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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.
M.D.Ga.: DOL Properly Invoked the “Government Informer Privilege” Where Defendants Sought Identities of Witnesses Who Cooperated in Pre-Suit DOL Investigation
Solis v. New China Buffet No. 8, Inc.
This case was before the court on defendants’ motion to compel the DOL (“DOL” or “Plaintiff”) to provide complete answers to discovery requests. Specifically, Defendants sought information relating to the DOL’s investigation (prior to the filing of the lawsuit) of this Fair Labor Standards Act (“FLSA”) case, particularly the identities of any employees that gave statements to the DOL, the contents of those statements, and the contents of the investigative file. The DOL refused to provide that information based on the informer’s privilege. The court upheld the DOL’s refusal based on the investigation privilege. However, the court ordered the DOL to provide the full contact information for all witnesses disclosed by the DOL in their Rule 26 disclosures.
The court boiled Defendants’ arguments down as follows:
“Defendants mount two arguments against Plaintiff’s refusal to disclose the requested information and documents. First, they argue that Plaintiff has not properly invoked the informer’s privilege. Second, they argue that the informer’s privilege should not protect the information they are seeking.”
Rejecting the Defendants’ first contention, that the DOL had not properly invoked the privilege, the court explained:
“Plaintiff properly invoked the informer’s privilege in this case. In response to Defendants’ Motion to Compel, Plaintiff produced a declaration from Acting Wage and Hour Administrator Nancy J. Leppink . In her declaration, Administrator Leppink stated that she had personally reviewed the relevant parts of the investigation file, including information withheld or redacted. [Doc. 34–1 ¶ 8]. She went on to the state that the Secretary of Labor objected to the production of the requested documents and identifying information because it was protected from disclosure pursuant to the informant’s privilege. [Id. ¶ 11]. She then “invoke[d] the informant’s privilege to protect from disclosure the identities, and any statements and other documents, or portions thereof, which could reveal the identifies, of persons who have provided information to the U.S. Department of Labor in the instant case.” [Id. ¶ 12].”
Turning to the applicability of the informer privilege to the case at bar, the court held that the discovery sought was properly the subject of the privilege. Describing the nature and purpose of the informer privilege, the court explained:
“What courts have termed the “informer’s privilege is in reality the Government’s privilege to withhold from disclosure the identity of persons who furnish information of violations of law to officers charged with enforcement of that law.” Rovario v. United States, 353 U.S. 53, 59, 77 S.Ct. 623, 627, 1 L.Ed.2d 639 (1957). The privilege protects “employees with legitimate complaints, exercising their constitutional and statutory right to present their grievances to the government.” Brennan v. Engineered Prods. Inc., 506 F.2d 299, 302 (8th Cir.1974). “The purpose of the privilege is the furtherance and protection of the public interest in effective law enforcement.” Rovario, 353 U.S. at 59, 77 S.Ct. at 627. The government may invoke the privilege “to conceal the names of employees who precipitated the suit by filing complaints with the Department of Labor.” Does I thru XXIII v. Advanced Textile Corp. ., 214 F.3d 1058, 1072 (9th Cir.2000). The privilege “applies whether the [Department of Labor] solicited statements from an employee or the employee made a complaint to the [ Department of Labor].” Martin v. New York City Transit Auth., 148 F.R.D. 56, 63 (E.D.N.Y.1993) (citing Dole v. Local 1942, International Bhd. of Elec. Workers, AFL–CIO, 870 F.2d 368, 370–71 (7th Cir.1989)). The privilege applies to both current and former employees of a company whose workers have communicated with the Department of Labor. Hodgson v. Charles Martin Inspectors of Petroleum, Inc., 459 F.2d 303, 305–06 (5th Cir.1972).
