California Federal Court Relies on Comcast to Deny Class Certification of Off-The-Clock and Meal Period Claims

Posted on May 8, 2013 by Wage and Hour Practice Group

By Bill Allen

Relying on the U.S. Supreme Court’s recent decision in Comcast Corp. v. Behrend, the U.S. District Court for the Central District of California denied Rule 23 class certification of California state law claims for off-the-clock work and unpaid work time during meal periods in Forrand v. Federal Express Corp.*

First, the plaintiff alleged that she and other hourly employees were not paid for work performed during the time between their clock-in times and their scheduled start times. The district court had previously denied class certification on this claim, but in 2010 the Ninth Circuit reversed and remanded that decision to “determine whether the level of FedEx’s control over employees within the proposed general class when they are on-the-clock but off-shift” was sufficient to render that time compensable under California law. On remand, the district court noted that Comcast requires a plaintiff “to bring forth a measurement method that can be applied classwide and that ties the plaintiff’s legal theory to the impact of the defendant’s illegal conduct.” The court found that the plaintiff’s proposed damages methodology, which assumed the entire gap between clock-in and the start of paid time was compensable, could be applied classwide, but failed “to tie California law to liability and a reliable measure of damages.” The court found that the plaintiff’s proposed class claim raised factual questions regarding whether each individual employee was in fact working and/or under the employer’s control during the gap period, and therefore individual factual inquiries predominated over classwide inquiries.

Second, on her meal period class claim, the named plaintiff alleged that she never received an uninterrupted 30-minute lunch break, presented testimony of another employee who claimed he had been required to work through unpaid meal breaks, and described data from earlier litigation purporting to show that 23.1 percent of unpaid breaks were interrupted by work. Under California law, an employer must relieve its employees of all duty for an uninterrupted 30-minute period but need not actually ensure its employees take meal breaks and need only pay for interrupted or missed meal breaks when it knows or should have known that an employee was working through the meal period. Again, the district court found Comcast instructive, stating that while the plaintiff’s “evidence and method of proof was applicable to the class as a whole, it does not adequately tie [her] allegation . . . to a proper and reliable measure of damages for work done on those breaks,” particularly because of the requirement to prove the employer knew or should have known of the work during the unpaid meal periods.

The Forrand decision represents at least the fourth wage and hour decision applying Comcast’s requirement that plaintiffs establish “damages are capable of measurement on a classwide basis” and denying class certification for failure to satisfy Rule 23(b)(3)’s predominance requirement. As discussed in a prior post, two of these decisions were in district courts in the Second Circuit – Roach v. T.L. Cannon Corp., and Tracy v. NVR, Inc. – and one was in a district court in the Ninth Circuit – Ginsburg v. Comcast Cable Communications Management. In addition, on April 1, 2013, the U.S. Supreme Court vacated and remanded Ross v. RBS Citizens, N.A. for further consideration in light of Comcast. In Ross, the Seventh Circuit had affirmed the district court’s decision certifying a class action involving off-the-clock and misclassification claims.

However, in Martins v. 3PD, Inc., a federal district court in Massachusetts certified a wage and hour class action and distinguished Comcast on the grounds that the parties in Comcast had conceded that the individual damages calculations fell within the “Herculean task” category and therefore warranted denial of class certification under the predominance requirement. The court interpreted Comcast “not to foreclose the possibility of class certification where some individual issues of the calculation of damages might remain, as in the current case, but those determinations will neither be particularly complicated nor overwhelmingly numerous.”

These decisions are likely only the start of a potential flood of decisions discussing the application of Comcast to class certification decisions in wage and hour cases. We will keep you posted as significant developments occur.

*The case was litigated by Federal Express’s in-house legal department.
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Pennsylvania Federal Court Decertifies FLSA Off-the-Clock Collective Action Against Citizens Bank

Posted on April 1, 2013 by Wage and Hour Practice Group

By Bill Allen

In Martin v. Citizens Financial Group, Inc., No. 2:10-cv-00260 (E.D. Pa. Mar. 27, 2013), Judge Goldberg of the Eastern District of Pennsylvania decertified an FLSA collective action involving 843 opt-in plaintiffs who had worked in a variety of hourly positions at over 1,000 bank branches in nine states. The plaintiffs alleged that the defendant’s unlawful practices included prohibiting employees from recording all time worked in excess of 40 hours in a week, erasing or modifying employees’ time records to eliminate or reduce overtime hours, providing “comp time” in subsequent weeks in lieu of paying overtime, and requiring employees to work during unpaid breaks. The district court held that the plaintiffs had failed to establish they met the FLSA’s “similarly situated” requirement.

