Employment Law Class Actions

Posted On: April 15, 2012 by Michael J. Hassen Email This Post

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Class Action Defense Cases–Brinker v. Superior Court: California Supreme Court Affirms, Reverses And Remand Class Action Certification Ruling In Labor Law Class Action Clarifying Meal And Rest Break Requirements

In Considering Class Action Certification Order in Labor Law Class Action, California Supreme Court Holds Rest Periods Not Mandated Prior to Meal Periods, and Employer must Provide Meal Breaks but need not Ensure Employee Takes Meal Breaks

Plaintiffs filed a putative class action in California state court against their employer, Brinker Restaurant, alleging various labor law violations; specifically, the class action complaint alleged that Brinker failed to provide employees with rest breaks, failed to provide employees with meal breaks, and that Brinker required employees to work “off-the-clock.” Brinker Restaurant Corp. v. Superior Court, ___ Cal.4th ___ (April 12, 2012) [Slip Opn., at 1, 4]. With respect to the meal period claim, plaintiffs argued that state law requires employers “to provide a 30-minute meal period at least once every five hours.” Id., at 5. Defense attorneys argued that state law does not so long as it provides one meal period for work shifts exceeding 5 hours and two meal periods for work shifts exceeding 10 hours, then it has complied with state law. Id. Brinker also argued that individual issues predominated so that class action treatment would be inappropriate, id. Specifically, Brinker argued that it was required only to permit its employees to take meal and rest breaks, but it was under no legal obligation to ensure that its employees take such breaks. Id., at 6. Plaintiffs moved the trial court to certify the litigation as a class action, id., at 5. The trial court agreed with plaintiffs, and granted plaintiffs’ motion to certify the lawsuit as a class action. Id., at 7. The Court of Appeal granted Brinker’s petition for writ relief and reversed. The Court of Appeal concluded that common issues did not predominate as a matter of law, and therefore the trial court erred in certifying the claims for class action treatment. Id., at 15. The California Supreme Court granted review and held (1) the trial court properly certified the rest break claim for class action treatment, (2) improperly certified the “off-the-clock” claim, and (3) needed to reconsider the meal period claim. Id., at 1-2. Importantly, with respect to the meal break claim, the Supreme Court held that “an employer’s obligation is to relieve its employee of all duty, with the employee thereafter at liberty to use the meal period for whatever purpose he or she desires, but the employer need not ensure that no work is done.” Id., at 2.

The Supreme Court decision in Brinker has been awaited by both sides of the class action bar. Unfortunately, the decision creates as many questions as it solves. For example, with respect to the general rules governing class certification, the Supreme Court recognized that both state and federal decisions hold that consideration of the merits may overlap class certification issues. See Brinker, at 10-12. The Court also held that “[t]o the extent the propriety of certification depends upon disputed threshold legal or factual questions, a court may, and indeed must, resolve them.” Id., at 13. However, in the next breath, the Supreme Court stated that “a court generally should eschew resolution of such issues unless necessary,” id. And relying on its prior decisions, the Court strongly discouraged trial courts from considering the merits of a claim in determining class certification. See id., at 11. But the Court summarized its holding as follows: “if the presence of an element necessary to certification, such as predominance, cannot be determined without resolving a potential legal issue, the trial court must resolve that issue at the certification stage.” Id., at 14. So precisely when trial court consideration of the merits is necessary or prohibited is less clear post-Brinker.

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Posted On: October 10, 2011 by Michael J. Hassen Email This Post

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Class Action Defense Cases–Ellis v. Costco Wholesale Corp.: Ninth Circuit Vacates And Remands Class Action Certification In Gender Discrimination Labor Law Case

District Court Applied Wrong Legal Criteria in Certifying Gender Discrimination Class Action Requiring Remand for Reconsideration based on Standards Enunciated in Wal-Mart v. Dukes Ninth Circuit Holds

Plaintiffs filed a putative class action against Costco Wholesale alleging that it discriminates in its promotional practices based on gender. Ellis v. Costco Wholesale Corp., ___ F.3d ___, 2011 WL 4336668 (9th Cir. September 16, 2011) [Slip Opn., at 17693, 17697]. The class action complaint was filed after the Equal Employment Opportunity Commission (EEOC) dismissed a charge that Costco engaged in gender discrimination in its practice of promoting employees. The class action complaint alleges violations of Title VII, and sought to be brought on behalf “of a Title VII class of all women employed by Costco in the United States denied promotion to [assistant general managers] and/or [general managers] positions.” Id., at 17702-03. The class action “sought class-wide injunctive relief, lost pay, and compensatory and punitive damages.” Id., at 17703. Plaintiffs moved the district court to certify the lawsuit as a class action based, in part, on the declarations of three experts – a statistician, a labor economist, and a sociologist – who opined that Costco’s female employees were “promoted at a slower rate” and were “underrepresented” in management positions relative to their male peers. Id. Costco opposed class action treatment, based in part on the declarations of 200 employees and the declarations of its own experts. Id. The district court granted class certification, id., at 17703-04. The Ninth Circuit granted Costco’s request for leave to file an interlocutory appeal, and proceeded to affirm in part, vacate in part, and remand the matter for further proceedings. Id., at 17697.

Briefly, Costco operates 350 warehouses, each containing a general manager (GM), two or three assistant general managers (AGM), and three or four senior staff managers (who are themselves divided into four categories consisting of front end managers, administration managers, receiving managers, and merchandise managers). Ellis, at 17699. The company “promotes almost entirely from within its organization” and “[o]nly current Costco AGMs are eligible for GM positions.” Id. No written policy exists explaining the criteria that Costco considers in selecting employees for consideration or in making its promotion decisions. Id., at 17699-700. Among senior staff managers, however, Costco generally rotates managers among the various categories as part of its belief that this exposure trains and develops employees for future positions as AGMs and GMs. Id., at 17700.

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Posted On: June 21, 2011 by Michael J. Hassen Email This Post

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Class Action Defense Cases–Wal-Mart v. Dukes: Supreme Court Reverses Class Action Certification Of Largest Labor Law Class Action In History Holding Sex Discrimination Claims Lacked Commonality

Class Action Treatment of Sex Discrimination in Promotion Claim Against Wal-Mart not Proper because Commonality Requirement not Met and because Rule 23(b)(2) Class Inappropriate given Monetary Relief Sought Supreme Court Holds

Plaintiffs filed a putative labor law class action against Wal-Mart Stores, alleging systematic discrimination against women in pay and promotion in violation of Title VII. Wal-Mart v. Dukes, 564 U.S. ___ (June 20, 2011) [Slip Opn., at 1]. The class action sought injunctive and declaratory relief, but also sought monetary damages in the form of backpay. Id. The theory underlying the class action against Wal-Mart was not that the company had “any express corporate policy against the advancement of women” but, rather, that Wal-Mart’s local managers “[exercised] discretion over pay and promotion…disproportionately in favor of men, leading to an unlawful disparate impact on female employees.” Id., at 4. As the Supreme Court explained, “The basic theory of the[] case is that a strong and uniform ‘corporate culture’ permits bias against women to infect, perhaps subconsciously, the discretionary decisionmaking of each one of Wal-Mart’s thousands of managers – thereby making every woman at the company the victim of one common discriminatory practice.” Id. The district court certified a nationwide class action against Wal-Mart consisting of approximately 1.5 million current and former female employees, id., at 1. The Ninth Circuit affirmed the class action certification order, id. The Supreme Court granted certiorari and reversed.

