Defense Post-Trial Motion to Decertify FLSA Collective Action Granted because Evidence Revealed Lack of Similarity Among Class Members thereby Precluding Defense from Presenting a Uniform Defense to FLSA Claims Louisiana Federal Court Holds
Plaintiffs filed a labor law class action against Big Lots Stores for violations of the federal Fair Labor Standards Act (FLSA); specifically, the class action complaint alleged that Big Lots had misclassified employees and failed to pay them overtime. Johnson v. Big Lots Stores, Inc., ___ F.Supp.2d ___ (E.D. La. June 20, 2008) [Slip Opn., at 1]. The gravamen of the class action was that Big Lots failed to pay its store managers and assistant store managers for overtime, id., at 3. Over defendant’s objection, the district court certified the litigation as an FLSA collective action and approximately 1,000 people elected to opt-in to the lawsuit, id., at 4-5. Following a one-week bench trial, the federal court decertified the nationwide class, dismissed without prejudice the claims of the individuals who had opted in to the action, and held that plaintiffs could proceed with their individual actions. Id., at 1.
Big Lots is a nationwide retailer with approximately 1,400 stores in 46 states. Johnson, at 2. Typically, each store has store manager and at least one assistant store manager, but the physical size, products available for sale, sales volume, sales history and number of employees all affected the number and nature of managers and assistant managers at any given store. Id. “Significant variations” existed as to the duties performed by assistant store managers, but each one was expected to work at least five 9-hour shifts per week. Id., at 3. All managers and assistant managers were salaried employees, but they were classified as “executive employees” under the FLSA and therefore exempt from overtime pay. Id., at 2. The job description of an assistant store manager supported this classification, see id., at 2-3. The class action complaint, however, filed as a collective action under the FLSA, alleged that Big Lots misclassified its assistant store managers as exempt employees because, in the words of one plaintiff, “a Big Lots ASM is nothing more than a ‘glorified stocker.’” Id., at 3-4.
Employing the generally accepted two-stage certification process for FLSA class actions, the district court “conditionally certified” the lawsuit as a collective action; in all, 936 members of the nationwide class consented to be part of the litigation. Johnson, at 4-5. Two years later, after the parties had conducted extensive discovery, defense attorneys moved to decertify the class based on the deposition testimony of a dozen opt-in plaintiffs; plaintiffs responded with declarations “in which large majorities of plaintiffs averred that they spent the vast majority of their time completing nonexempt tasks.” Id., at 5. Believing that the evidence at trial would confirm “strong similarities in job duties” among class members, “and in light of plaintiffs’ claim that Big Lots maintained a de facto policy and practice of misclassifying the ASM job position,” the federal court denied the motion to decertify. Id.
The matter proceeded to a bench trial, which the district court limited to a total of 62 hours (31 hours per side) during which time the parties were permitted to call up to 20 fact witnesses, in addition to expert witnesses. Johnson, at 6. Over the course of 7 days, the heard 43 hours of testimony, and received the deposition testimony of 33 individuals. Id., at 6-7. In addition, the parties submitted more than 1000 exhibits, id., at 7-8. The trial evidence also included the testimony of expert witnesses, including a survey sent to all 936 of the opt-in plaintiffs, 558 of whom provided responses. Id., at 8. At the close of the case, defense attorneys again moved for decertification of the class, id., at 8-9; the district court thus turned to “the vexing question of whether the opt-in-plaintiffs are sufficiently similar such that adjudication of their claims based on representative proof may be done in a manner that respects the rights of both parties.” Id., at 9. The district court explained at pages 9 and 10, “Considering Big Lots’ post-trial motion and the Court’s ongoing obligation to monitor the propriety of certification in light of factual developments, the Court finds it proper to revisit the certification question at this stage. The Court has not found a case that directly addresses a court’s authority to revisit the question of decertification after the conclusion of trial in an FLSA collective action. But there is authority that indicates that it is appropriate to reevaluate the propriety of collective treatment in the context of both the FLSA and traditional class actions under Federal Rule of Civil Procedure 23.” Such a reexamination was particularly appropriate in this case in light of the fact that “all of the factual issues did not come to the fore until after the Court reviewed all of the evidence presented by the parties.” Id., at 11.
In analyzing the defense motion to decertify, the district court observed that instead of plaintiffs building upon their earlier efforts to show “similarity among opt-in plaintiffs,” the evidence at trial disclosed “substantial variations among the opt-in plaintiffs.” Johnson, at 29-30. We do not here discuss the differences among the opt-in plaintiffs revealed by the evidence presented at trial, see id., at 30-49; for our purposes, it is sufficient to observe that the district court found these differences to be substantial. As the court concluded at page 49, the evidence revealed “wide differences in employment experiences between individual employees and the lack of common proof applicable to the class as a whole.” These differences made it “exceedingly difficult for Big Lots to assert its statutory exemption defense on a collective basis.” Id., at 49. Put simply, “Big Lots cannot prove a common defense to the claims of the class members by calling a handful of witnesses whose testimony strongly suggests that ASMs are properly classified, because there are other witnesses who will testify to the contrary.” Fairness would thus require that the collective action devolve into “multiple individual trials” which would be “the antithesis of a collective action.” Id., at 50. The court therefore found it necessary to grant the motion to decertify the collective action. Id., at 52.
The district court concluded by addressing “procedural and fairness considerations.” Johnson, at 52. While it regretted decertifying the action “after the large investment of resources by the parties,” it found the variance between the evidence presented prior to trial and the evidence received at trial compelled this result. Id., at 52-53. The court explained at page 53, “Based on what was presented at the decertification stage, the Court expected the evidence to be more uniform and, in particular, for plaintiffs’ evidence to reflect the theory they advanced at the outset of the lawsuit, i.e., that Big Lots maintained a uniform corporate policy and practice of misclassifying the ASM job position. But during the course of the litigation, plaintiffs moved away from that position, as was evidenced by their argument that consideration of evidence from non-opt-in ASMs who hold the same ASM job position was improper because they were unrepresentative.” With the benefit of all of the evidence before it, the federal court found that “it could not draw any reliable inferences about the job duties of plaintiffs as a class” and that “[i]t would be an injustice to proceed to a verdict on the merits that results in a binding classwide ruling based on such disparate evidence.” Id., at 53-54 (citation omitted). The court’s “middle ground” approach was the only avenue available that would be fair to each side: “Were the Court to rule in plaintiffs’ favor, it would have to do so on the basis of proof that is not representative of the whole class, and the verdict would result in liability on the defendant in a magnitude that is not likely to be warranted in reality…. [¶] On the other hand, were the Court to find that on the whole Big Lots proved its defense, then all of plaintiffs’ claims would be extinguished….” Id., at 55. Accordingly, the court decertified the nationwide collective action, dismissed without prejudice the claims of the opt-in plaintiffs, and permitted the original named plaintiffs to proceed with their claims on an individual basis. Id., at 56.