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Boyce v. Independent Brewers United Corp.

United States District Court, N.D. California

June 1, 2017

Victor Boyce, Plaintiff,
v.
Independent Brewers United Corporation, et al., Defendants.

          FINDINGS OF FACT AND CONCLUSIONS OF LAW

          Yvonne Gonzalez Rogers, United States District Court Judge

         Plaintiff Victor Boyce brings this action against defendants Independent Brewers United Corporation and (“IBUC”) and North American Breweries, Inc. (“NAB”) pursuant to the Fair Labor Standards Act of 1938, 29 U.S.C. section 201 et seq. (“FLSA”). In short, plaintiff claims that he was misclassified as an exempt employee under the FLSA between July 10, 2012 through September 27, 2013 (the “Relevant Period”), [1] thus entitling him to overtime pay for that period. Specifically, plaintiff claims $41, 125.62 in unpaid overtime, an equal amount in liquidated damages or in the alternative prejudgment interest in the amount of $18, 781.69, plus $16, 470.74 in costs and $226, 009.00 in attorney's fees.

         The Court held a five-day bench trial in this matter, in which plaintiff called three witnesses and defendants presented five witnesses. Additionally, the trial involved several exhibits containing emails, letters, production and operations logs, and diagrams, pictures, and videos of the facility.

         Having heard and carefully considered all of the evidence and argument presented at trial, and all briefings and stipulations, the Court hereby renders the following findings of fact and conclusions of law, resulting in its finding that plaintiff was properly classified as exempt during the Relevant Period. Accordingly, the Court Rules in favor of defendants.

         I. Undisputed Overview

         A. Undisputed Background

         The following facts are largely undisputed: Defendants hired plaintiff in 2005 to work at the Pyramid Brewery in Berkeley, California (the “Facility”) as the “Production Manager.” (Dkt. No. 116, Stipulated Facts (“SF”) 1, 2, and 5.) On or around September 27, 2013, due to demand and quality issues, defendants suspended operations at the Facility, and ultimately permanently closed the same. (See SF 4.) On October 7, 2013, defendants laid off plaintiff. (SF 5.)

         At the Facility, the Production Manager oversaw the production, shipping & warehouse, and draft departments. (SF 3.) When plaintiff was initially hired, defendants provided him with an offer letter setting forth his duties as follows: “1. Managing Inventories of all packaging raw materials in the plant[;] 2. Assuring quality of all finished goods plant wide[;] 3. Hiring, termination and supervision of direct reports[;] 4. Maintaining and building a strong team of direct reports that are trained and motivated to achieve objectives[;] 5. Accounting for all hours worked by direct and indirect reports[;] 6. Accounting for liquid and packaging material losses[;] 7. Responsible for weekly and month end inventories of all packaging materials[;] 8. Responsible for insuring we are compliant on all QA procedures and process[;] 9. Light maintenance of production line machinery.” (Defendants' Exhibit “DEX” 1001.) Plaintiff claims that this description of his duties did not accurately reflect his day-to-day obligations during the Relevant Period because he was forced to spend the majority of his day acting as a machine operator for the production line.[2]

         The parties submitted a summary showing the hours in which the production line was running during the Relevant Period. (DEX 1087 and Plaintiff's Exhibit (“PEX”) 9.)[3] These exhibits are based on operation logs admitted into evidence as DEX 1083. The summaries demonstrate the following: The Relevant Period included 298 working weekdays plus six weekend days during which the Facility was operational. Of those 304 total days, the production line did not run for 152 days, which amounts to 50% of the total working days during the Relevant Period.[4] Importantly, on days where no production occurred, plaintiff asserts that he was still at the Facility for ten hours due to a mandatory 6:30 a.m. to 4:30 p.m. schedule, and on days when production was active, plaintiff added 1.5 hours to the total run time to account for clean-up time. Defendants dispute that plaintiff had a mandatory ten-hour schedule, and also dispute the addition of 1.5 hours to the total run time.[5]

         Finally, the parties have stipulated that plaintiff's weekly salary during the Relevant Period was: (i) $1, 238.52 from July 10, 2012 to June 18, 2013 and (ii) $1, 263.29 from June 18, 2013 to September 27, 2013.[6]

