Tag Archives: Collective Actions

S.D.Ohio: Stage I Scrutiny Applied to Motion for Conditional Certification, Filed Prior to Bulk of Discovery, Notwithstanding Discovery Thereafter

Engel v. Burlington Coat Factory Direct Corp.

In a scenario that seems to be playing out more and more throughout the country, given the prevalence of FLSA collective action filings, this court was faced with a decision regarding which type of scrutiny to apply to plaintiffs’ motion for conditional certification of a collective action. Although the plaintiffs filed their motion only three (3) months into discovery, by the time the court was able to address the motion, discovery had concluded. While the plaintiffs maintained that the court should apply Stage I scrutiny, the defendants argued that Stage II scrutiny (or “final certification” scrutiny) should be applied, because discovery had been completed after plaintiffs filed their motion. The court reasoned that the lower Stage I scrutiny should be applied, based on the posture of the case when plaintiffs filed their Motion, not when the decision was rendered.

Discussing the issue, the court explained:

Plaintiffs and Defendants dispute whether this suit is in the first or second phase of inquiry. Defendants argue that this case is fully discovered, as the parties have produced more than 3,500 documents, served multiple sets of interrogatories and requests for production, and have taken six depositions. (Doc. 24, at 23). Plaintiffs filed their motion for conditional certification eight months after discovery opened, and five months before discovery closed on March 29, 2013. (Id.). Plaintiffs argue that because no discovery was permissible prior to the February 13, 2012 26(f) conference, and the parties agreed to postpone discovery pending mediation in July 2012, discovery had occurred less than three months before their motion for conditional certification was filed. (Doc. 26, at 8). Before Plaintiffs’ motion was filed in October, only three depositions had been taken. (Id.)

This Court finds that this suit is in the first phase of inquiry. Discovery closed on March 29, 2013, and Plaintiffs’ motion was filed in October 2012. Thus, discovery had not completed by the time Plaintiffs’ motion was filed. Moreover, as Plaintiffs correctly point out, only three out of eight total months of discovery took place before their motion was filed.

In ruling on Plaintiff’s motion, the Court’s analysis will employ the first phase of inquiry.

Click Engel v. Burlington Coat Factory Direct Corp. to read the entire Order & Opinion.

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S.D.Ohio: 21 Late Opt-ins May Be Properly Added Despite Lack of Good Cause Showing

Heaps v. Safelite Solutions, LLC

This case was before the court on the defendant’s motion to strike the consents of opt-in plaintiffs filed after the court-imposed deadline (45 days from mailing of notice), and plaintiff’s cross-motion for order allowing late opt–ins.  Citing judicial economy and the remedial principles underlying the FLSA, the court denied the defendant’s motion to strike and granted plaintiff’s cross-motion, allowing the opt-in plaintiffs to remain in the case.  Significantly, the court granted plaintiff’s motion without requiring a showing of good cause as to why the opt-ins filed their consents up to 2 months beyond the deadline imposed by the court.

Permitting the late opt-ins to remain in the case, the court reasoned:

“The FLSA provides the procedure for potential plaintiffs to opt-in to a collective action but does not specify when the potential plaintiff must opt-in. See 29 U.S.C. §§ 216(b), 255, 256. Consequently, deadlines to opt-in are established by the trial court. The FLSA also does not “provide a standard under which a court should consider whether to include opt-in plaintiffs whose consent forms are filed after the court-imposed deadline has passed.” Ruggles v. Wellpoint, Inc., 687 F.Supp.2d 30, 37 (N.D.N.Y.2009).

