Shoots v. iQor Holdings US, Inc.
Filing
447
ORDER denying 440 Defendant's Motion to Certify Interlocutory Appeal (Written Opinion). Signed by Judge Susan Richard Nelson on 5/25/2018. (MJC)
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UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Paris Shoots, Jonathan Bell, Maxwell
Turner, Tammy Hope, Phillipp Ostrovsky,
Brenda Brandt, Anissa Sanders, Najai
McCutcheon, and Michael Chavez, on
behalf of themselves, the Proposed Rule 23
Classes, and others similarly situated,
Case No. 15-cv-563 (SRN/SER)
MEMORANDUM OPINION AND
ORDER
Plaintiffs,
v.
iQor Holdings US Inc.,
Defendant.
Carl F. Engstrom, Rachhana T. Srey, and Robert L. Schug, Nichols Kaster, PLLP, 80
South Eighth Street, Suite 4600, Minneapolis, Minnesota 55402, Brian T. Rochel,
Douglas L. Micko, Marisa C. Katz, and Vildan A. Teske, Teske Micko Katz Kitzer &
Rochel, PLLP, 222 South Ninth Street, Suite 4050, Minneapolis, Minnesota 55402, for
Plaintiffs.
Brian T. Benkstein, Charles McNeill Elmer, Elizabeth S. Gerling, and Gina K. Janeiro,
Jackson Lewis P.C., 150 South Fifth Street, Suite 3500, Minneapolis, Minnesota 55402,
Robert James Lee, Shon Morgan, and Viola Trebicka, Quinn Emanuel Urquhart &
Sullivan, LLP, 865 South Figueroa Street, Los Angeles, California 90017, for Defendant.
SUSAN RICHARD NELSON, United States District Judge
I.
INTRODUCTION
This matter is before the Court on Defendant’s Motion to Certify Interlocutory
Appeal [Doc. No. 440]. For the reasons set forth herein, Defendant’s Motion is denied.
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II.
BACKGROUND
The factual and procedural background of this matter is well documented in the
prior rulings of this Court and only briefly summarized here.
A.
Factual Background
Plaintiffs are all current or former employees of iQor, for which they worked as
call center workers, or “contact center agents” (“CCAs”).
They filed this putative
collective action/class action alleging violations of the Fair Labor Standards Act
(“FLSA”) and several states’ laws stemming from iQor’s use of a timekeeping system
called TimeQey. Plaintiffs assert that the TimeQey system underreported their hours by
taking them off the clock after two minutes of computer inactivity, not compensating
them for log-in time, and creating time gaps. Defendant denies any violations.
B.
Procedural Background
In October 2015, the Court granted Plaintiffs’ motion for conditional FLSA
certification. (See Oct. 19, 2015 Order at 41–49 [Doc. No. 142].) Specifically, the Court
certified a collective action for current or former iQor CCAs who used TimeQey for
timekeeping purposes during the three years prior to the commencement of the action,
and who worked more than 40 hours during any workweek in that period. (Id. at 53–54,
63.) Approximately 3,500 people opted into the FLSA collective action. (Decl. of
Robert L. Schug in Supp. of Pls.’ Mot. for Class Certification Pursuant to Fed. R. Civ. P.
23,¶ 2 [Doc. No. 363].)
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In August 2017, iQor moved to decertify the FLSA collective and Plaintiffs
moved for class certification under Federal Rule of Civil Procedure 23. On March 27,
2018, the Court granted in part, and denied in part, iQor’s FLSA decertification motion,
and denied Plaintiffs’ Rule 23 motion. (See Mar. 27, 2018 Order at 1–2 [Doc. No. 430].)
Specifically relevant here, the Court denied iQor’s motion as it related to claims for
unpaid breaks of 20 minutes or less. (See id. at 50–55, 60–61.)
Shortly after the Court issued its ruling, Plaintiffs sought a 60-day stay of the
Order’s effective date.
(See Pls.’ Letter Request at 1–2 [Doc. No. 431].)
They
explained that a stay would give the FLSA opt-in Plaintiffs and putative Rule 23 class
members an opportunity to evaluate their respective legal options in light of the Court’s
ruling. (See id.) The Court granted the request and proceedings are currently stayed for
60 days from the date of the Court’s March 27 Order. (See Apr. 4, 2018 Order at 2
[Doc. No. 435].)
