Chao v. Self Pride, Inc.

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 06-1203
ELAINE L. CHAO, Secretary of Labor, United
States Department of Labor,
Plaintiff - Appellee,
versus
SELF PRIDE, INCORPORATED; BARBARA A. ROBINSON,
individually and as a corporate officer of the
aforementioned corporation,
Defendants - Appellants.
No. 06-1369
ELAINE L. CHAO, Secretary of Labor, United
States Department of Labor,
Plaintiff - Appellant,
versus
SELF PRIDE, INCORPORATED; BARBARA A. ROBINSON,
individually and as a corporate officer of the
aforementioned corporation,
Defendants - Appellees.
Appeals from the United States District Court for the District of
Maryland, at Baltimore. Richard D. Bennett, District Judge.
(1:03-cv-03409-RDB)
Argued: January 30, 2007 Decided: May 17, 2007
Before WILKINS, Chief Judge, and NIEMEYER and MICHAEL, Circuit
Judges.
Affirmed by unpublished per curiam opinion.
ARGUED: Neal Marcellas Janey, Sr., Baltimore, Maryland, for
Appellants/Cross-Appellees. Carol Beth Feinberg, Senior Attorney,
UNITED STATES DEPARTMENT OF LABOR, Office of the Solicitor,
Washington, D.C., for Appellee/Cross-Appellant. ON BRIEF: Howard
M. Radzely, Solicitor of Labor, Steven J. Mandel, Associate
Solicitor, Paul L. Frieden, Counsel for Appellate Litigation,
UNITED STATES DEPARTMENT OF LABOR, Office of the Solicitor,
Washington, D.C., for Appellee/Cross-Appellant.
Unpublished opinions are not binding precedent in this circuit.
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PER CURIAM:
The Secretary of Labor commenced this action under the Fair
Labor Standards Act (“FLSA”), 29 U.S.C. § 201 et seq., against Self
Pride, Inc., a Maryland provider of residential care for disabled
persons, and its CEO, Barbara Robinson, alleging that the
defendants violated the wage laws by: (1) failing to pay employees
for “breaks” which were in fact compensable work under the FLSA;
(2) double-penalizing tardy employees; (3) failing to pay employees
when they worked, but did not call in to Self Pride’s central line
on an hourly basis; and (4) reducing compensable hours for other
impermissible reasons or for no reason at all. The district court
entered a partial summary judgment in favor of the Secretary on the
issue of liability and, after a short bench trial, found that (1)
the defendant’s conduct was not willful and therefore the relevant
statute of limitations was two years, and (2) damages for the two-
year period were $527,903.63.
On Self Pride’s appeal challenging liability and damages and
the Secretary’s cross-appeal challenging the statute of limitations
determination, we affirm.
I
Self Pride is a nonprofit Maryland corporation that operates
eight “community living” centers in Baltimore City. It provides
24-hour residential care for disabled residents under grants from
the City and from the State of Maryland. Most of the residents are
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severely mentally retarded or physically disabled and require
constant care and attention, including feeding, bathing, changing
diapers, bed rotation, and similar services. In performing the
care, Self Pride requires employees -- “Community Living
Assistants” or CLAs -- to check on the residents every two hours
around the clock, including on weekends.
Self Pride pays its CLAs on the basis of time sheets that they
fill out and submit to their immediate supervisors, the “house
managers.” After the house managers verify the time sheets, they
submit them for approval to Adolphus Carr, Self Pride’s supervisor
of facilities. Carr often makes adjustments to time sheets,
usually initialing the changes, and then signs the time sheets at
the bottom before submitting them to Barbara Robinson, the CEO of
Self Pride. Only with Barbara Robinson’s approval of the time
sheets are wages paid to employees and then on the basis of the
time sheets as modified and approved.
CLAs working the weekend shift -- from 8 a.m. on Saturday to
8 a.m. on Monday -- are paid for 40 hours of work. Even though the
weekend shift is 48 hours long, the employees are not paid for two
four-hour “breaks” they are given over the course of the shift. In
order to provide coverage for the necessary 24-hour care, which
includes checking residents every two hours, two CLAs must be
present at each facility during the entire weekend.
