Hamilton et al v. Diversicare Leasing Corp. et al
Filing
196
ORDER granting 150 Motion decertification of class pursuant to 29:216(b); denying 134 Motion for Summary Judgment; denying 136 Motion for Partial Summary Judgment; denying as moot 164 Motion to Stay. Signed by Honorable Susan O. Hickey on October 1, 2014. (cnn)
IN THE UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF ARKANSAS
EL DORADO DIVISION
TRACEY HAMILTON, et. al.
V.
PLAINTIFFS
Civil No. 1:12-cv-1069
DIVERSICARE LEASING CORP., et. al.
DEFENDANTS
MEMORANDUM OPINION AND ORDER
Before the Court is Defendants’ Motion for Decertification of a putative collective action
under the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 216(b). (ECF No. 150). Plaintiffs
have responded to Defendants’ Motion for Decertification. (ECF No. 156). Defendants have
filed a replied. (ECF No. 163). This matter is ripe for the Court’s consideration.
BACKGROUND
The named Plaintiffs, who are all certified nursing assistants (“CNAs”) and licensed
practical nurses (“LPNs”), are current and former employees of healthcare facilities owned and
operated by Defendants.
Defendants Diversicare Leasing Corp. (“DLC”) and Diversicare
Management Services Co. (“DMS”) are wholly owned subsidiaries of Diversicare Healthcare
Services, Inc. (“DHS”), formerly known as Advocat, Inc. (hereinafter DLC, DMS, and DHS are
collectively referred to as “Diversicare”). On June 22, 2012, Plaintiffs filed this action under §§
207, 216(b) of the FLSA on behalf of themselves and other hourly employees claiming that
Diversicare denied overtime pay in violation of the FLSA. They allege that a 30-minute unpaid
meal break was automatically deducted from their hours worked, even when they worked
1
through the break. Some Plaintiffs also allege that they were not compensated for overtime
hours worked before or after their scheduled shifts.
The Court granted conditional class
certification of a collective action under § 216(b) on August 12, 2013 (ECF No. 49).
Subsequently, notice of the putative collective action was issued to potential opt-in plaintiffs, and
Plaintiffs report that approximately 1,592 employees have consented to join in this lawsuit.
After the opt-in period expired, Diversicare filed a Motion for Decertification.
All of the named Plaintiffs are CNAs and LPNs who worked at five of Diversicare’s
facilities located in Arkansas. The other hourly positions in the conditionally certified class
include “ancillary” employees at Diversicare facilities, such as kitchen staff, housekeeping staff,
maintenance staff, activities coordinators, social services coordinators, bookkeepers, payroll
staff, van drivers, receptionists, and admissions coordinators.
During the three years at issue in this lawsuit, 1 Diversicare owned and operated
healthcare facilities located in Alabama, Arkansas, Florida, Kentucky, Ohio, Tennessee, Texas,
and West Virginia. All hourly employees at all of Diversicare’s facilities were subject to the
same employee handbook and used the same time clock system. Diversicare required most of its
hourly employees to take uncompensated 30-minute meal breaks during each shift. 2 Most
employees could leave the facility for their meal break, but had to clock out and back in if they
chose to leave. Some employees who worked the night shift had to remain on the premises.
Employees who did not leave the facility for their meal break were not required to clock in and
out, but thirty minutes per shift was automatically deducted from those employees’ hours
worked. New time clock systems were installed in all Diversicare facilities in 2012. The new
1
Pursuant to § 255(a) of the FLSA, FLSA claims have a three-year statute of limitations if there has been a willful
violation of the Act. 29 U.S.C. § 255(a). Whether the Defendants violated the FLSA willingly is an issue for the
merits of the case. Therefore, the Court allowed the notice issued to potential Plaintiffs to go to individuals who
were employed by Diversicare during the three-year period immediately preceding the Court’s ruling (ECF No. 49).
2
In Kentucky, Diversicare’s hourly employees received paid meal breaks.
2
time clocks require employees to answer several prompts when they clock in and out, including
whether to use their scheduled shift as their recorded time or their actual swipe-in and swipe-out
times. Similarly, the new time clock asked whether the employees took their 30-minute meal
break.
As a result of the new time clocks, employees could record any changes to their
scheduled shifts.
