HODZIC v. FEDEX PACKAGE SYSTEM, INC.
Filing
46
MEMORANDUM OPINION indicating that, for reasons more fully stated within, Plaintiffs' Motion for Conditional Certification 35 is granted, in part, and denied, in part. An appropriate Order follows. Signed by Judge Nora Barry Fischer on 10/26/16. (jg)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA
SANEL HODZIC, and DAMIR MECAN, on
behalf of themselves and others similarly
situated,
Plaintiffs,
v.
)
)
)
)
)
)
)
)
FEDEX PACKAGE SYSTEM, INC.,
Defendant.
Civil Action No. 15-956
MEMORANDUM OPINION
I. INTRODUCTION
This is a proposed nationwide collective action brought by Plaintiffs Sanel Hodzic and
Damir Mecan against Defendant FedEx Package System, Inc., (“FedEx”), alleging that FedEx
violated the Fair Labor Standards Act, (“FLSA”), by failing to pay overtime compensation to
certain delivery drivers who were authorized representatives under Standard Operating
Agreements (“contractors”) with FedEx. (Docket No. 18). Presently before the Court is a
contested motion filed by Plaintiffs seeking conditional certification of a proposed collective
action to include all contractors “who worked [as] single route package delivery drivers for
FedEx in the United States from April 22, 2013 to the present, and who at any time drove a truck
weighing less than 10,001 pounds.” (Docket No. 36 at 15). Neither party requested oral
argument. As the Motion has been fully briefed, it is now ripe for disposition. (Docket Nos. 35,
36, 39, 42, 45). After careful consideration of the parties’ arguments, and for the following
reasons, Plaintiffs’ Motion [35] is granted, in part, and denied, in part.
1
II. BACKGROUND
A. FedEx Operations and Business Model
FedEx is an international logistics company that provides many types of shipping
services to its clients and operates a number of different divisions. (Docket No. 39-9 at ¶ 4).
Relevant here, FedEx maintains a Home Delivery division wherein drivers are primarily used to
deliver packages from a designated terminal station to residential homes. (Id. at ¶ 5). FedEx
also has a Ground Division that specializes in business-to-business shipping wherein drivers are
generally utilized to both deliver packages from a designated terminal station to the businesses,
and to pick-up packages from the businesses and return them to the designated terminal station.
(Id.).
FedEx has changed its business model vis-à-vis these delivery drivers several times over
the past decade in response to numerous lawsuits alleging that FedEx committed violations of
federal and state wage and hour laws by misclassifying the drivers as independent contractors.
(Docket No. 39-1 at ¶¶ 4-8). Starting in May of 2010, FedEx replaced its prior independent
contractor model with an “all-incorporated” business model whereby FedEx only contracts with
authorized representatives of incorporated businesses, i.e., “contracted service providers,” to
provide delivery driver services for its Ground and Home Delivery divisions. (Id.; Docket No.
39-9 at ¶¶ 3, 8, 10). As FedEx no longer enters into independent contractor agreements with
individuals to provide these types of services, it considers all delivery drivers to be employees of
the contracted service providers and not employees of FedEx. (Docket No. 39-9 at ¶ 11).
Indeed, FedEx expressly sets forth in its Standard Operating Agreements that it is the
responsibility of the contracted service providers to pay overtime compensation to their
employees. (Docket No. 39-1 at ¶¶ 16-17).
2
Under the “all-incorporated” business model, FedEx has entered into agreements with
contracted service providers that are effectively owner/operators with a single work area or
delivery route serviced by a single employee-driver.
(Docket No. 39-9 at ¶ 10).
Some
contractors that operate a single work area or route also employ a second or “supplemental”
driver. (Id. at ¶ 14). In other instances, the business owner is not a delivery driver but simply
manages the business in a more traditional sense, hiring others to drive. (Id. at ¶ 15). Some
contracted service providers offer both Ground and Home Delivery services; others offer only
one type of service. (Id. at ¶ 6).
FedEx is in the process of transitioning from the “all-incorporated” business model to an
“ISP model” under which the contractor entities are required to maintain a certain number of
employee drivers and take on a certain number of routes. (Docket No. 36 at 6; 39-9). This
transition has been implemented on a state-by-state basis and took place in Pennsylvania in late
2015. (Id.). FedEx proffers that it has preliminarily identified 2,355 contracted service providers
who were assigned a single work area or a single work area with a supplemental driver across its
thirty-three non-ISP states from April 2013 until the present. (Docket No. 39 at 17-19).
