Source: https://www.fdpklaw.com/2014/03/
Timestamp: 2019-06-20 03:59:07
Document Index: 267831079

Matched Legal Cases: ['§ 203', '§ 203', '§ 203', '§ 203', '§ 201', '§ 251', '§ 254']

March 2014 - Feinstein Doyle Payne Kravec
Developments in Wage and Hour Laws: Compensable Time Under the Fair Labor Standards Act
On May 24, 1937, when President Franklin Roosevelt sent a bill to Congress relating to Wage and Hour Laws for what later would become the Fair Labor Standards Act (“FLSA”),[1] he did so with the message that America should be able to give “all our able-bodied working men and women a fair day’s pay for a fair day’s work.”[2]
The U.S. Supreme Court has been particularly concerned with Wage and Hour Laws in recent years in determining exactly when employees are on and off the clock. Establishing rules for when employees are on and off the clock directly affects the wages that employees are owed—“a fair day’s pay for a fair day’s work.”
For example, this Term the Court decided Sandifer v. United States Steel Corp., No. 12-417, a Wage and Hour Laws case where the question was whether time that steelworkers spend donning and doffing protective gear is compensable under the FLSA, 29 U.S.C. § 203(o). Section 203(o) provides that a union and an employer may agree to exclude the time workers spend “changing clothes” from the minimum wage and overtime protections of the FLSA.
In a unanimous opinion authored by Justice Scalia, the Court held that “clothes” within the meaning of § 203(o) “denotes items that are both designed and used to cover the body and are commonly regarded as articles of dress.”[3] Protective gear such as flame-retardant hoods, flame-retardant jackets, and flame-retardant pants are “clothes” within the meaning of § 203(o).[4] The Court further held that “changing clothes” includes putting new clothes over old ones, and not simply taking off one outfit to put on another.[5] Accordingly, the time that employees spend donning and doffing protective gear falls within the exception of § 203(o) and is not compensable under the FLSA if a union and an employer have agreed to exclude it.[6]
On March 3, 2014, the Supreme Court granted certiorari in another Wage and Hour Laws case concerning compensable time under the FLSA: Integrity Staffing Solutions, Inc. v. Busk, No. 13-433. The question presented is whether time spent in security screenings should be compensated under the FLSA, as amended by the Portal-to-Portal Act.[7]
The Portal-to-Portal Act does not require compensation for activities that are “preliminary” or “postliminary” to the “principal activity or activities” that an employee “is employed to perform.”[8] However, preliminary and postliminary activities are compensable if they are “integral and indispensable” to the employee’s principal activities.[9] To be “integral and indispensable,” an activity must be: (1) necessary to the principal work performed; and (2) done for the benefit of the employer.[10]
Respondents in Integrity Staffing Solutions are warehouse workers who seek back pay, overtime, and double damages under the FLSA for time spent in security screenings after the end of their work shifts. Before they left work, employees waited up to 25 minutes to be searched and were required to remove their wallets, keys, and belts, and pass through metal detectors.[11] Relying on an unbroken line of authority from other jurisdictions, the district court dismissed Respondents’ claims because security screenings are typical “preliminary” or “postliminary” activities that are non-compensable under the FLSA pursuant to the Portal-to-Portal Act.[12]
The Ninth Circuit reversed, holding that time spent in security screenings was compensable under the FLSA because it was “necessary to [Respondents’] primary work as warehouse employees.”[13] That holding squarely conflicts with decisions from the Second and Eleventh Circuits concerning Wage and Hour Laws issues, holding that time spent in security screenings is not subject to the FLSA because it is not “integral and indispensable” to employees’ principal job activities.[14]
The Ninth Circuit distinguished the Second and Eleventh Circuit cases by noting that, unlike in Gorman and Bonilla, in which everyone who entered the workplace had to pass through a security clearance, only select employees were required to undergo security screenings.[15] Additionally, the security screenings were required to prevent employee theft, a concern that stemmed from the nature of the Respondents’ work and their access to merchandise in the warehouse.[16] Thus, the screenings were done for the benefit of the employer, unlike in Bonilla, where security screenings mandated by the FAA did not benefit the employer.[17]
The Supreme Court will not hear argument in Integrity Staffing Solutions, Inc. v. Busk until the October 2014 Term. The Court likely will use the case as an opportunity to clarify the “integral and indispensable” exception to the Portal-to-Portal Act’s exclusion of preliminary and postliminary activities from compensation under the FLSA.
FDPK lawyers are committed to ensuring that all workers receive a fair day’s pay for a fair day’s work. If you have questions concerning Wage and Hour Laws or wages that you believe you are owed, contact Partner Ed Feinstein.
[1] 29 U.S.C. §§ 201–19.
[2] Jonathan Grossman, U.S. Department of Labor, “Fair Labor Standards Act of 1938: Maximum Struggle for a Minimum Wage,” Monthly Labor Review (June 1978), available at http://www.dol.gov/dol/aboutdol/history/flsa1938.htm#21.
