Blotzer et al v. L-3 Communications Corporation

Filing 75

ORDER granting 68 Motion for Partial Summary Judgment; denying 70 Motion for Summary Judgment. Within 30 days of the date this Order is filed, the parties shall submit a Joint Proposed Pretrial Order. The Court refers the parties to its October 18, 2011 Scheduling Order (Doc. 19 ) for further instructions. Signed by Judge Jennifer G Zipps on 12/5/12. (See attached PDF for complete information.) (KAH)

1

WO

2
3
4
5
6

IN THE UNITED STATES DISTRICT COURT

7

FOR THE DISTRICT OF ARIZONA

8
9

Timothy Blotzer and Fred Lilly,

10

Plaintiffs,

11

ORDER

vs.

12

No. CV-11-274-TUC-JGZ

L-3 Communications Corp.,

13

Defendant.

14
15

Pending before the Court is Plaintiffs’ Motion for Partial Summary Judgment filed

16

on May 25, 2012. (Doc. 68.) Defendant filed a cross-Motion for Summary Judgment

17

and Response to Plaintiffs’ Motion for Partial Summary Judgment on June 28, 2012.1

18

(Doc. 70.) Plaintiffs filed a Response/Reply on July 9, 2012 and Defendant filed a

19

Response/Reply on July 24, 2012. (Docs. 72, 74.) For the reasons stated herein, the

20

Court will grant the Plaintiffs’ Partial Motion for Summary Judgment and deny the

21

Defendant’s Motion.2

22
FACTUAL AND PROCEDURAL BACKGROUND

23
24
1

25
26

Pursuant to the Court’s May 15, 2012 Order, the parties followed an abbreviated
briefing schedule on their cross-motions and were granted leave to exceed page limitations.
(Doc. 67.)
2

27
28

The Court finds this matter suitable for decision without oral argument. See Mahon v.
Credit Bureau of Placer County, Inc., 171 F.3d 1197, 1200 (9th Cir. 1999) (explaining that if the
parties provided the district court with complete memorandum of law and evidence in support of
their positions, ordinarily oral argument would not be required).

In 2009 and 2010, Defendant L-3 Communications Corporation (“L-3”) was a

1
2
3
4
5
6
7
8
9
10
11
12
13

contractor performing construction work on a “SBI Net” project in southern Arizona for
the United States Department of Homeland Security (“the Project”). (Doc. 68-2, pg. 2;
Doc. 71, pg. 12.) The SBI Net system is a series of towers that host detection and
communication equipment used to monitor persons entering into the United States from
Mexico along the Arizona border. (Doc. 68-2, pg. 2; Doc. 71, pg. 12.) The equipment on
the towers sends video and data to a command and control building, called the “C-2
Building.” (Doc. 68-2, pg. 2; Doc. 71, pg. 12.) Boeing was the primary contractor on the
Project and it hired L-3 to perform and manage construction work on the Project. (Doc.
68-2, pg. 2; Doc. 71, pg. 12.) The construction work on the Project was managed by L3’s Operations Department. (Doc. 68-2, pg. 2; Doc. 71, pg. 12.)

Employees within the

Operations Department completed some of the construction work themselves, while other
construction work was performed by various subcontractors that L-3 retained and
managed through its Operations Department. (Doc. 68-2, pg. 2; Doc. 71, pg. 12.) While

14

the Operations Department was responsible for completing construction work, L-3’s

15

Quality Control Department (“QC”) was responsible for checking the completed work to

16

make sure that it complied with applicable specifications. (Doc. 68-2, pg. 2; Doc. 71, pg.

17

12.)

18

Plaintiff Fred Lilly began working for L-3 on August 10, 2009 and Plaintiff

19

Timothy Blotzer began working for L-3 on October 5, 2009. (Doc. 68-2, pg. 2; Doc. 71,

20

pg. 12.) Plaintiffs worked for L-3 as QC Field Inspectors within the QC department.

21

(Doc. 68-2, pg. 2; Doc. 71, pg. 12.) Neither Plaintiff has a college degree; a college

22

education was not required for the position. (Doc. 68-2, pg. 3; Doc. 71, pg. 12.) The

23

compensation associated with the QC Field Inspector position is less than $100,000

24

annually. (Doc. 68-2, pg. 3; Doc. 71, pg. 12.) Plaintiffs’ primary job duty was to inspect

25

construction work as it was completed on the Project to verify whether the work had been

26

completed in strict adherence to the applicable specifications. (Doc. 68-2, pg. 2; Doc. 71,

27

pg. 12.)

28

plans and specifications with the specific work being inspected in order to identify

To this end, Plaintiffs’ primary job duties involved comparing the engineering

-2-

1
2
3
4
5
6
7
8
9
10
11
12
13

discrepancies and ensure that there was proper workmanship and compliance with the
operative grounding and electrical manuals (ie. the Motorola R-56 and the National
Electrical Code) as well as the company’s internal Work Order Process (“WOPs”), which
detailed in a step-by-step fashion how a particular task was to be completed. (Doc. 71,
pg. 2; Doc. 73, pg. 2.) Plaintiffs contend that their inspections were assigned by their
supervisors; according to Defendants, Plaintiffs inspected the items as construction
dictated, in adherence with the Buildbook and as they saw fit in their own judgment.
(Doc. 68-2, pg. 2; Doc. 71, pg. 12.) Plaintiffs initially reported to Doug Gordon; in
January 2010 they began reporting to Jeff D’Heron. (Doc. 68-2, pg. 2; Doc. 71, pg. 12.)
The parties dispute the nature of Plaintiffs’ work. Plaintiffs contend that they
regularly performed manual labor and that they completed additional paperwork and
received instructions from their supervisor at the beginning and end of each workday.
(Doc. 68-2, pgs. 3-4.) Defendant contends that Plaintiffs completed paperwork
throughout the day and were self-directed in their inspections. (Doc. 71, pg. 13.) The

14

parties disagree as to the amount of discretion and authority Plaintiffs had in conducting

15

inspections. (Doc. 68-2, pgs 4-6; Doc. 71, pgs. 13-16.) The parties agree that Plaintiffs

16

spent most of their workday, including the time spent completing paperwork, in the field.

17

(Doc. 68-2, pg. 3; Doc. 71, pg. 13.) The parties agree that quality inspectors had to rely

18

on their own working knowledge and expertise of the Project as well as industry

19

standards during inspections. (Doc. 71, pg. 3; Doc. 73, pg. 3.)

20

After inspecting a portion of the Project, Plaintiffs would complete the appropriate

21

portion of L-3’s quality document known as the Quality Control Checklist (“QCC”),

22

thereby indicating that the item had passed inspection. (Doc. 71, pg. 3; Doc. 73, pg. 3.)

23

After Plaintiffs had inspected an approved an item, the item would be inspected and

24

approved by the quality inspectors from Boeing and the federal government. (Doc. 71,

25

pg. 3; Doc. 73, pg. 3.) If an item did not pass Plaintiffs’ inspection, Plaintiffs would

26

complete a Non-Compliance Report (“NCR”) describing what was non-conforming and

27

why. (Doc. 71, pg. 5; Doc. 73, pg. 4.) An NCR could trigger a change to the engineering

28

plans for the Project. (Doc. 71, pg. 5; Doc. 73, pg. 4.) Accordingly, Plaintiffs’ jobs
-3-

1
2
3
4
5
6
7
8
9
10
11
12
13

required them to present to Boeing what work they had approved or rejected and why.
(Doc. 71, pg. 4; Doc. 73, pg. 3.)

Plaintiffs also attended some meetings at which Boeing

presented items to government inspectors. (Doc. 71, pg. 4; Doc. 73, pg. 3.)
At all times during their employment, Plaintiffs were classified as “exempt”
employees under L-3’s Exempt/Non-Exempt Status Policy, which states that exempt
employees are not compensated for hours worked in excess of 40 hours per week. When
they were hired by L-3, Plaintiffs believed they would be working around 50 hours per
week. (Doc. 68-2, pg. 6; Doc. 71, pg. 16.) Time records submitted to the Court indicate
that Plaintiffs reported to L-3 work periods ranging from 40 to 86 hours per week. (Doc.
68-3, Ex. 6.) Plaintiffs complained repeatedly to Jeff D’Heron about the long hours.
(Doc. 68-2, pg. 7; Doc. 71, pg. 17.)

