IN RE: AMAZON.COM, INC., FULFILLMENT CENTER FAIR LABOR STANDARDS ACT (FLSA) AND WAGE AND HOUR LITIGATION.
No. 16-5533
United States Court of Appeals, Sixth Circuit.
March 31, 2017
852 F.3d 601
Argued: December 7, 2016
The fact that this case arises in the context of ERISA further justifies narrowly reading the scope of the NLRB‘s jurisdiction here. Section 515 permits ERISA fund trustees special status akin to a holder in due course, entitling the trustees to enforce the CBA regardless of available defenses under the common law of contracts. See Ohio Ceiling & Partition Co., 48 Fed.Appx. at 192. Section 515 was enacted because Congress was concerned about “the problem that had arisen because a substantial number of employers had failed to make their ‘promised contributions’ on a regular and timely basis.” Laborers Health & Welfare Trust Fund v. Advanced Lightweight Concrete Co., 484 U.S. 539, 546 (1988). As this Court has noted, a fund “must assume that all participants in a plan are following the stated terms; no other approach permits accurate actuarial computations and proper decisions about which claims to pay.” Orrand v. Scassa Asphalt, Inc., 794 F.3d 556, 567 (6th Cir. 2015). Foreclosing Plaintiffs’ action in this case undermines that purpose. Plaintiffs relied upon the terms of the CBA, which allocated the aforementioned fringe benefits to the plans. Their calculations were specifically undertaken with these payments in mind. The majority‘s decision jeopardizes these assumptions and threatens the viability of Operating Engineers’ plans without a clear basis in law.
Again, Defendants and Operating Engineers reached a negotiated agreement, manifested in the CBA, a complex document signifying the parties’ intent. Absent any clear contradiction with federal labor policy, we must interpret the CBA according to ordinary contract principles. See M & G Polymers, 135 S.Ct. at 933. Ordinary contract principles dictate that Defendants have an obligation to pay contributions to Plaintiffs and to pay Laborers for the forklifting and skid steer work performed. The majority has not shown why this is contradictory. I therefore respectfully dissent.
Tina Vance and Aaron Vance, on behalf of themselves and all others similarly situated, Plaintiffs-Appellants,
v.
Amazon.com, Inc.; Amazon.com.KYDC, Inc.; Amazon.com.KYDC, LLC; Zappos.com, Inc.; Zappos Fulfillment Centers, Inc.; Kelly Services, Inc., Defendants-Appellees.
Before: SILER, BATCHELDER, and GRIFFIN, Circuit Judges.
OPINION
GRIFFIN, Circuit Judge.
In Integrity Staffing Solutions, Inc. v. Busk, — U.S. —, 135 S.Ct. 513, 190 L.Ed.2d 410 (2014), the Supreme Court held that post-shift security screening is a noncompensable postliminary activity under the Fair Labor Standards Act (FLSA),
I.
Online retailers Amazon.com, Amazon.com.KYDC, Inc., Amazon.com.KYDC, LLC, Zappos.com, and Zappos Fulfillment Centers (collectively, “Amazon“) operate a warehouse fulfillment center in Shepherdsville, Kentucky, where hourly workers fill orders, track merchandise, and process returns. Plaintiffs Tina and Aaron Vance began working at the center in 2012—Tina as an employee of Amazon, and Aaron as a joint employee of Amazon and staffing agency Kelly Services. Both regularly worked at least forty hours a week. Amazon tracked the Vances’ hours with a “time clock” system; employees “clocked in” at the beginning of their shifts, and “clocked out” at the end of the workday.
However, before permitting “clocked out” employees to leave, Amazon required them to—in plaintiffs’ words—“proceed through a lengthy theft-prevention security screening operation.” Workers passed through a metal detector while security guards “inspect[ed] any bags or personal items” they intended to take home. If an employee set off the metal detector, the guard “search[ed]” him or her further “using a metal detecting wand.” “This mandatory, post-shift theft-prevention screening” took anywhere from 10 to 30 minutes. Defendants never paid Tina or Aaron overtime compensation for the time they spent undergoing the post-shift security screening—“a required job activity,” designed “solely to benefit Defendants.”
