Arkansas-Co-authored by Abad Lopez and Noah Finkel

The two-step “send notice now/worry later” approach to FLSA collective actions — in which courts approve notice to potential collective action members under the lenient standard but comfort defendant-employers with the bromide of “don’t worry, we can revisit the issue at the decertification stage under a more rigorous standard” — continues to leave a bad taste.

Those who follow FLSA collective action litigation are familiar with the recipe. Motions for conditional certification usually are subject to a “lenient standard” under which a plaintiff need carry only a “low burden” in making a “modest showing.” These motions thus typically result in a notice of collective action being issued to all those meeting the collective action definition. Dozens, hundreds, or even thousands then opt in to the case and substantially increase a defendant-employer’s potential exposure. Substantial discovery then occurs, and then the defendant-employer files a motion for decertification. Viewing that motion under a far more rigorous standard, courts often undo conditional certification and find that the collective action members are not in fact similarly-situated to each other. The dozens, hundreds, or even thousands who opted in then are dismissed from the case without prejudice.

So damage repaired, right? Unfortunately, no. Those former opt-ins — who would not exist but for the conditional certification order — can remain a significant cost and potential liability for an employer. They may file new lawsuits separately or in smaller groups, or they may even find their way back into the current lawsuit.

In other words, by refusing to conduct a meaningful analysis at the conditional certification stage, courts invite numerous individuals to join litigation through the collective action mechanism, even when their claims do not belong in the same lawsuit. Defendants then bear the burden of defending multiple lawsuits that, but for the ease of the two-step approach, probably would not have been brought to begin with.

A recent case in Arkansas illustrates this point. In Conners v. Catfish Pies, Inc., et al., an Arkansas federal judge conditionally certified a lawsuit accusing Gusano’s Chicago-Style Pizzeria restaurant operators of using illegal tip pools to pay waiters less than the minimum wage. Conners, who worked as a server at the Gusano’s location in Conway, Arkansas, claimed she was forced to pool her tips with cooks and other kitchen employees, who typically do not receive gratuities, in violation of the FLSA. Conners argued that because Gusano’s tip-sharing agreement was invalid, the company was required to pay her a minimum wage of $7.25 per hour, rather than the $2.75 plus tips that she was given.

Following conditional certification under the “lenient standard,” more than a dozen current and former waiters joined the lawsuit. Later, the court purportedly undid the damage when it decertified the lawsuit using the more rigorous analysis in the second step of the two-step certification process typically utilized for collective actions under the FLSA. In its decertification order, the court found that the plaintiffs were in fact not “similarly situated” because different workers were employed by different entities that operated the restaurants, and thus were subject to different pay practices.

But what seemed like a victory for the defendants turned out to be a headache. A few months later, the judge reconsidered part of his decision to decertify the collective action and split the case into four separate trials. Although the court had previously dismissed the claims of all opt-in plaintiffs in its decertification order, it allowed each opt-in plaintiff to join the lawsuit as a named plaintiff against the respective restaurant where he or she was employed. Instead of a victory, the restaurants now have to defend against multiple lawsuits by plaintiffs who were not properly before the court in the first place. For these restaurants, decertification didn’t undo the damage of the conditional certification order. Ultimately, decertification compounded their problem. And to add insult to injury, that is only after these restaurants spent a lot of time and money after conditional certification to get to decertification.

The Conners v. Catfish Pies litigation is a reminder that conditional certification, though it can be undone, has long-term consequences for defendant-employers. Even if the case ceases being a collective action, it nevertheless can transform into a multi-named-plaintiff case, or it can morph into dozens or more separate cases. Defendants need to continue to make this clear to judges when they oppose conditional certification.

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.


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.


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.

Authored by Alex Passantino

It’s the week before Christmas, and we’ve accepted our mission,
The annual wage hour “sum-up” composition.
And to start it all off, we’ve got something nice,
‘Cause the Supreme Court addressed wage and hour stuff twice.

