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Schorr v. Frontier Transportation Co. (7/3/97), 942 P 2d 418
<![CDATA[
NOTICE: This opinion is subject to formal correction before
publication in the Pacific Reporter. Readers are requested to bring errors to the
attention of the Clerk of the Appellate Courts, 303 K Street, Anchorage, Alaska
99501, phone (907) 264-0608, fax (907) 264-0878.
THE SUPREME COURT OF THE STATE OF ALASKA
DANIEL SCHORR and RONALD )
GILLUM, ) Supreme Court No. S-7306
)
Appellants, ) Superior Court No.
) 3AN-92-4317 CI
v. )
) O P I N I O N
FRONTIER TRANSPORTATION )
COMPANY, an Alaska Corpora- ) [No. 4847 - July 3, 1997]
tion, DEAN C. McKENZIE, and )
DANIEL NELSON, )
)
Appellees. )
______________________________)
Appeal from the Superior Court of the State of
Alaska, Third Judicial District, Anchorage,
John Reese, Judge.
Appearances: Kenneth W. Legacki, Anchorage,
for Appellants. William F. Mede, Owens & Turner, Anchorage, for
Appellees.
Before: Compton, Chief Justice, Rabinowitz,
Matthews, Eastaugh, and Fabe, Justices.
RABINOWITZ, Justice.
I. INTRODUCTION
In this appeal we are asked to review the superior
court's grant of summary judgment against long haul truck drivers
claiming overtime compensation under the Alaska Wage and Hour Act
(AWHA). Additionally, Schorr and Gillum seek a determination that
the AWHA, prior to its amendment in 1995, did not provide for an
award of attorney's fees and costs to a prevailing employer. We
reverse and remand.
II. FACTS AND PROCEEDINGS
Ronald Gillum and Daniel Schorr were hired as long haul
truck drivers by Frontier Transportation, an Alaska Corporation
engaged in the business of transporting goods for hire within the
state. [Fn. 1] At the relevant time Appellees Dean McKenzie and
Daniel Nelson were each officers of Frontier.
The employment duties of Schorr and Gillum consisted of
driving trucks from a point of origin to a point of destination,
making various stops along the way where instructed. Like all of
Frontier's drivers, Schorr and Gillum were also required to perform
miscellaneous "hostling duties,"such as tying down loads, chaining
and unchaining, fueling, and checking the vehicle.
As long haul truck drivers engaged in the transportation
of goods in commerce, plaintiffs' "hours of service"were governed
by the Federal Motor Carrier Safety (FMCS) Regulations of the
Federal Highway Administration. [Fn. 2] In addition to dictating
the number of hours a truck driver may drive, the FMCS regulations
also require drivers to keep precise records of their duty status.
[Fn. 3]
On May 18, 1992, Schorr and Gillum brought suit under the
Alaska Wage and Hour Act (AWHA) against Frontier, McKenzie and
Nelson (Frontier), seeking payment of overtime compensation
allegedly owed pursuant to AS 23.10.060, liquidated damages
pursuant to AS 23.10.110, and penalties pursuant to AS 23.05.140,
[Fn. 4] as well as costs, interest, and attorney's fees. The
superior court ultimately granted Frontier's motions for summary
judgment on all claims for overtime arising after May 18, 1990.
Final judgment was entered on August 9, 1995. The superior court
subsequently awarded Frontier $13,997 in attorney's fees pursuant
to Civil Rule 82 and $4,934.94 in costs under Civil Rule 79.
Schorr and Gillum now bring this appeal.
III. DISCUSSION
A. May a Defendant in an Action to Recover Wages under the
AWHA Be Awarded Attorney's Fees Pursuant to Civil Rule 82?
The version of the AWHA applicable to the wage claims
advanced by Schorr and Gillum provided in relevant part:
The court in an action brought under this
section shall, in addition to a judgment awarded to the plaintiff,
allow costs of the action and reasonable attorney fees to be paid
by the defendant. [Fn. 5]
Resolution of the question whether a prevailing defendant in an
action to recover wages under the AWHA can be awarded attorney's
fees pursuant to Civil Rule 82 is controlled by our decision in
Grimes v. Kinney Shoe Corp., ___ P.2d ___, Op. No. 4815 (Alaska,
May 2, 1997). In that case Kinney argued that given the absence of
any statutory authority to the contrary, Civil Rule 82 provides for
a partial award of attorney's fees to a prevailing defendant in
AWHA litigation. On the other hand, Grimes contended that Civil
Rule 82 did not apply to prevailing defendants under the AWHA prior
to its amendment in 1995.
