No IN THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

Transcription

1 Case: /14/2011 ID: DktEntry: 8 Page: 1 of 51 No IN THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT JESSE BUSK, LAURIE CASTRO, on behalf of themselves and all others similarly situated, Plaintiffs-Appellants, v. INTEGRITY STAFFING SOLUTIONS, INC., Defendant-Appellee. On Appeal from the United States District Court for the District of Nevada D.C. No. 2:10-cv RLH-RJJ OPENING BRIEF OF APPELLANTS JESSE BUSK AND LAURIE CASTRO Attorneys for Plaintiffs-Appellants THIERMAN LAW FIRM, P.C. Mark R. Thierman (Cal. No ; Nev. No. 8285) Jason J. Kuller (Cal. No ; Nev. No ) Joshua D. Buck (Cal. No ; Nev. No ) 7287 Lakeside Drive Reno, Nevada Telephone: (775) Facsimile: (775)

2 Case: /14/2011 ID: DktEntry: 8 Page: 2 of 51 TABLE OF CONTENTS Page TABLE OF AUTHORITIES. I. Introduction iv 1 II. III. IV. Statement of Jurisdiction. A. Lower Court Jurisdiction B. Appellate Jurisdiction C. Timeliness of Appeal. Issues Presented. Standard of Review V. Statement of the Case 8 VI. VII. VIII. Statement of Facts.. A. The Mandatory Daily Security Clearances... B. The 20-Minute Meal Periods... Summary of Argument... Argument. A. The District Court Erred In Dismissing Appellants State Law Claims On The Grounds That Hybrid FLSA Collective Actions and Rule 23 Class Actions Are Procedurally Incompatible... B. The District Court Erred By Dismissing Appellants Claim That Time Spent Undergoing Mandatory Security Clearances Was Compensable Under The i

3 Case: /14/2011 ID: DktEntry: 8 Page: 3 of 51 FLSA 1. The time spent undergoing mandatory security clearances is compensable under the continuous workday doctrine The time spent undergoing security clearance is also a compensable postliminary activity.. C. The District Court Erred By Dismissing Appellants Claim That They Failed To Receive A Bona Fide 30- Minute Meal Period.. D. The District Court Further Erred By Concluding That Appellants Shortened Meal Periods Were De Minimis 1. There is no practical administrative difficulty in recording the additional time.. 2. The aggregate amount of compensable time is significant 3. The additional work occurs on a daily basis... E. The District Court Erred By Summarily Concluding That Appellant Had Failed To Allege Sufficient Facts To Support Their Claims Under Nevada State Law.. 1. Nevada does not have a state law analog to the Portal-to-Portal Act, the principal reason the Court rejected Appellants security clearance claims.. 2. Any interruption in the mandatory 30-minute meal period, no matter how small, is a violation of Nevada law ii

4 Case: /14/2011 ID: DktEntry: 8 Page: 4 of 51 IX. 3. Appellants are entitled to waiting time penalties under Nevada law for violations of either federal or state law... Conclusion CERTIFICATE OF COMPLIANCE... PROOF OF SERVICE iii

5 Case: /14/2011 ID: DktEntry: 8 Page: 5 of 51 TABLE OF AUTHORITIES CASES Page(s) AFSCME Local 889 v. Louisiana, 145 F.3rd 280 (5th Cir. 1998) Alvarez v. IBP., Inc., 339 F.3d 894 (9th Cir. 2003) Anderson v. Perdue Farms, Inc., 604 F. Supp. 2d 1339 (M.D. Ala. 2009)... 24, 25 Ballaris v. Wacker Siltronic Corp., 370 F.3d 901 (9th Cir. 2004) Bamonte v. City of Mesa, 2007 U.S. Dist LEXIS (D. Ariz. July 10, 2007) Bamonte v. City of Mesa, 598 F.3d 1217 (9th Cir. 2010)... 22, 24 BedRoc Ltd. v. United States, 541 U.S. 176 (2004)... 34, 35 Bonilla v. Baker Construction, Inc., 487 F.3d 1340 (11th Cir. 2007)... 24, 25, 26 Brennan v. Elmer s Disposal Serv., 510 F.2d 84 (9th Cir. 1975) City of Los Angeles v. United States Dept. of Commerce, 307 F.3d 859 (9th Cir. 2002)... 3 Cohen v. Gerson Lehrman Group, Inc., 686 F. Supp. 2d 317 (S.D.N.Y. 2010) Cortez v. Nebraska Beef, Inc., 266 F.R.D. 275 (D. Neb. 2010) Daprizio v. Harrahs s Las Vegas, Inc., 2010 U.S. Dist. LEXIS (D. Nev. Dec. 7, 2010) iv

6 Case: /14/2011 ID: DktEntry: 8 Page: 6 of 51 Dare v. Comcast Corp., 2010 WL (D.N.J. Jun. 23, 2010) De Asencio v. Tyson Foods, Inc., 500 F.3d 361 (3d Cir. 2007)... 24, 25 DeKeyser v. Thyssenkrupp Waupaca, Inc., 589 F. Supp. 2d 1026 (E.D. Wisc. 2008) Ellison v. Autozone Inc., 2007 U.S. Dist. LEXIS (N.D. Cal. Sept. 13, 2007) Ervin v. OS Rest. Serv., Inc., 632 F.3d 971 (7th Cir. 2011)... 9, 15, 16 Esparza v. Two Jinn, Inc., 2009 WL (C.D. Cal. Sept. 9, 2009) Fetrow-Fix v. Harrahs Entertainment, Inc., 2010 U.S. Dist. LEXIS (D. Nev. Nov. 16, 2010) Goorman v. The Consolidated Edison Corp., 488 F.3d 586 (2d Cir. 2007)... 24, 25, 26 IBP, Inc. v. Alvarez, 546 U.S. 21 (2005)... 18, 23 Pitts v. Terrible Herbst, 653 F.3d 1081 (9th Cir. 2011)... 9, 11, 12 Kolheim v. Glynn County, Ga., 915 F.2d 1473 (11th Cir. 1990)... 27, 29 Kurihara v. Best Buy, 2007 U.S. Dist. LEXIS (N.D. Cal. Aug. 29, 2007)... 19, 20, 24 Lang v. DirectTV, Inc., 735 F. Supp. 2d 421 (E.D. La. 2010) Lindsay v. Government Employees Insurance Co., 448 F.3d 416 (D.C. Cir. 2006) v

