WILLIAM J. MARTINI, United States District Judge.
Plaintiffs in this case worked as Assistant Store Managers ("ASMs") for Office Depot during a period ranging from early 2000 to July of 2013. Seeking to bring claims on behalf of themselves and other ASMs, they allege that Office Depot's method for paying overtime violated state and federal wage and hour laws. Pursuant to 29 U.S.C. § 216(b), Plaintiffs move for final certification of a collective action that alleges violations of the Fair Labor Standards Act ("FLSA"). Under Federal Rule of Civil Procedure 23, Plaintiffs also move for certification of four proposed classes (collectively, "the State Law Classes") that allege violations of state wage and hour laws. Office Depot opposes both motions, while also moving to decertify the FLSA conditional collective action.
For the reasons that follow, Plaintiffs' motion for final certification of the FLSA collective action will be
This action arises out of an overtime pay policy that Office Depot had in place from late 2005 to 2012. See Declaration of Seth R. Lesser in Support of Class Cert ("Lesser Class Decl."), Ex. 1. While the policy provided that ASMs were non-exempt employees entitled to overtime, it paid overtime pursuant to a "fluctuating workweek" or "FWW" plan. See Pls.' Mot. at 4. Accordingly, the Court will refer to the pay policy as the "FWW Plan."
Typically, non-exempt employees will be paid "time and a half overtime," meaning they will be paid at one and one-half times their normal hourly rate for every overtime hour worked. See, e.g., 29 U.S.C. § 207(a). Under the FWW Plan, however, the hourly overtime rate is reached by dividing total wages earned per week by the total numbers of hours worked that week. The resulting figure is termed "the regular rate." Office Depot then pays ASMs for hours worked overtime by using the regular rate instead of the time and one-half rate. See Opinion on MTD, at 3, ECF No. 34. Consequently, the hourly overtime rate decreases as the total number of overtime hours increases. See Mot. for Class Cert. at 3.
The FLSA and the relevant state wage and hour laws permit use of the FWW only where all of the following criteria are met: (1) the employee's hours fluctuate week to week; (2) the employee receives a fixed weekly salary that remains the same regardless of the number of hours worked; (3) the fixed paid amount must be at a rate not less than the legal minimum wage; (4) the employer and employee must have a clear, mutual understanding that the employee will receive a fixed weekly salary regardless of hours worked; and (5) for the time worked in excess of 40 hours in a given week, the employee must receive a 50% overtime premium in addition to the
Plaintiffs contend that when the FWW Plan was in place, an ASM's non-overtime salary fluctuated depending on how his or her work schedule coincided with certain holidays. Plaintiffs further argue that because ASMs received varying amounts of non-overtime "holiday pay" based on their work schedules, they did not receive a fixed weekly salary, which means the FWW Plan was illegal. Thus, Plaintiffs are of the position that ASMs were entitled to time and one-half overtime, which would have exceeded the amounts paid under the FWW Plan. See Pls.' Opp. to MTD, ECF No. 22.
In July of 2012, Office Depot moved to dismiss Plaintiffs' complaint. See ECF No. 11. In a February 22, 2013 opinion and order, The Honorable Dennis M. Cavanaugh granted in part and denied in part Office Depot's motion. See ECF No. 34. While Judge Cavanaugh dismissed Plaintiffs' claims for violation of the New Jersey Wage and Hour Law, it held that Plaintiffs had stated a claim under the FLSA. Taking Plaintiffs' allegations as true, Judge Cavanagh explained that "Office Depot makes additional payments to ASMs dependent upon the hours worked by the ASMs prior to the time the holiday pay is administered and such payments are impermissible under the `fixed' salary requirement of 29 C.F.R. § 778.114(a)." Op. dated Feb. 22, 2013, at 5, ECF No. 34. Plaintiffs later amended their complaint to add claims under the wage and hour laws of the following states: Colorado, Maryland, Oregon, and Washington. See ECF No. 178. Plaintiffs wish to bring separate class actions on behalf of ASMs who worked in each of those states.
