Korenblum v. Citigroup, Inc.

Citations: 195 F. Supp. 3d 475; 2016 U.S. Dist. LEXIS 94220; 2016 WL 3945692Docket: 15-CV-3383 (JMF)

Court: District Court, S.D. New York; July 19, 2016; Federal District Court

SummaryOriginalCytator Case TreatmentBackward CitatorAnalysis

EnglishEspañolSimplified EnglishEspañol Fácil

Plaintiffs Paulina Korenblum, Fredy Giron, and Kenneth M. Butler, representing themselves and similarly situated individuals, allege violations of the Fair Labor Standards Act (FLSA) and New York State Labor Law (NYLL) concerning overtime wage compensation. They are current or former employees of IT vendors associated with Citigroup, Inc. (Citi) and challenge the "Professional Day" and "Professional Week" billing arrangements, claiming these structures led to unpaid overtime due to certain hours being designated as "unbillable." 

On March 4, 2016, after limited discovery focused on preliminary certification of a collective action, the Plaintiffs sought conditional certification of an FLSA collective action encompassing roughly 7,500 workers affected by these Professional Plans from April 30, 2012, to the present. The collective includes employees from approximately forty different Citi vendors across various worksites. 

The named Plaintiffs, along with eleven others who opted in, primarily come from the Judge Group, Inc., which provides services to Citi under these billing arrangements. Plaintiffs argue that while Citi claims these plans are merely for billing, the unbillable hours also reflect uncompensated work. They submitted declarations from themselves and opt-in plaintiffs indicating their recruitment by Judge, work under the Professional Plans without compensation for unbillable hours, and Citi's control over their work. The court ultimately denied the Plaintiffs' motion for conditional certification.

Plaintiffs have not provided their employment contracts with Judge, but have submitted the employment contract of a non-Judge opt-in plaintiff with Axelon, along with deposition excerpts from Judge's Chief Operating Officer from a 2012 deposition related to a prior settled case. Both parties have introduced evidence from the discovery phase, with Plaintiffs including depositions from Citi's two Rule 30(b)(6) witnesses, while Defendants submitted a declaration from one of those witnesses, Donna Gruppuso, and excerpts from depositions of the named Plaintiffs. Notably, Plaintiffs did not submit any agreements between Citi and its IT vendors concerning a Professional Plan billing structure, despite Citi producing thirty-six such agreements.

Under the Fair Labor Standards Act (FLSA), workers may sue on behalf of themselves and similarly situated employees. The Second Circuit employs a two-step method for collective actions. At the first step, the court exercises discretion to decide whether to notify potential opt-in plaintiffs about the case. Plaintiffs must show a "modest factual showing" of a common policy or plan that violated the law, focusing on whether employees are similarly situated regarding the alleged unlawful policy. A shared unlawful policy is critical, and while the proposed collective need not be identical, potential members must be similarly situated concerning the policy in question. Mere allegations of standardized policies are insufficient; there must be evidence that other employees are similarly situated regarding job requirements and pay provisions. The court does not rule on the merits at this stage, but relevant legal standards inform the analysis of whether employees are similarly situated.

Defendants cannot successfully challenge a motion for conditional certification under 216(b) by merely highlighting differences in the day-to-day tasks of plaintiffs and opt-in plaintiffs. They must demonstrate that the plaintiffs are not similarly situated in ways relevant to their overtime compensation claims under the Fair Labor Standards Act (FLSA). While the plaintiffs’ burden at this initial stage is modest, it cannot be met through unsupported assertions. Courts typically base their decisions on the pleadings, affidavits, and declarations without resolving factual disputes or making credibility determinations. After the close of discovery, the employer can seek decertification of the collective action, with the court then determining if the opt-in plaintiffs are similarly situated to the named plaintiffs, potentially leading to dismissal of claims if they are not.

When a conditional certification motion is filed after partial discovery, the application of "intermediate scrutiny" remains uncertain, although some district courts in other Circuits have argued that scrutiny should increase with the amount of discovery conducted. In contrast, most district courts in this Circuit do not apply increased scrutiny until discovery is complete, adhering to a lenient standard. Despite concerns about the burdens of conditional certification, these do not outweigh the established standard in the Second Circuit, which remains relatively consistent in its application of either of two review standards. However, there is less consensus within the Circuit than it may first appear.

