Merchant v. Gordmans Stores, Inc.
Filing
46
MEMORANDUM AND ORDER...IT IS HEREBY ORDERED that Plaintiffs' Motion for and Memorandum in Support of Conditional Collective Action Certification (ECF No. 40 ) is GRANTED, in part, and DENIED, in part. IT IS FURTHER ORDERED that Plaintiffs Ste ven Cox and Samuel R. Mason conditionally are authorized to act as class representatives. IT IS FURTHER ORDERED that Stueve, Siegel, Hanson LLP and Shavitz Law Group, P.A. are authorized to act as class counsel. Signed by District Judge Ronnie L. White on 11/28/2016. (NEB)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
STEVE COX and SAMUEL R. MASON,
individually and on behalf of a class of others
similarly situated,
Plaintiffs,
vs.
GORDMANS STORES, INC.,
Defendant.
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No. 4:16CV219 RLW
MEMORANDUM AND ORDER
This matter is before the Court on Plaintiffs' Motion for and Memorandum in Support of
Conditional Collective Action Certification (ECF No . 40). This motion is fully briefed and ready
for disposition.
BACKGROUND
Plaintiffs Steve Cox and Samuel R. Mason ("Plaintiffs") filed a Complaint on February 17,
2016, alleging claims for Violation of the Fair Labor Standards Act of 1938 ("FLSA").
(Complaint ("Compl."), ECF No . 1). Plaintiffs purport to bring this putative collective action on
behalf of a class of Assistant Store Managers ("ASM") employees who worked for Defendant
Gordmans Stores, Inc. ("Gordmans"). Plaintiffs allege that the ASM employees have been
misclassified as "exempt" and denied payment of all of their earned wages and overtime
compensation under the FLSA. (Comp!. ,
~ 3) .
Plaintiffs also allege that Gordmans failed to
maintain accurate records regarding the hours worked by ASM employees. (Compl .,
~15).
The plaintiffs include Named Plaintiffs Steve Cox and Samuel Mason (former ASM
employees) and Opt-in Plaintiff Fallon Strack (a former Operations Assistant Store Manager
("OPS"). Plaintiffs claim that the principal job duty of Gordmans ' ASM employee is customer
service, including sales, merchandising, unloading the trucks, stocking, and inventory. (Compl.,
,-r9). Plaintiffs further assert that their primary duty is not the performance of work related to the
management or general business operations of Gordmans or its customers. (Compl., if l 0). They
contend- that ASMs are not customarily or regularly engaged to perform exempt
supervisory/managerial work, such as hiring, firing, disciplining, budgeting, and scheduling.
(Compl., ifl l).
Plaintiffs allege that ASMs' primary duties do not include the exercise of
discretion an independent judgment with respect to matters of significance. (Compl., if 12).
DISCUSSION
I.
Motion for Conditional Class Certification
A.
Conditional Certification
On August 15, 2016, Plaintiffs filed the instant Motion for and Memorandum in Support of
Conditional Class Certification. (ECF No. 40). Plaintiffs identify the putative class as "All
individuals employed by Gordmans Stores, Inc. as Assistant Store Managers, Assistant Store
Manager Operations, or any Assistant Manager position, however variously titled, from February
18, 2013 through the present." (ECF No. 40-11). Gordmans operated between 93 and 103 stores
in 16 states during the relevant time period. (ECF No. 44 at 7). Each store has between one and
three assistant store managers, based upon sales volume. The putative class of OPS and ASM
employees during the relevant time period is approximately 549 persons. (ECF No. 44 at 7).
Gordmans opposes class certification.
Gordmans claims that conditional class
certification is improper because Plaintiffs have not demonstrated a common policy.
Specifically, Gordmans contends that the proposed class of ASM employees and OPS employees
have different job duties and training manuals and are not "similarly situated" for purposes of a
proposed class. Gordmans claims that Plaintiffs conflate the two groups even though OPS
employees have more managerial authority and paperwork duties.
(ECF No. 44 at 3-5).
Gordmans further states that ASM employees are not similarly situated to one another.
Gordmans argues that, based upon the retail management regulations, retail management
exceptions are necessarily a fact-sensitive inquiry and not appropriate for collective class actions.
