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7th Cir.: District Court Erred In Dismissing FLSA Claims; Court Was Required To Consider Most Efficient Way To Adjudicate Claims and Subclaims; Plaintiffs Have Right To Pursue Claims Individually

Alvarez v. City of Chicago

In this case a collective action had previously been consolidated with a multiple-Plaintiff non-collective action.  Each of the Plaintiffs presented a variety of claims and between the hundreds of plaintiffs there were 10 different types of claims.  The Court below granted the Defendant’s motion for summary judgment against all plaintiffs, reasoning that the plaintiffs were not similarly situated because each plaintiff raised a different combination of the ten subclaims, such that the plaintiffs could not be readily divided into homogenous subgroups.  The district court also noted that arbitration pursuant to the collective bargaining agreement, while not mandatory, might be a more efficient way to resolve the paramedics’ claims.  The court did not reach the merits of the ten subclaims raised by the plaintiffs.  Instead, it dismissed the claims of all plaintiffs, without prejudice, and directed them to pursue arbitration.  The Seventh Circuit reversed however, noting that, the Court failed to consider the efficiency of adjudicating the claims as a collective action, and, that the named Plaintiffs in each of the consolidated cases had the right to proceed with their individual claims, regardless of whether they were similarly situated to the other class members.

The Court reasoned:

“The Fair Labor Standards Act gives employees the right to bring their FLSA claims through a “collective action” on behalf of themselves and other “similarly situated” employees. 29 U.S.C. § 216(b) (2006). A collective action is similar to, but distinct from, the typical class action brought pursuant to Fed.R.Civ.P. 23. The principle difference is that plaintiffs who wish to be included in a collective action must affirmatively opt-in to the suit by filing a written consent with the court, while the typical class action includes all potential plaintiffs that meet the class definition and do not opt-out.

The City-and the district court’s opinion-relies heavily on our decision in Jonites v. Exelon Corp., 522 F.3d 721 (7th Cir.2008). In Jonites, we affirmed the dismissal of a collective action brought on behalf of more than a thousand lineman and other hourly workers employed by Commonwealth Edison. The Jonites plaintiffs alleged that two types of purportedly off-duty time were really compensable work. The first involved Com Ed’s “call-out” policy, which required off-duty workers to respond to at least 35% of the calls from their employer for additional manpower on an emergency basis. The frequency of these call-outs varied widely among workers; some were called as often as once every five and a half days on average, and others no more than once a month. The employees took the position that they were entitled to be paid for “some of the time” during which they were subject to call, with the amount to be determined by the trier of fact. The second challenge was to the lunch policy, which required workers at job sites to remain awake and be alert for trespassing and the theft of tools. However, only part of the class worked the daytime shift, to which the lunch policy applied. We held that as to both of these claims, the purported class was “hopelessly heterogenous” because liability would require significant individual fact-finding and many of the workers had no conceivable claim at all. Id. at 725-26. We further held that the individual plaintiffs must either file individual suits, create homogenous classes, or ask the union to file grievance proceedings under the collective bargaining agreement. Id. at 726. Because the purported class here is made up of plaintiffs who each have a different combination of subclaims, defendants argue that it is similarly heterogenous and was properly dismissed in favor of arbitration.

Appellants argue that this case is different from Jonites because the plaintiffs here appear to be similarly situated with regard to individual subclaims, but are heterogenous only because there are several different combinations of those subclaims. For example, whether any given paramedic is entitled to recover on the uniform pay theory depends on the legal question of whether such pay should have been included in the base rate, and the simple factual question of whether the particular paramedic received uniform pay. Instead of dismissing their claims as heterogenous, plaintiffs argue, the district court should have allowed them to split their claims into homogenous subclasses. See, e.g., Fravel v. County of Lake, No. 2:07-cv-253, 2008 WL 2704744 (N.D.Ind. July 7, 2008) (allowing plaintiffs to proceed collectively and grouping the plaintiffs into four distinct subclasses depending on which theory of liability applied to them). Plaintiffs suggest that here, as in Fravel, “[r]esolving common questions as a class, even through the additional mechanism of sub-classes, remains inherently more efficient” than splitting the action into four separate collective actions or allowing individual claims by each plaintiff. Id. at *3.

The district court appeared to agree with the plaintiffs’ characterization of their subclaims, noting that the City’s liability to any particular plaintiff on any given subclaim turns only upon a single uniform policy and whether that policy impacted that particular plaintiff. However, the district court refused to adopt the Fravel approach, concluding that the number of subclaims made the plaintiffs “hopelessly heterogenous” and that arbitration would be more efficient.

A district court has wide discretion to manage collective actions. See Hoffmann-La Roche v. Sperling, 493 U.S. 165, 171 (1989). However, it appears that here the district court may have mistakenly read Jonites to forbid it from adopting a subclaim approach merely because the variety of subclaims renders the class “heterogenous.” The problem with the Jonites class, however, was not that the plaintiffs had different subclaims, but rather that determining whether any given plaintiff had a viable claim depended on a detailed, fact-specific inquiry, and many plaintiffs lacked any conceivably viable claim altogether. Jonites, 522 F.3d at 723, 725-26; see also Mooney v. Aramco Services Co., 54 F.3d 1207, 1214-15 (5th Cir.1995), overruled on other grounds by Desert Palace, Inc. v. Costa, 539 U.S. 90 (2003) (affirming decertification of collective action where employees who brought ADEA claim were subject to “vastly disparate employment situations” and defense was likely to center on purported reasonable factors other than age specific to each employee). If common questions predominate, the plaintiffs may be similarly situated even though the recovery of any given plaintiff may be determined by only a subset of those common questions.

Similarly, the district court mistakenly compared the efficiency of proceeding through subclaims only to the perceived efficiency of arbitration. Plaintiffs have the right to proceed individually and may be able to form more tailored classes. See Jonites, 522 F.3d at 725 (noting that a collective bargaining agreement cannot preempt or waive a worker’s right to a judicial remedy for FLSA violations). Thus, if it appears plaintiffs are prepared to proceed individually or through separate classes, the district court must consider whether these other mechanisms for judicial resolution of their claims are more or less efficient than a collective action comprised of various subclaims. Cf. Fravel, supra. In Jonites, the circumstances suggested that plaintiffs had “no stomach for proceeding case by case.” Id. at 726. Here, the twelve Caraballo plaintiffs filed their complaint as individuals and moved for summary judgment as individuals. Indeed, there is nothing apparent from the record to indicate that the fifty-four named plaintiffs in Alvarez were unwilling to proceed individually. Yet the district court dismissed their claims in favor of arbitration without considering whether it was better to address sixty-five individual claims or one collective action comprised of ten subclaims.

Finally, the district court erred when it dismissed the claims of the named plaintiffs. When a collective action is decertified, it reverts to one or more individual actions on behalf of the named plaintiffs. See Hipp v. Liberty Nat’l Life Ins. Co., 252 F.3d 1208, 1218 (11th Cir.2001) (citing Mooney, 54 F.3d at 1213-14); see also Fox v. Tyson Foods, Inc., 519 F.3d 1298, 1301 (11th Cir .2008) (affirming decertification of an FLSA collective action, dismissal of the opt-in plaintiffs, and severance of each of the named plaintiffs into separate individual actions). Defendants do not argue that arbitration under the collective bargaining agreement preempts litigating these issues in federal court. Plaintiffs are entitled, at minimum, to pursue their claims individually. Whether they are permitted to do so in one action or several is committed to the sound discretion of the district court, but misjoinder of parties is never a ground for dismissing an action. See Fed.R.Civ.P. 21. We therefore reverse the district court’s dismissal of the named plaintiffs’ claims in both the Alvarez and Caraballo actions.

Sifting through the subclaims of each of the myriad plaintiffs is an unenviable task. But plaintiffs are nonetheless entitled to their day in court. Moreover, it appears that here, common questions predominate with regard to each theory of liability. The parties have already filed cross-motions for summary judgment on the merits of these common questions. After the district court determines the validity of these subclaims, calculation of each plaintiff’s award (if any) will be largely mechanical. On remand, given that the claims of the named plaintiffs will still be before it, the district court should consider whether a collective action might be the most efficient judicial resolution of this matter after all.”

To read the entire decision click here.

D.R.I.: Collective Action FLSA Claims Not Mooted By Offer Of Judgment, In Full Satisfaction, To Named Plaintiff; Motion To Dismiss Denied

Nash v. CVS Caremark Corp.

