Hicks v. Mercedes-Benz U.S. International, Inc.
Filing
182
MEMORANDUM OPINION; Signed by Judge L Scott Coogler on 4/30/2012. (BST, )
FILED
2012 Apr-30 AM 09:57
U.S. DISTRICT COURT
N.D. OF ALABAMA
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
WESTERN DIVISION
JEFF HICKS,
Plaintiff;
vs.
MERCEDES-BENZ U.S.
INTERNATIONAL, INC.,
Defendant.
)
)
)
)
)
)
)
)
7:08-cv-0536-LSC
MEMORANDUM OF OPINION
I. Introduction
Before this Court is the third in a series of motions for summary judgment filed
by Defendant Mercedes-Benz U.S. International, Inc. (“MBUSI”).1 The present
motion, filed on September 12, 2011 (Doc. 107), seeks summary judgment as to claims
that arose when the relevant Plaintiffs allegedly fit the “highly compensated”
exemption to the Fair Labor Standards Act (“FLSA” or “the Act”). A brief in
support of the motion (Doc. 108) was contemporaneously filed. After the Court
1
This series of motions concerns the Plaintiffs who filed suit together in Lawson v. MBUSI,
7:09-cv-1157-LSC, and does not pertain to Jeff Hicks himself. The Lawson and Hicks cases were consolidated
for discovery purposes, and on February 7, 2012, this Court ordered the claims of the individual Lawson
Plaintiffs to be severed into individual cases. (Hicks Doc. 162.) These individual cases remain consolidated
for case management purposed under Hicks, with the Court continuing to evaluate the already-filed set of
summary judgment motions.
Unless otherwise noted, citations to the record are to the document numbers in the Hicks vs. MBUSI
case, 7:08-cv-0536-LSC. Document numbers preceded by “Lawson” reflect the document number assigned
in Lawson v. MBUSI, 7:09-cv-1157-LSC.
Page 1 of 17
granted an unopposed extension of the briefing period (Doc. 120), Plaintiffs filed a
response to the motion on October 17, 2011 (Doc. 129), and MBUSI filed a reply brief
on November 7, 2011 (Doc. 137). This motion is now ripe for decision.
II. Facts2
The present motion concerns just sixteen of the Plaintiffs and is directed only
at specific years in which each is alleged to meet the criteria for the “highly
compensated” exemption of 29 C.F.R. § 541.601. The claims at issue are those of
Danny Bankston (2009),3 Mario Cohen (2009), Thomas Daniels (2010), James Davis
(2006–08), Marcus Garth (2010), Timothy Lee (2010), Robert Little (2006–08,
2010), Marianne Magner (2010), Steven Munoz (2006–07), Allen Ozier (2009), Kelly
Pitman (2007), Susan Pope (2010), Jimmy Skelton (2006–08, 2010) Gene Upton
(2009), and Cathy Williams (2008).
2
The facts set out in this opinion are gleaned from the “Agreed Upon Undisputed Common Facts
Applicable to Summary Judgment Motions,” (Doc. 97), the parties’ individual submissions of facts claimed
to be undisputed, their respective responses to those submissions, as well as the Court’s own examination of
the evidentiary record. All reasonable doubts about the facts have been resolved in favor of the nonmoving
party. See Info. Sys. & Networks Corp. v. City of Atlanta, 281 F.3d 1220, 1224 (11th Cir. 2002). These are the
“facts” for summary judgment purposes only. They may not be the actual facts. See Cox v. Adm’r U.S. Steel
& Carnegie Pension Fund, 17 F.3d 1386, 1400 (11th Cir. 1994).
3
The Claims of two of these Plaintiffs have already been dismissed with prejudice. On December 22,
2011, the Court granted summary judgement against the claims of seven Plaintiffs, including Danny Bankston,
on grounds of judicial estoppel (Docs. 151–52). Plaintiffs did not oppose summary judgment as to Danny
Bankston. (Doc. 113 at 2.) Kelly Pitman was one of four Plaintiffs whose claims were dismissed on statute-oflimitations grounds. (Doc. 163–64.) Thus, as to Danny Bankston and Kelly Pitman, the present motion is
merely an alternate basis for the dismissal of their claims.
