Florida District Court Denies Conditional Certification in Off-the-Clock Case

Posted by Greg Mersol on July 27, 2012

Courts often cite the generally lenient standard for conditional certification, but that standard, like any other, has its limits.  In Holmes v. Quest Diagnostics, Inc.pdf., Case No. 11-80567 (S.D. Fla. June 14, 2012), the plaintiffs sought to represent a class of phlebotomists for Quest Diagnostics nationwide.  They claimed that the company essentially required off-the-clock time and thus failed to pay them overtime.

The plaintiffs sought conditional certification.  They noted that 29 potential members across the country had opted into the litigation, and filed 23 declarations in support of their motion.

The court, however, was unimpressed by this showing.  It noted that the declarations were, for the most part, cookie cutter forms and that they contained little concrete detail.  By contrast, the defendant submitted detailed declarations regarding the class members’ differing duties. 

Although it acknowledged the relatively lenient standard, the court refused to grant conditional certification.

The Bottom Line:  Some courts will continue to deny even conditional certification when the plaintiffs have only made a slight showing that the putative class members are similarly situated.

Court Denies Conditional Certification of FLSA Class of Satellite Dish Technicians

Posted by Greg Mersol on June 16, 2011

It has been a good few weeks for employers in the satellite dish industry.  Just last week, we wrote of the case of Espenscheid v. Directsat USA, LLC.pdf, Case No. 09-cv-625-bbc (W.D. Wis. May 23, 2011), in which the court decertified a class of satellite dish technicians only days before trial.  In that case, the court, despite repeated earlier rulings in favor of the class, concluded that the actual trial of such a case would be unwieldy.  Only a few days later, in Delano v. MasTec Inc.pdf., Case no. 10-cv-00320-JDW-MAP (M.D. Fla. June 2, 2011), a different district court denied even conditional certification of a similar class.

In Delano, the plaintiffs were former installers of satellite dishes who were paid primarily on a piece-rate basis.  They contended that the company encouraged the underreporting of hours by requiring pre-authorization of overtime (which was never granted) and withholding work assignments if it appeared that a technician was nearing 40 hours in a given work week.  These measures, of course, were lawful, but the plaintiffs contended that the company was aware that the technicians were working more hours than they were reporting.  They submitted numerous declarations to the effect that supervisors "must have been aware" that the technicians were working overtime hours due to the company's scheduling and reporting structures.  A handful of declarants asserted that mostly unspecified supervisors directed them not to report over 40 hours no matter how much they worked.  Based on this evidence, the plaintiffs moved for conditional certification and notice to the class.

The Middle District of Florida, like other courts in the Eleventh Circuit, follows the two-step procedure for certifying collective actions under the FLSA.  The court recognized that the plaintiffs' burden at the initial notice stage was light, but also that it was not “invisible.”  It further noted the requirement in that court for the plaintiffs to demonstrate that other, similarly situated employees wanted to opt in.  Ultimately, the court found that the plaintiffs failed to satisfy even the lesser burden because few technicians had expressed a desire to join the case, and many of the employees were subject to arbitration agreements that would have limited or barred their participation.  The court’s opinion also suggests fundamental problems with the plaintiffs’ case in that the company’s formal policies demanded adherence to the FLSA, while the plaintiffs’ proof of an over-arching practice consisted of anecdotal evidence from different facilities that together did not rise to the level of a state-wide employment practice.  It concluded that even conditional certification was inappropriate.

Incidentally, the court also noted during the course of its opinion - quite correctly - that the term “conditional certification” is a misnomer.  It is simply an order directing notice to the proposed class.  The "class" cannot be certified until there are opt-ins because section 16(b) of the FLSA, 29 U.S.C. section 216(b), provides that no one can be made a party without their consent.

The Bottom Line:  An overtime class should not be conditionally certified absent employees who are similarly situated, have claims they can assert, and actually want to join the litigation.

