OPINION
I. Introduction
This matter comes before the Court on Plaintiffs’ motion for conditional certification of a FLSA “opt-in” collective action and certification of a Rule 23 “opt-out” state wage class action [Docket Item 43], Defendants’ motion to seal [Docket Item 66], and Plaintiffs’ motion to dismiss Cardo Windows, Inc.’s counter-claims for breach of contract [Docket Item 74].
For the reasons set forth below, Plaintiffs’ motion for conditional certification of a FLSA collective action will be granted. Because Plaintiffs’ motion for class certification under Rule 23 turns on the appropriate test to determine whether an individual is an employee or an independent contractor under the New Jersey Wage and Hour Law (“NJWHL”) and the Supreme Court of New Jersey recently accepted certification of this exact question, this motion will be denied without prejudice. Defendants’ motion to seal will be granted in part. Plaintiffs’ motion to dismiss Cardo Windows, Inc.’s counter-claims will be granted in part and denied in part.
II. Background
A. Factual Background
Defendant, Cardo Windows, Inc. (“Cardo”) does business under the trademark, “Castle the Window People.” (Deposition of Roderick J. Arce on January 14, 2013 (“Arce Dep.”) 149:3-7.) Cardo sells and installs windows in multiple states including New Jersey, Pennsylvania, Delaware, Massachusetts, Rhode Island, Vermont, New Hampshire, Connecticut, New York, and Ohio. (Arce Dep. 149:8-18.) Cardo maintains warehouses and sales facilities in Mount Laurel, New Jersey; Cedar Grove, New Jersey; Mechanicsburg, Pennsylvania; East Berlin, Connecticut; and Boston, Massachusetts. (Certification of Christopher Cardillo, Sr. (“Cardillo Cert.”) [Docket Item 68-5] ¶ 4.) Defendants contend that each of the five different facilities operates on its own schedule and is operated by different people. (Cardillo Cert. ¶ 12.)
Plaintiff Jack Varner worked 10 to 14 hours per day as an installer for Cardo from February 2003 to October 2012. (Certification of Jack Varner (“Varner Cert.”) ¶ 1.) He did not install windows for anyone but Cardo during the 11 years he worked as an installer for Cardo, except for two roofing jobs he completed with his brother. (Deposition of Jack Varner (“Varner Dep.”) 27:4^18; 28:5-17.) Plaintiff Fred Adami worked 10 to 12 hours per day installing windows for Cardo from March 2001 to June 2012. (Deposition of Fred Adami (“Adami Dep.”) 113:4-12.) Varner and Adami primarily completed work orders in New Jersey. (Adami Dep. 257:11-16; Varner Dep. 127:17-25; 128:1-6.) Both completed work for Cardo as sole proprietors and signed agreements characterizing their relationship with Cardo as independent contractors. (Adami Agreement dated March 1, 2001 [Docket Item 6-1]; Varner Agreement dated January 29, 2010 [Docket Item 68-23.])
Roderick Arce was employed by Cardo from 1994 to January 2011. (Arce Dep. 8:16-
Cardo’s installation work crews consist of both “installers” and “helpers.” For efficiency, Cardo installation managers prefer crews with two or three people. (Arce Dep. 23:10-22.) A crew consists of an installer and one or more helpers. (Arce Dep. 23:20-22.) According to Plaintiffs, the only difference between installers and helpers is that installers have workers’ compensation liability insurance, a driver’s license, a work truck, tools, and equipment, while helpers lack any of the above. Otherwise, helpers complete the same tasks as the installers with few exceptions. (Arce Dep. 13:22-24; 15:7-18.) If a Cardo installer is not assigned enough work to keep a helper busy, the helper is assigned to another installer with more work. (Arce Dep. 74:16-25; 75:1-3.) Defendants contend that the helpers work for, are selected by, and are paid by the installer. (Def. CS ¶ 19.)
Plaintiffs and Defendants agree that Cardo provides installation crews with materials needed for each job and if Cardo does not have the needed materials, installation crews purchase the material for future reimbursement by Cardo. (Arce Dep. 59:23-25; 60:1-3; 61:6-18.)
Plaintiffs and Defendants agree that due to regular turnover, Cardo is frequently seeking and hiring new installers. When seeking new installers, Cardo’s primary requirement is that the applicant have workers’ compensation insurance, a pickup truck, and the tools necessary to install windows. (Arce Dep. 81:5-20.) Applicants with experience installing windows, but without a truck or tools, are offered a job as a helper. (Adami Dep. 267:1-12.) In 2009, Cardo had between 27 and 32 installers at any given time and 95 percent had a helper. (Arce Dep. 13:4-10.) Plaintiffs contend that Cardo trains 30 to 45 new installers each year at a cost of $10,000 each, and Cardo also trains the installers’ helpers. (Arce Dep. 210:1-25; 211:1-25; 212:1-6.) Defendants contend that Cardo only hires experienced installers and new installers only receive on-the-job training from other installers. (Def. CS ¶¶ 43-47.)
