Court Opinion

ID: 4706689
Source: CourtListenerOpinion
Date Created: 2021-07-27 06:44:52.324614+00
Date Added: 2024-06-11T08:06:37.127398
License: Public Domain

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                                                                     '"                 -,;:-;:-· •   •,   ...,. • ••   • 11 U.S.C. §§ 701-784.

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       Allen   v.   Dameron IV eta/., No. 93056-2

       proposal. Specifically, Dameron and Standen were "empowered" to file a chapter 7

       bankruptcy petition after approval from the board of directors. Immediately following that

       meeting, Rigas resigned.

                KAMP rejected all of the board's funding requests. In light of KAMP's rejection,

       Dameron proposed that AIS file for chapter 7 bankruptcy as soon as possible, terminate

       all AIS employees, except for those necessary to prepare the chapter 7 filings, and cease

       operations of AIS and its subsidiaries. The board unanimously approved the proposal.

       McGrane resigned after that meeting, leaving AIS without a chief executive officer (CEO)

       and only Dameron, Standen, and Kalman as the remaining members of the board.

                Pursuant to the board's action, Allen sent a termination letter to AIS's employees

        on March 4. The termination letter informed the employees of the chapter 7 filing and

        acknowledged that they would receive their final paycheck, including accrued vacation,

        on March 15, their regular payday date. Allen's employment was not terminated at this

        time since he was one of the employees the board deemed necessary to prepare the

        chapter 7 filing.

                At the next board meeting, the board decided that upon filing for chapter 7

        bankruptcy, the remaining company funds would be allocated for retained employees,

        payroll taxes, state sales taxes, and employees, while holding $25,000 for insurance.

        Shortly thereafter, the board paid $19,837.08 for AIS's April general insurance premiums,

        $13,953.00 for directors' and officers' insurance, and $7,853.96 in payroll advance for

        retained employees.

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        Allen v. Dameron IV eta/., No. 93056-2

              On March 14, 2013, the board authorized the filing of AIS's chapter 7 bankruptcy

       petition. 6 Minutes prior to the filing, the board adopted a resolution to use its remaining

       assets for employees' wages. The board paid approximately $16,000.00 to employees'

       401 K plans and $31,423.72 to payroll. That amount was not sufficient to cover all wages

       thatAIS owed to its employees, which amounted to $322,615.02, and none of that money

       was paid to Allen.

        II.    Procedural History

              After AIS filed chapter 7 bankruptcy, three former employees filed a class action

        suit on behalf of all terminated AIS employees against all former AIS board members,

        including Dameron and Standen (hereafter referred to as the defendants), for willful

        withholding of wages under RCW 49.52.050, the Washington Rebate Act (WRA). That

        case settled, and the defendants and Rigas agreed to pay the class $356,500. However,

        the terms of the settlement offer excluded Allen as a member of that class.

               Thereafter, Allen filed this civil suit in the United States District Court for the

        Western District of Washington, alleging that the defendants willfully withheld wages in

        violation of the WRAJ See Allen v. Dameron, No. C14-1263RSL, 2016 WL 827168, at

        *1 (W.O. Wash. Mar. 3, 2016) (court order), vacated on recons., 2016 WL 4772484

        6
         Allen asserts that the bankruptcy filing terminated all employees, including Dameron, Standen, and
        Kalman. Dameron and Standen disagree, asserting that they resigned following the filing. However,
        Kalman is the only board member who appears to have formally resigned; in a letter dated March
        13, 2013, Kalman announced his resignation, effective upon the chapter 7 filing. Regardless,
        Dameron and Standen's employment terminated upon the filing for chapter 7 bankruptcy.
        7Allen sought an award of $84,175.21, but the district court concluded that the unpaid wages,
        severance, and unused vacation amounted to $78,303.17.

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       Allen   v.   Dameron IV eta/., No. 93056-2

       (Apr. 22, 2016) (court order). Allen claimed that he was owed three months' severance

       pay, unused vacation pay, and wages earned during two pay periods: wages with a

       payday date one day after the bankruptcy petition was filed and one week's worth of

       wages with a payday date 15 days after the filing. 8 The defendants moved for summary

       judgment, and the district court granted that motion, reasoning that (1) the defendants

       did not have the authority to pay Allen's wages on the dates they became due and that

        (2) the defendants did not willfully withhold wages from Allen. See id. at *4.

