Hamilton v. Water Whole International Corp.

FILED
United States Court of Appeals
Tenth Circuit
UNITED STATES COURT OF APPEALS
December 10, 2008
TENTH CIRCUIT
Elisabeth A. Shumaker
Clerk of Court

JAMES ROBERT HAMILTON,
RICHARD A. KUS,

Plaintiffs - Appellants Nos. 07-6153
/Cross-Appellees, & 07-6157
(W.D. Oklahoma)
v. (D.C. No. 5:04-CV-1216-M)

WATER WHOLE INTERNATIONAL
CORPORATION, doing business as
Floran Technologies; WOLFGANG
ZWANZIGER;

Defendants - Appellees
/Cross-Appellants

FLORAN TECHNOLOGIES
BARBADOS, INC.; FLORAN
TECHNOLOGIES US, INC.;
FLORAN TECHNOLOGIES, INC.,

Defendants - Appellees.

ORDER AND JUDGMENT *

Before MURPHY, McKAY, and McCONNELL, Circuit Judges.

*
This order and judgment is not binding precedent except under the
doctrines of law of the case, res judicata, and collateral estoppel. It may be cited,
however, for its persuasive value consistent with Fed. R. App. P. 32.1 and 10th
Cir. R. 32.1.
I. INTRODUCTION

This case involves common law and statutory claims for back wages and

other relief stemming from plaintiffs’ employment with Water Whole

International Corporation (“Water Whole”). Defendants Water Whole and

Wolfgang Zwanziger challenge the jury verdicts in favor of plaintiffs Richard Kus

and James Hamilton. Defendants allege the district court improperly admitted

evidence of emotional suffering and past Water Whole settlements; improperly

excluded evidence of Kus’s and Hamilton’s status as employees; erred in its jury

instructions regarding alter ego and statutory wage claims; and improperly

exercised jurisdiction over wage claims of non-residents under the Oklahoma

Protection of Labor Act (“Wage Act”), Okla. Stat. Ann. tit. 40, §§ 165.1–165.11.

Kus and Hamilton appeal the district court’s denial of leave to amend their

motion for attorney’s fees and the subsequent denial of attorney’s fees. They also

appeal the entry of summary judgment for defendants Floran U.S., Floran

Barbados, and Floran Canada (the “Floran companies”). Exercising jurisdiction

pursuant to 28 U.S.C. § 1291, we affirm in part and reverse in part.

II. BACKGROUND

A. Factual History

Water Whole manufactured products for water treatment, water storage, and

water distribution systems. Water Whole stopped salary payments to Kus and

Hamilton, who were employed as Sales Managers for Water Whole, in March,

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2003. Plaintiffs claimed Zwanziger, president of Water Whole, represented that

new investor money was expected and they would receive back pay if they

continued working.

Kus and Hamilton further alleged that during one meeting, Zwanziger also

promised them each an additional 1000 shares of stock if they would continue

working for Water Whole. Hamilton claimed that during his employment he

suffered financial injury when Water Whole terminated his health insurance

without first informing him. Hamilton alleged he did not learn of the termination

of his health insurance until he had an outpatient procedure and attempted to file

a claim with his insurance company.

Kus’s employment with Water Whole ended in December, 2003. Hamilton

asserted he continued to work for Water Whole until June, 2004. Neither Kus nor

Hamilton ever received any wages or salary for work performed after March 1,

2003.

In March, 2004, Water Whole and Floran Canada entered into a written

contract providing for the purchase of Water Whole assets by Floran Canada.

Water Whole’s stockholders approved the asset sale on March 23, 2004. Pursuant

to the asset purchase agreement, Floran Canada assumed $2,098,827 of Water

Whole’s debt. The transfer of assets from Water Whole to Floran Canada

occurred in July, 2004. Floran Canada subsequently conveyed the assets to its

subsidiaries, Floran US and Floran Barbados.