Plaintiffs assert that Cardo exercises significant control over the day-to-day operations of the installers. Cardo requires installation crews to display signage on then-trucks and wear apparel with Cardo’s logo, indicating they work for Cardo. (Arce Dep. 47:7-16; 47:20-25; 48:1.) Cardo’s standard sales pitch to customers is that “all of our installers work only for Castle.” (Arce Dep. 151:8-18.) Cardo also requires its installers to tell customers they work for Cardo and discourages installers from telling customers they are independent contractors because Cardo sells its products with the understanding that Cardo manufactures, sells, and installs its own windows.
As further evidence of Cardo’s control over the installers, Plaintiffs note that each day, Cardo installation managers meet with the installers in the warehouse or meeting room for five to seven minutes to discuss their work the day before. (Arce Dep. 49:4-15.) Additionally, management provides installation crews with a job packet each day which
Plaintiffs and Defendants disagree regarding the typical hours worked by Cardo installation crews. Plaintiffs contend that some Cardo installers work seven days per week, but six days per week is mandatory. (Arce Dep. 97:10-14.) Beginning in 2008, Cardo started to give its installers off every other Saturday, so they would work a six day week, then a five day week, and so on. (Arce Dep. 97:10-14.) Installation crews work from seven in the morning when they are required to pick up windows for each window installation job at one of Cardo’s warehouses, until six, seven or eight o’clock at night, when they are required to call their manager to record their hours and report whether the job was completed. (Arce Dep. 25:23-25; 26:1-12; 98:7-13; 142:8-25; 143:1-6.) According to Plaintiffs, the average Cardo installer works 60 to 65 hours per week. (Arce Dep. 98:18-25; 99:1.) Defendants contend that installers work a wide variety of times for Cardo with no mandatory requirements. (Cardillo Cert. ¶ 13.) Further, Defendants state that neither Plaintiffs Adami nor Varner averaged more than 8.75 working days in a 14-day pay period during the most recent two-year period for each. (Id.)
Plaintiffs explain that Cardo’s installers are paid based on stubs submitted to Cardo upon completion of individual installation jobs. After completing a window installation, Cardo installers fill out an “Installer Pay Stub” reflecting the items installed, the quantity of each item installed, the cost for installation, and a subtotal of amount owed. (Hannye Cert. Ex. 68 [Docket Item 45-4.]) Cardo’s installers are paid based on the work completed. For example, installers are paid $40 for installation of one double hung window plus a $10 bonus. (Arce Dep. 50:18-19; 68:25; 80:5-11.) Cardo’s installers are paid every two weeks based upon the bills that had been approved by Cardo management after cross-referencing the installer’s weekly recap sheet with Cardo’s weekly recap. (Arce Dep. 51:23-25; 52:1-20.) Cardo installers are not paid for their travel time, but they receive a gas allowance. (Arce Dep. 77:16-23.) Defendants do not appear to dispute Plaintiffs’ description of the compensation process, but point to the piece work method as evidence that it is impossible to determine the number of hours per day worked by each installer. (Def. CS ¶¶ 76-79.)
In 2010, Cardo began requiring its installers to sign a master subcontractor agreement after an audit by Cardo’s workers’ compensation policy carrier, Selective. (Arce Dep. 154:14-25; 155:1-25; 156:1-25; 157:1-22.) Cardo required its installers to sign the Selective Master Subcontractor Agreement on a payday and threatened to withhold paychecks until the agreements were signed. (Adami Dep. 385:10-20; Varner Dep. 178:14-19. ) Neither Plaintiffs Adami nor Varner read the Selective Master Subcontractor Agreement before signing it and neither was allowed to keep a copy of what they signed. (Adami Dep. 385:5-11; 387:6-13; Varner Dep. 240:9-20.) Plaintiffs contend that many aspects of the Selective Master Subcontractor Agreement conflict with Cardo’s actual treatment of its installers including assignment of work and compensation. (Hannye Cert. [Docket Item 45-1] ¶¶ 163-207.) Defendants note that both Varner and Adami also signed independent contractor agreements upon starting work with Cardo. (Def. CS ¶ 39; see also Def. Exs. 19-20 [Docket Items 68-22 & 68-23.])
Plaintiffs assert that Cardo did not pay overtime to any of its installers for work in excess of 40 hours per week in 2009 or 2010. (Arce Dep. 160:19-24.) Cardo did not provide its installers with any benefits it provided its employees such as health insurance, disability insurance and life insurance in 2009 and 2010. (Arce Dep. 160:25; 161:1-5.) Cardo did not withhold any federal payroll taxes from the installers’ paychecks or provide installers with W-2s. (Arce Dep. 161:14-20. ) Cardo withholds state payroll taxes from the pay of installers depending on their state of residence. (Deposition of Nicholas
Defendants contend that during all relevant times, Cardo subcontracted its installation services to independent contractors and filed IRS 1099 forms for each installer. (Cardillo Cert. ¶ 17.) Defendants assert that Cardo’s treatment of its installers was validated in 2011 by the New Jersey Department of Labor and Workforce Development (“NJDOL”) after a review of Cardo’s payroll practices.