Courts in this Circuit have generally maintained a lenient first-stage test for conditional certification while also considering evidence obtained during discovery. Although some courts have declined to heighten scrutiny post-discovery, they still evaluate the evidence presented by both parties, indicating a more rigorous approach than initially suggested by mere allegations in pleadings or affidavits. Additionally, there is a precedent for applying a second-stage scrutiny after discovery has concluded, although whether this is automatic remains debated. Courts may bypass the first tier in favor of a second-tier factual determination when discovery is complete, reflecting a flexible interpretation of what constitutes an efficient use of the notification process. The "lenient" standard discussed in Myers does not impose an inflexible burden of proof and allows for increased scrutiny in light of the discovery conducted. Conditional certification is a discretionary process that leads to court-approved notice to potential collective action members, who must consent to participate. As discovery progresses, courts may appropriately apply a more exacting review to avoid undermining the purpose of the discovery itself and to prevent the conditional certification process from becoming an undue burden on the court and defendants.

The Court adopts a "modest 'plus' standard" for evaluating the case, examining evidence from both parties while noting that the evidence is incomplete. It emphasizes that the decision will not address the ultimate merits of the case or issues suited for decertification, and no negative inferences will be drawn from the lack of evidence due to incomplete discovery. The Court indicates that additional evidence from discovery should demonstrate a likelihood of uncovering similarly situated individuals among opt-in plaintiffs. 

Upon applying these standards, the Court finds the Plaintiffs' evidence insufficient for conditional certification of a nationwide collective of over 7,500 IT workers employed by forty vendors across multiple worksites. While there is acknowledgment of Citi's Professional Plan billing structure, this does not inherently imply a violation of law regarding nonbillable hours being uncompensated. The legality hinges on whether individual IT vendors had compensation policies treating nonbillable work as uncompensated, which the Plaintiffs have not sufficiently evidenced. 

Furthermore, for Citi to be viewed as a joint employer of the vendors' workers, the Plaintiffs must demonstrate this with evidence, which they failed to do. Specifically, for thirty-eight out of the forty vendors, the Court concludes that the Plaintiffs do not meet their burden. Although some uniform practices are evidenced, they do not establish that the vendors' workers are similarly situated under the relevant multi-factor joint employment test. Thus, conditional certification is denied based on the insufficiency of common proof addressing the necessary factors.

Plaintiffs fail to provide evidence demonstrating that the thirty-eight vendors shared a common policy regarding the non-compensation of IT workers for nonbillable hours or that they uniformly classified those workers. Although Citi has produced agreements with the staffing agencies from the last three years, Plaintiffs did not submit any of these agreements or explain their absence. This lack of evidence undermines their motion concerning the thirty-eight vendors, excluding Judge and Axelon. Furthermore, the Defendant has presented evidence indicating that at least three of the vendors compensated for nonbillable time, although Plaintiffs suggest this may be selective. Regardless, the burden remains on Plaintiffs to provide evidence of a common unlawful employment policy, which they have not done. The case is compared to previous rulings by Judge Engelmayer in Vasto and Martin, highlighting that unlike Vasto, which had clear evidence of a common policy, the current case is more akin to Martin, where insufficient documentation regarding classification and payment policies led to a denial of certification. Ultimately, the lack of provided agreements from Citi precludes any determination on its policies regarding worker classification and compensation.

Axelon Plaintiffs present a stronger case for certification regarding workers at Axelon, specifically citing evidence that opt-in plaintiff Jose Gomez was not compensated for nonbillable hours during his employment under a Professional Plan from March 2015 to February 2016. Gomez's contract explicitly states he would only be paid for billable hours, with the ninth and tenth hours of work in a day deemed nonbillable. However, the Plaintiffs fail to provide evidence concerning the compensation of other Axelon employees, despite Gomez’s claims of working alongside six others under the same plan. The potential involvement of multiple vendors at Citi, where Gomez worked, complicates the assertion that these other workers were indeed affiliated with Axelon. Consequently, without additional evidence or argument from the Plaintiffs, the Court finds their case insufficient.

