Reed v. Brex, Inc. et al

Filing 141

ORDER granting 91 Motion to Certify Class. Signed by Chief Judge Nancy J. Rosenstengel on 2/6/2020. (dhg)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ILLINOIS
TOM REED and MICHAEL ROY,
individually and on behalf of all others
similarly situated,
Plaintiffs,
v.

Case No. 3:17-CV-292-NJR

BREX, INC., et al.,
Defendants.

MEMORANDUM AND ORDER
ROSENSTENGEL, Chief Judge:
Pending before the Court is a Motion for Class Certification from Plaintiffs Tom
Reed and Michael Roy (“Plaintiffs”) (Doc. 91). For the reasons set forth below, the Court
grants the motion.
FACTUAL & PROCEDURAL BACKGROUND
The facts underlying this case are described at length in this Court’s recent order
(Doc. 140) on the motions for summary judgment (“Order on MSJs”) brought by Plaintiffs
and by Defendant Brex, Inc. (“Brex”). In addition to the facts previously enumerated, the
Court notes that Plaintiff Tom Reed was employed by Brex as an automotive technician
in Illinois from about August 2015 to December 2016 and seeks to serves as a class
representative for the Illinois class, while Plaintiff Michael Roy was employed by Brex as
an automotive technician in Missouri from about January 2015 to March 2017 and seeks
to serve as a class representative for the Missouri class (Doc. 91 at 2). Brex has disclosed

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that it employed 157 automotive technicians during the periods for which Plaintiffs seek
recovery (Doc. 91 at 3). Of those technicians, 77 had Illinois addresses and 80 had Missouri
addresses (Id.). Brex managers have indicated in depositions that all automotive
technicians employed by Brex have the same primary task of “inspect[ing] and
repair[ing] a wide variety of vehicles” but have also noted disparities in skill level
amongst the technicians (Doc. 91-1 at 9–10). Brex does not pay employees overtime for
work performed in excess of 40 hours per week and has not done so for the periods in
which Plaintiffs seek recovery (Id. at 31–32). Instead, Brex claims the “retail and service
establishment” exception (“Section 7(i) Exemption”) to the federal, Illinois, and Missouri
overtime laws under the Fair Labor Standards Act (“FLSA”) and its state equivalents due
to its “production scale” described in the Court’s Order on MSJs (the “Scale”). 29 U.S.C.
§ 207(i); 820 Ill. Comp. Stat. 105/4a(2)(F); Mo. Rev. Stat. § 290.505(3). All automotive
technicians employed by Brex during the periods for which Plaintiffs seek recovery were
paid according to the Scale and all had their work time tracked through the same
computerized time clock program (Id. at 12–13, 17–19).
This Court previously granted Plaintiffs’ Motion for Conditional Collective Action
Certification of claims under the FLSA (Doc. 39). Plaintiffs now move for certification of
Illinois and Missouri class actions for claims under the Illinois Minimum Wage Law
(“IMWL”) and Missouri Minimum Wage Law (“MMWL”) pursuant to Federal Rule of
Civil Procedure 23 (“Rule 23”).