(ECF No. 44 at 7-8). 1 Gordmans claims that Plaintiffs' allegations rest on the proposition that
"Gordmans deviated from their internal policies and stated job descriptions and forced Plaintiffs to
perform duties primarily outside of said job descriptions."
original)).
(ECF No. 44 at 8 (emphasis in
Gordmans contends that where Plaintiffs contend that their injury rises from a
deviation from policy, then such claims involve individualized inquiries. (ECF No. 44 at 8-9
(citing Jost v. Commonwealth Land Title Ins. Co., No. 4:08CV734CDP, 2009 WL 211943, at *4
(E.D. Mo. Jan. 27, 2009); Garner v. Regis Corp., No. 03-5037-CV-SW-SWH, 2004 WL 5455905,
1
See 29 C.F.R. §541. 700 (emphasis added):
(a) To qualify for exemption under this part, an employee's "primary duty" must be the
performance of exempt work. The term "primary duty" means the principal, main, major or most
important duty that the employee performs. Determination of an employee's primary duty must be
based on all the facts in a particular case, with the major emphasis on the character of the
employee's job as a whole. Factors to consider when determining the primary duty of an employee
include, but are not limited to, the relative importance of the exempt duties as compared with other
types of duties; the amount of time spent performing exempt work; the employee's relative
freedom from direct supervision; and the relationship between the employee's salary and the wages
paid to other employees for the kind of nonexempt work performed by the employee.
(b) The amount of time spent performing exempt work can be a useful guide in determining
whether exempt work is the primary duty of an employee. Thus, employees who spend more than
50 percent of their time performing exempt work will generally satisfy the primary duty
requirement. Time alone, however, is not the sole test, and nothing in this section requires that
exempt employees spend more than 50 percent of their time performing exempt work. Employees
who do not spend more than 50 percent of their time performing exempt duties may nonetheless
meet the primary duty requirement if the other factors support such a conclusion.
(c) Thus, for example, assistant managers in a retail establishment who perform exempt
executive work such as supervising and directing the work of other employees, ordering
merchandise, managing the budget and authorizing payment of bills may have management
as their primary duty even if the assistant managers spend more than SO percent of the time
performing nonexempt work such as running the cash register. However, if such assistant
managers are closely supervised and earn little more than the nonexempt employees, the
assistant managers generally would not satisfy the primary duty requirement.
at *2 (W.D. Mo. Aug. 5, 2004); Diaz v. Elecs. Boutique ofAm. , Inc., No. 04-CV-0840E(SR), 2005
WL 2654270, at *4 (W.D.N.Y. Oct. 17, 2005); Mike v. Safeco Ins. Co. of Am., 274 F. Supp. 2d
216, 220-21 (D. Conn. 2003)). Gordmans notes that assistant managers do not receive the same
training nationwide and that the duties of OPS and ASM employees vary widely, within the store
and between stores. (ECF No. 44 at 9-10). Gordmans asserts that Plaintiffs have not sufficiently
alleged that their job duties and experiences were similar to the job duties and experience of other
ASM or OPS employees nationwide. (ECF No. 44 at 11-12). Finally, Gordmans contends that
the time frame for identifying the proposed class is improper. Plaintiffs seek to certify a three
year limitations period, which requires a showing of "willfulness."
Gordmans states that
Plaintiffs have not set forth any evidence beyond conclusory allegations in the Complaint that
Gordmans acted "willfully" in violation of the FLSA.
(ECF No. 44 at 13).
In addition,
Gordmans engaged in a corporate restructuring that became effective on July 24, 2016 that
eliminated the ASM and OPS positions; therefore, Gordmans contends that the notice period for
the proposed class should cease on July 24, 2016. (ECF No. 44 at 14-15).
In response, Plaintiffs contend that their proposed class is proper based upon the lenient
burden for conditional class certification.
Plaintiffs cite to several corporate policies that
uniformly apply to all Assistant Managers, regardless of title. (ECF No. 45 at 4). Plaintiffs notes
that Gordmans uses same evaluation form used by Store Managers to evaluate Assistant
Managers; Gordmans uses same evaluation criteria for all Assistant Managers; all Gordmans '
Assistant Managers are paid on a biweekly schedule and on a salary basis; all Assistant Managers
are paid pursuant to the Gordmans' compensation guidelines; Gordmans uses a standard
application form and offer letter for all Assistant Managers; Gordmans provides all Store
Managers the same "hiring toolkit" for hiring all Assistant Managers; and Gordmans uses the same
software (Kronos) to track Assistant Mangers ' Time off. (ECF No. 45 at 4).
