Kaluom v. Stolt Offshore, Inc.

• Citation: 474 F.Supp.2d 866
• Decision Date: 07 February 2007
• Docket Number: Civil Action No. G-05-642.
• Parties: Jenggi KALUOM, Individually, and on behalf of those similarly situated, Plaintiff, v. STOLT OFFSHORE, INC., Defendant.
• Court: U.S. District Court — Southern District of Texas

474 F.Supp.2d 866 Jenggi KALUOM, Individually, and on behalf of those similarly situated, Plaintiff,
v.
STOLT OFFSHORE, INC., Defendant. Civil Action No. G-05-642. United States District Court, S.D. Texas, Galveston Division. February 7, 2007.

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Francis I. Spagnoletti, Spagnoletti & CO, Houston, TX, for Plaintiff.

Ralph E. Kraft, Jessica Ann Devitt, William P. Maines, Fulbright & Jaworski LLP, Houston, TX, for Defendant.

ORDER GRANTING PLAINTIFF'S MOTION FOR NOTICE AND DENYING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

KENT, District Judge.

Plaintiff Jenggi Kaluom ("Plaintiff"), on behalf of himself and those similarly situated, brings this action under the Fair Labor Standards Act (FLSA) to recover unpaid wages and overtime, plus damages, from Defendant Stolt Offshore, Inc. ("Defendant"). Plaintiff filed a Motion for Notice to Potential Plaintiffs for Collective Action Pursuant to 29 U.S.C. § 216(b) and Motion for Immediate Discovery. Defendant filed an Opposition to Plaintiffs Motion for Notice. Plaintiff then filed a Reply. Defendant filed a Motion for Summary Judgment, and Plaintiff filed a timely Response thereto. Defendant then filed a Summary Judgment Reply Brief and Supplemental Opposition to Plaintiffs Motion for Notice. The Court, after duly considering said Motions and as fully explained below, GRANTS Plaintiffs Motion for Notice and DENIES Defendant's Motion for Summary Judgment.

I. Background

Plaintiff, a Malaysian national, worked as a rigger or pipe-facing machine operator on a foreign-flag vessel, DLB-801, operating on the Outer Continental Shelf in the Gulf of Mexico. Plaintiff alleges that he was employed by Defendant, and that Defendant was the owner pro hac vice of DLB-801. Defendant is a Louisiana Corporation.

Plaintiff alleges that Defendant employed him and other similarly situated workers at pay rates less than the minimum wage standard set forth in the FLSA and that Defendant failed to pay overtime for hours worked in excess of forty each week. Plaintiff requests that the Court allow him to send notice of the instant litigation to "all current and former maritime workers who worked for Defendant Stolt Offshore Inc., from January 1, 2002, to the present." Such notice would advise potential class members of the litigation and allow them to opt-in. Defendant opposes Plaintiffs Motion for Notice because,

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according to Defendant, (1) Plaintiff has presented no evidence that there are similarly situated individuals; (2) the proposed class is overly broad because many workers are excluded from the provisions of the FLSA; (3) the inquiry required for each prospective plaintiff is too fact-specific for a collective action; and (4) Plaintiff presents no evidence that other employees want to opt-in.

Additionally, Defendant has moved for summary judgment. Defendant claims that Plaintiff is a seaman working on a foreign vessel and that, as such, the U.S. wage and hour laws do not apply. Plaintiff answers this allegation by claiming that, though the vessel is officially "foreign-flagged," it was controlled by Defendant to such an extent that Defendant was the owner pro hac vice of the vessel. Thus, under Plaintiffs theory, the vessel comes within the FLSA's definition of "American vessel," and seamen on American vessels are not excluded from the minimum wage provisions of the FLSA. See Fair Labor Standards Act of 1938, 29 U.S.C. § 213(a)(12), 213(b)(6) (2000) (exempting all seamen from the maximum hour provisions of the FLSA and exempting seamen on vessels other than American vessels from both the minimum wage and maximum hour provisions of the FLSA).

Defendant also claims that Plaintiffs claims are barred by the doctrine of res judicata and by the two-year statute of limitations. Plaintiff claims that res judicata is inapplicable in the instant case because the Court did not rule on any FLSA claims in any previous litigation. And, Plaintiff asserts that the statute of limitations for this action is three years, not two, because Defendant willfully violated the FLSA wage and hour provisions. The Court will first address Plaintiffs Motion for Notice. Then, it will discuss Defendant's Motion for Summary Judgment.