The year started out with the first one of those;
As Justice Scalia answered “What counts as clothes?”
With one simple phrase, the Court cleaned up a mess,
Clothes should be “commonly regarded as articles of dress.”

Gloves and hardhats, and fireproof suits,
And your shirt and your pants (and, presumably, boots),
They all count as clothes, from your toes to your face.
But not glasses, or plugs that can block out the bass.

Then later this year, the Court came back again,
To answer the question, “The clock, it starts when?
If you screen all your workers so they don’t steal your stuff,
And the clock stops before they’re in line, that’s enough.

The statute considered? ’Tis one that’s immortal.
The 68-year-old Portal-to-Portal.
With language so dated, it puts “whilst thou” to shame,
So we list the words here and we call them by name:

Principal Activity!  Integral! And Indispensable!
The words that define whether work is compensable.
The task’s required?  So what?  That’s not a fight you should pick.
You pay only those duties whose element’s intrinsic.

Now we leave SCOTUS cases and we turn to the rest,
The five or six topics our blog writers liked best.
Appearing so often, it borders on a fixation.
Are cases addressing increased decertification

And non-certification (you know what we mean).
Early on, or at trial, and all points in between.
Surveys kicked out.  Class reps were rejected.
Comcast has turned out to be nearly all we expected.

And even where Rio can dance on the sand,
Out came a case simply known as Duran.
If you’re asked to provide your trial proof logistics,
You can no longer just smile, shrug, and yell out “Statistics!”

So much litigation, so many cases to savor
And that’s only the issue of classbased arb waiver.
Add holding plaintiffs to standards when pleading a case,
And it kinda feels like employers are leading this race.

But just when you think wage claims might become less systemic,
We look at case numbers and declare “Epidemic!”
Interns, exemptions, independent contractor relations
Dominate dockets across the whole nation.

The government, too, makes employers squirm.
And this year, a new boss has gotten confirmed.
Those in restaurants, lodging, and others franchised,
Into DOL investigations, you’ll soon be baptized.

Now as we approach the end of the year,
And look forward to next, and the things we should fear,
At the top of the list, the elephant in the room,
Is the effort to make your exemptions go “Boom!

In early 2015, we’ll know what DOL may have planned,
If the rules out in Cali will apply ‘cross the land.
But before we say bye to the year that’s near past
Thanks for reading our blog.  You’ve made it a blast.


Co-authored by Gerald L. Maatman, Jr. and Matthew J. Gagnon

In a huge win for restaurant companies everywhere, Judge William Dimitrouleas of the U. S. District Court for the Southern District of Florida recently decertified a nationwide collective action against Darden Restaurants, Inc. – the corporate home of such iconic brands as Olive Garden and LongHorn Steakhouse – in Mathis et al. v. Darden Restaurants, Inc., Case No. 12-CV-61742, 2014 U.S. Dist. LEXIS 124631 (S.D. Fla. Sept. 1, 2014).  In July 2013, the Court had conditionally certified a nationwide collective action alleging that Darden required servers and bartenders to work “off-the-clock” and paid them the tip-credit wage for time spent on non-tip producing tasks.  The collective action spanned all 50 states and included over 218,000 putative class members.  More than 20,000 employees chose to opt-in to the suit.

While the Court may have been willing to certify a collective under the lenient standard applied at the conditional certification stage, anyone familiar with Darden and how it treats its employees knew that this collective action would ultimately be decertified.  And indeed, when Darden moved to decertify the collective action a year later, the Court sided with Darden, finding no evidence of a company policy that required employees to work off-the-clock or that resulted in employees being paid the tip credit rate improperly.

In a by-the-book decision, Judge Dimitrouleas applied the three factors identified by the Eleventh Circuit in Morgan v. Family Dollar Stores, Inc., 551 F.3d 1233, 1261 (11th Cir. 2008), as relevant to the decertification decision, including: (1) the existence of disparate factual and employment settings; (2) the existences of individualized defenses; and (3) fairness and procedural considerations.