Relying on the policies expressed in Whaley v. Alaska
Workers' Compensation Board, 648 P.2d 955 (Alaska 1982), [Fn. 6] as
well as the comprehensive nature of the AWHA scheme ("that plainly
allows only plaintiffs to recover their costs and attorney's fee"),
we held in Grimes:
It is the function of this court to interpret
AS 23.10.110(c) - not to balance the statute and Civil Rule 82.
Based on analogous case law and the plain language of AS
23.10.110(c), we hold that a prevailing defendant in an AWHA action
to recover wages is not entitled to an award of attorney's fees and
costs under former AS 23.10.110(c), nor is the prevailing defendant
entitled to an award of attorney's fees under Civil Rule 82.
Grimes, Op. No. 4815 at 10.
Therefore, assuming Frontier were to retain its status as
prevailing party, we hold that in this action to recover wages
under the AWHA, it is not entitled to an award of attorney's fees
under either former AS 23.10.110(c) or Civil Rule 82. Neverthe-
less, since we conclude, as discussed below, that the superior
court erred in granting summary judgment to Frontier, it follows
that its award of attorney's fees and costs to Frontier must be
vacated.
B. Did the Superior Court Err in Granting Frontier's Two
Motions for Partial Summary Judgment and Entering Final Judgment
against Schorr and Gillum on Their Overtime Wages Claims under the
AWHA?
The AWHA governs payment of overtime compensation to
employees, requiring that an employer pay an employee at a rate of
pay for all hours worked in excess of eight in a working day and
forty in a workweek. AS 23.10.060-.180. Alaska Statute 23.10.060
(d)(15) makes the normal AWHA overtime provisions inapplicable to
line haul drivers when the employer's compensation system includes
overtime pay for work in excess of forty hours a week or eight
hours in one day. [Fn. 7]
In its first motion for partial summary judgment,
Frontier successfully argued to the superior court that its system
of compensating line haul or long haul drivers complied with the
relevant statutory terms of AS 23.10.060(d)(15). [Fn. 8] In
determining that the requirements for exemption from the AWHA were
met, the superior court stated:
Plaintiffs raise as a genuine issue of
material fact the allegation that the formula
authorized in lieu of the usual overtime
scheme is a sham, and that their own certified
and uncertified work records were completed by
themselves falsely as directed by the
employer.
As to the former, the court finds no
merit to this argument. The formula meets the
standards of the statute.
As to the question of whether the
plaintiffs were fabricating their driving logs
at the direction of the employer, this court
finds there is insufficient credible evidence
to support such a conclusion. Changed factual
statements from a witness raised for the
purpose of defeating a summary judgment [sic]
are generally not allowed. Furthermore,
public policy strongly weighs records kept as
required by law and certified pursuant to that
same law. Self serving later revisions should
be given little weight.
The superior court thus granted Frontier's motion for summary
judgment on those overtime claims arising after September 1990.
Frontier's second motion for partial summary judgment
concerned wages paid prior to enactment of AS 23.10.060(d)(15).
Frontier claimed that because the court had already decided that
its compensation system after September 1990 included overtime
compensation, the payment system prior to enactment must
necessarily have included payment of overtime as well, since the
system itself remained the same for all times relevant to this
case. The superior court agreed, dismissing the overtime claims
for the period between May 18, 1990, and September 18, 1990. Final
judgment against Schorr and Gillum was entered accordingly.
The essence of Schorr and Gillum's appeal is that the
superior court erred in concluding that the requirements of the
AWHA line haul exemption were satisfied by Frontier's compensation
system. The basic issue to be determined here is whether Schorr
and Gillum raised a genuine issue of material fact as to whether
the mileage formula properly calculated overtime pay. [Fn. 9]
Frontier's mileage formula purported to include compensation for
both straight time and overtime. Once the number of hours required
for a particular trip was determined, those hours were broken down
into straight time for the first eight hours of duty, and overtime
for all hours in excess of the first eight. The straight time
hours were then multiplied by the regular hourly rate of pay and
the overtime hours were multiplied by the overtime rate of one-and-
one-half times that rate.
