Petition for Writ of Certiorari — Murray v. Stuckeys, Inc.
Supreme Court brief1995
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In The
Supreme Court of the United States
October Term, 1995
+
GLADYS MURRAY, On Behalf of Herself and All Others
Similarly Situated (and 27 Other Individuals),
Petitioners,
STUCKEYS, INC., and PET INCORPORATED,
Respondents.
S
On Petition For A Writ Of Certiorari
To The United States Court Of Appeals
For The Eighth Circuit
S
PETITION FOR A WRIT OF CERTIORARI
o
P. L. NyMANN
520 Pierce Street, Suite 383
P.O. Box 1825
Sioux City, IA 51102-1825
Telephone: (712) 258-0101
Facsimile: (712) 258-0103
Counsel of Record
STEVEN C. KOHL
520 Pierce Street, Suite 383
P.O. Box 1825
Sioux City, IA 51102-1825
Telephone: (712) 258-0101
Facsimile: (712) 258-0103
Co-Counsel for Petitioners
COCKLE LAW BRIEF PRINTING CO., (800) 225-6964
OR CALL COLLECT (402) 342-2831
IFo4t fy |
QUESTIONS PRESENTED FOR REVIEW
1. Under the “clearly erroneous” standard of
review, may the Court of Appeals ignore all evidence and
credibility determinations favorable to the prevailing par-
ties and concentrate solely on evidence favorable to the
losing party having the burden of proof on the FLSA
“executive exemption” and set aside five separate find-
ings of fact by the trial court in favor of employees
earning less than $250 per week?
2. Was the Court of Appeals justified in departing
from, and creating a conflict with, other courts of appeals
in FLSA cases and substituting its judgment for that of
the trial court on five separate findings of fact?
3. Has the Court of Appeals so far departed from
the accepted and usual course of proceedings as to call
for an exercise of this Court’s power of supervision when
the court of appeals ignores previous controlling deci-
sions of this Court in other FLSA cases and substitutes its
judgment for that of the trial court on five separate find-
ings of fact when any one of the trial court’s findings of
fact would support the judgment of the trial court?
4. Pursuant to Rule 16.1, should this Court on the
merits summarily reverse the decision of the Court of
Appeals ignoring controlling decisions of this Court and
conflicting with decisions of other courts of appeals,
thereby departing from the accepted and usual course of
proceedings?
OF NSPS}
LIST OF PARTIES TO THE PROCEEDING
Gladys Murray
Floyd Caskey
Allan Christiansen
Donald Scott
Deborah L. Hoyt
Russell C. Renecker
Eugene A. Rutledge
Lawrence B. Taylor
Warren Kajander
Jeannette Petrimoulx
Kinney Bryant
Carol S. Lewis
Harley Blair
Thomas Miller
Sandra Crist
Larry Brown
Randy Bushnell
Bobbie Cockerell
Mary T. Cope
Stanley Dixon
Thomas Foster
Edward Geisenheimer
Rae Jean Hamilton
Loren Jacoby
Donald Phillips
Joy M. Powers
Arthur Stotts
David Tompkins
Stuckey’s, Inc.
Pet Incorporated
lil
TABLE OF CONTENTS
Page
QUESTIONS PRESENTED FOR REVIEW ........... i
LIST OF PARTIES TO THE PROCEEDING. ......... ii
PE I oss so oi sc'k wooo Gabe kn dnkss iii
ee ee PT ss cc cidocasacncpecs tes Vv
BPE NIE. PARP EP EAS 6 ois ek ak eic ccc caccus. Vii
PETITION FOR WRIT OF CERTIORARI............ 1
SE EI ons de wb kb cance She pauceeaavaees 2
PRM G0 ca v's 2 68 Seice nc weh ces cst vessec. +
STATUTES, FEDERAL RULES, AND REGULATIONS
EE sg Le Wee pS UEES Ks BRE DA Ss cake t
eMea MES. GOP BEE CASE. ooo icc civeccccccss 4
REASONS FOR GRANTING THE WRIT ........... 6
A. Murray I Was Not Final and so is Subject to
Review as Well as Murray li................... 6
B. Both Murray I and Murray II Conflict with Deci-
ss fg -Ce pes wad ound cue wos’ 7
ge 0. Bo RAR to ies eae 11
en Se I i a 550 w SN need Vann ae wae way ois 13
B(3) Failure of Burden of Proof on Executive
IAS 1s Cane he tae shed Whe ees ei > 14
B(4) Supervising Two or More Employees..... 14
B(5) Exercising Discretionary Powers.......... 19
C. The Holdings of the Eighth Circuit also Conflict
with Recent Decisions in the Fifth Circuit, the
Third Circuit, and the Eleventh Circuit ........ 22
iv
TABLE OF CONTENTS - Continued
Page
D. The Eighth Circuit has so far Departed from the
Accepted and Usual Course of Judicial Proceedings
as to Call for an Exercise of this Court’s Power of
a, ee Poy Pee PE ria pee Tee 26
CEPT IRIE s Make boss ce tae pened se tesenwaue renee 27
wal ag te lel ape) Ete OS Bw
Vv
INDEX TO APPENDICES
Appendix A Opinion of the Court of Appeals
Appendix B
Appendix C
Appendix D
Appendix E
Appendix F
Appendix G
Appendix H
reported in Murray v. Stuckey’s,
Inc., 50 F.3d 564 (8th Cir. 1995)
CN EE cds Dkk et aeeee sc elabie ne:
Order of the Court of Appeals
denying Petition for Rehearing and
Suggestion for Rehearing En Banc,
es gt ae SPREE Te Ee
Memorandum Opinion and Order
of the District Court for the North-
ern District of Iowa, filed April 16,
oo ie 5 Pe a nr ese ry pate ee
Order of the District Court for the
Northern District of Iowa, filed
EEE By BOO 8 hs Weve eek eens 0c
Opinion of the Court of Appeals
reported in Murray v. Stuckey’s,
Inc., 939 F.2d 614 (8th Cir. 1991),
cert. denied, 502 U.S. 1073 (1992)
COMIN Tike siding axe ow este ies
Order of the Court of Appeals
denying Petition for Rehearing and
Suggestion for Rehearing En Banc,
filed September 19, 1991...........
Memorandum of Law and Order of
the District Court for the Northern
District of Iowa, filed July 17, 1989...
Order of the District Court for the
Northern District of Iowa, filed
POUUOES De Ne oi 6 oS iv kbs vo wed i
Page
82a
vi
INDEX TO APPENDICES - Continued
Appendix I
Appendix J
Appendix K
Appendix L
Appendix M
Appendix N
Order of the District Court for the
Northern District of Iowa, filed
Jeby 2h; 2000 ie. 8 rs BO
Order of the District Court for the
Northern District of Iowa, filed
el PR 0 RRR
Federal Rule of Civil Procedure 52a..
Section 16, Fair Labor Standards
PPT eee ey rere Pee eres
POD oon ok Chdnnbs% be bane ae
Exhibit “B” to Plaintiffs’ Trial
UR On ha tschwenke claweeveen
Page
Vii
TABLE OF AUTHORITIES CITED
Page
Cases
Anderson v. City of Bessemer City, N.C., 470 U.S. 564
Ce oa ae eee sa 11, 14
Arnold v. Ben Kanowsky, Inc., 361 U.S. 388 (1960) 20, 24
Bebensee v. Ives, 409 N.W.2d 710 (Iowa App. 1987) .... 14
Brock v. Mr. W. Fireworks Inc., 814 F.2d 1042 (5th
Cir. 1987), cert. denied, 484 U.S. 924 (1987) ........ 23
Brock v. Norman's Country Market, Inc., 835 F.2d 823
(11th Cir. 1988), cert. denied, 487 U.S. 1205 (1988) .... 24
Dalheim v. KDFW-TV, 918 F.2d 1220 (5th Cir. 1990)
Othe apd k CREAN W he SAA ode k4 eek Crean Weabee- 11, 22, 23, 24
Donovan v. Waffle House, Inc., 26 Wage & Hour
Cas. (BNA) 868, 99 Lab. Cas. (CCH) { 34,457
PEE, Sills MCS ak div wack hese cnbn tbr As naee cee 13
Freeman v. National Broadcasting Co., Inc., 846
oo Meg 5 ae. errr 27
Hughes Tool Company v. Trans World Airlines, 409
Se IGA 5 5.6 kA Sa aha heahiabaewsebsiewens’ --6
Icicle Seafoods Inc. 9. Worthington, 475 U.S. 709
CS bass AGN SSRGING Ue ba dawns edhcenkenescas passim
Marshall v. Sally Beauty Co., Inc., 25 Wage & Hour
Cas. (BNA) 672, 94 Lab. Cas. (CCH) { 34,207
CP RG. ROE & boo v vk ahs vhs 04 Ch aWadeat coulbeds ees 13
Martin v. Cooper Electric Supply Co., 940 F.2d 896
Ce 6 RR ian nbn taenehe hee kane hake ce) cat 24
Murray v. Stuckey’s, Inc., 939 F.2d 614 (8th Cir.
1991), cert. denied, 502 U.S. 1073 (1992) (Murray
Viii
TABLE OF AUTHORITIES CITED - Continued
Page
Murray v. Stuckey’s, Inc., 50 F.3d 564 (8th Cir. 1995)
(Murray If)... 2... .cccccccsceqecctassentesesces passim
Walling v. General Industries Co., 330 U.S. 545
CTE) a's a vinta ncn dn Ges 0b ¢ he aud pieae Pei mase passim
STATUTES
United States Code
SO UEAS Oe SOLE) cic vaste skitavedcqueedrdahienty 4
TE UGG. © BE ai boos c non dc rqeves sapdecpe'an coueel 5
Se Aes bp bona Va cauns cus ceakevuiece woul 15
29 UBL. | ZAMAN). «ov coast ces opya cas simi passim
Se UDA BRI + « 04k wie ei yc cho caukeateuaera ys 5
RULES AND REGULATIONS
BP GBR. © Pet heck sssccscvessevsacdsmeuisiatseies 10
SP CBRE ORR) oss as eh ee a 14
Be STi SOR Ra Wicc'nd be dnephindebddacveutinciees 19
oP CP OR Dae i i NE Ac ee RGN i ies 20
Federal Rule of Civil Procedure 52(a)....4, 5, 7, 18, 23
Rules of the Supreme Court of the United States
UN TID is a Bec rncccatanudegetede cence 4, 26
,
PN SUA oi evo honk C0 kod eb a ee a ee 28
ix
TABLE OF AUTHORITIES CITED - Contirued
Page
OTHER
Shepard’s United States Citations:
7th Case Ed. - 1995 (Vol. 3.7),-at 1286-87 .......... 8
Semiannual Cum. Supp., Pt. 3-S.Ct. Rep. (Vol.
va rem ty Fen. 1, 190) at OP... .. oe... 8
Cum. Supp., Pt. 3-S.Ct. Rep. (Vol. 94, No. 9, May
Pe NUE PP ee sit ei 8
Webster’s New Collegiate Dictionary, (G. & C. Mer-
PT TIE BEB. 6 86 ook AE... 8
Sao Bs a ach Nee tee De ee
Sb Riana MUTE TATA
Rie LRS
ae
‘Sate,
Oe
Rigas Saat le ARENT SE PGES Aether ed ett AaB RG By ie aR BRE ts ADO idk Lara whe EGE 9A
No. 95-___
*
In The
Supreme Court of the United States
October Term, 1995
¢
GLADYS MURRAY, On Behalf of Herself and All Others
Similarly Situated (and 27 Other Individuals),
Petitioners,
V.
STUCKEYS, INC., and PET INCORPORATED,
Respondents.
4
On Petition For A Writ Of Certiorari
To The United States Court Of Appeals
For The Eighth Circuit
¢
PETITION FOR A WRIT OF CERTIORARI
o-—
Petitioners respectfully pray that a writ of certiorari
issue to review the judgment of the United States Court
of Appeals for the Eighth Circuit filed March 20, 1995
(rehearing denied April 25, 1995), reversing findings of
fact made by the United States District Court for the
Northern District of Iowa, Western Division on remand
by the Court of Appeals for findings of fact on those very
factual issues.
OPINIONS BELOW
The opinion of a three-judge panel of the Court of
Appeals reversing findings of fact (after remand for those
very findings) with instructions to dismiss was filed
March 20, 1995, was reported as Murray v. Stuckey’s, Inc.,
50 F.3d 564 (8th Cir. 1995) (Murray II), and is reprinted in
the Appendix at pages la-17a (Appendix A).
The order of the Court of Appeals denying Plaintiffs’
Petition for Rehearing, with Suggestion for Rehearing En
Banc, was filed April 25, 1995, and is reprinted in the
Appendix at page 18a (Appendix B).
The trial court’s first unpublished opinion after
remand (making the findings of fact requested by the
Court of Appeals in its first opinion) is dated April 16,
1993. The trial court found that the defendants had not
met their burden of proof that plaintiffs customarily and
regularly directed the work of two or more employees
and that the defendants had not met their burden of
proof that the plaintiffs customarily and regularly exer-
cised discretionary power. That opinion is reprinted in
the Appendix at pages 19a-42a (Appendix C).
The trial court’s second unpublished opinion after
remand entered judgment in favor of plaintiffs in speci-
fied amounts and awarded attorney fees to plaintiffs’
counsel, is dated April 15, 1994, and is reprinted in the
Appendix at pages 43a-59a (Appendix D).
The first opinion of the same three-judge panel of the
Court of Appeals reversing and remanding in part the
award of the trial court, was filed July 25, 091, was
reported as Murray v. Stuckey’s, Inc., 939 F.2d 614 (8th Cir.
1991), cert. denied, 502 U.S. 1073 (1992) (Murray I), and is
reprinted in the Appendix at pages 60a-80a (Appendix E).
The order of the Court of Appeals denying Plaintiffs’
Suggestion for Rehearing En Banc by reason of a lack of a
majority (with at least one Circuit Judge dissenting) and
denying the Petition for Rehearing was filed on Septem-
ber 19, 1991 and is reprinted in the Appendix at page 8la
(Appendix F).
The trial court’s unpublished opinion after trial mak-
ing findings of fact that Defendants had failed to sustain
their burden of proof that the Plaintiffs were exempt from
the overtime provisions of the Fair Labor Standards Act is
dated and filed on July 17, 1989 and is reprinted in the
Appendix at pages 82a-121a (Appendix G).
The trial court’s unpublished opinion on Plaintiffs’
Motion to Alter or Amend and to Determine Attorney
Fees is dated January 5, 1990, was filed on January 8, 1990
and is reprinted in the Appendix at pages 122a-129a
(Appendix H).
The trial court’s unpublished opinion awarding dam-
ages (including liquidated damages), and reducing the
attorney fee award is dated July 14, 1990, was filed July
16, 1990, and is reprinted in the Appendix at pages
130a-142a (Appendix I).
The trial court’s unpublished opinion reconsidering
the attorney fee award dated January 5, 1990 (filed Janu-
ary 8, 1990) is dated and filed October 31, 1990 and is
reprinted in the Appendix at pages 143a-147a (Appendix
J).
JURISDICTION
The second opinion of the three-judge panel of the
Court of Appeals is dated and was entered on March 20,
1995. The Order of the same Court denying the Petition
for Rehearing with Suggestion for Rehearing En Banc is
dated and was entered on April 25, 1995. This Petition is
filed within ninety (90) days of that date. The statutory
provision believed to confer jurisdiction on this Court to
review that judgment by writ of certiorari is 28 U.S.C.
1254(1), and we believe the applicable rule of this Court
is Rule 10.1(a) and (c).
+
STATUTES, FEDERAL RULES,
AND REGULATIONS INVOLVED
Federal Rule of Civil Procedure 52(a) (in Appendix,
page 148a, Appendix K)
Fair Labor Standards Act (FLSA) of 1938 as amended,
29 U.S.C. § 216(b), Section 16(b) (in Appendix, pages
149a-150a, Appendix L).
Fair Labor Standards Act (FLSA) of 1938 as amended,
29 U.S.C. § 213(a)(1), Section 13(a)(1) (in Appendix, page
15la, Appendix M).
STATEMENT OF THE CASE
Gladys Murray and Sidney Murray, on behalf of
themselves and all others similarly situated, brought an
action against Respondents in the United States District
Court for the Northern District Court of Iowa, Western
Division. Jurisdiction of the district court was based upon
Section 16(b) of the Fair Labor Standards Act (FLSA), 29
U.S.C. § 216(b) and 28 U.S.C. § 1337.
The complaint sought overtime pay, liquidated dam-
ages, attorney fees and costs under the FLSA. The case
was tried to the court by ordinary proceedings and judg-
ment was entered in favor of all Petitioners based upon
detailed findings of fact.
Defendants contended that all Petitioners were
exempt from the overtime provisions of the Act under the
“executive” exemption, 29 U.S.C. § 213(a)(1), but
acknowledged that Defendants have the burden of proof
on this factual issue. This issue was listed as a factual
issue by both parties in the Pre-Trial Order.
In Murray I, a three-judge panel of the Court of
Appeals set aside three separate findings of fact showing
failure to satisfy the Section 13(a)(1) exemption require-
ments, without any reference to the “clearly erroneous”
standard of Federal Rule of Civil Procedure 52(a). The
Court of Appeals remanded for findings of fact by the
trial court on two other factual issues relating to the
conjunctive requirements for the exemption.
The trial court, based in part on credibility findings,
found in favor of Petitioners on each of these two factual
issues (conjunctive in nature) and entered judgment in
favor of Petitioners. Defendants again appealed.
The same three-judge panel set aside the very find-
ings of fact for which the panel had directed remand. This
time the panel paid lip service to the “clearly erroneous”
standard, but ignored substantial evidence favorable to
Petitioners and also ignored two United States Supreme
Court decisions dealing with exemptions under the FLSA.
Those cases are controlling herein. The panel directed
the trial court to dismiss the action. Those cases, Walling
v. General Industries Co., 330 U.S. 545 (1947) and Icicle
Seafoods Inc. v. Worthington, 475 U.S. 709 (1986), had been
cited by Petitioners herein in their briefs in the Court of
Appeals, but were ignored by Pet and Stuckey’s in their
briefs.
