Tag Archives: 216(b)

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.

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D.Conn.: Although Named Plaintiff Must File Consent to Join, Affidavit Submitted in Opposition to Motion to Dismiss Satisfied Consent Requirement

D’Antuono v. C & G of Groton, Inc.

This case was before the court on defendant’s motion for summary judgment. The defendant contended that the case should be dismissed, due to plaintiff’s failure to file a written consent to join within the relevant 3 year statute of limitations, as required by the FLSA. The case revolved around the somewhat novel issue of whether a named Plaintiff, who fails to file a written consent to join her own FLSA case, can nonetheless be deemed to have satisfied the consent requirement, by virtue of filing a written affidavit with the court that states her intention to proceed with an FLSA claim in court. Here, the court found that, on the facts presented, it was a close call. However, in line with the remedial purposes of the FLSA, the court agreed that plaintiff “consented” to join her FLSA case when she filed a prior affidavit in opposition to defendant’s motion to dismiss, because it was written evidence of her intention to participate in the case.

Framing the issue before it, the court explained:

The question presented is whether Mr. Cruz’s signed March 11, 2011 affidavit, attached as an exhibit to Plaintiffs’ response in opposition to a motion to dismiss, constitutes a signed, written consent filed with the court. In full, the only possibly relevant statement provides: “Given my current financial circumstances and my understanding of the costs associated with arbitration, I cannot afford to arbitrate my claims and I could not afford to undertake this litigation and pursue my rights if I had the risk of paying the Defendants’ costs if I lost at arbitration.” Pls.’ Mem. in Opp’n [doc. # 26–4] Ex. D ¶ 9 (Decl. of Ramona Cruz). At the time it was filed, Ms. Cruz was one of three named plaintiffs in this suit. All of the three named plaintiffs submitted signed affidavits with final paragraphs substantially similar to the text quoted above. See Pls.’ Mem. in Opp’n [docs. # 26–2, 26–3] Ex. B ¶ 13 (Decl. of Nicole D’Antuono), Ex. C ¶ 12 (Decl. of Karen Vilnit).

Discussing the authority cited by the parties, the court found no case to be on all fours with the facts presented:

The Court has located no dispositive precedent or closely analogous case. The cases most often cited by the parties are all distinguishable on the facts. See, e.g., Manning, 2011 WL 4583776, at *2–3 (finding that named plaintiff who had submitted a signed declaration stating ” ‘I am the named Plaintiff in this action’ ” and describing the facts of the litigation had met the consent requirement, but that named plaintiffs who had been deposed but had submitted no signed documents did not); Perkins, 2009 WL 3754097, at *3 n. 2 (holding that named plaintiff who submitted a signed declaration in support of a motion for class certification describing her job duties and stating that she ” ‘did not release any claims relating to unpaid overtime wages which are the subject of this litigation’ … insufficient to demonstrate her desire to take part in this action as a plaintiff”); Mendez, 260 F.R.D. at 52 (finding that named plaintiff who had submitted a signed affirmation in support of a motion for class certification stating ” ‘I am the Named Plaintiff in the above-captioned matter’ ” sufficient to meet the consent requirement).

Holding that plaintiff’s prior affidavit satisfied the requirement that all plaintiffs file a consent to join, the court reasoned:

Defendants’ arguments on the facts of prior cases are not convincing. It is irrelevant that Ms. Cruz does not explicitly claim to be a named plaintiff in the action; furthermore, the caption on her signed declaration states as much. Additionally, the fact that her declaration was submitted in response to a motion to dismiss, rather than in support of a motion for class certification, carries little weight. While a declaration attached to a motion for class certification may bolster a plaintiff’s argument that the declaration was meant to serve as a notice of consent, the inverse is not true.

Instead, the Court must determine, as a matter of law, whether Ms. Cruz’s signed declaration manifests a clear intent to be a party plaintiff. This question is a close one, and one which would not have arisen had Ms. Cruz’s counsel simply ensured that a written consent form was filed along with the complaint. Despite this lapse, the Court reads Ms. Cruz’s affidavit broadly as implicitly verifying the complaint, expressing an interest that legal action be taken to protect her rights, and expressing an interest in being a party plaintiff. See Manning, 2011 WL 4583776, at *3; Perkins, 2009 WL 3754097, at *3 n. 2; Mendez, 260 F.R.D. at 52. Unlike the plaintiff in Perkins, Ms. Cruz has expressed an interest not only in preserving her legal claims, but in “undertak[ing] this litigation and pursu[ing her] rights.” Pls.’ Mem. in Opp’n [doc. # 26–4] Ex. D ¶ 9 (Decl. of Ramona Cruz). Furthermore, while participation in a deposition is not dispositive or sufficient for the notice requirement, see Manning, 2011 WL 4583776, at *3, the Court finds that the fact that Ms. Cruz has already willingly undergone a lengthy deposition relevant in the evaluation of whether she intended to participate in this case. Finally, the Court notes that the two potential purposes of the notice requirement-ensuring both that the Defendants are aware of all potential plaintiffs and that each individual plaintiff intends to participate in the lawsuit—are both satisfied.

