Restaurant Supply Driver’s Federal FLSA Claims Shown the Exit Ramp on MSJ Ruling

Finding not a “scintilla” of evidence to support claims of minimum wage violations, a New York federal district court in Yu Sen Chen et al v. MG Wholesale Distribution Inc. et al, 16-cv-04439 (E.D.N.Y.) dismissed a proposed collective action (and refused to exercise supplemental jurisdiction of the corresponding state law claims).  In doing so, the district court relied on simple arithmetic and the plaintiff’s own admissions. 

Basis of Complaint

After spending more than a decade working as a truck loader and driver’s helper for a restaurant supply distribution company in Queens, New York, the named plaintiff filed a putative collective action alleging minimum wage and overtime violations under federal and state law.  In doing so, he claimed he worked 12 hours per day, six days per week, for a set salary of approximately $600/week. 

Allegations Taken with a Grain of Salt

Last year, the named plaintiff voluntarily dismissed the overtime claims.  Discovery ensued on the remaining claims.  During the course of discovery, the plaintiff alleged he worked approximately 72 hours per week (although he claimed that at times he may have worked upwards of 77 hours).  He testified his salary was approximately $600/week.  While the named plaintiff claimed the times sheets utilized in the litigation were falsified (and he thus worked much more), the Court applied plaintiff’s testimony regarding hours worked. 

Applying basic arithmetic, and accepting as fact that the named plaintiff worked 72 hours per week (or even 77 hours per week), he earned more than the $7.25 federal minimum wage, the Court ruled. As a result, no federal minimum wage claim existed, making the prospective collective action ripe for dismissal.  The Court also refused to exercise supplemental jurisdiction over the state law claims (minimum wage and spread of hours claims).    


While the information discovered regarding hours worked may have suggested potential issues under state law, simple math proved there was no minimum wage claim under the FLSA.  This finding was enough to divest the court of subject matter jurisdiction, and the Court punted on the state law claims.  This lesson should not be lost on any employer (regardless of the industry).  Employers facing a collective action should not overlook the possibility of attacking the pleadings of the federal claims.  If a court dismisses those claims, the employer may live to fight the state law claims another day (assuming the plaintiff even re-files them).   So pay attention to simple math; it may prove to be your salvation. 

11th Circuit Allows Intervenors in Buccaneers Class Action Lawsuit

The Eleventh Circuit Court of Appeals recently considered two class action lawsuits under the Telephone Consumer Protection Act (TCPA), which involved the same class and allegations and the question of whether additional parties could intervene in a pending case. In Technology Training Associates, Inc., et al. v. Buccaneers Limited Partnership, Cin-Q Automobiles, Inc. filed a complaint on behalf of a putative class, alleging that Buccaneers Limited Partnership was responsible for unsolicited faxes that violated the TCPA.  The case was litigated for approximately three years, with Medical & Chiropractic Clinic, Inc. joining in as a second named plaintiff.  In 2016, Technology Training Associates, Inc. et al. filed a complaint on behalf of the same putative class based on the same allegedly unlawful acts by Buccaneers, which subsequently settled.  After the settlement was announced, Cin-Q and Medical & Chiropractic Clinic (the “movants”) moved to intervene in the case.  The district court denied the movants (named plaintiffs in the first class action case) the opportunity to intervene in the second class action, but on October 26, 2017, a three judge panel of the Eleventh Circuit remanded the case to the district court with instructions to grant the movants’ motion to intervene, holding that the movants had satisfied Federal Rule of Civil Procedure 24(a)(2)’s requirements for intervention.

The movants originally filed a lawsuit in 2013 on behalf of a putative class against the defendant alleging violations of the TCPA. In 2016, the named plaintiffs in the second case filed a second complaint on behalf of the same putative class based on the same allegations against the same defendant.  One of the attorneys from the firm representing the plaintiffs in the first action changed firms, and his new firm represented the plaintiffs in the second action.  Soon after the second lawsuit was filed in 2016, the parties in the second lawsuit announced that they had reached a settlement, part of which involved the defendant agreeing to waive its statute of limitations defense against the plaintiffs in the second lawsuit.

After the settlement was announced in the second lawsuit, the movants moved to intervene in the second lawsuit, and the district court denied that motion and preliminarily approved the settlement agreement. The movants appealed the denial of their motion to intervene.

