Opinion
Case No. 3:09-cv-257
08-27-2013
Hilda L. Solis, Secretary of Labor, United States Department of Labor, Plaintiff, v. Cascom, Inc., and Julia J. Gress, Defendants.
Judge Thomas M. Rose
FINDINGS OF FACT AND CONCLUSIONS OF LAW REGARDING DAMAGES
This matter is before the Court for a determination of damages. Plaintiff, Hilda L. Solis, Secretary of the United States Department of Labor, brought this case charging overtime and record-keeping violations under Sections 17 and 16(c) of the Fair Labor Standards Act of 1938, as amended, 52 Stat. 1060, 29 U.S.C. 201 et seq. The Court bifurcated the case, holding a hearing on liability on July 11 and 12, 2011. On September 21, 2011, the Court found that installers working for Defendants, Cascom, Inc., and Julia J. Gress, were employees covered by the FLSA, rather than independent contractors. Accordingly, defendants owe overtime compensation under the FLSA.
The Court held a hearing on damages on November 22, 2011. Now, the Court awards back wages, liquidated damages and injunctive relief.
I. Findings of Fact
David Huster, prepared a back-wage calculation on behalf of the Secretary. Huster's method of calculation varied depending on whether the installer was working as a trainee, since trainees were paid an hourly rate, or the installer had passed the training period and was paid a piece rate. For installers who testified at the liability hearing, Huster used the estimate of hours given in each individual's testimony. For the remaining employees, an average was applied to calculate back wages.
Cascom did not keep a record of hours worked for its installers, who were also referred to in the record as technicians. However, payroll records showing gross wages were provided to Huster in the course of his investigation, and are in the record at Plaintiff's Exhibit 3. Rec. at 16-17. Cascom stipulated on the record that the documents in Plaintiff's Exhibit 3 are its records. Rec. at 18. For trainee periods, Huster divided the employee's weekly gross pay by the hourly rate of $10, yielding the number of hours worked. Huster then multiplied the hours in excess of 40 per week by half-time, or $5 to determine the amount of overtime compensation owed. Rec. at 18-19.
After the training period, the technicians were paid on a piece-rate basis. Rec. 19-20. For the installers who testified at the liability phase of the hearing and stated their average hours of work on the record, Huster used the number of hours given by each employee at trial in his back-wage calculation. Rec. at 21-22. Huster multiplied the earnings by a coefficient from the table used by the Department of Labor Wage and Hour Division to calculate halftime due. Rec. at 13, P. Ex. 9, at 18A. Huster reduced the coefficient by 25%, however, to allow for non-overtime weeks due to vacations, sick leave, slow periods, and other reasons. Rec. at 14.
For the remaining employees, who did not testify, Huster used an average based upon the hours stated by testifying employees. Rec. at 12. Huster's calculation of the average is found at p. 1 of Plaintiff's Exhibit 9. This shows the hours stated by each employee and the page of the liability hearing transcript on which the testimony of hours appears. Plaintiff's Exhibit 9 also shows two sets of calculations, each indicating a mean, median, and mode. Pl. Ex. 9 at 1. The second set of calculations uses two numbers for Kevin Klatte, who testified that he normally worked 60 hours a week, except that this changed to 35-45 hours a week while he was simultaneously attending the police academy. Huster used the median of 62.5 hours as the number of hours worked by non-testifying employees, including both 40 and 60 to represent Klatte's testimony. As with the testifying employees, the coefficient for 62.5 hours was reduced by 25% to account for non-overtime workweeks. Huster multiplied the reduced coefficient by the employees' gross earnings to determine additional half-time owed. Huster computed the total amount of back wages to be $737,133.13, which is derived from the amounts due to each employee. Id. at 2-17.
While Defendants dispute the amount of hours worked as estimated by Plaintiff, their position is only supported by the testimony of Heather Duwel-Mehl, granddaughter of Defendant Julia Gress, who testified concerning Defendants' Exhibit A. Defendants' Exhibit A show hours worked by five of the employees who testified at the liability hearing. Duwel-Mehl compiled this exhibit by taking screen shots from the computer system of Time Warner, with whom Cascom contracted to provide cable installation services. The actual Time Warner screen shots are not included in the record.
Duwel-Mehl testified that she converted the screen shots into a spreadsheet and then estimated total hours "without down time," which consisted of time spent at customers' houses, and "total time in the field," which included travel time. However, Duwel-Mehl was uncertain whether time spent at the shop in the morning was included in her calculations. R. at p. 94, 100-101. A review of the start and stop times on Exhibit A shows that "total time in the field" includes the time from the start of the earliest call to the end of the latest call. Shop time in the morning does not appear to be included. Further, Duwel-Mehl acknowledges that Exhibit A fails to capture "modem count days," meeting times, and inventory time. R. at p. 75, 94-95
While the Secretary's calculations of time is premised upon averages and extrapolations, the Supreme Court has established that denying any damages due to inexact calculations caused by the employer's own failure to maintain accurate records "would be a perversion of fundamental principles of justice." Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 688 (1946). The Secretary is entitled to recover damages on behalf of the employees on the basis of the employee-witnesses' testimony and the calculations of Wage and Hour Investigator David Huster.
