Deane v. Fastenal Company

Filing 51

ORDER GRANTING CONDITIONAL COLLECTIVE ACTION CERTIFICATION; ORDER RE: DISCOVERY (SI, COURT STAFF) (Filed on 11/14/2011)

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1 2 3 4 5 IN THE UNITED STATES DISTRICT COURT 6 FOR THE NORTHERN DISTRICT OF CALIFORNIA 7 8 9 United States District Court For the Northern District of California 10 11 12 13 KRISTOPHER DEANE, and MICHAEL ROMANO individually, and on behalf of all others similarly situated, No. C 11-00042 SI ORDER GRANTING CONDITIONAL COLLECTIVE ACTION CERTIFICATION; ORDER RE: DISCOVERY Plaintiffs, v. FASTENAL COMPANY, Defendant. / 14 15 16 On September 23, 2011, plaintiffs moved for conditional certification of this action as a 17 collective, opt-in action under the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201 et seq. Doc. 18 29. Defendant Fastenal filed an opposition on October 7, 2011, and plaintiffs replied on October 14, 19 2011. Docs. 39 and 42. A hearing is scheduled for this motion on November 18, 2011. Pursuant to 20 Civil Local Rule 7-1(b), the Court finds the matter appropriate for disposition without oral argument 21 and therefore VACATES the hearing. For the reasons set forth below, the Court GRANTS plaintiffs’ 22 motion for conditional certification. 23 24 The parties have also submitted letters regarding various discovery disputes. See Docs. 43, 44, 46, 47, and 48. Because this order affects the disputes, the Court will resolve them concurrently. 25 26 BACKGROUND 27 This is a wage and hour action in which the parties dispute whether plaintiffs were properly 28 classified as exempt from overtime payment requirements under the FLSA. Plaintiffs Kristopher Deane 1 and Michael Romano are former employees of Fastenal, an industrial supply, service, and installation 2 company. Pl.’s Mot. at 2. Fastenal has more than 2,300 domestic store locations, and employs 3 thousands of personnel. Id. Each of Fastenal’s stores has at least one General Manager (“GM”). All 4 of Fastenal’s GMs are classified as overtime exempt. Def.’s Opp. at 3. Plaintiffs Deane and Romano both worked as GMs for Fastenal. Deane was employed by 6 Fastenal from March 16, 2001 through June 16, 2010, during which time he worked at three different 7 stores: two in Washington, and one in Nevada. Deane Decl. ¶ 2. Romano was employed as a GM from 8 November 10, 2004 through June 10, 2010, at three different stores in California. Romano Decl. ¶ 2. 9 On February 16, 2011, plaintiffs filed an amended complaint against Fastenal for failure to pay 10 United States District Court For the Northern District of California 5 them overtime in violation of the FLSA, 29 U.S.C. §§ 206 and 207(a)(1).1 FAC at ¶ 2. Plaintiffs argue 11 that they regularly worked more than forty hours per week, but were never paid overtime because they 12 were improperly classified as exempt. Pl.’s Mot. at 3. Plaintiffs contend that they regularly performed 13 “the same rudimentary job tasks and duties every week, which require[d] little or no thought.” Deane 14 Decl. ¶ 6. Examples of such tasks were ensuring the store remained presentable, creating schedules and 15 duty lists for employees, ordering products, unloading products from the delivery trucks, and performing 16 various types of “routine” customer service. Deane Decl. ¶ 5. Plaintiffs claim that they had very 17 limited discretion - for example, they did not have the authority to hire or fire employees. Deane Decl. 18 ¶ 11; Romano Decl. ¶ 12. In sum, plaintiffs argue they did not qualify for the exemptions under the 19 FLSA, and thus are owed overtime payments for any work done in excess of forty hours per week. 20 Fastenal characterizes the job of General Manager far differently. Fastenal maintains that it 21 “gives its GMs the freedom to make their own independent business decisions. GMs regularly decide 22 – without needing approval from anyone else – what inventory to stock in their stores, which vendors 23 to source from, whether and on what terms they will enter into customer contracts, whether they will 24 provide discounts, and whether, if a customer needs a custom part, it should be manufactured in-house 25 26 27 28 1 Plaintiffs also allege violations of California labor law, and are seeking a class action of current and former California GMs of Fastenal pursuant to Fed. R. Civ. P. 23. See FAC ¶¶ 25-72. Plaintiffs have not moved for Rule 23 certification at this time. As the only claim affecting the instant motion is the FLSA claim, the Court need not discuss the state law claims or Rule 23 class certification at this time. 2 1 at Fastenal or sourced from an outside provider.” Def.’s Opp. at 4-5. Furthermore, Fastenal argues, the 2 GMs have the authority to decide how they will spend their time on a daily and weekly basis. Id. 3 Because of the nature of their jobs, “there are multiple exemptions that may apply, including outside 4 sales, executive, administrative, or the combination exemption.” Def.’s Opp. at 4 (emphasis in original). 