Overtime Law Blog

Home » 2012 » August

Monthly Archives: August 2012

W.D.Mo.: Under Motor Carrier Act (MCA), Weight of Vehicle Measured by Gross Vehicle Weight Rating (GVWR) Which Includes the Weight of Trailer Pulled

August 27, 2012 8:05 am / Leave a comment

McCall v. Disabled American Veterans Ernestine Schumann-Heink Missouri Chapter 2

This case was before the court on the parties dueling motions for summary judgment. Specifically, the motions addressed the applicability of the Fair Labor Standards Act (“FLSA”) to drivers employed by the defendants, in light of the Motor Carrier Act (“MCA”). As discussed here, the court was required to opine on the method by which the 10,001 pound threshold is calculated under the MCA, in order to determine whether a vehicle qualifies as a covered vehicle for the purposes of the MCA’s application to its driver(s). While the plaintiff argued that the actual weight of the truck, when loaded was less than 10,000 pounds, the court held that this was not dispositive of the issue. Instead, the court held that the plaintiff came within the MCA’s exemption to the FLSA because, “[t]he uncontroverted facts demonstrate[d] the truck’s gross vehicle weight rating (“GVWR”) exceeded 12,000 pounds.”

After surveying the MCA and the recent amendments thereto under SAFETA–LU and the TCA, the court- applying the post-TCA standard (due to the dates of plaintiff’s employment/claim) explained:

The TCA does not specify how the vehicle weight is to be determined: whether the vehicle is weighed loaded or unloaded, fueled or unfueled, or some sort of average is to be utilized. On November 4, 2010, the Department of Labor (“DOL”) issued Field Assistance Bulletin No.2010–2 (“the Bulletin”) to explain its interpretation of the TCA. Among other matters, the Bulletin announces DOL’s method for determining whether a vehicle weighs 10,000 pounds or less, stating the Wage and Hour Division “will continue to use the gross vehicle weight rating (GVWR) or gross combined vehicle weight rating in the event that the vehicle is pulling a trailer.”

The parties agree the Bulletin is entitled to deference because it represents DOL’s interpretation of statutory provisions it is charged with enforcing, but they disagree as to the Bulletin’s meaning. The Court believes the interpretation is quite clear: a vehicle’s GVWR is its weight for purposes of the TCA and, hence, applicability of the FLSA. If the vehicle is pulling a trailer, the combined GVWR of the vehicle and the trailer will be used. Plaintiff’s interpretation—that GVWR is to be used only if the vehicle is pulling a trailer makes no sense. There is no reason to use GVWR in one instance and not in another, and Plaintiff’s interpretation renders part of the Bulletin a nullity (or, at worst, surplusage) by purporting to have the Bulletin explain how vehicles are weighed if they pull a trailer but failing to explain how vehicles are weighed if they are not. The Court also notes DOL’s interpretation is reasonable because it not only leads to certainty but it is consistent with the Secretary of Transportation’s entire statutory and regulatory framework, which elsewhere typically relies on GVWR when referencing the weight of vehicles.

Plaintiff contends this interpretation thwarts Congress’ intent by diminishing the reach of the FLSA. The Court disagrees. Before 2005, the Secretary of Transportation had authority over all motor private carriers regardless of the weight of the vehicle, and the FLSA did not apply to any motor private carriers. With the passage of SAFETEA–LU in 2005, Congress removed the Secretary’s authority over motor private carriers using vehicles with a GVWR of 10,000 pounds or less—and thereby expanded the FLSA’s reach. The TCA restores the Secretary’s authority to all motor private carriers regardless of a vehicle’s weight, but specifies that the FLSA’s reach will remain as it was expanded with SAFETEA–LU’s passage. In short, the TCA expanded the Secretary’s authority, but it was not intended to further expand the FLSA’s reach—it remained exactly where it was before the TCA was passed.