By way of background, the Supreme Court noted that Wal-Mart is the largest private employer in the United States, operating 4 types of retail stores (Discount Stores, Neighborhood Markets, Sam’s Clubs and Superstores) that are “divided into seven nationwide divisions, which in turn comprise 41 regions of 80 to 85 stores apiece,” each with 40-53 separate departments and anywhere 80-500 employees. Wal-Mart, at 1-2. Decisions regarding pay and promotion “are generally committed to local managers’ broad discretion, which is exercised ‘ in a largely subjective manner.’” Id., at 2, quoting 222 F.R.D. 137, 145 (N.D. Cal. 2004). With respect to the individual named plaintiffs, Betty Dukes began working for Wal-Mart in 1994 and was eventually promoted to customer service manager before being demoted all the way down to greeter due to “a series of disciplinary violations.” Id., at 3. Dukes admitted that she violated company policy, but claimed that her demotions were “retaliation for invoking internal complaint procedures and that male employees have not been disciplined for similar infractions.” Id. Christine Kwapnoski worked at Sam’s Club “for most of her adult life” and held various positions, “including a supervisory position,” but she claimed that her male manager yelled at her and other female employees (but not at men) and told her to dress better, wear makeup and “doll up.” Id. Edith Arana worked at Wal-Mart from 1995-2001, and in 2000 repeatedly asked her store manager about management training “but was brushed off.” Id. She followed internal complaint procedures and was advised to bypass her store manager and apply directly to the district manager for management training, but she elected not to do so. Id. Arana was fired in 2001 for failing to comply with the company’s timekeeping policy. Id.

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Posted On: May 5, 2011 by Michael J. Hassen Email This Post

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Discovery Class Action Defense Cases–Starbucks v. Superior Court: California Appellate Court Reverses Discovery Order Compelling Starbucks To Identify And Disclose Names Of Possible Class Representatives

Trial Court Order Requiring Starbucks to Identify and Disclose Job Applicants with Marijuana Convictions Violates the Privacy Rights Sought to be Redressed by Putative Class Action California Appellate Court Holds

Plaintiffs filed a putative class action against Starbucks for allegedly violating California marijuana laws by asking prospective employees to disclose, on a preprinted form, whether they had suffered any marijuana convictions. Starbucks Corp. v. Superior Court, ___ Cal.App.4th ___ (Cal.App. April 25, 2011) [Slip Opn., at 2]. The class action complaint was premised on the fact that “[I]n the mid-1970s, the California Legislature reformed the state’s marijuana laws to require the ‘destruction’ by ‘permanent obliteration’ of all records of minor marijuana convictions that were more than two years old. Employers were prohibited from even asking about such convictions on their job applications, with statutory penalties of the greater of actual damages, or $200 per aggrieved applicant.” Id. The class action sought $26 million on behalf of 135,000 job applicants, alleging that Starbucks “failed to adequately advise job applicants not to disclose minor marijuana convictions more than two years old.” Id., at 2-3. During the litigation, the Court of Appeal held that the plaintiffs lacked standing to prosecute the class action “because none had any marijuana convictions to reveal.” Id., at 2 (citing Starbucks Corp. v. Superior Court (2008) 168 Cal.App.4th 1436). Accordingly, the trial court subsequently granted Starbuck’s motion for summary judgment and dismissed the named plaintiffs as class representatives. Id. However, rather than dismissing the lawsuit, the trial court ruled that plaintiffs could “file a first amended complaint to include only job applicants with marijuana convictions” as class members, and could “conduct further discovery to find a ‘suitable’ class representative.” Id. Toward that end, Starbucks was ordered “to randomly review job applications until it identifies job applicants with prior marijuana convictions” and to then disclose those names to plaintiffs’ counsel “unless they affirmatively opt out to a neutral administrator.” Id. Starbucks again sought writ review and the Court of Appeal reversed.

This case is surprisingly simple. As the Court of Appeal summarized its opinion, “By providing for the disclosure of job applicants with minor marijuana convictions, the discovery order ironically violates the very marijuana reform legislation the class action purports to enforce. We fail to understand how destroying applicants’ statutory privacy rights can serve to protect them.” Starbucks, at 2-3.

By way of background, the trial court believed plaintiffs had standing to prosecute this putative class action: “None of the plaintiffs had been convicted of a marijuana-related crime. But they contended that California law allowed any job applicant to receive a minimum statutory penalty of $200 per applicant if they filled out an improper job application.” Starbucks, at 3. The trial court agreed with plaintiffs, and found that every job applicant was entitled to receive the $200 statutory penalty “even those who never had sustained a marijuana conviction,” id. The appellate court disagreed, holding that “neither plaintiffs nor the tens of thousands of job applicants they purported to represent were entitled to recover statutory penalties where they did not have any marijuana convictions to disclose.” Id. Rather, “Only an individual with a marijuana-related conviction falls within the class of people the Legislature sought to protect.” (168 Cal.App.4th at 1449.)

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Posted On: May 4, 2011 by Michael J. Hassen Email This Post

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Class Action Defense Cases–Mora v. Big Lots Stores: California Appellate Court Affirms Denial Of Class Action Treatment In Labor Law Misclassification Class Action Brought By Store Managers

Trial Court did not Abuse Discretion in Denying Class Action Certification of Store Manager Misclassification Claim because Individual Questions Predominate California Appellate Court Holds

Plaintiffs filed a putative class action against their former employer, Big Lots Stores, alleging violations of California’s Labor Code for failure to pay them overtime or to compensate them for missed meal and rest periods. Mora v. Big Lots Stores, Inc., ___ Cal.App.4th ___ (Cal.App. April 18, 2011) [Slip Opn., at 2]. According to the allegations underlying the class action complaint, defendant “uniformly misclassifies its store manager as exempt employees based on their job description alone rather than on consideration of actual work performed, which involves a significant amount of time on nonexempt tasks.” Id. Specifically, plaintiff’s class action complaint alleged that Big Lots operates “closeout retail stores in California, [and] has intentionally and improperly designated certain employees as ‘exempt’ store managers in order to avoid payment of overtime wages and other benefits required by [California law].” Id. Plaintiffs’ counsel moved to certify the litigation as a class action; the trial court denied the motion finding “the company does not operate its stores in a standardized manner and has no systematic practice of misclassification of managers.” Id. Plaintiffs appealed. The California Court of Appeal affirmed.

The evidence presented by both sides was substantial. Plaintiffs cited defendant’s deposition testimony to establish that Big Lots “classified all its store managers in California as falling within the ‘executive exemption’” as its basis for failing to pay them overtime or provide meal and rest breaks. Mora, at 4, Plaintiffs also submitted declarations from 44 putative class members to “demonstrate[] that the basic job duties of store managers in California are the same regardless of location and that Big Lots runs all its stores in the state in a uniform and standardized manner.” Id. These declarations also stated that “Strict compliance with corporate manuals and actions plans, which set forth state-wide policies and procedures, is required; and such compliance is ensured by district managers, who supervise all store managers.” Moreover, “training of store managers is standardized, and their job performance is evaluated on the same basis and on the same form regardless of purported store-to-store differences.” Id. The declarations “averred that store managers are primarily engaged in nonexempt activities and routinely work more than 40 hours per week,” and that they “typically spend more than 75% of their time performing the same physical labor and routine clerical tasks” as nonexempt employees. Id., at 4-5. Finally, plaintiffs submitted an expert declaration in support of their motion for class action treatment. Id., at 5-6.

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Posted On: May 2, 2011 by Michael J. Hassen Email This Post

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Class Action Defense Cases–Marlo v. United Parcel Service: Ninth Circuit Court Affirms District Court Order Decertifying Class Action In Labor Law Misclassification Case

District Court did not Abuse its Discretion in Decertifying Class Action Alleging Misclassification of Employees based on its Determination that Common Question of Law and Fact did not Exist Ninth Circuit Holds

Plaintiff filed a putative class action against his employer, United Parcel Service (UPS), alleging violations of California’s Labor Code for failure to pay him overtime or to compensate him for missed meal and rest periods. Marlo v. United Parcel Service, Inc., ___ F.3d ___ (9th Cir. April 28, 2011) [Slip Opn., at 5544]. According to the allegations underlying the class action complaint, plaintiff worked as a full-time supervisor (FTS) for UPS from 1999 to 2008, and “worked more than forty hours per week on a regular basis without taking meal or rest-period breaks, or receiving overtime compensation.” Id. Because he was an FTS, UPS classified plaintiff as exempt from California’s overtime law under the executive and administrative exemptions. Id. Plaintiff alleged that he had been misclassified, and sought and obtained an order certifying the litigation as a class action. Id. The district court subsequently granted summary judgment in favor of UPS, but the Ninth Circuit reversed finding that plaintiff “ha[d] raised material issues of fact related to whether the FTS ‘customarily and regularly exercise[] discretion and independent judgment.’” Id., at 5545 (quoting Marlo v. United Parcel Serv., Inc., 254 Fed. App’x. 568, 568 (9th Cir. 2007)). On remand, however, the district court decertified the class, finding that plaintiff “had failed to establish that common issues of law or fact predominated over individual ones” as required by Rule 23(b)(3). Id., at 5544. A juy returned a partial verdict in favor of plaintiff, finding that the executive and administrative exemptions did not apply to certain supervisorial positions plaintiff held. Id., at 5546. Both sides appealed. The Ninth Circuit affirmed the decertification order, id., at 5544.

