Lay et al v. Spectrum Clubs, Inc et al
ORDER GRANTING IN PART and DENYING IN PART 92 Motion to Certify Class. The Court conditionally certifies a national class with respect to the Lay and Lane Plaintiffs Rate Claims and a regional class with respect to the Lay and Lane Plaintiffs Off- The-Clock Claims. The Court ORDERS the parties to confer regarding the content of the notices to be sent to the conditionally certified classes. The parties are further ORDERED to notify the Court within fourteen (14) days of the entry of this Order of any disputes regarding the content of the class notices. Signed by Judge David Ezra. (rg)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
SAN ANTONIO DIVISION
PAMELA R. LAY, BRIAN
DUCOTE, RYAN JETER, ALYSSA
JAYNES, MARCUS DEVANE,
AND SIMON SUAREZ, on behalf of
themselves and all others similarly
GOLD’S GYM INTERNATIONAL,
INC., et al.,
LAWRENCE J. LANE, MACARIO
ESCAMILLA, III, and SIMON
SUAREZ, on behalf of themselves
and all others similarly situated,
GOLD’S GYM INTERNATIONAL,
INC., et al.,
CV. NO. SA-12-CV-754-DAE
CV. NO. SA-12-CV-930-DAE
ORDER GRANTING IN PART AND DENYING IN PART MOTIONS TO
CONDITIONALLY CERTIFY COLLECTIVE ACTIONS
On September 23, 2013, the Court heard the Fitness Consultant
Plaintiffs’ Motion to Conditionally Certify a Collective Action and to Issue Notice
in the Lay action (No. 5:12-cv-00754) and the Sales Manager Plaintiffs’ Motion to
Conditionally Certify a Collective Action and to Issue Notice in the Lane action
(No. 5:12-cv-00930).1 (Lay Dkt. # 92; Lane Dkt. # 34.) After reviewing the
motions and the supporting and opposing memoranda, the Court GRANTS IN
PART AND DENIES IN PART the motions to conditionally certify collective
Plaintiffs in the Lay and Lane actions ask the Court to conditionally
certify a nationwide class of more than 800 Fitness Consultants and 120 Sales
Managers. The Lay Plaintiffs2 are former Fitness Consultants of Gold’s Gym3 and
On March 1, 2013, the Court ordered that the Lay and Lane actions be
consolidated for the purposes of discovery and all pretrial matters. (Lay Dkt.
Named plaintiffs in the Lay action are Pamela R. Lay, Brian Ducote, Ryan
Jeter, Alyssa Jaynes, Marcus Devane, and Simon Suarez. (Lay Dkt. # 84.)
“Gold’s Gym” or “Defendants” refers to Defendants Gold’s Gym
International, Inc., Gold’s Texas Holdings Group, Inc., Gold’s Holding Corp., GGI
the Lane Plaintiffs4 are former Sales Managers of Gold’s Gym. In both actions,
plaintiffs bring two separate claims under the Fair Labor Standards Act (“FLSA”),
29 U.S.C. § 201 et seq., for which they seek damages. (See Lay Dkt. # 84; Lane
Dkt. # 31.) First, they allege that Gold’s Gym violated the FLSA by failing to
include commissions and bonuses in their regular rates of pay for purposes of
calculating overtime compensation (the “Rate Claim”). Second, they aver that
Gold’s Gym did not compensate them for all overtime hours worked (the
“Off-The-Clock Claim”). Gold’s Gym does not oppose the Lay and Lane
Plaintiffs’ motions to conditionally certify collective actions with respect to the
Rate Claims. However, Gold’s Gym opposes the conditional certification of
classes with respect to the Off-The-Clock Claims.
Gold’s Gym and the Spectrum Acquisition
Collectively, Defendants own and operate 74 full-service,
mixed-gender health and fitness clubs nationwide. (Lay Dkt. # 100-1 (“Copeland
Dec.”) ¶ 6.) Forty-one are owned and operated by Gold’s Texas Holdings Group,
Holdings, LLC, GBG, Inc., Gold’s Alabama, LLC, Gold’s Gym Rockies, LLC,
Gold’s Gym Oklahoma, LLC, and Gold’s St. Louis, LLC. The defendants are the
same in the Lay and Lane actions except that Defendant GGI Holdings, LLC is not
a defendant in the Lay action.