On April 11, 2018, iQor filed the instant motion. It asks this Court to certify the
following question to the Eighth Circuit Court of Appeals on an interlocutory basis:
Are employee rest breaks of 20 minutes or less governed by: (1) the
predominantly-for-the-benefit-of-the-employer test, which looks at the
purpose of the break to determine compensability; or (2) the bright-line rule
in Department of Labor regulation 29 C.F.R. § 785.18, which presumes
compensability for such breaks?
(Def.’s Mem. Supp. Mot. to Certify (“Def.’s Mem.”) at 1 [Doc. No. 442].) Defendant
argues that an interlocutory appeal is appropriate because the applicable standard for the
payment of short rest breaks is a controlling question of law, there are substantial grounds
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for a difference of opinion on the issue, and an appeal would materially advance the
ultimate termination of this litigation. (See Def.’s Mem. at 1–2, 3–7.) Plaintiffs oppose
the motion. They argue that this is not one of the rare circumstances warranting an
interlocutory appeal and that an an immediate appeal would instead unnecessarily delay
the litigation. (Pls.’ Opp’n Mem. at 3–9 [Doc. No. 445].)
III.
DISCUSSION
A.
Legal Standard for Interlocutory Appeals
The Court’s March 27, 2018 ruling was a non-final order. Accordingly, 28 U.S.C.
§ 1292 governs whether it is subject to interlocutory appeal. This statute allows a district
judge to certify a non-final order for interlocutory appeal under the following
circumstances: (1) the order involves a controlling question of law; (2) there exist
substantial grounds for difference of opinion on that question; and (3) the immediate
appeal of the order would advance the ultimate termination of the litigation. 28 U.S.C. §
1292(b). Interlocutory appeals are the exception, however, not the rule. Johnson v.
Jones, 515 U.S. 304, 309 (1995).
An interlocutory appeal can make it more difficult for trial judges to do
their basic job—supervising trial proceedings. It can threaten those
proceedings with delay, adding costs and diminishing coherence. It also
risks additional, and unnecessary, appellate court work either when it
presents appellate courts with less developed records or when it brings
them appeals that, had the trial simply proceeded, would have turned out to
be unnecessary.
Id. Interlocutory appeals are only appropriate in “extraordinary cases” where an appeal
might avoid prolonged and expensive litigation. Union Cty., Iowa v. Piper Jaffray & Co.,
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525 F.3d 643, 646 (8th Cir. 2008). They are “not intended merely to provide review of
difficult rulings in hard cases.” Id. (quoting United States Rubber Co. v. Wright, 359
F.2d 784, 785 (9th Cir. 1966)). The movant “bears the heavy burden of demonstrating
that the case is an exceptional one in which immediate appeal is warranted.” White v.
Nix, 43 F.3d 374, 376 (8th Cir. 1994).
B.
Controlling Question of Law
Defendant asserts that a controlling question of law is present here: whether
compensation for breaks of 20 minutes or less is determined by the bright-line standard of
29 C.F.R. § 785.18 or the “predominantly-for-the-benefit-of-the-employer” standard
(hereafter, “predominant-benefit standard”). (Def.’s Mem. at 3.)
Plaintiffs do not
appear to contest that iQor satisfies this certification factor.
An issue is a controlling question of law if reversal of the district court’s order
would terminate the action, or is “quite likely” to influence the course of the litigation.
Nat’l Union Fire Ins. Co. of Pittsburgh v. Donaldson Co., No. 10-cv-4948 (JRT/TNL),
2015 WL 4898662, at *2 (D. Minn. Aug. 17, 2015) (quoting Century Pac., Inc. v. Hilton
Hotels Corp., 574 F. Supp. 2d 369, 372 (S.D.N.Y. 2008) and Sokaogon Gaming Enter.
Corp. v. Tushie–Montgomery Assocs., Inc., 86 F.3d 656, 659 (7th Cir. 1996)).
