Daniels v. Aeropostale West, Inc et al

Filing 37

ORDER GRANTING CONDITIONAL CERTIFICATION OF FLSA COLLECTIVE ACTION by Judge William Alsup [granting 25 Motion to Certify Class]. (whasec, COURT STAFF) (Filed on 4/24/2013)

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1 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE NORTHERN DISTRICT OF CALIFORNIA 8 9 11 For the Northern District of California United States District Court 10 PORTIA DANIELS, on behalf of herself and all others similarly situated, No. C 12-05755 WHA Plaintiff, 12 13 14 15 16 17 18 v. AÉROPOSTALE WEST, INC., a Delaware corporation, AÉROPOSTALE, INC., a Delaware corporation, and DOES 1 through 10, inclusive, ORDER GRANTING CONDITIONAL CERTIFICATION OF FLSA COLLECTIVE ACTION Defendants. / INTRODUCTION 19 In this failure-to-pay-overtime action, plaintiff moves for conditional certification of a 20 collective action under the FLSA. To the extent stated below, plaintiff’s motion is GRANTED. 21 22 STATEMENT Plaintiff Portia Daniels was employed for four years by defendant Aéropostale West, 23 Inc., as a non-exempt store manager (Compl. ¶ 13). Defendants are a nationwide, shopping 24 mall-based specialty retailer of casual apparel and accessories (id. at ¶ 15). Within the last three 25 years of plaintiff’s employment, she allegedly consistently worked in excess of forty hours per 26 week without getting paid the appropriate overtime compensation under the FLSA, and she 27 received several non-discretionary bonuses that were not included in her regular rate of pay 28 when she worked overtime (id. at ¶ 14). Defendants use a uniform payroll system for all of their 1 employees nationwide that calculates the employees’ rate of pay, hours worked, and earnings 2 paid (Br. 4). Plaintiff alleges that defendants had a uniform, nationwide practice of failing to 3 include earned bonus amounts into non-exempt store employees’ regular rate of pay for overtime 4 purposes, which violated the FLSA (id. at 2). 5 In March 2011, defendants’ employees in California commenced a civil action in the 6 Los Angeles Superior Court asserting California wage-and-hour claims (La Tina Sankey v. 7 Aéropostale, Inc., No. BC457468) (id. at 2, 6). There, Plaintiff La Tina Sankey included a claim 8 for failure to include bonus payments in the regular rate of pay for overtime hours California 9 management employees worked during the time period between March 2007 to the present (Schumacher Decl. ¶ 2). Plaintiff’s counsel there are counsel here, too (id. at ¶¶ 2–3). One year 11 For the Northern District of California United States District Court 10 after commencing Sankey, defendants sent a letter to its employees referencing the Sankey action 12 (Dkt. No. 25-1 at 74). The letter stated that defendants had conducted their own investigation 13 and found that overtime was potentially under-calculated at times, for which they were enclosing 14 a check and a detailed spreadsheet for the amount of the adjustment (ibid.). The Sankey action 15 was certified as a class action in December 2012 (Favarote Decl. ¶ 4). 16 Prior to July 2011, defendants’ calculation for overtime payment failed to include 17 non-discretionary bonuses into the regular rate of pay for purposes of calculating overtime 18 and failed to perform the calculations properly, thereby under-calculating the overtime pay 19 of its non-exempt employees (Br. 7). To correct this, defendants instituted a new process for 20 calculating the bonus-related overtime pay (ibid.). 21 In November 2012, plaintiff filed the present collective action claim against defendants 22 alleging that defendants violated the FLSA by failing to include non-discretionary bonus 23 amounts into non-exempt store employees’ regular rate of pay for overtime purposes (id. at 4). 24 A hearing on the present motion was held on April 18, 2013, which was attended by counsel. 25 26 ANALYSIS 27 Collective actions under the FLSA are governed by 29 U.S.C. 216(b), which provides 28 that one or more employees may bring a collective action “on behalf of himself or themselves 2 1 and other employees similarly situated.” The distinctive feature of a collective action, setting it 2 apart from Rule 23 class actions, is that the members of a collective action must “opt-in” by 3 providing written consent in order to become party plaintiffs. 