Named plaintiffs in the Lane action are Lawrence J. Lane, Macario
Escamilla III, and Simon Suarez. (Lane Dkt. # 31.)
Inc. (“GTH”). (Id. ¶ 5.) GTH divides its operations into three regions—Austin,
Dallas, and South Texas—each of which is managed by a Division Vice President
(“DVP”). (Id.) The remaining gyms are owned and operated by different
corporate entities, each of which is managed by a DVP, a District Manager, or
both. (Id.) Gold’s Alabama, LLC operates four gyms; GBG, Inc. operates one
gym; Gold’s Gym Rockies, LLC operates one gym; Gold’s Holding Corporation
operates sixteen gyms; Gold’s Oklahoma, LLC operates four gyms; and Gold’s St.
Louis, LLC operates seven gyms. (Id.)
The overwhelming majority of named and “opt-in” plaintiffs in the
Lay and Lane actions are former employees of gyms owned by Spectrum Clubs,
Inc. (“Spectrum”) located in San Antonio, Texas. GTH acquired Spectrum’s
eleven San Antonio-area gyms through an asset purchase agreement in March
2012. (Id. ¶ 7.) Following the acquisition, GTH hired many of Spectrum’s former
employees to continue working at the gyms, including several to work as Fitness
Consultants and Sales Managers. (Id.) Gold’s Gym also reclassified the Fitness
Consultants and Sales Managers as non-exempt employees under the FLSA. (Id.)
Accordingly, they were paid an hourly rate plus commissions and—in the case of
Sales Managers—bonuses. (Id.)
Official Timekeeping Policies of Gold’s Gym
There is no dispute that Gold’s Gym maintains official, written
policies requiring non-exempt employees—including Sales Managers and Fitness
Consultants—to record and be paid for all time worked. (Copeland Dec. ¶¶ 8–9.)
Additionally, the policies expressly prohibit off-the-clock work. (Id.) For
example, Gold’s Gym’s “Attendance, Timekeeping, and Work Schedules Policy”
provides: “You may not be asked by any Gold’s Gym Manager to change the time
you worked, to work time off the clock, or to volunteer for unpaid work. If this
occurs, please contact your Regional HR Manager immediately.” (Id. Ex. A.) This
policy against off-the-clock work is further emphasized in a Human Resources
memorandum periodically distributed to gym-level employees, which informs
employees that “[u]nder no circumstances is a non-exempt (hourly) Associate ever
permitted to work ‘off the clock.’” (Id. Ex. B.) Gold’s Gym also maintains an
“Employee Conduct and Work Rules Policy” that further prohibits “falsification
of, or failure to keep, accurate timekeeping or other business records.” (Id. Ex. C.)
While Gold’s Gym requires employees to receive approval before they work
overtime, it maintains a policy that employees “must be paid for ALL hours
worked whether scheduled or unscheduled,” even if overtime “was not
pre-approved by management.” (Id. Ex. D.)
Gold’s Gym trains managers and non-exempt employees in its
time-keeping and overtime policies. (Id. ¶¶ 9–10.) Several plaintiffs in the Lay
and Lane actions have admitted they knew that Gold’s Gym had official policies
prohibiting off-the-clock work. (Lay Dkt. # 100-2 (“Lane Dep.”) at 73:21–23; Lay
Dkt. # 100-3 (“Lay Dep.”) at 107:1–25; Lay Dkt. # 100-4 (“Ducote Dep.”) at
108:10–110:11; Lay Dkt. # 100-5 (“Devane Dep.”) at 121:2–122:7.) Gold’s Gym
also employs Human Resources personnel to investigate overtime complaints and
to review Punch Correction forms for improprieties. (Copeland Dec. ¶ 10.)
General Managers are further barred from accessing the timekeeping system. (Id.)
