Warren v. Edgeco, Inc.

Decision Date27 July 1979
Citation392 N.E.2d 857,8 Mass.App.Ct. 171
Parties, 24 Wage & Hour Cas. (BNA) 400, 87 Lab.Cas. P 33,831 Robert WARREN v. EDGECO, INC.
CourtAppeals Court of Massachusetts

Alan R. Hoffman, Boston, for defendant.

S. Thomas Martinelli, Springfield, for plaintiff.

KEVILLE, GOODMAN and GREANEY, JJ.

KEVILLE, Justice.

This is an appeal by the defendant, Edgeco, Inc. (Edgeco), from judgments in favor of the plaintiff Warren after a jury trial in the Superior Court. The action was originally brought in the Superior Court and transferred to a District Court under G.L. c. 231, § 102C. After a trial, the District Court judge found that, on the first count of the complaint for unpaid overtime services as foreman of Edgeco's shop, Warren was entitled to $11,850 1 in compensation and liquidated damages, and attorney's fees of $2,000 under the Fair Labor Standards Act, 29 U.S.C. 207(a)(1), 216(b) (1976). On the second count the judge found for Warren in the amount of $12,000 for breach of an oral contract under which Warren engaged in trucking for Edgeco. 2

Edgeco failed to seek review in the Appellate Division but requested instead that the case be retransferred to the Superior Court for retrial under G.L. c. 231, § 102C. At this trial Warren introduced into evidence the District Court finding on the Fair Labor Standards Act count and the contract count. At the close of the evidence Edgeco moved for directed verdicts on both counts, alleging that Warren was estopped from making a claim for overtime because of his failure to report the overtime work on his weekly time cards, and that the trucking agreement was unenforceable, being against public policy, because Warren failed to comply with certain State and Federal requirements pertaining to motor carriers. The motion was denied. The jury returned verdicts for Warren on both counts, awarding damages of $3,750.70 on the claim under the Fair Labor Standards Act and $12,000 under the trucking agreement. The judge subsequently denied Edgeco's motion for judgment notwithstanding the verdict, which raised the same grounds as those presented in the motion for a directed verdict, but also asserted that damages under the trucking agreement were based upon an erroneous measure. He allowed Warren's motion for attorney's fees in the amount of $2,500.

There was evidence at retrial in the Superior Court that a representative of Edgeco approached Warren in 1971 concerning possible employment with the company. After several meetings with the company's president George MacElhiney, Warren agreed to become foreman of Edgeco's South Deerfield shop. According to Warren, MacElhiney agreed to pay him ten percent of the profits for running the shop. 3 He was expected to work whatever hours were necessary to run the shop but was not to include all of his overtime on his weekly time cards. 4 Instead, his ten percent share of the profits was to be considered compensation for unreported overtime. 5 Warren kept a personal record of his unreported overtime in a notebook which he did not show to MacElhiney.

Warren also asserted that he offered to undertake the job of trucking for Edgeco if he were assured of the position "for at least a year." Relying on MacElhiney's agreement to this condition, Warren purchased a tractor and trailers. Approximately two months later, he was fired as foreman of the shop; and a few days thereafter he was relieved of the trucking job as well. He thereafter sold the tractor and trailers at a loss. MacElhiney denied that Warren was told that he would be paid ten percent of the profits as compensation for unreported overtime. MacElhiney claimed that the trucking arrangement was on a job by job basis and that there was no one year guaranty.

1. Overtime Compensation.

Edgeco asserts that Warren's failure to report the alleged additional overtime on his weekly time cards estopped him from claiming compensation for such work under the Fair Labor Standards Act, and for that reason that the judge erroneously denied its motion for judgment notwithstanding the verdict. However, the Congressional policy underlying that act weighs heavily against a rule of estoppel of an employee in such a situation; and courts will not invoke such a rule if, as in this case, there is evidence upon which the jury could find that the employer was aware that the employee was working unreported overtime (see Handler v. Thrasher, 191 F.2d 120, 123 (10th Cir. 1951); Burry v. National Trailer Convoy, Inc., 338 F.2d 422, 426-427 (6th Cir. 1964)) or if the employer was not misled or deceived. Annot., 162 A .L.R. 305 (1946). See George Lawley & Son Corp. v. South, 140 F.2d 439, 443 (1st Cir.), cert. denied, 322 U.S. 746, 64 S.Ct. 1156, 88 L.Ed. 1578 (1944). In cases cited by the defendant in which the employee was deemed to have been estopped, evidence was lacking that the employer was aware of the employee's extra work. See Mortenson v. Western Light & Tele. Co., 42 F.Supp. 319, 322 (S.D.Iowa 1941); Wirtz v. Harrigill, 214 F.Supp. 813, 815 (S.D.Miss.1963), aff'd 328 F.2d 903 (5th Cir. 1964); Brumbelow v. Quality Mills, Inc., 462 F.2d 1324, 1327 (5th Cir. 1972); Gale v. Fruehauf Trailer Co., 158 Kan. 30, 34, 145 P.2d 125 (1944); Cotton v . Weyerhaeuser Timber Co., 20 Wash.2d 300, 312-313, 147 P.2d 299 (1944).

