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Thomas v. Bed Bath and Beyond, Inc.

United States District Court, S.D. New York

February 21, 2018

DANYELL THOMAS, RASHAUN F. FRAZER, ANDRAE WHALEY, ELENI MIGLIS, CHERYL A. STRYCHARZ, and DANIELLE BROWN, individually and on behalf of all others similarly situated, Plaintiffs,
v.
BED BATH AND BEYOND, INC., Defendant.

          OPINION & ORDER

          PAUL A. ENGELMAYER, District Judge.

         This decision resolves cross-motions for summary judgment filed by plaintiffs, who are employees at the home-goods retailer Bed Bath & Beyond, Inc. ("BBB"), and their employer, BBB, the defendant. Plaintiffs bring claims under the Fair Labor Standards Act ("FLSA") and New York Labor Law. The motions turn on whether BBB paid a subset of employees, its Department Managers ("DMs"), in conformity with the "Fluctuating Work Week" method ("FWW")-a method for calculating overtime compensation which the FLSA permits under certain circumstances and which BBB used until March 2015.

         For the reasons that follow, the Court, finding that BBB properly implemented this method of compensation, grants BBB's summary judgment motion on plaintiffs' overtime compensation claims (Counts I and II of the Second Amended Complaint) and denies the DMs' motion.[1]

         I. Background[2]

         A. Facts

         BBB is a home-furnishings retailer with stores in the New York area. JSF ¶¶ 1, 5.

         The DMs in this case include the five named plaintiffs (Rashaun Frazer, id. ¶ 16, Danyell Thomas, id. ¶ 26, Andrae Whaley, id. ¶ 36, Cheryl Strycharz, id. ¶ 47, and Danielle Brown, id. ¶ 57) and 17 opt-in plaintiffs (Radica Kutwaru, id. ¶ 68, Guy-Robert Desir, id. ¶ 78, Bryan LaForest, id. ¶ 83, Karla Reynosa, id. ¶ 91, Elizabeth Padilla, id. ¶ 101, Cuthbert Baptiste, id. ¶ 111, Hector Caraballo, id, ¶121, Byron Villacres, id. ¶ 132, AndrewCertoma, id. ¶ 142, John Cutajar, id. ¶ 152, Alexis Carree, id. ¶ 159, Anthony Rollock, id. ¶ 170, Erick Ricardo Olivia, id. ¶ 178, Jose Alberto Cassia, id. ¶ 181, Latia Diaz, id. ¶ 184, LeRoy Clarke, id. ¶ 187, and Tomika Boyd, id. ¶ 190).

         Until March 2015, BBB paid DMs in its New York stores overtime according to the FWW method; since then, it has paid DMs overtime at a rate of 1.5 times their regular hourly rate. JSF ¶ 5. Plaintiffs' claims relate solely to the period when BBB used the FWW method.

         As to that period, BBB's employees, upon being hired or promoted to the DM position, received several documents explaining their compensation and the operation at BBB of the FWW method for calculating overtime pay. JSF ¶¶ 6-7, 9-13.

         First, each DM received a Department Manager Compensation Acknowledgement form. JSF ¶9. It explained BBB's compensation methodology. The form stated:

At the time I was hired, I was told what my anticipated weekly compensation will be and how it will be calculated.
I understand that my weekly compensation consists of two components: (1) a base weekly salary; and (2) an additional amount for all hours above 40 that I work during a week.
I understand that my base weekly salary is compensation for all hours I work in a week. I will get paid this base salary for each week I work, whether or not I work 40 hours in that week, subject to the Company's sick day and leave policies.
I further understand that I will be scheduled for no less than 47 hours per week, but that my actual hours worked will fluctuate depending on the needs of my store.

Id.

