D.Md.: Time Chicken Plant Workers Spent Donning & Doffing PPE Compensable; Plant’s Take Home Policy Is “Illusory”
Perez v. Mountaire Farms, Inc.
This opinion was rendered by the Court following a bench trial where expert and lay testimony was presented by both the employees and the employer. The primary issue in the case, was the oft-litigated issue of whether time the employees spent donning and doffing personal protection equipment (PPE), is compensable under the FLSA (as benefiting the employer), or not. In finding that such time is compensable the Court addressed several arguments presented by the Defendant to the contrary.
“The DOL has defined “work day” as “the period between the commencement and completion on the same work day of an employee’s principal activity or activities.” 29 C.F.R. § 790.6(a), (b). “[T]o the extent that activities engaged in by an employee occurs after the employee commences to perform the first principal activity on a particular work day and before he ceases the performance of the last principal activity on a particular work day,” those activities are not exempted from FLSA and are compensable. Id. Thus, under the “continuous work day” rule, any activity-donning and doffing, walking, waiting, sanitizing-undertaken by the employee after the work day has begun is compensable. See IBP, Inc. v. Alvarez, 546 U.S. at 28-29.
The Supreme Court has held that activities that are “integral and indispensable” to principal activities are themselves principal activities-not pre- or postliminary-and are therefore compensable under the FLSA. Steiner v. Mitchell, 350 U.S. 247, 256 (1956) (“activities performed either before or after the regular work shift, on or off the production line, are compensable … if those activities are an integral and indispensable part of the principal activities”). In my March 9, 2009 Memorandum and Order, I discussed the various approaches adopted by different circuits in defining the types of activities that are “integral and indispensable” to principal activities. In the end, I chose to follow the Ninth Circuit’s two part test: that donning and doffing of unique and non-unique protective gear are “integral and indispensable” if doing so is (1) necessary to the principal work performed and (2) done for the benefit of the employer. See Alvarez, 339 F.3d at 902-03. However, I left for determination at trial the specific question of whether donning and doffing PPE is “integral and indispensable” to the principal work of chicken processing. I find and conclude that it is.
First, donning and doffing is necessary to the principal work of chicken processing. It is undisputed that all employees are required to wear the following items no matter the department in which they work: wear plugs, bump caps, smocks (also called coats), hair/beard nets, and steel toed rubber boots. These items are required by Mountaire company policy, United States Department of Agriculture (“USDA”) sanitary regulations, and Occupational Safety and Health Administration safety requirements (“OSHA”). For example, OSHA requires employees to wear ear plugs to protect the employees’ ears. Different ear plugs have different OSHA ratings and employees are required to wear specific ear plugs depending on which section of the plant they work and how noisy that section is.
Other PPE items are required in order to keep the chickens clean. According to Alan Zlotorynski, a human resources manager at a different Mountaire plant, Mountaire requires employees to wear bump caps not to protect employees from actually bumping their heads, but because bump caps prevent employees’ hairs from falling into the products. The bump caps are not made of the same grade or quality of a helmet that prevents head injuries when worn. The primary purpose of the bump caps is to protect the product. The same may be said for hair and beard nets. In addition, employees must don and doff smocks, aprons, and gloves to safely handle chickens. Employees are not allowed to take smocks, aprons, or gloves into restrooms for sanitary reasons. Employees are likewise prohibited from taking aprons into the cafeteria. Shitwa Perez, an employee in the evisceration, salvage, and debone department, testified that an inspector specifically told her to replace her smocks to prevent contaminating the food. I credit this testimony. Clean smocks are so integral to chicken processing that the company launders the smocks daily and provides them to the employees on racks in easily accessible hallways.
Defense witnesses testified that everyone entering the production floor is required to wear all of these listed PPE items. But, the fact that everyone is required to wear these PPE items does not negate the fact that wearing them is required for chicken processing at Mountaire. Donning and doffing the required PPE are paramount to complying with federal regulations as well as producing safe products. Indeed, donning and doffing is so important to the work done at Mountaire that employees are subject to discipline or termination for failing to comply with donning requirements.
Other PPE that are not per se required by Mountaire are no less necessary for chicken processing. The workers testified during trial that they must wear clean cotton gloves in order to properly do their work. Mountaire does not require employees to wear cotton gloves; however, I find that cotton gloves are necessary to the principal work of chicken processing. Ray Barrientos, for example, worked on the Evisceration department. Workers in this department process chickens that have recently been dipped in scalding water and plucked. When the chickens arrive at his work station, therefore, the chickens are extremely hot and difficult to handle. Barrientos, and others on his line, are required to hang 45 chickens per minute. During cross-examination, Barrientos did admit that he may be able to perform his work without cotton gloves. Without the gloves, however, it would be impossible to hang the chickens properly at the pace required by Mountaire.
