Opinion
Civil Action No. 3:CV-03-0438.
April 29, 2004
MEMORANDUM
Before me is Defendant Lowe's Home Centers, Inc., Motion for Summary Judgment. (Doc. 51.) I allowed this motion to be filed in advance of considering the Plaintiff's Motion for Postponement of Their Time to Move for Class Certification Under Local Rule 23.3. (Doc. 35.)
Plaintiffs Barbara Evans, Raymond J. Berry, Scott McClellan, Andy Butler, Brian Diehl, Mark Kirby, Jacqueline Anselmi, Greg Steffee, and Mike Miller, current and former Department and Assistant Department Managers at three Lowe's Home Center Stores (hereinafter Lowe's) in Wilkes-Barre, Dickson City, and State College, Pennsylvania, bring suit alleging that Lowe's failed to pay them full overtime compensation in violation of the Fair Labor Standards Act (hereinafter FLSA), 29 U.S.C. § 210 et seq., and the Pennsylvania Minimum Wage Act (hereinafter PMWA), 43 PA. CONS. STAT. §§ 333.101-333.115.
Lowe's moves for summary judgment claiming there are no genuine issues of material fact, and, therefore, it is therefore entitled to summary judgment. Lowe's argues that is was utilizing the fluctuating workweek method (hereinafter FWW) of overtime compensation. FWW allows an employer to pay a weekly salary and compute overtime for work over forty hours. The employee is paid at a rate of one-half of the employee's hourly rate for work over forty hours. The employees hourly rate is determined by dividing the number of hours worked in the workweek into the amount of the weekly salary. See 29 C.F.R. § 778.114(a). Overtime is determined by multiplying one-half of the hourly rate yielded as the quotient of that calculation. Lowe's further argues that Plaintiffs and Lowe's have a "clear mutual understanding" of this overtime arrangement.
The Plaintiffs argue that the FWW method is inapplicable as there was no clear mutual understanding. Plaintiffs contend they were led to believe they were working a minimum of 48 hours a week, and they were never advised that the FWW method was being used.
Because there are genuine issues of material fact as to whether there was a clear mutual understanding that the FWW was rightfully applied to all Plaintiffs, the Defendant's Motion for Summary Judgment will be denied. The Court has jurisdiction pursuant to 28 U.S.C. § 1331.
STANDARD OF REVIEW
Summary judgment is appropriate if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." FED. R. CIV. P. 56(c). A fact is material if proof of its existence or non-existence might affect the outcome of the suit under the applicable substantive law. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
Where there is no material fact in dispute, the moving party need only establish that it is entitled to judgment as a matter of law. Where, however, there is a disputed issue of material fact, summary judgment is appropriate only if the factual dispute is not a genuine one. See id. at 248. An issue of material fact is genuine if "a reasonable jury could return a verdict for the nonmoving party." Id.
Where there is a material fact in dispute, the moving party has the initial burden of proving that (1) there is no genuine issue of material fact; and (2) the moving party is entitled to judgment as a matter of law. See CHARLES ALAN WRIGHT ARTHUR R. MILLER, FEDERAL PRACTICE AND PROCEDURE: CIVIL 2D § 2727 (2d ed. 1983). The moving party may present its own evidence or, where the nonmoving party has the burden of proof, simply point out to the court that "the nonmoving party has failed to make a sufficient showing of an essential element of her case." Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).
All doubts as to the existence of a genuine issue of material fact must be resolved against the moving party, and the entire record must be examined in the light most favorable to the nonmoving party. See White v. Westinghouse Elec. Co., 862 F.2d 56, 59 (3d Cir. 1988). Once the moving party has satisfied its initial burden, the burden shifts to the nonmoving party to either present affirmative evidence supporting its version of the material facts or to refute the moving party's contention that the facts entitle it to judgment as a matter of law. See Anderson, 477 U.S. at 256-257.
The court need not accept mere conclusory allegations or denials taken from the pleadings. See Schoch v. First Fidelity Bancorporation, 912 F.2d 654, 657 (3d Cir. 1990). In deciding a motion for summary judgment, "the judge's function is not himself to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial." Anderson, 477 U.S. at 249.
DISCUSSION
This case involves the issue of whether Plaintiffs and Lowe's had a clear mutual understanding that Plaintiffs would be paid according to Lowe's Salaried Plus Overtime Plan. The Salaried Plus Overtime Plan was Lowe's effort to apply the FWW method.
The factual circumstances of the various Plaintiffs differ. Plaintiffs Evans and Anselmi, at the time of their employment, signed a form which acknowledged their understanding of the FWW method. The acknowledgment form is entitled "Salaried Plus Overtime Eligible Compensation Plan." In my view, it explains the FWW method in clear and understandable terms. Plaintiff Evans says in her affidavit that the forms (she signed one at hire and two during the course of her employment) contain her signature; however, she claims that she never read the form, never received a copy of the form, nor was the plan ever explained to her. (Doc. 66, Ex. 10.)
