Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.

Learn more about what you receive with purchase of this case.

David Wagner v. Blue Sky Classic Cars


November 5, 2012


On appeal from the Superior Court of New Jersey, Law Division, Morris County, Docket No. L-3211-08.

Per curiam.


Submitted February 16, 2012

Before Judges Axelrad, Sapp-Peterson and Ostrer.

Defendants, Blue Sky Classic Cars, LLC (Blue Sky) and Alan Fox, appeal from a judgment awarding unpaid overtime wages, liquidated damages, and counsel fees to plaintiff, David Wagner, as a result of defendants' failure to pay Wagner overtime wages. We affirm.

Blue Sky restores, repairs, sells, buys, and consigns classic, antique, collector, vintage, street rod and muscle cars. Wagner was employed by Blue Sky as a mechanic between April 2007 and June 2008. Fox is the owner and operator of Blue Sky and served as Wagner's supervisor throughout his employment. Wagner was paid at an hourly rate and was never compensated at an overtime rate, despite often working more than forty hours per week.

On November 1, 2007, the New Jersey Department of Labor (DOL) conducted an audit of Blue Sky, in response to employee complaints. The DOL investigator, Victoria Mulligan, reviewed all of Blue Sky's relevant records and determined the company committed no overtime violation because she believed it was DOL practice and policy that all auto mechanics were exempt from overtime wages. Fox later testified he had discussed the situation with Mulligan at the time, and Mulligan told him he "did not have to pay mechanics overtime and that [he] did have to pay tow truck operators overtime." Following this audit, Blue Sky paid three towing operators unpaid overtime wages, but based upon Mulligan's representation, it did not pay overtime wages to any mechanics. A second audit occurred on November 6, 2008, as a result of another complaint from a Blue Sky mechanic. This audit, conducted by Shirley Schwenke, included all employees who worked for Blue Sky from November 6, 2006 to November 6, 2008. Defendants claim they were never notified that any monies were due to any employees as a result of this second audit. Specifically, Fox testified "there was no overtime to anybody[,]" and "[the reports] confirmed I was doing things properly. . . . I didn't change anything, because nobody told me I was doing it wrong."

On April 6, 2009, Wagner filed his complaint. He alleged he should have been paid overtime wages under the Fair Labor Standards Act (FLSA), 29 U.S.C.A. § 201 to -219, and the New Jersey Wage and Hour Laws, N.J.S.A. 34:11-1 to -68. Defendants filed an answer to the complaint and, among other defenses, argued they were exempt from liability for overtime wages based upon the fifty-percent sales provision of the FLSA and the good faith defenses under N.J.S.A. 34:11-56a25.2 and 29 U.S.C.A. §259(a).

The parties thereafter exchanged discovery, and when the discovery period ended on February 26, 2010, the matter was scheduled for trial on May 24, 2010. Defendants unsuccessfully sought to amend answers to interrogatories in order to serve certain documents. Later, after additional trial adjournments, the court granted Wagner's in limine motion to bar the introduction, at trial, of the very same documents defendants had attempted to provide to Wagner after discovery ended.

Shortly before the jury charge conference, Judge Robert J. Brennan made a determination that the good faith defenses under both state and federal law did not apply as a matter of law. Based upon this finding, the judge excluded Schwenke's testimony, finding it would be more prejudicial than probative. Wagner's attorney stipulated $9400 as the amount of overtime due, and defendants agreed to that amount. Judge Brennan then entered judgment in the amount of $9400 on the New Jersey wage and hour law claim. Despite entering the $9400 judgment in favor of plaintiff based upon the New Jersey Wage and Hour Law, the judge recognized that defendants had a further defense to plaintiff's unpaid overtime wages claim. Judge Brennan stated, "[t]he reason we have an issue that remains to go to the jury is we have a claim under the [FLSA] which would, if the [fifty] percent defense is not established by the jury, [then] there is a liquidated damages provision there."

In other words, notwithstanding the court's rejection of defendants' good faith defenses, under both federal and state law, if the jury found that defendants prevailed on the fifty percent sales defense, defendants would be exempt from paying plaintiff overtime wages. Thus, while the parties were free to stipulate as to the amount of unpaid overtime wages, the court should not have entered judgment in favor of plaintiff at that point. The error in doing so, however, was harmless because the fifty percent sales defense was nonetheless submitted to the jury for determination.

