Cole v. Farm Fresh Poultry, Inc.

• Decision Date: 19 August 1987
• Docket Number: No. 86-7316,86-7316
• Parties: 28 Wage & Hour Cas. (BN 369, 107 Lab.Cas. P 34,953 Johnnie Mae COLE, et al., Plaintiffs-Appellants, v. FARM FRESH POULTRY, INC., Defendant-Appellee.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 923

824 F.2d 923

28 Wage & Hour Cas. (BN 369, 107 Lab.Cas. P 34,953

Johnnie Mae COLE, et al., Plaintiffs-Appellants, v. FARM FRESH POULTRY, INC., Defendant-Appellee.

No. 86-7316.

United States Court of Appeals, Eleventh Circuit.

Aug. 19, 1987.

George C. Longshore, Birmingham, Ala., for plaintiffs-appellants.

Linda Jan S. Pack, Counsel for Appellate Litigation, Office of Solicitor, U.S. Dept. of Labor, Washington, D.C., for amicus curiae.

Constangy, Brooks & Smith, Terry Price and Edward Katze, Atlanta, Ga., for defendant-appellee.

Appeal from the United States District Court for the Middle District of Alabama.

Before RONEY, Chief Judge, JOHNSON, Circuit Judge, and ESCHBACH ^*, Senior Circuit Judge.

ESCHBACH, Senior Circuit Judge.

In this appeal the plaintiffs-appellants argue that the district judge erred in determining that the defendant-appellee Farm Fresh Poultry Co., Inc. ("Farm Fresh") was entitled to the benefit of the Portal-to-Portal Act's good-faith defense. We agree and will reverse and remand the case to the district court.

I

Farm Fresh operates a chicken processing plant in Alexander City, Alabama. Johnnie Mae Cole and the other plaintiffs in this action work, or did work, on the eviscerating line at the plant. The line must occasionally be shut down during the working day due to mechanical failures in the plant, delivery trucks' breakdowns, and the like. Prior to the time period at issue in this action Farm Fresh instituted a "thirty-minute rule" in reliance upon the oral advice of a compliance officer for the Wage and Hour Division of the Department of Labor, and upon an interpretative bulletin issued by the division. ¹ Under the rule When the Farm Fresh management expects the line to be down for thirty minutes or more, the employees are informed that they are free to do as they please until a specified time at which the plant will resume operation. Most of the plaintiffs live 10 to 20 minutes from the plant and carpool to work each day. Employees who live in the vicinity sometimes go home during these periods of inactivity. Others who can find transportation occasionally go to a local convenience store for a snack or a soft drink. However, most of the employees wait in the break room at the plant.

employees are compensated when the line is down for less than thirty minutes but are not compensated for inactive periods of thirty minutes or more.

The plaintiffs brought suit in federal district court in 1985 against Farm Fresh, contending that Farm Fresh's thirty-minute rule violates the minimum wage and overtime compensation provisions of the Fair Labor Standards Act of 1938 ("FLSA"), as amended, 29 U.S.C. Secs. 201, 206, 207, 215(a)(2). The complaint prayed for an injunction against future violations and damages for injury suffered from past violations in the form of unpaid minimum wages and overtime compensation from July 8, 1982. Farm Fresh denied any violation of the FLSA. It also raised an affirmative defense, claiming that it qualified for the "good faith" exemption of 29 U.S.C. Sec. 259 barring the action because it had acted in conformity with and in reliance on the Wage and Hour Division's interpretation of the FLSA. ² 29 U.S.C. Sec. 259.

The district court bifurcated the issues of liability and damage and held a bench trial on February 7, 1986. It concluded that Farm Fresh need not pay employees for break periods long enough to allow the employees to use the time effectively for their own purposes. It also found, however, that thirty minutes was not long enough for such effective use, and ruled that the employees "need at least one hour in order to use the time effectively for their own purposes, and, therefore, that any break period less than one hour in duration is compensable time under the Act." The court also concluded, however, that Farm Fresh had acted in good faith compliance with administrative regulation pursuant to section 259, and therefore denied all relief to the plaintiffs. The court did note, however, that "defendants' thirty-minute rule should not be followed in the future and that continued use of the rule would not constitute 'good faith reliance' on these interpretations."

The district court provided the following discussion of the good faith defense of section 259:

By enacting section 10 of the Portal to Portal Act [section 259 of Title 29 of the United States Code], Congress made clear that it did not intend for the Fair Labor Standards Act to subject employers to penalties for such good faith reliance [as Farm Fresh's] on administrative regulations, particularly where the regulations have been interpreted by a compliance officer of the Wage and Hour Because defendant's implementation of the thirty minutes rule was a reasonable interpretation of 29 U.S.C. Secs. 785.14-785.16, particularly in light of Mr. Rushing's advice, this court determines that defendant Farm Fresh has acted "in good faith in conformity with and in reliance on" 29 C.F.R. Secs. 785.14-785.16 at all times relevant to this action.