L-3 responded to the complaints by adjusting

Plaintiffs’ salaries. (Doc. 68-2, pg. 7; Doc. 71, pg. 17.)

From the beginning of the

Project, L-3 had paid Plaintiffs a bi-weekly salary, which was not adjusted depending on
the number of hours worked. (Doc. 68-2, pg. 7; Doc. 71, pg. 17.) In February 2010, L-3

14

began paying Plaintiffs overtime pay in addition to their bi-weekly salary. (Doc. 68-2,

15

pg. 7; Doc. 71, pg. 17.)

16

received their bi-weekly salary. For each hour over 50, they received overtime pay.

17

(Doc. 68-2, pg. 7; Doc. 71, pg. 17.) Plaintiffs did not receive overtime pay for hours over

18

60 in a work week. (Doc. 68-2, pgs. 7-8; Doc. 71, pg. 17.)

If Plaintiffs worked 50 hours or less in a work week, they

19

On May 4, 2011, Plaintiffs filed the instant action against Defendants, alleging a

20

single claim: unlawful failure to pay overtime wages in violation of the Fair Labor

21

Standards Act (“FLSA”), 29 U.S.C. §§ 201-219. (Doc. 1.) Plaintiffs seek an award of

22

compensatory and liquidated damages. (Id.)

23

STANDARD OF REVIEW

24

In deciding a motion for summary judgment, the Court views the evidence and all

25

reasonable inferences therefrom in the light most favorable to the party opposing the

26

motion. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986); Eisenberg v.

27

Insurance Co. of North America, 815 F.2d 1285, 1289 (9th Cir. 1987). Summary

28

judgment is appropriate if the pleadings and supporting documents "show that there is no
-4-

1
2
3
4
5
6
7
8
9
10
11
12
13

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); Celotex Corp. v. Catrett, 477 U.S. 317, 322
(1986). Material facts are those "that might affect the outcome of the suit under the
governing law." Anderson, 477 U.S. at 248. A genuine issue exists if "the evidence is
such that a reasonable jury could return a verdict for the nonmoving party." Id.
A party moving for summary judgment initially must demonstrate the absence of a
genuine issue of material fact. Celotex, 477 U.S. at 325. The moving party merely needs
to point out to the Court the absence of evidence supporting its opponent's claim; it does
not need to disprove its opponent's claim. Id.; see also Fed. R. Civ. P. 56(c). If a moving
party has made this showing, the nonmoving party "may not rest upon the mere
allegations or denials of the adverse party's pleading, but . . . must set forth specific facts
showing that there is a genuine issue for trial." Fed. R. Civ. P. 56(e). See also Anderson,
477 U.S. at 256; Brinson v. Linda Rose Joint Venture, 53 F.3d 1044, 1049 (9th Cir.
1995). The non-moving party may not "replace conclusory allegations of the complaint

14

or answer with conclusory allegations of an affidavit."

15

Federation, 497 U.S. 871, 888 (1990).

16

Lujan v. National Wildlife

ANALYSIS

17

The FLSA is a remedial statute designed to eliminate “labor conditions

18

detrimental to the maintenance of the minimum standard of living necessary for the

19

health, efficiency, and general well-being of workers.” 29 U.S.C. § 202. The FLSA sets

20

a maximum number of hours employees may work per week. Id. at § 207. Unless an

21

FLSA exemption applies, employees may be required to work more than 40 hours per

22

week only if, for every hour worked over the maximum, the employer compensates the

23

employee at a rate “not less than one and one-half times the regular rate at which he is

24

employed.” Id. at § 207(a)(1). The overtime pay requirements of the Act do not apply to

25

salaried employees who work in a “bona fide executive, administrative or professional

26

capacity.” Id. at § 213(a)(1). Pursuant to the FLSA, the Secretary of the Department of

27

Labor (“DOL”) has issued regulations defining each exemption.

28

541.200-541.215. In a FLSA overtime-wage case, the question of how an employee
-5-

See 29 C.F.R. §§

1
2
3
4
5
6
7

spends his or her workday is one of fact, while the question of whether his or her
activities exclude him or her from the overtime-pay requirement is one of law. See
Christopher v. SmithKline Beecham Corp., 635 F.3d 383, 391 (9th Cir. 2011) (citations
omitted).

employee. Id. FLSA exemptions are to be “narrowly construed against ... employers and
are to be withheld except as to persons plainly and unmistakenly within their terms and
spirit.” Klem v. County of Santa Clara, 208 F.3d 1085, 1089 (9th Cir. 2000) (internal
quotation marks and citations omitted).

8
9
10
11
12
13

The employer has the burden of showing the exemption applies to its

Plaintiff moves for partial summary judgment on three grounds: (1) Plaintiffs do
not fall within the executive or administrative exemption; (2) the Fluctuating Work Week
method (“FWW method”) should not be retroactively applied to calculate overtime
damages; and (3) Defendant’s affirmative defenses fail as a matter of law. In its crossmotion for summary judgment, Defendant contends that: (1) Plaintiffs were properly
classified as administratively exempt; (2) Plaintiffs qualify for the executive and

14

combination exemptions; (3) any calculation of damages should be conducted pursuant to

15

the FWW method; and (4) summary judgment on Defendant’s affirmative defenses is

16

improper. For the reasons stated herein, the Court will grant summary judgment in favor

17

of Plaintiffs.

18

1.

Plaintiffs do not fall within the administrative exemption

19

Defendant bears the burden of proving the applicability of an FLSA exemption.

20

Accordingly, Defendant can defeat Plaintiffs’ Motion for Summary Judgment by

21

demonstrating a material issue of fact exists with respect to the applicability of the

22

administration exemption. Defendant can prevail on its motion for summary judgment

23

by demonstrating that, on the undisputed facts, the exemption applies as a matter of law.

24

In order for the administrative exemption to apply, Defendant must prove that: (1)

25

Plaintiffs’ primary duty included the exercise of discretion and independent judgment

26

with respect to matters of significance; (2) Plaintiffs’ primary duty was the performance

27

of office or non-manual work related to the management or general business operations

28

of the employer or the employer’s customers; and (3) Plaintiffs were compensated on a
-6-

1
2
3
4
5
6
7
8
9
10
11
12
13
14

salary or fee basis at a rate of not less than $455 per week or $23,660 annually. See 29
C.F.R. § 541.200(a). Plaintiffs concede that they meet the salary requirement of the
regulation. The parties dispute whether Defendant has satisfied its burden with respect to
the other two prongs of the definition. The Court concludes that Defendant has failed to
demonstrate the applicability of the exemption and Plaintiffs are entitled to summary
judgment on this ground.
In FLSA cases, a court must first determine the employee's primary duty, and then
determine whether that primary duty disqualifies the employee from FLSA's protections.
See Maestas v. Day & Zimmerman, LLC, 664 F.3d 822, 827 (10th Cir. 2012). The
applicable regulations defined “discretion and independent judgment” as “the comparison
and the evaluation of possible courses of conduct, and acting or making a decision after
the various possibilities have been considered.” 29 C.F.R. § 541.202(a). The term
“matters of significance” refers to the level of importance or consequence of the work
performed.

Id.

In determining whether an employee exercises discretion and

independent judgment, courts look to numerous factors, including:

15

25

Whether the employee has authority to formulate, affect,
interpret, or implement management policies or operating
practices; whether the employee carries out major
assignments in conducting the operations of the business;
whether the employee performs work that affects business
operations to a substantial degree, even if the employee's
assignments are related to operation of a particular segment of
the business; whether the employee has authority to commit
the employer in matters that have significant financial impact;
whether the employee has authority to waive or deviate from
established policies and procedures without prior approval;
whether the employee has authority to negotiate and bind the
company on significant matters; whether the employee
provides consultation or expert advice to management;
whether the employee is involved in planning long- or shortterm business objectives; whether the employee investigates
and resolves matters of significance on behalf of
management; and whether the employee represents the
company in handling complaints, arbitrating disputes or
resolving grievances.

