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E.D.N.Y.: Named-Plaintiff’s Failure to File Consent to Join Not Fatal to Collective Action, Where Defendants Acknowledged Intent to Proceed as Collective Action in Answer and Plaintiff Filed Sworn Affidavit

December 22, 2012 10:36 am / Leave a comment

Ahmed v. T.J. Maxx Corp.

This case was before the court on the plaintiff’s motion to conditionally authorize a collective action, pursuant to Section 216 of the Fair Labor Standards Act (“FLSA”), 29 U.S.C. §§ 201 et seq. As discussed here, the court held that the plaintiff had “commenced” his FLSA case for the purposes of serving as the representative plaintiff in a collective action, notwithstanding his initial failure to file a formal consent to join, as required by 216(b), by virtue of the defendant’s admissions regarding same in their answer and the fact that plaintiff filed an sworn (signed) affidavit in support of his motion.

Discussing the issue, the court explained:

Defendants maintain, as an initial matter, that Ahmed’s case cannot proceed as a collective action because Ahmed himself has not filed a consent form as required by section 216(b) of the FLSA. (Defendant’s Memorandum of Law in Opposition to Plaintiff’s Motion for Conditional Certification, hereinafter “Def. Mem. of Law in Opp’n”, at 19.) It is defendant’s position that the FLSA requires a plaintiff—even a named plaintiff—to opt-in to his or her own action in order to proceed as a collective action. (Id.)

Although the cases upon which defendants rely provide that all plaintiffs must affirmatively opt in to a suit in order to proceed as part of a collective action, see, e.g. Gonzalez v. El Acajutla Restaurant, Inc., No. 04 Civ. 1513, 2007 U.S. Dist. LEXIS 19690, at *14–15 (E.D.N.Y. Mar. 20, 2007), courts in this Circuit have held that the FLSA itself does not require such written consent in order for a plaintiff to file a motion for conditional certification, see, e.g. Aros v. United Rentals, Inc., 269 F.R.D. 176, 181 (D.Conn.2010) (“The court concludes that denying the Motion for Conditional Certification … would undermine the FLSA’s broad remedial purpose”). Moreover, “[t]he purpose of this consent requirement … is to put the Defendants on notice, which many courts have noted is somewhat redundant with regard to named plaintiffs,” particularly when the named plaintiff has submitted sworn affidavits to the court, participated in depositions, and otherwise taken necessary action to pursue his claims and demonstrate that he “intends to participate in the lawsuit.” D’Antuono v. C & G of Groton, Inc., No. 11 Civ. 33, 2012 U.S. Dist. LEXIS 49788, at *6–7, 10–11 (D.Conn. Apr. 9, 2012).

Given that defendants expressly acknowledged, in their answer, that Ahmed purports to bring this action “pursuant to FLSA, 20 U.S.C.s. 216(b), on behalf of ‘Assistant Mangers’ employed in T.J. Maxx stores” (see Answer at ¶ 8), it cannot be said that defendants lacked notice of Ahmed’s consent, nor can it be said that defendants were unaware of Ahmed’s intent to pursue his claims as part of a collective action, particularly as Ahmed has already participated in a deposition and has submitted an affidavit in support of the instant motion. Consequently, while the form of Ahmed’s consent may not have strictly adhered to the preferred standard in FLSA collective actions, the substance of Ahmed’s complaint and his conduct throughout the discovery process was sufficient to satisfy the purpose of the written consent requirement. Furthermore, since defendants first raised this issue, Ahmed has filed a formal written consent with the Court. At this point, Ahmed is in compliance with not only the spirit, but also the letter of the written consent requirement. Thus, this Court finds that defendants had sufficient notice of Ahmed’s intent to proceed with a collective action, and this Court will therefore consider Ahmed’s request for conditional certification as a collective action on its merits.

Click Ahmed v. T.J. Maxx Corp. to read the entire Memorandum Opinion and Order.

While this case is certainly helpful to practitioners in the situation where the named-plaintiff has not filed a consent to join, as a practical matter (especially in courts outside of the Second Circuit), the best practice is to file a consent to join on behalf of all plaintiffs and opt-in plaintiffs, including the named-plaintiffs, to avoid the necessity of even addressing this issue.  Further, it should be noted that even in this case, the named-plaintiff ultimately did file a consent to join, after the issue had been raised by the defendants in their opposition to his motion for conditional certification.

EDITOR’S NOTE:  Within days of the Ahmed decision, another court- this one in the Eleventh Circuit- was faced with a similar issue.  In that case the plaintiff had actually styled his complaint as an individual claim, excluding language that he sought to proceed on a collective action basis.  Nonetheless, the court held that the defendants had adequate notice of plaintiff’s intent to proceed as a collective action, and ultimately granted plaintiff’s motion for conditional certification.  See  Hogan v. Allstate Beverage Co., Inc., 2012 WL 6027748, at *5 (M.D. Ala. Dec. 4, 2012).

