ORDER GRANTING PLAINTIFF'S MOTION FOR RECONSIDERATION AND DISMISSING FLSA CLAIM FOR SECURITY SCREENING ACTIVITIES WITH LEAVE TO AMEND

(Doc. 17)

ANTHONY W. ISHII, Senior District Judge.

BACKGROUND

Plaintiff filed the instant class action complaint on October 9, 2012. Doc 4-1. The sixth cause of action alleged that Defendants failed to pay employees at CVS distribution centers nationwide for passing through security and for donning and doffing aprons, in violation of the Fair Labor Standards Act ("FLSA"), 29 USC § 201 et seq. On March 4, 2013, the Court granted Defendant CVS's motion to dismiss both claims. It dismissed the security claim without leave to amend and the donning and doffing claim with leave to amend within thirty days. Doc. 11.

Before the Court is Plaintiff's motion, filed April 25, 2013, to reconsider its decision on the security claim. Doc. 17. The motion is based on newly published legal authority—the opinion in Busk v. Integrity Staffing Solutions, Inc., 713 F.3d 525 (9th Cir. 2013), filed April 12, 2013. On reconsideration, Plaintiff asks the Court to deny Defendant's motion to dismiss or, in the alternative, to grant leave to amend. Doc. 17. Defendant has filed an opposition, and Plaintiff has filed a reply. Docs. 18, 19. Plaintiff's reply brief makes the additional argument that reconsideration is justified by certain newly discovered evidence. On May 30, 2013, the Court vacated the hearing on Plaintiff's motion and took the matter under submission. Doc. 20.

For the reasons that follow, Plaintiff's alternative request is GRANTED. The security screening claim, formerly dismissed with prejudice, is dismissed with leave to amend within thirty days of service of this order.

STANDARD FOR RECONSIDERATION

A district court "possesses the inherent procedural power to reconsider, rescind, or modify an interlocutory order for cause seen by it to be sufficient." City of Los Angeles, Harbor Div. v. Santa Monica Baykeeper, 254 F.3d 882, 889 (9th Cir. 2001); Smith v. Massachusetts, 543 U.S. 462, 475 (2005). The court may do so "at any time" before the entry of final judgment. Fed. R. Civ. P. 54(b); see Local Rule 230(j) (procedural requirements). This allows district courts "to correct not only simple mistakes, but also decisions based on shifting precedent, rather than waiting for the time-consuming, costly process of appeal." United States v. Martin, 226 F.3d 1042, 1049 (9th Cir. 2000). Consistent with this purpose, courts generally avoid exercising this power unless they learn of newly discovered evidence, an intervening change in controlling law, or reason to believe they committed clear error. Kona Enterprises, Inc. v. Estate of Bishop, 229 F.3d 877, 890 (9th Cir. 2000) (applying this standard to motion to "alter or amend a judgment" under Fed. R. Civ. P. 59(e)); Pit River Home & Agr. Co-op. Ass'n v. United States, 30 F.3d 1088, 1096-97 (9th Cir. 1994) (under law of the case doctrine, same standard applies to motion to reconsider interlocutory order).

THE FAIR LABOR STANDARDS ACT

Under the FLSA, an employee must be paid for all hours worked. See 29 U.S.C. §§ 206, 207. The Portal-to-Portal Act carves out two exemptions, both relating to activities which the employee performs prior to commencing or subsequent to ceasing his principal activities. 29 U.SC. § 254(a). The first is for time traveling to and from the place where he performs his principal activities. The second is for activities which are "preliminary to" or "postliminary to" those activities. Id. Any activity that is "integral and indispensable" to a principal activity is itself a principal activity. IBP, Inc. v. Alvarez, 546 U.S. 21, 37 (2005).

FACTS

A. The Complaint

Plaintiff claims violations of the FLSA on behalf of persons who worked at CVS distribution centers nationwide (the "Nationwide Employees"). Complaint (Doc 4-1) at ¶¶3, 17, 55-62. As relevant here, she makes these allegations:

B. The Court's Order Dismissing the Security Screening Claim

The Ninth Circuit defines "integral and indispensable" to mean "necessary to the principal work performed and done for the benefit of the employer." Bamonte v. City of Mesa, 598 F.3d 1217, 1225 (9th Cir. 2010) (emphasis omitted). Applying this definition, the Court dismissed Plaintiff's security screening claim, explaining that Plaintiff had not pled facts suggesting that going through security was "integral" to the job in this sense of being done for the benefit of the employer.

