Owens v. Local No. 169, Ass'n of Western Pulp and Paper Workers

• Decision Date: 18 August 1992
• Docket Number: No. 91-35409,91-35409
• Citation: 971 F.2d 347
• Parties: 30 Wage & Hour Cas. (BNA) 1633, 30 Wage & Hour Cas. (BNA) 1728, 61 USLW 2104, 122 Lab.Cas. P 35,676 Arnold J. OWENS, et al., Plaintiff-Appellee, v. LOCAL NO. 169, ASSOCIATION OF WESTERN PULP AND PAPER WORKERS, Third-Party-Defendant, v. ITT RAYONIER, INC., Defendant-Third-Party-Plaintiff-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 347

971 F.2d 347

30 Wage & Hour Cas. (BNA) 1633,

30 Wage & Hour Cas. (BNA) 1728, 61 USLW 2104,

122 Lab.Cas. P 35,676

Arnold J. OWENS, et al., Plaintiff-Appellee, v. LOCAL NO. 169, ASSOCIATION OF WESTERN PULP AND PAPER

WORKERS, Third-Party-Defendant, v. ITT RAYONIER, INC., Defendant-Third-Party-Plaintiff-Appellant.

No. 91-35409.

United States Court of Appeals Ninth Circuit.

Argued and Submitted July 6, 1992.

Decided July 29, 1992.

As Amended Aug. 18, 1992.

Bruce Michael Cross, John F. Aslin, Nancy Williams, Perkins Coie, Seattle, Wash., for defendant-appellant ITT-Rayonier, Inc.

Donovan R. Flora, Longfelder, Tinker, Kidman & Flora, Seattle, Washington, James L. Holman, Tacoma, Wash., for plaintiffs-appellees Arnold J. Owens, et al.

Lewis K. Scott, Lane Powell, Spears Lubersky, Portland, Or., amicus curiae of Pacific Coast Ass'n of Pulp and Paper Manufacturers.

Kathryn T. Whalen, Bennett & Durham, Portland, Or., amicus curiae of Western Pulp and Paper Workers and Oregon AFL-CIO.

Ronald E. Richman, Chadbourne & Parke, New York City, amicus curiae of American Paper Institute, Inc.

Mona C. Zeiberg, The National Chamber Litigation Center, Inc., Washington, D.C., amicus curiae of The Chamber of Commerce of the U.S.

Jan S. Amundson, General Counsel, Quentin Riegel, Deputy Gen. Counsel, Washington, D.C., amicus curiae of The Nat. Ass'n of Manufacturers of the U.S.

Appeal from the United States District Court for the Western District of Washington.

Before: ALARCON, RYMER, and NELSON, Circuit Judges.

T.G. NELSON, Circuit Judge:

This case arises from a labor dispute between Defendant employer ITT-Rayonier, Inc. and 91 employees who had brought an action under the Fair Labor Standards Act ("FLSA"), 29 U.S.C. §§ 207 and 216. The principal issue is whether the FLSA requires overtime compensation for the hours Plaintiffs were required to be available by telephone for "on-call" activities. We hold that under the facts of this case, Plaintiffs are not entitled to overtime compensation for that time. We reverse the district court's grant of summary judgment in favor of the Plaintiffs and remand with instructions to grant summary judgment in favor of the Defendant ITT-Rayonier.

FACTS AND PROCEEDINGS BELOW

ITT-Rayonier operates a pulp mill in Hoquiam, Washington, which operates 24 hours per day, seven days per week. The Plaintiffs are mechanics who work daytime shifts Monday through Friday, 8 a.m. to 4:30 p.m. Rather than employing separate maintenance repair persons during the evening/nighttime shifts, ITT-Rayonier had an ongoing policy of phoning its regular daytime mechanics at home after hours to return to the plant to fix equipment. Such calls could occur at any time of night.

The Plaintiffs are represented by Local No. 169, Association of Western Pulp and Paper Workers (the "Union"), ¹ whose collective bargaining agreement recognizes this procedure and contains provisions for call-in time compensation as follows: (1) time and one-half for time on the call-in (with one hour of pay guaranteed); (2) three hours of straight-time compensation (approximately $50) as "call-time"; and (3) a hot meal allowance (up to $10.00) if the call-in involved more than four hours of work. No compensation was required under the agreement for non-work periods when mechanics were subject to call-ins.