Additionally, Gold’s Gym has provided evidence that, in the past, it has disciplined
associates and managers who perform, or permit others to engage in, off-the-clock
work. (Id.; Lay Dkt. # 100-6 (“Reed-Grant Dec.”) ¶ 11.)
Legal Standard for Class Certification Under the FLSA
Section 207(a) of the FLSA requires covered employers to
compensate non-exempt employees at overtime rates for all time worked in excess
of statutorily-defined maximum hours. 29 U.S.C. § 207(a). Section 216(b) creates
a cause of action for employees against employers violating the overtime
compensation requirements. 29 U.S.C. § 216(b). That section also authorizes an
employee to bring a “collective action” against an employer on behalf of himself
and “other employees similarly situated.” Id.
The law favors such collective actions under the FLSA because they
promote the “efficient resolution in one proceeding of common issues of law and
fact” and help plaintiffs “lower individual costs to vindicate rights by the pooling
of resources.” Hoffmann-LaRoche, Inc. v. Sperling, 493 U.S. 165, 170 (1989).
Unlike a Rule 23 class action, however, plaintiffs in a collective action under the
FLSA must affirmatively opt in to be covered by the suit. Compare 29 U.S.C.
§ 216(b) (“No employee shall be a party plaintiff to any such action unless he gives
his consent in writing to become such a party . . . .”) with Fed. R. Civ. P.
23(c)(2)(B) (requiring that the notice to class members include a statement “that
the court will exclude from the class any member who requests exclusion,”
providing when and how members may elect to be excluded). Because the benefits
of a collective action “depend on employees receiving accurate and timely notice
concerning the pendency of the collective action,” the FLSA grants courts “the
requisite procedural authority to manage the process of joining multiple parties in a
manner that is orderly, sensible, and not otherwise contrary to statutory commands
or the provisions of the Federal Rules of Civil Procedure.” Hoffmann-LaRoche,
493 U.S. at 170.
Although the Fifth Circuit has declined to adopt a specific test to
determine when a court should certify a class or grant notice in a § 216(b) action,
see Acevedo v. Allsup’s Convenience Stores, Inc., 600 F.3d 516, 518–19 (5th Cir.
2010), “most federal courts . . . have adopted the Lusardi [v. Xerox Corp., 118
F.R.D. 351 (D.N.J. 1987)] test when deciding these issues.” Pedigo v. 3003 S.
Lamar, LLP, 666 F. Supp. 2d 693, 696 (W.D. Tex. 2009) (citations omitted); see
also Mooney v. Aramco Servs. Co., 54 F.3d 1207, 1214 (5th Cir. 1995), overruled
on other grounds by Desert Palace, Inc. v. Costa, 539 U.S. 90, 90–91 (2003);
Clarke v. Convergys Customer Mgmt. Grp., Inc., 370 F. Supp. 2d 601, 605 (S.D.
Tex. 2005) (“[I]t is clear that the [Lusardi] two-step approach is the prevailing test
among the federal courts”) (internal quotation marks omitted).
Under Lusardi, the trial court approaches the “similarly situated”
inquiry in two stages. Mooney, 54 F.3d at 1213. The first is the “notice stage”; the
second is the “decertification stage.” See id. at 1213–14. “At the notice stage, the
district court makes a decision—usually based only on the pleadings and any
affidavits which have been submitted—whether notice of the action should be
given to potential [opt-in] class members.” Id. This determination is “made using
a fairly lenient standard, and typically results in a ‘conditional certification’ of a
representative class.” Pedigo, 666 F. Supp. 2d at 697 (citing Mooney, 54 F.3d at
1214); see also Ryan v. Staff Care, Inc., 497 F. Supp. 2d 820, 824 (N.D. Tex.
2007) (“At the notice stage, the [“similarity”] inquiry by the court is considerably
less rigorous than the court’s initial inquiry under the Rule 23 approach.”).