+
REASONS FOR GRANTING THE WRIT
FIRST OF ALL, THE COURT OF APPEALS HAS
DECIDED A FEDERAL QUESTION IN A WAY THAT
CONFLICTS WITH APPLICABLE CONTROLLING
DECISIONS OF THIS COURT. FURTHER, THE OPIN-
IONS OF THE EIGHTH CIRCUIT CONFLICT WITH
RECENT DECISIONS OF THE FIFTH CIRCUIT, THE |
THIRD CIRCUIT, AND THE ELEVENTH CIRCUIT.
ADDITIONALLY, THE EIGHTH CIRCUIT HAS SO
FAR DEPARTED FROM THE ACCEPTED AND USUAL
COURSE OF JUDICIAL PROCEEDINGS AS TO CALL
FOR AN EXERCISE OF THIS COURT’S POWER OF
SUPERVISION.
A. Murray I Was Not Final and so is Subject to
Review as Well as Murray II.
Murray I remanded the cause to the trial court for
additional findings of fact. Accordingly, Murray I was not
final and does not constitute the law of the case, collateral
estoppel, or res judicata. Hughes Tool Company v. Trans
World Airlines, 409 U.S. 363, 365 n.1 (1973). Accordingly,
this Court may review Murray I as well as Murray II.
Therefore, this Court has before it the propriety of setting
aside five separate findings of fact of the trial court, any
one of which alone would support the final judgment of
the trial court.
B. Both Murray I and Murray II Conflict with
Decisions of this Court.
As long ago as 1947, this Court held that the question
of whether a worker falls within the exemption for “exec-
utives” under 29 U.S.C. § 213(a)(1) is a factual question
subject to the “clearly erroneous” standard of review set
forth in Federal Rule of Civil Procedure 52(a). Walling v.
General Industries Co., 330 U.S. 545, 550 (1947) (disapprov-
ing court of appeals’ rejection of trial court findings as to
executive exemption).
In 1986, this Court reversed the Ninth Circuit
because it engaged in fact-finding in a case involving an
exemption under FLSA. Icicle Seafoods, Inc. v. Worthington,
475 U.S. 709 (1986). This Court (by Justice Rehnquist) said
in reversing:
“We think the Court of Appeals was mistaken to
engage in such factfinding.” 475 U.S. at 714.
and
“The question of how the respondents spent
their working time aboard the Arctic Star is a
question of fact.” id.}
Of course the ultimate test for “executive exemption”, in
the words of Section 13 (29 U.S.C. § 213(a)), is whether the
employee is “employed in a bona fide executive capacity”.
According to Shepard’s, Icicle has been cited and
followed by every court of appeals except the Eighth
Circuit. Shepard’s United States Citations: 7th Case Ed. -
1995 (Vol. 3.7), at 1286-87; Semiannual Cum. Supp., Pt. 3 -
S.Ct. Rep. (Vol. 94, No. 1, Jan. 1, 1995) at 407; Cum. Supp.,
Pt. 3-S.Ct. Rep. (Vol. 94, No. 9, May 1, 1995) at 172. Icicle
is the law of the land. Icicle has been cited by Plaintiffs in
every filing made in the Court of Appeals but has been
ignored by the Eighth Circuit. Plaintiffs respectfully sug-
gest this Court should require the Eighth Circuit to join
all other circuits in following Icicle.
Petitioners herein are not aware of any FLSA case,
except this one, in which a court of appeals has set aside
five separate findings of fact, any one of which would
support judgment for Petitioners. Further, Petitioners are
not aware of any FLSA case in which a circuit court set
aside any finding of fact on the “executive exemption”
issue or the “primary duty” issue where the employee
was earning less than $250 per week. When earnings are
less than $250 per week the “long test” becomes applica-
ble.
In Murray II, judgment had been entered only with
respect to employees earning less than $250 per week.
In both General Industries, supra, and Icicle, supra, this
Court granted certiorari and reversed the court of
appeals findings in FLSA cases dealing with exemptions.
(emphasis supplied) “Bona fide” is defined as “ . . . in good faith
without fraud or deceit”, or “ .. . with earnest intent”. Webster's
New Collegiate Dictionary, (G. & C. Merriam Co., 1979 ed.) 124.
Questions of good faith and intent are always questions of fact.
In both cases, the trial court had made findings of fact
and held in favor of employers that the employer had
carried its burden of proof on the exemption issues pre-
sented.
In both cases the court of appeals reversed the trial
court’s findings of fact. In both cases this Court held that
the action of the court of appeals was error.
In both cases the trial court had made factual find-
ings in favor of the employer. In its first decision, the
Murray trial court found that the duties of the claimed
exempt employees and admittedly non-exempt
employees were essentially the same. (1989 Order, Find-
ing of Fact 17, p. 86a). That finding has not been dis-
turbed. The three-judge panel also accepted the trial
court’s finding that the Plaintiffs spent 65%-90% of their
time on non-managerial duties. (p. 68a). The trial court
further found that:
(1) The Defendants have failed in their burden of
proof that the employees were exempt from the overtime
Provisions of the Act. (Finding of Fact 29, Pp. 96a).
(2) Defendants have failed in their burden of proof
that the primary duty of Plaintiffs was management.
(Finding of Fact 28, p. 95a).
(3) Defendants failed in their burden of proof that
Plaintiffs were in “sole charge” of their stores. (Finding of
Fact 29, p. 96a). On remand after Murray I, with directions
to make findings of fact on two other issues, the trial
court held that:
10
(4) The Defendants had not met their burden of
proof that Plaintiffs customarily and regularly directed
the work of two or more employees. (p. 34a).
(5) The Defendants had not met their burden of
proof that the Plaintiffs customarily and regularly exer-
cised discretionary power (p. 38a).
The applicable regulation, 29 C.F.R. § 541.1, is set
forth in Murray II (pp. 4a-5a). It was incorrectly or inac-
curately set forth in Murray I (p. 66a).
In Murray I and Murray II the Court of Appeals has
now set aside all five of those findings of fact and left
standing the finding of fact that the duties of the
employees claimed by defendants to be exempt and the
employees who were admittedly non-exempt were essen-
tially the same. (See Finding of Fact 17, p. 86a). That
finding by the trial court is inconsistent with the new
findings of the Court of Appeals.
Findings Nos. 4 and 5 above were set aside by the
appeals court in Murray II after specific direction in Mur-
ray I to the trial court to make findings of fact on those
very issues, in spite of having noted in Murray I that one
of the issues was a contested issue at trial (p. 73a), and
that Petitioners’ discretion was circumscribed or limited
(p. 72a).
Petitioners will now demonstrate in the following
five subsections that all five of the trial courts’ findings
were supported by substantial evidence, or perhaps more
accurately, because the Defendants had the burden of
proof, the lack of evidence by Defendants.
11
B(1) Primary Duty
The credibility of the witnesses and the inferences to
be drawn from the facts are factual matters for deter-
mination by the trial court. See Dalheim v. KDF W-TV, 918
F.2d 1220 (5th Cir. 1990). See also Anderson v. City of
Bessemer City, N.C., 470 U.S. 564 (1985).
Like this case, Dalheim involved Section 13(a)(1)
exemptions. A principal issue in Dalheim involved “pri-
mary duty” as in this case. The Dalheim trial court found
in favor of the workers and against the employer on the
issue of “primary duty” and the exemption, as the trial
court did in this case.
The employer invited the Fifth Circuit to set aside the
trial court findings. The Fifth Circuit declined to do so,
citing Icicle Seafoods and General Industries.
The Dalheim court noted that the exemption is to be
construed “narrowly against the employer” and that the
employer “ . . . must demonstrate clear error to prevail.”
918 F.2d at 1226. The court stated:
“... the... exemptions claimed by (the
employer) requires the district court to infer
from its findings of historical fact what consti-
tutes the employees’ ‘primary duty’ ” (emphasis
supplied) 918 F.2d at 1227.
and
“...+ Whether an employee’s work is “original
and creative” in character and whether such work
is an employee's ‘primary duty’ are based on infer-
ences from historical fact. Such inferences are also
reviewed for clear error” (emphasis supplied)
Id. at 1226.
12
At least three witnesses in this case testified that their
primary duty was not management. They testified, as did
a former regional manager, that the duties of a so-called
“manager” and admittedly non-exempt employees were
essentially the same. The trial court held that the duties
were essentially the same (1989 Order, Finding of Fact 17,
p. 86a), and that finding of fact has not been set aside.
Additionally, a Senior Vice President testified that it
was not unusual to have from 200 to 250 individual sales
of gasoline during the day handled by a “manager” in
addition to his or her other routine duties. (Lake Dep. p. 15).
That was supported by testimony that the “managers”
were really only “glorified gas boys” (E. Geisenheimer
Dep. p. 27).
Allowing three minutes for each such gasoline sale
would require from 10 to 12'/2 hours each day in addition
to his or her other routine duties. The trial court was entitled
to infer from this and substantial other testimony that the
“primary duty” of the so-called “manager” was not man-
agement.
Substanial testimony also demonstrated that so-
called “managers” spent the vast majority (65%-90%) of
their time performing non-exempt duties having nothing
to do with management (Finding of Fact 27, p. 94a). That
finding has not been set aside and is inconsistent with the
new findings of Murray II.
The trial court’s finding was supported by substan-
tial evidence, particularly considering the burden of
proof on the Defendants. The panel should not be permit-
ted to substitute its judgment for that of the trial court.
Or ey ap ae
a aria 5
i ae ak ie i ee ss
13
B(2) Sole Charge
The trial court held that because the duties of the so-
called “managers” were shared by the regional manager
and that the duties of the husband-wife team were essen-
tially the same, the so-called “managers” were not in
“sole charge.” (1989 Order, Pp: 96a).
In Murray I, the panel reversed that determination
without even holding that it was “clearly erroneous.” (p.
74a). Instead, the panel relied on three trial court deci-
sions with substantially different fact patterns, in which
those trial courts held that the employee was in “sole
charge.” In one case, the parties stipulated that the
employee was “in sole charge.” Marshall v. Sally Beauty
Co., Inc., 25 Wage & Hour Cas. (BNA) 672, 94 Lab. Cas.
(CCH) ¥ 34207 (E.D. La. 1982). In another case, the trial
court observed that “the applicability of the sole charge
exemption is an extremely close case.” Donovan v. Waffle
House, Inc., 26 Wage & Hour Cas. (BNA) 868, 99 Lab. Cas.
(CCH) ¥ 34,457 (N.D. Ga. 1983). If Waffle House had been
decided the other way, it would not have been disturbed
on appeal, as in this case, because it could not be found to
be clearly erroneous.
Clearly the panel has substituted its judgment (or
perhaps more accurately the judgment of other trial
courts, in different fact patterns) for the judgment of the
trial court in this case.
14
B(3) Failure of Burden of Proof on Executive
Exemption
As noted above the trial court found that the Defen-
dants failed in their burden of proof that the employees
were exempt from the overtime provisions of the Act.
(1989 Order, Finding of Fact 29, p. 96a).
When the trial court in a law action denies recovery
because of the party’s failure to carry the burden of proof
on an issue, “no interference on appeal will occur absent
overwhelming evidence in the party’s favor that only one
reasonable inference could be drawn.” (Emphasis sup-
plied). Bebensee v. Ives, 409 N.W.2d 710, 712 (lowa App.
1987); see Anderson v. City of Bessemer City, N.C., 470 U.S.
564, 573-76 (1985).
As noted in footnote 1, the question of whether the
so-called “executive” is “bona fide” is a question of fact.
Where so much depends on the inferences to be
drawn and the credibility of the witnesses as in this case,
the panel was not justified in overturning this finding.
B(4) Supervising Two or More Employees
On remand, the trial court held that the Petitioners
did not customarily and regularly supervise two or more
other employees as required by 29 C.FR. 541.1(b). (p.
34a). The “customarily and regularly” requirement was
the fighting issue on this finding.
In Murray II, the panel held that the trial court did
not have discretion to find in favor of Plaintiffs, in spite
of the fact that in Murray I, the same panel remanded for
15
a finding of fact on that issue, noting that this was a
contested issue at trial. (p. 73a).
The panel relied primarily on a so-called study by
and the testimony of Anthony Naughton and ignored
substantial evidence to the contrary. The panel noted that
the trial court “entirely discounted this study and Naugh-
ton’s testimony because there were gaps in the records
analyzed.” Murray II, (p. 9a).
But neither the trial court nor Naughton said that.
Naughton said and the trial court noted that the records
“were not very complete” and that Naughton had not
brought any original records into the court room. (1993
Order, pp. 29a-30a). This certainly bears on the credibility
of Naughton’s testimony, and the trial court’s opinion
was based in part on credibility. (p. 34a). The trial court
also noted that two former regional managers testified
that during the winter time the stores were pretty much
manned by the so-called “manager” and the spouse. (pp.
30a-31la). The trial court also noted, and had earlier
found, that employees were pressured into falsifying
records (p. 34a), thereby enhancing the credibility prob-
lem.
Rejecting inferences drawn by the trial court from
those facts, the panel attempted to excuse the lack of
records. (Murray II, p. 9a). The panel’s excuse completely
ignores the obligations of employers under the Act to
maintain and preserve records (29 U.S.C. § 211(c)) (and to
not falsify the records) and completely ignores Defen-
dants’ burden of proof on all factual matters related to
the executive exemption.
16
The panel then suggested that fifteen managers testi-
fied that they “regularly” supervised two or more
employees. Id. The panel never claimed that the alleged
“managers” customarily and regularly supervised two or
more employees. But even more importantly, the testi-
mony of the so-called “managers” does not rise to the
level attributed to it by the panel. Their testimony said
nothing about frequency. None of them testified that they
customarily and regularly supervised two or more
employees.
For example Harley Blair testified in his deposition,
with respect to frequency that in the winter time the
hours of work of the other employees did not add up to
80 (Blair Dep. p. 19).
For further example, Carol Lewis testified that at any
given time “There would be my husband and sometimes
one other person” (emphasis supplied) (p. 14 of her depo-
sition). This testimony was grossly misrepresented by
Defendants in their brief in the Court of Appeals prior to
the decision in Murray II when Defendants changed the
word “sometimes” to “always.” So much for “customarily
and regularly.”
While discussing testimony that only the “manager”
and the manager’s spouse worked during the winter
months, the panel speculates that “ . . . if those stores
needed substantial part time help during busier winter
days, the two-full-time-equivalent would still be satis-
fied. That no doubt explains why Naughton’s study
refuted some of this testimony.” (Emphasis supplied)
Murray II, (p. 11a)
17
Once again, the panel clearly drew speculative infer-
ences different than the trial court's findings, which were
based on substantial evidence. Ignoring this substantial
evidence, the panel substituted its judgment of the facts
for that of the trial court.2
The panel then claims, based on erroneous arithme-
tic, admittedly “not very complete records”, some of
which had been falsified, and conflicting testimony, that
the so-called “managers” supervised two or more
employees 98.2% of the time, stating that 1,454 store
weeks were analyzed by Naughton. This is all the more
remarkable when we remember that the panel held in
Murray I that this was a contested issue. Id. Plaintiffs
respectfully submit that the panel’s numbers are erro-
neous when compared to the exhibit. But Exhibit A-24
substantiates Naughton’s testimony that the records were
“not very complete.”
The panel noted that “the case focuses on the three
years immediately preceding May 30, 1985.” (p. 4a). The
panel also noted that the Naughton study covered nearly
30 store-years of operations (p. 9a). There are 28 Plaintiffs
and of course 52 weeks in each year. Three years times 52
trial court and substituted its judgment for that of the trial court
It is not enough to establish “clearly erroneous” to state as
the panel did in Murray II that certain evidence “supports
Stuckey’s contention” (p. 10a). In fact that language supports
the statement in Murray I that this was a contested issue.
18
weeks times 28 Plaintiffs (3 x 52 x 28) equals 4,368 work
weeks. The 1,454 weeks referred to by the panel is less
than one-third of the work weeks involved in the three
year period. The nearly “30 store-years of operations” is
just over one-third of the 3-year period. (28 x 3 = 84). This
again supports Naughton’s testimony that the records
were not very complete and affects the credibility of the
study, and the trial court’s finding was based on cred-
ibility.
The only original record on this issue and in evidence
in this case supports the trial court’s finding and negates
the testimony of Naughton and the conclusion drawn by
the panel. Exhibit “B” to Plaintiffs’ Trial Ex. 3 (repro-
duced in the Appendix at p. 152a), is a true and correct
copy of the labor budget of the Little Sioux store. Exhibit
B shows that during only about one-third of the weeks
(11 out of 30) were there 2 or more employees being
supervised.
In addition, credibility was an important issue in this
case. The trial court was justified when it discredited
testimony based on records that had been falsified and
“were not very complete.”
Other credibility problems also existed. Defendants,
in addition to pressuring employees to falsify records,
falsely responded to interrogatories. (1989 Order, Find-
ings of Fact 31 and 32, p. 98a). The panel should have
permitted the trial court to be the sole judge of the
credibility of the witnesses as required by Federal Rule of
Civil Procedure 52(a).
19
B(5) Exercising Discretionary Powers
On remand the trial court held that the Petitioners
did not “customarily and regularly exercise discretionary
powers” as required by 29 CFR 541.1(d). (1993 Order, p.
38a). Again the fighting issue on remand was the under-
lined words “customarily and regularly.”
In Murray II, the panel then held (after remand to
make a finding on that issue) that the trial court did not
have any discretion to find that Plaintiffs lacked discre-
tionary authority. (pp. 14a-16a). The panel ignored the
inferences drawn by the trial court and held that the so-
called “managers,” as a matter of law, “customarily and
regularly” exercised discretionary authority, even though
the same panel noted in Murray I that their discretion was
circumscribed or limited and remanded for a fact finding
on that issue.
