MEMORANDUM DECISION AND ORDER
This litigation is a collective action under the Fair Labor Standards Act (“FLSA”),
For the reasons set forth below: (1) plaintiffs’ motion for summary judgment is denied, (2) defendants’ motion for summary judgment and/or decertification of the class and collective actions is granted in part and denied in part, and (3) plaintiffs’ motion to amend the definition of the certified classes is denied.
BACKGROUND
Defendant Roto-Rooter Services Co. (“RRSC”) operates Roto-Rooter, a business which provides plumbing repair and maintenance services to residential and commercial customers. Defendant Chemed Corp. (“Chemed”) is the indirect parent corporation of RRSC.
Roto-Rooter has 50 branches, approximately 110 company-owned service locations, and employs over 1,600 technicians nationwide. Plaintiffs are employed as technicians for Roto-Rooter. They provided drain cleaning and plumbing services for Roto-Rooter’s customers and are compensated on a commission basis. The commissions that technicians received were based on the amounts they collected or billed, as well as the type of work they performed, less certain costs, such as outside labor and insurance surcharges.
Plaintiffs allege that a number of RotoRooter policies violated the FLSA and the wage and hour laws of the states in which they worked. They assert three categories of claims. First, plaintiffs claim that Roto-Rooter required them to bear business expenses that had the effect of bringing their wages below the applicable minimum wage. This category of claims is labeled as the “Business Expense Claims.” Second, plaintiffs allege that Roto-Rooter failed to compensate them for all hours they worked, including time shaved from their actual working hours and time spent at “turn-in.” “Turn-in” is a weekly process during which technicians review their time records for accuracy and submit records of their expenses, receipts, and money orders for that week. This category of claims is labeled as the “Uncompensated Hours Claims.” Third, plaintiffs allege that Roto-Rooter violated state law by taking deductions from plaintiffs’ wages for call-back work for warranty service. This category of claims is labeled as the “Illegal Deductions Claims.”
In June 2010, the Court certified a FLSA collective action on the Business Expense and Uncompensated Hours Claims.
At the time the instant motions were filed, 432 plaintiffs, representing approximately 48 branches in 25 states, had opted-in to assert FLSA claims. Notice of the certified class actions was sent to approximately 1,971 current and former Roto-Rooter technicians. At the time the instant motions were filed, 3 technicians had opted not to participate in this litigation. Further, the parties designated 39 technicians, including all of the named plaintiffs and several opt-in plaintiffs, as “Discovery Plaintiffs” for purposes of representative discovery.
Additional facts relevant to the instant motions will be set forth in greater detail below, as they relate to each of the motions and arguments at issue.
DISCUSSION
Plaintiffs have moved for summary judgment on four grounds, namely: (1) that defendants’ policy of shifting expenses to plaintiffs violates the FLSA and state minimum wage laws when it has the effect of bringing earnings below the applicable minimum wage; (2) that defendants violated their record-keeping duties under the FLSA; (3) that defendants’ taking of wage deductions for warranty call-back, work violates state laws regulating wage deductions; and (4) that plaintiffs are entitled to liquidated damages under the FLSA for defendants’ alleged minimum wage violations. Separately, defendants have moved for decertification or dismissal of the Business Expense, Uncompensated Hours, and Illegal Deductions Claims. Finally, defendants move for summary judgment on all claims against Chemed, arguing that it cannot be liable because it was not plaintiffs’ employer.
I. The Summary Judgment Standard
A court may grant summary judgment if the moving party shows that “there is no genuine dispute as to any material fact and that the movant is entitled to judgment as a matter of law.” See Fed.R.Civ.P. 56(a). A dispute is genuine if “the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc.,
On the other hand, in order “[t]o survive summary judgment ... the non-moving party must come forward with ‘specific facts showing that there is a genuine issue for trial.’ ” Reiseck v. Universal Commc’ns of Miami, No. 06 Civ. 777,
II. Chemed’s Liability
In their summary judgment motion, defendants argue that the claims against Chemed should be dismissed because there is no evidence that Chemed acted as
Only an “employer” may be liable under the FLSA, Herman v. RSR Sec. Servs., Ltd.,
In determining whether an entity can be considered an “employer,” “the overarching concern is whether the alleged employer possessed the power to control the workers in question, with an eye to the ‘economic reality’ presented by the facts of each case.” Herman,
Defendants do not contest that RRSC was plaintiffs’ employer. Indeed, defendants point to a number of RRSC’s employment policies in their motion. Instead, defendants argue that Chemed cannot be considered an “employer” for liability purposes because it is merely RRSC’s indirect parent company and the
Plaintiffs, on the other hand, claim that Chemed and RRSC “are two nominally separate entities that are actually part of a single integrated enterprise.” They rely on the “single employer” or “integrated employer” doctrine, which provides that “[t]o prevail in an employment action against a defendant who is not the plaintiffs direct employer, the plaintiff must establish that the defendant is part of an ‘integrated enterprise’ with the employer, thus making one liable for the illegal acts of the other.” Parker v. Columbia Pictures Indus.,
in determining whether an integrated enterprise exists, courts consider “(1) interrelation of operations, (2) centralized control of labor relations, (3) common management, and (4) common ownership or financial control.” Reiseck,
Although plaintiffs point to a num-' ber of ways in which RRSC and Chemed cooperate and interact, they do not cite sufficient evidence to raise a fact issue for the jury concerning Chemed’s status as an “employer.” First, with regard to the “economic reality” test, there is no dispute that Chemed did not hire, terminate, or discipline Roto-Rooter technicians or their supervisors. Although Chemed made recommendations concerning certain compensation policies, RRSC held ultimate decision-making authority over compensation and time-keeping policies for technicians. Additionally, plaintiffs have not proffered any evidence suggesting that Chemed ex-
Second, with regard to the “integrated employer” doctrine, plaintiffs have not adduced sufficient evidence to allow a reasonable jury to conclude that Chemed exercised “control of labor relations” so as to make it a single, integrated enterprise with RRSC. Plaintiffs attempt to create a fact issue by citing a statement on the investor relations page of Chemed’s website to argue that “Chemed’s main business purpose is RRSC’s — to provide plumbing and drain cleaning repair and maintenance services to residential and commercial markets through RRSC.” But this is plainly a selective reading that ignores Chemed’s ownership of a healthcare business.
Based on this record, a jury could not reasonably infer that Chemed and RRSC have coextensive business purposes. Although plaintiffs point to the fact that RRSC employees are required to abide by Chemed’s business ethics and information security policies, those policies have nothing to do with the employment matters at issue in this litigation. Nor can plaintiffs raise a jury issue based on the fact that RRSC and Chemed share a number of high-level managers. The law is clear that “the mere existence of common management and ownership are not sufficient to justify treating a parent corporation and its subsidiary as a single employer.” Meng v. Ipanema Shoe Corp.,
Plaintiffs’ arguments based on the services which Chemed provided to RRSC are also unavailing. There is nothing remarkable about the fact that Chemed and RRSC employees participate in common savings and retirement plans. See, e.g., Duffy v. Drake Beam Morin, No. 96 Civ. 5606,
At the end of the day, plaintiff can only rely on a handful of facts to suggest that Chemed and RRSC are an integrated enterprise, namely that Chemed and RRSC have offices in the same building and that Chemed issued the check for damages when RRSC was found liable in a previous labor action. But these facts do not imply that Chemed was “the final decision-maker with regard to the employment issue underlying the litigation.” Takacs,
III. State-Specific Issues
A. The Business Expense and Uncompensated Hours Claims Under Hawaii Law
Defendants argue that plaintiffs may not assert their Business Expense Claims for periods after July 24, 2009 or any claims for Uncompensated Hours under Hawaii law because of peculiar features of that state’s labor law. Under Haw.Rev.Stat. § 387-1, an employee gets the benefit of either the FLSA or the Hawaii minimum wage and overtime provisions, whichever are better, but if they are the same, then the FLSA applies.
The class period for the Hawaii state law class is February 25, 2004 to the present. Throughout that entire period, both Hawaii law and the FLSA have prescribed that overtime must be paid for workweeks in excess of 40 hours. See 29 U.S.C. § 207(a)(1); Haw.Rev.Stat. § 387-3(a). See also In re Wal-Mart Wage & Hour Emp’t Practices Litig.,
In response, plaintiffs argue that they asserted their Business Expense and Uncompensated Hours Claims under Chapter 388 of the Hawaii Wage and Hour Law, in addition to Chapter 387, and that § 387-1’s restriction on the definition of “employee” does not apply to claims brought under Chapter 388. See Haw. Rev.Stat. § 388-1. Plaintiffs rely on § 388-2(a) which requires employers to “pay all wages due to the employer’s employees” on regular semimonthly paydays.
