Allen v. Dameron, 2:14-cv-01263

Background

Plaintiff Allen served as interim CFO of Advanced Interactive Systems, Inc. (AIS) from April 2010 to March 2013; his employment offer included biweekly salary, a biweekly allowance, and a conditional three-month severance if involuntarily terminated (except for gross misconduct).
In December 2011 Allen accepted a reduced biweekly salary with the understanding the reduction would not affect severance calculation.
By February–March 2013 AIS faced insolvency; the Board voted to prepare for Chapter 7, ceased operations, and instructed Allen to terminate non‑essential employees.
On March 13, 2013 Allen calculated wages owed through the March 10 pay period and projected a large obligation (including severance, unused vacation, and accrued wages) that would come due after the March 14, 2013 Chapter 7 filing.
AIS allocated remaining funds to payroll and filed Chapter 7 on March 14, but Allen received no payment; the bankruptcy filing simultaneously terminated employment for both Allen and the individual defendants (board members Standen and Dameron).
Allen sued under Washington’s Wage Rebate Act (WRA), seeking unpaid wages, severance, vacation pay, exemplary damages, and prejudgment interest; defendants moved for summary judgment.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether defendants are personally liable under the WRA for severance and unused vacation that became payable only upon termination (which occurred at Chapter 7 filing)	Allen contends the severance and vacation were wages owed and defendants should be personally liable for failing to pay them	Defendants argue those amounts were not yet due when they ceased to be officers/agents and thus they lacked control to willfully withhold pay	Held: Not liable — severance and vacation were not due until termination; defendants had no authority to pay after they lost their positions
Whether defendants are personally liable for wages earned before March 14 but not due until the next scheduled pay date after filing	Allen relies on Morgan to argue earned wages give rise to liability even if pay date follows filing	Defendants assert WRA personal liability requires control and a willful decision to withhold when wages become due; absence of such volitional act here	Held: Not liable — personal liability requires a willful, intentional refusal or exercise of control to withhold when wages become due; mere insolvency or later unpaid accruals insufficient
Whether the Morgan decision requires imposing personal liability for non‑wage business decisions that led to insolvency	Allen interprets Morgan broadly to impose liability where insolvency caused unpaid earned wages	Defendants argue Morgan’s imposition of liability turned on a specific refusal/opportunity to infuse capital, not generalized business mistakes	Held: Court limits Morgan — liability tied to volitional acts (refusal to pay/infuse capital) and does not extend to ordinary business decisions that indirectly cause insolvency
Appropriateness of summary judgment	Allen seeks summary judgment for unpaid wages/double damages	Defendants move for summary judgment arguing absence of willful deprivation and lack of control at the time wages became due	Held: Defendants’ motion granted; Allen’s motion denied; claims against Standen and Dameron dismissed with prejudice

Key Cases Cited

Celotex Corp. v. Catrett, 477 U.S. 317 (summary judgment burden allocation)
Anderson v. Liberty Lobby, 477 U.S. 242 (summary judgment standard and need for more than a scintilla of evidence)
Ellerman v. Centerpoint Prepress, Inc., 143 Wn.2d 514 (WRA personal liability requires control over refusal to pay wages)
Morgan v. Kingen, 166 Wn.2d 526 (imposed personal liability where defendants wilfully refused to cure unpaid wages and had opportunity to infuse capital)
Schilling v. Radio Holdings, Inc., 136 Wn.2d 152 (WRA protects payment of wages earned)