Although the caselaw on this issue is wide-ranging, courts have generally decided the question by balancing various combinations of the following factors: (1) whether ‘good cause’ exists for the late submissions; (2) prejudice to the defendant; (3) how long after the deadline passed the consent forms were filed; (4) judicial economy; and (5) the remedial purposes of the FLSA.  Id. (citing Ayers v. SGS Control Servs., Inc., 2007 WL 3171342, at *4–5 (S.D.N.Y. Oct.9, 2007) (requiring that late opt-in plaintiffs show good cause for their untimely consent filings), Robinson–Smith v. Gov’t Empl. Ins. Co., 424 F.Supp.2d 117, 123–24 (D.D.C.2006) (considering the potential prejudice to the defendant and the purposes of the FLSA), Raper v. State of Iowa, 165 F.R.D. 89, 92 (S.D.Iowa 1996) (considering potential prejudice to the defendant and judicial economy), Monroe v. United Air Lines, Inc., 94 F.R.D. 304, 305 (N.D.Ill.1982) (considering how long after the deadline the consent forms were filed); but see Reyes v. Texas Ezpawn, L.P., 459 F.Supp.2d 546, 566–67 (S.D.Tex.2006) (dismissing plaintiffs who filed consent forms after the opt-in period without any discussion of the above factors)).

Balancing all of the above factors, the Court finds that the 21 opt-in plaintiffs may be properly added despite their failure to submit consent notices prior to the Court’s deadline. Although Plaintiffs have offered no good cause for their failure to timely file these consent forms, all of the other factors weigh in their favor. See id. (permitting late consent opt-in plaintiffs to join collective class even though the plaintiffs offered no good cause for their failure to timely file, but all other factors weighed in their favor); In Re Wells Fargo Home Mortgage Overtime Pay Litigation, No. MDL 06–01770 MHP, 2008 WL 4712769 at *2 (N.D.Cal. Oct.23, 2008) (rejecting a “rigid application of a ‘good cause’ standard” because it “does not fully respond to the various factors with which the court must concern itself” such as judicial economy and prejudice to the defendant) (citing Raper, 165 F.R.D. at 89).

Given that over 200 persons have consented to opt-in, the inclusion of these 21 plaintiffs, approximately 10% increase in the size of the potential class, will not overly burden or prejudice Defendants. See Abubakar v. Co. of Solano, No. Civ. S–06–2268, 2008 WL 550117 at *2 (E.D.Cal. Feb.27, 2008) (holding a 15% increase in liability, 23 plaintiffs added to a class of 155, was not prejudicial). Also, all of these consent notices were filed with the Court within a few months after the deadline and the majority of them within one month, not presenting any unfair surprise or requiring that Defendants take any additional steps to defend this action. See Raper, 165 F.R.D. at 92 (finding no prejudice to the defendant by allowance of the addition of plaintiffs even after liability had been determined). Thus, Defendant has not been prejudiced by a significant delay and the addition of these opt-in plaintiffs should not hamper the discovery process already underway.

In terms of judicial economy, were the Court to deny the admission of these plaintiffs, they would still be able to file separate claims for relief against Defendant, who would still face the prospect of defending against their individual FLSA claims. See Ruggles, 687 F.Supp.2d at 37 (citing 29 U.S.C. § 256(b)). Indeed, Plaintiffs suggest that they would file separate actions and then request consolidation with the instant action. (ECF No. 85 at 6) (the untimely plaintiffs “only option will be to file identical, individual claims with the Court” and this Court would be permitted to consolidate those individual lawsuits under Fed.R.Civ.P. 42(a) “because the cases will all ‘involve a common question of law or fact’ ”). “Obviously, there is little economy in spawning identical FLSA lawsuits that themselves might be properly joined with this lawsuit in the future.” Ruggles, 687 F.Supp.2d at 38 (citing Abubakar, 2008 WL 550117 at *2) (noting the futility in requiring late opt-in plaintiffs to file separately given the foreseeability of a consolidation order pursuant to Fed.R.Civ.P. 42(a)).

Finally, this Court agrees with other courts’ holdings that with respect to the FLSA, “[a] generous reading, in favor of those whom congress intended to benefit from the law, is also appropriate when considering issues of time limits and deadlines.” Kelley v. Alamo, 964 F.2d 747, 750 (8th Cir.1992) (citation omitted); see also Ruggles, 687 F.Supp.2d at 38 (agreeing with a generous reading of the FLSA in favor of those whom congress intended to benefit from the statute in late opt-in circumstance); In re Wells Fargo Home Mortg. Overtime Pay Litigation, 2008 WL 4712769 at *2 (same); Schaefer–LaRose v. Eli Lilly & Co., No. 1:07–cv–1133–SEB–TAB, 2008 WL 5384340, at *2 (S.D.Ind. Dec.17, 2008) (same).”

