Wilson v. Smurfit Newsprint Corp.

July 15, 2004, Argued appeal, judgment in favor of all submitted penalty wages begin penalty period on on claim for under ORS 652.150 modified to 11, 1999, interest; against prejudgment judgment November and to include Sub penalty wages B on claim under on unauthorized class for ORS 652.150 based reversed; premiums judgment against B deductions of insurance Subclass on claim timely reversed; judgment based on failure severance reversed; against penalties C under Subclass on claims for ORS 652.615 otherwise affirmed; cross-appeal February 23, 2005 affirmed on WILSON,

Gregory L. Chastain, Kendall, O.

Larry George G. Poe, Blank, Sale, Catherine David W. and Catherine - Appellants Cross-Respondents,

v. CORPORATION, SMURFIT NEWSPRINT - Respondent Cross-Appellant. 9912-13689; A120585

107 P3d 61 649-b Christina L. Beatty-Walters argued cause for appel- - lants cross-respondents. With her on the briefs were Steve D. Larson, Stoll Stoll Shlachter, P.C., Berne & Lokting Bobbitt, Barton C. Bobbitt, Barton C. P.C. -

Andrew M. Altschul argued cause for respondent With him cross-appellant. on the briefs were Joel A. Mullin and Stoel Rives LLP. Edmonds,

Before Presiding and Landau Judge, Schuman, Judges.

SCHUMAN, J. Edmonds, J.,P. concurring part dissenting part.

SCHUMAN, J. working Plaintiffs were for defendant Smurfit Newberg Newsprint Corporation paper mill at its when company. defendant sold the mill to another In this class plaintiffs action, characterize the sale as a termination of employment allege their that defendant did not compensation them various forms of earned within one busi- day, statutory thereby entitling penalties. ness them to See (establish- limit); (imposing ORS 652.140 time ORS 652.150 ing penalty). plaintiffs damages A also seeks from subclass 652.610(3), alleged defendant for an violation of ORS which prohibits payroll unauthorized deductions. After several summary judgment motions, the trial court con- rounds of they cluded that sought appeals. were entitled to some of the relief appeal cross- but not all ofit. Plaintiffs and defendant summary grant parties’ Both the and denial of the judgment subject Connell, review, motions are Cochran v. (1981), App 933, 939, 632 1385, den, 53 Or P2d rev 292 Or 109 according to the standard: sum and we review both same mary judgment appropriate if the evidence in the record is may it, inferences that be drawn from and all reasonable nonmoving party, light viewed in the most favorable to the moving party fact, no issue of material and the disclose judgment C; a matter of law. ORCP 47 Jones v. entitled to Corp., 404, 407-08, 939 P2d 608 General Motors (1997). employees, notified its 1999, In the fall of defendant Newberg including plaintiffs, it intended to sell its facil- (SP). Manufacturing Company ity Paper to Southeast day employees that November notice alerted “employment termination date.” The sale, would their be planned. sale occurred as required defendant and SP SP

The contract between substantially employment defendant’s all” of to “offer working employees. employees however, the SP, As a condition of drug reapply pass test, and union and to had to they any seniority rights had accumu- lost working defendant’s All five of lated while for defendant. but approximately employees subsequently by were rehired employees sale, SP. The rehired lost no work time due to the experienced gap coverage, in no their medical insurance change assignment. they most in underwent no When left they they 9, Smurfit; work on November worked for when they 10, arrived at work on November employees worked for SP. Union paychecks received final their from Smurfit and their first checks from SP on November and nonunion employees pay- received their final Smurfit and first SP shortly checks on November 15 or thereafter. seeking

Plaintiffs then initiated this class action 652.140(1) penalties civil from defendant under ORS 652.150(1) untimely payment wages ORS after termi- 652.140(1) provides, part: nation. ORS employer discharges employee “Whenever an an or employment by agree- where such is terminated mutual unpaid ment, all earned and at the time ofsuch dis- charge payable or termination shall become due and not day later than the end of the first business after the dis- charge or termination.” 652.150(1), imposes penalties employers turn, who 652.140(1): violate ORS “[I]f willfully pay anywages compen- an fails to or any employee employment pro- ceases, sation of whose * * *, then, vided in ORS 652.140 as a for such nonpayment, wages compensation or ofsuch hourly shall continuefromthe due date at thereof the same eight per day paid rate for hours until or until actionthere- However, for is commenced. case shall no such compensation days continuefor more than 30 fromthe due date.” sought penalties

Some also under ORS 652.615. right private against That an statute creates a of action employer who makes unauthorized deductions from an 652.610(3), employee’s wages contrary pro- to ORS which exceptions “[n]o that, here, vides with certain not relevant may any employer employee’s wages” portion withhold, deduct or divert of an

without written authorization from employee. ultimately plaintiff class into divided the

The court employees who A of defendant’s Subclass consists subclasses. employed by subsequently in that SP. Plaintiffs sub- not were par- defendant and are not a settlement with class reached appeal. defendant’s B consists of all ties to this Subclass Newberg facility the time of at the at who worked C, itself a subclass rehired SP. Subclass its sale and were nonunion, salaried B, consists of defendant’s of Subclass employees exempt compensation. from overtime who were following adopt attempt minimize confusion, we groups: B is “all the different Subclass shorthand labels for plaintiffs” plaintiffs,” consisting “union and “salaried plaintiffs.”1 plaintiffs sought penalty under ORS

All timely pay theory them that defendant did not 652.150 on the payday, regular earnings their next until their accumulated (for (for plaintiffs) or November 19 salaried November 15 penalty plaintiffs). of in the amount That would be union day regular earnings termina- after their between their they paid, 19. is, November 15 or were that tion and the time payment penalties of for late In addition to the sought penalties regular wages, plaintiffs also union earned timely pay severance them the defendant did not because they they under their were entitled to that claimed benefits (CBA). bargaining agreement defendant Because collective days, penalty paid would amount after 30 had not days. regular earnings for 30 amount of their be plaintiffs, for late in addition to the Salaried sought penalty regular wages, payment on based of earned unlawfully theory medical withheld that defendant According paychecks. payments to from their last insurance withholding plaintiffs, vio- that unlawful because salaried 652.150(1) 652.610(3), it ORS statutes, and lated two separate penalties. subjected two defendant to 1 membership. literally groups’ Some noted, describe these terms do not As plaintiffs” union members and some group are not we call “union members of the nonunion, overtime-exempt plaintiffs. salaried, plaintiffs are not salaried claim for regarding penalties

Union plaintiffs’ severance benefits was submitted to untimely of payment con- CBA.2 arbitrator required by arbitration SP, sold its business to union that, cluded when defendant were “terminated” and that defendant violated plaintiffs to severance to them at that by failing provide CBA benefits to the appeal time. The arbitrator’s award was upheld United District and the Circuit Oregon States Court Ninth Court of v. Ass’n Appeals. Newsprint Corp. Smurfit Workers, 60, Western (9th and Local 59 Fed Pulp Paper Appx 2003); Cir v. Ass’n Western Newsprint Corp. Smurfit Workers, 60, 01-953-AS, Civ Local No Pulp Paper 2001). (D Or, WL 34043382 Aug Meanwhile, after several rounds of summary judg- motions, ment the trial court concluded that defendant owed union for their plaintiffs penalties failing pay regular on time but not for severance benefits on failing time.3 salaried the court concluded that Regarding plaintiffs, defendant owed them for penalties failing regu- their lar on time not for unauthorized insurance deduc- but Further, tions. the court denied all plaintiffs’ requests prejudgment approxi- interest awarded mately $145,000 in fees. was entered attorney Judgment accordingly.