Cardo has produced IRS 1099 forms for installers from 2009 through 2012. (Def. Ex. 13 [Docket Item 68-13.]) These forms indicate that Cardo had 39 installers in 2009, 47 installers in 2010, 41 in 2011, and 39 in 2012. (Id.) Many installers worked for Cardo in consecutive years and 15 worked for Cardo in each of the three years from 2010 to 2012. (Id.) This is consistent with Plaintiffs’ claim that Cardo has “14 core installers,” including Plaintiffs Adami and Varner. (PI. Br. [Docket Item 43] at 24.)
Defendants assert that there are substantial differences between Cardo’s core installers and other installers who completed brief or limited work for Cardo. (Def. Opp. [Docket Item 67] at 23.) Unlike Adami and Varner, the majority of Cardo installers worked primarily in one state. (Cardillo Cert. ¶ 11.) Of the 92 installers who completed work for Cardo between 2009 and 2012, 27 were incorporated businesses, including one with over 10 employees, while 65 were sole proprietors like Adami and Varner. (Def. Opp. at 25-26; Def. Ex. 13 [Docket Item 68-13.]) 14 of the 65 sole proprietors did not work more than 40 hours per week and cannot be eligible for overtime pay. (Id.; Cardillo Cert. ¶ 23.) Only 28 worked primarily out of the New Jersey facilities. (Def. Ex. 13; Cardillo Cert. ¶¶ 4-6, 11.) Of these 28, 12 have binding arbitration agreements. (Cardillo Cert. ¶ 22.) Defendants further allege that Adami’s experience working for Cardo is distinguishable from other installers because of his close relationship with former Cardo owner, Roderick Arce. (Def. CS ¶¶ 84-88.)
B. Procedural Background
On May 10, 2012, Plaintiff Fred Adami, individually and on behalf of all others similarly situated, filed a putative collective action and class action against Defendants Car-do Windows, Inc. d/b/a “Castle ‘The Window People,’ ” Christopher Cardillo, Sr., Christopher Cardillo, Jr., Nicholas Cardillo, Edward Jones, John J. Belmonte, and Pat Tricocci. [Docket Item 1.] Plaintiff asserted claims under the Fair Labor Standards, Act (“FLSA”), New Jersey Wage and Hour Law (“NJWHL”), New Jersey Construction Industry Independent Contractor Act (“CIIC”), and the Employee Retirement Income Security Act (“ERISA”). Plaintiff also asserted claims for injunctive relief requiring Cardo to pay federal and state taxes on behalf of plaintiffs and comply with FLSA, NJWHL, CIIC, and ERISA in the future. Defendants filed an Answer on June 22, 2012 and Cardo asserted counter-claims against Fred Adami, including a claim for breach of contract.
Magistrate Judge Schneider ordered all fact discovery on certification issues to be completed by April 30, 2013. [Docket Item 32.] Thereafter, Plaintiffs filed a motion for conditional certification of an FLSA “opt-in” collective action and certification of Rule 23 “opt-out” state wage class action. [Docket Item 43.] Additional requested discovery regarding class issues will be addressed after the Court decides Plaintiffs’ motion for class certification. [Docket Item 58.] Defendants filed a motion to seal certain exhibits to Defendants’ opposition to Plaintiffs’ motion for class certification. [Docket Item 66.] Defendants also filed an Answer to Plaintiffs’ Amended Complaint in which Cardo asserted a counter-claim against Jack Varner for breach of contract.
Following oral argument, the Court allowed the parties to submit supplemental briefing addressing certain discrete issues. Plaintiffs subsequently submitted new certifications signed by Adami and Varner dated December 19, 2013 and December 20, 2013 respectively. Since oral argument, Plaintiffs have also submitted seven “FLSA Consent Form[s].” Three contain dates after oral argument, including those signed by Adami and Varner. Four others contain dates in October 2012. Because these submissions exceed the scope of supplemental briefing allowed at oral argument, the Court has not considered them and limits its review to those issues the Court asked the parties to brief.
III. Discussion
A. Plaintiffs’ Motion for Conditional Certification of a FLSA “Opt-in” Collective Action
Plaintiffs argue that the Court should conditionally certify Plaintiffs’ FLSA claims as a collective action because they have carried their burden of showing that Plaintiffs and proposed collective action members are similarly situated. Plaintiffs request that the Court approve notice to all persons who installed windows for Cardo at any time during the relevant period — May 9, 2009 through present.
Defendants respond that the Court should not conditionally certify Plaintiffs’ FLSA claims as a collective action for two reasons. First, the case will require individualized determination of whether each person performing window installations for Cardo was an independent contractor or an employee. Second, Plaintiffs cannot show that they are similarly situated to all persons encompassed by Plaintiffs’ proposed collective action definition, including helpers, installers who worked for Cardo for short periods of time, incorporated business entities engaged to
The Court will grant Plaintiffs’ motion for conditional certification of a FLSA collective action, but will exclude from the collective action definition all helpers, as well as installers who signed mandatory arbitration and/or class action waiver agreements.
