Darrell V. McGraw, Jr., Esq.
George J. Cosenza, Esq.
Attorney General
Cosenza, Merriman & Wolf, PLLC
Katherine A. Campbell, Esq.
Parkersburg, West Virginia
Assistant Attorney General
Attorney for the Appellee,
Shirley Skaggs, Esq.
Larry McDaniel
Assistant Attorney General
Charleston, West Virginia
Joseph M. Brown, Esq.
Attorneys for the Appellant,
Parkersburg, West Virginia
West Virginia Division of Labor Attorney for the Appellees,
L. Dean Schwartz and Michael Johnston
JUSTICE DAVIS delivered the Opinion of the Court.
JUSTICE MAYNARD concurs and reserves the right to file a concurring opinion.
JUSTICES MCGRAW and ALBRIGHT concur, in part, and dissent, in part, and
reserve the right to file separate opinions.
2. “An officer in the management of a corporation who knowingly
permits the corporation to violate the provisions of the Wage Payment and Collection Act,
W. Va. Code §§ 21-5-1 through 21-5-16 (1981 Replacement Vol.), may be held personally
liable for unpaid wages, fringe benefits, and liquidated damages under W. Va. Code § 21-5-
4.” Syllabus point 1, Mullins v. Venable, 171 W. Va. 92, 297 S.E.2d 866 (1982).
3. “The 'clearly wrong' and the 'arbitrary and capricious' standards of
review are deferential ones which presume an agency's actions are valid as long as the
decision is supported by substantial evidence or by a rational basis.” Syllabus point 3, In
re Queen, 196 W. Va. 442, 473 S.E.2d 483 (1996).
4. “Administrative agencies and their executive officers are creatures of
statute and delegates of the Legislature. Their power is dependent upon statutes, so that
they must find within the statute warrant for the exercise of any authority which they claim.
They have no general or common-law powers but only such as have been conferred upon
them by law expressly or by implication.” Syllabus point 3, Mountaineer Disposal Service,
Inc. v. Dyer, 156 W. Va. 766, 197 S.E.2d 111 (1973).
5. In the absence of express statutory authority or an implicit legislative
delegation of power, the West Virginia Division of Labor does not have the authority to
award damages in claims it adjudicates pursuant to the West Virginia Wage Payment and
Collection Act, W. Va. Code § 21-5-1, et seq.
Davis, Justice:
The appellant herein, and respondent below, the West Virginia Division of
Labor [hereinafter referred to as “the Division” or “Division of Labor”], appeals from two
orders entered by the Circuit Court of Wood County. In Case Number 31272, the Division
appeals from the circuit court's July 10, 2002, order finding that the appellee herein, and
petitioner below, Larry McDaniel [hereinafter referred to as “Mr. McDaniel”], was not a
director or officer of MCDI and therefore was not liable to MCDI's former employees
under the West Virginia Wage Payment and Collection Act, W. Va. Code § 21-5-1, et seq.
In Case Number 31273, the Division appeals from the circuit court's July 10, 2002, order
ruling that (1) the appellees herein, and petitioners below, L. Dean Schwartz [hereinafter
referred to as “Mr. Schwartz”] and Michael Johnston [hereinafter referred to as “Mr.
Johnston”], were officers of MCDI and, thus, liable to MCDI's former employees, but that
(2) the hearing examiner lacked the authority to award damages occasioned by their actions.
By order entered October 8, 2003, the Court consolidated these cases “for
purposes of consideration and decision.” Upon a review of the arguments of the parties,
the appellate record, and the pertinent authorities, we affirm the circuit court's rulings in
both Case Number 31272 and Case Number 31273.
In accordance with its administrative procedure in such matters, the Division contacted MCDI and requested payment of these sums on behalf of the former employees. MCDI responded by requesting a meeting with the Division to dispute the amount of compensation it allegedly owed. Because no resolution was reached during the parties' March 7, 2001, meeting, the matter was scheduled for an administrative hearing before the West Virginia Division of Labor. Following hearings on the matter, the Division's hearing examiner, by recommended order entered March 22, 2002, determined that
McDaniel, Inc. individually and doing business as MCDI is
liable to its employees for the wages, expenses and the
liquidated damages claimed.
