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Court Grants Class Certification in Wage and Hour Action Under New York Labor Law § 190(3)

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  • Posted on: May 31 2019

In 1975, the New York Legislature adopted Article 9 of the Civil Practice Law and Rules (“CPLR”) to replace the State’s prior class action mechanism. City of New York v. Maul, 14 N.Y.3d 499, 508 (2010). The Legislature did so because Section 1005, which remained virtually unchanged for more than a century, “had been judicially restricted over the years and was subject to inconsistent results.” Id. at 508-509, citing Sperry v. Crompton Corp., 8 N.Y.3d 204, 210 (2007).

By adopting Article 9, the Legislature intended “to set up a flexible, functional scheme whereby class actions could qualify without … undesirable and socially detrimental restrictions.” Id. at 509 (citation omitted). Given this intended flexibility, courts have broadly construed the requirements of CPLR § 901(a), “not only because of the general command for liberal construction of all CPLR sections (see CPLR 104), but also because it is apparent that the Legislature intended article 9 to be a liberal substitute for the narrow class action legislation which preceded it.” Id. at 509, quoting Friar v. Vanguard Holding Corp., 78 A.D.2d 83, 91 (2d Dept. 1980).

In applying Article 9, New York courts not only look to New York case authority for guidance, but also “[f]ederal jurisprudence” (Friar v. Vanguard Holding, 78 A.D.2d 83, 96 (2d Dept. 1980), because Article 9 “has much in common with Federal rule 23.” Matter of Colt Indus. Shareholder Litig., 77 N.Y.2d 185, 194 (1991). Indeed, “[t]he prerequisites to the filing of a New York class action are virtually identical to those contained in rule 23 (compare, CPLR 901 and Fed Rules Civ Pro, rule 23 [a]).” Id. at 194. For example, (a) the class must be “so numerous that joinder of all members, whether otherwise required or permitted, is impracticable”, (b) common questions of law or fact must predominate over individual claims, (c) the claims of the representative parties must be typical of those of the class, (d) the representatives must fairly and adequately represent the class, and (e) the class action must be superior to other methods of settling the controversy. Id., citing Weinberg v. Hertz Corp., 116 A.D.2d 1 (1st Dept. 1986), aff’d, 69 N.Y.2d 979; Friar, 78 A.D.2d at 96-100.

On a motion for class certification, the plaintiff bears the burden of demonstrating the prerequisites for class certification. Williams v. Air Serv. Corp., 121 A.D.3d 441, 441 (1st Dept. 2014). Whether an action qualifies as a class action under CPLR §§ 901(a) and 902 is within the court’s discretion. Small v. Lorillard Tobacco Co., 94 N.Y.2d 43, 52 (1999); see also Kudinov v. Kel-Tech Const. Inc., 65 A.D.3d 481, 481 (1st Dept. 2009). Conclusory allegations in pleadings and affidavits are insufficient to meet the plaintiff’s burden. Rallis v. City of New York, 3 A.D.3d 525, 526 (2d Dept. 2004). The court should neither decide substantive issues concerning the merits of the underlying claims nor determine credibility. Genxiang Zhang v. Hiro Sushi at Ollie’s Inc., 2019 WL 699179, at *6 (S.D.N.Y. Feb. 5, 2019) (internal quotation marks and citations omitted).

Against this background, this Blog looks at Henix v. LiveOnNY, Inc., 2019 N.Y. Slip Op. 31444(U) (Sup. Ct., N.Y. County May 23, 2019) (here).

Henix v. LiveOnNY, Inc.

Background

Plaintiffs were formerly employed by defendant, LiveOnNY, Inc. (“LiveOnNY”), as tissue recovery specialists (“TRSs”). As TRSs, plaintiffs traveled to hospitals, recovered tissue, facilitated the recovery of tissue for transplant, completed paperwork, and otherwise communicated with other members of the recovery team. Until May 15, 2016, TRSs were misclassified as exempt employees and paid a flat fee per tissue recovery case. On May 15, 2016, the TRSs were re-classified as non-exempt hourly workers.

Plaintiffs brought suit, on behalf of themselves and those similarly situated, claiming violations of, among other things, New York Labor Law § 190(3). Plaintiffs moved for class certification under CPLR §§ 901(a) and 902, seeking to certify a class consisting of: “All current and former TRSs who worked for Defendant in the State of New York during the Class Period and who (a) were not compensated for all time spent traveling to jobs and between jobs; (b) were not compensated for all time spent on-call; (c) were not paid at their straight or agreed upon rate for all hours worked under forty (40) hours in a week; (d) were not paid overtime of time and one-half their regular rate of pay for all hours worked over forty ( 40) in a week; (e) were not paid spread of hours pay and/or (f) were not provided accurate wage statements.” Slip Op. at *2.

