Opinion
No. 56154-5-I.
May 30, 2006.
The unpublished opinion in this cause was withdrawn by order of the Court of Appeals dated January 29, 2007. Substitute opinion filed. See 136 Wn. App. 1052.
Counsel for Appellant(s), Jay Edward Bitseff, Bauer Moynihan Johnson LLP, 2101 4th Ave Ste 2400, Seattle, WA 98121-2324.
Matthew Clayton Crane, Bauer Moynihan Johnson LLP, 2101 4th Ave Ste 2400, Seattle, WA 98121-2324.
Counsel for Respondent(s), Bradley H. Bagshaw, Helsell Fetterman LLP, 1001 4th Ave Ste 4200, Seattle, WA 98154-1154.
Ocean Transportation Services (OTS) appeals the jury verdict of overtime wages in favor of its former employee, Vic Bally. OTS claims that the evidence does not support the jury's finding that Bally was not an exempt administrative employee. OTS also claims that the statute of limitations had run on some of Bally's claims and that the doctrines of equitable tolling and fraudulent concealment were not applicable to allow the jury to award damages on the expired claims. Finally, OTS asserts that there is no evidence to support the jury's finding that OTS willfully withheld Bally's wages and the court's subsequent award of double damages under RCW 49.52.050 and .070. Bally cross-appeals the trial court's refusal to award an attorney fees multiplier. We affirm on all issues.
FACTS
Ocean Transportation Service (OTS) is a company set up primarily to administer and manage the business of its sister companies Emerald Reefer Lines (ERL), Cascade Shipping Lines (CSL), and Aleut Fisheries Ltd. (AFL). The three sister companies charter and operate ships that transport frozen seafood, and AFL also buys and sells seafood. The sister companies have no employees of their own, and the OTS employees are in charge of managing the operation and chartering of the vessels, cargo loading, and working with agents. Neal Gordon and Yevgeniy Rubtsov own all four companies. Vic Bally began working for OTS in 1996 or 1997. He had various duties. He negotiated fuel prices for the chartered ships. He communicated with port agents regarding arrangements when the ships were in port. He calculated the amount of time that the ships would need to be in port to load and unload their cargo. He renewed contracts for chartered vessels. And he sometimes acted as a broker between a ship owner and a cargo owner for vessels not under OTS's control.
Bally claims he began working at OTS in December 1996, while OTS contends he began in October 1997.
Bally often worked long hours. In 2003 he began to feel unappreciated at OTS, and left the company in September of that year. In July 2003, while researching unemployment benefits, Bally began to think he might be entitled to overtime for the long hours he had worked over the years at OTS. He filed a claim against OTS in October 2003 for failure to pay him overtime compensation. OTS contended that Bally was an administrative employee and was thus exempt from overtime requirements.
At trial, Bally testified that he never made important decisions at OTS. He also claimed he never saw a poster informing him of his overtime rights. A former OTS administrative assistant also testified that the poster was not posted when she started work and she did not remember if it was ever posted. This same former employee also testified that when she mentioned putting something about overtime in the employee handbook, Gordon stated that it would not be a problem because all of the employees were happy. The trial court instructed the jury that the normal statute of limitations for wage claims was three years, but that it could find Bally entitled to overtime for hours worked before October 2000 if it found that OTS did not post a required overtime notice and Bally did not otherwise know of his rights. The trial court also instructed the jury that it must decide whether OTS willfully failed to pay Bally overtime.
The jury found that Bally was not an exempt administrative employee. Further, the jury found that Bally was entitled to overtime compensation for hours worked both before and after October 2000. The jury also found that OTS willfully failed to pay Bally overtime. Accordingly, pursuant to RCW 49.52.050 and .070, the trial court doubled the $243,758.86 verdict for unpaid overtime. The trial court also awarded Bally attorney fees of $120,460.00. Although the trial court found that Bally only had a 50 percent chance of winning, it declined to apply a multiplier to the fee award. Both OTS and Bally appeal.
ANALYSIS I. Bally's Status as an Exempt Administrative Employee
OTS claims that the trial court erred in denying its motion for judgment as a matter of law after the jury found in Bally's favor. OTS asserts that no substantial evidence or reasonable inference supports the verdict that Bally was not an administrative employee and was not exempt from overtime. OTS also asserts that the trial court improperly refused to modify jury instruction no. 5 to state that negotiation itself involves the exercise of judgment and discretion.
