{"id":802,"date":"2023-09-11T09:37:45","date_gmt":"2023-09-11T13:37:45","guid":{"rendered":"https:\/\/blogs.duanemorris.com\/classactiondefense\/?p=802"},"modified":"2023-09-11T09:37:45","modified_gmt":"2023-09-11T13:37:45","slug":"ohio-federal-district-court-authorizes-notice-of-flsa-claims-in-step-one-of-the-two-step-strong-likelihood-test-and-certifies-rule-23-class","status":"publish","type":"post","link":"https:\/\/blogs.duanemorris.com\/classactiondefense\/2023\/09\/11\/ohio-federal-district-court-authorizes-notice-of-flsa-claims-in-step-one-of-the-two-step-strong-likelihood-test-and-certifies-rule-23-class\/","title":{"rendered":"Ohio Federal District Court Authorizes Notice Of FLSA Claims In Step One Of The Two-Step \u201cStrong Likelihood\u201d Test And Certifies Rule 23 Class"},"content":{"rendered":"

\"\"<\/a>By Gerald L. Maatman, Jr., Jennifer A. Riley, and Kathryn Brown<\/p>\n

Duane Morris Takeaways<\/i>:<\/b> In Hogan v. Cleveland Ave Restaurant, Inc. d\/b\/a Sirens, et al., 15-CV-2883 (S.D. Ohio Sept. 6, 2023), Chief Judge Algenon L. Marbley of the U.S. District Court for the Southern District of Ohio authorized notice<\/a> to potential opt-in plaintiffs and conditionally certified a collective action of thousands of adult club dancers in a case asserting violations of the Fair Labor Standards Act (\u201cFLSA\u201d) and Ohio law, including claims of unpaid minimum wages, unlawfully withheld tips, and unlawful deductions and\/or kickbacks. For good measure, the Court also granted class certification on the plaintiffs\u2019 state law claims. The opinion is a must-read for employers in the Sixth Circuit facing \u2014 or hoping to avoid facing \u2014 class and collective wage & hour claims.<\/i><\/p>\n

Case Background<\/b><\/p>\n

On October 6, 2015, the named plaintiff Hogan filed the lawsuit as a class and collective action asserting violations of the FLSA and Ohio law. After amending the complaint in May 2017 to add additional defendants, on May 14, 2020, Hogan filed a Second Amended Class and Collective Action Complaint, the operative complaint, with a second named plaintiff, Valentine.<\/p>\n

In the operative complaint, the named plaintiffs asserted claims against seven adult entertainment clubs and their owners and managers as well as two club associations and an individual defendant with which the clubs were associated. The plaintiffs later settled their claims against one of the seven clubs.<\/p>\n

The allegations in the operative complaint center on the clubs\u2019 use of a landlord-tenant system by which the defendant clubs charged dancers \u201crent\u201d to perform at the clubs for tips from customers in lieu of paying them wages for hours worked.<\/p>\n

On September 26, 2022, the plaintiffs moved for certification of their claims as a class and collective action. The parties concluded briefing on the motion five months before May 2023, when the Sixth Circuit issued its pivotal decision in Clark v. A&L Homecare and Training Center, LLC<\/i>, 68 F.4th 1003 (6th Cir. 2023). In Clark<\/i>, the Sixth Circuit ushered in a new, more employer-favorable standard for deciding motions for conditional certification pursuant to 29 U.S.C. \u00a7 216(b) of the FLSA.<\/p>\n

The District Court\u2019s Decision<\/b><\/p>\n

First, the court <\/i>articulated the standard by which it would decide the plaintiffs\u2019 motion for court-supervised notice of their FLSA claims.\u00a0 The court described the Sixth Circuit\u2019s opinion in Clark<\/i> as \u201cmaintain[ing] the two-step process for FLSA collective actions but alter[ing] the calculus.\u201d Slip Op. at 7. Whereas pre-Clark<\/i> case law authorized notice at step one of the two-step process after only a modest showing of similarly-situated status, the standard post-Clark<\/i> demands that plaintiffs show a \u201cstrong likelihood\u201d exists that there are others similarly situated to the named plaintiffs with respect to the defendants\u2019 alleged violations of the FLSA prior to authorizing notice. \u00a0Defendants after Clark <\/i>retain the ability, after fact discovery concludes, to demonstrate that the named plaintiffs in fact are not similarly- situated to any individual who files a consent to join the lawsuit as a so-called opt-in plaintiff. Also unchanged by Clark <\/i>is the standard for determining similarly-situated status for FLSA purposes.<\/p>\n

The court in Hogan <\/i>concluded that the plaintiffs <\/i>adequately demonstrated a \u201cstrong likelihood\u201d that they are in fact similar to the proposed group of dancers who too were classified as \u201ctenants\u201d of the six defendant clubs who paid rent to lease space at the clubs to earn tips from customers without receiving any wages from the defendant clubs.<\/p>\n