                Allen timely filed a motion asking the district court to vacate its judgment and

        reconsider the defendants' motion for summary judgment. Allen argued that the district

       court should have certified the relevant questions of state law to this court. Over the

       defendants' opposition, the district court granted Allen's motion to vacate the summary

       judgment. The district court then certified two questions to this court:

                [(1 )] Is an officer, vice principal, or agent of an       employer liable for a
                deprivation of wages under RCW 49.52.050 when             his or her employment
                with the employer (and his or her ability to control      the payment decision)
                was terminated before the wages became due and            owing?

                [(2)] Does an officer, vice principal, or agent's participation in the decision
                to file the chapter 7 bankruptcy petition that effectively terminated his or her
                employment and ability to control payment decisions alter the analysis? If
                so, how?

        We granted review pursuant to RCW 2.60.020. 9

        8
          AIS filed its chapter 7 petition on March 14, 2013. The first set of Allen's wages had a pay period
        that ended on March 10, with a payday date of March 15. The second set of Allen's wages had a
        pay period that ended on March 24 and a payday date of March 29.
        9
          On appeal, on October 13, 2016, the defendants filed their answer brief to the Washington
        Employment Lawyers Association's amicus brief supporting Allen. Allen moved to strike this answer,
        arguing that it was untimely because the deadline to file any answer to the amicus was September
        29, 2016. Subsequently, the court allowed the defendants to file a motion for an extension of time to

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       Allen    v.   Dameron IV eta/., No. 93056-2

       STANDARD OF REVIEW

                 We treat certified questions as "questions of law that we review de novo." Carlsen

        v. Glob. Client Sols., LLC, 171 Wn.2d 486, 493, 256 P.3d 321 (2011 ). In addition, "[w]e

       consider the legal issues not in the abstract but based on the certified record provided

       by the federal court." /d. For cases such as this, where the questions "pertain to a motion

       for summary judgment, we perform the same inquiry as the district court." Saucedo              v.
        John Hancock Life & Health Ins. Co., 185 Wn.2d 171, 178, 369 P.3d 150 (2016).

       ANALYSIS

                 We reject the defendants' invitation to reformulate the certified questions and

        answer both certified questions in the affirmative. First, we hold that an officer, vice

        principal, or agent may be personally liable for the failure to pay wages under the WRA,

        even when the payday date for such wages comes after the filing of chapter 7

        bankruptcy. Second, an officer, vice principal, or agent's participation in the decision to

        file for chapter 7 bankruptcy tends to show a willful withholding of wages under the WRA.

        I.       We Decline the Invitation To Reformulate the Certified Questions

                 We have the authority to reformulate certified questions. Danny v. Laidlaw Transit

        Servs., Inc., 165 Wn.2d 200, 205, 193 P.3d 128 (2008). However, we decline to do so

        here.

                 The defendants' request to reformulate the certified questions is actually a request

        for the court to answer a completely different question. The defendants ask us to answer

        whether they, as members of the board of directors, may be held liable under the WRA.

        be applied to their answer retroactively. We passed these motions to the merits and now grant the
        defendants' motion for extension of time and deny Allen's motion to strike.

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       Allen   v.   Dameron IV eta/., No. 93056-2

       The certified questions, on the other hand, ask us to clarify our law regarding the

       application of the WRA in circumstances of chapter 7 bankruptcy. The district court's

        certified questions already assume the existence of individuals who are liable under the

       WRA. The WRA states that an individual can be personally liable if they are an "officer,

       vice principal, or agent." 10 RCW 49.52.050. The district court's certified questions mirror

       that language exactly by asking about the liability of an "officer, vice principal, or agent."

        We decline to answer a question that the federal district court seems already to have

        answered.

                In addition, the circumstances where a member of the board of directors will be

        liable under the WRA appear to be rare. Here, the directors were acting as the de facto

        officers of AIS. In fact, AIS operated without a CEO for a period of several days until the

        board filed for chapter 7 bankruptcy. The board made the decisions of who, when, and

        how much was being paid to AIS employees. Such decision-making is not within the

        normal duties of a member of the board of directors for a corporation. Given the rare

        circumstances in which a director would make the type of decisions subject to liability

        under the WRA, we decline to reformulate the certified question.

