Opinion
Case No. EDCV 08-25-VAP (OPx).
July 10, 2008
ORDER GRANTING MOTION FOR CONDITIONAL CERTIFICATION
Plaintiffs' Motion for Conditional Certification came before the Court for hearing on July 7, 2008. After reviewing and considering all papers filed in support of, and in opposition to, the Motion, as well as the arguments advanced by counsel at the hearing, the Court GRANTS Plaintiffs' Motion for Conditional Certification.
I. BACKGROUND
A. Procedural History
On January 10, 2008, Plaintiffs Justine Clouse, Deborah Lanasa, Michael Styles, and Kevin Carter filed a Complaint ("Compl.") on behalf of themselves and others similarly situated, naming as Defendant Anderson Merchandisers, LP. The Complaint alleges violations of California, Oregon, and federal law for failure to pay overtime wages and provide appropriate meal and rest breaks to employees. Plaintiff seeks to assert claims on behalf of a nationwide collective class pursuant to the Fair Labor Standards Act ("FLSA"), and California and Oregon classes pursuant to Federal Rule of Civil Procedure 23. Defendant filed an Answer on February 13, 2008.Plaintiffs filed this Motion to Certify Class Conditionally ("Mot.") on June 2, 2008, along with supporting declarations and exhibits. Defendant filed an Opposition ("Opp'n") and supporting declarations and exhibits on June 16, 2008. On June 23, 2008, Plaintiffs filed a Reply with supporting declarations and exhibits.
B. Plaintiff's Collective Class Allegations
Plaintiffs and putative collective class members ("collectively Class Members") are or have been employed by Defendant as sales representatives. (Compl. ¶¶ 2-4.) Defendant failed to pay Class Members appropriate compensation, including overtime compensation. (Compl. ¶ 5.) Defendant misclassified Class Members as "exempt" from federal and state overtime laws, and misrepresented to Class Members that they were not entitled to overtime pay if they worked over forty hours in a week. (Id. ¶ 20.) During their employment by Defendant, Class Members worked in excess of forty hours per work week, and yet Defendant failed to pay them appropriate overtime compensation. (Id. ¶ 36.) Additionally, Defendant failed to record, report, and preserve accurate records of the hours Class Members worked. (Id. ¶ 37.)
II. LEGAL STANDARD
Under the FLSA, an employer is liable to its employees for any unpaid overtime compensation. See 29 U.S.C. §§ 207(a), 216(b). An employee may maintain an action on behalf of himself "and other employees similarly situated." 29 U.S.C. § 216(b); see also Does I though XXIII v. Advanced Textile Corp., 214 F.3d 1058, 1064 (9th Cir. 2000). A "putative plaintiff must affirmatively opt in to a § 216(b) action" by filing with the district court a written consent to sue. Hipp v. Liberty Nat'l Life Ins. Co., 252 F.3d 1208, 1216 (11th Cir. 2001); see also Advanced Textile, 214 F.3d at 1064; 29 U.S.C. § 216(b).
By contrast, "[i]n a Rule 23 class action, each person who falls within the class definition is considered to be a class member and is bound by the judgment, favorable or unfavorable, unless he has opted out." Hipp, 252 F.3d at 1216. Thus, while an FLSA representative action follows an "opt-in" procedure, a Rule 23 class action follows an "opt-out" procedure. See Mooney v. Aramco Services Co., 54 F.3d 1207, 1212 (5th Cir. 1995).
"To maintain an opt-in class under § 216(b), plaintiffs must demonstrate that they are `similarly situated.'" Hipp, 252 F.3d at 1217; 29 U.S.C. § 216(b). Though "similarly situated" is not defined in § 216(b) and the Ninth Circuit has not prescribed a test for determining when the standard has been met, at least two courts in this district have used the two-tiered approach adopted by the Fifth, Tenth, and Eleventh Circuits. See Pfohl v. Farmers Ins. Group, No. CV03-3080 DT (RCx), 2004 WL 554834, *2-3 (C.D. Cal. Mar. 1, 2004); Wynn v. Nat'l Broadcasting Co., Inc., 234 F. Supp. 2d 1067, 1081-82 (C.D. Cal. 2002) (both citing Mooney v. Aramco Services Co., 54 F.3d 1207, 1212 (5th Cir. 1995); Thiessen v. General Electric Capital Corp., 267 F.3d 1095, 1102 (10th Cir. 2001); and Hipp v. Liberty Nat'l Life Ins. Co., 252 F.3d 1208, 1216 (11th Cir. 2001)). Other Ninth Circuit district courts recently have followed this approach. See Adams v. Inter-Con Sec. Sys., 242 F.R.D. 530, 536 (N.D. Cal. 2007).
