Illinois Federal Court Denies Class Certification In Chicago Water Department Race Discrimination Lawsuit
By Gerald L. Maatman, Jr. and Jennifer A. Riley
Duane Morris Takeaways: In Edmond, et al. v. City of Chicago, No. 17-CV-4858 (N.D. Ill. June 6, 2023), Judge Matthew F. Kennelly of the U.S. District Court for the Northern District of Illinois denied a motion for class certification filed by a group of current and former employees alleging workplace race discrimination in violation of state and federal law. The ruling highlights the viability of defense positions relative to Plaintiffs’ failure to meet the Rule 23 commonality requirement, which was instrumental to defeating their bid for class certification.
Case Background
Nine African-American workers currently or previously employed by the Chicago Department of Water brought a putative class action against the City of Chicago and several individuals employed by it in 2017, alleging race discrimination and a hostile work environment on behalf of a group of employees. Plaintiffs alleged the existence of an ongoing and pervasive “culture of racism” fostered by organizational leadership across five bureaus and various sub-bureaus, treatment plants, and construction sites. Id. at 4. The lawsuit was brought after the City’s Inspector General uncovered emails containing racist exchanges between Department commissioners and deputies, which resulted in resignations of two executives. Id.
Plaintiffs alleged that the hostile work environment included racially offensive language, threatening gestures, and disparate treatment of Black employees in violation of 42 U.S.C. §§ 1981 and 1983 and Illinois law, and filed a motion to certify a class that included all Black workers employed by the Water Department since 2011 and three sub-classes for individuals who had been eligible for overtime, those with disciplinary infractions, and those who had been denied promotions.
In 2018, the Court granted Defendants’ partial motion to dismiss. Plaintiffs then brought a motion to amend the complaint in order to drop the individuals from the suit, which was granted without prejudice. Subsequently, Plaintiffs filed a motion to certify the classes pursuant to Rule 23 of the Federal Rules of Civil Procedure.
The Court’s Decision
The City argued that because Plaintiffs were unable to establish a shared work environment in their hostile work environment claim due to the Department’s dispersed workforce, Plaintiffs failed to identify a common contention whose resolution would resolve class claims, as required under Rule 23(a)(2)’s commonality element. The Court agreed with this position. It opined that there was no “evidence of common areas shared by all Department employees or instances of harassment broadcast across the entire Department.” Id. at 10. The Court found that the experience of putative class members varied across the Department, with individual claims of discrimination ranging from verbal to visual conduct, while others alleged bias in duty assignments or disciplinary actions.
Plaintiffs additionally contended that a pervasive culture of discrimination permeated the Water Department. They cited statements made by members of the city administration and the Inspector General’s investigation, and posited that this was proof of a “de facto policy of racism” across the workplaces. Id. at 11. The Court was not convinced that this had a uniform impact on all the named Plaintiffs and putative class members to satisfy the commonality question, and it denied the motion for class certification based on Plaintiffs’ failure to meet this threshold under Rule 23(a).
Likewise, Judge Kennelly rejected Plaintiffs’ arguments for certification of each sub-class based on a pervasively racist culture. The Court concluded that disciplinary, overtime, and promotion decisions were made by individual supervisors based on their personal discretion and varied across the Department, and that Plaintiffs failed to show evidence that the same decision-makers were responsible for such actions. Id. at 23. The Court was not convinced by Plaintiffs’ expert witness’ use of statistical data to show a disparate impact, noting that similar evidence had not been sufficient to demonstrate commonality for purposes of class certification in Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011).
Implications For Employers
The Edmond ruling underscores the importance of maintaining and utilizing a well-organized workplace reporting structure and managerial discretion in employment matters in anticipating arguing the absence of Rule 23’s commonality requirement, as seen in the Wal-Mart decision. In dismissing all of Plaintiffs’ arguments after finding an absence of a work environment common to all putative class members and no top-down decision-making policy regarding wages and promotions, the Court signals its steady reliance on the well-established standards for these types of claims, providing a valuable reaffirmation to employers’ reliable defense strategies.
