United States District Court, W.D. Arkansas, Fayetteville Division
MARK FOCHTMAN, et al., Individually, and on Behalf of All Others Similarly Situated PLAINTIFFS
v.
DARP INC. and HENDREN PLASTICS, INC. DEFENDANTS
SUPPLEMENTAL OPINION AND ORDER
TIMOTHY L. BROOKS UNITED STATES DISTRICT JUDGE
On
September 27, 2019, the Court issued a Memorandum Opinion and
Order (Doc. 135) on the parties' cross-motions for
summary judgment. The Court denied Defendant DARP, Inc.'s
("DARP") and Defendant Hendren Plastics, Inc.'s
("Hendren") motions, but granted in part and
deferred ruling in part on Plaintiffs' motion. In
particular, the Court granted Plaintiffs' motion for
summary judgment with respect to liability, finding that the
Defendants are jointly and severally liable for damages owed
to the class for their failure to pay minimum-wage and
overtime compensation. See Id. at 28. With respect
to the calculation of damages, however, the Court deferred
its ruling in favor of receiving supplemental briefing on two
of Defendants' affirmative defenses. In particular, the
Court asked the Plaintiffs to consider: (1) whether
Defendants were entitled to a credit against damages for the
value of in-kind services provided to the class in an amount
equal to the statutory cap of $0.30 per hour, as provided in
Section 11-4-213(a) of the Arkansas Minimum Wage Act
("AMWA"); and (2) whether Defendants were entitled
to a credit against damages for the value of
so-called "stipend" payments that DARP made to
certain class members for their successful completion of the
program.
Plaintiffs
filed a Supplemental Brief on damages (Doc. 136) on October
4, 2019. Hendren and DARP filed Supplemental Responses (Docs.
137, 139). On October 17, the Court held a telephonic hearing
with counsel for all parties and received oral argument. The
Court also directed DARP to file an updated spreadsheet
detailing the stipend payments, as discussed in the
telephonic hearing. See Doc. 142. DARP emailed the
revised spreadsheet to the Court, which it now attaches as an
exhibit to this Order. Plaintiffs stipulate that the figures
in the revised spreadsheet accurately reflect the stipend
payments made to the class members.
Now
having obtained additional stipulated facts and the
parties' briefing on the last issue remaining in
Plaintiffs' Motion for Summary Judgment (Doc. 87), the
Court GRANTS IN PART AND DENIES IN PART
Plaintiffs' request for damages. In summary, the class
members will receive compensatory damages for all regular and
overtime hours they worked at Hendren while residing at DARP.
The parties agree that these hours translate to $615, 308.44
in regular compensation and $20, 909.06 in overtime
compensation. See Doc. 100, pp. 32-33; Doc. 102, p.
1. Defendants are entitled to the maximum statutory credit
against the compensatory damages award for the value of the
in-kind services they provided the class members when they
resided at DARP's facility. The Plaintiffs stipulate that
these in-kind services were actually provided to the class
and that the Court should apply the full $0.30-per-hour
deduction on all regular hours worked, per Ark. Code Ann.
§ 11-4-213(a). See Doc. 136, pp. 2-3. The only
remaining question to resolve regarding the $0.30-per-hour
deduction is whether it applies to regular hours, overtime
hours, or both. The Court will address this issue in detail
in its discussion below.
The
Court further finds that Defendants are entitled to a
deduction from compensatory damages in the sum of $30,
575.82, which is the total amount of stipend payments that
DARP made to certain class members upon their completion of
the program. Below, the Court will address whether the amount
of the stipend should be prorated or reduced in some manner.
Finally,
the damages owed to Plaintiffs and class members will also
include an award of liquidated damages in an amount equal to
compensatory damages. The Court explained in its previous
Order the reasons why liquidated damages were justified in
this case. See Doc. 135, pp. 24-28 (finding that
"Defendants have failed to carry their burden of showing
they acted in good faith and with reasonable grounds in
failing to pay wages to the class").
I.