On August 19, 2013, the parties stipulated to conditional certification of the FLSA collective action. See ECF No. 114-1. Under the terms of the stipulation, Office Depot retained the right to move for decertification of the collective action pursuant to 29 U.S.C. § 216(b). id. Now, Office Depot moves to decertify the collective action, while Plaintiffs seek final certification. See ECF Nos. 225, 228. Plaintiffs also move for Rule 23 certification of the State Law Classes. See ECF No. 22.
II. FLSA CERTIFICATION
The Court will first decide the FLSA motions. In support of decertification, Office Depot argues that the FWW Plan was not illegal; but even if it were, Plaintiffs could prevail on their claims only if they qualified as non-exempt employees during the relevant period. Office Depot further argues that its decision to treat ASMs as exempt — and, in turn, pay them overtime — merely was a business maneuver designed to avoid future litigation costs. In reality, Office Depot contends, ASMs were "exempt" employees who enjoyed a wide range of discretion and authority. Consequently, Office Depot was not required to pay its ASMs any overtime, let alone overtime that complied with the wage and hour laws.
In light of that position, Office Depot argues that in order to prevail, Plaintiffs first must prove that ASMs were non-exempt employees entitled to overtime. However, the question of whether an employee qualifies as non-exempt is a fact-intensive inquiry that will largely depend on each ASM's individual circumstances of employment. Specifically, ASMs differed in their levels of supervisory responsibility; the extent to which they hired, trained, disciplined, and reviewed other employees; and the degree to which they assumed other managerial functions. Therefore, the argument goes, Plaintiffs' claims cannot be resolved on a collective basis.
Plaintiffs take issue with what they describe as Office Depot's "reverse misclassification
After reviewing the record, the Court concludes that ASMs are similarly situated for the purposes of final certification under the FLSA. Therefore, the Court is not presently required to decide whether Office Depot's reverse misclassification defense is viable. Should Plaintiffs continue to believe that the reverse misclassification defense must be rejected, they may re-raise that position at summary judgment.
In order to meet its burden for final certification, Plaintiffs must establish by a preponderance of the evidence that they and other opt-in ASMs are "similarly situated." Zavala v. Wal-Mart Stores, Inc., 691 F.3d 527, 537 (3d Cir.2012). Final certification imposes a higher burden than does the "fairly lenient" standard for conditional certification. See, e.g., id. at 535-36. Moreover, because the final certification inquiry is fact-intensive, it should take place "after discovery is largely complete and the case is ready for trial." Morisky v. Public Service Elec. and Gas. Co., 111 F.Supp.2d 493, 497 (D.N.J.2000). In determining whether plaintiffs are similarly situated for final certification purposes, a court should consider all relevant factors, including the following:
Zavala, 691 F.3d at 536-37. Additionally, courts in the Third Circuit have often considered "(1) the disparate factual and employment settings of the individual plaintiffs; (2) the various defenses available to [defendants] which appear to be individual to each plaintiff; [and] (3) fairness and procedural considerations." See, e.g., Ruffin v. Avis Budget Car Rental, LLC, Civ. No. 11-1069, 2014 WL 294675, *3 (D.N.J. Jan. 27, 2014) (citing Lusardi v. Xerox Corp., 118 F.R.D. 351, 359 (D.N.J.1987)).
When engaging in this analysis, the Court should also consider what Plaintiffs must prove at trial. Cf. AdamI v. Cardo Windows, Inc., 299 F.R.D. 68, 84 (D.N.J. 2014). Assuming that Office Depot's reverse misclassification defense is viable, Plaintiffs must prove that ASMs do not fall into any one of the following three exemptions:
If ASMs are not similarly situated, the Court cannot make a collective determination of whether any of the exemptions apply. If, however, ASMs are similarly situated, final certification of the collective action is appropriate. For the reasons that follow, the Court concludes that ASMs are similarly situated.