Click Heaps v. Safelite Solutions, LLC to read the entire Opinion and Order.

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W.D.Pa.: Following Denial of Class Cert as Incompatible With 216(b) Collective Action, Plaintiffs’ Motion to Dismiss State Law Claims to Re-File in State Court Granted

Bell v. Citizens Financial Group, Inc.

Although all circuit courts that have taken up the issue have held that so-called hybrid wage and hour cases- comprised of both opt-in collective actions (FLSA) and opt-out class action (state wage and hour law)- are permissible, some courts within the Third Circuit continue to hold otherwise.  As a result, not surprisingly, defendant-employers in such cases continue fighting the class action components of such cases on “inherent incompatibility” grounds.  Such was the case here, where the court had previously conditionally certified the FLSA claims, but denied plaintiffs related motion for class certification of Pennsylvania Minimum Wage Act (“PMWA”) claims on compatibility grounds.  However, in what may become a frequently cited case going forward, the plaintiffs took the logical next step and asked the court to dismiss the PMWA claims so they could re-file them in state court alone, where there would be no issue of compatibility.  Not surprisingly, the defendants then threw up their arms, essentially arguing that the plaintiffs should not be able to bring their class claims in federal court and therefore not be able to proceed as a class in any venue.  The court rejected the defendants argument, permitting the voluntary dismissal of the state law claims to be pursued separately in state court.

After reviewing the applicable standards under Rule 41, the court granted plaintiffs’ motion for voluntary dismissal of the PMWA claims.  The court reasoned:

“Here, defendants have already filed an answer and do not stipulate to the dismissal. Therefore, the court must weigh the equities and decide whether to enter an order of dismissal. Defendants do not assert, and the court cannot ascertain, that they would suffer any plain legal prejudice as a result of dismissal of Watson’s claims. Watson’s intent to re-file a PMWA claim in state court is not plain prejudice. Pouls, 1993 WL 308645, at *1.

Upon weighing the factors set forth in Pouls, we conclude that it is appropriate to grant Watson’s motion to voluntarily dismiss her case. Defendants are not prejudiced by their efforts and expenses in this litigation, because other opt-in plaintiffs remain and the instant suit will continue. Defendants have failed to identify any efforts or expenses unique to Watson. Similarly, the progression of the litigation and Watson’s diligence in moving for dismissal are not determinative factors, due to the ongoing nature of the collective action suit. Consideration of the final factor, the duplicative or excessive expense of subsequent litigation, yields some possibility of prejudice to defendants. If Watson does file a PMWA case in state court and if defendants successfully remove it to federal court, defendants might incur some duplicative expenses in future federal court litigation on issues of claim incompatibility. However, at this time, such expenses are highly speculative. Therefore, we do not find plain prejudice to defendants based on duplicative expenses.

Accordingly, because there is no plain legal prejudice and because the equities weigh in favor of dismissal, we will grant plaintiff Watson’s motion to dismiss her claims without prejudice to her right to refile these claims in state court. An appropriate order follows.”

With the issue of permissibility of so-called hybrids up at the Third Circuit right now it will be interesting to see if this decision gains legs in its trial courts.  For now however it is safe to say that defendants in so-called hybrid cases should be careful what they wish for in seeking dismissal of state classes, because two is not always better than one.

Click Bell v. Citizens Financial Group, Inc. to read the entire Memorandum and Order.

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E.D.Pa.: Dukes Does Not Affect Court’s Analysis On 216(b) Conditional Cert Motion; Defendant’s Motion to Reconsider Denied

Spellman v. American Eagle Exp., Inc.

In one of the first decisions, post-Dukes, to clarify what affect the Supreme Court’s recent decision will have on conditional certification of FLSA cases, the answer appears to be not much.