Page 2 of 17
All of these Plaintiffs were employed by MBUSI as Group Leaders (“GLs”) at
the relevant time periods. While employed as GLs, these Plaintiffs were classified by
MBUSI as exempt employees. MBUSI made changes to the overtime policy for
exempt employees in February and March of 2005, and again in March of 2006.
Following the March 2006 changes, GLs could be paid overtime only after completing
five unpaid hours per week of pre- and post-shift work activities designated as “casual
time.” While overtime would still be paid for extra hours worked on weekends
without the casual time requirement, the policy effectively required forty-five hours,
rather than forty, to be worked before any weekday overtime could accrue. The
“casual time” language was removed from the policy in a revision on April 7, 2008.
On June 10, 2009, a number of GLs and former GLs filed a complaint against
MBUSI. The essence of the complaint is that, by mischaracterizing the GLs as
exempt, MBUSI was “requiring [them] . . . to work overtime without payment of
overtime . . . in violation of the [FLSA].” (Lawson Doc. 1 at 9.)
III. Standard
Summary judgment is proper “if the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, if any, show that
there is no genuine issue as to any material fact and that the moving party is entitled
to a judgment as a matter of law.” FED. R. CIV. P. 56(c). The party moving for
Page 3 of 17
summary judgment “always bears the initial responsibility of informing the district
court of the basis for its motion, and identifying those portions of [the evidence] which
it believes demonstrate the absence of a genuine issue of material fact.” Celotex Corp.
v. Catrett, 477 U.S. 317, 323 (1986). The movant can meet this burden by presenting
evidence showing that there is no genuine dispute of material fact, or by showing that
the nonmoving party has failed to present evidence in support of some element of its
case on which it bears the ultimate burden of proof. Celotex, 477 U.S. at 322-23. In
evaluating the arguments of the movant, the court must view the evidence in the light
most favorable to the nonmoving party. Mize v. Jefferson City Bd. of Educ., 93 F.3d
739, 742 (11th Cir. 1996).
Once the movant has met its burden, Rule 56(e) “requires the nonmoving party
to go beyond the pleadings and by her own affidavits, or by the ‘depositions, answers
to interrogatories, and admissions on file,’ designate ‘specific facts showing that there
is a genuine issue for trial.’” Celotex, 477 U.S. at 324 (quoting FED. R. CIV. P. 56(e)).
“A factual dispute is genuine only if a ‘reasonable jury could return a verdict for the
nonmoving party.’” Info. Sys. & Networks Corp. v. City of Atlanta, 281 F.3d 1220,
1224 (11th Cir. 2002) (quoting United States v. Four Parcels of Real Property, 941 F.2d
1428, 1437 (11th Cir. 1991)).
Page 4 of 17
IV.
Discussion
Section 13(a)(1) of the FLSA provides that its minimum-wage and overtime
provisions do “not apply with respect to . . . any employee employed in a bona fide
executive, administrative, or professional capacity.” 29 U.S.C. § 213(a)(1). Normally,
determining whether employees are exempted by employment “in a bona fide
executive capacity” requires a detailed examination of the employees’ job duties.
29 C.F.R. § 541.100. This includes an inquiry into the “primary duty” of the
employees, a determination of whether they “customarily and regularly” direct the
work of at least two others, and an evaluation of their “authority to hire or fire other
employees.” 29 C.F.R. § 541.100(a)(2)–(4). But for “highly compensated
employees”—those with “total annual compensation of at least $100,000”—this
fact-intensive inquiry is simplified considerably. 29 C.F.R. § 541.601(a). If the
$100,000 compensation threshold is met, employees are “deemed exempt under
section 13(a)(1)” of the FLSA if they “customarily and regularly perform any one or
more of the exempt duties” set forth in the regulations. Id. (emphasis added).