26

29 C.F.R. § 541.202(b). The regulations further provide that: “[o]rdinary inspection

27

work generally does not meet the duties requirement for the administrative exemption.

16
17
18
19
20
21
22
23
24

28
-7-

1
2
3
4
5
6
7
8
9
10
11
12
13

Inspectors normally perform specialized work along standardized lines involving wellestablished techniques and procedures which may have been catalogued and described in
manuals or other sources. Such inspectors rely on techniques and skills acquired by
special training or experience. They have some leeway in the performance of their work
but only within closely prescribed limits.” 29 C.F.R. § 541.202(g).
In the present case, the parties agree that Plaintiffs’ primary duty was to inspect
construction work as it was completed on the Project in order to verify whether the work
had been completed in “strict adherence to applicable specifications.” (Doc. 68-2, pg. 3;
Doc 71, pg. 12.) As a matter of law, that duty did not include the exercise of discretion
and independent judgment. Plaintiffs performed ordinary inspection work of the type
contemplated by 29 C.F.R. § 541.202(g) and therefore do not fall within the
administrative exemption.
In an attempt to demonstrate that Plaintiffs’ duties exceeded those of ordinary
inspectors, Defendant alleges that Plaintiffs had autonomy with respect to initiating

14

inspection, approving or denying items, revising inspection specifications and presenting

15

approved items to Boeing. Even when the facts are construed in the light most favorable

16

to Defendant, however, Plaintiffs’ work cannot fairly be described as evaluating possible

17

courses of conduct and acting after the various possibilities have been considered, as

18

contemplated by 29 C.F.R. § 541.202(a). Plaintiffs did not have subjective autonomy

19

with respect to initiating inspection or approving or denying inspected items. Plaintiff

20

Blotzer and Supervisor Doug Gordon each gave similar testimony in their depositions

21

about the scope of Plaintiffs’ inspection responsibility and inspection. Construction and

22

inspections were performed in a sequential manner as dictated by the Project’s

23

Buildbook. (Doc. 71-2, pgs. 16-17.) Plaintiffs were notified by Operations Department

24

employees (ie. employees responsible for construction) when an item was ready for

25

inspection. (Docs. 71-1, pg. 7; 71-2, pg. 18.) Nothing in the record supports Defendant’s

26

assertion that Plaintiffs initiated inspections at their discretion. To the contrary, Doug

27

Gordon specifically testified that Plaintiffs did not decide whether to complete a

28

particular inspection. (Doc. 71-2, pg. 45.)
-8-

1
2
3
4
5
6
7
8
9
10
11
12
13

Defendant also overstates Plaintiffs’ autonomy with respect to approving or
denying items. It is undisputed that Plaintiffs’ inspection required them to compare the
construction work to the specifications set forth in national standards manuals and the
company’s internal Work Order Process. (Doc. 71, pg. 2; Doc. 73 pg. 2.) If work met
Defendant’s specifications, Plaintiffs noted a “pass” on Defendant’s QCC; Plaintiffs’
approval was then reviewed by Boeing and the government. (Doc. 71, pg. 3; Doc. 73 pg.
3.) Although Plaintiffs had the authority to reject work, they could only reject work on
the basis that the work did not comply with Defendant’s specifications. 3 (Doc. 71-2, pgs.
19-24; Doc. 71-3, pg. 13.) See 29 C.F.R. § 541.202(b) (authority to waive or deviate
from established policies and procedures without prior approval is one factor to consider
in evaluating independence and discretion). Thus, even as characterized by Defendant,
Plaintiffs’ work was primarily “specialized work … involving well-established
techniques … which may have been catalogued and described in manuals.” 29 C.F.R. §
541.202(g). The fact that, in order to conduct inspections, Plaintiffs were required to call

14

upon their experience and use their best judgment does not elevate them beyond the role

15

of an ordinary inspector.4 The regulations specifically contemplate that inspectors may

16

“rely on techniques and skills acquired by special training or experience” and exercise

17

“some leeway in the performance of their work.” 29 C.F.R. § 541.202(g).

18
19
20
21
22
23
24
25
26
27
28

3

Furthermore, it appears that attempts by inspectors to independently reject Project
specifications were not well-received. Plaintiff Blotzer described an incident in which he
arguably attempted to exercise independent judgment during the presentation of his approvals to
Boeing. After observing that an engineering blueprint called for three plumbing cleanouts and
the operations department was only able to install two, Blotzer noted that applicable codes
required only two and approached the Boeing inspector about whether installation of only two
would be sufficient. (Doc. 73-1, pg. 18.) The Boeing inspector rejected Blotzer’s suggestion
and instructed him to follow the standard protocol of issuing an NCR and triggering revision of
the engineering blueprint.
4

Given Plaintiffs’ lack of discretion in approving or rejecting items, the Court disagrees
with Defendant’s assertion that Plaintiffs are comparable to the inspectors in Brock v. On Shore
Quality Control Specialists, Inc., 1987 WL 31308 (W.D. Tex. 1987). The Brock inspectors had
far more independence and leadership responsibility than Plaintiffs: “on numerous occasions,
sometimes on a daily basis, the [Brock] inspectors deviated from prescribed standards” while
“testing welders, making recommendations that employees of the contractors should be
dismissed, shutting down jobs when unsafe conditions so merited, dealing with landowners and
making daily decisions as to whether the contractor was in fact performing the contract in a
suitable manner.” Id. at *7.

-9-

1
2
3
4
5
6
7
8
9
10
11
12
13

Defendant contends that Plaintiffs exercised discretion because they had the
authority to redline changes onsite to specifications in the WOP and QCC documents and
to close NCRs. In performing each of these tasks, however, Plaintiffs were still operating
within “closely prescribed limits.” 29 C.F.R. § 541.202(g). Plaintiff Lilly testified that
he could redline a WOP only with the approval of his supervisor. (Doc. 71-1, pg. 74.)
See Bothell v. Phase Metrics, Inc., 299 F.3d 1120, 1129 (9th Cir. 2002) (evidence that
inspector was required to consult with supervisor for all but the smallest decisions
supports finding that inspector did not fall within FLSA administrative exemption).
Doug Gordon also described the WOP as “dictated by the customer and the job
requirements,” and stated that Plaintiffs did not decide what work was going to be
performed or which criteria to use when applying the WOP during inspections. (Doc. 712, pgs. 44-45.) Although Plaintiffs had some input on WOPs and QCCs, that input was
not one of their primary job duties and was infrequent.5 (Doc. 71, pgs. 6-7; Doc. 73, pgs.
5-6.). See Copas v. East Bay Municipal Utility Dist., 61 F.Supp.2d 1017, 1039 (N.D. Cal.

14

1999) (evidence that employee assisted with preparation of budget does not support a

15

finding of administrative exemption where whatever time he contributed to that project

16

did not constitute a major portion of his time on the job); see also 29 C.F.R. § 541.202(a)

17

(“the term ‘matters of significance’ refers to the level of importance or consequence of

18

the work performed.”). In fact, it is undisputed that the bulk of Plaintiffs’ time was spent

19

performing inspection work and completing paperwork related to their inspections. (Doc.

