Norton et al v. Maximus Inc.

Filing 138

MEMORANDUM AND ORDER RE: CROSS-MOTIONS FOR SUMMARY JUDGMENT AS TO LIQUIDATED DAMAGES. IT IS THEREFORE ORDERED plaintiffs' motion for summary judgment as to liquidated damages be, and the same hereby is, GRANTED and defendants motion for summary judgement as to liquidated damages be, and the same hereby is, DENIED. All remaining pending motions are DENIED AS MOOT in light of the parties settlement and plaintiffs withdrawal of all objections. Signed by Judge William B. Shubb. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (st)

1
2
3
4
5
6
7
8

UNITED STATES DISTRICT COURT

9

DISTRICT OF IDAHO

10
----oo0oo----

11
12
13
14
15
16

YVETTE NORTON, JEANNETTE
RODRIGUEZ-GUZMAN, KELLY
BARKER, JOSEPH BELL, BRAD
EPPERLY, STEPHANIE JONES,
KATHERINE KELLEY KNOWLES,
NANCY RICHARDS, and MARK
ZUMWALT, Individually and On
Behalf of All Others
Similarly Situated,

CIV. NO. 1:14-30 WBS
MEMORANDUM AND ORDER RE: CROSSMOTIONS FOR SUMMARY JUDGMENT AS
TO LIQUIDATED DAMAGES

Plaintiffs,

17
18

v.

19

MAXIMUS INC.,

20
Defendant.

21

----oo0oo----

22
23

This class action under the Fair Labor Standards Act of

24

1938 (“FLSA”), 29 U.S.C. §§ 201–219, involves claims by

25

plaintiffs who work as Trainers and Supervisors for defendant

26

Maximus Inc.

27

for summary judgment pursuant to Federal Rule of Civil Procedure

28

56 on the Trainer plaintiffs’ claim for liquidated damages under

This Order is limited to the parties’ cross-motions

1

1

the FLSA.

2

I.

Factual and Procedural Background

3

Defendant operates calls centers in Boise, Idaho and

4

Brownsville, Texas to provide support for implementation of the

5

Affordable Care Act.

6

(“GDIT”) agreed to provide the call center services in a

7

government service contract with the Center for Medicaid and

8

Medicare Services and then subcontracted with defendant to

9

operate the call centers.

General Dynamics Information Technology

The parties do not dispute that

10

defendant is obligated under its subcontract to comply with the

11

Service Contract Act (“SCA”), 41 U.S.C. § 351.

12

At both call centers, defendant employs exempt and non-

13

exempt employees.

Customer Service Representatives take calls

14

from the public and are classified as non-exempt employees, and

15

the Trainers, who primarily trained the Customer Service

16

Representatives, were initially classified as exempt salaried

17

employees.

18

worked overtime hours but were not compensated for that overtime

19

because they were classified as exempt employees.

20

October through early November 2013, defendant received

21

complaints from some Trainers at the Boise facility about their

22

excessive and uncompensated overtime.

It is undisputed that the Trainers in both facilities

In late

23

Based on defendant’s misclassification of the Trainers,

24

failure to pay the Trainers for overtime, and alleged retaliation

25

against the Trainers for complaining about their uncompensated

26

overtime, plaintiffs initiated this class action on January 24,

27

2014.

28

reclassified the Trainers as non-exempt hourly employees, which

Shortly before the lawsuit was filed, defendant

2

1

took effect on February 1, 2014.

2

Trainers received the same hourly pay and were compensated for

3

their overtime.

4

Upon reclassification, all

In their First Amended Complaint (“FAC”), the Trainers

5

allege three claims under the FLSA: (1) failure to pay required

6

overtime and keep accurate records, 29 U.S.C. §§ 207(a)(2)(C),

7

211(c); (2) misclassification of employment status, 29 U.S.C. §

8

213(a); and (3) retaliation, 29 U.S.C. § 215(a)(3).

9

cross-motions for summary judgment, the parties settled all of

After filing

10

the Trainer plaintiffs’ claims except their claim for liquidated

11

damages under the FLSA.

