222 F.R.D. 676 | D. Kan. | 2004
MEMORANDUM AND ORDER
This lawsuit arises from the alleged practice of defendant Money Tree Mortgage, Inc. (Money Tree)
I. Class Certiftcation of Plaintiff’s FLSA Claim
A. Legal Standard for Certification
Plaintiff moves for class certification pursuant to Rule 23(b)(3) of the Federal Rules of Civil Procedure. A class certified under Rule 23(b)(3) includes all class members who do not opt out of the class. See Fed.R.Civ.P. 23(c)(3) (providing that a judgment in a Rule 23(b)(3) class action applies to all class members to whom notice was directed and who did not request exclusion from the class). In sharp contrast, plaintiffs FLSA claim is governed by FLSA § 16(b), which provides that an FLSA class only includes members who opt in to the class. See 29 U.S.C. § 216(b) (“No employee shall be a party plaintiff to any [§ 216(b)] action unless he gives his consent in writing to become such a party and such consent is filed in the
The FLSA provides for a class action where the complaining employees are “similarly situated.” 29 U.S.C. § 216(b). The Tenth Circuit has approved a two-step approach in determining whether plaintiffs are “similarly situated” for purposes of FLSA § 16(b). See Thiessen, 267 F.3d at 1105 (applying FLSA § 16(b) in an ADEA case); see generally, e.g., Williams v. Sprint/United Mgmt. Co., 222 F.R.D. 483, 484-85 (D.Kan. 2004) (explaining that the court applies this two-step approach in an ADEA ease). Under this approach, a court typically makes an initial “notice stage” determination of whether plaintiffs are similarly situated. Thiessen, 267 F.3d at 1102. That is, the district court determines whether a collective action should be certified for purposes of sending notice of the action to potential class members. See Mooney v. Aramco Servs. Co., 54 F.3d 1207, 1213-14 (5th Cir.1995). For conditional certification at the notice stage, a court “require[s] nothing more than substantial allegations that the putative class members were together the victims of a single decision, policy, or plan.” Thiessen, 267 F.3d at 1102 (quotation omitted; brackets in original). The standard for certification at this notice stage, then, is a lenient one that typically results in class certification. See Mooney, 54 F.3d at 1214; Williams, 222 F.R.D. at 485; Brooks v. BellSouth Telecommunications, Inc., 164 F.R.D. 561, 568 (N.D.Ala.1995), aff'd, 114 F.3d 1202 (11th Cir.1997) (unpublished table opinion).
At the conclusion of discovery, the court then revisits the certification issue and makes a second determination (often prompted by a motion to decertify) of whether the plaintiffs are similarly situated using a stricter standard. Thiessen, 267 F.3d at 1102-03. During this “second stage” analysis, a court reviews several factors, including the disparate factual and employment settings of the individual plaintiffs; the various defenses available to defendant which appear to be individual to each plaintiff; fairness and procedural considerations; and whether plaintiffs made any required filings before instituting suit. Id. at 1103.
B. Background
Plaintiffs first amended complaint (hereinafter referred to as, simply, the complaint) alleges that he was formerly employed by Money Tree at its location in Olathe, Kansas. As a Money Tree employee, he routinely worked more than forty hours per week. According to the allegations in the complaint, Money Tree engaged in a pattern and practice of not paying its employees required overtime compensation in violation of the FLSA. Money Tree’s other employees were similarly situated in that they are or were employed in similar positions. The complaint further alleges that this pattern and practice constituted a breach of the express and implied terms of Money Tree’s employment contracts with its employees, and that Money Tree engaged in a pattern and practice of fraud by representing to its employees that in lieu of being paid overtime they would accrue flex time that could be used at the employees’ election even though Money Tree knew the employees held non-exempt status; Money Tree made these representations to induce prospective job applicants and to mislead its employees into believing that they were receiving a benefit in return for foregoing overtime pay; and employees were then discouraged from using their accrued flex time and were even told that they would be terminated if they attempted to use it.
In support of the allegations in the complaint, plaintiff has submitted affidavits from two former employees of Money Tree. The first, James Derry, states that he worked for Money Tree as a sales manager of the Olathe office for approximately four or five months in 2003. According to Mr. Derry’s affidavit,
[ejmployees were not paid for the hours they worked. There were no work schedules and nothing was ever put in writing. I worked more than 40 hours in a week. The employees were never paid for more than 40 hours a week. The owners were also robbing the loan closers. The processors actually turned in time sheets for the hours they actually worked. They were paid for 40 hours and this 40 hours was reported no matter how many hours they worked. Inna Veekerman would use a white out pen to change the time sheets and then photocopy them so that they looked like originals. Some time sheets were also shredded if they had more than 40 hours a week on them. Employees were told they could take “comp time” for the overtime they worked but they were never allowed any time off. The sales people did not keep time sheets.
Derry Aff. ¶10, at 3.
The second affidavit is from Sheila Hicks, who states that she worked for Money Tree in September and October of 2003. She
[t]he books were handled through the Georgia office. Inna Vergerman was the individual in charge. Inna was supposed to be the office manager. Time sheets were turned into her. She conducted initial interviews for employment. She told applicants they would get $400 a week.
