Plaintiffs, individually and on behalf of all others similarly situated, bring claims against Duane Reade, Inc. and Duane Reade Holdings (collectively, “DR”), asserting that DR failed to compensate its assistant store managers (“ASMs”) for hours worked in excess of 40 hours per week, in violation of the Fair Labor Standards Act, 29 U.S.C. §§ 201 et seq. (“FLSA”), and the New York Labor Law §§ 650 et seq. (“NYLL”). On March 20, 2013, the Court granted Plaintiffs’ motion for class certification, certifying Plaintiffs as a class with regard to their NYLL claims pursuant to Federal Rule of Civil Procedure 23 and appointing Outten & Golden, LLP, Flatter Olsen & Lesser, and Gottlieb & Associates as class counsel. Before the Court is DR’s motion for reconsideration, which seeks to decertify the class in light of the Supreme Court’s recent decision in Comcast v. Behrend, — U.S. -,
I. Background
Familiarity with the underlying facts of this case, as set forth in this Court’s two prior opinions, is presumed. In its opinion certifying Plaintiffs’ NYLL claims, the Court determined that Plaintiffs had satisfied Rule 23(a)’s requirements of numerosity, commonality, typicality, and adequacy of representation. Jacob v. Duane Reade,
First, DR moves for reconsideration on the grounds that “intervening controlling authority,” namely, the Supreme Court’s recent decision in Comcast, as well as the Court’s vacatur and remand of the Seventh Circuit’s class certification of 1,129 Assistant Bank Managers in RBS Citizens, N.A. v. Ross, — U.S. -,
DR filed its motion for reconsideration on April 4, 2013 (Dkt. No. 108). Plaintiffs opposed the motion on April 24, 2013 (Dkt. No. 112), and DR replied on May 24, 2013 (Dkt. No. 118). Plaintiffs filed a surreply on June 4, 2013. (Dkt. No. 122.) The Court held oral argument on the motion on July 9, 2013.
II. Legal Standard
“A motion for reconsideration is an extraordinary remedy to be employed sparingly in the interests of finality and conservation of scarce judicial resources.” Drapkin v. Mafco Consol. Group, Inc.,
III. Discussion
A. Comcast and its Effects
In Comcast, the Supreme Court considered the class certification of a class of more than 2 million current and former Comcast subscribers who sought damages for purported violations of the federal antitrust laws.
The Comcast plaintiffs had alleged four theories of antitrust impact, but the district court accepted only one such theory as “capable of classwide proof and rejected the rest.” Id. at 1431. The damages model proposed by plaintiffs, however, failed to “isolate damages resulting from any one theory of antitrust impact.” Id. Upon review, the Supreme Court held that this inability to match a damages model with any one theory of liability was fatal to the class, noting that under the Third Circuit’s logic, “any method of measurement” would conceivably be “acceptable so long as it [could] be applied classwide, no matter how arbitrary the measurements.” Id. at 1433. In sum, the Com-cast class was improperly certified “[i]n light of the [damages] model’s inability to bridge the differences between supra-eompetitive prices in general and supra-competitive prices attributable to the deterrence of overbuilding.” Id. at 1435.
Several days after the Comcast decision, the Supreme Court vacated and remanded the Seventh Circuit’s decision in Ross v. RBS Citizens, N.A.,
In the wake of Comcast and the vacatur of RBS, district and circuit courts alike have grappled with the scope, effect, and application of Comcast’s holding, and in particular, its interaction with non-antitrust class actions. Broadly, the class-certification decisions applying Comcast can be divided into three, distinct groups: (1) courts distinguishing Comcast, and finding a common formula at the class certification stage, and thus, predominance, satisfied, see, e.g., Leyva v. Medline Indus. Inc.,
In Leyva, a class action involving employees of a medical product manufacturer and deliverer, the Ninth Circuit interpreted Com-cast’ s discussion of damages as requiring “that the plaintiffs must be able to show that their damages stemmed from the defendant’s actions that created the legal liability.”