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 B. Procedural History

Hamilton and Kus filed suit against Water Whole, Zwanziger, and the

Floran companies. The district court granted the Floran companies’ motion for

summary judgment, concluding Hamilton and Kus failed to present a genuine

issue of material fact as to whether the Floran companies were the alter egos of

Water Whole.

The claims against Water Whole and Zwanziger were tried before a jury.

Hamilton and Kus asserted claims under the Wage Act seeking their respective

unpaid wages and expenses, stock, and liquidated damages. They also asserted

claims of fraud against Water Whole and Zwanziger premised on repeated

promises to pay for past and future work that constituted material

misrepresentations or reckless falsehoods. Hamilton and Kus contended the

representations were made to fraudulently induce their continued employment

with Water Whole.

During trial, evidence of plaintiffs’ emotional distress and Water Whole’s

settlements with other employees was introduced over objection. In addition, the

district court rejected defense evidence of plaintiffs’ work for other companies

during the time period when they were purportedly Water Whole employees.

On the Wage Act claims, the jury awarded both Kus and Hamilton wages,

compensation for the promised stock, and liquidated damages. On the fraud

claims, Kus and Hamilton each received actual and punitive damages. Kus and

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Hamilton filed a motion for attorney’s fees based on the wrong statute. The

district court denied their request for leave to amend the motion and denied the

motion for fees.

III. D ISCUSSION

A. The Floran Defendants

This court reviews orders granting summary judgment de novo. Salehpoor

v. Shahinpoor, 358 F.3d 782, 785 (10th Cir. 2004). Summary judgment is

appropriate only if there is no genuine issue as to any material fact and the

moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). In

making this determination, courts are to view the factual record and draw all

reasonable inferences in the light most favorable to the nonmoving party. Curtis

v. Okla. City Pub. Sch. Bd. of Educ., 147 F.3d 1200, 1214 (10th Cir. 1998). This

court reviews de novo a district court’s interpretation of state law. Salve Regina

Coll. v. Russell, 499 U.S. 225, 231 (1991).

Kus and Hamilton alleged the Floran companies were alter egos of Water

Whole. The Oklahoma Supreme Court has held if a “corporation is so organized

and controlled and its affairs so conducted that it is merely an instrumentality or

adjunct of another corporation” the two corporations will no longer be considered

distinct legal entities. Wallace v. Tulsa Yellow Cab Taxi & Baggage Co., 61 P.2d

645, 648 (Okla. 1936). The factors to be considered in making this determination

are:

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 (1) whether the dominant corporation owns or subscribes to all the
subservient corporation’s stock, (2) whether the dominant and
subservient corporations have common directors and officers, (3)
whether the dominant corporation provides financing to the
subservient corporation, (4) whether the subservient corporation is
grossly undercapitalized, (5) whether the dominant corporation pays
the salaries, expenses or losses of the subservient corporation, (6)
whether most of the subservient corporation’s business is with the
dominant corporation or the subservient corporation’s assets were
conveyed from the dominant corporation, (7) whether the dominant
corporation refers to the subservient corporation as a division or
department, (8) whether the subservient corporation’s officers or
directors follow the dominant corporation’s directions, and (9)
whether the corporations observe the legal formalities for keeping the
entities separate.