The decertification order was based on “doubt regarding the continuing efficacy of a class action in this case.” Marlo, at 5545 (quoting Marlo v. United Parcel Serv., Inc., 251 F.R.D. 476, 480 (C.D. Cal. 2008)). In part, the district court reasoned that “the existence of a uniform policy classifying FTS as exempt is insufficient absent evidence of misclassification,” and that plaintiff “had relied heavily on a survey that was neither reliable nor representative of the class.” Id. (citations omitted). The court explained at 251 F.R.D. at 486,

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Posted On: June 30, 2010 by Michael J. Hassen Email This Post

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FLSA Class Action Defense Cases–Luiken v. Domino's Pizza: Minnesota Federal Court Grants Conditional Class Action Treatment To Nationwide Labor Law Class Action Alleging Failure To Pay Minimum Wage To Delivery Drivers

Nationwide Class Action (excluding California and New York) Alleging Domino’s Systematically Underpaid Delivery Drivers in Violation of Fair Labor Standards Act (FLSA) Entitled to Conditional Class Action Certification because Evidence Submitted by Plaintiffs Met Minimal Burden Required at First Stage of FLSA Proceedings Minnesota Federal Court Holds

Plaintiffs filed a putative class action against their employer, Domino’s Pizza, alleging violations of the federal Fair Labor Standards Act (FLSA); specifically, the class action complaint alleged that Domino’s failed to pay its pizza delivery drivers minimum wage. Luiken v. Domino’s Pizza, LLC, ___ F.Supp.2d ___ (D. Minn. June 21, 2010) [Slip Opn., at 1-3]. According to the allegations underlying the class action, Domino’s failed to reimburse its delivery drivers for all automobile expenses incurred in the course of their employment, id., at 4. The class action sought to represent a nationwide class, except for delivery drivers in California and New York. Id., at 2. Plaintiffs moved the district court to certify the litigation as a class action, id., at 1. Defense attorneys opposed class action treatment, arguing that class members were not “similarly situated” because of “highly individualized fact-specific determinations taking into account driver-specific factors such as type of car, routes, and total mileage” and because “reimbursements vary by geographic region.” Id., at 2. Noting the difference between class action certification motions under Rule 23 and conditional class certification under the FLSA (technically, certification of a “collective action”), the district court granted plaintiffs’ motion.

The federal court explained that class action certification under the FLSA is a two-part process, and that in determining whether to conditionally certify a class (the first step in the process), the court determines whether plaintiffs have established “a colorable basis that the putative class members are the victims of a single decision, policy, or plan.” Luiken, at 4 (citation omitted). Here, plaintiffs argued that Domino’s employed “a single policy which systematically under-reimbursed them for automobile expenses incurred in the course of their employment” and, accordingly, they were “paid below the federal minimum wage.” Id. In brief, plaintiffs argued that Domino’s used a uniform set of assumptions in determining reimbursement rates, and that those assumptions were uniformly unfair. Id. Defense attorneys countered that individual issues, including the base wages paid each driver, defeat class certification. Id., at 5. Domino’s additionally argued that at least some drivers were paid more than the federal minimum wage, and plaintiffs conceded that subclasses may be necessary due to differences in base pay. Id., at 5 n.5.

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Posted On: April 29, 2010 by Michael J. Hassen Email This Post

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Wal-Mart Class Action Defense Cases–Dukes v. Wal-Mart: Ninth Circuit Court Affirms Class Action Certification Of Largest Labor Law Class Action In U.S. History

Labor Law Class Action Alleging Wal-Mart Discriminates Against Female Employees in Violation of Title VII of the Civil Rights Act of 1964 Properly Certified As Nationwide Class Action by District Court Ninth Circuit Holds

Plaintiffs filed a class action against Wal-Mart alleging violations of Title VII of the Civil Rights Act of 1964; specifically, the class action complaint alleged that Wal-Mart discriminates against its female employees. Dukes v. Wal-Mart Stores, Inc., ___ F.3d ___ (9th Cir. April 26, 2010) [Slip Opn., at 6137, 6146]. According to the allegations underlying the class action complaint (originally filed in 2004), Wal-Mart discriminated against women employees in violation of Title VII of the 1964 Civil Rights Act because “women employed in Wal-Mart stores: (1) are paid less than men in comparable positions, despite having higher performance ratings and greater seniority; and (2) receive fewer—and wait longer for—promotions to in-store management positions than men.” Id., at 6147. The class action complaint sought to represent a nationwide class on the grounds “that Wal-Mart’s strong, centralized structure fosters or facilitates gender stereotyping and discrimination, that the policies and practices underlying this discriminatory treatment are consistent throughout Wal-Mart stores, and that this discrimination is common to all women who work or have worked in Wal-Mart stores.” Id. The proposed class included “women employed in a range of Wal-Mart positions, from part-time entry-level hourly employees to salaried managers.” Id. Plaintiffs’ counsel moved the district court to certify the litigation as a class action, defined as “All women employed at any Wal-Mart domestic retail store at any time since December 26, 1998 who have been or may be subjected to Wal-Mart’s challenged pay and management track promotions policies and practices.” Id., at 6148. Defense attorneys opposed class certification and stressed that the proposed class would consist of as many as 1.5 million current and former employees who worked at 3,400 stores in 41 regions. Id., at 6148 and n.3. The district court granted the motion and certified the litigation as a class action, id., at 6146-47. The Ninth Circuit affirmed. The Circuit Court opinion is quite lengthy, so we simply “hit the highlights” in this article. Defense attorneys may contact the author of the Blog for a more detailed discussion of the case.

The Ninth Circuit spent a considerable amount of time discussing the standard governing district court consideration of class certification under Rule 23 and clarified the “proper standard of Rule 23 adjudication.” See Dukes, at 6149-83. This analysis includes a discussion, and rejection, of the dissent’s “significant proof” standard. See id., at 6177-83. The Circuit Court then turned to the merits of the Rule 23 analysis, beginning with Rule 23(a)(1)’s numerosity requirement, which was not contested given the enormous size of the class. Id., at 6185. The Court also found that Wal-Mart had not waived its right to object to Rule 23(a)(3)’s typicality requirement, see id., at 6209-10, but concluded that the district court did not err in finding that the named-plaintiffs’ claims were sufficiently typical of those of the class: “Even though individual employees in different stores with different managers may have received different levels of pay or may have been denied promotion or promoted at different rates, because the discrimination they claim to have suffered occurred through alleged common practices—e.g., excessively subjective decision making in a corporate culture of uniformity and gender stereotyping—the district court did not abuse its discretion by finding that their claims are sufficiently typical to satisfy Rule 23(a)(3).” Id., at 6210. Moreover, “because all female employees faced the same alleged discrimination, the lack of a class representative for each management category does not undermine Plaintiffs’ certification goal.” Id., at 6211. And the Ninth Circuit found no difficulty in finding that the adequacy of representation test in Rule 23(a)(4) had been met. Id., at 6212.