Plaintiffs’ argument is unavailing. The Court agrees with defendants that § 388-2(a) “addresses only when wages are payable, not whether they are payable.”
B. The Business Expense and Uncompensated Hours Claims Under Indiana Law
Like Hawaii, Indiana’s Minimum Wage Law also limits the scope of its coverage through the use of definitions. But Indiana law focuses on the definition of “employer,” rather than “employee.” The Indiana Minimum Wage Law explicitly excludes from its definition of “employer” “any employer who is subject to the minimum wage provisions of the [FLSA].” Ind. Code. Ann. § 22-2-2-3. Courts have commented that “[o]ne of the main effects of this provision in Indiana Law is the exclusion of large employers from the purview of state law.” Bailey v. Wal-Mart Stores, Inc., No. IP 00-1398-C-B/S,
Plaintiffs appear to concede that their claims cannot succeed under Indiana’s Minimum Wage Law because of § 22-2-2-3 and argue instead that they should be allowed to amend their complaint to assert the Business Expense and Uncompensated Hours Claims under Indiana’s Wage Payment Statute, § 22-2-5-1, et seq., which does not contain the same limitation on the definition of “employer.”
It is axiomatic that a court “should freely give leave [to amend] when justice so requires.” Fed.R.Civ.P. 15(a)(2). According to the Supreme Court:
In the absence of any apparent or declared reason — such as undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of . allowance of the amendment, futility of amendment, etc. — the leave sought should, as the rules require, be “freely given.”
Foman v. Davis,
Although “[a] motion to amend a complaint is particularly disfavored where the amendment is proposed in response to a summary judgment motion[,]” Williams v. Bank Leumi Trust Co. of N.Y., No. 96
C. California Plaintiffs’ Claims
Defendants have moved for summary judgment on certain categories of claims asserted by California technicians. The categories overlap to some extent.
1. The California Business Expense Claims
Defendants request summary judgment on the FLSA and state Business Expense Claims for California technicians for claims covering the period after January 14, 2008. Defendants claim that “[pjlaintiffs have not identified ... a single week after January 14, 2008 in which a California technician contends he incurred business-related expenses that had the effect of bringing his wages below the minimum wage.” The Court’s examination of the evidence has likewise not revealed any weeks after January 14, 2008 for which a California technician failed to earn the minimum wage because of incurred business expenses. Plaintiffs fail to respond to this argument.
The law is clear that, on summary judgment, “the burden on the moving party may be discharged by ‘showing’ — that is pointing out to the district court — that there is an absence of evidence to support the nonmoving party’s case.” Pepsico, Inc. v. Coca-Cola Co.,
To the extent that there is evidence on the record, that evidence suggests that Roto-Rooter’s business expense policy did not cause California minimum wage violations during this period. Defendants cite a January 14, 2008 Roto-Rooter memorandum “Pay Considerations Unique to California” (the “California Memo”), which was to be implemented immediately. The California Memo states that “[i]n most cases” Roto-Rooter will provide technicians with their van. Further, defendants cite the testimony of plaintiff Castillo, the California class representative, that Roto-Rooter paid for his van and van-related expenses during the post-January 14, 2008 period. The California Memo also provides that certain technicians “are to be provided with uniforms, safety equipment, and all other equipment necessary for them to perform their jobs at Roto-Rooter’s expense and without deduction to the technician.” The California Memo emphasizes the absence of evidence to support plaintiffs’ claims. Therefore, the Court grants defendants summary judgment on this is
2. The California Illegal Deductions Claims
Defendants seek summary judgment on the California Illegal Deductions Claims for dates after January 14, 2008. Defendants rely on the California Memo which states that “[c]ommissioned employees should not be charged for call backs,” the absence of a call-back provision in the handbook for California employees, and testimony from plaintiffs that, in California, Roto-Rooter stopped making adjustments to commissions for call-backs and began paying technicians an hourly rate for their call-back work. Plaintiffs concede that their California Illegal Deductions Claims for this period cannot succeed. Accordingly, the Court grants defendants’ motion for summary judgment on this issue and dismisses the California Illegal Deductions Claims for dates after January 14, 2008.
3. The Ita Release
The third category of California claims involves claims that, defendants argue, were released pursuant to the settlement of a separate class action. In 2007, a group of California Roto-Rooter technicians brought a class action captioned Ita v. Roto-Rooter Services Company in California state court, asserting state law claims. The Ita plaintiffs alleged, among other things, that RRSC: (1) “failed to pay Plaintiffs overtime wages for any and all work performed in excess of 8 hours per day and/or for any and all work performed in excess of 40 hours per week”; (2) “required Plaintiffs to expend their own monies to conduct their employers’ business” and to shoulder ... business expenditures which should have been borne by their employer”; and (3) “made various deductions from Plaintiffs’ wages for certain items, including ... customers callbacks[.]”
On August 6, 2008, the Ita court certified the class action and approved the settlement. The settling plaintiff class encompassed
all persons who are or were employed by [RRSC] as plumbers, sewer and drain technicians or employees [and] combination plumbing/sewer and drain technicians or employees ... whether hourly-paid or commissioned, and with or without expenses, at any time from April 24, 2003 to May 19, 2008, the class period, in the State of California.
No one requested to opt-out of the Ita settlement and the court ordered that “each Class Member shall be deemed to have released defendants for any and all claims regarding the allegations of unpaid reimbursements and wages, interest and penalties through the date of entry of this Order.”
all claims demands, rights, liabilities, and causes of action of every nature and description whatsoever arising out of, relating to, or in connection with the causes of action asserted in the Complaint, including, without limitation, any and all claims for alleged failure to pay overtime, waiting time, travel time, call back, missed meal and rest breaks, on-call time, charges for replacement of tools and equipment and time expended in call back due to customer complaintand other similar deductions from wages[.]
Defendants rely on the fact that the Ita complaint contained claims concerning “failure to pay overtime,” “business expenditures which should have been borne by their employer,” and “deductions from Plaintiffs’ wages for certain items, including ... deductions for ... customer call-backs” to argue that .members of the California class who were employed on or before May 19, 2008 are barred from asserting claims for any period prior to August 6, 2008.
Neither side is entirely correct. First, even though the Ita complaint did not contain specific allegations regarding “turn-in” time, it did allege that RotoRooter failed to compensate technicians for “time spent doing other company business for Defendant Roto-Rooter, during which time Plaintiffs were under the supervision and control of Defendant RotoRooter.” Thus, despite plaintiffs’ argument, the Ita complaint encompassed their “turn-in” claims. Second, the release encompasses “claims ... arising out' of, relating to, or in connection with the causes of action asserted in the Complaint.” While plaintiffs argue that the term “cause of action” should mean the specific legal claims alleged in the complaint, California law supports a broader reading. “[T]he ‘cause of action’ is based upon the harm suffered, as opposed to the particular theory asserted by the litigant.... Even where there are multiple legal theories upon which recovery might be predicated, one injury gives rise to only one claim for relief.” Bay Cities Paving & Grading, Inc. v. Lawyers’ Mutual Ins. Co.,
There are two exceptions. First, California technicians hired after May 19, 2008 do not fall within the scope of the Ita release. The second exception is plaintiffs’ minimum wage claims. Plaintiffs are correct that the Ita complaint contains no allegations of minimum wage violations under federal or California law. Although the Ita plaintiffs did assert a claim for Roto-Rooter’s failure to indemnify its employees for business expenses under the California Labor Code, that claim is not simply a separate theory or remedy for the same right as a minimum wage claim. Two distinct rights are at issue: an employee’s right not to bear his employer’s business expenses and an employee’s right to earn a minimum wage. There was no “cause of action” for a minimum wage violation in Ita and, consequently, the Ita release does not bar plaintiffs’ minimum wage claims here.
A Summary
Since the above holdings overlap, some clarification as to which claims asserted by California plaintiffs have been dismissed and which survive is appropriate.
• California plaintiffs’ FLSA and state law Business Expense Claims are dismissed for the period after January 14, 2008. The FLSA and state law Business Expense Claims otherwise survive.
• California plaintiffs’ FLSA and state law Uncompensated Hours Claims are dismissed for the period prior to the August 6, 2008, because of the Ita release, except that claims asserted by California technicians hired after May 19, 2008 fall outside the scope of the Ita release and survive. The FLSA and state law Uncompensated Hours Claims otherwise survive.
