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Andrew R. Frisch
MORGAN & MORGAN, P.A.
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D.Kan.: Plaintiff May Serve Amended Complaint Asserting Successor Liability In FLSA Case

March 9, 2009 10:59 am / Leave a comment

Chao v. Concrete Management Resources, L.L.C.

Plaintiff filed this wage and hour suit against defendants alleging violations of the overtime and recordkeeping provisions of the Fair Labor Standards Act (FLSA). In her complaint, plaintiff alleged that defendant Concrete Management Resources, L.L.C. (CMR) was formerly known as Concrete Masonry & Restoration, L.L.C. Defendant CMR moved to dismiss the complaint on the grounds that it was not a proper party to the action. Specifically, CMR contended that it has never operated as Concrete Masonry & Restoration, L.L.C. and that CMR is a separate legal entity from Concrete Masonry & Restoration, L.L.C. CMR contended that any FLSA violations were committed by Concrete Masonry & Restoration., L.L.C. and that CMR has no relationship with that entity.

The Court entered an Order permitting Plaintiff leave to file an Amended Complaint, asserting successor liability, stating, “[t]he court believes that the Tenth Circuit, if faced with the issue, would conclude that successor liability exists under the FLSA. Indeed, the Circuit had little difficulty extending the doctrine to the Title VII context-long before the Ninth Circuit’s decision in Steinbach. Trujillo, 694 F.2d at 224-25. In doing so, the Circuit emphasized that the “same policy considerations” supporting the application of the doctrine in the labor law context mandated the application of the doctrine to remedy violations of Title VII. Id. at 224. The Circuit also cautioned, however, that “successor liability is not automatic but should be determined on a case by case basis” through application of the ” MacMillan factors,” including whether the successor company had notice of the charge; the ability of the predecessor to provide relief; and whether there has been a substantial continuity in operations, work force, location, management, working conditions and methods of production. Id. at 225 & n. 3. The court, then, rejects defendant’s suggestion that plaintiff’s amendment is futile because the Tenth Circuit has not recognized the theory of successor liability under the FLSA.”

In so doing, the Court joined other Courts, namely the Ninth Circuit in expressly recognizing the existence of successor liability in an FLSA context.

11th Cir.: Plaintiff Not Entitled To Prevailing Attorneys’ Fees, Although She Prevailed, Because Plaintiff’s Attorney Owed A Greater Duty To The Defendant, Who Violated The FLSA, Than His Own Client

March 5, 2009 2:00 am / 2 Comments on 11th Cir.: Plaintiff Not Entitled To Prevailing Attorneys’ Fees, Although She Prevailed, Because Plaintiff’s Attorney Owed A Greater Duty To The Defendant, Who Violated The FLSA, Than His Own Client

Sahyers v. Prugh, Holliday & Karatinos, P.L.

In a decision, which is widely being questioned in legal and scholarly circles, the 11th Circuit affirmed the lower Court’s decision that Plaintiff’s attorney was not entitled to any attorney’s fee, despite the fact that Plaintiff was the prevailing party in this FLSA case.

The Court stated: “The district court’s inherent powers support its decision here. Defendants are lawyers and their law firm. And the lawyer for Plaintiff made absolutely no effort-no phone call; no email; no letter-to inform them of Plaintiff’s impending claim much less to resolve this dispute before filing suit. Plaintiff’s lawyer slavishly followed his client’s instructions and-without a word to Defendants in advance-just sued his fellow lawyers. As the district court saw it, this conscious disregard for lawyer-to-lawyer collegiality and civility caused (among other things) the judiciary to waste significant time and resources on unnecessary litigation and stood in stark contrast to the behavior expected of an officer of the court. The district court refused to reward-and thereby to encourage-uncivil conduct by awarding Plaintiff attorney’s fees or costs. Given the district court’s power of oversight for the bar, we cannot say that this decision was outside of the bounds of the district court’s discretion.”

Perhaps recognizing that its decision held starkly against black letter law and over 70 years of nationwide jurisprudence, the Court limited its decision by stating, “[w]e strongly caution against inferring too much from our decision today. These kinds of decisions are fact-intensive. We put aside cases in which lawyers are not parties. We do not say that pre-suit notice is usually required or even often required under the FLSA to receive an award of attorney’s fees or costs. Nor do we now recommend that courts use their inherent powers to deny prevailing parties attorney’s fees or costs. We declare no judicial duty. We create no presumptions. We conclude only that the district court did not abuse its discretion in declining to award some attorney’s fees and costs based on the facts of this case.”