Plaintiffs contend
that, based upon the overwhelming record demonstrating the similarly among all Assistant
Mangers, then this Court should conditionally certify this as a class action. Plaintiffs maintain
that the differences that Gordmans identifies are simply minor, inconsequential variations for
purposes of conditional certification. Plaintiffs point out that Gordmans classifies all Assistant
Managers as exempt based upon their singular classification as Assistant Managers, without any
regard to their individual duties or other factors. (ECF No. 45 at 6). As a result, Plaintiffs claim
that Gordmans cannot now claim that the positions should not be treated collectively for purposes
of conditional certification. (ECF No. 45 at 6 (citing Nerland v. Caribou Coffee Co., 564 F. Supp.
2d 1010, 1024 (D. Minn. 2007) ("The Court finds it disingenuous for Caribou, on one hand, to
collectively and generally decide that all store managers are exempt from overtime compensation
without any individualized inquiry, while on the other hand, claiming the plaintiffs cannot proceed
collectively to challenge the exemption."). Plaintiffs also claim that Gordmans did not rebut the
overwhelming evidence--consisting chiefly of Gordmans ' own documents and admissions- that
all Assistant Managers, regardless of title, are similarly situated. (ECF No. 45 at 6-7).
Plaintiffs further maintain that Gordmans is attempting to litigate the merits of the
exemption, which is improper at the conditional certification stage of litigation. (ECF No. 45 at
7-8). Similarly, Plaintiffs assert that Gordmans ' claim that evaluation of the exemption defenses
will require an individualized analysis and, therefore, must fail. In a footnote, Plaintiffs argue
that if the subclasses are too distinct, then the Court can later create and certify two subclasses, one
for each position. (ECF No. 45 at 7, n. 1 (citing Arnold v. Directv, LLC, No. 4:10-CV-352-JAR,
2016 WL 1258579, at *4 (E.D. Mo. Mar. 31 , 2016)).
Plaintiffs likewise assert that they have alleged a willful violation and the FLSA' s three
year statute of limitations should define the temporal scope of the collective action. Plaintiffs
assert that they are not required at this step to provide any evidence of Gordmans' willfulness.
(ECF No. 45 at 9). In the interests of judicial economy, Plaintiffs maintain that the class should
extend the time period of the proposed class back from the filing of the Complaint. (ECF No. 45
at 9-1).
Section 7 of the FLSA mandates that an employer may not subject non-exempt employees
to a work week in excess of forty hours, unless the employee is compensated for his or her
overtime with additional pay of at least one and one-half times his or her regular hourly wage. 29
U.S.C. § 207.
A collective action under the FLSA to recover overtime compensation and
liquidated damages may be maintained, "by any one or more employees for and in behalf of
himself or themselves and other employees similarly situated." 29 U.S.C. § 216(b). Unlike a
Rule 23 class action, a collective action under the FLSA is pursued on an opt-in basis, requiring
employees to provide their consent in writing to join the action. 29 U.S.C. § 216(b); Ford v.
Townsends of Ark., Inc., No. 4:08CV00509BSM, 2010 WL 1433455, at *3 (E.D. Ark. Apr. 9,
2010).
District courts within the Eighth Circuit conduct a two-step analysis to determine whether
employees are "similarly situated." Beasley v. GC Services LP, 270 F.R.D. 442, 444 (E.D. Mo.
2010); Littlefield v. Dealer Warranty Services, LLC, 679 F.Supp.2d 1014, 1016 (E.D. Mo. 2010);
Ford, 2010 WL 1433455, at *3 . "Under this two-step process, the plaintiff first moves for class
certification for notice purposes." Dernovish v. A T&T Operations, Inc., No. 09-0015CVWODS,
2010 WL 143692, at *1 (W.D. Mo. Jan. 12, 2010)(intemal quotations and citation omitted). "The
plaintiffs motion for certification is typically filed at an early stage of the litigation thus requiring
a lenient evaluation standard and typically resulting in conditional certification of a representative
class." Kautsch v. Premier Communications, 504 F.Supp.2d 685, 688 (W.D. Mo. 2007) (citations
omitted). The Court does not reach the merits of the plaintiffs claims at this early stage of
litigation. Id.
