Citations
- 231 F. Supp. 2d 455
Full opinion text
MEMORANDUM OPINION
MICHAEL, Senior District Judge.
This matter comes before the court on the parties’ May 1, 2002 cross motions for summary judgment and the defendants’ “Motion for Default Judgment With Respect to Opt-in Plaintiffs,” filed July 15, 2002. The above-captioned civil action was referred to the presiding United States Magistrate Judge for proposed findings of fact, conclusions of law, and a recommended disposition. See U.S.C. § 636(b)(1)(B). In his August 21, 2002 Report and Recommendation, Magistrate Judge B. Waugh Crigler rendered to this court a report setting forth findings, conclusions, and recommendations for the disposition of the aforementioned filings. The defendants filed timely objections to portions of the Magistrate’s Report and Recommendation. The plaintiff, in turn, filed a timely response to the defendants’ objections.
The court has performed a de novo review of those portions of the Report and Recommendation to which objections were made. See U.S.C. § 636(b)(1)(C) (West 1993 and Supp.2000); FED.R.CIV.P. 72(b). Having thoroughly considered the entire case, all relevant law, and for the reasons stated herein, the court shall GRANT the plaintiffs Motion for Partial Summary Judgment (on issues of liability); DENY the defendants’ Motion for Summary Judgment;- GRANT, IN PART, the defendants’ Motion for Default Judgment and DISMISS the claims of opt-in plaintiffs McCormick, Brandon, Domagala, Lawrence, and Hinton, but DENY the Motion for Default Judgment in all other respects, and ACCEPT the Report and Recommendation of the Magistrate Judge.
I.
The court will rely on the Magistrate Judge’s recitation of the facts involved in this matter. In brief, this is an action in which the plaintiff alleges that his employer failed to pay overtime as required by the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201 et seq. Plaintiff Michael Smith initiated the above-captioned civil action on June 29, 2000, “individually and on behalf of all current or former employees of Defendant Central Security Bureau, Inc. (‘CSB’) who acted as ‘Field Supervisors.’ ” Complaint at 1 (emphasis added). Neither before nor after this case , was certified as a collective action did Smith file a consent form expressing his willingness to join as a party plaintiff in this action. The defendants, in their November 8, 2000 answer to the original complaint, contested whether the case could be brought as a collective action. Then, on April 19, 2001, the presiding Magistrate Judge granted the Plaintiffs Motion to Compel Production of a Putative Class List, and set a discovery and motions deadline for resolution of whether the ease could proceed as a collective action. The defendants objected to the Magistrate’s ruling and asked him to reconsider. On May 31, 2001, the Magistrate Judge granted the motion for reconsideration, allowing class-related discovery to move forward, but restricting production of evidence to anonymous salary information regarding “Field Supervisors.”
On February 19, 2002, after conducting a hearing earlier in the month, the Magistrate Judge granted the motion to certify the collective action, relying, in part, on the deposition testimony of CSB’s corporate representative. That evidence revealed that Michael Smith was “similarly situated” to the other Field Supervisors in both duties and methods of compensation. Soon thereafter, thirteen plaintiffs opted into the collective action by filing consents to join the action. Plaintiff Smith filed his consent, or “opt-in” form, on May 14, 2002.
Both parties filed motions for summary judgment on May 1, 2002. After these pleadings were filed, but before the responses were due, the Magistrate Judge granted the plaintiffs Motion to Reopen Discovery on three discrete issues: (1) information relevant to the “window of correction” defense raised by the defendants in their dispositive motion papers; (2) evidence affecting the statute of limitations defense against the opt-in plaintiffs; and (3) damages allegedly suffered by the opt-in plaintiffs.
Then, on July 15, 2002, the two sides each filed their respective responses to the May 1, 2002 motions for summary judgment. Additionally, the defendants filed a motion seeking entry of default and for default judgment against all thirteen opt-in plaintiffs for their alleged failures to cooperate in discovery after opting into the collective action. After hearing argument on these motions, the Magistrate Judge entered his August 21, 2002 Report and Recommendation.
II.
Before this court can adequately address the merits of the motions now before it, it is first necessary to review the underlying factual background of this matter. On June 17, 1999, plaintiff Michael Smith accepted a promotion to the position of “Field Supervisor” with defendant Central Security Bureau, Inc. (“CSB”). At the time Smith accepted the promotion, he signed an employment contract that denominated the position as “salaried,” but which fixed the terms of his pay at an hourly rate of $6.50. Smith was also given a copy of CSB’s employment policy, which, in pertinent part, provided that “[s]alaried employees are expected to work forty (40) hours each week. If you do not, you will only receive compensation for the hours you work. The state labor law says ‘NO WORK; NO PAY.’ ” Pl.’s Mot. for Part. Summ. J. Ex. 5 (emphasis in original).
While the plaintiff often worked well in excess of forty hours per week, Smith, on two occasions, worked less than the requisite forty hours in a week. From June 25, 1999 through July 8, 1999, the plaintiff worked seventy-nine hours and from January 8, 2000 through January 20, 2000, Smith worked thirty-nine hours. On both occasions Smith’s pay was docked exactly $6.50 for each hour under forty not worked. During the aforementioned pay periods, Smith was paid $6.50 per hour of work, which was the rate of pay set forth in his employment contract.
Additionally, the evidence reveals that while the predominance of the other opt-in plaintiffs never worked less than forty hours in any given week, at least one other former opt-in plaintiff experienced similar deductions for what are known in this action as “partial-day absences.” Robert Ennis was hired at a weekly “salary,” as the defendants denominate the compensation, of $560, calculated at the rate of $7 per hour multiplied by forty hours. Ennis was paid $553 instead of his “salary” of $560, which reflected a deduction of $7.00 for the one hour he fell short of forty hours for that pay period. Moreover, during the pay period of May 28,1999 through June 10, 1999, Ennis worked a total of seventy-eight and one half hours. Consequently, he was paid $549.50, again reflecting a deduction of $7.00 for the one and one half hours Ennis fell short of the forty hour minimum. There is no evidence in the record establishing that any Field Supervisor who experienced “partial-day absences” ever actually received a full salary as if he or she had worked the entire forty-hour week.
III.