And finally, in In re High-Tech Employee Antitrust Litig.,
Other courts have similarly held that Com-cast does not act as a bar to class actions where the plaintiffs provide a workable damages model. See, e.g., Parra v. Bashas’, Inc., No. Civ. 02-0591,
Taking the opposite approach from the aforementioned cases are those courts that have interpreted Comcast more broadly, as requiring a heightened damages inquiry at the class certification stage. According to this latter view, in order to advance as a certified class, plaintiffs must offer “a damages model susceptible of measurement across the entire class,” and this determination cannot be extracted from the inquiry governing liability. See Roach,
Other courts, applying Comcast with the same breadth, have reached similar conclusions. See, e.g., Cowden v. Parker & Associates, Inc., Civ. A. No. 5:09-323,
In grappling with Comcast, a third approach has been employed by some courts, and alluded to in others, involving use of Rule 23(c)(4)
Commentators have suggested that the type of bifurcation employed in In re Motor Fuel and Miri may become a common approach for courts grappling with the reach and effect of Comcast. See, e.g., Ellen Meriwether, Comcast Corp. v. Behrend: Game Changing or Business As Usual?, Antitrust, Summer 2013, at 57, 61 (noting the conflicting approaches employed by the Roach and In re Motor Courts); 54 Am.Jur.2d Monopolies and Restraints of Trade § 442 (“Bifurcation enables a court to certify a class action on the issue of liability only, leaving the question of individual class members’ damages to be tried separately. Class certification may be proper even though individualized proof of impact or fact of damage is required, particularly where such proof is simple or mechanical. Yet, if questions of impact or fact of damage require complex, individualized proof, then the common issues cannot be said to predominate for purposes of Rule 23(b)(3).” (footnotes omitted)). Additionally, the Tenth Circuit, in a recent opinion remanding a class certification case for further consideration, identified the importance of a district court’s role in determining how to structure class certification litigation in light of both Comcast and the Federal Rules. See Wallace B. Roderick Revocable Living Trust v. XTO Energy, Inc.,
While bifurcation, or some use of Rule 23(c)(4) to certify the class in a limited fashion, is clearly an aspect of the post-Comcast landscape, the extent to which such procedures may be used remains a shifting reality. For example, prior to Comcast, the courts of appeal were split on the issue as to whether, when common issues or questions fail to predominate over an entire claim or action, a court may properly “isolate the common issues under Rule 23(e)(4) [ ] and proceed with class treatment of these particular issues.” In re Nassau Cty. Strip Search Cases,
While Comcast itself fails to speak to the use and scope of Rule 23(c)(4), the Supreme Court did vacate and remand, in light of its Comcast ruling, a Sixth Circuit decision that had certified a class for liability purposes only. See Whirlpool Corp. v. Glazer, — U.S. -,
Divining the Supreme Court’s intent from a so-called “GVR order” is the subject of much scholarship and little clarity; suffice it to say that the vacatur and remand of In re Whirlpool does not necessarily speak to the propriety of liability-only certification in a post-Comcast world. The Sixth Circuit, on remand, acknowledged this obfuscation and construed the Supreme Court’s GVR similarly, noting that the “law is clear that a GVR order does not necessarily imply that the Supreme Court has in mind a different result in the case, nor does it suggest that our prior decision was erroneous.” In re Whirlpool Corp. Front-Loading Washer Products Liability Litig. (Whirlpool II), No. 10-4188,
Instead of remanding the case, the Sixth Circuit, in reviewing the district court’s certification and its prior affirmance in light of Comcast, was “satisfied that the [district] court considered relevant merits issues with appropriate reference to the evidence,” as required by Dukes and Amgen Inc. v. Conn. Retirement Plans & Trust Funds, — U.S. -,
With respect to predominance, the Whirlpool II court emphasized that Amgen stands for the enduring principle that “the predominance inquiry must focus on common questions that can be proved through evidence common to the class,” but a plaintiff class “need not prove that each element of a claim can be established by classwide proof.” Id. at *15 (citation omitted). “Following Amgen’ s lead,” the Sixth Circuit upheld the district court’s predominance conclusion, finding “that liability questions common to the Ohio class—whether the alleged design defects in the Duets proximately caused mold to grow in the machines and whether Whirlpool adequately warned consumers about the propensity for mold growth—predominate over any individual questions.” Id. at *16. In other words, the evidence required for the claims at issue in Whirlpool “will either prove or disprove as to all class members whether the alleged design defects caused the collection of biofilm, promoting mold growth, and whether Whirlpool failed to warn consumers adequately of the propensity for mold growth in the Duets.” Id. (citations omitted).
