Anderson v. Sara Lee Corp.

• Citation: 508 F.3d 181
• Decision Date: 19 November 2007
• Docket Number: No. 05-1091.,05-1091.
• Parties: David C. ANDERSON; Samuel Pullen, on behalf of themselves and all others similarly situated, Plaintiffs-Appellants, v. SARA LEE CORPORATION, Defendant-Appellee, and Does 1-100, Inclusive, Defendants.
• Court: U.S. Court of Appeals — Fourth Circuit

508 F.3d 181

David C. ANDERSON; Samuel Pullen, on behalf of themselves and all others similarly situated, Plaintiffs-Appellants, v. SARA LEE CORPORATION, Defendant-Appellee, and Does 1-100, Inclusive, Defendants.

No. 05-1091.

United States Court of Appeals, Fourth Circuit.

Argued: February 1, 2007.

Decided: November 19, 2007.

ARGUED:

Alvin Leonard Pittman, Los Angeles, California, for Appellants. William Randolph Loftis, Jr., Constangy, Brooks, & Smith, L.L.C., Winston-Salem, North Carolina, for Appellee.

ON BRIEF:

Robin E. Shea, Constangy, Brooks & Smith, L.L.C., Winston-Salem, North Carolina, for Appellee.

Before NIEMEYER and KING, Circuit Judges, and WILKINS, Senior Circuit Judge.

Affirmed in part, vacated in part, and remanded with instructions by published opinion. Judge KING wrote the opinion, in which Judge NIEMEYER and Senior Judge WILKINS joined.

OPINION

KING, Circuit Judge:

This appeal arises from a pay dispute between the defendant, Sara Lee Corporation, and the named plaintiffs, David C. Anderson and Samuel Pullen, as representatives of a class that includes approximately 1600 hourly production workers employed at Sara Lee's bakery in Tarboro, North Carolina (the "Class Members"). The Class Action Complaint alleges five claims under North Carolina law — for breach of contract, negligence, fraud, conversion, and unfair trade practices — each relating to Sara Lee's failure to compensate the Class Members for time spent complying with a mandatory uniform policy.

Early in the district court proceedings, Sara Lee sought dismissal of all five claims on the ground that they are preempted by the Fair Labor Standards Act of 1938, 29 U.S.C. §§ 201-219 (the "FLSA") (creating enforceable federal rights to minimum wage and overtime compensation). The court rejected Sara Lee's preemption contention, but dismissed with prejudice three of the five claims — the fraud, conversion, and unfair trade practices claims — under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted. See Anderson v. Sara Lee Corp., No. CA-03-31-H (E.D.N.C. Apr. 14, 2003) (the "Dismissal Order"). Following discovery, the court awarded summary judgment to Sara Lee under Rule 56(c) on the remaining contract and negligence claims. See Anderson v. Sara Lee Corp., No. CA-03-31-H (E.D.N.C. Dec. 7, 2004) (the "Summary Judgment Order"). On appeal, the Class Members challenge the propriety of both the Dismissal Order and the Summary Judgment Order, which Sara Lee defends on various grounds, including FLSA preemption.

As explained below, we affirm the district court's dismissal with prejudice of the conversion and unfair trade practices claims. We conclude, however, that the court should have dismissed the contract, negligence, and fraud claims as preempted by the FLSA. Accordingly, we vacate the court's alternative dispositions of those claims — the dismissal with prejudice of the fraud claim and the summary judgment awards on the contract and negligence claims — and remand with instructions to dismiss the claims without prejudice, giving the Class Members an opportunity to pursue any FLSA claims they may possess.

I.

A.

It is undisputed that, until early April 2003, Sara Lee enforced a so-called "Dress and Undress Rule" for hourly production workers at its Tarboro bakery, which makes cheesecakes, layer cakes, pastries, muffins, and other perishable goods. During the time period relevant to this civil action, the total number of Tarboro production workers at a given time varied between approximately 950 (the average number in 2000) and 650 (the average in the first part of 2003). These workers were divided into two shifts. Under the Dress and Undress Rule, they were required to wear a uniform consisting of the following: a shirt and pants (with a worker-provided belt), or an optional dress for women; a set of earplugs; a hairnet; and a pair of safety shoes. The shirts and dresses were personalized with the workers' names, and the uniforms, except the shoes, were washed and then sorted by employee number on a rotating conveyor in an on-site laundry room. The shoes were stored in personal lockers in men's and women's locker rooms.

