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Declining the offer of second trial proves to be bad decision for underpaid detectives

By Brandi O. Brown, J.D.

By insisting on a final judgment in order to appeal a ruling that, as a matter of law, they had been paid on a “salary basis,” a group of six detectives barred themselves from further pursuit of their overtime claim when their appeal failed.

Sheriff’s office detectives, who initially experienced success with their overtime claims before a jury, now find themselves shut out of further pursuit of those claims after the Fifth Circuit affirmed a Rule 50(b) ruling in their employer’s favor on a question crucial to the exemption determination. Although the jury had concluded that the detectives were not paid on a salary basis, which led inexorably to the conclusion that they were entitled to overtime pay, the lower court’s Rule 50(b) decision to the contrary completely upset the verdict. Rather than take up the offer of a new trial on the remaining aspects of the exemptions and try to prevail in another way, however, the detectives sought to fight the battle on one front only: appeal of the salary determination. That battle was lost and the lower court’s judgment was affirmed (Escribano v. Travis County, Texas, January 10, 2020, Costa, G.).

Jury decides in detectives’ favor. Six detectives, all of whom earned more than $100,000 per year, filed suit under the FLSA alleging that their county employer failed to pay them overtime pay to which they were entitled. The only issue was whether the detectives were exempt from the FLSA under either the executive or highly-compensated employee exemptions. The county, of course, argued that they were and the detectives contended that the exemptions did not apply and, if they did, there was an applicable exception to the exemption (the first-responded exception). Both of the exemptions are applicable only if the employee is paid on a salary basis, among other requirements, so when a jury concluded out of the gate that they were not paid on a salary basis it went straight to determining the detectives’ damages. Judgment was entered for the detectives.

Confusing actions. However, within 30 days the county filed a Rule 50(b) motion seeking judgment as a matter of law, arguing that no rational jury could have found that the employees were not paid on a salary basis. The court agreed and ruled as a matter of law that the employees were paid a salary. The court vacated the jury finding on that requirement and granted the employees’ conditional request for a new trial. What happened next was described by the appeals court as confusing because the employees appeared to change course, claiming they no longer wanted a new trial but instead wanted reentry of judgment in their favor, seemingly failing to understand that the “only way to move forward” would be with a new trial to answer the remaining questions about whether they were covered by the FLSA. The court gave them repeated opportunities to resurrect their request for a new trial, to no avail, and finally entered a final judgment. The employees appealed.

Rule 50(b) time limits not jurisdictional. In addition to the “procedural wrangling” at issue, the appeals court also found itself with a couple of jurisdictional challenges from the parties on appeal. With regards to the employer’s jurisdictional challenge, the court concluded that the employees had timely appealed once final judgment had been entered. The jurisdictional challenge levied by the employees was a little thornier because it was an issue not raised before the district court and led the appeals court to address a novel question—whether the time limits in Rule 50(b) were jurisdictional. It concluded that they were not, noting that it joined at least five other circuits in reaching that conclusion. As a result, the employees’ failure to challenge timeliness of that motion before the district court meant they forfeited the objection.

District court’s conclusion was proper. On the merits, the appeals court explained, the district court’s conclusion with regards to the salary question was proper. It could overturn the jury’s verdict if there was no legally sufficient evidentiary basis for it. The parties agreed that the employees had earned a predetermined amount of pay each period that remained the same and that their pay exceeded $100,000 a year. With regards to the “practice or policy” standard applicable to the “subject to reduction” question under Auer v. Robbins (which has since been refined by regulation to make practice the ultimate inquiry), there was no evidence of a practice of impermissible reductions for detectives. The employees’ pay was not docked and or reduced. Vague policies were inconsequential in light of how the detectives were actually paid.

An ‘unwise’ decision. Describing the employees’ decision not to “pursue the new trial the district court repeatedly offered” as an “unwise” one, the appeals court explained that the district court’s ruling in the employer’s favor on the salary question had, in fact, vacated the entire jury verdict and its own affirmation of that decision was the end of the road. A new trial would have been the only way to reach the additional conclusions necessary to determine whether the detectives were exempt and without that, the detectives are out of luck.