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S.D.N.Y.: Notwithstanding Defendants’ Disclaimer Of Liability, FLSA Plaintiffs That Accepted OJ Are “Prevailing Party”; Entitled To Reasonable Attorneys’ Fees And Costs
Kahlil v. Original Old Homestead Restaurant, Inc.
Plaintiffs moved for attorneys’ fees and costs following their acceptance of Defendants’ offer of judgment. The Defendants argued there was no fee entitlement, because their offer contained a disclaimer of liability. Rejecting this argument, the Court awarded Plaintiffs’ attorneys reasonable attorneys fees and costs.
The Court highlighted the following procedural history:
“Plaintiffs Sayed Kahlil, Wayne Walker, Mohamed Elmahdy and Brian Lahoff were employed as waiters at defendant The Original Old Homestead Restaurant. On January 30, 2007, plaintiffs filed a complaint to resolve wage and hour disputes arising under section 216(b) of the Fair Labor Standards Act of 1938 (“FLSA”) and section 198 of the New York State Labor Law (“NYLL”). 29 U.S.C. § 216(b) (2008); N.Y. Lab. Law § 198 (McKinney 2009). Plaintiffs were represented in this matter by Louis Pechman, a partner at Berke-Weiss & Pechman LLP (“BWP”), and Jaime Duguay, an associate at the same firm. On April 29, 2008, mid-way through the discovery process, defendants submitted an offer of judgment in the amount of $36,000, exclusive of attorneys’ fees, pursuant to Rule 68 of the Federal Rules of Civil Procedure. Plaintiffs accepted the offer of judgment on May 8, 2008, and judgment was entered by the Clerk on May 30, 2008. On June 13, 2008, plaintiffs filed a Motion for Attorneys’ Fees and Costs, pursuant to FLSA § 216(b) and NYLL § 198. Plaintiffs seek $119,737.15 to compensate Pechman and Duguay for labor and costs incurred up to the filing of the motion. Defendants oppose the award of attorneys’ fees and costs on the grounds that plaintiffs did not prevail in the foregoing litigation. In the alternative, defendants contend that the requested fee award should be reduced in light of Pechman’s excessively high hourly rate, the limited nature of plaintiffs’ success, the vagueness of BWP’s time entries, BWP’s small size, excessive hours, billing of clerical tasks at attorney rates, and billing of work completed prior to the filing of the complaint.”
The Court then determined that Plaintiffs were the “prevailing party” as defined by the FLSA:
In an action pursuant to the FLSA, a “prevailing party” must be awarded reasonable attorneys’ fees and costs: “The Court in such action shall … allow a reasonable attorney’s fee to be paid by the defendant, and costs of the action.” 29 U.S.C. § 216(b) (emphasis added). Likewise, the NYLL requires that “[i]n any action … in which the employee prevails, the court shall allow such employee reasonable attorney’s fees ….“ § 198(1-a) (emphasis added).
Plaintiffs are the prevailing party for the purposes of the FLSA and NYLL “if they succeed on any significant issue in litigation which achieves some of the benefit the parties sought in bringing suit.” Hensley v. Eckerhart, 461 U.S. 424, 433 (1983) (quoting Nadeau v. Helgemoe, 581 F.2d 275, 278-79 (1st Cir.1978)). Likewise, to qualify as a prevailing party, a plaintiff must demonstrate a change in the legal relationship between itself and the defendant arising from the resolution of the lawsuit. Texas State Teachers Ass’n v. Garland Indep. Sch. Dist., 489 U.S. 782, 792 (1989).
The judgment in this case suffices to establish plaintiffs as the prevailing party under the FLSA and NYLL. Where, as here, plaintiffs obtained a favorable settlement, they are entitled to an award of attorneys’ fees: “[t]he fact that [plaintiff] prevailed through a settlement rather than through litigation does not weaken [plaintiff’s] claim to fees.” Maher v. Gagne, 448 U.S. 122, 129 (1980). Defendants contend that the settlement is insufficient to render plaintiffs the prevailing party because the complaint sought monetary, declaratory, and equitable relief, while the offer of judgment provided only monetary relief. The Court finds defendants’ argument unpersuasive. Plaintiffs surely obtained some of the relief sought, and no court in this circuit has indicated that relief obtained in settlement must exactly match relief sought in the complaint. See Lyte v. Sara Lee Corp., 950 F.2d. 101, 104 (2d Cir.1991) (holding that a plaintiff may be considered a prevailing party if the relief obtained through settlement is of the “same general type” as relief requested in the complaint); Koster v. Perales, 903 F.2d 131, 134 (2d Cir.1990) (“A plaintiff may be considered a prevailing party even though the relief ultimately obtained is not identical to the relief demanded in the complaint”); Texas State Teachers Ass’n., 489 U.S. at 791-92 (indicating that a plaintiff’s receipt of some of the benefit sought is enough to “cross the threshold to a fee award of some kind”).
The Court also finds unpersuasive defendants’ argument that the disclaimer of liability in the offer of judgment indicates that the settlement did not change the legal relationship between the parties, and therefore that plaintiffs are not the prevailing party. It is not necessary for a defendant to admit liability in order for a plaintiff to be designated as the prevailing party. In Buckhannon, the Supreme Court indicated that a consent judgment without an admission of liability by the defendant “[is] nonetheless … a court-ordered ‘chang[e][in] the legal relationship between [the plaintiff] and the defendant.’ “ 532 U.S. at 604, citing Texas State Teachers Ass’n., 489 U.S. at 792. Further, the Supreme Court in Maher v. Gagne upheld an award of attorneys’ fees based on a settlement agreement containing a disclaimer of liability similar to the one in defendants’ offer of judgment. See 448 U.S. at 126 n. 8. The Court therefore finds that plaintiffs are the prevailing party, and that they are entitled to attorneys’ fees and costs under the FLSA and NYLL.”
Thus, the Court calculated a reasonable attorneys fee and costs and awarded same to Plaintiffs’ counsel.
D.Minn.: “Special Investigators” For Insurance Company, Who Investigate Potentially Fraudulent Claims, Non-Exempt As Matter Of Law; Entitled To Overtime Pay
Fenton v. Farmers Ins. Exchange
Farmers Insurance Exchange (“FIE”) is an inter-insurance exchange, or reciprocal, organized in California. FIE employs special investigators who investigate potentially fraudulent insurance claims. Special investigator Michael Fenton alleges that he and other FIE special investigators routinely work more than forty hours per week, but are improperly classified as “exempt” from overtime pay under the Fair Labor Standards Act (“FLSA”). Fenton and twenty other named plaintiffs bring this collective action challenging this practice on behalf of themselves and all other similarly situated special investigators. See 29 U.S.C. § 216(b). Both Plaintiffs and Defendant moved for summary judgment. Both motions were granted in part and denied in part. Significantly, as discussed here though, Plaintiffs were found to be non-exempt based on their duties performed (and entitled to overtime).
The Court recited the following facts as pertinent to its decision regarding Plaintiffs’ non-exempt status, “FIE is a reciprocal or inter-insurance exchange that sells insurance policies throughout the county. As a reciprocal exchange company, FIE is owned by its policyholders, or “subscribers,” who exchange contracts with one another and, by pooling their resources, insure one another against certain losses. FIE, whether on its own or through its related companies, performs all the functions of a typical insurance company, including selling policies, contracting with individual agents who sell and service policies, procuring reinsurance, and adjusting claims.
FIE’s special investigators-the plaintiffs in this action-investigate the factual basis for subscribers’ insurance claims, to determine whether the claims should be paid. The claim investigation process and the job duties of the investigators are critical to this action, and are described in detail below.
The claims investigations process begins with FIE’s claims representatives, who work out of a different business unit than the investigators, and flag claims that exhibit potential signs of fraud. (Morgan Aff., Docket No. 94, at 127-28.) The claims representatives then use a shared electronic database to refer the flagged claims to an FIE unit staffed by the plaintiffs. ( Id. at 105.) Managers in this unit then assign the claims to specific investigators. ( Id. at 107.)
After an investigator receives an assignment, he or she is required to promptly contact the claims representative who referred the claim. ( Id. at 115-16.) The investigator is required to consider the specific issues flagged by the claims representative, and attempt to develop a plan to investigate those issues. ( Id.; Morgan Aff., Docket No. 94, Ex. F, at 74.) While investigators may occasionally suggest an additional fraud indicator to pursue, they do not reshape the scope of an investigation without first getting the approval of the claims representative or their supervisor. (Morgan Aff., Docket No. 116, Ex. 7, at 44 (“It’s [the claims representative’s] file.”); id. Ex. 2, at 38 (indicating that investigation plans are “always” sent to supervisors for approval).) In addition, while investigators may recommend that a claim does not require the work of an investigator, the final decision about whether to close an investigation is made by supervisors or claims representatives. (Ashbridge Decl., Docket No. 41, ¶ 18.)