        II.     An Officer, Vice Principal, or Agent May Be Held Liable under the WRA When His
                or Her Employment Was Terminated by the Filing of a Chapter 7 Bankruptcy
                Petition and the Payday Date for Wages Came after the Filing

                We answer the first certified question in the affirmative for two reasons. Neither

        the date of the employee's payday in relation to the filing of the chapter 7 bankruptcy nor

        10
           The terms are defined according to their common law meanings. See Ellerman v. Centerpoint
        Prepress, Inc., 143 Wn.2d 514, 520-23, 22 P.3d 795 (2001). The additional requirement that the
        individual officer, vice principal, or agent had control over the payment of wages is discussed infra
        at Section II.

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        Allen v. Dameron IV eta/., No. 93056-2

       the court's holding in Ellerman v. Centerpoint Prepress, Inc., 143 Wn.2d 514, 522-23, 22

       P.3d 795 (2001 ), precludes imposing personal liability under the WRA on an officer, vice

       principal, or agent.

       A      In Circumstances of Chapter 7 Bankruptcy, We Look to Whether an Employee's
              Earned Wages Were Withheld on the Date the Corporation Filed for Bankruptcy

              As demonstrated in Morgan v. Kingen, 166 Wn.2d 526, 210 P.3d 995 (2009), the

       filing of bankruptcy does not cut off the potential liability of an officer, vice principal, or

       agent. Morgan presented a similar fact pattern-wages were earned prior to the chapter

       7 filing, but were not payable until payday dates after the filing. /d. at 532, 535 n.1. A

       CEO and CFO opened and operated a casino. /d. at 531. One year after opening, the

       casino filed for chapter 11 bankruptcy. /d. at 532. After the chapter 11 filing, the CEO and

        CFO continued to operate the casino as debtors-in-possession. /d. The casino's financial

        position continued to decline, and the United States trustee moved to convert the chapter

        11 proceeding into a chapter 7 liquidation. /d. During the hearing on the motion, the

        officers declined to inject more capital into the casino and the matter was converted into

        a chapter 7 bankruptcy. /d. Before the conversion, the casino's employees earned wages

        covering two pay periods, and the payday dates for the wages occurred after the chapter

        7 conversion date. /d. at 532, 535 n.1. The officers therefore "suggest[ed] the failure to

        pay these wages was beyond their control," relying on our holding in Ellerman. /d. at 535.

              We addressed this argument first in a footnote, stating that "the first pay period of

        unpaid wages ended well before the conversion date ... [and] even if we considered the

        payday date relevant, [the casino] lacked adequate cash to pay the employees their

        earned wages when it entered chapter 7 liquidation." /d. at n.1. Thus, Morgan suggested

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       Allen   v.   Dameron IV eta!., No. 93056-2

       that in circumstances of bankruptcy, we are most concerned with the withholding of

       earned wages on the date of filing, regardless of whether the established payday date

       comes after the employer entered bankruptcy.

                This understanding is consistent with RCW 49.48.01 0, which states that "[w]hen

       any employee shall cease to work for an employer, whether by discharge or by voluntary

       withdrawal, the wages due him or her on account of his or her employment shall be paid

       to him or her at the end of the established pay period." Under normal circumstances, an

        employee is paid his or her wages earned during a specified pay period on a payday

        date established by the employer. WAC 296-126-023. In those circumstances, we judge

       whether an employer or agent has withheld wages under the WRA if the employer failed

        to pay the employee his or her wages after the payday date ended. However, when an

        employer files for chapter 7 bankruptcy, the filing usually terminates all employees, as

        happened in this case. Often, this renders the previously established pay periods and

        payday dates irrelevant if they occur after the filing. 11

        11 The defendants argue that we should not hold an officer, vice principal, or agent liable in this
        situation because the legislature has created an alternative remedy for employees like Allen. The
        defendants direct the court to RCW 49.56.01 0, which states that wage claims "are preferred claims
        [in cases of bankruptcy], and must be paid by such trustees or assignees before any other creditor
        or creditors." Therefore, the defendants argue, "the trustee is the proper party against whom such
        claims may and should be brought."

