Edward Monroe v. FTS USA, LLCEdward Monroe v. FTS USA, LLC
Lead Opinion
STRANCH, J., delivered the opinion of the court in which BOGGS, J., joined. SUTTON, J. (pp. 1024-32), delivered a separate opinion concurring in part and dissenting in part.
OPINION
Edward Monroe, Fabian Moore, and Timothy Williams brought this Fair Labor Standards Act (FLSA) claim, on behalf of themselves and others similarly situated, against their employers, FTS USA, LLC and its parent company, UniTek USA, LLC. FTS is a cable-television business for which the plaintiffs work or worked as cable technicians. The district court certified the case as an FLSA collective action, allowing 293 other technicians (collectively, the FTS Technicians) to opt in. FTS Technicians allege that FTS implemented a company-wide time-shaving policy that required its employees to systematically underreport their overtime hours. A jury returned verdicts in favor of the class, which the district court upheld before calculating and awarding damages. We AFFIRM the district court’s certification of the case as a collective action and its finding that sufficient evidence supports the jury’s verdicts. We REVERSE the district court’s calculation of damages and REMAND the case for recalculation of damages consistent with this opinion.
I. BACKGROUND
A. Facts
FTS contracts with various cable companies, such as Comcast and Time Warner, to provide cable installation and support, primarily in Tennessee, Alabama, Mississippi, Florida, and Arkansas. To offer these services, FTS employs technicians at local field offices, called “profit centers.” FTS’s company hierarchy includes a company CEO and president, regional directors, project managers at each profit center, and a group of supervisors. FTS Technicians report to the supervisors and project managers. FTS’s parent company, UniTek, is in the business of wireless, telecommunication, cable, and satellite services, and provides human resources and payroll functions to FTS.
All FTS Technicians share substantially similar job duties and are subject to the same compensation plan and company-wide timekeeping system. FTS Technicians report to a profit center at the beginning of each workday, where FTS provides job assignments to individual technicians and specifies two-hour blocks in which to complete certain jobs. Regardless of location, “the great majority of techs do the same thing day in and day out which is install cable.” Time is recorded by hand, and FTS project managers transmit technicians’ weekly timesheets to UniTek’s director of payroll. FTS Technicians are paid pursuant to a piece-rate compensation plan, meaning each assigned job is worth a set amount of pay, regardless of the amount of time it takes to complete the job. The record shows that FTS Technicians are paid by applying a .5 multiplier to their regular rate for overtime hours.
FTS Technicians presented evidence that FTS implemented a company-wide time-shaving policy that required technicians to systematically underreport their overtime hours. Managers told or encouraged technicians to underreport time or even falsified timesheets themselves. To underreport overtime hours in compliance with FTS policy, technicians either began working before their recorded start times, recorded lunch breaks they did not take, or continued working after their recorded end time.
B. Procedural History
A magistrate judge recommended conditional certification as a FLSA collective action, which the district court adopted. The district court also authorized notice of the collective action to be sent to all potential opt-in plaintiffs. The notice defined eligible class members as any person employed by FTS as a technician at any location across the country in the past three years to the present who were paid by piece-rate and did not receive overtime compensation for all hours worked over 40 per week during that period. A total of 293 technicians ultimately opted in to the collective action.
The parties originally agreed on a discovery and trial plan, which the trial court adopted by order. Under the parties’ agreement, discovery would be limited “to a representative sample of fifty (50) opt-in Plaintiffs,” with FTS Technicians choosing 40 and FTS and UniTek choosing 10. The parties also agreed to approach the district court after discovery regarding “a trial plan based on representative proof’ that “will propose a certain number of Plaintiffs from the pool of fifty (50) representative sample Plaintiffs that may be called as trial witnesses.”
Following the 'completion of discovery, the district court denied FTS and Uni-Tek’s motions to decertify the class and for summary judgment, finding that the class members were similarly situated at the second stage of certification. In light of the parties’ agreement and. the district court’s resulting order — under which the litigation proceeded — the court held that it could not “accept Defendants’ contention that the parties’ stipulated agreement to limit discovery to fifty representative plaintiffs did not also manifest Defendants’ acquiescence to a process by which the remaining members of the class would not have to produce evidence as a prerequisite to proceeding to trial on their claims.” (R. 238, PagelD 5419.) The district court also denied FTS and UniTek’s pretrial motion to preclude representative proof at trial because “the class representatives identified by Plaintiff[s] sufficiently represent the class” and “[t]o deny the use of representative proof in this case would under
Accordingly, the collective action proceeded to trial on a representative basis. FTS Technicians identified by name 38 potential witnesses and called 24 witnesses, 17 of whom were class-member technicians. FTS and UniTek identified all 50 representative technicians as potential witnesses, but called only four witnesses — all FTS executives and no technicians.
The district court explained the representative nature of the collective action to the jury, both before the opening argument and during its instructions, noting that FTS Technicians seek “to recover overtime wages that they claim [FTS and UniTek] owe them and the other cable technicians who have joined the case.” (R. 450, PagelD 10646-47; R. 463, PagelD 12253.) The jury instructions specified that the named plaintiffs brought their claim on behalf of and collectively with “approximately three hundred plaintiffs who have worked in more than a dozen different FTS field offices across the country.” (R. 463, PagelD 12264.) The court also set out how the case would be resolved, instructing that FLSA procedure “allows a small number of representative employees to file a lawsuit on behalf of themselves and others in the collective group”; that the technicians who “testified during this trial testified as representatives of the other plaintiffs who did not testify”; and that “[n]ot all affected employees need testify to prove their claims” because “non-testifying plaintiffs who performed substantially similar job duties are deemed to have shown the same thing.” (Id. at 12264-65.) The district court then charged the jury to determine whether all FTS Technicians “have proven their claims” by considering whether “the evidence presented by the representative plaintiffs who testified establishes that they worked unpaid overtime hours and are therefore entitled to overtime compensation.” (Id. at 12265.) If the jury answers in the affirmative, the court explained, “then those plaintiffs that you did not hear from are also deemed by inference to be entitled to overtime compensation.” (Id. at 12265-66.)