Plaintiffs’ investigations often involve taking photographs of relevant materials; retrieving police or fire reports and other records; and interviewing the claimant and other witnesses. ( Id. ¶ 19.) Investigators also ensure that FIE complies with California’s requirement that suspected insurance fraud be reported to the state. See
Cal. Ins.Code § 1872.4. While plaintiffs may recommend that FIE use an expert to evaluate an incident, this determination is ultimately made by the claims representative. (Morgan Aff., Docket No. 116, Ex. 2, at 48.) In addition, while plaintiffs encounter new leads on occasion in the course of their investigations, they are not to pursue those leads without permission of the claims representative or a supervisor. (Morgan Aff., Docket No. 94, Ex. F, at 75.)
When an investigator believes that an investigation is complete, he or she contacts the claims representative to determine if the representative would like him or her to investigate further. (Morgan Aff., Docket No. 116, Ex. 12, at 158.) Once the claims representative approves the closing of the investigation, the investigators are required to submit an exhaustive file of their research materials, including “a list of all completed tasks (or an explanation of why a task was not completed), a report of any inconsistencies, discrepancies, and/or significant findings (both inculpating and exculpating); [and] a complete summary of the entire investigation.” (Ashbridge Decl., Docket No. 41, ¶ 22.) In addition, although investigators describe coming to credibility determinations after interviews with witnesses or claimants, and occasionally share these impressions in informal conversations with the assigning claims representatives, “the special investigator’s subjective opinions or conclusions are excluded from [these] written reports,” and investigators do not otherwise draft recommendations about whether a claim should be paid. ( Id. ¶ 21; Morgan Aff., Docket No. 94, Ex. A, at 146.)
Investigators are required to open new investigations at a rate of 12.5 per month, and must close each investigation within fourteen days. (Morgan Aff., Docket No. 94, Ex. 11, at 46.) These investigations are their primary job duty. (Ashbridge Decl., Docket No. 41, ¶ 6.) Investigators are also required to randomly review claim files to look for fraud indicators, an activity which accounts for 5% of their overall performance rating, (Morgan Aff., Docket No. 94, Ex. P, at 7), and occasionally conduct training for claims representatives about insurance fraud awareness.
FIE randomly subjects plaintiffs’ work product to Quality Assurance (“QA”) review. The results of QA reviews constitute 50% of FIE’s overall evaluation of an investigator’s performance. ( Id .) The guidelines for performing a QA review are nine pages long, and include dozens of specific criteria that are used to evaluate an investigation’s quality. (Moran Aff., Docket No. 94, Ex. O.) The QA guidelines give specific timelines for investigators’ work, state twenty-five separate steps that investigators should consider in the course of their investigations, and state nineteen requirements for investigators’ written reports. ( Id.) The QA guidelines add that the investigators’ “purpose is to provide … factual information that allows the Claims Professionals … to make good decisions, not tell them what decision to make, or provide conjecture on what really happened.” ( Id.)”
Discussing the relevant law the Court stated, “The FLSA delegates authority to define the scope of its exemptions to the Secretary of Labor (“Secretary”). 29 U.S.C. § 213(a)(1). In accordance with that authority, the Secretary has established the “short duties test,” which is used to determine whether an employee earning more than $455 per week qualifies for the administrative exemption. To qualify as exempt, an employee’s primary duty must (1) consist of the performance of office or non-manual work “directly related to the management or general business operations of the employer or the employer’s customers”; and (2) include “the exercise of discretion and independent judgment with respect to matters of significance.” 29 C.F.R. § 541 .200(a). The Secretary further explains:
The phrase ‘directly related to the management or general business operations’ refers to the type of work performed by the employee. To meet this requirement, an employee must perform work directly related to assisting with the running or servicing of the business as distinguished, for example, from working on a manufacturing production line or selling a product in a retail or service establishment.29 C.F.R. § 541.201(a). In addition, the exercise of discretion and independent judgment involves the comparison and the evaluation of possible courses of conduct, and acting or making a decision after the various possibilities have been considered. The term “matters of significance” refers to the level of importance or consequence of the work performed.
29 C.F.R. § 541.202(a). The Secretary adds that whether an employee exercises sufficient discretion and independent judgment depends on factors such as “whether the employee has authority to waive or deviate from established policies and procedures without prior approval [and] whether the employee has authority to negotiate and bind the company on significant matters.” 29 C.F.R. § 541.202(b). In other words, “[t]he exercise of discretion and independent judgment must be more than the use of skill in applying well-established techniques, procedures or specific standards described in manuals or other sources.” 29 C.F.R. § 541.202(e). The regulations go on to explain how these provisions apply to several specific jobs. For example, insurance claims adjusters generally are exempt where:
their duties include activities such as interviewing insureds, witnesses and physicians; inspecting property damage; reviewing factual information to prepare damage estimates; evaluating and making recommendations regarding coverage of claims; determining liability and total value of a claim; negotiating settlements; and making recommendations regarding litigation. 29 C.F.R. 541.203(a). In accordance with this standard, the Ninth Circuit has determined that FIE’s claims representatives-the employees to whom plaintiffs deliver their investigation results-are exempt. See In re Farmers Ins. Exch., 481 F.3d 1119 (9th Cir.2007). The Secretary clarifies, however, that “ordinary inspection work,” involving well-established techniques and procedures … catalogued and described in manuals or other sources” are not exempt. 29 C.F.R. § 541.203(g). Similarly, the Secretary has specifically indicated that investigators working in law enforcement are not exempt where they “perform work such as … conducting investigations or inspections for violations of law; performing surveillance … interviewing witnesses … preparing investigative reports; or other similar work.” 29 C.F.R. § 541.3(b)(1).
In arguing that plaintiffs are exempt from the FLSA’s overtime requirements, FIE relies heavily on the legal treatment of claims adjustors, both in the regulation quoted above, and in case law. See, e.g., McAllister, 325 F.3d at 999-1002 (finding an insurance claim “coordinator” exempt from the FLSA’s overtime requirements). Plaintiffs respond that their responsibilities are closer to those of mere investigators or inspectors, who are generally not exempt. In addition to the regulations quoted above, plaintiffs also point to an Opinion Letter issued by the Department of Labor, addressing employees who perform background investigations on federal employees seeking security clearances. See
Opinion Letter Fair Labor Standards Act, 2005 WL 3308592 (Dep’t of Labor Aug. 19, 2005); Auer v. Robbins, 519 U.S. 452, 461 (1997) (indicating that the Secretary’s interpretations of her own regulations are controlling unless they are plainly erroneous or inconsistent with the regulations). The Secretary confirmed that these investigators are not exempt from the FLSA’s overtime requirements, after noting a list of job responsibilities that are at least as significant as those at issue here. 2005 WL 3308592. Those responsibilities included (1) gathering and checking public records; (2) interviewing witnesses; (3) making decisions about whether to report security threats to the Defense Security Service (“DSS”); (4) determining what leads to follow; (5) resolving discrepancies in information with limited guidance; (6) stating whether a witness is credible; and (7) providing factual information to DSS so it can make a final determination about whether an individual should receive a security clearance. Id. The DOL explained:
[P]lanning one’s own workload, such as prioritizing the pursuit of particular leads, assessing whether the leads provided are in the Investigator’s area of responsibility, or have provided information that requires further investigation, determining which potential witnesses to see and which documents to review, and making similar decisions that promote effective and efficient use of that individual’s own work time in performing assigned investigative activities, do not constitute exercising discretion and independent judgment with respect to matters of significance. 2005 WL 3308592 (internal quotation marks omitted; emphasis original).
Plaintiffs also note that at least one federal case has dealt specifically with the classification of employees hired to investigate insurance claims. In Gusdonovich v. Business Information Co., the court considered the status of employees whose primary responsibilities were “the search of public records, the serving of subpoenas and orders, surveillance, [and] the interrogation of witnesses.” 705 F.Supp. 262, 263 (W.D.Pa.1985). The investigators’ work was subject to review by supervisors, who assessed whether the scope of their investigations stayed within appropriate parameters. Id. at 264. The court determined that in those circumstances, the employees did not exercise sufficient discretion and independent judgment to satisfy the short duties test. The court explained that in light of the extensive oversight over the investigators, their fact-gathering merely involved “applying their knowledge and skill in determining what procedure to follow,” as opposed to any bona fide exercise of discretion and independent judgment. Id. at 265.
The Court agrees that plaintiffs’ job duties and FIE’s constraints on their discretion are sufficiently aligned with the employment circumstances of (1) the insurance investigators discussed in Gusdonovich, and (2) the employees performing background investigations and police investigations addressed by the Secretary, for plaintiffs to be non-exempt from the FLSA’s overtime requirements as a matter of law. Specifically, the Court concludes that the record demonstrates as a matter of law that plaintiffs do not “exercise … discretion and independent judgment with respect to matters of significance.” 29 C.F.R. § 541.200(a).