The jury found defendants failed to prove that the fifty percent sales defense applied. The court subsequently entered judgment awarding Wagner $9400 in unpaid overtime wages and $9400 in liquidated damages. In addition, the court awarded Wagner $66,933.56 in counsel fees, for a total award of $85,733.56. The present appeal followed.

On appeal, defendants present the following arguments:


















We first address defendants' contention the trial court erroneously granted Wagner's in limine motion. We review a trial court's decision to exclude certain evidence from trial under an abuse of discretion standard. Bd. of Educ. v. Zoning Bd. of Adjustment, 409 N.J. Super. 389, 430 (App. Div. 2009). As such, we grant substantial deference to the trial judge's exercise of discretion in ruling on such motions. Ibid. Reversal of a trial court's evidentiary rulings is only appropriate when the ruling is "so wide of the mark that a manifest denial of justice" has occurred. State v. Carter, 91 N.J. 86, 106 (1982). See also Verdicchio v. Ricca, 179 N.J. 1, 34 (2004).

In granting the motion, the court prohibited the introduction of documents defendants proffered to support their affirmative defense that Blue Sky was exempt from paying Wagner overtime wages because more than fifty percent of its business is derived from the sale of automobiles. Under the FLSA, an employer is exempt from paying a covered employee overtime pay for hours worked in excess of forty hours in any given week if more than fifty percent of the employer's business is generated from the sale of motor vehicles. 29 U.S.C.A. § 213(B)(10)(A).

Defendants asserted this affirmative defense in their answer. Wagner served his first set of interrogatories and demand for the production of documents on November 25, 2009. This discovery sought all evidence defendants intended to rely upon to support their "[fifty percent] sales" defense. Defendants responded they were unaware of "any persons who have knowledge relevant to the subject matter of the . . . [a]ffirmative

[d]efenses." Similarly, on February 17, 2010, in response to Wagner's document request, defendants asserted they had produced all of the evidence they believed supported their position.

Discovery ended on February 26, 2010, and defendants filed a motion for summary judgment, raising the fifty percent sales defense and the good faith defenses under both federal and state laws. Wagner opposed the motion, arguing defendants failed to produce any documents to support these defenses, an argument he successfully advanced nearly one year earlier when defendants sought dismissal of Wagner's complaint based upon similar grounds. The motion judge agreed with Wagner and denied the motion. Consequently, leading into the May 24, 2010 trial date, defendants had produced no documentary evidence in support of their affirmative defenses. Moreover, prior to the close of discovery, defendants failed to move to extend discovery based upon any delay in the receipt of documents requested from DOL or for any other reason.

In a letter from defense counsel to the court dated May 11, 2010, counsel requested a trial adjournment because Fox, as the sole owner of Blue Sky, could not "obtain coverage at his business until June 7, 2010." The court granted the adjournment. Then, on May 26, 2010, Wagner's counsel received a "supplemental document production" along with an apology for the delay in producing the documents, which defense counsel explained was because the "documents were just provided to this office." On this same date, defendants filed a motion for reconsideration of the court's ruling denying their summary judgment motion.

In seeking reconsideration, defendants argued Wagner failed to refute Fox's testimony that Blue Sky was primarily engaged in the sale of cars and defendants possessed "new information which establishes that sales were actually slightly more than [fifty percent] in 2008." Judge W. Hunt Dumont denied reconsideration, stating:

[T]he alleged new information comes too late and no explanation is proffered as to why the accounting of Blue Sky revenue was not available at time of original filing. As a result, no basis is offered for reconsideration and it will be denied. It will be up to [the] trial judge as to whether these recent proofs[,] discovered outside the discovery period and after a trial date was set, will be allowed at time of trial.

When trial commenced several months later, Judge Brennan granted Wagner's in limine motion, barring the introduction of these documents. Citing Rule 4:17-7, the judge stated:

[T]o . . . this day[,] there is no certification of anyone on behalf of . . . defendants as . . . to why the information was not produced in a timely fashion.