Plaintiffs argue, however, that this streamlining of the analysis is illusory. They
point to subsection (d) of the same provision, which explains that the highly
compensated exemption “applies only to employees whose primary duty includes
performing office or non-manual work.” 29 C.F.R. § 541.601(d). This, Plaintiffs
Page 5 of 17
argue, creates a “circular conundrum,” requiring the Court to perform the full
executive exemption analysis and determine the “primary duty” of the employees in
question. According to Plaintiffs, in other words, the Court must find that Plaintiffs
fit the executive exemption in order to determine that the executive exemption
analysis is unnecessary. (Doc. 129 at 4.) If this were the case, the highly compensated
exemption would be meaningless; such an absurd result would be reason enough to
doubt Plaintiffs’ interpretation. Further, the previous subsection explicitly addresses
this issue: it explains that “[a] high level of compensation is a strong indicator of an
employee’s exempt status, thus eliminating the need for a detailed analysis of the
employee’s job duties.” 29 C.F.R. § 541.601(c) (emphasis added).
Plaintiffs appear to overlook the significance of the word “includes” in
subsection (d). There is a vast difference between fully determining an employee’s
“primary duty” as part of the executive-exemption analysis and simply determining
whether that primary duty “includes performing office or non-manual work.”29
C.F.R. § 541.601(d). Rather than creating a “conundrum” that incorporates the entire
executive-exemption test, subsection (d) simply clarifies what should be obvious: that
employees who “customarily and regularly” perform one or more exempt duties must
necessarily have some “office or non-manual work” included as part of their primary
duty.
Page 6 of 17
Accordingly, there are essentially two steps to determining whether summary
judgment should be granted for MBUSI under the highly compensated exemption.
First, the Court must ascertain whether there is a genuine issue of material fact as to
the level of compensation, and whether it totals at least $100,000 for each of the
sixteen Plaintiffs for each of the years in question. If the $100,000 threshold is
reached, the second step is to determine whether the primary duties of these sixteen
employees included some office or non-manual work, with one or more exempt duties
“customarily and regularly” performed. Although MBUSI maintains that both
requirements are easily demonstrated, Plaintiffs contend that neither is met.
A. Compensation Requirement
In order to satisfy the requisite compensation threshold, an employee’s
compensation must total at least $100,000 within a “52-week period” — by default
a “calendar year,” unless the employer “identif[ies] some other year period in
advance.” 29 C.F.R. § 541.601(b)(4). In addition to reaching this overall amount, the
compensation must also “include at least $455 per week paid on a salary or fee basis.”
29 C.F.R. § 541.601(b)(1). Plaintiffs deny that the $100,000 threshold has been met,
and they also dispute that Plaintiffs were paid on a “salary basis.”
Page 7 of 17
1. $100,000 Amount
MBUSI’s account of the Plaintiffs’ compensation is provided by a declaration
of Mark Jones, the Manager of Human Resources for MBUSI. (Doc. 112.) Mr. Jones’
declaration, based on MBUSI’s payroll and compensation records, gives figures of
over $100,000 for each of the Plaintiffs during the time periods in question. (Doc. 112
¶¶ 4–19.) Plaintiffs assert that these compensation figures are “fatally flawed and
cannot be relied upon,” because the amounts provided by Mr. Jones include
“medical, retirement, and fringe benefit payments.” (Doc. 129 at 22.) According to
Plaintiffs, “the only relevant indicator of an employee’s ‘total annual compensation’
is the W-2 tax form.” (Id. at 23.) Accordingly, Plaintiffs contend that “[t]his Court
only needs to look at the Box 1—‘wages, tips, other comp.’—of an employee’s W-2
form to determine whether he or she meets the $100,000 threshold.” (Id. at 3.)
Even if the Court were to agree that the W-2 forms are controlling, Plaintiffs
still concede that some of the individuals still “definitively earned over $100,000 in
total annual compensation”: Thomas Daniels (2010), Timothy Lee (2010), Robert
Little (2006–08), Steven Munoz (2006), and Jimmy Skelton (in 2006-08 & 2010).
