Home » Posts tagged 'Overtime Law' (Page 21)
Tag Archives: Overtime Law
N.D.Ill.: No “Self-Evaluation” Privilege Existed To Shield Relevant Documents From Discovery
Camilotes vs. Resurrection Healthcare
In their motion to compel, Plaintiffs sought information and documents from Defendants relating to Defendants’ participation in the National Database of Nurse Quality Indications (“NDNQI”), a program operated by the American Nurses Association. The NDNQI is a comprehensive database consisting of information compiled from various hospitals. The database includes data compiled from a RN Satisfaction Survey, which includes questions regarding nurses’ meal breaks, shifts and hours. Hospitals participate in the NDNQI in order to improve patient care and nursing practices. The NDNQI provides assurances of anonymity and confidentiality to the nurses who participate in the program.
Declining to shield such discovery under Defendants’ claim of “self-evaluation” privilege, the Court reasoned:
“Defendants contend that the self-evaluation privilege protects the reports and documents sought by Plaintiffs from discovery. “The self-critical analysis privilege is intended to encourage companies to engage in candid and often times critical internal investigations of their own possible wrong doings.” Ludwig v. Pilkington N. Am., Inc., 2004 WL 1898238, 2004 U.S. Dist. LEXIS 16049 (N.D.Ill. Aug. 13, 2004). “Despite the benefits of encouraging such investigations, courts have been somewhat hesitant to embrace the self-critical analysis privilege and have often qualified their uses of the privilege with phrases like ‘assuming that the self-critical analysis privilege exists’ or have noted that other courts have questioned the existence of such a privilege altogether.” Id. at *4. Significantly, the Seventh Circuit has “never recognized” the “self-critical analysis privilege.” Burden-Meeks v. Welch, 319 F.3d 897, 899 (7th Cir.2003); see also Gardner v. Johnson, 2008 WL 3823713, 2008 U.S. Dist. LEXIS 61707 (N.D.Ill. Aug. 13, 2008) (“The self-critical analysis privilege has never been adopted as federal common law by the Seventh Circuit.”). Indeed, when noting that the court has not recognized the privilege, the Seventh Circuit also highlighted that, “[m]any decisions caution against the creation of new privileges, even for what appear to be good reasons.” Burden-Meeks, 319 F.3d at 901 (citing University of Pennsylvania v. EEOC, 493 U.S. 182, 189, 107 L.Ed.2d 571, 110 S.Ct. 577 (1990)).
Defendants cite two cases in their motion to support the contention that courts in this district have applied the self-critical analysis privilege and found documents protected by the privilege. Neither case, however, is instructive because in those rulings the courts merely assumed or presumed that the privilege applied. Moreover, as one court in this district has recognized, “[t]he majority of courts that ultimately concede or assume the privilege exist have narrowed the privilege’s scope so that it does not apply to the documents at issue in the individual cases.” Ludwig, 2004 WL 1898238, 2004 U.S. Dist. LEXIS 16049, at *5 (N.D.Ill. Aug. 13, 2004). Considering that the Supreme Court instructs that privileges are “not lightly created nor expansively construed, for they are in derogation of the search for truth,” United States v. Nixon, 418 U.S. 683, 709 (1974), the Court finds more persuasive the decisions of district courts that have declined to apply the self-critical analysis privilege. See, e.g., EEOC v. City of Madison, 2007 WL 5414902, 2007 U.S. Dist. LEXIS 70647 (W.D.Wis. Sept. 20, 2007) (declining to recognize the “self-critical analysis privilege” because “[t]he Seventh Circuit has not recognized such a privilege”) (citing Burden-Meeks, 319 F.3d at 901); Ludwig, 2004 U.S. Dist. LEXIS 16049, at *8) (N.D.Ill. Aug. 13, 2004) (declining application of the self-critical analysis privilege in part based on the “tenuous” nature of the privilege); Bell v. Woodward Governor Co., 2004 U.S. Dist. LEXIS 1052, 2004 WL 5645759 (N.D.Ill. Jan. 26, 2004) (“Because the Seventh Circuit has not yet taken a definitive position on the proper scope of the self-critical analysis privilege, this court will rely on its past decisions in finding that the privilege does not exist with regards to affirmative action materials.”).
Moreover, it is clear that the documents and information sought by Plaintiffs are relevant to this dispute. In their complaint, Plaintiffs seek damages from Defendants for unpaid wages as a result of work performed during meal breaks. The NDNQI documents contain information regarding whether nurses received meal breaks, whether they interacted with patients during those meal breaks, and the duration of the meal breaks. The information contained in the NDNQI documents is thus relevant to Plaintiffs’ claims. Moreover, while Defendants contend that the documents are inadmissible hearsay, the Federal Rules of Civil Procedure only limit discovery to “any matter, not privileged, that is relevant to the claim or defense of any party” and specifically note that the discovery “need not be admissible at trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence.” Fed.R.Civ.P. 26(b)(1); see also Automated Solutions Corp. v. Paragon Data Sys., 231 Fed. Appx. 495, 497 (7th Cir.2007.)
Finally, while the Court recognizes that disclosure of the NDNQI data to Plaintiffs may raise confidentiality concerns, the protective order already in place in this matter should allay any concerns in this regard.
For the foregoing reasons, the Court grants Plaintiffs’ motion to compel. Defendants are to produce responsive documents and information to Plaintiffs’ Second Request for the Production of Documents by August 23, 2010.”
The Court thus joined other courts that have declined to recognize the self-evaluation privilege, such as the case previously reported here.
2d. Cir.: Question Of Joint Employer Is Mixed Question Of Law And Fact, Properly Submitted To The Jury
Ling Nan Zheng v. Liberty Apparel Co. Inc.
Plaintiffs-appellees were 25 Chinese garment workers living and working in New York City’s Chinatown. In 1999, they sued Liberty Apparel Company and its principals Albert Nigri and Hagai Laniado (collectively, “the Liberty Defendants”), and others, for violations of the Fair Labor Standards Act (“FLSA”), and the New York Labor Law (“NYLL”). After a lengthy procedural history, the case went to a jury trial, and the principal issue was whether the Liberty Defendants were plaintiffs’ “joint employer” for purposes of the FLSA and New York state law claims.
The Liberty Defendants appealed that judgment. In this opinion, the Second Circuit considered Defendants’ contention that the district court-rather than the jury-should have determined whether the Liberty Defendants were plaintiffs’ joint employer. And on that issue, they affirmed. The substantive law regarding the joint employment issue was discussed in a separate opinion.
After a lengthy procedural history, the defendants removed for summary judgment, and on May 23, 2008, Judge Sullivan denied that motion. Zheng v. Liberty Apparel Co., 556 F.Supp.2d 284, 287 (S.D.N.Y.2008) (“Zheng III ”). The court determined that, while there was no genuine issue of fact that the first, second, and fourth Zheng II factors weighed in the Liberty Defendants’ favor, there was a dispute of fact regarding factors three, five, and six. Id. at 289-95. On February 11, 2009, after a two-and-a-half week trial, the jury found in plaintiffs’ favor. The court denied the Liberty Defendants’ post-verdict motions to set aside the verdict and for a new trial. By final judgment entered October 26, 2009, plaintiffs were awarded $556,566.76 in damages.
