The lawsuit was brought by the New York law firm of Outten & Golden, LP.  In it, the plaintiffs alleged that they were misclassified as exempt from overtime pay when in fact they were non-exempt workers who should have been paid for the overtime hours they worked. 

In his ruling, Judge Berman authorized notice to go out to a lass of employees consisting of Audit Assistants, Audit Senior Assistants, Audits In-Charge, and Audit Seniors (collectively, “Audit Class Members”).  Any one working in these positions recently will now receive notice of this lawsuit and an invitation to join.

Judge Berman authorized this notice because “Plaintiffs have demonstrated that Deloitte’s alleged improper classification ofAudit Class Members as exempt from overtime pay requirements “may be determined on a collective basis.” Kress, 263 F.R.D. at 631. Class-wide determination is appropriate because Deloitte’s training and audit methodology (and applicable accounting professional standards) appear to uniformly apply to Audit Class Members. See Id.; Brady, 2010 WL 1200045, at *5. These uniform standards directly address whether Audit Class Members exercise discretion and independent judgment. See Kress, 263 F.R.D. at 630-31; 29 C.F.R. § 541.200( a). “

Good luck to Attorney Justin Swartz and his team at Outten & Golden and to any class members who join. 

First, a huge shout out to the plaintiff’s lawyers in this case.  Charles C. Goetsch from New Haven took this case and did a fabulous job.  Many of us would not have taken this case for economic reasons.  Way to go Attorney Goetsch!

Now, on to the case.  The facts are a bit complex, but essentially a Metro North worker who suffers from PTSD because of service during the first gulf war, needed to leave work and take another day off because of an argument with his boss.  He told another employee to tell his boss, then took another day off and again had another worker tell his boss.  He was later written up for not following MetroNorth’s procedures which required him to tell his boss directly.

He claims FMLA interference, FMLA retaliation and Intentional Infliction of Emotional Distress.  The jury returned a verdict for the plaintiff on the interference claim, but for MetroNorth on the other two claims.

The Second Circuit issued three holdings.  First, MetroNorth’s rule that you have to call your boss and cannot relay the message through another was illegal.  Second, that Judge Bryant’s jury instruction on material adverse employment action was wrong.  Here, the Second Circuit adopted the U.S. Supreme Court’s ruling in Burlington Northern and gave Millea a new trial:

“For purposes of the FMLA’s anti-retaliation provision, a materially adverse action is any action by the employer that is likely to dissuade a reasonable worker in the plaintiff’s position from exercising his legal rights. By instructing the jury that a “material adverse action” is restricted solely to changes in the employee’s terms and conditions of employment, the district court committed legal error.”

This ruling required a new trial on the retaliation claim because Metro North had placed a written reprimand in Millea’s file which the Second Circuit said by law is a materially adverse employment action.

The best part of the ruling for me (of course) is that part about attorneys fees.  Plaintiff’s counsel submitted evidence that its lodestar attorneys fee was $144,792.  Judge Bryant reduced it to $210 or approximately one third of the $612 judgment the jury returned for Plaintiff.  The Second Circuit said this reduction was reversible error.  I don’t have room to reprint the fantastic language from the decision here.  Please read it, print it and keep a copy close to your desk.  Here is a taste:

“The district court calculated its final fee award as a proportion of the damages Millea was awarded. Millea, 2010 WL 126186, at *6. This was legal error. While a court may, in exceptional circumstances, adjust the lodestar, Perdue, 130 S. Ct.at 1673, it may not disregard it entirely. Especially for claims where the financial recovery is likely to be small, calculating attorneys’ fees as a proportion of damages runs directly contrary to the purpose of fee-shifting statutes: assuring that civil rights claims of modest cash value can attract competent counsel. The whole purpose of fee-shifting statutes is to generate attorneys’ fees that are disproportionate to theplaintiff’s recovery. Thus, the district court abused its discretion when it ignored the lodestar and calculated the attorneys’ fees as a proportion of the damages awarded.”

Wow.  Great stuff.  The clear message for plaintiffs attorneys is to bring small, but strong cases and don’t worry about a district judge cutting your lodestar.  The Second Circuit has our back!

With that behind us, the news is that Judge Janet C. Hall of the District of Connecticut issued a ruling on September 27, 2011 in the case of Perkins v. SNET rejected SNET’s argument that any damages in this overtime misclassification case should be calculated on the basis of the Fluctuating Work Week method of overtime calculation.