12

decide liquidated damages on cross-motions for summary judgment

13

and plaintiff agreed to withdraw all evidentiary objections to

14

the evidence defendant had submitted.

15

II. Legal Standard

16

The parties agreed to have the court

(Docket No. 127.)

Summary judgment is proper “if the movant shows that

17

there is no genuine dispute as to any material fact and the

18

movant is entitled to judgment as a matter of law.”

19

P. 56(a).

20

of the suit, and a genuine issue is one that could permit a

21

reasonable jury to enter a verdict in the non-moving party’s

22

favor.

23

(1986).

24

burden of establishing the absence of a genuine issue of material

25

fact and can satisfy this burden by presenting evidence that

26

negates an essential element of the non-moving party’s case.

27

Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986).

28

Alternatively, the moving party can demonstrate that the non-

Fed. R. Civ.

A material fact is one that could affect the outcome

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
The party moving for summary judgment bears the initial

3

1

moving party cannot produce evidence to support an essential

2

element upon which it will bear the burden of proof at trial.

3

Id.

4

Once the moving party meets its initial burden, the

5

burden shifts to the non-moving party to “designate ‘specific

6

facts showing that there is a genuine issue for trial.’”

7

324 (quoting then-Fed. R. Civ. P. 56(e)).

8

the non-moving party must “do more than simply show that there is

9

some metaphysical doubt as to the material facts.”

Id. at

To carry this burden,

Matsushita

10

Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986).

11

“The mere existence of a scintilla of evidence . . . will be

12

insufficient; there must be evidence on which the jury could

13

reasonably find for the [non-moving party].”

14

at 252.

Anderson, 477 U.S.

15

In deciding a summary judgment motion, the court must

16

view the evidence in the light most favorable to the non-moving

17

party and draw all justifiable inferences in its favor.

18

255.

19

and the drawing of legitimate inferences from the facts are jury

20

functions, not those of a judge . . . ruling on a motion for

21

summary judgment . . . .”

22

III. Liquidated Damages

23

Id. at

“Credibility determinations, the weighing of the evidence,

Id.

An employer who violates the FLSA “shall be liable to

24

the employee or employees affected in the amount of . . .

25

unpaid overtime compensation . . . and in an additional equal

26

amount as liquidated damages.”

27

damages are not a penalty exacted by the law, but rather

28

compensation to the employee occasioned by the delay in receiving

29 U.S.C. § 216(b).

4

their

“Liquidated

1

wages due caused by the employer’s violation of the FLSA.”

2

Herman v. RSR Sec. Servs. Ltd., 172 F.3d 132, 142 (2d Cir. 1999).

3

The court, however, may decline to award liquidated damages or

4

award a lesser amount “if the employer shows to the satisfaction

5

of the court that the act or omission giving rise to such action

6

was in good faith and that he had reasonable grounds for

7

believing that his act or omission was not a violation of the

8

[FLSA].”

9

damages are mandatory.”

10
11

29 U.S.C. § 260.

“Absent such a showing, liquidated

Bratt v. County of Los Angeles, 912 F.2d

1066, 1071 (9th Cir. 1990).
A.

Initial Classification

12

1.

Good Faith

13

“To satisfy the subjective ‘good faith’ component, the

14

[employer is] obligated to prove that [it] had an honest

15

intention to ascertain what [the FLSA] requires and to act in

16

accordance with it.”

17

original) (quoting Brock v. Shirk, 833 F.2d 1326, 1330 (9th Cir.

18

1987)).

19

made above board and justified in public is more likely to

20

satisfy this test.”

21

endeavored” and took “affirmative ‘steps’ to ensure compliance”

22

with the FLSA.

23

2003).

24

insufficient, and “‘[a] finding that the employer did not act

25

willfully does not preclude an award of liquidated damages.’”

26

Id. (quoting Cox v. Brookshire Grocery Co., 919 F.2d 354, 357

27

(5th Cir. 1990)).

28

Id. at 1072 (second and third alteration in

Under this “essentially factual inquiry,” a “decision

Id.

The employer must show it “actively

Alvarez v. IBP, Inc., 339 F.3d 894, 910 (9th Cir.