Thus, the court concluded that plaintiff’s affidavit was sufficient to meet the notice requirement.  Moreover, since the affidavit was filed within the three year statute of limitations, the court determined that plaintiff had satisfied the notice or consent requirement of the FLSA.

Click D’Antuono v. C & G of Groton, Inc. to read the entire Memorandum of Decision.

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N.D.Ill.: Plaintiffs’ Motion for “Partial Decertification,” Seeking Subclasses by State Granted

Medina v. Happy’s Pizza Franchise, LLC

In an emerging trend in FLSA cases, this case was before the court on the plaintiffs’ motion for decertification.  The motion followed the defendants’ motion to dismiss, pursuant to FRCP 19, for failure to join necessary parties, franchisees who owned and operated its franchises.  The court granted plaintiffs’ motion, but noted that it was not considering the motion so much as a decertification motion in the collective action context, as a motion to subclass the existing opt-ins by geographic region (state).

Describing the relevant background the court explained:

Happy’s Pizza is a chain of franchise restaurants that sells pizza, chicken, seafood, and ribs in several states. Happy’s Pizza Franchise, LLC, sells the right to operate restaurants and use the Happy’s name and recipes to what it contends are independent franchisee corporations. Happy Asker is the sole member of Happy’s Pizza Franchise, LLC. Happy’s Pizza Chicago # 1, Inc. and Happy’s Pizza Chicago # 2, Inc. are two of the franchisee corporations. They operate restaurants in Chicago.

Plaintiffs filed suit in May 2010, alleging that Happy’s regularly directed them to work more than forty hours a week but did not pay them overtime wages in violation of the FLSA. All three plaintiffs alleged that they had worked at the Chicago Happy’s restaurants operated by the defendant corporations. Medina and Escobar also alleged that they had worked in Happy’s restaurants in Lansing and Ann Arbor, Michigan and that they had been subjected to the same practices there. Plaintiffs sought to include in the case similarly situated Happy’s employees who likewise had not been paid appropriate overtime wages.

The Court granted conditional certification and authorized the plaintiffs to send notice to Happy’s employees. At least 254 plaintiffs have opted into the lawsuit, although the parties dispute the exact number. Among the opt-in plaintiffs, a majority worked for Happy’s restaurants in either the Eastern or Western Districts of Michigan. Approximately fifty plaintiffs worked for Happy’s restaurants in Ohio, all in the Northern District of Ohio, and twenty-three of the opt-in plaintiffs worked for Happy’s restaurants in Illinois, all in the Northern District of Illinois. Only about twenty of the opt-in plaintiffs worked for Happy’s restaurants that are operated by the two Happy’s franchises named as defendants, Happy’s Pizza Chicago # 1 and Happy’s Pizza Chicago # 2. The remaining opt-in plaintiffs worked for forty-six other Happy’s restaurants. Defendants contend these restaurants are all operated by distinct franchisee corporations that are not defendants in this suit.

Following the defendants’ motion to dismiss, based on plaintiffs’ failure to join the franchisees whom various opt-ins worked for as defendants, the plaintiffs moved for what they called partial decertification, asking the court to transfer all of the opt-in plaintiffs who had not worked for Happy’s restaurants in this district to the appropriate districts in Michigan or Ohio.

Among other things, in opposition to the plaintiffs’ motion, the defendants argued: (1) partial decertification followed by transfer of the opt-in plaintiffs, was inappropriate, because decertification of a collective action results in dismissal of opt-in plaintiffs; (2) that the court lacked the authority to transfer the Ohio and Michigan plaintiff subclasses to district courts in those states; (3) that the court should have considered their motion to dismiss prior to addressing plaintiffs motion; and (4) that neither 1 nor the proposed 4 collective actions were appropriate because the plaintiffs were not similarly situated to one another, having worked for different franchisees.

