March 26, 2013 – The ongoing dispute between Menard Inc. and its former general counsel, Dawn Sands, continues with a state appeals court ruling that asks the circuit court to reexamine the allegation that Sands paid her sister to lie during arbitration.
The dispute started when Menard, the home improvement superstore with its headquarters in Eau Claire, fired Sands in 2006. Sands said the company unlawfully retaliated against her for asserting a right to equal pay under federal and state law.
Specifically, Sands said she was paid far less than comparable male employees in violation of the federal Equal Pay Act and the Wisconsin Fair Employment Act.
An arbitration panel ruled that Sands was unlawfully terminated and awarded her approximately $1.5 million for back pay, liquidated damages, emotional distress, and punitive damages.
It also awarded nearly $130,000 in attorney fees, up to that point, and ordered Menards to rehire her, although Sands had asked for front pay instead of reinstatement. Sands argued that “no reasonable person would entertain reinstatement as a possibility.”
Menard seemed to agree. The company refused to rehire Sands and challenged the reinstatement order. The circuit court affirmed reinstatement, and so did the appeals court in 2009.
However, the Wisconsin Supreme Court ruled that reinstatement was improper and remanded the case to determine front pay in lieu of reinstatement.
Case Goes Back
On remand, Menard asserted a new argument. The company said it had recently discovered evidence – a behind-the-scenes deal – that Sands violated company policy during her tenure, which would have given the company a legitimate reason to fire her.
It also wanted to show that Sands failed to mitigate her damage award by attempting to find comparable employment, and that she failed to inform Menard that her law license was suspended briefly for failing to pay dues, which would violate company policy.
This “after-acquired” evidence should bar Sands from receiving front pay, Menard argued. It also argued that this after-acquired evidence should be a basis to reduce the arbitrator’s award of back pay, which had been upheld in subsequent court rulings.
Sands, for her part, wanted an evidentiary hearing on the front pay issue to show that she planned to work at Menard until age 72, that Menard employees commonly work that long, and that her firing has prevented her from obtaining employment elsewhere.
The circuit court denied both parties’ requests for evidentiary hearings and awarded Sands nearly three years-worth of front pay, totaling $603,333.
It also awarded Sands $576,469 in attorney fees incurred since the date of the arbitration panel’s decision, which represented the amount that Menard incurred in attorney fees. Both parties appealed the circuit court’s various decisions.
Menard had also filed a separate motion under Wis. Stat. section 806.07(1)(h), which allows parties to challenge judgments for any reason justifying relief from operation of the judgment. This motion challenged the judgment confirming the initial arbitration award, which gave Sands $1.5 million in compensatory and punitive damages.
In addition to the after-acquired evidence it previously asserted, Menard said it now had evidence that Sands paid her sister to lie during arbitration proceedings. It asked for an evidentiary hearing on this issue. The circuit court also denied this motion.
Case Goes Up, Back Again
In Sands v. Menard Inc., 2012AP286 (March 26, 2013), a three-judge panel for the District III Wisconsin Court of Appeals reversed the circuit court’s decision, thereby reversing the award for front pay and attorney fees in favor of Sands.
The appeals court said the lower court should have considered Menards’ second motion, the one alleging she paid her sister to provide false testimony. It held that section 806.07(1) “can be used to reopen a judgment confirming an arbitration award.”
“Menard’s allegation that Sands purchased her sister’s testimony goes to the integrity of the arbitration proceedings themselves,” wrote Reserve Judge Thomas Cane.
“The circuit court should have therefore considered the merits of Menard’s second § 806.07(1)(h) motion, instead of summarily denying it.”
It ordered the circuit court to consider the motion, decide whether Menard would be entitled to relief if the alleged facts were true, and hold a hearing if necessary to determine the truth or falsity of these allegations against Sands.
If the motion is denied on proper consideration, the appeals panel ruled that the circuit court should still hold an evidentiary hearing to determine front pay.
The circuit court had ruled that no new evidence could be considered on the front pay issue, only the evidence that was presented to the arbitration panel.
“Both Sands and Menard sought to present evidence relevant to the appropriate amount of front pay,” wrote Judge Cane. “Because a court must consider all of the relevant facts when determining a front pay award, the circuit court erred by refusing to consider this evidence.”
The appeals panel also ordered a recalculation of attorney fees, because the circuit court “failed to apply the proper legal standards for awarding attorney fees.”