                This assertion ignores the purpose of the WRA, which expressly provides for personal
        recovery against individual officers. As we have noted in several cases, "The statute must be liberally
        construed to advance the Legislature's intent to protect employee wages and assure payment."
        Schilling v. Radio Holdings, Inc., 136 Wn.2d 152, 159, 961 P.2d 371 (1998). In addition, "[t]he wage
        statutes ... reflect the legislature's strong policy in favor of payment of wages to employees."
        Jumamil v. Lakeside Casino, LLC, 179 Wn. App. 665, 682, 319 P.3d 868 (2014). Although Allen may
        have another cause of action pursuant to RCW 49.56.01 0, this fact does not negate his cause of
        action under the WRA. There are many reasons why an employee may choose to sue an individual
        officer instead of the trustee of the employer's bankruptcy proceedings, chief among them an
        organization's financial insolvency, e.g., insufficient funds to satisfy wage claims. In such

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        Allen v. Dameron IV et a/., No. 93056-2

               We decline to allow responsible officers, principals, and agents to circumvent the

       legislature's intent that employees receive all the wages owed to them simply because

       the previously established payday date for wages occurs after a chapter 7 filing. 12 The

       purpose of the WRA is clear; it is

               "primarily a protective measure ... [with] the aim or purpose ... to see that
               the employee shall realize the full amount of the wages ... he is entitled to
               receive from his employer, and which the employer is obligated to pay, and,
               further, to see that the employee is not deprived of such right, nor the
               employer permitted to evade his obligation, by a withholding of a part of the
               wages."

        Schilling v. Radio Holdings, Inc., 136 Wn.2d 152, 159, 961 P.2d 371 (1998) (quoting

        State v. Carter, 18 Wn.2d 590,621, 140 P.2d 298, 142 P.2d 403 (1943)). In simpler terms,

       the WRA "must be liberally construed to advance the Legislature's intent to protect

        employee wages and assure payment." 13 /d. Therefore, in circumstances of chapter 7

        bankruptcy, we look to whether the employer or officer, vice principal, or agent withheld

        circumstances, the legislature has created a remedy via the WRA, allowing employees to recover
        their wages from the individual officers, vice principals, or agents of the employer.
         12
        '  The defendants also argue that the wages implicated by the certified questions are limited,
        comprising at most one month, implying that an employee's recovery of wages in these
        circumstances is somehow less important. See WAC 296-126-023(c) (requiring wages in
        Washington be paid at least monthly). However, this argument neglects that the WRA is part of "a
        comprehensive legislative system with respect to wages indicat[ing] a strong legislative intent to
        assure payment to employees of wages they have earned." Schilling, 136 Wn.2d at 159. Under the
        statute, it does not matter whether the wages withheld are for one day's or one month's work. In
        passing the WRA, the legislature intended to allow employees to recover a// the wages they have
        earned. See id.
        13
           The concurring opinion asserts that the mental element of the WRA is not subject to a liberal
        construction because it is not ambiguous and because it is a criminal statute. No party argues that
        the mental element of the WRA should be given a narrow construction. Instead, the defendants
        assert that they lacked the necessary control over wages to be held liable as an officer, vice principal,
        or agent. As a result, we do not comment here on the proper construction of the mental element of
        the WRA.

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       Allen v. Dameron IV eta/., No. 93056-2

       their employees' earned wages "when [the company] entered chapter 7 liquidation"

       instead of on the established payday date. Morgan, 166 Wn.2d at 535 n.1.

       B.     Ellerman Exempted Low-Level Managers and Supervisors from Liability under the
              WRA Because They Lack Control over the Decision To Pay Wages

              Our decision in Ellerman, on which the defendants rely, does not cut off the liability

       of officers, vice principals, or agents upon the filing for bankruptcy. Instead, our

       discussion of control in Ellerman exempted low-level managers and supervisors from

        liability under the WRA, as our decision in Morgan confirms.

              In Ellerman, we were asked whether a business manager had sufficient control

        over the payment of wages to be held liable under the WRA. Ellerman, 143 Wn.2d at

        519. Since the terms "vice principal" and "agent" are not defined in the WRA, they are

        given their common law meanings in which they could encompass a manager or

        supervisor. /d. at 521-22. However, in Ellerman, we declined to hold the business

        manager liable under the WRA. /d. at 523. After explaining that the manager lacked

        control over the payment of wages and the legislature "intended to impose personal

        liability on only [individuals] who directly supervise or control the payment of wages," we

        concluded the manager was not liable under the WRA. /d. 521-22.