As the Court observed in the March 27, 2018 Order, Department of Labor
(“DOL”) regulations address the compensability of various types of employee breaks
under the FLSA, including “rest periods of short duration”—running from five to
approximately 20 minutes—that are compensable, as they “promote the efficiency of the
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employee.” (Mar. 27, 2018 Order at 48–49) (citing 29 U.S.C. § 785.18). The Court
noted that “[a] bright-line rule either applies to the short breaks, in which case the FLSA
Plaintiffs are similarly situated, or it does not, making the employees less likely to be
similarly situated, as individual issues may inform liability.” (Id. at 51.) The Court
applied the bright-line test, but had it ruled to the contrary and applied the predominantbenefit test, such a ruling would have been “quite likely” to influence the course of the
litigation.
See Nat’l Union Fire Ins. Co., No. 10-cv-4948 (JRT/TNL), 2015 WL
4898662, at *2 (citation omitted). Accordingly, the Court finds that the March 27, 2018
Order addresses a controlling question of law.
C.
Substantial Grounds for Differences of Opinion
Defendant argues that conflicting and contradictory opinions on the legal standard
applicable to short breaks, and a lack of Eighth Circuit authority, demonstrate substantial
grounds for difference of opinion. (Def.’s Mem. at 4.)
Substantial grounds for a difference of opinion can exist where “the question is
difficult, novel and either a question on which there is little precedent or one whose
correct resolution is not substantially guided by previous decisions,” or if the question is
one of first impression. Graham v. Hubbs Mach. & Mfg., Inc., 49 F. Supp. 3d 600, 612
(E.D. Mo. 2014), reconsideration denied (Sept. 29, 2014) (quotations omitted).
A
“sufficient number of conflicting opinions” may evidence substantial grounds for
disagreement. White, 43 F.3d at 378. And while a dearth of cases on a particular issue
does not necessarily indicate there are substantial grounds for different opinions, id., a
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lack of such guidance may prompt a court to grant certification. See Gopher Oil Co., Inc.
v. Union Oil Co. of Cal., 757 F. Supp. 998, 1004 (D. Minn. 1991).
A party’s own
“strong disagreement with the [district court’s] ruling,” however, is not substantial
grounds for claiming a difference of opinion. Couch v. Telescope Inc., 611 F.3d 629,
633 (9th Cir. 2010).
In the March 27, 2018 Order, this Court acknowledged a lack of Eighth Circuit
precedent concerning the standard applicable to alleged FLSA violations for short rest
breaks. (See Mar. 27, 2018 Order at 50.) The Court declined to broadly read Henson v.
Pulaski Cnty. Sheriff Dep’t, 6 F.3d 531, 535 (8th Cir. 1993), to stand for the proposition
that a factually-driven analysis is required for all determinations of compensable break
time under the FLSA.
(Mar. 27, 2018 Order at 51–52.)
Rather, the Court found
Henson’s holding limited to meal-period compensation cases, as the Eighth Circuit
expressly stated, “We conclude that the predominantly-for-the-benefit-of-the employer
standard provides the appropriate test for determining the compensability of meal periods
under the FLSA.” (Id. at 52) (citing Henson, 6 F.3d at 534) (emphasis added).
Additionally, the Court recognized other district court authority within the Eighth
Circuit that either applied § 785.18 to short breaks of less than 20 minutes, without
analysis, (id. at 50–51) (citing Petrone v. Werner Enter., Inc., 121 F. Supp. 3d 860, 866
(D. Neb. 2015); Brown v. L&P Indus., LLC, No. 5:04-CV-0379-JLH, 2005 WL
3503637, at *6 (E.D. Ark. Dec. 21, 2005)), or, on the other hand, expanded the holding of
Henson to conclude that the DOL’s regulations are not controlling law in this Circuit and
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that the predominant-benefit test applies to all FLSA compensation questions. (Id. at 51–
52) (discussing Benton v. Labels Direct, Inc., No. 4:14CV01293 ERW, 2014 WL
4724696, at *7 (E.D. Mo. Sept. 23, 2014); Marti v. Grey Eagle Distrib., Inc., 937 F.
Supp. 845, 852 (E.D. Mo. 1996)).
