Fegley v. Higgins

• Decision Date: 26 April 1994
• Docket Number: Nos. 92-1771,92-2086 and 92-2164,s. 92-1771
• Citation: 19 F.3d 1126
• Parties: 128 Lab.Cas. P 33,088, 1 Wage & Hour Cas. 2d (BNA) 1638 Robert FEGLEY, Plaintiff-Appellant, Cross-Appellee, v. Ronald B. HIGGINS, Sr.; C.M.R.A. Incorporated; CMR Associates; Cynthia Higgins; Ronald Higgins, Jr.; Marcy Pakizer, Defendants-Appellees, Foremost Industries, Inc., Defendant-Appellee, Cross-Appellant.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 1126

19 F.3d 1126

128 Lab.Cas. P 33,088, 1 Wage & Hour Cas. 2d

(BNA) 1638

Robert FEGLEY, Plaintiff-Appellant, Cross-Appellee, v. Ronald B. HIGGINS, Sr.; C.M.R.A. Incorporated; CMR

Associates; Cynthia Higgins; Ronald Higgins,

Jr.; Marcy Pakizer, Defendants-Appellees,

Foremost Industries, Inc., Defendant-Appellee, Cross-Appellant.

Nos. 92-1771, 92-2086 and 92-2164.

United States Court of Appeals,

Sixth Circuit.

Argued Dec. 10, 1993.

Decided April 26, 1994.

Michael A. Alaimo (briefed), Theodore R. Opperwall (argued), Dickinson, Wright, Moon, Van Dusen & Freeman, Detroit, MI, for plaintiff-appellant, cross-appellee.

Ralph Musilli (argued and briefed), Musilli & Baumgardner, Theresa K. Klimczuk, Klimczuk & Paruszkiewicz, St. Clair Shores, MI, for Ronald B. Higgins, Sr., C.M.R.A., Inc., CMR Associates, Cynthia Higgins, Ronald Higgins, Jr., Marcy Pakizer.

Ralph Musilli, Elizabeth S. Lopez, Musilli & Baumgardner, St. Clair Shores, MI, for Foremost Industries, Inc.

Before: JONES, Circuit Judge; BROWN, Senior Circuit Judge; and WEBER, District Judge. ^*

BAILEY BROWN, Senior Circuit Judge.

Plaintiff Robert Fegley ("Fegley") and defendant Foremost Industries, Inc. ("Foremost") appeal the final judgment of the district court in this action under the Fair Labor Standards Act ("FLSA"), 29 U.S.C. Sec. 201 et seq., which awarded plaintiff overtime and attorney fees against Foremost and dismissed Fegley's additional claims and the remaining defendants. We affirm in part, and reverse and remand in part.

I.

Fegley seeks to collect unpaid wages, overtime, and attorney fees under the FLSA. The district judge granted Fegley's motion for partial summary judgment as to liability and allowed the case to go to trial to determine damages only. Fegley v. Higgins, 760 F.Supp. 617 (E.D.Mich.1991). At the bench trial to determine damages, the judge made the following findings of fact and conclusions of law:

1. CMR [Associates, a partnership which was incorporated as CMRA, Inc. in June 1988] and Foremost were in the business of fabricating automotive prototype metal parts during the relevant periods in 1988 and 1989. Ronald B. Higgins, Sr. (Higgins), and members of his family [son Ronald Higgins, Jr.; wife Cynthia Higgins; and daughter Marcy Pakizer] were the partners of CMR and the stockholders of Foremost. ¹ Higgins was manager of CMR and chief executive officer of Foremost. CMR was in business between January and April 1988. Thereafter Foremost continued the business.

2. Prototype parts are fabricated by skilled metal model makers. Manufacturers of automotive parts contract for prototype parts to assess the design of new parts and to make the necessary dies and the like for such new parts.

3. Higgins and Fegley had experience in the fabrication of prototype parts. Higgins had the experience and the relationships necessary to obtain contracts. Fegley was a skilled metal model maker. In late 1987, Higgins and Fegley discussed going into business together. Each was to own one-half of the business. The discussions were general and continued intermittently through April 1988. No agreement was reached because Fegley lacked the necessary funds to contribute to the capital of the proposed business.

4. Beginning around January 1, 1988, Higgins obtained several contracts for the fabrication of prototype parts. Fegley agreed to work on the fabrication of these parts knowing that Higgins had no money with which to pay him. Fegley was satisfied to work without pay, believing at the time that he would eventually go into business with Higgins. Fegley and Higgins agreed that if they did not get together in business then Higgins would pay Fegley for his work. No amount was agreed upon. Fegley was required to work no particular hours.

5. Fegley worked intermittently between January and March 1988 on the premises of Westco Metal Craft Co., where Higgins had rented space and facilities. Higgins paid Fegley $1,150 in March 1988, which the parties initially considered a loan. Higgins eventually treated it as compensation and so advised Fegley. Higgins also gave Fegley a set of tires during the period. The tires had a value of $400.

