Co-authored by Noah Finkel, Kristin McGurn, and Laura Reasons

The United States District Court for the Northern District of Illinois recently decertified an FLSA collective action and denied certification of a Rule 23 class in Camilotes v. Resurrection Health Care Corporation, No. 10-cv-366 (Oct. 4, 2012).  Camilotes is part of a rash of cases filed around the country over the last several years against hospitals and other health care providers alleging that defendants’ policies or practices of automatically deducting thirty minutes for an unpaid meal period violate the FLSA and various state wage and hour laws.

In Camilotes, Resurrection’s policy states that non-exempt employees scheduled for a shift of at least 7.5 hours will receive a thirty-minute unpaid meal period.  Instead of requiring an employee to clock out for the meal period and then back in, Resurrection’s time keeping system automatically deducts 30 minutes of work time for the meal period from an employee’s hours, unless that employee reports that he or she did not take an uninterrupted meal period.  The policy also directs employees to obtain manager approval to work through a meal period.  Plaintiffs allege that they were regularly required to work through all or part of their meal periods without being paid for the time worked.

In decertifying the FLSA collective action, the court discussed at length the differences in how the policy was implemented and enforced by different managers in different departments.  It found that individual issues would predominate over any common issues and, moreover, individualized defenses revealed in discovery made continued certification inappropriate.  Specifically, the plaintiffs reported to over 200 supervisors and performed divergent nursing duties on different shifts; the number of meals they allegedly missed varied greatly; the rate at which they canceled the deduction varied widely; the methods of reporting a missed meal varied by department; the defendant’s knowledge of missed meals varied by Plaintiff; and whether missed meals actually resulted in overtime varied by Plaintiff.

The facts of Camilotes are very similar to those in a number of cases brought around the country by the same (and other) plaintiffs’ class action counsel.  The Camilotes decision is especially significant for employers — both in the health care setting and in other industries — for a number of reasons.

First, Camilotes contains an employer-friendly recitation of the standard for certification of a class action under Rule 23 in wage and hour cases.  It does not cite the Seventh Circuit’s decision in Ross v. RBS Citizens, which is the first and, to date, only federal appellate court decision to assess the application of the Supreme Court’s Wal-Mart Stores, Inc. v. Dukes case in the wage and hour class context.  In Ross, the Seventh Circuit held that Dukes had no impact on a district court’s decision to certify under Rule 23(b)(3) a class of 1,100 individuals, most of whom claimed that they worked off the clock.  The Seventh Circuit found that Dukes’ broad language regarding Rule 23’s commonality requirement has no application outside the case’s exceptional facts — a class of millions asserting discrimination claims that required proof of individual intent.  That court also concluded, in a footnote, that the due process concerns described in Dukes apply only to 23(b)(2) classes, not (b)(3) classes.  Not only does Camilotes not cite to Ross, or incorporate its reasoning, but it cites instead to Dukes, albeit only for recitation of the standard for class certification.  See previous blog discussion of Dukes and Ross.

Second, Camilotes delivers a significant setback to automatic meal period deduction cases, ruling that it would be “impractical and unfair” to proceed to trial as a collective action.  The facts relied on and legal analysis in Camilotes seem to signal that so-called “meal break” cases are not sustainable as class cases.  Although in Camilotes there were huge differences in the Plaintiffs’ experiences (for example, the class covered 8 different hospitals), most of the facts that the Court found compelling present in virtually every hospital setting.  Accordingly, it appears that courts may be sending the message that automatic meal period deduction cases are difficult to try on a class-wide or collective basis.  The Sixth Circuit’s decision decertifying an FLSA collective action in Frye v. Baptist Memorial Hospital, Inc., No. 11-5648 (6th Cir. Aug. 11, 2012), also suggested the same.

Third, Camilotes is yet another illustration of the burden on employers imposed by the very lenient standard for initial collective action certification adopted by many courts, a phenomenon discussed frequently in this blog.  Although the parties in Camilotes stipulated to initial certification, courts often grant, sometimes as a matter of course, hotly-contested motions for conditional FLSA certification.  While employers have a very good chance of eventually getting the FLSA class decertified and defeating Rule 23 certification (as illustrated by Camilotes), these victories come at a great cost and often only after countless months and dollars are spent on litigation of the case, including burdensome discovery.  In a case like Camilotes, where ultimate certification is unsustainable, it makes little sense for a court to grant initial certification,  allow notice to the purported class, and engage in full discovery.  Nonetheless, courts often hold that they cannot look to the merits or apply the more stringent second-stage standard on a motion for conditional certification.  Accordingly, extensive resources are often spent on these cases, only to have them ultimately fail as class or collective cases.

This case is certainly a victory for Resurrection and, hopefully, a promising sign for other employers faced with automatic meal period deduction claims.  It also serves, however, to illustrate the high cost of litigation inherent in the collective action mechanism as it currently is interpreted by most courts.