Court Opinion

ID: 1003523
Source: CourtListenerOpinion
Date Created: 2013-07-04 18:27:49.114912+00
Date Added: 2024-06-11T09:09:19.931770
License: Public Domain

UNPUBLISHED

UNITED STATES COURT OF APPEALS
                FOR THE FOURTH CIRCUIT

ROBERT J. LEE; DAVID P. BRADY; C.        
BRIAN DIGGS; MARK E. FAIR; MARTIN
D. HARE; DOUGLAS O. HENDERSON;
RICH A. LOPEZ; JOHN V. O’HARA;
DOMINIC A. SABRUNO; GARY A.
THORN, JR.; WILLIAM A. TINSLEY;
CHARLES L. BREEDEN; VANCE E.
MORRIS; TODD K. MOLTER,
               Plaintiffs-Appellants,
                                                 No. 00-1330
                and
TERRANCE M. HINTON,
                            Plaintiff,
                 v.
VANCE EXECUTIVE PROTECTION,
INCORPORATED,
              Defendant-Appellee.
                                         
            Appeal from the United States District Court
         for the Eastern District of Virginia, at Alexandria.
              James C. Cacheris, Senior District Judge.
                          (CA-99-887-A)

                      Argued: December 6, 2000

                      Decided: February 8, 2001

        Before TRAXLER and KING, Circuit Judges, and
     Terrence W. BOYLE, Chief United States District Judge
 for the Eastern District of North Carolina, sitting by designation.
2             LEE v. VANCE EXECUTIVE PROTECTION, INC.
Affirmed in part, reversed in part, and remanded with instructions by
unpublished per curiam opinion.

                             COUNSEL

ARGUED:      Charles  W.    Gilligan,   O’DONOGHUE          &
O’DONOGHUE, Washington, D.C., for Appellants. Douglas Bennett
Mishkin, PATTON BOGGS, L.L.P., McLean, Virginia, for Appellee.
ON BRIEF: Sally M. Tedrow, Dinah S. Leventhal, O’DONOGHUE
& O’DONOGHUE, Washington, D.C., for Appellants.

Unpublished opinions are not binding precedent in this circuit.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

                             OPINION

PER CURIAM:

   Present and former executive protection agents ("Agents") appeal
from a grant of summary judgment in favor of their employer Vance
Executive Protection, Inc., ("Vance") on the Agents’ Fair Labor Stan-
dards Act ("FLSA") claim seeking overtime compensation. We affirm
in part, reverse in part, and remand with instructions.

                                  I.

   Agents employed by Vance serve as bodyguards for corporate offi-
cers and visiting dignitaries who contract with Vance for security ser-
vices. The parties agree that the Agents typically work twelve-hour
shifts, but on occasion are required to work more than twelve hours
depending on the needs of the client. According to Vance’s Opera-
tional Guidelines Manual, an Agent is paid a "Daily Rate" for work-
ing a shift. J.A. 734. The most junior Agents earn $145 per shift and
the most senior Agents earn in excess of $200 per shift. If circum-
               LEE v. VANCE EXECUTIVE PROTECTION, INC.                 3
stances require that an Agent work, for example, thirteen or fourteen
hours, the Agent will not receive more than the established shift rate.

   The dispute between the parties centers on whether Vance’s com-
pensation plan violates the FLSA’s requirement that an employee
receive "one and one-half times the regular rate at which he is
employed" for hours worked in excess of a forty-hour workweek. 29
U.S.C.A. § 207(a)(1) (West 1998). Vance contends that the FLSA’s
overtime requirement is already built into its compensation system.
According to Vance, Agents are paid straight time for the first eight
hours of a shift and double-time for the remaining four. The Agents,
on the other hand, argue that the eight-four split is but an accounting
mechanism used to avoid the FLSA’s overtime requirements. The
Agents assert that they are paid a day rate and that their regular hourly
rate should be determined by totaling all sums received in a work-
week and dividing by the total hours worked. See 29 C.F.R. § 778.112
(2000). Such a calculation yields a much higher regular hourly rate
than does Vance’s.

   The following example illustrates the dispute between the parties.
If an Agent earns $165 per shift and works six twelve-hour shifts in
one workweek, the gross amount he receives from Vance is $990 for
the seventy-two hours worked. Assuming this is a day rate, the Agent
would calculate his regular hourly rate by dividing $990 by seventy-
two hours, which yields an hourly rate of $13.75. Under the FLSA the
first forty hours should be paid at $13.75 per hour for a total of $550,
and the remaining thirty-two hours of overtime at time and a half
($20.625 per hour) for an overtime amount of $660. The overtime and
non-overtime payments yield a total of $1,210, and hence the Agent
argues he is due $220 from Vance ($1,210 - $990).

