McLaughlin v. Liu

• Decision Date: 14 June 1988
• Docket Number: No. 87-5669,87-5669
• Citation: 849 F.2d 1205
• Parties: 28 Wage & Hour Cas. (BN 1137, 109 Lab.Cas. P 35,077 Ann McLAUGHLIN, Secretary of Labor, U.S. Department of Labor, * Plaintiff- Appellee, v. Joe H. LIU, Individually and doing business as J L Fashions, Defendants- Appellants.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1205

849 F.2d 1205

28 Wage & Hour Cas. (BN 1137, 109 Lab.Cas. P 35,077

Ann McLAUGHLIN, Secretary of Labor, U.S. Department of

Labor, ^* Plaintiff- Appellee, v. Joe H. LIU, Individually and doing business as J L Fashions,

Defendants- Appellants.

No. 87-5669.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Dec. 9, 1987.

Decided June 14, 1988.

Edwin M. Rosenberg, Los Angeles, Cal., for defendants-appellants.

Gerald F. Krizan, U.S. Dept. of Labor, Washington, D.C., for plaintiff-appellee.

Appeal from the United States District Court for the Central District of California.

Before BROWNING, Chief Judge, HUG, and REINHARDT, Circuit Judges.

JAMES R. BROWNING, Chief Judge:

The district court granted summary judgment to the Secretary in an action for violation of the overtime provisions of the Fair Labor Standards Act (FLSA), 29 U.S.C. Sec. 201 et seq., during the period from February 1, 1983 to June 28, 1985. ¹ The Secretary's showing in support of the motion consisted of two items. The first was a government investigator's affidavit with accompanying photocopies of Liu's original piecework records for the biweekly pay period ending April 6, 1985. These records demonstrated that during this pay period Liu did not pay an overtime premium for overtime work; rather, each employee's total earnings were exactly equal to the value of the piecework he or she produced during all of the hours worked in that period. The second item upon which the Secretary relied was Liu's response to the Secretary's Requests for Admissions, in which Liu agreed with the statement that "[e]mployees paid piecework were paid only piecework." ²

In opposition to the motion for summary judgment, Liu relied on his sworn declaration in which he asserted that he had paid an overtime premium for piecework performed during overtime hours for all pay periods except the period ending April 6, 1985, and that during this one period he had deviated from his practice of prior and subsequent pay periods on the mistaken advice of an accountant friend whom he named. Liu attached a "piecework register" purporting to show a dollar amount of piecework performed by each employee which was less than the total compensation paid to employees who had worked overtime by an amount equal to overtime premiums properly calculated. Liu asserted in his declaration that his piecework register and payroll records were accurate. He also submitted sworn answers to interrogatories stating he paid the proper overtime premium and describing the manner in which the premium was calculated--a method the Secretary concedes was the proper one for calculating overtime for employees paid on a piecework basis. ³

The issue is whether the evidence created a conflict that could only be resolved at trial regarding the central issue of whether an overtime premium was paid during pay periods other than that ending April 6, 1985. ⁴

The Secretary argues the district court was authorized to grant summary judgment by Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986), because Liu's sworn declaration and sworn answers to interrogatories were "implausible." ⁵ The Secretary relies on the following language from the Matsushita opinion:

It follows from these settled principles that if the factual context renders respondents' claim implausible--if the claim is one that simply makes no economic sense--respondents must come forward with more persuasive evidence to support their claim than would otherwise be necessary.

Id. at 587, 106 S.Ct. at 1356.

In a case such as this in which the opposition to a motion for summary judgment rests upon sworn statements, the Secretary's reading of Matsushita would abrogate the long-standing rule that credibility may not be resolved by summary judgment--a rule reiterated in Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986), within ninety days after Matsushita was filed: "Credibility determinations ... are jury functions, not those of a judge ... ruling on a motion for summary judgment.... The evidence of the non-movant is to be believed...." Id. at 255, 106 S.Ct. at 2513.

It is clear from the Matsushita opinion that the Court was not speaking of direct evidence, but of circumstantial evidence. Matsushita authorizes an inquiry on summary judgment into the "implausibility" of inferences from circumstantial evidence, particularly in antitrust conspiracy cases, not an inquiry into the credibility of direct evidence. ⁶

This case does not involve inferences from circumstantial evidence. Liu's sworn statements that he calculated and paid overtime in accordance with the requirements of law are direct evidence of the central fact in dispute. Liu does not ask that inferences be drawn in his favor, but that his testimony be taken as true. To this he is clearly entitled under Anderson ("The evidence of the non-movant is to be believed," 477 U.S. at 255, 106 S.Ct. at 1513) and a host of other decisions. ⁷ Summary judgment cannot be justified in the face of such evidence.