On May 1, 2002, the parties filed cross motions for summary judgment. A party is entitled to summary judgment when the pleadings and discovery show that there are no genuine issues as to any material fact, and that the moving party is entitled to judgment as a matter of law. FED. R.CIV.P. 56(c); Anderson v. Liberty Lob by, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). “[Sjummary judgment ... is mandated where the facts and the law will reasonably support only one conclusion.” Hawkins v. PepsiCo, Inc., 203 F.3d 274, 279 (4th Cir.2000) (quoting McDermott Int’l, Inc. v. Wilander, 498 U.S. 337, 356, 111 S.Ct. 807, 112 L.Ed.2d 866 (1991)). If the evidence is such that a reasonable jury could return a verdict in favor of the non-moving party, then there are genuine issues of material fact. See Anderson, 477 U.S. at 248, 106 S.Ct. 2505. All facts and inferences shall be drawn in the light most favorable to the non-moving party. See Food Lion, Inc. v. S.L. Nusbaum Ins. Agency, Inc., 202 F.3d 223, 227 (4th Cir.2000). Guided by these principles, the Magistrate Judge recommends that this court grant the plaintiffs Motion for Partial Summary Judgment (on issues of liability) and deny the defendants’ Motion for Summary Judgment in every respect.
IV.
A. Objection 1 — Whether Plaintiff Smith may Proceed Simultaneously in Individual and Collective Capacities:
Defendant CSB has articulated three objections to the Magistrate Judge’s Report and Recommendation. First, defendant CSB objects to the Magistrate’s “recommendation that Smith may proceed simultaneously in individual and collective capacities.” Defendants’ Objections, page 2. In order to address the defendants’ objection, the court must first consider the statute under which the plaintiff initiated the present action.
The FLSA allows employees to initiate legal actions for themselves and on behalf of similarly situated others. Specifically, the statute authorizes “one or more employees” to initiate suit “for and in behalf of himself or themselves and other employees similarly situated.” 29 U.S.C. § 216(b) (emphasis added). While it is clear that the FLSA contemplates both individual and collective actions, the defendants maintain that when Smith’s motion to certify the case as a collective action was granted, his individual claim was supplanted by the collective action. According to CSB, therefore, the plaintiff cannot proceed simultaneously in individual and collective capacities.
Unfortunately, as the Magistrate Judge notes, there is little guiding decisional authority in the circuits, let alone in the Fourth Circuit, pertaining directly to the circumstances currently before the court. Although the Fourth Circuit has never expressly held that a plaintiff may bring an action in such dual and individual capacities, it is also true that the court has never foreclosed such a possibility, despite multiple opportunities to do so.
First, in Lee v. Vance Executive Protection, Inc., 7 Fed. Appx. 160 (4th Cir.2001) (unpublished), the court held that when multiple plaintiffs attempt to set forth the capacity in which the suit is brought by precisely copying the statutory language, the complaint is to be construed as one pleading a collective action and not separate individual actions brought by multiple plaintiffs under the FLSA. After discussing the case in detail, the Magistrate Judge noted that the principle difference between Lee and the case at bar is that Smith, the named plaintiff in the present matter, “did not employ merely the statutory language interpreted in Lee to plead the capacities in which he was instituting the case.” Report and Recommendation, page 16. Instead, Smith instituted the case “individually and on behalf of others.”
The defendants contend that while Smith may not have precisely copied the statutory language, his “pleading parallels the statutory definition of a collective action under the FLSA, though he did not reiterate the statutory language.” Defendants’ Objections, page 15. Put differently, CSB argues that the variance between Smith’s pleadings and the statutory language is a difference without a distinction.
Although Smith’s pleading was similar to the statutory language pled in the complaint at issue in Lee, which the court construed as one pleading a collective action, it is not identical. A logical inference from Smith’s failure to copy precisely the statutory language of the FLSA in his complaint, coupled with the seemingly unambiguous language employed by the plaintiff, is that Smith was attempting to avoid the result reached in Lee. Put differently, and contrary to the defendants’ contention, Smith wanted to make clear the dual capacities in which he was bringing the case. The plaintiff, therefore, stated that he was instituting the action “individually and on behalf of [others].” Complaint, page 1 (emphasis added).
The defendants, however, cite to Carbon Fuel Co. v. USX Corp., 100 F.3d 1124, 1133 (4th Cir.1996) for the proposition that “[u]nder the most basic canon of statutory construction, [a court] begin[s] interpreting a statute by examining the literal and plain language of the statute.” The same proposition applies to a court’s construction of a party’s filings — a court begins interpreting a pleading by examining the literal and plain language of that pleading. Here, Smith instituted the action “individually and on behalf of others.” The plain language of the aforementioned language is open only to one interpretation, namely, that Smith was attempting to proceed in a dual capacity. If the complaint does not indicate Smith’s intent to proceed in a dual capacity, the court is at a loss to understand how the plaintiff could have obtained such a result.
Although Smith unambiguously stated his intent to proceed in a dual capacity, the inquiry is not over. The court next must discern if one is permitted to plead simultaneously both individually and collectively. As noted earlier, although the Fourth Circuit has never expressly held that an FLSA plaintiff may plead in a dual capacity, it has also never foreclosed the possibility. Notwithstanding the Lee decision, the Fourth Circuit came closest to disclosing its position on the aforementioned issue in In re Food Lion, Inc., 151 F.3d 1029, 1998 WL 322682 (4th Cir.1998) (unpublished).
Not unlike the Lee court, the Food Lion court made an effort to discern from the pleadings whether the plaintiffs had brought individual cases. A careful reading of Food Lion leads the court to the same conclusion reached by the Magistrate Judge. Namely, that the court suggests that “where the record reveals an intent to file an individual claim, and the individual claim is timely filed, it should be allowed to continue, notwithstanding the individual plaintiffs failure to timely file a consent to join the collective action.” Report and Recommendation, page 19. Here, the record clearly reveals plaintiff Smith’s intent to proceed in a dual capacity.
