Category: Class Certification Motions

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.

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.

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.

 

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.

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.

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

Duane Morris Takeaways:  On 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.

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

Duane Morris Takeaways: In Gifford v. Northwood Healthcare Group LLC et al., No. 22-CV-04389 (S.D. Ohio Aug. 21, 2023), Judge Sarah D. Morrison of the U.S. District Court for the Southern District of Ohio granted plaintiff’s motion for conditional certification of a wage & hour collective action pursuant to 29 U.S.C. § 216(b) of the Fair Labor Standards Act (“FLSA”).  Through sworn declarations and documentary evidence of defendants’ meal break policy, the Court found plaintiff showed a “strong likelihood” that she was similarly-situated to potential collective action members who may elect to join the lawsuit.  The ruling adds to the body of case law applying the Sixth Circuit’s new standard for notice to potential opt-in plaintiffs in putative FLSA collective actions announced in Clark v. A&L Homecare and Training Center, LLC, 68 F.4th 1003 (6th Cir. 2023), and ought to be required reading for any employers involved in wage & hour litigation.

Case Background

On December 15, 2022, plaintiff filed a Complaint against Northwood Healthcare Group, LLC and Garden Healthcare Group, LLC, two entities operating healthcare facilities in Ohio.  Plaintiff allegedly worked at two such facilities as a non-exempt Licensed Practical Nurse.  The lawsuit targeted the defendants’ meal break practices.  Plaintiff contended that due to staffing shortages and the demands of patient care, she did not receive a full, uninterrupted 30-minute (“bona fide”) meal break on a regular basis.  As alleged in the Complaint, defendants automatically deducted 30 minutes of time from her hours worked even when she did not receive a bona fide meal break, resulting in unpaid overtime compensation.  On behalf of herself and similarly situated other employees, Plaintiff brought claims asserting failure to pay overtime wages under the FLSA, failure to pay overtime wages under the Ohio Minimum Fair Wage Standards Act (“OMFWSA”), failure to keep accurate payroll records under the OMFWSA and failure to pay wages timely under the Ohio Prompt Pay Act.

On March 15, 2023, plaintiff filed a motion for conditional certification of a collective action.  On May 15, 2023, defendants opposed the motion on the merits and urged the Court to delay ruling until the Sixth Circuit issued its opinion in Clark.

On May 19, 2023, the Sixth Circuit in Clark announced a more rigorous standard for authorizing notice of an FLSA lawsuit to other employees.  Abandoning the prior standard of a “modest factual showing” of similarly situated status, the standard in Clark requires plaintiffs to establish a “strong likelihood” that they are similarly situated to potential other plaintiffs.

Days later, in her reply brief filed on May 23, 2023, plaintiff argued that the evidence she presented in her motion satisfied the new standard in Clark.

The Court’s Decision

The Court determined that the evidence provided in support of plaintiff’s motion satisfied the “substantial likelihood” standard announced in Clark.

Specifically, plaintiff provided her own sworn declaration and the sworn declarations of six individuals who had filed consents to join the lawsuit as opt-in plaintiffs.  Together, plaintiff and the other declarants worked at six of the 14 facilities plaintiff sought to include in her lawsuit.  The Court found the declarations told a consistent story of employees not receiving overtime pay for those occasions when patient care needs required employees to skip or cut short their designated 30 minutes for a meal break, even after employees complained to management about being undercompensated.

Plaintiff also submitted evidence of employee handbooks in effect at the six facilities at which the declarants had worked for the defendants.  The Court found that the handbooks reflected nearly identical policies on overtime compensation and meal breaks.  For example, the meal break policy in the various employee handbooks stated that employees who worked through their meal breaks would receive pay for their time, whether the work was authorized or not. Defendants argued that plaintiff’s evidence fell short of identifying a “companywide” policy.  Defendants pointed out that the declarants had no personal knowledge of the meal break practices in effect at facilities operated by defendants at which they had not worked.  The Court disagreed. It opined that plaintiff presented enough evidence of a unified theory of conduct by defendants, notwithstanding that the declarants did not represent former employees at all of the facilities the plaintiff sought to include in the lawsuit.

The Court concluded that the evidence “establishes to a certain degree of probability” that the plaintiff, the individuals who had already filed consents to become opt-in plaintiffs, and the other potential plaintiffs performed the same tasks, were subject to the same policies and were unified by a common theory underlying their causes of action. Id. at 8.

In so ruling, the Court authorized plaintiff to send notice to all current and former hourly, non-exempt direct care employees of defendants who had a meal break deduction applied to their hours worked in any workweek in which they were paid for at least 40 hours of work during a three-year lookback period and through the final disposition of the case.