B. FedEx Standard Operating Agreements
As noted, FedEx enters into detailed Standard Operating Agreements with entities
providing delivery services to its Ground and Home Delivery divisions. (See e.g., Docket No.
39-10). FedEx does not contest that the terms and conditions of these agreements are the same
nationwide. (See Docket Nos. 39-1; 39-9). The named Plaintiffs provided services for entities
that contracted with the Home Delivery division and the record contains those agreements.1 (Id.).
1
The Court notes the form agreements that Fed Ex’s Ground division utilizes are not in the record because
there are no opt-in Plaintiffs in this case and neither of the Plaintiffs have driven for the Ground Division.
3
The relevant provisions of the Home Delivery division Standard Operating Agreements include
the following:
Both [FedEx] and Contractor intend that Contractor will provide
[…] services strictly as an independent contractor, and not as an
employee of [FedEx] for any purpose. Therefore, this Agreement
will set forth the mutual business objective of the two parties
intended to be served by this Agreement – which are the results the
Contractor agrees to seek to achieve – but the manner and means
of reaching these results are within the discretion of the Contractor,
and no officer or employee of [FedEx] shall have the authority to
impose any term or condition on Contractor or on Contractor’s
continued operation which is contrary to this understanding.
(Docket No. 39-10 at 5).
The Agreements detail that the Contractor is responsible to: provide
vehicular equipment in accordance with all applicable laws; maintain such equipment at its own
expense; bear all other operating costs and expenses; mark the vehicle with FedEx approved
logos; utilize the vehicle only for delivering FedEx packages while in service; maintain logs,
records and shipping documents; adhere to an agreed standard of service, including meeting
customer service requirements; employ qualified individuals to act as drivers and require them to
wear FedEx-approved uniforms; and demand that such drivers safely operate their vehicles. (Id.
at ¶¶ 1.1-1.13; 2.1; 2.2). With that said, the Agreements note that the Contractor:
shall be responsible for exercising independent discretion and
judgment to achieve the business objectives […] and no officer,
agent or employee of [FedEx] shall have the authority to direct
Contractor as to the manner or means employed to achieve such
objectives and results. For example, no officer, agent or employee
of [FedEx] shall have the authority to prescribe hours of work,
whether or when the Contractor is to take breaks, what route the
Contractor is to follow, or other details of performance.
(Id. at ¶ 1.14). The Contractor agrees to maintain insurance, including work accident and/or
workers’ compensation insurance, for all of its employees. (Id. at ¶¶ 3.1-3.6). The parties
stipulate that the Contractor provide services within a primary service area or route, as assigned
4
by Fed Ex. (Id. at ¶ 6). The Agreements also set forth settlement and payment procedures, the
term and renewals thereof, as well as termination provisions. (Id. at ¶¶ 4, 6, 8). Finally, the
Agreements are to be construed with reference to Pennsylvania law.2 (Id. at ¶¶ 10-16).
In addition to the base agreement, there are several Addenda. Addendum 16 specifies the
terms and conditions of the “Contractor as a Corporate Entity and Employer.” (Docket No. 3910 at 26). These provisions require that the Contractor:
use only personnel that Contractor ensures are treated as
employees of Contractor (“Contractor Personnel” or “Personnel”)
for all payroll, tax, withholding, insurance and other purposes
under applicable law. Contractor agrees that neither it nor any of
its Personnel are to be treated as or considered to be FedEx
Ground’s employees for any purpose . . . .
(Id. at ¶ 2). Later terms specify that the Contractor:
assume sole responsibility . . . for compliance with all applicable
federal, state and local laws, including without limitation, wage
payment, final payment of wages, required withholdings from
wages, deductions, overtime, and rest and meal periods, and, at the
request of FedEx Ground, provide evidence of such compliance.
(Id. at ¶ 2.3). It also obligates the Contractor to designate an “authorized officer” to deal with
FedEx with respect to modifications of the terms of the agreement as well as a “business contact”
who is permitted to deal with FedEx personnel as to day-to-day operations.3 (Id. at ¶ 6).
C. Delivery Drivers Hodzic and Mecan and their Businesses
Plaintiffs Sanel Hodzic and Damir Mecan were both authorized officers of entities
functioning pursuant to Standard Operating Agreements out of a FedEx terminal in Sewickley,
Pennsylvania. (Docket No. 36-1 at ¶ 1; 36-2 at ¶ 2; 39-9 at ¶¶ 2-3). The parties agree that they
each signed Standard Operating Agreements containing the relevant terms noted above, among
2
There are also a series of standard contract provisions that are not directly relevant at this time. (Docket
No. 39-10 at ¶¶ 10-16).
