Opinion ID: 4530912
Heading Depth: 2
Heading Rank: 2

Heading: Rebutting the Prima Facie Case

Text: Paragon argues that the district court misread Mt. Clemens and set the bar too high for rebutting a prima facie case. The district court stated that an absence or inadequacy of records “shifts to the employer the burden of specifically and expressly rebutting the reasonable inferences drawn from the employee’s evidence as to the amount of time spent working.” III Aplt. App. 623. Paragon claims that this formulation of the burden is heavier than what the Supreme Court actually imposed when it required “the employer to come forward . . . with evidence to negative the reasonableness of the inference to be drawn from the employee’s evidence.” Mt. Clemens, 328 U.S. at 687–88. We disagree. This court has held that “failure to comply with [the] obligation to keep records shifts to the employer the burden of specifically and expressly rebutting the reasonable inferences drawn from the employee’s evidence as to the amount of time spent working.” Bledsoe v. Wirtz, 384 F.2d 767, 771 (10th Cir. 1967) (emphasis added). The district court merely repeated this language. Paragon urges that the decision in Bledsoe was “misplaced” and “has not been followed or cited with approval by any subsequent Tenth Circuit case.” Aplt. Br. at 35. Paragon overlooks Donovan v. United Video, Inc., 725 F.2d 577, 584 (10th Cir. 1984), in which the court cited Bledsoe for its articulation of the Mt. Clemens test. Moreover, Bledsoe is still good law in this circuit and one panel of this court may not overrule another absent en banc consideration or an intervening Supreme Court decision. United States v. White, 782 F.3d 1118, 1126–27 (10th Cir. 2015). Neither of those conditions are present here. 8 Paragon contends that it carried its burden to negate the inferences arising from the Secretary’s evidence. It advances several theories under this heading, but most involve disagreements with how the Secretary filled in evidentiary gaps where information on claims forms was inadequate. The Supreme Court has said that “[t]he employer cannot be heard to complain that the damages lack the exactness and precision of measurement that would be possible had he kept records in accordance with the [FLSA].” Mt. Clemens, 328 U.S. at 688. The Secretary explained his methods of calculation in detail. See Aplee. Br. at 14–15. Claims forms with complete information on days and times worked were used to compute an average (here, the mode), which then filled in the gaps on forms where the information was incomplete or not disclosed. Id. The parties then agreed to several stipulations regarding the work hours, which necessitated adjustments. II Aplt. App. 313–14. Additional adjustments were made after the evidentiary hearing, including reducing hours to account for meal breaks. III Supp. App. 739. Paragon objects to several features of the Secretary’s gap-filling analysis. It argues that the Secretary (1) used an unrepresentative sample to calculate averages, (2) used a mode instead of a mean, (3) included hours worked in 2013 despite Paragon’s claim that it did not participate in that year’s harvest, (4) failed to exclude noncompensable travel time, and (5) failed to exclude hours worked by 12 and 13-year olds outside school time that Paragon claims are exempt under the FLSA. The first two arguments are unconvincing under the Mt. Clemens burden-shifting framework. Where a claimant provided concrete information on the claims form, the 9 Secretary used that to calculate unpaid wages. Aplee. Br. at 14. But where the information was missing, the Secretary calculated averages using the mode value from representative evidence and used those figures.4 Id. Paragon has shown merely that it could arrive at estimates of hours worked more favorable to itself were it in the Secretary’s position. That is both unsurprising and insufficient to negate the just and reasonable inferences arising from the Secretary’s analysis. Paragon has not shown that the Secretary’s methods were so deficient that inferences arising from its analysis cannot be trusted.5 The dissent concludes that DOL failed to carry its burden to establish a prima facie case under Mt. Clemens with respect to claimants who did not report the days or weeks they worked. It contends that the Secretary failed to provide “a reasonable explanation based on sound statistical analysis” for his estimate of days and weeks worked. We disagree. The dissent’s analysis improperly shifts the burden back to the Secretary. Under the Mt. Clemens framework, the Secretary’s burden is to show “the amount and 4 Confusion about exactly what constitutes an “average” — and what does not — arose in briefing and at oral argument. The “average” is “[a] familiar but elusive concept. Generally, an ‘average’ value purports to represent or to summarize the relevant features of a set of values; and in this sense the term would include the median and the mode. In a more limited sense an average compounds all the values of the set, e.g., in the case of the arithmetic or geometric means. In ordinary usage ‘the average’ is often understood to refer to the arithmetic mean.” Average, Oxford Dictionary of Statistical Terms (6th ed. 2003) (emphasis added). 5 At oral argument, Paragon appeared to suggest that the Secretary should have included claims forms that reported no data on hours or weeks worked in his calculation of averages, presumably as zeroes. Oral Argument at 7:28–42. We are not convinced that it would have been reasonable for the Secretary to construe a blank field on a form created to facilitate reporting of uncompensated work as reporting zero days or weeks worked. 