Busk v. Integrity Staffing Solutions, Inc. (In re Amazon.com, Inc.)

• Citation: 905 F.3d 387
• Decision Date: 19 September 2018
• Docket Number: 17-5785,Nos. 17-5784,s. 17-5784
• Parties: In re: AMAZON.COM, INC., Fulfillment Center Fair Labor Standards Act (FLSA) and Wage and Hour Litigation. Jesse Busk; Laurie Castro; Sierra Williams; Monica Williams; Veronica Hernandez, Plaintiffs-Appellants, v. INTEGRITY STAFFING SOLUTIONS, INC.; Amazon.Com, Inc., Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (6th Circuit)

905 F.3d 387

In re: AMAZON.COM, INC., Fulfillment Center Fair Labor Standards Act (FLSA) and Wage and Hour Litigation.Jesse Busk; Laurie Castro; Sierra Williams; Monica Williams; Veronica Hernandez, Plaintiffs-Appellants,

v.INTEGRITY STAFFING SOLUTIONS, INC.; Amazon.Com, Inc., Defendants-Appellees.

Nos. 17-5784

17-5785

United States Court of Appeals, Sixth Circuit.

Argued: June 14, 2018

Decided and Filed: September 19, 2018

Rehearing En Banc Denied November 1, 2018^*

COUNSEL ARGUED: Joshua D. Buck, Thierman Buck LLP, Reno, Nevada, for Appellants. Rick D. Roskelley, Littler Mendelson, Las Vegas, Nevada, for Appellee Integrity Staffing Solutions. Richard G. Rosenblatt, Morgan, Lewis & Bockius, LLP, Princeton, New Jersey, for Appellee Amazon.com. ON BRIEF: Joshua D. Buck, Mark R. Thierman, Thierman Buck LLP, Reno, Nevada, for Appellants. Rick D. Roskelley, Littler Mendelson, Las Vegas, Nevada, Cory G. Walker, Littler Mendelson, Phoenix, Arizona, for Appellee Integrity Staffing Solutions. Richard G. Rosenblatt, Morgan, Lewis & Bockius, LLP, Princeton, New Jersey, for Appellee Amazon.com.

Before: BATCHELDER and CLAY, Circuit Judges; SARGUS, District Judge.^*

CLAY, Circuit Judge.

Plaintiffs in this purported class action seek compensation under Nevada and Arizona law for time spent undergoing or waiting to undergo mandatory onsite security screenings at the Amazon facilities where they worked. The district court granted summary judgment for Defendants on the grounds that time related to security checks is not compensable as "hours worked" under Nevada and Arizona labor law. Because we conclude that time spent undergoing mandatory security checks is compensable under Nevada law, we REVERSE the district court's judgment with regard to the Nevada claims and REMAND for further proceedings. Because we conclude that the Arizona Plaintiffs have failed to satisfy Arizona's "workweek requirement," we AFFIRM the district court's dismissal of Plaintiffs’ Arizona claims.

BACKGROUND

Factual Background

Defendant Integrity Staffing Solutions, Inc. ("Integrity"), provides warehouse labor services to businesses throughout the United States where hourly workers fill orders, track merchandise, and process returns. Integrity employs thousands of hourly warehouse employees like Plaintiffs at each of Defendant Amazon.com's ("Amazon") facilities. Some Plaintiffs in this case were hourly employees of Integrity at warehouses in Nevada and Arizona. Other Plaintiffs were directly employed by Amazon. According to Plaintiffs, "Amazon.com exercises direct control over the hours and other working conditions of all Plaintiffs and all similarly-situated hourly shift employees who are paid on the payroll of Integrity working at all Amazon.Com's [sic] warehouse locations nationwide." (R. 134, Third Amended Compl., PageID # 2351.)

This case concerns a security clearance policy that is enforced by both Integrity and Amazon at all Amazon locations throughout the United States. Under the policy, Plaintiffs and all other hourly paid, non-exempt employees were required to "undergo a daily security clearance check at the end of each shift to discover and/or deter employee theft of the employer's property and to reduce inventory ‘shrinkage.’ " (Id. ) The policy worked like this: "At the end of their respective shifts, hundreds, if not thousands, of warehouse employees would walk to the timekeeping system to clock out and were then required to wait in line in order to be searched for possible warehouse items taken without permission and/or other contraband." (Id. at PageID # 2352.) Plaintiffs allege that "Defendants’ policy of requiring hourly warehouse employees to undergo a thorough security clearance before being released from work and permitted to leave the employer's property was solely for the benefit of the employers and their customers." (Id. at PageID # 2351.) Plaintiffs further allege that this screening process took approximately 25 minutes each day. Plaintiffs were also required to undergo the same security clearance prior to taking their lunch breaks, thereby reducing the full thirty-minute break they were supposed to receive. Because employees were required to "clock out" before undergoing the security screening, they were not compensated for their time spent waiting in line for and then undergoing the screenings. (Id. at PageID # 2351, 2352.)