An “ex post explanation and justification” is

In Bratt, the Ninth Circuit affirmed a district court’s
5

1

finding that an employer acted in good faith even though the

2

employer “did not do as good a job as it could have done.”

3

F.2d at 1072.

4

“person assigned to make the coverage decisions arguably was

5

adequately qualified, and his decisions whether to make more

6

extensive studies of individual jobs and corresponding data

7

involved practical considerations on how best to complete the

8

required evaluations in a timely fashion.”

9

further emphasized that there was “no evidence that the County

10
11

912

The Ninth Circuit found it sufficient that the

Id.

The court

attempted to evade its responsibilities under the Act.”

Id.

Defendant has put forth evidence showing that it took

12

affirmative steps to determine the Trainers’ FLSA classification

13

during the bidding process for the GDIT subcontract.

14

Lent, defendant’s Human Capital Director, explains that she has

15

had “extensive experience” with the FLSA and that she “analyzed

16

whether each position was exempt or non-exempted” under the FLSA.

17

(Lent Decl. ¶¶ 2, 8 (Docket No. 99-6).)

18

Lent visited an existing GDIT call-center on September 25, 2012

19

and learned that the Trainers at that call center performed some

20

supervisory tasks.

21

“Staff [Trainers] at higher level and then move trainers to other

22

jobs during peak time, such as acting supervisor of CSR’s.

23

visited call-center] shared success stories of trainers to acting

24

supervisor--ability to return to classroom with a better

25

understanding.”

26

(Id. ¶ 7.)

Roseann

As part of that process,

Based on that visit, she noted:

[The

(Id. Ex. 1 at 5.)

Similarly, Peter Oistad, defendant’s Senior Manager of

27

Compensation and Analytics, explains that he was tasked with

28

ensuring that the various job positions, including the Trainers,
6

1

complied with FLSA classification guidelines.

2

4-5 (Docket No. 99-9).)

3

numerous emails about the classification of the Trainers and

4

consulted “numerous guides/check lists” when reviewing the job

5

descriptions and FLSA classification.

6

6.)

7

Trainers would “mov[e] into supervisory positions after the

8

training work was complete.”

9

exchanged during the wage and classification process similarly

(Oistad Decl. ¶¶

Oistad had conversations and exchanged

(See id. ¶¶ 7-9, Exs. 1-

He explains that it was originally contemplated that the

(Id. ¶ 9.)

The spreadsheets

10

indicate that the Trainers’ role would “align with supervisor

11

function” “based on work function.”

12

(Id. Exs. 4-6.)

These affirmative inquiries are easily distinguishable

13

from many cases in which courts awarded liquidated damages.

14

e.g., Alvarez, 339 F.3d at 910 (employer relied only on an “ex

15

post explanation and justification” and offered “no evidence to

16

show that it actively endeavored to ensure such compliance”);

17

Herman, 172 F.3d at 142 (employer “had extensive knowledge of the

18

FLSA’s requirements, but utterly failed to take the steps

19

necessary to ensure RSR’s pay practices complied with the Act”);

20

Dole v. Elliott Travel & Tours, Inc., 942 F.2d 962, 968 (6th Cir.

21

1991) (“The only proof of good faith and reasonableness offered

22

by defendants is the bare assertion . . . that at all times they

23

have ‘acted in good faith in an effort to comply with the

24

Act.’”); Nellis v. G.R. Herberger Revocable Trust, 360 F. Supp.

25

2d 1033, 1045 (D. Ariz. 2005) (employer “submitted no evidence of

26

any efforts to ascertain the requirements of the FLSA,” “never

27

considered whether [the employee] might be eligible for

28

overtime,” and explained that it did not do “anything to
7

See,

1

determine her eligibility because [the employee] never raised the

2

issue”).

3

On the other hand, however, plaintiffs submitted

4

evidence calling defendant’s good faith into question.

5

internal email dated December 28, 2012, Lent identified the SCA

6

Wage Determinations for each of the positions and identified the

7

“Training Specialist” position as covered by a non-exempt SCA

8

“Occupation.”