On maintain that the sale of defen- appeal, plaintiffs facility employ- dant’s amounted to a termination of their ment and that defendant failed to them regular wages, and, also maintain that defendant They, severance benefits. insurance medical unlawfully premium payments. withheld also that should receive Finally, they argue they prejudg- Defendant, on the ment interest on their penalty wages. of its hand, maintains on the sale cross-appeal other termination of because employment plaintiffs was not a plant in the change their with no performing presale jobs continued 2 payment regular of was not arbitrated. The issue of late 3 are not inconsistent. decision and the trial court’s decision The arbitrator’s only plaintiffs bene were entitled to severance The arbitrator decided fits; that union having they penalties received for not of were also entitled to the issue whether separate and was not arbitrated. those benefits on time is a issue 654 employment that,

terms and conditions of their if there only penalties termination, was a then defendant owed for unpaid regular wages not or with- for severance benefits premium payments. held medical insurance assignments respond parties’ error, we To of following questions: First, must therefore address the did the plant sale of defendant’s amount to a termination of plaintiffs’ employment? Day, Second, so, if was Veterans day” purposes determining 11, a “business of November the days plaintiffs’ of the termination and number between “willfully” receipt pay wages? Third, fail to of their did defendant employees’ unpaid” union “earned and severance bene- certifying plaintiffs in maintaining Fourth, fits? did the court err salaried purposes Fifth, action? if as a class for class unlawfully not, premiums medical insurance did defendant withhold paychecks; or, so, from class final if did members’ penalties withholding expose under defendant both plaintiffs Sixth, and ORS 652.615? should 652.150 prejudgment any receive interest on or all of their wages? correctly plaintiffs seventh, And did the court award attorney their fees?

I. TERMINATION OF EMPLOYMENT defen Whether were “terminated” when Newberg facility 10, 1999, turns dant sold its on the November 652.140(1).4 meaning used in ORS of the term as is Supreme “terminate,” The statute does not define but purposes of the statute in State ex rel Nilsen Court did so for (1962), P2d 331 and that Johnston, 103, 108-09, 3707 v. definition 233 Or part if written into it at “becomesa ofthe statute as Corp., 312 Or of its enactment.” Walther v. SAIF the time (1991). Johnston, 149, 817 P2d 292 “[germination employment contem Court held that the employment relationship plates rather a severance of purposes is] for the “[W]hether [for of that statute there was termination the circumstances.” State ex rel fact to resolve from a consideration of all trier of (1962). where, 103, 108-09, However, Johnston, P2d 331 Nilsen v. 233 Or Lamy here, question undisputed, one of law. v. facts are becomes the historical (1978). 307, 313, Inc., Company, P2d 1107 That is so & Jack Jarvis statutory question purely one circumstances because such interpretation. By temporary of work.” 233 Or at 108. than a mere focusing cessation relationship inquiry between opposed employee, terms and conditions of as to the strongly suggested employment, that, when busi- the court undergo employ- a termination of sold, ness is its begins, employment relationship and another ment; one ends job description change. employee’s does not even if the suggestion in the context of That finds confirmation 652.140(1), particular part in another of the same 652.140(6), provides: statute, ORS which employment “When a termination of results from the purchaser property or and the sale of business business employment employs or continues the of an individual employed apply business, to the at the this sectiondoesnot payment to such an individual of for earned but holidayleave, leave, unused accrued sick vacationleave or payable upon employ- employ- other leave benefits termination of pursuant bargaining ment ment to a collective or other agreement employerpolicy!.]” beyond legislature The subsection establishes doubt that the employment” understood “termination of in ORS 652.140 to sold, “result” when a business is ues the even if the “contin- employment.” situation, has no (those duty payment specified wages to accelerate for holiday etc.); “earned leave, leave,” but unused accrued sick negative implication the obvious is that an does duty unspecified wages. have a to accelerate the any categories at issue in this case do not fall into of the for which acceleration need not occur. might

Further, even if some business sales not result surely present undisputed in termination, one did. The summary judgment facts transition record demonstrate that the plaintiffs’ employment defendant

between with employment not, and their with was defendant con- SP plaintiff guaranteed job tends, seamless. No had a with SP. drug testing. apply employment All had to submit to seniority, Union their with conse- members lost adverse quences pensions. Further, for their retirement dates and plaintiffs’ “employment defendant referred to termination pending sale, and it date” in a notice occasioned coverage pension and insurance informed benefits would end as of November that its By any

10, 1999. meas- relationship employment ure, the defendant and all between plaintiffs ended on that date. for the

Defendant cites a number of federal cases necessarily proposition that sale of a business does not cause employees, do a termination of the business’s but those cases Oregon law; fact, do not involve laws or case, not involve most designed that, like the statute in this were to contracts “discourage using position an from a of economic promptly superiority collecting to from as a lever dissuade ** * agreed compensation.” State ex rel Nilsen v. (1967). 133, 138, P2d 512 Ass’n, Ore. Motor 432 Rather, federal cases deal with statutes or contracts designed hardship during periods protect from to job unemployment one and the start of between the loss of Corp., E.g., 837, Adams v. Thiokol 231 F3d another. (11th 2000); Lakey Remington Co.,Inc., v. Arms 874 F2d Cir (8th 1989); Mallory Sly Co.,& 712 F2d 541, 545 Cir v. P.R. (7th 1983). context, to define Cir In that it makes sense in which an “termination” so as to exclude situations employee relationship employment to from one moves pay gap here, where, But another with no or benefits. employers exploiting purpose from is to deter former superiority, it makes no difference whether or their economic immediately replaced with a not the former was likely exploit superior employer is as to one; new a former position employment is when the transition to new economic seamless as when it is not. purposes plaintiffs for short, all were terminated 652.140(1) 652.150(3) defendant sold and ORS when of ORS Newberg facility SP, court did not err in so and the trial its nonpayment concluding. defendant concedes that its Because wages payday regular “will- the next scheduled was of ful,” until grant plaintiffs’ motion for the trial court’s we affirm respect summary judgment to their claim with regular failure to owed as a result of defendant’s day of termination. within one business DAT’ AFTER TERMINATION II. “FIRST BUSINESS 652.140(1) provides due “become day payable end business added.) not later than the first discharge (Emphasis Hav or termination.” after the ing terminated on November determined that were 11, that, trial court concluded because November Day, day, wages due not a were not Veterans was business Day argue was that Veterans until November 12. Plaintiffs holiday day and that therefore the trial not a but business regular wages penalties award of for failure to court’s day’s wages too few. included one day.” However, The statute does not define “business day” refer in some to “business does subsections Sundays, days “excluding Saturdays, other and subsections holidays.” logical It is therefore to consider the term day” complement any day as a that is not a “business day Saturday, Sunday, holiday; words, or in other if a is not a holiday, day. holiday, generally weekend or it is a A business speaking day employment law, and in the context is a off Dictionary from See Webster’s Third Int’l 1080 work. New 2002) (“a (unabridged day exempt ed on which one is from activity”). one’s usual labor or vocational Defendant’s CBA employees Day reg- with its unionized ular work which treated Veterans as a day holiday; listing holidays and not a in the employees pay, who worked would receive extra the Day. Employees required CBAdid not include Veterans were report Day to pay, for work on at their normal rate of Veterans plaintiffs, fact, that, in did so. We conclude because Day Veterans was not a weekend and neither defendant nor holiday its considered it to or treated it as be day. such, it was a business recognize Industries

We that Bureau of Labor and (BOLI) day” way regulations as to define “business such 839-001-0410(1) Day. a busi- exclude Veterans Under OAR day “Monday through Friday, exclusive of state holi- ness days provided oper- 187.010, in which the as ORS business 187.010(l)(h), ations of the is conducted.” ORS Day legal holiday. However, BOLI is turn, lists Veterans as a independent party in and it does have not a this case not authority pri 652.140; to enforce ORS that statute carries a mechanism, Further, vate enforcement ORS 652.150.5 187.010(4) enumerating legal holidays “[i]n provides * * * Legislative Assembly the not intend to limit or does * * * public private bargaining otherwise affect agreements.” or collective agreement private instance,

