Powers v. CENTENNIAL COMMUNICATIONS CORP., Cause No. 1:08-cv-208-PPC.

• Court: United States District Courts. 7th Circuit. United States District Court of Northern District of Indiana
• Citation: 679 F. Supp.2d 918
• Docket Number: Cause No. 1:08-cv-208-PPC.
• Parties: Brandi POWERS on Behalf of Herself and All Others Similarly Situated, Plaintiff, v. CENTENNIAL COMMUNICATIONS CORP., Defendant.
• Decision Date: 14 December 2009

679 F.Supp.2d 918

Brandi POWERS on Behalf of Herself and All Others Similarly Situated, Plaintiff,
v.
CENTENNIAL COMMUNICATIONS CORP., Defendant.

Cause No. 1:08-cv-208-PPC.

United States District Court, N.D. Indiana, Fort Wayne Division.

December 14, 2009.

679 F. Supp.2d 919

Ronald E. Weldy, Weldy & Associates, Indianapolis, IN, for Plaintiff.

Alan L. McLaughlin, Littler Mendelson, PC, Indianapolis, IN, John T. Stembridge, PHV, Lisa A. Schreter, PHV, Todd M. Nierman, Littler Mendelson, PC, Atlanta, GA, for Defendant.

OPINION AND ORDER

PHILIP P. SIMON, District Judge.

This is a wage payment dispute that has become rather unwieldy. Brandi Powers claims that her former employer, Centennial Communications Corp., failed to properly pay her sales commissions and overtime payments. Powers seeks class certification under Rule 23 and certification of a collective action under the Fair Labor Standards Act DE 9. Powers also seeks to amend her complaint DE 32. Previously, I dismissed claims brought by Powers under Indiana's Wage Payment Statute, see May 18, 2009 Order DE 65, 2009 WL 1404674. For the reasons explained below, both the motion for class certification and motion to amend are granted in part and denied in part.

BACKGROUND

Centennial is a provider of wireless and telecommunications services, and Powers worked for them as a sales representative for a number of years. Powers asserts several claims against Centennial, all relating to alleged improprieties with how she was paid by Centennial. Her income was composed of both a set weekly salary as well as monthly commissions. Pl.'s Mem. ISO Class Cert. DE 10 at 2-3. The dispute mainly involves whether Centennial calculated her overtime correctly and paid her in a timely fashion. Although she was a salaried employee, she was also entitled to overtime if she worked more than 40 hours a week. Sales Compensation Plan DE 9-5 at 2-3.

Calculating Powers' compensation is complex. Centennial had to first determine her regular hourly rate, and this involved factoring in both her salary and her commissions. Adding to the complexity, the commissions were somewhat amorphous figures, changing even after they were paid out because of customers' deactivations, rate plan downgrades, and feature downgrades, often made several months after the initial sale. Kruse Aff. DE 29-2, ¶ 17. Powers maintains that Centennial made these calculations incorrectly, and has demonstrated several, undisputed instances where her commission payments did not match her sales record and at least two months where accrued overtime was not paid at all. Pl.'s Reply ISO Class Cert. DE 36 at 5-8. She also claims that Centennial's general practice is to make deductions, or "charge backs," from an employee paycheck to make up for the commission overpayment on previous paychecks. Id. at 7. She argues that Centennial's handling of her paychecks was improper and amounted to violations of both federal and state laws.

679 F. Supp.2d 920

One of the laws brought into play from the initial complaint is the Indiana Wage Payment Statute, Indiana Code § 22-2-5-1 et. seq., which requires employers to pay each employee "at least semimonthly or biweekly" and for payment to be made "for all wages earned to a date not more than ten (10) days prior to the date of the payment." Earlier, I dismissed Powers' Wage Payment Statute claims after finding that an exemption in that statute for salaried employees eligible for overtime under the FLSA is applicable to Powers. May 18, 2009 Order DE 65. I also denied Powers' request to certify to the Indiana Supreme Court the question of whether that exemption was constitutional under Indiana's Privileges and Immunities clause. Id.

In addition to the Wage Payment Statute, Powers seeks relief under the Indiana Wage Deduction Statute, Indiana Code § 22-2-6 et. seq., for deductions made for an invalid purpose—in this case, the charge backs. Her original complaint sought relief for the violation of the Wage Deduction Statute which, according to Powers, "in turn violates the Wage Payment Statute." Complaint DE 1, ¶ 10. She now seeks to amend her claim with an alternative claim based solely on the Wage Deduction Statute. Mot. to Am. DE 32-2, ¶ 11. Her motion to amend also includes a breach of contract claim based on the commission payment discrepancies. Id., ¶ 14. It also asserts a new Wage Payment Statute claim for Centennial's failure to pay all commissions due and owing, id., ¶12, but as mentioned, Powers has since been found to be excluded from relief under the Wage Payment Statute. Lastly, Powers is also pursuing claims under the Fair Labor Standards Act (FLSA), 29 U.S.C. § 201 et seq. for Centennial's failure to pay overtime at time and a half and on a timely basis. Id., ¶ 9.