The plaintiff bears the burden of making the preliminary factual
showing that a similarly situated group of potential plaintiffs exists. Tice v. AOC
Senior Home Health Corp., 826 F. Supp. 2d 990, 995 (E.D. Tex. 2011); see also
England v. New Century Fin. Corp., 370 F. Supp. 2d 504, 508 (M.D. La. 2005)
(explaining plaintiffs must demonstrate “some factual nexus which binds the
named plaintiffs and the potential class members together as victims of a particular
alleged [policy or practice].”). The class representatives and potential opt-in class
members “must be similarly situated in terms of job requirements and similarly
situated in terms of payment provisions.” Ryan, 497 F. Supp. 2d at 824–25. “The
positions need not be identical”—just “similar.” Id. at 825. Broadly speaking, “[a]
court may deny a plaintiff’s right to proceed collectively only if the action arises
from circumstances purely personal to the plaintiff, and not from any generally
applicable rule, policy, or practice.” Id.
Once conditional certification is granted, “putative class members are
given notice and the opportunity to ‘opt-in.’” Mooney, 54 F.3d at 1214. The case
then “proceeds through discovery as a representative action.” Pedigo, 666 F. Supp.
2d at 697 (internal quotation marks omitted). Upon completion of discovery and
after notice has issued, the defendant may, if appropriate, file a motion for
decertification, initiating the second stage of the Lusardi analysis. Id. In this
second stage, the Court must re-examine the class and—in light of the additional
information produced through discovery—make another factual determination
under a more stringent standard as to whether the putative class members are, in
fact, similarly situated. Id. If the class is similarly situated, the representative
action may proceed; if not, the Court decertifies the class, dismisses the opt-in
plaintiffs without prejudice, and allows the class representatives to proceed on their
individual claims. Mooney, 54 F.3d at 1214.
At present, this action is in the first stage of the Lusardi analysis—
namely, the “notice” stage. Accordingly, the Lay and Lane Plaintiffs bear the
burden of making a preliminary factual showing that a “similarly situated” group
of potential plaintiffs exists. See Tice, 826 F. Supp. 2d at 995. Gold’s Gym argues
that the Lay and Lane Plaintiffs have not met this burden with respect to their OffThe-Clock Claims. For the reasons given below, the Court agrees that Plaintiffs
have not made a sufficient showing to permit conditional certification of a national
class of Fitness Consultants and Sales Managers, but finds that they have met the
burden of demonstrating a regional class should be so certified.
Whether There Exists a Common Policy or Practice
Even the lenient standard in the notice stage of conditional
certification requires “substantial allegations” that potential class members “were
together the victims of a single decision, policy, or plan.” McKnight v. D.
Houston, Inc., 756 F. Supp. 2d 794, 801 (S.D. Tex. 2010) (citation omitted). An
employer’s formal, written policies prohibiting off-the-clock work are insufficient
to defeat conditional certification where employees show that the employer
instituted a “common or uniform practice . . . to not follow its formal, written
policy.” See Pacheco v. Boar’s Head Provisions Co., Inc., 671 F. Supp. 2d 957,
962 (W.D. Mich. 2009). In other words, “it is sufficient to show that a facially
lawful policy was implemented in an unlawful manner, resulting in a pattern or
practice of FLSA violations.” Winfield v. Citibank, N.A., 843 F. Supp. 2d 397,
405 (S.D.N.Y. 2012).
In this case, there is no dispute that Gold’s Gym had written policies
in place prohibiting off-the-clock work and requiring employees to record all time
worked. However, the Lay and Lane Plaintiffs argue that Gold’s Gym had a de
facto policy of encouraging and allowing Sales Managers and Fitness Consultants
to work overtime without compensation. They further allege that Gold’s Gym had
a policy of falsifying time cards.
At present, the vast majority of named and opt-in plaintiffs are former
employees of San Antonio-area gyms that once belonged to Spectrum. Many of
these plaintiffs have submitted the declarations5 that they were “encouraged” to
work-off-the clock and that their General Managers had them sign blank Punch
Correction forms to alter the recorded number of hours worked. (See, e.g., Lay
Dkt. # 92-07 (“Ducote Dec.”) ¶¶ 5–7; Lane Dkt. # 34-1 (“Lane Dec.”) ¶¶ 5–6.)
