Bankston v. State of Ill.

• Decision Date: 26 July 1995
• Docket Number: Nos. 94-1160,94-1837,s. 94-1160
• Citation: 60 F.3d 1249
• Parties: 130 Lab.Cas. P 33,256, 2 Wage & Hour Cas.2d (BNA) 1377 Norman BANKSTON, Herman Davila, John E. George, Jr., and Rolando Hernandez, Plaintiffs-Appellees/Cross-Appellants, v. STATE OF ILLINOIS, Illinois State Department of Central Management Services, Stephen B. Schnorf, both in his capacity as Director of Department of Central Management and individually, Defendants-Appellants/Cross-Appellees. , and 94-1838.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1249

60 F.3d 1249

130 Lab.Cas. P 33,256, 2 Wage & Hour Cas.2d

(BNA) 1377

Norman BANKSTON, Herman Davila, John E. George, Jr., and Rolando Hernandez, Plaintiffs-Appellees/Cross-Appellants, v. STATE OF ILLINOIS, Illinois State Department of Central Management Services, Stephen B. Schnorf, both in his capacity as Director of Department of Central Management and individually, Defendants-Appellants/Cross-Appellees.

Nos. 94-1160, 94-1837, and 94-1838.

United States Court of Appeals Seventh Circuit.

Argued Jan. 17, 1995.

Decided July 26, 1995.

Jac A. Cotiguala (argued), Mark H. Mennes, Gregory R. Sun, Cotiguala & Mennes, Chicago, IL, for plaintiffs-appellees.

Gary M. Griffin, Asst. Atty. Gen., Brian F. Barov (argued), Jan E. Hughes, Asst. Atty. Gen., Office of Atty. Gen., Civil Appeals Div., Chicago, IL, for defendants-appellants.

Before BAUER, CUDAHY, and KANNE, Circuit Judges.

KANNE, Circuit Judge.

The plaintiffs, all police officers for the Illinois Department of Central Management Services (CMS), sued their employer for damages and back wages under the Fair Labor Standards Act (FLSA), 29 U.S.C. Secs. 201-219, and the Illinois Minimum Wage Law, 820 ILCS 105/1-15 (1992). They alleged that the state failed to pay them for the pre- and post-shift hours and lunch hours they worked. They also claimed that the state did not pay them at one-and-one-half times their normal rate, as the FLSA requires, for overtime they worked from 1990 forward. The defendants claimed that the officers, all of whom maintained the rank of sergeant, were exempt from the FLSA because they were executive employees.

Only the FLSA claims went to the jury, which returned a verdict in favor of the plaintiffs and awarded damages to the plaintiffs on all claims except back pay for pre- and post-shift work. Following the jury verdict, the plaintiffs moved to amend the judgment to include liquidated double damages pursuant to the FLSA and punitive damages under the Illinois Minimum Wage Law (even though the plaintiffs had apparently dropped their Illinois Wage Law claim before trial). The plaintiffs also moved for costs in the amount of $8,096.42 and attorneys' fees of $96,213.75. The defendants filed a post-trial motion for judgment as a matter of law, or, in the alternative, for a new trial, or, in the alternative, for remittitur. The district court denied defendants' motions and plaintiffs' motion for punitive damages. The court granted plaintiffs' motion for liquidated damages. And it originally granted plaintiffs' motion for costs in the amount of $120.00, but later added $7,946.42 in response to plaintiffs' motion for reconsideration. The court also awarded plaintiffs $55,537.50 in attorneys' fees.

Both sides appeal the various district court dispositions of their motions. The defendants argue that they are entitled to a judgment as a matter of law because the plaintiffs all hold executive positions and are, therefore, exempt from the overtime provisions of the FLSA. In the alternative, the defendants ask for a new trial on either liability or damages, a remittitur of liquidated damages, and a remittitur of attorneys' fees and costs. Plaintiffs seek additional attorneys' fees, arguing that the district court failed to properly apply the uncontradicted market rate.

I. Whether Plaintiffs are Bona Fide Executives under the FLSA

Defendants hinge the bulk of their claims on the issue of plaintiffs' status under the FLSA. They moved for judgment as a matter of law, arguing that the evidence showed that, except for the period from January 6, 1991 to September 6, 1991, the plaintiffs were bona fide executive employees and were therefore exempt from the overtime provisions of the FLSA.

The district court denied this motion, and we review its denial de novo. Henderson v. DeRobertis, 940 F.2d 1055, 1057 (7th Cir.1991), cert. denied, 503 U.S. 966, 112 S.Ct. 1578, 118 L.Ed.2d 220 (1992). Judgment as a matter of law is proper only where " '... reasonable people, viewing the facts most favorably to the plaintiff and disregarding conflicting unfavorable testimony, could not conclude that the plaintiff has made out a prima facie case.' " Id. (Citations omitted). Under the FLSA, all employers, including state and local governments, must pay their employees one-and-one-half times their normal rate for all hours worked over forty in one week. 29 U.S.C. Sec. 207(a)(1). Under the bona fide executive exception, however, an employee serving as a bona fide executive, as defined by the FLSA, is exempt from the overtime provisions. 29 U.S.C. Sec. 213(a)(1).