Gilbert v. Sec. Fin. Corp. of Okla., 152 P.3d 165, 175 (Okla. 2006). 1

Kus and Hamilton submitted evidence demonstrating that a number of

Water Whole officers and directors served in similar capacities for the Floran

companies. They also submitted evidence of the Floran companies’ use of the IP

address, business address, phone number, and fax number formerly used by Water

Whole. Finally, they submitted testimony from former Water Whole Vice

1
We note that it appears Gilbert is the test for piercing the corporate veil,
not for determining successor liability. The test for successor liability is set forth
in Williams v. Bowman Livestock Equipment Co., 927 F.2d 1128, 1132 n.4 (10th
Cir. 1991) (stating that under Oklahoma law, “[i]n order for a corporation that
acquires all, or substantially all, the assets of another corporation to succeed to
the debts and liabilities of the selling corporation there must be some evidence
that (1) there was an agreement to assume such debts or liabilities, (2) there was a
de facto merger, (3) the transaction was fraudulent in fact, or (4) the purchasing
corporation was a mere continuation of the selling company”). See also Pulis v.
U.S. Elec. Tool Co., 561 P.2d 68, 69 (Okla. 1977). Because, however, the district
court and parties analyzed the successor liability issues under Gilbert, and this
court would reach the same result under either test, we proceed under the Gilbert
analysis for purposes of this Order and Judgment.

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President, Tobey Simpson, that at the Board of Directors meeting where the asset

sale was approved, someone stated the reason for the sale was “Water Whole was

allegedly not making enough money [due to] too many pending lawsuits.”

Viewing the facts in the light most favorable to Kus and Hamilton, there is

insufficient evidence to create a genuine issue of material fact as to the alter ego

issue. The two companies’ use of the same IP address, business address, phone

number, and fax number occurred because these were Water Whole assets

purchased by Floran Canada pursuant to the asset purchase agreement. Even

though Floran and Water Whole may have some common officers, directors, or

employees, this by itself is insufficient to create a genuine issue of material fact

on the alter ego issue. See Warner v. Hillcrest Med. Ctr., 914 P.2d 1060, 1067

(Okla. Civ. App. 1995) (“The showing of a common board of directors and a

unity of corporate purpose is insufficient to pierce the corporate veil.”). The

statement at the Board of Directors meeting reflects only someone’s opinion as to

the reason Water Whole was having financial difficulties necessitating the sale of

its assets. It does not demonstrate, as Hamilton and Kus claim, a motive on the

part of Water Whole to sell its assets in order to avoid the lawsuits and yet

continue to operate as before. Hamilton and Kus have thus failed to present a

genuine issue of material fact supportive of their alter ego claim. See id.

(requiring evidence establishing two corporations were “so closely linked and so

inextricably intertwined as to be effectively one entity” in order to impose alter

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ego liability). We therefore affirm the district court’s grant of summary judgment

to the Floran Defendants.

B. Defendants Water Whole and Zwanziger

1. Alter Ego Jury Instruction

Water Whole and Zwanziger contend the district court erred in its jury

instruction regarding the imposition of alter ego liability upon Zwanziger, a

minority shareholder of Water Whole. Jury Instruction No. 22 read:

Generally, corporate board members, officers, and
shareholders are protected by its limited liability status from being
held individually liable for the debts of the corporation. However,
under Oklahoma’s “alter ego” doctrine, the privilege of limited
liability may be removed to hold individuals liable for corporate
debts, where such individuals have failed to respect the separate
identity of the corporation so that the individual and corporation are
indistinguishable. In considering whether the “alter ego” doctrine
applies, you should consider:

(1) whether defendant Zwanziger’s disregard of the corporate
identity of defendant Water Whole made it a mere instrumentality for
the transaction of his own affairs;

In determining whether the corporation is the mere instrumentality of
an individual, factors to consider include:

(a) whether the corporation is undercapitalized;
(b) whether the corporation is without separate books;
(c) whether the corporation’s finances are not kept separate
from individual finances, individual obligations are paid by the
corporation, or vice versa;
(d) whether corporate formalities are not followed; or
(e) whether the corporation is merely a sham.

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 (2) whether there is such a unity of interest and ownership that the
separate personalities of defendant Water Whole and defendant
Zwanziger no longer exist; and

(3) whether adhering to the general rule of limited liability would
promote injustice or protect fraud.

