Cliburn v. The Manufactured Home Center, Inc. et al
Filing
23
ORDER denying 18 Motion for Summary Judgment; granting nunc pro tunc 20 Motion for Extension of Time to File Response. Signed by District Judge Carlton W. Reeves on 12/28/2012. (AC)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
JACKSON DIVISION
DUSTIN CLIBURN
PLAINTIFF
v.
CAUSE NO. 3:12-CV-238-CWR-LRA
THE MANUFACTURED HOME
CENTER, INC. d/b/a Woods Home
Center; JOHN DITTO, III; J. KANE
DITTO; JOE T. SCOTT
DEFENDANTS
ORDER
Before the Court is the defendants’ motion to dismiss the plaintiff’s Fair Labor Standards
Act claim. Docket No. 18. After the Court entered an Order sua sponte converting the motion to one
for summary judgment, the plaintiff responded, Docket No. 21, and the defendants replied, Docket
No. 22. The motion will be denied without prejudice.
I.
Factual and Procedural History
On April 10, 2012, Dustin Cliburn filed his first amended complaint against defendants The
Manufactured Home Center, Inc. d/b/a Woods Home Center; John K. Ditto, III; J. Kane Ditto; and
Joe T. Scott. Docket No. 3, at 1. Cliburn started to work for The Manufactured Home Center in May
2010, pursuant to a written agreement. Id. at 2. But the defendants failed to pay him the sales
commissions and profit-sharing it promised, failed to remit his garnished wages to the State of
Mississippi, and failed to transfer a vehicle title into his name, among other allegations. Id. at 3-4.
Cliburn further alleged that he was terminated without warning in October 2011. Id. at 4-5.
Afterward, he said, the defendants defamed him in an effort to harm his future business
opportunities. Id. at 5.
Cliburn specifically charged the defendants with willfully violating the Fair Labor Standards
Act (FLSA) by failing to pay overtime, fraud, breach of contract, breach of the implied covenant of
good faith and fair dealing, and tortious interference. Id. at 6-8. He sought reinstatement, back pay,
damages, and specific performance. Id. at 8-9.
The defendants denied Cliburn’s allegations. Docket No. 13, at 1-16. Three of them – all but
Joe T. Scott – then counterclaimed against Cliburn, alleging that he overstated the company’s profits
in order to wrongfully inflate his pay, broke his agreement with the defendants in several ways,
misappropriated assets, and created false records to hide his activities. Id. at 17. Their specific
claims were breach of contract, breach of the covenant of good faith and fair dealing, conversion,
fraud, negligent misrepresentation, unjust enrichment, abuse of process, tortious interference, and
breach of fiduciary duty.1 Id. at 16-26. They sought damages and other relief. Id. at 26.
II.
Present Arguments
The defendants argue that Cliburn is not entitled to overtime because he was a salesman
primarily engaged in selling trailers, who worked for a nonmanufacturing establishment that
primarily sold trailers. Docket No. 19, at 4-5. He therefore falls into a statutory exception to FLSA
overtime, they assert. Id. (citing 29 U.S.C. § 213). They have submitted an affidavit from John Ditto,
the President of The Manufactured Home Center, attesting to the nature of the business and
Cliburn’s role in selling trailers. Docket No. 18-1. The defendants add that several prior courts have
found mobile homes to be trailers within the meaning of the FLSA. Docket No. 19, at 5-6.
Cliburn’s response first contends that this defense has been waived by the defendants’ failure
to include it in their answer. Docket No. 21, at 2. In the alternative, he argues that the word “trailer”
refers to “normal transportation equipment like automobiles, trucks, and farm implements,” not
mobile homes. Id. at 2-3. For example, Cliburn points to United States Department of Labor (DOL)
guidance stating that mobile homes are not “trailers” when they are placed “on a permanent
foundation requiring extensive site preparation.” Id. at 3-4 (quoting DOL Field Operations
Handbook at 24L13(e)(1)). He has attached an affidavit in which he states that the mobile homes
sold “were emplaced on a permanent foundation requiring extensive site preparation.” Docket No.
21-2.
In rebuttal, the defendants deny that they waived their trailer salesman defense. Docket No.
22, at 1-2. As to the remaining issue, they reassert their prior arguments and attach additional
evidence that the mobile homes sold were placed on “typical” foundations, not permanent
foundations, which means they are trailers. Id. at 5.
III.
Standard of Review
Summary judgment is appropriate when “the movant shows that there is no genuine dispute
1
“Defendants” will hereinafter refer to the three defendants that brought the counterclaim. They are the
same defendants asserting the present motion for summary judgment.
2
as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P.
56(a). A party seeking to avoid summary judgment must identify admissible evidence in the record
showing a fact dispute. Id. at 56(c)(1). The Court views the evidence and draws reasonable
inferences in the light most favorable to the non-movant. Maddox v. Townsend and Sons, Inc., 639
F.3d 214, 216 (5th Cir. 2011).
IV.
Discussion
A.
Waiver
Cliburn is correct that FLSA affirmative defenses are usually “waived if not pleaded.”
