Posts belonging to Category Certification Rulings

A New York federal court has conditionally certified a class of audit associates in an action alleging that the accounting firm KPMG violated their rights under the federal Fair Labor Standards Act (FLSA).  See Pippins v. KPMG, No. 11-Civ-0377, 2012 U.S. Dist. LEXIS 949 (S.D. N.Y. Jan. 3, 2012) (available here).  Specifically, the plaintiffs claim that KPMG systematically misclassified its auditors in order to avoid paying them overtime.  Id.

The court found that the auditors established that they were “similarly situated” per the FLSA’s certification requirements by proving that they received the same training, served on similarly structured work teams, performed similar job duties, were subject to the same compensation policies, and worked under tightly circumscribed guidelines applicable to all auditors.  Id. at *3-9.  The court rejected the defendant’s argument that individualized issues predominated, and instead gave credence to the plaintiffs’ allegations and declarations indicating that the same practices and policies apply to auditors across the country.  Id. *3, *28-29. 

Although Rule 23 requirements do not formally apply to FLSA collective actions, the Pippins court noted that “KPMG’s alleged policy of classifying all Audit Associates as exempt is the ‘glue’ that the Supreme Court found lacking in Dukes.”  Id. at *21 (discussing Dukes v. Wal-Mart, 131 S.Ct. 2541 (2011)).  The court also relied on decisions by other courts granting certification of classes of auditors with FLSA claims.  See id. at *29-31 (discussing Kress v. PricewaterhouseCoopers, LLP, 263 F.R.D. 623 (E.D. Cal. 2009)(granting conditional FLSA certification); In re Deloitte & Touche Overtime Litig., No. 11-Civ-2461 (S.D.N.Y. Dec. 16, 2011) (same)).

The Pippins matter is also notable due to a prior ruling by the magistrate judge that required KPMG to preserve electronically stored data during the litigation’s pendency, including prior to the time that conditional certification was granted.  That discovery order was subsequently affirmed by the presiding Article III judge, Hon. Coleen McMahon.  See Pippins v. KPMG, No. 11-Civ-0377 (S.D. N.Y Feb. 3, 2012) (order denying defendant’s objections to the discovery order).

The Third Circuit Court of Appeals has taken a moderate approach to the predominance analysis required by the U.S. Supreme Court’s ruling in Dukes v. Wal-Mart, 131 S. Ct. 2541 (2011).  See Sullivan v. DB Investments, No. 08-2784 (3rd Cir. Dec. 20, 2011) (order affirming class certification for settlement purposes) (available here).  In an en banc decision, the Sullivan majority interpreted Dukes as holding that “the focus is on whether the defendant’s conduct was common as to all of the class members, not on whether each plaintiff has a ‘colorable’ claim.”  Id. at 42. 

Two of the panel’s nine judges dissented, arguing that the majority’s relaxed commonality standard resulted in the improper certification of a nationwide class that “includes people who have no legal claim whatsoever.”  Id. at 1 (Jordan, J., dissenting).  The dissenters claim that Dukes expressly requires classwide common questions and answers, which necessarily entail a finding that each class member has a colorable legal claim.  Id. at 10 (Jordan, J., dissenting) (discussing Dukes, 131 S. Ct. 2551).  However, the dissenters do not acknowledge or confront the fact that class members who are ultimately found to lack a viable claim may nevertheless share common questions with the rest of the class. 

The majority addressed the dissent’s contentions and affirmed its holding as consistent with Dukes:

In Dukes, the Court held that commonality and predominance are defeated when it cannot be said that there was a common course of conduct in which the defendant engaged with respect to each individual.  But commonality is satisfied where common questions generate common answers “apt to drive the resolution of the litigation.”  Dukes, 131 S. Ct. at 2551.  That is exactly what is presented here, for the answers to questions about De Beers’s alleged misconduct and the harm it caused would be common as to all of the class members, and would thus inform the resolution of the litigation if it were not being settled.

 Id. at 42.

Because the disagreement between the majority and dissent is likely to play out in other trial and appellate courts, practitioners would do well to anticipate the dissent’s position and to note the majority’s compelling reasoning in response.

The Seventh Circuit recently affirmed class certification of wage and hour claims in a decision that provides considerable guidance on the commonality requirements of Dukes v. Wal-Mart.  See Ross v. Charter One, No. 10-3848 (7th Cir. Jan. 27, 2012) (order affirming class certification) (available here).  In Ross, the district court granted certification of the plaintiffs’ unpaid overtime claims.  The defendant appealed to the Seventh Circuit, arguing that the commonality requirements could not be met because the plaintiffs’ claims required individualized proof.  When the Dukes decision was issued, the appellate panel ordered supplemental briefing “addressing whether the class certification order satisfied Dukes.”  Slip op. at 2

The Seventh Circuit ultimately found that Dukes did not require reversal of class certification, because the plaintiffs had shown sufficient evidence of classwide employment policies relating to unpaid overtime.  Slip op. at 15.  For example, the plaintiffs presented 89 putative class member declarations attesting to defendant’s companywide policy of instructing employees not to record overtime.  Slip op. at 18.  This evidence was sufficient to overcome defendant’s contention that putative class members worked unpaid overtime for at least four different reasons, necessitating individualized inquiries.  Slip op. at 16-17. 

The Ross decision is significant because it suggests that the Dukes commonality requirement can be met by clearly articulating a companywide policy and establishing it by means of putative class member declarations.

A Northern District judge has conditionally certified claims brought under the Fair Labor Standards Act (FLSA) against an industrial supply company by two salaried retail store general managers.  See Deane v. Fastenal, No. 3:11-cv-00042 (N.D. Cal. Nov. 14, 2011) (order granting conditional certification) (available here).  The named plaintiffs seek to represent a nationwide class of approximately 2,000 former and current general managers who were allegedly misclassified as exempt employees.  Id.  Judge Susan Illston found that the named plaintiffs’ declarations and their documentary evidence established that they were similarly situated to the proposed class members, and found that the company’s contrary declarations did not sufficiently negate this showing.  Id.  Pursuant to the FLSA’s unique procedures, the court ordered Fastenal to provide the general managers’ contact information to a class action administrator, which will send the putative class members an opt-in notice.  Id.