The Court found that the opt-in plaintiffs worked under hopelessly disparate factual and employment settings.  The collective action encompassed two job titles, bartenders and servers, in over 1,995 restaurants spread across 50 states.  The relevant policies and practices relating to off-the-clock work and wages would differ by job title, state, brand (Olive Garden, LongHorn Steakhouse, Bahama Breeze, Seasons 52, and Red Lobster), specific restaurant, and manager.  Moreover, the opt-in plaintiffs asserted various combinations of claims relating to the tip-credit, off-the-clock work, and overtime.  This meant that there were six different combinations of claims that each opt-in plaintiff could make.  Given these differences, the Court found that this factor alone weighed heavily in favor of decertification.

Second, the Court held that Darden had multiple individualized defenses that would preclude collective adjudication.  For example, liability could depend on whether employees had received instructions from managers who were acting outside the scope of their authority and contrary to well-established company policies and practices.  Employees may also have voluntarily engaged in off-the-clock work in defiance of Darden’s official policies, or they may have unreasonably failed to avail themselves of the opportunities provided by the company to recover unpaid compensation.  In sum, although some factual issues – such as the existence and communication to employees of uniform nationwide policies – could be determined on a class-wide basis, the majority of material issues relating to Darden’s defenses were highly individualized.

Finally, the Court noted that a collective action of plaintiffs’ claims would be unmanageable and procedurally unfair to Darden.  In short, the circumstances of each individual employee were too dissimilar to justify a collective action, and plaintiffs’ proposed use of representative evidence or damage models could not account for the material distinctions among class members.  Yet, if the case were to proceed as a collective action, Darden would be subject to all-or-nothing liability for large groups of employees despite the material differences in working conditions and individual defenses.

Implications For Employers

This case shows how important it is for an employer not to give up even after an adverse conditional certification decision, and to move forward and present its evidence to the Court in a decertification setting.  In this case, the Court had concluded that although certification was warranted under the “fairly lenient standard” at the conditional certification stage, the more developed record at the decertification stage demonstrated that plaintiffs were not in fact similarly situated, and that a nationwide collective action would not be practical, efficient, or fair.  Although it took another year of hard-fought discovery, Darden’s willingness to stand its ground and defend its reputation paid off.

Co-authored by Jacob Oslick and Timothy Rusche

California requires written waivers if an employee misses a second meal break, right? Not exactly, clarified the California Court of Appeal in Fayerweather v. Comcast Corp. Instead, a waiver only is needed if the employer makes an employee miss a second meal break and not if the break is voluntarily skipped. The court also reaffirmed that off-the-clock class actions require proof of a uniform, companywide policy that violates the law.

The Fayerweahter plaintiffs were Comcast service technicians. They installed cable, internet, and phone service in homes and businesses. Much like customers whom Comcast hoped would take a break from the grind to watch TV and surf the web, Comcast policies directed technicians to take breaks, required them to fill out waivers if they skipped a second meal break, and obligated them to accurately record their hours worked. However, because technicians spent their days in the field, Comcast couldn’t know which of them actually took their TV timeouts.

The plaintiffs seized on this. Like the do-it-yourselfer who ignores direction and hangs a flat screen with the wrong screws, they alleged that their failure to follow policy and complete meal break waivers proved they were denied breaks. They argued that a device the company provided to communicate their status in the field more accurately reflected their hours than time records they had completed themselves.