Up until late 1987, a mechanic's decision to accept a call-in was purely voluntary. However, in response to increased employee refusals, ITT-Rayonier decided to formalize the policy. The company drafted a proposal and circulated it to the Union and various employees for comment. After consulting with its legal counsel who examined Department of Labor regulations and advised that the proposed procedure would not result in overtime liability, on November 25, 1987, ITT-Rayonier implemented the following system:

Six rosters were developed pooling mechanics according to their respective areas of expertise (i.e. electricians, instrument workers, machinists, millwrights, oilers and pipe fitters). If a breakdown occurred, the company called the employee on the top of the crew roster, working down the list until someone agreed to come in. If a mechanic accepted a call-in, the acceptance was recorded with an "X" and the mechanic's name was moved to the bottom of the following week's list. If a mechanic refused a call-in or could not be reached, it was indicated by an "O" and the mechanic's name remained in place on the list. Thus, mechanics who responded infrequently to call-ins, for whatever reason Employees were required to accept a "fair share" of call-ins. Originally, the company wanted the new provision to require each employee to accept 50% of call-in requests, but complied with the Union's request for the more general "fair share" language. Rosters were posted so that employees could contest any error and know where they were in the call-in pool. Discipline could be imposed on employees who failed to comply, as measured under the just-and-sufficient-cause provision of the collective bargaining agreement.

                eventually received more frequent calls.   An employee was subject to the call-in policy during all times he was not actively working, except for vacation periods.   Mechanics could leave forwarding numbers in order to be reached more easily, and those on top of the roster could request pagers.   The range of the pager was limited to the immediate Aberdeen/Hoquiam area, and a mechanic with a pager was expected to reply within ten minutes of receiving a call
                

Mechanics could select which calls to accept and, on the average, accepted about 30% of their calls. ² Although some skills were more likely than others to be involved in repairs of breakdowns, mechanics accepted an average of six call-ins per year. ³ After implementation of the formal call-in system, four mechanics were disciplined with oral reprimands. The circumstances for these disciplinary actions were as follows: (1) one employee responded to one out of 15 calls over three months; (2) one employee failed to respond to any of 13 calls over three months; (3) one employee responded to one out of 22 calls over six months; and (4) one employee failed to respond to any of 15 calls over three months and, a year later, did not respond to any of 13 calls in three months. In all cases, the reprimands were removed from the employee's record without further disciplinary action.

On October 14, 1988, the Plaintiffs filed suit under the FLSA, 29 U.S.C. §§ 207 and 216, seeking overtime compensation for the hours they were required to be available for on-call requests. No jury was requested. Following discovery, on February 8, 1990, ITT-Rayonier filed a Motion for Summary Judgment, and on February 15, 1990, Plaintiffs filed a Partial Motion for Summary Judgment on the issue of liability. The district court denied both motions by order dated June 21, 1990.

On July 18, 1990, the parties submitted an agreed pretrial order containing admitted facts. On August 7, 1990, a pretrial conference was held at which the district court informally stated that it was inclined to grant partial summary judgment in favor of Plaintiffs based on the agreed facts and the pretrial order. In response to the district court's informal ruling, ITT-Rayonier filed a Motion for Reconsideration of Preliminary Ruling on August 20, 1990. Neither party moved again for summary judgment.

At the hearing on liability on August 22, 1990, over Plaintiffs' objection, the district court permitted ITT-Rayonier to supplement the record with affidavits and interrogatory answers and depositions of some employees regarding Plaintiffs' off-duty activities. On August 24, 1990, ITT- Rayonier On September 26, 1990, the district court granted Plaintiffs' Motion for Summary Judgment on the issue of liability. ITT-Rayonier's Motion for Reconsideration was denied on November 16, 1990. A hearing on damages was held on March 1, 1991, and final judgment was entered on March 4, 1991, awarding the Plaintiffs actual and liquidated damages for 24-hour on-call time, including eating and sleeping time, amounting to nearly 58 million dollars. The district court did not hear live testimony nor did it conduct an evidentiary hearing.

filed a second memorandum in opposition to summary judgment.

ITT-Rayonier presently appeals, inter alia, from the Findings of Fact, Conclusions of Law and Judgment entered on March 4, 1991, and the order denying its motion for summary judgment entered on June 22, 1990.

I. FAIR LABOR STANDARDS ACT

This Circuit has not yet addressed the general applicability of the Fair Labor Standards Act to "call-in" time. ⁴ FLSA 29 U.S.C. § 207(a)(1) requires overtime compensation for hours worked beyond 40 per week. ⁵ The Supreme Court has held that time spent waiting for work is compensable if the waiting time is spent "primarily for the benefit of the employer and his business." Armour & Co. v. Wantock, 323 U.S. 126, 132, 65 S.Ct. 165, 168, 89 L.Ed. 118 (1944) (citation omitted). "Whether time is spent predominately for the employer's benefit [is] dependent upon all the circumstances of the case." Id. at 133, 65 S.Ct. at 168; accord Skidmore v. Swift & Co., 323 U.S. 134, 140, 65 S.Ct. 161, 164, 89 L.Ed. 124 (1944). For example, facts may show that the employee was "engaged to wait," which is compensable, or they may show that the employee "waited to be engaged," which is not compensable. Skidmore, 323 U.S. at 137, 65 S.Ct. at 163.

Although the Supreme Court has been reluctant to "lay down a legal formula" to determine whether waiting time is spent primarily for the benefit of the employer (id., 323 U.S. at 136, 65 S.Ct. at 162), cases dealing with this question have looked at two predominant factors: (1) the degree to which the employee is free to engage in personal activities ⁶; and (2) the agreements between the parties. ⁷

A. EMPLOYEE'S FREEDOM TO ENGAGE IN PERSONAL ACTIVITIES

The regulations at 29 C.F.R. §§ 785.14-17...