DAVID C. NORTON, UNITED STATES DISTRICT JUDGE.
This matter is before the court on plaintiffs' motion for conditional class certification. Plaintiffs seek conditional certification of a putative class pursuant to the collective action provision of the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 216(b). For the reasons set forth below, the court grants plaintiffs' motion.
Plaintiffs Andrew Gordon, Tavis McNeil, Donald Wrighton, Nicholas Cole, Jacob Grisson, and Dawn Dewey (collectively "Plaintiffs") were employed by defendant TBC Retail Group, Inc., d/b/a Tire Kingdom ("TBC") as mechanics in TBC's South Carolina stores. Pls.' Compl. ¶ 1. Plaintiffs and other mechanics employed by TBC during the relevant time period were responsible for inspecting, diagnosing, repairing, and servicing automobiles. Id. at ¶¶ 13 and 14. All mechanics employed by TBC during the relevant time period were, and continue to be, paid pursuant to the same compensation plan. Pls.' Compl. ¶ 16; Def.'s Answer ¶¶ 15, 16, 19, 22, 23, and 31. Under this plan, a mechanic's total compensation is composed of two basic components. First, each mechanic is paid an amount determined by multiplying the particular mechanic's "flat rate" — an hourly pay rate assigned to each mechanic based on that mechanic's particular skill, experience, and certifications — by the mechanic's "turned hours" — a pre-established amount of time designated by TBC for each mechanical task — for all tasks completed
When the amount of a mechanic's Turned Hours Pay earned over a given pay period is less than one and one-half times the statutory minimum wage
On August 20, 2014, plaintiffs filed their original complaint against TBC on behalf of themselves and "all other similarly situated employees including but not limited to each and every mechanic who suffered damages as a result of [TBC]'s" FLSA violations. Pls.' Complaint ¶ 2. Plaintiffs allege that TBC violated the minimum wage and overtime provisions of the FLSA by utilizing a compensation plan that did not provide compensation at a rate of one and one-half times their regular rate of pay when plaintiffs and similarly situated employees worked more than forty (40) hours in a workweek. Id. at ¶ 23. On October 27, 2014, TBC filed its answer to plaintiffs' complaint, arguing that plaintiffs and other similarly situated employees were paid under a bona fide flat-rate commission plan and were therefore not entitled to overtime compensation pursuant to Section 7(i) of the FLSA. Def.'s Answer ¶¶ 15-16. On April 15, 2015, plaintiffs filed the instant motion for conditional class certification, seeking authorization to proceed as a collective action on behalf of "all current and former [m]echanics who worked during the time period beginning August 20, 2011 through the present." Pls.' Mot. ¶ 8. Plaintiffs also ask the court to require TBC to provide the names, addresses, and telephone numbers of all potential opt-in plaintiffs, and to authorize
Under the FLSA, plaintiffs may institute a collective action against their employer on behalf of themselves and other similarly situated employees. Section 216(b) of the FLSA states,
29 U.S.C. § 216(b). The mechanism outlined in § 216(b) is designed to facilitate the efficient adjudication of similar claims by "similarly situated" employees by permitting the consolidation of individual claims and the pooling of resources in prosecuting such actions against their employers. See Hoffmann-La Roche Inc. v. Sperling, 493 U.S. 165, 170, 110 S.Ct. 482, 107 L.Ed.2d 480 (1989); LaFleur v. Dollar Tree Stores, Inc., 30 F.Supp.3d 463, 467(E.D.Va.2014); Lynch v. United Servs. Auto. Ass'n, 491 F.Supp.2d 357, 367 (S.D.N.Y.2007). In deciding whether the named plaintiffs in an FLSA action are "similarly situated" to other potential plaintiffs, courts generally employ a two-stage approach. Purdham v. Fairfax Cnty. Pub. Sch., 629 F.Supp.2d 544, 547 (E.D.Va.2009) (quoting Parker v. Rowland Express, Inc., 492 F.Supp.2d 1159, 1164 (D.Minn.2007)); see also Pelczynski v. Orange Lake Country Club, Inc., 284 F.R.D. 364, 367 (D.S.C.2012); Simons v. Pryor's, Inc., No. 3:11-cv-0792, 2011 WL 6012484, at *1 (D.S.C. Nov. 30, 2011).