3
There are terms governing the assignment of the Standard Operating Agreement to another entity approved
by FedEx, among other things.
5
others. (Id.). In this regard, Hodzic signed one on behalf of his company, Sanel, Inc., on
February 4, 2014 for a service area in Penn Hills, Pennsylvania. (Docket Nos. 36-1 at ¶¶ 3; 363). Mecan signed a Standard Operating Agreement on behalf of his company, Mecan, Inc. on
April 16, 2013 for a service area “near Pittsburgh.” (Docket No. 36-2 at ¶ 3). They purchased
trucks with gross vehicle weights below 10,001 pounds; affixed the required FedEx logos on
same; wore FedEx uniforms that they were required to purchase while making deliveries; carried
FedEx scanners to track packages; picked up and delivered packages in accordance with their
respective agreements during the relevant time-frame; and uploaded scanner data to FedEx’s
system as required. (See Docket Nos. 36-1; 36-2).
Plaintiffs maintain that FedEx employees at the Sewickley terminal controlled many
aspects of the day-to-day operations. For example, they were not able to decline to deliver
packages or to negotiate the delivery fee for such parcels. (Id.). Plaintiffs, who worked five or
six days per week, were required to arrive at the Sewickley terminal around 6:00 a.m. or 7:00
a.m. each day. (Id.). They also were mandated to attend safety meetings and report customer
service problems to designated FedEx staff. (Id.). More specifically, Mecan states that FedEx
employees would squeeze numerous packages onto his fully loaded truck; that he was required to
wait for late packages prior to leaving the facility; and that he paid into a program set up by
FedEx that provided a substitute driver to service his route while he took vacations. (Docket No.
36-2 at ¶¶ 10, 12). Plaintiffs contend that they worked fifty hours per week during the relevant
time frame, were paid on a per delivery basis and, thus, were not paid any overtime
compensation for hours worked in excess of forty. (Id.).
In their strikingly similar declarations, Plaintiffs each note that they believe that there
were approximately fifty Home Delivery drivers working out of the Sewickley terminal during
6
the relevant time frame who drove trucks weighing less than 10,001 pounds. (Docket Nos. 36-1;
36-2). Of these drivers, they believe that ten to twelve of them were also single route drivers.
(Id.). Both of them also explain, verbatim, that:
Because I saw these other drivers each day and attended meetings
with them, I observed that all of these single route contractors also
worked at least five days per week and regularly worked more than
forty hours per week, just as I did. These individuals also did not
receive any overtime pay.
…
I observed that all drivers at my terminal were treated alike. We
were all told we were subject to the same rules and policies, safety
standards, and dress standards. I personally observed that all of the
drivers were treated just like I was as I saw these drivers on a daily
basis, attended meetings with them, and worked alongside them as
they loaded their packages each day.
(Docket Nos. 36-1 at ¶¶ 14, 16; 36-2 at ¶¶ 13-14). Hodzic adds that “I understand that there
were other FedEx terminals in Pennsylvania that operated the same way, because some
contractors from the Sewickley terminal later moved to provide work from other terminals.”
(Docket No. 36-1 at ¶ 15). There is no other information in the record concerning any other
activities by these Pennsylvania drivers working at locations other than the Sewickley terminal.
The record is also devoid of any evidence concerning drivers working outside of Pennsylvania or
in any of the other thirty-two states where FedEx has not yet transitioned to its ISP model.
In opposition, FedEx points to the terms of the Standard Operating Agreements and other
correspondence between Plaintiffs and FedEx, (including certifications, applications and the
like), wherein Plaintiffs state that they were operating “businesses” that had their own
employees.
(See Docket Nos. 39-1:39-11).
FedEx also relies upon the changes to the
composition of Sanel, Inc. and Mecan, Inc. throughout the relevant time period. (Docket Nos.
39, 45).
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To this end, Sanel, Inc. “operated at times” with Hodzic as the only driver for a single
route but at other times had a supplemental driver servicing that route in addition to him.
