Perez v. Am. Future Sys., Inc.
| Decision Date | 16 December 2015 |
| Docket Number | CIVIL ACTION NO. 12-6171 |
| Parties | THOMAS E. PEREZ, SECRETARY OF LABOR, UNITED STATES DEPARTMENT OF LABOR, v. AMERICAN FUTURE SYSTEMS, INC. d/b/a/ PROGRESSIVE BUSINESS PUBLICATIONS, et al. |
| Court | U.S. District Court — Eastern District of Pennsylvania |
Plaintiff Thomas E. Perez, Secretary of Labor, United States Department of Labor ("Plaintiff" or the "Secretary"), filed suit against American Future Systems, Inc. d/b/a/ Progressive Business Solutions ("Progressive") and its principal owner, Edward Satell ("Satell") (collectively, "Defendants") for violations of the minimum wage and recordkeeping provisions of the Fair Labor Standards Act, 29 U.S.C § 201 et seq. The alleged minimum wage violations are the result of Progressive's policy that employees must "log-off" the computer systems, and thus not be paid, during any break taken through the workday, including breaks of 20 minutes or less. The alleged recordkeeping violations are the result of Progressive's failure to maintain and produce employee time records from certain branch locations for various time periods at issue. The parties have each moved for summary judgment in their favor.1 The parties have also each moved to exclude the expert testimony of the opposing party's principal expert witness pursuant to Federal Rule of Evidence 702 and Daubert v. Merrell Dow Pharm. Inc., 509 U.S. 579 (1993).
For the reasons that follow, both Daubert motions will be denied as moot.2 Further, the Secretary's summary judgment motion will be granted with respect to FLSA minimum wage liability, FLSA recordkeeping liability, Satell's role as an employer under the FLSA, and liquidated damages. The Secretary's motion for summary judgment will be denied with respect to the willfulness of the violations. Defendants' motion for summary judgment will be denied.
Progressive is a Pennsylvania corporation, with its principal place of business in Malvern, Pennsylvania. JSSF ¶ 1. Progressive's primary business is creating business information publications and selling those publications to various entities using sales representatives. Id. ¶ 2. Progressive's sales representatives' duties consist primarily of selling Progressive's publications to business executives via outbound telephone calls. Id. ¶ 12. Those sales representatives currently work in ten call centers operated by Progressive throughout Pennsylvania, Ohio, and New Jersey. Id. ¶ 13. During the relevant period, Progressive sales representatives also worked out of four additional call centers in Pennsylvania, which have since been closed. Id. ¶ 14. Progressive's sales representatives have been employed in an enterprise engaged in commerce or the production of goods for commerce within the meaning of 29 U.S.C. § 203(s)(1)(a), and Progressive's annual gross revenue meets the jurisdictional threshold in this matter. Id. ¶¶ 3, 11. Furthermore, Defendants do not dispute that Progressive is an "Employer" as defined in 29 U.S.C. § 203(d).
Satell is President, Chief Executive Officer, and at least 98% owner of Progressive. JSSF ¶ 4. Satell is responsible for Progressive's policies, operations, and results. Id. ¶ 5. Satell makes or approves high level recruitment decisions, large capital expenditures and/or significant contracts, and major changes of policy. Id.
Progressive maintains a timekeeping system that requires its sales representatives to log-on and log-off its computer and telephone systems at certain times. JSSF ¶ 20. When representatives arrive at work during a branch's hours of operation, they log-on to the branch's computer system. Id. ¶ 21. Representatives remain logged-on to the computer system while making outbound sales calls, documenting the results of those calls, receiving training, and other approved tasks. Id. ¶ 22. Progressive sales representatives are only paid for the time that they are logged into the timekeeping system.4 7/14/14 Hr'g Tr. 13:12 - 14:3, 33:17 - 34:14. See also JA 850 (setting forth what time is paid and unpaid under the Progressive break policy); JA 194-99 (deposition testimony of Colin Drummond explaining when and why employees should be logged into or out of the computer system).
