Kraft FLSA Class Action Defense Cases–Spoerle v. Kraft: Wisconsin Federal Court Certifies Class Action Of Class Action Complaint Alleging Labor Law Violations For Failure To Compensate Employees For Doffing/Donning Protective Gear

Class Action Complaint Alleging Failure to Pay Employees for Time Incurred Doffing and Donning Protective Gear Satisfied Rule 23 Requirements for Class Action Certification Wisconsin Federal Court Holds

Plaintiffs filed a labor law class action against their employer, Kraft Foods, alleging violations of the Federal Labor Standards Act (FLSA) for failure to pay them for time spent doffing and donning protective gear at a meat processing plant; the class action complaint alleged that employees were required “to put on several items of safety and sanitation equipment and then walk to their work stations” before clocking in for the day, and were required to reverse the process after clocking out at the end of the day. Spoerle v. Kraft Foods Global, Inc., ___ F.Supp.2d ___ (W.D. Wis. May 5, 2008) [Slip Opn., at 1]. As the court explained at page 4, Kraft “requires that all hourly employees wear certain company-provided items in the performance of their jobs: footwear…, hair nets, beard nets…, protective headgear…, polyester frocks, and ear plugs or ear muffs,” and that some employees are required to wear cotton shirts and/or safety glasses. Employees are required to don this gear before swiping in, and to doff the gear after swiping out, _id._, at 5. The time incurred by employees to comply with this requirement varies, as does the time incurred in walking to/from the employee’s workstations. _Id._, at 1. The gravamen of the class action is that Kraft’s failure to pay for this “off the clock” time violates federal and state labor laws. _Id._ Defense attorneys moved for summary judgment on the grounds that the time at issue was not compensable because it fell within the scope of various exceptions under the FLSA; the district court denied the motion. _See Spoerle v. Kraft Foods Global, Inc._, 527 F.Supp.2d 860 (W.D. Wis. 2007). Plaintiffs moved the court to certify a collective action under the FLSA and a Rule 23(b)(3) class action under Wisconsin state law, _Spoerle_, at 2; the district court granted plaintiffs’ motion, finding this to be “an easy case” for certification of a class action, _id._, at 3.

The federal court first addressed the defense argument that the state and federal class action claims could not be prosecuted in the same action, based on the theory that “a plaintiff should not be allowed to maintain a representative action involving both federal and state law wage claims because of the procedural differences between the two types of claims.” Spoerle, at 8. This argument is premised on the fact that employees must affirmatively “opt in” to the FLSA class action to be members of the class, but the same employees are deemed members of the state law class action unless they affirmatively “opt out.” Id. According to defense attorneys, “potential plaintiffs will be hopelessly confused by the differences between the two claims and will be unable to make an intelligent decision regarding whether to opt in or out of the lawsuit,” id.; this confusion is exacerbated by plaintiffs’ unilateral and premature notice to the class, which “contained inaccurate information,” id., at 9. The district court agreed that “plaintiffs made a foolish blunder,” id., at 9, but concluded that any confusion could be addressed through carefully drafted notices, id., at 8-9.

Certification of Class Actions Class Action Court Decisions Employment Law Class Actions Uncategorized

Wal-Mart Class Action Defense Cases–Sepulveda v. Wal-Mart: In Unpublished Opinion Ninth Circuit Reverses Denial Of Class Action Treatment In Labor Law Class Action Filed On Behalf Of Assistant Managers

Fifth Circuit’s “Incidental Damages” Approach to Class Action Certification under Rule 23(b)(2) Inapplicable in Ninth Circuit and District Court Erred in Denying Class Action Treatment of Labor Law Class Action based on Conclusion that “Claims for Monetary Relief were Non-Incidental” Ninth Circuit Holds