               In Morgan, we distinguished the Morgan officers from the Ellerman manager.

        Morgan, 166 Wn.2d at 536. In Morgan, it was clear that the officers "both had authority

        over the payment of wages." /d. We went on to note that "the wages owed were accrued

        prior to the chapter 7 conversion" 14 and that the "legislature intended ... to impose

        14 The amicus brief of Washington Employment Lawyers Association discusses at length the issue
        of when Allen's wages accrued, claiming that it is the only way that Morgan can be distinguished
        from the present case. The issue of wage accrual appears to be a heavily fact-dependent inquiry,

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        Allen v. Dameron IV eta!., No. 93056-2

       personal liability on the officers in cases like this because the officers control the financial

       decisions of the corporation." /d. Therefore, we rejected the officers' lack of control

       argument, declaring "bankruptcy of the corporation is not a means to escape personal

        liability by those who failed to pay wages owed." !d.

               Acknowledging that this language in Morgan supports Allen's position, the

       defendants attempt to distinguish it on the basis that in Morgan we decided "whether

       financial status, specifically bankruptcy under chapter 7 liquidation, is a valid defense to

        negate the finding of a willful failure to pay wages owed to employees." /d. at 531

        (emphasis added). The defendants argue that Morgan's holding is limited to the second

        element under the WRA, willfulness, since the court framed the question as one dealing

       with the element of willfulness. The defendants therefore assert that the court's language

        in Morgan clarifying why the WRA requires an officer to have control over the payment

        of wages is dicta and not binding. Rather, they argue that Ellerman's holding precludes

        a finding of personal liability since they lacked control over the payment of wages after

        the chapter 7 bankruptcy filing took place.

               The defendants' argument attempts to isolate both the Ellerman and Morgan

        holdings and ignores the language of the WRA. Before the court can reach the question

        of whether the withholding of wages was willful under the WRA, it must first determine if

        an individual qualifies as a member of the class of individuals designated as potentially

        liable under the statute. See RCW 49.52.050 (requiring an individual to be an "officer,

        and as the case is on a motion for summary judgment, the district court has yet to weigh in on these
        issues. In addition, this would be a superficial way for the court to distinguish Morgan, given its
        language that directly addresses the main issues contested here. As a result, the court need not and
        does not address the question about when Allen's wages accrued.

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       Allen v. Dameron IV eta/., No. 93056-2

       vice principal, or agent" and a willful withholding of wages to establish liability). The

       Morgan court concluded that the officers held the necessary control to qualify as officers

       under the WRA, despite the fact that the casino's status had been converted into a

       chapter 7 bankruptcy. See Morgan, 166 Wn.2d at 536. As a result, the court's language

       rejecting the officers' argument that "the failure to pay the[] wages was beyond their

       control" was not dicta, but a necessary first step in the court's analysis. /d. at 535.

       Consequently, our analysis in Morgan controls. The defendants make the same

       argument the officers in Morgan made, namely that they lacked control over the payment

       of wages and therefore cannot be held liable under the WRA. We once again reject the

       argument that the filing of chapter 7 bankruptcy precludes holding an officer, vice

        principal, or agent personally liable under the WRA.

        Ill.   An Officer, Vice Principal, or Agent's Participation in the Decision To File the
               Chapter 7 Bankruptcy Petition Tends To Show a Willful Withholding of Wages

               We also answer the second certified question in the affirmative. An officer's

        participation in the decision to file the chapter 7 bankruptcy petition, where this decision

        effectively terminated the officer's employment and thus the ability to control payment

        decisions, makes it more likely that an officer may be held liable under the WRA because

        it shows willfulness, the second element required by the WRA.

               To succeed in an action under the WRA, a claimant must show both (1) the

        individual being sued is an officer, vice principal, or agent of the claimant's employer who

        has control over the payment of wages and (2) the individual willfully withheld the

        claimant's wages. See RCW 49.52.050; see also Ellerman, 143 Wn.2d at 523. We read

        the district court's second question as one dealing with the second element of the WRA-

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       Allen v. Dameron IV et a/., No. 93056-2

       willfulness. We hold that an officer's participation in the decision to file the chapter 7

       bankruptcy petition alters the WRA analysis because it tends to show willfulness on the

       part of the officer.