As stated in the employee handbook, Diversicare has a company-wide policy that
prohibits employees from working off-the-clock and provides a procedure for employees to
follow when they do have to work off-the-clock. The employee handbook used under the old
time clock system states:
If you are requested by your supervisor to work during your meal
break, you will be paid for the time worked. Review your time
record when you clock out to verify that any additional time you
worked during your meal period has been recorded. If it has not,
see your supervisor.
(Divericare Employee Handbook – June 2009, Ex. 6, ECF No. 139-11). Similar procedures were
in place for time worked before or after a shift. The time policy is covered at each new
employee’s orientation and each new employee is taught how to use the time clock and the timekeeping procedures. New employees are given a copy of Diversicare’s Employee Handbook and
acknowledge receipt in writing.
LEGAL STANDARD
Section 216(b) of the FLSA provides that a collective action for unpaid overtime
compensation may be maintained against an employer by “any one or more employees for and in
behalf of himself or themselves and other employees similarly situated.” 29 U.S.C. § 216(b).
The opt-in collective action mechanism for plaintiffs in § 216(b) sets forth two requirements: (1)
the plaintiffs must be “similarly situated” and (2) all party plaintiffs must give their affirmative
3
written consent to participate in the action. Wright v. Pulaski Cnty., 4:09 CV 00065 SWW, 2010
WL 3328015, at *9, 2010 U.S. Dist. LEXIS 87283, at *32 (E.D. Ark. Aug. 24, 2010). “[T]he
fundamental inquiry in determining whether a collective action under § 216(b) is appropriate is
whether or not the plaintiffs are ‘similarly situated.’” Smith v. Heartland Auto. Servs., Inc., 404
F.Supp.2d 1144, 1149 (D. Minn. 2005). Section 216 does not define “similarly situated” and
courts have adopted varying approaches to certify a class of similarly situated plaintiffs for
purposes of § 216(b).
Courts in the Eighth Circuit approach the certification of collective actions in two stages.
First, a plaintiff may seek conditional certification of a collective action, authorizing notice to
potential opt-in plaintiffs. Smith, 404 F.Supp.2d at 1149. At the conditional certification stage,
the plaintiffs’ burden is not rigorous.
The plaintiffs must only establish that they have a
colorable basis for their claim and that the named plaintiffs are similarly situated with potential
collective action members. Douglas v. First Student, Inc., 888 F. Supp. 2d 929, 933 (E.D. Ark.
2012). Such a showing can be made with minimal evidence that the putative collective action
members were victims of a common policy or plan that may have violated the FLSA. See
Thiessen v. Gen. Elec. Capital Corp., 267 F.3d 1095, 1102 (10th Cir. 2001). In this action, the
Court conditionally certified a collective action pursuant to the FLSA and authorized notice to
potential opt-in plaintiffs. (ECF No. 49). Plaintiffs report that approximately 1,592 employees
have consented to join this lawsuit.
At the second stage, now germane, named Plaintiffs must make a stronger showing to
continue to proceed on a collective basis. Wright, 2010 WL 3328015, at *9, 2010 U.S. Dist.
LEXIS 87283, at *34. The court has much more information on which to base its decision and
can make a factual determination on the similarly situated question. See Mooney v. Aramco
4
Services, Co., 54 F.3d 1207, 1214 (5th Cir. 1995). A court may consider “(1) disparate factual
and employment settings of the individual plaintiffs; (2) the various defenses available to
defendant which appear to be individual to each plaintiff; [and] (3) fairness and procedural
considerations.” Bouaphakeo v. Tyson Foods, Inc., 2014 WL 4197378, at *2, 2014 U.S. App.
LEXIS 16283, at *8 (8th Cir. Aug. 25, 2014). Plaintiffs do not need to be identically situated to
proceed collectively. See Kautsch v. Premier Commc’ns, No. 06CV04035, 2008 WL 294271, at
*1 (W.D. Mo. Jan. 31, 2008). The essential question is “whether the differences among the
plaintiffs outweigh the similarities of the practices to which they were allegedly subjected.”
Douglas, 888 F. Supp. 2d at 933.
DISCUSSION
Diversicare moves to decertify this action, asserting that the Plaintiffs are not similarly
situated for purposes of a collective action under § 216(b). Specifically, Diversicare contends
that Plaintiffs cannot show that (1) they were victims of a common FLSA-violating policy; (2)
they are similarly situated with other class members in other job classifications; and (3) they are
similarly situated with class members in other facilities in the seven states at issue. Furthermore,
Diversicare alleges that damages are too individualized for a collective action.