In their papers, the defendants contend that the Magistrate Judge “construes two Fourth Circuit decisions to allow dual capacity suits based upon what those decisions did not hold.” Defendants’ Objections, page 15. This is certainly true. It is also true, however, as noted above, that the Fourth Circuit never expressly foreclosed the possibility that a plaintiff or group of plaintiffs could bring an action in such dual individual and collective capacities, so long as the complaint clearly put the employer and the court on notice of such. Given the Fourth Circuit’s reluctance to foreclose such a possibility, the Magistrate Judge explained that “far be it for [the Magistrate] to take the view that dual capacity actions are foreclosed.” Report and Recommendation, pages 17-18.-The same holds true for this court. The court will not do what the Fourth Circuit, despite multiple opportunities, has not done. The defendants’ first objection to the Report and Recommendation, therefore, shall be OVERRULED.
B. Objection 2—The Willfulness of the Alleged FLSA Violation:
CSB’s second objection to the Magistrate Judge’s filing is that “[cjontrary to the Report’s recommendation ... any alleged FLSA violation by CSB was not willful.” Defendants’ Objections, page 4. When coupled together, the defendants’ first and second objection form what is, essentially, a statute of limitations argument. Stated succinctly, the defendants seek dismissal of Smith’s individual and collective capacity claims on the ground that they are barred by the statute of limitations because he failed to file his opt-in consent form either at the time the suit was filed or within the applicable limitations period.
It is undisputed that plaintiff Smith did not file a consent to join the collective action until May 14, 2002, which was beyond two years but less than three years from the date his cause of action accrued. Additionally, it is undisputed that the limitations period under the FLSA is two years, unless there are genuine issues of material fact concerning willfulness on the part of the defendants, which could extend the limitations period to three years. 29 U.S.C. § 255(a). What is disputed,, however, is whether CSB violated the FLSA and, if it did, whether such violation was willful. The Magistrate Judge recommended that the court answer in the affirmative to both of the preceding two contested issues. It is to this latter recommendation that the defendants object.
The crux of the defendants’ objection is that, as a matter of law, any alleged FLSA violation by CSB was not willful. As noted earlier, Congress has provided two separate limitations periods for non-willful and willful violations of the FLSA, two years and three years respectively. 29 U.S.C. § 255(a). As the defendants correctly state, “[t]o benefit from the three year limitations period under § 255, Smith must demonstrate that CSB’s alleged FLSA violation was willful.” Defendants’ Objections, page 16. A violation is willful if an employer knew or showed reckless disregard for the matter of whether its conduct was prohibited by the statute. McLaughlin v. Richland Shoe Co., 486 U.S. 128, 108 S.Ct. 1677, 100 L.Ed.2d 115 (1988).
In support of their contention that there has been no willful violation of the FLSA, the defendants argue that the Magistrate Judge
mistakenly shifts the burden of proof to CSB to establish that any alleged violation [of the FLSA] was not willful. Relevant jurisprudence requires that Smith bear the burden to prove that any alleged violation was willful in order to invoke the three year limitations period for such violations. Smith has offered no competent evidence to dispute CSB’s evidence of non-willfulness as is his burden.
Defendants’ Objections, page 4.
Plaintiff Smith concedes that both he and “Magistrate Judge Crigler relied on Central Security Bureau’s own evidence, submitted in support of its motion for summary judgment, in concluding that a factual issue with respect to willfulness precludes summary judgment.” Plaintiffs Response to Defendants’ Objections, page 6. Despite the defendants’ contention to the contrary, however, the mere fact that the plaintiff did not present his own evidence to establish willfulness does not mandate an entry of summary judgment in favor of the defendants. Instead, “summary judgment ... is mandated where the facts and the law will reasonably support only one conclusion.” Hawkins v. Pepsi-Co, Inc., 203 F.3d 274, 279 (4th Cir.2000) (quoting McDermott Int’l, Inc. v. Wilander, 498 U.S. 387, 856, 111 S.Ct. 807, 112 L.Ed.2d 866 (1991)). If the evidence is such that a reasonable jury could return a verdict in favor of the non-moving party, then there are genuine issues of material fact. See Anderson, 477 U.S. at 248, 106 S.Ct. 2505.
There is evidence in this case, albeit evidence produced by the defendants, that there are genuine issues of material fact pertaining to willfulness. Specifically, when construed in a light most favorable to the non-moving plaintiff, the evidence reasonably shows that CSB knew or disregarded knowledge of the fact that partial-day deductions were not permissible for salaried employees. As the Magistrate Judge explains, because “there is evidence that Defendants deducted time allotted to partial-day absences pay from the pay of so called ‘salaried’ employees, their action reasonably could be construed as willful.” Report and Recommendation, page 21. Moreover, “there is evidence that Defendants further declined to pay proper overtime to employees they classified as exempt but whom they knowingly treated as hourly.” Id.
The defendants contend that by recommending a denial of their motion for summary judgment, the Magistrate Judge is requiring “CSB to prove non-willfulness, when McLaughlin and its progeny reiterate that the plaintiff bears the ultimate burden of proof on the issue.” Defendants’ Objections, page 20. The defendants mistakenly interpret the Magistrate’s recommendation for a denial of summary judgment as a shift in which party bears the ultimate burden in this controversy. Nothing in the Magistrate’s Report and Recommendation, or in this court’s opinion, is inconsistent with McLaughlin and its successor cases. The plaintiff still bears the ultimate burden in this civil action. Put differently, plaintiff Smith cannot prevail on his claim at trial without proving each and every element by a preponderance of the evidence. Denying the defendants’ motion for summary judgment does nothing to alter this ultimate burden.
After reviewing the record, and for the reasons stated herein and in the Magistrate Judge’s Report and Recommendation, the court shall find that there are genuine issues of material fact concerning willfulness on the part of the defendants, which could extend the limitations period to three years. The defendants’ second objection to the Magistrate Judge’s Report and Recommendation, therefore, shall be OVERRULED.
C. Objection 3 — Whether CSB Paid Field Supervisors on a Salaried Basis:
The willfulness issue notwithstanding, the defendants’ final objection is that, contrary to the Magistrate’s Report and Recommendation, and “as a matter of law, CSB properly paid field supervisors on a salaried basis.” Defendants’ Objections, page 4. In Auer v. Robbins, 519 U.S. 452, 461, 117 S.Ct. 905, 137 L.Ed.2d 79 (1997), the Supreme Court articulated a two-part test to aid lower courts in determining whether an employer properly has established salary-based employment. Specifically, courts are to inquire into whether (1) there is evidence of actual impermissible deductions or (2) the employment policy of the defendant creates “a significant likelihood of impermissible deduction.”