20
5

21
22
23
24
25
26
27
28

Defendant’s argument that Plaintiffs exercised independent judgment and discretion
because they had the authority to redline QCC’s is not well-supported or persuasive. The role of
a QCC in the construction process is unclear; Doug Gordon described it as a document that
would provide inspectors with additional inspection protocols to follow at certain inspection
points identified in the WOPs. (Doc. 71-2, pg. 36.) Both parties describe the QCC as a checklist
used during inspection. (Doc. 71, pg. 3; Doc. 73, pg. 3.) Doug Gordon also testified that he
prepared the QCCs with Jeff D’Heron and someone from the Operations Department. (Doc. 712, pg. 36.) The QCCs were then circulated among the inspectors, operations employees and
engineers for input. (Doc. 71-2, pgs. 36-37.) Plaintiff Lilly testified that he was unaware of any
QCCs being modified as a result of his review. (Doc. 71-1, pg. 77.) Doug Gordon testified that
Plaintiffs had the authority to redline QCCs in the field if the QCC was incorrect due to a sitespecific issue, but not if the proposed change would affect engineering plans. (Doc. 71-2, pgs.
40-45.) Doug Gordon was not able to articulate an example of a permissible redline to a QCC by
an inspector. (Doc. 71-2, pg. 41.) Contrary to Defendant’s characterization of Plaintiff Lilly’s
testimony, it is unclear from Lilly’s deposition whether he redlined QCC’s without supervisor
approval. (Doc. 71, pg. 5; Doc. 71-1, pg. 101.)

- 10 -

1
2
3
4
5
6
7
8
9
10
11
12
13

68-2, pg. 3; Doc. 71, pg. 13.) Plaintiffs could close out an NCR only after it was elevated
to the engineering department, approved by Defendant’s quality management team and
Boeing’s quality management and after Operations Department staff completed the
work.6 (Doc. 71, pg. 5; Doc. 68-2, pg. 5; Doc. 71, pgs. 14-15.) The record does not
suggest that redlining a WOP/QCC or closing out an NCR gave Plaintiffs special
“authority to waive or deviate from established policies and procedures without prior
approval,” 29 C.F.R. 541.202(b), or to determine the specifications that applied to
construction tasks on the Project.
Similarly, the fact that Plaintiffs presented inspections to Boeing is not persuasive
evidence that Plaintiffs exercise discretion and independent judgment. The Court agrees
with Plaintiffs’ contention that interfacing with a customer does not elevate an
employee’s job duties to a management or operations level. (Doc. 72, pg. 3.) It is
undisputed that upon approving an inspected item, Plaintiffs would notify a Boeing
inspector that the item had been approved by L-3.

Doug Gordon testified that

14

Defendant’s QC inspectors present to the Boeing inspectors “here’s what we’ve done …

15

I’ve accepted it … here’s the reasons why.” (Doc. 71-2, 26.) If the Boeing inspector did

16

not agree, Doug Gordon, Jeff D’Heron and/or L-3 engineers would manage the corrective

17

action and the Operations Department would implement it. (Doc. 71-2, pgs. 26-27.)

18

Plaintiffs’ involvement was basically limited to reporting. Plaintiffs had no authority to

19

formulate or implement corrective action at the management or operations level.

20

Defendant’s argument in favor of application of the administrative exemption

21

relies primarily on O'Dell v. Alyeska Pipeline Serv. Co., 856 F.2d 1452 (9th Cir.1988);

22

that reliance is misplaced. First, contrary to Defendant’s assertion, O’Dell is not the

23

“leading decision with respect to assessing the exempt status of inspectors.” (Doc. 70,

24

pg. 13.) O’Dell is a 24 year-old case that has been discounted as precedent because it

25

relies on the erroneous premise that FLSA regulations are simply guides that do not bind

26
6

27
28

The record does not support Defendant’s claim that Plaintiff Lilly wrote an NCR on
work that was in full compliance with specifications because he believed there was a better way
to do it. (Doc. 71, pg. 6.) That question was asked but not answered during Lilly’s deposition.
(Doc. 71-1, pg. 75.)

- 11 -

1
2
3
4
5
6
7
8
9
10
11
12
13

the court or limit its discretion. See Bothell v. Phase Metrics, Inc., 299 F.3d 1120 (9th
Cir. 2002) (noting that the O’Dell approach to regulatory construction has been rejected
by both the United States Supreme Court and the Ninth Circuit). Furthermore, O’Dell is
factually distinguishable from the case at bar. The inspector in O’Dell exercised far more
authority and discretion than Plaintiffs.

Whereas Plaintiffs are instructed to reject

construction work that does not comply with specification, the inspector in O’Dell had
the authority to “attempt to handle the discrepancy on site by negotiation with the project
supervisor.” Id. at 1453.

The O’Dell inspector could make recommendations for

waivers of specifications, review and override the decisions of quality control inspectors
employed by contractors, develop guidelines for inspection procedures and offer
assistance to contractors in interpreting codes. Id. at 1453-54. Acting as both “field
inspector and a quality control inspector,” the inspector in O’Dell was higher up the chain
of authority than Plaintiffs and operated with more autonomy. Unlike Plaintiffs, he had
the authority to compare, evaluate and choose between various courses of conduct as

14

contemplated by 29 C.F.R. § 541.202(a).

15

O’Dell to be binding or persuasive.

For those reasons, the Court does not find

16

Defendant has failed to meet its burden of proof with respect to the regulations’

17

criteria for the administrative exemption. Defendant’s characterization of Plaintiffs not

18

as ordinary inspectors but as autonomous “members of the quality team” defies the

19

FLSA’s instruction that the administrative exemption “be withheld except as to persons

20

plainly and unmistakenly within their terms and spirit.”

21

Because the Court concludes that Plaintiffs’ primary duties did not include the exercise of

22

discretion and independent judgment, the Court need not consider the second prong of 29

23

C.F.R. § 541.200(a), ie. whether Plaintiffs’ primarily performed office or non-manual

24

work related to the management or general business operations of the employer or the

25

employer’s customers. Accordingly, Defendant is not entitled to summary judgment on

26

the issue of whether the administrative exemption applies.

27

concludes that there is no genuine issue of material fact with respect to the administrative

28

exemption such that Defendant should be permitted to argue for application of the
- 12 -

Klem, 208 F.3d at 1089.

Moreover, the Court

1
2
3
4
5
6
7
8
9
10
11
12
13

exemption at trial.

Therefore the Court will grant summary judgment in favor of

Plaintiffs on this issue.
2.

Plaintiffs do not fall within the executive exemption
Defendant bears the burden of proving the applicability of the executive

exemption. Accordingly, Defendant can defeat Plaintiffs’ motion for summary judgment
by demonstrating a material issue of fact exists with respect to the applicability of the
exemption. Defendant can prevail on its motion for summary judgment by demonstrating
that, on the undisputed facts, the exemption applies as a matter of law. In order for the
executive exemption to apply, Defendant must prove that: (1) Plaintiffs were
compensated on a salary basis at a rate of not less than $455 per week; (2) Plaintiffs’
primary duty is management of the enterprise in which the employee is employed or of a
customarily recognized department or subdivision thereof; (3) Plaintiffs customarily and
regularly directed the work of two or more other employees; and (4) Plaintiffs had the
authority to hire or fire other employees or their suggestions and recommendations as to

14

the hiring, firing, advancement, promotion or any other change of status of other

15

employees were given particular weight. See 29 CFR § 541.100(a). Plaintiffs concede

16

that they meet the salary requirement of the regulation. The parties dispute whether

17

Defendant has satisfied its burden with respect to the other three prongs of the definition.

18

The Court concludes that Defendant has failed to demonstrate the applicability of the

19

exemption and that Plaintiffs are entitled to summary judgment on this ground.

20

Defendant identifies only one example in support of its claim that, as part of their

21

job duties, Plaintiffs made recommendations as to hiring and firing which were given

22

particular weight: Plaintiff Lilly recommended Plaintiff Blotzer for an inspector position

23

and, based upon that recommendation, Doug Gordon hired Plaintiff Blotzer.7 (Doc. 68-2,

24
25
26
27
28

7

The Court rejects as factually unsupported Defendant’s argument that Plaintiff Blotzer
recommended a change of status for an operations employee who performed “shoddy” work.
(Doc. 70, pg. 19.) The entirety of Blotzer’s testimony on that issue is that during an inspection
he issued an NCR because an operations employee had spliced wire and it was not in compliance
with code. (Doc. 71-1, pg. 31.) Blotzer described the work as “shoddy.” (Id.) Other than
issuing an NCR – which does not appear to have any bearing on employee discipline issues –
Blotzer took no other action and there is no evidence that the NCR triggered any employee

- 13 -

1
2
3
4
5
6
7
8
9
10
11

pg. 6; Doc. 71, pg. 15.) As a matter of law, this is insufficient evidence to categorize
Plaintiffs as executively exempt, especially given that FLSA exemptions are to be
narrowly construed against employers and withheld except as to persons plainly and
unmistakably within the terms of the regulation. See Klem, 208 F.3d at 1089. 29 C.F.R.
§ 541.105 provides:
To determine whether an employee's suggestions and recommendations are
given “particular weight,” factors to be considered include, but are not
limited to, whether it is part of the employee's job duties to make such
suggestions and recommendations; the frequency with which such
suggestions and recommendations are made or requested; and the frequency
with which the employee's suggestions and recommendations are relied
upon. Generally, an executive's suggestions and recommendations must
pertain to employees whom the executive customarily and regularly directs.
It does not include an occasional suggestion with regard to the change in
status of a co-worker.