Here, the judge correctly instructed the jury on the law of estoppel in its application to the evidence; and the District Court's finding on Warren's claim under the Fair Labor Standards Act, standing alone and absent a review by the Appellate Division, constituted prima facie evidence upon which the jury could have returned a verdict in Warren's favor regardless of other evidence introduced at trial in the Superior Court. G.L. c. 231, § 102C. S. Albertson Co. v. Great Northern Ry., 342 Mass. 326, 327, 173 N.E.2d 267 (1961). Methuen Constr. Co. v. J & A Builders, Inc., 4 Mass.App . 397, 401, 349 N.E.2d 357 (1976). O'Brion, Russell & Co. v. Lemay, 370 Mass. 243, 244-245, 346 N.E.2d 861 (1976). Sherman v. Doniger, --- MASS. --- , --- N.E.2D ----A (1978). We might add that there was, in any event, evidence before the jury, apart from the District Court finding, that the defendant knew or should have known of Warren's unclaimed overtime. See 29 C.F.R. §§ 785.11, 785.12, 785.36 (1978). Not only Warren's testimony concerning the employment arrangement, but the nature of the job itself furnished a basis for such a finding. See Handler v. Thrasher, 191 F.2d at 123. From his duties as foreman and his responsibilities in overseeing the work of the shop, the jury could have inferred that Warren's employer was aware of Warren's input of additional overtime which had not been reported.

2. Damages.

Edgeco challenges the judge's instruction to the jury in which he stated in substance that the measure of Warren's damages under the trucking agreement included his initial expenditure for the tractor and trailers less the price for which he sold them as well as his anticipated profit under the agreement. Even assuming that, if he were entitled to receive his anticipated profit under the agreement, he could not also receive his loss on the sale of the tractor and trailers bought in anticipation of the execution of the trucking agreement (see Mount Pleasant Stable Co. v . Steinberg, 238 Mass. 567, 570, 131 N.E. 295 (1921); Irwin v. Worcester Paper Box Co., 246 Mass. 453, 456, 141 N.E. 286 (1923); Sullivan v. O'Connor, 363 Mass. 579, 586 n. 5, 296 N.E.2d 183 (1973); Annot. 17 A.L.R.2d 1300, 1321-1322 (1951); but see Fuller and Perdue, The Reliance Interest in Contract Damages, 46 Yale L.J. 52, 81 and nn. 44, 45 (1936)), any error in this part of the judge's charge was in the circumstances harmless. The judge also instructed the jury that the District Court judge had awarded Warren "twelve thousand dollars in his second cause of action, and you the jury are entitled to consider (this) amount as Prima facie evidence on the issue of the plaintiff's damages." He further instructed them in substance that they could disregard the effect of the prima facie evidence and decide the case on the other evidence. As the jury's verdict was for precisely $12,000, it is apparent that the jury elected to rely upon the finding of the District Court as the basis for their award and to ignore any evidence to the contrary. 6 Spritz v. Lishner,355 Mass. 162, 165, 243 N .E.2d 163 (1969). See Methuen Constr. Co. v. J & A Builders, Inc., 4 Mass.App. at 401 B, 349 N.E.2d 357; Sherman v. Doniger, --- MASS. --- , --- N.E.2D ----C (1978).

3. Contract Illegality.

We turn to Edgeco's claim that Warren's failure to comply with certain State and Federal requirements applicable to motor carriers was against public policy so that performance of this trucking agreement was illegal and unenforceable. Evidence introduced before the jury formed the basis for the defendant's claim that the trucking agreement was illegal because of Warren's failure to obtain, inter alia, certain permits. But what transpired before the Superior Court judge on the question of illegality was disputed at oral argument before us. In its brief Edgeco asserts that at an unreported lobby conference the Superior Court judge...

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