29 U.S.C. 216(b). The Supreme 4 Court has held that district courts have discretion over FLSA collective actions. Hoffmann-La 5 Roche v. Sperling, 493 U.S. 164, 169 (1989). To certify a collective action, plaintiffs bear the 6 burden of showing that the proposed lead plaintiff and the proposed collective action group are 7 “similarly situated.” Leuthold v. Destination Am., Inc., 224 F.R.D. 462, 466 (N.D. Cal. Aug. 16, 8 2004) (Judge Vaughn Walker). Neither the FLSA nor our court of appeals has defined the term 9 “similarly situated.” Here, plaintiff seeks conditional certification of a FLSA collective action because 11 For the Northern District of California United States District Court 10 defendants had an alleged uniform and nationwide practice of failing to include bonuses into 12 the regular rate of pay for overtime purposes for non-exempt employees. Pursuant to 29 C.F.R. 13 778.209(a), this is a violation of the FLSA. After oral argument, however, it became clear that 14 the main issue is not whether defendants completely failed to pay, but whether they failed to 15 pay in a timely manner. This order holds that, to the extent stated below, plaintiff’s motion for 16 conditional certification is GRANTED. 17 1. 18 To certify a collective action, the majority of courts follow a two-step approach. CONDITIONAL CERTIFICATION: NOTICE STAGE. 19 Leuthold, 224 F.R.D. at 466. First, they must decide whether the potential class should be 20 given notice of the action. Id. at 467. Second, they must permit the defendant to move to 21 decertify the class once discovery is complete and the case is ready to be tried. Ibid. 22 Here, plaintiff is at the first step — seeking conditional certification to give notice of the 23 action to potential plaintiffs. In the initial “notice stage,” courts determine whether a collective 24 action should be certified for the purpose of sending notice of the action to potential class 25 members. Gerlach v. Wells Fargo & Co., 2006 WL 824652, at *2 (N.D. Cal. Mar. 28, 2006) 26 (Judge Claudia Wilken). This decision is based on the pleadings and affidavits submitted by 27 the parties. Adams v. Inter-Con Sec. Sys., Inc., 242 F.R.D. 530, 536 (N.D. Cal. Apr. 11, 2007) 28 (Judge Marilyn Hall Patel). Due to the limited amount of evidence, courts make this 3 1 determination under a fairly lenient standard which typically results in conditional class 2 certification. Ibid. Courts have held that conditional certification requires only that the plaintiff 3 make substantial allegations that the putative class members were subject to a single illegal 4 policy, plan or decision. Ibid. (internal quotations and citations omitted). The plaintiff must 5 show that there is some factual basis beyond the mere averments in her complaint for the class 6 allegations. Ibid. (internal quotations and citations omitted). 7 In the instant action, plaintiff seeks conditional certification of “all current and former 8 employees of Aéropostale classified as non-exempt, who have worked overtime for Aéropostale 9 in the United States or Puerto Rico at any time within the Collective Action Period and received a non-discretionary bonus” (Compl. ¶ 20, Br. 4). The collective action period begins 11 For the Northern District of California United States District Court 10 November 9, 2009 — three years prior to the filing of the complaint (ibid.). Plaintiff argues 12 that she has made her prima facie case for collective relief by alleging that she falls under the 13 uniform non-exempt job classification of the FLSA collective action members, there was a 14 common payroll system and methodology for calculating overtime, defendants had a common 15 practice to pay performance-related bonuses, the proposed collective action members worked 16 overtime during the period in which the bonuses were earned, and defendants applied a common 17 policy of denying certain overtime pay by not including the non-discretionary bonuses into the 18 proposed collective action members’ regular rate of pay (Br. 14). 19 As evidence, plaintiff points to her declaration in which she states that she did not 20 receive an overtime pay adjustment to reflect the bonuses she earned during her employment 21 with defendants (Daniels Decl. ¶ 4). Plaintiff also includes her earnings statements showing 22 the bonuses she earned and the overtime she worked (Daniels Decl. Exhs. G–J). To prove 23 defendants’ uniform policy, plaintiff relies on statements from defendants’ director of payroll, 24 Mr. Rawle Boatswain, derived from a deposition conducted for the Sankey litigation. Plaintiff 25 argues that defendants use a software program, data, and methodology to calculate the overtime 26 pay of all employees nationwide, and as such, any errors in the calculations or formulas would 27 affect all employees (Br. 17). Moreover, plaintiff provides a letter from defendants dated 28 March 22, 2012, that was sent to employees stating that as a result of the Sankey litigation, 4 1 defendants learned that overtime pay was potentially under-calculated (Dkt. No. 25-1 at 74). 