Dutcher v. Randall Foods

• Decision Date: 17 April 1996
• Docket Number: No. 94-1530,94-1530
• Citation: 546 N.W.2d 889
• Parties: 70 Fair Empl.Prac.Cas. (BNA) 1426, 131 Lab.Cas. P 33,376 Lori DUTCHER, Appellant, v. RANDALL FOODS, Appellee.
• Court: Iowa Supreme Court

Page 889

546 N.W.2d 889

70 Fair Empl.Prac.Cas. (BNA) 1426, 131 Lab.Cas. P 33,376

Lori DUTCHER, Appellant, v. RANDALL FOODS, Appellee.

No. 94-1530.

Supreme Court of Iowa.

April 17, 1996.

James L. Kramer and Stuart J. Cochrane of Johnson, Erb, Bice & Carlson, P.C., Fort Dodge, for appellee.

Considered by McGIVERIN, C.J., and HARRIS, LARSON, CARTER, and TERNUS, JJ.

TERNUS, Justice.

Appellant, Lori Dutcher, successfully proved her employer, appellee Randall Foods, violated the Equal Pay Act ¹, see 29 U.S.C. § 206(d) (1992), and the Iowa Civil Rights Act, see Iowa Code ch. 216 (1993). A jury awarded Dutcher lost wages and benefits. The trial court, however, refused to award Dutcher liquidated damages, damages for emotional distress and attorney fees. Dutcher appealed. We reverse the trial court's denial of liquidated damages and attorney fees, and remand for determination of an appropriate fee and entry of judgment in accordance with our decision.

I. Background Facts and Proceedings.

Lori Dutcher began working for Randall in 1984 as a part-time wrapper and counter person in the meat department. In 1990 she was promoted to a full-time position, responsible for the prepackaged meat section of the meat department. At that time, store management granted Dutcher's request to have a "supervisor" patch sewn on her white work jacket; two other full-time employees in the meat department received the same patch.

In late 1991, Dutcher began to suspect that Randall was discriminating against her based on her gender. Her suspicions were primarily based on her belief that Myron Gilliland, a full-time male employee in the produce department, received a higher wage than she did.

Randall hired Gilliland in September of 1991 as a full-time produce clerk. Randall expected Gilliland would move into a management position; he had twelve years of experience in the grocery business, five in managerial positions. Gilliland was initially hired at a rate of $5.80 per hour; three weeks later Dutcher's wage was raised to the same hourly rate. In October of 1991, however, Gilliland received a one dollar raise; Dutcher did not receive a raise at that time.

By coincidence, the produce department manager was Dutcher's brother-in-law, Tom Dutcher. Lori Dutcher learned of the pay differential between her and Gilliland when Tom Dutcher told his brother, Lori Dutcher's husband, in early 1992.

Lori Dutcher then complained to the store manager about being paid less than Gilliland. When she found the manager's response unsatisfactory, she filed a complaint with the Iowa Civil Rights Commission. See Iowa Code § 216.15 (1993). Following the issuance of a right-to-sue letter, see id. § 216.16, Dutcher filed a petition in the Iowa district court. Her petition included a claim under the Equal Pay Act to recover wages, liquidated damages and attorney fees. It also stated a claim under the Iowa Civil Rights Act for loss of income and benefits, emotional distress, punitive damages and attorney fees. Both claims were based on the allegation that Dutcher did not receive wage increases given to males working in equal positions.

Trial of Dutcher's case was bifurcated: the equal pay claim was tried to a jury and the civil rights claim was tried to the court. The jury decided Randall violated the Equal Pay Act by paying Dutcher at a rate less than the rate "paid to a member of the opposite sex for a job doing substantially equal work which required equal skill, effort and responsibility." It awarded her $2128 for lost wages and benefits, only $40.80 less than what she had requested. The court entered judgment on the jury verdict and addressed the remaining issues.

With respect to the Equal Pay Act, the court found Randall demonstrated it acted in good faith and had reasonable grounds to believe it was not violating the law in setting the pay rate for Dutcher and comparable employees. Thus, the court denied liquidated damages. See 29 U.S.C. § 260. In addition, Dutcher's claim for attorney fees was also denied.

The court then considered Dutcher's discrimination claim under the Iowa Civil Rights Act. The court adopted the jury's findings that (1) Randall paid Dutcher less than male employees because she was female and (2) Dutcher lost wages and benefits of $2128. Dutcher's claim for additional compensatory damages was denied because the court rejected her testimony that Randall's discriminatory conduct caused her emotional distress. The trial court also found Randall's actions were not willful or wanton and consequently concluded punitive damages were not warranted.