Counsel argues that there was a mistake made by an accountant on behalf of the --who was employed by . . . defendant and that once the mistake was realized[,] the information was produced. But as I say, it was done without a [c]ertification and without a [m]otion to [e]xtend the discovery period.

The . . . information was not only produced following the discovery end date but also it was produced following the . . first trial date. And it was simply set forth without explanation. And although arguments are made that the . . . documents support defenses that have been pursued by . . . defendant "from day one" and that [Wagner] has . . . already been . . . or [Wagner] was fully aware of the fact that these defenses were raised, that doesn't change the fact that the defenses are different from the evidence that would be submitted in support of the defenses.

Judge Brennan then reviewed, in detail, Wagner's previous efforts to obtain discovery relevant to defendants' affirmative defenses, culminating with defendants' response to Interrogatory 21 regarding the fifty percent sales defense. Defendants responded that they "intended to rely on . . . the parties['] pleadings and documents produced and received in discovery." The judge noted further that defendants provided a similar response in connection with Wagner's interrogatory addressing defendants' claimed good faith defenses.

Judge Brennan next discussed the documents defendants produced on June 22, 2010, obtained from DOL after the agency, in response to a trial subpoena, invited defendants "to come examine the documents, which was done. They were then copied and produced on June 22nd, which was after the second trial date and [sixteen] days before . . . the then scheduled July 7th, 2010 trial date." The judge noted none of the documents were accompanied by a Certification of Due Diligence or any explanation why the documents were produced late. The judge additionally observed that defendants at no time sought to extend discovery.

Against this procedural history, Judge Brennan barred the introduction of the documents, finding:

[I]t would be unfair to permit . . . defendants to rely on documents that were produced, as I have described their production. The discovery period had ended, at least two trial dates had come and gone, by the time . . . the first production . . . of May 26th was made following the first scheduled trial date, and the second production of June 22nd was made following the -- the second scheduled trial date.

The rule is clear that in the absence of a [c]ertification[,] that the adverse party and the [c]court are to disregard such amendments.

And here this is particularly so. [Wagner]'s claim for overtime amounts to something in the neighborhood of $12,000 or $13,000. . . . [T]hat doesn't mean the case isn't important. It . . . means that that is the amount of . . . the claim that has been made. . . . [S]ignificant affirmative defenses have been raised and which, of course, . . . defendants will be able to pursue. There is no ruling here that those affirmative defenses are stricken. . . .

[T]hey can be presented and litigated and . . . defendants will certainly be permitted to rely on the testimony of Mr. Fox and will be permitted to rely on whatever documents were produced within the discovery period.

But to permit . . . defendants now to rely on the late produced documents where they didn't file a Due Diligence Certification, where they didn't seek an extension of the discovery period, where they have yet [to] file a [c]ertification that would explain what transpired here, what the nature of the accountant's mistake was, why it was that [Wagner] certified discovery responses back on February 17th of 2010, and then three months expired until the . . . first supplemental production was done and another month before the second one was done.

Because . . . defendants apparently focused on these issues outside of the discovery period should not penalize . . . [Wagner]. [Wagner] would be unduly prejudiced because he took the deposition of . . . defendant, he relied on the documents, he asked Mr. Fox whether these were all the documents. Mr. Fox said they were. And so having done that much[, Wagner] ought not now be faced with numerous additional documents produced beyond the discovery period.

The [c]court is acutely aware of the preference to decide cases on the merits and not to rely on a technical and overly harsh application of . . . the rules, and every case must be evaluated in its own light. And I've certainly given that consideration here as to whether it would be -- we could work out a . . . reasonable means of resolving this issue so that both sides could proceed without any undue prejudice.