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Posted On: February 17, 2010 by Michael J. Hassen Email This Post

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FLSA Class Action Defense Cases–Robinson-Smith v. GEICO: D.C. Circuit Court Holds GEICO Properly Classified Auto Damage Adjusters As Exempt From Overtime Pay Under FLSA

District Court Erred in Granting Employee’s Motion for Summary Judgment in Class Action Alleging Failure to Pay Overtime under Federal Fair Labor Standards Act (FLSA) because Auto Damage Adjusters Exercise Sufficient Discretion and Independent Judgment to Fall Within FLSA’s Administrative Exemption District of Columbia Circuit Holds

Plaintiffs filed a putative class action against their employer, Government Employees Insurance Corporation (GEICO) alleging violations of the federal Fair Labor Standards Act (FLSA); specifically, the class action complaint alleged that defendant misclassified its automobile insurance policy damage adjusters as “exempt” and therefore failed to pay them overtime wages due under the FLSA. Robinson-Smith v. Government Employees Ins. Co., 590 F.3d 886, 887-88 (D.C. Cir. 2010). According to the allegations underlying the class action complaint, “GEICO employs at least three categories of personnel at varying levels of responsibility who may service a given automobile claim: the liability adjuster, the auto damage adjuster and the auto damage appraiser.” Id., at 888. The liability adjuster is at the “high” end of the responsibility scale, and the damage appraiser is at the “low” end of the responsibility scale. Id. “GEICO considers the former exempt as an administrative employee under the FLSA (and thus not entitled to overtime wages) but not the latter.” Id. The issue in this class action concerned the middle group of employees. The parties filed cross-motions for summary judgment on the issue of whether the damage adjusters were administrative employees exempt from overtime pay under the FLSA; the district court used the Department of Labor’s “short test” and “held that GEICO’s auto damage adjusters do not exercise ‘sufficient’ discretion and independent judgment to qualify for the exemption[.]” Id. Accordingly, the district court ruled in favor of plaintiffs, id. GEICO appealed – “arguing that the undisputed fact that the adjusters exercise ‘some discretion’ means that they are exempt from overtime pay as administrative employees under the FLSA” – and the District of Columbia Circuit reversed. Id.

The Circuit Court explained that a GEICO damage adjuster, on average, “handles more than 1,000 claims per year, totaling over $2.5 million.” Robinson-Smith, at 888. We do not here summarize the detail outlined in the court’s opinion concerning the job responsibilities of damage adjusters. Briefly, we note that while GEICO’s damage adjusters utilize software to assist them in estimating repair costs, they are also responsible for determining when to declare a vehicle a total loss. Id., at 888-89. Additionally, the adjuster “makes decisions that are not dictated by the software…, such as interviewing insureds about pre-existing damage, determining whether damage was caused by a covered event and recommending that payment be withheld on a claim if the damage did not result from a covered loss.” Id., at 889. Further, total loss determinations may account for 20-30% of an adjuster’s workload, and “can involve thousands of dollars in additional liability for GEICO.” Id. In fact, about 30% of the total loss claims involve further negotiation between the adjuster and the insured, and “the adjuster generally has full authority to settle a claim within his limits ($10,000 for a Level I adjuster or $15,000 for a Level II adjuster) if he can justify his decision within GEICO guidelines and based on his experience.” Id.

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Posted On: December 9, 2009 by Michael J. Hassen Email This Post

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Class Action Defense Cases–Keller v. Tuesday Morning: California Appellate Court Affirms Decertification Of Labor Law Class Action Because Evidence Supported Finding That Individualized Inquiries Would Predominate

Class Action Alleging Employer Misclassified Managers as Exempt and Failed to Pay them Overtime Wages Properly Decertified as Class Action because Amount of Time Spent on Managerial Duties Required Individual Inquiry and because “Individualized Issues of Liability and Damages will Predominate” California Appellate Court Holds

Plaintiffs filed a putative class action against their employer, Tuesday Morning, alleging violations of California labor laws; specifically, the class action complaint alleged that defendant misclassified its managers as exempt employees and failed to pay them overtime wages. Keller v. Tuesday Morning, Inc., ___ Cal.App.4th ___ (Cal.App. November 4, 2009) [Slip Opn., at 1-2.] Plaintiffs’ motion for class action certification was granted. Id., at 1. Two years later, defense attorneys moved the trial court to decertify the class. Id. Defendant filed the motion after the parties had conducted “extensive discovery” and supported the motion with 10 declarations and references to the deposition testimony of 49 managers. Id., at 2. “A different trial judge granted the motion on the ground that individual issues predominated over common issues, thus a class action was not the appropriate mechanism by which to litigate the managers’ claims.” Id., at 1. The new trial judge issued his ruling after conducting a three-day evidentiary hearing on the motion. Id., at 6. Based on the evidence, the court concluded that even though there were some common issues, “the amount of time a manager spent performing [various] acts and his or her exercise of discretion are matters of individual inquiry.” Id. Specifically, “the time spent in a managerial duty is an individual inquiry,” and “[e]ach manager’s background and management style varied from store to store.” Id., at 7. Plaintiffs appealed the class action decertification order, and the Court of Appeal affirmed.

The appellate court summarized the evidence presented by defense attorneys in support of the decertification motion. See Keller, at 2-5. The Court of Appeal also discussed two appellate court decisions that similarly concerned “unpaid overtime in retail chain operations” – Walsh v. IKON Office Solutions, Inc., 148 Cal.App.4th 1440 (Cal.App. 2007), and Dunbar v. Albertson’s Inc., 141 Cal.App.4th 1422 (Cal.App. 2006) – each of which affirmed trial court orders denying or decertifying class action treatment. See Keller, at 9-10. Based on Walsh and Dunbar, and the evidence presented in support of the motion to decertify the class, the Court of Appeal held that “[s]ubstantial evidence supports the trial court’s conclusion that individualized issues of liability and damages will predominate over issues common to the class if the overtime claims are tried as a class action.” Id., at 11. Accordingly, the appellate court affirmed the trial court order decertifying the litigation as a class action. Id.

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Posted On: November 30, 2009 by Michael J. Hassen Email This Post

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Class Action Defense Cases–Barbaroza v. West Coast Digital: California Appellate Court Affirms Trial Court Order Requiring Class Counsel in Certified Class Counsel To Represent Class Through Collection Of Judgment

Trial Court did not Err in Holding that Class Counsel owed Duty to Absent Class Members to Represent them in Collection of Judgment, not merely through Obtaining Judgment, Particularly in Light of Defendant-Employer’s Lack of Assets and Possible Bankruptcy Filing California Appellate Court Holds

Plaintiffs filed a putative class action in California state court against their employer, West Coast Digital GSM, alleging labor law violations; specifically, the class action complaint alleged that West Coast violated California’s Labor Code by “unlawful deductions from wages, failure to pay overtime, and failure to provide meal and rest breaks.” Barbaroza v. West Coast Digital GSM, Inc., 179 Cal.App.4th 540 (Cal.App. 2009) [Slip Opn., at 1-3.] Plaintiffs sought class action certification, but the motion was denied. Id., at 3. While the appeal on the denial of class action treatment was pending, the lawsuit went to trial on plaintiffs’ individual claims. Id. Plaintiffs generally prevailed, losing on only one of their causes of action. Id. The trial court disallowed some of the attorney fees sought by plaintiffs as the prevailing party, and that order was appealed. Id. The California Court of Appeal thereafter issued its opinion concerning class action certification and reversed the trial court’s order, directing the court to certify the litigation as a class action. Id. However, because the named plaintiffs already had litigated their individual claims, the appellate court also directed the trial court to determine whether could adequately represent the class and, if not, to allow plaintiffs’ counsel to find new representatives for the class action. Id. Almost a year later, the same plaintiffs filed a motion for class action certification, which was granted. Id., at 3-4. West Coast sold its assets and ceased operations. Id., at 4. West Coast then permitted plaintiffs to obtain its default, and secured a default judgment in excess of $5.7 million. Id. Plaintiffs’ counsel filed a motion for attorney fees but proposed to give notice to the class that West Coast “had sold its assets and ceased operations, and that it claimed to have no assets and would eventually declare bankruptcy.” Id. The proposed notice also advised the class that counsel had obtained a default judgment but once counsel obtained an award of attorney fees “class counsel no longer had any obligation to pursue the matter on behalf of the class because its obligation was only to pursue the matter on behalf of the class because its obligation was only to represent the class until judgment was obtained.” Id., at 4-5. The trial court denied the proposed notice on the ground that “class counsel had a duty to pursue the class claims ‘until the end (i.e., enforcement of the judgment) and not just until judgment.’” Id., at 5. Plaintiffs and class counsel appealed, id. The appellate court affirmed.

