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Johnson v. O'Malley Brothers Corp.

Court of Appeals of Oregon

June 1, 2017

Johnny R. JOHNSON, Plaintiff-Respondent,
v.
O'MALLEY BROTHERS CORPORATION, Defendant-Appellant.

          Argued and submitted February 23, 2016

         Multnomah County Circuit Court 140201508; Edward J. Jones, Judge.

          Andrew C. DeWeese argued the cause for appellant. With him on the brief was Andrew C. DeWeese, P.A.

          Conrad E. Yunker argued the cause for respondent. With him on the brief were Conrad E. Yunker, P.C., Gary Abbott Parks, and Northwest WageLaw LLC.

          Before Sercombe, Presiding Judge, and Tookey, Judge, and DeHoog, Judge.

         Case Summary: In this wage-claim case, plaintiff sued defendant for failing to pay wages that it owed him and for withholding wages from his paycheck without the signed authorization required by law. The trial court transferred the case to court-annexed arbitration. The arbitrator found for plaintiff on both claims and awarded $16, 866 in attorney fees based on ORS 652.200(2) and ORS 652.615. Defendant fled exceptions to the attorney fee award with the trial court, which upheld the award. Defendant now appeals the trial court's order. Held: The Court of Appeals ultimately rejected defendant's contention that plaintiff was not entitled to attorney fees under ORS 652.200(2) on the unpaid wage claim. However, the Court of Appeals concluded that the arbitrator abused his discretion in awarding attorney fees based on ORS 652.615 on plaintiff's unlawful withholding claim. The Court of Appeals therefore reversed and remanded to the trial court with instructions that the court calculate the appropriate fee in light of the factors in ORS 20.075.

         Award of attorney fees reversed and remanded; otherwise affrmed.

         [285 Or.App. 805] DEHOOG, J.

         In this wage-claim case, defendant appeals the trial court's award of attorney fees under ORS 652.200(2) and ORS 652.615. Plaintiff was a commercial truck driver who sued defendant, his former employer, for failing to pay wages that it owed plaintiff, and for withholding a small sum from his paycheck, albeit with his consent. The trial court transferred plaintiff's case to court-annexed arbitration, and the arbitrator found for plaintiff in small part on his unpaid wage claim, as well as on his unlawful withholding claim. Based on that limited success, the arbitrator awarded plaintiff attorney fees in the amount of $16, 866.00. Defendant did not challenge the arbitrator's substantive rulings, but did file exceptions to the attorney fee award with the trial court, as authorized by ORS 36.425(6) (allowing for review limited to the amount of an arbitrator's attorney fee award or the legal grounds for granting or denying an award).

         The trial court upheld the arbitrator's fee award, concluding that the arbitrator had not abused his discretion. Defendant now appeals the resulting judgment and contends that the trial court erred for six distinct reasons. We discuss the merits of only two of defendant's arguments-his third and fourth-ultimately rejecting defendant's contention that plaintiff was not entitled to attorney fees on the unpaid wage claim because his attorney "unreasonably failed to give written notice" of those claims prior to filing the action, ORS 652.200(2), but agreeing with defendant that the arbitrator abused his discretion in awarding plaintiff attorney fees on his unlawful withholding claim. See ORS 652.615. As for the remaining contentions, we discuss defendant's first argument, that the trial court improperly reviewed the arbitrator's decision for an abuse of discretion, only insofar as it implicates our standard of review. We summarily reject defendant's second argument for much the same reason as its third. Finally, in light of our decision that the trial court abused its discretion, we reverse the attorney fee award and remand to the trial court with instructions to address the [285 Or.App. 806] issues raised by defendant's sixth and final argument on remand.[1]

         We begin with an overview of the salient facts and procedural history of this case, taken from the limited record provided to us on appeal. Plaintiff worked briefly for defendant as a commercial truck driver in August and September 2013. Following the termination of his employment, in November 2013, plaintiff sent defendant a "Notice of Non-Payment of Wages." The notice stated that plaintiff was "not certain of all claims" that he had against defendant, because he did not have "access to all the documents and information in the possession, custody or control of [defendant]"; that he "reserve[d] the right to assert other claims and different amounts"; and that his notice was intended to put defendant "on notice of all * * * claims whether specified * * * or not." Plaintiff indicated that defendant had not paid him the following sums:

         "1. Unpaid regular wages earned consisting of:

Hours paid at the wrong rate: 84 x $1.00

$ 84.00

Unpaid pre-shift hours worked

$ 142.50

Unpaid post-shift hours worked:

$ 142.50

Unpaid wages deducted unlawfully

$ 126.95

TOTAL UNPAID EARNINGS:

$ 495.95

         "2. Liquidated damages for unlawful withholding: $ 200.00

         "3. Unpaid premium pay for hours worked over 40 in a work week:

16.0 @ $7.00

$ 112.00

8.0 @ $7.50

$ 60.00

9.5 @ $7.50

$ 71.25

9.5 @ $7.50

$ 71.25

         "4. Liquidated damages for failure to pay premium pay: $ 314.50

         "5. Continuation wages for failure to pay all

wages upon termination:

$ 3, 600.00

"TOTAL

$ 4, 924.95"

[285 Or.App. 807] (Boldface in original; footnote omitted.) In December 2013, plaintiff's attorney sent defendant a "Notice of Wage Claim, " which did not provide any further details regarding the claims plaintiff intended to assert against defendant, but which enclosed and incorporated the first notice by reference. The attorney's notice repeated the assertion that plaintiff reserved the right to bring additional claims.

