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Freundt v. Allied Tube & Conduit Corp.

November 29, 2007


The opinion of the court was delivered by: Susan E. Cox U.S. Magistrate Judge

Magistrate Judge Susan E. Cox


This matter is before the Court on defendant Allied Tube and Conduit Corporation's Motion for Partial Summary Judgment on certain portions of the putative class action Amended Complaint filed on behalf of plaintiff Randy Freundt and other similarly situated employees. For the reasons stated below, that motion is granted as to Paragraphs 8(d) and (e) of Count One and as to Count Two, and denied as to Paragraph 8(b) of Count One.


The facts underlying the motion for summary judgment are, for the most part, not in dispute. Freundt is an employee at defendant's manufacturing plant in Harvey, Illinois. He charges that defendant has violated the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 201 et seq. and the Illinois Minimum Wage Law ("IMWL"), 820 ILCS § 105/4 (a) in several ways resulting in an overall failure to pay plaintiff and other similarly situated employees overtime at one-and-one-half their regular rate of pay for all hours exceeding forty in a one week period. Two of the allegations of Count One focus on how that "regular rate of pay" gets calculated which is governed by specific sections of the collective bargaining agreement ("CBA") between the defendant and plaintiff's union, the United Steelworkers Local 9777-18. Article 24.3 of that agreement provides for certain production bonuses to be paid as part of "direct incentive programs dated 6/19/84" which are incorporated by reference into the CBA. Plaintiff has alleged that defendant violated the FLSA by manipulating these programs to its advantage. Specifically, plaintiff has charged that defendant limits the size of daily "efficiency percentages" which are calculated for each shift which, in turn, affects the size of the production bonuses it would otherwise be obligated to pay plaintiff. Because the production bonuses are not calculated correctly plaintiff alleges in his complaint a "corresponding failure" to pay him for overtime work. (See Paragraph 8(d)). Similarly, plaintiff also claims that defendant does not update its manufacturing percentages for its products which also affects production bonuses and, therefore, results in overtime due to plaintiff. (See Paragraph 8 (e)).

As noted above, the method of calculation of production bonuses is set forth in a lengthy document which is incorporated by reference into the CBA and made part of the record before this Court. Defendant argues that resolution of this issue necessarily requires interpretation of the CBA and the document it incorporates by reference. Pursuant to the explicit language in the CBA, these provisions are subject to a mandatory arbitration process set forth in the CBA and defendant contends they cannot be litigated as a FLSA claim. Although plaintiff agrees that a dispute which requires the interpretation of the CBA must be arbitrated, it nonetheless maintains that these allegations do not require any interpretation of the CBA and, accordingly, are cognizable under the FLSA.

Defendant also challenges Paragraph 8(b) of the Complaint which alleges that the defendant failed to include "lunch money" payments into plaintiff's regular rate of pay, thereby also causing a failure to pay requisite overtime. According to defendant, it is entitled to judgment as a matter of law because federal regulations exclude expenses incurred by an employee for his employer's convenience and are excluded from the regular rate of pay if they approximate the expense incurred by the employee. See 29 C.F.R. §778.217(a). These expenses include "supper money" if the funds represent a reasonable amount which will cover the cost of a meal so that an employee can remain on the job in the evening hours. 29 C.F.R. §778.217(b)(4). To support its claim, defendant points out that the undisputed facts show that the $4.00 it pays its employees as "lunch money" is the cost of a meal in its cafeteria and that employees are required to remain at Allied during their shift. Moreover, such money is only payable to an employee if he/she is required to remain at the plant for more than ten consecutive hours. In arguing against the application of the federal regulation, plaintiff concedes that it is company policy to require employees to remain on site during their shift, but points out that employees are granted permission to leave the premises from time to time. Plaintiff also points to evidence in the record that the amount (pay) employees receive for lunch money is taxable income and that the CBA requires that the payments be included in the average hourly rate to compute the base rate on which overtime is calculated.

