Court Opinion

ID: 996144
Source: CourtListenerOpinion
Date Created: 2013-07-04 00:46:54.419094+00
Date Added: 2024-06-11T15:38:21.326123
License: Public Domain

UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

THOMAS R. DUBOIS; ANTONIA
DUBOIS; HOUNT BATES; JANET
PEARSON; AMJED ALI RASHEED;
DELORIS REED; NIAMATULLAH AZIZI;
MACK EARL STACKHOUSE;
KAREEM D. HOLMES; MOHAMMAD S.
MOFIDI; RONALD F. SCOTT;
ANDRE M. EVANS; JULIA BARTEE;
JOHN D. PARKER; PATRICIA ANN LOY;
CEBRON LETERRIA EVANS; MICHAEL
LIPFORD; STACY STACKHOUSE; FADI
HADAD; TRACIE P. STACKHOUSE;
BOONLERT VARAPUNYO; SIRIPHAN
KANIA VARAPUNYO; NATALIE DAWN
WICKER; TASHIA DIXON; VALERIE
LOVATO; VERONICA RESHEA ROGERS;
                                      No. 97-2074
KEVIN ARTHUR JOHNSON; ELIDA
STARKER; SABRINA WICKER; ALIC
MIRSAD; LASTENIA A. RILEY; FELIX
BERNARDO LUGO; VINCE M.
SANTULLO; KHIEN T. LE; HAROON
MOFIDI, for themselves and other
employees similarly situated at the
Fort Belvoir Commissary,
Plaintiffs-Appellants,

and

DONALD D. TONEY; AMI K.
ANTONIOLI; DANIEL JAMES NORTON;
CALVIN LEE PARKER; MAL YON
WHITE; IMAD B. RASHEED; WATT
JUNIOR LEMAY; JAMES R. NEWSOME;
KENNETH PAUL JONES; HOWARD W.
WELLS; GODFREY S. HASSAN; NAJAT
DOUBY HASSAN; BRENDA L. COLON;
NEKITA DESHAVONE BISHOP; ARTEBIA
ARMWOOD; PRAKOB NARASRI; BUNCHA
NARASRI; BAMRONG THEMRATANA;
WILLIAM L. LAMBERT; MAURICE
HARRIS; TAMIKA THOMAS; JERMAINE
AARON THOMAS; MARVIN J.
WORTHEM; RUSSELL E. MCCOY;
ANTHONY A. SANDERS; OK CHA
HAVERTY; DOUGLAS NEWMAN
HAVERTY; BARBARA JEAN SHIFFLETT;
MOHAMMAD A. MAFIDI; ROY
CARTER; WALLAPHIS SARANWANICH;
JANSUDA PITUKNARATHAM; SHELDON
ARMSTRONG; DIEN H. NGUYEN;
PUANGPET PHERSHAYAPHAI,
Plaintiffs,

v.

SECRETARY OF DEFENSE; RICHARD E.
BEALE, Director, United States
Defense Commissary Agency;
THOMAS M. BRADY, Commander,
United States Army Garrison, Fort
Belvoir,
Defendants-Appellees.

Appeal from the United States District Court
for the Eastern District of Virginia, at Alexandria.
Claude M. Hilton, Chief District Judge.
(CA-96-1105-A)

Argued: May 7, 1998

Decided: September 3, 1998

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Before MURNAGHAN and WILKINS, Circuit Judges, and
BEEZER, Senior Circuit Judge of the
United States Court of Appeals for the Ninth Circuit,
sitting by designation.

_________________________________________________________________

Affirmed by unpublished per curiam opinion. Judge Murnaghan
wrote a dissenting opinion.

_________________________________________________________________

COUNSEL

ARGUED: Claude David Convisser, Alexandria, Virginia, for Appel-
lants. Thomas Mercer Ray, Special Assistant United States Attorney,
Alexandria, Virginia, for Appellees. ON BRIEF: Helen F. Fahey,
United States Attorney, Alexandria, Virginia, for Appellees.

_________________________________________________________________

Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).

