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Bliss v. Bobich (11/6/98), 971 P 2d 141
<![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
PATRICK J. BLISS, JR., and ) Supreme Court Nos. S-7477/7517/
BARBARA J. BLISS, ) 7518
)
Appellants and )
Cross-Appellees, ) Superior Court No.
) 3AN-91-5590 CI
v. )
) O P I N I O N
MATTHEW BOBICH, GRACE BLACK, )
DIANE BLACK-SMITH, DAVID )
RICHARDS, CRAIG SMITH, and ) [No. 5043 - November 6, 1998]
LINDA BOBICH, individually )
and as partners in ABC )
PARTNERSHIP, d/b/a PUBLIX )
STORAGE; ABC PARTNERSHIP )
d/b/a PUBLIX STORAGE; ABC )
PARTNERSHIP; MATTHEW BOBICH, )
DAVID RICHARDS, DIANE BLACK- )
SMITH, and CRAIG SMITH, )
individually and as partners )
in DIMOND SELF-STORAGE, a/k/a )
DIMOND MINI STORAGE; DIMOND )
MINI STORAGE; DIMOND SELF- )
STORAGE PARTNERSHIP; MATTHEW )
BOBICH, GRACE BLACK, DIANE )
BLACK-SMITH, DAVID RICHARDS, )
and CRAIG SMITH, individually )
and as partners in ABC )
INVESTMENT GROUP, INC., a/k/a )
DIMOND MINI STORAGE; ABC )
INVESTMENT GROUP, INC.; )
MATTHEW BOBICH and LINDA )
BOBICH, d/b/a MBS PROPERTIES, )
INC.; and MBS PROPERTIES, )
INC., d/b/a INTERNATIONAL )
MOVING & STORAGE, INC., )
)
Appellees and )
Cross-Appellants. )
______________________________)
Appeal from the Superior Court of the State of
Alaska, Third Judicial District, Anchorage,
Brian C. Shortell, Judge.
Appearances: Kenneth W. Legacki, Anchorage,
for Appellants and Cross-Appellees. Darryl Thompson, Anchorage,
and C. R. Kennelly, Stepovich, Kennelly & Stepovich, Anchorage, for
Appellees and Cross-Appellants.
Before: Matthews, Chief Justice, Compton,
Eastaugh, Fabe, and Bryner, Justices.
BRYNER, Justice.
Patrick and Barbara Bliss, former employees at a storage
facility owned by Matthew Bobich, sued Bobich for overtime
violations and retaliatory harassment and discharge. The Blisses
appeal, and Bobich cross-appeals. The parties raise numerous
issues. As we conclude that the superior court erred in
calculating Bobich's attorney's fees award, we remand on that
issue. In all other aspects, we affirm.
I. FACTS AND PROCEEDINGS
Bobich, a partner in Dimond Mini Storage in Anchorage,
hired the Blisses as managers of the storage facility on August 15,
1988. The Blisses were hired to work for the storage facility's
"gate hours"-- the hours when it was open. These were initially
eleven hours per day; in February 1989, they were reduced to ten
hours per day. Bobich treated the Blisses as administrative
employees who were exempt from overtime compensation. Each of the
Blisses was initially paid a monthly salary of $1100. In October
1989, each received a salary increase to $1300 a month; in May
1990, each received an increase to $1400 a month.
In 1988, the same year that the Blisses began working for
Bobich, Sharon and Jimmie Stewart, former managers at Dimond Mini
Storage, sued Bobich and his business partners (collectively,
Bobich) for unpaid overtime wages under the Alaska Wage and Hour
Act. During the 1990 trial of the Stewarts' case, Bobich contended
that, because the storage facility employed fewer than four
workers, the AWHA's overtime compensation provisions did not apply
to its employees. In December 1990, the jury rejected this defense
and found that Bobich owed the Stewarts overtime wages. In 1992,
this court sustained that verdict. See Bobich v. Stewart, 843 P.2d
1232 (Alaska 1992).
In June 1991, in response to the jury verdict in the
Stewarts' case, Bobich calculated the overtime that the Blisses had
accrued during their employment since August 1988. According to
Bobich's calculations, he owed Patrick $2004.50 in overtime wages,
and Barbara owed him $146.48. On advice from his attorneys, Bobich
also began to pay the Blisses on an hourly basis.
