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Sprint Class Action Defense Cases–Harlow v. Sprint: Kansas Federal Court Grants Class Action Treatment To Labor Law Class Action Against Sprint Alleging Systematic Failure To Properly Calculate Commissions Due Employees

Class Action Complaint Alleging Computer Problems Systematically Caused Sprint to Pay Employees Less than they were Due Warranted Class Action Treatment as Common Issues – Centered on Sprint’s Computer System – Predominated Class Action Claims Kansas Federal Court Holds

Plaintiffs filed a class action against Sprint Nextel Corporation and Sprint/United Management (collectively “Sprint”) alleging labor law violations; the class action complaint asserted that a computer error caused Sprint to systematically fail to properly calculate commissions due employees of Sprint’s Business Direct Channel. Harlow v. Sprint Nextel Corp., ___ F.Supp.2d ___ (D.Kan. December 10, 2008) [Slip Opn., at 1-2]. According to the allegations underlying the class action, these computer problems resulted in Sprint employees receiving each month $500-$1000 less than the amounts they were due, id., at 2. The class action centered, then, on a “problem with Sprint’s computer system that affects the amount of commissions the class members received.” Id. Originally, the class action complaint alleged causes of action for violations of Kansas’s Wage Payment Act, breach of contract, quantum meruit, promissory estoppels and unjust enrichment, but the parties stipulated to the dismissal of all claims except the Wage Payment Act and breach of contract class action claims. Id., at 4-5. Plaintiffs’ attorneys moved the district court to certify the litigation as a class action; defense attorneys argued against class action treatment. Id., at 1. The district court determined that class action treatment was warranted and therefore granted plaintiffs’ class action certification motion.

In ruling on the class action certification motion, the federal court stressed that the class action “centers on Sprint’s computerized procedures for calculating and paying commissions and not, for example, [on] a policy-based decision by Sprint to award a particular commission to one employee over another.” Harlow, at 5. The district court stressed that “[t]his distinction is key to the certification analysis.” Id. As the district court had little difficulty in finding that the requirements for class action certification under Rule 23(a) had been met, see id., at 13-17 (discussing numerosity, commonality, typicality, and adequacy of representation), we focus here – like the court – on the class action requirements set forth in Rule 23(b)(3). And in that regard, the federal court had little difficulty in determining that a class action is a superior means of resolving the issues presented in the complaint, rejecting Sprint’s objection that “a class action of this magnitude would be unmanageable because of the individualized inquiries to each plaintiffs’ claims” because the individual questions involved damage calculations. See id., at 11-13.

The central issue addressed by the district court, then, was whether Rule 23(b)(3)’s predominance test had been met – that is, whether common issues of law and fact will predominate, or whether individual issues will prevail. Harlow, at 6. Plaintiffs argued common issues predominate including “whether Sprint’s computer program systematically under-reported revenues; whether class members are entitled to commissions because the computer system failed to match records appropriately; what limitations period applies to the [Kansas Wage Payment Act] claims; whether language in the relevant contract is enforceable when it states that administrative delay in paying commissions is not a breach; and whether class members lose their right to pursue unpaid commissions if they do not follow internal appeal procedures.” Id., at 7. Defense attorneys countered that “the issues are so individualized in nature that they would require a separate inquiry for each plaintiff.” Id. Specifically, the defense argued that “for every event for every class member, the court would need to conduct a multi-step inquiry to see if that particular plaintiff did not receive appropriate commissions: is the employee eligible; did the employee earn commissions; did the employee receive the commissions; if not, did the employee give notice to Sprint of the commission error.” Id. In the end, the district court noted that “Sprint’s concerns are well-taken,” id., at 9, but concluded that they did not preclude class action treatment because “Plaintiffs’ complaint relies on a faulty computer system that resulted in systematic calculation errors,” id.

In sum, the district court explained at pages 12 and 13, “[T]he court appreciates the usefulness of the class action as a vehicle for lawsuits like this one. The alternative to a class action would be for many plaintiffs to bring individual suits against Sprint. This would be grossly inefficient, costly, and time consuming because the parties, witnesses, and courts would be forced to endure unnecessary duplicative litigation.” The federal court therefore concluded that the class action satisfied the requirements of Rule 23. Harlow, at 17.

Download PDF file of Harlow v. Sprint Nextel