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American Restaurant Group v. Clark (2/10/95), 889 P 2d 595
NOTICE: This opinion is subject to formal correction
before publication in the Pacific Reporter. Readers
are requested to bring errors to the attention of the
Clerk of the Appellate Courts, 303 K Street, Anchorage,
Alaska 99501; (907) 264-0607.
THE SUPREME COURT OF THE STATE OF ALASKA
AMERICAN RESTAURANT GROUP, )
d/b/a CATTLE COMPANY ) Supreme Court No. S-5545
) Superior Court No.
Appellant, ) 3AN-89-7722 CI
) (Includes consolidated case
v. ) No. 3AN-89-8569 CI)
STEVEN L. CLARK and ROBERT ) O P I N I O N
) [No. 4163 - February 10, 1995]
Appeal from the Superior Court of the
State of Alaska, Third Judicial District,
Mark C. Rowland, Judge.
Appearances: Douglas B. Baily and
Kirsten Tinglum, Ashburn & Mason, Anchorage,
for Appellant. Glen D. Mark, Portland,
Oregon, for Appellees.
Before: Moore, Chief Justice,
Rabinowitz, Compton, Justices, and Bryner,
Justice pro tem.*
This appeal involves the propriety of the superior
court's grants of partial summary judgment in favor of Steven
Clark and Robert Lilley on their respective claims for overtime
pay against their former employer American Restaurant Group d/b/a
Cattle Company Restaurant. The primary question presented for
resolution in this appeal is whether a genuine issue of material
fact exists as to whether or not Clark and Lilley, as bona fide
executives, were exempt from the overtime pay provisions of the
Alaska Wage and Hour Act. Because there was sufficient evidence
in the record before the superior court to create a material
factual dispute, we hold that summary judgment was improper and
we therefore reverse.
I. FACTS AND PROCEEDINGS
Steven Clark formerly held the position of general
manager of the Cattle Company Restaurant in Anchorage which is
owned by the American Restaurant Group (ARG). Robert Lilley
formerly held the position of assistant manager of the same
restaurant. Clark and Lilley each received substantial salaries
as well as incentive bonuses. It is undisputed that Clark and
Lilley frequently worked more than forty hours per week, for
which they were not paid overtime wages beyond their salaries and
After leaving their employment with ARG, Clark and
Lilley filed separate law suits against ARG for overtime pay,
liquidated damages, interest, and attorney's fees under the
Alaska Wage and Hour Act (Act), AS 23.10.050-.150, and the
Federal Fair Labor Standards Act, 29 U.S.C. 201-219 (1988).
Clark's and Lilley's actions were subsequently consolidated and
the superior court thereafter entered partial summary judgment in
favor of both Clark and Lilley on the basis that they were not
bona fide executives during their employment with ARG and
therefore were covered by the overtime pay provisions of the
Alaska Wage and Hour Act (i.e., that ARG was obligated to pay
Clark and Lilley overtime compensation under the Act).1 This
Alaska Statute 23.10.060 governs payment of overtime.
Alaska Statute 23.10.055 provides, in part, that AS 23.10.060
does not apply to
(9) an individual employed in a bona
fide executive, administrative or
professional capacity . . . .
The applicable regulations in force throughout the period of
Clark's and Lilley's employment with ARG defined an "executive
employee"as an employee
(A) whose primary duty consists of
the management of the enterprise in which he
is employed or of a customarily recognized
branch, department, or subdivision of the
(B) who customarily and regularly
directs the work of two or more other
(C) who has the authority to hire
or fire or effect any other change of status
of other employees or whose suggestions or
recommendations regarding these kinds of
changes are given particular weight;
(D) who customarily and regularly
exercises discretionary authority;
(E) who does not devote more than
20 percent of his weekly hours to activities
which are not directly and closely related to
the work described in this paragraph or
paragraphs (1) or (11) of this section; and
(F) who is compensated on a salary
basis . . . .