The Court credits the calculation of Huster over those of Duwel-Mehl. While Defendants decry the fact that Huster interviewed employees who did not testify, Huster stated that, while the testifying witnesses' testimony was in accord with the information he gleaned from non-testifying employees, the damages were based solely on the testifying witnesses' sworn trial testimony. Duwel-Mehl's testimony, in contrast, was based upon Defendants' Exhibit A, which was not produced during the discovery phase of this proceeding and were not produced until after Huster had completed his investigation. Moreover, Defendants did not provide a foundation for the screen shots upon which Duwell-Mehl based her testimony. These were Time Warner business records for which a Time-Warner record-keeper would need to testify to inform the finder of fact foundational information and respond to examination and cross-examination as to what the records show and what they do not show. See McKinney v. Haller, 2010 WL 4853306, *3 (E.D. Va. 2010). As it is, Defendants treat Duwell-Mehl as an undeclared expert witness who never filed a report. While the Court allowed Duwell-Mehl to testify, it cannot find a basis upon which to credit her testimony. A finder of fact may discredit testimony allowed into evidence. See, e.g., Jim Beam Brands Co. v. Beamish & Crawford Ltd., 937 F.2d 729, 736 (2nd. Cir. 1991).
Defendants allege that Huster should have applied a 25% coefficient reduction against the amount of hours worked each week. Multiplying the coefficient by the straight-time earnings provides the amount of additional overtime wages owed. Huster applied a 25% reduction to the coefficient to reflect that 25% of the weeks worked by employees did not include overtime. Reducing the coefficient by 25% caused the total amount of additional overtime wages to decrease by 25%. Applying Defendants' method of reducing the total hours worked by 25% (i.e., reducing the estimated weekly hours worked from 62.5 to 46.9), Defendants are alleging that employees worked 46.9 hours 100% of the weeks worked, rather than 62.5 hours 75% of the weeks worked. Defendants' method would result in only 6.9 hours of weekly overtime for all weeks worked rather than the estimated 22.5 hours of overtime for 75% of weeks worked, per employees' testimony. Defendants' proposed method of calculating overtime back wages misstates the overtime hours actually worked, so as to severely reduce the employees' overtime wages.
II. Analysis
Defendants are accused of violating the Fair Labor Standards Act, 29 U.S.C. § 201, et seq. Employers who violate the FLSA are liable for back pay, plus an additional equal amount as liquidated damages. 29 U.S.C. § 216(b). Employers who violate the FLSA are liable for back pay, plus an additional equal amount as liquidated damages. 29 U.S.C. § 216(b). If the Court finds, however, that the employer acted in good faith, it may choose to deny an award of liquidated damages. 29 U.S.C. § 260. The Court has previously found that Cascom did not act in good faith. See Doc. 45 at 13, PAGEID # 639. Therefore, Plaintiff is entitled to an award of back pay and liquidated damages.
Consistent with Huster's testimony, Defendants will be ordered to pay back wages in the amount of $737,133.13 that will be distributed to the employees listed in pages 2 to 17 of Plaintiff's Exhibit 9. To this amount is added an equal amount of liquidated damages also to be distributed to the employees listed in pages 2 to 17 of Plaintiff's Exhibit 9.
Finally, Plaintiff requests that the Court issue an injunction forbidding Defendants from violating the FLSA in the future.
A district court should, in considering whether to grant an injunction, look at evidence of current compliance, especially if compliance has continued for a long period of time. But current compliance alone, particularly when achieved by direct scrutiny of the government, is not sufficient ground for denying injunctive relief.Brock v. Big Bear Market No. 3, 825 F.2d 1381, 1383 (9th Cir. 1987) (citations omitted). Defendants counter that an injunction is unnecessary, as Cascom is defunct and Julia Gress is retired.
In deciding whether to grant injunctive relief, a district court must weigh the finding of violations against factors that indicate a reasonable likelihood that the violations will not recur. A dependable, bona fide intent to comply, or good faith coupled with extraordinary efforts to prevent recurrence, are such appropriate factors. An employer's pattern of repetitive violations or a finding of bad faith are factors weighing heavily in favor of granting a prospective injunction.
The Court, having found that Defendants did not act in good faith, will issue an injunction. Defendants have not so much complied with the FLSA as ceased operations. While they protest that their retreat from the business leaves renders an injunction unnecessary, as long as this remains the case, neither will the injunction burden them in any way. The presumption in favor of issuing an injunction with bad faith violation of the FLSA is found has not been overcome.
III. Conclusion
Defendants are liable for $737,133.13 in back wages. An additional $737,133.13 of liquidated damages will also be ordered. Finally, Defendants will be enjoined from further violations of the FSLA. A final judgment effectuating this ruling will issue separately.
DONE and ORDERED in Dayton, Ohio, this Tuesday, August 27, 2013.
________
THOMAS M. ROSE
UNITED STATES DISTRICT JUDGE