Discussing the issues on this appeal, the Court framed them as: Whether “(1) the district court improperly allowed the jury to determine the “ultimate legal question” whether the Liberty Defendants were plaintiffs’ joint employer, whereas instead the court itself should have resolved that issue; (2) the district court refused to charge the jury that, as a matter of law, three of the six Zheng II factors weighed in the Liberty Defendants’ favor (to some degree); and (3) as a matter of law, plaintiffs’ evidence was insufficient to support the jury’s finding of joint employment. As to the § 345-a(1) claim, the Liberty Defendants argue that (1) the statute does not authorize a private right of action, and, alternatively, (2) whether it authorizes a private right of action raises a novel and complex issue of state law such that the district court should have declined to exercise supplemental jurisdiction over that claim, see 28 U.S.C. § 1367(c)(1).”
Holding that the Court below had correctly submitted the issue of joint-employment to the jury, the Court reasoned:
“In the context of a jury trial, the question whether a defendant is a plaintiffs’ joint employer is a mixed question of law and fact. Such questions “involve[ ] the application of a legal standard to a particular set of facts.” Richardson v. N.Y. State Dep’t of Corr. Serv., 180 F.3d 426, 437 (2d Cir.1999) (internal quotation marks omitted). “FLSA claims typically involve complex mixed questions of fact and law….” Barrentine v. Arkansas-Best Freight Sys., 450 U.S. 728, 743 (1981); cf. Holzapfel v. Town of Newburgh, N.Y., 145 F.3d 516, 521 (2d Cir.1998).
The jury’s role was to apply the facts bearing on the multi-factor joint employment inquiry to the legal definition of joint employer, as that term had been (properly) defined by the district court in the jury charge. “[M]ixed questions [of law and fact] are ‘especially well-suited for jury determination….’ “ Richardson, 180 F.3d at 437 (quoting Mendell v. Greenberg, 927 F.2d 667, 673 (2d Cir.1990)); see also Kirsch v. Fleet St., Ltd., 148 F.3d 149, 171 (2d Cir.1998); Simms v. Vill. of Albion, N.Y., 115 F.3d 1098, 1110 (2d Cir.1997) (“A mixed question of fact and law may be submitted to the jury only if the jury is instructed as to the applicable legal standards.”).
In the Liberty Defendants’ view, the district court should have provided a special verdict form so that the jury could detail its factual findings regarding the various joint employment factors, and so that the district court could then have applied those findings to make the final determination as to joint employment. But such a rule would distort the jury’s proper role, described above, of applying law to fact. Moreover, requiring the use of a special verdict form would be anomalous in the law, cf. Fed.R.Civ.P. 49(a); Kirsch, 148 F.3d at 171; 9B C. Wright & A. Miller, Federal Practice & Procedure § 2505 (“Wright & Miller”); and appellate courts rarely-if ever-vacate for failure to use a special verdict form, see Skidmore v. Balt. & O.R. Co., 167 F.2d 54, 67 (2d Cir.1948) (“[W]e cannot hold that a district judge errs when, as here, for any reason or no reason whatever, he refuses to demand a special verdict, although we deem such verdict usually preferable to the opaque general verdict.”); Wright & Miller § 2505 (“[A]s numerous courts have held, as evidenced by the many cases cited in the note below, the exercise of th[e trial court’s discretion in using a general rather than a special verdict form] is not likely to be overturned on appeal.”).
The Liberty Defendants’ reliance on language from Zheng II is misplaced. That decision recognized that the joint employment question is a mixed one of law and fact: “Finally, there is the conclusion of law to be drawn from applying the factors, i.e., whether an entity is a joint employer.” Zheng II, 355 F.3d at 76 (emphasis added); cf. id. at 76 n.13 (noting “[t]he fact-intensive character of the joint employment inquiry”). Moreover, to the extent Zheng II contemplated de novo review of a joint employment determination, it did so only in the context of summary judgment, not a jury trial. De novo review of a jury’s joint employment determination would necessitate use of a special verdict-which, as we explained above, we do not require-and would cause the appellate court to tease apart the interwoven elements of facts and law, a project that would raise serious Seventh Amendment concerns, cf. Castillo v. Givens, 704 F.2d 181, 199 (5th Cir.1983) (Higginbotham, J., concurring)-if it could even be done.
For the foregoing reasons, we hold that the district court properly submitted the joint employment issue to the jury. The judgment of the district court is affirmed, subject to the partial vacatur and remand required by the companion summary order. The mandate shall issue forthwith.”
M.D.Fla.: Approval of Settlement Agreement Rejected, Where “Pervasive” General Release Makes Evaluation For Fairness “Elusive”
Moreno v. Regions Bank
As reported here several months ago, Judge Steven Merryday, in the Middle District of Florida rejected FLSA settlement agreements containing confidentiality provisions, as well as those containing non-disparagement agreements, in a set of well-reasoned opinions, discussing their conflict with the remedial purposes behind the Fair Labor Standards Act. Continuing his critique of what, for better or worse had largely become common practice in the resolution of FLSA cases, he has rejected a recent Motion for Approval, because the Settlement Agreement contained a “pervasive” general release of all claims known and unknown, without the exchange of any value for same, thus making an evaluation of the agreement for fairness “elusive” in his words.
The settlement agreement contained the following general release:
“In exchange for the Consideration, as set forth in Paragraph 2 . . ., Plaintiff for himself, attorneys, heirs, executors, administrators, successors and assigns hereby waives and releases, knowingly and willingly, Defendant, its heirs, executors, administrators, legal representatives, parent corporations, predecessor companies, insurers, past, present and future divisions, subsidiaries, affiliates and related companies and their successors and assigns and all past, present and future directors, officers, employees and agents of these entities, personally and as directors, officers, employees and agents, (“Released Parties”) from any and all claims of any nature whatsoever Plaintiff has arising out of his employment with Defendant, known or unknown, including but not limited to, any claims Plaintiff may have under federal, state or local employment, labor, or anti-discrimination laws, statutes and case and law and specifically claims including, but not limited to, any claims or allegations contained in or relating to the Lawsuit, arising under the federal Age Discrimination in Employment Act, The Older Worker Benefit Protections Act, the Civil Rights Acts of 1866 and 1964, as amended, the Americans with Disabilities Act, the Employment Retirement Income Security Act of 1974 (“ERISA”), the Family and Medical Leave Act, the Rehabilitation Act of 1973, the Fair Labor Standards Act, the Labor-Management Relations Act, the Equal Pay Act and the Worker Adjustment Restraining and Notification Act, the Florida Civil Rights Act, the Florida AIDS Act, the Florida Equal Pay Law, the Florida Wage Discrimination Law, the Florida Law Prohibiting Discrimination on the Basis of Sickle Cell Trait, the Florida Constitution, Florida common law and any and all other applicable state, federal, county or local ordinances, statutes or regulations, including claims for attorneys’ fees. Furthermore, if any charge of discrimination is brought on Plaintiff’s behalf, Plaintiff dismisses any claim to any benefits as a result of such charge. Plaintiff agrees that he will not apply for any positions with any of the Released Parties at any rime. Plaintiff has been fully compensated for his claims under the Fair Labor Standards Act. Plaintiff also represents and certifies that he has received full payment for all hours worked while employed by Defendant, including overtime hours, bonuses and vacation pay, and has received all benefits and leaves available or requested under the Family Medical Leave Act. Finally, Plaintiff has not suffered any workplace injuries while working for Defendant.”
Holding that such a “pervasive” general release in an FLSA compromise is, as a matter of law, unfair to the Plaintiff-employee, the Court reasoned:
“In the typical settled case, the parties (especially the defendant) design for a complete disengagement from each other, and a comprehensive settlement coupled with a general release usually accomplishes the intended effect. The district judge often remains unaware of the terms of the compromise, and the post-settlement dismissal of the action implies neither approval nor disapproval of any aspect of the parties’ settlement agreement. In these cases, the reciprocal, general release remains an accepted and common litigation practice. Although this disengagement almost uniformly accompanies the settlement of the typical civil action, settlement of an FLSA action requires judicial approval. A pervasive release in an FLSA settlement introduces a troubling imponderable into the calculus of fairness and full compensation.