Several maintain that although they complained to their supervisors that they were
working overtime without compensation, Gold’s Gym took no corrective action to
see that they were compensated. (See, e.g., Lane Dec. ¶¶ 5–6.) Around ten
different General Managers are named in the declarations as permitting overtime
work without compensation. Additionally, the declaration of Erik Weik—the
former General Manager of a San Antonio-area Gold’s Gym—provides that the
Regional Manager of GTH’s “South Texas” division, Rocco Greco, set monthly
sales goals for the region that required high levels of productivity from Sales
Managers and Fitness Consultants, while also strongly discouraging overtime
work. (Lane Dkt. # 34-1 (“Weik Dec.”) ¶ 4.) Weik explains that this caused
employees, who were allegedly fearful of being terminated if they failed to meet
One declaration from a Dallas employee of Gold’s Gym was stricken from
the record by order of the Court. (Lay Dkt. # 105, Lane Dkt. # 48.)
their sales quotas, to work overtime without compensation. (Id.) Further, he
maintains that “most” General Managers were aware of this practice. (Id. ¶ 6.) As
a whole, this evidence points to a regional de facto policy requiring off-the-clock
work in GTH’s South Texas division.
However, despite months of preliminary discovery, there is no
evidence to suggest that Gold’s Gym had a national de facto policy of requiring
off-the-clock work. Plaintiffs rely solely upon job descriptions and compensation
plans applicable to Sales Managers and Fitness Consultants in the employ of
Defendants across the country to infer a national policy to require off-the-clock
work existed. However, the various job descriptions do not state that job duties are
to be performed without compensation or that employees will not be paid for work
in excess of forty hours a week. See Richardson v. Wells Fargo Bank, N.A., No.
4:11–cv–00738, 2012 WL 334038, at *4 (S.D. Tex. Feb. 2, 2012) (“Plaintiffs
counter that Wells Fargo’s job descriptions and postings are evidence of a national
policy or plan . . . . Nowhere do these documents state that these duties are to be
performed without compensation if done outside an employee’s regular, assigned
shift hours.”). The fact that managers within one specific region allegedly required
or condoned off-the-clock work, without further evidence, is insufficient to warrant
certification of the national class that the Lay and Lane Plaintiffs request.
Nevertheless, as described above, Plaintiffs have made a sufficient
showing that a regional policy or practice of not compensating Sales Managers and
Fitness Consultants for all time worked existed in the South Texas division.
Although Gold’s Gym presents evidence that it disciplined and admonished certain
employees discovered to be working off-the-clock, this is not sufficient to defeat
the preliminary showing made by the Lay and Lane Plaintiffs. At the notice stage
of conditional certification, “the Court does not resolve factual disputes, decide
substantive issues going to the ultimate merits, or make credibility determinations.”
Brasfield v. Source Broadband Servs., LLC, 257 F.R.D. 641, 642 (W.D. Tenn.
2009); see also Barrus v. Dick’s Sporting Goods, Inc., 465 F. Supp. 2d 224, 230
(W.D.N.Y. 2006) (“It is not the Court’s role to resolve factual disputes, decide
substantive issues going to the ultimate merits or make credibility determinations
at the preliminary certification stage of an FLSA collective action.”); Clarke v.
Convergys Customer Mgmt. Grp., 370 F. Supp. 2d 601, 607 (S.D. Tex. 2005)
(noting that fact issues raised by the defendant are “of the sort that are appropriate
for consideration during the second-stage analysis, and not during the initial
‘notice’ stage”). Gold’s Gym also presents evidence that not all of its General
Managers in the South Texas division had knowledge of the alleged off-the-clock
violations. However, this is directly contradicted by the affidavits of numerous
plaintiffs, who maintain that they complained to their General Managers that they
were working overtime hours without compensation and that those managers took
no corrective action. Again, at the notice stage, it is improper for the Court to
weigh competing evidence.
