Law change cuts award in uniform rental wage deduction class action

The Southern District Court has reduced an award of attorney fees to a plaintiff class in a fight against a car parts manufacturer after a retroactive wage-reduction law went into effect earlier this year.

Brian Weil and Melissa Fulk — former employees of Bloomfield automobile parts manufacturer Metal Technologies, Inc. — filed class and collective actions and individual claims against the company, alleging it violated the Fair Labor Standards Act of 1938 and Indiana wage laws.

Among other claims, the plaintiffs alleged the company took wage-deduction payments for rented work uniforms from employees’ paychecks during two separate time periods, despite Indiana law authorizing withholding only for uniform purchases.

The U.S. District Court for the Southern District of Indiana granted Weil and Fulk summary judgment on the original wage-deduction form period between January 2013 and April 10, 2016, and denied summary judgment in respect to the amended form used after that period.

The plaintiffs were issued $93,152.58 in treble damages for the class under the original wage-deduction form, as well as $8,102.04 after the district court ruled Indiana law permitted wage deductions only for purchasing, not renting, uniforms. An additional $99,229.58 was awarded in attorney fees.

Both parties appealed, but before the 7th Circuit Court of Appeals issued its opinion, the Indiana Legislature on May 1, 2019 enacted a retroactively applicable law permitting employers to deduct employee wages for renting a uniform. The 7th Circuit remanded the case https://www.theindianalawyer.com/articles/50453-th-circuit-vacates-ruling-in-light-of-new-uniform-rental-law to the district court with instructions to consider whether Indiana Code 22-2-6-3(b) applied to the wage-deduction claims.

On remand, the district court concluded the amendment may be applied retroactively, finding unpersuasive the plaintiffs’ argument that a retroactive application would violate their vested right in earned wages and the Indiana and U.S. constitutions by being an ex post facto law.

“Contrary to Plaintiff’s assertions, the new law does not impair the parties’ contract, but enforces it. The new law confirms that the amended wage assignment form signed by the employees was proper,” Chief Judge Jane Magnus-Stinson wrote. “Plaintiffs’ wholesale disregard of the wage assignment form they each signed only serves to underscore the legitimacy of Metal Technologies’ argument. Because the new law enforces — not impairs — the parties’ contract, there is no constitutional takings issue. The deductions here were wholly voluntary; even the two named plaintiffs demonstrate this fact: Mr. Weil rented his uniform, Ms. Fulk did not.”

Additionally, the district court found equally unpersuasive the plaintiffs’ argument about the new law being a bill of attainder. It concluded the Legislature’s enactment of the amended law was neither “capricious” nor “improperly motivated,” but rather intended to clarify the earlier statute authorizing uniform deductions and to make it clear that the authority extends to both purchased and rented uniforms.

Attorney fees awarded to the plaintiffs were therefore reduced by 8%, made up of the percentage of total damages relating to deductions made based on the corrected wage assignment form. The district court concluded that the original attorney fee award of $116,098.61 should be reduced to $106,810.72.

“The wage deduction claim was a partial success, but the pre-statutory amendment claim was not vigorously litigated,” the district court concluded. “The post-amendment claim is now also unsuccessful, and the Court considers its reduced award of $106,810.72 to border on a generous estimate.”

Likewise, Metal Technologies was ordered to pay $93,152.58 to the plaintiff class, $2,500 of which should be paid as an incentive award to Fulk, $194.61 to Weil and another $128.97 to Fulk. The district court ultimately declined to award costs to either party. The case is Weil et al v. Metal Technologies, Inc., 2:15-cv-00016.

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