The jury returned verdicts of liability in favor of the class, finding that FTS Technicians worked in excess of 40 hours weekly without being paid overtime compensation and that FTS and UniTek knew or should have known and willfully violated the law. The jury determined the average number of unrecorded hours worked per week by each testifying technician — all of whom were representative and were called on behalf of themselves and all similarly situated employees, as authorized by 29 U.S.C. § 216(b) and instructed by the district court. As indicated to the parties and the jury, the court used the jury’s factual findings to calculate damages for all testifying and nontestifying technicians in the opt-in collective action. The trial court ruled that the formula for calculating uncompensated overtime should use a 1.5 multiplier, apparently based on the assumption that FTS and UniTek normally used that multiplier.
The district court
II. ANALYSIS
FTS and UniTek challenge the certification of the case as a collective action pursuant to 29 U.S.C. § 216(b), the sufficiency of the evidence as presented at trial, the jury instruction on commuting time, and the district court’s calculation of damages. After a review of the legal framework for collective actions in our' circuit, we turn to each of these arguments.
A. Legal Framework
Under the FLSA, an employer generally must compensate an employee “at a rate not less than one and one-half times the regular rate at which he is employed” for work exceeding forty hours per week. 29 U.S.C. § 207(a)(1). Labor Department regulations clarify, however, that in a piece-rate system only “additional halftime pay” is required for overtime hours. 29 C.F.R. § 778.111(a).
“Congress passed the FLSA with broad remedial intent” to address “unfair method[s] of competition in commerce” that cause “labor conditions detrimental to the maintenance of the minimum standard of living necessary for health, efficiency, and general well-being of workers.” Keller v. Miri Microsystems LLC,
To effectuate Congress’s remedial purpose, the FLSA authorizes collective actions “by any one or more employees for and on behalf of himself or themselves and other employees similarly situated.” 29 U.S.C. § 216(b). To participate in FLSA collective actions, “all plaintiffs must signal in writing their affirmative consent to participate in the action.” Comer v. Wal-Mart Stores, Inc.,
In O’Brien v. Ed Donnelly Enterprises, Inc., we clarified the contours of the FLSA standard for certification. There, employees alleged that their employer violated the FLSA by requiring employees to work “off the clock,” doing so in several ways— requiring unreported hours before or after work or by electronically altering their timesheets.
On appeal, we determined that the district court engaged in an overly restrictive application of the FLSA’s “similarly situated” standard. It “implicitly and improperly applied a Rule 23-type analysis when it reasoned that the plaintiffs were not similarly situated because individualized questions predominated,” which “is a more stringent standard than is statutorily required.” Id. at 584-85. We explained that “[w]hile Congress could have imported the more stringent criteria for class certification under Fed.R.Civ.P. 23, it has not done so in the FLSA,” and applying a Rule 23-type predominance standard “undermines the remedial purpose of the collective action device.” Id. at 584-86. Based on our precedent, then, the FLSA’s “similarly situated” standard is less demanding than Rule 23’s standard.
O’Brien applied the three non-exhaustive factors that many courts have found relevant to the FLSA’s similarly situated analysis: (1) the “factual and employment settings of the individual! ] plaintiffs”; (2) “the different defenses to which the plaintiffs may be subject on an individual basis”; and (3) “the degree of fairness and procedural impact of certifying the action as a collective action.” Id. at 584 (quoting 7B Wright, Miller & Kane, Federal Practice and Procedure § 1807 at 487 n. 65 (3d ed. 2005)); see Morgan v. Family Dollar Stores, Inc.,
Applying this standard, we found the O’Brien plaintiffs similarly situated. We determined that the district court erred because plaintiffs’ claims were unified, as they “articulated two common means by which they were allegedly cheated: forcing employees to work off the clock and improperly editing time-sheets.” O’Brien,
Just as O’Brien clarifies the procedure and requirements for certification of a collective action, the Supreme Court’s opinion in Anderson v. Mt. Clemens Pottery Co.— originally a Sixth Circuit case — explains the burden of proof at trial. Using a formula “applicable to all employees,” the
On certiorari, the Supreme Court held that we had imposed an improper standard of proof that “has the practical effect of impairing many of the benefits” of the FLSA. Id. It reminded us of the correct liability and damages standard, with a cautionary note: an employee bringing such a suit has the “burden of proving that he performed work for which he was not properly compensated. The remedial nature of this statute and the great public policy which it embodies ... militate against making that burden an impossible hurdle for the employee.” Id. at 686-87,
We quoted and applied this standard in Herman v. Palo Group Foster Home, Inc., concluding that the employees had met their burden on liability because “credible evidence” had been presented that they had performed work for which they were improperly compensated.
B. Certification as a Collective Action
FTS and UniTek appeal the denial of their motion to decertify the collective action. We review a district court’s certification of a collective action under an “abuse of discretion” standard. See
The district court made its final certification determination post-trial. With the benefit of the entire trial record — including representative testimony from technicians covering the several regions in which FTS operates — the court found that FTS Technicians were similarly situated and a collective action was appropriate. FTS and UniTek challenge certification of the case as a collective action, arguing that differences among FTS Technicians (differences in location, supervisors, reasons for submitting false timesheets, and types and amount of uncompensated time) require an individualized analysis as to every plaintiff to determine whether a particular violation of the FLSA took place for each.
