Conditional certification of a collective action under the Fair Labor Standards Act (“FLSA”) was recently granted in a New Jersey case involving approximately 100 employees who worked in the construction industry holding job titles such as hazardous abatement workers, demolition workers, and teamsters.  In Kristic v. J.R. Contracting & Environmental Consulting, et al., 2011 U.S. Dist. LEXIS 28121 (D.N.J. March 16, 2011) United States District Judge Peter Sheridan of the District of New Jersey held that conditional certification was proper where the approximately 100 hourly employees were similarly situated and were  not paid overtime compensation for working over forty (40) hours per week.  Judge Sheridan granted conditional certification despite the presence of signed arbitration agreements on behalf of some of the construction workers and held that Defendant’s Motion to Dismiss was procedurally improper.  Thus, New Jersey overtime lawyers should not automatically assume that the presence of an arbitration agreement necessarily precludes a plaintiff from seeking relief in federal court, notably an order granting conditional certification under the FLSA.  In granting conditional certification, the Court noted that four plaintiffs claimed, apparently based on their general recollection and routine, that they worked 8 to 10 hours per day.  Plaintiffs also sued two individual officers of defendant for the overtime violations alleging that the officers not only controlled the company but also controlled payment of the employees’ compensation.   Lastly, plaintiffs also sought to recover payment for wages and benefits allegedly owed to them as the result of working on publically-funded contracts – apparently a claim for payment of what is sometimes referred to as the “ prevailing wage.”

In a recent 2010 decision from the Southern District of New York, Cruz v. Hook-SupeRx,L.L.C., 2010 U.S. Dist. LEXIS 81021 (S.D.N.Y. Aug. 5, 2010), Judge Crotty granted conditional collective action certification to a group of current and former Assistant Store Managers at CVS.  The Assistant Managers hailed from six states:  Pennsylvania, New Jersey, New York, Massachusetts, Michigan, and North Carolina.

Conditional collective certification was granted pursuant to the Fair Labor Standards Act (FLSA) which allows employees to not only sue on their own behalf but also on behalf of other employees who are “similarly-situated.”  Plaintiffs alleged that they were improperly classified as executives and wrongfully denied any overtime compensation.    Judge Crotty noted that Plaintiffs burden at this stage was minimal and that “[a] modest factual showing is sufficient to demonstrate that Plaintiffs and potential Plaintiffs were victims of a common policy or plan that violated the law.” 

Indeed, the Court found very persuasive declarations of Assistant Store Managers in over 9 states which showed that CVS stores were all controlled by a corporate office; that Assistant Store Managers were required to participate in a uniform training program; and that the Assistant Managers were performing many non-exempt duties:  shelving merchandise, unpacking boxes, loading and unloading trucks, helping customers and working a cash register.  Moreover, the Assistant Managers did not regularly hire or fire other employees. 

Judge Crotty granted Plaintiffs’ motion for conditional collective action certification and also authorized court notice to go out to other Assistant Store Managers eligible to join the case.  This case demonstrates that the standard for initially certifying a class pursuant to the FLSA is indeed a low hurdle for overtime and wage attorneys to meet.  Thus, overtime and wage attorneys in Pennsylvania, New Jersey, and New York should be cognizant of possible claims that Assistant Managers may have for denied overtime compensation.

United States District Judge Bernice Bouie Donald from the Western District of Tennessee recently issued an opinion in Monroe v. FTS USA, LLC, No. 2:08-cv-2100, wherein she held that 300 cable installation technicians could continue pursuing their claims for overtime compensation as a collective action under the Fair Labor Standards Act (FLSA).  Judge Donald denied Defendant’s motions for summary judgment and for decertification.  The case involved over 300 current and former employees of FTS USA, LLC and UniTek USA, LLC – both with offices in Blue Bell, Pennsylvania.  The Plaintiffs alleged that they were not paid proper overtime compensation of one and one-half times their regular hourly rate for all hours worked over forty within a single workweek pursuant to the FLSA.

Plaintiffs alleged that they were directed by their managers to understate the amount of hours worked and that they would have a lunch break automatically deducted from their  timesheets regardless of whether they actually took a lunch.  Moreover, Plaintiffs alleged that managers altered their timesheets to reduce or remove overtime hours worked.  Plaintiffs were compensated on a “piece-rate” system, meaning they were paid a set percentage of the overall billing and revenue produced.   