On appeal, Water Whole and Zwanziger allege Instruction No. 22 failed to

address the issue of control, a necessary consideration in the alter ego analysis

under Oklahoma state law. See Gilbert, 152 P.3d at 175. At trial, however,

Water Whole and Zwanziger objected solely on the basis that paragraph (3) was

too broad. Because Water Whole and Zwanziger failed to object at trial to the

Instruction on the grounds now advanced on appeal, this court reviews the district

court’s decision to use the Instruction for plain error. Greene v. Safeway Stores,

Inc., 210 F.3d 1237, 1245 (10th Cir. 2000). Here, there is no error, plain or

otherwise, of the sort claimed on appeal.

The jury was instructed to consider, inter alia, whether Water Whole was a

“mere instrumentality for the transaction of [Zwanziger’s] own affairs” and

“whether there is such a unity of interest and ownership that the separate

personalities of defendant Water Whole and defendant Zwanziger no longer

exist.” These provisions of Instruction No. 22 sufficiently addressed the issue of

control and the appellate challenge lacks merit.

2. Wage Act Jury Instruction

Water Whole and Zwanziger challenge Jury Instruction No. 10, which read:

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 Plaintiffs claim that they are entitled to unpaid salary,
expenses, and bonuses of shares of company stock as wages. Under
Oklahoma law, whenever an employee’s employment terminates, the
employer shall pay the employee’s wages in full . . . . If you find by
the greater weight of the evidence that plaintiffs’ employment
terminated, then you must determine the wages to which they are
entitled.

On appeal, Water Whole and Zwanziger argue the Instruction is improper because

it fails to explicitly instruct the jury on a key element of the wage claim: that in

order to receive back wages, Hamilton and Kus must have remained “employees”

of Water Whole after payment of their salaries ceased. See 15 Okla. Op. Att’y

Gen. 195 (1983).

Water Whole and Zwanziger, however, failed to object to Instruction No.

10 at trial. This court therefore reviews the district court’s decision to give

Instruction No. 10 for plain error. Greene, 210 F.3d at 1245. The words

“employee” and “employment” appear in the Instruction multiple times, and the

Instruction makes clear that Kus and Hamilton are seeking damages under the

Wage Act as “employees.” As a consequence, Instruction No. 10 sufficiently

confined damages to the period of employment and there was no instructional

error.

3. Evidence of Settlements

Water Whole and Zwanziger contend the district court improperly admitted

evidence of settlements between Water Whole and other employees. At trial,

Water Whole and Zwanziger objected to the introduction of this evidence under

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Federal Rules of Evidence 401, 402, and 403. On appeal, they urge that the

evidence should have been excluded under Federal Rule of Evidence 408, which

prohibits the introduction of settlement offers to prove liability. Because Water

Whole and Zwanziger did not object to the admission of this evidence under Rule

408 at trial, this court reviews for plain error. Greene, 210 F.3d at 1245.

“Plain error occurs when there is (1) error, (2) that is plain, which (3)

affects substantial rights, and which (4) seriously affects the fairness, integrity, or

public reputation of judicial proceedings.” Wardell v. Duncan, 470 F.3d 954, 958

(10th Cir. 2006) (quotation omitted). “[A]n error is ‘plain’ if it is clear or

obvious at the time of the appeal.” Morales-Fernandez v. I.N.S., 418 F.3d 1116,

1124 (10th Cir. 2005).

The district court ruled that the evidence of prior claims or settlements

involving Water Whole was admissible if offered for reasons other than those

barred by Rule 408. While settlements may not be introduced to prove liability,

evidence of such settlements is admissible under Rule 408 for other purposes.

Fed. R. Evid. 408. The record, including counsel’s closing argument,

demonstrates the evidence was offered as part of the fraud claims to prove a

willful pattern of conduct by Zwanziger. Due to the evidence’s relevance to

Water Whole’s alleged plan to induce employees to continue working without pay

and the context in which it was introduced, it is not clear that the evidence was

admitted for purposes improper under Rule 408. See Bradbury v. Phillips

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Petroleum Co., 815 F.2d 1356, 1363-64 (10th Cir. 1987) (holding evidence of

settlement of prior claims admissible under Rule 408 where offered to show

defendants’ course of reckless conduct, lack of mistake, control, and intent).