By itself, this failure to plead sufficient facts would have warranted dismissal with leave to amend. However, the Court also observed a deeper problem: it found that "going through security is a preliminary and postliminary activity barred from compensation under the Portal-to-Portal Act." In other words, going through security was noncompensable as a matter of law. On this premise, no amendment could remedy the claim. The Court dismissed it with prejudice.

In reaching this second finding, the Court relied heavily on two out-of-Circuit opinions which also concluded that certain security measures were not "integral and indispensable" to an employee's "principal activity." In Gorman v. Consolidated Edison Corp., 488 F.3d 586 (2nd Cir. 2007), employees of a nuclear power plant were not allowed to enter or exit the facility without passing through various security measures. In dismissing this FLSA claim, the Second Circuit explained that it would define "integral" to require that the security measures and the principal work activities must be somehow "organically joined or linked," such as in the relationship between sharpening a knife to carving a carcass, testing an x-ray machine to taking x-rays, or feeding a dog to being a K-9 officer. In its view, these security measures did not pass this test. Instead, they were analogous to simple travel time. The court illustrated this conclusion by noting that the security measures applied to every employee equally and even to non-employees. In a footnote, the court acknowledged that there might be exceptions; it gave the example of an employee who engaged in "monitoring, testing, and reporting on the plant's infrastructure security." (The significance of this footnote is unclear; perhaps the screening would be related to this worker's job because it would be more narrowly tailored to the specific sensitive places where he worked.) But absent such an additional factor, the security screenings at this power plant were "modern paradigms of the preliminary and postliminary activities described in the Portal-to-Portal Act." Id.1

The second case this Court relied upon was Bonilla v. Baker Concrete Const., Inc., 487 F.3d 1340 (11th Cir. 2007). There, employees of a construction company were working at an airport. They had to show identification to enter the tarmac, then travel on a bus to reach the worksite. After dismissing the travel time as barred under the Portal-to-Portal Act, the court turned to the security clearance activity and found this was not "integral" to completing the employment tasks. However, unlike in Gorman, Bonilla did not reach this conclusion by analogizing the security activities to travel time, nor did it apply Gorman's interpretation of the "integral" requirement as "organically joined or linked." Rather, the Eleventh Circuit defined "integral" to mean "primarily benefit[ing] the employer," a definition resembling the Ninth Circuit's "done for the benefit of the employer." The security measures did not meet this definition: they were neither "primarily" nor "even particularly" done for the benefit of the construction company. This was evidenced by the fact that the FAA, not the construction company, determined whether employees would be screened.

C. Busk

On April 12, 2003, the Ninth Circuit issued its opinion in Busk. In that case, the employer supplied personnel to work in warehouses containing merchandise. Busk at *1. Its employees passed through security measures when exiting the warehouses. Plaintiffs alleged that the screenings were required by the employer and were "necessary to the employer's task of `minimizing shrinkage' or loss of product from warehouse theft." Id.

The district court dismissed this claim. It did so (as the Ninth Circuit explained) because it "assume[d] that Gorman and Bonilla created a blanket rule that security clearances are noncompensable." Id. The Ninth Circuit rejected this assumption. Instead, Gorman and Bonilla stood at most for the proposition that security screenings would not be compensable when they were not "put in place because of the nature of the employee's work." Id. True, Gorman did characterize "[t]he activities required to enter and exit Indian Point [power plant]" as "modern paradigms" of preliminary and postliminary activities. However, the screenings were imposed upon every category of employee and even on non-employees. In addition (as Busk did not mention) Gorman suggested that there could be exceptions where the security screenings were more related to the employee's work activity. Gorman also applied a different definition of "integral" than that used in the Eleventh or Ninth Circuits—an "organic" relationship rather than "benefiting the employer." Thus, the reasoning in Gorman was consistent with security screenings being compensable where they are more related to an employee's work activity. Similarly, while Bonilla found that the security screenings in question did not "principally benefit" the employer, it implied that security activities can be compensable when they do principally benefit the employer, suggesting two factors to consider: whether the screenings were mandated by the employer (the FAA had mandated these screenings) and whether they were imposed without distinction (the screenings were—as Busk observed—imposed as in Gorman upon "everyone who entered the workplace").