   Under Vance’s more complicated calculation, which requires use
of a multiplier of 1/16, the Agent’s hourly wage for the first eight
hours is $10.3125 (1/16 of $165). Thus, the Agent earns $412.50 for
the first forty hours worked and $577.50 for the remaining thirty-two.
Dividing $577.50 by thirty-two hours yields an overtime rate in
excess of $18, well above the time and a half required by law. Hence,
Vance denies the Agent is owed any compensation.

   Hearing cross motions for summary judgment, the district court
rejected the Agents’ assertion that they are paid a day rate and con-
4              LEE v. VANCE EXECUTIVE PROTECTION, INC.
cluded that Vance’s division of the workday is not prohibited by the
FLSA. However, the court held that Vance’s compensation plan
passes muster only if the Agents actually work twelve hours every
shift, or a limited number of additional hours which are covered by
Vance’s double-time payments. Though the court recognized that it
is possible for the Agents to have worked hours for which they were
not compensated, the court found that the Agents had failed to offer
sufficient proof of the number of uncompensated hours worked. The
Agents appeal the district court’s grant of summary judgment as well
as issues relating to the statute of limitations.

                                   II.

   A summary judgment motion should be granted only if there is no
genuine dispute as to an issue of material fact and the moving party
is entitled to judgment as a matter of law. See Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 247-48 (1986). The court must consider
the evidence in the light most favorable to the non-moving party and
draw all reasonable inferences from the facts in the non-movant’s
favor. See United States v. Diebold, Inc., 369 U.S. 654, 655 (1962).
"When reviewing cross-motions for summary judgment, we may, if
appropriate, direct entry of judgment in favor of the party whose
motion was denied by the district court." Bakery & Confectionery
Union & Indus. Int’l Pension Fund v. Ralph’s Grocery Co., 118 F.3d
1018, 1020 (4th Cir. 1997); see also Monahan v. County of Chester-
field, 95 F.3d 1263, 1265 (4th Cir. 1996).

   As a general rule, the FLSA provides that an employer must pay
an employee one and one-half times the employee’s "regular rate" for
all hours worked in excess of forty per week. See 29 U.S.C.A.
§ 207(a)(1). The "regular rate" is the hourly rate that the employer
pays the employee "for the normal, non-overtime workweek." Wall-
ing v. Youngerman-Reynolds Hardwood Co., 325 U.S. 419, 424
(1945). Normally, the regular rate is arrived at by "dividing [the] total
remuneration for employment (except statutory exclusions) in any
workweek by the total number of hours actually worked." 29 C.F.R.
§ 778.109 (2000).

   The exclusion central to the present case is found in 29 U.S.C.A.
§ 207(e)(5). This statutory provision permits employers to exclude
               LEE v. VANCE EXECUTIVE PROTECTION, INC.                 5
"extra compensation provided by a premium rate paid for certain
hours worked by the employee in any day or workweek because such
hours are hours worked . . . in excess of the employee’s normal work-
ing hours or regular working hours." 29 U.S.C.A. § 207(e)(5). For
example,

    [i]f an employee whose maximum hours standard is 40
    hours is hired at the rate of $5.75 an hour and receives, as
    overtime compensation under his contract, $6.25 per hour
    for each hour actually worked in excess of 8 per day (or in
    excess of his normal or regular daily working hours), his
    employer may exclude the premium portion of the overtime
    rate from the employee’s regular rate and credit the total of
    the extra 50-cent payments thus made for daily overtime
    hours against the overtime compensation which is due under
    the statute for hours in excess of 40 in that workweek.

29 C.F.R. § 778.202(c) (2000). Exemptions must be narrowly con-
strued and the burden is on Vance "to show that it is entitled to the
benefits of th[e] exceptions." Johnson v. City of Columbia, 949 F.2d
127, 130 (4th Cir. 1991) (en banc).