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Following an investigation of Self Pride’s wage practices by
the Department of Labor, the Secretary commenced this action
against Self Pride and Robinson, charging that they violated the
FLSA in their manner of paying employees for the 48-hour weekend
shift. The Secretary contended that the four-hour unpaid breaks
given to CLAs during the weekend were still part of the paid
workweek under 29 U.S.C. § 206(a), because the CLAs were not free
to leave the facilities during the breaks or otherwise to use the
time as they chose. The Secretary also alleged other violations of
the FLSA, such as excessive docking for lateness, docking for
failure to call in to Self Pride’s central office, and other
improper deductions from pay to penalize employees or simply avoid
payment.
The district court granted the Secretary partial summary
judgment on liability, concluding that “the undisputed record
before this Court reveals numerous violations of the FLSA by Self
Pride.” The court concluded that Self Pride violated the
requirements of the FLSA to pay employees overtime pay for their
weekend shifts, in violation of 29 U.S.C. § 207(a)(1); that Self
Pride violated the record-keeping requirements imposed by § 211(c);
that the violations entitled the employees to actual and liquidated
damages pursuant to § 216(b); and that Barbara Robinson, the CEO of
Self Pride, was an employer as defined in § 203(a) and therefore
also liable personally.
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After granting the Secretary partial summary judgment on
liability, the district court conducted a bench trial on (1)
whether the defendants violated the FLSA “willfully,” thereby
extending the statute of limitations from two years to three years,
see 29 U.S.C. § 255(a); and (2) the amount of damages. After
finding that the defendant did not violate the statute willfully
and that the two-year statute of limitations applied, the court
assessed damages against Self Pride and Robinson in the amount of
$527,903.63 (including liquidated damages of $155,239.72). The
court also enjoined the defendants from violating the FLSA in the
future.
From the judgment entered by the district court, the
defendants appealed, challenging both liability and damages, and
the Secretary cross-appealed, challenging the district court’s
determination of willfulness.
II
The defendants first contend that the district court
erroneously entered a partial summary judgment on liability because
the cross-affidavits of the parties created triable issues of
material fact.
In support of its motion, the Secretary presented 34
affidavits of Self Pride employees in which the employees detailed
Self Pride’s work requirements on weekends. The affidavits also
included the employees’ time sheets to corroborate their testimony.
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These affidavits demonstrated (1) that the employees often worked
alone during weekends, when at least two were required to provide
coverage for care of the residents; (2) that they were rarely able
to sleep during the 48-hour shifts because of their duties; (3)
that the facilities had limited or no sleeping facilities for the
CLAs; (4) that their breaks were frequently interrupted; (5) that
they were often unable to take their breaks; (6) that they had to
check on each of the residents every two hours; (7) that they had
to call Self Pride’s main office line each hour or be docked pay;
(8) that they could rarely if ever leave the facility during
breaks; (9) that there was no practical way for them to leave the
facility due to a lack of public transportation. These affidavits
demonstrated in effect that the entire 48 hours of the weekend
shift constituted “work” within the meaning of the FLSA, because
the “break” time was corrupted by duties carried out for Self
Pride’s benefit, not for the employees’ benefit. See Roy v. County
of Lexington, 141 F.3d 533, 544 (4th Cir. 1998); 29 C.F.R. §
785.16. The employees’ affidavits also demonstrated other
violations involving Self Pride’s improper reduction of hours
recorded on time sheets.
Self Pride responded to these employee affidavits with
affidavits from Barbara Robinson, the CEO of Self Pride, and from
Adolphus Carr, the supervisor of the facilities. Robinson’s
affidavit challenged no fact specifically but stated only
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conclusorily and generally that no employee worked continuously for
48 hours, because that “would be physically impossible.” The
schedule, she stated, consisted of two 24-hour periods, during
which “each such employee was scheduled to be paid for eight hours
of work, [] for a sleep period or sleep break of eight hours [and]
an additional four hour break, and was given yet another break of
four hours that was not compensated.” Thus, she asserted, for each
day of the weekend, each employee was paid for 20 hours, even
though she only had to work 8.* Robinson’s affidavit categorically
denied that employees were required to call in to the main office
each hour they were on duty, and stated that no employee was
reduced pay for not calling in every hour. The affidavit stated
also that all the employees were properly paid for overtime.
Carr’s affidavit was to the same effect, and provided no
additional detail.