               In Schilling, we discussed the element of willfulness under the WRA. We held that

       the "nonpayment of wages is willful 'when it is the result of a knowing and intentional

       action.'" Schilling, 136 Wn.2d at 160 (quoting Lillig v. Becton-Dickinson, 105 Wn.2d 653,

       659, 717 P.2d 1371 (1986)). We further explained that "there are two instances when an

       employer's failure to pay wages is not willful: ... 'either by a finding of carelessness or

       by the existence of a bona fide dispute."' /d. (quoting Pope v. Univ. of Wash., 121 Wn.2d

       479,491 n.4, 852 P.2d 1055, 871 P.2d 590 (1993)). "[C]arelessness ... suggests errors

       in bookkeeping or other conduct of an accidental character," and a bona fide dispute

       exists when there is "a 'fairly debatable' dispute over whether an employment

       relationship exists, or whether all or a portion of the wages must be paid." /d. at 161

        (citing Brandt v. lmpero, 1 Wn. App. 678, 680-81, 463 P.2d 197 (1969)). In Schilling, we

        specifically rejected a "financial inability to pay" exception to the WRA, concluding that

        an officer's failure to pay was willful under the WRA in circumstances where the

        corporation lacked sufficient funds to pay wages. 15 /d. at 164-66.

        15
          The concurring opinion argues that the court cannot reject a "'financial inability to pay"' defense to
        criminal liability under the WRA. Concurrence at 4. The WRA creates criminal liability and provides
        a civil remedy when an employer willfully withholds wages. This case is about the civil remedy
        available under the WRA. The criminal aspect of the statute was not briefed by the parties and is not
        before us.

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       Allen v. Dameron IV eta/., No. 93056-2

              We also discussed the element of willfulness under the WRA in Morgan.166

       Wn.2d at 536-37. There, we reasoned that officers, vice principals, or agents should be

       held liable under the WRA for their willful decisions that impact the payment of wages:

                     The legislature intended ... to impose personal liability on the
              officers in cases like this because the officers control the financial decisions
              of the corporation. There are many examples that highlight the need for
              such risk of personal liability. The officers decide whether to pay one debt
              over another (e.g., wages). The officers have the choice to file bankruptcy
              or, say, close the business and pay its debts (including wages). The officers
              decide whether to continue running an inadequately capitalized corporation
              while hoping for a change in financial position.

        /d. The WRA imposes personal liability on an officer for such decisions because "the

       officers control the choices over how the corporation's money is used." /d. at 537. And

       all of these decisions constitute willful action taken under the WRA.

              Contrary to the defendants' assertions, we do not subject any business decision

       to potential liability under the WRA. As discussed above, Morgan already held that

       individuals may be held liable under the WRA in circumstances of chapter 7 bankruptcy.

       The defendants offer no evidence that Morgan resulted in a business environment where

        management prematurely leaves corporations in financial distress. Rather, this decision

        is consistent with our reasoning in Schilling and Morgan. The defendants do not argue a

        recognized exception to the willfulness element of the WRA as discussed in Schilling.

        Instead, they say they lacked control. However, the defendants misapprehend when

        having control is critical in circumstances of bankruptcy. As discussed above, we are

        most concerned about whether the wages that employees have earned were withheld.

        A bankruptcy does not excuse the willfulness of an individual's exercise of his or her

        control to not pay wages, especially in circumstances where the decision to file for

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        Allen v. Dameron IV eta/., No. 93056-2

       chapter 7 bankruptcy is controlled by the individual exercising control over wages. See

       id. at 536 (concluding "bankruptcy of the corporation is not a means to escape personal

       liability by those who failed to pay wages owed").

              Here, the defendants chose to retain Allen, chose when to file for bankruptcy, and,

       most importantly, chose to withhold his wages. Unlike the business manager in Ellerman,

       the defendants had full control over the decision to pay wages up until they chose to file

       for chapter 7 bankruptcy. Then, the defendants chose to put further payment of employee

       wages beyond their control by filing a chapter 7 bankruptcy petition. In addition, the

       defendants chose to pay insurance costs with company funds before they paid employee

       wages in full. The defendants' decision to put the payment of employee wages beyond

       their control by filing a chapter 7 petition tends to show their willful withholding of wages

        under the WRA. As a result, individuals like the defendants may be held liable for their

        decision not to pay wages accordingly.

