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3d Cir.: Defendant May Not “Pick Off” a Putative Collective Action by Tendering Full Relief to Named-Plaintiff at Outset
Symczyk v. Genesis Healthcare Corp.
In an issue that has now been addressed by several circuits in recent years, the Third Circuit was presented with the question of whether a defendant-employer in an FLSA case may “pick off” a putative collective action (prior to conditional certification), where it tenders full relief to the named-Plaintiff. Consistent with other circuits to have taken up this issue, the Third Circuit held that a defendant may not do so and that such an offer of judgment (OJ) does not moot a putative collective action. As such, the court reversed the decision below, dismissing the case on mootness grounds.
In dismissing the case initially, the trial court below reasoned, “[Plaintiff] does not contend that other individuals have joined her collective action. Thus, this case, like each of the district court cases cited by Defendants, which concluded that a Rule 68 offer of judgment mooted the underlying FLSA collective action, involves a single named plaintiff. In addition, Symczyk does not contest Defendants’ assertion that the 68 offer of judgment fully satisfied her claims….”
After discussing the application of full tender relief offers in the Rule 23 context, the court concluded that the same reasoning precludes picking off the named-plaintiff in a representative action brought pursuant to 216(b). Instead, the court held that a motion for conditional certification in an FLSA case made within a reasonable time “relates back” to the time of the filing of the Complaint and thus such a representative action may proceed, notwithstanding to purportedly “full tender” offer to the named-plaintiff. The court explained:
“Although the opt-in mechanism transforms the manner in which a named plaintiff acquires a personal stake in representing the interests of others, it does not present a compelling justification for limiting the relation back doctrine to the Rule 23 setting. The considerations that caution against allowing a defendant’s use of Rule 68 to impede the advancement of a representative action are equally weighty in either context. Rule 23 permits plaintiffs “to pool claims which would be uneconomical to litigate individually.” Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 809, 105 S.Ct. 2965, 86 L.Ed.2d 628 (1985). Similarly, § 216(b) affords plaintiffs “the advantage of lower individual costs to vindicate rights by the pooling of resources.” Hoffmann–La Roche, 493 U.S. at 170. Rule 23 promotes “efficiency and economy of litigation.” Crown, Cork & Seal Co. v. Parker, 462 U.S. 345, 349, 103 S.Ct. 2392, 76 L.Ed.2d 628 (1983). Similarly, “Congress’ purpose in authorizing § 216(b) class actions was to avoid multiple lawsuits where numerous employees have allegedly been harmed by a claimed violation or violations of the FLSA by a particular employer.” Prickett v. DeKalb Cnty., 349 F.3d 1294, 1297 (11th Cir.2003).
When Rule 68 morphs into a tool for the strategic curtailment of representative actions, it facilitates an outcome antithetical to the purposes behind § 216(b). Symczyk’s claim-like that of the plaintiff in Weiss—was “acutely susceptible to mootness” while the action was in its early stages and the court had yet to determine whether to facilitate notice to prospective plaintiffs. See Weiss, 385 F.3d at 347 (internal quotation marks omitted). When the certification process has yet to unfold, application of the relation back doctrine prevents defendants from using Rule 68 to “undercut the viability” of either’ type of representative action. See id. at 344.
Additionally, the relation back doctrine helps safeguard against the erosion of FLSA claims by operation of the Act’s statute of limitations. To qualify for relief under the FLSA, a party plaintiff must “commence” his cause of action before the statute of limitations applying to his individual claim has lapsed. Sperling v. Hoffmann–La Roche, Inc., 24 F.3d 463, 469 (3d Cir.1994). For a named plaintiff, the action commences on the date the complaint is filed. 29 U.S.C. § 256(a). For an opt-in plaintiff, however, the action commences only upon filing of a written consent. Id. § 256(b). This represents a departure from Rule 23, in which the filing of a complaint tolls the statute of limitations “as to all asserted members of the class” even if the putative class member is not cognizant of the suit’s existence. See Crown, Cork & Seal Co. 462 U.S. at 350 (internal quotation marks omitted). Protracted disputes over the propriety of dismissal in light of Rule 68 offers may deprive potential opt-ins whose claims are in jeopardy of expiring of the opportunity to toll the limitations period—and preserve their entitlements to recovery—by filing consents within the prescribed window.
In sum, we believe the relation back doctrine helps ensure the use of Rule 68 does not prevent a collective action from playing out according to the directives of § 216(b) and the procedures authorized by the Supreme Court in Hoffmann–La Roche and further refined by courts applying this statute. Depriving the parties and the court of a reasonable opportunity to deliberate on the merits of collective action “conditional certification” frustrates the objectives served by § 216(b). Cf. Sandoz, 553 F.3d at 921 (explaining “there must be some time for a[n FLSA] plaintiff to move to certify a collective action before a defendant can moot the claim through an offer of judgment”). Absent undue delay, when an FLSA plaintiff moves for “certification” of a collective action, the appropriate course—particularly when a defendant makes a Rule 68 offer to the plaintiff that would have the possible effect of mooting the claim for collective relief asserted under § 216(b)—is for the district court to relate the motion back to the filing of the initial complaint.
Upon remand, should Symczyk move for “conditional certification,” the court’ shall consider whether such motion was made without undue delay, and, if it so finds, shall relate the motion back to December 4, 2009the date on which Symczyk filed her initial complaint. If (1) Symczyk may yet timely seek “conditional certification” of her collective action, (2) the court permits the case to move forward as a collective action (by virtue of Symczyk’s satisfaction of the “modest factual showing” standard), and (3) at least one other similarly situated employee opts in, then defendants’ Rule 68 offer of judgment would no longer fully satisfy the claims of everyone in the collective action, and the proffered rationale behind dismissing the complaint on jurisdictional grounds would no longer be applicable. If, however, the court finds Symczyk’s motion to certify would be untimely, or otherwise denies the motion on its merits, then defendants’ Rule 68 offer to Symczyk—in full satisfaction of her individual claim—would moot the action.
For the foregoing reasons, we will reverse the judgment of the District Court and remand for proceedings consistent with this opinion.”
Thus, while ultimately the OJ might have the effect of mooting the case, it could not do so prior to a reasonable opportunity to plaintiff of seeking conditional certification of same.
Click Symczyk v. Genesis Healthcare Corp. to read the entire decision.
11th Cir.: Board of Dental Examiners Not “Arm of the State” Entitled to Sovereign Immunity
***** EDITOR’S UPDATE *****:
On July 13, 2012, the Eleventh Circuit granted the Board of Dental Examiners of Alabama’s motion for rehearing, based on a subsequent decision of Alabama’s highest court which held that the Board was in fact an “arm of the state.” As they had in the prior decision, the Eleventh Circuit deferred to the courts of Alabama. Since a higher court in Alabama had ruled that the Board was an “arm of the state,” the Eleventh Circuit reversed itself (and the court below) and entered judgment on behalf of the Board holding that it was sovereign immune as an “arm of the state” of Alabama. Thus, the initial Opinion discussed below is no longer good law.
Click Versiglio v. Board of Dental Examiners of Alabama to read the entire substituted Opinion on Petition for Rehearing.
Versiglio v. Board of Dental Examiners of Alabama
This case was before the Eleventh Circuit on the Board’s appeal asserting that the court below erred when it held that it was not subject to Eleventh Amendment immunity from the FLSA as an “arm of the state.” Rejecting this contention and affirming the decision below, the Eleventh Circuit relied, almost entirely, on the fact that the highest court of Alabama had previously held that the Board was not entitled to Eleventh Amendment immunity.