7 Case: /14/2011 ID: DktEntry: 8 Page: 7 of 51 McCormick v. Festiva Dev. Group, LLC, 2010 WL (D. Me. Feb. 11, 2010) McLaughin v. Liberty Mut. Ins. Co., 224 F.R.D. 304 (D. Mass. 2004)... 8 McLaurin v. Prestage Foods, Inc., 271 F.R.D. 465 (E.D.N.C. 2010) Mendocino v. Centinela Hosp. Med. Ctr., 521 F.3d 1097 (9th Cir. 2008)... 1, 2 Mohawk Indus. v. Carpenter, 130 S. Ct. 599 (U.S. 2009)... 1 Morillion v. Royal Packing Co., 22 Cal. 4th 575 (Cal. 2000)... 33, 34 N.M. State Inv. Council v. Ernst & Young LLP, 641 F.3d 1089 (9th Cir. Cal. 2011)... 3 Parker v. NutriSystem, Inc., No (3d Cir. 2010)... 14, 16 Parmar v. Safeway, Inc., 2010 WL (W.D. Wash. June 18, 2010) Rutti v. Lojack Corp., 596 F.3d 1046 (9th Cir. 2010)...passim Salim Shahriar v. Smith & Wollensky Rest. Group, Inc., 659 F.3d 234 (2d Cir. 2011) Schwertfeger v. Village of Sauk Village, 2001 WL (ND Ill. Mar. 23, 2001) Silverman v. SmithKline Beecham Corp., 2007 U.S. Dist. LEXIS (C.D. Cal. Oct. 17, 2007) Sleiman v. DHL Express, 2009 U.S. Dist. LEXIS (E.D. Pa. Apr. 27, 2009)... 24, 25 vi

8 Case: /14/2011 ID: DktEntry: 8 Page: 8 of 51 Steiner v. Mitchell, 350 U.S. 247 (1956) Tennessee Coal, Iron & R. Co. v. Muscoda Local No. 123, 321 U.S. 590 (1944) Thorpe v. Abbot Labs. Inc., 534 F. Supp.2d 1120 (N.D. Cal. 2008) Voigt v. Savell, 70 F.3d 1552 (9th Cir. 1995)... 3 Wang v. Chinese Daily News, Inc., 623 F.3d 743 (9th Cir. 2010)... 8, 11, 14, 16 Westerfield v. Washington Mut. Bank, 2007 WL (E.D.N.Y. July 26, 2007) Williams v. Trendwest Resorts, Inc., 2007 WL (D. Nev. Aug. 20, 2007) Wren v RGIS Inventory Specialists, 256 F.R.D. 180 (N.D. Cal. 2009) STATUTES 28 U.S.C U.S.C. 1331, 1332 (a) & (d), 1441, 1446, U.S.C. 2107(a) U.S.C. 201, et seq U.S.C. 216 (b)... 1, U.S.C. 218(a) U.S.C. 254 (a) U.S.C. 1334(d)... 1 NRS , 35 vii

9 Case: /14/2011 ID: DktEntry: 8 Page: 9 of 51 NRS , 33, 34, 35 NRS (2) NRS , 17 NRS , 35 NRS (1) NRS NRS , 17 OTHER AUTHORITIES 29 C.F.R (a) C.F.R C.F.R (b)... 27, C.F.R (c) Fed. R. App. P. 32(a)(5), (a)(6), and (a)(7)(b) Fed. R. App. P. 32(a)(7)(B)(iii) Federal Rule of Appellate Procedure 4(a) , 16 Ninth Circuit Rule Fed. R. Civ. P passim viii

10 Case: /14/2011 ID: DktEntry: 8 Page: 10 of 51 I. INTRODUCTION Recently, in Pitts v. Terrible Herbst, 653 F.3d 1081 (9th Cir. 2011), the Ninth Circuit declined to address the Nevada district court s holding that a Rule 23 class action could not co-exist with a related collective action under the FLSA. Id. at 1093 (italics in original). While recognizing this issue has divided district courts in our circuit, the issue was not squarely presented in Pitts and so was not addressed. Id. at Here, the issue is now squarely presented as yet another Nevada district court has found an irreconcilable conflict between Rule 23 class actions and FLSA collective actions. As a result, the district court below dismissed all of Plaintiffs and Appellants state law claims, and dismissed all of their FLSA claims as well. The circuit split recognized by this Court in Pitts is almost singlehandedly due to the obstinacy of Nevada courts to adopt the overwhelming majority position both within this circuit and nationwide finding there is no conflict between Rule 23 and the FLSA. Making matters worse, the Nevada district courts view the FLSA as remedial in favor of employers and refuse to enforce the plain language of Nevada state laws. The instant appeal is symptomatic of this disease plaguing Nevada district courts, which have fallen behind their brethren in enforcing basic labor protections.

