Smith v. Heartland Automotive Services, Inc.

• Decision Date: 12 December 2005
• Docket Number: No. Civ.04-1403 RHK/AJB.,Civ.04-1403 RHK/AJB.
• Citation: 404 F.Supp.2d 1144
• Parties: Dawn SMITH, Mark Tarras, Jim Cox, Justin Durbin, Patrick Parris, Dewayne Klipple and Edward Willson, on behalf of themselves and other past and present employees similarly situated, Plaintiffs, v. HEARTLAND AUTOMOTIVE SERVICES, INC., d/b/a Jiffy Lube, Defendant.
• Court: U.S. District Court — District of Minnesota

404 F.Supp.2d 1144

Dawn SMITH, Mark Tarras, Jim Cox, Justin Durbin, Patrick Parris, Dewayne Klipple and Edward Willson, on behalf of themselves and other past and present employees similarly situated, Plaintiffs, v. HEARTLAND AUTOMOTIVE SERVICES, INC., d/b/a Jiffy Lube, Defendant.

No. Civ.04-1403 RHK/AJB.

United States District Court, D. Minnesota.

December 12, 2005.

COPYRIGHT MATERIAL OMITTED

Paul J. Lukas, Steven A. Smith, and Rachhana T. Srey, Nichols Kaster & Anderson, PLLP, Minneapolis, MN, for Plaintiffs.

Kimberly A. Jones, Blackwell Sanders Peper Martin LLP, Kansas City, MO, and Michael S. Ryan, Murnane, Conlin, White & Brandt, St. Paul, MN, for Defendant.

MEMORANDUM OPINION AND ORDER

KYLE, District Judge.

Introduction

Seven named plaintiffs who are current and former Jiffy Lube Store Managers ("Plaintiffs") have sued Defendant Heartland Automotive Services, Inc., d/b/a Jiffy Lube ("Heartland"), on behalf of themselves and other employees similarly situated, under the Fair Labor Standards Act ("FLSA"). Plaintiffs allege that they have been improperly classified as exempt executives and thus deprived of overtime pay. Heartland has now moved to decertify this action, arguing that Plaintiffs are not similarly situated for purposes of a collective action under § 216(b) of the FLSA. For the reasons set forth below, the Court will grant Heartland's Motion to Decertify.

Background

A. Factual and Procedural Background

Heartland owns Jiffy Lube stores, which offer quick oil changes and other basic car maintenance services to customers. Plaintiffs are current and former Jiffy Lube Store Managers from the Minneapolis/St. Paul area. The position of Store Manager is the only position at a Jiffy Lube store classified as exempt from overtime pay. All Jiffy Lube Store Managers are governed by the same job description and are subject to the same supervisory structure: Store Managers report to and are supervised by district managers, who in turn report to regional managers. Heartland is organized into thirteen different regions, in fourteen different states. Each region is sub-divided into as many as five, and as few as two, districts. District sizes vary, ranging from two to fourteen stores.

In early 2004, Plaintiffs, as similarly situated employees, initiated a collective action under § 216(b) of the FLSA, 29 U.S.C. § 216(b). Plaintiffs claim they were improperly classified as exempt executives and denied overtime wages as a result. They allege that Heartland implemented a centralized policy of keeping its stores on unreasonably tight labor budgets, thereby requiring Store Managers to work long hours performing primarily non-exempt duties in order to meet the centrally imposed labor budget for their stores. (Mem. in Opp'n at 9-10.) According to Plaintiffs, a collective action under § 216(b) is the appropriate mechanism by which to bring these claims because "all Jiffy Lube Store Managers hold the exact same position and perform precisely the same job duties on a daily basis." (Id. at 9 (emphasis in original).)

In October 2004, Plaintiffs were granted conditional certification as a class, and were allowed to send out notices to Store Managers alerting them to their ability to opt-in to the instant action. (Doc. No. 71 (October 18, 2004 Order adopting Report and Recommendation granting Plaintiffs' Motion for Judicial Notice).) Notice of the action was subsequently sent to all current and former Jiffy Lube Store Managers across the country who worked during the three-year statutory period. By the end of the opt-in period, 261 current and former Store Managers from 13 different states, supervised by over 40 different district managers, filed consents to join this action.¹

B. Heartland's Motion to Decertify this Action

Heartland has moved to decertify this action on the grounds that Plaintiffs' challenge to their status as exempt employees requires a fact intensive inquiry and discovery has established that the members of the class are not "similarly situated" for purposes of an FLSA action. (Mem. in Supp. at 2-3.) Heartland further asserts that, to the extent Plaintiffs have demonstrated they are similarly situated, those commonalities do not support Plaintiffs' claims of mis-classification under the FLSA. (Id. at 11.) Plaintiffs counter that discovery has revealed precisely the opposite — that they are similarly situated within the meaning of § 216(b) — and therefore, decertification would be an improper and inefficient result.