The panel simply substituted its judgment for that of
the trial court. That substitution is evident from the lan-
guage of the panel’s opinion itself. On this issue, the
panel said “ . . . the district court took too cramped a view
of what constitutes managerial discretion... ” (p. 15a)
(emphasis supplied). The panel substituted its “view” or
judgment of the facts for that of the trial court, and
rejected the inferences drawn by the trial court.
The panel in effect holds, in spite of its remand, that
the trial court had no discretion to find as it did, or
alternatively, that the remand permitted the trial court to
find only one way even after noting in Murray I that
Petitioners’ discretion was circumscribed or limited. The
20
panel implies that the circumscribed and limited discre-
tion of the Plaintiffs exceeded the discretion of the trial
court.
Again on this issue Plaintiffs note that:
1. The duties of the “managers” and the admittedly
non-exempt employees were essentially the same.
2. The executive exemption is to be granted only in
those cases clearly and unmistakably within the terms of
the exemption.
3. The exemption is to be construed narrowly
against the employer. Arnold v. Ben Kanowsky, Inc., 361
U.S. 388, 392 (1960).
4. The burden of proof is on the employer to estab-
lish all aspects of the executive exemption.*
5. The trial court is entitled to draw inferences from
the facts.
6. Credibility issues are for the trial court.
7. The trial court is entitled to exercise its discretion
in drawing inferences from the facts.
3 Finally, the panel’s holdings on the “executive” exemp-
tion in both Murray I and Murray II overlooked the “salary test”
requirements of 29 C.F.R. § 541.118. Defendants had the burden
of proof but presented no evidence to prove that Plaintiffs were
paid “on a salary basis” without deductions for sickness pur-
suant to 29 C.F.R. § 541.118. Uncontroverted testimony by both a
regional manager (Denninger dep., pp. 49-53) and Gladys Mur-
ray (Trial Tr. I, 49) showed that such deductions were in fact
made.
21
Since the factual tests for the “executive” exemption
are in the conjunctive, the judgment of the trial court
must be reinstated if the Court of Appeals was in error in
setting aside any one of the five findings of fact. If the
Court of Appeals was in error as to “primary duty” the
judgment as to Russell Renecker (the only Petitioner paid
more than $250 per week for some, but not all, weeks)
must be substantially enhanced since the trial court
treated Murray I as the law of the case on that issue on
remand. Petitioners believe they have demonstrated that
the Court of Appeals erred as to all five factual matters.
But error on any one is enough to require judgment for
Plaintiffs.
As noted earlier, in both General Industries, supra and
Icicle, supra, the trial court made findings of fact in favor
of the employer which were reversed by the Court of
Appeals and this Court reversed the findings of the court
of appeals.
Petitioners submit that the same standard of review
Should be applied by the Court of Appeals when the
worker wins in the trial court as when the employer wins
in the trial court.
As a matter of fact, it reasonably can be argued that
there is more reason to affirm a trial court when the trial
court finds in favor of the worker than when the trial
court finds in favor of the employer. First of all, the
burden of proof on the exemption issue is on the
employer. Secondly, the FLSA is a remedial act and
exemptions are to be construed narrowly against the
employer. Thirdly, exemptions are to be applied only to
22
those clearly and unmistakably within the terms and
spirit of the exemption.
Those considerations suggest that findings of fact in
favor of workers on exemptions should be less readily set
aside than findings of fact in favor of employers.
C. The Holdings of the Eighth Circuit also Con-
flict with Recent Decisions in the Fifth Circuit,
the Third Circuit, and the Eleventh Circuit
Dalheim v. KDFW-TV, 918 F.2d 1220 (5th Cir. 1990),
involved the 13(a)(1) exemption, as does this case. A
principal issue in Dalheim involved the question of “pri-
mary duty,” as did Murray I. The trial court found in
favor of the workers and against the employer on the
“primary duty” and the exemption.
The employer invited the Fifth Circuit to set aside the
trial court’s findings. The Fifth Circuit declined to do so,
citing Icicle Seafoods Inc., supra, and General Industries,
supra.
The Fifth Circuit noted that the Section 13(a)(1)
exemption is to be “construed narrowly against the
employer” and that the employer bears the burden of
proof on the issue of exemption. 918 F.2d at 1224. The
Fifth Circuit went on to state that the employer ” . . . must
demonstrate clear error to prevail.” Id. at 1226.
The court also said that:
“.,. the... exemptions claimed by (the
employer) requires the district court to infer
23
from its findings of historical fact what consti-
tutes the employees’ ‘primary duty’ ” Id. at 1227
(emphasis supplied).
Under Rule 52(a) of the Federal Rules of Civil Pro-
cedure, inferences are for the trial court and can be set
aside only if “clearly erroneous.” See Dalheim, supra,
where the court said at p. 1226:
“For example, whether an employee’s work is
‘original and creative’ in character and whether
such work is an employee's ‘primary duty’ are based
on inferences from historical facts. Such inferences
ae also reviewed for clear error” (emphasis
supplied).
See also Brock v. Mr. W. Fireworks Inc., 814 F.2d 1042, 1044
(Sth Cir. 1987), cert. denied, 484 U.S. 924 (1987) where it is
made plain that “inferences from facts . . . are questions
of fact that we may set aside only if clearly erroneous,”
citing Icicle, supra.
The trial court’s findings of fact, based upon the
inferences drawn by the court, can only be set aside for
clear error according to the doctrine of Dalheim, supra.
The Murray I opinion did not even claim that there was
clear error with respect to the findings of fact set aside in
Murray I, nor could it. The findings of fact in our case
were amply supported by the evidence as is demon-
strated above.
The Eighth Circuit, in reversing the trial court as to
the 13(a)(1) exemption and setting aside the inferences
drawn by the trial court, has clearly used a different
standard of review than the Fifth Circuit in affirming the
trial court in Dalheim, supra.
24
Even more recently the Third Circuit in Martin v.
Cooper Electric Supply Co., 940 F.2d 896 (3rd Cir. 1991),
declined to accept an employer’s invitation to set aside
the trial court’s findings of fact in favor of workers as to a
Section 13(a)(1) exemption.
In Martin, supra, the Third Circuit cited Dalheim,
supra, Icicle, supra, General Industries, supra, and Arnold,
supra, and adopted the teaching of those cases.
Additionally the Third Circuit noted that:
“ ...if the record is unclear as to some exemp-
tion requirement, the employer will be held not
to have satisfied its burden.” (emphasis sup-
plied) 940 F.2d at 900.
Similarly, in Brock v. Norman’s Country Market, Inc.,
835 F.2d 823 (11th Cir. 1988), cert. denied, 487 U.S. 1205
(1988) the Eleventh Circuit declined the employer’s invi-
tation to overturn the trial court’s findings of fact in favor
of the workers.
In that case the trial court, like the trial court here,
had stated:
“Because Defendants have failed to sustain their
burden of proving that the primary duty of these
employees was the management of their departments,
the court must conclude that they are not
exempt as executives under either of the regula-
tion tests” (emphasis supplied) (p. 826).
The Eleventh Circuit noted that:
“The burden of proving the applicability of the
executive exemption is upon the Defendant. The
exemption is to be applied only to those clearly
25
and unmistakably within the terms and Spirit of
the exemption” (p. 826).
and then went on to hold that:
“It has been well settled that the District Court
has the opportunity to observe the witnesses
and their demeanor, and is, therefore in the best
position to make credibility* determinations,
subject only to the clearly erroneous rule of
Federal Rule of Civil Procedure 52(a).” (p. 826).
The Eleventh Circuit panel concluded that:
“After carefully reviewing the record, we agree
with the district court’s determination. The
employees in questions were nothing more than
‘working foremen’. Although each of them may
have had a duty which is normally recognized
as that of a manager’s responsibility, looking at
each one individually and at the actual work
performed, we cannot say they qualified as a
‘bona fide executive’ .” (emphasis supplied) Id.
* Responderts’ credibility was seriously at issue at trial. In
response to interrogatories Respondents had claimed only four
Previous investigations under FLSA. Later after Plaintiffs had
made Freedom of Information requests as to previous investiga-
tions, and in response to Requests for Admissions, Respondents
admitted numerous additional investigations, claims, Ppay-
ments, and promises to comply with FLSA. (Findings of Fact 31
and 32, P- 98a).
26
D. The Eighth Circuit has so far Departed from the
Accepted and Usual Course of Judicial Proceed-
ings as to Call for an Exercise of this Court’s
Power of Supervision.
Rule 10.1(a) of the Rules of the Supreme Court of the
United States suggests as one of the reasons for the grant
of certiorari:
“When a United States Court of Appeals
has . . . so far departed from the accepted and
usual course of judicial proceedings . . . as to
call for an exercise of this Court’s power of
supervision.”
Petitioners herein submit that the action of the three-
judge panel of the Eighth Circuit cries out for the exercise
of this Court’s power of supervision.
The decisions of the panel in Murray I and Murray II
are not only in conflict with previous decisions of this
Court (Section B of this Petition) and in conflict with
other courts of appeal (Section C of this Petition). The
decision of the panel has also departed from the accepted
and usual course of judicial proceedings.
To the best of Petitioners’ knowledge there have been
no reported cases where a Court of Appeals has over-
turned findings of fact by the trial court in favor of
workers as to “primary duty” with respect to employees
making less than $250 per week or failure to sustain the
burden of proof as to the “executive” exemption. This is
easily understandable in light of the burden of proof, the
remedial nature of the statute, strict construction of the
Act against the employer, and the teaching of Icicle, supra,
and General Industries, supra.
27
Petitioners are even more confident that there have
been no reported decisions in which a Court of Appeals
has set aside five Separate findings of fact, letting stand
findings of fact conflicting with the new findings by the
Court of Appeals. As heretofore noted any one of the
findings erroneously set aside would justify the judgment
of the trial court.
Petitioners respectfully submit then that the three-
judge panel of the Eighth Circuit, under those circum-
stances, has dramatically departed from the accepted and
usual course of judicial Proceedings. Petitioners further
respectfully submit that those circumstances call for an
exercise of this Court's power of supervision.
S
CONCLUSION
The standard of review should not be different
depending on whether the employer or the worker
prevailed in the trial court.5 Nor should the standard of
review be different in the Eighth Circuit than in the Fifth
Circuit, the Third Circuit, or the Eleventh Circuit. The
Eighth Circuit’s action so far departs from the accepted
and usual course of judicial proceedings as to call for an
exercise of this Court’s power of supervision.
> This is a case involving employees at the lowest end of the
economic spectrum - those being paid less than $250 per week.
The act was designed to protect those on the lowest end of the
economic spectrum. This is not a case involving highly paid
employees as in Freeman v. National Broadcasting Co., Inc., 846
F.Supp. 1109 (S.D.N.Y. 1993).
28
For those reasons Petitioners respectfully pray that
this Petition for a Writ of Certiorari should be granted.
Petitioners pray further pursuant to Rule 16.1 of the
Rules of the Supreme Court of the United States, that this
Court order that all five findings of fact of the trial court
be reinstated, that the trial courts’ judgment of April 15,
1994 be reinstated, and that the matter be remanded to
the trial court for recomputation of damages to Russell
Renecker.
DATED at Sioux City, Iowa, July 6, 1995.
P. L. NyMANN
and
STEVEN C. KOHL
On the Petition
Respectfully submitted,
P. L. NYMANN
520 Pierce Street, Suite 383
P.O. Box 1825
Sioux City, lowa 51102
Telephone: (712) 258-0101
Facsimile: (712) 258-0103
Counsel of Record
STEVEN C. KOHL
520 Pierce Street, Suite 383
P.O. Box 1825
Sioux City, Iowa 51102
Telephone: (712) 258-0101
Facsimile: (712) 258-0103
Co-Counsel for Petitioners
la
APPENDIX A
United States Court of Appeals
for the Eighth Circuit
Nos. 94-2167 and 94-2172
Gladys Murray, for herself and all *
others similarly situated; consent *
to become parties plaintiff: Floyd *
Caskey; Allan Christiansen; Donald *
Scott; Deborah L. Hoyt; Russell C.
Renecker; Eugene A. Rutledge;
Lawrence B. Taylor; Warren
Kajander; Jeannette (Petrimoulx)
Arbuckle; Kinney Bryant; Carol S.
Lewis; Harley Blair; Thomas
Miller; Sandra L. Crist; Larry
Brown; Randy Bushnell; Bobbie
Cockrell; Mary T. Cope; Stanley
Dixon; Thomas Foster; Edward
Geisenheimer; Rae Jean Hamilton;
* Appeals from the
Loren Jacoby; Donald Phillips; .
United States
District Court for
the Northern
District of Iowa.
Joy M. Powers; Arthur Stotts;
David Tompkins,
Plaintiffs / Appellees /
Cross-Appellants,
Sidney Murray; Christine
Christiansen; Roger D. Hoyt; Carol
Renecker; Bettye Bryant; James L.
Lewis; Joyce Tompkins; Veralyn
Blair; Sandra L. Crist, in her
capacity as executrix of the estate
iii:
2a
of Kenneth L. Crist; Rita Miller;
Michael Hamilton; Anna M. Foster;
Joni Bushnell; Lois Louise Phillips;
Adrienne Geisenheimer; Sharon
Jacoby; Bonnie Stotts; Linda M.
Brown; Bev Caskey; Michelle Scott;
Kevin Murray; Joylene Taylor;
William Pohlman; Robert Pohlman;
Nancy Pohlman; Robert Kajander;
Tony Tompkins; Tracy Tompkins;
Georgia Phillips; Tammy Moore;
Bonita Dixon; Charles Brown,
Plaintiffs,
V.
Stuckey’s, Inc.; Pet, Incorporated,
Defendants /Appellants/
Cross-Appellees.
gh ee Ns ok ee ee OS eo oe ee ee a te
Submitted: December 13, 1994
Filed: March 20, 1995
Before BOWMAN, MAGILL, and LOKEN, Circuit Judges
LOKEN, Circuit Judge.
“Bona fide executive” employees are exempt from
the overtime requirements of the Fair Labor Standards
Act (FLSA). See 29 U.S.C. § 213(a)(1). In Murray v.
Stuckey’s, Inc., 939 F.2d 614 (8th Cir. 1991), cert. denied, 502
U.S. 1073 (1992) (Murray I), we reversed a damage award
3a
employees - having management as their primary duty,
and being solely in charge of a Physically separated
branch establishment. See 29 C.ER. § 541.1(a), (e).
On remand, after again reviewing the record from its
non-jury trial, the district court concluded that the man-
agers did not meet two other criteria specified in the
regulations — that an exempt executive must regularly
supervise two or more other employees and must regu-
larly exercise discretionary Powers. See 29 C.E.R.
§ 541.1(b), (d). The court recalculated compensatory and
liquidated damages, awarded additional attorney’s fees,
and entered judgment in favor of the plaintiff managers.
Stuckey’s, Inc., and its Parent, Pet, Incorporated
(“Stuckey’s”), again appeal, raising a variety of issues.
We hold that the managers were exempt executive
employees and therefore reverse.
I. Background.
We will only briefly restate the background facts
summarized in Murray I. Before it failed, Stuckey’s oper-
ated combination gas stations, restaurants, and conve-
nience stores, primarily in rural locations on interstate
highways. Each store’s resident manager was Paid a
weekly salary plus potential bonuses. If the manager was
married, Stuckey’s hired the spouse as an hourly
employee at just above the minimum wage. Gladys and
Sidney Murray are former employees at Stuckey’s stores
4a
in Randall and Little Sioux, Iowa. On May 30, 1985, the
Murrays commenced this action, alleging that Stuckey’s
had failed to compensate managers and spouses for over-
time as required by the FLSA. Other managers and
hourly employees filed written consents and joined the
suit. See 29 U.S.C. § 216(b). Because of the applicable
statute of limitations, the case focuses on the three years
immediately preceding May 30, 1985, a period in which
Stuckey’s was unsuccessfully attempting to turn around
its unprofitable operations.
The FLSA requires that covered employees be paid
1'/2 times their regular hourly rate for hours worked in
excess of forty per week. See 29 U.S.C. § 207(a)(1). This
requirement does not apply to “any employee employed
in a bona fide executive . . . capacity . . . (as such terms
are defined and delimited from time to time by regula-
tions of the Secretary [of Labor]).” 29 U.S.C. § 213(a)(1).
The Secretary first promulgated regulations to “define
and delimit” the executive employee exemption in Octo-
ber 1938. See Annot., 151 A.L.R. 1089, 1089 n.1 (1944). The
current regulations define an “employee employed in a
bona fide executive capacity” as one:
(a) whose “primary duty” consists of the man-
agement of a recognized subdivision of the
employer’s enterprise; and
(b) who “customarily and regularly directs the
work of two or more other employees”; and
(c) who “has the authority to hire or fire other
employees” or who makes recommendations as
to hiring, firing, and promoting that are “given
particular weight”; and
5a
(d) who “customarily and regularly exercises
discretionary powers”; and
(e) who devotes less than 40 percent of the
work week to nonexempt activities, or “is in
sole charge of ...a physically separated branch
establishment.”
29 C.FR. § 541.1.1 In Murray I, we resolved the “primary
duty” and “sole charge” issues in favor of Stuckey’s.
Because the managers concede that they had authority to
hire and fire other employees, we are now concerned
only with criteria (b) and (d), whether the managers
“customarily and regularly” supervised at least two other
employees and exercised discretionary powers. Stuckey’s
has the burden of Proof regarding these issues. See Wall-
ing v. General Indus. Co., 330 U.S. 545, 547-48 (1947).
II. Supervising Two or More Employees.
Until 1949, the Secretary’s regulations required only
that an exempt executive employee “customarily and reg-
ularly directs the work of other employees.” General
Industries, 330 U.S. at 548 n.6. That year, without explana-
tion, the Department added the “two or more other
employees” language presently found in 29 C.FR.
§ 541.1(b). See 14 Fed. Reg. 5573, 14 Fed. Reg. 7705, 7706
(1949). A companion regulation clarified that an exempt
' This is the so-called “long test.” Employees who earn at
least $250 per week are exempt executives if they meet the first
two of these requirements, the so-called “short test.” 29 C.ER.