2 Along with the letter, defendants enclosed a check and a detailed spreadsheet for the overtime 3 pay adjustment (ibid.). The day before the hearing, plaintiff filed a FLSA consent form signed 4 by a different current or former non-exempt employee of defendants’, signed September 14, 5 2012 (Dkt. No. 35 at 4). 6 As attachments to Director Boatswain’s declaration, defendants provide plaintiff’s Exhs. A at 8, B at 16). However, Director Boatswain does concede that plaintiff did not receive 9 an overtime adjustment for the overtime she worked in May 2011, which he points to have been 10 an “inadvertent mistake” (Boatswain Decl. ¶ 10). At the April 18 hearing, defendants’ counsel 11 For the Northern District of California earnings statements showing that plaintiff was paid an overtime adjustment (Boatswain Decl. 8 United States District Court 7 confirmed that plaintiff, as of now, has not yet received the overtime adjustment due to her for 12 May 2011. Director Boatswain also states in his declaration that since at least November 2009, 13 the nationwide practice has been to pay overtime on bonuses as an overtime adjustment and in 14 2011, the error of failing to pay overtime on earned bonuses in states in which double time is 15 earned was corrected (Boatswain Decl. ¶¶ 8–9). 16 Plaintiff has met the fairly lenient standard of providing sufficient evidence to show that 17 there was a uniform, nationwide policy of failing to pay non-exempt employees the appropriate 18 overtime compensation in a timely manner. In other words, potential plaintiffs may have been 19 under-compensated as early as November 2009 but failed to receive their corresponding 20 overtime adjustment until 2011 or later, when defendants discovered the error during the Sankey 21 litigation. Accordingly, the motion for conditional certification at the notice stage is GRANTED. 22 2. PRODUCTION OF CONTACT INFORMATION. 23 The Supreme Court has authorized “the discovery of the names and addresses” of 24 employees to send notices. Hoffman-La Roche, 493 U.S. at 170. Other employee information 25 such as alternate addresses, email addresses, social security numbers, telephone numbers, 26 employee numbers, office locations, and job titles have also been permitted for discovery. 27 See Lewis v. Wells Fargo & Co., 669 F. Supp. 2d 1124, 1130 (N.D. Cal. 2009) (Judge Claudia 28 5 1 Wilken); Hill v. R+L Carriers, Inc., 690 F. Supp. 2d 1001, 1010 (N.D. Cal. 2010) (Judge 2 Claudia Wilken). Plaintiff requests an electronic list of the collective action members along with their last 3 4 known addresses, telephone numbers, e-mail addresses, dates of employment, location(s) of 5 employment, and employee numbers so that the proposed notice and opt-in form can be sent 6 to them via first-class mail (Br. 21). Defendants are ORDERED to release, WITHIN FIFTEEN DAYS 7 OF THIS ORDER, 8 employment, and employee numbers to plaintiff. Employee e-mail addresses and telephone 9 numbers are unnecessary for first-class mail delivery. Plaintiff shall bear the full cost of the notice and use the contact information solely to send out the notice. COLLECTIVE ACTION NOTICE AND OPT-IN FORM. 11 For the Northern District of California United States District Court 10 the names, last known mailing addresses, dates of employment, location(s) of 3. 12 The Supreme Court has held that employees need to receive “accurate and timely notice 13 concerning the pendency of the collective action, so that they can make informed decisions 14 about whether to participate.” Hoffman-La Roche, 493 U.S. at 170. Moreover, “trial courts 15 must take care to avoid even the appearance of judicial endorsement of the merits of the action” 16 when overseeing the notice-giving process. Id. at 174. Plaintiff has provided a copy of her 17 proposed notice, and defendants have provided a redlined version of the proposed notice 18 indicating their amendments. Each proposed amendment by defendants will be addressed 19 in turn. 20 First, defendants argue that the language indicating that the Court has expressed no 21 opinion about the merits of the claims asserted should be placed beneath the title of the case 22 (Opp. 16–17). This order agrees. The statement should be in bold and at the top of the 23 front page below the court caption to make the Court’s neutrality clear to potential plaintiffs. 