II.
The Vances filed the present action against Amazon and Kelly Services in 2013, alleging that such nonpayment violates the Fair Labor Standards Act and its state-law counterpart, the Kentucky Wages and Hours Act. Plaintiffs were not the only employees who disputed Amazon‘s practices. By early 2014, the Vances’ case was one “of five related actions” pending in district courts across the country. Each involved similar allegations: “that Amazon.com and various staffing agencies violate federal and state wage and hour laws by requiring workers ... to pass through lengthy anti-theft security screening after clocking out ... without compensation for that time.”
The United States Judicial Panel on Multidistrict Litigation transferred the actions to the Western District of Kentucky for consolidation. Recognizing the Supreme Court already granted certiorari in
The Integrity Staffing Court determined the security screenings were noncompensable under the Portal-to-Portal Act. 135 S.Ct. at 518. Enacted as an amendment to the FLSA, the Portal-to-Portal Act “narrowed the coverage of the [Act]” by excluding certain “preliminary” and “postliminary” activities from the FLSA‘s compensation requirements. See IBP, Inc. v. Alvarez, 546 U.S. 21, 27 (2005). Integrity Staffing clarified that post-shift security screenings are among those noncompensable, “postliminary” activities. 135 S.Ct. at 518.
In view of the Court‘s ruling, the Vances withdrew their FLSA claims. They maintained, however, that Integrity Staffing did not foreclose their claim to overtime under the KWHA for two reasons. “First,” plaintiffs explained, Integrity Staffing “was not an FLSA decision but rather a Portal-to-Portal Act decision.... Second, Kentucky has never enacted a Portal-to-Portal Act of its own and the KWHA contains no comparable exclusions from coverage.” (Emphasis in original.)
In granting defendants’ motions for judgment on the pleadings, the district court rejected both arguments. “The main problem with the plaintiffs’ position,” it wrote, “is that they treat the Portal-to-Portal Act as separate and distinct from the FLSA. Yet the Portal-to-Portal Act amended the FLSA.... It does not alter the FLSA‘s construct or make substantive changes to the FLSA‘s concepts about work, overtime, or the like. It simply clarifies that some activities do not count as ‘work.‘” And while “Kentucky‘s laws do not contain Portal-to-Portal language,” the Kentucky Supreme Court refers to federal law in construing the KWHA. Given that “Kentucky looks to federal law to determine what is work under its wage and hour laws,” the district court concluded that Kentucky courts would find “federal law explaining what is not work” equally persuasive. Accordingly, the court applied Integrity Staffing to plaintiffs’ state-law claims, and granted defendants judgment on the pleadings. Plaintiffs timely appealed.
III.
At the outset, plaintiffs suggest that we certify the question at issue here—whether the KWHA incorporates the Portal-to-Portal Act—to the Kentucky Supreme Court before resolving their appeal.
Certification to a state supreme court “is most appropriate when the question is new and state law is unsettled,” as the parties agree it is here. City of Columbus v. Hotels.com, L.P., 693 F.3d 642, 654 (6th Cir. 2012). But the appropriate time to request certification of a state-law issue “is before, not after, the district court has resolved [it].” State Auto Property and Cas. Ins. Co. v. Hargis, 785 F.3d 189, 194 (6th Cir. 2015). “[O]therwise, the initial federal court decision will be nothing but a gamble with certification sought only after an adverse decision.” Id. (citing and quoting Perkins v. Clark Equip. Co. Melrose Div., 823 F.2d 207, 209-10 (8th Cir. 1987)). Moreover, we are not inclined to “trouble our sister state courts every time an arguably unsettled question of state law comes across our desks.” Pennington v. State Farm Mut. Auto. Ins. Co., 553 F.3d 447, 450 (6th Cir. 2009). “When we see a reasonably clear and principled course, we will seek to follow it ourselves.” Id. That course is most appropriate here, where the Vances chose to file
“The state court need not have addressed the exact question, so long as well-established principles exist to govern a decision.” Hargis, 785 F.3d at 194. Here, we have at least those principles in the form of state supreme court and court of appeals decisions, and the KWHA‘s implementing regulations. We therefore deny plaintiffs’ late request for certification.