Plaintiff pled this lawsuit for overtime benefits as a “collective action” under the Fair Labor Standards Act (“FLSA”).  That is, he purported to act on behalf of himself and “other employees similarly situated” pursuant to 29 U.S.C. § 216(b).  After one supposedly “similarly situated” party opted in to the case, Defendants presented both that person and Plaintiff with offers of judgment pursuant to Rule 68 of the Federal Rules of Civil Procedure.  The opt-in party previously accepted the offer and was no longer part of the case; Plaintiff rejected the offer, but did not dispute that it was adequate to cover his damages. Defendants then moved to dismiss the suit on grounds that the Rule 68 offer mooted Plaintiff’s claim.  However, since that time, other parties opted into the action and seeking to have their claims resolved as part of a “collective action” with Plaintiff.  Denying, Defendants’ Motion to Dismiss on mootness grounds, the Court discussed the remedial purposes of the FLSA’s collective action mechanisms.

Discussing Rule 68 initially, the Court reasoned, “[n]othing in the text of Rule 68 compels dismissal of a case for lack of subject matter jurisdiction when a plaintiff rejects an adequate offer of judgment. Rather, the Rule creates what amounts to a penalty scheme when a plaintiff moves forward with litigation despite being offered the maximum damages she can hope to obtain at trial. “If the judgment that the offeree finally obtains is not more favorable than the unaccepted offer, the offeree must pay the costs incurred after the offer was made.” Fed.R.Civ.P. 68(d). Of course, as a practical matter, in some circumstances a Rule 68 offer may “eliminate[ ] a legal dispute upon which federal jurisdiction can be based,” because “[y]ou cannot persist in suing after you’ve won.” Greisz v. Household Bank (Illinois), N.A., 176 F.3d 1012, 1015 (7th Cir.1999). But this does not transform Rule 68 into an escape hatch from every lawsuit. Rather, as this case makes clear, whether a controversy becomes moot following a Rule 68 offer depends on the factual circumstances, the cause of action, and the procedural status of the claims at issue. Moreover, nothing in Rule 68 itself suggests that it should be used as a vehicle for sabotaging claim-aggregating devices like 29 U.S.C. § 216(b) and Rule 23. See Fed.R.Civ.P. 1. (explaining that the Federal Rules of Civil Procedure should be “construed and administered to secure the just, speedy, and inexpensive determination of every action and proceeding”).”

The Court then distinguished a 216(b) collective action, from a Rule 23 class action:

“The Court agrees with Judge Almond that Cruz v. Farquharson, 252 F.3d 530, 533 (1st Cir.2001), in which the First Circuit approved the dismissal of a Rule 23 action as moot, is distinguishable. Cruz emphasized that between the date the plaintiffs in that case received “complete relief,” and the date the district court dismissed the case as moot, “no new plaintiffs tried to intervene, and the named plaintiffs made no effort to amend their complaint to add new parties.” Cruz, 252 F.3d at 533. That is not so here. Four additional parties have, in fact, “tried to intervene” as “similarly situated” plaintiffs by submitting their consents for the Plaintiff to pursue claims on their behalf.

As Judge Almond noted, where even one similarly-situated plaintiff opts in to an FLSA suit after the rejection of a Rule 68 offer, courts “have refused to permit defendants to moot putative FLSA collective actions.”   Yeboah v. Central Parking Sys., No. 06 CV 0128(RJD)(JMA), 2007 WL 3232509, at *3 (E.D.N.Y. Nov. 1, 2007); see Reyes v. Carnival Corp., No. 04-21861-CIV., 2005 WL 4891058, at *2 (S.D.Fla. May 25, 2005) (refusing to dismiss FLSA action where “other plaintiffs. opted in to [the] suit [after] the offer of judgment was made”); Roble v. Celestica Corp., 627 F.Supp.2d 1008, 1013-14 (D.Minn.2007) (finding that identifying opt-ins sustained jurisdiction); Rubery v. Buth-Na-Bodhaige, Inc., 494 F.Supp.2d 178, 179-80 (W.D.N.Y.2007) (denying motion to dismiss where more than fifty people had filed consents to join FLSA action). This is true even if, as here, there is no dispute about the adequacy of the offer. See Yeboah, 2007 WL 3232509, at *5 (explaining that even if the plaintiff could not dispute the sufficiency of the judgment, “it neither mooted plaintiff’s FLSA claim nor deprived [the court] of subject matter jurisdiction,” because of the “presence of opt-ins.”).

Defendants contend that the opt-ins cannot be considered “plaintiffs” or “parties” to the suit for purposes of any exception to mootness carved out by Cruz. See Cruz, 252 F.3d at 533. Cruz stressed that there had been no “decision on class certification” under Rule 23, appearing to require a formal grant of class status in order to preserve a controversy after named parties obtain full relief. Here, the case has not yet reached the equivalent stage in the § 216(b) context: “preliminary collective action certification,” which requires an initial demonstration that the plaintiff “is ‘similarly situated’ to the other members of the proposed class.” Poreda v. Boise Cascade, L.L.C., 532 F.Supp.2d 234, 238 (D.Mass.2008). In the absence of preliminary certification, Defendants argue, Plaintiff has no procedural right to act on behalf of purported “similarly situated” parties. “[A] § 216(b) plaintiff … presents only a claim on the merits …. [and][i]n contrast to the Rule 23 plaintiff, a § 216(b) plaintiff has no claim that he is entitled to represent other plaintiffs.” Cameron-Grant v. Maxim Healthcare Servs., Inc., 347 F.3d 1240, 1249 (11th Cir.2003).

In other words, Defendants insist, without the only safe harbor arguably warranted by Cruz-collective action status-this lawsuit died the moment that Plaintiff rejected his Rule 68 offer. At that time, there were no other opt-ins with live claims, and plaintiff had no right to stand in for anyone else. Later opt-ins could not resurrect the action once it expired.

This logic has some superficial appeal. But its limitation is that, if true, employers could always “use Rule 68 as a sword … and avoid[ ] ever having to face a collective action.” Sandoz v. Cingular Wireless LLC, 553 F.3d 913, 919 (5th Cir.2008). Congress clearly did not intend such an “anomaly” in enacting § 216(b). See id. Neither does Cruz, which concerns Rule 23, require the result Defendants urge here, which would effectively thwart Congress’ preference to “avoid multiple lawsuits where numerous employees” allege FLSA violations. Prickett v. DeKalb County, 349 F.3d 1294, 1297 (11th Cir.2003).

The Court recognizes that Cruz may create some tension with the underlying rationale for decisions allowing § 216(b) opt-ins to preserve jurisdiction. As explained by the Fifth Circuit in Sandoz, at bottom those cases rest on what is known as the “relation back” doctrine. See Sandoz, 553 F.3d at 921;see, e.g., Yeboah, 2007 WL 3232509, at *3 (citing Weiss v. Regal Collections, 385 F.3d 337, (3d Cir.2004), a Rule 23 case dealing with the “relation back” doctrine). Sandoz acknowledged the quandary raised by Cameron-Grant: a named FLSA plaintiff “cannot represent any other employees until they affirmatively opt in to the collective action.” Sandoz, 553 F.3d at 919 (citing Cameron-Grant, 347 F.3d at 1249.). “If our analysis stopped there,” the court reasoned, “[the plaintiff’s] case would be moot,” because she had received an adequate offer of judgment before any opt-ins joined the case. Id. Nevertheless, the court cited Sosna v. Iowa, 419 U.S. 393 (1975), as providing a solution. There, the Supreme Court observed that a Rule 23 controversy might become moot “before the district court can reasonably be expected to rule on a certification motion.” Id. at 402 n. 11. Depending on the circumstances, in such instances class certification might “be said to ‘relate back’ to the filing of the complaint,” which would preserve jurisdiction. Id. at 402 n. 11.Sandoz found that the “relation back” doctrine was just as appropriate for § 216(b) as Rule 23, because both types of actions were vulnerable to strategic mooting by Defendants. Accordingly, “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.” Sandoz, 553 F.3d at 921.