The only real answer would come from reopening discovery, having [Wagner] . . . re[-]depose Mr. Fox on these documents, and that would inevitably lead to further discovery disputes, I'm confident. But even if it didn't, it's a totally impractical approach because we're here for trial. Reviewed under our deferential standard accorded to a trial judge's evidentiary rulings, we are satisfied Judge Brennan did not abuse his discretion. Estate of Hanges v. Metro. Prop. & Cas. Ins. Co., 202 N.J. 369, 374 (2010). Defendants inexplicably failed to comply with Rule 4:17-7 in attempting to supplement their discovery responses. To the extent defendants were, at all times throughout the discovery period, seeking to obtain information from DOL to support their affirmative defenses, they offer no explanation why they failed to seek a discovery extension prior to the close of discovery. Moreover, by expressly stating they intended to rely on the pleadings and the documents produced and received in discovery, defendants invited Wagner to prepare trial strategy, in response to the asserted affirmative defenses, based upon their earlier responses to discovery. Under these circumstances, we find Judge Brennan did not abuse his discretion in excluding the documents.

With respect to the accounting records, defendants attribute the delay in timely producing these records to an unexplained clerical error. The proffered documents were significantly at odds with Fox's deposition testimony that slightly more than fifty percent of Blue Sky's business was generated from its automobile sales. In contrast, the accounting records proffered indicated that Blue Sky generated eighty-two percent of its revenue from sales in 2007. This disparity is illustrative of the prejudice to Wagner, who, throughout discovery, relied upon Fox's deposition and other evidence in addressing this affirmative defense. Therefore, the court's decision to disregard this proffered evidence at trial was not an abuse of discretion. See N.J.R.E. 403 (stating "relevant evidence may be excluded if its probative value is substantially outweighed by the risk of . . . undue prejudice, confusion of issues, or misleading the jury").

Under Rule 4:17-7, a party seeking to amend interrogatories after the discovery period has ended must certify that the information requiring the amendment was not readily available or discoverable by the exercise of due diligence prior to the end of discovery. Here, Fox did not produce the accounting records during discovery and instead waited until three months after the discovery period ended to attempt to include them. He attributed his inability to retrieve the accounting records within the discovery period to a clerical error, and he did not elaborate any further. The record also does not reflect that defendants ever provided a Certification of Due Diligence.

Between the time defendants' motion to dismiss was denied on June 12, 2009 and the February 26, 2010 discovery end date, they had eight months to gather their records and answer discovery requests. Wagner attempted to obtain evidence during the discovery period that would help him demonstrate defendants' affirmative defenses were not viable. He was unsuccessful in obtaining this discovery due to defendants' claimed, but unexplained, clerical error. This claimed error remained unexplained even at the time of trial, months after defendants were on notice, by virtue of Judge Dumont's ruling, that they failed to provide any competent explanation for their delay in complying with discovery demands. We therefore conclude Judge Brennan did not abuse his discretion in excluding Blue Sky's accounting records from trial.


Defendants additionally contend the trial court erred in excluding the documents received from DOL that had not been produced in discovery, including full field representative reports for both audits and documentation to support those findings. The documents were received in response to a trial subpoena, after which DOL invited defendants to review the documents and also afforded defendants an opportunity to copy relevant documents. There is nothing in the record to suggest defendants sought these documents during the discovery period and were denied access to these records. Judge Brennan did not permit the introduction of these documents, stating there's real prejudice that would be visited upon [Wagner] by virtue of these late produced documents. He's not had the opportunity to take discovery on them. He had the right to rely on the prior production and Mr. Fox's deposition. So . . . I find that it would be unduly prejudicial to [Wagner], balancing . . . the prejudice . . . on one side versus the other.

I . . . come down on the side that determines . . . it would be unduly prejudicial to [Wagner].

Defendants claim the records were obtained after discovery because of a related ongoing investigation, but they provided no certification from DOL attesting that there was a delay in providing the documents to defendants due to an investigation, nor did they demonstrate the documents were "not reasonably available or discoverable by the exercise of due diligence prior to the discovery end date." R. 4:17-7. Instead, defendants argued: (1) six months passed between obtaining the documents at issue and the beginning of trial, (2) many of the same documents had previously been provided to Wagner in discovery, and (3) Wagner was informed of defendants' position that they would raise the good-faith defense based upon their reliance on the DOL's position that mechanics are not entitled to overtime wages. Citing Tucci v. Tropicana Casino and Resort, Inc., 364 N.J. Super. 48, 52 (App. Div. 2003), defendants urged the discovery rules should be relaxed in order to obtain a just result. Given defendants' complete and repeated failure to timely comply with discovery demands and their failure to make any effort to properly explain the reason for their non-compliance, Judge Brennan did not abuse his discretion when he precluded the introduction of the proffered DOL documents at trial.