11 Case: /14/2011 ID: DktEntry: 8 Page: 11 of 51 Here, Plaintiffs-Appellants Jesse Busk and Laurie Castro were employed as warehousers by Defendant-Appellee Integrity Staffing Solutions Inc. ( Integrity ), which provides staffing at nationwide warehouse facilities of Amazon.com ( Amazon ). As warehouse employees in Las Vegas and Fernley, Nevada, Appellants roamed Amazon s cavernous warehouse facilities with collection carts and retrieved Amazon products to fulfill orders. Given the explosion of Amazon s online retail business, these warehouses are enormous facilities engulfing approximately seven football fields in total area filled with retail merchandise. At the end of each workday, Integrity required Appellants and all employees to pass through a mandatory security clearance before they could be released from work. Because of the number of employees required to pass through security, and the limited resources devoted to this function, employees were required to spend approximately 25 minutes each day clearing security before being relieved from duty. Employees were not compensated for these 25 minutes, however, because they were required to clock out prior to going through security. They were essentially held captive in the warehouse facility unable to leave and unable to engage in personal pursuits. Appellants and employees were also required to pass through security as part of their 30-minute meal period. Because Integrity requires employees to clock out for their meal break at a distant location, traverse the warehouse, and pass through 2

12 Case: /14/2011 ID: DktEntry: 8 Page: 12 of 51 security prior to reaching their meal break area, employees are clocked out a total of 30 minutes but only receive a 20-minute meal period. In addition, prior to the end of the meal break, Integrity managers interrupt employees breaks and instruct them to commence the journey back to the time-keeping system so that they can clock in exactly 30 minutes after they clocked out. As such, Appellants and other employees do not receive a bona fide uninterrupted meal period of 30 minutes. The Nevada district court, however, dismissed all of Appellants claims under the Fair Labor Standards Act ( FLSA ) and Nevada state law. As mentioned, the district court summarily dismissed all of Appellant s state law claims based on a perceived conflict between Rule 23 and the FLSA collective action mechanism. In doing so, the district court adopted an extreme minority view, although one prevalent in Nevada. As this Court recently recognized in Pitts, 632 F.3d at 1093 n.6, the only circuit court to have addressed this issue held that such mechanisms can peacefully coexist in one action. Ervin v. OS Rest. Serv., Inc., 632 F.3d 971, (7th Cir. 2011). The Ninth Circuit should now join the Seventh Circuit, and the vast majority of federal courts nationwide, in clarifying that no conflict exists. The Nevada district court also erroneously held Appellants failed to allege plausible claims under the FLSA for uncompensated security clearance time and for failing to receive bona fide meal periods. Yet Appellants alleged sufficient 3

13 Case: /14/2011 ID: DktEntry: 8 Page: 13 of 51 facts showing that their workday did not end until they passed through these security clearances, which were a job requirement imposed by Integrity for their own benefit (and the benefit of Amazon) to prevent inventory loss. Accordingly, this time is compensable as either part of the continuous workday or as an integral and indispensable postliminary activity. At the very least, Appellants alleged a plausible claim that could not be summarily dismissed by the District Court. Similarly, the Nevada district court erred by concluding that Appellants received bona fide 30-minute meal periods under the FLSA when the net effect of Integrity s policies and procedures robbed employees of at least 10 minutes of meal period time, and the remaining 20 minutes was still interrupted by Integrity managers. The district court compounded this error by holding that the 10 minutes of uncompensated time was de minimis as a matter of law. Contrary to the district court s ruling, Appellants alleged a plausible claim for relief under the FLSA that could not be summarily dismissed. Finally, the Nevada district court erred by conflating federal and Nevada labor standards for compensable work time and meal periods. For reasons unknown, the district court applied FLSA standards, including the Portal-to-Portal Act, to Appellants Nevada law claims, and simply ignored Nevada law requiring 4

14 Case: /14/2011 ID: DktEntry: 8 Page: 14 of 51 compensation for all hours worked and for meal periods less than 30 minutes. See Nevada Revised Statutes ( NRS ) , (a). For all these reasons, the Nevada district court must be reversed. II. STATEMENT OF JURISDICTION A. Lower Court Jurisdiction. Appellants filed this lawsuit as a collective and class action on behalf of themselves and all others similarly situated in the United States District Court for the District of Nevada ( District Court ) pursuant to the Fair Labor Standards Act ( FLSA ), 29 U.S.C. 216 (b), Nevada state law, and the Class Action Fairness Act ( CAFA ), 29 U.S.C. 1334(d). (ER at ) The District Court exercised subject matter jurisdiction based on one or more of these grounds. See 28 U.S.C. 1331, 1332 (a) & (d), 1441, 1446, 1453; 29 U.S.C. 216(b). B. Appellate Jurisdiction. The District Court entered an Order dismissing with prejudice all of Appellants claims alleged in their complaint without leave to amend and directed the Clerk of the Court to close the case. (ER at 1-12.) The District Court s Order is a final appealable judgment under Federal Rule of Civil Procedure ( FRCP ) 54 and this Court has jurisdiction over this appeal pursuant to 28 U.S.C See Mohawk Indus. v. Carpenter, 130 S. Ct. 599, (U.S. 2009) ( A "final decisio[n]" is typically one "by which a district court disassociates itself from a case. ); Mendocino v. Centinela Hosp. 5

15 Case: /14/2011 ID: DktEntry: 8 Page: 15 of 51 Med. Ctr., 521 F.3d 1097, 1102 (9th Cir. 2008) (stating that an order dismissing a complaint is final and appealable if it appears that the district court intended the dismissal to dispose of the action ). C. Timeliness of Appeal. Plaintiffs appeal from the District Court s order dismissing Appellants claims that was entered on July 19, (Id.) Plaintiffs Notice of Appeal was filed on August 5, 2011, (ER ) This appeal is timely pursuant to 28 U.S.C. 2107(a) and Federal Rule of Appellate Procedure 4(a). III. ISSUES PRESENTED A. Did the District Court err by dismissing all of Plaintiffs state law claims based on a perceived conflict between the opt-in and opt-out mechanisms of Plaintiffs FLSA collective action and Rule 23 class action? B. Where Plaintiffs were required to undergo mandatory security clearances for the benefit of their employer before being relieved of duty, did the District Court err by dismissing Plaintiffs claim that such time is compensable under the FLSA? C. Where Plaintiffs were docked 30 minutes of pay for only a 20- minute meal period, did the District Court err by dismissing Plaintiffs claim that such meal periods were not bona fide under the FLSA? D. Did the District Court err by dismissing Plaintiffs meal period claims on the basis that 10 minutes of uncompensated time is de minimis as a matter of law? E. Did the District Court err by dismissing all of Plaintiffs state law claims on the same grounds as it dismissed Plaintiffs 6