After discovery had been conducted as to 50 Plaintiffs, Defendants argued within their motion for decertification that damages could not be determined on a classwide basis as the amount of damages for each employee would obviously differ among the 300 plus opt-ins.  The Court dismissed this argument stating that representative testimony is completely sufficient and adequate in a case brought pursuant to Section 216(b).  Thus, individual testimony from numerous Plaintiffs as to how much time overtime they worked can form the basis for determining the amount owed to other Plaintiffs.  “Evidence from every member of the plaintiff class is not required for this task and, if required, would be so burdensome as to make trial of this case, or any other large collective action under § 216(b), impracticable.” 

 Further, the Court noted that because Plaintiffs allege that Defendants’ records are inaccurate, Plaintiffs’ burden of proof is relaxed and the individual Plaintiffs can rely upon their memory in determining the amount of overtime owed.  Further, whether Defendants’ failure to pay proper overtime compensation to Plaintiff was wilful, a factor under the FLSA, is itself “clearly amenable to classwide determination,” Judge Donald held, as testimony at trial could show that Defendants had a policy of denying such overtime to its employees.  Lastly, the Court rejected Defendants’ argument that individual determinations would have to be made as to whether Defendant had knowledge regarding each individual Plaintiff’s FLSA violation:  “The Court squarely rejects this contention.  So long as Defendants were generally aware-either actually or constructively-of the types of practices that Plaintiffs allege were used to deny them overtime, there is no requirement in the law to compel each member of the plaintiff class to establish that he or she individually complained of the FLSA violation.” 

Interestingly, the Court made the acute observation that Defendants’ arguments within their summary judgment motion were at odds with arguments set forth in their motion for decertification:  “The Court agrees with Plaintiffs that Defendants’ motion for summary judgment is in tension with their motion to decertify since one seeks to conclude the case on a classwide basis while the other argues that classwide adjudication is improper.”

In recent years, district courts within the Third Circuit have frequently held that workers cannot bring “hybrid” federal wage and hour claims under the FLSA as a collective action under 29 U.S.C. §216(b) along side state wage and hour class action claims under Federal Rule of Civil Procedure 23. See, e.g., Otto v. Pocono Health Sys., 457 F. Supp. 2d 522, 524 (M.D. Pa. 2006) (“To allow an Section 216(b) opt-in action to proceed accompanied by a Rule 23 opt-out state law class action claim would essentially nullify Congress’s intent in crafting Section 216(b) and eviscerate the purpose of Section 216(b)’s opt-in requirement.). The notion that such claims cannot be simultaneously pursued in federal court has become known as “inherent incompatibility.”

However, in an opinion issued on January 18, 2011, the Seventh Circuit Court of Appeals rejected this idea, holding that “there is no categorical rule against certifying a Rule 23(b)(3) state-law class action in a proceeding that also includes a collective action brought under the FLSA.” Ervin v. Os Restaurant Services, Inc., 2011 U.S. App. LEXIS 863, *3-4 (7th Cir. Ill. Jan. 18, 2011). “Nothing in the text of the FLSA or the procedures established by the statute suggests either that the FLSA was intended generally to oust other ordinary procedures used in federal court or that class actions in particular could not be combined with an FLSA proceeding.” Id. at *4.

In Ervin, former employees of an Outback Steakhouse restaurant brought claims under both the Fair Labor Standards Act and the Illinois Minimum Wage Law alleging that Outback failed to pay them minimum wage and overtime due to their tip sharing/pooling practices. The district court declined to certify the state law claims under Rule 23 because “of what he saw as a conflict between the two different forms of aggregate litigation.” Id. at *7-8.

The Seventh Circuit examined Congressional intent behind the FLSA and disagreed with the district court, noting that “[t]here is ample evidence that a combined action is consistent with the regime Congress has established in the FLSA.” Id. at *15. Moreover, the Seventh Circuit rejected the notion that §216(b)’s opt-in procedure and the opt-out nature of Rule 23 would create confusion among class members. In fact, the Court noticed that having two parallel actions, one in federal court and one in state court, would create more potential for confusion than having a class’s wage and hour claims proceed in one venue. Id. at *18-19.

The Ervin Court also addressed whether a district court could have supplemental jurisdiction over state wage and hour claims pursuant to 28 U.S.C. §1367. It held that the requirements of §1367(a) are satisfied where the state wage claims are closely related to the FLSA collective action. Id. at *21. The court also held that “a simple disparity in numbers should not lead a court to the conclusion that a state claim ‘substantially predominates’ over the FLSA action” as precluded by §1367(c). Id. at *24. In fact, the court observed that the 45 current and former Outback workers who had joined the suit (compared to the 180 to 250 who may be covered by the Rule 23 claims) was a “low” ratio ,suggesting that the state claims did not predominate over the FLSA claims in this case. Id. at *25. In closing, the Ervin court stated:

We agree with the D.C. Circuit in Lindsay and the Ninth Circuit in Wang that the Third Circuit decision in De Asencio represents only a fact-specific application of well-established rules, not a rigid rule about the use of supplemental jurisdiction in cases combining an FLSA count with a state-law class action. In our case, the record reflects no reason to doubt that it is sensible to litigate all theories in a single federal proceeding. The identity of the issues, the convenience to both plaintiffs and defendants of not having to litigate in multiple forums, and the economy of resolving all claims at once suggests that an exercise of supplemental jurisdiction will normally be appropriate. In all but the most unusual cases, there will be little cause for concern about fairness or comity.