And finally, in applying Comcast, the Whirlpool II court determined that the Supreme Court’s decision, while offering further instruction on the “necessary predominance inquiry,” failed to “change the outcome” of the court’s prior Rule 23 analysis. Id. In particular, the court noted that Comcast dealt with the certification of both “a liability and damages class under Rules 23(a) & (b)(3).” Id. For the Whirlpool II court, the fact that the district court had certified only the liability class meant that Comcast had “limited application,” as damages were not at issue. Id. at *17 (‘Where determinations on liability and damages have been bifurcated, see Fed.R.Civ.P. 23(c)(4), the decision in Com-cast—to reject certification of a liability and damages class because plaintiffs failed to establish that damages could be measured on a elasswide basis—has limited application.”). Similar to the Leyva court, the Sixth Circuit also noted that “[t]o the extent that Comcast Corp. reaffirms the settled rule that liability issues relating to injury must be susceptible of proof on a classwide basis to meet the predominance standard,” that requirement was fully satisfied as to the Whirlpool class. Id. (citation omitted).
Taking this jurisprudence into account, the Court finds it most logical to construe Com-cast as requiring a baseline inquiry into damages at the certification phase—meaning that the putative class’s theory of liability must track its theory of damages. Put another way, there cannot be a mismatch between the injury and the remedy, as there was between the single variant of antitrust impact—the overbuilder competition—and the generalized model of damages provided by the Comcast plaintiffs. See Comcast,
Even if this linkage requirement is met, together with all the other strictures of Rule 23(a) and (b), it is still quite possible, however, that individualized determinations or proof might be required at the damages phase. For example, where an employer
If the Court accepts the premise that the necessity of individualized proof, with respect to damages, may indeed defeat the predominance requirement, the next inquiry relates to the extent to which this determination affects the certification of other discrete issues, such as liability. While Comcast surely requires some inquiry into the relationship between injury and damages at the class certification stage, this Court understands Comcast to require a linkage between those two, rather than forbidding bifurcation in the event of individualized proof. In fact, the Comcast majority’s primary concern was the inability of the putative class to match their damages methodology to the single, viable, overbuilder theory of antitrust impact. See Comcast,
To summarize, Comcast requires that a putative class seeking Rule 23(b)(3) certification demonstrate a linkage between its theory of liability and its theory of damages. The Court must examine this relationship at the class certification stage, even where the inquiry overlaps with, or is “pertinent to[,] the merits determination.” 133
Rule 23(c)(4) cannot cure every ill that troubles a putative class. It can, however, serve as a useful and fair case management tool where (1) damages track liability in the manner contemplated by Comcast; (2) Rules 23(a) and (b) are satisfied as to common issues; and (3) individualized issues of proof predominate over a discrete, uncommon issue, such as damages, and due process impels that a defendant have the opportunity to respond to such individual positions. Accordingly, in the vein of In re Motor, Miri, Wallace, and Whirlpool II, the Court construes Rule 23(c)(4) as a viable option within the context of classwide damages.
