C.D.Cal.: Housekeepers Aboard Foreign-Flagged Ships Not Covered By FLSA
Priyanto v. M/S Amsterdam
Plaintiffs were on-board housekeeping staff on foreign-flagged cruiseships. After a discussing the fact that Plaintiffs were likely not “seaman” within the meaning of the FLSA and therefore not “seaman” exempt, the Court granted Defendants Motion for Summary Judgment, holding that the FLSA does not apply to Plaintiffs’ work aboard foreign-flagged ships at sea, stating, “[e]ven if the Plaintiffs are not excluded from the protection of the FLSA based on what kind of work they do, they may be excluded based on where they do it.”
There is a general presumption against the extraterritorial application of federal statutes, and the FLSA is no exception. In the instant case, this presumption is strengthened by “the well-established rule of international law that the law of the flag state ordinarily governs the internal affairs of a ship.” McCulloch v. Sociedad Nacional de Marineros de Honduras, 372 U.S. 10, 20, 83 S.Ct. 671, 9 L.Ed.2d 547 (1963). While general statutes apply to foreign-flag vessels located in United States territory, “absent a clear statement of congressional intent, general statutes may not apply to foreign-flag vessels insofar as they regulate matters that involve only the internal order and discipline of the vessel, rather than the peace of the port.” Spector v. Norwegian Cruise Line Ltd., 545 U.S. 119, 130, 125 S.Ct. 2169, 162 L.Ed.2d 97 (2005).
The Supreme Court has consistently held employment relations on a ship to be such “internal affairs.” See Spector, 545 U.S. at 130-31 (discussing “internal affairs” doctrine); E.E.O.C. v. Arabian American Oil Co., 499 U.S. 244, 111 S.Ct. 1227, 113 L.Ed.2d 274 (1991) (holding that, in absence of clear statement, Title VII (subsequently amended) did not apply to American citizen employees on ships at sea); McCulloch, 372 U.S. 10, 83 S.Ct. 671, 9 L.Ed.2d 547 (holding labor relations to be “internal affairs” and thus National Labor Relations Act does not apply to employees on foreign ship at sea); Benz v. Compania Naviera Hidalgo, S.A., 353 U.S. 138, 77 S.Ct. 699, 1 L.Ed.2d 709 (1957) (holding “internal affairs” limitation bars application of Labor Management Relations Act to ship at sea). In accordance with this case law, employment relations between foreign citizens and their employers on foreign-flagged ships lie within a ship’s “internal affairs.” Therefore, the FLSA could only apply to Plaintiffs if there were a “clear statement of congressional intent” suggesting as much.
Such a clear statement is lacking. Indeed, the text of the FLSA suggests that it does not apply to Plaintiffs insofar as the work they performed was outside the United States. The statute contains a specific provision barring its application to:
any employee whose services during the workweek are performed in a workplace within a foreign country or within territory under the jurisdiction of the United States other than the following: a State of the United States; the District of Columbia; PuertoRico; the Virgin Islands; outer Continental Shelf lands defined in the Outer Continental Shelf Lands Act (ch. 345, 67 Stat. 462) [43 U.S.C. § 1331 et seq.]; American Samoa; Guam; Wake Island; Eniwetok Atoll; Kwajalein Atoll; and Johnston Island
29 U.S.C. § 213(f). As the Third Circuit has noted, the services of maritime workers are generally “not rendered within the United States or one of the enumerated territories” under this provision. Cruz v. Chesapeake Shipping Inc., 932 F.2d 218, 226 (3d Cir.1991). The court there noted the “exclusion of ships flying foreign flags was presumably to avoid interference in the delicate field of international relations by imposing domestic labor law on foreign ships employing foreign nationals at foreign wages.” 932 F.2d at 231.
It was undisputed that Plaintiffs worked solely on foreign-flagged ships, and their work was performed at sea. Therefore, the Court held that the FLSA could not be applied to them without interfering with the internal afffairs of a foreign-flagged ship. In light of the lack of a clear statement of Congressional intent to do so, the Court found the overtime provision of the FLSA did not apply to Plaintiffs, and thus Plaintiffs could not recover unpaid overtime wages under the Seaman’s Wage Act.
D.S.C.: “Salaried” Accountant May Be Hourly After All; Question of Fact For Jury
Holladay v. Burch, Oxner, Seale Co., CPA’s, PA
In this FLSA case, the parties cross-moved for summary judgment, regarding the applicability of the professional exemption. It was not disputed that Plaintiff was an accountant, who performed exempt duties. The sole issue before the Court was whether Plaintiff received at least $455.00 per week on a salary basis.