Plaintiff Anselmi's affidavit is similar. Anselmi acknowledges signing the form, but was never given a copy of the form. (Doc. 66, Ex. 6.) Anselmi also states in her affidavit that she was not given time to read the form before signing it, and the form was never explained to her, except that she was told it was needed for the promotion to Assistant Manager. ( Id.)
Plaintiff Berry signed the acknowledgment form twenty-eight months after he began his employment. Berry acknowledges signing the form, but was never given a copy of the form. Berry also states in his affidavit that he was not given time to read the form before signing it, and the form was never explained to him.
Plaintiff Diehl became a Department Manager in July, 2001, after serving as an Assistant Manager. In September, 2002, Diehl signed a form acknowledging the FWW method. Diehl also states that he did not receive a copy of the form, nor was it ever explained to him. (Doc. 66, Ex 9.)
Plaintiffs Evans, Anselmi, Berry, and Diehl all contend they were never informed of the Salaried Plus Overtime Eligible Compensation Plan. All said they did not understand how their pay was calculated and all sought an explanation from their supervisors for an explanation of how their pay was calculated. However, no one could explain how the compensation plan worked. Plaintiff Evans states she asked her supervisor, Ms. Jones, how the compensation plan worked. (Doc. 66, Ex. 10.) Ms. Jones was unable to explain how the plan worked. ( Id.) Many referred to the pay system as "Chinese Overtime." ( Id.) Plaintiff Berry asked Mr. Hesser, the store manager, and Ms. Jones, how his pay was calculated, but neither was able to provide an understandable explanation. (Doc. 66, Ex. 7.) Plaintiff Diehl and Steffee had a similar experience when asking their respective supervisors for an explanation of how his pay was calculated. (Doc. 66, Ex. 9 14.) The remaining Plaintiffs, while not specifically asking about how their pay was calculated, were never told how it was calculated. Plaintiff Butler noted there was an unsigned acknowledgment form in his personnel file which he had never seen. (Doc. 66, Ex. 8.)
Lowe's affiant, Aleda Jo Howard, states that the Salaried Plus Overtime Eligible Compensation Plan (hereinafter the Plan) was established in 1989. (Doc. 54, Ex. A.) Howard states that Lowe's had a policy that the Plan be communicated and explained to employees at various times, including during orientation, store meetings, employee promotions, and upon a change in an employee's rate of pay. ( Id.) Howard's affidavit also states that employees were given a copy of the Plan and a copy was placed in the employee's personnel files. ( Id.)
I am unclear on when the acknowledgment form came into existence, since it is first mentioned in paragraph 11 of Ms. Howard's affidavit without any reference to it in the preceding paragraphs in the affidavit. I assume she is using plan and acknowledgment form interchangeably.
Each of the Plaintiffs state that despite Lowe's contention to the contrary, Lowe's never met with employees to have the employees review the Plan, never explained it, and never provided employees with a copy of the Plan. All who signed a copy of the Plan stated that they were unaware of what they had signed.
Lowe's argues that its policy, as set forth by Ms. Howard, was implemented. However, Lowe's presented no evidence to support this assertion. Lowe's also contends that the established law compels summary judgment in its favor.
In its memorandum in support, Lowe's, states that "[i]ndeed, employees may even disagree with and `manifest their dislike for the defendant's [FWW] compensation plan,' and still satisfy the Department of Labor Regulation." (Doc. 53 at 3.) Lowe's cites Friedrich v. U.S. Computer Systems, Inc., CIV. A. No. 90-1615, 1996 WL 32888, at *11 (E.D. Pa. Jan. 22, 1996) as support for this proposition. However, this is somewhat misleading. In Friedrich, the court was considering whether the defendants were entitled to a decision as a matter of law that plaintiffs understood and agreed to the overtime compensation plan under the PMWA's requirement of an "agreement or understanding" between the employer and employee. Id. at *1; see also 34 PA. CODE § 231.43(d) (regulations for PMWA).
The Friedrich court reviewed the evidence and found that there was an understanding and agreement on the plan. The plaintiffs in Friedrich testified about reading the plan, understanding the mechanics of it, understanding the formula, plugging in the numbers to get the result, and its application to all hours over forty. Moreover, the Friedrich court said nothing about disagreeing with the plan and still satisfying the Department of Labor Regulations as suggested in Lowe's brief. Indeed, Judge Gawthrop found there was agreement with, although perhaps a dislike for, the plan. This is far different from saying that one agrees when they do not.
Without deciding whether consent is necessary to satisfy the "clear mutual understanding" requirement of 29 C.F.R. § 788.114 (hereinafter section 788.114), it is clear from Defendant's authority that the employee needs to understand the fluctuating work week plan to satisfy section 788.114. Griffin v. Wake County, 142 F.3d 712, 716 (4th Cir. 1998).
Lowe's has not met its burden of proving that any of the Plaintiffs understood the Plan. Lowe's offers only that it had a policy of communicating and explaining the Plan to employees at various times including orientation, store meetings, employee promotion, and upon a change in pay. While Lowe's states that the policy included giving the employees a copy of the Plan, the company offered no evidence that this policy was executed or performed in the case of these Plaintiffs.
