In a favorable development for Hunton Andrews Kurth LLP client East Penn Manufacturing Co., a federal jury in Philadelphia has rejected most of the damages and all remaining liability issues in a sprawling wage-and-hour enforcement action brought under the Fair Labor Standards Act (FLSA) by the U.S. Department of Labor.
On May 9, 2023, jurors returned their verdict in the U.S. District Court for the Eastern District of Pennsylvania at the conclusion of a two month trial. The decision brings to an end five years of litigation and represents an affirmation of the pay practices of East Penn, which was facing claims for back wages, liquidated damages and administrative penalties in excess of $220 million. The jury rejected liability as to all claims on behalf of non-uniformed employees, and returned a verdict of only $22.25 million for claims on behalf of uniformed employees (before potential liquidated damages and administrative penalties). The dispute has been described by the district court as probably the largest wage-hour case ever to go to trial.
“We are pleased that the jury saw the government’s overreaching in this case, in particular as to its claims that employees must be paid to put on and take off everyday protective items such as safety shoes, safety glasses, and earplugs that supposedly start and end the workday,” said Hunton Andrews Kurth partner Michael J. Mueller, who led the defense for East Penn. “In the damages portion of the trial, the jury’s various findings are a rejection of 90% of the government’s wage claim because the jury agreed with us that East Penn did not willfully violate the FLSA and rejected the government’s unsupported high time estimates. On all the remaining liability issues, the jury agreed with our position entirely.”
As the largest single-site lead battery manufacturing operation in the United States, East Penn employs over 7,500 workers and is Pennsylvania’s 29th largest employer. The Labor Department sued East Penn in March 2018, alleging the company failed to pay what, by the time of trial, was 11,400 employees who worked at its battery plants in Lyons Station, PA, between November 2014 and September 2021, for all the time they spent putting on protective clothing at the beginning of their shifts and undressing and showering at the end of their shifts.
In response to a single employee complaint lodged in 2016, the Labor Department conducted its first ever investigation of East Penn under the FLSA, interviewing 36 employees about whether they were given enough time to don and doff uniforms. The overwhelming majority–78%–said the time allotted was sufficient or more than sufficient, and that they had no problem with their pay. Yet the government sued anyway.
At trial, the government called 39 hourly employee witnesses and an expert witness, whose time study was the sole basis for the government’s claimed $107 million in wages. Through cross-examination, East Penn demonstrated that the hourly employees were mainly supportive of East Penn and that the expert’s work did not provide a reasonable basis on which to calculate back wages owed.
Among other things, East Penn demonstrated that the government’s own study included measurements proving that the activities in question could mainly be performed in the time the company allotted. The jury also agreed with East Penn’s position that the time spent putting on and taking off standard Personal Protective Equipment worn by non-uniformed employees (such as boots, safety glasses, and earplugs) is not “integral and indispensable,” and thus need not be compensated under the FLSA.
The Hunton Andrews Kurth trial team included partners Michael J. Mueller and Tonya Gray, counsel Evangeline Paschal and associates Perie Koyama and Brianne Reese. The trial team also included local counsel Daniel B. Huyett of the Reading, Pennsylvania office of Stevens & Lee.
