Joshua Edwards v. 4JLJ, L.L.C. ( 2020 )

Case: 19-40553 Document: 00515551199 Page: 1 Date Filed: 09/02/2020
United States Court of Appeals
for the Fifth Circuit United States Court of Appeals
Fifth Circuit
FILED
September 2, 2020
No. 19-40553 Lyle W. Cayce
Clerk
Joshua Edwards, individually and on behalf of others similarly situated;
Francisco Gutierrez; Humberto J. Morales; Ricky
Martin; Ernesto Flores; Et Al.,
Plaintiffs—Appellants Cross-Appellees,
versus
4JLJ, L.L.C., doing business as J4 Oilfield Services; John
Jalufka,
Defendants—Appellees Cross-Appellants,
__________________________________________________
Rodrigo Tarango, Jr.
Plaintiff—Appellant Cross-Appellee,
versus
4JLJ, L.L.C., doing business as J4 Oilfield Services; John
Jalufka,
Defendants—Appellees Cross-Appellants.
Appeals from the United States District Court
for the Southern District of Texas
USDC No. 2:15-CV-299
USDC No. 2:18-CV-78
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Before Wiener, Graves, and Willett, Circuit Judges.
Don R. Willett, Circuit Judge:
4JLJ, LLC provides oil well pump and frack services. A group of its
employees sued 4JLJ under the Fair Labor Standards Act, alleging that 4JLJ
violated the FLSA’s overtime wage mandates. 4JLJ paid the Employees two
different types of bonuses—a stage bonus and a performance bonus—and the
Employees argued that both ought to have been included in the “regular
rate” for the purposes of overtime calculation. The case was tried before a
jury, which held for 4JLJ in all respects. After the verdict, the Employees
filed two identical motions for judgment as a matter of law, which were both
denied. The district court, however, did award sanctions to the Employees
over a contentious discovery dispute. The Employees appeal the denial of
their motions for judgment as a matter of law, and 4JLJ appeals the sanctions
award.
Our holdings are something of a mixed bag. We conclude that the
performance bonuses—but not the stage bonuses—should have been
included in the regular rate as a matter of law. So we reverse and remand for
the district court to consider all relief warranted. As for the sanctions award,
the district court did not abuse its discretion, so we affirm.
I
4JLJ is a single-member LLC, wholly owned by Defendant John
Jalufka. 4JLJ hired the Employees as frack and pump hands. On top of their
base pay, 4JLJ paid the Employees two types of bonuses. Neither bonus was
considered in the calculation of the Employees’ overtime wages—which lies
at the heart of the Employees’ claims on appeal. The first bonus was a “stage
bonus.” The fracking of a well occurs in identifiable stages, and 4JLJ offered
a bonus for each stage completed. Stage bonuses were not memorialized in
writing.
2
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4JLJ also offered a quarterly “performance bonus,” which, unlike the
stage bonus, was memorialized in a written contract given to the Employees
upon hiring. In all capital letters and in a large typeface, the contract said:
“THIS BONUS IS NOT TO BE EXPECTED, IT IS TO BE
EARNED.” The contract went on to say: “IF YOU ARE HERE JUST
TO GET A PAYCHECK, AND GET BY WITH AS LITTLE
WORK AS POSSIBLE, DON’T EXPECT TO GET A
PERFORMANCE BONUS.” The contract also provided the criteria by
which the Employees would be evaluated for performance bonus
consideration.1
The performance bonus was calculated using a pay scale applied to
three classes of employees:
A Class: $1.00/hour
B Class: $0.75/hour
C Class: $0.50/hour
So if 4JLJ chose to give an employee a performance bonus, the bonus was
calculated by adding an amount, shown above, to each hour the employee
worked that quarter.
The Employees filed a collective action complaint, alleging that 4JLJ2
violated the FLSA’s overtime wage mandates by failing to include these
1
The contract listed positive factors that weighed in favor of bonus eligibility as
well as negative factors that hurt one’s bonus prospects.
2
John Jalufka was later joined as a defendant. But we refer to both defendants
simply as 4JLJ throughout.
3
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bonuses as compensation in the “regular rate”—which, under the FLSA, is
used to calculate overtime wages.3
Before trial, the parties engaged in a bitter discovery brawl. The
Employees made a production request for GPS data on work vehicles driven
by the Employees,4 and 4JLJ challenged this request. 4JLJ claimed that it
didn’t have the data. A third-party provider, Fleetmatics, accumulated and
stored the data. And, 4JLJ claimed, it wasn’t 4JLJ’s burden to retrieve the
data; the Employees should have gone to Fleetmatics directly.5
The Employees indicated that they would file a motion to compel but
never followed through with the threat. Instead, seven months later, the
Employees sent more production requests to 4JLJ—again asking for the
same GPS data. 4JLJ again objected to the request as overly broad,
burdensome, and not limited in time or scope. 4JLJ also stated that it had
“none” of the data.
Five days before the final pretrial conference, the Employees filed a
brief with the court, complaining about 4JLJ’s failure to provide the
requested GPS data. In that brief, the Employees “assumed that [the data]
3
The Employees averred five bases for recovery: (1) 4JLJ failed to maintain
adequate time records; (2) 4JLJ paid employees on a task basis, as opposed to per hour; (3)
4JLJ underpaid employees relative to actual hours worked; (4) 4JLJ failed to pay overtime
wages for work exceeding 40 hours in a week; and (5) 4JLJ failed to include bonuses in
overtime wages. The Employees also contended that Jalufka was personally liable for the
actions of 4JLJ. The Employees dropped the first four issues on appeal. Now, their
remaining arguments are that 4JLJ should have included bonuses in overtime calculations
and that Jalufka is personally liable.