         B. Undisputed Overview of Facility Operations

         The Facility essentially consisted of two operations, namely the brewery and production departments. The production department was composed of the production line (for bottling beers), the draft line (for filling kegs), and warehouse & shipping. Additionally, the maintenance department provided support for both the brewery and production departments. Although the number of employees fluctuated during the Relevant Period, the production department employed approximately eleven individuals, the brewery approximately ten, and maintenance approximately three. The following “managed” each department during the Relevant Period: (i) Production (Victor Boyce for the entire period); (ii) Brewery (Simon Pesch and then John Chamberlain); and (iii) Maintenance (Kevin Gray from 2005 through November 29, 2012; Layne Powell from December 21, 2012 through the end of the Relevant Period). Each manager, in turn, reported to the Plant Manager. Eduardo Perez was Plant Manager from the beginning of the Relevant Period through approximately May 2013, and Norm Wolfe was Plant Manager from approximately May 2013 through the end of the Relevant Period.

         Generally, the Facility functioned thus: The brewery side of the operations produced the actual beer. The finished beer would then be placed in large containers called Brite Tanks. The production department would then extract the beer from the Brite Tanks and send it either to the production line or the draft line. Once the product had either been bottled or placed in a keg, a forklift operator would then take the product to the warehouse to await shipment.

         The schedule followed to produce the beer and then package for shipping was set generally by Marlis Sears, the Supply Chain Coordinator, who was based in Portland, Oregon. Essentially, Sears would receive an order for a specific product, and she would set it on a schedule to be shipped in approximately four weeks. (Trial Tr. 808:25-809:6; see generally DEX 1085.) Based on that schedule, she would ensure that the brewery out of which that product would be manufactured possessed the necessary ingredients and materials. (Trial Tr. 809:9-15.) The production schedules Sears prepared would be sent to Perez, Pesch, and plaintiff. (Id. at 810:24- 811:1.) Sears testified that the production department decided the order within any day's schedule, and she was primarily concerned with ensuring that the customer's order was filled. (Id. at 812:9-13.) If issues arose in the production line that would impact the schedule, Sears testified that plaintiff would inform her of the same so she could adjust schedules accordingly. (Id. at 815:21-816:20.)

         The crux of plaintiff's claim is that he spent most of his hours operating machines on the production line to provide mandatory rest and lunch breaks for the line operators. Thus, it is important here to discuss the process by which the beer was bottled, packaged, and sent to the warehouse for shipping. The production line required approximately five people for the following positions: (1) filler and labeler; (2) drop packer; (3) palletizer; (4) box erector and six-packer; and (5) backend forklift operator. The first position, the filler, was the initial person to arrive in the morning for the production line. Generally, the filler would check the white board next to the Brite tanks to determine what product needed to be produced for that day. The filler would then proceed with running certain sanitation tests and procedures before beginning the process of running beer through the machines. At the Facility, the filler also ran the labeling machine. (Trial Tr. 19:21-21:7.) The third position was the “drop packer, ” where the bottles are placed in boxes. (Id. at 21:8-11; 23:9-13.) The next position was the “palletizer, ” which rotates the box according to a certain pallet to prepare it for shipping. (Id. at 23:14-22.) The final position on the production line was the “box erector and six-packer.” (See DEX 8 at 2-3.) After the process was completed, a forklift operator would then take the finished pallet and move the product to the warehouse. (Trial Tr. at 24:2-4.)[7]

         II. Overview of Issues To Resolve

         The parties do not dispute the standard against which the controverted facts must be weighed. The Court reviews it here:

         The FLSA requires employers to provide overtime compensation for employees for hours worked above forty hours a week unless a particular exemption applies. 29 U.S.C. § 207(a)(1); see Solis v. Washington, 656 F.3d 1079, 1083 (9th Cir. 2011). “FLSA exemptions are to be ‘narrowly construed against . . . employers' and are to be withheld except as to persons ‘plainly and unmistakably within their terms and spirit.'” Solis, 656 F.3d at 1083 (quoting Auer v. Robbins, 519 U.S. 452, 462 (1997). The employer has the burden of demonstrating, by a preponderance of the evidence, that an exemption applies to any particular employee. Id. (“The criteria provided by regulations are absolute and the employer must prove that any particular employee meets every requirement before the employee will be deprived of the protection of the Act.” (citations omitted)); see also Duff-Brown v. City & Cty. of San Francisco, No. 11-CV-3917-TEH, 2013 WL 163530, at *4 (N.D. Cal. Jan. 15, 2013) (finding that defendant's burden in an FLSA classification case is the preponderance standard).