The Eleventh Circuit ultimately held that the movants satisfied Rule 24(a)(2)’s requirements for intervention, and in doing so found significance in a series of emails exchanged within the law firm representing the plaintiffs in the second case.  The emails appeared to show that the law firm in the second case not only knew how much the law firm from the first case wanted to settle their class action for, but also that the second law firm filed the second action with the intent to underbid the law firm in the first action.  In addition, the Court of Appeals found the fact that the plaintiffs’ claims in the second lawsuit might be time barred allowed the movants to meet the “minimal” burden of showing the plaintiffs’ representation in the second action might be inadequate, because the plaintiffs in the second action had a greater incentive to settle as their claims may have been time barred.

The Eleventh Circuit concluded its opinion by observing that the record suggested that plaintiffs’ counsel in the second action deliberately underbid the movants in an effort to collect fees, while at the same time doing a fraction of the work that movant’s counsel had done in the first lawsuit, together with a brief discussion of the American Bar Association’s Ethical Guidelines for Settlement Negotiations.

This case is a reminder of the complex procedural issues at stake in class action litigation.  For more information regarding this case or to discuss recent trends in TCPA class action litigation, please contact the Jackson Lewis attorney with whom you regularly work.

Jackson Lewis Class Action Trends Report Fall 2017 Now Available

Below is a link to the latest issue of the Jackson Lewis Class Action Trends Report.  This report is published on a quarterly basis by our firm’s class action practice group in conjunction with Wolters Kluwer.  We hope you will find this issue to be informative and insightful.  Using our considerable experience in defending hundreds of class actions over the last few years alone, we have generated another comprehensive, informative and timely piece with practice insights and tactical tips to consider concerning employment law class actions.

Fall 2017 Class Action Trends Report

General Awareness Is Not Enough for Willfulness Under the FLSA

A recent decision from the Third Circuit Court of Appeals involving the nature of the evidence sufficient to create a jury question on willfulness has carved out additional guidance for employers defending against Fair Labor Standards Act (FLSA) lawsuits. Though the FLSA generally applies a two-year statute of limitations, the limitations period can be extended to three-years for willful violations of the Act. That extra year means more dollars in a plaintiff’s pockets.

On September 20, 2017, a three-judge panel upheld the ruling of a district judge from the Middle District of Pennsylvania who granted the County’s motion for a directed verdict on the question of willfulness. In Souryavong v. Lackawanna County, two employees brought suit under the FLSA, arguing that although each of their part-time positions did not result in overtime hours, their combined hours well exceeded 40 hours per workweek. The only issue at the November 2015 trial was whether the violations were willful.

To support their argument, the employees’ evidence at trial was limited to testimony from two witnesses that the County was “generally aware” of its obligations, and an internal email that was circulated with the subject line “County wage and hour issues” discussing certain employees who were working second-jobs in excess of 40 hours per week. In granting the County’s motion for a directed verdict at trial, the Judge stated that the “employees’ evidence did not ‘measure up.’” The Third Circuit agreed.

“Willfulness” as defined by the Supreme Court includes situations where the employer knew its conduct was prohibited at the time of the FLSA violation or where the employer demonstrates a “reckless disregard” for the matter.

Despite there being evidence that the County was “generally aware” of its obligations under the FLSA, that alone was insufficient to create a genuine issue of fact for the jury. For the jury to rule on the issue of willfulness, the evidence must have established that the County was specifically aware of the two-job overtime issue as it related to the employees – prior to the dates of the violations.

In contrast, the Third Circuit referred to instances where its sister circuits allowed the question of willfulness to reach a jury: Flores v. City of San Gabriel, 824 F.3d 890 (9th Cir. 2016) (finding a jury question of “willfulness” where a city is aware of the FLSA requirements and has a system in place to classify pay and benefits, yet continues to allow a misclassification of a monthly payment for nine years); Davila v. Menendez, 717 F.3d 1179 (11th Cir. 2013) (finding a jury question of willfulness where a family fails to pay a nanny minimum wage, admits to knowing about the minimum wage laws, and where the family instructed the nanny to lie about her employment and the hours worked). Here, the Third Circuit could find no such level of egregiousness so as to send the issue to the jury.