5 Therefore, it argues, Fastenal was not required to pay GMs overtime compensation. 6 7 8 9 Plaintiffs seek to represent all former and current employees of Fastenal nationwide who are “similarly situated,” pursuant to 29 U.S.C. § 216(b). Plaintiffs define their FLSA Class as all persons who were employed as overtime-exempt managers by Defendant in one or more of its Fastenal retail locations in the United States at any time on or after February 16, 2008. United States District Court For the Northern District of California 10 FAC, ¶ 25. The class includes approximately 2,000 GMs in all 50 states. Def.’s Opp. at 1. Plaintiffs 11 argue that they, and all other GMs working for Fastenal, have been willfully misclassified as exempt 12 employees, and are therefore entitled to a three year (as opposed to two year) statute of limitations. See 13 29 U.S.C. § 255(a). In the instant motion, plaintiffs move for conditional certification of the class and 14 for authorization to provide notice to potential opt-in plaintiffs. 15 16 LEGAL STANDARD 17 Section 216(b) of the FLSA provides that one or more employees may bring a suit for unpaid 18 overtime wages “on behalf of himself or themselves and other employees similarly situated.” 29 U.S.C. 19 § 216(b). Unlike class actions brought under Federal Rule of Procedure 23, collective actions brought 20 under the FLSA require that individual members “opt in” by filing a written consent. 29 U.S.C. 21 § 216(b). Because class members must opt-in, the standards for finding a conditional FLSA class are 22 considerably less stringent than those for Rule 23 classes. Hill v. R+L Carriers, Inc., 690 F.Supp.2d 23 1001, 1009 (N.D.Ca. 2010) (Wilkes, J.). “All that need be shown by the plaintiff is that some 24 identifiable factual or legal nexus binds together the various claims of the class members in a way that 25 hearing the claims together promotes judicial efficiency and comports with the broad remedial policies 26 underlying the FLSA.” Id. (citing Wertheim v. Arizona, 1993 WL 603552, at *1 (D. Ariz. Sept. 30, 27 1993)). Plaintiffs bear the burden of demonstrating a "reasonable basis" for their claim of class-wide 28 discrimination. Gray son v. K-Mart, 79 F.3d 1086, 1099 (11th Cir. 1996). 3 1 Certification of a collective action under the FLSA involves a two-tiered analysis. See Wynn 2 v. Natal Broad. Co., Inc., 234 F. Supp. 2d 1067, 1082 (C.D. Cal. 2002). At the initial “notice stage,” 3 the court determines whether the plaintiffs are similarly situated, deciding whether a collective action 4 should be certified for the purpose of sending notice of the action to potential class members. See 5 Thiazine v. Gen. Elec. Cap. Corp., 267 F.3d 1095, 1102 (10th Cir. 2001). For conditional certification 6 at this stage, the court requires nothing more than substantial allegations, supported by declarations or 7 discovery, that “the putative class members were together the victims of a single decision, policy, or 8 plan.” Id.; Hill, 690 F. Supp. 2d at 1009. The determination at this stage is made based on a fairly 9 lenient standard, and typically results in a conditional certification. Wynn, 234 F. Supp. 2d at 1082. United States District Court For the Northern District of California 10 The second determination is made at the conclusion of discovery, usually upon a motion for 11 decertification by the defendant. Hill, 690 F. Supp. 2d at 1009. At this stage, a stricter standard for 12 similarly situated is used. The court reviews several factors, including whether individual plaintiffs’ 13 claims involve disparate factual or employment settings; the various defenses available to the defendant 14 which appear to be individual to each plaintiff; fairness and procedural considerations; and whether the 15 plaintiffs made any required filings before instituting suit. See Thiazine, 267 F.3d at 1102; Hill, 690 F. 16 Supp. 2d at 1009. 17 Once the class is conditionally certified -- i.e., after the first stage -- the court can exercise its 18 discretion “in appropriate cases” to authorize and facilitate notice of a collective action to similarly 19 situated potential plaintiffs. Hoffman-La-Riche Inc. v. Sealing, 493 U.S. 165 (1989). The Supreme 20 Court has noted that the benefits of the FLSA’s protections are dependent upon “employees receiving 21 accurate and timely notice concerning the pendency of the collective action, so that they can make 22 informed decisions about whether to participate.” 