         Thus, the entire case revolves around whether defendants have demonstrated by a preponderance of the evidence that plaintiff's work during the Relevant Period fell within an FLSA exemption, namely the executive employee exemption. To resolve that issue, the Court considered all of the documentary evidence and the testimony proffered, including weighing the relative credibility of the witnesses on the topics to which they testified. To that end, the Court identifies the witnesses called to testify and comments generally on their credibility and reliability:[8]

1) Plaintiff Victor Boyce: Plaintiff's testimony regarding his day-to-day activities is the most comprehensive source of information about daily tasks and duties. However, plaintiff's testimony lacked specificity as to the timing of certain events, and, at times, his testimony revealed critical flaws in his memory regarding timing and frequency of significant events. For instance, he testified about an incident that he explains occurred as a result of certain workforce reductions. (Trial Tr. 131:1-14.) However, on cross-examination, he conceded that such incident likely occurred in 2003, prior even to his being hired as Plant Manager. (Id. at 212:8-12.) Similarly, certain extensive maintenance work occurred well before the Relevant Period.
2) Kenneth Yartz: Yartz oversaw the Facility at Berkeley as the Vice President of Operations from the beginning of the Relevant Period until January 2013. Yartz was based out of Rochester, New York and visited the Facility only once in this capacity during the Relevant Period. Thus, although the Court finds Yartz' testimony to be credible, Yartz had only limited opportunity to observe personally the daily activities at the Facility. Additionally, although Yartz testified that he had weekly calls with the managers at the Facility, no record exists of who was on such calls on a weekly basis. The probative value of this testimony was weak.
3) Mark House: House succeeded Yartz in overseeing the Facility from January 2013 through the end of the Relevant Period. House was also based out of Rochester, New York, and visited the Facility periodically throughout the Relevant Period. During the trial a dispute arose as to how often House was on the premises during the Relevant Period. The Court only credits defendants' responses to interrogatories in its findings of fact and conclusions of law. Due to the contradictory nature of House's testimony and the lack of any business records to substantiate House's version of his visits to the Facility, the Court finds his testimony to be uncredible.
4) Joellen Grady: Grady served as the Human Resources Coordinator through the Relevant Period, and was based out of the Facility in Berkeley. The Court finds that Grady's testimony on the subjects upon which she was familiar to be credible. However, she also lacked detailed personal knowledge of plaintiff's day-to-day activities at the Facility making her less probative on those issues.
5) Layne Powell: Powell served as the Maintenance Manager from December 2012 through the end of the Relevant Period. The Court finds Powell's testimony and memory of events credible.
6) Kevin Gray: Kevin Gray was the Maintenance Manager from 2005 through November 2012. In this role, Gray worked with plaintiff on almost a daily basis and corroborated much of plaintiff's testimony. However, like plaintiff, Gray's testimony demonstrates a lack of memory as to the timing of certain events and the specific details of plaintiff's work. Further, the Court notes a certain amount of bias as he too sued defendants on the same basis.
7) Marlis Sears: Sears was the Supply Chain Coordinator throughout the Relevant Period, and was based in Portland, Oregon. Sears visited the Facility approximately once a month. The Court finds Sears' testimony credible, but also notes that she had limited exposure to plaintiff's daily activities at the Facility.

         The Court is well-aware that each side has a self-interest in the outcome of this case. For this reason the Court has searched for corroborating evidence. Notably, neither side called as witnesses the most knowledgeable third parties, namely either Eduardo Perez or any of the employees whom plaintiff either “managed” or worked alongside.