Applying this standard, Busk reviewed the complaint and concluded that the security activities were "integral and indispensable" under the Ninth Circuit's definition, in that they were "necessary to the principal work performed" and were "done for the benefit of the employer." Id. at *4. The allegation that the security was to minimize theft seemed "plausible . . . since the employees apparently pass through the clearances only on their way out of work, not when they enter." Id.

ANALYSIS

A. Dismissal Should Have Been Without Prejudice

The Court agrees with Plaintiff that it improperly dismissed her claim with prejudice. In originally reaching that conclusion, the Court relied on Gorman and Bonilla for the proposition that security screenings were not "integral and indispensable" as a matter of law. However, Busk clarifies that these cases did not stand for this. Rather, those screenings were noncompensable because they were unrelated to the nature of the employee's work.

However, the Court does not agree that Plaintiff has already alleged (beyond a plain assertion) that the screenings were integral and indispensable. She analogizes the security screenings in her complaint to those in Busk. In fact, the claims are quite dissimilar. Critically, the pleading in Busk explains how the security screenings benefited the employer. Plaintiff's does not.2

Plaintiff tacitly acknowledges this; she insists that she does allege how the screenings benefit her employer, but only if one is willing to draw these "reasonable inferences" from her complaint:

The Court has previously declined Plaintiff's invitation to make the above-mentioned "inferences"— some of which are really requests for judicial notice—in its previous order, when it found that Plaintiff did not explain how the screenings benefited her employer. Because Busk has nothing to say about the propriety of drawing these inferences, the Court sees no reason to reconsider this decision.

Plaintiff's reply brief also includes some exhibits obtained in discovery, which she provides in part to underscore the propriety of these inferences. In fact, some of these exhibits illustrate just how fraught Plaintiff's desired inferences are. Specifically, Plaintiff draws the Court's attention to a CVS policy stating that guards are on duty "for the purpose of guarding company assets" and that photo identification badges are "designed to protect CVS assets." But as Plaintiff fails to acknowledge, this sentence continues: ". . . the most important asset being its employees." On its face, this states the opposite of Plaintiff's desired inference; it denies that theft is the primary purpose of the screenings and focuses on employee safety. The Court refers to this evidence not to deprecate its usefulness in stating a claim, but to indicate why the Court will not draw controversial "inferences" that Plaintiff has not herself alleged.

The Court dismisses Plaintiff's complaint with leave to amend. If Plaintiff wishes to make these allegations in her amended pleading, she may do so.

B. Postponement of This Decision Is Not Necessary

The defendant in Busk has petitioned the Ninth Circuit to rehear that case en banc. Doc. 18 at Ex. 1. Should the Ninth Circuit do so, the panel opinion would not be citable as precedent. Advisory Committee Note 3 to Ninth Circuit Rule 35-3; Animal Legal Def. Fund v. Veneman, 490 F.3d 725 (9th Cir. 2007). The Defendant in this case therefore asks the Court to postpone this decision.

Insofar as Busk denied that security screenings are noncompensable as a matter of law, the Court denies this request. Busk did not change the law. It merely clarified the meaning of Gorman and Bonilla. In reconsidering its dismissal with prejudice of the security claim, the Court agrees.

Busk also holds that certain security activities are "integral and indispensable" under the FLSA. Whether Busk remains citable might affect the activities that Plaintiff wishes to allege herself. For this reason, while the Court now grants Plaintiff thirty days to amend her complaint, the Court acknowledges the propriety of a stipulation or motion for an extension of time.

CONCLUSION

Plaintiff's motion is GRANTED. Plaintiff's claim for compensation for time spent in security screenings, formerly dismissed without leave to amend, is dismissed with leave to amend within thirty (30) days of service of this order.

IT IS SO ORDERED.