On appeal Dutcher makes several claims: (1) the trial court erred in considering whether Randall's conduct was reasonable and in good faith because Randall had not raised this issue as an affirmative defense; (2) even if this issue had been properly raised, the court abused its discretion in finding Dutcher was not entitled to liquidated damages; (3) substantial evidence does not support the court's conclusion that Dutcher suffered no emotional distress; and (4) the trial court erred in failing to award Dutcher reasonable attorney fees. Randall did not file a cross-appeal and therefore, we accept as established that Randall violated the Equal Pay Act and the Iowa Civil Rights Act by paying Dutcher less than males in comparable positions. Similarly, the amount of Dutcher's lost wages and benefits, not challenged on appeal, is also conclusively determined.

II. Liquidated Damages.

Section 216(b) of the FLSA provides for an award of liquidated damages to a prevailing employee:

An employer who violates the provisions of [the Equal Pay Act] shall be liable to the employee ... affected in the amount of their unpaid ... wages ... and in an additional equal amount as liquidated damages.

29 U.S.C. § 216(b). An employee's right to liquidated damages may, however, be defeated:

[I]f the employer shows to the satisfaction of the court that the act or omission giving rise to such action was in good faith and that he had reasonable grounds for believing that his act or omission was not a violation of the Fair Labor Standards Act of 1938, as amended, the court may, in its sound discretion, award no liquidated damages or award any amount thereof not to exceed the amount specified in section 216 of this title.

Id. § 260.

Dutcher challenges the district court's denial of liquidated damages on both procedural and substantive grounds. First, she claims section 260 is an affirmative defense which the employer must plead and prove. Because Randall failed to plead "good faith and reasonable grounds" in its answer, Dutcher claims the defense was waived. Second, Dutcher asserts the trial court abused its discretion in failing to award liquidated damages because the evidence does not show good faith and reasonable grounds for Randall's actions.

We agree that Randall waived this defense when it failed to raise section 260 as an affirmative defense. Consequently, we do not reach the question of whether Randall successfully proved it acted in good faith and on reasonable grounds. Whether section 260 creates an affirmative defense is a question of law for the court; therefore, we review for errors of law. See Iowa R.App.P. 4.

A. Section 260 is an affirmative defense. Although other sections of the Portal-to-Portal Act require a particular defense to be "pleaded and proved" by the employer, e.g., 29 U.S.C. §§ 258, 259 (employer's reliance on past and future administrative rulings), section 260 merely provides that the employer "show" good faith and reasonable grounds. Thus, although the statute places the burden of proof on the employer, it does not address the necessity to plead a section 260 defense. Because the statute is silent on this issue, we look to our procedural rules to determine whether they require this defense to be affirmatively alleged. See Winans v. W.A.S., Inc., 112 Wash.2d 529, 772 P.2d 1001, 1008 (1989) (en banc) (examining state rules of civil procedure to decide whether section 260 is an affirmative defense).

Iowa Rule of Civil Procedure 101 requires "[a]ny defense ... which admits the facts of the adverse pleading but seeks to avoid their legal effect [to] be specially pleaded." A section 260 defense is more than a mere denial of liability; it arises only after the facts of the petition have been proven. Thus its purpose is to avoid one of the legal effects of a finding of discrimination--an award of liquidated damages. We think Randall's defense to the imposition of liquidated damages falls within this rule. Other jurisdictions have also concluded section 260 must be affirmatively alleged. E.g., Dole v. Haulaway, Inc., 723 F.Supp. 274, 288 (D.N.J.1989) (dicta), aff'd, 914 F.2d 242 (3d Cir.1990), cert. denied, 499 U.S. 936, 111 S.Ct. 1388, 113 L.Ed.2d 445 (1991); Brock v. First Constr., 105 Lab.Cas. (CCH) p 34,843, 1985 WL 26036 (D. Guam Sept. 4, 1985); Reid v. Day & Zimmerman, 73 F.Supp. 892, 895 (S.D.Iowa 1947) (dicta), aff'd, 168 F.2d 356 (8th Cir.1948); Pierce v. Concrete Prods. & Supply Co., 186 So.2d 751, 755 (Miss.1966); Witt v. Skelly Oil Co., 71 N.M. 411, 379 P.2d 61, 66 (1963).

We hold rule 101 required Randall to plead section 260 as an affirmative defense; Randall failed to make such a pleading. Failure to plead an affirmative defense normally results in waiver of the defense, unless the issue is tried with the consent of the parties. See Arkae Dev., Inc. v. Zoning Bd. of Adjustment, 312 N.W.2d 574, 575 (Iowa 1981) (issue of standing could not be raised in posttrial brief where lack of standing was not raised by pretrial motion or pleading and was not tried by consent of the parties); Nelson v. Leaders, 258 Iowa 919, 922-23, 140 N.W.2d 921, 924 (1966) (defendant's failure to plead invalidity of restrictive covenant resulted in waiver of defense). To avoid waiver Randall claims its good faith defense was tried with the implied consent of Dutcher.

B. Section 260's affirmative...