Turning to review, we, may not examine the certification' issue using a Rule 23-type analysis; we must apply the “similarly situated” standard governed by the three-factor test set out in O’Brien. Two governing principles from our case law serve as guides: plaintiffs do not have to be “identically situated” to be similarly situated, and the FLSA is a remedial statute that should be broadly construed. 2 ABA Section of Labor & EmployT Law, supra, at 19-150, 19166 (compiling cases).
1. Factual and Employment Settings
The first factor, the factual and employment settings of the individual FTS Technicians, considers, “to the extent they are relevant to the case, the plaintiffs’ job duties, geographic locations, employer supervision, and compensation.” Id. at 19-155. On FTS Technicians’ duties and locations, the record reveals that all FTS Technicians work in the same position, have the same job description, and perform the same job duties: regardless of location, “the great majority of techs do the same thing day in and day out which is install cable.” FTS Technicians also are subject to the same timekeeping system (recording of time by hand) and compensation plan (piece rate).
Key here, the record contains ample evidence of a company-wide policy of requiring technicians to underreport hours that originated with FTS executives. Managers told technicians that they received instructions to shave time from corporate, that underreporting is “company policy,” and that they were “chewed out by corporate” for allowing too much time to be reported. Managers testified that FTS executives directed them to order technicians to underreport time. FTS executives reinforced their policy during meetings with managers and technicians at individual profit centers. FTS Technicians testified that they complained of being required to underreport, often in front of or to corporate representatives, who did nothing.
Evidence of market pressures suggests that FTS executives had a motive to institute a company-wide time-shaving policy. According to one manager’s testimony, “[e]very profit center has ... a budget,” and to meet that budget “you couldn’t put all of your overtime.” Both managers and technicians were under the impression that FTS’s profitability depended on underre-porting.
The underreporting policy applied to FTS Technicians regardless of profit center or supervisor, as technicians employed at multiple profit centers and under multiple managers reported consistent time-shaving practices across the centers and managers. Namely, FTS executives told managers that technicians’ time before and
FTS Technicians identified the methods — the same methods found in O’Brien — by which FTS and UniTek enforced their time — shaving policy: (1) “requiring plaintiffs to work ‘off the clock’ ” before or after scheduled hours or during lunch breaks and (2) “altering] the times that had previously been entered.” O’Brien,
The dissent asserts that FTS Technicians allege “distinct” violations of the FLSA and “define the company — wide ‘policy’ at such a high level of generality that it encompasses multiple policies.” (Dis. at 1027.) The definition of similarly situated does not descend to such a level of granularity. The Supreme Court has warned against such a “narrow, grudging” interpretation of the FLSA and has instructed courts to remember its “remedial and humanitarian” purpose, as have our own cases. See Tenn. Coal, Iron & R.R. Co.,
The dissent concludes that FTS Technicians’ claims do “not do the trick” because a “company-wide ‘time-shaving’ policy is lawyer talk for a company-wide policy of violating the FLSA.” (Dis. at 1027.) But FTS Technicians’ claims do not depend on “lawyer talk”; they are based on abundant evidence in the record of employer mandated work off the clock. That an employer uses more than one method to implement a company-wide work “off-the-eloek” policy does not prevent employees from being similarly situated for purposes of FLSA protection. This is not a new concept to our court or to other courts. In accordance with O’Brien, we have approved damages awards to FLSA classes alleging that employers used multiple means to undercompensate for overtime. See, e.g., U.S. Dep’t of Labor v. Cole Enters., Inc.,
Like the plaintiffs in OBrien, FTS Technicians’ claims are unified by common theories: that FTS executives implemented a single, company-wide time-shaving policy to force all technicians — either through direct orders or pressure and regardless of location or supervisor — to un-derreport overtime hours worked on their timesheets. See O'Brien,
2. Individualized Defenses
We now turn to the second ■ factor — the different defenses to which the plaintiffs may be subject on an individual basis. FTS and UniTek argue that they must be allowed to raise separate defenses • by examining each individual plaintiff on the number of unrecorded hours they worked, but that they were denied that right by the allowance of representative testimony and an estimated-average approach. Several circuits, including our own, hold that individualized defenses alone do not warrant decertification where sufficient common issues or job traits otherwise permit collective litigation. O'Brien,
As noted above, the record includes FTS Technicians’ credible testimonial and documentary evidence that they performed work for which they were improperly compensated. In the absence of accurate employer records, both Supreme Court and Sixth Circuit precedent dictate that the burden then shifts to the employer to “negative the reasonableness of the inference to be drawn from the employee’s evidence”- and, if it fails to do so, the resulting damages award need not be perfectly exact or precise. Mt. Clemens,
Under this framework, and with the use of representative testimony and an esti
3. Fairness and Procedural Impact
The third factor, the degree of fairness and the procedural impact of certifying the case, also supports certification. This case satisfies the policy behind FLSA collective actions and Congress’s remedial intent by consolidating many small, related claims of employees for which proceeding individually would be too costly to be practical. See Hoffmann-La Roche Inc. v. Sperling,
4. The Seventh Circuit Decision in Espenscheid
Lastly, FTS and UniTek argue that Es-penscheid — a Seventh Circuit case affirming the decertification of a collective action seeking unpaid overtime — compels decertification here.
