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FedEx Class Action Defense Cases–Babineau v. Federal Express: Eleventh Circuit Affirms Denial Of Class Action Certification Of Labor Law Class Action Holding District Court Acted Within Its Discretion

District Court did not Err in Denying Class Action Treatment of Labor Law Class Action because Court did not Abuse its Discretion in Concluding that Individualized Factual Issues Concerning Gap and Break Periods Predominate over Common Issues Eleventh Circuit Holds

Plaintiffs filed a putative class action against Federal Express alleging labor law violations in that FedEx allegedly “fail[ed] to pay hourly employees for all time worked”; the lawsuit has been characterized as “Round Two” because “the district court denied certification of a nationwide class of FedEx employees asserting substantially similar claims in Clausnitzer v. Federal Express Corp/, 248 F.R.D. 647 (S.D. Fla. 2008)” and then this class action was filed in an “attempt[] to address the defects identified in Clausnitzer by limiting the scope of the class….” Babineau v. Federal Express Corp., ___ F.3d ___ (11th Cir. July 27, 2009) [Slip Opn., at 1-3]. Plaintiffs moved the district court to certify the litigation as a class action, but the court denied the motion concluding that “individualized factual inquiries into whether and how long each employee worked without compensation would swamp any issues that were common to the class.” Id., at 2. Plaintiff’s appealed the denial of class certification, id. The Eleventh Circuit explained that the issue on appeal was “whether the district court abused its discretion in declining to certify the class.” Id. The Circuit Court held the district court acted within its discretion and affirmed.

We do not here summarize the lengthy summary of facts in the Circuit Court opinion, see Babineau, at 2-14. Nor do we address Rule 23(a)’s requirements for class action treatment, as the district court assumed that they had been satisfied. See id., at 14-15. The Eleventh Circuit immediately began its analysis with Rule 23(b)(3)’s class certification requirements. See id., at 15. The Court noted that “common issues will not predominate over individual questions if, ‘as a practical matter, the resolution of [an] overarching common issue breaks down into an unmanageable variety of individual legal and factual issues.’” Id., at 15-16 (citation omitted). In other words, “[c]ertification is inappropriate if the ‘plaintiffs must still introduce a great deal of individualized proof or argue a number of individualized legal points to establish most or all of the elements of their individual claims.’” Id., at 16 (citation omitted). Using these rules, the district court refused class action treatment because it concluded “adjudication of Plaintiffs’ claims on a class basis would be swamped by individual factual inquiries into the activities of each employee during the gap periods or during breaks.” Id. The Circuit Court addressed each in turn.

With respect to the “gap” period claims, the district court had relied upon a decision in a putative class action against UPS – Cornn v. United Parcel Service, Inc., 2005 WL 2072091 (N.D. Cal. August 26, 2005) – that concerned a similar claim “that UPS did not pay its hourly employees for the time period between punching in and their scheduled start time.” Babineau, at 17-18. As in Cornn, the district court concluded – ”reasonably” in the Eleventh Circuit’s view – that “punch clock records do not provide common proof of any uncompensated work during gap periods,” id., at 18. Additionally, “the district court acknowledged that FedEx may mount an individualized defense that an employee knew of FedEx’s policy prohibiting off-the-clock work and chose to engage in its anyhow in breach of that contract.” Id., at 18-19. Plaintiffs countered that “it matters not whether an employee was drinking coffee, socializing, or checking his e-mail during the gap periods instead of performing ‘work-related’ activities” because the employee was “‘suffered or permitted to work’ from the moment he punches in, because from that moment hourly employees are under the control of FedEx.” Id., at 19-20. Under this theory, “the FedEx policy prohibiting off-the-clock work could not be asserted as an individualized defense, because employees were ‘on-the-clock’ as soon as they punched in.” Id., at 20. The district court rejected this theory, as did the Eleventh Circuit. The evidence demonstrated that at least some employees arrived early or stayed late “voluntarily and for purely personal reasons.” Id., at 22. Accordingly, the district court did not abuse its discretion in concluding that individual issues would predominate. Id.

The Circuit Court next held, “The individualized issues that could take over this litigation are even more apparent with respect to the break period claims.” Babineau, at 22. The evidence presented showed that many employees “did not work during unpaid breaks,” and that if one did, “individualized inquiries would be necessary to determine the amount of time actually spent.” Id., at 23. Additionally, FedEx “would raise the individualized defense that…an employee who worked during the break violated its terms and breached the contract himself.” Id.¸ at 23-24. Accordingly, the district court did not abuse its discretion in denying class action treatment of the class action’s break period claim. Id., at 24. The Eleventh Circuit therefore affirmed the district court order denying class action treatment. Id., at 26.

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