Employment Class Action Blog - Information and Commentary on Employment Class Action Cases Affecting Employers

“If at first you don’t succeed, try, try, again,” or so the adage goes.  A recent case suggests that may not always be the right strategy or, more apropos to this blog, that off-the-clock cases make poor fodder for class action claims. 

In Hernandez v. Ashley Furniture Industries, Inc., Civil Action No. 10-5459 (E.D. Pa. May 22, 2013), the plaintiffs brought suit under the Pennsylvania wage and hour statutes, as well as for unjust enrichment and breach of contract, for alleged unpaid wages, allegedly on behalf of 5,700 employees.  The crux of their claim was that the employer encouraged them to shorten their unpaid lunch periods or to work extra time before or after their shifts without pay. 

One interesting feature of the case was the technology the company used to enforce the fact that employees were not expected to work during their unpaid 30-minute meal period, for which there was an automatic deduction.  The employer’s manufacturing equipment actually shut down during meal periods to prevent employees from performing work during their meal time.  In practice, however, supervisors could, and apparently at times did, override the shutdown so that employees could work.  The employer’s time-keeping systems also recorded the times that the employees actually punched into work and when they actually began working on a production line.

The plaintiffs moved for class certification, but the district court initially denied their motion for lack of evidence, permitting them, instead, to obtain expert testimony to support their claims.  They did so, and their expert testified as to various damages scenarios that depended upon the specific conclusions of the finder of fact.

That qualification proved, at least in part, to be fatal to the plaintiffs’ second motion for class certification.  The court examined the named plaintiffs’ claims, and found that their off-the-clock allegations varied by supervisor and even by the production line on a particular day.  Further, the employees worked under different schemes, whether purely hourly or on an incentive plan.  The court refused to extrapolate claims from “representative” plaintiffs, consistent with the prohibition on “Trial by Formula” set forth in Wal-Mart Stores, Inc. v. Dukes, 564 U.S. ____ (2011).  Thus, the court ultimately refused to certify again based on any of the state law claims the plaintiffs had asserted.

The Hernandez case underscores the need for a uniform practice in off-the-clock cases, a requirement that will often prove elusive.  Off-the-clock cases, by their very nature, generally involve individual departures from the employer’s lawful uniform policies, rather than a uniform policy that violates applicable law.  From the employer’s standpoint, however, it also demonstrates that the human element can create the risk of off-the-clock claims even when it creates systems to prevent work from being performed during unpaid time.

The Bottom Line:  Off-the-clock cases remain tough cases to certify because of the inherent need to examine the situations of each individual plaintiff.

We’ve commented several times in the past on the importance of the second phase of the two-step procedure now commonly employed by district courts in Fair Labor Standards Act cases.  Under that procedure, courts will typically apply a lenient standard for “conditional certification,” really notice to the class, at the first stage.  Following an opt-in period, the defendant may then file a motion to decertify the class, at which time a higher standard applies.  While plaintiffs often prevail at the first stage, those cases that reach the second stage, or even the eve of trial, are frequently decertified as demonstrated by a recent decision from the Northern District of Ohio.

In Creely v. HCR ManorCare, Inc., Case No. 3:09:CV2879 (N.D. Ohio, Jan. 31, 2013), the defendant employer operated hundreds of long- and short-term rehabilitation facilities across the United States and employed over 44,000 hourly exempt employees in positions such as registered nurses, LPNs, nursing assistants, and administrative functions.  The employer employed an “auto-deduct” policy for meal periods, deducting 30 minutes unless the employee who missed their meal completed a form advising it of that fact. 

Such policies, incidentally, are used by many employers because of their general ease of administration and because many employees, particularly those in professional or paraprofessional positions, would prefer not to be required to “punch in” or “punch out” for breaks or meals throughout the day.  Despite their popularity, such policies are frequent targets for wage and hour claims.  These claims, like those asserted in the Creely case, generally allege that such policies place the burden of timekeeping on the employee (which would be true of the need to punch in or out in any event) or that they were subtly or even overtly discouraged from reporting missed meal periods.

