Remelius v. Vaisala Inc.

Filing 38

ORDER: For the reasons stated in the attached memorandum and order, Vaisala's motion for partial summary judgment (Doc. 28 ) is GRANTED IN PART and DENIED IN PART: it is granted as to the fluctuating work week point and that method of calculating damages will apply in this case, but it is otherwise denied. In addition, Remelius' motion to strike (Doc. 31 ) is DENIED as MOOT. Signed by Chief Judge Michael J. Reagan on 10/6/2016. (wtw)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ILLINOIS
JOHN REMELIUS,
Plaintiff,
vs.
VAISALA INC.,
Defendant.

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Case No. 15-cv-0553-MJR-SCW

MEMORANDUM AND ORDER
REAGAN, Chief District Judge:
John Remelius worked as a field service engineer for Vaisala, Inc., from July 2011
to November 2014. Vaisala is in the business of providing environmental and industrial
measurement services to meteorological outfits, aviation entities, and road authorities,
and the company’s field engineers install and service the company’s atmospheric
sensing equipment for those customers. Based on a 2008 outside audit of its positions, a
2009 inquiry by its outside counsel, and a 2013 review by the Department of Labor,
Vaisala was of the view that its field engineer positions were exempt from overtime pay
under the Fair Labor Standards Act, as the job qualified as a “learned professional”
post. After his departure from the company, Remelius came to disagree with that
assessment, and filed suit in this Court claiming that Vaisala violated the Act by not
paying him overtime during his time with the company. He sought unpaid overtime
for a three-year period and asked for liquidated (read: double) damages under the Act.

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The case proceeded through discovery, and Vaisala has since moved for partial
summary judgment on a few damages-related points. It insists that liquidated damages
and a three-year recovery period are both improper because Vaisala relied on an
outside expert, its outside counsel, and the Department of Labor’s audit to come to the
conclusion that its field service engineers were exempt from overtime, meaning that
Vaisala’s decision to classify the position as exempt was reasonable, was made in good
faith, and wasn’t willful. It also maintains that the fluctuating work week method of
calculating damages should be applied here. Remelius concedes the last point but
contests the first two, claiming that issues of fact preclude summary judgment on the
double damages point and the three-year recovery period. Vaisala’s motion for partial
summary judgment on damages is now before the Court for review.
Summary judgment is proper on one or more of a party’s claims if the evidence
shows that there is no genuine issue as to any material fact and the movant is entitled to
judgment as a matter of law. Archdiocese of Milwaukee v. Doe, 743 F.3d 1101, 1105 (7th
Cir. 2014). In evaluating whether there is a genuine issue as to a material fact, the Court
must construe the facts in the light most favorable to the non-movant, and draw all
legitimate inferences and resolve doubts in favor of that party.

Nat’l Athletic

Sportswear, Inc., 528 F.3d 508, 512 (7th Cir. 2008). If after doing so no reasonable
factfinder could find for the non-movant on his claim, summary judgment on that claim
is proper; if the factfinder could rule for the non-movant on that claim, it must proceed.
Dempsey v. Atchison, Topeka, & Santa Fe Ry. Co., 16 F.3d 832, 836 (7th Cir. 1994).

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The lion’s share of Vaisala’s motion goes to whether a Remelius has a reasonable
shot at obtaining liquidated damages under the Fair Labor Standards Act on the facts of
this case, so the Court will start there. The Fair Labor Standards Act originally made
liquidated damages mandatory, but Congress changed things when it passed the
Portal-to-Portal Act of 1947. See Walton v. United Consumers Club, Inc., 786 F.2d 303,
311-12 (7th Cir. 1986). Section 11 of the Portal-to-Portal Act allowed an employer to
avoid what was once mandatory damages if it showed “to the satisfaction of the court
that the act or omission giving rise to such action was in good faith and that [the
employer] had a reasonable grounds for believing that [its] act or omission was not a
violation of the Fair Labor Standards Act.” 29 U.S.C. § 260. The adjustment only
changed a rule to a presumption—double damages are still the norm, single damages
the exception, with the burden resting on the employer to show that it acted reasonably
and in good faith and thus should avoid the imposition of double damages. E.g.,
Bankston v. State of Ill., 60 F.3d 1249, 1254 (7th Cir. 1995); Walton, 786 F.2d at 311-12.
To show that there is no material issue of fact as to its reasonableness and good
faith, Vaisala first points out that it hired an independent auditor to review its
exemption classifications in 2008, and that auditor found that the field service engineer
position was properly classified as exempt from overtime pay under the Fair Labor
Standards Act. While that kind of evidence is certainly persuasive, there’s a potential
hole in Vaisala’s independent audit that casts just enough doubt as to the company’s
good faith to preclude the entry of summary judgment. To avail itself of good faith, an
employer must provide full and honest disclosure to its expert, Koellhoffer v. Plotke3