         Second, each DM received documents setting out what the DM's base annual salary would be if he or she worked 40 (or fewer) hours per week. JSF ¶ 6. These documents also set out what the DM's expected total earnings would be for a week in which he or she worked 47 hours (i.e., 7 overtime hours). Id. Each DM also received documents explaining that the dollar value (per overtime hour) for hours worked above 40 hours would vary due to BBB's use of the FWW method. JSF ¶ 7.[3]

         Third, all DMs received annual notice and acknowledgment of pay rate forms. Each stated:

Overtime rate of pay: rate fluctuations based on hours worked in excess of 40*.
*As a Department Manager, your base weekly salary is compensation for all hours you have worked in the week, regardless of the number of hours you work You will also be paid an additional amount for any hours worked over 40 in one week. Please refer to the attached Department Manager's Bi- Weekly Pay Stub for a detailed explanation.

Id. ¶ 10.

         Fourth, plaintiffs received pay stubs from BBB each pay period setting forth their pay. Id. ¶ 12.

         BBB's compensation practices for DMs as to overtime are helpfully illustrated by examples drawn from the pay records of named plaintiff Rashaun Frazer. As of January 21, 2014, Frazer's base weekly salary was $1, 034.22-he was paid that sum regardless whether he worked overtime. See JSF ¶ 20; id., Ex. 6. Frazer's weekly hours, however, like those of the other DMs, varied. JSF ¶ 23. His pay stubs reflected how the additional pay-on top of the base pay of $1, 034.22-was tabulated for weeks in which Frazer worked more than 40 hours. See JSF, Ex. 6; Alvarez Decl,, Ex. 1. For example, for a week in which Frazer worked 47 hours, BBB, to calculate his additional compensation for overtime, would divide his base compensation figure ($1, 034.22) by the total number of hours he worked that week (47). See generally Alvarez Deck, Ex. 1. This would yield the hourly rate that BBB would pay Frazer for his overtime hours for that week ($21.79 per hour). Thus, for the 7 hours of overtime Frazer worked, he would be paid $152.53 (i.e., $21.79/hour x 7 hours). See Id. In a week in which Frazer worked more overtime hours, this formula would result in Frazer's being paid a higher absolute overtime wage but a smaller rate per overtime hour. So, for example, had Frazer worked 54 hours in particular week, BBB would calculate his overtime hourly rate by dividing his weekly compensation ($1, 034.22) by the total number of hours worked in the week (54). This would yield an overtime hourly rate of $18.97; and for his 14 hours of overtime work, Frazer would be paid $265.58 (i.e., $18.97/hour x 14 hours). See id.

         The DMs were scheduled to work 47.5 hours per week. BBB's Response to P. 56.1 ¶¶ 1. The parties agree that, in almost every week at issue, the plaintiff DMs in fact either worked 40 or more hours, or, when annual or sick leave time taken that week was added to their actual hours worked, were credited with having worked 40 or more hours. See Id. ¶¶ 2, 6.

         However, as discussed below, on several occasions, three plaintiff DMs-Reynosa, Frazer, and Thomas-worked fewer than 40 hours in a given week, as a result of having taken unpaid leave. See infra § II.A.2. For these weeks, Reynosa, Frazer, and Thomas did not receive their base salary, but instead, a lesser figure. See Id. Plaintiffs' argument that BBB misapplied the FWW method relies heavily on these DMs' receipt for those several weeks of lower-than-usual base pay. Based on this alleged misapplication of FWW, plaintiffs argue that BBB is precluded from using that method to calculate the overtime pay of these employees and the other plaintiff DMs. Plaintiffs contend instead that BBB is obliged to calculate overtime pay by using the more generous "time and a half method that the FLSA prescribes for workers paid a regular hourly rate.

         B. Procedural History

         On October 18, 2016, plaintiffs filed this action, bringing claims on behalf of DMs and AMs under the FLSA and NYLL. Dkt. 1.

         On November 18, 2016, plaintiffs filed an amended complaint. Dkt. 11. On December 16, 2016, BBB answered the amended complaint. Dkt. 14. On June 16, 2017, after plaintiffs had moved for collective certification under the FLSA, see Dkt. 28, the Court granted plaintiffs leave to file a second amended complaint and denied as moot the motion for conditional class certification, see Dkt. 79.