   Though specifically permitting a premium for hours worked in
excess of regular working hours, the regulations prohibit split-day
compensation schemes in which "the normal workday is artificially
divided into a ‘straight time’ period to which one rate is assigned, fol-
lowed by a so-called ‘overtime’ period for which a higher ‘rate’ is
specified." 29 C.F.R. § 778.202(c); see also Walling v. Helmerich &
Payne, Inc., 323 U.S. 37, 38-39 (1944); 29 C.F.R. § 778.501 (2000).
To permit such divisions would undermine the FLSA’s objectives of
spreading work and compensating employees for excessive hours
worked. See Helmerich & Payne, Inc., 323 U.S. at 40.

   Of course, the Department of Labor through its interpretation of the
FLSA recognizes that not all employees entitled to overtime compen-
sation are paid by the hour. Some workers, for example, contract to
be paid on a piece rate or a day rate basis and the regulations explain
how to calculate the regular rate for these employees. See 29 C.F.R.
§§ 778.111-.112 (2000). The Agents contend that they are paid a flat
6              LEE v. VANCE EXECUTIVE PROTECTION, INC.
sum for a day’s work and consequently their overtime rate should be
calculated pursuant to 29 C.F.R. § 778.112, which provides:

    If the employee is paid a flat sum for a day’s work or for
    doing a particular job, without regard to the number of hours
    worked in the day or at the job, and if he receives no other
    form of compensation for services, his regular rate is deter-
    mined by totaling all the sums received at such day rates or
    job rates in the workweek and dividing by the total hours
    actually worked. He is then entitled to extra half-time pay
    at this rate for all hours worked in excess of 40 in the work-
    week.

29 C.F.R. § 778.112.

   The primary issue in this case is whether the Agents are paid a day
rate. Resolution of this issue then dictates the proper result under the
FLSA. Because this question is before us on cross motions for sum-
mary judgment and because there are no genuine issues of material
fact, our decision becomes one of law. We believe, however, the law
dictates a conclusion different from that of the district court.

   Vance’s Operational Guidelines Manual describes the Agents’ pay
structure as a "Daily Rate" which increases as an Agent gains senior-
ity. J.A. 734. The Manual further provides that Agents normally work
a minimum of twelve hours per day "with additional hours often aris-
ing from relief response, protectee’s movements, advances, luggage
details or other unforseen circumstances." J.A. 677. Vance officials
testified that if an Agent is required to work, for instance, fourteen or
fifteen hours in a day because of some exigency, the Agent receives
no additional compensation. In the rare case that an Agent receives
an assignment requiring him to work only eight hours, the Agent still
earns the same amount he normally receives for a twelve- or fourteen-
hour day. Documents provided to detail leaders attending a Vance
seminar listed the "average daily rate" paid to Agents as $153.93, and
made no mention of hourly rates. When filling out employment verifi-
cation forms for entities dealing with the Agents, Vance officials
noted that the Agents were paid "per day" even though there was a
"per hour" option on the forms. J.A. 650-51. In addition, the Agents
testified that when they were hired Vance officials never mentioned
               LEE v. VANCE EXECUTIVE PROTECTION, INC.                7
anything about an hourly rate; the Agents’ compensation was always
explained to them in terms of a daily rate.

   Vance officials counter that they described the Agents’ pay as a
"daily rate" because it was "the simplest term we have been able to
use to tell our employees how much they can expect to be paid for
a 12-hour shift." J.A. 382. Vance officials also contended that the
Agents did not "want to associate an hourly rate with the work that
they do," and therefore Vance used the term "daily rate" to assuage
the Agents’ egos. J.A. 471. Other than payroll documents, Vance offi-
cials could point to no documents available to the Agents that speci-
fied an hourly rate of employment.

   At appellate argument, Vance made much of the fact that the
Agents’ pay stubs split the gross amount earned into "regular" and
"doubletime." See J.A. 779. However, the pay stubs never specified
an hourly rate and testimony from Vance officials indicated that the
actual calculation of the hourly rates was left to the human resources
department and that such information was not readily available to the
Agents.