4
The GPS data subject to this discovery dispute has zero bearing on the
substantive issues pursued on appeal (beyond its impact on sanctions).
5
It later became clear that 4JLJ’s contractual agreement with Fleetmatics enabled
4JLJ to access the data. But 4JLJ claims that it didn’t know this because it wasn’t 4JLJ’s
practice to access or download data from Fleetmatics.
4
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has since been lost, and thus spoliated by Defendants.” As the Employees
had never filed a motion to compel, this was the first time the GPS issue
came before the court. At the final pretrial hearing a few days later, 4JLJ told
the court that it would do everything in its power to get the data. But 4JLJ
warned that it could take time.
The search for this data caused massive delays, and in December 2017,
two months later, the Employees filed a motion for sanctions. In their motion,
they claimed that 4JLJ had earlier denied the existence of the contested data.
And they continued to assert that important portions of the data had been
lost or destroyed due to 4JLJ’s dilatory tactics. The district court imposed
two sanctions on 4JLJ: (1) an adverse inference jury instruction and (2) a
burden shifting sanction. After it became clear that no data was spoliated, the
district court removed the adverse inference sanction but declined to vacate
the burden shifting sanction. It also denied 4JLJ’s request to proceed with
an interlocutory appeal to challenge the sanction.
The case was tried before a jury for five days. After both sides rested,
the Employees moved for a directed verdict, which the court denied. On
February 26, 2019, the jury found in favor of 4JLJ on every issue. A flurry of
motions and orders followed:
• On March 12, the Employees renewed their motion for
judgment as a matter of law (or alternatively for a new trial).
That same day, the Employees separately moved to recover
attorney fees and expenses related to the discovery dispute.
• On March 27, the district court entered a Final Judgment
order in favor of 4JLJ, and it issued an order awarding
monetary sanctions to the Employees.
• On April 10, the Employees filed a second motion for
judgment as a matter of law or for a new trial—
substantively identical to the first. And 4JLJ moved for
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costs, as prevailing parties, under Federal Rule of Appellate
Procedure 54(d).
• On May 20, the court denied the Employees’ second
request for judgment as a matter of law or a new trial.
• On June 3, the district court issued an “Order on Request
for Bill of Costs,” awarding 4JLJ only $14,920 of the
$44,553 it requested. These orders finally disposed of all
the parties’ claims.
• On June 12, the Employees filed a notice of appeal.
• On June 24, 4JLJ filed a notice of cross-appeal, challenging
the district court’s attorney-fee sanction and its allocation
of Rule 54(d) costs.
II
Let’s start with jurisdiction. 4JLJ did not make a jurisdictional
argument in its briefing. But at oral argument, 4JLJ contended that the
Employees’ notice of appeal was late and that this tardy notice is a
jurisdictional defect. Whether jurisdictional arguments are raised late (or not
at all), “we must always be sure of our appellate jurisdiction.”6 4JLJ is right
that the Employees’ notice of appeal was late.7 But 4JLJ is wrong that this
6
Castaneda v. Falcon, 166 F.3d 799, 801 (5th Cir. 1999).
7
A party has 30 days to file a notice of appeal. FED. R. APP. P. 4(a)(1)(A). But
that 30-day clock will restart upon the filing of a motion for judgment as a matter of law
under Rule 50(b). FED. R. APP. P. 4(a)(4)(A). In that case, the 30-day time period to
appeal starts “from the entry of the order disposing of the last such remaining motion.”
FED. R. APP. P. 4(a)(4)(A). However, a “second Rule 50 JMOL motion will not toll the
running of the Rule 4(a)(1) thirty-day time in which to file a notice of appeal unless such a
second Rule 50 motion presents ‘at least one completely different ground for relief from
the judgment.’ ” Lewallen v. City of Beaumont, 394 F. App’x 38, 41 (5th Cir. 2010)
(unpublished) (emphasis in original) (quoting Nobby Lobby, Inc. v. City of Dallas, 970 F.2d
82, 85 (5th Cir. 1992)).
Here, the district court’s March 27 Final Judgment order did not specifically
reference the Employees’ March 12 renewed motion for judgment as a matter of law. But
6
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late filing spoils our jurisdiction. In Hamer v. Neighborhood Housing Services of
Chicago, the Supreme Court made clear that “a provision governing the time
to appeal in a civil action qualifies as jurisdictional only if Congress sets the
time.”8 If not prescribed by Congress, a time limit is simply a “mandatory
claim-processing rule.”9 And these types of rules “may be waived or
forfeited.”10 The Federal Rules of Appellate Procedure were promulgated by
the Supreme Court, not by Congress.11 So the Employees’ failure to file a
timely notice of appeal does not affect our appellate jurisdiction. And because
when a district court “enters a final judgment, it has implicitly denied any outstanding
motions, even if the court does not explicitly deny a particular motion.” Snider v. L-3
Commc’ns Vertex Aerospace, L.L.C., 946 F.3d 660, 667 (5th Cir. 2019) (citing Tollett v. City
of Kemah, 285 F.3d 357, 369 n.* (5th Cir. 2002)). The Employees’ second renewed motion
for judgment as a matter of law on April 10 was substantively identical to the first—
presenting no new grounds for relief—so the second motion did not toll the running of Rule
4(a)(1)’s thirty-day appeal period. See Lewallen, 394 F. App’x at 41. In the Employees’
second motion for judgment as a matter of law, the Employees included a “Procedural
Note” that explained the reason for the second, identical filing; the Employees weren’t
sure if their original renewed motion for judgment as a matter of law complied with Rules
50(b) and 59 since the motion was filed before the district court’s Final Judgment order.
