West Teleservices Inc. v. Carney

• Court: Texas Court of Appeals
• Writing for the Court: Opinion by Tom Rickhoff
• Citation: West Teleservices Inc. v. Carney, 37 S.W.3d 36 (Tex. App. 2000)
• Decision Date: 01 November 2000
• Docket Number: No. 04-00-00323-CV,04-00-00323-CV
• Parties: (Tex.App.-San Antonio 2000) WEST TELESERVICES, INC.; West Telemarketing Corporation; West Telemarketing Corporation Outbound; and West Telemarketing Insurance Agency, Inc., Appellants v. Richard CARNEY et al., Appellees

Page 36

37 S.W.3d 36 (Tex.App.-San Antonio 2000)

WEST TELESERVICES, INC.; West Telemarketing Corporation; West Telemarketing Corporation Outbound; and West Telemarketing Insurance Agency, Inc., Appellants v. Richard CARNEY et al., Appellees

No. 04-00-00323-CV

Court of Appeals, Fourth District of Texas

November 1, 2000

Rehearing Overruled Jan. 5, 2001.

From the 131st Judicial District Court, Bexar County, Texas Trial Court No. 1997-CI-15780 Honorable Janet P. Littlejohn, Judge Presiding

[Copyrighted Material Omitted]

Sitting: Tom Rickhoff, Justice Catherine Stone, Justice Karen Angelini, Justice.

Opinion by Tom Rickhoff, Justice.

This is an accelerated appeal in which West Teleservices, Inc. ("WTI"), West Telemarketing Corporation ("Inbound"), West Telemarketing Corporation Outbound ("Outbound"), and West Telemarketing Insurance Agency, Inc. ("Agency") (collectively, the appellants) appeal an order granting class certification to Richard Carney and others (collectively, the appellees). In three points of error, the appellants assert the trial court erred in certifying the class because: (1) the certification order does not identify the causes of action, the factual claims, the common questions of law or fact, or a trial plan; (2) individual issues predominate over common issues; and (3) a class action is an inferior and unmanageable method of adjudicating this controversy.

BACKGROUND

The Parties

The appellees, who are the plaintiffs below and the class proponents, are employees of three telemarketing firms: Inbound, Outbound, and Agency. Inbound employees process incoming telephone calls generated by direct response advertising, direct mail, and print and radio. Outbound employees market products and services or conduct surveys by making outgoing calls to potential sales prospects. Agency employees verify and finalize sales of insurance products. The class size could number as many as 90,000 past and present employees.

Outbound and Inbound are independent companies, with separate officers, directors, and facilities, and with different policies, pay practices, and timekeeping procedures. Agency is also a separate company, but operates in the same facility as Outbound. Outbound provides payroll services for Agency. WTI is the parent company of Outbound and Agency.

The Allegations Against Inbound

The Inbound employees assert that Inbound's practice of rounding clock-in and clock-out times at the beginning and end of their shifts to the nearest quarter hour resulted in them not being paid for all the time they worked. The employees also allege they are required to line up before their shift begins to hear information supplied by a lead telemarketer, but they are not paid for the time. The employees do not allege minimum wage or overtime violations. The employees are not seeking to be paid for time that they did not attend the pre-shift line-up or for time not doing "productive work."

Inbound contends employees are not required to line up before the start of their shift, and any line-up time varies from day-to-day. Inbound contends employees are not disciplined if they do not line up and listen to information during the pre-shift time. When employees arrive one to seven minutes early, Inbound rounds the time to the start of the shift. When employees arrive eight or more minutes early, Inbound rounds the time to the preceding quarter hour. The same rounding practice is applied to clock-out times. Inbound argues that this practice is approved by the Department of Labor in its regulations interpreting the Fair Labor Standards Act ("FLSA").

The appellants contend the named plaintiffs knew from their first day of work that the company rounded clock-in and clock-out time. The appellants estimate it would cost approximately $3 million to pull the necessary records and calculate the amount of rounded time for each of the Inbound employees who are members of the certified class. Inbound contends there are no records to document which employees stood in line pre-shift or for how long.

The Allegations Against Outbound and Agency

The Outbound and Agency employees assert they should have been paid for the time between when they clocked in and the start of their shift. The employees do not allege minimum wage or overtime violations. They do not seek to be paid for time spent in personal activities after clocking in and before the start of their shift.