In reaching this conclusion, the Court begins with FIE’s extensive QA review guidelines, which explain in great detail how plaintiffs should approach dozens of issues that typically arise in the performance and documentation of investigations. ( See Morgan Aff., Docket No. 94, Ex. O.) Even though this document formally functions as guidance for how to evaluate investigators, rather than as guidance for how to perform investigations, deposition testimony demonstrates that investigators are well aware of it. ( See, e.g., Morgan Aff., Docket No. 94, Ex. H, at 92 (noting that one employee creates his own checklists to match the QA guidelines).) In light of the fact that QA reviews constitute 50% of an employee’s overall performance assessment, it is unsurprising that their detailed criteria attract investigators’ fixed attention, and it is clear that they are relevant to this Court’s application of the short duties test. ( See, e.g., Morgan Aff., Docket No. 94, Ex. H, at 92 (noting that one employee creates his own checklists to match the QA guidelines)); see also Gusdonovich, 705 F.Supp. at 265 (treating after-the-fact review as relevant to the scope of an employee’s discretion).
To be clear, FIE is correct that the mere fact that plaintiffs effectively operate in the shadow of an employment manual is not enough, on its own, to demonstrate that they are not exempt. See, e.g., McAllister, 325 F.3d at 1001 (“Just because McAllister was required to follow detailed manuals does not mean she did not exercise discretion and independent judgment.”); Cheatham v. Allstate Ins. Co., 465 F.3d 578, 585 (5th Cir.2006) (“[T]he requirement that Allstate adjusters must consult with manuals or guidelines does not preclude their exercise of discretion and independent judgment.”). Indeed, it is not difficult to conceive of circumstances where even extensive guidance could nonetheless leave employees with considerable discretion on matters of significance. See McAllister, 325 F.3d at 1001. Here, however, the Court finds nothing in the residual discretion available to investigators that is sufficient to justify exemption. Most significantly, FIE concedes that the investigators’ subjective opinions and conclusions are excluded from their written reports. (Ashbridge Decl., Docket No. 41, ¶ 21.) This is squarely confirmed in a passage from the QA review quoted above, which flatly states that the investigators’ “purpose is to provide … factual information that allows the Claims Professionals … to make good decisions, not tell them what decision to make, or provide conjecture on what really happened.” (Morgan Aff., Docket No. 94, Ex. O.) The guidelines add that “[a]ll inculpating and exculpating information must be reported in equal detail and emphasis,” and “[o]pinions and/or speculative ‘what if’ scenarios are not acceptable.” ( Id.) While employees do not necessarily need to make final decisions in order to be exempt, see
29 C.F.R. § 541.202(c), this explanation of the investigator’s responsibilities-in conjunction with the requirement that investigators provide the claims representatives with any and all documents that they gathered during their investigation ( id. (“All reports must be attached to the file, even if the result was no information available.”))-sufficiently demonstrates that their primary role is simply to gather facts and present them for someone else to analyze. They have no authority to determine whether a claim is covered or whether FIE should seek to negotiate a settlement, and-while their thoughts on these types of higher-level decisions may come up in informal conversation-any minor role they play in such discussions is plainly not among their “primary” duties. Cf. McAllister, 325 F.3d at 1001 (finding claims adjusters exempt despite their compliance with manuals where they had authority to settle claims of up to $250,000); Cheatham, 465 F.3d at 586 (finding insurance employees exempt despite their compliance with manuals and guidelines where they had discretion to determine liability and negotiate settlements). In short, as in Gusdonovich and the Secretary’s analysis of government background investigators, it is clear that plaintiffs are limited to “applying well-established techniques” in developing an evidentiary record for claims representatives, and do not exercise sufficient discretion and independent judgment to meet the short duties test. 29 C.F.R. § 541.202(e).
As to the Secretary’s assessment of claims adjustors, which is relied on heavily by FIE, the Court simply adds that although an employee need not perform all of the duties of claims adjusters listed by the Secretary in order to qualify as exempt, see In re Farmers, 481 F.3d at 1129, that list includes a variety of significant, discretion-laden activities that are undisputedly not present here, such as “negotiating settlements” and “making recommendations regarding litigation.” 29 C.F.R. § 541.203(a). In short, while the Ninth Circuit was correct to apply this regulation to FIE’s claims representatives, this Court finds nothing in federal law that would justify extending it to the employees who merely gather facts for those representatives, particularly when those employees are formally barred from presenting their opinions about how to handle claims in their written reports. Accordingly, as to the question of whether plaintiffs are exempt from the FLSA’s overtime requirements, plaintiffs’ motion is granted, and FIE’s motion is denied.”
U.S. Supreme Court Will Not Hear Family Dollar Appeal Of $35 Million Verdict; Dow Jones Reports
Dow Jones is reporting that the, “The U.S. Supreme Court on Monday rejected Family Dollar Stores Inc.’s (FDO) appeal of a $35 million verdict in favor of store managers who said the company wrongly denied them overtime pay.
Family Dollar argued the managers were salaried employees who were not eligible for overtime pay under the [Fair Labor Standards Act (“FLSA”)]. The discount retailer also objected to letting the store managers bring their cases in one collective lawsuit.
More than 1,400 Family Dollar employees joined the case as plaintiffs. They argued that they were eligible for overtime pay because they performed few managerial duties and spent most of their time doing the same work as their hourly-wage subordinates.
An Alabama jury ruled for the workers in 2006 and the trial court entered a $ 35.6 million judgment against the company. A federal appeals court upheld the judgment last year. The Supreme Court rejected Family Dollar’s appeal without comment.”
Click here to read the original report.
N.D.Ill.: FLSA And SCA Supplement One Another; FLSA Allows For A Private Right Of Action Despite The SCA’s Applicability
McDonald v. Eagle Exp. Lines, Inc.
The issue before the Court was whether an employee working under a federal contract, governed by the Service Contract Act (“SCA”), may bring a private cause of action under the FLSA. Defendant contended that the court lacked jurisdiction because the contract between Defendant and the USPS is a federal contract explicitly governed by the administrative procedures available in the SCA. Denying Defendant’s Motion to Dismiss for lack of jurisdiction, the Court explained that the SCA supplements the FLSA and does not bar private lawsuits by employees working under contracts governed by the SCA.
“The SCA provides that any work conducted pursuant to federal service contracts must pay wages and fringe benefits consistent with those established by the Secretary of Labor. 41 U.S.C. §§ 351, 358. Those established wage and benefit rates are found in the Secretary’s Register of Wage Determinations. The Secretary of Labor has sole jurisdiction to enforce the SCA. 41 U.S.C. §§ 352(b), 353. The SCA does not provide for an explicit or implicit private right of action. Dist. Lodge No. 166, Int’l Ass’n of Machinists & Aerospace Workers, AFL-CIO v. TWA Servs., Inc., 731 F.2d 711, 714-16 (11th Cir.1984); Miscellaneous Serv. Workers, Drivers & Helpers, Teamsters Local # 427 v. Philco-Ford Corp., 661 F.2d 776, 779-81 (9th Cir.1981); Oji v. PSC Envtl. Mgmt. Inc., 771 F.Supp. 232, 233-34 (N.D.Ill.1991). Eagle contends that McDonald is a service employee within the meaning of the SCA and is therefore not entitled to bring a private claim under the FLSA for overtime wages. Instead, Eagle argues that McDonald must file a complaint with the Secretary of Labor and proceed along the administrative channels prescribed by the SCA. Furthermore, Eagle asserts that McDonald’s state claims must be dismissed, as no basis for original jurisdiction would exist if the FLSA claim is not proper.
Both parties agree that subject matter jurisdiction in this case, including supplemental jurisdiction for McDonald’s quantum meruit and unjust enrichment state claims, is contingent on the propriety of the FLSA claim. Therefore, the issue is whether McDonald may bring a claim under the FLSA for overtime compensation despite the fact that the SCA governs the work he performed. For the reasons stated below, the court concludes that the court has jurisdiction over McDonald’s FLSA claim.
Eagle relies on Nichols v. Mower’s News Service, Inc., 492 F.Supp. 258 (D.Vt.1980), and Oji v. PSC Envtl. Mgmt. Inc., 771 F.Supp. 232, 233-34 (N.D.Ill.1991), in support of its motion to dismiss. Nichols involved the same fact pattern as here. In a briefly articulated decision, the court concluded that claims for overtime pay are regulated by the SCA and dismissed plaintiff’s claim for lack of subject matter jurisdiction. Id. Oji involved a suit by an employee for unpaid retirement benefits clothed as an action by a third-party beneficiary for breach of a contract to pay the benefits. The court inferred that the plaintiff was seeking to recover under a federal government contract subject to the SCA. Oji, 771 F. Supp at 233-34. As such, the plaintiff’s claim was under the SCA. Because there is no private right of action under the SCA, the court dismissed the lawsuit. As in Nichols, Eagle argues that consideration of legislative intent underlying the SCA and FLSA is unnecessary because the SCA plainly governs. The argument is unpersuasive in light of substantial authority to the contrary on which plaintiff relies. Indeed, Nichols is an outlier.
