Class-Action

Federal Court Indicates Equitable Tolling Only Available in FLSA Cases When There is Evidence of Deception by Defendants

December 1, 2011 | Peter S. Lubin and Patrick Austermuehle

Lubin Austermuehle handles wage and hour class action litigation on a regular basis, and many of our clients’ claims are based upon violations of the Fair Labor Standards Act (FLSA). Our Schaumburg unpaid overtime attorneys were interested to see a recent class-action brought by restaurant workers alleging violations of the FLSA.

Cao v. Wu Liang Ye Lexington Rest., Inc. is a suit filed by twenty-four employees of two restaurants in New York City. The employees worked as waiters, delivery workers, and a food packer for Defendants and filed suit for unpaid minimum and overtime wages, illegal tip deductions, expense reimbursement for the purchase and maintenance of bicycles and uniforms. Plaintiffs also sought statutory liquidated damages, prejudgment interest, and attorneys’ fees. Plaintiffs filed for default, which was granted by the Court. Plaintiffs subsequently submitted their damages calculations and Defendants opposed Plaintiffs’ application for damages on the basis that Plaintiffs’ calculations were inflated and Defendants’ violations of the FLSA were not willful.

The Court addressed Defendants’ arguments by first discussing the applicable law. The limitations period for FLSA claims is generally two years, but is three years for defendants that willfully break the law. The Court then ruled that the three year statute of limitations was applicable because Defendants defaulted and therefore admitted Plaintiffs’ willfulness allegations. The Court also found the longer statute of limitations applied because Defendants admitted that they did not try to learn about the FLSA’s requirements until just prior to the commencement of the lawsuit. Plaintiffs argued that they should receive unpaid wages for the entirety of their employment under the doctrine of equitable tolling due to the fact that Defendants failed to post a notice explaining the FLSA in plain view of employees. The Court saw no reason to extend Plaintiffs’ claims beyond the statutory three year period because Defendants’ had not engaged in any sort of deception or other exceptional activity, and prior case law held that equitable tolling only applies in unusual circumstances. The Court finished by granting Plaintiffs damages for unpaid minimum wage, overtime wages, unlawful tip deductions, reimbursement for bicycle expenses, liquidated damages, prejudgment interest, and attorneys’ fees.

The Court denied reimbursement for uniform expenses because most of the clothing worn by employees could be “worn as a part of the employees’ ordinary wardrobe.” Plaintiffs did also wear a red vest that could be considered outside an ordinary wardrobe, but there was no evidence in the record that Plaintiffs’ incurred expenses obtaining or cleaning the red vests.

Cao v. Wu Liang Ye Lexington Rest., Inc. provides future wage and hour litigants with several lessons when it comes to preparing damages applications. First and foremost, courts are unlikely to apply equitable tolling to extend the FLSA’s statute of limitations in the absence of intentional deception or fraud by defendants. Additionally, this case serves as a reminder that employees should keep accurate records of work related expenses if they wish to recover damages under the FLSA.

The Commonality and Numerosity Requirements in Missouri Class Action Certification – Doyle v. Fluor Corp.

October 20, 2011 | Peter S. Lubin and Patrick Austermuehle

“Commonality” and “Numerosity” are two of a handful of factors that most courts consider in deciding whether to allow a toxic dumping lawsuit to proceed as a class action. In Doyle v. Fluor Corp., a Missouri appellate court explains these requirements and how they should be applied in a particular matter.

Plaintiffs brought the action alleging that Defendants, owners and operators of a smelting (the process by which metal is extracted from ore) business in Herculaneum, Missouri, released lead, heavy metals and other toxic substances into the air, which in turn caused damage to real property in the surrounding area. Plaintiffs sought damages under theories of negligence, private nuisance, strict liability, and trespass. The trial court granted Plaintiffs’ motion to certify the matter as a class action with the class representatives suing on behalf of nearly 400 people who “own and occupy” residential real property in the area near Defendants’ operation.