Additionally, Plaintiffs’ championing of the W-2 form is less ardent than it first
appears: one page after referring to the the W-2 as “the only relevant indicator of an
employee’s ‘total annual compensation,’” Plaintiffs ask the Court to ignore the W-2s
Page 8 of 17
for four Plaintiffs whose W-2 forms indicate income over $100,000, which allegedly
includes the payment of severance benefits.4 (Id. at 24.)
Plaintiffs’ attacks on Mr. Jones’ figures, and their insistence on looking
exclusively to theW-2 forms, appear to stem from misunderstandings about the nature
of each. The accusation that Mr. Jones’ figures include amounts for “medical,
retirement, and fringe benefit payments” is, at best, a mischaracterization. (Doc. 129
at 23.) Mr. Jones’ declaration explicitly states that it “do[es] not include the value of
fringe benefits.” (Doc. 112 ¶ 21, emphasis added.) The included “medical [and]
retirement” amounts referenced by Plaintiffs are not payments made by MBUSI for
such items, which MBUSI admits would be improper. See 29 C.F.R. § 541.601(b)(1)
(“Total annual compensation . . . does not include payments for medical insurance,
payments for life insurance, contributions to retirement plans and the cost of other
fringe benefits.”). Mr. Jones’ figures exclude such contributions from MBUSI, but
does “include pre[-]tax payments made by each [Plaintiff ], such as 401k contributions
and health insurance premiums.” (Doc 112 at 9, emphasis added.) There is a vast
difference between payments made by employers towards an employee’s insurance or
4
Plaintiffs’ brief references the existence and amounts of these severance benefits (ranging from
$44,921.57 to $76,067.44), without providing any factual citations. The amounts and existence of such
benefits are irrelevant for present purposes, however, because even if severance benefits were paid, they
would not be excluded from the Plaintiffs’ total annual compensation. See 29 C.F.R. § 778.211.
Page 9 of 17
retirement, and the pre-tax payments that an employee elects to make on his or her own
behalf. While the former is undisputedly a “fringe benefit” that does not count toward
an employee’s total annual compensation, the latter is a voluntary use of funds that
the employee would be free to spend elsewhere. The choice to spend those earnings
on pre-tax contributions does nothing to alter what was earned.
The tax-exempt status of such transfers highlights the problems with looking
to W-2s as the standard for determining an employee’s income. Box 1 of the W-2
form, to which Plaintiffs direct the Court, displays only taxable compensation. See, e.g,
I.R.S., General Instructions for Forms W-2 and W-3, Cat. No. 25979S, at 12-13
(available at http://www.irs.gov/pub/irs-pdf/iw2w3.pdf ) (March 12, 2012)
(instructing employers to show, in Box 1, “the total taxable wages, tips, and other
compensation,” but to “not include elective deferrals” in that figure). The relevant
figure for purposes of this FLSA exemption is the employee’s “total annual
compensation,” not just taxable compensation. 29 C.F.R. § 541.601(a) . Relying on
Box 1 of the W-2 forms would improperly exclude the pre-tax spending made by
Plaintiffs. The only evidence that includes the amounts paid to Plaintiffs before such
pre-tax spending are the figures supplied by Mr. Jones’ declaration. These figures are
declared under penalty of perjury to be “the correct total compensation amount” for
each Plaintiff. (Doc. 112 at 9.) Although Plaintiffs contend that the included amounts
Page 10 of 17
are “fringe benefits,” they do not dispute the accuracy or authenticity of the numbers
provided by Mr. Jones. For the reasons just discussed, Plaintiffs’ pre-tax spending
does not somehow convert earnings into “fringe benefits.” Instead, those earnings
properly count toward the Plaintiffs’ “total annual compensation.” Because Mr.
Jones’ undisputed figures provide the only evidence of that figure, there is no genuine
question of material fact as to those amounts. The total annual compensation of each
of the sixteen Plaintiffs during the years in question exceeded $100,000.