Seemingly out of an abundance of caution, the Employees filed a word-for-word identical
renewed motion for judgment as a matter of law after the district court issued its Final
Judgment order. This superfluous motion—because it was identical to the first—did
nothing to change the Employees’ obligation to file a notice of appeal within 30 days of the
court’s Final Judgment order. So their notice was late. Very late.
8
138 S. Ct. 13, 17 (2017).
9
Id.10
Id.11
Jackson v. Stinnett, 102 F.3d 132, 135 (5th Cir. 1996).
7
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4JLJ did not properly raise the timeliness argument in its opening brief,12 the
argument is forfeited.13 We have jurisdiction under 28 U.S.C. § 1291.
III
Both parties have appealed. The Employees appeal the district court’s
denial of their motion for judgment as a matter of law or a new trial.14 4JLJ
asks us to overturn the district court’s award of attorney fees and its
allocation of costs. We address each issue in turn, starting with the
Employees’ request for us to set aside the jury’s verdict.
A
First, the standard of review. We review the denial of a motion for
judgment as a matter of law de novo, but “our standard of review with respect
to a jury verdict is especially deferential.”15 The jury’s verdict must be
upheld unless there is “no legally sufficient evidentiary basis for a reasonable
12
4JLJ never mounted a jurisdictional argument in its opening brief. It merely
hinted at a lack of clarity in our jurisdiction: “To the extent (which is unclear) [the
Employees’] second, substantially repetitive motion for judgment or new trial tolled its
deadline to appeal the Final Judgment, this court has jurisdiction over the principal appeal
pursuant to 28 U.S.C. § 1291.” Brief for 4JLJ at 2–3, Edwards v. 4JLJ, No. 19-40553 (5th
Cir. argued March 3, 2020). This isn’t an argument on timeliness. It’s a concession of
ignorance.
13
See DeVoss v. Sw. Airlines Co., 903 F.3d 487, 489 n.1 (5th Cir. 2018) (noting that
failure to adequately brief an argument forfeits the claim on appeal); Cinel v. Connick, 15
F.3d 1338, 1345 (5th Cir. 1994) (“A party who inadequately briefs an issue is considered to
have abandoned the claim.”).
14
In both of the Employees’ motions for judgment as a matter of law, they
requested the alternative relief of a new trial. But we refer throughout, for the sake of
simplicity, to the motions only as motions for judgment as a matter of law.
15
SMI Owen Steel Co., Inc. v. Marsh USA, Inc., 520 F.3d 432, 437 (5th Cir. 2008)
(quoting Flowers v. S. Reg’l Physician Servs., Inc., 247 F.3d 229, 235 (5th Cir. 2001)).
8
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jury to find for a party.”16 When entertaining a motion for judgment as a
matter of law, the court “must review all of the evidence in the record, draw
all reasonable inferences in favor of the nonmoving party, and may not make
credibility determinations or weigh the evidence.”17 For the court to grant a
motion for judgment as a matter of law, the “facts and inferences” must
“point so strongly and overwhelmingly in favor of one party that the court
concludes that reasonable jurors could not arrive at a contrary verdict.”18
Our standard of review for a motion for a new trial under Rule 59 is
even more restrictive.19 We review a denied motion for a new trial for abuse
of discretion.20 An abuse of discretion occurs when the district court’s ruling
is based on “an erroneous view of the law or on a clearly erroneous
assessment of the evidence.”21
16
Pineda v. United Parcel Serv., Inc. 360 F.3d 483, 486 (5th Cir. 2004) (quoting
FED. R. CIV. P. 50(a)); id. (“[I]f reasonable persons could differ in their interpretations
of the evidence, then the motion should be denied.” (quotation marks and citation
omitted)).
17
Ellis v. Weasler Eng’g Inc., 258 F.3d 326, 337 (5th Cir. 2001).
18
Bellows v. Amoco Oil Co., 118 F.3d 268, 273 (5th Cir. 1997).
19
Williams v. Manitowoc Cranes, LLC, 898 F.3d 607, 614 n.13 (5th Cir. 2018) (“It
is more difficult to satisfy the standard for reversing the denial of a motion for a new trial
than the standard for reversing the denial of judgment as a matter of law.”); Whitehead v.
Food Max of Miss., Inc., 163 F.3d 265, 269 n.2 (5th Cir. 1998) (“As we have noted, the
standard of review for appeals from denials of a new trial is far more narrow than that for
denials of judgment as a matter of law. At first blush, this appears inconsistent, given that
the remedy of a new trial is far less drastic for the nonmovant than suffering judgment as a
matter of law. However, the reason for the more narrow standard for review of the denial
of new trial motions springs from the lower standard applied by the district court to new
trial motions—it is far less demanding than that for judgment as a matter of law.”).
20
Munn v. Algee, 924 F.2d 568, 575 (5th Cir. 1991).
21
Tollett, 285 F.3d at 363.
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B
A jury was tasked with deciding who had the more convincing
argument, 4JLJ or the Employees. Now the Employees want to take that job
away from the jury and give it to us. We approach this request with caution.
The jury is “as central to the American conception of the consent of
the governed as an elected legislature or the independent judiciary.”22 We
inherited a reverence for juries from the English; Blackstone called the jury
trial “‘ the grand bulwark’ of English Liberties.”23 But in the years leading
up to the American Revolution, “Americans grew to rely on the jury as a
bulwark against British oppression, rejecting attempts to force American
juries to find other Americans guilty of illegal British regulations.”24 Juries
were so effective at curtailing British abuses that the British attempted to get
rid of juries for disputes between the colonists and the British colonial
government.25 Indeed, King George III’s efforts to strip colonists of their
22
Jennifer Walker Elrod, Is the Jury Still Out?: A Case for the Continued Viability of
the American Jury, 44 TEX. TECH L. REV. 303, 303–04 (2012).