Also in June, Alvie and Wanda Hughes, former employees at
Publix Storage, another storage facility in which Bobich had a
partnership interest, sued Bobich for unpaid overtime wages. On
September 18, the Hugheses moved to add the Blisses as plaintiffs
in their suit. Bobich learned of the Blisses' claim in late
September. On January 15, 1992, he fired them.
The Blisses amended their complaint to add claims of
retaliatory discharge. Bobich denied the claims and filed several
counterclaims, alleging that the Blisses had damaged his business
and reputation, converted business property, and breached their
duty of good faith and fair dealing. The parties eventually
stipulated to dismiss these counterclaims.
In August 1992, the superior court dismissed the
Hugheses' suit due to willful violations of its discovery orders.
We reversed the dismissal in 1994 and remanded the Hugheses' case.
See Hughes v. Bobich, 875 P.2d 749, 756 (Alaska 1994). By then the
Blisses' case had reached an advanced stage of litigation; the
superior court declined to reconsolidate the suits.
In 1994, the court allowed the Blisses to file an amended
complaint to add as additional defendants other businesses owned by
Bobich as well as Bobich's partners in those other businesses. The
Blisses' final amended complaint alleged violations of both the
federal Fair Labor Standards Act of 1938 [Fn. 1] and the AWHA. [Fn.
2] The amended complaint also claimed that Bobich had willfully
failed to pay overtime wages and had harassed and discharged the
Blisses in retaliation for their exercise of their statutory
rights. By adding this claim of willfulness, the Blisses evidently
hoped to extend their potential period of recovery for overtime
damages. Without proof of willfulness, both the AWHA and the FLSA
allowed the Blisses to recover overtime damages only for the two
years immediately preceding the filing of their overtime claims.
See 29 U.S.C. sec. 255 (1985); AS 23.10.130. But upon proof of a
willful failure to pay overtime, the FLSA allows overtime damages
reaching three years back from the time of filing. See 29 U.S.C.
sec. 255(a).
Bobich made offers of judgment to the Blisses on their
overtime claims in 1992 and again in 1995. They rejected the
offers. The Blisses' jury trial began on April 5, 1995, before
Superior Court Judge Brian C. Shortell. At the close of the
evidence, the court directed verdicts for the Blisses, ruling that
they were not exempt from overtime wages and that their salaries
should be considered compensation for forty hours of work per week.
The court also directed a verdict against the Blisses on their
claim that Bobich's failure to pay overtime was willful.
These rulings had the effect of holding Bobich liable for
overtime wages but limiting the Blisses' overtime claims to the
two-year time limit permitted under the AWHA; it thereby precluded
the Blisses from seeking the third year of overtime damages that
they would have been permitted under the FLSA's provision governing
willful overtime violations. The parties agreed that the only
remaining issue on the Blisses' overtime claims was the precise
amount of the unpaid wages that Bobich owed; because the parties
agreed on the total number of hours that the Blisses had actually
worked, they agreed that the remaining determination of damages
involved a mathematical calculation that the court could perform
without the jury.
This left only the Blisses' retaliatory discharge claims
for the jury. The jury failed to reach a verdict and was excused
on April 21, 1995. A second jury trial began in July 1995,
culminating in a verdict that Bobich had not harassed or fired the
Blisses in retaliation for their overtime claims.
After calculating the Blisses' unpaid overtime damages,
the court awarded attorney's fees to the Blisses on their overtime
claims and to Bobich on the retaliatory discharge claims. It
entered a net judgment for the Blisses.
The Blisses appeal; Bobich cross-appeals.
II. THE BLISSES' APPEAL
A. The Court Did Not Abuse Its Discretion in Excluding
Evidence of Bobich's Prior Overtime Violations and of Bobich's
Dealings with His Attorneys.
Shortly before trial, Bobich filed a motion for a
protective order, seeking to bar the Blisses from introducing
evidence that Bobich had been involved in prior overtime violation
cases and that he had retained several different attorneys in those
cases. The court deferred ruling on the ultimate admissibility of
this evidence, ruling instead that the Blisses would be barred from
divulging any of it to the jury "before an out of the presence of
the jury ruling is obtained." The court went on to specify that
the Blisses were free to "request out of the presence hearings as
to any of the evidence precluded. [The Blisses] must produce the
witnesses at the hearing(s) so their specific offers of proof may
be heard."