IV.
We review a district court‘s grant of judgment on the pleadings under
A.
“Enacted in 1938, the FLSA established a minimum wage and overtime compensation for each hour worked in excess of 40 hours in each workweek.” Integrity Staffing, 135 S.Ct. at 516. “The Act did not, however, define the key terms ‘work’ and ‘workweek.‘” Sandifer v. U.S. Steel Corp., — U.S. —, 134 S.Ct. 870, 875 (2014). Absent congressional guidance, the Supreme Court interpreted these terms broadly. Integrity Staffing, 135 S.Ct. at 516. “It defined ‘work’ as ‘physical or mental exertion (whether burdensome or not) controlled or required by the employer and pursued necessarily and primarily for the benefit of the employer and his business.‘” Id. (quoting Tenn. Coal, Iron & R. Co. v. Muscoda Local No. 123, 321 U.S. 590, 598 (1944)). Only months after Tennessee Coal, the Court expanded the definition further, “clarif[ying] that ‘exertion’ was not in fact necessary for an activity to constitute ‘work’ under the FLSA,” for “an employer, if he chooses, may hire a man to do nothing, or to do nothing but wait for something to happen.” IBP, 546 U.S. at 25 (quoting Armour & Co. v. Wantock, 323 U.S. 126, 133 (1944)). “Readiness to serve may be hired, quite as much as service itself,” and must therefore also be compensated. Armour, 323 U.S. at 133.
The Court took a similar approach with “the statutory workweek,” which “include[d] all time during which an employee is necessarily required to be on the employer‘s premises, on duty or at a prescribed workplace.” Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 690-91 (1946). That period, Anderson explained, encompassed time spent “pursuing certain preliminary activities after arriving, such as putting on aprons and overalls and removing shirts.” Sandifer, 134 S.Ct. at 875 (quoting Anderson, 328 U.S. at 692-93). Per Anderson, these preparatory efforts “are clearly ‘work’ under the Act.” Id. (quoting Anderson, 328 U.S. at 693).
Together, these holdings led to decisions requiring compensation for nearly every
“Congress responded swiftly.” Id. Finding the Court‘s decisions had “creat[ed] wholly unexpected liabilities” with the capacity to “bring about financial ruin of many employers,” it enacted the Portal-to-Portal Act of 1947. Id. at 516-17 (quoting
“[P]rincipal activity” refers to the activity “an employee is employed to perform.” Integrity Staffing, 135 S.Ct. at 517. “[T]he term principal activity ... embraces all activities which are an integral and indispensable part of the principal activities.” IBP, 546 U.S. at 29-30 (internal quotation marks and citation omitted). An activity is “integral and indispensable” to the principal activities an individual is employed to perform “if it is an intrinsic element of those activities and one with which the employee cannot dispense if he is to perform his principal activities.” Integrity Staffing, 135 S.Ct. at 517. In other words, an activity is integral and indispensable to the work an employee was hired to do if it is a component of that work, and he cannot complete the work without it. Id.
Applying these terms, the Integrity Staffing Court held that post-shift security screenings were neither the principal activity Amazon hired its employees to perform, nor “integral and indispensable” to that activity:
To begin with, the screenings were not the “principal activity or activities which [the] employee is employed to perform.” Integrity Staffing did not employ its workers to undergo security screenings, but to retrieve products from warehouse shelves and package those products for shipment to Amazon customers.
The security screenings also were not “integral and indispensable” to the employees’ duties as warehouse workers.... The screenings were not an intrinsic element of retrieving products from warehouse shelves or packaging them for shipment. And Integrity Staffing could have eliminated the screenings altogether without impairing the employees’ ability to complete their work.
