Michael Souryavong v. County of Lackawanna , 872 F.3d 122 ( 2017 )

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_____________
Nos. 15-3895 & 16-2214
_____________
MICHAEL SOURYAVONG; EDWIN VELEZ
v.
LACKAWANNA COUNTY;
LACKAWANNA COUNTY DEPUTY SHERIFFS
ASSOCIATION*
(D.C. No. 3-13-cv-01534)
NELSON ROLON
v.
LACKAWANNA COUNTY;
LACKAWANNA COUNTY DEPUTY SHERIFFS
ASSOCIATION*
(D.C. No. 3-13-cv-01581)
Michael Souryavong and Nelson Rolon,
Appellants
*
Dismissed pursuant to Clerk’s Order dated 7/29/17
_____________
On Appeal from the United States District Court
for the Middle District of Pennsylvania
(M.D. Pa. Nos. 3-13-cv-01534 & 3-13-cv-01581)
District Judge: Hon. A. Richard Caputo
______________
Argued March 28, 2017
______________
Before: AMBRO, VANASKIE, and RESTREPO, Circuit
Judges
(Filed: September 20, 2017)
Cynthia L. Pollick, Esq. [ARGUED]
The Employment Law Firm
363 Laurel Street
Pittston, PA 18640
Counsel for Appellants
Harry T. Coleman, Esq. [ARGUED]
41 North Main Street
Suite 316
Carbondale, PA 18407
Counsel for Appellee
______________
OPINION
______________
2
VANASKIE, Circuit Judge.
This employee-overtime appeal raises questions as to
the nature of the evidence that is sufficient to create a jury
question on the purported “willfulness” of an employer’s non-
payment of overtime. The question matters because a finding
of willfulness expands the limitations period for claims under
the Fair Labor Standards Act (“FLSA”), in effect permitting a
plaintiff to receive a larger award. Here only the willfulness
question was contested—Appellee Lackawanna County
conceded the basic overtime violations—and at trial
Appellants Michael Souryavong and Nelson Rolon presented
some evidence on the question but not enough to avoid a
directed verdict in the County’s favor. We find no error in the
District Court’s decision because the evidence presented did
not suggest the County was subjectively aware of the FLSA
problem at the time of the violations, at least with respect to
Souryavong and Rolon. Additionally, Souryavong and Rolon
challenge the District Court’s calculation of attorney’s fees, but
we find that decision appropriate as well. We will affirm.
I.
Souryavong and Rolon were among a class of
individuals working in two separate part-time capacities for
Lackawanna County. The County apparently tracked and paid
these employees for each of their individual jobs, but in 2011
the County became aware that it had failed to aggregate the
hours in both jobs, resulting in a failure to pay the overtime rate
for hours beyond 40 hours per pay period.
In June 2013, Souryavong, Rolon, and Edwin Velez
filed complaints in the Middle District of Pennsylvania
alleging several claims, including the only one relevant here, a
3
claim against Lackawanna County for non-payment of
overtime in violation of the FLSA, 29 U.S.C. § 207(a)(1). By
2015, it was undisputed that the County had violated the
FLSA’s overtime provisions at various times from 2008 to
2012. Still disputed, however, was whether the County’s
violation was “willful.”
In November 2015, the case went to trial on the
willfulness question and damages. At trial the employees
presented evidence that included (1) documents showing the
County’s failure to pay proper overtime, a failure that
apparently lasted into January 2012 for Velez; (2) testimony
from County Chief Financial Officer Thomas Durkin stating
that “from 2007 onward” the County was generally “aware” of
its obligations under the FLSA (App. 266); (3) testimony from
County Human Resources Director Nancy Pearson stating that
she was also generally aware of the FLSA and its requirements;
and (4) a March 28, 2011 email from Pearson, sent to two other
county officials, with the subject line reading “County wage
and hour issues,” and the body of the email discussing certain
county employees who were working “second jobs.” (App.