In 2009, the district court conditionally certified the case under the lighter, first-step of the procedure.  Creely v. HRC ManorCare Inc., 789 F. Supp. 2d 819 (N.D. Ohio 2009).  Interestingly, rather than provide notice to the entire proposed class, notice was only sent to approximately 3200 employees, of whom about 10% opted in, a relatively low rate.  Discovery was conducted on roughly 20% of that group, as well as on how the company’s auto-deduct policy was implemented at the various locations.  Following the additional discovery, the defendant moved to decertify the class and the plaintiff filed a motion to “confirm” the prior conditional certification.

The district court found that while the employer had a uniform “auto deduct” policy, the manner in which it was implemented varied based upon the facility, type of employee, and even individual manager.  Further, the ability to take uninterrupted meal periods varied based upon the type of work the employee performed.  The court was also persuaded that while the employer automatically deduct time for meals, it had several policies reflecting the employee’s right either to take their meal at a different time or to override the deduction through the submission of a form.  It noted several other cases in which courts had decertified such cases in the past, including Frye v. Baptist Memorial Hospital, Inc., 2012 WL 3570657 (6^th Cir. 2012), as well as cases from many other district courts.  It likewise found that the employer’s defenses varied among the employees and that, as a result, treatment of the case as a collective action would be difficult to manage.

The court thus decertified the case and dismissed the claims of all of the opt-in plaintiffs with prejudice.

While the ending was a positive result for the employer, the Creely case demonstrates the growing difficulty with using an overly low burden at the first stage.  Even on inspection, it is obvious that a 300-facility, 44,000-employee class is going to have difficulties surviving the second stage analysis.  That is particularly true when the employer’s policy is facially lawful and the plaintiffs are asserting “off-the-clock” or similar issues that are almost inherently individual.  In this case, the parties were in litigation for years, took dozens of depositions across the country, and now have to manage the after-effects of a decertified group of over 300 opt-in plaintiffs.  Courts should consider the likelihood that the class can actually meet the higher standard, and the cost and inconvenience to the parties through the second stage before relying solely on a recitation of the discretionary lower standard at the first phase.

The bottom line:  Another court has decertified a wage and hour case challenging the employer’s use of an “auto-deduct” policy based on differences in the manner in which it was implemented.

In the wake of the California Supreme Court’s decision in Brinker Restaurant v. Superior Court, 165 Cal. 4^th 1004 (2012) (see our post on the decision), cases refusing to certify rest and meal period have become far more common as a recent decision from the United States District Court for the Central District of California demonstrates. This case also demonstrates that even where plaintiffs have unusually good evidence of when employees might be taking (or not taking) their breaks, courts are still refusing to certify the claims because individual issues predominate.

In Gonzalez v. OfficeMax North America.pdf., Case No. 8:07-cv-00452-JVS-MLG (C.D. Cal. Nov. 5, 2012), the plaintiffs were nonexempt employees of the OfficeMax retail chain working in California.  In 2008, before the California Supreme Court accepted Brinker for review, they brought suit, claiming that they were denied rest and meal periods as required by California law.  They sought to represent a class of approximately 9,000 workers state-wide.  The district court expressed its misgivings about the class, but stayed the matter pending the Brinker decision.

In light of Brinker’s holdings, it is not surprising in one sense that the court found that the case was not suitable for class action treatment. The court found that since the employer’s obligation was only to make breaks and meal periods available, the claims would necessarily have to be decided on an individual basis.

What makes the decision interesting, however, is that the employer had employees punch in and out for their breaks, so there was at least decent evidence of the breaks that employees were taking (although there were many instances in which employees failed to punch in or out), but the court still found that the claims would require individualized inquiries.  It rejected arguments by the plaintiffs, inadvertently supported in part by the defendant’s expert, that stores were not heavily staffed and that customer demands might cause an employee to miss his or her break.  The court found that the plaintiffs showed that they had missed their breaks, but had failed to show what state-wide policy had caused them to do so.  Given the need for individual inquiries both on the meal and rest period claims, the court refused to certify the case.

