Home » Posts tagged 'FLSA' (Page 20)
Tag Archives: FLSA
S.D.N.Y.: Although Elements of First-Filed Rule Satisfied, Court Declines to Transfer Second-Filed Case Due to Lack of Progress of First-Filed Case
Pippins v. KPMG LLP
This case was before the court on defendant’s motions to dismiss the case under the first-filed rule, or in the alternative to transfer the case to the site of the first-filed case, as well as defendant’s motion to stay the case, pending the outcome of a related appeal in the first-filed case. Citing the lack of progress in the first-filed case, the court denied the motions, although acknowledging that the underlying elements necessary for application of the first-filed rule were present.
The court reasoned:
“KPMG has met its burden of showing that the first-filed rule applies in this case by demonstrating that the Present Action and the California Action are nearly identical; however, due to the extensive delay in the California Action, the application of the first-filed rule is diminished.
Since the actions include the same parties and claims, the first-filed rule applies. However, application of the first-filed rule is diminished where there has been little progress in the first-filed action. Am. S.S. Owners Mut. Prot. & Indem. Ass’n, Inc. v. Lafarge N. Am., Inc., 474 F.Supp.2d 474, 489 (S.D.N.Y.2007), aff’d sub nom, N.Y. Marine & Gen. Ins. Co. v. Lafarge N. Am ., Inc., 599 F.3d 102 (2d Cir.2010); see Raytheon Co. v. Nat’l Union Fire Ins. Co. of Pittsburgh, 306 F.Supp.2d 346, 352–53 (S.D.N.Y.2004). This case was filed by the California Plaintiffs in 2007. Since that time there has been no significant movement in the case, (Swartz Decl. Ex. 2.) and there has been no movement since the case was stayed in 2009 pending the outcome of Campbell by the Ninth Circuit. Thus, the presumption afforded the California Action is diminished here. If Plaintiffs can show the balance of convenience tilts even slightly in their favor, there is no reason for this court to transfer the action.
Plaintiffs have not identified any “special circumstances” that warrant deviation from the first-filed rule. However, the balance of convenience factors weigh in favor of maintaining this action in the Southern District of New York.”
The court also denied defendant’s motion for a stay, pending the outcome of a related appeal in the Ninth Circuit, noting:
“The first three factors are similar to those considered in the “first-filed” analysis, so those factors weigh in favor of proceeding with this action. The interests of the persons not parties to the civil litigation and the public interest also weigh in favor of denying Defendant’s motion to stay the action. As a collective action, the statute of limitations for opt-in plaintiffs continues to run until the plaintiffs opt-in to the action. 29 U.S.C. § 216(b); Hoffman v. Sbarro, Inc., 982 F.Supp. 249, 260 (S.D.N . Y.1997) (Sotomayor, J.). The FLSA has a statute of limitations of three years, two if “willfulness” is not found. Any further delay could prejudice the interests of potential opt-in plaintiffs, whose claims may stale. Public interest also favors the swift resolution of claims alleging violations of the FLSA.”
S.D.Fla.: Employer Need Not Pay Employee MW For All Hours Worked to Take Advantage of Tip Credit
Goldin v. Boce Group, L.C.
This case was before the court on defendant’s motion to dismiss, for failure to state a claim. The plaintiff’s theory of relief for minimum wage violations arose from the fact that while he worked 51 hours per week, each week, Defendants paid Plaintiff the required reduced minimum wage for only forty hours, and failed to pay him at all for the additional eleven hours of overtime. Plaintiff claimed that because Defendants “did not pay Plaintiff the required amount for every hour he worked,” they were not permitted to take advantage of the tip credit at all and must disgorge the entire tip credit. Inasmuch as the FLSA requires that employers who seek to take the tip credit must pay tipped minimum wage in order to do so, this theory would seem to make perfect sense, however the court disagreed and dismissed the case.
The court reasoned:
“There is no basis in the FLSA for the relief Plaintiff seeks. The FLSA clearly lays out the prerequisites an employer must meet in order to claim the tip credit. There are only two: (1) the employer must inform the employee that the employee will be paid the reduced minimum wage; and (2) all tips received by the employee must be retained by the employee. 29 U.S.C. § 203(m). There is no “condition precedent” that the reduced cash wage be paid for every hour worked before an employer is entitled to claim the statutorily-mandated tip credit. See id. Congress could, and did, write into the FLSA express conditions precedent to the application of the tip credit. The Court declines to read a condition precedent into the statute where Congress did not create one. In re Tennyson, 611 F.3d 873, 877 (11th Cir.2010) (stating that where statute is “clear, unambiguous, and does not result in any absurd consequences,” the Court “will not … read into the text of the statute an unstated purpose.”).
In addition, the FLSA very clearly lays out the remedies available to employees who are subject to FLSA violations by employers. Successful FLSA plaintiffs are entitled to recover “the amount of their unpaid minimum wages, or their unpaid overtime compensation, as the case may be, and [ ] an additional equal amount as liquidated damages.” 29 U.S.C. § 216(b). Congress wrote specific remedies into the statute. Congress did not choose to include as a remedy disgorgement of the tip credit where the plaintiff is a tipped employee. The Court will not write this additional remedy into the statute where Congress did not see fit to do so. See In re Tennyson, 611 F.3d at 877.
In addition, two other divisions of court in this District have rejected Plaintiff’s theory on almost identical facts. See Muldowney v. Mac Acquisition, LLC, Case No. 09–22489–CIV, 2010 WL 520912 (S.D.Fla. Feb. 9, 2010) (Huck, J.); Perez v. Palermo Seafood, Inc., Case No. 07–21408–CIV, 2008 WL 7505704 (S.D.Fla. May 8, 2008) (O’Sullivan, M.J.). In both cases, a tipped employee who was paid the reduced minimum wage for some hours claimed their employers were not entitled to claim the tip credit because they were not paid for “off-the-clock work.”
In Palermo Seafood, Magistrate Judge O’Sullivan found no textual support in the statute for the plaintiff’s position, observing: “The cases that have disallowed the tip credit have done so because the employer failed to comply with one, or both, of the following requirements: (1) the employee receive proper notice of the tip credit and (2) that the employee is not required to share his or her tips with non-tipped employees.” 2008 WL 7505704 at *2. Accordingly, Judge O’Sullivan found tip credit should apply to the plaintiff’s regular shift hours, for which she was compensated at the reduced minimum wage. Id. at *1.