23
Id. at 314 (citing 4 WILLIAM BLACKSTONE, COMMENTARIES ON THE
LAWS OF ENGLAND 342 (Univ. of Chi. Press 1979) (1769)). Blackstone also said that trial
by jury is “the glory of the English law” and “the most transcendent privilege which any
subject can enjoy or wish for, that he cannot be affected, either in his property, his liberty,
or his person, but by the unanimous consent of twelve of his neighbors and equals.”
Jennifer Walker Elrod, W(h)ither The Jury? The Diminishing Role of the Jury Trial in Our
Legal System, 68 WASH. & LEE L. REV. 3, 7 (2011) (citing Mitchell v. Harmony, 54 U.S.
115, 142-43 (1851) (quoting 4 WILLIAM BLACKSTONE, COMMENTARIES ON THE
LAWS OF ENGLAND 227–29 (Oxford, Clarendon Pr. 1992) (1765))).
24
Elrod, Is the Jury Still Out?, supra note 22, at 315.
25
Id.
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right to trial by jury was one of our chief grievances against the King and a
catalyst for declaring our independence.26
Given how important juries were in resisting the abuses of the British
colonial government, it’s no surprise that John Adams called trial by jury,
along with representative democracy, “the heart and lungs of liberty.”27
Thomas Jefferson believed juries to be “the only anchor ever yet imagined
by man, by which a government can be held to the principles of its
constitution.”28 In the ratification debates, the value of juries was the only
thing Federalists and Anti-Federalists could agree on. According to
Alexander Hamilton, “if there is any difference between them it consists in
this, that the former regard it as a valuable safeguard to liberty; the later
represent it as the very palladium of free government.”29 Juries are rightly
reverenced in the American justice system because, as Chief Justice Taft
said, juries give the people security that they, “being part of the judicial
system of the country, can prevent its arbitrary use or abuse.”30 Those
concerns are no less real now than they were in 1776.
26
Id. One of the grievances against King George III listed in the Declaration of
Independence was his habit of “depriving us, in many Cases, of the Benefits of Trial by
Jury.” Id. (quoting The Declaration of Independence para. 20 (U.S. 1776)).
27
Id. at 308, 331 (quoting Thomas J. Methvin, Alabama-The Arbitration State, 62
ALA. LAW. 48, 49 (2001) (“In 1774, John Adams stated: ‘Representative government and
trial by jury are the heart and lungs of liberty. Without them, we have no other fortification
against being ridden like horses, fleeced like sheep, worked like cattle, and fed and clothed
like swines and hounds.”)).
28
Id. at 308 (quoting Donald M. Middlebrooks, Reviving Thomas Jefferson’s Jury:
Sparf and Hansen v. United States Reconsidered, 46 AM. J. LEGAL HIST. 353, 353 (2004)).
29
Elrod, W(h)ither the Jury?, supra note 23, at 8 n.28 (citing THE FEDERALIST
NO. 83, at 521 (Alexander Hamilton) (G.P. Putnam’s Sons ed., 1888)).
30
Elrod, Is the Jury Still Out?, supra note 22, at 309 (citing Balzac v. People of Porto
Rico, 258 U.S. 298, 310 (1922)).
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So we do not “tamper lightly” with jury verdicts.31 The law
“commands judges, who are of all officials the least accountable to the
people, not to invade the province of judgment by the people.”32 But, when
necessary to protect the integrity of the courts and the rights of the people,
federal courts can set aside jury verdicts when they have no evidentiary
basis.33 That is the lens through which we must approach the Employees’
request for judgment as a matter of law.
The Employees challenge two findings on appeal—two questions that
have already been answered by a jury. The first is whether, under the FLSA,
4JLJ ought to have included the Employees’ bonuses in the calculation of
overtime pay. The second is whether Jalufka was an “employer” under the
FLSA and thus liable alongside 4JLJ for any unpaid wages.
1
We begin with the core issue on appeal—the nature of 4JLJ’s bonuses
and whether they should have been factored into the overtime wage
calculation.34 The FLSA was passed in 1938 in order to remedy labor
31
EEOC v. Boh Brothers Const. Co., LLC, 731 F.3d 444, 452 (2013) (quoting Stacy
v. Allied Stores Corp., 768 F.2d 402, 406 (D.C. Cir. 1985)).
32
Id.33
See Thompson v. Connick, 578 F.3d 293 (5th Cir. 2009) (Clement, J., concurring),
rev’d on other grounds, 563 U.S. 51 (2011) (“But as Judge Wisdom counseled when
overturning a jury verdict, ‘[i]n reviewing [a] . . . case when the plaintiff has been injured
grievously, hard as our sympathies may pull us, our duty to maintain the integrity of
substantive law pulls harder.’” (quoting Turner v. Atl. Coast Line R.R. Co., 292 F.2d 586,
589 (5th Cir. 1961)).