In nearly every case, the pervasive release confers no benefit on the employer because the employee has no other claim. In the typical case, the release is valueless—the employer receives nothing of monetary value, and the employee relinquishes nothing of monetary value. The general release is usually an instrument to ensure peace of mind to the employer’s otherwise worried mind. In the occasional case, however, an unknown claim accrues to the employee. For example, suppose an employee of a widget factory sues the employer for unpaid wages, the parties settle for $500.00, and the employee agrees to a pervasive release. Years later, the employee discovers that a chemical used to manufacture widgets has caused serious injury. In this instance, the employee’s release of the unknown claim (if effective) both confers an undeserved and disproportionate benefit on the employer and effects an unanticipated, devastating, and unfair deprivation on the employee. The release absolves the employer of an ominous contingent liability in exchange for $500.00 (which, in any event, the employer unconditionally owed to the employee).
An employee who executes a broad release effectively gambles, exchanging unknown rights for a few hundred or a few thousand dollars to which he is otherwise unconditionally entitled. In effect, the employer requests a pervasive release in order to transfer to the employee the risk of extinguishing an unknown claim. In the language of Hydradry, a pervasive release is a “side deal”4 in which the employer extracts a gratuitous (although usually valueless) release of all claims in exchange for money unconditionally owed to the employee. (If an employee signs a pervasive release as part of a “side deal” and later discovers a valuable but released claim, the employee perhaps looks for compensation from the attorney who advise the employee to grant the release.) Although inconsequential in the typical civil case (for which settlement requires no judicial review), an employer is not entitled to use an FLSA claim (a matter arising from the employer’s failing to comply with the FLSA) to leverage a release from liability unconnected to the FLSA.
Lynn’s Food’s imposition of the duty to scrutinize an FLSA compromise necessarily implies the court’s duty to scrutinize the claims and the defenses presented by the pleadings. An employee seeking to vindicate his FLSA rights often desperately needs his wages, and both the employee and the employer want promptly to resolve the matter. In a claim for unpaid wages, each party estimates the number of hours worked and the plaintiff’s wage (i.e., establishes a range of recovery), and the court evaluates the relative strength of the parties’ legal argument asserted in the particular case. However, in an FLSA action, neither party typically attempts to value the claims not asserted by the pleadings but within the scope of a pervasive release—that is, those “known and unknown,” or “past, present, and future,” or “statutory or common law,” or other claims included among the boiler plate, but encompassing, terms unfailingly folded into the typical general release.6 Absent some knowledge of the value of the released claims, the fairness of the compromise remains indeterminate. See, e.g., Alba Conte & Herbert B. Newberg, Newberg on Class Actions § 12:15, at 313 (4th ed. 2002) (“Of course, in order independently and objectively to evaluate the adequacy of the entire settlement . . ., the court must possess sufficient evidence or information to weigh the strengths and weaknesses of the additional . . . claims.”).
In sum, a pervasive release in an FLSA settlement confers an uncompensated, unevaluated, and unfair benefit on the employer. In the typical case, no unknown claim accrues to the employee and the pervasive release effects no change to the legal relationship of the parties. In other words, in the typical case, the pervasive release is superfluous and can be stricken without objection from either the employee or the employer. In the occasional case, an unknown claim accrues to the employee and the employer receives a release from a contingent liability in exchange for a modest payment of wages unconditionally owed to the employee. The employer who obtains a pervasive release receives either nothing (if no claim accrues) or a windfall at the expense of the unlucky employee. In either instance, the employee bears the risk of loss, and the employer always wins—a result that is inequitable and unfair in the
circumstance. The employer’s attempt to “play with house money” fails judicial scrutiny.
Lynn’s Food requires more than a “rubber stamp” of an FLSA compromise; the district court must assure the “fairness” of the proposed compromise. Although the parties’ desire for complete “disengagement” is understandable, a pervasive release in settlement of an FLSA action is both unfair and incapable of valuation. A compromise of an FLSA claim that contains a pervasive release of unknown claims fails judicial scrutiny.”
Click here to read the entire Moreno v Regions Bank opinion.
7th Cir.: FWW Is Appropriate Method To Determine Unpaid Overtime Where Plaintiff Was Salaried Misclassified
Urnikis-Negro v. American Family Property Services
Although plaintiff Brenda Urnikis-Negro prevailed in her suit for overtime pay, she contended on appeal that the district court improperly calculated the amount of pay she was owed. After a bench trial, the district court found that the Defendants, violated the Fair Labor Standards Act of 1938, as amended, 29 U.S.C. §§ 201, et seq. (“FLSA”), when they treated Urnikis-Negro as an administrative employee who was exempt from the overtime provisions of the statute. Urnikis-Negro v. Am. Family Prop. Servs., Inc., No. 06 C 6014, 2008 WL 5539823, at *5-*9 (N.D.Ill. Jul. 21, 2008); see 29 U.S.C. §§ 207, 216(b). As a result of Defendants’ misclassification, Urnikis-Negro was never paid anything above her fixed salary for her overtime hours.
However, in calculating Urnikis-Negro’s regular rate of pay and thence the overtime to which she was entitled, the court used the fluctuating workweek (“FWW”) method set forth in 29 C.F.R. § 778.114(a), an interpretive rule promulgated by the Department of Labor. 2008 WL 5539823, at *11-*12.
Recognizing that section 778.114(a) itself does not provide the authority for applying the FWW method in a misclassification case, it applied the FWW anyway. In a troubling opinion, the Court specifically stated that the FWW “is not a remedial measure that specifies how damages are to be calculated when a court finds that an employer has breached its statutory obligations.”
Nonetheless, the Court held that irrespective of the rule, it was appropriate for the district court to apply the FWW method in this case, citing the authority found in the Supreme Court’s decision in Overnight Motor Transp. Co. v. Missel, 316 U.S. 572, 62 S.Ct. 1216 (1942), superseded on other grounds by statute as stated in Trans World Air Lines, Inc. v. Thurston, 469 U.S. 111, 128 n. 22, 105 S.Ct. 613, 625 n. 22 (1985), “which approved this very method of calculating of an employee’s regular rate of pay and corresponding overtime premium. We therefore affirm the district court’s judgment.”
To read the entire decision, click here.
D.N.J.: Following 3rd Circuit Precedent Pharma Reps Found To Be Administrative Exempt
Jackson v. Alpharma, Inc.
Less than a month after the Second Circuit held that pharmaceutical representatives, who performed typical marketing duties, were non-exempt and entitled to overtime pay, a District Court in New Jersey reminds us that the Third Circuit disagrees, and believes that pharma reps are administrative exempt. However, like some other courts before it, the Court declined to address whether such employees qualify for the outside sales exemption as well.
The Court cited the following facts as relevant to its inquiry:
“The plaintiffs worked as PSRs for Alpharma, which manufactures Kadian and Flector, two treatments for pain. (Def.’s 56.1 Stmt. at ¶¶ 2-4; Doc. No. 81-4.) Because of federal statutes and regulations, Kadian and Flector can be sold or dispensed to the public only by a prescription written by a licensed healthcare professional. (Id. at ¶ 4.) Therefore, plaintiffs did not “sell” the drugs, but rather called on doctors and pharmacies to encourage them to prescribe or stock Alpharma’s products over the products of its competitors. (Id. at ¶¶ 5, 6.)