Office Depot Policies and Procedures
The fact that all ASMs were governed by the same corporate policies and procedures weighs in favor of final certification. According to Office Depot's Rule 30(b)(6) witness, Andrew Taylor, all ASMs were governed by the same standard operating procedures ("SOPs"), regardless of store location and size.
Mr. Taylor also testified that ASMs largely performed the same functions across different Office Depot stores.
While the imposition of uniform policies does not guarantee that all ASMs will be identical, it does suggest that their roles will be substantially similar. See, e.g., Damassia v. Duane Reade, Inc., 250 F.R.D. 152, 160 (S.D.N.Y.2008) (employees are more likely to have similar job functions where their roles "are largely defined by comprehensive corporate procedures and policies ...") (citing cases). However, as Office Depot correctly notes, the existence of uniform policies and procedures is not dispositive. See Alakozai v. Chase Investment Services Corp., Civ. No. 11-09178, 2014 WL 5660697, *7 (C.D.Cal. Oct. 6, 2014) (citing Rosenberg v. Renal Advantage, Inc., Civ. No. 11-2152, 2013 WL 3205426, *8 (S.D.Cal. June 24, 2013)). Accordingly, the Court will now turn to the portions of the record reflecting the actual work that ASMs performed on a daily basis.
2. Supervisory Authority and Managerial Role
In opposing final certification, Office Depot contends argues that ASMs vastly differ in the degree to which they supervised and managed other employees. The Court disagrees. The record shows that ASMs spent a vast majority of their time on menial tasks, including shelving, restocking, setting up planograms, and tending to the cash register. See, e.g., Stillman v. Staples, Inc., Civ. No. 07-849, 2009 WL 1437817, *19 (D.N.J. May 15, 2009) (granting final certification where employees testified that "they spent a majority of their time completing non-exempt `hourly tasks'"). For example, ASM Bridget Boykin testified that she spent approximately 85% of her time on those tasks.
Office Depot further argues that the Court cannot merely look at the amount of time ASMs spent on managerial tasks; it must also analyze the substantive importance of those tasks relative to the ASMs' overall job responsibilities. See Def's Reply at 18. After engaging in that exercise, however, the Court continues to find that the ASMs are similarly situated. Office Depot correctly notes that some ASMs admitted to acting as "Managers on Duty" who directed the activities of other associates, whereas other ASMs merely referred to themselves as "glorified cashiers." See Def's Mot. at 24-25.
3. Power to Train, Discipline, and Review
Office Depot further argues that ASMs vastly differed in how they trained, disciplined, and reviewed other employees. For the reasons that follow, the Court disagrees.
While almost all ASMs trained other associates to a limited degree, they nonetheless expended most of their energy on non-managerial tasks. ASM Brandie McDaniels testified that Office Depot employees "all coached each other"; Mr. Harriet admitted that he had given associates feedback on their sales techniques;
The record paints a similar picture with respect to disciplining and reviewing. True, ASMs are not identical in the degree to which they disciplined and reviewed associates; however, complete symmetry of job functions is not required for final certification under the FLSA. See, e.g., Ruffin, 2014 WL 294675, at *3 ("While there are disparities in the deposition testimony about job duties, they are not material and `any such differences are outweighed by the similarities between those Plaintiffs.'" (quoting Garcia v. Freedom Mortgage Corp., 790 F.Supp.2d 283, 287 (D.N.J. 2011))); Stillman, 2009 WL 1437817, *18 ("the similarly situated standard of § 216(b) ... does not require that plaintiffs be identical." (quoting Johnson v. Big Lots Stores, Inc., 561 F.Supp.2d 567, 573-74 (E.D.La.2008))). Here, the operative question is whether ASMs possessed certain "primary" duties such that they would qualify as exempt under the FLSA. So yes, Mr. Chaves wrote associates up for infractions
Role in Hiring
Office Depot also argues that ASMs varied with respect to their roles in hiring new employees. As previously indicated, an employee is more likely to be qualify as exempt where he or she plays a substantial role in hiring decisions. See 29 C.F.R. § 541.100(a); 29 C.F.R. § 541.708. If ASMs did not share similar responsibilities in that regard, they may not be similarly situated under the FLSA.