The informer’s privilege is not absolute. Its scope is “limited by the underlying purpose of the privilege as balanced against the fundamental requirements of fairness and disclosure in the litigation process.” Charles Martin, 459 F.2d at 305. If the “disclosure of the contents of a communication will not tend to reveal the identity of an informer, the contents are not privileged.” Rovario, 353 U.S. at 60, 77 S.Ct. at 627. Generally, in questions involving the privilege, “the interests to be balanced … are the public’s interest in efficient enforcement of the Act, the informer’s right to be protected against possible retaliation, and the defendant’s need to prepare for trial.” Charles Martin, 459 F.2d at 305. The defendant’s need for certain information is generally less weighty during the discovery phase, as opposed to the pre-trial stage of the proceedings. See id. at 307, Brennan, 506 F.2d at 303.”
The court then held that the privilege was indeed applicable here. In so doing, the court rejected Defendants’ argument that it would be inefficient to depose all 48 witnesses disclosed by the DOL, and questioned Defendants’ base assertion that they needed to know who participated investigation:
“The Defendants’ need to depose all forty-eight former employees listed in Appendix A, or even only those who provided statements, in order to adequately prepare a defense appears far from pressing. The relevance of the identity of informers in a FLSA case is often questionable. See Chao v. Westside Drywall, Inc., 254 F.R.D. 651, 660 (D.Or.2009) (noting that “the names of informers are [often] irrelevant to whether the employer properly paid its employees and otherwise complied with the Act’s requirements”). Defendants have failed to make any showing that this case is outside the normal situation wherein a defendant has access to information and its own witnesses regarding its wage and record keeping practices, and the identity of informers is largely irrelevant. In any event, courts have generally found that the cost and inconvenience that Defendants seek to avoid does not tip the balance in favor of disclosure. See Charles Martin, 459 F.2d at 307 (“[T]hat depositions would be expensive show that the statements would facilitate defendant’s investigation but such facilitation is not a requirement for fundamental fairness to the defendant.”); Brennan, 506 F.2d at 303 & n. 3 (noting that at the discovery stage defendant was entitled to know “the charges, dates, names of underpaid employees, and names of those persons known to the plaintiff who had information concerning the issues” and that defendant had the ability to depose nineteen workers listed as possessing such information).”
For these reasons, the court upheld the application of the informer privilege. However, because the DOL had disclosed the names of the witnesses at issue, among the 48 witnesses on their Rule 26 disclosures, the court held Defendants were entitled to their contact information, notwithstanding the fact that the DOL did not have to identify whom of the 48 witnesses had given statements in the pre-suit investigation.
While this case is of limited usefulness to private practitioners, it does give an interesting analysis into a privilege that seems to be litigated more and more, with the DOL getting more active in litigating cases.
Click Solis v. New China Buffet No. 8, Inc. to read the entire Order on Defendants’ Motion to Compel.
D.Md.: Loading/Unloading of Materials Could Be Deemed “Integral and Indispensable” for Fire Protection Services; DMSJ Denied
Ross v. Wolf Fire Protection, Inc.
Plaintiffs, employees who installed fire protection services (sprinklers) on behalf of their employer, filed this lawsuit claiming that Defendant failed to pay them for all of their compensable work time. Specifically, Plaintiffs asserted that Defendant improperly failed to start their work day each day when they were required to come to Defendant’s facility to pick up expensive tools necessary for their work and load Defendant’s trucks. Similarly, Plaintiffs alleged that Defendant failed to properly pay them for time spent when they were required to return such tools (and work vehicles) to Defendant’s facility at the end of each work day. The Defendant argued that such time was precluded by the Portal-to-Portal Act, and in any event was de minimus such that it was not compensable time. The court held that the facts could support a finding that such time was “integral and indispensable” to their work, thus making it potentially compensable. As such, it denied Defendant’s motion.
Rejecting Defendant’s contentions, the court reasoned:
“The Defendants argue that the Plaintiffs “have never been instructed or directed to come to the [warehouse] before the start of the workday or at the end of the workday to pick up or drop off tools,” so loading of equipment at the warehouse cannot be an integral and indispensable part of their jobs. Defs.’ Mot. 7. The Plaintiffs contend that loading the equipment was integral because the equipment was necessary to installing sprinkler systems, and the Defendants required that they pick up the equipment at the warehouse. Pl.’s Opp’n 2–4.