Defendants next argue the trial court erred in its interpretation of the good faith defense under N.J.S.A. 34:11-56a25.2. The statute provides:

[i]n any action or proceeding commenced prior to or on or after the date of the enactment of this act based on any act or omission prior to or on or after the date of the enactment of this act, no employer shall be subject to any liability or punishment for or on account of the failure of the employer to pay minimum wages or overtime compensation under this act, if he pleads and proves that the act or omission complained of was in good faith in conformity with and in reliance on any written administrative regulation, order, ruling, approval or interpretation by the Commissioner of the Department of Labor and Industry or the Director of the Wage and Hour Bureau, or any administrative practice or enforcement policy of such department or bureau with respect to the class of employers to which he belonged. Such a defense, if established, shall be a complete bar to the action or proceeding. . . . [N.J.S.A. 34:11-56a25.2.]

The New Jersey good faith statute mirrors the federal statute that, in pertinent part, provides:

[N]o employer shall be subject to any liability or punishment for or on account of the failure of the employer to pay minimum wages or overtime compensation under the [FLSA] . . . if he pleads and proves that the act or omission complained of was in good faith in conformity with and in reliance on any written administrative regulation, order, ruling, approval, or interpretation, of the agency of the United States specified in subsection (b) of this section, or any administrative practice or enforcement policy of such agency with respect to the class of employers to which he belonged. Such a defense, if established, shall be a bar to the action or proceeding .

[29 U.S.C.A. § 259a.]

The trial judge, in rejecting the good faith defense, found there was no clear demonstration of DOL's policies and enforcement procedures with respect to mechanics. While there are no reported New Jersey cases specifically discussing N.J.S.A. 34:11-56a25.2, it is discussed in Keeley v. Loomis Fargo & Co., 183 F.3d 257, 269 (3d Cir. N.J. 1999), cert. denied, 528 U.S. 1138, 120 S. Ct. 983, 145 L. Ed. 2d 933 (2000). Although not bound by federal decisions when interpreting New Jersey statutes, federal decisional law may serve to guide our courts, particularly in construing a state statute substantially similar to federal law. Tractenberg v. Twp. of West Orange, 416 N.J. Super. 354, 368-69 (App. Div. 2010).

In Keeley, the Third Circuit, in applying New Jersey's substantive law, looked to the plain text of N.J.S.A. 34:11-56a25.2 for guidance, along with federal case law considering the federal good faith defense when there has been a dispute regarding overtime pay in the trucking industry. Id. at 271. The court in Keeley held that for the good faith defense to apply, the employer (1) must be relying "on one of the enumerated sources in the statute, such as a regulation, practice, or policy of the state labor agency," and (2) must not fail to investigate a law's requirements or simply rely on a longstanding practice (of either the employer itself or its industry) of failing to pay overtime wages. Ibid.

In addition to Keeley, other federal cases have interpreted the federal good faith statute to require a writing. See, e.g., Henchy v. City of Absecon, 148 F. Supp. 2d 435, 442 (D.N.J. 2001) (stating the good faith defense is "available only where a defendant can show good faith conformity with and reliance on any written administrative regulation, order, ruling, approval, or interpretation."). Because the language of N.J.S.A. 34:11-56a25.2 so very closely parallels the language of 29 U.S.C.A. § 259(a), we interpret New Jersey's law as also requiring reliance upon a written administrative regulation, order, approval, or interpretation." Henchy, supra, 148 F. Supp. 2d at 442. Additionally, while not controlling, a Texas case held that "[g]enerally, an employer may not invoke the absolute defense of good faith if its reliance is based on a determination by a mere investigator for the Department of Labor." L & F Distribs. v. Cruz, 941 S.W.2d 274, 284 (Tex. App. Corpus Christi 1996) (internal citation omitted).