24 Adams, 242 F.R.D. at 540. 25 Second, defendants argue that the proposed notice should include language stating that 26 potential plaintiffs may be required to pay certain fees and/or costs pursuant to the prosecution 27 of the collective action (Opp. 17). This order agrees. Information that informs potential 28 6 1 plaintiffs that they share in liability should be included to present to potential plaintiffs a fair 2 statement of their rights. Adams, 242 F.R.D. at 540 (internal quotations and citations omitted). 3 Third, defendants argue that the proposed notice should include language stating that 4 potential plaintiffs may be required to provide deposition testimony or courtroom testimony 5 (Opp. 17). This order agrees. It is appropriate to include language informing potential plaintiffs 6 of possible obligations in the event they elect to opt-in. Sanchez v. Sephora USA, Inc., 2012 7 WL 2945753, at *7 (N.D. Cal. July 18, 2012) (Judge Saundra Brown Armstrong); Luque v. 8 AT&T Corp., 2010 WL 4807088, at *7 (N.D. Cal. Nov. 19, 2010) (Judge Charles Breyer). the word “conditional” in the title so it reads “notice of court conditional certification;” (2) in the 11 For the Northern District of California Fourth, as to additional minor edits: (1) on the first page, include defendants’ edit adding 10 United States District Court 9 “Introduction” section, in the first paragraph, include defendants’ edit adding “The Court 12 conditionally certified the Lawsuit to proceed as a ‘collective action’ on behalf of all non-exempt 13 employees who were employed by Aéropostale West Inc. and/or Aéropostale Inc. in the United 14 States and Puerto Rico from November 9, 2009 to the present;” (3) in the “Introduction” section, 15 in the second paragraph, include defendants’ edits deleting “improperly,” deleting “(those 16 earning overtime pay),” and deleting “contests all claims that have been asserted and;” (4) in the 17 “Effect of Joining this Lawsuit” section, include all of defendants’ edits (as indicated above); 18 (5) in the “If You Choose Not to Join This Lawsuit” section, include defendants’ edits adding 19 “if you do not wish to be part of this lawsuit, then do not return the attached ‘consent to join’ 20 form” in capital letters, and delete the last line “You do not have to complete and mail the 21 ‘Consent to Join’ form if you do not wish to join this Lawsuit;” and (6) in the “No Retaliation 22 Permitted” section, include defendants’ edit changing “anyone” to “Aéropostale West, Inc. or 23 Aéropostale, Inc.” 24 4. 25 Defendants submitted evidentiary objections to plaintiff’s declaration (Dkt. No. 29) EVIDENTIARY OBJECTIONS. 26 and to plaintiff’s counsel’s declaration (Dkt. No. 30). All objections are OVERRULED because: 27 (1) this order does not rely on information provided in paragraph three of plaintiff’s declaration; 28 (2) the information provided in paragraph four of plaintiff’s declaration consists of plaintiff’s 7 1 personal knowledge and belief; (3) the information on class certification in the Sankey action 2 provided in paragraph four of plaintiff’s counsel’s declaration was confirmed at oral argument, 3 and (4) this order relies on the letter sent by Aéropostale, not on the statements provided in 4 paragraph seven of plaintiff’s counsel’s declaration. 5 6 CONCLUSION To the extent stated above, plaintiff’s motion for conditional certification of a collective 7 action under the FLSA is GRANTED. The collective class of potential plaintiffs consists of 8 all current and former employees of Aéropostale classified as non-exempt who have worked 9 overtime for Aéropostale in the United States or Puerto Rico at any time within the last three years — since November 9, 2009 — and received a non-discretionary bonus. Defendants shall 11 For the Northern District of California United States District Court 10 release, within fifteen days of this order, the names, last known mailing addresses, telephone 12 numbers, dates of employment, location(s) of employment, and employee numbers to plaintiff. 13 Plaintiff shall incorporate the aforementioned changes into its notice and mail the notice to all 14 potential plaintiffs via first-class mail. Plaintiff shall bear the full cost of the notice. Plaintiff 15 and counsel may use the information solely to send out the notice. If a class member contacts 16 counsel, then counsel may follow up. 17 18 IT IS SO ORDERED. 19 20 Dated: April 24, 2013. WILLIAM ALSUP UNITED STATES DISTRICT JUDGE 21 22 23 24 25 26 27 28 8

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