34
The Employees first argue that 4JLJ forfeited its affirmative defense regarding
bonus payments. The Employees contend that 4JLJ bears the burden of establishing that
bonuses fall within an exemption, and that 4JLJ “failed to plead a statutory exclusion from
the regular rate for discretionary bonuses pursuant to Section 7(e)(3).” Brief for the
Employees, Edwards v. 4JLJ, No. 19-40553 (5th Cir. argued March 3, 2020). So, the
12
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conditions that were “detrimental to the maintenance of the minimum
standard of living necessary for health, efficiency, and general well-being of
workers.”35 The statute requires employers to pay non-exempt employees
who work more than 40 hours a week overtime of one and one-half times the
employees’ “regular rate” of pay.36 The text “broadly defines ‘regular rate’
as the hourly rate actually paid the employee for ‘all remuneration for
employment.’” 37 And the regular rate “must reflect all payments which the
parties have agreed shall be received regularly during the workweek,
exclusive of overtime payments.”38 So once the parties have decided on the
amount and mode of payment, the regular rate becomes a simple
mathematical formula.39
But it’s not always so simple to determine what kinds of payments
should be included in the formula. Most remuneration must be included, but
not all. Under § 207(e)(3), renumeration is not included in the regular rate if:
both the fact that payment is to be made and the amount of the
payment are determined at the sole discretion of the employer
at or near the end of the period and not pursuant to any prior
contract, agreement, or promise causing the employee to
expect such payments regularly.
Employees argue, 4JLJ has forfeited this defense. But this argument is unavailing.
Whether a bonus is discretionary—the central question on appeal—is not an exemption.
Rather, as discussed infra, under § 207(e)(3), it’s a definitional element of the “regular rate
of pay.”
35
29 U.S.C. § 202.
36
Gagnon v. United Technisource, Inc., 607 F.3d 1036, 1041 (5th Cir. 2010);
§ 207(a)(1).
37
Gagnon, 607 F.3d at 1041 (quoting § 207(e)).
38
Id. (quoting Bay Ridge Operating Co. v. Aaron, 334 U.S. 446, 461 (1948)).
39
Id.13
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29 C.F.R. § 778.211 provides the following helpful hypothetical for
considering whether this standard has been met: Suppose an employer
promises his sales associates that he will give them a monthly bonus of one
cent for each item they sell. But the bonus will only be given when the
employer decides, in his discretion, that the financial condition of the
company warrants such bonuses. According to § 778.211, the employer “has
abandoned discretion with regard to the amount of the bonus though not with
regard to the fact of each payment.”40 The upshot: For a bonus to be excepted
from the regular rate under § 207(e), the employer must maintain discretion
over whether to give the bonus and the amount given.
4JLJ did not include its bonuses in the regular rate. But the jury found
that 4JLJ retained enough discretion over whether to pay bonuses and the
amount to satisfy § 207(e)(3). The Employees say this was wrong as a matter
of law. We review de novo, considering whether there was a “legally
sufficient evidentiary basis for a reasonable jury to find” for 4JLJ.41
But first, an important detour. In an FLSA dispute, plaintiffs bear the
burden to prove all elements of their claims.42 If the employer, however,
wants to show that an employee is exempt from an FLSA requirement, the
employer has the burden of proof on that exemption.43 But we have never
answered a question that proves decisive in this case: Who has the burden of
proof on whether bonuses are discretionary and therefore excluded from the
40
29 C.F.R. § 778.211 (emphasis added).
41
Pineda, 360 F.3d at 486 (quoting FED. R. CIV. P. 50(a)); id. (“[I]f reasonable
persons could differ in their interpretations of the evidence, then the motion should be
denied.” (quotation marks omitted)).
42
Samson v. Apollo Resources, Inc., 242 F.3d 629, 636 (5th Cir. 2001).
43
Id.14
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regular rate under § 207(e)(3)? The answer turns on whether § 207(e)(3) is
an exemption from the overtime provisions in § 207(a).
Though we have never addressed this question head-on, we look to
our other FLSA cases for guidance. In Samson v. Apollo, we faced the
question of who has the burden of proving compliance with the requirements
of the Fluctuating Workweek (FWW) method of calculating employee salary
and overtime wages.44 We held that the FWW method was “one method of
complying with the overtime requirements” of § 207(a)(1)—rather than an
exemption to § 207(a)(1).45 Therefore, the employee bears the burden.
In Carley v. Crest Pumping Technologies, we analyzed burdens
surrounding the Motor Carrier Act (MCA) exemption.46 The MCA
exempts employees who are subject to Secretary of Transportation standards
from FLSA overtime requirements.47 In Carley, no one disputed that the
employer bore the burden to prove the MCA exemption applied. But the
parties quarreled over who bore the burden of proving the weight of vehicles
under the SAFETEA-LU Technical Corrections Act, which designates a
class of employees to which the MCA exemption does not apply.48 The
plaintiffs argued that the employer should bear the burden because the
Corrections Act uses exclusionary language, analogous to the language used
44
Id. at 631.
45
Id. at 636.
46
890 F.3d 575, 576 (5th Cir. 2018). Carley was issued shortly after Encino
Motorcars, LLC v. Navarro, where the Supreme Court rejected the principle embraced by
many courts—including our own—that exemptions to the FLSA should be narrowly
construed. 138 S. Ct. 1134 (2018). Carley recognized that, after Encino Motorcars, we were
bound to give the FLSA a “fair reading,” rather than employ strict construction against
employers’ claimed exemptions, as had long been our practice. See 890 F.3d at 579.
47
Id.
48
Id.
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in the exemptions listed in § 213.49 But we found it important that the
Corrections Act was “not codified as an exemption” along with those listed
under § 213.50 Rather, the Corrections Act was codified under § 207—a
section that sets out FLSA standards that place the burden of proving lack
of compliance on the employee.51
Unlike the enumerated exemptions listed in § 213, § 207 “defin[es]
when FLSA mandates overtime pay.”52 Considering this placement in § 207,
the Correction Act’s “statutory structure indicates that [it] is not meant to
be read in the same way as exclusionary language within a FLSA
49
Id. at 580.
50
Id.
51
Id.
