Court Opinion

ID: 3020560
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:23:05.640278+00
Date Added: 2024-06-11T15:03:39.961497
License: Public Domain

United States Court of Appeals
                           FOR THE EIGHTH CIRCUIT

                                ___________

                                No. 97-2647
                                ___________

Lane A. Gaby; Lisa J. Gaby;          *
                                     *
      Plaintiffs\Appellants,         *
                                     * Appeal from the United States
                                     * District Court for the
     v.                              * District of Nebraska.
                                     *
Omaha Home for Boys, a               *
non-profit corporation,              *
                                     *
     Defendant\Appellee.             *
                                     *
                                     *
                                     *
James Wiley; Alvera L. Wiley;        *
                                     *
     Plaintiffs/Appellants,          *
                                     *
     v.                              *
                                     *
Omaha Home for Boys, a               *
non-profit corporation,              *
                                     *
     Defendant\Appellee.             *
                                     *
                                     *
                                     *
Robert Cork; Kathy Cork;             *
                                     *
     Plaintiffs\Appellants,          *
                                     *
     v.                              *
                                     *
Omaha Home for Boys, a               *
non-profit corporation,              *
                                     *
     Defendant\Appellee.             *
                                     *
                                     *
Joe D. Clapp; Gail A. Clapp;           *
                                       *
     Plaintiffs\Appellants,            *
                                       *
     v.                                *
                                       *
Omaha Home for Boys, a                 *
non-profit corporation,                *
                                       *
     Defendant\Appellee.               *
                                       *
                                       *
                                       *
Boyd Eveland; Dianna Eveland;          *
                                       *
     Plaintiffs\Appellants,            *
                                       *
     v.                                *
                                       *
Omaha Home for Boys, a                 *
non-profit corporation,                *
                                       *
     Defendant\Appellee.               *
                                       *
                                       *
                                       *
Jerry L. Hall;Beverly J. Hall;         *
                                       *
     Plaintiffs\Appellants,            *
                                       *
     v.                                *
                                       *
Omaha Home for Boys, a                 *
non-profit corporation,                *
                                       *
     Defendant\Appellee.               *

                                   ___________

                   Submitted:      January 16, 1998

                          Filed:   April 13, 1998
                                   ___________

                                      -2-
Before RICHARD S. ARNOLD, Chief Judge, MORRIS SHEPPARD ARNOLD, Circuit
     Judge and SACHS,1 District Judge.

                                 ___________

SACHS, District Judge.

     Appellants, twelve individuals who were previously employed as "house
parents" by the Omaha Home for Boys, appeal from an adverse decision of the
United States District Court for the District of Nebraska.2      Appellants
alleged a violation of the Fair Labor Standards Act ("the Act"), 29 U.S.C.
§ 201 et seq.   After a bench trial, the district court found in favor of
the Omaha Home for Boys ("the Home").

                                     I.
     Lane A. Gaby, his wife, and five other couples were employed by the
Home, a residential-type institution in which eight to twelve boys live in
a unit with a set of house parents.        The arrangement is known as "The
Family Home Program."    Sound patterns of behavior are taught and exempli-
fied by the house parents who live with, monitor and provide guidance for
the youths.

     In early 1992, the Home presented eight of the appellants with an
employment agreement.    The remaining four appellants were hired later in
1992 and were also presented with a similar form of employment agreement.
The central theme of the contract was set forth in the following paragraph
taken from page two of the agreement:

     For purposes of the Fair Labor Standards Act, particularly
     Section 785.23 [sic], issued January 11, 1961, and amended in
     October 1, 1970, the parties agree that the usual work week
     which takes place within six (6) consecutive days, is 60 hours
     which each of the House Parents

     1
      The Honorable Howard F. Sachs, United States District Judge
for the Western District of Missouri, sitting by designation.
         2
       The Honorable Thomas M. Shanahan, United States District
Judge for the District of Nebraska.

                                     -3-
        would work. This takes into consideration the personal time
        available to the House Parents, sleep time and other time when
        the House Parents are not involved in working with the youth
        who are assigned to their residences.