The court rejected each of the defendants’ contentions, reasoning in part:

In this case, the use of subclasses, based on the judicial districts in which the plaintiffs worked, will similarly be a more efficient mechanism for adjudicating the plaintiffs’ claims. As defendants have argued, the plaintiffs from the different judicial districts worked at different restaurants, which suggests that a significant part of the evidence for each subclass would be distinct. Defendants also note that the Michigan and Ohio plaintiffs cannot bring supplemental claims under Illinois law, as the named plaintiffs have done, and that they may be in a position to assert supplemental state law claims based on Michigan and Ohio law, which the Illinois plaintiffs cannot bring. Dividing the plaintiffs into subclasses will allow those claims to be more effectively handled as well…

Because there is no basis to conclude at this point that the plaintiffs are not similarly situated, there is no reason to decertify the collective action and dismiss the opt-in plaintiffs. Instead, the Court divides the opt-in plaintiffs into subclasses and severs from this case the three subclasses containing the Michigan and Ohio opt-in plaintiffs.

Click Medina v. Happy’s Pizza Franchise, LLC to read the entire Memorandum Opinion and Order.

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2 New Decisions Regarding Enforcement of Arbitration Agreements in Context of FLSA Claims Reach Opposite Results

Recent weeks have brought more opinions regarding the issue of whether specific arbitration agreements are enforceable.  However, as two recent opinions show, these decisions continue to be fact-specific in virtually all instances, and judge and/or state-law specific in others.  In the first case, Carey v. 24 Hour Fitness USA Inc., relying on Texas state law, the Fifth Circuit affirmed a lower court’s decision holding that an arbitration agreement allowing the employer to unilaterally change the terms lacked the necessary consideration to render the agreement enforceable.  In a second case, LaVoice v. UBS Financial Services, Inc., a court within the Southern District of New York examined a different arbitration-related issue- the substantive unconscionability of a collective action waiver- concluding that compelling a potentially high value FLSA claim to arbitration on an individual basis does not conflict with the substantive law regarding the FLSA’s collective action provisions.  Significantly, the court’s conclusion in this regard appears to conflict with another recent holding discussed here, in which another court within the same district held that collective action waivers are unenforceable per se, because they prevent employees from vindicating their substantive statutory rights under the FLSA.

Carey v. 24 Hour Fitness USA Inc.

Law360 aptly summarized this decision as follows:

“The Fifth Circuit on Wednesday allowed a proposed overtime class action against 24 Hour Fitness USA Inc. to go forward, finding an arbitration agreement at issue contained an ‘escape hatch’ for the fitness chain that made it unenforceable.

In a unanimous, published opinion, the appeals court upheld a Texas federal court’s ruling that the arbitration agreement in 24 Hour Fitness’ employee handbook was illusory because it allowed the company to retroactively modify or terminate the agreement.

Because 24 Hour Fitness reserved the right to unilaterally adjust the conditions of employment — including those which required employees to arbitrate claims on an individual basis — the appeals court found that the arbitration agreement was invalid from the outset.

‘If a 24 Hour Fitness employee sought to invoke arbitration with the company pursuant to the agreement, nothing would prevent 24 Hour Fitness from changing the agreement and making those changes applicable to that pending dispute if it determined that arbitration was no longer in its interest,’ the panel said.

Click Carey v. 24 Hour Fitness USA Inc. to read the entire Fifth Circuit Opinion.

 

LaVoice v. UBS Financial Services, Inc.

In LaVoice, the court held that an arbitration agreement, requiring individual arbitration was enforceable, despite plaintiff’s argument that such an scheme would deprive plaintiff of substantive statutory rights to proceed collectively under the FLSA.  Discussing the issue, the court reasoned:

“…LaVoice also argues that the arbitration agreements between him and UBS are unenforceable because they would preclude him from exercising his statutory rights. To support this position, LaVoice likens the class waivers in the instant case with those that were found unenforceable in the Amex line of cases. LaVoice also draws comparison between his circumstances and those of the plaintiff in Sutherland v. Ernst & Young LLP, 768 F.Supp.2d 547 (S.D.N.Y.2011).