In Muldowney, Judge Huck came to the same conclusion:
Section 203(m) merely prescribes the method for calculating a tipped employee’s wages and sets forth two explicit requirements that must be met for an employer to claim the tip credit, both of which are satisfied in this case. The statute says nothing about unpaid wages due to off-the-clock hours. Further, by rejecting Plaintiff’s interpretation, she is not left without a remedy: she can seek unpaid wages for her alleged off-the-clock hours under state law or other sections of the FLSA. Therefore, the Court finds that Defendants are entitled to the tip credit for hours where Plaintiff was paid the specified reduced cash wage.2010 WL 520912 at *1.
The Court agrees with these two well-reasoned decisions. However, this does not mean, as Plaintiff argues, that employers are therefore not required to pay employees the minimum wage for every hour worked. Of course employers must compensate employees at the required rate for every hour worked, and of course the failure to do so is a violation of the FLSA. 29 U.S.C. § 206(a)(1) (providing minimum wage amounts); 29 U.S.C. § 215(a)(2) (creating cause of action for violation of minimum wage and overtime provisions).”
It should be noted that this decision and the 2 decisions on which it relies were all rendered in the Southern District of Florida. As tipped employee cases continue to become more and more prevalent though, as a result of tremendous amount of abuses of tipped workers in various industries, it will be interesting to see if courts outside of the Southern District of Florida have a different take, based on the text of 203(m).
Click Goldin v. Boce Group, L.C. to read the entire order.
D.Mass.: FLSA Defendant Not Entitled to Discovery of Plaintiff’s Immigration Status
Jin-Ming Lin v. Chinatown Restaurant Corp.
This case was before the court on the parties cross-motions to compel discovery. It appears that, as often occurs, the defendant was all too happy to employ plaintiff, an undocumented immigrant, prior to plaintiff’s filing of his FLSA case. However, once the FLSA case was filed, the employer sought to fight the FLSA claim on the basis of plaintiff’s immigration status. As discussed here, the court denied defendant’s motion to compel discovery of plaintiff’s immigration status. Apparently this was an issue of first impression in the First Circuit, as the court noted that no prior court within the First Circuit had decided this hot-button issue. While the court reached the same conclusion as most- that such information was irrelevant, because FLSA rights are absolute, regardless of immigration status- it noted that it’s reasoning was divergent from the majority of courts.
Denying the defendant’s motion and noting that such information was irrelevant to a case under the FLSA, the court reasoned:
“Nonetheless, while I find the reasoning advanced by other courts in holding that illegal aliens may recover for unpaid wages under the FLSA to be insufficient, I come to the same ultimate conclusion for a different reason that has not, so far as I know, yet been relied on. Awards for back pay under the NLRA, at issue in Hoffman, are discretionary. See 29 U.S.C. § 160(c) (Courts may order “reinstatement of employees with or without back pay ….”); see also NLRB v. Harding Glass Co., 500 F.3d 1, 8 (1st Cir.2007) (NLRB has “broad remedial powers” under 29 U.S.C. § 160(c) including “discretion both to determine that back pay is appropriate … and to compute the back pay amount.”). As Hoffman recognized, agencies are required to exercise their discretion in light of other federal policies. 535 U.S. at 146 (“In devising remedies for unfair labor practices, the Board is obliged to take into account [other] equally important Congressional objective[s].”) (internal quotation omitted). This basic tenet of administrative law is what first prompted the Court in Hoffman to look at federal immigration policy as a limit on the NLRB’s authority and discretion to award back pay in the circumstances. See id. at 143-44.
In contrast, awards for unpaid wages under the FLSA are not discretionary, but rather a matter of statutory entitlement when the necessary factual predicate has been established. 29 U.S.C. § 216(b) (“Any employer who violates the [minimum wage or overtime provisions of the FLSA] shall be liable to the employee or employees affected in the amount of their unpaid minimum wages, or their unpaid overtime compensation.”) (emphasis added). Courts do not have discretion to deny the award of FLSA damages when they have been proved. Adjudication of an FLSA cause of action does not call upon the court to make a discretionary policy- or interest-balancing assessment. See Keith Cunningham-Parmeter, Redefining the Rights of Undocumented Workers, 58 Am. U.L.Rev. 1361, 1389 (2009) (remarking that the nondiscretionary nature of back pay under the FLSA “leaves no room for any type of Hoffman-inspired balancing between federal labor and immigration objectives”).
Of course, the tension between policies underlying the FLSA, on the one hand, and the IRCA, on the other, continues to exist. In Hoffman, the Court was able to find a resolution by giving priority to the statutory policy of the IRCA over the administrative discretion of the NLRB. That resolution is not possible where both poles of the conflict are statutory directives. A court entertaining an FLSA suit lacks the authority or discretion to resolve the tension. If a plaintiff makes out an FLSA case, he is entitled to an FLSA remedy, any obstruction or interference with immigration policy notwithstanding. As Judge Walker of the Second Circuit noted, after that circuit tackled a particularly confounding case of conflict preemption under Hoffman, “judges are especially ill-suited to divining the unexpressed will of Congress when it comes to hot-button and ever-shifting issues like immigration policy.” Madeira, 469 F.3d at 254 (Walker, C.J., concurring). Any remedy for an incompatibility between federal labor and immigration policies will have to come from Congress, not the lower courts.
For the foregoing reasons, the plaintiffs’ immigration status is irrelevant to their FLSA claims and their suitability to lead a class. The defendants’ motions to compel (dkt. nos. 28 & 29) are DENIED.”
Click Jin-Ming Lin v. Chinatown Restaurant Corp. to read the entire decision.