2. Salary Basis
In addition to meeting the $100,000 threshold, Plaintiffs’ total annual
compensation must “include at least $455 per week paid on a salary or fee basis.” 29
C.F.R. § 541.601(b)(1) (emphasis added). Plaintiffs allege that they do not meet the
salary-basis test for two reasons. First, they claim that their compensation was
“subject to reduction because of variations in the quality or quantity of the work
performed.” 29 C.F.R. § 541.602(a). Second, they contend that
“deductions . . . [were] made for absences occasioned by the . . . operating
requirements of the business.”Id. MBUSI does not deny that either of these
conditions would preclude compensation from being on a “salary basis.” Rather,
MBUSI maintains—correctly—that neither situation applies here.
Page 11 of 17
Plaintiffs’ first argument fails because it relates solely to overtime
compensation. Plaintiffs point out that “[i]f one GL worked 10 hours of overtime
versus another GL who worked 20, the GL who worked 20 hours would make more
money.” (Doc. 129 at 26.) Because of this discrepancy, Plaintiffs argue, “GLs were
not paid [on] a true salary basis.” (Id.) The regulations, however, specifically provide
that “an employer may provide an exempt employee with additional compensation
without losing the exemption or violating the salary basis requirement, if the
employment arrangement also includes a guarantee of at least the minimum
weekly-required amount paid on a salary basis.” 29 C.F.R. § 541.604(a). Plaintiffs do
not allege that their actual salaries were impacted by the number of hours worked, just
that it affected their compensation for overtime. Because their salaries remained
constant regardless of the amounts of overtime earned, MBUSI’s choice to provide
additional compensation for overtime does nothing to erode the “salary basis” on
which Plaintiffs were paid.
Plaintiffs’ second argument is that they are not paid on a salary basis because
their “compensation is connected to the operational requirements of the production
plant.” (Doc. 129 at 26.) They point out that, as of 2008, MBUSI does not build cars
at its Alabama plant on Fridays, although some non-production activities apparently
still take place. GLs not scheduled to work on these non-production Fridays have
Page 12 of 17
various options: they can elect to use a paid vacation day, they can take an unpaid
personal day off work, or they can bank their unworked Friday hours against future
overtime hours. Plaintiffs argue—without any supporting citations—that this “Friday
Bank” procedure requires MBUSI to “count [] hours worked, which violates the
whole concept of a fixed salary.” (Doc. 129 at 27.)
Here, Plaintiff confuses the concept of counting hours for purposes of base
compensation with counting hours for purposes of calculating overtime above and
beyond the fixed salary. As noted above, employers may—but are not required—to
provide overtime compensation for exempt, salaried employees. MBUSI’s decision
to provide overtime in addition to a predetermined salary has no bearing on whether
a “salary basis” exists. If MBUSI—of its own accord—chooses to pay an overtime
premium, it may also determine how that overtime is paid, so long as employees still
receive, in full, their predetermined salaries. There appears to be no dispute that
Plaintiffs did receive their full salaries, even when “banking” Friday hours against
future overtime. As such, Plaintiffs plainly received “at least $455 per week paid on
a salary or fee basis.” 29 C.F.R. § 541.601(b)(1). Because their total annual
compensation exceeded $100,000 for the years in question, and they were paid at least
$455 per week on a salary basis, these sixteen Plaintiffs meet the compensation
requirements for the highly compensated exemption.
Page 13 of 17
B. Customary and Regular Performance of Exempt Duties
In addition to the compensation requirement, the highly compensated employee
exemption requires an employee’s primary duty to “include performing office or nonmanual work,” 29 C.F.R. § 541.601(d), in that the employee must “customarily and
regularly perform[] any one or more of the exempt duties” identified in the
regulations. 29 C.F.R. § 541.601(a). “Customarily and regularly” is defined as “a
frequency that must be greater than occasional but which, of course, may be less than
constant.” 29 C.F.R. § 541.701. It includes “work normally and recurrently
performed every workweek,” but not “isolated or one-time tasks.” Id.
As previously discussed, the need to examine job duties is considerably relaxed
for the highly compensated exemption; an employee need only perform one or more
exempt duties customarily and regularly. It is enough, for instance, if an employee
customarily and regularly “directs the work of two or more other employees,” one of
the executive duties found in 29 C.F.R. § 541.100. In fact, the regulations use this very
example:
[A] highly compensated employee will qualify for
exemption if the employee customarily and regularly
performs any one or more of the exempt duties or
responsibilities of an executive . . . . An employee may
qualify as a highly compensated executive employee, for
example, if the employee customarily and regularly directs
the work of two or more other employees, even though the
Page 14 of 17
employee does not meet all of the other requirements for
the executive exemption under § 541.100.
