INVESTIGATING AND LITIGATING WAGE AND HOUR COLLECTIVE AND CLASS ACTIONS FROM PLAINTIFFS COUNSEL S PERSPECTIVE

Transcription

1 INVESTIGATING AND LITIGATING WAGE AND HOUR COLLECTIVE AND CLASS ACTIONS FROM PLAINTIFFS COUNSEL S PERSPECTIVE AMERICAN BAR ASSOCIATION 2007 LABOR AND EMPLOYMENT LAW CLE CONFERENCE Philadelphia, PA Nvember 7-10, 2007 Rberta L. Steele (rsteele@gdblegal.cm) Gldstein, Demchak, Baller, Brgen & Dardarian 300 Lakeside Drive, Suite 1000 Oakland, CA /

2 I. INTRODUCTION Wage and hur cllective and class actins brught by private plaintiffs have played an increasingly significant rle in the enfrcement f the federal and state wage and hur laws. Litigating these actins can be daunting due bth t the cmplexity f the legal and factual issues and csts invlved. It is nt an endeavr t be undertaken lightly. In deciding whether t bring a cllective r class actin, the plaintiffs attrney shuld carefully weigh the advantages and disadvantages f this type f litigatin. Wage and hur cllective and class actins can be vehicles t address cmpany wide vilatins f the wage and hur laws. They can prvide mnetary damages t large numbers f emplyees with claims nt large enugh t warrant the filing f an individual lawsuit. These cases als can prvide the impetus fr early dispute reslutin. Meritrius cllective r class actins ften prmpt a cmpany t carefully analyze its ptential liability and litigatin risks, and can prmpt early settlement t avid negative publicity and expensive prtracted litigatin. On the ther hand, cllective and class actins can be expensive and time cnsuming t prsecute. They als invlve many individuals and therefre require management, crdinatin and cmmunicatin with and amng multiple class representatives and numerus class members. This paper describes hw t investigate and evaluate cllective and class claims, prepare t file a cllective r class actin cmplaint and prepare fr the certificatin mtin. II. PROCEDURAL FRAMEWORK A. The Fair Labr Standards Act The Fair Labr Standards Act f 1938 ( FLSA ), 29 U.S.C. 216(b), authrizes private enfrcement f the statute in the frm f cllective actins brught by ne r mre representative plaintiffs n behalf f a class f similarly situated individuals. The members f the class must individually pt in t be included in the cllective actin. See Graysn v. K-mart Crp., 79 F.3d 1086 (11th Cir. 1996). 1. Tw Step Certificatin Prcedure Curts cmmnly fllw the tw step apprach first articulated by the Fifth Circuit in 1995 fr certificatin f cllective actins. See Mney v. Aramc, 54 F.3d 1207 (5th Cir. 1995), verruled in part n ther grunds by Desert Palace, Inc. v. Csta, 539 U.S. 90 (2003); see als Thiessen v. General Electric Capital Crp., 267 F.3d 1095 (10th Cir. 2001); Hipp v. Liberty Natinal Life Ins. C., 252 F.3d 1208 (11th Cir. 2001). Under this tw step prcedure, the curt (1) preliminarily r cnditinally certifies a cllective actin, rders ntice t the ptential pt ins based n a mdest evidentiary shwing, and sets an pt in perid; and (2) after discvery, reviews the preliminary certificatin decisin, and determines whether the case shuld prceed n the merits as a cllective actin. Althugh bth stages require the 2

3 curt t assess whether plaintiffs and the ptential pt ins are similarly situated, the curt s scrutiny is mre exacting at the secnd stage after discvery has been taken. a. Ntice Stage In the first stage f the cllective actin prceeding, the s-called ntice stage, plaintiffs must persuade the curt t initially r cnditinally certify the actin s that ntice will be sent t ther similarly situated emplyees t give them an pprtunity t pt int the lawsuit. The curt has discretin t rder ntice t ptential class members. See Hffman-LaRche v. Sperling, 493 U.S. 165 (1989). Because the statute f limitatins is nt tlled by the filing f a cllective actin cmplaint, plaintiffs cunsel shuld press fr early ntice t the class members in rder t preserve their individual claims. See e.g. Cahill v. City f New Brunswick, 99 F. Supp. 2d 464, 479 (D.N.J. 2000); Cash v Cnn Appliances, 2 F. Supp. 2d 884, 897 (E.D. Tex. 1997). The standard fr ntice t the ptential pt ins in a cllective actin is a lenient ne, requiring nly a mdest factual shwing. See Mney, 54 F.3d at It is cnsiderably less stringent than the prf required pursuant t Fed. R. Civ. P. 20(a) fr jinder r Fed. R. Civ. P. 23 fr class certificatin. Graysn, 79 F.3d at Plaintiffs shuld resist arguments by defense cunsel that Rule 23 is the prper standard in a FLSA cllective actin. It is nt. A large majrity f curts have held that Rule 23 des nt apply t FLSA claims. See e.g. Kinney She Crp. v. Vrhes, 564 F.2d 859, 862 (9th Cir. 1977), abrgated n ther grunds, Hffman-LaRche v. Sperling, 493 U.S. a65 (1989); LaChappelle v. Owens-Illinis, Inc., 513 F.2d 386, 288 (5th 1975); Schmidt v. Fuller Brush C., 527 F.2d 532, 536 (8th Cir. 1975); Garza v. Chicag Transit Authrity, 2001 WL (N.D. Ill. 2001). Plaintiffs bear the burden f establishing that they are pursuing their claims bth fr themselves and n behalf f ther similarly situated emplyees t warrant cllective actin treatment under FLSA. See Graysn, 79 F.3d at Even thugh the ntice standard is lenient, plaintiffs must make sme evidentiary shwing at this stage t cnvince the curt that there are ther similarly situated emplyees available and willing t pt in. After the curt determines that plaintiffs are similarly situated, the case prceeds thrugh discvery as a cllective actin. See e.g. Mney, 54 F.3d at 1213; Hffman v. Sbarr, 982 F. Supp. 249, (S.D.N.Y. 1997). b. Decertificatin Stage In the secnd stage, called the decertificatin stage, a secnd and mre stringent review f the similarly situated standard is undertaken t ensure that having the 3