D.Mass.: Offsets to Unpaid Overtime, Pursuant to § 207(h)(2) of FLSA, Attributable Only to Singular Workweeks in Which Both Premiums and Overtime Earned Simultaneously
Rudy v. City of Lowell
This case was before court on defendant’s motion for summary judgment, as to the methodology applicable to calculate plaintiff’s damages. The interesting, but rarely raised issue: to the extent that the employer is entitled to an offset for certain premium compensation paid to the employee, to what extent can that offset reduce the unpaid overtime wage damages sought by the employee? Holding that such offsets are only applicable in singular workweeks (i.e. they may only be taken in the week in which the payment giving rise to the offset occurred), the court explained:
“Section 207(h) (2) of the FLSA provides that extra compensation paid as described in paragraphs (5), (6), and (7) of subsection (e) of this section shall be creditable toward overtime compensation payable pursuant to this section.
29 U.S.C. § 207(h)(2). Only the “premium” portion of the contractual overtime rate (the extra one-half on top of the regular rate) may be used to offset the defendant’s statutory overtime liability. O’Brien v. Town of Agawam, 350 F.3d 279, 289 (1st Cir.2003) (“O’Brien I” ).
Here, the CBA allows employees to treat certain non-work days such as vacation, sick and personal days as hours actually worked for the purpose of determining overtime hours. The City also pays some workers time and one-half for working on holidays. The parties do not dispute that the extra compensation provided for in the plaintiffs’ CBA falls within the compensation described in subsection (5), (6) and (7) and can be used to offset defendant’s underpayment, pursuant to § 207(h)(2).
The parties do dispute, however, whether premium compensation earned in one week can be used to offset an underpayment in a different week. Plaintiffs argue that their damages for unpaid overtime should be calculated on a workweek basis and that any offsets pursuant to § 207(h)(2) may only be attributed to the singular workweeks in which the premiums and overtime were earned. In other words, an underpayment one week cannot be offset by a premium payment made in a different week. The defendant contends, to the contrary, that it is entitled to a “cumulative offset”, consisting of all premium payments, against any FLSA overtime it owes, regardless of when the premium payments were earned or made.
The FLSA does not provide an explicit answer to this difference of interpretation and the United States Circuit Courts have taken divergent positions. Some courts have held that § 207(h) offsets should be calculated on a workweek basis. Herman v. Fabri-Centers of Am., Inc., 308 F.3d 580, 585-93 (6th Cir.2002); Howard v. City of Springfield, 274 F.3d 1141, 1147-49 (7th Cir.2001); Roland Elec. Co. v. Black, 163 F.2d 417, 420 (4th Cir.1947); Conzo v. City of New York, 667 F.Supp.2d 279, 291 (S.D.N.Y.2009); Bell v. Iowa Turkey Growers Co-op., 407 F.Supp.2d 1051, 1063 (S.D.Iowa 2006); Nolan v. City of Chicago, 125 F.2d 324, 331 (N.D.Ill.2000). Other courts have allowed defendants to apply a cumulative offset. Singer v. City of Waco, 324 F.3d 813, 826-28 (5th Cir.2003); Kohlheim v. Glynn County, 915 F.2d 1473, 1481 (11th Cir.1990).
The First Circuit has not directly addressed this issue but other sessions in this District have. In O’Brien v. Town of Agawam, United States District Judge Michael A. Ponsor addressed facts analogous to those at bar and held that the employer could apply a cumulative offset. 491 F.Supp.2d 170, 176 (D.Mass.2007) (“O’Brien II” ). The Court surmised that the First Circuit would hold accordingly given its holding in Lupien v. City of Marlborough. Id. at 175. In Lupien, the employer’s practice of compensating employees for overtime by use of compensatory time (“comp time”), instead of in cash, violated the FLSA. 387 F.3d 83 (1st Cir.2004). With respect to damages, the First Circuit held that the employer did not have to pay its employees for overtime hours for which the employee had used comp time, regardless of when the employee used the comp time. The Court reasoned that paying the employees for overtime hours for which they had used comp time would result in double payment for the same overtime hours. In Murphy v. Town of Natick, another case analogous to this one, United States District Judge Richard G. Stearns agreed with the holding in O’Brien II and also allowed defendants to apply a cumulative offset. 516 F.Supp.2d 153, 160-61 (D.Mass.2007).
Although the two cases in this District are directly analogous to this case, the Court disagrees with them with respect to their interpretation of the FLSA and of Lupien. A further analysis of the Lupien case, the purpose of the FLSA and its interpretation by the Department of Labor (“the DOL”) and the First Circuit’s language in O’Brien I all undermine the position adopted by the courts in O’Brien II and Murphy. Rather, they lead to the conclusion that § 207(h)(2) offsets should be calculated on a workweek basis for the following reasons:
1. This case is distinguishable from Lupien and other First Circuit case law indicates support for a workweek offset model. Lupien dealt with an application of § 207(o) (regulating the use of compensatory time), not § 207(h). In fact, § 207(h) is not referred to in that opinion. Furthermore, here, the employees were not given the option of taking comp time rather than overtime payments. Thus, there is no risk in our case, as there was in Lupien, that the plaintiffs will be compensated twice for the same hours. Thus, the Court concludes that the First Circuit’s decision in Lupien does not indicate how it would decide the question at bar.
More on point is the First Circuit’s discussion of § 207(h)(2) in O’Brien I, in which it stated that
The regulations specifically explain how to treat such mid-workweek contractual overtime payments under the Act: only the premium portion of the contractual overtime rate (that is, the amount in excess of the employee’s regular rate) is deemed “overtime” pay and may be offset against any statutory overtime liability in the same week. O’Brien I, 350 F.3d at 289 (citing 29 C.F.R. §§ 778.201(a), 202(a)) (emphasis added). Thus, although not resolving the offset issue in that decision, the First Circuit conveyed its inclination by specifying that offsets pursuant to § 207(h)(2) would apply “in the same week”.
2. The FLSA overtime requirement uses a single workweek as its basic unit of measurement. Scott v. City of New York, 592 F.Supp.2d 475, 484 (S.D.N.Y.2008). Section 207(a)(1) sets forth the basic overtime rule:
no employer shall employ any of his employees … for a workweek longer than forty hours unless such employee receives compensation for his employment in excess of the hours above specified at a rate not less than one and one-half times the regular rate at which he is employed.
