Court Opinion

ID: 1015538
Source: CourtListenerOpinion
Date Created: 2013-07-04 21:34:38.768664+00
Date Added: 2024-06-11T15:12:38.997005
License: Public Domain

UNPUBLISHED

                    UNITED STATES COURT OF APPEALS
                        FOR THE FOURTH CIRCUIT

                               No. 03-2091

DARRELL WALL,

                                               Plaintiff - Appellee,

           versus

FRUEHAUF TRAILER SERVICES, INCORPORATED,       a
subsidiary of Wabash National Corporation,

                                              Defendant - Appellant.

Appeal from the United States District Court for the District of
South Carolina, at Greenville. Terry L. Wooten, District Judge.
(CA-01-1959-6-25)

Argued:   September 29, 2004             Decided:    February 24, 2005

Before MICHAEL and MOTZ, Circuit Judges, and Roger W. TITUS, United
States District Judge for the District of Maryland, sitting by
designation.

Affirmed by unpublished opinion. Judge Titus wrote the opinion, in
which Judge Michael and Judge Motz joined.

ARGUED: Richard James Morgan, MCNAIR LAW FIRM, P.A., Columbia,
South Carolina, for Appellant. Justin Marshall Grow, Greenville,
South Carolina, for Appellee.    ON BRIEF: Reginald W. Belcher,
MCNAIR LAW FIRM, P.A., Columbia, South Carolina, for Appellant.
Brian P. Murphy, Greenville, South Carolina, for Appellee.

Unpublished opinions are not binding precedent in this circuit.
See Local Rule 36(c).
TITUS, District Judge:

     On March 12, 2001, Darrell Wall (“Wall”) filed a complaint in

the Court of Common Pleas for the County of Greenville, South

Carolina alleging that Fruehauf Trailer Services, Inc. (“Fruehauf”)

violated   the   Payment    of    Post-Termination      Claims   to   Sales

Representatives Act, S.C. Code Ann. §§ 39-65-10, et seq. (Supp.

1999), and breached its contract with Wall when it refused to pay

Wall sales commissions.     Fruehauf removed the case to the United

States   District   Court   for   the   District   of    South   Carolina,

Greenville Division, on April 11, 2001.      On February 27, 2002, the

District Court1 granted leave to Wall to file a Second Amended

Complaint which would replace Wall’s claim under §§ 39-65-10, et

seq., with a claim under the South Carolina Payment of Wages Act,

S.C. Code Ann. §§ 41-10-10, et seq. (Supp. 2003), and a claim for

treble damages pursuant to §§ 41-10-80(C). On March 13, 2002, Wall

filed his Second Amended Complaint.          After a trial, the jury

returned a $35,000 verdict in favor of Wall on February 11, 2003.

On July 25, 2003, the District Court awarded Wall treble damages,

attorney’s fees and costs pursuant to §§ 41-10-80(C).

     In its appeal, Fruehauf challenges the following actions of

District Court: (1)the Order granting Wall’s Motion To File Second

Amended Complaint; (2) the decision to retain diversity

     1
      The order granting leave for the filing of a Second Amended
Complaint was entered for the District Court by a Magistrate Judge.

                                    2
 jurisdiction over the case after Wall voluntarily dismissed his

claim for violation of §§ 39-65-10, et seq.; (3) the decision to

award Wall treble damages, attorney’s fees and costs; (4) the

admission of the testimony of Mike Dodson; (5) the interpretation

of §§ 41-10-10, et seq.      For the reasons set forth below, we

affirm.

                                 I.

     Wall was employed by Fruehauf (or its predecessor companies)

from September 1994 until September 2000 selling new and used

trailers.   Fruehauf    compensated   Wall   with   a   base   salary   and

commissions based on Fruehauf’s gross profit margin on his sales.

According to Fruehauf, beginning in 1996, the company limited the

maximum commissions per year to $50,000 per account.           Fruehauf’s

position is that this limitation was distributed in writing to all

salespersons, including Wall, on two separate occasions in 1996.

