Marshall v. Gerwill, Inc.

• Decision Date: 13 August 1980
• Docket Number: Civ. A. No. J-78-1329.
• Parties: Ray MARSHALL, Secretary of Labor, United States Department of Labor, Plaintiff, v. GERWILL, INC., doing business as Local Cab Co., and Willard Durbin, Individually and as an Officer thereof, Defendant.
• Court: U.S. District Court — District of Maryland

495 F. Supp. 744

Ray MARSHALL, Secretary of Labor, United States Department of Labor, Plaintiff, v. GERWILL, INC., doing business as Local Cab Co., and Willard Durbin, Individually and as an Officer thereof, Defendant.

Civ. A. No. J-78-1329.

United States District Court, D. Maryland.

August 13, 1980.

Carin A. Clauss, Sol. of Labor, Washington, D. C., Marshall H. Harris, Regional Sol., Joan M. Roller, U. S. Dept. of Labor, Philadelphia, Pa., Russell T. Baker, Jr., U. S. Atty., Ellen L. Hollander, Asst. U. S. Atty., Baltimore, Md., for plaintiff.

John Wheeler Glenn, O'Connor, Preston, Glenn & Smith, P. A., Baltimore, Md., for defendant.

MEMORANDUM AND ORDER

SHIRLEY B. JONES, District Judge.

Plaintiff, the Secretary of Labor, United States Department of Labor, brought this action against the defendants seeking monetary and injunctive relief for various violations of the Fair Labor Standards Act of 1938, as amended, 29 U.S.C. §§ 201-219 (FLSA). Plaintiff essentially contends that:

(1) the defendants failed to pay certain employees (taxicab drivers) minimum wages for all the hours worked, 29 U.S.C. § 206, and for work performed which was an integral part of their job, 29 U.S.C. § 254;

(2) the defendants were required to pay their dispatchers and helpers overtime for any work performed over forty hours per week;

(3) that the defendant Durbin is an employer within the meaning of the FLSA and should be held jointly and severally liable with Gerwill, Inc.;

(4) that the defendants' violations were willful within the meaning of the FLSA and thus the three year (and not two year) statute of limitations period is applicable;

(5) that the defendants should be enjoined from further violations of the FLSA; and

(6) that the plaintiff is entitled to prejudgment interest on the back wages due.

This action has its beginnings in Hagerstown, Maryland in May of 1975. At that time Willard Durbin, who owned a towing service in Hagerstown (Durbin Auto Service) became interested in the operation of Local Leasing Corporation (Local Leasing). Local Leasing operated a taxicab service in Hagerstown. While a contract was entered into on May 27, 1975 (defendants' Exhibit 1) between Local Leasing and Gerwill, Inc. (Gerwill), Durbin acted as a caretaker of the business until early September of that year when Gerwill (which continued to do business as Local Leasing) took over as owner.¹ As will become relevant later, Durbin met with Wayne Baumgardner, a Department of Labor Compliance Officer (among others), in May of 1975 concerning certain problems Local Leasing had with the Internal Revenue Service (payment of liens) and in not complying with the FLSA. Durbin met Baumgardner sometime later on the street in Hagerstown and, according to Baumgardner's testimony at trial, told Baumgardner that he knew he was not in compliance with the FLSA. He further indicated that if the Maryland Public Service Commission approved his requested rate increase, he could then pay minimum wages to his drivers and that he would retroactively pay "make-up pay" for those drivers who had not earned minimum wages. After no improvements were forthcoming, Baumgardner began an investigation of the company's records in December of 1977 and concluded in February of 1978. This investigation included speaking with drivers and company officials, chiefly Karl Snyder, Gerwill's bookkeeper, and examining manifest sheets, "yellow tags" (see infra at 748-749), some invoices and work records of drivers, gas attendants and dispatchers. Subsequent to that investigation, Baumgardner met with Snyder and Frances Showe² at what he termed a "closing conference." Baumgardner informed them of the alleged violations of the FLSA, of future compliance measures and sought, but did not explicitly receive, any assurances. Baumgardner returned to Gerwill in June of 1978, prior to the sale to Turner Taxi, and examined sample manifest sheets. He testified that there were no changes at all for any class of employment at Gerwill (drivers, dispatchers or gas attendants). Suit was filed on July 20, 1978.

The facts in this case are relatively simple. It is the legal implications from those facts and the plaintiff's methodology in computing damages for both the alleged minimum wage violation and uncompensated time violation that cause the Court some disconcertion. Accordingly, after setting forth the general factual scenario, the Court will expound on the facts relevant to the respective legal issues and will deal with these issues seriatim.