Gonzales is the latest in a string of California cases denying certification of rest and meal period cases in Brinker’s wake.  It also rejects some creative arguments by plaintiffs’ counsel to hold a class together despite Brinker’s pronouncements.

The Bottom Line:  Courts are increasingly refusing to certify rest and meal periods after Brinker despite creative lawyering by plaintiffs’ counsel.

Sometimes, when a heavily hyped movie arrives in theaters, the tremendous business it generates can have a negative effect on all the other surrounding films.

 For example, The Avengers landed in American cinemas on May 4, 2012.  Since that time, not only has it racked up astronomical box office figures of its own (in fact, as of the writing of this article, The Avengers is on pace to surpass Star Wars and settle in among the top five grossing movies of all time), but it has also prevented several other movies from accumulating any significant box office figures as a result.  Dark Shadows, The Dictator, and Battleship – all heavily hyped, all with significant studio backing, and all three have been consumed by the wake emanating from The Avengers.  (Please note, the author of this article is aware that there are likely plenty of other reasons why all three of those movies have failed at the box office, such as people's tolerance for Sacha Baron Cohen, Johnny Depp’s diminishing appeal, and the fact that Battleship looks just plain awful – but for the purposes of this analogy, we’ll say it was because of The Avengers.)

Brinker Restaurant Corp. v. Superior Court (2012) 2012 WL 1216356, is the California legal equivalent of The Avengers, a case so large that its ripple is already beginning to demolish smaller lawsuits in its wake.  Take, for example, the Superior Court for the County of Los Angeles’ ruling in Kimani v. Healthcare Investments, Inc., Case No. BC432360 (May 11, 2012).  The group of plaintiff nurses in Kimani alleged that the defendant had failed to provide timely meal breaks, failed to overtime and double-time wages due, failed to provide itemized wage statements, and committed other unfair business practices.  On February 8, 2012, the court denied certification of the class as to the theories regarding overtime, failure to provide first meal breaks and failure to provide rest breaks.  Following that ruling, the court ordered briefing on the only remaining theories regarding the alleged denial of compliant second meal breaks when the nurses worked double-shifts.

Enter Brinker.  With the force of six superheroes defending a city against an army of alien invaders, the court cited to Brinker for the proposition that an employer must only relieve the employee of all duty for the designated meal period, but not ensure that the employee does no work.  With that Thor-esque hammer of an edict in hand, the court reasoned that if the defendant had allowed the nurses to take a break before the start of their second shift, then it had a defense to the statutory violation.  The defendant proffered evidence that if a nurse agreed to work a double shift, she was allowed a second break in exchange for the extra hours.  Any further investigation into the matter would require an individualized inquiry, defeating the common questions of law.

The Bottom Line:  While courts continue to interpret the Brinker decision, at least one has held that for purposes of class certification questions, an employer need only provide a meal break, it does not need to enforce that an employee perform no work. 

It’s bad enough that a plaintiff’s attorney loses a motion to certify a class – it must be even worse when the reason the motion is denied is the attorney’s own failure to plead his case properly.  A recent California court of appeals decision affirmed the denial of a California meal and rest break class in part because it found that the plaintiffs’ attorney could not adequately represent the class.  Interestingly, the court cited errors made by the attorney during certification briefing in support of this finding. 

In Chaaban v. Wet Seal, Inc., Super Ct. No. 07CC01290 (Cal. 4^th App. Dist. April 4, 2012), the plaintiffs appealed an order denying their motion to certify a class action against their former employer, Wet Seal.  They alleged various violations of California’s Labor Code and the applicable wage order, including claims for unpaid meal and rest periods.   They filed their motion for certification in June 2010 along with 67 exhibits.  In what the court described colorfully described as “evidentiary bloodletting,” the trial court found the vast bulk of this evidence to be inadmissible.  After clearing away the “deadwood,” the trial court denied plaintiffs’ motion based on their failure to make the well-established showings of commonality and typicality, as well as its determination that the plaintiffs’ counsel could not adequately represent the proposed class.       