        The normal work week for house parents consisted of six days at work
and three days off.    During the six days at work, the house parents lived
and ate all of their meals with the boys in the unit.                The agreement
provided for overtime payments for what was estimated to be the time when
house parents worked over forty hours during the six-day work week.                In
effect, the house parents thus received forty hours of regular pay and
twenty hours of time and a half pay during a normal week.           Active work for
ten hours each day was assumed to be required, on the average, for each of
the two house parents.      The agreement also provided in paragraph 3 that "in
the event it would be necessary to work substantially more than those hours
in any particular work week because of an emergency or the unavailability
of Alternative House Parents," overtime would again be paid.           Overtime pay
was in fact allowed for each such day, again based on an assumed ten hours
of work activity.

        Each of the plaintiffs brought suit under 29 U.S.C. § 216(b) which
authorizes private litigation for enforcement of the Act.            The cases were
consolidated.     After a four day bench trial, the district judge found in
favor of the Home.

                                         II.
        The Fair Labor Standards Act establishes a maximum number of work
hours    that   employees   may   work   without   receiving    overtime   pay,   and
"employers and employees may not, in general, make agreements to pay and
receive less pay than the statute provides."            Rudolph v. Metropolitan
Airports Comm'n, 103 F.3d 677, 680 (8th Cir. 1996) (citing Barrentine v.
Arkansas-Best Freight Sys., 450 U.S. 728 (1981)).              An exception to this
general rule is set forth in the following regulation:

                                         -4-
     An employee who resides on his employer's premises on a
     permanent basis or for extended periods of time is not consid-
     ered as working all the time he is on the premises.       Ordi-
     narily, he may engage in normal private pursuits and thus have
     enough time for eating, sleeping, entertaining, and other
     periods of complete freedom from all duties when he may leave
     the premises for purposes of his own.       It is, of course,
     difficult to determine the exact hours worked under these
     circumstances and any reasonable agreement of the parties which
     takes into consideration all of the pertinent facts will be
     accepted. This rule would apply, for example, to the pumper of
     a stripper well who resides on the premises of his employer and
     also to a telephone operator who has the switchboard in her own
     home.

29 C.F.R. § 785.23.

     The findings of the district court are reviewed under a clear error
standard.   Estate of Davis by Ostenfeld v. Delo, 115 F.3d 1388, 1393 (8th
Cir. 1997).    "We will overturn a finding of fact only if it is not
supported by substantial evidence in the record, if the finding is based
on an erroneous view of the law, or if we are left with the definite and
firm conviction that an error has been made."          Id. (citing Sawheny v.
Pioneer Hi-Bred Int'l, Inc., 93 F.3d 1401, 1407-8 (8th Cir. 1996)).

                                      III.
     Appellants    raise    several   issues   for   our   review.   Primarily,
appellants argue that the agreement form is unreasonable under the Fair
Labor Standards Act in that considerably more than a ten-hour day was
required for their work, and the agreements were coercively obtained.
Next, appellants contend that the district court erred in its findings
regarding overtime compensation for a seventh workday, and in its failure
to apply the portion of the agreement allegedly requiring overtime pay for
all overtime work.

                      A.   Reasonableness under the Act
     The appellants contend that the agreement is unreasonable under
29 C.F.R. § 785.23.        This Court has recently addressed a comparable
situation in Rudolph v. Metropolitan Airports Comm'n,

                                      -5-
103 F.3d 677 (8th Cir. 1996).      In Rudolph, we were called upon to review
an application of § 785.23 in the context of off-duty police officers
caring for dogs from the department's canine unit.       Id. at 678-79.    As will
be noted below, portions of the Rudolph analysis apply in this case, and
favor the Home.

      Section 785.23 envisions some jobs in which the exact numbers of
hours worked are difficult to determine due to the employee residing on his
employer's premises.     See 29 C.F.R. § 785.23; Rudolph, 103 F.3d at 681.
The relationship between the house parents and the Home is exactly the type
of employment dealt with in § 785.23.            The house parents lived at the
facility for extended periods of time.           Testimony was presented to the
trial court that, with two house parents, one person was often sufficient
to respond to the occasional demand or problem.          This allowed the other
parent to "engage in normal private pursuits."        29 C.F.R. § 785.23.      Thus
it   was possible to "cover" well over ten hours of activity a day.
Moreover, and most significantly, demands for attention were intermittent,
allowing private activities frequently and for extended periods during a
24-hour day.