Id. at 518 (citation omitted). The screenings were therefore “postliminary” to the employees’ principal activities and excluded from compensation pursuant to the Portal-to-Portal Act.
Defendants contend the KWHA implicitly incorporates the Portal-to-Portal Act‘s exclusions, making Integrity Staffing strongly persuasive in resolving plaintiffs’ state-law claims. The Vances counter that the KWHA does not include “preliminary” or “postliminary” language, and, as a result, its application should not turn on
B.
As a federal court applying state law, “we anticipate how the relevant state‘s highest court would rule in the case and are bound by controlling decisions of that court.” In re Dow Corning Corp., 419 F.3d 543, 549 (6th Cir. 2005). “If the state supreme court has not yet addressed the issue,” we render a prediction “by looking to all the available data.” Allstate Ins. Co. v. Thrifty Rent-A-Car Sys., Inc., 249 F.3d 450, 454 (6th Cir. 2001). Sources of relevant data include “the decisions (or dicta) of the Kentucky Supreme Court in analogous cases, pronouncements from other Kentucky courts,” and regulatory guidance from the Kentucky Labor Cabinet and Department of Workplace Standards. Hargis, 785 F.3d at 195; see also Whitewood v. Robert Bosch Tool Corp., 323 Fed.Appx. 397, 401 (6th Cir. 2009) (consulting the KWHA‘s interpretive regulations).
In Kentucky, “the cardinal rule of statutory construction is to ascertain and give effect to the intent of the legislature.” Beshear v. Haydon Bridge Co., 304 S.W.3d 682, 703 (Ky. 2010) (citation and brackets omitted). “The obvious place to start is with the language of the statute itself.” Members Choice Credit Union v. Home Fed. Savings and Loan Ass‘n, 323 S.W.3d 658, 660 (Ky. 2010). If the Kentucky Act is “similar to a Federal Act,” its language “will normally be interpreted consistent with federal law.” Starr v. Louisville Graphite, Inc., No. 2014-CA-000620-MR, 2016 WL 1612940, *3 (Ky. Ct. App. Apr. 22, 2016); see also Ammerman v. Bd. of Educ. of Nicholas Cty., 30 S.W.3d 793, 797-98 (Ky. 2000) (holding the Kentucky Civil Rights Act “should be interpreted consistently with” Title VII).
Plaintiffs agree the KWHA is similar to its federal counterpart—so much so that the Kentucky Supreme Court considers it “Kentucky‘s analogue to the Fair Labor Standards Act.” City of Louisville, Div. of Fire v. Fire Serv. Managers Ass‘n, 212 S.W.3d 89, 92 (Ky. 2006). Both statutes require employers to compensate employees “at a rate not less than one and one-half times the regular rate” for a “workweek longer than forty hours.” Compare
Federal law is less useful, however, when the dispute concerns a “distinct structural difference” in state law, as the Kentucky Supreme Court explained in City of Louisville. Id. Like the FLSA, the KWHA‘s overtime requirement applies only to employees, a group that includes any person “suffered or permitted to work for an employer, but [does] not include” those employed in a supervisory capacity.
But the Kentucky Supreme Court reversed. Rejecting the Court of Appeals’ reasoning, it explained:
Under the FLSA, all employees are automatically entitled to time-and-a-half overtime pay unless those employees fall under a specified “exemption.”
29 U.S.C. § 207(a)(1) . One of these specified exemptions under the FLSA is “any employee employed in a bona fide executive, administrative, or professional capacity.”29 U.S.C. § 213(a)(1) (“Exemptions“). In contrast, individuals who are employed in a bona fide supervisory capacity are not “employees” at all under KRS 337.285, and thus, are completely excluded from the statute‘s scope.