The difference between the Seventh Circuit’s standard for collective actions and our own is the controlling distinction for the issues before us.
Conversely, FTS and UniTek ask us to overturn-a case tried to completion. They seek a determination that the district court abused its discretion in declining to decer-tify the 293-member collective action after both parties preliminarily agreed to a representative trial plan, completed discovery on that basis, and jointly selected the representative members. The jury here, moreover, heard representative testimony from 5.7% of the class members at trial, FTS and UniTek had abundant opportunity to provide contradictory testimony, and FTS Technicians also submitted testimony from managers and supervisors along with documentary proof. Upon completion of the case presentations by the parties, and following jury instructions regarding collective actions, the jury returned verdicts in favor of FTS Technicians. In light of these legal, factual, and procedural differences, Espenscheid is simply not controlling.
To conclude our similarly situated analysis, certification here is supported by our standard. The factual and employment settings of individual FTS Technicians and the degree of fairness and the procedural impact of certifying the case favor upholding certification. FTS and UniTek’s alleged individual defenses do not require decertification because they can be, and were, adequately presented in a collective forum. On the record before us, the district court was within its wide discretion to try the claims as a collective action and formulated a trial plan that appropriately did so. Based on the record evidence of a
C. Sufficiency of the Evidence
At the close of FTS Technicians’ case and after the jury verdicts, FTS and Uni-Tek moved for judgment as a matter of law, challenging the sufficiency of the evidence, particularly the allowance of representative testimony at trial to prove liability and the use of an estimated-average approach to calculate damages. The district court denied the motion, which FTS and UniTek now appeal.
“Our review of the sufficiency of the evidence is by review of a trial judge’s rulings on motions for directed verdict or [judgment as a matter of law].” Young v. Langley,
Pursuant to Mt. Clemens, the evidence as a whole must be sufficient to find that FTS Technicians performed work for which they were improperly compensated (ie., liability) and sufficient to support a just and reasonable inference as to the amount and extent of that work {ie., damages). Mt. Clemens,
1. Liability
FTS and UniTek challenge the district court’s allowance of representative testimony to prove liability for nontestify-ing technicians. We have recognized that “representative testimony from a subset of plaintiffs [can] be used to facilitate the presentation of proof of FLSA violations, when such proof would normally be individualized.” O'Brien,
In another comparable FLSA case, the Eleventh Circuit held that, “[i]f anything, the Mt. Clemens line of cases affirms the general rule that not all employees have to testify to prove overtime violations.” Morgan,
Our sister circuits overwhelmingly recognize the propriety of using representative testimony to establish a pattern of violations that include similarly situated employees who did not testify. See, e.g., Garcia v. Tyson Foods, Inc.,
FTS and UniTek next assert that, even if representative testimony is allowed generally, testifying technicians here were not representative of nontestifying technicians. The record suggests otherwise, as we explained above when determining that FTS Technicians were similarly situated. We found that testifying technicians were geographically spread among various FTS profit centers and were subject to the same job duties, timekeeping system, and compensation plan as nontes-tifying technicians. As Morgan highlights, the collective-action framework presumes that similarly situated employees are representative of each other and have the ability to proceed to trial collectively. See Morgan,
The dissent also challenges the representative nature of the technicians’ testimony, arguing for a blanket requirement of direct correlation because a plaintiff alleging “the company altered my time-sheets” cannot testify on behalf of one alleging that “I underreported my time because my supervisor directed me to.” (Dis. at 1028.) Though the time-shaving policy may have been enforced as to individual technicians by several methods, we do not define “representativeness” so specifically — just as we do not take such a narrow view of “similarly situated.” See O’Brien,
Here, the jury heard testimony that managers told technicians to underreport hours before and after work and during lunch and that, in the absence of direct orders, FTS otherwise exerted pressure to underreport under threat of reprimand, loss of work assignments, or termination. Or managers just directly altered the time-sheets. The dissent’s conclusion that the proof was not “remotely representative” (Dis. at 1028) neither acknowledges how representative testimony was presented here nor does it follow from the record evidence. There was ample evidence of managers implementing off-the-clock work requirements established and enforced through one corporate policy and ample evidence that the collective group of plaintiffs experienced the same policy enforced
The collective procedure adopted by the district court, moreover, was based on FTS and UniTek’s agreement, which was memorialized by court order, to limit discovery “to a representative sample of fifty (50) opt-in Plaintiffs” and to approach the district court after discovery regarding “a trial plan based on representative proof’ that “will propose a certain number of Plaintiffs from the pool of fifty (50) representative sample Plaintiffs that may be called as trial witnesses.” After discovery closed, FTS and UniTek did object to the use of representative proof at trial. But as we have explained, the district court’s denial of that motion is not grounds for reversal at this stage.
FTS and UniTek’s remaining arguments on liability are simply reiterations of the claims that FTS Technicians are not similarly situated and that the testifying technicians are not representative. FTS and UniTek first complain that the liability verdict form gave the jury an “all or nothing” choice. But the jury’s choice was whether or not FTS applied a single, company-wide time-shaving policy to all FTS Technicians that encompassed each means used to enforce it. The jury found that it did. This accords with precedent recognizing that preventing similarly situated employees from proceeding collectively based on representative evidence would render impotent the collective-action framework. See, e.g., Garcia, 770 F.3d at 1307.
Next FTS and UniTek cite Espenscheid a second time. As to representative testimony, Espenscheid emphasized that the representative evidence before it could not be sufficient because it consisted entirely of testimony regarding “the experience of a small, unrepresentative sample of [workers]” (1.8% of the 2,341 members), which cannot “support an inference about the work time of thousands of workers.”
