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Brown v. Family Dollar Stores of Indiana

July 15, 2008


Appeal from the United States District Court for the Southern District of Indiana, Indianapolis Division No. 04 C 2015-Larry J. McKinney, Judge.

The opinion of the court was delivered by: Rovner, Circuit Judge.


Before CUDAHY, RIPPLE, and ROVNER, Circuit Judges.

Plaintiff-Appellant Vivian Brown brought an action against her former employer, Family Dollar Stores of Indiana, LP ("Family Dollar"), alleging that Family Dollar failed to pay in a timely manner overtime wages due her in violation of the Fair Labor Standards Act, ("FLSA"), 29 U.S.C. 201 et seq., the Indiana Wage Payment Statute, Ind. Code § 22-2-5-1 et seq., and the Indiana Wage Claim Statute, Ind. Code § 22-9-1 et seq. The district court granted Family Dollar's motion for summary judgment on the FLSA claim and the state claim for an unpaid incentive bonus, and dismissed the remaining state claims without prejudice. Brown now appeals that decision, and we reverse.

Family Dollar owns and operates a chain of retail stores. Brown was hired as a cashier/stock person in August 2003. She subsequently was promoted to assistant manager, with a corresponding increase in hourly pay. On approximately November 24, 2003, Family Dollar terminated the manager at the store in which Brown worked. As assistant manager, Brown then took on some of the responsibilities of the store manager, but remained an employee paid on an hourly basis and eligible for overtime pay. There were two other employees who worked at the store in addition to Brown, but they filled the positions of clerk and stock persons. The store remained without a store manager until January 8, 2004, when Family Dollar promoted Brown to store manager. Pursuant to Brown's request, she was transferred to a different Family Dollar store in April 2004, and in May 2004, she was terminated by the company.

Brown alleged that she was not properly compensated for overtime during the time she worked at Family Dollar. The FLSA provides that employees who work more than forty hours in a week must be paid for the excess hours at one and one-half times the regular rate of pay. 29 U.S.C. § 207(a)(1). An employee bears the burden of proving that she performed overtime work for which she was not properly compensated. Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 686-87 (1946), superseded by statute on other grounds as stated in IBP, Inc. v. Alvarez, 546 U.S. 21, 41 (2005). The district court held that " 'while this burden is not an insurmountable one, an employee who brings suit for unpaid overtime compensation bears the burden to prove, with definite and certain evidence, the she performed work for which she was not properly compensated.' " Dist. Ct. op. at 5-6, citing Anderson, 328 U.S. at 686-87; Reeves v. IT & T Corp., 616 F.2d 1342, 1351 (5th Cir. 1980), implicitly overruled on other grounds as recognized in Heidtman v. County of El Paso, 171 F.3d 1038, 1042 n.4 (5th Cir. 1999). Brown was unable to identify with specificity the hours or even days for which she worked overtime that was not properly paid. Accordingly, the district court concluded that Brown's general allegations were insufficient to meet that burden and granted summary judgment in favor of Family Dollar.

Anderson, however, does not set forth a new "definite and certain evidence" standard but merely recognized the established requirement that damages be proven. Anderson recognized that once a plaintiff establishes a violation of the FLSA, the plaintiff must establish damages, and that the task is not a difficult one where the employer has kept time records in compliance with the requirements of the FLSA. In that circumstance, the accurate time records will establish the amount of damages, and the general rule that precludes recovery of uncertain and speculative damages is appropriate. Anderson, 328 U.S. at 688. That is a recognition of the need to quantify damages, not a new, more burdensome standard. Anderson also articulated, however, a different standard that was to apply where the employer's records did not provide that accurate record of time worked.

Anderson recognized that where an employer failed to keep the proper and accurate records required by the FLSA, the employer rather than the employee should bear the consequences of that failure. To place the burden on the employee of proving damages with specificity would defeat the purpose of the FLSA where the employer's own actions in keeping inadequate or inaccurate records had made the best evidence of such damages unavailable. The Court accordingly held that "[i]n such a situation, . . . an employee has carried out his burden if he proves that he has in fact performed work for which he was improperly compensated and if he produces sufficient evidence to show the amount and extent of that work as a matter of just and reasonable inference." Id. at 687-88. The burden then would shift to the employer to produce evidence of the precise amount of work performed or to negate the reasonableness of the inference to be drawn from the employee's evidence. Id. If the employer fails to meet that burden, a court may award damages even though they are approximations. Id. at 688.

The district court in this case recognized the just and reasonable inference test set forth in Anderson, but deemed it inapplicable because it concluded that "Brown does not allege that Family Dollar's records are not in accord with FLSA requirements." The record, however, demonstrates that Brown presented evidence that the records were not in compliance with the FLSA and could not be trusted. First, Brown introduced evidence that the records were accurate when submitted by employees, but were subsequently altered by management prior to issuance of the paychecks. Specifically, Brown testified in her deposition that managers, district managers, and assistant district managers could manipulate the records of times worked in the computer system. She testified that as a manager, she personally observed employees paychecks that were not reflective of the times in the printouts and e-mails that she had sent to payroll. She further declared that when she reported that a person's check was short, she was given the response that they were not going to get paid. Finally, Brown also testified that she had the same experience when LaTasha Holder was the store manager, with Brown's own paycheck not reflecting the hours on the printout. That evidence alone is sufficient to raise a genuine issue of fact regarding the accuracy of the records kept by Family Dollar, but Brown provided additional evidence that the time records were inadequate or inaccurate.

Brown provided evidence that the hours in the employer's time records could not have been accurate because they did not conform with the hours that she would have had to have been at the store given the store's hours of operations. The district court acknowledged that the manager of the Family Dollar store at which Brown worked was terminated on approximately November 24, 2003, and that Brown continued to serve as assistant manager but also took on the managerial duties. Brown testified that she was the only person with the key to open and close the store. The only other persons at the store were two associates who were clerks and stock persons, and only assistant managers or managers had the responsibility of opening and closing stores. She further testified that if she did not come in, the store would not be open for business, and that on one occasion when she injured her finger, she had to return from the emergency room to reopen the store or it would not have been open for business. Brown testified that it took approximately 1-1 1/2 hours to open the store, and an additional 1-2 hours to close it. Closing a store involved myriad duties, that could include redoing a display wall, putting up new SKU (stock keeping unit) numbers, and rearranging shelves or end caps. During the holiday period from Thanksgiving to Christmas, the store had extended hours and closing would take longer. The hours in the employer's records, however, were not reflective of those hours. For instance, in numerous instances, the recorded time would have allowed significantly less than the 1-2 hours that closing the store requires. The store closed at 8:00 p.m. every day but Sunday, when it closed at 6:00 p.m. The following clock-out times were inconsistent with the 1-2 hours of work required to close the store:

Closing time of 6:00 p.m.-clock-out time:

10-19-03 6:30

Closing time of 8:00 p.m., clock-out time:

10-20-03 8:18 11-7-03 8:34 11-15-03 8:30 11-20-03 8:27 11-25-03 8:29 ...

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