Although the court found the plaintiffs’ evidence tended to establish that the putative class members may have been denied overtime, the plaintiffs were unable to produce “substantial evidence of a single decision, policy, or plan” that affected employees in the same way. Rather, the plaintiffs reported that the overtime denial decisions were made independently, either at the branch or regional level, and were in direct conflict with the company’s written policy requiring compliance with all state and federal overtime compensation rules. The court noted that the 435 declarations submitted by the plaintiffs themselves showed frequent disparities in the methods in which the plaintiffs alleged they were denied overtime.

The district court also found that the company’s individualized defenses weighed against certification. First, the district court noted contradictions between the plaintiffs’ and managers’ declarations as to whether overtime was denied. “In order to resolve the question of liability, a fact-finder would need to determine whether the employee or the manager was being truthful,” and resolving the dispute as to one plaintiff and one manager would not resolve the issue for any of the others. Second, the district court found that cross-examination about statements by particular plaintiffs in their declarations and depositions would not resolve credibility disputes as to other plaintiffs. Such individualized defenses “destroy the efficiency sought to be gained through a collective action.”

Finally, the court found that a representative sampling of plaintiffs would prejudice the parties. The court stated that “the multitude of differences in the factual and employment settings of Plaintiffs, Plaintiffs’ inability to provide evidence of an overarching illegal policy, and concerns of individualized defenses, . . . [as well as] fairness and procedural considerations” required decertification. Although mindful of the potential problem that would result if hundreds of opt-in plaintiffs initiated suits on an individual basis, the court noted that “lower costs and pooling of resources are not the only considerations. Any efficiency gained through bringing this action collectively would be outweighed by the substantial likelihood of ‘mini-trials’ and the risk of prejudice to both parties.”

While this case provides additional case authority to support decertification arguments such as individualized factual settings and the resulting “mini-trials,” it is perhaps most helpful in its commentary on the need to resolve, on an individualized basis, factual disputes and credibility issues.

Photo credit: Alina555
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Another Auto-Deduct Meal Break Case Against a Healthcare Provider Decertified by Federal Court

Posted on February 20, 2013 by Wage and Hour Practice Group

Building upon a growing body of case law finding automatic-deduction meal break claims are not suitable for class or collective action treatment, an Ohio federal judge decertified a collective action against a national system of medical and rehabilitation care facilities by registered nurses, licensed practical nurses, certified nursing assistants, and admissions coordinators who claimed they were not paid for missed or interrupted meal breaks that were automatically deducted from pay. In Creely v. HCR ManorCare, Inc., Littler attorneys convinced the court that the employees’ experiences were too diverse to allow the case to proceed as a collective action under the Fair Labor Standards Act. To learn more about the decision, see Littler's Healthcare Employment Counsel blog.

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California Superior Court Validates Piece-Rate Pay For Drivers That Covers Both Driving And Non-Driving Duties

Posted on September 10, 2012 by Wage and Hour Practice Group

By Richard Rahm and Angela Rafoth

In a significant victory for trucking companies operating in California, a superior court judge decertified a class of California truck drivers who challenged the legality of compensating drivers on a “combined” piece rate that covers both driving and non-driving duties, when compensation for the “piece” is based generally on the number of miles driven. The decertification order in Carson v. Knight Transportation is particularly significant not only because it is the first state-court order addressing the legality of a combined piece rate, but also because three federal courts in the Northern and Central Districts of California concluded that such a combined piece rate runs afoul of California’s law prohibiting the “averaging” of hours worked.

The plaintiffs made two arguments against decertification, which were both rejected by the Superior Court. First, the plaintiffs argued that based on Cardenas v. McLain FoodServices, Inc., 796 F. Supp. 2d 1246 (C.D. Cal. 2011), a combined piece rate that covers both driving and non-driving activities is illegal. In its May 8, 2012 ruling, the Superior Court rejected the Cardenas decision, finding its reasoning “to be circular” because the district court simply assumed that a piece-rate contract that calculates compensation based on mileage does not cover non-driving work. Because the Superior Court found that such a combined piece rate was not “illegal on its face,” the Court held that Plaintiffs’ claims were essentially contractual.

