D.Colo.: Statute of Limitations Tolled During Time Motion for Conditional Certification Pending
Stransky v. HealthONE of Denver, Inc.
This case was before the court on the plaintiffs’ Motion to Toll the Statute of Limitations, which was filed simultaneously with the plaintiffs’ motion for conditional certification of the case as a collective action. In granting the plaintiffs motion (in part) and tolling the statute of limitations as of the date on which the plaintiffs sought conditional certification, the court looked to the both the procedural realities of the opt-in provisions of 216(b) and the remedial purpose behind the FLSA. Significantly, the court noted that there would be no prejudice to the defendant in granting such tolling while the potential plaintiffs would be significantly prejudiced by the continued expiration of their respective statutes of limitations if the tolling were not granted.
After discussing cases from around the country that have granted equitable tolling under similar circumstances, largely based upon the amount of time that it took for the court to rule upon a plaintiff’s pending motion for conditional certification, because same is in the interests of justice, the court honed in on the policy supporting such decisions:
In the case of a collective FLSA action, a least one district court in the Tenth Circuit has explained that the unique circumstances of a collective action “is not only significant but justifies tolling the limitations period [ ] for the FLSA putative class until the court authorizes the provision of notice to putative class members or issues an order denying the provision of notice.” In re Bank of America Wage and Hour Emp’t Litig., No. 10–MDL–2138, 2010 WL 4180530 (D.Kan. Oct.20, 2010). In making that equitable tolling determination, the court in In re Bank of America utilized a flexible standard, where a court considers five factors in determining whether to equitably toll a statute of limitations: (1) lack of notice of the filing requirement; (2) lack of constructive knowledge of the filing requirement; (3) diligence in pursuing one’s rights; (4) absence of prejudice to the defendant; and (5) the plaintiff’s reasonableness in remaining ignorant of the particular legal requirement. Id. (citing Graham–Humphreys, 209 F.3d at 561).
Plaintiffs argue that the statue of limitations should be equitably tolled here in the interest of justice in order to protect the Opt-in Plaintiffs’ diminishing claims. The Court agrees. Although early notice to Opt-in Plaintiffs in a collective action such as this is favored, such notice was not possible here as Defendant is in sole possession of the names and last known physical addresses of all potential Opt-in Plaintiffs. As such, allowing Opt-in Plaintiffs’ claims to diminish or expire due to circumstances beyond their direct control would be particularly unjust. The Tenth Circuit has also recognized the possible need for equitable tolling under such conditions. See Gray v. Phillips Petroleum Co., 858 F.2d 610, 616 (10th Cir.1988) (tolling statute of limitations where plaintiffs were lulled into inaction and defendant did not show that any “significant prejudice” would result from allowing plaintiffs to proceed; defendant was “fully apprised” of the plaintiffs’ claims). Moreover, Defendant will not be prejudiced by such equitable tolling. See Baden–Winterwood, 484 F.Supp.2d at 828–29 (defendant not prejudiced because it “had full knowledge that the named Plaintiff brought the suit as a collective action on the date of the filing” and “was fully aware of its scope of potential liability.”). Indeed, Defendant fails to claim it would be prejudiced in any manner, let alone prejudiced unduly, were this Court to toll the applicable limitations period. Thus, having considered the particular facts of this case, the Court finds that the interests of justice are best served by tolling the statute of limitations for the Opt-in Plaintiffs in this case.
However, while the court granted the plaintiffs motion, it declined to toll the statute of limitations back to the date of the filing of the original complaint. Instead, the court held the appropriate date to begin tolling was the date on which the plaintiffs filed their motion for conditional certification.
Click Stransky v. HealthONE of Denver, Inc. to read the entire Corrected Order Granting in Part Plaintiffs’ Motion to Toll the Statute of Limitations.
D.Md.: Compensatory Damages for Emotional Distress Are Available Under §§ 215 and 216(b) for Retaliation Claims
Randolph v. ADT Sec. Services, Inc.
This case was before the court on several pretrial motions of the parties. As discussed here, among the issues briefed before the court was whether compensatory damages are available to a plaintiff-employee pursuing a claim of retaliation under the FLSA. The court answered this question in the affirmative, noting the issue was one of first impression within the Fourth Circuit.
Restating the parties’ respective positions, the court explained:
ADT maintains that, as a matter of law, Plaintiffs are precluded from seeking emotional distress damages because such damages are unavailable under “the very similar damages provision of the ADEA.” (ECF No. 101, at 18). Plaintiffs disagree, pointing to several circuit court opinions upholding such awards. On this issue, Plaintiffs have the better end of the argument.