16 Case: /14/2011 ID: DktEntry: 8 Page: 16 of 51 FLSA claims, thus conflating the federal and Nevada standards for compensable work time and meal periods? 1 IV. STANDARD OF REVIEW The District Court s order granting Integrity s motion to dismiss Appellants complaint is reviewed de novo. N.M. State Inv. Council v. Ernst & Young LLP, 641 F.3d 1089, 1094 (9th Cir. Cal. 2011). Such review is limited to the face of the complaint and this Court must accept the allegations alleged therein as true and construe them in the light most favorable to the plaintiff-appellee. See id. The District Court s interpretation and application of federal and state law is also reviewed de novo. See City of Los Angeles v. United States Dept. of Commerce, 307 F.3d 859, 868 (9th Cir. 2002). In conducting de novo review, the Ninth Circuit does not defer to the lower court s ruling but independently considers the matter anew as if no decision had been rendered on the matter below. See Voigt v. Savell, 70 F.3d 1552, 1564 (9th Cir. 1995). Appellants preserved their contentions on appeal through their opposition to Integrity s motion to dismiss Appellants claims. (ER at ) / / / 1 As indicated by the issues presented in this appeal, the District Court dismissed Appellants Nevada state law claims on two separate grounds: (1) Appellants state law claims could not co-exist as a procedural matter with their FLSA causes of action; and (2) Appellants failed to allege sufficient facts to support valid claims under state law. (See ER at 10, 11, and 12). The District Court did not grant Appellants leave to amend to add any missing facts. 7

17 Case: /14/2011 ID: DktEntry: 8 Page: 17 of 51 V. STATEMENT OF THE CASE Mr. Busk filed this lawsuit as a collective and class action on behalf of himself and all others similarly situated in federal court in the state of Nevada on October 22, (ER at ) The complaint was later amended to include Ms. Castro as a named-plaintiff in the action on December 15, 2010, and alleged five causes of action relating to mandatory unpaid security clearances and shortened meal period issues: (1) failure to pay minimum and overtime wages under the FLSA, 29 U.S.C. 201, et seq.; (2) failure to pay wages for meal periods less than 30 minutes in violation of the FLSA, 29 U.S.C. 201, et seq.; (3) failure to pay minimum wage and overtime under NRS and NRS ; (4) failure to provide an uninterrupted 30-minute meal period under NRS ; and (5) failure to timely pay wages due and owing under NRS (ER at ) Plaintiffs sought to represent the following two classes: (1) an FLSA Class of all persons employed by Integrity as hourly warehouse employees within the United States within the last three years of the filing of the original complaint who opted into this action; and (2) a Nevada State Law Class of all persons employed by Integrity as hourly warehouse employees within the State of Nevada within the last three years of the filing of the original complaint who did not opt out of this action. (ER at ) Integrity filed a motion to dismiss Appellants First Amended Complaint ( FAC ) on January 18, Appellants filed an opposition 8

18 Case: /14/2011 ID: DktEntry: 8 Page: 18 of 51 to Integrity s motion on February 4, The District Court granted Integrity s motion in its entirety on July 19, VI. STATEMENT OF FACTS Defendant-Appellee Integrity Staffing Solutions, Inc., is an employee leasing company that contracts with various companies to provide labor. (ER at 222.) Integrity contracts with Amazon to supply hourly paid (non-exempt) warehouse employees to Amazon warehouse facilities in Nevada and throughout the United States. (ER at 222.) Appellant Jesse Busk was employed for more than three years by Integrity and worked as an hourly paid, non-exempt warehouse employee at the Amazon warehouse in Las Vegas, Nevada. (ER at 219.) Appellant Laurie Castro was also employed as an hourly paid, non-exempt warehouse employee by Integrity and worked at Amazon s Fernley, Nevada, warehouse facility. (ER at 190.) Appellants fulfilled orders placed by Amazon customers and directed those orders to be distributed. (ER at 192.) A. The Mandatory Daily Security Clearances. Each day, Integrity required Appellants clock out and then, after they were off the clock, to submit to a security clearance before leaving the warehouse facility at the end of their respective shifts. (ER at 193.) A security clearance is a search of the employee and his or her bags (if any) to make sure the employee had 9

19 Case: /14/2011 ID: DktEntry: 8 Page: 19 of 51 not taken anything from the warehouse i.e. employee theft or shrinkage. Appellants would routinely clock out and then wait for approximately 25minutes before being released from work and permitted to leave the warehouse facility. (ER at 193.) Appellants were not compensated for undergoing mandatory security clearances. (ER at 194.) Appellants did not want to wait 25 minutes to go through the security clearance at the end of each day. They were told that they had to do this as a condition of their employment. Appellants could not enjoy any personal pursuits during this time. (ER at 194.) Indeed, they were not allowed to leave the warehouse facility without going through security. (ER at 194.) The security search was for the sole benefit of the employer and its customer, Amazon.Com, to ensure proper accounting of warehouse merchandise and prevent employee theft. (ER at 193.) Appellants were required to remove all personal belongings from their person such as wallets, keys, belts, and pass through metal detectors. (ER at ) Appellants were released from work and permitted to leave the facility only upon passing the security clearance. Even though Appellants were under Integrity s control from the point they clocked out until the point they successfully passed through security, Appellants were not compensated for this time. (ER at 194.) 10

