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Sue Ann Seymour, et al v. Ppg Industries

August 29, 2012

SUE ANN SEYMOUR, ET AL., PLAINTIFFS,
v.
PPG INDUSTRIES, INC. DEFENDANT.



The opinion of the court was delivered by: Conti, District Judge.

MEMORANDUM OPINION AND ORDER

Presently before the court is a motion challenging the court's subject-matter jurisdiction over this collective action on the basis of mootness following the rejection by plaintiffs of a Federal Rule of Civil Procedure 68 offer of judgment. For the reasons set forth below, the motion will be denied because the court continues properly to exercise subject-matter jurisdiction over this action.

I. Introduction and Procedural History

Plaintiffs in this collective action are former employees of defendant PPG Industries, Inc. ("PPG" or "defendant"). Plaintiffs bring misclassification and retaliation claims under the Fair Labor Standards Act of 1938, as amended, 29 U.S.C. § 201 et seq.("FLSA"). (Second Amend. Compl. (ECF No. 110).)

Plaintiffs filed their original complaint (ECF No. 1) on December 30, 2009. They filed an amended complaint (ECF No. 9) on January 25, 2010. On May 21, 2010, the court granted plaintiffs' motion for conditional certification (ECF No. 32) of their collective action. Plaintiffs filed a second amended complaint (ECF No 110), with leave of the court, on June 7, 2011.

On March 21, 2012, with discovery due to be completed by May 11, 2012, PPG filed a motion to dismiss for lack of jurisdiction (ECF No. 139) with a supporting brief (ECF No. 140). In response, on April 4, 2012, plaintiffs filed a motion to strike the motion to dismiss, arguing that (a) since it relied on matters outside the pleadings, the court must treat it as a summary judgment motion, and (b) the filing of the motion violated the court's explicit instruction not to file motions for summary judgment until the close of fact discovery.

During a hearing on April 24, 2012 (addressing the motion to strike and an unrelated discovery dispute), the court denied plaintiffs' motion to strike, but extended plaintiffs' time to respond to PPG's motion to dismiss until twenty days after the end of discovery. The court noted that the motion need not be converted into a motion for summary judgment, as only Federal Rule of Civil Procedure 12(b)(6) motions to dismiss relying on factual matters not referenced in the allegations of the complaint must be so converted. Although defendant believed the motion to dismiss to be authorized by Federal Rule of Civil Procedure 12(b)(1), the court could not construe it as such because it was filed after PPG had already answered the complaint. As such, the court treated the motion as a suggestion under Federal Rule of Civil Procedure 12(h) that the court lacked jurisdiction.

At a status conference on May 24, 2012, the court extended the deadline for fact discovery to June 25, 2012. The court informed the parties that it would hear arguments on the defendant's suggestion that it lacked jurisdiction during the conference after the close of fact discovery, which the court scheduled for June 22, 2012. The court permitted the parties to file supplemental briefing. On June 7, 2012, defendant filed its supplemental brief (ECF No. 151).

On June 21, 2012 plaintiffs filed their brief in opposition (ECF No. 156) and an appendix thereto (ECF No. 157). On June 29, 2012, Defendant filed a reply brief (ECF No. 160).

The court held a hearing on the motion on July 9, 2012, at which it gave the parties its preliminary assessment, and indicated that this opinion and order would be forthcoming.

II.Factual Background

A. Plaintiffs' Employment as Territory Managers

Plaintiffs are former employees of PPG. PPG is a Pennsylvania corporation with offices in Pittsburgh, Pennsylvania. PPG manufactures paints and stains under the trade names Olympic Paints and Olympic Stains. Olympic Paints and Olympic Stains are sold at Lowe's Home Center Stores ("Lowe's stores"). PPG employed plaintiffs as "territory managers" relating to the distribution and sale of Olympic products at Lowe's stores. As territory managers, plaintiffs were each assigned to multiple Lowe's stores. They were responsible for ensuring that Olympic products were properly stocked and displayed within the shelf space PPG negotiated with the Lowe's stores. They were also responsible for conducting event and brand marketing, product-specific training for Lowe's employees, and engaging in conversations and demonstrations with customers. PPG classified these employees as exempt from the overtime requirements of the FLSA. The complaint alleges that PPG required plaintiffs to clock in and out of the Lowe's stores, and required them to work forty hours per week "under the Lowe's roof." The complaint alleges they were not compensated for additional time, including travel time between stores, when they were allegedly carrying products between stores, and conducting PPG business using their cell phones. The complaint also contains allegations of retaliation against some, but not all, plaintiffs after they complained about their exempt classification.