Defendants fairly point out that Cruz did not approve of such an approach to Rule 23, and in fact took a narrow view of Sosna. The holding in Sosna was that jurisdiction did not disappear when a named plaintiff’s claim became moot after certification of a class with live controversies. Sosna, 419 U.S. at 402. Cruz stated outright that the “holding in Sosna ” was not applicable, because the plaintiffs in Cruz had not obtained class certification. Cruz, 252 F.3d at 534. At the same time, Cruz did not address the footnote in Sosna explaining the “relation back” idea. Furthermore, no First Circuit decision has considered the question of whether it would be proper to use the “relation back” approach in the context of § 216(b).FN2

In the Court’s view, applying the “relation back” doctrine is appropriate in this case. Plaintiff represents he has not yet moved for preliminary certification because he has been busy opposing Defendants’ efforts to transfer venue and dismiss the case, which they commenced less than a month after the Complaint was filed. Under the “relation back” doctrine, the opt-ins who appeared after Plaintiff rejected the Rule 68 offer sustain jurisdiction; this will give Plaintiff the opportunity to seek provisional certification without “undue delay” after the entry of this Order. Sandoz, 553 F.3d at 921 (quoting Weiss, 385 F.3d at 348). This, in turn, will enable “due deliberation” on the issue of whether Plaintiff is the appropriate representative of a collective action. See Weiss, 385 F.3d at 348.”

Last, the Court noted that policy precludes a dismissal due to mootness under these circumstances, because of the remedial purposes of the FLSA:

“As discussed, and as Judge Almond noted, granting dismissal in these circumstances would impair the Congressional preference for collective actions embodied in 216(b). The Court offers some additional comments on this topic below. But there is also a second policy consideration that favors affirming the R & R. Specifically, the present motion underscores the unique danger of tactical manipulation in FLSA cases. Thus, as explained below, to the extent Cruz could be read to establish a broad mootness regime that reaches beyond the Rule 23 context, an exception for FLSA actions is warranted.

To begin with, it is clear that allowing Defendants to “pick off” named FLSA plaintiffs one-by-one encourages manipulation of cases and ultimately of the federal courts. See Sandoz, 553 F.3d at 919. One court in Illinois described the ways employers can hamstring collective actions if allowed to snuff named plaintiffs’ claims using Rule 68:

[The] defense strategy creates a virtually unwinnable situation for plaintiffs in collective or class action lawsuits. Defendant makes an offer of “judgment” to Plaintiff, then alleges that the action is moot. Plaintiff therefore must either pursue discovery very early in the case, when a court likely will deem it premature, or seek class certification and/or notice before discovery, which runs the risk of harming the interest of those as-yet undiscovered class members.  Reed v. TJX Cos., NO. 04 C 1247, 2004 WL 2415055, at *3 (N.D.Ill. Oct. 27, 2004). The FLSA enforcement scheme clearly does not envision such a minefield. Section 216(b) does not require plaintiffs to petition for provisional certification of a “collective action” when filing a complaint. In fact, the final ruling on whether the named plaintiff may maintain a “collective action” usually occurs “after discovery is complete.” Poreda, 532 F.Supp.2d at 239. The collective action process “should be able to ‘play out’ according to the directives” of § 216(b) and the cases applying it, to permit “due deliberation by the parties and the court” on collective action certification. See Weiss, 385 F.3d at 347-48 (discussing the Rule 23 process).

The moot-and-dismiss tactic also facilitates forum-shopping and plaintiff-shopping. At oral argument, Defendants confirmed that multiple lawsuits regarding the overtime claims asserted here are pending in different jurisdictions around the country. Permitting use of Rule 68 to moot cases in one or more forums and thereby cherry-pick another, potentially with the weakest collective action representative, upends the longstanding principle that, in cases based on federal-question jurisdiction, the plaintiff is the “master of the claim.” Caterpillar, Inc. v. Williams, 482 U.S. 386, 392 (1987).

Defendants might object that Rule 23 actions present the same worries. After all, Rule 23 advances a policy similar to § 216(b): the efficient resolution of widespread small claims dependent on common legal and factual questions. Arguably, the opt-out structure of Rule 23 embodies an even firmer commitment to aggregating claims, in contrast to the opt-in rule for § 216(b) cases. And if this is true, how can the cited policies provide any basis to distinguish Cruz, where the same concerns were not enough to stave off dismissal of a Rule 23 action? In that case, the plaintiffs alleged, there was a large pool of class members, and the defendant had defused class action litigation by mooting the claims of the named parties. See Cruz, 252 F.3d at 535.

The answer to the question above is that FLSA actions are more vulnerable to manipulation than Rule 23 actions. For the latter, filing a complaint tolls the statute of limitations for all alleged class members, whether they know of the lawsuit or not. See Crown, Cork & Seal Co. v. Parker, 462 U.S. 345, 350 (1983) (“The filing of a class action tolls the statute of limitations as to all asserted members of the class ….”). In contrast, parties alleged to be “similarly situated” in a § 216(b) case must affirmatively opt in to toll the limitations period. See29 U.S.C. § 256 (explaining that an FLSA action is not considered to be commenced for a similarly situated party until he submits written consent to join the case); Bonilla v. Las Vegas Cigar Co., 61 F.Supp.2d 1129, 1136-37 (D.Nev.1999) ( “[A]ll potential plaintiffs to § 216(b) actions must file their consent to the suit to toll the statute of limitations.”) (emphasis in original).

This means that defendants can bleed value out of a large pool of outstanding FLSA claims in a way they cannot with a comparable group of Rule 23 claims. “Picking off” § 216(b) plaintiffs delays the point at which any collective action can be provisionally certified. This stalls notification to potential “ similarly situated” parties. O’Donnell v. Robert Half Int’l, Inc., 534 F.Supp.2d 173, 177 (D.Mass.2008) (“A class may be conditionally certified and notified of the pendency of an action only if the putative class members are “similarly situated” with the named plaintiffs.”) The longer it takes for an FLSA class to mature, the lower members’ damages will be once they opt in, given the two-year limitations period. See29 U.S.C. § 255 (2010). In a parallel situation under Rule 23, the clock for absentees stops upon the filing of a complaint that raises their claims. Thus, even if employers pick off some named plaintiffs, the limitations period for absentees pauses while any applicable class action is pending.

The predicament of the opt-ins in this case brings the problem into sharper focus. Widespread claims involving common issues invite lawsuits in different jurisdictions, as is the situation here. Note the disparate outcomes this creates for Rule 23 absentees and FLSA opt-ins. As a practical matter, if a Rule 23 action is dismissed, class members may not have to worry about expiration dates for their claims drawing closer. If there is another class action underway that allegedly embraces their claims, the automatic tolling rule from Crown, Cork & Seal shelters them. Opt-ins to collective actions enjoy no such protection. If the suit to which they have hitched their claims sinks-the result Defendants seek here-the clock starts running again, even if they might be “similarly situated” to the named plaintiff in another pending case. Thus, as Judge Almond observed:

[I]f [Defendants were] successful in dismissing the case as mooted, the four plaintiffs who opted in … would arguably have to either initiate new individual FLSA actions or join another applicable collective action. Thus, the tolling of the limitations period for their claims could be delayed and, if they were ultimately successful, their back pay damages could be reduced since the value of their claims is potentially diminished with each passing day.  (R & R at 4-5.) The point is that FLSA opt-ins are more exposed to the erosion and possible expiration of their claims than Rule 23 absentees.

Simply put, it is easier to drown collective actions than class actions. If allowed to use Rule 68 as a weapon, defendants can torpedo complaint after complaint, leaving opt-ins to swim for the nearest viable action as their claims leak value. This justifies a more relaxed mootness standard in FLSA cases than Rule 23 cases, and therefore provides an additional basis for distinguishing Cruz.”

Thus, the Court denied Defendants’ Motion to Dismiss.

E.D.Tex.: Where Class Consists Of Over 1000 Plaintiffs, Court Limits Discovery To 91 Randomly Chosen Representative “Discovery Plaintiffs”

Nelson v. American Standard, Inc.

Before the Court is Plaintiffs’ motion for entry of limited discovery order, filed in support of Plaintiffs’ proposal contained in the Joint Motion for Entry of Discovery and Case Management Plan and Scheduling Order.  Although the parties largely agreed on the extent of discovery to be conducted, Plaintiffs sought an Order limiting such discovery a representative sampling of 91 “discovery Plaintiffs,” while Defendants claimed they should be entitled to seek discovery from every individual class member.  Agreeing with Plaintiffs, the Court pared discovery down to the 91 representative Plaintiffs.