Former 8 Alaska Administrative Code (AAC) 15.910(a)(7) (1991)
ARG claims that the record demonstrates the existence
of genuine issues of material fact as to whether Clark and Lilley
were bona fide "executive employees,"exempt from the overtime
pay provision of the Act. Thus, the dispositive question in this
appeal is whether the record discloses the existence of a genuine
issue of material fact as to whether Clark and Lilley devoted
more than twenty percent of their weekly activities to performing
tasks which were not "directly and closely related" to their
executive (managerial) duties.
We conclude that the superior court erred in granting
partial summary judgment in favor of both Clark and Lilley for
two reasons. First, review of the record shows that a genuine
issue of material fact exists as to the percentages of time Clark
and Lilley spent performing tasks which were not directly and
closely related to their executive-managerial duties. Second, we
further conclude that whether the performance by Clark and Lilley
of tasks which were otherwise performed by hourly employees were
directly and closely related to Clark's and Lilley's management
duties necessarily presents factual questions which, on this
record, are not appropriately resolved by summary judgment.
Clark and Lilley claim that they spent more than forty
percent of their weekly work hours performing duties not directly
and closely related to their management duties. They based this
claim upon their performance of "many of the exact same tasks
. . . performed by the hourly employees they supervised."4 In
contrast, ARG's District Manager, Ron Englund, in his deposition
testimony stated that ARG managers such as Clark and Lilley spent
less than ten percent of their time "performing tasks that are
performed by the hourly employees[.]"
We construe this evidence in the light most favorable
to the non-movant, ARG. Wright v. State, 824 P.2d 718, 720
(Alaska 1992). Because Clark's and Lilley's claims for overtime
rely entirely upon their performance of tasks otherwise performed
by hourly employees, we hold that Englund's deposition testimony
creates a genuine issue of material fact as to the percentage of
their work week that Clark and Lilley spent performing tasks
which were not directly and closely related to their executive
duties at ARG.
Clark and Lilley assert that even though the relevant
testimony by Englund is part of the record, it should not be
considered because it is found only in memoranda submitted by
Clark and Lilley. We disagree, and conclude that Englund's
deposition testimony should be considered in determining whether
a genuine issue of material fact exists.
Alaska Civil Rule 56(c) states, in part:
Judgment shall be rendered forthwith if
the pleadings, depositions, answers to
interrogatories, and admissions on file,
together with the affidavits, show that there
is no genuine issue as to any material fact
and that any party is entitled to judgment as
a matter of law. . . .
Under Rule 56, even if ARG failed to bring the relevant
deposition testimony of Englund to the superior court's
particular attention, it did not relieve the superior court of
its obligation to examine the record before determining that no
genuine issue of material fact existed. As we noted in a case in
which the non-movant had neither filed a statement of genuine
issues of material fact nor raised the disputed factual issue in
its memorandum in opposition to the summary judgment:
Rule 56(c) is merely permissive. It
remains the duty of the trial court to
determine whether the record presents any
factual issues which would preclude the entry
of summary judgment as a matter of law. Here
the trial court record included affidavits
which clearly showed the factual dispute.
Since the factual dispute was fairly
presented to the trial court, the issue may
be raised on appeal.
Drake v. Hosley, 713 P.2d 1203, 1206 n.2 (Alaska 1986) (citations
omitted); see also Bowers v. Alaska State Employees Fed. Credit
Union, 670 P.2d 1145, 1146-47 & n.3 (Alaska 1983); Jennings v.
State, 566 P.2d 1304, 1310 (Alaska 1977).
Therefore, the superior court was obliged to consider
Englund's testimony that managers such as Clark and Lilley spent
less than ten percent of their time performing tasks otherwise
performed by hourly employees. Viewing this testimony in the
light most favorable to ARG, a genuine issue of material fact
exists as to whether Clark and Lilley spent more than twenty
percent of their time on duties not directly and closely related
to management of the restaurant.