The court noted that the issue presented was one of first impression in the Fourth Circuit and then examined case law from other circuit and district level courts:
Neither the Fourth Circuit nor any district court within this circuit has previously determined whether a plaintiff may recover compensatory damages from emotional distress in an FLSA action. Four circuit courts of appeal—the Sixth, Seventh, Eighth, and Ninth Circuits—have, however, either directly or indirectly addressed the issue, and all have permitted the recovery of emotional distress damages. Moore v. Freeman, 355 F.3d 558, 563–64 (6th Cir.2004) (explaining that “consensus on the issue of compensatory damages for mental and emotional distress [in FLSA cases] seems to be developing”); Broadus v. O.K. Indus., Inc., 238 F.3d 990, 992 (8th Cir.2001) (upholding a compensatory award that may have included damages for emotional distress); Lambert v. Ackerley, 180 F.3d 997, 1011 (9th Cir.1999) (affirming an award of emotional distress damages in an FLSA action); Avitia v. Metro. Club of Chi., Inc., 49 F.3d 1219, 1226–30 (7th Cir.1995) (reducing an award for emotional distress damages after finding the award excessive, but noting that such damages are available under the FLSA (citing Travis, 921 F.2d at 111–12)).
The compensatory nature of the remedies in § 216(b) supports the outcome in these cases. “The [FLSA’s] statutory scheme contemplates compensation in full for any retaliation employees suffer from reporting grievances.” Moore, 355 F.3d at 563 (citing Snapp, 208 F.3d at 934; Lanza, 97 F.Supp.2d at 740); Republic Franklin Ins. Co. v. Albemarle Cnty. Sch. Bd., 670 F.3d 563, 568 (4th Cir.2012) (citing Snapp and Lanza for the proposition that the relief provided in § 216(b) “is compensatory in nature”). The text of § 216(b) expressly provides for “such legal or equitable relief as may be appropriate to effectuate” this compensatory purpose, employing the broad phrase “without limitation” to indicate that the enumerated remedies within that section are not exhaustive. 29 U.S.C. § 216(b). “[L]ike the forms of relief mentioned [therein], damages for mental anguish are intended to compensate the injured party for harm suffered.” Moore, 355 F.3d at 564.
Certainly, an argument could be made that the availability of liquidated damages [under § 216(b) ] would be sufficient to fully compensate a plaintiff with proof of actual economic damages but only minor, subjective mental anguish occasioned by an employer’s violation of the [FLSA]. However, in a case involving only nominal economic losses but proved retaliation consisting of concerted, directed harassment, resulting in grave emotional distress, such nominal economic damages or the available doubling of those damages would be insufficient to make the plaintiff whole. Damages for mental anguish would be the necessary compensatory legal relief “appropriate to effectuate the purposes of [the anti-retaliation provision].” Bogacki v. Buccaneers Ltd. P’ship, 370 F.Supp.2d 1201, 1203 (M.D.Fla.2005) (quoting 29 U.S.C. § 216(b)); cf. Snapp, 208 F.3d at 937 (reasoning that “district courts may have to exercise some creativity in awarding relief in retaliation cases” beyond those forms set forth in the statutory text).
The court then rejected the contrary holdings of courts that had held ADEA cases to be persuasive based upon the fact that the ADEA was patterned after the FLSA, noting that such reasoning:
fails to consider that the relief authorized under both statutes must be determined ‘not in isolation, but in conjunction with the other provisions of the Act[s], the policies they further, and the enforcement framework[s] they envision.’ Dean, 559 F.2d at 1038.” The court further distinguished the ADEA legislative framework by pointing out that “[t]he ADEA includes an administrative conciliation process that is critical to its enforcement framework… [and] [l]ooking to this process, circuit courts have repeatedly held that emotional distress damages are unavailable in ADEA actions because they would impede mediation and conciliation by discouraging early resolution of ADEA claims.
Thus, the court concluded:
Because “full compensation is the evident purpose and paramount policy” in an FLSA retaliation action, “the more reasoned approach” would permit a plaintiff who makes a proper showing to recover damages for emotional distress. Id.; Moore, 355 F.3d at 563–64. Neither party here has addressed the strength or weakness of Plaintiffs’ evidence of alleged emotional distress. Until the parties do so at trial, the court cannot conclude—as a matter of law—”that damages for mental anguish should be disallowed.” Id. at 1205–06. Plaintiffs will be permitted to seek emotional distress damages through a jury trial, and their motion on this issue will, therefore, be granted.
