Oct. 8, 2009 – The Wisconsin Court of Appeals reinstated on Oct.  6 a discharged Milwaukee police officer’s claim for back wages and benefits, reversing the circuit court’s holding that such a claim can only arise from work actually performed.

In Sliwinski v. City of Milwaukee, 2008AP2141, the court held that a claim for payments owed under Wis. Stat. section 109.01 (3) requires the claimant to have performed personal services at some time so as to have entitled him or her to wages. Restricting a claimant to seeking only those amounts earned for hours worked would contradict the statute’s express mention of recovery for sums owed for holiday pay and severance.

A series of lawsuits

In November 2002, the Milwaukee Police Department discharged Det. Philip Sliwinski for an alleged rule violation. After an unsuccessful administrative appeal, the city cut off Sliwinski’s pay and benefits in March 2004.

The circuit court upheld the decision against Sliwinski, but the court of appeals reversed the decision to discharge in January 2006, remanding the case because significant evidence had been excluded at Sliwinski’s dismissal hearing.

Because he had not received his new hearing or been paid following the court of appeals decision, Sliwinski sued in April 2006 in circuit court for a deprivation of property without due process. The City of Milwaukee removed the action to federal court which ruled that Sliwinski had not exhausted his state court remedies, including the filing of a mandamus action.

In April 2007, Sliwinski filed a petition for a writ of mandamus, his third circuit court action. The circuit court denied the petition, but the court of appeals reversed in June 2008 because Sliwinski had shown a “clear, specific legal right” to his pay and benefits under Wis. Stat. section 62.50 (18) governing salary during suspension. The court of appeals issued the writ to the city, requiring it – for a second time – to conduct the due process-compliant hearing. Further, the court of appeals instructed, Sliwinski was entitled to his pay and benefits until that hearing took place.

On the day before he filed his petition for a writ of mandamus, Sliwinski had begun to make a claim under Wis. Stat. chapter 109. That claim was finally filed in October 2007 and the circuit court denied it in September 2008 according to its interpretation of Wis. Stat. section 109.01 (3).

While Sliwinski appealed the chapter 109 action, the circuit court granted the writ for mandamus as directed by the court of appeals. Of the $372,770.25 owed for back pay and benefits, plus interest, the city paid $308,025.37 in July 2009. The city made assurances that the balance would be forthcoming. Accordingly, the city argued the matter was now moot during oral arguments for the appeal of the chapter 109 suit.

Meaning of ‘wages’

In an opinion authored by Judge Kitty Brennan, the court of appeals reversed the circuit court’s decision that “wages,” as defined in Wis. Stat. section 109.01 (3), does not include Sliwinski’s back pay and benefits because he had not actually performed any personal services after discharge.

“A Wis. Stat. ch. 109 wage claim is meant to be a procedure for employees to get prompt payment of monies clearly owed to them by their employers,” the court of appeals explained, citing to German v. Dept. of Transportation, 2000 WI 62.

“We conclude there are two facets to the Wis. Stat. § 109.01 (3) wage claim: (1) the employee must have at some time performed services that entitle him or her to the wages; and (2) the employee’s entitlement to the wages must be clear and already determined by either an agreement or employer’s policy,” the court reasoned.

Noting that the statute does not define the “personal services” at issue in the first prong, the court observed that section 109.01 (3) lists examples of “remuneration … for personal services” beyond traditional salaries and commissions. “For example, it includes holiday and vacation pay, supplemental unemployment benefit plan payments, severances pay and dismissal pay,” the court wrote. “In each of these instances, the employee is entitled to remuneration, not for actual work done during the holiday, vacation, period of unemployment or after severance or dismissal, but instead, the entitlement to the remuneration is based on past personal services performed.”

“Construing Wis. Stat. § 109.01 (3) as the circuit court did would eliminate coverage of the items the statute has listed as covered,” the court of appeals wrote.

Turning to the second prong, the court concluded that an employee can demonstrate entitlement to remuneration by reference to a collective bargaining agreement, an employment contract, or the employer’s established policy. In German, the court of appeals noted, DOT officers were entitled to pay under a separate agency code provision that entitled them to compensation during those meal hours they were required to be on call.

“Sliwinski, like the DOT officer, was clearly entitled to be paid for the discharge period as we held in [his earlier appeal], although his entitlement was based on a statute (Wis. Stat. § 62.50 (18)) and theirs was based on an administrative code provision,” the court wrote.

The court distinguished this situation from Dept. of Industry, Labor and Human Relations v. Coatings, Inc., 123 Wis. 2d 418 (Ct. App. 1985), in which a claim for wages arising from liquidated damages in a noncompete agreement failed under section 109.01 (3). “The plaintiff’s entitlement to damages was dependent upon a determination (which had not yet been made) as to whether the employee was fired for cause,” the court explained.

Not moot

Because the city had yet to fully pay Sliwinski for the back pay and benfits, the court of appeals rejected the city’s contention that the chapter 109 claim had become moot. “And even when and if fully paid, Wis. Stat. ch. 109 provides other remedies for an employee denied prompt payment of wages, including attorney fees and wage increases that are not resolved by the City’s July 2009 payment,” the court wrote.

Likewise, the court disagreed with the city’s argument that Wis. Stat. section 783.05 prohibits Sliwinski’s claim because the writ of mandamus had been returned in the form of the back pay and benefit payments. That statute states “[a] recovery of damages by virtue of this chapter against any party who shall have made a return to a writ of mandamus shall be a bar to any other action against the same party for the making of such return.”

Sliwinski’s chapter 109 claim is not barred because he filed it in April 2009 – before the writ existed. “The only return that has been made in this case is at best a partial return that did not happen until July 2009 – twenty-six months after this action was filed,” the court said.

Claim preclusion

The city argued that the doctrine of claim preclusion bars Sliwinski’s chapter 109 action, but the court of appeals disagreed.

Citing A.B.C.G. Enterprises v. First Bank Southeast, 184 Wis. 2d 465 (1994), the court explained that a claim is precluded when (1) “there is an identity of parties and an identity of causes of action” between the two actions and (2) a successful outcome in the second action “would nullify the prior … action or impair rights established in the initial action.”

“Here, there is neither identity of parties nor of causes of action between this Wis. Stat. ch. 109 action and the mandamus action,” the court said. “The Milwaukee Police Association and Sliwinski  were both plaintiffs in the mandamus action. The Milwaukee Police Association is not a party to the ch. 109 action … [A] ch. 109 wage claim ‘would not vindicate the interests of the Police Association.’”

Further, the court said, the doctrine of claim preclusion applies when “a final judgment is conclusive in all subsequent actions between the same parties [or their privies] as to all matters which were litigated or which might have been litigated in the former proceedings,” the court wrote, quoting Kowske v. Ameriquest Mortgage, 2009 WI App 45.

  “A final judgment in the mandamus action would not resolve the issues of attorney fees or increased wages in the Wis. Stat. ch. 109 action. And the attorney fees and increased wages penalties in ch. 109 could not have been litigated in the mandamus action,” the court said.