(Docket No. 39-9 at ¶ 16). Sanel, Inc. also operated multiple routes briefly during 2014 as it
obtained an additional primary service area from another entity, Hodzic, Inc. – owned by Arnel
Hodzic, who is not a plaintiff here. (Id. at ¶¶ 17, 19). This area was later assigned back to
Hodzic, Inc. (Id.). More recently, in February and March of 2016, Sanel, Inc. acquired three
additional service areas and has been operating in a total of 4 service areas.
(Id. at ¶ 20).
Naturally, Sanel, Inc. employed multiple drivers to service these additional areas. (Id. at ¶¶ 15,
21). Hodzic expanded his business in this manner because he was told in 2015 that FedEx was
transitioning to an ISP model and that he needed to purchase five routes, or the equivalent of 500
stops per week. (Docket No. 36-1 at ¶ 17). Otherwise, he explains his contract would not be
renewed by FedEx in April of 2016. (Id.).
With respect to Mecan, Inc., FedEx contends that its records show that it operated with
Mecan as the only driver at times and at other times also had a supplemental driver for that single
route. (Docket No. 39-9 at ¶ 16). In December of 2015, Mecan, Inc. assigned its territory to
Hodzic, Inc. (Id. at ¶ 17). Mecan now works as a driver for a different contracted service
provider. (Id.).
D. Relevant Procedural History
Plaintiff Sanel Hodzic initiated this FLSA collective action against FedEx on July 23,
2015. (Docket No. 1). A few weeks later, Damir Mecan filed his consent to opt in, joining the
lawsuit. (Docket No. 3). An Amended Complaint was then filed on August 11, 2015, naming
both Hodzic and Mecan as Plaintiffs. (Docket No. 4). In October of 2015, FedEx moved to
dismiss the Amended Complaint under Rule 12(b)(6). (Docket Nos. 6, 7). After accepting
8
briefing from the parties, the Court ordered that Plaintiffs file a Second Amended Complaint
setting forth all applicable facts supporting their causes of action.
(Docket Nos. 12-17).
Plaintiffs filed their Second Amended Complaint on December 15, 2015. (Docket No. 18).
FedEx responded by submitting its Answer on December 29, 2015. (Docket No. 19).
The Court held a case management conference in February of 2016 and ordered the
parties to conduct limited discovery and deferred its mandatory referral of this case to
Alternative Dispute Resolution until the disposition of anticipated proceedings related to
conditional certification.
(Docket Nos. 25, 26).
Plaintiffs filed the pending motion, their
supporting brief, and evidence on April 22, 2016. (Docket Nos. 35, 36). After receiving an
extension of time, FedEx responded with a brief in opposition and counter evidence on June 6,
2016. (Docket No. 39). The Court granted the parties leave to submit reply and sur-reply briefs,
with Plaintiffs filing their reply on June 24, 2016 and FedEx filing its sur-reply on June 29, 2016.
(Docket Nos. 42, 45). Neither party requested oral argument. As the motion is fully briefed, it is
now ripe for disposition.
III. LEGAL STANDARD
Section 216(b) of the FLSA authorizes employees to bring an action on behalf of
themselves and others “similarly situated.” 29 U.S.C. § 216(b).
An action to recover the liability . . . may be maintained against any employer
(including a public agency) in any Federal or State court of competent jurisdiction
by any one or more employees for and in behalf of himself or themselves and
other employees similarly situated. No employee shall be a party plaintiff to any
such action unless he gives his consent in writing to become such a party and such
consent is filed in the court in which such action is brought.
Id.
Courts follow a two-tiered analysis in determining whether a case may move forward as a
collective action. Symczyk v. Genesis HealthCare Corp., 656 F.3d 189, 192 (3d Cir. 2011), rev’d
9
on other grounds, 133 S. Ct. 1523 (2013). The first phase, or “notice” phase, requires that a
court “make[] a preliminary determination whether the employees enumerated in the complaint
can be provisionally categorized as similarly situated to the named plaintiff.” Id. If the plaintiff
carries this burden, the collective action is “conditionally certified” for purposes of notice and
discovery. Id. The second phase is addressed after all similarly situated employee members
have had an opportunity to opt in and further discovery has taken place. Zavala v. Wal-Mart
Stores, Inc., 691 F.3d 527, 534 (3d Cir. 2012). At this “more stringent” stage, the plaintiff must
show by a preponderance of the evidence that the class members are similarly situated. Id.
Articulating the differences in these two stages of the collective action certification analysis, the
Third Circuit has explained that the initial step of conditional certification asks whether similarly
situated plaintiffs do, in fact, exist; by contrast, the second stage asks whether the specific
plaintiffs who have opted-in are, in fact, similarly situated to the named plaintiffs. Id. at 536 n.4
(quoting Myers v. Hertz Corp., 624 F.3d 537, 555 (2d Cir. 2010)).
