Rodriguez v. Farm Stores Grocery, Inc.

• Decision Date: 06 March 2008
• Docket Number: No. 06-13186.,No. 06-13303.,06-13186.,06-13303.
• Citation: 518 F.3d 1259
• Parties: Lorenda RODRIGUEZ, Vilma Thomas, et al., Plaintiffs-Appellees, v. FARM STORES GROCERY, INC., Defendant-Third-Party-Plaintiff-Counter-Defendant-Appellant, v. Oasis Outsourcing, Inc., Third-Party-Defendant-Counter-Claimant.
• Court: U.S. Court of Appeals — Eleventh Circuit

518 F.3d 1259

Lorenda RODRIGUEZ, Vilma Thomas, et al., Plaintiffs-Appellees, v. FARM STORES GROCERY, INC., Defendant-Third-Party-Plaintiff-Counter-Defendant-Appellant, v. Oasis Outsourcing, Inc., Third-Party-Defendant-Counter-Claimant.

No. 06-13186.

No. 06-13303.

United States Court of Appeals, Eleventh Circuit.

March 6, 2008.

Susan Nadler Eisenberg, Jennifer M. Taylor, Akerman, Senterfitt & Eidson, P.A., Miami, FL, Susan Potter Norton, Rodolfo Gomez, Allen, Norton & Blue, P.A., Coral Gables, FL, Joseph W. Hatchett, Akerman, Senterfitt & Eidson, P.A., Tallahassee, FL, for Farm Stores Grocery, Inc.

Neil Rose, Bernstein, Chackman & Liss, Hollywood, FL, for Plaintiffs-Appellees.

Appeals from the United States District Court for the Southern District of Florida.

Before EDMONDSON, Chief Judge, and CARNES and FAY, Circuit Judges.

EDMONDSON, Chief Judge, CONCURS in the result.

CARNES, Circuit Judge:

We deny Farm Stores Grocery, Inc.'s petition for rehearing but withdraw our previous opinion dated January 28, 2008, and published at 514 F.3d 1207, and substitute the following opinion in its place:

This appeal in a Fair Labor Standards Act, 29 U.S.C. §§ 201-19, case involves a number of issues arising under that statute. It also presents us with an interesting issue that is not FLSA-specific. Without objection from either party, the district court gave the jury an erroneous instruction on how to calculate damages. The jury compounded the error by returning a verdict for a larger amount of damages than the erroneous instruction would permit. Is the correct remedy a remittitur, reducing the damages down to the maximum amount that could have been awarded under the erroneous but unobjected to instruction, or a new trial with a proper instruction on calculating damages?

I.

Farm Stores operates a chain of 103 fullservice, free-standing, drive-through grocery stores throughout Florida. Each store employs between three and six workers. One worker at each store is given the title "store manager" and is paid a weekly salary, unlike the others who are "sales associates" and are paid an hourly wage. Each store manager reports to a "district manager" who supervises between ten and twenty stores. Twenty-six of the twenty-eight plaintiffs are former store managers who were terminated during a company-wide reorganization in 2002.¹

After they were terminated for reasons unrelated to hours and wages, the store managers brought this FLSA lawsuit in federal district court. Their complaint sought back pay for overtime they claim Farm Stores owes them pursuant to 29 U.S.C. § 207(a)(1), which requires that employers pay time and a half for each hour an employee works beyond forty each week. Generally, employees may only recover up to two years of back pay under the FLSA's statute of limitations. 29 U.S.C. § 255(a). However, the complaint alleged that Farm Stores' violation of the FLSA was willful, which would entitle the plaintiffs to as much as one additional year of back pay.

Farm Stores' answer asserted that the store managers were exempt from the FLSA's overtime provision because they fell within the Act's "executive exemption." That exemption applies to employees who earn a salary of at least $250 a week, whose primary duty is management of a recognized department or subdivision, and who regularly direct two or more employees. 29 C.F.R. § 541.1(f) (2002).² Farm Stores also asserted that it had not willfully violated the FLSA.

After the close of discovery, both Farm Stores and the store managers moved for summary judgment on the issue of whether the store managers were covered by the executive exemption. The district court denied both parties' motions, explaining that: "It is impossible to grant summary judgment for either party because the record does reveal very hotly disputed facts concerning what [the store managers] did in their day-to-day duties as `store managers,' and whether those activities bring them within the relevant exemptions as a matter of law." The case then proceeded to a jury trial.