Luisa Perez, who worked in the breast debone department, encountered a different problem than Ray Barrientos. The temperature in the debone department was kept at 45 ° F. She had to wear fabric gloves under her mesh gloves in order to keep her hands warm. Moreover, she needed clean gloves to hold the knives safely because the blood and fat from the chickens made the knives extremely slippery. Cold hands make using knives, scissors, and other cutting equipment more dangerous to use. It is extremely clear that the PPE items are necessary to processing chickens properly.
Second, donning and doffing is done for the benefit of Defendant-employers. Michael Tirrell summarized the benefits of donning and doffing well. He testified that employees benefit from donning and doffing the PPE items inasmuch as the PPE items protects employees from workplace hazards. He also testified that Mountaire benefits from the employees’ donning and doffing because the PPE protects the products from contamination, helps keep workers compensation payments down, keeps missed time to a minimum, and shields the company from pain and suffering payments. I find and conclude that Mountaire is the primary beneficiary of the donning and doffing.”
The Court then addressed Defendant’s contention that the time is not compensable, because the employees have the option of taking home their PPE and changing there, rather than at work. Rejecting this argument, the Court stated it believed this was simply an “illusory” argument:
“In May 2006, DOL issued an advisory opinion stating that “if employees have the option and ability to change into the required gear at home, changing into the gear is not a principal activity, even when it takes place at the plant.” DOL Wage & Adv. Mem. No.2006-2 (May 31, 2006).FN1 In Abbe v. City of San Diego, the Southern District of California granted the city’s summary judgment motion because it could find “no evidence that its officers were required by law, policy, or the nature of their work to don and doff their uniform or safety equipment at work.” 2007 WL 4146696 at *7 (S.D.Cal. Nov. 9, 2007). The Northern District of California, on the other hand, concluded that donning and doffing may be compensable even if performed off the employer’s premises because “the location of the donning and doffing activity [should] be only one of the considerations” in determining if an activity is compensable. Lemmon v. City of San Leandro, 538 F.Supp.2d 1200, 1207 (N.D.Cal.2007). The important question is whether employees “actually have a meaningful opportunity to don their protective gear at home, or instead, whether that option is illusory.” Martin v. City of Richmond, 504 F.Supp.2d 766, 775 (N.D.Cal 2007).
The same memorandum includes a footnote which reads, “Since, like donning, obtaining the gear (as opposed to waiting to obtain the gear) ‘is always essential if the worker is to do his job,’ the compensable day starts once the employee has obtained the gear required to be stored on the premises by taking items out of a bin, a locker or another designated storage area.” Defendants would have the court read the phrase “required to be stored on the premises” strictly. They argue that, because PPE items are not required to be kept at the plant, the compensable day does not start when the employee dons PPE. I decline to read the DOL footnote so strictly. I find and conclude that the phrase “required to be stored on the premises” has a more practical meaning. The PPE were required to be stored at the premises because Mountaire gives each employee a locker in which to store all of the PPE and because, in reality, employees keep their PPE in their lockers, thereby making the option to take PPE home, illusory.
Defendants assert that employees have the option of taking home all of their PPE items; thus, donning and doffing cannot be a principal activity per DOL’s advisory opinion. I disagree. This case differs from Abbe in that Mountaire employees are required by law, policy, and the nature of the work to don and doff their PPE at work. More importantly, I find the take home option illusory. Employees are provided with lockers. Any employee who requests a locker receives one. Employers recently expanded the number of employee lockers. If changing at home were a bona fide option, there would be no real need for employee lockers or for Defendants to incur the costs of installing them. While employees are required to clean out their lockers on Fridays, they keep all of their PPE items in the lockers during the week. Dr. Radwin’s videos show employees storing their PPE items in their lockers at the end of the day, rather than taking those items home. As a practical matter, it would be onerous and indeed impractical for employees to take home a host of PPE (ear plugs, bump caps, smocks, aprons, hair/beard nets, and steel toed rubber boots) everyday when they have the option and ability to leave them in their lockers at the plant.
While Tirrell testified that he has seen employees driving around town with all of their PPE on, this particular incidence happens once in a “blue moon.” And it certainly does not happen in the middle of a humid Delaware summer. Furthermore, employees were not allowed to take smocks home prior to July 9, 2006. The normal order of donning is as follows: the smock goes on first, followed by the apron, the arm sleeves, and gloves. The smock is the foundation of the PPE. It must be in place before other gear can be donned. Complete donning for work, therefore, cannot be achieved until the lab coat is donned. So, even if employees were taking their PPE home before July 9, 2006, they could not commence the donning process until after they arrived at the plant.
Defendants emphasize that employees were allowed to take smocks home beginning on July 9, 2006. This fact does not strengthen Defendants’ take home defense. First, it is wholly illogical for employees to take home smocks soiled with chicken blood and fat when the company (1) provides hampers, close to the exits, in which employees may place the soiled smocks, (2) launders the smocks free of charge, and (3) provides clean smocks, arranged neatly on racks that are easily accessible at the plant hallways, at the beginning of the shifts. Second, it is plausible that employees take home clean smocks at the end of their shifts, before they go home; however, no witnesses have testified that this is a normal occurrence. To the contrary, Defendants’ expert Dr. Davis testified during deposition and at trial that he did not see anyone taking a smock home at the end of the day in the two separate weeks in which he conducted his study at Millsboro. The workers testified during trial that they all pick up smocks at the beginning of their shifts. Indeed, Dr. Radwin’s videos also confirm that the majority of employees pick up smocks at the beginning of their shifts. Zlotorynski also testified to this effect during depositions.