However, Wall maintains that Fruehauf never informed him of this

limit on commissions.

     In 1999, Wall earned $77,316.85 in commissions from the

purchase of trailers by D. M. Kaye and Sons Transport, and Fruehauf

paid him all of the commissions to which he was entitled in the

absence of the $50,000 limitation.    During the first part of 2000,

Fruehauf discovered that it had overpaid Wall for his 1999 earned

commissions in the amount of $35,000. Thus, Fruehauf incrementally

                                  3
withheld approximately $27,000 from subsequent commissions Wall

earned in 2000.         Additionally, Fruehauf deducted $8,000 from

commissions earned on other accounts in 2000.                Wall asserts that

this deduction for excess commissions was the first time in history

that Fruehauf had enforced its alleged cap on commissions.

     After Fruehauf removed the complaint filed by Wall in the

Court of Common Pleas for the County of Greenville, South Carolina

to the United States District Court for the District of South

Carolina, Greenville Division, an initial scheduling order was

issued on September 5, 2001 which, among others, prohibited the

parties from amending the pleadings after June 11, 2001.                         This

scheduling order deadline was later extended by the Court until

October 9, 2001.   Discovery ended on January 15, 2002 and trial was

scheduled to begin on April 11, 2002.

     During    Wall’s    deposition,       he   testified    that    he    had,    on

occasion, sold tractor trailers to independent owners.                          As a

result, he no longer fit the definition of a sales representative

under    the   Payment     of   Post-Termination            Claims        to    Sales

Representatives Act, S.C. Code Ann. §§ 39-65-10 et seq.                        Lee v.

Thermal Eng’g Corp., 572 S.E.2d 298, 304 (S.C. Ct. App. 2002).2

     2
      Section 39-65-10(4)       only       provides    relief        to    a    sales
representative who:

     (a)   contracts with a principal to solicit wholesale orders;
     (b)   is compensated, in whole or in part, by commission;
     (c)   does not place orders for purchases for his own account
           or for resale; and

                                       4
     After completing discovery and after a status conference held

on January 31, 2002, Wall sought leave to amend his complaint to

replace his claim under §§ 39-65-10, et seq. with a cause of action

alleging a violation of the South Carolina Payment of Wages Act,

S.C. Code Ann. §§ 41-10-10, et seq.3      On February 27, 2002, the

District Court granted the motion, reopened discovery and ordered

Wall to pay all of Fruehauf’s discovery costs associated with

investigating the amended claim.

     The case went to trial on February 10, 2003, a full year after

Wall filed his Second Amended Complaint. On February 11, 2003, the

jury returned a verdict for Plaintiff in the amount of $35,000.   On

February 26, 2003, Wall moved for an order granting treble damages,

attorney’s fees and costs pursuant to § 41-10-80(C).    On July 25,

2003, the trial court granted Wall’s motion and awarded treble

damages in the amount of $105,000.00, with interest at the rate of

1.13 %, plus attorney’s fees and costs.

     (d)   does not sell or take orders for the sale of products to
           the ultimate consumer. (emphasis added)
     3
      Unlike the Payment of Post-Termination Claims to Sales
Representatives Act, the South Carolina Payment of Wages Act does
not require that Wall not have sold products to the ultimate
consumer. S.C. Code Ann. § 41-10-40(C) provides simply that
employers “shall not withhold or divert any portion of an
employee’s   wages  unless...the   employer  has   given  written
notification to the employee of the amount and terms of the
deductions...”