The focus on the unitary workweek is prevalent throughout § 207 and the DOL’s interpretation of that section. For example, 29 C.F.R. § 778.103 directs employers to calculate overtime liability on a weekly basis. Further, 29 C.F.R. § 778.104 provides that “[t]he Act takes a single workweek as its standard” and an employer cannot average the number of hours an employee worked in two weeks in order to avoid paying overtime:
[I]f an employee works 30 hours one week and 50 hours the next, he must receive overtime compensation for the overtime hours worked beyond the applicable maximum in the second week, even though the average number of hours worked in the 2 weeks is 40.
It is clear from § 778.104 that cumulative offsets were not contemplated by the DOL. In addition, where the single workweek model is problematic, i.e. when applied to firefighters and law enforcement officers, the FLSA includes a very specific and limited exception. See 29 U.S.C. § 207(k).
With regard to the exact issue before the Court, 29 C.F.R. § 778.202(c) explains that credits pursuant to § 207(h) may be given for overtime due “in that workweek”. See Howard, 274 F.3d at 1148-49; Conzo, 667 F.Supp.2d at 290. Finally, and perhaps most importantly, the DOL has also issued an opinion letter stating that surplus overtime premium payments, which may be credited against overtime1 pay pursuant to section 7(h) of FLSA, may not be carried forward or applied retroactively to satisfy an employer’s overtime pay obligation in future or past pay periods.
Letter from Herbert J. Cohen, Deputy Administrator, U.S. Dep’t of Labor, WH-526, 1985 WL 304329 (Dec. 23, 1985).
3. Overtime payments are intended to be paid as soon as is practicable. Although they are not entitled to deference by this Court, several of the DOL’s official interpretations of § 207 demonstrate the FLSA’s emphasis on ensuring that overtime payments are made soon after they are earned. Howard, 274 F.3d at 1148. For instance, 29 C.F.R. § 778.106 provides that overtime payments need not be paid weekly but must be paid as soon as is practicable:
Payment may not be delayed for a period longer than is reasonably necessary for the employer to compute and arrange for payment of the amount due and in no event may payment be delayed beyond the next payday after such computation can be made. See also Nolan, 125 F.Supp.2d at 332 (discussing 29 C.F.R. § 778.106 and holding that offsets for overtime paid apply on a pay period basis).
The reason for requiring employers to calculate and make overtime payments as soon as practicable is obvious: employees are entitled to know how much they will be paid and to prompt payment of what they have earned. As poignantly stated by the Seventh Circuit in Howard v. City of Springfield, if § 207(h)(2) were to permit a cumulative offset, employers could withhold overtime earnings in order to offset them against potential “short” weeks in the future. 274 F.3d at 1148-49. Under such a model, an employee’s overtime payments could be put on hold indefinitely until the employer is either willing or compelled to pay. That outcome is not only illogical but also contradicts the FLSA’s focus on the workweek as a unit and its concern with prompt overtime payments.
In fact, this case uniquely illustrates why a workweek offset is appropriate: if the City had correctly calculated its overtime rate and applied the § 207(h)(2) offsets contemporaneously, it would not have been able to apply those offsets to obligations incurred one or two years later. See id. at 1148. The workweek method of calculating offsets most closely reproduces what the parties would be entitled to had there been no error in the City’s initial computation of its overtime liability. See Nolan, 125 F.Supp.2d at 333.
4. The purpose of the FLSA, to protect workers from “excessive work hours and substandard wages”, is best served by the workweek offset model. Howard, 274 F.3d at 1148; see Herman, 308 F.3d at 585-93. This was clearly articulated in Scott v. City of New York, in which the DOL advocated for the workweek offset model. 592 F.Supp.2d at 484. The District Court in that case found that “both the structure of the Act and its legislative history lend credence to DoL’s interpretation.” Id. The Court explained how a cumulative offset undermines the protections afforded by the FLSA:
The [overtime] requirement protects workers from the imposition of excessive hours by placing an immediate cost on the employer. If employers were allowed to bank credit for contractual overtime against future obligations to pay statutory overtime, it would place workers in the employer’s debt[.] Id. In essence, it would require employees to work large blocks of overtime without premium compensation.
5. Finally, the arguments for applying a cumulative offset are unpersuasive. The City claims that a workweek offset will result in a windfall to the employees but that seems implausible given the fact that, if the City had been correctly calculating its overtime rate and applying the § 207(h)(2) offset at every pay period, the offset would have been applied only to the overtime liability in that pay period. Moreover, the circuit court cases cited by the City do not provide support for a cumulative offset. In Singer v. City of Waco, 324 F.3d at 827, the Fifth Circuit held that § 207(h) was inapplicable, while in Kohlheim v. Glynn County, 915 F.2d at 1481, the Eleventh Circuit did not even explain why it allowed a cumulative offset.
In summary, the Court finds that the plaintiffs’ method of calculating damages is most compatible with both the language and purpose of the FLSA’s overtime requirements and the First Circuit’s understanding of those requirements. As such, the plaintiffs’ damages for unpaid overtime should be calculated on a workweek basis and any offsets pursuant to § 207(h)(2) should be attributed only to the singular workweeks in which both premiums and overtime were earned. The Court concludes that only the premium portions of the extra payments, i.e. the extra one-half of the regular rate, may be used to offset the City’s overtime liability. O’Brien II, 491 F.Supp.2d at 176.”
Click Rudy v. City of Lowell to read the entire order.
S.D.Ind.: FLSA Defendant Not Entitled to Discovery of Plaintiff’s Attorney’s Billing Records, Until Such Time Plaintiff Is “Prevailing Party”
Johnson v. Bridges of Indiana, Inc.
This case was before the court on the defendant’s motion to compel discovery of plaintiff’s attorney’s billing records. In denying the motion, the court noted that only a “prevailing” plaintiff is entitled to attorney’s fees. As such, the request was premature.
Denying the motion to compel, the court explained:
“The FLSA directs courts to award reasonable attorneys’ fees and costs to prevailing plaintiffs.” Spegon v. Catholic Bishop of Chicago, 175 F.3d 544, 550 (7th Cir.1999) (emphasis added). Federal Rule of Civil Procedure 54(d)(2) and the common practice in this District requires the court to establish an appropriate fee after the Plaintiff has prevailed at trial. Plaintiff has not yet, and may never, become a “prevailing plaintiff.” Rule 26(b)(1) of the Federal Rules of Civil Procedure explains: “Unless otherwise limited by court order, the scope of discovery is as follows: Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party’s claim or defense …. Because Plaintiff has not yet become a prevailing party, her attorney’s billing records are not relevant to any claim she has raised against Defendants, nor is it relevant to any defense that Defendants might raise.”
