Earlier this week, the Second Circuit agreed to hear an appeal from the Southern District of New York concerning the impact of Comcast on wage and hour class actions. The court will consider this appeal “in tandem” with Roach v. T.L. Cannon Corp.—another employment class action from the Northern District of New York. While other Circuits have considered Comcast generally—including the Ninth Circuit’s ruling in Leyva v. Medline Indus., Inc., a factually distinguishable wage and hour case—the Second Circuit is now in position to render the most substantive and far-reaching interpretation of Comcast in the wage and hour context to date.
As we previously posted, the U.S. Supreme Court ruled earlier this year that a Rule 23 class action against Comcast Corp. was improperly certified because “[q]uestions of individual damage calculations will inevitably overwhelm questions common to the class.” Lower federal courts have since split on whether Comcast’s holding essentially creates a new or heightened standard for class certification. The Second Circuit’s granting of leave to appeal in these two cases indicates that it is ready to address this very question (i.e., what is the impact of individual damages on the certification process?).
In this suit, the plaintiffs asserted that their employer failed to compensate assistant store managers for hours worked in excess of 40 hours per week in violation of the FLSA and New York Labor Law (NYLL). Before the Comcast decision, the district court certified a Rule 23 class with respect to plaintiffs’ NYLL claims. The employer filed a motion for reconsideration in light of Comcast since the damage calculations for each of the 750 class members would be “inherently individualized” and plaintiffs offered no model to measure damages on a class-wide basis.
In ruling on the defendant’s motion, the district court noted that subsequent decisions applying Comcast have generally fallen into three categories: (1) courts distinguishing Comcast and finding a common formula at the class certification stage (like Medline); (2) courts applying Comcast and rejecting class certification on the ground that no common formula for damages exists (like Roach); and (3) courts embracing a “middle approach” whereby they employ Rule 23(c)(4) and maintain class certification as to liability only, leaving damages for a separate, individualized determination. In light of the individualized damages for the assistant store managers at issue, the district court opted for the “middle approach” by affirming class certification with respect to liability, while “partially decertify[ing]” the class by requiring plaintiffs to proceed individually on their damages claims (assuming liability is found).
By granting leave to appeal for these two cases (i.e., cases which embody two of the three approaches taken by the lower courts), it seems inevitable that the Second Circuit will rule on what it considers to be the proper class certification analysis under Comcast. Its holding may have significant impact on wage and hour cases throughout the country since those cases often involve the calculation of highly-individualized damages for each class member. Employers and employees will, therefore, watch this case carefully to see if the Second Circuit rules that, pursuant to Comcast, the existence of individualized damages is a reason to deny class certification in full, only with respect to damages, or not at all.