958 F.2d 746 (6th Cir. 1992), 91-1063, Lilley v. BTM Corp.

Docket Nº:91-1063, 91-1100, 91-1398.
Citation:958 F.2d 746
Party Name:Robert LILLEY, Plaintiff-Appellant, Cross-Appellee, v. BTM CORPORATION, Defendant-Appellee, Cross-Appellant.
Case Date:March 12, 1992
Court:United States Courts of Appeals, Court of Appeals for the Sixth Circuit
 
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Page 746

958 F.2d 746 (6th Cir. 1992)

Robert LILLEY, Plaintiff-Appellant, Cross-Appellee,

v.

BTM CORPORATION, Defendant-Appellee, Cross-Appellant.

Nos. 91-1063, 91-1100, 91-1398.

United States Court of Appeals, Sixth Circuit

March 12, 1992

Argued Oct. 4, 1991.

Rehearing Denied April 20, 1992.

Rehearing En Banc Denied

April 29, 1992.

Page 747

[Copyrighted Material Omitted]

Page 748

Robert M. Vercruysse, argued, Butzel, Long, Gust, Klein & Van Zile, Detroit, Mich., Ronald E. Reynolds, briefed, Butzel, Long, Gust, Klein & Van Zile, Birmingham, Mich., for plaintiff-appellant cross-appellee.

Page 749

David R. Heyboer, argued, briefed, Luce, Henderson, Bankson, Heyboer & Lane, Port Huron, Mich., for defendant-appellee cross-appellant.

Before RYAN and SUHRHEINRICH, Circuit Judges, and PECK, Senior Circuit Judge.

SUHRHEINRICH, Circuit Judge.

Robert Lilley brought an action against BTM Corporation ("BTM") alleging age discrimination and retaliatory discharge in violation of the federal Age Discrimination in Employment Act ("ADEA"), 29 U.S.C. § 621 et seq., and Michigan's Elliott-Larsen Act, Mich. Comp. Laws § 37.2101 et seq.; willfulness under state and federal law with respect to both age discrimination and retaliatory discharge; discharge in breach of an employment contract; and failure to pay commissions owed ("procuring cause"). BTM defended that Lilley was not an employee under the discrimination statutes. Prior to the first trial, the district court dismissed the breach of employment contract claim. At the conclusion of the evidence, the court granted a directed verdict in favor of BTM on the procuring cause claim. The jury found that Lilley was an employee of BTM, returned a general verdict in Lilley's favor on the age discrimination, retaliatory discharge, and willfulness claims, and awarded damages for back pay, front pay, and mental anguish totaling $800,000. The court accepted the jury's finding on employment status but ordered a new trial on the issues of age discrimination, retaliatory discharge, willfulness, and damages. The second jury returned a general verdict in favor of BTM on the age discrimination claim and in favor of Lilley on the retaliatory discharge claim and awarded damages of $186,000. The court ordered a new trial on the issue of damages for retaliation. The third jury awarded Lilley $425,000. The district court then awarded Lilley liquidated damages, attorney's fees, costs, and prejudgment interest and entered final judgment in the amount of $600,551.04. Lilley appeals the directed verdict on his procuring cause claim, the grant of a new trial after the first trial of his age discrimination claim, the second jury's verdict on age discrimination, claiming it resulted from judicial bias, the denial of prejudgment interest, and the district court's computation of attorney's fees and costs. 759 F.Supp. 1248. BTM cross-appeals the determination that Lilley was an employee, the award of liquidated damages, and the award of mental anguish damages.

We affirm in part and reverse and remand in part.

I

BTM President Edwin Sawdon offered Lilley a position selling BTM's products for a five percent commission on sales. Lilley agreed and became the only BTM employee compensated on straight commission. After receiving several large commissions, Lilley began to discuss retirement with the other members of BTM's sales staff, Steve Sawdon and Andy Janiszewski, and eventually announced to Ed Sawdon his intention to retire effective as of October 1987.

One of Lilley's projects involved a large sale to General Motors CPC-Parma. Ed Sawdon came to doubt Lilley's ability to close this deal because of his lack of engineering experience. Ultimately, Sawdon removed Lilley from this project, remarking that Lilley was "confused" and "losing it." A number of other projects that Lilley was counting on fell through, and he realized that he would not be able to retire in October 1987 as planned. Lilley informed Sawdon of this sometime in early 1987. During this time Sawdon and Lilley began to argue over commissions that Lilley claimed were owed him.