The Blisses complain that the court erred in not
permitting them to introduce this evidence. [Fn. 3] They claim
that they were "precluded by the court from cross-examining and
probing into [Bobich's] alleged good faith"and that they were
"den[ied] . . . the opportunity to show [that] Bobich's surprise at
being sued was feigned." They argue that the court's ruling was
particularly prejudicial because Bobich expressly claimed good
faith compliance with the law and selectively referred to advice
that he had received from his attorneys.
This claim is unpersuasive. In arguing that the trial
court erroneously excluded their proposed evidence, the Blisses
focus primarily on the pretrial order itself. But they are
mistaken in claiming that the order excluded evidence. It excluded
nothing categorically. Rather, it temporized: it protected against
jury prejudice by precluding mention of the evidence to the jury
until its admissibility was determined; but at the same time it
allowed the Blisses to make specific offers of proof on an issue-
by-issue basis when they actually sought to admit their evidence.
This approach seems eminently sensible. We find no abuse of
discretion.
The Blisses also maintain that they pressed for admission
of the disputed evidence throughout their two trials but were
constantly thwarted in their efforts. Yet they provide no
meaningful discussion of the court's specific rulings excluding
proffered evidence and fail to demonstrate that any particular
ruling amounted to an abuse of discretion. Our own review of the
record of both trials reveals few instances in which the Blisses
even arguably complied with the protective order's requirement of
a specific offer of proof. We find no specific instance of
arguable compliance in which the court's response to their offer
amounted to an abuse of discretion.
B. The Court Did Not Err in Denying the Blisses Summary
Judgment or Directed Verdicts on Their Retaliatory Discharge
Claims.
In both trials, the court denied summary judgment and
declined to enter directed verdicts for the Blisses on their
retaliatory discharge claims. The Blisses argue that the court
erred in failing to find as a matter of law that Bobich had
harassed and discharged them in retaliation for their overtime
complaints. [Fn. 4] Their argument lacks merit.
As proof of retaliation, the Blisses point to evidence
that, at one time, Bobich offered them a bonus to drop their
demands for overtime wages and, at a later time, reduced their
salaries. But Bobich presented evidence at trial indicating that
he did not recall discussing the bonus. Moreover, it was
undisputed that Bobich reduced the Blisses' pay before he became
aware that they had filed complaints for unpaid overtime. Thus,
the jury could have found that Bobich's conduct regarding the bonus
and the pay reduction was not retaliatory.
The Blisses also point to evidence that Bobich
unreasonably changed the conditions of their employment after they
filed their overtime complaints and then discharged them for
failing to comply with these unreasonable new conditions.
According to the Blisses, this evidence conclusively established
that Bobich set them up to fail. Yet the Blisses ignore that this
evidence was disputed. Although the Blisses testified that they
felt harassed by Bobich's actions, Bobich testified that he acted
for legitimate business purposes, and not to harass the Blisses or
to retaliate against them for filing overtime complaints.
Last, the Blisses claim that Bobich brought his
counterclaims to harass them. But the Blisses stipulated to
dismiss the counterclaims with the express understanding that they
could not be mentioned at trial. Because their stipulation
precluded inquiry into Bobich's grounds for filing these
counterclaims, the Blisses cannot now be heard to complain that
Bobich filed them for a retaliatory purpose.
C. The Court Did Not Err in Determining the Blisses'
Overtime Damages.
The Blisses contend that the trial court erred in
awarding them damages for only two years, instead of three years,
of unpaid overtime wages. They argue primarily that the court
mistakenly ruled, as a matter of law, that Bobich's failure to pay
overtime was not willful.
Bobich's willfulness was at issue because of the statute
of limitations governing overtime claims under the FLSA. Under
both the AWHA and the FSLA, recovery of unpaid overtime is limited
to the two years immediately preceding the filing of a complaint.
See 29 U.S.C. sec. 255 (1985); AS 23.10.130. But for a willful
failure to pay overtime, the FLSA allows the claimant to recover an
additional year of back pay. See 29 U.S.C. sec. 255(a). Thus, in
directing a verdict against the Blisses on the issue of
willfulness, the trial court precluded them from recovering a third
year of unpaid overtime wages.
The Blisses summarily assert that they presented ample
evidence of Bobich's willfulness; and they insist that they could
have presented even more if the trial court had not erroneously
precluded them from adducing evidence of Bobich's past overtime
violations. We have already determined, however, that the trial
court did not err in excluding evidence of prior violations.