Gold’s Gym also points to evidence that it paid the Lay and Lane
Plaintiffs for hundreds of hours of overtime work and argues this demonstrates that
a de facto policy requiring off-the-clock work never existed. However, “[t]he
question for the Court is not whether Defendants paid any overtime to some of the
Plaintiffs but whether they paid all overtime or had a policy of limiting the amount
of overtime pay—through the explicit or implicit actions of their managers and
supervisors—that [Plaintiffs] were entitled to receive.” Amador v. Morgan Stanley
& Co. LLC, No. 11 Civ. 4326(RJS), 2013 WL 494020, at *8 (S.D.N.Y. Feb. 7,
2013). Thus, the fact that Gold’s Gym paid a fairly significant sum in overtime
wages to Sales Managers and Fitness Consultants is not dispositive at the
conditional certification stage.
Whether the Job Duties of Former Spectrum Employees Were Unique
Gold’s Gym also argues that the Lay and Lane Plaintiffs—the
majority of whom previously worked for Spectrum gyms before the acquisition of
those facilities by Gold’s Gym—had unique job duties during the ownership
transition. As such, it contends that other Fitness Consultants and Sales Managers
located across the county are not sufficiently “similarly situated” to Plaintiffs.
More specifically, Gold’s Gym argues that former Spectrum
employees used, among other things, different vocabulary to describe their work
and different methods to track sales and “walk-ins” before, and immediately
following, the acquisition. (Lay Dkt. # 100 at 23.) Former Spectrum employees
also had to adapt to different technology after the transition. However, these
differences are not substantial enough to defeat conditional certification. Gold’s
Gym International, Inc.—the entity overseeing Human Resources for all regional
subsidiaries—maintained uniform job descriptions for Sales Managers and Fitness
Consultants nationwide. (Lane Dkt. # 34-3.) Additionally, Gold’s Gym concedes
that Sales Managers and Fitness Consultants generally “sell gym memberships
and training packages” and are paid “through commissions and bonuses.” (Lay
Dkt. # 100 at 10.) Thus, on a national basis, Sales Managers and Fitness
Consultants appear to share the same general job duties. Moreover, “[s]light
differences in job duties or functions do not run afoul of the similarly situated
requirement.” Walker v. Honghua Am., LLC, 870 F. Supp. 2d 462, 468 (S.D. Tex.
2012) (quoting Tolentino v. C & J Spec–Rent Servs., Inc., 716 F. Supp. 2d 642,
651 (S.D. Tex. 2010)).
Gold’s Gym also contends that “Plaintiffs’ theory that sales goals
dictated off-the-clock work” is untenable because each gym has different sales
goals and different method for meeting these goals. (Lay Dkt. # 100.) Gold’s
Gym cites Carey v. 24 Hour Fitness USA, Inc., No. H–10–3009 (NFA), 2012 WL
4857562 (S.D. Tex. Oct. 11, 2012) in support of this proposition. In Carey, the
plaintiff sought conditional certification on his claim that 24 Hour Fitness failed to
compensate Sales Counselors for all overtime hours worked. Id. at *1–2. Like the
Lay and Lane Plaintiffs, the plaintiff claimed that 24 Hour Fitness imposed sales
goals on employees that those employees could not meet without working
overtime. See id. However, the court denied conditional certification because it
found that “sales goals are imposed differently from club to club” and that only
three putative class members submitted evidence and sought to join the lawsuit,
despite its two-year pendency. See id. at *2–3.
Here, Gold’s Gym maintains that sales goals “differ from gym to gym,
based on several factors, including local competition, improvements at the gym,
the number of Gold’s gyms in the area, customer traffic trends, and the gym’s age.”
(Lay Dkt. # 100.) However, Plaintiffs have presented sufficient evidence that, at
least in the South Texas division, sales goals promulgated in some fashion by the
Regional Manager, and enforced by at least ten General Managers, caused
Plaintiffs to work overtime hours without compensation. As such, the Lay and
Lane Plaintiffs have sufficiently demonstrated that there potentially exist “similarly
situated” putative class members on a regional basis.
