California State Court Grants Class Certification For Wage & Hour Claims Against Cannabis Dispensaries

By Seth A. Goldberg and Nick Baltaxe

Duane Morris Takeaways: A California Superior Court recently granted class certification relative to a class of hundreds of employees against a group of dispensary defendants where the Plaintiffs presented sufficient evidence that the off-the-clock work claims, meal and rest period claims, and reimbursement of necessary business expenses claims predominated over individual inquiries and were typical of the class.  The Court did not rule on the merits of the integrated enterprise, alter ego, or joint employer arguments, nor did the Court agree with the Defendant’s arguments that the claims were not typical because the Plaintiffs were not employed by each Defendant. Nonetheless, the ruling is important for employers in general and cannabis dispensaries in particular.

Case Background and the Court’s Ruling

A group of dispensary and retail store employees at four different dispensaries owned by different entities asserted that they should be treated as a single enterprise. The Plaintiffs moved to certify a class of all current and former non-exempt, hourly employees of the Defendants from January 13, 2017 through the present. The Plaintiffs alleged that the putative class members were expected to work off-the-clock in order to set up their timekeeping program and their payroll program as well as review materials on the timekeeping program, before clocking-in on their personal cell phone. The Plaintiffs additionally contended that the Defendants failed to provide meal and rest periods, timely pay all wages on termination, or provide accurate itemized wage statements. The Plaintiffs also argued that because the four Defendants should be considered a single enterprise, they failed to comply with the higher minimum wage found in the City of Los Angeles Minimum Wage Ordinance.

The Court granted the Plaintiffs’ motion for class certification.  The Court noted that the Plaintiffs’ arguments  regarding the Defendants being an integrated enterprise could be established by common proof. At the class certification stage, the Court determined that the Defendants’ arguments went to the merits of the Plaintiffs’ claims and did not compel denial of the Plaintiffs’ motion.  The Court found that each of the Plaintiffs’ class claims were subject to common proof, that the Plaintiffs’ injuries were typical of the class, and that the Plaintiffs and their counsel were adequate to serve as class representative and class counsel.  Importantly, the Court reached this conclusion despite Defendants’ introduction of compliant policies and procedures relating to these wage & hour claims.

Key Takeaways

There are thousands of state-licensed cannabis operators in California, a state known for its ubiquitious wage & hour litigation, and thousands more across the 38 states in the US that have legalized cannabis for medical and/or adult-use purposes.  As the cannabis industry continues to mature and evolve, wage & hour class actions are likely to become more frequent in the cannabis industry, just as they have grown in other industries.  It is crucial that employers ensure that they follow federal and state wage & hour laws and provide their employees with complaint policies and procedures.  Arbitration agreements with class waivers also should be provided to each employee in states where applicable.  This becomes even more crucial in the cannabis space, where brands are expanding due to a high volume of M&A transactions and market consolidation.  Cannabis companies should continue to be cognizant of the strict wage & hour regulations in their states as the industry continues to grow.

Maryland Federal Court Reinstates Class Certification In Data Breach Class Action

By Gerald L. Maatman, Jr., Jennifer A. Riley, and Emilee N. Crowther

Duane Morris Takeaways: In the proceeding captioned In Re Marriott International Customer Data Security Breach Litigation, MDL No. 8:19-MD-02879, 2023 WL 8247865 (D. Md. Nov. 29, 2023), Judge John Preston Bailey of the U.S. District Court for the District of Maryland granted Plaintiff’s Motion for Class Certification and reinstated several previously-certified classes.  The defendant argued that class certification was improper, in part, because the putative class members signed a Choice of Law Provision that contained a class action waiver.  Conversely, the plaintiffs contended that the defendant waived its defense based on the Choice of Law Provision.  The Court held that (i) the defendant waived its Choice of Law Provision, and (ii) in the absence of an arbitration agreement, the Choice of Law Provision did not override the Rule 23 requirements.  For these reasons, this case serves as an important reminder for companies on the importance of the terms of contractual agreements in the context of seeking to arbitrate cases and potentially avoid class or collective actions.

Case Background

In 2016, Marriott purchased Starwood Hotels & Resorts Worldwide (“Starwood”), and inherited Starwood’s IT infrastructure provided by Accenture LLP (“Accenture”) for all Starwood properties.  Id.  In September 2018, Marriott learned that an unidentified party tried to gain access to the Starwood guest reservation database.  After an investigation, Marriott determined Starwood’s database was compromised from July 2014 through September 2018.  Id. *1.  On November 30, 2018, Marriott disclosed the data breach.  Id.

Thereafter, affected consumers filed suit against Marriott and Accenture nationwide.  Id.  Marriott requested that the actions be consolidated into one multi-district litigation (“MDL”) in the U.S. District Court for the District of Maryland, where Marriott is headquartered.  Id. * 4.  The case was consolidated, and the plaintiffs filed their joint MDL Complaint alleging various state law contract, statutory consumer protection, and state law negligence claims.  Id.  The plaintiffs then moved to certify various classes.  Id. *2.

The putative class included members of the Starwood Preferred Guest Program (“SPG”).  Id. *2.  Members of the SPG program signed a contract that contained a “Choice of Law and Venue” Provision (the “Choice of Law Provision”).  Id.  The Choice of Law Provision stated that any disputes related to the SPG program would “be handled individually without any class action” and would have exclusive jurisdiction in the State of New York.  Id.  Therefore, the defendant asserted that Rule 23(a)’s “typicality” requirement was not met because the class members were SPG program members, and the class contained both members and non-members of the SPG program.  Id.

The District Court agreed with the defendant, and redefined all classes to include only SPG members.  Id. *3.  However, by doing so, every putative class member was “someone who had purportedly given up the right to engaged in just such class litigation.”  In Re Marriott Int’l, Inc., 78 F.4th 677, 682-83 (4th Cir. 2023).  The District Court “did not further consider the import of the class waiver on its certification decision,” id. at 683, and granted certification as to three of the plaintiffs’ Rule 23(b)(3) and four Rule 23(c)(4) damages classes.  In Re Marriott Int’l, Inc., 341 F.R.D 128, 172-73 (D. Md. 2022).  Subsequently, the defendants appealed.

On appeal, the Fourth Circuit held that the District Court erred in failing to address whether or not the SPG members agreed to bar the certification of a class action.  In Re Marriott International, 2023 WL 8247865, at *3.  The Fourth Circuit vacated the class certification and remanded to the District Court to consider the effect of the Choice of Law Provision on the class.  Id.

The District Court’s Decision

The District Court concluded that (i) the defendants waived the Choice of Law Provision, and (ii) absent an arbitration agreement, Rules 23 and 42 prevailed over the parties’ Choice of Law Provision Id. Accordingly, the District Court reinstated the previously-certified classes.

