Cadena v. Customer Connexx LLC

51 F.4th 831

Cariene CADENA; Andrew Gonzales, on behalf of themselves and all others similarly situated, Plaintiffs-Appellants,

v.CUSTOMER CONNEXX LLC; Janone, Inc.; Does, 1 through 50, inclusive, Defendants-Appellees.

No. 21-16522

United States Court of Appeals, Ninth Circuit.

Argued and Submitted June 14, 2022 San Francisco, California

FILED OCTOBER 24, 2022

Joshua D. Buck (argued), Mark R. Thierman, and Leah L. Jones, Thierman Buck LLP, Reno, Nevada, for Plaintiffs-Appellants.

Veronica T. Hunter (argued) and Paul T. Trimmer, Jackson Lewis PC, Las Vegas, Nevada, for Defendants-Appellees.

Frances Y. Ma (argued), Attorney; Rachel Goldberg, Counsel for Appellate Litigation; Jennifer S. Brand, Associate Solicitor; Seema Nanda, Solicitor of Labor; United States Department of Labor, Office of the Solicitor, Washington, D.C.; for Amicus Curiae Secretary of Labor.

Before: Jay S. Bybee, Consuelo M. Callahan, and Daniel P. Collins, Circuit Judges.

OPINION

BYBEE, Circuit Judge:

Plaintiffs-Appellants Cariene Cadena and similarly situated employees (Appellants) are employed by Customer Connexx LLC (Connexx) to operate a call center in Las Vegas, Nevada. Appellants' primary responsibilities are to provide customer service and scheduling to customers over a "soft phone," operated only through their employer-provided computers. We are asked to determine whether their time booting up and shutting down their computers is an integral and indispensable part of their principal duties, making the time compensable under the Fair Labor Standards Act (FLSA), 29 U.S.C. §§ 201 – 19. The district court granted summary judgment for Connexx. We reverse and remand for further proceedings.¹

I. BACKGROUND

Connexx, a wholly owned subsidiary of JanOne Inc., operates a call center in Las Vegas, Nevada that provides customer service and scheduling for an appliance recycling business. Appellants work in-person at the call center in a variety of hourly-paid, non-exempt positions, including as call center agents whose primary responsibilities are to provide customer service and scheduling functions for customers over the phone.² Like many employers, Connexx has a policy prohibiting "off the clock" work and requires hourly employees to record their actual hours worked each day. Employees clock in and out using a computer-based timekeeping program, which they must do before accessing other job-relevant programs. To reach the timekeeping program, employees must awaken or turn on their computers, log in using a username and password, and open up the timekeeping system. Appellants are not assigned to a particular computer and they testified that, depending on the age of the computer and whether the computer was off or in sleep mode, it would take anywhere from a minute to twenty minutes for the computer to boot-up so they could clock in. Appellants estimate the average boot up time is between 6.8 to 12.1 minutes. Connexx allows employees to correct inaccuracies in their timecards that occur due to technical issues using a "punch claim form."

Once clocked in, Appellants load various programs and scripts and confirm that their phone is connected and ready to accept calls. Connexx agents use a phone program called "Five9," an application that operates through employees' computers rather than through a physical phone. At the end of their shift, employees wrap up any calls they are on, close out of job-relevant programs, clock out, and then log off or shut down their computers.³ Connexx employees gave varied accounts of how long it took to log off of their computers, ranging from less than a minute to fifteen minutes, and Appellants estimate it took an average of 4.75 to 7.75 minutes to log off and boot down the computers.

Appellants filed suit in Nevada state court on behalf of themselves and similarly situated employees alleging violations of the overtime provisions of the FLSA and Nevada law. They contend that they were not paid for the time spent booting up their computers prior to clocking in to the electronic timekeeping system or closing down their computers after clocking out of the timekeeping program. Defendants removed the case to federal court.

The district court conditionally certified the FLSA collective action and notice was sent to putative collective action members, resulting in fifteen opt-in plaintiffs currently in the suit. Connexx moved to decertify the FLSA collective action and for summary judgment on the FLSA claim. The district court granted summary judgment to Defendants, holding that "[s]tarting and turning off computers and clocking in and out of a timekeeping system are not principal activities" because Connexx did not hire employees for that purpose, but "to answer customer phone calls and perform scheduling tasks." The district court noted that Connexx "could dispense with the electronic timekeeping method and the employees could still perform their work." The court compared booting up to "the electronic equivalent of waiting in line to clock in or out of a physical timeclock, which is non-compensable." The court concluded that those tasks "are not integral and indispensable to the employees' duties as call center customer service agents." Having disposed of the FLSA claim, the district court declined to exercise supplemental jurisdiction and remanded the state law claims to state court. The district court denied Appellants' motion for reconsideration.