The record reveals that while ASMs may not have had identical experiences in hiring, their roles were sufficiently similar to weigh in favor of final certification. Office Depot argues that some ASMs testified that they would interview candidates and provide feedback to their managers,
At the final certification stage, courts in the Third Circuit will also consider "(1) the disparate factual and employment settings of the individual plaintiffs; (2) the various defenses available to [defendants] which appear to be individual to each plaintiff; [and] (3) fairness and procedural considerations." See, e.g., Ruffin, 2014 WL 294675 at *3 (citations omitted). For reasons already explained, the factual and employment settings of ASMs were sufficiently similar to warrant final certification. The Court will now consider the other two factors: (1) Office Depot's defenses, and (2) fairness and procedural considerations.
First, the Court concludes that it can address Office Depot's defenses on a collective basis. Office Depot largely argues that representative testimony is problematic because many of the testifying ASMs are not credible.
Second, procedural and fairness considerations weigh in favor of final certification. In the absence of final certification, ASMs who wish to pursue their claims would be forced to file individual lawsuits on their own behalf. Because in most cases the cost of litigation would greatly exceed the amount of any potential recovery, a majority of ASMs would not be able to pursue their claims. Moreover, even if many ASMs did individually sue, litigating hundreds of individual wage and hour claims arising out of the same corporate policy would place an onerous — and totally unnecessary — burden on this Court.
Accordingly, the Court
III. CLASS CERTIFICATION
The Court must now determine whether it should certify the State Law Classes, which consist of a Colorado Class, a Maryland Class, an Oregon Class, and a Washington Class. The representative plaintiffs (the "Named Plaintiffs") for each State Law Class allege that the FWW Plan violated their respective state wage and hour laws. The parties agree that the overtime exemptions existing under those state laws
Under Federal Rule of Civil Procedure 23(a), a class may be certified only where (1) the class is so numerous that joinder of all members is impracticable; (2) there are questions of law or fact common to the class; (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and (4) the representative parties will fairly and adequately protect the interests of the class." Fed. R. Civ. P. 23(a). These are known as the numerosity, commonality, typicality, and adequacy requirements. See In re Constar Int'l Inc. Sec. Litig., 585 F.3d 774, 780 (3d Cir.2009). In addition to fulfilling the requirements of Rule 23(a), a plaintiff must also meet one of the requirements set forth in Rule 23(b). id. The requirement at issue here comes from Rule 23(b)(3), which permits certification only if "questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy." Fed. R. Civ. P. 23(b)(3). "The twin requirements of Rule 23(b)(3) are known as predominance and superiority." In re Hydrogen Peroxide Antitrust Litig., 552 F.3d 305, 310 (3d Cir.2008).
"To be certified, a class must be large enough in number to ensure that, for efficiency purposes, a class does not subject the defendants to multiple, similar lawsuits." Elias v. Ungar's Food Products, Inc., 252 F.R.D. 233, 242 (D.N.J.2008) (quoting In re Prudential Ins. Co. Am. Sales Practice Litig., 148 F.3d 283, 309 (3d Cir.1998)). The numerosity requirement does not impose a bare minimum number of plaintiffs, however "if the named plaintiff demonstrates that the potential number of plaintiffs exceeds 40, the first prong of Rule 23(a) has been met." Stewart v. Abraham, 275 F.3d 220, 226-27 (3d Cir. 2001). In this case, the smallest State Law Class contains 35 members, while the other State Law Classes contain at least 49 members. In light of those numbers, the Court is satisfied that the numerosity requirement has been met.
