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Lambert v. Ackerly

October 01, 1998


D.C. No. CV-95-00039-BJR

Before: Melvin Brunetti, Pamela Ann Rymer, and Andrew J. Kleinfeld, Circuit Judges.

The opinion of the court was delivered by: Brunetti, Circuit Judge


Appeals from the United States District Court for the Western District of Washington Barbara J. Rothstein, District Judge, Presiding

Argued and Submitted February 6, 1998--Seattle, Washington

Judge Brunetti

COUNSEL Andrew L. Frey, Mayer, Brown & Platt, Washington, D.C., for the defendants-appellants-cross-appellees. Spencer Hall, Jr. and John W. Widell, Mundt, MacGregor, Happel, Falconer, Zulauf and Hall, Seattle, Washington, for the plaintiffs-appellees-cross-appellants.

Defendants appeal a verdict in favor of plaintiffs on plaintiffs' claims that they were discharged by defendants in retaliation for complaining about overtime compensation, in violation of the federal Fair Labor Standards Act (FLSA), 29 U.S.C. S 215(a)(3), and in violation of the public policy of the state of Washington. Plaintiffs, six former ticket sales account executives for the Seattle SuperSonics professional basketball team, were awarded compensatory and punitive damages as a result of the jury's finding that defendants, the Seattle SuperSonics, Inc., Full House Sports & Entertainment Inc., and Barry and William Ackerly, unlawfully discharged plaintiffs in retaliation for their overtime complaints.

The district court denied defendants' motion for judgment as a matter of law, but remitted plaintiffs' punitive damages award. The district court also awarded plaintiffs attorneys' fees. The defendants now appeal both the denial of their motion for judgment as a matter of law and the attorneys' fee award. Plaintiffs cross-appeal with respect to the issue of attorneys' fees.


Plaintiffs Esther Ackley, Steve Belling, Pat Cooke, Laura Lambert, Letitia Selk, and Chuck Viltz were all employed by Full House Sports & Entertainment, Inc. (Full House) as ticket sales account executives (AEs) for the Seattle Super-Sonics, a team in the National Basketball Association. The corporate defendants are the Seattle SuperSonics, Inc. (the Sonics) (formerly known as SSI Sports, Inc.) and Full House.*fn1 The individual defendants are Barry Ackerly and his son William Ackerly, corporate officers and directors of the corporate defendants.

As AEs, plaintiffs solicited orders for Sonics season tickets, multi-game packages, and group sales. They also staffed a season ticket information booth at Sonics basketball games. Beginning in 1991, AEs were paid a base salary of $13,000, with most of their compensation based on commissions. Also in 1991, the Sonics began paying AEs a $2,000 allowance for overtime worked at basketball games and other events. Any employee who exhausted this overtime was required to stop working or to take compensatory time. The Sonics paid this $2000 allowance in semi-monthly installments of $166.67 during the basketball season, regardless of overtime actually worked. By December of the 1993-94 season, with Sonics tickets largely sold out, the AEs' workweek was cut back to 20 hours plus game nights, and the automatic overtime payments were discontinued.

In March 1994, John Dresel, Sonics Executive Vice President, authorized Laura Kussick, Sonics Senior Vice President of Sales, to restructure ticket sales operations. Kussick concluded that the AEs, who were earning $60,000-$90,000 per year, were overpaid. Thereafter, Kussick and Ticket Sales Director Bob Boustead discussed a plan to alter the AEs' compensation structure with plaintiffs Lambert and Viltz, who had been chosen by the AEs to represent the group in Discussions with Sonics management about compensation. A new compensation system was put into effect in June 1994, and in August 1994, Boustead instituted a fixed 8:30 a.m. to 5:30 p.m. workday for the AEs.

Meanwhile, after realizing that she had not been paid the full $2000 in overtime compensation for the 1993-94 season, Lambert left a note with Sonics Controller Brian Dixon on May 2, 1994, requesting a meeting. Lambert also raised the overtime issue with Boustead that day. On May 4, 1994, Lambert phoned the U.S. Department of Labor (DOL) to ask for information regarding overtime laws. Following that phone conversation, Lambert again spoke with Boustead, who said that overtime compensation was a "dead issue."

At a May 16, 1994 ticket sales department meeting, the AEs complained about the lack of overtime compensation, and were told by Boustead that they would receive no overtime the following year. Lambert then called the DOL again and asked for documentation regarding overtime requirements. Lambert presented this information to Dixon and to Sonics Payroll Manager Eddie Roldan on May 20, 1994. Dixon allegedly told Lambert that he knew the Sonics were breaking the law, but that William Ackerly did not care, and would not pay overtime. According to Lambert, Dixon threatened to fire her if she continued to pursue the overtime issue.

On June 17, 1994, Lambert's attorneys sent Barry Ackerly a letter requesting that the Sonics compensate Lambert and the other employees for overtime, in accordance with Washington law. Then, on July 6, 1994, Lambert delivered, but did not file, a complaint for unpaid overtime on her own behalf, naming Barry and William Ackerly and the Sonics as liable parties. On October 6, 1994 the Sonics settled Lambert's claim in exchange for a full release. At the same time, the Sonics paid other employees, including several of the present plaintiffs, amounts due them for overtime.

Less than a week after settling the overtime claims, on October 12, 1994, Dresel wrote a memo to William Ackerly informing Ackerly that, in anticipation of a mid-season decline in AE work, Dresel was planning to layoff the entire ticketing staff by November 30, 1994. Near the end of October 1994, the Sonics required each AE except Lambert to sign a memorandum stating that he or she had been paid overtime compensation for October 1992 through October 1994, and that he or she was not owed any further compensation.

On October 17, 1994 Full House was organized to run the Sonics business organization, and Dresel was named as President. Full House executives decided to restructure the ticket sales staff and to implement a "fluctuating workweek," whereby anyone working more than eight hours in one day had to take corresponding ...

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