Moreover, the evidence that the Blisses claim was
erroneously excluded could not have affected the trial court's
decision to grant directed verdicts on willfulness. The court
granted the directed verdicts on willfulness only because it found
no evidence that Bobich had acted willfully in failing to pay
overtime wages during the third year preceding the Blisses'
overtime wage complaint. Since the Blisses filed their overtime
complaint in September 1991, their third year of overtime coverage
extended back from September 1989 to September 1988. But the
Blisses' evidence of Bobich's prior violations related back no
further than December 1990, the time of the verdict in the case of
Stewart v. Bobich. Thus their entire third year of coverage
predated the evidence of willfulness that the Blisses claim was
wrongfully excluded. Even if admitted, this evidence could not
have established Bobich's willfulness before the Stewart v. Bobich
trial.
The Blisses have not challenged the trial court's
specific finding that they offered insufficient evidence to prove
willfulness in the third year prior to filing. Nor have they
challenged the court's conclusion that the FLSA requires such
proof. To the extent that the Blisses develop their argument
concerning the sufficiency of the evidence on willfulness, they
focus on evidence relating to events occurring no earlier than
December 1990 -- evidence, that is, tending to show willfulness
after the third year of coverage.
We find no error in the court's assessment of the lack of
evidence that Bobich acted willfully between September 1988 and
September 1989. We also find no plain error in the court's tacit
legal premise that proof of willfulness had to relate specifically
to this third year of coverage. We thus conclude that the directed
verdicts on willfulness must stand. The Blisses advance two other
theories to support a third year of damages. Citing AS 09.10.200,
they theorize that, by signing "payroll recap"sheets in early
September 1991 acknowledging unpaid overtime wages extending back
to the beginning of their terms of employment, Bobich somehow
removed this case from the AWHA and FLSA statutes of limitation.
And citing AS 23.05.140, which entitles all terminated workers to
be paid in full for back wages within three days of termination,
the Blisses reason that they became entitled to their full unpaid
overtime wages upon termination, regardless of the AWHA's statute
of limitation. These claims are both meritless. Because the
Blisses pursued their overtime claims under the FLSA and the AWHA,
the specific statutes of limitation set out in those acts governed
their causes of action. See Quinn v. Alaska State Employees Ass'n,
944 P.2d 468, 472 (Alaska 1997).
D. The Court Did Not Err in Accepting Bobich's, Rather Than
the Blisses', Version of the Blisses' Total Overtime Hours.
At trial, the parties stipulated that two of the Blisses'
exhibits, Exhibits 10 and 11, accurately represented the hours that
the Blisses had worked. The court calculated the Blisses' overtime
damages on the basis of these stipulated hours. The Blisses now
contend that these exhibits did not show all of their hours. They
argue that they meant to stipulate only that Exhibits 10 and 11
were accurate, not that they were complete. They claim that the
court "erroneously accepted the defendants' version of the time
owed, rather than the plaintiffs." Our review of the record
convinces us that this argument is frivolous. We find no error.
 E. The Court Did Not Abuse Its Discretion in Awarding
Attorney's Fees to the Blisses.
The Blisses object to the court's award of attorney's
fees on a number of grounds. [Fn. 5]
The net attorney's fees award reflects a complicated
process. The Blisses' attorney's billing records showed 1273.75
hours of work -- most at an hourly rate of $150, part at a
paralegal rate of $65 -- for a total of $182,817.50. The court
first ruled that the Blisses deserved no fees for prosecuting their
retaliatory discharge claims, since they did not prevail on them.
Because the second trial dealt solely with these claims, the court
reduced the Blisses' total fees by the amount that they had
actually been billed for the second trial: $16,065. As to billings
for work before the second trial, the court found "almost nothing"
linking specific billings to specific claims. Unable to determine
the hours that the Blisses' attorney had actually spent on the
unsuccessful claims, the court decided to attribute half of all
time billed prior to the second trial to work on the retaliatory
discharge claims. This reduction resulted in a fee of $83,376.50.
Beyond this, the court noted that "[b]oth sides
overlitigated their claims and defenses, indulging in unnecessary
motion practice and unnecessary and wasteful discovery practice."
