The Minnesota Attorney General's Office can continue to investigate wage theft allegations leveled by four security guards against downtown St. Paul's largest landowner, Madison Equities, the state Supreme Court has decided.
Minnesota Supreme Court lets attorney general investigate wage theft claims at St. Paul's Madison Equities
The largest property owner in downtown St. Paul has been trying for two years to limit the state's investigation of the way it pays hourly workers.
December 23, 2021 at 7:36PM
"Madison Equities workers have alleged widespread and purposeful evasion of state and federal overtime laws," Attorney General Keith Ellison said in a statement. "I am glad the Supreme Court applied its prior precedents in recognizing our authority and allowing us to move forward with this important case."
The court on Wednesday ordered Madison Equities and 10 of its subsidiaries to respond to Ellison's civil investigation and provide information regarding all hourly workers.
Madison Equities' attorney Kelly Hadac, told the Star Tribune that the ruling represented "a victory" for the property firm. While the overtime pay investigation will continue, it will be somewhat scaled back, he said.
"If you look at how broad their [the A.G.'s) discovery requests were, it could have been investigating everything from individuals to 40 to 50 different entities. ... It gets to the bounds of being absurd," Hadac said.
"That is where we said the AG's office has a boundary on what you can investigate. You have to have a reasonable basis to do so. The Court of Appeals and now the Supreme Court agreed with our arguments."
The investigation stems from complaints made by four security guards, who said they were denied overtime pay in 2019 because they were ordered to clock-in their hours under different company names.
Madison Equities — owner of more than 14 buildings in St. Paul, including the First National Bank Building, U.S. Bank Center and Alliance Bank Center — has denied wrongdoing. Various limited liability companies own individual buildings within its portfolio and so workers deal with each separately, the firm argued.
Service Employees International Union (SEIU) Local 26 worked with the affected Madison Equities employees to file grievances on social media and with Ellison's office. Madison Equities sued the SEIU and one of its security guards for defamation in 2019.
Ellison ordered an investigation, citing a 2019 wage-theft law that gave his office the authority to investigate employer crimes against low-income workers. His office's demand for wage information on security guards and maintenance workers set off a series of legal maneuvers that built to the Supreme Court decision.
Madison Equities initially complained in court that the investigation was overly broad because it reached beyond the security guards. A district judge declined to block the investigation, and the company then appealed.
The state Court of Appeals then took over, also ruling that the investigation could continue. However, it limited the attorney general's inquiries to facts surrounding the security guards, not the maintenance workers. The appeals court also restricted the investigation to four Madison Equities subsidiaries.
Ellison's office then appealed to the Supreme Court.
In the ruling Wednesday, Chief Justice Lorie Gildea found that the district court had essentially ruled correctly when it allowed the demand for 10 Madison Equities entities to turn over wage information to the Attorney General's Office.
Gildea restricted the investigation to hourly workers but required the lower court to review whether 30 subsidiaries should turn over wage information, rather than just 10.
"We remand this matter to the district court for further findings regarding the 30 Madison Equities related companies," Gildea wrote.
The case is one of a handful of wage theft investigations underway by Ellison's office.
In June, Loving Care Home Services agreed to pay $39,000 in back wages and damages to settle allegations that it failed to pay 60 workers overtime.
In August, the Bartmann Cos. restaurant group agreed to pay employees more than $230,000 in overtime, back pay and damages after Ellison's office investigated complaints.
The party supply company told employees on Friday that it’s going out of business.