Conditional certification poses a lower threshold, requiring a “modest factual showing”
that the proposed plaintiffs are similarly situated. Symczyk, 656 F.3d at 192-93. This standard is
not particularly high—it merely calls for “some evidence, ‘beyond mere speculation,’ of a
factual nexus between the manner in which the employer’s alleged policy affected her and the
manner in which it affected the other employees.” Id. at 193 (citing Smith v. Sovereign Bancorp,
Inc., Civ. A. No. 03-2420, 2003 WL 22701017, at *3 (E.D. Pa. Nov. 13, 2003)). Generally,
plaintiffs meet the standard by producing some evidence indicating common facts among the
parties’ claims, and/or a common policy affecting all the collective members. 7B Wright, Miller,
& Kane, Federal Practice and Procedure: Civil § 1807, at 489–90 (3d ed. 2005).
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IV. DISCUSSION
Plaintiffs Hodzic and Mecan seek conditional certification of a proposed nationwide
collective action of delivery drivers challenging FedEx’s alleged misclassification of them as
contractors rather than as employees and thereby failing to pay overtime compensation to which
Plaintiffs believe they are entitled under the FLSA. (Docket Nos. 35, 36, 42). Beyond Plaintiffs,
who both delivered packages out of the Sewickley, Pennsylvania FedEx terminal, no other
individuals have joined this lawsuit, by filing opt-in notices or otherwise. (See Docket Report,
Civ. A. No. 15-956). More specifically, Plaintiffs pursue certification of a putative class defined
as:
[a]ll individuals who 1) either individually or through a business
entity entered into a FedEx Operating Agreement to deliver
packages on behalf of FedEx in the United States; 2) operated a
vehicle weighing less than 10,001 pounds at any time; 3) drove
that vehicle on a full-time basis any time from April 22, 2013 to
the present; and 4) worked as “single work area” or “single work
area with a supplemental” delivery driver.
(Docket No. 35-2). FedEx asserts that Plaintiffs’ proposed collective action could include
approximately 2,355 individuals across thirty-three different states.
(Docket Nos. 39, 45).
FedEx contests conditional certification, arguing initially that Plaintiffs have failed to meet their
burden to demonstrate that there are similarly situated individuals because it has no driveremployees under the challenged “all-incorporated” business model. (Id.) FedEx alternatively
maintains that even if similarly situated individuals are located, conditional certification should
be denied because there are too many individualized issues pertaining to potential plaintiffs that
would make it difficult to litigate the FLSA claims on a class-wide basis.
(Id.).
Although the Court is not yet in a position to decide the ultimate merits of Plaintiffs’
overtime claims, the initial step is to define the claims at issue. See Dunkel v. Warrior Energy
11
Servs., Inc., 304 F.R.D. 193, 199 (W.D. Pa. Dec. 23, 2014) (citation omitted) (“The Court notes
at the outset that it is not to consider the disposition of the merits of the claims. Nevertheless, it is
necessary to look at what the claims are in order to decide whether other employees are
‘similarly situated’ for the purposes of notice.”). The FLSA establishes federal “‘overtime
guarantees that cannot be modified by contract.’” Davis v. Abington Memorial Hosp., 765 F.3d
236, 241 (3d Cir. 2014) (quoting Symczyk, ___ U.S. ____, 133 S.Ct. at 1527)). Relevant here, an
employer must pay its employees “one and one-half times the employer’s regular wage for hours
worked in excess of forty hours per week.” Id. (citing 29 U.S.C. § 207). The parties do not
contest that truck drivers operating vehicles with gross weights less than 10,001 pounds are
generally not exempt from FLSA overtime requirements. See, e.g., Dunkel, 304 F.R.D. at 199200 (explaining the relevant exemptions regarding truck drivers operating vehicles weighing
more than 10,000 pounds).