Despite the general rule regarding the duties of an attorney and class counsel’s claim that “enforcement of judgments requires specialized knowledge on the part of the attorney,” the Court of Appeal explained that “there are in fact important reasons to treat class counsel differently[.]” Barbaroza, at 6. Notably, the class action device puts in place “certain safeguards” to protect the interests of absent class members, id., at 7. One such safeguard is the requirement that class counsel demonstrate an ability to “adequately represent the interests of the class as a whole,” id. (citations omitted). Another safeguard is the requirement that the class representatives and their counsel “owe absent class members a fiduciary duty to protect the absentees’ interests throughout the litigation.” Id. (citation omitted). And finally, the trial court itself must safeguard the rights of absent class members, id. (citation omitted). This last protection was implicated by the trial court’s ruling when it concluded that “class counsel’s job did not end with entry of judgment.” Id., at 8. The class claims were too small to be pursued individually for purposes of securing a judgment, and they remained too small to be pursued individually for purposes of collection. Id. The Court of Appeal explained further that “more importantly, since it seems unlikely…that there are sufficient assets to pay each class member what is owed, plus attorney fees, there remains an important class issue – i.e., how the recoverable assets (if any) are to be distributed.” Id. At this stage of the proceedings, and based on this showing, the trial court did not err in requiring class counsel to continue representation of the class. Id., at 8-9. Accordingly, the appellate court affirmed the trial court order, id., at 9.

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Posted On: November 17, 2009 by Michael J. Hassen Email This Post

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Class Action Defense Cases–Schachter v. Citigroup: California Supreme Court Affirms Defense Judgment In Labor Law Class Action Holding Forfeiture Of Restricted Stock Shares Upon Termination Did Not Violate California Labor Code

Trial Court Properly Granted Summary Judgment in Favor of Employer in Class Action Alleging Failure to Pay Wages under Labor Code because Prospective, Bilateral Agreement between Employer and Employee to Pay a Portion of Compensation in Restricted Stock Shares that were Forfeited upon Resignation or Termination for Cause Prior to Expiration of Two-Year Vesting Period did not Violate Labor Code California Supreme Court Holds

Plaintiff, a former stockbroker at Smith Barney (a subsidiary of Citigroup), filed a putative class action in California state court against Citigroup and others alleging violations of California’s labor laws; specifically, the class action complaint alleged that Citigroup’s voluntary employee incentive compensation plan, which permitted employees to obtain “shares of restricted company stock at a reduced price in lieu of a portion of that employee’s annual cash compensation,” violated California law because the plan provided that if the employee resigns or is fired then he forfeits any shares of stock that had not yet vested. Schachter v. Citigroup, Inc., 47 Cal.4th 610 (Cal. 2009) [Slip Opn., at 1-2]. According to the allegations underlying the class action complaint, plaintiff, “along with officers and other key individuals in the company’s employ,” participated in the plan – receiving restricted stock in lieu of a portion of their salary. Id., at 3. The stock would not vest for two years, and if an employee was fired without cause prior to that time then “the employee forfeited his or her restricted stock, but received in return, without interest ‘a cash payment equal to the portion of his or her annual compensation that had been paid in the form of such forfeited [r]estricted [s]tock.’” Id. However, if the employee voluntarily resigned or was terminated for cause prior to that time, then “the employee forfeited his or her restricted stock as well as the percentage of annual income designated by the employee to be paid as shares of restricted stock.” Id. Plaintiff resigned before all of his stock vested, and therefore fell within this latter group, forfeiting his stock and that portion of his income that he directed to be paid as stock. Id., at 4. His class action complaint followed, id. Defense attorneys moved for summary judgment but the motion was denied, id. After several years of litigation, and after the trial court certified the litigation as a class action, the trial court reconsidered its summary judgment ruling sua sponte and concluded that the plan’s forfeiture provision did not violate California law; accordingly, it granted defendants’ motion for summary judgment. Id., at 5. The California Court of Appeal affirmed, see id., at 5-6, and the California Supreme Court granted review, id., at 7. The Supreme Court affirmed, concluding that “the forfeiture provision does not run afoul of the Labor Code because no earned, unpaid wages remain outstanding upon termination according to the terms of the incentive plan.” Id., at 1.

The issue before the Supreme Court was whether employees “would be owed – and therefore would be required to forfeit – any ‘earned and unpaid’ wages upon resigning or being terminated for cause.” Schachter, at 8. Plaintiff argued “the percentage of his annual compensation he directed be paid to him in the form of shares of restricted stock constitutes a wage that remained earned but unpaid following his resignation.” Id., at 9. The Supreme Court disagreed, holding that the shares of restricted stock constituted wages. Id. The controlling factor was that the employer and employees had entered into a bilateral agreement after the employees had been hired: “It cannot be questioned that employers and employees are free to prospectively and bilaterally alter the terms of employment.” Id., at 11. Here, plaintiff specifically requested that he be paid in part in restricted stock shares, and contractually agreed that “his resignation or termination for cause before the end of the two-year vesting period would result in forfeiture of the restricted stock and the percentage of his compensation that he ‘authorized to be paid in the form of such restricted stock.’” Id. The Supreme Court summarized its holding at page 13:

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Posted On: November 13, 2009 by Michael J. Hassen Email This Post

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FSLA Class Action Defense Cases—In re Enterprise: Judicial Panel On Multidistrict Litigation (MDL) Grants Plaintiff Motion To Centralize Class Action Litigation But Selects Western District Of Pennsylvania As Transferee Court

Judicial Panel Grants Plaintiff Request for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407, Over Objection of Common Class Action Defendants, but Transfers Class Actions to Western District of Pennsylvania

Seven class actions – two in the Northern District of Illinois, and one each in the Middle and Southern Districts of Florida, the Northern District of Georgia, the Southern District of New York and the Western District of Pennsylvania, – were filed against various Enterprise Rent-A-Car entities alleging labor law violations. In re Enterprise Rent-A-Car Wage & Hour Employment Prac. Litig., ___ F.Supp.2d ___ (Jud.Pan.Mult.Lit. June 10, 2009) [Slip Opn., at 1]. According to the allegations under the class actions, “defendants violated the Fair Labor Standards Act (FLSA) by misclassifying their assistant managers as salaried and thus not entitled to overtime.” Id. Attorneys for plaintiffs in one of the Illinois class actions filed a motion with the Judicial Panel for Multidistrict Litigation (MDL) requesting centralization of the class actions pursuant to 28 U.S.C. § 1407 in the Northern District of Illinois, where their class action was pending. Id. “With the exception of plaintiff in the Western District of Pennsylvania action, who urges that the Panel select that district as transferee district, all responding plaintiffs support selection of the Northern District of Illinois. Responding defendants Enterprise Rent-A-Car Co., Inc., and its affiliates, however, oppose centralization, and, if the Panel orders centralization over their objections, ask that the Eastern District of Missouri be selected as transferee district.” Id. The Judicial Panel granted the motion to centralize the class action lawsuits, rejecting defendants’ claims that the various class actions presented individual issues. The Panel explained:

In opposing centralization, defendants argue, inter alia, that the actions do not share factual issues, because individual Enterprise subsidiaries – unique to each state – employed the assistant branch managers and were responsible for classifying them as exempt and ensuring compliance with the FLSA. We are not persuaded by this argument, however, because the record indicates that the involvement vel non of Missouri-based Enterprise Rent-A-Car Co., Inc., in overseeing its subsidiaries and, in particular, setting policies affecting the employment of assistant managers is, in fact, an open question common to the actions in the litigation. On this and any other common issues, centralization under Section 1407 has the benefit of placing all actions in this docket before a single judge who can structure pretrial proceedings to consider all parties’ legitimate discovery needs, while ensuring that common parties and witnesses are not subjected to discovery demands that duplicate activity that has already occurred or is occurring in other actions.

