Abigail Ransom v. M. Patel Enterprises, Inc
734 F.3d 377
| 5th Cir. | 2013Background
- Plaintiffs, Abigail Ransom and fifteen Party City executive managers, alleged FLSA misclassification as exempt and entitlement to overtime.
- They were paid a fixed weekly salary, with hours fluctuating week to week, leading to disputes over overtime calculation.
- The district court denied summary judgment on method issues and later calculated damages using a 55-hour divisor per a magistrate judge’s method (EZPawn-inspired).
- The magistrate judge rejected the fluctuating workweek method (FWW) and devised a novel damage formula, underpaying for hours over 40.
- Upon judgment, the district court awarded unpaid overtime, unpaid minimum wages, liquidated damages, and attorneys’ fees based on that calculation.
- Both sides appealed; the Fifth Circuit reversed, vacated, and remanded for recalculation under proper FWW methodology, with possible adjustment of liquidated damages and fees.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether FWW applies to EMs paid fixed salary | Ransom argues FWW is proper due to fluctuating hours and fixed salary. | Party City argues 55-hour fixed-week assumption controls; FWW not applicable. | FWW applies; 55-hour assumption rejected. |
| How to compute the regular rate when salary covers fluctuating hours | Regular rate should be salary divided by hours actually worked weekly. | Regular rate should be salary divided by a fixed 55 hours per week. | Regular rate must be salary divided by all hours actually worked; 55-hour divisor is erroneous. |
| Proper method to calculate overtime under FWW | Use FWW: 1.5x regular rate for all hours over 40 in a week. | Use a bespoke formula limiting overtime to hours exceeding 40 up to 55 and beyond, undercutting FWW. | FWW must be applied to all hours over 40; bespoke formula rejected. |
| Impact of possible minimum-wage issues on the method | If FWW yields less than minimum wage in any week, minimum wage governs. | Min wage issue is not formatting error; may adjust on remand. | If FWW results below minimum wage, use minimum wage as regular rate for that weeks’ unpaid hours. |
| Liquidated damages and attorneys’ fees remand | Damages recalculation may change liquidated damages and fees; remand appropriate. | Recalculate after damages; keep or adjust as necessary. | Vacate liquidated damages and fees; remand for recalculation consistent with new damages. |
Key Cases Cited
- Overnight Motor Transp. Co. v. Missel, 316 U.S. 572 ( Supreme Court 1942) (regular rate equals wage divided by hours)
- Blackmon v. Brookshire Grocery Co., 835 F.2d 1135 (5th Cir. 1988) (FWW method: divide salary by hours and apply 1.5x to hours over 40)
- Urnikis-Negro v. Am. Family Prop. Servs., 616 F.3d 665 (7th Cir. 2010) (supports applying FWW where salary covers fluctuating hours)
- Missel v. Overnight Transp. Co., 316 U.S. 572 (supreme court 1942) (reiterates regular rate = wage divided by hours; fluctuating-wage contexts)