4 case prceed t trial as a representative cllective actin, as ppsed t individual actins, is apprpriate. See e.g. Mney, 54 F.3d at 1214; Hipp, 252 F.3d at The decertificatin stage ccurs after the ntice, pt in and discvery phases f the litigatin have been cmpleted and defendant has filed a mtin fr decertificatin prir t trial. If the claimants are fund t be similarly situated, the actin prceeds t trial as a representative actin. If they are fund nt t be similarly situated, the class is decertified; the pt-in plaintiffs are dismissed withut prejudice; and the riginal plaintiffs, wh filed the cmplaint, prceed t trial n their individual claims. See e.g. Mney, 54 F.3d at 1214; Hipp, 252 F.3d at Recent Cases Regarding Cnditinal Certificatin a. Cnditinal Certificatin Granted Based n Cmmn Plicy r Scheme Declaratins frm wrkers in nine ffices cnstituted a representative sample sufficient t certify a cllective actin as t all 19 cmpany ffices. Levy v. Verizn Infrmatin Systems, 2007 WL (E.D.N.Y. 2007). Telephne sales representatives brught this misclassificatin case fr failure t pay vertime and nt having a system t recrd hurs wrked. Plaintiffs declaratins cvered nine f the 19 ffices where the wrkers were emplyed. The curt certified the case as t all ffices, stating that the representative sample prvided by plaintiffs is sufficient t permit an inference that the plicy gverns all 19 ffices. Three affidavits frm plaintiffs were sufficient t shw that the defendant had a cmmn plicy that vilated the FLSA. Ashley v. Lake Cunty, 2007 WL (N.D. Ind. 2007). Crrectins fficers brught suit fr failure t pay wages fr time spent during rll call 15 minutes befre a scheduled shift. The curt granted cnditinal certificatin, finding the existence f a cmmn plicy based n three affidavits frm plaintiffs attesting that: (1) they attended rll call fr each f their shifts; (2) they were nt paid fr rll call; and (3) ther crrectins fficers tld plaintiffs that they als were nt being paid fr rll call time. Schl district emplyees cvered by cmmn pay plan plicies specified in memrandum f understanding ( MOU ) between district and unin were similarly situated. Agdipa v. Grant Jint Unin High Schl Dist., 2007 WL (E.D. Cal. 2007). Plaintiffs argued that they and ther current and frmer schl district emplyees all were cvered by the MOU s cmpensatin prvisins and entitled t pay fr vertime accrding t the MOU scale. Defendant s arguments that different payrll prcedures may have existed fr different ptential pt ins were rejected by the curt. The curt relied n the MOU and fund that it established a cmmn pay system. The curt further fund that t require the plaintiffs t g beynd the MOU t describe specific payrll systems was inapprpriate at the lenient first stage. 4

5 Wrkers hired by different subcntractrs were nt paid vertime pursuant t cmmn pay plans warranting ntice. Lima v. Int l Catastrphe Slutins, Inc., 493 F. Supp. 2d 793 (E.D. La. 2007). Plaintiffs, predminantly immigrants, wh were recruited by multiple defendants t wrk as manual labrers in the clean-up and restratin f varius businesses alng the Gulf Cast in the aftermath f Hurricane Katrina, alleged that they were nt paid vertime. The plaintiffs relied n the allegatins in their cmplaint and affidavits (which cntained near identical language) frm the seven plaintiffs and three pt ins, wh wrked fr nly ne f the defendants, t establish that there were similarly situated individuals entitled t ntice. The curt fund that even thugh the wrkers were hired t wrk by varius subcntractrs, they were similarly situated with respect t defendants pay plan prvisins, s as t justify cnditinal certificatin. Off-the-clck claims were suitable fr cllective actin certificatin. Plaintiffs were nt required t prvide equal amunts f evidence fr every facility. Adams v. Inter-Cn Security Systems, Inc., 242 F.R.D. 530 (N.D. Cal. 2007). Five security fficers brught suit based n defendant s plicy f requiring attendance at uncmpensated pre-shift briefings, uncmpensated pre-emplyment rientatin sessins and ther claims. In finding that ff-the-clck allegatins were suitable fr cllective actin certificatin, the curt relied n the detailed declaratins frm the five plaintiffs, as well as 13 declaratins frm ther emplyees. The curt als nted that 383 plaintiffs in 50 cities under six different cntracts had already pted in. The curt rejected the defendant s argument that individual cnsideratins such as a different amunt f damages fr each plaintiff precluded cnditinal certificatin. In defining the class, the curt rejected defendants arguments t limit the scpe t facilities fr which plaintiffs had prvided evidence. The curt stated that plaintiffs were nt required t prvide equal amunts f evidence fr every facility. The curt als rejected defendant s arguments t limit the class t facilities where plaintiffs made a shwing f the alleged plicy. In ding s, the curt nted that the defendant had refused t allw discvery f dcuments t supprt the existence f a natinwide plicy. The curt, hwever, excluded fficers cvered by a CBA, althugh it nted that it may cnsider creating a subclass if an fficer cvered by a CBA became a named plaintiff. b. Cnditinal Certificatin Granted Based n Similar Jb Duties Curt granted certificatin finding that similarly situated class members need nt be identically situated. Fast v. Applebees, 243 F.R.D. 360 (W.D. M. 2007). The curt fund cnditinal certificatin prper based n cmmn plan r practice t utilize servers and bartenders in a nn-tipped capacity withut paying them the required minimum wage, as established by affidavits, crprate mems regarding best practices fr utilizatin f tipped emplyees and a Department f Labr investigative reprt. The curt rejected defendants arguments that bartenders and servers were nt similarly situated because each restaurant 5

