North Carolina Court Rejects Collective Action Based on Regular Rate Issues

Greg MersolBy Greg Mersol on Posted in Collective Action

In some instances, it’s hard to see what benefit there is to a class action other than for the lawyers. This is particularly true in so-called “regular rate” cases challenging employer perks such as free meals, various kinds of bonuses, or other employee benefits. We’ve commented on these cases previously.

A recent case raises these same questions. In Alminiana v. Lowe’s Home Centers, LLC, Case No. 5:20-cv-00010 (W.D. N.C., Sept. 22, 2020), the complaint challenged the consequences of two benefits provided by an employer to its employees. The first was a one-time payment made by the company to its employees in 2018 to make up for 2017 changes in the tax code that year that had adversely affected them. The second was a program to promote charitable activities by paying employees for up to eight hours per year for doing volunteer work for charities. It’s pretty hard to argue with either of these. Continue Reading

Eleventh Circuit Invalidates Class Action Individual Incentive Awards

Greg MersolBy Greg Mersol on Posted in Incentive Awards

Yes, you read that right.

Class action litigation is fueled largely by the availability of often large attorney fee awards. To get a class action case in the first place, however, attorneys bringing them often entice a potential individual plaintiff into the role of class representative with the prospect of a monetary “incentive award,” usually in the thousands of dollars. Indeed, the giving of such awards has become commonplace or even routine. But is it lawful?

Apparently not. In Johnson v. NPAS Solutions LLC, Case No. 18-12344 (11th Cir. Sept. 17, 2020), the court dealt with what it described as a fairly typical settlement of a class action approved by a Florida district court. The case itself involved claimed violations of the Telephone Consumer Protection Act (TCPA), 47 U.S.C. § 227, for making automatic telephone calls without the recipient’s consent. The plaintiff contended that the defendant had made such calls to 179,642 telephone numbers and sought relief under the TCPA on behalf of a class. Continue Reading

Travel Time Compensable Under California Law Despite Contrary Union Agreement

Todd DawsonBy Todd Dawson on Posted in Wage and Hour

While California’s wage-and-hour rules recognize a number of exceptions for employees subject to a collective bargaining agreement, the California Supreme Court’s denial of review in Gutierrez v. Brand Energy Svcs. of Calif. is a reminder that such exceptions are not without limits. Case No. A154604, review denied 9/9/20.

The California wage order at issue in Gutierrez provided that “all employer-mandated travel that occurs after the first location where the employee’s presence is required by the employer shall be compensated at the employee’s regular rate of pay.” (Wage Order 16, § 5(A)). The wage order further provided that this requirement applied “to any employees covered by a valid collective bargaining agreement unless the collective bargaining agreement expressly provides otherwise.” (Id. at § 5(D), emphasis added). Continue Reading

Ninth Circuit Doesn’t Require Uber to Litigate Driver’s Data Security Breach Putative Class Action

John LewisBy John Lewis on Posted in Arbitration

A Ninth Circuit panel denied a mandamus petition attempting to overturn a district court order requiring arbitration of a putative class action brought by an Uber driver. The action claimed that Uber failed to protect drivers’ and riders’ personal information and botched a data security breach by online hackers.

The district court ultimately concluded that William Grice, an Alabama based Uber driver who never crosses state lines, did not qualify for the Federal Arbitration Act’s (FAA) § 1 exemption. As a reminder, Section 1 of the FAA exempts “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce” – the Section’s “residual clause.” 9 U.S.C. § 1 (Emphasis added). This case concerned the scope of that exception as applied to a ride-sharing service. Continue Reading

Missouri District Court Rules on Employment Class Action Procedural Quagmire

Greg MersolBy Greg Mersol on Posted in FLSA

Res judicata helps cut the Gordian knot

Rule 23 and FLSA Section 16(b) can provide myriad benefits to the plaintiffs in class actions, but in some instances the attorneys may resort to procedural runarounds to try to leverage those benefits even further. Courts have been less than receptive to these efforts, as a recent opinion from the Eastern District of Missouri demonstrates. Buchta v. Air Evac EMS, Inc., Case No. 4:19-cv-00976 (E.D. Mo. Aug. 10, 2020).

The case — really two class action cases — has a convoluted fact pattern, but we’ll hit just the high points. The disputes in the two related actions concerned claims for overtime against the same employer, an air ambulance company operating in several states in and around Kentucky. The first case, Peck v. Air Evac EMS, was filed in Kentucky in 2018 and settled in April 2019. The settlement in that case included a release of any claims relating to “failure to pay overtime,” “failure to pay wages,” and “any claim that was or could have been asserted in the action.” Following notice to the class, the Kentucky district court approved the settlement on a class-wide basis in January 2020. Continue Reading

Florida District Court Denies Conditional Certification in ‘Tip Credit’ Case

Greg MersolBy Greg Mersol on Posted in Class Certification

Tip credit issues are inherently difficult. Section 3(m) of the Fair Labor Standards Act permits an employer to count tips toward a portion of a tipped employee’s wages to meet the minimum wage (and in some instances overtime) requirements of the Act. The Department of Labor, however,  has gone back and forth over the requirements for tipped work and what the test is for the amount of side work permitted to take advantage of the tip credit. Even worse, courts have disagreed, both before and after the recent changes in the DOL guidance, over how the test is to be administered. The questions relate both to how side work is measured (i.e., is there a 20 percent limit?) and which activities actually produce tips and which ones do not.