Hence, the central dispute in this matter is whether there is an employer-employee
relationship between Plaintiffs, any potential opt-ins, and FedEx. (See Docket Nos. 36, 39, 42,
45). As the Court of Appeals has explained:
[o]ur first inquiry in most FLSA cases is whether the plaintiff has
alleged an actionable employer-employee relationship. An
“employer” is “any person acting directly or indirectly in the
interest of an employer in relation to an employee....” [29 U.S.C.] §
203(d). An “employee” is “any individual employed by an
employer.” Id. § 203(e)(1). To “employ” means “to suffer or
permit to work.” Id. § 203(g). As we have recently recognized, the
breadth of these definitions is both intentional and obvious: When
determining whether someone is an employee under the FLSA,
“economic reality rather than technical concepts is to be the test of
employment.” Under this theory, the FLSA defines employer
“expansively,” and with “striking breadth.” The Supreme Court
has even gone so far as to acknowledge that the FLSA’s definition
of an employer is “the broadest definition that has ever been
included in any one act.” In re Enterprise Rent–A–Car Wage &
12
Hour Emp't Prac. Litig., 683 F.3d 462, 467-68 (3d Cir. 2012)
(citations omitted).
Thompson v. Real Estate Mortgage Network, 748 F.3d 142, 148 (3d Cir. 2014). This Court next
turns to the “economic realities test,” as delineated by the Court of Appeals:
1) the degree of the alleged employer’s right to control the manner
in which the work is to be performed; 2) the alleged employee’s
opportunity for profit or loss depending upon his managerial skill;
3) the alleged employee’s investment in equipment or materials
required for his task, or his employment of helpers; 4) whether the
service rendered requires a special skill; 5) the degree of
permanence of the working relationship; 6) whether the service
rendered is an integral part of the alleged employer’s business.
Martin v. Selker Bros., Inc., 949 F.2d 1286, 1293 (3d Cir. 1991) (quotation omitted).4 To prevail
on the merits of their claims, Plaintiffs must show that these factors, on balance, weigh in favor
of them being deemed employees. Id.
Returning to the conditional certification issues, it is Plaintiffs’ burden to make a “modest
factual showing” that there is “a factual nexus between the manner in which the employer’s
alleged policy affected Plaintiffs and the manner in which it affected other employees.”
Symczyk, 656 F.3d at 195. As Judge Hornak of this Court has cogently explained, “[i]n other
words, Plaintiffs must show three things: (1) an employer policy, (2) that affected the Plaintiffs
in a particular way, and (3) that also affected other employees in a similar way.” Dunkel, 304
F.R.D. at 201.
4
The Court also notes that the Third Circuit has explained that:
[u]nder the FLSA, multiple persons or entities can be responsible for a single
employee’s wages as “joint employers” in certain situations. 29 C.F.R. § 791.2.
One such scenario occurs where both employers “exert significant control” over
the employee, N.L.R.B. v. Browning–Ferris Indus. of Pa., Inc., 691 F.2d 1117,
1124 (3d Cir. 1982), “by reason of the fact that one employer controls, is
controlled by, or is under common control with the other employer.” 29 C.F.R. §
791.2(b)(3). Under these circumstances, each joint employer may be held jointly
and severally liable for the FLSA violations of the other, in addition to direct
liability for its own violations.
Thompson, 748 F.3d at 148.
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Rather than taking this type of straightforward approach, the parties engage in a wideranging survey of non-binding caselaw examining numerous “misclassification” cases and other
decisions from outside this jurisdiction ruling on litigation between FedEx and delivery drivers.
(See Docket Nos. 36, 39, 42, 45). They also debate whether this type of FLSA overtime case
involving a dispute over whether there is an employer-employee relationship is capable of being
conditionally certified. (Id.). As this Court held in Hively, conditional certification is governed
by a relatively “lenient” standard, and a more robust evaluation of the sufficiency of the claims
and defenses takes place at the second step or final certification stage of this litigation.5 Hively v.
Allis-Chalmers Energy, Civ. A. No. 13-106, 2013 WL 5936418, at *4-5 (W.D. Pa. Nov. 5,
2013). It is this Court’s opinion that FedEx’s arguments opposing conditional certification
generally raise merits-based defenses that are best resolved at step-two, including, FedEx’s
position that it has no employees under the “economic realities test” and the alleged
individualized issues regarding potential class members that may disqualify them as prospective
members of the class. See e.g., Scovil v. FedEx Ground Package Sys., Inc., 811 F. Supp. 2d 516,
519-20 (D. Maine Sept. 16, 2011) (declining to resolve the dispute of whether Maine FedEx
drivers were independent contractors or employees at step-one and reserving ruling on the
application of the “economic realities test” until step-two); Hively, 2013 WL 5936418, at *4-5
(individualized defenses more properly adjudicated at step-two). Therefore, the Court finds that
Plaintiffs’ FLSA overtime claims are generally capable of conditional certification and FedEx’s
position to the contrary is overruled.