         Much of plaintiff's case hinged on the argument that Plant Manager Perez's micro-management style prevented plaintiff from serving as a “true” manager. Given that Perez was not employed for four of the fourteen-month Relevant Period, plaintiff's strongest case does not apply to over twenty-five percent of the Relevant Period. Further, while the Court reviews each of the factors under the law which evidence managerial roles, these factors are less helpful where, as here, plaintiff was supervising a seasoned team of employees during a slow-down period. Against this backdrop and in light of all the record evidence, the Court makes the following findings of fact regarding plaintiff's job duties during the Relevant Period organized into nine separate categories.

         III. Findings of Fact

         A. First Category: Time Spent on the Production Line

         The Court finds that until approximately April 2013, plaintiff did not regularly cover as a machine operator absent extenuating circumstances such as simultaneous absences.[9] From April 2013 through the end of the Relevant Period, the production line was often shut down because of declining demand and quality issues. (See PEX 9.) Moreover, between April 2013 through the second half of May 2013, the Facility operated on a 32-hour week schedule because of declining demand. (See Trial Tr. 512:2-7.)[10] This Category does not support a finding of misclassification.

         The Court's finding is based in part on the following:

         Plaintiff testified that he spent about six to eight hours operating machines on days when production was running. The evidence in the record partially corroborates plaintiff's testimony. Both Powell and Gray testified that Perez instructed them to relieve hourly employees for breaks. (Trial Tr. 705:13-706:10 (Powell); 620:2-621:2 (Gray).) In a May 13, 2013 email, Eduardo Perez asked Mark House when they would be able to backfill the recently eliminated positions because the “salary guys are spending more than 60% of the day out on the floor.” (PEX 8 at 2; see also PEX 10 (May 24, 2013 Email from Perez) at 1 (“The direction was given by Mark House to utilize maintenance staff (Layne Powell) as machine operators . . . Victor will operate the box erector and six pack erector as usual. Layne Powell will rotate breaks and lunches; this should take up most of his day.”); DEX 1016 (June 2013 Appraisal Report) (“[Boyce's] roll [sic] as the production manager continues to be a busy one. He is needed out on the floor for most of the day so he does a good job powering through his paperwork in order to get out on the floor and does it with a positive attitude.”).) Additionally, several witnesses testified to seeing plaintiff operating machines. (See Trial Tr. 618:2-22 (Gray); 704:18-705:17 (Powell).) A contemporaneous email from plaintiff indicates difficulty in scheduling manager phone conferences because of his obligations related to operating the machines. (See DEX 1102a (June 21, 2013 Email) (“Mark, would it be possible to move the meeting up to 9am just because that's pretty much the only window I have before rotating out breaks and lunches I'm usually running the filler by at least 9:45.”).)

         However, the evidence also demonstrates that plaintiff would have had little to no occasion to fill in as a line operator during the Relevant Period because either the line was not running or staffing was otherwise sufficient. First, PEX 9 shows that for approximately 50% of the days during the Relevant Period, no production was occurring and therefore the production line was not operational.[11] Significantly, recalls of the product occurred in late 2012, and the Facility ceased operations for much of April 2013 to May 2013 and again in September 2013.

         Second, for much of the Relevant Period, sufficient staffing existed to cover the production line and still have another employee fill-in during the breaks. At the beginning of the Relevant Period, plaintiff supervised the following individuals: (i) Trung Bui (production line operator); (ii) Leopoldo Martinez (draft line operator); (iii) Maria Carillo (production line operator/forklift driver); (iv) Erick Campista (production line operator); (v) Carlos Sanchez (forklift driver); (vi) Francisco Flores (production/draft line operator); (vii) Marco Flores (production/draft line operator); (viii) Keith Bright (line operator/drop packer); (ix) Jose Mora (lead warehouse employee/forklift driver); and (x) Dennis Tabbert (production line supervisor). (SFs 9-19; see also Trial Tr. 922:23-926:16 (Grady).) The production line only required approximately five machine operators to run, and with a full contingent, Dennis Tabbert was free to provide breaks to the machine operators. (See Trial Tr. 755:17-23) (Powell testifying that Tabbert was still production lead and able to fill in on the line in early 2013).) Additionally, Kevin Gray and Layne Powell as well as Eduardo Perez sometimes provided breaks to the line operators.