Frontier asserts that its
mileage compensation system paid Schorr and
Gillum overtime comparable to what they would have received under
a traditional hourly overtime arrangement, and in some instances
even more, because all hours over eight in a trip were
automatically paid at the overtime rate even if the hours in excess
of eight were not worked in the same 24 hour workday.
Schorr and Gillum assert that Frontier's mileage rate
formula was based on implausible driving times. They contend that
Frontier's initial determinations of the number of hours required
to complete a trip were mistakenly low, and that the resulting
formula consequently undercompensated overtime hours.
Frontier's response is straightforward:
The admissible evidence presented to the trial
court clearly established that not only can the trips be completed
in the time allowed by Frontier's formula, but Schorr and Gillum's
own driving logs[ [Fn. 10]] reveal the trips were uniformly
completed by appellants in less than the time specified in the
Frontier mileage rate.
Schorr and Gillum seem to admit that Frontier's formula
would properly compensate the drivers if trip times were as
reported in the log books, [Fn. 11] but assert that the log books
upon which the formula was based were themselves inaccurate.
Moreover, Schorr and Gillum contend that Frontier in fact "required
inaccurate recordkeeping."
The superior court held that there was insufficient
evidence to support the conclusion that Schorr and Gillum
fabricated their log books at the direction of Frontier.
Disclaiming any knowledge of the drivers' alleged fabrications,
Frontier asserts:
[It] was not at all aware that Schorr and
Gillum required unreported time in which to complete their duties.
Frontier was well aware that the industry standard for a line-haul
trip from Anchorage to Fairbanks and back was fourteen hours, with
some time for non-driving activities. If Schorr and Gillum did
underreport hours, Frontier relied to its detriment upon Schorr and
Gillum's representations. Moreover, if they did knowingly and
falsely under-report hours worked, Schorr and Gillum come to this
court with unclean hands.
. . . .
In light of the admissions and
certifications contained in Schorr and Gillum's driver logs, there
was no genuine issue of material fact regarding appellants'
reported hours. Their own documentary admissions were sufficient
grounds for granting appellee's motion for partial summary
judgment.
(Footnotes omitted.)
Federal courts have held that an employee may be estopped
from making a claim for overtime where the employee has
deliberately misled the employer by inaccurately reporting the
hours he has worked. See Newton v. City of Henderson, 47 F.3d 746,
748 (5th Cir. 1995); Forrester v. Roth's I.G.A. Foodliners, Inc.,
646 F.2d 413, 414 (9th Cir. 1981). However, the federal courts
have added a caveat to this rule: "An employee would not be
estopped from claiming additional overtime if '[t]he court found
that the employer knew or had reason to believe that the reported
information was inaccurate.'" Newton, 47 F.3d at 749 (emphasis
added) (quoting Brumbelow v. Quality Mills, Inc., 462 F.2d 1324,
1327 (5th Cir. 1972)). [Fn. 12]
If Frontier knew that the drivers' logs were inaccurate,
the logs should not be used as the basis for summary judgment
against Schorr and Gillum. If Frontier knew that the long-haul
trips could not possibly have been completed in the time allotted
by its formula, the fact that Gillum and Schorr allegedly
underreported their own driving times is indeed relevant and the
logs themselves would thus not be dispositive. Put differently, if
Gillum and Schorr are able to prove that Frontier knowingly based
its formula on inaccurate driving times, the resulting formula
could conceivably fail to come within the exemption provided for in
AS 23.10.060(d)(15). [Fn. 13]
Frontier admits as much in its briefs. Citing Forrester,
646 F.2d at 414, Frontier notes:
The very essence of a claim for overtime is
that the employer "suffered or permitted"the employee to work
hours in excess of the statutory limitations. For purposes of
overtime entitlement, the terms "suffer and permit"are synonymous
with the employer's knowledge of the employee's overtime activi-
ties.
While it may generally be true that employee records
serve as notice to an employer of compensable hours worked, in this
case Schorr and Gillum are specifically asserting alternative bases
for Frontier's knowledge that the driving times used for
calculation of its formula were inaccurate. Thus, in our view,
this case presents issues not typically involved when a court
deciding a summary judgment motion disregards testimony which
conflicts with prior documentary assertions.