In light of the proper use of representative testimony to prove liability, we note the sufficiency of the evidence presented here. FTS Technicians offered testimony from 17 representative technicians and six managers and supervisors, as well as documentary evidence including timesheets and payroll records, to prove that FTS implemented a company-wide time-shaving scheme that required employees to systematically underreport their hours. See id. at 1277 (“The jury’s verdict is well-supported not simply by ‘representative testimony,’ but rather by a volume of good
Our standard of review dictates that we view the evidence in the light most favorable to FTS Technicians and give them the benefit of all reasonable inferences. Based on the trial record and governing precedent, we conclude that the evidence here is sufficient to support the jury’s verdict that all FTS Technicians, both testifying and nontestifying, performed work for which they were not compensated.
2. Damages
FTS and UniTek object to the use of an estimated-average approach to calculate damages for nontestifying technicians. They argue that an estimated-average approach does not allow a “just and reasonable inference” — the Mt. Clemens standard — on the number of hours worked by nontestifying technicians because it results in an inaccurate calculation, giving some FTS Technicians more than they are owed and some less.
We addressed a version of the estimated-average approach in Cole Enterprises, Inc., concluding that “[t]he information [pertaining to testifying witnesses] was also used to make estimates and calculations for similarly situated employees who did not testify. The testimony of fairly representative employees may be the basis for an award of back wages to nontestifying employees.”
Mt. Clemens acknowledges the use of “an estimated average of overtime worked” to calculate damages for nontesti-fying employees.
Disapproving of an estimated-average approach simply due to lack of complete accuracy would ignore the central tenant of Mt. Clemens — an inaccuracy in damages should not bar recovery for violations of the FLSA or penalize employees for an employer’s failure to keep adequate records. See id. at 688,
Mt. Clemens’s burden-shifting framework, in conjunction with the estimated-average approach, functioned here as envisioned. Seventeen technicians working at various locations testified and were cross-examined as to the number of unrecorded hours they worked, allowing the jury to infer reasonably the average weekly unpaid hours worked by each. Testifying technicians were similarly situated to and representative of nontestifying technicians, as specified by the district court’s instructions to the jury, and thus the average of these weekly averages applied to nontesti-fying technicians. The jury found fewer unrecorded hours than testifying technicians claimed; FTS and UniTek thus partially refuted the inference sought by FTS Technicians and their defenses were distributed to make the damages more exact and precise, as the Mt. Clemens framework encourages.
Viewing the evidence in the light most favorable to FTS Technicians, we cannot conclude that reasonable minds would come to but one conclusion in favor of FTS and UniTek. Accordingly, the average number of unpaid hours worked by testifying and nontestifying technicians, based on
D. Jury Instruction on Commuting Time
In another challenge to the jury’s determination of unrecorded hours worked, FTS and UniTek argue that the district court erred by instructing the jury on commuting time. FTS and UniTek do not dispute that the district court accurately instructed the jury on when commuting time requires compensation; they instead argue that, as a matter of law, the instruction should not have been given because a reasonable juror could not conclude that compensation for commuting time was required here.
“This [c]ourt reviews a district court’s choice of jury instructions for abuse of discretion.” United States v. Ross,
E. Calculation of Damages
FTS and UniTek lastly challenge the district court’s calculation of damages. They argue that the district court (1) took the calculation of damages away from the jury in violation of the Seventh Amendment and (2) used an improper and inaccurate methodology by failing to recalculate each technician’s hourly rate and by applying a 1.5 multiplier. These are questions of law or mixed questions of law and fact that we review de novo. See Harries v. Bell,
We begin with the Seventh Amendment arguments. The dissent claims that the Seventh Amendment was violated because the trial procedure resulted in “non-representative” proof (Dis. at 1030) and posits a standard requiring a jury in any collective action to “determine the ‘estimated average’ that each plaintiff should receive” (Id. at 1031 (emphasis added)). Such an individual requirement for each member of a collective action does not comport with the principles of and precedent on representative proof, and would contradict certification of the case as a collective action in the first place.
Here, moreover, the proof was representative and the jury rendered its findings for the testifying and nontestify-ing plaintiffs in accordance with the district court’s charge. Finding that “the evidence presented by the representative plaintiffs who testified established] that they worked unpaid overtime hours,” and applying that finding in accordance with the instruction that “those plaintiffs that you did not hear from [would] also [be] deemed by inference to be entitled to overtime compensation,” the jury determined that all FTS Technicians had “proven their claims.” The jury accordingly made the factual findings necessary for the court to complete the remaining arithmetic of the estimated-average approach. The Seventh
At any rate, FTS and UniTek rejected the district court’s offer to impanel a second jury to make additional findings and perform the damages calculation. They had cited their “constitutional rights to a jury” at the end of trial, but at the status conference on damages the court asked if FTS and UniTek wished to have “a panel come in, select another panel, and submit the issues of damages.” (R. 444, PagelD 10171-72.) Their counsel responded, “No, your honor. I don’t think that’s allowed ... for these claims.” (Id. at 10172.) The court went on to ask, ‘You would be upset if we did have a jury trial to finish up the damages question?” (Id. at 10173.) Counsel responded, “Well, your Honor, again, it’s our position that that’s not appropriate.” (Id.) Banking instead on their arguments that the estimated-average approach is inappropriate and that any calculation of damages would not be supported by sufficient evidence, counsel maintained that “the only thing, quite frankly, that’s left and that is appropriate is an entry of judgment ... either for the defense or liability for plaintiffs and with zero damages.” (Id.) After the court asked for a “more constructive approach from the defense,” counsel agreed to a briefing schedule on the calculation of damages. (Id. at 10181.) Counsel subsequently qualified that FTS and UniTek were “not waiving ... or changing their position,” but the positions referenced were those relied upon at the status conference — the estimated-average-approach disagreement and sufficiency-of-the-evidence argument. Based on this record, FTS and UniTek abandoned and waived any right to a jury trial on damages that they may have had.