II. Notice

A. Legal Standard

Representative actions are authorized under the FLSA by "one or more employees for and in behalf of himself ... and other employees similarly situated." Fair Labor Standards Act, 29 U.S.C. § 216(b). In Hoffmann-La Roche, Inc. v. Sperling, the Supreme Court noted that Congress's policy reasons for allowing representative action litigation include "the advantage of lower individual costs to vindicate rights by the pooling of resources," and "[t]he judicial benefits [of] efficient resolution in one proceeding of common issues of law and fact arising from the same alleged ... activity." Hoffmann-La Roche, Inc. v. Sperling, 493 U.S. 165, 170, 110 S.Ct. 482, 486, 107 L.Ed.2d 480 (1989). The Supreme Court determined that district courts must "have discretion, in appropriate cases, to implement [this section of the FLSA] ... by facilitating notice to potential plaintiffs," because the benefits of representative action litigation necessarily "depend on employees receiving accurate and timely notice concerning the pendency of the collective action." Id. at 169-70, 110 S.Ct. at 486. Furthermore, district court involvement at the notice stage "serves the legitimate goal of avoiding a multiplicity of duplicative suits and setting cutoff dates to expedite disposition of the action." Id. at 172, 110 S.Ct. at 487.

The Fifth Circuit extensively discussed the class certification procedure for an ADEA representative action, which incorporates the section of the FLSA covering representative actions, 29 U.S.C. § 216(b), in Mooney v. Aramco Services, 54 F.3d 1207, 1212-14 (5th Cir.1995) (overruled on other grounds as recognized in Rachid v. Jack in the Box, Inc., 376 F.3d 305, 311 n. 10 (5th Cir.2004)). The Fifth Circuit discussed two different approaches to representative actions under the ADEA and

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FLSA: the Lusardi approach and the Shushan approach. See id.; see also Shushan v. Univ. of Colo., 132 F.R.D. 263 (D.Colo.1990); Lusardi v. Xerox Corp., 122 F.R.D. 463, 465-66 (D.N.J.1988). Due to recent changes in the Federal Rules of Civil Procedure and other reasons explained below, the Court finds that the Lusardi approach is preferable.

1. Lusardi Approach

Under the Lusardi approach, which has been the favored approach by courts in the Fifth Circuit, "the trial court approaches the `similarly situated' inquiry via a two-step analysis." Mooney, 54 F.3d at 1213; see also, e.g., England v. New Century Fin. Corp., 370 F.Supp.2d 504, 509 (M.D.La.2005) (applying Lusardi because "the approach has been `embraced' more often in the Fifth Circuit that the `Spurious Class Action' found in Shushan"). The first step is the "notice stage," during which "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." Id. at 1213-14. The district court, using a "fairly lenient standard" due to the "minimal evidence" available, may conditionally certify the representative class, which gives the representative plaintiff a right to send notice of the opportunity to "opt-in" to putative class members. Id.

The second step involves a motion for decertification, which is generally filed as discovery nears completion and the trial is approaching. Mooney, 54 F.3d at 1214. If the district court, which at this stage has considerably more information, determines that not all of the claimants are similarly situated, then it will decertify the class and dismiss the claims of the opt-in plaintiffs without prejudice. See id. If, however, the district court finds that the plaintiff and the opt-in plaintiffs are similarly situated, the case will proceed to trial. See id.

2. Shushan Approach

The second approach to representative class certification is the Shushan approach, which is also called a "Spurious Class Action." See id. See generally Shushan, 132 F.R.D. 263. Under the Shushan approach, an FLSA or ADEA representative class is completely analogous to a Federal Rules of Civil Procedure Rule 23 class action — except that, under the FLSA or ADEA, potential class members who do not opt-in are not bound by the result. See Mooney, 54 F.3d at 1214; see also Fed.R.Civ.P. 23. Thus, in order for a district court to certify the class and allow notice, the proposed class must meet the requirements of Rule 23: numerosity, commonality, typicality, and adequacy of representation. See Fed.R.Civ.P. 23.

The Court notes that Rule 23 has changed since the Mooney decision. The 2003 amendments changed Rule 23(c)(1)(C). The old Rule 23(c)(1)(C) stated that a class certification "may be conditional." Now, Rule 23(c)(1)(C) states that the order certifying the class "may be altered or amended." The Advisory Committee, in explaining this change, notes that "[a] court that is not satisfied that the requirements of Rule 23 have been met should refuse certification until they have been met," and admits that "[t]ime may be needed to gather information necessary to make the certification decision." Id. (advisory committee's notes).

Under Rule 23, "the commencement of a class action suspends the applicable statute of limitations as to all asserted members of the class...." Am. Pipe & Constr. Co. v. Utah, 414 U.S. 538, 554, 94 S.Ct. 756, 766, 38 L.Ed.2d 713 (1974) (emphasis added). Because the burden on the representative plaintiff in a Rule 23 motion

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for certification is so high, particularly given the change to Rule 23(c)(1)(C), it is likely that significant discovery will have to be undertaken before the representative plaintiff will be successful at getting a class certified....