5
The Court notes that FedEx initially put forth its contract defense in a Rule 12(b)(6) motion to dismiss,
which the Court denied without prejudice, granting Plaintiffs leave to amend. (See Docket Nos. 6, 7, 17). Plaintiffs
thereafter filed a Second Amended Complaint, to which FedEx responded by filing an Answer, implicitly agreeing
that Plaintiffs had sufficiently pled that they were employees in support of their FLSA overtime claims. (See Docket
Nos. 18, 19).
14
With that said, the Court cannot rely on judicial rulings in prior cases involving FedEx to
justify conditional certification of a nationwide collective action in this case but must evaluate
the evidence that Plaintiffs have introduced in these proceedings to determine the scope of the
putative class of potential plaintiffs. See Dunkel, 304 F.R.D. at 207; see also Hively, 2013 WL
5936418, at *4-5. Having conducted its review of same, the Court holds that Plaintiffs have
failed to adduce sufficient evidence to conditionally certify a nationwide collective action of
FedEx Home Delivery and Ground contractors estimated as 2,335 individuals. Instead, Plaintiffs
have made a “modest factual showing” for the Court to permit a collective action of FedEx
Home Delivery contractors delivering packages out of the Sewickley, Pennsylvania terminal.
Symczyk, 656 F.3d at 192-93. Through their respective declarations, Plaintiffs suggest that there
were ten to twelve such individuals during the relevant time period. (See Docket Nos. 36-1, 362). The Court assesses the evidence supporting this conclusion below.
It is undisputed that FedEx had a uniform policy designating authorized representatives
of contracted service providers as employees of those entities. (Docket No. 39-1; 39-9; 39-10).
As such, it did not pay overtime to drivers as it expected those entities to pay overtime to their
own employees per the express terms of the Standard Operating Agreements. (Id.). FedEx also
inserted many contractual provisions in the Standard Operating Agreements which Plaintiffs
believe support their case that FedEx exerted significant control over the work which was
performed, including, among other things, requiring: FedEx logos to be affixed to trucks; drivers
to wear FedEx uniforms; FedEx scanners to be used to track packages; drivers to meet
performance and customer service standards; and, drivers to upload scanner data to FedEx’s
tracking system. (Id.) In addition, FedEx paid contracted service providers on a per delivery
15
basis. (Id.). It would thus appear that these policies may apply to a broad class of contractors
across 33 states during the relevant time frame. (Id.).
However, “[t]he alleged application of a uniform policy does not, without more, show
that potential class members are similarly situated.” Schneck v. Lawrence D. Brudy &
Associates, Inc., No. CA 15-1058, 2016 WL 912299, at *6 (W.D. Pa. Mar. 10, 2016) (Mitchell,
M.J.) (quoting Asirifi v. West Hudson Sub-Acute Care Center, LLC, Civ. A. No. 11-4039, 2014
WL 294886 (D. N.J. 2014)); see also Moore v. PNC Bank, N.A., Civ. A. No. 12-1135, 2013 WL
2338251, at *5-7 (W.D. Pa. May 29, 2013) (McVerry, J.) (“Even when considering those
decisions that weigh a company’s blanket exemption policy in favor of conditional certification,
those courts have still required more of showing than an across-the-board classification.”). Here,
Plaintiffs’ overtime claims not only rely upon these broader policies, but they were arguably
more “affected” by the facts underlying the operation of FedEx’s Sewickley terminal. Dunkel,
304 F.R.D. at 201. Indeed, it is this more localized evidence which largely forms the basis of
their overtime claims, and allegedly caused them to work more than forty hours per week during
the relevant time period, possibly entitling them to overtime compensation. In this regard,
FedEx employees at the Sewickley terminal: set the boundaries of the routes where Plaintiffs
conducted deliveries, (i.e., Mecan, “near Pittsburgh” and Hodzic in Penn Hills), both of which
are many miles from the terminal; directed that they make deliveries six days a week, at times;
mandated that they arrive at the terminal each morning between 6:00 a.m. and 7:00 a.m.; delayed
loading their vans with packages despite them being at the terminal on time and ready to work;
overfilled the vans with numerous packages requiring delivery on many days; mandated that
certain packages be returned to the terminal if delivery attempts were unsuccessful; and, required
that drivers attend safety meetings at the terminal. (See Docket Nos. 36-1; 36-2). Simply put,
16
Plaintiffs’ declarations suggest that FedEx personnel at the Sewickley terminal were not adhering
to the terms and conditions of the Standard Operating Agreements. (See Docket No. 39-10 at ¶
1.14 (“no officer, agent or employee of [FedEx] shall have the authority to direct Contractor as to
the manner or means employed to achieve such objectives and results. For example, no officer,
agent or employee of [FedEx] shall have the authority to prescribe hours of work, whether or
when the Contractor is to take breaks, what route the Contractor is to follow, or other details of
performance.”)).