As evidence of actual impermissible deductions, plaintiff Smith points to two separate incidents in which he received less than his normal working salary. These deductions were in the pay periods June 25, 1999 through July 8, 1999 and January 7, 2000 through January 20, 2000. The defendants argue that these two pay periods represent the first and the last weeks in which Smith was employed as a field supervisor. CSB then notes that under the relevant statute and regulations, “failure to pay full salary in the initial or terminal week of employment is not considered inconsistent with salary basis of employment.” 29 C.F.R. § 541.118(c).
While it is undisputed that Smith’s terminal week of employment was encompassed in the January 7 through January 20 pay period, the parties disagree as to whether the June 25 through July 8 period was the plaintiffs first pay period in his new position. If it was, as the defendants contend, then the deductions taken during the pay periods at issue would be permissible and, as a matter of law, would not affect Smith’s status as a salaried employee. If, however, the June 25 through July 8 pay period was not the plaintiffs first pay period in his new position, as Smith argues, then the deduction taken by CSB would be inconsistent with salary basis of employment.
There is evidence in the record supporting both theories. Plaintiff Smith argues that he was promoted on June 17 and, therefore, the June 25 through July 8 pay period would not have been the first in his new position. The defendants, conversely, point to a declaration by Beverly Rowe in which she states that Smith accepted the promotion on June 17, but that the promotion did not become effective until the June 25 pay period. In support of his contention that the aforementioned pay period was not his first in his new position, however, Smith cites CSB’s earlier answers to interrogatories in which June 17 was portrayed as the effective date of Smith’s promotion. Despite CSB’s contention to the contrary, then, there is at very least a factual dispute as to whether actual impermissible deductions were made from Michael Smith’s salary.
The defendants contend, however, that any impermissible deductions on their part are subject to cure under the “window of corrections” defense. As set out in the federal regulations, the window of correction defense provides that
where a deduction not permitted [by the FLSA] is inadvertent, or is made for reasons other than the lack of work, the exemption will not be considered to have been lost if the employer reimburses the employee for such deductions and promises to comply in the future.
29 C.F.R. § 541.118(a)(6). This defense, in effect, saves employers from forfeiting their salary basis exemption because of inadvertent or non-work related deductions that later are reimbursed to employees. Auer, 519 U.S. at 463, 117 S.Ct. 905. The Auer Court explained, however, that the window of correction defense is available only if the deduction was inadvertent or made for some reason other than lack of work. Id. (citing 29 C.F.R. § 541.118(a)(6)). Since Auer, the circuit courts considering the window of correction defense have held that the defense is only available to an employer who is found to have objectively intended to pay its employees on a salary basis in the first place. See, e.g., Takacs v. Hahn Automo tive Corp., 246 F.3d 776 (6th Cir.2001); Whetsel v. Network Property Services, 246 F.3d 897 (7th Cir.2001).
As the plaintiff points out, in Takacs v. Hahn Automotive Corp., 246 F.3d 776 (6th Cir.2001), cert. denied, — U.S.-, 122 S.Ct. 202, 151 L.Ed.2d 143 (2001), the Sixth Circuit considered an issue left open-by the Auer Court, and of utmost importance to this matter. Specifically, the Sixth Circuit addressed the question of whether an employer may utilize the window of correction defense if it had an actual practice of making more than a single impermissible deduction or had a policy that, as here, created a significant likelihood of impermissible pay deductions for salaried employees.
After relying on the Secretary of Labor’s interpretation of the window of correction defense, the Sixth Circuit held that the defense was unavailable to an employer that had a policy that created a significant likelihood of impermissible deductions and a practice of making such deductions. Id. at 783. The court explained that “[i]n essence, we believe that if employers could simply ‘use window of correction to comply retroactively with the salaried-basis requirement,’ the ‘salary basis’ test would be rendered ‘essentially meaningless.’ ” Id. (quoting Klem v. County of Santa Clara, 208 F.3d 1085, 1092 (9th Cir.2000)) (citing Yourman v. Giuliani, 229 F.3d 124, 128 (2d Cir.2000), cert. denied, 532 U.S. 923, 121 S.Ct. 1362, 149 L.Ed.2d 291 (2001)).
As set forth below, CSB has not and cannot establish an objective intention to pay Smith and the other Field Supervisors on a “salary basis” because its own employment policy effectively communicates that deductions will be made in specified circumstances, thereby violating Auer and its progeny. CSB, therefore, cannot avail itself of the window of corrections defense. The defendants are left, then, with their argument that there was no actual practice of making impermissible deductions.
Even assuming, arguendo, that the defendants are correct and that there was no actual practice of making impermissible deductions, the inquiry is not over. There is still a question as to whether CSB’s employment policy satisfies the second prong of the salary-basis test. That policy states, in pertinent part, that “[s]alaried employees are expected to work forty (40) hours each week. If you do not, you will only receive compensation for the hours you work. The state labor law says ‘NO WORK; NO PAY.’ ” Pl.’s Mot. for Part. Summ. J. Ex. 5 (emphasis in original).
Under the salary-basis test, in the absence of actual deductions, the employer still fails the test if its employment policy creates a “significant likelihood” of deductions. Auer, 519 U.S. at 461, 117 S.Ct. 905. Specifically, a “clear and particularized” policy, “which ‘effectively communicates’ that deductions will be made in specified circumstances” would not meet the standard. Id. In order to be sufficiently “particularized,” the policy must apply only to salaried employees, not both to salaried and hourly employees.
Defendants’ counsel conceded during argument at the summary judgment hearing that the relevant portions of the policy apply only to “salaried” employees. The dispositive issue, then, is whether the policy creates a “significant likelihood” of deductions. The mere possibility of an employee deduction in pay does not defeat an employee’s salary status. Karson v. American College of Cardiology, 1999 WL 87547 at *3 (4th Cir.1999) (unpublished) (citing Auer, 519 U.S. at 460, 117 S.Ct. 905). When the policy effectively communicates that deductions will be made in specified circumstances, however, the employer violates the FLSA. Such is the case here.
