Green v. Harbor Freight Tools USA, Inc.

• Decision Date: 14 December 2012
• Docket Number: Case No. 09–CV–2380–JAR–JPO.
• Citation: 888 F.Supp.2d 1088
• Parties: Stephanie R. GREEN, et al., on Behalf of Themselves and All Others Similarly Situated, Plaintiffs, v. HARBOR FREIGHT TOOLS USA, INC., Defendant.
• Court: U.S. District Court — District of Kansas

888 F.Supp.2d 1088

Stephanie R. GREEN, et al., on Behalf of Themselves and All Others Similarly Situated, Plaintiffs,

v.HARBOR FREIGHT TOOLS USA, INC., Defendant.

Case No. 09–CV–2380–JAR–JPO.

United States District Court, D. Kansas.

Aug. 17, 2012.

Memorandum Denying Stay Dec. 14, 2012.

Amy P. Maloney, Matthew J. O'Laughlin, Holman Schiavone, LLC, Kansas City, MO, Theodore J. Lickteig, Law Offices of Theodore J. Lickteig, Lenexa, KS, for Plaintiffs.

Justin M. Dean, Mary Katherine Paulus, Patrick F. Hulla, Sara B. Anthony, Ogletree, Deakins, Nash, Smoak & Stewart, PC, Kansas City, MO, for Defendant.

MEMORANDUM AND ORDER

JULIE A. ROBINSON, District Judge.

Plaintiffs bring this collective action under the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 216(b), against Defendant Harbor Freight Tools (“Harbor Freight”), claiming they were misclassified as exempt from the FLSA's overtime requirements and are owed overtime compensation. This matter is before the Court on Harbor Freight's Motion to Decertify Plaintiffs' Claims (Doc. 433), on the grounds that Plaintiffs are not similarly situated for purposes of a collective action under § 216(b) of the FLSA. The parties do not request a hearing, and after reviewing the extensive submissions and record, the Court determines that a hearing would not significantly assist in the determination of this matter. For the reasons explained in detail below, Harbor Freight's motion to decertify is granted.

I. Procedural Background

Harbor Freight sells tools and related products and accessories at retail stores throughout the United States. All Harbor Freight Store Managers are governed by the same job description. Store Managers are the highest ranking employees working at each store, and directly report to District Managers, each of whom oversees approximately eight stores. The Store Manager position is classified as exempt from the FLSA overtime requirements.

Plaintiffs Stephanie Green, Brent Foster, Trey Pace, Dennis Collins and Andy VanMeter pursue their claims on their own behalf and on behalf of others who are “similarly situated.” On August 17, 2010, this Court conditionally certified the following class:

Individuals employed by Harbor Freight Tools USA, Inc. and any predecessors from the time period three years from the date of the Court's order to the present with the title Store Manager at any Harbor Freight Tools retail store. ¹

On September 15, 2010, the Court approved the parties' proposed Notice and Consent Form and the 90–day opt-in period began to run October 4, 2010. ² Eighty-one (81) additional plaintiffs filed consents to join this action. By stipulation, fifty (50) of the total eighty-six (86) claims were dismissed without prejudice, leaving thirty-six (36) Plaintiffs.

Each of the thirty-six remaining Plaintiffs has responded to written discovery. Harbor Freight has deposed all current Plaintiffs as well as obtained declaration testimony from non-opt-in Store Managers. Harbor Freight has responded to written discovery requests and produced two corporate representatives to provide deposition testimony under Fed.R.Civ.P. 30(b)(6). Plaintiffs also deposed two former Harbor Freight District Managers.

II. StandardA. Similarly Situated

As set forth in the Order granting conditional certification, the Tenth Circuit has not specifically defined the term “similarly situated” but has upheld the use of a two-step ad hoc method for determining whether a suit may proceed as a collective action under the FLSA.³ The Court completed the first stage when it determined that certification was proper for purposes of sending notice of the action to potential collective action members, giving them the opportunity to opt-in to the action, and conditionally certifying the class as “similarly situated.” ⁴ In so ruling, this Court joined other judges in this District in declining to consider the individualized nature of factual inquiries regarding whether an employee is exempt until the second-stage analysis.⁵