The court panned the show and affirmed the decision to cancel the series. In brief:

  • The plaintiffs admitted that, under Comcast policy, they were supposed to sign written waivers every time they chose to skip a second meal break. They claimed that they neglected to, and insisted that this failure violated Labor Code § 512. The Court held that the law, unlike Comcast policy, didn’t require written waivers, and that “[i]f an employee voluntarily chooses to continue working through a provided meal break, no waiver is required.”  And, because figuring out whether they chose or were forced to miss a break would “require individual analysis of every instance,” this theory wasn’t appropriate for class treatment.
  • The plaintiffs also sought class certification on the grounds that Comcast didn’t maintain a formal policy to provide premium pay for denied breaks. However, as the Court noted, Labor Code § 226.7 only requires that premium pay get paid; it does not require a written policy to pay it. Whether the plaintiffs were actually denied breaks , or voluntarily skipped them, remained an individualized issue.
  • The plaintiffs further alleged that they widely underreported their hours and that entries from a communication device called TechNet showed that Comcast should have known about this underreporting. The Court found that TechNet was used to communicate about availability, not to track time, and that there was no evidence that the plaintiffs’ self-reported time records were less reliable than their TechNet entries. Nor did it find “substantial evidence point[ing] to a uniform, companywide policy” of encouraging technicians to underreport their time. Accordingly, the Court found that TechNet’s data could not be used to impute knowledge to Comcast, or to justify findings on a class-wide basis.

Employer Take-Aways

Though Fayerweather currently is an unreported decision, which limits its precedential value, it establishes that meal break waivers are different than voluntary decisions to skip breaks, and reiterates that class certification requires evidence of uniformly applied, unlawful company policy. Now that’s a show worth tuning into.

Authored by Kyle Petersen

What happens if plaintiffs break their promise to present evidence that their claims can be decided on a classwide basis at trial?  In Dilts v. Penske Logistics, LLC, the Plaintiffs found out this harsh lesson when the Court decertified the case mid-trial because Plaintiffs failed to present classwide proof of their claims.  This decision out the United States District Court for the Southern District of California becomes one in a growing series of court decisions decertifying automatic meal period deduction class actions due to the lack of common proof.

The Setup

  • Plaintiffs worked in the field delivering and installing appliances. 
  • The company automatically applied a thirty-minute meal period deduction from the installers’ pay if they worked a shift of 6 or more hours, and did not keep records of if and when the actual meal breaks were taken.  Instead, the company presumed the meal break was taken in full.
  • The company did not provide a method for the installers to reverse the automatic meal period deduction if the meal period was missed or interrupted with work.
  • Plaintiffs and other installers used company-provided trucks for their work.  As a matter of policy, the company prohibited installers from using the company vehicles for personal business; required that the truck be legally parked and the cargo secured before the installer left the vehicle; and prohibited installers from parking the trucks at establishments that might tarnish the company’s reputation.
  • The company required installers to carry and leave their cell phones on at all times during the workday.  If a call went unanswered, it would go to voicemail.

In their initial bid for class certification, Plaintiffs successfully convinced the Court that through these common policies they could prove—on a classwide basis—the class was forced to work through their meal periods without pay. 

The Delivery

At trial, Plaintiffs failed to deliver any evidence that the company’s policies prevented the class from taking their unpaid meal periods.  Instead, Plaintiffs testified that the company’s tight rules on the use of the company trucks did not actually prevent them from legally parking, securing their cargo, and eating lunch in a restaurant.  In addition, the evidence at trial showed that any lunch time phone calls were either answered by voicemail or were de minimis

Plaintiffs also conceded that they did not have any personal knowledge about the experiences of other installers with respect to meal periods because they worked varied schedules and were out in the field without opportunity to observe their colleagues.  So despite the company’s common policies applicable to all installers, the determination of whether any particular Plaintiff or class member worked through the unpaid meal period required an individualized assessment.  As a result, the Court decertified the class.

The Impact

The court here joins several others that also came to realize—unfortunately, late in the litigation process—that automatic meal period deduction cases are difficult to try on a class or collective basis.  This decision highlights the increasing success of employers in demonstrating that plaintiffs need more than a common, lawful policy to establish that all class members were forced to work off the clock.  But, the success came after extensive and expensive classwide litigation, and a trial.

The challenge for employers now is to parlay these eleventh-hour victories into early decisions denying class certification or collective certification under the FLSA where the case cannot ultimately be resolved through common or even representative evidence.

