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Gerber Products Co. v. Hewitt

Supreme Court of Arkansas

May 26, 2016

GERBER PRODUCTS COMPANY D/B/A NESTLE INFANT NUTRITION D/B/A NESTLE NUTRITION USA D/B/A NESTLE NUTRITION USA-INFANT NUTRITION D/B/A NESTLE NUTRITION USA-PERFORMANCE NUTRITION APPELLANT
v.
DAVID HEWITT II ET AL., INDIVIDUALLY AND ON BEHALF OF OTHERS SIMILARLY SITUATED APPELLEES

         APPEAL FROM THE SEBASTIAN COUNTY CIRCUIT COURT [NO. CV-2012-715] HONORABLE JAMES O. COX, JUDGE

          Quattlebaum, Grooms & Tull PLLC, by: E.B. Chiles IV and Joseph R. Falasco, for appellant.

          Holleman & Associates, P.A., by: John Holleman and Timothy A. Steadman; and Byars, Hickey & Hall, P.L.L.C., by: Joe D. Byars, Jr., for appellees.

          OPINION

          KAREN R. BAKER, Associate Justice

         Appellant, Gerber Products Company d/b/a Nestle Infant Nutrition d/b/a Nestle Nutrition USA d/b/a Nestle Nutrition USA-Infant Nutrition d/b/a Nestle Nutrition USA-Performance Nutrition ("Gerber") appeals the Sebastian County Circuit Court's January 23, 2015 order granting partial summary judgment in favor of appellees in their case alleging Gerber's liability for failure to pay certain overtime wages in violation of the Arkansas Minimum Wage Act ("AMWA"), Arkansas Code Annotated sections 11-4-201 et seq. (Repl. 2012 & Supp. 2015).

         Appellees are employed by Gerber at its baby food processing and manufacturing facility located in Fort Smith, Arkansas ("employees"). On June 6, 2012, the employees filed a class action complaint against Gerber in the Sebastian County Circuit Court.[1] The employees sought relief from Gerber's custom and practice of not fully compensating its employees for all the time the employees spent working at the facility, in violation of the AMWA. Specifically, the employees alleged that Gerber failed to compensate the employees for their time spent donning and doffing clothing and protective gear, sanitizing clothing and equipment, washing their hands, and walking to and from their work stations.[2] The employees asserted that these activities were necessary and indispensable to their principal work, but the employees were not compensated. This action was brought on behalf of hourly employees who are nonexempt from the overtime requirements of the AMWA and who were, are, or will be employed by Gerber at any time within three years prior to the filing of the complaint through the date of final disposition of the action, and who were, are, or will be required by Gerber to perform donning and doffing activities without compensation. The employees alleged the following facts regarding their tasks prior to beginning their shifts: upon arrival, the employees walk through an electronic turnstile which is activated by the employees swiping their security cards; the security turnstile records the time when the employee swipes the card; after going through the turnstile, the employees are required to walk to the locker rooms and change into the uniforms supplied by Gerber and to change into shoes that are required to be kept at the facility; after changing into their uniforms, the employees are required to use a lint roller on their clothing, don protective gear such as hairnets, beard nets, ear plugs, and bump caps, and wash their hands; the employees are then required to walk a significant distance to clock in. At the completion of their shifts, the employees are required to clock out prior to doffing the protective clothing. The employees alleged that as a result of the mandatory donning and doffing activities, they were frequently required to work in excess of forty hours in a workweek without overtime compensation at a rate of at least one and a half times their regular rate of pay.[3]

         In August 2014, both parties filed motions for summary judgment. The employees argued that there was no genuine issue of material fact that Gerber did not pay the employees for their time spent donning, doffing, washing, walking, and waiting. To support its motion for summary judgment, Gerber relied on collective-bargaining agreements between Gerber and Lodge 260 of the International Association of Machinists and Aerospace Workers, AFL-CIO ("Union"), which represented the employees during the negotiation process. During the 2010 labor negotiations, the Union proposed an amendment to Article 11.3 of the collective-bargaining agreement to require Gerber to compensate the employees for "18 minutes per day for donning and doffing." However, this request was removed from the 2010–2013 collective-bargaining agreement and the time spent donning and doffing was treated as noncompensable. In 2013, the Union requested compensation for "30 minutes per day for donning and doffing." The 2013–2016 collective bargaining agreement was ratified and included a provision treating donning and doffing time as compensable. Article 6.13 of the 2013–2016 collective-bargaining agreement states as follows:

The well-known custom and practice at this Fort Smith facility has for years been that time spent by employees donning and doffing clothes, shoes and various protective gear, and time spent performing related preparation or concluding activities like washing hands, linting off and walking to and from a work station (all activities referred to collectively in this Section as "Donning/Doffing"), are treated as non-compensable time. Under the immediately prior collective bargaining contract dated April 26, 2010, the Company and the Union agreed that time spent on Donning/Doffing was to be treated as non-compensable for the term of the contract. In the 2010 labor contract negotiations, the parties expressly bargained over various economic proposals of the Union, specifically including the issue of possibly treating Donning/Doffing time as compensable time, and the issue of increasing employees' base wage rates. Ultimately the Company agreed to grant increases to the base wage rates, but denied the Union's proposal to begin treating Donning/Doffing time as compensable. As a result of that bargaining, the past practice of treating Donning/Doffing time as non-compensable continued into and during the 2010 agreement.
Starting as soon as practicable, but no longer than ninety (90) days after the ratification of the 2013 labor agreement, the Company will permit Donning/Doffing activities to be performed on regular paid time, both at the front and back end of an employee's shift.