B. Application of Law to Facts
Here, the gravamen of DR’s motion for reconsideration is that individualized damages calculations defeat predominance. (Def.’s Mem. at 3.) DR’s position is that Comcast’s holding invalidates prior decisions that “relegate the assessment of damages to a minor role in Rule 23(b)(3) analysis.” (Id. at 4.) With damages now clearly at the forefront of the 23(b)(3) inquiry, DR claims, “[w]ere this case to proceed to trial, and were Plaintiffs to prevail on the issue of liability, the jury would be required to undergo a time-consuming, painstaking review of the eligibility of each of the approximately 750 class members for unpaid overtime pay, and to calculate how much overtime pay each individual was entitled to receive.” (Id. at 5.) To deny DR’s right to have such testimony, DR contends, would be akin to a due process violation, as proscribed by Dukes, because each individual is entitled to a different amount of overtime pay. In response, Plaintiffs cite Leyva,
Plaintiffs’ reliance on Leyva in this particular instance is misplaced, however, as the situation in that case varied from that at issue here. In Leyva, the plaintiffs—current and former hourly employees of Medline— sought certification of four separate subclasses based on four, distinct violations of California law: (1) a rounding violation class, comprising employees who would perform unpaid work before their official start times; (2) a bonus violation class, constituting employees alleging the exclusion of “nondiscretionary bonuses from employees’ overtime rates, thus lowering overtime pay”; (3) a waiting time penalties class, referring to those terminated employees owed monies under California Labor Law, due to rounding and bonus violations; and (4) a wage statement penalties class, consisting of those plaintiffs alleging “that because of the rounding and bonus violations, Medline’s payroll records did not accurately record the hours employees worked and the wages they earned,” in violation of California labor laws.
Here, both Plaintiffs and DR agree that DR maintains some species of a “swipe-card” system that records “at least some of the hours worked by ASMs.” (Pl.’s Opp. at 12.) The presence of records, however, does not automatically convert the instant case into the situation in Leyva. As DR points out, there are at least three different subsets of ASMs: (1) ASMs who believed their salary was designed to cover 40 hours of work per week, or “standard employees”; (2) ASMs who believed their salary was to cover however many hours they worked a week, or so-called “fluctuating workweek” (“FWW”) employees; and (3) employees who understood their salary to cover work up to a certain number of hours per week, such as 60, but no more: the “hybrid employees.” (Defendant’s Reply Memorandum of Law, Dkt. No. 118 (“Def.’s Rep.”), at 2.) The classification of employees is significant, as the statutory measure of damages may vary depending on which category is associated with a given ASM. Moreover, the category into which a particular ASM is placed depends upon his salary, hours, and in some instances his understanding of how many hours a week his salary was intended to cover. Defendants have pointed to evidence suggesting that discerning an ASM’s salary, together with the hours the salary was meant to cover, would, in many cases, require an inquiry into each class member’s circumstances. This process would be time-consuming and supremely incapable of “classwide proof,” as some agreements with DR were oral or informal, and others were written.
Regarding the actual overtime calculation, the regular rate of pay for each DR employee must be calculated using the aforementioned evidence, and after that calculation, the employee would receive a certain statutory amount for all hours worked above 40, or in the ease of the hybrid employees, for all hours worked above the agreed upon number of hours. First, for example, with respect to standard employees, if the class were to prevail for liability purposes, they would receive one and one-half times their regular rate of pay for all hours worked above 40 in a workweek. See 29 U.S.C. § 207(a)(1); 29 C.F.R. § 778.107; 12 N.Y.C.R.R. § 146-1.4. Second, Defendants argue, the rate of overtime pay to which the FWW group would be entitled would constitute only half-time wages for every horn* over 40 an employee worked in a given workweek. 29 C.F.R. § 778.114.
It is not clear, however, that Defendants are correct in their interpretation of the FWW’s applicability to misclassification cases, as § 778.114, the regulation which discusses the FWW, is silent as to its relevance to a misclassification case such as this one.