Finally, defendant argues that Count Two, a state law claim under the Illinois Minimum Wage Law ("IMWL"), is preempted by the federal Labor-Management Relations Act ("LMRA"), 29 U.S.C. § 185, because the terms and conditions of plaintiff's employment are governed by the CBA. Plaintiff contends preemption is not applicable because there is no need for the Court to analyze the CBA to resolve the issues raised in Count Two.


On a motion for summary judgment, the entire record is considered with all reasonable inferences drawn and all factual disputes resolved in favor of the non-movant. Turner v. J.V.D.B. & Associates, Inc., 330 F.3d 991, 994-95 (7th Cir.2003); Palmer v.. Marion County, 327 F.3d 588, 592 (7th Cir.2003); Abrams v. Walker, 307 F.3d 650, 653-54 (7th Cir.2002). The burden of establishing a lack of any genuine issue of material fact rests on the movant. Outlaw v. Newkirk, 259 F.3d 833, 837 (7th Cir.2001); Wollin v. Gondert, 192 F.3d 616, 621-22 (7th Cir.1999). The non-movant, however, must make a showing sufficient to establish any essential element for which the non-movant will bear the burden of proof at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Binz v. Brandt Construction Co., 301 F.3d 529, 532 (7th Cir.2002); Traylor v. Brown, 295 F.3d 783, 790 (7th Cir.2002). The movant need not provide affidavits or deposition testimony showing the nonexistence of such essential elements. Celotex, 477 U.S. at 324. Also, it is not sufficient to show evidence of purportedly disputed facts if those facts are not plausible in light of the entire record. See NLFC, Inc. v. Devcom Mid-America, Inc., 45 F.3d 231, 236 (7th Cir.), cert. denied, 515 U.S. 1104, 115 S.Ct. 2249, 132 L.Ed.2d 257 (1995); Covalt v. Carey Canada, Inc., 950 F.2d 481, 485 (7th Cir.1991); Collins v. Associated Pathologists, Ltd., 844 F.2d 473, 476-77 (7th Cir.), cert. denied, 488 U.S. 852, 109 S.Ct. 137, 102 L.Ed.2d 110 (1988).


I. Are Claims Regarding Efficiency and Production Bonuses in Count One Cognizable Under the FLSA?

In Barrientine v. Arkansas-Best Freight System, the Supreme Court held that minimum wage claims under the FLSA may be brought in federal court even though the employee's collective bargaining agreement provides for arbitration of those claims. 450 U.S. 728, 734 (2001). In Leahy v. City of Chicago, the Seventh Circuit held that as long as a collective bargaining agreement comported with the FLSA, the grievance process provided in that agreement should be utilized to interpret its terms. 96 F.3d 228, 232 (7th Cir. 1996); see also Jonites v. Exelon Corp., 2007 WL 2198380 (N.D. Ill. July 20, 2007). Plaintiff conceded in his brief (and at oral argument) that the FLSA claim is precluded if the Court is required to interpret the terms of the collective bargaining agreement.

Plaintiff argues that the Court is not required to interpret the CBA because the defendant has not proffered any evidence to show that it would be necessary to calculate production bonuses to determine whether defendant imposed an arbitrary cap or ceiling on them when it calculated the employees' regular rate of pay. But this argument is not persuasive. Both the collective bargaining agreement and the direct incentive agreement are of record in this case. Even a cursory reading of those documents makes it obvious that this Court must extensively analyze the CBA and the documents it incorporates by reference to decide whether overtime pay is due to plaintiff under the FLSA. First, the Court must interpret the agreements to determine how both efficiency percentages and manufacturing percentages should have been correctly calculated under the CBA for each task performed by the plaintiff. After reaching this conclusion, the Court must decide whether those percentages were capped and the reasons for that alleged action. Such an analysis requires more than a mere reference to the CBA. The question is not (as plaintiff argues) whether such bonuses should have been included in the regular rate of pay under ...

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