But the court then specified that "much of the complexity of this
lawsuit was attributable to the Bliss[es'] counsel's unreasonable
behavior, as the 42 court files and the . . . in-court record of
this case clearly show,"and that "the wasteful and vexatious
conduct of plaintiffs' counsel must be accounted for." The court
decided that the portion of the Blisses' fees attributable to their
overtime claims should be reduced by twenty-five percent to account
for their attorney's conduct. By this process the court determined
that the Blisses' full reasonable attorney's fees on their overtime
claims amounted to $62,533.
After determining the prevailing party fees for the
Blisses, the court calculated Bobich's fees for prevailing on the
retaliation claims and the other named defendants' fees for
prevailing on the overtime claims. The court calculated the total
prevailing party fees for all defendants to be $29,790.
Subtracting the defendants' prevailing party fees from
the plaintiffs', the court arrived at a net attorney's fees award
of $32,743 in favor of the Blisses. Although Judge Shortell
observed that "I have seriously considered denying both motions for
attorneys' fees because of the wasteful and vexatious behavior
exhibited by both sides,"he concluded "that consideration of all
of the circumstances in this case warrants the sum awarded."
The Blisses assert that this net fee award violates case
law and the public policy underlying the AWHA's provision for full
reasonable attorney's fees. They also claim that their attorney
handled the litigation reasonably in light of Bobich's vexatious
tactics.
The Blisses advance several specific arguments. We find
no merit to their contention that, by declaring Bobich the
prevailing party on the retaliatory discharge claims, and refusing
to award the Blisses any fees for their unsuccessful efforts on
these claims, the court violated the policy of the AWHA. Former AS
23.10.110(c), which governed this case, guaranteed the Blisses an
award of reasonable attorney's fees for prevailing on their claims
for unpaid overtime wages. We have held that this subsection
entitled an employee to full reasonable fees for prevailing on an
overtime claim, noting that "[t]he objective of AS 23.10.110 . . .
is to encourage employees to press wage-and-hour claims." Bobich
v. Stewart, 843 P.2d at 1238 n.9. However, the Blisses did not
bring their retaliatory discharge claims under the AWHA; they
brought them as common-law tort actions for lost wages, punitive
damages, and emotional distress. Former AS 23.10.110(c) addresses
attorney's fees for employees prevailing on wage claims; its
purpose is not to subsidize excursions into tort claims. We have
acknowledged that the AWHA's underlying policies prevent a
prevailing employer in a wage-and-hour case from recovering
attorney's fees under either former AS 23.10.110(c) or Civil Rule
82. See Grimes v. Kinney Shoe Corp., 938 P.2d 997, 999-1001
(Alaska 1997). But the trial court's order did not award fees to
Bobich on the overtime claims; rather, it awarded Bobich fees only
on the Blisses' unsuccessful tort claims.
In cases governed by Rule 82 that involve multiple causes
of action, "[w]e have consistently held that both the determination
of 'prevailing party' status and the award of costs and fees are
committed to the broad discretion of the trial court." Tobeluk v.
Lind, 589 P.2d 873, 878 (Alaska 1979). We have affirmed a decision
in which the trial court came to the "sound conclusion that each
side should bear its own costs since each side prevailed in
substantial areas of [the] litigation." Oaksmith v. Brusich, 774
P.2d 191, 202 (Alaska 1989). And in another case we found "no
abuse of discretion in the superior court declaring the case a
'wash' and ordering each party to bear his own costs and fees."
Pavone v. Pavone, 860 P.2d 1228, 1233 (Alaska 1993).
We see no need to apply a different rule to cases
involving mixed causes of action, some governed by Rule 82's
attorney's fees provisions and some by the AWHA's. The
determination of prevailing party status in such cases remains a
matter for sound trial court discretion. In these particular
circumstances -- where the Blisses' overtime claims were resolved
before their case was submitted to the jury in the first trial, and
their retaliatory discharge claims required a second trial -- we
find no abuse of discretion in the court's decision to split
prevailing party status for the divergent claims.