Seventh Circuit.jpgCo-authored by Laura Reasons, Giselle Donado, and Noah Finkel

In an opinion likely to make it more difficult for wage-hour plaintiffs to certify a class action and maintain certification of a collective action, the Seventh Circuit affirmed the Western District of Wisconsin’s decertification decision in Espenscheid v. DirectSat USA, LLC on the grounds that trial was not manageable under the plan submitted by plaintiffs, where determining damages would require 2,341 separate evidentiary hearings.  We previously discussed the District Court’s decision here (and thus will not rehash the background facts).  Espenschied is a very important decision that could shape the wage-hour certification landscape because of its holding that ultimate certification of a collective action is subject to the same standard as a Rule 23 class action, its requirement that damages in a wage-hour case be capable of being determined through common proof, and its emphasis on a workable, trial plan as a predicate for class and collective action certification.

In the Seventh Circuit’s opinion, Judge Posner started from the premise that, for certification purposes, there is no reason to treat a state-law wage-hour class action brought pursuant Federal Rule of Civil Procedure 23 differently from a collective action under Section 216(b) of the FLSA.  It explained that the district court correctly held that plaintiffs had not presented a feasible trial plan.  Determining damages would require 2,341 separate evidentiary hearings.  This was not a case where, for example, each technician worked from 8 a.m. to 5 p.m. and was forbidden to take a lunch break.  The court reasoned that, in such a case, damages could be calculated formulaically by a computer program.  But in this case, damages for each individual plaintiff would have to be determined separately by a trier of fact, as such determinations would turn on individual facts such as a workers’ effort and efficiency, different tasks performed, and the reasons the workers did not record certain tasks.  Those same factors are present in several off-the-clock collective or class actions

The Seventh Circuit also upheld the district court’s rejection of plaintiffs’ proposal to present trial testimony from 42 “representative” members of the 2,341-person class.  This proposal was problematic because it did not appear that the “representatives” were chosen in a statistically sound manner.  Moreover, extrapolating damages of the “representatives” to the whole could result in conferring a windfall on some, while shorting others.  Indeed, plaintiffs themselves acknowledged at argument that it would be “[d]ifficult for Plaintiffs to provide an objective framework for identifying each class member within the current class definitions without making individualized findings of liability.”

The court stated that class counsel “must think that like most class actions suits this one would not be tried — that if we ordered a class or classes certified DirectSat would settle.  That may be a realistic conjecture, but class counsel cannot be permitted to force settlement by refusing to agree to a reasonable method of trial should settlement negotiations fail.”  The court wrote that class counsel essentially had “asked the district judge to embark on a shapeless, free-wheeling trial that would combine liability and damages and be would virtually evidence free as far as damages were concerned.”  This, the Seventh Circuit would not allow and thus upheld the district court’s decertification decision.

With this opinion, the Seventh Circuit has given employers some improved tools to defend against class and collective claims.  This decision demonstrates an emerging trend to treat Section16(b) collective actions and Rule 23 class actions as one for purposes of analyzing certification.  Judge Posner expressly stated that “there isn’t a good reason to have different standards for the certification of two different types of action, and the case law has largely merged the standards, though with some terminological differences.”  With that in mind, Judge Posner reviewed the district court’s decision to decertify the three subclasses, treating “the entire set of suits before [the court] as if it were a single class action.”  Few appellate courts, or district courts for that matter, have set forth the level of common proof that collective action plaintiffs must set forth at the ultimate certification stage.  The Sixth Circuit, for example, has suggested that it may be similar to the standard for joinder under Federal Rule 20.  O’Brien v. Ed Donnelley Enterprises, Inc. 575 F.3d 567, 584-86 (6th Cir. 2009).  The Seventh Circuit takes the different view that the standard is more in line with the rigorous standard under Rule 23.  In doing so, Espenschied  brings the Supreme Court’s decision in Wal-Mart Stores, Inc. v. Dukes into the fold for 216(b) collective actions by using Rule 23’s commonality standard to drive the certification decision. 