In Dukes, the Supreme Court held that the trial court had inappropriately certified a class of over a million women employed by Wal-mart, based on claims of gender bias.  The Supreme Court reasoned that the plaintiffs had not met their burden to demonstrate the requisite commonality required by FRCP 23.  In the wake of Dukes, there was much speculation as to whether courts would extend the reasoning in Dukes to cases seeking conditional certification of collective actions under 216(b) of the FLSA.  In one of the first decisions rendered on this issue, the answer appears to be a resounding no.

This case was before the court on the defendant’s motion seeking reconsideration of the court’s prior order conditionally certifying a class of drivers employed by defendant.  Plaintiffs alleged that defendant, a trucking company, improperly misclassified all of its drivers as independent contractors, when they were really employees.  Holding that plaintiffs had met their lenient burden of proof as so-called stage one, the court conditionally certified a nationwide class of drivers, all of whom had been classified as independent contractors.  Following the Duke’s decision, the defendant sought reconsideration of the order conditionally certifying the class.  Denying the motion, the court explained that the differences between FRCP 23, the class action provision under which Dukes was decided and 216(b), the opt-in provision for FLSA collective actions render Dukes inapplicable in the context of an FLSA collective action.  As such, the court denied defendant’s motion.

The court reasoned:

“The instant case is a collective action brought pursuant to the FLSA, 29 U.S.C. § 216(b). Unlike Rule 23 class actions. the FLSA requires collective action members to affirmatively opt in to the case. See § 216(b). To determine whether the proposed group of plaintiffs is “similarly situated,” and therefore qualified to proceed as a conditional collective action, a district court applies a two-step test. See Smith v. Sovereign Bancorp, Inc., No. 03–2420, 2003 U.S. Dist. LEXIS 21010 (E.D.Pa. Nov. 13, 2003). In the first step, which is assessed early in the litigation process, the plaintiff at most must make only a “modest factual showing” that the similarly situated requirement is satisfied. See Bosley v. Chubb Corp., No. 04–4598, 2005 U.S. Dist. LEXIS 10974, at *7–9 (E.D.Pa. Jun. 3, 2005). The Plaintiffs have made this modest factual showing, and this Court’s analysis is not affected by Dukes. The second step of the collective action certification process will be conducted at the close of class-related discovery, at which time this Court will conduct “a specific factual analysis of each employee’s claim to ensure that each proposed plaintiff is an appropriate party.” Harris v. Healthcare Servs. Grp., Inc., No. 06–2903, 2007 U.S. Dist. LEXIS 55221, at *2 (E.D.Pa. Jul. 31, 2007). At this second stage, AEX may argue that Dukes‘s analysis of what constitutes a “common question” is persuasive to this Court’s analysis of whether an FLSA collective action should be certified. In the interim, AEX’s motion for reconsideration is denied.”

Click Spellman v. American Eagle Exp., Inc. to read the entire Order.

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S.D.N.Y.: SOL Equitably Tolled, Where Decision on Plaintiffs’ Motion for Conditional Certification Delayed, Notwithstanding Plaintiffs’ Diligence In Pursuing Same

Yahraes v. Restaurant Associates Events Corp.

This case was before the court on plaintiffs’ motion seeking equitable tolling of their FLSA claims.  During oral argument on plaintiffs’ motion to certify that this case may proceed as a collective action pursuant to 29 U.S.C. § 216(b), the court had questioned whether the 2007 FLSA claims, even assuming that defendants’ violation was willful, were still viable or were now time-barred.  Plaintiffs conceded that, absent an order equitably tolling the statute of limitations, their claims were indeed outside of the statute of limitations.  However, Plaintiffs argued that, since they had moved for conditional certification very early on in the case and only through events outside of their control had a decision on same been delayed, the court was due to toll the statute of limitations.  The court agreed and tolled the statute of limitations.