Click Johnson v. Bridges of Indiana, Inc. to read the entire decision.
U.S.S.C.: Oral Complaints Are Sufficient to Trigger the Anti-Retaliation Provisions of the Fair Labor Standards Act
Kasten v. Saint-Gobain Performance Plastics Corp.
Kasten brought an anti-retaliation suit against his former employer, respondent (Saint-Gobain), under the Fair Labor Standards Act of 1938 (Act), which forbids employers “to discharge . . . any employee because such employee has filed any complaint” alleging a violation of the Act, 29 U. S. C. §215(a)(3). In a related suit, the District Court found that Saint-Gobain violated the Act by placing timeclocks in a location that prevented workers from receiving credit for the time they spent donning and doffing work related protective gear. In this case Kasten claimed that he was discharged because he orally complained to company officials about the timeclocks. Holding that such oral complaints were not protected activity, the trial court granted the respondent summary judgment. Subsequently, the Seventh Circuit affirmed. Reversing, the Supreme Court held that the scope of statutory term “filed any complaint” includes oral, as well as written, complaints.
Click Kasten v. Saint-Gobain Performance Plastics Corp. to read the entire decision.
S.D.N.Y.: SOL Equitably Tolled, Where Decision on Plaintiffs’ Motion for Conditional Certification Delayed, Notwithstanding Plaintiffs’ Diligence In Pursuing Same
Yahraes v. Restaurant Associates Events Corp.
This case was before the court on plaintiffs’ motion seeking equitable tolling of their FLSA claims. During oral argument on plaintiffs’ motion to certify that this case may proceed as a collective action pursuant to 29 U.S.C. § 216(b), the court had questioned whether the 2007 FLSA claims, even assuming that defendants’ violation was willful, were still viable or were now time-barred. Plaintiffs conceded that, absent an order equitably tolling the statute of limitations, their claims were indeed outside of the statute of limitations. However, Plaintiffs argued that, since they had moved for conditional certification very early on in the case and only through events outside of their control had a decision on same been delayed, the court was due to toll the statute of limitations. The court agreed and tolled the statute of limitations.
The court reasoned:
“The FLSA provides for a two-year statute of limitations generally, with an additional one-year extension for willful violations. 29 U.S.C. § 255(a). In a FLSA collective action, the statute of limitations runs for each plaintiff until he files written consent with the court to join the lawsuit. Id. § 256(b). Thus, unlike the statute of limitations in a Rule 23 class action which is tolled for all putative class members upon the filing of the complaint, the limitations periods in a FLSA action continues to run until an individual affirmatively opts into the action. Moreover, “[s]igned consents do not relate back to the original filing date of the complaint.” Lee v. ABC Carpet & Home, 236 F.R.D. 193, 199 (S.D.N.Y.2006). Nonetheless, the court has the discretion to equitably toll the limitations period.
Federal courts should grant equitable tolling “sparingly,” Irwin v. Dep’t of Veterans Affairs, 498 U.S. 89, 96, 111 S.Ct. 453, 112 L.Ed.2d 435 (1990), and “only … in [ ] rare and exceptional circumstance[s],” Zerilli-Edelglass v. New York City Transit Auth., 333 F.3d 74, 80 (2d Cir.2003) (alteration in original) (internal quotation marks omitted). Equitable tolling is generally reserved for situations “where the claimant has actively pursued his judicial remedies by filing a defective pleading during the statutory period, or where the complainant has been induced or tricked by his adversary’s misconduct into allowing the filing deadline to pass.” Irwin, 498 U.S. at 96. Nevertheless, “[a] statute of limitations may be tolled as necessary to avoid inequitable circumstances.” Iavorski v. U.S. Immigration & Naturalization Serv., 232 F.3d 124, 129 (2d Cir.2000). In determining whether equitable tolling is warranted, the Second Circuit has stated that a court “must consider whether the person seeking application of the equitable tolling doctrine (1) has acted with reasonable diligence during the time period she seeks to have tolled, and (2) has proved that the circumstances are so extraordinary that the doctrine should apply.” Zerilli-Edelglass, 333 F.3d at 80-81 (internal quotation marks omitted).
The delay caused by the time required for a court to rule on a motion, such as one for certification of a collective action in a FLSA case, may be deemed an “extraordinary circumstance[ ]” justifying application of the equitable tolling doctrine. See Abadeer v. Tyson Foods, Inc., 2010 WL 5158873, at *2-4 (M.D.Tenn. Dec.14, 2010); Israel Antonio-Morales v. Bimbo’s Best Produce, Inc., 2009 WL 1591172, at *1 (E.D.La. Apr.20, 2009) (collecting cases for the proposition that “[c]ourts routinely grant equitable tolling in the FLSA collective action context to avoid prejudice to actual or potential opt-in plaintiffs that can arise from the unique procedural posture of collective actions”); Stickle v. Sciwestern Mkt. Support Ctr., 2008 WL 4446539, at *22 (D.Ariz. Sept.30, 2008) (collecting cases); Owens v. Bethlehem Mines Corp., 630 F.Supp. 309, 312 (S.D.W.V.1986). But see Hintergerger v. Catholic Health Sys., 2009 WL 3464134, at *14-15 (W.D.N.Y. Oct.21, 2009) (denying tolling for the time period while certification motion was pending).
Plaintiffs argue for equitable tolling primarily on the ground that they have diligently pursued their claims and, through no fault of their own, have been frustrated in their attempts to send notice any sooner to potential 216(b) opt-in plaintiffs. Docket Entry 96. I find that the circumstances of this case, and in particular plaintiffs’ diligence in pursuing the FLSA claims on behalf of putative opt-ins, warrant equitable tolling to avoid an inequitable result. A discussion of the procedural history of this case will explain the “extraordinary circumstances” present here that justify tolling.
In addition, plaintiffs contend that Judge Townes’ tolling is still ongoing. Docket Entries 96, 102. For the reasons just stated, I do not reach this question either.