Parenthetically, at the beginning of the trial, the parties stipulated that certain non-driver employees (dispatchers and gas attendants) were owed overtime back wages. The defendants stipulated that while these fourteen employees were owed $4,097.87 in overtime, it was not part of the stipulation that this amount included, as requested by plaintiff, pre-judgment interest, or that the failure to pay this money was willful. With these provisos, the stipulation was accepted by the Court. The issues of pre-judgment interest and willfulness shall be dealt with later (infra at 755-756).

Numerous drivers and dispatchers testified on behalf of the plaintiff. Robert E. Sprankle, Sr., for example, testified that he was a driver and dispatcher for Gerwill and had worked for Local Leasing. Sprankle testified that both prior and subsequent to moving to the new office behind the Maryland National Bank Building (201 W. Franklin Street) in September of 1975, it was the driver's responsibility to clean out the cab prior to beginning work and sometimes (after the move) to gas up the cab. At that point, whether the driver's manifest sheet had already been punched in or not, the driver was still not on the day's payroll until he reported to the dispatcher that he was ready to go. During the day, if Sprankle wished to take lunch or to "grab a cup of coffee at the Snow White" (a restaurant near a popular taxistand in Hagerstown that the drivers apparently frequented), he reported this to the dispatcher. Most of the drivers who testified followed the same pattern. It is what the dispatcher upon receiving the information did (i.e., punch the driver off the clock) that is controverted and is an important factor in both the back wages and full compensation issues.³ Upon re-entering his cab, the driver reported to the dispatcher that he had returned and at that point (according to plaintiff) the driver was back on the clock. After Sprankle had discharged his last passenger, he radioed the dispatcher that he was returning to the office. The credible testimony is that at that point the dispatcher punched a yellow ticket and the driver was off the clock. According to Sprankle and all the drivers, it generally took between 5 and 8 minutes to get back to the office, regardless of where in Hagerstown they were. While some of the drivers' testimony varied, Sprankle testified that it then took 15-20 minutes "if lucky" to punch in the manifest sheet and hand it to either Mr. Snyder or Ms. Showe. Sprankle, under cross-examination, testified that he always called the dispatcher when he took a break but that he realized some drivers did take breaks without reporting them.⁴ While there is no exact figure, Sprankle testified that he had from time to time engaged in "knock-downs," i.e., drivers not reporting their entire fares for a shift. All but one of the drivers testified that he had knocked-down, and the issue of knock-downs is at the very foundation of the defendants' case. Defendants argue that since all fares should have been reported and were not, no violations of the minimum wage provisions of the FLSA can exist.

The rest of the drivers testified essentially of the same general procedures as set forth by Sprankle. They also testified that they knocked-down and also did not report tips. For example, Jack Leggett (driver) testified that he could not remember if he reported to Mr. Snyder the approximately $20 per month in tips he received, and he certainly did not report the $3 per day in knock-down money. Howard W. Hornbaker (driver) did not report $20 per month in tips or $6-8 per week in knock-down money. The other drivers generally testified to a like amount of knock-down money, the highest being Eugene Imes' testimony of $20-22 per week. The relevance of unreported tips and knock-down money will be explicated when dealing with the allegations of minimum wage violations.

Donnie Light, a dispatcher for Local Leasing and later for Gerwill, testified as to the physical layout of both the old and new offices. As relevant herein, Light testified that the driver was punched in when he went out on the street, not when he got his first haul. Light also testified that if a reported break was for more than five minutes, he punched a yellow ticket on the driver indicating that the driver was off the clock.

Finally, most of the other drivers who were witnesses testified that there was some delay in the check out process, i. e., from the time they arrived at the office at the end of their shift to being ready to leave the premises. The times were generally between 5 and 10 minutes, except for Sprankle's estimated 15 to 20 minutes.

As mentioned earlier, (supra at 746-747), Wayne Baumgardner conducted the investigation for the plaintiff. From the records of the defendants and from the conversations with Snyder, Baumgardner estimated that there was a 30-45 minute difference between when the manifest was punched on the dispatcher's desk when the driver arrived in the morning, and when the first yellow ticket was punched indicating the first fare. The time on that yellow ticket was, according to Baumgardner, the driver's starting time. Likewise, the driver's quitting time was the time on the last yellow ticket which was punched when the driver reported to the dispatcher that his last fare was finished and that he was heading back to the office.⁵

The defendants' case can be quickly capsulized....