The question of willfulness is a hot-button issue in the context of FLSA claims. The decision in Souryavong serves to further limit the kinds of factual scenarios when the statute of limitations for FLSA claims is extended to three years.


Step Right Up: Tentative Ruling Shows Amusement Park Beats Back Bulk of Class Bid

In a mixed ruling, a California state court judge in Villegas v. Six Flags Entertainment Corp., Case No. BC505344, issued a decision last week denying certification of eight subclasses of amusement park workers, but indicating she would consider certification of several others pending further briefing. 

Basis of Complaint

In 2013, a group of four plaintiffs filed suit in Los Angeles Superior Court seeking to represent a class of current and former Six Flags Magic Mountain and Hurricane Harbor employees who worked at the parks. The complaint accused Six Flags of a series of state labor law violations, including the failure to pay employees overtime wages, provide mandatory meal and rest breaks or proper seating.  The named plaintiffs held positions such as ride mechanics, ride operators, and game attendants.

Certification Bid

Last year, the plaintiffs moved for class certification.  Magic Mountain opposed the motion, arguing there was a complete lack of evidence of common issues requiring certification.  In doing so, it argued, in part, that during the relevant time period, it employed more than 25,000 employees in 255 positions within 25 separate departments (and thus, common proof was missing). 

During oral argument last week, the judge issued a tentative decision denying certification of the bulk of the subclasses, drawing protests from plaintiffs’ counsel.  A particular point of contention concerned a “shaved time” subclass (a class consisting of workers whose wages were not fully paid) and a “walking time” subclass (a class consisting of workers who were not compensated for time spent walking to break areas).  Based upon the preliminary ruling, the judge rejected these arguments citing the individualized nature of the issues, but took the matter under submission. 

Not So Fast:  Certification of Additional Classes Will Be Considered

Perhaps thinking that everyone deserves a chance to walk away a winner, the judge ordered additional briefing on three subclasses: a rounding subclass (where employees’ hours were manually reduced) and two regular rate subclasses (where employees’ overtime rates were based on their hourly rates, and not on their “regular rate of pay”).  In doing so, the judge did not indicate which way she was leaning. 


While drawing comparisons between an amusement park and any other employer may be difficult, one key takeaway is clear:  arguing the practical application of an employer’s business practices to the proposed subclass should lay at the forefront of any certification opposition.  Indeed, showing a lack of commonality across a proposed subclass through representative examples can make or break an opposition to certification.  So keep your eye on the brass ring.


Class Action Filed Against NCAA and 20 Universities Alleging Student-Athletes with Scholarships Are Employees

In the latest effort to argue that student athletes qualify as employees under the Fair Labor Standards Act (“FLSA”), a class action lawsuit was filed last week in a federal court in Pennsylvania against the National Collegiate Athletic Association (“NCAA”) and 20 universities.

Last year, the U.S. Court of Appeals for the Seventh Circuit affirmed U.S. District Judge William T. Lawrence’s dismissal of a student-athlete litigation against the NCAA and over 120 NCAA Division I member schools alleging that student-athletes are employees who are entitled to a minimum wage under the FLSA.  Berger v. NCAA, No. 16-1558 (7th Cir. Dec. 5, 2016).   Jackson Lewis had the privilege of representing 30 of the Universities named in that lawsuit.  You can read more about the Berger case here.

Now, Plaintiff Lawrence “Poppy” Livers has filed a lawsuit on behalf of himself and others alleged to be similarly situated, claiming that college student athletes who receive scholarships are employees who are entitled to compensation.  Plaintiff argues the “crux” of the Complaint is that recipients of athletic scholarships, which require them to participate in NCAA athletics under daily supervision of full-time coaching and training staff, are employees of NCAA member schools as much as, “and arguably more than, fellow students employed in work study programs, e.g., student ticket takers, seating attendants and food concession workers at NCAA contests.”

Further, Plaintiff argues that this Complaint differs from Berger in that the putative collective in this case “only includes Scholarship Athletes, and does not address the status of ‘walk-ons,’ i.e., student athletes who are not obligated to, and controlled by, NCAA member schools pursuant to Athletic Financial Aid Agreements.”  The Plaintiffs in Berger attended the University of Pennsylvania which does not enter into Athletic Financial Aid Agreements.  A copy of the Complaint in Livers can be accessed here.