152.) Pearson’s email highlighted two employees, one of
whom was Edwin Velez, as examples of the issue, and she
noted how these employees had each worked more than 40
hours per week by serving the County in two part-time
capacities: “Velez works 50 plus hours a [two-week] pay
period for the booking center and up to sixty hours a pay period
for the sheriff’s department. This sampling is not infrequent,
irregular or scattered.” (App. 152.) The email concluded by
raising the prospect that these employees might file labor
grievances:
[A]ll employees who work for the County should
only be working in one position. That brings us
4
to the next point on dealing with those
individuals who may file a grievance for back
pay for overtime for being paid straight time.
Who would you like involved in a further
conversation about this matter so this can be
resolved?
(App. 152 (emphasis added).)
At the close of the employees’ case, the County made
an oral motion for entry of judgment as a matter of law, arguing
the employees’ evidence was insufficient to create a jury
question on willfulness. The Court immediately held oral
argument on the motion, and the employees’ Attorney Cynthia
Pollick argued that their evidence was sufficient. In support,
she cited (1) “testimony from Nancy Pearson” and (2) “the fact
that [the County] did not correct” the overtime issue over the
course of “four years” of violations. (App. 9-10.) At the close
of argument, the District Judge ruled from the bench. He stated
the employees’ evidence did not “measure up,” and granted the
County’s motion and entered judgment in its favor on the
willfulness question. (App. 21.)
The damages question still remained, the case went to
the jury, and it awarded $5,588.30. The Court then addressed
several post-trial motions, two of which are relevant here.
First, the plaintiffs moved for liquidated damages under 29
U.S.C. § 216.1 The County opposed the motion and argued
1
The effect of a liquidated damages award is to double
the unpaid overtime compensation. In this regard, 29 U.S.C. §
216 provides that “[a]ny employer who violates the provisions
of section 207 of this title shall be liable to the employee or
employees affected in the amount of their . . . unpaid overtime
5
liquidated damages were inappropriate because the County had
operated in “good faith” and its FLSA violations were
inadvertent. See 29 U.S.C. § 260 (stating liquidated damages
shall not be awarded if an employer operated in “good faith”
and “had reasonable grounds for believing that his act or
omission was not a violation of the [FLSA]”). The employees
disagreed, and argued the County’s violation was
“intentional.” (App. 83.) The Court sided with the employees
and granted the motion, but rather than grounding its ruling on
“intentionality,” as the employees had argued that it should, the
court reasoned in its memorandum opinion that the County had
presented “no evidence” to show that it had taken any
“affirmative steps to ascertain the FLSA’s requirements” prior
to the at-issue overtime violations, or that the County had
“acted in ‘good faith.’” (App. 84.) In support of this
determination, the District Court correctly followed Martin v.
Cooper Elec. Supply Co., 940 F.2d 896, 910 (3d Cir. 1991), in
which we held that an employer’s failure to take “affirmative
steps to ascertain the legality of its pay practices” mandates an
award of liquidated damages.
In another motion, the employees moved for
attorney’s fees and costs, requesting an award of $166,162.50.
They based their request on a fee rate for Attorney Pollick’s
work of $400 per hour, 367.6 hours of legal work, and
additional legal-assistant time and costs. The Court found the
proper rate for Attorney Pollick to be significantly lower—
$250 per hour—and that only 278.2 hours were compensable,
for a lodestar of $69,550.00. It then deviated downward from
compensation . . . and in an additional equal amount as
liquidated damages.”
6
the lodestar to a final award of $55,852.85—approximately
one-third of what the employees initially requested—after an
analysis of the factors laid out in Hensley v. Eckart, 461 U.S.
424, 430 n.3, 434-37 (1983). The court recorded its analysis
in a meticulous and thorough opinion.
This appeal followed, with Souryavong and Rolon
filing a joint notice of appeal. Velez—Souryavong and
Rolon’s co-plaintiff in the District Court—did not join
Souryavong and Rolon’s notice of appeal and did not file his
own. Velez is therefore not a party to this appeal.2
II.
The District Court had federal question jurisdiction
under 28 U.S.C. § 1331. We have jurisdiction under 28 U.S.C.
§ 1291.
III.
Souryavong and Rolon’s appeal presents two issues:
(1) whether the District Court was right to grant judgment as a
matter of law on the willfulness question; and (2) whether the
Court erred in its calculation of attorney’s fees.
2
The Lackawanna County Sheriffs Association was
dismissed from the appeal after they and the employees
resolved the employees’ claims through successful mediation.