9

the series of emails identifies all of the potential positions

(Docket No. 101-1 at 29-31.)

In an

An attachment within

10

and, while some are described as “SCA NOT APPLICABLE,” the

11

“Training Specialist” is linked with a non-exempt SCA

12

“Occupation.”

13

plaintiffs, this email shows that “Maximus was instructed that

14

the Trainer position was to be categorized as a [SCA] position,

15

i.e. non-exempt, hourly employees.”

16

No. 109).)

17

months after Lent visited the existing call-center.

18

(Docket No. 101-3 at 31.)

According to

(Pls.’ Reply at 35 (Docket

Notably, these email conversations occurred several

Although defendant appears to have made a good faith

19

inquiry initially, the December 28, 2012 email at least suggests

20

that the Trainers should not have been classified as exempt and

21

raises questions as to whether defendant continued to believe in

22

good faith that the Trainers should be classified as exempt

23

employees.

24

2.

Reasonable Grounds

25

Even assuming defendant acted in good faith when making

26

its initial classification, plaintiff would still be entitled to

27

liquidated damages if defendant cannot also show that its

28

classification decision was objectively reasonable.
8

1

“[D]etermining the reasonableness of the [employer’s] belief

2

involves applying the proper interpretation of the FLSA and

3

supporting regulations to uncontested facts.”

4

1072.

5

Bratt, 912 F.2d at

It is undisputed that defendant ultimately conceded

6

that the Trainers should be classified as non-exempt and

7

reclassified them in response to their complaints.

8

explains, however, that its initial classification decision was

9

objectively reasonable because it contemplated that the Trainers

Defendant

10

would perform tasks that came within the FLSA administrative

11

exemption.

12

requires that the employee (1) have a minimum salary of $455 per

13

week; (2) a primary duty of performing “office or non-manual work

14

directly related to the management or general business operations

15

of the employer or the employer’s customers”; and (3) a primary

16

duty of exercising “discretion and independent judgment with

17

respect to matters of significance.”

18

directly related to management or general business operations

19

includes . . . quality control; . . . personnel management; and

20

similar activities.”

21

To come within the administrative exemption, the FLSA

29 C.F.R. § 541.200.

“Work

Id. § 541.201.

Lent explains that defendant anticipated that the

22

Trainers would at times take on the Supervisor role, which

23

included “supervision, development, coaching, leadership,

24

monitoring attendance, hiring and discipline.”

25

12.)

26

Trainers would help develop the training materials.

27

Decl. ¶ 11.)

28

(Lent Decl. ¶

During the bidding process, Oistad also believed that the
(Oistad

In Bates v. United States, the Federal Claims court
9

1

found that a Course Development Instructor role came within the

2

administrative exemption when the employee had a “great deal of

3

authority as to course development, policy, and oversight” and

4

played a “prominent role in the development of the . . .

5

[employer’s] training program.”

6

2004).

7

to make recommendations to his superiors concerning disciplinary

8

action against a student” and had “a great deal of independent

9

authority to manage the [] training program and oversee the work

10

A Course Development Instructor also had the “authority

of the trainers below him.”

11

60 Fed. Cl. 319, 333 (Fed. Cl.

Id. at 332.

Similar to that position, defendant believed at the

12

time of initial classification that the Trainers would be

13

responsible for developing the training materials and then would

14

take on a supervisory role over the employees they trained.

15

Based on these assumptions, it appears defendant may have had a

16

reasonable ground to believe at the time of its initial

17

classification that the Trainers would qualify for the

18

administrative exemption.

19

B.

Continued Exempt Status after Call Centers Began

20

Operating

21

Assuming defendant’s initial classification does not

22

merit liquidated damages, the undisputed evidence is that the

23

Trainers’ actual job responsibilities once the call centers began

24

operating were materially different than expected.

25

significantly, defendant does not contend that the Trainers took

26

on any significant supervisory responsibilities.

27

provided the training curriculum and thus the Trainers did not

28

play any role in developing the training materials.
10

Most

GDIT also

(Oistad

1

Decl. ¶ 11.)