But under either test, the question is fundamentally one that is not well-suited to class or collective action treatment. By its very nature, working in a restaurant entails ebbs and flows of customers, peaking around meal times and slowing during off times. There is disagreement over what might constitute “side work” (how about replacing a dirty piece of silverware for a customer?), and frequently side work is done in conjunction with tipped duties. Some customers want more service than others; some shifts are different from others. So it’s hard to say that even one day is similar to another, let alone that a class exists of “similarly situated” tipped servers. Continue Reading

Denial of Conditional Certification Highlights Importance of Handbook Policies

Todd DawsonBy Todd Dawson on Posted in Class Certification

A recent decision from the Eastern District of Wisconsin serves as a strong reminder that well-crafted handbook policies can sometimes save the day for employers in proposed Fair Labor Standards Act collective actions. Amandah v. Alro Steel Corp., No. 19-CV-1607-JPS (E.D. Wis. Aug. 21, 2020).

The plaintiff in Amandah brought a proposed collective action against his employer, claiming that the company unlawfully failed to compensate employees for all hours worked. Specifically, the plaintiff claimed that the employer maintained a policy encouraging employees to arrive 15 minutes early for work, but rounded the employees’ punch-in times to the scheduled start of the shift. The plaintiff’s proposed collective action encompassed hourly employees working at 73 warehouses spread across 12 states. Continue Reading

Sixth Circuit Sets Out Guidelines for Lodestar Fee Awards in Class Actions

Greg MersolBy Greg Mersol on Posted in Class Action Litigation

Attorney fee awards are a major driver of class action litigation – both in the employment and other contexts. How they are awarded, and what is “reasonable” has been an ongoing source of contention in many cases. A recent opinion from the Sixth Circuit provides some guidance and also places limits on methodology used by some courts to support generous, even lavish, fee awards.

The decision in Linneman v. Vita-Mix Corp., Case Nos. 19-3993/4249 (6th Cir., Aug. 12, 2020), related to the settlement of a class action involving the high-end Vita-Mix blenders used commercially and by consumers. The plaintiffs, who owned the mixers, claimed that a seal used in the blenders was defective and would wear away with use. The parties settled the case under a two-part structure: Consumers could get either a $70 gift card or a replacement assembly with a revised seal; commercial users would get only the assembly. As the parties were unable to agree to a fee amount, the settlement provided that class counsel would receive a fee to be determined by the district court. As explained below, after two years of litigation, and using a lodestar calculation, the district court awarded $3.9 million in fees ($2.2 million plus a 75% premium), and the defendant appealed. Continue Reading

Something Is Rotten in the State of California? Ride Share Misclassification Ruling Is Merely Act I

Todd LebowitzBy Todd Lebowitz on Posted in California

“To be or not to be” are the opening words of a soliloquy by Prince Hamlet. With that, I have exhausted what I remember about Shakespearean plays without consulting Wikipedia. Having consulted Wikipedia, I can confirm that this soliloquy occurs in Hamlet, Act III, Scene 1.

A lot happens in Act III and beyond, and if you stopped reading Hamlet after Act I, you’d miss most of the action, including assorted plotting, scheming and mayhem. Continue Reading

Who Is ‘Engaged in Commerce’ Under FAA Section 1? Not Food Delivery Drivers

John LewisBy John Lewis on Posted in Arbitration

Certain Grubhub Inc. delivery drivers brought two putative collective and class actions asserting that they were misclassified as independent contractors, resulting in both federal and state wage and hour violations. The drivers – who worked in Chicago, Portland and New York – had signed Delivery Service Provider Agreements that required arbitration but claimed their agreements were exempt from the Federal Arbitration Act (FAA) because they were “workers engaged in foreign or interstate commerce.” The district courts disagreed and compelled arbitration under the FAA.

The Analysis

Now, in a sometimes-colorful August 4th decision, the Seventh Circuit has affirmed both judgments.  Wallace v. Grubhub Holdings, Inc., Nos. 19-1564 and 19-2156 (7th Cir. Aug. 4, 2020).  Judge Amy Barrett, who authored the decision, began her interpretation with the text of § 1 of the FAA which declares:  “nothing herein contained shall apply to contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.”  9 U.S.C. § 1.  Most relevant to the decision was the residual category “any other class of workers engaged in foreign or interstate commerce” and its “membership”.  Perhaps the most meaningful portion of the decision was that the “operative unit” was a “class of workers” not simply individual workers who claim to have worked in commerce.  So, a worker “whose occupation is not defined by . . . engagement in interstate commerce does not qualify for the exemption . . . .”  And, merely because a worker “occasionally” performs that class of work, is not enough.  Hill v. Rent-A-Center, 398 F. 3d 1286, 1289-90 (11th Cir. 2005). Continue Reading

LexBlog