In this employees supersedes between defendant and its tory the statu remand, definition. On the court should treat November day plaintiffs’ wages on which were due. BENEFITS III. SEVERANCE The CBA between defendant and its unionized employees provided subject exceptions that, to certain (5) appeal, any “employee with five are not relevant to this years more full of continuous service” would receive “termi year pay” for “each full nation at rate of hours’ only company “[i]n decide of service” but the event the should major permanently Newberg to departments mill or one of the close added.) (Emphasis the mill.” Some of the plaintiffs years’ service, had five or more but defen union asserting plant dant, occurred, that no closure had did not day within one of the them severance benefits business company’s Instead, sale. defendant submitted the claim to provided in the CBA and did not union arbitration as plain decided the issue in until after arbitrator favor, tiffs’ the district court affirmed the arbitrator’s deci sion, and the Circuit affirmed the federal district court. Ninth nonpayment plaintiffs claim that Qualified union payment requirement of ORS violated the accelerated 652.140(1), thereby entitling penalties them to the from 652.150(3).6 ruling court, defendant under ORS The trial approximately after the arbitrator’s final deci two months judicial review, sion that decision was affirmed on but before concluding rejected plaintiffs’ claim, that defendant’s union 5 claims, may assignments” wage “[t]ake of ORS The commissioner of BOLI 652.330(l)(b), not done so in this case. but has 6 days penalties over and above the amount These do not seek 30 of only they payment regular amount that but the additional receive for late days equal penalties. 30 would total of

659 did not violate severance benefits failure to 652.140(1). employee penalty an ORS 652.150 entitles (1) employer employment and the

if or her is terminated his (3) (2) (4) day, willfully pay, within one business fails (5) unpaid at the time of the that are earned already plaintiffs were ter- We have held that termination. minated on November pay

10, 1999, and that defendant did not required any compensation the time form of within chapter pay “wages” purposes period. for ofORS is Severance (“wages” Or at 136 means “all Ass’n, 652. See Ore. Motor paid by employer compensation contracted to be earned personal regardless employee’s ofthe nature for the service generally (emphasis original)); compensation” see such Wyatt Body Imaging, P.C., 526, 539-40, Or v. (2000) (1999), (collecting defini- den, P2d 36 tions). rev 330 Or 252 unpaid only plaintiffs claiming penalties sev- for by working are had “earned” them erance benefits those who only years Thus, the number of for defendant. sufficient remaining inquiry failure to sev- is whether defendant’s erance was “willful.” benefits rejecting Johnston, court, various constitu- challenges 652.150, to ORS discussed “willfulness”

tional adopted a definition ofthat term: hypo- placed defendants have before us numerous

“[T]he they claim demonstrate thetical situations which and the discrimination which vagueness, the arbitrariness of these exam- fosters. A theme common to each the statute into unwary trapped who has been ples depicts an himself he was unaware subjecting to a because termi- employment had been employee’s either that actually done the amount of employee that the had nated or Throughout their brief he claimed he had done. work which an assumption proceed the defendants innocent error who made an honest and has employee assum- computing either in what he owes unfairly penal- employ is still in his ing that his making ized this error. the fact that ORS 652.150 assumption

“The overlooks ‘wilfully’ failed to only has operates where purpose Its obligations outlined ORS 652.140. meet the 660 protect

is to employees from unscrupulous or careless employers who fail compensate their employees although they fully are aware of their obligation to do so. In Nordling * * *, v. Johnston this court said: ‘The meaning of the term “wilful” in the statute correctly Morris, is stated in Davis v. 269, 99 37 Cal 2d P2d quote 345.’ We now the definition adopted: thus

“ ‘* * * In “wilful,” civil cases the word ordinarily law, used in necessarily courts of does not imply any- blamable, thing any or wrong malice or toward the other party, perverseness or delinquency, merely moral but thing that the done or omitted to be done was done or intentionally. omitted It amounts to nothing more than this: the person That knows what he doing, intends to do what he is doing, agent.’ and is a free “That definition excludes the individual who does not know that employee his has left employ his or who has made an conclude, unintentional miscalculation. We must therefore, that the defendants’ assumption is erroneous hypotheticals and that their apply do not to the statute under consideration.” then, Or at 107-08. An employer, willfully fails to pay owed at if

wages only termination it is aware of “fully [its] obligation to do so” but nonetheless consciously and voluntar- decides not to fulfill ily that The obligation. employer’s awareness is described terms of and intent. knowledge the Johnston and defini-

Unfortunately, discussion tion at least the issues: “Full partially beg awareness” or knowledge Of the historical facts that would estab- ofwhatl lish aprima obligation case that the exists? What if the facie employer knows that it owes but faith good believes that the has done something justify would offset? What or reckless lack of negligent knowledge? about The discussion faith standard: an appears imply good willful, but, “unintentional” miscalculation is not by negative an intentional or reckless one is. implication, cases have addressed some of these Subsequent Lee, In State ex rel Nilsen v. 444 P2d questions. (1968), the defendants failed to owed at ter- pay wages mination but the evidence did not disclose that were they believed, liability; they erroneously, they aware of their were not liable because were they not actual employers but merely agents of a corporate court, employer. citing Johnston, held that were not appropriate:

“ORS 652.150 authorizes the imposition of a penalty only if the employer wilfully pay fails to employee’s his wages. if, An wilfully acts having the financial ability owes, which he knows he fails to them. The statute was not intended to impose liability where employer’s the refusal to pay wages is based upon bona fide belief that he obligated is not pay to them.” Lee, 251 Or at 293 (emphasis in original).

The court reached a similar conclusion in Hekker v. (1973). Sabre Co., Construction 552, 265 Or 510 P2d 347 The plaintiff was a salesman employed by the defendant. His compensation consisted of commissions minus deductions for expenses that the employer paid on his behalf. When the plaintiff quit, arose dispute whether, over under the terms of the employment contract, the had car- correctly ried forward expenses from an earlier pay period. The court construed the contract in the plaintiffs favor and awarded him damages but it denied him penalty wages. Lee, Citing the court held that the employer’s conduct was not willful:

“Plaintiff pointed has not any to evidence in this case which require would the trial court to find that defendant wilfully, acted as that term was in defined Lee. We have found none. For all that shows, the record fail- defendant’s ure to pay plaintiff his commissions was based on a bona fide belief that no commissions were due under the terms of the employment agreements.”

265 Or at 561. Hekker, then, that an implies lacks and knowledge, therefore does not act if willfully, it has a good faith belief that one of the elements necessary to trigger the obligation pay wages owed at termination is lacking.

The court returned to ORS 652.150 Sabin v. (1976). Willamette-Western Corp., 557 P2d 1344 case, that when the plaintiffs terminated, employment the employer owed him for unused vacation $500 time. The employer, however, deducted from that amount an out- standing debt of theory the that the $91.62 had the right to recoupment or set off. The court affirmed the trial Johnston damages. Citing

court’s decision to award case, from that the definition of “willful” the quoting court held: hold question, it to a close we

“Although we believe be by finding support evidence to that there was sufficient for the defendant’s conduct was ‘wilful’ judge the trial that * * * * * wrongfully *. [Defendant of this statute purposes ‘recoupment’ ‘set-off or to deduct as a matter of undertook for that plaintiff] [the due to from $91.62 * * * work. acted with ‘malice or may defendant not have “Although we delinquency,’ or moral ‘perverseness or with wrong,’ reasonably infer from trial court could that believe defen- making the deduction $91.62 these facts miscalculation’; but make an ‘unintentional dant did not doing, he was doing, intended to do what ‘knew what he was was a ‘careless and that defendant agent’ and was a free a ‘wilful’ failure so as to constitute employer,’ meaning of ORS payable plaintiff within * * 652.150, [Johnston] this court in as construed court, then, reaf- explicitly Sabin, 276 Or at 1093-94. “knowing,” definition of “willful” existing firmed the fit within action “wrongful” the employer’s concluded malice, driven by it was not because, although category that or on misinformation an innocent error based neither was it can careless, however, be Action that lack of information. “knowing.” “willful” or this or altered developed has not Court construing Sabin In its case since only of “willful.”

