Klem v. County of Santa Clara

• Citation: 208 F.3d 1085
• Decision Date: 03 April 2000
• Docket Number: ZONIA,ORTIZ-LOPE,No. 98-16844,98-16844
• Parties: (9th Cir. 2000) KATHLEEN KLEM, ROSEMARY KNOX,PATRICIA CHRISTMAN, and LINDA SHADWELL, on behalf of themselves and others similarly situated,Plaintiffs-Appellees, v. COUNTY OF SANTA CLARA,CALIFORNIA,Defendant-Appellant. HAROLD ASSENZA, JOHN CARLSON,SHARON COOLEY, NANCY S.BENNETT, DOUG WILLIS, ALFONSO M. HACKETT, ROBERT CARGILL, ARMENIA CHAVEZ, DIANABEECHER, AMANDO CABLAS, KATHRYN CANTER, MARY CLESI, ANGELIKA COLUNGA, RAUL COLUNGA, ANTHONY CONIGLIARO, JUNE CRAMBLIT, JOAN CUNNINGHA,OPINION ARTHUR DEMATTEI, WAYNE DORN,KAREN DUPREE, STEVEN FAST,KRISTINE FISHER, RUTH FRANKLIN,HARRY GIRETTI, SHIRLEY GODBOUT,PAUL GOOGE, ANDY GRIMLEY, JON HACKLEY, RENEE HUF, THOMAS IRION, DALE JENKINS, BETTY KONG,LAWRENCE LAMBERT, LORRAINE LEIPOLD, CARLOS LINDSEY, MANUEL MARTINEZ, IDA MATSON, PHILLIP MAYER, MICHAEL MERRITT, JIM MIDDLETON, JOAQUIN MONTANO,MARIE MORELAND, JERRY MORGAN,JOYCE MUKUNO, CHARLES MYERS,JOCELYN MYERS, NORMA PAYNE,MARCIA PETERSON, ROBERT RIORDAN, KARL SCHMUCKI, PETER SCHNEIDER, RONALD SMITH, ILLENE STAHR, ROBIN SURMONT, ANN TAMURA, LORI THOMAS, HELEN TINDALL, JACK TONEY, ROSITA TORRES, HAMISI WHITE, PETE WILSON, DONALD WOOD, RALPH CANO, DONNA FAIRCHILD, LUANN HAHN, GWEN KEEGAN, THOMAS KENNEDY, BARBARA MCGUINESS, JOYCE PANATTUNI, RICHARD RAPACCHIETTE, ALYSON SANCHEZ,FERNANDO VALCARCEL, BENJAMIN A. AGUILAR, SUSAN KELLEY, and CONNIE SYMONS,Plaintiffs-Appellees, v. COUNTY OF SANTA CLARA and SANTA CLARA BOARD OF SUPERVISORS,Defendants-Appellants
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

Page 1085

208 F.3d 1085 (9th Cir. 2000)

KATHLEEN KLEM, ROSEMARY KNOX,PATRICIA CHRISTMAN, and LINDA SHADWELL, on behalf of themselves and others similarly situated,Plaintiffs-Appellees, v. COUNTY OF SANTA CLARA,CALIFORNIA,Defendant-Appellant.

HAROLD ASSENZA, JOHN CARLSON,SHARON COOLEY, NANCY S.BENNETT, DOUG WILLIS, ALFONSO M. HACKETT, ROBERT CARGILL, ARMENIA CHAVEZ, DIANA ORTIZ-LOPEZ, ZONIA BEECHER, AMANDO CABLAS, KATHRYN CANTER, MARY CLESI, ANGELIKA COLUNGA, RAUL COLUNGA, ANTHONY CONIGLIARO, JUNE CRAMBLIT, JOAN CUNNINGHA,OPINION ARTHUR DEMATTEI, WAYNE DORN,KAREN DUPREE, STEVEN FAST,KRISTINE FISHER, RUTH FRANKLIN,HARRY GIRETTI, SHIRLEY GODBOUT,PAUL GOOGE, ANDY GRIMLEY, JON HACKLEY, RENEE HUF, THOMAS IRION, DALE JENKINS, BETTY KONG,LAWRENCE LAMBERT, LORRAINE LEIPOLD, CARLOS LINDSEY, MANUEL MARTINEZ, IDA MATSON, PHILLIP MAYER, MICHAEL MERRITT, JIM MIDDLETON, JOAQUIN MONTANO,MARIE MORELAND, JERRY MORGAN,JOYCE MUKUNO, CHARLES MYERS,JOCELYN MYERS, NORMA PAYNE,MARCIA PETERSON, ROBERT RIORDAN, KARL SCHMUCKI, PETER SCHNEIDER, RONALD SMITH, ILLENE STAHR, ROBIN SURMONT, ANN TAMURA, LORI THOMAS, HELEN TINDALL, JACK TONEY, ROSITA TORRES, HAMISI WHITE, PETE WILSON, DONALD WOOD, RALPH CANO, DONNA FAIRCHILD, LUANN HAHN, GWEN KEEGAN, THOMAS KENNEDY, BARBARA MCGUINESS, JOYCE PANATTUNI, RICHARD RAPACCHIETTE, ALYSON SANCHEZ,FERNANDO VALCARCEL, BENJAMIN A. AGUILAR, SUSAN KELLEY, and CONNIE SYMONS,Plaintiffs-Appellees, v. COUNTY OF SANTA CLARA and SANTA CLARA BOARD OF SUPERVISORS,Defendants-Appellants.