Plaintiffs
maintain that collective action members, regardless of their job classification or the facility at
which they worked, were subject to a uniform policy that violated the FLSA, and that procedural
considerations weigh in favor of a collective action. In conducting its analysis, the Court will
consider the factors relevant to the second stage of analysis. See Thiessen, 267 F.3d at 1103.
A. Disparate Factual and Employment Settings
Courts consider such factors as location, job duties, supervision, and salaries in analyzing
Plaintiffs factual and employment settings. Bouaphakeo v. Tyson Foods, Inc., 564 F. Supp. 2d
5
870, 899 (N.D. Iowa 2008). Plaintiffs contend that the disparate factual and employment settings
are immaterial because a uniform, FLSA-violating policy applied to all hourly employees
without regard to job duties, location, or supervision.
Diversicare argues that the named
Plaintiffs fail to show that they are similarly situated with collective action members who worked
at other facilities and in other job classification.
The Court finds that disparate employment settings and job classifications are material in
determining whether the Plaintiffs are similarly situated in this case. While Diversicare had a
uniform policy that applied to all of its hourly employees, that policy did not violate the FLSA.
The Eighth Circuit has not ruled as to whether automatic meal deductions are a per se violation
of the FLSA, however, courts have consistently held that an automatic meal deduction in and of
itself does not violate the FLSA. See White v. Baptist Mem’l Health Care Corp., 699 F.3d 869,
873 (6th Cir. 2012); McClean v. Health Sys., Inc., 11-03037-CV-S-DGK, 2012 WL 607217, at
*6 (W.D. Mo. Feb. 23, 2012); Fengler v. Crouse Health Found., Inc., 595 F.Supp.2d 189, 195
(N.D. N.Y 2009); see also Wage and Hour Division, U.S. Dep’t of Labor, Factsheet No. 53, The
Health
Care
Industry
and
Hours
Worked
http://www.dol.gov/whd/regs/compliance/whdfs53.pdf
(July
(recognizing
2009),
that
available
automatic
at
meal
deduction policies comport with the FLSA). Therefore, Plaintiffs must show that Defendants
have a “policy-to-violate-the-policy.” See Saleen v. Waste Mgmt., Inc., No. 08-4959, 2009 WL
1664451, at *4 (D. Minn. June 15, 2009).
Diversicare has a formal policy in place to compensate employees who worked through
their lunch breaks and Plaintiffs have failed to show that Diversicare’s common or uniform
practice did not follow the written policy. Plaintiffs’ case is premised on their assertion that
there was a disconnect between the written policy and what happens in practice, however,
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Plaintiffs provide no direct evidence of a de facto policy to not compensate employees for
missed meal breaks or to even discourage employees from seeking compensation. The deposition
testimony of the named Plaintiffs reveals that their experiences with the policy varied greatly.
Some state that they did not let anyone know when they missed a meal break. Some testify that
they were paid for at least some of their missed meal breaks, but not all. Many of the named
Plaintiffs indicate that they only used Diversicare’s procedures to report uncompensated
overtime some of the time. At the second stage of the certification process, Plaintiffs must offer
substantial evidence that they are, in fact, similarly situated. Plaintiffs have failed to establish
that Diversicare maintains a uniform policy that violates the FLSA, or that Diversicare violates
the FLSA in practice despite its written policies.
As for the job classifications, the conditionally certified class includes kitchen staff,
housekeeping staff, maintenance staff, activities coordinators, social services coordinators,
bookkeepers, payroll staff, van drivers, receptionists, and admissions coordinators. Apart from
the consents to join the action, Plaintiffs have presented no evidence of hourly employees other
than CNAs and LPNs failing to be paid for their missed meal breaks. All of the named Plaintiffs
are CNAs and LPNs. Diversicare contends that CNAs and LPNs are “clinical” employees who
work directly in patient care. Other hourly employees in the conditionally certified class are
“ancillary,” such as housekeeping, maintenance, and payroll employees.
These positions
typically are not so intertwined with patient care that the demands of the job would require an
employee to miss his or her lunch break.
Plaintiffs have not demonstrated that ancillary
employees are similarly situated to the named Plaintiffs.
Similarly, Plaintiffs have offered no evidence that Diversicare fails to pay its employees
for their missed lunch breaks in states other than Arkansas.