Defendant paints a picture of the PSR with unlimited autonomy, given only a list of doctors and an expense account with which to effectuate their goal. (Def.’s 56.1 Stmt. at ¶¶ 38-71.) The facts that defendant highlights to pinpoint the PSRs’ discretion include: (1) that each PSR worked alone and not with partners or on teams; (2) that plaintiffs spent only two days with their District Manager every one to two months; (3) that upon the beginning of their employment with Alpharma, each plaintiff was given a list of 500 physicians in their territory, and it was up to each PSR to narrow this list to approximately 120 physicians, and further that it was up to each PSR to decide how best to contact these doctors and move their business; (4) that PSRs had similar experiences when dealing with pharmacies; (5) that the PSRs planned their own routing, the process by which they would map out what their activities would be for the upcoming weeks; and (6) that each PSR prepared an annual business plan, which laid out how the PSR intended to grow his or her business in the coming year.
Plaintiffs, on the other hand, paint a picture of Alpharma “micro-managing” its PSRs. Alpharma notes that from the beginning of their employment, Alpharma PSRs receive training and instruction from Alpharma specifically designed to ensure the Alpharma Representatives did not deviate from corporate-approved messages about the drugs. (Pl.’s 56.1 Stmt. at ¶ 22; Doc. No. 83-1.) Plaintiffs also state that they had no discretion concerning, and did not exercise independent judgment in framing Alpharma’s message, and Alpharma explicitly directed its PSRs to use company scripted messages. (Id. at ¶¶ 23-25.) Further, with respect to Kadian, plaintiffs state that they had no discretion in describing its effectiveness, but instead were trained to adhere to the information that was already on the package insert. (Id. at ¶ 27.) Alpharma also provided specific information in the form of handouts and promotional literature that could not be altered or modified by the PSRs, nor could the PSRs develop their own aids to use in their work. (Id. at ¶ 31.) Further, according to plaintiffs, their direct supervisors were micro-managers that “wanted to know everything you were doing” and required plaintiffs to check in with management at least three times per day. (Id. at ¶¶ 34-35.)”
Reasoning that that Plaintiffs were exempt under the administrative exemption, the Court stated:
“The parties concede that the plaintiffs in this case meet the salary requirement of the rules. (Pl.’s Br. in Opp. at Fn. 8; Doc. No. 83.) The main disputes are the second and third prongs: whether the PSRs work is directly related to management or general business operations, and whether the PSRs exercise discretion and independent judgment with respect to matters of significance.
With respect to the second prong, the phrase “directly related to the management or general business operations” refers to the type of work performed by the employee. “To meet this requirement, an employee must perform work directly related to assisting with the running or servicing of the business.” 29 C.F.R. § 541.201(a). The regulations distinguish this type of work from, for example, “working on a manufacturing production line” or “selling a product in a retail or service establishment.” Id. The regulations state that “[w]ork directly related to management or general business operations includes, but is not limited to, work in functional areas such as … advertising; marketing … and similar activities.” 29 C.F.R. § 541.201(b). The regulations specifically include “marketing” and “promoting sales” in the definition of general business operations. Id. Because the PSRs in this case were clearly marketing and promoting the sale of Alpharma’s products, the Court concludes that they were performing work “directly related to the management or general business operations” of Alpharma.
With respect to the third prong:
In general, the exercise of discretion and independent judgment involves the comparison and the evaluation of possible courses of conduct, and acting or making a decision after the various possibilities have been considered. The term “matters of significance” refers to the level of importance or consequence of the work performed. 29 C.F.R. § 541.202(a).
Defendant argues that the primary duties of the PSRs require discretion and independent judgment with respect to matters of significance. (Def.’s Br. at 24; Doc. No. 81-2.) Defendant relies heavily on Smith v. Johnson & Johnson, 593 F.3d 280 (3d Cir.2010), the pending outcome of which caused this matter to be stayed. In Smith, the Third Circuit held that a pharmaceutical sales representative was not entitled to overtime pay because she qualified for the administrative exemption under the FLSA. Id. at 285. In Smith, the plaintiff testified regarding the independent and managerial qualities that her position required. Smith described herself as “the manager of her own business who could run her own territory as she saw fit.” Id. Though the duties of a particular position is a fact-sensitive inquiry, the facts in Smith are startlingly similar to the case at bar. Johnson & Johnson (“J & J”), Smith’s employer, gave her a list of target doctors that it created and told her to complete an average of ten visits for day. Id. at 282. J & J left the itinerary and order of Smith’s visits to the target doctors to her discretion. Id. The J & J target list identified “high-priority” doctors that issued a large number of prescriptions for the drug that Smith was promoting, or a competing product. Id. While meeting with doctors, Smith worked off of a prepared “message” that J & J provided, although she had “some discretion when deciding how to approach the conversation. Id. J & J gave her visual aids and did not permit her to use other aids.” Id.
Here, the plaintiffs were assigned a geographic territory for which they were solely responsible. (Def.’s 56.1 Stmt. at ¶ 40; Doc. No. 81-4.) They worked alone the majority of the time. (Id. at ¶ 42.) PSRs controlled their territory by developing business plans designed to grow their business and also by governing their own day-to-day activities (Id. at ¶ 72.) PSRs decided when and where to travel (their “routing”) and with whom to meet in order to effectuate the most business. (Def.’s 56.1 Stmt. at ¶¶ 51, 67-68.) In executing individual calls, the plaintiffs had discretion by deciding how to approach the physician, what topics to discuss with the physician, and what materials to use (though the universe of materials were provided to them, as in Smith ). (Def.’s 56.1 Stmt. at 59, 83, 97.)
Plaintiffs argue that this case is distinguishable from Smith, because here the plaintiffs worked under a “closely supervised and tightly controlled regime, exercising no independence and discretion in any important matters.” (Pl.’s Br. in Opp. at 35; Doc. No. 83.) Plaintiffs argue that the controlling nature of Alpharma, as noted in the facts section above, differs from the type of “freelancing” done by the plaintiff in Smith. (Id. at 36.) Further, plaintiffs note that the regulations provide a nonexhaustive list of factors for use in the Court’s examination of whether or not an employee exercises the requisite discretion and judgment to fit within the exemption. (Id. at 31.) The list includes: whether the employee carries out major assignments in conducting the operations of the business; whether the employee performs work that affects business operations to a substantial degree, even if the employee’s assignments are related to the operation of a particular segment of the business; … whether the employee has authority to waive or deviate from established policies and procedures without prior approval; … whether the employee provides consultation or expert advice to management; whether the employee is involved in planning long- or short-term business objectives; … and whether the employee represents the company in handling complaints, arbitrating disputes, or resolving grievances. 29 C.F.R. § 541.202(b). Plaintiffs argue that they do not meet a single one of the identified factors, nor any surrogates of those factors, and thus do not exercise discretion or independent judgment. (Pls.’ Br. at 32; Doc. No. 83.)
The Court concludes that the plaintiffs in this case, like the plaintiff in Smith, qualify for the administrative employee exemption. While this case lacks the direct testimony of the plaintiffs regarding their autonomy and independent nature, the underlying facts differ little from the facts in Smith. Through either stipulation or undisputed facts (not plaintiffs’ characterizations of those facts), it is clearly shown that the plaintiffs in this case (1) earn a salary high enough to qualify for the first prong of the exemption, (2) perform non-manual work directly related to the general business operations of their employer, and (3) exercise discretion and independent judgment with respect to matters of significance. Of the ten factors listed in § 541.202(b), the Court concludes that the plaintiffs satisfy the same two that Smith did: their work for advancing the sales of their products within their territories “affects business operations to a substantial degree,” and they are “involved in planning long- or short-term business objectives” related to the marketing of their products within their territories. 29 C.F.R. § 541.202(b). These conclusions are buttressed by the plaintiffs’ duties to write reports and business plans to determine where their business was coming from, to detect trends in the sales of the drug, and to generate ideas on how to grow the business. (Def.’s 56.1 Stmt. at ¶ 76; Doc. No. 81-4.)
