Alvarez v. City Of Chicago

• Decision Date: 21 May 2010
• Docket Number: No. 09-2020,09-2021.,09-2020
• Citation: 605 F.3d 445
• Parties: Deborah A. ALVAREZ, et al., Plaintiff-Appellants,v.CITY OF CHICAGO, a Municipal Corporation, Defendant-Appellee.Alexander Caraballo, et al., Plaintiff-Appellants,v.City of Chicago, a Municipal Corporation, Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

605 F.3d 445

Deborah A. ALVAREZ, et al., Plaintiff-Appellants,

v.CITY OF CHICAGO, a Municipal Corporation, Defendant-Appellee.

Alexander Caraballo, et al., Plaintiff-Appellants,

v.City of Chicago, a Municipal Corporation, Defendant-Appellee.

Nos. 09-2020, 09-2021.

United States Court of Appeals Seventh Circuit.

Argued Nov. 4, 2009.

Decided May 21, 2010.

Jac A. Cotiguala (argued), Chicago, IL, for Plaintiffs-Appellants.

Jennifer Erickson Baak (argued), Office of the Corporation Counsel Appeals Division, Chicago, IL, for Defendant-Appellee.

Before CUDAHY, FLAUM, and EVANS, Circuit Judges.

FLAUM, Circuit Judge.

This is the consolidated appeal from the dismissal of two lawsuits brought by paramedics in Chicago. The plaintiffs claim that the City of Chicago systemically miscalculated their overtime pay in a total of ten different ways. Not all claims, however, are common to all plaintiffs. Relying on our decision in Jonites v. Exelon Corp., 522 F.3d 721 (7th Cir.2008), the district court dismissed the plaintiffs' collective action as “hopelessly heterogenous” and directed the plaintiffs to proceed through arbitration. Because the named plaintiffs have the right to proceed individually, we reverse the judgment of dismissal.

I. Background

On August 28, 2006, a group of fifty-four paramedics employed by the Chicago Fire Department filed a two-count collective action against the City of Chicago, alleging that it willfully failed to properly compensate them for overtime, in violation of the Fair Labor Standards Act (“FLSA”), 29 U.S.C. §§ 201-219 (2006). See Alvarez v. City of Chicago, No. 06-cv-4639 (N.D.Ill.). The district court granted the Alvarez plaintiffs' motion to begin distributing notices of the action to prospective plaintiffs and provided them with 60 days in which to add additional plaintiffs.

More than three hundred additional plaintiffs opted in. On the City's motion, the district court dismissed several of them because the 60-day deadline had passed. Four of those plaintiffs, along with eight new plaintiffs, then filed a new action. See Caraballo v. City of Chicago, No. 07-cv-2807 (N.D.Ill). The Caraballo plaintiffs assert the same claims as the Alvarez plaintiffs, but did not style their lawsuit as a collective action or seek class certification. On September 13, 2007, the district court consolidated Alvarez and Caraballo.

On June 6, 2008, the Caraballo plaintiffs moved for summary judgment. In their motion for summary judgment, the Caraballo plaintiffs identified a total of ten subclaims under FLSA. Briefly summarized, these claims are:

1. Payments excluded from employees' “regular rate” for determining overtime compensation. FLSA requires overtime at the rate of one-and-a-half times an employee's “regular rate,” which is defined as “all remuneration for employment paid to ... an employee,” with several exceptions including “payments to an employee which are not made as compensation for his hours of employment.” The paramedics identify six types of pay that they believe were wrongly excluded from their “regular rate.”

a. Duty availability pay. This is a quarterly lump-sum payment of $175 made to all emergency medical services employees who work in 24-hour shifts pursuant to the collective bargaining agreement (“CBA”).

b. Fitness pay. Also made pursuant to the CBA, this is a lump-sum payment of $350 to employees who meet certain physical qualifications measured by a voluntary fitness test, which employees may take yearly.

c. Specialty pay. Specialty pay is provided under the CBA to paramedics who are also hazardous materials technicians and certified drivers. The compensation is equal to 5% of the employee's annual salary and is paid quarterly on a pro rata basis.

d. Uniform pay. Pursuant to the CBA, all paramedics receive two lump-sum payments during the course of a year “for cleaning and maintenance of dress uniforms, work clothes and protective clothing.”

e. Acting pay. If a paramedic temporarily works in a higher rank, he receives additional compensation known as acting pay.

f. Driving pay. Paramedics receive additional compensation, known as driving pay, if they drive the ambulance.