Thus the court concluded:

There is no dispute that the GVWR of the vehicle Plaintiff drove exceeded 10,000 pounds. Therefore, the FLSA does not apply and the moving Defendants are entitled to judgment as a matter of law.

Click McCall v. Disabled American Veterans Ernestine Schumann-Heink Missouri Chapter 2 to read the entire Order and Opinion.

7th Cir.: Named-Plaintiffs Who Settled Their Individual Claims Following Decertification Retained Standing to Appeal Decertification Based on Possibility of Incentive Awards

August 19, 2012 5:40 pm / Leave a comment

Espenscheid v. DirectSat USA, LLC

This case presented the relatively novel issue of whether the named-plaintiffs in a decertified class/collective action retain standing to appeal decertification once they have settled their individual claims. Noting that it was a case of first impression, the Seventh Circuit held that individual employees had sufficient interest for standing to appeal decertification, in large part because they retained a financial stake inasmuch as the stood to receive incentive awards if the class/collective action was ultimately successful.

Briefly discussing the relevant procedural history and facts the court explained:

The district judge certified several classes but later decertified all of them, leaving the case to proceed as individual lawsuits by the three plaintiffs, who then settled, and the suits were dismissed. The settlement reserved the plaintiffs’ right to appeal the decertification, however, and they appealed. The defendants then moved to dismiss the appeal on the ground that the plaintiffs had suffered no injury as a result of the denial of certification and so the federal judiciary has lost jurisdiction of the case.

The court distinguished the case from one in which the defendant seeks to moot or “pick off” a class/collective by making an offer of judgment that exceeds the named-plaintiff’s damages and reasoned that the named-plaintiffs retained standing by virtue of prospective incentive awards, if the case were to proceed as a class/collective rather than individual basis:

One might think that because the plaintiffs settled, the only possible injury from denial of certification would be to the unnamed members of the proposed classes; and if therefore the plaintiffs have no stake in the continuation of the suit, they indeed lack standing to appeal from the denial of certification. Premium Plus Partners, L.P. v. Goldman, Sachs & Co., 648 F.3d 533, 534–38 (7th Cir.2011); Pettrey v. Enterprise Title Agency, Inc., 584 F.3d 701, 705–07 (6th Cir.2009). This is not a case in which a defendant manufactures mootness in order to prevent a class action from going forward, as by making an offer of judgment that exceeds any plausible estimate of the harm to the named plaintiffs and so extinguishes their stake in the litigation. As we explained in Primax Recoveries, Inc. v. Sevilla, 324 F.3d 544, 546–47 (7th Cir.2003) (citations omitted), “the mooting of the named plaintiff’s claim in a class action by the defendant’s satisfying the claim does not moot the action so long as the case has been certified as a class action, or … so long as a motion for class certification has been made and not ruled on, unless … the movant has been dilatory. Otherwise the defendant could delay the action indefinitely by paying off each class representative in succession.”

But the plaintiffs point us to a provision of the settlement agreement which states that they’re seeking an incentive reward (also known as an “enhancement fee”) for their services as the class representatives. In re Synthroid Marketing Litigation, 264 F.3d 712, 722 (7th Cir.2001); In re Continental Illinois Securities Litigation, 962 F.2d 566, 571–72 (7th Cir.1992); In re United States Bancorp Litigation, 291 F.3d 1035, 1038 (8th Cir.2002); 2 Joseph M. McLaughlin, McLaughlin on Class Actions § 6:27, pp. 137–42 (6th ed.2010). The reward is contingent on certification of the class, and the plaintiffs argue that the prospect of such an award gives them a tangible financial stake in getting the denial of class certification revoked and so entitles them to appeal that denial.

After an extensive discussion of incentive payments to class representatives, the Seventh Circuit adopted the plaintiffs reasoning.  Additionally the court noted that judicial economies could never be preserved if the named-plaintiffs forfeited standing when they settled their individual claims, because another named-plaintiff would simply come forward and start the entire process anew, the court held that the named-plaintiffs here retained their standing to pursue class/collective issues, notwithstanding the settlement of their individual claims.  Thus, the court denied the defendants motion to dismiss.