While it remains to be seen what, if any, precedential value this decision will have, given the language clearly limiting the scope of the decision, it is clear that the 11th Circuit thinks that attorney Defendants should be treated differently from other Defendants in FLSA cases. In fact, the Court went to great lengths to make it clear that it believes an attorney owes a greater duty to a fellow member of the bar, than to his or her own client. Interestingly, while recognizing that the FLSA does not require a pre-suit notice letter, apparently the Court has created such a requirement if the Defendant is an attorney.

S.D.Fla.: FLSA Retaliation Plaintiff Must Show Defendants’ Counterclaim Lacked Reasonable Basis In Fact And Law; Demonstration Of Retaliatory Motive Alone Insufficient

February 22, 2009 9:51 pm / Leave a comment

Munroe v. PartsBase, Inc.

6 months after Plaintiff brought her case for unpaid overtime wages, pursuant to the FLSA, the Defendants brought counterclaims against Plaintiff for Breach of Confidentiality Agreement and Conversion. The Plaintiff then filed an Amended Complaint adding a 215 Retaliation cause of action. The parties moved for Summary Judgment on several of the claims and cross claims.  The Court granted Defendants summary judgment on Plaintiff’s retaliation claim.

Addressing Plaintiff’s retaliation claim, the Court adopted the majority view that, for a Plaintiff to prevail on her retaliation claim, she must demonstrate that Defendants’ counterclaims (1) were filed for a retaliatory motive and (2) lack a reasonable basis in fact or law. See Darveau, 515 F.3d at 343-44 (reversing district court order dismissing retaliation claim where plaintiff alleged his employer filed a lawsuit against him with a retaliatory motive and without a reasonable basis in fact or law); Barnes v. Akal Sec., Inc., 2005 WL 1459112, *5 (D.Kan.2005) (agreeing with Defendants analysis of the law that “the filing of a counterclaim can not be actionable retaliation unless Plaintiffs establish (1) retaliatory motive and (2) lack of a reasonable basis for the claims”); Torres, 2008 WL 4054417, *17 (“Courts have held that baseless claims or lawsuits designed to deter claimants from seeking legal redress constitute impermissibly adverse retaliatory actions, even though they do not arise strictly in an employment context.”) (emphasis added); Ergo v. Int’l Merch. Servs., 519 F.Supp.2d 765, 781 (N.D .Ill.2007) (holding that a compulsory counterclaim is not actionable for retaliation unless it is totally baseless); Orr., 2008 WL 2605569, *17 (accord).

The Court found that there was record evidence to support the conclusion that but for the filing of Plaintiff’s FLSA claims, Defendants would not have filed their counterclaims. In six months, Defendants took no steps to sue Plaintiff for this alleged breach. Additionally, other former co-employees engaged in the very conduct which Defendants used as the basis of their counterclaims against Plaintiff. Defendants did not file an action against the other former co-employees, who, unlike Plaintiff, did not sue the Defendants for FLSA violations.

Nonetheless, the Court held, even assuming the retaliatory motive prong is met, Plaintiff’s retaliation claim must fail if she cannot prove that the counterclaims lack a reasonable basis in fact or law. See Darveau, 515 F.3d at 343-44;
Barnes v. Akal Sec., Inc., 2005 WL 1459112, *5-6. As the court held in Barnes,”the ultimate standard for determining whether a counterclaim has a ‘reasonable basis’ is whether there is a genuine issue of material fact.” 2005 WL 1459112, *6. Because the Court concluded that genuine issues of material fact existed with regard to Defendants’ counterclaims, which must be resolved at trial, the Court found that the counterclaims were not baseless. Accordingly, Plaintiff could not meet both elements required to prove that Defendants’ counterclaims constitute actionable FLSA anti-retaliation.


W.D.Wash.: Flight Attendants Not Entitled To Compensation For Training Time Which Was For Their Benefit

February 21, 2009 1:14 pm / Leave a comment

Ulrich v. Alaska Airlines, Inc.

The parties agreed to the applicability of and the Court applied, the six-factor test adopted by the Department of Labor in several Opinion letters, to determine whether trainees are employees under the FLSA.

The six factors which must be met in order for the trainees not to be employees are:

1) the training, even though it includes actual operation of the facilities of the employer, is similar to that which would be given in a vocational school;

2) the training is for the benefit of the trainees;

3) the trainees do not displace regular employees, but work under close observation;

4) the employer that provides the training derives no immediate advantage from the activities of the trainees; and on occasions his operations may actually be impeded;

5) the trainees are not necessarily entitled to a job at the completion of the training period; and

6) the employer and the trainees understand that the trainees are not entitled to wages for the time spent training.

The Court granted Alaska summary judgment, finding that Alaska’s training program meets all six requirements of the six-factor Department of Labor test. The Court therefore followed the American Airlines and TWA cases from the Fifth and Eighth Circuit Courts of Appeals in ruling that the flight attendant training program conducted by Alaska Airlines does not constitute compensable “work” under the FLSA. Additionally the Court held that the training time does it constitute work within California for which compensation is due under California labor law.