Another Court Denies Conditional Certification of a Putative FLSA Class

Posted by Greg Mersol on March 14, 2011

The mantra uttered by plaintiffs in FLSA cases is the "fairly lenient" standard used by many courts to determine conditional certification. As we have written before, this standard may give the plaintiffs an early victory, but may not really benefit either side as such claims are frequently decertified, suggesting that the original decision to certify conditionally was a waste of money and judicial resources. A recent case from the Western District of New York reflects that common sense may still result in conditional certification being denied.

In Brickey v. Dolgencorp., Inc.pdf., Case No. 06-CV-6084L (W.D.N.Y. Feb. 23, 2011), the plaintiffs were hourly employees of the Dollar General Stores. They contended that as a result of the company's allocation payroll budgets to individual stores, managers were pressured to “shave” time from payroll records or to ask employees to work off the clock. They claimed that these policies encouraged violations not only of the FLSA, but also that of the laws of New York, Ohio, Maryland, and North Carolina, where the individual plaintiffs worked. They sought conditional certification of a nationwide class of assistant managers and clerks under the FLSA, and also state law class actions in the four states in which they had worked.

The district court cited and followed the two-step procedure for certification of an FLSA collective action. It first noted, however, that there was nothing inherently illegal about an employer having or enforcing a payroll budget. To the extent that they were claiming violations, their real complaint was that individual managers may not have complied with the statute to meet their budgets. Thus, the court found, following the lead of at least one other case, that a policy that might indirectly encourage managers to limit overtime did not violate any statute. Further, because the existence of any violation turned on the actions of individual managers, the court found that examination of the plaintiffs' claims would have to be undertaken on a manager-by-manager basis, and not on a nationwide or state-wide basis. While acknowledging the “fairly lenient” standard for conditional certification, the court concluded that the plaintiffs had not shown that they “were subject to a common policy or practice that violated the law, as opposed to unlawful actions by individual, anomalous managers” and denied the plaintiffs’ motion.

With that ruling, the court’s conclusion as to the state law claims was no surprise. It found for the same reasons that the plaintiffs could not establish that common legal or factual issues predominated or that the interests of judicial economy would be served by having “hundreds of fact-intensive ‘mini-trials.’” Thus, it found that the plaintiffs could not satisfy the requirements of Rule 23(b) and denied certification of the state law classes.

The Bottom Line: While plaintiffs have a lesser standard for conditional certification, they still need to demonstrate a common class-wide policy that actually violates the law.

Supreme Court Accepts Certiorari In Dukes v. Wal-Mart

Posted by Greg Mersol on December 08, 2010

We’ve already written twice now on the case of Dukes v. Wal-Mart Stores, 605 F.3d 571 (9th Cir. 2010), most recently to argue (August 27, 2010) that the Supreme Court should accept certiorari and reverse.   The Supreme Court has now accepted cert., but has done so in a manner that leaves the scope of the review up to question.  The Dukes case presented numerous cert.-worthy issues relating to, among other things, the sheer size of the class, manageability, the trial court’s proposed methodology for trial, and the use (or mis-use) of expert testimony at the Rule 23 stage.  At first blush, Wal-Mart's petition for certiorari rested on two questions:  (1) whether a court may certify a class under Rule 23(b)(2) when the plaintiffs seek substantial money damages; and (2) whether the trial court should have certified such a case at all.  We’ve obviously paraphrased their brief, and the actual questions are set forth below. Wal-Mart, of course, wove several of the other issues into these two, but the second issue would have had especially broad application.  That issue attacked the practical effect of the trial court's decision, which was to grant the plaintiffs a gargantuan class and their very best evidence while denying Wal-Mart the right to present its strongest defenses, the individual situations of the putative class members.

On December 6, 2010, the Supreme Court did indeed accept certiorari, but not on every issue.  Commentators are already discussing the ruling and its potential to change the employment class action landscape, but the entry itself is rather cryptic. You can find the order at  http://www.supremecourt.gov/orders/courtorders/120610zor.pdf, but it reads, in its entirety:

WAL-MART STORES, INC. V. DUKES, BETTY, ET AL.