12
13
14
15
16
17
18
19
20
21
22
23
24
25
26

The only evidence in the record related to Plaintiff Lilly’s recommendation of
Plaintiff Blotzer is Doug Gordon’s testimony that “obviously they knew one another prior
to coming there.

In fact, as I recall, I hired Fred, and he recommended Tim.

interviewed Tim and found that he was everything that Fred had represented and hired
him as well.” (Doc. 71-2, pgs. 14-15.) There is no evidence in the record to suggest that
it was part of Plaintiff Lilly’s job duties to suggest or recommend people for the inspector
position.

There is no evidence that either Plaintiff made such suggestions or

recommendations with frequency – or even more than once. Furthermore, Plaintiff Lilly
did not direct Plaintiff Blotzer’s work. In short, Plaintiff Lilly’s recommendation appears
to have been nothing more than “an occasional suggestion with regard to the change in
status of a co-worker.” 29 C.F.R. § 541.105. As such, it is not grounds for categorizing
Plaintiffs as executively exempt. See Rock v. Sunbelt Cranes, Const. & Hauling, Inc.,
678 F.Supp.2d 1264, 1269-70 (M.D. Fla. 2009) (denying summary judgment on
application of executive exemption where employee made occasional suggestions
regarding employee promotions and infrequently exercised his authority to hire and fire).

27
28

I

discipline.

- 14 -

Defendant has failed to meet its burden of proof with respect to the regulations’

1
2
3
4
5
6
7
8
9
10
11
12
13

criteria for the executive exemption. Because the Court concludes that Defendant has
failed to demonstrate that Plaintiffs’ suggestions and recommendations as to the hiring,
firing, advancement, promotion or any other change of status of other employees were
given particular weight, the Court need not consider whether Plaintiffs’ primary duty was
management of the enterprise or whether Plaintiffs customarily and regularly directed the
work of two or more other employees.

Accordingly, Defendant is not entitled to

summary judgment on the issue of whether the executive exemption applies. Moreover,
the Court concludes that there is no genuine issue of material fact with respect to the
executive exemption such that Defendants should be permitted to argue for application of
the exemption at trial. Therefore the Court will grant summary judgment in favor of
Plaintiffs on this issue.
3.

The FWW method should not be used to calculate overtime damages
Because the Court concludes that Defendant misclassified Plaintiffs as exempt, the

14

Court also concludes Defendant violated the FLSA and Plaintiffs are entitled to an award

15

of damages.

16

“fluctuating work week method” (“FWW”) set forth in 29 C.F.R. § 778.114, applies to

17

Plaintiffs’ damages calculation. Under this method, non-exempt employees who are paid

18

on a salary basis and have hours that fluctuate week to week are entitled to overtime

19

calculated as a fixed salary to cover all hours worked plus one-half the regular rate of pay

20

for all hours over 40. Defendant contends that the method is appropriate, while Plaintiffs

21

contend it should not be applied.8 The Ninth Circuit has not directly addressed the

Both parties seek summary judgment on the issue of whether the

22
23
24
25
26
27
28

8

Neither party briefed the issue of how damages should be calculated in the event the
FWW method is not applied. For the reasons stated in Ransom v. M. Patel Enters., Inc., 825
F.Supp.2d 799, 809 (W.D. Tex. 2011), the Court concludes that Plaintiffs’ “regular rate” within
the meaning of 29 U.S.C. § 207(a)(1) is determined by dividing their weekly salary by the
number of hours per week the salary was intended to compensate, and that this is a question of
fact. Defendants are entitled to rebut the presumption that Plaintiffs’ fixed salary was meant to
compensate them solely for 40 hours. Id. In fact, given that the parties did not dispute in the
context of these motions that Plaintiffs believed they would work 50 hours per week, the parties
may be able to stipulate that Plaintiffs’ regular rate should be calculated as their weekly salary
divided by 50. Plaintiffs are entitled to 150% of that amount for each hour worked over 40; it is
undisputed that some portion of that overtime pay was paid to Plaintiffs beginning in February,

- 15 -

1
2
3
4
5
6
7
8
9
10
11

question of whether the FWW method may be used retroactively to compensate
employees who have been misclassified as exempt. Other federal courts are divided on
the issue. See In re Texas EZPawn Fair Labor Standards Act Litigation, 633 F.Supp.2d
395, 401 n.4 (W.D. Tex. 2008) (collecting cases).

Circuit courts have applied the FWW method in misclassification cases. See, e.g., Valerio
v. Putnam Associates Inc. 173 F.3d 35, 39 (1st Cir. 1999); Desmond v. PNGI Charles
Town Gaming, L.L.C.., 630 F.3d 351, 357 (4th Cir. 2011); Blackmon v. Brookshire
Grocery Co., 835 F.2d 1135 (5th Cir. 1988); Urnikis–Negro v. Am. Family Prop. Servs.,
616 F.3d 665, 681 (7th Cir. 2010); and Clements v. Serco, Inc., 530 F.3d 1224, 1230-31
(10th Cir. 2008). However, this Court is persuaded by the reasoning of those courts that
have concluded the FWW method should not be applied in a misclassification case in
light of the FLSA’s remedial purpose.9

12
13

The Court acknowledges that several

Ordinarily, the FLSA mandates that overtime be compensated at 150% of the
“regular” hourly rate. See 29 U.S.C. § 207. Four years after the FLSA was adopted, the

14

United States Supreme Court decided Overnight Motor Transp. Co. v. Missel, 316 U.S.

15

572 (1942) (“Missel”). Missel held that an employer and employee could legally agree,

16

in certain circumstances, to a compensation arrangement where the employee would be

17

paid a flat weekly rate for fluctuating hours without violating the FLSA, provided that the

18

agreement contained a provision for overtime pay and the wage was sufficient to satisfy

19

minimum wage requirements and offer a premium of at least “fifty per cent for the hours

20

actually worked over the statutory maximum.” Id. at 581. In 1968, the Department of

21

Labor (DOL) promulgated 29 C.F.R. § 778.114, an interpretive rule intended to codify

22

the Supreme Court's decision in Missel.

See Russell v. Wells Fargo and Co., 672

23
24
25
26
27
28

2010.
9

The Court is not swayed by the Department of Labor’s January 14, 2009 Opinion letter,
which concludes that the FWW method can be used to compute overtime compensation
retroactively in a misclassification scenario. See Wage & Hour Div., U.S. Dep't of Labor,
Retroactive Payment of Overtime and the Fluctuating Workweek Method of Payment, Opinion
Letter (FLSA2009-3) (2009). The Opinion letter relies on Clements v. Serco, Inc., 530 F.3d
1224 (10th Cir.2008), and Valerio v. Putnam Associates, Inc., 173 F.3d 35 (1st Cir.1999), which,
for the reasons stated herein, the Court declines to follow.