When Inna hired me, I was told I would get $400 a week. No compensation was mentioned for more than 40 hours of work and no comp time was mentioned---- I worked more than 40 hours a week three of the eight weeks I was employed. I turned in time slips to Inna. If I worked less than 40 hours, my pay was deducted. I received $10 an hour for hours I worked under 40.
Inna said if I worked more than 40 hours in a week and kept track of it, I would take time out of the office if it was taken in the same pay period. It was dropped if not taken and referred to as donated hours.
A girl named Shellie who worked there took time off. She left the company because she took time off. They refused to pay her, so she left.
I asked about overtime pay and I told Inna if I worked more than 40 hours it was against the law not to be paid for it. She said I was wrong. She said it was company policy and that was how I would be paid.
Id. at 4-5.
C. Discussion
The court readily concludes that conditional certification of this action is appropriate for purposes of sending notice to potential class members. Clearly, plaintiffs complaint contains detailed allegations, supported by affidavits from Mr. Derry and Ms. Hicks, that these three were “together the victims of a single decision, policy, or plan,” Thiessen, 267 F.3d at 1102, which was Money Tree’s alleged pattern and practice of not paying its employees overtime. Each of them worked in excess of forty hours per week and were not paid any overtime compensation, and plaintiffs complaint alleges that the other Money Tree employees were employed in similar positions. Thus, plaintiff is similarly situated to other members of the putative collective action, which includes present and former Money Tree employees who were employed in similar positions and who were denied overtime compensation for hours worked beyond forty hours per week.
Money Tree has raised a variety of arguments in opposition to plaintiffs motion, the overwhelming majority of which are without merit or simply misplaced in light of the fact that the court is construing the motion as a motion to certify a collective action pursuant to FLSA § 16(b). For example, Money Tree argues that class certification is inappropriate because whether each putative class member will have a meritorious claim under the FLSA will depend on whether the
Money Tree also argues that Mr. Brown is not an adequate class representative because he was employed by Money Tree for only seven weeks and therefore his damages would be rather limited compared to those of other class members who were employed by Money Tree for longer periods of time. Although FLSA § 16(b) does not expressly incorporate Rule 23(a)(4)’s adequacy-of-representation requirement, the adequacy of a class counsel or a class representative is not necessarily irrelevant in a putative FLSA § 16(b) collective action because the court has an inherent interest in ensuring that opt-in plaintiffs are adequately represented. See White v. Osmose, Inc., 204 F.Supp.2d 1309, 1315 (M.D.Ala.2002); Hoffmann v. Sbarro, Inc., 982 F.Supp. 249, 263 (S.D.N.Y.1997). With that being said, however, the court is unpersuaded that the particular concern articulated by Money Tree in this regard is sufficient to render plaintiff an inadequate class representative. The FLSA allows an action under § 16(b) to be brought “by any one or more employees.” 29 U.S.C. § 216(b). It does not contain any language from which it can be implied that an action must be brought by the employee who suffered the greatest damages from an employer’s unlawful practice.
In addition, Money Tree argues that this court is not the proper venue for a class action because the vast majority of Money Tree’s employees were located in Georgia. The FLSA does not contain a special venue provision, see 29 U.S.C. § 216(b) (providing that an FLSA action may be brought “in any Federal or State court of competent jurisdiction”), and therefore the general venue provision, 28 U.S.C. § 1391, governs venue for FLSA claims. See Bredberg v. Long, 778 F.2d 1285, 1287 (8th Cir. 1985); Stein v. Chemtex Int’l, Inc., No. 04-001, 2004 WL 722252, at *2 (D.Del. Mar.31, 2004); Goldberg v. Wharf Constructers, 209 F.Supp. 499, 501 (N.D.Ala.1962). In this case, venue is proper in the District of Kansas pursuant to 28 U.S.C. § 1391(b)(2) because a substantial part of the events giving rise to the claims occurred in Olathe, Kansas. To the extent that Money Tree believes Georgia would be a more convenient forum, its remedy would be to file a motion to transfer pursuant to 28 U.S.C. § 1404(a).
Money Tree also argues that plaintiffs motion for class certification is premature because Money Tree has not yet had an opportunity to conduct discovery sufficient to adequately respond to plaintiffs motion for class certification. As explained above, however, class certification involves a two-step approach that adequately addresses this concern. The court’s ruling at this time does not determine how this case will ultimately proceed because Money Tree will have an adequate opportunity to ask the court to engage in a second-phase analysis after it has had the opportunity to conduct discovery.
