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Sornsin v. Scout Media, Inc.

Court of Appeals of Washington, Division 1

October 14, 2019

WILLIAM SORNSIN, an individual, MARC T. BECK, an individual, ROBERT GOREE, an individual, AARTI VARMA, an individual, EVAN W. LEWIS, an individual, BENJAMIN G. JOLDERSMA, an individual, BRIAN N. KU, an individual, DAMIEN JOLDERSMA, an individual, DONALD J. CLORE, an individual, JOSEPH C. WRIGHT, an individual, Appellants,
v.
SCOUT MEDIA, INC., a Delaware corporation, CRAIG and JANE DOE MALLITZ, and their marital community, CRAIG AMAZEEN, an individual, JOE and JANE DOE ROBINSON, and their marital community; TAMMER and JANE DOE FAHMY, and their marital community, PILOT GROUP GP, LLC, a Delaware corporation, and JANE and JOHN DOES 1 through 8, Respondents.

          Leach, J.

         Ten former employees of Scout Media Inc. appeal the trial court's summary dismissal of their failure to pay wages claim. They claim an affirmative statutory entitlement to payment for accrued paid time off (PTO) that they did not use before they voluntarily quit. Because they have no statutory right to payment and do not claim a contractual right, we affirm.

         FACTS

         On July 10, 2016, many members of the technology team of Scout Media Inc., including appellants, resigned at the same time without prior notice. The parties agree that Scout Media paid appellants all salary earned as of their date of resignation and did not pay appellants for their accrued and unused PTO. Scout's employee manual addresses "PTO Pay Upon Termination." It states, in relevant part, "Employees will be paid out 70% of PTO they have accrued at employment end. . . . Scout reserves the right to withhold any and all PTO time if an employee neglects to give a two week notice of termination regardless of position or length of service."

         In early December 2016, Scout Media filed Chapter 11 bankruptcy proceedings.[1] Later that month, appellants filed a lawsuit against Scout Media, Scout Media's former president and former directors, and Pilot Group GP LLC, a former investor in Scout Media's parent company (together Scout), claiming failure to pay wages and unjust enrichment. Appellants later dismissed their claim of unjust enrichment and their claim against Pilot Group. Both parties filed motions for summary judgment. The court denied appellants' motion and granted Scout's motion. Appellants appeal.

         STANDARD OF REVIEW

         This court reviews an order granting summary judgment de novo and performs the same inquiry as the trial court.[2] It considers all facts and reasonable inferences in the light most favorable to the nonmoving party.[3] And it affirms summary judgment only when the evidence presented demonstrates no genuine issue of material fact and the moving party is entitled to judgment as a matter of law.[4]

         ANALYSIS

         Appellants make three claims: (1) they have an affirmative statutory right to payment of their accrued PTO, (2) the individual respondents are liable to them for the balance of their accrued PTO and for double damages because Scout's board of directors instructed Scout not to pay them for their accrued PTO, and (3) they are entitled to prejudgment interest on their unpaid PTO. We disagree.

         Appellants assert that they have an affirmative statutory entitlement to payment for their accrued PTO because hours worked determines the amount of accrued PTO, placing PTO within the definition of "wages" under former RCW 49.46.010(2) (2011). Scout responds that an employee's right to PTO is only contractual.

         Appellants rely on cases where Washington courts have looked to former RCW 49.46.010(2)'s definition of "wages" to define "wages" in other statutory provisions.[5] RCW 49.46.010(7), formerly RCW 49.46.010(2), [6] defines "wages" as "compensation due to an employee by reason of employment." Appellants assert that McGinnity v. AutoNation, Inc.[7] shows that unpaid vacation benefits are wages under this definition and Naches Valley School District No. JT3 v. Cruzen[8] shows that a sick leave cash-out represents wages. These cases do not establish an affirmative statutory entitlement to payment for accrued PTO for two reasons.

         First, each case examined whether the contested benefit was "wages" within the meaning of RCW 49.48.030, a fee shifting statute allowing an employee to recover attorney fees in any action in which the employee successfully recovers wages or salary owed to him.[9] RCW 49.48.030 is a remedial statute that must be construed liberally in favor of the employee.[10] McGinnity's and Cruzen's characterization of unpaid vacation and sick leave as wages is specific to this remedial attorney fees statute. It is not at issue here.

         Second, the contested benefits were contractual, not statutory. In McGinnity, plaintiffs prevailed on their breach of contract claim for loss of vacation benefits.[11] And in Cruzen, the language of the collective bargaining agreement (CBA) at issue required that the school district pay teachers for their sick leave accrued for the contract period.[12] Neither case involved failure to pay a statutorily required amount, like a minimum wage or overtime.

         Next, appellants note a statement in Hisle v. Todd Pacific Shipyards Corp.[13] that RCW 49.46.010(7)'s definition of "wages" includes payments that are "tied to hours worked." But our Supreme Court cited former RCW 49.46.010(2)'s definition of "wages" only as context to explain that the Washington Minimum Wage Act (MWA)[14] prohibits employees and employers from bargaining collectively to establish wages or other conditions less than the statutory minimum but does not otherwise restrict their freedom to bargain.[15] The court ultimately held that the CBA provision for a retroactive payment, tied to hours worked, was subject to the overtime provisions of the MWA.[16]Hisle does not concern accrued PTO or a statutory right to PTO. Instead, it involves a contractual wage entitlement to which the ...


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