If the Court conditionally certifies the class, the potential class members are given
notice and the opportunity to opt-in. Dernovish, 2010 WL 143692, at *l.
The second step of the process occurs when the defendant moves to decertify the class.
Beasley, 270 F.R.D. at 444; Dernovish, at *1 (W.D. Mo. Jan. 12, 2010). This typically is done
after the close of discovery, when the Court has much more information and is able to make a more
informed decision. Dernovish, 2010 WL 143692, at * 1. "At that time, applying a stricter standard,
the court makes a factual determination on the similarly situated question. " Garner v. Regis
Corp., No. 03-5037-CV-SW-SWH, 2004 WL 5455905, at *2 (W.D. Mo. Aug. 5, 2004)(citation
omitted). "Courts will consider three factors at the second stage: (1) the employment and factual
settings of the plaintiffs; (2) the various defenses available to the defendants; and (3)
considerations of fairness , procedure, and manageability." Ford, 2010 WL 1433455, at *3(intemal
quotation omitted). "If the claims are not similarly situated, the Court decertifies that class and the
opt-in plaintiffs are dismissed without prejudice." Garner, 2004 WL 5455905, at *2 ((citation
omitted).
For the first step of the process, the FLSA does not define the term "similarly situated."
Kautsch, 504 F.Supp.2d at 689; Garner, 2004 WL 5455905 , at *2. Courts agree that a plaintiffs
burden at the first stage of the process is not onerous, however, and "plaintiffs can meet this burden
by making a modest factual showing sufficient to demonstrate that they and potential plaintiffs
together were victims of a common policy or plan that violated the law." Kautsch , 504 F.Supp.2d
at 689 (citations omitted); Ford, 2010 WL 1433455, at *3 ("A class is similarly situated at this
stage if plaintiffs make a modest factual showing, based upon the pleadings and affidavits, that the
proposed class members were victims of a single decision, policy, or plan."); Dernovish, 2010 WL
143692, at * 1 ("There is no need to show that the would-be members of the class are actually
similarly situated or that they are identical, but the plaintiff must present some evidence to
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demonstrate the class members are similar in important respects and are subjected to similar
policies or circumstances."). A plaintiff may meet this burden by "detailed allegations supported
by affidavits." Kautsch, 504 F.Supp.2d at 689 (citation omitted).
Upon consideration and as discussed herein, the Court finds that, given the lenient notice
standard, Plaintiff has met her burden to show conditional certification is proper. Kautsch, 504
F.Supp.2d at 690. Based upon the depositions and as discussed herein, Plaintiff has established
the existence of a common, nationwide policy that violates the FLSA. Gordmans' purported
policy requires non-exempt employees to act as salaried employees. Plaintiff specifically alleges
that they, and other similarly situated employees, were denied compensation as a result of this
illegal policy. Cf Wacker v. Pers. Touch Home Care, Inc., 4:08CV93 CDP, 2008 WL 4838146,
at *3-4 (E.D. Mo. Nov. 6, 2008)(denying conditional class certification where the plaintiffs failed
to testify that they personally were denied compensation or provide any competent evidence of a
company-wide policy).
The Court holds that Plaintiff has provided a sufficient basis for finding that a common,
unlawful decision, policy, or plan existed during the relevant time period. As stated, "plaintiffs
must establish a colorable basis for their claim that the class members were the victims of a single
decision, policy, or plan."
Wacker, 2008 WL 4838146, at *2.
Plaintiff has provided the
depositions of two ASM employees and one OPS employee in different states who all experienced
the common policy of being categorized as nonexempt, salaried employees.
The Court finds that the majority of Gordmans' objections relate to the Plaintiffs'
credibility, which is improper at this juncture. See Arnold v. DirecTV, Inc., No. 4: 1O-CV-352-JAR,
2012 WL 4480723, at *2 (E.D. Mo. Sept. 28, 2012)("The Court will not make any credibility
determinations or findings of fact with respect to contradictory evidence presented by the parties at
this initial stage."). Although Gordmans asks the Court to discount the deposition testimony
based upon the fact that they do not have the knowledge of other stores, such a finding is not
possible at the conditional class certification stage.