In affirming the trial court’s decision, the court found that the plaintiffs had not established commonality because they had failed to show how they could prove that Wet Seal had not provided meal and rest breaks to its employees on a class-wide basis.  The plaintiffs’ evidentiary failures aside, the court noted that they had failed to explain how allegations of missed meals and breaks could be determined for the class as a whole without resorting to numerous individual inquiries.  The court found the plaintiffs’ reporting time and split-shift payments to be “even more complex problems” in terms of class treatment. 

As for typicality, the court found that the potential class representatives did not establish through admissible evidence that they had claims against Wet Seal.  Rather, the plaintiffs’ declarations contained unfounded assertions such as “I was never paid an additional hour of pay for any missed rest break” without explaining what foundation they used to establish this.  Thus, because the plaintiffs had not shown they had claims against Wet Seal, they failed to demonstrate that they had claims against Wet Seal that were typical of the class they proposed to represent. 

Running the risk of piling on, the court then cited the plaintiffs’ counsel’s certification briefing missteps to support its conclusion that class counsel was unable to handle a large class action properly.  The court found that the plaintiffs’ counsel’s inability to offer admissible evidence, overruled objections to West Seal’s expert declaration, and inability to prepare an adequate reply brief did “not install confident in appellants’ counsel’s qualifications to be class counsel.”  Perhaps sensing a sinking ship, the court also noted that more experienced plaintiff class action lawyers had already dissociated themselves from the case.  The court concluded that plaintiffs’ counsel’s relative lack of experience and questionable resources to handle a case with potentially 10,000 class members provided “ample” support for the trial court’s ruling.      

The bottom line:  While this case provides some guidance for a possible inadequacy of representation argument based on poor lawyering, practically this will likely be a moot issue since errors that could give rise to such a defense are also likely to result in the plaintiffs producing a losing certification motion. 

Employers Prevail on Duty to Provide Meal Periods; Mostly Good on Certification

“We will decide no case before its time.” Alright, that’s not really the California Supreme Court’s motto, but it certainly did take its time deciding the Brinker case. During the three and a half years the case was pending before the state Supreme Court, neither employers nor claimants could say what an employer’s meal period obligations might be or how to prove them. Likely hundreds of millions of dollars changed hands in settlement given the uncertainty of the law.

By way of background, California employers are required to “provide” meal and rest periods for their non-exempt employees within a certain number of hours. Cal. Labor Code §§ 226.7, 512. To oversimplify, the employer must provide a 10-minute paid rest period for every 4 hours of work (or major fraction), and an unpaid 30-minute meal period for every 5 hours of work. California also penalizes employers for one hour of pay per type of violation per day if they fail to follow the law. The rest period requirement has generally not been the center of controversy, because courts quickly concluded that the employer need only make such breaks available. The question, however, has been whether employers need only make meal periods available, or whether they must actually force (or less threateningly “ensure”) employees to actually take them.

In 2005, one California appellate court appeared to say that the employer had an affirmative duty to make sure that the employees actually took their meal periods. See Cicairos v. Summit Logistics, Inc., 133 Cal. App. 4^th 949, 35 Cal. Rptr. 3d 243 (2005). Federal district courts quickly distinguished Cicairos and read California law to mean that the employer has no affirmative duty to require employees to take such breaks. See, e.g., White v. Starbucks Corp., 497 F. Supp. 2d 1080 (C.D. Cal. 2007); Brown v. Federal Express Corp., 249 F.R.D. 580 (C.D. Cal 2008).

Meanwhile, the California appellate courts split on the issue when a different appellate district decided the case of Brinker Restaurant Corp. v. Superior Court, 2007 WL 2965604 (Ct. App. Oct. 12, 2007). If you’re counting, that is precisely four years and six months ago. The trial court in Brinker had construed the law to require the employer to ensure that meal periods were actually taken. It certified classes for rest periods, meal periods, and for so-called “off the clock” time. The court of appeals reversed, however, finding that the employer need only make meal periods available and also concluding that the classes had not been properly certified. In October, 2008, the California Supreme Court accepted review.