Thus, the error, if any, was not plain.

4. Evidence of Kus’s and Hamilton’s Other Work

Water Whole and Zwanziger allege the district court erred by not allowing

evidence regarding Kus’s and Hamilton’s work for other enterprises during the

time period when they claimed to be Water Whole employees. They argue on

appeal that this evidence was relevant to prove Hamilton and Kus were

independent contractors working on commission, not employees, for purposes of

recovery under the Wage Act. At trial, however, Water Whole and Zwanziger

attempted to introduce this evidence only as character evidence bearing on the

credibility of Kus and Hamilton. Consequently, this court reviews the district

court’s denial of this evidence for plain error. Greene, 210 F.3d at 1245.

Even if the district court erred in denying the admission of this evidence,

such error did not seriously affect the fairness, integrity, or public reputation of

judicial proceedings as required under the plain error test. Morales-Fernandez,

418 F.3d at 1122-23. The district court allowed Water Whole and Zwanziger to

introduce testimony that those who continued to work for Water Whole after their

salaries were terminated did so only on a commission basis. Thus, the district

court did not wholly deny Water Whole and Zwanziger the opportunity to present

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evidence on the issue of whether Kus and Hamilton remained “employees.” In

addition, Zwanziger and Water Whole themselves did not view this evidence as

essential to support their contention that Kus and Hamilton were only working on

a commission basis. They offered the evidence only to demonstrate Kus and

Hamilton were disloyal employees whose testimony the jury should not find

credible. Consequently, this court cannot say that the district court’s error, if any,

in failing to admit the evidence on grounds not even advanced by the proponent,

constitutes a miscarriage of justice. Morales-Fernandez, 418 F.3d at 1124

(stating that in order to satisfy the fourth prong of the plain error test, the party

must show that allowing the error to stand would result in a miscarriage of

justice); see also Petty v. Ideco, 761 F.2d 1146, 1150 (5th Cir. 1985) (“The plain

error rule is an extraordinary remedy which is invoked only in exceptional

circumstances to avoid a miscarriage of justice.”) (quotation omitted).

5. Scope of the Wage Act

Water Whole and Zwanziger contend the district court erred in construing

the Wage Act to apply to wage claims by non-residents. This Court reviews de

novo a district court’s interpretation of state law. Salve Regina Coll., 499 U.S. at

231. The relevant provision of the Wage Act reads:

1. “Employer” means every individual, partnership,
firm, association, corporation, the legal representative of
a deceased individual, or the receiver, trustee or
successor of an individual, firm, partnership, association
or corporation, employing any person in this state;

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 2. “Employee” means any person permitted to work by
an employer.

Okla. Stat. Ann. tit. 40, § 165.1.

Water Whole and Zwanziger contend the definitions demonstrate an intent by the

Oklahoma Legislature to exclude non-residents from the Wage Act’s protection.

The Oklahoma courts have not yet addressed the issue presented here.

Thus, this court “must endeavor to predict how the [Oklahoma] high court would

rule.” Lovell v. State Farm Mut. Auto. Ins. Co., 466 F.3d 893, 899 (10th Cir.

2006). In construing statutes under Oklahoma law, courts are to further the

intention of the Legislature. Haney v. State, 850 P.2d 1087, 1089 (Okla. 1993).

“[T]he cardinal rule is to begin with consideration of the language used.” Id.

(citation omitted). This court is to interpret a statute “in accordance with [its]

plain, ordinary meaning according to the import of the language used.” Graham

v. Travelers Ins. Co., 61 P.3d 225, 232 (Okla. 2002) (citation omitted). “Only

where the legislative intent cannot be ascertained from the statutory language, i.e.

in cases of ambiguity or conflict, are rules of statutory construction employed.”

Keating v. Edmondson, 37 P.3d 882, 886 (Okla. 2001) (citation omitted).