All but one of the Blisses' remaining attorney's fees
arguments are meritless. The Blisses complain that the court's
award punished them for overlitigation and rewarded Bobich for
vexatiousness. Yet a careful reading of the attorney's fees order
establishes that its purpose and effect were not to punish or
reward any party's conduct, but rather to determine, as accurately
as possible, the full reasonable fees attributable to the Blisses'
overtime claims. Cf. Bobich v. Hughes, ___ P.2d ___, Op. No. 5032
at 12-13 (Alaska, September 11, 1998). The Blisses assert that the
attorney's bills that they submitted should have been accepted as
presumptively accurate and treated as binding on the court unless
expressly rebutted by Bobich. This assertion is both legally
unsupported and logically unsound. They also assert that Bobich
never filed a timely application for attorney's fees, and that his
recompiled billings were invalid. But the record fails to support
the former assertion, and the Blisses cite no legal authority to
support the latter. They further insist that the court erred in
failing to hold a hearing on the accuracy of their billings. Yet
the Blisses offered no additional information concerning their
billings and did not request a hearing; no hearing was required
under the circumstances. The Blisses also contend that the court
erred in deducting Bobich's fees from their own to arrive at a net
award of fees for the entire case; they complain that this in
effect took money "out of the plaintiffs' attorney's pocket." But
in guarding his own pocket instead of the Blisses', their attorney
actually argues against his clients; moreover, the argument ignores
that fees are not awarded directly to a prevailing attorney; they
are instead part of the judgment awarded to the prevailing party.
The Blisses' final attorney's fees argument, however, has
merit. The Blisses contend that the court erred in denying fees
for the time their attorney spent preparing their fee application.
This argument finds support in two recent cases. See Singh v.
State Farm Mut. Auto. Ins. Co., 860 P.2d 1193, 1203 (Alaska 1993),
and Bobich v. Stewart, 843 P.2d 1232, 1237 (Alaska 1992) (both
indicating that prevailing party fees in cases where full rather
than partial compensation for attorney's fees is called for should
include time reasonably necessary to compile an affidavit detailing
an attorney's time on the case). As we hold later in this opinion,
a remand will in any event be necessary to allow the trial court to
reconsider Bobich's attorney's fees; on remand, the court should
also reconsider, in light of Singh and Bobich v. Stewart, its order
denying the Blisses' request for fees covering the time their
attorney spent preparing their fee application.
III. BOBICH'S CROSS-APPEAL
A. The Court Did Not Err in Failing to Enforce Bobich's 1992
Offers of Judgment on the Overtime Claims.
Bobich argues that the court erred in refusing to enforce
Bobich's 1992 offers of judgment on the Blisses' overtime claims,
which provided, as to each plaintiff, that "[d]efendants, pursuant
to Rule 68 of the Alaska Rules of Civil Procedure, hereby offer[]
to allow entry of judgment in favor of plaintiff . . . as to [the]
claim for overtime compensation, in the amount of $20,000.00 . . .
inclusive of all costs, interest and attorneys' fees." Both of the
Blisses rejected Bobich's offers.
The superior court found these offers unenforceable for
essentially the same reasons it refused to enforce similarly worded
offers in the companion case of Bobich v. Hughes. See Bobich v.
Hughes, ___ P.2d ___, Op. No. 5032 at 4-5 (Alaska, September 11,
1998). And Bobich's arguments here are essentially identical to
those we rejected in Bobich v. Hughes. See id. at 6-9. Our ruling
in Bobich v. Hughes is dispositive of Bobich's present claim.
B. The Court Abused Its Discretion in Calculating the
Defendants' Attorney's Fees.
In 1992, Bobich made offers of judgment on the
retaliatory discharge claims. In 1995, Bobich made offers on the
overtime claims. The Blisses rejected these offers. On appeal,
Bobich objects to the trial court's calculation of the defendants'
prevailing party attorney's fees on the retaliatory discharge
claims, arguing that the court abused its discretion in failing to
consider, as a basis for enhancing fees under Civil Rule 82(b)(3),
the Blisses' rejection of the offers. But in Fairbanks North Star
Borough v. Lakeview Enterprises, Inc., 897 P.2d 47, 62 (Alaska
1995), we expressly left such determinations to the trial court's
discretion; we concluded that "when a trial court awards fees it
may, but need not, take into account [under Rule 82(b)(3)] the
existence of an unaccepted Rule 68 offer if the claimant-offeree
fails to better the offer." Bobich fails to persuade us that the
court abused its discretion in declining to take into account the
unaccepted offers.
Bobich next disputes the court's calculation of his fees
in relation to the fees covering the additional defendants named in
the Blisses' amended complaint. The Blisses brought the additional
defendants into the case in an effort to expand the size of
Bobich's business enterprise for purposes of establishing an
alternative basis for FLSA jurisdiction over their overtime claims.