The Court summarized the issue before it as follows:
“Appellant Board of Dental Examiners of Alabama (the “Board”) appeals the district court’s judgment denying it sovereign immunity protection as an arm of the state of Alabama. Appellee Natalie Versiglio contends that the Board is sufficiently independent from the state of Alabama, that it is not entitled to Eleventh Amendment immunity, and that her claim under the Fair Labor Standards Act should be allowed to continue. The Supreme Court in Alden v. Maine settled the matter of state employees suing under the FLSA, writing, “We hold that the powers delegated to Congress under Article I of the United States Constitution do not include the power to subject nonconsenting States to private suits for damages in state courts. We decide as well that the State of Maine has not consented to suits for overtime pay and liquidated damages under the FLSA.” 527 U.S. 706, 712, 119 S.Ct. 2240, 2246 (1999). Thus, the question before this court is whether the Board is an arm of the state. For the reasons stated below, we conclude that at this time it is not and affirm the judgment of the district court.”
Discussing the parties assertions regarding the applicability of the Eleventh Amendment to Defendant the Eleventh Circuit, the court appeared to find Board’s arguments more compelling. Specifically, the court noted that in creating the Board, the Alabama legislature made specific findings that supported the argument that the Board was an “arm of the state.” Further, the Eleventh Circuit rejected the Plaintiffs’ arguments that Board’s independence- including the composition of its Board and its discretion to spend its funds- supported the finding that it was not an “arm of the state,” based on prior jurisprudence. Curiously, the court also questioned the Plaintiffs’ assertion that the State treasury was not implicated by the case before it. Instead, the court reasoned that- despite the fact that the State does not allocate, administer or collect the funds used by the Board- ultimately the State would likely have to pay any judgment.
Notwithstanding all of the above, the court still concluded that that the Board was not subject to Eleventh Amendment immunity, but relied almost entirely on a decision by Alabama’s highest court in reaching its holding. The court reasoned:
“Despite the strength of the Board’s claim of sovereign immunity under the Miccosukee test, one factor weighs heavily against it. On April 1, 2011, the Court of Civil Appeals of Alabama released its opinion in Wilkinson v. Board of Dental Examiners of Alabama, 2011 WL 1205669, 2011 Ala. Civ.App. LEXIS 88 (Ala. Civ.App. April 1, 2011). FN3 In its opinion, the state appeals court conducted the first substantial analysis by a state court of the Board’s status as a state agency. FN4 The Board argued that it was immune from suit in state court pursuant to Article 1, Section 14 of the Alabama Constitution. That section provides that “the State of Alabama shall never be made a defendant in any court of law or equity.” Alabama courts have construed this immunity to extend to arms of the state. Armory Comm’n v. Staudt, 388 So.2d 991, 993 (Ala.1980). The test for entities seeking immunity is much like this court’s test: whether “a lawsuit against a body created by legislative enactment is a suit against the state depends on the character of power delegated to the body, the relation of the body to the state, and the nature of the function performed by the body.” Id. Applying this test, the Court of Civil Appeals examined many of the provisions discussed above, concluding that the Board is not an arm of the state and thus “is not entitled to § 14 immunity.” Wilkinson, 2011 Ala. Civ.App. Lexis 88 at *16, 2011 WL 1205669 at *5.
This court gives great deference to how state courts characterize the entity in question. This practice is in keeping with the ordinary deference granted state courts when they interpret matters of state concern. See Silverberg v. Paine, Webber, Jackson & Curtis, Inc., 710 F.2d 678, 690 (11th Cir.1983) (“A federal court applying state law is bound to adhere to decisions of the state’s intermediate appellate courts absent some persuasive indication that the state’s highest court would decide the issue otherwise.”). Federal courts are often more skeptical of state court decisions involving issues of sovereign immunity, as otherwise “[a] state would have too much self-interest in extending sovereign immunity to as many of its agencies and corporate creations as possible.” Miller–Davis Co. v. Illinois State Toll Highway Auth., 567 F.2d 323, 330 (7th Cir.1977). However, that concern is obviated when, as here, the state court finds that an entity is not an arm of the state. Id. (“Especially when a state supreme court does not extend immunity but, rather, holds that an entity is not to be deemed the state for purposes of sovereign immunity, we think the federal courts must pay careful attention to the state opinion.”).
Finding that the Board is entitled to sovereign immunity would require this court to interpret Alabama law in a way that is diametrically opposed to the findings of the highest state court to consider the issue. Such a ruling would also create the incongruous result of having a “state agency” that is immune from suit under federal law but not under state law. Cf. Alden, 527 U.S. at 793 n.29, 119 S.Ct. at 2285 n.29 (noting in a different context that the Framers of the Eleventh Amendment “would have considered it absurd that States immune in federal court could be subjected to suit in their own courts”). As such, we believe that a holding by this court that the Board is an arm of the state for purposes of sovereign immunity would be inappropriate.
For the aforementioned reasons, we affirm the district court’s finding that the Board is not entitled to sovereign immunity protection as an arm of the state of Alabama.”
Click Versiglio v. Board of Dental Examiners of Alabama to read the entire decision.
4th Cir.: Job Applicant Lacked Standing Under § 215 for Retaliation Against Prospective Employer; Protections Extend Only to “Employees”
Dellinger v. Science Applications International Corp.
Plaintiff commenced this action under the Fair Labor Standards Act of 1938 (“FLSA”) against Science Applications International Corporation which, she alleges, retaliated against her, in violation of the FLSA’s anti-retaliation provision, 29 U.S.C. § 215(a)(3), by refusing to hire her after learning that she had sued her former employer under the FLSA. As discussed here, the district court granted Science Applications’ motion to dismiss, concluding that Plaintiff was not an “employee” of Science Applications, as defined in the FLSA, and that the FLSA’s anti-retaliation provision does not cover prospective employees. On appeal, Dellinger contended that the district court’s reading of the statute was too narrow and that the FLSA’s anti-retaliation provision protects any employee that has been the victim of FLSA retaliation by “any person,” including future employers. Affirming the dismissal, the Fourth Circuit concluded that the FLSA gives an employee the right to sue only his or her current or former employer and that a prospective employee cannot sue a prospective employer for retaliation.
Rejecting the common sense approach proffered by the Plaintiff (and supported by the DOL, who filed an Amicus Brief in support of the Plaintiff), the Fourth Circuit reasoned:
“While § 215(a)(3) does prohibit all “persons” from engaging in certain acts, including retaliation against employees, it does not authorize employees to sue “any person.” An employee may only sue employers for retaliation, as explicitly provided in § 216(b). The use of the term “person” in § 215(a) is attributable to the structure of the provision, which prohibits a number of separate acts in addition to retaliation, not all of which are acts performed by employers. For instance, § 215(a)(1) prohibits any person from transporting “any goods in the production of which any employee was employed in violation of section 206 [minimum wages] or section 207 [maximum hours] of this title.” Thus, Congress prohibited the shipment of goods produced by employees who are paid in violation of the Act, and for enforcement, it authorized the criminal prosecution of any “person” violating the prohibition. See 29 U.S.C. § 216(a). Just as there is no remedy for an employee to sue such a shipper, there is also no remedy for an employee to sue anyone but his employer for violations of the anti-retaliation provision. Accordingly, if the person retaliating against an employee is not an employer, the person is not subject to a private civil action by an employee under § 216(b).
