Shea v. Galaxie Lumber & Const. Co., Ltd.

• Decision Date: 19 August 1998
• Docket Number: 97-1827,Nos. 97-1379,s. 97-1379
• Citation: 152 F.3d 729
• Parties: 136 Lab.Cas. P 33,733, 4 Wage & Hour Cas.2d (BNA) 1473 Joy R. SHEA, Plaintiff-Appellant, Cross-Appellee, v. GALAXIE LUMBER & CONSTRUCTION COMPANY, LTD., Defendant-Appellee, Cross-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 729

152 F.3d 729

136 Lab.Cas. P 33,733, 4 Wage & Hour Cas.2d

(BNA) 1473

Joy R. SHEA, Plaintiff-Appellant, Cross-Appellee, v. GALAXIE LUMBER & CONSTRUCTION COMPANY, LTD.,

Defendant-Appellee, Cross-Appellant.

Nos. 97-1379, 97-1827.

United States Court of Appeals, Seventh Circuit.

Argued Nov. 7, 1997.

Decided Aug. 19, 1998.

Ernest T. Rossiello (argued), Rossiello & Associates, Chicago, IL, for Plaintiff-Appellant, Cross-Appellee.

Bradley B. Falkof (argued), Melissa A. Vallone, Barnes & Thornburg, Chicago, IL, Allen B. Glass, Glass & Weiner, Chicago, IL, for Defendant-Appellee, Cross-Appellant.

Before COFFEY, FLAUM, and DIANE P. WOOD, Circuit Judges.

DIANE P. WOOD, Circuit Judge.

Joy Shea worked as a receptionist and office assistant at Galaxie Lumber & Construction Company for about a year and a half, from June 1992 until January 1994. Toward the end of her tenure there, she complained to the company's president, Steven Pinsler, that she was not receiving the overtime pay to which she was entitled under the Fair Labor Standards Act (FLSA), 29 U.S.C. § 207(a). Her complaints were unavailing, which prompted her to resign. She later filed this lawsuit against Galaxie, raising unpaid overtime and retaliation claims under the FLSA, 29 U.S.C. §§ 207(a), 215(a)(3), and a sexual harassment claim under Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e-2(a)(1). A jury found in her favor.

The dispute now before us on Shea's appeal, No. 97-1379, relates to the district court's decision to deny Shea liquidated and punitive damages on her FLSA claims, and the court's decision to award her lawyers only about one-fifth of the fees and costs they requested. Galaxie has cross-appealed, No. 97-1827, claiming that the district judge erred in rejecting its motion for remittitur on the punitive damages the jury awarded on Shea's Title VII claim.

I

A. FLSA Claim

Donna Ruzecki was the office manager at Galaxie who initially hired Shea to be the company's receptionist. Ruzecki informed Shea that her hours were to be 8:30 a.m. to 4:30 p.m., Monday through Friday, and 9:00 a.m. to 12:00 p.m. every other Saturday. Ruzecki also instructed Shea to keep track of her hours by recording them by hand on timecards, which Ruzecki collected. From the start, Galaxie did not pay Shea at a rate of one-and-a-half times her ordinary hourly wage for her three extra Saturday hours. Instead, it paid her "straight time," as it also did when she worked longer hours during the week. Testimony at the trial indicated that Shea often worked at Galaxie until 6:00 p.m. or later during the week, and that her three-hour duty on alternate Saturdays frequently stretched to four or five hours.

In August 1992, Galaxie changed its method of paying Shea from an hourly system to a flat weekly wage of $250 per week. After this change, she continued to work her basic 40 hours per week, extra hours on weekdays, and alternate Saturdays. She received no additional compensation for hours worked in excess of 40 per week. In November 1992, Galaxie increased Shea's salary to $300 per week; her work hours continued to exceed 40 per week. In December 1992 Ruzecki left the company and many of her duties were reassigned to Shea, including preparing payroll, accounts payable, and accounts receivable, and writing (but not signing) checks. Shea received another raise--to $325 per week--but not a formal promotion. At this point, she often worked from 8:30 a.m. until 6:00 or 7:00 p.m. weekdays, and she began to work every Saturday. Although Galaxie installed a time clock in December 1992, Shea apparently did not need to submit timecards to anyone after Ruzecki's departure. She received her last raise in February 1993, to $350 per week. Beginning in late August of that year, she was authorized to prepare extra checks for management signature that compensated her on a straight time basis for the 13 or so overtime hours she worked each week. (Shea did not know that she might have been entitled to the higher multiple established by the FLSA.) Galaxie representatives signed those checks, even though Pinsler testified at trial that he did not believe Shea was entitled to any overtime for the period from August 1993 to January 1994, because she took the job knowing that she would have to work more than 40 hours per week to get her work done.