First, the District Court analyzed the plaintiff’s position that the defendants waived the Choice of Law Provision.  It opined that “[w]aiver is the intentional relinquishment or abandonment of a known right.”  United States v. Olano, 507 U.S. 725, 733 (1993) (internal citations omitted).  The District Court reasoned that a party “waives a contractual provision when the party takes actions that are inconsistent with the provision.” In Re Marriott International, 2023 WL 8247865, at *4.  The District Court held the defense “clearly waived 5/6” of its Choice of Law Provision because the defendants: (1) requested consolidation into an MDL, which “is the antithesis of handling each claim on an individual basis”; (2) stated that “separately litigating each of the 59 related actions” would “offer no benefit” and heighten the burdens of all involved; and (3) stated venue was proper in Maryland and requested that the MDL be assigned to Maryland, which was inconsistent with the New York Choice of Law Provision.  Id.  As such, the District Court found that the defendants waived the Choice of Law Provision and all terms contained therein.  Id.

Second, the District Court held that it was not required to enforce the Choice of Law Provision outside of a binding arbitration provision.  Id. *8.  The Choice of Law Provision was “patently distinguishable” from “all of the reported cases on contractual class action waivers” because it did not have a mandatory arbitration clause.  Id. *7.  When parties agree to resolve their case in a non-judicial forum such as arbitration, “the Federal Rules have limited applicability”.  Id. *6. However, in the absence of such an agreement, the District Court opined that “[t]he parties cannot by agreement dictate that a district court must ignore the provisions of Rule 23 of the Federal Rules of Civil Procedure.”  Id. *7.  The District Court found that Rule 23 and Rule 42 do not “call for consideration of the parties’ preferences,” but rather “furtherance of efficient judicial administration.”  Id.  Thus, the District Court was not required to enforce the Choice of Law Provision, and held that the plaintiffs did not waive their right to bring a class action claim.  Id. *8 *(quoting Martrano v. Quizno’s Franchise Co., 2009 WL 1704469, at *20-21 (W.D. Pa. June 15, 2009)).

Implications For Companies

Companies should proactively review their arbitration agreements and class or collective action waivers to ensure that contractually agreed-upon terms can and will be imposed by a court.  Additionally, when faced with multiple nationwide claims, companies should analyze their case defense strategy and make an informed decision before filing and/or joining an MDL.  Finally, as part of any acquisition, companies should have their own data security team thoroughly vet and approve the acquired company’s security infrastructure prior to, or shortly after, the acquisition.

New York Federal Court Denies Class Certification Due To Rule 23(a)(4) Adequacy Requirement Based On Employer’s Strong Defense To Plaintiff’s Individual Claims

By Gerald L. Maatman, Jr., Katelynn Gray, and Gregory S. Slotnick 

Duane Morris TakeawaysLack of adequacy of the named plaintiff in a class action can result in the denial of Rule 23 class certification in appropriate circumstances.  In Cheng, et al. v. HSBC Bank USA, N.A., No. 20-CV-01551, 2023 U.S. Dist. LEXIS 161453 (E.D.N.Y. Sept. 12, 2023), the plaintiff filed a class action against the defendant alleging breach of contract and violation of § 349 of the New York General Business Law.  The plaintiff filed a motion for class certification pursuant to Rule 23, and the court denied the motion on the basis of the bank’s strong defense to the plaintiff’s individual claims, which was was likely to impede the claims of other class members – even though the class members were not subject to the same defense.  Employers in New York defending Rule 23 class actions should carefully consider the court’s reasoning and finding that plaintiff was an inadequate representative of his sought-after class.  As shown in Cheng, potential defenses to a named plaintiff’s individual claims may be sufficient to defeat class certification.  

Case Background

In Cheng, the plaintiff asserted that defendant HSBC Bank USA, N.A. (“HSBC” or “the bank”) failed to apply interest to plaintiff’s bank savings account deposits in a timely manner.  After the plaintiff made a deposit with the bank on May 31, 2019, he alleged HSBC did not apply any interest on the account until June 4, 2019, four days after the deposit.  Plaintiff claimed the bank also delayed applying interest on another deposit made on November 26, 2019 until November 29, 2019.  In November and December 2019, the plaintiff made phone calls to HSBC to address the alleged delays in crediting interest to his deposits.  Id. at *2.  The bank responded that its policy was to not credit interest on account deposits until 3 to 5 business days after they were made.  In the 2019 phone calls, the plaintiff indicated that he understood interest could not accrue until the bank had his “money on hand,” and that his concern was that the bank was failing to post the funds and initiate interest accrual upon receipt of those funds, despite the fact that it already had the “money on hand.”  Id. at *3.  In one of the 2019 phone calls, when a bank representative explained that plaintiff should have received an email indicating his deposit needed to pass through a clearing process before HSBC could post it to his account (and presumably, begin interest accrual), plaintiff responded, “I don’t care about the email…I look at when is my money withdraw[n] from other bank, when is the money posted to my HSBC account, okay?  Don’t tell me HSBC takes five days to post the money after you receive it.”  Id. at *4.

In plaintiff’s lawsuit, brought on behalf of himself and a prospective class of customers, plaintiff claimed HSBC was obligated to credit interest to his account on the day he initiated the deposit or transfer, rather than when the bank actually received the money.  Plaintiff contended the class consisted of at least 100 members and the amount in controversy exceeded $5 million.  Id. at *5.  At his deposition, plaintiff attempted to contextualize the 2019 phone calls, but admitted that he had read HSBC’s Terms and Charges Disclosures (“Disclosures”) when opening his account.  The Disclosures stated that “[i]nterest begins to accrue on the Business Day you deposit noncash items.”  Noncash items are instruments like checks and wire transfers.  Id. at *1-2.

Although the court previously had denied the bank’s motion for summary judgment on the claims by drawing all reasonable inferences in plaintiff’s favor, it expressed in that decision its view that the 2019 phone calls “strongly suggested” plaintiff shared HSBC’s understanding that the “you deposit” language in the Disclosures meant interest would begin to accrue once HSBC had cleared funds on hand, not when he initiated the deposit.  Id. at *6.  The court also opined that in the calls, plaintiff appeared to recognize HSBC could not apply interest until it was in receipt of his funds, and plaintiff told the bank multiple times that if the delay in accruing interest was due to a delay in receiving the funds, “that’s perfect” and “that’s fine.”  Id.

The Court’s Opinion Denying Class Certification

In its decision denying class certification under Rule 23, the court set forth Rule 23’s threshold requirements for class certification – numerosity, commonality, typicality, and adequacy – and confirmed plaintiff bears the burden of establishing each element.  Id. at *8.  The court pointed specifically to the adequacy requirement of Rule 23(a)(4), which focuses on the fitness of purported class representative to competently litigate the case on behalf of absent class members, and reiterated that the interests of the named plaintiff cannot be antagonistic to those of the rest of the class.  Id.

The court found that plaintiff faced “serious obstacles to recovery on his individual claims,” and that plaintiff’s statements made in the 2019 phone calls were compelling evidence he understood that he would not begin accruing interest until the bank had his cash on hand.  Id. at *10.  The court reasoned that in his class certification motion, plaintiff now alleged that the bank misled him to believe that interest would begin accruing as soon as he initiated a deposit, which was contradicted by the statements made by plaintiff in the 2019 phone calls.  The court determined that the 2019 phone calls, plaintiff’s conflicting allegations about whether he read the Disclosures, and his prior relevant litigation and banking history were all likely to weaken his claims, and that there was a strong argument that plaintiff “knew precisely what he was doing and that he and HSBC shared the same understanding about what the key term ‘you deposit’ meant.”  Id. at *11.

