UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 03-2091
DARRELL WALL,
Plaintiff - Appellee,
versus
FRUEHAUF TRAILER SERVICES, INCORPORATED, a
subsidiary of Wabash National Corporation,
Defendant - Appellant.
Appeal from the United States District Court for the District of
South Carolina, at Greenville. Terry L. Wooten, District Judge.
(CA-01-1959-6-25)
Argued: September 29, 2004 Decided: February 24, 2005
Before MICHAEL and MOTZ, Circuit Judges, and Roger W. TITUS, United
States District Judge for the District of Maryland, sitting by
designation.
Affirmed by unpublished opinion. Judge Titus wrote the opinion, in
which Judge Michael and Judge Motz joined.
ARGUED: Richard James Morgan, MCNAIR LAW FIRM, P.A., Columbia,
South Carolina, for Appellant. Justin Marshall Grow, Greenville,
South Carolina, for Appellee. ON BRIEF: Reginald W. Belcher,
MCNAIR LAW FIRM, P.A., Columbia, South Carolina, for Appellant.
Brian P. Murphy, Greenville, South Carolina, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
See Local Rule 36(c).
TITUS, District Judge:
On March 12, 2001, Darrell Wall (“Wall”) filed a complaint in
the Court of Common Pleas for the County of Greenville, South
Carolina alleging that Fruehauf Trailer Services, Inc. (“Fruehauf”)
violated the Payment of Post-Termination Claims to Sales
Representatives Act, S.C. Code Ann. §§ 39-65-10, et seq. (Supp.
1999), and breached its contract with Wall when it refused to pay
Wall sales commissions. Fruehauf removed the case to the United
States District Court for the District of South Carolina,
Greenville Division, on April 11, 2001. On February 27, 2002, the
District Court1 granted leave to Wall to file a Second Amended
Complaint which would replace Wall’s claim under §§ 39-65-10, et
seq., with a claim under the South Carolina Payment of Wages Act,
S.C. Code Ann. §§ 41-10-10, et seq. (Supp. 2003), and a claim for
treble damages pursuant to §§ 41-10-80(C). On March 13, 2002, Wall
filed his Second Amended Complaint. After a trial, the jury
returned a $35,000 verdict in favor of Wall on February 11, 2003.
On July 25, 2003, the District Court awarded Wall treble damages,
attorney’s fees and costs pursuant to §§ 41-10-80(C).
In its appeal, Fruehauf challenges the following actions of
District Court: (1)the Order granting Wall’s Motion To File Second
Amended Complaint; (2) the decision to retain diversity
1
The order granting leave for the filing of a Second Amended
Complaint was entered for the District Court by a Magistrate Judge.
2
jurisdiction over the case after Wall voluntarily dismissed his
claim for violation of §§ 39-65-10, et seq.; (3) the decision to
award Wall treble damages, attorney’s fees and costs; (4) the
admission of the testimony of Mike Dodson; (5) the interpretation
of §§ 41-10-10, et seq. For the reasons set forth below, we
affirm.
I.
Wall was employed by Fruehauf (or its predecessor companies)
from September 1994 until September 2000 selling new and used
trailers. Fruehauf compensated Wall with a base salary and
commissions based on Fruehauf’s gross profit margin on his sales.
According to Fruehauf, beginning in 1996, the company limited the
maximum commissions per year to $50,000 per account. Fruehauf’s
position is that this limitation was distributed in writing to all
salespersons, including Wall, on two separate occasions in 1996.
However, Wall maintains that Fruehauf never informed him of this
limit on commissions.
In 1999, Wall earned $77,316.85 in commissions from the
purchase of trailers by D. M. Kaye and Sons Transport, and Fruehauf
paid him all of the commissions to which he was entitled in the
absence of the $50,000 limitation. During the first part of 2000,
Fruehauf discovered that it had overpaid Wall for his 1999 earned
commissions in the amount of $35,000. Thus, Fruehauf incrementally
3
withheld approximately $27,000 from subsequent commissions Wall
earned in 2000. Additionally, Fruehauf deducted $8,000 from
commissions earned on other accounts in 2000. Wall asserts that
this deduction for excess commissions was the first time in history
that Fruehauf had enforced its alleged cap on commissions.