§ 541.1(f). Some of the Stuckey’s managers fe'] into each earn-
ings category. The distinction does not affect this appeal.
6a
executive must supervise the equivalent of two or more
full-time employees:
Two or more other employees.
(a) An employee will qualify as an “execu-
tive” under § 541.1 only if he customarily and
regularly supervises at least two full-time
employees or the equivalent. For example, if the
“executive” supervises one full-time and two
part-time employees of whom one works morn-
ings and one, afternoons; or four part-time
employees, two of whom work mornings and
two afternoons, this requirement would be met.
14 Fed. Reg. 7730, 7731-32 (1949), codified at 29 C.ER.
§ 541.105(a).
In Murray I we commented briefly on the two-
employee issue in remanding the store managers’ claims
to the district court:
The district court did not reach this issue. The
evidence included Stuckey’s labor budget docu-
ments, which appear to reflect that all Stuckey’s
store managers supervised the equivalent of at
least two other full-time employees at all times.
Since the district court concluded that these
labor budgets understated the labor needed to
run the stores, it seems likely that Stuckey’s met
its burden of proof as to this factor. However,
this was a contested issue at trial, and it appears
that the district court deferred rulings on the
admissibility of other evidence Stuckey’s sub-
mitted on the question. Under these circum-
stances, it would be inappropriate for us to
resolve this issue in the first instance.
7a
939 F.2d at 620. On remand, neither side supplemented
the trial record, and the district court did not exclude any
trial evidence. The court held that Stuckey’s failed to
meet its burden of proof on this issue because it relied
upon an incomplete analysis of payroll records, because
there was testimony that only two people ran some low-
volume stores in the winter, and because Stuckey’s “did
not submit direct evidence on the volume of each store.”
Stuckey’s contends that this decision reflects errors of fact
and law. Unlike the record before us in Murray I,
Stuckey’s has now Provided the full trial record for our
consideration of this issue.
There was undisputed trial testimony that Stuckey’s
hired a new management team in early 1982, the start of
the period at issue in this lawsuit. Charged with the task
of making Stuckey’s profitable, the new Senior Vice Presi-
dent of Store Operations, George Davis, developed new
weekly labor schedules for the various stores. These
schedules recommended the hours of operation and the
work force for each day of the week, taking into account
normal customer traffic flows. The schedules recom-
mended a smaller work force for stores with lower sales
volumes. In most parts of the country, the schedules also
recommended shorter hours of operation and correspon-
dingly reduced labor expense in the winter months, when
there is less highway traffic.
In 1982 and 1983, the labor schedule with the smallest
recommended work force was the October 28, 1982, win-
ter schedule for stores having up to $5,000 per week in
total sales. That schedule recommended store hours of
7:00 a.m. to 6:00 p.m., seven days a week, staffed by the
manager working sixty hours per week, the manager’s
8a
spouse working forty hours, and five part-time
employees working a total of sixty-seven additional
hours per week.? In January 1984, Davis circulated a new
schedule for stores electing to close on Mondays that
winter. It showed the manager and spouse at sixty and
forty hours per week, and three part-time employees at
38-40 hours. By contrast, the January 1984 schedule for
small-volume stores remaining open on winter Mondays
called for four part-time employees working sixty hours
per week in addition to the manager and his or her
spouse.
The parties agree that the manager’s spouse was an
hourly employee supervised by the store manager. Thus,
as we noted in Murray I, if Davis’s labor schedules were
followed, all Stuckey’s store managers supervised the
equivalent of at least two other full-time employees at all
times.
Most of plaintiffs’ trial evidence was aimed at pro-
ving that Davis’s labor schedules significantly understated
the work force needed to operate Stuckey’s stores, forcing
the managers’ spouses to work long hours “off the clock”
without overtime pay. All trial witnesses agreed that two
employees were needed to operate a store; plaintiffs’
witnesses opined that three employees were needed to
operate a store properly. At plaintiffs’ urging, the district
court in its first post-trial decision found “that there were
2 It is clear from the regulations that this criterion is met if
an employee supervises several part-time employees whose
total hours of work are the equivalent of two full-time
employees. See 29 C.F.R. § 541.105(a); Marshall v. Hudson Sta-
tions, Inc., 24 Wage & Hour Cas. (BNA) 260 (D. Kan. 1979).
9a
not sufficient hours Projected into the labor schedule.”
Based upon that finding, the court made substantial over-
time awards to the hourly plaintiffs, and we affirmed
those awards in Murray I. On remand, however, the dis-
trict court simply ignored this essential aspect of the case
in addressing the two-or-more-employees issue.
Stuckey’s permitted individual store managers to
deviate from the labor schedules with the approval of
their regional managers. Therefore, in an effort to provide
more specific evidence on this issue, Stuckey’s analyzed
voluminous payroll records from many of the stores at
Which the plaintiff managers worked during the
1982-1985 period. Anthony Naughton, a Stuckey’s
accountant, summarized the results of this study at trial.
A total of 1454 store weeks were analyzed. In 1428 of
those weeks, or 98.2% of the total, the store manager
supervised two or more other employees who worked
more than eighty total hours. In eleven of the remaining
weeks, the manager supervised two or more employees
who worked 75-80 hours. In the remaining fifteen weeks,
the manager Supervised two or more employees who
worked only 61-74 hours.
10a
testimony. We conclude that the district court erred in
rejecting this highly relevant evidence.
Many plaintiff managers testified briefly on this
issue. For example, manager Russell Renecker admitted
that he supervised as many as eight or ten employees,
and never fewer than two, during the period in question.
The district court credited this testimony, but then found,
“There were other Russell Reneckers out there but the
evidence was not presented to this court.” That finding is
clearly erroneous. We have read the testimony of the
many plaintiff managers who testified by deposition, tes-
timony that was not in the record on appeal in Murray I.
Fifteen other managers testified that they regularly
supervised two or more employees who worked more
than eighty hours per week.? In most cases, this testi-
mony is confirmed by the Naughton study. The other
twelve managers* did not testify directly on this issue,
but their descriptions of store operating hours and
employees supervised, combined with the Naughton
study of their stores, support Stuckey’s contention that
they, too, regularly supervised the equivalent of two or
more full-time employees.
3 Harley Blair, Larry Brown, Kinney Bryant, Randy Bush-
nell, Floyd Caskey, Allan Christiansen, Mary Cope, Thomas
Foster, Deborah Hoyt, Warren Kajander, Thomas Miller, Jean-
nette Arbuckle, Eugene Rutledge, Donald Scott, Lawrence Tay-
lor.
4 Gladys Murray, Carol Lewis, Bobbie Cockrell, Sandra
Crist, Stanley Dixon, Edward Geisenheimer, Rae Jean Hamilton,
Loren Jacoby, Donald Phillips, Joy Powers, Arthur Stotts, and
David Tompkins.
lla
The remaining evidence on this issue consisted of
testimony that some Stuckey’s stores were SO unsuccess-
ful that only the manager and spouse worked some days
during the winter. Of course, if those stores needed sub-
stantial part-time help during busier winter days, the
two-full-time-equivalent criterion would still be satisfied.
That no doubt explains why Naughton’s Study refuted
some of this testimony. Nonetheless, it is to some extent
credible, and Naughton’s Study confirmed that there
were some weeks in which some Stuckey’s store man-
agers did not supervise two full-time-equivalent
employees. However, for the following reasons, we con-
clude that this evidence does not refute Stuckey’s proof
that its store managers “customarily and regularly” met
this criterion.
First, as the regulations elsewhere Provide, custom-
arily and regularly “signifies a frequency which must be
greater than occasional but which, of course, may be less
than constant.” 29 C.ER. § 541.107(b). We disagree with
the comment that “76 percent of the time . . . falls short of
‘regular and customary’ ” in Secretary of Labor v. Daylight
Dairy Prods., Inc., 779 F.2d 784, 788 (1st Cir. 1985). But in
any event, Stuckey’s study of a large sample showed that
store managers Supervised at least two or more
employees who worked eighty hours per week 98.2% of
the time. That is “customarily and regularly” by any
definition.
Second, although forty hours per week is generally
the equivalent of a full-time employee, the Department of
Labor in applying this regulation recognizes that this is
not a rigid standard. Paragraph 22c00 of the Wage and
12a
Hour Division, U.S. Department of Labor, Field Operations
Handbook states in part:
Two full-time employees or the equivalent
within the meaning of Reg 541.105(a) is gener-
ally considered to mean 80 hours of work by
subordinate employees. . . . Unusual circum-
stances might occasionally justify lower stan-
dards. . . . The determination as to whether an
employee customarily and regularly supervises
other employees within the meaning of Reg
541.1(b) depends on all the facts and circum-
stances.>
In our view, we should not interpret this regulation more
rigidly than the Department does in enforcing it. Courts
undermine the statute when they construe regulations
more inflexibly than the enforcing agency.
Finally, even if the Department considered two full-
time equivalent employees an inflexible requirement, we
would not rigidly apply it to this case. The Department’s
only published justification for this rule is the statement
in the regulations, “It has been the experience of the
divisions that a supervisor of a[s] few as two employees
usually performs nonexempt work in excess of the gen-
eral 20-percent tolerance provided in § 541.1.” 29 CFR.
§ 541.105(c). That justification is,inapplicable here
because employees in sole charge of a physically separate
branch establishment, like Stuckey’s store managers, are
> Counsel included this portion of the Field Operations
Handbook in the record on appeal. Inquiring at our request, an
Eighth Circuit librarian was told by the Department that the full
Handbook is obtainable only by a formal Freedom of Informa-
tion Act demand.
13a
exempt from the twenty-percent requirement. See 29
C.F.R. § 541.1(e).
Stuckey’s adopted nationwide labor schedules rec-
ommending that its managers employ more than two full-
time employees per week. Plaintiffs’ witnesses testified,
and the district court found, that these schedules were, if
anything, too lean. The company then fell on hard times
and, in the years just Prior to its failure, some of the
managers testified that they operated small rural stores
on a skeletal basis in the winter, rather than closing
altogether. In our view, these were unusual circumstances
that do not alter the fact that Stuckey’s store managers
customarily and regularly Supervised the work of at least
two other full-time equivalent employees. The district
court’s contrary decision is reversed.
III. Exercising Discretionary Powers.
To qualify for the executive exemption, Stuckey’s
must prove that its store managers “customarily and
regularly exercise[d] discretionary powers.” 29 C.F.R.
§ 541.1(d). The regulations at 29 C.ER. § 541.107 further
refine this criterion:
Discretionary powers.
eae person whose work is so com-
pletely routinized that he has no discretion does
not qualify for exemption.
(b) The phrase “customarily and regu-
larly” signifies a frequency which must be
greater than occasional but which, of course,
may be less than constant. The requirement will
be met by the employee who normally and
l4a
recurrently is called upon to exercise and does
exercise discretionary powers in the day-to-day
performance of his duties. The requirement is
not met by the occasional exercise of discretion-
ary powers.
In Murray I, we concluded: “Although the record seems
clear that store managers . . . were ‘normally and recur-
rently . . . called upon to exercise . . . discretionary
powers in the day-to-day performance of [their] duties,’
29 C.F.R. § 541.107(b), we again will remand to the dis-
trict court for initial consideration of [this issue].” 939
F.2d at 620.
On remand, the district court found that “[w]hat little
discretion the managers did exercise on a day-to-day
basis was so circumscribed as to be no discretion at all.”
This finding was based on the testimony of various man-
agers that their authority was limited by company poli-
cies and training manuals, by the recommended labor
schedules, and by the need to obtain the regional man-
ager’s approval to fire an employee, to alter the com-
pany-prescribed store inventory, to make repairs costing
more than $25.00, and so forth. Thus, concluded the dis-
trict court, the manager’s “work is so completely rou-
tinized that he has no discretion” within the meaning of
29 C.F.R. § 541.107(a).
In Murray I, we determined that management was the
store managers’ primary duty and that they were in sole
charge of the isolated stores. At one level, therefore, these
managers clearly exercised constant discretion. They
were responsible for the initial handling of any emer-
gency that threatened these significant company assets,
such as fire, theft, vandalism, sudden employee absences,
q
:
f
3
S
3
z
15a
and so forth. The fact that such emergencies did not often
occur does not justify the district court’s complete refusal
to recognize this aspect of the managers’ responsibilities.
An employer such as Stuckey’s must have at each physi-
cally separate facility one employee with the mandate to
“the day-to-day performance of his [or her] duties.” 29
C.F.R. § 541.107(b).
Even ignoring emergency situations and focusing on
more normal day-to-day activities, we conclude that the
district court took too cramped a view of what constitutes
managerial discretion, resulting in clearly erroneous find-
ings on this issue. Most if not all nationwide companies
with multiple outlets establish standardized Procedures
and policies to guide individual store managers. This
Practice may circumscribe but it does not eliminate the
discretion of the on-site manager of an isolated store who
is responsible for day-to-day operations. Similarly, active
supervision and periodic visits by a regional manager do
not eliminate the day-to-day discretion of the on-site
store manager. See Donovan v, Waffle House, Inc., 26 Wage
& Hour Cas. (BNA) 868, 874 (N.D. Ga. 1983); Marshall v.
Saliy Beauty Co., 25 Wage & Hour Cas. (BNA) 672 (E.D.
La. 1982).
In this case, various store managers testified that
they hired other employees; scheduled employee work
hours; trained and disciplined other employees; ordered
store inventories; and handled customer complaints
under Stuckey’s general “the customer is always right”
policy. In considering whether branch store managers
were exempt executive employees, the court in Sally
l6a
Beauty Co., 25 Wage & Hour Cas. (BNA) at 673, con-
cluded:
The store manager’s position entails a vari-
ety of daily administrative and managerial
duties. Opening and closing the store falls
within the managers’ responsibility, in addition
to their discretionary functions in scheduling
employee hours, customer relations, and order-
ing merchandise. The exclusive authority to
grant discounts and markdowns, extend credit
and approve checks, and to resolve customer
complaints is vested with the managers. Inven-
tory maintenance and display techniques consti-
tute another aspect of the manager’s job. The
aforesaid duties thus require the managers to
customarily and regularly exercise discretionary
powers within the strictures of 29 C.F.R.
§§ 541.1(d) and 541.107.
We agree with this interpretation of the regulations.
Therefore, the district court’s finding that Stuckey’s failed
to prove that the store managers customarily and regu-
larly exercised discretionary powers is clearly erroneous.
IV. Conclusion.
The plaintiff store managers were bona fide executive
employees exempt from the FLSA’s maximum hours pro-
visions. The judgment of the district court in favor of
these plaintiffs is reversed and the case is remanded with
instructions to dismiss their complaints. The district
court’s award of attorney’s fees is vacated. No fees may
be awarded for work on the store managers’ claims.
Although work on the hourly employees’ claims should
have been substantially completed prior to our decision
17a
in Murray I, on remand Plaintiffs may petition the district
court for an additional fee award if any work that was
solely on behalf of the hourly employees was included in
the fee award that we now vacate. Plaintiffs’ cross appeal
is dismissed. The costs of both appeals are taxed in favor
of Stuckey’s.
A true copy.
Attest:
CLERK, U. S. COURT OF APPEALS,
EIGHTH CIRCUIT.
18a
APPENDIX B
UNITED STATES COURT OF APPEALS
for the Eighth Circuit
No. 94-2167 /2172NISC
Gladys Murray, et al.,
Appellees, , Order Denying Petition
. , for Rehearing and
, Suggestion for Rehearing
Stuckey’s Inc., et al., En Banc
Appellants. "
The suggestion for rehearing en banc is denied. The
petition for rehearing by the panel is also denied.
April 25, 1995
Order Entered at the Direction of the Court:
/s/ Michael E. Gens
Clerk, U.S. Court of Appeals, Eight Circuit
19a
APPENDIX C
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF IOWA
WESTERN DIVISION
SIDNEY MURRAY and GLADYS _)
MURRAY, on behalf of themselves ) No. C 85-4085
and all others similarly situated, )
MEMORANDUM
Plaintiffs, OPINION
ae ) AND ORDER
STUCKEY’S, INC. and PET )
INCORPORATED,
Defendants. )
This matter comes before the court on defendants’
motion for summary judgment following a decision by
the Eighth Circuit Court of Appeals reversing and
remanding portions of the above entitled matter to this
court. Additional hearings were held and the Parties sub-
mitted proposed findings of fact and conclusions of law
for the court’s consideration. Despite the fact that the
court requested further evidence, the parties have agreed
that no further evidence need be submitted on the
remaining issues and have requested this court to rule.
After considering the parties arguments, both oral and
written, the court finds that the defendants are not enti-
tled to the “executive exemption” for the store “man-
agers.” The court also adheres to its previous position
regarding the applicable statute of limitations and the
finding that plaintiffs are entitled to liquidated damages.
20a
In addition, after further consideration, the court finds
that the appropriate method for calculating plaintiff
“managers” hourly rate of pay is by dividing the weekly
rate by forty (40) rather than sixty (60) as originally found
by this court.
I. FACTS!
The facts in this case have been set out repeatedly in
previous orders of this court and in the decision of the
Court of Appeals for the Eighth Circuit.2 On May 31,
1985, plaintiffs, former “managers” and “hourly
employees” of various Stuckey’s stores throughout the
country, commenced this action under the Fair Labor
Standards Act, (FLSA), 29 U.S.C. § 201 et seq., seeking to
recover additional overtime compensation and compen-
sation for hours claimed to have been worked “off the
clock.” The matter was tried to the court from February
21, 1989 through February 25, 1989. One of the main
issues in the case was whether the “managers” of the
Stuckey’s stores were exempt under FLSA’s overtime
requirements under Section 13(a)(1) of the Act, 29 U.S.C.
§ 213(a)(1). The Secretary of Labor’s regulations provide a
test for determining whether or not managers are exempt
1 This court issued a 35 page memorandum of law and
order in 1989 which contained extensive findings of fact and
conclusions of law. Those findings of fact and conclusions of
law are incorporated in this opinion as if fully set forth herein,
to the extent that they were not overturned by the Eighth Circuit
Court of Appeals.