20 Case: /14/2011 ID: DktEntry: 8 Page: 20 of 51 B. The 20-Minute Meal Periods. Appellants were forced to clock out for a 30-minute meal period but were only permitted to take a 20-minute uninterrupted meal period. (ER at ) Appellants had to clock out and undergo a security clearance check at specific locations remote from the place they were told they had to eat lunch. Given the sheer size of the Amazon warehouse facilities, each covering approximately 7 football fields in total area, Appellants were forced to clock out for their lunch period, pass through security clearance, and then walk a significant distance before reaching the area to take their meal period. Id. It would regularly take Appellants approximately 5 minutes before they were able to take their meal period. (ER at 71.) Likewise, Appellants would have to end their meal period 5-minutes earlier to do the reverse and clock in prior to the end of the 30 minutes allotted by Integrity for meal periods. Id. Frequently as well, Integrity supervisors would instruct Appellants to terminate their meal period early so that they could clock back in prior to the end of the 30-minute allotted period. Id. The employer could have eliminated the problem simply by moving the time clocks and security checks closer to the lunch area. Rather than clocking out at their station, the employee would then clock out next to the employer designated lunch area and there would not be any loss of time from the lunch break. But instead, the Defendant required 11

21 Case: /14/2011 ID: DktEntry: 8 Page: 21 of 51 the employees to clock out near their working areas, and waste 5 minutes at the beginning and end of each lunch break doing things in a manner and at place specified by the employer. As a result, Appellants lost 30 minutes of compensable time but received only 20-minutes of uninterrupted meal time. VII. SUMMARY OF ARGUMENT The District Court s dismissal of Appellants complaint is wrought with naked conclusions and cursory analysis that must be reversed. First, the District Court dismissed all of Appellants state law claims by perceiving an irreconcilable conflict between the Rule 23 opt out mechanism and the FLSA opt in mechanism. In doing so, the District Court adopted an extreme minority view, although one prevalent in Nevada. The District Court s decision not only ignores the majority position, which was fully briefed by Appellants, but also fails to address this Court s recent ruling in Wang v. Chinese Daily News, Inc., 623 F.3d 743 (9th Cir. 2010), which upheld a lower court s decision to certify a hybrid Rule 23 class action and FLSA collective action. Contrary to the District Court s ruling, hybrid Rule 23 and FLSA actions are not in conflict; rather, they are mutually compatible mechanisms for remedying the basic fundamental federal labor laws (the floor ) and the heightened labor protections found in most state labor codes (the ceiling ). See 29 U.S.C. 218(a) ( No provision of this chapter or of any order thereunder shall excuse noncompliance with any Federal or State law... ); 12

22 Case: /14/2011 ID: DktEntry: 8 Page: 22 of 51 see also McLaughin v. Liberty Mut. Ins. Co., 224 F.R.D. 304, 308 (D. Mass. 2004) ( Nothing in the [FLSA] limits available remedies under state law. ). Indeed, as recently recognized by this Court, the only circuit court to have addressed this issue held that such mechanisms can peacefully coexist in one action. Ervin v. OS Rest. Serv., Inc., 632 F.3d 971, (7th Cir. 2011), cited in Pitts v. Terrible Herbst, 653 F.3d 1081, 1093 n.6 (9th Cir. 2011). Second, the District Court incorrectly determined that 25-minutes spent at the end of each workday undergoing mandatory security clearances is not compensable time under the FLSA. Yet Appellants alleged sufficient facts showing that their workday did not end until they passed through these security clearances, which were a job requirement imposed by Integrity for its own benefit (and the benefit of Amazon) to prevent inventory loss. Accordingly, this time is compensable as either part of the continuous workday or as an integral and indispensable postliminary activity. At the very least, this raises a question of fact and Appellants alleged a plausible claim that should not have been summarily dismissed by the District Court. Third, the District Court erred by concluding that Appellants had not stated a claim for failing to receive bona fide meal periods under the FLSA, even though Appellants alleged they were docked 30 minutes of pay for a 20-minute lunch period each and every day. The District Court compounded this error by holding 13

23 Case: /14/2011 ID: DktEntry: 8 Page: 23 of 51 that the 10 minutes of uncompensated time was de minimis as a matter of law. As alleged by Appellants, however, Integrity strategically placed its time-keeping system in an area that required warehouse employees to traverse the facility and pass through security prior to reaching their break area. Integrity managers also interrupted employee breaks and instructed them to return to work so they could clock in no later than 30-minutes after they had clocked out. The net effect of these policies deprived Appellants of the ability to take an uninterrupted 30-minute meal period. Appellants claim was thus valid as alleged, and should not have been summarily dismissed by the District Court. Finally, the District Court erred by conflating federal and Nevada labor standards for compensable work time and meal periods. By concluding that Appellants state-law claims failed for the same reasons as their FLSA claims, the District Court applied a federal standard that is inapplicable to Nevada state law claims. Nevada has never adopted the Portal-to-Portal Act s limiting language that employers are free from compensating employees for preliminary or postliminary activities. The District Court simply ignored Nevada law requiring that employees be compensated for all hours worked and for meal periods less than 30 minutes. See Nevada Revised Statutes ( NRS ) , (a). / / / / / / 14

24 Case: /14/2011 ID: DktEntry: 8 Page: 24 of 51 VIII. ARGUMENT A. The District Court Erred In Dismissing Appellants State Law Claims On The Grounds That Hybrid FLSA Collective Actions and Rule 23 Class Actions Are Procedurally Incompatible. The District Court s decision to dismiss Appellants state law class claims on the grounds that Rule 23 opt-out class actions are incompatible with FLSA opt-in collective actions was not surprising. Indeed, with very few exceptions, Nevada federal district courts have routinely ruled as such: This Court and others have held that state law class claims which are predicated on the same acts and circumstances as a simultaneously asserted FLSA claim collective action must be dismissed due to the conflicting opting mechanisms. (ER at 5.) Accord Fetrow- Fix v. Harrahs Entertainment, Inc., 2010 U.S. Dist. LEXIS , *9-11 (D. Nev. Nov. 16, 2010); Williams v. Trendwest Resorts, Inc., 2007 WL , at *4-5, *9 (D. Nev. Aug. 20, 2007). But see Daprizio v. Harrahs s Las Vegas, Inc., 2010 U.S. Dist. LEXIS , *1 (D. Nev. Dec. 7, 2010) (reconsidering its prior decision dismissing state law class claims that were brought in a hybrid complaint in light of Wang, 623 F.3d at 743). Recently, in Pitts v. Terrible Herbst, 653 F.3d 1081 (9th Cir. 2011), this Court recognized that another Nevada district court had alternatively dismissed a claim because, in its view, a Rule 23 class action could not co-exist with a related collective action under the FLSA. Id. at 1093 (italics in original). Because the 15

