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Despite the lenient standards for conditionally certifying an FLSA collective action, a federal court in Miami recently ruled that a collective action against a local auto dealership was inappropriate.

First, some background on FLSA collective actions. The Fair Labor Standards Act provides that an action for overtime compensation “may be maintained . . . 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). The Eleventh Circuit Court of Appeals, which covers Alabama, Florida, and Georgia, has instructed district courts to follow a two-tiered procedure to determine whether plaintiffs are “similarly situated” for purposes of class certification under § 216(b).  At the initial stage, or “notice stage,” the district court’s decision is based only on the pleadings and any affidavits which have been submitted. The second stage of the two-tiered procedure typically occurs at the end of discovery when the matter is ready for trial and defendant has filed a motion for decertification of the class.  

In deciding whether to authorize notice at the “notice stage,” the Court should strike a balance between allowing the named plaintiffs to contact potential class members to inform them of their rights, and the prohibition against solicitation of clients and the desire to avoid frivolous claims. One district court explained the rationale for this requirement as follows:

In seeking court-authorized notice, plaintiffs are in effect asking this court to assist in their efforts to locate potential plaintiffs and thereby expand the scope of the litigation. As a matter of sound case management, a court should, before offering such assistance, make a preliminary inquiry as to whether a manageable class exists. Moreover the sending of notice and consent forms to potential plaintiffs implicates concerns in addition to orderly case management. The courts, as well as practicing attorneys, have a responsibility to avoid the “stirring up” of litigation through unwarranted solicitation.

Severetson v. Phillips Beverage Co., 137 F.R.D. 264, 266 (D. Minn. 1991).

The Eleventh Circuit has held that a district court has the authority to enter an order requiring notice to individuals who are “similarly-situated,” but “before determining to exercise such power…the district court should satisfy itself that there are other employees…who desire to ‘opt in’ and who are ‘similarly situated.’” Dybach v. State of Florida Dep’t of Corrections, 942 F.2d 1562, 1567-68 (11th Cir. 1991). A plaintiff must offer “detailed allegations supported by affidavits which successfully engage defendants’ affidavits to the contrary.” Id.  Generalized, unsupported allegations are insufficient to discharge the plaintiff’s burden. Rather, a plaintiff has the burden of demonstrating a reasonable basis for crediting her assertion that aggrieved individuals exist in the proposed class. Rodgers, 2006 U.S. Dist. LEXIS 23272, at *7-8 (citing Haynes v. Singer Co., Inc., 696 F.2d 884, 887 (11th Cir. 1983)). 

Thus, plaintiff or her counsel’s mere belief in the existence of other employees who desire to opt in, and “unsupported expectations that additional plaintiffs will subsequently come forward, are insufficient to justify” certification of a collective action and notice to a potential class. Id.  Moreover, “[c]ertification of a collective action and notice to a potential class is not appropriate to determine whether there are others who desire to join the lawsuit.” Id. (citing Dybach, 942 F.2d at 1567-68). Rather, a plaintiff must show that others desire to opt in before the court can authorize notice. Id. 

When there is a lack of evidence to support a finding that other employees are interested in opting in to the litigation, a court should deny the Plaintiffs’ motion for conditional certification. 

That was exactly the result reached in a recent decision by United States District Court Judge Ursula Ungaro in Galban v. Bill Seidle's Nissan, Inc., Case No. 1:09-cv-20310-uu (S.D. Fla.)  The plaintiffs, former salesmen, alleged in their complaint that they were denied the federal minimum wage based on the dealership's "commission-only" pay plan.  They moved for conditional certification of a class, but failed to demonstrate that any other similarly situated salespeople had an interest in joining the litigation.  Absent such evidence, Judge Ungaro did not hesitate in denying the plaintiffs' motion.

The Galban decision illustrates an important principle of FLSA litigation.  A so-called "collective action" is not a collective action until the court says it is.  And although the standards for certifying a collective action at the initial, "notice" stage are lenient, there are certain minimum requirements that a plaintiff must meet.  It is defense counsel's role to hold plaintiffs to those standards and demonstrate, if possible, that a collective action is inappropriate.  

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Three employees of Bellsouth's call center in Escambia County, Florida have filed a putative collective action against the company under the Fair Labor Standards Act, alleging that they were denied overtime pay. 

The complaint alleges that call center employees routinely start work before their official eight hour shift begins in order to boot up their computers, start computer applications, and perform other duties so that they are ready to field incoming calls at the start of their shift.  The complaint also alleges that the company denies call center employees pay for work performed during rest and meal breaks, and that the company requires employees to continue work "off the clock" after their scheduled shift ends.  The case is Bonner v. Bellsouth Telecommunications, Inc., Case No. 3:08-cv-00524-WS-EMT (N.D. Fla.). 