Notwithstanding CSB’s contention to the contrary, their employment policy is not “at best vague ... ambiguous ... and broadly-worded.” Defendants’ Objections, pages 30-31. As the Magistrate Judge notes, the “policy essentially shouts in capital letters”, “NO WORK; NO PAY.” Report and Recommendation, page 26 (emphasis added). The defendants next argue that the words “no work; no pay” are qualified by the preceding phrase, which states that the policy refers only to Virginia law. According to the defendants, “[t]he policy may effectively communicate Virginia law, but not federal law under the FLSA” because “the policy does not ‘effectively communicate’ that field supervisors will suffer deductions which the FLSA does not allow.” Defendants’ Objections; page 31. CSB’s contention is unavailing.
Considered in its entirety, CSB’s employment policy unambiguously makes clear the likelihood that impermissible deductions will be made. Prior to the policy’s referral to the “state labor laws,” the policy provides that “[i]f you do not [work forty hours per week], you will only receive compensation for the hours you work.” The policy clearly and unambiguously provides that salaried employees will not be paid for forty hours unless they work forty hours. Like the Magistrate Judge, the court fails to see how the policy can be interpreted in any way other than “salaried” employees will be paid only for the hours worked. In short, the policy effectively communicates that deductions will be made in specified circumstances and, therefore, fails to meet the standard articulated in Auer.
As a matter of law, therefore, the defendants’ third objection shall be OVERRULED and their motion for summary judgment shall be DENIED. The plaintiffs, conversely, are entitled to summary judgment on the issue of liability, namely, whether the position of Field Supervisor is exempt from the requirements of the FLSA as a salaried basis position. For the reasons set out herein, the court holds that it is' not exempt as a matter of law.
IV.
Because neither the plaintiff nor the defendants filed timely objections to the Magistrate Judge’s recommended disposition as to the defendants’ Motion for Default Judgment; there is no reason for the court to address the issue. In the interest of completeness, however, the court notes that having thoroughly reviewed the entire case and all relevant law, the court is in complete agreement with the Magistrate Judge’s analysis. For the reasons articulated in the Magistrate’s Report and Recommendation, default judgment shall enter only against collective opt-in plaintiffs James McCormick, Michael Brandon, Joe Domagala, Marvin Lawrence, and Printise Hinton, who should be dismissed for failure to prosecute their claims in the collective action.
• V.
For the reasons articulated herein, the court shall (1) GRANT the Plaintiffs’ Motion for Partial Summary Judgment and determine as a matter of law that the position of Field Supervisor was not an exempt salary-based position; (2) DENY the Defendants’ Motion for Summary Judgment based on their statute of limitations defense; and (3) GRANT IN PART and DENY IN PART the Defendants’ Motion for Default Judgment. Default Judgment shall enter only against collective opt-in plaintiffs James McCormick, Michael Brandon, Joe Domagala, Marvin Lawrence, and Printise Hinton, who should be dismissed for failure to prosecute their claims in the collective action.
Additionally, the court shall OVERRULE the defendants’ objections to the Magistrate Judge’s Report and Recommendation. The court shall ADOPT the Magistrate Judge’s Report and Recommendation in its entirety. The court dispenses with oral argument because the facts and legal contentions are adequately presented in the materials before the court, and argument would not aid in the decisional process. An appropriate Order shall this day enter.
The Clerk of the Court hereby is directed to send a certified copy of this Memorandum Opinion and the accompanying Order to Magistrate Judge Crigler and to all counsel of record.
ORDER
For the reasons stated in the accompanying Memorandum Opinion, it is this day
ADJUDGED, ORDERED, AND DECREED
as follows:
(1) The defendants’ “Objections to Report and Recommendation,” filed September 5, 2002, shall be, and they hereby are, OVERRULED;
(2) The Magistrate Judge’s Report and Recommendation, filed August 21, 2002, shall be, and it hereby is, ACCEPTED and ADOPTED in its entirety;
(3) The plaintiffs “Motion for Partial Summary Judgment,” filed May 1, 2002, shall be, and it hereby is, GRANTED (on issues of liability). As a matter of law, the position of Field Supervisor was not an exempt salary-based position;
(4) The defendants’ “Motion for Summary Judgment,” filed May 1, 2002, shall be, and it hereby is, DENIED; and
(5)The defendants’ “Motion for Default Judgment With Respect to Opt-in Plaintiffs,” filed July 15, 2002, shall be, and it hereby is, GRANTED IN PART and DE-NYED IN PART. Default Judgment shall enter only against collective opt-in plaintiffs James McCormick, Michael Brandon, Joe Domagala, Marvin Lawrence, and Printise Hinton, who should be dismissed for failure to prosecute their claims in the collective action.
The Clerk of the Court hereby is directed to send a certified copy of this Order and the accompanying Memorandum Opinion to Magistrate Judge Crigler and to all counsel of record.
REPORT AND RECOMMENDATION
CRIGLER, United States Magistrate Judge.
This action alleging Defendants’ failure to pay overtime as required by the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201 et seq., is before the undersigned under authority of 28 U.S.C. § 636(b)(1)(B) to render to the presiding District Judge a report setting forth findings, conclusions, and recommendations for the disposition of the parties’ May 1, 2002, cross motions for summary judgment and Defendants’ July 15, 2002, Motion for Default Judgment With Respect to Opt-in Plaintiffs. The parties appeared before the undérsigned and presented oral argument on July 23, 2002. For the reasons that follow, the undersigned will recommend that the presiding District Judge GRANT Plaintiffs Motion for Partial Summary Judgment (on issues of liability); DENY Defendants’ Motion for Summary Judgment; GRANT, in part, Defendants’ Motion for Default Judgment and DISMISS the claims of opt-in plaintiffs McCormick, Brandon, Doma-gala, Lawrence, and Hinton, but DENY the Motion for Default Judgment in all other respects.
BACKGROUND
I. Procedural Background
Michael Smith filed this action on June. 29, 2000, “individually and on behalf of all current or former employees of Defendant Central Security Bureau, Inc. who acted as ‘Field Supervisors.’ ” (Compl. at 1) (emphasis added). Neither before nor after this case was certified as a collective action did Smith file a consent form expressing his willingness to join as a party plaintiff in the case. Defendants answered the original complaint on November 8, 2000, contesting whether the case could be brought as a collective action. On April 3, 2001, the undersigned heard argument on Plaintiffs Motion to Compel Production of a Putative Class List, and on April 19, 2001, the undersigned granted the motion and set a discovery and motions deadline for resolution of whether the case could proceed as a collective action. Defendants objected to this order and asked the undersigned to reconsider. On May 31, 2001, the undersigned granted the motion for reconsideration, allowing class-related discovery to move forward, but restricting production of evidence to anonymous salary information regarding “Field Supervisors.”