_________________________________________________________________

OPINION

PER CURIAM:

Plaintiffs-appellants worked at the Fort Belvoir Commissary (the
"Commissary") as grocery baggers ("baggers"). They seek a declara-
tion that they are "employees" of defendant-appellee, the Secretary of
Defense (the "Secretary"), pursuant to the Fair Labor Standards Act
("FLSA"), 29 U.S.C. §§ 201 et seq. Plaintiffs, whose only compensa-
tion consists of tips from Commissary customers, contended the Sec-
retary violated FLSA by failing to pay them minimum wage and
overtime pay. Following a bench trial, the district court denied their
claims. We have jurisdiction pursuant to 28 U.S.C.§ 1291, and we
affirm.

                    3
Appellants contend the district court erred in holding they failed to
demonstrate they were "employees" for purposes of FLSA. We
review the district court's findings of fact for clear error. Icicle Sea-
foods, Inc. v. Worthington, 475 U.S. 709, 713 (1986) ("[F]acts neces-
sary to a proper determination of the legal question whether an
exemption to the FLSA applies . . . should be reviewed by the courts
of appeals pursuant to [Federal Rule of Civil Procedure] 52(a).").
Under the "clearly erroneous" standard, we must accept the district
court's findings of fact unless upon review we are"left with the defi-
nite and firm conviction that a mistake has been committed." United
States v. United States Gypsum Co., 333 U.S. 364, 395 (1948).
Whether plaintiffs should be excluded from FLSA coverage and ben-
efits is a question of law that we review de novo. Icicle Seafoods, 475
U.S. at 714.

Appellants contend they satisfy the "economic reality" test set forth
in Bartels v. Birmingham, 332 U.S. 126 (1947), and United States v.
Silk, 331 U.S. 704 (1947). Under FLSA, "employees are those who
as a matter of economic reality are dependent upon the business to
which they render service." Bartels, 332 U.S. at 130. In determining
whether individuals are "employees" under FLSA, we consider the
degree of control exercised by the employer over the workers; the
workers' opportunity for profit or loss and their investment in the
business; the degree of skill and independent initiative required to
perform the work; the permanence or duration of the working rela-
tionship; and the extent to which the work is an integral part of the
employer's business. Silk, 331 U.S. at 716-17 (cited in Brock v. Supe-
rior Care, Inc., 840 F.2d 1054, 1058-59 (2d Cir. 1988)); Garrett v.
Phillips Mills, Inc., 721 F.2d 979, 981-82 & n.5 (4th Cir. 1983)
("economic reality" test applies to FLSA claims). The "economic real-
ity" test is based upon the totality of the circumstances, and no single
factor is dispositive. Rutherford Food Corp. v. McComb, 331 U.S.
722, 730 (1947). Appellants challenge the district court's findings of
fact and conclusions of law with respect to the five Bartels/Silk fac-
tors; we consider each factor in turn.

With respect to control, the district court found that the degree of
control exercised by the Defense Commissary Agency ("DeCA")
managers over plaintiffs was negligible. The district court found the
testimony demonstrated that the baggers elected a head bagger who

                     4
supervised them and that the baggers voluntarily paid a fee for the
privilege of working as baggers. The head bagger was responsible for
scheduling, hiring, firing and disciplining baggers. The district court
found plaintiffs failed to demonstrate the election of the head bagger
was a "sham election." The district court acknowledged there was evi-
dence that "on occasion certain baggers were asked by DeCA manag-
ers to perform tasks such as cleaning and emptying trash in the
checkout area where the baggers work and that on one occasion a
bagger was asked to scrape dried chewing gum from the parking
area." The district court found these requests were made infrequently
and "often when a DeCA manager noticed that baggers were not
attending to trash or a spill that had recently occurred." The district
court also held that evidence that baggers were required by DeCA to
wear uniforms and to load bags so that groceries were not crushed did
not evince control by DeCA. The district court concluded the evi-
dence "simply shows that DeCA managers were attempting to ensure
that baggers did not detract from or otherwise disrupt Commissary
operations."

Appellants contend the district court erred. They claim the Secre-
tary controlled baggers' work conditions by controlling the head bag-
ger, prescribing the policies and rules that the baggers must follow
and compelling baggers to perform work tasks for which they do not
receive tips. Although appellants cite to evidence that tends to support
their assertions, there is also evidence to the contrary. For example,
the Commissary manager testified that the head bagger worked for the
baggers, trained the new baggers and arranged their schedules and
that baggers were not directed or required by Commissary manage-
ment to perform maintenance tasks. In light of the deferential stan-
dard of review, we cannot characterize the factual findings of the
district court as clearly erroneous.