C. The FLSA

While the Court does not consider the merits of Plaintiffs' claims on a decertification motion, understanding the FLSA standards regarding the ultimate determination of exempt status is necessary in order to determine whether Plaintiffs are similarly situated in relevant respects. See, e.g., Bradford v. Bed Bath & Beyond, Inc., 184 F.Supp.2d 1342, 1345 (N.D.Ga. 2002).

The parties are largely in agreement regarding the main factors that will be determinative of the merits of Plaintiffs' claims. (See Mem. in Supp. at 9-10; Mem. in Opp'n at 32.) Plaintiffs allege that Heartland has violated § 207 of the FLSA, which provides that an employee engaged in commerce must receive one and a half times the regular rate of pay for hours worked in excess of forty hours per week. 29 U.S.C. § 207(a)(1). Employers are not, however, required to provide overtime benefits to any employee employed in a bona fide executive capacity (those employees are referred to as "exempt"). 29 U.S.C. § 213(a)(1). Heartland classifies its Store Managers under the executive exemption, meaning they are not entitled to overtime pay regardless of the number of hours they work in a week.

Under the FLSA, an employee may be exempt as an executive if she spends more than 50% of her time performing executive tasks or, if less than 50% of the time is spent on executive tasks, these tasks nevertheless predominate or define the job. 29 C.F.R. § 541.700 (2004); 29 C.F.R. § 541.103 (1973). Prior to a change in the pertinent regulations,² the "short test" to classify employees for purposes of the executive exemption, which the parties agree applies to Plaintiffs' claims, included the following criteria for an employee to qualify as exempt from overtime: (1) the employee is paid a salary of more than $250 per week, (2) the employee's primary duty is the management of the enterprise or a subdivision, and (3) the employee regularly directs the work of two or more employees. Id. § 541.1(f) (1973) (emphasis added). The parties also agree that the main issue to be determined on the merits is whether Plaintiffs' primary duty is management. (Mem. in Opp'n at 1; Reply Mem. at 2.)

To determine whether an employee's primary duty involves management, in addition to the time spent on managerial tasks, a court can consider (1) the relative importance of the managerial duties as compared with other types of duties; (2) the frequency of the employee exercising discretionary powers; (3) the employee's relative freedom from supervision; and (4) the "relationship between the employee's salary and the wages paid to other employees for the kind of nonexempt work performed by the [exempt employee]." See Auer v. Robbins, 65 F.3d 702, 712 (8th Cir.1995).

Standard of Decision

To recover unpaid overtime compensation under the FLSA, § 216(b) provides that employees may collectively sue an employer. Specifically, it states:

Any employer who violates [the minimum wage or maximum hours provisions of this title] shall be liable to the employee or employees affected in the amount of their unpaid minimum wages, or their unpaid overtime compensation, as the case may be, and in an additional equal amount as liquidated damages.... An action to recover [such] liability may be maintained ... in any ... court of competent jurisdiction by any one or more employees for and in behalf of himself or themselves and other employees similarly situated.

29 U.S.C. § 216(b) (emphasis added). Unlike class actions under Rule 23, "[n]o employee shall be a party plaintiff to any such 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." Id. Determining whether such a collective action is the appropriate means for prosecuting an action is in the Court's discretion. See Glass v. IDS Fin. Servs., Inc., 778 F.Supp. 1029, 1081 (D.Minn.1991).

The fundamental inquiry in determining whether a collective action under § 216(b) is appropriate is whether or not the plaintiffs are "similarly situated." 29 U.S.C. § 216(b). Plaintiffs bear the burden of establishing that they are similarly situated. Grayson v. K Mart Corp., 79 F.3d 1086, 1096 (11th Cir.1996) (ADEA claim). While the FLSA does not define the term "similarly situated," courts have held that plaintiffs "need show only that their positions are similar, not identical to the positions held by the putative class members." Id. (internal quotations omitted); see also Morisky v. Public Serv. Elec. and Gas Co., 111 F.Supp.2d 493, 498 (D.N.J.2000) ("[A] collective action would only be appropriate where the plaintiffs make some showing that the nature of the work performed by other claimants is at least similar to their own." (internal quotations and alterations omitted)).

Courts generally approach this inquiry in two stages. First, a plaintiff may seek conditional certification of a collective action, authorizing notice to potential opt-in plaintiffs. See Bradford, 184 F.Supp.2d at 1345. This first look at the appropriateness of the representative action is not rigorous; rather, the Court must only determine that plaintiffs have established a colorable basis for their claim that a class of similarly situated plaintiffs exists. Severtson v. Phillips Beverage Co., 141 F.R.D. 276, 278-79 (D.Minn.1992).

In the instant action, the Court conditionally certified a collective action pursuant to the FLSA and authorized notice to potential...