                                   5
                                       II.

       Fruehauf argues that the District Court erred in the following

ways: (1)it permitted Wall to file a Second Amended Complaint after

the close of discovery without establishing good cause pursuant to

Federal Rule of Civil Procedure 16(b) and causing prejudice to the

Defendant in violation of Federal Rule of Civil Procedure 15(a);

(2)it permitted Wall to file a Second Amended Complaint after he

had admitted that he could not prove the elements of the claim in

his Amended Complaint; and (3)it retained jurisdiction over Wall’s

claim, despite the “dismissal” of the claim under the Payment of

Post-Termination Claims to Sales Representatives Act, S.C. Code

Ann.       §    39-65-10   which,   Fruehauf   argues,   destroyed   federal

jurisdiction over the claim by reducing the amount in controversy.4

       This Court reviews a district court’s decision to grant leave

to amend and the decision to retain jurisdiction of a claim under

an abuse of discretion standard.         See Foman v. Davis, 371 U.S. 178,

182 (1962); Shanaghan v. Cahill, 58 F.3d 106, 112-13 (4th Cir.

1995).         This standard “mandates a significant measure of appellate

       4
      At several points in its brief, Fruehauf refers to the
“dismissal” of a claim asserted by Wall under § 39-65-10.       The
District Court did not “dismiss” the claim.        When the Second
Amended Complaint was filed, it had the effect of superseding the
earlier complaint (which contained the claim under § 39-65-10)
which “no longer performs any function in the case.” 6 Charles Alan
Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice And
Procedure § 1476. (2d ed. 1990). After the Second Amended Complaint
was filed, the District Court granted a previously filed motion for
summary judgment as to the § 39-65-10 claim, but this action was a
nullity because that claim was no longer before the Court.

                                        6
deference to the judgment calls of trial courts.” United States v.

Pittman, 209 F.3d 314, 316 (4th Cir. 2000).

      A.      Leave to File Second Amended Complaint

      Federal    Rule      of    Civil   Procedure      16(b)    provides   that   a

scheduling order devised by the District Court “shall not be

modified except upon a showing of good cause and by leave of the

district judge or, when authorized by local rule, by a magistrate

judge.”    This Court has noted that scheduling orders “are not set

in   stone,    but   may    be    relaxed       for   good   cause,   extraordinary

circumstances, or in the interest of justice.”                  Barwick v. Celotex

Corp., 736 F.2d 946, 954 (4th Cir. 1984).                    Federal Rule of Civil

Procedure 15(a) provides that after a responsive pleading has been

served, a party may amend its pleading “only by leave of court or

by written consent of the adverse party; and leave shall be freely

given when justice so requires.”                 Furthermore, leave to amend is

a liberal standard and will not be denied unless the amendment will

cause actual prejudice to the adverse party.                      See Ward Elecs.

Serv., Inc. v. First Commercial Bank, 819 F.2d 496, 497 (4th Cir.

1987) (holding that a change in the theory of recovery and one

prior amendment is not sufficient to deny a motion to amend the

complaint where no evidence of bad faith existed).

      Here, the District Court properly exercised its discretion in

determining that good cause existed to permit Wall to amend his

complaint, pursuant to Federal Rules of Civil Procedure 16(b) and

                                            7
15(a).    Wall moved to file a Second Amended Complaint immediately

after his counsel learned that a minor portion of his sales

activities     involved    selling       trailers   to   independent

owners/operators, an activity that is not covered under S.C. Code

Ann. § 39-65-10.

         Furthermore, Fruehauf did not suffer any prejudice as a

result of the amendment.      The trial court reopened discovery,

permitting Fruehauf to depose Wall a second time, and ordered Wall

to pay all of Fruehauf’s associated discovery costs. Moreover, the

amendment did not substantively change the claim, only the statute

under which the claim proceeded.          Both before and after the

amendment, the suit was a claim for the same unpaid commissions.

Principles of judicial economy would have been sacrificed had Wall

not been permitted to amend his complaint because it would have

forced Wall to litigate an entirely new and separate action based

on the same set of facts under the new statute. Rowe v. United

States Fid. & Guar. Co., 421 F.2d 937, 943 (4th Cir. 1970)(“the

fact that the supplemental pleading technically states a new cause

of action should not be a bar to its allowance.”)    We find no abuse

of discretion in the District Court’s decision to permit Wall to

file a Second Amended Complaint.