         Defendant declined to pay the sums demanded by plaintiff. In its exceptions to plaintiff's fee request, defendant explained that it had reviewed plaintiff's personnel file after receiving plaintiff's written notice and concluded that his wage and unlawful withholding claims were "unfounded."

         Plaintiff filed an action against defendant in February 2014. The allegations of the complaint tracked the claims described in plaintiffs prelitigation notice of nonpayment. Specifically, in his first claim for relief (the wage claim), plaintiff alleged all of the amounts listed in his notice of nonpayment, including $126.95 that he claimed had been unlawfully deducted from his paycheck to pay a traffic fine. In his second claim for relief (the unlawful withholding claim), plaintiff sought, under ORS 652.615, statutory liquidated damages of $200.00 arising solely out of his claim that the $126.95 deduction was unlawful.[2] In connection with the wage claim, the complaint alleged that "[p] laintiff's attorney gave written notice of the claims in this matter to defendant before filing the action." Consistent with his prelitigation notice, plaintiff alleged damages and penalties totaling $4, 924.95. In its answer, defendant denied that plaintiff was entitled to any unpaid wages or penalties and denied that plaintiff had given defendant notice of his claims.

         Plaintiff deposed defendant's representative on July 9, 2014, three weeks before the scheduled arbitration hearing. Two days after the deposition, defendant mailed plaintiff a check in the amount of $975.59, purporting to represent 37.15 hours of work at $14.00 per hour, less applicable state and federal withholdings, as well as a [285 Or.App. 808] "miscellaneous]" sum in the amount of $521.50.[3] According to defendant, it sent the check to plaintiff in an attempt to pay him wages that it first learned that it owed him at the July 9 deposition. Plaintiff did not accept that payment. Instead, on July 28, plaintiff amended the complaint to allege that he had worked 24.95 hours in August 2013 for which he had not been paid (the August wages), as well as additional premium pay claims corresponding to the newly added August wages.[4]

         As noted, the trial court referred the action to court-annexed arbitration, see ORS 36.400(2), and an arbitrator heard the matter on July 30, 2014. Following the hearing, the arbitrator issued a written opinion separately addressing each of plaintiff's claims. The arbitrator denied most of plaintiff's wage claim, but awarded him $349.30 (24.95 hours at $14.00 per hour) for the August wages that had come to light at defendant's deposition and that plaintiff had first alleged in the amended complaint. On plaintiff's unlawful withholding claim, in which he alleged that defendant had unlawfully deducted $126.95 from his wages to pay a traffic fine on his behalf, the arbitrator found for plaintiff after concluding that the withholding was, in fact, unlawful, because defendant made the deduction without first obtaining plaintiff's written authorization. See ORS 652.6lO(3)(b).[5] On that claim, the arbitrator awarded plaintiff liquidated damages of $200.00 in accordance with ORS [285 Or.App. 809] 652.615. Finally, after finding against plaintiff on all of his remaining claims and allegations, the arbitrator determined that defendant had not acted willfully in failing to pay plaintiff any of the amounts that it owed him, because defendant's "actions amounted to a combination of unintentional miscalculation, innocent error or lack of information, and/or were performed under a good faith belief that the wages were not due." Therefore, the arbitrator declined to award continuation wages as a penalty under ORS 652.150(1).[6]

         Following the arbitrator's rulings on the merits, plaintiff sought $33, 732.00 in attorney fees under two statutory provisions: ORS 652.200(2), which, with certain exceptions that we will discuss, provides for a mandatory attorney fee award to a plaintiff who prevails on a wage claim; and ORS 652.615, which authorizes an award of attorney fees to a party who prevails on an unlawful withholding claim.

         The arbitrator considered defendant's written exceptions to that request before concluding that a "full award of the attorney fees sought [wa] s not reasonable in light of the amount involved in the controversy and the results obtained." Instead, "[a]fter considering all of the factors in ORS 20.075[7] and applying them to the evidence, " [285 Or.App. 810] the arbitrator awarded plaintiff half of his requested fees, or $16, 866.00. Defendant again filed written exceptions to that award, this time with the trial court under ORS 36.425(6), which, as noted, allows for ...


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