Class Action Defense

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.