In supplemental submissions, the plaintiffs direct the Court’s attention to two new cases: Jirak v. Abbott Laboratories, Inc., Civ. No. 07-3626 (N.D. Ill. June 10, 2010) (Doc. No. 85) and In re Novartis Wage and Hour Litigation, Civ. No. 09-0437 (2d Cir. July 6, 2010) (Doc. No. 87). In light of the Third Circuit’s clear opinion in Smith, and subsequent nonprecedential opinion in Baum v. Astrazeneca LP, 2010 U.S.App. LEXIS 6047 (3d Cir. Mar. 24, 2010), the Court does not find it necessary to discuss these other cases.”
Although the holding here should come as no surprise, given Third Circuit precedent, it does create a situation where abutting districts (New Jersey and the Eastern and Southern Districts of New York) ascribe entirely different meanings to the administrative exemption generally, and specifically its effect on the classification of pharmaceutical reps. With so much at stake, it’s likely this conflict of law is headed to the United States Supreme Court for resolution.
To read the entire decision, click here.
D.D.C.: High-Profile D.C. Chef Is An “Employer” And Personally Liable For Wage And Hour Violations At His Restaurant
Ventura v. Bebo Foods, Inc.
This case, concerning alleged Wage and Hour violations under the FLSA and the DCWPCL was before the Court on two issues: (1) whether defendant Roberto Donna (“Donna”) was personally liable for minimum wage and overtime violations of the Fair Labor Standards Act (“FLSA”) and the D.C. Wage Payment and Collection Law (“DCWPCL”); and (2) damages, if any, as to the corporate defendants. The Court held that Donna was personally liable for such violations, but deferred on the remaining issues.
Discussing the personal liability of Donna, the Court reasoned:
“The Court concludes that Donna is personally liable under the FLSA and DCWPCL for minimum wage, overtime, and equal pay violations because he is an employer under both the FLSA and DCWPCL. To be liable for violations of the FLSA, the defendant must be an “employer.” 29 U.S.C. §§ 206–207 (2010). The FLSA defines “employer” to include “any person acting directly or indirectly in the interest of an employer in relation to an employee.” 29 U.S .C. § 203(d). This definition is broadly construed to serve the remedial purposes of the act. Morrison v. Int’l Programs Consortium, Inc., 253 F.3d 5, 10 (D.C.Cir.2001). Thus, courts look to the “economic reality” rather than technical common law concepts of agency to determine whether a defendant is an employer. Id. at 11; see also Donovan v. Agnew, 712 F.2d 1509, 1510 (1st Cir.1983).
In applying the economic reality test, the Court considers “the totality of the circumstances of the relationship between the plaintiff/employee and defendant/employer to determine whether the putative employer has the power to hire and fire, supervise and control work schedules or conditions of employment, determine rate and method of pay, and maintain employment records.” Del Villar v. Flynn Architectural Finishes, 664 F.Supp.2d 94, 96 (D.D.C.2009) (citing Morrison, 253 F.3d at 11). This test may show that more than one “employer” is liable for violations of the FLSA. Dep’t of Labor v. Cole Enterprises, Inc., 62 F.3d 775, 778 (6th Cir.1995). As a result, a corporate officer may qualify as an employer along with the corporation under the FLSA if the officer has operational control of a corporation’s covered enterprise. Agnew, 712 F.2d at 1511. To determine whether a corporate officer has operational control, the Court looks at the factors above plus the ownership interest of the corporate officer. See Cole Enterprises, 62 F.3d at 778 (explaining that an individual has operation control if he or she is a high level executive, has a significant ownership interest, controls significant functions of the business, and determines salaries and makes hiring decisions).
Here, plaintiffs have demonstrated that Donna is an “employer” under the FLSA because he has operational control over the corporate defendants. First, Donna is an executive with significant ownership interest in the corporate defendants. He is the president and sole owner of Bebo Foods and was the president and sole owner of RD Trattoria. (Donna Dep. at 18:3-20:11, 29:16-17.) He also owned eighty percent of Galileo. (Id. at 33:7-8.) Second, Donna had the power to hire and fire, control work schedules and supervise employees, determine pay rates, and maintain employment records. For example, Donna transferred employees from Galileo to Bebo Trattoria when Galileo closed in 2006, and he took part in the hiring of other employees. (Pls.’ Opp’n [12] to Defs.’ Mot. to Dismiss Ex. 2; Donna Dep. 54:5-7.) Moreover, at the evidentiary hearing, several plaintiffs testified that Donna supervised plaintiffs on the floor of his restaurants. He also approved wage payments to plaintiffs, including the issuance of post-dated or unsigned checks, the payment of partial wages, and the withholding of any payment. (See, e.g., Ventura Aff. ¶¶ 7-9; Vuckovic Aff ¶ 4.) Furthermore, when plaintiffs complained about defendants’ payment practices, he informed them that he withheld wage payments-either in full or in part-from plaintiffs in order to pay Bebo Trattoria’s past debts for which he was behind in payment. (See, e.g., Ventura Aff. ¶ 7; Romic Aff. ¶ 10.) Indeed, plaintiffs’ evidence demonstrates that Donna exerted operational control over the corporate defendants.
Accordingly, Donna is an “employer” under the FLSA and is personally liable for the corporate defendants’ wage, overtime, and equal pay violations. Similarly, because the DCWPCL is construed consistently with the FLSA, Donna is an “employer” under the DCWPCL and is liable for the corporate defendants’ violations of its wage and overtime provisions.”
Due to the high volume of claims against restaurants and their chef-owners recently, this case will no-doubt will have wide-reaching reverberations.
To read the entire opinion, click here.
To learn more about laws and regulations applicable to tipped employees, click here.
E.D.Tenn.: K-9 Officer’s Time Spent Training/Caring For Narcotics Detection Dog Compensable
Lewallen v. Scott County, Tennessee
This case was before the Court, following a bench trial. The issue before the Court revolved around whether time spent by a K-9 officer training and caring for a narcotics detection dog assigned to him was compensable under the FLSA. For the reasons discussed below, the Court held that such time was indeed compensable and awarded Plaintiff damages in accordance with his off-duty time spent performing these duties.
The Court recited the following facts as relevant to the inquiry regarding the compensability of the hours at issue:
Kristofer Lewallen began his duties as a K-9 officer on July 1, 2006, when Sheriff Jim Carson ordered him to pick up a black Labrador dog named “J.J.” Sheriff Carson told Lewallen to begin working with the dog and eventually J.J. would be trained as a narcotics detection dog. J.J. lived with Lewallen and Lewallen fed, trained and cared for him. These activities with J.J. were “off the clock,” that is, they were performed in addition to Lewallen’s regularly scheduled work.
In September 2006, Sheriff Anthony Lay took office, and Lewallen’s immediate supervisor became Chief Deputy Bobby Ellis. Lewallen continued to feed, train and care for J.J. under Sheriff Lay. In October 2006, J.J. received training in narcotics detection and was certified as a narcotics detection dog. In addition to the previous care, Lewallen now needed to perform maintenance training with J.J. to keep him certified. Lewallen was not compensated for any of the time he cared for and trained J.J., although Scott County paid for food, veterinary care, and other necessary items for the dog.