In regard to FTS and UniTek’s challenge to the district court’s methodology, FLSA actions for overtime are meant to be compensatory. See, e.g., Nw. Yeast Co. v. Broutin,
As for the hourly rate, the amount of “straight time” paid in a piece rate system remains the same regardless of the number of hours required to complete the number of jobs. The fixed nature of piece rates shows that piece-rate compensation was paid for all hours worked by FTS Technicians, regardless of whether that time was recorded. It also creates an inverse relationship between the number of hours worked and the hourly rate: working more hours lowers a technician’s hourly rate. By not recalculating hourly rates to reflect the actual increased number of hours FTS Technicians worked each week, the district court used a higher hourly rate than would have been used if no violation had occurred. This approach overcompensated FTS Technicians and required FTS and UniTek to pay more for unrecorded overtime hours than recorded overtime hours. For the damages calculation to be compensatory, therefore, hourly rates must be recalculated with the correct number of hours to ensure that FTS Technicians receive the pay they would have received had there been no violation.
Regarding the correct multiplier, the FLSA entitles piece-rate workers to an overtime multiplier of .5, and the record shows that FTS and UniTek used this multiplier to calculate FTS Technicians’ overtime pay for recorded hours. In explaining the piece-rate system to their technicians, FTS and UniTek provided an example where a technician receiving $1,000 in piece rates for 50 hours of work would receive $100 in overtime compensation. Reverse engineering this outcome gives us the following formula: regular rate of $20.00/hour multiplied by a .5 multiplier and 10 overtime hours. Plugging a multiplier of 1.5 into the formula would result in $300 of overtime pay, overcompensating this hypothetical technician, as it did FTS Technicians. We accordingly reverse the district court’s use of a 1.5 multiplier.
Reversal of the district court’s calculation of damages does not necessitate a new trial on liability. We have “the authority to limit the issues upon remand to the [district [c]ourt for a new trial” and such action does “not violate the Seventh Amendment.” Thompson v. Camp, 167 F.2d 733, 734 (6th Cir.1948) (per curiam). We remand to the district court to recalculate damages consistent with this opinion.
III. CONCLUSION
For the foregoing reasons, we AFFIRM the district court’s certification of this case as a collective action, allowance of representative testimony at trial, and use of an estimated-average approach; REVERSE the district court’s calculation of damages; and REMAND to the district court for recalculation of damages consistent with this opinion.
Notes
. Named plaintiff Monroe was a technician during the class period. After the class period, lie was promoted to a managerial position.
. The Honorable Bernice Donald presided over all pretrial and trial issues before assuming her position on the Sixth Circuit. The Honorable Jon Phipps McCalla and John Fowlkes presided over all post-trial issues, including the calculation of damages.
. The dissent suggests we must follow Espen-scheid because it “involved the same defendant in this case." (Dis. at 1026.) UniTek, the parent company that provided human resources and payroll functions, was involved in both cases, but at issue in each case was what the direct employer — here FTS, there Direct-Sat USA — required regarding the reporting of overtime.
Concurrence Opinion
concurring in part and dissenting in part.
Two questions loom over every multi-plaintiff action: Who is representing whom? And can they fairly represent them? Whether it be a class action under Civil Rule 23, a joined action under Civil Rule 20, or as here a collective action under § 216 of the Fair Labor Standards Act, 29 U.S.C. § 216(b), the only way in which representative proof of liability— evidence by some claimants to prove liability for all — makes any sense is if the theory of liability of the testifying plaintiffs mirrors (or is at least substantially similar to) the theory of liability of the non-testifying plaintiffs. The same imperative exists at the damages stage, where the trial court
The three trial judges who handled this case (collectively as it were) did not heed these requirements. Before trial, the district court mistakenly certified this case as one collective action as opposed to a collective action with two or three sub-classes, as the various and conflicting theories of liability required. At trial, the district court approved a method of assessing damages that violated the Seventh Amendment. After trial, the district court miscalculated damages by failing to adjust plaintiffs’ hourly wages and using an incorrect multiplier. The majority goes part of the way to correcting these problems by reversing the district court’s damages calculation. I would go all of the way and correct the first two errors as well.
