Steger et al v. LTF Club Operations Company, Inc. Inc.
Filing
133
MEMORANDUM Opinion and Order Signed by the Honorable Sharon Johnson Coleman on 1/21/2016:Mailed notice(rth, )
UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
JARED STEGER, DAVID RAMSEY, JOHN
CHRISPENS, and MAI HENRY, individually
and on behalf of all others similarly situated,
Plaintiffs,
v.
LIFE TIME FITNESS, INC., a Minnesota
corporation, LTF CLUB MANAGEMENT
COMPANY, LLC, a Delaware Limited Liability
Company, and LTF CLUB OPERATIONS
COMPANY, INC., a Minnesota corporation,
and DOES 1 to 10, inclusive,
)
)
) Case No. 14-cv-6056
)
) Judge Sharon Johnson Coleman
)
)
)
)
)
Defendants.
MEMORANDUM OPINION AND ORDER
Plaintiffs Jared Steger, David Ramsey, John Chrispens, and Mai Henry (“plaintiffs”), acting
on behalf of themselves and all others similarly situated, filed an amended complaint against
defendants Life Time Fitness, Inc., LTF Club Management Company, LLC, LTF Club Operations
Company, Inc., and ten unnamed individuals (together “defendants”), alleging claims under the Fair
Labor Standards Act and California and Illinois state law. The plaintiffs now move for conditional
certification of their proposed class and judicial notice to the class pursuant to section 216(b) of the
Fair Labor Standards Act. For the reasons set forth herein, this motion [103] is denied.
Background
The defendants operate over one hundred fitness centers throughout the United States.
(Dkt. 112-2 22:20-21). As is pertinent here, the defendants employ personal trainers, Pilates
instructors, Pilates coordinators, metabolic specialists, nutritionists, and dietary specialists, all of
whom the plaintiffs collectively describe as “Personal Trainers” or “PTs.” PTs’ primary job is to sell
Life Time’s personal training services and products and to provide personal training services to Life
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Time members. (Dkts. 112–2, 47:11–17; 112–4, 16:3–7, 18:9–20). Additionally, PTs are responsible
for performing general duties such as providing free initial consultations, staffing the service desk,
cleaning exercise equipment and gym spaces, communicating with managers, and attending meetings
and trainings. (Dkts. 105-4 ¶ 6; 105-12 ¶ 6; 105-26 ¶ 8). PTs are paid by commission, which they
earn from selling products, setting up appointments, and providing personal training services to
members. (Dkt. 112-5, 65:6–66:16).
If a PT does not earn enough in commissions to compensate them time-and-a-half of the
applicable minimum wage for the hours that they have worked, Life Time’s payroll software
automatically pays them that amount. (Dkt. 112-2, 51:1–55:24, 72:22-73:16). The difference
between the PT’s commissions and their paycheck is known as a “recoverable draw” or “draw,” and
is carried forward into future pay periods and recovered against future commissions. (Id. at 73:12–
15, 98:25–99:2). The department heads who supervise PTs are partially compensated based on
department revenues, and therefore are negatively impacted when their employees incur such draws.
(Dkt. 103-9).
Some PTs were informed that incurring a draw increased the likelihood of being placed on a
“Performance Improvement Plan” or being terminated. (Dkt. 103-8; 105-2 ¶ 12). A few PTs also
preferred to avoid draws because they did not want their future commissions to be diminished to
recoup the draw. (Dkt. 105-16, ¶ 14; 105-17 ¶ 14). There were also department heads who explicitly
instructed PTs to underreport their hours or to only report the hours that they spent servicing
clients so as to avoid incurring draws. (Dkt. 105-5, ¶ 8; 105-26, ¶ 7; 105-20, ¶ 7). Thus, some PTs
underreported their work hours, based at least in part on either the threat of disciplinary action or
the direct instructions of their supervisors. (Dkt. 105-16, ¶ 14; 105-17 ¶ 14). However, Life Time’s
official policy, as set forth in its Team Member Handbook, required that all employees accurately
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report their hours, and even those PTs who misreported their hours were aware of that policy.
(Dkts. 112-25, 15; 112-3, 88:1-89:13, 102:13-18; 112-5 38:3-39:10).
This case consolidates a complaint filed by plaintiffs David Ramsey and Jared Steger in the
Circuit Court of Cook County and one filed by plaintiffs John Chrispens and Mai Henry, among
others, in the United States District Court for the Central District of California. By agreement of
the parties, discovery in this matter was bifurcated into two phases, the first of which was limited to
those issues relevant to class certification and the claims of the named plaintiffs. (Dkt. 62). That
phase of discovery has since been completed. (Dkt. 78). The plaintiffs now move for conditional
certification of a class consisting of:
All individuals in positions, job titles, job codes, job classifications, or
job descriptions of “Personal Trainer” and all other similar
nomenclature (including, but not limited to, Personal Trainers, Pilates
Instructors, Dietary Technicians, and other similar positions within
the Personal Training department) performing substantially identical
functions and/or duties, currently or formerly employed by
Defendants in the United States who were not paid the minimum
wage or overtime for all hours worked.