The Court described the dispute as follows:

“[The parties] have agreed to the scope of oral discovery and to a schedule governing the deadlines in this case. The parties have also agreed that they will select individual case participants as “Discovery Plaintiffs” as a representative sample from all of the individuals who are named plaintiffs or who have opted into the litigation. The “Discovery Plaintiffs” are to be selected as follows: (1) three Named Plaintiffs (Nelson, Gross, and Dewberry); (2) 19 individuals who submitted declarations in support of the Motion for Notice; and (3) 84 opt-ins selected at random by the parties from the 1,328 individuals in the consolidated case, with a specified number of opt-ins for each location.  The fundamental disagreement which remains to be resolved by the Court is the scope of written discovery. The central disagreement is that Plaintiffs seek to limit written discovery to the Discovery Plaintiffs who may be used at trial while Defendant seeks to allow written discovery to be issued to the entire class of 1,328 opt-in plaintiffs in some capacity. In the joint motion, both sides present their proposals on how written discovery should be conducted. In support of Plaintiffs’ proposal contained in the joint motion for discovery order, Plaintiffs’ also filed a motion for entry of limited discovery order. (Dkt. No. 110.) Plaintiffs seek to limit both written and oral discovery of class members to the agreed upon group of 91 Discovery Plaintiffs rather than to require all 1,328 participants to be subjected to written discovery and disclosures. Defendant seeks individualized written discovery for all opt-in plaintiffs.”

Citing other courts that have reached the same conclusion, the Court ordered representative discovery, rather than individualized discovery, stating:

“The Eastern District of Texas, and specifically this Court, is one of many jurisdictions that has ordered limited, representative discovery of the named plaintiffs and opt-in plaintiffs in FLSA actions. Schiff et al. v. Racetrac Petroleum, Inc., 2:03-cv-402-TJW, Dkt. No. 111 (E.D. Tex. June 8, 2005) (limiting discovery to a random sample of 35 opt-in plaintiffs). Numerous other courts also have found that individualized discovery is generally not appropriate in FLSA collective actions and should be limited to a representative sample of the entire group. See Smith v. Lowes Home Ctrs., 236 F.R.D. 354, 356-58 (S.D.Ohio 2006) (denying defendant’s request for individualized discovery of more than 1,500 opt-ins and instead ordering a representative sample of 90 randomly selected individuals from the opt-in plaintiffs); Cranney v. Carriage Services, Inc., 2008 WL 2457912 at *3-5 (D.Nev. June 16, 2008) (limiting individualized discovery to 10% of a relevant combination of workers and work sites for the opt-in plaintiffs). The Court finds that limiting discovery in a FLSA action to a relevant sample minimizes the burden imposed on the plaintiffs “while affording the defendant a reasonable opportunity to explore, discover and establish an evidentiary basis for its defenses.” Smith, 236 F.R.D. at 357-58. Further, the Court finds that there is no due process violation to Defendant in limiting written discovery to the Discovery Plaintiffs.

In this case “representative” discovery refers not only to the named plaintiffs but to a sample of 91 largely randomly selected individuals that the parties have agreed to designate as “Discovery Plaintiffs.” The Court finds that there is no reason that all defenses and alleged differences among class members cannot be ascertained and articulated based on the results of full discovery for the “Discovery Plaintiffs.” If the discovery shows defenses and differences for these individuals, Defendant Trane will be able to make its case for decertification or summary judgment. The fundamental precept of statistics and sampling is that meaningful differences among class members can be determined from a sampling of individuals. The Court finds that the agreed upon group of “Discovery Plaintiffs” is a statistically acceptable representative sample of the entire group of opt-in Plaintiffs. Defendant Trane has not shown that the representative sample needs expanding to all class members for discovery purposes. However, if after conducting the discovery of the representative sample Defendant Trane can demonstrate to the Court that broader discovery is appropriate and necessary, the Defendant can so move.

III. CONCLUSION

Accordingly, it is ORDERED that written discovery in this case be limited to the named plaintiffs and the 91 opt-in plaintiffs who the parties have agreed to designate as Discovery Plaintiffs. A concurrent order will be entered that adopts the parties’ joint proposal for discovery and case management plan and adopts the Plaintiffs’ proposal on written discovery, consistent with this order. Thus, Plaintiffs’ Motion (Dkt. No. 110) is hereby GRANTED.”

Wal-Mart To Pay $40 Million To Massachusetts Workers For Off-the-Clock Work Claims, Boston Globe Reports

The Boston Globe is reporting that the United States’ largest retailer, Wal-Mart has agreed to settle a collective action in Massachusetts for approximately $40 Million.

“Wal-Mart Stores Inc., the world’s largest retailer, has agreed to pay $40 million to as many as 87,500 current and former employees in Massachusetts, the largest wage-and-hour class-action settlement in the state’s history.

The class-action lawsuit, filed in 2001, accused the retailer of denying workers rest and meal breaks, refusing to pay overtime, and manipulating time cards to lower employees’ pay. Under terms of the agreement, which was filed in Middlesex Superior Court yesterday by the employees’ attorneys, any person who worked for Wal-Mart between August 1995 and the settlement date will receive a payment of between $400 and $2,500, depending on the number of years worked, with the average worker receiving a check for $734…

The Massachusetts case is similar to many others that have been brought against the retail behemoth by employees across the country, most alleging that the Bentonville, Ark.-based company violated laws by requiring employees to work through breaks, to work beyond their regular shifts, and similar practices. Wal-Mart has denied the allegations, but in December, the merchant agreed to pay up to $640 million to settle 63 federal and state class-action wage-and-hour lawsuits.”

To read the full story go to the Boston Globe website.

D.Minn.: Defendant’s Request To Distribute Post-Notice Memorandum To Opt-ins Denied; Risk That Opt-ins Would Be Discouraged From Exercising FLSA Rights Outweighs Defendant’s Interests

Ahle v. Veracity Research Co.

Following the Court’s Order granting Notice, Defendant sought to send out a memorandum to all putative class members reminding them that they may not divulge trade secrets (without outlining what those trade secrets were).  Plaintiff objected and Defendant’s filed a Motion to send the memorandum out.  Finding that the chilling effect outweighed the probative value, if any, of such memorandum, the Court denied Defendant’s Motion.

The Court initially described the procedural history up until the point of the Motion and the contents of the memorandum Defendant sought to distribute.

“Veracity is a private investigative firm that specializes in insurance defense investigations. The Plaintiffs are current or former employees of Veracity, who work, or worked, as private investigators, and who claim that Veracity has violated the Fair Labor Standards Act, Title 29 U.S.C. §§ 201219 (“FLSA”), by failing to pay them for certain hours that they had allegedly worked. Veracity denies any violation of the FLSA, and filed Counterclaims against certain of the Plaintiffs, including claims that those Plaintiffs had misappropriated confidential information, and trade secrets. In an Order dated July 28, 2009, the District Court, the Honorable Ann D. Montgomery presiding, granted the Plaintiffs’ Motion to Dismiss Veracity’s claims, on jurisdictional grounds, that those Plaintiffs had misappropriated Veracity’s confidential information, and trade secrets. See, Memorandum Opinion and Order dated July 28, 2009, Docket No. 67.

Veracity now seeks leave of the Court to distribute the following memorandum to those of its employees who elect to opt-into this collective action:

We understand that you recently elected to become a party plaintiff in this wage and hour lawsuit. We respect your decision and assure you that you will not be retaliated against in any way by [Veracity] because of your involvement in this case.

However, we want to remind you that, like all [Veracity] employees, you have a duty not to share or disclose any of our trade secrets or other confidential information outside of the Company except as authorized by [Veracity]. This includes any company property, whether in tangible or electronic form. Although we have no desire to interfere with your participation in this lawsuit, it does not relieve you of your obligations as a [Veracity] employee, including to protect our trade secrets and other confidential information.

Please let me know if you have any questions concerning this Memorandum or our policies prohibiting the nondisclosure and nonmisappropriation of [Veracity’s] confidential information and property, as reflected in our Employee Manual and your Agreement with [Veracity].

Before distributing the memorandum to opt-ins, counsel for Veracity requested permission to do so from counsel for the Plaintiffs, who objected to the distribution, and urged that Veracity seek Court approval.

Without the knowledge of its counsel, on August 6, 2009, Veracity sent a copy of the memorandum, authored by Veracity’s Chief Executive Officer, to a current employee who had opted into the lawsuit, and followed that transmission with a personal email to the employee which directed that he confirm that he received, understood, and would comply, with the terms of that memorandum. According to the Plaintiffs, Veracity sent the memorandum to that employee “within 20 minutes” of the employee’s election to opt-into the case. See, Plaintiffs’ Memorandum in Opposition, Docket No 93 (“Pl’s Memo.”), at p. 4 of 8; see also, Sokolowski Aff., supra at p. 4 of 6. After counsel for the Plaintiffs reiterated their opposition to the distribution of the memorandum, Veracity filed their Motion for Court approval to do so.”

