Reich v. Stewart

• Decision Date: 08 August 1997
• Docket Number: No. 96-2011,96-2011
• Citation: 121 F.3d 400
• Parties: 134 Lab.Cas. P 33,593, 4 Wage & Hour Cas.2d (BNA) 50 Robert B. REICH, Secretary of Labor, U.S. Department of Labor, Appellee, v. Thomas J. STEWART, doing business as Stewart Trucking & Pallet, Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 400

121 F.3d 400

134 Lab.Cas. P 33,593, 4 Wage & Hour Cas.2d (BNA) 50

Robert B. REICH, Secretary of Labor, U.S. Department of Labor, Appellee, v. Thomas J. STEWART, doing business as Stewart Trucking &amp Pallet, Appellant.

No. 96-2011.

United States Court of Appeals,

Eighth Circuit.

Submitted Dec. 12, 1996.

Decided Aug. 8, 1997.

Robert William Chapin, Jr., Lincoln, NE, argued, for appellant.

Lauriston H. Long, Washington, DC, argued (J. Davitt McAteer, Steven J. Mandel and William J. Stone, Washington, DC, on the brief), for appellee.

Before McMILLIAN and MAGILL, Circuit Judges, and WEBBER, ^* District Judge.

McMILLIAN, Circuit Judge.

Thomas J. Stewart appeals from a final judgment entered in the United States District Court ¹ for the District of Nebraska in favor of the Secretary of Labor (Secretary) in the amount of $13,506.50 in this action filed by the Secretary pursuant to the Fair Labor Standards Act of 1938, 29 U.S.C. §§ 201-219 (1994) (FLSA). Reich v. Stewart, No. 4:CV94-3307, 1996 WL 325891 (D.Neb. Mar. 7, 1996) (Judgment). For reversal, Stewart argues that the district court erred in holding (1) his employees were engaged in commerce or the production of goods for commerce; (2) he was not exempt from the FLSA pursuant to 29 U.S.C. § 203(s)(1); and (3) his employees were entitled to overtime pay. Stewart also argues that the district court lacked personal jurisdiction over a represented employee. For the reasons discussed below, we affirm the order of the district court.

I. Background

The following facts are taken primarily from the district court order. Between September 1, 1991, and August 31, 1993, Stewart owned and operated a sole proprietorship in Lincoln, Nebraska, called Stewart Trucking and Pallet (ST & P). Part of ST & P's business consisted of "recycling," or repairing, broken shipping pallets for resale to other local businesses. Among ST & P's local customers were Cook Family Foods (Cook), Millard Refrigerated Warehouse (Millard), Gooch Milling, Nash-Finch, Sunkist Meat, Lenco, American Signature, Seward Motor Freight, and Lincoln Cartridge. Stewart regularly made truck deliveries of pallets to these businesses in Lincoln, Nebraska. Cook purchased between 374 and 935 pallets per week from ST & P for shipping boxes of processed hams to other states and Canada, with ninety-seven percent of the shipments going outside of Nebraska. At that time, Cook's annual gross volume of sales was $200,000,000. Millard also used ST & P's pallets to ship meat to its other plants, one of which was located in Alabama.

The pallets were repaired by "pallet builders," and each builder repaired the pallets which were stocked on his or her work table when he or she arrived each morning. The builders were paid on a piece-rate basis at fifty cents for each of the first 100 pallets repaired each day and sixty cents for each pallet repaired thereafter. The number of pallets repaired per day by each builder varied depending on the skill and experience of the builder and the condition of the pallets. Each builder recorded on a slip of paper the number of pallets repaired each day, and, at 3:00 p.m. each weekday, each builder submitted the slip of paper to Stewart's daughter, Jennifer Scurto, who helped run ST & P. After checking the accuracy of each builder's daily pallet count, Scurto totaled the number of pallets repaired by each builder on a master sheet and paid the builders every Friday in accordance with that total. Scurto also kept track of the pallet builders' tardiness and absenteeism. However, no records were kept of each builder's daily or weekly hours.

Between January and March 1992, Joseph Petty worked for ST & P as a part-time general laborer and was paid by the hour. In March 1992, Petty became a full-time pallet builder for ST & P and was paid primarily on a piece-rate basis. Approximately thirty days after Petty became a full-time pallet builder, Stewart gave Petty keys to ST & P, which Petty used to open ST & P around 5:00 a.m. each weekday and to gain access on weekends. Stewart was aware that Petty worked weekends because, occasionally, he explicitly authorized Petty to work on a particular weekend. However, on several weekends, Stewart saw Petty at the shop and instructed him to go home. On Monday mornings, Stewart would find the pallets that Petty had repaired during the weekend, and he always compensated Petty for that work.