During the second stage, which occurs at the conclusion of discovery, a defendant typically files a motion to decertify the collective action.⁶ Upon ruling on the motion to decertify, “the court then makes a second determination, utilizing a stricter standard of ‘similarly situated.’ ” ⁷ If the claimants are indeed similarly situated, “the district court allows the representative action to proceed to trial.' ” ⁸ “If the claimants are not similarly situated, the district court decertifies the class, [ ] the opt-in plaintiffs are dismissed without prejudice,” and “[t]he class representatives— i.e. the original plaintiffs—proceed to trial on their individual claims.” ⁹ In determining whether plaintiffs have satisfied their burden to establish they are similarly situated, “a court reviews several factors, including (1) disparate factual and employment settings of the individual plaintiffs; (2) the various defenses available to defendant which appear to be individual to each plaintiff; [and] (3) fairness and procedural considerations.” ¹⁰ The decision whether to decertify a collective action is within the district court's discretion. ¹¹

B. Executive Exemption

In order to determine whether members of the class are similarly situated, the Court must consider the salient factors in an exemption analysis. Under the FLSA, the general rule is that any employee who works more than forty hours in a workweek must receive overtime compensation.¹² Employers need not pay overtime, however, if the employee is “employed in a bona fide executive, administrative, or professional capacity” as defined by the regulations promulgated by the Secretary of Labor.¹³ While it is the employee's burden to prove that the employer is violating the FLSA, ¹⁴ it is the defendant employer's burden to prove that the employee falls within one of these exceptions, all of which are narrowly construed against it.¹⁵ Under the Department of Labor regulations, an employee qualifies for the executive exemption if the employee: (1) is paid a salary not less than $455 per week; (2) has a primary duty of management; (3) regularly directs two or more employees; and (4) has “authority to hire or fire other employees or whose suggestions and recommendations as to the hiring, firing, advancement, promotion, or any other change of status of other employees are given particular weight.” ¹⁶ In this case, the second and fourth criteria are in dispute.

The FLSA regulations include the following illustrative list of management activities:

interviewing, selecting, and training of employees; setting and adjusting their rates of pay and hours of work; directing the work of employees; maintaining production or sales records for use in supervision or control; appraising employees' productivity and efficiency for the purposes of recommending promotions or other changes in status; handling employee complaints and grievances; disciplining employees; planning the work; determining the techniques to be used; apportioning the work among the employees; determining the type of materials, supplies, machinery, equipment or tools to be used or merchandise to be bought, stocked and sold; controlling the flow and distribution of materials for merchandise and supplies; providing for the safety and security of the employees or the property; planning and controlling the budget; and monitoring or implementing legal compliance measures.¹⁷

Under the regulations, management itself entails performing tasks included in the other executive exemption criteria, i.e., directing the work of other employees and having the authority to hire or fire and make influential recommendations that affect others' employment status.

An employee's “primary duty” is management if it is the “principal, main, major or most important duty that the employee performs.” ¹⁸ To determine whether an employee's primary duty is management, the Court may look at the following non-exclusive factors: (1) the amount of time spent performing non-managerial tasks, (2) the relative importance of non-managerial duties as compared to other duties, (3) the employee's relative freedom from direct supervision, and (4) the relationship between the employee's salary and the wages paid to other employee's performing nonexempt work.¹⁹

Although the FLSA regulations recognize that “the amount of time spent performing exempt work can be a useful guide in determining whether exempt work” is an employee's primary duty, they also stress that exempt employees are not required to completely abstain from non-exempt duties in order for the exempt classification to be proper.²⁰ Rather, “[t]ime alone ... is not the sole test, and in situations where the employee does not spend over 50 percent of his time in managerial duties, he might nevertheless have management as his primary duty if the other pertinent factors support such a conclusion.” ²¹ The regulations also explicitly recognize that an employee may perform exempt and nonexempt duties concurrently.²² “Whether an employee meets the [executive exemption criteria] when the employee performs concurrent duties is determined on a case-by-case basis.” ²³ The regulations distinguish between exempt and nonexempt employees who both perform nonexempt work based on whether the exempt employee retains supervisory and managerial responsibility even while performing non-exempt work:

Generally, exempt executives ... [decide] when to perform nonexempt duties and remain responsible for the success or failure of business operations under their management while performing the nonexempt work. In contrast, the nonexempt employee generally is directed by a supervisor to perform the exempt work or performs the exempt work for defined periods.²⁴

Factors to consider in determining whether management is still an employee's primary duty when that individual is, for example, stocking shelves alongside the employees whom he simultaneously supervises, include to what extent the...