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Beauford v. Actionlink LLC

United States District Court, E.D. Arkansas, Western Division

June 14, 2016

JENNIFER BEAUFORD, et al., individually and on behalf of others similarly situated PLAINTIFFS
v.
ACTIONLINK, LLC DEFENDANT

          OPINION AND ORDER

          J. LEON HOLMES UNITED STATES DISTRICT JUDGE.

         The plaintiffs in this case were employed by ActionLink, LLC, as brand advocates in the LG Slingshot program, which was a program in which ActionLink provided marketing services for LG Electronics, LLC. The plaintiffs brought this action alleging that ActionLink failed to pay them overtime as required by the Fair Labor Standards Act, 29 U.S.C. § 201 et seq. ActionLink contended that the brand advocates were exempt from the overtime requirements of the Fair Labor Standards Act pursuant to the outside sales exemption and the administrative exemption. This Court granted the plaintiffs’ motion for partial summary judgment, holding as a matter of law that the brand advocates were not exempt.

         ActionLink subsequently moved for partial summary judgment contending that the claims of more than twenty plaintiffs should be dismissed pursuant to 29 U.S.C. § 216(c). Those plaintiffs signed and cashed checks the stubs of which stated that the checks represented full payment of all wages earned. This Court granted ActionLink’s motion and dismissed the claims of those plaintiffs.[1]

         On appeal, the United States Court of Appeals for the Eighth Circuit affirmed this Court’s holding that, as a matter of law, the brand advocates were not exempt from the overtime requirements of the Fair Labor Standards Act, but reversed with respect to the plaintiffs whose claims were dismissed pursuant to 29 U.S.C. § 216(c). Beauford v. ActionLink, LLC, 781 F.3d 396, 399 (8th Cir. 2015). As to those plaintiffs, the Eighth Circuit held that the language on the check stubs was insufficient to notify employees of the consequences of cashing the checks. Id.

         On remand, ActionLink moved for partial summary judgment contending that the remaining plaintiffs do not have sufficient evidence to show that the amount and extent of overtime work should be different from that recorded on the Department of Labor’s Form WH-56. The Department of Labor conducted an investigation into ActionLink’s overtime pay practices in the fall of 2011. By December of 2011, the Department of Labor had determined that brand advocates were not exempt. ActionLink then reclassified brand advocates from exempt to nonexempt. In January of 2012, the Department of Labor investigator provided ActionLink with a Form WH-56 reflecting the amounts that should have been paid. Id. at 400. Although the plaintiffs initially opposed ActionLink’s motion for partial summary judgment, they subsequently withdrew their opposition, so the Court entered an order granting the motion for partial summary judgment on the issue of whether the amount and extent of overtime work should be different from that recorded on the Department of Labor’s Form WH-56.

         The Court then conducted a bench trial on the issue of whether the remaining plaintiffs are entitled to liquidated damages pursuant to 29 U.S.C. § 216(b), which provides that any employer who fails to pay the required minimum wage or overtime must pay that amount plus an additional equal amount as liquidated damages. An employer may avoid the additional damages by showing that the failure to pay the required overtime was in good faith and that the employer had reasonable grounds for believing that the decision was not a violation of the Fair Labor Standards Act. 29 U.S.C. § 260.

         Liquidated damages under the Fair Labor Standards Act are not punitive; rather, they are designed to compensate employees for the delay in the payment of the wages due under the Fair Labor Standards Act. Chao v. Barbeque Ventures, LLC, 547 F.3d 938, 941 (8th Cir. 2008). The employer bears the burden of proving both good faith and reasonableness. Id. “‘This burden is a difficult one, with double damages being the norm and single damages being the exception.’” Id. at 941-42 (quoting Herman v. RSR Sec. Servs., Ltd., 172 F.3d 132, 142 (2nd Cir. 1999)).

         The good faith requirement is a subjective standard that requires the employer to establish an honest intention to ascertain and follow the requirements of the Fair Labor Standards Act. Id. at 942. To carry the burden of showing good faith, the employer must show that it took affirmative steps to determine the requirements of the Fair Labor Standards Act but nevertheless violated those requirements. Id. In addition, as mentioned, the employer must prove that its position was objectively reasonable. Id. Ignorance is no excuse. Id.

         On appeal, the Eighth Circuit described the job duties of brand advocates as follows:

ActionLink hired “brand advocates” to visit retail stores, to train the retail stores’ employees on how LG electronics worked, and to convince those employees to recommend LG products to customers. ActionLink preferred to hire brand advocates with prior sales and marketing experience, but it did not require this prior experience. Brand advocates occupied the bottom of ActionLink’s organizational chart.
ActionLink typically trained brand advocates for five days. It assigned every brand advocate approximately twenty stores to cover each week. ActionLink provided brand advocates with scripts, PowerPoint presentations, and other promotional materials to use when they visited stores. In addition to teaching store employees about LG products, the brand advocates maintained in-store LG displays, cleaned and repaired LG products, and spoke with customers who had questions about the products. The brand advocates’ goal was to boost sales of LG products. ActionLink provided each brand advocate a small monthly budget to use for promotional activities. Despite their other tasks, brand advocates did not sell directly to customers or to retail stores. ActionLink prohibited brand advocates from negotiating prices, making marketing decisions, and deciding what inventory should be ordered. Brand advocates maintained a close relationship with their supervisors.
They frequently spoke with supervisors during conference calls and through emails. And at the end of each store visit, ActionLink required brand advocates to complete a six-page call report informing ActionLink exactly what the brand advocates did during their visits.

Beauford, 781 F.3d at 399-400.

         At the evidentiary hearing, ActionLink presented the testimony of David Gries, who was the payroll manager for ActionLink at the time the decision in question was made, and Delbert Tanner, who was and is the Chief Operating Officer of ActionLink. The testimony of Gries and Tanner established that ActionLink had several persons involved in discussing whether brand advocates in the LG Slingshot program were exempt from the overtime requirements of the Fair Labor Standards Act. Document #191 at 13, 56-63. After some period of investigation, a roundtable meeting was conducted among these various individuals, with Tanner present, after which Tanner made the decision that brand advocates were exempt and would not be paid overtime. Id. at 61. Persons who participated in this discussion included some employees from ActionLink’s human resources department and some from its executive team. Id. at 13. Before the roundtable meeting, Gries printed ...


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