The enforceability of a class action waiver in an arbitration agreement must be considered on a case-by-case basis “on its own merits, governed with a healthy regard for the fact that the FAA is a congressional declaration of a liberal federal policy favoring arbitration agreements.” Amex II, 634 F.3d at 199. Turning to the class waiver at issue and LaVoice’s specific circumstances, this Court finds that the “practical effect of enforcement of the waiver” in the instant case would not “preclude” LaVoice from exercising his rights under the statutes. Id. at 196. The Court comes to its finding that LaVoice’s statutory rights will not be precluded by enforcement of the class waiver after reviewing his submissions regarding: his estimated damages claim, his estimated attorneys’ fees, his estimated expert fees, his disinclination to pursue his claims individually, his counsel’s disinclination to pursue the claims individually, and his likelihood of success at arbitration.

Although LaVoice and Defendants contest the value of LaVoice’s overtime claim, in reaching its decision, the Court accepts the figure cited in LaVoice’s own opposition papers of overtime claims between $127,000 to $132,000. Aff. Jeffrey G. Smith in Supp. of Opp’n. to Mot. to Compel Arbitration at ¶ 5. Assuming this self-reported value of claims, the Court finds that LaVoice’s circumstances differ drastically on their face from those of the plaintiffs in either the Amex line of cases or Sutherland. Plaintiffs in those cases could each only claim de minimus damages of less than $6000.

With respect to the estimated attorneys’ fees, the Court finds that, unlike the arbitration agreement at issue in Sutherland, the arbitration agreements at issue in the instant case would permit LaVoice to recover an award of attorneys’ fees. Since the agreements authorize the arbitrator(s) to “award whatever remedies would be available to the parties in a court of law” and awards of attorneys’ fees are mandatory for the prevailing party under the FLSA, the agreements themselves crate no impediment to LaVoice’s recovery of fees. See Ex. 6 to Decl. of Matthew Levitan at 20; Ex. 10 to Decl. of Matthew Levitan at 3; and 29 U.S.C. § 216(b) (“The court in such action shall … allow a reasonable attorney’s fee to be paid by the defendant, and costs of the action.”) The instant case is therefore distinguishable from Sutherland and its consideration of attorneys’ fees in determining whether plaintiff’s claims were unarbitrable. See also Banus v. Citigroup Global Mkts., Inc., No. 09–7128, 2010 WL 1643780, at *10 n. 61 (S.D.N.Y. Apr.23, 2010) (enforcing class action waiver in arbitration agreement where plaintiff’s estimated recovery was $45,675.36 and attorney’s fees would be “at least $100,000.”)

The court also evaluated and rejected plaintiff’s claim that expert costs to be incurred would be prohibitive in an individual claim, whereas spreading the cost over a collective group would be more palatable and rejected same, in the context of plaintiff’s proffered argument that his counsel would be disinclined to pursue his claims on an individual basis by themselves.

The court concluded, “[i]n light of the foregoing, the Court finds that LaVoice has not met his “burden of showing the likelihood of incurring” such “prohibitively expensive” costs such that the class waiver provisions in the instant action would preclude him from bringing his claims against Defendants in an individual or collective capacity. Amex II, 634 F.3d at 197 (citing Randolph, 531 U.S. at 92.)”

Click LaVoice v. UBS Financial Services, Inc. to read the entire Memorandum and Order compelling the case to arbitration on an individual basis.

As more and more cases are decided following recent United States Supreme Court jurisprudence on arbitrability and class waiver issues, it’s becoming more and more clear that the results are very fact-specific to each case.  Hopefully, higher courts will begin to weigh in on some of the broader issues and give some clarity in the near future.

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11th Cir.: Following Tender of Unpaid Wages and Liquidated Damages, an Employer Only Moots a Case if the Plaintiff Agrees to Dismissal, Absent Payment of Mandatory Fees and Costs

Dionne v. Floormasters Enterprises, Inc.

Following a controversial opinion that created more questions than it answered, the Eleventh Circuit reconsidered it’s prior Opinion in this case and in so doing largely restricted its holding to the unique facts presented in the case.  Previously the Court had held that  an employer, who denies liability for nonpayment for overtime work, need not pay attorney’s fees and costs pursuant to 29 U.S.C. § 216(b) of the Fair Labor Standards Act (“FLSA”) if the employer tenders the full amount of overtime pay claimed by an employee, and moves to dismiss on mootness grounds where the employee concedes that “the claim for overtime should be dismissed as moot.  Although the prior Opinion seemed restricted to these unique facts where the employee conceded that the overtime claim should be dismissed (but attempted to reserve as to fees/costs), courts throughout the Eleventh have since expanded the holding to scenarios where the employee makes no such stipulation.  Here, the Eleventh Circuit affirmed the prior decision, but clarified and limited its applicability.