The first step in this process, which is the subject of the instant motion, is the "notice," or "conditional certification," stage. Purdham, 629 F.Supp.2d at 547. With regard to this conditional certification stage, "[t]he Supreme Court has held that, in order to expedite the manner in which collective actions under the FLSA are assembled, `district courts have discretion[,] in appropriate cases[,] to implement... § 216(b) ... by facilitating notice to potential plaintiffs.'" Purdham, 629 F.Supp.2d at 547 (quoting Hoffmann-La Roche, Inc., 493 U.S. at 169, 110 S.Ct. 482); see Genesis Healthcare Corp. v. Symczyk, ___ U.S. ___, 133 S.Ct. 1523, 1530, 185 L.Ed.2d 636 (2013) (citation omitted) ("`[C]onditional certification' does not produce a class with an independent legal status, or join additional parties to the action. The sole consequence of conditional certification is the sending of court-approved written notice to employees, who in turn become parties to a collective action only by filing written consent with the court." (citing § 216(b))). At this stage, the plaintiff must demonstrate that the proposed class members are "similarly situated" and that notice is "appropriate." Id. at 548. Notice is "appropriate" where the proposed class members' claims "share common underlying facts and do not require substantial individualized determinations for each class member." MacGregor v. Farmers Ins. Exch., No. 2:10-cv-03088, 2012 WL 2974679, at *2 (D.S.C. July 20, 2012). Ordinarily, the plaintiff's burden at this initial stage is fairly lenient, requiring only a modest factual showing that members of the proposed class are "victims of a common policy or plan that violated the law." Regan v. City of Charleston, S.C., No. 2:13-cv-3046, 2014 WL 3530135, at *2 (D.S.C. July 16, 2014); Long v. CPI Sec. Sys., Inc., 292 F.R.D. 296, 298-99 (W.D.N.C.2013); Essame v. SSC Laurel Operating Co. LLC, 847 F.Supp.2d 821,
"Second, after the court has conditionally certified the class, the potential class members have been identified and notified, and discovery has been completed, `a defendant may then move to decertify the collective action, pointing to a more developed record to support its contention that the plaintiffs are not similarly situated...'" Regan, 2014 WL 3530135, at *3 (quoting Pelczynski, 284 F.R.D. at 368); Purdham, 629 F.Supp.2d at 547. At this "decertification stage" the court applies a heightened, fact-specific standard to the "similarly situated" analysis, Regan, 2014 WL 3530135, at *3, and considers various additional factors, including: (1) the disparate factual and employment settings of the individual plaintiffs; (2) the various defenses available to defendants that appear to be individual to each plaintiff; and (3) fairness and procedural considerations. Id. at *3.
Although defendant all but abandoned this argument at the hearing, defendant asked the court to deviate from this approach and review plaintiffs' motion for conditional certification using a heightened, "intermediate standard." Def.'s Resp. 9-11. Despite the ordinarily lenient standard at the conditional certification stage, courts have occasionally applied an intermediate standard, which requires a more stringent showing in cases where some, but not all, discovery has been completed. See MacGregor, 2012 WL 2974679, at *3; McClean v. Health Sys., Inc., 2011 WL 6153091, at *4 (W.D.Mo. Dec. 12, 2011); Blaney v. Charlotte-Mecklenburg Hosp. Auth., 2011 WL 4351631, at *5 (W.D.N.C. Sept. 16, 2011). Most district courts within this circuit hold that the intermediate standard is generally inappropriate when relatively little discovery has taken place. See, e.g., Holmes v. Charleston Ret. Investors, LLC, No. 2:13-cv-1713, 115 F.Supp.3d 653, 658, 2014 WL 10122868, at *3 (D.S.C. Feb. 25, 2014) ("[A]lthough the parties have completed some discovery, including taking several depositions, it appears to the [c]ourt that significant additional discovery remains... Accordingly, the [c]ourt will apply the more lenient standard ..."); Curtis v. Time Warner Entm't-Advance/Newhouse P'ship, No. 3:12-cv-2370, 2013 WL 1874848, at *3 (D.S.C. May 3, 2013) ("Where extensive discovery remains, courts usually apply the more lenient standard applicable at the first step."); Long, 292 F.R.D. at 300 ("[T]he limited precertification discovery contemplated ... in this case, and performed by the parties, does not rise to the level of discovery performed by parties in other cases where courts applied the intermediate standard."); Essame, 847 F.Supp.2d at 826 ("[Defendant] has identified no authority from this jurisdiction standing for the proposition that courts may disregard the traditional two-stage analysis where the parties have completed `some' discovery.").