Third, even if employees do take clean smocks home at the end of the day, employees keep the rest of their PPE in their lockers so they would still need to report to the plant in advance of the start of line time to finish donning all of their PPE. It is quite clear that Mountaire employees did not “actually have a meaningful opportunity to don their protective gear at home.” Martin, 504 F.Supp.2d at 775. The take home option is illusory.
Defendants’ motivation for enacting the smock take home policy also bolsters the conclusion that the take home option is illusory. Tirrell’s email to various company personnel indicated that the smock take-home policy was designed to “effectively eliminate the donning and doffing issue.” This same email also indicated that Mountaire personnel “should have begun moving the hand wash sinks out to the dept areas to delay the ‘first principal activity’ until the line started.” Clearly, the decisions to institute the smock take home policy and moving the sinks closer to the production floor were motivated by Mountaire’s desire to circumvent DOL’s persistent directives that Mountaire must compensate employees for donning and doffing time. The same email thread, however, highlights the fact that the take home option is illusory. Replying to Tirrell’s email, Everett Brown, a Mountaire employee, wrote, “At this point we have talked with each employee and they are signing their name saying they understand they have the option to take the coat or not take the coat. Most are not taking the coat and don’t want it the night before. However as with all their other equipment they have the option.” This exchange elucidates Defendants’ position: that the important thing is that employees have a take home option, and not that the option is meaningful.”
9th Cir.: FLSA Applicable To Retail Business Located On An Indian Reservation, Owned By Indian Tribal Members
Solis v. Matheson
Appellant Paul Matheson is a member of the Puyallup Tribe. The Puyallup Tribe is a Pacific Northwest Indian tribe that has a reservation in the State of Washington. Paul Matheson owns and operates a retail store known as Baby Zack’s Smoke Shop (“Baby Zack’s”), located on trust land within the Puyallup Indian Reservation. Appellant Baby Zack’s sells tobacco products and sundries to Indians and non-Indians. Some of the goods sold by Baby Zack’s have been shipped in from locations outside the State of Washington. Baby Zack’s accepts credit card and debit card payments and uses electronic or telephonic means of communication to banks and credit card companies located outside of the State of Washington. Baby Zack’s regularly employs both Indian and non-Indian workers.
In 2004 and 2005, Baby Zack’s had an annual gross volume of sales of not less than $500,000. Paul and Nick Matheson are employers within the meaning of the FLSA. If the FLSA applies, the amount of wages due to employees and former employees is $31,354.87.
Although they acknowledged that they were enterprises otherwise covered by the FLSA, Defendants argued that they were exempt from the FLSA, because they qualify for either or both the intramural affairs exception set forth in Donovan v. Coeur d’Alene Tribal Farm, 751 F.2d 1113, 1115-16 (9th Cir.1985), or the treaty rights exception. The Court disagreed holding:
“In this opinion we resolve whether the overtime provisions of the Fair Labor Standards Act (“FLSA”) apply to a retail business located on an Indian reservation and owned by Indian tribal members. We also resolve whether Appellee the Secretary of Labor for the United States Department of Labor (the “Secretary”) has the authority to enter the Indian reservation to inspect the books of that business… We conclude that the overtime requirements of the FLSA apply to the retail business at issue in this case. Because the FLSA applies to the retail business, we conclude that the Secretary had the authority to enter the Indian reservation to audit the books of the business, as she would regularly do with respect to any private business. We therefore affirm the decision of the district court on these two issues.”
In a separate issue, the Court found that the District Court’s appointment of a receiver due to Defendants’ failure to pay overtime wages was premature and reversed on that issue, stating, “[w]e conclude that the district court’s decision with respect to the automatic appointment of a receiver over the retail business in the event the overtime payments were not made was premature. We therefore vacate that portion of the judgment.”
N.D.Ill.: Offer Of Judgment, Silent On Its Face As To Attorneys Fees And Costs, Read To Allow For Attorneys Fees And Costs
Garcia v. Oasis Legal Finance Operating Co.
Plaintiff filed a one-count Complaint against Defendant in which she asserted violations of the Equal Pay Act, 29 U.S.C, § 206 et seq., and requested, inter alia, the following relief; an Order awarding her the difference between wages paid to her and those paid to similarly situated male employees, liquidated damages, and statutory attorneys’ fees and costs. Defendant answered the Complaint, denying the material allegations. This Motion concerned Plaintiff’s acceptance of Defendant’s Offer of Judgment, as more fully detailed below.