We will continue to carefully monitor developments in this case and draft updates as appropriate.  For more information regarding this case or the Berger case, please contact the Jackson Lewis attorney with whom you regularly work.

Supreme Court Hears Argument on Validity of Class Action Waivers in Employment Arbitration Agreements

Yesterday the U.S. Supreme Court held a one-hour oral argument in three consolidated cases concerning the enforceability of arbitration agreements requiring employees to waive their right to bring or participate in a class or collective actions. Click here for a summary of yesterday’s argument.

“12 Inches” is Much Ado About Nothing – Seventh Circuit Serves Subway and Practicality a Win in Footlong Class Action

“A class action that ‘seeks only worthless benefits for the class’ and ‘yields [only] fees for class counsel’ is ‘no better than a racket’ and ‘should be dismissed out of hand.’” In re Subway Footlong Sandwich Mktg. & Sales Practices Litig., 2017 U.S. App. LEXIS 16260, at *3 (7th Cir. Aug. 25, 2017) (quoting In re Walgreen Co. Stockholder Litig., 832 F.3d 718, 724 (7th Cir. 2016)).  With those words, the Seventh Circuit put an end to a putative class action spawned by a Subway sandwich, a measuring tape, and a Facebook post that went viral.


In 2013, an Australian teenager discovered that his “footlong” Subway sandwich measured only 11 inches, not 12.  The teenager posted a picture of his sandwich and a tape measure on Facebook, and the post went viral.  It also spawned a putative class action.

However, early discovery confirmed that the natural baking process for Subway’s bread created minor variations in the sizes of the “footlong” sandwiches, even if the same amount of dough was used.  Thus, in the absence of any damages, the plaintiff’s attorneys shifted focus and sought certification for injunctive relief under Federal Rule of Civil Procedure 23(b)(2).  Ultimately, the case settled, with Subway agreeing to take steps that might help further ensure that its “footlong” sandwiches would bake-out to the full 12 inches.  In return, class counsel received $520,000 in attorney’s fees and each class representative received $500.  But Theodore Frank, a well-known class action objector, believed the settlement was worthless, and appealed the settlement to the Seventh Circuit.


The Seventh Circuit agreed with Mr. Frank and held that the putative class action should not have been certified and the settlement should not have been approved because the putative class action and settlement offered “zero benefits for the class.” Id. at *14.  Before the settlement, Subway customers could be fairly (but not entirely) certain that their “footlong” sandwiches would be 12 inches long: Subway used uniform quantities of dough that were meant to bake to 12 inches.  After the settlement, nothing really changed.     Assuming implementation of the proposed injunctive relief, Subway customers still could only be fairly (but not entirely) certain that their “footlong” sandwiches would be 12 inches long.  As both parties acknowledged, “because of the inherent variability in food production and the bread baking process, [Subway] will never be able to guarantee that each loaf of bread will always be exactly 12 inches or greater in length after baking.” Id. at *13.  Finding this all “utterly worthless,” the Seventh Circuit concluded that the settlement only served to enrich class counsel and, to a lesser extent, the class representatives, and the settlement should not have been approved and the class action decertified.  Id.


The impact of this decision may be curtailed by the fact that this case involved an injunctive class action under Rule 23(b)(2).  Still, it is a win for practicality and commonsense, and it may give pause to the next overly zealous attorney who tries to make a quick fortune off a Facebook post gone viral.

Employer’s Use of Non-Compliant Disclosure Form Did Not Result in Concrete Injury Under Fair Credit Reporting Act

A job applicant alleging a violation of one of the procedural requirements of the Fair Credit Reporting Act (FCRA) lacked standing to sue under Article III of the United States Constitution because he failed to allege facts showing he suffered a concrete injury in fact, apart from the alleged statutory violation itself, the U.S. Court of Appeals for the Seventh Circuit has ruled unanimously, applying the U.S. Supreme Court’s decision in Spokeo, Inc. v. Robins, 136 S.Ct. 1540 (2016). Groshek v. Time Warner Cable, Inc., No. 16-3355; Groshek v. Great Lakes Higher Education Corp., No. 16-3711 (7th Cir. Aug. 1, 2017).