Less than one month after filing an amended complaint, plaintiffs filed a fully-briefed motion to certify the collective action.FN4 Docket Entries 33-39. In their opposition to plaintiffs’ certification motion, defendants noted that one of the defendants, Amerivents, had recently entered into an agreement with the New York State Department of Labor (“NYSDOL”) to pay unpaid wages. Docket Entry 41 at 14. During a conference in June, 2010, Judge Townes issued a stay of the proceedings until November 19, 2010, to await the result of the NYSDOL investigation. The parties agree that plaintiffs’ claims were tolled for approximately 160 days while the stay was in place. See Docket Entry 102 n. 3 (stating that 160 days is “the minimum undisputed number of days the statute of limitations was tolled”); see also Tr. 5.
After the stay was lifted, defendants requested leave to re-brief their opposition to the certification motion, and sought to defer the certification motion until Judge Townes decided their motion to dismiss, which had not yet even been filed. Docket Entry 81. During a telephone conference held in December, 2010, I set a short briefing schedule for the certification motion, with the fully-briefed motion due at the end of January, 2011. At the oral argument held on February 9, 2011, I granted plaintiffs’ motion for certification of the collective action.
This procedural history demonstrates that plaintiffs have vigorously pursued their claims and, through no fault of their own, have been delayed in prosecuting their action and distributing 216(b) notice to potential opt-in plaintiffs. Moreover, defendants’ actions-re-briefing the certification motion, seeking to defer certification in anticipation of dispositive motions, and failing to produce documents in connection with the NYSDOL investigation have frustrated plaintiffs’ diligent attempts to ensure that claims did not expire. I attribute no trickery or wrongdoing on the part of defendants. I do, however, conclude that defendants will not be prejudiced by any tolling because they have been on notice since the complaint was served in March, 2010, that they were potentially liable for 2007 FLSA claims. Accordingly, in the interest of fairness, I find equitable tolling is warranted from the date plaintiffs served their original certification motion, May 3, 2010, to June 8, 2010, the date Judge Townes issued the stay (a period of 37 days), and from the date plaintiffs re-filed their certification motion, December 17, 2010, to February 9, 2011, the date I granted it (a period of 55 days). The additional 92 days will permit any collective member who timely opts in to maintain a FLSA claim based on wages allegedly due for labor performed in September, 2007, assuming plaintiffs establish defendants’ willful violation of the statute.
For the reasons stated above, I find equitable tolling of plaintiffs’ FLSA claims warranted in light of the procedural history of this case.”
Click Yahraes v. Restaurant Associates Events Corp. to read the entire decision.
E.D.Mo.: First-Filed Rule Inapplicable to FLSA Case For A Variety of Reasons
Arnold v. DirecTV, Inc.
This FLSA putative collective action was before the court on defendants’ motion to dismiss. The opinion is of interest, because it discusses an issue raised more and more frequently in recent years, given the proliferation of FLSA cases around the country- the so-called first-filed rule. Here, the defendants were sued in state court in the first action. Nine (9) days later, the plaintiffs in this case filed a second case, alleging similar claims. The defendants moved to dismiss this second-filed case, in favor of the first-filed case, in part based on the first-filed rule. The court rejected the applicability of the first-filed rule in this context and suggested that given the opt-in procedures applicable in FLSA cases, the first-filed rule may not be applicable to FLSA cases in general.
The court reasoned:
“To conserve judicial resources and avoid conflicting rulings, the first-filed rule gives priority, for purposes of choosing among possible venues when parallel litigation has been instituted in separate courts, to the party who first establishes jurisdiction.” Nw. Airlines, Inc. v. Am. Airlines, Inc., 989 F.2d 1002, 1006 (8th Cir.1993). The rule “is not intended to be rigid, mechanical, or inflexible, but is to be applied in a manner best serving the interests of justice.” Id. at 1005 (citation omitted). The prevailing standard is that “in the absence of compelling circumstances the first-filed rule should apply.” Id. at 1005 (citation omitted). However, district courts enjoy wide discretion in applying the first-filed rule. Id. at 1004.
Upon review of the record, the relevant case law, and the arguments of the parties, this Court declines to apply the first-filed rule to dismiss or stay the present case, for several reasons. Although several district courts have applied the first-filed rule to FLSA collective actions, see, e.g., Abushalieh v. Am. Eagle Exp., Inc., No. 10-211, 2010 WL 2301150 (D.N.J. Jun. 7, 2010), this Court is not convinced that the rule is a good fit for such actions. Generally, the rule is applied when the two cases are between the same parties litigating essentially the same issue, with one party being the plaintiff in one case and the defendant in the other, and vice versa. The decision of whether to apply the first-filed often turns on whether one party unfairly “raced to the courthouse.” See, e.g., Innovation Ventures, L.L.C. v. Custom Nutrition Labs., 534 F.Supp.2d 754 (E.D.Mich.2008). This is not the case here.
Application of the rule in the FLSA opt-in collective action context would, in theory, limit all potential members of a nation-wide class to opt into just one and the same collective action in all the federal district courts. Defendants have not pointed to anything in the FLSA itself that indicates that such a situation was intended. The Court notes that the prejudice claimed by Defendants resulting from having to defend against two (or more) contemporaneous lawsuits raising the same FLSA claims could be mitigated by Defendants availing themselves of multidistrict litigation options. See, e.g., In re Wells Fargo Home Mortg. Overtime Pay Litig., 571 F.3d 953 (9th Cir.2009) (multidistrict litigation arising from three putative collective actions and one putative class action against home mortgage company on behalf of current and former home mortgage consultants seeking overtime pay).
In addition, the Court is not convinced that in this context, the date that Lang was filed in state court should be the operative date for determining which case, i.e., Lang or the present case, was filed first for purpose of the first-filed rule. Clearly, had Lang remained in state court, this Court would not dismiss or stay the present action in deference to Lang. In light of the fact that the first-filed rule is one of comity as between the federal district courts, it seems to this Court that the question is which federal court first obtained jurisdiction over the issues and parties. At least one federal district court has so held. See N. Am. Commc’ns, Inc. v. Homeowners Loan Corp., No. CIVA 3:2006-147, 2007 WL 184776, at *3 n. 1 (W.D.Pa. Jan. 22, 2007) (“In applying the first-filed rule, the first-filed case is the federal civil action which is first in time, whether by removal or the actual filing of a civil action in federal court. Since the rule the Court follows today is limited to federal district courts, the plaintiff in a state civil action can avoid being the second-filed matter by simply filing a complaint in a federal district court, not a state trial court at the outset.”).
