Harvey et al v. Maximus Inc

Filing 43

MEMORANDUM DECISION AND ORDER denying 28 Plaintiff's Motion for Class Certification. Signed by Judge B. Lynn Winmill. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (cjs)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO
REGIS HARVEY, AMANDA
COLLINS, ANDREA MCDONALD,
Individually and On Behalf of All Others
Similarly Situated,

Case No. 1:14-cv-00161-BLW
MEMORANDUM DECISION AND
ORDER

Plaintiff,
v.
MAXIMUS INC.,
Defendant.

INTRODUCTION
Pending before the Court is plaintiffs Regis Harvey’s, Amanda Collins’s, and
Andrea McDonald’s (collectively the “Plaintiffs”) Motion to Certify Class. (Dkt. 28).
Plaintiffs seek to certify a class to challenge MAXIMUS Inc.’s hiring and firing of
employees at their call center in Boise, Idaho. MAXIMUS operated call centers in Boise,
Idaho and Brownsville, Texas to field calls regarding the Affordable Care Act. (Dkt. 36
at 2). The Centers for Medicare & Medicaid Services contracted with General Dynamics
Information Technology (“GDIT”), who in turn contracted with MAXIMUS to operate
these call centers. Id. The subcontract became effective on April 15, 2013. Id. Hiring
for the call center in Boise began in summer 2013 with additional hiring extending into
fall of 2013. Id. at 3.

MEMORANDUM DECISION AND ORDER - 1

MAXIMUS hired three categories of employees to staff its Boise call center. (Dkt
28-1 at 2). Customer Service Representatives (“CSRs”) answered incoming calls. Id.
Trainers were responsible for training incoming CSRs and for knowing company
materials. Id. First-Level Supervisors were responsible for a team of approximately 14
CSFs and monitored the CSRs’ work product and productivity. Id. Most Trainers were
hired by mid-June 2013. (Dkt. 36 at 5). Supervisors were hired by late July 2013. Id.
Maximus hired about 1,800 CSRs in waves, with the first wave beginning training in
mid-September 2013 and the second wave on October 1, 2013. Id. MAXIMUS
continued to hire CSRs throughout the Fall of 2013. Id.
Harvey was employed by MAXIMUS as a Trainer and was hired in July 2013.
Am. Compl. ¶ 13. Harvey had previously been employed by Verizon for six years and
left his job there to work at MAXIMUS. Id. Collins was employed by MAXIMUS as a
CSR and was hired in July 2013. Id. ¶ 14. She had previously worked at ITT Technical
Institute as an Instructor for four years and left that employment for the job at
MAXIMUS. Id. McDonald worked for Maximus as a Supervisor and was hired in July
2013. Id. ¶ 15. Prior to working at Maximus, McDonald had a custom clothing and
show company. Id.
When hiring employees, Maximus sent every employee an offer letter, which the
Plaintiffs received. (Dkt. 36 at 9). The letters contained language stating that the offer
was one of “full-time employment” and that Maximus believed “this is an excellent
career opportunity for you and that we can offer you challenges to grow professionally.”

MEMORANDUM DECISION AND ORDER - 2

Id. The offer letters contained an “Employment At-Will” clause. Id. Offer letters to
limited-service employees stated, “We believe this will be an excellent career choice
offering an opportunity for professional growth.” Id. Offer letters to Trainers and
Supervisors stated, “Your compensation in succeeding years will be considered for
adjustment as part of our normal performance review process.” Id. Offer letters to
regular-capacity CSRs stated, “Your succeeding compensation reviews and adjustments
will be contingent on the federally established annual Wage Determination rate for your
position and locality.” Id. Some employees, including Collins, signed an “Employee
Acknowledgment Form” which contained language stating that the employee recognizes
that employment was at-will and there was “no specific length of employment.” Id. at 910.
In addition to these written statements, Plaintiffs also allege that oral promises
were made to them. Am. Compl. ¶ 43. Plaintiffs allege that that MAXIMUS told
Plaintiffs that regular capacity employees “would remain employed after the first open
enrollment period to service future enrollment periods through the duration of the CCO
contract.” Id. Further, MAXIMUS allegedly told Plaintiffs during hiring that “after the
CCO contract they would work on other projects for MAXIMUS.” Id. ¶ 44.
In August 2013, GDIT determined that the projected call volume indicated a
“ramp down” beginning in Spring of 2014 for the MAXIMUS Boise call center. Id. at 5.
According to MAXIMUS, it became apparent that a significant reduction in employees
would be necessary in Boise. Id. However, MAXIMUS hired an addition 600 CSRs