In its Order, the Court also considered the weight that courts are to afford agency
rules and regulations. (Id. at 52–53) It distinguished Henson, in which one of the
reasons for not applying the DOL’s lunch-break regulatory standard was that the DOL
itself had inconsistently applied it. (Id.) (citing Henson, 6 F.3d at 535). Here, however,
the DOL has consistently interpreted the relevant standard, § 785.18, as the Court noted.
(Id.) (citing Dep’t of Labor v. Am. Future Sys., Inc., 873 F.3d 420, 427–28 (3d Cir.
2017), petition for cert. filed, No. 17-995 (Jan. 18, 2018)). Moreover, in Henson, 6 F.3d
at 535, the Eighth Circuit found that applying a bright-line standard would be inconsistent
with Supreme Court authority concerning meal breaks.
The breaks here are not meal
breaks.
Additionally, this Court considered the validity of the DOL’s reasoning with
respect to the compensability of short breaks. (Mar. 27, 2018 Order at 53.) The Court
agreed with the reasoning of the Third Circuit in American Future Systems, in which it
explained that compensation for short rest breaks is consistent with FLSA’s legislative
objective of maintaining employees’ health, efficiency, and general well-being. (Id.)
(citing Am. Future Sys., 873 F.3d at 428).
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With respect to the instant motion, the Court does not find that substantial grounds
for a difference of opinion are present. It is true that in the March 27, 2018 Order, this
Court recognized that district courts within this Circuit have reached differing results
with respect to § 785.18. (See Mar. 27, 2018 Order at 50.) But those different results
largely turned on different questions of fact, as the Court’s ruling made clear. (See id. at
55.) Benton involved a dispute about the very nature of the breaks in question—whether
they were rest breaks or bona fide meal breaks. (Id. at 50) (citing 2014 WL 4724696, at
*1, 7). And the breaks at issue in Marti were 30-minute breaks, not breaks of 20 minutes
or less. (Id. at 55–56) (citing 937 F. Supp. at 848, 852). Yet even so, the court in Marti
observed, “[t]he Secretary of Labor has recognized that breaks of short duration, five (5)
to twenty (20) minutes, are generally viewed as ‘rest periods’ and are compensable.” 937
F. Supp. at 851. Moreover, the two cases in which the district courts applied the brightline standard, Brown and Petrone, included the same issue present here: the
compensability of breaks of 20 minutes or less. See Brown, 2005 WL 3503637, at *6;
Petrone, 121 F. Supp. 3d at 870. The facts of Benton and Marti, as compared to Petrone
and Brown, are simply too distinguishable to support a finding of substantial grounds for
a difference of opinion.
Nor is the Court persuaded that a lack of Eighth Circuit precedent warrants
certification for interlocutory review here.
In Petrone, the Eighth Circuit actually
considered whether to permit a petition for interlocutory appeal of the district court’s
dispositive rulings—including its ruling that short rest breaks of 20 minutes or less are
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compensable under § 785.18. 1 See Petrone, 2015 WL 5156869, at *2 (D. Neb. Aug. 25,
2015).
But the Eighth Circuit summarily denied the employer’s petition to file an
interlocutory appeal, and remanded the matter to the district court. 2 See Petrone, No. 158015 (8th Cir. Sept. 25, 2015). This Court has no reason to believe that the Eighth
Circuit would rule differently now, given the applicability of one of the very same
regulations here.
In sum, the Court finds that iQor has not met its burden of establishing the
existence of substantial grounds for difference of opinion.
D.
Materially Advance the Ultimate Termination of the Litigation
Defendant contends that an interlocutory appeal would materially advance the
ultimate termination of this case because if the predominant benefit test applies, this
action would likely be decertified, leaving only the named Plaintiffs’ individual claims.
(Def.’s Mem. at 6.)
If only those claims remain, iQor believes that resolution via
settlement is “much more likely.” (Id.) Additionally, iQor argues that any delay due to
an interlocutory appeal would “be reduced by the fact that the Court has already granted a
60-day stay of the effective date of its Order, at plaintiffs’ request.” (Id.) But if an
1
The district court had certified interlocutory review of its summary judgment
rulings, citing the lack of Eighth Circuit precedent on the issues addressed therein. See
Petrone, 2015 WL 5156869, at *2 (D. Neb. Aug. 25, 2015).