Under the two-tiered approach, a court first determines, "on anad hoc case-by-case basis, whether plaintiffs are `similarly situated.'" Thiessen, 267 F.3d at 1102 (citing Mooney, 54 F.3d at 1213). This is typically referred to as the "notice stage" because the court "makes a decision — usually based only on the pleadings and any affidavits which have been submitted — whether notice of the action should be given to potential class members."Mooney, 54 F.3d at 1213-14.
Because the court only has minimal evidence at this stage, the determination of whether opt-in plaintiffs will be similarly situated "is made using a fairly lenient standard, and typically results in `conditional certification' of a representative class." Mooney, 54 F.3d at 1214. Courts require "nothing more than substantial allegations that the putative class members were together the victims of a single decision, policy, or plan."Thiessen, 267 F.3d at 1102-3 (internal quotations omitted).
Though at this stage the plaintiff's evidence may show no more than a pattern of illegal conduct, this does not prevent conditional certification, which is properly understood as a case management tool and a means by which courts can oversee and guide discovery. See Hoffmann-LaRoche Inc. v. Sperling, 493 U.S. 165, 169, 172 (1989) ("Section 216(b)'s affirmative permission for employees to proceed on behalf of those similarly situated must grant the court the requisite procedural authority to manage the process of joining multiple parties in a manner that is orderly [and] sensible. . . .").
The Supreme Court considered a claim under the Age Discrimination in Employment Act in Hoffman-LaRoche, 493 U.S. at 167. Because the ADEA incorporates § 216(b) of the FLSA's enforcement provisions, the Hoffman-LaRoche decision is relevant here. Id. (indicating that "[s]ection 7(b) of the ADEA incorporates enforcement provisions of the [FLSA] and provides that the ADEA shall be enforced using certain of the powers, remedies and procedures of the FLSA").
Furthermore, the mandatory language and the purpose of the FLSA would be frustrated by a higher evidentiary hurdle precluding employees who have suffered the same illegal treatment by an employer from prosecuting one action more efficiently and economically than would be possible with numerous individual claims. 29 U.S.C. § 202 (describing purpose of FLSA "to correct and . . . to eliminate . . . labor conditions detrimental to the maintenance of the minimum standard of living necessary for health, efficiency, and general well-being of workers"); see also Alamo Found. v. Sec'y of Labor, 471 U.S. 290, 296-97 (1985) ("broad coverage is essential to accomplish the goal of outlawing from interstate commerce goods produced under conditions that fall below minimum standards of decency") (citing Mitchell v. Lubin, McGaughy Assoc., 358 U.S. 207, 211 (1959); Powell v. United States Cartridge Co., 339 U.S. 497, 516 (1950)).
After the court "conditionally certifies" a representative class, it may authorize the named plaintiffs to send notice to all potential plaintiffs and set a deadline by which opt-in plaintiffs must file consents to join the suit. See Advanced Textile, 214 F.3d at 1064 (citing Hoffmann-LaRoche, 493 U.S. at 169, 172). The case then proceeds as a representative action throughout discovery. Mooney, 54 F.3d at 1214.
The second stage of the two-tiered approach usually is precipitated by a motion for decertification by the defendant and occurs "after discovery is largely complete and the matter is ready for trial." Mooney, 54 F.3d at 1214. At this stage, the court has much more evidence on which to base its decision, and makes a factual determination on whether the opt-in plaintiffs are similarly situated. Id. The court may weigh several factors, including: "(1) the disparate factual and employment settings of the individual plaintiffs, (2) the various defenses available to the defendant which appear to be individual to each plaintiff, and (3) fairness and procedural considerations." Pfohl, 2004 WL 554834 at *2 (citing Thiessen, 267 F.3d at 1103).
If the court finds the claimants are similarly situated, the representative action will proceed to trial. Mooney, 54 F.3d at 1214; Hipp, 252 F.3d at 1218 (quoting Mooney). If, on the other hand, the claimants are not similarly situated, the court decertifies the class, and the opt-in plaintiffs are dismissed without prejudice. Id. The original named plaintiffs and former class representatives then proceed to trial on their individual claims. Id.
