67. Prejudgment interest at 12% to date based on the
scheduled payroll date totals $1,277. 08.

E. The deductions for rent, program fees or housing fees from Class 2 members?
wages were unlawful and the court should award back wages and exemplary
damages for all amounts deducted.

1. The deductions for rent, program fees or housing fees do not meet the test for
law?llness under RCW 49.52.060.

An employer may withhold any portion of an employee?s wages when a deduction has
been expressly authorized in writing in advance by the employee for a lawful purpose accruing to

the bene?t of such employee PROVIDED, That the employer derives no ?nancial bene?t from

 

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AWN



Emphasis added. It is undisputed that Class 2 members signed authorizations

such deduction .
for amounts to be deducted from their wages for program fees, housing fees or rent upon
onboarding as employee/tenants. See Pizl Dec]. 116, Ex. F. On the surface, the ?rst two prongs of
the test are met: in writing and in advance. Setting aside the possibility, even the high likelihood
that the signatures were compulsory to be part of the program, obtained by undue in?uence or
duress, or were involuntary for other reasons, the criteria for lawfulness is still not met. VIEW
?nancially bene?tted ?om the deduction as the money remained in its checking account and were

used to pay its operating expenses as indicated by the payroll deduction authorization forms. Since

VIEW ?nancially bene?tted from the deductions, the deductions are unlawful.

2. Looking at the realitv of the relationship between Class 2 Members and VIEW
yields the same result.

It is disingenuous at best for VIEW to characterize its connection with Class 2 Members
as two separate and distinct relationships, employer/employee and landlord/tenant. Based on
stated mission and vision, the two are in inextricably linked. As stated in its mission,
these individuals were and are ?in transition from homelessness, incarceration and/ or economically
disadvantaged situations.? In reality, if they were not provided with housing, they would not be
able to work at VIEW and vice versa.

When this reality is considered, Defendants are clearly in violation of MWA because in
substance, they are improperly considering the rent and program fees as wages. ??Wage? means
compensation due to an employee by reason of employment, payable in legal tender of the United
States or checks on banks convertible into cash on demand at full face value RCW 49.46. 010
(7). Consequently, housing or programs provided cannot be considered wages for purposes of
determining whether Defendants have met their obligation of paying Class 2 members at or above
the applicable minimum wage. In substance, Class 2 members were paid lower than the minimum

wage because the minimum wage threshold must be met in cash, not in housing or programs.

 

2 RCW 49.52.060. See also WAC 296-126?028 (3).

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rClass 2 Members are entitled to back wages and exemplarv damages

Whether the court considers the amounts deducted to be unlawful deductions under RCW
4952060 or as a failure to pay wages at or above the minimum wage in violation of RCW
49.46.020, Class 2 members are entitled to back wages in the amounts taken as deductions.

Exemplary damages are applicable when the violation is willful. RC 49. 52.070. There
is no fair debate on whether the deductions were unlawful. As discussed previously, when there
is no fair debate on whether wages are due, the violations are willful. Therefore, Class 2 members
are also entitled to exemplary damages.

Defendants business records clearly show the amounts deducted. For the period
November 2, 2015 though May 10, 2018, the total amount deducted for program fees, housing
fees and rent was $132,604.70. Calculating prejudgment interest at 12% to current date based
on payroll due dates yields a total of $37.748.69. Pizl Dec]. 118, Ex. H.

F. The Classes are entitled to recover reasonable attorney?s fees and costs.

Because Class 1A and Class 2 are recovering back wages in this matter, those Plaintiffs
are entitled to recover their reasonable attomey?s fees and costs. See RCW 49.46.090, RCW
49.48.030 and RCW 4952070. For Class 1, because the court is ?nding that the late payment of
wages was willful, the same statute that provides for exemplary damages, RCW 49.52.070 also
requires the payment of attorney?s fees and costs. The Plaintiffs? attomey?s fees of $79,859.00
and costs of $6,179.20 are reasonable. See Pizl Decl. 11119-16, Ex. I. Plaintiffs anticipate
approximately $1,500 of additional attorney?s fees to draft a reply to the Defendants? response to

this motion and to prepare for and argue this motion to the court.

G. Gary Peterson and Donald Hutt are Employers for the purposes of MWA and
WRA and are personally liable for claims asserted in this case.