Here, defendants assert they relied on DOL investigators, who told Fox that mechanics were not entitled to overtime wages. As noted earlier, defendants, from the inception of Wagner's employment, failed to pay overtime based upon their assumption they did not have to do so. As noted earlier, at best, the representations from the DOL investigators merely reinforced defendants' own internal practice. Further, unlike the defendant in State v. Frech Funeral Home, 185 N.J. Super. 385 (Law Div. 1982), who relied on a written regulation before making a decision, here there was no such regulation or other written policy or practice upon which Blue Sky relied. Thus, defendants' reliance upon Frech is misplaced. Further, the final orders issued after the audits never explicitly stated mechanics were not due overtime pay, as the words "overtime" and "mechanic" were not mentioned anywhere in the orders. Moreover, there is no evidence in the record that Blue Sky took any affirmative steps to determine its obligation to pay overtime wages to mechanics. Keeley, supra, 183 F.3d at 271.

Defendants also claim 29 C.F.R. § 790.18(d) supports their position. Under this regulation, an employer will not be liable under the FLSA when there has been "reliance in good faith on an administrative practice or enforcement policy . . . where a practice or policy of not enforcing the Act with respect to acts or omissions led the employer to believe in good faith that such acts or omissions were not violations of the Act." Ibid. However, "a regulation, order, ruling, approval, or interpretation of the Administrator may be relied on only if it is in writing." 29 C.F.R. § 790.13. Defendants produced nothing in writing from "the Administrator" that mechanics were not due overtime wages.

Defendants additionally argue the trial court erred in barring the testimony of the DOL investigator whose testimony was relevant to their good faith defenses. Specifically, Judge Brennan did not permit Schwenke to testify regarding her understanding of whether auto mechanics were entitled to overtime wages. He determined allowing the testimony would confuse the jury or be unduly prejudicial to Wagner. We agree.

As previously discussed, evidence may be excluded if "its probative value is substantially outweighed by the risk of (a) undue prejudice, confusion of issues, or misleading the jury or (b) undue delay, waste of time, or needless presentation of cumulative evidence." N.J.R.e. 403. Schwenke was prepared to testify she believed there was a policy in effect at the time that mechanics did not qualify for overtime wages, and she would have indicated in her report after the audit if she believed there was a violation for failing to pay overtime to mechanics. However, her subjective beliefs about a policy are insufficient to trigger a potential good faith defense by an employer for non-compliance with overtime pay requirements under both State and federal law. Rather, under 29 C.F.R. § 790.13, the policy must be in writing. Schwenke admitted on cross-examination she was unaware of any written policy actually stating mechanics were not entitled to overtime wages. We therefore find no abuse of the judge's discretion in excluding Schwenke's testimony.


Defendants contend the trial court erred in permitting Wagner to testify at trial as to his opinion concerning the percentage of Blue Sky's revenue that came from sales as opposed to other activities, testimony elicited to rebut defendants' fifty percent defense under the FLSA. Defendants note the court permitted this testimony despite Wagner testifying he did not have personal knowledge of Blue Sky's sales activities while he was employed there. Defendants contend this testimony was unduly prejudicial and misled the jury. We consider this evidentiary ruling under an abuse of discretion standard of review. State v. Marrero, 148 N.J. 469, 484 (1997). We are satisfied the ruling does not reflect a "clear error of judgment." Ibid.

"[A] witness may not testify to a matter unless evidence is introduced sufficient to support a finding that the witness has personal knowledge of the matter. Evidence to prove personal knowledge may, but need not, consist of the testimony of that witness." N.J.R.E. 602. For any non-expert witness, "the witness' testimony in the form of opinions or inferences may be admitted if it (a) is rationally based on the perception of the witness and (b) will assist in understanding the witness' testimony or in determining a fact in issue." N.J.R.E. 701. Taken together, "those rules help ensure that certain unreliable evidence is not presented to the jury. They form the trial courts' gate-keeping function to guarantee that only relevant, probative, and competent evidence that is sufficiently reliable not to run afoul of Rule 403 may be considered by the finder of fact." State v. Chen, 208 N.J. 307, 319 (2011).

Judge Brennan permitted Wagner to testify to the extent of his personal knowledge as to how much revenue Blue Sky generated from sales as opposed to repairs. Wagner believed, based solely upon his observations while working, that Blue Sky made more money from its "other operations" than it did from its sales. Upon objection, Judge Brennan responded that a proper foundation was made for his testimony because "[h]e was there."