Procedural History

In 2010, Plaintiffs filed a putative class action in the District Court of Nevada against Integrity on behalf of similarly situated employees in the Nevada warehouses for alleged violations of the Fair Labor Standards Act, 29 U.S.C. § 201 et seq. ("FLSA") and Nevada labor laws. The employees alleged that they were entitled to compensation under the FLSA for the time spent waiting to undergo and actually undergoing the security screenings. They also alleged that the screenings were conducted "to prevent employee theft" and thus occurred "solely for the benefit of the employers and/or their customers." (R. 30-3, First Amended Compl., PageID # 223.)

The district court dismissed Plaintiffs’ first amended complaint for failure to state a claim, holding that the time spent waiting for and undergoing the security screenings was not compensable under the FLSA. Busk v. Integrity Staffing Sols., Inc. , No. 2:10-cv-01854, 2011 WL 2971265 (D. Nev. July 19, 2011). It explained that, because the screenings occurred after the regular work shift, the employees could state a claim for compensation only if the screenings were an integral and indispensable part of the principal activities they were employed to perform. The district court held that these screenings were not integral and indispensable, but instead fell into a noncompensable category of postliminary activities. As for Plaintiffs’ Nevada state law claims for unpaid wages arising from the security checks and shortened meal periods, the Nevada district court found that Plaintiffs had properly asserted a private cause of action under Nev. Rev. Stat. § 608.140 but failed to allege sufficient facts to support their clam. Id. at *7.

Plaintiffs appealed to the Ninth Circuit, which affirmed the dismissal of the meal-period claims but reversed as to the security-check claims. Busk v. Integrity Staffing Sols., Inc. , 713 F.3d 525 (9th Cir. 2013). The Ninth Circuit asserted that post-shift activities that would ordinarily be classified as noncompensable postliminary activities are nevertheless compensable as integral and indispensable to an employee's principal activities if those post-shift activities are necessary to the principal work performed and done for the benefit of the employer. Id. at 530. Accepting as true the allegation that Integrity required the security screenings to prevent employee theft, the court concluded that the screenings were "necessary" to the employees’ primary work as warehouse employees and done for Integrity's benefit. Id. at 531.

The case was then appealed to the Supreme Court, which held that the time related to the security checks was not compensable under the FLSA. Integrity Staffing Solutions, Inc. v. Busk , ––– U.S. ––––, 135 S.Ct. 513, 190 L.Ed.2d 410 (2014) ("Integrity Staffing "). Specifically, the Court found that the security screenings were "noncompensable postliminary activities" under the Portal-to-Portal Act, 29 U.S.C. § 254(a)(2). Id. at 518. The Portal-to-Portal Act was enacted as an amendment to the FLSA, and it "narrowed the coverage of the [Act]" by excluding certain "preliminary" and "postliminary" activities from the FLSA's compensation requirements. See IBP, Inc. v. Alvarez , 546 U.S. 21, 27, 126 S.Ct. 514, 163 L.Ed.2d 288 (2005). Integrity Staffing clarified that post-shift security screenings are among those noncompensable, "postliminary" activities under federal law. 135 S.Ct. at 518.

Following the Supreme Court's reversal, the Ninth Circuit remanded the remainder of Plaintiff's state law claims to the district court. Busk v. Integrity Staffing Sols., Inc. , 797 F.3d 756 (9th Cir. 2015). Plaintiffs again amended their complaint, and the case was then transferred to an ongoing multidistrict litigation in the Western District of Kentucky.

Consistent with the Supreme Court's decision, Plaintiffs’ third amended complaint eliminates the claims for compensation under federal law and asserts claims under Nevada and Arizona law for unpaid wages and overtime, as well as minimum wage violations. Plaintiffs asserted their claims as a class action under Rule 23 of the Federal Rules of Civil Procedure on behalf of the following persons:

Nevada Class : All person [sic] employed by Defendants, and/or each of them, as hourly paid warehouse employees who worked for Defendant(s) within the State of Nevada at anytime [sic] within three years prior to the original filing date of the complaint in this action.

Arizona Class : All person [sic] employed by Defendants, and/or each of them, as hourly paid warehouse employees who worked for Defendant(s) within the State of Arizona at any time from within three years prior to the filing of the original complaint until the date of judgment after trial, and shall encompass all claims by such persons for the entire tenure of their employment as provided in A.R.S. 23-364 (G).

(R. 134, Third Amended Compl., PageID # 2353.)

The Nevada plaintiffs allege claims on behalf of themselves and the Nevada Class for failing to pay for all the hours worked ( NRS § 608.016 ), daily and weekly overtime ( NRS § 608.018 ), and a minimum wage claim under the Nevada Constitution ( Nev. Const. art. 15, § 16 ). The Nevada plaintiffs seek continuation wages in the amount of 30-days of additional wages for failing to pay employees all their wages due and owing at the time of separation from employment ( NRS § 608.020 –.050). The Arizona plaintiffs allege claims on behalf of themselves and the Arizona Class for failing to pay regular and minimum wages ( A.R.S. § 23-363 ). These Plaintiffs also seek continuation wages...