LEGAL STANDARD
Plaintiffs
originally moved for summary judgment on both liability and
damages. The Court found in Plaintiffs' favor on
liability, and as to damages, the Court determined that
Plaintiffs were entitled under the AMWA to an award of
compensatory damages for all regular and overtime hours they
worked. See Doc. 135, p. 20. The Court also found
that Plaintiffs had met their burden under Federal Rule of
Civil Procedure 56 to show they were entitled to an award of
liquidated damages. The Court deferred ruling on two of
Defendants' affirmative defenses. Prevailing on these
defenses would mean that Defendants would be entitled to
receive certain deductions from the compensatory damages
award.
Hendren
contends in its Supplemental Response that since Plaintiffs
are tasked with establishing "the amount of unpaid wages
owed," they should also bear the burden of proving the
amount of credits to which Defendants might be
entitled to offset damages. (Doc. 137, p. 7). Clearly, this
is an incorrect assessment of the burden of proof on summary
judgment. In point of fact, Plaintiffs have already
established that they are entitled to both compensatory and
liquidated damages. They concede that Defendants are entitled
to a credit for the value of in-kind services DARP provided
to the class members, but they dispute that Defendants are
entitled to a credit for the stipends they paid as a matter
of law.
The
legal question of whether the stipends should be deducted
from compensatory damages is for the Court to decide. As for
the amount of the deduction, the burden rests with the
Defendants to establish proof of the correct amount-or else
that a genuine dispute of material fact exists as to the
correct amount. See Fed. R. Civ. P. 56;
Matsushita Bee. Indus. Co. v. Zenith Radio Corp.,
475 U.S. 574, 586-87 (1986); Nat'l Bank of Commerce
of El Dorado, Ark. v. Dow Chem. Co., 165 F.3d 602, 607
(8th Cir. 1999); Jaramillo v. Adams, 100 Ark.App.
335, 342 (2007) ("When an affirmative defense is raised,
the defendant has the burden of proof.").
Here,
the Court reopened discovery for a brief period in order to
allow DARP to gather proof to substantiate its payment of
stipends to certain class members and to provide that proof
to Plaintiffs' counsel. At this point, DARP has assembled
a spreadsheet (Exhibit 1) that details the names of the class
members who received stipends and the amounts of those
stipends. Plaintiffs have advised that they do not disagree
that the spreadsheet accurately reflects the stipend payments
that were made to these members of the class.
II.
DISCUSSION
A.
Whether the $0.30-per-hour Credit Applies to Overtime
Wages
DARP
provided room, board, and other in-kind services to the class
members during the time they lived and worked at DARP.
According to the version of Ark. Code Ann. § 11-4-213(a)
that applies to this case, [1] an employer may deduct a maximum
of $0.30 per hour from the wages of its employees to
compensate for all in-kind services provided. Plaintiffs
contend that this deduction applies only to regular hours
worked, while Defendants believe the deduction applies to
both regular and overtime hours. For the reasons explained
below, the Court finds that Plaintiffs' interpretation of
the statute is correct.
The
full text of Section 11-4-213(a) of the AMWA is as follows:
Every employer of an employee engaged in any occupation in
which board, lodging, apparel, or other items and services
are customarily and regularly furnished to the employee for
his or her benefit shall be entitled to an allowance for the
reasonable value of board, lodging, apparel, or other items
and services as part of the hourly wage rate provided in
§ 11-4-210 in an amount not to exceed thirty cents (30
cent(s)) per hour.
The
important language to focus on is at the tail end of the
paragraph. It states that an employer may take an
"allowance" for in-kind services "as part of
the hourly wage rate provided in §
11-4-210." Id. (emphasis added). Section
11-4-210 of the AMWA is titled "Minimum Wage."
"Overtime" is separately described in Section
11-4-211. Thus, a straightforward reading of Section
11-4-213(a) makes clear that the employer's allowance for
in-kind services applies to regular hours of minimum-wage
work, and not overtime hours.
If the
statute itself were not clear enough, both Defendants concede
that the administrative rule interpreting the statute states
that the $0.30-per-hour credit does not apply to overtime
hours. The full ...