Implications For Employers

The Court’s ruling in Gifford demonstrates that application of the Sixth Circuit’s “strong likelihood” standard is highly dependent on the evidence presented by a plaintiff.  By contrast, under the prior standard, courts routinely granted plaintiffs’ motions to authorize notice to potential opt-in plaintiffs.

Employers with operations in Ohio, Tennessee, Michigan and/or Kentucky should keep a close watch on Gifford and other cases applying the Sixth Circuit’s new standard in FLSA litigation.

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

Duane Morris Takeaways: In Nelson v. Experian Information Solutions, Inc., No. 4:21-CV-894, 2023 WL 5284831 (N.D. Ala. Aug. 16, 2023), Judge Corey L. Maze of the U.S. District Court for the Northern District of Alabama granted Defendant Experian Information Solutions, Inc.’s (“Experian”) Motion for Summary Judgment, and denied as moot Plaintiff’s Motion for Class Certification.  Judge Maze reasoned that summary judgment was appropriate because it was not objectively unreasonable for Experian to believe it was not required to reinvestigate the accuracy of Nelson’s name, addresses, and social security number (“SSN”) on her credit report under Section 1681i of the Fair Credit Reporting Act (“FCRA”).  This ruling not only provides guidance into the duties of Credit Reporting Agencies (“CRA”) in the Eleventh Circuit to conduct “reasonable reinvestigations” of “the completeness or accuracy” of items on an individual’s credit report, but also demonstrates how an effectively timed summary judgment motion can preclude class certification.

Case Background

Experian is a multinational data analytics and CRA company that collects and aggregates credit information for millions of individual consumers and businesses.  Nelson discovered inaccuracies in her Experian credit report, namely, that her maiden name was misspelled, two addresses that were not hers were listed on her report, and the last digit of her SSN was incorrect.  Nelson made three attempts to contact Experian to correct the inaccurate information, and even though Experian removed all of the inaccurate information aside from one address (associated with an open credit account), Experian did not inform Nelson, or the furnishers of the information, that the inaccurate information had been removed.  Thereafter, Nelson filed a class action against Experian in 2021 for negligent and willful non-compliance with the FCRA.

Following discovery Experian moved for summary judgment against Nelson under several theories, including: (1) it accurately reported the inaccurate information it received; (2) it did not cause Nelson’s injury, if any; (3) 15 U.S.C. § 1681i’s reinvestigation requirement does not apply to personal identification information; and (4) Experian is not liable for its employees’ unauthorized acts. Nelson concurrently moved for class certification under Rule 23.

The Court’s Decision

The Court denied Nelson’s motion for class certification. Instead, it granted Experian’s motion for summary judgment.

The FRCA’s Reinvestigation Requirement

Section 1681i of the FRCA requires a CRA to conduct a reasonable reinvestigation only if a consumer disputes “the completeness or accuracy of any item of information contained in a consumer’s file.”  15 U.S.C. § 1681i.  Both Nelson and Experian agreed that the Court must grant summary judgment if it found 15 U.S.C. § 1681i imposed no duty on Experian to reinvestigate Nelson’s dispute over inaccurate personal identification information.

Nelson asserted “any item of information contained in a consumer’s file” included, at the very least, her name, address, and SSN, because the term “file” as defined by the FRCA includes “all of the information on that consumer recorded and retained by a [CRA].”  Id. at 5; 15 U.S.C. § 1681a(g). However, Experian countered that the FRCA’s disclosure provision requires CRAs to disclose six categories of information if requested by the consumer, including the first category of “all information in the consumer’s file.” Id.; 15 U.S.C. § 1681g(a).  Experian argued, and the Court agreed, that Congress’ addition of five subcategories of information after the broad phrase “all information in the consumer’s file” established that “Congress did not literally mean all information in the consumer’s file when it defined ‘file’ to mean ‘all information in the consumer’s file.’” Id. at 6.

Experian further argued that under 15 U.S.C. § 1681a(g), the word “any” in “any item of information contained in a consumer’s file” is limited to information that might be, or has been, furnished in a consumer report.  Id. at 6-7.  Since personal identification information like a consumer’s name, address, and SSN do not bear on an individual’s creditworthiness, Experian contended that such information did not itself constitute a credit report.  Id. at 7.  The Court disagreed with Experian’s argument. It held that the FRCA’s plain language and canons of construction “forbid the use of credit worthiness as the limitation on information contained in both the consumer’s credit report and the consumer’s file.”  Id. at 8.

Ultimately, the Court found that, according to 15 U.S.C. §§1681c(h), 1681g(a)(1), and 1681u, names, addresses, and SSNs fit within the phrase “any item of information contained in a consumer’s file,” and Experian thus had a duty to reinvestigate the accuracy of Nelson’s name, addresses, and SSN when Nelson filed a direct dispute under that provision.  Id. at 9-10.

