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Moody v. Lodge

Supreme Court of Alaska

December 14, 2018

JEFF MOODY, Appellant and Cross-Appellee,
ROYAL WOLF LODGE, LINDA BRANHAM, and CHRIS BRANHAM, Appellees and Cross-Appellants.

          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.


          MAASSEN, Justice.


         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.


         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.


         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]


         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, ...

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