1. Conditional Certification
The FLSA requires employers to pay overtime compensation for an employee’s work in excess of 40 hours per week. 29 U.S.C. § 207. The statute also permits “similarly situated” employees to sue collectively for violations of this provision. Id. § 216(b). Unlike class actions under Fed.R.Civ.P. 23, the FLSA requires collective action members to affirmatively opt in to the case. Id. Courts in the Third Circuit follow a two-step process for deciding whether an action may proceed as a collective action under the FLSA. Camesi v. Univ. of Pittsburgh Med. Ctr.,
The first step, commonly referred to as the notice stage, occurs early in the litigation when the court has minimal evidence. Morisky v. Pub. Serv. Elec. & Gas Co.,
At the second stage, after further discovery, a court then makes “a conclusive determination as to whether each plaintiff who has opted in to the collective action is in fact similarly situated to the named plaintiff.” Symczyk,
To determine whether plaintiffs are similarly situated, the court must make a factual determination on a case-by-case basis considering all the relevant factors. Zavala,
2. Similarly Situated
The instant action requires the Court to analyze whether individuals are similarly situated with regard to the analysis applicable to whether they are employees or independent contractors.
The FLSA defines “employee” as “any individual employed by an employer.” 29 U.S.C. § 203(e)(1); Martin v. Selker Bros., Inc.,
In the instant case, the Court will grant conditional certification because Plaintiffs meet the lenient evidentiary standard applied at this stage. Examining the factors specifically identified by the Third Circuit relevant to whether Plaintiff and proposed collective action members are similarly situated, Plaintiffs here advance the same claims and seek the same form of relief.
Considering the similarly situated analysis in light of the Martin factors used to determine whether an individual is an employee or an independent contractor under the FLSA, Plaintiffs have made a sufficient factual showing justifying conditional certification. Plaintiffs have presented evidence of similarities in the way Defendants allegedly control Plaintiffs and proposed collective action members including requirements that the installers report to the warehouses at 7:00 am to unload delivery trucks, call their managers between 1:00 and 2:00 pm each afternoon, meet with managers each day to discuss the previous day’s work, and receive job packets each day providing detailed specifications for their work. Further, the evidence of record supports Plaintiffs’ contention that Defendants instructed installers to present themselves as employees of Cardo, not independent contractors. Cardo also required installers to display Cardo signage on their trucks and wear clothing with Cardo’s logo.
Consideration of other Martin factors reveals further similarities in Cardo’s treatment of installers. The parties agree that Cardo requires its installers to have their own pickup trucks and equipment, but Cardo provides all materials to the installers. The degree of permanence of the relationship between the installers may vary for each installer, but Defendants concede there is a core group of installers and many who have worked for Cardo in consecutive years. Finally, there is no question that window installation is an integral part of Cardo’s business.
Defendants rely on Bamgbose v. Delta-T Grp., Inc.,
Although Defendants have identified several potential differences between Plaintiffs and proposed collective action members, these differences, unlike those in Bamgbose, do not prevent Plaintiffs from carrying their modest burden at this stage. While the Court finds that all helpers, as well as installers who signed mandatory arbitration and/or class action waiver agreements should be excluded from the collective action, the remaining differences between potential collective action members do not prevent conditional certification. Here, unlike Bamgbose, the job performed by the installers does not change significantly based on the customer or the location of the job. Similarly, the manner of Cardo’s supervision and management and the process for compensation does not change based on the identity of the customer or the location of the Cardo warehouse involved. The skills required for the installers is uniform because the installers perform a single task.
Further, the question of whether some of Cardo’s installers were incorporated entities requires determination of the merits in the case and in light of the FLSA’s broad remedial purpose does not preclude inclusion in the proposed collective action at this stage. Smith v. Johnson & Johnson,
However, “helpers,” and installers who signed mandatory arbitration and/or class action waiver agreements will be excluded from the collective action definition. The Court finds that Plaintiffs have not made a sufficient factual showing that helpers are similarly situated. While evidence in the record supports Plaintiffs’ contention that the majority of installers engaged at least one helper, Adami and Arce testified that helpers work for and are paid by the installer. (Adami Dep. 13:6-10; 263:21-264:24; Arce Dep. 74:19.) Further, the parties agreed at oral argument that there are no records of the individuals who served as helpers for Cardo windows during the relevant period. As such, there is no reliable method to ascertain their identities. Similarly, Plaintiffs have not made a sufficient factual showing that installers who have signed mandatory arbitration or class action waiver agreements are similarly situated because Adami and Varner have not signed any such agreement. The named Plaintiffs thus lack standing to contest the validity of these agreements. Therefore, the Court will exclude from the collective action definition
Plaintiffs request that the Court approve the proposed notice form attached to their motion. [Docket Item 43-5.] Rather than accept Plaintiffs’ proposed form, the parties shall meet and confer to devise a notice form that is fair and accurate and consistent with today’s determination. The Court will resolve disputes between the parties as necessary and provide final approval of the notice upon submission by the parties. Consistent with the foregoing, the conditional membership in the collective action shall include all individuals who installed windows for Cardo at any time up to the three years prior to the notice date.