7th Cir.: Named-Plaintiffs Who Settled Their Individual Claims Following Decertification Retained Standing to Appeal Decertification Based on Possibility of Incentive Awards

August 19, 2012 5:40 pm / Leave a comment

Espenscheid v. DirectSat USA, LLC

This case presented the relatively novel issue of whether the named-plaintiffs in a decertified class/collective action retain standing to appeal decertification once they have settled their individual claims. Noting that it was a case of first impression, the Seventh Circuit held that individual employees had sufficient interest for standing to appeal decertification, in large part because they retained a financial stake inasmuch as the stood to receive incentive awards if the class/collective action was ultimately successful.

Briefly discussing the relevant procedural history and facts the court explained:

The district judge certified several classes but later decertified all of them, leaving the case to proceed as individual lawsuits by the three plaintiffs, who then settled, and the suits were dismissed. The settlement reserved the plaintiffs’ right to appeal the decertification, however, and they appealed. The defendants then moved to dismiss the appeal on the ground that the plaintiffs had suffered no injury as a result of the denial of certification and so the federal judiciary has lost jurisdiction of the case.

The court distinguished the case from one in which the defendant seeks to moot or “pick off” a class/collective by making an offer of judgment that exceeds the named-plaintiff’s damages and reasoned that the named-plaintiffs retained standing by virtue of prospective incentive awards, if the case were to proceed as a class/collective rather than individual basis:

One might think that because the plaintiffs settled, the only possible injury from denial of certification would be to the unnamed members of the proposed classes; and if therefore the plaintiffs have no stake in the continuation of the suit, they indeed lack standing to appeal from the denial of certification. Premium Plus Partners, L.P. v. Goldman, Sachs & Co., 648 F.3d 533, 534–38 (7th Cir.2011); Pettrey v. Enterprise Title Agency, Inc., 584 F.3d 701, 705–07 (6th Cir.2009). This is not a case in which a defendant manufactures mootness in order to prevent a class action from going forward, as by making an offer of judgment that exceeds any plausible estimate of the harm to the named plaintiffs and so extinguishes their stake in the litigation. As we explained in Primax Recoveries, Inc. v. Sevilla, 324 F.3d 544, 546–47 (7th Cir.2003) (citations omitted), “the mooting of the named plaintiff’s claim in a class action by the defendant’s satisfying the claim does not moot the action so long as the case has been certified as a class action, or … so long as a motion for class certification has been made and not ruled on, unless … the movant has been dilatory. Otherwise the defendant could delay the action indefinitely by paying off each class representative in succession.”

But the plaintiffs point us to a provision of the settlement agreement which states that they’re seeking an incentive reward (also known as an “enhancement fee”) for their services as the class representatives. In re Synthroid Marketing Litigation, 264 F.3d 712, 722 (7th Cir.2001); In re Continental Illinois Securities Litigation, 962 F.2d 566, 571–72 (7th Cir.1992); In re United States Bancorp Litigation, 291 F.3d 1035, 1038 (8th Cir.2002); 2 Joseph M. McLaughlin, McLaughlin on Class Actions § 6:27, pp. 137–42 (6th ed.2010). The reward is contingent on certification of the class, and the plaintiffs argue that the prospect of such an award gives them a tangible financial stake in getting the denial of class certification revoked and so entitles them to appeal that denial.

After an extensive discussion of incentive payments to class representatives, the Seventh Circuit adopted the plaintiffs reasoning.  Additionally the court noted that judicial economies could never be preserved if the named-plaintiffs forfeited standing when they settled their individual claims, because another named-plaintiff would simply come forward and start the entire process anew, the court held that the named-plaintiffs here retained their standing to pursue class/collective issues, notwithstanding the settlement of their individual claims.  Thus, the court denied the defendants motion to dismiss.

Click Espenscheid v. DirectSat USA, LLC to read the entire Order denying Defendants’ Motion to Dismiss.

W.D.Mo.: Court Has Subject Matter Jurisdiction Over Claims That Could Be Brought By Members of Putative Class, But Could Not Be Brought By Named Plaintiffs

September 2, 2011 10:50 am / Leave a comment

Nobles v. State Farm Mut. Auto Ins. Co.

This case concered off-the-clock claims that were brought as a so-called hybrid case, so named because the claims asserted were a hybrid of several state wage and hour laws, as well as under the FLSA.  As discussed here, the plaintiffs, employees of one State Farm entity (State Farm Fire) sued both their employer, and another State Farm entity (State Farm Mutual), alleging identical wage and hour violations were committed by both against similarly situated employees.  By Motion to Dismiss, State Farm Mutual challenged the named-plaintiffs’ standing to assert claims against it, asserting that the named plaintiffs lacked standing to do so, because it was not their employer.  The court rejected these arguments, in granting plaintiffs’ motions for conditional and class certification.