Georgia Federal Court Approves Consent Judgment For Department Of Labor-Initiated FLSA Action
By Gerald L. Maatman, Jr., Jennifer A. Riley, and George J. Schaller
Duane Morris Takeaways: In Su v. 811 Autoworks LLC et al., No. 3:21-CV-00220 (N.D. Ga. June 5, 2023), a federal district court in Georgia entered a consent judgement requiring an employer to pay approximately $40,000 for back wages and liquidated damages to end an FLSA suit filed by the U.S. Department of Labor (DOL) last year. The circumstances of the award are far from typical, and show how context is everything.
For employers facing DOL-initiated lawsuits involving retaliation, overtime, and recordkeeping prohibitions of the FLSA, this decision is illustrative of the potential for liquidated damages for failures to adhere to the FLSA, particularly in disputes over back wages and final wages where retaliation occurs.
Case Background
The DOL filed an FLSA action on behalf of former workers (“Claimants”) of 811 Autoworks LLC d/b/a/ AOK Walker Luxury Autoworks (“AOK”) and AOK’s owner, Miles Walker. The Claimants alleged they were denied pay for final wages and did not receive required overtime pay when they worked over 40 hours in a workweek. In its investigation, the DOL also determined Walker failed to keep adequate and accurate records of employees’ pay rates and work hours in violation of the FLSA’s recordkeeping prohibitions.
Additionally, at least one Claimant, Andreas Flaten, alleged he was retaliated against for requesting his final paycheck where AOK delivered his final $915 paycheck as 91,500 oil covered pennies with an expletive marked pay stub left on the driveway of his residence. Subsequently, the oil covered pennies damaged Flaten’s driveway and took nearly seven hours to remove.
The Court’s Decision
The Court resolved the DOL suit by entering its consent judgment. The consent judgement directed AOK to compensate workers who exceeded 40 hours in a workweek at a rate of “at least one-half times the regular rate at which such employee is employed, unless such employee qualifies for an exemption . . .” Id. at 2. The consent judgment also ordered that AOK must “not threaten or intimidate (verbally or in writing), terminate or threaten to terminate, coerce or attempt to influence behavior, disparage in person or electronically, or retaliate or discriminate against any current and/or former AOK employees based on AOK’s belief that an employee was engaged in protected activity.” Id. at 2-3. The Court further included a definition for “protected activity.” Id. at 3. The consent judgement required AOK “shall not fail to make, keep and preserve adequate and accurate employment records as prescribed by Regulation.” Id. In response to Flaten’s retaliation allegations, the Court sought immediate removal from AOK’s website all photographs and references to Flaten and permanently enjoined AOK from posting photographs or references to Flaten on any other website or social media site. Id.
As to payments, the Court held AOK was “restrained from withholding back wages in the total amount of $19,967.9 plus liquidated damages in the amount of $19,987.09.” Id. at 4. The Court provided a schedule for the payments, where the payments must be delivered to, and noted AOK would be in default for failure to make any payments per the schedule. Id. at 4-5. Finally, the Court required AOK to post this Consent Judgment and immediately post U.S. Department of Labor, Wage and Hour Division Fact Sheet #77A in all conspicuous places in or about its facility. Id. at 6.
Implications For Employers
Employers that are confronted with DOL-initiated litigation involving FLSA prohibitions should, from a practical standpoint, continuously review recordkeeping procedures, overtime policies, and final wage policies to ensure FLSA compliance. Employers should also note that, in response to the alleged retaliation, the Court sought removal of and enjoined the company from referencing the retaliated claimant on its own website and any other website or social media site. And obviously, paying disputed wage by dumping a truckload of oil-covered pennies on the driveway of a worker is ill-advised.
Nebraska Federal Court Allows EEOC-Initiated ADA Lawsuit To Proceed
By Gerald L. Maatman, Jr., Alex W. Karasik, and George J. Schaller
Duane Morris Takeaways: In EEOC v. Werner Enterprises, Inc., No. 8:18-CV-00329, 2023 U.S. Dist. LEXIS 95981 (D. Neb. May 31, 2023), a federal district court in Nebraska denied an employer’s partial motion to reconsider the Court’s prior denial of its motion for summary judgment, holding that facially discriminatory policies can be demonstrated through evidence other than hiring policy documents.
For employers facing EEOC-initiated lawsuits involving ADA claims in the hiring process, this decision is instructive in terms of the evidence courts will consider at the summary judgment stage, particularly training documents that may be discriminatory on their face.