definition 461, 988 Inc., 329 Or v. Werner term, Taylor Enterprises, the that Johnston —held (1999), again citing the P2d 384 court — a from it withheld “bond” when willfully an acted employer that was satisfied company until the wages an employee’s at 463-64. it. Id. against there were no claims that an cases, then, establish Cotut The Supreme intentional, and volun- fully knowing, willful if it is action is faith taken in bad action or one a malicious Clearly, tary. does not act will- an clearly, employer qualifies. Equally cir- that the historical knowing fully if it acts without fully (for have occurred the obligation triggering cumstances 663 on an if it acts based quit) has that the example, miscalculation not careless. that is innocent additional court provides cases from this A series of v. (Young recent them the most except In all of guidance. (2004), 31, 96 P3d 1239 Oregon, State of App 195 Or Or at below, App 197 allowed, 338 Or (2005), 57 discussed rev earned who failed to holly that an 664), employer we held the employer’s willfully, despite acted on termination And in all of of its action. in the correctness faith belief good belief the of the employer’s (except Young), basis the cases the employee that Although acknowledging the same: was terminated, had and that the employment had earned intentionally failed knowingly nonetheless employer excuse external owed, claiming full amount some 652.140(1). to the terms of ORS Inc., Hudson Oil Company,

In Schulstad v. den, rev (1981), 292 Or 825 323, 328-29, 637 P2d 1334 App on an (1982), employer we example, imposed penalties authority it had withhold erroneously believed an to a equal from the final amount employee’s paycheck gas that the a station receipts employee, the cash shortage in the deposited employer’s was to have manager, supposed a cases, log we on subsequent imposed penalties account. from a cutter’s final contractor who deducted debt ging Cutters, Inc., 61 Or App 497, 501, Garvin v. Timber wages, (1983); good who believed employer 658 P2d 1164 timely had waived his right pay faith that the employee v. Exxon 74 Kling Corp., termination, ment of owed at 401-02, (1985); P2d 1021 on an employer Or 703 such money wages pending who deducted from v. Emery the employer’s equipment, return of employee’s Machine, & 635, 638, Or App Typewriter Portland Office insur (1987); and on an who withheld 740 P2d fact, when, final check from the premiums employee’s ance to the insur paying premiums had stopped claimed the fact that despite ance company, Wyatt, the policy, faith that it could reinstate good belief for the prop these cases stand Collectively, at 531-32. Or App not avail 652, that, chapter ‘self-help’ ORS “[u]nder osition it owes to to offset that an who seeks employer able to misconduct any alleged remedy an Defendant’s employee. 664 plaintiff

by through separate damages.” was action for App Co., Miller v. C. Inc., 148, C. Meisel 183 Or P3d 160, 51 (2002). applies employer 650 self-help That rule even takes when good in actions faith. Young, dealing our most recent def- case with the plaintiffs

inition of “willful,” were state con- who among things, tended, other that the state violated 652.150(1) failing pay by required them overtime as recently interpreted. App statute that we had at 34. depended Whether, in fact, the state owed overtime on that interpretation. respect that, We held with to those definitively who accrued overtime before the statute was interpreted, employer’s pay failure to was not willful employer fully obligation. because the was not aware its Id. 44. That at outcome is not with ear- inconsistent this court’s employer’s lier cases because the failure to overtime did not result belief from its that it was entitled to an offset against wages obligated pay; it knew it was employer’s resulted, instead, from the reasonable lack of knowledge obligation place. that it had in the first at Id. 46. apply then, all cases, the definition first stated employer willfully Johnston, 233 Or at 108: An if it acts doing, doing,

knows what it is intends to do it is is a what and agent. explains However, free Johnston itself that an employer that makes an does “unintentional miscalculation” willfully, Lee, act Or 108, not 233 at 251 293- both Or at 94, Hekker, 561, Or at that an 265 hold withholds owed at termination under a bona fide belief authority willfully. that it has that does not act Those cases only indicate that what an “knows” includes those good Supreme facts that it believes faith to be true. The Court has never overruled cases, and, indeed, those it contin- Johnston). Taylor, (citing ues to cite 469 them. See 329 Or at App Meanwhile, Schulstad, 55 this court Or at “rejected” that the Court fide observed ‘Nona repeated Sabin, belief’ standard in and we have that obser- (“The frequently. E.g., Wyatt, vation Or at * * * Supreme Court has construed the term as used in ORS faith[.]”). require showing And, 652.150 to no noted bad above, we have held that an whose failure to at from fide at wages attempt owed termination stems a bona Miller, nonetheless acts 183 Or at self-help willfully. App 160.

This confusion derives not from the cases apparent themselves and their outcomes but from occasional reliance and conclusory knowledge, such as imprecise concepts faith, themselves, and malice. The cases to good opposed them, the courts’ of reveal a consistent descriptions coherent An fails to pattern: employer willfully pay wages knows owed at termination when it or reasonably should all the obligation know facts that the under ORS trigger 652.150, in particular, that the has employment relationship ended and that an identified has not received the employee earned, he or she has fails to the pay nonetheless those A lack employee wages. knowledge reasonable of of those historical facts immunizes the from employer penalties.

Further, not any quantum knowledge the exposes to employer case, Johnston, the refers penalties; leading to who “fail to employers their compensate employees although they are aware of their fully obligation so,” to do 233 Or at added), and the most recent (emphasis Court * * * case cites that passage and echoes it: “The question * * * whether the had, or can be to have employer imputed [ ] had, a level awareness of its such obligation pay plaintiff ” that its failure to pay was ‘willful.’ 329 Or at 470 Taylor, added). (emphasis contrast,

In an acts when it has employer “willfully” or should have the at the requisite knowledge requisite level fully but fails the because it pay employee believes some source of law external to ORS 652—a chapter personal debt, contract, a term of the employment or simi- something lar —entitles the to reduce employer obliga- or eliminate the tion. The or faith good reasonableness belief does not Miller, matter. 183 Or at 160. Put another App way, if need not owed at termination it pay wages reasonably believes that the cannot make a prima However, case that the are due and the owing. facie does not the escape obligation merely because believes that it has an affirmative defense or counterclaim

against employee’s if, fact, claim—even such defense pay case, counterclaim or exists. such must bring damages.” separate and then “a action for Young, Id.; accord at 46.7 present pay qualified case, In the defendant did not union their severance until after the Ninth because, Circuit affirmed the under the arbitrator’s order obligation the CBA, terms of only the benefits arose company per “in the should decide to event close manently Newberg mill,” and defendant believed that the precepts we have deduced event had not occurred. Under the question above, the is: When did that become unrea belief words, achieve, sonable? In other when did defendant requisite achieved, should defendant have awareness of its the “level of obligation pay” plaintiffs, light in of the to language of the CBA?Plaintiffs contend that defendant had day 10, that level of awareness on November the ofthe sale to construing SP, or, latest, at the once the arbitrator’s decision permanently” plaintiffs’ the term “close in favor became final. requisite that it could not achieve the Defendant contends appeal level of awareness until its of the arbitrator’s decision agreed defendant. We do became final. The trial court with not.

