Revised April 22, 1999
UNITED STATES COURT OF APPEALS
For the Fifth Circuit
___________________________
No. 98-50359
___________________________
KELLY HEIDTMAN; ET AL,
Plaintiffs,
KELLY HEIDTMAN; SUSIE GAINES-CHARSKE; JAMES A. HICKS; MARY LOU
GALLEGOS; JOSE M. SIERRA; JUTTA MATALKA; LESLIE RAYBURN,
Plaintiffs-Appellees,
VERSUS
COUNTY OF EL PASO; CITY OF EL PASO,
Defendants-Appellants.
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Appeal from the United States District Court
for the Western District of Texas
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April 21, 1999
Before GARWOOD, DAVIS, and DeMOSS, Circuit Judges.
W. EUGENE DAVIS, Circuit Judge:
The City of El Paso and the County of El Paso challenge the
judgment entered against them and in favor of their employees for
violations of the Fair Labor Standards Act. For the most part, we
affirm the judgment of the district court. However, we reverse the
district court’s 50 percent enhancement of the attorney’s fees
lodestar award.
I.
Plaintiffs-Appellees Kelly Heidtman, Susie Gaines-Charske,
James Hicks, Mary Lou Gallegos, Jose Sierra, Jutta Matalka, and
Leslie Rayburn were employees of the El Paso Convention and
Visitors Bureau (“CVB”), a joint operation of Defendants-Appellants
the City of El Paso and the County of El Paso.1 Five of the
Appellees were employed to attract certain categories of visitors
or events to the El Paso area: Rayburn and Heidtman (conventions);
Matalka (tourists); Hicks and Heidtman (sporting events and
corporate meetings); and Gaines-Charske (movies). In addition,
Sierra worked with Gaines-Charske by finding and photographing
possible film locations and by helping film crews locate the
settings they desired. Gallegos was the liaison between CVB’s
advertising agency and CVB employees needing magazine
advertisements for their services. The City employed Heidtman and
Hicks and the County employed Sierra, Gaines-Charske, Matalka,
Gallegos, and Rayburn.
All seven Appellees were categorized by their respective
employers as employees exempt from the Fair Labor Standards Act
(“FLSA”), 29 U.S.C. §§ 201-19. Appellees were therefore not
granted overtime compensation for hours worked in excess of forty
hours per week as required by the FLSA. Appellees sued the County
of El Paso in state court for unpaid overtime compensation,
alleging that they were incorrectly categorized as exempt
employees. The City of El Paso was joined and the case was removed
1
Originally, there were nine Plaintiffs. However,
Plaintiffs Ana Whited and William Sparks have been dismissed as
parties to this appeal by Appellant County of El Paso.
2
to federal district court, where it was tried before a jury. The
jury returned a verdict for Appellees on all issues. The district
court then entered a judgment on the jury’s verdict. In addition,
the district court awarded Appellees liquidated damages and
substantial attorney’s fees. The City and County now appeal.
II.
A.
Appellants argue first that the district court abused its
discretion in excluding Appellants’ expert witnesses as a discovery
sanction for Appellants’ failure to timely disclose their expert
witnesses as required by the Federal Rules of Civil Procedure, a
Local Rule of the Western District of Texas, and the scheduling
order.
Under Federal Rule of Civil Procedure 37(c)(1), “A party that
without substantial justification fails to disclose information
required by Rule 26(a) [(which includes the expert witness
disclosure requirements)] or 26(e)(1) shall not, unless such
failure is harmless, be permitted to use as evidence at a trial, at
a hearing, or on a motion any witness or information not so
disclosed.” See also Barrett v. Atlantic Richfield Co., 95 F.3d
375, 380 (5th Cir. 1996) (providing four-part test, based on Rule
37, for reviewing exclusion of expert witnesses). Appellants
provided no explanation for their actions. Therefore, under Rule
37 and Barrett, the district court clearly did not abuse its
discretion by excluding the testimony of Appellants’ experts.