     B.     Diversity Jurisdiction

     Fruehauf next argues that the trial court erred when it

retained jurisdiction over Wall’s case after he had “dismissed” his

                                     8
claim under S.C. Code Ann. § 39-65-10.5                Fruehauf argues that the

“dismissal” of Wall’s claim under §§ 39-65-10, et seq., destroyed

subject matter jurisdiction under 28 U.S.C.A. § 1332(a), because

without the ability to prove a necessary element of that statutory

claim, Wall had no longer asserted a claim that caused the amount

in controversy to exceed $75,000.6                  However, as Wall correctly

points out in his brief, his claim under §§ 39-65-10, et seq. was

simultaneously       replaced     with    a    claim    under     S.C.    Code    Ann.

§§ 41-10-10, et seq., which permits a court to award treble damages

to   an   employee   who    has   not    been      justly   compensated,     thereby

increasing the amount in controversy from the unpaid commissions of

$35,000 to $105,000.        Thus, the amount in controversy requirement

was met and subject matter jurisdiction was maintained.                           See

Missouri    State    Life    Ins.   Co.       v.   Jones,   290    U.S.    199,    202

(1933)(holding that where a state statute provides for the award of

attorney’s fees, those fees can be considered as part of the amount

in controversy for the purpose of determining federal diversity

jurisdiction).       Even if we were to find that the treble damages

provision of §§ 41-10-10 was not sufficient to cause the Second

Amended Complaint to satisfy the jurisdictional requirement of

      5
      As noted above in footnote 4, the claim under § 39-65-10 was
not “dismissed.” Rather, the claim was replaced with a claim under
§ 41-10-10 which superseded the earlier claim.
      6
      Section 39-65-10 provides for the award of punitive damages,
making the possible amount in controversy in excess of $75,000.

                                          9
28     U.S.C.A.       §   1332(a),     Plaintiff’s        initial   claim     under

§§ 39-65-10, et seq. was made in good faith and the District Court

had the discretion to retain any residual claims.                        Shanaghan,

58 F.3d at 112; St. Paul Mercury Indem. Co. v. Red Cab Co.,

303 U.S. 283, 288 (1938).7

                                        III.

       Fruehauf also appeals the trial court’s decision to award Wall

treble damages and attorney’s fees on the ground that the trial

court erroneously relied exclusively on the testimony of Wall’s

former General Manager Ned Armstead (“Armstead”).                        The trial

court’s decision to award Wall treble damages, attorney’s fees and

costs is reviewed under an abuse of discretion standard.                          See

Rice v. Multimedia, Inc., 456 S.E.2d 381, 384 (S.C. 1995).

       Fruehauf argues that the District Court erred when it awarded

Wall       treble    damages   and   attorney’s     fees,    relying     solely    on

Armstead’s          redirect   testimony    that,    in     Fruehauf’s     opinion,

contradicted his deposition and trial cross-examination testimony.

       7
      Furthermore, as Appellee correctly points out in his brief,
even if the Second Amended Complaint did not meet the required
amount in controversy for diversity jurisdiction under 28 U.S.C.A.
§ 1332(a), the doctrine of supplemental jurisdiction would permit
the trial court in this instance to retain jurisdiction over this
case.   28 U.S.C.A. 1367; Shanaghan, 58 F.3d 106, 110 (4th Cir.
1995)(citation   omitted)(indicating    that   the   doctrine    of
supplemental jurisdiction is “designed to allow courts to deal with
cases involving pendent claims in the manner that most sensibly
accommodates a range of concerns and values”).

                                           10
We disagree.       Fruehauf argues that on redirect examination at

trial, Wall’s general manager, Armstead, testified that he was not

aware of a commissions cap, whereas in his deposition, Armstead

testified that the commissions cap was a company-wide policy that

was never rescinded.