On appeal, the Court of Appeals for Missouri’s Eastern District upheld the decision to certify the class. A class may be certified under Missouri law where: 1) the class is so numerous that joinder of all members is impracticable; 2) common questions of law or fact exist among the class; 3) the claims or defenses of the representative parties are typical of that of the class; and 4) the representative parties are able to fairly and adequately protect the class’ interest. In addition, a court considering certification must also determine that the common factual or legal questions “predominate over any questions affecting only individual members” and that a class action is more suitable than other methods to fairly and efficiently adjudicate the issue.

In affirming the trial court’s decision, the court noted that the “commonality” requirement does not mean that all issues in a particular action be common to all class members, but instead that the common issues predominate over the others. “A single common issue may be the overriding one in a matter, despite the existence of numerous remaining individual questions,” the court ruled. In this case, several of the action’s central issues were shared among the class, including whether Defendants were responsible for emitting toxic metals in to the air; whether such an act constitutes negligence; and whether the pollution caused property in Herculaneum to be contaminated.

Class Certification Order Affirmed By Appellate Court

October 7, 2011 | Peter S. Lubin and Patrick Austermuehle

We recently had a win in the Illinois Appellate Court in S37 v. Advanced Refrigeration. The Appellate Court affirmed the trial court’s decision to certifiy a class action regarding the claims in that. Advanced sells appliances to various businesses and added a charge on its invoices called government processing requirment. This fee was not required to be paid by the government and was not a government mandated fee. Advanced created the fee to recover costs it allegedly incurrs in complying with government requirements. The Class-Action Complaint alleged that the fee was deceptive in that it allegedly made a profit generating fee appear as if it were a government required fee. Advanced denied these allegations and opposed class-certification. The trial court denied Advanced’s motion to dismiss and then certified the case as a class-action.

The Appellate Court granted leave for an appeal of the class-certification decision. Advanced argued that it disclosed the true nature of the fee to all customers and that such alleged disclosure gave rise to individual issues blocking class certification. The Class argued that this defense did not create invididual issues barring class-certification as the defense of full disclosure was common the entire class given Advanced’s claim that it told all customers that the fee wasn’t a government mandated fee or tax as the fee’s name allegedly suggested it was.

The Appellate Court rejected Advanced’s arguments and found that the trial court properly exercised its discretion in certifying the class-action.

The Appellate Court held:

We agree with the plaintiff that this case fits the pattern of cases routinely certified as
class actions by Illinois courts. See Martin v. Heinold Commodities, Inc., 163 Ill. 2d 33, 643
N.E.2d 734 (1994) (resolved as a class action, the court held the commodity option contracts
broker’s disclosure statement was misleading, in violation of the Illinois Consumer Fraud Act,
because the “foreign service fee” to be charged investors was a commission from which it would receive compensation); Harrison Sheet Steel Co. v. Lyons, 15 Ill. 2d 532, 155 N.E.2d 595 (1959)(class action was proper where the defendant refused to refund illegal occupation taxes collected from its customers); P.J.’s Concrete Pumping Service, Inc. v. Nextel West Corp., 345 Ill. App. 3d 992, 1003, 803 N.E.2d 1020 (2004) (“The primary factual issue in this case is a uniform billing practice that allegedly violated the Consumer Fraud Act in the same manner as to all class members. The propriety of such a uniform practice is amendable to being resolved in a class action.”).

The Appelalte Court also noted that the brief of the National Association of Consumer Advocates (which filed a friend of the court submission) stated that class-actions provided a way for small claims like this to proceed to court and to obtain justice when small alleged wrongs in the aggregate allegedly harm many consumers:

“ ‘The policy at the very core of the class action mechanism
is to overcome the problem that small recoveries do not provide the
incentive for any individual to bring a solo action prosecuting his or
her rights. A class action solves this problem by aggregating the
relatively paltry potential recoveries into something worth
someone’s (usually an attorney’s) labor.’ ” Amchem Products, Inc. v. Windsor, 521
U.S. 591, 617 (1997), quoting Mace v. Van Ru Credit Corp., 109 F.3d 338, 344 (7th Cir. 1997).

