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E.D.Ky.: “Self-Critical Analysis” Privilege Does Not Shield Employer From Disclosure Of Documents Relating To FLSA Classification; Such Discovery Is Relevant To Issues Of “Good Faith” And Willfulness
Cochran v. National Processing Co.
This matter was before the Court on the Motions to Quash filed by the Defendants. Defendants sought to quash a subpoena issued by the Court and served on one of the Defendants (Hanna), seeking documents relating to the FLSA classification of the Plaintiffs, who were employees of Defendant, National, assigned to work for Defendant, Hanna. Defendants argued that the documents requested in the subpoena are protected under the self-critical analysis privilege and that they are beyond the scope of discovery.
The underlying action was pending in the United States District Court for the Southern District of Texas. National was the Defendant in the Texas action. The Plaintiffs in that action are current and former National employees. They asserted a claim against National under the Fair Labor Standards Act, alleging that National had improperly classified them as “exempt” employees under the Act and has, thus, improperly failed to pay them overtime. Hanna, which is located in Lexington, Kentucky, was not a party to the Texas action. However, the subpoena required Hanna to produce certain documents relating to work performed by Hanna for National regarding National’s policies and procedures for paying overtime.
Discussing the lack of “self critical analysis” privilege, the Court stated:
“National argues that the documents sought by the Plaintiffs are protected by the ‘self-critical analysis privilege.’
As an initial matter, it is not clear that the privilege exists. As support for its argument that the Sixth Circuit has adopted the self-critical analysis privilege, the Plaintiffs cite ASARCO, Inc. v. N.L.R.B., 805 F.2d 194 (6th Cir.1986). In that case, the Sixth Circuit determined that the employer should not have to disclose self-critical reports prepared after serious accidents in order to improve safety and prevent similar mishaps. Id. at 199. The court determined that “[t]he practice of uninhibited self-critical analysis, which benefits both the union’s and employer’s substantial interest in increased worker safety and accident prevention, would undoubtedly be chilled by disclosure.” Id. at 200.
However, that case involved a company’s duty to turn over certain information in collective bargaining efforts with the employee’s union. The Sixth Circuit specifically noted that items subject to discovery in litigation may not be subject to disclosure “in the collective bargaining context” and that any duty to disclose in that context must be evaluated in light of the rights and obligations created by the National Labor Relations Act. Id. at 199.
Even after ASARCO, district courts have found that the Sixth Circuit has never explicitly adopted the self-critical analysis privilege. See United States v. Allison Engine Company, Inc., 196 F.R.D. 310, 313-14 (S.D.Ohio 2000); Hickman v. Whirlpool Corp., 186 F.R.D. 362, 363 (N.D.Ohio 1999).
One district court has summarized the status of the privilege as follows:
Furthermore, “no circuit court of appeals has explicitly recognized the self-critical analysis privilege.” Johnson v. United Parcel Serv., Inc., 206 F.R.D. 686, 689-90 (M.D.Fla.2002). Most important, the validity of the self-critical analysis privilege is highly doubtful in light of the Supreme Court’s decision University of Pennsylvania v. EEOC, 493 U.S. 182, 110 S .Ct. 577, 107 L.Ed.2d 571 (1990), which declined to recognize a common law privilege against disclosure of confidential peer review materials.Granberry v. Jet Blue Airways, 228 F.R.D. 647, 650 (N.D.Cal.2005).
In Allison Engine, the court considered a claim of self-critical analysis privilege regarding internal audits of quality control for products supplied to the United States Navy. It applied a four-part test from Bredice v. Doctors Hosp., Inc., 50 F.R.D. 249 (D.D.C.1970):
(1) the information must result from self-critical analysis undertaken by the party seeking protection; (2) the public must have a strong interest in preserving the free flow of the type of information sought; (3) the information must be of the type whose flow would be curtailed if discovery were allowed; and (4) no documents should be accorded the privilege unless it was prepared with the expectation that it would be kept confidential.
Allison Engine, 196 F.R.D. at 312.
The court rejected the privilege in that case, noting that the privilege had rarely been applied and that its very rationale had been called into doubt. Id. at 313.See also Wade v. Washington Metropolitan Area Transit Authority, 2006 WL 890679 at * 5 (D.D.C.2006)(the privilege is “rarely recognized.”)
Even if the Sixth Circuit has or would adopt the privilege, National would not meet all four elements of the test set forth above. National argues that the documents requested from Hanna relate to an evaluation that National hired Hanna to perform of National’s classification of employees as exempt or non-exempt under the FLSA. However, clearly not all the information contained in documents relating to the evaluation are necessarily protected by the privilege:
The privilege is not absolute. It applies only to analysis or evaluation, not the facts on which evaluation is based. See In re: Crazy Eddie Securities Litigation, 792 F.Supp. 197, 205 (E.D.N .Y.1992). Courts have protected analytical or evaluative information but allowed discovery of factual information. See Troupin, 169 F.R.D. at 550. Under the privilege, parties are not required to reveal self-critical analyses, but must produce data or statistical information. See Roberts v. National Detroit Corp., 87 F.R.D. 30, 32 (E.D.Mich.1980). Information, documents or records otherwise available from other sources are not immune from discovery. See Shipes, 154 F.R.D. at 307 (citing Hollowell v. Jove, 247 Ga. 678, 279 S.E.2d 430, 434 (1981)). Additionally, this is a qualified privilege and it can be overcome by showing extraordinary circumstances or special need. See Reichhold Chem. Inc., 157 F.R.D. at 527. The privilege must be balanced against the opposing party’s need for discovery. See In re: Crazy Eddie Securities Litigation, 792 F.Supp. at 205. Allison Engine, 196 F.R.D. at 315.
The subpoena requests “all documents relating or pertaining to any review(s), audit(s), consulting or human resources management-related work performed by you for [National] regarding its policies or procedures concerning payment of overtime and/or classification of employees for overtime purposes,” and “all communications between you and anyone with [National] related to its policies or procedures concerning payment of overtime and/or classification of employees for overtime purposes.”
National has produced no evidence at all regarding the kinds of information contained in the documents requested, i.e., whether the information is “analysis” or “evaluation” or whether the information is “factual.” Thus, the Court has no basis for finding any of the documents are privileged.
Further, the privilege is most often applied in cases involving public health or safety. First Eastern Corp. v. Mainwaring, 21 F.3d 465, 467 n. 1 (C.A.D.C.1994). In fact the privilege was “initially developed to promote public safety by encouraging businesses to voluntarily evaluate their safety procedures. Morgan v. Union Pacific R. Co., 182 F.R.D. 261, 265 (N.D.Ill.1998)(citing Bredice v. Doctors Hosp. Inc., 50 F.R.D. 249, 251 (D.D.C.1970)). “Because production of such documents ‘would tend to hamper honest, candid self-evaluation geared toward the prevention of future accidents,’ the doctrine evolved in order ‘to prevent a ‘chilling’ effect on self-analysis and self-evaluation prepared for the purpose of protecting the public by instituting practices assuring safer operations.’ “ Id. (citing Granger v. National R.R. Passenger Corp., 116 F.R.D. 507, 508-509 (E.D.Pa.1987)).
While the privilege has been applied in other settings, the “essence of the privilege is the value to the public of continuing the free flow of the type of information created by the analysis. Consequently, the inquiry focuses on the public policy requirement, that is, whether disclosure of material generated by a party’s self-critical analysis will discourage or curtail future such studies.” Drayton v. Pilgrim’s Pride Corp., 2005 WL 2094903 at *2 (E.D.Pa.2005).
The assessment at issue in this case involved National’s classification of employees as exempt or non-exempt under the FLSA. National argues that it hired Hanna to develop and implement a compensation structure for the company including an evaluation of National’s classification of employees as exempt or non-exempt under the FLSA. Disclosure of that assessment will not inhibit National from conducting further such assessments. In order to pay its employees, it obviously must continue to classify them as exempt or non-exempt. Thus, to the extent that the Hanna report contained any “evaluation” or “analysis,” National must continue to engage in that analysis in order to pay its employees and avoid liability under the Act.
The privilege has been extended to employment cases to “protect business entities which are legally mandated to critically evaluate their hiring and personnel policies.” Morgan v. Union Pacific R. Co., 182 F.R.D. 261, 265 (N.D.Ill.1998). However, the rationale for the privilege in employment cases is different than it is for tort cases. While, “the justification for the privilege in tort cases is to promote public safety through voluntary and honest self analysis,” id., the privilege in employment cases is meant to “protect those businesses that are required to engage in critical self-evaluation from exposure to liability resulting from their mandatory investigations.” Id. To the extent that Hanna’s assessment contained any “evaluation” or “analysis,” National has pointed to no law requiring such an evaluation.
For all these reasons, the Court hold that the Hanna documents are not protected under the self-critical analysis privilege.
Next the Court addressed Defendants’ argument that the documents sought were not relevant. Rejecting this argument, the Court explained, “National objects that the documents sought are not relevant to the Plaintiffs’ action and Hanna has joined in that objection. National argues that the Plaintiffs are IT Support Technicians in Texas but that the subpoena seeks information about every National employee and that it seeks information beyond the classification of those employees under the FLSA.
The Plaintiffs argue that the documents are relevant to the “good faith” defense to the imposition of liquidated damages under the Act and to the extended statutory limitations period for “willful violations” of the Act. National has asserted the good faith defense and has denied any willful violations or purposes of extending the limitations period. The Plaintiffs argue that the defense “delves into the mind of the employer” and, thus, communications with Hanna regarding interpretation and application of the FLSA are relevant.
The Court agrees with the Plaintiffs that National’s communications with Hanna regarding the FLSA classification of its employees for overtime purposes is relevant to National’s “good faith” and “willfulness.” The subpoena is confined to documents regarding “payment of overtime and/or classification of employees for overtime purposes.” Accordingly, the documents requested in the subpoena are discoverable.”