6 develped its wn list f tipped emplyees duties t be perfrmed thrughut the day and wrk schedules varied depending n expected needs. Despite each restaurant s freedm t schedule emplyees jb duties, a cmpany wide dcument entitled Labr Management Best Demnstrated Practices, specified nn-tipped duties fr tipped emplyees. The curt als declined t hear the merits f the case, rejecting defendants arguments that certificatin shuld be denied because plaintiffs claims were nt valid and the class wuld be unmanageable. Althugh there were variatins in duties, all emplyees maintained pint-fsale equipment and therefre were similarly situated. Renfr v. Spartan Cmputer Services, Inc., 243 F.R.D. 431 (D. Kan. 2007). Plaintiffs wrked in varius psitins installing and maintaining restaurant pint-f-sale systems. Plaintiffs bught claims fr unpaid vertime n behalf f varius titled emplyees arguing that they were similarly situated because they all perfrmed wrk n pint-f-sale systems and were subject t the emplyer s same plicy f nt requiring maintenance f accurate time recrds and refusing t pay vertime. The curt fund that althugh there was sme variatin in the specific duties f putative class members, the fact that they all maintained pint-f-sale systems was sufficient at the first stage t find that the emplyees were similarly situated. The curt nted that if there were variatins in the duties f emplyees, subclasses culd be cnsidered at the secnd stage. The curt rejected defendants arguments t cmbine the first and secnd steps f the certificatin analysis. Curt refused t evaluate merits and rejected argument that certain putative class members may be exempt frm the FLSA at certificatin stage. Stanfield v. First NLC Financial Services, 2006 WL (N.D. Cal. 2006). Lan fficers sued fr unpaid vertime and prduced declaratins frm emplyees wh wrked in different ffices at different times but perfrmed similar jb duties, wrked mre than 40 hurs per week and were nt paid vertime. The curt nted that at the time f the filing f their ntice mtin, 164 current and frmer emplyees had filed pt ins. The curt granted cnditinal certificatin, stating that any differences in jb duties were nt material and a fact intensive inquiry was nt required at this juncture. Defendant argued that plaintiffs declaratins were unreliable and shuld be stricken because they were all substantially the same. The curt disagreed, finding that it was entirely lgical that emplyees in the same jb title perfrmed very similar tasks. Omnibus class nt apprpriate fr certificatin but the curt allws a managers class. Fundatin and hearsay bjectins t declaratins were nt relevant at the certificatin stage. Beauperthuy v. 24 Hur Fitness USA, Inc., 2007 WL (N.D. Cal. 2007). Plaintiffs filed a cllective actin fr an mnibus class cnsisting f three categries f emplyees: managers, cmmissin-based emplyees and persnal trainer-hurly based emplyees wh wrked fr 24 Hur Fitness in states ther than Califrnia [Califrnia emplyees had their wn separate actin]. The curt denied certificatin f the mnibus class nting that plaintiff failed t prvide a factual nexus binding the members as victims f a cmmn plicy r practice. The curt went n t grant cnditinal 6

7 certificatin f a managers class, relying n affidavits frm 11 frmer managers that unifrmly stated, pursuant t cmpany plicy, they and ther managers were designated as exempt, denied vertime, and denied real management authrity in a number f ways. The curt als fund defendant s mre than 300 fundatin and hearsay bjectins t plaintiffs declaratins were nt relevant t the curt s determinatin at the first stage f certificatin. c. Cnditinal Certificatin Denied While the certificatin requirement is nt nerus, plaintiffs must shw mre than mere existence f ther similarly situated persns. Plaintiffs must shw that similarly situated persns actually desire t pt in t the lawsuit. Otherwise, certificatin wuld be autmatic. Parker v. Rwland Express, Inc., 492 F. Supp. 2d 1159 (D. Minn. 2007). Tw drivers brught suit alleging in their cmplaints and affidavits that they were infrmed and believed that ther ptential plaintiffs may have existed. Defendant argued that this was nt an apprpriate case fr cllective actin status because plaintiffs had nt prffered evidence that ther similarly situated individuals desired t pt in. The curt agreed, stating that plaintiffs must d mre than shw the mere existence f ther similarly situated persn, because there is n guarantee that they will actually seek t jin the lawsuit. If plaintiffs were required nly t shw that ther ptential plaintiffs exist rather than shwing they wuld actually seek t jin, it wuld render first stage ntice certificatin autmatic as lng as the cmplaint cntained the magic wrds: ther emplyees similarly situated. The curt thus denied ntice certificatin in the absence f sme evidence indicating that thers wuld pt in t this lawsuit. The curt further stated that a FLSA plaintiff was nt entitled t cnditinal certificatin simply t seek ut thers wh might wish t jin the actin. The curt further nted that, given the five year tenure f ne f the plaintiffs, it was nt an insurmuntable hurdle fr him t cntact drivers he knws abut pting in. The curt made clear, hwever, that it was cnceivable in certain circumstances, such as when an emplyee wrked fr an emplyer fr nly a shrt perid f time, t permit sme discvery as t the identity f ther similarly situated emplyees. The curt further limited its analysis t thse cases where there are ne r tw named plaintiffs. It nted, fr example, that if eight plaintiffs cmmenced a FLSA actin, it might nt be necessary t shw that thers desired t pt in, since the sheer number f plaintiffs, standing alne, culd render the actin apprpriate fr cllective actin status. The curt declined, hwever, t draw a precise numerical line regarding the number f plaintiffs required t render cnditinal certificatin prper withut evidence f additinal pt ins. Single plaintiff declaratin, absent ther declaratins r evidence attesting t victims f a single decisin, plicy r plan, nt enugh t satisfy similarly situated test. Bensn v. West Cast Cnst., 2007 WL (W.D. Wash. 2007). Plaintiff, a frmer hurly cnstructin labrer, sught payment f back vertime fr himself and all current and frmer emplyees. Defendants presented evidence that plaintiff agreed t be paid straight time fr vertime hurs wrked. This agreement was in place until defendants realized that the agreement was 7