5th Cir.: Relation Back Principle Applies to Ensure That Defendants Cannot Unilaterally “Pick Off” Collective Action Representatives and Thwart Availability of Collective Actions Under FLSA by Paying Employee’s Claim in Full

February 21, 2009 12:47 pm / Leave a comment

Sandoz v. Cingular Wireless LLC

Although, in theory, FLSA claim could become moot when purported representative of collective action receives offer that would satisfy his or her individual claim and no other plaintiffs have opted in, when FLSA plaintiff files timely motion for certification of collective action, that motion relates back to date plaintiff filed initial complaint; relation back is warranted only when plaintiff files for certification without undue delay.

S.D.Fla.: “Offensive” Collateral Estoppel Appropriate Where Defendant’s Exemption Argument Previously Rejected By 11th Circuit

February 16, 2009 1:11 am / Leave a comment

Schulman v. Southern Shuttle Services Inc.

Defendant, a company which provides bus shuttle transportation to and from airports for a fee filed a motion for summary judgment, asserting that Plaintiffs were exempt under the so-called taxicab exemption to the FLSA of § 213(b)(17).  Plaintiffs, drivers for Defendant, opposed the motion, primarily by pointing to a recent decision by the 11th Circuit, which held such drivers not to be taxi cab exempt.

In denying Defendant summary judgment the Court stated:

“[We] find that offensive collateral estoppel is appropriate. Defendant, Southern Shuttle, has previously litigated unsuccessfully the issue of whether it qualifies for the taxicab exemption. See Abel v. Southern Shuttle Services, Inc., 2008 WL 5047626 (11th Cir. Nov.28, 2008. The Eleventh Circuit held that, while Defendant’s airport shuttle vans share some characteristics with taxicabs, they are not “taxicabs” under the narrow interpretation required of an FLSA exemption. Id. Since Defendant received a “full and fair” opportunity to litigate its taxicab exemption claim in the Abel action, the law of collateral estoppel leads inescapably to the conclusion that Defendant is collaterally estopped from relitib Exemption, Collateral Estoppel, Summary Judgmentgating the question of whether it qualifies for the taxicab exemption under the FLSA. See Blonder-Tongue Laboratories, 402 U.S. at 328. The Court is unconvinced that the factual distinctions alleged between this case and Abel v. Southern Shuttle Services, Inc. (07-80584-KLR) are sufficient to prevent the exercise of collateral estoppel here.”

D.D.C.: Prisoners Are Not Entitled to FLSA Coverage

February 16, 2009 12:52 am / 3 Comments on D.D.C.: Prisoners Are Not Entitled to FLSA Coverage

Shipley, Jr. v. Woolrich, Inc.

Plaintiff, a prisoner in the Federal prison system, filed a Complaint seeking minimum wages under the FLSA.  Citing the longstanding caselaw from around the country, the Court dismissed Plaintiff’s Complaint, because it failed to state a cause of action.  Discussing Plaintiff’s lack of 13th Amendment rights or that under the FLSA, the Court stated:

“It is well-settled that the Thirteenth Amendment’s protection against involuntary servitude does not extend to prisoners who are required to perform work at little or no pay. To the contrary, the Thirteenth Amendment clearly excepts involuntary servitude as punishment for a crime after conviction: “Neither slavery nor involuntary servitude, except as a punishment for crime whereof the party shall have been duly convicted, shall exist within the United States, or any place subject to their jurisdiction.” U.S. Const., amend. XIII, § 1. “Convicted criminals … are not protected by the Thirteenth Amendment against involuntary servitude.” Henthorn v. Dep’t of the Navy, 29 F.3d 682, 686 (1994); see also Vanskike v. Peters, 974 F.2d 806 (7th Cir.1992) (stating that prison work assignments are part of the inmates’ sentences of incarceration). Furthermore, “where the inmate’s labor is compelled and/or where any compensation he receives is set and paid by his custodian, the prisoner is barred from asserting a claim for minimum wage under the FLSA [Fair Labor Standards Act.].” Henthorn v. Dep’t of the Navy, 29 F.3d 682, 686 (1994); see also Sanders v. Hayden, 544 F.3d 812, 814 (7th Cir.2008) ( “Prison and jail inmates are not covered by the FLSA.”).”