25 Case: /14/2011 ID: DktEntry: 8 Page: 25 of 51 plaintiff had abandoned this claim by the time of appeal, the Ninth Circuit declined to address the district court s decision, even while recognizing this issue has divided district courts in our circuit. Id. at The time has now come to settle this split since the issue is squarely presented for the Court. In reality, it is not much of a split at all. As just mentioned, the Nevada district courts are the primary Ninth Circuit culprits finding FLSA and Rule 23 actions incompatible. Although Nevada district courts, including the District Court below, have deprived litigants the ability to pursue their federal and state wageand-hour claims together, this represents the extreme minority view in both this Circuit and other circuit courts across the county. Indeed, as this Court recently recognized in Pitts, [t]he only circuit that has addressed this issue has held that Rule 23 class actions and FLSA collective actions may peacefully co-exist. 653 F.3d at & n.6 (citing Ervin v. OS Rest. Servs., 632 F.3d 971, (7th Cir. 2011)). Within the Ninth Circuit, while concerns have been expressed by some courts regarding the propriety of allowing plaintiffs to prosecute both opt-in and opt-out claims in the same action, the majority of courts, including courts in this district, have concluded that the two types of actions are not inconsistent. Wren v RGIS Inventory Specialists, 256 F.R.D. 180, 210 (N.D. Cal. 2009) (emphasis added). See also Silverman v. SmithKline Beecham Corp., 2007 U.S. Dist. LEXIS 16

26 Case: /14/2011 ID: DktEntry: 8 Page: 26 of at *1-2 (C.D. Cal. Oct. 17, 2007)( rejecting the argument that Congress s intent to implement FLSA actions through an opt-in procedure indicates, as a matter of law, that an opt-in FLSA action cannot proceed in the same court alongside an opt-out state law action ); Ellison v. Autozone Inc., 2007 U.S. Dist. LEXIS 70187, at *5-6 (N.D. Cal. Sept. 13, 2007) (concluding that Rule 23 class actions and FLSA collective actions are not incompatible). 2 The nationwide trend is the same. See, e.g., Salim Shahriar v. Smith & Wollensky Rest. Group, Inc., 659 F.3d 234, 249 (2d Cir. 2011) (stating that the conflict between the opt-in procedure under the FLSA and the opt-out procedure under Rule 23 is not a proper reason to decline jurisdiction under section 1367(c)(4) (citation omitted)); Lindsay v. Government Employees Insurance Co., 448 F.3d 416, 425 (D.C. Cir. 2006) ( We do not view the difference between the opt-in procedure provided by section 216(b) for FLSA claims and the opt-out procedure for state law claims provide by Rule 23 as fitting the exceptional circumstances / other compelling reasons language of the supplemental jurisdiction statute, section 1367(c)(4). ); Cohen v. Gerson Lehrman Group, Inc., 686 F. Supp. 2d 317, (S.D.N.Y. 2010) (concluding that Rule 23 class 2 Accord Bamonte v. City of Mesa, 2007 U.S. Dist LEXIS 50101, at *10-13 (D. Ariz. July 10, 2007) (same) ;Parmar v. Safeway, Inc., 2010 WL , at *1 (W.D. Wash. June 18, 2010) (same); Esparza v. Two Jinn, Inc., 2009 WL , at *3 (C.D. Cal. Sept. 9, 2009) (same); Thorpe v. Abbot Labs. Inc., 534 F. Supp.2d 1120, (N.D. Cal. 2008) (same). 17

27 Case: /14/2011 ID: DktEntry: 8 Page: 27 of 51 actions do not irreconcilably conflict with FLSA collective actions); DeKeyser v. Thyssenkrupp Waupaca, Inc., 589 F. Supp. 2d 1026, 1033 (E.D. Wisc. 2008) ( [D]espite the procedural differences, [p]laintiffs may maintain an FLSA collective action and seek class certification on their state law claims in the same action. ). 3 In addition, the United States Department of Labor has also taken the position that the Rule 23 class action opt-out procedure is not incompatible or inconsistent with the FLSA s opt-in procedure. See Brief of Secretary of U.S. Dep t of Labor as Amici Curiae Supporting Plaintiffs-Appellants, Parker v. NutriSystem, Inc., No (3d Cir. 2010), found at While this Court has never squarely addressed whether the FLSA s opt-in and Rule 23 s opt-out class mechanisms are incompatible as a matter of law, the recent opinion in Wang held that the district court properly certified a Rule 23 class along with an FLSA collective action and properly exercised supplemental jurisdiction over the state-law claim. 623 F.3d at 750. Indeed, as demonstrated by 3 Accord Dare v. Comcast Corp., 2010 WL , at *1 (D.N.J. Jun. 23, 2010) (same); McCormick v. Festiva Dev. Group, LLC, 2010 WL , at *4-8, 13 & n.9 (D. Me. Feb. 11, 2010) (same); McLaurin v. Prestage Foods, Inc., 271 F.R.D. 465, (E.D.N.C. 2010) (same); Lang v. DirectTV, Inc., 735 F. Supp. 2d 421, 429 (E.D. La. 2010) (same); Cortez v. Nebraska Beef, Inc., 266 F.R.D. 275, 281, 284 (D. Neb. 2010) (same). 18