Considering the Act more broadly, we cannot overlook the fact that the FLSA was intended at its core to provide minimum wages and maximum hours of work to ensure employees a minimum standard of living necessary for “health, efficiency, and general well-being of workers.” 29 U.S.C. § 202(a). The anti-retaliation provision is included, not as a free-standing protection against any societal retaliation, but rather as an effort “to foster a climate in which compliance with the substantive provisions of the [FLSA] would be enhanced.” Mitchell v. Robert DeMario Jewelry, Inc., 361 U.S. 288, 293 (1960). Thus, the anti-retaliation provision was meant to ensure that employees could sue to obtain minimum wages and maximum hours from their employers without the employers taking adverse action against them for the exercise of those rights. This purpose is inherent in the employment relationship, which is the context in which the substantive provisions operate.
We have been unable to find any case that extends FLSA protections to applicants or prospective employees. Indeed, prior cases have reached the conclusion that we have, applying the anti-retaliation provision only within the employer-employee relationship. See, e.g., Glover v. City of North Charleston, S.C., 942 F.Supp. 243, 245 (D.S.C.1996) (noting that the “any employee” language in the anti-retaliation provision mandates that the plaintiff have an employment relationship with the defendant); Harper v. San Luis Valley Reg’l Med. Ctr., 848 F.Supp. 911 (D.Col.1994) (same); cf. Darveau v. Detecon, Inc., 515 F.3d 334, 340 (4th Cir.2008) (requiring, as part of a prima facie FLSA retaliation case, a showing of “adverse action by the employer”); Dunlop v. Carriage Carpet Co., 548 F.2d 139 (6th Cir.1977) (holding that an employee could sue his former employer when the former employer retaliated against the employee by advising a prospective employer that the employee had previously filed an FLSA suit).
We are sympathetic to Dellinger’s argument that it could be problematic to permit future employers effectively to discriminate against prospective employees for having exercised their rights under the FLSA in the past. The notion, however, that any person who once in the past sued an employer could then sue any prospective employer claiming that she was denied employment because of her past litigation would clearly broaden the scope of the FLSA beyond its explicit purpose of fixing minimum wages and maximum hours between employees and employers. We are, of course, not free to broaden the scope of a statute whose scope is defined in plain terms, even when “morally unacceptable retaliatory conduct” may be involved. Ball v. Memphis Bar–B–Q Co., 228 F.3d 360, 364 (4th Cir.2000).
Dellinger urges us to extend the FLSA’s definition of “employee” to protect job applicants, pointing to other statutes under which applicants are protected. In particular, she refers to the Energy Reorganization Act, the National Labor Relations Act (“NLRA”), the Occupational Safety and Health Act (“OSHA”), and the Pipeline Safety Improvement Act. Reference to these statutes, however, does not advance her cause. The case cited by Dellinger with respect to the Energy Reorganization Act merely assumed, without deciding, that an applicant was covered under that Act. See Doyle v. Secretary of Labor, 285 F.3d 243, 251 n. 13 (3d Cir.2002). While the NLRA does protect prospective employees from retaliation, the Act itself defines “employee” more broadly than does the FLSA, providing that the term “employee” “shall not be limited to the employees of a particular employer” unless explicitly stated. See 29 U.S.C. § 152(3). With respect to OSHA and the Pipeline Safety Improvement Act, regulations implementing those statutes have been promulgated to extend protections to prospective employees. See 29 C.F.R. § 1977.5(b) (OSHA); 29 C.F.R. § 1981.101 (Pipeline Safety Improvement Act). The Secretary of Labor has not, however, promulgated a similar regulation for the FLSA.
Because we conclude that the text and purpose of the Fair Labor Standards Act of 1938 link the Act’s application closely to the employment relationship and because the text of the applicable remedy allows for private civil actions only by employees against their employers, we hold that the FLSA anti-retaliation provision, 29 U.S.C. § 215(a)(3), does not authorize prospective employees to bring retaliation claims against prospective employers. The judgment of the district court is accordingly affirmed.”
In a must-read strong dissent, authored by Judge King, he indicated that he would have reversed the dismissal at the district court below. Following a lengthy discussion of the parallels in this case to the Robinson case- in which the Supreme Court reversed an en banc decision of the Fourth Circuit and concluded that similar statutory text in Title VII should be read expansively to protect former employees- Judge King explained that he would have held that job applicants are protected by § 215. Judge King challenges the majority who he asserts ignored binding opinions from both the Supreme Court and the Fourth Circuit in favor of what he calls their “textualist” approach:
“It is unlawful under the FLSA ‘for any person,’ not just employers, ‘to discharge or in any other manner discriminate against any employee because such employee has filed any complaint or instituted … any proceeding under or related to this chapter[.]’ 29 U.S.C. § 215(a), –(a)(3). The Act criminalizes willful violations of § 215, and it also provides civil recourse to ’employees affected’ by the retaliatory acts described in subsection (a)(3). See § 216(a), –(b). Affected employees are entitled to “legal or equitable relief as may be appropriate to effectuate the purposes of” the antiretaliation provision, ‘including without limitation employment, reinstatement, promotion, and the payment of wages lost and an additional equal amount as liquidated damages.’ § 216(b). Liability attaches to ‘[a]ny employer,’ id., which ‘includes any person acting directly or indirectly in the interest of an employer in relation to an employee .’ § 203(d).
A plain reading of these several sections of the Act, taken together, indicates that Congress was concerned enough with retaliatory conduct to impose criminal penalties on actual decisionmakers (“any person”), regardless of whether that person could also be considered the employing entity or was acting at the entity’s behest. Civil liability for retaliation, on the other hand, is reserved for employers and their agents who are sued by an “employee,” which generally means “any individual employed by an employer.” § 203(e)(1). Science Applications is undoubtedly an employer subject to the Act, and Ms. Dellinger broadly qualifies as an employee, having once sued her former employer for allegedly violating the FLSA. It does not follow perforce, however, that “Dellinger could only sue Science Applications if she could show … that Science Applications was her employer.” Ante at 7 (emphasis added).
It would hardly be a stretch to interpret the FLSA to permit Ms. Dellinger’s action, particularly considering that other, similar remedial statutes already apply to employees in her situation…
…I am therefore left to wonder why, in the face of a statute’s relative silence as to a material enforcement term, we must presume that a particular avenue is foreclosed because it is not explicitly mentioned, rather than permitted because it is not specifically prohibited. See Healy Tibbitts Builders, Inc. v. Dir., Office of Workers’ Comp. Programs, 444 F.3d 1095, 1100 (9th Cir.2006) (“[F]aced with two reasonable and conflicting interpretations, [an act] should be interpreted to further its remedial purpose.”). The majority’s decision today bucks the trend begun by Robinson, which is indisputably toward an expansive interpretation of protective statutes like Title VII and the FLSA to thwart employer retaliation. See, e.g., Gomez–Perez v. Potter, 553 U.S. 474, 491 (2008) (concluding that, under applicable provision of ADEA, federal employee may state claim for retaliation as form of discrimination); CBOCS West, Inc. v. Humphries, 553 U.S. 442, 457 (2008) (ruling that anti-discrimination provisions of 42 U.S.C. § 1981 encompass action for retaliation); Jackson v. Birmingham Bd. of Educ., 544 U.S. 167, 178 (2005) (same with respect to Title IX).