In the background, Powell v. U.S. Cartridge Company presents an important parallel. There, munitions workers operating under government contracts controlled by the Walsh-Healey Act sued their employers for overtime compensation under the FLSA. 339 U.S. 497 (1950). The United States Supreme Court characterized the broad sweeping nature of the FLSA as indicating “congressional awareness that the coverage of the Fair Labor Standards Act overlaps that of other federal legislation affecting labor standards.” Powell, 339 U.S. at 518. The Court noted that the FLSA specifically exempts certain employees from coverage but does not exempt employees of private contractors under public contracts. Id. at 517. Thus, the Court held that the Walsh-Healey Act did not preclude application of the FLSA. Id. at 519-20.
The SCA, like the Walsh-Healey Act, also deals with the wage rates of and benefits due to employees of government contractors. Courts have looked to Powell in determining whether the FLSA can supplement the SCA, have concluded that the FLSA and SCA can indeed supplement one another, and have held that the FLSA allows for a private right of action despite the SCA’s applicability.
For example, in Lee v. Flightsafety Services Corp., the court affirmed a judgment under the FLSA in favor of firefighters and engineers working under an SCA contract, reasoning from the parallel to Powell and asserting that Congress intended the FLSA to “overlap” with other federal legislation, including the SCA. 20 F.3d 428, 431 (11th Cir.1994). Similarly, in Masters v. Maryland Management Co., the Fourth Circuit concluded that the SCA can be supplemented by the FLSA where they are not in direct conflict. 493 F.2d 1329, 1332-33 (4th Cir.1974). The court affirmed the judgment in favor of the employees, reasoning that because the overtime computation rate was the same under both the FLSA and the SCA, the two acts did not conflict, permitting the employees to file a suit under the FLSA. Id.; see also Mersnick v. USProtect Corp., No. C-06-03993 RMW, 2006 WL 3734396, at *3-5 (N.D.Cal. Dec. 18, 2006) (FLSA overtime claim was not precluded by the SCA or a settlement entered into between the Department of Labor and the plaintiff’s employer under the SCA regarding unpaid compensation); Koren v. Martin Marietta Services, Inc., 997 F.Supp. 196, 211, 214-17 (D.P .R.1998) (summary judgment denied on FLSA claims because the SCA did not impliedly repeal the FLSA’s private enforcement provisions for unpaid overtime compensation); Brown v. Luk, Inc., No. 95-CV-1780, 1996 WL 280831 (N.D.N.Y. May 10, 1996) (wage rate and holiday pay claims dismissed because the SCA does not provide a private right of action to enforce these claims, but claims for certain overtime compensation could proceed under the FLSA); Dowd v. Blackstone Cleaners, Inc., 306 F.Supp. 1276, 1278-79 (N.D.Tex.1969) (a claim for overtime can be filed under the FLSA despite the SCA).
Both the FLSA and the SCA were enacted to guarantee employee rights, and the United States Supreme Court has made clear that rights under the FLSA may overlap with other labor laws without being conflicting. The reasoning of the Fourth and Eleventh Circuits and a variety of district courts is more persuasive than Nichols, the single district court decision Eagle cites. The SCA is designed to ensure that employees working on federal contracts receive, at minimum, the same prevailing wages and benefits as other employees, government and non-government alike, in their respective localities. To this end, § 351(a) of the SCA provides that each federal contract shall contain a provision specifying the minimum monetary wage to be received as well as fringe benefits.FN5 41 U.S.C. § 351(a). Although § 351(a) does not require overtime compensation for federal contracts, § 355 provides that overtime pay may be determined under any applicable federal law, including the FLSA. Id. § 355. Moreover, Department of Labor regulations make clear that the SCA “does not provide for compensation of covered employees at premium rates for overtime hours of work …. however, … other Federal laws may require such compensation.” 29 C.F.R. § 4.180 (2009).
Given the supplemental nature of the FLSA, combined with the SCA’s failure to explicitly guarantee overtime compensation in all federal contracts but referencing the availability of other governing law as well as Department of Labor regulations stating that other laws may be applicable to claims for overtime compensation, the court concludes that McDonald and similarly situated employees may proceed under the FLSA for unpaid overtime despite being covered by the SCA. As such, the court has subject matter jurisdiction over McDonald’s claim.”
E.D.Tenn.: Defendant’s Motion For Decertification Denied; Common Pay Practice/Policy Overcomes Individual Facts And Defenses
Johnson v. Koch Foods, Inc.
This case was before the court on Defendant’s Motion for Decertification or, in the Alternative, Motion for Separate Trials. Denying Defendant’s Motion, the Court held that despite disparate factual and employment settings, that these differences are not material because the plaintiffs are all subject to a common policy or plan, payment by production line time, which they allege violates the FLSA.
Analyzing Defendant’s Motion the Court explained, “[p]ursuant to § 216(b) of the FLSA, employees can sue on their own behalf or on the behalf of “similarly situated” persons. “Section 216(b) establishes two requirements for a representative action: 1) the plaintiffs must actually be ‘similarly situated,’ and 2) all plaintiffs must signal in writing their affirmative consent to participate in the action.” Comer v. Wal-Mart Stores, Inc., 454 F.3d 544, 546 (6th Cir.2006) (citing 29 U.S.C. § 216(b); Hoffmann-La Roche, Inc. v. Sperling, 493 U.S. 165, 167-68 (1989)).
“Although the FLSA does not define the term ‘similarly situated,’ courts generally do not require prospective class members to be identical.” Moss v. Crawford & Co., 201 F.R.D. 398, 409 (W.D.Pa.2000). The Sixth Circuit has adopted a two-step inquiry for the determination of whether members of the class are in fact similarly situated. See Comer, 454 F.3d at 546; see also Wilks v. Pep Boys, No. 3:02-0837, 2006 WL 2821700, at *2 (M.D.Tenn. Sept. 26, 2006) (cases cited therein). The first step occurs at the “notice stage,” which is usually in the initial part of the case when the court determines whether notice of the lawsuit should be given to the putative members of the class. Pep Boys, 2006 WL 2821700, at *2 (citing White v. MPW Indus. Servs., Inc., 236 F.R .D. 363, 366 (E.D.Tenn.2006)). At this stage, a fairly lenient standard is used to determine whether plaintiffs are similarly situated for a class to be preliminarily certified. See Frank v. Gold’n Plump Poultry, Inc., No. 04-CV-1018 (PJS/RLE), 2007 WL 2780504, at *2 (D.Minn. Sept. 24, 2007).
The second step occurs after discovery has been taken and is precipitated if and when the defendant files a motion for decertification of the class. See Pep Boys, 2006 WL 2821700, at *2; Moss, 201 F.R.D. at 409. “At this juncture, the court uses a higher standard to analyze the similarly situated issue.” Moss, 201 F.R.D. at 409 (citations omitted); see also Comer, 454 F.3d at 547 (“At the second stage, following discovery, trial courts examine more closely the question of whether particular members of the class are, in fact, similarly situated.”).
There are primarily three factors that district courts consider at the decertification stage to determine whether the plaintiffs who have opted in are similarly situated. These factors are: “(1) the disparate factual and employment settings of the individual plaintiffs, such as a) job duties; b) geographic location; c) supervision; and d) salary; (2) the various defenses available to defendant that appear to be individual to each plaintiff; and (3) fairness and procedural considerations.” Pep Boys, 2006 WL 2821700, at *3 (citing Moss, 201 F.R.D. at 409).
As noted above, an agreed order was entered in this case in which the court conditionally certified this action as a collective action under 29 U.S.C. § 216(b) and identified the conditional class. The court authorized notice to be distributed to the conditional class, and approximately 150 current and former Koch Foods employees have opted into this lawsuit. Koch Foods now seeks to decertify the class claiming that the plaintiffs are not all similarly situated and therefore this case cannot go forward as a collective action. At this stage, the court employs the higher standard and the factors described above to resolve this issue. In doing so, the court has reviewed the hundreds of pages submitted in support of and opposition to this motion.
Koch Foods has presented extensive amounts of evidence and argues in exhaustive detail what it says are the many differences among the plaintiffs. As noted, the court has reviewed this evidence and will not specifically cite to it here. Koch Foods points out that the live and de-bone plants perform different functions in the chicken processing sequence. The evidence also shows that regarding both plants there are many different departments, work and meal shifts, clothing items worn by employees, and donning and doffing practices of the various employees. Koch Foods also points out that the plaintiffs work for different supervisors who exercise different levels of flexibility regarding whether an employee is marked tardy if he or she is late coming to the production line.