EDITOR’S NOTE: Within days of the issuance of the Order in this case, a court within the Northern District of California held that there is no such thing as the “self-critical analysis” privilege. See Lewis v. Well Fargo & Co., 2010 WL 890183 (N.D.Cal. March 12, 2010).
D.Md.: Training Time Outside Of Regular Work Hours Not Compensable, Because It Was Primarily For The Benefit Of The Employees Not The Employer
Carter v. Mayor & City Council of Baltimore City
Before the Court was Defendants’ Motion for Summary Judgment. This was the second such Motion, because the Court had denied the prior application with leave to further establish the factual record. Plaintiffs claimed that they were entitled to be paid for certain time spent training in Defendants’ CRT Apprentice program outside of their regular workweek. The Court disagreed, granting Defendants’ Motion. As discussed below, the Court reasoned that since the primary benefit of the training was to the Plaintiffs, such time spent training was not compensable under the FLSA or Portal-to-Portal Act.
Discussing the facts pertinent to its inquiry the Court explained:
“Plaintiffs are current or former apprentices in a Baltimore City Fire Department (BCFD) three-year Firefighter/Paramedic Apprenticeship Program. Plaintiffs allege that as part of their apprenticeship they were required to attend class and perform on-the-job practical training on an ambulance and in the hospital without compensation in violation of the FLSA.
It is undisputed that one of the duties of a Firefighter/Paramedic is to provide emergency medical care, including Advanced Life Support. In order to provide Advanced Life Support, Maryland state law requires licensure as a Cardiac Rescue Technician (CRT). Md.Code Regs. 30.01.01.20. State law designates the State Emergency Medical Services Board (EMS Board) to approve CRT courses, conduct examinations, and issue CRT licenses. Md.Code Ann., Educ. § 13-516(a)(2) [a portion of the facts is excluded here]…
The Fire Department required remedial training for apprentices when they failed the required national registry EMT test or any of the exams during the CRT-I course. In addition, if students failed the National Registry exam three times, the National Registry required the students to take a 48 hour review before it would allow them to re-take the exam.
The Maryland Institute for Emergency Medical Services Systems issued regulations governing the content of ALS education programs. Md.Code Regs. 30.04.02.01 et seq. In addition to classroom training, ALS students must also complete a supervised clinical experience, which includes the practice of skills within clinical education facilities, and a supervised field internship, which includes the practice of skills while functioning in a prehospital ALS environment. Id. 30.04.02.05. During the clinical and field training, the MIEMSS regulations require that the student is supervised by clinical and field preceptors. Id. 30.04.02.06. In the field portion of the training, the ratio of students to preceptors must be one to one. Id. 30.04.02.06(F)(2).
Upon entering the fire academy, the apprentices signed an Apprenticeship Agreement in which they agreed to the terms of the Apprenticeship Standards filed with the Maryland Apprenticeship and Training Council. The Standards include a requirement that apprentices will complete a minimum of 144 hours per year of related instruction and that these hours will not be considered as hours worked when given outside regular working hours. In addition to the CRT-I course, apprentices were required to undergo enhanced training, including courses in pump operations, aerial operations, hazmat tech, arson awareness/sprinkler, and rescue technician.
During the second portion of the apprentices’ training, they worked an eight day cycle, with 4 days on and 4 days off. Training to obtain their CRT licensure was sometimes scheduled on the apprentices’ days off. Apprentices were not compensated during the off-duty training times. Plaintiffs contend that they should have been compensated for this off-duty training time under the FLSA.”
Discussing the relevant law and concluding that Plaintiffs’ after-hours training was not compensable under the FLSA, the Court stated:
“Plaintiffs allege that the City violated this provision by refusing to pay them overtime for the hours spent in training outside their regular workweek.
Cases analyzing whether training mandated by employers or potential employers should be compensable as hours worked include cases in which the potential employer requires the completion of training before an individual may be hired and cases in which the individual is an apprentice or already an employee and required to complete training as part of the apprenticeship or as an agreed upon condition to hiring. The seminal cases relating to training and the FLSA are the companion cases, Walling v. Portland Terminal Co., 330 U.S. 148 (1947) and Walling v. Nashville, Chattanooga and St. Louis Ry., 330 U.S. 158 (1947). In Portland Terminal, the defendant railroad had required the completion of a course of practical training before individuals could be hired as prospective yard brakemen. 330 U.S. at 149. The course involved a progressive increase in the trainees’ ability to act as a brakeman beginning with observing routine activities through gradually conducting the actual work of a brakeman under close scrutiny. Id. The Supreme Court noted that the activities of the trainee did not displace any of the regular employees, who were required to supervise any actual work done by the trainees, and did not expedite the company business, but may at times have impeded it. Id. at 149-50. Once certified as competent, the individuals who completed the training comprised a pool of qualified workmen available to the railroad when needed. Id. at 150. The Supreme Court focused on whether the trainees were to be considered employees and thus protected by the FLSA. Id. The FLSA defines employ as “to suffer or permit to work.” Id. at 152; 29 U.S.C. § 203(g). Despite the broad definition, the Supreme Court held that it could not “be interpreted so as to make a person whose work serves only his own interest an employee of another person who gives him aid and instruction.” Portland Terminal, 330 U.S. at 152. The Court compared the training at issue to courses in railroading in a public or private vocational school, in which “it could not be reasonably suggested that [the students] were employees of the railroad merely because the school’s graduates would constitute a labor pool for the railroad.” Id. at 152-53. Thus, the Court held that when the railroads received no “immediate advantage” from the work done by the trainees, the trainees were not employees under the FLSA. Id. at 153.
In analyzing Portland Terminal, the Fourth Circuit has concluded that the general test used to determine if an employee is entitled to the protections of the Act is “whether the employee or the employer is the primary beneficiary of the trainees’ labor.” McLaughlin v. Ensley, 877 F.2d 1207, 1209 (4th Cir.1989). In McLaughlin, the defendant owned a snack foods distribution business in which he required new hires to spend five days travelling an ordinary route with an experienced routeman as training before they were hired. 877 F.2d at 1208. The trainees loaded and unloaded the delivery truck, restocked stores with the defendants products, were given instruction on how to drive the trucks, were introduced to retailers, were taught basic snack food vending maintenance, and occasionally helped in preparing orders of goods with financial exchanges. Id. The court found that, unlike in Portland Terminal, the prospective employees were simply helping to service a route, and the instruction they received did not rise to the level that one would receive in a general, vocational course in outside salesmanship. Id. at 1210. Instead, the court found that the trainees were taught only simple, specific job functions related to the defendant’s business. Id. For those reasons, the court concluded that the trainees were entitled to be considered covered employees under the FLSA. Id. Compare Reich v. Parker Fire Protection District, 992 F.2d 1023 (10th Cir.1993) (holding that firefighter trainees were not employees because they obtained training comparable to a vocational school and the defendant was not immediately benefited by the trainees’ activities as their training activities were supervised and they did not assume the duties of career firefighters; the benefit to the defendant from the plaintiffs’ supervised training activities was de minimis ).
Where trainees are already employees, the Courts look also to the Portal-to-Portal Act, which provides that an employer need not pay an employee for activities that are “preliminary or postliminary” to the principal activity or activities the employee is employed to perform. 29 U.S.C. § 254(a)(2). The Supreme Court has interpreted the mandate of the Portal-to-Portal Act to mean “that activities performed either before or after the regular work shift, on or off the production line, are compensable … if those activities are an integral and indispensable part of the principal activities for which covered workmen are employed.” Steiner v. Mitchell, 350 U.S. 247, 256 (1956).
The most oft-cited case applying the “preliminary or postliminary” test to training activities is Ballou v. General Electric Co. 433 F.2d 109 (1st Cir.1970). In Ballou, the First Circuit held that the classroom training required of the defendant’s apprentices taking place outside of working hours was neither integral nor indispensable to the apprentices’ principal activity, which was the work that took place during their regular 40 hour work-training week. Id. at 112. The court looked to Portland Terminal and found that if the defendant had not employed the appellants as workers, but provided only training programs that they were required to complete successfully before they could be employed as journeymen, the apprentices would be entitled to no compensation. Id. Thus, the court concluded that “the employer’s decision to hire its employees before the completion of training did not obligate it to compensate them for the time spent in their status as students after their hiring.” Bienkowski v. Northeastern Univ., 285 F.3d 138, 141 (1st Cir.2002) (citing Ballou, 433 F.2d at 112).Accord Chao v. Tradesman Int’l, Inc., 310 F.3d 904, 910 (6th Cir.2002) (“Therefore, we agree with the First Circuit that the defendant employer should not be made liable for overtime pay for time its employees spend as students, rather than as workers…. We do not see why the employer should be penalized for allowing a potential employee to begin earning income while striving to meet certain prerequisites for the job when the employer could just as easily withhold employment until successful completion of all the job requirements.”).
In Bienkowski, the First Circuit applied its analysis in Ballou to facts similar to the facts found here. 285 F.3d at 141. In Bienkowski, the defendant hired the plaintiffs as probationary police officers with a requirement that they receive and retain certification as Massachusetts-registered EMTs within one year of their appointment. Id. at 139. At the time of hire, the plaintiffs signed a letter acknowledging the requirement. Id. The training, as required pursuant to Massachusetts statutes, regulations, and Department of Public Health standards, required approximately 110 hours of classroom work, as well as 10 hours of in-hospital evaluation time, practical exams, and written exams. Id. Although the plaintiffs could have taken the EMT courses at various locations throughout Massachusetts, they chose to take the course at Northeastern, where they were entitled to tuition reimbursement. Id. For the most part, the course requirements took place outside of the plaintiffs’ working hours. Id. at 140. Prior to receiving their certification, the plaintiffs were prohibited from performing EMT work, but following their certification, they regularly used their skills on the job. Id. The Court held that it would not hold the defendant “liable for overtime pay for time its employees spend as students, rather than as workers, simply because [the defendant] decided to hire its employees on a probationary basis until they complete the training required to hold the job on a permanent basis.” Id. at 141.