MEMORANDUM DECISION AND ORDER - 3

after January 1, 2014 in temporary positions for a limited duration because of the
impending reduction in force. Id. at 6.
On April 25, 2015, MAXIMUS terminated 850 employees. Id. MAXIMUS
terminated 777 CSRs, 57 Supervisors, and 16 Trainers. Id. Of the 850 employees
terminated, 199 of these were limited capacity CSRs. Id. The 651 regular-capacity
employees were offered two weeks’ severance pay in exchange for a signed Separation
Agreement and Release. Id. Out of the employees offered the severance pay, 526
employees signed a Separation Agreement. Id. The Separation Agreement included a
clause releasing MAXIMUS of all claims, including those arising from a class action
lawsuit. Id.
Plaintiffs bring claims for fraudulent misrepresentation and promissory estoppel.
Am. Compl. 12-15 (Dkt. 3). Plaintiffs allege that MAXIMUS’s hiring process promised
Plaintiffs and the proposed class members career employment when MAXIMUS had no
intention of retaining the new employees for long-term employment. (Dkt. 28-1 at 3-4).
Plaintiffs seek to certify a class of all “similarly situated persons hired by Maximus
beginning in approximately June 2013 up until January 1, 2014, and were employed at its
Boise call center as [CSRs], Trainers, and First-Level Supervisors.” Id. at 4.
LEGAL STANDARD
Under Rule 23 of the Federal Rules of Civil Procedure, plaintiffs must
“affirmatively demonstrate” that class certification is appropriate. Wal-Mart Stores, Inc.
v. Dukes, 564 U.S. 338, 350 (2011). Under Rule 23(a), the Plaintiffs must show that: (1)

MEMORANDUM DECISION AND ORDER - 4

the class is so numerous that joinder of all members is impracticable; (2) there are
questions of law or fact common to the class; (3) the claims or defenses of the
representative parties are typical of the claims or defenses of the class; and (4) the
representative parties will fairly and adequately protect the interests of the class.
These four requirements of 23(a) are designed to “[ensure] that the named
plaintiffs are appropriate representatives of the class whose claims they wish to litigate.”
Id. at 349. This Court must, following a “rigorous analysis,” be satisfied that Plaintiffs
will fulfill that role. Id. at 351.
Second, Plaintiffs must show that the proposed class satisfies at least one of the
Rule 23(b) requirements. Plaintiffs rely on Rule 23(b)(3), which applies when questions
of law or fact common to class members predominate over any questions affecting only
individual members, and that a class action is superior to other available methods for
fairly and efficiently adjudicating the controversy. Fed. R. Civ. P. 23(b)(3). Rule
23(b)(3) also provides that matters pertinent to these findings include: (1) the interest of
the class members in individually controlling the prosecution of separate actions; (2) the
extent and nature of any litigation concerning the controversy already begun by or against
class members; (3) the desirability of concentrating the litigation of the claims in the
particular forum; and (4) the likely difficulties in managing a class action. Id.
MAXIMUS challenges Plaintiffs’ motion on the commonality, typicality, and
adequacy of representation requirements of Rule 23(a). Furthermore, MAXIMUS

MEMORANDUM DECISION AND ORDER - 5

contends that the predominance test and superiority requirement of Rule 23(b)(3) are not
met.
ANALYSIS
Plaintiffs fail to meet the typicality requirements of Rule 23(a) and the predominance
standard of Rule 23(b)(3). Because these elements are not met, the Court declines to
certify the proposed class.
a. Typicality
The typicality prerequisite of Rule (23)(a) is fulfilled if “the claims or defenses of
the representative parties are typical of the claims or defenses of the class.” Fed.R.Civ.P.
23(a)(3). The commonality and typicality requirements of Rule 23(a) “tend to merge”
because both “serve as guideposts for determining . . . whether the named plaintiff’s
claim and class claims are so interrelated that the interests of the class members will be
fairly and adequately protected in their absence.” Wal-Mart, 564 U.S. at 349, n.5.
The Plaintiffs cannot meet the typicality elements of Rule 23(a) because none of
them signed the Separation Agreement upon termination releasing their claims against
MAXIMUS. Out of the 651 regular-capacity employees terminated during the reduction
in force, 526 signed the Separation Agreement that contained a clause releasing
MAXIMUS from all potential claims, including those arising from a class action lawsuit,
and received compensation for signing the agreement. Plaintiffs are clearly atypical of
the vast majority of the proposed class in that they did not sign the Separation
Agreement.

