England v. New Century Financial Corp.
| Decision Date | 26 April 2005 |
| Docket Number | No. CIV.A.04-216-B-M1.,No. CIV.A.03-360-B-M1.,CIV.A.03-360-B-M1.,CIV.A.04-216-B-M1. |
| Citation | 370 F.Supp.2d 504 |
| Parties | Kimberly A. ENGLAND, et al v. NEW CENTURY FINANCIAL CORPORATION, et al Michael Klas, et al v. New Century Financial Corporation, et al |
| Court | U.S. District Court — Middle District of Louisiana |
Ellis B. Murov, Ambrose V. McCall, Meredith Elizabeth Moore, New Orleans, LA, for New Century Financial Corporation, et al.
Donald Harold Nichols, Nichols, Kaster & Anderson, Minneapolis, MN, pro se.
Andrew J. Voss, Littler Mendelson, Minneapolis, MN, pro se.
RULING
This matter is before the Court on the New Century Defendants' Motion to Reject Conditional Certification of a Collective Action.1 Plaintiffs have opposed this motion.2 On March 31, 2005, the Court granted the defendants' motion. The Court now sets forth its reasons for granting defendants' motion.
Two suits were filed by employees of the New Century Financial Corporation, New Century Mortgage Corporation, Worth Funding, Incorporated, and The Anyloan Company (hereinafter referred to as "New Century" or "defendants") for alleged violations of the Fair Labor Standards Act ("FLSA"),3 as will be set forth in more detail later in this opinion. The England suit was filed in a Louisiana state court and removed to federal court. Thereafter, the Klas suit was filed in the District Court of Minnesota. Plaintiffs seek to file this action as a collective action and contend that 485 plaintiffs have filed consent forms to join in this action seeking overtime compensation for which they were not paid. Plaintiffs allege that they are all loan officers who performed the same job, under the same job title, job duties, compensation plan, policies, procedures and performance standards. Further, plaintiffs offer 232 declarations submitted by various plaintiffs, 198 of which declare that managers at 70 of the 80 defendants' branch offices nationwide instructed them not to record their overtime hours. Plaintiffs contend this evidence is sufficient to satisfy the "lenient `similarly situated' standard."4 As will be noted in more detail later in this opinion, at no time did the plaintiffs file a formal motion to certify this action as a collective action. As a result, the defendants have filed a motion to reject conditional certification of a collective action.
In support of their motion, the defendants note that this action involves loan officers who work under different branch managers in approximately 80 branches located in 30 different states. Defendants also contend that in order for plaintiffs to successfully prove that this case is appropriate for collective class treatment, plaintiffs must submit evidence of a centralized and company-wide practice with respect to the approval and documentation of overtime. The defendants further argue that "off-the-clock" allegations are "inherently local in nature and, thus, not susceptible to being handled as a nationwide class."5 Defendants also emphasize that plaintiffs' counsel contemplates taking 200-400 discovery depositions, and argue that, "[a]ny action requiring over 400 depositions is inappropriate for class treatment."6
The Court believes it is important to set forth the complicated procedural background of this case. The England action was originally filed in the 19th Judicial District Court for East Baton Rouge Parish, Louisiana, in April of 2003. Defendants timely removed England to the United States District Court for the Middle District of Louisiana in May of 2003. On June 10, 2003, the Klas action was filed in the United States District Court for the District of Minnesota. Thereafter, the plaintiffs in England filed a motion to dismiss the Louisiana suit in order to join the action in Minnesota. This Court denied the motion based on the "first to file" rule.7 The Klas action was then transferred to this Court and consolidated with the England case.8
Before the Klas action was transferred from Minnesota and consolidated with England, the Klas plaintiff filed a "Motion for Judicial Notice" seeking the Minnesota district court's approval of plaintiff's proposed "Notice of Lawsuit." It is this motion that plaintiffs' counsel now argues should be treated as a motion for conditional certification.9 Plaintiffs' counsel admits in his February 23, 2005, letter to the Court that the plaintiffs have never brought a formal motion seeking conditional certification of a collective action.10 The record supports this concession by plaintiffs' counsel.