Lastly, but not of least significance, the present case has a defendant, DTV Home Services II, LLC, that is not a defendant in Lang and Lang has two defendants that are not defendants here. Although DTV Home Services II, LLC, is a wholly-owned subsidiary of DIRECTV, it is a separate party. See Martin v. Citizens Fin. Group, Inc., No. 10-260, 2010 WL 3239187, at *2 (E.D .Pa. Aug. 13, 2010) (declining to apply first-filed rule to a FLSA case where one of the defendants was not a defendant in an earlier case raising the same issues); Gardner v. GC Servs., LP, No. 10-CV-997-IEG, 2010 WL 2721271, at *5-6 (S.D.Cal. July 6, 2010).
Although not determinative, the Court also notes that with the filing of the amended complaint in Lang, the nature of that suit has changed. In addition, the class action aspects of the two suits are different-one brought under Missouri law and one brought under Louisiana law. See Gardner, 2010 WL 2721271, at *5-6. In sum, the Court declines to dismiss or stay this action under the first-filed rule, and turns to consider the merits of Defendants’ motion to dismiss for failure to state a claim and on other grounds.”
Click Arnold v. DirecTV, Inc. to read the entire opinion.
S.D.N.Y.: Class Action Waiver Unenforceable in FLSA Case, Because Cost of Individual Litigation vs. Potential Recovery Prohibitive
Sutherland v. Ernst & Young LLP
This case was before the court on Defendant’s motion to stay the proceedings and compel arbitration on an individual (rather than class/collective) basis. There was no dispute as to whether the Plaintiff had executed the arbitration agreement, containing the class waiver, however the court held that the class waiver was unenforceable, after a lengthy discussion of Second Circuit law and the impact of the recent United States Supreme Court case, Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 130 S.Ct. 1758 (2010).
The court reasoned:
“Because the Amex decision retains its persuasive force, the Court applies the test adopted in Amex to determine the enforceability of the class waiver provision here at issue. In the totality of the circumstances, the Court finds that the class waiver provision is invalid because it prevents Sutherland from vindicating her statutory rights.
1. Cost to Individual Plaintiff Versus Potential Recovery
The record supports Sutherland’s argument that her maximum potential recovery would be too meager to justify the expenses required for the individual prosecution of her claim. Sutherland alleges “an actual overtime loss of approximately $1,867.02, with potentially liquidated damages of an equal amount under the FLSA.” (Folkenflik Decl. ¶ 8; see also Sutherland Deck. ¶ 4.) If her only option were to prosecute her claim on an individual basis, Sutherland would be required to pay expenses that would dwarf her potential recovery.
Sutherland’s uncontested submission estimates that her attorney’s fees during arbitration will exceed $160,000, and that costs will exceed $6,000. (Folkenflik Decl. ¶ 20, 24.) Sutherland will utilize expert assistance in support of her claims.(Id. ¶ 22.) Her expert, a professor of accountancy, has submitted an affidavit stating that his fees may exceed $33,500, and that he requires a retainer payment of $25,000. (Carmichael Decl. ¶ 5.) In sum, Sutherland would be required to spend approximately $200,000 in order to recover double her overtime loss of approximately $1,867 .02. Only a “lunatic or a fanatic” would undertake such an endeavor. Carnegie v. Household Intern., Inc., 376 F.3d 656, 661 (7th Cir.2004). Indeed, rather than prosecuting her low-value, high-cost claim on an individual basis, Sutherland “would give up any rights” she might have to recover overtime payments allegedly owed to her. (Sutherland Decl.¶ 2.)
Pursuant to the E & Y Agreement, Sutherland is responsible for the Court Equivalent Fee, or a fee specified by the arbitration provider, whichever is less; arbitration fees and costs are to be shared equally between the parties. (Reece Decl. Exh. D¶ IV.P.) Sutherland has submitted an uncontested affidavit stating that arbitration fees would amount to $24,000, and that the applicable Court Equivalent Fee is $350. (Folkenflik Decl.¶ 24.) E & Y’s offer to pay such costs, which the Court has factored into Sutherland’s expenses as detailed above, thus lessens her burden by $12,350. Although this amount is not insignificant, it is hardly enough to allow Sutherland to bring her claims on an individual basis: she would still be required to spend approximately $200,000 on attorney’s fees and costs, as well as expert fees, in order to recover double her overtime loss of approximately $1,867.02.
E & Y’s attempt to distinguish the cost-recovery differential in Amex from the differential present here is unavailing. The “median plaintiff” in Amex would have recovered damages of $1,751, and the expert’s services would have cost at least several hundred thousand dollars. Amex, 554 F.3d at 317. According to E & Y, a “median plaintiff” in the instant matter could recover “substantially more,” and expert fees here amount to “a small fraction” of those at issue in Amex. (Def. Reply at 6-7.) The Amex decision did not, however, set a cost-to-recovery ratio below which claims are deemed “prosecutable.” The court instead embraced a functional approach, which “depends upon a showing that the size of the recovery received by any individual plaintiff will be too small to justify the expenditure of bringing an individual action.” Amex, 554 F.3d at 320. Sutherland has satisfied her burden on that score.