MEMORANDUM DECISION AND ORDER - 6

In their Motion for Class Certification (Dkt. 28) and reply brief (Dkt. 37),
Plaintiffs failed to mention or offer any explanation of how Plaintiffs are typical of the
class members when they did not sign the Separation Agreement that over 80 percent of
the proposed class signed. Plaintiffs attempted to distinguish themselves from the case
law presented by MAXIMUS in MAXIMUS’s response brief, but could not offer a
response other than the fact that the Separation Agreements were a part of the alleged
fraudulent scheme. (Dkt. 37 at 15-16). However, merely alleging that the Separation
Agreements are a part of the claim does not explain how Plaintiffs are typical of the class
when they did not sign the Separation Agreements. Plaintiffs are atypical of the proposed
class specifically because they did not sign the Separation Agreements and, as such,
cannot claim to represent the class members who did. For this reason, Plaintiffs fail to
meet the typicality element of Rule 23(a).
b. Predominance
In addition to meeting the conditions imposed by Rule 23(a), the parties seeking
class certification must also show that the action is maintainable under Rule 23(b)(3).
Rule 23(b)(3) requires that common questions must “predominate over any questions
affecting only individual members,” and that the class resolution must be “superior to
other available methods for fairly and efficiently adjudicating the controversy.”
Fed.R.Civ.P. 23(b)(3).
“The Rule 23(b)(3) predominance inquiry tests whether proposed classes are
sufficiently cohesive to warrant adjudication by representation.” Amchem Products, Inc.

MEMORANDUM DECISION AND ORDER - 7

v. Windsor, 521 U.S. 591, 608, 117 S.Ct. 2231, 138 L.Ed.2d 689 (1997). This analysis
presumes the existence of common issues of fact or law; thus, the presence of
commonality alone is not sufficient to fulfill Rule 23(b)(3). Hanlon v. Chrysler Corp.,
150 F.3d 1011, 1022 (9th Cir. 1998). In contrast to Rule 23(a)(2), Rule 23(b)(3) focuses
on the relationship between the common and individual issues. Id.
Plaintiffs have claims of fraud and promissory estoppel remaining in this action.
To prove fraud under Idaho law, Plaintiffs must prove the following nine elements:
(1) A representation; (2) its falsity; (3) its materiality; (4) the speaker’s knowledge
about its falsity or ignorance of its truth; (5) his intent that it should be acted upon
by the person and in the manner reasonably contemplated; (6) the hearer’s
ignorance of its falsity; (7) his reliance on the [representation]; (8) his right to rely
thereon; (9) his consequent and proximate injury.
MWI Veterinary Supply Co. v. Wotton, 2012 WL 2576205, at *2 (D. Idaho July 3, 2012).
To prove promissory estoppel, Plaintiffs must prove that “(1) one party’s reliance on a
promise [created] a substantial economic detriment, (2) the reliance was or should have
been foreseeable, and (3) the reliance was reasonable and justified.” Profits Plus Capital
Mgmt. LLC v. Podesta, 156 Idaho 873, 891, 332 P.3d 785, 803 (2014) (citation and
quotation marks omitted).
Both the fraud and promissory estoppel claims contain an element of individual
reliance. MAXIMUS argues that “individualized reliance issues related to plaintiffs’
knowledge, motivations, and expectations bear heavily on the causation analysis,” Poulos
v. Caesar’s World, Inc., 379 F.3d 654, 665 (9th Cir. 2004), and that the claims Plaintiffs
bring for fraud and promissory estoppel clearly require a showing of individualized