The defendants contend that plaintiffs have attempted to engage in discovery which should only be available if the conditional certification had been granted. The defendants also argue that plaintiffs purposely failed to file a motion for conditional certification to circumvent the Case Management Order which required that such a motion be filed by April 2, 2004. Thus, to bring this issue to a conclusion, the New Century defendants filed a "Motion to Reject Conditional Certification of a Collective Action." As noted earlier, the Court has granted this motion in a separate order issued by the Court.
To certify a collective action under the Fair Labor Standards Act, two requirements must be met. First, the named representatives and the putative members of the prospective FLSA class must be similarly situated.11 Second, the pending action must have a general effect. A court may deny plaintiffs' right to proceed collectively if the action arises from circumstances purely personal to the plaintiff, and not from any generally applicable rule, policy, or practice.12
In the seminal case Mooney v. Aramco Services Co.,13 the United States Court of Appeals for the Fifth Circuit noted the two different tests which have been applied to determine if the claims are "similarly situated." This two-step approach was set forth in Lusardi v. Xerox Corp.14 and the "Spurious Class Action" outlined in Shushan v. University of Colorado.15 These two cases will be discussed and analyzed in more detail because of their importance to the Court's decision.
Plaintiffs bear the burden of establishing that they are similarly situated to the proposed class of other employees.16 Similarly situated does not necessarily mean identically situated.17 Rather, an FLSA collective action determination is appropriate when there is "a demonstrated similarity among the individual situations ... some factual nexus which binds the named plaintiffs and the potential class members together as victims of a particular alleged [policy or practice]."18 The district court for the Eastern District of Louisiana noted as follows:
This standard has been restated and further refined in H & R Block, Ltd. v. Housden, 186 F.R.D. 399 (E.D.Tex.1999):
[A]lthough the standard for satisfying the first step is lenient,... the court still requires at least "substantial allegations that the putative class members were together victims of a single decision, policy or plan infected by discrimination." [C]ourts who have faced the question of whether movants established substantial allegations have considered factors such as whether potential plaintiffs were identified ...; whether affidavits of potential plaintiffs were submitted ...; and whether evidence of a widespread discriminatory plan was submitted...19
Another district court has concluded "that while a united policy, plan or scheme of discrimination may not be required to satisfy the more liberal similarly situated requirement, some identifiable facts or legal nexus must bind the claims so that hearing the cases together promotes judicial efficiency."20
In Basco v. Wal-Mart Stores, Inc.,21 the Eastern District of Louisiana succinctly explained the Lusardi and Shushan cases as follows:
Under Lusardi, the trial court approaches the "similarly situated" inquiry via a two-step analysis. The first determination is made at the "notice stage." At the notice stage, the district court makes a decision — usually based only on the pleadings and any affidavits which have been submitted — whether notice of the action should be given to potential class members.
Because the court has minimal evidence, this determination is made using a fairly lenient standard, and typically results in "conditional certification of a representative class." If the district court "conditionally certifies" the class, putative class members are given notice and the opportunity to "opt-in." The action proceeds as a representative action throughout discovery.
The second determination is typically precipitated by a motion for "decertification" by the defendant usually filed after discovery is largely complete and the matter is ready for trial. At this stage, the court has much more information on which to base its decision, and makes a factual determination on the similarly situated, the district court decertified the class, and the opt-in plaintiffs are dismissed without prejudice. The class representatives — i.e. the original plaintiffs — proceed to trial on their individual claims.22
The Eastern District of Louisiana utilized the Lusardi approach because it found that the Lusardi approach has been "embraced" more often in the Fifth Circuit than the "Spurious Class Action" found in Shushan. This Court agrees and will apply Lusardi to the facts of this case.
In Basco, the plaintiffs alleged that Wal-Mart pursued a pattern of conduct which caused employees to work off the clock, be "locked in" at night off the clock while waiting for management to let them out, and missing rest and meal breaks. The plaintiffs sought a court order certifying this case as a collective action under §...
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