Lewallen was trained as a K-9 officer in January 2007. At that training Lewallen learned for the first time that K-9 officers should receive extra pay for the time they spent with their dogs off the clock. Lewallen researched the requirements and submitted the information to Chief Ellis, who gave it to the Scott County finance director. The information included a statement that the Department of Labor requires that the time spent with police dogs is compensable time and, if the hours spent with the dog exceed the 40-hour work week, time and one-half compensation must be paid.
In March 2007, Sheriff Lay called a mandatory meeting of the Sheriff’s Department employees where he announced the suspension of the County K-9 program. Nevertheless, Lewallen still had to care for and train J.J. since he still had possession of the dog. During this time, Lewallen kept training logs for J.J., which were given to Chief Ellis. The training logs showed the amount of time Lewallen was training J.J. during his off-duty hours-45 minutes to six hours a day on his days off and after his shifts.
Sheriff Lay allowed the K-9 officers to begin working with their dogs again in September 2007, and the Scott County K-9 officers were scheduled and sent for training and certification at that time. Lewallen asked Chief Ellis about compensation for his off-duty care and training of his dog, and Ellis said that the Sheriff knew about his request for overtime compensation. Other Scott County K-9 officers also asked Chief Ellis about getting paid for their overtime. Lewallen prepared a proposed schedule that gave each K-9 officer two hours of paid time per scheduled work day as compensation for the care and training of the dogs, and he submitted the plan to Chief Ellis. He never received any response to his proposal…
Lewallen claims one and one-half hours per day of overtime related to his responsibilities of caring for and training his narcotics dog for 874 days. Specifically, on a daily basis Lewallen provided food and water for his dog; brushed the dog and its teeth; administered arthritis medication; and cleaned the kennel area. In addition, the training log examples submitted as evidence show that he often trained his dog for several hours after his shift or on his days off. While Lewallen admits that one and one half hours is an estimate, Scott County has not produced any proof that this estimate is too high or unreasonable.”
Holding that such time was compensable the Court said:
“The first issue to be decided is whether the off-duty time Lewallen spent caring for and training his narcotics dog qualifies as work. The Supreme Court has defined “work” as “physical or mental exertion (whether burdensome or not) controlled or required by the employer and pursued necessarily and primarily for the benefit of the employer and his business.” Tenn. Coal, Iron & R.R. Co. v. Muscoda Local No. 123, 321 U.S. 590, 598 (1944). This definition includes work performed off-duty. Steiner v. Mitchell, 350 U.S. 247, 256 (1956) (holding that employees must be compensated for activities performed for the employer before or after a regular work shift if the activities are an “integral and indispensable” part of the employees’ principal activities). The definition even applies when the work is not requested but is “suffered or permitted.” 29 C.F.R. § 785.11. “If the employer knows or has reason to believe that the work is being performed, he must count the time as hours worked.” 29 C.F.R. § 785.12.
To determine whether the care and training of the narcotics dog was compensable work, there are three questions to be considered: (1) Did Scott County require or suffer Lewallen to care and train J.J.? (2) Was the care and training of the dog necessarily and primarily for the benefit of the County? and (3) Was the off-duty work an integral and indispensable part of Lewallen’s principal activities? Brock v. City of Cincinnati, 236 F.3d 793, 801 (6th Cir.2001). The court concludes that the answer to all three questions is “yes.”
Sheriff Carson ordered Lewallen to pick up a black Labrador dog named J.J. and to begin working with the dog in the hope that J.J. eventually would be trained as a narcotics detection dog. J.J. was to live with and to be taken care of by Lewallen, but he was not Lewallen’s dog as evidenced by the fact that the Sheriff had the dog picked up from Lewallen when he was demoted. Sheriff Carson wanted Scott County to have a certified narcotics dog and K-9 officer, as did Sheriff Lay, and the sheriffs were certainly aware that keeping a dog at home would require taking care of it beyond Lewallen’s scheduled shifts. Even if Sheriffs Carson and Lay were not aware of the exact amount of time needed to care for and train a narcotics dog, they required Lewallen to perform these activities with J.J. Sheriff Lay was informed that Lewallen thought he should get paid for taking care of and training J.J. when he was off duty, but he did nothing to curtail Lewallen’s time spent with the dog, other than suspending the K-9 program for a few months. Sheriff Lay scheduled the training of J.J. and Lewallen in narcotics detection, and Scott County paid for J.J.’s food, veterinary bills, and other necessities. As the Sixth Circuit held in Brock, Scott County “required the officers to take the canines home with them, look after them at all times, keep them well-nourished and in good health, and have them ready for recall to active service at a moment’s notice.” Brock, 236 F.3d at 804.
The court finds that the care and training of J.J. was for the benefit of Scott County, and an integral and indispensable part of the County’s K’9 program. After he was certified, Lewallen’s principal activity for the Sheriff’s Department was working as a K-9 officer. Thus, the time Lewallen spent caring for and training his canine is compensable work.”
Not discussed here, the Court rejected Defendant’s assertions that such time was properly compensated by $1,000.00 per year and/or “comp time.”
To read the entire Memorandum Opinion, click here.
W.D.Va.: Dollar General “Store Manager” May Have Been Misclassified As Executive Exempt; Defendant’s Motion For SJ Denied
Hale v. Dolgencorp, Inc.
This case was before the Court on Defendant’s Motion for Summary Judgment. Defendant asserted the Plaintiff, the “Store Manager” of its Dollar General store was properly classified as exempt from the Fair Labor Standard Act’s (“FLSA”) overtime provisions, under the executive exemption. Citing factual issues, that needed to be resolved by a jury, the Court denied Defendant’s Motion however.
The Court conducted a detailed factual inquiry in reaching its holding, as is typical in most exemption cases:
“Dollar General operates a chain of discount retail stores located around the country. Hale was hired as a full-time clerk in one of the stores in 1996. Initially, she earned $4.75 per hour and worked as a clerk until January 1997, when she was promoted to a position known as “third key.” A third key worker is a clerk who can open and close the store, and may take deposits to the bank. A year later, in 1998, Hale was promoted to assistant store manager. During this period she transferred from her original store to several different Dollar General stores in Southwest Virginia. With each promotion Hale also received a pay raise. She was promoted to the position of store manager in November 1999, and she worked in this position until July 2003, when she left the company for a new job.
During her tenure as a store manager, Hale was paid a weekly salary and she was eligible for bonuses based upon her store’s profitability. In the four years that she managed a store, Hale received one bonus for $1,182.02. Her salary as a manager ranged from $313 per week to $431 per week. As a manager Hale estimated that she averaged between sixty to seventy hours of work per week. In her management position, Hale was not required to punch a time clock and the company did not pay her overtime.
The parties in this case agree that Hale made more than $250 and her work included the regular direction of two or more employees. The central issue thus is whether Hale’s primary duty consisted of management.
Contrary to the defendant’s assertion, it is not particularly helpful to compare Hale’s situation to that of other discount store managers, such as the one described in Grace v. Family Dollar Stores Inc., No. 3:08 MD 1932, 2009 WL 2045784 (W.D.N.C. July 9, 2009). The question here centers upon the facts of Hale’s employment. I must, therefore, perform a fact-intensive inquiry as to each prong of the five-factor test as applied to Hale in order to determine whether the management issue can be decided as a matter of law.
Although the plaintiff’s estimate of time spent on managerial tasks is important, it has been held that “ ‘when non-management duties are performed simultaneous to the supervision of employees or other management tasks” this supports a finding “ ‘that the employee’s primary duty is managerial.’ “ Jones, 69 F. App’x at 637 (quoting Horne v. Crown Cent. Petroleum, Inc., 775 F.Supp. 189, 190 (D.S.C.1991)).
