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Kidd v. Wallace Pork Systems, Ltd.

United States District Court, N.D. Indiana, South Bend Division

October 2, 2017

JOSEPH KIDD, Plaintiff,
v.
WALLACE PORK SYSTEMS, LTD., Defendant. RAY RISNER, Plaintiff,
v.
WALLACE PORK SYSTEMS, LTD., Defendant.

          OPINION AND ORDER

          Michael G. Gotsch, Sr. United States Magistrate Judge

         These cases[1] arise from a dispute over overtime pay between Plaintiffs, Joseph Kidd (Cause No. 3:16-cv-210-MGG) (“the '210 case”) and Ray Risner (3:16-cv-211-MGG) (“the '211 case”), and their former employer, Wallace Pork Systems, Ltd. (“Wallace Pork”). Wallace Pork operates both a hog farm in Kokomo, Indiana, and a feed mill in Winamac, Indiana. Plaintiffs were employed at the Feed Mill between 2013 and 2016, during which time they often worked more than forty hours per week and were never paid overtime. On February 29, 2016, Plaintiffs both filed complaints in Pulaski County Superior Court alleging that Wallace Pork's failure to pay them overtime constituted violations of Indiana's minimum wage and wage payment statutes as well as the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201, et seq. The cases were removed to this Court on April 5, 2016, based upon original jurisdiction arising from their claims under the federal FLSA.

         After discovery closed, Plaintiffs filed the instant motions for partial summary judgment on February 28, 2017, and Wallace Pork filed its motions for summary judgment on March 1, 2017. Now ripe, [2] the parties' cross motions for summary judgment hinge upon diametrically opposed perspectives on whether Plaintiffs' work at the Feed Mill constituted secondary agriculture so as to exempt them from overtime pay under Section 13(b)(12) of the FLSA.

         The undersigned heard oral argument on the motions on September 20, 2017. The undersigned retains jurisdiction over these cases based on the parties' consent and 28 U.S.C. § 636(c). Having considered the parties' briefs and oral argument, the undersigned issues the following Opinion and Order denying Plaintiffs' motions for partial summary judgment and denying in part and granting in part Wallace Pork's motions for summary judgment.

         I. Relevant Background

         The following facts are primarily not in dispute. Where the facts are in dispute, this Court has determined that the disputes are either not material or has chosen to address such disputes in the Court's substantive analysis of the issues.

         Wallace Pork, a limited partnership, was created in February 1994 with the primary purpose of raising hogs. [DE 19-3 at 1-2]. On average, Wallace Pork has raised approximately 25, 000 hogs per year at its Hog Farm and has contracted with third parties to raise an additional 45, 000 hogs per year on land not owned by Wallace Pork. [DE 19 at 2, ¶ 8]. From 2012 to present, Wallace Pork employed about 10-11 individuals at the Hog Farm on average annually. [Id. at 3, ¶ 13].

         In 2011, Wallace Pork opened the Feed Mill in 2011 for the purpose of “grind[ing] grain products purchased from ethanol manufacturers and various other suppliers and enhance the ground pulp with vitamins and other growth products to create animal feed.” [Id. at 2, ¶ 4; see also DE 22-1 at 4, ¶¶ 13-14]. From the Feed Mill's inception until the summer of 2016, Wallace Pork used its own employees[3] to produce animal feed at the Feed Mill while simultaneously contracting with Bi-County Pork, Inc. (“Bi-County”) to purchase feed produced by Bi-County's own staff at its independent, neighboring facilities using inputs provided solely by Wallace Pork. [Id.]. Bi-County only produced feed for Wallace Pork and Wallace Pork purchased all the feed Bi-County produced. [Id.; DE 32 at 18, 53:23-54:6]. All of Wallace Pork's feed-both that produced at the Feed Mill and that produced by Bi-County-is either fed to animals owned or raised by Wallace Pork or sold to third-parties. [DE 19 at 2].

         Kidd worked at the Feed Mill from October 10, 2013, until January 26, 2016. [Id. at 3, ¶ 15]. Risner worked at the Feed Mill from August 27, 2013, until January 23, 2016. [Id., ¶ 16].

         Neither Kidd nor Risner ever worked at Wallace Pork's Hog Farm and neither had any work responsibilities at the Hog Farm. [Id., ¶¶ 17, 19]. While employed at the Feed Mill, Kidd worked the afternoon shift and Risner worked the day shift. [Id., ¶¶ 18, 20]. The duties of both Plaintiffs included making feed with a pay loader, scheduling delivery trucks, working with bag and bulk ingredients, and performing occasional repair work. [Id.]. Kidd also performed some associated supervisory work. [Id., ¶ 18]. Both Plaintiffs' direct supervisor was DeWayne Doty, Production Supervisor. [Id., ¶ 21]. Neither Kidd nor Risner ever worked at Bi-County.