Addressing this issue the court explained:

“In its pending Motion to Dismiss, State Farm Mutual contends that because Plaintiffs lack standing to assert joint employer status, the Court lacks subject matter jurisdiction, and therefore that claim should be dismissed under Federal Rule of Civil Procedure 12(b)(1). Alternatively, State Farm Mutual contends that Plaintiffs have failed to state a claim for joint employer status and therefore it should be dismissed pursuant to Federal Rule of Civil Procedure 12(b)(6).

State Farm Mutual argues that “[o]nly State Farm Fire employees could possibly have standing to assert joint employment claims under Plaintiffs’ … theory, and there are no such plaintiffs in this case.” [Doc. # 111, at 13]. Neither Nobles nor Atchison are employees of State Farm Fire. However, standing issues “must be assessed with reference to the class as a whole, not simply with reference to the individual named plaintiffs.” Payton v. County of Kane, 308 F.3d 673, 680 (7th Cir.2002). Here, unnamed class members of the certified classes and collective include State Farm Fire employees who would have standing to bring claims under State Farm Mutual’s status as a joint employer with State Farm Fire. Thus, the Plaintiffs in this litigation have standing to assert joint employment status for members of the class.

Two recently decided cases in this district, Gilmor v. Preferred Credit Corp., No. 10–0189–CV–W–ODS, 2011 WL 111238 (W.D. Mo. Jan 13, 2011), and Wong v. Bann–Cor Mortgage, No. 10–1038–CV–W–FJG, 2011 WL 2314198 (W.D. Mo. June 9, 2011), also concluded that the court had subject matter jurisdiction over claims that could be brought by members of the certified class, but could not have been brought by any of the named plaintiffs. However, as a practical matter, it may be prudent to have a specific named Plaintiff whose named employer is State Farm Fire. See Gilmor, 2011 WL 111238, at *7. Therefore, Plaintiffs shall file an appropriate motion to designate such an employee prior to the close of discovery on the merits.”

Addressing (and rejecting) the defendants’ contention that plaintiffs had failed to sufficiently plead joint employment, the court reasoned:

“To determine whether an individual or entity is an employer, courts analyze the economic reality of the relationship between the parties.” Loyd v. Ace Logistics, LLC, No. 08–CV–00188–W–HFS, 2008 WL 5211022, at *3 (citation omitted). Although the Eighth Circuit has not yet stated a test to determine joint employer status, four factors are typically examined by courts to make this determination. They are: “whether the alleged employer: (1) had the power to hire and fire the plaintiff; (2) supervised and controlled plaintiff’s work schedules or conditions of employment; (3) determined the rate and method of payment; and (4) maintained plaintiff’s employment records.” Id. at * 3 (citing Schubert v. BethesdaHealth Grp., Inc., 319 F.Supp.2d 963, 971 (E.D.Mo.2004)).

State Farm Mutual asserts that Plaintiffs have failed to allege the elements of joint employer status or single enterprise status. This argument rests on the contention that because all of the named plaintiffs in the litigation are not employees of State Farm Fire, none of their allegations concern State Farm Mutual’s power to hire or fire any plaintiff who is an employee of State Farm Fire. [Doc. # 111, at 7].

The Court finds that this argument is a re-characterization of State Farm Mutual’s standing argument. As previously stated, Plaintiffs in this case include the certified classes. See Gilmor, 2011 WL 111238, at *6 (citing Sosna v. Iowa, 419 U.S. 393, 399 (1975)). Plaintiffs in this case include State Farm Fire employees who were subject to State Farm Mutual’s policies; and the Second Amended Complaint alleges that State Farm Mutual had the power to hire or fire them.

Second, State Farm Mutual asserts that even if the Court finds that Plaintiffs have alleged the elements of joint employment status, Plaintiffs’ factual allegations are “broad, unsupported statements” that do not provide the required factual support for Plaintiffs’ joint employment claim. [Doc. # 111, at 9]. The Court disagrees with State Farm Mutual’s characterization of Plaintiffs’ allegations. The Plaintiffs allege in their Second Amended Complaint that (1) the human resources department in State Farm Mutual retains the power to promote, retain, and discipline State Farm Fire employees, (2) State Farm Fire employees’ work and compensation are subject to State Farm Mutual’s written pay and timekeeping policy, and (3) State Farm Mutual’s and State Farm Fire’s timekeeping records are housed together, which the Court liberally construes to imply that State Farm Mutual maintains State Farm Fire’s timekeeping records. 

For these reasons, the Court finds that Plaintiffs have sufficiently stated a joint employer claim.”

Click Nobles v. State Farm Mutual Automobile Insurance Company to read the entire Order.