Considering the plain language of the Wage Act, Water Whole

unambiguously falls within the definition of “employer” because it is a

corporation “employing any person in this state.” Okla. Stat. Ann. tit. 40,

§ 165.1. It is undisputed that Water Whole employed a number of individuals in

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Oklahoma. Since Water Whole meets the definition of employer, the next step is

to consider whether Kus and Hamilton each meet the definition of “employee.”

An employee is “any person permitted to work by an employer.” Id. Since it is

undisputed that both Hamilton and Kus served as Sales Managers for Water

Whole, the “employee” definition is also met. Therefore, the district court did

not err in construing the Wage Act to apply to non-resident claims.

6. Evidence of Mental Suffering

Water Whole and Zwanziger contend the district court committed error by

allowing Kus and Hamilton to testify over objection about the mental distress

they suffered as a result of Zwanziger’s fraudulent misrepresentations. This court

reviews a district court’s decision to admit evidence for abuse of discretion.

Koch v. Koch Indus., Inc., 203 F.3d 1202, 1227 (10th Cir. 2000).

The final pretrial order 2 contains no claim for damages from the alleged

fraud under a theory of mental or emotional distress, anguish, or suffering.

Hamilton and Kus argue their amended complaint explicitly sought general

damages resulting from the fraud. This is irrelevant, however, as “claims, issues,

defenses, or theories of damages not included in the pretrial order are waived

even if they appeared in the complaint.” Wilson v. Muckala, 303 F.3d 1207, 1215

(10th Cir. 2002). Because there is no mention of damages for mental suffering in

2
This document is actually titled “final pretrial report,” but this opinion will
refer to it as the “final pretrial order” so as to avoid confusion with past circuit
precedent.

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the pretrial order, the district court abused its discretion by allowing evidence of

such damages. Furthermore, we cannot say that the error was harmless because it

is unknown whether the actual damages awarded on the fraud claims included

emotional distress damages and, if so, what amount was allocated to emotional

distress. Fed. R. Civ. P. 61 (“[T]he court must disregard all errors that do not

affect any party’s substantial rights.”); see also U.S. v. Cestnick, 36 F.3d 904, 910

(10th Cir. 1994) (explaining that the erroneous admission of evidence is not

harmless where it leaves one in grave doubt as to whether the evidence had a

substantial influence on the jury in reaching its verdict). We therefore reverse the

awards of actual and punitive damages on the fraud claims and remand to the

district court for a new trial. 3 If the district court is unable to conclude, based on

the record before it, that the injury element of the fraud claim was found by the

jury based on evidence independent of emotional distress, a new trial must be

held on the issue of injury; otherwise, the sole issue for retrial is the amount of

damages, independent of emotional distress, resulting from the fraud.

7. Attorney’s Fees

3
Water Whole and Zwanziger further contend the fraud claim should not
have been submitted to the jury at all because “nothing else in the transcript of
the trial or exhibits can otherwise explain the awards of actual damages under
[the] fraud claims.” This contention is without merit. The record contains
evidence of actual damages suffered by Kus and Hamilton, such as the lost wages
and debt incurred as a result of the alleged misrepresentations. In addition,
Hamilton testified he suffered financial injury when Water Whole terminated his
health insurance without first informing him.

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 Kus and Hamilton contend the district court erred by denying their

application for leave to file a new motion for attorney’s fees and subsequently

denying their motion for attorney’s fees. This court reviews the district court’s

decision whether or not to consider an untimely motion for abuse of discretion.

Quigley v. Rosenthal, 427 F.3d 1232, 1237 (10th Cir. 2005). This court also

reviews the district court’s denial of attorney’s fees for abuse of discretion.

United States ex rel. Fine v. MK-Ferguson Co., 99 F.3d 1538, 1548 (10th Cir.

1996).

Under Rule 54 of the Federal Rules of Civil Procedure, a motion for

attorney’s fees must be filed “no later than 14 days after entry of judgment.” Fed.