On May 4, 1987, BTM announced a new policy that, beginning in October 1987, it would no longer sell its metal joining systems through distributors or "five percenters." This policy was never implemented as to distributors, and Lilley was the company's only five percenter. The new policy had the effect of eliminating Lilley's job. The October effective date of the policy was chosen due to Lilley's previously expressed intent to retire at that time.

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On July 8, 1987, Lilley filed an age discrimination complaint with the Equal Employment Opportunity Commission. On July 10, Lilley asked Sawdon to reconsider the new policy. When Sawdon refused, Lilley informed him of the discrimination complaint. Sawdon immediately terminated Lilley.

II

A

BTM argues that Lilley was not an employee. The jury disagreed. 1 BTM then moved unsuccessfully for judgment notwithstanding the verdict.

The term "employee" is to be given a broad construction in order to effectuate the remedial purposes of the ADEA. 2 This circuit employs the economic realities test to determine whether an employment relationship exists for the purposes of the ADEA. See Armbruster v. Quinn, 711 F.2d 1332, 1340 (6th Cir.1983). This test, developed under the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 201 et seq., looks to whether the putative employee is economically dependent upon the principal or is instead in business for himself. See Dole v. Snell, 875 F.2d 802, 804 (10th Cir.1989); Mednick v. Albert Enters. Inc., 508 F.2d 297, 300 (5th Cir.1975); cf. Bartels v. Birmingham, 332 U.S. 126, 130, 67 S.Ct. 1547, 1549, 91 L.Ed. 1947 (1947). This test is a loose formulation, leaving the determination of employment status to case-by-case resolution based on the totality of the circumstances. See Armbruster, 711 F.2d at 1339-40.

BTM exercised control over Lilley. Although Lilley set his own hours and vacation schedule, such flexibility is not sufficient to negate control. See, e.g., Snell, 875 F.2d at 806. BTM had the authority to remove Lilley from particular sales. In at least one instance, BTM exercised this authority, removing Lilley from a deal while negotiations were still taking place and replacing him with another employee. In addition, BTM required Lilley to obtain its approval before he could quote a price to a potential buyer.

Although he paid some of his own expenses, Lilley did not make an investment in the business. BTM supplied Lilley with an office, secretarial services, business cards and stationery bearing BTM's name, brochures and stickers advertising BTM's products, and telephone privileges.

In addition, Lilley was integrated into BTM's normal business operations. After BTM approved a price quotation, Lilley was authorized to sign for and bind BTM. He also attended weekly meetings of BTM's sales staff, whose members are undisputedly employees. Lilley went on "troubleshooting" trips, involving the resolution of problems that customers had with BTM's products after purchase. Finally, BTM invited its customers to visit its facility and offered that "our people will give you all the help you need...." Lilley was listed among BTM's "people."

It is also significant that Lilley sold only BTM's products. Although this is by no means determinative, it provides support for the existence of an employment relationship, particularly when viewed within the totality of the facts of this case.

Page 751

In light of the totality of circumstances in this case, there was sufficient evidence to raise a question for the jury. The district court properly denied BTM's motion for judgment notwithstanding the verdict.

B

BTM moved for a new trial on the grounds that the jury was instructed erroneously regarding Lilley's status as an employee and that prejudicial evidence was admitted on this issue. First, BTM contends that the following instruction misled the jury as to which party bore the burden of proof:

If there is a doubt or ambiguity in the matter, you should resolve it in favor of coverage. Establishment of an independent contractor relationship requires a convincing accumulation of factors indicating that Robert Lilley's services were rendered in pursuit of his separate business enterprise of selling those services.

If you find, based upon the preponderance of the evidence, that Robert Lilley was an employee of BTM, then he is within the protection of the federal law and the state law.

The instruction that "[e]stablishment of an independent contractor relationship requires a convincing accumulation of evidence" is a direct quotation of this circuit's rule. See Falls, 834 F.2d at 614.

BTM also challenges the instruction that doubt be resolved in favor of coverage. This portion of the instruction may have been ambiguous but the effect of the charge as a whole was not misleading. See Howard v. Chesapeake & Ohio Ry. Co., 812 F.2d 282, 287 (6th Cir.), cert. denied, 484 U.S. 820, 108 S.Ct. 78, 98 L.Ed.2d 40 (1987). The instruction on ambiguity was followed by an instruction that the plaintiff bears the burden of proof of employment status by a preponderance of the evidence. In addition, this was succeeded by a discussion of the ADEA itself that in five instances refers to Lilley as bearing the burden of proof. Viewing the charge as a whole, the district court did not abuse its discretion.

III

Lilley argues that the district court erred in directing a verdict in favor of BTM on its procuring cause claim. Michigan law provides:

[T]he agent is entitled to recover his commission whether or not he has personally concluded and...

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