Leonard v. McMorris

63 P.3d 323, 8 Wage & Hour Cas.2d (BNA) 740, 2003 Colo. LEXIS 96, 2003 WL 231233
CourtSupreme Court of Colorado
DecidedFebruary 3, 2003
Docket01SA380
StatusPublished
Cited by57 cases

This text of 63 P.3d 323 (Leonard v. McMorris) is published on Counsel Stack Legal Research, covering Supreme Court of Colorado primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Leonard v. McMorris, 63 P.3d 323, 8 Wage & Hour Cas.2d (BNA) 740, 2003 Colo. LEXIS 96, 2003 WL 231233 (Colo. 2003).

Opinions

Justice HOBBS

delivered the Opinion of the Court.

Pursuant to C.A.R. 21.1, the United States Court of Appeals for the Tenth Circuit certified to us the following questions of Colorado law:

1) Are officers of a now-bankrupt corporation individually liable for the wages of the corporation’s former employees under the Colorado Wage Claim Act, Colo.Rev.Stat. § 8-4-101 et seq (1999)?
2) If so, are all officers individually liable due to mere status as officers or must the officers have been high ranking or active decision-makers?

See Leonard v. McMorris, 272 F.3d 1295 (10th Cir.2001).

Upon acceptance of the certified questions, we reframed the questions and directed the parties to brief the following four issues:

1) Whether officers of a corporation are individually liable for the wages of the corporation’s former employees under the Colorado Wage Claim Act, Colo.Rev.Stat. § 8-4-101 et seq. (2001);
2) If so, whether all of the corporation’s officers are individually liable or only the officers who have been high ranking or active decision-makers;
3) If so, whether the Colorado Wage Claim Act imposes personal liability on officers when the corporation declares bankruptcy; and,
4) If so, whether the Colorado Wage Claim Act’s “good faith legal justification” clause is a defense to the officer’s personal liability to former employees under the Act when the corporation files for bankruptcy.

We answer our reframed first question as follows: No, under Colorado’s Wage Claim Act, the officers and agents of a corporation are not jointly and severally liable for payment of employee wages and other compensation the corporation owes to its employees under the employment contract and the Colorado Wage Claim Act. Our answer is disposi-tive of the two questions the Court of Appeals for the Tenth Circuit certified to us, and we return this case to that court for further proceedings.

I.

The plaintiffs in this case (Leonard) are former employees of NationsWay. The defendants (McMorris) were corporate officers of NationsWay. NationsWay was one of the largest privately held trucking companies in the United States. In May of 1999, Nations-Way had more than 3,200 employees in forty-three different states.

On May 20, 1999, NationsWay filed a petition for bankruptcy protection pursuant to Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Arizona. Harold Roth, Senior Vice President and William Ward, Senior Vice President, filed the petition on behalf of the corporation. On February 11,1999, Nations-Way’s board of directors had given these two officers the authority to file the petition if, and when, they determined it was necessary in the best interest of the corporation. After filing the bankruptcy petition, NationsWay terminated many of its employees and did not pay wages and other compensation that became due after the petition’s filing, because the Bankruptcy Code’s automatic stay provision prevented the corporation from making these payments. 11 U.S.C. § 362(a) (2002).

The NationsWay bankruptcy proceeded as a Chapter 11 liquidation and the United States Bankruptcy Court confirmed Nations-Way’s Chapter 11 plan on October 13, 2000. The employees received, as a result of the Chapter 11 proceeding, approximately $3.0 million in December of 2000 and an additional $350,000 in August of 2001. Leonard claims that the officers of NationsWay are personally liable to pay the difference between what the employees received in the bankruptcy proceeding and the remaining [326]*326amount of unpaid wages, benefits, and other compensation that NationsWay did not pay them, amounting to approximately $12 million, plus penalties and attorney’s fees.

Leonard originally brought this action in a Colorado district court. McMorris removed it to the Federal District Court for Colorado. The Federal District Court, on summary judgment, found eight officers personally liable for unpaid wages and other compensation. Leonard v. McMorris, 106 F.Supp.2d 1098 (D.Colo.2000).

The Federal District Court relied on three provisions of the Wage Claim Act: 1) section 8-4-101(6), 3 C.R.S. (2002), which includes officers in the definition of employer; 2) section 8-4-104(l)(a), 3 C.R.S. (2002), which states that wages for services earned and unpaid are due and payable immediately when the relationship is interrupted at the volition of the employer; and 3) section 8-4-104(3), 3 C.R.S. (2002), which states that if an employer refuses to pay wages without a good faith legal justification, the employer is liable to the employee for a penalty of fifty percent of the compensation due.

On interlocutory appeal, when the case went from the Federal District Court to the United States Court of Appeals for the Tenth Circuit, that court certified its questions of Colorado law to us because of lack of controlling precedent, and we agreed to exercise our C.A.R. 21.1 jurisdiction. See Leonard, 272 F.3d at 1295-97.

II.

Leonard contends that the plain language of Colorado’s Wage Claim Act imposes individual liability on all corporate officers and agents, in all circumstances, for payment of the wages and other compensation the corporation does not pay to employees. We disagree. The plain language of the Wage Claim Act does not say this. In support of the employees’ argument, Leonard places reliance on the definition of “employer” in the Wage Claim Act.

However, we find the Colorado Wage Claim Act’s definition of “employer” to be ambiguous on the question of personal officer and agent liability. Upon review of the language, design, purpose, and construct of Colorado’s Wage Claim Act, we conclude that the General Assembly did not intend to impose personal liability on corporate officers and agents for payment of earned, but unpaid, wages and other compensation the corporation owes to employees.

A.

Standard of Review and Canons of Statutory Construction

We conduct de novo review of the questions of law before us. Gorman v. Tucker, 961 P.2d 1126, 1128 (Colo.1998). These questions concern Colorado’s Wage Claim Act, sections 8-4-101 et seq., 3 C.R.S. (2002). Our fundamental responsibility when construing a statute is to give effect to the General Assembly’s intent. Martin v. People, 27 P.3d 846, 851 (Colo.2001); Reg’l Transp. Dist. v. Lopez, 916 P.2d 1187, 1192 (Colo.1996). We must read and consider the statute as a whole and give harmonious and sensible effect to all its parts, when possible. Martin, 27 P.3d at 851; Gorman, 961 P.2d at 1128. In the event the statute is ambiguous, we consider the language the legislature chose to utilize, the evident legislative purposes, the consequences of alternative constructions, and legislative history of the General Assembly’s discussion, if available. Martin, 27 P.3d at 851. We will not adopt a construction that leads to an absurd result. Reg’l Transp. Dist., 916 P.2d at 1192; Bd. of County Comm’rs v. IBM Credit Gorp.,

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Bluebook (online)
63 P.3d 323, 8 Wage & Hour Cas.2d (BNA) 740, 2003 Colo. LEXIS 96, 2003 WL 231233, Counsel Stack Legal Research, https://law.counselstack.com/opinion/leonard-v-mcmorris-colo-2003.