Desmond v. Gaming

• Decision Date: 14 January 2011
• Docket Number: Nos. 09–2189,09–2254.,09–2190,09–2192,s. 09–2189
• Citation: 630 F.3d 351
• Parties: John DESMOND, Plaintiff–Appellant,v.PNGI CHARLES TOWN GAMING, L.L.C., d/b/a Charles Town Races & Slots, Defendant–Appellee.Dana Witherspoon, Plaintiff–Appellant,v.PNGI Charles Town Gaming, L.L.C., d/b/a Charles Town Races & Slots, Defendant–Appellee.M. Larry Sanders, Plaintiff–Appellant,v.PNGI Charles Town Gaming, L.L.C., d/b/a Charles Town Races & Slots, Defendant–Appellee.John Desmond, Plaintiff–Appellee,v.PNGI Charles Town Gaming, L.L.C., d/b/a Charles Town Races & Slots, Defendant–Appellant.
• Court: U.S. Court of Appeals — Fourth Circuit

630 F.3d 351

160 Lab.Cas. P 35,861

17 Wage & Hour Cas.2d (BNA) 104

John DESMOND, Plaintiff–Appellant,

v.PNGI CHARLES TOWN GAMING, L.L.C., d/b/a Charles Town Races & Slots, Defendant–Appellee.Dana Witherspoon, Plaintiff–Appellant,

v.PNGI Charles Town Gaming, L.L.C., d/b/a Charles Town Races & Slots, Defendant–Appellee.M. Larry Sanders, Plaintiff–Appellant,

v.PNGI Charles Town Gaming, L.L.C., d/b/a Charles Town Races & Slots, Defendant–Appellee.John Desmond, Plaintiff–Appellee,

v.PNGI Charles Town Gaming, L.L.C., d/b/a Charles Town Races & Slots, Defendant–Appellant.

Nos. 09–2189

09–2190

09–2192

09–2254.

United States Court of Appeals, Fourth Circuit.

Argued: Sept. 23, 2010.Decided: Jan. 14, 2011.

ARGUED: Paul B. Weiss, Martin & Seibert, LC, Martinsburg, West Virginia, for John Desmond, Dana Witherspoon, and M. Larry Sanders. Brian Michael Peterson, Bowles, Rice, McDavid, Graff & Love, PLLC, Martinsburg, West Virginia, for PNGI Charles Town Gaming, L.L.C., d/b/a Charles Town Races & Slots. ON BRIEF: Charles F. Printz, Jr., Bowles, Rice, McDavid, Graff & Love, PLLC, Martinsburg, West Virginia, for PNGI Charles Town Gaming, L.L.C., d/b/a Charles Town Races & Slots.Before TRAXLER, Chief Judge, SHEDD, Circuit Judge, and JAMES C. DEVER III, United States District Judge for the Eastern District of North Carolina, sitting by designation.Affirmed in part, vacated in part, and remanded by published opinion. Judge DEVER wrote the opinion, in which Chief Judge TRAXLER and Judge SHEDD joined.

OPINION

DEVER, District Judge:

John Desmond, Dana Witherspoon, and M. Larry Sanders (collectively “appellants” or “former employees”) appeal from an award of unpaid overtime compensation in their case under the Fair Labor Standards Act (“FLSA”) against their former employer, PNGI Charles Town Gaming, L.L.C., d/b/a Charles Town Races & Slots (“Charles Town Gaming” or “employer”). The former employees dispute how the district court computed unpaid overtime compensation under the FLSA. Charles Town Gaming cross-appeals and disputes the district court's decision to grant summary judgment to the former employees as to whether Charles Town Gaming's FLSA violation was willful. As explained below, we affirm the district court's method of computing unpaid overtime compensation, vacate the district court's judgment as to willfulness, and remand for a trial on the issue of willfulness.

I.

Desmond, Witherspoon, and Sanders are three former racing officials who filed suit against their former employer Charles Town Gaming, alleging violations of the overtime provisions of the FLSA. J.A. 49–50. The district court consolidated the three actions and granted summary judgment to Charles Town Gaming, concluding that because the appellants held administrative positions, they were therefore exempt from the overtime provisions of the FLSA. Appellants timely appealed, and we reversed. See Desmond v. PNGI Charles Town Gaming, L.L.C., 564 F.3d 688, 689, 691 (4th Cir.2009). We concluded that the former employees did not qualify for the administrative exemption under the FLSA. Id. at 695. We then remanded the case to the district court for further proceedings. Id. at 695.

On remand, the district court entered summary judgment for the former employees on the issue of FLSA liability. Desmond v. PNGI Charles Town Gaming, L.L.C., 661 F.Supp.2d 573, 576 (N.D.W.Va.2009). The district court then calculated the unpaid overtime compensation owed to the former employees under 29 U.S.C. § 216(b). Id. at 576–85; see 29 U.S.C. § 216(b) ( “Any employer who violates the provisions of [29 U.S.C. § 206 or § 207] shall be liable to the employee or employees affected in the amount of their unpaid minimum wages, or their unpaid overtime compensation, as the case may be, and in an additional equal amount as liquidated damages.”). Charles Town Gaming conceded the number of hours for which overtime was owed. Desmond, 661 F.Supp.2d at 577. The district court determined the rate at which those hours should be compensated by first applying Overnight Motor Transportation Co. v. Missel, 316 U.S. 572, 62 S.Ct. 1216, 86 L.Ed. 1682 (1942), to determine the regular rate. The district court then examined whether the appropriate overtime premium was 50% or 150% of that regular rate for all hours worked over 40. After briefing, the district court calculated the unpaid overtime compensation under 29 U.S.C. § 216(b) by using a 50% premium. The court based its decision not on 29 C.F.R. § 778.114, but rather upon the logic of Overnight Motor and general principles of compensatory damages. Desmond, 661 F.Supp.2d at 583–84.