• California plaintiffs’ Illegal Deductions Claims are dismissed in their entirety, both because of plaintiffs’ consent (for the period after January 14, 2008) and because of the Ita release (for the earlier period).
IV. The Illegal Deductions Claims
The parties have cross-moved for summary judgment on the state law-based Illegal Deductions Clams. Plaintiffs claim that Roto-Rooter provides its customers with a warranty on certain work performed by its technicians, typically six months for residential services and three months for commercial services. If RotoRooter needs to provide additional service on work under warranty, it often does not charge the customer for the additional work. Although Roto-Rooter attempts to send the same technician to do the warranty work as did the original work, if that technician is not available, Roto-Rooter typically deducts the commission paid to the technician for the original work and pays it to the technician who performed the warranty work through a process known as a call-back.
Roto-Rooter’s systems track call-backs. They can be deducted from either a technician’s commissions or their non-commission earnings. The call-back policy is companywide, but does not apply in California or Hawaii. According to Roto-Rooter’s February 2008 Company Handbook, callbacks may be made because “all commissions are considered advances until the
Plaintiffs allege that the call-back practice violates state law prohibitions on deductions from wages, including wages earned on a commission basis, and seek summary judgment on these grounds. Defendants argue that call-backs do not constitute illegal wage deductions because commissions are advances, not earned wages, and, even if the commissions are considered earned wages, call-back deductions are allowed under certain states’ laws because the technicians in those states authorized the deductions in writing. Indeed, as this Court has previously held, “[i]f the reversals are found to be part of the calculation of the final wage, then no class member has a claim because, by definition, there has been no ‘wage deduction.’ ” See Class Certification Order, at 25. Thus, as plaintiffs put it, “the First issue to be decided ... is whether the callback process ... constitutes a wage deduction or is simply the calculation of the final commission.”
The parties rely on competing documents in arguing over whether the callbacks constitute wage deductions or part of the calculation of final wages. Plaintiffs rely on the Service Technicians Compensation Agreement (“TCA”), a contract that technicians enter into with Roto-Rooter when hired.
Roto-Rooter pays service technicians commissions and reimburses for substantiated expenses. The commissions are based upon the amounts collected or billed (authorized) depending on the type of work done, LESS any sales, excise or other taxes; any special job costs such as permits, helpers, and outside labor; and any special charges for each job such as insurance surcharges that the company may deem necessary and may impose from time to time.,
Becausé, under the TCA, commissions are calculated based on the “amounts collected and billed less certain items like taxes,” these items are known to Roto-Rooter at the end of each week, and technicians are paid on a weekly basis, plaintiffs argue that commissions are earned weekly. Further, nothing in the TCA characterizes the commissions as advances or includes callbacks as part of calculating the commissions.
Defendants first criticize plaintiffs’ reliance on the TCA. They argue that nothing in the TCA establishes when technicians earn their wages. Instead, defendants rely on RRSC’s Reversal of Commission Policy which has been contained in the Roto-Rooter Employee Handbook since February 2008. The Policy states that “[bjecause commissions are subject to adjustments ... all commissions are considered advances until the invoice is paid and the warranty period expires.” Since February 2008, when technicians receive their weekly timesheets, they are required to acknowledge and approve the adjustments to their commissions or raise concerns with their supervisors. Further, technicians, including 28 of the 39 Discovery Plaintiffs, signed acknowledgments stating that they “understand that it is my responsibility to read and comply with the policies contained in the Handbook” and that they have “full access to the Handbook,
Standing alone, however, the Reversal of Commission Policy in the Employee Handbook cannot demonstrate as a matter of law that the commissions were advances for several reasons. First, the Policy was only written in February 2008. Technicians hired prior to that date could not have read the Policy until it was included in the Employee Handbook, although RRSC apparently had an ongoing practice concerning call-backs from at least March 2004. Further, technicians are only required to acknowledge that they have access to the Employee Handbook, not that they have read it. And, perhaps most importantly, the Employee Handbopk itself contains the explicit disclaimer that “The Handbook is neither a contract of employment nor a legal document.”
Nevertheless, defendants argue that it is immaterial whether or not the Employee Handbook is a binding contract because “the core inquiry under the laws of each Class State[] is whether there was an understanding between RRSC and plaintiffs that commission payments were advances.” According to this position, even if the Employee Handbook does not itself establish that the commissions are advances, it is evidence of the understanding held by RRSC and the technicians concerning the nature of the commissions. In support, defendants cite a number of cases from different class states in which non-contractual employment policies are used by courts to determine when a commission is fully earned.
Plaintiffs attempt to foreclose defendants’ approach by arguing that ’ any agreement (explicit or implicit) that technicians’ commissions are advances would be void as contrary to public policy because that agreement has the effect of driving technicians’ compensation below minimum wage. See Cary Oil Co., Inc. v. MG Ref. & Mktg., Inc.,
Under the law of all of the class states, the question of when a commission is earned is answered by examining the relevant employment contract.
Plaintiffs argue that, unlike deductions for call-backs, all the enumerated items in the TCA that can reduce a technician’s commissions are known to Roto-Rooter by the end of the given workweek and RotoRooter pays the technician at that time. That may very well be the case, but the TCA also contains a savings clause which demonstrates that these enumerated deductions are not the only deductions that are permitted. Moreover, Roto-Rooter did not impose the call-back policy on technicians without notice.
Having established that technicians’ commissions are advances rather than earned wages, the question remains whether Roto-Rooter’s call-back policy violates the applicable state laws. There are nine remaining states for which plaintiffs assert their Illegal Deductions Clams. Under the laws of all nine states, only deductions from earned wages are actionable.
V. The Business Expense Claims
Plaintiffs assert that Roto-Rooter technicians are required to bear certain job expenses, specifically: (1) the- cost of acquiring a work van; (2) van operation costs, including gas, tolls, registration, parking, and insurance; (3) van maintenance costs; (4) the cost of acquiring tools used for the job; (5) the costs of job equipment, such as cables; and (6) the cost
In calculating the commission to pay a technician, Roto-Rooter adds a premium of 15% of the amount the technician collected or billed to cover expenses. According to plaintiffs, Roto-Rooter makes no attempt to ensure that the commissions, plus the premium, cover all of the expenses they actually incur. Further, as a matter of payroll policy, Roto-Rooter allows technicians to divide their weekly commissions into “wages” and “expense reimbursements.” Plaintiffs characterize this policy as an “accounting gimmick” done for tax purposes that has no effect on how much technicians are paid.
Plaintiffs cite the example of one technician, L'eVoid Bradley. For one week in April 2009, Bradley incurred $1,098.35 in work expenses, but he was only paid $516.20. According to plaintiffs, Bradley should have been paid $1,361.02, which would have encompassed his expenses and an additional $267.67 to raise his earnings to the minimum wage level. Instead, Bradley’s expenses were deferred, according to plaintiffs, in order to conceal that “[i]n effect, Bradley paid $582.15 to work for Roto-Rooter that week.” Plaintiffs claim that the class representative plaintiffs received less than the minimum wage for approximately 5% of the-weeks that they worked.
On the basis of this conduct, plaintiffs seek summary judgment “that Roto-Rooter’s policy of shifting its business expenses, including the cost of the van itself, onto Plaintiffs is a violation of the FLSA and state minimum wage laws where the expenses have the effect of bringing the earnings below the established minimum wage.” In essence, plaintiffs seek summary judgment that Roto-Rooter’s business expense policy is unlawful. Additionally, plaintiffs claim that defendants failed to comply with their obligation to “maintain and preserve payroll or other records containing” information on “[tjotal ... deductions from wages paid each pay period.” 29 C.F.R. § 516.2(a)(10). Defendants, on the other hand, argue that the Business Expense Claims classes should be decertified because no minimum wage violations were reported for certain discovery plaintiffs and because there are individualized inquiries. Defendants oppose plaintiffs’ summary judgment motion by attempting’to raise a number of purported fact issues concerning whether certain expenses ' can properly be considered busi
The parties generally do not dispute the applicable law. A “minimum wage must be paid free and clear of any deductions or kickbacks to the employerf.]” Teoba v. Trugreen Landcare LLC,
Whether in cash or in facilities, “wages” cannot be considered to have been paid by the employer and received by the employee unless they are paid finally and unconditionally or “free and clear.” The wage requirements of the Act will not be met where the employee “kicks-back” directly or indirectly to the employer or to another person for the employer’s benefit the whole or part of the wage delivered to the employee. This is true whether the “kick-back” is made in cash or in other than cash. For example, if it is a requirement of the employer that the employee must provide tools of the trade which will be used in or are specifically required for the performance of the employer’s particular work, there would be a violation of the Act in any workweek when the cost of such tools purchased by the employee cuts into the minimum or overtime wages required to be paid him under the Act.