    In light of the foregoing, we can find no genuine issue of material
fact regarding the Agents’ rate of pay. Unquestionably, Vance Agents
are "paid a flat sum for a day’s work . . . without regard to the number
of hours worked in the day." 29 C.F.R. § 788.112; see also Dufrene
v. Browning-Ferris, Inc., 207 F.3d 264, 266 (5th Cir.) (describing
employees who "were guaranteed a day’s pay, regardless of the hours
worked that day" as day-rate employees), cert. denied, 121 S. Ct. 72
(2000). Vance represented to its Agents and the world that the Agents
were paid day rates. The pay stubs did reflect a regular and double-
time component, but the stubs standing alone cannot compete with the
plethora of evidence indicating that the Agents were paid a day rate.
See Brennan v. Elmer’s Disposal Serv., Inc., 510 F.2d 84, 88 (9th Cir.
1975) (holding that pay stubs alone were not sufficient to establish an
employee’s regular rate); see also Anderson, 477 U.S. at 251 (a scin-
tilla of evidence is insufficient to bar summary judgment). The
alleged hourly rate paid to the Agents is in reality but a form of math-
ematical legerdemain used by Vance to avoid the implications of the
FLSA. Accordingly, the district court erred in awarding summary
judgment to Vance on the grounds that the Agents were paid by the
8              LEE v. VANCE EXECUTIVE PROTECTION, INC.
hour and that no overtime was owed in light of the premium paid to
the Agents.1 We reverse the district court on this matter and remand
for the entry of summary judgment in favor of the Agents. See
Ralph’s Grocery Co., 118 F.3d at 1020.

                                  III.

   The Agents also seek compensation for hours worked in excess of
forty per week that are not reflected in Vance’s records. As discussed
in the previous section, the parties do not dispute that on occasion the
Agents’ shifts lasted longer than twelve hours. The regulations imple-
menting the FLSA mandate that the employer keep records of the
"[h]ours worked each workday" by all employees. 29 C.F.R.
§ 516.2(a)(7) (2000). Vance admits that it did not keep proper
records, and the Supreme Court has held that in such a situation an
employee should not be penalized "on the ground that he is unable to
prove the precise extent of uncompensated work." Anderson v. Mt.
Clemens Pottery Co., 328 U.S. 680, 687 (1946).

   When an employer’s records are inadequate or inaccurate, an
employee carries his burden under the law by (1) "prov[ing] that he
has in fact performed work for which he was improperly compen-
sated," and (2) "produc[ing] sufficient evidence to show the amount
and extent of that work as a matter of just and reasonable inference."
Id. If the employee carries his burden, "[t]he burden then shifts to the
employer to come forward with evidence of the precise amount of
work performed or with evidence to negative the reasonableness of
the inference to be drawn from the employee’s evidence." Id. at 687-
88. If the employer cannot "produce such evidence, the court may
then award damages to the employee, even though the result be only
approximate." Id. at 688.

  Though the Agents have easily satisfied the first prong of their bur-
den by proving that they performed work for which they were not
compensated, we agree with the district court that the Agents have not
come forward with "sufficient evidence to show the amount and
    1
   Because we conclude that the Agents were paid a day rate, we need
not determine whether Vance’s compensation scheme violates the
FLSA’s prohibition against split-day plans.
               LEE v. VANCE EXECUTIVE PROTECTION, INC.                 9
extent of that work as a matter of just and reasonable inference." Id.
at 687. The bulk of the Agents’ proof on the second prong concerns
work done for demanding clients such as Princess Sarah of the Saudi
royal family. Princess Sarah, for example, often asked the Agents to
run errands for her after their shifts were scheduled to end. There is
much general testimony about picking up gifts for Princess Sarah’s
children and paying her bills, but the record is bereft of evidence
showing the amount or extent of this extra work. While we acknowl-
edge that the Agents need not "prove each hour of overtime work
with unerring accuracy or certainty," Pforr v. Food Lion, Inc., 851
F.2d 106, 108 (4th Cir. 1988), enough evidence must be offered so
that the court as "a matter of just and reasonable inference" may esti-
mate the unrecorded hours, Mt. Clemens Pottery Co., 328 U.S. at 687.
Because there is insufficient evidence to estimate the amount and
extent of hours worked in excess of forty per week, we affirm the
grant of summary judgment as to the unrecorded hours.2

                                  IV.

