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Posts Tagged ‘Third Circuit’

Coffee, Water, Less Than 20 Minutes

Posted on: June 19th, 2018

SCOTUS KICKS THE CAN ON SHORT BREAKS COMPENSATION

By: John McAvoy

On June 11, 2018, the U.S. Supreme Court refused to entertain the appeal of a Pennsylvania employer that could have resolved the emerging split of authority between the federal appellate courts and the U.S. Department of Labor (DOL) as to the compensability of employees’ short rest breaks.

In American Future Systems, Inc. d/b/a Progressive Business Publications v. R. Alexander Acosta, Secretary, U.S. Department of Labor, the Secretary of Labor filed suit against Progressive Business Publications, a company that publishes and distributes business publications and sells them through its sales representatives, as well as the company’s owner, alleging they violated the Fair Labor Standards Act (FLSA) by paying their salespeople an hourly wage and bonuses based on their number of sales per hour while they were logged onto the computer at their workstations, and by not paying them if they were logged off for more than 90 seconds.

The U.S. District Court for the Eastern District of Pennsylvania previously found that the employer’s policy had violated the FLSA, relying on a DOL regulation which states that “[r]est periods of short duration, running from 5 minutes to about 20 minutes, are common in industry.  They promote the efficiency of the employee and are customarily paid for as working time.  They must be counted as hours worked.”  In so holding, the District Court found that the employer was liable for at least $1.75 million in back wages and damages.

On appeal to the Third Circuit Court of Appeals, the employer argued that that it provided “flex time” rather than “breaks,” which allowed workers to clock out whenever they wanted, for any reason.  In other words, that the employees were not “working” after they logged off of their computers since they could do anything they wanted, including leaving the office.  The appellate court rejected this argument, reasoning that to dock the pay of employees who can’t manage a bathroom sprint is “absolutely contrary to the FLSA,” and affirmed the lower court’s decision.

The Third Circuit’s reliance on DOL regulation was contrary to the holdings of some of the other circuit courts which opted to assess the circumstances of the break in lieu of interpreting the DOL regulation as a bright-line rule that fails to take into consideration the facts of a particular situation.

The employer asked the U.S. Supreme Court to clarify how compensability for breaks should be determined.  Citing the circuit split, the employer posited that the question of break pay should be determined by assessing the circumstances of the break, rather than adopting the DOL regulation as a bright-line rule.  In its reply brief, the DOL fervently defended its regulations and denied the existence of the alleged circuit split, arguing that “hours worked [are] not limited to the time an employee actually performs his or her job duties.”  Unfortunately, this remains an issue for another day as the Supreme Court refused to hear the case and/or resolve the alleged split.

Absent a decision from the Supreme Court to the contrary, employers in Pennsylvania, New Jersey, and Delaware are bound by the Third Circuit’s decision. As such, employers in these states must continue to comply with DOL regulations with respect to the compensability of short breaks.

Fortunately, the applicable DOL regulations are designed to protect employers’ rights. For starters, the regulations recognize that meal periods serve a different purpose than coffee or snack breaks and, as such, are not compensable.  Second, an employer need not count an employee’s unauthorized extensions of authorized work breaks as hours worked when the employer has expressly and unambiguously communicated to the employee that the authorized break may only last for a specific length of time, that any extension of the break is contrary to the employer’s rules, and any extension of the break will be punished.

Although an employer will have to compensate an employee who repeatedly takes unauthorized breaks lasting less than 20 minutes in order to comply with the Third Circuit’s ruling and the applicable DOL regulations, the employer is nevertheless free to discipline the employee for such indiscretions by whatever means the employer deems appropriate, including termination.

Prudent employers should prepare themselves to address such issues through smart planning and proper training of employees, including managers, supervisors and HR personnel to ensure the employer’s break, discipline, and termination policies and procedures comply with all applicable DOL regulations.

Want to know whether your company’s break, discipline, and termination policies and procedures comply with DOL regulations? Let me help. Please call or email me (215.789.4919; [email protected]).

