Reich v. Southern Maryland Hospital, Inc.

43 F.3d 949
CourtCourt of Appeals for the Fourth Circuit
DecidedJanuary 13, 1995
DocketNo. 93-2344
StatusPublished
Cited by6 cases

This text of 43 F.3d 949 (Reich v. Southern Maryland Hospital, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fourth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Reich v. Southern Maryland Hospital, Inc., 43 F.3d 949 (4th Cir. 1995).

Opinion

Affirmed in part, reversed in part, and remanded by published opinion. Chief Judge ERVIN wrote the opinion, in which Judge WIDENER and Judge WILKINSON joined.

OPINION

ERVIN, Chief Judge:

This is an appeal from a judgment rendered in the District Court of Maryland under the Fair Labor Standards Act, 29 U.S.C. §§ 201 et seq. (“FLSA”). The Secretary of Labor (the “Secretary”) brought this suit on behalf of more than 3,000 present and past employees of Southern Maryland Hospital, Inc. (the “Hospital”), alleging willful violations of the overtime pay and record-keeping requirements of FLSA by the defendants, Southern Maryland Hospital and Dr. Francis P. Chiaramonte, its president and chief executive officer. The district court granted liquidated damages and injunctive relief to the Secretary for the time period from December 1984 through November 1989. The central issue on appeal is the district court’s finding of employer liability based on the representational testimony from only 1.6% of the employee population. For the reasons stated below, we affirm in part, reverse in part, and remand for further proceedings consistent with this opinion.

I.

Southern Maryland is a 338-bed, for-profit medical complex. Dr. Chiaramonte, the Hospital’s founder, owns 51% of the Hospital’s stock and is actively involved in the Hospital’s daily operations. The Hospital has four administrative divisions (financial services, nursing, professional services, and support services), which are headed by four administrative officers. There are 52 separate departments within these divisions. Additionally, four related entities provide services to the Hospital, and are listed as departments in the Hospital’s records. Employees of these entities are on the Hospital payroll, use the same time clock as Hospital employees, and are subject to the same supervision as Hospital employees.

Upon consent by both parties, a Special Master heard the case in conjunction with the district court. Based on testimony presented by the Secretary from 54 of the Hospital’s 3368 employees, Judge Blake found: (1) that the hospital and Dr. Chiaramonte, as employers, were liable under FLSA; (2) that the employees of the hospital-affiliated institutions were employees of Southern Maryland and Dr. Chiaramonte under FLSA; (3) that the “salaried” employees were not exempt from FLSA’s overtime provisions; and (4) that the employees were entitled to compensation for pre-shift and post-shift work and two missed lunches per week. Additionally, Judge Blake found that the violations were willful, and that liquidated damages and prospective injunctive relief were appropriate.

The District Court adopted most of the Special Master’s findings, modifying the findings only with respect to some departments where the evidence failed to support a finding of missed lunches.

II.

The district court’s findings of fact are reviewed under a “clearly erroneous” standard. Martin v. Deiriggi 985 F.2d 129, 132 (4th Cir.1992). Issues of law are reviewed de novo. In re Bryson Properties, XVIII, 961 F.2d 496, 500 (4th Cir.1992), cert. [951]*951denied, Bryson Properties, XVIII v. Travelers Ins. Co., — U.S. -, 113 S.Ct. 191, 121 L.Ed.2d 134 (1992).

The evidence in this case clearly supports the district court’s finding that the defendants Dr. Chiaramonte and Southern Maryland Hospital, as employers, willfully violated the overtime and recordkeeping requirements under FLSA. In fact, during oral argument, defendants conceded that some back pay was due. They dispute, however, the amount of $4.2 million. We agree with defendants that the evidence does not support the district court’s award of liquidated damages and back pay of $4.2 million based on the testimony from only 54 of 3368 employees, representing 1.6% of the total employee population. The 1.6% sample constitutes the lowest percentage by far in any reported case using representative testimony under the proof scheme of Anderson v. Mt Clemens Pottery Co., 328 U.S. 680, 66 S.Ct. 1187, 90 L.Ed. 1515 (1946).

Under Mt. Clemens, the Secretary can present'testimony from representative employees as part of his proof of the prima facie case. Donovan v. Bel-Loc Diner Inc., 780 F.2d 1113, 1116 (4th Cir.1985). The court can award back wages under FLSA to non-testifying employees based on the “fairly representational” testimony of other employees. Id. Although the Secretary’s initial burden under Mt. Clemens is minimal, it is not non-existent. Secretary of Labor v. DeSisto, 929 F.2d 789, 793 (1st Cir.1991).

In DeSisto, the Secretary presented testimony from only one employee and sought to have that testimony represent 244 other employees holding a variety of positions at different locations. 929 F.2d at 793. The First Circuit held that the Secretary had not met his initial burden of proof, and that the evidence was “simply inadequate to give rise to a ‘just and reasonable inference’ as to the amount and extent of undercompensated work.” Id. at 794 (citing Mt. Clemens, 328 U.S. at 687, 66 S.Ct. at 1192). The court emphasized that in most cases where a small number of employees had been allowed to represent the interests of a larger number, the representative employee performed substantially similar, if not identical, work to the non-testifying employees. Id. at 793 (citing McLaughlin v. Ho Fat Seto, 850 F.2d 586 (9th Cir.1988) (garment factory workers), cert. denied, 488 U.S. 1040, 109 S.Ct. 864, 102 L.Ed.2d 988 (1989); McLaughlin v. DialAmerica Marketing, Inc., 716 F.Supp. 812 (D.N.J.1989) (home telephone number researchers), aff'd, 935 F.2d 1281 (3rd Cir.1991), cert. denied, 501 U.S. 981, 112 S.Ct. 583, 116 L.Ed.2d 608 (1991)). See also Dole v. Snell, 875 F.2d 802 (10th Cir.1989) (cake decorators), and Donovan v. Burger King Corp., 672 F.2d 221 (1st Cir.1982) (assistant managers).

Additionally, the court in DeSisto noted that several cases included stipulations between the parties that the testifying employee was representative. 929 F.2d at 794 (citing Dole, 875 F.2d at 811). See also Burger King, 672 F.2d at 224 (stipulation that employee was representative and that additional testimony would be cumulative). Furthermore, the court suggested that where several job categories exist, a minimum of one representative from each category with first-hand knowledge is essential. DeSisto, 929 F.2d at 793.

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Reich v. Southern Maryland Hospital
43 F.3d 949 (Fourth Circuit, 1995)

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