An activity is “integral and indispensable” to the employee’s principal activities if it is “(1) necessary to the principal work performed and (2) done for the benefit of the employer.” Perez, 601 F.Supp.2d at 676 (citing Alvarez v. IBP, Inc., 399 F.3d 894, 902–03 (9th Cir.2003)).
The parties do not dispute that the Plaintiffs’ principal work was sprinkler system installation. See Defs.’ Mot. 6; Pls.’ Opp’n 2. Phillips’s affidavit is that the equipment he loaded and unloaded included items “necessary” to installing the sprinkler systems, such as the sprinkler heads, and because this equipment was expensive, Fire Protection “did not want [it] delivered directly to the job site” and “required [employees] to pick the[ ] [equipment] up at the warehouse, sign for [it], and account for [it].” Phillips Aff. ¶ 9.
From the evidence in Phillips’s affidavit, a reasonable factfinder could conclude that Phillips needed the equipment loaded at the warehouse to complete his job (the first part of the “integral and indispensable” inquiry). From his testimony that Fire Protection did not want expensive items delivered directly to the job sites, and required that the pipefitters pick up and sign for the equipment, a reasonable factfinder could conclude that the loading and unloading was “done for the benefit of the employer.” It is genuinely disputed whether Fire Protection required the plaintiffs to load and unload equipment, and whether the loading and unloading was “integral” to their “principal activity” requiring compensation under the FLSA.”
Rejecting Defendant’s contention that Plaintiffs were not entitled to be paid for travel time, the court explained:
“The Defendants argue that the Plaintiffs’ “voluntary carpooling” while “transporting tools, equipment and supplies” is not compensable under the FLSA. Defs.’ Reply 4. The Plaintiffs contend that because their workday started with loading the trucks at the warehouse, they must be compensated for all subsequent travel time within the workday. Pls.’ Opp’n 3–5.
The Portal–to–Portal Act did not change the “continuous workday” rule that “any walking, riding, or traveling time that occurs after the beginning of the employee’s first principal activity and before the end of the employee’s last principal activity … is covered by the FLSA.” Epps, 2011 WL 1566004, at *5 (internal quotation marks omitted). Applicable regulations provide that:
Time spent by an employee in travel as part of his principal activity, such as travel from job site to job site during the workday must be counted as hours worked. Where an employee is required to report to a meeting place … to pick up and to carry tools, the travel from the designated place to the work place is part of the day’s work, and must be counted as hours worked regardless of contract, custom, or practice. 29 C.F.R. § 785.38.
As discussed above, Phillips’s affidavit that Fire Protection required him to report to the warehouse to load and sign out expensive equipment Fire Protection did not want delivered directly to the job site creates a genuine dispute whether the loading and unloading was a principal activity. Viewing the evidence in the light most favorable to the Plaintiffs, it also creates a genuine dispute about whether travel from the warehouse to the job site and the return to the warehouse at the end of the day are “part of the day’s work” requiring compensation under the FLSA. The Defendants’ motion for summary judgment on the Plaintiffs’ FLSA unpaid wages claim will be denied.”
The issues discussed in this case are far from unique in the work world. However, many employers continue to violate the law, assuming that they need only pay employees for time spent at customer work sites, where the employer is profiting from the employees’ work. This case serves as a reminder that this is a misconception of the law.
Click Ross v. Wolf Fire Protection, Inc. to read the entire Memorandum and Opinion.
Direct Care Job Quality Improvement Act Would Amend the FLSA to Include Basic Labor Protections for Home Care Workers
The Direct Care Job Quality Improvement Act [S. 1273/H.R. 2341] – a bill that would help create a more stable, valued direct care workforce was introduced on 6/23/2011, by Rep. Linda Sanchez (D-CA) and Sen. Robert P. Casey, Jr. (D-PA). Senator Tom Harkin (D-IA), Chairman of the Senate Health, Education, Labor and Pensions committee and Sen. Bernie Sanders (I-VT) were also original co-sponsors of the Senate bill. The House bill had twenty-one original co-sponsors. This legislation takes major steps towards ensuring the health, autonomy and well-being of more than 13 million Americans with long-term care needs today and an estimated 27 million by 2050.