Not until December 1993 did Shea begin complaining to management about her lack of overtime pay. Her complaints elicited a strong reaction from Pinsler, who stormed into her office in a rage, swearing at her, sweeping objects off her desktop onto the floor, and shouting that she was not worth the overtime pay she wanted. Shortly after this incident, Shea tendered her resignation to the company. Pinsler's brother Bruce, also a Galaxie executive, responded by offering her a raise to $450 or $500 a week if she would stay, but she declined.

B. Title VII Claim

During the time of Shea's employment, Galaxie had no written policy forbidding sexual harassment in the workplace. Pinsler believed it was understood that sexual harassment would not be tolerated and believed such a policy was unnecessary. According to testimony at trial, he was too optimistic, and too hypocritical. Beginning in December 1992 or early 1993, Pinsler's father Leon (a consultant to the company) would sidle up to Shea, hug her, kiss her, pat her bottom, and whisper in her ear. Witnesses confirmed Shea's account of these events. Leon also repeatedly told Shea that he thought the two made a great couple and that he wished they could have sex. Shea tried laughing it off, but she eventually became exasperated enough to order him to stop. He did not. On one occasion, he came up behind her and grabbed her breasts.

Not to be outdone by his father, at some time after December 1992, Pinsler told Shea that his wife was out of town, and invited her to come to his house for a tryst. At trial, Pinsler admitted that the conversation had taken place, but he brushed it off as "kidding." After that, he began on a daily basis to ask Shea to perform fellatio on him. Shea felt degraded and humiliated by these remarks. In early 1993, after Galaxie had completed some work for a trade show at the O'Hare Expo Center (now known as the Rosemont Convention Center), Pinsler asked Shea and her co-worker if he could go to their hotel room with them and have sex. Later, while Shea and her fiance were on a cruise that Shea had earned as a company bonus, Pinsler, his father, and his brother all commented to Shea (in the presence of the fiance) that she had beautiful breasts and that they wished they could touch them. Shea was embarrassed and promptly put on a t-shirt over her bathing suit. Other vulgar remarks and behavior along these lines also occurred.

C. Retaliation Claim

After Shea filed this lawsuit, Galaxie filed a separate suit against Shea and Shea's fiance's mother, claiming that the mother should have paid in a lump sum, rather than in installments, for work Galaxie had performed on a bathroom in her home. Pinsler, his foreman, and Shea had reached a verbal agreement that Shea would pay for the work in $200 installments. Shea made five such payments, but Galaxie never cashed the checks, and Shea stopped payment on all five checks after she received notice of Galaxie's suit against her. Galaxie also sued Shea for the cost of the cruise, and for repayment of certain loans she had taken out from the company. Shea had treated the cruise as a bonus, and had received an IRS Form 1099 from Galaxie that corroborated her understanding. Her company loans had been paid off by deductions from her weekly paycheck, except for a $1,600 loan that she repaid in cash.

II

The jury found in Shea's favor, but its damage awards reflected a nuanced view of the case. On her two FLSA claims, it awarded Shea $1,207.50 for lost wages, nothing in compensatory damages for humiliation, inconvenience, and emotional suffering for her complaints about overtime wages, and $9,100 in punitive damages. On the Title VII claim for sexual harassment, the jury awarded Shea $1 for emotional pain, suffering, and humiliation, and $2,500 in punitive damages. After the verdict, Shea moved for liquidated damages under 29 U.S.C. § 216(b), which would have doubled her FLSA lost wages award. The district court refused to grant liquidated damages, but it did grant Shea prejudgment interest on the lost wages award. Galaxie moved first for judgment as a matter of law on the FLSA punitive damages, and second to remit $2,475 of the $2,500 Title VII punitive damages award, arguing that a ratio of 2,500 to 1 was impermissibly high. The district court granted the first motion and reduced the FLSA punitive damages award to zero. It denied the remittitur.

For their part, Shea's lawyers moved under 29 U.S.C. § 216(b) and 42 U.S.C. § 2000e-5(k) for $114,766.50 in attorneys' fees and $5,694.15 in expenses. The district court slashed the request dramatically. It granted only about one-fifth of the fees ($20,841.50) and less than half of the expenses ($2,642.97). To a minor degree, it based these decisions on specific objections Galaxie had raised to the listed fees and expenses, but the principal reason for its action was the court's belief that the lawyers had achieved only limited success for their client.

III

We begin with Shea's argument that the district court should have granted liquidated damages on her FLSA claims pursuant to 29 U.S.C. § 216(b), doubling the award she received. That statute makes liquidated damages mandatory unless the district court finds that the defendant-employer was acting in good faith and reasonably believed that its conduct was consistent with the law. See 29 U.S.C. § 260. The employer bears the burden of proving both good faith and reasonable belief. Bankston v. State of Illinois, 60 F.3d 1249, 1254 (7th Cir.1995). Although in the final analysis we review a district court's decision on liquidated damages...