Id., at 1-2. The Judicial Panel rejected the Northern District of Illinois, however, even though it enjoyed wide support, deciding instead that the Western District of Pennsylvania as the appropriate transferee court because “[t]he first-filed action is pending there, and that action is measurably more advanced than either [class action in Illinois],” id., at 2. Accordingly, the Panel transferred all class actions pending outside of Pennsylvania to that district. Id.

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Posted On: October 5, 2009 by Michael J. Hassen Email This Post

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FLSA Class Action Defense Cases–Rutti v. Lojack: Ninth Circuit Affirms Defense Summary Judgment In FLSA Class Action Except As To One Claim Seeking Compensation For Postliminary Activities

District Court Properly Granted Defense Motion for Summary Judgment as to Commute Time and Preliminary Activities Time, but Issue of Fact Existed as to Whether Postliminary Activity of Daily Transmissions to Employer Warranted Compensation Ninth Circuit Holds

Plaintiff filed a putative class action against his employer, Lojack, alleging violations of the federal Fair Labor Standards Act (FLSA); specifically, the class action complaint alleged that defendant failed to compensate its installation technicians for “time they spent commuting to worksites in Lojack's vehicles and for time spent on preliminary and postliminary activities performed at their homes.” Rutti v. Lojack Corp., Inc., 578 F.3d 1084, 1086-87 (9th Cir. 2009) (footnote omitted). According to the allegations underlying the class action, most installation and repair work was performed on location, and plaintiff was “required to travel to the job sites in a company-owned vehicle.” Id. Lojack paid its installation technicians on an hourly basis, and plaintiff was paid “for the time period beginning when he arrived at his first job location and ending when he completed his final job installation of the day.” Id., at 1086. Plaintiff alleged, however, that he was not compensated for “off-the-clock” activities that he “performed before he left for the first job in the morning and after he returned home following the completion of the last job,” and that “Lojack required technicians to be ‘on call’ from 8:00 a.m. until 6:00 p.m. Monday through Friday, and from 8:00 a.m. until 5:00 p.m. on Saturdays,” during which time they had to “keep their mobile phones on and answer requests from dispatch to perform additional jobs, but they were permitted to decline the jobs.” Id. (footnote omitted). Defense attorneys moved for summary judgment; the district court granted the motion, “holding that [plaintiff’s] commute was not compensable as a matter of law and that the preliminary and postliminary activities were not compensable because they either were not integral to [plaintiff’s] principal activities or consumed a de minimis amount of time.” Id. Plaintiff appealed, id., at 1087. The Ninth Circuit affirmed in part, agreeing that plaintiff’s commute time and preliminary activities were not compensable, but reversed and remanded with respect to plaintiff’s “postliminary activity of required daily portable data transmissions,” id., at 1086.

The Ninth Circuit first held that the time plaintiff spent commuting was not compensable. See Rutti, at 1088-93. The Circuit Court explained that, under the Employee Commuting Flexibility Act, 29 U.S.C. § 254(a)(2), an employer may require an employee to commute in a company vehicle. See id., at 1088-90. Further, the Court held that the conditions placed by defendant on plaintiff’s use of the company vehicle did not render his commute time compensable. See id., at 1090-92 (citing Bobo v. United States, 136 F.3d 1465 (Fed. Cir. 1998), and Adams v. United States, 471 F.3d 1321 (Fed. Cir. 2006)). And finally, the Ninth Circuit held that California law did not require Lojack to compensate plaintiff for his commute time in the company’s vehicle. See id., at 1092-93. Accordingly, the Circuit Court affirmed the district court’s conclusion “that [plaintiff] is not entitled to compensation for the time spent commuting to and from his job sites in a vehicle provided by Lojack under either 29 U.S.C. § 254(a)(2) or California law.” Id., at 1093.

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Posted On: September 17, 2009 by Michael J. Hassen Email This Post

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Class Action Defense Cases–Brown v. JEVIC: Third Circuit Reverses Order Remanding Class Action To State Court Holding Class Action Properly Removed Under Class Action Fairness Act Despite Fact Co-Defendant Was In Bankruptcy

Class Action Filed in State Court Against Defendant and Co-Defendant Debtor in Bankruptcy Removable to Federal Court under CAFA (Class Action Fairness Act) because Co-Defendant Sued in Violation of Automatic Stay and because Co-Defendant’s Bankruptcy does not Preclude Defendant from Removing Class Action to Federal Court Third Circuit Holds

Plaintiffs filed a putative class action against JEVIC Transportation and its parent company, Sun Capital Partners, alleging labor law violations; specifically, the class action complaint alleged that defendants violated New Jersey’s WARN Act which, “[l]ike its federal counterpart, …requires advance notice of a plant closing under certain circumstances.” Brown v. JEVIC, 575 F.3d 322, 325 (3d Cir. 2009). JEVIC had filed for bankruptcy protection, and the class action was filed as an adversary proceeding in the United States Bankruptcy Court, id. One week later, and despite the automatic stay afforded by the bankruptcy proceeding, plaintiffs filed a class action in New Jersey state court against JEVIC and Sun Capital Partners. Id. Defense attorneys for JEVIC removed the state court class action to federal court under the Class Action Fairness Act (CAFA); the district court remanded the class action sua sponte on the grounds that the automatic stay precluded the debtor’s petition for removal. Id. Defense attorneys for Sun Capital then removed the state court class action to federal court under CAFA; the district court again remanded the class action, ruling that “[w]hen an action is initiated after the filing of a Chapter 11 petition, in violation of the accompanying stay, removal is not available.” Id., at 325-26. The Third Circuit granted Sun Capital’s petition for leave to appeal the remand order, id., at 326. The Circuit Court explained at page 325, “In this appeal implicating the Class Action Fairness Act of 2005, we consider whether a defendant is precluded from removing a class action to federal court because a co-defendant is in bankruptcy. We hold that it is not.”

The Third Circuit began its analysis by noting that Sun Capital bore the “heavy burden” of establishing federal court jurisdiction. Brown, at 326 (citation omitted). Central to the Circuit Court’s analysis was the fact that Sun Capital was not in bankruptcy, so the district court’s reliance “on cases dealing with debtor defendants who attempted to remove actions” were inapplicable. Id. Also central to its analysis was the fact that the state court class action against JEVIC was improper because it was filed in knowing violation of the automatic stay, so plaintiffs had “improperly joined JEVIC in the [state court class action], [and] that joinder cannot prevent Sun from removing the action.” Id. In essence, plaintiffs fraudulently joined JEVIC in the state court class action. Id., at 326-27. The Third Circuit summarized its holding at page 327: “In sum, because [plaintiffs] had no reasonable basis to believe that JEVIC was amenable to suit, we hold that JEVIC was a fraudulently joined party and its status as a Defendant could not be used to defeat otherwise proper federal jurisdiction.” (The Third Circuit also held that the district court erred in remanding the class action to state court because JEVIC had never been served with legal process and therefore was not properly before the district court. See id., at 327. We do not here analyze that aspect of the Circuit Court's opinion.) Accordingly, the Circuit Court reversed the district court order remanding the class action to state court, id., at 329.