Koch Foods also argues that the defenses available to it require decertification. Koch Foods anticipates presently individualized defenses, such as that some of the plaintiffs are already paid for donning, doffing, washing, and walking time. It also expects to show that some employees are not required to wear various clothing items and that other clothing items benefit workers in different ways, depending on the employee’s position and plant location.
Based on these arguments, Koch Foods contends that the plaintiffs are not similarly situated. Therefore, the class should be decertified; the opt-in plaintiffs should be dismissed without prejudice; and the named plaintiffs should proceed with their individual actions.
In their response, plaintiffs do not dispute that there are disparate factual and employment settings, nor do they dispute that employees use different equipment and protective gear. They contend, however, that these differences are not material because the plaintiffs are all subject to a common policy or plan, payment by production line time, which they allege violates the FLSA. Plaintiffs argue that this common policy or plan overrides or outweighs the myriad of factual and employment differences. They also contend that any defenses Koch Foods can assert will be applicable to all the plaintiffs
One of the factors material to many courts’ analysis of the plaintiffs’ factual and employment settings is whether they were all impacted by a “single decision, policy, or plan.” See Moss, 201 F.R.D. at 409-10 (citing Thiessen v. Gen. Elec. Capital Corp., 996 F.Supp. 1071, 1082 (D.Kan.1998)). The existence of this commonality may assuage concerns about plaintiffs’ otherwise varied circumstances. See Hill v. Muscogee County Sch. Dist., No. 4:03-CV-60, 2005 WL 3526669, at *3-*4 (M.D.Ga. Dec. 20, 2005) (finding that the plaintiffs “had met their burden of showing that they [were] similarly situated with regard to employment setting and job duties by presenting substantial allegations of a pattern of potential FLSA violations); Moss, 201 F.R.D. at 410 (finding that the plaintiffs’ claim that they were subjected to a common, impermissible practice trumped the disparity in their employment situations). Pep Boys, 2006 WL 2821700, at *3.
Plaintiffs have submitted evidence that they are paid by production line time and that this payment does not capture donning and doffing, waiting, sanitizing or walking. They have shown that they must be washed and dressed when they take their places on the production line, but they are not paid until the line starts to run. The evidence submitted by plaintiffs also shows that production line time does not capture the time for doffing gear at the beginning of the meal break; donning gear at the end of the meal break; or washing and sanitizing during the meal break. Koch Foods deducts thirty minutes each day from plaintiffs’ shift time for the unpaid meal break. Plaintiffs argue that because they are all subject to the same policy or plan, i.e. payment by production line time that does not capture tasks they must perform without compensation, they are similarly situated, and this commonality overcomes the factual and employment differences emphasized by Koch Foods.
In Bouaphakeo v. Tyson Foods, Inc., 564 F.Supp.2d 870 (N.D.Iowa 2008), the district court dealt with a similar circumstance. Plaintiffs were current and former employees of a pork processing plant operated by Tyson Foods who were paid on a “gang time” system. “Gang time is sometimes called ‘line time,’ ‘shift time,’ or ‘mastercard time’.” Id. at 879 n. 2. Plaintiffs, like those in this case, claimed this system violated the FLSA. The district court found that there were “some very big factual differences” among the hourly employees because they were spread out across six departments and they performed different duties under different supervisors. However, the court concluded that there was a common factor among the employees, the gang time pay system, that bound the putative plaintiffs together. The court held that the “potential plaintiffs are similarly situated if the collective action class is limited to only those production employees that are paid via gang time. Gang time, after all, is the company-wide policy that Plaintiffs claim violates the FLSA.” Id. at 900.
The court believes that in this case the common policy or practice of paying plaintiffs by production line time is the factor that binds them together. Because of this common factor, the factual differences and the variations in plaintiffs’ employment settings do not make this collective action improper. The class is limited to those workers, as specified in the notice, “whose pay was computed or is computed based in whole or in part on production line time.” Viewed from this perspective, the argument by Koch Foods concerning its need to put on individualized defenses carries less weight as it should have a general defense to the use of this common pay practice. In addition, allowing this case to go forward as a collective action “takes into account the ‘fundamental purpose’ of the FLSA by lowering the costs to plaintiffs and efficiently resolving the issues in one proceeding.” Id.
The Sixth Circuit has specifically noted that the FLSA “must not be interpreted or applied in a narrow, grudging manner.” See Dunlop [v. Carriage Carpet Co.], 548 F.2d [139,] 144 [ (6th Cir.1977) ]. As such, the court’s decision to allow the plaintiffs to proceed collectively is in line with Congress’s determination that defendants will not always have the opportunity to pursue individual defenses against FLSA plaintiffs but, instead, must collectively defend a suit that is so pursued. See 29 U.S.C. § 216(b). Pep Boys, 2006 WL 2821700, at *8
Koch Foods argues in the alternative that if the court does not decertify this action, the court should order separate trials for the two plants, live and de-bone. Koch Foods relies on Fed.R.Civ.P. 42(b), which provides in pertinent part: “For convenience, to avoid prejudice, or to expedite and economize, the court may order a separate trial of one or more separate issues, claims, crossclaims, counterclaims, or third-party claims.”
When considering whether to order separate trials, a court “must consider several issues such as potential prejudice to the parties, potential confusion to the jury, and the relative convenience and economy which would result.” In re Beverly Hills Fire Litig., 695 F.2d 207, 216 (6th Cir.1982) (footnote and citations omitted). In addition, “[i]t is well settled that the ordering of separate trials is within the sound discretion of the trial judge.” Id. (citations omitted); see also Climer v. Dillenbeck, No. 08-cv-11074, 2009 WL 2168867, at *1 (E.D.Mich. July 21, 2009) (quoting 9A Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 2388 (3d ed., 2008)(“It is well-established by a wealth of case law that ultimately the question of whether to conduct separate trials under Rule 42(b) should be, and is, a matter left to the sound discretion of the trial court on the basis of the circumstances of the litigation before it.”)).
The court has considered the circumstances of this case and the relevant factors set out above and finds no substantial reason for two trials. The plants are located in the same complex, and while they perform different types of jobs, the workers in both plants are paid on the basis of production line time. This common policy or practice was the primary factor in defeating decertification. The differences between the plants, like the differences between the various jobs performed by the workers, can be dealt with at trial. Therefore, the court will deny the request by Koch Foods to have separate trials for each plant.”
For the reasons stated above, the Court denied both prongs of Defendant’s Motion.
W.D.N.Y.: Time Spent “Arming Up,” Checking Through Security And “Arming Down” Not Compensable For Security Guards At Nuclear Power Plant
Albrecht v. Wackenhut Corp.
Plaintiffs brought this action alleging violations of the Fair Labor Standards Act of 1938, as amended, 29 U.S.C. § 201 et seq. (“FLSA”) and violations of New York Labor Law (“NYLL”) seeking additional compensation for certain activities that occurred before and after their scheduled work shifts and workdays. Specifically, plaintiffs alleged that Wackenhut violated the FLSA and the NYLL by failing to pay them for time spent arming up and checking through security and arming down at the Ginna facility. The case was before the Court on the parties’ respective motions for summary judgment. Granting Defendant’s motion and denying Plaintiff’s motion, the Court discussed the nature of Plaintiffs’ uncompensated activities deeming them to be preliminary and post-liminary and thus non-compensable.
The Court discussed the nature of the time in dispute:
“B. Arming Up and Reporting to Post Prior to March 1, 2006
The guards report to work in uniform, which consists of blue pants, a blue shirt, boots, a hat, jacket and other equipment. The guards are free to wear their uniforms home and return to work in uniform on their next scheduled workday. Before March 1, 2006 guards were permitted to leave Ginna with most of the equipment issued by Wackenhut, including their gun belts, radio pouches and bandoliers. The only equipment that guards were required to leave on site was their service revolver, which was kept in the armory, and a handheld radio, which was stored in a nearby charging unit. Plaintiffs contend that service revolvers and handheld radios were stored in various locations on the Ginna facility at different relevant time periods.
There is no dispute that the arming up and arming down process prior to March 1, 2006 took place in the room in which the armory was located. According to Wackenhut, after clearing security, the guards were able to go directly to the room in which their weapons and radios were stored to retrieve them before reporting to their assigned post. Plaintiffs claim that upon clearing security, the guards were required to first report to the locker room to obtain ammunition, gun belts, radio pouches and bandoliers, before obtaining their firearms and radios in the armory.