As a result, the court determined that the plaintiff could not be an adequate representative of the class he sought to represent because he acknowledged in the 2019 phone calls that he understood the key terms of the bank’s policies.  The court opined there was a strong argument that the plaintiff understood the defendant’s terms, but was attempting to represent a class based on the bank’s alleged misconduct.  Id. at *10-11.  The court ruled that it was “not comfortable” making plaintiff the representative of all other class members’ claims and allowing him to bind hundreds of absent class members to plaintiff’s story, conditioning their recovery on how well plaintiff’s story held up.  Id. at *12.  For these reasons, the court denied plaintiff’s motion for class certification under Rule 23(a)(4).

Implications For Employers

The court’s decision denying class certification based on its finding that plaintiff failed to meet Rule 23’s adequacy threshold requirement is a potentially helpful roadmap for employers facing class action claims.  The court’s analysis centered on an individualized determination of plaintiff’s particular factual background in ultimately holding it was uncomfortable the plaintiff could adequately represent hundreds of absent class members based on his own contradictory and inconsistent testimony and evidence.  Businesses defending class actions should consider each named plaintiff’s individual circumstances and factual background for issues that could preclude their ability to adequately represent class members.  The decision confirms that in the appropriate circumstances, courts will not hesitate to deny class certification to named plaintiffs on such grounds.

Athletes Secure Class Certification On Monetary Relief Claims In NIL Battle In California Federal Court With The NCAA And Power 5 Conferences

By Gerald L. Maatman, Jr. and Sean P. McConnell

Duane Morris Takeaways: On November 3, 2023, Judge Claudia Wilken of the U.S. District Court for the District of Northern California granted a motion by Plaintiffs – a group of former, current and future student athletes – for certification of three proposed damages classes under Rule 23(b)(3) in the litigation entitled In Re College Athlete NIL Litigation, No. 4:20-CV-03919 (N.D. Cal. Nov. 3, 2023). Judge Wilken certified three classes seeking to recover compensation for the commercial use of their names, images, and likenesses (“NIL”). This class certification order follows a September 22, 2023 order in the same case certifying a proposed injunctive relief class under Rule 23(b)(2). While defendants did not dispute certification of the proposed injunctive relief class, they argued that the damages classes should not have been certified because the NIL market is inherently too distinct for the thousands of impacted student-athletes to claim the same kind of harm from lost compensation. In certifying the three proposed damages classes, the order sets the stage for a possible class-wide trial for hundreds of millions or even billions in back pay for student athletes.

Case Background

Plaintiffs are student athletes who either have competed or will compete on a Division I team since June 15, 2020. Defendants are the National Collegiate Athletic Association (“NCAA”) and the “Power Five” Conferences – the Pac-12 Conference, Big Ten Conference, Big 12 Conference, Southeastern Conference, and Athletic Coast Conference. Plaintiffs allege that Defendants set and enforced a set of rules to restrict the compensation that student-athletes can receive in exchange for the commercial use of student-athletes’ NIL and prohibit NCAA member conferences and schools form sharing with student athletes the revenue they receive from third parties for the commercial use of student-athletes’ NIL. Even though Defendants had suspended enforcement of some of these rules, they have not suspended enforcement of rules that prohibit NIL compensation contingent upon athletic participation or performances or enrollment at a particular school, including, most notably, compensation for lucrative broadcast deals that pay conferences hundreds of millions of dollars. Plaintiffs’ complaint includes claims for Sherman Act Section 1 violations for conspiracy to fix prices and group boycott or refusal to deal as well as a claim for unjust enrichment.

Plaintiffs moved for class certification of their claims under § 1 of the Sherman Act only.

The Court’s Certification Order

The decision at issue deals only with Plaintiffs’ motion for certification of three proposed damages classes under Rule 23(b)(3). The proposed classes are (i) current and former Division I men’s basketball players and FBS football players; (ii) current and former Division I women’s basketball players; and (iii) current and former Division 1 athletes that did not play Division I basketball or FBS football. Plaintiffs’ alleged damages fall into three different buckets, including: (1) broadcast TV NIL damages, which arise out of student-athletes having been deprived of compensation they would have received from conferences for use of their NIL in broadcasts of FBS football or Division I basketball games in the absence of the challenged restrictions; (2) video game damages, which arise out of student-athletes having been deprived of compensation they would have received from video game publishers for use of their NIL; and (3) third-party NIL damages suffered between 2016 and July 1, 2021 when the NCAA started to allow some NIL compensation for student athletes.

Defendants argued that the predominance requirement of Rule 23(b)(3) was not met because common proof cannot establish antitrust damages on a class-wide basis due to intra-class conflicts that exist among class members in each class as a result of Plaintiffs’ methodology for calculating damages. The Court disagreed. Relying largely on the opinions of Plaintiffs’ experts, the Court concluded that every class member suffered injury as a result of the NCAA’s rules, and that every class member will be entitled to receive a piece of the damages pie.

Implications For Organizations

The Court’s ruling is important to the ongoing debate over student athletes’ compensation. Thus far, NCAA-member schools cannot directly compensate their athletes for NIL. By certifying the damages classes proposed by Plaintiffs, the Court’s decision is likely to advance the ball on this issue.

Illinois Federal Court Denies Class Certification In A Nationwide FCRA Lawsuit Due To Issues With Commonality, Adequacy Of Representation, And Predominance

By Gerald L. Maatman, Jr., Jennifer A. Riley, and Emilee N. Crowther

Duane Morris Takeaways: In Sgouros v. Transunion Corp., No. 1:14-CV-01850, 2023 WL 6690474 (N.D. Ill. Oct. 12, 2023), Judge Sharon Johnson Coleman of the U.S. District Court for the Northern District of Illinois denied Plaintiff’s motion for class certification in a Fair Credit Reporting Act (“FCRA”) case because Plaintiff failed to satisfy the Rule 23 requirements of commonality, adequacy of representation, and predominance. For entities facing FCRA class actions, this decision provides a concise explanation of what factors courts may consider with respect to commonality, adequacy of representation, and predominance in ruling on a motion for class certification.

Case Background

In this litigation, Defendants are collectively a well-known American consumer credit reporting agency.  In 2013, Defendants offered a 3-in-1 Credit Report, Credit Score & Debt Analysis for consumers to purchase. The 3-in-1 report included a VantageScore, which, similar to a FICO score, looks at the information in a consumer’s credit report and generates a score to help lenders determine a consumer’s creditworthiness.

On June 10, 2013, Plaintiff purchased a 3-in-1 Credit Report and VantageScore from Defendants.  Id. at 1.  On the same day he purchased the report, Plaintiff alleged he was denied his desired auto loan because “the credit score the lender was provided was more than 100 points lower than the number contained in the VantageScore [Plaintiff] purchased.”  Id.