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LEGAL STANDARD
The Supreme Court has provided that district courts have discretion in
appropriate cases to provide conditional certification of class actions, and individual
courts have subsequently developed a two-step process in which plaintiffs need only
make an initial showing that proposed plaintiffs are similarly situated. See, e.g., HoffmanLa Roche Inc. v. Sperling, 493 U.S. 165, 169 (1989) (noting discretion of district courts to
certify FLSA cases); Marshall v. Amsted Industries, Inc., 2010 WL 2404340 at *4 (S.D. Ill.
2010) (collecting cases on two-step process for certifying FLSA actions).
Rule 23 differs from this ad-hoc, court-made process for conditional certification
of FLSA actions. As the moving party under Rule 23, Plaintiffs hold the burden of
showing that class certification is appropriate. Retired Chicago Police Ass’n v. City of
Chicago, 7 F.3d 584, 596 (7th Cir. 1993). A party seeking class certification under Rule 23
must meet all the requirements of Rule 23(a), which establishes four elements commonly
referred to as numerosity, commonality, typicality, and adequacy of representation.
Additionally, Plaintiffs must show that the proposed class will satisfy one of the
categories of Rule 23(b)— here, Plaintiffs seek certification under 23(b)(3), which calls for
a showing that common questions predominate and that the class action is superior to
other forms of resolving the dispute, factors referred to as predominance and superiority.
Class actions should be approved only after the trial court has conducted a
thorough analysis and satisfied itself that the prerequisites to certification have been met.
General Telephone Co. of Southwest v. Falcon, 457 U.S. 147, 161 (1982). The court need not
decide the merits of the case but must make factual and legal inquiries sufficient to assess
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compliance with Rule 23, and the court cannot simply accept the plaintiff’s allegations as
conclusive. Rule 23, however, should be liberally interpreted, as its policy is to favor
maintenance of class actions, particularly where denial of class status would effectively
terminate further litigation of claims. King v. Kansas City Southern Industries, Inc., 519 F.2d
20, 26 (1975).
Brex argues that certain courts have found that class actions are disfavored in the
context of the Section 7(i) Exemption. In support of this proposition, Brex cites a number
of cases, largely unpublished, with factual backgrounds that are readily distinguishable
from the case at hand. See Osorio v. Tile Shop, LLC, 2016 WL 7491810, at *5–6 (N.D. Ill.
2016) (finding Section 7(i) Exemption would require individualized inquiries preventing
certification where hours and commissions varied widely across employees and common
question was whether compensation equaled one and one half times minimum wage for
all employees); Velasquez v. Digital Page, Inc., 303 F.R.D. 435, 442 (E.D.N.Y. 2014) (finding
certification not appropriate where defendant conceded that policy violated law and
question was whether individual defendants were entitled to overtime); Steger v. Life Time
Fitness, Inc., 2016 WL 245899 at *3–4 (N.D. Ill. 2016) (finding certification not appropriate
where job duties and compensation structures varied widely across employees, locations,
department heads); Beauperthuy v. 24 Hour Fitness USA Inc., 772 F. Supp.2d 1111, 1126
(N.D. Cal. 2011) (finding certification not appropriate where commission and
compensation structure varied widely across class members and question was whether
plaintiffs had all been paid all overtime to which entitled and whether time was counted
accurately); Johnson v. TGF Precision Haircutters, Inc., 2005 WL 1994286 at *6 (S.D. Tex.
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2005) (declining to certify where job duties differed across class members, members were
paid salary as well as commission, and question is how much of each employee’s pay
was commission). Unlike in these cases, the proposed classes in this action have the same
job duties and the same compensation structure, consistent across locations within the
proposed classes, regardless of certain variations in skill level. The key question in this
case turns on an assessment of the Scale itself—whether all compensation paid under the
Scale counts as commission. The answer to this question will be the same for all
prospective class members and will determine whether any of them are entitled to
overtime pay. While some individualized inquiry may subsequently be necessary if some
compensation is found to not constitute commission, the initial threshold question is the
key issue here. For this reason, the Court rejects Brex’s argument that the 7(i) Exemption
requires an overly individual analysis for certification, and this argument will not be
considered in analysis of the individual elements of Rule 23 certification below.
ANALYSIS
I.

Numerosity
A. Applicable Law
A proposed class will be deemed sufficiently numerous if it is so large that joinder

of all members in a single action would be impractical. Fed. R. Civ. P. 23(a)(1). “While
there is no magic number that applies to every case, a forty-member class is often
regarded as sufficient to meet the numerosity requirement.” Mulvania v. Sheriff of Rock
Island Cnty., 850 F.3d 849, 859 (7th Cir. 2017).
B. Discussion
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Here, Plaintiffs seek certification of an Illinois class of at least 77 technicians and a
Missouri class of at least 80 technicians. In the view of the Court, it would be burdensome
to join this many plaintiffs in a single action or have them pursue individual actions, and
these numbers are well above the 40-member threshold that the Seventh Circuit has
previously discussed as a reasonable marker for numerosity. As Brex does not appear to
contest the issue of numerosity in its brief, the Court finds that the proposed classes are
sufficiently numerous.
II.