[3] Sandifer v. United States Steel Corp., No. 12-417, slip op. at 5 (U.S. Jan. 27, 2014).
[5] Id. at 7–8.
[7] 29 U.S.C. §§ 251–62.
[8] Id. § 254(a).
[9] Busk v. Integrity Staffing Solutions, Inc., 713 F.3d 525, 530 (9th Cir. 2013) (quoting Steiner v. Mitchell, 350 U.S. 247, 249–51 (1956)), cert. granted, 2014 WL 801096 (U.S. Mar. 3, 2014) (No. 13-433).
[12] Busk v. Integrity Staffing Solutions, Inc., 2011 WL 2971265, at *4 (D. Nev. July 19, 2011), aff’d in part, rev’d in part and remanded, 713 F.3d 525 (9th Cir. 2013).
[13] Busk, 713 F.3d at 531.
[14] Gorman v. Consol. Edison Corp., 488 F.3d 586, 593–94 (2d Cir. 2007); Bonilla v. Baker Concrete Const., Inc., 487 F.3d 1340, 1344–45 (11th Cir. 2007).
[15] Busk, 713 F.3d at 531.
Fraud on the Market Theory – Halliburton Co. v. Erica P. John Fund, Inc.
On March 5, 2014, the Supreme Court heard oral argument in Halliburton Co. v. Erica P. John Fund, Inc. This case concerns the “fraud on the market theory,” established in 1988 when the Supreme Court issued its ruling in Basic v. Levinson. The Basic ruling allows plaintiffs to presume that an alleged misrepresentation affected the price that all investors paid for securities.
Halliburton asked the Court to overturn the “fraud on the market theory.” Class action plaintiffs routinely rely on Basic and the “fraud on the market theory” to certify classes in securities class actions.
Haliburton aggressively argued that Basic was a mistake and the Court should overrule this decision. Halliburton further argued that the Supreme Court’s recent decisions that scaled back class actions in Comcast Corp. v. Behrend and Wal-Mart v. Dukes established that no element in a class action could ever be shown through an assumption and must be established by direct proof.
If the Supreme Court adopts this argument, the effects will be felt by all class action litigants. Class actions frequently rely upon presumptions to establish elements (such as reliance) that otherwise would disqualify class certification by requiring mini-trials to determine each class member’s state of mind.
The respondent argued that Basic reflected a basic area of concern to securities law, and not merely economic theory. In fact, Basic was indirectly ratified by Congress in later securities legislation (the Private Securities Litigation Reform Act (PSLRA) and the Securities Litigation Uniform Standards Act (SLUSA)). Congress had therefore had an opportunity to disapprove of the “fraud on the market theory” that had been established in Basic.
Amicus United States also argued in defense of Basic, since the theory assisted with SEC enforcement actions. (An amicus is a person or group with strong interest in or views on the subject matter of an action, is not a party to the action, but may petition the court for permission to file a brief. Such briefs are commonly filed in appeals that concern matters of public interest.)
The March 5, 2014 Supreme Court Argument
Chief Justice Roberts and Justices Alito and Scalia attacked the “fraud on the market theory” established by Basic. Justice Scalia made it clear that he believed that the Court’s Amgen Inc. v. Conn. Retirement Plans and Trust Funds opinion did not indicate that Congress had approved Basic in ratifying the PSLRA or SLUSA. Justices Kagan and Breyer strongly defended Basic, and challenged Halliburton to explain why it believed the presumption of the “fraud on the market theory” was inappropriate. Justices Kagan and Breyer argued that this theory addresses a common question that would be better answered at the merits stage of the case.
Justice Kennedy, and to a lesser extent Chief Justice Roberts, expressed significant interest in a middle ground proposed by a group of law professors who filed an amicus brief. The amicus brief suggested that the presumption of the “fraud on the market theory” should be allowed to stand, but only applied if a plaintiff made a statistical demonstration of the impact of a specific misrepresentation. Justice Sotomayor did not directly endorse or condemn Basic, though she rejected outright the law professors’ middle ground suggestion in their amicus brief.
Posted by McKean J. Evans, Esquire.
Supreme Court Updates – Class Actions
On February 24, 2014, the Supreme Court announced an important development in class action law.
The Supreme Court refused to consider the defendants’ petitions for certiorari (the name given to proceedings in an appeal court requesting that the court re-examine the findings of a lower court) in two class action lawsuits against manufacturers of front-loading washing machines. These lawsuits were based upon claims that the defendants’ washing machines were defectively designed and that this defect caused an accumulation of mold and bad odors.
The defendants (Sears Roebuck and Co. and Whirlpool Corporation) asked the Supreme Court to reverse the Sixth and Seventh Circuits’ decisions that permitted the cases to proceed as class actions. The Supreme Court refused to reconsider the decisions in these two lawsuits.
The Seventh Circuit had ordered that class action treatment was appropriate in the Sears case because the basic question of whether the machines were defective was common to the entire class. Butler v. Sears, Roebuck & Co., 727 F.3d 796, 798 (7th Cir. 2013) cert. denied, 2014 WL 684064 (U.S. Feb. 24, 2014).