The process of arming up began with a guard identifying the serial number of his or her weapon and would then retrieve the weapon in a clearing barrel from a supervisor in the armory. The guard would then follow a series of instructions from the supervisor concerning the process of loading and holstering his or her weapon. The arming up process was complete when the guard holstered the weapon. The deposition testimony of several plaintiffs confirm that it took thirty seconds to less than a minute from the time when a security guard identified the serial number on his weapon to the time the weapon was holstered. The arming down process was essentially the same process in reverse and was completed in the same amount of time. After retrieving their weapon, guards obtained a handheld radio at a location in the same area as the armory, at which time each signed a log to identify which radio they took. It is undisputed that the arming up and arming down process was routine, relatively effortless and could be completed in a short time frame.
Upon completion of the arming up process and retrieval of the handheld radio, guards then reported to their first assigned post. Based on the deposition testimony, it takes less than thirty seconds to walk from the armory, which is currently located in the guard house, to many of the posts. The remaining posts can be reached by a person walking at a normal pace in one to five minutes. Plaintiffs claim that the amount of time to arm up and arm down depends upon various factors. Further, plaintiffs submitted four affidavits in opposition to Wackenhut’s summary judgment motion alleging that it took them between eight minutes to fifteen minutes to complete pre-shift activities prior to March 1, 2006. However, these alleged time ranges are not consistent with the deposition testimony of various plaintiffs deposed by defendant.
In addition, the affidavits provided by the four guards demonstrate that they included in the time estimates time that they claim they spent engaging in activities that are separate and distinct from arming up and arming down. For instance, the four guards included in the time estimates in their affidavits the time they claim they spent walking from the room in which the armory was located to their assigned posts. Moreover, they included in their estimates the time they allegedly spent engaging in certain activities that occurred before the arming up process started, such as time allegedly spent on occasionally having to wait for the arming up process to begin. They also included in their estimates the time that they allegedly spent on occasionally addressing radio issues or difficulties. These alleged radio issues happen infrequently and take a matter of seconds to address e.g. dealing with radio traffic at the BRAVO alarm station would take no more than five seconds to address.
According to defendant, security guards were not asked to perform any work before the start of their regularly-scheduled shifts. Before March 1, 2006, guards were compensated for all work time beginning with the start of their scheduled shift but guards were not required to arrive on site at any specified time prior to their scheduled shift to be considered on time. Plaintiffs contend that they were required to report to their post 15 minutes before the start of their shift but were not compensated until their shift actually started. Wackenhut argues that plaintiffs did not have to arrive at the site at any particular time prior to the start of their shift to be on time. In fact, prior to March 1, 2006, defendant was aware of many occasions on which guards completed the security clearance process just a minute or two before the start of their scheduled shift and were able to retrieve their weapon and radio and report to their post on time. These guards were not disciplined and were considered to be in compliance with Wackenhut’s policies and expectations.
C. Pre-Shift Briefings That Began in February 2006
On or about February 26, 2006, Wackenhut implemented a pre-shift briefing process for all guards at the Ginna facility. During these briefings, guards are advised about various issues relevant to their position including any incidents that may have occurred in previous shifts, developments in the industry, and/or changes in any policies or procedures by Wackenhut. The pre-shift briefing is held in the Security Building. Guards are able to go directly to the briefing room once they complete the security clearance process in the same building. Since the implementation of these pre-shift briefings, guards report to the briefing room fifteen minutes before the start of their scheduled shifts. For instance, a guard assigned to the 6:30 a.m. to 2:30 p.m. shift must report, in uniform, to the briefing room by 6:15 a.m. At the conclusion of the pre-shift briefing, the security guards report to the armory to retrieve their weapons and then proceeded to their first assigned post. Since on or about February 26, 2006, guards have been compensated from the start of the pre-shift briefings, which occur before the arming up process begins. They continue to be paid through the remainder of the day until the arming down process is completed at the end of their shifts.
Plaintiffs argue that the time spent from the beginning of the pre-shift briefing until the commencement of their scheduled shifts are not calculated towards overtime. Defendant contends that plaintiffs’ assertions are inconsistent with the plaintiffs’ deposition testimony and the terms of the written policy issued at the same time that the shift briefings were implemented. According to defendant, the Wackenhut employee manual for the February 2006 time period provided that guards would be compensated for time spent during the shift briefing and de-gunning process. In addition, the policy stated that this time would be compensated at the guards’ normal base rate for time under forty hours in a week and at the guards’ overtime rate for time over forty hours in a week.”
The Court then determined that Plaintiffs were, as a matter of law, not entitled to be compensated for such activities:
“This case falls under the purview of the 1947 Portal-to-Portal Act, in which Congress provided that employers would not be liable to provide compensation for activities which are “preliminary to or postliminary to” the principal activity or activities which employees are employed to perform. See 29 U.S.C. § 254(a)(2). Applying the Portal-to-Portal Act, the Supreme Court has determined that activities performed before or after an employee’s regular work shift are compensable if they are “an integral and indispensable part of the principal activities for which covered workman are employed.” See Steiner v. Mitchell, 350 U.S. 247, 256 (1956). Moreover, in Gorman v. Consolidated Edison Corp., 488 F.3d 586, 594 (2d Cir.2007), the Second Circuit articulated a distinction between the terms “indispensable” and “integral.” While “indispensable” means only “necessary,” the term “integral” adds the requirement that the activity be “essential to completeness … organically linked … [or] composed of constituent parts making a whole.” See id. at 592. Therefore, unless an activity is essential to complete the employee’s task, it is excluded from compensation under the Act. See id.; see also IBP, Inc. v. Alvarez, 546 U.S. 21, 40-41 (2005) (unless an activity is both integral and indispensable to performing the job, it is not a principal activity of the job).
In Gorman, the plaintiffs sought compensation for time spent donning and doffing helmets, safety glasses, and steel-toed boots. The court conceded that such gear might have been indispensable to the employees’ work, in that it was required by the employer or by government regulations, but found that the donning and doffing of such gear was not integral to the employees’ work at Indian Point and accordingly, did not constitute “work time” for purposes of the FLSA. See Gorman, 488 F.3d at 594. Rather, the Court opined that “[t]he donning and doffing of generic protective gear is not rendered integral by being required by the employer or by government regulation.” See id. (citing Reich v. IPP. Inc., 38 F.3d 1123, 1126 (10th Cir.1994) (holding that donning and doffing safety glasses, a pair of ear plugs, a hard hat, and safety shoes “although essential to the job, and required by the employer, are pre-and postliminary activities”).
The Gorman court also contrasted the uncompensated wearing of generic safety gear with the complete changing and showering required by the employer in Steiner. It also contrasted the wearing of specialized gear required for employees who worked in the nuclear containment area, for which those employees were compensated. The court reasoned that procedures for wearing this specialized gear were integral to the act of working in the hazardous environment of the containment area. By contrast, the court found that “the donning and doffing of … generic protective gear [such as a helmet, safety glasses, and steel-toed boots] is not different in kind from ‘changing clothes and showering under normal conditions,’ which under Steiner are not covered by the FLSA.” See Gorman, 488 F.3d at 594. Further, the Gorman court observed that “donning and doffing” of the equipment at issue in that case were “ ‘relatively effortless,’ noncompensable, preliminary tasks.” Id. at 594 (citing Reich v. New York City Transit Auth., 45 F.3d 646, 649 (2d Cir.1995). Accordingly, the Court held that these activities constituted non-compensable preliminary and postliminary tasks for which no pay was required under the FLSA.
Here, the record demonstrates that the arming up process was accomplished with minimal effort and the arming down was not difficult or time-consuming. See Reich, 45 F.3d at 651 (Second Circuit observed that Portal-to-Portal Act amendments exempt such “trivial, non-onerous aspects of preliminary preparation, maintenance and cleanup” from “work time” under the FLSA). There is no dispute that the arming up and arming down process was routine, relatively effortless and could be accomplished in a short period of time. The deposition testimony of plaintiffs confirm that the arming up process took approximately thirty seconds to less than a minute to complete. The arming down process was essentially the same process in reverse and was completed in the same amount of time. Upon completion of the arming up process and retrieval of the handheld radio, guards reported to their first assigned post. Based on the deposition testimony, it takes less than thirty seconds to walk from the armory, which is currently located in the guard house, to many of the posts. The remaining posts can be reached by a person walking at a normal pace in one to five minutes. Further, plaintiffs were not required to arrive on site at any particular time prior to their scheduled shift to be considered on time.
Plaintiffs attempt to establish a question of fact by providing four affidavits contending that it could take up to eight to fifteen minutes to complete the arming up and arming down process prior to March 1, 2006. For instance, in Stacy Janke’s affidavit submitted in opposition to defendant’s motion for summary judgment, he states that “the time required to … report to an assigned post, is approximately twelve (12) to fifteen (15) minutes.” See Janke Aff., ¶ 6. It is well settled, however, that plaintiffs “may not create an issue of fact by submitting an affidavit in opposition to a summary judgment motion that, by omission or addition, contradicts the affiant’s previous deposition testimony.” See Hayes v. New York City Department of Corrections, 85 F.3d 614, 619 (2d Cir.1996) (citations omitted); see also Schratz v. Potter, 2008 WL 5340992 at *6 (W.D.N.Y.2008).