52
Id. (emphasis added). But see Vela v. City of Houston, 276 F.3d 659, 664 (5th Cir.
2001); Foremost Dairies, Inc. v. Wirtz, 381 F.2d 653 (5th Cir. 1967). In Vela, we addressed
the question of who bears the burden of proof on the “§ 207(k) exemption,” which exempts
employees of a public agency engaged in “fire protection activities” from the general
overtime rule of § 207(a)(1). 276 F.3d at 664. Likewise, in Foremost Dairies, we held that
§ 7(e) of the FLSA (now § 207(f)), is an exemption on which the employer has the burden
of proof. 381 F.2d at 656 n.4. Section 7(e), known as the “Belo provision,” provides an
exception to § 207(a)(1)’s 40-hour maximum workweek requirement, where the employee
is engaged in “irregular hours of work.” Id. at 655.
Vela and Foremost Dairies show that placement in § 207 isn’t definitive proof that
the provision in question isn’t an exemption. But both cases helpfully show what such an
exemption might look like outside the enumerated list in § 213. In Vela, the city sought to
show that—under to § 207(k)—unless plaintiffs worked over 53 hours a week, they were
exempt from the general overtime compensation requirements of § 207(a)(1). The city’s
argument was that § 207(a)(1) simply did not apply to that class of employee—those
engaged in fire protection activities. Likewise, in Foremost Dairies, the employer sought to
show that its employees were exempt from the FLSA’s 40-hour-workweek requirement
because, under § 7(e), the employees were engaged in irregular hours of work.
In contrast, 4JLJ hasn’t argued that its employees are exempt from the
requirements of § 207(a). Rather, 4JLJ contends that it has complied with § 207(a)(1)’s
overtime requirements under § 207(e)(3)’s definition of “regular rate.”
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exemption.”53 The Corrections Act is not an exemption from § 207(a);
instead, “it codifies conditions under which § 207(a) requires overtime pay
notwithstanding the MCA exemption.” In keeping with the logic of Samson,
we found that the burden of proof should be on plaintiffs because
“compliance with the Corrections Act is of a piece with compliance with
§ 207(a), rather than a way to exempt oneself from § 207(a).”54
So our key question: Is § 207(e)(3) “of a piece with compliance with
§ 207(a),”55 or is it more like the exemptions listed in § 213—a mechanism
for exempting oneself from compliance with § 207(a)?
Section 207(e) does not exempt employers from compliance with
§ 207(a); it provides instruction for compliance with § 207(a)(1), where
“regular rate” is used without definition. Section 207(e) provides that
definition, which is crucial for employers if they are to understand what must
be included in the regular rate—in order to comply with § 207(a). It was the
Employees’ burden to show that they “performed work for which [they
were] not properly compensated.”56 And to do so, they must show that 4JLJ
ought to have included the renumeration in question in the regular rate.
Because § 207(e)(3) is merely a definitional element of the regular rate—and
therefore merely a definitional element of the Employees’ claim—it was their
burden to show that bonuses were not discretionary according to the statute’s
terms.57
53
Carley, 890 F.3d at 580.
54
Id.
55
See id.
56
Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 687 (1946), overruled on other
grounds by Integrity Staffing Sols., Inc. v. Busk, 574 U.S. 27, 31 (2014).
57
But see Newman v. Advanced Tech, 749 F.3d 33, 36 (1st Cir. 2014) (noting that the
provisions at § 207(e)(1)-(8)“are to be interpreted narrowly against the employer, and the
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Now, with § 207(e)(3) in mind, we discuss 4JLJ’s stage bonuses. The
Employees argue that stage bonuses were nondiscretionary as a matter of law
because: (1) 4JLJ did not retain discretion as to whether the bonuses would
be paid; (2) the amount of the stage bonus was determined prior to the work
being performed; (3) 4JLJ did not retain discretion as to the payment until
near the end of the pay period; and (4) the bonus was paid according to a prior
agreement.
But the Employees struggle to locate support for any of these
assertions in the record. And reviewing a motion for judgment as a matter of
law, we can only overturn the district court’s denial based on evidence that
was actually before the jury.58 The Employees do point to testimony that
some employees sometimes received stage bonuses—first $75 per stage and
later $100. But the Employees show us no evidence in the record that
elucidates how employees came to expect stage bonuses, who determined the
amount, when the amount was determined, whether all employees typically
received such bonuses, or whether the amount ever varied.
It was the Employees’ burden to show that bonuses were non-
discretionary. And given the paucity of evidence before the jury, there is
nothing that “point[s] so strongly and overwhelmingly in favor” of a finding
that stage bonuses were nondiscretionary that “reasonable jurors could not
employer bears the burden of showing that an exception applies” (quoting O’Brian v. Town
of Agawam, 350 F.3d 279, 294 (1st Cir. 2003))); Madison v. Resources for Human Dev., Inc.,
233 F.3d 175, 187 (3d Cir. 2000) (“The burden is on the employer to establish that the
remuneration in question falls under an exemption.”).
58
Ellis, 258 F.3d at 337; see also Apache Deepwater, L.L.C. v. W&T Offshore, Inc.,
930 F.3d 647, 652-653 (5th Cir.), cert. denied sub nom. W & T Offshore, Inc. v. Apache
Deepwater, L.L.C., 140 S. Ct. 649 (2019) (“A party is only entitled to judgment as a matter
of law on an issue where no reasonable jury would have had a legally sufficient evidentiary
basis to find otherwise.”).
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arrive at a contrary verdict.”59 The Employees simply didn’t present enough
evidence at trial to conclusively show a lack of discretion in 4JLJ’s allocation
of stage bonuses—at least not enough evidence to warrant judgment as a
matter of law. Here, we decline to disturb the jury’s reasoned judgment on
such a flimsy record.