Significantly, the Eleventh Circuit included the following footnote in its new Opinion:

“Our decision in this matter addresses a very narrow question: whether an employee who conceded that his claim should be dismissed before trial as moot, when the full amount of back pay was tendered, was a prevailing party entitled to statutory attorney’s fees under § 216(b). It should not be construed as authorizing the denial of attorney’s fees, requested by an employee, solely because an employer tendered the full amount of back pay owing to an employee, prior to the time a jury has returned its verdict, or the trial court has entered judgment on the merits of the claim.”

It remains to be seen exactly how the new Dionne Opinion will be applied by trial courts, but it does appear that much of the uncertainty created by the initial Opinion has now been resolved.  To that end, it appears that a Plaintiff who has suffered a theft of his or her wages can now safely accept tender of such wages (and liquidated damages) in response to a lawsuit to collect same, without fear that the employer can avoid payment of mandatory fees and costs, as long as they do not agree that the tender moots the case.

Click Dionne v. Floormasters Enterprises, Inc. to read the entire Opinion on Petition for Rehearing.

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M.D.Fla.: Defendant Does Not Moot FLSA Case By Tender of Unpaid Wages/Liquidated Damages, Absent Payment of Reasonable Attorneys Fees and Costs

Klinger v. Phil Mook Enterprises

Following the recent 11th Circuit decision Dionne v. Floormasters, the blogosphere has been abuzz with articles positing that the decision gave employers the green light to engage in wholesale wage theft and take a wait and see approach with regard to paying employees their wages.  Several management-side attorneys have even gone as far as to suggest that a thieving employer could tender payment of wages/liquidated damages alone on the courthouse steps on the eve of a jury verdict and simply avoid paying mandatory fees and costs under 216(b).  Not so, holds Judge James D. Whittemore, in the first case on the issue post-Dionne.

In Klinger v. Phil Mook Enterprises, the defendants-employers attempted just this strategy.  After Klinger filed a lawsuit seeking the payment of her unpaid wages and liquidated damages, her former employers tendered what it deemed “full payment” of her unpaid wages and liquidated damages.  However, it denied liability and refused to pay reasonable attorneys fees and costs.  Instead, it filed a Motion to Dismiss, asserting that the case was now moot.  The Court rejected the defendants’ contention that the case was moot absent payment of attorneys fees and costs and denied defendants’ motion.

Significantly, the Court noted:

“Defendants’ mere tender of payment does not provide Plaintiff with all the relief she seeks and would be entitled to as a prevailing party in this action, to wit: an enforceable judgment, attorney’s fees, and costs.  Allowing Defendants to avoid responsibility for Plaintiff’s attorneys fees merely by tendering full payment after litigation has commenced would run counter to the FLSA’s goal of fully compensating the wronged employee.  See Silva v. Miller, 307 Fed. App’x 349, 351 (11th Cir. 2009)(“FLSA requires judicial review of the reasonableness of counsel’s legal fees to assure… that counsel is compensated adquately…”.  Further, Defendants’ tender effectively circumvents the requirements of Rule 68(a), Fed.R.Civ.P.”

As such, the Court denied the defendants’ motion.

Click Klinger v. Phil Mook Enterprises to read the entire Order.

DISCLAIMER:  It is not this author’s assertion that the defendants in this particular case engaged in willful wage theft.  Absent further research into the facts giving rise to the underlying claim, the author makes no representations whatsoever as to the specific facts of this case.  Instead, this post is a commentary on the procedural history of the case once filed.

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W.D.Mo.: Court Has Subject Matter Jurisdiction Over Claims That Could Be Brought By Members of Putative Class, But Could Not Be Brought By Named Plaintiffs

Nobles v. State Farm Mut. Auto Ins. Co.

This case concered off-the-clock claims that were brought as a so-called hybrid case, so named because the claims asserted were a hybrid of several state wage and hour laws, as well as under the FLSA.  As discussed here, the plaintiffs, employees of one State Farm entity (State Farm Fire) sued both their employer, and another State Farm entity (State Farm Mutual), alleging identical wage and hour violations were committed by both against similarly situated employees.  By Motion to Dismiss, State Farm Mutual challenged the named-plaintiffs’ standing to assert claims against it, asserting that the named plaintiffs lacked standing to do so, because it was not their employer.  The court rejected these arguments, in granting plaintiffs’ motions for conditional and class certification.