Collective-action certification. The Fair Labor Standards Act permits employees to bring lawsuits on behalf of “themselves and other employees similarly situated.” 29 U.S.C. § 216(b). To determine whether plaintiffs are “similarly situated,” we look to (1) “the factual and employment settings of the individua^ ] plaintiffs,” (2) “the different defenses to which the plaintiffs may be subject,” and (3) “the degree of fairness and procedural impact of certifying the action as a collective action,” among other considerations. O’Brien v. Ed Donnelly Enters.,
That is where the plaintiffs come up short. They claim that the defendants violated the Fair Labor Standards Act in three distinct ways: (1) by falsifying employees’ timesheets; (2) by instructing em-' ployees to underreport their hours; and (3) by creating incentives for employees to underreport by rewarding “produetiv[ity]” and scheduling fewer shifts for those who worked too piany hours. R. 200 at 8. The problem with the plaintiffs’ approach is that a jury could accept some of their theories of liability while rejecting others, and yet the verdict form gave the jury only an all-or-nothing-at-all option. Assume that, as plaintiffs allege, supervisors at a certain subset of the defendants’ offices directed employees to underreport (which violates the FLSA), while supervisors at a distinct subset of offices merely urged employees to be more efficient (which normally will not violate the FLSA). See Davis v. Food Lion,
The evidence introduced at trial illustrates the problem. Start with Richard Hunt, who said he was instructed “to dock an hour for lunch whether [he] took it or not.” R. 456 at 125. Compare him to Paul Crossan, who testified that he un-derreported his time “because [he] wanted more jobs for more money for [him]self,” thinking he would not be scheduled for extra shifts if he recorded too many hours. R. 448 at 77. Then compare them both to Stephen Fischer, who said he was instructed to underreport his hours on some occasions, was told to ov-erreport his hours on other occasions, and in still other cases underreported because he wanted to “be routed daily and not miss any work.” R. 456 at 78. With so many variables in play — different employees offering different testimony about different types of violations — how could a jury fairly assess liability on a class-wide, one-size-fits-all basis? I for one do not see how it could be done.
The Seventh Circuit recently explained how all of this should work in its unanimous opinion in Espenscheid v. DirectSat USA LLC,
The plaintiffs offer two reasons for concluding that their trial plan worked, even without sub-classes. First, they argue that they were subject to a “unified” company-wide “time-shaving policy” and that their trial plan enabled them to prove this policy's existence on a class-wide basis. Appellees’ Br. 41. But what was the relevant policy? Was it that supervisors should alter employees’ timesheets? That they should instruct employees to underreport their hours? That they should subtly encourage employees to underreport by urging them to be efficient? The plaintiffs define the company-wide “policy” at such a high level of generality that it encompasses multiple policies, each one corresponding to a different type of statutory violation and some to no violation at all. The FLSA does not bar “benign underreport-ing” where workers try “to impress the company with [their] efficiency in the hope of obtaining a promotion or maybe a better job elsewhere — or just to avoid being laid off.” Espenscheid,
The majority worries that, by requiring sub-classes to litigate the relevant policies, my approach would limit liability to donning and doffing cases. But those are not the only types of cases in which a company-wide policy — in the singular — permits class-wide resolution of liability and damages. Imagine that FTS and UniTek, rather than employing different practices in different offices, told supervisors at every location to dock the pay of employees who worked at least fifty hours; or declined to pay employees for compensable commuting time; or stated that technicians in each office should not be paid for their lunch break, even if they worked through it; or used punch-in clocks that systematically under-recorded employees’ time. The plaintiffs in each of these cases could prove liability and damages on a class-wide basis, which means they could use the collective-action device to litigate their claims. But if, as here, the company employs multiple policies, as FTS and Uni-Tek allegedly did, the plaintiffs must bring separate actions or prove violations using sub-classes (or any other trial plan that permits class-wide adjudication). The majority warns that my approach “would compel employees to bring a separate collective action ... for unreported work required by an employer before clocking in, and another for work required after clocking out.” Supra at 1012. But of course that “level of granularity,” id. at 1012, is not required, and crying wolf won’t make it so. All that’s required is an approach that allows plaintiffs to litigate their claims collectively only when they can prove their claims collectively.
That representative proof works in some cases does not mean it works in all cases. The question — always—is who can fairly represent whom. If the proof shows systematic underreporting by the employer of, say, the time it takes to don and doff the same protective clothing — giving the same workers credit for three minutes when the proof shows it takes seven minutes — representative proof works just fine. In that setting, there is evidence about how long it takes workers to don and doff and proof that the same deficiency was applied to all plaintiffs. But I am skeptical, indeed hard pressed to believe, that plaintiffs who allege one theory of liability {e.g., the company altered my timesheets) can testify on behalf of those who allege another {e.g., I underreported my time because my supervisor directed me to) or still another {e.g., I altered my time because the company urged me to be efficient). Plaintiffs who were told to un-derreport, for example, tell us very little about plaintiffs at different offices, working under different supervisors, who un-derreported based on efforts to improve efficiency. That is why the majority goes astray when it suggests that “it is enough that technicians testified as to each means of enforcement of the common, FLSA-vio-lating policy.” Supra at 1018. The question is not whether each “means of enforcement” was represented; it is whether each means of enforcement was represented in proportion to its actual employment by FTS and UniTek across the entire class — something that the plaintiffs did not even attempt to prove.
Does anyone doubt how this case would come out if the roles were reversed — if most of the testifying plaintiffs were subtly pressured to underreport while only a few were told to do so? We would hesitate, I suspect, to say that the testifying employees were “representative” of all their non-testifying peers, especially if the jury returned a verdict for the defendants. What is sauce for one, however, presumably should be sauce for the other, making the district court’s certification order perilous for defendants arid, plaintiffs alike. No doubt, collective actions permit plaintiffs to rely on representative proof. But that proof must be representative — and here plaintiffs’ own evidence demonstrates that it was not remotely representative. See Espenscheid,
The plaintiffs claim that Anderson v. Mt. Clemens Pottery Co. permits this trial plan.
The plaintiffs counter that the defendants agreed to representative discovery, claiming that this means they necessarily agreed to representative proof at trial. The one does not follow from the other. The only way to determine whether one group of plaintiffs is representative of another is to gather information about both groups, typically by conducting discovery. When the defendants, after taking depositions, learned that the selected employees were not representative of their peers, they objected to the plaintiffs’ plan to use representative proof at trial. Then they objected to it three more times. We have no right to penalize them for failing to raise this objection before discovery when the targeted problem did not materialize until after discovery was complete. Put another way, there is a difference between alleging a uniform policy of underreport-ing and proving one. Once discovery showed there was no uniform policy, the defendants properly objected to representative proof.