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Posted On: September 15, 2009 by Michael J. Hassen Email This Post

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FedEx Class Action Defense Cases–Babineau v. Federal Express: Eleventh Circuit Affirms Denial Of Class Action Treatment Of Putative Labor Law Class Action Claims Holding Rule 23(b)(3)’s Predominance Requirement Not Met

Labor Law Class Action Complaint did not Warrant Class Action Treatment because Individualized Inquiries would Predominate and because Rule 23(b)(1)(A)’s Requirements for Class Action were not Met given Monetary Relief Sought by Plaintiffs Eleventh Circuit Holds

Plaintiffs filed a putative class action against their employer, Federal Express, alleging labor law violations; specifically, the class action complaint alleged that FedEx “failed to pay employees for ‘all hours worked.’” Babineau v. Federal Express Corp., ___ F.3d ___ (11th Cir. July 27, 2009) [Slip Opn., at 2]. According to the allegations underlying the class action complaint, “FedEx has engaged in a pervasive and long-standing policy of failing to pay hourly employees for all time worked.” Id. The class action claimed “FedEx breached their contracts by failing to pay for three categories of time worked: (1) the interval between an employee’s manual punch in time and his scheduled start time; (2) the interval between an employee’s scheduled end time and his manual punch out time; and (3) the time worked during unpaid breaks.” Id., at 3. Plaintiffs moved the district court to certify the litigation as a class action, id., at 2. Originally a class action was filed on behalf of a nationwide class asserting “substantially similar claims,” but the district court denied class action treatment in that case. See Clausnitzer v. Federal Express Corp., 248 F.R.D. 647 (S.D. Fla. 2008). This class action complaint was filed in “[an] attempt[] to address the defects identified in Clausnitzer by limiting the scope of the class to Florida employees, adding a claim for quantum meruit, and altering the theory of their breach of contract claim.” Babineau, at 2-3. As defined, the class action seeks to represent a class that “includes couriers, courier/handlers, service agents, and any other nonexempt employees who are, or were, required during the class period to punch in and out on a manual time clock, but were paid only from their scheduled start time to their scheduled end time.” Id., at 3. The district court again denied class action treatment, holding class certification “was improper primarily because individualized factual inquiries into whether and how long each employee worked without compensation would swamp any issues that were common to the class.” Id. Plaintiffs appealed. The Eleventh Circuit explained at page 2, “The sole question before this Court is whether the district court abused its discretion in declining to certify the class. We hold that the district court acted within the bounds of its discretion and affirm its decision.”

The resolution of this case is very fact-specific, so the Eleventh Circuit spent considerable time on claims and facts supporting and contradicting those claims. See Babineau, at 3-11. We give only a brief summary. The Circuit Court noted that FedEx provides two manuals to its employees – a “People Manual” and an “Employee Handbook.” Id., at 4. Each manual states, “It is the policy of FedEx [] to compensate for all time worked in accordance with applicable state and federal law,” and the People Manual also provides that “[e]xcept for certain approved preliminary and post-liminary activities, no employee should perform work ‘off the clock’ for any reason, whether on their own initiative or at the request of management.” Id. The Eleventh Circuit also explained that FedEx tracks employee time three ways: “First, employees track their time by entering various codes corresponding to different work activities into a hand-held computerized tracking device (a ‘tracker’). Employees manually enter into the trackers their scheduled start times and end times as well as the times at which they start and finish a break…. Additionally, as a backup for the tracker data, employees manually write on a time card the time codes for each task, as well as the start and end time for that task. [¶] FedEx also requires employees to punch in and out on a manual punch clock before and after their shifts. Until 2007 the trackers did not automatically time stamp the employees’ entries, so an employee who was supposed to commence work at 8:00 a.m. but arrived for work at 8:05 a.m. could hide his tardiness by entering an 8:00 a.m. start time into the tracker. Thus, FedEx claims that the manual punch records were simply used to verify the integrity of time entries that employees entered into the trackers. FedEx paid its employees only for the time between the scheduled start and end times as entered into the trackers, which did not necessarily coincide with employees’ manual punch in and punch out times. The periods of time between the start/end times entered into the tracker and the punch in/out times are referred to as ‘gap periods.’” Id., at 5-6.

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Posted On: September 8, 2009 by Michael J. Hassen Email This Post

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Class Action Defense Cases–Garza v. Swift: Arizona Supreme Court Holds Court Of Appeals Lacked Jurisdiction To Hear Appeal From Trial Court Order Denying Class Action Certification Motion

Trial Court Order Denying Class Action Treatment not Appealable because not “Final Judgment” so Court of Appeals Erred in Exercising Appellate Jurisdiction to Review Order Denying Class Action Certification Arizona Supreme Court Holds

Plaintiff filed a putative class action in Arizona state court against his former employer, Swift Transportation, a trucking company, alleging labor law violations; specifically, the class action complaint alleged that Swift paid its truck drivers per “dispatched mile” but “systematically underestimated mileage and, by doing so, routinely underpaid its drivers.” Garza v. Swift Transportation Co., Inc., ___ P.3d ___, 2009 WL 2579527 (Ariz. August 24, 2009) [Slip Opn., at 2-3]. The class action complaint defined the putative class as “[a]ll persons who contracted with Swift Transportation [through the form contract].” Id. Plaintiff’s counsel moved the trial court to certify the litigation as a class action; the trial court denied class action treatment “finding that (1) [plaintiff] did not have a claim under his proposed definition of the class, (2) the class was not adequately defined, and (3) the dispute over the meaning of the contract term ‘dispatched miles’ would require inquiry into extrinsic evidence for each class member.” Id., at 3. Plaintiff appealed, and the Court of Appeals found “without discussion” that it had appellate jurisdiction over the denial class action certification. Id. The appellate court then vacated the trial court order, “determining that [plaintiff] has a claim typical of other potential class members’ claims” and “holding that the term ‘dispatched mile’ should be interpreted uniformly for all class members.” Id. Defense attorneys sought review by the Arizona Supreme Court without reference to the appellate jurisdiction issue, id. The Supreme Court “granted review and d ordered the parties to submit supplemental briefs on the jurisdictional issue.” Id., at 3-4. The Arizona Supreme Court reversed: “In this case, we address whether the court of appeals properly exercised jurisdiction over an appeal from a superior court order denying a motion for class certification. We hold that the court of appeals lacked appellate jurisdiction.” Id., at 2.

In considering whether a trial court order denying class action certification was appealable, the Arizona Supreme Court explained that “federal courts of appeal long struggled with whether a district court’s order denying class certification was an appealable order.” Garza, at 4-5 (citations omitted). Further, “Even those federal courts finding orders denying class certification appealable acknowledged that such decisions were not technically final judgments…because they did not finally dispose of the underlying action,” but they “applied the so-called ‘death knell’ doctrine to find finality when, because of the small size of the claim, ‘a plaintiff simply [could not] continue his law suit alone.’” Id., at 5 (citations omitted). The Arizona Supreme Court noted, however, that “[t]he United States Supreme Court ultimately rejected the federal death knell doctrine in Coopers & Lybrand v. Livesay, 437 U.S. 463, 465 (1978).” Id., at 6-7. The Court then reversed Arizona appellate cases applying the death knell doctrine to find appellate jurisdiction over denials of class action certification motions. See id., at 7-16. The Court emphasized, however, that interlocutory review was still available “in an extraordinary case,” id., at 17. But because appellate jurisdiction does not exist over denials of class action certification orders, the Arizona Supreme Court reversed the Court of Appeals’ decision. Id., at 18.

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Posted On: August 24, 2009 by Michael J. Hassen Email This Post

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FLSA Class Action Defense Cases–Boucher v. Shaw: Ninth Circuit Affirms Dismissal Of Labor Law Class Action Claims Against Individual Managers But Reverses As To Class Action's FLSA Claims Against Individuals

Labor Law Class Action Seeking to Hold Individual Managers Liable for Wages due Employees Properly Dismissed as to Class Action Claims under Nevada State Law, but Improperly Dismissed as to Class Action Claims under Federal Fair Labor Standards Act (FLSA) Ninth Circuit Holds

Plaintiffs, former employees and their local union, filed a putative class action in Nevada state court against individual managers of the Castaways Hotel, Casino and Bowling Center alleging violations of state and federal labor laws; specifically, the class action complaint alleged that That the three individual managers – the Chairman and CEO, who had a 70% ownership interest in Castaways, the CFO, who had a 30% ownership interest in the Castaways, and the head of labor and employment matters for the Castaways – were personally liable for the state and federal labor law violations because “each defendant had custody or control over the ‘plaintiffs, their employment, or their place of employment at the time that the wages were due.’” Boucher v. Shaw, ___ F.3d ___ (9th Cir. July 27, 2009) [Slip Opn., at 9731, 9734-36]. According to the allegations underlying the class action, plaintiffs were not paid for their final pay period or were paid late, and were not paid for accrued vacation and holiday time. Id., at 9735. Plaintiffs had filed the lawsuit against the individuals because the Castaways was in Chapter 11 bankruptcy proceedings at the time the plaintiffs were fired, and subsequently went through a Chapter 7 liquidation. Id. Defense attorneys removed the class action to federal court, and moved to dismiss the class action complaint for failure to state a claim. Id., at 9736. The district court dismissed the class action because it found “that the defendants were not ‘employers’ under Nevada law, Local 226 lacks standing to bring a claim under Nevada law and the plaintiffs cannot maintain a cause of action under the Fair Labor Standards Act [(FLSA)] against the defendants.” Id. The Ninth Circuit affirmed in part, but reversed as to the class action’s FLSA claim.