The Direct Care Job Quality Improvement Act would amend the Fair Labor Standards Act (FLSA) to include basic labor protections for home care workers. Currently, FLSA covers domestic service workers and most direct care workers in institutional settings such as nursing homes; however, the law continues to exclude home care workers from basic minimum wage and overtime protections.
In addition to extending wage and overtime protections for home care workers, The Direct Care Job Quality Improvement Act would:
- Establish data collection and reporting requirements to monitor important workforce indicators such as size, compensation levels, turnover rates and vacancies.
- Improve the recruitment and retention of direct care workers by providing grants to states to expand and support efforts aimed at recruiting, training and retaining an adequate supply of direct care workers.
To read more about the proposed legislation click here.
S.D.Ind.: Court Erred In Resolving MCA Exemption Issues on Motion for Conditional Certification; On Reconsideration Motion Granted
Thompson v. K.R. Drenth Trucking, Inc.
This case was before the court on plaintiffs’ motion for reconsideration of the court’s order denying their motion for conditional certification of a collective action. The case arose out of allegations that defendants violated the Fair Labor Standards Act (“FLSA”) by failing to pay a certain group of truck drivers (“plaintiffs”) overtime premiums. Initially, the court denied Plaintiffs’ Motion. In doing so, “the Court held that the Motor Carrier Act exemption applied to [the] named Plaintiffs… thus rendering them ineligible for overtime pay and unsuitable collective action representatives.” In their motion for reconsideration, the plaintiffs asserted that the court had previously erred by inappropriately resolving the merits of the Motor Carrier Act exemption, with respect to the named-plaintiffs at the conditional certification stage. The court agreed, and upon reconsideration granted conditional certification.
The court explained:
“In the February 11, 2011 Entry (Dkt.68), this Court acknowledged that the issue of whether Thompson and Hayden engaged in interstate commerce was “hotly contested.” Plaintiffs emphasized that both Thompson and Hayden were Non–Recyclable Drivers who regularly transported non-recyclable materials within the State of Indiana. Plaintiffs argued that since they never engaged in interstate commerce as part of their “regular” or “normal” duties, Thompson and Hayden are suitable collective action representatives. KRD counters that any of its drivers, including Thompson and Hayden, “could be called upon at any time to carry any load, whether intrastate or interstate,” meaning the MCA exemption applies. (Dkt. 71 at 4). And, indeed, Thompson and Hayden each crossed Indiana state lines on one occasion to transport KRD equipment to South Carolina.
In its prior entry, the Court found KRD’s argument persuasive, determining that the MCA exemption applied to Thompson and Hayden. In other words, even if Thompson and Hayden rarely crossed state lines (or, for that matter, hauled recyclable material destined for out-of-state purchasers), they could have been called upon to do so in their regular course of work. For this reason, the Court denied Plaintiffs’ motion for conditional certification.
Having now reviewed a more thorough body of case law, the Court finds that it erred by, in effect, making a merits determination at this early stage. As Plaintiffs emphasize, they have a “lenient” burden at this stage of the proceedings and, as such, courts do not reach the merits of Plaintiffs’ FLSA claims. Fravel v. County of Lake, 2008 WL 2704744, at *2 (N.D.Ind. July 7, 2008) (citations omitted). However, it is worth noting that even at this early stage, a court must also ensure that the proposed class representatives are adequate.”
Luckily for the plaintiffs here, the court recognized its initial error and corrected it almost immediately. The court’s decision serves as a reminder that courts simply do not resolve the merits of an FLSA case at the conditional certification stage.
Click Thompson v. K.R. Drenth Trucking, Inc. to read the court’s Entry on Plaintiffs’ Motion to Reconsider.