A. Motion for JNOV
We review the denial of a motion for judgment as a matter of law de novo. Davis v. Microsoft Corp., 149 Wn.2d 521, 530-31, 70 P.3d 126 (2003). A motion for judgment as a matter of law must be granted when, `viewing the evidence most favorable to the nonmoving party, the court can say, as a matter of law, there is no substantial evidence or reasonable inference to sustain a verdict for the nonmoving party.' Sing v. John L. Scott, Inc., 134 Wn.2d 24, 29, 948 P.2d 816 (1997). Substantial evidence is evidence sufficient to persuade a fair-minded, rational person of the truth of the declared premise. Brown v. Superior Underwriters, 30 Wn. App. 303, 306, 632 P.2d 887 (1980).
In general, employers must compensate their employees who work in excess of forty hours per week at an overtime rate of pay for the excess hours worked. RCW 49.46.130(1). Individuals who are employed in a bona fide executive, administrative, or professional capacity are exempted from this requirement. RCW 49.46.130(2)(a); RCW 49.46.010(5)(c). OTS claims that Bally was employed in an administrative capacity.
Under state and federal law, an employee who is compensated at least $250 per week and `whose primary duty consists of the performance of office or non-manual work directly related to management policies or general business operations of his employer or his employer's customers; which includes work requiring the exercise of discretion and independent judgment' is an administrative employee. WAC 296-128-520(4)(b); 29 C.F.R. sec. 541.2. OTS argues that Bally's job meets both disputed aspects of this test: that his primary duty was work related to management policies and business operations of OTS and OTS's customers and that his work required the exercise of discretion and independent judgment. Although chapter 49.46 RCW and the federal Fair Labor Standards Act (FLSA) are not identical, the former is based on the FLSA and so federal authority provides guidance on this issue. Drinkwitz v. Alliant Techsystems, Inc., 140 Wn.2d 291, 298, 996 P.2d 582 (2000).
Bally was a salaried employee, initially making $36,000 per year, and his salary increased from that point, so there does not appear to be a dispute that he made at least $250 per week at all relevant times.
Substantial evidence and reasonable inferences supported the jury's conclusion that Bally did not exercise discretion and independent judgment. Bally testified that many aspects of his job essentially consisted of plugging numbers into predetermined formulas. For example, he testified that when determining vessel lay time and demurrage calculations, he would look at the terms of the contract and how long the vessel was going to be in port, and make the calculations based on those factors. He also testified that he performed voyage calculations, which determined whether the voyage would be profitable. Bally stated that to do this, he entered numbers such as quantity and value of the cargo into an Excel spreadsheet.
This evidence supports a finding that Bally did not evaluate and compare possible courses of conduct and make a decision, but rather used preexisting numbers and formulas when making his calculations.
Bally also testified that he did not make final decisions at OTS. He testified that he presented demurrage calculations to Gordon and Rubtsov, who would decide whether to cut the demurrage. He testified that after performing voyage calculations, he would present the numbers to the principals, who would decide whether to undertake the voyage. He testified that he spoke with Rubtsov before executing every bunker transaction and that Rubtsov would tell him what price to choose. He testified that he negotiated with respect to terms of the chartering contracts, but that OTS officers had the final say as to whether the terms were acceptable. He also testified that he never made a decision of significance at OTS.
Bally also introduced into evidence an e-mail message from Rubtsov to Gordon that supported his contention that he made no significant decisions. The message was sent in March 2003 and addressed various business issues. In the message, Rubtsov tells Gordon `I think it was our mistake not to give Vic more responsibility and independ[e]nce to run business without coming everytime and asking `What to do? Please confirm.' We failed to use his knowledge, education and skills in full scale in our favour.' This evidence supports Bally's testimony that he presented information to the principals to make the final decision, and that he did not have the authority to make business decisions without the guidance of the principals.
OTS points out that final decision making authority is not determinative of whether Bally exercised discretion and independent judgment. OTS is correct that discretion and independent judgment do not necessarily require unlimited authority and the complete absence of review this was stated in the jury instructions. But the jury instruction also stated that `discretion and independent judgment' implies `that the person has the authority or power to make an independent choice, free from immediate direction or supervision and with respect to matters of significance.' The jury was entitled to infer from the evidence presented that Bally did not have the authority to make independent choices on significant matters, but rather had to confirm all his calculations and determinations with Gordon and Rubtsov.
OTS argues that Bally's level of discretion and independent judgment is analogous to that of the dispatchers found to be exempt in Donovan v. Flowers Marine, Inc., 545 F. Supp. 991 (E.D. La. 1982). The dispatchers were responsible for maintaining and operating the employer's barge fleet. Donovan, 545 F. Supp. at 993. While it is true that there are similarities between Bally's duties and the dispatchers' duties, the distinctions are adequate to uphold the jury's determination. For example, the dispatchers had the authority to supervise fleet `mates' in certain respects and to recommend that disciplinary action be taken against them. Donovan, 545 F. Supp. at 993. The dispatchers were also only supervised generally, and some of them had no supervisors on the premises during their shifts. Donovan, 545 F. Supp. at 994. These differences are sufficient to make Flowers distinguishable.
