Evou v. All In
1 CA-CV 16-0240
| Ariz. Ct. App. | May 30, 2017Background
- Evou (Evou Fitness/Spectrum Fitness) operated Fitness Evolution gyms; Phu was a manager Jan 2013–Jan 2014 and received a regular salary plus commissions; DiNobile worked briefly (≈1 week) while discussing ownership and later opened All In nearby.
- Evou sued All In, Phu, DiNobile, alleging solicitation of employees/customers and misuse of an Evou-owned Facebook page; parties agreed on the record to injunctive terms (no solicitation, no disclosure of confidential info, transfer of Facebook page control).
- Appellants filed multiple counterclaims: declaratory relief re: unenforceability of Evou’s employee non-competes; DiNobile alleged breach of an ownership promise, misrepresentation, and wage claims under FLSA and the Arizona Wage Act; Phu alleged breach and unpaid overtime/commissions/benefits under the Wage Act and FLSA.
- Evou voluntarily dismissed its claims after obtaining discovery time and paid DiNobile his claimed wages; Evou and appellants each moved for summary judgment on remaining counterclaims.
- Trial court granted summary judgment for Evou on: (1) Phu’s FLSA overtime claim (found exempt employee and salary basis met); (2) DiNobile’s request for treble damages under the Arizona Wage Act (court declined treble). Court denied fee awards to either side. Appellants appealed; appellate court affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Phu was entitled to FLSA overtime | Phu: he was not a salaried exempt employee; pay was non-employee compensation or subject to deductions (so not salary-basis) | Evou: Phu performed exempt duties, was paid above regulatory minimum on a salary basis, and there was no evidence of actual improper deductions or a policy creating likely deductions | Affirmed: Phu was exempt; salary-basis and pay level satisfied; no evidence of improper deductions or policy meeting Auer standard |
| Whether DiNobile was entitled to treble damages under the Arizona Wage Act | DiNobile: Evou failed to pay wages and treble damages are mandatory under A.R.S. §23-355(A) | Evou: paid wages before decision; equitable factors negate trebling given circumstances (ownership discussions, no timely demand, resolved without prolonging wage dispute) | Affirmed: trial court did not abuse discretion declining treble damages based on nature of dispute and conduct of parties |
| Whether appellants were entitled to attorney fees under A.R.S. §12-341.01 | Appellants: they were prevailing parties because Evou voluntarily dismissed claims and appellants obtained injunctive stipulations | Evou: litigation outcome was mixed; both sides had wins and losses; no clear prevailing party | Affirmed: trial court reasonably declined fees; record shows mixed results and no single prevailing party |
| Whether appellate sanctions under ARCAP 25 were warranted | Evou: appeal was frivolous and intended to extract fees; seeks sanctions | Appellants: claims presented nonfrivolous legal issues despite aggressive litigation tactics | Denied: appellate court declines sanctions; cannot find appeal wholly frivolous on record |
Key Cases Cited
- Dreamland Villa Cmty. Club, Inc. v. Raimey, 224 Ariz. 42 (App. 2010) (standard of review for summary judgment)
- Keller v. Miri Microsystems LLC, 781 F.3d 799 (6th Cir.) (only employees are entitled to FLSA overtime; employer classification not dispositive)
- Auer v. Robbins, 519 U.S. 452 (1997) (salary-basis deduction doctrine and standard for salary-basis challenges)
- Baden-Winterwood v. Life Time Fitness, Inc., 566 F.3d 618 (6th Cir.) (discussing DOL regulatory revisions post-Auer regarding actual practice of improper deductions)
- Colson v. Avnet, Inc., 687 F. Supp. 2d 914 (D. Ariz.) (analysis of FLSA exemptions and duties test)
- Crum v. Maricopa Cty, 190 Ariz. 512 (App. 1997) (standard of review for treble-damages refusals under discretion)
- D’Amico v. Structural I Co., 229 Ariz. 262 (App. 2012) (factors for awarding treble damages under Arizona Wage Act)
- Lee v. ING Inv. Mgmt., LLC, 240 Ariz. 158 (App. 2016) (trial court discretion in determining prevailing party for fee awards)
- Real v. Driscoll Strawberry Assocs., Inc., 603 F.2d 748 (9th Cir.) (common-law employee/independent-contractor labels not dispositive for FLSA coverage)