Defendants have articulated and Plaintiffs have not disagreed that the classes and on-the-job training required of the apprentices can be broken down into four categories: 1) initial classroom training to obtain CRT licensure; 2) classroom enhanced training; 3) clinical training with an ambulance medic team and in the hospital to obtain CRT licensure; and 4) mandatory repeat classroom training to obtain CRT licensure when a student has failed any of the required exams. Under either the “primary beneficiary” test of McLaughlin or the “integral and indispensable part of the principal activities” test of Steiner, the hours spent in all four categories of training are not compensable as hours worked under the FLSA.
All of the classroom and practical training required to obtain the CRT license, the classroom enhanced training, and the repeat classroom training are no different than that found in Portland Terminal, Ballou, and Bienkowski. Plaintiffs are apprentices in an apprenticeship program approved by the Department of Labor and as part of that program were required to take the CRT Training, which required both classroom and clinical training. As the CRT license was required in order for Plaintiffs to conduct their duties as firefighters/paramedics, the City could have required the Plaintiffs to obtain the license before hiring them. In fact, similar training is provided at Baltimore City Community College and Community College of Baltimore County. Instead the city allowed Plaintiffs to obtain the license while they were concurrently employed by the city, and funded the training. Although the City ultimately benefitted from Plaintiffs obtaining the CRT license in that it then had a pool of employees certified to conduct ALS, Plaintiffs obtained a license fully transferrable to their employment with any other employer that required the ability to provide Advanced Life Support. Thus, as in Portland Terminal and unlike in McLaughlin, Plaintiffs were the primary beneficiaries of the training. Moreover, as Plaintiffs were not able to perform any of the ALS duties until they obtained their license, as in Bienkowski the training was not an integral and indispensable part of their paid work duties during the period of their training.
This Court’s holding is supported by Department of labor regulations interpreting the FLSA that exclude from the computation of “hours worked” the time spent in certain kinds of training. One such regulation is found at 29 C.F.R. § 553.226(b).
(b) While time spent in attending training required by an employer is normally considered compensable hours of work, following are situations where time spent by employees of State and local governments in required training is considered to be noncompensable:
(1) Attendance outside of regular working hours at specialized or follow-up training, which is required by law for certification of public and private sector employees within a particular governmental jurisdiction (e.g., certification of public and private emergency rescue workers), does not constitute compensable hours of work for public employees within that jurisdiction and subordinate jurisdictions.
(2) Attendance outside of regular working hours at specialized or follow-up training, which is required for certification of employees of a governmental jurisdiction by law of a higher level of government (e.g., where a State or county law imposes a training obligation on city employees), does not constitute compensable hours of work.
(3) Time spent in the training described in paragraphs (b)(1) or (2) of this section is not compensable, even if all or part of the costs of the training is borne by the employer.
A 1999 Department of Labor Opinion letter applies this regulation to facts identical to those found here.
Q.1. As a condition of employment, firefighters for County A must have current EMT (emergency medical training) certification. Although this certification is granted through the state, the state does not require the fire fighters have the certification. However, since City A requires it, the training is not “voluntary.” Under these circumstances, must the EMT training that is required to maintain this certification be counted as hours worked if the training takes place during non-working hours?
A.1. No. While time spent in attending training required by an employer is normally considered compensable hours of work, attendance outside of regular working hours at specialized or follow-up training which is required by law for certification of employees of a governmental jurisdiction, does not constitute hours of work under the FLSA. See Section 553.226 of Regulations, 29 CFR Part 553. Sept. 30, 1999, Dept. of Labor Op. Letter, 1999 WL 1788163.
In addition, the Department of Labor has issued a regulation as to apprenticeship training.
[T]ime spent in an organized program of related, supplemental instruction by employees working under bona fide apprenticeship programs may be excluded from working time if…. (b) such time does not involve productive work or the performance of the apprentice’s regular duties. If the above criteria are met the time spent in such related instruction shall not be counted as hours worked unless the written agreement specifically provides that it is hours worked. The mere payment or agreement to pay for time spent in related instruction does not constitute an agreement that it is hours worked. 29 C.F.R. § 785.32.
Plaintiffs do not contest that the initial CRT training and the enhanced training are not compensable under these regulations. They argue, however, that although the clinical training is a required component of the CRT-I course, it was compensable time because it was productive work and constituted performance of their regular duties. The undisputed evidence shows that a regular medic unit is staffed by two individuals, which could be two ALS providers or an ALS provider and a BLS provider. When Plaintiffs were assigned to a medic unit as part of their training, there was always an ALS provider and another BLS provider; the trainee would then be a third person on the team. Plaintiffs state in their opposition that “[i]n the experience of many Plaintiffs, under the guise of ‘training,’ only one person, the [ALS] preceptor-was paid. Therefore, a paid position on the medic unit was eliminated during the training, as the Defendants filled it with two unpaid apprentices.” Opp. at 8.
Contrary to Plaintiffs’ statements in their opposition, however, neither of the provided affidavits establishes that unpaid trainees replaced a paid BLS provider. Moreover, they have not established that any benefit the City may have received from the trainee’s presence is anything more than de minimis or that it outweighed the benefit to the trainee in completing a required component of the CRT training. One affiant testified that the other BLS provider was paid and drove the ambulance while he, as the trainee, sat in the back of the ambulance. Stoakley Aff. ¶ 4. Notably, the second affiant said nothing regarding whether the other BLS provider was paid and said nothing about whether he ever drove the ambulance while he was on a training run. Bonovich Aff. ¶ 4. Thus, Plaintiffs have provided no reason to believe that when they were conducting training runs they were not able to work with the ALS provider in a training capacity for the entire period.
Similarly, the time spent by the trainees in the hospital was also a required component of the CRT training. Plaintiffs’ affidavits confirm that all of the Plaintiffs’ activities in the hospital were supervised. They have not shown, however, that their activities were part of their regular duties or any more productive than the supervised work done by trainees in Portland Terminal. Thus, the clinical training does not constitute compensable hours worked under the FLSA and the Portal-to-Portal Act.
Plaintiffs also argue that the duplicative classroom training, required when Plaintiffs did not pass certain examinations required for the EMT-I certification, is compensable as hours worked because it was neither a part of the approved apprenticeship program nor a legal requirement. While the apprentice standards may have simply required the CRT-I course, it is logical to conclude that the apprentices were expected to successfully complete the course and obtain their CRT license. If an apprentice fails the course and must repeat it in order to satisfy the requirements to obtain the CRT license, it is hard to imagine how this is any different than the initial requirement to attend the course. Moreover, it seems perverse logic to say that the initial training is not compensable, but if an apprentice fails the training, it then becomes compensable. Finally, the Court sees no immediate benefit to the Defendants from Plaintiffs taking remedial courses since it delayed the time that Plaintiffs could conduct ALS duties. Thus, the Court sees no difference in the initial requirement to attend the CRT course and the requirement to take duplicative training when the student fails the required exams.”
Having determined that the training time at issue was not compensable, the Court granted Defendants’ Motion for Summary Judgment.
D.S.D.: Special Detail Exemption Recognized By 29 U.S.C. § 207(p)(1) Of The FLSA Applies To Exclude Certain Time Worked, Because Firefighters Were On Firefighting Detail Solely At Their Own Option, During Off Duty Hours, And The State And The City Are Separate And Independent Employers
Specht v. City of Sioux Falls
This case was before the Court on Defendant’s Motion for Summary Judgment. The specific issue is the City’s affirmative defense that the firefighters were exempt from the Fair Labor Standards Act. 29 U.S.C. § 207(p)(1) establishes a special detail exemption so that hours worked on special detail are not combined with the regular hours for calculating overtime compensation.
The Court cited the following facts as relevant to the issue at bar:
“Plaintiffs are firefighters employed by the City of Sioux Falls in the Fire Rescue Department (SFFR). During July and August of 2006, all of the Plaintiffs were deployed to assist in fighting wildfires. In July of 2006, Ricky Larsen, who was the Chief of SFFR received a call from the South Dakota state fire dispatch requesting assistance in battling wildfires. There was a list of SFFR firefighters who were wildland firefighter certified. Each firefighter has the right to accept or deny when offered an opportunity at deployment. Reimbursements to the City by the State for the firefighters’ compensation were made pursuant to a contract between the City and the State. The normal schedule called for the firefighters to work 204 hours during a 27 day pay period. Typically a firefighter’s deployment for wildland firefighting is not more than 14 days. There was a concern that deployed firefighters would be paid less than if they had stayed in Sioux Falls and worked the normal 204 hours work schedule. SFFR agreed to pay the difference between 204 hours and the hours actually worked during a 27 day period in which a firefighter was deployed if a firefighter’s hours during the 27 day period totaled less than 204.”
Laying out the relevant law regarding the s0-called “Special Detail Exemption” the Court stated:
“29 U.S.C. § 207(p)(1) provides:
If an individual who is employed by a State, political subdivision of a State, or an interstate governmental agency in fire protection or law enforcement activities (including activities of security personnel in correctional institutions) and who, solely at such individual’s option, agrees to be employed on a special detail by a separate or independent employer in fire protection, law enforcement, or related activities, the hours such individual was employed by such separate and independent employer shall be excluded by the public agency employing such individual in the calculation of the hours for which the employee is entitled to overtime compensation under this section if the public agency-
(A) requires that its employees engaged in fire protection, law enforcement, or security activities be hired by a separate and independent employer to perform the special detail,
(B) facilitates the employment of such employees by a separate and independent employer, or
(C) otherwise affects the condition of employment of such employees by a separate and independent employer.
Code of Federal Regulations.