The next factor, the baggers' opportunities for profit and loss and
their investment in their business, was found by the district court to
indicate plaintiffs were not "employees." The district court found that
although the baggers' investment in their business was not "great,"
their opportunity for profit or loss was found to be"entirely depen-
dent on the baggers themselves."

Appellants challenge this finding. Appellants contend their tips
were a function of the volume of customers passing through their

                    5
assigned lane, as determined by whether management chose to keep
the particular lane open and the speed with which the cashier worked.
Appellee contends baggers have opportunity for profit and loss based
on the strength of their own self-employment and their investment of
time and energy put into bagging. Appellee asserts the Commissary
simply allowed the baggers space on the premises and bagging mate-
rials with which to bag groceries for patrons. In light of the fact there
is evidence tending to support both appellants' and appellee's views,
the district court's determination concerning plaintiffs' opportunity
for profit and loss is not clearly erroneous.

With respect to the baggers' initiative, the district court found that
the duties of a bagger required independent initiative. The district
court referred to the fact that in order to become a bagger, an individ-
ual had to apply for a license and to submit to a background investiga-
tion. In addition, baggers had to arrange scheduling with the head
bagger. The district court acknowledged that baggers' duties did not
involve great skill.

Appellants assert the district court erred with respect to these find-
ings concerning initiative. They contend that the reasons cited by the
district court as reflecting initiative--baggers had to apply for the job
and show up for work on their scheduled shifts--are insufficient to
demonstrate initiative. Appellants argue that if these reasons sufficed
to demonstrate initiative, then a worker in virtually any job would be
considered an independent contractor. This argument is somewhat
persuasive, but it does not compel reversal because no single
Bartels/Silk factor is dispositive. Rutherford Food Corp., 331 U.S. at
730.

With respect to the permanence and duration of the working rela-
tionship, the district court found that baggers determined when and
how long they wished to work. Baggers could work for months at a
time without a day off or could take several months off and then
return to work. Appellants contend the district court erred because
baggers considered themselves, and the Secretary treated them as,
permanent employees. Appellants point to the fact that baggers who
failed to report to work at scheduled times were subject to discipline
and that baggers were required to report to work on time and to
remain there until the end of their shift. We agree with the district

                     6
court's determination that baggers' flexibility in scheduling indicates
they are not employees.

With respect to the final factor, the district court determined the
work performed by the baggers was not an integral part of the Com-
missary's business. The district court found that the Commissary's
"mission" was the sale of groceries and that the services performed
by baggers constituted a convenience for patrons who had already
purchased groceries. The baggers' functions were found nonessential
for the sale of groceries.

Appellants contend their work is an integral part of the Commis-
sary's business. They cite to evidence indicating that baggers per-
formed a necessary function at the Commissary and that without them
there would be gridlock. Appellants also point out that their work was
physically integrated into the Commissary premises and operation.
Other evidence, however, suggests that appellants' work was not an
integral part of the Commissary's business. For example, there was
evidence that the baggers satisfied the need of the patrons, not of the
Commissary. The district court's resolution of this issue was not
clearly erroneous.

Because we affirm the district court's decision that plaintiffs are
not Commissary employees under FLSA, we do not address plain-
tiffs' other contentions.

AFFIRMED

MURNAGHAN, Circuit Judge, dissenting:

The five factors set forth in United States v. Silk, 331 U.S. 704, 716
(1947), give structure to our analysis of whether a group of individu-
als are employees for purposes of the Fair Labor Standards Act
("FLSA"), 29 U.S.C. §§ 201-19. The touchstone of our inquiry, how-
ever, is whether the alleged employees are, "as a matter of economic
reality . . . dependent upon the business to which they render service,"
Bartels v. Birmingham, 332 U.S. 126, 130 (1947), or in business for
themselves. Dole v. Snell, 875 F.2d 802, 804 (10th Cir. 1989). There-
fore, no individual factor is dispositive, "nor can the collective