On November 20, 2008, Defendant’s attorney mailed a Rule 68 Offer of Judgment to Garcia’s counsel. Defendant’s attorney also faxed a copy of this Offer to Plaintiff’s counsel on that same date. This Offer read in its entirety:
As you know our firm represents Oasis Legal Finance, LLC, and Oasis Legal Finance Operating, LLC in reference to the above captioned matter. This letter is being written to you pursuant to F .R.C.P. 68, “Offer of Judgment”. Please be advised that pursuant to F.R.C.P. 68 the defendants offer judgment to the plaintiff, Karina Garcia, in the sum of $3,850.00. Pursuant to F.R.C.P. 68, your client has ten (10) days to accept the offer in judgment as set forth herein. If you have any questions, please contact me. Thank you,
On December 8, 2008, Plaintiff’s attorney submitted a letter to Oasis’ counsel accepting the Offer. This letter read in its entirety:
This letter is in response to Defendant’s offer of judgment which was served via U.S. mail on November 20, 2008. Your letter provided only that “defendants offer judgment to the plaintiff, Karina Garcia, in the sum of $3,850.00” in connection with Ms. Garcia’s cause of action under the Equal Pay Act in the above referenced federal case. Because the offer of judgment is for an amount in excess of the value of Plaintiff’s Equal Pay Act claim, Plaintiff hereby accepts the offer of judgment as stated for her currently pending federal action. Since Defendant’s offer made no reference to costs or attorney’s fees, Plaintiff will proceed with a petition for fees and costs as to this cause of action upon entry of the judgment. Plaintiff’s claims under Title VII and the Illinois Human Rights Act remain under investigation at the EEOC/IDHR and cannot be resolved through the offer of judgment. If you wish to discuss those claims as the investigation moves forward, please feel free to call me.
Defndant then filed a Motion to Strike Plaintiff’s Purported Acceptance of Offer of Judgment, asserting Plaintiff’s purported acceptance was not in fact an acceptance, but was rather a rejection and a counter-offer, which is impermissible under Rule 68, Plaintiff cross-motioned for judgment in her favor. On January 26, 2009, the Court granted Plaintiff’s Motion, denied Defendant’s Motion, and directed the Clerk to enter judgment for Plaintiff. The Clerk entered judgment on January 27, 2009. The Court, in its January 26, 2009 Opinion and Order, granted Plaintiff leave to file a motion for attorneys’ fees if it was appropriate to do so. Plaintiff filed her Motion for Attorneys’ Fees on February 17, 2009.
“Oasis correctly asserts that its Rule 68 Offer covered the sole Count of Garcia’s complaint, and that Garcia’s claim sought attorneys’ fees as part of the requested relief. The Court must therefore first determine, as a threshold matter, whether Garcia’s acceptance of Oasis’ Offer of Judgment precludes her from seeking a further award of attorneys’ fees.
Oasis contends that Nordby controls. In that case, defendants made a Rule 68 Offer of Judgment “in the amount of $56,003.00 plus $1,000 in costs as one total sum as to all counts of the amended complaint.” Nordby, 199 F.3d at 391. Plaintiff accepted the Offer, and moved the district court for a statutory award of attorneys’ fees. Id. The court denied the motion, reasoning that the Offer as accepted included fees. Id. On the specific set of facts before it, the Seventh Circuit affirmed, finding that the Offer unambiguously included fees. ” ‘One total sum as to all counts of the amended complaint’ can only mean one amount encompassing all the relief sought in the counts. One of those counts specified attorneys’ fees as part of the relief sought. That relief was covered by the offer.” Id. at 392.
Garcia, on the other hand, asserts that Oasis’ Offer of Judgment is more like the one made by defendants in Webb. In that case, defendants’ Offer read in its entirety; “The Defendants, Dick James and Dick James Ford, Inc., by their attorneys, Steven C. Wolf and Victoria A. Barnes, hereby make an offer of judgment in the above-captioned matter in the amount of Fifty Thousand Dollars ($50,000.00) pursuant to Federal Rule of Civil Procedure 68.” Webb, 147 F.3d at 619. The district court granted plaintiff’s separate motion for fees, and the Seventh Circuit affirmed. The Seventh Circuit first noted that, “[o]n its face, the offer did not address costs or fees,” id., and later observed that it would have been a simple matter for defendants to “have drafted the offer to signal Webb that it was inclusive of attorney’s fees.” Id. at 623, Because a Rule 68 Offer puts plaintiffs at risk whether or not they accept it, the Seventh Circuit reasoned, “the defendant must make clear whether the offer is inclusive of fees when the underlying statute provides fees for the prevailing party … [T]he plaintiff should not be left in the position of guessing what a court will later hold the offer means.” Id. The Seventh Circuit found that the defendants should therefore “bear the burden of the ambiguity created by their silence on fees,” and held that the district court could “award an additional amount to cover costs and fees.” Id.