If you’ve never heard of it, this overtime pay scheme allows employers to pay half time, rather than time and a half for their non-exempt employees.  There is a very old (1942) U.S. Supreme Court case on this topic called Overnight Motor Transportation Co. v. Missel, 316 U.S. 572 (1942).  There is also a federal regulation.  C.F.R. Section 778.114.  These rules allow employers to pay their non-exempt employees overtime at this reduced rate as long as they do not dock their salary when they work less than 40 hours.  In other words, employers cannot have their cake and eat it, too.

The tricky part comes when employers have classified a group of employees as exempt from overtime, they are sued and lose, and now we have to figure out what the class of misclassified employees are owed.  Plaintiffs attorneys want to divide the weekly salary by 40 to come up with an hourly rate and pay that rate times 1.5.  ($800 weekly salary / 40 = $20 x 1.5 = $30 overtime rate). If the worker puts in 50 hours, they claim $300 for their 10 overtime hours.

Clever defense attorneys want to divide the salary by the total number of hours worked in the week, including overtime hours, lets say 50.  $800 / 50 = $16.  $16 x 1.5 = $24.  Since they claim to have already paid $16 for the 10 overtime hours, they claim that all they owe is $8 x 10 hours or $80. 

In Perkins, SNET filed a motion in limine seeking a ruling that if they lose, they only owe overtime at the half time rate, not the time and a half rate discussed above.  In the above example, it is a difference of $220 per week per person.  Lots of money on the line.

Judge Hall rejected this argument and granted Plaintiff’s motion in limine, ruling that the time and a half method was applicable.  Her ruling (it is not yet published but can be found on Pacer.  It is civil action 3:07 CV 967 (JCH))contains a detailed and thoughtful analysis of the relevant statute, regulations, cases and DOL opinion letters.  It is must reading for any Connecticut wage / hour practitioner. 

In the end, my favorite part of her ruling was her footnote 5:

“In addition, the court agrees that assessing damages using the fluctuating workweek method provides a perverse incentive to employers to misclassify workers as exempt, and a windfall in damages to an employer who has been found liable for misclassifying employers under the FLSA. (citations omitted).”

This ruling should provide powerful precedent going forward to other plaintiffs or groups of plaintiffs seeking to be compensated for unpaid overtime wages. 
Congratulations to counsel for the plaintiffs, Sanford, Wittels & Heisler, LLP-NY.

The litigation was brought by a group of Carlos Torres and other Assistant Managers who claimed that they should not have been denied overtime pay.  The litigation was settled.  Gristedes stopped making its required payments.  Plaintiffs filed a motion for summary judgment to hold its owner, billionaire John Catsimatidis, personally liable.  Attorney Justin Swartz of the law firm of Outten & Golden in Manhattan was the lead attorney on this case.

The court ruled that Mr. Catsimatidis is personally responsible.  First, the Fair Labor Standards Act has a broad and liberal definition of employer.  It include “any person acting directly or indirectly in the interest of an employer in relation to any employee.”  29 U.S.C. § 203(d). 

The legal test that courts apply is called the “economic reality test.”  It requires the individual to have:

(1) the power to hire and fire employees;(2) supervise and control employee work schedules;(3) determine the rate and methods of pay; and (4) maintain employment records.

The court held that this definition included Mr. Catsimatidis because “he is the one person who is in charge of the corporate defendant.” 

This ruling is truly a great ruling for employees.  It holds the individuals behind corporations personally responsible for failing to pay wages and does not allow corporations to avoid their wage debts by hiding behind the corporate shell.

Congratulation to Attorney Swartz and his entire team.

 The Third Circuit invoked the “relation back doctrine” to prevent the employer from rendering the potential collective action moot by making an offer of judgment to the nurse in a strategic attempt to “pick off” the named plaintiff before the court could consider certification of the collective action.  Under the relation back doctrine, a court can retain jurisdiction of a case to rule on a named plaintiff’s attempt to represent a class by treating a certification motion as though it had been filed at the same time as the initial complaint.  In other words, a court can pretend that the certification motion was filed before an employer makes an offer of judgment to decide class certification.   The Third Circuit quoted the Fifth Circuit which declared in another case that: “Congress did not intend . . . to create an ‘anomaly’ by allowing employers to use Rule 68 [offers of judgment] as a sword, ‘picking off’ representative plaintiffs and avoiding ever having to face a collective action.”