29 C.F.R. § 531.35. See also Arriaga v. Florida Pac. Farms,
A. Plaintiffs’ Summary Judgment Motion
According to plaintiffs, “the only question on summary judgment is which of the many expenses that Roto-Rooter requires its Technicians to bear are properly considered to be “primarily for the benefit or convenience of the employer.” Defendants, however, raise a number of challenges which the Court addresses in turn.
First, defendants contend that Roto-Rooter need not reimburse plaintiffs for all their van-related expenses, but only those incurred on Roto-Rooter’s behalf. Defendants highlight the testimony of certain plaintiffs, including LeVoid Bradley, that they used their vans for personal reasons while employed by Roto-Rooter and argue that expenses related to personal use, including gas, tolls, depreciation, and maintenance should not be considered in determining the proper minimum wage payment. Further, defendants point out that, under the law, they are not responsible for technicians’ commuting expenses, see 29 C.F.R. § 531.32(a), and maintain that these expenses must be accounted for separately.
These incidental personal uses, however, pale in comparison to the abundant evidence that suggests that technicians’ van-related costs were primarily for the benefit of Roto-Rooter. Technicians are required to purchase a particular kind of van and equip it a certain way. The vans must carry Roto-Rooter signage and RotoRooter receives about 10% of its business from customers who saw a Roto-Rooter van. Technicians are not permitted to use the van for personal reasons and the smell of the plumbing equipment kept in the van makes other uses impractical. These facts
More importantly, the fact that the technicians made incidental personal use of the vans does not imply that van-related expenses were not primarily for Roto-Rooter’s benefit. See Marshall v. Sam Dell’s Dodge Corp.,
Further, Roto-Rooter recognizes a category of expenses, known as “substantiated expenses,” which are business-related expenses for which Roto-Rooter provides tax deductions to its technicians. According to Roto-Rooter policy, tools, supplies, tolls, gasoline, van repair and maintenance, the outside purchase or lease of a van, and the outside purchase of van, insurance, among other items, are considered “substantiated expenses” when supported by detailed expense receipts. This policy establishes, fairly conclusively, that at least “substantiated expenses” constitute business expenses that may not cut into the minimum wage.
Second, defendants argue that RotoRooter does not need to reimburse a technician for his business expens.es in a single week because the technician does not necessarily incur the entire cost of . the expense in a single week. Although certain expenses like parking and -tolls may be properly accounted for during the week in which they are incurred, defendants argue that larger expenses, such as financing the purchase of a van, are incurred over a period of time. For example, according to defendants, a technician’s monthly-van finance or lease payments are “not incurred in the week payment is, made[,]” instead the expense “is reasonably spread across a one-month period, and RRSC accounts for such expenses in this manner.” Defendants also suggest that the cost of an expensive replacement van part, like a fuel pump, may be amortized over the life of that part.
But, as plaintiffs correctly point out, defendants have not presented any authority to show that their accounting theory is consistent with the FLSA (or the law of any relevant state), nor is the Court aware of any. To the contrary, the FLSA consistently ties the minimum wage inquiry to an individual work week. See, e.g., 29 C.F.R. § 531.35 (providing that there would be a violation of the FLSA “in any workweek when the cost of such tools purchased by the employee cuts into the minimum ... wages required to be paid him
But defendants’ final argument is their most compelling. Defendants argue that the law does not require them to reimburse technicians for their actual expenses. Instead, they only need to provide a- reasonable approximation of employee expenses in order to comply with the minimum wage laws. Defendants rely on cases addressing the reimbursement of pizza delivery drivers for their transportation expenses. In Wass v. NPC Int’l Inc., 688 F.Supp.2d 1282, 1285-86 (D.Kan.2010), the court reasoned that § 531.35, which prohibits employers from making employees bear business expenses that cut into the minimum wage, indirectly incorporates language from 29 C.F.R. § 778.217, which governs the calculation of an employee’s regular rate for overtime purposes. Under § 778.217(b), the “actual or reasonably approximate amount” of a variety of employee business expenses “will not be regarded as part of the employee’s regular rate” for overtime purposes. The Wass court concluded that this language, read in conjunction with §, 531.35 meant that “the applicable regulations ... permit an employer to approximate reasonably the amount of an employee’s vehicle expenses without affecting the amount of the employee’s wages for purposes of the federal minimum wage law.”
Plaintiffs challenge defendants’ reliance on these cases, arguing that § 778.217 only addresses overtime compensation and, thus, the cases are inapposite. Since overtime regulations address different policy concerns than minimum wage regulations, there is some force to plaintiffs’ argument, but, as defendants correctly observe, the Wass line of cases does address an employer’s obligation to pay the minimum wage. And defendants have put forward evidence that, even though Roto-Rooter reimburses, a technician for his “substantiated expenses,” it also incorporates a premium of 15% into a technician’s commissions and that this premium is intended to cover technicians’ work-related expenses, including their van costs. Thus, defendants have created a fact issue as to whether they have satisfied their minimum wage obligations by reasonably approximating a technician’s expenses. Whether the 15% premium represents a reasonable approximation of expenses, especially when viewed in light of Roto-Rooter’s substantiated expenses policy, is an issue for the jury to determine. Accordingly, plaintiffs’ motion for summary judgment on the Business Expense Claims is denied.
Two other holdings flow from this ruling. First, plaintiffs have asked the Court to grant them summary judgment and hold that Roto-Rooter violated its record-keeping obligations under the FLSA by failing to keep records of all employees’
Second, plaintiffs ask the Court to grant summary judgment on their entitlement to FLSA liquidated damages on their FLSA Business Expense Claim. If the Court had found as a matter of law that defendants were liable for the FLSA Business Expense Claim, summary judgment on liquidated damages might be appropriate. But liability has not yet been determined, which is, of course, a prerequisite for any award of liquidated damages. See Wong v. HSBC Mortg. Corp.,
B. Defendants’ Motion to Decertify
Defendants ask the Court to decertify the Business Expense Claims classes and FLSA collective action. Defendants argue that, even if all of plaintiffs’ expenses were for Roto-Rooter’s benefit and incurred during the weeks contended, plaintiffs have failed to show on a class-wide basis that these expenses caused plaintiffs’ earnings to fall below the minimum wage. According to defendants, plaintiffs have only demonstrated a violation for one technician (Bradley), in one week of employment, and have no proof that such violations were widespread, other than Exhibit D to their own interrogatory responses which is not admissible evidence. See generally Gilmore v. Macy’s Retail Holdings, Civ. No. 06-3020,
Further, defendants assert many of the same arguments that they made in opposi
Defendants have not persuaded the Court. Roto-Rooter’s “substantiated expenses” policy makes the question of what constitutes a business expense a question that can be readily answered through generalized proof. Moreover, as discussed above, defendants have cited no authority to convince the Court that it should be allowed to account for employee expenses other than according to when the employee incurs the expenses, so as to create an individualized issue. Lastly, assessing the reasonableness of the 15% premium can be done by comparing the premium amount to the “substantiated expenses.” This analysis can be performed entirely through using Roto-Rooter’s records and, thus, the issue is susceptible to generalized proof.
With regard to the fact that plaintiffs cannot show violations for certain technicians, defendants misconstrue the nature of the Business Expense Claims. The Court agrees with plaintiffs that “[ijmplieit in” the Court’s certification of the Business Expense Claims “is the recognition that some individuals’ expenses will show a violation and others will not.” The lack of claims for certain technicians and the disparity between technicians in no way makes the claims of the classes and the collective action less susceptible to generalized proof. Accordingly, defendants’ motion to decertify the Business Expense Claims classes and FLSA collective action is denied.
VI. The Uncompensated Hours Claims
Since the Court’s Class Certification Order, plaintiffs’ Uncompensated Hours Claims have been limited. Currently, the Uncompensated Hours Claims are based on two sets of factual allegations: (1) that Roto-Rooter shaved hours from plaintiffs’ actual working time and (2) that RotoRooter did not compensate plaintiffs for time spent at “turn-in.”
Generally, technicians are compensated solely through their commissions for hours worked up to 40 per week. Technicians receive an overtime premium for hours worked in excess of 40 per week. The gravamen of both the time-shaving and the “turn-in” claims is that by deducting or failing to record working time, Roto-Rooter lowered technicians’ hours in order to avoid paying them overtime premiums.