In this case, although it is a close call, the Court determines that the Offer of Judgment made by Oasis is more like the one in Webb than the one in Nordby. Here, the Offer of Judgment states in part, “Please be advised that pursuant to F.R.C.P. 68 the defendants offer judgment to the plaintiff, Karina Garcia, in the sum of $3,850.00.” The Offer is silent as to attorneys’ fees and costs, and does not include, like the Offer in Nordby, language to the effect that the Offer is “one total sum” as to the entirety of Garcia’s requested relief Moreover, there is no question that it would have been a simple matter for Oasis to clearly indicate in its Offer whether fees were included. A standard Rule 68 Offer of Judgment form published by Bender’s Federal Practice includes specific language defendants can use to indicate that costs and fees are included in an Offer of Judgment. 11-68 Bender’s Federal Practice Forms No. 68:3; see also 11-68 Bender’s Federal practice Forms, Comment on Rule 68, ¶ 6 (“it is well established that when an offer is silent about whether the sum specified includes costs and attorney’s fees, the silence means that the court will add costs and attorney’s fees to the amount stated. An argument that the lump sum was meant to include all costs and attorney’s fees will be unavailing.”). Because Oasis failed to take the simple step of indicating whether the Offer included fees and costs, Oasis must “bear the burden of [its] ambiguity created by [its] silence on fees.” See Webb, 147 F.3d at 619. The Court therefore determines that Garcia’s acceptance of Oasis’ Offer of Judgment does not preclude her from pursuing an award of fees and costs.”
Rodriguez v. Diego’s Restaurant, Inc.
The parties reached a settlement and on August 7, 2008, the Court conducted a fairness hearing pursuant to Lynn Food Stores v. United States, 679 F.2d 1350, 1352-53 (11th Cir.1982). On the same day, the Court issued an Order dismissing the case with prejudice and retaining jurisdiction to enforce the terms of the settlement until October 15, 2008. The defendants did not make the scheduled payment and on September 19, 2008, the plaintiff filed Plaintiff’s Motion for Final Default Judgment Against Defendants. Defendants moved to dismiss the case for lack of subject matter jurisdiction, despite the fact that they had stipulated on multiple occasions that FLSA jurisdiction had been met.
The Court acknowledged that the Eleventh Circuit has yet to address the issue head on of whether FLSA coverage is jurisdictional, stating, “[t]he issue of whether individual or enterprise coverage is jurisdictional or only a required element of the plaintiff’s claim has not been resolved in this Circuit. The Eleventh Circuit in Turcios v. Delicias Hispanas Corp., 275 Fed. Appx. 879, *2 (11th Cir. Apr. 29, 2008) found that “the question of enterprise coverage was intertwined with the merits of an FLSA claim.” In Turcios, the district court dismissed the plaintiff’s complaint for lack of subject matter jurisdiction under Fed.R.Civ.P. 12(b)(1). The plaintiff appealed the ruling. On appeal, the Eleventh Circuit reversed the district court holding that the lower court should have applied the Rule 56 summary judgment standard. Id. at *1. The Eleventh Circuit observed that the same operative facts determine whether the plaintiff can recover under the FLSA and the scope of the FLSA’s coverage. “In short, the sections of the FLSA that provide the substantive relief, § § 206 and 207, are interwined with and dependent on the section of the FLSA that defines the scope of the FLSA, § 203.” Id. at 2. The Eleventh Circuit acknowledged that the First Circuit in Chao v. Hotel Oasis, Inc., 493 F.3d 26, 33 (1st Cir.2007) concluded that enterprise coverage was not jurisdictional under the FLSA in light of the Supreme Court’s ruling in Arbaugh v. Y & H Corp., 546 U.S. 500 (2006). Id. at * 2 n. 5. Nonetheless, the Eleventh Circuit declined to decide the issue in Turcios because the parties did not dispute the jurisdictional nature of enterprise coverage. Id.”
After discussing the case law related to the issue from around the country, the Court concluded, “[i]n sum, the Court finds that the individual or enterprise coverage prongs are elements of the plaintiff’s claim and are not jurisdictional. Because these are elements of the plaintiff’s claim, the defendant was required to raise any attacks on these elements in a timely manner. “[T]he objection that a complaint ‘fail[s] to state a claim upon which relief can be granted,’ Rule 12(b)(6), may not be asserted post trial.” Here, the instant case settled on the eve of the calendar call. The Court held a fairness hearing, approved the settlement and dismissed the case on August 7, 2008. Fifty-five days after the case was dismissed, the defendants filed their motion to dismiss. Under these facts, any motion for failure to state a claim under Rule 12(b)(6) is untimely. Additionally, the defendants waived the right to assert any affirmative defenses to individual or enterprise coverage by stipulating that these elements were met. See Chao v. Hotel Oasis, Inc., 493 F.3d 26, 33 (1st Cir.2007) (finding no abuse of discretion in district court’s decision to hold the defendants to their stipulation that the $500,000 gross annual sales element had been met).”