While the case was sitting (OK, if you want to be polite, you can say “pending”), class action lawsuits alleging meal period violations continued to be filed. A number of cases were stayed pending the decision in Brinker. See, e.g., Iniguez v. Evergreen Aviation Ground Logistics Enterprise, Inc., 2009 WL 3157420 (C.D. Cal. Sept. 25, 2009). Others were resolved on other grounds, such as, in cases affecting the trucking industry, preemption under the Federal Aviation Administration Authorization Act (“FAAAA”). See Dilts v. Penske Logistics LLC, No. 08-cv-318, 2011 U.S. Dist. LEXIS 1224221 at *15 (C.D. Cal. Oct. 19, 2011). Countless claims settled given the long time the Brinker case was undecided, the uncertainty of the ultimate ruling, and (for employers) the escalating potential risk while the cases were pending.

Today the California Supreme Court announced its holding in Brinker. Was it worth the wait? Well . . . Yes.

The 53-page decision addresses a host of issues, including rest periods, meal periods, whether the court should consider the merits of a case on certification, as well as others. For the most part, employers prevailed on the important substantive aspects of the case, but the certification parts of the order are more mixed. Commentators and parties will likely quibble over this lengthy opinion for years, but the key points appear to be:

1. Duty to Provide Meal Periods. Employers do not need to ensure that employees are actually taking their meal periods, and are not even liable if they are aware that the employees are working through them so long as they have provided a meaningful opportunity to make them freely available. In the words of the Court:

To summarize: An employer’s duty with respect to meal breaks under both section 512, subdivision (a) and Wage Order No. 5 is an obligation to provide a meal period to its employees. The employer satisfies this obligation if it relieves its employees of all duty, relinquishes control over their activities and permits them a reasonable opportunity to take an uninterrupted 30-minute break, and does not impede or discourage them from doing so.

The employer may however be liable for straight pay if it “knew or reasonably should have known that the worker was working through the authorized meal period.”

2. No Bright-Line Test. There is no bright-line test for when the employer has satisfied its obligation to provide a meal period:

What will suffice may vary from industry to industry, and we cannot in the context of this class certification proceeding delineate the full range of approaches that in each instance might be sufficient to satisfy the law.

This is an issue that can lead to litigation, but may also make it more difficult to certify a class because the context may vary between different situations. (So it’s both good and bad for employers).

3. No “Rolling” Period for Meal Periods. The Court rejected a “rolling” time period urged by the plaintiffs that would have made it more difficult for employers to administer the law’s requirements and could have had devastating financial consequences if decided differently and retroactively applied

4. Courts Deciding Certification Can Peek at The Merits. The Court held that it should defer to the trial court’s decision to certify a class so long as it is supported by “substantial evidence.” More importantly, citing the United States Supreme Court’s decision in Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011), it held that the trial court may “properly evaluate” the merits of a case when “evidence or legal issues germane to the certification question bear as well on aspects of the merits.” This is generally a positive standard for employers as oftentimes the merits will demonstrate that certification is not appropriate. Similarly, it can also tip the court’s hand and signal that settlement may be appropriate if the claim is ultimately certified.

5. Computation of Number of Rest Periods. The Court adopted a somewhat more employee-friendly approach to rest periods than the employer urged for situations in which the employee worked more than four hours (or fraction thereof), but less than a multiple of four. The requirement of the Wage Order is of a 10-minute rest period for every four hours of work, and the employer argued that the right to a rest period did not accrue until the completion of a full multiple of 4 hours so that, for example, an employee working 7 hours would only have a right to a single rest period. Following the language of the Wage Order, the Court concluded that an employee working 3-1/2 hours or more was entitled to a 10-minute rest period both for the initial 4 hours and for any additional 4-hour segment in which the employee worked more than two hours. For example, an employee working 6 hours (4+2) is entitled to one rest period, an employee working more than 6 hours but up to 10 is entitled to two rest periods, one working more than 10 hours (4+4+2) to three rest periods, etc.

The Court, however, rejected broad timing arguments raised by the plaintiff that the rest period must come before a meal period. Still, it appeared to approve guidance from the Department of Labor Standards enforcement that “[a]s a general matter,” if there are two rest periods they should fall on either side of the meal period. For most employers this should not be a problem as that is how employees typically take their breaks, but it does leave open the problem of timing for atypical shifts.

