Jones v. SuperMedia Inc.

Citations: 281 F.R.D. 282; 19 Wage & Hour Cas.2d (BNA) 376; 2012 U.S. Dist. LEXIS 40799; 2012 WL 995292Docket: Civil Action No. 3:11-CV-1467-B

Court: District Court, N.D. Texas; March 23, 2012; Federal District Court

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Defendants filed a Motion to Reconsider their Motion to Dismiss Plaintiffs’ Original Complaint and alternatively sought to dismiss the First Amended Complaint. Simultaneously, Plaintiffs filed a Motion to Conditionally Certify a Collective Action and to Issue Notice. The Court denied Defendants’ Motion and granted Plaintiffs’ Motion. The case involves a Fair Labor Standards Act (FLSA) claim for unpaid overtime compensation, initiated by seven former salespersons of SuperMedia Inc., who were classified as non-exempt inside sales employees. They contend they are owed overtime pay due to the improper calculation of their regular rate of pay, including commissions, and inadequate tracking of hours worked. Defendants previously submitted an Offer of Judgment accepted by three Plaintiffs, which they argued rendered the case moot. However, the Court found that the filing of the Amended Complaint mooted the Motion to Dismiss. Defendants now seek to reconsider their dismissal motion and argue that Plaintiffs lack standing to amend. They also move to dismiss the Amended Complaint for failure to state a claim. Plaintiffs assert that a collective action is justified, as there are similarly situated individuals who would likely opt-in to the FLSA claim.

A motion to dismiss under Rule 12(b)(1) for lack of subject matter jurisdiction is warranted when a court lacks the constitutional or statutory authority to hear a case. Federal jurisdiction is restricted to "cases and controversies" as defined by Article III of the U.S. Constitution. When a case becomes moot—meaning the issues are no longer "live" or the parties lack a legal interest in the outcome—the court loses subject matter jurisdiction. The review standard for a 12(b)(1) motion depends on whether it is a facial or factual challenge. A facial attack requires the court to accept the allegations in the complaint as true, while a factual attack allows consideration of external evidence. The plaintiff bears the burden of proving jurisdiction by a preponderance of the evidence in factual attacks, and disputed facts do not prevent the court from assessing jurisdictional merits. A dismissal for lack of jurisdiction should only occur if it is clear that the plaintiff cannot demonstrate any facts that would establish the court's jurisdiction.

Under Rule 68, an offer of complete relief by the defendant typically moots the plaintiff's claim, as there is no remaining interest in the litigation. If a defendant satisfies the plaintiff's entire demand, the case becomes moot, and refusal to accept this offer results in loss of standing under Rule 12(b)(1). For a case to be deemed moot, the court must assess whether the Rule 68 offer provided full relief. Relevant to this context, the Fair Labor Standards Act (FLSA) mandates that nonexempt employees receive at least a minimum wage and overtime pay. Employers violating the FLSA are liable for unpaid wages and liquidated damages, and plaintiffs who prevail are entitled to reasonable expenses and attorney’s fees. A Rule 68 offer must fully cover all reasonable statutory damages to be deemed valid.

The court will now address the motion to conditionally certify a collective action in light of the plaintiffs' certification motion and the defendants’ motion to dismiss under Rule 12(b)(6).

The Court is currently in the "notice stage" of class action certification, where it determines whether to notify potential class members based on the pleadings and affidavits presented. This stage uses a lenient standard, typically resulting in conditional certification of a representative class, provided there are substantial allegations that the putative class members suffered from a common decision, policy, or plan. Plaintiffs must demonstrate: 1) a reasonable basis for the existence of aggrieved individuals, 2) that these individuals are similarly situated to the plaintiff in relevant respects, and 3) that they wish to opt-in. This standard is less stringent than Rule 23 requirements. The court may deny certification if the claims stem solely from personal circumstances of the plaintiff rather than a general policy. However, it does not require uniformity in every employment aspect to find the class similarly situated. The Court emphasizes the remedial nature of the FLSA, which supports collective proceedings.

In the context of a Motion to Dismiss, Defendants argue that Plaintiffs’ FLSA claims are moot due to a Rule 68 Offer that they contend fulfills the claims in the original complaint, thus challenging the Court's subject-matter jurisdiction and Plaintiffs' standing to amend their complaint. Plaintiffs counter that the Offer does not fully satisfy their claims, justifying a timely amended complaint under Rule 15(a)(1)(B). They assert that their declarations clarify the basis of their allegations, maintaining that their claims are still valid. The Court will address these arguments and subsequently consider Plaintiffs’ Motion for Conditional Certification and Notice. Defendants’ 12(b)(1) Motion contends that Plaintiffs have not shown evidence contradicting their claim that the Offer satisfied all FLSA-related damages, although there is a dispute regarding the calculation of those damages, which the Court will review.