It is the employer's burden to prove the application of the executive exemption, an exemption that is to be construed narrowly. Klein v. Rush-Presbyterian-St. Luke's Medical Ctr., 990 F.2d 279, 282-83 (7th Cir.1993). So, in order to find for the defendants, we must determine that, based on the evidence as construed in the light most favorable to the plaintiffs, no reasonable juror could have concluded that the plaintiffs were not bona fide executive employees (except for the period January 5, 1991-September 6, 1991, a period for which the defendants do not claim to be entitled to judgment as a matter of law for reasons we will explain below).

For an employee to be exempt from the overtime provisions of the FLSA, an employer must prove that the employee is one:

(a) Whose primary duty consists of the management of the enterprise in which he is employed or of a customarily recognized department or subdivision thereof; and

(b) Who customarily and regularly directs the work of two or more other employees therein; and

(c) Who has the authority to hire or fire other employees or whose suggestions and recommendations as to the hiring and 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 exercises discretionary powers; and

(e) Who does not devote more than 20 percent ... of his hours of work in the workweek to activities which are not directly or closely related to the performance of the work described in paragraphs (a) through (d) ...; and

(f) Who is compensated for his services on a salary basis of not less than $155 per week....

29 C.F.R. Sec. 541.1. This test is commonly divided into a duties component, subparts (a)-(e), and a salary component, subpart (f) both of which the defendant must prove in order for the employee to be exempt. See Barner v. City of Novato, 17 F.3d 1256, 1259-60 (9th Cir.1994).

Generally, an employer cannot show that an employee is exempt if the employer docks the employee's pay for partial day absences, violations of rules other than significant safety rules, and other barometers of the quantity or quality of the employee's work. See 29 C.F.R. Sec. 541.118. Commonly known as the "no-docking rule," this regulation does not require proof that a deduction actually has been made from an employee's salary; rather, it is enough that one could have been made for this regulation to remove an employee from exempt status. Klein, 990 F.2d at 286. This rule applied to public sector employees until the Department of Labor added a new regulation allowing public employers to dock their exempt employees for partial day absences without eliminating their exemption from the FLSA. 29 C.F.R. Sec. 541.5d. Defendants acknowledge that the no-docking rule prevents them from showing that plaintiffs were exempt employees until September 6, 1991, when this change was made. The court instructed the jury on this rule change.

However, the change does not permit deductions for other quantity or quality considerations, such as a penalty for violating rules other than safety rules of major significance. 29 C.F.R. Secs. 541.118(a)(4) & (5). Plaintiffs presented testimony from various sources that they were subject to salary deductions or other unpaid leave as discipline for violating any rule of conduct. ¹ CMS commander Harris, for example, testified that officers of plaintiff's rank may be suspended without pay for violating any CMS rule. The defendants presented no evidence to contradict this testimony. Therefore, it was reasonable for the jury to conclude that the plaintiffs were not exempt executive employees because they were subject to being docked for pay for reasons that would violate the no-docking rule. The defendants are not entitled to judgment as a matter of law.

The defendants also argue that, even if they violated the FLSA's overtime provisions, some of plaintiffs' claims were time-barred. Plaintiffs' claims before January 5, 1991 are time-barred, defendants argue, because plaintiffs filed their original complaint on January 5, 1993 and, except for cases of willful violations, claims under the FLSA must be brought within two years of the violation. See 29 U.S.C. Secs. 201 et seq.; Portal-to-Portal Act of 1947, Sec. 6(a), 29 U.S.C. Sec. 255(a); McLaughlin v. Richland Shoe Co., 486 U.S. 128, 129, 108 S.Ct. 1677, 1679, 100 L.Ed.2d 115 (1988). Defendants argue that there was insufficient evidence to support a conclusion that they acted willfully; therefore, they are entitled to judgment as a matter of law as to all claims arising prior to January 5, 1991.

We begin by noting that, while the defendants bore the burden at trial of showing that the plaintiffs were exempt employees, the plaintiffs bore the burden of showing that the defendants' conduct was willful for purposes of the statute of limitations. See Walton v. United Consumers Club, Inc., 786 F.2d 303, 308 (1986). It is the jury's province to decide which limitations period, two or three years, applies in light of the plaintiffs' evidence that the defendants acted willfully. ² An employer acts willfully, for purposes of establishing the proper statute of limitations, where he knows or shows reckless disregard for whether his actions are unlawful under the FLSA. McLaughlin, 486 U.S. at 133, 108 S.Ct. at 1681. The...