The commonality requirement is met if there are "questions of law or fact similar to the class." Newton, 259 F.3d 154, 182 (quoting Fed.R.Civ.P. 23(a)(2)). "`The commonality requirement will be satisfied if the named plaintiffs share at least one question of fact or law with the grievances of the prospective class.'" In re Prudential Ins. Co. America Sales Practice Litig. Agent Actions, 148 F.3d 283, 311 (3d Cir.1998) (quoting Baby Neal for and by Kanter v. Casey, 43 F.3d 48, 56 (3d Cir.1994)). The "threshold of commonality is not high." In re Sch. Asbestos Litig., 789 F.2d 996, 1010 (3d Cir.1986) (internal citations omitted).
Plaintiffs meet the commonality requirement because all individuals within the State Law Classes were subject to the FWW Plan. Therefore, there is a common question of whether the FWW Plan violated the laws of Colorado, Maryland, Oregon, and Washington. Office Depot argues against commonality on the grounds that the ASMs greatly varied in their roles and responsibilities. However, the Court concludes that those concerns are more germane to the question of whether Plaintiffs have established predominance under Rule 23(b)(3). See In re Morgan Stanley Smith Barney LLC Wage and Hour Litig., Civ. No. 11-3121, 2016 WL 1407743, *3 (D.N.J. Apr. 11, 2016) (citing Newton v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 259 F.3d 154, 187 (3d Cir.2001)). Accordingly, the Court will address those issues later in this opinion.
3. Typicality and Adequacy
The Court must also determine whether Plaintiffs have established typicality and adequacy. "Typicality entails an inquiry whether the named [plaintiffs'] individual circumstances are markedly different... or the legal theory upon which
The Court concludes that, with the exception of the Oregon Class, Plaintiffs have established both typicality and adequacy by a preponderance of the evidence. Setting aside the Oregon Class for the moment, the Named Plaintiffs and the individuals they seek to represent shared the same job title, were compensated pursuant same pay policy, and will be subject to the same defenses. The Court also finds that the incentives of the Named Plaintiffs are sufficiently aligned with those of the other class members. See, e.g., In re Schering Plough Corp. ERISA Litig., 589 F.3d 585, 599 (3d Cir.2009). Therefore, the Court finds that the Named Plaintiffs from Colorado, Maryland, and Washington meet the typicality and adequacy requirements.
Office Depot argues that typicality and adequacy have not been established for the Oregon Class because the claims of Amanda Nohrenberg — the sole Named Plaintiff for the Oregon Class — have been dismissed with prejudice for failure to participate in discovery. See Def's. Opp. at 32; see also ECF No. 178, ¶¶ 60-63. In response, Plaintiffs argue that where a representative plaintiff's claims have been mooted or are otherwise not viable, courts should permit the substitution of a new class representative. See Pls.' Reply at. 11.
While Plaintiffs correctly observe that the substitution of class representatives is allowed at the pre-certification stage, see In re Nat'l Austl. Bank Sec. Litig., Civ. No. 03-6537, 2006 WL 3844463, *3 (S.D.N.Y. Nov. 8, 2006), their failure to substitute Ms. Nohrenberg in accordance with that principle currently precludes certification of the Oregon Class. Plaintiffs ask this Court to grant their motion for certification before a new representative for the Oregon Class is put in place. Adopting that proposal would turn the class certification process on its head. Without a replacement for Ms. Nohrenberg, the Court cannot determine whether typicality and adequacy have been established for the Oregon Class. See, e.g., Johnston v. HBO Film Management, Inc., 265 F.3d 178, 184 (3d Cir.2001) (typicality involves determination of whether "the named plaintiff[s'] individual circumstances are markedly different ... or the legal theory upon which the claims are based differs from that upon which the claims of other class members will perforce be based.") (emphasis added) (citing Eisenberg, 766 F.2d at 786 (3d Cir.1985)); see also Pittsburgh Mack Sales & Service, Inc. v. Int'l Union of Operating Engineers, Local Union No. 66, 580 F.3d 185, 190-91 (3d Cir.2009) (judicial action that relies on a series of hypotheticals amounts
The Court will now determine whether the other requirements of Rule 23 have been met.