                     7
answers to all of the inquiries produce a resolution which submerges
consideration of the dominant factor--economic dependence." Usery
v. Pilgrim Equip. Co., 527 F.2d 1308, 1311 (5th Cir. 1976); see
Weisel v. Singapore Joint Venture, Inc., 602 F.2d 1185, 1189 (5th Cir.
1979) ("It is often possible for both sides to point to the presence or
absence of particular Silk factors. Yet such an attempt to apply
mechanically the components of Silk represents a distortion of that
case."). After reviewing the five Silk factors with appropriate empha-
sis on the question of economic dependence, I am compelled to con-
clude that a number of the district court's factual findings are clearly
erroneous, and that the baggers at the Fort Belvoir Commissary
("Commissary") are employees entitled to FLSA coverage. Commis-
sary baggers are not autonomous entrepreneurs who operate indepen-
dent businesses. Instead, baggers are closely supervised, unskilled
laborers who earn compensation by performing tasks that are essential
to the efficient operation of the Commissary. Therefore, I dissent
from the majority's holding that the baggers are not employees.1

I cannot agree with the district court and the majority that the
United States Defense Commissary Agency ("DeCA") exercised only
"negligible" control over the baggers. To the contrary, Commissary
managers had a duty to control and manage the bagger operation. See
Bartels, 332 U.S. at 129 (control is "the right to direct what should
_________________________________________________________________

1 Because the majority holds that the baggers are not employees cov-
ered by the FLSA, neither they nor I address the scope of a 1978 amend-
ment to the FLSA which excepted individuals performing "bagger or
carryout service" for commissary patrons from the definition of
employee. Department of Defense Appropriation Authorization Act of
1979 § 819, 29 U.S.C. § 203 note. Were we to reach the question, I
would be inclined to hold that the baggers are entitled to FLSA coverage
at least to the extent they performed non-tipped tasks which did not con-
stitute "bagger or carryout service," such as mopping floors.

In the context of our present inquiry, I think it noteworthy that the
1978 amendment was passed in the wake of a controversial finding by
the Civil Service Commission that commissary baggers were employees
under the Silk economic realities test. See A Bill to Amend the Fair Labor
Standards Act: Hearings on H.R. 6256 Before the Subcomm. on Labor
Standards of the House Comm. on Educ. and Labor, 95th Cong. 26-27
(1976).

                    8
be done and how it should be done"). Commissary manager Raymond
Lane testified that he was responsible for "quality assurance" in the
bagger operation, and that his duties encompassed oversight of the
bagger program. Lane's testimony was consistent with a DeCA
"Talking Paper on Commissary Baggers," which commanded Com-
missary managers to "[c]ontrol and manage the bagger program,"
while reminding Commissary officials to exercise control indirectly,
through the head bagger.2 Lane asserted that he was obligated, as was
any Commissary manager, to address problems with the bagger oper-
ation, such as double bagging, improper bagging methods, baggers
"idling about," or spills and breakage, by speaking to the head bagger
or directly to the baggers. While DeCA managers had infrequent
direct contact with baggers, there was substantial evidence that man-
agers frequently gave instructions to the head bagger regarding
detailed aspects of the bagger program. According to Lane, the bag-
gers invariably carried out his instructions.

DeCA also exercised substantial control over the baggers' work
hours. Managers were required to ensure that sufficient baggers were
on duty during the Commissary's hours of operation, and communi-
cated those requirements to the head bagger who then scheduled the
specified number of baggers. Once scheduled to work, baggers were
subject to discipline for failing to report for their shift or leaving
before the end of the shift, even if management closed the checkout
lane to which the bagger had been assigned. The Commissary bagger
Standard Operating Procedure ("SOP"), issued by DeCA, commanded
baggers to "[b]e at work on time," cautioned that "[b]aggers who fail
to report to work at scheduled times or dates will be subject to disci-
pline," and forbade baggers to leave their bagging assignment without
approval.

The DeCA bagger SOP also contained detailed regulations of bag-
ger attire and behavior. DeCA required that baggers wear uniforms,
and baggers were disciplined for failure to comply with the uniform
requirement. Although baggers voted on the uniform, the bagger SOP
gave Commissary management the authority to approve or disapprove
the baggers' selection. The bagger SOP instructed baggers to "[u]se
_________________________________________________________________
2 "It's business as usual -- controlling baggers through the head bag-
ger."

                    9
proper grooming" and "demonstrate proper manners," and forbade
them to wear "exposed hair curlers," to "wave or summon patrons to
their particular checkout counter," to talk loudly, and to speak at
length with the cashier.