Veracity contends that the memorandum is “neither threatening, coercive, nor misleading, and Plaintiffs fail to explain why they object to it,” see, Veracity’s Memorandum in Support, Docket No. 89 (“Veracity’s Memo.”), at p. 1 of 6, and believes that, as the employer of those opt-ins who are current employees, Veracity is doing no more than reminding those employees of their obligation to maintain the secrecy of Veracity’s confidential information, and trade secrets. Id. at p. 1-2 of 6 (“The memo, which [Veracity] believed to be appropriate and benign, was intended to remind employees of their obligation not to disclose trade secrets or other confidential information.”). Accordingly, Veracity requests an Order that permits “it to distribute the memorandum to any future opt-in plaintiffs who are current employees of [Veracity] at the time they opt in to the lawsuit.” Id.

Addressing the competing interests, the Court noted, ” ‘Because of the potential for abuse, a district court has both the duty and the broad authority to exercise control over a class action and to enter appropriate orders governing the conduct of counsel and the parties.’ Gulf Oil Co. v. Bernard, 452 U.S. 89, 100 (1981). “But this discretion is not unlimited, and indeed is bounded by the relevant provisions of the Federal Rules.” Id., citing Eisen v. Carlisle & Jacquelin, 417 U.S. 156 (1974). “Before entry of such an order, there must be a clear record and specific findings that reflect a weighing of the need for a limitation and the potential interference with the rights of the parties.” Great Rivers Cooperative of Southeastern Iowa v. Farmland Industries, Inc., 59 F.3d 764, 766 (8th Cir.1995), citing Gulf Oil Co. v. Bernard, supra at 101.

‘In addition, such a weighing-identifying the potential abuses being addressed-should result in a carefully drawn order that limits speech as little as possible, consistent with the rights of the parties under the circumstances.’ Id., quoting Gulf Oil Co. v. Bernard, at 102. ‘Nevertheless, a limited restriction-such as precluding a defendant from soliciting class members to opt out of the litigation-will sometimes be justified.’ Id., quoting Manual for Complex Litigation, Second, at § 30.24 at p. 232, citing, in turn, Kleiner v. First Nat’l Bank of Atlanta, 751 F.3d 1193 (11th Cir.1985). While the foregoing authorities specifically address class action proceedings, the same principles have been extended to collective actions, such as this one. See, Hoffman-La Roche Inc. v. Sperling, 493 U.S. 165, 170-71 (1989). In Hoffman-La Roche, the Court specifically recognized that the benefits of the collective form of litigation “depend on employees receiving accurate and timely notice concerning the pendency of the collective action, so that they can make informed decisions about whether to participate.” Id. at 170.

We do not suggest that there is anything misleading in the contents of Veracity’s proposed memorandum. Rather, we have concern that the memorandum, which will only be sent to Veracity’s current employees who opt-into the collective action, will unnecessarily highlight Veracity’s close attention to that employee’s election to participate in this proceeding. Perhaps, in and of itself, such a highlighting could prove to be innocent, we find no logical nexus between joining this collective action, and any derivative motivation to impermissibly share Veracity’s confidential information, or trade secrets. Instead, we are left with the distinct impression that the transmission of the memorandum-only to opt-ins-is intended to not-so-subtly influence the opt-in, as to his choice to engage in this lawsuit, by assuring him or her that Veracity’s management will be more closely scrutinizing that employee’s demeanor and conduct, than other similarly-situated employees who have not joined the suit.

The opt-ins do no wrong in joining this collective action; they are simply exercising their rights under a statute that Congress enacted to assure that they were fairly compensated for the hours that they worked for Veracity, or for any other employer. If that joinder warrants a cautionary, that the opt-in should not seek to steal Veracity’s property, whether tangible or electronic, the connection escapes us. Nor are we able to clearly understand Veracity’s asserted business purpose for the advisory. While we certainly accept that Veracity is engaged in a sensitive business, and could be exposed to penalties if the information its investigators gather is improperly disclosed in such a way as to violate State or Federal statutes, or Veracity’s contracts with third-parties, we are unable to perceive why joining this lawsuit potentiates toward any such violations. Veracity, and the Plaintiffs, have entered a Protective Order that preserves the confidentiality of information that has been so labeled by one party or the other. Counsel for the Plaintiffs need not request, even if they were so unprofessionally motivated to do so, information from the opt-ins which is otherwise available from Veracity.

Nor is it clear what Veracity characterizes as confidential, or as a trade secret. Surely that characterization could not encompass evidence, if any there be, that Veracity’s policies and practices violate the provisions of the FLSA, and yet, that inference may not be fully understood by the opt-ins who are warned not to communicate some undefined information to persons outside of Veracity. The Confidentiality Agreements between Veracity, and its investigators, have not been presented for our review, but we have grave difficulty in conceiving why “information about other employees” could be considered confidential. See, Veracity’s Memo., supra at p. 5 of 6 (“[Veracity’s] employees have access to confidential information and trade secrets, including clients lists and information about other employees.”). While the confidences of Veracity’s client lists would surely be proprietary, we are unable to fathom why that information would be a subject of inquiry, by the Plaintiffs’ counsel, in an FLSA action.

In our considered view, Veracity’s memorandum unfairly chills the opt-ins’ Sixth Amendment right of access to the Courts, as well as their entitlement to consult with legal counsel, concerning their FLSA claims, without fear of retribution arising from some notion that the information that they are disclosing will subject them to discipline, or other legal action, predicated upon a breach of a Confidentiality Agreement. Moreover, we are unable to perceive any reason for the opt-ins to be disclosing information that would compromise a confidence, or a trade secret. As we have noted, the issues raised in this action pertain to wages, and hours worked; they do not involve matters of confidence or trade secret, and Veracity has failed to explain why it should fear such disclosures, much less why it believes that counsel for the Plaintiffs would be interested in any such information.

Given these considerations, and the entirety of the Record that the parties have presented for our consideration, we find that Veracity should be allowed to exercise its free speech right to communicate with its employees on matters as significant as the preservation of confidential information, and trade secrets. In order to preserve that right, without trammeling upon the opt-in’s right of access to the Courts, any communication from Veracity, on this subject, should be transmitted to all of its employees, who signed a Confidentiality Agreement, and not just to the opt-ins. In this fashion, the rights of both sides are appropriately weighed and protected. While our ruling will require that the memorandum be modestly reworded, if Veracity truly has a concern that its employees, or some subclass of them, will improperly disclose its trade secrets, or confidential information, then a cautionary advisory to its workforce will further its interest in preserving the integrity of such information, without sacrificing the opt-ins’ rights under the FLSA. As we did at the Hearing, we suggest that the memorandum be generic in form and content, and not be connected to this litigation. If a suitable memorandum evades the parties, they may jointly contact this Court for assistance.”

Thus, the Court denied the Defendant’s Motion for an Order Approving the Distribution of a Memorandum to Opt-ins.

E.D.Tenn.: Defendant’s Motion For Decertification Denied; Common Pay Practice/Policy Overcomes Individual Facts And Defenses

Johnson v. Koch Foods, Inc.

This case was before the court on Defendant’s Motion for Decertification or, in the Alternative, Motion for Separate Trials.  Denying Defendant’s Motion, the Court held that despite disparate factual and employment settings, that these differences are not material because the plaintiffs are all subject to a common policy or plan, payment by production line time, which they allege violates the FLSA.

Analyzing Defendant’s Motion the Court explained, “[p]ursuant to § 216(b) of the FLSA, employees can sue on their own behalf or on the behalf of “similarly situated” persons. “Section 216(b) establishes two requirements for a representative action: 1) the plaintiffs must actually be ‘similarly situated,’ and 2) all plaintiffs must signal in writing their affirmative consent to participate in the action.” Comer v. Wal-Mart Stores, Inc., 454 F.3d 544, 546 (6th Cir.2006) (citing 29 U.S.C. § 216(b); Hoffmann-La Roche, Inc. v. Sperling, 493 U.S. 165, 167-68 (1989)).