The petition for a writ of certiorari is granted limited to Question I presented by the petition. In addition to Question I, the parties are directed to brief and argue the following question: “Whether the class certification ordered under Rule 23(b)(2) was consistent with Rule 23(a).”

Of course, most orders granting cert. are just as brief, and there is no debate that this order accepts the Issue I for review.  Wal-Mart phrased the issue in its petition as:

I.   Whether claims for monetary relief can be certified under Federal Rule of Civil Procedure 23(b)(2)--which by its terms is limited to injunctive or corresponding declaratory relief -- and, if so, under what circumstances.

This issue is certainly important, and has been an issue meriting Supreme Court review for at least a decade. The decisions in Allison v. Citgo  Petroleum Corp., 151 F.3d 402 (5th Cir. 1998), and Jackson v.  Motel 6  Multipurpose, Inc., 130 F.3d 999 (11th Cir. 1999), finding that Rule 23(b)(2) could not be used when compensatory and punitive damages are sought,  have curtailed certain types of class actions in the Fifth and Eleventh Circuits.  The Ninth Circuit in Dukes rejected those holdings, and the Second Circuit takes a third viewpoint still.  While this would ordinarily be an issue that should be reviewed, however, it was not the broadest issue presented in the case.  The Court denied, without explanation, review of Wal-Mart’s second issue, which it broadly defined as:

II.  Whether the certification order conforms to the requirements of Title VII, the Due Process Clause, the Seventh Amendment, the Rules Enabling Act, and Federal Rule of Civil Procedure 23.

Very broad, but then again so was the Ninth Circuit’s lengthy order.  The Supreme Court, however, as is the norm, did not explain why it rejected it.  The rejection of this issue would have been a major setback but for the additional language of the Court’s Order granting certiorari.  That language directed the parties to brief “[w]hether the class certification ordered under Rule 23(b)(2) was consistent with Rule 23(a).”  

This question is somewhat ambiguous because the Court did not identify which provision of Rule 23(a) might be in question.  Numerosity, pursuant to Rule 23(a)(1), cannot possibly be worthy of Supreme Court review as the putative class has well over 1 million members.  While there was some concern expressed by one of the dissents before the Ninth Circuit over the claims of some of the named plaintiffs, there is no issue of the competence of plaintiffs' counsel that would ordinarily implicate adequacy of representation under Rule 23(a)(4).  Some commentators assume that the court may be referring to the Rule 23(a) elements of commonality and typicality, but the Order references Rule 23(a) in its entirety, and not subsections (3) and (4).

Another possibility relates to the Court's mention of Rule 23(b)(2).  One construction of the Court's question is to read in an issue relating to the interplay between Rules 23(a) and 23(b), but that does not require Supreme Court review.  All class actions need to satisfy the requirements of Rule 23(a), whether they are certified under Rule 23(b)(1), (2), or (3). 

Our best guess is that the Court was trying to set limits on Wal-Mart’s second issue and to focus the question on those portions of Rule 23 that are at issue, primarily commonality and typicality.  These provisions largely leave out Wal-Mart’s intriguing arguments about the net effect of the lower court's rulings, and also have little to do with the predominance arguments under Rule 23(b)(3) that now at the forefront of many employment class actions.  A Supreme Court ruling more tightly prescribing the commonality and typicality requirements would seriously affect many class actions, as would a decision resolving the split in the Circuits on the appropriate use of Rule 23(b)(2).   Most of Wal-Mart’s arguments will clearly be in play, but the limited issue may result in an opinion that fails to reach some important aspects of the trial court's decision.

The Bottom Line:  The Supreme Court has accepted certiorari in Dukes, but don't bet on it settling the most important issues.

Second Circuit Affirms Denial of Class Certification for Hertz Station Managers and Provides Guidance on FLSA Certification Standard

Posted by Gilbert Brosky on November 08, 2010

On October 27, 2010, the Second Circuit affirmed a federal court’s refusal to certify a proposed class of Hertz Station Managers allegedly denied overtime under New York law.  (Myers v. Hertz Corp., No. 08-1037 (2d Cir. Oct. 27, 2010)).  In doing so, the court addressed the potential difficulties of certifying Rule 23 overtime exemption cases and expounded on the appropriate certification standard for FLSA exemption cases.  