Whether the plaintiffs' allegations have any merit remains to be seen.  It's also questionable whether booting up a computer is compensable activity, as noted in this post from the Connecticut Employment Law Blog. Nevertheless, the Bonner case serves as a reminder to employers to keep accurate records of actual time worked by non-exempt employees.  Scheduling employees for an eight hour shift is fine, but employers should not assume that the employees work only during their scheduled shift.  Preliminary and postliminary activities may be deemed principal activities and thus compensable.  Likewise, rest periods of 20 minutes or less are compensable, as are meal breaks when the employee is not completely relieved of duty.

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Sealing a significant victory to a Florida skycap company in an FLSA collective action, the Eleventh Circuit Court of Appeals recently affirmed the federal district court’s summary judgment decision in Pellon v. Bus. Representation Int'l, Inc., 528 F. Supp. 2d 1306 (S.D. Fla. 2007). My colleagues Mike Casey and Mark Beutler ably represented the employer at both the district court and the appellate levels.

In Pellon, the district court rejected claims by skycaps at Miami International Airport that their employer violated the Fair Labor Standards Act’s requirements for using the tip credit by (a) providing them insufficient tip credit notice, (b) deploying them to perform non-tipped work while receiving a tipped wage, and (c) imposing a $2 per bag service charge which the skycaps claimed reduced their tips.

The case was advanced by 53 skycaps. The skycaps worked for Business Representation International (BRI), assisting American Airlines passengers at Miami International Airport with their baggage. The skycaps alleged that the employer was violating federal and state minimum wage law and contract law by improperly claiming a tip credit and charging passengers $2 per bag for curbside check in. In August 2007, both sides moved for summary judgment.

The skycaps’ primary challenge was to the tip credit. The tip credit is the reduction in wage that an employer can pay a tipped employee. When the suit was filed, the federal minimum wage was $5.15 per hour. But, under federal minimum wage law, an employer can pay as little as $2.13 if an employee received sufficient tips to make up the difference. A tip credit is the difference between the minimum wage and the amount paid by the employer to a tipped employee.

The court ruled for the employer on all federal claims, and declined to exercise jurisdiction over the state-law based claims.

The court concluded that the skycaps received adequate notice of the tip credit because they were informed that they would be paid $2.13 plus tips, and an FLSA poster containing the DOL-approved language regarding the tip credit, was prominently displayed.

The court held that “every task [the skycaps] complain of are part of the normal duties of a skycap.” The court specifically stated that tasks that "properly fall within the skycap occupation" include transporting luggage to security screeners, assisting disabled passengers, charging passengers for overweight and extra baggage, and collecting baggage fees.

The court rejected the skycaps’ argument that the two dollar ($2) baggage service fee charged by the airline reduced their tips and thereby violated the requirement that all tips be retained by the tipped employee. The court concluded that the baggage fee was not a tip because it was neither given at the customer's discretion nor kept by the skycap. So long as genuine bona fide tips were sufficient to meet the income requirements for use of the tip credit, the employer was entitled to credit those tips against the minimum wage obligation.

The court declined to reach the skycaps state law minimum wage and contract claims, noting that its dismissal of the federal claims permitted it to decline jurisdiction.

BRI’s victory was significant. Had the court invalidated the tip credit, all 53 of the skycap plaintiffs, plus an additional 7 skycaps in a similar case, would have been entitled to recover the tip credit (between $3 and $4 dollars) for every hour logged back to April 2004, plus liquidated damages and attorney fees. In addition, there were supplemental state law claims that would have added to the liability exposure. The Florida minimum wage is higher than the federal minimum wage. In addition, the skycaps claimed that they should have received an $11.76 wage under the county living wage ordinance. Finally, the skycaps claimed that they were owed 50 cents per bag based on an oral contract. Resolving these claims favorably would have required additional costly litigation. An additional risk attendant to an adverse ruling was that the skycaps who had not yet sued BRI would have likely filed another class action lawsuit. Liability exposure was substantial even beyond the cost of a trial. The district court's decision resolving the legal issues in favor of the employer, and the affirmance by the Eleventh Circuit, prevented this.

The Pellon decision is notable as there are several similar cases pending in other federal courts involving thousands of skycaps around the country and millions of dollars in potential liability. While this case was on appeal, nine American Airlines skycaps stationed at Boston’s Logan airport were awarded $325,000 plus fees and costs in litigation regarding skycap tips. Within weeks, nationwide class actions lawsuits were filed against major air carriers and airline industry service providers. The Eleventh Circuit’s affirmance of the district court’s decision will likely affect those cases.

The decision has already had an impact on federal regulations. On July 28, 2008, The U.S. Department of Labor issued proposed regulations that would modify existing regulations to conform to case law. In the commentary explaining the proposed regulations affecting the tip credit notice, the district court’s decision in Pellon is cited as one of the cases to which the regulations conform.

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