Since we agree that the jury could reasonably have determined from the evidence that Bally's job did not include the exercise of discretion and independent judgment, we need not decide whether Bally's primary duty consists of the performance of office or non-manual work directly related to management policies or general business operations of his employer or his employer's customers.
B. Jury instruction No. 5
OTS claims that the trial court refused to correctly instruct the jury that negotiation constitutes the exercise of discretion and judgment. Trial courts have significant discretion in wording jury instructions. State v. Castle, 86 Wn. App. 48, 62, 935 P.2d 656 (1997). Instructions are sufficient if they properly inform the jury of the applicable law without misleading the jury, and permit each party to argue its theory of the case. Gammon v. Clark Equip., 104 Wn.2d 613, 617, 707 P.2d 685 (1985).
The instruction given stated that `[t]he exercise of discretion and independent judgment involves the comparison and the evaluation of possible courses of conduct and acting or making a decision after the various possibilities have been considered.' OTS could certainly argue that negotiation inherently involved the comparison and evaluation of different offers and strategies and making offers and pursuing strategies based on those comparisons and evaluations. The instruction given allowed OTS to argue that Bally's negotiation duties constituted the exercise of discretion and independent judgment.
Further, the wording of OTS's requested sentence on negotiation was an incorrect statement of the law. OTS's suggested sentence read: `An employee who has reasonable latitude in carrying on negotiations on behalf of the employer or the employer's customers exercises discretion and independent judgment.' But the section of the C.F.R. that OTS claims mandates this instruction states that discretion and independent judgment `may include the kind of discretion and judgment exercised by buyers, certain wholesale salesmen, representatives, and other contact persons who are given reasonable latitude in carrying on negotiation on behalf of their employers.' 29 C.F.R. sec. 541.207(d)(2) (2002) (emphasis added). An instruction that stated that negotiation per se involved discretion and independent judgment would have been incorrect. The trial court's refusal to give OTS's instruction was not error.
The C.F.R. was revised in 2005 and no longer contains this provision.
II. Equitable Tolling
OTS asserts that Bally's pre-October 2000 overtime claims were barred by the statute of limitations. It claims that jury instruction no. 7 incorrectly stated the law on equitable tolling, and that equitable tolling was not supported because there was no evidence of bad faith on OTS's part. OTS also argues that fraudulent concealment does not apply to toll the statute of limitations because OTS did not conceal any material facts and OTS was not required by law to post a notice of overtime rights.
OTS has waived its right to assert this issue on appeal because it did not propose an alternate instruction. See City of Bellevue v. Kravik, 69 Wn. App. 735, 740, 850 P.2d 559 (1993) (`A party objecting to a jury instruction has an affirmative obligation to offer a correct statement of the law on the issue'). OTS objected to this jury instruction for the first time near the end of trial, and orally informed the court of what it believed to be the correct statement of law. However, the record reveals that OTS did not propose an alternative written instruction at any point or a citation to authority to support its oral statement. OTS's oral statement of its proposed test for equitable tolling was not sufficient. See CR 51(c), (e) (the trial court may disregard any proposed instruction [not typewritten and] submitted in accordance with the rule). The trial court was not afforded an adequate opportunity to properly rule on the issue. Thus, OTS has not preserved the issue for appeal.
III. Willful Withholding
OTS claims that the trial court erred when it failed to enter judgment as a matter of law that OTS had not willfully withheld Bally's wages in violation of RCW 49.52.070. OTS argues that there was a bona fide dispute as to whether it owed overtime, and so its actions could not have been willful.
RCW 49.52.050(2) and RCW 49.52.070 together provide that an employer shall be liable for attorney fees, costs, and double damages if the employer willfully pays the employee a lower wage than the employer is obligated to pay. Nonpayment is willful when it is the result of knowing and intentional action. Sheriffs' Ass'n v. Chelan County, 109 Wn.2d 282, 300, 745 P.2d 1 (1987). An employer's genuine belief that it is not obligated to pay precludes a finding of willfulness. Ebling v. Gove's Cove, Inc., 34 Wn. App. 495, 500-01, 663 P.2d 132 (1983). Whether an employer acts willfully and whether there is a bona fide dispute are questions of fact. Schilling v. Radio Holdings, Inc., 136 Wn.2d 152, 160, 961 P.2d 371 (1998); Chelan County, 109 Wn.2d at 300. A motion for judgment as a matter of law must be granted when, `viewing the evidence most favorable to the nonmoving party, the court can say, as a matter of law, there is no substantial evidence or reasonable inference to sustain a verdict for the nonmoving party.' Sing v. John L. Scott, Inc., 134 Wn.2d 24, 29, 948 P.2d 816 (1997).