R. Civ. P. 54(d)(2)(B)(I). A district court may, however, “for good cause, extend

the time . . . on motion made after the time has expired if the party failed to act

because of excusable neglect.” Fed. R. Civ. P. 6(b)(1)(B). In determining

whether a party’s neglect is excusable, this court considers: 1) the danger of

prejudice to the opposing party, 2) the length of delay caused by the neglect and

its impact on judicial proceedings, 3) the reason for delay, and whether it was in

the reasonable control of the moving party, and 4) the existence of good faith on

the part of the moving party. U.S. v. Torres, 372 F.3d 1159, 1162 (10th Cir.

2004) (analyzing the excusable neglect standard in the context of Federal Rule of

Appellate Procedure 4(b)(4), where the party filed an untimely notice of appeal);

see also Quigley, 427 F.3d at 1238 (applying the Torres standard to a claim of

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excusable neglect under Federal Rule of Civil Procedure 6(b)). The reason for

delay is an important, if not the most important, factor in this analysis. Torres,

372 F.3d at 1163.

On October 3, 2006, Kus and Hamilton filed a timely motion for attorney’s

fees. In support of their motion, Kus and Hamilton erroneously cited 42 U.S.C.

§ 1988(b), the statutory basis for attorney’s fees in civil rights actions. The

proper basis for recovery is Okla. Stat. Ann. tit. 40, § 165.9(b), which provides

for attorney’s fees under the Wage Act. In its response filed October 24, 2006,

Water Whole highlighted this discrepancy and argued the fee application

therefore failed to meet the requirements of Rule 54(d) that a motion for

attorney’s fees be filed “no later than 14 days after entry of judgment” and

“specify the judgment and the statute . . . entitling the movant to the award.” Fed.

R. Civ. P. 54(d)(2)(B)(i)-(ii). In a November 16, 2006 motion to amend the

original motion for fees, counsel for Kus and Hamilton claimed that due to

transitions in his office and a lack of support staff, he had not become aware of

defendants’ October 24, 2006 response until that day. On November 29, 2006,

the district court entered an order granting leave to amend, but immediately

withdrew the order because Water Whole’s time to respond to the application for

leave to amend had not yet expired.

Water Whole filed a response in opposition to the application for leave to

amend and the district court subsequently denied the application for leave to

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amend. The court reasoned that because Kus and Hamilton would satisfy the

requirements of Rule 54 if granted leave to amend, Water Whole would “clearly

be prejudiced by allowing plaintiffs to amend their motion.” The court further

concluded that “the plaintiffs have not set forth sufficient good cause for granting

them leave to amend, particularly in light of the fact that their motion to amend

was filed forty-four days after their original motion for attorney fees and twenty-

three days after Defendants’ response.”

Kus and Hamilton contend the district court abused its discretion by

denying them leave to file a new motion for attorney’s fees, yet granting

defendants an extension of time to file a new response to the motion for

attorney’s fees after they filed the wrong document. They argue that the proposed

amendment would not have prejudiced Water Whole, as the standard for

determining reasonable attorney’s fees is the same under both the mistakenly

cited statute, 42 U.S.C. § 1988(b), and the proper statute, Okla. Stat. Ann. tit. 40,

§ 165.9. Compare State ex. rel. Burk v. City of Oklahoma City, 598 P.2d 659, 661

(Okla. 1979) (employing a twelve factor standard for determining reasonable

attorney’s fees under Oklahoma law), with Battle v. Anderson, 541 F. Supp. 1061,

1070 n.12 (E.D. Okla. 1982) (employing same standard to a civil rights action

under 42 U.S.C. § 1988(b)). Moreover, according to plaintiffs, the motion citing

the incorrect statute not only gave notice to Water Whole that Kus and Hamilton

sought attorney’s fees, but also gave notice of the precise amount of attorney’s

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fees sought. Thus, Kus and Hamilton argue, Water Whole would not have been

prejudiced by allowing them to amend the motion. Finally, they argue that

because counsel’s office was undergoing major transitions, there was sufficient

good cause for the delay.