5th Cir.: FLSA Does Not Require Employers to Reimburse H-2B Visa’d Guest Worker Expenses

February 16, 2009 12:45 am / Leave a comment

Castellanos-Contreras v. Decatur Hotels, LLC

In the aftermath of Hurricane Katrina, Defendant, a hotelier in New Orleans, sought the services of foreign national H-2B guest workers to staff its hotel in a variety of positions.  Each worker hired a recruitment company to locate H-2B job opportunities on his or her behalf, to guide him or her through the H-2B visa application process, and to arrange transportation to the United States.  Each recruitment company charged between $1,700 and $2,000 for its services.  In addition to this fee, each recruitment company required workers to pay their own visa-application fees as well as all transportation expenses necessary to relocate to the United States.  Altogether, each guest worker paid between approximately $3,000 and approximately $5,000 in recruitment, transportation, and visa expenses before relocating to the United States.

When the guest workers arrived in New Orleans, Defendant conducted a week-long orientation session, for which it paid the workers; and the guest workers began to work. Defendant paid the guest workers whom it hired through one company, $6.09 per hour, the guest workers whom it hired through a second recruiting company, $6.02 per hour, and the guest workers whom it hired through a third recruiting company $7.79 per hour.  Defendant did not reimburse the guest workers for their recruitment, transportation, or visa expenses, all of which they incurred before relocating to the United States.

The Court held, relying in part on a 2008 DOL Interpretative Letter, that, under the FLSA, an employer is not required to reimburse guest workers for (1) recruitment expenses, (2) transportation expenses, or (3) visa expenses, which the guest workers incurred before relocating to the employer’s location.  In reaching their decision the Court recognized its disagreement with another Court, which had previously found such expenses to be reimbursable, due to the fact that they were employer business expenses, and not for the benefit of the guest workers.  See Rivera v. Brickman Group, 2008 U.S. Dist. LEXIS 1167, at *47-*50 (E.D.Pa. Jan. 7, 2008).

Further, the Court, likely recognizing the injustice that would result from its ruling, discussed the fact that its ruling will likely have little future impact, because, effective January 18, 2009, the Department of Labor requires an employer seeking H-2B labor certification to attest that “[t]he employer has contractually forbidden any foreign labor contractor or recruiter whom the employer engages in international recruitment of H-2B workers to seek or receive payments from prospective employees, except as provided for in DHS regulations at 8 CFR 214.2(h)(5)(xi)(A).” 20 C.F.R. § 655.22(g)(2). Also effective January 18, 2009, the Department of Homeland Security forbids an employer, employer’s agent, recruiter, or similar employment service from collecting any “job placement fee or other compensation (either direct or indirect)” from a foreign worker as a condition of an H-2B job offer or as a condition of H-2B employment. 8 C.F.R. § 214.2(h)(6)(i)(B).

E.D.La.: Defendant Permitted To Move For Summary Judgment Against One Plaintiff Rather Than Entire Class

February 16, 2009 12:14 am / Leave a comment

Lindsley v. Bellsouth Telecommunications, Inc.

Plaintiff sued Defendants, claiming that he and the putative class were misclassified as independent contractors, when they were, in fact employees under the FLSA.  The Court had previously granted Plaintiff’s Motion to Permit Notice pursuant to 216(b).  Following the deposition of the named Plaintiff, but before any other members of the putative class had been deposed, the Defendants moved for Summary Judgment, as to the named Plaintiff.  Denying the Plaintiff’s Motion to Strike Defendant’s Motion for Summary Judgment as premature, the Court rejected Plaintiff’s argument that Defendants had to move for summary judgment on a classwide basis, until such time as the class had been decertified.

The Court reasoned, “[b]ecause of the allegation that they were employees, the completion of discovery as to Lindsley, and the filing of the motion for summary judgment, the court finds that it is appropriate to choose Lindsley as a test plaintiff to resolve the issue of employee versus independent-contractor status. Resolution of the issue regarding Lindsley, which may be common to the other plaintiffs, does not hinder the purpose of the collective action to aid the “unprotected” in an efficient and effective manner.”

U.S.Jud.Pan.Mult.Lit.: Declines to Consolidate Actions Pending In 2 Different Districts

February 12, 2009 2:00 am

In re: U.S.A. Exterminators, Inc., Fair Labor Standards Act (FLSA) Litigation

Considering Defendant’s unopposed Motion to Consolidate 2 actions, one pending in the E.D.N.Y. and the other pending in the S.D.N.Y., the Court denied the Motion.  The Multidistrict Panel reasoned “Section 1407 centralization would not necessarily serve the convenience of the parties and witnesses or further the just and efficient conduct of this litigation. Inasmuch as this litigation involves only two actions, which are pending in adjacent districts, the proponents of centralization have failed to persuade us that any common questions of fact are sufficiently complex and/or numerous to justify Section 1407 transfer in this docket at this time. Alternatives to transfer exist that can minimize whatever possibilities there might be of duplicative discovery and/or inconsistent pretrial rulings.”

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