Initially, person we conclude that a could reasonable language of the CBA itself that the obli- not know from the gation 10. The severance benefits arose on November ownership day occurred on that transfer of event that —the any way, amount, in from defendant to SP—did not obvious permanent However, the ren- to a closure. once arbitrator construing CBA, the defendant’s level dered a final decision 7 Johnston, that, argues Supreme a stan The dissent in Court described irrelevant, yet employer willfully good fail to faith an does not dard under which is reasonably “knowledge pay wages the facts that create its if the lacks of strayed holding obligation wages.” The court then from earned good which returned to the Johnston standard under Hekker and Lee but Sabin However, reading played does not account for role. the dissent’s of Sabin faith no Lee, and, fact, explicitly left did not overrule Hekker and the fact that the court holding nonpayment caused an unintentional intact from Johnston that Johnston,Hekker, penalty wages. expose did not an miscalculation circumstances, that, proposition reasonable lack of for the in some Lee all stand dissent, words, liability. knowledge in other does an from The insulates satisfactorily ofthe provide interpretation reconciles all of ORS 652.150 not and the Court. cases from this court reasonably changed. have Parties to of awareness should disputes to in order to determine CBA submit arbitration agreement. definitively meaning their As the Ninth of Circuit has noted: designed contract, “Unlikethe commercial which is to be comprehensive parties’ bargain, distillation of the the col- bargaining agreement skeletal, lective ument is a interstitial doc- * * person parties *. The is the labor arbitrator designate stances arbitrator will state the officiallydesignated gaps; array to fill in the for the vast of circum- they writing, have not consideredor reducedto parties’ bargain. parties’ He is ‘the * * * contract, “reader” of the purpose their

joint ego striking supple- alter for the whatever mentary bargain necessary’ to handle matters omitted agreement.” fromthe Stead Motors Walnut Creek v. Automotive Machinists (9th

Lodge 1989), 886 F2d 1173, 1200, 1205 den, No. Cir cert (1990) (quoting Antoine, 495 US 946 Theodore J. St. Judicial Review Labor Arbitration Awards: A Second Look at Enterprise Progeny, 1137,1140 Wheeland Its 75 Mich L Rev (1977)). judicial “very

Further, review of labor arbitrations is limited. Courts are not authorized to review the arbitrator’s despite allegations decision on the merits that the decision misinterprets parties’ agree rests on factual errors or ment.” Major League Players Garvey, Baseball Ass’n v. (2001). 504, 509, US L S Ct 149 Ed 2d 740 court will not overturn an arbitrator’s convinced that the decision is erroneous as if it is decision even

long as the arbi arguably construing applying trator even “is or the contract acting authority.” scope within the of his Eastern Corp. Workers, Associated Coal 17, v. United Mine Dist. (2000) (citation 57, 62, US 121 S L 462, Ct 148 Ed 2d 354 omitted). light hyper-deferential of that standard of review, defendant either knew or should have known with a high degree certainty appeals of fail. that its would We there acquired requisite fore conclude that defendant informa tion on which to base its decision to severance benefits requiring when the arbitrator’s decision it to do so became April 30, 2001, That more than 30 final. event occurred on days finally paid defendant severance benefits. We before rejecting plaintiffs’ erred in hold that the trial court

therefore qualified a total of 30 deserved that union claim days’penalty wages those defendant’s failure based on benefits. SALARIEDPLAINTIFFS CERTIFICATION OF

IV. dispute parties C, of Subclass whether members The plaintiffs,8 generically see 197 as “salaried” we refer to whom penalties defen because at 652 n were entitled Or premiums unlawfully from medical insurance dant withheld prior paychecks issue, A authorization. without their last certifying the erred in the trial court however, is whether precludes certifi ORCP 32 K contends that class. Defendant provides: rule cation. That recovery may for the “A action not be maintained class any statutory penalties for class member minimum of 1640(a) any

provided other 15 USC in ORS 646.638or statute.” similar private authorize ORCP 32 K refers

The statutes to which private civil authorizes a of action: ORS 646.638 causes action for Oregon’s damages Practices Unlawful Trade under 1640(a) private cause of authorizes a Act, 15 USC section Lending Act. Truth in under the Federal action meaning parties’ dispute of the concerns the any phrase maintains statute.” Defendant “or other similar possession by of statutes, the two that the trait shared by third statute “similar makes that which another statute right provide private statutes, that named is both to” the argue statutory penalties. Plaintiffs minimum action pro- similarity are consumer statutes both the critical tection rights private provide recov- of action for statutes that statutory penalties. ery minimum interpretation agree plaintiffs. Defendant’s with

We simply “A action read: class if the statute tenable would be the Smurfit mill other insurance benefits.” union Smurfit alleged improper The order certifying ** * that are or unauthorized who the class described were seeking employed deduction of recover it as SP penalties * * * following “consisting of all former non premiums under for medical or ORS 652.615 for SP’s purchase any statutory recovery mini- may for the not be maintained interprets “so penalties.” statutes However, this court mum every meaning Beal, 191 give v. Due-Donohue word.” as to (2003). pre- must therefore We 98, 101, 80 P3d 529 Or 1640(a) share and 15 USC section that ORS 646.638 sume penal- statutory providing minimum for trait in addition protect the consumer of statutes That trait is that both ties. not; goods case do at issue in this services. The statutes or providers they protect The trial court of services. rather, C. err when it certified Subclass did not PREMIUMS MEDICAL INSURANCE WITHHELD V. group medical insurance available Defendant made employ paid premiums. The most of the to its payment. responsible partial To facil ees, however, were for plaintiffs signed payments, “Pre-Tax itate those salaried authorizing Enrollment/Change with defendant to Form” pay. from their hold their contribution stopped providing parties agree The that defendant coverage 10, at the close of on November insurance business parties agree day The also 1999, the of the sale to SP. plain- days’ premiums from salaried defendant deducted 15 through period November tiffs’ thereby deducting for the November during plain- days salaried for five which Finally, par- and not for defendants. tiffs worked ties from for the also deducted insurance SP agree plaintiffs received their that, when salaried period 15, SP 11 to November of November SP period.

premiums for the same According plaintiffs, deduc- defendant’s salaried 652.610(3)(b). prohibits That statute violated ORS tions withholding any part deducting of an or from employee’s wages are authorized the “deductions unless employee’s [and] writing bene- are for the subject [.]” to “a statute is An who violates that fit * * * damages private $200, for actual cause of action argue greater.” Plaintiffs also ORS 652.615. whichever is war- ORS 652.140 and violated that the same deductions under ORS 652.150. ranted an award summary judgment plaintiffs’ motions on trial court denied granted assign both issues and defendant’s. Plaintiffs error dispositions. to those

Resolution of this issue turns on whether the deduc- employee’s tion was “authorized” and “for the benefit” under begin question ORS 652.610. We with the of authorization. plaintiffs deduction, To the extent that salaried they authorized Enrollment/Change Form,” did so in the “Pre-Tax which provides, part: employee, “I understand that as an Active full-time I automatically [various have forms of life and accidental

injury insurance]. coverages, In addition to these I elect insurance] [medical,dental, and vision at a costto me. ^ * * *

“[B]ysigning Company this enrollmentformI authorizethe required premium to deduct the contributions of the from my earnings [.]” on a before-taxbasis begin by contract; The form ining embodies we therefore exam disputed provision the text of the within the context of Yogman Parrott, 358, 361, the document as a whole. v. (1997). 937 P2d 1019 quoted provisions Both of the contract are relevant. introductory phrase, The first contains the “I understand * * employee, Although that as an Active full-time phrase immediately attaches most to the statement in the regarding coverage, first sentence automatic it also bears on coverage, implying the next sentence’s treatment of elected beyond period that the authorization does not extend employment. implication strength- active full-time That provision, ened deductions any “earnings” the text which authorizes second

only “earnings.” from Plaintiffs did not receive 10; after as of that

from defendant November “earnings” date, deduction could be which an there were no from authorized par- implausible made, and it is that the ties intended to enter into a contract under which defendant earnings authority premiums period’s had to deduct from one buy period employment in order to insurance for a after the relationship ended. authorized, if it