In response to the defendants’ contention that these
affidavits created a material issue of fact, the district court
concluded that the defendants’ affidavits were simply “conclusory
denials,” which did not contradict the facts asserted by the
employees in their affidavits, particularly the actual time sheets
*
Of course, if each of two employees assigned to provide
coverage on weekends had to work only 8 hours each 24-hour day, as
Robinson suggested, then there were 8 hours during each 24-hour day
when no one was working. Yet, the residents required round-the-
clock coverage and each had to be visited at least every 2 hours.
Neither Robinson in her testimony nor her counsel at oral argument
was able to explain the logical inconsistency.
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used by Self Pride in the course of its business. We agree with
the district court.
To successfully oppose a motion for summary judgment, a party
must present admissible evidence that puts a material fact into
issue. If no reasonable jury could credit the nonmovant’s
evidence, the nonmovant has likewise failed to meet his burden.
See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S.
574, 587 (1986). With respect to the random subtractions, double-
docking for lateness, subtractions while waiting for a van to pick
up residents, and docking for failing to call in, a reasonable jury
would have to conclude that these violations took place. They are
readily apparent from the face of the time sheets attached to the
employees’ affidavits -- time sheets that were generated by the
employees and approved and signed by Self Pride supervisors. A
generalized, blanket denial does not save Self Pride from summary
judgment in these circumstances. See Lujan v. Nat’l Wildlife
Fed’n, 497 U.S. 871, 888 (1990) (“The object of [summary judgment]
is not to replace conclusory allegations of the complaint or answer
with conclusory allegations of an affidavit”); Cleveland v. Policy
Mgmt. Sys. Corp., 526 U.S. 795, 806-07 (1999) (“A party cannot
create a genuine issue of fact sufficient to survive summary
judgment simply by contradicting his or her own previous sworn
statement (by, say, filing a later affidavit that flatly
contradicts that party’s earlier sworn deposition) without
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explaining the contradiction or attempting to resolve the
disparity”).
In addition, Robinson’s sworn deposition testimony confirms
that the CLAs had to work during their breaks, as it was
mathematically impossible for them to have provided the necessary
care and also to have taken four-hour breaks. Perhaps more
critically, Robinson admitted during her deposition that employees
could not leave the premises during their breaks, essentially
admitting that break periods were work, because they were not
“periods during which an employee [was] completely relieved from
duty and which [were] long enough to enable him to use the time
effectively for his own purposes.” 29 C.F.R. § 785.16.
The district court did not err in entering partial summary
judgment on liability in favor of the Secretary.
III
The defendants next challenge the damage award entered by the
district court. They argue that the Secretary failed to create a
“just and reasonable inference” of damages, because the Secretary
relied on paper records, rather than calling the employees as
witnesses to testify to the amount of time worked, and the paper
records were insufficient to support the district court’s finding
of damages. In addition, the defendants claim that the court erred
in assuming that the illegal deductions made on the representative
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plaintiffs’ time sheets were also to be applied to the other
employees’ time sheets.
In this case, many time sheets were missing and the Secretary
undertook various methods to interpolate damages based on the
records that were available. In these circumstances, the Secretary
has only to show damages as a matter of “just and reasonable
inference,” after which the burden shifts to Self Pride to show
that those damages were not suffered. Anderson v. Mt. Clemens
Pottery Co., 328 U.S. 680, 687-88 (1957), superseded by statute on
other grounds, 29 U.S.C. § 254 et seq.
To prove damages in this case, the Secretary reviewed every
available time sheet and payroll record. Because records were
incomplete and many time sheets were missing, the Secretary often
used statistical inferences to reconstruct the amount of time
worked for which the employee was not paid. Thus, if a time sheet
was available, damages were assessed based on the actual number of
violations present. If an employee had more than 30% of her time
sheets available, the Secretary used those time sheets to determine
how many hours, on average, were improperly deducted from her time
worked. That per-time sheet average was then imputed to all the
time sheets missing for that particular employee. For employees
without sufficient time sheets to create an individual average, the
Secretary used a “universal average” -- the average amount of time
improperly deducted from all of the time sheets. The missing time
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sheets were then assumed to be in line with the universal average.
Thus, the Secretary made efforts to minimize the use of
representative data in the damages determination, perhaps even more
than necessary, and attempted to calculate damages on each
individual basis, relying on records for every employee working at
Self Pride during the relevant period.