In so doing, the Court joined the majority of Courts who have decided the issue. While the question is still one that is open in some courts, more and more courts seem to be adopting the majority view that FLSA coverage is non-jurisdictional in nature.
D.Minn.: Whether Defendant Is An “Employer” Under 216(b) Is Element Of The Claim, Not Jurisdictional
Saleen v. Waste Management, Inc.
Plaintiffs brought this action to recover overtime compensation under the Fair Labor Standards Act (“FLSA”), 29 U.S.C. §§ 201 et seq. The matter was before the Court on the Defendant’s motion of to dismiss for lack of subject-matter jurisdiction. WMI argued that, because plaintiffs were employed by two of its subsidiaries, and not by Defendant itself, Defendant is not plaintiffs’ “employer” within the meaning of the FLSA. Defendant further argued that, because Defendant is not an “employer” within the meaning of the FLSA, the Court lacked subject-matter jurisdiction over this action. The Court disagreed with the latter argument, and thus the Court did not take up the former argument at this time.
The Court held that Defendant’s assertion that it is not an “employer” under the FLSA is a defense on the merits and not a challenge to subject-matter jurisdiction. Therefore, Defendant’s motion to dismiss for lack of subject-matter jurisdiction was denied.
The Court declined to treat Defendant’s motion as one for summary judgment, because plaintiffs had not yet had an opportunity to conduct discovery.
S.D.N.Y.: Email From Employer’s “Management Team” Regarding FLSA Classification Not Attorney-Client Privileged
Clarke v. J.P. Morgan Chase & Co.
Before the Court in this FLSA/Overtime Law case was an application by defendant, J.P. Morgan Chase & Co. for an order compelling plaintiffs to return or destroy all copies of an e-mail message, dated December 3, 2007, allegedly sent from Defendant’s Global Technology Infrastructure Management Team (the “GTI Management Team”) to “all those in GTI who manage employees impacted by upcoming FLSA changes.” Defendants contended that the e-mail is protected by the attorney-client privilege and the work product doctrine and that the email, intended solely for senior management, was errantly forwarded to Plaintiffs, who it was not intended for. After considering arguments from both parties, the Court denied Defendant’s application, finding that the email lacked confidentiality and was not an attorney-client communication either.
First the Court addressed whether the email was in fact an “attorney-client communication”:
“Here, when distributed to management employees, the e-mail in question did not state that it was prepared by or was being sent from Gutfleisch; rather, the “sender” of the e-mail was identified only as the GTI Management Team. (Defendant’s 3/3/09 Letter, at Ex. A2.) Nor did the e-mail state that it contained privileged information. (Id.) Nor did it state that any of the information incorporated therein had been obtained from counsel, or was based on communications from counsel, or even that counsel had been consulted.(Id.) Nor did it state that the policy change reflected in the e-mail was intended to implement a recommendation of counsel. (Id.)
Defendant has the burden of establishing that the e-mail is privileged, see Mercator Corp. v. United States, 318 F.3d 379, 384 (2d Cir.2002), and, as a threshold matter, this includes showing that the recipients of the e-mail would have understood that it contained or referenced a communication from counsel. On this point, Defendant essentially asks the Court to assume that the recipients of the e-mail would have understood that the e-mail incorporated the advice of counsel because (1) the e-mail addressed the issue of FLSA compliance, (2) it noted facts regarding the IT employees’ job duties on which, according to Defendant, “no non-lawyer manager could ever have been expected to focus” (Defendant’s 3/3/09 Letter, at 4), and (3) it referenced litigation against other companies. Yet none of these aspects of the e-mail necessarily signaled to the recipients that the e-mail contained legal advice. Cf. Baptiste, 2004 U.S. Dist. LEXIS 2579, at *7 (finding that it was “of no moment that the e-mail was not authored by an attorney or addressed to an attorney” where the e-mail at issue “was clearly conveying information and advice given to [its author] by … outside counsel”); see also id. at *2 (noting that the e-mail at issue specifically referenced the author’s having spoken with counsel).)
Indeed, all of the information in the e-mail could easily have been understood to have come from senior management, working in conjunction with Defendant’s human resources (“HR”) department, as can be seen from the follow-up memorandum that was apparently sent out by the HR department on or about December 11, 2007. (See Letter to the Court from Sam S. Shaulson, Esq., dated April 1, 2009 (“Defendant’s 4/1/09 Letter”) (enclosing the follow-up memorandum), and attachment thereto; Defendant’s 3/3/09 Letter, at Ex. A2 (noting that follow-up would be sent on December 11 from “Corporate Sector HR”).). Not only does that second communication also fail to mention any involvement of counsel, but it suggests that the recipients tell the reclassified employees that “Human Resources and technology management partnered to conduct a review of Technology jobs to ensure they are classified consistently from an overtime eligibility standpoint.”(Defendant’s 4/1/09 Letter, attached exhibit, at TG00003.). Further, this follow-up memorandum explains that the reclassification was being made because, “[a]s a normal practice, we periodically review our jobs to ensure we have them classified consistently.” (Id. at TG00006). There is no implication that this particular compliance review was actually conducted by counsel and that the upshot of the review was a recommendation by counsel to implement a reclassification. On the contrary, the plain implication of the communications, especially when read together, was that the determination to reclassify certain employees was made by HR and “management,” as part of their “normal practice.” (Id. at TG00003, TG00006).”