At some point in 2009, Satell consulted with Colin Drummond, Progressive's Director of Call Center Operations, to develop a uniform break policy across its call centers. JSSF ¶¶ 7, 27. In or around June 2009, the Department of Labor ("DOL") commenced a multi-year investigation of Progressive's break policy. Id. ¶ 15. In July 2009, Progressive implemented a written compensation policy stating, among other things, that: Id. ¶ 28; JA 850. After July 2009, if a Progressivesales representative is not on an active sales call, recording the results of a call, engaged in training or administrative activities, or engaged in other activities that Progressive considers to be work-related, the sales representative is required to log-off on Progressive's computer system. JSSF ¶ 30. The log-on/log-off records after July 2009 produced by Progressive show each time the employee in question logged on an logged off system during the day in question and the amount of time that the employee in question was logged on and logged off the system during the day in question.5 Id. ¶ 33. Progressive was unable to produce log-on/log-off records from the Bensalem, Meadville, Pottsville, Sayre, Uniontown, and Wyomissing call centers for various timespans during the relevant period. Id. ¶¶ 44-49. Progressive stated that its inability to produce these log-on/log-off records was due to the records being lost on account of (1) computer server destruction due to force majeure (e.g., flood or power outage), or (2) the recycling of computer servers containing the relevant records when the corresponding branch office closed. Id. ¶ 50.
On March 16, 2011, the Wage & Hour Division of the DOL informed Progressive that breaks of twenty minutes or less were compensable and that Progressive's policy of not paying for those breaks resulted in violations of the FLSA's minimum wage requirement. JSSF ¶ 16. The parties agreed to toll all applicable statutes of limitations for the periods from May 2, 2011 through August 1, 2011, and from August 9, 2011 through September 14, 2012. Id. ¶ 19.
The Secretary initiated this action against Defendants on November 1, 2012. ECF No. 1. The parties cross-moved for summary judgment on May 23, 2014. ECF Nos. 31-32, 35-36, 38-40. On May 23, 2014, the parties also cross-moved to exclude the expert testimony offered by the opposing side. ECF Nos. 33-34, 37. The parties filed their responses in opposition to the cross-motions for summary judgment on June 13, 2014. ECF Nos. 41-42, 44-45, 47. On June 13, 2014, the parties also filed their responses in opposition to the cross-motions to exclude expert testimony. ECF Nos. 43, 46. The parties filed replies in further support of their cross-motions for summary judgment on June 20, 2014. ECF Nos. 48, 51. On June 20, 2014, the parties also filed their replies in further support of their cross motions to exclude expert testimony. ECF Nos. 49-50. On July 4, 2014, with leave of Court, Defendants filed a sur-reply with respect to Plaintiff's motion to exclude Defendants' expert testimony. ECF No. 54. The Court held oral argument on both sets of cross-motions on July 14, 2014. ECF Nos. 57-58. With leave of Court, the parties submitted supplemental briefing with respect to: (1) a Notice of Supplemental Authority regarding Ruffin v. MotorCity Casino, 775 F.3d 807 (6th Cir. 2015) (ECF Nos. 63-65), (2) the appropriate level of deference afforded to certain administrative regulations (ECF Nos. 67-68); and (3) a Notice of Supplemental Authority regarding Babcock v. Butler County, 806 F.3d 153 (3d Cir. 2015) (ECF Nos. 71-72).
This court has subject-matter jurisdiction over this matter pursuant to 29 U.S.C. § 217, and 28 U.S.C. §§ 1331, 1345.
In ruling on a motion for summary judgment, the Court must "construe the evidence in the light most favorable" to the non-moving party, Zimmerman v. Norfolk S. Corp., 706 F.3d 170, 176 (3d Cir. 2013), and grant summary judgment "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). A fact's "materiality" is determined by the substantive law at issue,and "[o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson v. Liberty Lobby, Inc., 4778 U.S. 242, 247 (1986). "A genuine issue is present when a reasonable trier of fact, viewing all of the record evidence, could rationally find in favor of the non-moving party in light of his burden of proof." Doe v. Abington Friends Sch., 480 F.3d 225, 256 (3d Cir. 2007) (citations omitted). This analysis remains unchanged when there are cross-motions for summary judgment. Lawrence v. City of Philadelphia, PA, 527.F.3d 299, 310 (3d Cir. 2008). The analysis is unchanged because "[c]ross-motions are no more than a claim by each side that it alone is entitled to summary judgment, and the making of such inherently contradictory claims does not constitute an agreement that if one is rejected the other is necessarily justified or that the losing party waives judicial consideration and determination whether genuine issues of material fact exist." Rains v. Cascade Indus., Inc., 402 F.2d 241, 245 (3d Cir. 1968).
That the parties have each moved for summary judgment, and thus each represented that there are no material facts in dispute, does not permit the Court to ignore this portion of the summary judgment...
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