[Fn. 6] Before the first trial, the court granted summary judgment
for the additional defendants on the retaliatory discharge claims,
ruling that they were not the Blisses' employers. After the
Blisses had presented their evidence at the first trial, the court
directed verdicts in favor of the additional defendants on the
overtime claims, ruling that the Blisses had failed to prove
enterprise liability under the FLSA.
After the second trial, the additional defendants
submitted $58,181 in attorney billings and moved for fees of
$29,090.50 -- half the amount of their billings -- for prevailing
against the Blisses on the overtime claims. [Fn. 7] Bobich, on his
own behalf, submitted total billings of $118,694 for defending
against the retaliatory discharge claims. He asked for an award of
$75,150.58, or 65 percent of his billings.
In determining the amount of fees to award Bobich and the
additional defendants, the court assumed that Bobich's $118,694 in
billings encompassed the total fees for both Bobich and the
additional defendants. Thus, having attributed $58,181 in fees to
the additional defendants, the court deducted this amount from the
$118,694 in billings that Bobich had submitted, and reached $60,513
as the total amount of fees incurred by Bobich in defense of the
retaliatory discharge claims. The court awarded Bobich fees based
on this amount.
Bobich maintains that the court's calculations are
mistaken, since his own fees totaled $118,694 and the other
defendants incurred $58,181 in addition to that amount. Thus,
according to Bobich, the starting point for his own fee award
should have been $118,694. Under Rule 82(b)(2)'s "with trial"
schedule, the court should have awarded him 30 percent of this
amount: $35,608.20.
Our review of Bobich's and the additional defendants'
billing records convinces us that Bobich's argument has merit. The
billings do not support the trial court's conclusion that the
additional defendants' $58,181 in fees was included in Bobich's
$118,694 in billings.
The defendants' records show three sets of bills: one
from attorney Darryl Thompson for representing the additional
defendants from January 1994 through April 1995, with fees of
$58,181; one from the firm of Stepovich, Kennelly & Stepovich for
representing Bobich from January 1992 through May 1994, with fees
of $75,238.50; and one from Darryl Thompson, who took over the
representation of Bobich from Stepovich in May 1994 and billed
through October 1995, charging fees of $43,455. The last two
figures, when rounded off, add up to the $118,694 that Bobich
claimed as his total fees.
Stepovich's bills do include a notation at the bottom of
each page that says "Summary of Billings Re: Bliss, wrongful
termination and dismissed defendants." But, as Bobich notes,
Stepovich never represented the additional defendants. It appears
that the "dismissed defendants"note simply refers to the fact
that, as the billing notes reflect, the Stepovich attorneys met
with Thompson early in 1994 to discuss Thompson's "representation
of new defendants." Accordingly, we must vacate the fee award to
Bobich and remand for recalculation.
Another aspect of the fee award requires our
consideration. The trial court relied on Civil Rule 82(b)(2)'s 20
percent "without trial"rate in awarding $11,636 in fees to the
additional defendants; it relied on the rule's 30 percent "with
trial"rate in awarding $18,154 in fees to Bobich. The additional
defendants argue that, because they remained in the case until the
conclusion of the evidence in the first trial, they should have
been awarded attorney's fees at Rule 82(b)(2)'s "with trial"rate,
under which they were presumptively entitled to 30 percent of their
actual fees. We agree.
The Blisses' retaliation claims against the additional
defendants were dismissed by pretrial summary judgment. But their
overtime claims against these defendants were dismissed by a
directed verdict that was entered after the Blisses presented their
evidence at the first trial. Because these claims proceeded to
trial, Rule 82(b)(2)'s "with trial"schedule must, in our view, be
used as the starting point for determining the attorney's fees to
be awarded for prevailing on those claims.
Of course, the trial court had discretion under Rule
82(b)(3) to adjust the presumptive award; in exercising this
discretion, the court could have taken into account the fact that
these claims were disposed of by directed verdict prior to reaching
the jury. But before adjusting the presumptive recovery on this
basis, the court would be required to "explain the reasons for the
variation." Alaska R. Civ. P. 82(b)(3). Here, the court did not
explain the award. On remand, the court must reconsider this
aspect of its fee award.
 C. Bobich's Contingent Arguments
Bobich advances additional arguments in his cross-appeal
for consideration only in the event of a reversal based on
arguments advanced in the Blisses' direct appeal. Since we have
rejected the Blisses' arguments, we need not consider Bobich's
contingent cross-appeal points.