Plaintiffs must demonstrate by a preponderance of the evidence that Defendants’ Offer was insufficient to maintain jurisdiction. Defendants reference the case of Rollins to argue that Plaintiffs did not meet this burden, noting that in Rollins, the plaintiff failed to counter evidence from Defendants. In the current case, Plaintiffs assert the Offer's insufficiency is due to inaccurate time-keeping records, claiming Defendants knowingly permitted employees to work unrecorded overtime. Defendants counter that it was the employees' responsibility to log their hours and that overtime required managerial approval. However, the court highlights that an employer aware of employees working overtime cannot ignore the need for compensation, regardless of employee claims. While the Fifth Circuit has estopped employees from claiming hours beyond what was logged, it allows claims for additional overtime if the employer was aware of inaccuracies in reported hours.

Plaintiffs allege that many sales employees worked overtime without proper compensation. They provide declarations indicating instances where managers instructed employees to sign for only 40 hours, suggesting improper time-keeping practices. Consequently, Plaintiffs have adequately shown that the Offer is insufficient, allowing the court to maintain subject-matter jurisdiction. As a result, Plaintiffs retained standing to file an amended complaint, which was done in a timely manner, leading to the denial of Defendants’ Motion to Dismiss.

Regarding the Motion to Conditionally Certify a Collective Action and Issue Notice, the court will assess whether certification is warranted based on three criteria. Plaintiffs have presented a viable claim under Section 207 of the FLSA, which mandates non-exempt employees receive overtime pay at a rate of at least one and one-half times their regular rate for hours over 40. Declarations from named Plaintiffs assert Defendants’ non-compliance with this section, suggesting a common policy affecting multiple employees. Moreover, Plaintiffs argue that SuperMedia operates extensively across several states, likely employing numerous inside sales personnel, with approximately 234 inside sales employees identified at the Irving, Texas location alone.

The Court finds a reasonable basis for believing that other aggrieved employees exist, given the national scope of the Defendants' business. To determine if potential class plaintiffs are "similarly situated" to named plaintiffs, the focus is on job requirements and pay provisions, which need not be identical but similar. Plaintiffs submitted four declarations to support their claims against Defendants' Motion to Dismiss. One declaration indicates that commissions were excluded from overtime calculations for similarly situated Media Consultants. Another claims that sales employees were told by General Sales Manager Darren Farrer that their jobs were not confined to a 40-hour workweek and were pressured to meet sales targets regardless of hours worked. Additional declarations highlight that Media Consultants often worked unreported hours, including weekends, to meet elevated quotas. Defendants assert a formal policy against unauthorized overtime but are accused of having an unwritten policy that allowed managers to avoid witnessing employees' overtime work. In response to these claims, Defendants argue that Plaintiffs have not provided sufficient facts to justify collective treatment under the Fair Labor Standards Act (FLSA), contending that violations stem from individual managers’ actions rather than a company-wide policy. They cite past court decisions where collective action was denied due to insufficient evidence of a company-wide policy. In contrast, Plaintiffs in this case present multiple declarations documenting that they regularly worked over 40 hours without proper compensation, which strengthens their claims for collective treatment.

Plaintiffs allege informal pressure from supervisors against requesting overtime, suggesting an informal policy to violate overtime regulations. Declarations indicate that managers were aware of and required sales employees to work over 40 hours weekly, with violations not being isolated incidents but rather stemming from a common cause. This may indicate an informal policy mandating off-the-clock work, which could undermine the Fair Labor Standards Act (FLSA) compliance. The court finds sufficient evidence suggesting that plaintiffs are similarly situated due to shared challenges in recording overtime. Despite defendants' assertions that other employees complied with overtime policies, the possibility of an informal policy exists, leading the court to permit certification and notify potential claimants. While plaintiffs did not submit affidavits from other potential plaintiffs, the court notes that previous cases have allowed class certification with minimal declarations. With four declarations submitted and an amended complaint adequately stating claims against the defendant for denied overtime pay over the past three years, the court concludes that a group of similarly situated potential plaintiffs likely exists. Consequently, the court denies the defendants' motion to dismiss and grants the plaintiffs' motion for certification, subject to future review for decertification if necessary. Under the FLSA, class action certification is required, with courts applying different approaches to authorize notice to employees regarding their rights to join a collective action under Section 216(b).

In Tolentino v. C. J Spec-Rent Services Inc., the court outlines the procedural framework for determining whether employees are similarly situated under the Fair Labor Standards Act (FLSA), emphasizing a two-step approach rather than a Rule 23 class certification approach. The Fifth Circuit has not definitively ruled on this matter, but the district court adheres to the two-step method, which is considered the "typical" approach for collective actions. The court also addresses the implications of a Rule 68 offer of judgment, stating that such an offer made before the named plaintiff files for class certification does not moot the class action. It argues that allowing defendants to 'pick off' named plaintiffs before collective action certification would undermine the purpose of the collective action provision. In this case, the defendants’ offer was made too soon, approximately one month after the original complaint, preventing it from mootifying the plaintiffs' claims.