      The district court concluded that the contract was reasonable under
§ 785.23.    The judge heard substantial testimony that the estimated time
to complete the work of house parent was sixty hours per six-day week.           He
received    evidence   detailing   the    time   requirements   of   various   work
activities and of the amount of "down time" or personal time available.3
He was not required to accept testimony from every potential witness,
especially when the majority of the witnesses had an interest in the
outcome of the

      3
      Plaintiffs tend to concentrate criticism of estimates on the
time commitments necessary when the youths were not in school, par-
ticularly during the summer months. Defendant presented testimony
that the number of boys in the residence generally decreased during
the summer, that outside staff availability increased, and that
other factors, such as later sleeping habits, tended to counter the
impact of closing schools. In any event, the year-round average of
ten hours of active daily work for each of the two house parents
did not preclude a longer work day during certain days and months.

                                         -6-
litigation.     United States v. Fairchild, 122 F.3d 605, 613 (8th Cir. 1997),
cert. denied,           U.S.     , 118 S. Ct. 1086 (1998).        We have reviewed the
transcript and conclude that the testimony of the defense witnesses was
knowledgeable, plausible, and in some respects more specific and arguably
more realistic than the testimony presented by plaintiffs.

        It is worth observing that this Court has previously considered the
overtime claims of house parents in a different context, with mixed
results.      In Hultgren v. County of Lancaster, Nebraska, 913 F.2d 498 (8th
Cir. 1990), the Court affirmed a trial court ruling that "sleep time" could
not be subtracted from compensable time of overnight relief workers at
residential facilities for the mentally retarded.           In Hultgren there was
proof    of   serious   client   behavioral    problems   that    rarely   allowed   an
uninterrupted night's sleep.          There were also certain deficiencies in
sleeping accommodations.       In Bouchard v. Regional Governing Board, 939 F.2d
1323 (8th Cir. 1992), review of similar contentions resulted in appellate
disallowance of all but one of the "sleep time" claims.              Appellants here
acknowledge in their brief on appeal that they do not seek "payment for
their sleep time, and specifically excluded sleep time from their testimony
concerning the number of hours for which they are seeking overtime pay."
In other words, we do not have a claim alleging a right to 24 hours of pay
during each of the "on duty" days of service.             This concession is well
advised, given the evidence here.       Compare, Beaston v. Scotland School for
Veterans' Children, 693 F. Supp. 234 (M.D. Pa. 1988), aff'd, 869 F.2d 587
(3rd Cir. 1989), a case favoring the employer, cited without disapproval
in Hultgren.

        Appellants further claim that the agreements are voidable under an
economic duress theory.          Under this theory of contract law, the house
parents argue that they should be returned to the old salary system, which
they found satisfactory.         Testimony was heard at trial that some of the
employees not only disagreed with the time estimates in the agreement but
expressed that disagreement

                                         -7-
to administrators at the Home.   Appellants argue that the position of house
parent left them in a particularly vulnerable position.         Many of the
appellants did not maintain a residence outside of the Home.      Given the
reality that the appellants had no other residence, they argue that the
employment agreements were forced upon them and left them without any
bargaining position.   The Home argues, however, that the appellants failed
to establish the elements of economic duress.

     Although federal law is in question, it is sufficient to examine
Nebraska state law, as the parties do, for the standard concepts determin-
ing if a contract was entered into under economic duress.       For present
purposes we assume that duress would be fatal to an employer's contention
that its agreement with employees is a "reasonable agreement of the parties
. . ." as required by the regulation in question.   The appellants cite two
Nebraska cases.   In First Data Resources, Inc. v. Omaha Steaks Intern.,
Inc., 307 N.W.2d 790 (Neb. 1981), the Nebraska Supreme Court held that "in
order for an agreement to be voidable by reason of economic duress, it must
not only have been obtained by means of pressure brought to bear, but the
resulting agreement must be unjust, unconscionable, or illegal." 307
N.W.2d at 793.     The Nebraska Supreme Court further held that "'[t]o
constitute duress, there must be an application of such pressure or
constraint as compels a man to go against his will, and takes away his free
agency, destroying the power of refusing to comply with the unjust demands
of another.'"   Haumont v. Security State Bank, 374 N.W.2d 2, 6 (Neb. 1985)
(quoting Buhrman v. International Harvester Co., 150 N.W.2d 220, 223 (Neb.
1967)).   A central issue in economic duress cases is whether the party
applying pressure is exercising a right that is legitimate (i.e. raising
prices, First Data Resources, Inc., 307 N.W.2d at 792), or illegitimate
(threatening criminal prosecution, Haumont, 374 N.W.2d at 6).   Nebraska law
on this subject appears to be conventional.   Compare, Mirax Chemical Prods.
Corp. v. First Interstate Commercial Corp., 950 F.2d 566, 570 (8th Cir.
1991) (Wisconsin law).