D.Md.: For Application of Outside Sales Exemption, Any Fixed Site Used By Employee To Solicit Sales Is Considered Employer’s Place of Business
Speert v. Proficio Mortgage Ventures, LLC
This case was before the court on the plaintiffs’ motion for partial summary judgment. The case concerned a group of mortgage loan originators who claimed they were wrongly denied minimum wages and overtime compensation by defendants. As discussed here, plaintiffs, who were loan originators employed by defendants, moved for a finding that the “outside sales exemption” was inapplicable to them. It appears undisputed that the plaintiffs worked in a satellite or branch office, rather than defendants’ main office or headquarters. Despite this fact, the court awarded plaintiffs summary judgment on this issue.
Citing the relevant CFR regs, the court explained:
“The only point otherwise argued by Defendants is that Plaintiffs concede they never performed any work at Proficio’s licensed Owings Mills, Maryland, office and, therefore, Plaintiffs have conceded they were “customarily and regularly engaged away from their employer’s place of business,” within the meaning of the “outside sales” exemption of 29 C.F.R. § 541.500. (Defs.’ Opp. 10.) Defendants’ interpretation of the exemption is contrary to the explanatory language of 29 C.F.R. § 541.502, which states, “[A]ny fixed site, whether home or office, used by a salesperson as a headquarters or for telephonic solicitation of sales is considered one of the employer’s places of business, even though the employer is not in any formal sense the owner or tenant of the property.” Given that language, it matters not whether Plaintiffs worked in Proficio’s “licensed” location or in another location. Defendants have not sustained their burden of proving by clear and convincing evidence the applicability of the “outside sales” exemption to Plaintiffs. In fact, no genuine dispute of material fact exists on the applicability of this exemption. It does not apply to the Plaintiffs.”
Although the law is fairly clear in this area, this case serves as a reminder that employees need not be working out of the employer’s headquarter’s or “home” office, in order to be considered working from an inside sales location within the meaning of the FLSA.
Click Speert v. Proficio Mortgage Ventures, LLC to read the entire Memorandum Opinion.
U.S.Jud.Pan.Mult.Lit.: 4 Off-the-Clock Cases Against Foot Locker Centralized to Venue of First-Filed Case
In re: FOOT LOCKER, INC.
These proceedings were before the Multi District Panel, pursuant to 28 U.S.C. § 1407. The defendants (Foot Locker) moved to centralize several pending cases, all arising from similar claims, in the Eastern District of Pennsylvania. At the time Foot Locker’s motion was made four actions were pending in four districts. Plaintiffs in all actions oppose centralization. Notwithstanding the opposition of all plaintiffs in all cases, the Panel granted Foot Locker’s motion.
Largely breaking from its prior jurisprudence (in granting the motion over opposition of multiple parties), the Panel reasoned:
“On the basis of the papers filed and hearing session held, we find that these actions involve common questions of fact, and that centralization in the Eastern District of Pennsylvania will serve the convenience of the parties and witnesses and promote the just and efficient conduct of this litigation. No party disputes that these actions share factual questions arising out of allegations that Foot Locker routinely fails to pay retail employees wages for work they performed. These actions allege that (1) the timekeeping system used by Footlocker allows managers to modify or decrease the time recorded; and (2) Footlocker’s bonus policy encourages managers to force employees to work off-the-clock and to delete time recorded. As in In re Bank of America Wage and Hour Employment Practices Litigation, it appears that defendants’ timekeeping and labor budgeting policies and practices are corporate-wide and uniformly applied. See 706 F.Supp.2d 1369, 1371 (J.P.M.L.2010). Discovery among these actions regarding defendants’ corporate labor budgeting and timekeeping policies therefore will overlap. This litigation, like In re Bank of America, is distinguishable from wage and hour dockets “in which the Panel has denied centralization, because the duties of the employees at issue appeared to be subject to significant local variances.” Id. at 1371, n.3 (citing In re Tyson Foods, Inc., Meat Processing Facilities Fair Labor Standards Act (FLSA) Litig., 581 F.Supp.2d 1374, 1375 (J.P.M.L.2008)).