3. Equitable Tolling under the FLSA
Plaintiffs request that the statute of limitations for each potential collective action member under the FLSA be equitably tolled. Plaintiffs argue that equitable tolling under the FLSA is appropriate where similarly situated plaintiffs, through no fault of their own, have been unable to join the lawsuit. Plaintiffs note that Defendants have refused to reveal the names and addresses of installers and helpers employed during the collective action period.
Defendants respond that none of the rare circumstances permitting equitable tolling are applicable to the present action. First, Defendants argue that they are not required to provide the potential plaintiffs’ names and contact information until the collective action is conditionally certified. Second, Defendants argue that the arbitration agreements were voluntarily entered and have not prevented any installer from joining the action. Third, Defendants reject any inference of inequity or intimidation in filing a legitimate criminal complaint against Adami. Last, Defendants argue that the pending motion to dismiss has had no effect on potential plaintiffs’ ability to join this action.
Under the FLSA, the filing of the complaint does not toll the statute of limitations for putative collective action members. Rather, the statute of limitations continues to run until putative collective action members “opt-in” by filing consent forms. 29 U.S.C. § 256. The equitable tolling doctrine applicable to every federal statute of limitation, including the FLSA, pertains in three principal situations in the Third Circuit. See Miller v. Beneficial Mgmt. Corp.,
In the present action, none of the situations identified in Miller apply. The Court does not credit Plaintiffs’ arguments suggesting that Defendants actively sought to prevent potential plaintiffs from joining the collective action through arbitration agreements, intimidation, or delaying their re
For two reasons, the Court finds that Defendants’ failure to provide potential plaintiffs’ names and contact information pri- or to conditional certification does not itself justify tolling the statute of limitations period. First, “Congress knew when it enacted 29 U.S.C. § 256 that time would lapse between the filing of the collective action complaint by the named plaintiff and the filing of written consents by the opt-in plaintiffs, yet it chose not to provide for tolling of the limitations period.” Woodard v. FedEx Freight E., Inc.,
B. Plaintiffs’ Motion for Certification of a Rule 23 “Opt Out” State Wage Class Action
Plaintiffs seek to certify the following class under Fed.R.Civ.P. 23(b)(3) for claims for overtime asserted under the NJWHL:
All persons who installed windows for Castle Windows from May 9, 2009 to present who were not paid overtime for work weeks in excess of 40 hours.10
(PI. Br. at 23.)
The Court will deny Plaintiffs’ motion for certification of a Rule 23 state wage class action without prejudice because Plaintiffs’ motion turns on the appropriate test to determine whether an individual is an employee or an independent contractor under the NJWHL and the Supreme Court of New Jersey recently accepted certification of this exact question. Further, based on the present record, the Court is concerned about Plaintiffs’ ability to satisfy the predominance and ascertainability requirements of Rule 23(b).
1. Rule 23(b) Requirements
Before a class may be certified, Plaintiffs must show that they qualify under at least one subsection of Rule 23(b), and in this case Plaintiffs seek certification under Rule 23(b)(3). Rule 23(b)(3) permits class certification if “the court finds that the questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.” Fed.R.Civ.P. 23(b)(3).
Despite similarities with the elements of Rule 23(a), the predominance test is “a standard far more demanding than the commonality requirement.” In re Hydrogen
Plaintiffs argue that questions of law or fact common to the class predominate over individual questions because members of the class performed the same work and were compensated in the same way. Further, members of the class performed the same duties, worked the same hours, and were harmed in the same way by Defendants’ failure to pay overtime and provide employee benefits. Finally, joinder of multiple claims would be impracticable because the amounts owed to each class member are relatively small as many installers only worked for Cardo for a short period of time.
Defendants respond that individual issues predominate over questions common to the class. Primarily, Defendants note that Plaintiffs’ claim requires individualized analysis to determine whether each installer is an “employee” under the NJWHL.
Because the predominance analysis requires the Court to determine the appropriate test for whether an individual is an employee or an independent contractor under the NJWHL and the Supreme Court of New Jersey recently accepted certification of this exact question, the Court in an abundance of caution will deny Plaintiffs’ motion without prejudice at this time.
Defendants contend that the Court should deny Plaintiffs’ motion with prejudice because Plaintiffs cannot satisfy any test to determine whether an individual is an employee under the NJWHL.
Additionally, the Court notes that the present record raises issues regarding ascertainability. Aseertainability entails two elements: “First, the class must be defined with reference to objective criteria. Second, there must be a reliable and administratively feasible mechanism for determining whether putative class members fall within the class definition.” Hayes v. Wal-Mart Stores, Inc.,
Defendants properly note that the differences among potential class members may require individualized fact-finding or minitrials rendering the class action an inappropriate and inefficient method of litigating Plaintiffs’ claims. Ascertaining the identity of class members will require inquiry into each member’s independent contractor status, hours worked, level of control or autonomy, rate of pay, and status as a sole proprietor or incorporated business entity. Therefore, Plaintiffs must identify a reliable and administratively feasible method for determining whether class members satisfy the class definition, and they have failed to do so on the present record.
2. Rule 23(a) Requirements
Fed.R.Civ.P. 23(a) enumerates four threshold requirements for class certification known as numerosity, commonality, typicality and adequacy of representation.