Once again, measured under our deferential standard accorded to a trial judge's decision to admit or exclude evidence, we discern no such abuse of discretion by Judge Brennan. Bd. of Educ., supra, 409 N.J. Super. at 430. Wagner's testimony was an approximation based on what he witnessed firsthand, and the jury was free to accept or reject this estimate.

Even if the trial court erred in permitting this testimony, the error was harmless because defendants bore the burden of proving their affirmative defense and were in the best position to produce this evidence. See Pagano v. United Jersey Bank, 276 N.J. Super. 489, 500 (App. Div. 1994) (holding that the defendant bears the burden to prove its affirmative defense), aff'd, 143 N.J. 220 (1996).


Defendants also assert the trial court erred in permitting the issue of liquidated damages to proceed to the jury. In the context of wage disputes under the FLSA, "liquidated damages serve 'as compensation for delay in payment of sums due under the [29 U.S.C.A. § 207(a)].'" Krause v. Cherry Hill Fire Dist. 13, 969 F. Supp. 270, 279 n.12 (D.N.J. 1997) (quoting Brooklyn Sav. Bank v. O'Neil, 324 U.S. 697, 715, 65 S. Ct. 895, 906, 89 L. Ed. 1296, 1314 (1945)). A party seeking to recover damages under the FLSA may be entitled to recover liquidated damages in addition to recovering unpaid wages. See 29 U.S.C.A. § 216(b) (stating an employer who violates 29 U.S.C.A. § 206 or 207 "shall be liable to the employee or employees affected in the amount of their unpaid minimum wages, or their unpaid overtime compensation, as the case may be, and in an additional equal amount as liquidated damages").

In contrast to a good faith defense asserted to avoid liability under 29 U.S.C.A. § 207 for unpaid wages, a good faith defense to a claim for liquidated damages under 29 U.S.C.A. § 260 does not require a writing. An employer asserting good faith under § 260 need only show, to the satisfaction of the court, "that the act or omission giving rise to such action was in good faith and that he had reasonable grounds for believing that his act or omission was not a violation of the Fair Labor Standards Act. . . ." 29 U.S.C.A. § 260. "To avoid liability for liquidated damages, the employer must make a showing of good faith and reasonable grounds for its conduct. If the employer fails to carry its burden of demonstrating good faith and reasonable grounds, the award of liquidated damages is mandatory." Krause, supra, 969 F. Supp. at 279 (internal quotation omitted).

The good faith requirement is a subjective one that "requires that the employer have an honest intention to ascertain and follow the dictates of the Act." Brooks v. Vill. of Ridgefield Park, 185 F.3d 130, 137 (3d Cir. 1999) (internal quotation omitted). "The reasonableness requirement imposes an objective standard by which to judge the employer's conduct. Ignorance alone will not exonerate the employer under the objective reasonableness test." Ibid. (internal quotation omitted). "Reasonable grounds" under 29 U.S.C.A. § 260 is therefore viewed under an objective standard. 29 C.F.R. § 790.15(a). However, even if the court determines that the employer's actions were in good faith and based on reasonable grounds, the court has discretion to award liquidated damages. Lee v. Coahoma County, 937 F.2d 220, 226-27 (5th Cir. 1991). In other words, an award of liquidated damages, even where an employer has acted in good faith, is committed to the sound discretion of the court and will not be set aside absent a showing of an abuse of discretion. Id. at 227. Such an abuse of discretion occurs where judicial action has clearly been unreasonable in light of the accompanying and surrounding circumstances and has resulted in prejudice to the rights of the complaining party. State v. Hayes, 205 N.J. 522, 539 (2011) (citing Smith v. Smith, 17 N.J. Super. 128, 132 (App. Div. 1951), certif. denied, 9 N.J. 178 (1952)).