Plaintiff stated that the amount she was paid was based on an hourly rate computed by dividing the total estimated compensation by 2300, the expected hours worked per year. She took the position in her brief that the firm’s pay scheme was based on an expectation that she would work 44.23 hours per week (based on 2300 hours divided by 52 weeks) and that her guaranteed wages compute to 32.31 hours per week (for 2006).
The parties did not dispute that the Plaintiff was working in a professional capacity and that she received at least $455 per week in compensation. However, the Plaintiff contended that her status as an exempt salaried employee was lost as a matter of law since her pay was in fact calculated on an hourly basis and that her guaranteed pay did not bear a reasonable relationship to her actual earnings for her normal workweek as set forth in 29 C.F.R. 541.604(b). Defendant contended that the Plaintiff retained her exempt status as a matter of law and that her method of pay placed her under subsection (a) of 541.604.
In denying both parties’ motions for summary judgment, after a lengthy discussion of the issue presented—hourly vs. salary basis – the Court determined it was a question of fact whether the guaranteed salary amount paid to the plaintiff was for forty (40) hours (the normal workweek) or for only 32.31 hours (for example, in 2006) as the plaintiff suggests. The Court further explained, If the jury determined the guaranteed salary amount was for a normal workweek (i.e., 40 hours) then the defendant would not have lost the exemption and the plaintiff could not recover. However, if the jury determined the guaranteed amount was in fact for fewer hours than a normal workweek of forty (40) hours, such as 32.31 hours as Plaintiff contends for 2006, then the exemption is lost and the plaintiff would be entitled to damages. The jury would determine the number of overtime hours, the hourly rate of pay for each period, as well as wilfulness. The Court would then make the mathematical calculations. After reviewing the record submitted, the Court is simply unable to make a ruling as a matter of law for either party on the issue of whether the plaintiff is an exempt employee without additional factual findings. See, e.g., Archuleta v. Wal-Mart Stores, Inc., 543 F.3d 1226, 1236 (10th Cir.2008); Davis v. Lenox Hill Hospital, 2004 WL 1926087 (S.D.N.Y.2004).
N.D.Cal.: Former DOL Wage and Hour Investigator Struck As Expert Because Cannot Testify As A “Legal Expert”
Valladon v. City of Oakland
Defendant sought to use a former DOL Wage and Hour Investigator as their expert to defend this FLSA claim. While working at the Department of Labor (“DOL”), Ms. Kramer gained expertise on Department of Labor regulations and federal case law interpreting FLSA.
She applied this expertise in her report and arrives at the following conclusion:
‘[I]t is my opinion that the City’s compensation practices with regard to donning and doffing of uniforms and equipment and the maintenance of uniforms and equipment, as well as its practices with regard to the use of compensatory time of, fully comply with the FLSA.’ Ms. Kramer also opined that if the Court nonetheless found that the Defendant’s practices violate FLSA, (1) those violations are not willful, so a two-year statute of limitations applies and (2) that the City is not liable for liquidated damages because it acted in good faith with a reasonable belief that its practices were lawful. Ms. Kramer reached these conclusions by analyzing DOL regulations and federal cases interpreting FLSA and determining whether the policies at issue here violate those laws. That is, she applied the facts of this case to the law. For example, after interpreting the text of FLSA, the DOL’s regulation concerning the “continuous workday rule,” two Supreme Court cases, a DOL advisory opinion, and the DOL’s “Wage and Hour Division’s Field Operations Handbook,” Ms. Kramer 2 concluded, ‘Thus, applying DOL’s interpretation of the FLSA and the agency’s own regulations, the time [p]laintiffs spent donning and doffing uniforms and equipment is not compensable because the City permits donning and doffing at home.’
Ms. Kramer used a similar method to reach her opinions about the statute of limitations and the reasonableness of the Defendant’s policies. She even opines that a particular district court reached the “incorrect” legal conclusion about whether a city must compensate its employees for the time spent donning and doffing uniforms.
Finding that, “Ms. Kramer’s “expert report” reads like a legal brief,” the Court found that because “[r]esolving doubtful questions of law is the distinct and exclusive province of the trial judge,” Nationwide, 523 F.3d at 1058 (citation omitted), Ms. Kramer’s report must be stricken. The Court reasoned that “her area of expertise is the law. She therefore purports not to “assist the trier of fact to understand the evidence or to determine a fact in issue,” but to help the jury understand the law itself. This is not permissible.
The Court further clarified its holding saying, “[h]ad Ms. Kramer offered opinions moored to the facts of this case, such opinions would not have been inadmissible merely because they included reference to legal terms or regulations. See, e.g., Hangarter v. Provident Life and Acc. Ins. Co., 373 F.3d 998, 1017 (9th Cir.2004) (citation omitted) (“[A] witness may properly be called upon to aid the jury in understanding the facts in evidence even though reference to those facts is couched in legal terms.”). However, Ms. Kramer’s report as drafted, and hence her anticipated testimony, was effectively a surrogate for legal instructions to the jury. This is not allowable.