“Although the FLSA does not define the term ‘similarly situated,’ courts generally do not require prospective class members to be identical.” Moss v. Crawford & Co., 201 F.R.D. 398, 409 (W.D.Pa.2000). The Sixth Circuit has adopted a two-step inquiry for the determination of whether members of the class are in fact similarly situated. See Comer, 454 F.3d at 546; see also Wilks v. Pep Boys, No. 3:02-0837, 2006 WL 2821700, at *2 (M.D.Tenn. Sept. 26, 2006) (cases cited therein). The first step occurs at the “notice stage,” which is usually in the initial part of the case when the court determines whether notice of the lawsuit should be given to the putative members of the class. Pep Boys, 2006 WL 2821700, at *2 (citing White v. MPW Indus. Servs., Inc., 236 F.R .D. 363, 366 (E.D.Tenn.2006)). At this stage, a fairly lenient standard is used to determine whether plaintiffs are similarly situated for a class to be preliminarily certified. See Frank v. Gold’n Plump Poultry, Inc., No. 04-CV-1018 (PJS/RLE), 2007 WL 2780504, at *2 (D.Minn. Sept. 24, 2007).

The second step occurs after discovery has been taken and is precipitated if and when the defendant files a motion for decertification of the class. See Pep Boys, 2006 WL 2821700, at *2; Moss, 201 F.R.D. at 409. “At this juncture, the court uses a higher standard to analyze the similarly situated issue.” Moss, 201 F.R.D. at 409 (citations omitted); see also Comer, 454 F.3d at 547 (“At the second stage, following discovery, trial courts examine more closely the question of whether particular members of the class are, in fact, similarly situated.”).

There are primarily three factors that district courts consider at the decertification stage to determine whether the plaintiffs who have opted in are similarly situated. These factors are: “(1) the disparate factual and employment settings of the individual plaintiffs, such as a) job duties; b) geographic location; c) supervision; and d) salary; (2) the various defenses available to defendant that appear to be individual to each plaintiff; and (3) fairness and procedural considerations.” Pep Boys, 2006 WL 2821700, at *3 (citing Moss, 201 F.R.D. at 409).

As noted above, an agreed order was entered in this case in which the court conditionally certified this action as a collective action under 29 U.S.C. § 216(b) and identified the conditional class. The court authorized notice to be distributed to the conditional class, and approximately 150 current and former Koch Foods employees have opted into this lawsuit. Koch Foods now seeks to decertify the class claiming that the plaintiffs are not all similarly situated and therefore this case cannot go forward as a collective action. At this stage, the court employs the higher standard and the factors described above to resolve this issue. In doing so, the court has reviewed the hundreds of pages submitted in support of and opposition to this motion.

Koch Foods has presented extensive amounts of evidence and argues in exhaustive detail what it says are the many differences among the plaintiffs. As noted, the court has reviewed this evidence and will not specifically cite to it here. Koch Foods points out that the live and de-bone plants perform different functions in the chicken processing sequence. The evidence also shows that regarding both plants there are many different departments, work and meal shifts, clothing items worn by employees, and donning and doffing practices of the various employees. Koch Foods also points out that the plaintiffs work for different supervisors who exercise different levels of flexibility regarding whether an employee is marked tardy if he or she is late coming to the production line.

Koch Foods also argues that the defenses available to it require decertification. Koch Foods anticipates presently individualized defenses, such as that some of the plaintiffs are already paid for donning, doffing, washing, and walking time. It also expects to show that some employees are not required to wear various clothing items and that other clothing items benefit workers in different ways, depending on the employee’s position and plant location.

Based on these arguments, Koch Foods contends that the plaintiffs are not similarly situated. Therefore, the class should be decertified; the opt-in plaintiffs should be dismissed without prejudice; and the named plaintiffs should proceed with their individual actions.

In their response, plaintiffs do not dispute that there are disparate factual and employment settings, nor do they dispute that employees use different equipment and protective gear. They contend, however, that these differences are not material because the plaintiffs are all subject to a common policy or plan, payment by production line time, which they allege violates the FLSA. Plaintiffs argue that this common policy or plan overrides or outweighs the myriad of factual and employment differences. They also contend that any defenses Koch Foods can assert will be applicable to all the plaintiffs

One of the factors material to many courts’ analysis of the plaintiffs’ factual and employment settings is whether they were all impacted by a “single decision, policy, or plan.” See Moss, 201 F.R.D. at 409-10 (citing Thiessen v. Gen. Elec. Capital Corp., 996 F.Supp. 1071, 1082 (D.Kan.1998)). The existence of this commonality may assuage concerns about plaintiffs’ otherwise varied circumstances. See Hill v. Muscogee County Sch. Dist., No. 4:03-CV-60, 2005 WL 3526669, at *3-*4 (M.D.Ga. Dec. 20, 2005) (finding that the plaintiffs “had met their burden of showing that they [were] similarly situated with regard to employment setting and job duties by presenting substantial allegations of a pattern of potential FLSA violations); Moss, 201 F.R.D. at 410 (finding that the plaintiffs’ claim that they were subjected to a common, impermissible practice trumped the disparity in their employment situations). Pep Boys, 2006 WL 2821700, at *3.

Plaintiffs have submitted evidence that they are paid by production line time and that this payment does not capture donning and doffing, waiting, sanitizing or walking. They have shown that they must be washed and dressed when they take their places on the production line, but they are not paid until the line starts to run. The evidence submitted by plaintiffs also shows that production line time does not capture the time for doffing gear at the beginning of the meal break; donning gear at the end of the meal break; or washing and sanitizing during the meal break. Koch Foods deducts thirty minutes each day from plaintiffs’ shift time for the unpaid meal break. Plaintiffs argue that because they are all subject to the same policy or plan, i.e. payment by production line time that does not capture tasks they must perform without compensation, they are similarly situated, and this commonality overcomes the factual and employment differences emphasized by Koch Foods.

In Bouaphakeo v. Tyson Foods, Inc., 564 F.Supp.2d 870 (N.D.Iowa 2008), the district court dealt with a similar circumstance. Plaintiffs were current and former employees of a pork processing plant operated by Tyson Foods who were paid on a “gang time” system. “Gang time is sometimes called ‘line time,’ ‘shift time,’ or ‘mastercard time’.” Id. at 879 n. 2. Plaintiffs, like those in this case, claimed this system violated the FLSA. The district court found that there were “some very big factual differences” among the hourly employees because they were spread out across six departments and they performed different duties under different supervisors. However, the court concluded that there was a common factor among the employees, the gang time pay system, that bound the putative plaintiffs together. The court held that the “potential plaintiffs are similarly situated if the collective action class is limited to only those production employees that are paid via gang time. Gang time, after all, is the company-wide policy that Plaintiffs claim violates the FLSA.” Id. at 900.

The court believes that in this case the common policy or practice of paying plaintiffs by production line time is the factor that binds them together. Because of this common factor, the factual differences and the variations in plaintiffs’ employment settings do not make this collective action improper. The class is limited to those workers, as specified in the notice, “whose pay was computed or is computed based in whole or in part on production line time.”  Viewed from this perspective, the argument by Koch Foods concerning its need to put on individualized defenses carries less weight as it should have a general defense to the use of this common pay practice. In addition, allowing this case to go forward as a collective action “takes into account the ‘fundamental purpose’ of the FLSA by lowering the costs to plaintiffs and efficiently resolving the issues in one proceeding.” Id.

The Sixth Circuit has specifically noted that the FLSA “must not be interpreted or applied in a narrow, grudging manner.” See Dunlop [v. Carriage Carpet Co.], 548 F.2d [139,] 144 [ (6th Cir.1977) ]. As such, the court’s decision to allow the plaintiffs to proceed collectively is in line with Congress’s determination that defendants will not always have the opportunity to pursue individual defenses against FLSA plaintiffs but, instead, must collectively defend a suit that is so pursued. See 29 U.S.C. § 216(b). Pep Boys, 2006 WL 2821700, at *8

Koch Foods argues in the alternative that if the court does not decertify this action, the court should order separate trials for the two plants, live and de-bone. Koch Foods relies on Fed.R.Civ.P. 42(b), which provides in pertinent part: “For convenience, to avoid prejudice, or to expedite and economize, the court may order a separate trial of one or more separate issues, claims, crossclaims, counterclaims, or third-party claims.”