Plaintiff later testified he knew the VantageScore was “useless” in September 2012, and failed to provide an explanation as to why he purchased a VantageScore nine months after such realization.  Id.  Plaintiff also testified that, contrary to the allegations in his complaint, he did not buy the score in advance of his search for an auto loan, and “he did not read the TransUnion website content that accompanied the purchase of his VantageScore.”  Id.

In 2014, Plaintiff filed suit against Defendants alleging violations the Fair Credit Reporting Act (“FCRA”) and the Missouri Merchandising Practices Act (“MMPA”).  Id.  Plaintiff sought to represent a nationwide class and a Missouri-based class consisting of all persons “who purchased a VantageScore 1.0 Score through TransUnion Interactive’s website, or its predecessor website, during the period October 1, 2009, to September 1, 2015.”  Id.

The Court’s Decision

The Court held that Plaintiff failed to establish commonality, adequacy of representation, and predominance for both the FCRA and MMPA claims under Rule 23(a) and (b), and denied class certification. Id. at 6.

Rule 23(a)(2) – Commonality

Plaintiffs must demonstrate that “there are questions of law or fact common to the class” to meet the commonality requirement of Rule 23(a)(2).  Id. at 3.  Importantly, Plaintiff is required to “demonstrate that the class members ‘have suffered the same injury,’” and that the claims are “capable of classwide resolution.”  Id. (citing Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011)).   Plaintiff asserted five questions to establish commonality.  Id.  Overall, the Court found Plaintiff’s commonality questions were insufficient because they “merely restate[d] the core elements of statutory violations” and did not demonstrate “to what extent the class members suffered a common injury.”  Id.

Specifically as to the alleged FCRA violations, the “core liability dispute” was whether or not Defendants failed to supply the class “with a credit score . . . that assist[ed] the consumer in understanding the credit scoring assessment of the credit behavior of the consumer and predictions about the future credit behavior of the consumer.”  Id. at 2.  Plaintiff asserted that the VantageScore could not assist consumers in understanding their credit score assessment “because the VantageScore was not similar enough to a FICO score and or widely used by lenders.”  Id. at 4.  The Court disagreed. It held that because Plaintiff failed to present any argument or evidence “independent of a comparison to a FICO score,” Plaintiff’s common questions were not “capable of common answers,” and Rule 23(a)’s commonality requirement was not met.  Id.

Similarly, “[b]ecause [Plaintiff’s] MMPA common question . . . [was] premised on the same logic as the FCRA claim,” the Court found that “commonality was not met.”  Id.

Rule 23(a)(4) – Adequacy of Representation

A named plaintiff must also establish they can adequately serve as a class representative under Rule 23(a)(4).  Id.  A named plaintiff is inadequate if they “have serious credibility problems” or if they have “antagonistic of conflicting” interests to absent class members.  Id.  The Court held that Plaintiff was inadequate to represent the class on both the FCRA and MMPA claims due to Plaintiff’s questionable credibility and the inconsistencies in his deposition testimony.  Id. at 4-5.

Rule 23(b)(3) – Predominance

The plaintiff must also demonstrate that the putative class claims “predominate over any questions affecting only individual members,” and are “sufficiently cohesive to warrant adjudication by representation.”  Id. at 5.  The Court found that the FCRA’s statutory requirement of assisting a consumer in understanding their credit score is “necessarily individualized given the inherently personal nature how credit scores are calculated and consumers’ personal behaviors,” and predominance was not met.  Id.

Implications For Credit Reporting Companies

This ruling provides a straightforward analysis of what elements courts may find persuasive in ruling on a motion for class certification in an FCRA class action. It ought to be a required read for corporate counsel in any FCRA case.

D.C. Federal Court Denies Class Certification For COVID-19 Remote Learning Claims Due To Inadequacy Of The Class Representative

By Gerald L. Maatman, Jr., Jennifer A. Riley, and George J. Schaller

Duane Morris Takeaways: In Gur-Ravantab, et al. v. Georgetown University, No. 1:22-CV-01038, 2023 U.S. Dist. LEXIS 179493 (D.D.C. Oct. 5, 2023), Judge Trevor McFadden of the U.S. District Court for the District of Columbia denied Plaintiffs’ motion for class certification on the grounds that the named Plaintiff was neither an adequate representative of the proposed class nor even a member of it.  

For companies facing motions for certification motions in class actions, this decision is instructive in terms of considerations over the circumstances where a named plaintiff may fall short of satisfying the adequacy requirement under 23(a)(4). 

Case Background

The named Plaintiff, Emir Gur-Ravanatab (“Plaintiff”), was a Class of 2020 graduate of Georgetown University.  Id. at 1.  In March 2020 of his final semester, the COVID-19 pandemic swept the nation.  Id. at 2.   Defendant, Georgetown University (“Defendant”), like many other schools, announced its transition to remote instruction for the rest of the Spring 2020 semester.  Id.

Plaintiff alleged that he entered a contract with the Defendant, and under that contract, Plaintiff paid tuition in exchange for a guarantee of “in-person classroom learning and other services.” Id. at 1-2.  Plaintiff alleged that there was a material difference in value between in-person and remote instruction. Therefore, despite Defendant’s transition to remote instruction, Plaintiff was never paid the difference.  Id. at 2.

Plaintiff alleged breach of an express and implied contract claims, and an unjust enrichment claim.  Id.  Plaintiff sought compensatory and punitive damages, and restitution for his claims.  Id.   He also moved to certify a class on behalf of other students who similarly formed contracts with Defendant and were enrolled as undergraduate students “during the Spring 2020 semester who paid tuition and Mandatory Fees.”  Id.  Plaintiff alleged the class covered roughly 7,300 other current and former university students.  Id.

The Court’s Decision

The Court denied Plaintiff’s motion for class certification. It held that the named Plaintiff was not an adequate representative of the class he proposed to certify nor even a member of the class.  Id. at 1.

The Court reasoned the requirements of all class action suits are well-settled under Rule 23.  Id. at 3.  These requirements are known as “numerosity,” “commonality,” “typicality,” and “adequacy.”  Id. at 4.    Additionally, the Court relied on U.S. Supreme Court precedent that “has ‘repeatedly held’ that ‘a class representative must be a part of the class and possess the same interest and suffer the same injury as the class members.’”  Id.  After a plaintiff and his proposed class satisfy those requirements, then the plaintiff and the proposed class must fall within one of the three “buckets” of class actions enumerated under Rule 23(b).  Id. at 4-5.  The Court found Plaintiff “stumbled before reaching Rule 23(b)” as he was “both an inadequate representative of the proposed class, and a non-member” of it.  Id. at 5.