Indeed, “factual issues created solely by an affidavit crafted to oppose a summary judgment motion are not ‘genuine’ issues for trial.” See Hayes, 85 F.3d at 619. Though Stacy and other plaintiffs testified under oath at their deposition, they never claimed that it took twelve to fifteen minutes to complete the arming up or arming down process. Rather, Mr. Janke and other plaintiffs testified that the actual process of arming up could be completed in less than one minute. It is also undisputed that the arming down process involves the same procedure in reverse and was completed in the same time frame. Accordingly, plaintiffs cannot rely on their contradictory affidavits to create an issue of fact on this point. Moreover, a further analysis of the four affidavits submitted by plaintiffs confirms that all four individuals included time in their pre-shift estimates that is not part of the arming up and arming down process. Rather, they included time allegedly spent walking, waiting in line and/or donning and doffing generic equipment or clothing that is distinct from arming up and arming down. None of the time allegedly spent engaging in any of those activities is compensable under Gorman and Second Circuit case law.
Further, plaintiffs’ reliance on the decision in Maciel v. City of Los Angeles, 569 F.Supp2d 1038 (C.D.Calif.2008) is misplaced. The rationale employed by courts such as Bamonte v. City of Mesa, 2008 WL 1746168 (D.Ariz.2008) are more sound and have been adopted by many other courts and the Department of Labor as it pertains to the significance of an employee’s ability to leave work with required equipment. See Bamonte, 2008 WL 1746168 at *5 (observing that “a rule which categorically defines donning and doffing time as noncompensable when an employee has an opportunity to change at home is consistent with the Department of Labor’s “longstanding” interpretation of the FLSA.”) In Bamonte, the court held that time spent changing into and out of police uniforms and other equipment was not compensable because the police officers were allowed to go to the police station in uniform. See id. at *11-12. Here, the evidence reveals that plaintiffs were free to leave the site in their uniforms, with most of the equipment they were issued by Wackenhut, including the radio pouches, gun belts, and bandoliers which the four plaintiffs reference in their affidavit in opposition to the motion for summary judgment.
As a matter of law, the activities for which plaintiffs seek compensation were preliminary and postliminary activities not subject to compensation under the FLSA. To the extent that they were otherwise compensable activities, they are de minimis in nature. Accordingly, defendant is entitled to summary judgment.”
2nd Cir.: Reiterates Carrying 20 LB. Bag Does Not Transform Otherwise Non-Compensable Commute Time Into Compensable Time; Applyies “Predominate Benefit Test”
Clarke v. City of New York
Revisiting an issue it has previously ruled on, the 2nd Circuit held that an employee’s required carrying of 20 pounds of materials each day to and from work, during his or her daily commute does not transform otherwise non-compensable travel time into compensable work hours.
“This case falls squarely under the previously decided Singh v. City of New York, 524 F.3d 361 (2d Cir.2008). In Singh, a group of inspectors with the Fire Alarm Inspection Unit of the New York Fire Department brought a claim under the Fair Labor Standards Act (“FLSA”), as amended by the Portal-to-Portal Act, demanding compensation for their commuting time because they were required by their employer to transport and protect inspection documents. Id. The collective weight of their materials was between 15 and 20 pounds. Id. at 365.
We analyzed the claim in two parts, looking first to whether plaintiffs were entitled to compensation for the entire commute and, if not, whether they were entitled to compensation for the additional commuting time that resulted from their transport of these materials. Id. at 366-67. For the first part of the analysis, we applied a “predominant benefit test,” asking whether the employer’s restrictions hindered the employees’ ability to use their commuting time as they otherwise would have. Id. at 369. We determined that the inspectors’ commute was not materially altered by their document transport responsibilities, and thus they were not entitled to compensation for the entire commute. Id. at 370. We then looked to the second part of the test to determine if the additional commuting time that resulted from the transport of the documents was compensable. Id. While noting that the additional time was time spent “necessarily and primarily for the benefit of the City” and thus was compensable, we looked to a three-part test to determine if such compensable time qualified as de minimis. Id. The three factors were: “(1) the practical administrative difficulty of recording additional time; (2) the size of the claim in the aggregate; and (3) whether the claimants performed the work on a regular basis.” Id. at 371. Under this test, we determined that the additional commuting time was de minimis as a matter of law. Id. Thus, none of the plaintiffs’ commuting time was compensable under the FLSA. Id. at 372.
The facts of the case before us are materially indistinguishable from Singh. Plaintiffs in this case, like Singh, are responsible for the transport of a 20-pound bag of equipment. This 20-pound bag, however, does not burden the plaintiffs to such a degree as to make the City the predominant beneficiary of their commute. Their responsibility is limited to transporting the bag; there are no other active work-related duties required during the commute. Transporting a bag in a car trunk, or at plaintiffs’ feet on a train or bus, allows them to use their commuting time as they wish. To the extent that the bag adds time to their commute, we find, just as in Singh, that such time is de minimis and non-compensable.”
Lowe’s To Pay $29.5 Million To Settle Overtime Lawsuit, Central Valley Business Times Reports
The Central Valley Business Times is reporting that Lowe’s has settled an overtime class action accusing the home improvement retailer of forcing thousands of employees to work “off the clock.”
“Home improvement retailer Lowe’s Companies Inc. (NYSE: LOW) has agreed to pay $29.5 million to settle a class action lawsuit that argued it had required “thousands” of hourly workers to toil “off the clock.”
Two former Lowe’s employees alleged that they and thousands of other hourly Lowe’s workers were required to work before and after their normal shifts but were not paid for the extra work…
Earlier, Lowe’s denied all of the claims raised in the lawsuit. The company, contacted Wednesday for comment, said it could not comment directly on the settlement but a spokeswoman said the company believes it is in compliance with all laws and regulations.
The settlement was approved Tuesday by the Los Angeles Superior Court, shortly before the case was to finally go to trial.”
To read the entire story go the the Central Valley Business Times’ website.
E.D.Ark: Punitive Damage Awards Permissible For FLSA Retaliation Claims
Wolfe v. Clear Title, LLC
This case was before the Court on Defendant’s Motion for Summary Judgment. In resolving the Motion in favor of the Plaintiff, the Court also held that punitive damages are permissible to a Plaintiff in an FLSA retaliation case brought pursuant to 29 U.S.C. 215(a), after acknowledging a split of authority on the issue between Circuit courts and trial level courts within the Eighth Circuit as well.
“The prohibition on retaliation is stated in 29 U.S.C. § 215(a)(3), which makes it unlawful to discharge or in any other manner discriminate against any employee because the employee has filed a complaint or instituted or caused to be instituted a proceeding under the FLSA. The majority of circuits have held that this provision protects an employee who makes an internal complaint to the employer. Kasten v. Saint-Gobain Performance Plastics Corp. ., 570 F.3d 834, 838 (7th Cir.2009). The Eighth Circuit has interpreted the statute to prohibit discrimination against an employee who asserts or threatens to assert FLSA rights. Brennan v. Maxey’s Yamaha, Inc., 513 F.2d 179, 183 (8th Cir.1975). That interpretation has been criticized as contrary to the plain language of subsection 215(a)(3). See Kasten, 570 F.3d at 840 (holding that the phrase “file any complaint” requires a plaintiff employee to submit some sort of writing). Needless to say, the holding of the Eighth Circuit in Brennan v. Maxey’s Yamaha, Inc., is binding on this Court. Here, the conduct of which Wolfe complains falls within the prohibition of subsection 215(a)(3) as broadly interpreted by the Eighth Circuit.