The plaintiffs lean on O’Brien v. Ed Donnelly Enterprises to try to sidestep these problems but it cannot bear the weight.
Finally, the plaintiffs (and the majority) try to distinguish this case from the Seventh Circuit’s decision in Espenscheid. It is true that the Seventh Circuit applies the Rule 23 class-action standard to assess whether plaintiffs are “similarly situated” and that our circuit has rejected Rule 23(b)(3)’s “predominance” inquiry as an element of the “similarly situated” analysis. Compare Espenscheid,
Seventh Amendment. It should come as no surprise that a skewed liability determination leads to a skewed damages calculation. The majority to its credit corrects one problem with the damages calculation. I would correct the other. The plaintiffs provided no evidence from which the jury (or, alas, the court) could conclude that the testifying plaintiffs failed to record a comparable number of hours on their time-sheets as their non-testifying peers. The district court nonetheless adopted a trial procedure that assumed that each of the testifying and non-testifying employees was similarly situated for purposes of calculating damages. That procedure not only ignored the non-representative nature of the proof but it also violated the Seventh Amendment.
Here’s how the district court calculated damages: When the jury returned a verdict for the plaintiffs, it identified the average number of weekly hours that each of the seventeen testifying employees had worked but had not recorded on their timesheets. The court then averaged together the number of unrecorded hours for each testifying employee, assumed that this value was also the average number of unrecorded hours for each of the 279 non-testifying employees, and awarded damages to the class as a whole.
The Seventh Amendment bars this judge-run, average-of-averages approach. “In Suits at common law, where the value in controversy shall exceed twenty dollars,” the Amendment reads, “the right of trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise reexamined in any Court of the United States, than according to the rules of the common law.” U.S. Const, amend. VII. That means a court may not “substitute] its own estimate of the amount of damages which the plaintiff ought to have recovered[ ] to enter an absolute judgment for any other sum than that assessed by the jury.” Lulaj v. Wackenhut Corp.,
The plaintiffs defend this procedure by noting that a court may “render judgment as a matter of law as to some portion of a jury award if it is compelled by a legal rule or if there can be no genuine issue as to the correct calculation of damages.” Id. But the district court did not award damages based on a legal conclusion; it did so based on its finding that the non-testifying plaintiffs failed to record the same number of hours, on average, as their testifying peers. That is a factual finding about the number of hours worked by each plaintiff. And the Seventh Amendment means that a jury, not a judge, must make that finding.
The majority portrays the district court’s damages determination as a matter of “arithmetic,” a “formulaic or mathematical calculation.” Supra at 1023. How could that be? There was no finding by the jury about the overtime hours worked by the non-testifying employees and thus no basis for the judge to do the math or apply
Nor did the district court cure the problem when it instructed the jury that non-testifying plaintiffs would be “deemed by inference to be entitled to overtime compensation.” R. 463 at 28. This instruction told the jury only that, if it found liability with respect to the testifying plaintiffs, it also was finding liability with respect to the> non-testifying plaintiffs. The court did not inform the jury that its damages calculations would be áveraged together to make a class-wide finding. Nor did the court charge the jury with determining the estimated average that each plaintiff should receive. All the instructions did, in effect, was tell the jury that the judge would calculate damages. But it should go without saying that a court cannot correct a Seventh Amendment violation by informing the jury that a Seventh Amendment violation is about to occur.
For the same reason, Mt. Clemens Pottery has nothing to do with this case. It is not a Seventh Amendment case. It did not permit a judge, rather than a jury, to decide whether the damages of the testifying and non-testifying employees were similar and thus could be assessed on an “estimated average approach.” And it involved compensation for employees’ preliminary work activities, which took roughly the same amount of time for each employee to perform.
Herman v. Palo Group Foster Home, Inc., is of a piece.
The majority claims in the alternative that the defendants forfeited their claim to a jury trial on damages. Not true. The defendants opposed the district court’s ruling that the court could calculate damages, and they reiterated their objections at a post-trial status conference. Consistent with these objections, the district judge did not decide that defendants forfeited the point. He instead explained he was “at a little bit of a loss” because he had not tried the case and only “now” “realize[d]” that a “residual issue” remained. R. 444 at 6. In response, the district court offered to call a second jury to calculate damages, and asked the defendants what steps would be “appropriate[.]” Id. at 6-7. Counsel responded, “[W]e think the only thing ... that’s left and that is appropriate is an entry of judgment ... either for the defense or liability for plaintiffs ... with zero damages.” Id. at 7. “[P]art of our position,” counsel concluded, “is to be clear for any type of post-trial appellate record” that the defendants were “not waiving ... or changing their position.” Id. at 19-20. Nowhere in this exchange do the defendants forfeit their Seventh Amendment argument; at times they indeed reaffirm it. Of course, even if the defendants had forfeited or for that matter waived their right to a jury trial (which they did not), the appropriate response would have been to conduct a bench trial on damages, not to impose damages as a matter of law with no finding by anyone — judge or jury — about the right amount. Cf Singer v. United States,
It is not difficult to imagine how this case could have gone differently. The plaintiffs could have organized themselves into sub-classes, one corresponding to each type of alleged statutory violation. See, e.g., Fravel v. County of Lake, No. 2:07 cv 253,
The majority seeing things differently, I respectfully dissent.