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Proskauer on Class and Collective Actions

FLSA Decertification: District Courts Write Largely On A Blank Slate

Posted in Uncategorized

Without any U.S. Supreme Court guidance, and little to none from the Circuit Courts, the trial courts facing FLSA decertification motions are making up their rulings mostly from scratch, and the results are all over the map.  Although courts facing decertification motions generally apply the same three factors to determine if plaintiff pass the FLSA “similarly situated” test, there are cases with almost identical facts that result in disparate and irreconcilable outcomes.  As one judge aptly described the state of the law:

[I]t is difficult to draw consistent guidelines from the case law on how to apply [the three] factors . . . the decertification determination is extremely fact-dependent and appears to be largely in the Court’s discretion.

Seward v. IBM Corp., No. 08cv3976(VB)(PED), slip op., at 31 (Jan. 20, 2012) (emphasis added), adopted in full, 2012 WL 860363 (S.D.N.Y. Mar. 9, 2012).  Class decertification – as well as many other FLSA issues – clearly call out for higher courts’ guidance.

Seward involved off-the-clock claims by IBM call center workers that had been conditionally certified in 2009.  The court granted IBM’s post-discovery motion, however, and decertified the case before trial.  The parties rested their legal arguments on other federal district court decisions from across the country.  The Magistrate Judge conducted a comprehensive analysis of each party’s respective decisions but concluded that they were “very different to reconcile, as they reach different conclusions on relatively similar facts.”  Slip op., at 31-32 (emphasis added).  He ultimately recommended decertification (in a report that the District Court Judge adopted in full), reasoning that:  IBM’s common timekeeping and overtime policies were lawful on their face (and therefore did not advance plaintiffs’ claims); plaintiffs lacked sufficient evidence of any common unlawful practice; and IBM’s defenses would likely be highly fact specific and require individualized testimony.

In addition to highlighting the absence of, and need for, higher court guidance in this area, Seward is noteworthy for the court’s refusal to order subclasses, and it demonstrates  the importance of plaintiffs raising, and employers objecting to, subclasses at the first instance.  The plaintiffs there had not raised sub-classes, but IBM had objected to the idea when the Magistrate Judge raised it sua sponte at oral argument.  On review by the District Judge, plaintiffs advocated only for subclasses, but the court refused, holding that their failure to argue for subclasses before the Magistrate Judge, coupled with IBM’s previous opposition, meant that the subclass issue had been waived.

The case also is noteworthy for its very small number of class members (40) who all worked at the same facility – factors that typically would make a decertification attempt difficult.  The court’s decision to decertify appears to have rested largely on the extensive evidence presented by IBM.  In addition to gathering current manager declarations, IBM had deposed 28 of the 40 plaintiffs and elicited written discovery from all 40, through which it obtained significant admissions and inconsistencies in testimony that helped its arguments on decertification.  The outcome suggests that employers should consider deposing and obtaining discovery from as many opt-ins as possible before moving for decertification (provided that business or other reasons do not counsel otherwise).