Particularly relevant to this motion is the parties' understanding about whether the salary paid to plaintiffs was compensation only for their forty hours per week "under the Lowe's roof" or was compensation for all hours worked, regardless of location. As set forth below, the record evidence is mixed on this question.

Plaintiffs point out that many of PPG's own internal documents, which referenced plaintiffs' salary and rate-type ("ANNUAL") indicated that plaintiffs' "hrs/wk" or "standard conditions-working hrs/wk" were "40." (Pls.' Ex. 35.)

Many plaintiffs indicated in their depositions that their understanding at the time was that "anything over 40 hours you thought you were working for free." (See, e.g., Pls.' Ex. 39 (ECF No. 157-39) at 70.) For example, Geoff Hudson testified that "we were told upon my hiring, 'You will be working eight hours a day,' or the understanding was a 40-hour workweek." (Pls.' Ex. 41 (ECF No. 157-41) at 23.) Jamie Briggs was told that he was "being paid for my 40 hours in the store" and that "there was no compensation for" other time spent working outside the store. (Pls.' Ex. 39 (ECF No. 157-39) at 58-60.) More examples can be found in plaintiffs' brief and the accompanying appendix.

To the contrary, defendant points to the testimony of certain plaintiffs tending to show that they knew their weekly paycheck would not change regardless of how many hours they worked. (Def.'s Supp. Br. (ECF No. 151) at 3.) Defendant, for example, relies on the testimony of sample plaintiff Kelly Munsterman, who responded affirmatively when asked whether he understood that his compensation was for all hours worked, not just for the forty hours worked at a Lowe's store. (Id. at 5; Def.'s Ex. 8 (ECF No. 151-3) at 27.) Defendant points to contemporaneous emails sent by sample plaintiffs in which they complained that their average hourly earnings were decreasing because they were being asked to work more hours outside the Lowe's stores. (Def.'s Supp. Br. (ECF NO. 151) at 8.)

B. The Parties' Damages Stipulation and the Offer of Judgment

On December 20, 2011, counsel for both parties signed a stipulation indicating they had reached a compromise regarding the number of hours worked by each plaintiff during the time he or she had been classified as exempt, obviating the need for discovery or argument on the number of hours worked by each plaintiff. (ECF No. 140-3.) The parties also reached a compromise agreement about the statute of limitations applicable to this action. Attached to the stipulation is a chart, which indicates the greatest value of all plaintiffs' overtime claims (including liquidated damages) is $352,649.46, assuming the half-time method of calculation is used, and incorporating the parties' agreement vis-a-vis the statute of limitations. (ECF No. 140-3 at 6.) The chart indicates that the maximum value of the overtime claims using the time-and-a-half method is $1,305,658.04. (Id.)

On February 1, 2012, counsel for defendant tendered an offer of judgment with respect to plaintiffs' overtime claims (Count I) in the amount of $353,179.73 (or approximately $500 more than the stipulated half-time value of plaintiffs' claims). (ECF No. 140-2.) Pursuant to the explicit terms of the offer of judgment, and by virtue of Federal Rule of Civil Procedure 68, the offer was deemed to have been rejected when plaintiffs failed to respond within two weeks.

III.Standard

A. Federal Rule of Civil Procedure 12(h)(3)

A rule 12(b)(1) motion must be filed before the filing of an answer. FED. R. CIV. P. 12(b) ("A motion asserting any of these defenses must be made before pleading if a responsive pleading is allowed."). An objection that a federal court lacks subject-matter jurisdiction, however, may be raised under Rule 12(h)(3) by a party, or by a court on its own initiative, at any stage in the litigation, even after trial and the entry of judgment. Arbaugh v. Y&H Corp., 546 U.S. 500, 506 (2006) (citing FED. R. CIV. P. 12(h)(3)). The Supreme Court instructed in Arbaugh that "in some instances, if subject-matter jurisdiction turns on contested facts, the trial judge may be authorized to review the evidence and resolve the dispute on her own." Id. at 514 (citing 5B CHARLES ALAN WRIGHT & ARTHUR R. MILLER, FEDERAL ...


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