Id. at *26.

While the Seventh Circuit’s opinion is not the first circuit court to reject inherent incompatibility, see, e.g, Wang v. Chinese Daily News, Inc., 623 F.3d 743, 753-55, 760-62 (9th Cir. 2010) (holding that a district court properly certified a Rule 23(b)(2) class along with an FLSA collective action and properly exercised supplemental jurisdiction over the state-law claim), the Third Circuit Court of Appeals has yet to address this issue. As a result, overtime lawyers in Pennsylvania, New Jersey and Delaware must still confront this issue when planning any class/collective action litigation.

Court decisions resolving FLSA conditional certification motions are relatively commonplace.  However, far fewer decisions are available addressing FLSA class certification at the post-discovery stage of litigation.  These decisions usually arise in response to the defendant’s motion to “decertify” the FLSA class.

I recently wrote a brief responding to a decertification motion.  In the process, I came across four decisions in which federal courts in Pennsylvania have refused to decertify the FLSA class.  These decisions are briefly discussed below:

In Lockhart v. Westinghouse Credit Corp., 879 F.2d 43 (3d Cir. 1989), the Third Circuit applied §216(b)’s “similarly situated” requirement to an ADEA claim alleging that workers were discriminatorily terminated from their jobs.  Id. at 46.  The individual class members were “from different divisions of the company” and “different areas of the country” and “reported to different managers,” id. at 61 (Garth, J., dissenting), so, in opposing collective treatment, the company emphasized the “individualized explanations” for each plaintiff’s termination, id. at 62.  Even (more…)

It was a busy quarter for issuing opinions in FLSA collective actions by federal district courts within the Fifth Circuit.  These opinions touched on a number of different compensation related issues, from tip sharing to conditional certification of classes alleging that they worked off-the-clock.  Below is a brief summary of each of the opinions issued from March 16, 2008 through June 15, 2008 that concern FLSA collective actions. (more…)

On May 30, 2008, the United States District Court for the Middle District of Pennsylvania issued an important decision reaffirming the right of unionized prison guards employed in Scranton, Pennsylvania to pursue their Fair Labor Standards Act (“FLSA”) claim notwithstanding the existence of a collective bargaining agreement between their union and their employer.  In Gallagher, et al. v. Lackawanna County, 3:07-cv-00912-TIV, a group of Lackawanna County (PA) sergeants and corrections officers filed a federal court lawsuit asserting that, under the FLSA, they were entitled to full compensation, including overtime pay, for time spent attending daily pre-shift meetings and picking up radio batteries.  The county sought dismissal of the lawsuit, alleging that the existence of a collective bargaining agreement (“CBA”) between the county and the prison prohibitted the plaintiffs from pursuing their FLSA lawsuit in federal court. (more…)

On April 4, 2008, a federal district judge in Philadelphia, Pennsylvania issued an important opinion in Chabrier v. Wilmington Financial, Inc., 2008 U.S. Dist. LEXIS 27761 (E.D. Pa. Apr. 4, 2008).  Chabrier is typical of many FLSA lawsuits that have been filed on behalf of loan officers in recent years.  In these lawsuits, the loan officers — who usually are paid on a commission basis – allege that they are entitled to overtime pay, while the mortgage or financial company asserts that the loan officers are exempt from FLSA coverage under either the administrative exemption or the outside salesperson exemption.  In Chabrier, the action was “conditionally certified” as an FLSA collective action and, after notice forms were sent to prospective class members, number loan officers joined the lawsuit as plaintiffs.  Discovery ensued and, at the close of discovery, the company sought to “decertify” the collective action, citing to purported diffences in the individual loan officers’ employment circumstances.  The district court disagreed, observing that all of the class members were paid under the same compensation package, shared the same job title, job duties, and job descriptions, and were supervised by the same managers.  The court reaffirmed the well-accepted principle that the FLSA does not require workers seeking overtime on a collective casis to share identical circumstances.  The court observed:  “A showing that there are elements of plaintiffs’ claims that differ, or that a small number of current plaintiffs are excluded, cannot override the similarities present in most plaintiffs’ claims and circumstances.”