Performance bonuses, however, are another story. In contrast to stage
bonuses, the Employees produced a written agreement at trial that governed
performance bonuses. The agreement contains: (1) a list of criteria for
determining whether a performance bonus would be awarded; and (2) a pay
scale that stipulates precisely how much is to be given. As a reminder, for a
bonus to be excluded from the regular-rate calculation, the employer must
retain discretion over the fact of payment and the amount.
It was reasonable for the jury to conclude that 4JLJ retained discretion
over whether to give performance bonuses. On top of witness testimony that
indicted 4JLJ exercised discretion over whether to give bonuses generally,
the jury had the performance bonus agreement itself to consider, which
makes clear that bonuses are “NOT TO BE EXPECTED.” The
agreement also states that performance bonuses are for those who
“consistently perform on a higher level”; it’s for those who are “top
performer[s].” Section 207(e) doesn’t say that the existence of an agreement
alone nullifies employer discretion in regard to remuneration; the statute
pinpoints an agreement that causes employees to expect those bonuses. Given
the testimony offered by the Employees’ own witnesses, along with Jalufka’s
testimony and the written agreement, it was perfectly reasonable for the jury
to conclude that the Employees would not expect the regular payment of
performance bonuses.
59
Bellows, 118 F.3d at 273 (cleaned up).
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But § 207(e) also demands that employers retain discretion over the
amount of payment, not just whether payment is given.60 The performance
bonus agreement provides a concrete pay scale. That scale shows exactly
what employees will be paid if they receive a bonus. And 4JLJ points to no
evidence that contradicts this predetermined pay scale. For instance, not a
single employee testified that he received a performance bonus that deviated
from the contracted-for amount. Based on the performance bonus
agreement, and the complete absence of any evidence contradicting the
universal applicability of the agreement, a reasonable jury could not have
concluded that 4JLJ maintained discretion over the amount of performance
bonuses. Thus, the performance bonuses were nondiscretionary under the
FLSA, and 4JLJ ought to have included them in the regular rate. The
Employees were entitled to judgment as a matter of law regarding
performance bonuses.61
2
We next consider whether Jalufka was an “employer” under the
FLSA and thus liable alongside 4JLJ for the unpaid wages. The jury found
that Jalufka wasn’t an employer. We agree.
60
29 U.S.C. § 207(e)(3).
61
We do not address the Employees’ alternatively requested relief of a new trial.
That’s because “[i]t is more difficult to satisfy the standard for reversing the denial of a
motion for a new trial than the standard for reversing the denial of judgment as a matter of
law.” Williams, 898 F.3d at 614 n.13. So if we would affirm a denied motion for judgment
as a matter of law, we would affirm denial of the same motion for a new trial. Miller v. Travis
County, 953 F.3d 817, 821 (5th Cir. 2020) (finding the evidence under the “more exacting
standard” for judgment as a matter of law to satisfy the standard for a new trial). For this
reason, we affirm the district court’s denial of a motion for a new trial over the issue of
stage bonuses. And because we reverse the district court’s denial of judgment as a matter
of law regarding performance bonuses, the requested relief of a new trial over this issue is
moot.
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To determine whether an individual or an entity is an employer under
the FLSA, we use the “economic reality” test.62 That test asks us to
consider “whether the alleged employer: (1) possessed the power to hire and
fire the employees, (2) supervised and controlled employee work schedules
or conditions of employment, (3) determined the rate and method of
payment, and (4) maintained employment records.”63
The Employees make much of the fact that Jalufka is the sole owner
of 4JLJ, so he was the sole beneficiary of the “unpaid overtime premiums.”64
But they cite no case supporting this as a relevant factor. And under the
standard economic reality factors, 4JLJ offered ample evidence. The record
demonstrates that Jalufka did not make day-to-day hiring or firing decisions,
that he did not set pay rates, and that he did not maintain employment files.
There was testimony that Jalufka was not the type of owner who “controls
everything” or is “involved in day-to-day operations and decisions”; rather,
his managers made those decisions. Meanwhile, Jalufka was usually “out in
the yard working with the rest of the guys.” Testimony from several
individuals—including the Employees’ own witnesses—supported a finding
that Jalufka was not an “employer” for the purposes of personal liability
under the FLSA.
C
Finally, 4JLJ cross-appealed, arguing that the district court’s award
of attorney fees and its Rule 54(d) cost allocation were both an abuse of
discretion. 4JLJ frames the district court’s attorney-fee award and its Rule
62
Gray v. Powers, 673 F.3d 352, 354. (5th Cir. 2012).
63
Id. at 355 (quotation marks omitted).
64
Brief for the Employees at 33, Edwards v. 4JLJ, No. 19-40553 (5th Cir. argued
March 3, 2020).
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54(d) cost allocation as “second and third tier sanctions.”65 This is because,
before trial, the district court shifted the burden of proof—from the
Employees to 4JLJ —on an element of the Employees’ claim. Both parties
agree that this burden shifting sanction is not at issue. But the first sanction
plays a role in 4JLJ’s theory on appeal because, 4JLJ argues, the burden
shifting sanction was the first of multiple tiers of sanctions. The second tier
was the attorney fee award to the Employees. And the third tier was the
reduction in Rule 54 costs that the district court awarded to 4JLJ as the
prevailing party.66 These sanctions, 4JLJ argues, were duplicative.