Taking this methodology a step further, DR contends that the damages of the third and final group of ASMs—the hybrid employees—would mandate two separate calculations. First, assuming that DR could show the existence of an enforceable agreement between a given ASM and DR that the ASM’s salary was designed to cover, for example, a 60-hour workweek, the regular rate of pay for that employee would be calculated by dividing the salary by 60-hours. That employee, according to DR, would be eligible for half-time payment for all hours between 40 and 60 and time and one-half for all hours over 60. The Court, however, disagrees with DR’s interpretation of the hybrid employees’ rate. It seems, even if FWW applied to a misclassification case, and, in this situation, even if DR could show a salary arrangement by which an ASM was paid by a fixed salaried rate, that individual would not constitute a FWW individual at all, as, by its plain terms, § 778.114 refers to a circumstance “[w]here there is a clear mutual understanding of the parties that the fixed salary is compensation (apart from overtime premiums) for the hours worked each workweek, whatever their number, rather than for working 40 hours or some other fixed weekly work period ----“ 29 C.F.R. § 778.114(a) (emphasis added). Accordingly, a workweek of 60 hours would not constitute a FWW in the sense imagined by the regulation. Thus, the Court sees no reason why such a hybrid employee, if misclassified, would not simply receive the normal, one and one-half times rate of overtime pay for hours in excess of 60.
The unsettled nature of the FWW’s applicability in misclassification cases, and the varied, proposed methods of overtime pay calculation for various employee types aside, the aforementioned subsets of ASMs do represent a fundamental obstacle in terms of classwide damages calculation. Regardless of whether a given ASM is of the standard, FWW, or hybrid variety, all overtime calculations require first a determination of that employee’s regular rate of pay, which is defined as the regular hourly rate of pay during
Plaintiffs assert that the regular rate of pay reflects an objective test, capable of classwide proof. (Pl.’s Surrep. at 1.) This formula may be objective, but it is not capable of classwide proof in this particular instance. Since there are at least three different classes of ASMs, there would first need to be a determination of the sub-class to which each ASM belonged: standard, FWW, or hybrid. This determination alone would require individualized, miniature trials, as the Court would be required to examine offer letters, contracts, or in some cases, oral testimony of each class member and DR. After that point, the regular rates of pay would have to be calculated, which for FWW ASMs, as discussed, would require another layer of individualized analysis. Here, DR’s due process rights could be violated if the Court were to simply assume that all ASMs were of the standard, FWW, or hybrid variety. Such an assumption would also work an inequity, providing some ASMs with a windfall while undereompensating still others.
In light of Comcast, these discrepancies, coupled with the individualized proof that they require, demonstrate that certification of this class for all purposes would be inappropriate. This reality, however, is not fatal to the class in all respects. As noted supra, Comcast demands that a class’s theory of liability track its theory of damages or injury. Here, regardless of whether an ASM is a standard, FWW, or hybrid employee, his claim is the same: he is wrongfully classified as a statutorily exempt employee, and, as such, was never paid the overtime compensation to which he was entitled. Thus, unlike in Comcast, the injury here— lack of overtime—clearly stems from one, common harm—the uniform misclassifieation of all ASMs. Granted, Comcast, together with Dukes, instructs courts that the method by which those damages are calculated may not serve as an afterthought in the class certification analysis, as whenever damages calculations require significant degrees of individualized proof, defendants are entitled to respond to and address such variances—in fact, due process requires it. But, the Court is “not inclined to extend Comcast beyond its facts and holding,” and will accordingly not read Comcast as “foreclose[ing] a district court from certifying a liability only class under Rule 23(c)(4)____” Wallace,
The Court has already determined that the putative class has satisfied its predominance requirement as to liability. Nothing in Comcast alters this conclusion. Given the focus on damages that Comcast demands, however, the Court must partially decertify the class, requiring Plaintiffs, if successful on the merits, to proceed individually on their damages claims. The predominance inquiry
Again, the Court declines to read Comcast as disallowing certification as to certain issues, such as liability. Accord Wallace,
Here, certification of the class for liability purposes will clearly advance the litigation in a meaningful way. Unlike a case in which a class proves, for example, that “defendants collectively breached a duty, [but] must still establish that this breach caused each plaintiffs injury,” Hamilton v. Accutek,