Donovan v. Hamm’s Drive Inn, 661 F.2d 316, 317 (5th Cir. 1981) (citation omitted); see Fed. R.
Civ. P. 8(c)(1). That rule operates to give plaintiffs notice and an opportunity to respond to the
defenses the defendant has asserted. See Oden v. Oktibbeha County, Miss., 246 F.3d 458, 467 (5th
Cir. 2001).
“However, where the matter is raised in the trial court in a manner that does not result in
unfair surprise . . . technical failure to comply precisely with Rule 8(c) is not fatal.” Pasco ex rel.
Pasco v. Knoblauch, 566 F.3d 572, 577 (5th Cir. 2009) (quotation marks, brackets, and citation
omitted). “An affirmative defense is not waived if the defendant raised the issue at a pragmatically
sufficient time, and the plaintiff was not prejudiced in its ability to respond.” Id. (quotation marks,
brackets, and citation omitted).
While the defendants’ answer asserted two FLSA defenses, this particular defense was not
invoked. Docket No. 13, at 14. It was first mentioned by the defendants at a hearing on the plaintiff’s
motion to dismiss. That does not necessarily result in waiver, though, since the Fifth Circuit does
“not take a formalistic approach to determine whether an affirmative defense was waived. Rather,
[it] look[s] at the overall context of the litigation and ha[s] found no waiver where no evidence of
prejudice exists and sufficient time to respond to the defense remains before trial.” Knoblauch, 566
F.3d at 577 (citations omitted).
The overall context of this litigation does not suggest that Cliburn has been prejudiced by
the defendants’ post-answer invocation of the trailer salesman defense. After the defense was raised
at the October 18, 2012, hearing, the Court offered to entertain a dispositive motion on the plaintiff’s
FLSA count. That motion followed on November 1; was converted to a summary judgment motion
by Text Order on November 7 pursuant to General Retail Servs., Inc. v. Wireless Toyz Franchise,
3
LLC, 255 F. App’x 775, 784-85 (5th Cir. 2007); and was responded to by the plaintiff on November
26.2 Cliburn had adequate time to respond to the specific argument that he is exempt from overtime
because he primarily sold trailers.
It also is relevant that at this early stage of the litigation – where no Case Management
Conference has been held, and therefore no deadline to amend the pleadings exists – the defendants
would be entitled to move to amend their answer to plead the affirmative defense in question. Such
motion would be granted, again given the early point we find ourselves in today. See Fed. R. Civ.
P. 15(a)(2).
In sum, there is no evidence that Cliburn has been prejudiced by the defendants’ failure to
plead this affirmative defense in their answer. As a result, the Court will proceed to consider the
merits of the defendants’ argument.
B.
The FLSA Exemption
The FLSA “requires employers to pay minimum wages, to pay employees for overtime and
to keep records of hours worked.” Donovan, 661 F.2d at 317 (citing 29 U.S.C. § 201 et seq.). The
overtime provisions of the law, however, do not apply to “any salesman primarily engaged in selling
trailers, boats, or aircraft, if he is employed by a nonmanufacturing establishment primarily engaged
in the business of selling trailers, boats, or aircraft to ultimate purchasers.” 29 U.S.C. §
213(b)(10)(B). “Exemptions from the Fair Labor Standards Act are to be narrowly construed against
the employer, upon which the burden rests to show that it comes within the exemption.” Shultz v.
Louisiana Trailer Sales, Inc., 428 F.2d 61, 67 (5th Cir. 1970) (citations omitted).
It is not disputed that Cliburn was primarily engaged in selling mobile homes and was
employed by a nonmanufacturing establishment that primarily sold mobile homes. The issue is
whether mobile homes are “trailers” within the meaning of the FLSA.
The parties have not pointed to many decisions answering that question. One district court
concluded without explanation that mobile homes are trailers within the meaning of the FLSA. See
Brennan v. Sullivan, No. T-5049, 1973 WL 1186, *3 (D. Kan. May 25, 1973) (“The term ‘trailers’
2
On November 21, Cliburn moved for five additional days to respond to the motion for summary
judgment. Docket No. 20. If his response required substantially more time or discovery, counsel could have asserted
as much or filed a formal Rule 56(d) response. The absence of such a request suggests that he has not been
prejudiced in his ability to respond to the affirmative defense.
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as used in 29 U.S.C. § 213(b)(10) includes mobile homes.”). Of course, that may prove only that the
mobile homes at the heart of that case were trailers. It is not clear.
Other courts have found the issue to be slightly more nuanced. In 1970, for example, the
Fourth Circuit adopted the Secretary of Labor’s position that mobile homes have a “dual identity”:
He recognizes them as trailers for the purposes of the exemption to the extent that
they are transported from place to place on their own wheels and suspension systems.
But when a mobile home has been delivered to its site, mounted on a base, and
connected to utilities, he argues, it loses its character as a trailer.
Snell v. Quality Mobile Home Brokers Inc., 424 F.2d 233, 235 (4th Cir. 1970).