After Fruehauf removed the complaint filed by Wall in the
Court of Common Pleas for the County of Greenville, South Carolina
to the United States District Court for the District of South
Carolina, Greenville Division, an initial scheduling order was
issued on September 5, 2001 which, among others, prohibited the
parties from amending the pleadings after June 11, 2001. This
scheduling order deadline was later extended by the Court until
October 9, 2001. Discovery ended on January 15, 2002 and trial was
scheduled to begin on April 11, 2002.
During Wall’s deposition, he testified that he had, on
occasion, sold tractor trailers to independent owners. As a
result, he no longer fit the definition of a sales representative
under the Payment of Post-Termination Claims to Sales
Representatives Act, S.C. Code Ann. §§ 39-65-10 et seq. Lee v.
Thermal Eng’g Corp., 572 S.E.2d 298, 304 (S.C. Ct. App. 2002).2
2
Section 39-65-10(4) only provides relief to a sales
representative who:
(a) contracts with a principal to solicit wholesale orders;
(b) is compensated, in whole or in part, by commission;
(c) does not place orders for purchases for his own account
or for resale; and
4
After completing discovery and after a status conference held
on January 31, 2002, Wall sought leave to amend his complaint to
replace his claim under §§ 39-65-10, et seq. with a cause of action
alleging a violation of the South Carolina Payment of Wages Act,
S.C. Code Ann. §§ 41-10-10, et seq.3 On February 27, 2002, the
District Court granted the motion, reopened discovery and ordered
Wall to pay all of Fruehauf’s discovery costs associated with
investigating the amended claim.
The case went to trial on February 10, 2003, a full year after
Wall filed his Second Amended Complaint. On February 11, 2003, the
jury returned a verdict for Plaintiff in the amount of $35,000. On
February 26, 2003, Wall moved for an order granting treble damages,
attorney’s fees and costs pursuant to § 41-10-80(C). On July 25,
2003, the trial court granted Wall’s motion and awarded treble
damages in the amount of $105,000.00, with interest at the rate of
1.13 %, plus attorney’s fees and costs.
(d) does not sell or take orders for the sale of products to
the ultimate consumer. (emphasis added)
3
Unlike the Payment of Post-Termination Claims to Sales
Representatives Act, the South Carolina Payment of Wages Act does
not require that Wall not have sold products to the ultimate
consumer. S.C. Code Ann. § 41-10-40(C) provides simply that
employers “shall not withhold or divert any portion of an
employee’s wages unless...the employer has given written
notification to the employee of the amount and terms of the
deductions...”
5
II.
Fruehauf argues that the District Court erred in the following
ways: (1)it permitted Wall to file a Second Amended Complaint after
the close of discovery without establishing good cause pursuant to
Federal Rule of Civil Procedure 16(b) and causing prejudice to the
Defendant in violation of Federal Rule of Civil Procedure 15(a);
(2)it permitted Wall to file a Second Amended Complaint after he
had admitted that he could not prove the elements of the claim in
his Amended Complaint; and (3)it retained jurisdiction over Wall’s
claim, despite the “dismissal” of the claim under the Payment of
Post-Termination Claims to Sales Representatives Act, S.C. Code
Ann. § 39-65-10 which, Fruehauf argues, destroyed federal
jurisdiction over the claim by reducing the amount in controversy.4
This Court reviews a district court’s decision to grant leave
to amend and the decision to retain jurisdiction of a claim under
an abuse of discretion standard. See Foman v. Davis, 371 U.S. 178,
182 (1962); Shanaghan v. Cahill, 58 F.3d 106, 112-13 (4th Cir.
1995). This standard “mandates a significant measure of appellate
4
At several points in its brief, Fruehauf refers to the
“dismissal” of a claim asserted by Wall under § 39-65-10. The
District Court did not “dismiss” the claim. When the Second
Amended Complaint was filed, it had the effect of superseding the
earlier complaint (which contained the claim under § 39-65-10)
which “no longer performs any function in the case.” 6 Charles Alan
Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice And
Procedure § 1476. (2d ed. 1990). After the Second Amended Complaint
was filed, the District Court granted a previously filed motion for
summary judgment as to the § 39-65-10 claim, but this action was a
nullity because that claim was no longer before the Court.
6
deference to the judgment calls of trial courts.” United States v.
Pittman, 209 F.3d 314, 316 (4th Cir. 2000).