Click Espenscheid v. DirectSat USA, LLC to read the entire Order denying Defendants’ Motion to Dismiss.

5th Cir.: Where Employees Were Represented in Grievance Process By Their Union and Its Attorneys, Private Settlement of a Bona Fide Dispute Enforceable

August 18, 2012 10:01 am / 1 Comment on 5th Cir.: Where Employees Were Represented in Grievance Process By Their Union and Its Attorneys, Private Settlement of a Bona Fide Dispute Enforceable

Martin v. Spring Break ’83 Productions, L.L.C.

Following the entry of summary judgment on behalf of the defendants, the plaintiffs appealed. As discussed here, plaintiffs challenged the trial court’s holding that the private settlement reached between their union and one of their alleged employers was binding and enforceable. Specifically, the plaintiffs argued that absent: (1) court approval, (2) DOL supervision, or (3) a showing that they had been paid their wages in full without compromise, the settlement previously reached was not binding and/or enforceable. Affirming the decision below, the Fifth Circuit held that the settlement agreement was binding and enforceable notwithstanding the lack of court or DOL supervision, because it was a resolution of a bona fide dispute. While it is not entirely clear, it appears that the Fifth Circuit reasoned that the agreement, at least arguably could be said to be “without compromise,” thus making it binding and enforceable.

The case concerned grips and other movie production employees who worked on the set of a movie. Laying out the relevant procedural/factual background, the Fifth Circuit explained:

The plaintiffs “filed a grievance against Spring Break Louisiana alleging that they had not been paid wages for work they performed. The Union sent a representative to investigate the merits of the claims. After his investigation, the representative concluded that it would be impossible to determine whether or not Appellants worked on the days they alleged they had worked. The Union and Spring Break Louisiana entered into a Settlement Agreement pertaining to the disputed hours allegedly worked by Appellants.”

Discussing the issue of whether the private settlement here was binding and enforceable the Fifth Circuit reasoned:

The district court concluded that the plain language of the Settlement Agreement “is binding upon the [Appellants] in their individual capacities and prohibits those individuals from pursuing future legal action against Spring Break Louisiana after receiving their settlement payments.” We agree. The Settlement Agreement, in relevant part, states:

The Union on its own behalf and on behalf of the IATSE Employees agrees and acknowledges that the Union has not and will not file any complaints, charges or other proceedings against Producer, its successors, licenses and/or assignees, with any agency, court, administrative body, or in any forum, on condition that payment in full is made pursuant to the terms of this Settlement Agreement.

The Settlement Agreement also states that the Union “has the full power and authority to enter into this Settlement Agreement on behalf of IATSE Employees and bind them in accordance with the terms hereof.” By this plain language, the Appellants, who were IATSE Employees, were bound by its terms. Appellants contend, however, that the Settlement Agreement is unenforceable because they never signed it or agreed to it—instead, the Settlement Agreement was signed by Union representatives. However, Appellants do not dispute that they received full payment for their claims pursuant the terms of the Settlement Agreement. Nor do Appellants dispute that they cashed the Settlement Agreement payment checks they received. The Appellants were members of the Union and, under the CBA, Spring Break Louisiana recognized “the Union as exclusive representative of the employees in the bargaining unit.” Considering that Appellants, who were members of the Union, received and accepted full payment for their FLSA claims under the Settlement Agreement, the fact that Appellants did not themselves personally sign the Settlement Agreement does not render it unenforceable. See N.L.R.B. v. Allis–Chalmers Mfg. Co., 388 U.S. 175, 180, 87 S.Ct. 2001, 18 L.Ed.2d 1123 (1967) (“The employee may disagree with many of the union decisions but is bound by them.”).