According to Syllabus Point 1[,] [i]n Mullins v. Venable,
297 SE2d 866 ([W]. Va. 1982):
An officer in the management of a corporation
who knowingly permits the corporation to violate
the provisions of the Wage Payment and
Collection Act, W. Va. Code §§ 21-5-1 through
21-5-16 (1981 Replacement Vol.), may be held
personally liable for unpaid wages, fringe
benefits, and liquidated damages under W. Va.
Code § 21-5-4.
By the testimony and documents submitted in this
hearing it is also clear that Larry M. McDaniel, L. Dean
Schwartz, and Michael R. Johnston are responsible for the
wages, expenses and liquidated damages not paid.
The hearing examiner then held that
the Division's finding that the back wages due to the claimants
in the total amount of $27,510.68, plus expenses in the amount
of $14,229.19 plus liquidated damages in the amount of
$47,721.16 is AFFIRMED and that the respondent McDaniel,
Inc. d/b/a MCDI and the responsible individuals Larry M.
McDaniel, L. Dean Schwartz, and Michael R. Johnston are
found to be jointly and severally liable for payment of the said
wages and damages and are hereby ORDERED to pay the same
to the Division within 30 days of entry of this Order by the
Commissioner.
Following this adverse decision, the appellees herein, McDaniel, Schwartz, and Johnston,
appealed to the circuit court pursuant to W. Va. Code § 29A-5-4 (1998) (Repl. Vol. 2002).
(See footnote 7)
By order entered July 10, 2002, the circuit court ruled, as to Mr. McDaniel,
that
it is the opinion of the court that the findings concerning Larry
McDaniel are clearly wrong in view of the reliable and
probative evidence on the whole record and the commissioner's
order is, therefore, Reversed. There is no probative evidence
that he was and remained a director or officer of the
corporation at the time in question[] nor that he “knowingly
permitted” the violation of the statute.
In a separate order, also entered July 10, 2002, the circuit court ruled, as to Mr. Schwartz
and Mr. Johnston, that
It appears that there is authority for the administrative
agency to hold hearings and investigate matters in order to
determine whether any person has violated any provision of the
Wage Payment and Collection Act. In furtherance thereof the
agency has power to subpoena and examine witnesses under
oath. W. Va. Code, § 21-5-11 (Michie 1996); [W. Va. Code
§§] 29A-5-1 through 3 (Michie 1998).
However, although such administrative remedies must
be exhausted before actions in court are instituted, such
agencies are not authorized to award damages. There is
nothing in the legislation to such effect. See Bank of Wheeling
v. Morris Plan Bank[ & Trust Co.], 155 W. Va. 245, 183
S.E.2d 692 (1971).
The findings of the commissioner with respect to Dean
Schwartz and Michael J. Johnston appear to be supported by
the evidence on the record and the commissioner's order is,
therefore, Affirmed, except to the extent that it purports to
award damages, to which extent it is hereby Reversed.
From these decisions, the Division appeals to this Court.
Thereafter,
[o]n appeal of an administrative order from a circuit
court, this Court is bound by the statutory standards contained
in W. Va. Code § 29A-5-4(a) and reviews questions of law
presented de novo; findings of fact by the administrative officer
are accorded deference unless the reviewing court believes the
findings to be clearly wrong.
Syl. pt. 1, Muscatell v. Cline, 196 W. Va. 588, 474 S.E.2d 518 (1996). Accord Syl. pt. 2,
Walker v. West Virginia Ethics Comm'n, 201 W. Va. 108, 492 S.E.2d 167 (1997). See also
Syl. pt. 1, Wheeling-Pittsburgh Steel Corp. v. Rowing, 205 W. Va. 286, 517 S.E.2d 763
(1999) (“Under the West Virginia Administrative Procedures Act, W. Va. Code ch. 29A,
appellate review of a circuit court's affirmance of agency action is de novo, with any factual
findings made by the lower court in connection with alleged procedural defects being
reviewed under a clearly erroneous standard.”).
Mindful of these standards, we proceed to consider the parties' arguments.
the [hearing examiner's] findings concerning Larry McDaniel
are clearly wrong in view of the reliable and probative evidence
on the whole record . . . . There is no probative evidence that
he was and remained a director or officer of the corporation at
the time in question[] nor that he “knowingly permitted” the
violation of the statute.