8 illegal. At that pint, defendants made a full and uncnditinal tender f back vertime wages t plaintiff. The curt agreed with defendant that plaintiff s situatin was s unique that he culd nt satisfy the similarly situated standard. The curt nted that in rder t grant cnditinal certificatin, it required little mre than substantial allegatins, supprted by declaratins r discvery, that the putative class members were tgether the victims f a single decisin, plicy, r plan. The curt fund that even under this lenient standard, plaintiff prduced n evidence that ther emplyees were subject t a similar agreement. He nly prduced his wn self serving declaratin that was rife with hearsay statements that ther emplyees wrked vertime and were nt paid. In cntrast, defendants prduced a declaratin stating that emplyees rarely wrked vertime hurs, and that when they did wrk such hurs, they received prper vertime pay. d. Cnditinal Certificatin Discvery and Jurisdictin Curt rejected argument that when discvery n the issue f cllective actin certificatin has ccurred, the tw step methd cllapsed int ne. Herring v. Hewitt Assciates, Inc., 2007 WL (D.N.J. 2007). Benefits analysts, wh prvided human resurces utsurcing services t varius businesses, filed suit fr unpaid vertime. The defendant argued that substantial discvery n the certificatin issue had been cmpleted and the curt shuld cllapse the tw stages f the certificatin analysis, prceed directly t the secnd stage and make a cnclusive factual determinatin regarding whether plaintiffs are similarly situated. The curt disagreed, stating that t engage in a mre substantial, factual determinatin at stage tw requires discvery t be largely cmplete and the case ready fr trial. The curt fund that the case was nt ready fr trial and that it was premature t make factual findings regarding certificatin. The curt cnditinally certified the class fr ntice purpses, rejecting defendant s arguments that emplyees tasks were inherently diverse and varied. Even thugh the parties had engaged in extensive discvery, the stricter standard fr determining similarly situated nly applies at the cnclusin f discvery. Gerlach v. Wells Farg & C., 2006 WL (N.D. Cal. 2006). Plaintiffs were business systems emplyees wh sught back vertime pay under the FLSA. The curt held that plaintiffs met their burden f establishing that they and a ptential class f pt ins were similarly situated t permit cnditinal certificatin by shwing that the emplyees shared a cmmn jb descriptin, were classified as exempt frm vertime pay by defendants and perfrmed similar jb duties. Althugh discvery had been extensive, the curt rejected defendants argument t apply the stricter secnd stage analysis that is applied when decertifying a cllective actin. The curt stated that nce discvery was cmpleted, defendants culd mve fr decertificatin and the curt wuld apply the heightened secnd-tier review. Because the curt fund that plaintiffs met their burden fr cnditinal certificatin, it did nt cnsider the 39 declaratins submitted by defendants. 8

9 An rder granting cnditinal certificatin and apprving ntice is nt appealable. Cmer v. Wal-Mart Stres, Inc., 454 F.3d 544 (6th Cir. 2006). Frmer assistant stre managers brught case seeking back vertime pay. The district curt held that the plaintiffs made a preliminary shwing that they and ptential pt ins were similarly situated under the lenient standard applicable at the first stage f certificatin. Defendants appealed the district curt s ruling n cnditinal certificatin. The Sixth Circuit applied the Supreme Curt s analysis in Chen v. Beneficial Indus. Lan Crp. t determine whether the district curt s ruling was final and irrevcable. In hlding that it did nt have jurisdictin, the Sixth Circuit fund that the district curt rder was specifically defined as cnditinal and temprary. 3. Recent Cases Regarding Decertificatin a. Decertificatin Granted Similarly situated must extend beynd mere facts f jb duties and pay prvisins. Andersn v. Cagles, 488 F.3d 945 (11th Cir. 2007). Current and frmer emplyees f chicken prcessing facilities appealed the district curt s rder decertifying the class. The district curt fund that the named plaintiffs culd nt fairly and adequately represent the wide variety f wrk assignments and varied cmpensatin structures affecting the purprted class. In reaching this cnclusin, the district curt cntrasted the emplyers independent identities, lcatins and wrk frces; varius methds used t cmpensate the putative class members; and the prtective clthing the putative class members were required t wear. The appellate curt affirmed the district curt based n the numerus distinctins between the named plaintiffs and many f the pt in plaintiffs in the recrd. In particular, the appellate curt nted that a key defense in this case related t a cllective bargaining agreement and many f the pt in plaintiffs were nt uninized. The curt stated that while the FLSA des nt require ptential class members t hld identical psitins, similarities must extend beynd the mere facts f jb duties and pay prvisins. Decertificatin granted where pt ins were nt subject t plicy that frms the basis f the cmplaint. Sharer v. Tandberg, Inc., 2007 WL (E.D. Va. 2007). Tw plaintiffs were salaried emplyees wh brught suit claiming they were subjected t defendant s practice f partial-day pay dcking. Fllwing cnditinal certificatin and ntice, eight additinal plaintiffs pted in t the lawsuit, six f whm later vluntarily dismissed their claims. On a mtin fr decertificatin, the curt fund that the tw remaining pt in plaintiffs were situated differently than the tw riginal plaintiffs because bth left emplyment ver ne year prir t the implementatin f the partial-day pay dcking system at issue, and were thus never subjected t the alleged plicy that frmed the basis f the cmplaint. The curt als fund that the pt ins were situated differently with respect t jb titles and respnsibilities. 9

10 b. Decertificatin Denied Decertificatin denied but curt divided the plaintiffs int fur classes based n the facilities where they perfrmed their services. Rawls v. Augustine Hme Health Care, Inc., F.R.D., 2007 WL (D. Md. 2007). Plaintiffs were certified nursing assistants wh cared fr elderly and disabled clients at their hmes. The dwellings f the individual clients varied and included private hmes, apartment cmplexes, senir living facilities, and assisted living and nursing hmes. Defendants argued that plaintiffs' disparate emplyment settings and jb requirements rendered them sufficiently dissimilar, requiring decertificatin f the cllective actin. The curt cnsidered three factrs t determine whether t decertify the actin: (1) the disparate factual and emplyment settings f the individual plaintiffs; (2) the varius defenses available t defendant which appear t be individual t each plaintiff; and (3) fairness and prcedural cnsideratins. The curt did nt decertify, but instead fund that the independent defense factr (ptential defenses pertaining t the plaintiff class r whether the ptential defenses require prf f individualized facts at trial) weighed in favr f dividing the plaintiff class accrding t the individual residence facility at which the plaintiffs perfrmed their services. In denying a mtin fr decertificatin, the Magistrate crrectly applied factrs t make a determinatin f similarly situated. Hayes v. Lary Thmas, Inc., 2007 WL (E.D. Tex. 2007). Fur cnstructin wrkers brught a cllective actin n behalf f all current and frmer cnstructin wrkers fr back vertime pay. Fllwing cnditinal certificatin, the defendant filed a mtin t decertify the class. The magistrate judge denied defendant s mtin and defendant filed bjectins with the district curt. The curt fund that the defendant s bjectins were withut merit and the magistrate crrectly used three applicable factrs t determine whether the plaintiffs were similarly situated: (1) disparate factual and emplyment settings f the individual plaintiffs; (2) the varius defenses available t defendant which appear t be individual t each plaintiff; and (3) fairness and prcedural cnsideratins. In ding s, the curt summarily rejected defendant s arguments regarding judicial efficiency and disparate factual and emplyment settings f the individual plaintiffs. B. Hybrid FLSA Cllective/State Law Class Actins Bth federal and state law wage and hur claims can be brught tgether in a single lawsuit, as a hybrid r dual filed actin, in federal curt, pursuing the FLSA claims as an pt in cllective actin under Sectin 216(b) and the pendent state law claims as an pt ut class actin under Fed. R. Civ. P. 23. Such cases are being brught by plaintiffs with increasing frequency. District curts that have allwed cases t prceed under bth federal and state law have exercised supplemental jurisdictin ver the state law claims, finding that prceeding under bth statutes des nt create any manageability issues. 10