     First,    a   trial   judge   is   given   a   considerable   amount   of

latitude about what credibility to assign the testimony of one

witness over another, especially considering the fact that the

trial judge is much closer to the actual testimony than the

appellate court.     United States v. D’Angou, 16 F.3d 604, 614 (4th

Cir. 1994).    Furthermore, in the trial court’s July 25, 2003 Order

granting Wall treble damages, the court listed a number of factors

on which it based its decision, including the following:            Fruehauf

initially paid Wall the full balance of his commission; Armstead

testified that he was not aware of a cap on sales commissions;

Fruehauf failed to provide clear evidence that Wall received a

written memorandum notifying the salesperson of a cap on sales

commissions; the salesperson hired to replace Wall, Mike Dodson,

was not notified of a sales commissions cap; Fruehauf withheld

undisputed commissions from Wall’s pay; and Fruehauf failed to

adhere to the notification requirements of the South Carolina

Payment of Wages Act. Therefore, the argument that the trial court

abused its discretion by only considering Armstead’s inconsistent

testimony is without merit.

                                        11
                                IV.

     Fruehauf also challenges the District Court’s evidentiary

ruling admitting the testimony of Mike Dodson (“Dodson”), the

salesperson who assumed Wall’s position after he left Fruehauf, on

the grounds that the testimony was irrelevant and impermissible

hearsay.   We review an evidentiary ruling of a trial court for an

abuse of discretion and find no abuse here.   United States v. Abel,

469 U.S. 45, 54-55 (1984).

     We first note that Fruehauf never made any specific hearsay

objection to any part of Dodson’s testimony; therefore it cannot be

raised now because Fruehauf has failed to properly present this

issue for review.8   For that reason alone, the District Court’s

ruling on this issue can be affirmed.   However, if the issue had

been preserved, the ruling would still be affirmed because the

District Court did not abuse its discretion in admitting the

testimony.

     First, Fruehauf argues that the District Court erred in

admitting Dodson’s testimony because it was irrelevant.     Federal

Rule of Evidence 401 defines relevant evidence as any evidence

having “any tendency to make the existence of any fact that is of

consequence to the determination of the action more probable or

     8
      Fruehauf did file a motion in limine to exclude this
testimony, but the motion was overruled by the District Court.
“[A]n overruled motion in limine does not preserve error on
appeal.” Rojas v. Richardson, 703 F.2d 186, 189 (5th Cir. 1983).

                                12
less probable than it would be without the evidence.” Fed. R. Evid.

401.       Dodson,    Wall’s    immediate      replacement,      testified   as    to

Fruehauf’s compensation policy.                Fruehauf argues that because

Dodson was not employed by Fruehauf during the relevant time

period, his testimony as to Fruehauf’s compensation policy is

inadmissible; however, as Wall points out, Dodson was his immediate

replacement.       The fact that Dodson testified that he was not made

aware of any commission ceiling is relevant to whether or not

Fruehauf had, in fact, established such a policy.

         Second,     Fruehauf    argues     that      Dodson’s     testimony      was

inadmissible hearsay. The Federal Rules of Evidence define hearsay

as   a    statement,    other   than   one     made   by   the   declarant     while

testifying at a trial or hearing, offered in evidence to prove the

truth of the matter asserted.          Fed. R. Evid. 801.          Dodson did not

testify to any out of court statements, but only testified that, to

his knowledge, no sales commissions cap was in existence at the

time that he was hired. Furthermore, as Wall asserts, any possible

hearsay statements to which Dodson would have testified would have

been made to him by one of Fruehauf’s representatives within the

context of its employment relationship with Dodson. Therefore, any

statements that were hearsay statements would be excepted from

operation of the rule as an admission of               a party opponent.       Fed.

R. Evid. 801(d)(2)(D).

                                          13
                                V.

     Finally, Fruehauf argues that the District Court erred in its

interpretation of South Carolina law concerning the South Carolina

Payment of Wages Act, S.C. Code Ann. §§ 41-10-10, et seq., when it

awarded Wall treble damages and attorney’s fees.      The District

Court’s decision to award treble damages, attorney’s fees and costs

is reviewed for an abuse of discretion.   See Rice, 456 S.E.2d 381,

384 (S.C. 1995).