The courts are divided on the issue of whether the FLSA provides for punitive damages for employees who are subject to retaliation for claiming their rights under that statutory scheme. The Seventh Circuit has held that punitive damages are available in FLSA retaliation cases. Travis v. Gary Community Mental Health Ctr., 921 F.2d 108, 112 (7th Cir.1990). The only other circuit to address the issue thus far is the Eleventh Circuit, which held that punitive damages are not available in FLSA retaliation cases. Snapp v. Unlimited Concepts, Inc., 208 F.3d 928 (11th Cir.2000), cert. denied, 532 U.S. 975, 121 S.Ct. 1609, 149 L.Ed.2d 474 (2001).FN1 The only district courts in the Eighth Circuit to address the issue are the Eastern and Western Districts of Missouri, and they, too, have reached opposite conclusions. The Eastern District of Missouri has followed the Eleventh Circuit in two cases. Huang v. Gateway Hotel Holdings, 520 F.Supp.2d 1137, 1143 (E.D.Mo.2007); Tucker v. Monsanto Co., 2007 WL 1686957 (E.D.Mo. June 8, 2007). Even before the Eleventh Circuit decided Snapp, the Eastern District of Missouri had held, without discussion, that the FLSA does not provide for punitive damages in retaliation cases. Waldermeyer v. ITT Consumer Fin. Corp., 782 F.Supp. 86, 88 (E.D.Mo.1991). On the other hand, the Western District of Missouri followed the Seventh Circuit in one case decided before Snapp, O’Brien v. Dekalb-Clinton Counties Ambulance Dist., 1996 WL 565817, at *6 (W.D.Mo. June 24, 1996) (“In the absence of conflicting interpretation of the amended section 16(b) by another circuit, the court is persuaded to follow the Seventh Circuit’s reasoning and hold that compensatory and punitive damages are available for violation of the FLSA’s anti-retaliation provision.”). See also Johnston v. Davis Security, Inc., 217 F.Supp.2d 1224, 1230-31 (D.Utah 2002) (holding that punitive damages are not recoverable under subsection 216(b)); Lanza v. Sugarland Run Homeowners Ass’n, Inc., 97 F.Supp.2d 737, 739-42 (E.D.Va.2000) (same). But see Marrow v. Allstate Sec. & Investigative Services, 167 F.Supp.2d 838, 842-46 (E.D.Pa.2001) (holding that punitive damages are recoverable in a claim for retaliation under the FLSA).
The remedies for violating the FLSA are set out in 29 U.S.C. § 216. Subsection 216(a) provides:
Any person who willfully violates any of the provisions of section 215 of this title shall upon conviction thereof be subject to a fine of not more than $10,000, or to imprisonment for not more than six months, or both. No person shall be imprisoned under this subsection except for an offense committed after the conviction of such person for a prior offense under this subsection.
Subsection 216(b) provides, in pertinent part:
Any employer who violates the provisions of section 215(a)(3) of this title shall be liable for such legal or equitable relief as may be appropriate to effectuate the purposes of section 215(a)(3) of this title, including without limitation employment, reinstatement, promotion, and the payment of wages lost and an additional equal amount as liquidated damages.
In Travis, the Seventh Circuit held that this provision authorizes legal relief, “a term commonly understood to include compensatory and punitive damages.” Travis, 921 F.2d at 111. Otherwise, the analysis in Travis was fairly cursory.
In Snapp, the Eleventh Circuit engaged in a lengthy, detailed analysis of the statutory scheme and arrived at a conclusion opposite from that reached in Travis. The court held in Snapp that the term “legal relief” ordinarily would include punitive damages, but interpreting the statute in the light of the principle of ejusdem generis, the court said that the term “legal relief” in subsection 216(b) should be construed to include only compensatory relief, not punitive damages, because the specific items listed in that subsection as “legal or equitable relief” were all designed to make plaintiffs whole. Snapp, 208 F.3d at 934. The court also said that the statute was structured so that punitive sanctions were covered in subsection 216(a), while subsection 216(b) provided remedies for making aggrieved employees whole. Id. at 935.
The most thorough critique of the Eleventh Circuit’s reasoning in Snapp appears to be the critique of the Eastern District of Pennsylvania in Marrow. There, the court said that application of the maxim of ejusdem generis to subsection 216(b) was inappropriate because the subsection prefaces its list of various forms of relief with the phrase “including without limitation.” Marrow, 167 F.Supp.2d at 844 (emphasis by the Marrow court). “The most sensible reading of that phrase leads to the conclusion that by listing several potential forms of relief, Congress did not mean to exclude others.” Id. Moreover, Marrow reasoned, the purpose of subsection 215(a)(3) is not purely compensatory but is intended to deter employers from engaging in retaliation, so that limiting subsection 216(b) to remedies designed to make the plaintiff whole would not fully implement the intent of Congress. Id. The court in Marrow also found unpersuasive the argument that because Congress provided criminal sanctions in subsection 216(a) it could not have meant to include punitive damages in subsection 216(b). Id.
Although the issue is obviously not free from doubt, the undersigned is persuaded by the reasoning Marrow. Subsection 216(b) was drafted broadly to authorize “such legal or equitable relief as may be appropriate to effectuate the purposes of section 215(a)(3) of this title, including without limitation….” As Snapp noted:
“Legal relief” is certainly a broad formulation. It would have almost no boundary were it not for the commonly understood decision between the “legal” and “equitable” powers of a court. Where such an expansive term is used, we look for clues within the statute to help us understand the exact nature of the “legal relief” that Congress intended; and we are not disappointed when we look to section 216(b).Snapp, 208 F.3d at 934. The only limitation on the term “legal relief” stated in subsection 216(b) is that it be “appropriate to effectuate the purposes of section 215(a)(3)….” The ordinary meaning of “legal relief” as including punitive damages is consistent with that limitation because punitive damages may be appropriate in some cases to effectuate the purposes of subsection 215(a)(3). It is contrary to the legislative intent, as expressed in this broadly worded provision, to exclude punitive damages from the relief authorized by subsection 216(b). The maxim of ejusdem generis is an aid to ascertaining legislative intent and should not be employed to defeat legislative intent, to make general words meaningless, or to reach a conclusion inconsistent with other rules of construction. Donovan v. Anheuser-Busch, Inc., 666 F.2d 315, 326 (8th Cir.1981); United States v. Clark, 646 F.2d 1259, 1265 (8th Cir.1981).
Nor is the undersigned persuaded by the argument in Snapp that punitive sanctions are covered in subsection 216(a), while subsection 216(b) is designed to make plaintiffs whole. In Snapp, the court said, “Congress has already covered punitive damages in section 216(a); and there is simply no reason to carry the punitive element over from section 216(a) to section 216(b), a provision intended to compensate not punish.” Snapp, 208 F.3d at 935. Section 216 has five subsections: subsection 216(a) provides for criminal sanctions; subsection 216(b) provides for civil actions by aggrieved employees; subsection 216(c) provides for civil actions by the Secretary of Labor to recover unpaid minimum wages or overtime compensation on behalf of employees to which those wages are owed; subsection 216(d) states certain narrow exceptions to “liability or punishment” under the FLSA; and subsection 216(e) authorizes civil penalties for child labor violations. Section 216 is not structured so as to have a punishment section and a compensation section; instead, the structure includes a section providing for criminal prosecution by the government prosecuting attorneys, a section providing for civil actions by aggrieved employees, a section providing for civil actions by the Secretary of Labor to recover minimum wages and overtime on behalf of employees, and a section providing for civil penalties for child labor violations. The fact that in subsection 216(a) Congress provided criminal sanctions for willful violations of section 215 supports rather than undercuts the notion that the remedies available under subsection 216(b) include punitive damages, for it shows that Congress regarded willful violations as serious enough to warrant punishment and as a form of misconduct that stands in need of deterrence-which is to say that Congress determined that in some cases punishment would be “appropriate to effectuate the purposes of section 215(a)(3).” Moreover, that subsection 216(e) provides for penalties shows that subsection 216(a) was not intended as an exhaustive statement of the punishment available for violations of the FLSA.
In summary, subsection 216(b) was intended to authorize civil actions by aggrieved employees in which the employees could recover any form of legal or equitable relief that might be appropriate to effectuate the purposes of subsection 215(a)(3). In some cases, punitive damages might be appropriate to effectuate the purposes of that subsection. Therefore, punitive damages may in the proper case be recoverable under subsection 216(b).”
Strippers’ Lawsuit Challenges Independent Contractor Status, Boston Globe Reports
As reported in yesterday’s Boston Globe:
“When Noel Van Wagner began working as a stripper in New England clubs about 15 years ago, she typically got a modest wage or no salary at all. But she said she made so much in tips – $300 to $800 per shift – that she didn’t care and didn’t even mind paying club owners $10 or $20 for the right to perform each night.
Like other forms of entertainment, however, strip clubs have lost customers because of the bad economy, and Van Wagner said the place where she works, Ten’s Show Club in Salisbury, has responded by wringing as much money as it can out of each dancer. The club, she says, pays no salary, charges each stripper $40 to $60 per shift to perform, and imposes other fees for lateness or failing to participate in every dance routine – all at a time when tips have plunged.
Yesterday, she and another dancer at the club, along with one who left in March, sued the business in Essex Superior Court for allegedly misclassifying them as “independent contractors,” depriving them of wages and tips. The strippers were emboldened by a recent state court ruling that about 70 strippers who worked at King Arthur’s Lounge in Chelsea were entitled to recover thousands of dollars in damages in a class-action lawsuit that made similar allegations. That complaint was believed to be the first of its kind in Massachusetts.”
To read the entire article go to the Boston Globe’s website.
Although it is a widespread practice nationwide, for adult entertainment nightclubs to treat their performers as independent contractors vs employees, most courts to have considered the issue have found such performers to be employees. Nonetheless the rampant misclassification of strippers and other adult entertainers continues all over the country.
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