29 C.F.R. § 553.227 provides:
(a) Section 7(p)(1) makes special provision for fire protection and law enforcement employees of public agencies who, at their own option, perform special duty work in fire protection, law enforcement or related activities for a separate and independent employer (public or private) during their off-duty hours. The hours of work for the separate and independent employer are not combined with the hours worked for the primary public agency employer for purposes of overtime compensation.
(b) Section 7(p)(1) applies to such outside employment provided (1) The special detail work is performed solely at the employee’s option, and (2) the two employers are in fact separate and independent.
(c) Whether two employers are, in fact, separate and independent can only be determined on a case-by-case basis.
(d) The primary employer may facilitate the employment or affect the conditions of employment of such employees. For example, a police department may maintain a roster of officers who wish to perform such work. The department may also select the officers for special details from a list of those wishing to participate, negotiate their pay, and retain a fee for administrative expenses. The department may require that the separate and independent employer pay the fee for such services directly to the department, and establish procedures for the officers to receive their pay for the special details through the agency’s payroll system. Finally, the department may require that the officers observe their normal standards of conduct during such details and take disciplinary action against those who fail to do so.
(e) Section 7(p)(1) applies to special details even where a State law or local ordinance requires that such work be performed and that only law enforcement or fire protection employees of a public agency in the same jurisdiction perform the work. For example, a city ordinance may require the presence of city police officers at a convention center during concerts or sports events. If the officers perform such work at their own option, the hours of work need not be combined with the hours of work for their primary employer in computing overtime compensation.
(f) The principles in paragraphs (d) and (e) of this section with respect to special details of public agency fire protection and law enforcement employees under section 7(p)(1) are exceptions to the usual rules on joint employment set forth in part 791 of this title.
(g) Where an employee is directed by the public agency to perform work for a second employer, section 7(p)(1) does not apply. Thus, assignments of police officers outside of their normal work hours to perform crowd control at a parade, where the assignments are not solely at the option of the officers, would not qualify as special details subject to this exception. This would be true even if the parade organizers reimburse the public agency for providing such services.
(h) Section 7(p)(1) does not prevent a public agency from prohibiting or restricting outside employment by its employees.
Department of Labor Letter Rulings.
This § 207(p)(1) exemption has been addressed in two opinion letter rulings issued by the United States Department of Labor on November 19, 1992 and in a third opinion letter ruling issued December 31, 2007. Ginsburg et al., Fair Labor Standards Handbook, App. III, pp. 186-87 & 457-58 (1998). In the second1992 opinion letter the Department of Labor opined that county sheriff’s deputies who are employed by a village to perform law enforcement services for the village under a proposed contract between the county and the village fall under § 207(p)(1) so that the hours worked by the deputies for both employers are not combined for FLSA overtime compensation purposes. “Section 207(p)(1) applies to such outside employment provided (1) the special detail work is performed solely at the employee’s option, and (2) the two employers are in fact separate and independent.” The Department of Labor cited 29 C . F.R. § 553.227.
In contrast, the first November 19, 1992, opinion letter opined that § 207(p)(1) did not apply to a paramedic who worked for a county’s emergency medical services department and who also worked as a part time communications supervisor in the county’s sheriff department so that the hours worked in both county departments should be combined for overtime purposes. The departments were not separate and independent employers. The employee worked for a single employer, the county, in different departments. These two opinion letters illustrate the principle of § 207(p)(1) which is described as follows in the first letter ruling:
Section 7(p)(1) makes special provision for fire protection and law enforcement employees who, at their own option, perform activities for a separate and independent (emphasis in original) employer(public or private) during their off-duty hours. The hours of work for the separate and independent employer are not combined with the hours worked for the primary public agency employer for the purposes fo overtime compensation. See § 553.227 of the regulations. Id.
In the 2007 opinion letter the Department of Labor opined that the city police department and a non-profit group which operates the city convention center are separate and independent employers so that § 207(p)(1) applies when police officers perform security duties at the convention center during their off hours. “[I]t is our opinion that the City Police Department would not be obligated to include the hours worked by police officers on special assignment to the Authority in calculating and paying overtime due them.”
The language of 29 U.S.C. § 207(p)(1), 29 C.F.R. § 553.227, and the Department of Labor is plain, i.e. if the firefighter has the option to accept or reject the assignment and if the second employer is a separate and independent employer, then the primary employer does not count the hours the firefighter spends on the special detail for the second employer in the calculation to determine the firefighter’s entitlement to overtime.
Case Precedent.
Case precedent is consistent with these legal principles. Jackson v. City of San Antonio, 2006 WL 2548545, *4-*7, (W.D.Tex.2006) (Section 7(p)(1) special duty exemption bars police officers’ overtime claims against the City for hours worked for separate and independent employers during off duty hours); Nolan v.. City of Chicago, 125 F.Supp.2d 324, 335-339, (N.C.Ill.2000) (Section 7(p)(1) sets forth a two part test: if the assignment is solely at the employees option and the employers are in fact separate and independent the special detail exemption applies and the hours worked for the separate employer are not combined for purposes of assessing overtime compensation); Cox v. Town of Puughkeepsie, 209 F.Supp.2d 319, 324-327 ((S.D. N.Y 2002) (Section 7(p)(1) does not apply to voluntary work performed by police officers because the town and the town police department are a single employer); Baltimore County FOP Lodge 4 v. Baltimore County, 565 F.Supp.2d 672, 676-679, (D. Maryland 2008) (Section 7(p)(1) special detail exemption cannot be decided as a matter of law on summary judgment motion because there are questions of fact to be resolved by a jury on both the voluntary and separate employer prongs); Murphy v. Town of Natick, 515 F.Supp.2d 153, 157-158, (D. Mass 2007) (Section 7(p)(1) special detail exemption does not apply because the Town is not a separate and independent entity from any of its constituent departments); Barajas v. Unified Government of Wyandotte County/Kansas City, Kansas, 87 F.Supp.2d 1201, 1205-1209, (D.Kansas 2000) (Section 7(p)(1) special detail exemption cannot be decided as a matter of law even though parties agree the assignments are solely at the employees option because there are questions of fact about the Unified Government and the Housing Authority as separate and independent employers).
The Court then analyzed the relevant factors, concluding that all elements of the exemption were met here.
“Solely at the Firefighter’s Own Option.
Specht described the procedure for calling the list for volunteers (Doc. 24, Ex. 13, Specht depo. p. 63-64):
… [Y]ou have to go to the first person on the list that has the fewest number of hours…. I will use SF 29 as an example …; under “Remarks,” it says, “No answer.”…. [T]hey can leave an answer (sic) on the answering machine, and they must wait a minimum of-I believe it’s five minutes-before they can call the next person so that that person could look at their messages and call in and say: “Yes, I want to work.” “No, I don’t.” …. By contract and by policy, you can either accept the overtime or reject it, unless they declare an emergency. Or, once they’ve been all the way through the list, then they can call-if they get a hold of you the second time, then they can require you to take the overtime. (emphasis added).
Specht also testified that all the firefighters who responded in 2006 were accepting the offered “overtime.” Whether it is called volunteering or called overtime, the firefighters accepted. They had the option to say, “no, I won’t go,” or “yes” on the first time the list was called. Plaintiff argues that the wildfire fighting deployment was not voluntary because the firefighter could be assigned to go on deployment if there were not enough who accepted the first time the list was called. This argument is academic and not relevant. There were enough firefighters who accepted the first time the list was called. None of these plaintiffs was assigned to accept the deployment against his will. The list was not called a second time. The notes on the calling sheets reflect that several said “yes” to this wildfire fighting deployment and several said “no” (Doc. 36). There were ten “yes.” There were ten “no.” There were seven who said “after a certain date.”
The plaintiffs were on this wildland fire fighting project solely at their own option. The first prong of the section 7(p)(1) special detail test existed.
Separate and Independent Employer.
The other employer is the State. It cannot reasonably be argued or concluded that the City and the State are the same employer. The Department of Labor and the case law have identified the factors to test for separate and independent employers:
(1) whether the employers have separate payroll/personnel systems;
(2) whether the employers have separate retirement systems;
(3) whether the employers have separate budgets and funding authorities;
(4) whether the employers are separate legal entities with the power to sue and to be sued;
(5) whether the employers dealt with each other at arms length concerning the employment of any individuals in question;
(6) how they are treated under state law;
(7) whether one employer controls the appointment of the officers of the other entity.
Department of Labor Letter Ruling: December 31, 2007; Jackson, 2006 WL 2548545 at *5.
The responses to these questions are so obvious there is little or nothing in the record about them. Judicial notice is taken of the facts not in the record, but which are nonetheless relevant to the evaluation of these factors. Federal Rules of Evidence 201(b), (c) & (f). It is known that under state law the State has its own payroll, personnel, and retirement system. It is known that under city ordinance the City has its own payroll, personnel, and retirement system. The State and the City have separate budgets and different funding sources. (Both rely significantly on sales taxes-the State sales tax is 4% and the City sales tax is 2%. A purchaser in Sioux Falls pays a total of 6%, but the 6% is the total of two separate tax levies.) The State and the City are separate legal entities. Both have the power to sue and be sued, e.g. this lawsuit where the City is a defendant and the State is not a party. The State and the City dealt at arms length-see the written contract between them formed and filed under State statute, SDCL 1-24. The City and the State are treated as separate entities under state law. Neither the State nor the City control the appointment of officers of the other.
The City and the State are separate and independent employers. The second prong of the section 7(p)(1) special detail test existed.
During Off Duty Hours.