Moreover, the Court finds sufficient indicia of an unlawful policy based upon the
depositions, particularly given the low burden at this early stage of the proceedings. The Court
finds that the depositions provide a colorable basis for Plaintiffs' claim that the class members
were the victims of a single decision, policy, or plan. Although the depositions are from different
offices, they all describe a common company policy that Assistant Managers perform manual
labor. All of the depositions indicate that the Plaintiffs were paid on a salaried basis, despite
performing extensive manual labor.
Likewise, all of the Plaintiffs state that they were not
properly compensated as a result of this company policy. Further, the Court will not limit the
notice period of the proposed class until July 29, 2016, as suggested by Gordmans. At this point,
it is unclear if the policy changed at that time and what impact, if any, that change had on the
putative class. At decertification, the parties can allege that Assistant Managers should be
excluded after that date. The Court also agrees that, if necessary, it can separate the class into two
separate classes during the decertification process. See Arnold v. Directv, LLC, No.
4:10-CV-352-JAR, 2016 WL 1258579, at *4 (E.D. Mo. Mar. 31, 2016). Finally, the Court holds
that Plaintiffs properly alleged willfulness sufficient to satisfy the three year notice period.
Gordmans can dispute willfulness at the second, decertification stage. Based upon the foregoing,
the Court grants Plaintiffs' Motion for and Memorandum in Support of Conditional Collective
Action Certification for all Assistant Managers who have worked at any time for the period of
three (3) years from the date of this Order.2
B.
2
Proposed Notice
The Court certifies a class that extends three years from the date of this Order. Of course,
this is an interlocutory order and the time frame may change.
Gordmans takes issue with several aspects of the proposed notice.
1. Page 1 of the Notice
Gordmans claims that the balded language on the first page of Plaintiffs' proposed notice
form-"This is a Court-Authorized Notice and is not a Solicitation from a Lawyer"-is
misleading as to both Plaintiffs' counsels' and the Court's involvement. (ECF No. 44 at 15).
Instead, Gordmans suggests the following disclaimer replace that language:
THIS NOTICE IS FOR THE SOLE PURPOSE OF DETERMINING THE
IDENTITY OF THOSE PERSONS WHO WILL BE INVOLVED IN THE
LAWSUIT. THE DISTRICT COURT FOR THE EASTERN DISTRICT
OF MISOURI EXPRESSES NO OPINION REGARDING THE MERITS OF
THE PLAINTIFFS' CLAIMS OR GORDMANS' DEFENSES. THERE IS
NO ASSURANCE AT THIS TIME THAT ANY RELIEF WILL BE
GRANTED, NOR IF GRANTED, THE NATURE AND AMOUNT OF
RELIEF.
(ECF No. 44 at 15 (citing Huang v. Gateway Hotel Holdings, 248 F.R.D. 225, 229 (E.D. Mo.
2008); Harvey v. AB Electrolux, 857 F. Supp. 2d 815, 819 (N.D. Iowa 2012)). Plaintiffs do not
respond to this argument.
The Court agrees with Gordmans that greater detail is required to inform potential class
members of the purpose of the notice. The Court, however, finds that the last sentence of
Gordmans' proposed revision is argumentative. Therefore the Court orders that the following
language should be included in the notice:
THIS NOTICE IS FOR THE SOLE PURPOSE OF DETERMINING THE
IDENTITY OF THOSE PERSONS WHO WILL BE INVOLVED IN THE
LAWSUIT. THE DISTRICT COURT FOR THE EASTERN DISTRICT
OF MISOURI EXPRESSES NO OPINION REGARDING THE MERITS OF
THE PLAINTIFFS' CLAIMS OR GORDMANS' DEFENSES.
2. Page 3 of the Notice
Gordmans also critiques that the proposed notice does not disclose that the opt-in plaintiffs
may be responsible for Gordmans' costs if it prevails in the lawsuit. (ECF No. 44 at 16).
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Gordmans states that the proposed notice does not inform potential class members that they may
be required to travel to St. Louis, Missouri for depositions and/or trial in order to fully apprise
them of their obligations in joining the lawsuit.
In response, Plaintiffs contend that courts in this District and in the Eighth Circuit
consistently reject Gordmans ' proposed language that the parties may be responsible for litigation
costs because it is "antithetical to the remedial purposes of the FLSA" for potential class members
to be told that they may have to pay litigation costs. (ECF No. 45 at 10-11 ).