Commonality
A. Applicable Law
For certification of a class, there must be “questions of law or fact common to the

class[.]” Fed. R. Civ. P. 23(a)(2) Plaintiffs need not have entirely the same claims to show
commonality, yet there must be at least one common question of law or fact “capable of
class-wide resolution and . . . central to the claims’ validity” in order to meet the
requirement. Beaton v. SpeedyPC Software, 907 F.3d 1018, 1026 (7th Cir. 2018). Class-wide
resolution refers to the capacity of a proceeding to generate common answers that will
help to drive the resolution of the litigation, while dissimilarities in the proposed class
will have the potential to impede the generation of common answers. See Wal-Mart Stores,
Inc. v. Dukes, 564 U.S. 338, 359 (2011) (finding lack of commonality where class members
held a “multitude of jobs, at different levels of Wal-Mart’s hierarchy, for variable lengths
of time, in 3,400 stores, sprinkled across 50 states . . . subject to a variety of regional
policies that all differed.”)
B. Discussion
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Here, members in the two proposed classes hold the exact same job, as they are all
automotive technicians. Testimony by Brex executives confirms that job responsibilities
do not vary significantly among technicians, and that all technicians are subject to the
Scale and have their hours tracked through the same system. The members of the two
proposed classes all reside in the same states, and there is no indication that there is any
significant variation among Brex policies as applied to members of the same classes. The
question that all of these technicians face is whether the Scale is a valid commission
system that entitles Brex to the Section 7(i) Exemption. This determination will depend
largely on an analysis of the Scale itself, not the hours worked by the individual
technicians, as the allegations made by Plaintiffs are not focused on whether certain
technicians made less than the minimum wage or had compensation that was more than
50% wages—they allege that the Scale itself is not fully a commission system and that not
all compensation paid by the Scale should be counted as commission. If their allegations
are proven correct, then determination of whether individual technicians are entitled to
overtime wages will be greatly simplified and will merely require a calculation of
whether technician compensation was more than 50% commission with the guaranteed
minimum commission considered wages.
For these reasons, the Court finds that there are questions of law and fact common
to the proposed classes.

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III.

Typicality
A. Applicable Law
Class certification requires a showing that “the claims or defenses of the

representative parties are typical of the claims or defenses of the class[.]” Fed. R. Civ. P.
23. A class representative’s claims will be deemed typical if they arise from the same
theory or conduct as the claims of the class members and demonstrate enough
congruence with the claims of the class members to justify the named party litigating on
behalf of the group. See Lacy v. Cook County, Illinois, 897 F.3d 847, 866 (7th Cir. 2018)
(holding typicality satisfied if claims arise from same events, practices, conduct, and
based on same legal theory); Spano v. The Boeing Co., 633 F.3d 574, 586 (holding typicality
requires congruence sufficient to justify litigation for class).
B. Discussion
Here, the parties have generally agreed that the proposed classes involve
individuals with the same job titles, duties, working conditions, and terms of
employment, albeit with some differences in skill. They are paid on the same Scale, their
time is tracked through the same system, and their hours are not significantly variable.
They all have the same contention—that the compensation paid to Brex employees
pursuant to the Scale is not wholly commission for the purposes of the 7(i) exemption,
and thus they are entitled to overtime pay. These claims arise through the same conduct
and are based on the same legal theory, and the lead plaintiffs’ claims are sufficiently
congruent to justify their litigation on behalf of the class. Accordingly, the Court finds
that the lead plaintiffs’ claims are typical of the claims of the proposed classes.
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IV.

Adequacy of Representation
A. Applicable Law
Class certification requires a showing that representative parties will fairly and

adequately protect the interests of the class. Fed. R. Civ. P. 23(a)(4). Representative parties
may be deemed adequate if the attorneys for the lead plaintiffs are qualified, experienced,
and able to conduct the proposed litigation, and the plaintiff has no interests antagonistic
to the class. Susman v. Lincoln American Corp., 561 F.2d 86, 90 (7th Cir. 1977); see also Riffey
v. Rauner, 873 F.3d 558, 563–64 (7th Cir. 2017) (noting class not adequately represented if
claims are conflicting).
B. Discussion
Here, Brex has not argued that counsel for the lead plaintiffs is not capable of
conducting the proposed litigation, and the conduct of plaintiffs’ counsel thus far
indicates that they are sufficiently qualified to assume representation of the proposed
classes. Similarly, there is no indication that the lead plaintiffs or any other members of
the proposed classes have motives or interests that are antagonistic to the proposed
classes or would otherwise cause friction. Accordingly, the Court finds that the
representative parties will fairly and adequately protect the interests of the proposed
classes.
V.

