Recognizing the inherently individualized nature of most off-the-clock cases, plaintiffs have been searching for new areas of “common” evidence to justify the certification of class and collective actions. The existence of company-wide labor budgets has frequently been relied upon in wage and hour cases, despite case law holding that the lawful, and eminently rational, decision of a corporation to limit unnecessary expenses is not a common policy sufficient upon which to ground certification.1 A recent decertification decision by the Eastern District of Pennsylvania highlights the inadequacy of “labor-budget pressure” allegations as a justification for certification. See Martin v. Citizens Financial Group, Inc., Slip Copy, 2013 WL 1234081 (E.D. Pa. Mar. 27, 2013).
In Martin, the Court decertified a collective consisting of over 800 non-exempt bank employees seeking compensation for work performed off the clock. While the employer had in place a lawful written policy requiring the payment of all hours worked, and overtime for hours over 40, the plaintiffs alleged that budgetary pressures forced a pattern and practice of off-the-clock work. The Court rejected the argument, and decertified the collective. Because liability was dictated by the decentralized decisions of various actors, and because the defendant would need to present individualized testimony in its defense, collective treatment was inappropriate.
Summary of the evidence
The plaintiffs submitted declarations from 435 of the 843 opt-in plaintiffs, and their expert testified that the declarants claimed as follows:
• 100% were denied overtime pay;
• 90.65% were pressured or instructed not to report all overtime hours;
• 86.54% were offered comp time in future weeks instead of overtime;
• 70.43% had their time adjusted to remove overtime hours;
• 83.64% were pressured to alter their own timesheets to remove overtime hours; and
• 89.79% were required to perform work during uncompensated breaks.
Id. at *2.
Citing variations in the deposition testimony, the employer highlighted how different plaintiffs claimed denied overtime for different time periods, and that numerous plaintiffs testified that their experience was limited to a particular location or manager. The plaintiffs countered that the similarities in the practices described by their expert outweighed the differences. The Court agreed with the employer. According to the Court, while plaintiffs’ evidence “tends to establish that the putative class members may have experienced a denial of overtime,” the evidence was individualized. Id. at *5. The numbers did not help the plaintiffs. As the Court noted, the number of plaintiffs who claimed to have been subjected to each of the five different methods of depriving employees of overtime differed. While 89.79% alleged that they were required to work through breaks, only 70.43% alleged that management unlawfully adjusted their time entries. Id.
According to the Court, individualized defenses also warranted decertification. Individual plaintiffs testified that certain supervisors instructed them to work off the clock, but the supervisors denied the allegations. To resolve these testimonial disputes, the Court acknowledged that the fact finder will have to determine who was being truthful, and “resolving this question with regard to one manager and one employee would not accomplish the task for any of the others.” Id. at *6.
Finally, the Court held that fairness and procedural considerations justified decertification. The plaintiffs’ preliminary trial plan proposed the use of representative testimony, but the Court held that sampling would be inappropriate under the circumstances: “Drawing liability conclusions about a large group based upon a small portion of statements can be problematic, especially when testimony among the representatives themselves is disparate. Id. at *7 (quoting Prise v. Alderwoods Group, Inc., 817 F. Supp. 2d 651, 677, n.20 (W.D. Pa. 2011)).
As Martin demonstrates, centralized labor-budget pressure is not enough for certification. When the common action or policy directed toward the putative class is lawful, liability is premised on the unlawful actions of individual actors. Absent special facts, determining whether a supervisor decided to break the law (and company policy) to achieve business outcomes is an individual question, and the answer to this question cannot be applied to other actors. Under these circumstances, the case cannot continue in a collective and representative fashion.
Rafuse Hill & Hodges LLP
1 See, e.g., Eng-Hatcher v. Sprint Nextel Corp., 2009 WL 7311383, *4 (S.D.N.Y. Nov. 13, 2009) (denying conditional certification and Rule 23 certification; centralized control over labor budgets insufficient for certification when individual managers have discretion to authorize work); Bernard v. Household Int’l, Inc., 231 F. Supp. 2d 433, 435 (E.D. Va. 2002) (management incentive plan rewarding managers for minimizing overtime hours and increasing unit productivity insufficient for conditional certification); Basco v. Wal-Mart Stores, Inc., 2004 WL 1497709, at *7 (E.D. La. 2004) (corporate policy to reign in wage costs insufficient to support certification).↩