Dalheim v. KDFW-TV

• Decision Date: 04 May 1989
• Docket Number: Civ. A. No. CA3-85-0894-D.
• Citation: 712 F. Supp. 533
• Parties: Edward W. DALHEIM, et al., Plaintiffs, v. KDFW-TV, Defendant.
• Court: U.S. District Court — Northern District of Texas

712 F. Supp. 533

Edward W. DALHEIM, et al., Plaintiffs, v. KDFW-TV, Defendant.

Civ. A. No. CA3-85-0894-D.

United States District Court, N.D. Texas, Dallas Division.

May 4, 1989.

Yona Rozen of Hicks, Gillespie, James, Rozen & Preston, P.C., Dallas, Tex., for plaintiffs.

David M. Ellis and Michael P. Maslanka of Clark, West, Keller, Butler & Ellis, Dallas, Tex., for defendant.

MEMORANDUM OPINION AND ORDER

FITZWATER, District Judge.

Plaintiffs, who prevailed in their action under the Fair Labor Standards Act ("FLSA") to recover unpaid overtime compensation, move the court for an award of liquidated damages or prejudgment interest. Following an evidentiary hearing, the court finds and concludes¹ that defendant, KDFW-TV ("KDFW"), has demonstrated that the acts and omissions giving rise to its violation of the FLSA were undertaken in good faith and upon reasonable grounds. The court determines, in its sound discretion, that liquidated damages should not be awarded and declines to award prejudgment interest.

I.

The procedural history and background facts of this action are reported, see Dalheim v. KDFW-TV, 706 F.Supp. 493, 495-500 (N.D.Tex.1988), and the court recounts here only the portions of its prior decision that are necessary to understand today's opinion.

Plaintiffs are present and former general assignment reporters, producers, directors, and assignment editors at a network affiliate television station, KDFW. They brought suit against KDFW to recover unpaid overtime compensation. KDFW took the position at trial that plaintiffs were exempt from FLSA coverage as professional, administrative, or executive employees. Plaintiffs contended they were not exempt and that KDFW's violations of the Act were "willful."

Following a bench trial, the court found in favor of plaintiffs on their claim for overtime compensation and held against plaintiffs on their assertion that KDFW acted willfully. The court noted that the action "presented questions of first impression," 706 F.Supp. at 495, that "resolution of the FLSA coverage question was particularly knotty," id., that the administrative agency interpretive guides were issued prior to "the considerable technical advances that had taken place in the television industry and in broadcast journalism," id. at 496, and that, to an extent, the court was required to "navigate uncharted waters without the assistance of a jurisprudential sextant," id. The court held that the determinations whether general assignment reporters and producers were exempt employees were "close" ones that ultimately turned upon the evidence adduced by KDFW at trial. Id. at 503 & 507 n. 16.

The court rejected plaintiffs' contention that KDFW had acted willfully. Applying the Supreme Court's holding in McLaughlin v. Richland Shoe Co., 486 U.S. ___, 108 S.Ct. 1677, 1681, 100 L.Ed.2d 115 (1988), that "willful" refers to conduct that is voluntary, deliberate, and intentional, the court found that the novel nature of the questions presented, the closeness of two of the issues, and KDFW's reliance upon a favorable 1981 Department of Labor ("DOL") investigation — in which the DOL approved KDFW's position regarding the exempt status of these employees — warranted the finding that KDFW had not acted willfully. 706 F.Supp. at 511.

Plaintiffs now move for liquidated damages pursuant to 29 U.S.C. § 216(b). They correctly assert that the court's prior finding that KDFW did not act willfully does not preclude an award of liquidated damages because the standards for determining the two issues are not identical. Plaintiffs argue that KDFW cannot prove that it acted in good faith and upon reasonable grounds. They correctly contend that, even if KDFW can satisfy both prongs, the court may nevertheless award liquidated damages in the exercise of its discretion. Plaintiffs concede the court's prior findings for declining to hold that KDFW acted willfully, but argue that the questions concerning directors and assignment editors were not close, that a 1984 DOL investigation found violations of the FLSA, and that KDFW simply took a calculated risk in failing to compensate plaintiffs for overtime. They also point to the delay between the time they should have been paid overtime and the date they will ultimately be compensated and the lack of availability of prejudgment interest,² and ask the court to award liquidated damages in at least this amount to make them whole.

II.