2 See Murray v. Stuckey’s Inc., 939 F.2d 614 (8th Cir. 1991).
SM? PS eh Ryo ae A
GDN ARIS
od
2la
under the FLSA. The “test,” codified at 29 C.ER. § 541.1
provides:
The term “employee employed in a bona-
fide executive... capacity” in section 13(a)(1) of
the Act shall mean any employee:
(a) whose primary duty constitutes the
management of the enterprise in which he is
employed or of a customarily recognized
department of a subdivision thereof; and
(6) who customarily and regularly directs
the work of two or more other employees
therein; and
(c) who has the authority to hire and fire
other employees or whose suggestions and rec-
ommendations as to the hiring or firing and as
to the advancement and promotion or any other
change of status of other employees will be
given particular weight; and
(d) who customarily and regularly exer-
cises discretionary powers; and
(e) who does not devote more than 20%,
or, in the case of an employee of a retail or
service establishment who does not devote as
much as 40%, of his hours of work in the work
week to activities which are not directly and
closely related to the performance of the work
described in paragraphs (a) through (d) of this
subsection; provided, that this Paragraph shall
not apply in the case of an employee who is in
sole charge of an independent establishment or
a physically separated branch establishment, or
who owns at least a 20% interest in the enter-
prise in which he is employed; and
22a
(f) who is compensated for his services on
a salary basis at a rate of not less than $155.00
per week (or $130.00 per week, if employed by
other than the federal government in Puerto
Rico, the Virgin Islands, or American Samoa),
exclusive of board, lodging or other facilities:
provided, that an employee who is compensated
on a salary basis at a rate of not less than
$250.00 per week (or $200.00 per week, if
employed by other than the federal government
in Puerto Rico, the Virgin Islands or American
Samoa), exclusive of board, lodging, or other
facilities, and whose primary duty consists of
the management of the enterprise in which the
employee is employed or of a customarily recog-
nized department or subdivision thereof, and
includes the customary and regular direction of
the work of two or more other employees
therein, shall be deemed to meet all the require-
ments of this section.
As noted by this court in its order of July 17, 1989, it
was necessary for the court to apply both the “long test,”
subparts (a) through (e), and the “short test,” subsection
(f), in determining whether managers in this case were
exempt under the FLSA.? The court found that. under
either test, it was important to determine if an employee's
“primary duty” was management. Based on the factors
3 The “long test” applies to those earning less than $250.00
per week and the “short test” applies to those earning more than
$250.00 per week. It is undisputed, as found in this court’s
earlier order, that all managers of Stuckey’s stores were paid at
least $155.00 per week.
23a
set forth in 29 C.ER. § 541.103,4 this court determined
that the facts in this case clearly warranted a finding that
the manager plaintiffs’ primary duties were not manage-
ment, but rather, Stuckey’s regional managers served as
the “real managers” of their stores. The court also deter-
mined that the defendants failed to establish that they
were entitled to the exemption under the “sole charge”
exception as set forth in 29 C.F.R. § 541.1(e). Because
defendants did not meet their burden with respect to the
“primary duty” Part of either the short test or the long
test or the sole charge exception, the court determined
* Section 541.103 reads:
A determination of whether an employee has man-
agement as his primary duty must be based on all the
facts in a particular case. The amount of time spent in
the performance of the manageri.l duties is a useful
guide in determining whether management is the pri-
mary duty of an employee. In the ordinary case it may
be taken as a good rule of thumb that primary duty
means the major part, or over 50%, of the employee's
time. Thus, an employee who spends over 50% of his
time in management would have management as his
primary duty. Time alone, however, is not the sole
test, and in situations where the employee does not
spend over 50% of his time in managerial duties, he
might nevertheless have management as his primary
duty if the other pertinent factors support such a
conclusion. Some of these pertinent factors are the
relative importance of the managerial duties as com-
pared with other types of duties, the frequency with
which the employee exercises discretionary powers,
his relative freedom from Supervision, and the rela-
tionship between his salary and the wages paid other
employees for the kind of nonexempt work per-
formed by the supervisor.
24a
they were not entitled to the “bona fide executive”
exemption under Section 13(a)(1) of the Act.
On appeal, a three judge panel of the Eighth Circuit
Court of Appeals determined that this court erred in
ruling that Stuckey’s failed to prove that the plaintiff
store managers’ primary duty was management for pur-
poses of the first part of the “bona fide executive” test, 29
C.F.R. § 541.1(a). Murray v. Stuckey’s Inc., 939 F.2d 614, 620
(8th Cir. 1991). In addition, the Eighth Circuit determined
that the Stuckey’s store managers clearly fell within the
“sole charge” criterion of 29 C.F.R. § 541.1(e), contrary to
this court’s ruling. Id. The Court of Appeals noted that
this court did not reach the issue of whether the store
managers regularly and customarily supervised two or
more employees, nor did this court reach the two other
“long test” factors; i.e. whether the managers had author-
ity to hire and fire and whether they regularly and cus-
tomarily exercised discretionary authority.> Therefore, the
Court of Appeals remanded the case to this court for
further consideration of those issues. Id.
Il. DISCUSSION
The Court of Appeals decision remanded three main
issues for further consideration by this court:
(1) Whether the Stuckey’s “managers” regularly
and customarily directed the work of two or more
employees;
5 This court did not reach those issues in its original order
because the test is conjunctive. If the defendants fail to satisfy
even one of the factors, they are not entitled to the exemption.
25a
(2) Whether the Stuckey’s “managers” had the
authority to hire or fire other employees or make recom-
mendations as to hiring, firing, and promotion that were
given particular weight; and
(3) Whether the Stuckey’s “managers” regularly
and customarily exercised discretionary powers.
The plaintiffs concede that the defendants have prob-
ably met their burden with respect to the second of these
issues; i.e. that the “managers” had the authority to hire
or fire other employees or make recommendations to that
effect. The plaintiffs concede this issue because, unlike
the other sections which require “regular and customary”
exercise of the specific authority, the section requiring
hire and fire authority does not. Therefore, the court will
consider that this issue has been Proved in favor of
defendants. It is then necessary for this court to address
the other two remaining factors in the test for the bona
fide executive exemption.
A. Supervision of Two or More Employees.
Both the “short test” and the “long test” require that
the defendants prove that each store manager custom-
arily and regularly supervised two or more employees. If
the defendants fail on their burden of Proving this factor
with respect to any one store manager, they are not
entitled to the executive exemption for that employee.
There was little or no relevant testimony concerning this
issue presented by the defendants at the original trial and
despite a clear request for more evidence the defendants
either don’t have it or made a calculated choice not to
26a
submit it on the mistaken belief they could prevail any-
way because of comments made by the Circuit Court.
In the “Interpretations,” at 29 C.F.R. § 541.105(a),
directing the work of two or more other employees is
interpreted to mean “customarily and regularly super-
vises at least two full-time employees or the equivalent.”
According to this section, the requirement is met if the
“executive” supervises one full-time and two part-time
employees of whom one works morning and one after-
noons. It is also satisfied if there are four part-time
employees, two of whom work mornings and two after-
noons. 29 C.F.R. § 541.105(a). The defendants contend
that there is substantial evidence in the record to demon-
strate that managers of stores customarily and regularly
supervised two or more full-time employees or their
equivalent, namely the testimony of the managers and
their families; the testimony of Anthony Naughton, who
reviewed payroll records; and, the testimony of George
Davis, who supplied the labor schedules. In addition,
defendants contend that the above requirements are met
when a manager supervises two or more employees, who,
in any combination work a total of 80 or more hours in a
week. Secretary of Labor v. Daylight Dairy Products, Inc.,
779 F.2d 784 (1st Cir. 1985). In other words, defendants
contend that if the manager was supervising his or her
spouse, who worked 60 hours, and one other part-time
employee who worked 21 hours, the manager would be
supervising “two or more full-time employees” within
the meaning of the regulation because he or she would be
supervising two people, who in combination, worked
more than 80 hours.
27a
The court disagrees with defendants’ interpretation
of this regulation and of the Daylight Dairy decision. The
regulation clearly requires the supervision of two or more
full-time employees or the equivalent. The interpretations
provide that the manager can supervise one full-time
employee and two part-time employees or four part-time
employees to satisfy this requirement. This regulation
cannot, however, be read to allow the supervision of one
full-time employee who is also considered a part-time
employee because he works overtime, and one other part-
time employee. Taken to its logical conclusion, the defen-
dants’ position would allow the managers to qualify for
the exemption if they supervised their spouses for 79
hours and one other employee for at least 1 hour. This
court does not believe that such a result was intended by
this regulation. Nor does the court feel that the Daylight
Dairy case stands for such a broad Proposition. The Day-
light Dairy court said:
The equivalent of two full-time employees
working 40-hour weeks is any number of part-
time employees, as long as the total number of
hours supervised exceeds 80. For example, four
persons each working 25 hours per week satisfy
the requirement, because the hours supervised
total 100.
Secretary of Labor v. Daylight Dairy Products, Inc., 779 F.2d
784, 787 (1st Cir. 1985). This holding does not encompass
counting a spouse as one full-time and one part-time
employee simply because he works overtime. Therefore,
in those instances that defendants rely on a spouse and
one other part-time employee to assert that they have
28a
satisfied the supervising two or more employees require-
ment, the court finds that they have not met their burden
of proof. As has been stated in Brock v. Norman’s Country
Market, Inc.:
The burden of proving the applicability of the
executive exemption is upon the defendant. The
exemption is to be applied only to those clearly
and unmistakably within the terms and spirit of
the exemption.
Brock v. Norman’s Country Market, Inc., 835 F.2d 823, 826
(11th Cir.), cert. denied, 108 S.Ct. 2845 (1988) (emphasis
added). The Eighth Circuit followed this same sentiment
when it stated that “[aJn employer who asserts it is
exempt from the Act ‘has the burden of establishing the
exemption affirmatively and clearly.’” Donovan v. Wil-
liams Chemical Co., Inc., 682 F.2d 185 (8th Cir. 1982) (cita-
tions omitted).
Not only have defendants failed in their burden of
proof in those instances where they rely on a spouse and
one other part-time employee to meet the “two or more
full-time employee” requirement, they have also failed in
their burden with respect to most other “managers.”
Keeping in mind that the burden of proving the appli-
cability of the exemption is on the defendants and that
the exemption is to be applied only in those cases clearly
and unmistakably within the terms and spirit of the
exemption, this court notes that the proof is insufficient
in this case. The defendants rely on the testimony of the
“managers” as to the hours worked by other employees
and their spouses; the testimony of Anthony J. Naughton
who summarized the results of a review of the existing
payroll records; and the testimony of George Davis who
29a
testified regarding the labor schedules he developed for
use at Stuckey’s. While this court is cognizant of the
comment made by the Eighth Circuit on appeal that “it
seems likely that Stuckey’s met its burden of Proof as to
this factor,” this court also notes that the record transmit-
ted on appeal “did not contain many of the relevant
portions of the trial record, including the pleadings that
set forth the manner in which each plaintiff's damages
were calculated, the trial testimony of over 40 witnesses
who testified by deposition, and many trial exhibits.”
Murray v. Stuckey’s, 939 F.2d 614, 622 n.3 (8th Cir. 1991).
Defendants’ reliance on the testimony of Anthony J.
Naughton and the existing payroll records is misplaced.
At several points in Mr. Naughton’s testimony he admit-
ted that the payroll records were not very complete. For
example, on direct examination by the defendants’ attor-
ney the following exchange took place:
Q. In connection with that, were you asked to
look at the number of hours employees worked
and the number of people supervised at the
store?
A. Yes, they were.
Q. And did you have very complete records?
A. No. They were not very complete.
Q. And were these all the records from the
Stuckey’s stores of the list of people that you
were asked to do?
A. Yes. It was the records that we could find.
(Tr. IV. 731:13-21). Ir addition, the following exchange
took place between the plaintiffs’ attorney and Mr.
Naughton:
30a
Mr. Nymann: Have you brought any of the orig-
inal records that you are referring to into this
courtroom?
The Witness: Yes, there are some.
Mr. Nymann: The original records?
The Witness: Not the source documents, no.
These are summary computer reports.
Mr. Nymann: What you brought in are your
own summaries from -
The Witness: Correct.
Mr. Nymann: And those are the records you
found not to be complete?
The Witness: Correct.
(Tr. IV. 732:12-23). Mr. Naughton made similar comments
when discussing specific plaintiff’s records. For instance,
Mr. Naughton said: “With certain weeks omitted that we
did not — were unable to find the records.” (Tr. IV.
738:13-14); and “Henryville, we did not have very good
records on.” (Tr. IV. 741:20). While Mr. Naughton’s testi-
mony indicated that there were time periods when two or
more full-time employees or their equivalent were super-
vised by some of the managers, this court cannot say that
Mr. Naughton’s testimony establishes that these “man-
agers” regularly and customarily supervised two or
more full-time employees. This is true particularly in
light of testirmony from former regional manager Dale
Roush, who testified that at the lower volume stores there
was a great many times in the winter months that the
labor schedules were cut so much that there would only
be two people to run the store. (Roush Deposition p.42).
Furthermore, former regional manager Marvin Mangers
3la
testified by deposition that during the winter-time the
“manager” of the stores performed routine clerical duties
at least 40 percent of their time “because in the winter-
time they was about the only employee there . “i
(Manger Deposition p.14). Mangers further testified that
depending on the volume of the Store in the winter-time
the store was pretty much manned by the man and wife.
(Manger Deposition p.18).
In response to this type of testimony that indicated
that whether the “managers” regularly and customarily
supervised two or more full-time employees depended
upon the volume of the stores in question, this court, as
mentioned, ordered the parties to supplement the record.
Specifically, this court asked the parties to submit to the
court the name and location of the stores involved in this
action; the names of the plaintiffs employed at each store;
whether the store was a large or small store; and a list of
any exhibits or pleadings that would assist the court in
determining the size of each store in relation to the other
stores.© The defendants, in their response to the court’s
© The court was well aware that a significant percentage of
these stores are small “mom and pop” stores in remote places on
interstates in the northern part of the United States and that
from October Ist to May Ist of each year they are open a limited
number of hours a day, that there is very little tourist traffic in
many of those months, that the “locals” eat in their town cafes
and provide w-ry little business for these “out in the country”
stores that close at dusk which is usually 5:30 or 6:00 p.m. The
court really believed that the defendants would respond to the
courts request for more records with a list or a computer print
out showing they had blank number of Stores, many in warm
weather areas that didn’t have short seasons and which rou-
tinely had 3 to 10 employees. No such evidence was presented
even though it is probably true.
32a
order, stated that they had diligently searched the testi-
mony presented at trial, the testimony of the plaintiffs in
depositions and the Exhibits presented by both parties at
the time of trial and concluded that there is very little, if
any, evidence in the record specifically identifying the
volume of the store where any of the plaintiffs were
employed. The court already knew this and that was
what had prompted the request for more evidence.
Defendants admitted that they did not submit direct evi-
dence on the volume of each store. Defendants further
stated that the volume of the stores changed during the
time period when the plaintiff “managers” were in charge
of their stores. Finally, defendants stated that the volume
of stores is not determinative as to whether the “man-
agers” were exempt. This ignores the clear directives of
the area managers who would not authorize another
employee until the business was there. You can’t super-
vise two or more when two or more are not authorized
for months at a time. Rather, defendants once again asked
this court to consider the labor schedules which they
contend establish that the managers always were allotted
sufficient labor so as to satisfy the requirements that they
supervise two full-time employees or their equivalent.
Defendants further asserted that testimony of Stuckey’s
management established that the managers were given
sufficient labor budgets to allow managers to adhere to
the labor schedules.
The court notes that the assertion by the defendants
that they have established that the managers were given
sufficient labor budgets to allow them to adhere to the
labor schedules is in direct conflict with the testimony of
former regional manager Dale Roush. In his deposition
33a
testimony submitted to the court for consideration the
following exchange took place:
Q. You were looking at some labor schedules
that Mr. Nymann handed you. In your opinion,
was it possible to run a Stuckey’s store within |
the guidelines of those labor schedules?
A. The higher-volume stores, yes; the lower-
volume stores, no.
Q. The Petrimoulx store, could it have been
run within the guidelines on those schedules?
A. During the summer months, yes; during the
winter months, I would have to say it would be
very hard to run within those schedules.
Q. How about the Hoyt store?
A. The Hoyt store would have been approx-_
imately the same thing.
Q. And the Renneker store?
A. Renneker’s store would have been a little
easier, but, yes, in the winter months it would
have been tough to follow the schedule.
Q. Why is that?
A. Because in the winter months it was cut
down to the point where you would have a
great many times it would be two people only.
Q. Did you ever have Mrs. Hoyt complain that
she needed more labor hours? ;
A. Yes.
(Roush Deposition p.42:2-25). Based on this and other
evidence, defendants’ reliance on the labor schedules and
the testimony of George Davis is also misplaced. This
34a
court, in its initial opinion, found that employees were
pressurized into falsifying hours. In addition, plaintiffs
submitted Exhibit 3 at trial which contained an Exhibit B
attached to that exhibit. Exhibit B attached to trial exhibit
3 was prepared as a true and correct copy of the labor
budget for the store at Little Sioux, Iowa. That exhibit
showed that the labor budget was much different than
those in the proposed or sample schedules developed by
George Davis. In addition, as previously noted, former
regional managers testified that the labor budgets were
cut in the winter months so that there would be enough
only for two people. Furthermore, in finding of fact 30 in
the original order, this court found:
Defendants’ witnesses testified that labor sched-
ule guidelines were “scientifically” developed
for Stuckey’s and were designed to provide suf-
ficient hours for each store to be adequately
staffed based on sales volume. Defendants also
contend that regional managers made additional
labor money available to a store if he or she
requested it and it was justified. However, the
testimony with regard to the practicalities of the
labor schedule was disputed between the par-
ties.