On appeal, the plaintiffs argued that the settlement agreement was not binding and enforceable, because generally individuals may not privately settle FLSA claims. In response the defendants argued that that a private compromise of claims under the FLSA is permissible where there exists a bona fide dispute as to liability (and as to the amount of appropriate damages). After a discussion of the relevant Fifth Circuit precedent, the court agreed with the Defendants and held the settlement agreement at issue to be enforceable.

Significantly the court reasoned:

[H]ere, there is a bona fide dispute between Appellants and Spring Break Louisiana over the number of hours for which they are owed their set rate of pay. In fact, the Union representative conducted an investigation into the dispute and received conflicting information from various sources, ultimately concluding that it would be impossible to determine whether or not Appellants worked on the days they claimed they had worked in their grievance.  Approving of this rationale, we hold that the payment offered to and accepted by Appellants, pursuant to the Settlement Agreement, is an enforceable resolution of those FLSA claims predicated on a bona fide dispute about time worked and not as a compromise of guaranteed FLSA substantive rights themselves. See Brooklyn Sav. Bank v. O’Neil, 324 U.S. 697, 714, 65 S.Ct. 895, 89 L.Ed. 1296 (1945) (“Our decision … has not necessitated a determination of what limitation, if any, Section 16(b) of the [FLSA] places on the validity of agreements between an employer and employee to settle claims arising under the Act if the settlement is made as the result of a bona fide dispute between the two parties, in consideration of a bona fide compromise and settlement.”); see also D.A. Schulte, Inc. v. Gangi, 328 U.S. 108, 114–15, 66 S.Ct. 925, 90 L.Ed. 1114 (1946) (“Nor do we need to consider here the possibility of compromises in other situation which may arise, such as a dispute over the number of hours worked or the regular rate of employment.”); 29 U.S.C. § 253(a).

Apparently the court also believed that the settlement at issue here could arguably be said to be “without compromise” such that the third permissible basis for an enforceable private settlement was met:

Notably, in Thomas v. Louisiana, 534 F.2d 613 (5th Cir.1976), we held that a private settlement of FLSA claims was binding and enforceable where the settlement gave employees “everything to which they are entitled under the FLSA at the time the agreement is reached.” Id. at 615. We explained that, “[a]lthough no court ever approved this settlement agreement, the same reason for enforcing a court-approved agreement i.e., little danger of employees being disadvantaged by unequal bargaining power[,] applies here.” Id.  Here, Spring Break Louisiana and the Union agreed in the Settlement Agreement that the payments Appellants were paid pursuant to that agreement were the “amounts due and owing” for the disputed number of hours they claimed they had worked and not been paid for. The Settlement Agreement was a way to resolve a bona fide dispute as to the number of hours worked—not the rate at which Appellants would be paid for those hours—and though Appellants contend they are yet not satisfied, they received agreed-upon compensation for the disputed number of hours worked.

Lastly, the court distinguished a settlement privately negotiated by a union and its attorneys from a situation where a labor union purports to waive an employees’ rights under the FLSA through a collective bargaining agreement, a longstanding no-no under well-established FLSA jurisprudence:

Finally, Appellants contend, citing Barrentine v. Arkansas–Best Freight Sys., 450 U.S. 728, 745, 101 S.Ct. 1437, 67 L.Ed.2d 641 (1981), that because the Supreme Court has held that a union cannot waive employees’ rights under the FLSA through a collective bargaining agreement, they cannot have settled their FLSA claims in the Settlement Agreement, which was arrived at through the Union-facilitated grievance procedure laid out in the CBA. See Barrentine, 450 U.S. at 745, 101 S.Ct. 1437 (“FLSA rights … are independent of the collective-bargaining process. They devolve on petitioners as individual workers, not as members of a collective organization. They are not waivable.”). Although the terms and conditions of Appellants’ employment with Spring Break Louisiana were covered by a collective bargaining agreement, Barrentine is distinguishable. In Barrentine, the plaintiffs’ grievances based on rights under the FLSA were submitted by the union to a joint grievance committee that rejected them without explanation, a final and binding decision pursuant to the collective bargaining agreement. 450 U.S. at 731, 101 S.Ct. 1437. Here, Appellants accepted and cashed settlement payments—Appellants’ FLSA rights were adhered to and addressed through the Settlement Agreement, not waived or bargained away. The concerns the Court in Barrentine expressed, that FLSA substantive rights would be bargained away, see id. at 740, 101 S.Ct. 1437 (“This Court’s decisions interpreting the FLSA have frequently emphasized the nonwaivable nature of an individual employee’s right to a minimum wage and to overtime pay under the Act. Thus, we have held that FLSA rights cannot be abridged by contract or otherwise waived because this would ‘nullify the purposes’ of the statute and thwart the legislative policies it was designed to effectuate.”), are not implicated by the situation here where Appellants’ Union did not waive FLSA claims, but instead Appellants, with counsel, personally received and accepted compensation for the disputed hours. We reiterate that FLSA substantive rights may not be waived in the collective bargaining process, however, here, FLSA rights were not waived, but instead, validated through a settlement of a bona fide dispute, which Appellants accepted and were compensated for. Therefore, the district court did not err by finding an enforceable release resolving this wage dispute.

Given, the somewhat unique facts of this case, it remains to be seen whether the Fifth Circuit’s decision while trigger a change in longstanding FLSA jurisprudence regarding the enforceability of privately-negotiated settlements, or whether this case will remain an outlier, largely limited to its facts. For example, it is not clear whether the settlement would have been enforced absent the fact that plaintiffs were represented by both their union and attorneys in the negotiations, or if this was a “straight time” case where there was demonstrative evidence of the precise number of hours at issue.  Stay tuned, for what’s likely to be an influx of cases where defendant-employers seek to expand this case’s holding while plaintiff-employees seek to limit the holding to the facts at bar (which are not likely to be oft-repeated).

Click Martin v. Spring Break ’83 Productions, L.L.C. to read the entire Decision. For an excellent historical overview of more typical decisions regarding the enforceability of private settlements of FLSA claims click here to read an outline from the folks at Outten & Golden.

10th Cir.: Jury Instruction That Employer Bore Burden of Proving Exemption “Plainly and Unmistakably” Was in Error

August 12, 2012 8:15 pm / Leave a comment

Lederman v. Frontier Fire Protection, Inc.

Following a jury verdict in favor of the plaintiff-employee in a misclassification case, the defendant appealed. At issue was one jury instruction that the plaintiff had requested and which the trial court had given, instructing the jurors that:

An employer seeking an exemption from the overtime requirements of the FLSA bears the burden of proving that the particular employee fits plainly and unmistakably within the terms of the claimed exemption.

While the court acknowledged that the Tenth Circuit had regularly used the “plainly and unmistakably” language for decades, it ultimately held that such language is only applicable to statutory construction in the context of issues of law (i.e. decisions made by the court such as those on summary judgment motions) and not apply to issues of fact (i.e. decisions made by the jury or fact-finder). The court further clarified that the burden of proof on a defendant-employer raising an exemption defense under the FLSA is simply a preponderance of the evidence. Moreover, because the court held that the instruction had prejudiced the defendant, the court reversed the judgment in favor of the plaintiff and remanded the case back to the trial court for a new trial.

After sifting through three decades worth of Tenth Circuit jurisprudence, the court explained:

[a]ll of our other cases employing this phrase have done so in addressing legal rather than factual issues… In sum then, just as some courts have mistakenly viewed “clear and affirmative evidence” as a heightened evidentiary standard, the same is true with the phrase “plainly and unmistakably.” When our prior cases employing this phrase are read as a whole, they do not establish a heightened evidentiary requirement on employers seeking to prove an FLSA exemption. Instead, the ordinary burden of proof—preponderance of the evidence—controls the jury’s evaluation of whether the facts establish an exemption to the FLSA.

Click Lederman v. Frontier Fire Protection, Inc. to read the entire Decision.