On appeal to this Court, the Division urges that the circuit court erred in rendering this
ruling and that the hearing examiner's decision finding Mr. McDaniel was an officer of
MCDI should be reinstated. Mr. McDaniel, however, asserts that the circuit court correctly
reversed the hearing examiner's decision.
The Wage Payment and Collection Act specifically defines an “officer” to “include officers or agents in the management of a corporation or firm, who knowingly permit the corporation or firm to violate the provisions of this article.” W. Va. Code § 21- 5-1(h) (1987) (Repl. Vol. 2002). In Mullins v. Venable, 171 W. Va. 92, 297 S.E.2d 866 (1982), we interpreted this provision to mean that corporate officers could be held personally liable for their corporation's failure to pay wages and other compensation to its employees:
An officer in the management of a corporation who
knowingly permits the corporation to violate the provisions of
the Wage Payment and Collection Act, W. Va. Code §§ 21-5-1
through 21-5-16 (1981 Replacement Vol.), may be held
personally liable for unpaid wages, fringe benefits, and
liquidated damages under W. Va. Code § 21-5-4.
(See footnote 9)
Syl. pt. 1, 171 W. Va. 92, 297 S.E.2d 866 (footnote added). Accord West Virginia-Ohio
Valley Area IBEW Welfare Fund v. Ball Elec. Co., Inc., 685 F. Supp. 953, 954 (S.D.W. Va.
1988) (mem. op.); Syl. pt. 5, Britner v. Medical Sec. Card, Inc., 200 W. Va. 352, 489 S.E.2d
734 (1997) (per curiam). In rendering its ruling, the circuit court found that the evidence
did not support a finding that Mr. McDaniel “knowingly permitted”
(See footnote 10)
MCDI to violate the
payment provisions of the Wage Payment and Collection Act, and, therefore, that he was
not an officer subject to personal liability for MCDI's nonpayment.
As we previously noted, our review of a circuit court's findings of fact in the
context of an administrative proceeding is deferential. Syl. pt. 1, in part, Muscatell v. Cline,
196 W. Va. 588, 474 S.E.2d 518. In other words, we will not reverse a circuit court's
evidentiary determinations unless such findings are clearly wrong. See also Syl. pt. 1,
Francis O. Day Co., Inc. v. Director, Div. of Envtl. Prot. of the West Virginia Dep't of
Commerce, Labor & Envtl. Res., 191 W. Va. 134, 443 S.E.2d 602 (1994) (“Evidentiary
findings made at an administrative hearing should not be reversed unless they are clearly
wrong.”). “The 'clearly wrong' and the 'arbitrary and capricious' standards of review are
deferential ones which presume an agency's actions are valid as long as the decision is
supported by substantial evidence or by a rational basis.” Syl. pt. 3, In re Queen, 196
W. Va. 442, 473 S.E.2d 483 (1996).
From the facts before us, we do not find that the circuit court was clearly
wrong in concluding that Mr. McDaniel was not a corporate officer of MCDI during the
period at issue in this case. The record evidence clearly indicates that Mr. McDaniel had
not been an integral part of MCDI's management since he tendered his resignation as
president of McDaniel, Inc., on January 10, 2000.
(See footnote 11)
Although MCDI's Board of Directors
refused to accept Mr. McDaniel's resignation as the company's president, it nevertheless
acknowledged that Mr. McDaniel's actions in tendering his resignation marked the end of
his employment with the company since he was asked to immediately clean out his desk
and vacate the premises. There further is no indication that, following Mr. McDaniel's
departure, he participated in the management of MCDI.
It is clear to us, then, that while Mr. McDaniel may have remained MCDI's
president in name until it ceased operations on December 19, 2000, Mr. McDaniel did not
possess, or exercise, the powers associated with said office during the period at issue in this
case. Furthermore, despite Mr. McDaniel's appearance at the Board's meeting in
December, 2000, during which MCDI's bleak financial status was discussed, it does not
seem that Mr. McDaniel actually participated in such meetings so as to be held to have
“knowingly permitted” MCDI to shirk its obligations to its employees under the Wage
Payment and Collection Act. Because we find that the circuit court correctly determined
that Mr. McDaniel was not an officer of MCDI and thus was not subject to liability under
the Wage Payment and Collection Act, we affirm the circuit court's ruling in this regard.
although . . . administrative remedies must be exhausted before
actions in court are instituted, such agencies are not authorized
to award damages. There is nothing in the legislation to such
effect. See Bank of Wheeling v. Morris Plan Bank[ & Trust
Co.], 155 W. Va. 245, 183 S.E.2d 692 (1971).
