Category: Class Certification Motions

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.

By Gerald L. Maatman, Jr. and Rebecca S. Bjork

Duane Morris Takeaways: On July 18, 2023, the U.S. Court of Appeals for the District of Columbia Circuit ruled that district courts must analyze the predominance and superiority requirements for certification of a class action when considering an “issue class” under Rule 23(c).  In Harris v. Medical Transportation Management, Inc., No. 22-7033 (D.C. Cir. July 18, 2023), the three-judge panel ruled that the district court erred when it certified an “issue” class under Rule 23(c)(4) without first undertaking an analysis of whether the class certification prerequisites of Rule 23(a) and 23(b) had also been satisfied.  The case was remanded for further proceedings.  The D.C. Circuit’s decision ought to be required reading for employers with large workforces and those dealing with wage & hour class actions.  It bears watching whether the district court’s analysis of the rigorous requirements of Rule 23(b) on remand also results in a pro-certification decision, given the instructions provided on remand.    

Case Background

In Harris, the named plaintiffs were non-emergency medical drivers for the defendant, a company that provides transportation to individuals on public assistance who require transit getting to medical appointments.  They alleged that they and a class of other drivers who they seek to represent in a class action lawsuit were denied minimum and overtime pay in violation of District of Columbia and federal wage and hour laws.  Slip op. at 5-6.

Whether defendant MTM could as a matter of law be held liable as the drivers’ employer is a threshold question in the litigation.   Id. at 6.  The district court certified issues classes as to (i) whether MTM is the drivers’ joint employer (along with its sub-contractors); and (ii) whether MTM is a general contractor under D.C. law and thus strictly liable.  Id. at 8.  The district court did so despite finding previously that the predominance requirement of Rule 23(b)(3) was not met under the facts of the case specifically as they relate to the payment system for the drivers.  Id. at 7-8.

MTM appealed the issue certification ruling.

The D.C. Circuit’s Decision

In a straightforward ruling, but one that delves into the complexities of Rule 23 with law-professor like precision, the D.C. Circuit panel consisting of Judges Millett, Childs and Rogers determined that the district court could not certify the issue classes under Rule 23(c)(4) without deciding whether those classes also meet the requirements of Rule 23(a) – commonality and typicality – and 23(b) – predominance and superiority.  In essence, the D.C. Circuit read the plain language of Rule 23 and observed that sub-sections (a), (b) and (c) all bear on the certification inquiry conducted by the district court and therefore must be considered on an equal basis.  Id. at 14-15.

In the penultimate statement of the holding, Judge Childs opined that “Rule 23’s text and structure offer no quarter to the view that Rule 23(c)(4) creates an independent type of class action that is freed from all of Rule 23’s other class action prerequisites.  So the district court should have ensured that the issue class that it certified met all, and not just some, of Rule 23(a) and (b)’s preconditions to class status.”  Id. at 15-16.

The D.C. Circuit instructed the district court that it must analyze on remand each of the potential class actions available under Rule 23(b)(3)’s predominance analysis.  Id. at 19-20.  It discussed various ways in which Rule 23(c)(4) can be applied in the context of the joint employer analysis that is at issue in Harris, such as bifurcating the liability issue from remedial claims, or where affirmative defenses may muddy the waters of class-wide evidence in a certified issues class.  Id. at 21-22.

In a similar vein, Judge Childs instructed that summary judgment motions on discrete issues represent another way in which district courts could management issue certified class actions where the predominance of individualized issues threaten to overrun the common proof.  Id. at 24-25.

Implications For Employers

The D.C. Circuit opinion in Harris v. MTM provides corporate counsel and executives a clear and easily understandable explanation of how Rule 23(b) and (c) intersect with one another when an issue class or classes are certified in class action litigation.  District courts cannot certify issue classes under Rule 23(c)(4) without undertaking the rigorous analysis required to conclude that a class action is superior and manageable, that common issues will predominate over individualized issues, and that there are common and typical issues to be resolved in the first place.  And by suggesting specific mechanisms that a district court has at its disposal for case management purposes such as targeted summary judgment motions, the decision provides reasonable strategies to consider when facing class action litigation.