Plaintiffs filed a class action against Wal-Mart on behalf of assistant managers alleging labor law violations. Plaintiffs filed a motion with the district court for class action certification, arguing that class action treatment was appropriate under Rule 23(b)(2) and 23(b)(3). In an order denying class action certification that may be found here, see Sepulveda v. Wal-Mart Stores, Inc., 237 F.R.D. 229 (C.D.Cal. 2006), the district court refused to certify the litigation as a class action on the grounds that (1) the claims for monetary relief in the class action complaint were not incidental, thus rendering certification under Rule 23(b)(2) inappropriate, and (2) the duties of associate managers “are not susceptible to collective proof,” thus rendering class action treatment under Rule 23(b)(3) inappropriate. Id., at 245-46 and 248-49. Plaintiffs appealed. Sepulveda v. Wal-Mart Stores, Inc., Case No. 06-56090 (9th Cir. April 25, 2008) [Slip Opn., at 1-2]. In an unpublished opinion, the Ninth Circuit reversed. In a single paragraph, the Circuit Court stated that the district court had “misapplied Ninth Circuit precedent when, relying on its conclusion that Plaintiffs’ claims for monetary relief were non-incidental, it denied certification under [Rule] 23(b)(2),” and cited a Ninth Circuit opinion that “refus[ed] to adopt the incidental damages approach set forth by the Fifth Circuit in Allison v. Citgo Petroleum Corp., 151 F.3d 402 (5th Cir. 1998).” Id., at 2 (citing Molski v. Gleich, 318 F.3d 937, 949-50 (9th Cir. 2003)). Rather, the lower court should have “focus[ed] on the intent of the Plaintiffs in bringing suit.” Id. (citation omitted). By failing to do so, the district court abused its discretion in denying class action treatment under Rule 23(b)(2). Id. The Ninth Circuit instructed the district court to reconsider on remand whether class certification was appropriate under Rule 23(b)(2) and, further, to consider “using Rule 23(c)(4) to certify issues under the Rule 23(b)(2) standard.” Id. (citation omitted).

The author notes that the district court opinion contains the following discussion of Rule 23(b)(2):

Certification of Class Actions Class Action Court Decisions Employment Law Class Actions Uncategorized

Microsoft Vista Class Action Defense Cases-Kelley v. Microsoft: Ninth Circuit Denies Review Of Certification Of Nationwide Class Action Against Microsoft By Washington Federal Court In Class Action Challenging OEM Marketing Of Vista Operating System

Microsoft Petition for Permission to Appeal Class Action Certification of Nationwide Class Action Challenging Labeling PCs as “Windows Vista Capable” even if PCs could not Run Premium Vista Properly Denied by Ninth Circuit We previously reported on the nationwide class action certified against Microsoft arising out of a class action complaint that challenges the marketing of new “Windows Vista Capable” and “Express Upgrade” programs. That class action complaint alleged that almost a year before its release of the new Vista operating system, Microsoft “authorized original equipment manufacturers…to place a sticker on personal computers… indicating that the PCs had been certified by Microsoft as ‘Windows Vista Capable.

Certification of Class Actions Class Action Court Decisions Uncategorized

Class Action Defense Cases–Vandyne v. Allied Mortgage: Missouri Supreme Court Reverses Certification Of Class Action Because Membership In Class Action Required A Finding Of Liability And Because Class Definition Ambiguous

Class Action Alleging Failure to Disclose “Loan-Related” Fees Improperly Certified as Class Action because Class Membership Turned on Finding of Defendant’s Liability and because Class Definition Failed to Adequately Describe “Loan-Related” Fees and Services, Requiring Reversal of Trial Court Order Missouri Supreme Court Holds

Plaintiffs filed a class action in Missouri state court against Allied Mortgage Capital Corporation alleging violations of the state’s Merchandising Practices Act “by misrepresenting charges for third-party services in connection with their loan transaction.” Vandyne v. Allied Mortgage Capital Corp., 242 S.W.3d 695, 696 (Mo. 2008). The class action alleged that Allied “failed to disclose costs incurred in processing Plaintiffs’ loans”; plaintiffs moved to certify the lawsuit as a class action, defining the class “in part as those individuals who paid costs based upon alleged ‘nondisclosures and false, unfair, deceptive or misleading disclosures’ by Allied.” Id., at 697. Defense attorneys objected that the definition of the class “requires the court to resolve a paramount liability question in order to identify class membership.” Id. The trial court granted plaintiffs’ motion for class action certification, but the Missouri Supreme Court unanimously reversed.