10 extent of [the employee’s] work as a matter of just and reasonable inference.” The Secretary did that here by collecting claims forms and filling in the gaps on those that did not report specific information by using the mode value. Though the dissent questions the rigor of the statistical analysis, we must remember that Mt. Clemens seeks to prevent an employer from benefitting from its failure to keep records. See 328 U.S. at 688 (“The employer cannot be heard to complain that the damages lack the exactness and precision of measurement that would be possible had he kept records.”).6 The dissent makes an argument that Paragon never clearly raised and of course we cannot cross the line into advocacy. See Cordova v. Aragon, 569 F.3d 1183, 1191 (10th Cir. 2009) (“It is not our role to sift through the record to find evidence not cited by the parties to support arguments they have not made.”); Craven v. Univ. of Colo. Hosp. Auth., 260 F.3d 1218, 1226 (10th Cir. 2001) (“We will not manufacture arguments for an appellant, and a bare assertion does not preserve a claim.”) (quoting Entm’t Research Grp., Inc. v. Genesis Creative Grp., Inc., 122 F.3d 1211, 1217 (9th Cir. 1997)). The dissent’s analysis relies upon outside sources that Paragon did not discuss or even cite.7 6 We note, also, that the Secretary will not face the unique difficulty gathering evidence it had here in most cases. As shown by United Video and Simmons Petroleum, the government often includes deposition testimony as part of its prima facie case. Such testimony is favored because it provides the opportunity for parties to cross-examine witnesses and expose weaknesses in the government’s case. See Marshall v. Truman Arnold Distrib. Co., 640 F.2d 906, 911 (8th Cir. 1981) (concluding the defense rebutted the prima facie case with cross examination). 7 For example, the dissent cites three different statistical treatises. Paragon cited none in its briefing before this court. 11 While the dissent is correct that the law does not prohibit us from reaching outside the briefs, it has provided no persuasive reason for doing so given what Paragon actually argued and the Mt. Clemens framework. The dissent claims that it is enough that Paragon generally “challenged DOL’s methodology as to the incomplete-reporting claimants,” and its calculation of the “universal average.” It also observes that the district court discussed and rejected Paragon’s appeal for the use of a weighted average. But the question is whether Paragon ever made an argument against the Secretary’s use of the mode, not whether it objected to his calculations generally. None of the dissent’s citations show Paragon claiming the mode was not an appropriate measure of central tendency for the dataset, which is the heart of the dissent’s argument. Indeed, the dissent observes that Paragon never even used the word “mode” in the district court. The district court would have needed a touch of clairvoyance to divine the argument the dissent now attributes to Paragon. The word “mode” was also missing from Paragon’s opening brief before this court. It appeared for the first time on a single page of Paragon’s reply brief. See Aplt. Reply Br. at 12. We do not think that a bare allegation that the Secretary’s analysis was “conclusory, unfounded and misguided” justifies this court supplying Paragon with a statistical argument it never made on its own behalf, either here or at the district court. Aplt. Br. at 33. The dissent may be correct that, statistically speaking, the mode was not the best measure of central tendency to describe this particular set of data. Perhaps Paragon could have presented testimony from statistical or subject matter experts to argue that the mode was not an appropriate measure of central tendency to infer values for the missing data in 12 this set, or that the arithmetic mean was a more appropriate one.8 It did not. The district court was well within its discretion to decide this case the way it did based on the evidence and arguments advanced. Paragon also failed to negate the inference that it was responsible for work performed on the Ranch in 2013, after the end of the last agreement with Paragon in 2012. Forty-nine claimants stated that they worked on the Ranch in 2013. III Aplt. App. 616. Paragon argues here, as it did in the district court, that it immediately halted its relationship with the Ranch at the expiration of the agreement in 2012. The district court rejected this argument as “speculative,” and found that Paragon had put forward “insufficient evidence” to support it. Id. at 617. This finding was not clearly erroneous — Paragon has offered nothing more than the agreement and its own assertion about its actions post-expiration. Paragon argues that the district court should have reduced the total of hours worked for travel time. It relies on evidence that children sometimes gathered at a prayer meeting before traveling to the Ranch. Aplt. Br. at 22. Evidence of sporadic practice by some of the workers was not enough to rebut the Secretary’s contrary evidence. 8 Nor is it clear that such an argument could change the outcome on remand. The median responses for reported data are the same as the mode responses — 6 days per week and 2.5 to 3 months or more per year worked. See III Supp. App. 632. To compel the government to use the arithmetic mean, Paragon would presumably need to establish that it is the only average value appropriate for drawing inferences about missing data from reported data in this case. 13