ROBERT PITMAN, District Judge.
Before the Court is the report and recommendation of United States Magistrate Judge Jeffrey C. Manske, (Dkt. 115), concerning Plaintiff Christopher Ferguson's ("Ferguson") Motion for Conditional Certification and Notice, (Dkt. 13). Also before the Court are the timely objections filed by Defendants Texas Farm Bureau Business Corporation, Texas Farm Bureau Casualty Insurance Company, Texas Farm Bureau Mutual Insurance Company, Texas Farm Bureau Underwriters, Farm Bureau County Mutual Insurance Company of Texas, and Texas Farm Bureau (collectively, the "TFB Defendants"), and Defendant Southern Farm Bureau Life Insurance Company ("SFB Life") (together, "Defendants"). (Dkts. 122, 123, 124).
This case was referred to Magistrate Judge Manske for a report and recommendation on the merits pursuant to 28 U.S.C. § 636(b), Rule 72 of the Federal Rules of Civil Procedure, and Rule 1(d) of Appendix C of the Local Rules of the United States District Court for the Western District of Texas.
In his report and recommendation, Magistrate Judge Manske recommends that the Court grant Ferguson's motion and conditionally certify the proposed class. (R. & R., Dkt. 115, at 25). Having considered the parties' submissions, the record, and the applicable law, the Court will adopt the report and recommendation.
This case concerns alleged violations of the Fair Labor Standards Act of 1938, as amended, 29 U.S.C. §§ 201 et seq. ("FLSA"), by a handful of insurance companies. (Compl., Dkt. 1, at 1-2). Ferguson is an insurance agent who has been working for the TFB Defendants since 2004. (Id. at 2). According to Ferguson, he was misclassified as an independent contractor from 2009 to 2013 and denied overtime premiums required by the FLSA. (Id.). Accordingly, Ferguson asserts a cause of action under the FLSA against each defendant for willfully failing to pay overtime premiums. (Id. at 18-19). Ferguson seeks certification of a collective action on behalf of "all current and former misclassified Agency Managers of Defendants," (id. at 2), who he says have been "subject to a uniform misclassification policy," (Mot. Class Cert., Dkt. 13, at 1). Ferguson filed his Motion for Conditional Certification and Notice on May 8, 2017. (Dkt. 13). Magistrate Judge Manske found sufficient grounds to conditionally certify Ferguson's proposed class and recommended that the Court grant Ferguson's motion. (R. & R., Dkt. 115, at 25). Defendants then timely filed objections to parts of the report and recommendation. (Objs., Dkts. 122, 123, 124).
Under federal statute and the Federal Rules of Civil Procedure, magistrate judges may make findings and recommendations on dispositive motions. 28 U.S.C. § 636(b)(1)(B); Fed. R. Civ. P. 72(b)(1). Motions for class certification are dispositive motions under the Federal Magistrates Act. Davidson v. Georgia-Pac., L.L.C., 819 F.3d 758, 763 (5th Cir. 2016) (citing 28 U.S.C. § 636(b)(1)(A)). For dispositive motions, parties are entitled to de novo review of any part of the magistrate judge's disposition that has been properly objected to. Fed. R. Civ. P. 72(b)(3).
The FLSA permits a court to order an action to proceed as a collective action on behalf of others similarly situated. 29 U.S.C. § 216(b). Unlike a class action filed under Federal Rule of Civil Procedure 23(c), a collective action under Section 216(b) requires prospective claimants to opt in rather than opt out. Roussell v. Brinker Int'l, Inc., 441 F. App'x 222, 225 (5th Cir. 2011) (citing Sandoz v. Cingular Wireless LLC, 553 F.3d 913, 916 (5th Cir. 2008)).
This Court uses the two-step approach from Lusardi v. Xerox Corp., 118 F.R.D. 351 (D.N.J. 1987), to determine whether to certify a FLSA class of similarly situated individuals. See Dyson v. Stuart Petroleum Testers, Inc., 308 F.R.D. 510, 512 (W.D. Tex. 2015) (noting that the majority of courts in the Fifth Circuit use the Lusardi approach to determine FLSA class certification). The two stages of the Lusardi approach are the "notice stage" and the "decertification stage." Mooney v. Aramco Servs. Co., 54 F.3d 1207, 1213-14 (5th Cir. 1995), overruled on other grounds by Desert Palace, Inc. v. Costa, 539 U.S. 90, 123 (2003). At the notice stage, the district court decides whether notice should be given to potential class members based on the pleadings and affidavits. Id. "Because the court has minimal evidence, this determination is made using a fairly lenient standard" that "typically results in conditional certification of a representative class." Id. at 1214 (citation and internal quotation marks omitted). To satisfy that lenient standard, a plaintiff must provide "nothing more than substantial allegations that the putative class members were together the victims of a single decision, policy, or plan infected by discrimination." Id. n.8 (citation omitted).