In light of the continuing disagreement of courts regarding this issue, this might be one to watch for further appellate level developments in the future.
Click Randolph v. ADT Sec. Services, Inc. to read the entire Memorandum Opinion.
U.S.S.C. Grants Cert to Decide Whether a Defendant-Employer Can Moot a Putative Collective Action By “Picking Off” the Named Plaintiff
Genesis HealthCare Corp. v. Symczyk
As reported by law360 and the ScotusBlog, today the Supreme Court announced that it had granted Certiori to a Defendant-employer who sought to moot a putative collective action by offering “full relief” to the named-Plaintiff before she could file a motion seeking conditional certification of her claims as a collective action.
Initially, the trial court dismissed the plaintiff’s claims noting that:
[Plaintiff] does not contend that other individuals have joined her collective action. Thus, this case, like each of the district court cases cited by Defendants, which concluded that a Rule 68 offer of judgment mooted the underlying FLSA collective action, involves a single named plaintiff. In addition, Symczyk does not contest Defendants’ assertion that the 68 offer of judgment fully satisfied her claims….
However, the Third Circuit reversed reasoning, in part:
When Rule 68 morphs into a tool for the strategic curtailment of representative actions, it facilitates an outcome antithetical to the purposes behind § 216(b). Symczyk’s claim-like that of the plaintiff in Weiss—was “acutely susceptible to mootness” while the action was in its early stages and the court had yet to determine whether to facilitate notice to prospective plaintiffs. See Weiss, 385 F.3d at 347 (internal quotation marks omitted). When the certification process has yet to unfold, application of the relation back doctrine prevents defendants from using Rule 68 to “undercut the viability” of either’ type of representative action. See id. at 344.…
In sum, we believe the relation back doctrine helps ensure the use of Rule 68 does not prevent a collective action from playing out according to the directives of § 216(b) and the procedures authorized by the Supreme Court in Hoffmann–La Roche and further refined by courts applying this statute. Depriving the parties and the court of a reasonable opportunity to deliberate on the merits of collective action “conditional certification” frustrates the objectives served by § 216(b). Cf. Sandoz, 553 F.3d at 921 (explaining “there must be some time for a[n FLSA] plaintiff to move to certify a collective action before a defendant can moot the claim through an offer of judgment”). Absent undue delay, when an FLSA plaintiff moves for “certification” of a collective action, the appropriate course—particularly when a defendant makes a Rule 68 offer to the plaintiff that would have the possible effect of mooting the claim for collective relief asserted under § 216(b)—is for the district court to relate the motion back to the filing of the initial complaint.
Now the Supreme Court will apparently be weighing in on the issue.
Of note, the plaintiff was a single plaintiff and had not sought conditional certification of a collective action at the time the defendant sought to moot the claim. We will see how much, if at all, these facts play into the Court’s decision to come.
Click ScotusBlog to read the briefs and Overtime Law Blog, to read our initial post regarding the 3rd Circuit’s Opinion.
U.S.S.C.: Pharma Reps Outside Sales Exempt
In an anxiously awaited decision the Supreme Court handed down a 5-4 decision today holding that Pharmacy Reps are not entitled to overtime. Affirming the Ninth Circuit’s decision holding pharma reps to be outside sales exempt the conservative majority’s decision was delivered by Justice Alito.
Click Christopher v. Smithkline Beecham Corp. to read the entire decision.
2 Recent Decisions Discuss Successor Liability in FLSA Cases
When an employee is employed by a company, as long as that company is an enterprise covered by the FLSA, it is subject to the wage and hour requirements of the FLSA. But what about when the company alleged to have violated the FLSA changes hands before its employees have initiated a lawsuit or claim for their unpaid wages. Does the successor company, who acquires the assets of the alleged violator have successor liability under the FLSA? Two recent decisions discuss this very issue. However, given the factually intensive nature of the inquiry, as discussed below, both courts denied the respective defendants’ motions based on issues of fact.
Paschal v. Child Development Inc.
In the first case, Paschal v. Child Development, Inc., the plaintiffs’ subsequent employer (“CDIHS”) sought judgment as a matter of law at the pleading stage of the case, asserting that it could not be plaintiffs’ employer under the FLSA, because it was not in existence when the plaintiffs’ claims arose. In denying the subsequent employer’s motion as premature, the court explained the parameters for successor liability in FLSA cases.