- 16 -

1
2
3
4
5
6
7
8
9
10
11

F.Supp.2d 1008, 1011 (N.D. Cal. 2009). The section provides, in pertinent part:
An employee employed on a salary basis may have hours of
work which fluctuate from week to week and the salary may
be paid him pursuant to an understanding with his employer
that he will receive such fixed amount as straight time pay for
whatever hours he is called upon to work in a workweek,
whether few or many. Where there is a clear mutual
understanding of the parties that the fixed salary is
compensation (apart from overtime premiums) for the hours
worked each workweek, whatever their number, rather than
for working 40 hours or some other fixed weekly work
period, such a salary arrangement is permitted by the Act if
the amount of the salary is sufficient to provide compensation
to the employee at a rate not less than the applicable
minimum wage rate for every hour worked in those
workweeks in which the number of hours he works is
greatest, and if he receives extra compensation, in addition to
such salary, for all overtime hours worked at a rate not less
than one-half his regular rate of pay.

12

The employer must satisfy five conditions in order to take advantage of the FWW

13

calculation: (1) the employee's hours must fluctuate from week to week, (2) the employee

14

must receive a fixed salary, (3) the salary must meet the minimum wage standards, (4)

15

the employee and the employer must have a clear mutual understanding that the salary

16

(not including overtime premiums) is fixed regardless of the number of hours the

17

employee works, and (5) the employee must receive overtime compensation for hours

18

worked in excess of forty hours, not less than one-half the rate of pay. Brown v. Nipper

19

Auto Parts and Supplies, Inc., 2009 WL 1437836, *6 (W.D. Va. 2009) (citing Flood v.

20

New Hanover County, 125 F.3d 249, 252 (4th Cir.1997) and 29 C.F.R. § 778.114(a)).

21

The FWW method set forth in 29 C.F.R. § 778.114 is not intended to apply

22

retroactively in a misclassification case. See Urnikis-Negro, 616 F.3d at 666 (stating that

23

29 C.F.R. § 778.114 is not a remedial measure that specifies how damages are to be

24

calculated when a court finds that an employer has breached its statutory obligations). It

25

was drafted by the Department of Labor as “forward-looking” and only describes how

26

employers and employees should structure an agreement for future compensation. Id.at

27

677. Moreover, because the regulation was adopted without formal rule-making, it is

28

entitled to less deference. See Hasan v. GPM Investments, LLC, 2012 WL 3725693, *2
- 17 -

1

(D.Conn. 2012) (citing Christensen v. Harris Co., 529 U.S. 576 (2000)).

The Court

2

concludes that the FWW should not be applied in the present case because: (1) it is

3

contrary to the rationale of the FLSA to apply the FWW method in misclassification

4

cases; (2) application of the FWW in misclassification cases runs counter to the intent of

5

the FLSA; and (3) even if the FWW method were applied, Defendant has failed to prove

6

the elements of the FWW method are present in this case.

7

Application of the FWW method in a misclassification case is contrary to FLSA’s

8

rationale. The FWW method requires proof of a “clear mutual understanding” that: (1)

9

the fixed salary is compensation for the hours worked each work week, whatever their

10

number; and (2) overtime pay will be provided contemporaneously such that it fluctuates

11

depending on hours worked per week.

12

misclassification case, at least one of the parties initiated employment with the belief that

13

the employee was exempt from the FLSA, paid on a salary basis, and therefore not

14

entitled to overtime. When an employee is erroneously classified as exempt and illegally

15

being deprived of overtime pay, neither the fourth nor fifth legal prerequisites for use of

16

the FWW method is satisfied. The parties do not have a “clear, mutual understanding”

17

that a fixed salary will be paid for “fluctuating hours, apart from overtime premiums”

18

because the parties have not contemplated overtime pay.10 In addition, because the

19

employees were erroneously classified as exempt, overtime compensation was not

20

provided contemporaneously. See Russell v. Wells Fargo and Co., 672 F.Supp.2d 1008

21

(N.D. Cal. 2009); Hasan, 2012 WL 3725693 at * 4 (collecting cases which hold that, in a

22

misclassification case, the parties never agreed to an essential term of a fluctuating work

23

week arrangement, ie. that overtime would be paid at different rates depending on the

24

number of hours worked per week). As the court stated in Ransom v. M. Patel Enters.,

25

Inc., 825 F.Supp.2d 799, 810 n.11 (W.D. Tex. 2011):

See 29 C.F.R. §§ 778.114(a) & (c).

In a

26
10

27
28

The parties cannot mutually agree that the employee will be paid a flat weekly rate for
fluctuating hours, including those hours worked in excess of forty, without overtime pay. Such
an agreement would be illegal: employees cannot agree to waive their right to overtime pay. See
Russell v. Wells Fargo and Co., 672 F.Supp.2d 1008 (N.D. Cal. 2009).

- 18 -

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27

The significance of the employee's lack of knowledge of nonexempt status cannot be overstated. The fundamental
assumption underpinning the FWW is that it is fair to use it to
calculate overtime pay because the employee consented to the
payment scheme. But in the context of an FLSA
misclassification suit when consent is inferred from the
employee's conduct, that conduct will always, by definition,
have been based on the false assumption that he was not
entitled to overtime compensation. The job will have been
advertised as a salaried position. The employee, if he raised
the issue, will have been told that the salary is all he will
receive, regardless of how many hours he works. That is the
very nature of a salaried, exempt position. When it turns out
that the employer is wrong, and it is learned that the FLSA
required the employer to pay the employee an overtime
premium, the notion that the employee's conduct before he
knew this is evidence that the employee somehow consented
to a calculation method for the overtime pay that no one even
knew was due, is perverse. If the FWW requires consent in
some fashion, the employee's actions before he knew he was
due overtime pay just cannot logically be the basis of that
consent.
Furthermore, 29 C.F.R. § 778.114(c) provides that the FWW method cannot be used
“where all the facts indicate that an employee is being paid for his overtime hours at a
rate no greater than that which he receives for non-overtime hours.”

In a

misclassification case, because employees have not been paid overtime premiums, they
are compensated for those hours worked more than forty at a rate not greater than the
regular rate. Russell, 672 F.Supp.2d at 1014. Thus, attempting to retroactively apply the
FWW method to a miscalculation case is akin to “the old ‘square peg in a round hole’
problem [because it requires] apply[ing] § 778.114 to a situation it was not intended to
address.” EZPawn, 633 F.Supp.2d at 402.
“In making its decision here, the Court is ‘mindful of the directive that the [FLSA]
is to be liberally construed to apply to the furthest reaches consistent with Congressional
direction.’” Russell, 672 F.Supp.2d at 1014 (citing Klem, 208 F.3d at 1089). Application
of the FWW in a misclassification case gives rise to a “perverse incentive” for employers,
because the employee’s hourly “regular rate” decreases with each additional hour
worked. In fact, the difference between the FWW method and the traditional time-anda-half method can result in an employee being paid seventy-one percent less for overtime

28
- 19 -

1

over a given year, and under the FWW method, the effective overtime hourly rate of an

2

employee working sixty-one hours or more is less than the non-overtime hourly rate of an

3

employee who worked no more than forty hours per week. See Russell, 672 F.Supp.2d at

4

1012; see also Hasan, 2012 WL 3725693 at *2 (calculating the pay difference for a

5

misclassified employer under both methods). This result is contrary to the FLSA’s

6

purpose: encouraging employers to spread employment among more workers, rather than

7

employing fewer workers who are then required to work longer hours. See Robertson v.

8

Alaska Juneau Gold Min. Co., 157 F.2d 876, 879 (9th Cir. 1946).
Finally, even if the Court concluded that the FWW method does apply in some

9
10
11
12
13
14
15
16
17
18
19
20
21

miscalculation cases, it would not apply in the present case because Defendant has failed
to demonstrate a “fluctuating” work week or a “clear mutual understanding” of straight
pay and a contemporaneous overtime arrangement as required by the regulation. The
FWW was intended to apply to “fluctuating” work schedules, ie. schedules in which an
employee endures long hours some weeks but enjoys the benefit of short hours in other
weeks, all at the same rate of pay. See Hasan, 2012 WL 3725693 at *4. In the present
case, it is undisputed that Plaintiffs consistently worked more than 40 hours per week.
Thus, Plaintiffs’ “variance, between weeks with a moderate amount of overtime hours,
and weeks where a majority of hours worked exceeded the 40 hour threshold, is not the
same as the up and down fluctuation contemplated by the DOL and by the Court in
Missel.” Id.