A. Amendment of the Class Definitions for the Uncompensated Hours Claims
Before turning to defendants’ motion concerning the Uncompensated Hours Claims, plaintiffs have sought an amendment of the class definitions relating to these claims. Although the Court initially certified the Uncompensated Hours Claims classes to include time spent maintaining vans and work equipment, the Court later granted defendants’ motion for reconsideration and decertified the classes for this portion of the Uncompensated Hours Claims. See Memorandum Decision & Order, dated July 8, 2011 (the “Reconsideration Order”). Plaintiffs have now asked the Court to amend the class definitions yet again and to include in the Uncompensated- Hours Claims time for van maintenance that “as a practical mat
Plaintiffs claim that they were not compensated for time they spent maintaining their vans and tools. According to a RotoRooter witness, technicians were required to maintain their equipment and vans but, if they performed this work outside of a branch office, there was no clear way for them to record time. After the Court certified classes on this portion of the Uncompensated Hours Claims, defendants sought reconsideration. They argued that the Court certified the Uncompensated Hours Claims classes based on plaintiffs’ representation that they would be able to demonstrate liability almost entirely through the use of defendants’ records, but since no document would be able to establish liability for van and tool maintenance time, plaintiffs would have to rely on “testimony from a parade of Technicians claiming that they actually performed van and equipment maintenance off-the-clock.”
In addressing defendants’ reconsideration motion, the Court disagreed with defendants. It cited testimony from a Roto-Rooter witness that, with regard to vans, only minor maintenance could be done during compensable “stand-by” time. The Court reasoned that since technicians were required to complete tasks that, as a practical matter, could not always be performed in the office and were not otherwise compensated, representative testimony could be sufficient to demonstrate liability. See Reconsideration Order, at 2-3. But the witness also explained that tool maintenance time could be registered as compensable “stand-by” time by someone at the branch office, even if done outside the office, and that some technicians were able to record van and tool maintenance time as “stand-by” time, although the time was not always compensated. Id. at 3^L In light of this evidence “suggesting that some of the technicians may have been able to squeeze all of their maintenance time on stand-by time,” the Court concluded that individualized testimony would be necessary to establish liability on this claim and liability could not be established on a class-wide basis through representative testimony. Id. at 4. Accordingly, the Court amended the definition of the Uncompensated Hours Claims classes to exclude claims for uncompensated time spent maintaining vans and equipment.
The gravamen of plaintiffs’ current argument in support of their motion to amend is that the van and equipment maintenance claims need to be sliced more finely. Plaintiffs argue that the testimony only established that tool maintenance was or could have been completed during “stand-by” time. On the other hand, because van maintenance, “as a practical matter, cannot always be performed on the clock and was not compensated otherwise!,]” it is an ideal candidate for proof of liability through representative testimony, as the Court suggested in the Reconsideration Order. Plaintiffs further distinguish between minor van maintenance — like oil changes and tidying the van — which could be completed during “stand-by” time, and more major forms of van maintenance which were required but could not be performed while on-the-clock because the technicians had to be able to respond to customer calls quickly.
Although styled as a motion to amend the class definitions, plaintiffs’ motion clearly seeks reconsideration of the Reconsideration Order. But plaintiffs fail to demonstrate adequate grounds for re
Despite their arguments, plaintiffs have failed to show that the Court' overlooked anything in the Reconsideration Order. The testimony on which the Court relied in the Reconsideration Order was not confined to tool maintenance; it also encompassed van maintenance'. Specifically, the Court quoted testimony that technicians cleaned their vans and changed the oil while on “stand-by” time. See Reconsideration Order at 3 n. 2. Moreover, in their briefing on the Reconsideration Order, plaintiffs treated their van and tool maintenance time claim as a single claim. ' Although plaintiffs acknowledged in their briefing on the Reconsideration Order that there are factual differences between major and minor van maintenance in terms of whether the work was or could be done on-the-clock, plaintiffs nonetheless treated both kinds of maintenance as part of the single claim for van and equipment maintenance. Instead of highlighting a consideration the Court overlooked, it instead appears that plaintiffs have merely thought of a better way to conceptualize and argue their claim. That is not a sufficient basis for reconsideration, especially given this late stage of the litigation and the substantial efforts the parties put into their summary judgment motions.
If the Court were to revisit the issue on its merits, the Court would still deny certification of plaintiffs’ claim for major van maintenance that “as a practical matter, cannot always be performed on the clock.” Even if certain kinds of maintenance could not practically be completed during “stand-by” time, plaintiffs have not demonstrated how they would differentiate between the kinds of maintenance work that could be done on “stand-by” time and the kinds of work that could not and whether that distinction would be consistent across the class. Perhaps technicians at certain branches could perform more kinds of major maintenance during “stand-by” time than circumstances at other branches allowed. Indeed, one technician, Shilo Cain, testified that he could perform van maintenance work during “stand-by” time so long as it was not “too involved” and the maintenance would not “take too long” in light of the amount of time he had before his next job.
Thus, it appears that any distinction between minor and major van maintenance that could be drawn is context-dependent and, consequently, proof that defendants should be liable for a particular kind of maintenance work cannot be efficiently adduced through representative testimony. See Myers v. Hertz Corp., 624 F.3d 537,
Before moving on, some housekeeping is in order. Plaintiffs’ proposed amendment only related to the state classes for the Uncompensated Hours Claims, not the FLSA collective action on these claims. But, as defendants note, the FLSA collective action on the Uncompensated Hours Claims still technically includes claims based on uncompensated van and equipment maintenance time. Defendants argue that all the reasons that led the court to decertify those claims in the context of the classes apply with equal, if not greater, force to the FLSA collective action and the Court should decertify the van and equipment maintenance time claim in the FLSA collective action. Plaintiffs’ arguments in opposition are the same arguments they make in support of their motion to amend the class definitions. But, for the reasons discussed, those arguments fail. Accordingly, the Court grants defendants’ motion and decertifies the van and equipment maintenance time claim in the FLSA collective action.
B. The Uncompensated Hours Claims Based on Time-Shaving
One of the two remaining categories of plaintiffs’ Uncompensated Hours Claims is for time-shaving. Plaintiffs allege that Roto-Rooter routinely altered technicians’ time records to reduce their hours and the resulting overtime premium that must be paid. Plaintiffs point to prior accusations and findings of time-shaving at several Roto-Rooter branches.
“Off-the-clock” cases can present challenges for class-wide determination that often preclude certification. See, e.g., Doyel v. McDonald’s Corp., No. 08-cv-1198,
In accepting plaintiffs’ proposed means of proving their claims, the Court commented,
I may have otherwise been skeptical of plaintiffs’ ambitious claim that there would be sufficient instances of “temporal impossibilities” for the jury to conclude that defendants impermissibly altered time-records on a class-wide basis, but there is evidence suggesting that plaintiffs’ plan is not only plausible but sufficiently sound that defendants have themselves employed, it to investigate fraud.
Specifically, Gary Sander, Roto-Rooter’s Executive Vice-President, conducted a review of Roto-Rooter’s electronic time records using a query he developed to locate “temporal impossibilities” and concluded that one Roto-Rooter branch was engaged in fraud. Id. at 21-22. The Court cautioned, though, that:
[pjlaintiffs have proffered what essentially amounts to a “paper case.” I recognize that some testimony will be necessary, not just to authenticate and interpret defendants’ records, but to fill in occasional gaps and provide relevant background. However, if plaintiffs begin to have second thoughts about their chances at trial without offering more testimony, I will de-certify the class.
Id. at 38.
Defendants now argue that the Court’s skepticism at-the class certification stage was warranted and that plaintiffs’ time-shaving claims should be decertified because they cannot be proved on a nationwide or statewide basis or, alternatively, that the claims should be dismissed for plaintiffs in some state classes due to a lack of evidence to support their claims. Defendants served contention interrogatories on plaintiffs, asking them to identify every time record that, plaintiffs contend, reflects a “temporal impossibility” that demonstrates time-shaving. In response, plaintiffs produced a spreadsheet attached to their interrogatory answers (“Exhibit A”). Plaintiffs also produced a separate spreadsheet listing instances of purported time-shaving that do not involve “temporal impossibilities” (“Exhibit A2”). Together Exhibits A and A2 contain all the entries on which plaintiffs will rely to prove their time-shaving claims.