We conclude that there is a genuine issue of material
fact as to whether the driving times relied upon by Frontier in
calculating driver compensation were inaccurate and, moreover,
whether Frontier knew this to be the case despite driver logs to
the contrary. In short, we disagree with the superior court's
determination that no genuine issue of material fact existed. [Fn.
14] We therefore hold that the superior court's grant of summary
judgment against Schorr and Gillum on their wage claims should be
vacated. [Fn. 15]
IV. CONCLUSION
The superior court's award of summary judgment against
Schorr and Gillum is REVERSED. The superior court's award of
attorney's fees and costs against Schorr and Gillum is REVERSED.
The case is REMANDED for further proceedings not inconsistent with
this opinion.
FOOTNOTES
Footnote 1:
1 Most of the assets of Frontier have been sold to Alaska
West Express, Inc., a subsidiary of Lynden Transportation.
Footnote 2:
2 49 C.F.R. sec. 395.1-.15.
Footnote 3:
3 49 C.F.R. sec. 395.8.
Footnote 4:
4 The penalty pay claims were subsequently dismissed.
Footnote 5:
5 AS 23.10.110(c). The 1995 amendments to AS 23.10.110
became effective August 25, 1995. Among other changes, these
amendments added subsections (e)-(h), which relate to awards of
attorney's fees. These amendments apply to "wages earned on or
after the effective date of the Act." Committee Substitute for
House Bill (C.S.H.B.) 115, 19th Leg. 1st Sess sec. 4(c) (1995).
Thus,
in order for former AS 23.10.110(c) to apply, the employee's claims
must relate to work performed before August 25, 1995. Schorr and
Gillum's wage claims are based on hours allegedly worked prior to
August 25, 1995. Therefore, the former statute is controlling.
The current version of AWHA provides in AS 23.10.110(f)
that
[i]f the defendant prevails in an action for
unpaid overtime compensation under (a) of this section and had
previously made an offer of judgment to the plaintiff, the court
shall award attorney fees to the defendant unless the plaintiff
proves to the satisfaction of the court that the action was both
brought and prosecuted in good faith and that the plaintiff had
reasonable grounds for believing that the act or omission was in
violation of AS 23.10.060.
Footnote 6:
6 In Whaley we held that an award of attorney's fees
against an employee in the context of a workers' compensation
appeal was improper absent a showing that the appeal was
"frivolous, unreasonable, or brought in bad faith." Whaley, 648
P.2d at 960. We further emphasized that awards of attorney's fees
would undermine the purposes of our Workers' Compensation Act and
severely limit a claimant's ability to seek appellate relief. Id.
at 959-60.
Footnote 7:
7 AS 23.10.060(d)(15) provides the following exemption from
the overtime requirements of the AWHA:
[A]n individual employed as a line haul truck
driver for a trip that exceeds 100 road miles one way if the
compensation system under which the truck driver is paid includes
overtime pay for work in excess of 40 hours a week or for more than
eight hours a day and the compensation system requires a rate of
pay comparable to the rate of pay required by this section[.]
The rationale for this exemption is as follows:
Unlike typical production employees whose
hours may be easily tracked by punching in and
out on a time clock, long-haul truck drivers perform their job
duties away from their employer's place of business, often in
remote locations and away from the direct supervision of the
employer. Traditionally, trucking industry management has left the
decision on how long to drive a truck up to the driver, provided
the driver stays within the federal regulations governing hours of
service. Some drivers choose to make a trip without stopping, if
they can do so within the confines of the federal regulations,
while others prefer to stop regularly and eat, relax, or sleep.
Because of the peculiarities of long-haul truck driving, measuring
job productivity by the hour is impossible. Accordingly, long-haul
truck drivers have traditionally been paid on a mileage rather than
an hourly basis.
(Footnotes omitted.) See Line Haul Truck Driving Exemption from
Overtime Wage Requirements: Hearings on SB 506 before Senate Labor
and Commerce Committee, 16th Legis., 2d Sess. (March 7, 1990), and
before House Transportation Committee, 16th Legis., 2d Sess. (April
5, 1990).
Footnote 8:
8 AS 23.10.060(d)(16) was enacted in September 1990. In
1996, AS 23.10.060(d) was renumbered and subsection (16) became
subsection (15). The 1996 revision did not otherwise change the
subsection. For simplicity, we will refer to former AS
23.10.060(16) as AS 23.10.060(15).