The court reasoned:

“The FLSA provides for a two-year statute of limitations generally, with an additional one-year extension for willful violations. 29 U.S.C. § 255(a). In a FLSA collective action, the statute of limitations runs for each plaintiff until he files written consent with the court to join the lawsuit. Id. § 256(b). Thus, unlike the statute of limitations in a Rule 23 class action which is tolled for all putative class members upon the filing of the complaint, the limitations periods in a FLSA action continues to run until an individual affirmatively opts into the action. Moreover, “[s]igned consents do not relate back to the original filing date of the complaint.” Lee v. ABC Carpet & Home, 236 F.R.D. 193, 199 (S.D.N.Y.2006). Nonetheless, the court has the discretion to equitably toll the limitations period.

Federal courts should grant equitable tolling “sparingly,” Irwin v. Dep’t of Veterans Affairs, 498 U.S. 89, 96, 111 S.Ct. 453, 112 L.Ed.2d 435 (1990), and “only … in [ ] rare and exceptional circumstance[s],” Zerilli-Edelglass v. New York City Transit Auth., 333 F.3d 74, 80 (2d Cir.2003) (alteration in original) (internal quotation marks omitted). Equitable tolling is generally reserved for situations “where the claimant has actively pursued his judicial remedies by filing a defective pleading during the statutory period, or where the complainant has been induced or tricked by his adversary’s misconduct into allowing the filing deadline to pass.”   Irwin, 498 U.S. at 96. Nevertheless, “[a] statute of limitations may be tolled as necessary to avoid inequitable circumstances.” Iavorski v. U.S. Immigration & Naturalization Serv., 232 F.3d 124, 129 (2d Cir.2000). In determining whether equitable tolling is warranted, the Second Circuit has stated that a court “must consider whether the person seeking application of the equitable tolling doctrine (1) has acted with reasonable diligence during the time period she seeks to have tolled, and (2) has proved that the circumstances are so extraordinary that the doctrine should apply.” Zerilli-Edelglass, 333 F.3d at 80-81 (internal quotation marks omitted).

The delay caused by the time required for a court to rule on a motion, such as one for certification of a collective action in a FLSA case, may be deemed an “extraordinary circumstance[ ]” justifying application of the equitable tolling doctrine. See Abadeer v. Tyson Foods, Inc., 2010 WL 5158873, at *2-4 (M.D.Tenn. Dec.14, 2010); Israel Antonio-Morales v. Bimbo’s Best Produce, Inc., 2009 WL 1591172, at *1 (E.D.La. Apr.20, 2009) (collecting cases for the proposition that “[c]ourts routinely grant equitable tolling in the FLSA collective action context to avoid prejudice to actual or potential opt-in plaintiffs that can arise from the unique procedural posture of collective actions”); Stickle v. Sciwestern Mkt. Support Ctr., 2008 WL 4446539, at *22 (D.Ariz. Sept.30, 2008) (collecting cases); Owens v. Bethlehem Mines Corp., 630 F.Supp. 309, 312 (S.D.W.V.1986). But see Hintergerger v. Catholic Health Sys., 2009 WL 3464134, at *14-15 (W.D.N.Y. Oct.21, 2009) (denying tolling for the time period while certification motion was pending).

Plaintiffs argue for equitable tolling primarily on the ground that they have diligently pursued their claims and, through no fault of their own, have been frustrated in their attempts to send notice any sooner to potential 216(b) opt-in plaintiffs. Docket Entry 96. I find that the circumstances of this case, and in particular plaintiffs’ diligence in pursuing the FLSA claims on behalf of putative opt-ins, warrant equitable tolling to avoid an inequitable result. A discussion of the procedural history of this case will explain the “extraordinary circumstances” present here that justify tolling.

In addition, plaintiffs contend that Judge Townes’ tolling is still ongoing. Docket Entries 96, 102. For the reasons just stated, I do not reach this question either.