A. Leave to File Second Amended Complaint
Federal Rule of Civil Procedure 16(b) provides that a
scheduling order devised by the District Court “shall not be
modified except upon a showing of good cause and by leave of the
district judge or, when authorized by local rule, by a magistrate
judge.” This Court has noted that scheduling orders “are not set
in stone, but may be relaxed for good cause, extraordinary
circumstances, or in the interest of justice.” Barwick v. Celotex
Corp., 736 F.2d 946, 954 (4th Cir. 1984). Federal Rule of Civil
Procedure 15(a) provides that after a responsive pleading has been
served, a party may amend its pleading “only by leave of court or
by written consent of the adverse party; and leave shall be freely
given when justice so requires.” Furthermore, leave to amend is
a liberal standard and will not be denied unless the amendment will
cause actual prejudice to the adverse party. See Ward Elecs.
Serv., Inc. v. First Commercial Bank, 819 F.2d 496, 497 (4th Cir.
1987) (holding that a change in the theory of recovery and one
prior amendment is not sufficient to deny a motion to amend the
complaint where no evidence of bad faith existed).
Here, the District Court properly exercised its discretion in
determining that good cause existed to permit Wall to amend his
complaint, pursuant to Federal Rules of Civil Procedure 16(b) and
7
15(a). Wall moved to file a Second Amended Complaint immediately
after his counsel learned that a minor portion of his sales
activities involved selling trailers to independent
owners/operators, an activity that is not covered under S.C. Code
Ann. § 39-65-10.
Furthermore, Fruehauf did not suffer any prejudice as a
result of the amendment. The trial court reopened discovery,
permitting Fruehauf to depose Wall a second time, and ordered Wall
to pay all of Fruehauf’s associated discovery costs. Moreover, the
amendment did not substantively change the claim, only the statute
under which the claim proceeded. Both before and after the
amendment, the suit was a claim for the same unpaid commissions.
Principles of judicial economy would have been sacrificed had Wall
not been permitted to amend his complaint because it would have
forced Wall to litigate an entirely new and separate action based
on the same set of facts under the new statute. Rowe v. United
States Fid. & Guar. Co., 421 F.2d 937, 943 (4th Cir. 1970)(“the
fact that the supplemental pleading technically states a new cause
of action should not be a bar to its allowance.”) We find no abuse
of discretion in the District Court’s decision to permit Wall to
file a Second Amended Complaint.
B. Diversity Jurisdiction
Fruehauf next argues that the trial court erred when it
retained jurisdiction over Wall’s case after he had “dismissed” his
8
claim under S.C. Code Ann. § 39-65-10.5 Fruehauf argues that the
“dismissal” of Wall’s claim under §§ 39-65-10, et seq., destroyed
subject matter jurisdiction under 28 U.S.C.A. § 1332(a), because
without the ability to prove a necessary element of that statutory
claim, Wall had no longer asserted a claim that caused the amount
in controversy to exceed $75,000.6 However, as Wall correctly
points out in his brief, his claim under §§ 39-65-10, et seq. was
simultaneously replaced with a claim under S.C. Code Ann.
§§ 41-10-10, et seq., which permits a court to award treble damages
to an employee who has not been justly compensated, thereby
increasing the amount in controversy from the unpaid commissions of
$35,000 to $105,000. Thus, the amount in controversy requirement
was met and subject matter jurisdiction was maintained. See
Missouri State Life Ins. Co. v. Jones, 290 U.S. 199, 202
(1933)(holding that where a state statute provides for the award of
attorney’s fees, those fees can be considered as part of the amount
in controversy for the purpose of determining federal diversity
jurisdiction). Even if we were to find that the treble damages
provision of §§ 41-10-10 was not sufficient to cause the Second
Amended Complaint to satisfy the jurisdictional requirement of
5
As noted above in footnote 4, the claim under § 39-65-10 was
not “dismissed.” Rather, the claim was replaced with a claim under
§ 41-10-10 which superseded the earlier claim.
6
Section 39-65-10 provides for the award of punitive damages,
making the possible amount in controversy in excess of $75,000.
9
28 U.S.C.A. § 1332(a), Plaintiff’s initial claim under
§§ 39-65-10, et seq. was made in good faith and the District Court
had the discretion to retain any residual claims. Shanaghan,
58 F.3d at 112; St. Paul Mercury Indem. Co. v. Red Cab Co.,
303 U.S. 283, 288 (1938).7
III.
Fruehauf also appeals the trial court’s decision to award Wall
treble damages and attorney’s fees on the ground that the trial
court erroneously relied exclusively on the testimony of Wall’s
former General Manager Ned Armstead (“Armstead”). The trial
court’s decision to award Wall treble damages, attorney’s fees and
costs is reviewed under an abuse of discretion standard. See
Rice v. Multimedia, Inc., 456 S.E.2d 381, 384 (S.C. 1995).