By Gerald L. Maatman, Jr., Alex W. Karasik and Shaina Wolfe

Duane Morris Takeaways: In Emmanuel Jean-Francois et al. v. Smithfield Foods, Inc., et al., No. 7:22-CV-63, 2023 U.S. Dist. LEXIS 118136  (E.D.N.C. July 10, 2023), a federal district court in North Carolina denied plaintiffs’ motion for conditional certification of an FLSA collective action, holding that the collective action they sought to certify was duplicative to the conditionally certified collective actions in two other pending cases.

This decision is well worth a read for companies who are confronted with numerous collective action lawsuits containing similar alleged violations of wage and hour laws.

Case Background

Three employees (“Plaintiffs”) sued their employer, Smithfield Fresh Meats Corp. (“Smithfield”), and three of its sister companies (collectively “Defendants”) for violations of the Fair Labor Standards Act (“FLSA”), and specifically, for failing to include a “responsibility bonus” in their pay when calculating overtime. Id. at 1. During COVID-19, Plaintiffs received a “responsibility bonus,” which entitled them, as hourly employees, to a bonus of “$5 per hour for all regular hours worked up to and including forty in a workweek,” between April 1, 2020 and October 31, 2020. Id. at 3. Plaintiffs alleged that Defendants underpaid them for overtime pay during the period between April 1, 2020 and October 31, 2020. Id.

Plaintiffs moved to certify a collective action of a similarly situated group of 8,000 employees who were not properly compensated by Defendants for overtime work performed. Id. at 1. Defendants opposed the motion for conditional certification and argued, among other things, that the proposed collective action could not be certified because it was duplicative to two other cases entitled Canas and Winking. Id. at 2. The parties in Canas and Winking had recently reached agreements to settle the FLSA claims concerning the same responsibility bonus for employees and notices to opt-in plaintiffs who opted into the settlement had already been distributed. Id. at 2-3.

The Court’s Decision

The Court agreed with Defendants and denied Plaintiffs’ motion for conditional certification. Id. at 11. Significantly, the Court found that the Canas action encompassed claims identical to the claims Plaintiffs alleged in Jean-Francois. Id. at 11.

The Court explained that, “[i]n Canas, the collective [action members] settled claims against Smithfield (including employees in North Carolina) based on the same facts and during the same time period.” Id. In Canas v. Smithfield Packaged Meats Corp., No. 1:20-CV-4937 (N.D. Ill.), some employees brought a collective action lawsuit for violations of the FLSA against Smithfield, one of its sister companies, and another company. Id. at 2. On September 13, 2021, the judge in Canas approved a settlement between “the FLSA settlement class plaintiffs who opted into the settlement” and the two Smithfield companies concerning the responsibility bonus. Id. at 2–3. The settlement included employees who worked in North Carolina. Id. at 3.

The Court further explained that Plaintiffs were already part of the collective action that received notice as part of the Canas collective action, and that the scope of the Canas collective action included every potential opt-in plaintiff in the current proposed collective action at issue in Plaintiffs’ motion. Id. at 9-10. Instead of certifying another collective action, the Court opined that Plaintiffs’ remedy was “to proceed with their action as an individual action or request to be paid now what they would have received had they submitted a claim for from the Canas reserve fund.” Id. at 10-11. For these reasons, the Court denied Plaintiffs’ motion for conditional certification.

Implications For Employers

In FLSA collective actions, it is not uncommon for a series of cascading lawsuits to be filed against the same company, especially in scenarios when employees in scattered locations may independently retain their own counsel. However, it can be distracting for a business to have its workforce receive multiple notifications providing opportunities to join lawsuits against their employer, especially when the lawsuits may appear to be similar. This is an excellent ruling for employers to use when they are confronted with multiple, duplicative FLSA collection action lawsuits. Accordingly, businesses involved in wage and hour litigation would be wise to keep this ruling tucked away.

 

By Gerald L. Maatman Jr., Jeffrey R. Zohn, and Jesse S. Stavis

Duane Morris Takeaways: On June 27, 2023, Judge J. Paul Oetken of the U.S. District Court for the Southern District of New York denied certification in a putative class action filed under the Employee Retirement Income Security Act (“ERISA”) by a participant in a retirement plan offered by Teachers Insurance and Annuity Association of America (“TIAA”). In Haley v. Teachers Ins. and Annuity Ass’n, No. 17 Civ. 855 (S.D.N.Y. Jun. 27, 2023), the court brought an end to a legal battle that began in 2018 by applying an appellate ruling that held that Rule 23(b)’s predominance requirement obligates courts to consider not only a plaintiff’s allegations, but also a defendant’s affirmative defenses.