City of Louisville, 212 S.W.3d at 95 (emphasis added). This “distinct structural difference” meant that, unlike a federal claimant, a KWHA claimant must prove he is an “employee” as part of his prima facie case. Id. at 94. Federal cases requiring “‘exemption[s]’ [to] be narrowly construed against the employer” are inapplicable to KWHA claimants for much the same reason—the Act‘s exclusion of supervisory staff from the definition of “employee” “does not constitute an exemption.” Id.
The Vances argue that the absence of language referring to “principal activity” or “preliminary” and “postliminary” acts in the KWHA is akin to the “distinct structural difference” identified in City of Louisville, making Integrity Staffing inapposite. Further, they note that the Kentucky legislature expressly adopted the Portal-to-Portal Act‘s “good faith” exception, which grants a court discretion to deny liquidated damages against an employer who acted “in good faith,” with “reasonable grounds for believing that his or her act or omission was not a violation” of the FLSA.
Yet, plaintiffs do not speak to the main distinction between City of Louisville and the present action: the Kentucky Supreme Court determined the burden of proving employee status lay with the claimant based on an express, affirmative departure from the FLSA. Here, we do not have an affirmative departure. We have only the state legislature‘s failure to explicitly incorporate certain Portal-to-Portal Act terms; or more accurately, a departure by omission.
To be sure, Kentucky courts are bound by “the words [the General Assembly] used in enacting the statute“; they are not free to “surmis[e] what may have been intended but was not expressed.” Travelers Indem. Co. v. Reker, 100 S.W.3d 756, 765 (Ky. 2003) (citation omitted). “Admittedly,” then, “when a legislature‘s enactment departs from the language of a model act, it usually does so to express an intention different from the model act.” Members Choice Credit Union, 323 S.W.3d at 663 (internal quotation marks and citation omitted). “But,” Kentucky‘s Supreme Court has cautioned that “this approach is primarily relevant when the legislature is working in a vacuum, building first principles in an area of the law.” Id. Here, the Kentucky General Assembly was not “working in a vacuum, building first principles of [wage and hour] law.” Id. It drafted the KWHA in 1974, decades after Congress enacted the 1947 Portal-to-Portal Act. “Where such context exists, it does not automatically follow that the legislature meant anything by a departure from the model act.” Id. (recognizing that at the time of the amendment at issue, “credit unions were already regulated in Kentucky and had been so for over sixty years“). Rather, “absent a clear indication that the General Assembly considered the revision and deliberately rejected it ... legislative inaction is a weak reed upon which to lean, and a poor beacon to follow in construing a statute” that borrows some, but not all, of a model act‘s provisions. Shawnee Telecom Res., Inc. v. Brown, 354 S.W.3d 542, 560 (Ky. 2011) (citation, brackets, and ellipsis omitted).
Model-act-based statutes are better interpreted “with reference to the circumstances existing at the time of passage.”1 Members Choice Credit Union, 323 S.W.3d at 663 (quoting United States v. Wise, 370 U.S. 405, 411 (1962)). These circumstances may include an awareness of the conditions that precipitated the Portal-to-Portal Act—particularly the “flood of litigation” provoked by the Supreme Court‘s early permissive rulings. Integrity Staffing, 135 S.Ct. at 516. “Further, our rules of statutory construction presume that the legislature is aware of the state of the law at the time it enacts a statute, concluding judicial construction of prior enactments.” St. Clair v. Commonwealth, 140 S.W.3d 510, 570 (Ky. 2004). If the Kentucky General Assembly intended to expose employers to the type of liability Congress foreclosed in the Portal-to-Portal Act, one may reasonably assume it would have done so affirmatively—especially given its willingness to affirmatively depart from the FLSA in other instances. See, e.g., City of Louisville, 212 S.W.3d at 95; compare also
Kentucky‘s Commissioner of Workplace Standards, whom the General Assembly has empowered to issue regulations “defining and governing” the KWHA, see
Despite the lack of “preliminary” and “postliminary” language in the KWHA, the Commissioner has nevertheless concluded that the Portal-to-Portal Act‘s exemptions are part of that framework. Kentucky‘s administrative regulation regarding “Travel Time,” is the most significant example. It states:
(1) General. The principles which apply in determining whether or not time spent in travel is working depend upon the kind of travel involved.