On February 5, 2002, the undersigned conducted a hearing on whether to certify the case as a collective action. On February 19, 2002, the undersigned granted the motion to certify the collective action, relying, in part, on the deposition testimony of CSB’s corporate representative. That evidence demonstrated that Michael Smith was “similarly situated” to the other Field Supervisors in both duties and method of compensation. Soon thereafter, thirteen plaintiffs opted into the collective action by filing consents to join the action. Smith filed his consent, or “opt-in” form, on May 14, 2002.
Both sides filed motions for summary judgment on May 1, 2002. After these pleadings were filed, but before responses were due, the undersigned granted Plaintiffs Motion to Reopen Discovery on three discrete issues: (1) information relevant to the “window of correction” defense raised by defendants in their dispositive motion papers; (2) evidence affecting the statute of limitations defense against the opt-in plaintiffs; and (3) damages allegedly suffered by the opt-in plaintiffs.
On July 15, 2002, the parties each filed their responses to the May 1, 2002, motions for summary judgment. Also on July 15, Defendants filed a motion seeking entry of default and for default judgment against all thirteen opt-in plaintiffs for their alleged failures to cooperate in discovery after opting into the collective action. The undersigned heard argument on these motions on July 23, 2002, from which this Report ensues.
II. Factual Background
On June 17, 1999, Michael Smith accepted a promotion to the position of “Field Supervisor” with defendant Central Security Bureau, Inc. (“CSB”). At the time Plaintiff accepted the promotion, he signed an employment contract which denominated the position as “salaried” but which fixed the terms of his pay at an hourly rate of $6.50. Also provided at the time the contract was signed was a copy of CSB’s employment policy. In pertinent part, this policy provided that, “[s]aiaried employees are expected to work 40 hours each week. If you do not, you will only receive compensation for the hours you work”. “The state labor laws says (sic) ‘NO WORK; NO PAY.’ ” (PL's Mot. for Part. Summ. J. Ex. 5) (emphasis in original).
For the most part, Smith worked well in excess of 40 hours per week, since Field Supervisors were responsible for ensuring that all shifts were covered at the locations where CSB had contracted to provide security. (Field Supervisor Job Description, Id. Ex. 6). For example, in the two-week pay period from October 15, 1999, to October 28, 1999, plaintiff worked one hundred eighty-six hours. In the following two-week period he worked two hundred hours. However, on two occasions, Smith worked less than 40 hours in a week: from June 25, 1999, through July 8, 1999, he worked 79 hours; and from January 8, 2000, through January 20, 2000, he worked 89 hours. On both occasions his pay was docked exactly $6.50 for each hour, or the same rate of pay set forth in his employment contract.
The evidence also shows that while the predominance of the other opt-in plaintiffs never work less than 40 hours per week, at least one other opt-in plaintiff experienced similar deductions for what are know in this case as “partial-day absences.” Robert Ennis was hired at a weekly “salary”, as defendant denominates the compensation, of $560, calculated at the rate of $7 per hour multiplied by 40 hours. For the pay period from April 16, 1999, through April 29, 1999, Ennis worked 79 hours. He was paid $553 instead of his “salary” of $560 which reflected a deduction of $7.00 for the one hour he fell short of 40 hours for that pay period. During the pay period of May 28, 1999, through June 10, 1999, Ennis worked 78.5 hours. He was paid $549.50, again reflecting a deduction óf $7.00 for the Vk hours Ennis fell short of the 40 hour minimum. No evidence has been produced in this record that would show that any Field Supervisor who experienced “partial-day absences” ever actually received a full salary as if he/she had worked the entire 40-hour week. CONTENTIONS OF THE PARTIES
1. Defendants’ Motions for Summary Judgment and for Default Judgment
Defendants first contend that there is no dispute that Smith filed his consent opting into the collective action more than two years after his cause of action accrued, and that his claims are barred by the two-year period of limitation under the FLSA. While they also acknowledge that Smith filed his consent opting into the collective action within three years of the date his cause of action accrued, which is within the three-year period of limitations for willful violations under the FLSA, Defendants argue they are entitled to judgment as a matter of law on the question of willfulness, thus depriving Plaintiff of entitlement to relay on the longer period. Should Smith’s claims be barred under the applicable statute of limitations, defendants submit that the entire case likewise should be dismissed on the ground that Smith is the only named plaintiff, and that a collective action cannot proceed absent at least one named plaintiff.
Should the court deny their motion on the above grounds, Defendants offer that the discovery evidence shows, as a matter of law, that the compensation paid Smith and all of the collective plaintiffs was a salary. Thus, neither Smith nor any other plaintiff can prevail, and all claims should be dismissed.
At the next alternative tier of arguments in support of summary judgment, defendants focus on Smith’s employment, and the fact that there were only two deductions for partial day absences, both of which THEY CLAIM were permissible under the regulations because they occurred in the first and last weeks of his employment as a Field Supervisor. Defendants acknowledge partial day deductions for Robert Ennis, but they offer that those deductions were inadvertent, and assert the “window of correction” defense under the FLSA.
More generally, Defendants contend that there was no evidence produced in discovery showing any deductions from Field Supervisor pay that would be considered impermissible under the FLSA or its regulations. Interestingly they also assert that the company’s employment policy is ambiguous and that, as a matter of law, it cannot be interpreted to create a significant likelihood of impermissible deductions. Therefore, Defendants ask the court to determine, as a matter of law, that Smith and the other collective plaintiffs were paid on a salary basis, and to enter judgment in Defendants’ favor on the primary liability claims in this case.
Defendants also seek the entry of default judgment in this case against certain of the collective plaintiffs who filed their consents to opt-in but failed to participate in the discovery process. Defendants acknowledge that the relief sought here should be considered a permissible sanction to impose for failure to engage in the discovery process, even though they have not sought any intermediate sanction provided under Fed.R.Civ.P. 37 before asking the court to dismiss Plaintiffs allegedly offending claims. The undersigned will address this motion before it assesses and offers recommendations on the parties’ cross motions for summary judgment.