The Supreme Court agreed with defense attorneys that the definition of the class was improper; it held, however, that “the class definition can be cured by eliminating the phrase ‘nondisclosures and false, unfair, deceptive or misleading disclosures’ from the class definition.” Vandyne, at 697. The Supreme Court also agreed with a separate defense argument, that the definition of the class “is insufficiently definite with respect to defining what fees and services are ‘loan-related.’” Id. The Court explained that “the question as to whether a particular service or fee is ‘loan-related’ can only be reached through an analysis of each individual potential class members’ loan documents.” Id. Class counsel apparently represented at oral argument that, on remand, the class action complaint would be amended to “state separately those fees and services as to which class certification is sought.” Id., at 697-98

Certification of Class Actions Class Action Court Decisions Uncategorized

FLSA Class Action Defense Cases–In re Pilgrim’s Pride: Arkansas Federal Court Conditionally Certifies Class Action In MDL Labor Law Class Action Alleging Failure To Pay For Time Spent Donning And Doffing Protective Equipment

FLSA Class Action Alleging Failure to Compensate Workers for Time Spent Donning, Doffing and Cleaning Safety and Sanitary Gear Involved Putative Class Action Representatives “Similarly Situated” to Members of Proposed Class Warranting Certification of FLSA Collective Action for Purposes of Notice Despite Differences in Employee Equipment Utilized, Time Incurred and Timekeeping Methods Arkansas Federal Court Holds Various class action lawsuits were filed against Pilgrim’s Pride for violations of the Fair Labor Standards Act (FLSA) alleging failure to compensate employees for time spent donning and doffing safety and sanitary gear at chicken processing plants; the Judicial Panel on Multidistrict Litigation centralized the class actions in the Western District of Arkansas, and plaintiffs filed a consolidated motion for class action certification (technically, a “collective action” under the FLSA).

Certification of Class Actions Class Action Court Decisions Employment Law Class Actions Uncategorized

Coca-Cola Class Action Defense Cases–Coca-Cola v. Honorable W. Stephen Nixon: Missouri Supreme Court Reverses Order Granting Class Action Certification Holding That Definition Of Class Action Membership Was Overly Broad And Indefinite

Class Action Complaint Alleging Failure to Disclose Type of Sweetener used in Diet Drink Improperly Granted Class Action Treatment because Definition of Class Included Millions of Uninjured Individuals and Class Definition could not be Permissibly Limited Missouri Supreme Court Holds

Plaintiff filed a putative class action lawsuit in Missouri state court against Coca-Cola alleging that it “made affirmative misrepresentations and omitted material information regarding the types of artificial sweeteners used in fountain Diet Coke” in violation of state law; Specifically, the class action alleged that Coca-Cola “misled consumers into believing that fountain Diet Coke is the same product as bottled Diet Coke,” when in point of fact the fountain Diet Coke is sweetened with aspartame and saccharin while bottled Diet Coke is sweetened only with aspartame. State ex rel. The Coca-Cola Company v. The Honorable W. Stephen Nixon, ___ S.W.3d ___ (Mo. April 15, 2008) [Slip Opn., at 3]. According to the allegations underlying the class action, plaintiff and other putative class members would not have purchased the fountain drink if they had known that it was made with saccharin. _Id._ Plaintiff filed a motion requesting that the trial court certify the litigation as a class action; she proposed to define the class as “All individuals who purchased for consumption and not resale fountain diet Coke in the State of Missouri after March 24, 1999 through the date of this order.” _Id._ Defense attorneys opposed the motion on the grounds that the proposed class was overly broad and indefinite, _id._ Despite the fact that plaintiff provided no estimate of the size of the class, the trial court accepted the proposed definition and granted class action treatment. _Id._ Ultimately, defense attorneys filed a petition for writ of prohibition with the Missouri Supreme Court, arguing that the trial court abused its discretion in granting class action certification; the Court reversed. _Id._