This decision also puts the onus on plaintiffs seeking certification of large classes based on a “representative” sample to provide evidence that the claims and damages of all class members can be readily ascertained from the sampling in order to satisfy Rule 23’s commonality standard.  Indeed, plaintiffs’ inability to articulate how their “representative” sample was truly representative was fatal to certification.  Importantly, Judge Posner suggests that even differences in damages among the class members might be reason enough not to allow certification.  Offering a purportedly “representative” sample of class members, without more, likely will no longer be sufficient.  Here, Dukes’ guidance on statistical evidence will prove useful to employers by providing a high threshold for what statistical evidence plaintiffs may use as the glue that binds the claims and damages of class members.  With that in mind, employers would be wise to prepare a discovery plan that demands that plaintiffs establish the validity of the “representative” nature of their class sample with respect to their claims and damages.  This strategy may prove useful in limiting the class to the individual representatives, and foster an early settlement given the heavy burden plaintiffs will face to validate their “representative” sample. 

Finally, Espenschied makes clear that practical considerations are not to be ignored at the ultimate certification stage.  The Seventh Circuit gave much weight to the fact that the plaintiffs did not offer a feasible way for determining liability and damages based upon their representative sample, and noted that while, as a practical reality, most certified classes do go on to settle, that does not obviate the need to provide evidence that plaintiffs are able to calculate damages in a meaningful way for all class members.  Employers would be wise to demand a trial plan from plaintiffs explaining how they will attempt to ask the court to determine liability and damages for the class, particularly in those cases where plaintiffs rely on a representative sample.  Any failure by plaintiffs to provide a feasible plan to ascertain the claims and damages should prove useful in opposing certification.  Indeed, these practical considerations also may be worth raising at the conditional certification stage.  While the standard is a lenient one, alerting the court that plaintiffs’ claims present significant practical hurdles that cannot be cured may sway the court.  The court’s message in Espenscheid  was clear–judicial resources should not be wasted simply to facilitate a settlement of a class whose claims are not ascertainable and damages are not readily calculable without individualized findings.

N.D. Ala.gifCo-authored by Brett Bartlett and Kevin Young

Last month, we reported on a ruling handed down by Judge Scott Coogler, a U.S. District Court Judge in Alabama, decertifying a nationwide FLSA collective action of store managers who claimed that they were misclassified as overtime-exempt.  As is common in store manager cases under the FLSA, the plaintiffs in that case, Knott v. Dollar Tree Stores, essentially argued that they should be thought of as managed rather than managing—this, despite the fact that each  was the highest-ranking employee in his or her store.  Who ran the stores, one might ask?  The district managers…the regional managers…the corporate manual…anyone but the store managers, the plaintiff-store managers argued.  In decertifying the collective, Judge Coogler made clear not only that the FLSA’s executive exemption was in play, but also that its duty-specific nature left no room to force Dollar Tree to argue the defense on a one size fits all basis.

One month later, we can report a nearly identical result in a remarkably similar case: on Monday, Judge Coogler decertified another nationwide collective action of store managers for a large retail chain, Dollar General Stores, who alleged that they were misclassified due to the prevalence of their non-management duties.  The named plaintiff, Cynthia Richter, won conditional certification in March 2007, and thousands of current and former store managers joined the litigation thereafter.  Over five years later, Judge Coogler’s decertification order means that those who joined the case will likely be dismissed. 

Richter is an important decision, in part because of the district  court’s handling of Morgan v. Family Dollar, a store manager misclassification case in which the Eleventh Circuit upheld a $35 million verdict and refused to reverse a pretrial decision denying the employer’s decertification motion.  Since it came down in 2008, plaintiffs have cited Morgan routinely and indiscriminately in their efforts to resist decertification, often drawing upon facts from that case that could be established against any large employer—a uniform classification decision was made, a single job description existed, a handbook was in place.