2

from defendant’s original expectations, defendant ultimately

3

reclassified the Trainers as non-exempt.

4

however, that defendant’s delay in deciding to reclassify the

5

Trainers merits liquidated damages.

Because the Trainers’ responsibilities differed

Plaintiff argues,

6

Defendant began hiring employees for its Brownsville

7

facility in May 2013 and began taking calls from the public in

8

August 2013.

9

hiring employees for the Boise facility in June 2013 and began

(Lowry Decl. ¶ 7 (Docket No. 99-7).)

(Id.)

It began

10

taking calls in October 2013.

The “ramp” period before

11

the centers began taking calls was an especially demanding time

12

at both facilities requiring regular overtime hours.

13

Decl. Ex. E, Oct. 10, 2013 email (Docket No. 94-8) (“[J]ust to be

14

clear, leadership staff does not leave when your 8 hours are up,

15

leadership staff leaves when the work is complete. . . . That

16

being said, if you have been working crazy hours, are exhausted

17

and are swearing that you will never, ever, ever do another ramp-

18

-Thank you. . . . If you are not doing the above, please prepare

19

to do so.

20

expectation is that all leadership (managers, supervisors) will

21

be scheduled from 5:00 am - 5:00 pm. . . . Trainers will be

22

expected to also follow this schedule . . . .”); see also Britt

23

Decl. ¶ 12 (Docket No. 99-2) (describing a ramp period from

24

September 9, 2013 through the end of October 2013 when the Boise

25

Trainers “consistently worked overtime” and then indicating that

26

he worked “minimal overtime, if any, after the ramp”); Lugo Decl.

27

¶ 4 (Docket No. 99-8) (describing a ramp period from July 21,

28

2013 through September 2013 when the Brownsville Trainers

(Richards

Moving forward, until we are out of ramp, the

11

1

“regularly work[ed] 10-12 hour days” and occasionally “even

2

longer hours”).)

3

Defendant received complaints from Trainers in the

4

Boise facility about their uncompensated overtime as early as

5

mid-October.

6

(Docket No. 90-2) (Vice President of Human Capital indicating

7

that she had “received a call about a training specialist role in

8

Boise and [overtime]”); see also Lowry Decl. ¶ 13 (“In or around

9

late October through early November, 2013, . . . Trainers at the

(See Hudson Decl. Ex. H, Oct. 17, 2013 email

10

Boise facility[] raised concerns with MAXIMUS management and

11

Human Capital about whether the Trainer position had been

12

correctly classified as exempt from overtime compensation under

13

the FLSA.”).)

14

The evidence shows that defendant initially took the

15

complaints seriously and promptly began to address the issue.

16

(See, e.g., Hudson Decl. Ex. H, Oct. 29, 2013 email (“[W]e

17

categorize these trainers as exempt and this is a class of

18

employees that we have been looking at with regard to this

19

issue.”); Hudson Decl. Ex. B, Oct. 17, 2013 email (“We received a

20

call about a training specialist role in Boise and OT.

21

send us the JD so we can verify the FLSA classification?”);

22

Hudson Decl. Ex. D, Nov. 4, 2013 email (forwarding an email from

23

a Trainer and indicating that “one of our Trainers is trying to

24

get a Class action law suit going” and that the email should be

25

added to the “investigation”).)

26

Could you

The evidence also shows that as early as mid-October,

27

defendant at least suspected that it may have incorrectly

28

classified the Trainers.

(See id. Ex. C, Oct. 22, 2013 email
12

1

(Docket No. 90-2) (“The fact that the prime has them classified

2

as Exempt (perhaps incorrectly classified), doesn’t exempt us

3

from the Wage & Hour section of the FLSA.

4

complaint and we have to investigate it either way.”); id. Ex. H,

5

Oct. 21, 2013 email (“I’m officially worried because there are

6

potentially 60+ people who are misclassified and if true, we’re

7

not complying SCA regs.”).)

8
9

This was reported as a

Despite defendant’s undisputable knowledge of the
potential misclassification by the end of October, it took over

10

two-months to decide to reclassify the Trainers and over three

11

months to begin compensating them as non-exempt employees.