Because the Secretary relied on the best evidence available --
the available time records -- we cannot agree with the defendants
that she also had to call each employee to the witness stand in an
effort to obtain the employee’s best recollection of work over a
period of two years. Such evidence would have contributed little,
if anything. Moreover, the FLSA imposes no requirement that the
Secretary call each individual employee and attempt to reconstruct,
from recollection, the time worked in the absence of time records.
See Reich v. Gateway Press, Inc., 13 F.3d 685, 688 (3d Cir. 1994);
Dole v. Elliott Travel & Tours, Inc., 942 F.2d 962 (6th Cir. 1991);
Brock v. Norman’s Country Market, Inc., 835 F.2d 823, 828 (11th
Cir. 1988). In this case, the documentary evidence, if not the
only evidence available, was certainly the most reliable evidence
of damages. Furthermore, “To support an award for back wages, the
Secretary is not required to identify with specificity each and
every employee who was undercompensated and for exactly what time
period.” Martin v. Deiriggi, 985 F.2d 129, 132 (4th Cir. 1992).
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While we agree that there probably were imperfections in the
calculation of damages, particularly when so many records were
missing, and we recognize that there may have been minor
inaccuracies in the Secretary’s determination of a “universal
average,” the defendant did not point out any of these flaws and
preserve them for review on appeal. The damages ultimately became
a question of fact within the district court’s factfinding
authority. See Mt. Clemens, 328 U.S. at 687-88. We are satisfied
that the Secretary’s proof was sufficient to justify the district
court’s findings and that the findings were not clearly erroneous.
Accordingly, we also affirm the district court’s damage award.
IV
The Secretary cross-appeals the district court’s finding that
the defendants’ violations of the FLSA were not willful and
therefore that only the two-year -- as distinct from the three-year
-- statute of limitations applied. See 29 U.S.C. § 255(a).
The evidence at trial showed that an investigator from the
Department of Labor arrived at Self Pride in August 1998 and on
September 30, 1998, told Barbara and Jerome Robinson that Self
Pride’s policy on paying for breaks violated the FLSA. At that
time, Barbara and Jerome Robinson expressed disagreement with the
investigator’s conclusion, stating that they believed that the
breaks need not be paid. There was a follow-up call, seven months
later, to the same effect. At no point did the investigator
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discuss which provisions of law might have been violated, nor did
he provide any examples of violations. The investigator also did
not explain how the violations he was claiming might have been
corrected. Self Pride had no further dealings with the Department
of Labor until another investigator arrived some two and one-half
years later, in September 2001, leading to the claims in this case.
The district court found as a matter of fact that the
Secretary had failed to demonstrate that the defendants had notice
of the requirements of the FLSA at the time of the alleged
violations. In the district court’s view, such notice was a
prerequisite to finding of either a reckless disregard of a
violation or a knowing violation of the FLSA. See McLaughlin v.
Richland Shoe Co., 486 U.S. 128, 133, 135 n.13 (1988) (noting that
the defendant’s conduct can be found “willful” if (1) the defendant
is reckless or deliberate with regard to whether its conduct
complies with known provisions of the FLSA, or (2) the defendant is
reckless or deliberate with regard to determining its obligations
under the FLSA).
We read the recklessness requirement as the district court did
-- as requiring notice, actual or constructive -- of the existence
and general requirements of the FLSA. We would be able to conclude
that notice was given constructively if Self Pride had been
reckless or deliberate in failing to learn of its legal
obligations. But only with such notice, actual or constructive,
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could a defendant form the willful mental state, either by choosing
to remain ignorant of legal requirements or by learning of those
requirements and disobeying them. See Dole v. Elliott Travel &
Tours, 942 F.2d at 966-67 (6th Cir. 1991). In Richland Shoe, the
Supreme Court rejected a circuit court doctrine that held conduct
willful whenever the FLSA “was in the picture,” Coleman v. Jiffy
June Farms, Inc., 458 F.2d 1139 (5th Cir. 1971), instructing us to
look for an actually malignant -- not merely careless -- mental
state.
With this standard and on this record, we find no clear error.
The district court could have fairly concluded that Self Pride and
the Robinsons had a good-faith disagreement with the Department of
Labor about their legal obligations; or that they reasonably
interpreted the investigator’s departure and absence for several
years as a sign that their practices were legal; or that Self Pride
and the Robinsons, though neglectful in learning their legal
obligations, were nonetheless not reckless in their failure. Thus,
on this issue we also affirm the district court.
Accordingly, the judgment of the district court is
AFFIRMED.
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