Based on the foregoing, and after listening to and
judging the credibility of the witnesses in this case, this
court cannot find that the defendants have met their
burden with respect to most managers by proving that
the plaintiff “managers” regularly and customarily
supervised two or more employees. The only manager
that this court can specifically say the defendants met
their burden of proving the two or more full-time
35a
employee factor is Russell Renecker. On cross-examina-
tion Mr. Renecker admitted that customarily and regu-
larly throughout the period from June, 1982 to April,
1985, he had at least two employees on the payroll and
sometimes several more, who worked more than 80
hours. (Tr. II, 284:7-13). There were other Russell
Reneckers out there but the evidence was not presented
to this court.
B. Exercise of Discretionary Power
In its decision reversing and remanding to this court,
the Eighth Circuit Court of Appeals stated that the record
seems clear that store managers were normally and recur-
rently called upon to exercise discretionary powers in the
day-to-day performance of their duties. Murray v.
Stuckey’s Inc., 939 F.2d at 620. This court again heard all
the arguments of competent counsel for the defendants
and reviewed the record diligently and for reasons set out
below respectfully draws a different conclusion. The
court of appeals then remanded this point to this court
for initial consideration. With respect to this issue, 29
CFR § 541.107 states:
(a) Section 541.1(d) requires that an exempt
executive employee customarily and regularly
exercise discretionary powers. A person whose
work is so completely routinized that he has no
discretion does not qualify for exemption.
(b) The phrase “customarily and regularly”
signifies a frequency which must be greater than
occasional but which, of course, may be less
than constant. The requirement will be met by
the employee who normally and recurrently is
36a
called upon to exercise and does exercise discre-
tionary powers in the day-to-day performance
of his duties. The requirement is not met by the
occasional exercise of discretionary powers.
The explanation in part (a) above that “a person whose
work is so completely routinized that he has no discretion
does not qualify for exemption” is important in this
courts consideration of whether the “managers” regu-
larly and customarily exercised discretionary authority.
The defendants contend that because the Eighth Circuit
Court of Appeals determined, contrary to this court’s
ruling, that the manager’s primary duty was manage-
ment and that the managers were in “sole charge” of their
store, that finding is conclusive in establishing that man-
agers possessed and exercised discretionary authority.
The court disagrees. The regulations setting forth the
executive exemption specifically list the customary and
regular exercise of discretionary powers as a separate and
distinct factor in determining whether the exemption
applies. The regulation would not set forth that factor as
an independent factor if a finding of “management as
primary duty” would satisfy that factor. In addition, the
following statements were made by the Eighth Circuit in
its opinion in this case:
Like other courts that have considered the ques-
tion, we believe that the manager of a local store
in a modern multi-store organization has man-
agement as his or her primary duty even though
the discretion usually associated with management
may be limited by the company’s desire for standard-
ization and uniformity.
Murray v. Stuckey’s, 939 F.2d at 619 (emphasis added). The
court went on to state:
37a
In this case, it is undisputed that the plaintiff
store managers were the on-site employees ulti-
mately responsible for the stores’ operations,
even though their discretion was circumscribed.
Id. at 620 (emphasis added). Finally, the court noted:
It is clear that Stuckey’s: store managers satisfy
these sole charge standards. The store managers
were ultimately in charge of all operations on
the premises. The extent of their control may have
been circumscribed by Stuckey’s standardized
methods of operation and by the supervision of the
regional managers, but this typical organizational
characteristic of a modern retail chain does not
change the fact that the store managers were, in
a very real economic sense, in “sole charge” of
the local store operations.
Id. (emphasis added). This court finds, on the basis of the
regulation and its interpretation, that the work of the
“managers” in this case was “so completely routinized
: that [they] had no discretion.” 29 CFR § 541.107(a).
4 Indeed, as just pointed out, the Eighth Circuit recognized
that the “managers” discretion was “circumscribed” and
“limited.” No where is it more evident that the “man-
agers” had no real discretion than in the testimony of
Russell Renecker. On cross examination of Mr. Renecker,
defendants attorney tried to elicit what types of discre-
tionary functions Mr. Renecker performed as a “man-
ager.” In his responses to questions posed by defendants
teen aac eae
PSNI ASAT IENLE ERA Oa
PRB EE LN Sy heat
EE
counsel, Mr. Renecker testified that he was given a train- :
ing manual that told how to wait on cars and other things
(Tr. II, 246:19-22); he was given a labor budget within
which to operate (Tr. II, 248:1-8); it was up to the regional
manager to determine if someone got a raise or not; (Tr.
iP rate
38a
II, 248:9-15); he could recommend sick leave but did not
have authority of final approval of sick leave (Tr. II,
2509-20); he did not have the authority to fire someone
without the regional manager’s approval (Tr. II,
251:12-20); the inventory was a set inventory and he
would re-order based on how much of that had been sold
(Tr. Il, 254:19-24); the original inventory could only be
changed by the regional manager if he decided you
needed more or less of something (Tr. II, 256:2-8); he
never purchased anything he wasn’t told he could pur-
chase (Tr. II, 256:11-12); the regional manager made the
decision whether to stock other products (Tr. II, 257:9-24);
if he wanted to buy something at the store he had to have
it approved (Tr. II, 258:11-15); his authority to adjust
customer complaints was dictated by the company policy
that the customer is always right (Tr. II, 262:3-22); if
repairs cost over $25.00 he had to get authorization to fix
them (Tr. II, 264:9-24); the regional manager decided who
made repairs costing over $25.00 (Tr. II, 265:14-16).
Based on testimony of this nature, this court finds
that defendants have not met their burden of proving that
the “managers” regularly and customarily exercised dis-
cretionary powers. What little discretion the managers
did exercise on a day-to-day basis was so circumscribed
as to be no discretion at all. The court does not believe
that the powers exercised by these “managers” are clearly
and unmistakably within the terms and spirit of the
exemption.
Because this court finds that the “managers,” with
the exception of Russell Renecker, did not regularly and
customarily supervise two or more full-time employees
Bs aa
39a
or their equivalent and that none of the managers regu-
larly and customarily exercised discretionary powers, the
defendants are not entitled to the executive exemption.
Again, this court refers to page 4 of this opinion discuss-
ing the “short test” and the “long test” factors. For some
plaintiffs it was necessary to address both factors while
for others it was only necessary for this court to address
the “two or more employees” factor.7 The Court of
Appeals declined to rule on the willful violations and
liquidated damages aspect of this case as it pertained to
the store managers because of their decision to remand
on the above issues. The court did point out that the
willfulness and good faith issues must be considered in
the context of reasonable reliance on the executive
exemption defense. After lengthy and careful consider-
ation as directed by the Court of Appeals, this court
adheres to its initial determination that the three year
statute of limitations is applicable because Stuckey’s vio-
lations were willful. The court also adheres to the finding
that plaintiffs are entitled to liquidated damages because
Stuckey’s failed to prove that the violations were both in
good faith and predicated upon such reasonable grounds
” The evidence was not clear as to whether Russell
Renecker fit within the “short test” or the “long test.” If his
situation was analyzed under the “short test,” it is possible that
defendants have proven the executive exemption in his case
because of this courts finding that he did regularly and custom-
arily supervise two or more full-time employees. The court will
leave it to the parties to reach an agreement as to whether Mr.
Renecker fits within the short or long test. Its up or down
depending on whether he made more than $250.00 per week or
less than that.
40a
that it would be unfair to impose more than a compensa-
tory verdict.
Finally, the Court of Appeals declined to rule on
plaintiffs’ cross appeal claim that this court erred in cal-
culating the store managers’ damages based on a 60 hour
work week, rather than a 40 hour work week, and that
their attorneys’ fee award was inadequate. After further
review of the regulations governing the question of calcu-
lating hourly rates of pay, specifically 29 C.F.R.
§ 778.113(a)&(b), the court finds that the correct method
of calculating the store managers hourly rate should be
determined by dividing the weekly rate by forty (40)
rather than sixty (60). The court is persuaded by plain-
tiffs’ assertion that the number of hours the salary was
intended to compensate for was forty (40). In addition,
plaintiffs pointed out that dividing the weekly rate by
sixty (60) would, in at least 7 cases, result in an hourly
rate less than the statutory minimum wage. Such a result
is contrary to the act. Oliver v. Mercy Medical Center, Inc.,
695 F.2d 379 (9th Cir. 1982). The remainder of this court’s
opinion on the issue of hourly rate of pay for “managers”
shall remain the same.® In addition, because the Court of
Appeals vacated the award of attorney’s fees, this court
8 Dividing the weekly rate by forty (40) to arrive at an
hourly rate of pay (and in no event shall the hourly rate be less
than minimum wage) and then multiplying the hourly rate of
pay by one and one-half to arrive at the overtime rate. The
bonuses paid to “managers” must be totaled with other earn-
ings to determine the regular rate on which overtime pay must
be based. Fringe benefits such as paid vacations and holidays
shall be excluded in calculating damages herein.
SA RRS SR EY
4la
will, at the appropriate time, hold a hearing on the issue
of attorney’s fees and expenses.
Ill. CONCLUSION
This court concludes that with the exception of
Russell Renecker, the defendants have not met their bur-
den of proof on the issue of whether plaintiff’s regularly
and customarily supervised two or more full-time
employees or their equivalent. The defendants have also
failed to meet their burden of proof regarding whether
plaintiff's regularly and customarily exercised discretion-
ary powers. The defendants are not entitled to the execu-
tive exemption for the store “managers.” This court
adheres to its previous position regarding the applicable
statute of limitations and the finding that plaintiffs are
entitled to liquidated damages. The court determines that
the appropriate method for calculating plaintiff “man-
agers” hourly rate of pay is by dividing the weekly rate
by forty (40) hours rather than sixty (60) hours. Finally,
the court will hold further hearings at the appropriate
time on the issue of attorney’s fees.
Upon the foregoing,
IT IS ORDERED
(1) Defendants are not entitled to the executive
exemption for plaintiff store “managers.”
(2) The court adheres to its initial determination
with respect to the three year statute of limitations and
liquidated damages.
(3) The correct method for calculating the “man-
agers” hourly rate of pay is by dividing the weekly rate
42a
by forty (40) rather than sixty (60). The remainder of this
courts original findings with regard to that issue shall
stay the same.
(4) The court will hold a hearing on the issue of
attorney’s fees and costs at an early date.
(5) Counsel for both parties shall submit to the
court, within twenty (20) days of the date of this order,
their calculations as to the amount of monetary judgment
each plaintiff “manager” is entitled to based on this
courts order. If differences exist with regard to the
amounts submitted, the court may hold a hearing to
resolve the conflict.
Dated this 16th day of April, 1993.
/s/ Donald E. O’Brien
Donald E. O’Brien, Judge
UNITED STATES DISTRICT COURT
Copy mailed by regular mail April 16, 1993 to:
PL Nymann; Steven Kohl; PO Box 1825; Sioux City, IA
51102
Gene LaSuer; Jean McNeil; 2300 Financia) Center; Des
Moines, IA 50309
John Renick; 2730 North Ballas Road; Suite 200; St. Louis,
MO 63131
/s/ J. Hoch
Deputy Clerk
43a
APPENDIX D
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF IOWA
WESTERN DIVISION
SIDNEY MURRAY and GLADYS )
MURRAY, on behalf of themselves )
and all others similarly situated, ) No. C 85-4085
Plaintiffs, ORDER
vs. ) (Filed
STUCKEY’S, INC. and PET ) Apr. 15, 1994)
INCORPORATED,
Defendants. )
This matter comes before the court on plaintiffs’
motion for entry of judgment and plaintiffs’ renewed and
amended motion for attorney fees and expenses. The
court has entered several orders which detail the facts in
this case at length and therefore, the facts will not be
repeated here except as applicable to the motions before
the court.
A. MOTION FOR ENTRY OF JUDGMENT:
This court entered an order in April, 1993, reaffirm-
ine its original decision that the defendants in this case
were not entitled to the “executive exemption” for the
Store “managers” under 29 U.S.C. § 213(a)(1). In that
April, 1993 order the court ordered the parties to submit
44a
to the court their calculations as to the amounts of mone-
tary judgment each plaintiff “manager” would be entitled
to based on the court’s rulings. Plaintiffs move for entry
of judgment in the amounts listed in their calculations
plus post judgment interest. Plaintiff asserts that under 28
U.S.C. § 1961, the post judgment interest rate would be
7.9%. Further, plaintiff contends that post-judgment inter-
est should be calculated from the entry of the first judg-
ment in July 16, 1990, before this case was appealed to the
Eighth Circuit and sent back on remand. Plaintiffs assert
that the court has essentially reaffirmed its prior judg-
ment in favor of the plaintiff “managers.” The damages
have been increased somewhat because this court made a
correction on how damages would be calculated. How-
ever, plaintiffs assert that the equities of the situation
dictate that the successful “managers” should receive
interest on the loss of the use of their money judgments
from the date damages were originally determined. See
Buck v. Burton, 768 F.2d 285 (8th Cir. 1985).
In their resistance to the motion to enter judgment,
defendants noted that while they didn’t dispute plain-
tiffs’ calculations, they did dispute the court’s ruling
changing the way damages were calculated. Also in their
resistance defendants state that they dispute the dates of
employment of certain employees. Ultimately, defendants
agree that the plaintiffs’ calculations are correct based on
the court’s rulings. However, they assert that the best
interests of justice require the court to rule on the issue of
attorney’s fees before entering judgment so that there
would be one judgment for the defendants [to] consider
when deciding whether to pay and settle the claims or to
file a Notice of Appeal.
45a
The court has considered the resistance to entry of
judgment and concludes that entry of judgment is appro-
priate at this time. The court so concludes based on the
fact that included in this order is a ruling on the motion
for attorney’s fees. Defendants’ resistance to the entry of
judgment was based, in large part, on the fact that the
court still had not decided the issue of attorney’s fees and
defendants felt it would be best to have only one judg-
ment from which to appeal. Because the court is ruling on
all remaining issues, it is appropriate to order that judg-
ment be entered now. Also, while the court is aware that
defendants dispute some of the court’s rulings from the
April, 1993 order, it is clear that the defendants feel that
the calculations of the plaintiffs are correct, based on the
court’s ruling. The court, in ordering that judgment be
entered in the amount as calculated by the plaintiffs, is
not indicating that it feels defendants have waived their
objections to the rulings that have a bearing on those
calculations. In fact, it is clear that defendants have not
waived those objections and may in fact pursue them on
appeal. With those comments in mind, the court will
order that the Clerk of Court enter judgment in favor of
the following plaintiffs in the following amounts:
NAME AMOUNT
Harley Blair $ 62,276.66
Larry Brown 30,410.50
Kinney Bryant 54,032.83
Randy Bushnell 23,703.49
Floyd Caskey 15,668.35
Allan Christiansen 20,863.72
Bobbie Cockrell 18,201.22
Mary T. Cope 65,143.07
Sandra Crist 46,855.87
46a
Stanley Dixon 75,394.48
Thomas Foster 12,708.86
Edward Geisenheimer 18,095.00
Rae Jean Hamilton 15,187.05
Deborah L. Hoyt 49,498.60
Loren Jacoby 49,816.90
Warren Kajander 21,058.83
Carol Lewis 38,722.75
Thomas Miller 18,311.33
Gladys Murray 74,887.45
Jeanette (Petrimoulx)
Arbuckle 88,614.05
Donald Phillips 52,327.83
Joy M. Powers 85,062.51
Russell Renecker 6,127.20
Eugene Rutledge 115,381.79
Donald Scott Be Br
Arthur Stotts 31,995.03
Lawrence Taylor 57,767.10
David Thompkins 56,933.61
In addition to the above amounts, the court is per-
suaded that plaintiffs are entitled to post judgment inter-
est from the date of the original judgment, July 16, 1990,
subject to the interest rate determined at that time pur-
suant to 28 U.S.C. § 1961. Plaintiffs have calculated that
interest rate to be 7.9%.
B. MOTION FOR ATTORNEY FEES AND
EXPENSES:
In their motion for attorney’s fees, plaintiffs state that
their counsel, P.L. Nymann and Steven Kohl have
devoted a total of 2276.5 hours to this litigation. They also
claim out of pocket expenses of $7,014.57 through August
31, 1993 which results in a total of advanced expenses in
5
f
ae
Tos
ie
:
bis
b
ie
%
:
47a
the amount of $23,267.78. Plaintiffs point out that in two
employment law class action lawsuits previously litigated
before this court, Jansen v. Greyhound and Berry v. Grey-
hound plaintiffs counsel, Nymann and Kohl, received the
following amounts of attorney’s fees: In Jansen, they
claim that for 1,602.9 hours they received $899,898.41, for
a fee per hour of $561.42. In Berry, they claim that for
686.6 hours they received $442,500.00 for a fee per hour of
$644.48. Plaintiffs also note that they are involved in the
Jensen v. SIPCO matter, but that fees have not yet been
ruled on.! Plaintiffs contend that based on these two prior
cases, a reasonable hourly rate of $650.00 per hour would
be considered the normal hourly rate of attorneys in
Sioux City and similar markets for similar contingent case
litigation of employment law class actions. Plaintiffs fur-
ther assert that this is reasonable in light of the protracted
nature of this litigation (over 8 years) and the tendency of
the defense to litigate even the smallest of issues.
Plaintiffs note the 12 factors that are taken into
account in determining attorney’s fees from Johnson v.
Georgia Highway Express, 488 F.2d 714, 717-19 (5th Cir.
1974). As mentioned, plaintiffs contend that they have
established the prevailing market rate for contingent fee
employment class actions in Sioux City by virtue of their
settlement awards in the other cases mentioned. Plaintiffs
assert that attorneys who take cases on a contingent fee
basis must charge a higher fee than those who work on a
! Jensen v. SIPCO is a case in front of this court where the
identical issue of attorneys’ fees is pending. Two of plaintiffs’
attorneys in that case are P.L. Nymann and Steve Kohl, the
attorneys for the plaintiffs in this case.
48a
noncontingent basis to compensate for the risk of loss,
etc.
Plaintiffs cite Norwood v. Charlotte Memorial Hospital &
Medical Center, 720 F.Supp. 543, 548 (W.D.N.C. 1989); Sug-
arland Industries, Inc. v. Thomas, 420 A.2d 142, 153 (Del.
