Jeoung Lee v. Evergreen Hosp. Med. Ctr.

464 P.3d 209, 195 Wash. 2d 699

• Court: Washington Supreme Court
• Decided: June 4, 2020
• Docket: 97201-0
• Status: Published

Opinion

FILE THIS OPINION WAS FILED FOR RECORD AT 8 A.M. ON IN CLERK’S OFFICE JUNE 4, 2020 SUPREME COURT, STATE OF WASHINGTON JUNE 4, 2020 SUSAN L. CARLSON SUPREME COURT CLERK

IN THE SUPREME COURT OF THE STATE OF WASHINGTON

) JEOUNG LEE and SHERRI MCFARLAND, ) on their own behalves and on behalf of all ) No. 97201-0 persons similarly situated, ) ) En Banc Respondents, ) ) v. June 4, 2020 ) Filed ____________________ ) EVERGREEN HOSPITAL MEDICAL ) CENTER, a/k/a KING COUNTY PUBLIC ) HOSPITAL DISTRICT No. 2, ) ) Petitioner. ) )

WIGGINS, J.P.T.*—This case concerns a putative class action lawsuit filed by

Jeoung Lee against her former employer, King County Public Hospital District No. 2

d/b/a Evergreen Hospital Medical Center 1 (Evergreen). Lee alleges that Evergreen

failed to give rest and meal breaks in accordance with Washington law. After nine

months of litigation and the addition of a second named plaintiff, Evergreen moved to

compel arbitration, alleging that the claims were covered under the collective

* Justice Charles Wiggins is serving as a justice pro tempore of the Supreme Court pursuant to Washington Constitution article IV, section 2(a). 1In its briefing Evergreen refers to the hospital as “EvergreenHealth Medical Center,” but the collective bargaining agreement and caption on the case refer to the hospital as “Evergreen Hospital Medical Center.” Lee et al. v. Evergreen Hosp. Med. Ctr., No. 97201-0

bargaining agreement (CBA) between Evergreen and the Washington State Nurses

Association (WSNA) that governs nurse employment. The trial court denied the

motion to compel arbitration, and the Court of Appeals affirmed.

We affirm the Court of Appeals on the ground that Evergreen waived the right

to compel arbitration and remand to the superior court for further proceedings

consistent with this opinion. Because we affirm on the ground of waiver, we decline to

reach the issue of whether the claims are statutory or contractual under the CBA.

FACTS AND PROCEDURAL HISTORY

WSNA negotiated the CBAs governing the employment between Evergreen

and its nurses that are applicable to this case. Although some nurses were present

as negotiating team members, the majority of nurses were not. The grievance

procedure and the meal and rest break rules have not materially changed between

CBAs. Under the CBAs, the nurses are allowed three 15-minute paid breaks and one

30-minute unpaid break per 12-hour shift. Further, the CBA defines a grievance as a

violation of the CBA’s express terms. Under the four-step grievance procedure, a

nurse who has a grievance must first present their grievance to a manager who will

attempt to resolve the issue. If unsatisfactory, the grievance shall go to the director

who will hold a conference with all parties. If there is still no resolution, the grievance

goes to the chief nursing officer. If the grievance is still not settled, WSNA may submit

the grievance to binding arbitration. A grievance that involves multiple nurses with a

common factual basis may be submitted to WSNA at step two. There is no indication

2 Lee et al. v. Evergreen Hosp. Med. Ctr., No. 97201-0

in the CBA that Evergreen or individual nurses may submit any grievance to

arbitration.

Lee worked in Evergreen’s emergency department (ED) from 2010 to 2016.

Lee alleges that while she worked for Evergreen, she and other nurses often worked

without rest breaks for every 4 hours worked, worked more than 5 and upward of 16

hours without a meal break, had their breaks interrupted and were not permitted to

resume their breaks, and that Evergreen did not compensate them for all missed

breaks.

In November 2016, Lee filed a putative class action lawsuit on behalf of herself

and all current and former ED nurses against Evergreen for “failing to provide rest and

meal breaks as required under Washington law.” Lee broke down the applicable

classes as (1) ED nurses who missed rest breaks over the applicable period and (2)

ED nurses who missed meal breaks, who had meal breaks interrupted, or who did not

receive a meal break within the first five hours of a shift.