In this case, very little discovery has taken place. The only discovery requests made to this point are plaintiffs' first set of interrogatories and first set of document requests. See ECF No. 15. This level of discovery is clearly insufficient to justify use of the intermediate standard under the general rule, as it appears that significant additional discovery
Moreover, there is no indication that such exceptional circumstances are present in this case. Unlike in MacGregor, plaintiffs did not utilize, much less rely upon, discovered information in support of their initial motion,
Plaintiffs ask the court to conditionally certify a class of "all current and former [m]echanics who worked during the time period beginning August 20, 2011 through the present."
TBC does not deny that all mechanics were paid under the same compensation plan but nevertheless argues that class certification would be inappropriate, because TBC's primary defense at trial — that the compensation plan constitutes a bona fide flat-rate commission plan under § 7(i) of the FLSA — will render individualized, fact-specific inquiries necessary in deciding each class member's claim. Def.'s Resp. 16.
FLSA § 7(i) provides that:
29 U.S.C. § 207(i). TBC contends that due to the "`highly individualized nature' of claims for overtime involving the § 7(i) defense, which, in this case, would require a review of each class member's actual time records, turned-hours records and pay records — courts have made clear that commissioned employees' claims under § 7(i) cannot proceed as a collective action."
TBC nevertheless analogizes the instant case to Holt v. Rite Aid Corp., 333 F.Supp.2d 1265 (M.D.Ala.2004), in which the court refused to conditionally certify the proposed class because "substantial evidence" indicated that the application of an FLSA defense would require individualized inquiries into the daily tasks of each proposed class member. Holt, 333 F.Supp.2d at 1274-75 ("[S]ubstantial evidence has been presented which indicates to this court that if the case were conditionally certified as a collective action at this stage, the court would have to inquire at a second stage as to the daily tasks of each putative collective action member to determine whether they are similarly situated to the persons identified by the [p]laintiffs, and then, on the merits, whether they had suffered an FLSA violation because they were not eligible for overtime compensation."); see also Pelczynski, 284 F.R.D. at 369 (declining to conditionally certify a class after determining that "[the court] must eventually conduct an individualized assessment of each of [p]laintiffs' claims"). The court in Holt, however, had the benefit of "fairly extensive evidence on the issue of whether putative class members [were] similarly situated." Holt, 333 F.Supp.2d at 1274. As discussed above, the available evidence in this case is extremely limited, thus, it would be inappropriate to inquire into the individualized nature of the § 7(i) defense at this stage.
To the extent defendant's § 7(i) defense is relevant, plaintiffs have still provided at least a "modest factual showing" that liability will not depend on individualized, fact-specific inquiries. The courts in 24 Hour Fitness and Johnson both held that application of the § 7(i) defense would require a highly individualized inquiry that could not be accomplished with common proof, because the court would need to calculate the separate elements of the § 7(i) defense — i.e. the regular rate of pay, the hours worked, and total commissions as a percentage of total pay over each representative period — for each week that each plaintiff was employed. See 24 Hour Fitness, 772 F.Supp.2d at 1126-27; Johnson, 2005 WL 1994286, at *6 ("Functionally... § 7(i) is in fact a highly individualized defense because its application requires week-by-week and other periodic calculations (e.g., not less than monthly on one part of the formula) specific to each individual [p]laintiff and his or her particular circumstances."). This reasoning assumes that liability will turn on whether or not the calculations of each plaintiff's pay fall within the quantitative requirements of § 7(i).