7
A.
On the issue of whether the District Court should have
entered judgment as a matter of law on the FLSA “willfulness”
question, we apply de novo review. Brownstein v. Lindsay,
742 F.3d 55, 63 (3d Cir. 2014). Although willfulness is a
“question of fact,” Bianchi Trison Corp. v. Chao, 409 F.3d
196, 208 (3d Cir. 2005), a district court may take the question
from the jury and grant a Rule 50(a) motion for judgment as a
matter of law if “there is no legally sufficient evidentiary basis
for a reasonable jury to find for” the non-moving party, Rego
v. ARC Water Treatment Co., 181 F.3d 396, 400 (3d Cir. 1999).
Under the FLSA, whether an employer “willfully”
violates the statute is of import because such a finding extends
the FLSA’s limitations period from two years to three, bringing
another year of lost pay within the scope of the worker’s claim.
29 U.S.C. § 255(a). The Supreme Court defines “willfulness”
to include situations when the employer, at the time of its
FLSA violation, either “knew” its conduct was prohibited by
the FLSA or “showed reckless disregard for the matter.”
McLaughlin v. Richland Shoe Co., 486 U.S. 128, 133 (1988).
Acting only “unreasonably” is insufficient—some degree of
actual awareness is necessary. Id. at 135 n.13.
Here, no pre-violation awareness of the two-job-FLSA
problem was shown by the evidence that Souryavong and
Rolon presented at trial. They argue otherwise based on: a
series of overtime violations that continued into January 2012
with respect to Velez; Nancy Pearson’s raising of the overtime
issue with other County employees in her March 28, 2011
email; and the County’s general awareness of the FLSA’s
requirements at all relevant times, as indicated by Durkin’s
testimony. But these three bits of evidence do nothing to show
8
that the County was (i) specifically aware of the two-job FLSA
overtime problem (ii) as it related to Souryavong and Rolon
(iii) prior to the dates of the violations. Durkin’s testimony, for
example, is insufficient because it does not get at the two-job
problem—he only testified to an awareness of the FLSA on a
basic level. Willful FLSA violations require a more specific
awareness of the legal issue. See Flores v. City of San Gabriel,
824 F.3d 890, 896, 905-07 (9th Cir. 2016) (identifying a jury
question on FLSA “willfulness” where a city misclassified
employee pay for nine years despite familiarity with the type
of problem), cert. denied, 137 S. Ct. 2117 (2017). Also,
Pearson’s testimony and the timing of Velez’s overtime
violations do not show the necessary order of events for a
willfulness finding as to Souryavong and Rolon. Although
Velez’s overtime violations post-date Pearson’s email,
supporting an argument that the County’s violations as to him
were willful, the same is not true for Souryavong and Rolon,
who are the only parties for whom we may order relief because
they are the only appellants. For them, the parties have
highlighted no evidence suggesting the County’s violations
with their pay continued after Pearson’s email was sent.
Alternatively, even if Pearson’s email pre-dates some of
the County’s FLSA violations as to Souryavong and Rolon,
two other factors still indicate the District Court’s ruling is
correct. First, decisions from our sister circuits indicate that an
FLSA violation must have a degree of egregiousness that is
lacking in Lackawanna County’s case. For example, a jury
question on willfulness is present when a city is well aware of
the FLSA’s strictures, sets up a bureaucracy to classify pay and
benefits and properly calculate overtime, and then despite all
that allows a misclassification of a monthly payment to
continue for nine years. Id. Similarly, there is a jury question
9
on willfulness if a family fails to pay a nanny a minimum wage,
family testimony indicates the family “knew” about minimum
wage laws, and the nanny’s testimony was that the family
required her to work twice as many hours as the family
claimed, did not provide a contract or record her working
hours, and instructed her to lie about her employment. Davila
v. Menendez, 717 F.3d 1179, 1182-83, 1185 (11th Cir. 2013).
Here, nothing indicates Lackawanna County’s violation could
be attributed to any similar level of recklessness or ill will. The
County apparently addressed the two-job FLSA problem
within a year of the date of Pearson’s email—much sooner than
the nine years in Flores—and while the County’s bureaucratic
failure that caused the time-tracking snafu is perhaps an
example of government morass, the evidence shows nothing
akin to the manipulation and concealment found in the facts of
Davila.