The Court focused its ruling on the adequacy prong under Rule 23(a).  The Court opined that “[Plaintiff] does not share the same interests as the other class members, and indeed, has a potential conflict of interest with them,” and therefore is “not an adequate class representative.”  Id. at 7.  Plaintiff suffered two problems, including: (i) Plaintiff’s mother is an employee of the university; and (ii) Plaintiff did not personally pay tuition or mandatory fees.  Id. at 7-8.  Therefore, the Court determined “he lack[ed] the kind of concrete stake in the outcome of th[e] litigation necessary to be the vigorous advocate the class is entitled to.”

As to potential class conflicts, Plaintiff’s mother was a Turkish language instructor with the university, and hence he had a close familial relationship to a person who may be harmed by a judgment against the university.  Id. at 8.  Further, Plaintiff testified in his deposition that his parents, including his mother “exert a ‘pretty major’ influence over his decisions.”  Id.  The Court reasoned that “Rule 23 requires that class representatives be able to engage in arm’s-length dealings with the opposing side” and Plaintiff did not meet that standard.  Id.  However, the Court acknowledged that this conflict on its own “would not be enough, standing on its own, to defeat adequacy,” but other problems persisted. Id.

Plaintiff’s second problem was he did not share the same interest in this case as the other class members.  Id.  Plaintiff “sued for a refund of the difference in value between the education he paid for and the one he got,” but Plaintiff “did not pay for an education at all.”  Id.  The Court considered Plaintiff’s student account as the operative measure for educational payments.  Id. at 8-11.

On balance, the Court construed the student account two ways. Either, Plaintiff did “not pay [Defendant] a dime,” Id. at 9, or Plaintiff “got more money out of [Defendant] that semester than he put in.”  Id. at 11.  Based on the Court’s reasoning, both accountings lead to the same problem, i.e., that Plaintiff “will likely have no compensatory damages to claim,” and “without compensatory damages, [Plaintiff] cannot claim punitive damages either.” Id.  Therefore, the Court held that Plaintiff could not obtain meaningful relief, and thus, “he lack[ed] ‘the incentive to represent the claims of the class vigorously.’”  Id.   As a result of Plaintiff owing no money towards tuition and Mandatory Fees, the Court found he “quite simply is not a member of the proposed class.”  Id. 

The Court further discussed the second named Plaintiff, Emily Lama, and her exclusion from the class as well because she was “enrolled as a graduate student during the Spring 2020 Semester,” meaning she also did not fit the undergraduate class description.  Id. at 11-12.

Accordingly, as there was no named Plaintiff to represent the class, the Court denied Plaintiffs’ motion for class certification.  Id. at 12.  

Implications For Companies

Companies confronted with motions for class certification should take note that the court in Gur-Ravantab relied on Plaintiffs’ inability to adequately represent the class based on a fact intensive analysis that disqualified the named Plaintiff as a suitable class representative.  Further, from a practical standpoint, companies should carefully evaluate class representatives for unique characteristics that are distinguishable from the proposed class.

North Carolina Federal Court Certifies Class While Refusing To Decertify FLSA Collective Action

By Gerald L. Maatman, Jr., Zachary J. McCormack, and Emilee N. Crowther

Duane Morris Takeaways: In Wade et al. v. JMJ Enterprises LLC, No. 1:21-CV-506 (M.D.N.C. Sept. 30, 2023), Judge Loretta C. Biggs of the U.S. District Court for the Middle District of North Carolina granted in part Plaintiff’s motion to certify a Rule 23 class involving North Carolina Wage and Hour Act (“NCWHA”) claims by certifying Plaintiffs’ claims for unpaid wages due for training, mandatory meetings, and improper reductions from employee time logs. In addition, Judge Biggs ruled that the Fair Labor Standards Act (“FLSA”) preempted Plaintiff’s claim for failure to pay overtime wages under the NCWHA. In turn, Judge Biggs denied Defendants’ motion to decertify the FLSA collective action claims involving failure to pay overtime wages. This decision provides a good roadmap of the interplay in “hybrid wage & hour lawsuits” relative to the standards for certification of both class actions and collective actions.

Case Background

JMJ Enterprises LLC and owner Traci Johnson Martin (collectively “JMJ”) operate three group homes in Greensboro, North Carolina. The group homes assist children with mental illnesses or emotional disturbances, as well as adults suffering from mental illnesses and developmental issues. The Named Plaintiff, Tiffany Wade (“Ms. Wade”), was employed at Fresh Start Home for Children, one of the three group homes operated by JMJ from February 2021 to April 2021, and alleged she was not fully compensated for her time attending training sessions and mandatory meetings. Specifically, Wade alleged three claims under the FLSA, including failure to pay minimum wages, failure to pay overtime wages, and retaliation. Wade also brought two state law claims against JMJ under the NCWH for failure to pay wages due and failure to pay overtime wages. In her ruling, Judge Biggs issued an order in response to Wade’s motion to certify her class claims pursuant to Rule 23(a) and Rule 23(b)(3) of the Federal Rules of Civil Procedure, and JMJ’s attempt to decertify Wade’s FLSA collective action.

The Court’s Order

State Law Claim Preempted By The FLSA 

Wade alleged two state law claims against her former employer under the NCWHA. In the first claim, Ms. Wade alleged JMJ failed to pay wages due pursuant to N.C. Gen. Stat. § 95-25.6 and § 95-25.7. Section 95-25.6 is commonly known as the “payday statute” and requires an employer to pay “all wages and tips accruing to the employee on the regular payday.” See Martinez-Hernandez v. Butterball, LLC, 578 F. Supp. 2d 816, 818, 821 (E.D.N.C. 2008). In the second state law claim, Wade alleged JMJ failed to pay overtime wages pursuant to N.C. Gen. Stat. § 95-25.4.

Judge Biggs concluded that Wade’s second state law claim, the overtime claim, was preempted by the FLSA. The Court reasoned that N.C. Gen. Stat. § 95-25.14 provided an exemption to employees covered under the FLSA. Although arising from the same facts, Wade’s wages due claim did not fall under any NCWHA exemption and was deemed sufficiently separate and distinct from her FLSA claims for minimum wage and overtime wages considering that her theory of liability did not invoke provisions of the FLSA.

Rule 23 Class Certification 

Considering Wade’s first state law claim, the wages due claim, the Court ruled that it was not preempted by the FLSA, Judge Biggs focused on whether Ms. Wade could meet her burden to certify a class involving similar NCWHA claims. Ms. Wade, as class representative, sought to establish a class of hourly, non-exempt employees who worked at JMJ with similar wage claims. The Court considered the four prerequisites established in Rule 23, including numerosity, commonality, typicality, and adequacy of representation. Gunnells v. Healthplan Servs., Inc., 348 F.3d 417, 423 (4th Cir. 2003).

The Court agreed with Wade that nearly 100 class members rendered joinder impracticable, therefore satisfying the numerosity requirement. Judge Biggs ruled commonality was achieved through JMJ’s improper time recording and wage policies and practices, which determined compensation for class members. Even though each member had distinguishable circumstances, the Court opined that the heart of the claims was similar, and typicality was met. Regarding adequacy of representation, the Court looked at the resume of L. Michelle Gessner at Gessner Law, PLLC, who was appointed as class counsel. JMJ argued that she could not competently represent this class by pointing to Gessner’s extensive objections during Wade’s depositions (which JMJ contended demonstrated Gessner’s lack of sufficient understanding and control of the case). Judge Biggs rejected this defense position. Relying on Gessner’s 20 plus years of experience practicing labor and employment law, specifically complex wage and hour class and collective action cases, The Court held that she was adequate counsel for purposes of representing the class.