To comply with the Dress and Undress Rule, production workers were to arrive at the bakery in street clothes, pass through security, walk to the laundry room, wait in line with their shiftmates, obtain their uniforms at the laundry room window from the lone attendant on duty (or occasionally retrieve their uniforms themselves), walk to the appropriate locker room, wait for space to change clothes, change into their uniforms, place their street clothes in their lockers, walk to a hand washing and foot bath area, wash and sanitize their hands and shoes, and walk to the time clock inside the production area — all before clocking in and taking their places on the production line. At the end of the shift, the workers clocked out, then walked back to the locker room, changed into their street clothes, walked to the laundry room, and deposited their soiled uniforms into a bin before leaving the bakery.

While the Dress and Undress Rule was in effect, the production workers had to worry about committing two types of infractions. First, workers who failed to comply with the Dress and Undress Rule were prohibited from working the shift. Second, workers who clocked in late because of delays in the clothes-changing process were deemed tardy; those who accumulated twenty citations for tardiness in a twelve-month period were discharged. The Dress and Undress Rule was revised in early April 2003 to allow workers to don their uniforms (except their safety shoes) at home.

B.

The Class Action Complaint was filed in January 2003 in the Superior Court of Edgecombe County, North Carolina, on behalf of current and former hourly production workers at the Tarboro bakery who were subject to the Dress and Undress Rule and entitled to FLSA protections.¹ It alleges that, by failing to compensate workers for time spent complying with the Dress and Undress Rule, Sara Lee violated the "applicable wage and hour law," i.e., the FLSA. See Class Action Complaint ¶ 48. The Complaint does not, however, plead claims directly under the FLSA. Rather, it pleads five separate claims under North Carolina law for breach of contract, negligence, fraud, conversion, and unfair trade practices in contravention of the North Carolina Unfair and Deceptive Trade Practices Act, N.C. Gen.Stat. § 75-1.1 (the "UDTPA"). The Complaint seeks recovery of, inter alia: compensatory damages, including back pay; penalties and interest; punitive damages; and, with respect to the unfair trade practices claim, treble damages and attorneys' fees pursuant to the UDTPA. The Class Members maintain that they are entitled to damages for the period from January 27, 2000, through April 1, 2003 (when the Dress and Undress Policy was revised).

On February 26, 2003, Sara Lee removed this action, under 28 U.S.C. § 1441, to the Eastern District of North Carolina.² Shortly thereafter, on March 3, 2003, Sara Lee made its motion, under Federal Rule of Civil Procedure 12(b)(6), to dismiss the Class Action Complaint for failure to state a claim upon which relief can be granted. In support of the Rule 12(b)(6) motion, Sara Lee maintained that the FLSA preempted each of the Class Members' state claims and that, apart from being preempted, the claims were not cognizable. By its Dismissal Order of April 14, 2003, the district court rejected Sara Lee's preemption contention.³ The court agreed, however, that the Complaint fails to state colorable claims for fraud, conversion, and unfair trade practices, and it therefore dismissed those three claims with prejudice. Finally, the court refused to dismiss the contract and negligence claims, based on its determination that those two claims were sufficiently pleaded in the Complaint. Significantly, the court recognized that the contract and negligence claims were predicated on violations of the FLSA, and that their ultimate success thus depended on a showing that the FLSA required Sara Lee to compensate its workers for time spent complying with the Dress and Undress Rule.

Thereafter, the parties engaged in discovery and stipulated to the certification of a class on the contract and negligence claims. On June 1, 2004, Sara Lee filed its motion, under Federal Rule of Civil Procedure 56, for summary judgment. In its supporting memorandum, Sara Lee reiterated its position that the contract and negligence claims are preempted by the FLSA. Additionally, Sara Lee contended that those claims must nonetheless fail, because the FLSA (on which they were predicated) did not require paying workers for compliance with the Dress and Undress Rule. Specifically, Sara Lee asserted that time spent complying with the Rule was noncompensable, pursuant to the Portal-to-Portal Act, 29 U.S.C. §§ 251-262 (excluding from FLSA compensability, in § 254(a), certain functions that are "preliminary" or "postliminary" to employees' "principal" work activities). Alternatively, Sara Lee recognized that, generally speaking, time spent by employees on the isolated act of changing clothes might be compensable under the FLSA, but that the time spent by the Class Members changing clothes was yet noncompensable because it was "de minimis."

On its de minimis point, Sara Lee acknowledged that the Class Members had forecast evidence, by way of the deposition testimony of the named plaintiffs, showing that "a single clothes change took as much as 20 minutes," J.A. 102, and that workers thus spent a total of "30-40 minutes a day on clothes-changing time alone," id. at 112. In discussing the Class Members' evidence, Sara Lee referred to excerpts from the named plaintiffs' deposition transcripts, which Sara Lee had attached to its summary judgment memorandum. See id. at 165-66 (testimony of David C. Anderson that it took him about fifteen minutes...