The FCRA requires that before an employer may obtain a consumer background report on an employee or job applicant, the employer must give the person a “clear and conspicuous” written disclosure that a background report may be obtained. The disclosure must be “in a document that consists solely of the disclosure.” This is known as the “stand-alone disclosure” requirement. In addition, the person must give written consent authorizing the employer to obtain the background report.

In May 2016, the Supreme Court decided Spokeo, which involved a different provision of the FCRA. The Supreme Court held that to have standing to sue under Article III, a plaintiff must have suffered a “concrete” injury apart from the underlying statutory violation itself. (For details of Spokeo, see our article, Supreme Court: ‘Actual Injury’ Needed to Establish Standing to Sue for Violations of Fair Credit Reporting Act.) Spokeo has been applied to actions, typically class actions, brought under many different statutes, including the FCRA. Courts applying Spokeo in FCRA stand-alone disclosure cases, such as Groshek, are divided on the standing question. Decisions dismissing cases for lack of standing presently outnumber approximately two-to-one decisions that find standing.


Groshek involved appeals from two district court decisions holding the plaintiff lacked standing under Spokeo. In each case, Cory Groshek had received and signed a disclosure and authorization form before the employer obtained a background report on him. Groshek brought class actions alleging that the disclosure and authorization forms he received and signed did not comply with the FCRA’s stand-alone disclosure requirement because they contained extraneous information, including a release of liability. Groshek did not allege, nor could he have, that the inclusion of extraneous language confused him or that he would have done anything differently had the form complied with the FCRA by not including the extraneous language. Groshek and the alleged class sought to recover statutory damages (not actual damages), which can range from $100 to $1,000 per person for willful violations of the FCRA.

Relying on Spokeo, the defendant-employers moved to dismiss the cases for lack of standing. The district courts granted the motions and dismissed each of the cases. Groshek appealed those decisions to the Seventh Circuit, which consolidated the appeals.

Seventh Circuit’s Opinion

The issue before the Seventh Circuit was whether the statutory violation alleged by Groshek (the Court assumed, but did not decide, the legal sufficiency of Groshek’s claim) constituted a “concrete” injury within the meaning of Spokeo. Groshek contended that he suffered two types of concrete injuries: an informational injury and a violation of his right of privacy. Writing for a unanimous panel of the court, Judge William J. Bauer rejected both of Groshek’s arguments and affirmed the district court decisions.

The Court began its analysis by considering the purpose of the FCRA’s disclosure and authorization requirements. It stated that the stand-alone disclosure requirement “is clearly designed to decrease the risk of a job applicant unknowingly providing consent to the dissemination of his or her private information,” and that the authorization requirement further protects consumer privacy by giving the person the right to withhold consent. The Court then reasoned that the statutory violation alleged by Groshek was not tied to the concrete harm that the FCRA sought to protect against, because (a) the disclosure that he received did inform him that a background report may be obtained, and (b) there was no allegation that the extraneous language confused him or “caused him not to understand the consent he was giving.”

In rejecting his claim of an informational injury, the Court distinguished the two Supreme Court cases relied upon by Groshek, Federal Election Commission v. Akins, 524 U.S. 11 (1998), and Public Citizen v. Department of Justice, 491 U.S. 440 (1989). In those cases, the plaintiffs sought to compel the government to disclose information that the government was statutorily required to disclose. In contrast, Groshek was not seeking to compel the employers to provide him with any information, and he therefore suffered no informational injury. The Court also held that Groshek did not suffer a concrete privacy injury, because he had knowingly signed the disclosure and authorization form allowing the employer to obtain a background report.

The Court concluded by distinguishing the decision in Syed v. M-I, LLC, 853 F.3d 492 (9th Cir. 2017), an FCRA stand-alone disclosure case in which the Ninth Circuit held that the plaintiff had standing under Spokeo. The disclosure form in Syed contained a liability waiver similar to those in the disclosure forms at issue in Groshek. However, the Syed court characterized the allegations in that case, and reasonable inferences therefrom, as alleging that the plaintiff was “confused” by the inclusion of the liability waiver and, further, that the plaintiff “would not have signed it” in the absence of the liability waiver. The Seventh Circuit found Syed to be “inapposite,” because, “[u]nlike the plaintiff in Syed, Groshek presents no factual allegations plausibly suggesting that he was confused by the disclosure form … or that he would not have signed it had the disclosure complied” with the FCRA.