6. Between January and April 1988, Fegley was an incipient partner of Higgins. He anticipated that a business relationship with Higgins would develop. While the Court has previously found that Fegley was an employee of CMR, ² that finding is not sufficient to find that any money is owed Fegley for the work he did during that period. The Court cannot extrapolate from the contracts Fegley worked on, his statements and casual observations of third-parties the hours worked and particularly whether Fegley worked more than forty hours in any particular week.

7. In early 1988, Foremost acquired premises in New Baltimore and Higgins began contracting work to be performed on these premises by Foremost. Fegley assisted Higgins in setting up the new premises for fabricating operations.

8. Early in April 1988, Higgins and Fegley agreed that Fegley would go to work full time in the New Baltimore premises as shop foreman for $750 a week. Fegley was first paid for the week ending May 15, 1988 and worked regularly until [Higgins discharged him on] April 1, 1989.

9. The regular work week at New Baltimore ran from Monday to Saturday and covered 56 hours with work on Monday through Thursday from 6:00 a.m. to 4:30 p.m. and Friday and Saturdy [sic] from 8:00 a.m. to 4:00 p.m. Fegley was aware of this when he agreed to the $750.00 per week and generally worked these hours each of the 44 weeks between May 15, 1988 and April 1, 1989. No record was kept of the hours Fegley worked.

10. Fegley and Higgins did not discuss overtime. Since Fegley knew the work week was 56 hours and agreed to $750 a week as his compensation, his hourly pay was $13.70 an hour. See Brennan v. Valley Towing Co., Inc., 515 F.2d 100, 109 n. 13 (9th Cir.1975). The Court rejects the reasoning of Marhsall [sic] v. Hendersonville Bowling Center, Inc., 483 F.Supp. 510 (M.D.Tenn.1980) [, aff'd, 672 F.2d 917 (6th Cir.1981) ].

11. The only credible evidence regarding the hours Fegley worked is the detailed hours Richert and Roberts worked since Fegley's working hours closely paralleled their working hours. During the forty-four weeks in which Fegley, Richert and Roberts worked in common, Richert worked 644 hours of overtime exclusive of Sundays and Roberts worked 573 hours of overtime exclusive of Sundays. Fegley did not work Sundays.

12. The best approximation, which is all that can reasonably be found, of Fegley's overtime hours is determined by averaging the hours of Richert and Roberts. This approximation is 600 hours. Fegley was entitled to an hourly rate for these hours of $20.10. Since he was paid only $13.70 an hour, he is entitled to $6.40 an hour or $3,840 for overtime pay.

13. Foremost's failure to pay Fegley overtime was willful. Foremost made no effort to determine its responsibilities with regard to Fegley. See Dalheim v. KDFW-TV, 712 F.Supp. 533 (N.D.Tex.1989). Fegley is entitled to $3,840 in liquidated damages as a consequence.

Opinion and Order of May 14, 1992. ³

To clarify, three distinct time periods are involved in this lawsuit. During the first period from January 1 to April 11, 1988, Fegley contends he worked for CMR Associates under the direction of Ronald B. Higgins, Sr. ("Higgins"). The trial judge awarded no damages for this first period. On appeal, Fegley claims that he was entitled to damages for wages and overtime against Higgins and the three partners of CMR Associates.

During the second period from April 11 to May 15, 1988, Fegley contends he labored for Foremost, again under the direction of Higgins, but did not receive any wages. The trial judge awarded no damages to Fegley for the second period. Fegley avers that he is entitled to judgment against Foremost and Higgins for his work.

Finally, during the third period from May 15, 1988 to April 1, 1989, Fegley, without dispute, worked for Foremost and received wages of $750 per week. The trial court found Foremost solely liable for $7,680 in overtime and liquidated damages for this period. Neither party appeals the amount of this award, but Fegley contends that Higgins should be jointly liable with Foremost for the damages.

In addition to the award of $7,680 in damages, the judge later awarded Fegley $40,000 in attorney fees and denied the defendants' request for attorney fees. Foremost has appealed the award of attorney fees, and Fegley has cross-appealed.

II.

Thus, on appeal, the parties have raised the following issues:

1. Whether the district court erred in completely dismissing defendants Ronald Higgins, Sr.; Ronald Higgins, Jr.; Cynthia Higgins; and Marcy Pakizer.

2. Whether the district court erred in refusing to assess damages against Higgins and the partners of CMR Associates for the period from January 1 to April 11, 1988.

3. Whether the district court erred in failing to award damages to Fegley against Foremost and Higgins for the period from April 11 to May 15, 1988.

4. Whether the district court erred in failing to hold Higgins jointly liable with Foremost for overtime for the period from May 15, 1988 to April 1, 1989.

5. Whether the district court erred in determining Fegley was a prevailing party entitled to attorney fees where the damages award was less than defendants' offers to settle prior to trial; whether the court erred in failing to make all of the defendants liable for the award of attorney fees; and whether defendants are entitled to attorney fees.

III.

Whether the district court erred in completely dismissing defendants Ronald Higgins, Sr.; Ronald Higgins, Jr.; Cynthia Higgins; and Marcy Pakizer.

In awarding damages to Fegley against Foremost for the period from May 15, 1988 to April 1, 1989, the district court dismissed all of the defendants except Foremost without explaining its rationale. Fegley argues that Higgins, as well as Foremost,...