In addition, by its plain terms, the FWW method applies only when the

employee clearly understands that he will receive straight-time pay for all hours worked
and extra compensation of at least half his regular rate of pay, in addition to the fixed

22

salary, for overtime hours during the weeks when he works overtime. Hunter v. Sprint

23

Corp., 453 F.Supp.2d 44, 59 (D.D.C. 2006); Russell, 672 F.Supp.2d at 1013-14. No such

24

clear, mutual understanding is present in this case. Defendant contends that Plaintiffs

25

agreed to work for a set salary regardless of whether they worked “35 hours or 55 hours.”

26

(Doc. 74, pg. 13.) Defendant misquotes Plaintiffs’ testimony regarding the number of

27

hours they anticipated working. Although Defendant describes the Plaintiffs’ testimony

28

regarding their salary as their “sole source of income regardless of whether they worked
- 20 -

1
2
3
4
5
6
7
8
9
10

35 or 55 hours,” neither Plaintiff testified to any expectation of ever working less than 40
hours. (Doc. 71, pg. 10; Doc. 71-1, pgs. 35 & 52.) The undisputed evidence is that
Plaintiffs expected to work 50 hours a week. Furthermore, even if Defendant could prove
that Plaintiffs and Defendant had a clear, mutual understanding that Plaintiffs would
work 50 hours a week without overtime pay, such an arrangement amounts to an
agreement “not to receive their FLSA entitlement to overtime pay. This would be illegal.
Employees cannot agree to waive their right to overtime pay.” Russell, 672 F.Supp.2d at
1014. The parties’ lack of “mutual understanding” regarding Plaintiffs’ salary is further
supported by the fact that Plaintiffs, upon realizing that they were being required to work
far more than 50 hours per week, complained about their hours and were eventually paid
some overtime.

11
12
13

In sum, the Court agrees with its sister district court in Northern California which
held that “If Defendants' position were adopted, an employer, after being held liable for
FLSA violations, would be able unilaterally to choose to pay employees their unpaid

14

overtime premium under the more employer-friendly of the two calculation methods.

15

Given the remedial purpose of the FLSA, it would be incongruous to allow employees,

16

who have been illegally deprived of overtime pay, to be shortchanged further by an

17

employer who opts for the discount accommodation intended for a different situation.”

18

Russell, 672 F.Supp.2d at 1014. Accordingly, the Court concludes that the FWW method

19

to damages calculation is not applicable in the instant case.

20

4.

21

Plaintiffs are entitled to summary judgment on Defendant’s affirmative
defenses

22

a.

23

The scope of Plaintiffs’ argument regarding Defendant’s affirmative defenses

24

narrowed during the course of briefing on the cross-motions for summary judgment.

25

Plaintiffs initially moved for summary judgment on Defendant’s affirmative defenses B,

26

K, G, H, I and J on the ground that those defenses were not applicable in FLSA actions to

27

recover overtime compensation. (Doc. 68, pg. 23.) Defendant subsequently offered to

28

withdraw those affirmative defenses. (Doc. 70, pgs. 29-30; Doc. 74, pg. 14.)

Several affirmative defenses are no longer at issue

- 21 -

Thus,

1
2
3
4
5
6
7

affirmative defenses B, K, G, H, I and J are no longer at issue and Plaintiffs’ Motion for
Summary Judgment is moot as to those defenses.11
Plaintiffs also moved for summary judgment on affirmative defenses A, D and F,
which allege that Plaintiffs’ claims are barred because Plaintiffs were exempt from the
FLSA. As stated in sections 1 & 2 of this Order, Plaintiffs are entitled to summary
judgment on Defendant’s exemption claims and therefore the Court need not consider
other grounds for summary judgment on these affirmative defenses.
b.

8
9
10
11
12
13

Plaintiffs are entitled to summary judgment on Defendant’s “good
faith” defenses

Finally, Plaintiffs seek summary judgment on affirmative defenses C and E, in
which Defendant asserts that Plaintiffs’ claims are barred by Sections 10 and 11 of the
Portal-to-Portal Act, 29 U.S.C. §§

259-260, because Defendant’s classification of

Plaintiffs as exempt was made in good faith. Plaintiffs do not dispute the potential
applicability of these provisions, but contend that Defendant failed to identify any

14

supporting material facts or persons with relevant knowledge regarding those affirmative

15

defenses during discovery or present evidence in the record at the summary judgment

16

stage to support Defendant’s claim that it acted in good faith when it classified Plaintiffs

17

as exempt. The Court agrees.

18

The FLSA provides partial and whole “escape hatches” from liability in certain

19

instances in which an employer’s misclassification of an employee is made in good faith.

20

One of those escape hatches is Section 11 of the Portal-to-Portal Act, 29 U.S.C. § 260,

21

which gives the Court the discretion not to award liquidated damages if certain conditions

22

are met. Defendant asserts a Section 11 defense in affirmative defense E.

23

Section 10 of the Portal-to-Portal Act provides employers with a complete defense

24

against overtime damages in certain situations. Defendant asserts a Section 10 defense in

25

affirmative defense C. The Court considers each of these affirmative defenses in turn.

26

i.

Similarly,

Defendant has failed to meet its burden of proof with respect to

27
11

28

In addition, Defendant does not intend to pursue affirmative defenses L and M. (Doc.
70, pg. 29; Doc. 74, pg. 14.)

- 22 -

affirmative defense E

1
2

Plaintiffs are entitled to summary judgment on affirmative defense E, which

3

asserts a “good faith” defense pursuant to Section 11 of the Portal-to-Portal Act, 29

4

U.S.C. § 260. Section 216 of the FLSA mandates that an employer who fails to pay

5

overtime as required by the FLSA is liable to the employee in the amount of their unpaid

6

overtime compensation and an additional equal amount as liquidated damages. “Double

7

damages are the norm, single damages the exception....” Walton v. United Consumers

8

Club, Inc., 786 F.2d 303, 310 (7th Cir. 1986). Thus, liquidated damages are mandatory

9

unless the employer can prove compliance with Section 11 of the Portal-to-Portal Act,

10

which states:

11

If the employer shows to the satisfaction of the court that the
act or omission giving rise to such action was in good faith
and that he had reasonable grounds for believing that his act
or omission was not a violation of the Fair Labor Standards
Act of 1938, as amended, the court may, in its sound
discretion, award no liquidated damages or award any amount
thereof not to exceed the amount specified in section 216 of
this title.

12
13
14
15
16

29 U.S.C. § 260. Section 11 requires proof that the employer acted both in subjective

17

good faith and with objectively reasonable grounds to believe that it was not in violation

18
19
20
21
22
23
24
25
26
27

of the FLSA. See E.E.O.C. v. First Citizens Bank of Billings, 758 F.2d 397, 403 (9th Cir.
1985).
An employer’s burden of proof with respect to Section 11 is “plain and
substantial,” Marshall v. Brunner, 668 F.2d 748, 752 (3rd Cir. 1982), and “a difficult one
to meet.” Brock v. Wilamowsky, 833 F.2d 11, 19 (2d Cir.1987). In order to meet the
subjective test, the employer must come forward with evidence of its actual reliance on a
person or entity with knowledge of the FLSA regulations, including its attorney or the
Department of Labor. See Elwell v. University Hospitals Home Care Services, 276 F.3d
832, 840-41 (6th Cir. 2002); see also Martin v. Cooper Elec. Supply Co., 940 F.2d 896,
908 (3rd Cir. 1991) (to carry his burden, a defendant employer must show that he took
affirmative steps to ascertain the Act's requirements, but nonetheless, violated its

28
- 23 -

1
2
3
4
5
6
7
8
9
10
11
12
13

provisions).