However, Gold’s Gym correctly argues that there is no evidence
before the Court regarding the sales goals and policies of facilities owned by
Gold’s Gym outside this limited region. Moreover, Gold’s Gym has presented
evidence that it organizes its San Antonio-based gyms into a tiered structure that
differs from other areas of the country. (Lay Dkt. # 100.) San Antonio’s top-tier
facilities consist of the eleven former Spectrum gyms, which have more amenities
and cater to a wealthier clientele. (Shaffer Dec. ¶¶ 4, 5; Gochee Dec. ¶ 4;
Robinson Dec. ¶ 8; Jeter Dep. at 77:12–78:5.) The tiered system means that,
unlike any other area in the country, Sales Managers and Fitness Consultants who
worked for former Spectrum gyms were expected to sell “upgrades” from one level
to a higher level and were compensated based on those “upgrades.” (See Jeter
Dep. at 79:11–81:12.) However, while these distinctions weigh against the
creation of a national class, they continue to support the certification of a regional
Gold’s Gym also points out that the transition in ownership caused
“disruption and discord” among former Spectrum employees. (Lay Dkt. # 100.)
At Spectrum, Fitness Consultants and Sales Managers were classified as exempt
from the FLSA’s overtime provisions; they were paid a salary, were not required to
record their time worked, and, according to their testimony, were free to manage
their own schedule. (Devane Dep. at 24:6–23, 56:21–23; Ducote Dep. at 20:1–5,
23:16–24:2; Escamilla Dep. at 42:7–20.) After the acquisition, former Spectrum
employees were reclassified as non-exempt workers and paid an hourly rate plus
commissions and, in the case of Sales Managers, bonuses. (Copeland Dec. ¶ 7.)
Several former Spectrum employees found these changes unwelcome (see Ducote
Dep. at 40:24, 85:18–19) and were concerned that their pay would decrease.
(Devane Dep. at 47:5–18; Escamilla Dep. at 50:8–25; Ducote Dep. at 40:13–14,
While these concerns were certainly unique to former Spectrum
employees, their uniqueness is not sufficient to defeat certification of a regional
class given the other evidence before the Court regarding the policies allegedly
enacted by Regional Manager Rocco Greco and the less-than-exacting burden that
plaintiffs carry at the notice stage of an FLSA collective action.
Whether Damages Are Sufficiently Similar
Gold’s Gym cites the Supreme Court’s recent opinion in Comcast v.
Behrend, 133 S. Ct. 1426 (2013) for the proposition that “courts must undertake a
rigorous analysis of class certification motions and, in particular, plaintiffs’ ability
to measure damages under a common classwide theory.” (Lay Dkt. # 100.) In
Comcast, the Supreme Court reviewed the certification of a putative class
consisting of 2 million current and former Comcast subscribers who sought
damages for alleged violations of federal antitrust laws. 133 S. Ct. at 1429–30,
1435. The Supreme Court found certification improper under Rule 23 where
plaintiffs fell “far short of establishing that damages are capable of measurement
on a classwide basis,” and “[q]uestions of individual damage calculations will
inevitably overwhelm questions common to the class.” See 133 S. Ct. at 1433.
Comcast is distinguishable from the instant case for several reasons.
First, and most importantly, this is a collective action under 29 U.S.C. § 216(b), not
a class action under Rule 23. Rule 23 certification requirements do not apply to
FLSA collective actions. Richardson v. Wells Fargo Bank, N.A., No. 4:11-cv00738, 2012 WL 334038, at *2 n.8 (citing LaChapelle v. Owens–Illinois, Inc., 513
F.2d 286, 288 (5th Cir. 1975) (declining to apply Wal–Mart Stores, Inc. v. Dukes,
131 S.Ct. 2541 (2011) to an FLSA collective action).
Second, at the notice stage of the proceedings, the relevant inquiry is
whether there exist similarly situated potential plaintiffs. Gold’s Gym argues that,
because the Lay and Lane Plaintiffs must offer evidence of the overtime hours that
each of them worked individually, they cannot “develop a common theory of
damages.” (Lay Dkt. # 100.) It points to the fact that some plaintiffs have testified
that they can only speculate as to the number of overtime hours that they worked.