The findings of the commissioner with respect to Dean
Schwartz and Michael J. Johnston appear to be supported by
the evidence on the record and the commissioner's order is,
therefore, Affirmed, except to the extent that it purports to
award damages, to which extent it is hereby Reversed.
On appeal to this Court, the Division argues that the circuit court erred by ruling that the
hearing examiner lacked the authority to award damages. By contrast, Mr. Schwartz and
Mr. Johnston contend that not only does the circuit court's ruling relieve them of the
hearing examiner's order to pay damages, but it also absolves them of any liability
whatsoever, regardless of whether they “knowingly permitted” MCDI to violate the
provisions of the Wage Payment and Collection Act.
The issue presented by this appeal is one of first impression. Although this
Court previously has examined tangential issues regarding the authority of administrative
agencies to award damages in the context of the exhaustion of administrative remedies
(See footnote 15)
and in cases in which the Legislature has expressly delegated
(See footnote 16)
such power to or implicitly
conferred
(See footnote 17)
such authority on the agency in question, we have yet to address the narrow
issue presently before us as to whether, generally speaking, an administrative agency,
namely the Division of Labor,
(See footnote 18)
may award damages
(See footnote 19)
during an administrative proceeding.
We previously have examined the scope of agency authority and have held
[a]dministrative agencies and their executive officers are creatures of statute and delegates of the Legislature. Their power is dependent upon statutes, so that they must find within the statute warrant for the exercise of any authority which they claim. They have no general or common-law powers but only such as have been conferred upon them by law expressly or by implication.
Syl. pt. 3, Mountaineer Disposal Serv., Inc. v. Dyer, 156 W. Va. 766, 197 S.E.2d 111
(1973). Accord Syl. pt. 3, Appalachian Reg'l Health Care, Inc. v. West Virginia Human
Rights Comm'n, 180 W. Va. 303, 376 S.E.2d 317 (1988); 2 Am. Jur. 2d Administrative Law
§ 24, at 47 (1994); 1A Michie's Jurisprudence Administrative Law § II.3, at 231-32 (Repl.
Vol. 1993).
Correspondingly, administrative agencies also possess “such powers as are
reasonably and necessarily implied in the exercise of its duties in accomplishing the
purposes of the act.” State Human Rights Comm'n v. Pauley, 158 W. Va. 495, 498, 212
S.E.2d 77, 78 (1975) (citations omitted). Accord Colvin v. State Workmen's Comp. Comm'r,
154 W. Va. at 289-90, 175 S.E.2d at 192-93; 1A Michie's Jurisprudence Administrative
Law § II.3, at 233. However, “[a]lthough an express grant of powers will be determined
to include such other powers as are necessarily or reasonably incident to the powers
granted, the powers should not be extended by implication beyond what may be necessary
for their just and reasonable execution.” Walter v. Ritchie, 156 W. Va. 98, 108, 191 S.E.2d
275, 281 (1972) (citations omitted). Thus, “[w]hen a court is asked to find implied powers
in a grant of legislative or executive authority it must assume that the lawmakers intended
to place no greater restraint on the liberties of a citizen than was clearly and unmistakenly
indicated by the language they used.” Id. (citation omitted).
As to the specific matter of damages, we have observed that “'we see no
constitutional objection to legislative authorization to an administrative agency to award,
as incidental relief in connection with a subject delegable to it, money damages, ultimate
judicial review thereof being available.'” Pauley, 158 W. Va. at 500, 212 S.E.2d at 79-80
(quoting Jackson v. Concord Co., 54 N.J. 113, 126, 253 A.2d 793, 800 (1969) (citation
omitted)) (additional citations omitted). It goes without saying, then, that the Legislature
may expressly authorize an administrative agency to award damages or that such power
may be implicitly recognized as an integral part of the agency's function. Apart from these
two scenarios, though, “an administrative agency has no power and may not determine
damages and award a personal money judgment therefor.” Woods v. Midwest Conveyor
Co., Inc., 231 Kan. 763, 770, 648 P.2d 234, 241 (1982) (citations omitted), superseded by
statute on other grounds as stated in Kansas Human Rights Comm'n v. Dale, 25 Kan. App.