Predominance and Superiority
A. Applicable Law
In addition to meeting the requirements of Rule 23(a), a proposed class must also

meet one of the requirements of Rule 23(b). Plaintiffs have indicated that they believe that
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their proposed classes satisfy Rule 23(b)(3), which requires that common questions of law
or fact predominate over questions affecting individual members and that the class action
be superior to other methods for fair and efficient adjudication of the action. This
provision requires two separate showings, commonly termed predominance and
superiority.
“The predominance requirement will be met where common questions represent
a significant aspect of the case and can be resolved for all members of a class in a single
adjudication.” Riffey, 873 F.3d 558 at 565 (7th Cir. 2017) (citing Costello v. BeavEx, Inc., 810
F.3d 1045, 1059 (7th Cir. 2016)). Where members of a proposed class must present
evidence that varies from member to member in order to make a prima facie showing on
a given question, then the question is an individual one, but where the same evidence
will suffice for each member, then it becomes a common question. Id. (quoting Messner v.
Northshore Univ. HealthSystem, 669 F.3d 802, 815 (7th Cir. 2012)). This does not mean that
a hint of an individual question is fatal to class certification, but common questions must
truly predominate, and a court must view the evidence pragmatically to assess if classwide resolution would substantially advance the case. Id. (quoting Suchanek v. Sturm
Foods, Inc., 764 F.3d 750, 761 (7th Cir. 2014)).
Factors relevant to establishing superiority are listed in Rule 23 and include:
(A) the class members’ interests in individually controlling the prosecution
or defense of separate actions; (B) the extent and nature of any litigation
concerning the controversy already begun by or against class members;
(C) the desirability or undesirability of concentrating the litigation of the
claims in the particular forum; and (D) the likely difficulties in managing a
class action.

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Courts have held that analysis of these factors requires a comparative examination;
courts must assess efficiency with an eye toward other available methods of managing
the claims of the proposed class members. Mullins v. Direct Digital, LLC, 795 F.3d 654, 664
(7th Cir. 2015).
B. Discussion
As discussed, the individual plaintiffs in the proposed classes are similarly
situated, and there are no divisive factors here which would seem to pit one against
another in pursuing their claims. It is in the interest of all class members to pursue their
claims in the manner resulting in the least individual financial burden. As Brex has
discussed, “[o]vertime cases are expensive and burdensome” (Doc. 93 at 16). If the
alternative to certification is individual representation for each member of the
prospective class, many of these individuals will likely face difficulty retaining counsel
to pursue these claims, and many may choose not to pursue them at all —it is to remedy
situations like this that Rule 23 was created. Brex states that Plaintiffs’ desire to litigate as
a class does not “override the negative effects that certification is very likely to have on
the fairness and manageability of the proceedings[,]” but it is not clear what these
negative effects would be (Doc. 93 at 16). It seems that litigating one proceeding in a single
district would be significantly more manageable for all parties involved than litigating
150 separate ones in multiple forums in two states. Similarly, it seems substantially more
fair to have all of the similarly placed Brex employees have the same outcome in a single
action rather than have numerous actions that may result in settlements of differing size
depending on the negotiating abilities of the individual plaintiffs. This case has been
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litigated in this forum since March 2017, almost three years ago, and substantial discovery
and fact-finding has been conducted here, including several lengthy depositions. Given
the extent to which the litigation has already advanced in this forum, it is logical to
concentrate claims here and to give all technicians the benefit of discovery already
conducted in this case. The Court does not consider a class action, or even two class
actions, to be more difficult to manage than individual cases, or joining all prospective
plaintiffs individually in a single suit, which appear to be the primary alternatives to
certifying a class. Accordingly, finding that the factors for superiority are also present
here, the Court holds that Rule 23 is satisfied and that the class certifications requested
are appropriate in the action.
CONCLUSION
For the reasons set forth above, the Court GRANTS Plaintiffs’ Motion for Class
Certification.
IT IS SO ORDERED.
DATED: February 6, 2020
_____________________________
NANCY J. ROSENSTENGEL
Chief U.S. District Judge

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