The FLSA provides that an employer who violates the requirement to pay overtime compensation "shall be liable to the employee or employees affected in the amount of ... their unpaid overtime compensation ... and in an additional equal amount as liquidated damages." 29 U.S.C. § 216(b).³ Although the language of § 216(b) is mandatory, Congress thereafter added a provision that grants the district court the sound discretion not to award liquidated damages if the employer shows (1) "that the act or omission giving rise to such action was in good faith" and (2) "that he had reasonable grounds for believing that his act or omission was not a violation of the FLSA." 29 U.S.C. § 260.⁴Barcellona v. Tiffany English Pub, Inc., 597 F.2d 464, 468 (5th Cir.1979) (minimum wage case); see Hays v. Republic Steel Corp., 531 F.2d 1307, 1309 n. 3 (5th Cir.1976) (age discrimination case) (employer must show failure was in good faith and predicated upon such reasonable grounds that it would be unfair to impose liquidated damages). The purpose for the amendment "was to mitigate the harshness of the then-strict liability offense of violating Section 216." LeCompte v. Chrysler Credit Corp., 780 F.2d 1260, 1263 (5th Cir.1986).

The burden of proving that the two-prong test has been met is upon the employer, 29 U.S.C. § 260 ("if the employer shows to the satisfaction of the Court"); Thomas v. State of Louisiana, 348 F.Supp. 792, 796 (W.D.La.1972), who has "the plain and substantial burden" of persuading the court by proof that its failure to obey the statute was both in good faith and was predicated upon such reasonable grounds that it would be unfair to impose more than a compensatory⁵ verdict. Barcellona, 597 F.2d at 468. The defense requires plain and substantial evidence of at least an honest intention to ascertain what the FLSA requires and to comply with it. Brock v. Wilamowsky, 833 F.2d 11, 19 (2d Cir.1987) (citing Williams v. Tri-County Growers, Inc., 747 F.2d 121, 129 (3d Cir.1984); Barcellona, 597 F.2d at 468-69). The burden is a difficult one to meet; "double damages are the norm, single damages the exception." Id. (quoting Walton v. United Consumers Club, Inc., 786 F.2d 303, 310 (7th Cir.1986)). Even if the employer carries its burden, the court retains the discretion to award liquidated damages. Hayes v. McIntosh, 604 F.Supp. 10, 21 (N.D.Ind.1984); Thomas, 348 F.Supp. at 796.

The court first sets forth the factual findings pertinent to its decision, then discusses its reasons for finding that KDFW has met the good faith and reasonable grounds test of § 260, and finally articulates its reasons for exercising its sound discretion in favor of denying liquidated damages. See Reed v. Murphy, 232 F.2d 668, 678 (5th Cir.) (although § 260 gives trial judge widest latitude, it imposes duty on judge to make reasoned, articulate judgment), cert. denied, 352 U.S. 831, 77 S.Ct. 45, 1 L.Ed.2d 51 (1956).

A.

KDFW presented two witnesses at the liquidated damages evidentiary hearing: William Keller, Esq. ("Keller"), KDFW's labor law attorney for in excess of 20 years, and I.W. (Bill) Baker ("Baker"), KDFW's vice president and general manager since 1983.

Keller's testimony can be divided into three general areas: the legal advice that his firm gave to KDFW concerning whether the employees in question were exempt under the FLSA;⁶ KDFW's efforts to comply with the FLSA; and the negotiating positions of the employees' collective bargaining units that indicate the union viewed the employees as being exempt. From his testimony the court finds the following.⁷

In 1981 the DOL conducted an investigation of KDFW to determine if its overtime compensation practices comported with the FLSA. The DOL file regarding that investigation was inexplicably empty when examined in 1984, but the file jacket contained the penciled notation "no violations." At the conclusion of the 1981 investigation, the DOL orally advised KDFW that the investigation had given KDFW a "clean bill of health." Because the KDFW management representative who dealt with the DOL in 1981 is now deceased, KDFW could offer no direct testimony as to the scope of the 1981 investigation.

KDFW considered KDFW general assignment reporters, producers, directors, and assignment editors to be exempt within the meaning of the FLSA; accordingly, they were not paid overtime compensation. These employees were, however, permitted "comp" time. That is, if an employee worked in excess of a certain number of hours daily or weekly, the employee could, with approval, take off other time with full pay. The "comp" time could be "banked" and taken outside the work week in which it was earned. With management approval, "comp" time could be aggregated with available vacation time. Holiday work was credited as two days for banking purposes. Baker testified that, in one extreme case, a KDFW reporter who worked numerous extra hours during the session of the Texas legislature was able to use banked "comp" time to take a lengthy overseas vacation.

In 1983 the DOL certified a collective bargaining unit — known as AFTRA⁸ 1— that consisted of on-air reporters and anchors at KDFW. These employees had not previously been organized, and the union's contract was to be the first with KDFW. Collective bargaining commenced in February 1984. Following approximately 40 negotiating sessions, the parties reached agreement in 1985.

In March 1984 the AFTRA 2 bargaining unit was formed,⁹ consisting of producers, directors, assignment editors, and associate...