Addressing this issue the court explained:

“In its pending Motion to Dismiss, State Farm Mutual contends that because Plaintiffs lack standing to assert joint employer status, the Court lacks subject matter jurisdiction, and therefore that claim should be dismissed under Federal Rule of Civil Procedure 12(b)(1). Alternatively, State Farm Mutual contends that Plaintiffs have failed to state a claim for joint employer status and therefore it should be dismissed pursuant to Federal Rule of Civil Procedure 12(b)(6).

State Farm Mutual argues that “[o]nly State Farm Fire employees could possibly have standing to assert joint employment claims under Plaintiffs’ … theory, and there are no such plaintiffs in this case.” [Doc. # 111, at 13]. Neither Nobles nor Atchison are employees of State Farm Fire. However, standing issues “must be assessed with reference to the class as a whole, not simply with reference to the individual named plaintiffs.” Payton v. County of Kane, 308 F.3d 673, 680 (7th Cir.2002). Here, unnamed class members of the certified classes and collective include State Farm Fire employees who would have standing to bring claims under State Farm Mutual’s status as a joint employer with State Farm Fire. Thus, the Plaintiffs in this litigation have standing to assert joint employment status for members of the class.

Two recently decided cases in this district, Gilmor v. Preferred Credit Corp., No. 10–0189–CV–W–ODS, 2011 WL 111238 (W.D. Mo. Jan 13, 2011), and Wong v. Bann–Cor Mortgage, No. 10–1038–CV–W–FJG, 2011 WL 2314198 (W.D. Mo. June 9, 2011), also concluded that the court had subject matter jurisdiction over claims that could be brought by members of the certified class, but could not have been brought by any of the named plaintiffs. However, as a practical matter, it may be prudent to have a specific named Plaintiff whose named employer is State Farm Fire. See Gilmor, 2011 WL 111238, at *7. Therefore, Plaintiffs shall file an appropriate motion to designate such an employee prior to the close of discovery on the merits.”

Addressing (and rejecting) the defendants’ contention that plaintiffs had failed to sufficiently plead joint employment, the court reasoned:

“To determine whether an individual or entity is an employer, courts analyze the economic reality of the relationship between the parties.” Loyd v. Ace Logistics, LLC, No. 08–CV–00188–W–HFS, 2008 WL 5211022, at *3 (citation omitted). Although the Eighth Circuit has not yet stated a test to determine joint employer status, four factors are typically examined by courts to make this determination. They are: “whether the alleged employer: (1) had the power to hire and fire the plaintiff; (2) supervised and controlled plaintiff’s work schedules or conditions of employment; (3) determined the rate and method of payment; and (4) maintained plaintiff’s employment records.” Id. at * 3 (citing Schubert v. BethesdaHealth Grp., Inc., 319 F.Supp.2d 963, 971 (E.D.Mo.2004)).

State Farm Mutual asserts that Plaintiffs have failed to allege the elements of joint employer status or single enterprise status. This argument rests on the contention that because all of the named plaintiffs in the litigation are not employees of State Farm Fire, none of their allegations concern State Farm Mutual’s power to hire or fire any plaintiff who is an employee of State Farm Fire. [Doc. # 111, at 7].

The Court finds that this argument is a re-characterization of State Farm Mutual’s standing argument. As previously stated, Plaintiffs in this case include the certified classes. See Gilmor, 2011 WL 111238, at *6 (citing Sosna v. Iowa, 419 U.S. 393, 399 (1975)). Plaintiffs in this case include State Farm Fire employees who were subject to State Farm Mutual’s policies; and the Second Amended Complaint alleges that State Farm Mutual had the power to hire or fire them.

Second, State Farm Mutual asserts that even if the Court finds that Plaintiffs have alleged the elements of joint employment status, Plaintiffs’ factual allegations are “broad, unsupported statements” that do not provide the required factual support for Plaintiffs’ joint employment claim. [Doc. # 111, at 9]. The Court disagrees with State Farm Mutual’s characterization of Plaintiffs’ allegations. The Plaintiffs allege in their Second Amended Complaint that (1) the human resources department in State Farm Mutual retains the power to promote, retain, and discipline State Farm Fire employees, (2) State Farm Fire employees’ work and compensation are subject to State Farm Mutual’s written pay and timekeeping policy, and (3) State Farm Mutual’s and State Farm Fire’s timekeeping records are housed together, which the Court liberally construes to imply that State Farm Mutual maintains State Farm Fire’s timekeeping records. 

For these reasons, the Court finds that Plaintiffs have sufficiently stated a joint employer claim.”

Click Nobles v. State Farm Mutual Automobile Insurance Company to read the entire Order.

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