Reasonable Belief

The Court noted that the existence of a duty to reinvestigate “is not enough to prove a violation of the FCRA” — Nelson also had to establish that Experian either negligently or willfully failed to satisfy its duty to reinvestigate by showing that Experian’s interpretation of the FCRA was objectively unreasonable.  Id. at 10; see also, Safeco Ins. Co. of America v. Burr, 551 U.S. 47, 68-70 (2007).

Experian argued that its understanding of 15 U.S.C. § 1861i counseled that disclosures and reinvestigations should be limited to information that bared on the consumer’s credit worthiness.  In support of its position, Experian pointed to two federal circuit opinions, as well as regulations from the Consumer Financial Protection Bureau and the Federal Trade Commission, all establishing that the term “file” should only contain what was included in a consumer report.

Considering no case law told Experian that its interpretation was wrong, and other circuits’ precedent and CFPB and FTC regulations suggested that Experian could be right, the Court ruled that no jury could find that Experian negligently or willfully violated the FCRA, and that Experian’s interpretation of the FCRA was objectively reasonable.

Implications For CRAs

This ruling provides guidance for CRAs regarding how the Eleventh Circuit will treat “reasonable reinvestigations” of “the completeness or accuracy” of items on an individual’s credit report.  Considering Experian’s favorable ruling precluded class certification, Experian avoided expensive litigation and numerous claims involving issues similar to Nelson’s class action.  Considering this is the first case of its kind, other federal courts may take note in FCRA class actions.

By Gerald L. Maatman, Jr. and Sean McConnell

Duane Morris Takeaways: On August 9, 2023, Judge Richard F. Boulware II of the U.S. District Court for the District of Nevada granted Plaintiffs’ motion to certify a class of all persons who competed in one or more live professional UFC-promoted mixed-martial arts bouts taking place or broadcast in the United States from December 16, 2010 to June 30, 2017 in Le v. Zuffa, LLC, No. 2:15-CV-01045 (D. Nev. Aug. 9, 2023). The Court rejected defense arguments that class certification should be denied on the grounds that the statistical model of Plaintiffs’ expert was flawed because it failed to include everyone in the sport and failed to consider the ways promoters help fighters develop in to headliners. Instead, the Court found that these arguments were factual and merits-based, and therefore, were unavailing as a matter of law to defeat class certification. The Court also found defendants’ arguments unpersuasive relative to factual matters underlying the elements of Rule 23.

The ruling in Le v. Zuffa is required reading for any corporate counsel handling antitrust class action litigation involving wage-suppression issues.

Case Background

Plaintiffs are current or former UFC fighters. Defendant, Zuffa, LLC does business as UFC and is the preeminent MMA event promoter in the United States. Plaintiffs allege that UFC used exclusive contracts, market power, and a series of acquisitions to suppress wages paid to UFC fighters during the class period by up to $1.6 billion. Plaintiffs filed suit in December 2014 and defeated UFC’s motions for partial summary judgment in 2017. In February 2018, plaintiffs moved to certify two classes. The first consisted of all persons who competed in one or more live professional UFC-promoted MMA bouts taking place in the United States from December 16, 2010 to June 30, 2017. As discussed in more detail below, the Court certified this class. The second putative class consisted of all UFC fighters whose identity was expropriated or exploited by the UFC. Due to differences in identity rights allegedly at issue and a lack of connection between UFC’s anticompetitive scheme and any suppressed identity compensation, the Court did not certify the identity-based class.

Class Certification Granted

Plaintiffs’ expert advanced a statistical regression model to tie UFC’s alleged anticompetitive scheme to allegedly suppressed wages earned by UFC fighters. The model utilized a database that tracked any fighter that fought for an MMA promoter as well USA Today/MMA Junkie rankings to identify the top fifteen fighters in any of the ten major MMA weight classes.

Defendants opposed certification on grounds that these inputs were flawed because they were underinclusive and failed to account for all of the ways that promoters promote fighters. The Court rejected these arguments at the class certification stage on the grounds that they were factual and merits-based. The Court also found these arguments unpersuasive as to the facts in the record underlying the motion for class certification.

The Court concluded plaintiffs met the requirements of Rule 23(a) and Rule 23(b)(3). In doing so, the Court recognized a relevant antitrust market for elite fighter services. The Court also found that UFC dominated that market because it controls, or controlled, in excess of 70% of it. The Court also opined that UFC used exclusionary provisions in fighter contracts, coercive tactics, and acquisitions of competing promoters as part of an anticompetitive scheme to frustrate fighters’ ability to fight for rivals and suppress wages.

Implications for Employers

Le v. Zuffa is yet another example of a federal court class certification decision turning on the existence of common, injury-producing conduct. The Court credited evidence establishing UFC has anticompetitive power on the buyer-side market of purchasing fighter services and that it used this power to harm all UFC fighters.