4. Predominance and Superiority — Rule 23(b)(3)
The Court must determine whether Plaintiffs have demonstrated predominance under Rule 23(b)(3). Predominance will exist where "questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy." While bearing some similarity to the commonality requirement of Rule 23(a), the predominance test presents a "far more demanding" standard. In re Hydrogen Peroxide Antitrust Litig., 552 F.3d at 310-11.
"If proof of the essential elements of the cause of action requires individual treatment, then class certification is unsuitable." id. at 311 (quoting Newton, 259 F.3d at 172). Accordingly, Plaintiffs must demonstrate that their claims are "capable of proof through evidence that is common to the class rather than individual to its members." id. at 311-12. As the Supreme Court has recently stated, "Rule 23(b)(3), as an adventuresome innovation, is designed for situations in which class-action treatment is not as clearly called for." Comcast v. Behrend, ___ U.S. ___, 133 S.Ct. 1426, 1432, 185 L.Ed.2d 515 (2013).
For reasons already explained in Section II of this opinion, the Court concludes that common issues predominate.
Like it did in its opposition to final certification of the FLSA collective, Office Depot argues that class certification must be denied because the roles and functions of different ASMs varied significantly. However, the differences pointed out by Office Depot are largely immaterial to the ultimate determination of whether ASMs are exempt. Instead, those differences unremarkably demonstrate that ASMs were not exactly the same in every single way imaginable. But while Rule 23(b)(3) imposes a considerable burden on Plaintiffs, granular uniformity between class members is not required for establishing predominance. Instead, Plaintiffs' claims must be "capable of proof at trial through evidence that is common to the class rather than individual to its members." See In re Ins. Brokerage Antitrust Litig., 579 F.3d 241, 268 (3d Cir.2009) (citing In re Hydrogen
A class action is also a superior method of adjudicating Plaintiffs' claims. See Georgine v. Amchem Prods., 83 F.3d 610, 632 (3d Cir.1996). As this Court already concluded in its discussion of the FLSA collective, ASMs will have little incentive to pursue their claims on an individual basis. See, e.g., Clark v. Bally's Park Place, Inc., 298 F.R.D. 188, 201-202 (D.N.J.2014). More importantly, class treatment is practicable because ASMs in the State Law Classes shared similar roles and responsibilities, they all were governed by a uniform corporate overtime policy, and they all are alleging that the FWW Plan was illegal. See Mann v. TD Bank, N.A., Civ. No. 09-1062, 2010 WL 4226526, *18 (D.N.J. Oct. 20, 2010) (citations and quotations omitted). Finally, the proposed class members are reasonably ascertainable. See id.
5. Appointment of Class Counsel
The following firms request that they be appointed class counsel: Klafter Olsen & Lesser LLP, Berger & Montague, P.C., Whitfield Bryson & Mason LLP, and Locks Law Firm. Under Rule 23(g), which provides for the appointment of class counsel, courts must consider:
Fed. R. Civ. P. 23(g)(1)(A). After reviewing the relevant information, the Court will appoint the above-mentioned firms as class counsel with respect to the Colorado, Maryland, and Washington Classes. Appointment of class counsel for the Oregon Class would be premature because the class has not been certified. See Glen Ridge SurgiCenter, LLC v. Horizon Blue Cross and Blue Shield of New Jersey, Civ. No. 08-6160, 2011 WL 5881924, *7 (D.N.J. Sept. 16, 2011).
For the foregoing reasons, Plaintiffs' motion for certification of the FLSA collective action is