Defendants’ Motion To Decertify The FLSA Collective Action  

In order for this FLSA collective cction to proceed to trial, Judge Biggs applied a heightened standard to the “similarly situated” analysis. Wade argued that all employees making up the proposed collective action were paid based on a common policy, had similar roles at JMJ, and worked at one JMJ’s three group homes. The Court agreed that JMJ had common policies and practices with respect to training, mandatory meetings, overtime pay, and employee time logs, which applied to all employees and proved a common resolution of the FLSA claims was possible. Judge Biggs further determined there were sufficient similarities between the employees’ factual allegations and employment settings, and similar circumstances with regard to JMJ’s defenses. Judge Biggs therefore allowed the FLSA collective action to proceed.

Implications For Employers

The ruling in Wade details the burden employers must meet to decertify a FLSA collective action and also the burden for employees to certify a class action in the Fourth Circuit. This is yet another case which details the importance of employers’ obligations to abide by all record-keeping and paperwork requirements in their respective jurisdictions.


In The Latest Application of the Sixth Circuit’s Novel “Strong Likelihood” Standard, Ohio District Court Denies Plaintiffs’ Motion to Issue Notice of FLSA Overtime Lawsuit

By Gerald L. Maatman, Jr., Jennifer A. Riley, and Kathryn Brown

Duane Morris Takeaways: On September 27, 2023, District Court Judge Charles E. Fleming in Woods et al. v. First Transit, Inc., et al., 21-cv-739 (N.D. Ohio Sept. 27, 2023) denied plaintiffs’ motion for court-authorized notice of bus drivers’ claims of alleged unpaid overtime wages under the Fair Labor Standards Act (FLSA).  The district court applied the Sixth Circuit’s newly-minted standard to conclude the plaintiffs failed to demonstrate a “strong likelihood” exists that they are similarly situated in relevant respects to other employees of the defendant transportation company.  The court’s rejection of the plaintiffs’ “self-serving declarations” and consideration of the defendants’ competing evidence illustrates how the Sixth Circuit’s new standard is a game changer for FLSA litigants in Ohio, Michigan, Tennessee and Kentucky.

Case Background

On April 6, 2021, three named plaintiffs filed a class and collective action lawsuit asserting claims of unpaid overtime in violation of the FLSA and Ohio, California and New York state laws.  The plaintiffs alleged that the defendant failed to pay overtime wages to fixed-route bus drivers for work performed before and after their shifts.  The plaintiffs also alleged the defendant deducted 30 minutes’ worth of time from their pay for unpaid meal breaks even when they did not receive uninterrupted break time.  After the district granted the defendant’s partial motion to dismiss the New York and California state law claims, only the Ohio state law claims survived.  Additionally, only two named plaintiffs remained after one of the named plaintiff s was shown never to have worked as a fixed-route bus driver.

Two individuals filed consents to join the lawsuit as opt-in plaintiffs in October 2021 and a third joined the lawsuit in February 2022.

After approximately six months of fact discovery solely on the issue of conditional certification, the named plaintiffs moved for conditional certification of their claims under the FLSA on June 29, 2022.  If granted, the plaintiffs would have authority to issue notice to a collective including any person who drove a fixed bus route for the defendant in any week during the prior three years.

In support of their motion, the plaintiffs submitted sworn declarations of the two named plaintiffs and three putative opt-in plaintiffs, job descriptions, an employee handbook and a user guide for time entry.  In opposition to the motion, the defendant submitted sworn declarations of managers at the locations at which the named or opt-in plaintiffs had worked, declarations of corporate human resources and payroll staff and collective bargaining agreements governing fixed-route bus drivers at various locations.

After the parties fully briefed the motion, the district court deferred ruling on the motion until the Sixth Circuit Court of Appeals issued its anticipated decision on the standard for conditional certification in FLSA cases.

On May 19, 2023, the Sixth Circuit in Clark v. A&L Homecare and Training Center, LLC, 68 F.4th 1003 (6th Cir. 2023), announced a new standard for determining whether FLSA plaintiffs may issue court-sanctioned notice to other employees.  Rejecting the prior standard in which a plaintiff need only make a “modest factual showing” to win court-authorized notice, the Sixth Circuit held that plaintiffs must put forth sufficient evidence to demonstrate a “strong likelihood” exists that they are similarly situated to other employees.  Factors relevant to the analysis include whether the potential other plaintiffs performed the same tasks and were subject to the same timekeeping and pay policies as the named plaintiffs.  After Clark, the parties submitted supplemental briefs arguing how the new standard applied to the plaintiffs’ pending motion.

The Court’s Decision

Upon weighing the parties’ competing evidence, the district court answered “no” to the question whether a strong likelihood exists that the named plaintiffs experienced the same policies of unpaid overtime wages as other employees of the defendant.

The district court concluded that the plaintiffs did not introduce any evidence of a “company-wide policy” binding on all fixed-route bus drivers that potentially violates the FLSA.  The court stated that the only evidence of the alleged unlawful overtime pay practices came in the form of “self-serving declarations” of doubtful credibility.  For example, an opt-in plaintiff declared that she worked as a fixed-route bus driver until December 2020.  However, the manager who oversaw the opt-in plaintiff’s location declared that no driver at that location drove a fixed bus route.  The court reasoned no “strong likelihood” exists that the opt-in plaintiff is similarly situated to the named plaintiffs given that the opt-in plaintiff could not be in the proposed collective of fixed-route bus drivers.

The court also considered the evidence of written policies regarding meal breaks, or the lack thereof, for fixed-route bus drivers.  Contrary to the plaintiffs’ allegation of company-wide automatic pay deductions for meal break time, the manager of the location at which one of the named plaintiffs had worked declared that drivers at that location did not even receive meal breaks.

The collective bargaining agreements in evidence showed that different locations of work had different policies governing time entry and breaks for fixed-route bus drivers.  For example, a collective bargaining agreement for one location stated that the defendant paid drivers for 15 minutes of time prior to their route to perform pre-shift work.  A collective bargaining agreement for another location said the defendant paid drivers 20 minutes for pre-shift work.

In sum, the court reasoned that the evidence revealed dissimilarity in policies and practices concerning compensation for the company’s fixed-route bus drivers.  Because the evidence showed employees were subject to different policies concerning key issues such as how they report time, how schedules are set, what period of time is compensable, whether they receive a meal break and how meal breaks are paid, the court concluded the plaintiffs did not satisfy the “strong likelihood” standard announced in Clark to obtain court-authorized notice of their FLSA claims.