The Court holds that Plaintiffs are not required to notify potential opt-in plaintiffs that they
might be liable for certain cost or to travel for depositions. The Court believes that such notice
language would have a cooling effect on participation in the class and is contrary to the purpose of
the FLSA.
3. Page 4 of the Notice
Gordmans argues that Plaintiffs should not be permitted to include any references to their
counsels' websites regarding the pending action. Gordmans states that the Court should control
the information provided in the notice and the message conveyed to prospective class members.
Gordmans contends that referencing the website allows content to be communicated to proposed
class members without the Court' s review. (ECF No. 44 at 17).
Plaintiffs maintain that Gordmans ' objection to the inclusion of Plaintiffs' counsels'
websites with their contact information on the notice is without merit. (ECF No. 45 at 12).
Plaintiffs claim that collective members should be provided this information so that they can learn
about the attorneys who will be representing them if they elect to opt into this action.
The Court holds that inclusion of Plaintiffs' counsels' website is not appropriate.
Plaintiffs' counsels' website contains a lot of information that is extraneous to this lawsuit and not
relevant to providing notice to potential opt-in plaintiffs.
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4. Contact Information, Social Security Numbers, Methods of Dissemination
Plaintiffs have requested that Gordmans provide the following information for putative
class members: (1) names and dates and locations of employment; (2) addresses and telephone
numbers; (3) email addresses; and (4) social security numbers.
Gordmans claims that the
information requested is overbroad. (ECF No. 44 at 17). Gordmans contends that this requested
information is intrusive on putative class members ' right to privacy. Gordmans asserts that
telephone numbers and email addresses are private information.
Gordmans maintains that
communication with potential class members by telephone and/or email improperly invades the
province of this Court to control the manner and method by which notice of this lawsuit is
communicated to potential class members and the neutrality of that notice. (ECF No. 44 at 18).
Likewise, Gordmans contends that social security numbers are highly sensitive and not relevant to
disseminating notice. (ECF No. 44 at 19). Finally, Gordmans contends that Plaintiffs' proposed
methods of dissemination of notice other than U.S. mail, are duplicative, unnecessary, and
confusing.
Plaintiffs assert that Courts routinely approve multiple methods of communication because
the goal of notice is to ensure that the notice is actually received by the members of the collective
class action. (ECF No. 45 at 12-13 ). Plaintiffs maintain that the Court should order production of
all the contact information requested by Plaintiffs. Plaintiffs state that the purpose of obtaining
full contact information is to further ensure that notice actually is delivered and received.
The Court holds that Gordmans shall provide the following information regarding putative
class members: (1) names and dates of employment, (2) addresses, and (3) email addresses. The
Court holds that providing the putative class members ' telephone numbers and social security
numbers is too intrusive and not relevant to providing notice. See Martinez v. Cargill Meat Sols.,
265 F.R.D. 490, 501 (D. Neb. 2009) (There is "no evidence supporting plaintiffs' request for
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personal phone numbers or highly sensitive identification information such as social security
numbers").
Accordingly,
IT IS HEREBY ORDERED that Plaintiffs' Motion for and Memorandum in Support of
Conditional Collective Action Certification (ECF No. 40) is GRANTED, in part, and DENIED,
in part.
IT IS FURTHER ORDERED that Plaintiffs Steven Cox and Samuel R. Mason
conditionally are authorized to act as class representatives.
IT IS FURTHER ORDERED that Stueve, Siegel, Hanson LLP and Shavitz Law Group,
P.A. are authorized to act as class counsel.
IT IS FURTHER ORDERED that Plaintiffs' proposed notice is APPROVED, subject to
the changes outlined above.
IT IS FURTHER ORDERED that Gordmans shall provide Plaintiffs' attorneys with the
names and current or last known mailing addresses of all employees who may be potential
plaintiffs in this suit on or before January 2, 2017.
IT IS FINALLY ORDERED that on or before January 17, 2017, Plaintiffs' counsel
shall mail and/or email out the notice to the putative class members.
Dated this
cf<~
~
day of November, 2016.
~~~
RONNIE L. WHITE
UNITED STATES DISTRICT JUDGE
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