Footnote 9:
9 According to Frontier, the mileage rate paid to long haul
truck drivers (including Schorr and Gillum) was determined by the
following methodology:
The computation started with an hourly
rate. That hourly rate was then multiplied by the number of hours
required to drive the trip. Added to this figure was a specific
number of hours for miscellaneous job duties or "hostling"that may
have to be performed in addition to driving. These "hostling
hours"were intended to allow for duties such as hook-ups, fueling,
tying down, chaining and unchaining, pre-trip and in-transit
checks, breakdowns, tire repair, off-loading (if necessary),
completing paper work, and any other job-related tasks associated
with the trip. The number of hours allotted for these
miscellaneous jobs varied according to the trip.
After the total number of hours for the
trip was determined, including driving time and hostling, those
hours were broken down into straight time hours and overtime hours.
The first eight hours were compensated at a straight time hourly
rate and any hours over the initial eight hours were paid at an
overtime rate of one and one-half times that rate.
Once the total compensation due for the
trip was determined, it was divided by the number of miles in the
trip to arrive at a mileage rate for the trip. Frontier's long-
haul truck drivers were then compensated at that rate. Mileage
rates varied, depending upon such factors as the type of vehicle
driven, the geographic duration of the trip, and the weight of the
load.
(Footnotes omitted.)
Footnote 10:
10 Federal law required Schorr and Gillum to complete driver
logs for each of their trips. These logs consisted of a detailed
grid on which each fifteen-minute period of a twenty-four hour day
was accounted for. Entering false or inaccurate information in the
log subjected Schorr and Gillum to criminal prosecution. 49 C.F.R.
sec. 395.8.
Footnote 11:
11 The superior court explicitly determined that "the
formula meets the standards of the statute"in granting Frontier's
motion for summary judgment.
Footnote 12:
12 See Forrester v. Roth's I.G.A. Foodliners, Inc., 646 F.2d
413, 414 (9th Cir. 1981) ("[A]n employer who knows or should have
known that an employee is or was working overtime [is obligated to
pay overtime]. An employer who is armed with this knowledge cannot
stand idly by and allow an employee to perform overtime work
without proper compensation, even if the employee does not make a
claim for the overtime compensation."); Truslow v. Spotsylvania
County Sheriff, 783 F. Supp. 274, 278 (E.D. Va. 1992); Lindow v.
United States, 738 F.2d 1057, 1060-61 (9th Cir. 1984).
In the case at bar, one former Frontier driver affied
that "it was common knowledge that the drivers' log books were not
accurate"and that "[i]n the event we were busy and out of hours,
Frontier would routinely request that drivers take trips and not
record them in the log books and not record local work time." Five
witnesses, including Schorr and Gillum, affied that the log books
upon which the formula was based were inaccurate, and that actual
driving times were greater than indicated in the records. These
witnesses, other than Schorr and Gillum, did not mention any
knowledge or condonation on the part of Frontier of this practice
of underreporting hours. In this regard both Schorr and Gillum
affied, "The company knew our driver's log books were not accurate
because McKenzie and Thompson told us not to keep our driver's log
books accurate."
Footnote 13:
13 As discussed, the first step of Frontier's compensation
computation involved an estimate of the number of hours required to
drive round trip. Frontier's brief does not explain specifically
how it arrived at this figure. In any case, if the allotted time
underrepresented the number of hours typically required for the
trip, the resulting mileage rate would presumably undercompensate
the drivers.
Footnote 14:
14 Specifically, in the context of a summary judgment award,
where "[a]ll reasonable inferences of fact are drawn in favor of
the non-moving party and against the moving party,"Dayhoff v.
Temsco Helicopters, Inc., 772 P.2d 1085, 1086 (Alaska 1989), we
find troubling the superior court's statement that
[a]s to the question of whether the plaintiffs
were fabricating their driving logs at the direction of the
employer, this court finds there is insufficient credible evidence
to support such a conclusion. Changed factual statements from a
witness raised for the purpose of defeating a summary judgment
[sic] are generally not allowed. Furthermore, public policy
strongly weighs records [sic] kept as required by law and certified
pursuant to that same law. Self serving later revisions should be
given little weight.
Footnote 15:
15 Given this disposition, we find it unnecessary to address
Gillum and Schorr's arguments regarding "wait time,""hostling
time,"and mandatory safety meetings, or their claims related to
Frontier's record keeping.
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