After rejecting plaintiff’s claim that interlocutory relief should not be considered, see Coca-Cola, at 3-4, and after noting that the standard of review was abuse of discretion, id., at 4, the Missouri Supreme Court turned to the merits. It noted that “the underlying question in any class action certification is whether the class action device provides the most efficient and just method to resolve the controversy at hand, all things considered,” id., at 4, and that implicit in the statutory scheme governing certification of class actions is the requirement that the class definition be proper, id., at 4-5 (citations omitted). In fact, the Supreme Court stated that the first task facing a court in ruling on a motion for class certification is “‘to determine whether the class exists and is capable of legal definition.’” Id., at 5 (citation omitted). The Court explained at page 5, “A class definition that encompasses more than a relatively small number of uninjured putative members is overly broad and improper.” (Citations omitted.) And while it was permissible to certify a class action such that the putative class “initially include[s] members who could not have brought the underlying action in their own name,” the definition ultimately must be capable of being modified so as to “remove the uninjured putative members.” Id. (citations omitted). This requires that only “a relatively small number of uninjured putative members remain,” because the trial court may then “easily resolve individual questions after the common questions have been answered.” Id. If it will not be possible to modify the class definition in this manner, then “the putative class is impermissibly overbroad.” Id.

Certification of Class Actions Class Action Court Decisions Uncategorized

Class Action Defense Discovery Cases-Montoya v. S.C.C.P. Painting: Maryland Federal Court Holds Employer Bank Records Relevant But Discovery Concerning Immigration Status Irrelevant To Class Action Certification Issues

Labor Law Class Action Plaintiffs Entitled to Redacted Bank Records of Putative Class Members because Defendant Lacked other Business Records Relevant to Class Action Numerosity and Commonality Requirements, and Class Action Defense Attorneys Entitled to Information Regarding Specific Terms of Plaintiffs’ Employment Agreements because Relevant to Typicality and Commonality but not Entitled to Information Concerning Immigration Status, Maryland Federal Court Holds

Plaintiffs filed a labor law class action against S.C.C.P. Painting alleging that it “failed to pay wages for all work performed, failed to pay wages for work directed to be performed but not accounted for on timesheets, failed to pay time and a half for hours worked greater than 40 hours, and deducted wages from paychecks, purportedly for tax withholding purposes but not in fact withheld for that purpose.” Montoya v. S.C.C.P. Painting Contractors, Inc., 530 F.Supp.2d 746, 747 (D.Md. 2008). The class action alleged violations of both state and federal law, and sought to proceed both as a class action under Rule 23 and as a collective action under 29 U.S.C. § 216(b), id. As discovery limited to class action certification issues proceeded, disputes arose and each side filed motions to compel discovery. Id., at 747-48. Plaintiffs’ lawyer sought bank records; defense attorneys sought inter alia information concerning plaintiffs’ immigration status and concerning the specific employment agreements between the putative class representatives and defendant. The court granted the plaintiffs’ motion, and granted and denied the defense motion.

The district court first addressed plaintiffs’ request for bank records, which sought documents “reflecting wages paid to any employees.” Montoya, at 748. The court held that information sought was relevant to issues of numerosity and commonality, and that privacy concerns were resolved by plaintiffs’ agreement that the names of the employees may be redacted from the bank records. Id. The court noted that the records were necessary “in light of the absence of other business records,” and that according to defense attorneys “SCCP did not have any payroll records, no information submitted to tax authorities, no tax sheets or sign-in sheets, no personnel files and no documents showing the rates of pay for any person.” Id. Because the company did not have any information necessary to support a motion for class action certification, plaintiffs were entitled to obtain the bank records.

Certification of Class Actions Class Action Court Decisions Uncategorized

Cigarette Class Action Defense Cases–McLaughlin v. Philip Morris: Second Circuit Reverses Certification Of Class Action Alleging Deceptive Advertising Of “Light” Cigarettes Holding Individual Questions of Reliance Predominate

Class Action Alleging Fraud Under RICO in Advertising of Light Cigarettes Fails to Satisfy Prerequisites for Class Action Certification Under Rule 23 because Individual Issues Predominate Second Circuit Holds