The Seventh Circuit is the second Court of Appeals to decide the question of whether a plaintiff alleging a violation of the FCRA’s stand-alone disclosure requirement has standing. The Ninth Circuit in Syed reached the opposite result. The Groshek opinion likely will be more influential than Syed among district courts, however. First, the standing analysis in Groshek is more thorough than was the Ninth Circuit’s analysis in Syed, which was only two paragraphs long. Also, the Ninth Circuit’s rationale is much narrower, because it is based on the Ninth Circuit’s reading of the plaintiff’s complaint as alleging he was confused by the inclusion of the liability release language and would not have consented to the background check had that language not been there. In our experience, few, if any, plaintiffs would be able to credibly (and truthfully) make such an allegation. And if the existence of an injury in fact turned on whether the named plaintiff was confused by the inclusion of extraneous language in the disclosure, that could turn the standing inquiry into an individual determination, thereby making class certification inappropriate under the predominance requirement of Rule 23 of the Federal Rules of Civil Procedure.

Illinois Class Actions Spark New Attention For Biometric Data Applications

Capturing the time employees’ work can be a difficult business. In addition to the complexity involved with accurately tracking arrival times, lunch breaks, overtime, etc. across a range of federal and state laws (check out our Wage and Hour colleagues who keep up on all of these issues), many employers worry about “buddy punching” or other situations where time entered into their time management system is entered by a person other than the employee to whom the time relates. To address that worry, some companies have implemented biometric tools to validate time entries. A simple scan of an individual’s fingerprint, for example, can validate that individual is the employee whose time is being entered. But that simple scan can come with some significant compliance obligations, as well as exposure to litigation as discussed in a recent Chicago Tribune article.

The use of biometrics identifiers still seems somewhat futuristic and high-tech, but the technology has been around for a while, and there are already a number of state laws addressing the collection, use and safeguarding of biometric information. We’ve discussed some of those here, including the Illinois Biometric Information Privacy Act which is the subject of the litigation referenced above. Notably, the Illinois law permits individuals to sue for violations of the law and, if successful, can recover liquidated damages of $1,000 or actual damages, whichever is greater, along with attorneys’ fees and expert witness fees. The liquidated damages amount increases to $5,000 if the violation is intentional or reckless.

For businesses that want to deploy this technology, whether to time management, physical security, validating transactions or other purposes, there are a number of things to be considered. Here are just a few:

  • Is the company really capturing biometric information as defined under the applicable law? New York Labor Law Section 201-a generally prohibits the fingerprinting of employees by private employers. However, a biometric time management system may not actually be capturing a “fingerprint.” According to an opinion letter issued by the State’s Department of Labor on April 22, 2010, a device that measures the geometry of the hand is permissible as long as it does not scan the surface details of the hand and fingers in a manner similar or comparable to a fingerprint. So it is important to understand the technology and, specifically, the exact type of information being captured.
  • How long should biometric information be retained? A good rule of thumb – avoid keeping personal information for longer than is needed. The Illinois statute referenced above codifies this rule. Under that law, biometric identifiers and biometric information must be permanently destroyed when the initial purpose for collecting or obtaining such identifiers or information has been satisfied or within 3 years of the individual’s last interaction with the entity collecting it, whichever occurs first.
  • How should biometric information be accessed, stored and safeguarded? Before collecting biometric data, companies may need to provide notice and obtain written consent from the individual. This is the case in Illinois. As with other personal data, if it is accessible to or stored by a third party services provider, the company should obtain written assurances from its vendors concerning such things as minimum safeguards and record retention.
  • Are you ready to handle a breach of biometric data? Currently, 48 states have passed laws requiring notification of a breach of “personal information.” Under these laws, the definitions of personal information vary, and the definitions are not limited to Social Security numbers. A number of them include biometric information, such as Connecticut, Illinois, Iowa and Nebraska. Accordingly, companies should include biometric data as part of their written incident response plans.

The use of biometrics is no longer something only seen in science fiction movies or police dramas on television. It is entering mainstream, including the workplace and the marketplace. Businesses need to be prepared.