Implications For Employers

The district court’s ruling in Woods leaves no doubt that FLSA plaintiffs in the Sixth Circuit face a heightened evidentiary burden to obtain court-authorized notice in the wake of the Sixth Circuit’s new standard in Clark.  The district court clarified that the “strong likelihood” standard in Clark is an evidentiary standard, not a pleading standard.  The court’s analysis in Woods shows defendants have a genuine opportunity to present evidence to attack the plaintiffs’ efforts to show a common policy of FLSA-violating conduct and thereby block notice to other employees who may expand the scope of the lawsuit exponentially.  Employers with operations in the Sixth Circuit ought to use Clark as an opportunity to look anew at their wage and hour policies and practices to guard against the risk of costly and time-consuming FLSA litigation.

California District Court Grants Class Certification In Wage Statement Action

By Gerald L. Maatman, Jr., Jennifer Riley, Nick Baltaxe, Nathan K. Norimoto

Duane Morris Takeaways: In Oman v. Delta Air Lines, Inc., No. 15-CV-00131(N.D. Cal. Sept. 22, 2023), 2023 U.S. Dist. LEXIS 169540, Judge William Orrick of the U.S. District Court for the Northern District of California certified a class of flight attendants based in California on the limited issue of whether Delta Airlines’ wage statements were compliant with Section 226 of the California Labor Code. This decision further highlights the low barriers plaintiffs face in certifying wage statement claims under California law and emphasizes the importance for employers to review wage statements on a regular basis for compliance with the California Labor Code.

Case Background

Following dispositive motion practice and an appeal to the Ninth Circuit, Plaintiffs moved to certify a class of class of California employees who worked as flight attendants for Defendant Delta Air Lines, Inc. (“Delta Airlines or “Delta”). Id. at 1. Plaintiffs attempted to certify a very narrow class regarding compliant wage statements issued to flight attendants who worked from January 10, 2022, to October 7, 2022, and did not participate in Delta’s Enhanced Retirement or Voluntary Opt-Out Programs. Id. at 2. Plaintiffs did so after the Ninth Circuit found that Delta had a good faith defense to the wage statement claim prior to January 10, 2022, and that Delta changed its wage statements in an effort to make them compliant on October 8, 2022. Id. at 1. This motion came after the parties’ negotiations to certify this narrowed class fell apart when Plaintiffs refused to stipulate that Delta’s post-October 21, 2022, wage statements were compliant. Id. at 1.

Delta Airlines opposed Plaintiffs’ motion for class certification. Delta’s opposition to Plaintiffs’ motion for class certification did not dispute the Rule 23 requirements of numerosity and commonality. Id. at 2. However, Delta argued that the claims were not “typical.” Id. Delta relatedly argued that Plaintiffs’ request for certification would create “prejudicial” discrepancies between Plaintiffs and putative class members that disqualifies them and their counsel as adequate class representatives under Rule 23 of the Federal Rules of Civil Procedure. Id.

In addition, Delta sought relief to file a second motion for summary judgment to secure an “advisory opinion” from the Court that its wage statements issued after October 21, 2022, were fully compliant with the Labor Code. Id.

The District Court’s Decision

The Court granted Plaintiffs’ motion for class certification and held that Plaintiffs satisfied the Rule 23 requirements of typicality, adequacy, predominance, and superiority of a class action. Id. at 2-5.

First, the Court held that Plaintiffs’ alleged wage statement violations were “typical” of the putative class in light of Delta’s “good faith defense” to any wage statement violations that occurred before the proposed class period’s start date and Delta’s admission that it revised wage statements immediately after the class period’s end date. Id. at 2-3. The Court rejected Delta’s argument that Plaintiffs’ proposed class period was shorter than the class alleged in the operative pleading which prevented Plaintiffs’ claim from being typical, because Plaintiffs had provided “adequate justification” for narrowing the class period, especially after the Ninth Circuit’s ruling. Id.

Second, the Court held that Plaintiffs and their counsel were adequate representatives given the “sensible and logical manner” Plaintiffs used to narrow the class definition, i.e., the class period starts immediately after the time period of Delta’s good faith defense and the class period ends when Delta admittedly started making revisions to its wage statements. Id. at 3. The Court dismissed Delta’s accusation of “claim splitting” as Plaintiffs were not “jettisoning categories of damages to make this case more certifiable to the detriment of class members.” Id.

As the final step in certifying the class, the Court determined that predominance and the superiority of resolving Plaintiffs claims on a class-wide basis were satisfied given the amount of class members who were “based in California and performed a majority of their work in California.” Id. at 4-5. Delta’s argument that Plaintiffs’ proposed class did not account for the number of intrastate flights outside of California and the hours worked in non-California airports was rejected by the Court as Delta, which apparently had “that information at its disposal,” did not introduce any evidence to support those defenses with its opposition. Id. The Court overruled Delta’s attempts to invalidate Plaintiff’s proposed class certification notice and instead, found the notice was “short, clear, and written in plain language.”

Finally, the Court denied Delta’s request for leave to file a second motion for summary judgment on the question of whether the wage statements issued after the class period complied with the Labor Code requirements. Id. at 5-6. The Court ordered Plaintiffs to file an amended pleading that conforms to the certified class and, since Delta’s request implicated statements provided after the class period, there was no “case or controversy remaining” on the issue. Id. at 6.

Implications For Employers

California employers already face strict regulations for compliant wage statements. Even if fully compliant, California employers can face a litany of derivative wage statement penalties. Employers can limit liability by arguing good faith defenses and updating their wage statements for compliance, as Delta did. However, this case shows that, even with those arguments and changes, Courts are willing to certify even limited classes. As this litigation shows, an employer’s proactive audits of wage statement compliance can be critical to reducing future wage statement-related liability in California.

New York Federal Court Rules That One Long-Tenured Employee’s Testimony Is Sufficient To Support Granting Of Conditional Certification Of An FLSA Collective Action

By Gerald L. Maatman, Jr., Jennifer A. Riley, and Gregory S. Slotnick 

Duane Morris TakeawaysOn September 25, 2023, Judge Colleen McMahon of the U.S. District Court for the Southern District of New York District granted conditional certification of a collective class under the Fair Labor Standards Act (“FLSA”) in Ademi v. Central Park Boathouse, LLC et al., No. 22 Civ. 8535 (S.D.N.Y. Sept. 25, 2023).  In its order, the Court found that one single affidavit, submitted by a long-tenured named employee, provided allegations sufficient to grant his request to conditionally certify the collective action.  Employers in the Second Circuit (i.e., New York, Connecticut, and Vermont) should note the extremely minimal burden workers are required to meet at the conditional certification stage of a wage & hour lawsuit, as granting certification based on a single declaration is at the low end of the spectrum as certifications rulings go.  The case also serves as the latest reminder for businesses to ensure their wage & hour practices and compliance are up to date given the ever-changing landscape and evolving federal, state, and local rules and regulations concerning wage & hour issues.