Judge Jack Weinstein of the United States District Court for the Eastern District of New York certified a class action against Philip Morris USA, R.J. Reynolds Tobacco Co., Brown & Williamson Tobacco Corp., Lorillard Tobacco Co., Ligget Group, American Tobacco Co., Altria Group, and British American Tobacco; the underlying class action complaint alleged the tobacco companies duped smokers into believing that “light” cigarettes were less harmful to them. See Schwab v. Phillip Morris USA, Inc., 449 F.Supp.2d 992 (E.D.N.Y. 2006). We have previously reported on the district court’s 540-page opinion in that class action, and a copy of that summary may be found here. The theory underlying the class action was that defendants deceived smokers “by convincing them that smoking ‘light’ cigarettes was safer for their health.” 449 F.Supp.2d at 1018. As the Second Circuit explained, the class action claims were “brought as based in fraud under the Racketeer Influenced and Corrupt Organizations Act (RICO)…, but under RICO, each plaintiff must prove reliance, injury, and damages.” McLaughlin v. Philip Morris USA, Inc., ___ F.3d ___ (2d Cir. April 3, 2008) [Slip Opn., at 4]. Accordingly, the Circuit Court reversed class action certification, finding that “Plaintiffs’ putative class action suffers from an insurmountable deficit of collective legal or factual questions.” _Id._

The district court based its certification of the class action on its belief that there was “evidence of fraud on the class appears to be quite strong”: “If, as contended by plaintiffs, a huge fraud was perpetrated on tens of millions of people causing them billions of dollars in loss—measured largely by the difference between the value people were led to believe they were getting when they bought ‘light’ cigarettes for safety, and what they received, a non-safe product—recovery dependent on proof should be allowed.” Schwab, at 1021. The district court explained at page 1018:

Certification of Class Actions Class Action Court Decisions Uncategorized

FedEx Class Action Defense Cases–In re FedEx Ground: Indiana Federal Court Grants Class Action Treatment In 19 Labor Law Class Action Cases Alleging Misclassification Of Pickup/Delivery Drivers But Denies Certification In 9 Other Class Actions

In Considering Class Action Certification in 28 Labor Law Class Action Lawsuits Centralized by the Judicial Panel on Multidistrict Litigation, 19 Cases Satisfied Class Action Prerequisites but 9 other Putative Class Actions would Require Individualized Inquiries Sufficient to Defeat Class Action Treatment Indiana Federal Court Holds

Numerous class action lawsuits were filed against FedEx Ground alleging that the company misclassified its pickup and delivery drivers as independent contractors rather than employees; the Judicial Panel on Multidistrict Litigation consolidated the class actions in the Northern District of Indiana, and the plaintiffs in the class action cases characterized as “Wave 1,” “Wave 2” and “Wave 3” moved the district court for class action certification. In re FedEx Ground Package System, Inc., Employment Prac. Litig., ___ F.Supp.2d ___ (N.D. Ind. March 25, 2008) [Slip Opn., at 1]. As the federal court summarized, these class action plaintiffs “assert that although FedEx Ground represents to its drivers that they are only partnering with FedEx Ground and will essentially own their own businesses, all FedEx Ground drivers sign the FedEx Ground Operating Agreement, which actually reserves to FedEx Ground the right to exercise pervasive control over the method, manner, and means of the drivers’ work,” _id._ FedEx opposed class action treatment, arguing that “the plaintiffs’ claims turn on individualized issues, including whether contractors should be classified as employees under the states’ statutory tests, and whether any individual contractor can meet the high bar for rescission of his individual contract.” _Id._, at 2. In a 164-page opinion, the district court certified the Wave 1, Wave 2 and Wave 3 cases as class actions with respect to cases involving drivers from Alabama, Arkansas, California, Florida, Indiana, Kentucky, Maryland, Minnesota, New Hampshire, New Jersey, New York, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, West Virginia and Wisconsin; the court denied class action treatment for drivers from Illinois, Iowa, Massachusetts, Michigan, Mississippi, Missouri, Montana, South Dakota and Virginia. _Id._, at 3. The district court noted that it had previously granted class action certification with respect to drivers from Kansas, _id._, at 9, bringing to 20 the total number of states for which class action treatment has been approved.