Second, even if Pearson’s email shows the County was
aware of an overtime problem generally at the time of the
Souryavong and Rolon violations, it does not indicate an
awareness of an FLSA overtime problem specifically. A
plaintiff must put forward at least some evidence of the
employer’s awareness of a violation of the FLSA overtime
mandate. See Flores, 824 F.3d at 907 (Owens, J., concurring)
(emphasizing that Supreme Court “willfulness” precedents
require a showing of some degree of subjective actual
awareness of an FLSA violation and that mere negligence will
not do). Here, Pearson’s email only references “wage and hour
issues,” and never mentions the FLSA or any other law—state
or federal. Pearson’s statement that the County’s conduct gave
rise to the risk that an employee “may file a grievance for
backpay for overtime” does not belie an awareness of an FLSA
problem. Without something connecting the email to the
10
FLSA, Pearson’s email is not enough on its own to create a jury
question as to FLSA willfulness. See Oakes v. Pennsylvania,
871 F. Supp. 797, 801 (M.D. Pa. 1995) (finding no jury
question on the willfulness of a meal-break FLSA violation in
spite of employees previously raising a similar meal-break
issue, because the previous issue was raised only in the context
of a collective-bargaining agreement).
Finally, Souryavong and Rolon argue the District
Court’s holding on liquidated damages somehow requires us to
hold in their favor on willfulness. Their argument is that the
District Court recognized that the County acted “intentionally”
when it ruled in the employees’ favor on the liquidated-
damages motion. (Appellants’ Br. at 9.) But the District Court
grounded its ruling in a lack of evidence going to the County’s
good faith attempts at FLSA compliance. A lack of evidence
going to good faith is not the same as evidence in support of
intentionality.
In sum, the District Court was correct: the evidence
presented at trial did not measure up, and judgment as a matter
of law was appropriate.
B.
The second issue in this case is the award of attorney’s
fees. We review the “reasonableness” of a district court’s
award of attorney’s fees for abuse of discretion, Smith v.
Borough of Dunmore, 633 F.3d 176, 183 (3d Cir. 2011), but
exercise plenary review over its selection of legal standards for
determination of a fee award, Washington v. Phila. Cty. Court
of Common Pleas, 89 F.3d 1031, 1034-35 (3d Cir. 1996).
11
Attorney Pollick makes three arguments that her fee
award should have been higher. Her first argument as we
understand it is that the District Court erred as a matter of law
in reducing the fee award below the lodestar amount.
Specifically, she argues that use of the Johnson factors was
prohibited by Perdue v. Kenny A., 559 U.S. 542 (2010). We
disagree.
Decades ago, courts calculated attorneys’ fees in
divergent ways, with some relying exclusively on twelve
factors laid out in the seminal Fifth Circuit decision, Johnson
v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir.
1974), and others applying the lodestar method pioneered by
this Court in Lindy Bros. Builders, Inc. of Philadelphia v.
American Radiator & Standard Sanitary Corp., 487 F.2d 161(3d Cir. 1973). In 1983 the Johnson factors were given a boost
when the Supreme Court explicitly stated in Hensley that
district courts “may consider” the Johnson factors. 461 U.S. at434 n.9 (1983). Among those factors listed by the Court was
“the amount involved and the results obtained.” Id. at 430 n.3
(citing Johnson, 488 F.2d at 717-19).
Eventually, however, our lodestar approach “achieved
dominance,” and in the 2010 case Perdue v. Kenny A. the
Supreme Court spoke glowingly of the lodestar approach and
its advantages as compared to the Johnson factors. 559 U.S. at
551 (quoting Gisbrecht v. Barnhart, 535 U.S. 789, 801 (2002)).
The Court observed that the lodestar method has “several
important virtues,” most specifically that “the lodestar method
is readily administrable” and, “unlike the Johnson approach,”
is objective in that it “cabins the discretion of trial judges,
permits meaningful judicial review, and produces reasonably
predictable results.” Id. at 551-52.