Potential class members are then given notice and the opportunity to opt in, and the action "proceeds as a representative action throughout discovery." Id. Later, at the decertification stage, when "discovery is largely complete and more information on the case is available, the court makes a final determination of whether all plaintiffs are sufficiently similarly situated to proceed together in a single action." Acevedo v. Allsup's Convenience Stores, Inc., 600 F.3d 516, 519 (5th Cir. 2010).
Defendants collectively objected to most of the magistrate judge's report and recommendation, and they are entitled to de novo review of those parts of the report and recommendation. Having conducted a de novo review of the record and applicable law where appropriate,
In adopting the magistrate judge's report and recommendation in full, the Court has considered and rejected each of Defendants' objections. Defendants each give considerable attention to the magistrate judge's use of the Lusardi approach rather than Rule 23. (TFB Obj., Dkt. 124, at 3-4; SFB Obj., Dkt. 122, at 4-9). The Court has already determined that the Lusardi approach is the proper vehicle for certifying FLSA collective actions, see Dyson, 308 F.R.D. at 512, and none of Defendants' arguments persuade the Court to proceed differently here.
SFB Life objects to sending reminder notices because it believes that the notices will harm its relationships with current agency managers. (SFB Obj., Dkt. 122, at 19). In light of the fact that Defendants themselves have made 80 agency managers aware of this action already, (see TFB Resp. Mot. Class Cert., Dkt. 65, at 1 n.1), the Court is not persuaded that the detriment to Defendants outweighs the benefits of a thorough notice procedure.
SFB Life objects that the proposed notice does not describe its defenses with enough specificity, pointing to another district court's holding that "notice to potential class members must contain a brief explanation of Defendants' bases for disputing liability." Yaklin v. W-H Energy Servs., Inc., No. CIV.A. C-07-422, 2008 WL 1989795, at *4 (S.D. Tex. May 2, 2008). The brief description of Defendants' position is adequate and sufficiently neutral for purposes of this notice.
SFB Life objects that Ferguson has not met his burden to identify individuals who desire to opt in to this action. (SFB Obj., Dkt. 122, at 16 (citing Clark v. City of Ft. Worth, 800 F.Supp.2d 776, 779 (N.D. Tex. 2011)). First, a number of district courts—including this one—have held that a plaintiff need not identify specific class members who desire to join the litigation at Lusardi's notice stage. Contreras v. Land Restoration LLC, No. 1:16-CV-883-RP, 2017 WL 663560, at *6 (W.D. Tex. Feb. 17, 2017) (citing Jones v. Cretic Energy Servs., LLC, 149 F.Supp.3d 761, 768 (S.D. Tex. 2015) and Dreyer v. Baker Hughes Oilfield Operations, Inc., 2008 WL 5204149, at *3 (S.D. Tex. Dec. 11, 2008)). Even if Ferguson were required to identify specific individuals who desire to join this litigation, he has done so by acquiring consent forms from five former agency managers and one current agency manager. (SFB Resp. Mot. Class Cert., Dkt. 67, at 15).
The TFB Defendants object to the magistrate judge's recommendation that plaintiff's counsel be permitted to call potential class members for whom no email address is available to confirm receipt of the proposed notice because "there is no way to ensure" that plaintiff's counsel will only read from the approved script. (TFB Obj., Dkt. 124, at 10). The Court is not inclined to credit the TFB Defendants' concern when they have already unilaterally contacted dozens of potential class members about this litigation.
The TFB Defendants also object to referring to a three-year statute of limitations and liquidated damages in the notice because it would be expensive to file a motion for decertification at a later date. (Id.). In light of this order granting conditional certification, the decertification stage will arrive regardless of the inclusion of these provisions. Because the Court has not decided either of these issues, it is appropriate for potential class members to be aware that Ferguson has alleged both to be true.
Finally, Defendants focus most of their objections on the differences between potential class members that they argue would require such a degree of individualized analysis that class certification is inappropriate. (TFB Obj., Dkt. 124, at 10-16, 17-18; SFB Obj., Dkt. 122, at 5-9). These objections are better suited for the decertification stage, after the parties have had an opportunity to conduct discovery and the Court has a fuller record on which to base its determination. As the Fifth Circuit has recognized, a court's review at the notice stage is "lenient" and requires only a finding that potential class members "were together the victims of a single decision, policy, or plan infected by discrimination." Mooney, 54 F.3d at 1214, 1214 n.8. The Court agrees with the magistrate judge's assessment that Ferguson's pleadings, along with the affidavits and other evidence presented, are adequate evidence at this early stage of common policies and practices relevant to determining whether Defendants were required to pay overtime wages to Ferguson and other agency managers. (R. & R., Dkt. 115, at 9-13).
For the reasons stated above,
Accordingly, the Court