III. DISCUSSION
In their Complaint, Plaintiffs defined a collective class consisting of:
All persons who are or have been employed by [Defendant] as a Sales Representative, who were either misclassified as exempt, and therefore erroneously denied overtime compensations as required by federal wage and hour laws, or not paid for all time they suffered or permitted to work for [Defendant] and therefore erroneously denied overtime compensation as required by federal wage and hour laws, at any time within the United States within three years prior to this action's filing date through the final disposition of this case.
(Compl. ¶ 16.)
In their Motion, however, Plaintiffs seek conditional certification of a narrower collective class consisting of "sales representatives who were classified as exempt employees since June of 2005." (Mot. at 6 n. 36; Reply at 5.) Defendant argues that Plaintiffs cannot narrow the class definition at this stage of the litigation, but provides no authority for that argument. (See Opp'n at 11-12.) Indeed, courts routinely narrow class definitions at the certification stage. See, e.g., Gibson v. Local 40, Supercargoes and Checkers of Intern. Longshoremen's and Warehousemen's Union, 543 F.2d 1259, 1264 (9th Cir. 1976) (approving a narrower class definition than that proposed by the plaintiffs in order to exclude non-typical class members). Accordingly, the Court considers conditional certification of the following class:
All persons who Defendant employs or has employed as a Sales Representative, who Defendant misclassified as exempt since June 1, 2005, and who were therefore denied compensation required by federal wage and hour laws.
A. First or Second Stage
Under the two-stage approach to collective class certification, courts apply a lenient standard at the first, or "notice" stage, and a stricter standard at the second stage. Mooney, 54 F.3d at 1213-14. Here, Defendant urges the Court to apply the stricter second stage standard in considering Plaintiffs' Motion.
Defendant cites to Smith v. T-Mobile USA, Inc. for their contention that the Court should apply the second stage standard where, as here, the parties have exchanged "voluminous discovery" on class certification issues. (Opp'n at 12-15 (citing Smith v. T-Mobile USA, Inc., No. CV 05-5274 ABC (SSx), 2007 WL 2385131 (C.D. Cal. 2007)).) In Smith, the court initially "applied the `first tier' analysis to Plaintiffs' Second Motion, based partly on the view that significant discovery was still ongoing, and issued a minute order granting Plaintiffs' Motion for conditional certification." Smith, 2007 WL 2385131, at *2. In deciding the defendant's motion for reconsideration, however, the court applied the second-tier analysis, because by that time, discovery as to class certification was complete. Id. at *4.
Defendant also cites Pfohl v. Farmers Ins. Group, No. CV03-3080 DT (RCx), 2004 WL 554834 (C.D. Cal. 2004). In that case, as inSmith, the parties had already concluded discovery as to class allegations, so the court applied a second-tier standard. Pfohl, 2004 WL 554834, at *2-*3. Moreover, a second-tier standard was required because the Pfohl plaintiff moved not for conditional certification, but for final certification of a collective class. Id. at *1, *3.
Here, in contrast to the situation in Smith and Pfohl, the parties have not finished discovery on class issues. (See Opp'n at 15 (conceding that Plaintiffs have until August 4, 2008 to file their motion for class certification under Rule 23).) Moreover, unlike in Pfohl, Plaintiffs here do not seek final certification, but only conditional certification. Additionally, the procedural posture of this Motion is different from that inSmith, where the court was deciding a motion for reconsideration filed by the defendants. As Defendant explains, the purpose of the lenient first-tier standard is to allow Plaintiffs time to "marshal their best evidence" in support of the final certification motion. (See Opp'n at 15 (citing Davis v. Charoen Pokphand (USA), Inc., 203 F. Supp. 2d 1272, 1276 (M.D. Ala. 2004).) This purpose would be frustrated if, where Plaintiffs have noticed and filed a motion for conditional certification, Defendant could in its opposition convert the motion into one for final certification. Accordingly, the Court applies the lenient first-tier standard in consideration of Plaintiffs' Motion for Conditional Certification.
B. Similarly Situated
At the first stage, a plaintiff satisfies its burden of establishing that class members are similarly situated by showing "nothing more than substantial allegations that the putative class members were together the victims of a single decision, policy, or plan." Thiessen, 267 F.3d at 1102-3.