The court recognizes that the plaintiffs in 24 Hour Fitness offered a similar argument that class certification was appropriate because the payments they received "were not in fact bona fide commissions under § 7(i), and [] the § 7(i) defense could be defeated via common proof of this fact." 24 Hour Fitness, 772 F.Supp.2d at 1127. The Northern District of California characterized this as a merits argument and rejected it as premature. Id. ("[W]hether plaintiffs actually meet the criteria of an FLSA exemption is irrelevant to a determination of whether they are similarly situated."). Regardless of whether or not this rationale was appropriate in 24 Hour Fitness, it would mischaracterize the argument in this case. Though the merits of plaintiffs' challenge are irrelevant in determining whether the proposed class members are similarly situated, the ways in which that challenge might be proven or defeated, and how the success or failure of that challenge will affect the ultimate disposition of the case, are highly relevant to the similarly situated analysis. LaFleur, 30 F.Supp.3d at 468 ("[C]ourts have determined if potential class members are similarly situated by assessing the existence of `issues common to the proposed class that are central to the disposition of the FLSA claims and that such common issues can be substantially adjudicated without consideration of facts unique or particularized as to each class member.'").
Moreover, adopting an interpretation of the "similarly situated" standard that could be defeated any time defendants offered a § 7(i) defense would effectively deny the benefits of the FLSA collective action provisions to all employees being paid pursuant to a purported "commission" plan. This result appears inconsistent with the remedial goals of the FLSA. Hoffmann-La Roche Inc., 493 U.S. 165 at 173, 110 S.Ct. 482, 107 L.Ed.2d 480 (stating that "Congress left intact the `similarly situated' language providing for collective actions" and "[t]he broad remedial goal of the statute should be enforced to the full extent of its terms").
Thus, TBC's § 7(i) defense does not preclude plaintiffs from making a modest factual showing that the proposed class members are similarly situated. It is certainly possible that further discovery may clarify the contours of plaintiffs' claims in such a way that it becomes clear the parties are not similarly situated. For instance, it may be that the central issue is not whether or not the compensation plan itself qualified as a bona fide commission plan under § 7(i), but rather, whether the acts of specific managers
Ultimately, the court is satisfied that plaintiffs' have made a "modest factual showing" that the proposed class members were "victims of a common policy or plan that violated the law," as required by Purdham, 629 F.Supp.2d at 547-48. The essence of plaintiffs' claim is that, pursuant to a common compensation plan, defendant denied plaintiffs and proposed class members overtime pay in violation of the FLSA. See Pls.' Reply 2-4. Plaintiffs' assertion that all mechanics were paid pursuant to the same compensation plan is supported by their own affidavits, Cole Aff. ¶ 9, Gordon Aff. ¶ 10, McNeil Aff. ¶ 13, Dewey Aff. ¶ 10, as well as defendant's admissions, which essentially state that plaintiffs and similarly situated employees were compensated pursuant to a bona fide flat-rate commission plan. Def.'s Ans. ¶¶ 15, 16, 19, 22, 23, and 31; see also Def.'s Resp. 5 ("[TBC] hires mechanics to perform [] auto services, and pays them a commission."). Plaintiffs' complaint and affidavits also support their claim that they, along with other class members, regularly worked over forty hours a week without receiving overtime pay, Pls.' Compl. ¶ 21; Gordon Aff. ¶ 10, McNeil Aff. ¶ 13, Dewey Aff. ¶ 10, which TBC does not appear to dispute. Def.'s Answer ¶ 15 (admitting that "[p]laintiffs and other similarly situated employees worked more than forty (40) hours in a workweek" and that the overtime calculations were not applicable). Thus, plaintiffs' pleadings and affidavits demonstrate that "the proposed class members raise a similar legal issue as to coverage, exemption, [] nonpayment[,] minimum wages[,] or overtime arising from at least a manageably similar factual setting." De Luna-Guerrero, 338 F.Supp.2d at 654.
