Seyfarth Shaw has updated its definitive guide to the litigation of wage and hour lawsuits. Co-authored by three Seyfarth partners and edited by the chair of the firm’s national wage-hour practice, Wage & Hour Collective and Class Litigation is an essential resource for practitioners. The unique treatise provides insight into litigation strategy through all phases of wage & hour lawsuits, and is now updated with additional significant cases through early 2015.

Among many other topics, the treatise’s authors examine how employers in multiple industries are targeted for wage-hour lawsuits and provide substantive, procedural and practical considerations that determine the outcome of such actions in today’s courts. Principally designed to assist employment litigators and in-house counsel, the treatise also proves useful to senior management seeking to fend off wage-hour actions before they strike.

Authors Noah Finkel, Brett Bartlett and Andrew Paley, who practice in the firm’s Chicago, Atlanta and Los Angeles offices respectively, as well as Boston-based Richard Alfred, who is Chair of Seyfarth’s National Wage & Hour Litigation Practice Group, are each experienced wage and hour litigators who have handled numerous collective and class actions asserting violations under both state and federal law.

Wage & Hour Collective and Class Litigation covers the complex rules surrounding all types of wage and hour lawsuits. These include claims under the Fair Labor Standards Act, claims under state wage and hour laws, or hybrid cases involving both, as well as special issues involving government contractors. It provides readers guidance around: how to respond to a wage and hour complaint; what to consider when deciding whether to remove a case to federal court; how to assess the particular merits of a claim; whether to settle; how to oppose plaintiffs’ motion to facilitate notice for conditional certification; what kinds of affirmative defenses are best; and how to tilt the odds in favor of the defense.

In its fifth update to the treatise, Wage & Hour Collective and Class Litigation features discussions of recent decisions from appellate and trial courts and their effect on wage and hour litigation, emphasizing the following developments:

  • The United States Supreme Court’s decision in Integrity Staffing Solutions v. Busk in which the Court held that time spent by employees going through anti-theft metal detectors at the end of their shifts was not compensable because it was not integral or indispensable to the employees’ principal activities.
  • The United States Supreme Court’s decision to hear Tyson Foods v. Bouaphakeo, a case that will provide the Supreme Court with the opportunity to clarify the extent to which Wal-Mart Stores, Inc. v. Dukes applies to FLSA collective actions.
  • Federal District Court decisions refusing to follow the California Supreme Court’s decision in Iskanian and ruling that the FAA preempts California’s rule against the waiver of PAGA claims.
  • The Ninth Circuit joining the First, Second and Third Circuits in requiring allegations that a plaintiff worked more than 40 hours in a given work week without being compensated for those additional hours to avoid a motion to dismiss, and the Eighth Circuit requiring proof of such conduct to avoid summary judgment.
  • A number of Federal District Court cases specifying how notice of conditional certification must be provided and what must be contained in the notice, including notifying potential class members that they could be liable for costs.

The 2015 update to Wage & Hour Collective and Class Litigation is published by American Lawyer Media’s Law Journal Press.  It is available online at www.lawcatalog.com.

Authored by Steve Shardonofsky

In the beginning, the U.S. Supreme Court decided in Genesis Healthcare that an FLSA case is moot when the plaintiff accepts an offer of full relief. As we noted in our previous blog, the decision left open, however, the question of what happens when the plaintiff affirmatively declines the offer or when the offer expires, which is what happens in most cases (under Rule 68, an offer not accepted within 14 days is considered withdrawn). In addition, because Genesis Healthcare involved a collective action under the FLSA as opposed to a class action under Rule 23, the Supreme Court did not answer whether a Rule 68 offer of full relief to a class representative moots a wage-hour action that includes a Rule 23 claim under state law (or a case that involves only state law wage-hour claims). The Court may soon answer these questions and write the second, much-anticipated chapter in this legal saga.

On May 18, the U.S. Supreme Court agreed to review in Gomez v. Campbell-Ewald Company whether a potential Rule 23 class under the Telephone Consumer Protection Act may be mooted by an offer of complete relief. According to the class-action complaint filed by Jose Gomez in March 2010, Campbell-Ewald Company allegedly sent thousands of unsolicited text messages through a subcontractor in violation of the TCPA as part of the U.S. Navy’s recruitment efforts. While Gomez was still the only named plaintiff in the case and before the case was certified as a class action, the company offered to pay him (under Rule 68) for each unsolicited text message substantially more than the damages he could have recovered under the statute. In September 2014, the U.S. Ninth Circuit Court of Appeals reversed the lower court’s order granting summary judgment in favor of the company on grounds of derivative sovereign immunity and holding that the putative Rule 23 class action could continue even though the defendant offered full relief to the sole plaintiff before he moved for class certification. As the U.S. Chamber of Commerce noted in its amicus brief in support of the writ for certiorari, the 9th Circuit’s ruling harms employers and the judicial system because it encourages lawsuits and discourages settlements. More fundamentally, however, the ruling harms plaintiffs because it “allows putative class counsel to maintain federal lawsuits for their own benefit, even when their only client stands to gain nothing,” and there is no longer a live case or controversy.