IV. CONCLUSION
We REMAND so that the superior court can recalculate
Bobich's attorney's fees award and reconsider the Blisses' award in
light of Singh and Bobich v. Stewart. In all other aspects, we
AFFIRM.
FOOTNOTES
Footnote 1:
1 29 U.S.C. sec.sec. 201-19 (1978 & Supp. 1998).
Footnote 2:
2 AS 23.10.050-.150.
Footnote 3:
3 We examine a trial court's decisions to admit or exclude
evidence for abuse of discretion. See Buster v. Gale, 866 P.2d
837, 841 n.9 (Alaska 1994). We will reverse only "'when we are
left with a definite and firm conviction, after reviewing the whole
record, that the trial court erred in its ruling.'" Id. (quoting
Dura Corp. v. Harned, 703 P.2d 396, 409 (Alaska 1985)).
Footnote 4:
4 We consider the Blisses' appeal of the court's rulings
regarding summary judgment and directed verdict under the same
standard, since, if the court could not properly direct a verdict,
neither could it properly grant summary judgment. See Tripp, Inc.
v. Kenneth A. Murray Ins., Inc., 600 P.2d 1361, 1363 (Alaska 1979).
When reviewing a denial of a directed verdict, we determine whether
the evidence, when viewed in the light most favorable to the
nonmoving party, is such that reasonable jurors could not differ in
their judgment. See City of Whittier v. Whittier Fuel & Marine
Corp., 577 P.2d 216, 220 (Alaska 1978). If reasonable jurors could
reach different judgments on the issue, then the jury should decide
the question. See id.
Footnote 5:
5 Trial courts have broad latitude in determining
attorney's fees; we will reverse an attorney's fees award only if
the court below abused its discretion. See Mount Juneau Enters.,
Inc. v. Juneau Empire, 891 P.2d 829, 834 (Alaska 1995). An abuse
of discretion exists only if the fee award is arbitrary,
capricious, manifestly unreasonable, or based upon an improper
motive. See Hughes v. Foster Wheeler Co., 932 P.2d 784, 793
(Alaska 1997); In re Soldotna Air Crash Litig., 835 P.2d 1215, 1220
n.7 (Alaska 1992).
Footnote 6:
6 The FLSA originally contained only traditional coverage,
which applied to employees who were "engaged in [interstate]
commerce or in the production of goods for [interstate] commerce."
29 U.S.C. sec. 207(a) (amended 1961); 29 U.S.C. sec. 203(b)
(amended
1961). In 1961, Congress expanded the FLSA by creating enterprise
coverage. While traditional coverage focuses on the individual
employee's duties, enterprise coverage focuses on the employer's
business. "Enterprise,"under the FLSA, refers to "related
activities performed (either through unified operation or common
control) by any person or persons for a common business purpose,
and includes all such activities whether performed in one or more
establishments." 29 U.S.C.A. sec. 203(r)(1) (West Supp. 1998). In
order for a business to qualify as an enterprise, it must also be
involved in interstate commerce, and have annual gross sales of a
certain dollar amount. See 29 U.S.C.A. sec. 203(s)(1)(A)(i)-(ii)
(West Supp. 1998). See generally Mark A. Rothstein et al.,
Employment Law sec. 4.2, at 334-37 (1994).
Footnote 7:
7 The Blisses have not challenged the trial court's decision
to award attorney's fees to the additional defendants for
prevailing on the Blisses' overtime claims. In Grimes v. Kinney
Shoe Corp., 938 P.2d 997, 999-1001 (Alaska 1997), we held that an
employer who prevails on an employee's AWHA claim may not be
awarded prevailing party fees under Civil Rule 82. However, Grimes
was published more than a year after the court in the present case
issued its attorney's fees order. More significantly, in the
present case the court's decision to award attorney's fees to the
additional defendants appears to have been based on the theory that
they had never been the Blisses' employers and had been added as
defendants only as a means of expanding the scope of Bobich's
business enterprise in order to establish FLSA liability against
him. See supra note 6 and accompanying text. In their cross-
motion for attorney's fees, the defendants expressly argued this
theory to the trial court as a basis for an award of fees for the
overtime claims. Given these circumstances, we decline to find
plain error in the award of fees to the additional defendants for
prevailing on the overtime claims.
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