Second, the plaintiffs argued that even if the claims were contractual, the terms of the contract were ambiguous and therefore there was no contract providing that the piece rate covered non-driving work. Thus, the plaintiffs claimed, they were owed payment for non-driving work. In its ruling on August 30, 2012, the Superior Court found the argument illogical. If there was a lack of mutual agreement, then there would be “no contract at all,” and if there was no contract at all, the plaintiffs could not have a contractual claim. Thus, their only claim could be that they were paid less than minimum wage. But, the court stated, “[t]here is no way to determine whether any driver was not paid at least minimum wage without an individual inquiry into each trip and/or day.” Accordingly, The Superior Court found the case inappropriate for class action treatment and decertified the class.

To learn more about the decision, please see Littler's ASAP, California Court Validates Piece-Rate Pay for Drivers, by Richard Rahm and Angela Rafoth.

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Sixth Circuit Affirms Decertification of Class Challenging Automatic Meal Break Deduction

Posted on August 24, 2012 by Wage and Hour Practice Group

By Craig Brown and Inna Shelley

As healthcare providers continue to face a sea of wage and hour class actions, Littler attorneys successfully convinced the Sixth Circuit Court of Appeals to affirm decertification of an FLSA collective action against Baptist Memorial Hospital, a large Tennessee hospital system. In Frye v. Baptist Memorial Hospital, the plaintiff brought a collective action, claiming that the hospitals’ policy of automatically deducting pay for employee lunch breaks violated the FLSA’s requirement to pay employees for all the time worked.

The district court initially granted conditional certification to the class under the more lenient standard courts have generally applied at the initial notice stage in FLSA collective actions, but following discovery the court decertified the action because the plaintiff failed to show that other would-be class members were similarly situated. It also found that the plaintiff failed to establish a common FLSA injury from the automatic deduction policy because the vast majority of opt-in plaintiffs were aware of the policies for reporting work during breaks, were paid when they properly reported working, and were not discouraged from or retaliated against for reporting missed breaks. The district court also refused to find a common injury based on the hospitals’ alleged failure to monitor their automatic deduction policy for FLSA violations because it found the vast majority of employees knew the policies for reporting hours worked during meal breaks and the hospitals were unaware that their procedures for reversing the deductions were not working.

Faced with an FLSA collective action regarding automatic meal break deductions for the first time, the Sixth Circuit Court of Appeals agreed that the plaintiff’s evidence was insufficient to demonstrate that opt-in plaintiffs were similarly situated and experienced a common FLSA injury. It elaborated on the Sixth Circuit standard for decertifying a collective action under FLSA Section 216(b) at the final stage, which occurs after conditional certification and near the end of discovery. The court stated that this stage warrants a “stricter standard” than at the conditional certification stage, considering differences in employment settings, the availability of different individualized defenses, and the fairness and procedural impact of proceeding as a class action.

The Sixth Circuit agreed with the district court that there was insufficient evidence of a common injury as a result of the automatic deduction policy and that the plaintiff’s common theory of injury was essentially nothing more than a critique of the policy. The court emphasized, however, that such a policy, by itself, is lawful under the FLSA and would not alone establish the similarity necessary to maintain a collective action.

The court also agreed that different workplace experiences regarding department procedures to reverse deductions, training, and oversight outweighed any similarities alleged by the plaintiff. The court rejected the plaintiff’s failure to monitor theory based on some employees’ failure to report work during meals breaks, stating that employers could not be required to pay for work where they did not know and had no reason to know about the work. But the court left unresolved the question of whether an employer’s failure to monitor could ever form a basis for certification.

Frye is a welcome decision for healthcare employers facing the continuing threat of FLSA collective actions based on automatic meal break deduction policies. The case is particularly helpful where employers can show that employees understand the policies and procedures to reverse any automatic deduction and have been paid for missed breaks when they have followed the employer’s procedures.

To learn more about the decision, please see Littler's ASAP, Sixth Circuit Upholds Decertification of FLSA Collective Action Challenging Automatic Meal Break Deductions, by Paul Prather, Lisa Leach, and Alex Boals.

Photo credit: MBPhoto, Inc.
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