In a reply petition for a writ of certiorari filed by Campbell-Ewald, the company emphasized that the case “presents a clean opportunity to decide the issue left open in Genesis Healthcare, as well as the related–and equally important–question of when an offer of complete relief moots a class claim.” The Court’s guidance on these issues is necessary for employers and wage-hour practitioners alike, because a Circuit split exists on whether a Rule 68 offer of full relief to a class representative moots a Rule 23 class action. Most recently, the 11th Circuit in Stein v. Buccaneers Limited Partnership joined the 3rd, 5th, 9th, and 10th Circuits in holding that it does not. By granting the writ, the Supreme Court may well be ready to answer this important question once and for all, and provide additional guidance on whether a court loses jurisdiction of an FLSA case and must dismiss it before it blossoms into a collective action after an unaccepted offer of judgment.

Like Genesis Healthcare, this the case is certain to prove to be a key precedent in wage-hour cases–under the FLSA and Rule 23. So stay tuned … we will keep our readers updated on any future developments.

Authored by Geoffrey Westbrook

After more than four years of litigation, Citibank hauled in a significant victory last week against putative class and collective actions in Ruiz v. Citibank. Personal bankers from California, New York, Washington D.C. and other states alleged that Citibank withheld overtime pay under a nationwide scheme encouraging off-the-clock work. Although finding “systematic violations at the branch level,” a New York federal district court held that the plaintiffs failed to produce sufficient evidence to connect those violations to an uniform, overarching company practice. The court denied the plaintiffs’ bid for class certification of state law claims and decertified a collective action under the Fair Labor Standards Act.

Ruiz is part of a growing trend among trial courts emphasizing the need for evidence of an unlawful company policy in nationwide class and collective actions. Modern class actions must satisfy the “rigorous” Rule 23 certification standard articulated by the U.S. Supreme Court in Wal-Mart Stores, Inc. v. Dukes. Collective actions, however, are assessed under the FLSA’s “similarly situated” test. As explained below, the court in Ruiz blurred the lines between these two distinct standards, requiring evidence of an illegal company policy or uniform nationwide managerial conduct supporting the plaintiffs’ claims in both types of actions. Without such evidence, even with nationwide violations at the local level, under Ruiz both must fail.

Background

Digna Ruiz, a New York resident, filed a complaint seeking to represent a nationwide collective action under the FLSA and a class action under state labor law. He alleged that Citibank failed to compensate its personal bankers for overtime hours by setting high production targets and strictly limiting overtime work. A month later, residents of Washington, D.C., Illinois, Virginia and California filed nearly identical collective and class actions under the FLSA and laws of their respective states. These matters were consolidated in the U.S. District Court for the Southern District of New York.

After limited discovery, the court granted conditional certification of the FLSA collective action. More than 400 personal bankers opted in, and discovery proceeded in anticipation of the plaintiffs’ motion for class certification and Citibank’s motion to decertify the collective action.

Denial of State Law Class Certification Based on Rule 23 and Dukes

Class certification was denied based almost entirely on the “commonality” requirement of Rule 23. To certify a nationwide class, among other requirements, there must be some evidence of a common policy or management practice that is subject to testing at the class-wide level. The court likened the case to Dukes, where written corporate policies were lawful and managers were lawfully given significant discretion over pay and promotions. In the absence of an illegal policy, Dukes requires evidence showing an unlawful corporate practice connecting Citibank’s more than 900 branch offices across the country. Evidence of a local or even regional policy will not likely be sufficient to certify a nationwide class.

The plaintiffs failed to show Citibank’s lawful policies uniformly translated themselves into unlawful managerial behavior across the country. Anecdotal evidence demonstrated conflicting experiences among bankers nationwide in which some personal bankers felt pressured to work off the clock, while others had no issue meeting performance goals. There was significant evidence that certain managers pressured bankers not to report overtime hours, but at those and other branches many were properly paid overtime, indicating at best an inconsistent practice. Knowledge of overtime violations rarely percolated above the district level, and when it did, immediate efforts were made by area management to rectify the violations. Thus, the plaintiffs could not establish a common management approach — on a nationwide basis — in exercising their considerable discretion and resulting in unpaid overtime through Citibank branches as a whole. Evidence of even systematic violations at the branch level (and in some cases reaching up to senior management) was not sufficient to certify a nationwide class.