Further, even the deduction were clearly employee’s “for the Defendant knew was not benefit.” going provide insurance for its that it was not them in a letter before that 10; it so informed after November deducting paychecks on November 15 it issued date. When period premiums for the between November insurance reasonably could not be said to have and November they expectation that would deductions with the made those employees, and, in what were then former be used to benefit were not so used. The fact that salaried fact, the deductions coverage negate plaintiffs does not the fact received seamless coverage they paid for some of that twice. Defendant’s independent responsibility to avoid unlawful deductions was obligations. of SP’s plaintiffs argue also that defendant’s excess Salaried 652.610(3)(a) only

withholding violated not ORS but also withholding pay- 652.150, resulted in late because Thus, ment of tend, on termination. salaried con- only must each of them not under defendant $200 wages. days ORS 652.615 but also 30 suggest plaintiffs Two cases that are correct. (2000), County Jackson, 116, 7 Allen v. P3d 739 of argued employer’s the that their unauthorized 652.610(3) them not deduction only violation of ORS entitled penalty attor to the under ORS 652.615 but also to $200 652.200(2). ney separate That lat statute, fees under a ORS attorney “any the collec ter statute allows tion of fees for action for [.]” presented questions that Allen therefore two comparable presented First, are to those here: does an does not who makes an unlawful deduction and remedy statutory payment of it within the deadline for subject untimely payment wages? itself to a claim for of Sec pen employee ond, so, to claim both the if is the entitled $200 wages? alty penalty untimely payment separate a argu questions suggests plaintiffs’ those Our answer to ment is correct. 652.615, the

“Before the creation of what is now to file a normal way illegal to recover an deduction was creating claim. action in a Nothing legislature’s in the wage the new, that it intended to abolish separate suggests claim rather, a new rem- remedy; legislature the added existing edy existing to the one. * * * short,

“In when an deducts amounts that illegal employeemay [ORS652.615], are or both oftwo differentkinds under the file one (1) regular wage claims: * * * (concerning claimunder ORS652.120 or ORS652.140 (2) payment wages employment); at termination of specific illegal 652.615, claim for deductions under ORS * * damage includesthe minimum amount which Id. at 133-34. Taylor,

Similarly, 329 Or at the withholding unauthorized amounts to a fail- Court held that pay wages 652.140, that an who ure to under ORS authorization violates both ORS 652.150 withholds without employee “is entitled to 652.610, and ORS and that 652.610(3)(c),together under ORS 652.150 and ORS recover penalties attorney with fees.” only precisely point. Allen case is on holds

Neither says nothing may employee claims; make it in about that an two employee Taylor apparently achieving two recoveries. The separate unpaid and one for claims, one for made two only holding may deductions, mean unauthorized so employee and not that an can recover on both However, the same claim. we conclude could recover twice for point that, with- that, overall, the to the conclusion cases penalty holding pay wages authorization, defendant incurs without -under ORS under ORS 652.150 and $200 652.615. withholding have was willful as we

Further, providing it was not term: defendant knew that defined that coverage 10 and it made insurance after November denying intentionally. erred in The trial court deductions summary judgment plaintiffs’ this issue and in motion for granting defendant’s. PRE INTEREST

VI. JUDGMENT assign denial of to the trial court’s Plaintiffs error penalty wages prejudgment under ORS awarded interest on 82.010(1), provides, part: They rely ORS which 652.150. on * * * following transactions interest for the “Therate of payable percent per and is on: is nine annum “(a) due; open they but moneys after become All last item of the from the date bear interest accounts thereof.” moneys penalty due are that the contend

Plaintiffs statutory carry rate. they at the interest therefore and that agree. We 82.010(l)(a) prejudg applies full force to with

ORS “[t]he Supreme announced, has Court interest; as the ment mat prejudgment is not a interest in an action allowance of 82.010(l)(a) by required judicial ORS discretion, is but ter of ” Highway they moneys v. Comm. due.’ ‘all after become on (1976). DeLong Corp., 2,n 551 P2d 102 351, 275 Or long language, uncompromising however, has That predecessor judicial gloss. Interpreting subject a to a been 82.020(l)(a), held that Court to ORS statute “ only prejudgment party the ‘exact interest when receive can by pecuniary ascertainable ascertained, either or amount was recognized by generally simple computation, reference to price,’ ‘the time from and where standards such as market ” * * * * * * can be ascertained.’ interest must run which P2d 916 Portland, 522, 625, 138 171 Or Public Market Co. v. (9th (1943) Damages Sedgwick (quoting § 300, 571 ed 1916)) determining original). (emphasis whether starting damages are date of the interest amount of operate perspective of the from the ascertainable, we do not objective,post-judgment during litigation parties perspective. from but App Grange Co., 179 Or Mutual Ins. Strader v. (2002). den, rev 334 Or 190 329, 339, 39 P3d damages at standards, the amount Under these readily wages, penalty ascer- case, is, issue in this regular each Defendant’s records show tainable. rate of that rate as a matter of penalty pay, follows from and the amount of simple Further, the date arithmetic. must run is also ascertainable. from which the interest willfully imposes penalty fails who on an 652.150 day after the end of the first business earned wage, penalty theof which is a continuation termination. daily Wyatt, wages, until 534, accrues at earned days. paid the sec- Thus, at the end of more than 30 but for no (and day, incurs a ond business 674

employee damages) obtains entitlement to in the amount of day’s wages; day, one at the end of the third business (and penalty incurs a becomes enti- damages) days’ wages; tled to in the amount of two etc. imposes 30-day Because ORS maximum, if, 652.150 as unpaid days, penalty here, earned remain after 30 fully begins point. has accrued and interest to run at that present penalty nonpay- Thus, in case, interest on the for regular wages plaintiffs plain- ment of to all and to salaried nonpayment unlawfully pre- tiffs for withheld insurance began days nonpayment, miums to nm after 30 11,1999. ofwillful is, on December Because, employees’ decided, as we have will- nonpayment ful of union severance benefits did begin penalties not until order, the arbitration interest on nonpayment began days associated with that thereafter. Defendant, however, contends that there is another exception requiring prejudgment to the rule interest on damage according ascertainable awards; interest, such justified damages punitive defendant, is not when the are opposed compensatory. support contention, of that Rexnord, defendant relies on Inc. v. Ferris, (1984), 150, 684 P2d 26 where we stated: “Although progeny Public Market v.Co. Portland and its provide prejudgment readily computable interest on compensatorydamages proper, for breach ofcontract is we authority extending punitive damages, find no that rule to readily computable, which are not here.” and we declineto do so Rexnord, Defendant misreads Inc. That case does not create separate exception requiring or new to the rule interest on money points punitive due; rather, as it becomes out that damages example existing exception are one of the because punitive damages readily computable. present are not In the * * * although penalty wages nonpay- case, are “a they “punitive damages” ment,” are not of the kind that require speculate money a factfinder to much about how necessary in order to achieve a deterrent effect on a tortfea- They “by simple are, in words, sor. other ascertainable com- putation.” Co., Public Market 171 Or at 625.9 that, correctly points jurisdictions, Defendant out in most courts do not allow prejudgment punitive damages purpose interest on because the of such interest is

VIL ATTORNEY FEES the trial On defendant error to assigns cross-appeal, failed to fees, that the court attorney arguing court’s award of sum request adequate representing deduct from plaintiffs’ on claims on which did not spent prevail. time of medical claims involved defendant’s deduction Those the trial insurance On we have reversed premiums. appeal, claims; they longer those are no court’s determination Therefore, did not we prevail. claims on which plaintiffs defendant’s of error and remand to the reject assignment trial court for further proceedings.

On in favor of all on appeal, judgment plaintiffs under ORS 652.150 modified to claim for penalty 11, 1999, on November and to include begin period B interest; Subclass on claim prejudgment judgment against for under ORS 652.150 based on unauthorized penalty wages reversed; deductions of insurance premiums judgment B against Subclass on claim for based on fail- penalty wages timely reversed; ure severance pay pay judgment against Subclass C on for under penalties claims ORS 652.615 reversed; Affirmed otherwise affirmed. on cross-appeal.

EDMONDS, J., P. and dissent- concurring part, ing part.