Behind this impressive array of authority is the Supreme Court’s acknowledgment of the vital role that antiretaliation provisions play in regulating a vast range of undesirable behaviors on the part of employers. See, e.g., Crawford v. Metro. Gov’t of Nashville & Davidson Cnty., Tenn., 129 S.Ct. 846, 852 (2009) (observing that fear of retaliation is primary motivation behind employees’ failure to voice concerns about bias and discrimination and reversing Sixth Circuit’s judgment in employer’s favor as inconsistent with primary objective of Title VII to avoid harm to employees) (citations omitted); Burlington N. & Santa Fe Ry. Co. v. White, 548 U.S. 53, 57 (2006) (explaining that liability for Title VII retaliation extends well beyond those actions affecting terms and conditions of employment to include employer’s acts outside workplace that are “materially adverse to a reasonable employee or job applicant”). There is no reason to doubt that similar concerns obtain in the FLSA context, as expressed in Reyes–Fuentes v. Shannon Produce Farm, 671 F.Supp.2d 1365, 1368 (S.D.Ga.2009) (“Congress chose to rely upon information and complaints from employees seeking to vindicate their rights. Plainly, effective enforcement could thus only be expected if employees felt free to approach officials with their grievances”) (citations omitted).”
Given the strong dissent of Judge King, it is possible if not likely that this case might be headed to the Supreme Court. This is certainly one to keep an eye on.
Click Dellinger v. Science Applications International Corp. to read the entire Opinion and Dissent.
9th Cir.: Defendant in Putative Wage and Hour Class Action May Not “Pick Off” Class With OJ to Named Plaintiff
Pitts v. Terrible Herbst, Inc.
This case was before the Ninth Circuit on any issue that has become more and more prevalent in recent years, with the increased wage and hour putative class and collective action filings. Specifically, the issue before the Ninth Circuit was “whether a rejected offer of judgment (OJ) for the full amount of a putative class representative’s claim moots a class action complaint where the offer precedes the filing of a motion for class certification.” The Ninth Circuit held that it does not and a defendant may not “pick off” a class by making such an offer to the named-plaintiff alone.
The procedural history in the case is worth discussing, because there were other issues, not discussed in detail, also addressed in the opinion. The trial court had not set a bright-line deadline for filing a motion for class certification simultaneously. And, because the defendant failed to provide plaintiff with the records pertaining to the putative class members during the initial discovery period, plaintiff filed a motion to compel and sought to extend the discovery deadline as well. The court ultimately granted both motions. However, while it held that the OJ did not moot the claim, it nonetheless dismissed the case, because the plaintiff had failed to move for class certification as of the initial discovery deadline. This appeal ensued.
After reviewing surveying applicable case law from around the country, the court held that the district court below properly concluded that a defendant may not “pick off” a putative class action, by tendering payment to the named-plaintiff alone.
Other issues the court discussed included whether state law class actions (Rule 23 classes) are “inherently incompatable” with FLSA opt-in actions. However, because the plaintiff had volutarily dismissed his FLSA claims at the lower court, the Ninth Circuit declined to address this hot-button issue, addressed earlier in the year by the Seventh Circuit and currently pending before the Third Circuit. The court did rule however, that the court below erred in dismissing the case based on plaintiff’s perceived failure to move for class certification in a timely manner. On this issue the Ninth Circuit opined, “[w]ithout a clear statement from the district court setting a deadline for the filing of the motion for class certification, Pitts could not predict that he was expected to file his motion by the end of the initial discovery deadline.”
Click Pitts v. Terrible Herbst, Inc. to read the entire decision.
M.D.Tenn.: Where Employees Believed They Were Required to Sign WH-58 and/or Unaware of Private Lawsuit Regarding Same Issues, Waivers Null & Void
Woods v. RHA/Tennessee Group Homes, Inc.
This case was before the court on a variety of motions related to the plaintiffs’ request for conditional certification and for clarification as to the eligible participants in any such class. The case arose from plaintiffs’ claims that defendants improperly automatically deducted 30 minutes for breaks that were not provided to them. Of interest here, during the time the lawsuit was pending, the DOL was also investigating defendants regarding the same claims. Shortly after the lawsuit was commenced, the DOL made findings and recommendations to the defendants, in which it recommended payments of backwages to certain employees that were also putative class members in the case. As discussed here, the defendants then made such payments to the putative class members, but required that all recipients of backwage payments sign a WH-58 form (DOL waiver), which typically waives an employees claims covered by the waiver. Subsequently, the plaintiffs sought to have the WH-58’s declared null & void and asserted that any waiver was not knowing and/or willful as would be required to enforce. The court agreed and struck the waivers initially. However, on reconsideration the court held that a further factual showing was necessary to determine whether the WH-58 waivers were effectual or not under the circumstances.
The court explained the following procedural/factual background relevant to the waiver issue:
“The six named plaintiffs filed this putative collective action on January 13, 2011. Coincidentally, on the same day, the Department of Labor (“DOL”) contacted the defendant and commenced an investigation regarding the Meal Break Deduction Policy. (Docket No. 80 at 25 (transcript of April 14, 2011 hearing).) The DOL was apparently following up on a complaint that it had received nearly a year earlier. (Id. at 32.) Several days later, on January 18, the defendant informed the DOL of the pending private lawsuit.
Nevertheless, the DOL proceeded with the investigation and, in early March 2011, the DOL and the defendant reached a settlement, pursuant to 29 U.S.C. § 216(c). Under the settlement, the defendant agreed to comply with the FLSA in the future and to pay a certain amount of back wages to employees who were subject to the Meal Break Deduction Policy. (See Docket No. 80 at 14.)
To distribute these payments, the defendant posted the following notice in a common area:
The following employees must come to the Administrative Building and see Michelle regarding payment for wages as agreed upon by the Stones River center and the Department of Labor on Tuesday, April 12, 2011, 8:00 am–4:00 pm.
If you have questions, see Lisa or Kamilla
(Docket No. 43, Ex. 1 at 72; Docket No. 56, Ex. 1.) The posting contained a list of over 60 employees (see Docket No. 56, Ex. 1), including several employees who had already opted into this lawsuit (see, e.g., Docket No. 43, Ex. 1 at 56), although the defendant claims that their inclusion was an oversight. In her declaration, Human Resources Director Kamilla Wright states that she was simply “instructed to post a list of employees for whom checks were available.” (Docket No. 55 ¶ 7.)
Wright was further instructed “that when an employee came to the office to pick up their check, [she] was to have them sign the receipt for payment of back wages and then give them their check.” (Id. ¶ 9.) The declaration of Lisa Izzi, the defendant’s administrator, states that Izzi received identical instructions. (Docket No. 56 ¶ 9.) Accordingly, at the meetings with employees, each employee was given a check and DOL Form WH–58, which was titled “Receipt for Payment of Back Wages, Employment Benefits, or Other Compensation.” (Docket No. 43, Ex. 1 at 13.) The form stated:
I, [employee name], have received payment of wages, employment benefits, or other compensation due to me from Stones River Center … for the period beginning with the workweek ending [date] through the workweek ending [date.] The amount of payment I received is shown below.
This payment of wages and other compensation was calculated or approved by the Wage and Hour Division and is based on the findings of a Wage and Hour investigation. This payment is required by the Act(s) indicated below in the marked box(es):
[X] Fair Labor Standards Act 1 …
(Id.) Further down, in the middle of the page, the form contained the following “footnote”:
FN1NOTICE TO EMPLOYEE UNDER THE FAIR LABOR STANDARDS ACT (FLSA)—Your acceptance of this payment of wages and other compensation due under the FLSA based on the findings of the Wage and Hour Division means that you have given up the right you have to bring suit on your own behalf for the payment of such unpaid minimum wages or unpaid overtime compensation for the period of time indicated above and an equal amount in liquidated damages, plus attorney’s fees and court costs under Section 16(b) of the FLSA. Generally, a 2–year statute of limitations applies to the recovery of back wages. Do not sign this receipt unless you have actually received this payment in the amount indicated above of the wages and other compensation due you.
