Opinion
AC 44321
11-01-2022
Crystal HORROCKS, et al. v. KEEPERS, INC., et al.
Stephen R. Bellis, New Haven, for the appellants (defendants). Kenneth J. Krayeske, Meriden, for the appellees (plaintiffs).
Stephen R. Bellis, New Haven, for the appellants (defendants).
Kenneth J. Krayeske, Meriden, for the appellees (plaintiffs).
Alvord, Cradle and Flynn, Js.
CRADLE, J. This appeal stems from a dispute between the plaintiffs, Crystal Horrocks, Yaritza Reyes, Dina Danielle Caviello, Jacqueline Green, Sugeily Ortiz and Zuleyma Bella Lopez, and the defendants, Keepers, Inc., and Joseph Regensburger, as to the proper characterization of the plaintiffs as independent contractors, instead of employees, for services rendered as exotic dancers at a gentlemen's club owned and operated by the defendants. The defendants appeal from the judgment of the trial court denying their motion to vacate, and granting the plaintiffs’ application to confirm, arbitration awards finding that the plaintiffs were employees, not independent contractors, and awarding them damages. We affirm the judgment of the trial court.
Regensburger is the president of Keepers, Inc., and was sued in both his individual capacity and as an agent, principal or representative of Keepers, Inc. He has been involved throughout both the arbitration and the present case. The arbitrator's awards, which were later confirmed by the trial court's judgment, were against both defendants and made no mention of apportionment.
The trial court set forth the following relevant procedural history. "The plaintiffs ... brought suit against the defendants ... for alleged violations of the relevant state and federal minimum wage and overtime laws. As alleged in the plaintiffs’ complaint, each of the plaintiffs worked as an exotic dancer at Keepers Gentlemen's Club located in Milford. This establishment is owned and operated by the defendants. The plaintiffs allege[d] that, during their time working for the defendants, they were improperly characterized as independent contractors as opposed to employees. According to the plaintiffs, this improper employment relationship ... caused them, inter alia, to be unable to obtain needed workers’ compensation benefits, as well as not be paid the appropriate minimum wage and overtime pay. The plaintiffs also contend[ed] [that] they were illegally forced to pay the defendants certain gratuities that they received from customers. Accordingly, the plaintiffs’ eight count complaint allege[d] the following causes of action: (1) count one—failure to pay minimum wage in violation of the Fair Labor Standards Act (FLSA), 29 U.S.C. § 206 ; (2) count two—failure to pay overtime in violation of the FLSA, 29 U.S.C. § 207 ; (3) count three—unlawful deductions from wages and/or gratuities in violation of the FLSA; (4) count four—failure to pay minimum wage in violation of General Statutes § 31-60 ; (5) count five—failure to pay overtime in violation of General Statutes § 31-76b ; (6) count six—unlawful deductions from wages in violation of General Statutes § 31-71e ; (7) count seven—unjust enrichment; and (8) count eight—breach of implied contract.
"On May 26, 2015, the defendants filed a motion to dismiss and/or stay this action ... on the ground that the employment relationship between the parties was governed by an entertainment lease agreement [agreement] that contained a mandatory arbitration clause. The court, Wilson , J. , denied the motion to dismiss ... on October 13, 2015, but it also ordered a stay of the proceedings pending arbitration on January 4, 2016 .... [T]he parties [thereafter] proceeded to an arbitration .... On July 18, 2019, [the arbitrator] issued his initial arbitration award wherein he determined that the plaintiffs were appropriately characterized as employees as opposed to independent contractors. Subsequently, on March 17, 2020, [the arbitrator] issued a further arbitration award where he determined, inter alia, that the ... agreement was illegal and unenforceable because it was an attempt to circumvent statutory wage and hour requirements, and, as a result, the plaintiffs were entitled to be paid the appropriate minimum and overtime wage for the hours they worked for the period between April 14, 2013, to April 14, 2015. [The arbitrator] awarded the plaintiffs $113,560.75 in damages. [The arbitrator] further denied the plaintiffs’ request for double liquidated damages because he found [that] the defendants acted with a good faith belief they were complying with the law, but he also gave the plaintiffs $85,000 in attorney's fees and $2981.16 in costs." (Footnotes omitted.)