Giordani, 858 F. Supp. 2d 1181, 1193 (D. Colo. 2012), and giving Remelius all
reasonable inferences from the facts, there’s some doubt on that here. In 2009, about a
year after the outside auditor finished his audit, Vaisala’s human resources manager
received a question from one of the company’s field service engineers about the
engineer exemption. The manager emailed the question to the outside auditor and
asked for his thoughts, and the auditor said that his exemption decision in 2008 was a
close call for the field engineer position given the variability in job duties among
companies for those posts and the fact that Vaisala’s job description for field engineers
was a bit vague. That said, the auditor found that the exemption was proper because he
was told by Vaisala management that an employee really needed to be a “graduate
engineer” to fulfill the requirements of a field engineer at the company, and fourteen
out of Vaisala’s seventeen field engineers were indeed “graduate engineers.” The rub is
that the record suggests that, at the time of the audit, approximately three engineers
had bachelor’s degrees and some ten had associates degrees. If those in the know in the
field, both on the audit side and the company side, would have taken “graduate
engineers” to mean anyone with a college degree in an area touching on engineering,
then management’s statement to its own auditor might not have been wrong or might
not have been the kind of slip-up that would have made any difference to the expert,
and Vaisala’s good faith would likely be intact. However, if those in the field would
have regarded questions and answers about “graduate engineers” as meaning those
with engineering-related bachelor’s degrees or higher, then Vaisala may well have

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misled its own auditor, and its good faith would be in question. All of this is to say that
material questions of fact persist, so summary judgment isn’t proper.
To support taking liquidated damages out of the calculus, Vaisala also flags that
it asked its outside counsel about the field service engineer exemption and that he, too,
authorized the exemption. That argument suffers from a similar defect as the one
addressed above. The only evidence of outside counsel advice concerns the same 2009
email chain mentioned above—after the independent auditor responded to the human
resources manager, stating that the field engineer exemption was a close question but
ultimately proper because Vaisala told him that field engineers “really did need” to be
graduate engineers, that response was forwarded to Vaisala’s outside counsel. The
outside lawyer then drafted a letter for the human resources manager to send to
Vaisala’s employee explaining why the field engineer position was properly classified
as exempt. In the letter, the lawyer relied in part on the 2008 audit and the fact that
many of Vaisala’s field engineers were graduates at the time of the audit, and if
Vaisala’s disclosures to its lawyer were false, Vaisala’s good faith reliance on its
attorney’s assessment would be questionable. See Koellhoffer, 858 F. Supp. 2d at 1193;
see also Mumby v. Pure Energy Serv., Inc., 636 F.3d 1266, 1270, 1272 (10th Cir. 2011).
As another basis to preclude liquidated damages, Vaisala points out that a 2013
Department of Labor audit found that its field service engineers were properly
classified. Like reliance on outside counsel or reliance on an outside expert, the fact that
the Department of Labor reviewed the field service engineer position and ruled it
exempt from overtime would be strong evidence against liquidated damages. Vaisala’s
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problem is that it hasn’t offered anything from the Department of Labor to indicate
whether the Department actually reviewed the field engineer position, instead pointing
to an email from the company’s president after the audit indicating that the review was
likely directed at the field engineer position and not the company’s developmental
engineers, and that the auditor seemingly found no violations. Vaisala should know
that it bears a “substantial burden” to show that it reasonably believed its classification
decision to be proper, Bankston, 60 F.3d at 1254, and without a report from the
Department of Labor that its auditor actually examined the field engineer position—or
at least testimony or an affidavit from the auditor confirming as much—there is an open
question of fact about the reasonableness of Vaisala’s exemption decision.
As its final argument for closing off liquidated damages, Vaisala points out that
Remelius never raised the exemption issue during his tenure with the company,
meaning that Vaisala’s good faith must be intact. To support that proposition Vaisala
relies on two out-of-circuit decisions—White Star Manufacturing Company v. Nicolle,
403 F.2d 41, 42 (5th Cir. 1968), and White v. Beckman Dairy Company, 352 F. Supp.
1266, 1270 (W.D. Ark. 1973)—which both held that supervisory employees who didn’t
raise the overtime issue with their employer couldn’t obtain double damages. Those
decisions don’t get Vaisala as far as it would like for two reasons. For one, even if those
decisions mesh with the Seventh Circuit’s view of good faith, they aren’t all that helpful
to Vaisala when compared to the facts here, as there’s nothing to suggest that Remelius
held a supervisory post at Vaisala. More fundamentally, those two decisions don’t
include all that much analysis on the good faith point, and they both are in some
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tension with the Seventh Circuit’s view of good faith in Walden v. United Consumers
Club, Inc., 786 F.2d at 311-12. Walden noted that objective criteria should feed into the
good faith evaluation, with an eye towards assessing whether the employer’s decision
to classify a job as exempt looked “aboveboard” and honest to the “reasonable man”
famous in tort law. A reasonable man wouldn’t see good faith merely because an
employer was ignorant of a problem—a “good heart but an empty head does not
produce a defense.”

