Martin v. ConAgra, Inc.

• Decision Date: 21 January 1992
• Docket Number: Civ. No. 90-036-D-2.
• Citation: 784 F. Supp. 1394
• Parties: Lynn MARTIN, Secretary of Labor, United States Department of Labor, Plaintiff, v. CONAGRA, INC., d/b/a Northwest Fabrics and Crafts, Defendant.
• Court: U.S. District Court — Southern District of Iowa

784 F. Supp. 1394

Lynn MARTIN, Secretary of Labor, United States Department of Labor, Plaintiff, v. CONAGRA, INC., d/b/a Northwest Fabrics and Crafts, Defendant.

Civ. No. 90-036-D-2.

United States District Court, S.D. Iowa, Davenport Division.

January 21, 1992.

Malinda Schoeb, Jamison Ann Milford and Tedrick A. Housh, Jr., U.S. Dept. of Labor, Kansas City, Mo., for plaintiff.

Eugene DeShazo, Kansas City, Mo., Charles E. Miller and Robert V.P. Waterman, Lane & Waterman, Davenport, Iowa, for defendant.

MEMORANDUM OPINION, RULING GRANTING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT, AND ORDER

VIETOR, Chief Judge.

Plaintiff Lynn Martin, Secretary of Labor, United States Department of Labor ("Secretary"), brings suit against defendant ConAgra, Inc., doing business as Northwest Fabrics and Crafts ("NWF & C"), under the Fair Labor Standards Act of 1938, as amended ("Act"), 29 U.S.C. § 201 et seq., to enjoin NWF & C from violating certain provisions of the Act. The parties have filed cross-motions for summary judgment and have agreed that this case can be disposed of based on stipulated facts and the motions for summary judgment. Each party has also filed a resistance brief and oral argument has been heard. The motions are submitted.

Summary Judgment Standard

Rule 56 of the Federal Rules of Civil Procedure provides that summary judgment "shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R.Civ.P. 56(e). To preclude the entry of summary judgment, the nonmovant must make a sufficient showing on every essential element of its case for which it has the burden of proof at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986); Continental Grain Co. v. Frank Seitzinger Storage, Inc., 837 F.2d 836, 838 (8th Cir. 1988). Rule 56(e) requires the nonmoving party to go beyond the pleadings and by affidavits, or by the "depositions, answers to interrogatories, and admissions on file," designate "specific facts showing that there is a genuine issue for trial." Fed. R.Civ.P. 56(e); Celotex, 477 U.S. at 324, 106 S.Ct. at 2553; Johnson v. Schopf, 669 F.Supp. 291, 295 (D.Minn.1987). The quantum of proof that the nonmoving party must produce is not precisely measurable, but it must be "enough evidence so that a reasonable jury could return a verdict for the nonmovant." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 257, 106 S.Ct. 2505, 2514, 91 L.Ed.2d 202 (1986); Johnson, 669 F.Supp. at 295-96.

On a motion for summary judgment, the court views all the facts in the light most favorable to the nonmoving party, and gives that party the benefit of all reasonable inferences that can be drawn from the facts. United States v. City of Columbia, Mo., 914 F.2d 151, 153 (8th Cir.1990); Woodsmith Publishing Co. v. Meredith Corp., 904 F.2d 1244, 1247 (8th Cir.1990).

Facts

The parties have stipulated to the following facts. NWF & C is a multi-state retail chain of stores that sells fabrics, craft items and related materials and supplies to the general public. At each individual retail store, NWF & C employs a store manager, one or more assistant managers, a bookkeeper and numerous salespersons.

The sales force is primarily part-time and composed of individuals who have a knowledge of and an interest in sewing or making crafts. In most instances, these individuals are homemakers, raise children or go to school. Few, if any, of the sales people have other employment. Most of these individuals work because they enjoy being around fabrics or crafts and enjoy the break from their routine.

All employees are hired to sell the company's inventory during their scheduled work hours, and no one is required to sew garments or make craft items as a condition of employment. At a pre-employment interview, each applicant for work at NWF & C is informed of the opportunity to participate, on a voluntary basis, in the Company's display model program. Some employees choose not to participate in the display model program, and participation is not a requirement for a job. Those who do not participate do the job they were hired to do with no adverse effect on their employment or on their opportunity for advancement.