11 This hybrid prcedure has been accepted by sme curts. See e.g. Beltran- Benitez v. Sea Safari, Ltd., 180 F. Supp. 2d 772 (E.D.N.C. 2001) (denying mtin t dismiss state law claims); Ansumana v. Gristede s Operating C., 201 F.R.D. 81 (S.D.N.Y. 2001) (finding that the tasks required t manage a cllective actin with 350 pt ins were nt very different frm thse needed t manage a state law class actin). Other curts have refused t certify bth the cllective actin and class actin in a single case. See e.g. DeAsenci v. Tysn Fds, Inc., 342 F.3d 301, (3rd Cir. 2003) (refusing t exercise supplemental jurisdictin ver state law claims because, given nvelty and number, wuld predminate ver FLSA claims); Jacksn v. City f San Antni, 220 F.R.D. 55 (W.D. Texas 2003) (declining t exercise jurisdictin ver state law claims, which were remanded t state curt). Still thers have allwed the case t prceed as bth a cllective and class actin, but limited certificatin f the state law claims t thse individuals wh had pted in t the FLSA actin. See e.g. Bartlesn v. Winnebag Ind., Inc., 219 F.R.D. 629 (N.D. Iwa 2003). 1. Rule 23 Class Actin Prcedures T certify the state law claims, Plaintiffs must demnstrate that they meet the fur prerequisites f Federal Rule f Civil Prcedure 23(a) and ne f the requirements f Rule 23(b) t prceed as a class actin. See Visa Check/Mastermney Antitrust Litigatin, 280 F.3d 124, (2nd Cir. 2001). a. Rule 23(a) Plaintiffs must demnstrate that they meet the fur prerequisites f Rule 23(a) knwn as numersity, cmmnality, typicality, and adequacy f representatin. 1 Numersity. There is n bright line rule r magic number regarding numersity. See Gen. Tel. C. v. EEOC, 446 U.S. 318, 330 (1980) ( The numersity requirement requires examinatin f the specific facts f each case and impses n abslute limitatins. ). Curts have certified classes with as few as 18 members and refused t certify classes with as many as 67 members. See Rdger v. Electric Data Sys. Crp., 160 F.R.D. 532, (E.D.N.C. 1995); Kelley v. Nrflk & W.Ry., 584 F.2d 34, (4 th Cir. 1978); see als Cnslidated Rail Crp. v. Twn f Hyde Park, 47 F.3d 473, 483 (2 nd Cir. 1995) (stating that numersity is presumed at a level f 40 [class] members ), citing 1 Newberg On 1 Rule 23(a) prvides fr certificatin when: (1) the class is s numerus the jinder f all members is impracticable ( numersity ); (2) there are questins f law r fact cmmn t the class ( cmmnality ); (3) the claims r defense f the representative parties are typical f the claims r defense f the class ( typicality ), and (4) the representative parties will fairly and adequately prtect the interests f the class ( adequacy f representatin ). 11

12 Class Actins 2d, (1985 ed.) Cmmnality: Questins f law r fact that are cmmn t the class must exist. The cmmnality test is t be liberally applied and is satisfied if there is at least ne cmmn issue f fact r law that affects all class members. See Trief v. Dun & Bradstreet Crp., 144 F.R.D. 193, 198 (S.D.N.Y. 1992). Typicality: Typicality requires that disputed issues f law r fact ccupy essentially the same degree f centrality t the named plaintiff s claims as t that f the ther members f the prpsed class. Caridad, 191 F.3d at 293, citing, Krueger v. New Yrk Tel. C., 163 F.R.D. 433, 442 (S.D.N.Y. 1995). The cmmnality and typicality requirements tend t merge and bth serve as guidepsts fr determining whether... the named plaintiff s claim and the class claims are s inter-related that the interests f the class members will be fairly and adequately prtected in their absence. Caridad, 191 F.3d at 291, citing, Gen. Tel. C. v. Falcn, 477 U.S. 147, 157 n.13 (1982). Adequacy f Representatin: Plaintiffs and their cunsel must demnstrate they will adequately prtect the interests f the class members. This requirement is satisfied if: (1) plaintiffs interests are nt antagnistic t the interests f the class members; and (2) plaintiffs attrneys are qualified, experienced and able t cnduct the litigatin. See Baffa v. Dnaldsn, Lufkin & Jenrette Securities Crp., 222 F.3d 52, 60 (2d Cir. 2000). b. Rule 23(b) Plaintiffs als must satisfy ne f the subparts f Rule 23(b) t prceed as a class actin. Rule 23(b)(2), 2 which des nt prvide ntice t the absent class members r the right t pt ut, applies in thse cases where plaintiffs are primarily seeking injunctive relief, althugh mnetary damages that are incidental and flw frm the injunctive relief may als be sught. Rule 23(b)(3), 3 which des prvide ntice t absent class members and the right t pt ut, requires that the class questins predminate ver individual issues and that the class actin is superir t ther methds fr reslving the claims. 2 Rule 23(b)(2) prvides fr certificatin f a class when the party ppsing the class has acted r refused t act n grunds generally applicable t the class, thereby making apprpriate final injunctive relief r crrespnding declaratry relief with respect t the class as a whle. 3 Rule 23(b)(3) prvides fr certificatin when the curt finds that the questins f law r fact cmmn t the members f the class predminate ver any questins affecting nly individual members and that a class actin is superir t ther available methds fr the fair and efficient adjudicatin f the cntrversy. The curt shuld cnsider the fllwing factrs in making this determinatin (A) the interest f members f the class 12