        CONCLUSION

              We reject the defendants' invitation to reformulate the certified questions. We

        answer both certified questions in the affirmative. First, we hold that an officer, vice

        principal, or agent may be held liable under the WRA when his or her employment was

        terminated due to chapter 7 bankruptcy and the payday date for wages owed came after

        the filing for chapter 7 bankruptcy. This conclusion reflects our holdings in both Ellerman

        and Morgan. And, in these circumstances, we consider whether the earned wages were

        withheld on the date when the individuals chose to file for chapter 7 bankruptcy, rather

        than on the established payday date if such a date came after the chapter 7 filing.

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        Allen v. Dameron IV eta!., No. 93056-2

             Second, we hold that an officer, vice principal, or agent's participation in the

       decision to file the chapter 7 bankruptcy petition tends to show a willful withholding of

       wages under the WRA. We recognize that the legislature intended to hold individuals

       liable in these circumstances because of the control they exercise over payment

       decisions. Having answered the certified questions in the affirmative, we remand the

       case to the district court for proceedings consistent with this opinion.

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       Allen v. Dameron IV eta/., No. 93056-2

           WE CONCUR.

                                        t~·~·-

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        Allen v. Dameron IV et al., No. 93056-2
        (Gordon McCloud, J., concurring)

                                             No. 93056-2

              GORDON McCLOUD, J. (concurring)-! agree with the majority's answer

        to the certified questions, but I write separately to emphasize the limits of those

        holdings.

              The first certified question asks whether "an officer, vice principal, or agent

        of an employer [is] liable for a deprivation of wages under RCW 49.52.050 when

        his or her employment with the employer (and his or her ability to control the

        payment decision) was terminated before the wages became due and owing." Order

        Vacating J. & Certifying Questions to Wash. Supreme Ct. (Order), Allen v.

        Dameron, No. C14-1263RSL, at 3-4 (W.D. Wash. Apr. 28, 2016). The majority

        says that the answer is yes because ( 1) those entities are listed as potential defendants

        in the cited statute and (2) termination of those entities' employment prior to their

        payday does not insulate them from liability. Majority at 8-11. It concludes that this

        means that such entities "may be held personally liable under the WRA [(wage rebate

        act), RCW 49.52.050]." Id. at 2 (emphasis added). I agree.

              I write separately to clarify that "may" means "may." The other prerequisites

        to WRA liability must still be met before such liability can attach. Specifically,
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        Allen v. Dameron IV et al., No. 93056-2
       (Gordon McCloud, J., concurring)

       plaintiffs must still prove the statute's mental element: that the deprivation of wages

       was done "[w]illfully and with intent to deprive." RCW 49.52.050(2).

               The majority is generally correct that the WRA must be liberally construed to

        advance the legislative purpose '"to protect employee wages and assure payment."'

       Majority at 11 (quoting Schilling v. Radio Holdings, Inc., 136 Wn.2d 152, 159, 961

       P.2d 371 (1998)). But this mental element of the statute we are construing today-

        RCW 49.52.050(2)-is not subject to a liberal construction for two reasons.

               First, RCW 49.52.050(2) is not ambiguous.             The legislature clearly and

        expressly included within that statute the mental element of"[w]illful[ness] and ...

        intent to deprive." RCW 49.52.050(2). When a statute contains such an explicit

        mens rea requirement, the courts must enforce it.

               Second, RCW 49.52.050(2) is a criminal statute. It states that any covered

        person who commits any act listed in subsections (1)-(5) "[s]hall be guilty of a

        misdemeanor." RCW 49.52.050. Thus, even if it were ambiguous, it would subject

        to a strict, not a liberal, construction. 1

               1  The fact that the plaintiffs in this case seek a civil remedy does not change
        that. RCW 49.52.070 provides a civil remedy to employees who are victimized by the
        willful and intentional deprivation of wages criminalized by RCW 49.52.050(2). But it is
        still the meaning ofRCW 49.52.050(2) that we were asked to interpret. And because that
        statute has criminal applications, we must apply the same interpretive rules to the mens rea
        in that statute that we apply when interpreting other criminal statutes. See United States v.
                                                      2
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        Allen v. Dameron IV et al., No. 93056-2
        (Gordon McCloud, J., concurring)

              I therefore agree with the majority's answer that the entities listed in the first

        question, which are the same as the entities listed as potential defendants in RCW

        49.52.050, "may" be held liable. But the plaintiffs in this case must still prove the

        other prerequisites to WRA liability, including willfulness and intent, in order to

       prevail.