Defendant employs approximately 1,500 full-time sales representatives in all fifty states and Puerto Rico. (Morgan Decl. Ex. 3, Girard Depo. ("Girard Depo.") at 159.) Sales representatives work both at home and at Wal-Mart stores. (Id. at 139-49.) They receive information and products from Defendant at their homes, and deliver the products to Wal-Mart stores. (See Mot. at 4 (citing, inter alia, Morgan Decl. Ex. 5, Decl. Huntsman ¶ 8).) At the store, representatives stock products on the store shelves, process product returns, clean and maintain the area where the products are displayed, and set up product displays. (See id. at 5 (citing, inter alia, Morgan Decl. Ex. 5, Decl. Huntsman ¶¶ 8-9).)
Plaintiffs contend that "[a]ll Plaintiffs in all states hired by Defendant prior to August of 2006 were classified as exempt from overtime." (Mot. at 11 (citing Mot. Ex. 6, Johnson Depo. ("Johnson Depo.") at 9-11); Reply at 4 (citing Opp'n Ex. 3, Girard Decl. ¶ 2; Johnson Depo. at 49-50.) The evidence cited by Plaintiffs for this proposition, however, does not establish that such a policy existed. The deposition of Debbie Johnson merely establishes that in August of 2006, Defendant reclassified all sales representatives employed in Maine, New Jersey, New Mexico, Washington, California, Alaska, Hawaii, and Puerto Rico from salaried employees to hourly employees. (Johnson Depo. at 9.) It also instituted a new policy of classifying all newly hired sales representatives in all states as hourly employees. (Id.) These changes applied to sales representatives regardless what store they worked in or what product they were responsible for. (Id. at 10.) While the deposition establishes that both before and after August of 2006, Defendant classified at least some sales representatives as salaried employees, there is no evidence to establish that it classified all sales representatives as exempt. (See id. at 9-11; 49-50.)
Contrary to Plaintiffs' characterization of a common policy to classify all sales representatives as exempt, Defendant provides evidence that it reviewed the duties of each individual representative to determine whether it should classify that employee as exempt. (See Johnson Decl. ¶¶ 4-5.) Indeed, since 2002 it has re-reviewed the classification of seventeen percent of its sales representatives in response to litigation and a Department of Labor audit. (Id.) Currently, Defendant classifies approximately seventy-four percent of its sales representatives as exempt and the other twenty-six percent receive hourly wages. (Id. ¶ 8.) Nevertheless, Defendant's evidence shows that it maintained a policy allowing sales representatives to be classified as exempt, and that it changed that policy after August 2006.
Defendant argues that Plaintiffs are not similarly situated because their job duties vary based on the product the representative sells, the type and sales volume of the Wal-Mart stores to which the representative is assigned, the representative's "level," and the management style of the representative's manager. (Opp'n at 17-18; Johnson Decl. ¶ 3.) Defendant provides declarations from sixty-four sales representatives to show that different sales representatives cater to different customers, promote different products, and work with differing volumes of product. (See Opp'n at 4-6 (citing, inter alia, Girard Decl. ¶¶ 5, 7, 9, 11, 14, 17-20).) Additionally, representatives vary their sales tactics and product placement based on the Wal-Mart store manager's wishes and requirements. (Id. at 6-7 (citing, inter alia, Girard Decl. ¶ 12.) Representatives exercise discretion in ordering differing amounts and types of product and engaging in various promotions. (Id. at 7-8 (citing, inter alia, Root Decl. ¶¶ 6, 9).) Finally, representatives control their own work schedule. (Id. at 8-9 (citing, inter alia, Austin Decl. ¶ 5).)
None of Defendant's examples of representatives' varied job activities contradict Plaintiffs' contention that they are similarly situated. Indeed, Defendant's own declarations show that Plaintiffs' job duties are substantially similar, even if the circumstances in which they perform those duties, and the methods by which they choose to accomplish the duties, are different. Plaintiffs are similarly situated in that they receive products and information from Defendant and stock, maintain and promote those products in Wal-Mart stores. (See Opp'n at 2-3; Girard Depo. at 139-49, 159; Mot. at 4-5.)
Plaintiffs have thus met their burden of setting forth "substantial allegations" that sales representatives who comprise the proposed class, i.e., those who Defendant classified as salaried employees, were victims of a common policy allowing sales representatives to be classified as exempt. See Thiessen, 267 F.3d at 1102-3. Plaintiffs provide declarations from twenty-five Plaintiffs from eighteen states who Defendant classified as salaried employees. (See Mot. at 12.) Eighty-one salaried sales representatives already have opted in to the proposed class. (Id.) Plaintiff provides substantial evidence that all Class Members were similarly situated with respect to their fundamental job duties. (See Opp'n at 2-3; Girard Depo. at 139-49, 159; Mot. at 4-5.) Accordingly, the proposed class is appropriate for conditional certification.
