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Schweninger v. Advanced Vision Technology Inc.

United States District Court, N.D. Illinois, Eastern Division

March 31, 2017

MARTIN SCHWENINGER, Plaintiff,
v.
ADVANCED VISION TECHNOLOGY, INC. A/K/A AVT, INC., Defendant.

          OPINION AND ORDER

          Joan H. Lefkow Judge.

         Martin Schweninger filed suit against his former employer, Advanced Vision Technology, Inc. (AVT), alleging violations of the Fair Labor Standards Act, 29 U.S.C. § 201 et seq. (FLSA).[1] Cross motions for summary judgment are pending, and the parties agree that the case can be resolved on the issue of whether there is a valid Belo contract under 29 U.S.C. § 207(f). If a Belo contract exists, there can be no violation of the FLSA. For the reasons stated below, AVT's motion is granted and Schweninger's motion is denied.

         BACKGROUND[2]

         AVT is a business that deals in printing technology. Schweninger worked for AVT as a Field Service Engineer (FSE) from 2007-the time AVT acquired his previous employer, GMI-until he resigned in September 2014. As an FSE, Schweninger worked on a variety of AVT's product lines, and his job duties covered a wide range of activities. These duties included: installing, maintaining, and repairing AVT systems, which sometimes entailed extensive travel by car or plane to reach customer locations; consulting with customers, training customers' employees to use the machines, troubleshooting problems and providing remote support; and completing routine paperwork, ordering parts, promoting sales, and attending trainings. When Schweninger had to travel to customer locations for installation or repair work, his trips would be scheduled in advance. The duration of these trips could vary for any number of reasons, including variations in travel time, delays in receiving parts, the type of product being installed or repaired, the customer's employee-training needs, or a repair or maintenance issue that was not known to him before he arrived onsite. Schweninger was also regularly scheduled to be “on call, ” during which times he would be responsible for addressing customer emergencies either by phone or through in-person visits. Issues that would come up when he was on call were “usually just kind of one off little issues, ” (dkt. 37-5, Ex. 4 at 50:21-22), and “each troubleshooting call was its own entity . . . . [that] could take a few minutes or an hour.” (Id. at 53:16-18.)

         In approximately 2005, GMI switched all the FSEs from salary to hourly pay. As part of that switch, GMI guaranteed FSEs would be paid for a minimum of 40 hours per week, even when they worked fewer than 40 hours. AVT maintained this pay structure when it acquired GMI in 2007. In January 2009, however, AVT ran into financial difficulties due to the financial downturn and began considering modifying the way it paid FSEs. First, it tried to maintain the same pay structure but with reduced hourly wages. When that did not alleviate the financial strain, AVT tried to limit FSEs' overtime, but that caused customer service to suffer. After further consideration, AVT came up with three possible solutions: (1) keeping the same pay structure but further lowering hourly wages; (2) abolishing the guaranteed minimum weekly pay and only paying employees for hours worked; or (3) adopting what is known as a Belo contract, under which the company would lower hourly wages but also guarantee a minimum weekly pay equivalent to 40 hours at a regular hourly wage and an additional 10 hours at an overtime wage equal to one and a half times the regular wage.[3] AVT, wanting to stabilize its labor costs while still providing FSEs with a steady, predictable income, opted to adopt the Belo contract.

         AVT informed the FSEs of this change in a letter dated December 10, 2009. The letter explained AVT's reasoning for the change and laid out the terms of the new pay structure, including the employee's new hourly wage, overtime wage, and minimum weekly pay. It further stated that acceptance of those terms was a condition of continued employment. AVT asked each employee to sign their letter and return it prior to the new pay structure taking effect on January 1, 2010. Schweninger signed his letter and returned it. Schweninger continued to work for AVT and to be compensated in accordance with the terms laid out in the December 2009 letter, until he voluntarily resigned in September 2014.

         On August 11, 2015, Schweninger filed suit against AVT, alleging that AVT violated the FLSA's overtime provision, 29 U.S.C. § 201(a), because the new pay structure was not a valid Belo contract under 29 U.S.C. § 207(f) because it did not meet two of the four requirements under that exception (count I). Schweninger additionally alleged that AVT's violation was willful, thus extending the applicable statute of limitations for recovery of unpaid overtime to three years, pursuant to 29 U.S.C. § 255(a) (count II), and that he, on behalf of himself and a similarly situated class of plaintiffs, was entitled to liquidated damages under 29 U.S.C. § 260 (count III). After the completion of discovery, AVT filed for summary judgment that the new pay structure was a valid Belo contract. Schweninger filed a cross-motion for summary judgment on the same issue.

         LEGAL STANDARD

         Summary judgment obviates the need for a trial where there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). A genuine issue of material fact exists if “the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). To determine whether any genuine fact issue exists, the court must pierce the pleadings and assess the proof as presented in depositions, answers to interrogatories, admissions, and affidavits that are part of the record. Fed.R.Civ.P. 56(c). Because the parties agree that a single issue resolves the case, the court views the facts in a light favorable to Schweninger. See Scott v. Harris, 550 U.S. 372, 378127 S.Ct. 1769, 167 L.Ed.2d 686 (2007). It is unnecessary to treat the motions separately.

         AVT bears the initial burden of proving there is no genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). In response, Schweninger cannot rest on bare pleadings alone but must designate specific material facts showing that there is a genuine issue for trial. Id. at 324; Insolia v. Philip Morris Inc., 216 F.3d 596, 598 (7th Cir. 2000). If a claim or defense is factually unsupported, it should be disposed of on summary judgment. Celotex, 477 U.S. at 323-24.

         ANALYSIS

         I. Requirements of a “Belo” Contract

         Section 207 of the FLSA addresses the maximum time an employer can require an employee to work during any given week without being entitled to compensation in excess of the normal hourly rate, i.e., overtime pay. See generally, 29 U.S.C. § 207(a). Subsection (f) of this section, however, makes an exception for “[e]mployment necessitating irregular hours of work.” See 29 U.S.C. § 207(f). In order to qualify for this exception, four requirements have to be met: (1) the employee is employed pursuant to a bona fide individual contract; (2) the employee's duties necessitate irregular work hours; (3) the contract specifies a regular rate of pay and compensation of not less than one-and-a-half times that rate for hours in excess of a maximum workweek (40 hours); and (4) the contract contains a weekly pay guarantee, based on the specified rates, for not more than 60 hours of work. Id.[4] “[A]n employer who invokes the Belo exception has the burden of showing affirmatively that each of the essential conditions to the exception are met.” Donovan v. Brown Equip. & Service Tools, Inc., 666 F.2d 148, 153 (5th Cir. 1982); see also Acton v. City of Columbia, 436 F.3d 969, 976 (8th Cir. 2006); Johnson v. City of Columbia, S.C., 949 F.2d 127, 129-30 (4th Cir. 1991).

         The parties do not dispute that their employment contract specified a regular rate of pay and an overtime rate of one-and-a-half times the regular rate and that it included a weekly pay guarantee. (Dkt. 50 ¶ 8.) Thus, the only questions are whether the contract constituted a bona fide individual agreement and whether Schweninger's employment duties necessitated irregular work hours. In interpreting the terms “bona fide individual contract” and “necessitate irregular hours of work, ...


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