In a case the court described as “procedurally convoluted,” the plaintiffs originally sought to proceeded as a collective action under the FLSA.  After the district court denied this motion, the plaintiffs then moved for certification under Rule 23 based on alleged violations of unpaid overtime under New York Labor Law § 191.  While the court found the plaintiffs’ state law claim to be nothing more than an alternative method of seeking redress for an underlying FLSA violation, it addressed the plaintiffs’ appeal by using the traditional requirements of Rule 23. 

Finding that it only needed to address Rule 23’s predominance requirement, the court determined the relevant “question of law and fact” to be whether the plaintiffs established they were entitled to overtime under the FLSA.  The court found this to be a “complex, disputed” issue whose resolution required answering a number of subsidiary questions involving whether the plaintiffs fell under the FLSA’s executive exemption.  The court noted that while the exemption issue may not be an inherently individualized inquiry, the exemption inquiry does require examination of actual duties performed and involve evidence that the plaintiffs’ jobs “were similar in ways material to the establishment of the exemption criteria.”

The plaintiffs relied on two categories of evidence to show the required common proof:  (1) Hertz decided to classify all station managers as exempt without an examination of each individual manager’s duties; and (2) testimony of Hertz representatives which, plaintiffs claimed, established that station managers’ duties did not vary materially across Hertz locations.  With respect to the first category, the court found that the existence of such a blanket exemption policy, standing alone, “is not determinative of the main concern in the predominance inquiry:  the balance between individual and common issues.”  The court further explained that such a policy does not establish whether all plaintiffs were actually entitled to overtime pay, and that the question of entitlement to overtime pay is still answered by examining the employee’s actual duties.  As to the second category, the court found that the proffered testimony was general, largely inconclusive, and only provided mixed support for the plaintiffs.  Thus, the court found that the district court did not abuse its discretion in declining to certify a class.

While the court declined to review the district court’s refusal to conditionally certify the plaintiffs’ FLSA claims, it elected to provide guidance on the standard district courts should apply to motions seeking certification of a collective action under § 216(b) of the FLSA.  The court noted that district courts of the Second Circuit have largely adopted a two-step method.  While not required, the court found this approach to be “sensible.”  The court stated that in FLSA exemption cases, plaintiffs make the showing necessary to send notice to potential opt-ins (the first stage) by “making some showing that ‘there are other employees . . . who are similarly situated with respect to their job requirements and with regard to their pay provisions,’ on which the criteria for many FLSA exemptions are based, who are classified as exempt pursuant to a common policy or scheme.”  The court cautioned that while this is a low standard of proof, it cannot be satisfied simply by “unsupported assertions.”  In the second stage, the district court must determine whether the collective action may go forward by determining whether the plaintiffs who have opted in are in fact similarly situated to the named plaintiffs.   

The bottom line:  As this case demonstrates, Plaintiffs seeking a Rule 23 overtime class do not show predominance simply because the employer used a blanket exemption policy.  Rather, the determinative issue should be whether the plaintiffs' job duties are similar enough so that the applicability of the overtime exemption(s) can be determined on a class-wide basis.

Another Court Decertifies An FLSA Class

Posted by Greg Mersol on October 18, 2010

As we wrote on August 31, many plaintiffs and defendants assume, if often implicitly, that conditional certification of an FLSA class is tantamount to a win for the plaintiffs.  This is so even though conditionally certified classes are frequently decertified later in the case.  In fact, conditional certification, despite having the name "certification" in its name, means little more than that notice can go to the putative class to facilitate the process of opting in under section 16(b) of the Act.  It is not a decision that any such class will ever be viable.