              The second certified question asks whether a defendant's "participation in the

        decision to file the Chapter 7 bankruptcy petition that effectively terminated his or

        her employment and ability to control payment decisions alter[s] the analysis" and,

        "[i]f so, how." Order at 3-4. Once again, the majority correctly answers in the

        affirmative and explains that, in the context of the record we have been supplied with

        in this case, "an officer's participation in the decision to file the chapter 7 bankruptcy

        petition alters the WRA analysis because it tends to show willfulness on the part of

        the officer." Majority at 15.

               The majority does, however, go on to state that we have "specifically rejected

        a 'financial inability to pay' exception to the WRA." Id. (quoting Schilling, 136

        Thompson/Center Arms Co., 504 U.S. 505, 518 n.10, 112 S. Ct. 2101, 119 L. Ed. 2d 308
        (1992) (plurality opinion) (rules of statutory construction applicable to criminal statute-
        here, rule of lenity-applies to a tax statute with both civil and criminal applications); id.
        at 519 (Scalia, J., concurring in judgment) (expressly agreeing with the plurality's
        application of that interpretive rule).
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        Allen v. Dameron IV et al., No. 93056-2
       (Gordon McCloud, J., concurring)

       Wn.2d at 164-66); see also id. at 16 (quoting Morgan v. Kingen, 166 Wn.2d 526,

       536-37, 210 P.3d 995 (2009)).

              Once again, I write to emphasize my understanding that this is a holding

       limited to the particular facts presented here. Indeed, the majority could not

       completely reject a "financial inability to pay" defense to criminal liability without

       contradicting controlling United States Supreme Court precedent. Bearden v.

        Georgia, 461 U.S. 660, 672-73, 103 S. Ct. 2064,76 L. Ed. 2d 221 (1983) (revoking

       probation for nonwillful failure to pay fine "would be contrary to the fundamental

        fairness   required    by    the   Fourteenth     Amendment       [to   the   federal

        constitution]"). Thus, despite some broad statements in the majority (and in the

        Schilling and Morgan decisions on which it relies) about financial inability to pay

        being irrelevant to criminal consequences, I take the majority's actual holding as far

        more narrow. It is a holding about timing:

              [D]efendants ... say they lacked control. However, the defendants
              misapprehend when having control is critical in circumstances of
              bankruptcy .... A bankruptcy does not excuse the willfulness of an
              individual's exercise of his or her control to not pay wages, especially
              in circumstances where the decision to file for chapter 7 bankruptcy is
              controlled by the individual exercising control over wages.

        Majority at 16-17.

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         Allen v. Dameron IV et al., No. 93056-2
         (Gordon McCloud, J., concurring)

              To the extent the majority opines that the defendants' decisions to file a

        chapter 7 bankruptcy petition supports an inference of willfulness, I read that as a

        holding based on the facts of this case. Specifically, as the majority explains, "the

        defendants chose to retain Allen, chose when to file for bankruptcy, and, most

        importantly, chose to withhold his wages." Id. at 17.

              [T]he defendants had full control over the decision to pay wages up
              until they chose to file for chapter 7 bankruptcy. Then, the defendants
              chose to put further payment of employee wages beyond their control
              by filing a chapter 7 bankruptcy petition. In addition, the defendants
              chose to pay insurance costs with company funds before they paid
              employee wages in full.

        I d. Given these specific facts, I completely agree with the majority's conclusion that

        "defendants' decision to put the payment of employee wages beyond their control

        by filing a chapter 7 petition tends to show their willful withholding of wages under

        the WRA." Id.

              With these observations about the limits of the majority's holding, I concur.

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        Allen v. Dameron IV et al., No. 93056-2
       (Gordon McCloud, J., concurring)

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