As discussed below, the Court granted the motion with a modification to the class definition.

The Court’s Decision

Numerosity

Plaintiffs maintained that there were approximately 38 members of the proposed class: 28 putative class members identified by Defendant, and an additional 10 identified by Plaintiffs. Defendants argued that plaintiffs’ proposed class consisted of 28 members, too few to satisfy the numerosity requirement, and that the additional class members identified by Plaintiffs should not be considered because they were not “per diem TRSs like plaintiffs,” and, therefore, were not similarly situated with Plaintiffs and the other members of the class.

The Court agreed with Plaintiffs. In doing so, the Court observed that “[t]here is no mechanical test to determine whether the requirement of numerosity has been met” (Globe Surgical Supply v. GEICO Ins. Co., 59 A.D.3d 129, 137 (2d Dept. 2008) (citations omitted), and that classes of 40 members or fewer “have been deemed sufficient for class certification.” Slip Op. at *4, citing Stecko v. Three Generations Contracting Inc., 2013 N.Y. Slip Op. 31524(U) (Sup. Ct., N.Y. County 2013), aff’d, 121 A.D.3d 542 (1st Dept. 2014); Galdamez v. Biordi Const. Corp., 13 Misc. 3d 1224(A) (Sup. Ct., N.Y. County 2006), aff’d, 50 A.D.3d 357 (1st Dept. 2008) (class consisting of between 30 and 70 members sufficiently numerous); Caesar v. Chem. Bank, 118 Misc. 2d 118, 120 (Sup. Ct., N.Y. County 1983), aff’d, 106 A.D.2d 353 [1st Dept. 1984), mod., 66 N.Y.2d 698 (1985) (class of 38 members sufficiently numerous).

In finding numerosity, the Court held that “Defendant’s assertion that the additional ten proposed class members should not be considered because they [were] not similarly situated with the plaintiffs [was] a question of commonality and typicality, not numerosity.” Slip Op. at *5.

Commonality

Whether common issues predominate over individual issues requires the court to examine the conduct alleged to be wrongful. In that regard, the proposed class must have been subjected to the same, or substantially the same, alleged unlawful conduct of the defendant. Weinstein v. Jenny Craig Operations, Inc., 138 A.D.3d 546, 547 (1st Dept. 2016). Consideration of the proposed class members’ damages is not part of the analysis. Id.

Plaintiffs argued that common questions existed among the proposed class members, including “whether they were misclassified as exempt, whether they were unlawfully denied pay for travel time, on-call time, and straight time, and whether they [were] owed overtime pay.” Slip Op. at *5. Plaintiffs further argued that these issues “predominate over individual issues because they concern whether defendant instituted an unlawful wage policy or practice.” Id.

Defendants contended that common issues did not predominate over individual ones “because there were: (1) different starting points for each job assignment; (2) different job locations; (3) different job durations; (4) different ending points for each job assignment; (5) different compensation structures depending on level of TRS; (6) different job titles; (7) different times when employees were on-call; (8) different times where employees accepted a job while on-call; (9) different times where employees declined a job while on-call; and, (10) different employment statutes.” Id. at **5-6.

The Court held that “common issues predominate[d] over individual issues because each proposed class member was subject to the same allegedly unlawful wage policy.…” Id. at *6. The Court rejected Defendant’s argument, finding that “the issues highlighted by defendant reflect differences in the damages alleged by the class members.” Id. “Thus,” concluded the Court, “the assessment of liability is identical for each class member, and certification is not precluded.”  Id. (citations omitted).

Typicality

Plaintiffs contended that their claims were typical of the proposed class because Defendant’s wage policies and practices affected all class members in the same manner: they were not adequately paid for travel time and/or on-call time. Slip Op. at *7.

Defendant argued that Plaintiffs’ claims were different than those of the proposed class because they asserted claims based only travel time and failure to compensate on-call time, whereas the proposed class possessed claims based on minimum wage, overtime, spread-of-hours compensation, and accurate wage statements. Thus, Plaintiffs’ claims were not typical of the proposed class.

The Court agreed with Plaintiffs. “Claims are typical when the named plaintiffs’ claims ‘derive[] from the same practice or course of conduct that gave rise to the remaining claims of other class members and [are] based upon the same legal theory.’” Slip Op. at *7, quoting Friar, 78 A.D.2d at 99. The Court found that Plaintiffs’ claims were “premised on the same allegedly unlawful wage policy.” Id.  The Court rejected Defendant’s argument that because “some class members may not advance all the claims asserted by the named plaintiffs,” the claims were not typical. Id.