DISCUSSION

I. Certification of Collective Action

Under 29 U.S.C. § 216(b), an employee may bring an action to recover unpaid overtime compensation on "behalf of himself... and other employees similarly situated." This is known as a "collective action." Harkins v. Riverboat Services, Inc., 385 F.3d 1099, 1101 (7th Cir.2004). No employee may be a party plaintiff to a collective action "unless he gives his consent in writing to become such a party and such consent is filed in the court in which such action is brought." 29 U.S.C. § 216(b).

Collective actions under the FLSA are fundamentally different than class actions under Federal Rule of Civil Procedure 23. Plaintiffs in a collective action must "opt-in" to the action to be bound by a judgment while plaintiffs in a Rule 23 class action must "opt-out." See King v. General Electric Co., 960 F.2d 617, 621 (7th Cir.1992); Woods v. New York Life Ins. Co., 686 F.2d 578, 580 (7th Cir.1982). Because of the "opt-in" requirement, a representative plaintiff in a collective action has to be able to inform other individuals who may have similar claims that they may join his lawsuit. Austin v. CUNA Mut. Ins. Soc'y, 232 F.R.D. 601, 605 (W.D.Wis.2006).

Section 216(b) does not explicitly provide for court-ordered notice. Nonetheless, the Supreme Court has held that, in appropriate cases, district courts have the discretion to implement § 216(b) by facilitating notice to potential plaintiffs. Hoffmann-La Roche, Inc. v. Sperling, 493 U.S. 165, 169, 110 S.Ct. 482, 107 L.Ed.2d 480 (1989). Such court-authorized notice serves the broad, remedial purpose of the FLSA and comports with the court's interest in managing its docket. Id. at 172-74, 110 S.Ct. 482.

679 F. Supp.2d 921

The FLSA neither defines the term "similarly situated" nor instructs judges when to exercise their discretion and authorize notice to potential plaintiffs. Nevertheless, a majority of federal courts have held that, for a case to proceed as a collective action, the Plaintiffs must make a modest factual showing at the outset of the case that they and the other employees were victims of a common policy or plan that violated the law. See, e.g., Russell v. Illinois Bell Telephone Co., 575 F.Supp.2d 930, 934 (N.D.Ill.2008); Ashley v. Lake County, 2007 WL 1549926, at *2 (N.D.Ind. May 24, 2007); Sipas v. Sammy's Fishbox, Inc., 2006 WL 1084556, at *2 (S.D.N.Y. Apr. 24, 2006); Kreher v. City of Atlanta, 2006 WL 739572, at *2 (N.D.Ga. March 20, 2006); Austin, 232 F.R.D. at 605; Harrison v. McDonald's Corp., 411 F.Supp.2d 862, 865 (S.D.Ohio 2005); Hunter v. Sprint Corp., 346 F.Supp.2d 113, 117 (D.D.C. 2004); Mielke v. Laidlaw Transit, 313 F.Supp.2d 759, 762 (N.D.Ill.2004); Flores v. Lifeway Foods, Inc., 289 F.Supp.2d 1042, 1045 (N.D.Ill.2003); Realite v. Ark Restaurants Corp., 7 F.Supp.2d 303, 306 (S.D.N.Y.1998).

If Plaintiffs make this modest factual showing, then notice and an opportunity to "opt-in" can be sent to those employees who are similarly situated to the named Plaintiffs. See Cameron-Grant v. Maxim Healthcare Servs. Inc., 347 F.3d 1240, 1243 n. 2 (11th Cir.2003); Flores, 289 F.Supp.2d at 1045; Austin, 232 F.R.D. at 606. The action then proceeds through discovery as a representative or collective action. Though lenient, the "modest factual showing" standard is not a mere formality. So, for example, evidence that an employer made errors in paying two employees out of fifty was found to be not enough of a factual showing that the employer had a common policy to violate the FLSA. Flores, 289 F.Supp.2d at 1045-46.

In this case, Powers has two theories of liability under the FLSA. The first concerns Centennial's failure to pay her commissions and overtime. The second theory is that the timing of the overtime payments that she did receive violated the FLSA. Powers seeks to have this case proceed as a collective action under both theories.

A. The Failure to Pay Overtime Claim

Powers claims, and Centennial acknowledges, that for several months she was paid less in commission than she was owed, based on her sales for the corresponding months. Pl.'s Reply ISO Class Cert. DE 36 at 5-6; Def.'s Surreply DE 62 at 4. Since commissions are to be included in her regular rate, 29 C.F.R. § 778.117, and overtime is to be calculated based on the regular rate, 29 U.S.C. § 207, Powers was not paid the correct overtime for those months in which she was paid the incorrect commissions. In total, Centennial admits to shorting Powers $490.23 in commissions for those months. Def.'s Surreply DE 62 at 4. Centennial also concedes that Powers was not paid an overtime adjustment for September 2005 and April 2008, and the parties are in dispute over whether she was paid overtime for October 2007. Id. Powers seeks to turn these two admissions of payment errors into a collective action claim on behalf of all similar Centennial salespeople.

Powers has not overcome her initial burden of showing that she and her fellow employees were victims of a common policy or plan that violated the law. She has only presented evidence of her own payment irregularities, without any evidence that this occurred to other employees. Nor has she shown...