II. Rule 23 Class Certifícation of Plaintiff’s State Law Claims
The remaining issue before the court, then, is the aspect of plaintiffs motion in which he seeks class certification of his state law breach of contract and fraud claims pursuant to Rule 23 of the Federal Rules of Civil Procedure. As discussed previously, plaintiff did not utilize the appropriate procedural vehicle for seeking class certification of his FLSA claim. Presumably because of this, the parties also did not recognize the fact that certifying a class jointly under FLSA § 16(b) and Rule 23 raises a variety of procedural considerations, including the threshold issue of whether the court should exercise supplemental jurisdiction over the putative Rule 23 class action on plaintiffs state law claims. See De Asencio v. Tyson Foods, Inc., 342 F.3d 301, 307-12 (3d Cir.2003) (holding the district court abused its discretion by exercising supplemental jurisdiction over Rule 23 class action for state law claims that substantially predominated over FLSA collective action); Bartleson v. Winnebago Indus., 219 F.R.D. 629, 637-38 (N.D.Iowa 2003) (holding the magistrate judge’s decision was contrary to law insofar as it allowed leave to amend for plaintiffs who were not already asserting FLSA claims because the court would lack supplemental jurisdiction over those claims and hence those claims were futile); Jackson v. City of San Antonio, 220 F.R.D. 55, 58-61 (W.D.Tex.2003) (declining to exercise supplemental jurisdiction over pendent plaintiffs who did not opt in to FLSA claim); see also McClain v. Leona’s Pizzeria, Inc., No. 04C1913, 2004 WL 1745750, at *l-*4 (N.D.Ill. July 30, 2004) (denying Rule 23 motion for class certification where court had previously certified a collective class on FLSA claim because Rule 23 was not a superior method for adjudicating the state law claims); Goldman v. RadioShack Corp., No. 03-CV-0032, 2003 WL 21250571, at *1 — *11 (E.D.Pa. Apr. 16, 2003) (granting conditional certification of FLSA collective action and postponing a decision on Rule 23 class certification of state claims because further discovery was needed regarding the predominance test of Rule 23(b)(3)); De La Fuente v. FPM Ipsen Heat Treating, Inc., No. 02 C 50188, 2002 WL 31819226, at *l-*2 (N.D.Ill.Dec.16, 2002) (granting § 16(b) certification and denying Rule 23 motion without prejudice to re-file after the close of the opt-in period for the FLSA collective action); Scott v. Aetna Servs., Inc., 210 F.R.D. 261, 264-68 (D.Conn. 2002) (certifying Rule 23 class where FLSA class was previously certified); Ballaris v. Wacker Siltronic Corp., No. 00-1627, 2002 WL 926272, at *3 (D.Or. Feb.7, 2002) (noting the absence of a pendent-party issue because the plaintiff was intending to move for certification of a Rule 23 class on state law claims that only consisted of the FLSA opt-in members); Ansoumana v. Gristede’s Operating Corp., 201 F.R.D. 81, 95-96 (S.D.N.Y.2001) (certifying Rule 23 class for state law claims where approximately 350 plaintiffs had already filed consents for collective action on FLSA claim). Because the parties have not addressed these important issues, the court declines to grant plaintiff’s motion for certification of a Rule 23 class on his state law claims based on the record currently before the court. The court will, however, deny the motion without prejudice to plaintiff re-filing a Rule 23 motion for class certification of his state law claims at a later date, perhaps (for reasons suggested by some of the courts in the cases cited supra) after the scope of the opt-in class has been ascertained.
III. Conclusion
In conclusion, the court grants plaintiffs motion for class certification with respect to plaintiffs FLSA claim and hereby conditionally certifies a class pursuant to FLSA § 16(b) for purposes of sending notice of the action to potential collective action members. Plaintiffs motion is otherwise denied without
IT IS THEREFORE ORDERED BY THE COURT that defendant’s motion for class certification (doc. 9) is granted in part and denied in part without prejudice to be re-filed at a later date.
. Plaintiff also brought this action against individual defendants Todd Webster, Randy A. Webster, and Leslie A. Webster, who are allegedly Money Tree’s three shareholders. Todd Webster managed Money Tree's office in Olathe, Kansas, and Randy Webster managed Money Tree's office in Woodstock, Georgia. Leslie Webster was active in the management of the corporation, and is also Todd and Randy's mother. Plaintiff intends to seek to pierce the corporate veil of Money Tree in order to obtain a judgment against these three individual defendants. Insofar as the court's resolution of the current motion is concerned, however, for the sake of simplicity the court will simply refer to Money Tree as the defendant.
. Interestingly, plaintiff recognized in his complaint that FLSA § 16(b) is the appropriate procedural vehicle for certifying a class on his FLSA claim. He also acknowledged in his memorandum in support of his motion for class certification that he is seeking a proposed Rule 23 opt-out class that parallels the opt-in collective action. Thus, the court believes that counsel for plaintiff simply mistakenly sought relief under Rule 23, perhaps due to confusion regarding the appropriate procedure for seeking to certify a class for an FLSA claim and state law claims.
. Plaintiff's proposed class definition includes all Money Tree employees who were denied overtime compensation, and he alleges that all of the other putative class members were employed in similar positions. Money Tree does not attempt to refute this allegation nor does it argue that the court should revise plaintiff's proposed class definition to exclude any particular category of Money Tree employees. The court anticipates that the parties will file a motion for reconsideration if they believe that the court needs to address this issue.