The program is simple in operation. Periodically, the store manager or the company will select patterns and fabric swatches for garments that are seasonally appropriate. A sign-up sheet is posted by the pattern, and employees who choose to do so may sign up to make the garment. Employees are free to substitute other fabrics and other patterns, so long as they are acceptable to the store manager, the criterion being to produce a garment that, when displayed, will attract or inspire customers to buy fabric. The program is similar for craft kits or projects. The store provides all of the materials and supplies except for sewing machines, and the employees are free to make the garments or craft items for themselves, family members, friends, or even for private resale.

NWF & C does not sell completed garments. Rather, the completed garments and craft projects made by participants in the display model program are theirs to do with as they choose after the display period. The only requirement imposed on participants by the store is that the project be completed by an agreed-upon date, generally two weeks, and displayed in the store for approximately six weeks.

For each project, the employee gathers the materials and supplies from the store's inventory, writes the items up on a ticket and removes them from the store. The only exception occurs when a project is not completed and returned for display as agreed. In those instances, the employee pays the employee discount price for the materials and supplies removed from the store.

The entire program is flexible in practice, and employees' special needs are accommodated. At the Davenport store, numerous employees have clothed their families, made prom dresses, wedding outfits, and confirmation dresses through the program, all at no cost to the participant-employee for materials required to make the display item. No employee is coerced to participate in the display model program and participation in the display model program is in no way related to any employee's employment opportunities with NWF & C. The Davenport store's assistant manager does not participate in the program and is the second highest paid employee at the store.

The Secretary stated in her enforcement position published in the Federal Register that:

Such display garment programs are considered beneficial by employers and employees. The employees find the program beneficial because many of them are enthusiastic home sewers. The display garment programs are of advantage to consumers because they can see finished products. The employers are pleased since they can display model garments — which are constructed with personal care — to their customers.

53 Fed.Reg. 45706, 45719 (Nov. 10, 1988).

The parties also stipulate to NWF & C's written policy concerning the display model program.

Discussion

The Secretary's action against NWF & C is based upon the fact that NWF & C does not keep records of the time spent by participants making garments and crafts at home for use in NWF & C's display model program. Section 15(a)(5) of the Fair Labor Standards Act makes it unlawful for any person to violate section 11(c), the recordkeeping provisions, of the Act. See 29 U.S.C. §§ 211(c), 215(a)(5).

Under the Act, the Secretary is charged with the responsibility of providing and enforcing regulations relating to industrial homework. See 29 U.S.C. § 211(c) & (d). Regulations regarding recordkeeping requirements for the activities of employees who work at home are found at 29 C.F.R. section 516.31. These regulations were most recently amended in 1988. See 53 Fed.Reg. 45706, 45726 (Nov. 10, 1988); 29 C.F.R. § 516.31. At that time, the Secretary articulated her enforcement policy regarding model display programs. According to the Secretary,

time spent by employees in sewing model garments is hours worked under the FLSA and ... such hours must be combined with hours worked at the establishment in recording the total hours in the workweek and calculating the payment of the minimum wage and overtime pay.

53 Fed.Reg. at 45719. The Secretary further explained it would take no enforcement action where five criteria were present:

(1) The employees' work is voluntary;

(2) The materials (e.g., patterns, fabrics, and notions) are provided to the employees free or at no more than their cost to the employer;

(3) The employees retain ownership of the model garments after the display period;

(4) An accurate record in homeworker handbooks is maintained of all hours worked in the home-sewing activities; and

(5) The employees are paid for all hours worked, both in the stores and in the home-sewing activities, in accordance with the provisions of the FLSA.

Id. (emphasis added).¹

The Secretary's determination that the recordkeeping provisions of the Act apply to display model programs is entitled to substantial deference. See Martin v. Occupational Safety & Health Review Comm'n, ___ U.S. ___, 111 S.Ct. 1171, 1175-76, 113 L.Ed.2d 117 (1991). Furthermore, when an employer contends it is exempt from the Act, the employer "has the burden of establishing the exemption clearly and affirmatively." Donovan v. Williams Chemical Co., Inc., 682 F.2d 185, 191 (8th Cir.1982) (citations omitted); cf. Carlson v. City of Minneapolis, 925 F.2d 264, 265 (8th Cir.1991) (for purposes of the Fair Labor Standards Act, City had burden of showing that employees plainly and unmistakenly came within the claimed exception). Because the Secretary's interpretation of the regulations is reasonable, see Martin, 111 S.Ct. at...