The Fifth Circuit considered some of the same issues that same year. In Shultz, the parties
“stipulated that the word ‘trailer’ as used in the [Fair Labor Standards] Act includes mobile homes.”
Shultz, 428 F.2d at 62. That case involved “servicemen” that provided mechanical repair and
construction work on mobile homes, not salesmen, but it remains relevant to our situation.
Like the Fourth Circuit, the Shultz court explained that “[t]he hybrid nature of a mobile
home, however – as a vehicle when moving from place to place, and as a residence when
permanently mounted on a stationary base – has engendered much of this controversy in determining
the intent of the Legislature in excluding trailers from the Act’s coverage.” Id. “The question [of the
mechanics’ role] admittedly is a close one because of ambiguities in the Act which are not resolved
by statutory definition. The statute defines neither ‘mechanic’ nor ‘trailer’ and our resort to
dictionaries produces only further ambiguities because of the various shades of meaning ascribed
to both terms.” Id. at 63. The court ultimately concluded that the servicemen in question were more
like construction workers than mechanics who worked on moving vehicles, and therefore that the
statutory exemption was not applicable. Id. at 66.3
The available evidence and authorities support that the mobile home industry – or
manufactured home industry, as it is now called – has changed since the above cases were decided.
The Department of Labor now states that a mobile home should not be considered a trailer under the
3
Moreover, in the earlier version of 29 C.F.R. § 779.372(c)(3), the term “trailer” was specifically defined
as “including any nonpowered vehicle used for industrial, commercial, or personal transport or travel on the
highways that is attached to the rear of a separately powered vehicle.” 3 Emp’t Cord. Compensation § 8.15 (2012).
“Mobile home” fit within that definition for purposes of the exemption. However, the term “trailer” is no longer
defined in the current version of 29 C.F.R. § 779.372(c)(3). Id.
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FLSA when documents at the time of sale show “that parts of the transportation system are to be
removed and that the mobile home is to be emplaced on a permanent foundation requiring extensive
site preparation.” Docket No. 21-1, at 2 (DOL Field Operations Handbook at 24L13(e)(1)). The next
subsection clarifies that “[t]ypical installation on concrete pads with sewer and water connections,
electricity, anchoring apparatus or cables, and ‘skirting’ is not considered permanent emplacement.”
Id. (DOL Field Operations Handbook at 24L13(e)(2)).4
Our parties agree that the mobile homes sold during Cliburn’s employment were installed
without the transportation system parts. But they differ on what kind of foundation the units were
placed upon. Cliburn’s affidavit recites that the foundations were permanent. Docket No. 21-2.
Ditto’s affidavit states that the vast majority of the mobile homes were placed on typical
foundations: dirt or concrete pads with sewer and water connections, electricity, skirting, and
anchoring. Docket No. 22-3.
Plainly, then, there is a fact dispute on this issue. And while Ditto’s affidavit discusses what
the documents at the time of sale showed – a relevant consideration, according to the DOL Field
Operations Handbook – the lack of discovery in this case has prevented the plaintiff from reviewing
that evidence and challenging Ditto’s conclusion.
The defendants may respond that this dispute is a legal one suitable for immediate resolution.
They are correct that “the ultimate decision whether an employee is exempt is a question of law.”
Smith v. City of Jackson, Miss., 954 F.2d 296, 298 (5th Cir. 1992) (citation omitted). That said, the
Fifth Circuit also stated in that case that “[t]he decision whether an employee is exempt under the
Act is primarily a question of fact which must be reviewed under the clearly erroneous standard.”
Id. (quotation marks and citation omitted); see also Vela v. City of Houston, 276 F.3d 659, 677 (5th
4
According to another federal agency, “[p]ermanent foundations must be constructed of durable materials;
i.e. concrete, mortared masonry, or treated wood - and be site-built. It shall have attachment points to anchor and
stabilize the manufactured home to transfer all loads, herein defined, to the underlying soil or rock. The permanent
foundations shall be structurally developed in accordance with this document or be structurally designed by a
licensed professional engineer for [vertical and lateral stability].” United States Dep’t of Housing & Urban
Development, Permanent Foundations Guide for Manufactured Housing, Sept. 1, 1996, Ch. 1, at 1, available at
http://www.huduser.org/portal/publications/destech/permfound.html.
The DOL and HUD materials suggest that “permanent foundation” is a term of art that refers to the means
by which the mobile home is secured to the ground, not the length of time the unit may remain in place. Just because
a mobile home is placed permanently and lived in permanently does not necessarily mean that it is placed on a
“permanent foundation.”
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Cir. 2001) (finding it not possible to apply a FLSA exemption as a matter of law where there was
an “utter lack of probative evidence” on the issue). Before making a legal conclusion about
Cliburn’s status, it is important to first resolve the factual question of whether the mobile homes sold
were placed on typical or permanent foundations.
V.
Conclusion
The motion is denied without prejudice. The Court will rule on the plaintiff’s outstanding
motion to dismiss the defendants’ counterclaims.
SO ORDERED, this the 28th day of December, 2012.
s/Carlton W. Reeves
UNITED STATES DISTRICT JUDGE
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