TBC also urges the court to deny conditional certification based on the Eastern District of Virginia's decision in Herrera v. TBC Corp., 18 F.Supp.3d 739 (E.D.Va. 2014), granting summary judgment to TBC Corp. and finding that the same flat rate compensation plan at issue in this case was compliant with § 7(i) of the FLSA. Def.'s Resp. 3, 11. TBC notes that a recent investigation of its South Florida stores, conducted by the U.S. Department of Labor, Wage and Hour Division, also found no violations. Id. at 3. TBC argues that Herrera and the Department of Labor investigation show that plaintiffs' claims are unlikely to succeed at trial; therefore class certification is improper, and likely to result in judicial inefficiency and unnecessary costs. Id. at 8 ("Plaintiffs must show a common policy or plan that violates the law ... These [p]laintiffs clearly cannot do so, as the common commission-based pay plan [p]laintiffs must seek to attack is one already adjudged to comply with the FLSA.") (emphasis in original).
TBC's argument is premature at this stage. Though some courts have held that class certification should be denied when a defendant employer shows that it is likely to succeed at trial, Amendola v. Bristol-Myers Squibb Co., 558 F.Supp.2d 459, 467 (S.D.N.Y.2008), this position has been widely rejected — even in the Southern District of New York, where it was first announced. See, e.g. McLawhorn v.
Aside from the impropriety of TBC's merits argument, neither Herrera nor the Department of Labor investigation is necessarily indicative of TBC's likelihood to succeed at trial. While Herrera focused on the requirement that there be "some element of proportionality" between employees' commissions and the prices charged to customers, Herrera, 18 F.Supp.3d at 747, the proportionality requirement is not the only reason a purported commission plan may not qualify as bona fide under FLSA § 7(i). See Erichs v. Venator Grp., Inc., 128 F.Supp.2d 1255, 1260 (N.D.Cal.2001) ("The [c]ourt finds that the two examples [of non-bona fide commission plans] in 29 C.F.R. § 779.416(c) are not exhaustive. As a general matter, the term `bona fide commission rate' [asks] courts to consider whether the particular payment plan before it comports with Congress' purpose in exempting employers from paying overtime in certain situations ..."). TBC has provided little information about the contents of the Department of Labor investigation, which, in any event, is not binding on this court. Thus, even if the court were to stray from the majority position and incorporate a preliminary evaluation of the merits into its analysis, it appears that neither Herrera nor the Department of Labor investigation would disturb the court's finding that plaintiffs have overcome the "fairly lenient" burden at this stage.
TBC also argues that plaintiffs have failed to show evidence that other potential class members desire to opt-in.
The court in Parker held that it was necessary for plaintiffs to show other potential class members' desire to opt in, because, otherwise, there would be no guarantee others would actually join the lawsuit, and if they did not, no purpose would have been served by certifying the class.
The majority of courts in this circuit have declined to require evidence of other potential plaintiffs' desire to opt-in.
In connection with their motion for conditional certification, plaintiffs also ask the court to: (i) compel TBC to produce a list containing the names, addresses, and telephone numbers of all potential opt in plaintiffs in the manner in which it regularly maintained those records, and (ii) to authorize plaintiffs to send their proposed notice, by mail, to all proposed class members. Pls.' Br. 9. TBC initially objected to several aspects of the proposed notice, Def. Resp. 20-21, but later withdrew all but two objections at a hearing held September 2, 2015. At the same hearing, the
For the foregoing reasons, the court
With respect to other differences in potential class member's pay, the court notes that while each class member's actual hours, "flat-rate," and commissions as a percentage of total pay will vary, courts have held that "[d]ifferences as to time actually worked, wages actually due[,] and hours involved are, of course, not significant" in determining whether proposed class members are similarly situated. Pelczynski, 284 F.R.D. at 368 (citing De Luna-Guerrero v. N. Carolina Grower's Ass'n, Inc., 338 F.Supp.2d 649, 654 (E.D.N.C.2004)).