6. Rest Period Class Could be Certified Due to Uniform Policy. In that light, the Court found that a rest period class had been properly certified in light of the company’s uniform policies that allegedly did not satisfy the employer’s obligations under these timing requirements. This is a positive for the employees, but leaves open the question of whether such a class could survive if the employer’s policies were in compliance with the California requirements.

7. Trial Court Must Revisit Meal Period Class. The Court largely punted on the issue of whether the meal period class should have been certified, finding that the trial court had improperly construed the law with respect to the need to ensure employees took their meal periods and how the time for such periods had been computed. It therefore remanded the case for further consideration under the correct standard.

8. “Off-the-Clock” Claim Should Not Have Been Certified. It found that no substantial evidence supported the existence of an “off-the-clock” class and therefore found that it should not have been satisfied. This is a very good aspect of the decision for employers because, as is true in most cases, it recognized that it would need to determine liability on an individual basis.

Overall, the Brinker decision is more good for employers than not. As to the most important issue, it adopted a more employer-friendly view of the meal period requirements. While the employees won a technical issue regarding the calculation of rest periods, for most employers this should not prove especially problematic. With regard to certification, the court did affirm certification given a uniform arguably non-compliant break policy, but did not issue broad pronouncements that such cases should be certified in the future and, in fact, found absent a uniform policy (as in the case of off the clock time) a claim should not be certified. This holding may prove especially important for employers in the future as it cuts into the heart of many wage and hour putative class claims.

The bottom line: Brinker has been decided. California employers need only make meal periods available for their employees. A class may be appropriate in the case of employers with uniform policies that do not comply with California law, but absent such a policy it may be difficult for plaintiffs to maintain a class claiming wage and hour violations.

Authorship credit: Greg Mersol, Margaret Rosenthal, Sabrina Shadi, Gil Brosky, and Jeff Vlasek

The Supreme Court’s decision in Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011), seems to be taking hold in meal and rest period cases in California, as shown by two decisions handed down this month.

The most recent casualty of the holding in Dukes is Cortez v. Best Buy Stores, LP, Case No. CV-11-05053 SJO (FFMx) (C.D. Cal. Jan. 25, 2012). The Cortez case was a putative class action against electronics retailer Best Buy. To meet the Dukes requirement of a common policy, the plaintiffs contended that the company’s policy of not budgeting for overtime or for missed meal and rest periods at the store level resulted in employees being pressured to falsify their time records by local managers and thus not being paid properly under California law.

This is actually a pretty clever theory, but the court didn’t buy it. It noted that the company’s policy was compliance with applicable law and the company could certainly direct its managers to manage their stores in a way that did not incur unnecessary overtime or other obligations above straight time pay. It found that the plaintiffs’ claims all boiled down to reliance on one-on-one oral statements (or possibly store-wide, but no greater), that rendered a state-wide class unavailable under Dukes. Indeed, the court’s opinion casts doubt on whether a case relying on oral statements should ordinarily ever be certified.

The court similarly found that any claims that time records were falsified would have to be evaluated on a case-by-case basis as there are many legitimate reasons why time records could be changed, such as an employee forgetting to punch in or out, etc. Applying Dukes, the court denied the plaintiffs’ motion for class certification.

Earlier this month, in Hughes v. Winco Foods.pdf, Case No. ED CV11-00644 JAK (Opx), (C.D. Cal. Jan. 4, 2012), a different judge of the same court reached the same conclusion with respect to a proposed class of grocery store workers at approximately 30 stores. In Hughes, the plaintiffs brought run-of-the-mill California claims for missed meal and rest periods. They relied on electronic payroll data that showed that over one-third of the time employees did not receive their initial meal period within 5 hours as required under California law. They argued that the company policy requiring employees to obtain approval from a supervisor before taking a break resulted in employees not receiving the time to which they were entitled.