There is substantial evidence to support the jury's finding that OTS willfully withheld Bally's overtime pay. Taken in the light most favorable to Bally, the evidence showed that OTS did not have a genuine belief that it was not obligated to pay Bally overtime. Kathleen Bruner, a former OTS administrative assistant testified that when she spoke with OTS's outside counsel while preparing the employee manual, the attorney agreed that overtime should be addressed. Bruner also testified that when she spoke to the OTS controller about overtime, the controller told her that OTS did not pay overtime, and that everyone was salaried and exempt. Bruner also testified that when she spoke with Gordon about whether to include information about overtime in the employee manual, he told her the same thing. Bruner replied that she thought it needed to be addressed, `because it was fine while everybody in an office is happy, but as soon as somebody is not happy, then you run into problems.' Gordon replied that `he did not think that there would be a problem because the employees were loyal and everybody was happy.'
The jury was entitled to infer from this testimony that OTS intentionally concealed from its employees the statutory provisions that would indicate if and when it had an obligation to pay overtime. The jury could have inferred that Gordon had a policy of not paying employees overtime, rather than a good faith belief that he did not owe overtime. When Gordon said there would not be a problem because the employees were happy, the jury could have interpreted that statement as an acknowledgment that Gordon's policy was not based on an understanding of what the law required, but an expression of a belief that requirements were not important if the employees were happy. The court did not err in denying OTS's motion for judgment as a matter of law.
IV. Attorney Fees Multiplier
Bally cross-appeals, claiming that the trial court erred when it failed to award an attorney fees multiplier. He asserts that because the trial court found that he had only a 50 percent chance of winning the litigation, the court should have awarded a multiplier of two. He argues that because the trial court found a factor that would support a multiplier, refusal to award the multiplier with no reason given is an abuse of discretion. After the court calculates attorney fees under the lodestar method, the court may adjust the fee under two broad categories: the contingent nature of success, and the quality of the work performed. Bowers v. Transamerica Title Ins., 100 Wn.2d 581, 598, 675 P.2d 193 (1983). Bally only requested a multiplier to account for the contingent nature of the compensation. `[T]he contingency adjustment is designed solely to compensate for the possibility . . . that the litigation would be unsuccessful and that no fee would be obtained.' Bowers, 100 Wn.2d at 598-99 (quoting Copeland v. Marshall, 641 F.2d 880, 893 (D.C. Cir. 1980)). But there is a presumption that the lodestar amount represents a reasonable fee. Xieng v. Peoples Nat'l Bank, 63 Wn. App. 572, 587, 821 P.2d 520 (1991). A trial court's decision on whether to apply a multiplier is a matter falling within the trial court's discretion. Boeing Co. v. Heidy, 147 Wn.2d 78, 90-91, 51 P.3d 793 (2002).
The trial court did not abuse its discretion. Although the trial court did find that there was a 50 percent chance that Bally would lose, it also crossed out the entire sentence in Bally's proposed order awarding Bally a multiplier of two. If the trial court's quarrel had been with the amount of the multiplier, it could have crossed out only the two and substituted a more suitable number. But it did not do this. The reasonable inference from the trial court's actions is that while it agreed that the case was risky, it did not conclude that this risk warranted a multiplier. Given the wide latitude granted to the trial court, we cannot conclude that this was an abuse of discretion. Bally's cross-appeal fails.
V. Attorney Fees on Appeal
Bally asks for his attorney fees on appeal under RCW 49.48.030, RCW 49.52.050 and 070, and RCW 49.46.090. RCW 49.48.030 provides that in any action in which a person successfully recovers wages or salary owed to him or her, that the court shall assess reasonable attorney fees against the employer. RCW 49.46.090 states that any employer who pays an employee less than the wages to which he or she is entitled is liable for the unpaid wages, plus costs and reasonable attorney fees.
Bally is entitled to his attorney fees on appeal incurred in successfully defending his judgment, but not to fees on appeal incurred in his unsuccessful cross-appeal. See Kohn v. Georgia-Pacific, 69 Wn. App. 709, 727, 850 P.2d 517 (1993) (employee entitled to fees under RCW 49.48.030 for successfully defending contract claim judgment on appeal, but not entitled to fees on her unsuccessful cross-appeal). Subject to Bally's timely filing of the proper fee affidavit with this court, a court commissioner shall determine the amount of the fee award on appeal.
We affirm.
SCHINDLER and BECKER, JJ., Concur.