As the factual nexus for this class, plaintiffs allege both that (1) Life Time had an uniform,
unofficial policy of pressuring employees to work off the clock and (2) Life Time uniformly
misclassified the class members as exempt from overtime compensation under 29 U.S.C. § 207(i).
Legal Standard
Section 216(b) of the Fair Labor Standards Act (“FLSA”) authorizes employees to act
together to seek redress for violations of the statute’s minimum wage and maximum hour
provisions. Unlike a Rule 23 class action, a FLSA collective action requires that the unnamed
plaintiffs opt in to be bound, rather than, as in a class action, opting out to not be bound.
Espenscheid v. DirectSat USA, LLC, 688 F.3d 872, 877 (7th Cir. 2012).
Courts of this Circuit employ a two-step process for determining whether an FLSA lawsuit
should proceed as a collective action. Jirak v. Abbott Labs., Inc., 566 F. Supp. 2d 845, 847 (N.D. Ill.
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2008). At the first stage, “the court makes an initial determination to send notice to potential opt-in
plaintiffs who may be similarly situated to the named plaintiffs with respect to whether an FLSA
violation has occurred.” Kurgan v. Chiro One Wellness Ctrs. LLC, No. 10-cv-1899, 2014 WL 642092 at
*3 (N.D. Ill. Feb. 19, 2014) (Dow, J.). To meet this burden, plaintiffs must make a “modest factual
showing” sufficient to demonstrate that they and the potential plaintiffs were victims of a common
policy or plan that violated the FLSA. Flores v. Lifeway Foods, Inc., 289 F. Supp. 2d 1042, 1045 (N.D.
Ill. 2003) (Norgle, J.). At the second stage, “following the completion of the opt-in process and
merits-related discovery, the defendant may ask the court to reevaluate the conditional certification
to determine whether there is sufficient similarity between the named and opt-in plaintiffs to allow
the matter to proceed to trial on a collective basis.” Madden v. Corinthian Colls., Inc., No. 08-cv-6623,
2009 WL 4757269, at *2 (N.D. Ill. Dec. 8, 2009) (Hibbler, J.).
However, when limited discovery has been completed as is the case here, the lenient
standard applied at the first stage is heightened to an intermediate standard more stringent than the
first-step certification standard but more lenient than the second-step decertification standard.
Bergman v. Kindred Healthcare, Inc., 949 F. Supp. 2d 852, 856 (N.D. Ill. 2013). Under the heightened
standard, both parties’ evidentiary submissions are considered in determining whether there is a
group of similarly situated employees that may be discovered by sending opt-in notice. Id. at 856.
But in evaluating each side’s submissions, it must be kept in mind that, despite the discovery that has
been allowed, the defendants still have greater access to evidence than the plaintiffs, and that the
plaintiffs’ showings therefore need not be conclusive. Id. Rather, the plaintiffs need only make a
modest factual showing that there is a group of potentially similarly situated plaintiffs that may be
discovered by sending opt-in notices. Id. In determining whether a group of plaintiffs are similarly
situated, district courts consider: (1) whether the plaintiffs share similar or disparate factual and
employment settings; (2) whether the various affirmative defenses available to the defendant would
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have to be individually applied to each plaintiff; and (3) fairness and procedural concerns. Mielke v.
Laidlaw Transit, Inc., 313 F. Supp. 2d 759, 762 (N.D. Ill. 2004).
Discussion
1. Shared Factual and Employment Setting
The plaintiffs contend that the members of their putative class are similarly situated with
respect to their employment setting because all members of their putative class performed
“substantially identical functions and/or duties.” However, the testimony of class members shows
that the job duties of the putative class members varied depending on job title and certification
levels. For instance, the deposition testimony of named plaintiff Jared Steger indicates that, as a
metabolic specialist, he spent some of his time training other Life Time employees, a duty that
ordinary personal trainers or instructors did not share. (Dkt. 112-3 7:6–13:24). Moreover, Steger
was compensated for his conducting those trainings with a percentage of the metabolic department
budget, in contrast to personal trainers whose compensation was based solely on commission. (Id.).
Another plaintiff testified that the value of each employee’s commissions varied based on each
individual trainer’s level of classification and that sale goals were individually set for each employee.
(Dkt. 112-4 55:14–56:14; 75:6–18). Thus, the duties and compensation of the putative class
members were not substantially identical.