MEMORANDUM DECISION AND ORDER - 8

reliance to prove causation that cannot be presumed on a class-wide basis. Plaintiffs
respond that individual reliance does not predominate over the common question and that
they have “established a class-wide inference of reliance . . . because the logical
motivation for accepting a ‘career opportunity’ is limited to those who are seeking an
opportunity for a career.” Dkt. 37 at 9.
Plaintiffs are incorrect, however, because the issue here of predominance is not
whether class members were accepting a job with career opportunities. Rather, it is
whether the class members relied on an alleged promise, whether this reliance can be
presumed on a class-wide basis, and whether the common question predominates over
any issues of individual reliance. It is not enough to merely allege that it is obvious that
the class members expected career employment when accepting employment with
MAXIMUS.
The Supreme Court recognized a distinction between presumed and individual
reliance in Halliburton Co. v. Erica P. John Fund, Inc., 134 S.Ct. 2398 (2014). There,
the Court held in a securities fraud case that a defendant has a right to rebut a
presumption of reliance during class certification. Id. at 2414-17. The Court held that if
reliance could not be presumed, a suit “cannot proceed as a class action: Each plaintiff
would have to prove reliance individually, so common issues would not ‘predominate’
over individual ones, as required by Rule 23(b)(3). Id. at 2416.
As MAXIMUS argued, the leading Ninth Circuit case on this issues is Poulos, 379
F.3d 654. There, the Ninth Circuit noted the “shortcut of a presumption of reliance

MEMORANDUM DECISION AND ORDER - 9

typically has been applied in cases involving securities fraud and, even then, the
presumption applies only in cases primarily involving a ‘failure to disclose . . . .’” Id. at
666. The Ninth Circuit declined to apply this presumption of reliance in Poulos because
the claims were “best characterized as . . . affirmative misrepresentations . . . that would
not be entitled to the presumption.” Id.
As a starting point, Plaintiffs’ case is not a securities fraud case and instead
revolves around the issue of what promises or representations were made to Plaintiffs
when they were offered employment with MAXIMUS. This is similar to Poulos in that
Plaintiffs’ claims allege MAXIMUS made affirmative misrepresentations rather than
failed to disclose a fact. Therefore, Plaintiffs are most certainly not entitled to a
presumption of reliance.
Plaintiffs have not shown that presumed reliance on a class-wide basis is proper
here because whether the claims succeed clearly turns on individual reliance of an alleged
promise of career employment. Each individual class members’ experiences and
decisions in accepting employment could vary greatly. It has been shown through the
evidence presented that the named Plaintiffs accepted employment for different reasons,
and it is unclear whether they relied on an alleged promise of “career employment” in
accepting the employment. Here, Plaintiffs’ “suggestion that ‘common sense’ links”
accepting employment to a reliance on a promise of career employment is not sufficient
to grant presumed reliance. Id. at 667.

MEMORANDUM DECISION AND ORDER - 10

Plaintiffs’ fraud and promissory estoppel claims clearly require a showing of
individual reliance, and there are too many unanswered questions in this case to establish
a presumption of reliance. For example, did each individual class member rely on the
offer letters’ language of a career opportunity when accepting employment? And, if not,
did the class members rely on an oral promise of career employment? If so, what exactly
was said in each individual interview to each class member that could have been a
promise, and were these oral promised said in exactly the same way in every interview?
Clearly there are fundamental issues of reliance here that Plaintiffs have not provided
answers to. Further, in depositions, the named Plaintiffs did not establish that they relied
on written or oral representations of career employment in accepting the positions at
MAXIMUS. The Court cannot presume reliance on a class-wide basis when there are
clear discrepancies and unanswered questions regarding individual reliance for each
plaintiff.
Discovery is over in this case, and Plaintiffs have not shown that presumed
reliance is proper here. Because individual issues of reliance clearly predominate over
any common issues, the predominance element of Rule 23(b)(3) is not met.
CONCLUSION
Because Plaintiffs have failed to meet the typicality requirement of Rule 23(a) and
the predominance standard of Rule 23(b)(3), the Court need not discuss the remaining
elements of Rule 23(a) or Rule 23(b)(3) and declines to do so. As such, the Plaintiffs’
Motion to Certify class is denied.

MEMORANDUM DECISION AND ORDER - 11

ORDER
IT IS ORDERED:
1.

Plaintiff’s Motion for Class Certification (Dkt. 28) is DENIED.

DATED: December 15, 2016
_________________________
B. Lynn Winmill
Chief Judge
United States District Court

MEMORANDUM DECISION AND ORDER - 12