Less than one month after filing an amended complaint, plaintiffs filed a fully-briefed motion to certify the collective action.FN4 Docket Entries 33-39. In their opposition to plaintiffs’ certification motion, defendants noted that one of the defendants, Amerivents, had recently entered into an agreement with the New York State Department of Labor (“NYSDOL”) to pay unpaid wages. Docket Entry 41 at 14. During a conference in June, 2010, Judge Townes issued a stay of the proceedings until November 19, 2010, to await the result of the NYSDOL investigation. The parties agree that plaintiffs’ claims were tolled for approximately 160 days while the stay was in place. See Docket Entry 102 n. 3 (stating that 160 days is “the minimum undisputed number of days the statute of limitations was tolled”); see also Tr. 5.

After the stay was lifted, defendants requested leave to re-brief their opposition to the certification motion, and sought to defer the certification motion until Judge Townes decided their motion to dismiss, which had not yet even been filed. Docket Entry 81. During a telephone conference held in December, 2010, I set a short briefing schedule for the certification motion, with the fully-briefed motion due at the end of January, 2011. At the oral argument held on February 9, 2011, I granted plaintiffs’ motion for certification of the collective action.

This procedural history demonstrates that plaintiffs have vigorously pursued their claims and, through no fault of their own, have been delayed in prosecuting their action and distributing 216(b) notice to potential opt-in plaintiffs. Moreover, defendants’ actions-re-briefing the certification motion, seeking to defer certification in anticipation of dispositive motions, and failing to produce documents in connection with the NYSDOL investigation have frustrated plaintiffs’ diligent attempts to ensure that claims did not expire. I attribute no trickery or wrongdoing on the part of defendants. I do, however, conclude that defendants will not be prejudiced by any tolling because they have been on notice since the complaint was served in March, 2010, that they were potentially liable for 2007 FLSA claims. Accordingly, in the interest of fairness, I find equitable tolling is warranted from the date plaintiffs served their original certification motion, May 3, 2010, to June 8, 2010, the date Judge Townes issued the stay (a period of 37 days), and from the date plaintiffs re-filed their certification motion, December 17, 2010, to February 9, 2011, the date I granted it (a period of 55 days). The additional 92 days will permit any collective member who timely opts in to maintain a FLSA claim based on wages allegedly due for labor performed in September, 2007, assuming plaintiffs establish defendants’ willful violation of the statute.

For the reasons stated above, I find equitable tolling of plaintiffs’ FLSA claims warranted in light of the procedural history of this case.”

Click Yahraes v. Restaurant Associates Events Corp. to read the entire decision.

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S.D.N.Y.: Because FLSA Collective Action Is Not A Class Action, FLSA Collective Action Subject To Arbitration Despite FINRA Rule Prohibiting Class Actions

Velez v. Perrin Holden & Davenport Capital Corp.

Plaintiff brought this action alleging violations of the Fair Labor Standards Act (“FLSA”) and the New York Labor Law (“NYLL”) on behalf of himself and other similarly situated stock brokers employed or formerly employed by defendant Perrin Holden & Davenport Capital Corp. (“PHD Capital”) and its officers and owners. Plaintiff sought designation of the case as as a collective action pursuant to FLSA section 216 for his FLSA claims and as a class action pursuant to Fed.R.Civ.P. 23 for his state law claims.

Defendants moved to dismiss the complaint pursuant to Fed.R.Civ.P. 12(b)(6) or, in the alternative, to compel arbitration pursuant to the Federal Arbitration Act (“FAA”), 9 U.S .C. §§ 3, 4, on the ground that Plaintiff had agreed to arbitrate his FLSA claims at the time he was hired.   In line with other courts that have decided the issue, the court held that a “collective action” is not encompassed within the term “class action” as that term is used in FINRA’s rules, and thus compelled arbitration of Velez’s FLSA claims, allowing for a collective action in FINRA arbitration.