Nor is the putative class similarly situated with respect to the alleged uniform “unwritten, de
facto policy of intimidating and pressuring employees to work off the clock.” The evidence
demonstrates that some department heads informed PTs that they would be placed on a
performance improvement plan or terminated if they incurred draw or directly instructed trainers to
underreport their hours so as to avoid incurring draw. However, it also demonstrates that some
department heads did not do these things, and that some PTs did not misreport their hours. And it
showed that it was Life Time’s stated corporate policy that all employees must accurately report their
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hours, that this policy was enforced, and that at least some of the putative class were aware of this
official policy. Cf. Nieddu v. Lifetime Fitness, Inc., 977 F. Supp. 2d 686, 703 (S.D. Tex. 2013
(recognizing that evidence that an employer has and enforces appropriate pay policies weighs heavily
against class certification).
Thus, the evidence shows that the proposed class was impacted, not by a uniform if
unwritten corporate policy, but rather by the individual actions of specific department heads acting
contrary to corporate policy, as moderated by each employee’s individual decisions. The pressure
that each PT felt to work off the clock depended on his or her location, his or her job title and
responsibilities, his or her department head at the particular moment, his or her productivity, and his
or her personal decisions. Although two putative plaintiffs might share one or two of these factors
in common, a highly individualized analysis would nonetheless be necessary to determine the extent
to which each employee worked off the clock and whether that conduct was attributable to Life
Time. Because the proposed nationwide class is therefore not similarly situated with respect to the
allegation that Life Time had an unofficial corporate policy requiring PTs to work off the clock, it
cannot be certified as a class on that basis. See Griffith v. Wells Fargo Bank, N.A., No. 4:11-CV-1440,
2012 U.S. Dist. LEXIS 129937, at *14 (S.D. Tex. 2012) (denying class certification based on an
alleged unofficial policy of pressuring employees to work uncompensated hours because that
“pressure” was based on the employees’ individual abilities and perceptions and their office-specific
experiences relating to the actions of supervisors); see also Carey v. 24 Hour Fitness USA, Inc., No. H10-3009, 2012 U.S. Dist. LEXIS 146471, *2 (S.D. Tex. 2012) (denying conditional certification
because an inquiry into whether club managers violated company policy to encourage employees to
work off the clock would require extensive individualized analysis).
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2. Individualized Defenses
Life Time argues that all of the putative class members were exempt from overtime under
the commissioned retail salesperson exemption set forth in FLSA section 7(i), while the plaintiffs
argue that they were miscategorized as exempt employees under that section. Section 7(i) creates an
exemption to federal overtime requirements for retail or service employees who (1) derive more
than half of his or her compensation from commissions on goods or services and (2) receive a
regular rate of pay in excess of one and one-half times the minimum wage. 29 U.S.C. § 207(i).
Courts have noted that section 7(i) is a highly individualized defense, because its application requires
week-by-week and other periodic calculations specific to each individual Plaintiff and his or her
particular circumstances. Johnson v. TGF Precision Haircutters, Inc., No. Civ.A. H-02-3641, 2005 WL
1994286, at *6 (S.D. Tex. 2005).
Here, the plaintiffs contend that they are not exempt employees under 7(i) because,
accounting for the unreported hours that they worked, they did not receive a regular rate of pay in
excess of one and one-half times the minimum wage. 1 As was previously discussed, however, the
putative plaintiffs are not similarly situated with respect to whether they misreported their hours,
when they did so, or how many hours they misreported. Moreover, the record reflects that each
plaintiff’s compensation would vary based on the amount of commissioned hours they worked, their
certification level, the time period in which they worked, and whether or not they were recouping
previously earned draws. Thus, the application of section 7(i) would require highly individualized
inquiries into each plaintiff’s hours and compensation that could not be accomplished by common
proof but would instead require “the equivalent of mini-trials” for each Plaintiff. Id; see also
The plaintiffs also allege that they were misclassified because most of their time was spent on regimented duties for
which they could not earn a commission. Without deciding on the validity of this theory, the evidence reflects that PTs’
duties, and thus the portion of their time spent earning commission, varied by position, location, manager, and timing.
Thus, an individualized determination of each employee’s duties would be required and class certification would be
inappropriate on this basis. Reich v. Homier Distrib. Co., Inc., 362 F. Supp. 2d 1009, 1013–14 (N.D. Ind. 2005).
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Beauperthuy v. 24 Hour Fitness USA, Inc., 772 F. Supp. 2d 1111, 1127 (N.D. Cal. 2011) (decertifying a
class based in part on the individualized analysis required to determine if the section 7(i) defense
applied to the members of the putative class).
3. Fairness and Procedural Considerations
Here, there is no identifiable nexus that binds the potential claims of the putative class such
that hearing the claims collectively would promote fairness and judicial efficiency. Rather, the highly
individualized inquiries which will be required would substantially eliminate the judicial efficiency,
and the resulting benefit to the parties, traditionally attained through the collective treatment of
claims. Accordingly, conditional certification of this lawsuit as a collective action is unwarranted.
Conclusion
For the foregoing reasons, plaintiff’s motion for conditional class certification [103] is
denied.
SO ORDERED.
____________________________________
Sharon Johnson Coleman
United States District Court Judge
DATED: January 21, 2016
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