The Sixth Circuit found that the Whirlpool case was suitable for class action treatment because “[W]hether the alleged design defects caused biofilm and mold to accumulate in the [washing machines] is a common issue for all members of the certified class.” In re Whirlpool Corp. Front-Loading Washer Products Liab. Litig., 722 F.3d 838, 854 (6th Cir. 2013) cert. denied, 2014 WL 684065 (U.S. Feb 24 2014).
In their virtually identical petitions to the Supreme Court, Sears and Whirlpool argued that the Sixth and Seventh Circuits were wrong in permitting the lawsuits to proceed as class actions. The defendants argued that the development of mold in a particular washing machine would be an individual issue and not a class issue. The defendants further claimed that even if each consumer purchased a product with the same defect they could not join together in a class action because they would need to individually prove the defect.
The defendants asked the Supreme Court to extend its recent ruling in Comcast Corp. v. Behrend, 185 L. Ed. 2d 515 (2013) to show that class certification by itself would not be proper whenever harm from a common theory of liability may vary among different participants in class actions. The Supreme Court declined the manufacturers’ invitation to expand Comcast to further restrict class action ligation.
The Supreme Court’s refusal to consider these cases is significant for class action litigation. Plaintiffs who seek to represent classes of consumers who purchased products with a common source of liability may now rely on the Sixth and Seventh Circuit opinions to support class certification in cases where the details of class members’ harm may vary.
March 6, 2014. Posted by McKean J. Evans.
McKean Evans is an associate with FDPK’s class action team. If you have questions about class action litigation, contact Partner Joseph N. Kravec, Jr.
Class Action Settlement – Larsen, et al.v. Trader Joe’s Company
Tamar Davis Larsen and Aran Eisenstat, on behalf of themselves and all others similarly situated v. Trader Joe’s Company, a California Corporation
Case No. 3:11-cv-05188-WHO
Feinstein Doyle Payne & Kravec, LLC announces a class action settlement in Larsen, et al. v. Trader Joe’s Company, a California corporation.
Details about the Trader Joe’s class action settlement are posted at https://tjallnaturalclassaction.com/
The class action lawsuit, pending in the United States District Court for the Northern District of California, claims that certain Trader Joe’s food products were improperly labeled, marketed, supplied, made and sold as being “all Natural” and/or 100% Natural” even though they contained one or more of the following allegedly synthetic ingredients: ascorbic acid, cocoa processed with alkali, sodium acid pyrophosphate, xanthan gum, and vegetable mono- and diglycerides.
The products at issue are: Joe-Joe’s Chocolate Vanilla Creme Cookies; Joe-Joe’s Chocolate Sandwich Creme Cookies; Trader Joe’s Jumbo Cinnamon rolls; Trader Joe’s Buttermilk Biscuits; Trader Giotto’s 100% Natural Fat Free Ricotta Cheese; and Trader Joe’s Fresh Pressed Apple Juice.
Trader Joe’s denies all charges of wrongdoing or liability, defended itself throughout this litigation and asserts that the Labeling, packaging, sale, distribution, supply, marketing and advertising, including statements made on the Products’ labels and on Trader Joe’s website, were truthful, accurate, not misleading, and not in violation of the law.
Both sides have agreed to settle the dispute and to provide benefits to consumers, taking into account the burdens and expense of litigation, including the risks and uncertainties, and the difficulties and delays in such litigation.
The class action settlement is awaiting court approval. Class members may review the Class Notice and Stipulation of Class Action Settlement by clicking on the links below. As the notice explains, class members have a right to object.
The class action settlement class consists of the following:
ALL CONSUMERS IN THE UNITED STATES WHO, FROM OCTOBER 24, 2007 THROUGH FEBRUARY 6, 2014, MADE RETAIL PURCHASES OF ONE OR MORE OF THE PRODUCTS THAT WERE LABELED “ALL NATURAL” OR 100% NATURAL” AND ALSO CONTAINED OINE OR MORE OF THE FOLLOWING INGREDIENTS: ASCORBIC ACID, COCOA PROCESSED WITH ALKALI, SODIUM ACID PYROPHOSPHATE, VEGETABLE MONO- AND DIGLCERIDES, AND XANTHAN GUM
Trader Joe’s – Order Granting Preliminary Approval of Class Action Settlement
Trader Joe’s – Notice
Trader Joe’s – Superseding Stipulation of Class Action Settlement
JUNE 2, 2014 – LAST DAY TO FILE AN OBJECTION TO THE CLASS ACTION SETTLEMENT
JUNE 2, 2014 – LAST DAY TO EXCLUDE YOURSELF FROM THE CLASS ACTION SETTLEMENT
JULY 9, 2014 – CLASS ACTION SETTLEMENT FAIRNESS HEARING, Courtroom No. 6 of the United States District Court of the Northern District of California, 450 Golden Gate Avenue, Courtroom 2, 17th Floor, San Francisco, CA 94102
Contact: Joseph N. Kravec, Jr. ([email protected])