Gary Peterson and Donald Hutt are and were board members and delegated management
authority, including matters related to employees of VIEW, to of?cers and subordinates. For

part of the class period Mr. Hutt held the position President and CEO and at other times during

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the class period Mr. Peterson held the position of President and CEO. The President and CD0
routinely acted in the interest of VIEW in relation to its employees. However, for the entire
class period, as board members delegating management authority, both acted indirectly in the
interest of VIEW in relation to its employees. Consequently, both fall under the de?nition of
?Employer? under RCW 49.46.010 (4) and consequently, are personally liable for the wage
claims asserted in this case.

For the claims deemed to be willful withholding, as all of these claims are, both Mr.
Peterson and Mr. Hutt are personally liable for exemplary damages and attomey?s fees and costs.
Not only do they meet the de?nition of employer, but they were and are also of?cers or agents of
VIEW. See RCW 49.52.070, RCW 49.52.050 (1-2). See also Morgan v. Kingen, 166 Wn.2d
526, 210 P.3d 995 are personally liable for wages, exemplary damages and
attorneys? fees even when bankruptcy trustee froze company assets and would not permit
payment of wages with the frozen assets); Allen v. Dameron, 187 Wn.2d 692, 389 P.3d 487
(2017) (Board members, of?cers, vice-principals or agents are personally liable even when the
company is legally prohibited from paying employees due to Chapter 7 bankruptcy ?ling).

VI. DAMAGES SUMMARY

Total damages consist of back wages in the amount of $143,111.37 for Class
1A and $132,604.70 for Class 2) and exemplary damages of $291,445.68 for Class
1, $10,506.67 for Class 1A, and $132,604.70 for Class 2) which totals to $434,557.05.
Prejudgment interest totals to $39.707.08 ($681.30 for Class 1, $1,277.08 for Class 1A, and
$37,748.69 for Class 2). Attomey?s fees and costs through oral argument for this motion total an
estimated $87,538.20.

VII. CONCLUSION

There are no genuine issues of material fact related to the Plaintiffs? claims in this case and

the court should grant partial summary judgment against all Defendants, jointly and severally, in

favor of all Plaintiffs in all Certi?ed Classes on all claims.

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The Court should ?nd that on several occasions, Defendants failed to pay members
of Class 1 on the long-established, regularly scheduled pay dates and those late payments of wages
constitute willful withholding in violation of WRA and award exemplary damages, prejudgment
interest and reasonable attorney?s fees and costs to Class 1 members for all incidents of late
payment of wages.

2. The Court should ?nd that deductions taken from the wages of Class 2 members
?nancially bene?tted Defendants and therefore, were unlawful under RCW 49.52.060 and award
back wages in the amount of the unlawful deductions, exemplary damages, prejudgment interest
and reasonable attorney?s fees and costs.

3. The Court should ?nd that when Class 1A members were permitted to work
following layoffs and that the hours were compensable under MWA and award back wages,
exemplary damages, prejudgment interest and reasonable attorney?s fees and costs.

4. The Court should ?nd that Gary Peterson and Donald Hutt are employers pursuant
to MWA and WRA and are therefore or otherwise jointly and severally liable for all wages,
exemplary damages, prejudgment interest and attorney?s fees and costs awarded.

5. The Court should enter judgement in favor of Plaintiffs against all Defendants,
jointly and severally, in the amount of $561,802.33 consisting of judgment principal of
$434,557.05, interest of $39,707.08 and attorney?s fees and costs of $87,538.20.

DATED This the 3rel day of July, 2019

ENTENTE LAW PLLC



Jymes B. Pizl, 
Attorney for 

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CERTIFICATE OF SERVICE

I certify that I caused to be served in the manner noted below a copy of the foregoing
Plaintiff?s Motion for Partial Summary Judgment on the following individua1(s):

Counsel or Defendants: Cl Via Facsimile .
Richard Wooster, 962 V13 Priority Mall

CI Via Messenger
Kram Wooster, P-S- IZI Via Email Pursuant to Agreement

1901 South I Street 
Tacoma, WA 98405 IZI Vla 



DATED: July 3, 2019, at Puyallup, Washington.



Jahies B. Pizl, 

Entente Law PLLC
315 39th Ave SW Ste 14
Puyallup, WA 98373-3690

(253) 446-7668
jirn@ententelaw. com

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