Appeal
from the Superior Court No. 3AN-08-07621 CI of the State of
Alaska, Third Judicial District, Anchorage, Erin B. Marston,
Judge.
Kenneth W. Legacki, Anchorage, for Appellant/Cross-Appellee.
William M. Bankston and Renee J. Sheyko, Bankston Gronning
O'Hara, P.C., Anchorage, for Appellees/Cross-Appellants.
Before: Stowers, Chief Justice, Winfree, Maassen, Bolger, and
Carney, Justices.
OPINION
MAASSEN, Justice.
I.
INTRODUCTION
This
appeal involves a pilot's claim for unpaid overtime
compensation. The superior court concluded after a bench
trial that the pilot, who flew seasonally for a remote
wilderness lodge, was a professional employee and therefore
subject to an exemption from the overtime requirements of the
Alaska Wage and Hour Act (AWHA). We reversed that decision on
appeal, holding that the pilot was not exempt, and remanded
the case for a determination of the overtime hours actually
worked.[1]
On
remand the superior court framed the issue as whether the
pilot, during his time at the lodge, was "engaged to
wait or waiting to be engaged." The superior court
applied a multi-factor test and found that the pilot was
"waiting to be engaged" and therefore was not
entitled to overtime compensation for hours other than those
he spent actually performing duties for his employer. The
court found that the pilot had worked 6.4 hours of unpaid
overtime but declined to award liquidated damages, finding
that an exception to the liquidated damages statute applied
because the lodge had acted reasonably and in good faith. The
court also declined to award attorney's fees to the lodge
despite the fact that it had bettered the terms of several
offers of judgment.
Both
parties appeal. We conclude that the superior court did not
err in its legal analysis when determining whether the pilot
was entitled to overtime compensation. We also affirm the
superior court's decision not to award attorney's
fees to the employer. But because the superior court made no
findings about the lodge's subjective good faith, we
remand the liquidated damages issue to the superior court for
further consideration of whether the good-faith exception
applies.
II.
FACTS AND PROCEEDINGS
A.
Facts
Linda
and Chris Branham owned and operated Royal Wolf Lodge, a
fishing lodge in Katmai National Park that operated
seasonally from June to late September.[2]Employees lived
there for the season, and because the lodge had no road
access they depended on aircraft for materials and
supplies.[3]
Royal
Wolf Lodge employed Jeff Moody as a pilot for six seasons,
from 2002 through 2007, to fly the lodge's de Havilland
Beaver aircraft.[4] A separate employment agreement covered
each year. In January 2008 the Branhams sent Moody a letter
informing him that he would not be rehired for the 2008
season.
B.
Proceedings
1.
Trial before Judge Joannides and Moody I
Moody
filed a complaint against the Branhams and Royal Wolf Lodge
in May 2008, seeking damages under AWHA for unpaid overtime
compensation and liquidated damages in an equal amount.
Superior Court Judge Stephanie E. Joannides issued a decision
in June 2011 following a bench trial, making specific
findings about Moody's job responsibilities and his other
activities while at the lodge. She found that Moody was
"responsible for preparing the plane for flights,"
properly loading and unloading it, flying guests to and from
the lodge for fishing, and flying in "supplies and other
materials," and that he sometimes volunteered for other
duties around the lodge. She also found, however, that the
time he spent on tasks "not directly related to"
his duties as a pilot "comprised only a small percentage
of his time." She found that between flights Moody
"was able to visit with other employees and guests while
eating, use the internet, watch movies, do laundry, stay in
his room, and take naps," though she recognized that the
lodge's remote location meant he had to stay nearby.
A
determinative issue was whether Moody was a professional
employee exempt from AWHA's overtime
requirements.[5] Judge Joannides decided he was and
therefore was not entitled to overtime compensation. She
found that he was, however, entitled to contract damages
because his agreed salary was based on a 30-day month and one
day off per week, and it was uncontested that he did not take
days off in 2006 or 2007. While awarding no overtime, Judge
Joannides awarded Moody unpaid wages for July 31 and August
31 of 2006 and 2007 and for the extra day he worked every
week.
In
Moody 1we reversed Judge Joannides's
determination that Moody fell under the professional employee
exemption.[6] We followed United States Department of
Labor advice and federal cases holding that airline pilots do
not meet the definition of "professional employees"
for the purpose of the exemption because their "primary
duty"-piloting an aircraft - does not require
specialized academic training.[7] But we affirmed Judge
Joannides's factual findings about the days Moody worked
and his entitlement to contract damages.[8] We remanded the
case "for further proceedings on whether Moody in fact
worked overtime as defined by AS 23.10.060 and whether he is
entitled to recover compensation for unpaid
overtime."[9]
2.
Remand proceedings before Judge Marston
The
case on remand was assigned to Superior Court Judge Erin B.
Marston. Following a four-day bench trial in May 2016, Judge
Marston issued a written decision, finding that Moody had
worked a total of 6.4 hours of uncompensated overtime. To
reach this conclusion the judge first had to determine
whether Moody was "engaged to wait" - i.e., was
entitled to pay while waiting for the lodge to call for his
services - or was "waiting to be engaged" - i.e.,
was on his own time and not entitled to pay until called.