2. Plaintiff
In response to Defendants’ statute of limitations defense, Smith points out that his complaint clearly sets forth the allegation that he was bringing this action both in his individual capacity and on behalf of collective plaintiffs who were similarly situated. Smith does not attempt to avoid the undisputed fact that, while his complaint was filed within the two-year period allowed by the statute, his consent to join the collective action was not filed until after the two-year period had expired. He asserts, however, that there is no dispute over the fact that his consent was filed within three years of the accrual of his cause of action. As a result, Smith offers alternative arguments to support his opposition to Defendants’ motion.
First, he contends that even if his consent was separately required under the statute in order for him to proceed as a party to the collective action, his individual action should not be dismissed since he instituted that action well within the two-year period. Second, Smith takes the position that filing a complaint on his clearly articulated individual claim suffices to toll the statute for his participation in the collective action claim, and that such obviates the need for filing a separate consent form. Last, Smith contends that there are genuine issues of material fact concerning whether Defendants’ conduct was willful. On this score, Smith simply suggests that the very evidence offered by Defendant in support of summary judgment on the question of willfulness is two-edged. If all the evidence is taken in a light most favorable to him as the non-moving party, a reasonable trier of fact could conclude that Defendants’ conduct was willful, as that term is defined and applied under the statute. Therefore, he argues that, should a jury find willfulness, the period of limitations, even for his joining the collective action, would be pushed back from two to three years, and there is no dispute that his consent was filed within the three-year period.
The collective plaintiffs oppose Defendants’ motion for default judgment in several particulars, though they offer little-to-no opposition in other particulars. Their principal opposition is to Defendants’ effort to obtain default judgment as the result of instructions from plaintiffs’ counsel not to answer questions relating to “on-call” time. The collective plaintiffs submit they have made no claim in this case for compensation for “on-call” time as that term is defined by the statute. Plaintiffs further submit that “on-call” issues arise here only as the result of Defendants’ record keeping policies that allegedly required the collective plaintiffs to log actual working time as “on-call” time. Plaintiffs’ counsel represented that discovery on this matter has never been denied defendants, and, as a result, their motion should be denied.
By the same token, Plaintiffs’ Counsel acknowledged to the undersigned that five of their number failed to attend properly noticed depositions. No excuse or justification for such failure has been offered. Yet counsel did submit that any failure of Robert Ennis to respond to written discovery was an oversight which had been or was in the process of being corrected. Even then, counsel offered that this discovery does not address any issue of liability that may be before the court on the parties’ dispositive motions.
Finally, plaintiffs, themselves, seek partial summary judgment on the question of whether defendants’ Field Supervisors were paid on a salary basis. They first offer that the undisputed evidence in this record shows that partial-day deductions in Supervisors’ pay actually occurred under circumstances for which there was no statutory or regulatory justification. In addition, Plaintiffs’ contend that the written employment policy clearly and unambiguously created the likelihood that impermissible deductions would be made, and that the evidence in the record establishes that such impermissible deductions actually were made based upon that employment policy. Accordingly, Plaintiffs do not believe there is any defense available to Defendants under the statute or regulations, and that they are entitled to judgment as a matter of law on liability under the FLSA.
ANALYSIS .
I. Motion for Default Judgment
As indicated above, Defendants’ Motion for Default Judgment rests on several alleged or admitted discovery violations by Plaintiff which Defendants believe are sufficiently grievous to support the Court’s by-passing intermediate sanctions and the direct entry of default judgment under Fed.R.Civ.P. 37.
These alleged violations are as follows:
(1) five of the opt-in plaintiffs did not appear for depositions;
. (2) six of the opt-in plaintiffs did not submit any answers to interrogatories, including all five who did not appear for depositions;
(3) seven of the opt-in plaintiffs did not file answers to interrogatories until July 11, which was six days after the extended discovery deadline of July 5;
(4) of the seven who submitted responses to interrogatories, those responses were not signed by the plaintiffs under oath;
(5) those who did sign under oath, with one exception (Stacey St. James), did not answer interrogatories pertaining to the “on call” system of defendant CSB and compensation under that system, which Defendants argue is relevant to questions of damages;
(6) those who did attend depositions did not answer questions regarding the “on call” system.
This motion, of course, has both disposi-tive and non-dispositive components to it. In one sense, discovery sanctions ordinarily are non-dispositive, and, under authority of 28 U.S.C. § 636(b)(1)(A), the undersigned initially may decide them subject to an appeal under Fed.R.Civ.P. 72 to the presiding District Judge. However, the undersigned does not perceive that a magistrate judge has authority to enter a default judgment as a sanction under Rule 37 absent the consent of the parties. Instead, this Court must make a recommendation relating to such a sanction to the presiding Court.
That having been observed, the undersigned finds that five of the collective plaintiffs who opted into this case both failed to attend their depositions and failed to submit responses to interrogatories. These parties were identified as James McCormick, Michael Brandon, Joe Domagala, Marvin Lawrence, and Printise Hinton. No excuse has been offered for such failure, despite advance admonition by the undersigned when the collective action was certified that the consenting plaintiffs were to submit to post-consent discovery. Accordingly, the undersigned will recommend that the presiding judge grant Defendants’ Motion for Default Judgment against plaintiffs McCormick, Brandon, Domagala, Lawrence, and Hinton and dismiss them as collective plaintiffs in this case.
On the other hand, the undersigned does not find that Defendants have presented sufficient circumstances to recommend entry of default against any other collective plaintiff. First, the undersigned observes that Defendants have not been hampered from gathering the same kind of information in the depositions that were taken of these plaintiffs that was sought from them by the written discovery. Furthermore, there has been or will be supplementation of this discovery as directed by the undersigned on the date of the hearing, and Defendants have not been and will not be prejudiced by Plaintiffs’ technical failures.
Finally, the undersigned finds that Plaintiffs never have intended to proceed, nor are they currently proceeding, on any claim for compensation for “on-call” time. Thus, evidence relating to the basis for any “on-call” compensation is not relevant to the case, and Plaintiffs need not respond to written discovery seeking such information. The undersigned is of the view that Defendants either are or were aware already of the company’s own timekeeping policy related to the recording of actual work time as “on-call” time, as well as the forms used to record such. Moreover, counsel for Defendants did not suggest during the hearing that any plaintiff who had responded to discovery had been deficient in this respect. Therefore, no sanctions, apart from the undersigned’s recommendation to dismiss the claims of those collective plaintiffs who completely failed to participate in the post-certification discovery process, should be imposed, and to that extent the motion for default should be denied.