The court, relying on evidence from the employer (and a dose of common sense), found that the issue of management approval of breaks necessarily came down to the individual manager. Management differed between stores, departments, and employee functions, as well as other factors. Further, significantly in light of Dukes, the employer’s formal policies required compliance with California law. The court found that the only truly uniform policy was one of management discretion, which was, of course, the very argument rejected in Dukes. The court concluded that the plaintiffs could not meet the requirement of commonality under Rule 23(a)(2) and Dukes, and further could not demonstrate either predominance or superiority under Rule 23(b)(3). Thus, it denied certification.

The Bottom Line: California district courts are applying Dukes to bar certification of California meal and rest period claims based on conduct attributable to individual managers.

Plaintiffs frequently include collective action allegations in even run-of-the-mill FLSA cases. What if an employer concludes, however, that no matter how frivolous the underlying claim, the defense costs will be more than even an oversized settlement?

In theory, an offer of judgment under Federal Rule 68 would be one avenue. By offering the plaintiff all they can possibly recover in the case, shouldn't that cut off the case (and the expected great defense costs)? No, according to two recent circuit decisions.

Most recently, in Symczyk v. Genesis Healthcare Corp.pdf., Case No. 10-3178 (3d Cir. Aug. 31, 2011), the plaintiff brought claims under the FLSA challenging the employer's policy of deducting 30 minutes for meal periods and included the typical collective action allegations. Before the plaintiff had moved to certify the class, and before there were any opt-ins, the defendant made a Rule 68 offer of judgment for $7,500, plus attorney fees and costs to be determined by the court. Although the plaintiff did not accept the offer, the district court ultimately dismissed the claims on that basis, although it remanded state law claims. The plaintiff appealed.

The Third Circuit first tacitly acknowledge the validity of the two-step procedure for certification of claims under the FLSA often ascribed to the district court's decision in Lusardi v. Xerox Corp., 975 F.2d 964 (3d Cir.1992). It then addressed the question of whether the case should have been dismissed due to the Rule 68 offer. It is not difficult to predict the court's holding from the language it used, as it referred dismissively to the "tactic" of defendants of "picking off" lead plaintiffs and to "calculated attempts by some defendants to short-circuit the class action process." Expressing concern that Rule 68 could "morph[] into a tool for the strategic curtailment of representative class actions," the court placed limits on whether the offer of judgment could be effective. It held that the unaccepted offer did not moot the case and it ultimately remanded the case for the court to determine (1) whether a motion for conditional certification would have been timely, (2) whether such a motion should be granted and, (3) if so, whether other employees actually opt in.

The Ninth Circuit reached essentially the same conclusion three weeks earlier in Pitts v. Terrible Herbst, Inc.pdf, Case No. 10-15965 (9th Cir. Aug. 9, 2011). In that case, the defendant made the plaintiff an offer of judgment in an amount over ten times higher than the value of his individual claim before he had even moved for class certification. [OK, we admit we're been a little dramatic - the claim was for $88 and the offer was $900.] Although the plaintiff did not accept the offer, the district court entered it as a judgment and dismissed the case, mooting the class allegations. Like the Third Circuit, the Ninth Circuit held that an unaccepted offer of judgment, even one made before a motion to certify a class had been filed, did not moot the case and it ordered the lower court to consider the certification issue.

One problem with both of these cases is their inherent assumption that class actions should be brought and that a defendant resisting them must have some devious purpose in mind. Both decisions pay little or no regard for the massive cost of defending even the weakest collective action claim and express little sympathy for the plight of employers trying to avoid the many tens of thousands of dollars in litigation expenses they will undoubtedly have to pay regardless of the merits of the case. The net result of these decisions is to negate the value of a Rule 68 offer of judgment to a representative plaintiff in an FLSA collective action, unless the plaintiff actually accepts it.

The Bottom Line: Many courts are hostile towards the use of Rule 68 offers to representative plaintiffs in class or collective cases.

Too often in law school (and in the many years that follow) students are forced to read cases where final decisions will turn on one minute detail, or an obscure rule of law that rarely comes into play.  It is for all of these reasons that Villa v. Tyco Electronics Corp., Case No. C 10-00516 MHP (N.D. Cal. Jan. 7, 2011) stands out as a testament that good, old-fashioned lawyering will still prevail in the litigation game.