     Section 41-10-40 (C) of the South Carolina Payment of Wages

Act provides that employers “shall not withhold or divert any

portion of an employee’s wages unless...the employer has given

written notification to the employee of the amount and terms of the

 deductions...”9

     In case of any failure to pay wages due to an employee as
     required by Section 41-10-40 or 41-10-50 the employee may
     recover in a civil action an amount equal to three times
     the full amount of the unpaid wages, plus costs and
     reasonable attorney’s fees as the court may allow.

§ 41-10-80(C).

     The South Carolina Supreme Court has interpreted this treble

damages provision to mean that the decision to award the penalty of

treble damages is discretionary, and the penalty should not be

     9
      Furthermore, the Act requires that the employers “notify each
employee in writing at the time of hiring of ...the deductions
which will be made from [their] wages,” and “[T]he employer has the
option of giving written notification by posting the terms
conspicuously at or near the place of work.” § 41-10-30 (A). “Any
changes in these terms must be made in writing at least seven
calendar days before they become effective.” Id.

                                14
imposed “if there is a good faith dispute over wages allegedly

due.” Rice, 456 S.E.2d at 383.          Fruehauf asks us to extend the

requirement that there be a bona fide, good faith wage dispute to

require that Wall show that Fruehauf willfully failed to pay Wall’s

commissions or did so in bad faith in order to receive treble

damages.     We   disagree   and    find     that   the   trial   court’s

interpretation was not an abuse of discretion.

     South Carolina case law does not support Fruehauf’s position.

Fruehauf cites to a number of cases which discuss punitive damages

in general, but not treble damages under § 41-10-80(C). See, e.g.,

Carter v. R.C. Jordan Oil Co., 390 S.E. 2d 367, 368 (S.C. Ct. App.

1990).   Although South Carolina law requires that there be no good

faith dispute concerning the wages due in order for treble damages

to be awarded under § 41-10-80(C), the decision is in the complete

discretion of the trial court and no specific finding of bad faith

or willfulness is required.        Rice, 456 S.E.2d 381 (S.C. 1995)

(holding that the treble damages provision is not mandatory and

will not apply if the trial court determines that a good faith

dispute over the wages allegedly due exists); Futch v. McAllister

Towing of Georgetown, Inc., 518 S.E.2d 591 (S.C. 1999) (holding

that an employee who breaches the duty of loyalty to his employer

forfeits his right to compensation and creates a good faith dispute

over the payment of his wages by virtue of his bad behavior);

O’Neal v. Intermedical Hospital of South Carolina, 585 S.E.2d 526

                                   15
(S.C. Ct. App. 2003) (holding that the award of treble damages,

while a matter of discretion for the trial court, is inappropriate

in circumstances where there is a bona fide wage dispute).

      Here, the District Court specifically addressed the question

of whether a good faith dispute existed over the payment of Wall’s

wages and determined that based on all of the evidence presented,

no dispute existed.       The evidence considered by the trial court

included that: Fruehauf failed to put its employees on notice of

the   commission    cap   as    required     by   §   41-10-30(A);        Fruehauf

initially paid Wall the “disputed” commission and later deducted

the   “disputed”     amount      from    Wall’s       subsequent,    undisputed

commissions; Armstead, Wall’s General Manager, was not aware of any

$50,000 cap on commissions; Armstead, after research, determined

that the commission cap did not apply to Wall’s position; Wall’s

replacement, Dodson, was never informed of any commission cap.

      The trial court is in the best possible position to evaluate

the   credibility    of   all    the    evidence      before   it   and    make   a

determination over whether a good faith dispute existed as to the

treble damages.     The District Court carefully evaluated all of the

evidence before it and we find no abuse of discretion regarding its

interpretation of South Carolina law.

                                                                          AFFIRMED

                                        16