9th Circuit Holds Inadmissible Evidence May Support Class Cert

Posted on: May 17th, 2018

By: Ted Peters

Courts around the country are split over whether admissible evidence is needed to support a class certification.  The Fifth Circuit requires it, and the Seventh and Third Circuits appear to be of the same opinion.  In contrast, the Eighth Circuit has indicated that inadmissible evidence can be considered.  On May 3, 2018, the Ninth Circuit join ranks with the Eighth Circuit when it issued an opinion indicating that certification of a class action can be supported by inadmissible evidence.

The case arises out of the district court’s decision to deny class certification to a group of nurses based, in part, on the finding that two of the named plaintiffs had not offered evidence that they were underpaid.  Their only evidence consisted of a paralegal’s analysis of time cards reflecting that hours were not properly calculated.  While perhaps not sufficiently trustworthy to be admitted at trial, the Ninth Circuit concluded that the district court prematurely rejected such evidence when ruling on whether the class could be certified.  The Court stated: “Notably, the evidence needed to prove a class’s case often lies in a defendant’s possession and may be obtained only through discovery.  Limiting class-certification-state proof to admissible evidence risks terminating actions before a putative class may gather crucial admissible evidence.”

The Court also concluded that, because there was no consideration as to whether the employer controlled the nurses after they clocked in, the district court misapplied the definition of “work” under California jurisprudence.  Lastly, the Court was critical of the finding that the law firm representing the putative class action was incapable of properly representing the class, focusing on “apparent errors by counsel with no mention of the evidence in the record demonstrating class counsel’s substantial and competent work on [the] case.”

If you have questions or would like more information, please contact Ted Peters at [email protected].

Non-Pennsylvanians Can Sue Pa. Businesses for Out of State Transactions Under the Pennsylvania Unfair Trade Practices Consumer Protection Law

Posted on: March 2nd, 2018

By: Erin E. Lamb

Citizens from outside Pennsylvania can now sue Pennsylvania businesses for transactions that occurred outside the commonwealth, under the Pennsylvania Unfair Trade Practices Consumer Protection Law (UTPCPL). The Pennsylvania Supreme Court, in a unanimous ruling, affirmed such to the U.S. Court of Appeals for the Third Circuit in the class action suit Danganan v. Guardian Protection Services. The Third Circuit had certified the question to the Supreme Court of Pennsylvania. Previously, the District Courts within the Third Circuit had held repeatedly that the UTPCPL only applied to Pennsylvania business regarding Pennsylvania transactions.

Plaintiff Jobe Danganan sued Pennsylvania-based UTPCPL under the UTPCPL after he continued to be billed for a home security system in a Washington, D.C., house aft he had moved and after he had cancelled the contract. The district court ruled against him and he appealed to the Third Circuit.

Danganan argued that the language of the UTPCPL, specifically the terms “person,” “trade” and “commerce,” did not denote a specific geographic requirement, according to the Supreme Court’s opinion written by Chief Justice Thomas G. Saylor. The Court agreed. “Respecting the specific terms employed by the UTPCPL, we agree with appellant’s observation that the plain language definitions of ‘person’ and ‘trade’ and ‘commerce’ evidence no geographic limitation or residency requirement relative to the law’s application,” Saylor said. However, the law does state that it applies to conduct that “directly or indirectly affect[s] the people of this commonwealth.” Saylor, writing for the Court, did away with that clause by stating “that phrase does not modify or qualify the preceding terms. Instead, it is appended to the end of the definition and prefaced by ‘and includes,’ thus indicating an inclusive and broader view of trade and commerce than expressed by the antecedent language.”

Saylor also said the statute is meant to be construed liberally as it covers an expansive breadth of conduct. “In this respect, we recognize, as we previously have, the wide range of conduct the law was designed to address, including equalizing the bargaining power of the seller and consumer, ensuring the fairness of market transactions, and preventing deception and exploitation, all of which harmonize with the statute’s broad underlying foundation of fraud prevention,” Saylor said.

This has far-reaching implications for Pennsylvania’s businesses, particularly in the context of class actions like the one at issue in this case. (Its application to a certain global telecommunications conglomerate that is the largest broadcasting and cable television company in the world by revenue certainly springs to mind.)