You can view the full opinion of the Appellate Court by clicking here.

Illinois Court Rules that Class Certification in Toxic Dumping Cases is Not an “All or Nothing” Decision – Leib v. Rex Energy Operating Corp.

October 6, 2011 | Peter S. Lubin and Patrick Austermuehle

It doesn’t take a genius to understand that every person is different. Our daily routines; our likes and dislikes; our physical, spiritual, family and money situations; each of these differences make individuals individual. In the toxic dumping class action context, the Southern District of Illinois has made clear that while personal differences mean that some questions are not suitable for class action proceedings, it should not prevent the court from certifying a class on other common questions central to the action.

In Leib v. Rex Energy Operating Corp., Plaintiffs – residents of Bridgeport, Illinois – filed suit alleging that their properties were contaminated with unsafe levels of hydrogen sulfide (H2S), a poisonous gas, released into the air from the more than 100 nearby oil wells owned by defendant PennTex Resources Illinois, Inc. (“PennTex”) and managed by defendant Rex Energy Operating Corporation (“Rex Energy”). Plaintiffs sought damages for injury to property, injunctive relief restraining Defendants from allowing further contamination and forcing them to abate the existing contamination, the establishment of a Court-administered fund for medical monitoring of class members, punitive damages, costs and fees.

Plaintiffs also filed a motion for class certification, seeking to certify a class of all persons and entities owning property or residing in the area surrounding the wells and including most of the towns of Bridgeport and Petrolia. The court determined that Plaintiffs satisfied the requirements for class certification on the question of whether and to what extent Defendants contaminated the Class Area with H2S, but not as to the question of individual property damage amounts.

The court found that the contamination question involves issues common to the entire class:

Plaintiffs’ claims arise out of the same core of operative facts, that is, the allegation that [Defendants] allowed dangerous levels of H2S to contaminate the air in the Class Area. Such alleged behavior constitutes standardized conduct toward all prospective class members. Resolution of this question — whether and, if so, to what extent [Defendants] caused contamination in the Class Area — will certainly advance the litigation.

The court further found that Plaintiffs’ claims were sufficiently common to those of the proposed class, noting “[P]laintiffs need not allege the same exact injury or be free of factual distinctions so long as their claims are based on the same legal theory.”

Employers Can Require Exempt Employees to Take Mandatory Leave and Still Meet the IMWL Salary Basis Test

September 29, 2011 | Peter S. Lubin and Patrick Austermuehle

At Lubin Austermuehle, we are accustomed to litigating wage claims brought under the Fair Labor Standards Act, and most of our clients have FLSA claims. However, our firm also is well versed in Illinois wage laws, and our Tinley Park wage and hour attorneys discovered an interesting overtime class-action in the Appellate Court of Illinois.

Robinson v. Tellabs, Inc. is wage dispute over a policy instituted by Defendant Tellabs requiring employees to take mandatory unpaid days off. Defendant is a manufacturer of telecommunications components that saw a significant boom in its business during the 1990’s, but saw its profits dwindle after the turn of the millennium. As a result of the downturn in revenue, Defendant laid off a significant portion of its work force and instituted many other cost cutting measures. One of the measures implemented by the company was to institute mandatory unpaid leave several days each year around existing paid holidays. Even after the mandatory unpaid leave policy was instituted, Defendant’s had to lay off additional employees to keep the company afloat.

The named Plaintiff worked as a lead engineer for Defendant while the unpaid leave policy was in effect, and was laid off eleven months after his hiring having never been paid any overtime. Plaintiff then filed a class-action lawsuit alleging that Defendant’s implementation of their mandatory unpaid leave policy made he and similarly situated employees non-exempt for the purposes of the Illinois Minimum Wage Law (IMWL). Therefore, Plaintiffs were entitled to overtime pay for any week in which they worked more than forty hours. The trial court ruled in favor of Defendant and found that the mandatory days off was essentially a prospective salary reduction that served the company’s bona fide business needs.

