COA affirms ruling for business on ex-employee’s wage claim, also awards appellate attorney fees

A northern Indiana man who lost his Wage Claims Act complaint against his former employer did not convince the Court of Appeals of Indiana that the trial court erred in its ruling and will now also have to pay appellate attorney fees to the business.

Chris Gallo worked as an assistant manager at one of Sunshine Car Care’s retail locations in Valparaiso until his employment was terminated on Nov. 2, 2018. Gallo and his manager, Gerry Barkey, filled out and signed an employee separation report that day.

Gallo did not provide a forwarding address, though there was a section for such information on the form. His last day worked was Oct. 28, and the next regular paycheck was to be issued the following week.

On Nov. 5, SCC issued a paycheck to Gallo in the amount of $655.60. When Gallo did not come in to pick it up, SCC mailed it to his last reported address.

But having yet to receive his paycheck, Gallo filed an application for wage claim with the Indiana Department of Labor on Nov. 9. Meanwhile, the check that SCC had mailed was marked by the post office as undeliverable on Nov. 24.

SCC alerted the DOL that it was trying to get the check to Gallo, and the DOL provided SCC with his current address, which was listed on the wage claim form. SCC then overnighted the check to Gallo, and he cashed it on Jan. 16, 2019.

The payment was made before SCC had been served with Gallo’s complaint, which occurred on Jan. 26.

In the meantime, on Dec. 27, 2018, Ronald Weldy filed a complaint against SCC on Gallo’s behalf. Gallo filed an amended complaint on Jan. 30, 2019, indicating that the Attorney General’s Office had referred the wage claim to Weldy on Jan. 11, but omitting the fact that the wages had been paid by SCC. In addition to reasserting his state wage claim, Gallo included a claim based on the Fair Labor Standards Act.

Nearly a year later, Gallo moved to dismiss the FLSA claim and, with respect to the state wage claim, filed a motion for summary judgment. He filed an affidavit stating that SCC should have paid him $796.94 for the relevant pay period, but he did not indicate that he received those wages more than a year prior.

Gallo sought an award against SCC in the amount of $796.94 in actual wages, $1,593.88 in liquidated damages and $4,464.61 in attorney fees and costs in addition to prejudgment interest. SCC’s counsel responded with a strongly worded letter to Weldy demanding the dismissal of Gallo’s lawsuit, asserting the amended complaint and summary judgment motion were frivolous and brought in bad faith.

On July 8, 2020, the Porter Superior Court issued an order vacating the summary judgment hearing, denying Gallo’s motion for summary judgment and granting SCC’s cross-motion for summary judgment.

The court found two facts significant. First, as of the date of the original complaint, Weldy had not obtained authority from the attorney general to file the wage claim. Second, Gallo had been paid the full amount of his wages prior to filing the amended complaint, though he continued to request those wages, liquidated damages, attorney fees and costs in the amended complaint.

In August 2020, SCC asked the trial court, among other things, for attorney fees in the amount of $9,765. The trial court awarded those fees the following December.

“The Court finds that Gallo continued to litigate his claims despite knowing that they were clearly groundless,” the trial court wrote. “Attorney Weldy knew there were no facts in existence, at the time when he filed his original complaint or amended complaint, to support the legal claim upon which he relied and presented.”

On appeal, the COA affirmed the trial court’s ruling.

“As the trial court recognized, two critical, undisputed facts — the lack of authorization at the time of the original complaint and the lack of unpaid wages at the time of the amended complaint — control the outcome of this case,” Judge Robert Altice wrote. “The trial court properly applied the law to these facts in granting summary judgment to SCC and denying Gallo’s summary judgment motion.”

After determining it was not an abuse of discretion to award SCC attorney fees at the trial level, the COA determined the business should also receive appellate attorney fees.

“In addition to clearly lacking merit, Gallo’s appellate arguments were presented with procedural bad faith, including a woefully incomplete appendix, certain contentions made without support, and an argument section related to the trial court’s award of attorney fees asserted with flagrant disregard of the appellate rules,” Altice wrote. “… We conclude that SCC is entitled to appellate attorney fees under the circumstances and remand to the trial court to determine the proper amount of such fees.”

Judge L. Mark Bailey concurred in result without a separate opinion.

The case is Chris Gallo v. Sunshine Car Care, LLC, 21A-CP-548.

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