The decision is instructive for defendants who are faced with class allegations that purport to target a single policy or practice, but which in fact relate to numerous individual decisions. It should also serve as a reminder that defendants must consider not only the facial validity of a claim, but also the robust defenses available under the ERISA.

Case Background

Melissa Haley, an employee of Washington University in St. Louis, initiated her lawsuit against TIAA in 2018. She sought to represent participants in approximately 8,000 retirement plans that used TIAA’s services to allow members to take out loans against their retirement savings. Haley alleged that TIAA had departed from standard industry practices by retaining interest earned on participants’ collateral as compensation for administering loans. TIAA countered that while the transactions might be facially prohibited under Section 406 of the ERISA, they were permissible because they were covered by several of the defenses provided by Section 408 of the Act. Most significantly, TIAA argued that the transactions were permissible under Section 408(b)(17), which allows a plan to engage in otherwise-prohibited transactions where it pays no more and receives no less than “adequate consideration.”

Judge Oetken initially granted class certification in 2020 under Rule 23(b)(3) in Haley v. Teachers Ins. & Annuity Ass’n of Am., 337 F.R.D. 462 (S.D.N.Y. 2020).  However, the Second Circuit vacated the ruling and remanded the case on the grounds that the district court had erred in assessing whether Rule 23’s predominance requirement had been met. See Haley v. Teachers Ins. & Annuity Ass’n of Am., 54 F.4th 115 (2d Cir. 2022). The predominance requirement mandates that plaintiffs demonstrate not only that there are common questions of law or fact in a putative class’ allegations, but also that such questions predominate over questions affecting only individual members. In conducting the predominance analysis, the Second Circuit held that the district court must not only consider a plaintiff’s allegations, but also must analyze a defendant’s defenses. Because the district court had not conducted a predominance analysis with respect to the Section 408(b)(17) defenses, the class certification order could not stand.

Southern District of New York Opinion

On remand, Judge Oetken considered whether both the alleged claims and defenses were “amenable to general, class-wide proof.” Haley, No. 17 Civ. 855, at 4 (citing Langan v. Johnson & Johnson Consumer Cos., 897 F.3d 88, 97 (2d Cir. 2018)). Plaintiff argued that similar issues of law and fact were involved in all of the putative class’ claims, but TIAA countered that evaluating the substantial consideration defense would require the district court to conduct an individualized assessment of how TIAA acted with respect to each of the roughly 8,000 plans involved in the litigation. Judge Oetken ultimately sided with TIAA, holding that “[t]he common issues that Plaintiff identifies as satisfying predominance are insufficient to overcome the individual issues raised by section 408(b)(17).” Id. at 6. Because there were clear differences in fees and plan structures, it would not be possible to arrive at common answers to the decisive question of whether there had been adequate consideration for each transaction.

The district court rejected Plaintiff’s attempt to draw class-wide conclusions from either her own plan’s arrangement or from statistical averages that allegedly showed that plan participants paid an average of 4.66% to receive 1.66% in returns. Allowing the class allegations to proceed based on these averages would constitute an impermissible attempt at “trial by formula,” which the district court held would be prohibited by both Rule 23 and the due process clause. Judge Oetken opined that “[t]he averages are probative of the parameters of the statistical sample, not common traits within it.” Id. at 7. Finally, the district court rejected Plaintiff’s attempt to save the class by dividing it into sub-classes because Plaintiff had failed to raise this argument earlier.

Implications For Defendants

ERISA class actions can be difficult to defend against, as Plaintiffs typically assert that discrete types of alleged plan mismanagement led to common injuries that affected large numbers of participants in similar ways. As a result, ERISA plaintiffs often do not face the same problems in establishing typicality, commonality, and predominance as do plaintiffs in other class actions. Haley is an exception to this rule. Defendant was able to show that the case was not about a single policy, but about numerous individual actions. The decision underscores the importance of probing deeply into a putative class member’s allegations to determine whether they meet the rigorous standards of Rule 23.

In addition, Haley shows just how powerful the affirmative defenses in Section 408 can be. As the district court noted, Section 406 is written so broadly that a plain reading of the section would ban many, if not most, transactions involving service providers like TIAA. However, the broad sweep of Section 406 is explicitly limited by the exemption defenses contained in Section 408. Accordingly, defendants who are accused of violating Section 406 must carefully consider the defenses provided by Section 408 and raise them in a timely fashion.