Our opinions on summary judgment subsequent to Anderson and Matsushita have honored the difference between weighing direct evidence and refusing to draw unreasonable inferences from circumstantial evidence. We have upheld summary judgment on the basis of Matsushita's "implausibility" standard only where the non-movant relied on inferences from circumstantial evidence. ⁸ We analyzed the distinction explicitly and at some length in T.W. Elec. Serv. v. Pacific Elec. Contractors Ass'n, 809 F.2d 626, 630-31 (9th Cir.1987). We noted that at the summary judgment stage of the litigation,

"the judge does not weigh conflicting evidence with respect to a disputed material fact.... Nor does the judge make credibility determinations with respect to statements made in affidavits, answers to interrogatories, admissions, or depositions.... These determinations are within the province of the fact-finder at trial. Therefore, at summary judgment, the judge must view the evidence in the light most favorable to the nonmoving party: if direct evidence produced by the moving party conflicts with direct evidence produced by the nonmoving party, the judge must assume the truth of the evidence set forth by the nonmoving party with respect to that fact.

Id. (citations omitted).

Turning to inferences from circumstantial evidence, we said:

Inferences must also be drawn in the light most favorable to the nonmoving party.... Inferences may be drawn from underlying facts that are not in dispute, such as background or contextual facts ..., and from underlying facts on which there is conflicting direct evidence but which the judge must assume may be resolved at trial in favor of the nonmoving party. Assuming the existence of these underlying facts, however, an inference as to another material fact may be drawn in favor of the nonmoving party only if it is "rational" or "reasonable" and otherwise permissible under the governing substantive law.

Id. at 631 (citations omitted).

We continued:

If the nonmoving party produces direct evidence of a material fact, the court may not assess the credibility of this evidence nor weigh against it any conflicting evidence presented by the moving party. The nonmoving party's evidence must be taken as true. Inferences from the nonmoving party's "specific facts" as to other material facts, however, may be drawn only if they are reasonable in view of other undisputed background or contextual facts and only if such inferences are otherwise permissible under the governing substantive law. This inquiry ensures that a "genuine" issue of material fact exists for the factfinder to resolve at trial.

Id. at 631-32.

We reiterated "[w]here there is no direct evidence of a conspiracy, the defendant may discharge its summary judgment burden by proffering a 'plausible and justifiable' alternative interpretation of its conduct that rebuts the plaintiff's allegation of conspiracy." Id. at 632 (emphasis added). And again "[w]here an antitrust plaintiff's allegation of a conspiracy is based solely on indirect evidence that is capable of inferences of both lawful and unlawful behavior, the plaintiff must produce some evidence tending to exclude the possibility that the defendant acted independently." Id. (emphasis supplied).

Other circuits also have explicitly noted that Matsushita's implausibility analysis is confined to drawing inferences from circumstantial evidence. See Arnold Pontiac-GMC, Inc. v. Budd Baer, Inc., 826 F.2d 1335, 1338 (3d Cir.1987) (reversing summary judgment and distinguishing Matsushita because "here plaintiff, unlike the plaintiffs in Matsushita, has produced direct evidence of a conspiracy"). In Leonard v. Dixie Well Serv. & Supply, Inc., 828 F.2d 291 (5th Cir.1987), the Fifth Circuit reversed a summary judgment based upon the district court's conclusion that the movant's documentary showing on the central issue of fact was "unreasonable" in contrast to the "inaccurate and imprecise recollections" of the testimony of the non-movant and his witnesses on the same issue. Id. at 293. Noting Matsushita's doctrine that "a judge may require parties making an 'implausible' claim to 'come forward with more persuasive evidence to support their claim than would otherwise be necessary' to avoid summary judgment" (id. at 294), Judge Rubin emphasized, "The Supreme Court has not, however, approved summary judgments that rest on credibility determinations." Id. He continued:

The party opposing a motion for summary judgment, with evidence competent under Rule 56, is to be believed; it is for the jury at trial, not for the judge on a pretrial motion, to decide whose evidence is more credible. A judge assessing the "persuasiveness" of evidence presented on a motion for summary judgment may discount such evidence as unspecific or immaterial, but not as unbelievable.

Id. ⁹

Because Liu's sworn statement...