Judge Brennan found the good faith defense did not apply to the liquidated damages claim, focusing primarily upon the undisputed lack of any affirmative steps by defendants to determine whether they were in compliance with the wage and hour laws as to their mechanics. In addition to the record being devoid of any affirmative steps by defendants to ascertain the law, Fox testified that prior to the DOL audits, Blue Sky was not paying mechanics overtime wages, based on nothing other than his assumption that mechanics were not due overtime wages. The court also noted the paucity of evidence supporting Schwenke's testimony during the 104*fn2 hearing that she believed it was DOL policy not to pay overtime wages to mechanics. Therefore, we find Judge Brennan did not abuse his discretion in finding, as a matter of law, that defendants' conduct did not constitute good faith under 29 U.S.C.A. § 260.


Finally, defendants argue the trial court erred by awarding excessive counsel fees to plaintiff. The standard of review when reviewing the awarding of attorney's fees is "abuse of discretion." Rendine v. Pantzer, 276 N.J. Super. 398, 462 (App. Div. 1994), aff'd, 141 N.J. 292 (1995).

Pursuant to 29 U.S.C.A. § 216(b), when an employer violates 29 U.S.C.A. § 207, the court "shall, in addition to any judgment awarded to the plaintiff or plaintiffs, allow a reasonable attorney's fee to be paid by the defendant, and costs of the action." New Jersey's Wage and Hour Law, N.J.S.A. 34:11-56a25, parallels the language of 29 U.S.C.A. § 216(b) and permits reasonable attorney's fees to be awarded to a prevailing employee in a wage claim. Additionally, Rule 4:42-9(a)(8) permits the awarding of attorney's fees when they are permitted by statute, which is the case here.

The parties agree New Jersey courts have adopted the "lodestar" approach from the federal courts when establishing a reasonable fee. Under this approach, the court will determine the lodestar, which equals the number of hours worked multiplied by a reasonable hourly rate. Rendine v. Pantzer, 141 N.J. 292, 334-35 (1995). The lodestar "may be adjusted upward or downward," as "adjustments to amount of counsel fees may be made to reflect the quality of the attorney's work, the complexity of the issues presented and the contingent nature of success." Id. at 334 (citations omitted). A court should calculate a reasonable hourly rate "according to the prevailing market rates in the relevant community. Thus, the court should assess the experience and skill of the prevailing party's attorneys and compare their rates to the rates prevailing in the community for similar services by lawyers of reasonably comparable skill, experience, and reputation." Id. at 337 (quoting Rode v. Dellarciprete, 892 F.2d 1177, 1183 (3d Cir. 1990)). Additionally, federal courts have discouraged reducing the lodestar in FLSA cases, as courts "should not place an undue emphasis on the amount of the plaintiff's recovery because an award of attorney fees here encourages the vindication of congressionally identified policies and rights." Fegley v. Higgins, 19 F.3d 1126, 1134-35 (6th Cir.), cert. denied, 513 U.S. 875, 115 S. Ct. 203, 130 L. Ed. 2d 134 (1994).

The Court in Rendine held the lodestar should be increased in contingency cases because of the risk that attorneys will not be paid if their clients lose the case. Rendine, supra, 141 N.J. at 343. Specifically, "contingency enhancements in fee-shifting cases ordinarily should range between five and fifty percent of the lodestar fee, with the enhancement in typical contingency cases ranging between twenty and thirty-five percent of the lodestar." Ibid.

Judge Brennan stated that Wagner's attorney was a highly-experienced employment attorney, his hourly rate of $250 was reasonable, and he believed the attorney reasonably worked for around 300 hours on the case. "[A] trial court may exercise its discretion to exclude excessive hours from the lodestar calculation[.]" Id. at 336 (emphasis removed). Therefore, Judge Brennan had the discretion to either accept or adjust the amount of hours counsel asserted. He was under no mandate to exclude any amount of hours from his calculation, and while he adjusted the requested amount downward because he believed the amount of legal research performed by Wagner's attorney was slightly unreasonable, he concluded $66,933.56 was a proper amount to award, as Wagner and his attorney had a contingency arrangement. Nothing in the record indicates the amount of hours and dollars per hour were unreasonable. Under our deferential standard of review, we conclude Judge Brennan properly exercised his discretion to award a reasonable amount of attorney's fees to Wagner.


Buy This Entire Record For $7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.

Learn more about what you receive with purchase of this case.