Given the extraordinary length and detail of the district court opinion, we provide here only a broad outline of its holdings. Because it had previously granted class action treatment on behalf of the Kansas drivers, the district court used its prior ruling as a benchmark against which it considered the new class action certification motions. In re FedEx Ground, at 9. The court held that class action complaints containing only former drivers as named-plaintiffs could still proceed as class actions on behalf of former and current drivers because “courts have held that former employees have standing to represent a class consisting of both current and past employees.” Id., at 10 (citations omitted); see also, e.g., id., at 24-25 and 30. But with respect to defense attorney efforts to defeat class action treatment on the ground that individual inquiries would be required to determine whether the Operating Agreements were valid and the manner and extent to which the “right to control” will impact the validity of the Operating Agreements, the federal court rejected this argument with respect to the laws of certain states, see, e.g., id., at 14-16 (Tennessee), 25-27 (Arkansas) and 39-42 (Texas), but agreed with FedEx Ground that common questions would not predominate under the laws of other states, see, e.g., id., at 18-20 (Montana), 20-23 (Mississippi) and 80-84 (Michigan). For example, with respect to the Missouri putative class action, the district court explained that class action certification was not warranted because “Whether FedEx Ground has the right to control its drivers within the meaning of Missouri agency law cannot be resolved by simple reference to the Operating Agreements and corporate policies.” Id., at 105. Rather, “Missouri courts define the ‘right to control’ with reference to the actual exercise of control, [citation], which will require a driver-by-driver, terminal-by-terminal, supervisor-by-supervisor analysis that is unnecessary in most other states.” Id., at 105-06. This presented the primary basis for the difference among states for which the court certified class actions and states for which it denied motions for class certification.

Certification of Class Actions Class Action Court Decisions Employment Law Class Actions Uncategorized

Class Action Defense Cases–Allen v. Holiday Universal: Pennsylvania Federal Court Certifies Class Action Against Health Clubs Alleging Excessive Membership Fees In Violation Of State Law But Denies Class Action Treatment Of Unjust Enrichment Claim

Class Action Treatment Warranted for Class Action Claims Against Health Clubs based on Violations of State Law but not as to Class Action Complaint’s Unjust Enrichment Claim Pennsylvania Federal Court Holds

Plaintiffs filed a putative class action in Pennsylvania state court against three health clubs (Holiday Universal, Scandinavian Health Spa and Bally Total Fitness) alleging violations of Pennsylvania’s Health Club Act and Unfair Trade Practices and Consumer Protection Law (UTPCPL); defense attorneys removed the class action to federal court. Allen v. Holiday Universal, ___ F.Supp.2d ___ (E.D. Pa. March 11, 2008) [Slip Opn, at 1]. The class action complaint alleged that plaintiffs entered into “Retail Installment Contract” prepared by defendants that required payment of a membership fee ($632 for one of the named plaintiffs, which she financed at 17.50% interest, and $1275 for the other named plaintiff, which he financed at 13% interest) and monthly dues; the health club memberships renewed automatically. _Id._, at 3. The theory underlying the class action was that the health clubs charged “grossly excessive initiation fees” in violation of Pennsylvania state law. _Id._ Plaintiffs moved the district court to certify the litigation as a class action, _id._, at 2; defense attorneys opposed the motion. The federal court found the elements of Rule 23 satisfied and granted plaintiffs’ request for class action treatment.

The defense first argued that the definition of the proposed class was overly broad because it included within its sweep individuals who suffered no damage because they wanted, accepted and benefited from the health club memberships. Allen, at 6-8. The district court disagreed, holding that if the initiation fees were excessive under Pennsylvania law then every member of the proposed class action suffered damage, regardless of whether they wanted and utilized the health club services, id., at 8. The district court also rejected a claim that the class action’s definition of the class was improper because it created a “‘fail/safe’ class, that is, membership in a portion of the Class depends upon a finding for Plaintiffs’ on the merits.” Id., at 15. In essence, the defense argued that inclusion in the class turned on whether a particular health club was owned by defendant Bally Holding; plaintiffs countered that club ownership was not the “central issue of liability” presented by the class action and, accordingly, there was no improper “fail/safe” class. Id., at 15-16. The district court agreed with plaintiffs, and noted that “the question of whether any particular health club in Pennsylvania is owned by the Health Clubs is a question of fact not central to the question of liability and easily answered through further discovery.” Id., at 16. However, the federal court made it clear that it “expect[ed] the parties to promptly clarify any remaining confusion as to this issue.” Id. (The court also rejected a “ratification” argument, but that is not summarized here. See id., at 8-15.)

Certification of Class Actions Class Action Court Decisions Uncategorized