For Judge, the Plaintiffs’ arguments for conditional certification appear stronger, supported by testimony from Judge's COO, Katy Wiercinski, indicating that unbillable time was not compensated as of November 2012. Fourteen sworn declarations from current and former Judge employees affirm the same regarding their compensation under the Professional Plan. These declarations also suggest a joint employer relationship with Citi, detailing Citi's direct management and oversight of the workers. Despite this, issues arise due to the late disclosure of declarations from key Plaintiffs, which contradicted their earlier deposition testimony, raising concerns about the reliability of their claims.

Each named Plaintiff claimed in their declarations that they were not compensated for unbillable hours worked at Citi. However, during depositions, they acknowledged that Judge, their employer, had been paying them for unbillable hours since at least December 2013. For instance, Plaintiff Giron initially stated he received no payment for unbillable hours but later admitted he had been compensated for all hours since April 2012. Similarly, Plaintiff Webb claimed he was not paid for overtime but later confirmed he received payment for hours beyond the eighth hour starting from December 2013. Due to these inconsistencies between the declarations and deposition testimony, the Court chose to disregard the declarations. It cited precedent that a party’s affidavit contradicting prior deposition testimony should not be considered in summary judgment. The Court noted that certifying a collective action based on contradictory and self-serving declarations was inappropriate. Additionally, the Plaintiffs failed to demonstrate that the putative class members were similarly situated, as there were significant differences in the experiences of the workers and insufficient evidence to establish Citi as a joint employer of Judge's IT workers. The lack of agreements between Citi and its contractors further weakened their claims.

Plaintiff Webb, who works from home and has visited a Citi location only twice in years, fails to demonstrate that Citi employed a common policy or plan that violated the law, particularly concerning Judge's employees. Even if the Plaintiffs could establish this for Judge's workers, certifying a collective action would not enhance efficiency. The collective-action process aims to resolve common legal and factual issues in a single proceeding, and the court's authority to send notice to potential class members is intended for efficient case management. Sending notice to a large number of Judge workers is inappropriate, as Plaintiffs previously litigated similar allegations against Judge in a settled case, where they had already sought third-party discovery from Citi, yet chose not to include Citi as a party in that lawsuit. While this prior decision does not preclude the current suit against Citi, it impacts the efficiency of certifying a new collective action. The court emphasizes that allowing piecemeal litigation undermines the efficiency principle of collective actions, advocating for the inclusion of all relevant parties in a single lawsuit. Consequently, the motion for conditional certification of a collective action is denied. The court has scheduled a conference for August 2, 2016, and ordered the submission of a new case management plan and a status update on settlement discussions prior to the conference. The court notes additional declarations from Judge's accounting head and IT vendors regarding compensation for "unbillable" hours, indicating that a similar outcome would likely result under the regular first-stage standard, although this question is not reached.

Gomez's contract explicitly states that he is solely an employee of Axelon and not of Citi, prohibiting any claims to the contrary. The Court questions whether Gomez's claims should be combined with those of other Plaintiffs who worked for Judge, suggesting it could delay a decision until after a decertification motion following full discovery. Alternatively, the Court might separate Gomez's claims for independent discovery related to the two vendors. The parties are instructed to confer regarding this issue before the next case management conference.

Additionally, the Plaintiffs' assertions about not receiving pay for "nonbillable" hours appear misleading. They argue that a change in compensation practices in December 2013, when Judge began paying for those hours, supports their claims. However, pay stubs indicate that nonbillable hours were consistently designated as such before and after the policy change, contradicting the Plaintiffs' sworn statements. The Court notes that workers who signed new contracts after May 2012 likely agreed to arbitration, which could lead to the dismissal of their claims. Given that Judge began compensating for nonbillable work by December 2013 and considering the three-year statute of limitations for FLSA claims, potential collective relief is limited to employees who worked for Judge and Citi from approximately mid-2013 to November 2013 under contracts signed before May 2012, excluding some current opt-in Plaintiffs. The size of this eligible group is unclear but is evidently small compared to the total number of Judge-Citi workers.