Case Background
The EEOC filed suit on behalf of a hearing-impaired truck driver applicant (the “Claimant”) who submitted an application with Defendant Werner Enterprises, Inc. (“Werner”). The Claimant, along with other hearing-impaired applicants, allegedly were subject to a different workflow for applications. The EEOC claimed an internal training document provided by Werner instructed its recruiters to provide a different workflow for applications from hearing-impaired drivers – if the recruiter was “aware of an FMCSA waiver or a hearing issue, then the recruiter was directed ‘do not Pre-Approve the application.’” Id. at *3. Instead, the recruiter would send the hearing-impaired applicants completed application “to the manager basket,” and management would decide to move forward or not. Id. Therefore, the EEOC contended Werner’s pre-approval procedure adversely affected hearing-impaired applicants.
After the Claimant filed an administrative charge, and the EEOC ultimately filed a lawsuit on his behalf, Werner moved for summary judgment. It argued that its training document at issue “does not unlawfully classify applicants because of their disability.” Id. at *4. Instead, Werner maintained diverting applications from hearing-impaired applicants was to verify that an applicant had a valid exemption from physical qualification standards. Id.
The Court rejected Werner’s argument and reasoned that the training document does instruct recruiters to treat hearing-impaired applicants differently from other applicants. Id. at *4-5. Subsequently, Werner filed a motion to reconsider the denial of its motion for summary judgment.
The Court’s Decision
The Court denied Werner’s motion for reconsideration.
In Werner’s motion for summary judgment, it asserted that the EEOC’s claim of a “facially discriminatory” hiring policy could only be based on a single training document without considering other evidence. In its motion to reconsider, Werner pivoted and argued that the Court erred by considering what might be shown by evidence beyond the face of the training document. Id. at *5-6. The Court reasoned that applicable case law authorities consider whether the policy is discriminatory on its face, but this inquiry is not dispositive of the entire claim. The Court also opined that the EEOC could demonstrate discriminatory intent through other evidence if the policy is not discriminatory on its face. Id. at *8. The Court also noted that the policy at issue was facially discriminatory – “even if a policy isn’t discriminatory on its face (which, to reiterate, this document is.)” in light of Werner’s assertion. Id.
The Court rejected Werner’s argument that the EEOC’s claim of a facially discriminatory hiring policy was based exclusively on the training document itself. First, the Court explained the basics of a discrimination claim require the EEOC must show, among other things, an adverse employment action because of disability. Second, the Court explained that discriminatory intent can be proved either through direct evidence of discrimination, or through a showing of disparate treatment. Id. at *6. As to this point, the Court clarified there is direct evidence of discrimination when the “evidence shows a specific link between the alleged discriminatory animus and the challenged decision, sufficient to reasonably support a finding that an illegitimate criterion actually motivated the adverse employment action.” Id.
The Court held that Werner’s training document evidenced disparate treatment, but the effect of that treatment, if any, occurred after the applications from hearing-impaired drivers were diverted to the “manager basket.” Id. at *9. The Court also found the EEOC was not bound by its pleading to rely exclusively on the face of the training document to support its claim. Id. Finally, the Court determined the disputed issue for the parties to focus on is whether accommodating a hearing-impaired placement driver is reasonable. Id. at *10-11. Therefore, the Court denied Werner’s motion to reconsider the denial of Werner’s motion for summary judgment.
Implications For Employers
Employers confronted with EEOC-initiated litigation involving hiring practices should take note that the Court relied heavily on additional evidence demonstrating discriminatory intent supporting the purported facially discriminatory policy. Further, from a practical standpoint, employers should carefully evaluate training documents that may impact applicants with disabilities, as courts are apt to scrutinize these materials.
The Class Action Weekly Wire – Episode Fifteen: Labor Class Actions
Colorado Federal Court Denies Class Certification Without Uniform Job Conditions In Hybrid Wage & Hour Litigation
By Gerald L. Maatman, Jr., Emilee N. Crowther, and Nicolette J. Zulli
Duane Morris Takeaways: In Levine v. Vitamin Cottage Natural Food Markets, Inc., No. 20-CV-00261, 2023 U.S. Dist. LEXIS 92027 (D. Colo. May 25, 2023), Magistrate Judge Scott T. Varholak of the U.S. District Court for the District of Colorado granted Defendant Vitamin Cottage Natural Food Markets, Inc.’s (“Vitamin Cottage”) Motion to Decertify Plaintiff’s FLSA collective action, and denied Plaintiff’s Motion for Rule 23 Class Certification. The Court’s decision in this case aptly illustrates the standards under which courts should analyze, and defendants should move, for decertification of FLSA collective actions, as well as the standards for certification of a Rule 23 class in wage & hour misclassification lawsuits. This opinion is well-worth a read by corporate counsel, as it underscores the importance of well-planned and strategic discovery in defending class and collective actions in the context of an exemption misclassification case. Furthermore, it also demonstrates the contingent relationship and outcome of concurrently filed motions to for decertification brought by defendants and motions for Rule 23 class certification brought by plaintiffs.