Plaintiffs’ primarily argue that informal coordination is preferable to centralization since only four actions are pending and plaintiffs are represented by common counsel. Plaintiffs make a strong case against centralization but, on balance, particularly given the likely overlap in discovery and pretrial proceedings, we are persuaded that centralization will promote the just and efficient conduct of this litigation. Though a large number of actions are not presently before the Panel, also weighing in favor of centralization is that additional related actions alleging similar class claims in other states could well be filed. Centralization in these circumstances will have the benefit of eliminating duplicative discovery; preventing inconsistent pretrial rulings, including with respect to class certification; and conserving the resources of the parties, their counsel, and the judiciary.
We are persuaded that the Eastern District of Pennsylvania is the most appropriate transferee district. The first-filed Pereira action has been pending there since May 2007, and Judge J. Curtis Joyner is familiar with the issues in this litigation. Although the Pereira action has been pending for some time, discovery is ongoing and, given that plaintiffs in all actions are represented by common counsel, plaintiffs will not be prejudiced by transfer to the Eastern District of Pennsylvania.”
Thus, although the Panel noted that the plaintiffs made a “strong case” against centralization, it centralized the case nonetheless.
Click In re: Foot Locker, Inc. to read the entire Transfer Order.
S.D.Tex.: Defendant’s Motion to Dismiss Collective Action Allegations Denied; Argument Inappropriately Raised at Pleading Stage
Richardson v. Wells Fargo Bank, N.A.
This case was before the court on the Motion to Dismiss Collective Action Allegations, or, in the Alternative, Motion for More Definite Statement (“Motion”). Plaintiff, a former personal banker for Wells Fargo, filed this collective action alleging that Defendant violated the Fair Labor Standards Act (“FLSA”) by failing to pay him overtime compensation for hours worked in excess of forty (40) per week. Plaintiff purported to sue also on behalf of all Wells Fargo personal bankers throughout the United States. Defendant filed the Motion, asserting that Plaintiff failed to plead sufficient facts to support the collective action allegations.
Holding such a motion was inappropriately made at the pleading stage, the court explained:
“Plaintiff alleges sufficient facts in his Complaint to satisfy the pleading requirements for collective actions under the FLSA. Plaintiff alleges that he and other similarly-situated personal bankers working for Wells Fargo were improperly classified as non-exempt, regularly worked more than forty hours per week, and were not paid overtime compensation for those additional hours. These are all factual allegations that, if proven, state a plausible claim for relief under the FLSA. See, e.g., Hoffman v. Cemex, Inc., 2009 WL 4825224, *3 (S.D.Tex. Dec.8, 2009) (Rosenthal, J.).
Additionally, dismissal of the collective action allegations under Rule 12(b)(6) is not appropriate. Whether the case should proceed as a collective action is properly addressed when Plaintiff moves for conditional certification and issuance of notice to the class. Id. at *4 (citing Mooney v. Aramco Servs. Co., 54 F.3d 1207, 1212 (5th Cir.1995)).
For the same reasons that dismissal under Rule 12(b)(6) is unwarranted, there is no need for Plaintiff to file a more definite statement. Plaintiff alleges an adequate factual basis for the FLSA claim and the Federal Rules require no more at this stage.
Plaintiff has adequately pled his FLSA claim. Whether the case should proceed as a collective action will be determined if and when Plaintiff moves for conditional certification and the issuance of notice.”
Armed with recent Supreme Court jurisprudence (Iqbal and Twombly), FLSA defendants are making more and more motions to dismiss as here. However, as this court correctly held, such motions, in effect, to “decertify” collective actions before they reach “stage 1” or the conditional certification stage are inappropriately made at the pleading stage of a case.
Click Richardson v. Wells Fargo Bank, N.A. to read the entire Memorandum and Order.
2d. Cir.: Award of Attorney’s Fees for All Time Worked Cannot Be Based Solely Upon Court’s Observation of Counsel
Scott v. City of New York
This case was before the Second Circuit for the second time on the issue of attorney’s fees. The plaintiffs prevailed in the underling case, but the plaintiffs’ attorney failed to keep contemporaneous time records. Nonetheless, following judgment for employees in a Fair Labor Standards Act (FLSA) suit, the trial court awarded plaintiffs’ attorney partial attorney fees. On the first appeal, the defendant appealed, and plaintiffs’ attorney cross-appealed from denial of certain fees. In a decision discussed here, the Court of Appeals, 626 F.3d 130, vacated the initial fee award and remanded because the district court did not explain the basis on which attorney was excepted from requirement to submit contemporaneous time records with fee application. Upon remand, the District Court, 2011 WL 867242, reinstated original award, and based the award on its own observations of plaintiffs’ counsel during the case. Both parties appealed. The Second Circuit held that the district court’s personal observation and opinions of attorney (alone) did not constitute exceptional circumstances that permitted award of attorney’s fees. Thus, the case was again remanded for a finding as to reasonable attorney’s fees.