On remand, the parties also disputed whether Charles Town Gaming's FLSA violation was willful. After considering cross motions for summary judgment as to willfulness, the district court concluded that Charles Town Gaming's FLSA violation was willful as matter of law, thereby expanding the statute of limitations period from two years to three years. Id. at 586.

The former employees appealed the district court's calculation of unpaid overtime compensation under 29 U.S.C. § 216(b). Charles Town Gaming cross-appealed the district court's decision to award summary judgment on the willfulness issue.

II.

The former employees worked as racing officials with Charles Town Gaming. J.A. 50. Charles Town Gaming prepared the job descriptions for racing officials in 1999. Id. at 55–56. In doing so, Charles Town Gaming's human resources director used a computer program to help determine whether to designate the position as exempt or non-exempt from overtime under the FLSA. Id. Charles Town Gaming paid the racing officials a per diem rate and treated them as exempt. See Aff. Karen Raffo, Nov. 20, 2007. Over the ensuing years, Charles Town Gaming changed the pay from per diem to a fixed weekly salary that the parties intended to cover all hours worked. See J.A. 56, 146–52; Aff. Karen Raffo, Nov. 20, 2007. Charles Town Gaming believed (erroneously) that the former employees were subject to the FLSA administrative exemption; therefore, Charles Town Gaming did not pay them overtime. J.A. 49. All three appellants often worked more than 40 hours in a week. Id. at 50. After the appellants unanimously declared the wrong horse to have won a race, Charles Town Gaming dismissed them from their employment. Id.

The former employees contend the district court erred in calculating their unpaid overtime compensation under 29 U.S.C. § 216(b). Charles Town Gaming contends the district court erred by concluding that their FLSA violation was willful. We review a grant of summary judgment de novo. See, e.g., United States v. Bergbauer, 602 F.3d 569, 574 (4th Cir.2010). When cross-motions for summary judgment are before a court, the court examines each motion separately, employing the familiar standard under Rule 56 of the Federal Rules of Civil Procedure. See, e.g., Ga. Pac. Consumer Prods., L.P. v. Von Drehle Corp., 618 F.3d 441, 445 (4th Cir.2010).

A.

The former employees challenge how the district court calculated their unpaid overtime compensation under 29 U.S.C. § 216(b). The Supreme Court addressed how to calculate such unpaid overtime compensation under 29 U.S.C. § 216(b) in Overnight Motor. 316 U.S. at 580, 62 S.Ct. 1216. The Court held that when calculating the “regular rate” of pay for an employee who agreed to receive a fixed weekly salary as payment for all hours worked, a court should divide the employees fixed weekly salary by the total hours worked in the particular workweek. Id. at 579–80, 62 S.Ct. 1216 (analyzing section 7 of the FLSA, now codified at 29 U.S.C. § 207(a)(1)). This calculation should be completed for each workweek at issue and results in a regular rate for a given workweek. Id. Of course, the Court recognized that the regular rate could vary depending on the total hours worked. The Court then determined that the employee should receive overtime compensation for all hours worked beyond 40 in a given workweek at a rate not less than one-half of the employee's regular rate of pay. Id.

Although the parties agree that Overnight Motor applies in calculating the regular rate, they disagree about how to calculate the overtime premium. Specifically, the parties disagree over whether the former employees should receive 150% of the regular rate for all hours worked over 40 in a given workweek or 50% of the regular rate for all hours worked over 40 in a given workweek.

In analyzing how to calculate unpaid overtime compensation under 29 U.S.C. § 216(b) in this mistaken exemption classification case, we note that four sister circuits have addressed this issue. The First, Fifth, Seventh, and Tenth Circuits all have determined that a 50% overtime premium was appropriate in calculating unpaid overtime compensation under 29 U.S.C. § 216(b) in mistaken exemption classification cases, so long as the employer and employee had a mutual understanding that the fixed weekly salary was compensation for all hours worked each workweek and the salary provided compensation at a rate not less than the minimum wage for every hour worked. See Urnikis–Negro v. Am. Family Prop. Servs., 616 F.3d 665 (7th Cir.2010); Clements v. Serco, Inc., 530 F.3d 1224 (10th Cir.2008); Valerio v. Putnam Assocs., Inc., 173 F.3d 35 (1st Cir.1999); Blackmon v. Brookshire Grocery Co., 835 F.2d 1135 (5th Cir.1988).

In Blackmon, the Fifth Circuit applied 29 C.F.R. § 778.114 to calculate unpaid overtime compensation in a mistaken exemption classification case. 835 F.2d at 1138. The employees in Blackmon were meat-market managers who were wrongly classified as exempt. Id. at 1137–38. The district court calculated their unpaid overtime compensation by dividing the weekly salary by 40 hours to determine their regular rate, multiplying that rate by 150%, and then multiplying that result by the number of overtime hours. Id. at 1138. The Fifth Circuit rejected this method, instead applying 29 C.F.R. § 778.114 to determine the regular...