After finding  that the Plaintiff’s claims were subject to arbitration, the court then discussed whether, under FINRA rules banning class actions, Plaintiff could proceed with an FLSA collective action.  Reasoning he could the court explained:

“FINRA Rule 13200 mandates arbitration of disputes between the parties “except as otherwise provided.” (FINRA Rule 13200, Ex. B to Declaration of Matthew D. Kadushin dated Aug. 27, 2010 (“Kadushin Decl.”).) Notably, FINRA Rule 13204 prohibits arbitration of “class action claims.” (FINRA Rule 13204, Ex. A to Kadushin Decl.) It is thus uncontested that Velez’s state law claims-which plaintiff has asserted as a class action pursuant to Fed.R.Civ.P. 23-are ineligible for arbitration. The parties dispute, however, whether that exemption of class action claims from arbitration also applies to plaintiff’s FLSA collective action claims. While defendants contend that collective actions are distinct from class actions and therefore subject to FINRA arbitration, Velez argues that the phrase “class action” in FINRA Rule 13204 encompasses a collective action and therefore collective action claims are not arbitrable. Velez looks to the interpretation by FINRA staff members of FINRA’s rules to support his position.

Every court to address whether an FLSA collective action is arbitrable pursuant to FINRA’s rules has found in favor of arbitrability.  See Gomez v. Brill Securities, Inc., No. 10 Civ. 3503, 2010 WL 4455827 (S.D.N.Y. Nov. 2, 2010); Suschil v. Ameriprise Financial Servs., Inc., No. 07 Civ. 2655, 2008 WL 974045, at *5 (N.D.Ohio Apr. 7, 2008); Chapman v. Lehman Bros., Inc., 279 F.Supp.2d 1286, 1290 (S.D.Fla.2003). This Court agrees with its sister district courts.

FINRA Rule 13204 clearly states that “[c]lass action claims may not be arbitrated” under FINRA’s Code of Arbitration Procedure. However, that rule says nothing about collective action claims. Although collective and class actions have much in common, there is a critically important difference: collective actions are opt-in actions, i.e., each member of the class must take steps to opt in to the action in order to participate in it, whereas class actions are opt-out actions, i.e., class members automatically participate in a class action unless they take affirmative steps to opt out of the class action. Collective actions bind only similarly situated plaintiffs who have affirmatively consented to join the action.

Velez urges the Court to defer to the opinions of FINRA staff who have issued letters construing collective actions to come within the ambit of class actions for the purposes of FINRA arbitration. (See, e.g., Letter from Jean I. Feeney, NASD Assistant General Counsel, dated Sept. 21, 1999, Ex. C. to Kadushin Decl.; Letter from George H. Friedman, NASD Executive Vice President, Dispute Resolution, Director of Arbitration, dated Oct. 10, 2003, Ex. D to Kadushin Decl.) However, those letters do not contain any substantial analysis, and the Feeney letter itself includes the disclaimer that “the opinions expressed herein are staff opinions only and have not been reviewed or endorsed by the Board of Directors of [the] NASD.” Moreover, FINRA’s website specifically states that “[s]taff-issued interpretive letters express staff views and opinions only and are not binding on FINRA and its Board.” (FINRA-Interpretive Letters, Ex. 1 to Affirmation of Emily A. Hayes dated Sept. 9, 2010). Such “staff opinion letters are not the sort of agency interpretation that is entitled to deference by this Court.” Gomez, 2010 WL 4455827 at *1; see also Auer v. Robbins, 519 U.S. 452, 461 (1997); Skidmore v. Swift & Co., 323 U.S. 134 (1944). If FINRA wanted to prohibit arbitration of collective action claims, FINRA is certainly able to amend its rules to do so. See FINRA Rulemaking Process, available at http://www.finra.org/In dustry/Regulation/FINRARules/RulemakingProcess (Feb. 2, 2010); see also Gomez, 2010 WL 4455827 at *2.

As noted above, the parties here have agreed in writing to arbitrate certain disputes as required by FINRA. In light of other district court opinions, this Court’s own interpretation of FINRA rules, and the federal policy favoring arbitration as an alternative forum in which to resolve disputes, this Court finds that FLSA collective actions are within the scope of the parties’ agreement to arbitrate. In addition, no congressional intent precludes arbitration of the federal FLSA claims. See, e.g., Gomez, 2010 WL 4455827 at *2; Coheleach v. Bear, Stearns & Co., 440 F.Supp.2d 338, 240 (S.D.N.Y.2006).”