Petty served as supervisor of the other pallet builders from October 1992 until April 1993. This period was considered the "busy season," which Petty testified coincided with the winter months. Petty's work hours depended upon the seasonal demands of ST & P. According to the United States Department of Labor's pre-trial investigation report (DOL's report) and Petty's trial testimony, he worked between fifty-five and seventy-two hours per week. Petty was paid piece-rate for all but fifty of his total hours during the non-peak season, during which he purportedly worked an average of fifty-five hours per week, and for all but 167.25 of his total hours during the peak season, during which he purportedly averaged seventy-two hours of work per week. Petty did not receive overtime, or premium, pay for his workweeks which exceeded forty hours.

Scott Hoss worked as a pallet builder for ST & P for sixteen weeks during the fall of 1992. Based upon the DOL's report and the testimony adduced at trial, Hoss's average workweek consisted of forty to forty-five hours and occasional Saturday work. During those sixteen weeks, Hoss worked twenty-five hours of overtime, for which he did not receive premium pay.

As of approximately January 1995, Stewart began paying ST & P's pallet builders an hourly wage and limited their hours to forty per week. The builders began punching a time clock, and, as of April 1995, Scurto began entering the builders' compiled time sheets into a computer. Petty was fired on January 21, 1995, for being intoxicated on the job. Petty became intoxicated on the job approximately once every three months, but, on January 21, 1995, he was particularly disruptive because of the change in the pay system for pallet builders.

The Secretary filed this action pursuant to the FLSA, alleging that Stewart violated the FLSA's recordkeeping, minimum wage, and overtime provisions during the period between September 1, 1991, and August 31, 1993. The Secretary filed this action on behalf of four ST & P employees, Petty, Hoss, Matthew Worrell, and Jimmy Uglow, and sought prospective injunctive relief barring future violations as well as back wages and liquidated damages.

This case was tried without a jury on August 16-17, 1995. The district court found that Stewart owed Petty $6,681.00 in overtime compensation and $6,681.00 in liquidated damages. Reich v. Stewart, No. 4:CV94-3307, 1996 WL 325891 (D.Neb. Mar. 7, 1996) (Memorandum of Decision) (slip op. at 22, 28-29). It further found that Stewart owed Hoss $72.25 in overtime compensation and $72.25 in liquidated damages. Id. at 24, 28-29. The district court denied relief for Worrell and Uglow because it found that their pay exceeded the minimum wage and that they did not work overtime. Id. at 17-18, 23. While the district court found that Stewart violated the recordkeeping provision of the FLSA, 29 U.S.C. § 211(c), see id. at 29, it denied the Secretary's request for prospective injunctive relief because ST & P currently appears to be in compliance with the FLSA and there is no indication that future violations will occur, id. at 15. Stewart appealed. ²

II. Discussion

Under the FLSA, "it shall be unlawful for any person" to violate the minimum wage, overtime, and recordkeeping provisions of that statute. 29 U.S.C. § 215(a)(2),(5). Employees who are "engaged in the production of goods for commerce" are entitled to overtime compensation for working more than forty hours in a week. See id. § 207(a). The ultimate question of whether an employee falls within the FLSA's protection is a question of law to be reviewed de novo. See Spinden v. GS Roofing Prods. Co., 94 F.3d 421, 426 (8th Cir.1996) (citing Icicle Seafoods, Inc. v. Worthington, 475 U.S. 709, 714, 106 S.Ct. 1527, 1530, 89 L.Ed.2d 739 (1986)), cert. denied, --- U.S. ----, 117 S.Ct. 1254, 137 L.Ed.2d 334 (1997). However, the amount of time an employee works and the duties he or she performs present factual questions to be reviewed for clear error. See Fed.R.Civ.P. 52(a); see also Spinden v. GS Roofing Prods. Co., 94 F.3d at 426.

A. Engaged in Commerce or the Production of Goods for Commerce

Stewart argues that the Secretary failed to prove by "definite and certain evidence" that ST & P was involved in commerce or the production of goods for commerce. Brief for Appellant at 7, citing Johnson v. Blankenship, 152 F.2d 99 (8th Cir.1945) (requiring that the plaintiff establish by a preponderance of the evidence the number of hours worked and the amount of wages due). Stewart maintains that ST & P's employees are exempt from the FLSA because they are involved in purely local activities; specifically, ST & P's pallets were repaired in Lincoln, Nebraska, with materials purchased in Lincoln, and were returned to businesses in Lincoln. Id. at 7-8, citing Mitchell v. C.W. Vollmer & Co., 349 U.S. 427, 429, 75 S.Ct. 860, 861-62, 99 L.Ed. 1196 (1955) (the test to determine whether an employee is engaged "in commerce" within the meaning of the FLSA is "whether the work is so directly and vitally related to the functioning of an instrumentality or facility of interstate commerce as to be, in practical effect, a part of it, rather than isolated, local activity"), and Wirtz v. McDaniel, 325 F.2d 78, 82 (8th Cir.1963) (same). Stewart contends that the Secretary presented no evidence that the pallets actually left Lincoln, Nebraska, and, therefore, the district court clearly erred in assuming that to be true. Stewart claims that the evidence was neither sufficiently definite nor...