Case Background

Plaintiff, a former long-tenured server who worked at the Central Park Boathouse (the “Boathouse”) from approximately January 2011 through October 16, 2022, filed a complaint on behalf of himself and all current and former front-of-the-house tipped employees (captains, assistants, bartenders, bussers, runners, and servers) employed at the Boathouse within the last six years.  In the complaint, the worker sought to recover unpaid wages (including overtime) due to an invalid tip credit policy, unreimbursed costs for maintenance of uniforms, and unpaid wages due to improper meal credit deductions in violation of the FLSA and the New York Labor Law (“NYLL”), as well as failure to provide proper wage statements under the NYLL.  Plaintiff also brought a claim for unlawful retaliation against him in violation of both laws, and all claims were filed against the Boathouse and its former owner and operator.  Id. at 1.

Plaintiff claimed that he was regularly scheduled to work seven hours a day, five days per week, but also regularly worked two or three double-shifts per week, totaling approximately 49 to 56 hours worked per week.  Id. at 3.  Plaintiff’s declaration included a list of the first (but not last) names of six other servers also allegedly scheduled to work similar hours and shifts, and he claimed there were additional names of other workers as well.  Id.  Plaintiff asserted that the Boathouse paid tipped front-of-the-house employees tip-credited wages without providing them notice that tip credits would be taken against their wages.  Id. at 4.  The complaint claimed the Boathouse thus paid the tipped employees below the New York minimum and overtime rate based on the tip credit, and attached paystubs generated between 2016 and 2020 confirming such rates.  Id.  Plaintiff claimed he personally observed and discussed the Boathouse paying below the required minimum amounts with named and unnamed co-workers.  The Complaint also alleged the Boathouse maintained a tip credit policy despite requiring tipped workers spend more than 20% of their total weekly hours performing non-tipped work and required the workers to maintain their own uniforms without proper cost reimbursement to offset cleaning costs.  Id. at 4-5.  Finally, Plaintiff alleged the restaurant improperly deducted meal credits from wages of all tipped front-of-house employees for meals that often made coworkers sick and often consisted of unsold chicken and seafood leftovers.  Id. at 5.

On March 23, 2023, Plaintiff filed a motion for conditional certification of a collective action under the FLSA, seeking the Court also allow mailing out notice of the opportunity to join the case to all putative opt-in plaintiffs.  Id. at 2.

The Order Granting Conditional Certification

In its decision, the Court noted that in assessing whether a plaintiff is “similarly situated” to employees the plaintiff seeks to represent, courts look to the pleadings, affidavits, and declarations, but often authorize notice at the conditional certification stage based “solely on the personal observations of one plaintiff’s affidavit.”  Id. at 9.  The Court confirmed that at the conditional certification stage (the first of a two-step process for certifying a collective action in the Second Circuit), courts do not resolve factual disputes or weigh the merits of the underlying claims when determining whether potential members of the collective action are similarly situated.  Id.  A more rigorous factual review takes place during the second stage of the certification analysis after discovery, where a court may decertify a conditionally certified collective action and dismiss the claims of the opt-in plaintiffs (without prejudice).  Id. at 8.

Judge McMahon specifically cited the fact that courts in the Second Circuit have “routinely” granted conditional certification of a FLSA collective action based on a single plaintiff’s affidavit when the employee declares that other co-workers were subjected to similar employer practices.  In applying the principle to this matter, the Court cited to the single affidavit submitted by the named Plaintiff that chronicled his eleven years of employment at the Boathouse during which he claimed the Boathouse failed to provide him and all other tipped front-of-house employees with notice it was taking a tip credit against their wages, including for all worked hours during which they performed non-tipped duties for more than 20% of the time.  Id. at 10-11.  According to the employee, these common practices resulted in the Boathouse unlawfully compensating him and the other tipped workers below the New York tipped minimum wage and overtime rates.  Plaintiff also claimed the Boathouse required him and all tipped front-of-house employees to maintain their work uniforms without proper reimbursement and further deducted a meal credit from their wages for meals that did not meet New York’s minimal meal requirements.  Id.

Critically, the employee declared that he had personal knowledge from his own observations and his conversations with named and unnamed co-workers during the course of his eleven years of employment of the Boathouse applying the same policies (and violations) to “all tipped front-of-house employees.”  Id. at 11.  Judge McMahon found that based on his declaration alone, Plaintiff satisfied his minimal burden of showing he is “similarly situated” to the proposed class members.  The Court found that Plaintiff set forth a factual basis for his claims of common policies violating the FLSA, i.e., specifically, policies “depriving tipped front-of-house workers of wages, failing to reimburse workers for uniform maintenance, and deducting improper meal credits.”  Id.

The Court found unconvincing the Boathouse’s arguments that the worker did receive proper notice of the restaurant’s tip credit policy, failed to plead sufficient facts to support his allegations, and that his declaration contained false statements.  The Court instead noted that at the first stage of conditional certification, it “does not resolve any factual disputes” and stated that case law is “clear” that a single plaintiff’s affidavit may be enough to meet the evidentiary burden.  Id. at 11-12.  However, the Court did agree with the Boathouse that because two of the job positions Plaintiff sought to include in his collective action (“captains” and “assistants”) did not actually exist at the restaurant while it was owned and operated by Defendants, those positions should not be included in the definition of the collective action.  Id.  Otherwise, the Court found that the worker met his “low burden” to show that he was similarly-situated with the other proposed class members.

Notably, the Court limited the proposed collective action to any persons employed at the Boathouse from October 6, 2019 through the date the Complaint was filed (October 26, 2022), but not including those currently employed on the date of the Decision and Order (September 25, 2023), unless that person was also employed on October 26, 2022.  Id. at 12-13.  This was in light of a new concessionaire (and not the defendants sued in the case) reopening the Boathouse restaurant in June 2023 after it was closed between October 16, 2022 through that time.

As a result of its granting conditional certification, the Court authorized notice to be sent out to a collective class consisting of all tipped front-of-house bartenders, bussers, runners, and servers employed at the Boathouse during the aforementioned three-year period.  In order to effectuate the notice mailing process, the Court also ordered the Boathouse to provide plaintiff with names and addresses of all collective class members to allow them the opportunity to opt-in to the case.  The Judge also denied plaintiff’s request to post the notice at the Boathouse, as it is no operated under entirely new management, but granted plaintiff’s request to equitably toll the statute of limitations from the date plaintiff filed his motion for conditional certification through the date notice is mailed out to the potential opt-in plaintiffs.

Implications for Employers

The order in this case is the latest example of the stark minimal burden employees must meet in order to conditionally certify a FLSA collective action within the Second Circuit.  In this case, a single plaintiff’s affidavit – which included alleged discussions with unnamed co-workers confirming they were subjected to common unlawful policies – was enough to convince a judge to conditionally certify a proposed collective class.  In order to give themselves a chance at defeating a conditional certification motion similar to the one filed against the Boathouse in this case, employers and businesses in the Second Circuit are well- advised to regularly keep themselves up to speed and aware of the ever-evolving developments in the world of wage& hour law, state and local rules and regulations concerning pay practices, and abide by all necessary paperwork and record-keeping requirements in their respective jurisdictions.

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The opinions expressed on this blog are those of the author and are not to be construed as legal advice.

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