Further, we conclude that entry of the partial summary
judgments was improper on an additional ground. There is a
genuine issue of material fact as to whether Clark and Lilley
were "professional employees"as defined in 8 AAC 15.910(a)(11).
See Dayhoff v. Temsco Helicopters, Inc., 848 P.2d 1367 (Alaska
1993).5 In Dayhoff, a helicopter pilot brought a similar action
for overtime wages against his employer. Id. at 1368. The
employer argued that the pilot was exempt from the Act, because
he was a "professional employee." We reversed the superior
court's grant of summary judgment in favor of the employer,
[t]he applicability of exemptions
[under the Act] are questions of fact to be
determined considering the individual's
duties and other qualifications, and not upon
how the employer classified the employee. A
trial court must make a finding of fact in
determining an employee's status.
Id. at 1372 (emphasis added) (citations omitted). In this case,
ARG claims that the podium work which Clark and Lilley heavily
rely on as non-exempt work was closely and directly related to
Clark and Lilley's respective management duties.6 Whether such
activities were or were not closely and directly related to
Clark's and Lilley's management duties is a question of fact, and
therefore as in Dayhoff, 848 P.2d at 1372, entry of partial
summary judgments was inappropriate. See also Donovan v. Burger
King Corp., 672 F.2d 221 (1st Cir. 1982) (reviewing trial court's
factual findings regarding whether restaurant assistant manager
spent more than forty percent of time on activities not closely
related to management duties under the Federal Fair Labor
Standards Act for clear error); Richter v. Barrett, 173 F.2d 320,
324 (3d Cir. 1949) (holding that whether employee was exempt from
Federal Fair Labor Standards Act as an executive employee was a
question of fact); Marshall v. Burger King Corp., 504 F. Supp.
404, 410-11 (E.D.N.Y. 1980) (entering findings after trial
regarding whether performing same work as hourly employees was
directly and closely related to executive functions under the
Federal Fair Labor Standards Act), amended by 509 F. Supp. 353
(E.D.N.Y. 1981), aff'd sub nom. Donovan v. Burger King Corp., 675
F.2d 516 (2d Cir. 1982); cf. Cote v. Burroughs Wellcome Co., 558
F. Supp. 883, 886-87 (E.D.Pa. 1982) (holding that where there was
no factual dispute as to "the basic job description and
responsibilities," summary judgment on Federal Fair Labor
Standards Act claim was appropriate).
In short, we hold that the question of the nature of
the activities performed by Clark and Lilley should be decided by
the trier of fact. In resolving this issue the trier of fact
will be called upon to apply the criteria of 8 AAC 15.910(a)(7)
to determine whether or not Clark and Lilley devoted more than 20
percent of their weekly hours to activities which were not
directly and closely related to the work "described in this
paragraph [8 AAC 15.910(a)(7)] or paragraphs (1) and (11) of this
section[.]"7 When applying these criteria, the trier of fact
should further consider the nature of the employer's business and
the role of management in the particular business.
We therefore REVERSE the superior court's entry of
partial summary judgment in favor of Clark and Lilley and REMAND
for further proceedings.
* Sitting by assignment made pursuant to article IV,
section 16 of the Alaska Constitution.
1 The parties stipulated to the amount of damages Clark
and Lilley are entitled to recover. No issues regarding Clark
and Lilley's respective Fair Labor Standards Act claim are
involved in this appeal.
2 "When reviewing a grant of summary judgment, the court
must determine whether any genuine issue of material fact exists
and whether the moving party is entitled to judgment on the law
applicable to the established facts." Wright v. State, 824 P.2d
718, 720 (Alaska 1992).