12

this amount of time may be consistent with good faith when an

13

employer is faced with a complex and difficult FLSA

14

classification question, application of the FLSA to the Trainer

15

role was not difficult.

16

anticipated the Trainers would handle before the call centers

17

opened justified exempt classification.

18

the Trainers did not handle the anticipated administrative tasks

19

and defendant has not argued that the Trainers actually performed

20

any tasks consistent with exempt classification.

While

Defendant argues only that the duties it

It is undisputed that

21

Moreover, while the evidence shows that defendant was

22

concerned with exposure to liability from misclassification, it

23

does not establish that defendant had an “honest intention” to

24

ascertain the FLSA’s requirements or that defendant took

25

“affirmative ‘steps’ to ensure compliance.”

26

defendant’s Chief of Human Capitol and President TCES’s response

27

to the suggestion that the Trainers be re-classified as non-

28

exempt.

Most striking is

Instead of focusing on what the FLSA required, he
13

1

indicated, “I’m good with [reclassifying the Trainers as non-

2

exempt] . . . OR keeping them exempt and bringing up the bottom

3

paid to cover the possibility of us being wrong . . . .”

4

Ex. E, Dec. 10, 2013 email.)

5

increase the Trainers’ pay to “cover the possibility of

6

[defendant] being wrong,” defendant was not acting openly with

7

the Trainers or putting forth a good faith effort to determine

8

what the FLSA actually required.

9

(explaining how “[a]n employer’s willingness to state and defend

(Id.

In suggesting that defendant simply

Cf. Bratt, 912 F.2d at 1072

10

a ground suggests a colorable foundation, and openness

11

facilitates challenges by the employees,” which may be indicative

12

of good faith).

13

Defendant has therefore failed to establish that it

14

subjectively acted in good faith in deciding whether to

15

reclassify the Trainers after their actual duties were materially

16

different than their anticipated duties.

17

Nor has defendant shown that it acted objectively

18

reasonable in its decision to reclassify the Trainers.

Most

19

significantly, after taking over two months to reach the fairly

20

obvious conclusion that the Trainers were not performing duties

21

consistent with exempt status, defendant waited almost two

22

additional months to begin compensating the Trainers as non-

23

exempt employees.

24

Vice President of Human Capital indicated that reclassifying the

25

Trainers as non-exempt effective as of January 2, 2013 had been

26

“approved.”

27

Defendant did not even adhere to this delayed schedule and

28

instead reclassified the Trainers on January 7, 2013 and made

As early as December 10, 2013, defendant’s

(Hudson Decl. Ex. E, Dec. 10, 2013 email.)

14

1

that reclassification effective as of February 1, 2013.

2

Defendant has not provided any explanation as to how this delayed

3

reclassification is consistent with the FLSA.

4

While defendant’s initial classification decision may

5

have been in good faith and based on a reasonable ground,

6

defendant has failed to establish that its subsequent decision to

7

reclassify the Trainers was made in good faith or was objectively

8

reasonable.

“Absent such a showing, liquidated damages are

9

mandatory.”

Bratt, 912 F.2d at 1071.

Moreover, because Congress

10

intended liquidated damages as a means to compensate employees

11

for the delay in receiving wages required under the FLSA,

12

Alvarez, 339 F.3d at 909, liquidated damages are fitting in a

13

case like this where the defendant unreasonably delayed in

14

reclassifying and compensating its employees for overtime.

15

Accordingly, the court will grant plaintiffs’ motion for summary

16

judgment with respect to their claim for liquidated damages and

17

deny defendant’s cross-motion.

18

IT IS THEREFORE ORDERED plaintiffs’ motion for summary

19

judgment as to liquidated damages be, and the same hereby is,

20

GRANTED and defendant’s motion for summary judgement as to

21

liquidated damages be, and the same hereby is, DENIED.

22

remaining pending motions are DENIED AS MOOT in light of the

23

parties’ settlement and plaintiff’s withdrawal of all objections.

24

Dated:

November 19, 2015

25
26
27
28
15

All