Having found the record deficient based on predominance and ascertainability, the Court need not engage in a detailed discussion of the Rule 23(a) requirements. It is sufficient to note that numerosity is hotly contested between the parties and Plaintiffs’ maintain the burden to articulate a practicable method to identify potential class members in light of the differences among Cardo’s installers discussed above. Importantly, the Court agrees with Defendants that Cardo installers who signed mandatory arbitration and class action waiver agreements should be excluded from the proposed class. The Court also concludes that the class should not include “helpers” or installers Defendants’ contend were incorporated entities.
It is important to make clear that the Court is not reopening class discovery. Magistrate Judge Schneider ordered all fact discovery on certification issues to be completed by April 30, 2013 and provided that additional requested discovery regarding class issues will be addressed after the Court decides Plaintiffs’ motions for class certification. Accordingly, the parties had an ample period of 11 months of discovery and, according to Defendants, conducted 14 depositions over 10 days. The Court finds denial without prejudice appropriate in light of the question pending before the Supreme Court of New Jersey in Hargrove so Plaintiffs may refile their motion after an opportunity to brief applicable law, provided further that Plaintiffs address the shortcomings regarding predominance and ascertainability addressed above.
C. Defendants’ Motion to Seal
Defendants filed a motion to seal [Docket Item 66] relating to certain exhibits to their opposition to Plaintiffs’ motion for class certification [Docket Item 68,] which is unopposed.
Under L. Civ. R. 5.3(c)(2), a party moving to seal must address four factors: “(a) the nature of the materials or proceedings at issue, (b) the legitimate private or public
Defendants’ motion to seal initially sought to prevent public disclosure of two categories of documents: 1) deposition testimony and other documents that describe the “competitively sensitive confidential business information of Defendants (Exhibits 2, 3, 8, and 22); and 2) private financial information of non-parties presented by IRS 1099 forms (Exhibits 13a-13d; 15).” (Def. Br. [Docket Item 66-1] at 2.) Following oral argument, counsel for Defendants submitted a letter withdrawing the motion in part as to exhibits 2, 3, 8, and 22. Therefore, Defendants only maintain their motion to seal as to exhibits 13a-13d and 15. Exhibits 13a-13d contain IRS 1099 forms for various Cardo installers from 2009 to 2012 with portions of their social security numbers redacted. Exhibit 15 contains 1099 forms for Varner and Adami with all social security numbers redacted except one.
Having reviewed the documents, the Court will grant Defendants’ motion to seal exhibits 13a-d and 15 because they have satisfied the elements of Rule 5.3(e)(2). Cardo’s installers whose personal information is contained in these exhibits have a legitimate private interest in not having their addresses, social security numbers, and salaries disclosed to the public at this time. See Platt v. Freedom Mortgage Corp., Civ. 10-968,
D. Plaintiffs’ Motion to Dismiss Car-do’s Counter-Claims for Breach of Contract
Plaintiffs filed a motion to dismiss Cardo’s counter-claims against Adami and Varner for breach of contract. [Docket Item 74.] The Court will grant Plaintiffs’ motion as to Car-do’s counterclaim for breach of contract against Varner, but deny Plaintiffs’ motion as to Cardo’s counter-claim for breach of contract against Adami.
1. Facts
The Court takes the following facts, alleged in Defendants’ Answer to Plaintiffs’ original Complaint and Defendants’ Answer to Plaintiffs’ Amended Complaint, to be true for the purposes of this motion. Fred Adami is a professional window installer. (Def. Answer to Complaint (“Def. Ans. 1”) [Docket Item 9] ¶ 5.) In March 2001, Adami entered an agreement with Cardo Windows (d/b/a Castle “The Window People”) to perform work as an independent contractor. (Id. ¶ 7.) Pursuant to the agreement, Adami agreed to “provide all construction supervision, inspection, labor, tools, equipment and anything else necessary for the execution and completion of the” installation work he agreed to do. (Id. ¶ 8.) Adami and Cardo agreed that Ada-mi would work as an independent contractor. (Id. ¶ 9.) Cardo was interested in the “results” of Adami’s work, and the parties agreed that “the manner, method and means of conducting the work shall be under the sole and exclusive control of’ Adami. (Id.) The work of residential window installers is highly specialized, typically done by independent contractors, and recognized as an independent profession in the construction industry. (Id. ¶ 11.)
On March 1, 2006, Adami and Cardo entered into an updated independent contractor’s agreement in which they affirmed Adami’s status as an independent contractor, including terms relating to their working relationship, liability and loss, insurance and taxes. (Id. ¶ 12.) On January 29, 2010, Adami and Cardo again affirmed their business relationship in a Master Subcontract Agreement. (Id. ¶ 13.) Adami expressly agreed to be solely responsible for all federal, state or local taxes for the work
Jack Varner is professional window installer. (Def. Answer to Amended Complaint (“Def. Ans. 2”) [Docket Item 69] ¶ 5.) In 2003, Varner entered an agreement with Cardo to perform work as an independent contractor. (Id. ¶ 7.) Pursuant to the agreement, Varner agreed to “provide all construction supervision, inspection, labor, tools, equipment and anything else necessary for the execution and completion of the” installation work he agreed to do. (Id. ¶ 8.) Varner and Cardo agreed that Varner would work as an independent contractor. (Id. ¶ 9.) Cardo was interested in the “results” of Varner’s work, and the parties agreed that “the manner, method and means of conducting the work shall be under the sole and exclusive control of’ Varner. (Id.) In 2010, Varner and Cardo again affirmed their business relationship in a Master Subcontract Agreement. (Id. ¶ 12.)