Division of the Department of Labor, as in this case.

The plaintiffs appeal from the district court's decision.

II

On appeal the plaintiffs-appellants argue that the district court invoked and applied an incorrect rule of law in determining that Farm Fresh could invoke the protection of the good faith defense of section 259 to bar the suit. This, of course, is a question of law we review de novo. The good-faith defense of section 259 is an objective test that bars actions for violations of the minimum wage or overtime compensation provisions of the FLSA if the employer pleads and proves that the act or omission complained of was (1) taken in good faith and was (2) in conformity with and (3) in reliance on a written administrative interpretation by a designated agency. The agency designated to provide interpretations of the FLSA is the Administrator of the Wage and Hour Division of the Department of Labor. ³ See 29 U.S.C. Sec. 259; e.g., Olson v. Superior Pontiac-GMC, Inc., 765 F.2d 1570, 1579 (11th Cir.), modified on other grounds 776 F.2d 265 (1985); Equal Employment Opportunity Commission v. Home Insurance Co., 672 F.2d 252, 263-65 (2d Cir.1982); Clifton D. Mayhew, Inc. v. Wirtz, 413 F.2d 658, 661 (4th Cir.1969). The district court did not invoke this standard.

Instead, the district judge held that the good-faith defense was completely satisfied if an employer reacted to an administrative pronouncement as a reasonably prudent person would react under similar circumstances. That query is certainly a component of the good-faith defense, but it serves only to elucidate the proper definition of whether the employer actually showed good faith under the objective standard required by section 259. The showing of objective good faith under such a standard does not satisfy the other necessary components of the defense. E.g., Superior Pontiac-GMC, 765 F.2d at 1579-80; see also, e.g., King v. Board of Education, 435 F.2d 295, 297 (7th Cir.1970), cert. denied, 402 U.S. 908, 91 S.Ct. 1380, 28 L.Ed.2d 649 (1971). A court must also find that the employer acted "in actual conformity with and in reliance on" the written agency interpretation. 29 U.S.C. Sec. 259. The Second Circuit has noted that

This is not a requirement of a showing of general good faith; the Portal Act language, 'in good faith in conformity with,' precisely links the question of good faith to an act in conformity, and if there is no conformity, general good faith in other respects cannot save the day.

Equal Employment Opportunity Commission v. Home Insurance Co., 672 F.2d 252, 263-65 (2d Cir.1982); see Superior Pontiac-GMC, 765 F.2d at 1579-80.

A. The Interpretive Bulletin

Plaintiffs-appellants have specifically argued that the interpretive bulletin at issue, entitled Interpretive Bulletin, Part 785, Hours Worked Under the Fair Labor Standards Act of 1938, as Amended (the "Bulletin"), cannot satisfy the requirements for the good-faith defense under section 259 because it was insufficient to operate as an interpretation of the compensable time requirements of the FLSA. We agree.

The bulletin contains particular provisions from the Code of Federal Regulations, 29 C.F.R. Secs. 785.14-785.16, that provide some guidance to employers regarding the considerations appropriate to a determination of whether waiting time is time worked compensable under the FLSA. ⁴ Farm Fresh argues that the provisions provide the necessary interpretations suited to particular situations necessary for them to qualify as an administrative interpretation under section 259. The Secretary's regulations suggest otherwise; while the introductory sections to other similar subparts of the Code of Federal Regulations expressly note that interpretations in those subparts may be relied upon to establish section 259 defenses, the introductory section to Subpart 785 pointedly declines to make that representation. Compare, e.g., 29 C.F.R. Secs. 783.3, 784.4, 788.5 (all expressly allowing reliance for the purposes of section 259) with id. Sec. 785.2 (making no mention of section 259 and noting only that the subpart should provide a " 'practical guide for employers' " (quoting Skidmore v. Swift & Co., 323 U.S. 134, 138, 65 S.Ct. 161, 163, 89 L.Ed. 124 (1944)).

The provisions expressly declare that "[w]hether waiting time is time worked under the [FLSA] depends upon particular circumstances," 29 C.F.R. Sec. 785.14, and the determinination involves a consideration of "all the circumstances," id. (quoting Skidmore v. Swift & Co., 323 U.S. 134, 136-37, 65 S.Ct. 161, 163, 89 L.Ed. 124 (1944)). The provisions also expressly declare that

[p]eriods during which an employee is completely relieved from duty and which are long enough to enable him to use the time effectively for his own purposes are not hours worked. .... Whether the time is long enough to enable him to use the time effectively for his own purposes depends upon all of...