(2) Home to work. An employee who travels from home before his regular workday and returns to his home at the end of the workday is engaged in ordinary home-to-work travel which is a normal incident of employment. This is true whether he works at a fixed location or at different job sites. Normal travel from home to work is not worktime.
(3) Travel that is worktime. Time spent by an employee i[n] travel as part of his principal activity, such as travel from job site to job site during the workday, must be counted as hours worked. Where an employee is required to report at a meeting place to receive instructions or to perform other work there, the travel from the designated place to the work place is part of the day‘s work, and must be counted as hours worked.
Both the phrase and concept of a “principal activity” are taken from the text of the Portal-to-Portal Act. See
The inclusion of this language in a regulation concerning “Travel Time” strengthens the Portal-to-Portal Act connection, which has employer liability for “walking, riding [and] traveling to and from the actual place of performance” squarely at its focus.
If the [integral and indispensable] test could be satisfied merely by the fact that an employer required an activity, it would sweep into “principal activities” the very activities that the Portal-to-Portal Act was designed to address. The employer in Anderson, for instance, required its employees to walk from a timeclock near the factory gate to a workstation so that they could begin
their work, but it is indisputable that the Portal-to-Portal Act evinces Congress’ intent to repudiate Anderson‘s holding that such walking time was compensable under the FLSA. A test that turns on whether the activity is for the benefit of the employer is similarly overbroad.
135 S.Ct. at 519 (quotation marks and citation omitted). The Portal-to-Portal Act after all “does not purport to change th[e] Court‘s earlier descriptions of the terms ‘work’ and ‘workweek.‘” IBP, 546 U.S. at 28. It abrogates Anderson because “the walking [in that case] preceded the employees’ principal activity; it occurred before the workday began.” Id. at 35. But walking and travel remain compensable under the Act so long as they occur between two principal activities; that is, “after the workday begins and before it ends.” Id.; see also Sandifer, 134 S.Ct. at 875 (explaining that under the “continuous workday rule,” compensable time comprises “the period between commencement and completion on the same workday of an employee‘s principal activity or activities, whether or not the employee engages in work throughout all that period” (citation, ellipsis, and alteration omitted)). By specifying that “travel from job site to job site during the workday” is compensable as a “principal activity,” while travel to and from home is not,
Kentucky‘s wait-time regulation,
Plaintiffs’ primary response to the term “principal activity” in
Where the KWHA‘s regulations are “substantially similar to” their federal equivalents, and there is no state case law on point, the Kentucky Supreme Court relies on federal decisions to aid in their application. City of Louisville, 212 S.W.3d at 95-100. We conclude it would do the same here and would agree that the KWHA incorporates the Portal-to-Portal Act‘s compensation limits on preliminary and postliminary activities. Integrity Staffing is therefore on point.
C.
Having stipulated to dismiss their FLSA claims after the Supreme Court‘s decision, plaintiffs have all but agreed that it controls. The Vances alleged defendants hired them as “warehouse employees [to] perform tasks related to [] merchandise,” such as “receiving deliveries“; “transporting merchandise“; “processing it for shipping; processing returns; and refurbishing returned items.” Post-shift security screenings are “not the ‘principal activity or activities’ ” they were hired to perform and are “not ‘integral and indispensable’ to the[ir] ... duties as warehouse workers.” Integrity Staffing, 135 S.Ct. at 518 (quoting
Accepting plaintiffs’ “well-pleaded allegations” as true, we conclude that Amazon and Kelly Services are “nevertheless clearly entitled to judgment.” Wurzelbacher, 675 F.3d at 583 (citation omitted). The district court therefore did not err in granting defendants judgment on the pleadings.
V.
For these reasons, we affirm the district court‘s judgment.