13 2. Recent Cases Certifying Bth Cllective/Class Actin Claims Reversing district curt s denial f class certificatin t thse state law claimants wh did nt pt in t cllective actin. Lindsay v. Gv t Emplyees Ins. C., 448 F.3d 416 (D.C. Cir. 2006). Aut insurance claims adjusters alleged that they were misclassified as exempt emplyees and nt paid vertime. District curt fund that adjusters natinwide were similarly situated and rdered ntice. It then exercised supplemental jurisdictin ver the New Yrk state law claims f nly thse individuals frm New Yrk wh had pted in t the FLSA actin by filing a cnsent t jin frm. The appellate curt reversed the district curt s denial f class certificatin f the state law claimants wh did nt als pt in t the FLSA actin and remanded with instructins t determine whether it may decline t exercise supplemental jurisdictin ver the state law claims. The appeals curt stated, hwever, that the district curt s ability t decline t exercise supplemental jurisdictin ver thse class members with state law claims nly is circumscribed. It further stated that it did nt view the difference between the pt-in prcedure prvided by sectin 216(b) fr FLSA claims and the pt-ut prcedure fr state law claims prvided by Rule 23 as fitting the exceptinal circumstances/ther cmpelling reasns language that wuld allw it t decline jurisdictin under the supplemental jurisdictin statute. Curt refused t dismiss actin dual filed under FLSA and Pennsylvania state law. Lehman v. Legg Masn, Inc., 2007 WL (M.D. Pa. 2007). Securities brkers sued alleging that they were nt paid vertime and wrngful deductins were made frm cmpensatin. Defendants filed a mtin t dismiss, arguing that the plaintiff may nt jin in a single actin in federal curt a FLSA pt in cllective actin with a state pt ut class actin because s ding creates an impermissible cnflict with Cngressinal intent in drafting the FLSA and the Rules Enabling Act. The curt disagreed. The curt fund that in enacting the FLSA Cngress acted with respect t federal claims and did nt intend t limit the substantive remedies available under state law r the prcedural mechanism under which such remedies may be pursued. The curt further held that the Rules Enabling Act did nt preclude dual filed suits such as this. FLSA cause f actin certified as cllective actin and New Yrk Labr Law claims certified pursuant t Rule 23. Iglesias-Mendza v. LaBelle Farm, Inc., 239 F.R.D. 363 (S.D.N.Y. 2007). Wrkers at pultry prcessing plant sught damages fr failure t pay minimum wage and vertime under the FLSA and New Yrk Labr Law. The curt fund that plaintiffs met their minimal burden f shwing they are similarly situated t prpsed class members under FLSA at the preliminary certificatin stage based n their declaratins. The curt als in individually cntrlling the prsecutin r defense f separate actin; (B) the extent and nature f any litigatin cncerning the cntrversy already cmmenced by r against members f the class; (C) the desirability r undesirability f cncentrating the litigatin f the claims in the particular frum; (D) the difficulties likely t be encuntered in the management f a class actin. 13

14 exercised supplemental jurisdictin ver the state law claims and certified a Rule 23 class. The curt nted that it and ther curts in this district had n difficulty in administering previusly dual filed actins. FLSA cause f actin certified as cllective actin and Califrnia Labr Cde vilatins certified pursuant t Rule 23. Mrtn v. Valley Farm Transprt, Inc., 2007 WL (N.D. Cal. 2007). Tw frmer milk truck drivers sught damages fr failure t pay vertime and missed meal and rest perids under the FLSA and Califrnia Labr and Business and Prfessins Cdes. Plaintiffs submitted their wn declaratins, as well as declaratins f tw frmer drivers wh had pted in t the actin. All fur drivers stated that they regularly wrked mre than 40 hurs and were nt paid vertime and were tld by managers and the wner that the cmpany wuld nt pay vertime. In certifying the cllective actin, the curt rejected defendants arguments that there were ver 30 different rutes that drivers culd be assigned, that drivers earned different hurly rates, that sme drivers had additinal respnsibilities and that the drivers had different wrk schedules which wuld be relevant t determining each class members damages. The curt fund persuasive plaintiffs evidence f a cmmn plicy f nt paying vertime pay, standardized jb qualificatins fr the driver psitin, and descriptins f the duties f the driver psitin. The curt als certified a class, pursuant t Fed.R.Civ.P. 23, based n the Califrnia vertime and meal and rest perid claims. The curt fund that cmmn questins included whether drivers received vertime pay and drivers were prvided meal and rest breaks. Additinally, the curt nted that declaratins submitted by plaintiffs stated that n class members expressed an interest in pursuing a separate independent actin and that numerus putative class members expressed an interest in participating in the case. Curt certified a FLSA pt in cllective actin and a class actin based n Califrnia state law claims. Rmer v. Prducers Dairy Fds, Inc., 235 F.R.D. 474 (E.D. Cal. 2006). Plaintiffs were rute sales drivers fr dairy prducer wh sued fr vertime pay vilatins under the FLSA and Califrnia Labr and Business and Prfessins Cdes. The curt fund that the allegatins in the cmplaint were sufficiently detailed t establish the basis fr a cllective actin. The curt als reviewed declaratins f tw emplyees and fund that they were sufficient t establish that the utside sales exemptin did nt preclude cnditinal certificatin. The curt thus certified a cllective actin, but declined t include equivalent delivery psitins in the definitin f the cllective actin because the term was nn-specific. The curt als certified a class actin, pursuant t Fed.R.Civ.P. 23, based n the Califrnia state law claims. 3. Recent Cases Certifying Cllective Actin, But Nt Class Actin Curt certified FLSA cllective actin, but refused t certify Pennsylvania state law claims. Evans v. Lwe s Hme Centers, Inc., 2006 WL (M.D. Pa. 2006). Department managers and assistant department managers at 36 14