Fruehauf argues that the District Court erred when it awarded
Wall treble damages and attorney’s fees, relying solely on
Armstead’s redirect testimony that, in Fruehauf’s opinion,
contradicted his deposition and trial cross-examination testimony.
7
Furthermore, as Appellee correctly points out in his brief,
even if the Second Amended Complaint did not meet the required
amount in controversy for diversity jurisdiction under 28 U.S.C.A.
§ 1332(a), the doctrine of supplemental jurisdiction would permit
the trial court in this instance to retain jurisdiction over this
case. 28 U.S.C.A. 1367; Shanaghan, 58 F.3d 106, 110 (4th Cir.
1995)(citation omitted)(indicating that the doctrine of
supplemental jurisdiction is “designed to allow courts to deal with
cases involving pendent claims in the manner that most sensibly
accommodates a range of concerns and values”).
10
We disagree. Fruehauf argues that on redirect examination at
trial, Wall’s general manager, Armstead, testified that he was not
aware of a commissions cap, whereas in his deposition, Armstead
testified that the commissions cap was a company-wide policy that
was never rescinded.
First, a trial judge is given a considerable amount of
latitude about what credibility to assign the testimony of one
witness over another, especially considering the fact that the
trial judge is much closer to the actual testimony than the
appellate court. United States v. D’Angou, 16 F.3d 604, 614 (4th
Cir. 1994). Furthermore, in the trial court’s July 25, 2003 Order
granting Wall treble damages, the court listed a number of factors
on which it based its decision, including the following: Fruehauf
initially paid Wall the full balance of his commission; Armstead
testified that he was not aware of a cap on sales commissions;
Fruehauf failed to provide clear evidence that Wall received a
written memorandum notifying the salesperson of a cap on sales
commissions; the salesperson hired to replace Wall, Mike Dodson,
was not notified of a sales commissions cap; Fruehauf withheld
undisputed commissions from Wall’s pay; and Fruehauf failed to
adhere to the notification requirements of the South Carolina
Payment of Wages Act. Therefore, the argument that the trial court
abused its discretion by only considering Armstead’s inconsistent
testimony is without merit.
11
IV.
Fruehauf also challenges the District Court’s evidentiary
ruling admitting the testimony of Mike Dodson (“Dodson”), the
salesperson who assumed Wall’s position after he left Fruehauf, on
the grounds that the testimony was irrelevant and impermissible
hearsay. We review an evidentiary ruling of a trial court for an
abuse of discretion and find no abuse here. United States v. Abel,
469 U.S. 45, 54-55 (1984).
We first note that Fruehauf never made any specific hearsay
objection to any part of Dodson’s testimony; therefore it cannot be
raised now because Fruehauf has failed to properly present this
issue for review.8 For that reason alone, the District Court’s
ruling on this issue can be affirmed. However, if the issue had
been preserved, the ruling would still be affirmed because the
District Court did not abuse its discretion in admitting the
testimony.
First, Fruehauf argues that the District Court erred in
admitting Dodson’s testimony because it was irrelevant. Federal
Rule of Evidence 401 defines relevant evidence as any evidence
having “any tendency to make the existence of any fact that is of
consequence to the determination of the action more probable or
8
Fruehauf did file a motion in limine to exclude this
testimony, but the motion was overruled by the District Court.
“[A]n overruled motion in limine does not preserve error on
appeal.” Rojas v. Richardson, 703 F.2d 186, 189 (5th Cir. 1983).
12
less probable than it would be without the evidence.” Fed. R. Evid.
401. Dodson, Wall’s immediate replacement, testified as to
Fruehauf’s compensation policy. Fruehauf argues that because
Dodson was not employed by Fruehauf during the relevant time
period, his testimony as to Fruehauf’s compensation policy is
inadmissible; however, as Wall points out, Dodson was his immediate
replacement. The fact that Dodson testified that he was not made
aware of any commission ceiling is relevant to whether or not
Fruehauf had, in fact, established such a policy.
Second, Fruehauf argues that Dodson’s testimony was
inadmissible hearsay. The Federal Rules of Evidence define hearsay
as a statement, other than one made by the declarant while
testifying at a trial or hearing, offered in evidence to prove the
truth of the matter asserted. Fed. R. Evid. 801. Dodson did not
testify to any out of court statements, but only testified that, to
his knowledge, no sales commissions cap was in existence at the
time that he was hired. Furthermore, as Wall asserts, any possible
hearsay statements to which Dodson would have testified would have
been made to him by one of Fruehauf’s representatives within the
context of its employment relationship with Dodson. Therefore, any
statements that were hearsay statements would be excepted from
operation of the rule as an admission of a party opponent. Fed.