The usual scenario for the application of 7(p)(1) is when the fireman or policeman works for a second employer during off duty hours, e.g. at a concert or a sporting event. The Code of Federal Regulations and the Department of Labor letter rulings use the words “during their off duty hours.” The present plaintiffs are not in that situation because they are geographically so far from their home duty station that they cannot return home after a duty shift. Consequently, at the remote locations they work both the equivalent of their normal duty shift and the equivalent of their normal off duty hours. Since the present firefighters work both their normal on duty hours and their normal off duty hours at a remote location fighting wildfires, the use of the words “off duty hours” in the Code of Federal Regulations raises an issue about the applicability of the special detail exemption to the plaintiffs. The question is answered by 29 U.S.C. § 207(p)(1) itself. The statute does not limit the special detail exemption to off duty hours. The statute provides that a firefighter employed by a city “in fire protection … who, solely at the firefighter’s option agrees to be employed on a special detail by a separate or independent employer in fire protection … the hours such individual was employed by such separate and independent employer shall be excluded by the public agency employing such individual in the calculation of the hours for which the employee is entitled to overtime compensation ….“ (emphasis added) The statute which created the special detail exemption did not limit the special detail exemption to off duty hours. The statute plainly says the hours employed by the separate and independent employer shall be excluded when calculating overtime compensation
Under the FLSA the second employer must pay overtime if the employee works more than 40 hours during a workweek and some exemption does not apply. 29 U.S.C. § 207(a)(1). To illustrate, if the firefighter works three 16 hour days fighting a wildfire during a workweek, then the second employer pays overtime, i.e. 48 hours worked compared to 40 hours equals 8 hours overtime. The way it works is this: if FLSA overtime is worked on the special wildfire fighting detail, the State pays the FLSA overtime. If a firefighter’s special detail hours and other, normal hours in Sioux Falls added together during a 27 day work cycle total fewer than 204 hours, the City pays the difference so the firefighter is assured at least 204 hours for the pay cycle in which a wildfire fighting deployment occurs. The special detail hours are not combined with the normal shift hours to calculate overtime compensation per 29 U.S .C. § 207(p)(1).”
Holding that all the relevant elements of the exemption were present here, the Court granted Defendant’s Motion for Summary Judgment finding that the special detail exemption recognized by 29 U.S.C. § 207(p)(1) of the Fair Labor Standards Act applied.
9th Cir.: Tip Pool That Required Tipped Employees To Share Tips With Non-Tipped Employees Did Not Violate FLSA, Because Restaurant Paid Tipped Employees Cash Wages In Excess Of Minimum Wage And Did Not Claim Tip Credit
Cumbie v. Woody Woo, Inc.
This case was before the Ninth Circuit to decide whether a restaurant violates the Fair Labor Standards Act, when, despite paying a cash wage greater than the minimum wage, it requires its wait staff to participate in a “tip pool” that redistributes some of their tips to the kitchen staff. The Court ruled that such a tip sharing arrangement does not violate the FLSA.
Describing the tip pool at issue, the Court said, “[Plaintiff] worked as a waitress at the Vita Café in Portland, Oregon, which is owned and operated by Woody Woo, Inc., Woody Woo II, Inc., and Aaron Woo (collectively, “Woo”). Woo paid its servers a cash wage at or exceeding Oregon’s minimum wage, which at the time was $2.10 more than the federal minimum wage. In addition to this cash wage, the servers received a portion of their daily tips. Woo required its servers to contribute their tips to a “tip pool” that was redistributed to all restaurant employees . The largest portion of the tip pool (between 55% and 70%) went to kitchen staff (e.g., dishwashers and cooks), who are not customarily tipped in the restaurant industry. The remainder (between 30% and 45%) was returned to the servers in proportion to their hours worked.”
The Court below dismissed Plaintiff’s Complaint on Defendant’s 12(b)(6) Motion, holding that Plaintiff failed to state a claim for minimum wages, because she acknowledges she was paid in excess of minimum wage, but challenged the legality of Defendant’s tip pool nonetheless. This appeal ensued.
“On appeal, [Plaintiff] argue[d] that because Woo’s tip pool included employees who are not ‘customarily and regularly tipped employees,’ 29 U.S.C. § 203(m), it was ‘invalid’ under the FLSA, and Woo was therefore required to pay her the minimum wage plus all of her tips. Woo argue[d] that Cumbie’s reading of the FLSA is correct only vis-à-vis employers who take a ‘tip credit’ toward their minimum-wage obligation. See id.” Defendant, argued that, “[b]ecause [it] did not claim a ‘tip credit,’ it contends that the tip-pooling arrangement was permissible so long as it paid her the minimum wage, which it did.”
Affirming the lower Court’s decision, finding the pay policy at issue to be legal, the Ninth Circuit discussed the applicable law:
“Williams establishes the default rule that an arrangement to turn over or to redistribute tips is presumptively valid. Our task, therefore, is to determine whether the FLSA imposes any “statutory interference” that would invalidate Woo’s tip-pooling arrangement. The question presented is one of first impression in this court.
Under the FLSA, employers must pay their employees a minimum wage. See29 U.S.C. § 206(a). The FLSA’s definition of “wage” recognizes that under certain circumstances, employers of “tipped employees” may include part of such employees’ tips as wage payments. See id.§ 203(m). The FLSA provides in relevant part:
In determining the wage an employer is required to pay a tipped employee, the amount paid such employee by the employee’s employer shall be an amount equal to- (1) the cash wage paid such employee which for purposes of such determination shall be not less than the cash wage required to be paid such an employee on August 20, 1996; and (2) an additional amount on account of the tips received by such employee which amount is equal to the difference between the wage specified in paragraph (1) and the wage in effect under section 206(a)(1) of this title.
The additional amount on account of tips may not exceed the value of the tips actually received by an employee. The preceding 2 sentences shall not apply with respect to any tipped employee unless such employee has been informed by the employer of the provisions of this subsection, and all tips received by such employee have been retained by the employee, except that this subsection shall not be construed to prohibit the pooling of tips among employees who customarily and regularly receive tips. Id.
We shall unpack this dense statutory language sentence by sentence. The first sentence states that an employer must pay a tipped employee an amount equal to (1) a cash wage of at least $2.13, plus (2) an additional amount in tips equal to the federal minimum wage minus such cash wage. That is, an employer must pay a tipped employee a cash wage of at least $2.13, but if the cash wage is less than the federal minimum wage, the employer can make up the difference with the employee’s tips (also known as a “tip credit”). The second sentence clarifies that the difference may not be greater than the actual tips received. Therefore, if the cash wage plus tips are not enough to meet the minimum wage, the employer must “top up” the cash wage. Collectively, these two sentences provide that an employer may take a partial tip credit toward its minimum-wage obligation. See29 U.S.C. §§ 203(m), 206(a)(1) (1996).
The third sentence states that the preceding two sentences do not apply (i.e., the employer may not take a tip credit) unless two conditions are met. First, the employer must inform the employee of the tip-credit provisions in section 203(m). Second, the employer must allow the employee to keep all of her tips, except when the employee participates in a tip pool with other customarily tipped employees.
Cumbie argues that under section 203(m), an employee must be allowed to retain all of her tips-except in the case of a “valid” tip pool involving only customarily tipped employees-regardless of whether her employer claims a tip credit. Essentially, she argues that section 203(m) has overruled Williams, rendering tip-redistribution agreements presumptively invalid. However, we cannot reconcile this interpretation with the plain text of the third sentence, which imposes conditions on taking a tip credit and does not state freestanding requirements pertaining to all tipped employees. A statute that provides that a person must do X in order toachieve Y does not mandate that a person must do X, period.
If Congress wanted to articulate a general principle that tips are the property of the employee absent a “valid” tip pool, it could have done so without reference to the tip credit. “It is our duty to give effect, if possible, to every clause and word of a statute.” United States v. Menasche, 348 U.S. 528, 538-39 (1955) (internal quotation marks omitted). Therefore, we decline to read the third sentence in such a way as to render its reference to the tip credit, as well as its conditional language and structure, superfluous.
Here, there is no question that Woo’s tip pool included non-customarily tipped employees, and that Cumbie did not retain all of her tips because of her participation in the pool. Accordingly, Woo was not entitled to take a tip credit, nor did it. See Richard v. Marriott Corp., 549 F.2d 303, 305 (4th Cir.1977) (“[I]f the employer does not follow the command of the statute, he gets no [tip] credit.”). Since Woo did not take a tip credit, we perceive no basis for concluding that Woo’s tippooling arrangement violated section 203(m).
Recognizing that section 203(m) is of no assistance to her, Cumbie disavowed reliance on it in her reply brief and at oral argument, claiming instead that “[t]he rule against forced transfer of tips actually originates in the minimum wage section of the FLSA, 29 U.S.C. § 206.” Section 206 provides that “[e]very employer shall pay to each of his employees … wages” at the prescribed minimum hourly rate. Id. § 206(a).
While section 206 does not mention tips, let alone tip pools, Cumbie maintains that a Department of Labor (“DOL”) regulation elucidates the meaning of the term “pay” in such a way as to prohibit Woo’s tip-pooling arrangement. She refers to the regulation which requires that the minimum wage be “paid finally and unconditionally or ‘free and clear,’ “ and forbids any “ ‘kick [ ]-back’ … to the employer or to another person for the employer’s benefit the whole or part of the wage delivered to the employee.” 29 C.F.R. § 531.35. The “free and clear” regulation provides as an example of a prohibited kick-back a requirement that an employee purchase tools for the job, where such purchase “cuts into the minimum or overtime wages required to be paid him under the Act.” Id.
According to Cumbie, her forced participation in the “invalid” tip pool constituted an indirect kick-back to the kitchen staff for Woo’s benefit, in violation of the free-and-clear regulation. As she sees it, the money she turned over to the tip pool brought her cash wage below the federal minimum in the same way as the tools in the regulation’s example. The Secretary of Labor agrees, asserting that “if the tipped employees did not receive the full federal minimum wage plus all tips received, they cannot be deemed under federal law to have received the minimum wage ‘free and clear,’ and the money diverted into the invalid tip pool is an improper deduction from wages that violates section [20]6 of the Act.”