First, defendants assert that plaintiffs should not be able to use Exhibit A2 because it was based on queries other than the one developed by Sander to identify “temporal impossibilities.” Defendants read the Court’s class certification too narrowly. The Court did not merely approve of the specific query Sander employed, but of the kind of query Sander used, namely one that could, using nothing other than defendants’ own records and representative testimony, identify time entries that are likely to be the result of improper time-shaving. Plaintiffs purport to have done just that in crafting the queries on which Exhibit A2 is based.
Second, defendants make much of the fact that Exhibit A reveals no “temporal impossibilities” for roughly a quarter of the Discovery Plaintiffs and no “temporal impossibilities” within the FLSA limitations period for nearly 30 percent of the Discovery Plaintiffs. Further, Exhibit A2 reveals no more than one alleged instance of time-shaving for approximately a quarter of the Discovery ÍPlaintiffs. Defendants also highlight many of the distinctions among the Discovery Plaintiffs. For example, defendants point out that some Discovery Plaintiffs in the same state, and even in the same branch, had “temporal impossibilities” while others did not, and that the number of “temporal impossibilities” for plaintiffs in the same state ranged widely, from zero to 22. Similar variations characterize the entries on Exhibit A2.
Plaintiffs are correct, however, that defendants’ emphasis on these variations misconstrues the nature of the time-shaving claim. As plaintiffs argue, “[ijmplicit in the fact that individualized proof of off-the-clock time would be necessary is the
The cases on which defendants rely to argue otherwise only reinforce plaintiffs’ argument. First, in Hughes v. WinCo Foods, No. ED CV11-00644,
More troubling, though, is how plaintiffs intend to use Exhibits A and A2 to prove liability for the 1,440 alleged instances of time-shaving that they identify and whether, in light of a number of innocent explanations proffered by defendants, they may still do so on a class-wide basis. Plaintiffs’ briefing on this motion reveals that Exhibits A and A2 were generated by applying six electronic queries to analyze RotoRooter’s time records for the Discovery Plaintiffs. Specifically, plaintiffs’ counsel employed the following queries:
• Query 1 identifies instances when a technician performed a job resulting in over $100 in revenue but the job took less than 10 minutes. According to testimony from Sander, such occurrences could indicate time-shaving. Query 1 is limited to instances when the time entry for the job was manually changed during a “turn-in”day (Tuesday or Wednesday) subsequent to the job and the technician’s compensable time for the day was reduced.
Query 2 is a variation on Query 1 designed to account for the theory that shaving could occur by substituting non-compensable personal time (“PR”) for work time. Query 2 identifies instances when a technician performed a job resulting in over $100 in revenue that took less than 10 minutes and the job occurred on the same day an entry for at least 60 minutes of PR time was made as the last entry of the day. Sander had testified that situations such as this would require additional investigation to determine if time manipulation had occurred.
Query 3 is another variation on Queries 1 and 2. Query 3 identifies instances when a technician performed a job resulting in over $100 in revenue that took less than 10 minutes on days when at least 60 minutes of PR time appears in the middle of the day, the PR time record was added during a subsequent “turn-in” day, and the records showed a reduction of compensable time.
Query 4 applies Sander’s original query. It identifies instances when a technician’s records were changed to show a job being performed before it had been called into Roto-Rooter’s dispatch, and the change resulted in a shortening of compensable time. Query 5 identifies instances where a technician’s morning “stand-by” time was changed. An earlier Roto-Rooter investigation of practices in its Atlanta branch revealed that hours were sometimes manipulated by cutting “stand-by” time. Specifically, Query 5 focuses on instances in which a technician began his day on “stand-by” at his scheduled time and the record was changed later in the week (on a Monday, Tuesday, or Wednesday) to show a later start time.
• Query 6 is a variation on Query 5 and identifies instances where a technician ended his day on “standby” at his scheduled ending time and the record was changed later in the week (on a Monday, Tuesday, or Wednesday) to show an earlier ending time.
Exhibit A lists the instances identified by Queries 1-4 while Exhibit A2 lists the Queries identified by Queries 5-6. Based on plaintiffs’ explanation, these queries appear to be entirely sensible ways to identify instances of time-shaving. Plaintiffs expect the jury to decide whether it is more likely than not that the records identified by each of the six queries represent improper time-shaving. Plaintiffs also plan to support their case with evidence of Roto-Rooter’s history of shaving technicians’ time records and corporate management’s failure to stop it.
But the Court has doubts about how plaintiffs intend to present this evidence to the jury and whether it can be done efficiently. As discussed above, a party may not rely upon its own answers to interrogatories as affirmative evidence. See Gilmore,
Moreover, Sander’s declaration in support of defendants’ motion for decertification reveals that there are many context-specific innocent explanations for the instances that plaintiffs identified through their queries. The parties do not dispute that the mere deletion of a time entry does not necessarily suggest time-shaving. Roto-Rooter’s system automatically deletes entries as part of its proper record-keeping function and many manual deletions and alterations can occur for innocuous reasons. For example, a technician may forget to code out until after he stopped working or, if the job site is out of range of Roto-Rooter’s wireless network, the technician cannot properly enter his time until he is back within the network’s range.
With regard to Exhibit A, Sander notes that some entries have associated ticket numbers which would allow Roto-Rooter to determine when the job was called in and, thus, whether the instance represents a “temporal impossibility,” but other entries do not. Sander claims that many entries on Exhibit A are “facially deficient” in that the deleted time would not have brought the technician’s hours above 40 per week, entitling the technician to overtime, or were nonetheless counted in the technician’s total hours because it was non-PR time in the middle of the workday. While these criticisms only suggest that Exhibit A is over-inclusive, Sander also examined a sample of entries that were not “facially deficient.” For example, although crediting only a minute or two of work time for a job that resulted in revenue might appear to suggest time-shaving, Sander identified eight instances in the sample of entries he reviewed in which the job was actually performed on a different date, as confirmed by the ticket appearing on the record for the correct date. Sander also found cases where a job was originally assigned to one technician but then reassigned to another technician who actually performed the work. Further, time records might show job tickets assigned to a technician even though an examination of Schedule File entries would reveal that the technician’s van was out of service on that particular date.
With regard to Exhibit A2, Sander identified a number of instances in which a time entry was modified during the day or two after the work in question, which, according to Sander, is exactly when modifications to account for time entry errors would be made. Further, Sander pointed to other entries in Exhibit A2 which could be explained by the technician leaving early for the day. Defendants also note that for a number of entries on Exhibits A and A2, the technician certified that his weekly time reports were accurate.
Plaintiffs have some persuasive responses to Sander’s points. For example, although deducted time from the middle of the workday might not reduce the amount of a technician’s compensable time for the day, it would if the time were converted to non-compensable PR time — the exact kind of situation targeted by Query 3. But the thrust of plaintiffs’ response to defendants’ and Sander’s arguments is that they can, and should be allowed to, adjust their queries so as to exclude the innocent explanations identified by Sander and submit revised interrogatory responses.
The law is clear that “[e]ven after a certification order is entered, the judge remains free to modify it in light of subsequent developments in the litigation” because such an order is “inherently tenta
Here, as defendants have demonstrated, a number of legitimate reasons for altering time records exist. Although the technicians’ certification of the accuracy of their time records of course does not waive their rights to be paid properly, see Brooklyn Sav. Bank v. O’Neil,
Allowing plaintiffs to address this concern through amending their queries and revising their interrogatory responses would not necessarily solve the problem. Plaintiffs are correct that they can base many of the appropriate modifications to their queries on Roto-Rooter’s records, but doing so would not necessarily obviate the need for individualized testimony on other innocent explanations, including innocent explanations that defendants have yet to uncover based on their limited review of a sample of entries in Exhibits A and A2. Although discovery responses may be amended, discovery has closed and the timing of the parties’ summary judgment motions was tied to plaintiffs’ responses to the interrogatories at issue. If the modifications plaintiffs propose to make could have been gleaned from Roto-Rooter’s records, plaintiffs should have conducted additional analysis or discovery, perhaps with expert assistance, before having developed their queries. At this late stage, the Court is not inclined to give plaintiffs what could amount to multiple chances to revise their queries in order to account for all the innocent explanations that defendants might proffer. See Erchonia Corp. v. Bissoon, No. 07 Civ. 8696,
There is, however, an exception to the foregoing for evidence of “temporal impossibilities” identified by Query 4. Although Sander only applied that Query to the Hartford branch, the Court perceives no reason why Sander is not competent to
Although defendants have successfully called into question much of plaintiffs’ proposed trial plan, with regard to Query 4, the plan appears to remain viable. The Court recognizes that, even limited to Query 4, the presentation of evidence may be laborious and time-consuming, but, as the parties know, “clockwatching is not very helpful in ascertaining whether class-action treatment would be desirable in a particular case.” 7 Charles Alan Wright, et al., Federal Practice & Procedure § 1778 (3d ed. 2012).