   The Agents also challenge the district court’s ruling that the statute
of limitations for Agents Vance E. Morris and Todd K. Molter would
only run back from December 21, 1999, the day these two Agents
filed their consents. Under the FLSA, an employee may bring an
action on behalf of similarly situated employees who must opt-in to
the suit by filing written consents with the district court. See 29
U.S.C.A. § 216(b) (West 1998) ("An action to recover [unpaid over-
time] . . . may be maintained against any employer . . . by any one
or more employees for and in behalf of himself or themselves and
other employees similarly situated. No employee shall be a party
plaintiff to any such action unless he gives his consent in writing to
become such a party and such consent is filed."). An FLSA collective
action is deemed commenced for an individual plaintiff "on the date
when the complaint is filed, if he is specifically named as a party
plaintiff in the complaint and his written consent to become a party
plaintiff is filed on such date in the court." 29 U.S.C.A. § 256(a)
(West 1998). For plaintiffs not named in the original complaint, a col-
lective action under the FLSA commences "on the subsequent date on
  2
   Where the hours worked in excess of forty per week were recorded
by Vance, the Agents are, of course, able to prove them with specificity.
10             LEE v. VANCE EXECUTIVE PROTECTION, INC.
which [the plaintiffs’] written consent is filed in the court." 29
U.S.C.A. § 256(b); see also Songu-Mbriwa v. Davis Memorial Good-
will Indus., 144 F.R.D. 1, 2 (D.D.C. 1992) ("Until a plaintiff, even a
named plaintiff, has filed a written consent, [ ]he has not joined in the
class action, at least for statute of limitations purposes."). In other
words, consents not filed with the complaint do not relate back.

   Though not named in the original complaint, Morris and Molter
were named in the amended complaint filed in September 1999. How-
ever, the consent forms for these two agents were not filed with the
court until December 21, 1999. Examining the statute of limitations
as of the filing of the consents rather than the filing of the action,
especially in the case of Morris, affects the amount of damages, if
any, these two Agents can recover. See 29 U.S.C.A. § 255(a) (1998)
(stating that the statute of limitations for an action seeking overtime
compensation is two years and in cases of willful violation of the
FLSA it is three years).3 The Agents argue that the suit against Vance
was not a collective action and therefore no consent forms were
required. The fact that Morris and Molter did not file consent forms
until December 1999, so the argument goes, should in no way affect
the period of time for which they are entitled to recover damages.

   The complaint and amended complaint, however, make clear that
the suit against Vance is a collective action. The seventh paragraph
in both documents states that "[p]laintiffs bring this action on behalf
of themselves and all other employees similarly situated." J.A. 11, 68.
Yet, the Agents argue that a collective action was never pursued and
that the suit against Vance was simply fifteen individual actions
joined under Federal Rule of Civil Procedure 20(a). We disagree.

   The purpose of the consent forms is "to make . . . uncertain plain-
tiffs certain, and actual participants, so that defendants could know
the parties and the charges with which they were to be faced." Deley
v. Atlantic Box & Lumber Corp., 119 F. Supp. 727, 728 (D.N.J.
  3
   Morris was terminated on July 27, 1997, and Molter was terminated
on September 13, 1999. If on remand, the district court determines that
the limitations period is two rather than three years, Morris would collect
no damages. Molter’s damages would also be affected, but not to the
same degree.
               LEE v. VANCE EXECUTIVE PROTECTION, INC.                  11
1954). Otherwise, one employee could sue on behalf of similarly situ-
ated employees "without the specific rights of the others ever being
actually considered." Id. The consent form requirement clearly enures
to the benefit of employers by making them aware of what allegations
they face and from whom the allegations originate. We can find noth-
ing in the record to indicate that the Agents ever considered their suit
to be anything but a collective action or that the Agents represented
to Vance or the district court that their action was not collective;
therefore, we decline to inject uncertainty into the law by permitting
plaintiffs to change the nature of their action in the middle of judicial
proceedings without proper notice to the court and employer. If a
group of plaintiffs decided to abandon a collective action and instead
simply join their individual actions under Rule 20(a), they could, for
example, move to amend the pleadings pursuant to Rule 15(a), which
provides leave to freely amend pleadings "when justice so requires."
But nothing indicates to us that the Agents so changed their action,
and therefore we affirm the district court’s decision regarding the
necessity of consent forms for the present case.4

                                    V.

   For the foregoing reasons we reverse the district court’s grant of
summary judgment for Vance on the Agents’ compensation scheme
and remand with instructions for the entry of summary judgment in
favor of the Agents. We affirm the district court’s decision that the
Agents cannot recover overtime compensation for unrecorded hours
worked in excess of forty per week because the Agents did not come
forward with sufficient evidence to show the amount and extent of the
work. Finally, we affirm the district court’s decision that the Agents
pursued a collective action and therefore the statute of limitations for
Morris and Molter runs back from the date their consent forms were
filed with the district court.

                        AFFIRMED IN PART, REVERSED IN PART,
                          AND REMANDED WITH INSTRUCTIONS
  4
   Prior to appellate argument, Vance moved pursuant to Local Rule
28(b) for leave to attach various items to its brief. Because Vance has not
shown good cause as required by the Rule, we deny the motion.