23 24 25 DISCUSSION A. Conditional Certification 26 Plaintiffs proffer various types of evidence in support of their claim that Fastenal’s other General 27 Managers are similarly situated. Foremost are the declarations of plaintiffs themselves. Plaintiff Deane 28 states that over the course of nine years, he worked as a GM in three different stores, two in Washington 4 1 and one in Nevada. Deane Decl. ¶ 2. Plaintiff Romano states that over the course of six years, he 2 worked as a GM in three different California stores. Romano Decl. ¶ 2. Deane declares that, “[as a 3 Fastenal [GM], I was required to follow the same policies and procedures at each of the store locations 4 where I worked and I understand that Fastenal requires every Store Manager to follow the same policies 5 and procedures at every Fastenal store.” Deane Decl. ¶ 3. Romano also declares that he was required 6 to follow the same policies and procedures at each of the three store locations. Romano Decl. ¶ 2. He 7 further states that, “[in 2009, Fastenal issued a Standard Operating Procedure document, which 8 described Fastenal’s policies and procedures for operation of their stores and was given to all of the 9 Store Managers to implement.” Romano Decl. ¶ 3. United States District Court For the Northern District of California 10 Plaintiffs also provide documentary support for their claim. They attach a job posting for an 11 available GM position, which contains blanks for the “City” and “State” fields. Celesta Decl., Ex. C. 12 The posting describes the various responsibilities of the GM, as well as “support responsibilities” such 13 as purchasing, receiving, packing orders, and deliveries. Id. They also attach an Hours of Operation 14 & Expectations Policy, signed by Deane, which states that, “[all full time Exempt positions which 15 include General Managers and Outside Sales Personnel must report to work from 7:00am - 5:00p.m., 16 Monday through Friday at a minimum unless approved by a District Manager.” Celesta Decl, Ex. I. 17 They provide Fastenal’s “Organization Chart” illustrating the chain of command within the management 18 structure, in which the General Manager reports to the District Manager, who in turn reports to the 19 Regional Vice President, who in turn reports to the Executive Vice President of Sales and the CEO. 20 Celesta Decl., Ex. E. They attach Fastenal’s Store Operations Guide, which sets forth store-wide 21 policies. Celesta Decl., Ex. Finally, they also state - and Fastenal confirms - that all GMs were 22 classified as exempt by the company. Pl.’s Mot. at 3; Def.’s Opp. at 4. 23 Fastenal, for its part, provides numerous declarations from current and former employees at a 24 variety positions in the company. The declarations from eight GMs, three District Managers, and the 25 Vice President of Employee Development for Fastenal portray the position of GM as diverse and 26 discretionary. See Rakish Decl., E’s. A-C. Fastenal argues that plaintiffs have failed to meet their 27 evidentiary burden that plaintiffs were victim of a “single decision, policy, or plan.” Def.’s Opp. at 1. 28 5 1 The Court finds that plaintiffs have met the lenient standard required for conditional certification 2 at the notice stage. They have provided substantial allegations, supported by declarations and 3 documentary evidence, that the putative class members were similarly situated. See Thiazine, 267 F.3d 4 at 1102. The Court finds particularly persuasive the fact that plaintiffs worked at multiple stores in 5 multiple states, and thus have personal knowledge of the similarities between the stores. At this “notice stage,” the declarations provided by Fastenal do not negate the showing Plaintiff 7 has made for conditional certification. Hill, 690 F.Supp.2d at 1010. Nor do the cases Fastenal relies on 8 defeat plaintiffs’ claims. See Slavinsky v. Columbia Association, 2011 WL 2119231 (D. Md. 2011) 9 (finding plaintiffs’ showing for conditional certification insufficient after plaintiff provided only a “lone 10 United States District Court For the Northern District of California 6 affidavit” and failed to interview witnesses or depose employees despite two years of discovery); 11 Carruthers v. Keiser School, Inc. 2010 WL 5055876 (M.D. Fla. 2010) (finding insufficient plaintiffs’ 12 “bare-bones allegations” that defendant failed to pay them for working through lunch). Plaintiffs here 13 do not root their claim of similarity in the “mere allegation” that they were all classified as exempt. See 14 Def.’s Opp. at 1. Instead, they’ve provided substantial allegations, supported by documentary evidence 15 as well as their own informed declarations, that GMs across Fastenal are similarly situated. Defendant 16 may resubmit their declarations at the second, “decertification” stage, at which time the Court will apply 17 the more stringent standard discussed above. Hill, 690 F. Supp. at 1010. 