No. 98-16844

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

Argued and Submitted October 4, 1999

Filed April 3, 2000

[Copyrighted Material Omitted]

COUNSEL: Linda A. Tripoli and Felicia R. Reid, Curiale Dellaverson Hirschfeld Kelly & Kraemer, San Francisco, California, for the defendants-appellants.

Lynn Rossman Faris, Leonard, Carder, Nathan, Zuckerman, Ross, Chin & Remar, Oakland, California, and Christopher E. Platten and Carol L. Koenig, Wylie, McBride, Jesinger, Sure & Platten, San Jose, California, for the plaintiffs-appellees.

Paul L. Frieden, United States Department of Labor, Washington, D.C., and Thomas A. Woodley, Mulholland & Hickey, Washington, D.C., for the amici curiae.

Appeals from the United States District Court for the Northern District of California; Ronald M. Whyte, District Judge, Presiding. D.C. Nos. CV 95-20454-RMW. CV-91-20674-RMW

Before: Mary M. Schroeder, Robert R. Beezer, and Susan P. Graber, Circuit Judges.

GRABER, Circuit Judge:

This appeal arises under the Fair Labor Standards Act (FLSA), 29 U.S.C. S 201 et seq. Plaintiffs, who are managers and registered nurses employed by defendant County of Santa Clara, filed actions seeking overtime pay under the FLSA. Defendant moved for summary judgment, arguing that it could correct its failures to comply with the relevant administrative rules through the regulatory "window of correction." The district court issued an order denying the motion and granting Plaintiffs' cross-motion for summary judgment and certified its order for interlocutory appeal under 28 U.S.C. S 1292(b). Defendant appealed, contending that the district court had erred in denying its motion, and this court permitted the appeal. For the reasons that follow, we affirm.

FACTUAL AND PROCEDURAL BACKGROUND

Two related groups of plaintiffs brought FLSA actions. The Klem plaintiffs are registered nurses who are or were employed by Defendant. In October 1991, they filed a complaint seeking a declaratory judgment that Defendant had violated the FLSA by improperly denying them overtime compensation. The Assenza plaintiffs are managers who are or were employed by Defendant. They filed a complaint seeking overtime compensation under the FLSA in December 1994.

Defendant employs about 14,000 workers and classifies approximately 5,300 of them as executive, administrative, or professional employees, who are exempt from the overtime provisions of the FLSA. See 29 U.S.C. S 213(a)(1). Plaintiffs were classified as exempt employees at all relevant times.

Section A-25-300 of the Santa Clara County Ordinance Code authorizes the County to discipline its employees for cause through, among other things, unpaid suspensions of up to 30 days. That provision of the Code does not distinguish between exempt and nonexempt employees; all are subject to disciplinary suspensions. During the six-year period for which Defendant provided records, it imposed 53 disciplinary suspensions, of durations other than one full workweek, on employees whom it classified as exempt.

On April 1, 1996, the district court granted summary judgment for Plaintiffs on the issue of Defendant's liability under the FLSA. The court concluded that Defendant improperly had suspended purportedly exempt employees for periods of less than one workweek, in violation of Department of Labor regulations implementing the FLSA. Accordingly, the court concluded, the County's classification of Plaintiffs and other similarly situated employees as exempt was improper, and Plaintiffs were entitled to receive overtime compensation for the period beginning September 6, 1991.