Plaintiffs appealed the trial court’s decision and claimed that the trial court incorrectly applied the salary basis test in making its ruling. The Appellate Court did not find Plaintiffs’ arguments persuasive and agreed with the trial courts decision. The Court discussed that the rule relied upon by the trial court and set forth by Department of Labor opinion letters, which states “the salary-basis test permits employers to prospectively reduce employees’ salaries for a legitimate business need unless done so frequently that the purported salary becomes a sham attempt to pay an hourly wage.” The Court went on to hold that the rule “refers only to deductions during the current pay period…not reductions in future salary.”
Because Defendant’s policy caused reductions in future salary and the policy was a result of Defendant’s bona fide economic difficulties, the Court found that Defendant satisfied the salary-basis test. Additionally, the Court found the test to be met because the policy was applied uniformly among all employees and was not instituted on an ad hoc basis.

Michigan Toxic Pollution Class Action Stalls in Circuit Court – Dow Chemical v. Henry

August 25, 2011 | Peter S. Lubin and Patrick Austermuehle

A Michigan court recently pumped the breaks on a class action toxic pollution suit against Dow Chemical, finding that while property owners may be able to prove that the chemical giant contaminated local rivers and surrounding property with toxins, the plaintiffs did not meet the standards for bringing the suit as a class action.

The Michigan Messenger’s Eartha Jane Melzer reports that “[o]perations at Dow’s Midland plant have spread dioxin — a highly toxic and cancer-causing byproduct of the chemical manufacturing process — and other chemicals, through the Tittabawassee and Saginaw Rivers and into Lake Huron. Flooding of the rivers downstream from Dow has deposited dioxin-laden sediments on properties in the floodplain.”
Dow Chemcial v. Henry concerns a suit by roughly 150 Tittabawassee property owners filed against Dow on behalf of the more than 2,000 people with property in the floodplain in 2003 and claiming that their property had lost value due to contamination. Two years later, Saginaw County Judge Leopold Borello certified the class of property owners, a ruling that Dow appealed to the Michigan Supreme Court.

In order to be certified as a class, Michigan law requires that a group of plaintiffs meet the following criteria:

(a) the class is so numerous that joinder of all members is impracticable;
(b) there are questions of law or fact common to the members of the class that predominate over questions affecting only
individual members;
(c) the claims or defenses of the representative parties are typical of the claims or defenses of the class;
(d) the representative parties will fairly and adequately assert and protect the interests of the class; and
(e) the maintenance of the action as a class action will be superior to other available methods of adjudication in promoting the convenient administration of justice.

MCR 3.501(A)(1). On appeal, the state supreme court remanded the case to Judge Borello, requiring that he analyze the action under criteria (c) and (d) above.

Upon further consideration, Borello reversed his earlier approval of class status for the group. In so doing, he relied on the recent U.S. Supreme Court decision in Wal-Mart Stores v. Dukes, a 5-4 ruling in which the court reversed a lower court’s decision to certify a class of women employees alleging bias in pay and promotions, noting that the company’s decentralized structure meant that the case involved millions of employment decisions and that the women failed to show “some glue holding the alleged reasons for all those decisions together.”

7th Circuit Court of Appeals Rules Employees Entitled to Compensation for Time Spent Donning Safety Gear Under State Law

August 24, 2011 | Peter S. Lubin and Patrick Austermuehle

The federal government passed the Fair Labor Standards Act (FLSA) to ensure that American workers would be paid appropriately for the work they provide. While some people may think of the FLSA as a statute that is concerned only with getting workers their unpaid overtime, the language of the law is broad enough to ensure that employees are paid for all of their time spent working, regardless of whether that time is overtime or not. Our Downers Grove wage and hour class-action attorneys found a case in the Seventh Circuit Court of Appeals involving employees who were not paid for the time they spent donning safety gear and wanted to share it with our readers.

