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Drake v. Steak N Shake Operations, Inc.

United States District Court, E.D. Missouri, Eastern Division

May 10, 2019

SANDRA DRAKE and RANDY SMITH on behalf of themselves and others similarly situated, Plaintiffs,
v.
STEAK N SHAKE OPERATIONS, INC, Defendant.

          MEMORANDUM AND ORDER

          JOHN A. ROSS UNITED STATES DISTRICT JUDGE.

         This matter is before the Court on Plaintiffs' Motion to Alter Judgment. (Doc. 336.) The motion is fully briefed and ripe for ruling. (See Docs. 337, 342.)

         Background

         This case began in 2014 with a complaint for damages for unpaid overtime filed by Managers who worked for Defendant Steak N Shake Operations, Inc. (“SnS”) Managers. The Managers sought to pursue a class action under the Missouri Minimum Wage Law (“MMWL”) and a collective action under the Fair Labor Standards Act (“FLSA”). (Doc. 1.) The collective and class were formally certified in December 2017. (Doc. 170.) A six-day jury trial was held in February 2019. (Docs. 306-26.) The jury found for Plaintiffs on the issues of liability and willfulness and, in a second phase of trial, awarded the 275 MMWL class members a total of $2, 883, 180.05 and awarded the eleven FLSA class members a total of $154, 988.22. (Docs. 324, 332.) The Court entered a judgment incorporating the jury's verdicts on February 28, 2019. (Doc. 333.)

         Thereafter, Plaintiffs filed this motion to alter judgment, arguing that they are entitled to (1) liquidated damages under the MMWL in an amount equal to the jury's $2, 883, 180.05 award; (2) liquidated damages under the FLSA in an amount equal to the jury's $154, 988.22 award; (3) attorney fees in the amount of $1, 819, 200 based on hourly rates of $575 and $550; and (4) costs in the amount of $40, 219.49. (Doc. 337.) Defendant does not challenge Plaintiffs' first or fourth requests, but it argues that it is shielded from liquidated damages under the FLSA because it acted in good faith and asserts that the claimed hourly rates are unreasonably high. (Doc. 342.)

         Discussion

         The Court has broad discretion to amend its judgment under Rule 59(e). White v. N.H. Dep't of Emp't Sec., 455 U.S. 445, 450 (1982).

         1. Plaintiffs' Request for Liquidated Damages under the MMWL

         Under the MMWL, as applicable when Plaintiffs filed suit, employers who fail to properly pay overtime “shall be liable to the employee affected for the full amount of the wage rate and an additional equal amount as liquidated damages.” Mo. Rev. Stat. § 290.527 (2017). Defendant does not dispute that the award of liquidated damages is mandatory and automatic under the statute. (See Doc. 342.) Accordingly, the Court will amend its judgment to include liquidated damages under the MMWL in an amount equal to the jury's $2, 883, 180.05 award.

         2. Plaintiffs' Request for Liquidated Damages under the FLSA

         Under the FLSA, employers who fail to properly pay overtime “shall be liable to the employee or employees affected in the amount of their unpaid minimum wages, or their unpaid overtime compensation, as the case may be, and in an additional equal amount as liquidated damages.” 29 U.S.C.A. § 216(b). “An award of liquidated damages under section 216(b) is mandatory unless the employer can show good faith and reasonable grounds for believing that it was not in violation of the FLSA.” Braswell v. City of El Dorado, Ark., 187 F.3d 954, 957 (8th Cir. 1999) (citing Hultgren v. Cty. of Lancaster, 913 F.2d 498, 508-09 (8th Cir. 1990)).

         Defendant asserts that it “acted in good faith and had reasonable grounds for believing that its Managers were performing [exempt work].” (Doc. 342 at 2.) At trial, Defendant presented evidence that its Managers routinely certified that they had been informed of their expected job duties and were to notify their superiors if their work deviated from those expectations. Defendant argues that the lack of such notification left it unaware that the Managers were not primarily engaged in exempt work. (Id.) In addition, Defendant presented evidence at trial from SnS employees who testified that the company spent significant time and resources training Managers how to perform exempt duties, indicating their good faith belief that the Managers were performing those duties. (Id.) In short, Defendant argues that they relied in good faith on their Managers' written certifications that their daily work consisted of the expected exempt duties. Plaintiffs respond that the jury's finding that Defendant willfully violated the requirements of the MMWL precludes a finding of good faith in this case. (Doc. 337 at 3-6.)

         The Court begins by noting that the standard for finding willfulness under the MMWL is not the same as the inquiry surrounding good faith under the FLSA. During the liability phase of the trial, the jury found that SnS had acted willfully because it “knew that its conduct was prohibited by the law regarding overtime pay, or showed reckless disregard for whether its conduct was prohibited by the law.” (Doc. 319 at Instruction No. 14.) That is not the same as failing to act with “good faith and reasonable grounds for believing that it was not in violation of the FLSA.” Braswell, 187 F.3d at 957. While the two standards may overlap, the Court believes there is a conceivable set of facts in which an employer acted in good faith under the FLSA but in reckless disregard for the legality of their actions under the MMWL. For this reason, the Court rejects Plaintiffs' assertion that the jury's verdict precludes a finding of good faith.

         However, under the specific facts of this case, the Court is not persuaded that Defendant “had no reason to believe that Managers were not performing [exempt] tasks.” (Doc. 342 at 2.) Indeed, SnS senior management testified that it was aware of chronic and widespread understaffing. The evidence at trial showed that SnS's primary solution for understaffed stores was to use salaried Managers working overtime and that SnS must have known that those Managers were simply too busy performing production and service duties to meet the definitions for exempt employees. Thus, SnS's failure to pay overtime was not a good ...


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