When considering whether to order separate trials, a court “must consider several issues such as potential prejudice to the parties, potential confusion to the jury, and the relative convenience and economy which would result.”   In re Beverly Hills Fire Litig., 695 F.2d 207, 216 (6th Cir.1982) (footnote and citations omitted). In addition, “[i]t is well settled that the ordering of separate trials is within the sound discretion of the trial judge.” Id. (citations omitted); see also Climer v. Dillenbeck, No. 08-cv-11074, 2009 WL 2168867, at *1 (E.D.Mich. July 21, 2009) (quoting 9A Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 2388 (3d ed., 2008)(“It is well-established by a wealth of case law that ultimately the question of whether to conduct separate trials under Rule 42(b) should be, and is, a matter left to the sound discretion of the trial court on the basis of the circumstances of the litigation before it.”)).

The court has considered the circumstances of this case and the relevant factors set out above and finds no substantial reason for two trials. The plants are located in the same complex, and while they perform different types of jobs, the workers in both plants are paid on the basis of production line time. This common policy or practice was the primary factor in defeating decertification. The differences between the plants, like the differences between the various jobs performed by the workers, can be dealt with at trial. Therefore, the court will deny the request by Koch Foods to have separate trials for each plant.”

For the reasons stated above, the Court denied both prongs of Defendant’s Motion.

W.D.Mo.: Minor Differences In Plaintiffs’ Situations Do Not Warrant Decertification

Fast v. Applebee’s Intern., Inc.

This case was before the Court on Defendant’s Motion to Decertify the class (stage 2). The Court denied Defendant’s Motion, finding that the Plaintiffs were similarly situated, such that the case should proceed as a collective action, notwithstanding minor differences in each employees situation.

The Court identified three factors to consider on a Motion to Decertify: “(1) individual plaintiff’s disparate factual and employment settings, (2) defenses which are individual to each plaintiff, and (3) fairness and procedural considerations. See Keef v. M.A. Mortenson Co., No. 07-CV-3915 (JMR/FLN), 2009 WL 465030 (D.Minn. Feb. 24, 2009).”

Evaluating the evidence before it the Court stated, “Plaintiffs have shown that they are similarly situated with respect to their job requirements and pay provisions. First, they have demonstrated that their claims involve substantially similar factual and employment settings, despite minor variances restaurant-to-restaurant. Applebee’s applied national uniform policies and practices relevant to its servers and bartenders, including policies concerning the tip credit, manager bonuses for productivity, complaint resolution, and job descriptions. Plaintiffs performed substantially the same job tasks under national guidelines. Plaintiffs were subject to similar pay structures.

The minor differences in Plaintiffs’ situations do not warrant decertification. See generally Frank v. Gold’N’Plump Poultry, Inc ., No. 04-CV01018 (PJS/RLE), 2007 WL 2780504 (D.Minn. Sept. 24, 2007). Applebee’s focuses on differences in Plaintiffs’ situations which vary by restaurant. Any challenges which might be posed by these differences will be addressed through dividing the class into subclasses by restaurant.

Second, liability in this case turns on class-wide claims and defenses, most notably whether Applebee’s improperly took the tip credit for general maintenance and preparation work done by the class. Evidence contradicting Plaintiffs’ claims may be resolved by a finder of fact at trial. See Pendlebury v. Starbucks Coffee Co., 518 F.Supp.2d 1345, 1363 (S.D.Fla.2007) (finding that conflicts in evidence concerning the amount of time store managers spent performing nonmanagerial work did not require decertification). Both Applebee’s and the Plaintiffs benefit from having these matters resolved collectively. As to due process concerns, representative testimony is contemplated by the FLSA and Applebee’s can defend with representative testimony just as Plaintiffs can seek to prove their claims with representative testimony.

Third, fairness and other procedural considerations weigh in favor of maintaining class certification. The FLSA is a remedial statute which should be read in favor of coverage. Kelly v. Alamo, 964 F.2d 747 (8th Cir.1992). The judicial system will benefit from efficient resolution of the common issues in Plaintiffs’ claims which arise from the same alleged FLSA violations. See Hoffmann-La Roche Inc. v. Sperling, 493 U.S. 165, 170 (1989) (evaluating ADEA class). Applebee’s interest in defending Plaintiffs’ small claims individually must be balanced against the rights of Plaintiffs, many of whom could not bear the costs of individual trials to redress the alleged violations. Id.

Plaintiffs have established that they are sufficiently similarly-situated. No fairness or procedural considerations raised by Applebee’s warrants disturbing the Court’s conclusion that this case should proceed to trial collectively.” Accordingly the Court denied Defendant’s Motion to Decertify.

E.D.Cal.: Settlement Of Rule 23 And 216(b) Class Hybrid Action Requires Simultaneous Notice; Opt-out Notice Alone Insufficient To Bind Class On FLSA Claims

Wright v. Linkus Enterprises, Inc.

Plaintiffs filed this action against Defendant for violation of various state and federal labor laws. Before the Court was Plaintiffs’ Unopposed Motion for Preliminary Approval of Settlement of their hybrid action, which consisted of both a Federal Rule of Civil Procedure 23(b)(3) class action and a Federal Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 216(b), collective action. Though the Motion was essentially unopposed, the parties did disagree as to one issue pertaining to release of claims by currently absent parties, regarding notice required to the class members (Defendant proposed an opt-out Rule 23 notice alone). The Court resolved that dispute by ordering that the parties’ existing agreement and forms be modified to provide both “opt-out” procedures as allowed under Rule 23 and “opt-in” procedures as required by the FLSA.

Explaining that opt-in notice as well as opt-out notice must be provided to class members in such a hybrid action, the Court stated, “According to Defendants, the Rule 23 opt-out procedures, under which potential plaintiffs are bound by the terms of the settlement unless they affirmatively opt out, should apply to both the state law claims and to those claims arising under the FLSA. Plaintiffs disagree arguing that, while Rule 23 applies to their state law claims, the FLSA requires potential plaintiffs to opt-in to this action in order to release any claims they may have under the FLSA. The Court agrees with Plaintiffs.

In a collective action brought under the FLSA, “[n]o employee shall be a party plaintiff to any such action unless he gives his consent in writing to become such a party and such consent is filed in the court in which such action is brought.”29 U.S.C. § 216(b). Congress enacted this provision for the purpose of “limiting private FLSA plaintiffs to employees who asserted claims in their own right and freeing employers of the burden of representative actions.” Hoffman-La Roche Inc. v. Sperling, 493 U.S. 165, 173 (1989).

Conversely, a class action brought pursuant to Rule 23(b)(3) mandates notice informing potential plaintiffs that they can avoid being bound by the terms of a settlement or judgment if they so inform the court. SeeFed.R.Civ.P. 23(c)(2)(B)(v). Thus, a plaintiff that does not affirmatively “opt-out” from the class may be bound by the disposition of the case, regardless of whether he received actual notice. Amchem Products, Inc. v. Windsor, 521 U.S. 591, 614-15 (1997).

In Kakani v. Oracle Corp., the Northern District examined the relationship between the two regimes and held that the use of “opt-out” notice would violate the FLSA.2007 WL 1793774, at *7 (N.D. Cal. June 19, 2007). That court stated that it would have been “unconscionable to try to take away the FLSA rights of all workers, whether or not they choose to join in affirmatively.”Id. (emphasis in original).

Defendants’ authority to the contrary is inapposite. First, Defendants cite Hoffman-La Roche Inc. for the proposition that district courts possess discretion over the procedural methods used to join multiple parties in a single case. However, Defendants interpret Hoffman-La Roche too broadly. That case merely established that district courts may authorize notification of potential plaintiffs regarding the opportunity to “opt-in” to a collective action. 493 U.S. at 169. Hoffman La Roche does not stand for the proposition that this Court may substitute Rule 23 “opt-out” notice for the “opt-in” notice expressly required by 29 U.S.C. § 216(b).

Defendants also cite two district court opinions, one in which the court stated without analysis that “opt-out” procedures would be used to settle both FLSA and state law claims, and one in which the federal court simply refused to enjoin a state court from releasing FLSA claims as part of a settlement that utilized “opt-out” notice. Frank v. Eastman Kodak Co., 228 F.R.D. 174, 179 (W.D.N.Y.2005); Dibel v. Jenny Craig, Inc., 2007 WL 2381237, at * 1 (S.D. Cal Aug. 10, 2007). This Court finds neither of these cases persuasive and now holds that “opt-in” procedures must be provided for the release of the instant FLSA claims.

9th Cir.: Lead Plaintiffs Who Voluntarily Settle Their FLSA Claims May Not Proceed On Behalf Of The Putative Class Thereafter

Smith v. T-Mobile USA, Inc.