Even if the Court were to find that an attorney-client relationship existed between Gutfleisch and the recipients of the e-mail, the way in which the e-mail was written in any event undermines any argument that a privileged communication was made with the expectation that it be kept confidential. Although the e-mail did request that the recipients “not begin any communication to employees prior to receiving specific details on December 11” (see Defendant’s 3/3/09 Letter, at Ex. A2), the e-mail did not flag that any of its contents, in particular, were privileged and should not be communicated. Further, the December 11 follow-up memorandum (which, as stated above, was sent out by corporate HR) was plainly intended to provide guidance as to how to communicate with the employees whose positions had been reclassified; nothing therein identified any particular information that was supposed to be held back and not conveyed. (Defendant’s 4/1/09 Letter, at attached exhibit). Thus, nothing about the original e-mail or its follow-up gave the recipients any indication that portions of the e-mail contained legal reasoning or legal advice that should be held in confidence.
Moreover, the fact that one or more of the affected employees actually obtained the e-mail in the course of their employment (see Declaration of Tapas Sarkar Regarding Letter Sent to Potential Class Members, dated Feb. 24, 2009 (“Sarkar Decl.”), at ¶¶ 2, 4-5, attached to Plaintiffs’ 2/24/09 Letter) bolsters the Court’s view that the recipients of the e-mail would not have been aware that it contained confidential legal advice.
At bottom, Defendant has not satisfied its burden of demonstrating that the recipients of the e-mail would have reasonably understood that its contents, or any specific portion of those contents, contained legal advice that was being communicated in confidence.”
S.D.N.Y.: Undocumented Immigrant FLSA Plaintiffs Failed To Plead Civil RICO Claim Based On Defendants’ Wage Violations
Nichols v. Mahoney
In this case, the Plaintiffs pled Civil RICO in addition to typical FLSA violations, and other relatively unique claims under the Sherman Act and the Donnelly Act. Specifically, the Plaintiffs claimed that the Defendants regularly paid substandard wages, and the practice resulted from their employment of undocumented immigrants in violation of federal laws. In dismissing the portion of Plaintiffs’ claims pertaining to Civil RICO, the Court found that the Plaintiffs had not properly alleged proximate cause of Defendants’ pattern of criminal activity and their damages due to wage violations.
“In evaluating whether the plaintiffs have adequately alleged proximate cause in this case, the Court focuses on the proposed amended complaint, because it adequately alleges the commission of a pattern of racketeering activity, to wit: two or more violations of the harboring statute. The question to be answered is whether the plaintiffs’ injury-the depression of their wages-was proximately cause by defendants’ hiding their illegal alien employees from the Government. The answer to that question is no.
There is no direct relationship between the harboring of illegal aliens and the plaintiffs’ depressed wages. Indeed, plaintiffs do not so allege. Rather, they contend that they were paid below-market wages because the defendants knowingly hired undocumented workers, who would and did work for wages that were lower than the prevailing rate. That act-the knowing hiring of illegal aliens-is specifically alleged to be the proximate cause of plaintiffs’ lower wages. (Am.Compl.¶¶ 45, 94, 109, 119, 128, 132.) As explained above, that act is not a RICO predicate act.
If plaintiffs had managed to plead that defendants knowingly hired 10 or more illegal aliens who defendants knew had been “brought into” the country-that is, if plaintiffs had successfully pled a violation of section 274(a)(3), which is a RICO predicate act-their proposed amended complaint might well plead proximate cause, as the Second Circuit found in analogous circumstances in Commercial Cleaning, 271 F.3d at 381-385. Of course, Commercial Cleaning is a pre-Anza case, so if plaintiffs had managed to plead that defendants knew some of their illegal employees had been “brought into” the country by others, this Court would have to consider whether Commercial Cleaning remains good law on this point. But plaintiffs’ failure to allege the requisite specific facts moots any such inquiry.
Because hiring illegal aliens without knowing they were “brought in” is not racketeering activity, plaintiffs’ allegation that hiring illegal aliens depressed wages-a correlation long recognized by courts, including the Supreme Court, see, e.g., DeCanas v. Bica, 424 U.S. 351, 356-357 (1976)-does not satisfy the requirement that plaintiffs plead injury caused by a pattern of racketeering activity. To clear that hurdle, plaintiffs need to plead facts tending to show that defendants’ harboring of illegal aliens proximately caused the drop in their wages. This they have not done.
Reading the plaintiffs’ proposed amended complaint in the most favorable light, they do allege that the defendants were able to keep their “scheme” to employ illegal aliens going by hiding the aliens from the Government-by “harboring” them. (See Am. Compl. ¶¶ 25-45, 64, 67-73, 76.) But the fact that harboring may have allowed the alleged injury to persist for a longer period does not mean that harboring caused the injury.