         Both parties' motions for summary judgment were initially denied. However, on November 3, 2014, a hearing was held on the cross-motions for summary judgment, and the circuit court orally announced from the bench that it was changing its earlier order in favor of the employees. On January 23, 2015, the circuit court entered a written order granting the employees' motion for partial summary judgment as to Gerber's liability for failure to pay certain overtime wages. Specifically, the circuit court found that the AMWA requires Gerber to "treat the time required by employees to complete the mandatory donning and doffing activities at issue in this lawsuit as compensable work time, notwithstanding any contrary custom or practice under a collective bargaining agreement applicable to those employees or any express agreement." Further, the circuit court found that the AMWA does not incorporate the Federal Labor Standards Act ("FLSA") 203(o) exception for donning and doffing. The circuit court specifically found as follows:

1. Plaintiffs' Motion for Partial Summary Judgment is granted in part, as to [Gerber's] liability for failure to pay certain overtime wages. The Court concludes that the Arkansas Minimum Wage Act ("AMWA") requires that the employer, [Gerber], treat the time required by employees to complete the mandatory Donning and Doffing activities at issue in this lawsuit as compensable work time, notwithstanding any contrary custom or practice under a collective bargaining agreement applicable to those employees or any express agreement. The Arkansas Minimum Wage Act does not incorporate the federal 203(o) [exception] for clothes changing time in unionized facilities. There is no genuine issue of material fact that Gerber employed 4 or more individuals and that the class members worked more than 40 hours in one or more workweeks. Gerber did not treat the mandatory Donning and Doffing activities as compensable work time, and thereby violated the AMWA by failing to pay overtime as required by the Act.
a. "Donning" includes changing from personal clothes and shoes into the Company-supplied uniform pants and shirt, and work shoes or (protective shoe covers), putting on the required personal protective equipment–namely, a hairnet, a beard net if applicable, safety glasses, hearing protection and a bump cap (collectively described as "PPE")–washing hands and lint rolling one's clothes.
b. Doffing" includes changing out of the uniform pants and shirt and work shoes (or protective shoe covers) and into personal clothes and shoes, and removing the PPE.
2. Because the time required to perform the Donning and Doffing activities is deemed by the Court to be compensable work time, certain walking and waiting time was compensable as well. This includes: a) the employees' post-Donning walking time from areas where the employees completed Donning activities, to places where employees reported for duty, and b) the pre-Doffing walking time from time clocks where employees clocked out, to the places they performed their Doffing activities.
. . . .
4. [Gerber's] Motion for Summary Judgment is reconsidered, and is denied. As discussed above, the AMWA requires employers to pay employees for all hours that employees are suffered or permitted to work. The mandatory Donning and Doffing Activities at Gerber's Fort Smith Plant are work under the AMWA. There is no genuine dispute that time spent by class members on Donning and Doffing activities was historically treated as non-compensable time pursuant to a custom and practice under the collective bargaining agreements in place between Gerber and the Union representing the class members. Nevertheless, the Court concludes that these facts are irrelevant to the liability aspect of Plaintiffs' claim for wages under the AMWA. The AMWA does not incorporate the federal 203(o) [exception].

Also on January 23, 2015, the parties stipulated to the remaining issues of fact and procedures. For purposes of the calculation of damages for the period of June 6, 2009, through August 4, 2013, the parties agreed that during each work shift, depending on the department, the employees spent 14.2 minutes to 20.22 minutes performing donning, doffing, waiting and walking activities.

         On August 4, 2015, the circuit court entered an order denying the employees' request for liquidated damages, reasoning that "it is not clear that [Gerber] should have known prior to this Court's ruling that the compensation should have been paid for donning and doffing activities." The circuit court granted the employees' request for prejudgment interest at a rate of 6% per annum accruing based on the amount of damages on each payday within the damages period until entry of the final judgment.

         On the same date, the circuit court entered its final judgment pursuant to its January 23, 2015 order and the parties' January 23, 2015 stipulation of the remaining issues of fact and procedures. Accordingly, the total amount of damages awarded to the employees was $3, 001, 669.84. In addition to the 6% prejudgment interest, the employees were awarded postjudgment interest at a rate of 10% per annum. On September 1, 2015, Gerber filed its notice of appeal.

         Law and Analysis

         On appeal, Gerber argues that the circuit court erred in granting the employees' motion for partial summary judgment. Generally, Gerber takes issue with the circuit court's finding that the AMWA requires Gerber to treat the time required by employees to complete the mandatory donning and doffing activities as compensable work time. Specifically, Gerber argues that donning and doffing activities are noncompensable based on 29 U.S.C. § 203(o), an exception contained in the FLSA. The employees respond that Gerber's failure to treat the donning and doffing activities as compensable work time resulted in a violation of the AMWA. Further, the employees argue that the AMWA does not contain the FLSA exception, and Arkansas Code Annotated section 11-4-218(b) prevents the parties from entering into an agreement in contravention of the overtime provision of the AMWA.

         On appeal, the issue is whether the mandatory donning and doffing activities constitute compensable work time pursuant to the AMWA despite contrary custom and ...


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