Case Background
Vitamin Cottage owns and operates more than 150 grocery stores in nineteen states, and employs over 3,000 individuals. Plaintiff, a former Assistant Store Manager (“ASM”) in Colorado, filed suit under the Fair Labor Standards Act (“FLSA”) and Colorado Wage Claim Act (“CWCA”) alleging improper classification of ASMs as exempt employees and denying them overtime.
In November 2020, the Court granted Plaintiff’s Motion for Conditional Certification and conditionally certified a collective action for the purposes of Plaintiff’s FLSA claims. In total, one-hundred fifty-eight (158) individuals opted-in to the collective action against Vitamin Cottage. Thereafter, Plaintiff and Vitamin Cottage conducted written discovery and depositions.
After the close of discovery, Vitamin Cottage filed a Motion to Decertify the conditionally certified collective action on the grounds that the opt-ins and Plaintiff were not similarly situated. Two months later, Plaintiff filed a Motion to for Class Certification, seeking to certify a Rule 23(b)(3) class of ASMs for the purpose of Plaintiff’s state law claims.
The Court ultimately granted Vitamin Cottage’s Motion to Decertify, and denied Plaintiff’s Motion for Class Certification.
The Court’s Decision On The Motion For Decertification
In granting Vitamin Cottage’s Motion for decertification, the Court emphasized that its review at the post-discovery decertification stage of whether workers “are similarly situated” under the FLSA is “strict.” Id. at *5. The Court evaluated the following factors in its strict “similarly situated” analysis: “(1) the disparate factual and employment settings of the individual plaintiffs; (2) the various defenses available to defendant which appear to be individual to each plaintiff; and (3) fairness and procedural considerations.” Id. at *5; see also Thiessen v. Gen. Elec. Capital Corp., 267 F.3d 1095, 1102-05 (10th Cir. 2001) (known as the Thiessen factors).
As the basis of the suit was a misclassification claim, for the first factor, the Court conducted “a fact-intensive inquiry into the daily activities of each individual plaintiff in order to adequately identify the actual scope of Plaintiffs’ job duties to determine the extent and consequences of any disparities among them.” Id. at *10 (quoting Green v. Harbor Freight Tools USA, Inc., 888 F.Supp. 2d 1088, 1099 (D. Kan. 2012)). After noting that FLSA claims are permitted to proceed collectively “when disparities among the opt-in plaintiffs are ‘not material’ and are ‘outweighed by the similarities between those Plaintiffs,’” the Court held that the discovery responses and deposition testimony established “material disparities” that weighed against the matter “proceeding collectively.” Id. at *10-11.
While Plaintiffs argued that the disparities between the opt-ins were minor and non-material, and that the ASMs collectively spent the majority of their time on non-exempt tasks, the Court reiterated that “determining the exemption status of any given individual depends on all the facts in a particular case and demands an examination of the character of the employee’s job as a whole.” Id. at *18. Expanding on that general proposition, the Court noted “the amount of time spent performing exempt work . . . is not the sole test of whether an employee is exempt,” and analyzed the disparities that arose during discovery between potential collective members’ involvement in: (1) management (extent and type); (2) scheduling and task assignment; (3) managing and reporting store finances and performance; (4) ensuring store compliance with food safety regulations, including managing safety audits; (5) managing employee complaints and grievances; (6) directing the work of other employees; (7) hiring and firing employees. Id. at *11-16.