In Spoerle vs. Kraft Foods Global, Plaintiffs were employed in Defendant’s plant in Madison, Wisconsin preparing meat products as hourly workers and spent several minutes at the outset of each work day putting on steel-toed boots, hard hats, and other safety gear required to perform the job. Plaintiffs filed suit to challenge a trade-off — struck in a collective bargaining agreement between Plaintiffs’ union and Defendant — where Plaintiffs would not be paid for their time spent donning this protective gear in exchange for a higher base pay rate. The FLSA permits such a tradeoff under §203(o), but Plaintiffs argued that Wisconsin law has no equivalent exception, and therefore state law requires payment for time spent donning such gear. Defendant argued that the FLSA and federal labor laws pre-empt the state law, so the CBA agreement should be honored and the time spent dressing in safety gear should remain noncompensable. The district court found in favor of the Plaintiffs, and Defendant appealed.

On appeal, defendant argued that §203(o) was the federal government’s decision to “permit a collectively bargained resolution to supersede the rules otherwise applicable to determining the number of hours worked.” The Court of Appeals did not find this argument persuasive, however, because nothing placed in a CBA exempts an employer from state laws of general application. Therefore, the Court found that the district court did not err in ruling that Plaintiffs were entitled to be paid for their time spent equipping themselves with safety gear.

Court Certifies Class-Action for Unpaid Employee Login Time

August 18, 2011 | Peter S. Lubin and Patrick Austermuehle

Courts have been flooded lately with claims by non-exempt employees who have not been compensated for time spent logging into computer systems and performing other start-up procedures. As experienced overtime lawyers, Lubin Austermuehle has been tracking many of these cases, and the Northern District of Illinois made a recent ruling on one such case.

In Kernats v. Comcast Corporation, Plaintiffs worked for Defendant as customer account representatives (CAE’s) who performed non-exempt work and were paid on an hourly basis. Plaintiffs worked in one of Defendant’s eight call centers in Illinois, and while all Plaintiffs did not perform exactly the same job, they did have the same job description and primary duty. Additionally, they all had similar training, were governed by the same employment policies, and were compensated in the same way. Also, all CAE’s were allegedly required to first log into a work computer, load all of the necessary computer applications, and log into Defendant’s phone system before the start of their shift. In addition to the customer service responsibilities, Defendant required CAE’s to learn about new products, services, marketing campaigns, and review company emails.

Plaintiffs filed suit alleging that Defendant failed to compensate Plaintiffs for the time after they first logged in, but prior to their scheduled start time, which violated the Illinois Wage Payment and Collection Act (IWPCA). Plaintiffs also claimed that working this uncompensated time caused them to work more than forty hours a week. This entitled them to overtime compensation pursuant to the Illinois Minimum Wage Law (IMWL). After some limited discovery, Plaintiffs moved to certify two classes, one for each state law claim, under Federal Rule of Civil Procedure 23.

In making their ruling, the Court found that Plaintiffs met the threshold requirements of Rule 23(a) because the class members were subject to standardized conduct by Defendant. This conduct was the implementation of a company-wide practice allowing CAE’s to work after their login, but before the start of their shift without being paid. The class-members’ claims also were based upon the same legal theory, and thus met the minimal requirements of typicality and commonality. The Court then held that the requirements of Rule 23(b)(3) were met because the evidence required to prove liability that was common to the class significantly outweighed the evidence particular to the individual class members. The Court also found that a class-action was the preferable means for adjudicating the issues because the individual recovery for individuals would be relatively small, while the aggregate recovery would be quite large. As such, the Court ruled that the requirements of FRCP 23 were met and certified the class-action.