E & Y also cites to authorities in which the cost-recovery differential was held not to preclude the prosecution of claims on an individual basis. Such decisions are either inapposite or unpersuasive. In Pomposi v. GameStop, Inc., for instance, a class waiver was enforced where the amount in controversy was $11,000, and plaintiff’s total fees and costs ranged from $46,000 to $62,000.09 Civ. 0340, 2010 WL 147196, at *7 (D.Conn. Jan. 11, 2010). The court in Pomposi did not, however, meaningfully discuss plaintiff’s ability to retain counsel notwithstanding the differential between potential costs and recovery. E & Y cites Ornelas v. Sonic-Denver T, Inc., No. 06 Civ. 253, 2007 WL 274738 (D.Colo. Jan. 29, 2007), as standing for the proposition that “compelling arbitration would not preclude plaintiff from pursuing his claims where damages were at least $3500.” (Def. Mem. at 12.) But the plaintiff in Ornelas was allegedly entitled to (i) a trebling of the approximately $3500 in actual damages, and (ii) unspecified punitive damages and interest. Id. at *6. Moreover, the plaintiff in Ornelas apparently would not incur any expert witness fees. Id. at *7. Finally, E & Y offers Anglin v. Tower Loan of Miss., Inc., 635 F.Supp.2d 523 (S.D.Miss.2009) as precedent for “compelling arbitration where damages, attorney’s fees and punitive damages would result in [a] recovery of over $5,000.” (Def. Reply at 12.) The nub of Anglin, however, was that the plaintiff “made no effort” to demonstrate the prohibitive costs of individual arbitration. Anglin, 635 F.Supp.2d at 529. By contrast, Sutherland has “substantial[ly] demonstrat[ed]” that an inability to prosecute her claims on a class basis “would be tantamount to an inability to assert [her] claims at all.” Amex, 554 F.3d at 302-03 n.1.
2. Ability to Obtain Legal Representation
Even if Sutherland were willing to incur approximately $200,000 to recover a few thousand dollars, she would be unable to retain an attorney to prosecute her individual claim. This is due largely to the E & Y Agreement’s obstacles to reimbursement of fees and expenses. Whether attorney’s fees and expenses incurred during arbitration are compensable is subject to the discretion of the arbitrators. (Reece Decl. Exh. D ¶ IV.P.3.) The amount of such reimbursement is also left to the arbitrators’ discretion. (See id. (arbitrators may award attorney’s fees, “in whole or part, in accordance with applicable law or in the interest of justice”); 29 U.S.C. § 216(b) (providing for the reimbursement of “reasonable” attorney’s fees).)
In light of the foregoing, Sutherland cannot reasonably be expected to retain an attorney to pursue her individual claim, and E & Y has not submitted an affidavit stating otherwise. Sutherland cannot afford to advance the fees and costs in order to hire an attorney on an hourly basis: she has remained unemployed since her termination from E & Y in December 2009; she has no savings, and owes $35,000 in student loans. (Sutherland Decl. ¶ 5.) Counsel for Sutherland will not prosecute her individual claim without charge, and will not advance the required costs where the E & Y Agreement’s fee-shifting provisions present little possibility of being made whole. (Folkenflik Decl. ¶ 25.) As the uncontested affidavit of Sutherland’s counsel reflects, Sutherland would find no attorney willing to represent her under the circumstances. (Id. ¶ 27.) Cf. Kristian, 446 F.3d at 60 (“[I]t would not make economic sense for an individual to retain an attorney to handle one of these cases on an hourly basis and it is hard to see how any lawyer could advise a client to do so.”) (internal quotations omitted).
Sutherland’s only option in pursuing her individual claim is thus to retain an attorney on a contingent fee basis. But just as no rational person would expend hundreds of thousands of dollars to recover a few thousand dollars in damages, “no attorney (regardless of competence) would ever take such a case on a contingent fee basis .” Caban v. J.P. Morgan Chase & Co., 606 F.Supp.2d 1361, 1371 (S.D.Fla.2009); see also Folkenflik Decl.¶ 27. Cf. Kristian, 446 F.3d at 59 (“[I]t would not make economic sense for an attorney to agree to represent any of the plaintiffs in these cases in exchange for 33 1/3% or even a greater percentage of the individual’s recovery.”) (internal quotations omitted). E & Y has submitted no evidence that an attorney would expend approximately $200,000 in time and costs in return for a mere chance to earn potentially one-third of Sutherland’s less than $4,000 recovery.
If Sutherland could aggregate her claim with the claims of others similarly situated, however, she would have no difficulty in obtaining legal representation. (See Folkenflik Decl.¶ 25; see also Pl. Reply at 3.) This is because class proceedings “achieve economies of time, effort, and expense….” Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 616 (1997) (internal quotations omitted).
3. The Practical Effect of Waiver
Enforcement of the class waiver provision in this case would effectively ban all proceedings by Sutherland against E & Y. She will be unable to pursue her claims, even if they are meritorious. As a result, E & Y would enjoy de facto immunity from liability for alleged violations of the labor laws. The legislative purposes in enacting such laws-including, for example, combating “labor conditions detrimental to the maintenance of the minimum standard of living” FLSA § 2(a), 29 U.S.C. § 202(a), and assuring workers “additional pay to compensate them for the burden of a workweek beyond” 40 hours per week, In re Novartis Wage and Hour Litig. Litig. 611 F.3d 141, 150 (2d Cir.2010)-would go unfulfilled. “Corporations should not be permitted to use class action waivers as a means to exculpate themselves from liability for small-value claims.” Dale v. Comcast Corp., 498 F.3d 1216, 1224 (11th Cir.2007).
4. Summary
Having examined the totality of the facts and circumstances, the Court finds that the class waiver provision here at issue is unenforceable because it prevents Sutherland from vindicating her statutory rights. See Amex, 554 F.3d at 302-03 n.1.
V. Future Proceedings
Although the class waiver provision is unenforceable, the Court cannot order E & Y to submit to class arbitration. After the offending provision is severed from the E & Y Agreement, (see Reece Decl. Exh. D ¶ V.F.), the Agreement is rendered silent as to whether class arbitration is permissible. In accordance with Stolt-Nielsen, class arbitration may not be imposed on parties whose arbitration agreements are silent on the permissibility of class proceedings. 130 S.Ct. at 1764, 1775. See also Fensterstock v. Educ. Fin. Partners, 611 F.3d 124, 140 (2d Cir.2010). The Court must accordingly deny E & Y’s motion to compel arbitration.”
It will be interesting to see whether courts in other circuits will follow this well-reasoned opinion. This is an area of FLSA jurisprudence where there is a wide divergence of opinions. The Eleventh Circuit for example has long-held that FLSA Collective Action rights can be waived by agreement.
Click Sutherland v. Ernst & Young LLP to read the entire opinion.
Overtime Law Blog 