Outbound and Agency contend that employees are not required to be at their stations before the start of their shift, but they are required to be at their stations ready to begin work once the shift starts. Employees are encouraged to report to work early enough before the start of their shift so that they may begin work as soon as the shift starts. They are not required to perform compensable work between the time they clock in and the start of their shift. Unless an employee is specifically asked to report to work early, employees are not paid until the start of their shift when they begin making phone calls.¹ To calculate hourly pay, Outbound and Agency correct "long punches" to the start of shift. "Long punches" refer to early clock-in times of employees who arrive on the company's premises before they start work, clock in, and then engage in preliminary, personal, or social activities before the start of their shift. Clock-out times are not adjusted. Outbound and Agency argue that this practice is approved by the Department of Labor in its regulations interpreting the FLSA.

Outbound does not pay its employees solely on an hourly basis. Employees are paid the greater of their hourly wages for the week or the commissions they earned during the week. Rounding time would not affect an employee who earned the greater amount in commissions.

The appellants estimate it would take approximately 600 hours, at a cost of approximately $6 million, to pull the necessary records and calculate the amount of rounded time and the value of that time for each of the Outbound and Agency employees who are members of the certified class.

The Lawsuit

The appellees filed suit against WTI, Inbound, Outbound, Agency, and two individual managers and one officer of Outbound and Agency. They asserted claims of quantum meruit, fraud, conspiracy to commit fraud, common law debt, conversion, conspiracy to commit conversion, civil theft, and conspiracy to commit civil theft. The petition stated the appellees were "not asserting any causes of action maintainable under any law or statute of the United States or any other federal cause of action." The appellees later dropped their conversion and fraud claims, but added a breach of contract claim. The basis of the implied contract claim was "that an employer subject to the [FLSA] . . . is required to pay employees for all work performed and for all time during which an employee is present on the employer's premises and subject to its control or direction."

The appellees moved for class certification, and the appellants moved for summary judgment. Both motions were heard together. The court rendered summary judgment in favor of the appellants on the appellees' breach of express contract, civil theft, and conspiracy to commit theft causes of action. The court dismissed the individual defendants. The court informed the parties by letter that it would grant the appellees' motion for class certification, noting that its ruling "may raise questions in your minds regarding the parameters of the class." The appellants objected to the certification order on the grounds that it was vague and did not identify the causes of action or factual complaints being certified. The appellants asked the court to specify in the order the causes of action or factual complaints.

The appellants requested findings of fact and conclusions of law, which the court asked appellees' counsel to prepare. After appellees' counsel declined to prepare the findings of fact and conclusions of law, the appellants filed a notice of past due findings of fact and conclusions of law. This appeal by the appellants followed. The appellees do not challenge the granting of the summary judgment in favor of the appellants.

STANDARD OF REVIEW

An appellate court reviews the trial court's determination that a case should be certified as a class action using an abuse of discretion standard. Health & Tennis Corp. of Am. v. Jackson, 928 S.W.2d 583, 587 (Tex. App. San Antonio 1996, writ dism'd w.o.j.). The trial court abuses its discretion when it does not properly apply the law to the undisputed facts, when it acts arbitrarily or unreasonably, or when its ruling is based on factual assertions unsupported by the record. Id.

There is no automatic right to maintain a lawsuit as a class action. Weatherly v. Deloitte & Touche, 905 S.W.2d 642, 647 (Tex. App. Houston [14th Dist.] 1995, writ dism'd w.o.j.). Instead, a trial court may certify a class action if the class proponent satisfies all four requirements of Texas Rule of Civil Procedure 42(a),² and at least one of the requirements under Rule 42(b). Id. Although class proponents must do more than merely allege they fulfill the requirements of Rule 42, they are not required to prove a prima facie case or make an extensive evidentiary showing in support of a motion for class certification. Id. Here, the appellees relied on Rule 42(b)(4).³ This portion of the Rule is satisfied if the class representatives show that the factual or legal issues common to the class predominate over issues affecting only individual members, a criterion known as "predominance," and that the class action is a superior method to fairly and efficiently adjudicate the controversy compared to other available methods, a criterion known as "superiority."

Trial courts enjoy a broad range of discretion in determining whether to maintain a lawsuit as a class action, but may not consider the substantive merits of the class claims in making a determination. Id. Certification is...