On March 17, 2020, the plaintiffs filed an application to confirm both the July 18, 2019 and the March 17, 2020 arbitration awards. On April 7, 2020, the defendants filed a motion to vacate the arbitration awards, claiming that (1) the arbitrator exceeded his authority because, when he determined that the agreement was void and unenforceable, the arbitration clause within the agreement was also rendered unenforceable, (2) the arbitrator's award of attorney's fees was improper and should be vacated because the arbitrator relied on the current revision of General Statutes § 31-72 as opposed to the iteration of the statute that was in existence between April, 2013, and April, 2015, and (3) it was incorrect for the arbitrator to rely on oral testimony of the plaintiffs regarding how much time they had worked. By way of a memorandum of decision filed on October 2, 2020, the court, Abrams , J. , granted the plaintiffs’ application to confirm the arbitration awards and denied the defendants’ motion to vacate the awards. This appeal followed.
On appeal, the defendants claim that the trial court erred by failing to conclude that the arbitrator's calculation of damages constituted a manifest disregard of the law because the arbitrator "should have based [that calculation] on the written records [presented by the defendants] not [on] a verbal estimate of the plaintiffs. We disagree.
The defendants also claim on appeal that the trial court erred by not holding that the arbitrator's awards violated a legitimate public policy of the freedom to contract, and by failing to sever the enforceable and unenforceable terms of the agreement and to determine that the defendants were entitled to a credit against wages for the entertainment fees paid to the plaintiffs. Because the defendants did not raise these claims before the trial court, we decline to review them. See Board of Education v. Commission on Human Rights & Opportunities , 212 Conn. App. 578, 590, 276 A.3d 447 ("[t]his court will not review issues of law that are raised for the first time on appeal" (internal quotation marks omitted)), cert. denied, 345 Conn. 902, 282 A.3d 466 (2022) ; see also Practice Book § 60-5 (reviewing court not bound to consider claim unless it was distinctly raised at trial).
"[T]he manifest disregard of the law ground for vacating an arbitration award is narrow and should be reserved for circumstances of an arbitrator's extraordinary lack of fidelity to established legal principles." (Internal quotation marks omitted.) Blondeau v. Baltierra , 337 Conn. 127, 161, 252 A.3d 317 (2020). "Under this highly deferential standard ... our precedent instructs that three elements must be satisfied before we will vacate an arbitration award on the ground that the [arbitrator] manifestly disregarded the law: (1) the error was obvious and capable of being readily and instantly perceived by the average person qualified to serve as an arbitrator; (2) the [arbitrator] appreciated the existence of a clearly governing legal principle but decided to ignore it; and (3) the governing law alleged to have been ignored by the [arbitrator] is [well-defined], explicit, and clearly applicable. ... [E]very reasonable presumption and intendment will be made in favor of the [arbitration] award and of the arbitrators’ acts and proceedings." (Citations omitted; internal quotation marks omitted.) Id., at 161–62, 252 A.3d 317.
In setting forth the basis for the calculation of his award of damages, the arbitrator recounted the evidence presented by the parties, including evidence of the record keeping procedures used by the defendants to record the hours worked by the plaintiffs. The defendants submitted that they had used two systems to account for attendance. First, they used a sort of "punch card" system, whereby the identification card of each plaintiff was photocopied at the beginning of each shift, and from those "punch cards," the administrative staff would create a "daily business recap." After that recap was produced each day, the punch cards were discarded. The defendants also utilized a biometric system that scanned the plaintiffs’ fingerprints at the beginning of their shifts. Due to a system malfunction, however, the records from that system were lost. Although the plaintiffs did not have written records of the hours they had worked, the arbitrator considered their oral testimony regarding those hours, along with the incomplete records of the defendants, to calculate damages.
Before the trial court, the defendants challenged the damages awarded by the arbitrator on the ground that they constituted a manifest disregard of the law. In rejecting the defendants’ argument, the court explained that, "[a]lthough the defendants attempt to frame this portion of their motion as an attack on the overly speculative nature of [the arbitrator's] damages calculation, in reality, the defendants believe that [the arbitrator] erred when he credited the plaintiffs’ oral testimony over certain written documentation offered by the defendants." The court referred to the arbitrator's assessment of the evidence submitted by the parties, explaining that the arbitrator had concluded that the defendants’ record keeping was "inadequate and incomplete" and, therefore, that, "in calculating [the] plaintiffs’ damages, [he] ... necessarily relied on both the plaintiffs’ testimony and the partial records of the defendants." (Internal quotation marks omitted.) On that basis, the court noted that the arbitrator "indicate[d] that he examined the defendants’ attendance records, but he found that they were not completely accurate. Therefore, he also relied on the plaintiffs’ oral testimony in order to determine a complete total of the number of hours that they worked." The court concluded: "This finding is more than substantial evidence to support [the arbitrator's] damages calculations, and it is not the role of this court to substitute its judgment for that of the arbitrator. Consequently, the court also rejects this argument as a valid basis to grant the defendants’ motion to vacate."