The Court must then consider whether that reliance was objectively

reasonable. An employer may not rely on ignorance alone in meeting the objective test.
See Barcellona v. Tiffany English Pub, 597 F.2d 464, 468-69 (5th Cir. 1979). In addition,
in lieu of any affirmative attempt by an employer to determine the legality of its wage
payment practices, the employer's adherence to customary and widespread industry
practices that violate the Act's overtime pay provisions is not evidence of an objectively
reasonable good faith violation. Martin, 940 F.2d at 910. Finally, even where an
exemption appears legally uncertain, the misclassification cannot be deemed objectively
reasonable unless it “pervade[s] and markedly influence[s] the employer's belief.” Id.
Given the exceptionally high burden of proof placed on employers attempting to
assert a Section 11 affirmative defense, the Court concludes that Plaintiffs are entitled to
summary judgment on Defendant’s affirmative defense E. During discovery, Plaintiffs
served Defendant with an interrogatory asking Defendant to identify all material facts
supporting affirmative defense E as well as any individual with personal knowledge

14

regarding that affirmative defense. (Doc. 68-2, Ex. 9, pg. 10.) Defendant’s response to

15

the interrogatory stated several objections and asserted that it would supplement the

16

response after the close of discovery. (Id.) It does not appear that any supplement was

17

provided.12 Now that Plaintiffs have put Defendant to its proof with the pending Motion

18

for Summary Judgment, Defendant contends that its decision to categorize Plaintiffs as

19

exempt is supported by “a sufficient body of case law and supporting regulations” (Doc.

20

70, pg. 28), as well as offer letters stating Plaintiffs’ positions were exempt and the

21

disclosure of three Human Resource professionals. (Doc. 74, pg. 15.) Defendant points

22

to its Initial Disclosure Statement, in which it listed Beth Skoletsky, Evelyn Finely and

23

Michael Francisco – all employed in L-3’s Human Resources Department – as

24

“individuals likely to have discoverable information that Defendant may use to support

25

its defenses.” (Doc. 74-1, pgs. 2-3.) The Initial Disclosure Statement alleges that these 3

26
12

27
28

Because the Court concludes that Defendant has failed to meet its burden of proof with
respect to affirmative defenses C and E, it need not consider Plaintiffs’ claim that Defendant
failed to timely disclose evidence in support of those affirmative defenses and should not be
permitted to use that evidence at trial.

- 24 -

1
2
3
4
5
6
7
8
9
10
11
12
13

individuals “may have information relating to Plaintiffs’ claims that L-3 failed to pay
them overtime wages in violation of [FLSA], the amounts L-3 actually paid to Plaintiffs
and its basis for doing so . . . and other facts and issues related to this lawsuit.” (Id.)
At best, the case law, documents and witness disclosures highlighted by Defendant
could take shape at trial in the form of testimony from Beth Skoletsky, Evelyn Finely
and/or Michael Francisco that they were familiar with FLSA regulations and case law
and subjectively believed Plaintiffs could be classified as exempt, or that they relied on
the advice of someone familiar with the FLSA (and applicable case law and regulations)
in classifying Plaintiffs. These human resource department employees would also need
to testify that they did more than comply with industry-wide practices. However, if
Defendant has access to that testimony, it needed to bring it forward in the context of
these cross-motions. Plaintiffs’ Motion for Summary Judgment points out the absence of
evidence supporting affirmative defense E. Celotex, 477 U.S. at 325. The burden is
therefore on Defendant to set forth specific facts showing that there is a genuine issue for

14

trial." Fed. R. Civ. P. 56(e). It is not enough for Defendant to point to case law,

15

documents and witness disclosures in a suggestion of an inference that the requisite

16

“specific facts” exist. See Martin, 940 F.2d at 908 (if the employer fails to come forward

17

with plain and substantial evidence to satisfy the good faith and reasonableness

18

requirements, the district court is without discretion to deny liquidated damages).

19

Accordingly, the Court concludes that Plaintiffs are entitled to summary judgment as to

20

Defendant’s affirmative defense E.

21
22

ii.

Defendant has failed to meet its burden of proof with respect to
affirmative defense C

23

For similar reasons, the Court will grant summary judgment in favor of Plaintiffs

24

as to Defendant’s affirmative defense C, which asserts a defense under Section 10 of the

25

Portal-to-Portal Act. Section 10 provides that an employer is not liable for violation of

26

the FLSA if “he pleads and proves that the act or omission complained of was in good

27

faith in conformity with and in reliance on any written administrative regulation, order,

28

ruling, approval, or interpretation” of the Wage and Hour Division of the Department of
- 25 -

1
2
3
4
5
6
7
8
9
10
11
12
13

Labor. 29 U.S.C. § 259. Like Section 11, Section 10 of the Portal-to-Portal Act places a
high burden of proof on the employer. The employer must prove actual reliance on a
specific administrative ruling or interpretation.

See 29 C.F.R. § 790.16(a).

The

administrative interpretation relied upon must provide a clear answer to the particular
situation in order for the employer to rely on it. See Cole v. Farm Fresh Poultry, Inc.,
824 F.2d 923 (11th Cir. 1987). Finally, the employer must demonstrate that his good faith
reliance was objectively reasonable. See Frank v. McQuigg, 950 F.2d 590, 598 (9th Cir.
1991).
As was the case with affirmative defense E, Plaintiffs served Defendant with an
interrogatory asking Defendant to identify all material facts supporting affirmative
defense C as well as any individual with personal knowledge regarding that affirmative
defense. (Doc. 68-2, Ex. 9, pg. 9.) Defendant’s response to the interrogatory stated
several objections and asserted that it would supplement the response after the close of
discovery. (Id.) It does not appear that any supplement was provided. At the summary

14

judgment stage, Defendant has not provided the Court with specific citation to any

15

portion of the record regarding this issue. In fact, Defendant’s response brief was

16

essentially silent on the issue of affirmative defense C, prompting Plaintiffs to conclude

17

in their Response/Reply that Defendant had abandoned the affirmative defense. (Doc.

18

72, pg. 12.) Defendant then clarified in its Response/Reply that it had not abandoned the

19

defense and that its Motion contained “ample support (including the Rule 408

20

communication dated December 12, 2011, attached to Plaintiffs’ Response) for this

21

defense.” (Doc. 74, pg. 15.)13

22

Even if the Court were to construe Defendant’s argument as a claim that it

23

classified Plaintiffs as exempt based on its reasonable reliance on the authorities cited in

24

its Motion, Defendant has nonetheless failed to meet its burden of proof with respect to

25

affirmative defense C. The record is devoid of any testimony that anyone within L-3’s

26

offices was actually familiar with and acted in reliance on that authority. Defendant’s

27
13

28

The December 12, 2011 letter was not attached to any of Defendant’s filings.
Plaintiffs provided it as an attachment to their Response/Reply. (Doc. 72-1, pgs. 6-7.)

- 26 -

1
2
3
4
5
6
7
8
9
10
11
12
13

Motion also fails to cite to a DOL regulation, order, ruling, approval, or interpretation
that is specific to Defendant’s situation. To the contrary, the only regulations cited by
Defendant are the regulations related to administrative and executive exemptions
generally; the administrative exemption specifically excludes “ordinary inspection
work.”14 29 C.F.R. § 541.202(g). In sum, Defendant has failed to meet its burden of
proof with respect to affirmative defense C, and Plaintiffs are entitled to summary
judgment on that affirmative defense.
CONCLUSION
For the foregoing reasons, IT IS ORDERED THAT:
1. Plaintiffs’ Motion for Partial Summary Judgment filed on May 25, 2012 (Doc. 68)
is GRANTED;
2. Defendant’s cross-Motion for Summary Judgment filed on June 28, 2012 (Doc.
70) is DENIED;
3. Within 30 days of the date this Order is filed, the parties shall submit a Joint

14

Proposed Pretrial Order. The Court refers the parties to its October 18, 2011

15

Scheduling Order (Doc. 19) for further instructions.

16

Dated this 5th day of December, 2012.

17
18
19
20
21
22
23
24
25
26
14

27
28

To the extent Defendant’s Motion cites to applicable case law construing the FLSA,
Defendant has not cited to, and the Court is unaware of, any authority suggesting that case law is
a “regulation, order, ruling, approval, or interpretation” by the DOL within the meaning of 29
U.S.C. § 259.

- 27 -