Another recent case from the United States District Court for the Northern District of California illustrates this point.  In Wong v HSBC Mortgage Corp.pdf., the plaintiffs sought to represent a class of loan officers nationwide who contended that they were misclassified as exempt for overtime purposes.  More specifically, they challenged whether they met the requirements of the outside salesperson exemption under the FLSA, 29 U.S.C. section 213(a)(1).  The court, relying on the two-step procedure for FLSA cases now used by most courts, conditionally certified the class in 2008, and 124 class members opted in.  Following class-wide discovery of over a year, the defendant moved to decertify the class, arguing that the exempt or nonexempt status of each of the opt-in class members would have to be determined on an individual basis.  

Continue Reading

Sanctions Recommended For Opt-In Plaintiffs In FLSA Collective Action

Posted by Todd Dawson on October 14, 2010

"Hey, Judge, You Don't Understand......I Just Wanted The Money!"

About two dozen people who opted into an FLSA collective action in Nevada federal court may soon be reminded that the pinch is usually in the fine print. Magistrate Judge Peggy A. Leen recommended sanctions against these individuals after they refused to respond to discovery. In fact, these lovable rapscallions apparently enjoy life on the wild side, as they even ignored the magistrate judge's order granting the employer's motion to compel.

Continue Reading

Preliminary Certification Is Not The End

Posted by Greg Mersol on August 31, 2010

Many courts today use the two-step procedure described in Lusardi v. Xerox Corp., 99 F.R.D. 89 (D.N.J.1983), to decide whether to certify potential classes under section 16(b) of the Fair Labor Standards Act.  Under that procedure, the court the court looks at certification twice, first before much discovery is done, and again at the close of discovery.  In both cases, the question is whether the class members are "similarly situated," but the standard is different.

Under the Lusardi approach, the court typically uses a lighter standard to certify at the early "preliminary certification" stage, and requires only a modest showing that the class members are similarly situated.  If the court finds that the case meets that standard, it "conditionally" certifies the class and orders notice to the potential class members and the appropriate opt-in procedures.  Once more discovery is completed, the defendant can move to decertify the class. The plaintiff has a much higher burden to keep the class at this second stage.

This two-step procedure tends to create a false sense of victory on behalf of the plaintiffs when the case is conditionally certified.  Certainly, conditional certification aids in getting notice to the class and securing opt-ins, and obviously a defeat at this stage is a serious set-back to a "class" strategy.  But unlike a Rule 23 class, decertification still remains a significant likelihood and even a probability.

Fifteen years ago (after 16(b) had been the law for many decades), the Fifth Circuit found that "Based on our review of the case law, no representative class has ever survived the second stage of review."  Mooney v. Aramco Services Co., 54 F.3d 1207 (5th Cir. 1995). Two recent decisions reflect that decertification still remains  a serious possibility in any case that has been conditionally certified.

Most recently, in Lugo v. Farmers Pride Inc.pdf, the United States District Court for the Eastern District of Pennsylvania considered the claims of a group of chicken processors who brought a "donning and doffing" claim under the FLSA for the time they spend putting on and taking off their protective clothing and equipment.  The court conditionally certified the class in the spring of 2008, permitting it to proceed as a collective action.  Following two years of additional discovery, however, the court decertified the class, finding that the employees situations varied based upon their positions, departments, and shifts.  While the court left open the possibility that a smaller class might be viable, the decision cannot be termed anything but a victory for the employer.

In a completely different court and industry, earlier this year the United States District Court for the Northern District of California considered a claim that low-level supervisors for an automobile finance company had been misclassified as exempt for overtime purposes.  Hernandez v. United Auto Credit Corp.pdf., but it too, later found that the class should be decertified. In Hernandez, the court, like the court in Lugo, conditionally certified the class, but it, too, later found that the class should be decertified.  In the Hernandez case, the difficulty was that, as discovery revealed, the duties and responsibilities of the putative class members varied, making them something other than "similarly situated," and making class action treatment inappropriate.

The bottom line:  While defendants want to avoid conditional certification, decertification under section 16(b) remains a very real likelihood at the end of the case.