In summary, the undersigned RECOMMENDS that Defendants’ Motion for Default Judgment be GRANTED to the extent that the claims of plaintiffs McCormick, Brandon, Domagala, Lawrence, and Hinton should be DISMISSED for their failure to participate in discovery, but that the motion, in all other respects, should be DENIED.
II. Motions for Summary Judgment
1. Summary Judgment Standard'
A party is entitled to summary judgment if the evidence shows that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. See Celotex v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). In order to avoid summary judgment, the non-moving party must present sufficient evidence to support each element of that party’s claim or defense. See id. When ruling on a motion for summary judgment, the court must assess the evidence in a light most favorable to the non-moving parties. See Myers v. Finkle, 950 F.2d 165 (4th Cir.1991).
2. Statute of Limitations
Defendants seek dismissal of Smith’s individual and collective capacities claims on the ground that they are barred by the statute of limitations because he failed to file his opt-in consent form either at the time the suit was filed or within the limitations period. As indicated, there is no dispute that Smith did not file a consent to join the collective action until May 14, 2002, and that this was beyond two years but less than three years from the date his cause of action accrued. Moreover, there is no dispute that the limitations period under the FLSA is two years, unless there are genuine issues of material fact concerning willfulness on the part of Defendants, which could extend the limitation period to three years. 29 U.S.C. 255(a).
The undersigned will address more fully below Defendants’ contention that they should be granted summary judgment on Plaintiffs’ willful conduct claim. Nevertheless, a resolution of this is pertinent to the Court’s evaluation of the statute of limitations defense simply because it bears on whether the period of limitations is three rather than two .years from the date Smith’s cause of action accrued. In the end, the undersigned believes there are genuine issues of material fact concerning whether there were willful violations of the FLSA, which must await resolution at trial,
Willfulness, however, is only the tip of the proverbial statute of limitations iceberg. The body of this iceberg lies beneath the surface of what the parties presented to the court in their respective memoranda. It goes deeper, to the form Smith pleaded, the capacity in which he brought this case, and the substantive effects that form has on whether Smith’s claims were brought in a timely fashion even under the two-year limitations period. In other words, the form by which Smith instituted this action, i.e. his allegations setting forth the capacities in which he brought this case, will be seen to impact the substantive issue of whether his claims are barred even by the shorter two-year statute of limitations.
In what is anything but a model of drafting clarity, the FLSA essentially allows employees to institute actions in courts of competent jurisdiction for themselves and on behalf of others. 29 U.S.C. § 216(b) In an apparent effort to sanction both individual and collective actions, the statute specifically provides a right to “one or more employees” to institute suit “for and in behalf of himself or themselves and other employees similarly situated.” Id. (emphasis added). The undersigned uses the term “apparent” because, according to the decisional authorities, one pleading an FLSA claim may achieve something less than expected if suit is instituted simply utilizing the statutory language to plead the capacity by which the plaintiff institutes the case.
Here, Smith alleges the following in his complaint:
“Plaintiff Michael Smith ... herein proceeds individually and on behalf of all current or former employees of [defendant] who acted as ‘Field Supervisors.’ Pursuant to the Fair Labor Standards Act, 29 U.S.C. § 216(b), he is initiating this action as a class of former and current ‘Field Supervisors’ .... ” (Compl. at ¶ 1) (emphasis added).
Moreover, in his March 15, 2001, Motion to Compel Production of Putative Class List, Plaintiff reiterated that he was bringing the case “individually and is seeking to proceed as a representative [of the class].” Though the case proceeded for some time as an individual action brought by Smith, and would have continued as such had evidence not been developed to show there were other Field Supervisors who were situated similarly to Plaintiff, the Court certified a collective action, which, under the FLSA, involves an “opt-in” process under the statute. No one disputes here that whether any opt-in plaintiff timely joins the collective action is controlled by the date a consent is filed to join the collective action. 29 U.S.C. § 256. Because Smith did not file his consent to join the collective action until after the two-year period expired, an issue has been raised as to whether he may now proceed either as an individual or as part of the collective action or both, apart from any consideration of whether there was willful conduct.
Defendants’ position, at least their position as refined at oral argument, simply is that when Smith’s motion to certify the case as a collective action was granted, his individual claim was supplanted by the collective action. As a result, the requirements of 29 U.S.C. § 256, which fix the date consents to join the collective action are filed as the tolling event, controls, and because Smith did not file his consent within the two-year period, Defendants offer that all his claims should be dismissed as barred by the statute of limitations.
Smith, on the other hand, takes the position that: 1) his complaint clearly and unambiguously apprizes the reader that he is proceeding both individually and on behalf of others; and 2) the order certifying the case as a collective action did nothing to vitiate the fact that he tolled any limitation period by filing in his individual capacity. Alternatively, Smith has offered that, if he is barred from proceeding as a part of the collective action and, by that, disallowed any benefit of the evidence applicable only to the collective action, his individual claim should be allowed to proceed in any event because the statute of limitations was tolled when he filed the individual action in the first instance.
The issues before this court are whether a named plaintiff can institute and proceed simultaneously in individual and collective capacities, and whether the tolling effects of filing the individual action continue for a plaintiff who initiated suit in his individual and collective capacity, notwithstanding his failure to file a consent to join the collective action until after the two-year limitations period had lapsed. It is unfortunate that most of the guiding decisional authority in other circuits, and all the decisional authority in the Fourth Circuit, rests in unpublished, decisions. Even then, none speaks directly to the circumstances before the Court in this case.
The only published decisions in this area that have come to the Court’s attention are Allen v. Atlantic Richfield Co., 724 F.2d 1131 (5th Cir.1984) and Perella v. Colonial Transit, Inc., 148 F.R.D. 147 (W.D.Pa.), aff'd 977 F.2d 569 (3rd Cir.1992). In Allen, a case cited by Smith as supporting his contentions, there were multiple plaintiffs who filed individual claims that later were joined under Fed.R.Civ.P. 20(a). In other words, that case was not initiated as a collective action, or anything purporting to seek collective certification. The Court held that the time of filing controlle