DeCA's control over the baggers is not rendered insubstantial
merely because DeCA delegated some supervisory authority to the
head bagger. DeCA's bagger SOP contained precise instructions
regarding the head bagger's duties. Although the head bagger had ini-
tial responsibility for supervising the baggers' work, Commissary
management had a duty to rectify any problems not identified or cor-
rected by the head bagger. And while the head bagger had some disci-
plinary authority, the bagger SOP entrusted Commissary managers
with the duty officially to reprimand baggers. Commissary officials
had the sole authority to revoke or suspend a bagger's license. In
short, DeCA exercised significant control over virtually every aspect
of the baggers' work.

With respect to the baggers' opportunity for profit and loss and
their investment in the business, the district court concluded that the
bagger's opportunity for profit or loss was "entirely dependent on the
baggers themselves." That finding cannot be reconciled with evidence
that the baggers' ability to earn tips was substantially affected by the
number of open checkout lanes, the efficiency of cashiers, and the
volume of customers in the store. Baggers had almost no control over
the number of Commissary patrons for whom they bagged groceries,
but only over the manner in which they interacted with the customer
and performed the service. I am unconvinced, moreover, that the bag-
ger's tip income is properly characterized as "profit." Compensation
derived from labor is not commonly referred to as"profit," but as
wages.

The baggers had no investment in the bagging operation or the
business of the Commissary. "[T]he `investment' which must be con-
sidered as a factor is the amount of large capital expenditures, such
as risk capital and capital investments, not negligible items, or labor
itself." Dole, 875 F.2d at 810; see Usery, 527 F.2d at 1313-14. And,
having invested nothing but their labor, the baggers had no way to
suffer a loss in the conduct of their allegedly independent business.

                    10
"A reduction in money earned . . . is not a `loss' sufficient to satisfy
the criteria for independent contractor status." Dole, 875 F.2d at 810.

The district court correctly concluded that bagging required no spe-
cialized skills, but found that baggers exercised a"not insignificant"
degree of independent initiative. The court based its conclusion on
evidence that individuals must obtain a license before working at the
Commissary, submit to a background investigation, and arrange with
the head bagger to be placed on the schedule. Any person who desires
employment, however, must apply for it, and any civilian who wishes
to work at the Commissary must obtain permission to enter the instal-
lation and submit to a background check. The record does not support
a finding that the baggers acted "`with any degree of independence
which would set them apart from what one would consider normal
employee status.'" Baker v. Flint Eng'g & Constr. Co., 137 F.3d
1436, 1441 (10th Cir. 1998) (quoting Dole, 875 F.2d at 806).

The general test of permanency is whether the alleged employees
have a continuous, indefinite relationship with the business they
serve, or whether they have fixed employment periods and transfer
from place to place. See id. at 1442. Commissary baggers do not per-
form an isolated, finite task, but are hired by the Commissary for an
indefinite period. A number of baggers testified to a lengthy and con-
tinuous working relationship with the Commissary. Although some
baggers worked at other jobs, there was no evidence that baggers mar-
keted their services as baggers to other commissaries or commercial
grocery stores. Some flexibility in work schedules does not make bag-
gers independent contractors rather than employees. Doty v. Elias,
733 F.2d 720, 723 (10th Cir. 1984).

Finally, the record fails to support the majority's conclusion that
the baggers were not an integral part of Commissary operations. Lane
testified that baggers were a "necessary" part of the Commissary
operation and agreed that the Commissary would "grind to a halt"
without the baggers. Walter Harris, a Commissary officer, agreed that
baggers were an integral component of the business. Although Harris
said that the Commissary could function if baggers failed to report to
work, he explained that "[w]e would have to pull people from some-
where" on the installation to bag groceries. Philip Koren, DeCA's
Deputy General Counsel for Personnel, testified that the likelihood of

                     11
gridlock would be high without baggers. The fact that DeCA officials
perceive baggers as providing an added convenience to patrons does
not contradict or undermine their testimony that the bagging operation
was necessary at the high-volume Commissary. The purpose of the
Commissary is to provide a benefit to its patrons; baggers play an
integral role in achieving that goal.

In sum, I believe the majority's conclusion that Commissary bag-
gers are independent business owners and operators is unfounded.
The only indicia of independence is the baggers' limited flexibility in
determining their work schedules. Otherwise, baggers have none of
the independence or autonomy that characterizes independent con-
tractors. They are, instead, regimented and unskilled workers who
labor for meager compensation. Because I believe the Commissary
baggers are employees within the meaning of the FLSA, I would
reverse and remand for further proceedings.

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