Therefore, the Court grants in part defendants’ motion to decertify the FLSA collective action and the state class actions on the time-shaving portion of the Uncompensated Hours Claims. The FLSA collective action and the state class actions, however, remain certified with regard to instances of alleged time-shaving identified by Query 4.
C. The Uncompensated Hours Claims Based on “Twm-In” Time
The other remaining portion of plaintiffs’ Uncompensated Hours Claims relates to defendants’ alleged failure to compensate them for “turn-in” time — the weekly process during which technicians “reconcile their invoices, receipts, and expenses and present them to their branch office.” Plaintiffs allege that “turn-in” time is the only time that many technicians go to the branch office and that, for all technicians, “turn-in” had to be done outside of their scheduled working hours at least sometimes. Further, during “turn-in,” technicians frequently perform other job-related tasks such as replenishing their supplies, taking inventory of their vans, and attending trainings.
At the class certification stage, the Court found that “[t]he evidence shows that turn-ins ... are sufficiently common to all the branches, even if there is some variation in their duration.” See Class Certification Order, at 17-18. Additionally, the Court approved of plaintiffs’ plan to prove their “turn-in” claim by generalized proof, specifically that:
The turn-in documents are timestamped to reflect when they are first printed; defendants’ other records also provide the time when, after a technician reviews the turn-in material, he submits those documents. That time, plaintiffs explain, can then be compared against defendants’ payroll records to see if each plaintiff was on the clock for these activities---- [T]he inquiry is individual in part, requiring individualized proof to show when a class member was off-the-clock, but it will be proven efficiently— i.e., with the addition of each class member’s claim not greatly altering the amount of proof to be weighed by the jury.
Id. at 18.
As with other claims, defendants presented plaintiffs with a contention inter
Based on their review of Exhibit B, defendants first argue, as they did with regard to the time-shaving claim, that the “turn-in” claim should be decertified because a significant number of the Discovery Plaintiffs (approximately 15%) do not claim that they performed “turn-in” work that was not recorded as working time. Further, within various class states, some technicians — including technicians working in the same branch — assert a claim for unrecorded “turn-in” time while others do not and there is substantial intra-state disparity regarding the number of instances of unrecorded “turn-in” time alleged. For the reasons discussed in the context of the time-shaving claim, the Court is not persuaded by this argument because it does not undermine plaintiffs’ ability to establish their “turn-in” time claims through common proof. Moreover, the variation is readily explainable; for some technicians, “turn-in” fell in the middle of their regularly scheduled work hours, so their “turn-in” time would have been compensated.
Defendants also contend that 570 of the entries on Exhibit B correspond to a week in which that technician worked fewer than 37 hours. Since it is undisputed that “turn-in” took at most three hours (and often far less), defendants argue that these entries cannot support an overtime claim based on “turn-in” time and demonstrate that Exhibit B is unreliable. But, as with the analogous argument in the context of the time-shaving claim, defendants have demonstrated, at most, that Exhibit B is over-inclusive, not that it is unreliable. Moreover, plaintiffs persuasively argue that defendants’ criticism is premature. It is possible that, if a jury finds that RotoRooter otherwise shaved a technician’s hours, the allegedly uncompensated “turn-in” time that appears inadequate to support liability when viewed in isolation would support liability when viewed in conjunction with potentially shaved hours.
Defendants further argue that individual inquiries as to whether the “turn-in” time will result in an overtime violation will nonetheless be inevitable because the evidence does not suggest “turn-in” took a standard amount of time. Rather, the length of “turn-in” time varied widely between branches and technicians, according to defendants.. Not only is this argument premature, for the reasons just explained, but plaintiffs can also adduce generalized proof on this point through representative testimony by a technician from each state. Moreover, Roto-Rooter has kept electronic records of the length of “ ‘turn-ins” since 2010 and plaintiffs can present these records as suggesting a reasonable estimate for the length of “turn-in” time. Where, as here, the employer evidently failed to keep accurate records of compensable working time, a plaintiff may “submit sufficient evidence from which violations of the [FLSA] ... may be reasonably inferred.” Reich v. So. New England Telecomms., Corp.,
Also, plaintiffs do not face a similar evidentiary hurdle with regard to the “turn-in” claim as they did in the context of the time-shaving claim. Although Exhibit B from plaintiffs’ interrogatory responses would not be admissible, plaintiffs do not need to rely on Exhibit B at trial. Instead, plaintiffs plan to establish their “turn-in” claims through testimony from Sander. Plaintiffs will ask Sander to com
Defendants have, however, identified— and plaintiffs have admitted to — an error in Exhibit B. Defendants highlight 252 entries in Exhibit B that correspond to a time when the technician was actually on-the-clock. Plaintiffs explain that this error was a result of their using an incomplete set of Roto-Rooter time records to generate Exhibit B. When plaintiffs re-ran their analysis with the correct set, the 252 challenged entries dropped out. Thus, defendants have not demonstrated an infirmity in plaintiffs’ methodological approach. Nor are defendants prejudiced because plaintiffs did not need to rely on Exhibit B and plaintiffs’ correction only reduces the number of allegedly uncompensated “turn-in” instances at issue.
In their final attempt to convince the Court to decertify the “turn-in” claims, defendants make one more effort to create individualized issues. They claim that one document created in connection with the “turn-in” process, the Detailed Listing of Time, can be, and often was, printed hours before the “turn-in” took place. Even though that may be true, plaintiffs also rely on another document, the Preliminary Drivers Report, which Roto-Rooter policy requires to be printed at “turn-in.” Unlike the Detailed Listing of Time, defendants have not argued that the Preliminary Drivers Report was not, in fact, printed at “turn-in.” Thus, plaintiffs may still prove their claim without individual issues predominating. Defendants also claim that 40 entries on Exhibit B do not plausibly suggest uncompensated “turn-in” time because they occur at 11:59 PM when the offices are closed and “turn-in” is unlikely to occur. Defendants are free to make this argument, which may very well be successful as to those 40 entries, to the jury. The argument only makes liability on a number of the “turn-in” instances less likely; it does not call into question plaintiffs’ ability to establish the claim through collective proof. Accordingly, the Court denies defendants’ motion to decertify the FLSA collective action and the state class actions on the “turn-in” time portion of the Uncompensated Hours Claims.
VII. Class Representatives and Discovery Plaintiffs
As discussed, plaintiffs have listed in exhibits to their interrogatory responses instances which they claim support defendants’ liability on the Business Expense and Uncompensated Hours claims. But, as defendants have shown, for a number of Discovery Plaintiffs, including some class representatives, there are no entries for certain claims. Defendants urge the Court to decertify the classes for which the class representative is unable to assert a claim. Defendants cite eases from the class certification stage where a court declined to certify a class at least in part because the class representative did not suffer from the same injury as the rest of the class. See, e.g., Newman v. RCN Telecom Servs., Inc.,
But, as plaintiffs correctly point out, a different inquiry is conducted when classes are already certified. “The Second Circuit has noted that, following certification of a class, ‘whenever it later appears that the
Here, the initial certification was proper and, for all the reasons set forth above, the certification of the remaining claims is proper. In such circumstances, courts allow plaintiffs an opportunity to substitute representative plaintiffs. See Shahriar v. Smith & Wollensky Rest. Grp., Inc.,
The situation is different, however, with regard to Discovery Plaintiffs. As discussed, at summary judgment, “[t]he time has come” for plaintiffs “to put up or shut up.” Weinstock,
• The FLSA and state class Uncompensated Hours Claims based on time-shaving are dismissed for plaintiffs McMahon, Hollister, Christie, Hess, Drejaj, Smith, Branco, Frazier-Smith.
• The FLSA Uncompensated Hours Claims based on time-shaving are dismissed for plaintiffs Gorman, Cardwell, Loetscher, and Harris.
• The FLSA and state class Uncompensated Hours Claims based on “turn-in” time are dismissed for plaintiffs Castillo, Yasuna, Sabas,30 Hollister, Soto, and Kennedy.
• The FLSA and state class Business Expense Claims are dismissed for plaintiffs Hollister, Poczok, Róseme, Buono, and Villatoro.
• The FLSA Business Expense Claims are dismissed for plaintiffs Castillo,31 Cardwell, Soto, Najmon, Cain, and Richardson.