Setting aside the merits of the employer-employee relationship dispute at this juncture,
the facts proffered by Plaintiffs may collectively support a prima face case that they were caused
to work in excess of forty hours a week, but their evidence concerning other similarly situated
individuals affected by FedEx’s business policies is sparse, at best. Symczyk, 656 F.3d at 19293. To this end, Plaintiffs have set forth very similar declarations stating that there were
approximately fifty other Home Delivery drivers at the Sewickley terminal and that ten to twelve
of them were contractors having the same type of relationship with FedEx. (See Docket Nos. 361; 36-2). Plaintiffs worked alongside these individuals and personally observed that they were
subject to the same type of work conditions as are discussed above. (Id.). But, the only evidence
that has been proffered concerning FedEx operations beyond the Sewickley terminal is a
statement by Hodzic that “I understand that there were other FedEx terminals in Pennsylvania
that operated the same way, because some contractors from the Sewickley terminal later moved
to provide work from other terminals.” (Docket No. 36-1 at ¶ 15). While the Court accepts
Plaintiffs’ declarations regarding FedEx’s operation of the Sewickley terminal and their first
person observations of the other contractors working there, Hodzic’s sole assertion as to the
conditions at other, unidentified Pennsylvania terminals which relies upon hearsay from
17
unnamed declarants is not enough to broaden the scope of the putative class beyond the
Sewickley terminal. See Dunkel, 304 F.R.D. at 203 (rejecting declarations from plaintiffs as to
work conditions at locations where they did not personally work on the basis that “[t]hese
attempts fail because the Plaintiffs have offered little more than a combination of hearsay,
guesswork, and enthusiastic hopefulness to support their assertions”).
All told, “[t]his Court cannot justify ordering and facilitating notice to a nationwide class
of plaintiffs possibly numbering in the hundreds or thousands on the basis of such little factual
support.” Moore, 2013 WL 2338251, at *6. As such, the Court must limit the scope of the
putative class to conform to the evidence that has been presented by Plaintiffs. See Dunkel, 304
F.R.D. at 207 (“Plaintiffs’ Motion for Conditional Certification is granted, but the scope of the
conditional certification (i.e., notice) is limited by the actual evidence Plaintiffs submitted.”). It is
also within the discretion of the Court to set the parameters of any such notice. “By monitoring
preparation and distribution of the notice, a court can ensure that it is timely, accurate, and
informative.” Hoffmann–La Roche v. Sperling, 493 U.S. 165, 172 (1989). Given the Court’s
ruling, the Court orders the parties to meet and confer in an effort to finalize the content and
form of the notice in accordance with this decision and to submit a joint proposal for the Court’s
consideration.6 To that end, the Court will approve the issuance of such a notice which includes
the following description of the proposed class:
[a]ll individuals who 1) were authorized representatives under a
FedEx Home Delivery Standard Operating Agreement and
delivered packages on behalf of FedEx out of the Sewickley,
Pennsylvania terminal; 2) operated a vehicle weighing less than
10,001 pounds at any time; 3) drove that vehicle on a full-time
basis any time from April 22, 2013 to the present; and 4) worked
as “single work area” or “single work area with a supplemental”
delivery driver.
6
Insofar as the parties are unable to agree upon the form and/or content of the notice, that issue may be
referred to the neutral.
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V. CONCLUSION
Based on the foregoing, Plaintiffs’ Motion for Conditional Certification [35] is
GRANTED, IN PART, and DENIED, IN PART. An appropriate Order follows.7
s/Nora Barry Fischer
Nora Barry Fischer
U.S. District Judge
Date: October 26, 2016
cc/ecf: All counsel of record.
7
As ADR was deferred until the Court’s resolution of conditional certification issues, (Docket No. 24), the
Court now enters an order requiring the parties to submit a Revised Stipulation Selecting ADR Process and will
refer this matter to ADR, forthwith.
19
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