1980); and Kirchoff v. Flynn, 786 F.2d 320 (7th Cir. 1986) for
the proposition that the fees they are requesting are rea-
sonable.
In resistance to the motion for attorney’s fees, defen-
dants first set forth the procedural history of this attorney
fees issue. On August 4, 1989, plaintiffs filed their first
application for fees. They sought to recover for 1,444.7
hours of time and expenses of $11,699.56. On December 7,
1989, the plaintiffs amended to seek an{ ] additional 24.3
hours. On Jan. 8, 1990, this court ruled that a reasonable
hourly rate for Mr. Kohl to be $70 per hour and $80 per
hour for Nymann. The court reduced the number of
hours claimed due to unnecessary trips to the courthouse
and for claims’ unrelated to the Fair Labor Standard Act.
The court adjusted the fee upward by 15% for the contin-
gency risk of not prevailing. The net award was
$126,055.00 and expenses of $16,253.21. A motion to
amend was filed by defendants and after further hearing,
the court reduced the award by $19,737.50 as plaintiff's
counsel had already recovered that amount to settle a
portion of the claims. The court also reduced the
expenses by $2,694.75. The recovery was $106,317.50 and
expenses of $13,558.46. Both parties appealed the award
to the 8th Circuit but the Circuit refused to rule because it
was remanding the damages award to the court. Because
of that ruling, those fees and expenses were not paid.
49a
Plaintiffs now seek to recover for an additional 759.6
hours of time and additional expenses of $11,568.22.
Defendants agree that the appropriate way to deter-
mine the reasonable fee is by utilizing the lodestar
method whereby you multiply the reasonable hours by a
reasonable hourly rate. Any adjustments upward from
that figure must be proven by the fee applicant. Defen-
dants point out that the reasonable hourly rate is gener-
ally the prevailing market rate in the relevant community.
Defendants contend that $650.00 is not a reasonable
hourly rate. The[y] assert that there is absolutely no basis
for the court to find that this is the prevailing rate in
Sioux City or in Iowa. Defendants point out that in a
hearing on September 25, 1989 the plaintiffs sought fees
of $450.00 per hour. Defendants assert that the court
specifically told plaintiffs counsel that the amount he was
able to negotiate for his fees in another case was far more
than what the court would have awarded.
Defendants state that plaintiffs misrepresent the
holding in Norwood and further state that the Supreme
Court has made it clear that it does not condone outra-
geous fee awards which are nothing more than a windfall
to the attorney. Pennsylvania v. Delaware Valley Citizens’
Council for Clean Air, 478 U.S. 546, 565 (1986).
Defendants point out that the law does not allow an
enhanced fee due to contingent risk. That premise was
rejected in Burlington v. Dague, __ U.S.__, 112 S.Ct. 2638
(1992). Defendants also point out that the 8th Circuit has
consistently reversed attorney fee enhancement for risk
of loss since Dague. See, Hukkanen v. International Union of
Operating Engineers, 3 F.3d 281, 287 (8th Cir. 1993); Jeffers
50a
v. Clinton, 992 F.2d 826, 830 (8th Cir. 1993); Kientzy v.
McDonnell Douglas Corp., 990 F.2d 1051, 1063 (8th Cir.
1993). Plaintiffs respond to this argument by asserting
that they are not asking for an enhancement based on
contingent risk and therefore, the Dague case is not appli-
cable. Defendants go on to assert that the appropriate
hourly rate would be that rate that these attorneys nor-
mally charge ard which was found to be the rate by the
court earlier, $70 per hour for Kohl and $80 per hour for
Nymann. Further, defendants assert that this hourly rate
should be decreased for those substantial hours the plain-
tiffs’ counsel is claiming for time spent on the attorney’s
fee issue.
Next defendants assert that plaintiffs are asking for
$4,553.65 for expert witness fees and these fees are not
recoverable under fee shifting statutes unless the statute
specifically provides. Crawford Fittings Co. v. J.T. Gibbons,
Inc., 482 U.S. 437 (1987); West Virginia University Hospitals,
Inc. v. Casey, __ U.S.__, 111 S.Ct. 1138 (1991). Defen-
dants point out that there is no explicit language allowing
the shifting of expert witness fees under 29 U.S.C.A.
§ 216(b). See, Gray v. Phillips Petroleum Co., 971 F.2d 591
(10th Cir. 1992). Defendants assert that expert witness
fees of $40 per day is all that is allowed under 28 U.S.C.
§ 1821(b).
Finally, defendants contend that plaintiffs are not
entitled to recover for time spent on a premature appeal
in January 1990. Further, they should not be compensated
for any of the time spent seeking Rehearing and Rehear-
ing En Banc before the court of appeals. Defendants point
out that plaintiffs were unsuccessful in both instances.
Defendants also object to plaintiffs collecting for their
5la
time spent seeking certiorari before the U.S. Supreme
Court or the $400 it cost for plaintiffs’ attorneys to
become admitted to the U.S. Supreme Court, or the
$2,367.25 of printing costs for their Supreme Court brief.
The Court first notes that the proper method for
setting a reasonable attorney’s fee begins with a deter-
mination of the lodestar amount. The lodestar is obtained
by multiplying “ ‘the number of hours reasonably
expended on the litigation times a reasonable hourly
rate.’ ” Pennsylvania v. Delaware Valley Citizens’ Council for
Clear Air, 478 U.S. 546, 565 (1986); see also Hensley v.
Eckerhart, 461 U.S. 424, 433-34 (1983); Accord M.C. Jeffers v.
Clinton, 992 F.2d 826 (8th Cir. 1993). Because defendants
do not challenge plaintiffs’ counsel's right to attorneys’
fees or the number of hours expended by plaintiffs’ coun-
sel, the only question before the Court is what constitutes
a reasonable hourly rate for counsels’ work in this case.
In addition, the court will have to rule on certain
“classes” of fees requested such as the fees on appeal and
the expenses incurred to apply to the Supreme Court.
Initially, to arrive at a reasonable hourly rate, a court
must look to the “prevailing market rates” in the relevant
community. Blum v. Stenson, 465 U.S. 886, 896 (1984).
“Where an attorney requesting fees has well-defined bill-
ing rates, those rates can be use to help calculate a
reasonable rate for a fee award.” McDonald v. Armontrout,
860 F.2d 1456, 1459 (8th Cir. 1988). The use of well-
defined billing rates to set a reasonable rate is consistent
with Blum, because “ ‘in most cases, billing rates reflect
market rates — they provide an efficient and fair short cut
for determining the market rate.’” Id. at 1459; (citing
Student Pub. Interest Research Group, Inc. v. AT and T Bell
52a
Laboratories, 842 F.2 1436, 1445 (3d Cir. 1988)). An attor-
ney’s ordinary billing rate is not conclusive of reasonable-
ness, however, and it should be compared to the usual
and customary fee for similar work in the community.
McDonald, 860 F.2d at 1459.
Although plaintiffs’ assert that the Jansen and Berry
cases must determine the prevailing market rate in the
Sioux City area, this Court is persuaded that translating
fees agreed to in settlement negotiations into ordinary
hourly fee rates would lead to an unreasonable attorneys’
fee award. If the Court uses the Jansen and Berry cases to
set the prevailing hourly market rate in this case, plain-
tiffs’ counsel would be awarded $650.00 per hour in
attorneys’ fees multiplied by over 2000 hours for a total
of over $1,300,000.00. This Court is not persuaded that it
is bound by the fee agreements in the Jansen and Berry
settlements. A decision by the parties to settle a case
depends on a wide variety of factors that ultimately
influence the amount of the settlement and the agreement
as to attorneys’ fees. Each case has different facts and
circumstances, and thus the amount of settlement awards
and attorneys fees vary greatly. Most importantly, this
Court has found no authority to support the proposition
that attorneys’ fees agreed to in a settlement can be used
to set “the prevailing market rate” for a case that went to
trial. This Court finds that a more appropriate guide in
determining the hourly rate in this case is to look to
counsel’s ordinary hourly rate, and therefore, the Court
sets the lodestar fee in this case at $110 for Steven Kohl,
and at $115 for P.L. Nymann.?
2 The Court is not persuaded that it is bound by the $70-$80
hourly fee award made several years ago in this case as
53a
After determining an initial lodestar fee, courts are
also advised to consider the factors identified in Johnson
v. Georgia Highway Express, Inc., 488 F.2d 714, 717-19 (Sth
Cir. 1974), in setting a reasonable attorneys’ fee award.
This Court, according to Johnson, must consider, among
other things, the time and labor spent on the case, the
novelty and difficulty of the legal issues involved, the
skill required to perform the legal service, the experience
and ability of the attorneys, and the results obtained for
the client. Id. at 717-19; see also McDonald v. Armontrout,
860 F.2d 1456, 1459 (1988). In this case, plaintiffs’ counsel
very competently represented a class of plaintiffs in a
complex piece of litigation. Plaintiffs’ counsel devoted a
significant amount of time and effort to the case and were
successful in obtaining awards for plaintiffs both initially
and on remand to this court. Furthermore, each of plain-
tiffs’ counsel have several years of experience in the labor
and employment law fields and also have specific experi-
ence in class action litigation. For these reasons, this
Court finds it appropriate to enhance the hourly fee rate
in this case to $250.00 an hour.3
defendant argues. Nymann and Kohl have since reported to the
court in the Jensen case that their hourly rates are $115.00 and
$110.00 per hour respectively.
* The Court realizes that to enhance each attorneys’ fee
proportionally, the court would have to award P.L. Nymann
$255.00 per hour because Nymann’s hourly fee is $115.00, as
compared to $110.00 an hour for Steven Kohl. To award P.L.
Nymann the $255.00 rate, however, this court would need to
know the total number of hours that N ymann spent on this case.
In their briefs and exhibits to the court, Nymann and Kohl failed
to state the total number of hours that each attorney spent on the
case. The totals provided were the total number of hours spent
54a
As previously mentioned, the defendants did not
challenge the number of hours expended by plaintiffs on
this case. In fact, the court would note that the most
recent filing by the plaintiffs following discovery indi-
cates that plaintiffs are seeking compensation for 2,276.5
hours of work while defendants appear to have devoted
more than 2,624.4 hours on their case. The court does
note that defendants have challenged certain “classes” of
fees and expenses being claimed by plaintiffs. Speci-
fically, as mentioned, defendants assert that plaintiffs are
not entitled to the $4,553.65 in expert fees they are
requesting. The court has reviewed the cases cited by the
defendants and agrees that there is no explicit language
allowing the shifting of expert witness fees under 29
U.S.C. § 216(b). The court is persuaded that expert wit-
ness fees are not recoverable as part of reasonable attor-
ney’s fee and costs of the action in this case. Gray v.
Phillips Petroleum Co., 971 F.2d 591 (10th Cir. 1992). There-
fore, that amount will be subtracted from the $23,267.78
in expenses requested.
Defendants also contend that plaintiffs hourly fee
should be reduced for the hours that plaintiffs’ counsel
spent working on the issue of attorney’s fees. They cite
Delfin v. Turnage, 792 F.Supp. 522, 525 (W.D. Ky. 1992) and
Gabriele v. Southworth, 712 F.2d 1505, 1507 (1st Cir. 1992)
by both attorneys. In addition, Nymann and Kohl, in their
request for attorneys’ fees of $650.00 per hour did not indicate
that they felt Mr. Nymann should be paid at $5.00 per hour more
because of his ordinary hourly fee. The court is persuaded that
$2£4).00 is an appropriate fee per hour for both attorneys in a
case of this nature, despite the fact that Nymann ordinarily
charges $5.00 per hour more than Kohl.
55a
for that proposition. Again, the court has reviewed those
cases and determines that a reduction in rate is appropri-
ate in this case. While an enhancement of the hourly rate
is appropriate due to the complex nature of this litigation
and the other factors discussed previously, the court is
not persuaded that those same factors apply to the issue
of attorney fees. Still, the court is persuaded that the
issue of attorneys’ fees directly affects the plaintiffs in
this case and a small upward adjustment from the lode-
star amount is warranted for those hours spent on the
issue of attorneys’ fees. The court is persuaded that plain-
tiffs’ counsel should be paid at least half of the other
hourly rate or $125.00 per hour for the hours spent on the
issue of attorneys’ fees. Therefore, for the time that plain-
tiffs’ counsel spent on the issue of attorney fees, the fees
awarded will be $125.00 per hour.
In addition, the court is not persuaded that it should
not award fees or reduce fees for time spent pursuing an
appeal and rehearing in front of the 8th Circuit. The court
is persuaded that plaintiffs should be compensated at the
rate of $250.00 per hour for that activity. The court cannot
say the appeals were frivolous or baseless. However, the
court does feel it would be inappropriate to allow $400.00
in expenses for plaintiffs’ attorneys to become admitted
to practice before the United States Supreme Court and
for the printing costs of $2,367.25 in their unsuccessful
attempt at certiorari before that Court, as well as the
hours spent on that appeal. Due to the degree of success
obtained, the court is persuaded that those amounts
should be subtracted from the expenses and hours prayed
for. The court has calculated the hours spent before the
56a
Supreme Court to be 116.6. Those hours shall be sub-
tracted from the total number of hours claimed.
Based on these rulings by the court, the court calcu-
lates the attorney fees to be as follows: Plaintiffs were
seeking fees for a total of 2,276.5 hours of work. Based on
a previous order by the court in October, 1990, 12.3 of
those hours were being claimed for trips to the court-
house which the court ruled were not compensable. This
leaves 2,264.2 hours claimed. The court has ruled that the
hours spent on petition for certiorari to the U.S. Supreme
Court should not be reimbursed. The court calculated
from plaintiffs’ time sheets that 116.6 hours were spent on
the appeal to the Supreme Court. Subtracting 116.6 from
2,264.2 leaves 2,147.6 hours claimed. In addition, the
court has determined that the hours spent on the issue of
attorney fees should be compensated at a lower rate per
hour than other work on the case. The plaintiffs’ pre-
sented to the court an itemization indicating that 90.1 of
the original 2,276.5 hours claimed were hours spent on
the issue of attorney fees. Subtracting those hours from
2,147.6 leaves 2057.5 hours to be compensated at $250.00
per hour. A total of 2057.5 hours at $250.00 per hour
amounts to an award of $514,375.00. As for the 90.1 hours
spent on the attorney fees issue, multiplied by $125.00
per hour gives a total for those hours of $11,262.50.
Combined, this results in a total attorney fee award of
$525,637.50. Finally, the defendants pointed out that
plaintiffs have already recovered $19,737.50 in attorney
fees and that amount must be subtracted from the award
given here. Based on the order of this court of July 16,
57a
1990, the court agrees that this amount must be sub-
tracted from the fee award here to prevent duplicate
recovery. That leaves an award of $505,900.00.
With regard to the expenses claimed by plaintiffs in
this case the court calculates as follows: Plaintiffs request
a total of $23,267.78 in expenses. The court has ruled that
the expenses of expert witness fees are not recoverable
and therefore, $4,553.65 must be subtracted from that
amount, leaving $18,714.13 claimed. In addition, the court
has ruled that the $400.00 claimed for admission to the
Supreme Court , ractice is not recoverable, leaving
$18,314.13. Further, the court has denied the requested
$2,367.25 for printing costs for the petition for certiorari
to the U.S. Supreme Court. This leaves $15,946.88. Finally,
in this court’s July 16, 1990 order, the court reduced the
original expenses requested by $2,694.75 for travel, motel
and meal expenses being claimed by plaintiffs attorneys.
The court still deems it appropriate to exclude those
expenses. This leaves a total of $13,252.13 in expenses
that plaintiffs should receive.
Upon the foregoing,
IT IS ORDERED:
(1) The Clerk of Court is directed to enter judgment
in favor of the following plaintiffs in the following
amounts, plus post judgment interest from July 16, 1990
pursuant to 28 U.S.C. § 1961:
NAME AMOUNT
Harley Blair $ 62,276.66
Larry Brown 30,410.50
Kinney Bryant 54,032.83
Randy Bushnell 23,703.49
58a
Floyd Caskey 15,668.35
Allan Christiansen 20,863.72
Bobbie Cockrell 18,201.22
Mary T. Cope 65,143.07
Sandra Crist 46,855.87
Stanley Dixon 75,394.48
Thomas Foster 12,708.86
Edward Geisenheimer 18,095.00
Rae Jean Hamilton 15,187.05
Deborah L. Hoyt 49,498.60
Loren Jacoby 49,816.90
Warren Kajander 21,058.83
Carol Lewis 38,722.75
Thomas Miller 18,311.33
Gladys Murray 74,887.45
Jeanette (Petrimoulx)
Arbuckle 88,614.05
Donald Phillips 52,327.83
Joy M. Powers 85,062.51
Russell Renecker 6,127.20
Eugene Rutledge 115,381.79
Donald Scott 31,252.32
Arthur Stotts 31,995.03
Lawrence Taylor 57,767.10
David Thompkins 56,933.61
(2) That judgment be entered in favor of P.L.
Nymann and Steve Kohl together for $505,900.00 in attor-
neys’ fees consistent with this opinion.
(3) That judgment be entered in favor of P.L.
Nymann and Steve Kohl together for $13,252.13 in costs
59a
and expenses of the litigation, consistent with this opin-
ion.
Dated this 15th day of April, 1994.
/s/ Donald E. O’Brien
Donald E. O’Brien, Senior Judge
UNITED STATES DISTRICT COURT
Copy mailed by regular mail April 15, 1994 w/ Judgment to:
PL Nymann; Steven Kohl; PO Box 1825; Sioux City, IA 51102
Gene LaSuer; Jean McNeil; 2500 Financial Center; 666 Walnut
Street; Des Moines, IA 50309-3993
John Renick; 2730 North Ballas Road; Suite 200; St. Louis,
MO 63131
/s/ J. Hoch
Deputy Clerk
60a
APPENDIX E
United States Court of Appeals
FOR THE EIGHTH CIRCUIT
a
Nos. 90-2375, 90-2376 and 90-2897NI
Gladys Murray, on Behalf of
Herself and All Others Similarly
Situated, consent to become party
plaintiffs: Floyd Caskey; Christine
Christiansen; Allan Christiansen;
Donald Scott; Roger D. Hoyt;
Deborah L. Hoyt; Russell C.