         The reductions in staff for plaintiff's department began occurring in earnest in February 2013 when Erick Campista was transferred to the brewing department. (Id. at 925:15-17.) Following that transfer, Leo Martinez was then laid off in April 2013 due to a decline in production. (Id. at 925:18-19.)[12] In May 2013, defendants provided Carlos Fairbank medical leave for three weeks and Marco Flores paternity leave for approximately eight weeks. (Id. at 924:16-925:7.) After Carlos Fairbank went on medical leave, the Facility hired a temporary employee to cover in the production department. (See Id. at 926:18-21.)[13]

         Such evidence sufficiently rebuts plaintiff's faulty memory and testimony regarding the amount of time he spent on the production line throughout the Relevant Period. While it may be true that for some parts of the Relevant Period, plaintiff had to spend significant amounts of time on the production line, the evidence does not support plaintiff's testimony that such was true for the majority of, let alone the entirety of, the Relevant Period. To the contrary, the Court finds that plaintiff's testimony regarding his time spent on the production line is properly limited only to a short window of time around May 2013.

         B. Second Category: Hiring, Suspending, and Terminating Temporary or Permanent Employees

         The Court finds that plaintiff had a role in hiring employees, albeit minimal. Given the lack of much activity on this front, this Category does not weigh heavily in the Court's analysis but ultimately supports a management classification.

         With respect to the hiring of permanent employees, plaintiff testified that during the Relevant Period he did not hire or fire any employees, nor did he have the authority to do so. (Trial Tr. 88:11-16; 196:12-14.) The record demonstrates one occasion in which Grady informs plaintiff that House had approved hiring another full time line operator. (DEX 1099 (February 14, 2013 Email).) Plaintiff's response was to continue using a temporary employee (on staff for a few months) rather than hire someone else, so that plaintiff could evaluate the temporary employee's work ethic and reliability. (Id.) This temporary employee was ultimately not hired full-time.[14]

         With respect to hiring of temporary employees, several documents demonstrate that plaintiff communicated directly with temp agencies for projects in his department. (See generally DEX 1095.) For a period in May 2013, plaintiff had to process requests through Grady, who then communicated with the agency. (See Id. (May 31, 2013 Email Chains).) However, House determined that he only wanted Human Resources to identify the agency for cost control purposes, but decided that it would be more efficient for the Facility departments to communicate with the agencies directly for hiring. (Id. (“Mark has given approval for you [Boyce] and Dennis to resume ordering temps directly through the agency as you know the specific needs of the department.”).) Plaintiff testified, however, that Perez would instruct him as to how many temporary employees to request. (Trial Tr. 390:9-12.) Additionally, plaintiff testified that Dennis Tabbert, one of his subordinates, was actually in charge of communicating with the agencies and managing the temporary employees. (Id. at 303:12-304:4, 398:8-20.)

         The emails in the record demonstrate that plaintiff played an active role in managing the relationship with the temp agencies throughout the Relevant Period. (DEX 1095 (January 30, 2013 Email) (“I just wanted to give you the opportunity to see if you can get this corrected if not I will be looking to work with another agency as our schedule/demand is tight and I must produce what's on my schedule and without the people I can't fill my numbers.”); see Id. (September 6, 2013 Email from Agency to Boyce only) (“I am happy to say that we can match the $13.70 bill rate of your current agency.”).) Thus, plaintiff was central to hiring decisions even if he did not ultimately hire or fire anyone in the Relevant Period. This Category does not support a finding of misclassification.

         C. Third Category: Involvement in Disciplining Employees

         Plaintiff did have a role in disciplining employees, again albeit minimal. Because of the lack of any activity on this front, this Category does not weigh heavily in the Court's analysis but ultimately supports a management classification.

         The record evidence demonstrates that plaintiff was involved in disciplining his subordinates both during and before the Relevant Period. (See, e.g., DEX 1039 & 1068.) For instance, on October 24, 2012, plaintiff issued a written warning to Dennis Tabbert, noting the following: “The safety glass on the drop packer has not been in place for approximately two weeks. I have asked Dennis to replace it several times, the last being Tuesday October 16th during repack, but it has not been done. This is not the only incident where I have asked Dennis to do something and he does not get it done. The missing safety glass on the drop packer results in not only a safety hazard, but a noise hazard as it is designed to be a noise-cancellation device. We had a noise study ...


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