1
We start with attorney fees. District courts “wield their various
sanction powers at their broad discretion.”67 We review a district court’s
decision to impose sanctions for abuse of discretion.68 A district court abuses
its discretion when its ruling “is based on an erroneous view of the law or on
a clearly erroneous assessment of the evidence.”69
Here, the district court didn’t abuse its discretion in fashioning
sanctions for 4JLJ’s delays. The court invoked Rules 26 and 37 in its sanction
order. 4JLJ contends that neither rule authorized the district court’s
sanctions. Although we doubt whether the court’s sanction order would be
65
Brief for 4JLJ at 54, Edwards v. 4JLJ, No. 19-40553 (5th Cir. argued March 3,
2020).
66
The court awarded 4JLJ only $14,920.98 of the requested $44,533.04.
67
Olivarez v. GEO Grp., Inc., 844 F.3d 200, 203 (5th Cir. 2016) (quoting Topalian
v. Ehrman, 3 F.3d 931, 934 (5th Cir. 1993)).
68
U.S. v. 49,000 Currency, 330 F.3d 371, 376 (5th Cir. 2003) (citing Smith v. Smith,
145 F.3d 335, 344 (5th Cir. 1998)).
69
Tollett, 285 F.3d at 363.
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warranted under Rule 37 alone (given that no spoliation occurred),70 it was
still within the district court’s inherent and Rule 26 powers to sanction 4JLJ
for evasive discovery practices.71 And the district court did not base its
sanctions ruling on a clearly erroneous assessment of the evidence. There is
support in the record for the district court’s conclusion that 4JLJ’s delays
were willful and imposed unnecessary costs on the Employees. 4JLJ
intimated that it could not access the Fleetmatics data when it could, in one
instance responding to a discovery request by stating “we wouldn’t have
anything anyway.” Given our strong reluctance “to substitute our judgment
for that of the trial court, when it comes to enforcement of acceptable
standards of litigation conduct,”72 we decline to upset the district court’s
decision to sanction this sort of behavior.
4JLJ also argues that the sanctions were punitive rather than
compensatory and therefore unwarranted under Goodyear Tire & Rubber Co.
v. Haeger.73 We disagree. A sanction is compensatory if it is “calibrated to the
damages caused by the bad-faith acts on which it is based.”74 And “a fee is so
calibrated if it covers the legal bills that the litigation abuse occasioned.”75
The district court’s sanctions fit the bill. The expenses and attorney fees
were calibrated to the damages caused by 4JLJ’s failure to timely produce
the Fleetmatics data. The sanctions remedied, among other things, the
Employees’ “numerous expenses, delay costs, and the burden of attorney
70
See FED. R. CIV. P. 37(e).
71
See FED. R. CIV. P. 26(g); Goodyear Tire & Rubber Co. v. Haeger, 137 S. Ct.
1178, 1186 (2017).
72
Topalian, 3 F.3d at 935 (internal citation omitted).
73
See 137 S. Ct. at 1186.
74
Id. (internal quotation marks, bracketing, and citation omitted).
75
Id.23
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time and attention to motions, [and] status conferences,” all of which
resulted from 4JLJ’s delays. The district court’s measurement may not have
been perfect, but it need not be. The “essential goal in shifting fees is to do
rough justice, not to achieve auditing perfection.”76 Here, we decline to
second-guess the district court’s sense of rough justice; the attorney fees
award was not an abuse of discretion.
2
We next address what 4JLJ labels the third-tier sanction—the district
court’s Rule 54 cost allocation. Despite a “strong presumption that the
prevailing party will be awarded costs,” we will only reverse a district court’s
decision regarding costs for an abuse of discretion.77 Our review is narrow
because district courts have wide discretion under Rule 54 to decide whether,
and to what extent, to reduce these costs.78 It may reduce or deny costs for
many reasons,79 although it must articulate its reasons for doing so.80
Here, the district court articulated its reasons in its order on the bill of
costs. In the district court’s view, reducing costs was necessary “to ensure
that its sanctions [were] effective and not unduly offset by [4JLJ’s] costs.”
And the court based its decision on facts in the record suggesting that 4JLJ
had engaged in evasive discovery practices.
4JLJ argues that—like the attorney-fees sanction—the court’s
decision to reduce Rule 54 costs was punitive because it was layered atop
76
Haeger, 137 S. Ct. at 1187 (internal quotation marks and citation omitted).
77
Pacheco v. Mineta, 448 F.3d 783, 793 (5th Cir. 2006).
78
Migis v. Pearle Vision, Inc., 135 F.3d 1041, 1049 (5th Cir. 1998).
79
See Pacheco, 448 F.3d at 794 (listing “misconduct by the prevailing party” as a
reason for withholding costs from the prevailing party).
80
Id.24
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prior sanctions. We reject this argument. By denying 4JLJ some of the costs
it would have otherwise been entitled to, the district court sought to ensure
that the costs would not offset the attorney fees and expenses the court
awarded to the Employees. In light of its “superior understanding of the
litigation,”81 we find no basis to question the district court’s decision to
reduce these costs.
In sum, 4JLJ’s arguments on cross-appeal are unavailing. The district
court did not abuse its discretion in awarding attorney fees to the Employees
or in awarding Rule 54 costs.
CONCLUSION
We are reluctant to second-guess the decision of a jury, but we will
when the law requires it. Judgment as a matter of law in favor of the
Employees was warranted regarding performance bonuses but not stage
bonuses. So we REVERSE the district court’s denial of judgment as a
matter of law and REMAND for the court to consider what relief is owed to
the Employees consistent with this opinion. Also, we AFFIRM the district
court as to Jalufka’s status as an employer under the FLSA. Finally, we
AFFIRM the court’s award of attorney fees and its bill of costs allocation.
81
Haeger, 137 S. Ct. at 1187.
25