R. Evid. 801(d)(2)(D).
13
V.
Finally, Fruehauf argues that the District Court erred in its
interpretation of South Carolina law concerning the South Carolina
Payment of Wages Act, S.C. Code Ann. §§ 41-10-10, et seq., when it
awarded Wall treble damages and attorney’s fees. The District
Court’s decision to award treble damages, attorney’s fees and costs
is reviewed for an abuse of discretion. See Rice, 456 S.E.2d 381,
384 (S.C. 1995).
Section 41-10-40 (C) of the South Carolina Payment of Wages
Act provides that employers “shall not withhold or divert any
portion of an employee’s wages unless...the employer has given
written notification to the employee of the amount and terms of the
deductions...”9
In case of any failure to pay wages due to an employee as
required by Section 41-10-40 or 41-10-50 the employee may
recover in a civil action an amount equal to three times
the full amount of the unpaid wages, plus costs and
reasonable attorney’s fees as the court may allow.
§ 41-10-80(C).
The South Carolina Supreme Court has interpreted this treble
damages provision to mean that the decision to award the penalty of
treble damages is discretionary, and the penalty should not be
9
Furthermore, the Act requires that the employers “notify each
employee in writing at the time of hiring of ...the deductions
which will be made from [their] wages,” and “[T]he employer has the
option of giving written notification by posting the terms
conspicuously at or near the place of work.” § 41-10-30 (A). “Any
changes in these terms must be made in writing at least seven
calendar days before they become effective.” Id.
14
imposed “if there is a good faith dispute over wages allegedly
due.” Rice, 456 S.E.2d at 383. Fruehauf asks us to extend the
requirement that there be a bona fide, good faith wage dispute to
require that Wall show that Fruehauf willfully failed to pay Wall’s
commissions or did so in bad faith in order to receive treble
damages. We disagree and find that the trial court’s
interpretation was not an abuse of discretion.
South Carolina case law does not support Fruehauf’s position.
Fruehauf cites to a number of cases which discuss punitive damages
in general, but not treble damages under § 41-10-80(C). See, e.g.,
Carter v. R.C. Jordan Oil Co., 390 S.E. 2d 367, 368 (S.C. Ct. App.
1990). Although South Carolina law requires that there be no good
faith dispute concerning the wages due in order for treble damages
to be awarded under § 41-10-80(C), the decision is in the complete
discretion of the trial court and no specific finding of bad faith
or willfulness is required. Rice, 456 S.E.2d 381 (S.C. 1995)
(holding that the treble damages provision is not mandatory and
will not apply if the trial court determines that a good faith
dispute over the wages allegedly due exists); Futch v. McAllister
Towing of Georgetown, Inc., 518 S.E.2d 591 (S.C. 1999) (holding
that an employee who breaches the duty of loyalty to his employer
forfeits his right to compensation and creates a good faith dispute
over the payment of his wages by virtue of his bad behavior);
O’Neal v. Intermedical Hospital of South Carolina, 585 S.E.2d 526
15
(S.C. Ct. App. 2003) (holding that the award of treble damages,
while a matter of discretion for the trial court, is inappropriate
in circumstances where there is a bona fide wage dispute).
Here, the District Court specifically addressed the question
of whether a good faith dispute existed over the payment of Wall’s
wages and determined that based on all of the evidence presented,
no dispute existed. The evidence considered by the trial court
included that: Fruehauf failed to put its employees on notice of
the commission cap as required by § 41-10-30(A); Fruehauf
initially paid Wall the “disputed” commission and later deducted
the “disputed” amount from Wall’s subsequent, undisputed
commissions; Armstead, Wall’s General Manager, was not aware of any
$50,000 cap on commissions; Armstead, after research, determined
that the commission cap did not apply to Wall’s position; Wall’s
replacement, Dodson, was never informed of any commission cap.
The trial court is in the best possible position to evaluate
the credibility of all the evidence before it and make a
determination over whether a good faith dispute existed as to the
treble damages. The District Court carefully evaluated all of the
evidence before it and we find no abuse of discretion regarding its
interpretation of South Carolina law.
AFFIRMED
16