(Id.) Below that was an area for the employee to sign and date the form.
It appears that Wright and Izzi did not, as a matter of course, inform the employees that accepting the money and signing the WH–58 form was optional. Nor did they inform the employees that a private lawsuit covering the same alleged violations was already pending.
On April 12 and 13, 2011, a number of employees accepted the payments and signed the WH–58 forms. On April 13, the plaintiffs’ counsel learned of this and filed a motion for a temporary restraining order or preliminary injunction, seeking to prevent the defendant from communicating with opt-in plaintiffs and potential opt-in plaintiffs. (Docket No. 43.)
The court held a hearing on the plaintiffs’ motion on April 14, 2011. At that hearing, the court expressed its displeasure with the defendant’s actions, which, the court surmised, were at least partly calculated to prevent potential class members from opting in to this litigation. The court stated that it would declare the WH–58 forms (and the attendant waiver of those employees’ right to pursue private claims) to be null and void; thus, those employees would be free to opt in to this lawsuit.”
On reconsideration, the court reconsidered its prior Order on the issue. While re-affirming that non-willful waivers would be deemed null & void, the court explained that the issue would be one for the finder of fact at trial. After a survey of the relevant case law, the court explained:
“To constitute a waiver, the employee’s choice to waive his or her right to file private claims—that is, the employee’s agreement to accept a settlement payment—must be informed and meaningful. In Dent, the Ninth Circuit explicitly equated “valid waiver” with “meaningful agreement.” Dent, 502 F.3d at 1146. Thus, the court stated that “an employee does not waive his right under section 16(c) to bring a section 16(b) action unless he or she agrees to do so after being fully informed of the consequences.” Id. (quotation marks omitted). In Walton, the Seventh Circuit likened a valid § 216(c) waiver to a typical settlement between private parties:
When private disputes are compromised, the people memorialize their compromise in an agreement. This agreement (the accord), followed by the payment (the satisfaction), bars further litigation. Payment of money is not enough to prevent litigation…. There must also be a release. Walton, 786 F.2d at 306. The relevant inquiry is whether the plaintiffs “meant to settle their [FLSA] claims.” Id.
Taken together, Sneed, Walton, and Dent suggest that an employee’s agreement to accept payment and waive his or her FLSA claims is invalid if the employer procured that agreement by fraud or duress. As with the settlement of any other private dispute, fraud or duress renders any “agreement” by the employee illusory. See 17A Am.Jur.2d Contracts § 214 (“One who has been fraudulently induced to enter into a contract may rescind the contract and recover the benefits that he or she has conferred on the other party.”); id. § 218 (“ ‘Duress’ is the condition where one is induced by a wrongful act or threat of another to make a contract under circumstances which deprive one of the exercise of his or her free will. Freedom of will is essential to the validity of an agreement.” (footnote omitted)). The court finds that employees do not waive their FLSA claims, pursuant to § 216(c), if their employer has affirmatively misstated material facts regarding the waiver, withheld material facts regarding the waiver, or unduly pressured the employees into signing the waiver.
This holding does conflict with Solis v. Hotels.com Texas, Inc ., No. 3:03–CV–0618–L, 2004 U.S. Dist. LEXIS 17199 (N.D.Tex. Aug. 26, 2004), in which the district court rejected the contention that “an allegation of fraud could lead to the invalidity of a waiver under 216(c).” Id. at *6. That finding was mere dicta, however, and, regardless, this court is not bound by decisions from the Northern District of Texas.
Here, the defendant posted a sign with a list of employees’ names stating that those employees “must come to the Administrative Building and see Michelle regarding payment for wages as agreed upon by the Stones River center and the Department of Labor.” (Docket No. 43, Ex. 1 at 72 (emphasis added).) It appears that, when the employees met with the defendant’s human resources representatives, neither the representatives nor the Form WH–58 informed the employees that they could choose to not accept the payments. On the evidence presented at the April 14 hearing and submitted thereafter, the court finds that reasonable employees could have believed that the defendant was requiring them to accept the payment. Obviously, this calls into question the willingness of the employees’ waivers.
Additionally, it appears that the defendant never informed the employees that a collective action concerning the Meal Break Deduction Policy was already pending when the waivers were signed. The court finds that it was the defendant’s duty to do so. Section 216 exists to give employees a choice of how to remedy alleged violations of the act—by either accepting a settlement approved by the DOL or by pursing a private claim. An employer should not be allowed to short circuit that choice by foisting settlement payments on employees who are unaware that a collective action has already been filed. If employees are unaware of a pending collective action, they are not “fully informed of the consequences” of their waiver, Dent, 502 F.3d at 1146, because waiving the right to file a lawsuit in the future is materially different than waiving the right to join a lawsuit that is already pending. In the former situation, an employee who wishes to pursue a claim must undertake the potentially time-consuming and expensive process of finding and hiring an attorney; in the latter, all an employee must do is sign and return a Notice of Consent form.
Thus, the court finds that any employee of Stones River Center may void his or her § 216(c) waiver by showing either: (1) that he or she believed that the defendant was requiring him or her to accept the settlement payment and to sign the waiver; or (2) that he or she was unaware that a collective action regarding the Meal Break Deduction Policy was already pending when he or she signed the waiver. The court will vacate its April 14, 2011 Order, to the extent that the order declared all such waivers to be automatically null and void. Instead, under the above-described circumstances, the waivers are voidable at the election of the employee. Because the validity of any particular employee’s waiver depends on questions of fact, the issue of validity as to each employee for whom this is an issue will be resolved at the summary judgment stage or at trial.”
Click Woods v. RHA/Tennessee Group Homes, Inc. to read the entire Memorandum Opinion on all the motions.
M.D.Fla.: Applying Twombly, Defendant’s Assertion of Generalized Affirmative Defense of “Good Faith” Struck, Due to Insufficient Facts
Drzik v. Haskell Co.
This case was before the court on Plaintiff’s motion to strike several affirmative defenses pled by Defendant as factually insufficient under FRCP 8 and Twombly. Significantly, the court struck Defendant’s two affirmative defenses asserting that liquidated damages were not due to Plaintiff because Defendant had acted in “good faith” in committing violations, if any, of the FLSA. The case is significant, because the affirmative defenses struck are asserted in the majority of FLSA defendants’ answers, typically with identical language to that pled here. Noting that such bare bones allegations do not satisfy the pleading requirements of Rule 8, the court struck the Defendant’s affirmative defense(s) of good faith, with leave to replead with additional facts.
Holding that the Defendant’s allegations of good faith were insufficient as pled, the court explained:
“[Defendant’s] Third and Fifth Affirmative Defenses respectively claim that Plaintiff’s claims are barred because Haskell has acted in good faith, and because of the existence of exceptions, exclusions, or exemptions provided in the FLSA. (Doc. 6 at 6). These affirmative defenses correctly state that a “good faith” defense and exceptions exist under the FLSA. See 29 U.S.C. §§ 207, 260. However, the affirmative defenses, as drafted, are lacking in sufficient details and fail to provide the requisite notice of the theory of the defense. See Twombly, 550 U.S. at 556 (explaining the need for factual support to give defendant fair notice of claims, but equally applicable to defenses). The requirement to include factual support to provide fair notice of claims is also applicable to affirmative defenses. Therefore, if Haskell intends to pursue these defenses it will need to plead some factual basis to give the Plaintiff fair notice of its defense. Therefore, Plaintiff’s Motion is granted as to the Third and Fifth Affirmative Defenses and those defenses are stricken with leave to amend.”