Specifically, Lee claimed, “Defendant’s practices under which Plaintiff and the

class did not receive meal and rest breaks violate RCW 49.12 and WAC 296-126-

092,” 2 as well as “RCW 49.46.130 [and] RCW 49.48.010.” Further, she sought a

declaration that Evergreen’s past and present practices did not comply with

Washington law because of the missed meal and rest breaks and the failure to

2 The core of the present case revolves around WAC 296-126-092(1)-(2), which reads, “Employees shall be allowed a meal period of at least thirty minutes which commences no less than two hours nor more than five hours from the beginning of the shift” and “[n]o employee shall be required to work more than five consecutive hours without a meal period.” This means that in a 12-hour shift, an employee is entitled to two 30-minute meal breaks and three 10-minute rest breaks.

3 Lee et al. v. Evergreen Hosp. Med. Ctr., No. 97201-0

compensate for said breaks, as well as injunctive relief “barring Evergreen from

continuing to withhold payment of wages due for missed rest and meal breaks and

overtime pay over the class period.”

In its answer, Evergreen asserted multiple affirmative defenses, including that

Lee “lack[ed] standing to assert claims for declaratory judgment and injunctive relief”

and Lee “failed to exhaust the grievance and arbitration process under the applicable

[CBA].”

Lee then filed a first amended complaint in January 2017 with almost identical

claims but sought a different class certification. The only substantive change to the

claims is that Lee further clarified that the injunctive relief to prevent “Evergreen from

continuing to withhold payment of wages” was for wages and pay that Evergreen

already owed Lee and the class members, not prospective relief for future withholding

of wages. Lee also added a claim alleging that the break practices unjustly enriched

Evergreen at the expense of Lee and the class members.

In February 2017, Lee moved for class certification; Evergreen opposed class

certification and sought dismissal but did not seek arbitration. In March 2017, the trial

court granted Lee’s motion for class certification. Evergreen moved for

reconsideration of the class certification, and the court narrowed the class certification.

In April 2017, Evergreen moved for the court to approve its class certification notice

and opt out form. It still did not seek arbitration. Lee also moved for approval of the

class notice, which the court approved, and sent the notice to the 565 class members

at her own expense.

4 Lee et al. v. Evergreen Hosp. Med. Ctr., No. 97201-0

The parties then engaged in months of discovery and depositions, including

those of Lee and Sherri McFarland. In July 2017, Lee moved to continue trial from

November 2017 to March 2018. On August 4, 2017, Evergreen opposed the

continuance, indicating it was ready to go to trial on the statutory claims. That same

day, Lee moved to amend her complaint again and added McFarland, a current

Evergreen employee, as another named plaintiff. Evergreen opposed the motion. The

trial court granted the motion, and Lee and McFarland (hereinafter collectively

Plaintiffs) filed the second amended complaint. The claims in the second amended

complaint are identical to the first amended complaint.

In September 2017, Evergreen moved to compel arbitration, alleging that the

second amended complaint, recent discovery, and depositions of the class

representatives indicated that the claims arose under the CBA. At the hearing

regarding the motion to compel arbitration, defense counsel told the court to “proceed

under Rule 12,” and so the court decided the motion to compel arbitration on the

pleadings. Accordingly, the court denied the motion to compel arbitration, reasoning

every iteration of the complaint was brought under the applicable statute, the timing

of the second amended complaint did not change the court’s assessment of the case,

the parties had been litigating for months, and the defendant had not previously

sought to enforce the right to arbitration. Further, because WSNA was not a party to

the litigation, the court stated,

[W]ere I to look outside the pleadings at the [CBA], I question whether or not the right party before would be before me to compel an arbitration hearing in any event. Just on pleadings alone, I don't see any basis to compel arbitration in this case and I deny that request.