Accordingly, defendants’ motion was granted to the extent that the court compelled arbitration of Plaintiff’s FLSA claims.

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M.D.Fla.: Magistrate Judge’s Order Requiring That FLSA Defendant Take Out-of-State Opt-in Plaintiff’s Deposition In Opt-in’s Home Forum Upheld

Fiore v. Goodyear Tire & Rubber Co.

This matter was before the Court on defendant’s Objection to Order on Plaintiff’s Motion for Protective Order Regarding the Location of an Opt-In Plaintiff Deposition.  Previously, the Magistrate Judge had granted in part a protective order by declining to compel an opt-in plaintiff who resides in Texas to come to the Middle District of Florida for a deposition, and further required the deposition to be held in Texas.  The Magistrate Judge found that “forcing an out of state opt-in plaintiff to travel hundreds of miles to take a deposition would undermine the purpose of this collective action, and effectively destroy any benefits gained by proceeding as a class under the [Fair Labor Standards Act] FLSA. It would be unreasonable to force Wandell to attend a deposition in Tampa, Florida. Wandell did not choose the Middle District as his forum, the forum was chosen for him.”  

Agreeing that the Magistrate Judge’s order was not contrary to law or clearly erroneous, reviewing the prior order, the District Judge reasoned:

“A district court reviews an objection to a non-dispositive order of a magistrate judge to determine whether the order was clearly erroneous or contrary to law. 28 U.S.C. § 636(b)(1)(A); Fed.R.Civ.P. 72(a). Defendant argues that the Magistrate Judge was clearly erroneous and disregarded Middle District of Florida Local Rule 3.04(b), and that Wandell should appear for his deposition in the Middle District of Florida. Because the Order was neither clearly erroneous nor contrary to law, defendant’s objection is overruled.

The Court finds that the Magistrate Judge applied the correct law and that her decision was not clearly erroneous. Control of discovery in a civil case is committed to the sound discretion of the court. Chrysler Int’l Corp. v. Chemaly, 280 F.2d 1358, 1360 (11th Cir.2002). This is the standard recognized by the Magistrate Judge in her Order. (Doc. # 73, p. 2.)

A reviewing court applies an abuse of discretion standard in its review of a decision on a motion to compel. Holloman v. Mail-Well Corp., 443 F.3d 832, 837 (11th Cir.2006). A judge abuses her discretion if she applies an incorrect legal standard, follows improper procedures in making the determination, or makes findings of fact that are clearly erroneous. Morgan v. Family Dollar Stores, Inc., 551 F.3d 1233, 1260 (11th Cir.2008). Additionally, a court “abuses its discretion when it misconstrues its proper role, ignores or misunderstands the relevant evidence, and bases its decision upon considerations having little factual support.” Serra Chevrolet, Inc. v. GMC, 446 F.3d 1137, 1147 (11th Cir.2006). Absent such situations, discretion means that a magistrate judge is allowed a range of choices, and should not be second-guessed unless the decision reflects a clear error of judgment.   Holloman, 443 F.3d at 837.

The Court concludes that the magistrate judge did not abuse her discretion. Control over discovery, including the location of a deposition, is committed to the sound discretion of the Court. The decision was not clearly erroneous, i.e., there has been no showing that the location of the deposition was a clear error in judgment. The Magistrate Judge recognized Local Rule 3.04(b), and stated adequate reasons for her decision as to the location. Her decision is well within the permissible range of choices allowed in the sound exercise of discretion.”

However, the Court clarified that it was ruling on the issue before it only, (whether the Magistrate Judge had abused her discretion):

“The Court does not hold that an opt-in [plaintiff'] cannot be required to give a deposition within this District. The Court only holds that, as to Mr. Wandell, there was no abuse of discretion in requiring a deposition in his home district. If this case is certified as a collective action, there may be other considerations as to the locations of depositions. That issue, however, is not before the Court at this time. The Court also does not necessarily adopt the FLSA rationale articulated by the Magistrate Judge.”

Click Fiore v. Goodyear Tire & Rubber Co. to read the entire Opinion and Order.

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