In addition, Appellants failed to proffer any of the expert
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witness testimony or the expert witness reports into the record.
Without such proffers indicating what testimony the experts would
have provided, Appellants cannot demonstrate that the district
court’s exclusion of the testimony affected their substantial
rights. See Fed. R. Evid. 103(a)(2); Petty v. IDECO, Division of
Dresser Industries Inc., 761 F.2d 1146, 1151 (5th Cir. 1985). For
these reasons, we reject Appellants’ argument that the district
court abused its discretion in excluding the testimony.
B.
Appellants next contend that the district court erred in
failing to find that Appellees were exempt from the FLSA as a
matter of law. In support of this argument, they rely primarily on
Appellees’ job descriptions. After reviewing the record, we
conclude that there is ample support for the jury’s finding that
Appellants were not exempt employees.
Appellants argue that Appellees were exempt from FLSA coverage
as a matter of law under the bona fide administrative employee
exemption. They focus primarily on the “short test” for the
administrative employee exemption. Under the short test, the
administrative employee exemption is correctly applied if: (1) the
employee has a salary of more than $250 per week; (2) the
employee’s primary duty2 is performing office work or nonmanual
2
The version of the short test Appellants rely on provides
“50 percent of his time” instead of “his primary duty.” For the
purpose of this appeal, this difference--if any--is not relevant,
as the focus here is primarily on the “discretion and independent
judgment” prong of the short test.
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work directly related to management policies or general business
operations; and (3) the employee exercises discretion and
independent judgment. Reich v. John Alden Life Ins. Co., 940 F.
Supp. 418, 421 (D. Mass. 1996). This appeal focuses primarily on
the third prong, whether Appellees exercised discretion and
independent judgment.3
Appellants rely on the job descriptions they prepared for
Appellees to demonstrate that Appellees were required to exercise
discretion and independent judgment to perform their jobs.
Appellant County of El Paso, however, does not point to any
specific aspects of the job descriptions that require independent
judgment, nor does the County point to any specific instance in
which any of their employees exercised discretion or independent
judgment.
In contrast, Appellant City of El Paso points to specific
aspects of the job descriptions of its employees--Hicks and
Heidtman--to support its position that these employees exercised
discretion and independent judgment. The City quotes Hicks’s and
Heidtman’s job descriptions, which state in part that Hicks and
Heidtman were to “[i]nitiate sales contacts . . . answer and
respond to inquiries . . . [by] developing lists of prospective
clients; contacting . . . clients to solicit business; preparing
and participating in bid proposals and presentations; . . .
3
There is also disagreement as to whether Appellees
performed work related to general business operations. However, we
do not enter this dispute, as our conclusions concerning the third
prong render analysis of the second prong unnecessary.
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[r]epresent the City of El Paso . . . [by] attending and
participating in professional organizations, industry trade shows,
meetings and seminars.” In addition, the City points to trial
testimony of Heidtman in which she stated that she used “judgment”
in at least one aspect of her job.
In response to Appellants’ arguments, Appellees point to their
testimony denying that they exercised significant discretion and
independent judgment in their jobs. For example, Heidtman
testified that much of her time was merely spent on the phone
determining whether an organization that might be interested in
coming to El Paso wanted information or brochures on the city.
Heidtman also testified that when she was at a convention, she
could take potential clients out for a meal. However, prior to
such a meal, she needed to obtain the approval of her superior. In
addition, Appellees’ expert witness, Joseph Wysong, testified in
detail about the minimal discretion some of the Appellees
exercised. He concluded that this discretion fell far short of
that required under the FLSA’s administrative employee exemption.
Wysong’s testimony was based both on his past experience and on the
relevant regulations interpreting the FLSA.
One of the regulations interpreting the FLSA, 29 C.F.R. §
541.207, defines and explains discretion and independent judgment.