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

Duane Morris Takeaways: In Edmond, et al. v. City of Chicago, No. 17-CV-4858 (N.D. Ill. June 6, 2023), Judge Matthew F. Kennelly of the U.S. District Court for the Northern District of Illinois denied a motion for class certification filed by a group of current and former employees alleging workplace race discrimination in violation of state and federal law. The ruling highlights the viability of defense positions relative to Plaintiffs’ failure to meet the Rule 23 commonality requirement, which was instrumental to defeating their bid for class certification.

Case Background

Nine African-American workers currently or previously employed by the Chicago Department of Water brought a putative class action against the City of Chicago and several individuals employed by it in 2017, alleging race discrimination and a hostile work environment on behalf of a group of employees. Plaintiffs alleged the existence of an ongoing and pervasive “culture of racism” fostered by organizational leadership across five bureaus and various sub-bureaus, treatment plants, and construction sites. Id. at 4. The lawsuit was brought after the City’s Inspector General uncovered emails containing racist exchanges between Department commissioners and deputies, which resulted in resignations of two executives. Id.

Plaintiffs alleged that the hostile work environment included racially offensive language, threatening gestures, and disparate treatment of Black employees in violation of 42 U.S.C. §§ 1981 and 1983 and Illinois law, and filed a motion to certify a class that included all Black workers employed by the Water Department since 2011 and three sub-classes for individuals who had been eligible for overtime, those with disciplinary infractions, and those who had been denied promotions.

In 2018, the Court granted Defendants’ partial motion to dismiss. Plaintiffs then brought a motion to amend the complaint in order to drop the individuals from the suit, which was granted without prejudice. Subsequently, Plaintiffs filed a motion to certify the classes pursuant to Rule 23 of the Federal Rules of Civil Procedure.

The Court’s Decision

The City argued that because Plaintiffs were unable to establish a shared work environment in their hostile work environment claim due to the Department’s dispersed workforce, Plaintiffs failed to identify a common contention whose resolution would resolve class claims, as required under Rule 23(a)(2)’s commonality element. The Court agreed with this position. It opined that there was no “evidence of common areas shared by all Department employees or instances of harassment broadcast across the entire Department.” Id. at 10. The Court found that the experience of putative class members varied across the Department, with individual claims of discrimination ranging from verbal to visual conduct, while others alleged bias in duty assignments or disciplinary actions.

Plaintiffs additionally contended that a pervasive culture of discrimination permeated the Water Department. They cited statements made by members of the city administration and the Inspector General’s investigation, and posited that this was proof of a “de facto policy of racism” across the workplaces. Id. at 11. The Court was not convinced that this had a uniform impact on all the named Plaintiffs and putative class members to satisfy the commonality question, and it denied the motion for class certification based on Plaintiffs’ failure to meet this threshold under Rule 23(a).

Likewise, Judge Kennelly rejected Plaintiffs’ arguments for certification of each sub-class based on a pervasively racist culture. The Court concluded that disciplinary, overtime, and promotion decisions were made by individual supervisors based on their personal discretion and varied across the Department, and that Plaintiffs failed to show evidence that the same decision-makers were responsible for such actions. Id. at 23. The Court was not convinced by Plaintiffs’ expert witness’ use of statistical data to show a disparate impact, noting that similar evidence had not been sufficient to demonstrate commonality for purposes of class certification in Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011).

Implications For Employers

The Edmond ruling underscores the importance of maintaining and utilizing a well-organized workplace reporting structure and managerial discretion in employment matters in anticipating arguing the absence of Rule 23’s commonality requirement, as seen in the Wal-Mart decision. In dismissing all of Plaintiffs’ arguments after finding an absence of a work environment common to all putative class members and no top-down decision-making policy regarding wages and promotions, the Court signals its steady reliance on the well-established standards for these types of claims, providing a valuable reaffirmation to employers’ reliable defense strategies.