2d 689, 968 P.2d 692 (1998).
Looking to the statutes imbuing the Division of Labor with the power to
administer the Wage Payment and Collection Act, we find nothing to indicate that the
Legislature intended to vest, either expressly or impliedly, the Division with the authority
to award damages. Although the governing statutes expressly authorize the Division to
investigate claims,
(See footnote 20)
initiate proceedings therein,
(See footnote 21)
subpoena witnesses to gather evidence
with regard thereto,
(See footnote 22)
and generally to administer the provisions of the Wage Payment and
Collection Act,
(See footnote 23)
there is no indication, in either the Wage Payment and Collection Act
itself or in its clarifying regulations, that the Division may similarly determine and/or award
damages in such proceedings. See W. Va. Code § 21-5-1, et seq.; 2 W. Va. C.S.R. § 42-5-1,
et seq. Given the vast array of powers with which the Division specifically has been vested,
it is quite apparent that the Legislature did not intend the Division's authority to be so broad
as to additionally include the power to award damages. See State ex rel. Roy Allen S. v.
Stone, 196 W. Va. 624, 630 n.11, 474 S.E.2d 554, 560 n.11 (1996) (“'Inclusio unius est
exclusio alterius,' the expression that 'one is the exclusion of the others,' has force in this
case. This doctrine informs courts to exclude from operation those items not included in
the list of elements that are given effect expressly by statutory language.”). See also
Johnson v. Continental Cas. Co., 157 W. Va. 572, 578, 201 S.E.2d 292, 296 (1973) (“[T]he
exclusion of one subject or thing in a statute is the inclusion of all others.” (citations
omitted)).
Likewise, as the Division of Labor is not specifically exempted from the
operation of the Administrative Procedures Act, these statutes also govern the proceedings
conducted by the Division of Labor to enforce the provisions of the Wage Payment and
Collection Act. See W. Va. Code § 29A-5-5 (1991) (Repl. Vol. 2002) (enumerating
agencies to which “Contested Cases” Article of Administrative Procedures Act does not
apply). See also W. Va. Code § 29A-1-2(b) (1982) (Repl. Vol. 2002).
(See footnote 24)
Again, however,
there is no indicia that the Legislature intended administrative authority to generally include
the ability to award damages in contested cases. See W. Va. Code § 29A-1-1, et seq.; 2
W. Va. C.S.R. § 42-20-2, et seq. Therefore, we hold that, in the absence of express
statutory authority or an implicit legislative delegation of power, the West Virginia Division
of Labor does not have the authority to award damages in claims it adjudicates pursuant to
the West Virginia Wage Payment and Collection Act, W. Va. Code § 21-5-1, et seq.
(See footnote 25)
Accordingly, we affirm the circuit court's decision insofar as it reached this same
conclusion.
(See footnote 26)
We caution, however, that this affirmance should not be construed, as urged
by the appellees, as relieving Mr. Schwartz and Mr. Johnston from liability as officers of
MCDI who “knowingly permitted” that company to violate the provisions of the Wage
Payment and Collection Act. Rather, based upon the record evidence before us, we find
that the hearing examiner's and circuit court's findings as to Mr. Schwartz's and Mr.
Johnston's culpability were correct and are not disturbed by our conclusion that the hearing
examiner lacked the authority to award damages in this regard.
Case Number 31272-Affirmed.
Case Number 31273-Affirmed.
W. Va. 1, 239 S.E.2d 145 (1977) (“The West Virginia Human Rights Commission as part of its cease and desist orders may award to complainant incidental damages as compensation for humiliation, embarrassment, emotional and mental distress, and loss of personal dignity, without proof of monetary loss. W. Va. Code, 5-11-8.”); Syl. pt. 1, State Human Rights Comm'n v. Pauley, 158 W. Va. 495, 212 S.E.2d 77 (1975) (“Under the authority granted by the Human Rights Act, as provided in W. Va. Code, 1931, 5-11-1, et seq., as amended, the Human Rights Commission may make an award of monetary damages to a victim of unlawful discrimination as defined in that Act.”).