There’s a saying in Hollywood – “The last sequel is the one that doesn’t make any money.”  Unfortunately for moviegoers, too often a franchise is exhausted beyond its foreseeable lifespan by a studio looking to cash in on characters one last time before the end, despite an audience’s waning interest in the series.  Thus, instead of having a nice, complete story that ends with the hero riding off into the sunset, we find the characters dragged out and dusted off for one more round, and more often than not, that final sequel serves to end the series on a sour note.

Such was the situation with Judge Hellerstein’s May 2, 2011, decision in Cortes v. Foot Locker, Inc.pdf, Case No. 1:06-cv-01046 (S.D.N.Y.).  In this case, assistant managers at Foot Locker, Inc. completed a trilogy of failure when the judge refused to certify an opt-out class of employees who alleged that their employer mandated that they work off-the-clock.  Three times the plaintiffs asked for Judge Hellerstein to amend his January 20, 2010 order.pdf, and three times their requests were denied. 

The case itself began over four years ago, when the plaintiff Foot Locker employees sued their employer alleging that the store managers continually altered the workers’ time sheets to decrease hours and meet corporate quotas. The case proceeded for three years until it was conditionally certified as an opt-in class under the FLSA in January 2010.  In the year that followed, 43 assistant managers joined the action. 

In his conditional certification order, Judge Hellerstein specifically denied the plaintiffs’ request to certify an opt-out class, pursuant to Federal Rule of Civil Procedure 23, as to claims arising under New York State Labor Law (which has a six-year statute of limitations).  This decision, much like the decision to make a Godfather Part III fifteen years after Part II, raised a few eyebrows, as some courts will certify both a Rule 23 class and an FLSA opt-in action simultaneously, despite their apparent incongruity (an issue which has been discussed previously in this blog (see “Court Finds FLSA Precludes State Overtime Class Actions” – May 30, 2011; and Seventh Circuit Finds That Overtime State Class Actions And FLSA Collective Actions Are Not Incompatible” – January 26, 2011)). 

When he certified the opt-in class, however, Judge Hellerstein permitted the plaintiffs to take discovery beyond the FLSA’s statute of limitations and allowed them to renew their motion for class certification if they uncovered evidence that Foot Locker had committed violations outside of the collective action window.  On January 14, 2011, the plaintiffs moved to alter or amend the 2010 order.  Foot Locker replied and claimed that plaintiffs had “cherry-picked” testimony to bolster their allegations.

Like the writers who “crafted” The Hangover Part II in less than two years from the original hit, Judge Hellerstein did not wait long to strike.  Before plaintiffs could reply to Foot Locker, he denied certification, and noted that an opt-out class would delay the trial.

Plaintiffs, however, were undaunted, and continued their earnest campaign to amend the court’s order to certify the Rule 23 class.  Like the long-labored production of Indiana Jones and the Kingdom of the Crystal Skull, they struggled against the odds to finish what they had started.  They requested that the court provide them with another several days in which to file a reply, which the judge promised he would consider in a third, and final ruling.  On April 12, 2011, plaintiffs filed their reply.

Seven days later, Judge Hellerstein renewed his denial of the Rule 23 certification.  His reasoning was simple and consistent with his previous arguments, as well as the arguments made by most defense attorneys involved in simultaneous collective and class actions:  “If an opt-out class were certified on the New York state labor law claims, the proofs on those claims would potentially overshadow and overwhelm the claims that arise under federal law.”  Put another way, the judge did not want to watch the case become engulfed in a dense, complicated motion and discovery process that would potentially swallow the opt-in class that he had already certified.  (Much as On Stranger Tides threatens to overshadow any good memories that fans of the previous Pirates of the Caribbean films may still have for Captain Jack Sparrow).

The Bottom Line: Echoing the concerns raised by many defense attorneys, some courts still recognize that simultaneous opt-in and opt-out classes are incompatible.