As the trend of defendants filing more and more motions to dismiss based on Twombly continues, it will be interesting to see if we begin seeing an uptick in motions like this, which seek to apply the pleading standards equally to the other side of the “v.”
Click Drzik v. Haskell Co. to read the entire Order.
S.D.Fla.: Pharma Rep (PSR) Entitled to Overtime If She Worked Over 40 Hours; Administrative and Outside Sales Exemptions Inapplicable
Palacios v. Boehringer Ingelheim Pharmaceuticals, Inc.
Pharmaceutical companies have been involved in a series of cases in recent years, regarding the exempt status of their pharmaceutical sales representatives (“PSRs”). While the DOL has stated in a multiple amicus briefs that PSRs performing typical duties are not exempt under either the outside sales exemption or administrative exemption, the industry has stubbornly refused to reclassify its PSRs as non-exempt and begin paying overtime.
In the most recent case, Judge Ursula Ungaro in the Southern District of Florida joined the Second Circuit, the DOL and several other District-level courts around the country, and held that a Boehringer PSR was neither outside sales exempt nor administratively exempt.
First, the court rejected the contention that the plaintiff was subject to the outside sales exemption. Noting that she could not be outside sales exempt, if she did not perform sales, the court explained:
“Here, there is no dispute that Plaintiff was not permitted to give healthcare providers drugs in exchange for anything of value. It is also undisputed that the employees in Boehringer’s Trade Relations and Managed Markets sell drugs to retailers, and the retailers sell the drugs to patients with prescriptions for them. Moreover, there is no dispute that Plaintiff was not an employee in the Trade Relations and Managed Markets groups. Thus, none of the work that Plaintiff performed involved the “transfer of title to tangible property.” At best, Plaintiff’s presentation of Boehringer’s core message to physicians was non-exempt promotional work that was incident to the sales made by individuals in the Trade Relations and Managed Market groups. Accordingly, the Court agrees with the Second Circuit’s rationale. Plaintiff’s inability to transfer ownership of any one of the drugs she was responsible for in exchange for money, her inability to take a purchase order for any of the drugs, and her inability to obtain a binding commitment from physicians to prescribe a drug, renders her unable to make a “sale” as defined under the FLSA and its implementing regulations. See In re Novartis, 611 F.3d at 154.”
In a footnote, the court discussed the fact that it was declining to follow the Ninth Circuit’s liberal reading of the phrase “sale.”
Specifically, the court said:
“The Court declines to follow the Ninth Circuit’s liberal reading of the phrase “sale” and its tenuous application of the outside sales exemption to PSRs. The crux of the Ninth Circuit’s reasoning in SmithKline Beecham is as follows: Because the products for which PSRs are responsible may be legally dispensed only with a prescription written by a licensed healthcare provider, the relevant purchaser is the healthcare provider, and thus PSRs make a “sale” when they obtain non-binding commitments from providers that they will write a prescription. 635 F.3d at 396. The undersigned disagrees with the contention that the relevant purchaser is the healthcare provider. First, the healthcare provider is not bound to write a prescription just because she tells a PSR that she will. Second, even if the provider writes a prescription, she does not actually purchase anything. The prescription merely allows a patient to purchase a given drug; it does not guarantee that there will be a “transfer of title to tangible property” because the prescription does not obligate the patient to purchase the drug. Accordingly, PSRs like Plaintiff cannot make a “sale” to physicians, because physicians cannot purchase the drugs.”
The court also held that plaintiff’s duties failed to satisfy either prong of the administrative exemption’s duties requirements. The court explained:
“Here, Plaintiff was not involved in “running or servicing” Boehringer’s business. Instead, Plaintiff worked out of her vehicle or in physicians’ offices communicating to physicians Boehringer’s carefully scripted core message. Boehringer has separate departments in its corporate headquarters that are responsible for preforming administrative duties and running and servicing its business. For example, Boehringer has separate Trade Relations and Managed Markets groups, and separate advertising, sales operation, and commercial analytics departments. Plaintiff never worked in any of these groups or departments. Plaintiff’s role was to merely perform promotional work that aided these departments in their duties. Plaintiff also was not involved in Boehringer’s “management policies or general operations.” She never performed any work in the functional areas of tax, finance, accounting, auditing, advertising, research and development, personnel management, human resources, labor relations, government relations, or information technology. Accordingly, Plaintiff’s role was not related to the management or general business operations of Boehringer.”
After holding that plaintiff’s role was not related to the management or generatl business operations of defendant, it also addressed the plaintiff’s lack of independent discretion:
“In comparing Plaintiff’s primary duties against the factors set forth in § 541.202(b), the Court finds no evidence in the record that Plaintiff had any authority to formulate, affect, interpret, or implement Boehringer’s management or operating policies, or that she was involved in planning Boehringer’s long-term or short-term business objectives, or that she carried out major assignments in conducting the operation of Boehringer’s business, or that she had any authority to commit Boehringer in matters that have significant financial impact. See In re Novartis, 611 F.3d at 157. For example, although Plaintiff could decide how to use funds reserved for promotional events, her managers gave her a strict budget for each event, which she was not permitted to exceed. The record does not indicate that Plaintiff was allowed to negotiate and bind Boehringer to any significant matters, or waive or deviate from Boehringer’s established policies and procedures without its prior approval. Moreover, Plaintiff’s ability to determine how best to engage physicians, develop a rapport with them, and address their questions and concerns about a particular product are all skills that Plaintiff developed and honed through Boehringer’s training sessions. And, although Plaintiff determined how best to approach physicians, Boehringer never allowed her to stray outside the core message. Finally, even though Plaintiff had discretion in determining the order in which she would visit physicians, Boehringer determined which physicians she would visit, required her to visit every physician on its list, and mandated how many times she had to visit each physician in a six-month period. If Plaintiff did not visit every physician on the list the specified number of times, she was subject to discipline. In light of all the controls that Boehringer placed upon Plaintiff, the Court finds that Plaintiff did not exercise discretion or independent judgment relating to matters of significance.”
Click Palacios v. Boehringer Ingelheim Pharmaceuticals, Inc. to read the entire Order on Motions for Summary Judgment.
Andrew Frisch, the publisher of the Overtime Law Blog, represents Ms. Palacios. If you are a Pharmaceutical Sales Rep who believes you have been wrongly denied overtime, call Mr. Frisch at (888)OVERTIME or click here to learn about your wage and hour rights today.
S.D.Fla.: Defendant May Not Seek SJ Against Individual Plaintiffs Where Case Remains Certified At Stage 2
Hernandez v. Starbucks Coffee Co.
In this case plaintiffs, “store managers” at Starbucks claimed they had been uniformly misclassified as exempt employees and wrongly denied overtime as a result. The case was before the court on defendant’s motion for summary judgment regarding 4 individual plaintiffs in the (certified) class—on the ground that these Plaintiffs offered generally consistent testimony that compels the conclusion that they are exempt “executive” employees as a matter of law. Significantly, prior to defendant filing its motion for summary judgment, the court had denied defendant’s motion to decertify the class. The court denied defendant’s motion, largely on the ground that it is inappropriate for a defendant to attempt to target individual plaintiffs for summary judgment, where the class is proceeding as a whole and liability will therefore be determined on a classwide rather than individual basis.