I with the in all agree majority opinion respects for its conclusion about what to demon- except necessary strate that an acts for of a “willfully’ purposes pen- 652.150(1). claim under alty wage majority ORS holds that the union severance due qualified plaintiffs’ pay became liability when the arbitrator determined defendant’s those under bargaining agreement the collective (CBA). to the I would hold that Contrary majoritys holding, defendant’s failure to severance was willful at the mill completed time that the sale of the was and defendant’s from their employment. were deemed terminated employees I write with the separately explain my disagreement loss, compensate party purpose punitive for his or her while the of awards is to conduct; prejudgment punitive interest on such awards is deter future bad to allow 82.010(l)(a) ignore to add windfall to windfall. We are not free to or the cases interpreting reach that result. it in order to majority point. appears disagree only on that It that we differently import because we understand ofthe Corp., Court’s decision v. Sabin Willamette-Western (1976), Appeals 1083, 557 P2d 1344 and the cases Court applying it.1 background seniority

A recital of the factual about rights backdrop why in this case forms as to I reach a dif- majority. ferent conclusion than The CBAbetween employees provided pay, defendant and its for severance years based on the if worked, number defendant decided permanently Newberg majority “to close mill.” The reasonably asserts that defendant could not know that its sale of the mill satisfied that condition and that it was liable opinion for severance until the arbitrator’s became final. recognize That conclusion does not the effect of defendant’s employees Although actions on in the context ofthe CBA. physically stop producing paper mill did not after the trans- ownership, permanently operation fer of closed its defendant ownership change plaintiff of the mill. The effect of the significant respects, comparable plant was, in to a immediately reopening closure followed a sale and under ownership, unquestion- new a circumstance that would have ably pay. entitled to severance sale,

The crucial effect of the as it structured in was seniority this case, is that defendant’s lost their rights suffering in addition to the effects on their retirement pensions majority Seniority duties and that the mentions. may important right employee acquires be the most that an provides job security under a CBA because it choice and employee’s standpoint, would not otherwise From exist. an seniority the effect of the of loss is identical to the loss of one job by beginning job followed of a new because of the loss job protection rights employee of all the and other that the up years job. having has over the in the built first Instead of right job, employee a contractual to a desirable and secure an subject being under the circumstances in this case could be assigned job. changes a less desirable or less secure Such change job change could involve a tasks as well as a in upon practical The effect of our difference is the date which the interest on penalty wages begins to run. Thus, work shift. severance based on the of time length has worked constitutes a employee contractual method under the CBA to for that provide loss. recompense facts,

Based on those the issue is whether defen- dant’s failure to pay wages due to at the plaintiff employees time that the sale was was “willful” within the complete 652.150(1). meaning of ORS The statute provides that an is liable for “if an penalty wages willfully fails to pay any or compensation any employee whose employment [.]” ceases The statute does not define “willfully,” but the Court Supreme has it in sev- interpreted eral cases. The is State ex for the rel starting point analysis Nilsen v. ux, Johnston et (1962), 377 P2d 331 which the Court Supreme established the meaning word “willful” that it and we have continued to follow up this time. Johnston, the defendant argued that ORS

652.150 for an provided unconstitutional because the penalty statute was vague, arbitrary, discriminatory. Court noted that all of the arguments defendant’s assumed unwary

“an employer who trapped has been subjecting into himself to a because he was unaware either that the employee’s employment had been terminated or that had actually done the amount of work which he claimed he had done. Throughout their brief the defen- proceed dants on the assumption that an employer who has made an honest and innocent error either in computing what he owes an employee or in assuming that his employee is still in employ unfairly his penalized for making this error.”

Id. at 107. The court out responded pointing is not hable for penalty wages unless it acts will- It then fully. quoted a definition of the term from a case on which it had previously relied: “wilful,”

“Tn civil ordinarily cases the word used law, courts necessarily does not imply anything blama- ble, any or malice or wrong party, per- toward the other verseness or delinquency, merely moral thing but that the omitted to done was done or omitted intention- done or be ally. nothing person It amounts to more than this: That the doing, doing, intends do what he knows what he is to is ” agent.’ is a free (quoting Morris, 269, 99 Id. at 108 Davis v. 37 Cal 2d P2d (1940) added)). (emphasis Johnston, Under the definition of in an “willful” employer excusably ignorant giving that is of the facts rise to liability unpaid wages protected the ity for earned is from liabil- way, penalty wages. pur- Said another “willfulness” for poses depends employer’s knowledge of on the ORS 652.150 obligation pay wages, to earned its of the facts that create its pay wages, intent not to those and its freedom to act as it did. employer’s good failing pay The plays faith or lack thereof obligation Rather, role in that the

no formulation. pay employer acquires knowledge is once the the of absolute creating obligation. Thus, the facts formulation, its under the Johnston contemplates

the statute pay wages If must when due. an believes that interpretation employment its of the contract does not obli- gate pay wages existing circumstances, it to under the or payment if it believes that it has a defense to the of against owed, must, an offset the amount it under the stat- requirements ute, in accordance with the time position separately 652.140 and assert its in the appropriate imposition penalty wages. forum or risk the purpose in ORS encour- clear of the 652.150 to age they employers earned at the time that are require employees payment earned and not to to wait for the wage of their earned until the outcome of an unrelated dis- pute. delay payment wages Indeed, if could legal that it had some defense under an because believed agreement, purpose employment would be frustrated. majority correctly points cases, out, As the two later (1968), Lee, 284, 444 State ex v. 251 Or P2d 548 rel Nilsen Co., Hekker v. Sabre Construction 510 P2d 347 (1973), got appear off track and to contradict Johnston respects by importing good requirement into the those faith meaning “willfully” However, of the in the statute. word Sabin and unambigu- Court “righted ship” to the Johnston formulation. ously returned Sabin, In the defendant failed to the pay plaintiffs terminated it did vacation when his because pay employment that it owed the vacation The defen- legally pay. not believe memorandum, dant relied on the of a confidential provisions that which it had never communicated to the plaintiff, termination no on right pay had to vacation termination, At the time of his the plaintiff employment. $91.62, owed the defendant a sum that he refused to pay until he received his vacation When the defendant later pay. the that the plaintiff rehired withheld the plaintiff, $91.62 owed from his first the admittedly paycheck. plaintiffs When time, was terminated a second he still was not employment his vacation The trial court awarded the paid pay. plaintiff the vacation unpaid pay, less the that the plaintiff $91.62 It him admittedly owed. also awarded penalty wages, appar- the ently based on defendant’s failure to the full amount pay owed at the time of the second termination. Sabin

On the defendant appeal, argued, relying Johnston, Lee, Hekker, that ORS 652.150 does not penalize whose refusal to is “based pay upon Sabin, fide that bona belief he is not to obligated pay[.]” Or at 1092. It contended that it had a good faith belief at the time of the termination that it was not legally obli- gated to the vacation to the defen- pay wages. response dant’s arguments, recognized Court first Lee it had held that the had the burden to plaintiff prove acted and that not willfully statute was intended to when the refusal to impose liability employer’s was based on a fide that it is not obligated bona belief Id. that, at The pay. defining “[i]n 1093. court then explained statute, however, ‘wilfully’ the term for the of this purposes ex ux, State rel Nilsen v. Johnston et we held in supra at added). Id. The court then its (emphasis quoted follows[.]” discussion about “willfulness” in Johnston. Id.