Renecker; Carol Renecker; Eugene
A. Rutledge; Lawrence B. Taylor;
Warren Kajander; Jeannette
Petrimoulx; Kinney Bryant; Bettye
Bryant; Carol S. Lewis; James L.
Lewis; Harley Blair; Thomas * Appeal and
Miller; Joyce Thompkins; Veralyn ‘* Cross-Appeal
Blair; Sandra L. Crist, in her * from the United
capacity as executrix of the estate * States District
of Kenneth L. Crist; Kenneth Crist; * Court for the
Rita Miller; Michael Hamilton; * Northern District
Anna M. Foster; Joni Bushnell; * of Iowa.
Lois Louise Phillips; Adrienne
Geisenheimer; Sharon Jacoby;
Bonnie Stotts; Linda M. Brown;
Sandra Crist; Larry Brown; Randy
Bushnell; Bobbie Cockrell; Mary T.
Cope; Stanley Dixon; Thomas
Foster; Edward Geisenheimer; Rae
Jean Hamilton; Loren Jacoby;
o 6 OE OO ECTS TE SS
“Se ae oe ee ea ace aes eee
6la
Donald Phillips; Joy M. Powers;
Arthur Stotts; David Tompkins;
Sidney Murray; Bev Caskey;
Michelle Scott; Kevin Murray;
Joylene Taylor; William
Pohlman; Robert Pohlman;
Nancy Pohlman; Robin Kajander;
Tony Tompkins; Tracy Tompkins;
Georgina Phillips; Tammy
Moore; Bonita Dixon; Charles
Brown,
Plaintiffs-Appellees
and Cross-Appellants.
v.
Stuckey’s, Inc. and Pet Incorporated,
Defendants-Appellants
and Cross-Appellees.
Submitted: February 13, 1991
Filed: July 25, 1991
Before BOWMAN, MAGILL, and LOKEN, Circuit Judges.
LOKEN, Circuit Judge.
Stuckey’s, Inc. and its parent, Pet, Incorporated
(“Stuckey’s”), appeal from the district court’s judgment
after a bench trial awarding more than $900,000 in com-
pensatory and liquidated damages and $142,000 in attor-
neys’ fees to forty-five of its former store managers and
62a
hourly employees for violations of the maximum hours
(overtime) requirements of the Fair Labor Standards Act
(“FLSA”), 29 U.S.C. § 207. Stuckey’s argues that the dis-
trict court erred in rejecting Stuckey’s defense that the
store managers were exempt executive employees, in con-
cluding that Stuckey’s violations were willful for statute
of limitations purposes, in awarding liquidated damages,
in failing to require adequate proof of compensatory
damages by each plaintiff, and in its award of attorneys’
fees. Plaintiffs have cross-appealed challenging the dis-
trict court’s calculation of the store managers’ compensa-
tory damages and the attorneys’ fee award. For the
reasons discussed below, we affirm the damage awards to
the hourly employees, reverse the district court’s resolu-
tion of the executive exemption issue, and remand to the
district court for further proceedings.
I. Facts and Proceedings Below
During 1982-1985, the period at issue in this proceed-
ing, Stuckey’s operated roadside stores along interstate
and other major highways across the United States. These
stores were combination gasoline stations, convenience
stores, and restaurants. Pet had acquired Stuckey’s, Inc.
just prior to 1982 and was attempting to reverse its lack of
competitive success in the 1970’s. The attempted turn-
around failed, and Stuckey’s stores were closed sometime
after 1985.
Each Stuckey’s store had an on-site store manager
responsible for its day-to-day operations. Where possible,
Stuckey’s hired married couples who were required to
live on the premises. One spouse was hired as the store
63a
manager and received compensation on a salary basis,
with the opportunity for a profit-oriented bonus; the
other worked as an hourly employee, typically at or near
the minimum wage. Each store manager reported to a
regional manager who was responsible for 10 to 20 stores.
Regional managers visited their various stores peri-
odically and communicated with the store managers by
telephone on at least a weekly basis.
In addition to managing the store’s day-to-day opera-
tions, each store manager was responsible for hiring suf-
ficient additional workers to staff the store in accordance
with a labor budget furnished by Stuckey’s. Stuckey’s
based these labor budgets on the projected volume of
business in each store, which varied seasonally as well as
from store to store. In these budgets, the manager was
scheduled to work 60 hours per week, and his or her
spouse was scheduled to work 40, or in some cases 44
hours per week.
Plaintiffs Sidney and Gladys Murray filed this action
alleging that Stuckey’s unlawfully failed to compensate
them for the overtime that each of them worked at
Stuckey’s stores in Randall and Little Sioux, Iowa. Pur-
suant to 29 U.S.C. § 216(b), the other, similarly situated
plaintiffs filed written consents and became additional
parties. During the lengthy court trial, numerous plain-
tiffs’ witnesses testified that Stuckey’s labor budgets were
unrealistic, so that store managers and their spouses in
fact worked many additional unpaid hours “off the
clock.” The store manager plaintiffs testified that they
were required to work as many as 120 hours per week, so
that they received less than the minimum wage, in order
to meet Stuckey’s stated requirement that they work “as
64a
long as it took to get the job done.” The hourly employee
spouses testified that they worked far more than the 40 or
44 hours for which they were scheduled and paid, and
that Stuckey’s regional managers refused to allow them
to work paid overtime and in fact knew that these plain-
tiffs were working many unpaid hours to help their man-
ager spouses “get the job done.”
Stuckey’s defended its practices as lawful under the
FLSA. Stuckey’s presented evidence intended to show
that its store managers were executive employees for
FLSA purposes and thus were not subject to FLSA’s mini-
mum wage and overtime requirements. In addition,
numerous Stuckey’s witnesses testified that the schedules
were reasonable, that hourly employees were properly
paid for all recorded hours, and that plaintiffs’ claims of
additional hours worked were grossly exaggerated.
Stuckey’s supervisory witnesses denied any knowledge
that managers’ spouses had in fact worked unpaid over-
time.
After trial, the district court initially determined that
the plaintiff store managers had worked more than their
scheduled 60 hours per week, and that they were not
exempt executives and therefore were entitled to FLSA
overtime compensation for all hours worked over 40 per
week. The court found that the hourly paid plaintiffs had
worked substantial unpaid overtime, and that Stuckey’s
had discouraged these plaintiffs from reporting overtime
hours and therefore knew or should have known of the
overtime violations. Having concluded that Stuckey’s
violations were willful, the court held that the three year
statute of limitations applied and that Stuckey’s was lia-
ble to each plaintiff for liquidated damages in an amount
65a
equal to the compensatory damages (the amount of the
unpaid overtime).
Following further factual submissions and argument
concerning the amount of damages, the district court
entered two additional orders, first determining the maxi-
mum number of unpaid overtime hours worked by each
group of plaintiffs, and then fixing a specific amount of
damages for each plaintiff and the attorneys’ fees to be
awarded in favor of all plaintiffs. This appeal followed.
II. The Store Managers
Stuckey’s store managers were paid a flat weekly
salary, were scheduled to work a 60-hour week, and were
told to work for as long as it took to “get the job done.”
The district court determined that this compensation
arrangement was inconsistent with the FLSA’s core
requirement that covered employees be paid 1 1/2 times
their regular rate for hours worked in excess of 40 per
week.! Stuckey’s principal argument on appeal is that the
' The district court then converted this determination into
damage awards in its later post-trial rulings. First, it held: “The
hourly rate shall be determined by dividing the weekly rate by
sixty (60) for managers ... . Managers shall receive one half of
the hourly wage in overtime pay for each of the 20 hours from
40 to 60 that they worked each week. They shall receive one
and one half times the hourly wage for each hour over 60
worked each week. The maximum hours per week to be
allowed in figuring overtime for managers is 70 for each week
from October 1 to May 1 and 77 for each week from May 1
from [sic] October 1.” Specific damages were then awarded to
each store manager plaintiff in the third post-trial order of July
14, 1990. Given our resolution of the executive exemption
issue, we need not consider Stuckey’s challenge to these dam-
age awards.
66a
evidence established that the store managers were “bona
fide executive” employees and were therefore exempt
from FLSA’s overtime requirements under Section
13(a)(1) of the Act, 29 U.S.C. § 213(a)(1).
Section 13(a)(1) expressly provides that the term
“bona fide executive” shall be “defined and delimited
from time to time by regulations of the Secretary” of
Labor. The Secretary’s regulations provide a complicated
definition of an “executive employee.” To establish that
an employee is an exempt executive, the employer must
show that the employee:
- is one whose “primary duty” consists of the
management of a recognized subdivision of
the employer’s enterprise;
- “regularly directs the work of two or more
other employees”;
- “has the authority to hire or fire other
employees” or makes recommendations as to
hiring, firing, and promoting that are “given
particular weight”;
- “regularly exercises discretionary powers”;
and
- devotes less than 40 percent of the work
week to nonexempt activities or “is in sole
charge of . . . a physically separated branch
establishment.”
29 C.F.R. § 541.1. This regulation is further complicated
by a provision that employees who earn more than $250
per week need satisfy only the first two of the above
requirements (the so-called “short test”), whereas
employees who earn less than $250 per week must satisfy
all five (the “long test”). Since some of Stuckey’s store
67a
managers fell into each earnings category during portions
of the damage period, both the short test and the long test
are at issue in this case.
Primary Duty. Much of the evidence at trial
addressed Stuckey’s contention that the plaintiff store
managers’ work satisfied the “primary duty” prong of the
executive employee definition. Seeking to demean or
minimize the importance of the manager’s position, the
plaintiff managers testified that most of their time was
spent on routine non-management jobs such as pumping
§as, mowing the grass, waiting on customers and stock-
ing shelves; that the manager’s duties could be and were
regularly handled by the manager’s hourly-paid spouse;
and that all decisions of real importance were made by
Stuckey’s regional managers to whom the store managers
regularly reported. On the other hand, Stuckey’s wit-
nesses testified that the store managers were in charge of
the day-to-day store operations, which encompassed the
hiring and firing of other store employees, as well as
numerous other discretionary management functions
such as training and supervising store employees, order-
ing merchandise, handling customer complaints, and
safe-guarding cash receipts.
The district court resolved this crucial issue in favor
of plaintiffs, concluding that Stuckey’s had failed to
establish that the store managers’ primary duty was man-
agement for three reasons — because the managers spent
65-90 percent of their time performing non-managerial
duties, because “there were little, if any, differences in the
duties of managers and their spouse hourly employees,”
and because “Stuckey’s regional managers served as the
68a
‘real managers’ of their stores.” We disagree with this
interpretation of the regulations.
The Secretary’s regulations specifically define the
primary duty concept: 29 C.F.R. § 541.103 provides that
the primary duty determination “must be based on all the
facts in a particular case” and that the amount of time
spent on managerial duties is a relevant, but not disposi-
tive, factor:
In the ordinary case it may be taken as a good
rule of thumb that primary duty means the
major part, or over 50 percent, of the employee’s
time. Thus, an employee who spends over 50
percent of his time in management would have
management as his primary duty. Time alone,
however, is not the sole test, and in situations
where the employee does not spend over 50
percent of his time in managerial duties, he
might nevertheless have management as his pri-
mary duty if the other pertinent factors support
such a conclusion. Some of these pertinent fac-
tors are the relative importance of the manag-
erial duties as compared with other types of
duties, the frequency with which the employee
exercises discretionary powers, his relative free-
dom from supervision, and the relationship
between his salary and the wages paid other
employees for the kind of nonexempt work per-
formed by the supervisor.
The district court’s finding that the managers spent 65-90
percent of their time on non-managerial duties, though
imprecise and unexplained, is relevant and not clearly
erroneous. However, it is not a controlling factor under
the regulations. As the court said in Donovan v. Burger
King Corp., 672 F.2d 221, 227 (1st Cir. 1982), “the person
69a
‘in charge’ of a store has management as his primary
duty, even though he spends the majority of his time on
non-exempt work and makes few significant decisions.”
The district court’s second reason, that the managers
and their spouses shared their duties, is in our view
irrelevant to the primary duty inquiry. It is undisputed
that Stuckey’s only designated one employee at each
store to be the manager and only seeks an executive
exemption for that one designated employee. The ques-
tion is whether that person, who was in charge of the
day-to-day operations of an isolated gasoline station, con-
venience store and restaurant, had management as his or
her primary duty. It is irrelevant to that question whether
the manager delegated some discretionary duties, or
whether other employees who reported to the manager
were capable of performing part or even all of the man-
ager’s duties. The employer is still entitled under the
FLSA and the regulations to have one designated exempt
executive at this type of facility.2 See Tipple v. Affordable
Inns, Inc., 24 Wage & Hour Cas. 975 (BNA) (W.D. Okla.
1980) (spouses were hired as “co-managers” of
employer’s motels; manager’s duties included “complete
operation of the office”; held, one spouse an exempt
executive, the other entitled to FLSA damages for unpaid
* The Secretary’s regulatioris specifically warn that an
employer may not expand the number of exempt supervisors
beyond the amount of managerial work required. See 29 C.E.R.
§ 541.105(d). Significantly, the regulations do not provide, con-
versely, that an employee whose primary duty is managerial
will not qualify for exempt executive status because other, non-
supervisory employees are able to and sometimes do perform
his or her managerial duties.
70a
overtime). Thus, the district court erred in relying upon
this factor.
We also conclude that the district court misin-
terpreted the Secretary’s primary duty regulation in rely-
ing upon its third reason, that the regional managers
were the “real managers” of Stuckey’s stores. Section
541.102 of the regulations explains what types of work
are exempt managerial duties. The record is clear that the
store managers performed, at the local level on a day-to-
day basis, the types of management tasks described in
§ 541.102(b). It is true that Stuckey’s manufactured candy
and purchased gasoline for its stores on a national basis
and, like most modern retail chains, prescribed and stan-
dardized many aspects of store operations. It is also true
that the regional managers actively supervised the store
managers, traveling to each store from time to time and
communicating by phone with store managers at least
weekly to monitor compliance with Stuckey’s stan-
dardized methods of operation. However, we do not
believe that the local store manager’s job is any less
managerial for FLSA purposes simply because he or she
has an active regional manager boss. Like other courts
that have considered the question, we believe that the
manager of a local store in a modern multi-store organi-
zation has management as his or her primary duty even
though the discretion usually associated with manage-
ment may be limited by the company’s desire for stan-
dardization and uniformity.
In Donovan v. Burger King Corp., 675 F.2d 516, 521 (2d
Cir. 1982), the court concluded that the primary duty of
Burger King Assistant Managers was managerial, noting
that “the restaurants could not operate successfully
71la
unless the managerial functions of Assistant Managers,
such as determining amounts of food to be prepared,
running cash checks, scheduling employees, keeping
track of inventory, and assigning employees to particular
jobs, were performed.” Rejecting the Secretary’s argu-
ment that all these duties were dictated by Burger King’s
detailed instructions, the court observed:
We fully recognize that the economic genius of
the Burger King enterprise lies in providing uni-
form products and service economically in
many different locations and that adherence by
Assistant Managers to a remarkably detailed
routine is critical to commercial success. The
exercise of discretion, however, even where cir-
cumscribed by prior instruction, is as critical to
that success as adherence to “the book.”
675 F.2d at 521-522. Under the Secretary’s regulations as
construed in Burger King, the primary duty of a local store
manager is no less managerial because the store manager
reports to a distant regional manager whose primary
duty is to manage multiple stores at a higher level within
the organization. As the court said in Donovan v. Waffle
House, Inc., 26 Wage & Hour Cas. (BNA) 868, 874 (N.D.
Ga. 1983), “The mere fact that a superior comes in for a
one- or two-day visit does not destroy the inferior’s sole
charge status if during the intervals when the superior is
absent the inferior manager makes the decisions normally
made by an executive in charge of an establishment.” See
also Marshall v. Sally Beauty Co., 25 Wage & Hour Cas.
(BNA) 672 (E.D. La. 1982).
Having concluded that the district court erred in
construing the primary duty factor, we turn again to
72a
§ 541.103 of the Secretary’s regulations, which provides in
part:
[I]n some departments, or subdivisions of an
establishment, an employee has broad respon-
sibilities similar to those of the owner or man-
ager of the establishment, but generally spends
more than 50 percent of his time in production
or sales work. While engaged in such work he
supervises other employees, directs the work of
warehouse and delivery men, approves adver-
tising, orders merchandise, handles customer
complaints, authorizes payment of bills, or per-
forms other management duties as the day-to-
day operations require. He will be considered to
have management as his primary duty.
In this case, it is undisputed that the plaintiff store man-
agers were the on-site employees ultimately responsible
for the stores’ operations, even though their discretion
was circumscribed. Thus, their responsibilities placed
them squarely within the dictates of the above regulation,
as construed by Burger King and other decisions dealing
with comparable multi-store operations. Accordingly, we
conclude that the district court erred in ruling that
Stuckey’s failed to prove that the plaintiff store man-
agers’ primary duty was management for purposes of the
first part of the “bona fide executive” test, 29 C.FR.
§ 541.1(a).
Two or More Empioyees. To qualify for the executive
exemption, Stuckey’s also must prove that each store
manager regularly supervised two or more employees.
The district court did not reach this issue. The evidence
included Stuckey’s labor budget documents, which
73a
appear to reflect that all Stuckey store managers super-
vised the equivalent of at least two other full-time
employees at all times. Since the district court concluded
that these labor budgets understated the labor needed to
run the stores, it seems likely that Stuckey’s met its
burden of proof as to this factor. However, this was a
contested issue at trial, and it appears that the district
court deferred rulings on the admissibility of other evi-
dence Stuckey’s submitted on the question. Under these
circumstances, it would be inappropriate for us to resolve
this issue in the first instance. Accordingly, it is remanded
to the district court for further consideration.
Other “Long Test” Factors. For store managers earn-
ing less than $250 per week, Stuckey’s must also satisfy
three other cri
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