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Court Decertifies Nationwide FLSA Action; ManorCare Workers Not Similarly Situated

Friday, February 1, 2013

A federal district court in Ohio Jan. 31 decertified a nationwide Fair Labor Standards Act collective action that potentially could have included more than 44,000 hourly nursing home and rehabilitation center employees, because the class members failed to show they are similarly situated (Creely v. HCR ManorCare Inc., N.D. Ohio, No. 09-02879, 1/31/13).

HCR ManorCare Inc. has a policy of automatically deducting 30-minute meal periods from employee time cards. A class of HCR registered nurses, licensed practical nurses, certified nursing assistants, and admissions coordinators alleged that the company violated the FLSA by failing to compensate workers who missed or worked through those meal breaks.

In decertifying the collective action, Judge Jack Zouhary of the U.S. District Court for the Northern District of Ohio found that class members' wide-ranging employment settings and individualized experiences weighed against a determination that they are similarly situated.

For example, the record shows that HCR provided employees with a procedure to report missed meal breaks, and that the workers' knowledge of, training on, and ability to use that procedure varied based on their job duties and the management at each of the company's facilities, the court said.

Accordingly, HCR's defenses would vary based on the circumstances of each individual plaintiff, and collective treatment of the employees' FLSA claims “would be unfair and unmanageable,” the court said. 

Court Conditionally Certified Action in 2011

The hourly workers sued HCR in December 2009. They did not allege that the company's auto-deduct policy violated the FLSA.

Instead, the court recounted, the employees contended that HCR “illegally” shifted the burden of monitoring compensable work time under the FLSA to employees, did not affirmatively ensure that employees actually took their breaks, failed to adequately notify or train workers and managers on how to use “missed punch” forms to report and receive compensation for missed or interrupted breaks, and discouraged use of those forms.

The district court conditionally certified an FLSA collective action in June 2011. Given that the class potentially could include more than 44,000 hourly employees nationwide, notices of the action were sent to a sample class of approximately 3,239 current and former HCR workers from 29 facilities in 28 states. About 318 employees from the sample class opted into the action.

During discovery, the employees and HCR offered varying deposition testimony from approximately 78 employees and company human resources officers. The testimony concerned whether workers and managers received information about the auto-deduct policy and the missed punch forms during orientations, whether they signed documents acknowledging their receipt and understanding of the policy, and whether they were otherwise trained on how to report missed breaks.

HCR also presented testimony suggesting that hourly employees' ability to have uninterrupted meal periods “depended on their particular facility, unit, shift, patient population, job duties, and individual habits,” the court said.

“What is apparent from the record here is that Plaintiffs' knowledge of and training on the policy, and the application of the auto-deduct policy itself, varied in large part depending on the individual managers at Defendant's facilities,” the court found.

In addition, although some employees testified that their managers discouraged them from using missed punch forms--allegations that the managers themselves disputed--other workers stated they never felt discouraged and that their managers encouraged them to report their interrupted meal breaks.

At the close of discovery, the employees moved for final certification of the collective action, while HCR moved to decertify the class. 

Varied Application of Policy Dooms Certification

Granting the company's motion, the district court explained that class certification under the FLSA continues where plaintiffs and opt-in plaintiffs are similarly situated.

The court said it must evaluate such factors as the “disparate factual and employment settings of the individual opt-in plaintiffs,” the defenses available to the employer, and “fairness and procedural considerations.”

The court acknowledged that “individualized proofs” always exist in putative collective actions. However, relying on a number of district court and appellate decisions in the U.S. Court of Appeals for the Sixth Circuit and the Third Circuit, the court ruled that the varying witness testimony in the instant case “weighs against final certification.”

“Yes, all Plaintiffs were subject to the auto-deduct policy, but the application of the policy varied based on several factors, including job duties and individual managers at the various HCR facilities,” the court said. “What is apparent from the record here is that Plaintiffs' knowledge of and training on the policy, and the application of the auto-deduct policy itself, varied in large part depending on the individual managers at Defendant's facilities.”

Although the evidentiary record may indicate that the employees have individual FLSA claims, the “evidence as a whole does not demonstrate 'similarly situated plaintiffs experiencing a common FLSA injury,' ” the court said. 

Individualized Defenses, Unmanageable Class

In addition, the court found that any defenses available to HCR would be individualized and would “overwhelm any trial of this case as a collective action.”

For instance, HCR would have to make individual inquiries about each class member's knowledge of the auto-deduct policy, time spent working through meal periods, and use of missed punch forms, the court said.

“Testimony from managers regarding, for example, actual or constructive knowledge that a Plaintiff worked through a meal break without compensation, and the actual training provided to a Plaintiff regarding the auto-deduct policy, will be especially relevant because of the decentralized implementation of the auto-deduct policy,” the court said.

Furthermore, the court held that class certification here would not be “fair” or “procedurally manageable.”

“Although this Court is sympathetic to Plaintiffs' argument regarding the desirability of pooling resources to seek vindication of their FLSA rights and the remedial nature of the FLSA, this argument does not outweigh the significant factual differences here,” the court said. “Despite the fact that Defendant's auto-deduct policy applied to all Plaintiffs, Plaintiffs' right to compensation hinges on their individual experiences. It is unclear how proceeding collectively and using representative testimony would be fair or useful.”

The employees also failed to “offer a meaningful way to partially decertify the class,” the court said. “For example, the primary difficulty in producing representative testimony here would not be resolved by certifying sub-classes based on job descriptions because Defendant's implementation of its policy was done through individual managers on a decentralized basis, and was also dependent on the nature of the resident population at the individual facilities. Certification here would hinder, not promote, judicial economy.”

Gary F. Lynch of New Castle, Pa.; Michael J. Palitz, Fran L. Rudich, Kyra N. Hild, and Seth R. Lesser of Klafter Olsen & Lesser in Rye Brook, N.Y.; Gerald D. Wells III and Kendall S. Zylstra of Faruqi & Faruqi in Jenkintown, Pa.; Lance C. Young of Southfield, Mich.; Steven D. Bell of Brecksville, Ohio; and Sunshine R. Fellows of Pittsburgh represented the employees. Gregory H. Wagoner of Shumaker, Loop & Kendrick in Toledo, Ohio; Alexander R. Frondorf, Bradley A. Sherman, David K. Haase, Inna Shelley, Matthew J. Hank, Robert M. Wolff, and William J. Simmons of Littler Mendelson in Cleveland, Chicago, and Philadelphia; and Cory D. Catignani and Robert M. Anspach of Anspach Meeks Ellenberger in Toledo represented HCR.

By Jay-Anne B. Casuga


Text of the opinion is available at http://about.bloomberg.com/files/2013/02/Creely.pdf.

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