Dep't of Labor & Industries v. Cannabis Green, LLC

Court of Appeals of Washington·Decided March 5, 2024·No. 39459-0·Published

Opinion

FILED

MARCH 5, 2024

In the Office of the Clerk of Court WA State Court of Appeals, Division III

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON DIVISION THREE

DEPARTMENT OF LABOR AND ) INDUSTRIES, ) No. 39459-0-III )

Appellant, )

)

v. )

) PUBLISHED OPINION CANNABIS GREEN, LLC, dba ) LOVELY BUDS, a Washington limited ) liability company, SIMPLY BUD, LLC ) dba LOVELY BUDS NORTH, a ) Washington limited liability company, ) TLE OF SPOKANE, LLC dba LOVELY ) BUDS DIVISION, a Washington limited ) liability company, and TODD BYCZEK ) and ELIZABETH BYCZEK, in their ) individual capacities and as a marital ) community, )

)

Respondents. )

STAAB, J. — After settling a wage complaint with Cannabis Green, the Department of Labor and Industries (DLI) continued to investigate the company, believing that other employees had been denied overtime pay. When Cannabis Green ended negotiations and stopped cooperating, DLI filed a lawsuit in superior court, seeking damages of “approximately” $318,500 on behalf of unidentified employees. Cannabis Green moved to dismiss, arguing that DLI was not authorized to file a lawsuit

Dep’t L&I v. Cannabis Green, LLC, et al.

without a wage order, wage complaint, or wage assignment. The superior court agreed and concluded that DLI had failed to state a claim upon which relief could be granted. DLI appeals, arguing that its “de jureauthority,” granted by RCW 49.48.040(1)(b), authorizes it to institute actions in superior court on behalf of unidentified workers affected by wage violations without a wage order, wage assignment, or wage complaint.

We disagree and affirm dismissal of DLI’s civil action. As an administrative agency, DLI has only the powers bestowed on it by the legislature. The authority granted by RCW 49.48.040(1)(b) allows DLI to “[o]rder the payment of all wages owed the workers and institute actions necessary for the collection of the sums determined owed.” This unambiguous language allows DLI to institute a civil action only for the collection of specified wages and penalties that DLI has previously ordered an employer to pay. In this case, since DLI failed to comply with this statutory prerequisite it is not authorized to institute an action in superior court.

BACKGROUND

Because this is a motion for summary judgment, the facts are set out in a light most favorable to the nonmoving party, DLI.

In January 2019, DLI issued a “Wage Payment Act” (WPA) violation against Cannabis Green after receiving a wage complaint from one of its employees. Cannabis Green is an entity doing business as Lovely Buds, Lovely Buds North, and Lovely Buds Division. The employee conveyed that like most of the other employees of Cannabis

Dep’t L&I v. Cannabis Green, LLC, et al.

Green, she was required to work at all three Lovely Buds locations. The employee claimed that while she never worked overtime at any individual store, she worked overtime when her hours at the three stores were combined. When this occurred, she was not paid overtime for the hours worked. This employee opined that aside from one other employee, all employees worked similar schedules across the different locations and it was unlikely they were properly compensated for overtime work. Eventually, DLI settled the employee’s complaint.

Meanwhile, DLI opened a company-wide investigation to determine if other employees of Cannabis Green were being denied overtime. DLI interviewed workers and obtained partial payroll records from Cannabis Green. DLI determined that there was a joint-employer relationship with respect to the employees and each shop, and determined that overtime hours should be calculated based on collective hours worked in all three shops.

In late 2020, DLI asked Cannabis Green for additional records and information.

Counsel for Cannabis Green responded by questioning the validity of the investigation and indicated that his client would no longer be cooperating. DLI then attempted to serve subpoenas on Cannabis Green, but they were unable to serve the owners.

Cannabis Green contends that it was unaware of a formal investigation into their business until one year after the original employee’s wage complaint was resolved.

Dep’t L&I v. Cannabis Green, LLC, et al.

Additionally, Cannabis Green pointed out that DLI did not respond to concerns expressed by Cannabis Green relating to the scope of the investigation.

In March 2021, DLI and the attorney general’s office attempted to serve documents purporting to be administrative subpoenas at the three Lovely Buds locations. In April 2021, Cannabis Green moved for a writ to stop the investigation and quash the subpoenas. The court found that the subpoenas were not properly served, but otherwise denied Cannabis Green’s petition for a writ.

DLI and Cannabis Green continued to negotiate but these negotiations eventually ended without a resolution. Cannabis Green rejected DLI’s suggestion for mediation and rejected a proposed compliance agreement. Cannabis Green asserted that DLI had not received a specific wage complaint from an employee, and asserted that the proposed compliance agreement would not protect Cannabis Green from additional claims by employees. Finally, Cannabis Green rejected DLI’s demand for attorney fees or costs.

Based on the information received during its investigation, and Cannabis Green’s refusal to continue negotiations, DLI filed a complaint in superior court, seeking damages for wages in an unspecified amount for unidentified employees. The complaint alleged that Cannabis Green violated laws regarding overtime, hours worked, paid sick leave, and meal and rest breaks. DLI asserted that it brought the causes of action “on behalf of affected workers including all current and former non-exempt employees who worked for Cannabis Green.” Clerk’s Papers (CP) at 4. DLI did not claim that it had determined the

Dep’t L&I v. Cannabis Green, LLC, et al.

amount owed to employees or that it had ordered Cannabis Green to pay the amount owed. Finally, in its prayer for relief, it requested unspecified compensatory and exemplary damages for affected workers as well as attorney fees.

Several months later, DLI moved to amend its complaint. In the proposed amended complaint, DLI indicated that “the approximate amount owed to workers is $318,500.” CP at 23.

Cannabis Green objected to DLI’s motion to amend its complaint and moved to dismiss under CR 12(b)(6) and CR 56. The superior court granted Cannabis Green’s motion, concluding without further explanation that there was no genuine issue of material fact and that DLI had failed to state a claim upon which relief could be granted.

DLI appeals.

ANALYSIS

The primary issue in this case is whether DLI is authorized by RCW 49.48.040(1)(b) to initiate an action in superior court to collect unspecified wages without first ordering the employer to pay wages owed. While Cannabis Green contends that the statute limits DLI’s authority to initiate a lawsuit, DLI asserts that the statute grants it plenary authority to enforce wage violations in superior court.

The trial court granted Cannabis Green’s CR 12(b) motion after considering declarations, so the parties concede that the summary judgment standard applies. Under this standard, we consider the facts and reasonable inferences in a light most favorable to

Dep’t L&I v. Cannabis Green, LLC, et al.

the nonmoving party and review de novo the trial court’s ruling. Pearson v. Dep’t of Lab. & Indus., 164 Wn. App. 426, 431, 262 P.3d 837 (2011). Summary judgment is proper if there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. CR 56(c).

1. BACKGROUND OF COLLECTION OF WAGES IN PRIVATE EMPLOYMENT ACT (CWPEA) AND THE WPA

Before addressing the statutory interpretation of RCW 49.48.040 of the CWPEA, the background and history of wage complaints in Washington is helpful.

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