28 Case: /14/2011 ID: DktEntry: 8 Page: 28 of 51 the district court s handling of these two class mechanisms in Wang, there is nothing inherently incompatible about the two procedures. This is precisely what the Seventh Circuit held in Ervin v. OS Rest. Servs., 632 F.3d 971 (7th Cir. Ill. 2011). In Ervin, the Seventh Circuit rejected the proposition that there is a clear incompatibility between the opt out nature of a rule 23 action and the opt in nature of a [FLSA] Section 216 action. 632 F.3d at Nothing we find suggests that the FLSA is not amenable to state-law claims for related relief in the same federal proceeding... There is ample evidence that the combined action is consistent with the regime Congress has established in the FLSA. Id. at 977. The Court further rejected the related argument that a hybrid opt-in and opt-out mechanism would generate confusion among potential class members: It does not seem like too much to require potential participants to make two binary choices: (1) decide whether to opt in and participate in the federal action; (2) decide whether to opt out and not participate in the state-law claims. Other courts in this circuit appear to have had little trouble working out an adequate notice in this type of case. Id. at 978. In fact, the Court recognized there is a much greater risk of generating confusion among potential class members if the FLSA action and state law action were to proceed separately with uncoordinated collective and class notices in federal and state court. Id. As a general rule, it will usually be preferable if the notice comes from a single court, in a unified proceeding, where the court and 19

29 Case: /14/2011 ID: DktEntry: 8 Page: 29 of 51 lawyers alike are paying close attention to the overall message the participants will receive. Id. Based on the majority view of district courts in this Circuit, and the Seventh Circuits opinion in Ervin (the only circuit court to have addressed this specific issue) the District Court s decision that Appellants cannot assert state law class claims that are predicated on the same acts and circumstances as simultaneously asserted FLSA collective claims should be reversed. Indeed, there is no legal basis for holding that state law class claims must be dismissed because of incompatible class mechanisms. See, e.g., Wang, 623 F.3d at 750; Ervin, 632 F.3d at ; see also Westerfield v. Washington Mut. Bank, 2007 WL , at *2 (E.D.N.Y. July 26, 2007) ( There is no legal doctrine... that permits the Court to dismiss a cause of action solely on the grounds that it is inherently incompatible with another action before it. ). And, by dismissing Appellants state law claims on this basis, the District Court has deprived Appellants their right to seek unique state law claims on behalf of Integrity employees in the state of Nevada: Appellants are foreclosed from recovering (1) minimum wages that exceed the federal rate under NRS , (2) overtime for hours worked in excess of eight (8) hours a day under NRS (federal law only mandates overtime for hours worked in excess of forty (40) hours in a workweek), and (3) waiting time penalties for failing to timely pay former employees their wages due and owing 20

30 Case: /14/2011 ID: DktEntry: 8 Page: 30 of 51 under NRS These causes of action are unique to Nevada employees and provide additional protection above and beyond federal law. Thus, Appellants state law class claims are not duplicative of their federal claims and, although they arise out of the same facts, provide additional substantive relief to Nevada employees. Given the reluctance of the Nevada District Court to permit plaintiffs from pursuing hybrid FLSA collective actions and Rule 23 class actions notwithstanding the overwhelming majority position Appellants respectfully request that this Court uphold the viability of such actions in a published opinion. B. The District Court Erred By Dismissing Appellants Claim That Time Spent Undergoing Mandatory Security Clearances Was Compensable Under The FLSA. 1. The time spent undergoing mandatory security clearances is compensable under the continuous workday doctrine. The District Court analyzed whether the time spent by Appellants undergoing mandatory security clearances at the end of each workday was compensable as a postliminary activity. This was incorrect. Rather than analyzing whether the security clearances were postliminary to Appellants primary duties, the proper inquiry is whether the security clearances amount to an extension of Appellants workday and, thus, should be compensated under the continuous workday doctrine. 21

31 Case: /14/2011 ID: DktEntry: 8 Page: 31 of 51 Under the continuous workday doctrine, time spent between the commencement and completion on the same workday of an employer s principal activity or activities is a compensable workday. See IBP, Inc. v. Alvarez, 546 U.S. 21, 29, 37 (2005) (citing 29 C.F.R (b)). A workday is considered to be continuous if an employee is not completely relieved of duty i.e., an employee is unable use the time for his or her own purposes. See 29 C.F.R (a) ( Periods during which an employee is completely relieved from duty and which are long enough to enable him to use the time effectively for his own are not hours worked ). Whether an employee is engaged in an employer s principal activity should be liberally construed no matter what work is performed. See Rutti v. Lojack Corp., 596 F.3d 1046, 1056 (9th Cir. 2010) (citing Lindow v. United States, 738 F.2d 1057, 1061 (9th Cir. 1984)). The relevant inquiry here is whether the security clearance was part of the regular work of the employees in the ordinary course of business... necessary to the business and... performed by the employees, in the ordinary course of that business. Rutti, 596 F.3d at Courts must also consider the extent to which the work impacts the employee s freedom to engage in other activities. Id. at Here, contrary to the District Court s conclusion, Appellants have alleged a plausible claim for relief. Appellants have alleged facts showing their workday did 22

32 Case: /14/2011 ID: DktEntry: 8 Page: 32 of 51 not end until they passed through Integrity s security clearance. From the moment Appellants clocked-in until they passed through the security clearance they were on Integrity time under Integrity s control. (See ER at 193.) Appellants had no freedom to engage in other activities while passing through security clearance. Indeed, Appellants were imprisoned within the walls of the Amazon warehouse for an additional 25 minutes each workday until they successfully passed security. This was not time spent for Appellants benefit it was for the benefit of Integrity. Although the District Court compared this time to waiting in line to receive pay checks (ER at 7), waiting in line to receive pay checks is obviously for the benefit of the employee not the employer. Nor is waiting in line to receive pay checks a job responsibility. Here, however, waiting in line to pass security clearance is the responsibility of every employee to prevent loss of warehouse inventory. See Kurihara v. Best Buy, 2007 U.S. Dist. LEXIS 64224, *4 (N.D. Cal. Aug. 29, 2007). 4 This 25-minute 4 In Kurihara, Best Buy employees were subject to security inspections in order to prevent inventory loss without compensating these employees for the time spent undergoing these security checks. Id. at *2. Best Buy s handbook stated that the security clearances were designed to prevent shrink, meaning the loss of inventory, cash or other company property, [which is] the responsibility of every employee. Id. at *4. The Court ultimately granted certification of All persons who are/were employed by Best Buy Co., Inc., in one or more of its California retail stores... who were subjected to uncompensated security checks. Id. at *34. Similar to Best Buy s policies stated in Kurihara, the security clearance here is designed to prevent shrink and is a responsibility of each and every Integrity employee. 23