The court reasoned:
“An award based entirely on the district court judge’s personal observation and opinions of the applying attorney, however, is contrary to Carey and must be vacated. If nothing else, permitting that basis for what should be a rare exception is completely unfair to an attorney who has done identical work, failed to keep the required contemporaneous records but whose reputation is unknown to the judge. It would also be unfair to that lesser-known attorney who has done good work but for one reason or another has failed to impress the judge. Moreover, such an “exception” is not an exception to the Carey rule at all. It is an abrogation. We interpreted Carey as conditioning attorney’s fees on contemporaneous records in all but the “rarest of cases.” Scott, 626 F.3d at 133. A district court judge has an opportunity to see and evaluate a lawyer’s work in all cases. On appellate review there are additional considerations. As we recognized in Carey, it is difficult if not impossible for courts of appeal to meaningfully review awards based entirely on a district court’s sense of fairness. 711 F.2d at 1147. Without contemporaneous records “we have little choice but to show considerable deference to the District Court’s conclusion as to how many hours were reasonably compensable.” Id. Abuse of discretion review in these instances, however, requires a more searching inquiry. While it is true that we will—by default—need to rely on a district court’s estimate of compensable time when Carey’s narrow exception is triggered, such deference is a necessary evil brought about only by some other good reason. It is not a justification unto itself.
We have been pointed to no evidence that would permit us to conclude that this case falls within an exception to the Carey rule that would justify an award of all the fees for time that might be documented by an attorney’s contemporaneous records. Nonetheless, we are persuaded that Puccio should be eligible to recover limited fees for any contemporaneously documented time that he was physically before the district court. We thus hold that entries in official court records (e.g. the docket, minute entries, and transcriptions of proceedings) may serve as reliable documentation of an attorney’s compensable hours in court at hearings and at trial and in conferences with the judge or other court personnel. Where the court’s docket reflects that Puccio was in the courtroom participating in trial or was in chambers in conference with the judge and other counsel, these entries, comparable to contemporaneous attorney time records, may be effective substitutes for Puccio’s own contemporaneous records. In so holding, we hasten to add that this is not an invitation for district courts to engage in the type of conjecture that has occurred here with respect to Puccio’s purported 120 hours of trial time. Instead, attorneys seeking fees must point to entries in the official court records that specifically and expressly demonstrate their presence before the court and indicate with reasonable certainty the duration of that presence. No accommodation is to be made for travel time or out-of-court preparation because that will vary from attorney to attorney and issue by issue. Finally, we emphasize that the onus of gathering the applicable docket entries and other court records, if any, is on the applying attorney, not the district court. The district courts are under no obligation to award fees based on such time. Our holding today merely clarifies that using such remedies in this limited fashion will not run afoul of Carey if the district court chooses to do so. We believe that such a regime prevents a totally inequitable result in cases such as this while, at the same time, preserving the strong incentive Carey creates for lawyers to keep and submit contemporaneous records.”
Accordingly, the Second Circuit vacated the district court’s order reinstating plaitniffs’ attorney’s fees, and remanded the case to the district court so that plaintiff could submit a new application for attorney’s fees based exclusively on official court records.
As some have noted, the series of decisions rendered in this case seem to be in contradiction to previous Second Circuit jurisprudence, which has not required contemporaneous time records in order to support an award of fees. Since the Second Circuit did not explicitly overrule its prior cases, it will be interesting to see what effect, if any, the Scott decisions will have on future cases.
Click Scott v. City of New York to read the entire Second Circuit opinion.
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