29 C.F.R. § 541.601(c). This example is especially instructive here, since it is
a fitting description of the sixteen Plaintiffs at issue. First, it is undisputed that,
generally, “each GL has a group consisting of one or more teams.” (Doc. 97 at ¶ 5.)
All but two of the sixteen Plaintiffs have admitted that in their “job[s] as Group
Leader at MBUSI, [they] supervise the team leaders and team members in [their]
group.”5 The two Plaintiffs who did not openly admit this were Mario Cohen and
Allen Ozier. Mario Cohen’s response to this request for production—like his response
to all the rest—was to evade the question (Doc. 113 at 3), and Allen Ozier responded
with a qualified denial. (Doc. 110-15 at 3). But both Cohen and Ozier establish
elsewhere that their GL roles involved regularly directing the work of two or more
employees.
Mario Cohen has described his GL position as his “job as [a] manager[].”(Doc.
110-12 at 30.) He conceded that his team members are “supposed to follow [his]
instructions,” and that they “can be disciplined” if they fail to do so. (Id.) Ozier, on
the other hand, repeatedly characterizes his giving of directions as “only relay[ing]
5
This is true of Danny Bankston (Doc. 110-11 at 3), Phillip Cooper (Doc. 111-6 at 3), Thomas Daniels
(Doc. 111-3 at 3), James Davis (Doc. 110-1 at 85), Marcus Garth (Doc. 111-11 at 3), Timothy Lee (Doc. 111-9
at 3), Robert Little (Doc. 110-3 at 3), Marianne Magner (Doc. 111-13 at 3), Steven Munoz (Doc. 110-7 at 3),
Kelly Pitman (Doc. 110-9 at 3), Susan Pope (Doc 111-7 at 41), Jimmy Skelton (Doc. 110-5 at 3), Gene Upton
(Doc. 111-2 at 3), Cathy Williams (Doc. 111-15 at 3).
Page 15 of 17
messages to team leaders and team members in his group.” (Doc. 110-15 at 3.) He
admits, however, that this was to “make sure they were doing” what was instructed.
(Doc. 110-14 at 30.) He would regularly “walk the [production] line,” to “see what
team members were doing and make sure that they were doing what they were
supposed to do.” (Id. at 30-31.) Nearly all of the Plaintiffs—including Allen
Ozier—admit that they “give work directions and assignments to members of [their]
group,” they “manage attendance,” and they “manage vacation scheduling,
timekeeping and attendance.” (Doc. 110-15 at 3–4.) Additionally, all the Plaintiffs but
Cohen and Cooper admit that as GLs they “have the authority to initiate a Corrective
Performance Review on a team member when [they] deem necessary.” (Id. at 5.)
In short, the depositions and admissions of the sixteen Plaintiffs amply
demonstrate that they, as GLs, would “customarily and regularly direct the work of
two or more other employees.”Whatever else their jobs may have entailed, this fact
alone is enough to satisfy the “one or more . . . exempt duties” prong of 29 C.F.R. §
541.601(a). Even taking all the evidence in the light most favorable to Plaintiffs, there
is clearly no genuine dispute of material fact on this point. The very purpose of the
highly compensated employee exemption is to “eliminat[e] the need for a detailed
analysis of the employee’s job duties,” so any further inquiry is unnecessary. 29
C.F.R. § 541.601(c).
Page 16 of 17
V. Conclusion
All sixteen of these Plaintiffs meet the highly compensated exemption
requirements for the years in question. As such, summary judgment is appropriate for
their claims arising out of those years, and MBUSI’s motion (Doc. 107) is due to be
granted. A separate order consistent with this opinion will be entered.
Done this 30th day of April, 2012.
L. Scott Coogler
United States District Judge
[167037]
Page 17 of 17
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?