CONCLUSION
Plaintiffs’ motion to amend the Class Certification Order [257] and plaintiffs’ motion for summary judgment [231] are denied. Defendants’ motion for summary judgment and/or decertification of the class and collective actions [235] is granted in part and denied in part as set forth above.
SO ORDERED.
Notes
. More specifically, Chemed is the parent company of Roto-Rooter Group, Inc., which, in turn, is the parent company of RRSC.
. Plaintiffs did not assert the Illegal Deductions Claims under the FLSA, nor could they have.
. The states are: New York, New Jersey, California, Colorado, Connecticut, Florida, Hawaii, Illinois, Indiana, Minnesota, Missouri, North Carolina, Ohio, and Washington. A total of 34 branches in these states are represented. North Carolina plaintiffs do not assert Business Expense or Uncompensated Hours Claims, while Florida and Hawaii plaintiffs do not assert Illegal Deduction Claims.
. See Hart v. Rick's Cabaret Int'l Inc., No. 09 Civ. 3043,
. Defendants assert that the Court should not consider plaintiffs’ "integrated employer” theory of liability because plaintiffs did not plead this theory. The issue is not so clear. The Third Amended Class Action Complaint alleges (1) that "Chemed owns and operates [RRSC],” (2) that “Chemed and RRSC employed Plaintiffs and participated directly in employment decisions regarding the Plaintiffs’ rights for which they seek redress[,]” and (3) that “Defendants are individually and collectively an enterprise engaged in Ínterstate commerce for the purpose of the FLSA.” Although these allegations may be sufficient to have put defendants on notice that plaintiffs were invoking the "integrated employer” theory, the allegations also may be too conclusory to state a claim. See Ashcroft v. Iqbal,
. More precisely, Haw.Rev.Stat. § 387-1 explicitly excludes from the definition of “employee” any person for whom “the minimum wage which may be paid the employee or the maximum hours which the employee may work during any workweek without the payment of overtime, are prescribed by the [FLSA]”, unless Hawaii law establishes a higher minimum wage or a shorter threshold for overtime.
. Further, courts have concluded that “Hawaii did not intend for an implied right of action under § 388-2 or § 388-7. Rather, Hawaii vests enforcement authority for these provisions in the director of labor and industrial relations.” In re Wal-Mart Wage & Hour Emp’t Practices Litig.,
. Defendants are incorrect when they cite Parker for the proposition, expressed in dictum, that "in Indiana, claims for overtime compensation cannot be raised under the Wage Law.”
. The California state class representative and the only Discovery Plaintiff from California both received payments as members of the Ita settlement class.
. Under 28 U.S.C. § 1738, federal courts must give a state court judgment approving a class action settlement “the same effect that it would have in the courts of the State in which it was rendered." Matsushita Elec. Indus. Co. v. Epstein,
. Plaintiffs’ reliance on the unreported decision in Garnica v. Verizon Wireless Telecom, Inc., No. 128577,
. If the same technician who did the original work also performs the warranty work, the technician receives no commission for the warranty work.
. Plaintiffs have'conceded that their Illegal Deduction Claims, as now stated, are not viable under Missouri or Ohio law. Accordingly, the Illegal Deduction Claims under Missouri and Ohio law are dismissed.
. Defendants make much of the fact that there is no evidence that 17 of the 39 Discovery Plaintiffs even signed the TCA. But defendants’ policies require this form to be completed upon hiring.
. See Barrentine v. Arkansas-Best Freight Sys., Inc.,
. Specifically, the employer at issue paid its mechanics on a commission basis and had a policy whereby if, in a given workweek, the mechanic’s wages fell below the minimum wage, the employer would provide a subsidy to bring the mechanic’s compensation up to
. Plaintiffs point to plaintiff LeVoid Bradley’s time records for the week ending May 5, 2009. But assuming, arguendo, that these records establish a minimum wage violation, they do so only because of the business expenses that Bradley incurred, not because of call-backs. A call-back was assessed against Bradley for that week and his total wages for the week was $661.47. Bradley worked in Missouri where, at the time, the applicable minimum wage was $7.05. He worked 43 hours and 25 minutes that week which entitled him to $318.15 in wages. Once the $342.29 for expense reimbursements is deducted from Bradley's total pay, the remaining amount, $318.18, is basically equal to the minimum wage he was owed. Obviously, if the other $531.94 in substantiated expenses that had not yet been reimbursed were factored in, Bradley’s compensation would have been inadequate. But that violation would stem from the business expense policy, not the call-back policy. This example, therefore, does not suffice to establish that minimum wage violations occurred as a result of the call back policy.
. See In re Citigroup, Inc., Capital Accumulation Plan Litig.,
. Many plaintiffs testified that they considered their commissions earned when they were paid, not when the warranty period expired. But the technicians’ unilateral understanding cannot trump the explicit terms of the agreement that they endorsed. As the oft-cited quote from Learned Hand explains:
A contract has, strictly speaking, nothing to do with the personal, or individual, intent of the parties. A contract is an obligation attached by the mere force of law to certain acts of the parties, usually words, which ordinarily accompany and represent a known intent. If, however, it were proved by twenty bishops that either party, when he used the words, intended something else than the usual meaning which the law imposes upon them, he would still be held, unless there were some mutual mistake, or something else of the sort.
Hotchkiss v. Nat'l City Bank of New York,
. The Court does not mean to imply that this notice is sufficient to make the call-back policy a modification of the TCA. Rather, the notice is only relevant to show that technicians were, or should have been, aware of the policy.
. See McKeithan,
. Plaintiffs' complaint asserts Illegal Deductions Claims under the laws of several states for which no state law class action was certified. Plaintiffs' motion discusses the law of many of these states (Arkansas, Delaware, Kentucky, Louisiana, Maryland, Nevada, Pennsylvania, South Carolina,'and West Virginia), but not all of them. It is not clear if plaintiff sought to move for summary judgment on these state law claims. The Court has not ruled on these claims but notes that its holding concerning the nature of the technicians’ commissions appears to be equally relevant to the non-class states as it is to the states with certified classes.
. Plaintiffs stress that technicians are not required to report all of their expenses to Roto-Rooter and that, for some branches, reporting expenses was the exception rather than the rule.
. In responding to defendants' interrogatories, plaintiffs created a spreadsheet ("Exhibit D”) which, they represent, constitutes "a list of the weeks that Plaintiffs incurred business-related expenses that caused minimum wage violations.”
. This is not to suggest that, when a technician purchases a van with financing, RotoRooter needs to reimburse the technician for the full purchase price of the van in one week. Nothing in the minimum wage laws requires such a windfall for employees. Rather, an employer is required to reimburse an employee's expenses as the employee incurs them.
. Plaintiffs sought summary judgment on this issue in order to shift the burden of proof for establishing damages on to defendants. See generally Chao v. Vidtape, Inc.,
. Defendants further criticize Exhibit D for lacking any documentation or explanation to support including the supposed instances of minimum wage violations it identifies.
. The Court notes that plaintiffs' motion was brought well after the two-week window for reconsideration motions under Local Civil Rule 6.3 had expired. Plaintiffs offer no explanation for waiting to move for reconsideration until after the parties submitted lengthy summary judgment briefs. Plaintiffs' suggestion that they only learned of the relevant facts once discovery was complete and after the period to move to reconsideration had expired is unavailing. Although more recent testimony may have amplified the record on the issue, there was sufficient testimony on the record prior to the Reconsideration Order for plaintiffs to have argued that major van maintenance was performed off-the-clock.
. Specifically, plaintiffs must find substitutes for: (1) Jason Castillo to represent the non-dismissed California state class for Business Expense and Uncompensated Hours Claims; (2) Stephen McMahon to represent the Colorado state class for Uncompensated Hours Claims based on time-shaving; (3) Dino Bran-co to represent the Ohio state class for Uncompensated Hours Claims based on time-shaving; (4) Byron Frazier-Smith to represent the Washington state class for Uncompensated Hours Claims based on time-shaving; (5) Alan Kennedy to represent the Minnesota state class for Uncompensated Hours Claims based on "turn-in” time; (6) Frank Poczok to represent the Illinois state class for Business Expense Claims; and (7) Steven Hess to represent the Indiana state class for Uncompensated Hours Claims based on time-shaving.
. A portion of plaintiff Sabas’ Uncompensated Hours Claims are also dismissed for Hawaii-specific reasons, as discussed in Section
. A portion of plaintiff Castillo’s Business Expense Claims are also dismissed for California-specific reasons, as explained in Section III.C. 1, supra.