The Sabin court then turned to the facts of the case of the Johnston formulation and concluded: light ‘malice or “Although may defendant not have acted with we wrong,’ ‘perverseness delinquency,’ or with or moral reasonably believe that the trial court could infer from making these facts that in the deduction of defen- $91.62 dant did not make miscalculation’; an ‘unintentional but doing, doing, “knewwhat he was intended to dowhat he was agent’ and was a ‘free and that defendant was a ‘careless employer,’ so as to constitute a ‘wilfulfailure to wages payable plaintiff meaning within the of ORS 652.150L’]” Id. at 1094. key understanding holding in Sabin is to

put proper “however,” word above, as italicized in its con- text. The word “however” can mean “nevertheless” or “in spite signaling of,”2thus a contrast with what went before. That is the sense in which the Sabin court used it—to con- say trast what it had said in Lee with what it was about to regarding “willfully.” Although the definition of the Sabin expressly acknowledged court that it had held in Lee that the impose liability statute was not intended to where the employer’s pay wages good refusal to was based on a faith obligated, implicitly repu- belief that the was not understanding following paragraph by diated that in the use of the word “however”in the lead sentence. In substance, the court returned to the definition of the word “willful”that spite it had used in Johnston in ofwhat it had said in Lee and Hekker.3 holding

That is the conclusion about the in Sabin Company, that we reached in Schulstad v. Hudson Oil Inc., App (1981), 55 Or 323, 326, 328, 637P2d 1334 den, rev 292 Or (1982), 825 relationship in which we first considered the between the Johnston!Sabin definition and the Lee 2 2002). Dictionary Webster’s (unabridged Third New Inti 1097 ed majority my understanding Sabin, The asserting criticizes that I do not recognize account for the fact that Sabin continued to that an unintentional mis wages give penalty calculation of does not rise to a App under ORS 652.150.197 Or course, at 666 n 7. Of defendant not does contend in this case that it made an unin wages thought tentional miscalculation of owing. Regard that it were due and less, an satisfy unintentional miscalculation of could not the definition of my understanding requirements “willfulness” under of the Sabin because that depends, part, employer’s knowledge term on the ofthe that facts create the obli gation wages; earned miscalculation, in the case of an unintentional required knowledge is absent because of the inadvertent nature of the calculation of the amount of due. Hekker cases. In Schulstad, employee brought action to collect he claimed were due him upon the ter- mination of his employment. counterclaimed, The alleging that the owed it a money sum of under the terms of the employment contract.

On appeal, the defendant argued that a standard of good faith applied ORS 652.150. We rejected that argument:

“Although the Supreme applied Court has a standard of good faith in determining the question past wilfulness occasions, that rejected standard was In that [Sabin]. opinion, the court returned to the more restrictive defini- * ** tion ofwilfulness in [Johnston].

* * * * “The court in Sabin found wilfully that the defendant withheld wages plaintiff, from despite showing good * * * faith.

«íjí :js ‡ í¡{ bar, “In the at case the trial court found that defendant intentionally did ity to do pay plaintiff, not although it had the abil-

so. evidence supports finding. We con- clude that and, defendant’s therefore, action was ‘wilful’ subject defendant was payment wages under ORS 652.150.”

Schulstad, 55 Or at App Schulstad, 328-29. Since we have uniformly rejected arguments that an exempt from penalty wages See, if it acted in good faith. v. e.g., Vento Versatile Logic Systems 272, 167 Or Corp., App 277-78, 3 P3d (2000); Wyatt Body P.C., v. Imaging, (2000). 531-32, 989 P2d 36 (1999), den, rev 330 Or 252 We have also in emphasized the above cases that an employer has an to obligation know what it owes its employees.4 4 Supreme expressly The Court has not considered this issue since Sabin. How ever, my concerning penalty discussion is consistent with its most recent decision wages. Taylor Inc., Enterprises, (1999), v. Werner Or 988 P2d 384 the separate entity defendant asserted to the trial court that a was the actual Nebraska, employer, Oregon, applied, that rather than law and that action in its withholding wages legal Oregon dispute was under law. There was no that the Supreme legal ques defendant knew the historical facts. The Court decided the against held, law, pay tions the defendant and as a matter of that its failure to was 652.150(1), relying doing willful under ORS on the definition in so. Johnston suggest

Finally, majority that our seems to the employer in the to situations which recent cases are limited majority an “affirmative describes as what the asserts majority wages. obligation pay earned to the to defense” many the statute have cases decided under is correct that employer withheld earned in which the situations involved self-help attempt through to collect that it owed in an App money employee But it. 197 Or at 663-66. the owed that only circumstance where a common those cases describe provisions implicated. The definition of are of the statute depend reason on the in the statute does not “willfulness” by employer earned for the failure advanced by employer wages, asserted in which the as shown cases grounds. good instance, in For defense on other faith plaintiffs argued work that the Schulstad, the defendant wages. quality him to earned to entitle not of sufficient was Enterprises, Taylor App Inc., 329 326. In v. Werner 55 Or at (1999), arguments the defendant’s 461, 465, 988 P2d 384 Or legally argument not that it was included the Finally, applied. employer law state’s and that a different question owed over- the defendant was whether Vento, the against plaintiff plaintiff; other claims to the time played no role. concerning 652.150,

In most recent decision our (2004), Oregon, Young 31, 96 P3d v. State holding (2005), our we reaffirmed allowed, 338 Or 57 rev good We not a defense. faith belief is that a Schulstad explained: knowledge that, has actual employer if an have held “[W]e knowl- or if such overtime obligation has an

that it good employer, a imputed to the reasonably can be edge paying not overtime has an excuse for that faith belief pen- imposition of escape not allow the will * ** 652.150(1). this court In Schulstad alty under ORS Sabin, on [Johnston] the tension between considered in Lee and decisions hand, Court’s Supreme and the the one * * Braddock, In Lee and *, the other. Braddock an faith belief good held that a Court pay- excuse wages could an it did not owe [Johnston], above, the court As noted penalty. of a ment by good faith belief that, apparent despite concluded the full amount it did not owe statute, the by employee employer claimed its under the wages pay to and failed to employee knew that it owed them. The court held that the its

employer’s pay failure to the penalty a wages subjected was willful and the Sabin, In the Court held that under the statute. willfully plaintiff the defendant withheld from the Schulstad, employee despite showing good faith. In we controlling. [Johnston] concluded that and Sabin were We that, court, explained as found the trial the defendant employee Schulstad knew that owed its wages at time employee employment. the that the left his that, although employer good We held it had an excuse for not believed in faith that

paying wages, the failure pay its them was intentional and the to pen- was entitled alty wages. Id. at 329.” added).

195 Or App at 43 We concluded that an (emphasis 652.150(1) employer is liable for under penalties either if it knew that were entitled to the employees unpaid or if it could be with that Id. at 47. charged knowledge.

In there Young, was direct testimony employer did not know that the employees were entitled to overtime and the trial court pay, found that the entitlement to overtime pay was the result of an unintentional legislative error. drafting facts, As result of those we held that had failed to their that the carry proving burden knew of their entitlement or that it was charged with that at knowledge. App contrast, 47-48. obligation to severance compensation this case comes from a negotiated agreement between defendant and plain- Moreover, tiffs’ union. there is no evidence of an uninten- tional drafting error in that agreement. Based on the evi- us, dence before defendant either knew or can be properly with charged knowledge plaintiffs’ right severance com- on pensation 10, November the date that it terminated their employment. Plaintiffs’ severance due compensation became at 11, the end of the on day business November see ORS 652.140(1), and under Schulstad and enti- Young, they were penalty wages beginning provided tled to November 652.150(1). in ORS the above

Despite controlling precedents, major- ity concludes that “defendant infor- acquired requisite mation on which to base its decision to severance benefits requiring

when the arbitrator’s decision it to do so became final.” 197 Or at 667. It holds therefore that the trial they rejecting plaintiffs’ court erred in claims that were enti- tled to from the date that the sale was com- plete plaintiffs’ employments That were terminated. holding holdings Young, Sabin, is inconsistent with the Schulstad, expressed for the reasons above. Because majority legislature interpret fails to the statute as intended, Court con- and as both we have majority’s portion opinion. Iit, strued dissent from that ofthe

Case Details

Case Name: Wilson v. Smurfit Newsprint Corp.

Court Name: Court of Appeals of Oregon

Date Published: Feb 23, 2005

Citation: 107 P.3d 61

Docket Number: 9912-13689; A120585

Court Abbreviation: Or. Ct. App.