Morgan was the strategy in Richter, where the plaintiffs argued, among other things, that: (i) the employer made a single decision to classify the manager position as exempt, rather than on an employee-by-employee basis—just like in Morgan; (ii) the managers were expected to adhere to a company handbook and operating manual—just like in Morgan; (iii) the employer had one job description for the manager position—just like in Morgan; and (iv) the managers spent much of their time on non-management work—just like in Morgan.  These facts were “virtually identical” to Morgan, the plaintiffs argued, and therefore necessitated the same result.

Judge Coogler offer a multifold rejection of the plaintiffs’ Morgan offensive.  First, the district judge explained, Morgan merely upheld the trial court’s decision permitting the store managers in that case to proceed to trial collectively as something less than an “abuse of discretion.”  “It does not necessarily follow,” Judge Coogler explained, “that a contrary ruling would have been an abuse of the district court’s discretion.”  In other words, just because denying decertification was not utterly wrong does not necessitate that it was right. 

Second, Judge Coogler rejected the plaintiffs’ assertions that evidence that they spent over half their time on non-management duties was similar to Morgan and sufficient to bind them together for trial.  Judge Coogler correctly noted that, under the FLSA, even employees who spend over half their time on non-exempt work may be exempt.  Moreover, even if the plaintiffs spent similar amounts of time on management duties, the relative importance of each type of work could lead to differing determinations on their “primary duty,” the touchstone of exempt status.  For example, the plaintiffs managed entirely different stores, which impacted the nature and extent of their exempt work (e.g., larger stores have more associates to manage, stores in high-crime areas require a greater focus on asset protection, etc.).

Third, and perhaps most importantly, in considering the fairness of forcing Dollar General to a collective action trial, Judge Coogler rejected the argument that because the company made a universal classification decision, like the defendant in Morgan, the court could and should try its exemption defense on a universal basis.  The exemption turns on an assessment of an employee’s actual management duties—it could work for one store manager and not another.  Recognizing this, Judge Coogler explained that while a single, massive trial might be most efficient, such efficiency “cannot be obtained at the expense of Dollar General’s due process rights.”  This reasoning is especially important because it is remarkably similar to the Supreme Court’s due process holding in Wal-Mart v. Dukes, which, as we have discussed before, is a game-changing case whose application in the FLSA arena is still being decided.

Judge Coogler’s decision is an important one.  At a time when plaintiffs have come to reflexively cite Morgan to raise and preserve massive collectives, his ruling recognizes that Morgan did not hold that the trial court got it right in permitting an FLSA collective action trial, but rather that it had not gotten it completely wrong.  And a time when Dukes’ applicability in collective actions is still being charted, his ruling draws upon the very due process concerns annunciated in that case, which dictate that it is not okay to trade the right of a litigant—even a corporate litigant—to defend itself for some measure of efficiency or cost savings.

ND Ill Seal.bmpCo-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.

N.D. Ala.gifCo-authored by Brett Bartlett and Kevin Young

Any employer that has faced a putative FLSA collective action in Florida, Georgia, or Alabama since 2008 should be aware of Morgan v. Family Dollar Stores, Inc., a case in which the Eleventh Circuit upheld a $35 million trial verdict against the Family Dollar chain and refused to reverse a pretrial decision to allow the store manager misclassification case to proceed collectively in the first place.  Plaintiffs have since rung the Morgan bell often and indiscriminately, likening their cases to Morgan because of perceived similarities among the employees in their cases and those who sued Family Dollar.  An employer decided to classify all individuals in a position as exempt?  “That happened in Morgan, too!”  The employer had a manual describing its expectations of the employees in its stores?  “So did Family Dollar!”  Morgan, these plaintiffs have exclaimed, has required that employees like these must be “similarly situated,” the key requirement to proceed collectively.  After all, the Eleventh Circuit upheld the multi-million dollar verdict against Family Dollar.