D.Kan.: Plaintiff May Serve Amended Complaint Asserting Successor Liability In FLSA Case
Chao v. Concrete Management Resources, L.L.C.
Plaintiff filed this wage and hour suit against defendants alleging violations of the overtime and recordkeeping provisions of the Fair Labor Standards Act (FLSA). In her complaint, plaintiff alleged that defendant Concrete Management Resources, L.L.C. (CMR) was formerly known as Concrete Masonry & Restoration, L.L.C. Defendant CMR moved to dismiss the complaint on the grounds that it was not a proper party to the action. Specifically, CMR contended that it has never operated as Concrete Masonry & Restoration, L.L.C. and that CMR is a separate legal entity from Concrete Masonry & Restoration, L.L.C. CMR contended that any FLSA violations were committed by Concrete Masonry & Restoration., L.L.C. and that CMR has no relationship with that entity.
The Court entered an Order permitting Plaintiff leave to file an Amended Complaint, asserting successor liability, stating, “[t]he court believes that the Tenth Circuit, if faced with the issue, would conclude that successor liability exists under the FLSA. Indeed, the Circuit had little difficulty extending the doctrine to the Title VII context-long before the Ninth Circuit’s decision in Steinbach. Trujillo, 694 F.2d at 224-25. In doing so, the Circuit emphasized that the “same policy considerations” supporting the application of the doctrine in the labor law context mandated the application of the doctrine to remedy violations of Title VII. Id. at 224. The Circuit also cautioned, however, that “successor liability is not automatic but should be determined on a case by case basis” through application of the ” MacMillan factors,” including whether the successor company had notice of the charge; the ability of the predecessor to provide relief; and whether there has been a substantial continuity in operations, work force, location, management, working conditions and methods of production. Id. at 225 & n. 3. The court, then, rejects defendant’s suggestion that plaintiff’s amendment is futile because the Tenth Circuit has not recognized the theory of successor liability under the FLSA.”
In so doing, the Court joined other Courts, namely the Ninth Circuit in expressly recognizing the existence of successor liability in an FLSA context.
11th Cir.: Plaintiff Not Entitled To Prevailing Attorneys’ Fees, Although She Prevailed, Because Plaintiff’s Attorney Owed A Greater Duty To The Defendant, Who Violated The FLSA, Than His Own Client
Sahyers v. Prugh, Holliday & Karatinos, P.L.
In a decision, which is widely being questioned in legal and scholarly circles, the 11th Circuit affirmed the lower Court’s decision that Plaintiff’s attorney was not entitled to any attorney’s fee, despite the fact that Plaintiff was the prevailing party in this FLSA case.
The Court stated: “The district court’s inherent powers support its decision here. Defendants are lawyers and their law firm. And the lawyer for Plaintiff made absolutely no effort-no phone call; no email; no letter-to inform them of Plaintiff’s impending claim much less to resolve this dispute before filing suit. Plaintiff’s lawyer slavishly followed his client’s instructions and-without a word to Defendants in advance-just sued his fellow lawyers. As the district court saw it, this conscious disregard for lawyer-to-lawyer collegiality and civility caused (among other things) the judiciary to waste significant time and resources on unnecessary litigation and stood in stark contrast to the behavior expected of an officer of the court. The district court refused to reward-and thereby to encourage-uncivil conduct by awarding Plaintiff attorney’s fees or costs. Given the district court’s power of oversight for the bar, we cannot say that this decision was outside of the bounds of the district court’s discretion.”
Perhaps recognizing that its decision held starkly against black letter law and over 70 years of nationwide jurisprudence, the Court limited its decision by stating, “[w]e strongly caution against inferring too much from our decision today. These kinds of decisions are fact-intensive. We put aside cases in which lawyers are not parties. We do not say that pre-suit notice is usually required or even often required under the FLSA to receive an award of attorney’s fees or costs. Nor do we now recommend that courts use their inherent powers to deny prevailing parties attorney’s fees or costs. We declare no judicial duty. We create no presumptions. We conclude only that the district court did not abuse its discretion in declining to award some attorney’s fees and costs based on the facts of this case.”
While it remains to be seen what, if any, precedential value this decision will have, given the language clearly limiting the scope of the decision, it is clear that the 11th Circuit thinks that attorney Defendants should be treated differently from other Defendants in FLSA cases. In fact, the Court went to great lengths to make it clear that it believes an attorney owes a greater duty to a fellow member of the bar, than to his or her own client. Interestingly, while recognizing that the FLSA does not require a pre-suit notice letter, apparently the Court has created such a requirement if the Defendant is an attorney.
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