         On June 28, 2017, plaintiffs filed their second amended complaint, the operative pleading before the Court. Dkt. 90 (the "SAC"). On July 12, 2017, plaintiffs moved again to certify a collective action under the FLSA. See Dkts. 105-07. On August 9, 2017, that motion became fully briefed. See Dkts. 112 (Def Op. Br.), 134 (Pl. Reply Br.). On August 25, 2017, however, plaintiffs informed the Court that they intended to move for summary judgment on the DMs' FWW claim and to move for class certification of their NYLL claims under Rule 23. See Dkt. 141. On September 13, 2017, at a pre-motion conference, the Court set a briefing schedule for the cross-motions for partial summary judgment; held in abeyance, pending resolution of the summary judgment motions, plaintiffs' motion for collective certification under the FLSA; and directed that plaintiffs defer filing any motion for class certification under Rule 23 until after the summary judgment motions were resolved. See Dkt. 144.

         On October 27, 2017, BBB filed its motion for partial summary judgment and supporting documents, including its Rule 56.1 Statement. Dkts. 152-56. On November 21, 2017, plaintiffs filed their brief in opposition and in support of their cross-motion for partial summary judgment. Dkts. 159-61. On December 15, 2017, BBB filed its brief in opposition to the plaintiffs' motion and in further support of its own, Dkt. 166, and, on January 5, 2018, a revised brief in opposition, Dkt. 171, and a counterstatement of facts in response to plaintiffs' 56.1 statement, Dkt. 172.[4] On January 19, 2018, plaintiffs filed their brief in reply. Dkt. 175.

         II. Applicable Legal Standards

         A. Standards for Summary Judgment

         To prevail on a motion for summary judgment, the movant must "show [] that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). The movant bears the burden of demonstrating the absence of a question of material fact. Celolex Corp. v. Catrett, 477 U.S. 317, 322 (1986).

         When the movant has properly supported its motion with evidentiary materials, the opposing party must establish a genuine issue of fact by "citing to particular parts of materials in the record." Fed.R.Civ.P. 56(c)(1); see also Wright v. Goord, 554 F.3d 255, 266 (2d Cir. 2009). An issue of fact is "genuine" if the evidence is such that a reasonable jury could return a verdict for the non-moving party. SCR Joint Venture L.P. v. Warshawsky, 559 F.3d 133, 137 (2d Cir. 2009). "[A] party may not rely on mere speculation or conjecture as to the true nature of the facts to overcome a motion for summary judgment." Hicks v. Baines, 593 F.3d 159, 166 (2d Cir. 2010) (internal quotation marks and citation omitted). "Only disputes over facts that might affect the outcome of the suit under the governing law" will preclude a grant of summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). In determining whether there are genuine issues of material fact, the Court is "required to resolve all ambiguities and draw all permissible factual inferences in favor of the party against whom summary judgment is sought." Johnson v. Killian, 680 F.3d 234, 236 (2d Cir. 2012) (quoting Terry v. Ashcroft, 336 F.3d 128, 137 (2d Cir. 2003)).

         "A court faced with cross-motions for summary judgment need not 'grant judgment as a matter of law for one side or the other, ' but 'must evaluate each party's motion on its own merits, taking care in each instance to draw all reasonable inferences against the party whose motion is under consideration.'" Cariou v. Prince, 784 F.Supp.2d 337, 345 (S.D.N.Y. 2011) (quoting Heubkin, Inc. v. United States, 996 F.2d 1455, 1461 (2d Cir. 1993)); see also, e.g., AGCS Marine Ins. Co. v. World Fuel Servs., Inc., 187 F.Supp.3d 428, 435 (S.D.N.Y. 2016).

         B. Standards Governing the Fluctuating Work Week Method

         The FLSA sets a maximum number of hours employees may work per week without additional, overtime compensation. See 29 U.S.C. § 207. For every hour a non-exempt employee works above 40 in a given week, the FLSA requires employers to pay "a rate not less than one and one-half times the regular rate at which he is employed." 29 U.S.C. § 207(a)(1), "This higher rate for overtime is intended to apply financial pressure on employers to spread employment and to compensate employees for the burden of a workweek exceeding forty hours." Russell v. ...


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