33 Case: /14/2011 ID: DktEntry: 8 Page: 33 of 51 job responsibility is imposed by Integrity it is not undertaken voluntarily by employees. Hence it is simply not true, as the District Court concluded, that Plaintiffs could perform their warehouse jobs without such daily security screenings. (ER at 7.) These daily security screenings were mandatory and necessary to Integrity s business. (ER at 193.) Under established Ninth Circuit authority, requiring employees to undergo this type of security clearance must be considered work. See Rutti, 596 F.3d at First, such security clearances are part of the regular work of the employees in the ordinary course of business since all Integrity employees must undergo security clearances each and every day. Second, they must be necessary to the business or else Integrity would not require it. Finally, these clearances are performed by the employees, primarily for the benefit of the employer, in the ordinary course of that business since Integrity benefits by monitoring warehouse inventory and preventing loss. (ER at 193.) Accordingly, Plaintiffs have alleged a plausible claim for relief, and the District Court erred. Labeling the activity of security clearance as postliminary merely because employees have already clocked out begs the question of when the work day really ends. No one would seriously argue if the employees punched out and returned to sorting products and picking orders that this time would be considered off-theclock work entitled to compensation. In AFSCME Local 889 v. Louisiana,

34 Case: /14/2011 ID: DktEntry: 8 Page: 34 of 51 F.3rd 280 (5th Cir. 1998), the Fifth Circuit held a 15-minute end-of-shift role call period was compensable for prison guards since it was done for the benefit of the employer rather than the benefit of employees. Accord Schwertfeger v. Village of Sauk Village, 2001 WL (ND Ill. Mar. 23, 2001). Similarly, in this case, the end-of-shift security clearance is ordered by Integrity for the benefit of Integrity (and its customer Amazon) and is of no value to the employee. The amount of time required for security clearance might be reduced to a de minimis amount if Integrity would devote more resources to this function (i.e., add more security guards or x-ray machines to expedite the end of the day search process) but it does not since it costs the employer nothing to have employees wait in line. Alternatively, Integrity could have installed time clocks after the security clearance line clearance. It is Integrity s abuse and lack of respect for employees own time that is the impetus for this lawsuit. 2. The time spent undergoing security clearance is also a compensable postliminary activity. As already mentioned, this is not a Portal-to-Portal case relating to postliminary activity. The security clearances are not postliminary activities. They are part of an Integrity employee s regular work duties under the continuous workday doctrine. Nevertheless, even if the Court looks at whether the security clearances are compensable postliminary activities, Appellants still have stated a plausible 25

35 Case: /14/2011 ID: DktEntry: 8 Page: 35 of 51 claim for relief. Under the Portal-to-Portal Act of 1947, an employer is responsible for compensating an employee for preliminary or postliminary activities of a given job that are an integral and indispensable part of the principal activities for which an employee is employed. Bamonte v. City of Mesa, 598 F.3d 1217, 1221 (9th Cir. 2010); Steiner v. Mitchell, 350 U.S. 247, 256 (1956). An activity is an integral and indispensable part of the principal activities if it is required by the employer and necessary to complete his or her workday. See Bamonte, 598 F.3d at 1221 (recognizing that the United States Department of Labor has explained that [s]uch a [compensable] situation may exist where the [activity] on the employer s premises is required by law, by rules of the employer, or by the nature of the work. ); cf. 29 C.F.R (c) ( If an employee in a chemical plant, for example, cannot perform his principal activities without putting on certain clothes, changing clothes on the employer's premises at the beginning and end of the workday would be an integral part of the employee's principal activity. ). Most of the cases involving whether postliminary activity is compensable involve so-called donning and doffing protective gear and clothing. See, e.g., Alvarez v. IBP., Inc., 339 F.3d 894, (9th Cir. 2003) (aff'd on other grounds sub nom. IBP v. Alvarez, 546 U.S. 21 (2005)). The critical inquiry in these cases has been whether donning and doffing protective gear was under the exclusive control of the employer. See id. at 899 (recognizing that the employee s time was 26

36 Case: /14/2011 ID: DktEntry: 8 Page: 36 of 51 strictly regulated and monitored ). In Alvarez, the Ninth Circuit stated that the postliminary activity was necessary to the principal work performed and, thus, compensable because the donning and doffing of this gear on the... plant s premises is required by law, by rules of [the employer], and by the nature of the work. Id. at 903 (emphasis and alteration added). Similarly, the facts alleged here show the security clearances were exclusively controlled by Integrity and integral and indispensable to Appellants job. Pursuant to Integrity rules, Appellants and every fellow warehouse worker were required to undergo security clearance before being released from the warehouse facility. (ER at 193.) See Ballaris v. Wacker Siltronic Corp., 370 F.3d 901, 910 (9th Cir. 2004) (noting that where the changing of clothes on the employer's premises is required by law, by rules of the employer, or by the nature of the work, the activity may be considered integral and indispensable to the principal activities (quoting 29 C.F.R (c) n.65) (emphasis added)). Without fail, this was part and parcel of their duties as an Integrity employee each and every day. See Bamonte, 598 F.3d at 1221; Kurihara, 2007 U.S. Dist. LEXIS at *4. In addition, the security clearances were integral and indispensable to Appellants duties as warehouse pickers. Appellants duties included collecting merchandise from the warehouse and directing the merchandise to be distributed to 27