On the other hand, the Plaintiffs to a one said that they did not understand the Plan. None were ever told about the Plan or had it explained to them, and no one was provided with a copy of the Plan. Plaintiffs Evans, Diehl, Butler, and McClellan asked their supervisors about how their pay was calculated, and their supervisors could not do so. In addition, each Plaintiff said that a work week of 48 hours was not only noted as the requirement, but it was stressed as a minimum. Each said they did not understand that they would receive overtime for hours over 40 or that they could work less than 40 hours and still receive their salary.
Lowe's also argues that receipt of pay by Plaintiffs over the period of their employment is evidence of a clear understanding of the plan. Lowe's reliance on Griffin in this regard is misplaced. The pay checks over the years in Griffin were "a regular lesson . . . about how the fluctuating work week plan operates." Griffin, 142 F.3d at 716-17. However, this "lesson" was in addition to providing careful explanations to the employees as to how the plan worked, providing employees with a memorandum on how the plan worked, and securing of an acknowledgment that the plan was explained. Id. at 716. The additional evidence of a clear understanding found in Griffin is lacking here.
The signed acknowledgments in the case of Plaintiffs Evans and Anselmi present a more difficult question. No court has held that a signed acknowledgment form is conclusive evidence of a clear mutual understanding as a matter of law. Moreover, even Griffin said that an executed acknowledgment form is probative of a clear understanding. Id. (citing Highlander v. K.F.C. Nat'l Mgmt Co., 805 F.2d 644, 648 (6th Cir. 1986)). Here, both Evans and Anselmi submitted sworn statements that they did not understand the plan, that it was never explained to them, and that the acknowledgment form was never explained to them as setting forth any kind of a FWW or Salaried Plus Overtime Eligible Compensation Plan. Unlike the plaintiff in Highlander, Evans and Anselmi swear to their lack of understanding of the Plan, and there is no other evidence that tends to show they understood the Plan. At this stage of the case, there is a genuine issue of material fact as to whether Evans and Anselmi understood the Plan.
Plaintiffs Berry and Diehl present similar evidence regarding their lack of understanding of the Plan despite their execution of the acknowledgment form after working for some time. The form was not explained to them in terms of being an explanation of the Plan. Again, without more evidence that Berry and Diehl understood the plan, there is a genuine issue of material fact on the issue of clear understanding under section 778.114.
With respect to Plaintiffs' claims under the PMWA, Defendant contends that the "agreement or understanding" requirement under section 231.43(d) of the PMWA regulations has been interpreted in the same way as the "clear mutual understanding" requirement of the FLSA. Lowe's cites Friedrich to support this proposition. However, Friedrich works against Lowe's because the Friedrich court said that the employee and employer had to agree to and understand the compensation method before commencing work. Friedrich, 1996 WL 32888 at *10. Section 231.43(d) provides in pertinent part:
No employer may be deemed to have violated these §§ 231.41 — 231.43 by employing an employee for a workweek in excess of the maximum workweek applicable to the employer under § 231.41 if, under an agreement or understanding arrived at between the employer and the employee before performance of the work, the amount paid to the employee for the number of hours worked by him in the workweek in excess of the maximum workweek applicable to the employee under § 231.41;
(3) Is computed at a rate not less than 1½ times the rate established by the agreement or understanding as the basic rate to be used in computing overtime compensation thereunder; and if the average hourly earnings of the employee for the workweek, exclusive of payments described in subsection (a)(1) — (7), are not less than the minimum hourly rate required by applicable law and if extra overtime compensation is properly computed and paid on other forms of additional pay required to be included in computing the regular rate.34 Pa. Code § 231.43(d). Thus, it is clear that the PMWA requires an agreement. Defendant has essentially argued there was no agreement between it and any employee, or that an agreement was unnecessary. Moreover, and in any event, Lowe's presented no evidence of an agreement with respect to any Plaintiff. Therefore, there is a genuine issue of material fact. Moreover, the agreement under the PMWA is to occur before work began. Again there is a genuine issue of material fact. Lowe's motion therefore fails with regard to the PMWA.
Lowe's argues that in the event summary judgment is not granted, the Plaintiffs' claims must be limited by the applicable statute of limitations. Since the resolution of this issue is not dispositive, I will defer ruling on this until a time closer to trial.
Plaintiffs have argued that the FSLA fluctuating work week compensation method cannot apply here because the Plaintiffs were regularly scheduled to work forty-eight hours and not forty hours. In other words, Plaintiffs contend the FWW method cannot apply unless the regularly scheduled work week is forty hours. Because I have found a genuine issue of material fact exists with respect to the clear mutual understanding requirement of the FSLA, I will not reach this issue at this time. If necessary, I will revisit it at a later date with additional briefs from the parties.
Because there are genuine issues of material fact, the Defendant's Motion for Summary Judgment will be denied.
An appropriate Order follows.