Opinion ID: 71474
Heading Depth: 1
Heading Rank: 1

Heading: A Russian imbroglio

Text: 5 Defendants McCullar and Edward Peabody served in a variety of executive roles for a web of companies including World Business Network, Inc., World Charities, Inc. and World Lottery Services, Inc. The precise details of the web's structure are inconsequential, because the companies suffered a default judgment and only McCullar and Peabody remain as defendants on appeal. What is consequential is that this web of companies collaborated with Gil Bachman (not a party to this suit) to create private lotteries in the former Soviet Union. With claimed expertise in lottery operations, Bachman served as point man for defendants McCullar and Peabody in their dealings with plaintiffs Nicholson and Smith. 6 Plaintiff Smith had worked on lotteries with Bachman before. Then, in November 1992, Bachman convinced Smith to help on the lottery enterprise in the former Soviet Union. Smith was to travel to Russia for five to six weeks at a salary of $2000 per week. Smith took care of some initial business in America for a week and a half, and then departed on February 26, 1993. He stayed in Russia until March 20. While there, Smith performed spadework for the lottery business: he established a security system, organized tickets and prizes and inspected operations. Sometime near the end of Smith's stay, Bachman flew to Russia and fired him. Smith was never paid. He filed suit on October 13, 1993 against the web of companies and McCullar and Peabody, alleging breach of contract and violation of the FLSA. On the FLSA claim, he sought unpaid minimum wages, overtime compensation, an equal amount in liquidated damages and attorneys' fees, as 29 U.S.C. § 216(b) provides. Because the FLSA does not apply to work performed in a foreign country, 29 U.S.C. § 213(f), Smith's damages would be confined to the salary he earned before departing for Russia. 7 Plaintiff Nicholson did his work entirely in the United States. Like Smith, Nicholson's relationship with Bachman antedated these dealings. In February 1993, Nicholson began his employ as a recruiter for Bachman's and defendants' Russian enterprise, for which he was paid $5,000 per month. A few months later, Nicholson moved beyond recruiting to some participation in sales and trading. Nicholson says he was never paid for this sales and trading work. Nicholson filed suit in tandem with Smith on October 13, 1993, making the same allegations: that the companies had breached their contract with Nicholson, and that all the defendants had violated the FLSA. 8 Defendants filed a motion for summary judgment against both plaintiffs. On the FLSA claims, the district court refused to rule on whether Smith and Nicholson were employees or independent contractors (contractor status would have exempted them from the FLSA). The district court then assumed arguendo that Nicholson and Smith were employees, and turned to defendants' next affirmative defense: that Smith and Nicholson fell outside the FLSA's ambit as administrative employees, a term we examine in the next section (II). The district court decided that the defendants had proven that Smith fell into that class, but the facts of Nicholson's employment were inconclusive. The suit proceeded to trial, whereupon a jury returned a special verdict holding that Nicholson was an employee--but an administrative employee. 9 Meanwhile the companies had stopped representing themselves in the lawsuit, presumably because they had been emptied of cash and other assets. The district court entered a default judgment against them for breach of contract. But, because the district court had earlier held that defendants McCullar and Peabody were not personally liable for the contract claim, the default judgment, against moneyless companies, amounted to a hollow victory for Nicholson and Smith. 10 After the special verdict on the FLSA claim, Nicholson filed a motion for judgment as a matter of law or, in the alternative, for a new trial. His argument was the same claim that he and Smith present on appeal: that they could not have been administrative employees as a matter of law. The district court denied the motion. Reviewing a question of law like this one de novo, Reich v. Davis, 50 F.3d 962, 964 (11th Cir.1995), we now turn to whether the district court denied the motion properly. 11