The court explained:
“Before reaching the merits of this argument, the Court must first consider whether it is even proper for Defendant to move for summary judgment as to selected individual Plaintiffs when the Court is presented with a collective action. Relying upon Hogan v. Allstate Ins. Co., 361 F.3d 621, 623 (11th Cir.2004), Defendant argues that where a “FLSA collective action has been conditionally certified but no ruling has been made as to whether the case will proceed to trial as a collective action, the district court may entertain summary judgment motions as to individual plaintiffs.” [DE–241, pg. 12]; see also Lindsley v. Bellsouth Telecomm., Inc., Case No. 07–6569, 2009 WL 322144, at *2 (E.D.La. Feb.9, 2009) (denying motion to strike motion for summary judgment against an individual, named plaintiff, finding it “appropriate to choose [the individual plaintiff] as a test plaintiff to resolve the issue of employee versus independent-contractor status.”).
In response, Plaintiffs argue that the Court should reject Defendant’s attempt to have its motion treated as one directed to only certain individuals, as opposed to the class as a whole, pointing to Judge Marra’s conclusion in Pendlebury v. Starbucks Coffee Company, Case No. 04–80521–CIV–KAM, DE–495 (S.D. Fla. filed Jan. 8, 2008). Plaintiffs point out that unlike Hogan, 361 F.3d at 623, neither this Court nor Plaintiffs have consented to a “test plaintiff” procedure, and Defendant cannot randomly select certain individual Plaintiffs and at the same time seek to prohibit Plaintiffs from using testimony from other Plaintiffs in order to oppose the entry of summary judgment. Defendant attempts to refute this argument by contending that Rule 56(a) permits it to seek summary judgment as to a claim or defense, or part of a claim or defense, and reiterates the holding in Hogan. Defendant also argues that Plaintiffs have not cited to any authority prohibiting the Court from considering such a motion where as here the Court has not yet conducted a stringent review of the propriety of collective treatment.
Importantly, subsequent to Defendant filing the instant motion for summary judgment, on June 28, 2011, this Court denied Defendant’s motion for decertification [DE–300], concluding that Plaintiffs are similarly situated and can proceed as a class. As such, the Court has now conducted a stringent review of the propriety of collective treatment and found collective treatment to be appropriate. Defendant’s reliance on Hogan as its basis for moving for summary judgment as to only four (4) individual Plaintiffs is misplaced. Defendant similarly attempted to raise this argument and rely on Hogan in filing its motion for partial summary judgment in Pendlebury. The Pendlebury court rejected Defendant’s argument, pointing out that in Hogan the court had specifically authorized the selection of test plaintiffs for purposes of discovery and motions for summary judgment. Case No. 04–80521–CIV–KAM, DE–495 at pg. 3. The court concluded that “allowing Defendant to move for summary judgment against particular individuals who are indistinguishable from other members of the class defeats the entire purpose of a collective action.” Id. at 5. Instead, the court held that since the action was certified as a collective action, the court would “only address dispositive motions that resolve common issues of law or fact as to the entire class or an identifiable subclass.” Id.
Similarly here, the Court has already concluded that collective treatment is appropriate and has not authorized the use of “test” plaintiffs. Instead it appears that Defendant unilaterally selected individuals as its “test” plaintiffs. Notably, Defendant does not argue that these Plaintiffs somehow represent a “subclass” or otherwise address the Pendlebury court’s ruling on this issue in any manner. Consequently, the Court finds that it is not proper for Defendant to move for summary judgment as to individual Plaintiffs given the Court’s recent conclusion that Plaintiffs shall proceed as a class.”
E.D.Pa.: Defendant’s Attempt to Obtain Class Waivers From Absent Class Members While Motion for Conditional Certification Pending Impermissible; Corrective Measures Ordered
Williams v. Securitas Sec. Services USA, Inc.
Before the court was the emergency motion of plaintiffs for a protective order and corrective mailing to address defendant’s improper communications with absent class members. While plaintiffs motion for conditional certification was pending before the court (but before it had been resolved), the defendant sought to obtain class waivers of the claims in the case from its current employees, by sending each an alternative dispute resolution agreement. The court held that such attempts by the defendant amounted to an obstruction of the court’s role in managing the collective action, granted plaintiffs motion and ordered related corrective action by defendant.
The motion alleged that defendant distributed to all its employees, including its Pennsylvania employees, a document entitled “Securitas Security Services USA, Inc. Dispute Resolution Agreement” (hereinafter “the Agreement”). The body of the Agreement consists of ten paragraphs on four type-written, single-spaced pages and is written in a small font. A fifth page provides a place for the employee to acknowledge receipt of the document. In relevant part:
“The Agreement purports to require all Securitas employees to submit “any dispute arising out of or related to Employee’s employment with [Securitas] … or termination of employment” to a binding arbitration conducted pursuant to the Federal Arbitration Act (“FAA”), 9 U.S.C. § 1, et seq. It states in small boldface letters that “this Agreement requires all such disputes to be resolved only by an arbitrator through final and binding arbitration and not by way of court or jury trial.” The Agreement specifies that any dispute arising from federal “wage-hour law” and the FLSA must be arbitrated. The Agreement states, again in small bold font, “there will be no right or authority for any dispute to be brought, heard or arbitrated as a class, collective or representative action (“Class Action Waiver”).”
Paragraph 7 of the Agreement says that although the Agreement is meant to apply “broadly,” if an employee is “a named party plaintiff, or ha[s] joined as a party plaintiff this Agreement shall not apply to those Actions, and you may continue to participate in them without regard to this Agreement,” but “shall apply to all Actions in which you are not a plaintiff or part of a certified class.” The Agreement then lists five representative or class action lawsuits in which Securitas is a named defendant, including this lawsuit, “Frankie Williams and Kimberly Ord, filed 12/10/2010, USDC, Eastern District of Pennsylvania Case No. 2:10–CV–07181–HB.” The term “Actions” is defined as “litigation on behalf of [Securitas] employees in which those employees desire to represent claims of other employees in class, collective or other representative actions.” Thus, the term “Actions” does not appear to be limited only to the five lawsuits enumerated later in paragraph 7. The nature of the Williams action is not explained.
The Agreement further states that if the employee would like to participate in one of the “Actions,” he or she “may opt out of this Agreement by following the procedure set forth in Section 9, below.” To opt out of the Agreement, the employee must call a toll-free telephone number within 30 days of the date the employee received the Agreement. According to the Agreement, “Should an Employee not opt out of this Agreement within 30 days of the Employee’s receipt of this Agreement, continuing the Employee’s employment constitutes mutual acceptance of the terms of this Agreement by the Employee and [Securitas].” The Agreement declares that not opting out means an employee forfeits the right to participate in any collective or representative action. Securitas adds that it will not retaliate against any employee for opting out of the Agreement or for asserting claims according to its terms.
The fifth page of the Agreement states as follows:
ACKNOWLEDGMENT OF RECEIPT OF THE SECURITAS SECURITY SERVICES USA, INC. DISPUTE RESOLUTION AGREEMENT
BY SIGNING BELOW, I AM ACKNOWLEDGING RECEIPT OF THE SECURITAS SECURITY SERVICES USA, INC. DISPUTE RESOLUTION AGREEMENT, EFFECTIVE IMMEDIATELY.
Below this text is a place for the employee to sign and date the Agreement. There is also a place for a witness to sign his or her name.”