 

By Gerald L. Maatman, Jr., Emilee N. Crowther, and Nicolette J. Zulli

Duane Morris Takeaways: In Levine v. Vitamin Cottage Natural Food Markets, Inc., No. 20-CV-00261, 2023 U.S. Dist. LEXIS 92027 (D. Colo. May 25, 2023), Magistrate Judge Scott T. Varholak of the U.S. District Court for the District of Colorado granted Defendant Vitamin Cottage Natural Food Markets, Inc.’s (“Vitamin Cottage”) Motion to Decertify Plaintiff’s FLSA collective action, and denied Plaintiff’s Motion for Rule 23 Class Certification. The Court’s decision in this case aptly illustrates the standards under which courts should analyze, and defendants should move, for decertification of FLSA collective actions, as well as the standards for certification of a Rule 23 class in wage & hour misclassification lawsuits. This opinion is well-worth a read by corporate counsel, as it underscores the importance of well-planned and strategic discovery in defending class and collective actions in the context of an exemption misclassification case. Furthermore, it also demonstrates the contingent relationship and outcome of concurrently filed motions to for decertification brought by defendants and motions for Rule 23 class certification brought by plaintiffs.

Case Background

Vitamin Cottage owns and operates more than 150 grocery stores in nineteen states, and employs over 3,000 individuals. Plaintiff, a former Assistant Store Manager (“ASM”) in Colorado, filed suit under the Fair Labor Standards Act (“FLSA”) and Colorado Wage Claim Act (“CWCA”) alleging improper classification of ASMs as exempt employees and denying them overtime.

In November 2020, the Court granted Plaintiff’s Motion for Conditional Certification and conditionally certified a collective action for the purposes of Plaintiff’s FLSA claims. In total, one-hundred fifty-eight (158) individuals opted-in to the collective action against Vitamin Cottage. Thereafter, Plaintiff and Vitamin Cottage conducted written discovery and depositions.

After the close of discovery, Vitamin Cottage filed a Motion to Decertify the conditionally certified collective action on the grounds that the opt-ins and Plaintiff were not similarly situated. Two months later, Plaintiff filed a Motion to for Class Certification, seeking to certify a Rule 23(b)(3) class of ASMs for the purpose of Plaintiff’s state law claims.

The Court ultimately granted Vitamin Cottage’s Motion to Decertify, and denied Plaintiff’s Motion for Class Certification.

The Court’s Decision On The Motion For Decertification

In granting Vitamin Cottage’s Motion for decertification, the Court emphasized that its review at the post-discovery decertification stage of whether workers “are similarly situated” under the FLSA is “strict.” Id. at *5. The Court evaluated the following factors in its strict “similarly situated” analysis: “(1) the disparate factual and employment settings of the individual plaintiffs; (2) the various defenses available to defendant which appear to be individual to each plaintiff; and (3) fairness and procedural considerations.” Id. at *5; see also Thiessen v. Gen. Elec. Capital Corp., 267 F.3d 1095, 1102-05 (10th Cir. 2001) (known as the Thiessen factors).

As the basis of the suit was a misclassification claim, for the first factor, the Court conducted “a fact-intensive inquiry into the daily activities of each individual plaintiff in order to adequately identify the actual scope of Plaintiffs’ job duties to determine the extent and consequences of any disparities among them.” Id. at *10 (quoting Green v. Harbor Freight Tools USA, Inc., 888 F.Supp. 2d 1088, 1099 (D. Kan. 2012)). After noting that FLSA claims are permitted to proceed collectively “when disparities among the opt-in plaintiffs are ‘not material’ and are ‘outweighed by the similarities between those Plaintiffs,’” the Court held that the discovery responses and deposition testimony established “material disparities” that weighed against the matter “proceeding collectively.” Id. at *10-11.

While Plaintiffs argued that the disparities between the opt-ins were minor and non-material, and that the ASMs collectively spent the majority of their time on non-exempt tasks, the Court reiterated that “determining the exemption status of any given individual depends on all the facts in a particular case and demands an examination of the character of the employee’s job as a whole.”  Id. at *18. Expanding on that general proposition, the Court noted “the amount of time spent performing exempt work . . . is not the sole test of whether an employee is exempt,” and analyzed the disparities that arose during discovery between potential collective members’ involvement in: (1) management (extent and type); (2) scheduling and task assignment; (3) managing and reporting store finances and performance; (4) ensuring store compliance with food safety regulations, including managing safety audits; (5) managing employee complaints and grievances; (6) directing the work of other employees; (7) hiring and firing employees.  Id. at *11-16.