 Ultimately, the Third Circuit remanded the case to allow the nurse to move for conditional certification and have the trial court decide whether the certification motion was made without undue delay.  On remand, if the trial court found that the nurse’s certification motion was timely, then the relation back doctrine would apply.  Then, if the trial court allowed the suit to proceed as a collective action and at least one other similarly situated employee opted in, then the offer of judgment made to the nurse would not moot the collective action because such offer would no longer fully satisfy everyone in the collective action.

 A key lesson from Symczyk is that a prospective FLSA representative plaintiff should not stall in filing a motion to certify so that he/she can reduce the possibility that a defendant makes an offer of judgment to him or her to render the potential collective action moot.

Thanks to Attorney Erick Diaz for this post.

In Hart v. Family Dental Group, PC, 2011 U.S. App. LEXIS 10967 (2d Cir. 2011), a dentist who was a member of the U.S. Army Reserves sought to return to his contract position at Family Dental Group (“FDG”) after a six-month tour in Iraq.  Three days after he returned from his tour, FDG handed him a letter notifying him that it would terminate his employment contract and fire him in 60 days.  After the dentist questioned the legality of his termination, FDG issued him a second letter reducing the amount of notice given from 60 to 30 days (which is what the employment contract required).  The dentist then obtained the help of the U.S. Department of Labor (“DOL”).  DOL informed FDG that, based on the duration of the dentist’sIraq tour, § 4316(c)(2) of USERRA provided that FDG could not discharge him for 180 days following his return.   FDG waited 180 days, and fired the dentist.  Subsequently, the dentist filed a lawsuit in federal district court alleging several violations of his USERRA rights.

A jury trial was held on the dentist’s claims.  After the dentist rested his case, the district court granted judgment as a matter of law in favor of FDG on six of the eight USERRA claims, and the jury found in favor of FDG on two counts that addressed whether FDG discriminated against the dentist for him being a member of the U.S. Army Reserves.   On appeal, the dentist only challenged the district court’s grant of judgment as a matter of law in favor of FDG as to his two USERRA 38 U.S.C. § 4312(a) claims, which dealt with whether FDG complied with its USERRA obligation of reemploying the dentist in either the position of employment in which he would have been employed if his continuous employment had not been interrupted by his military service or in a position of like seniority, status and pay for which he was qualified. 

The Second Circuit defined the issue on appeal as whether FDG’s letter providing the dentist with 60-days notice (later amended to 30-days) and the dentist’s subsequent termination violated § 4312(a).  The Second Circuit affirmed the grant of judgment as a matter of law on the two claims being appealed, finding that FDG complied with “all [that] § 4312 requires”.  The court of appeals reasoned that FDG complied with § 4312 because the evidence was clear that the dentist was reemployed for 180 days upon his return from his military tour, with the same seniority and other rights and benefits or lack of benefits that he had before he left on his tour. 

Importantly, while the outcome of the case is unfortunate for the dentist who sacrificed to serve his country, Hart should not discourage other employees who are affiliated with the uniformed services from asserting their substantial USERRA rights.  The Second Circuit decided Hart on a narrow basis because the dentist was only appealing his USERRA 38 U.S.C. § 4312(a) claims.  Indeed, the Second Circuit noted that it expressed “no opinion” on the merit of the dentists’ USERRA claims under § 4311 (which bans discrimination and retaliation against military service members) or § 4316 (which provides that a reemployed service member is entitled to the seniority, rights and benefits determined by seniority that the person had on the date of the commencement his/her military tour plus the additional seniority and rights and benefits that he/she would have attained if the person had remained continuously employed).  Therefore, if you believe your USERRA rights have been violated, you should consult with competent legal counsel.

(Thank you to Attorney Erick Diaz for contributing this post)

In Jackler v. Byrne, _ F.3d _ (2d Cir. 2010), a police officer claimed that he was fired for refusing to retract a false statement in an official report about another officer’s misconduct.  The defense, relying on Garcetti, argued that this conduct was done pursuant to his official duty.  Garcetti has been used by employers ever since its release to severely limit the application of the 1st amendment in the workplace.  Essentially, employers had claimed that almost any speech at work was pursuant to the employee’s official duties and therefore not protected.