5 Lee et al. v. Evergreen Hosp. Med. Ctr., No. 97201-0

Evergreen appealed the denial of the motion to compel arbitration. The Court

of Appeals, Division One affirmed, holding that the Plaintiffs’ claims are statutory and

not subject to arbitration and, even if the claims were subject to arbitration, that

Evergreen waived arbitration by litigating the case for nine months prior to moving to

compel arbitration. See Jeoung Lee v. Evergreen Hosp. Med. Ctr., 7 Wn. App. 2d 566,

434 P.3d 1071 (2019). Evergreen then petitioned for this court’s review of whether the

claim for late meal breaks (those not within the first five hours of a shift) is subject to

arbitration and whether Evergreen waived its right to compel arbitration. We granted

review.

The Association of Washington Public Hospital Districts filed an amicus curiae

brief in support of Evergreen. WSNA and the Washington Employment Lawyers

Association filed amicus curiae briefs in support of the Plaintiffs.

ANALYSIS

We review de novo whether a party has waived the right to arbitration. Steele

v. Lundgren, 85 Wn. App. 845, 850, 935 P.2d 671 (1997).

The right to arbitration can be waived if it is not timely invoked. Otis Hous. Ass’n

v. Ha, 165 Wn.2d 582, 587, 201 P.3d 309 (2009). We look to three factors to determine

whether a party has waived the right to arbitration: “‘(1) knowledge of an existing right

to compel arbitration, (2) acts inconsistent with that right, and (3) prejudice.’” Adler v.

Fred Lind Manor, 153 Wn.2d 331, 362, 103 P.3d 773 (2004) (internal quotation marks

omitted) (quoting Steele, 85 Wn. App. at 849). “Simply put, we [have held] that a party

waives a right to arbitrate if it elects to litigate instead of arbitrate.” Otis Hous. Ass'n,

165 Wn.2d at 588.

6 Lee et al. v. Evergreen Hosp. Med. Ctr., No. 97201-0

It is undisputed that Evergreen believed it had an existing right to arbitrate. In

its answer to Lee’s initial complaint, Evergreen raised arbitration as a potential

affirmative defense. Evergreen contends, however, that it did not know of the specific

arbitrability of the claims until McFarland was added as a plaintiff. Evergreen claims

the addition of a current employee created standing for “forward-looking declaratory

and injunctive relief―seeking to invalidate [Evergreen’s] current practices―directly

challeng[ing] the CBA and its historic implementation of the single 30-minute meal

break on a 12-hour shift.” This argument is unpersuasive.

Evergreen’s characterization of the claims is incorrect under the language of

the pleadings. In the second amended complaint, the Plaintiffs sought injunctive and

declaratory relief that Evergreen violated the statutes by not paying its nurses for

missed breaks and injunctive relief to prevent Evergreen from continuing to withhold

payment. It does not indicate that the Plaintiffs are “seeking to invalidate” the “historic

implementation” of breaks under the CBA. Moreover, from the original complaint

through the second amended complaint, Lee has challenged the fact that the nurses

did not receive their breaks in accordance with WAC 296-126-092. The addition of

McFarland as a named plaintiff did not modify the claims.

Evergreen further argues that the addition of McFarland “was a game-changer”

because she received her meal breaks, but not within the first five hours of a shift as

required by WAC 296-126-092. But in all three iterations of the complaint, the class

breakdown indicated that the “meal break” class included nurses who did not receive

their breaks within the first five hours of their shifts. Further, in the order granting

Lee’s motion for class certification after the first amended complaint, the court

7 Lee et al. v. Evergreen Hosp. Med. Ctr., No. 97201-0

indicated there was a common question of law and fact as to “whether Evergreen

violated the Washington Wage Statute by failing to compensate [ED] nurses for all

missed, on-duty, on-call, and late 30-minute meal breaks as required by Washington

law.” Evergreen cannot now claim that it was unaware of this claim prior to the addition

of McFarland as a named plaintiff.