Id. at 312.

He could see good faith if there was a lack of

complaints from an employee and an objectively honest go by an employer to ascertain
whether a position was exempt through an independent audit, regardless of some
imperfections in the auditor’s conduct. See Nellis v. G.R. Herberger Revocable Trust,
360 F. Supp. 2d 1033, 1043 (D. Ariz. 2005). But there’s some doubt as to whether
Vaisala made an honest effort at examining the field service engineer exemption, and
that foundational doubt precludes summary judgment in Vaisala’s favor.
Vaisala also wants summary judgment concerning the damages period available
to Remelius, claiming that Remelius has no evidence suggesting willful conduct, and
thus can’t obtain damages over a three-year period. The statute of limitations for Fair
Labor Standards Act violations is typically two years, unless there was a willful
violation, and then the limitations period is three years. 28 U.S.C. § 255(a). Unlike the
burden related to liquidated damages, the plaintiff bears the burden of establishing
willfulness, meaning that he must show that the defendant either knew he was
violating the Act or showed reckless disregard for whether his actions were unlawful
under the Act. Bankston, 60 F.3d at 1253-54. Given the switch in burdens as to the
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willfulness question, it’s easier for a plaintiff to obtain liquidated damages than it is for
him to secure a three-year recovery period. Walton, 786 F.2d at 310.
Vaisala faults Remelius for not offering enough evidence to show willful conduct
here, but construing the facts in favor of Remelius, there’s just barely enough evidence
to preclude summary judgment in favor of Vaisala. As the Court already said, there’s
an open question as to whether Vaisala misled its auditor and its outside counsel about
the number of engineers who had graduate degrees at the time of the audit. There are
also open questions about the target of the Department of Labor’s subsequent review
and the findings of its review. If the Department of Labor’s review wasn’t targeted at
the field service engineer position or if the Department didn’t find those jobs exempt—
and if Vaisala did mislead its experts during its own previous examinations—the
misstatements constitute evidence, minimal as it may be, that Vaisala was reckless with
respect to its classification decision. See Koellhoffer, 858 F. Supp. 2d at 1193-94. To be
sure, the standard for willfulness isn’t the same as the standard for liquidated damages,
and there are so many “ifs” above that Remelius will have a lot to prove at trial to
secure the three-year period of limitations. But the two standards do involve some
overlapping factual issues, so much so that a question of fact in the liquidated damages
context can leave an open question as to whether an employer acted recklessly in the
willfulness context. E.g., Bankston, 60 F.3d at 1253-54; Koellhoffer, 858 F. Supp. 2d at
1193-94. Given the open factual questions concerning Vaisala’s review of the field
engineer position, granting summary judgment would be a premature move.

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One closing note is in order concerning a motion that Remelius filed with his
response to Vaisala’s request for summary judgment. Remelius has asked the Court to
strike Exhibits 6 through 8 of Vaisala’s request for partial summary judgment pursuant
to Federal Rule of Civil Procedure 56(c)(2), which allows a party to “object that the
material cited to support or dispute a fact” at the summary judgment phase of the case
“cannot be presented in a form that would be admissible in evidence.” The Court has
assumed that the exhibits in question are admissible for purposes of the summary
judgment-related dispute between the parties, and because Vaisala’s motion for
summary judgment must be denied as to the points relevant to those exhibits even with
the benefit of that assumption, there’s no need for the Court to rule on admissibility for
now. Any effort to strike the material under the summary judgment rule is moot.
To sum up, Vaisala’s motion for partial summary judgment (Doc. 28) is
GRANTED IN PART AND DENEID IN PART: it is granted as to the fluctuating work
week point and that method of calculating damages will apply in this case, but it is
otherwise denied. In addition, Remelius motion to strike Exhibits 6 through 8 from the
summary judgment calculus (Doc. 31) is DENIED as MOOT.
IT IS SO ORDERED.
DATED: October 6, 2016
/s/ Michael J. Reagan
Chief Judge Michael J. Reagan
United States District Court

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