The case was before the Court on Plaintiffs’ appeal of an Order, on reconsideration, denying Plaintiffs’ Motion for Conditional Certification. Appellants Mentha Smith and Justin Gossett — the only named plaintiffs in this case — voluntarily settled their Fair Labor Standards Act claims before this appeal was taken. The Court held, “that such plaintiffs no longer have a personal stake in the outcome…” and “thus rendered moot.” Accordingly, the Court dismissed the appeal for lack of jurisdiction.

“The district court initially granted the motion for conditional certification. However, it reversed its decision after T-Mobile filed a motion for reconsideration. Plaintiffs filed a motion for reconsideration, which the district court denied. Following that ruling, Smith and Gossett voluntarily accepted an offer of judgment from T-Mobile and settled their claims. A stipulated judgment set out the amounts T-Mobile agreed to pay to plaintiffs as “full, complete, and final satisfaction of all [their] individual claims as stated in this action.” The parties agreed that Chavez was not entitled to any payment since all the claims he could have asserted were fully satisfied in connection with the settlement of a prior lawsuit. T-Mobile also agreed to pay plaintiffs’ counsel $10,000 as “full, complete and final satisfaction of any claim they or their clients may have for attorneys’ fees and/or costs of litigation in connection with the individual claims asserted by their clients.”

Before reaching settlement, the parties represented to the district court that they discussed whether there existed a mechanism by which plaintiffs’ individual claims could be settled while still preserving their ability to appeal the ruling denying FLSA certification. They eventually signed a stipulated judgment that stated: At Plaintiffs’ request, . . . Plaintiffs’ acceptance of this Offer shall be expressly subject to Plaintiffs[‘]. . . reservation of rights (a) to take an appeal, as contemplated in Dugas v. Trans Union Corp., 99 F.3d 724 (5th Cir. 1996), and the cases cited therein, of the Court’s earlier Order denying their motion for conditional certification of this action as a collective action under the Federal Fair Labor Standards Act(“FLSA”), and (b) in the event such an appeal is pursued, is successful and the case is remanded to this Court for further proceedings, to continue to prosecute the case in accordance with the order of remand, with the understanding, however, that their individual claims have been fully and finally compromised, settled and dismissed, and that these claims may not be reinstated or reopened, and that no further claimsof any kind may be asserted on their individual behalf. In accepting this Offer, Plaintiffs and their counsel acknowledge that they have relied solely on their own legal analysis and not on any representation by Defendants or their counsel regarding the legal effect of this Offer and/or their standing to appeal. The district court entered judgment in accordance with the parties’ stipulations. Plaintiffs then timely filed a notice of appeal.”

Distinguishing this case from a Rule 23 class action the Court explained,We need not decide whether a Rule 23 class action plaintiff who settles his individual claims can preclude mootness by affirmatively preserving his claim to appeal in the settlement agreement and then asserting a procedural right to represent a class. Compare, e.g., Richards v. Delta Air Lines, Inc., 453 F.3d 525, 528-29 (D.C. Cir. 2006) (finding reservation sufficient to preclude mootness) with, e.g., Potter, 329 F.3d at 613-14 (finding reservation insufficient to preclude mootness); cf. Seidman v. City of Beverly Hills, 785 F.2d 1447, 1448 (9th Cir. 1986) (also declining to address this issue). We do not decide this issue because here, structural distinctions between a FLSA collective action and a Rule 23 class action foreclose appellants’ claims of a continuing personal stake. Accordingly, we join our sister circuits in holding that a FLSA plaintiff who voluntarily settles his individual claims prior to being joined by opt-in plaintiffs and after the district court’s certification denial does not retain a personal stake in the appeal so as to preserve our jurisdiction. See Sandoz v. Cingular Wireless LLC, 553 F.3d 913, 915-19 (5th Cir. 2008); Cameron-Grant v. Maxim Healthcare Servs., Inc., 347 F.3d 1240, 1247-49 (11th Cir. 2003).

A plaintiff seeking FLSA collective action certification does not have a procedural right to represent a class in the absence of any opt-in plaintiffs. Section 216(b) of the FLSA, the collective action provision, provides that no employee other than the plaintiff “shall be a party plaintiff to [a FLSA collective] action unless he gives his consent in writing to become such a party and such consent is filed in the court in which such action is brought.” Thus, while the existence of a Rule 23 class action “does not depend in theory on the participation of other class members,” who can either opt in or opt out, a FLSA case cannot become a collective action unless other plaintiffs affirmatively opt in by giving written and filed consent. Cameron-Grant, 347 F.3d at 1248-49. A FLSA plaintiff therefore has no independent right to represent a class that would preserve a personal stake in the outcome for jurisdictional purposes; his right to represent a class depends entirely on whether other plaintiffs have opted in. This key difference between a Rule 23 opt-out class action and a FLSA opt-in collective action cannot be overlooked for purposes of determining our jurisdiction to entertain this appeal.

Because plaintiffs did not have a right to represent a class, they were not acting in the capacity of class representatives at the time of settlement as they now claim. Compare Dugas v. Trans Union Corp., 99 F.3d 724, 726-29 (5th Cir.1996). Thus, Smith and Gossett’s acceptance of T-Mobile’s offer of judgment when no other plaintiffs had opted in disposed of the only claims they could assert at the time. See Sandoz, 553 F.3d at 919 (“This means that when Cingular made its offer of judgment, Sandoz represented only herself, and the offer of judgment fully satisfied her individual claims.”).

For the same reasons, Smith and Gossett’s argument that they continue to retain a personal stake in the recovery of attorneys’ fees and costs relative to the class claims, the “class share” of any liquidated or punitive damages, and the enhancement to which a class representative is entitled if the claims ultimately prevail also fails. Plaintiffs’ attorneys agreed to accept $10,000 as full satisfaction of any claim they had to attorneys’ fees and costs of litigation in connection with the individual claims. At the time they settled, plaintiffs could only assert individual claims because they had no right to represent a class, as to reiterate, they were the only plaintiffs in the case. Attorneys’ fees therefore do not provide the plaintiffs with the personal stake required for a case or controversy.

Any enhancement a district court may order for plaintiffs’ service as class representatives also does not create a personal interest in the case, as any enhancement awarded would relate only to costs of litigation brought about by the class litigation itself.3 They similarly had no right to liquidated and punitive damages that a district court might award if other plaintiffs opted in. Because the plaintiffs voluntarily settled all of their claims after the district court’s denial of certification, they have failed to retain a personal stake in the litigation and their case is moot.”

Accordingly, the Court dismissed the appeal for lack of jurisdiction.

D.N.J.: Defendant’s Motion To Dismiss Opt-out NJWL Claims As Incompatible With FLSA Opt-in Claims Denied At Pleading Stage

Perry v. Freedom Mortg. Corp.

This case was before the Court on Defendant’s motion to dismiss or strike count II of Plaintiffs Complaint, which alleged overtime law violations pursuant to the New Jersey Wage Law (“NJWL”). The Court denied Defendant’s motion, explaining that it was premature at the pleading stage. This case is of note, because there is conflict of authority within the 3rd Circuit, as to whether Rule 23 “opt-out” classes and 216(b) “opt-in” classes can ever be brought together, or whether the Court should necessary deny its inherent supplemental authority necessarily in such cases.

“The underlying Complaint in this case is a putative class claim, filed by Plaintiff, contending that Freedom violated the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201 et seq. and the New Jersey’s Wage Law (“NJWL”), N.J.S.A. 34:11-56a et seq. by improperly classifying mortgage loan officers to prevent them from receiving overtime pay for work in excess of 40 hours a week. In its motion to dismiss Plaintiff’s NJWL claim, Freedom argues that Plaintiff’s FLSA and NJWL claims are legally incompatible. This Court concurs with and adopts Judge Linares’ reasoning in Freeman v. Hoffman-Laroche, Inc. No. 07-1503, 2007 U.S. Dist. LEXIS 92589, at * 70*10 (N.J.D. Dec. 18, 2007), determining that dismissal of a cause of action under NJWL solely for “inherent incompatibility” with FLSA is not appropriate.

Freedom’s additional argument is that the Court should dismiss Count II because Plaintiff cannot establish the “superiority” test required for class certification under Federal Rule of Civil Procedure 23(b)(3). The Court holds that this argument is premature. The parties have conducted no discovery. No motions for class certification have been filed. The Court will be in a much better position to address this issue at the class certification stage.”