Cumbie acknowledges that the applicability of the “free and clear” regulation hinges on “whether or not the tips belong to the servers to whom they are given.” This question brings us back to section 203(m), which we have already determined does not alter the default rule in Williams that tips belong to the servers to whom they are given only “in the absence of an explicit contrary understanding” that is not otherwise prohibited. 315 U.S. at 397. Hence, whether a server owns her tips depends on whether there existed an agreement to redistribute her tips that was not barred by the FLSA.
Here, such an agreement existed by virtue of the tippooling arrangement. The FLSA does not restrict tip pooling when no tip credit is taken. Therefore, only the tips redistributed to Cumbie from the pool ever belonged to her, and her contributions to the pool did not, and could not, reduce her wages below the statutory minimum. We reject Cumbie and the Secretary’s interpretation of the regulation as plainly erroneous and unworthy of any deference, see Auer v. Robbins, 519 U.S. 452, 461 (1997), and conclude that Woo did not violate section 206 by way of the “free and clear” regulation.
Finally, Cumbie argues against the result we reach because “[a]s a practical matter, it nullifies legislation passed by Congress.” Her argument, as we understand it, is that Woo is functionally taking a tip credit by using a tip-pooling arrangement to subsidize the wages of its non-tipped employees. The money saved in wage payments is more money in Woo’s pocket, which is financially equivalent to confiscating Cumbie’s tips via a section 203(m) tip credit (with the added benefit that this “de facto” tip credit allows Woo to bypass section 203(m)‘s conditions).
Even if Cumbie were correct, “we do not find [this] possibility … so absurd or glaringly unjust as to warrant a departure from the plain language of the statute.” Ingalls Shipbuilding, Inc. v. Dir., Office of Workers’ Comp. Programs, 519 U.S. 248, 261 (1997). The purpose of the FLSA is to protect workers from “substandard wages and oppressive working hours.” Barrentine v. Ark.-Best Freight Sys., Inc., 450 U.S. 728, 739 (1981) (citing 29 U.S.C. § 202(a)). Our conclusion that the FLSA does not prohibit Woo’s tip-pooling arrangement does not thwart this purpose. Cumbie received a wage that was far greater than the federally prescribed minimum, plus a substantial portion of her tips. Naturally, she would prefer to receive all of her tips, but the FLSA does not create such an entitlement where no tip credit is taken. Absent an ambiguity or an irreconcilable conflict with another statutory provision, “we will not alter the text in order to satisfy the policy preferences” of Cumbie and amici. Barnhart v. Sigmon Coal Co., Inc., 534 U.S. 438, 462 (2002).
The Supreme Court has made it clear that an employment practice does not violate the FLSA unless the FLSA prohibits it. Christensen v. Harris County, 529 U.S. 576, 588 (2000). Having concluded that nothing in the text of the FLSA purports to restrict employee tip-pooling arrangements when no tip credit is taken, we perceive no statutory impediment to Woo’s practice. Accordingly, the judgment of the district court is affirmed.”
Click here for more information on tipped employees and tip pooling.
Companies Slash Payrolls By Calling Workers Independent Contractors; Costly To IRS And States, L.A. Times Reports
The LA Times reports that the “Internal Revenue Service and 37 states are cracking down on companies that try to trim payroll costs by illegally classifying workers as independent contractors, rather than as full employees, The Associated Press has learned. The practice costs governments billions in lost revenue and can leave workers high and dry when they are hurt at work or are left jobless.
Many who have studied the problem believe it’s worsened during the economic downturn, fueling even more aggressive recovery efforts by states.”
The article points out that “[t]ypically, unless workers fight for and win a ruling that they should have been treated as full employees, they aren’t able to collect workers’ compensation for the injury or unemployment benefits when left jobless.”
To read the full article click here.
To read more about the legal factors that determine whether someone is misclassified as an independent contractor vs employee, and industries where misclassification is rampant click here.
D.R.I.: Collective Action FLSA Claims Not Mooted By Offer Of Judgment, In Full Satisfaction, To Named Plaintiff; Motion To Dismiss Denied
Nash v. CVS Caremark Corp.
Plaintiff pled this lawsuit for overtime benefits as a “collective action” under the Fair Labor Standards Act (“FLSA”). That is, he purported to act on behalf of himself and “other employees similarly situated” pursuant to 29 U.S.C. § 216(b). After one supposedly “similarly situated” party opted in to the case, Defendants presented both that person and Plaintiff with offers of judgment pursuant to Rule 68 of the Federal Rules of Civil Procedure. The opt-in party previously accepted the offer and was no longer part of the case; Plaintiff rejected the offer, but did not dispute that it was adequate to cover his damages. Defendants then moved to dismiss the suit on grounds that the Rule 68 offer mooted Plaintiff’s claim. However, since that time, other parties opted into the action and seeking to have their claims resolved as part of a “collective action” with Plaintiff. Denying, Defendants’ Motion to Dismiss on mootness grounds, the Court discussed the remedial purposes of the FLSA’s collective action mechanisms.
Discussing Rule 68 initially, the Court reasoned, “[n]othing in the text of Rule 68 compels dismissal of a case for lack of subject matter jurisdiction when a plaintiff rejects an adequate offer of judgment. Rather, the Rule creates what amounts to a penalty scheme when a plaintiff moves forward with litigation despite being offered the maximum damages she can hope to obtain at trial. “If the judgment that the offeree finally obtains is not more favorable than the unaccepted offer, the offeree must pay the costs incurred after the offer was made.” Fed.R.Civ.P. 68(d). Of course, as a practical matter, in some circumstances a Rule 68 offer may “eliminate[ ] a legal dispute upon which federal jurisdiction can be based,” because “[y]ou cannot persist in suing after you’ve won.” Greisz v. Household Bank (Illinois), N.A., 176 F.3d 1012, 1015 (7th Cir.1999). But this does not transform Rule 68 into an escape hatch from every lawsuit. Rather, as this case makes clear, whether a controversy becomes moot following a Rule 68 offer depends on the factual circumstances, the cause of action, and the procedural status of the claims at issue. Moreover, nothing in Rule 68 itself suggests that it should be used as a vehicle for sabotaging claim-aggregating devices like 29 U.S.C. § 216(b) and Rule 23. See Fed.R.Civ.P. 1. (explaining that the Federal Rules of Civil Procedure should be “construed and administered to secure the just, speedy, and inexpensive determination of every action and proceeding”).”
The Court then distinguished a 216(b) collective action, from a Rule 23 class action:
“The Court agrees with Judge Almond that Cruz v. Farquharson, 252 F.3d 530, 533 (1st Cir.2001), in which the First Circuit approved the dismissal of a Rule 23 action as moot, is distinguishable. Cruz emphasized that between the date the plaintiffs in that case received “complete relief,” and the date the district court dismissed the case as moot, “no new plaintiffs tried to intervene, and the named plaintiffs made no effort to amend their complaint to add new parties.” Cruz, 252 F.3d at 533. That is not so here. Four additional parties have, in fact, “tried to intervene” as “similarly situated” plaintiffs by submitting their consents for the Plaintiff to pursue claims on their behalf.
As Judge Almond noted, where even one similarly-situated plaintiff opts in to an FLSA suit after the rejection of a Rule 68 offer, courts “have refused to permit defendants to moot putative FLSA collective actions.” Yeboah v. Central Parking Sys., No. 06 CV 0128(RJD)(JMA), 2007 WL 3232509, at *3 (E.D.N.Y. Nov. 1, 2007); see Reyes v. Carnival Corp., No. 04-21861-CIV., 2005 WL 4891058, at *2 (S.D.Fla. May 25, 2005) (refusing to dismiss FLSA action where “other plaintiffs. opted in to [the] suit [after] the offer of judgment was made”); Roble v. Celestica Corp., 627 F.Supp.2d 1008, 1013-14 (D.Minn.2007) (finding that identifying opt-ins sustained jurisdiction); Rubery v. Buth-Na-Bodhaige, Inc., 494 F.Supp.2d 178, 179-80 (W.D.N.Y.2007) (denying motion to dismiss where more than fifty people had filed consents to join FLSA action). This is true even if, as here, there is no dispute about the adequacy of the offer. See Yeboah, 2007 WL 3232509, at *5 (explaining that even if the plaintiff could not dispute the sufficiency of the judgment, “it neither mooted plaintiff’s FLSA claim nor deprived [the court] of subject matter jurisdiction,” because of the “presence of opt-ins.”).
Defendants contend that the opt-ins cannot be considered “plaintiffs” or “parties” to the suit for purposes of any exception to mootness carved out by Cruz. See Cruz, 252 F.3d at 533. Cruz stressed that there had been no “decision on class certification” under Rule 23, appearing to require a formal grant of class status in order to preserve a controversy after named parties obtain full relief. Here, the case has not yet reached the equivalent stage in the § 216(b) context: “preliminary collective action certification,” which requires an initial demonstration that the plaintiff “is ‘similarly situated’ to the other members of the proposed class.” Poreda v. Boise Cascade, L.L.C., 532 F.Supp.2d 234, 238 (D.Mass.2008). In the absence of preliminary certification, Defendants argue, Plaintiff has no procedural right to act on behalf of purported “similarly situated” parties. “[A] § 216(b) plaintiff … presents only a claim on the merits …. [and][i]n contrast to the Rule 23 plaintiff, a § 216(b) plaintiff has no claim that he is entitled to represent other plaintiffs.” Cameron-Grant v. Maxim Healthcare Servs., Inc., 347 F.3d 1240, 1249 (11th Cir.2003).
In other words, Defendants insist, without the only safe harbor arguably warranted by Cruz-collective action status-this lawsuit died the moment that Plaintiff rejected his Rule 68 offer. At that time, there were no other opt-ins with live claims, and plaintiff had no right to stand in for anyone else. Later opt-ins could not resurrect the action once it expired.