Ultimately, despite some uniformity (including a uniform job description, employment policies, and Vitamin Cottage’s uniform policy of classifying ASMs as non-exempt), the Court stressed that “the decertification analysis must turn on whether the [collective action] members were actually performing similar duties,” and where opt-ins “effectively disavow the job descriptions as not reflective of their day-to-day responsibilities,” opt-ins “may not rely on the job description itself as generalized evidence of the scope and similarity of their daily activities.” Id. at *20. As such, the Court held that the disparate factual and employment settings of the individual opt-in ASMs weighed in favor of decertification. Id. at *22.

The Court also found that the second factor weighed in favor of decertification, as the application of the defenses denied on each Plaintiff’s specific job duties, and Plaintiffs failed to establish that they were “similarly situated.”  Id. at *22-23.  Finally, as to the third factor, “[b]ased on the material disparities within and among the opt-in’s discovery responses and deposition testimonies . . . individualized defenses and credibility concerns would result in at least dozens of the type of ‘mini-trials’ that undercut the efficacy and fairness of a collective action.” Id. at *24. Thus, for the same reasons as the Court found in considering the first and second factors, the Court found that the fairness and procedural considerations weighed against proceeding collectively, and granted Vitamin Cottage’s Motion to for decertification. Id.

The Court’s Decision On The Motion For Rule 23 Class Certification

In denying Plaintiff’s Rule 23(b)(3) Motion for class certification, the Court conducted a “rigorous analysis” under both Rule 23(a) and 23(b)(3), relying, in large part, on its findings in granting Vitamin Cottage’s Motion for decertification of Plaintiff’s FLSA claim. For starters, the Court cited the seminal ruling of Walmart Stores, Inc. v. Dukes, 564 U.S. 338, 350 (2011).

Here, Plaintiff sought to certify a class for his unpaid overtime claim under CWCA. The Court noted that relevant state exemptions are similar, but not identical, to the FLSA exemptions discussed in the context of a Motion for decertification, and therefore required a separate, fact-intensive inquiry into the daily activities of an employee.

In considering the issue of commonality under Rule 23(a) together with the requirement of predominance under Rule 23(b)(3), the Court focused on whether the questions of law or fact common to class members predominated over any questions affecting only individual members, such that a class action would be superior to other available methods for fairly and efficiently resolving the controversy.

The Court held that while Vitamin Cottage’s uniform exemption policy showed that it considered the employees to be similar to at least some degree, a blanket exemption policy does not eliminate the need to make a factual determination as to whether class members are actually performing similar duties in the context of a misclassification claim.

Relying primarily on the briefing and exhibits associated with the Motion for decertification and the executive exemption as an illustration, the Court likewise found there were disparities in putative class members’ “supervisory” duties and hiring and firing authority.

In discussing the final element of the executive exemption, the Court noted an important difference between the Colorado executive exemption and the FLSA executive exemption: Whereas time spent performing exempt duties is not a dispositive element under the FLSA exemption, the Colorado executive exemption expressly requires the employees spend a minimum of 50% of the workweek in duties directly related to the supervision in order to qualify as exempt. Based on the evidence (i.e., deposition testimony and written discovery), the Court held there were plainly material disparities among the class members regarding the degree to which their day-to-day duties as ASMs involved supervisory or management-related objectives.

The Court reasoned that these material disparities went to the heart of liability in this matter – whether the class members were classified properly. And for that reason, the question of exemption was not capable of class-wide resolution. It further opined that due to the centrality of this question in the context of this case, whether other issues in the matter were capable of producing class-wide answers did not matter, as those issues did not predominate over the individualized question of whether each ASM was properly classified under Colorado law.

Ultimately, the Court held that for the same reasons it granted Vitamin Cottage’s Motion for decertification, Plaintiff did not meet his Rule 23 burden by relying on Vitamin Cottage’s common policies and procedures or uniform job description for ASMs.

Implications For Employers

The decision in Levine precisely delineates the standards for decertification of FLSA actions and certification of state law corollary class action claims. It also highlights the symbiotic nature of its analysis of these actions in the misclassification context and the important role that discovery plays in driving the outcome.

The Levine decision provides helpful guidance for employers that general uniform policies and procedures, such as the exemption policy analyzed by the Court in this case, are not enough to show that putative class or collective action members are actually performing similar duties. In order to withstand the Court’s “rigorous analysis,” an employer’s written discovery, such as interrogatory answers, and deposition testimony of putative class or collective action members must reflect that the specific duties and responsibilities of the putative class or collective action members at issue are uniform across-the-board.