If you have any questions or would like more information, please contact Erin Lamb at [email protected].

Another Super Bowl in New Jersey? Unlikely!

Posted on: December 19th, 2017

By: Joshua G. Ferguson

A Third Circuit panel issued an opinion last week in an NFL fan’s class action alleging the National Football League violated New Jersey’s consumer fraud law by failing to make enough 2014 Super Bowl tickets available for sale, finding that the economic factors presented created a plausible theory that the league’s conduct inflated prices.

The three-judge panel reversed the district court’s decision to dismiss the claim brought by Josh Finkelman alleging that the NFL’s lottery ticket policy for the Super Bowl distributed a fraction of the tickets to the public. Plaintiff relied on a statute which requires the sale of 95 percent of all tickets of any event held in New Jersey.  In their amended complaint Plaintiff cited the opinion of sports economist Dr. Daniel Rascher’s that Finkelman paid more on the secondary market for his tickets to Super Bowl XLVIII than he would have had the NFL not withheld more than 5 percent of tickets from sale to the public, and in doing so violated the New Jersey Consumer Fraud Act.

In rendering the decision, The Third Circuit deferred the action to the Supreme Court of New Jersey to certify the meaning of the New Jersey ticket law statute and determine if the NFL’s violation falls within that statute.

For further information or for further inquiries involving hospitality law, you may contact Joshua Ferguson of Freeman Mathis & Gary, LLP, at [email protected].

What Does Your Video Watching Behavior Say About You?

Posted on: December 18th, 2017

By: Jonathan Romvary

A federal court recently determined that the sharing of an individual’s device identification number and the videos watched does not violate federal privacy laws. In Eichenberger v. ESPN, Inc. , 2017 BL 427074, 9th Cir., No. 15-35449 (Nov. 29, 2017), the Ninth Circuit held that an individual’s Roku Inc. device serial number and a list of the ESPN videos watched does not qualify as personally identifiable information (PII) under the Video Privacy Protection Act (VPPA) such that ESPN’s sharing of the information with a third party did not violate VPPA protections.

What did the Court hold?

The three-judge panel held that while the plaintiff had standing under the Court’s Spokeo ruling, he could not continue with his suit because the shared information was not personally identifiable under the VPPA. The panel adopted and expanded the Third Circuit’s 2016 Viacom ruling that information can only be considered personally identifiable if an ordinary person could use it to pinpoint a specific individual’s video-watching behavior. Here, an individual would require the data to be combined with other personal information that ESPN never shared or possessed.

Why is this important?

The impact of the Ninth Circuit’s ruling may be far reaching. Nowadays, technology service providers and app developers are moving away from identifying their users by their names. They now utilize a variety of alphanumeric identifiers to identify their users, whether it is the unique identification number of the user’s device (see ESPN) or a unique user account identification number. Without more, the average user is unable to identify the person who watched. As one observer noted, this ruling may pave the way for companies such as Hulu, Netflix, Google and Facebook to optimize their user experience to provide more targeted marketing without violating federal statute.

In recent years, plaintiffs have filed a serious of class actions alleging violations of the VPPA against companies such as Fandango, Blockbuster, Overstock.com, Gamefly, Redbox, Best Buy, Netflix, and Hulu. The attractiveness of these suits is likely because plaintiffs can argue that violations are punishable by $2,500 in statutory damages per violation. However, as this court’s ruling indicates, every technological advancement away from the brick and mortar video rental stores away will make it harder for a plaintiff to sustain a successful claim.

However, the impact should also not be overstated. Despite this win for technology providers in the Ninth Circuit, there remains the matter of Yershov v. Gannett Satellite Information Network, Inc., No. 15-1719 (1st Cir. Apr. 29, 2016) which held that the disclosure of an individual’s viewing data along with the device’s unique identifier and device’s GPS information constituted PII such that the disclosure may violate the VPPA. The fact remains that there is still much uncertainty about the scope and viability of the VPPA.

If you have any questions or would like more information on this developing issue please contact Jonathan Romvary at [email protected].