2
On remand, the employer moved the court to revise its judgment. Because the
employer did not specifically seek reconsideration of the court’s dispositive ruling that
short rest breaks of 20 minutes or less were compensable, the district court declined to
revise its earlier conclusion. Petrone, No. 8:11cv401, 2017 WL 510884, at * 5 (D. Neb.
Feb. 2, 2017). And, in any event, the district court reiterated that short rest periods of 20
minutes or less must be counted as hours worked pursuant to § 785.18. Id.
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interlocutory appeal is not granted, and the case proceeds to trial using the bright-line
rule, iQor argues that the Court and the parties may be required to hold two trials, if the
Eighth Circuit were to later find that the predominant-benefit standard should have been
applied. (Id. at 6.)
When considering whether an interlocutory appeal would materially advance the
termination of the litigation, “the Court must balance the burden certification would
impose on many entities, including the district court and court of appeals.” Nat’l Union
Fire Ins. Co., 2015 WL 4898662 at *4. Moreover, an interlocutory appeal should not be
had where it would do no more to advance termination of the case than simply
proceeding with the litigation. Hartley v. Suburban Radiologic Consultants, Ltd., No. 11cv-2664 (JRT/JJG), 2013 WL 6511847, at *2 (D. Minn. Dec. 12, 2013). The potentially
deleterious impact, both in delay and expense, if the district court’s ruling is upheld on
interlocutory appeal cannot be ignored. Id. at *3; see also Ray v. Union Pac. RR. Co.,
971 F. Supp. 2d 869, 896 (S.D. Iowa 2013) (“Defendant is correct that if this Court
certifies the matter, and if the Eighth Circuit agrees with Defendant’s position . . . this
litigation will end. The Court cannot, however, ignore the reasonable likelihood of an
alternate outcome, namely that the Court of Appeals would affirm this Court’s ruling . . .
. Indeed, if this latter scenario comes to fruition, the litigation in this matter will have
been dramatically and unnecessarily prolonged, at significant expense to both parties, by
an interlocutory appeal.” (emphasis original) (internal quotations omitted)).
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While iQor’s argument that an interlocutory appeal would materially advance the
termination of this litigation has some merit, it concedes that the named Plaintiffs’
individual claims would still remain. Defendant argues that this scenario would likely
spur settlement, but the Court finds this prospect speculative. The fact that the Eighth
Circuit might overturn this Court’s decisions on appeal is no different than the legal
reality facing any litigant—there is always some risk that a decision or award from a
lower court will, or will not, be overturned on appeal. The parties here must weigh their
chances at trial, but also on appeal, in deciding whether or not to settle and for what
amount.
More importantly, the considerable delay and expense for all parties and courts
created by an interlocutory appeal weighs heavily against granting certification. See
Nat’l Union Fire Ins. Co., 2015 WL 4898662 at *4.
If this Court’s rulings are upheld
“the litigation in this matter will have been dramatically and unnecessarily prolonged, at
significant expense to both parties, by an interlocutory appeal.” See Ray, 971 F. Supp. 2d
at 896 (denying certification for interlocutory appeal). The fact that Plaintiffs requested
a 60-day stay primarily for administrative purposes does not in any way lessen the
significant impact of delay were this Court to certify an interlocutory appeal. For all of
these reasons, the Court finds that certification of an interlocutory appeal would not
materially advance this litigation.
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III.
CONCLUSION
The Court finds that iQor fails to meet its heavy burden of demonstrating that the
issue it seeks to certify is so extraordinary that an interlocutory appeal is warranted. See
White, 43 F.3d at 376. It will have the opportunity to challenge the Court’s rulings on
appeal after final judgment is rendered. However, an interlocutory appeal on these issues
would only serve to delay the proceedings and presents the risk of creating piecemeal,
incomplete, and potentially unnecessary appeals. See Johnson, 515 U.S. at 309.
THEREFORE, IT IS HEREBY ORDERED THAT:
1.
Defendant’s Motion to Certify Interlocutory Appeal [Doc. No. 440] is
DENIED.
Dated: May 25, 2018
s/Susan Richard Nelson
SUSAN RICHARD NELSON
United States District Judge
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