Water Whole responds that it would have been prejudiced by the

expenditure of additional time and money to respond to an amended application

for fees. Water Whole further points out that Kus and Hamilton offered no reason

for the initial mistake, and offered only the transition in counsel’s office as

justification for filing the motion to amend forty-four days after the initial filing.

Water Whole concludes Kus and Hamilton have therefore failed to demonstrate

“excusable neglect” under Federal Rule of Civil Procedure 6(b).

Kus and Hamilton failed to provide the statutory basis under which they

sought leave to amend their motion for fees. Because they sought to substitute a

new motion citing the correct statutory basis for relief more than fourteen days

after judgment was entered, the assumption must be that plaintiffs were seeking to

file an untimely motion pursuant to Rule 6(b). The district court apparently made

that assumption in referencing the Rule 6(b) requirement of good cause and

relying upon three of the four factors informing excusable neglect in denying the

application to file an untimely motion for attorney’s fees, i.e., prejudice, length of

the delay, and reason for the delay.

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 While the district court did not particularize the nature of the prejudice to

defendants, it had before it defendants’ assertion of prejudice due to the

expenditure of additional time and expense in responding to a new motion for

fees. The district court also relied upon the insufficient showing of good cause,

highlighting the gap of forty-four days between the original motion for fees and

the motion to amend and the passage of twenty-three days between defendants’

response to the initial motion and the motion to amend. In so ruling, the district

court noted that the only suggestion of good cause was that counsel’s office was

in transition and lacked support staff, not a compelling reason in light of the

passage of a great deal of time.

Plaintiffs’ contention that the district court abused its discretion because it

denied them leave to file a new motion for attorney’s fees yet granted defendants

an extension of time to file a new response to the motion lacks merit. Unlike

defendants, who within one day of filing their mistaken motion discovered and

corrected their error, forty-four days passed before plaintiffs discovered their

error and attempted to file a new motion. In addition, while defendants would

have had to expend time and resources if plaintiffs were allowed to file a new

motion, plaintiffs do not even attempt to argue that they were prejudiced by the

one-day extension granted to defendants. The district court did not err by failing

to respond to these significantly different situations in the same manner.

Furthermore, it was within the district court’s discretion to conclude that a

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transition in counsel’s office, by itself, did not justify such an extensive delay so

as to warrant relief under Rule 6, especially when considering the potential

prejudice to defendants. See Ghamrawi v. Case & Assocs. Props. Inc., 116 Fed.

Appx. 206, 210 (10th Cir. 2004) (denying relief under Rule 6(b) where “counsel's

workload was out of control and counsel could not timely file the request because

of other deadlines”); McLaughlin v. City of LaGrange, 662 F.2d 1385, 1387 (11th

Cir. 1981) (per curiam) (ruling that the fact that a solo practitioner is engaged in

the preparation of other cases does not establish excusable neglect under Rule

6(b)(2)).

Finally, because Kus and Hamilton’s motion for attorney’s fees did not

present a statutory basis under which such fees could be granted, they failed to

meet the Rule 54 requirement of specifying the statute entitling them to the award

of fees. Fed R. Civ. P. 54(d)(2)(B)(ii). Thus, the district court did not abuse its

discretion in denying the motion for attorney’s fees.

IV. Conclusion

For the foregoing reasons, we affirm the awards of back wages,

compensation for promised stock, and liquidated damages under the Wage Act;

the grant of summary judgment to the Floran Companies; and the denial of leave

to amend the motion for attorney’s fees. We reverse the awards of actual and

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punitive damages based on the fraud claims against Water Whole and Zwanziger

and remand to the district court for proceedings consistent with this opinion.

ENTERED FOR THE COURT

Michael R. Murphy
Circuit Judge

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