During all times Varner performed work for Cardo, he agreed to be paid the per-job payments offered by Cardo as his sole compensation for such work. (Id. ¶ 14.) Varner also expressly agreed to be solely responsible for all federal, state or local taxes for the work he performed and the payments he received. (Id. ¶ 16.) He also agreed that he was not entitled to any employee benefits from Cardo. (Id.) Relying on the terms of their contractual relationship, Cardo paid Varner nearly $1,000,000 for his professional work. (Id. ¶ 17.) Varner requests in the present litigation to be reclassified as an employee and receive employee benefits, overtime pay and payment of employment taxes. (Id. ¶ 18.)
2. Standard of Review
A motion to dismiss under Fed.R.Civ.P. 12(b)(6) may be granted only if, accepting all well-pleaded allegations in the complaint as true and viewing them in the light most favorable to the plaintiff, a court concludes that plaintiff failed to set forth fair notice of what the claim is and the grounds upon which it rests that make such a claim plausible on its face. Bell Atlantic Corp. v. Twombly,
“As a general matter, a district court ruling on a motion to dismiss may not consider matters extraneous to the pleadings.” In re Burlington Coat Factory Sec. Litig.,
Defendants attach documents to their Answer to Plaintiffs original Complaint, but not their Answer to Plaintiffs’ Amended Complaint. The Court will consider the documents attached to Defendants’ Answer to Plaintiffs’ original Complaint because these documents are integral to Cardo’s counterclaim for breach of contract against Adami and there is no dispute regarding authenticity-
3. Analysis
The Court will first address Plaintiffs’ procedural arguments challenging Cardo’s breach of contract counter-claims. Plaintiffs argue that Cardo’s counter-claims
Cardo assert that Adami has waived his right to file this motion to dismiss by filing an answer to the counter-claim. A defendant may move to dismiss a complaint before or after filing an answer. Fed. R.Civ.P. 12(b)(6), (c); see also Borough of Sayreville v. Union Carbide Corp.,
The Court will now address the substance of Plaintiffs’ motion to dismiss. Plaintiffs argue that Cardo’s counter-claims for breach of contract should be dismissed because neither the FLSA, nor the NJWHL authorizes counter-claims or offsets by an employer against an employee.
A party alleging a breach of contract satisfies its pleading requirement if it alleges (1) a contract; (2) a breach of that contract; (3) damages flowing therefrom; and (4) that the party performed its own contractual duties. See Pub. Serv. Enter. Group, Inc. v. Phila. Elec. Co.,
In the present ease, the question is whether Cardo has properly alleged that Adami and Varner breached the various agreements they entered with Cardo. The Court finds that the instant action by Plaintiffs, challenging their classification as independent contractors and seeking compensation and employee benefits, does not constitute a breach. Cardo does not identify any language in the agreements prohibiting Plaintiffs from challenging the agreement or their classification as independent contractors. As to Plaintiff Varner, Cardo fails to allege any additional facts that suggest any failure to perform under the agreements. Therefore, the Court will grant Plaintiffs’ motion and dismiss Car-do’s counter-claim for breach of contract against Varner.
The Court must consider Cardo’s counterclaim against Adami separately because it contains additional allegations that Adami’s conduct constitutes a breach of the implied covenant of good faith and fair dealing. Specifically, Cardo alleges that
Adami engaged in ... unlawful, tortious and malicious conduct toward Cardo Windows while performing his services. This unlawful and breaching conduct included participating in and benefitting from false and fraudulent invoices to Cardo Windows, theft and conversion of Cardo Windows supplies for his own benefit, and conspiring with others to defraud and steal from Car-do Windows.
(Def. Ans. 1 ¶¶ 67-68.)
New Jersey law provides that “every contract ... contains an implied covenant of good faith and fair dealing,” requiring that “neither party shall do anything which will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract[.]” Kalogeras v. 239 Broad Ave., L.L.C.,
IV. Conclusion
In light of the foregoing, the Court will grant Plaintiffs’ motion for conditional certification of a FLSA collective action because Plaintiffs have made the requisite preliminary factual showing that the potential collective action members are similarly situated. The Court will deny without prejudice Plaintiffs’ motion for certification of a Rule 23 state wage class action in light of the Supreme Court of New Jersey’s recent acceptance of a certification to determine the appropriate test for whether an individual is an employee or independent contractor under the NJWHL. The Court will grant Defendants’ motion to seal as to exhibits 13a-13d and 15 containing IRS 1099 forms of Plaintiffs and non-parties. Finally, the Court will grant Plaintiffs’ motion to dismiss Cardo’s counter-claim for breach of contract against Varner, but deny Plaintiffs’ motion to dismiss Cardo’s counterclaim for breach of contract against Adami due to additional allegations implicating a breach of an implied covenant of good faith and fair dealing. An accompanying Order will be entered.