The regulation states that these terms indicate that “the person
has the authority or power to make an independent choice, free from
immediate direction or supervision and with respect to matters of
significance.” 29 C.F.R. § 541.207(a). Moreover, in order to
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qualify for the administrative employee exemption, an employee must
be required to exercise discretion and independent judgment
“customarily and regularly.” 29 C.F.R. § 541.207(g). An employer
claiming an exemption bears the burden of proving that the
exemption claimed is valid. Blackmon v. Brookshire Grocery Co.,
835 F.2d 1135, 1137 (5th Cir. 1988).
We conclude that the jury’s finding that Appellees did not,
customarily and regularly, exercise discretion and independent
judgment is supported by the record. Most of Appellees’ employment
actions were mechanical, rather than discretionary, in nature. For
most Appellees, considerable time was spent simply compiling names
of prospects to complete their databases, calling prospects in
these databases, and sending them brochures. The jury was entitled
to find that any significant decision required the approval of a
superior. Also, most of Appellees’ jobs were equivalent to sales
positions, and sales jobs are not exempt from FLSA coverage. 29
C.F.R. § 541.205(a). Because the jury’s findings are supported by
the record, the district court did not err in denying Appellants’
motions for judgment as a matter of law.
III.
Appellants next argue that the district court abused its
discretion in awarding Appellees liquidated damages.
Under the FLSA, liquidated damages are to be awarded unless
the employer demonstrates that it acted reasonably and in good
faith. 29 U.S.C. § 260. Even if the district court determines
that the employer’s actions were taken in good faith and based on
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reasonable grounds, the district court still retains the discretion
to award liquidated damages. Id.; Lee v. Coahoma County,
Mississippi, 937 F.2d 220, 227 (5th Cir. 1991).
In this case, the district court made a factual finding that
“Defendants suspected that they were not in full compliance with
the FLSA.” In light of the record, we conclude that this finding
was not clearly erroneous. Because employers cannot act in good
faith based on reasonable grounds when they suspect that they are
out of compliance with the FLSA, it would have been an abuse of
discretion if the district court had not awarded liquidated
damages. See, e.g., Barcellona v. Tiffany English Pub, Inc., 597
F.2d 464, 468-69 (5th Cir. 1979). Therefore, the award of
liquidated damages is affirmed.4
IV.
The district court awarded attorney’s fees to Appellees’
counsel using a lodestar approach. The district court then
enhanced the lodestar by 50 percent because of the “exceptional
4
In setting forth the legal standards on which it based its
decision to award liquidated damages, the district court stated, “a
lack of good faith is only shown when an employer ‘“knew or
suspected that [its] actions might violate the [Act] . . . .”’
Reeves v. Int’l Telephone & Telegraph Corp., 616 F.2d 1342, 1353
(5th Cir. 1980) (quoting Coleman v. Jiffy June Farms, 458 F.2d
1139, 1142 (5th Cir. 1972)).” The district court’s reliance on
Reeves and Jiffy June is misplaced. The Supreme Court has
specifically overruled Jiffy June, and in doing so implicitly
overruled Reeves. McLaughlin v. Richland Shoe Co., 486 U.S. 128,
133-34, 108 S. Ct. 1677, 1681, 100 L. Ed. 2d 115 (1988). The
district court’s reference to this outdated standard, however, does
not affect our conclusion. As we explain in the text, the district
court’s well-supported factual finding clearly requires an award of
liquidated damages.
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circumstances in this case includ[ing] time limitations, complexity
of issues, results obtained, and preclusion of other employment by
the attorney.” Appellants challenge this enhancement, contending
that the district court committed legal error and abused its
discretion. We agree with Appellants that the 50 percent
enhancement was not warranted.
This Court uses the “lodestar” method to calculate attorney’s
fees. Fender v. Zapata Partnership, Ltd., 12 F.3d 480, 487 (5th
Cir. 1994). A lodestar is calculated by multiplying the number of
hours reasonably expended by an appropriate hourly rate in the
community for such work. Shipes v. Trinity Industries, 987 F.2d
311, 319-20 (5th Cir. 1993). After making this calculation, the
district court may decrease or enhance the lodestar based on the
relative weights of the twelve factors set forth in Johnson v.