Adequacy

“When assessing the adequacy of the representative parties, the court considers the ‘potential conflicts of interest between the representative and the class members, personal characteristics of the proposed class representative (e.g. familiarity with the lawsuit and his or her financial resources), and the quality of the class counsel.’” Slip Op. at *8, quoting Globe Surgical Supply, 59 A.D.3d at 144, citing Ackerman v. Price Waterhouse, 252 A.D.2d 179 (1st Dept. 1998).

The Court held that Plaintiffs were adequate representatives of the proposed class. First, the Court found that there were no conflicts of interest between the proposed class and Plaintiffs; the claims asserted by Plaintiffs were “identical to those of the proposed class.…” Slip Op. at *9. Second, the Court found that Plaintiffs understood “the nature of the case and the claims asserted therein.” Id. (citation omitted). Finally, the Court found that counsel was more than qualified to serve as class counsel, having “practiced employment law and litigation for 30 years, and [having] successfully handled numerous wage and hour class actions, some as lead or co-lead class counsel.” Id.

Superiority

The Court held that a class action was “a superior method of adjudication” because there was a large enough “number of proposed class members with similar claims and a relatively small potential recovery for each member.” Slip Op. at *10 (citation omitted).

Moreover, the Court noted that class certification was well-suited for wage and hour actions, even where an administrative remedy was available. Id. citing Weinstein, 138 A.D.3d at 547 (“Class action is an appropriate method of adjudicating wage claims arising from an employer’s alleged practice of underpaying employees”); Dabrowski v. Abax Inc., 84 A.D.3d 633, 635 (1st Dept. 2011) (“class action is superior to the prosecution of individualized claims in an administrative proceeding in view of the difference in litigation costs, the laborers’ likely insubstantial means, and the modest damages to be recovered by each individual laborer, if anything”); Nawrocki v. Proto Const. & Dev. Corp., 82 A.D.3d 534, 536 (1st Dept. 2011) (class action vehicle superior to administrative remedies under Labor Law).

CPLR § 902

In addition to satisfying the requirements of CPLR § 901(a), the proposed class representative must meet the requirements of CPLR § 902.

In determining whether to certify a class, the court must consider: (1) the interest of members of the class in individually controlling the prosecution or defense of separate actions; (2) the impracticability or inefficiency of prosecuting or defending separate actions; (3) the extent and nature of any litigation concerning the controversy already commenced by or against members of the class; ( 4) the desirability or undesirability of concentrating the litigation of the claim in the particular forum; and (5) the difficulties likely to be encountered in the management of a class action.

Slip Op. at **10-11, citing Jiannaras v. Alfant, 124 A.D.3d 582, 584 (2d Dept. 2015), aff’d, 27 N.Y.3d 349 (2016).

The Court held that Plaintiffs satisfied the requirements of CPLR § 902.

It is uncontested that there are no pending actions by proposed class members concerning the claims advanced here, and given the relatively small individual potential recovery, there is little incentive for a class member to forego certification in favor of prosecuting individual claims.

Id. at *11 (citation omitted).

Moreover, the Court found that “[t]he availability of administrative remedies [did] not render this forum inappropriate.” Id.

Class Definition

Finally, the Court redefined the proposed class because it was a fail-safe class. Slip Op. at **12-13. A fail-safe class is one “whose membership can only be ascertained by a determination of the merits of the case because the class is defined in terms of the ultimate question of liability.” Hicks v. T.L. Cannon Corp., 35 F. Supp. 3d 329, 356 (W.D.N.Y 2014), quoting In re Rodriguez, 695 F.3d 360, 369-370 (5th Cir. 2012). A fail-safe class is impermissible because it “shields the putative class members from receiving an adverse judgment.” Hardgers-Powell v. Angels in Your Home LLC, 2019 WL 409276, at *6 (W.D.N.Y. 2019), quoting Hicks, 35 F. Supp. 3d at 356.

The Court held that “Plaintiffs’ proposed class definition constitute[d] an impermissible fail-safe class as it presume[d] liability.” Slip Op. at *13. Plaintiffs defined the proposed class “as TRSs who were not provided accurate wage statements. If it were ultimately determined that the wage statements provided were accurate, class members other than plaintiffs would not be bound by the adverse judgment because there would be no class.” Id.  Since Plaintiffs sought to represent all TRSs employed by LiveOnNY within the class period, the Court redefined the class as follows: “All current and former tissue recover specialists who worked for LIVEONNY, INC. in the State of New York from September 29, 2010 to the present.” Hardgers-Powell, 2019 WL 409276, at *8 (the court “retains the discretion to redefine a faulty class definition”); B&R Supermarket, Inc. v. MasterCard Int’l Inc., 2018 WL 1335355, at *10 n.17 (E.D.N.Y. 2018) (same).

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