The Ninth Circuit opened its opinion as follows: “This appeal raises three issues: (1) whether the Castaways’ individual managers can be held liable for unpaid wages under Nevada law; (2) whether the union has standing to raise the state law claim; and (3) whether the managers can be held liable under the Fair Labor Standards Act (FLSA).” Boucher, at 9734. Because the question of whether individual managers may be liable under Nevada law for unpaid wages was a matter of first impression, the Circuit Court certified the issue to the Nevada Supreme Court – the Nevada Supreme Court held that “individual managers cannot be held liable as ‘employers,’ and therefore that claim was properly dismissed by the district court.” Id., at 9734, 9737-38. That decision rendered moot the second issue on appeal, as it did not matter whether the local union had standing to raise a state law claim that did not exist. Id., at 9734-35. The issue became, then, whether individual managers may be held liable under the FLSA. Id., at 9735. 9738-39. This was not a matter of first impression in the Ninth Circuit. The Court noted at pages 9739 and 9740 that in Lambert v. Ackerley, 180 F.3d 997, 1011-12 (9th Cir. 1999) (en banc), the Ninth Circuit held:

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Posted On: August 19, 2009 by Michael J. Hassen Email This Post

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FedEx Class Action Defense Cases–In re FedEx Ground: Indiana Federal Court Grants Class Action Certification Motions As To Certain State Labor Law Class Action Claims And Denies Class Action Treatment As To Five State Lawsuits

Labor Law Class Actions, Coordinated for Pretrial Purposes by Judicial Panel on Multidistrict Litigation, Warranted Class Action Treatment under Certain State Laws but failed to Satisfy Prerequisites for Class Action Treatment under Other State Laws Indiana Federal Court Holds

Numerous class action lawsuits were filed in various states against Federal Express alleging labor law violations in that FedEx allegedly failed to pay certain delivery drivers overtime and other wages; ultimately, the Judicial Panel on Multidistrict Litigation coordinated the class actions for pretrial purposes in the Northern District of Indiana. In re FedEx Ground Package System, Inc., Employment Practices Litig., ___ F.3d ___ (N.D.Ind. July 27, 2009) [Slip Opn., at 1 et seq.]. In October 2007 and March 2008, the district court resolved “the first of three wages” of class action certification motions involving putative class actions that had been filed in 28 states. Id., at 1 (and see Note, below). Plaintiffs in 14 of the remaining class actions, filed in at least 11 different states, moved the district court to certify their lawsuits as class actions (or as collective actions under the Fair Labor Standards Act (FLSA)), id., at 1-2. The district court explained that in considering whether to grant class action treatment with respect to the states at issue, “Analysis focuses primarily on whether the substantive law governing the motion allows resolution, without extrinsic evidence, of whether the Operating Agreement and policies applicable to the entire class create an employment relationship, and whether a would-be employer’s conduct can convert an employment relationship (as defined in the employment contract) into an independent contractor relationship.” Id., at 2.

Given the length of the district court’s opinion, and the detailed analysis involved in considering each state’s laws, we provide here only the court’s conclusions. First, the district court granted the motion by Arizona plaintiffs to certify their lawsuit as a class action, see In re FedEx, at 4-5. Second, the court denied the motion by Colorado plaintiffs to certify their lawsuit as a class action, id., at 7. Third, the court denied the motion by Connecticut plaintiffs to certify their lawsuit as a class action, id., at 9. Fourth, the court denied the motion by certain plaintiffs for conditional certification of a collective action under the FLSA, id., at 16. Fifth, the court granted the motion by Georgia plaintiffs to certify their lawsuit as a class action, id., at 24. Sixth, the court granted the motion by Louisiana plaintiffs to certify their lawsuit as a class action with respect to certain claims for relief, but denied the motion with respect to other claims for relief, id., at 39-40. Seventh, the court denied the motion by certain plaintiffs to certify as a class action their lawsuit under the Motor Carrier Safety Act, id., at 43-44. Eighth, the court granted the motion by Nevada plaintiffs to certify their lawsuit as a class action with respect to a statutory claim brought under Nev. Rev. Stat. Ch. 608, but otherwise denied the motion with respect to all other claims for relief, id., at 50. Ninth, the court granted the motion by North Carolina plaintiffs to certify their lawsuit as a class action, id., at 52. Tenth, the court granted the motion by Ohio plaintiffs to certify their lawsuit as a class action, id., at 56. Eleventh, the court granted the motion by Oregon plaintiffs to certify their lawsuit as a class action with respect to all claims for relief except for the rescission claim, id., at 67. Twelfth, the court denied the motion by Vermont plaintiffs to certify their lawsuit as a class action, id., at 78.

Continue reading "FedEx Class Action Defense Cases–In re FedEx Ground: Indiana Federal Court Grants Class Action Certification Motions As To Certain State Labor Law Class Action Claims And Denies Class Action Treatment As To Five State Lawsuits" »

Posted On: August 11, 2009 by Michael J. Hassen Email This Post

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Blue Cross Class Action Defense Cases–Yeager v. Blue Cross: California Court Affirms Judgment For Insurer In Class Action Challenging Infertility Treatment Coverage Holding Full Coverage Not Required By Statute

Trial Court Properly Granted Insurer’s Motion for Summary Judgment in Class Action Challenging Infertility Treatment Benefits because California Law Requires only that Blue Cross “Offer” such Coverage on Terms Negotiated with Employer, not that the Insurance Benefits Provide “Full” Coverage for Infertility Treatments California Appellate Court Holds

Plaintiff filed a putative class action against Blue Cross of California alleging for violations of California’s Unfair Competition Law (UCL) and false advertising; specifically, the class action complaint alleged that California law required Blue Cross to offer to provide insurance coverage for infertility treatments, but that it only offered “to pay up to $2,000 a year for half the cost of each group member’s treatment for infertility.” Yeager v. Blue Cross of California, 175 Cal.App.4th 1098, 96 Cal.Rptr.3d 723, 723-24 (Cal.App. 2009). According to the allegations underlying the class action, plaintiff “could not become pregnant without medical assistance” and the “limited infertility treatment [covered by the insurance policy] proved ineffective.” Id., at 724. She therefore filed her class action against Blue Cross, id. The theory underlying the class action was that Blue Cross was required to provide “full” coverage for infertility treatments, id., at 725. Defense attorneys moved for summary judgment on the ground that California law does not require full insurance coverage for infertility treatments and that it complied with California law. Id., at 724. The trial court agreed and entered judgment in favor of Blue Cross, id. Plaintiff appealed, and the California Court of Appeal affirmed.

The Court of Appeal explained that the statute at issue – California Health & Safety Code section 1374.55 – requires only that insurers “offer” coverage for infertility treatment “under those terms and conditions as may be agreed upon between the group subscriber and the plan.” Yeager, at 725 (quoting § 1374.55) (italics added). Plaintiff argued that “only about 15 percent of couples suffering infertility can be successfully treated for less than $4,000” – the relevant figure considering the plan’s $2,000 cap and 50% co-pay – so the benefits afforded were essentially illusory, id. The appellate court found, however, that “[plaintiff’s] argument for full coverage finds no support in the statute’s language,” id. The Court of Appeal also rejected plaintiff’s argument that the preamble to § 1374.55 supports her position, id., at 725-26. The appellate court held that “a statute’s preamble can be illuminating if a statute is ambiguous” but “a preamble is not binding” and “many not overturn the statute’s language.” Id. (citation omitted). Put simply, “[t]he Legislature knows how to establish a health plan’s coverage and costs when it chooses,” as evidenced by California law mandating coverage for mental health in contrast to merely offering coverage for infertility treatments. Id., at 726-27. Accordingly, the Court affirmed the judgment of the trial court. Id., at 730.

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