Georgia Highway Express, Inc., 488 F.2d 714, 717-19 (5th Cir.
1974).5 The lodestar may not be adjusted due to a Johnson factor,
however, if the creation of the lodestar award already took that
factor into account. Shipes, 987 F.2d at 319-20. Such
reconsideration is impermissible double-counting. Id.
Here, the district court justified the lodestar enhancement
5
The Johnson factors are: (1) the time and labor required;
(2) the novelty and difficulty of the issues; (3) the skill
required to perform the legal services properly; (4) the preclusion
of other employment by the attorney; (5) the customary fee; (6)
whether the fee is fixed or contingent; (7) the time limitations
imposed by the client or circumstances; (8) the amount involved and
results obtained; (9) the experience, reputation, and ability of
the attorneys; (10) the undesirability of the case; (11) the nature
and length of the professional relationship with the client; and
(12) the award in similar cases. 488 F.2d at 717-19.
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because of “time limitations, complexity of issues, results
obtained, and preclusion of other employment by the attorney.” The
Supreme Court, however, has stated that two of the Johnson factors
considered by the district court, “complexity of the issues” and
“results obtained,” are “presumably fully reflected in the lodestar
amount, and thus cannot serve as independent bases for increasing
the basic fee award.” Pennsylvania v. Delaware Valley Citizens’
Council for Clean Air, 478 U.S. 546, 565, 106 S. Ct. 3088, 3098, 92
L. Ed. 2d 439 (1986). Thus, in Shipes, this Court held that
enhancement based on “complexity of the issues” and “results
obtained” is only appropriate in “rare and exceptional
circumstances” and must be supported by both specific evidence in
the record and detailed findings by the lower court. 987 F.2d at
319-22 & n.9. Such specific evidence and detailed findings are not
present here.
The question then remains as to whether the two other
justifications--“time limitations” and “preclusion of other
employment by the attorney”--are sufficient to justify the
enhancement. In Shipes, this Court observed that “preclusion of
other employment” is generally subsumed within the lodestar amount.
987 F.2d at 321-22. Appellees provide no reason why that is not
the case here. Therefore, the sole remaining justification for the
enhancement is the time limitations in this case.
The district court provides no explanation as to why the time
limitations in this case mandate an enhancement. It is true that
this case was tried in a relatively short period of time for a
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civil proceeding. Specifically, this case took slightly less than
eight months from the filing of the complaint until the entry of
judgment. Over those eight months, however, Appellees’ counsel
spent only 244.75 hours on this case. Eighty-nine of these hours
were spent in the three weeks leading up to trial. Thus, excluding
from consideration this pretrial “crunch,” which would have been
present even if the case had been tried on a much slower schedule,
counsel spent little more than twenty hours per month on this case.
That amount of effort does not support an enhancement due to time
limitations.
In light of the strong presumption that the lodestar award is
the reasonable fee, there is simply not enough evidence to justify
an enhancement on time limitations alone. See City of Burlington
v. Dague, 505 U.S. 557, 562, 112 S. Ct. 2638, 2641, 120 L. Ed. 2d
449 (1992) (holding that the fee applicant bears the burden of
showing that an enhancement is necessary to the determination of a
reasonable fee). For these reasons, we conclude that the district
court erred in enhancing the lodestar.
Conclusion
The district court acted well within its discretion in
excluding the testimony of Appellants’ expert witnesses. Moreover,
the district court correctly ruled that the CVB employees were not
exempt from the FLSA as a matter of law. In addition, the district
court’s factual findings support its award of liquidated damages.
We agree with Appellants, however, that the district court’s
50 percent enhancement of the attorney’s fees lodestar award was
11
not warranted. We therefore vacate the enhancement and remand this
case to the district court so that judgment may be entered
consistent with this opinion.
AFFIRMED in part, VACATED in part, and REMANDED.
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