         Before Plaintiffs began working for Wallace Pork at the Feed Mill, at least one other Feed Mill employee complained about not receiving overtime pay. [Id. at 4, ¶ 26]. The complaint prompted an investigation by the United States Department of Labor (“DOL”) into the applicability of the FLSA's overtime exemption for secondary agricultural labor at the Feed Mill. [Id.]. The DOL's investigation covered the period from March 5, 2011, until March 1, 2013. [DE 19-3 at 4]. After holding a final conference on June 16, 2013, with Wallace Pork's owner, Steve Wallace, and the Feed Mill's manager and Production Supervisor, DeWayne Doty, the DOL representative issued a final report on June 20, 2013. [Id. at 6].

         In the final report, the DOL concluded that the Feed Mill's operations warranted a secondary agriculture designation exempting Feed Mill employees from overtime pay because the primary use of the feed produced there was feeding the Wallace Pork hogs. [Id.]. The DOL supported its conclusion with statistics showing that 77, 000 tons of feed were produced and 42, 900 tons were used on the Wallace Pork farms with the remaining 34, 100 tons being sold to other users.[4] [Id. at 2]. In other words, the DOL found that Wallace Pork used 55% of the feed it produced itself and sold the remaining 45%. The DOL representative appears to have been influenced by assurances from Wallace and Doty that the Feed Mill “operation [was] created for the intent of getting cheap feed for their own animals.” [Id. at 6].

         Nevertheless, the DOL representative conveyed to Wallace and Doty “that although the [Feed Mill] enterprise qualified for secondary agriculture at this time and date, the success with outside suppliers and clients may change that designation in the future.” [Id.]. After delineating the special factors found in 29 C.F.R § 780.147[5] that must be considered in any analysis of secondary agricultural activities, the DOL representative also “cautioned Steve Wallace that having a business with ADV approximating $26 million dollars will bring the attention of employees, plus private and public investors.” [DE 19-3 at 6]. The DOL representative then noted that the “practice performed today as secondary agriculture may be classified tomorrow as manufacturing.” [Id.].

         Through discovery in these actions, Wallace Pork has reported that the Feed Mill and Bi-County combined produced approximately 120, 000 tons of feed for Wallace Pork annually between 2012 and 2015 with about 90, 000 tons being sold annually to third parties. [DE 19 at 2, ¶ 5; DE 22-1 at 4, ¶¶ 13-14; DE 32 at 66]. At the high water mark, about 75% of Wallace Pork's total feed output was sold to third parties with 75-80% of that total feed output being produced by Bi-County. [DE 22-1 at 4, ¶¶ 13-14]. Wallace Pork also reports that “something less than half of [the 120, 000 tons of total feed output] was produced by Wallace Pork employees using Wallace Pork facilities.” [DE 32 at 66]. The record includes no further detail regarding how much feed the Feed Mill or Bi-County individually produced. However, Wallace Pork has produced evidence of its annual gross revenue, including revenue from the sale of animal feed and hogs, between 2012 and 2015; its annual gross revenue from the sale of animal feed during the same years; and its annual gross revenue from sale of hogs during that time period. [DE 19 at 2, ¶¶ 6, 9, 10].

         Kidd and Risner both worked more than forty hours per week sometimes, but Wallace Pork never paid them at an overtime rate. Wallace Pork considers all of its employees, including those at the Feed Mill, to be agriculturally exempt from overtime under state and federal law. Based on the premise that the Feed Mill operation is more akin to manufacturing than agriculture, Plaintiffs filed their respective lawsuits after they resigned from Wallace Pork seeking overtime pay for their work at the Feed Mill.

         Through their instant motions, Plaintiffs seek partial summary judgment as to whether Wallace Pork's failure to pay them overtime wages is a violation of the FLSA, 29 U.S.C. § 207(a). [DE 20 at 22]. Plaintiffs do not seek summary judgment on whether Wallace Pork's alleged FLSA violation was willful and how much the liquidated damages for the alleged violation would be. [Id.]. Wallace Pork, on the other hand, contends that its operations have not changed since the DOL issued its report in June 2013. [DE 22 at 4]. Therefore, Wallace Pork seeks summary judgment on Plaintiffs' FLSA claims arguing that the DOL's conclusion should be given deference and that Kidd and Risner were exempt from overtime pay as employees in secondary agriculture while they worked at the Feed Mill.

         Plaintiffs concede that their state law claims are subsumed by their FLSA claims as Wallace Pork argued in its motions for summary judgment. [DE 25 at 4; see also DE 22 at 6]. Therefore, the Court GRANTS Wallace Pork's motions for summary judgment on ...


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