On May 21, 1997, Defendant issued a "policy change" concerning disciplinary suspensions of employees that it classified as exempt. Under the new policy, exempt employees are not subject to disciplinary suspensions of less than one full workweek. The County then reimbursed the exempt employees whom it improperly had suspended, for wages that they had lost during their suspensions.

In a motion for summary judgment filed in August 1997, Defendant sought reconsideration of the district court's order of April 1, 1996. Defendant contended that, in the light of the Supreme Court's decision in Auer v. Robbins, 519 U.S. 452 (1997), it could remedy its improper suspensions through the regulatory "window of correction" and thereby retain exempt status for its employees. On that basis, Defendant argued, it was entitled to summary judgment on the issue of its liability for overtime compensation. The Secretary of Labor filed a brief as amicus curiae, opposing Defendant's motion for summary judgment and arguing that Defendant's interpretation of the window-of-correction rule was contrary to the Secretary's interpretation. Plaintiffs filed a cross-motion for summary judgment.

The district court denied Defendant's motion for summary judgment and granted Plaintiffs' motion. First, the court found that "the evidence establishes that the County engaged in a pattern of improper disciplinary deductions pursuant to its charter and ordinance." The court then deferred to the Secretary's interpretation of the relevant rules and concluded that, under that interpretation, Defendant could not avail itself of the window of correction to remedy its longstanding practice of suspending allegedly exempt employees in violation of the FLSA. The court certified its order for interlocutory appeal under 28 U.S.C. S 1292(b). This timely appeal followed.

STANDARD OF REVIEW

We review de novo the denial or grant of a motion for summary judgment. See IDK, Inc. v. County of Clark , 836 F.2d 1185, 1189 (9th Cir. 1988). Viewing the evidence in the light most favorable to the nonmoving party, we must determine whether there is any genuine issue of material fact and whether the moving party is entitled to judgment as a matter of law. See Margolis v. Ryan, 140 F.3d 850, 852 (9th Cir. 1998).

The Secretary of Labor's interpretation of her own regulations is entitled to deference and is controlling unless "plainly erroneous or inconsistent with the regulation." Auer, 519 U.S. at 461 (citations and internal quotation marks omitted). The Secretary's interpretation is entitled to deference even when, as here, that interpretation comes to the court in the form of a legal brief. See id. at 462.

In addressing questions under the FLSA, this court is "mindful of the directive that [the statute ] is to be liberally construed to apply to the furthest reaches consistent with Congressional direction." Biggs v. Wilson, 1 F.3d 1537, 1539 (9th Cir. 1993). To that end, "FLSA exemptions are to be `narrowly construed against . . . employers' and are to be withheld except as to persons `plainly and unmistakably within their terms and spirit.' " Auer, 519 U.S. at 462 (quoting Arnold v. Ben Kanowsky, Inc., 361 U.S. 388, 392 (1960)); see also Donovan v. Nekton, Inc., 703 F.2d 1148, 1151 (9th Cir. 1983) (construing overtime exemption for "any employee employed as a seaman"). An employer who claims an exemption from the FLSA bears the burden of demonstrating that the exemption applies. See id.

THE FAIR LABOR STANDARDS ACT

I. Statutory and Regulatory Background

Under the FLSA, employers generally must pay their employees at least one and one-half times their regular rate of pay for hours worked in excess of 40 in a week. See 29 U.S.C. S 207(a)(1). Employees who are employed in executive, administrative, or professional capacities are exempt from that overtime requirement. See 29 U.S.C. S 213(a)(1). The Secretary of Labor is authorized to define by rule the scope of those exemptions. See id.

Under the Secretary's rules, three tests must be satisfied for an employee to be considered an exempt executive, professional, or administrative employee: The "duties" test, see 29 C.F.R. S 541.1; the "salary level" test, see 29 C.F.R. S 541.1(f); and the "salary basis" test, see 29 C.F.R. S 541.118. Only the "salary basis" test is at issue in this case.

An employee is considered to be paid on a salaried basis if "he regularly receives each pay period on a weekly, or less frequent basis, a predetermined amount constituting all or part of his compensation, which amount is not subject to reduction because of variations in the quality or quantity of the work performed." 29 C.F.R. S 541.118(a). In order to qualify for exempt status, "the employee must receive his full salary for any week in which he performs any work without regard to the number of days...