The Second Circuit refused to stretch Garcetti this far:

Although defendants argue that Jackler’s refusals were part of his job and that Garcetti requires affirmance because otherwise any employee who simply files a truthful report could claim that his First Amendment rights were implicated because he did not file a false one, we reject that contention because it ignores the context of Jackler’s refusals. Jackler’s allegation–which must be accepted as true in the context of judgment on the pleadings–was that Rickard and Freeman, as directed by Chief Byrne, repeatedly attempted to force him to withdraw the truthful report he had filed and to submit one that was false. In the context of the demands that Jackler retract his truthful statements and make statements that were false, we conclude that his refusals to accede to those demands constituted speech activity that was significantly different from the mere filing of his initial Report. In sum, it is clear that the First Amendment protects the rights of a citizen to refuse to retract a report to the police that he believes is true, to refuse to make a statement that he believes is false, and to refuse to engage in unlawful conduct by filing a false report with the police. We conclude that Jackler’s refusal to comply with orders to retract his truthful Report and file one that was false has a clear civilian analogue and that Jackler was not simply doing his job in refusing to obey those orders from the department’s top administrative officers and the chief of police.

This is great news for employees and their lawyers. who feared that Garcetti had all but removed any protection the 1st amendment gave employees in the workplace.

The arbitration agreement submitted all matters to arbitration and did not expressly prohibit nor authorize class arbitrations.  The arbitrator found an implied agreement to arbitrate.  The District Court, relying on the U.S. Supreme Court’s ruling in Stolt-Nielsen S.A. v. AnimalFeeds International Corp. , __ U.S. __, 130 S. Ct. 1758 (2010),held that an agreement that does not expressly allow class arbitrations must be interpretted to prohibit them. 

The Second Circuit disagreed.  It held that the arbitrator’s decision cannot be vacated simply because the District Court disagreed with its legal analysis.  Further, it held that Stolt-Nielsen did not hold that abitration agreements must expressly allow for class arbitrations in order for them to occur.  It held that an abitrator may find an implied agreement to arbitrate. 

The take away for plaintiffs is that they should advance class arbitrations even if the agreement doesn’t expressly allow them.

Well, the Second Circuit is going to have a chance to address this question in the wage / hour contest very soon.

In D’antuono v. Service Road Corp, et al, Judge Kravits of the District of Connecticut granted a motion to dismiss and compel arbitration based on a similar arbitration agreement which contained a no-class actions clause.  The plaintiffs have now sought and received permission to file an interlocutory appeal with the Second Circuit.  Of course, the plaintiffs hope to win a ruling that any such class action waiver contained in an arbitration clause is unconscionable and renders the arbitration agreement invalid.  This will likely be the first Circuit court to take up this issue since Concepcione.  Stay tuned!

“The term ‘management is not self-defining.  Titles are cheaply had, and little weight, if any, can be given to the fact that SNET labels their employees “managers.”  … Further, the fact that Level Ones take advantage of this title in constructing their resumes is both unsurprising and unhelpful.” 

SNET labeled these employees managers, and classified them as exempt Executives under the CMWA.  They are challenging this designation and seeking unpaid overtime compensation.  SNET’s lawyers filed a motion for summary judgment, but Judge Hall denied it.  She concluded that they there were genuine issues of material fact as to whether they performed management duties as intended by the Act.  She also ruled that even if they performed some management duties, that there were genuine issues of material fact as to whether or not management was their primary duty.

As to whether or not they performed management duties at all, Judge Hall examined SNET’s claim that they perfomed five specific types of duties.  In each case, she rejected SNET’s claim.  “In light of the little control Level Ones exercise over the nature of the various duties described in this section, the record supports a finding that Level Ones do not engage in “management duties.”

Judge Hall then turned her attention to SNET’s argument that Level Ones have management as their primary duty.  “Even if one or more of the aforementioned duties were to constitute “management,” partial summary judgment would be inappropriate in this case.  … There is undisputed evidence 0n the record that Level Ones exercise very little discretion in their position, are closely monitored by their superiors, and earn less money than their “subordinate” Techs. … In light of this evidence, summary judgment is clearly inappropriate.”

Ms. Perkins and the plaintiffs are aptly represented by Sanford, Wittles & Heisler, from New York.  Congratulations and thanks for expanding workers’ rights in Connecticut!