3 Former 8 AAC 15.910(a)(1) (1991) defined an
"administrative employee"as an employee
(A) whose primary duty consists of
work directly related to management policies
or supervising the general business
operations of his employer;
(B) who customarily and regularly
exercises discretion and independent
(C) who performs his work under
only general supervision;
(D) who is paid on a salary or fee
(E) who regularly and directly
assists a proprietor or an exempt executive
employee of the employer; and
(F) who performs work along
specialized or technical lines requiring
special training, experience or knowledge and
does not devote more than 20 percent of his
weekly hours to activities which are not
described in this paragraph or paragraphs (7)
or (11) of this section . . . .
8 AAC 15.910(a)(11) (1991) defines "professional
employee"as an employee
(A) whose primary duty is
(i) to perform work requiring
knowledge of an advanced type in a field of
science or learning customarily acquired by a
prolonged course of specialized intellectual
instruction and study, as distinguished from
a general academic education or from an
apprenticeship or from training in the
performance of routine mental, manual, or
physical processes, or
(ii) to perform work that is
original and creative in character in a
recognized field of artistic endeavor (as
opposed to work which can be produced by a
person with general manual or intellectual
ability and training), and the result of
which depends primarily on the invention,
imagination, or talent of the employee, or
(iii) to teach, tutor, instruct,
or lecture in the activity of imparting
knowledge, and who is employed and engaged in
this activity as a teacher certified or
recognized as such in a school or other
educational establishment or institution; and
(B) whose work
(i) requires the consistent
exercise of discretion and judgment in its
(ii) is predominately
intellectual and varied in character (as
opposed to routine mental, manual,
mechanical, or physical work) and is of such
character that the output produced or the
result accomplished cannot be standardized on
a time basis, and
. . .
4 Specifically, Clark and Lilley allege that over forty
percent of their time was spent doing "podium work," bussing
tables, cleaning bathrooms, and substituting for absent
employees. While doing podium work the manager on duty works
with a non-salaried hostess greeting and seating customers,
taking reservations, quoting waiting times, picking up menus, and
policing the dining room.
Additionally, Clark and Lilley note that they provided
assistance to bartenders at the restaurant. In the evening,
Clark would assist the bartenders by washing glasses, covering
for the bartender so that he or she could take a break, getting
ice, checking identification, and performing head counts. Lilley
also helped the bartenders by washing glasses, taking drink
orders, serving drinks, getting ice, checking identification, and
relieving the disc jockey.
5 Based upon 8 AAC 15.910(a)(11), this court derived
a four-part test for exemption as a professional. Dayhoff, 848
P.2d at 1371. To be exempt, the superior court must find that
1) the employee's primary duty is
to perform work requiring knowledge of
2) the work requires consistent
exercise of discretion,
3) the work must be predominantly
intellectual and varied, and
4) the work must be compensated
on a fee basis.
6 In this regard, Englund testified as follows:
[T]he management style that I like to
see my managers work is participative, hands-
on, and involved in the operation. It's a
good point of reference to manage from. . . .
I think that's what the consumer wants to see
when they come into your restaurant, that the
manager is visible.
The restaurant management job isn't
sitting in the office administrating.
There's certainly a certain amount of time
that's spent administering the business, but
during peak hours of operation, they should
be visible to the guests and to the employees
so the employees can see that they're being
supervised as well.
. . . .
I think anybody works a little bit
better when they know they're being watched
and notice [sic] what they're doing. I think
particularly with our unit staff employees,
bussers, food servers, bartenders, when
they're serving the public, I think the
manager there working with them, showing care
and concern for customers, only enhances how
the employees treat their customers as well.
Englund also stated,
[B]eing in the restaurant business, you
know, the managers work the podium, which is
as a host, as a manager host, with another
hostess or host, you know, during peak hours,
during lunch and dinner, but they're there as
a manager and not as a host. I mean, they're
there to greet guests as a manager . . . .
It's the point that they manage the
restaurant from; where the employees,
customers, know where that manager is.
They're not tied into any one
position, but they're there to supervise the
food service from that point. . . .
7 See supra note 3 and accompanying text for the texts of
8 AAC 15.910(a)(1), (7), and (11).