                                    -8-
       In this case, the stated purpose of the agreement was to comply with
the Fair Labor Standards Act.          There was evidence that the Home was
uncertain that the previous annual salary arrangement complied with the
Act.   In signing the new contract, appellants did not experience a decrease
in compensation4 and were not threatened with any illegal or illegitimate
pressure.    Several of the house parents signed the agreement on numerous
occasions.    The district court found that there was no economic duress.
There was no error in that appraisal of the circumstances.

                            B.   Overtime Compensation
       The second point raised by the appellants concerns the construction
of the overtime provisions.        The trial court heard evidence that house
parents were paid overtime when they were required to work past the sixth
day because of some emergency or unavailability of replacements.          Although
some extra days could have required more than ten hours of work, some
seventh day activity may have required less.            As previously stated, ten
hours of active but intermittent work was a reasonable estimate, contractu-
ally agreed to by the parties.

       Appellants   claim   that   paragraph   3   of   the   agreement5 should   be
construed to mean that the house parents should be compensated with
overtime wages on every day they worked in excess of ten hours and should
be compensated for a full ten-hour day even when they may have worked less
than ten hours.     This contention is inherently unreasonable, given the
purpose of the regulation and the agree

       4
      Our understanding is that one couple's initial joint salary
of $24,000 (plus room and board) was increased under the new system
to produce income exceeding $35,000 in 1993 and over $38,000 in
1994. Fringe benefits were calculated at over $7,000.
       5
      Paragraph 3 provides in part that "both parties agree that in
the event it would be necessary to work substantially more than
those hours, . . . then in that event, when hours are worked over
the base number, overtime shall be paid at the overtime rate agreed
to heretofore." This language refers to extra days of work, as the
full text of the sentence, excerpted earlier, clearly shows.

                                       -9-
ment, as discussed in Rudolph, 103 F.3d at 681.   The regulation authorizes
reasonable agreements that will help "eliminate complicated, repetitious,
and hard-to-resolve disputes about exactly how much" work activity is
required in a residential setting.

     The contract was reasonably construed when the district court found
that the clear purpose of the agreement was to make estimates of reasonable
time commitments of the job.   Just because the Home proposed the language
of the agreement, the district court was not required to construe the terms
unreasonably to satisfy appellants' claims.

     As stated in appellants' brief, the Home would compensate the house
parents for a full ten hours "without any regard for the actual number of
hours."   The trial court did not commit clear error by not ordering the
Home to compensate the house parents on a time-clock or time-sheet basis
when extra days were worked under the "emergency" or "unavailability"
provisions.   Although the agreements referred to sixty hours of work in a
six-day week, and did not expressly refer to ten-hour days, that was
clearly contemplated by the agreements and understood by the parties.
There was no evidence that the parties were in controversy over this point
until they consulted counsel and filed suit.      The practical construction
given to the agreement by the Home and acquiesced in by plaintiffs was both
sensible and binding.

     The Home applied the overtime provisions in a reasonable manner, and
the district court did not err in concluding that the requisite overtime
compensation had been paid.6

      6
       Contrary to plaintiffs' contention, discussion between the
district judge and counsel, as recorded in the transcript, shows
that the claim for overtime during an extended work week was not
overlooked.    The somewhat cryptic statements in the opinion
regarding overtime compensation for extra days of work are adequate
for present purposes.

                                   -10-
                                     IV.
     The Omaha Home for Boys and the house parents made a reasonable
agreement as to the amount of time normally required to perform the work
of the house parents.     Substantial evidence supports the trial judge's
         7
findings.    He was entitled to conclude that there was neither coercion nor
misapplication of the employment contracts.    The decision of the district
court is affirmed.

     A true copy.

             Attest:

                  CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT

     7
      We do not suggest, however, that this case serves to legiti-
mize a standard ten-hour day theory for house-parent work.
Different circumstances may dictate different results, particularly
in cases where, unlike the present one, claimants prepare and
present credible illustrative time sheets showing segments of work
activity by each house parent on typical days.      In the present
case, although neither side tried to justify its position as
lawyers routinely do in seeking fee allowances, the district court
could conclude that the defense witnesses offered the most specific
and convincing estimates.

                                    -11-