Northern District of Illinois Federal Court Grants Conditional Class Certification for Lawsuit for Unpaid Overtime

August 10, 2011 | Peter S. Lubin and Patrick Austermuehle

One of the most important issues at the outset of every class-action lawsuit is determining the size of the class itself. In some instances, making such a determination can be accomplished through preliminary investigations by the named plaintiff in the suit. However, the true size and scope of the class can only be confirmed by documentation obtained from the defendant company. Our Berwyn overtime class-action attorneys recently encountered a case involving a dispute over the potential members of the class, and wanted to share it with our readers.

In Smallwood v. Illinois Bell Telephone, Plaintiffs held multiple different positions, but were all classified as Outside Plant Engineers (OSPs) at Defendant’s facilities in Elgin and Des Plains, Illinois. Plaintiffs generally performed design and analysis of Defendants plant facilities and Defendant’s network and were classified as exempt employees until 2009, when Defendant reclassified all OSP engineers as non-exempt employees, which entitled them to overtime. After this reclassification, Plaintiffs filed suit for unpaid overtime wages in violation of the Fair Labor Standards Act (FLSA) because they had regularly worked in excess of forty hours per week during the entirety of their employment and had never been paid overtime previously. Plaintiffs then filed a motion requesting conditional collective action certification under §216(b) of the FLSA for all persons who were employed by Defendant as OSPs during the previous three years. Plaintiffs also requested approval of a 90-day opt-in period and a 7-day time period for Defendant to supply them with a list of putative claimants.

Defendants argued that Plaintiffs were not similarly situated because the Plaintiffs had separate and distinct job duties despite being generally referred to OSPs, and provided job descriptions as evidence of these differences. The Court found that Defendant’s arguments regarding the day-to-day work activities of the individual Plaintiffs were premature at this early stage of the case, and because the case was not “clearly beyond the first tier” of FLSA class certification. Therefore, applying a stricter standard of review was inappropriate. The Court then granted the motion for conditional certification, finding that Plaintiffs – through their individual declarations — had met the statutorily required modest factual showing that Plaintiffs were the subject to the Defendant’s common policy or plan to violate the FLSA by failing to pay OSPs overtime wages. Defendants also requested that the notice period be limited to 30 days, but the Court found that an opt-in period of 60 days was appropriate, and gave Defendants two weeks to supply the putative member list, so that collective action notices could be mailed in a timely manner.

Northern District of Illinois Federal Court Grants Motion to Strike Putative Overtime Class-Action

July 25, 2011 | Peter S. Lubin and Patrick Austermuehle

Class-action lawsuits are common in unpaid overtime cases because the misclassification of employees or miscalculation of overtime usually happens on a large scale because major companies have such sizable work forces. Because such lawsuits can prove to be quite costly, defendant employers will do whatever they can to dispose of those claims in any way possible. Lubin Austermuehle knows the ‘tricks of the trade’ that defendants use, and our Skokie overtime attorneys found a federal case the illustrates one of the tools that wage claim defendants utilize.

Wright v. Family Dollar Inc. is a putative class-action filed by former associates who worked for Defendant Family Dollar and were allegedly not paid regular and overtime wages that they earned in the course of their employment. The named plaintiff, a store manager, alleged that Defendant “withheld compensation from associates by giving its store managers unfeasibly low payroll budgets” that forced those managers to require associates to work without being paid. The case, which alleged violations of the Illinois Wage Payment and Collection Act, and the Illinois Minimum Wage Law, was initially filed in the Cook County Circuit Court, but was removed to the federal court by Defendant.

Defendant then filed a motion to strike class allegations pursuant to FRCP23(c)(1)(A) and (d)(1)(D), claiming that Plaintiffs could not establish typicality and adequacy of representation. The Court granted Defendant’s motion, holding that the named plaintiff, as a manager, participated in the wrongful conduct at issue and her counsel therefore had a conflict of interest with the class members who were associates. The Court also held that the typicality requirement was not met because there were defenses unique to the named plaintiff and other managers in the putative class that did not apply to associate class members.