In support of their motion, the plaintiffs submitted sworn declarations, deposition testimony, and documentary evidence of the defendants\u2019 policies and practices with respect to dancers. The court found that the plaintiffs showed that the clubs maintained a system in which the defendants acted together to require dancers to pay rent for leasing space, often documented in lease agreements, instead of being paid as employees for performing work.<\/p>\n

Among the defendants\u2019 arguments opposing the plaintiff\u2019s motion, the court considered, but ultimately rejected, the defendants\u2019 argument that arbitration provisions in the lease agreements should preclude court-authorized notice of the FLSA claims. The court cited Clark<\/i> for the proposition that it may consider as a relevant factor the defense of mandatory arbitration agreements in deciding whether to authorize notice of FLSA claims. Homing in on the facts, the court reasoned that members of the potential collective action did not all sign the lease agreements and that those who signed the lease agreements had the option to agree to forgo arbitration of their claims.\u00a0 According to the court, the defendants would have a stronger basis to defeat court-authorized notice if they could show that all dancers had to sign the lease agreement and the lease agreement made arbitration mandatory.<\/p>\n

In addition, the court evaluated whether the plaintiffs satisfied the Rule 23 standards for seeking to certify a class of dancers on their state law claims. The court concluded that the plaintiffs met the requirements for class certification under Rule 23(b)(3), because questions of law or fact common to class members predominated over any questions affecting only individual members (the predominance inquiry), and that a class action was superior to other available methods for fairly and efficiently adjudicating the case (the superiority inquiry).<\/p>\n

As to predominance, the court reasoned that the issue of the defendants\u2019 alleged unlawful system of treating dancers as tenants rather than paying them wages predominated over individualized issues such as whether a particular dancer signed a lease agreement. As to superiority, the court concluded that the relatively small size of each dancer\u2019s wage claim demonstrated that individuals would have little incentive to pursue their claims alone.\u00a0 Finding no factors pointing against class treatment of the claims, the court concluded that treating the claims as a class action was the superior method for adjudicating liability efficiently.<\/p>\n

Implications For Employers<\/b><\/p>\n

Hogan <\/i>is the latest in a series of opinions applying the Sixth Circuit\u2019s novel \u201cstrong likelihood\u201d standard to plaintiffs\u2019 efforts to expand the scope of their FLSA claims to potential opt-in plaintiffs. The developing case law in this area reflects a highly fact-specific approach to deciding whether plaintiffs have made the necessary showing to unlock court-authorized notice of their claims to potential opt-in plaintiffs.\u00a0 The opinion in Hogan <\/i>is significant in that it grapples with the \u201cstrong likelihood\u201d standard alongside the well-established test for certifying a class pursuant to Rule 23(b)(3) of the Federal Rules of Civil Procedure.<\/p>\n","protected":false},"excerpt":{"rendered":"

By Gerald L. Maatman, Jr., Jennifer A. Riley, and Kathryn Brown Duane Morris Takeaways: In Hogan v. Cleveland Ave Restaurant, Inc. d\/b\/a Sirens, et al., 15-CV-2883 (S.D. Ohio Sept. 6, 2023), Chief Judge Algenon L. Marbley of the U.S. District Court for the Southern District of Ohio authorized notice to potential opt-in plaintiffs and conditionally … <\/p>\n

Continue reading “Ohio Federal District Court Authorizes Notice Of FLSA Claims In Step One Of The Two-Step \u201cStrong Likelihood\u201d Test And Certifies Rule 23 Class”<\/span><\/a><\/p>\n","protected":false},"author":575,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[42],"tags":[],"ppma_author":[7,9,87],"class_list":["post-802","post","type-post","status-publish","format-standard","hentry","category-wage-hour-litigation"],"authors":[{"term_id":7,"user_id":575,"is_guest":0,"slug":"gmaatman","display_name":"Gerald L. Maatman, Jr.","avatar_url":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-content\/uploads\/sites\/56\/2022\/09\/maatmangerald-100x100.jpg","0":null,"1":"","2":"","3":"","4":"","5":"","6":"","7":"","8":""},{"term_id":9,"user_id":576,"is_guest":0,"slug":"jariley","display_name":"Jennifer A. Riley","avatar_url":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-content\/uploads\/sites\/56\/2023\/08\/rileyjennifer-100x100.jpg","0":null,"1":"","2":"","3":"","4":"","5":"","6":"","7":"","8":""},{"term_id":87,"user_id":645,"is_guest":0,"slug":"krbrown","display_name":"Kathryn R. Brown","avatar_url":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-content\/uploads\/sites\/56\/2023\/05\/brownkathryn-100x100.jpg","0":null,"1":"","2":"","3":"","4":"","5":"","6":"","7":"","8":""}],"_links":{"self":[{"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/posts\/802","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/users\/575"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/comments?post=802"}],"version-history":[{"count":0,"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/posts\/802\/revisions"}],"wp:attachment":[{"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/media?parent=802"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/categories?post=802"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/tags?post=802"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/ppma_author?post=802"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}