2. Treatment of continuing education time. Plaintiffs make two arguments regarding the way the city handled time spent in continuing education. First, plaintiffs argue that the city improperly counted time spent in continuing education as “hours worked” for purposes of calculating the regular rate, since continuing education was compensated on an annual basis. Because the City calculated plaintiffs' regular rate (and, in turn, overtime rate) by dividing paramedics' salary by the number of hours worked, an increase in “hours worked” decreases the rate at which plaintiffs are compensated for overtime. Second, plaintiffs argue that the city could not use payments made for continuing education as credits against overtime owed.

3. Treatment of additional shifts. The plaintiffs also argued that the City could not count hours spent working additional shifts as “hours worked” for purposes of determining the regular rate and that the City was not permitted to use them as credits against overtime owed.

4. Human computation errors. The plaintiffs argued that the city committed various human errors in calculating their overtime compensation.

5. Salary method of computing weekly regular rates. Plaintiffs argue that the city violated the FLSA by using the fixed salary method to determine regular rates.

The City filed a cross-motion for summary judgment against all parties, including the Alvarez plaintiffs. In addition to responding on the merits, defendant moved to decertify plaintiffs' collective action and dismiss their claims on the grounds that they were “hopelessly heterogenous.” On March 20, 2009, the district court granted the city's motion for summary judgment against all plaintiffs, reasoning that the plaintiffs were not similarly situated because each plaintiff raised a different combination of the ten subclaims, such that the plaintiffs could not be readily divided into homogenous subgroups. The district court also noted that arbitration pursuant to the collective bargaining agreement, while not mandatory, might be a more efficient way to resolve the paramedics' claims. The court did not reach the merits of the ten subclaims raised by the plaintiffs. Instead, it dismissed the claims of all plaintiffs, without prejudice, and directed them to pursue arbitration.

II. Analysis

The Fair Labor Standards Act gives employees the right to bring their FLSA claims through a “collective action” on behalf of themselves and other “similarly situated” employees. 29 U.S.C. § 216(b) (2006). A collective action is similar to, but distinct from, the typical class action brought pursuant to Fed.R.Civ.P. 23. The principle difference is that plaintiffs who wish to be included in a collective action must affirmatively opt-in to the suit by filing a written consent with the court, while the typical class action includes all potential plaintiffs that meet the class definition and do not opt-out.

The City-and the district court's opinion-relies heavily on our decision in Jonites v. Exelon Corp., 522 F.3d 721 (7th Cir.2008). In Jonites, we affirmed the dismissal of a collective action brought on behalf of more than a thousand lineman and other hourly workers employed by Commonwealth Edison. The Jonites plaintiffs alleged that two types of purportedly off-duty time were really compensable work. The first involved Com Ed's “call-out” policy, which required off-duty workers to respond to at least 35% of the calls from their employer for additional manpower on an emergency basis. The frequency of these call-outs varied widely among workers; some were called as often as once every five and a half days on average, and others no more than once a month. The employees took the position that they were entitled to be paid for “some of the time” during which they were subject to call, with the amount to be determined by the trier of fact. The second challenge was to the lunch policy, which required workers at job sites to remain awake and be alert for trespassing and the theft of tools. However, only part of the class worked the daytime shift, to which the lunch policy applied. We held that as to both of these claims, the purported class was “hopelessly heterogenous” because liability would require significant individual fact-finding and many of the workers had no conceivable claim at all. Id. at 725-26, 522 F.3d 721. We further held that the individual plaintiffs must either file individual suits, create homogenous classes, or ask the union to file grievance proceedings under the collective bargaining agreement. Id. at 726. Because the purported class here is made up of plaintiffs who each have a different combination of subclaims, defendants argue that it is similarly heterogenous and was properly dismissed in favor of arbitration.

Appellants argue that this case is different from Jonites because the plaintiffs here appear to be similarly situated with regard to individual subclaims, but are heterogenous only because there are several different combinations of those subclaims. For example, whether any given paramedic is entitled to recover on the uniform pay theory depends on the legal question of whether such pay should have been included in the base rate, and the simple factual question of whether the particular paramedic received uniform pay. Instead of dismissing their claims as heterogenous, plaintiffs argue, the district court should have allowed them to split their claims into homogenous subclasses. See, e.g., Fravel v. County of Lake, No. 2:07-cv-253, 2008 WL 2704744 (N.D.Ind. July 7, 2008) (allowing plaintiffs to proceed collectively and grouping the plaintiffs into four distinct subclasses depending on which theory of liability applied to them). Plaintiffs suggest that here, as in Fravel, “[r]esolving common questions as a class, even through the...