15 Lwe s stres in Pennsylvania brught suit seeking unpaid vertime. The curt granted cnditinal certificatin and 499 emplyees had pted in t the FLSA actin after ntice. The curt then granted final cllective actin certificatin. It refused, hwever, t exercise supplemental jurisdictin ver the state law claims and certify a Rule 23 class, because the disparity in numbers between the FLSA pt in plaintiffs [499] and the state law Fed.R.Civ.P. 23 plaintiffs [1,317] wuld flaunt the Cngressinal intentin that FLSA claims prceed as an pt in scheme. Cnditinal certificatin f a 216(b) cllective actin is apprpriate, but class certificatin f Califrnia state law claims under Rule 23 is nt. Analysis f differences in jb duties is better dne at the decertificatin stage and nt the certificatin stage regarding the FLSA claims. Edwards v. City f Lng Beach, 467 F. Supp. 2d 986 (C.D. Cal. 2006). Plice fficers brught claims against the city fr failure t prvide meal and rest perids and reimbursement f csts f maintaining and cleaning safety equipment. Under the lenient cnditinal certificatin standard, the curt certified the actin after reviewing the cmplaint, affidavits and supprting exhibits and finding that the members f the class were similarly situated. Althugh defendant fcused n the differences in jb duties between the named plaintiff and ther ptential class members, the curt fund that these arguments were better decided in a mtin t decertify the class. The curt denied plaintiffs mtin fr Rule 23 class certificatin, stating that the Rule 23 class was based slely n state law claims and raised jurisdictinal cncerns. The curt questined its exercise f supplemental jurisdictin if nly a few plaintiffs pted int the FLSA class after it certified a Rule 23 state law class, because the curt wuld then be faced with the peculiar situatin f a large number f plaintiffs in the state law class wh have chsen nt t prsecute their federal law claims. The curt further nted that allwing a Rule 23 class actin wuld frustrate the purpse f requiring plaintiffs t pt in t 216(b) cllective actins. The curt thus fund that the 216(b) cllective actin was a mre apprpriate vehicle t hear the state law claims f plaintiffs wh are interested in pursuing such claims and held that any persn wh pts in t the FLSA cllective actin may pursue any pendent state law claims they have. III. CASE INVESTIGATION AND EVALUATION A. General The decisin whether t file a cllective actin r hybrid lawsuit is an imprtant ne. The factrs that shuld be cnsidered in making the case selectin decisin include (1) the nature f the wrngful cnduct; (2) the quality f the ptential class representatives; (3) whether thers are affected; (4) the size f the ptential class; (5) the basis fr the belief that a vilatin f law ccurred; (6) the size f the cmpany; (7) the type f jb(s) and industry invlved; (8) the legal theries by which the allegatins may be prven; (9) the prspects fr efficiently and cst effectively litigating the case; (10) the slvency f the defendant; and (11) the venue in which the case may be litigated. 15

16 Significant resurces shuld be devted t the investigatin f a cllective r class case. The end result will smetimes be a decisin that there is n case r the case is nt suitable fr class treatment. The case investigatin shuld be frntend laded s that plaintiffs cunsel can hit the grund running, after filing a cmplaint and engage immediately in meaningful discvery and prepare fr the certificatin mtins. Everything the plaintiffs lawyer des frm the pint f the initial intake frward shuld be undertaken with an eye tward btaining class certificatin. It is imprtant t have a histrical perspective n the types f cases that have been successful. Cmpany wide practices prevalent in certain industries may have imprperly classified emplyees as exempt frm the requirement t pay vertime. Fr example, certain patterns f wage and hur vilatins may exist in particular industries, such as retail stres, restaurant chains, insurance cmpanies, mrtgage cmpanies, and financial services cmpanies. B. Investigatin and Evaluatin Tls Selectin f Named Plaintiffs. Selectin f apprpriate named plaintiffs is critical. The individuals selected as named plaintiffs may nt be the first individuals wh cntracted yu r wh were interviewed abut a ptential case. It is imprtant t interview as many ptential class members as yu can befre selecting the named plaintiffs. Amng the factrs t cnsider in selecting a named plaintiff are (1) the strength f the individual s claims; (2) whether the individual s claims are timely; (3) whether the individual s claims are typical f thse f the class members; (4) whether the individual is similarly situated t the ptential pt in plaintiffs; (5) whether the individual will be an adequate class representative; (6) whether the individual has any cnflicts with ther ptential class representatives; (7) whether the individual understands and is willing t take n the rle f a class representative; (8) the individual s demeanr; (9) whether the individual cmes with any baggage that can undermine the case, distract frm the fcus f the litigatin, r lead t cllateral litigatin, such as a terminatin claim; and (10) whether the individual is credible. If there is any dubt, a check f criminal, bankruptcy and credit recrds shuld be dne with the individual s cnsent. Factual Investigatin. The factual investigatin is nt nly the basis fr deciding whether t file an actin, but the infrmatin cllected during this phase als will be useful in drafting the cmplaint, crafting a discvery strategy, and mving fr class certificatin nce the case is filed. Cmpany infrmatin. It is imprtant t learn as much as yu can abut the cmpany frm publicly available infrmatin. In the case f a public cmpany, SEC filings and annual sharehlder reprts prvide relevant 16