The court explained that the test for liability of a successor company under the FLSA requires the examination of several elements:
The doctrine of successor liability has [ ] been recognized to apply to FLSA violations.” The question of successor liability is difficult based on the “myriad [of] factual circumstances and legal contexts in which it can arise;” therefore, the court must give emphasis on the facts of each case as it arises. A finding of successorship involves two essential inquiries: (1) whether there is continuity of the business; and (2) did the successor know of the violations at the time it took over the business. A court may also consider whether: (a) the same plant is being used; (b) the employees are the same; (c) the same jobs exist; (d) the supervisors are the same; (e) the same equipment and methods of production are being used; and (f) the same services are being offered.
Applying these factors, the court addressed the parties respective positions:
In their Reply, CDIHS argues that Plaintiffs failed to plead any facts that put them in the category of being a successor in interest. Specifically, they argue that “[t]he business was not transferred, nor were employees or property transferred. There was no purchase of the business in any sense.” However, Defendants fail to address the two essential questions of whether they had notice of the violations and whether there was continuity of the business… Plaintiffs argue that “[s]ubstantial continuity of operations between CDI and CDIHS is a given.” They point to CDIHS’s website that indicates all of the efforts on CDIHS’s behalf to maintain the continuity of program. They also argue that based on CDIHS’s intervention, they were “aware of CDI’s potential liability for FLSA and ERISA violations.”
Ultimately, the court denied CDIHS’ motion as premature.
Click Paschal v. Child Development Inc. to read the entire Order Denying Motion to Dismiss.
Battino v. Cornelia Fifth Ave., LLC
In the second case, Battino v. Cornelia Fifth Ave., LLC, a different court applied a similar test to that discussed above. However, because the Battino case was before the court on the defendants’ motion for summary judgment (rather than a motion to dismiss at the pleading stage), it provides a greater insight into how courts apply the multi-factor test in ascertaining whether there is successor liability under the FLSA. In Battino, the court denied the subsequent employers’ motion for summary judgment holding that issues of fact precluded a finding in the defendants’ favor on this issue. As discussed here, the court primarily focused its inquiry on the second factor enunciated above, whether the successor knew of the violations at the time it took over the business.
Regarding the specific test applied by the Battino court, the court explained:
The substantial continuity test in the labor relations context looks to “whether the new company has acquired substantial assets of its predecessor and continued, without interruption or substantial change, the predecessor’s business operations.” Fall River, 482 U.S. at 43 (citation and quotation marks omitted). Courts applying this test typically look at the nine factors enunciated by the Sixth Circuit in the Title VII discrimination context in EEOC v. MacMillan Bloedel Containers, Inc., 503 F.2d 1086, 1094 (6th Cir.1974): (1) whether the successor company had notice of the charge or pending lawsuit prior to acquiring the business or assets of the predecessor; (2) the ability of the predecessor to provide relief; (3) whether there has been a substantial continuity of business operations; (4) whether the new employer uses the same plant; (5) whether he uses the same or substantially the same work force; (6) whether he uses the same or substantially the same supervisory personnel; (7) whether the same jobs exist under substantially the same working conditions; (8) whether he uses the same machinery, equipment, and methods of production; and (9) whether he produces the same product. Musikiwamba, 760 F.2d at 750 (paraphrasing MacMillan Bloedel ). “No one factor is controlling, and it is not necessary that each factor be met to find successor liability.” EEOC v. Barney Skanska Const. Co., 99 Civ.2001, 2000 WL 1617008, at *2 (S .D.N.Y. Oct. 27, 2000) (citation omitted).
In denying the defendants’ motion, the court held that there were issues of fact precluding same, because the successor company could not be said to be an “innocent purchaser,” inasmuch as one of its principals was also a principal in the prior company.
The court explained:
This is not a case of an “innocent purchaser” who “exercised due diligence and failed to uncover evidence” of any potential liability. Musikiwamba, 760 F.2d at 750, 752. Rather, SCFAL was fully aware of the potential liabilities to the unpaid employees and attempted to negotiate the APA accordingly. Thus, the Court is unable to conclude as a matter of law that Canizales cannot be liable as a successor to Cornelia Fifth because of a lack of notice of the claim to SCFAL.
Click Battino v. Cornelia Fifth Ave., LLC to read the entire Opinion and Order.
7th Cir.: Pharma Reps Are Administratively Exempt
Schaefer-LaRose v. Eli Lilly & Co.
This case was before the Seventh Circuit on the consolidated appeals of two different summary judgment orders in two different cases. In one case, the trial court had granted the plaintiffs’ motion for summary judgment holding that, as a matter of law, pharmaceutical reps were not administratively exempt employees. In the other case, the trial court held that the pharmaceutical reps were subject to the administrative exemption, and granted the defendant’s motion for summary judgment. Resolving this issue, at least in the Seventh Circuit, the court agreed with the latter and held that pharma reps do in fact meet both of the duties prongs of the administrative exemption. In so doing, the court joined the Third Circuit and furthered the split with the Second Circuit which had previously held that pharma reps with virtually identical duties are not subject to the administrative exemption.