B. Notice
Plaintiffs must provide notice to potential opt-in class members that is "timely, accurate, and informative." See Hoffmann-La Roche Inc. v. Sperling, 493 U.S. 165, 172 (1989).
Plaintiffs have included a proposed Notice form with their Motion. (See Morgan Decl. Ex. 1, Notice of Overtime Lawsuit ("Notice Form").) Defendant argues that Plaintiffs' proposed Notice Form is inaccurate because it describes a class consisting of all "individuals who worked as sales representatives during the past three years," instead of the class which Plaintiffs seek to certify, which is limited to "sales representatives who were classified as exempt employees since June 2005." (See Opp'n at 24.) Plaintiffs argue that this difference is immaterial because they will send the Notice Form only to the more limited class. (Reply at 12 n. 8.) Moreover, the Notice Form makes clear that only the limited class is eligible to participate, providing that recipients may only join the class if they were employed "by Defendant as a sales representative . . . at any time from June 2, 2005 to the present." (See Notice Form.) Plaintiffs, however, do not object to amending the Notice Form to reflect the limited class definition. (Reply at 12.) Accordingly, the Court approves the form of Notice proposed by Plaintiffs, but amended to reflect a class of "sales representatives who were classified as exempt employees since June 2005."
Defendant also objects that Plaintiffs' proposed deadline of ninety days for conditional class members to opt in is too lengthy. (Opp'n at 24.) Defendant argues that a ninety day deadline "will delay litigation." (Id.) In the context of this case, in which a hearing on class certification pursuant to Rule 23 is set for September 28, 2008, it will not delay the litigation to allow collective class members to opt in for ninety days. Accordingly, the Court approves the ninety day opt-in period.
Plaintiffs also seek an order requiring Defendant to produce the names, addresses, telephone numbers, and dates and location of employment of "all persons employed by Defendant during the relevant statutory period who are or were employed as sales representatives and who are or were classified as exempt." (Mot. at 14.) Defendant objects that if it produces this information to Plaintiffs, Plaintiffs are likely to harass its employees. (Opp'n at 14.) As evidence of the risk of harassment, Defendant provides the declarations of two employees who have received letters from Plaintiffs asking them to join the lawsuit. (See Opp'n at 24 (citing Long Decl. ¶ 11; Wilson Decl. ¶ 13).)
Defendant provides no authority for its objection to an order requiring disclosure of employee information. (See id.) InStanfield v. First NLC Financial Services, LLC, as here, the defendants argued the court should appoint a third-party administrator to notify potential class members, because disclosure of its employee's contact information to the plaintiffs would compromise the employees' privacy. No. C 06-3892 SBA, 2006 WL 3190527, at *5 (N.D. Cal. 2006). The plaintiffs argued that such information was relevant and discoverable. Id. The court agreed that the defendants should disclose the contact information to the plaintiffs because ordering a third-party administrator would add to the plaintiffs' financial burden. Id.
As in Stanfield, Plaintiffs here have requested the employee contact information in discovery, it is relevant and discoverable, and appointing a third-party administrator would needlessly increase Plaintiffs' costs. Accordingly, an order requiring Defendant to disclose that information is appropriate.
IV. CONCLUSION
For the foregoing reasons, the Court GRANTS Plaintiff's Motion to Certify Class Conditionally. The Court conditionally certifies a class of:
All persons who Defendant employs or has employed as a Sales Representative, who Defendant misclassified as exempt since June 1, 2005, and who were therefore denied compensation required by federal wage and hour laws.
The Court ORDERS Defendant to produce to Plaintiffs, within ten days of this Order, a list, in electronic and importable format, of all persons employed by Defendant as sales representatives since June 2, 2005 and who are or were classified as exempt employees, along with each identified employees' name, address, job title, date of employment in that position, and current employment status.
Plaintiffs' counsel is authorized to send notice of this action to all such persons, in the form set forth in Exhibit 1 to the Declaration of Morgan, amended to reflect a class of "sales representatives who were classified as exempt employees since June 2005." Putative class members are permitted to file notices of consent through ninety days from the entry of this Order.