This logic has some superficial appeal. But its limitation is that, if true, employers could always “use Rule 68 as a sword … and avoid[ ] ever having to face a collective action.” Sandoz v. Cingular Wireless LLC, 553 F.3d 913, 919 (5th Cir.2008). Congress clearly did not intend such an “anomaly” in enacting § 216(b). See id. Neither does Cruz, which concerns Rule 23, require the result Defendants urge here, which would effectively thwart Congress’ preference to “avoid multiple lawsuits where numerous employees” allege FLSA violations. Prickett v. DeKalb County, 349 F.3d 1294, 1297 (11th Cir.2003).
The Court recognizes that Cruz may create some tension with the underlying rationale for decisions allowing § 216(b) opt-ins to preserve jurisdiction. As explained by the Fifth Circuit in Sandoz, at bottom those cases rest on what is known as the “relation back” doctrine. See Sandoz, 553 F.3d at 921;see, e.g., Yeboah, 2007 WL 3232509, at *3 (citing Weiss v. Regal Collections, 385 F.3d 337, (3d Cir.2004), a Rule 23 case dealing with the “relation back” doctrine). Sandoz acknowledged the quandary raised by Cameron-Grant: a named FLSA plaintiff “cannot represent any other employees until they affirmatively opt in to the collective action.” Sandoz, 553 F.3d at 919 (citing Cameron-Grant, 347 F.3d at 1249.). “If our analysis stopped there,” the court reasoned, “[the plaintiff’s] case would be moot,” because she had received an adequate offer of judgment before any opt-ins joined the case. Id. Nevertheless, the court cited Sosna v. Iowa, 419 U.S. 393 (1975), as providing a solution. There, the Supreme Court observed that a Rule 23 controversy might become moot “before the district court can reasonably be expected to rule on a certification motion.” Id. at 402 n. 11. Depending on the circumstances, in such instances class certification might “be said to ‘relate back’ to the filing of the complaint,” which would preserve jurisdiction. Id. at 402 n. 11.Sandoz found that the “relation back” doctrine was just as appropriate for § 216(b) as Rule 23, because both types of actions were vulnerable to strategic mooting by Defendants. Accordingly, “there must be some time for a[n FLSA] plaintiff to move to certify a collective action before a defendant can moot the claim through an offer of judgment.” Sandoz, 553 F.3d at 921.
Defendants fairly point out that Cruz did not approve of such an approach to Rule 23, and in fact took a narrow view of Sosna. The holding in Sosna was that jurisdiction did not disappear when a named plaintiff’s claim became moot after certification of a class with live controversies. Sosna, 419 U.S. at 402. Cruz stated outright that the “holding in Sosna ” was not applicable, because the plaintiffs in Cruz had not obtained class certification. Cruz, 252 F.3d at 534. At the same time, Cruz did not address the footnote in Sosna explaining the “relation back” idea. Furthermore, no First Circuit decision has considered the question of whether it would be proper to use the “relation back” approach in the context of § 216(b).FN2
In the Court’s view, applying the “relation back” doctrine is appropriate in this case. Plaintiff represents he has not yet moved for preliminary certification because he has been busy opposing Defendants’ efforts to transfer venue and dismiss the case, which they commenced less than a month after the Complaint was filed. Under the “relation back” doctrine, the opt-ins who appeared after Plaintiff rejected the Rule 68 offer sustain jurisdiction; this will give Plaintiff the opportunity to seek provisional certification without “undue delay” after the entry of this Order. Sandoz, 553 F.3d at 921 (quoting Weiss, 385 F.3d at 348). This, in turn, will enable “due deliberation” on the issue of whether Plaintiff is the appropriate representative of a collective action. See Weiss, 385 F.3d at 348.”
Last, the Court noted that policy precludes a dismissal due to mootness under these circumstances, because of the remedial purposes of the FLSA:
“As discussed, and as Judge Almond noted, granting dismissal in these circumstances would impair the Congressional preference for collective actions embodied in 216(b). The Court offers some additional comments on this topic below. But there is also a second policy consideration that favors affirming the R & R. Specifically, the present motion underscores the unique danger of tactical manipulation in FLSA cases. Thus, as explained below, to the extent Cruz could be read to establish a broad mootness regime that reaches beyond the Rule 23 context, an exception for FLSA actions is warranted.
To begin with, it is clear that allowing Defendants to “pick off” named FLSA plaintiffs one-by-one encourages manipulation of cases and ultimately of the federal courts. See Sandoz, 553 F.3d at 919. One court in Illinois described the ways employers can hamstring collective actions if allowed to snuff named plaintiffs’ claims using Rule 68:
[The] defense strategy creates a virtually unwinnable situation for plaintiffs in collective or class action lawsuits. Defendant makes an offer of “judgment” to Plaintiff, then alleges that the action is moot. Plaintiff therefore must either pursue discovery very early in the case, when a court likely will deem it premature, or seek class certification and/or notice before discovery, which runs the risk of harming the interest of those as-yet undiscovered class members. Reed v. TJX Cos., NO. 04 C 1247, 2004 WL 2415055, at *3 (N.D.Ill. Oct. 27, 2004). The FLSA enforcement scheme clearly does not envision such a minefield. Section 216(b) does not require plaintiffs to petition for provisional certification of a “collective action” when filing a complaint. In fact, the final ruling on whether the named plaintiff may maintain a “collective action” usually occurs “after discovery is complete.” Poreda, 532 F.Supp.2d at 239. The collective action process “should be able to ‘play out’ according to the directives” of § 216(b) and the cases applying it, to permit “due deliberation by the parties and the court” on collective action certification. See Weiss, 385 F.3d at 347-48 (discussing the Rule 23 process).
The moot-and-dismiss tactic also facilitates forum-shopping and plaintiff-shopping. At oral argument, Defendants confirmed that multiple lawsuits regarding the overtime claims asserted here are pending in different jurisdictions around the country. Permitting use of Rule 68 to moot cases in one or more forums and thereby cherry-pick another, potentially with the weakest collective action representative, upends the longstanding principle that, in cases based on federal-question jurisdiction, the plaintiff is the “master of the claim.” Caterpillar, Inc. v. Williams, 482 U.S. 386, 392 (1987).
Defendants might object that Rule 23 actions present the same worries. After all, Rule 23 advances a policy similar to § 216(b): the efficient resolution of widespread small claims dependent on common legal and factual questions. Arguably, the opt-out structure of Rule 23 embodies an even firmer commitment to aggregating claims, in contrast to the opt-in rule for § 216(b) cases. And if this is true, how can the cited policies provide any basis to distinguish Cruz, where the same concerns were not enough to stave off dismissal of a Rule 23 action? In that case, the plaintiffs alleged, there was a large pool of class members, and the defendant had defused class action litigation by mooting the claims of the named parties. See Cruz, 252 F.3d at 535.
The answer to the question above is that FLSA actions are more vulnerable to manipulation than Rule 23 actions. For the latter, filing a complaint tolls the statute of limitations for all alleged class members, whether they know of the lawsuit or not. See Crown, Cork & Seal Co. v. Parker, 462 U.S. 345, 350 (1983) (“The filing of a class action tolls the statute of limitations as to all asserted members of the class ….”). In contrast, parties alleged to be “similarly situated” in a § 216(b) case must affirmatively opt in to toll the limitations period. See29 U.S.C. § 256 (explaining that an FLSA action is not considered to be commenced for a similarly situated party until he submits written consent to join the case); Bonilla v. Las Vegas Cigar Co., 61 F.Supp.2d 1129, 1136-37 (D.Nev.1999) ( “[A]ll potential plaintiffs to § 216(b) actions must file their consent to the suit to toll the statute of limitations.”) (emphasis in original).
This means that defendants can bleed value out of a large pool of outstanding FLSA claims in a way they cannot with a comparable group of Rule 23 claims. “Picking off” § 216(b) plaintiffs delays the point at which any collective action can be provisionally certified. This stalls notification to potential “ similarly situated” parties. O’Donnell v. Robert Half Int’l, Inc., 534 F.Supp.2d 173, 177 (D.Mass.2008) (“A class may be conditionally certified and notified of the pendency of an action only if the putative class members are “similarly situated” with the named plaintiffs.”) The longer it takes for an FLSA class to mature, the lower members’ damages will be once they opt in, given the two-year limitations period. See29 U.S.C. § 255 (2010). In a parallel situation under Rule 23, the clock for absentees stops upon the filing of a complaint that raises their claims. Thus, even if employers pick off some named plaintiffs, the limitations period for absentees pauses while any applicable class action is pending.
The predicament of the opt-ins in this case brings the problem into sharper focus. Widespread claims involving common issues invite lawsuits in different jurisdictions, as is the situation here. Note the disparate outcomes this creates for Rule 23 absentees and FLSA opt-ins. As a practical matter, if a Rule 23 action is dismissed, class members may not have to worry about expiration dates for their claims drawing closer. If there is another class action underway that allegedly embraces their claims, the automatic tolling rule from Crown, Cork & Seal shelters them. Opt-ins to collective actions enjoy no such protection. If the suit to which they have hitched their claims sinks-the result Defendants seek here-the clock starts running again, even if they might be “similarly situated” to the named plaintiff in another pending case. Thus, as Judge Almond observed:
[I]f [Defendants were] successful in dismissing the case as mooted, the four plaintiffs who opted in … would arguably have to either initiate new individual FLSA actions or join another applicable collective action. Thus, the tolling of the limitations period for their claims could be delayed and, if they were ultimately successful, their back pay damages could be reduced since the value of their claims is potentially diminished with each passing day. (R & R at 4-5.) The point is that FLSA opt-ins are more exposed to the erosion and possible expiration of their claims than Rule 23 absentees.
Simply put, it is easier to drown collective actions than class actions. If allowed to use Rule 68 as a weapon, defendants can torpedo complaint after complaint, leaving opt-ins to swim for the nearest viable action as their claims leak value. This justifies a more relaxed mootness standard in FLSA cases than Rule 23 cases, and therefore provides an additional basis for distinguishing Cruz.”
Thus, the Court denied Defendants’ Motion to Dismiss.