Puzzlingly, Evergreen consistently argues that the meal break provision of the

CBA varies from and supersedes WAC 296-126-092 because it allows only for “a

single meal period,” and yet, Evergreen simultaneously contends Lee’s claims were

purely statutory prior to the addition of McFarland. However, Lee claims that

Evergreen’s practices under which the nurses did not receive meal breaks violated

WAC 296-126-092. And, as required under the WAC, this would include a second

meal break that Evergreen alleges was not authorized under the CBA. Evergreen

cannot successfully argue both that it could not move for arbitration prior to the

addition of McFarland as a named plaintiff and that the CBA provision varies from and

supersedes WAC 296-126-092 such that the claims are contractual. 3 Under

Evergreen’s own interpretation of the CBA, it would have been allowed to, and would

have had to, move for arbitration in response to the initial complaint for missed meal

3 Although we decline to reach the issue of whether the claims are statutory or contractual under the CBA, it is helpful to provide context to this argument. Under RCW 49.12.187, “[e]mployees of public employers may enter into collective bargaining contracts . . . that specifically vary from or supersede, in part or in total, rules . . . regarding appropriate rest and meal periods.” Evergreen contends that the CBA varies from and supersedes the applicable WAC 296-126-092 and therefore the CBA governs.

8 Lee et al. v. Evergreen Hosp. Med. Ctr., No. 97201-0

breaks because under its interpretation the CBA does not allow a second meal break

as required under WAC 296-126-092.

Further, Evergreen chose to litigate for approximately nine months and

therefore behaved inconsistently with a party seeking to arbitrate. In Steele, the Court

of Appeals held that the employer waived the right to arbitration because he did not

assert arbitration at any obvious opportunity (in the answer, when the complaint was

amended, substitution of counsel, among others) and engaged in “‘overly aggressive’”

discovery. 85 Wn. App. at 853-56.

In contrast, in Hill v. Garda CL Northwest, Inc., 169 Wn. App. 685, 691, 281

P.3d 334 (2012), rev’d on other grounds, 179 Wn.2d 47, 308 P.3d 635 (2013), the

Court of Appeals held that although the time between the initiation of the case and

when the employer moved to compel arbitration was over one year, the employer did

not waive the right to compel arbitration. In that case, the parties had delayed litigation

for this court to resolve a case with similar issues, had engaged in mediation in hopes

of coming to a settlement, and the parties stipulated that the issue was subject to

arbitration under the CBA.

The present case is more similar to Steele than to Hill. Here, the parties

engaged in discovery and litigation for approximately nine months without seeking

mediation or awaiting a decision from this court in another case. While Evergreen did

list arbitration in its answer, it did not move to compel until the third iteration of the

complaint even though the complaint had almost identical claims throughout. Further,

Evergreen opposed Lee’s motion to continue the trial because it was ready to go to

9 Lee et al. v. Evergreen Hosp. Med. Ctr., No. 97201-0

trial on the statutory claims. Through its conduct, Evergreen chose to litigate rather

than arbitrate.

Finally, granting the motion to compel arbitration this late in litigation would

cause severe prejudice to the Plaintiffs. The Court of Appeals has found that an

unnecessary delay or expense can support a finding of waiver of the right to compel

arbitration. See Steele, 85 Wn. App. at 859-60. In addition, an effective attempt to use

arbitration to relitigate a motion that was lost on the merits can support a finding of

substantive prejudice. In the present case the Plaintiffs assert they have incurred over

$140,000 in legal fees from discovery, sending the notice of the class action to all of

the nurses, and securing expert witnesses. Further, to compel arbitration would give

Evergreen the opportunity to relitigate class certification on which it lost. Accordingly,

granting the motion to compel arbitration at this point would be prejudicial to the

Plaintiffs.

Because Evergreen knew of the right to arbitration, litigated contrary to

arbitration, and arbitration at this point would cause prejudice to the Plaintiffs, we hold

that Evergreen waived its right to compel arbitration.

Because we affirm the Court of Appeals on the basis of waiver, we decline to

reach the issue of whether the claims are statutory or contractual.

CONCLUSION

We affirm the Court of Appeals on the ground that Evergreen waived its right

to compel arbitration. Accordingly, we remand to the trial court for further proceedings

consistent with this opinion.

10 Lee et al. v. Evergreen Hosp. Med. Ctr., No. 97201-0

WE CONCUR.