Hale stated she spent ten percent of her time, about six hours each week, performing management duties such as ordering supplies and scheduling workers. The remainder of her time was spent performing menial labor: cleaning restrooms, scrubbing floors, checking out customers, and stocking shelves.
Hale’s district manager determined how many labor hours each store was allotted. As a store manager, Hale was responsible for scheduling employees according to the district manager’s allotment of labor hours. Hale’s primary concern was making certain she had enough staff to unload supply trucks and place merchandise on the store floors on “truck day.” (Hale Dep. 274.) Dollar General required stores to place stock on the floor within twenty-four hours of a supply truck’s arrival. The store referred to this as their “door-to-store in 24” strategy. (Hale Dep. 278.) Hale would save her staff’s hours for truck day so merchandise could be placed in the store within twenty-four hours. During the rest of the week, Hale had to run the store with a skeleton crew.
To save labor hours for truck day, Hale worked alone in the store for about four hours every day during her ten-hour shift. During this time she manned the cash register, which could not be left unattended. When staff was in the store with her, Hale would have the other individual man the register while she stocked merchandise on shelves according to the company’s “Plan-O-Grams.” A Plan-O-Gram was a chart that instructed employees where to place specific merchandise within a store. Typically, ninety percent of Hale’s store was organized according to the Plan-O-Gram, with the remaining ten percent stocked according to rules prescribed by Dollar General and Hale’s discretion. (Hale Dep. 125-128.)
In response to questions from defense counsel in her deposition, Hale admitted that she was always thinking about how to manage her store even when she performed menial labor such as stocking shelves or cleaning. (Hale Dep. 205-207.) Hale’s answer, however, did not indicate that she actively managed the store while performing menial labor. Rather, she performed menial tasks and at the same time she pondered ways to clean the store or organize merchandise.
The defendant argues that a reasonable jury “could only” conclude that these facts demonstrate Hale’s primary duty was management. (Def.’s Individual Reply Br. 6.) But, in fact, a reasonable juror could reach the opposite conclusion. Based upon these facts, a juror could decide that Hale spent very little time managing the store. Hale spent forty percent of her time alone in the store, during which she supervised no one and she performed tasks typically done by a clerk. A juror could conclude that her mental management of the store, such as spotting empty shelves while performing menial labor, did not constitute management or supervision of others. Further, a reasonable juror could determine that the company’s strict policies and stringent allocation of staff labor hours resulted in Hale forgoing true management duties in order to perform menial tasks so the store could simply remain open. Thus, a genuine issue of material fact exists as to whether Hale’s primary duty was management, or, whether Hale essentially performed a clerk’s duties under a different title and pay scale.
Dollar General argues that it principally valued Hale’s management abilities. This is evidenced, the defendant asserts, by the fact that Hale had to take a test to become a manager and that Hale’s district manager transferred Hale to two different locations to “rescue” the troubled stores. (Id.) Further evidence of the store’s emphasis on Hale’s management duties was Hale’s salary-she earned more than any other employee in the store-and the fact that she could receive a bonus based upon the profitability of her store. The defendant also notes that Hale was subject to very little supervision because the district manager only visited Hale’s location once every few months for twenty to thirty minutes. The company asserts that this shows that it trusted Hale’s management abilities and that she was the individual responsible for the store’s overall performance.
Although Dollar General asserts that these facts indicate Hale’s management duties were the most important tasks that she performed, a reasonable juror could reach a different conclusion.
Hale’s deposition testimony emphasizes that she spent a significant amount of time alone in the store manning the cash register. Further, the company frequently sent Hale to a store in nearby West Virginia where she spent the day stocking shelves. While Hale testified that her district manager, Judy Spangler, never interfered with her ability to perform her duties, a possible reason for this was that Spangler did not have enough time to frequently visit Hale’s store or to spontaneously review Hale’s work. As Hale testified, Spangler served as the district manager for twenty to thirty stores within in a 200-mile radius. In addition, Spangler worked from an office located three hours away from Hale’s store. Hale testified that Spangler left frequent voice mails for her, which included detailed instructions on running the store. Under Dollar General’s policies, the company expected store managers to immediately report issues to district managers, which Hale did. The company’s policies did not instruct store managers to wait for a district supervisor’s visit to discuss issues or problems.
Based upon these facts, a reasonable juror could conclude that Dollar General valued Hale’s ability to quickly stock shelves, man a cash register, and serve as an employee who promptly informed her superior about problems. Hale’s testimony could lead a juror to conclude that what Dollar General truly valued was Hale’s unquestionable compliance with company rules and her ability to promptly report problems to a supervisor who could then decide how to proceed.
As a store manager, Hale interviewed and recommended candidates for hiring, trained employees, conducted employee performance evaluations, created employees’ work schedules, and recommended employees for raises, promotions and terminations. While Dollar General permitted Hale to perform these tasks, she did so under rules that a reasonable juror could interpret as severely limiting the frequency with which Hale truly exercised discretion.
Although Hale created work schedules, she had no control over the amount of labor hours allotted to the store. Given the company’s emphasis on its “door-to-store in 24” policy, Hale had almost no discretion with scheduling staff because her primary focus was to make sure she had enough staff for truck day. Hale was unable to discipline or terminate employees unless the district manager directed her to do so. While Hale could recommend that employees receive raises or promotions, the district manager decided whether to adopt such recommendations. Further, the company’s standard operating procedures dictated, with step-by-step directions, how Hale should respond to numerous issues, such as angry customers, answering the phone, and store operations during possible weather emergencies.
Hale testified that the true amount of discretion she exercised depended upon the specific task at hand. When it came to general staff issues on a day-to-day basis, things were “pretty open.” (Hale Dep. 280.) But, when she made decisions about inventory, procedures, and stocking shelves, Hale “didn’t feel like [she] had that much discretion….” (Id.)
Dollar General argues that Hale had the discretion to manage inventory and to mark down items, but Hale testified that she never discounted an item unless she had express permission from her district manager. The defense asserts that Hale had discretion as to what she placed within the “flex-space” that constituted ten percent of the store’s floor area. But, even within this space, Hale had to adhere to company policies such as placing related items near one another.
Given these facts, it would be rational for a juror to conclude that in reality, the company’s policies left little for Hale to decide and therefore, she did not frequently exercise her discretion.
Hale testified that Spangler, the district manager, spent relatively little time inside Hale’s store. Hale testified that Spangler was in the store for eight to ten hours during inventory visits. Outside of inventory days, Spangler was in the store for about twenty minutes every two to three months.
Clearly, the record demonstrates that Hale had little face-to-face contact with her supervisor. This factor weighs in favor of the exemption. But the record does not show that Hale was genuinely free from supervision. Rather, Hale’s testimony indicates that she knew she did not have the freedom to make unfettered decisions about employee pay, promotions, terminations, or punishment. Further, Hale was constantly reminded by Spangler’s frequent voice mails or in-store visits that she had to closely adhere to Dollar General’s rules regarding placement of merchandise, store cleanliness, and other customer relations policies such as greeting customers within ten feet of entry.
Viewing the evidence at this stage most favorably to Hale, it appears that her decisions about merchandise and store procedures were dictated by company policies, from which she could not deviate. So while Spangler did not personally supervise Hale on a day-to-day basis, Hale had little freedom from the supervisory rules and regulations outlined in Dollar General’s corporate publications and ultimately enforced by Spangler.
Hale testified that on average, she worked sixty to seventy hours. Prior to her departure from Dollar General, Hale earned $431 per week. When she started as a manager, her pay was $313 per hour. Converted to an hourly rate, Hale’s salary ranged from $4.47 to $5.21 when she began as a manager, and between $6.16 and $7.19 per hour when she left the company. The actual hourly rate depends upon whether Hale’s salary is based upon her minimum work week, sixty hours, or the higher end of her average work week, seventy hours.