Judge Marston noted that "parties are permitted to agree
on what constitutes work hours in situations where an
employee lives on the work site." He determined,
however, that the contracts at issue were "unclear and
inconsistent" and reflected "no meeting of the
minds" as to job requirements, number of work hours, or
hourly rate. Therefore, in order "[t]o determine whether
Mr. Moody was engaged to wait, the court must determine
whether he was permitted to use his time for his own
purposes."
Judge
Marston reviewed the factors set out in Owens v. Local
No. 169, Association of Western Pulp & Paper
Workers., [10] for determining whether an employee is
free to engage in personal activities, and found that
Moody's job responsibilities left him "free to do
whatever he decided to do for much of the day." The
judge found that "none of the employment agreements
between the parties contemplated on[-]call or standby time[,
]... there were no policies, written or otherwise, that
required any of the pilots to be on call[, ]... [and] [t]he
2007 employment agreement specifically states there is no
on[-]call or standby time." He concluded that because
the parties had not agreed to standby or on-call time, and
because "in practice Mr. Moody was free to use his
non[-]flying time for his own purposes, he was not engaged to
wait, but rather was waiting to be engaged."
Judge
Marston next determined the number of hours Moody actually
worked. Finding the employment agreements unhelpful because
of their inconsistencies and ambiguities, the judge found
"Moody's log books to be the most accurate primary
source," as they "were kept contemporaneously and
have indicia of reliability." Judge Marston determined
how many flight hours Moody logged in 2006 and 2007 and added
some time for related duties, "such as preparing and
preflighting the airplane, loading and unloading passengers,
loading and unloading cargo[, ] and making supply runs and
errand runs." He concluded that "[t]o exceed eight
hours in a day, [Moody] would have to have flown at least
five and a half hours." Extrapolating from calendars
that in turn collected information from Moody's flight
logs and Chris Branham's summaries of work hours, Judge
Marston concluded that "Moody worked overtime hours in
2006 in the amount of 5.4 hours . . . [and] one hour of
overtime in 2007."
Judge
Marston then decided that liquidated damages under AS
23.10.110(a) were not appropriate because of the
statute's exception for employers who have acted
reasonably and in good faith.[11]
Royal
Wolf Lodge moved for an award of costs and attorney's
fees, citing AS 23.10.110(f), which allows the court "in
an action for unpaid overtime compensation" to award
attorney's fees to a prevailing defendant who has
"made an offer of judgment to the plaintiff, ... 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 [AWHA]." Judge
Marston denied the attorney's fees motion, finding that
Moody had "pursued his legal claim on remand in good
faith," but he awarded Royal Wolf Lodge its costs
because such an award was mandated by Alaska Civil Rule 68
and not precluded by AWHA.
Both
parties appealed. Moody argues that the superior court erred
or abused its discretion in the following ways: (1) by
failing to apply the proper methodology in determining
whether Moody was entitled to compensation for unpaid
overtime; (2) by failing to apply the law of the case
doctrine; (3) by declining to award liquidated damages; and
(4) by failing to consider the public policy effects of its
decision. Royal Wolf Lodge argues that the superior court
erred by not awarding it attorney's fees.
III.
STANDARD OF REVIEW
Whether
a superior court "on remand has correctly applied our
mandate is a question of law which we review de novo,
"[12] as is "the interpretation of the
controlling statutes and regulations."[13]
A
"determination regarding subjective good faith is
generally factual and reviewed for clear error," while a
"determination regarding objective reasonableness
'involves applying the proper interpretation of the [law]
to uncontested facts'" and is primarily a legal
determination we review de novo.[14] "Once it is
established that the superior court did not err in finding
clear and convincing evidence of good faith and
reasonableness, the superior court's decision regarding
whether or not to award any level of liquidated damages is
reviewed for abuse of discretion."[15]
We
review attorney's fees awards for abuse of
discretion.[16] "An abuse of discretion exists if
an award is 'arbitrary, capricious, manifestly
unreasonable, or the result of an improper motive.'
"[17] "The trial court's application
of law in awarding attorney's fees is reviewed de
novo."[18]
IV.
DISCUSSION
A.
Judge Marston Applied The Correct Methodology In Determining
Whether Moody Was Owed Compensation For Unpaid
Overtime.
Moody
argues that Judge Marston used the wrong methodology in
determining whether an employee like Moody is entitled to
overtime pay. He points to the relevant federal regulation,
29 C.F.R. § 785.23, which recognizes that "[a]n
employee who resides on his employer's premises on a
permanent basis or for extended periods of time is not
considered as working all the time he is on the
premises," because ordinarily he is given time to
"engage in normal private pursuits" such as
"eating, sleeping, [and] entertaining." The
regulation also recognizes that in such cases it is
"difficult to determine the exact hours worked,"
and therefore "any reasonable agreement of the parties
which takes into consideration all of the pertinent facts
will be accepted."[19] The burden is on the employer to
prove "plainly and unmistakably" both that (1)
there was an agreement to compensate the employee for
overtime work, and (2) "the agreement was
'reasonable,' having taken into account 'all of
the pertinent facts.' "[20]
Moody
asserts that there was such an agreement, that both Judge
Joannides and our decision in Moody /recognized the
agreement's existence and reasonableness, and that Judge
Marston erred when he "undid the agreement" on
remand. But we disagree that the factual issues central to
Moody's overtime claim had been established for remand,
...