17 infrmatin abut the cmpany, including (1) the cmpany s rganizatinal structure; (2) the number, lcatin and type f wrkplace facilities; and (3) the ttal number f emplyees in the wrkfrce. News articles als can prvide helpful infrmatin. D nt frget t search the cmpany s Internet website, it can be a rich surce f infrmatin. Witness interviews. It is imprtant t interview as many witnesses and ptential class members as pssible t gather direct evidence f discriminatry cnduct. This includes, class members, frmer managers f the cmpany and nn-class member current and frmer emplyees wh have infrmatin regarding the cmpany s emplyment practices. Sme f the mst helpful witnesses are recent past managers and emplyees wh are willing t cperate because they d nt fear retaliatin. It is imprtant, hwever, t adhere t ethical prhibitins against cntact with currently emplyed managers r discussing infrmatin prtected by the cmpany s attrney-client privilege with any witness. Dcument review. It als is imprtant t review dcuments btained frm clients and witnesses, such as jb descriptins, emplyee handbks, pay plans, wage statements, training recrds and time recrds, if any. Other Case Evaluatin and Selectin Cnsideratins. In additin t gathering the infrmatin described abve regarding the cmpany, plaintiffs, class members and ptential classwide claims, cnsideratin f the fllwing issues is als imprtant. Financial Status f Prspective Defendant. The ptential defendant needs t have sufficient financial stability and resurces t pay the ptential judgment and cntinue in business and prvide jbs. Is the cmpany stagnant r is it grwing? If the cmpany s stck is publicly traded, SEC filings are a surce f infrmatin that shuld be reviewed. In sme instances, it may be apprpriate t retain a financial r investment expert r investigatr t advise yu abut the financial status f the cmpany. Reputatin f the Cmpany. Cmpanies ften have reputatins as gd r bad emplyers. Reputatin is nt dispsitive f whether a class actin shuld be filed and even the best cmpanies have prblems. Hwever, cmpanies that are insensitive t the prblems f discriminatin, fr example, ften are similarly insensitive t the requirements f the wage and hur laws. Surces f infrmatin regarding a cmpany s reputatin include past cmplaints yur firm may have received abut the cmpany; LEXIS, Westlaw and curt dcket searches fr past and pending litigatin against the cmpany; administrative cmplaints btained thrugh FOIA and public recrds act requests; and searches fr news articles abut the cmpany and its emplyee relatins. 17

18 IV. Tactical Cnsideratins. Befre deciding t file a cllective r class lawsuit, plaintiffs cunsel must cnsider the pssible venues and available decisin-makers, judges and jury pls. Liability evidence has t be particularly strng where there may be less sympathetic fact finders. Scpe f the Class. Hw yu define the ptential class is extremely imprtant and must be carefully cnsidered. D nt verreach. Assessment by a Jury Cnsultant. In cases that wuld be triable t a jury, a quick pinin n the industry setting, nature f claims, and ptential themes by a jury cnsultant culd prvide insights relevant t selecting r structuring the case. PRE-FILING AND EARLY LITIGATION STRATEGIES A. Cnsideratins fr Drafting the Cmplaint The relief requested and claims alleged will dictate whether the case is tried t a jury r the curt. The chice f frum, i.e., state r federal curt and, in sme cases, venue, is an imprtant decisin. Althugh Fed. R. Civ. P. 8(a) requires nly a ntice pleading, the cmplaint shuld be detailed and tell a cmpelling stry f treatment f emplyees that vilates the law. There are a number f reasns fr this. A well pleaded cmplaint will supprt the mtin fr cnditinal certificatin and als can be used during discvery supprt requests fr dcuments r depsitins. The press will likely be mre interested in a detailed cmplaint. B. Filing the Cmplaint and Publicity As discussed abve, the thrugh backgrund investigatin cnducted befre drafting the cmplaint permits the filing f mre than a ntice cmplaint. The cmplaint shuld present t the curt and public a cmpelling, detailed stry and named plaintiffs with sympathetic claims. Publicity at the time the cmplaint is filed is very imprtant in rder t cmmunicate with and infrm absent class members abut the lawsuit and btain infrmatin frm ptential witnesses wh identify themselves in respnse t the publicity. This is particularly imprtant in a FLSA cllective actin because the statute f limitatins cntinues t run n each class member s claim until he r she pts in t the actin. Additinally, early witness declaratins btained frm individuals wh cntact yu can be used t supprt the mtin fr cnditinal certificatin. 18

19 The cmbinatin f publicity, the use f an 800 telephne number, and prmpt respnse t calls can be an effective way t lcate witnesses and cmmunicate with class members. Be aware f and fllw r seek relief frm lcal rules limiting cmmunicatins with class members. C. Filing the Mtin fr Cnditinal Certificatin Plaintiffs can meet their burden at the ntice mtin stage thrugh detailed allegatins in the cmplaint and supprting affidavits frm ptential class members. Graysn, 79 F.3d at Because plaintiffs want early ntice, they will have t rely n evidence gathered during their pre-suit case investigatin t supprt their mtin fr ntice. Plaintiffs cunsel shuld nt engage in prtracted discvery prir t bringing a mtin fr ntice. On the ther hand, they will want t engage in early limited discvery t btain the names and addresses f current and frmer emplyees wh shuld be sent ntice. Despite the lenient standard at the ntice stage, plaintiff s cunsel shuld take care nt t verreach because curts will refuse t apprve ntice requests that are nt sufficiently supprted. See e.g. Madrid v. Minlta Bus. Slutins, Inc., 2002 U.S. Dist. LEXIS (S.D.N.Y. 2002) (denying ntice because plaintiff relied n single affidavit frm ne ffice in cmpany with 41 ffices natin wide); Bernard v. Husehld Int l, Inc., 231 F. Supp. 2d 433 (E.D. Va. 2002) (lack f evidence f cmpany wide plicy caused curt t limit ntice t tw ffices in Virginia and deny ntice as t the ther 18 ffices in 14 states. T ensure that the curt authrizes early ntice, plaintiffs cunsel shuld take the fllwing steps t supprt their mtin fr ntice: Draft the cmplaint with sufficient detail t allege and describe a cmmn cmpany plicy r practice that vilates FLSA and affects a number f emplyees wh are perfrming similar jb duties with the same rate f pay; File declaratins r affidavits frm plaintiffs and ptential pt ins demnstrating the existence and scpe f a plicy r practice that vilates FLSA, such as the misclassificatin f a grup f emplyees as exempt at all f emplyer s ffices; The declaratins shuld state with particularity that: the testimny is based n persnal knwledge f the facts, nting declarant s psitin and dates f emplyment with defendant cmpany; identify the cmpany practice that vilates FLSA; i.e., failure t pay vertime t assistant managers at 500 fast fd restaurants thrughut the cuntry because they are misclassified as exempt; 19