During the time Hale worked as a manager, the federal minimum wage was $5.15. When Hale left the company in 2003, the lowest paid clerk earned $5.60 per hour. (Hale Dep. 112). At that same time, assistant managers earned about $7 per hour.
Hale was also eligible for bonuses and during her tenure as a manager she received one for $1,182. The bonus paid to Hale weighs against a finding that Hale’s salary was similar, or close to, the salary of an hourly worker because Hale earned a ten percent bonus based upon the store’s profit while the remainder of the profit was pro-rated among lower-paid employees.
The analysis of Hale’s salary, however, when converted to an hourly rate, weighs toward a finding that Hale essentially earned the same as a clerk. For example, had a clerk earning $5.60 per hour, the lowest paid salary in Hale’s store, worked a sixty-hour week, she would have earned $224 for the first forty hours, and time and a half, or $168, for the next twenty hours. If this clerk worked a sixty-hour week she would earn $392 to Hale’s $431. If the same clerk worked seventy hours, she would earn $476 to Hale’s salary of $431. Thus, only when Hale worked a sixty-hour week would she earn slightly more than an hourly employee. Given these facts, a reasonable juror could determine that this factor weighs in favor of Hale and demonstrates that her primary duty was not management.
Whether Hale’s primary duty consisted of management is a question which must be answered by a jury. Based upon the applicable five-prong test, a reasonable juror could determine that Hale’s primary duty was not management. Thus, summary judgment in favor of the defendant is inappropriate.”
Similarly, the Court denied the branch of Defendant’s Motion seeking summary judgment regarding the alleged willful nature of its FLSA violations.
The Court’s analysis and holding was starkly similar to another case, recently discussed here, where another Court held that issues of fact required a jury determination of whether a Dollar General “Store Manager” was exempt under the executive exemption.
EDITOR’S NOTE: On July 8, 2010, another Court reached virtually the same decision, regarding another claim alleging that a Dollar General “Store Manager” was improperly denied overtime. In that case, Kanatzer v. Dogencorp, Inc., No. 4:09CV74 CDP (E.D. Mo. July 8, 2010), the Court denied Defendant’s motion for summary judgment, citing to factual issues regarding the applicability of the executive exemption.
W.D.Mo.: Where Over 1,000 Opt-ins, “Full Discovery” Targeting All Class Members Inappropriate
Dernovish v. AT&T Operations, Inc.
This case involved a collective action brought under the Fair Labor Standards Act (“FLSA”). Plaintiffs, call center employees, alleged that Defendant failed to pay them for some time spent working, while they were in the process of logging in to Defendant’s computer system, prior to their scheduled shift. The issue before the Court was what proper scope of discovery should be granted to Defendant, with respect to the over 1,000 members of the opt-in class. While the Defendant maintained that all opt-ins were parties and thus, they were entitled to full discovery from each and every class member, the Plaintiffs disagreed. The Court held that the opt-ins need only produce limited discovery responses, because they were akin to class members in a Rule 23 class.
Discussing the issue, the Court said:
“The Court holds Plaintiffs’ view is more appropriate. Normally, a class action governed by Rule 23(b)(3) would permit those defined by the class definition to opt out of the suit. The FLSA effectively changes the normal situation in two ways: it creates its own class action device that replaces the one created in Rule 23 and requires individuals defined by the class definition to opt in, not opt out. See Hoffmann-La Roche Inc. v. Sperling, 493 U.S. 165, 170 (1989) (describing section 216(b) as permitting “employees to proceed on behalf of those similarly situated”); Anderson v. Unisys Corp., 47 F.3d 302, 305 n. 6 (8th Cir.1995) (declaring that “Certification of ADEA class actions is governed by 29 U.S.C. § 216(b) rather than Fed.R.Civ.P. 23.”); Kelley v. Alamo, 964 F.2d 747, 749 (8th Cir.1992) (“the FLSA provides for a form of ‘class action’ suit under” section 216(b)); Kloos v. Carter-Day Co., 799 F.2d 397, 399-400 (8th Cir.1986) (describing section 216(b) as creating a “type of statutory class action”). Other courts have reached the same conclusion. E.g., Alvarez v. City of Chicago, No. 09-2020, slip op. at —- (7th Cir. May 21, 2010) (“A collective action is similar to, but distinct from the typical class action…. The principle difference is that plaintiffs who wish to be included in a collective action must affirmatively opt-in to the suit….”); Thompson v. Weyerhaeuser Co., 582 F.3d 1125, 1127 (10th Cir.2009) (“the opt-in class mechanism of the [FLSA] authorizes class actions when the complaining parties are ‘similarly situated.’ ”); Smith v. T-Mobile USA Inc., 570 F.3d 1119, 1122 (9th Cir.2009) (“A plaintiff seeking FLSA collective action certification does not have a procedural right to represent a class in the absence of any opt-in plaintiffs.”); Ruehl v. Viacom, Inc., 500 F.3d 375, 379 & n. 3-4 (3d Cir.2007). This characterization suggests the permissible scope of discovery for the class members is not necessarily intended to be as great as it is for the actual parties to the case.
Another factor affecting the scope of discovery is the measure of damages, which consists of “the payment of wages lost and an additional equal amount as liquidated damages.” 29 U.S.C. § 216(b). This determination is based on a formula, not subjective testimony; there is no recovery for pain and suffering or emotional distress. Defendant’s policies provide the commonality that binds the class together. If it is determined that employees were required to login before the start of their shift, damages will be calculated by multiplying the applicable wage by the amount of time necessary to login, multiplied again by the number of days the employee worked. There is also no great need to rely on the employees’ memory to ascertain damages-the superior, more reliable evidence resides in Defendant’s records.”
The Court was careful to note that the Defendant was entitled to some individualized discovery:
“Nothing the Court has said, however, means that Defendant is not entitled to any information about the individuals who opt in. Even in a traditional class action under Rule 23, class members may be required to supply a certain amount of information. However, allowing the “full” range of discovery defeats the purpose of permitting a collective/class action by denying the efficiencies such a procedure is intended to produce. The nature and extent of the discovery effort is subject to the trial court’s discretion and depends on the nature of the case and the purported need for the information. Manual for Complex Litigation (Fourth) at 256.
With these principles in mind, the Court has reviewed Defendant’s discovery requests. The Court concludes it is appropriate and proper for those who opt-in to the case to answer Interrogatory Number Two. This interrogatory asks the individual to identify job titles, supervisors, and locations worked for Defendant. The remaining interrogatories ask for information that is more readily (and conclusively) found in Defendant’s records (such as Interrogatories 3 and 5), carries a significant burden that can be obviated by seeking discovery from the named Plaintiffs (such as Interrogatories 1 and 4), or ask for information that is of dubious importance in the case (such as Interrogatories 6, 7, 8, and 9).
The Request for Production of Documents presents an additional problem: Defendant has posed “contention”-type requests. For instance, Defendant asks the class members to produce “[a]ll documents regarding your assertion that AT & T ‘required these call center employees to be ready to work at the beginning of their scheduled shift.’ “ The undersigned generally finds such interrogatories to be unnecessary at best and inappropriate at worst . Here, requiring the class members to supply the documents will result in significant duplication and inefficiencies that are not warranted in the circumstances of this case. The class members will be required to produce any documents they may have responsive to requests 2 and 3, and submit any such documents along with their answer to Interrogatory Number Two. The remaining requests for documents need not be answered by the class members.”
Overtime Law Blog 