Initially, the court examined the first duties prong of the administrative exemption and held that the reps’ primary duty as pharmaceutical sales representatives was performance of office work directly related to their employers’ general business operations. In so doing, the Seventh Circuit seems to have taken a particularly broad view of the first prong, in line with other recent Seventh Circuit authority, but in contrast to other circuits such as the Second and Eleventh, which typically require that an administrative employee “run of service” the employer’s business or at least some aspect of it in order to fall under the exemption.
In holding that they exercised the requisite independent judgment and discretion, the court cited the arguments raised by the defendants that:
the pharmaceutical companies assert that the representatives had a host of core duties committed to their discretion, including determining how best to gain access to particular physicians and managing their limited discretionary budgets. Their primary argument, however, focuses on the discretion that an individual representative must employ in the course of an individual sales call with a physician to communicate effectively his employer’s core message to the specific audience and to address a physician’s particular concerns.
As in other recent cases regarding the administrative exemption, the Seventh Circuit seems to have lowered the bar for the level of discretion that an employee must exercise in order to qualify for the exemption. Whereas § 541.202(b) explains:
The phrase “discretion and independent judgment” must be applied in the light of all the facts involved in the particular employment situation in which the question arises. Factors to consider when determining whether an employee exercises discretion and independent judgment with respect to matters of significance include, but are not limited to: whether the employee has authority to formulate, affect, interpret, or implement management policies or operating practices; whether the employee carries out major assignments in conducting the operations of the business; whether the employee performs work that affects business operations to a substantial degree, even if the employee’s assignments are related to operation of a particular segment of the business; whether the employee has authority to commit the employer in matters that have significant financial impact; whether the employee has authority to waive or deviate from established policies and procedures without prior approval; whether the employee has authority to negotiate and bind the company on significant matters; whether the employee provides consultation or expert advice to management; whether the employee is involved in planning long- or short-term business objectives; whether the employee investigates and resolves matters of significance on behalf of management; and whether the employee represents the company in handling complaints, arbitrating disputes or resolving grievances.
the court seemed to simply conclude that the plaintiffs’ duties were sufficient because they exercised some level of discretion, a fact that the parties did not dispute. Discussing the discretion exercised by the plaintiffs, the court reasoned:
Beyond these physician interactions, which we consider to be the critical function of the job and the place in which discretion is most evident, the representatives’ other duties related to the actual call on the physician also manifest a substantial measure of judgment. Although representatives are given specific call plans identifying the physicians to be visited and the degree of frequency or priority category for each physician, several representatives testified that they apply a measure of strategic analysis to their work, choosing to see physicians not on their call plans or non-physicians who may influence prescribing patterns. See supra note 14 (describing discretion applied to call plans). They work collaboratively with one another, proposing comprehensive visit plans for the territories and checking in regularly by phone to keep each other abreast of developments in particular visits with physicians. Representatives also spend the vast majority of their time entirely unsupervised. Although they keep extensive records, through which management can and does monitor their progress, neither the fact that management reviews their work nor that they are required to keep such records detracts from the discretion they exercise in the core of their workday.
The court also rejected the plaintiffs’ contention that the plaintiffs’ principal duties involved the application of skill, rather than the judgment required for application of the exemption:
Finally, the plaintiffs and the Secretary briefly contend that the work of the representatives principally involves the application of skill, rather than judgment. Although they are correct that the regulations draw this distinction and caution that skill is insufficient to warrant the exemption, skill and judgment are not mutually exclusive. The records clearly demonstrate that the representatives receive extensive skills training, particularly on sales techniques. They most certainly employ this skill, and, indeed, many others in the course of their daily duties. Nevertheless, applying these skills entails a great deal of judgment. The job requires far more than “applying well-established techniques, procedures or specific standards described in manuals.”
With the issue of whether pharmaceutical reps are subject to the outside sales exemption notwithstanding the fact that they technically do not make such sales currently before the Supreme Court, the conflict between the circuits may or may not continue to be significant in a few weeks time. Regardless of the effects of this decision on the ongoing pharma rep overtime battles, it is becoming more and more clear that the Seventh Circuit is the place employers want to be if they are arguing that any type of employee is administratively exempt.
Click Schaefer-LaRose v. Eli Lilly & Co. to read the entire Order.
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