Furthermore, that the only allegation in the amended complaint connecting harboring and wages concerns the duration of the harm rather than its cause underscores another critical point. “The key reasons for requiring direct causation include avoiding unworkable difficulties in ascertaining what amount of the plaintiff’s injury was caused by the defendant’s wrongful action as opposed to other external factors.” First Nationwide Bank v. Gelt Funding Corp., 27 F.3d 763, 770 (2d Cir.1994). Any effort to quantify how much of plaintiffs’ depressed wages was caused by the harboring of illegal aliens, as opposed to hiring them or some other factor at work in the marketplace, would be even more inherently speculative than the proceeding anticipated (and condemned) by the Supreme Court in Anza.
Finally, because harboring is a direct affront to the Government, there is no need for private attorneys general like plaintiffs to bring damages actions in order to redress it. Just as the State of New York could be expected to pursue a corporation that was failing to pay state income tax, the Government can be expected to vindicate the laws against hiding aliens from the Government. This is not to say that proximate cause will be lacking every time a governmental entity has an interest in vindicating its laws. Indeed, any such result would effectively wipe the civil RICO statute off the books, since every RICO violation is predicated on a violation of some federal criminal statute-a violation that the United States, a “victim” whenever its laws are violated, has an incentive to remedy. However, in this case, where there is no direct or obvious connection between the racketeering activity alleged (harboring) and the harm to the plaintiffs (depressed wages), the fact that the direct victim of the harboring has the incentive to redress the harm (by capturing and deporting the aliens and by prosecuting the harboring employer) fatally undermines any contention that these plaintiffs have suffered injury by virtue of the alleged racketeering activity.
The amended complaint thus fails to state a claim under 18 U.S.C. § 1962(c). Because plaintiffs fails to plead any RICO violation, they also fail to plead any violation of 18 U.S.C. § 1962(d), the RICO conspiracy statute. All three RICO counts-Counts I, II and III-are dismissed.”
Johnson v. Big Lots Stores, Inc.
This case presented the issue of whether salaried “Assistant Store Managers” (ASM’s) were exempt pursuant to the FLSA’s executive exemption. In deciding that they were not, because their primary duty was not management, the Court went through a detailed analysis of the test required by the CFR.
David v. Signal Intern., LLC
Among their claims in this case, the undocumented immigrant Plaintiffs alleged various FLSA violations. The Defendants moved to compel information pertaining to Plaintiffs’ immigration status and the Court granted Plaintiffs request for a protective order, citing the in terrorem effect such a disclosures would likely have. The Court cited the other Courts who had held the same way and discussed the issue at great length.
The Defendants addressed the relevance of the information sought and contended that plaintiffs must demonstrate that the issues are not relevant to any claim or issue in the case, including plaintiffs’ civil rights or tort claims. Plaintiffs contended that the damage and prejudice which would result if discovery into their current immigration status were permitted far outweighs its probative value with respect to their discrimination and tort claims.
In discussing the issue the Court stated, “[t]his Court finds plaintiffs’ argument persuasive. Even if current immigration status were relevant to plaintiffs race/national origin discrimination, contract and tort claims, discovery of such information would have an intimidating effect on an employee’s willingness to assert his workplace rights. Plaintiffs’ claims and allegations of fact supporting same in the case at bar find no parallel in reported federal decisions reviewed by the undersigned. See, e.g., Rivera v. NIBCO, Inc., 364 F.3d 1057, 1065 (9th Cir.2004) (“[W]ere we to direct district courts to grant discovery requests for information related to immigration status in every case involving national origin discrimination under Title VII, countless acts of illegal and reprehensible conduct would go unreported.”).
As stated above, this is also an action for unpaid wages and overtime for work actually performed for Signal. Courts have recognized the in terrorem effect of inquiring into a party’s immigration status and authorization to work in this country when irrelevant to any material claim because it presents a “danger of intimidation [that] would inhibit plaintiffs in pursuing their rights.” Here, plaintiffs’ current immigration status is a collateral issue. The protective order becomes necessary as “[i]t is entirely likely that any undocumented [litigant] forced to produce documents related to his or her immigration status will withdraw from the suit rather than produce such documents and face … potential deportation.”
Liu v. Donna Karan International, Inc., 207 F.Supp.2d 191, 193 (S.D.N.Y.2002) (citations omitted).
Topo v. Dhir, 210 F.R.D. 76, 78 (S.D.N.Y.2002) (quoting Flores v. Albertsons Inc., 2002 WL 1163623, *6 (C. D.Cal. Apr. 9, 2002)); see also EEOC v. First Wireless Group, Inc., 225 F.R.D. 404 (E.D.N.Y.2004) (good cause shown for protective order where disclosure of immigration status would cause embarrassment, potential criminal charges, or deportation if status was discovered to be illegal).”