The main issue at trial was whether the store managers fell within the executive exemption. Both sides presented evidence on the question of whether the store managers' primary duty was management. On the one hand, Farm Stores introduced evidence that the store managers interviewed, hired, trained, evaluated, and disciplined employees; maintained store inventory; and were relatively free from supervision of their daily activities. Additionally, its expert witness testified that, based on his review of the store managers' job descriptions, their primary duty was management.

On the other hand, the store managers testified that their primary duties were sales related, not managerial. They explained that they spent almost no time performing managerial tasks during most weeks, that they lacked real authority over their stores and employees, and that they were required to consult their district managers before making management decisions. They also testified that their hourly rate of pay, calculated by dividing their weekly salary by the total number of hours they worked each week, was essentially the same as the hourly rate of pay for sales associates. Their expert witness testified that, based on his review of affidavits from the store managers, as well as their job descriptions, their primary duty was not management.

On the issue of damages, each store manager also testified about the average number of hours he worked each week and the amount of his weekly salary from 1999 to 2002. Their counsel asked each store manager what his regular rate of pay was and asked most of them how they calculated it. The store managers were virtually unanimous in testifying that they calculated their regular rate of pay by dividing their weekly salary by the total number of hours they worked each week. This method is the one that counsel for the store managers used to explain and argue damages to the jury in his opening statement and closing argument. It is also the way the district court instructed the jury to calculate damages. Neither side asked for or objected to the instruction.

The jury returned a verdict finding that the store managers did not fall within the executive exemption and awarding damages to each individual store manager. The jury also found that Farm Stores' violation of the FLSA overtime provision was not willful, a finding which had the effect of limiting the store managers to a maximum of two years of back pay. The total amount of damages the jury awarded was $297,700.00.

Farm Stores filed two post-trial motions. In the first one it sought judgment as a matter of law or, in the alternative, a new trial, under Federal Rule of Civil Procedure 50 on the ground that the jury's finding on the executive exemption was not supported by the evidence. In the second motion Farm Stores sought a remittitur of the verdict because the damages the jury awarded exceeded the amount established by the evidence. The district court summarily denied both of those motions.

The store managers also filed a post-trial motion, seeking an award of liquidated damages equal to the amount of the jury award under 29 U.S.C. § 216. The district court granted that motion. This is Farm Stores' appeal.

II.

Farm Stores first contends that the district court erred in denying its Rule 50 motion because store managers, at least those who are assigned to separate locations, categorically fall within the executive exemption and therefore are not entitled to overtime under the FLSA. Alternatively, it contends that the evidence presented at trial is insufficient to sustain the jury's finding regarding that exemption. The store managers counter that the executive exemption is an inherently fact-based inquiry that turns on the individual circumstances of each case, and that they presented sufficient evidence for the jury reasonably to conclude that these specific store managers were not exempt employees.

Generally, the FLSA requires employers to pay their employees time and a half for all the work they do over forty hours a week, 29 U.S.C. § 207(a)(1), but that requirement does not apply to "any employee employed in a bona fide executive ... capacity," id. § 213(a)(1). The Department of Labor has promulgated regulations defining who is an "executive" for purposes of the FLSA. Under the applicable regulation, an employee is an "executive" if he earns at least $250.00 per week and: (1) is paid on a salary basis; (2) manages, as his primary duty, a recognized department or subdivision; and (3) regularly directs two or more employees. 29 C.F.R. § 541.1(f) (2002).

Before trial, the parties stipulated that the store managers were paid a salary of at least $250.00 per week. After hearing the evidence, the jury found that the store managers "customarily and regularly directed the work of two (2) or more employees at his or her store," and the store managers do not contest that finding. Accordingly, the overtime wages issue turns on whether the store managers' primary duty was management. The jury found that it was not, but Farm Stores argues that finding is not supported by the evidence.

The sufficiency of the evidence on that issue must be viewed against the applicable DOL regulation, which sets out five factors to use in determining whether an employee's primary duty is management. The factors are: (1) the amount of time spent performing managerial duties; (2) the relative importance of an employee's managerial and non-managerial duties; (3) the frequency with which an employee may exercise discretionary powers; (4) the employee's relative freedom from supervision; and (5) the relationship between the purportedly exempt employee's wages and the wages paid to other employees performing similar, non-exempt work. 29 C.F.R. § 541.103 (2002).

In the face of the regulation, Farm Stores insists that the store managers are exempt employees "as a matter of law." What we...