Appellants timely filed a notice of appeal. The United States Department of Labor (DOL) filed an amicus brief in support of Appellants.

II. STANDARD OF REVIEW

We have jurisdiction under 28 U.S.C. § 1291. We "review a district court's grant of summary judgment de novo , and may affirm on any basis supported by the record." Gordon v. Virtumundo, Inc. , 575 F.3d 1040, 1047 (9th Cir. 2009) (citing Burrell v. McIlroy , 464 F.3d 853, 855 (9th Cir. 2006) ). "Our review is governed by the same standard used by the trial court under Federal Rule of Civil Procedure 56." Id. (citing Adcock v. Chrysler Corp. , 166 F.3d 1290, 1292 (9th Cir. 1999) ). "Viewing the evidence in the light most favorable to the nonmoving party, we must determine whether there are any genuine issues of material fact and whether the district court correctly applied the relevant substantive law." Id. (quoting Devereaux v. Abbey , 263 F.3d 1070, 1074 (9th Cir. 2001) (en banc)).

"Whether an activity is excluded from hours worked under the FLSA, as amended by the Portal-to-Portal Act, is a mixed question of law and fact." Ballaris v. Wacker Siltronic Corp. , 370 F.3d 901, 910 (9th Cir. 2004). "The nature of the employees' duties is a question of fact, and the application of the FLSA to those duties is a question of law." Id.

III. DISCUSSION

Appellants have raised a single issue for our review: Whether Appellants' time spent booting up and shutting down their computers, through which they access their phone and customer service programs, is an integral and indispensable part of their duties and thus compensable under the FLSA. We will begin with important background on the FLSA, including the Portal-to-Portal Act, which amended the FLSA; DOL regulations; and the relevant jurisprudence. We will then apply those standards to Connexx's call center employees.

A. The Fair Labor Standards Act

Enacted in 1938, the FLSA requires employers to pay employees one and one-half times their regular pay for any time worked over forty hours per workweek. 29 U.S.C. § 207. In 1946, the Supreme Court held that "the statutory workweek includes all time during which an employee is necessarily required to be on the employer's premises, on duty or at a prescribed workplace." Anderson v. Mt. Clemens Pottery Co. , 328 U.S. 680, 690–91, 66 S.Ct. 1187, 90 L.Ed. 1515 (1946). The Court's interpretation in Mt. Clemens extended to preliminary activities like "walking to work on the employer's premises," "putting on aprons and overalls," and "turning on switches for lights and machinery." Id. at 691–93, 66 S.Ct. 1187.

In response, in 1947 Congress passed the Portal-to-Portal Act, 29 U.S.C. §§ 251 – 62, to correct the "unexpected liabilities" created by the FLSA being "interpreted judicially in disregard of long-established customs, practices, and contracts between employers and employees." Id. § 251(a). The Act provided that

no employer shall be subject to any liability or punishment under the [FLSA] ... on account of the failure of such employer to pay an employee minimum wages, or to pay an employee overtime compensation, for or on account of any of the following activities ... —

(1) walking, riding, or traveling to and from the actual place of performance of the principal activity or activities which such employee is employed to perform, and

(2) activities which are preliminary to or postliminary to said principal activity or activities,

which occur either prior to the time on any particular workday at which such employee commences, or subsequent to the time on any particular workday at which he ceases, such principal activity or activities.

Id. § 254(a).

In the wake of the Portal-to-Portal Act, the Supreme Court revised its prior understanding of the FLSA and held that "activities performed either before or after the regular work shift ... are compensable ... if those activities are an integral and indispensable part of the principal activities for which covered workmen are employed." Steiner v. Mitchell , 350 U.S. 247, 256, 76 S.Ct. 330, 100 L.Ed. 267 (1956). Activities that are "integral and indispensable" are themselves treated as "principal activities" under the Portal-to-Portal Act. See IBP, Inc. v. Alvarez , 546 U.S. 21, 37, 126 S.Ct. 514, 163 L.Ed.2d 288 (2005). The first principal activity of the day begins the workday and "any [waiting] time that occurs after the beginning of the employee's first principal activity and before the end of the employee's last principal activity ... is covered by the FLSA." Id. ; see 29 C.F.R. § 790.8(a) (interpreting " ‘principa...