12
Yet the Court in Perdue still left room for Johnson
factors to play a role in the attorney fee award decision: First,
a district court should calculate the lodestar—“the number of
hours worked multiplied by the prevailing hourly rate”—which
carries a “strong presumption” of “reasonable[ness]” and
“includes most, if not all, of the relevant factors constituting a
‘reasonable’ attorney’s fee.” Id. at 543-44, 546, 552. After
calculating the lodestar, the court may deviate from it, but only
in the “rare circumstances in which the lodestar does not
adequately take into account a factor that may properly be
considered in determining a reasonable fee.” Id. at 543-44
(emphasis added). Thus, the consideration of Johnson
“factors” is permissible on the back end of a lodestar’s
calculation, as long as they are not already “subsumed in the
lodestar calculation.” Id. at 553.
Here, the District Court followed the proper lodestar-
then-Johnson factors process almost to a “T”: it calculated the
lodestar, identified the Johnson factors it thought not subsumed
in the lodestar, analyzed those factors in light of the facts of
this case, and then decided that a downward deviation from the
lodestar was justified. Pollick argues this downward deviation
was impermissible because Perdue overruled Hensley’s
blessing of the Johnson factors, and any post-Perdue reliance
on the Johnson factors is impermissible, at least as it relates to
any tinkering with the lodestar. This is incorrect for at least
four reasons. First, Hensley explicitly states that use of the
Johnson factors is permissible, and Hensley remains binding
precedent because the Supreme Court has not said otherwise—
its “decisions remain binding precedent until [the justices] see
fit to reconsider them, regardless of whether subsequent cases
have raised doubts about their continued vitality.” Bosse v.
Oklahoma, 137 S. Ct. 1, 2 (2016) (per curiam) (quoting Hohn
13
v. United States, 524 U.S. 236, 252-53 (1998)). Second, there
should be no doubt that Perdue preserved the availability of the
Johnson factors because the Perdue decision explicitly states
that “factor[s]” may still justify a deviation from the lodestar.
559 U.S. at 554. Third, Perdue, like Hensley, explicitly
permits consideration of Johnson’s eighth factor—“the results
obtained.” Hensley, 461 U.S. at 434. And fourth, the Perdue
Court’s concerns were related to a poorly reasoned upward
deviation from the lodestar, not a well-reasoned downward
deviation, as was the case here. The Perdue district court’s
untenable fee award was 75% higher than the lodestar and was
supported by a bare-bones reference to “extraordinary”
circumstances. 559 U.S. at 548, 557-60. Here, by comparison,
the District Court deviated downward and provided ample
reasoning in a thorough and lengthy opinion.3
The District Court applied the right law in its fee
analysis. And it did not abuse its discretion in determining that
the relatively modest damage award justified a reduction in the
lodestar result.
Pollick’s two remaining arguments focus on the
reasonableness of the District Court’s fee determinations, and
both arguments fall within the abuse-of-discretion standard of
review. First, she argues the District Court should have
accepted her proposed $400-per-hour rate instead of the $250-
per-hour rate the Court picked because the County proffered
no evidence to contradict her proposed rate. That is not true—
the County did offer evidence. It presented an attorney’s
affidavit stating that attorneys of similar stature in the region
3
We also note that we rejected the same argument about
Perdue and Johnson that Attorney Pollick made in Dee v.
Borough of Dunmore, 548 F. App’x 58, 64-65 (3d Cir. 2013).
14
were compensated at rates of $260 and $275 per hour, not far
from the $250-per-hour rate the court used. (App. 143.)
Second, Pollick argues she deserves relief because she made
out at least a prima facie case supporting her suggested fee rate,
contrary to the District Court’s holding. This argument fails,
however, because Pollick has not shown that she was
prejudiced by the Court’s decision on that issue: she still
received a hearing and was permitted to present evidence, and
the Court recorded its reasoning in a long and thorough
opinion. A prima-facie holding in her favor would have
substantively altered neither that process nor the outcome. We
discern no abuse of discretion by the adoption of an hourly rate
of $250.
IV.
The evidence presented at trial was insufficient to create
a jury question as to whether the County’s FLSA violations
were made willfully, and the District Court’s attorney’s-fee
standards were correct and applied without abuse of discretion.
We will affirm.
15