Even if individualized issues (rather than common issues) were to predominate the*594 damage inquiry, the more appropriate course of action would be to bifurcate a damages phase and/or decertify the class as to individualized damages determinations. In other words, even if individualized issues predominate the issue of damages, the court believes that common questions nonetheless predominate in this case because common questions will govern the more difficult, threshold liability issues____
Id. at *18 (quoting In re Urethane Antitrust Litigation,
C. Dukes and Commonality
DR also moves for reconsideration on the ground that the Court “improperly distinguished” Dukes. (Def.’s Mem. at 1-2.) Citing Wang v. Chinese Daily News,
In early March 2013, the Ninth Circuit reversed its earlier opinion, noting that despite the fact that the Dukes class and the class which was certified by the district court in Wang were “factually distinguishable,” remand was necessary in light of “potentially significant differences among the class members.” Wang,
DR misinterprets this Court’s analysis of Dukes. In its prior opinion, the Court distinguished Dukes not to suggest that its holding did not apply in wage and hour cases such as this. Instead, the differences were meant to highlight, as the Ninth Circuit did in its Wang decision, the myriad differences between the Dukes class and the ASM class as a means of explicating why class certification was inappropriate in the former instance, but nevertheless appropriate here. Dukes made clear, and the Second Circuit has since reiterated, that a district court’s commonality analysis must be rigorous. See Cuevas,
DR is correct that Comcast brings damages to the forefront of the class certification inquiry—a holding that, when combined with Dukes’ discussion of trial by formula, suggests that where individualized damages questions so predominate over damages questions capable of elasswide proof, certification is inappropriate and raises due process concerns for defendants. However, this particular concern has been addressed by the Court’s conclusion that Rule 23(c)(4) is an appropriate mechanism by which to certify the ASM class as to liability only, decertifying it as to damages. Put another way, Dukes clearly applies to wage and hour claims with equal force as it applies to cases brought under Title VII. And this Court never held differently. Nevertheless, with respect to the liability class, for the reasons stated in the prior opinion, as well as in light of the vast differences between the Dukes class and the ASM class here, the Court’s commonality determination stands.
IV. Conclusion
For the foregoing reasons, Defendants’ motion for reconsideration is GRANTED in part and DENIED in part. Plaintiffs’ class remains certified as to liability, but is decertified for damages purposes, in light of the need for individualized proof necessary to determine monies potentially owed each ASM.
The Clerk of Court is directed to close the motion at docket entry number 108.
SO ORDERED.
Notes
. Rule Federal of Civil Procedure 23(c)(4) provides that: “When appropriate, an action may be brought or maintained as a class action with respect to particular issues.”
. The Forrand. Court also denied certification of plaintiffs' working meal break claim, stating that under Comcast, "the need for individualized fact inquiries dominates the determination of liability and damage issues.”
. Rule 23(c)(4) reads as follows: "Particular Issues. When appropriate, an action may be brought or maintained as a class action with respect to particular issues.”
. Section 778.114(a) reads as follows:
An employee employed on a salary basis may have hours of work which fluctuate from week to week and the salary may be paid him pursuant to an understanding with his employer that he will receive such fixed amount as straight time pay for whatever hours he is called upon to work in a workweek, whether few or many. Where there is a clear mutual understanding of the parties that the fixed salary is compensation (apart from overtime premiums) for the hours worked each workweek, whatever their number, rather than for working 40 hours or some other fixed weekly work period, such a salary arrangement is permitted by the Act if the amount of the salary is sufficient to provide compensation to the employee at a rate not less than the applicable minimum wage rate for every hour worked in those workweeks in which the number of hours he works is greatest, and if he receives extra compensation, in addition to such salary, for all overtime hours worked at a rate not less than one-half his regular rate of pay. Since the salary in such a situation is intended to compensate the employee at straight time rates for whatever hours are worked in the workweek, the regular rate of the employee will vary from week to week and is determined by dividing the number of hours worked in the workweek into the amount of the salary to obtain the applicable hourly rate for the week. Payment for overtime hours at one-half such rate in addition to the salary satisfies the overtime pay requirement because such hours have already been compensated at the straight time regular rate, under the salary arrangement.