(See Ducote Dep. at 142:1–19, 153:17–20; Escamilla Dep. at 115:3–6; Devane
Dep. at 125:7–14, 126:6–25; Jeter Dep. at 109:24–110:18.) However, while
damages may not be easily determinable in this case, the Lay and Lane Plaintiffs
have sufficiently demonstrated that their alleged damages are the product of a
common, de facto policy promulgated by Gold’s Gym requiring off-the-clock
work, at least at a regional level.
Gold’s Gym also argues that certain plaintiffs and putative class
members may be exempt from the FLSA’s overtime requirements under the
“commissioned retail salesperson” exemption set forth in 29 U.S.C. § 207(i). (Lay
Dkt. # 100.) Under § 207(i), employees of retail and service establishments are
exempt from overtime requirements if their regular rate of pay exceeds one and
one-half times the minimum wage and if they earn more than half their pay from
commissions. 29 U.S.C. § 207(i). Gold’s Gym contends that this defense cannot
be established “by common proof” because it requires “highly individualized”
inquiries into each employee’s earnings and employment history. (See Lay Dkt.
# 100.) However, several courts have concluded that such issues are best
addressed in the latter stages of an FLSA collective action—typically, in the
decertification stage. See, e.g., Johnson v. Wave Comm GR LLC, No. 6:10-CV346 , 2011 WL 10945630, at *9 (N.D.N.Y. Oct. 4, 2011) (deferring consideration
of the effect of § 207(i) defenses at the notice stage of FLSA conditional
certification); Jason v. Falcon Data Com, Inc., 09-CV-03990, 2011 WL 2837488,
at *6 (E.D.N.Y. July 18, 2011) (finding that § 207(i) defenses are “more
appropriately addressed at the decertification stage”); see also Beauperthuy v. 24
Hour Fitness USA, Inc., 772 F. Supp. 2d 1111, 1126–27 (N.D. Cal. Feb. 24, 2011)
(considering § 207(i) exemptions at the decertification stage of FLSA conditional
certification). Accordingly, the Court defers consideration of the effect of potential
§ 207(i) exemptions at this stage of the proceedings, leaving open the possibility
that Gold’s Gym may re-raise its concerns at the decertification phase.
In sum, the Court finds that the Lay and Lane Plaintiffs have
presented sufficient evidence to warrant conditional certification of their Off-TheClock Claims with respect to a regional class consisting of those Fitness
Consultants and Sales Managers working in GTH’s South Texas division.
However, they have not met the burden of conditional certification with respect to
a national class.
Insofar as Gold’s Gym does not oppose the conditional certification of
the Lay and Lane Plaintiffs’ Rate Claims, the Court grants the motions for
conditional certification. There is no dispute that Gold’s Gym maintains
nationwide compensation policies designating Fitness Consultants and Sales
Managers as non-exempt, hourly employees under the FLSA. Until recently,
Gold’s Gym had a nationwide policy of excluding commissions and bonuses from
the overtime pay of Fitness Consultants and Sales Managers. Accordingly,
certification of a national class with respect to the Lay and Lane Plaintiffs’ Rate
Claims is appropriate.
For the foregoing reasons, the Court GRANTS IN PART AND
DENIES IN PART the motions to conditionally certify collective actions. (Lay
Dkt. # 92; Lane Dkt. # 34.) The Court conditionally certifies a national class with
respect to the Lay and Lane Plaintiffs’ Rate Claims and a regional class with
respect to the Lay and Lane Plaintiffs’ Off-The-Clock Claims.
The Court ORDERS the parties to confer regarding the content of the
notices to be sent to the conditionally certified classes. The parties are further
ORDERED to notify the Court within fourteen (14) days of the entry of this Order
of any disputes regarding the content of the class notices.
IT IS SO ORDERED.
DATED: San Antonio, Texas, October 4, 2013.
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