Ultimately, despite some uniformity (including a uniform job description, employment policies, and Vitamin Cottage’s uniform policy of classifying ASMs as non-exempt), the Court stressed that “the decertification analysis must turn on whether the [collective action] members were actually performing similar duties,” and where opt-ins “effectively disavow the job descriptions as not reflective of their day-to-day responsibilities,” opt-ins “may not rely on the job description itself as generalized evidence of the scope and similarity of their daily activities.” Id. at *20. As such, the Court held that the disparate factual and employment settings of the individual opt-in ASMs weighed in favor of decertification. Id. at *22.
The Court also found that the second factor weighed in favor of decertification, as the application of the defenses denied on each Plaintiff’s specific job duties, and Plaintiffs failed to establish that they were “similarly situated.” Id. at *22-23. Finally, as to the third factor, “[b]ased on the material disparities within and among the opt-in’s discovery responses and deposition testimonies . . . individualized defenses and credibility concerns would result in at least dozens of the type of ‘mini-trials’ that undercut the efficacy and fairness of a collective action.” Id. at *24. Thus, for the same reasons as the Court found in considering the first and second factors, the Court found that the fairness and procedural considerations weighed against proceeding collectively, and granted Vitamin Cottage’s Motion to for decertification. Id.
The Court’s Decision On The Motion For Rule 23 Class Certification
In denying Plaintiff’s Rule 23(b)(3) Motion for class certification, the Court conducted a “rigorous analysis” under both Rule 23(a) and 23(b)(3), relying, in large part, on its findings in granting Vitamin Cottage’s Motion for decertification of Plaintiff’s FLSA claim. For starters, the Court cited the seminal ruling of Walmart Stores, Inc. v. Dukes, 564 U.S. 338, 350 (2011).
Here, Plaintiff sought to certify a class for his unpaid overtime claim under CWCA. The Court noted that relevant state exemptions are similar, but not identical, to the FLSA exemptions discussed in the context of a Motion for decertification, and therefore required a separate, fact-intensive inquiry into the daily activities of an employee.
In considering the issue of commonality under Rule 23(a) together with the requirement of predominance under Rule 23(b)(3), the Court focused on whether the questions of law or fact common to class members predominated over any questions affecting only individual members, such that a class action would be superior to other available methods for fairly and efficiently resolving the controversy.
The Court held that while Vitamin Cottage’s uniform exemption policy showed that it considered the employees to be similar to at least some degree, a blanket exemption policy does not eliminate the need to make a factual determination as to whether class members are actually performing similar duties in the context of a misclassification claim.
Relying primarily on the briefing and exhibits associated with the Motion for decertification and the executive exemption as an illustration, the Court likewise found there were disparities in putative class members’ “supervisory” duties and hiring and firing authority.
In discussing the final element of the executive exemption, the Court noted an important difference between the Colorado executive exemption and the FLSA executive exemption: Whereas time spent performing exempt duties is not a dispositive element under the FLSA exemption, the Colorado executive exemption expressly requires the employees spend a minimum of 50% of the workweek in duties directly related to the supervision in order to qualify as exempt. Based on the evidence (i.e., deposition testimony and written discovery), the Court held there were plainly material disparities among the class members regarding the degree to which their day-to-day duties as ASMs involved supervisory or management-related objectives.
The Court reasoned that these material disparities went to the heart of liability in this matter – whether the class members were classified properly. And for that reason, the question of exemption was not capable of class-wide resolution. It further opined that due to the centrality of this question in the context of this case, whether other issues in the matter were capable of producing class-wide answers did not matter, as those issues did not predominate over the individualized question of whether each ASM was properly classified under Colorado law.
Ultimately, the Court held that for the same reasons it granted Vitamin Cottage’s Motion for decertification, Plaintiff did not meet his Rule 23 burden by relying on Vitamin Cottage’s common policies and procedures or uniform job description for ASMs.
Implications For Employers
The decision in Levine precisely delineates the standards for decertification of FLSA actions and certification of state law corollary class action claims. It also highlights the symbiotic nature of its analysis of these actions in the misclassification context and the important role that discovery plays in driving the outcome.
The Levine decision provides helpful guidance for employers that general uniform policies and procedures, such as the exemption policy analyzed by the Court in this case, are not enough to show that putative class or collective action members are actually performing similar duties. In order to withstand the Court’s “rigorous analysis,” an employer’s written discovery, such as interrogatory answers, and deposition testimony of putative class or collective action members must reflect that the specific duties and responsibilities of the putative class or collective action members at issue are uniform across-the-board.