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The named Plaintiffs were
employees of only five facilities located in one of the eight states at issue. Thus, Plaintiffs have
not demonstrated that employees in other states are similarly situated to the named Plaintiffs.
Plaintiffs’ argument that the collective action members are similarly situated rests heavily
on the company-wide policies regarding the automatic 30-minute meal deduction.
This
argument is without merit because Plaintiffs have failed to show that Diversicare’s policies and
practices violate the FLSA. The Plaintiffs do not offer any other evidence of similarities among
the factual and employment settings of the Opt-In Plaintiffs that would support the Court finding
the Plaintiffs are similarly situated. Therefore, this factor weighs in favor of decertification.
B. Individualized Defenses
The second relevant factor in determining whether to allow the action to proceed
collectively is the extent to which defenses appear to be individualized to each plaintiff.
Douglas, 888 F. Supp. 2d at 935. In addition to its defense that the policy of automatically
deducting meal breaks is compliant with the FLSA, Diversicare has defenses regarding actual
liability as to individual plaintiffs. These defenses will not be uniform throughout the class.
For example, some Plaintiffs claim they did not know about Diversicare’s policy of
working off the clock.
Diversicare asserts that it will show that the employee signed
acknowledgements receiving employment policies that stated this rule.
Diversicare also
contends that some of the putative class members are registered nurses and activities directors.
Plaintiffs in these job classifications may be exempt from overtime compensation as employees
who work in an administrative or supervisory capacity. 3 Other issues raised by the defenses
asserted in this case include whether individual plaintiffs worked missed meal breaks without
compensation, whether individual supervisors were aware that individual plaintiffs missed meal
3
See 29 U.S.C. § 213(a).
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breaks without compensation, and whether individual plaintiffs followed the policies for
receiving overtime compensation.
Plaintiffs have failed to establish a common, FLSA-violating policy that applied to all
putative class members. Without a common thread of FLSA violations, the asserted defenses of
Diversicare will require a highly individualized analysis. For the foregoing reasons, this factor
also weighs in favor of decertification.
C. Fairness and Procedural Considerations
When ruling upon a decertification motion, courts should consider whether proceeding as
a collective action “comports with the purposes of the FLSA by balancing the benefits of a
reduction in the cost to individual plaintiffs, and any increased judicial utility that may result
from the resolution of many claims in one proceeding, with the cost of any potential detriment to
the defendant and the potential for judicial inefficiency that could stem from collective
treatment.” Nerland v. Caribou Coffee Co., 564 F. Supp. 2d 1010, 1025 (D. Minn. 2007) (citing
Hoffmann–La Roche Inc. v. Sperling, 493 U.S. 165, 170 (1989) (ADEA claim)). Coherent
management of the trial and avoidance of jury confusion are essential considerations. Douglas,
888 F. Supp. 2d at 936.
Plaintiffs have failed to show that the named Plaintiffs are similarly situated with the
putative class members who have consented to join this action. There is no common, FLSAviolating policy that overcomes the otherwise disparate factual and employment settings of the
Opt-In Plaintiffs. The highly individualized defenses would encumber a collective action. It
would be very difficult to adjudicate the claims of 1,592 Opt-In Plaintiffs properly. Therefore,
the judicial inefficiency that would stem from a collective action outweighs any reduction in the
cost to potential plaintiffs. Thus, this factor also dictates in favor of decertification.
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CONCLUSION
For the reasons explained above, Defendants’ Motion for Decertification (ECF No. 150)
is hereby GRANTED. The claims of all Opt-In Plaintiffs are hereby DISMISSED WITHOUT
PREJUDICE.
The Parties filed motions for summary judgment addressing both Named and Opt-In
Plaintiffs. Because the Court has now dismissed the Opt-In Plaintiffs, the Court finds that
updated motions for summary judgment are necessary. Accordingly, the pending Motions for
Summary Judgment (ECF Nos. 134 and 136) are hereby DENIED WITHOUT PREJUDICE. 4
IT IS SO ORDERED, this 1st day of October, 2014.
/s/ Susan O. Hickey
Susan O. Hickey
United States District Judge
4
Because the Motions for Summary Judgment have been denied without prejudice and the Defendants’ Motion for
Decertification has been granted, Plaintiffs’ Motion to Stay (ECF No. 164) is hereby denied as moot.
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