S.D.Fla.: Assistants At Medical Office Properly Allege Individual Coverage Under The FLSA, Based On Evidence Of Regular Communications With Out-Of-State Insurers, Patients And Vendors
Lopez v. Pereyra
Plaintiffs brought this action to recover unpaid overtime wages under the Fair Labor Standards Act (“FLSA”). Defendant was an obstetrics and gynecological doctor’s office located in Hollywood, Florida. Plaintiff Carmen Lopez was a medical assistant in the Office from October 31, 2006 through January 23, 2009. Plaintiff Dawn Serra was an administrative assistant in the Office from May 2, 2006 through May 1, 2009. Plaintiffs alleged that the Office met the requirements of an enterprise under the FLSA and that each Plaintiff also qualified for individual coverage because they engaged in commerce. Defendant moved for summary judgment arguing that the Office was not an enterprise as defined by the FLSA and Plaintiffs were not individually engaged in interstate commerce so as to trigger individual coverage. The Court agreed that Defendant was not an enterprise engaged in commerce, based on its tax returns showing revenue of less than $500,000.00 per year. However, the Court denied Defendant’s Motion as to individual coverage, holding that Plaintiffs’ allegations of regular communications with out-of-state insurers, out-of-state patients and out-of-state vendors, if true, satisfied the “engaged in commerce” test for individual coverage.
Discussing the applicability of individual coverage, the Court stated:
“For individual coverage to apply under FLSA, an employee must present evidence that he or she was (i) engaged in commerce or (ii) engaged in the production of goods for commerce. See Thome v. All Restoration Services, Inc., 448 F.3d 1264, 1265-1266 (11th Cir.2006).FN4 The Eleventh Circuit found that to “engage in commerce,” a plaintiff must “directly participat[e] in the actual movement of persons or things in interstate commerce.” Thome, 448 F.3d at 1266. When determining individual coverage, the character of the employee’s activities is determinative, not the nature of the employer’s business. Overstreet v. N. Shore Corp., 318 U.S. 494, 498 (1943).
FN4. The Department of Labor takes the position that the “[s]hipment of goods from another State direct to a customer located in the same State as the distributor who ordered the shipment, constitutes interstate commerce by virtue of which [ ] the distributor’s employees who procured the shipment … are covered by the FLSA as being engaged in interstate commerce.” Field Operations Handbook (FOH), Wage and Hour Division, U.S. Dep’t of Labor, § 11 i15 (1994). Although not entitled to Chevron deference, the Department of Labor’s Field Operations Handbook has been held to be persuasive and entitled to some weight in judicial interpretations of the FLSA. See Martin v. Occupational Safety and Health Review Comm’n, 499 U.S. 144, 157, 111 S.Ct. 1171, 113 L.Ed.2d 117 (1991); Morgan v. Family Dollar Stores, Inc., 551 F.3d 1233, 1275 (11th Cir.2008).
A key factor in determining if a plaintiff engaged in commerce for purposes of individual coverage under the FLSA is whether such activities were a “regular and recurrent” part of the plaintiff’s employment duties. 29 C.F.R. 776.10(b). The “employee’s interstate activity must be regular and recurrent and not simply isolated or sporadic for jurisdiction to exist.” Dent v. Giaimo, 606 F.Supp.2d 1357, 1360 (S.D.Fla.2009) (citing Scott v. K.W. Max Investments, Inc., 256 Fed. App’x 244, 247 (11th Cir.2007)); see also Curry v. High Springs Family Practice and Diagnosis Center, Inc., 2009 WL 3163221 (N.D.Fla. Sept.30, 2009) (granting summary judgment on FLSA claim by doctor’s assistant who performed primarily administrative functions and had only sporadic contact with out-of-state insurers).
The Court finds that there is a factual dispute regarding whether individual coverage applies to each Plaintiff. Defendants rely heavily on the Dent case where the court found no individual coverage for a medical assistant working in a local doctor’s office. Judge Ryskamp’s decision in Dent presents a similar, though distinguishable, factual scenario. Dent can be distinguished on two grounds, which ultimately require a different result.
First, Judge Ryskamp found that “although some patients may have been residents of other states, defendant was not engaged in interstate commerce if his contact with those patients was primarily local.” Dent, 606 F.Supp.2d at 1361. In Dent, “there [was] no evidence to suggest that defendant solicited business from patients while they were out of state or that any contract with out of state patients was regular or recurrent.” Id. Conversely, the Declaration of Carmen Lopez states that “[o]n a weekly basis I … made telephone calls to patients located in Santo Domingo and other states.”
Second, in Dent, “although the plaintiff averred that her job duties included contacting out of state insurance companies she did not allege how much of her time was spent conducting these activities.” 606 F.Supp.2d at 1361 (emphasis in original). Therefore, the court reasoned that “[i]t could be that [other individuals in the office] conducted the majority of those activities and that plaintiff only occasionally contacted out of state insurance companies.” Id. Here, the Declaration of Dawn Serra states that she “used to telephone [ ] insurance companies outside of Florida to verify patient insurance coverage at least three (3) times each work day.” DE 38-2 ¶ 5. Further, Ms. Serra declares that her job duties “each work day” also included (i) “mailing twelve (12) to twenty five (25) billing and other insurance forms to insurance companies outside of Florida;” id. ¶ 6, and (ii) “opening mail containing checks and other documents from insurance companies outside of Florida.” Id. ¶ 7.
In addition, Defendants rely on Thorne to argue that “[w]ith respect to the supplies and equipment used by the [Office], Plaintiffs do not allege that the [Office] engaged in the sale of goods that came from other states.” DE 42 at 5. “Plaintiffs’ ‘activities were not rendered interstate commerce simply because [the Office], an ultimate consumer, purchased goods which had previously moved in interstate commerce.’ “ Id. (quoting Thome, 448 F.3d at 1267). This argument holds true with respect to medical supplies used by the Office such as syringes, latex gloves and surgical sutures. The same cannot be said with respect to products and medications for which the Office’s patients were the ultimate consumer. In this regard, Ms. Lopez states that she “regularly used the telephone to call businesses to order from outside of Florida birth control medications for patients, birth control devices for patients and bladder control devices for patients.” Id. ¶ 5. Ms. Lopez also attests that she used “the telephone weekly to call patient insurance companies outside of Florida to obtain authorization for medications that the insurance companies did not cover.” Id. ¶ 6.
Finally, Defendants argue that Plaintiffs’ Declarations are vague and rely on words such as “regularly.” Defendants claim that such statements are conclusory and fail to “state the frequency with any particularity.” DE 42 at 4. Defendants claim is not entirely accurate as each Declaration does contain certain specific statements regarding the frequency of employment activities. Moreover, Defendant has not provided the Court with any telephone records, invoices or patient information that would enable this Court to conclude that Plaintiffs did not engage in commerce on a “regular and recurrent” basis. Cf. Curry v. High Springs Family Practice and Diagnosis Center, Inc., 2009 WL 3163221 (N.D.Fla. Sept.30, 2009).
In Curry, the plaintiff relied on an affidavit describing the number of times she communicated with out-of-state insurers. Id. at *1. “In response, Defendants provided detailed billing records for all phone and facsimile lines at the walk-in-clinic from the relevant time period.” Id. Based on this evidence, the Court granted summary judgment in favor of defendants finding that plaintiff’s contact with out-of-state insurers was sporadic at best. Id. at *4. In this case, the parties have relied solely on conflicting declarations and, therefore, the Court can only decide this issue by making credibility determinations. “Credibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions ….” Anderson, 477 U.S. at 255. Therefore, whether each Plaintiff qualifies for individual coverage is factually in dispute and must be decided by the trier of fact. Accordingly, Defendant’s Motion for Summary Judgment will be denied on the issue of individual coverage.”
W.D.Mich.: FLSA Permits Successful Plaintiff To Recover Costs Which Are ‘Normally Charged To A Fee-paying Client’ In Addition To Those Enumerated In § 1920
Carlson v. Leprino Foods Co.
This case was before the Court on both parties’ objections to the Report and Recommendation (R&R) issued by the Magistrate Judge regarding an award of fees and costs following the settlement of a collective action. Of note, the Plaintiffs objected to the R&R issued by the Magistrate Judge, because the Magistrate cut over $2,000 in miscellaneous costs Plaintiffs requested. The Court extensively discussed the award of the attorneys fees to the prevailing Plaintiffs and, as discussed here, reinstated the miscellaneous costs, opining that a prevailing Plaintiff in an FLSA case is entitled to recover those types of costs ‘normally charged to a fee-paying client,’ in addition to those enumerated in § 1920.
Specifically, discussing the award of costs, the Court reasoned:
“Finally, Plaintiffs object that the Magistrate Judge should not have deducted $2,343.45 in miscellaneous expenses from the total award of costs. (Pls.’ Objections to Report and Recommendation of Magistrate Judge, docket # 221, at 8.) The Court agrees. The Report and Recommendation states that Plaintiffs failed to describe these miscellaneous expenses with particularity and that the expenses therefore are not recoverable. (Report and Recommendation, docket # 219, at 12.) However, Plaintiffs described the expenses with particularity in Exhibit 2 of their original fee petition. (Br. in Support of Mot. for Attorneys’ Fees and Costs, docket # 196, Ex. 2.) The miscellaneous expenses identified include, without limitation, costs for travel, supplies, web maintenance, translations, and telephone service. (Id.) These are the sort of costs which are “normally charged to a fee-paying client.” See, e.g., Renfro v. Indiana Mich. Power Co., 2007 WL 710138 at *1 (W.D.Mich., Mar.6, 2007) (overruled on other grounds, 497 F.3d 573 (6th Cir.2007) (citations omitted)); Communities for Equity v. Mich. High School Athletic Ass’n, 2008 WL 906031 at *22-23 (W.D.Mich., Mar.31, 2008). The total award for costs to Plaintiffs should include the $2,343.45 for miscellaneous expenses.”
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