The story is the classic tale of an electrician working the morning shift, from 6:00 a.m. to 2:30 p.m., with just a fifteen-minute break at 9:00 a.m., and a lunch break combined with a second ten-minute break from 11:50 a.m. to 12:30 p.m.  While many of us would probably jump at the chance to clock out at 2:30 in the afternoon, the plaintiff thought differently.  Indeed, he brought a litany of allegations against his former employer (of less than three months) on behalf of himself and others similarly situated claiming violations of California meal and break time laws, unpaid overtime wages and waiting time penalties, failure to pay his wages in a timely fashion, failure to reimburse him for business expenses, and failure to keep accurate payroll records.  And, of course, this case wouldn’t be mentioned on this blog if Villa hadn’t brought these claims on behalf of himself as an individual, and on behalf of all others similarly situated.

When examined, Villa presents a formidable list, to be sure. But it was also one dismantled with military precision using one very powerful weapon available to both plaintiffs and defendants—an excellent deposition.

Villa’s crucial allegation centered on his belief that Tyco deprived him of his meal and breaks by combining them into a single period of time around the lunch hour, that the defendant failed to adequately staff the facilities in a manner that allowed him to take his breaks as necessary, and that they failed to record the beginning and end of his break periods.

The defendant battled back by pointing to Villa’s deposition testimony where he testified that he was paid for the break time in the morning, and that he testified the extra ten minutes on his lunch hour constituted his second paid break of the day.  They also knocked in the extra point by citing California Labor Code § 226.7, which merely specifies that breaks shall be taken, not that the time shall be recorded.

  Villa: 0

  Tyco: 7

With regard to the overtime claims, the defendant returned to the deposition once more to illustrate that plaintiff had not identified a single hour worked for Tyco when he was not paid.  Indeed, he could not point to a single paystub that he alleged was inaccurate.  The court kicked in the extra point as well, when it disregarded Villa’s attempt to raise donning and doffing claims as grounds for overtime, despite having never raised them in the Amended Complaint.

  Villa: 0

  Tyco: 14

The defendant powered through Villa’s timely wage payment claims as well, by producing myriad records indicating that plaintiff was paid twice a month, every month, for the duration of his time at Tyco.  The only near-fumble occurred, however, when the plaintiff alleged that his final paycheck arrived late as a result of Tyco’s willful withholding.  However, evidence proved that inclement weather had prevented FedEx from delivering the final paycheck until two days after it was sent—and that it was no fault of the defendant.

  Villa: 0

  Tyco: 21

The court also wasted little time on the failure to reimburse the plaintiff for business expenses—Villa testified that he was paid as required.

  Villa: 0

  Tyco: 28

Now in the home stretch, and with the clock winding down, the court turned to plaintiff’s allegation that Tyco failed to keep accurate payroll records under § 226.  As with nearly every other play the plaintiff attempted to run, however, the defendant was prepared and pointed to the deposition where, once again, Villa testified that he had been paid wages for all of the time periods.

  Villa: 0

  Tyco: 35

With all of his individual claims dismissed, the court addressed the remaining issue, that is, what to do about the putative class allegations.  Thus, with the clock winding down and little else to say, the court took a knee and let time expire when it held that, having found each of plaintiff’s claims failed to meet the requirements to show actual injury as a result of defendant’s actions, Villa lacked standing to pursue any claim on behalf of his purported class.

  Villa: 0

  Tyco: 42 (Although I will admit that it’s almost impossible to score while taking a knee.)

The Bottom Line:  This article is in no way meant to be an endorsement of defense attorneys (or of any particular team winning the Super Bowl).  As mentioned above, if nothing else, Villa stands for one principle: an excellent, accomplished deposition can make all the difference in the world when it comes time to move for summary judgment in an employment class action case.  Facts and testimony can and will win court battles, just as a perfectly executed offense and defense will win on the field.

And, specific to the issue of class actions, Villa reminds us that strategic, targeted attack can reap tremendous results: by dismissing Villa’s individual claims, the court was left with no choice but to dismiss the rest of the putative class members’ claims without prejudice, putting an end to the big game before it even began.