The court rejected defendant’s attempts to stretch the holding of the Supreme Court’s recent holding in AT&T Mobility LLC v. Concepcion, stating:
“Under Hoffman–La Roche, this court has a responsibility to prevent confusion and unfairness concerning this action in which plaintiffs seek to have the matter proceed as a collective action and to insure that all parties act fairly while the court decides whether and how this action will move forward under the FLSA. In the meantime, to prevent confusion and unfairness, we will order Securitas to rescind the Agreement with respect to its Pennsylvania employees as it relates to this litigation. We will require Securitas to set forth the nature of this action and advise its Pennsylvania employees that the Agreement is not binding with regard to those employees’ right to participate in this lawsuit, notwithstanding the fact that the employee may have signed the Agreement or failed timely to opt out.
Securitas contends that any interference by this court with its efforts to compel arbitration of disputes with its employees will be contrary to the Supreme Court’s recent decision in AT&T Mobility LLC v. Concepcion, –––U.S. ––––, 131 S.Ct. 1740, 179 L.Ed.2d 742 (2011). We disagree. In Concepcion, the Supreme Court held that, generally, states may not adopt rules of contract interpretation that undermine the “overarching purpose” of the FAA, which “is to ensure the enforcement of arbitration agreements according to their terms so as to facilitate streamlined proceedings.” Id. at 1748. There, the Court considered California contract law, which deemed unconscionable certain contracts that disallowed class arbitration. The Court found the law impermissibly stood “as an obstacle to the accomplishment of the FAA’s objectives.”
Securitas’ reliance on Concepcion is inapposite because plaintiffs’ motion for a protective order does not rely on any state-law ground to invalidate the Agreement. Here the issue is quite different. This court has found the Agreement to be a confusing and unfair communication with the class of possible plaintiffs in this action under the FLSA.
Securitas argues that invalidating the Agreement merely because this class action lawsuits is pending is equivalent to preventing it from adopting any arbitration policy at all. Whatever right Securitas may have to ask its employees to agree to arbitrate, its current effort, which specifically references this lawsuit, is confusing and misleading and clearly designed to thwart unfairly the right of its employees to make an informed choice as to whether to participate in this collective action under the FLSA. Since the Agreement by its terms will directly affect this lawsuit, this court has authority to prevent abuse and to enter appropriate orders governing the conduct of counsel and the parties. Hoffman–La Roche, 493 U.S. at 171–72. Securitas did not act fairly when it gave notice through the Agreement to potential class members concerning this lawsuit.
Defendant’s proposal to resolve the plaintiffs’ pending motion for conditional class certification before resolving issues related to the Agreement is insufficient to prevent potential plaintiffs from misapprehending their rights. The confusing nature of the Agreement may cause Securitas employees to misunderstand the nature of their rights to participate in this litigation while the court determines whether to conditionally certify a class, damage not easily undone. Similarly, Securitas’s proposal to allow its Pennsylvania employees a second 30–day opt out period if the court conditionally certifies a class is also insufficient because it is for the court, not Securitas, to determine the amount of time employees shall have to consider their right to join this action. Immediate action by this court is necessary.
Securitas shall be required to implement the corrective measures described in the accompanying order.”
In the accompanying Order, the court required that the defendant submit a proposed corrective notice to the plaintiffs within 48 hours which, among other things, stated the the dispute resolution agreement was not binding on with regard to participation in the case (i.e. they would not be precluded from joining this class if they signed the agreement at issue).
Click Williams v. Securitas Security Services USA, Inc. to read the entire Memorandum Opinion and here to read the accompanying Order.
W.D.Mo.: Plaintiffs Sufficiently Pled a “Rounding” Claim, Where Alleged Defendants’ Policy of Rounding Resulted in Improper Denial of Wages
McClean v. Health Systems, Inc.
The Plaintiffs, Certified Nursing Assistants (“CNAs”) for Defendant, claimed that they were required to work off the clock during automatically deducted meal breaks, during mandatory meetings and training sessions, and while performing mandatory data entry known as “dart charting.” The result of these policies was to allegedly deny the Plaintiffs wages and overtime. After the Plaintiffs amended their Complaint the Defendants filed a motion to dismiss regarding several of Plaintiffs’ allegations. As discussed here, the court denied Defendants’ motion as it pertained to Plaintiffs’ claims arising from Defendants’ policy of rounding their time to the nearest quarter of an hour, regardless of actual time worked.
Discussing the sufficiency of the rounding claim, the court explained:
“One of the Plaintiffs’ substantive allegations is that the Defendants have a practice of “reduc[ing] [their] employees’ work hours by rounding their hours to the nearest quarter hour of time to their detriment (i.e., the rounding did not average out to equally benefit Defendants and its employees over time) which results in Defendants not paying its employees for all time worked.” Doc. 51 at ¶ 112. Defendants cite federal regulations which expressly allow the practice of rounding to the nearest 15–minute increment. 29 C.F.R. § 785.48(b) (“For enforcement purposes this practice of [rounding to 5, 10 or 15–minute increments] will be accepted, provided that it is used in such a manner that it will not result, over a period of time, in failure to compensate the employees properly for all the time they have actually worked.”). The Defendants submit Harding v. Time Warner, Inc. in support of their position that the Plaintiffs have not sufficiently pled a claim of improper rounding. No. 09cv1212–WQH–WMC, 2010 WL 457690 (S .D.Cal. Jan. 26, 2010). In Harding, the court found that, despite describing the allegedly improper rounding procedures in detail, Harding had failed to provide “specific factual allegations” showing that employees had been underpaid. Id. at *5. The Plaintiffs provided the following statements regarding rounding in their Amended Complaint:
112. Defendants further reduce its [sic] employees’ work hours by rounding their hours to the nearest quarter hour of time to their detriment (i.e., the rounding did not average out to equally benefit Defendants and its [sic] employees over time) which results in Defendants not paying its [sic] employees for all time worked. This practice results in Plaintiffs and all other similarly situated employees being denied wages including overtime premiums and Defendants’ illegal rounding practices are not de minimus. [sic]
113. Even though Defendants had a computerized timekeeping system in place and could have easily recognized and paid Plaintiffs’ and other similarly situated employees’ actual hours worked, Defendants deliberately disregarded the system’s records and rounded Plaintiffs’ and other similarly situated employees work time down to the nearest quarter of an hour.”
114. Defendants willfully and illegally rounded Plaintiffs’ and other similarly situated employees’ work time down to the nearest quarter of a [sic] hour.
Doc. 51 at ¶¶ 112–14 (legal conclusions in bold). Iqbal requires “factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 129 S.Ct. at 1949. The Plaintiffs allege that the rounding did not average out properly. They further allege that the Defendants maintain a computerized system which keeps time, but still chose to use rounding. Assuming the truth of these allegations, the Court can plausibly infer that the Defendants chose to round time because it would be more favorable than paying for actual time worked on a minute by minute basis, thus violating the averaging rationale inherent to rounding. While the Plaintiffs could have chosen to state more, to require them to plead, for example, specific minutes on specific days for which they were denied wages would be fact pleading inconsistent with Iqbal. Hamilton v. Palm, 621 F.3d 816, 817 (8th Cir.2010) (noting that “Iqbal did not abrogate the notice pleading standard of Rule 8(a)(2)”). The Defendants’ Motion to dismiss the Plaintiffs’ rounding claim is DENIED.”
Click McClean v. Health Systems, Inc. to read the entire Order.
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