But could they be wrong?  Would a district court in the Eleventh Circuit ever again decertify a store manager misclassification case?  The answer is yes.  The latest example surfaced early last week, arising from the very district court from which Morgan arose.  In a 21-page ruling, The Honorable Scott Coogler, of the Northern District of Alabama, decertified the conditionally-certified class in Knott et al. v. Dollar Tree Stores, Inc., which included 260+ Store Managers of various Dollar Tree stores who urged the court to deny decertification in their case because it was “nearly identical” to Morgan

It all began six years ago, when Susie Knott, a former Store Manager of a Dollar Tree in Tuscaloosa, Alabama, filed an FLSA collective action alleging that Dollar Tree misclassified her and all of its other Store Managers as overtime-exempt.  She alleged that the Store Managers—who, as the highest-ranking employees at their respective stores, were classified as exempt managers—were misclassified because their managerial duties were in fact “non-existent or extremely minimal.”  Each store’s management, she alleged, “was left to the District Manager[s],” not to the Store Managers themselves.  In 2007, she convinced the court to conditionally certify her alleged class and to authorize her attorneys to distribute notice of the lawsuit to Dollar Tree’s Store Managers across the country.

After what Judge Coogler described as “a war” between the parties over discovery, Dollar Tree moved to decertify Knott’s conditionally certified collective action.  The company argued that the evidence developed during discovery proved that Store Managers were not similarly situated because their duties varied significantly across the class, and that the duties that varied were the very ones that would ultimately dictate whether Dollar Tree properly classified each as overtime-exempt.  For example, Store Managers’ involvement in adjusting employees’ pay rates, evaluating them, training them, disciplining them, and securing the store would eventually be the duties examined to determine whether each was exempt, and the evidence showed—according to Dollar Tree—clear variation from manager to manager. 

Knott simply could not sustain her burden to establish that she and those managers who opted into her case were similarly situated despite all of the evident variations among them.  She argued that every Dollar Tree store was controlled tightly and identically, and that Store Managers like her spent over half of their time on non-management tasks (e.g., sweeping the parking lot, running the cash register, stocking shelves).  She also argued that the company could not possibly prevail at decertification because they had in fact classified everyone the same, as if everyone performed the same duties.  Judge Coogler didn’t buy it.

In granting Dollar Tree’s decertification motion, the court found that Knott and the other Store Managers failed to establish that they were similarly situated.  The evidence revealed too many differences in their management duties.  While some “may have performed uniform tasks mandated by a corporate manual, others routinely exercised their independent judgment and the amount of time they spent performing managerial duties is a matter of individual inquiry.”  “While the differences in the amount of time spent on any individual act of ‘management,’ such as training associates, might not seem material,” the judge explained, “as a whole [they] could … lead to differing conclusions as to each employee’s ‘primary duty.’”  Morgan could not save the class, even though Knott argued that her case was “nearly identical” to the one that sparked that lightning-rod ruling.

On that point, Judge Coogler’s sage ruling speaks volumes.  He recognized that the Eleventh Circuit in Morgan did not hold that the district court in that case got it right.  Rather, the appellate court “simply decid[ed] that the district court had not abused its discretion by finding the multiple plaintiffs similarly situated.”  In other words, the Eleventh Circuit held only that the district court had not gotten it completely wrong—it had not committed clear error when it denied Family Dollar’s motion to decertify.  The point?  Even in a case “nearly identical” to Morgan, provable differences in management duties across a class will justify decertification.

Given the landscape of FLSA litigation in the Eleventh Circuit and across the country, it would not be shocking to see Knott appeal this ruling, be it in the weeks to come or after her claims are resolved.  As many courts considering the case have noted, however, Morgan does not require a collective action trial of every misclassification case with arguably similar facts.  And if the Eleventh Circuit were to apply the same abuse-of-discretion in Knott’s case as it did in Morgan, Dollar Tree—and employers that take heart in its decertification victory—almost certainly will not be disappointed.