Decertification of FLSA Collective Action

In decertifying the FLSA collective action, the court followed a rising trend analogizing the “commonality” requirement of Rule 23 to the “similarly situated” test for collective action ultimate certification. In this vein, the Ruiz court granted Citibank’s decertification motion. It relied on the same evidence underlying its class action certification denial, holding that “Plaintiffs have advanced the ball very little in demonstrating a common plan or scheme.” Secondhand statements regarding an alleged companywide policy to force unpaid overtime by branch managers, in the face of Citibank’s lawful overtime and performance policies, was not sufficient to show personal bankers across the country were “similarly situated.” All told, evidence of individual overtime violations at the district level will not alone carry the day for purposes of class and collective action certification.

Conclusion

Ruiz represents a growing movement of the courts seeking to bridge the analytical differences between class and collective actions. The result of this trend is a greater uniformity in wage and hour decisions based on parallel theories. Logically, a putative class of plaintiffs failing to meet Rule 23 “commonality” requirements should not be permitted to proceed with a collective action either. We will continue to track district courts throughout the country in hopes that this common sense line of cases increases in popularity.

Co-authored by Gerald L. Maatman, Jr. and Scott Rabe

“Sometimes surrender is the best option.”  That is how Judge Raymond J. Dearie of the U.S. District Court for the Southern District of New York described how the Rule 68 Offer of Judgment may be used by employers to pay—i.e., “pick off”—individual plaintiffs to defeat a broader and significantly more costly FLSA collective action in his recent opinion in Anjum v. J.C. Penney Co., Inc.. The Anjum decision provides the most fulsome analysis of the current state of the law in the Second Circuit regarding Offers of Judgment made in FLSA cases following the Supreme Court’s important decision last year in Genesis Healthcare Corp. v. Symczyk, which we wrote about here. And the decision provides hope for employers that the Offer of Judgment “pick off” strategy may be used with great effect to eliminate FLSA collective actions early and at far less cost.

Facts Of The Case

In Anjum, defendant J.C. Penney made offers of judgment to all named plaintiffs in a FLSA collective action. The named plaintiffs rejected the offers, and J.C. Penney moved to dismiss the action as moot. After the original offers of judgment were made and rejected, more than fifty new plaintiffs opted-in to the suit. The Court denied J.C. Penney’s motion on two primary bases: (1) the Court found that there was a question of fact as to whether J.C. Penney’s offers of judgment fully satisfied each of the Plaintiff’s claims, and (2) even if complete offers of judgment had been made, the case was not moot because more than 50 opt-ins joined the lawsuit before judgment had been entered, and a matter is not moot, and the Court retains subject matter jurisdiction, until judgment is entered.

Lessons Of The Ruling

Notwithstanding the result in Anjum, the decision provides significant fodder for employers looking to shortcut a potentially onerous and expensive FLSA collective action by using the offer of judgment.

(1)  Anjum re-emphasizes that the “pick off” is a legitimate strategy for obtaining dismissal of FLSA actions.

The Court in Anjum not only rejected the notion that a “pick off” strategy is disfavored in the FLSA context, it blessed the strategy as a legitimate means for employers to potentially avoid the significant cost of litigating and settling a FLSA collective action. Employers should, therefore, evaluate the feasibility of an early “pick off” strategy as a means of short-cutting a potentially expansive and costly FLSA collective action.

(2)  The “pick off” strategy applies even if a motion for conditional certification is pending.

The Court in Anjum not only endorsed the “pick off” as a valid means of defeating FLSA collective actions, but also opined that the “relation back” doctrine also does not apply in the FLSA context. The “relation back” doctrine stands for the proposition that after class certification is granted, an event in the interim that moots the named plaintiffs’ claims does not moot the entire lawsuit.  Anjum re-emphasized what the Supreme Court said in Genesis Healthcare, that the “relation back” doctrine did not apply to FLSA cases because of the fundamental differences between a Rule 23 class and a FLSA collective. But Anjum went even further to state that an offer of judgment could moot a FLSA case even where there was a pending motion for conditional certification. This will likely have broad impact in the FLSA context, as it will prevent Plaintiffs from filing motions for conditional certification shortly after filing a complaint so as to prevent employers from making viable offers of judgment.

(3) Timing is important!!

Anjum also underscores that a Court retains subject matter jurisdiction over a FLSA case even after offers of judgment have been made fully satisfying all Plaintiffs’ claims up until the point the Court enters judgment on the basis of mootness. In other words, after making a complete offer of judgment, an employer must move for dismissal and await judgment from the Court before the matter is mooted. The practical effect of this rule is that opt-ins may continue to join the lawsuit before entry of judgment so as to prevent a finding of mootness. Therefore, to maximize the potential benefit, employers should make offers of judgment sooner than later, before potential plaintiffs are aware of the lawsuit, and if at all possible, before notice is distributed to potential members of the collective, and quickly move to dismiss the action following expiration or rejection of an offer. Employers should also be prepared to make immediate supplemental offers of judgment to opt-ins that join the lawsuit after the original offers have been made to prevent plaintiffs from defeating the motion to dismiss by adding new plaintiffs.