18 19 B. Notice to Potential Opt-In Plaintiffs 20 Plaintiffs request that the Court require disclosure of putative class members’ contact 21 information. Doc. 43. In their motion, they also request that the Court authorize notice to potential opt- 22 in plaintiffs. Pl.’s Mot. at 7. In Hoffman-La Riche v. Sealing, 493 U.S. 165, 170 (1989), the Supreme 23 Court upheld a district court’s Order permitting the discovery of the names and addresses of employees 24 and authorizing the issuance of notice to them. 25 The Court finds that notice through a third party administrator is appropriate, and orders the 26 parties to meet and confer on the form of notice. While plaintiffs attach a proposed notice form, 27 Fastenal argues that it is overbroad and misleading. At the meet and confer, the parties should propose 28 a joint form of notice, or, if that is impossible, file with the Court alternative forms of notice along with 6 arguments in support of their respective forms. Fastenal argues that the geographic scope of the 2 proposed notice is “grossly overbroad” based on plaintiffs’ “individual experiences in a handful of 3 stores located on the West Coast.” Def.’s Opp. at 18. The Court disagrees. The Court has found that 4 plaintiffs have made a sufficient showing at this stage that the members of the putative nationwide class 5 are similarly situated. Therefore, Fastenal must provide contact information for all of the GMs 6 nationwide to the third party administrator. Finally, the Court finds that the notice period should extend 7 back three years. “A cause of action for an individual who is a member of an FLSA collective action 8 commences on the date the individual files a written consent with the Court, and the maximum 9 applicable statute of limitations is three years; [n]otice should be consistent with this determination.” 10 United States District Court For the Northern District of California 1 In re RBC Dain Rauscher Overtime Litig., 703 F. Supp. 2d 910, 966 (D. Minn. 2010). Therefore, 11 contact information should be provided for all current and former GMs that work or worked at Fastenal 12 within three years of this Order. 13 14 The parties shall submit their joint recommendation as to form of notice no later than December 2, 2011. 15 16 C. Remaining Discovery Issues 17 The parties have submitted various discovery disputes to the Court. Plaintiffs contend that 18 defendant has failed to respond to their Requests for Production (RFPs) Nos. 27, 39, 41, 43, 44, 45, 46, 19 and 47. Following the receipt of plaintiffs’ letter, defendant sent plaintiffs a supplemental response to 20 plaintiffs’ request for production, and filed with the Court a letter defending their failure to produce 21 further responses. Defendant argues that with respect to these RFPs, and more,2 “after a diligent search, 22 it has no documents responsive to this request.” Doc. 47. Based on defendant’s assertion that it has no 23 responsive documents, the Court DENIES plaintiffs’ requests as moot. 24 Fastenal also opposes special interrogatories 1 through 4. In a separate letter filed November 25 1, 2011, Fastenal opposed special interrogatory 1 -- which requests identification information of each 26 person “who holds or has held, at any time during the class period, any employment position referenced 27 28 2 Defendant’s response includes RFPs 27, 29, 39, 41, 43, 44, 45, 46, 47, and 57. 7 1 in the Complaint” -- as premature, because the Court had not yet found the putative class members to 2 be similarly situated. It also argued that plaintiffs were not entitled to the information in order to merely 3 solicit new claims or “stir up litigation.” Doc. 48 at 3. The Court has now conditionally certified the 4 class. Plaintiffs, as fiduciaries to putative class members, are entitled to the contact information in order 5 to properly investigate their claims. See Stone v. Advance America, 2009 WL 4722924 at *3 (S.D. Cal. 6 2009). Plaintiffs’ request, in so far as it is a motion to compel, is GRANTED with respect to special 7 interrogatory 1. Plaintiffs also request responses to special interrogatories 2 through 4. Following plaintiffs’ 9 request, on October 25, 2011, Fastenal provided supplemental responses to plaintiffs’ interrogatories. 10 United States District Court For the Northern District of California 8 Plaintiffs’ thereafter sent a letter to the Court, on November 10, 2011, arguing that Fastenal did not 11 provide substantive responses. The Court finds that the responses are sufficient answers to the question 12 as framed. Therefore, in so far as plaintiffs’ letter is a motion to compel, it is DENIED with respect to 13 special interrogatories 2 through 4. 14 15 CONCLUSION 16 Plaintiffs’ motion for conditional certification of collective action under the FLSA is 17 GRANTED. Plaintiffs’ discovery motions are GRANTED IN PART/DENIED IN PART as discussed 18 above. The parties shall submit their joint recommendation as to form of notice no later than 19 December 2, 2011. 20 21 IT IS SO ORDERED. 22 23 Dated: November 14, 2011 SUSAN ILLSTON United States District Judge 24 25 26 27 28 8

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