Notes
. Plaintiffs also contend that Cardo instructs installers to further obscure their employment status by telling customers to call the office to speak to their managers if asked about workers’ compensation insurance. (Arce Dep. 56:110-12.)
. Defendants provide a series of documents relating to a 2011 investigation by the New Jersey Department of Labor and Workforce Development following a complaint for unpaid wages filed by Eugene Latona. (Def. Opp. Ex. 6.) These documents do not validate Cardo's treatment of its installers as Defendants claim because, if anything, they merely show that the claimant was not owed any money. The only document that explicitly states that the claimant was not owed any money was authored by Nicholas Cardillo, not the Department of Labor. Further, the documents do not address Cardo’s characterization of its installers as independent contractors.
. Cardo also asserted counter-claims against Adami for fraud, conversion, and tortious interference with contract. [Docket Item 6.]
. Defendants’ Answer to Plaintiffs’ Amended Complaint does not recite the counter-claims previously asserted by Cardo against Fred Ada-mi. Instead, in the Answer to Plaintiffs’ Amended Complaint, Cardo asserts a counter-claim against Jack Varner for breach of contract “in addition to the counterclaims previously filed against plaintiff Frederick Adami.” (Def. Answer to Amended Complaint ("Def. Ans. 2”) [Docket Item 69] at 21.)
. The Court acknowledges that courts in the Third Circuit have adopted different approaches to motions for conditional certification under the FLSA where the claim is based on independent contractor misclassification. See Scott v. Bimbo Bakeries, USA, Inc., Civ. 10-3154,
. However, "helpers" shall not be included in the collective action because the parties agreed at oral argument that there are no records of the individuals who served as helpers for Cardo during the relevant period. Therefore, there is no reliable method to ascertain their identities. Further, installers who have signed mandatory arbitration and/or class action waiver agreements shall be excluded because the named Plaintiffs have not signed such waivers and therefore lack standing to contest their validity.
. Defendants rely on two additional Third Circuit cases addressing the alleged misclassification of independent contractors at the conditional certification stage, Spellman v. Am. Eagle Exp., Inc., Civ. 10-1764,
. The Court finds that three years prior to the notice date is the appropriate start date for the collective action period because the Amended Complaint alleges a willful violation of the FLSA.
. As part of their opposition to Plaintiffs' motion for class certification, Defendants provided IRS 1099 forms with the names of installers who performed work for Cardo from 2009 to 2012. Defendants have not provided any documentation relevant to 2013, but Defendants are hereby directed to promptly provide the relevant information for 2013 and 2014 up to the date of this Opinion.
. Plaintiffs' counsel could not clarify at oral argument whether Plaintiffs only seek Rule 23 class certification for claims asserted under the NJWHL or whether they seek certification for additional claims asserted under the CIIC and ERISA, as well as claims for injunctive relief requiring Cardo to comply with the FLSA, NJWHL, CIIC, and ERISA. Consistent with Plaintiffs’ proposed class definition and the parties' briefing, this Opinion only addresses Rule 23 class certification for Plaintiffs’ claim under the NJWHL.
. Noting that neither the Supreme Court of New Jersey nor any other New Jersey appellate court has determined which employment test applies, the Third Circuit certified to the Supreme Court of New Jersey the question of the appropriate test under the NJWHL. The Supreme Court of New Jersey issued an order on July 10, 2013 accepting the question as certified. Hargrove v. Sleepy’s LLC,
. Plaintiffs, in supplemental briefing following oral argument, do not object to the Court’s denial of their motion without prejudice.
. Rule 23(a) provides:
One or more members of a class may sue or be sued as representative parties on behalf of all members only if:
(1) the class is so numerous that joinder of all members is impracticable;
(2) there are questions of law or fact common to the class;
(3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and
(4) the representative parties will fairly and adequately protect the interests of the class.
Fed.R.Civ.P. 23(a).
. Plaintiffs also argue that Cardo’s counterclaims seek the return of all wages paid to Plaintiffs in violation of the Thirteenth Amendment. While it is true that Cardo’s counter-claim against Adami seeks "recovery of all amounts paid to him under their contractual agreements,” Cardo’s counter-claim against Varner seeks recoveiy of "any costs and damages it incurs as a result of his breach, including payment of any taxes, employee benefits or damages paid to Varner or to a third party.” (Def. Ans. 1 ¶ 71; Def. Ans. 2 ¶ 19.) The Court finds that Cardo’s pleadings related to damages are sufficient to survive a motion to dismiss.
. Cardo’s counter-claim against Jack Varner states, "Varner's request in this litigation to be reclassified as an employee, and receive employee benefits, overtime pay and payment of employment taxes, constitutes a breach of his contractual agreement with Cardo Windows to be an independent contractor, without benefits and to pay all of his own taxes.” (Def. Ans. 2 ¶ 18.) Cardo’s counter-claim against Adami contains identical language. (Def. Ans. 1 ¶ 72.)