On appeal to this court, the defendants again challenge the damages awarded to the plaintiffs on essentially the same ground that they raised before the trial court. Specifically, the defendants contend that "the arbitrator disregarded the law that the defendants have the right to present evidence of the precise amount of work the plaintiffs performed." The defendants claim that the court "should have based the hours worked on the written records of the employer, not [on] a verbal estimate by the plaintiffs." As aptly recounted by the trial court, the arbitrator considered the evidence presented by the defendants but concluded that the defendants’ record keeping was "inadequate and incomplete" and, consequently, "relied on both the plaintiffs’ testimony and the partial records of the defendants" in calculating the damages that he awarded to the plaintiffs. Contrary to the defendants’ assertion, they were not prevented from submitting evidence to prove the number of hours worked by the plaintiffs, but the evidence that they did present, which was considered by the arbitrator, was deficient. Faced with that deficiency, the arbitrator considered the oral testimony of the plaintiffs. It was not improper for the arbitrator to do so. Accordingly, the court did not err in rejecting the defendants’ claim that the arbitrator disregarded the law in calculating the damages awarded to the plaintiffs, and thus did not err in granting the plaintiffs’ application to confirm, and denying the defendants’ motion to vacate, the arbitration awards.
We note that, at oral argument before this court, counsel for the defendants acknowledged that it was not "improper for the arbitrator to credit some of the plaintiffs’ [oral] testimony."
The judgment is affirmed.
In this opinion ALVORD, J., concurred.
FLYNN, J., concurring.
I agree that the trial court's judgment should be affirmed. I write separately for the following reasons. It has been usual for this court either to address each claim raised by an appellant on appeal or, in the alternative, to explain why review is not undertaken. In the present case, the first claim of the defendants/appellants, Keepers, Inc., and Joseph Regensburger, is "[w]hether the standard of review for the trial court should have been de novo review rather than the more deferential review afforded arbitration decisions when the arbitrator found the entertainment lease agreement violated public policy and determined it to be illegal." This claim is listed as Roman numeral one in the defendants’ statement of issues, and the defendants devote more than one half of their appellate brief to detailing their supporting arguments. I write separately to explain why I think this claim, ultimately, is unreviewable. In support of their argument, the defendants cite to Schoonmaker v. Cummings & Lockwood of Connecticut, P.C ., 252 Conn. 416, 425, 747 A.2d 1017 (2000) ("we conclude that because the arbitrator's decision regarding the postemployment payments implicated a legitimate public policy, that is, facilitating clients’ access to an attorney of their choice, the trial court should have exercised de novo review"). In response, the plaintiffs, Crystal Horrocks, Yaritza Reyes, Dina Danielle Caviello, Jacqueline Green, Sugeily Ortiz and Zuleyma Bella Lopez, contend: "Although the first issue raised by the defendants in this appeal is disguised as a legal question concerning the standard of review utilized by the trial court, they are actually asking this court to hold that the trial court applied an improper standard of review to a claim it was never asked to consider. Despite never challenging the arbitrator's determination that the ... agreement was void as a matter of public policy, in [their] motion to vacate [the arbitration awards], the defendants now ask this court to reverse the trial court on an issue [they] never raised." The defendants raise for the first time on appeal the issue of whether the arbitrator properly had determined that the agreement was void as a matter of the public policy of the freedom to contract and challenge the standard of review purportedly used by the trial court in addressing that issue. However, there is an obstacle in the path of reviewability. The defendants never raised in connection with their motion to vacate a challenge to the arbitrator's decision that the agreement was void as a matter of the public policy of the freedom to contract, and, as a result, the trial court did not address that issue, much less apply a standard of review to it. The defendants’ mere citation in their motion to vacate to Schoonmaker v. Cummings & Lockwood of Connecticut, P.C. , supra, 252 Conn. 416, 747 A.2d 1017, for the proposition that the arbitrator in the present case exceeded his authority under General Statutes § 52-418 (a) (4), is not sufficient. Although Schoonmaker concerns the necessity to review an arbitrator's decision de novo where it affects the public policy of a client's right to be represented by an attorney of his or her choice, reference to Schoonmaker , without more, would not alert a trial court to the distinct freedom to contract ground that the defendants now assert for the first time on appeal. This court cannot review a claim on appeal that the trial court applied the wrong standard of review to a claim that it had not been asked to review. Issues must be distinctly raised before the trial court to be reviewable on appeal. See E. Prescott, Connecticut Appellate Practice & Procedure (7th Ed. 2021) § 8-2:1.1, p. 466; see also Practice Book § 60-5 (reviewing court not bound to consider claim not distinctly raised at trial).