Wilson v. Regions Fin. Corp.
Wilson v. Regions Fin. Corp.
Opinion of the Court
RICHARD W. STORY, United States District Judge *1245This case comes before the Court on Plaintiffs' Motion for Conditional Certification [45], Defendants' Motion for Judgment on the Pleadings [63], Plaintiffs' Motion for Leave to File a Five-Page Sur-Reply in Opposition to Defendants' Rule 12(c) Motion [100], and Plaintiffs' Amended Motion for Leave to File a Sur-Reply [102]. After reviewing the record, the Court enters the following Order.
Background
Plaintiffs bring this putative class action under the Fair Labor Standards Act ("FLSA"),
Defendants provide mortgage-loan services throughout the United States, including at a mortgage-operations center in Gainesville, Georgia, with a satellite location in Cumming, Georgia (collectively, "Gainesville MOC"). (Third Am. Compl., Dkt. [41] ¶¶ 44-47.) Defendants also operate mortgage-operations centers in Alabama, Indiana, Tennessee, Florida, and Mississippi. (Id. ¶¶ 48-51.) Defendants employ individuals to work in three mortgage-related positions at all MOCs: (1) mortgage processor; (2) mortgage underwriter, and (3) mortgage closer. (Id. ¶¶ 52-57.)
The three named Plaintiffs in this action, Betty Wilson, Linda Wick, and Susan Colbert, worked at the Gainesville MOC. (Id. ¶ 60.) At various times from August 2000 until about April 2014, Wilson was employed as either a mortgage processor or mortgage underwriter. (Id. ¶ 62.) From September 2008 until sometime in 2013, Wick worked as a mortgage closer. (Id. ¶ 63.) Colbert was employed as a mortgage underwriter from June 2009 until around March 2014. (Id. ¶ 64.)
Plaintiffs contend that Defendants are employers under the FLSA, Plaintiffs were not exempt employees under the statute, and they were due overtime compensation for hours worked in excess of 40 hours per week. (See
All employees in these three positions, including Plaintiffs, were eligible for and often paid nondiscretionary production bonuses for meeting production goals. (Id. ¶¶ 102-03.) All employees used an electronic timekeeping system to clock in and clock out each day, including for lunch breaks, at the Gainesville MOC. (Id. ¶¶ 111-13.) At various times since May 20, 2009, Plaintiffs worked in excess of 40 hours in a workweek. (Id. ¶ 115.)
Plaintiffs accuse Defendants of cheating them and other employees at both the Gainesville MOC and other MOCs out of their proper overtime pay in three ways:
(1) Defendants excluded all MOC employees' nondiscretionary bonus payments from the calculation of their regular rate of pay used to compute overtime compensation;
(2) Defendants required Gainesville MOC employees to work off the clock to *1246complete their assigned tasks and refused to pay all overtime hours actually worked; and
(3) Defendants falsified Gainesville MOC employees' actual clock-in and clock-out times to decrease their compensable overtime hours.
(See
In addition to seeking recovery under the FLSA, Plaintiffs bring class action claims on behalf of Gainesville MOC employees for violations of Georgia RICO. Plaintiffs allege that Georgia law requires every corporation to pay its employees "the full net amount of wages or earnings due the employees for the period for which the payment is made." O.C.G.A. § 34-7-2(b). But since at least May 20, 2009, Defendants
have systematically taken and converted without justification for their own benefit, and continue to do so, the off-the-clock labor and services of mortgage processors, mortgage underwriters, and mortgage closers at the Gainesville MOC, including [Plaintiffs], in order to decrease compensable hours in excess of 40 in a workweek per employee while still obtaining essentially the same level of employee production.
(Third Am. Compl., Dkt. [41] ¶ 141.)
Plaintiffs maintain that Defendants used economic fear to obtain their labor and services. (Id. ¶ 143.) And by decreasing labor costs, Defendants increased their cash flow to pay dividends to stockholders and to pay principal and interest on outstanding debt. (Id. ¶ 145.) Plaintiffs thus allege that Defendants have engaged in a pattern of racketeering activity by committing criminal acts against its mortgage processors, mortgage underwriters, and mortgage closers at the Gainesville MOC. (Id. ¶¶ 146, 166-74.) These acts include theft of Plaintiffs' services, theft of Plaintiffs' contractually earned straight-time hourly rates, and extortion. (Id. )
Plaintiffs move for conditional certification of the three subclasses described above, while Defendants move for judgment on the pleadings of the Georgia RICO claims contained in Plaintiffs' Third Amended Complaint.
Discussion
I. Motion for Conditional Certification
A. Legal Standard
The FLSA authorizes collective actions, providing, in pertinent part:
An action ... may be maintained against any employer ... by any one or more employees for and in behalf of himself or themselves and other employees similarly situated. No employee shall be a party plaintiff to any such action unless he gives his consent in writing to become such a party and such consent is filed with the court in which such action is brought.
As is clear from the plain language of § 216(b), an opt-in class may be certified only where the named plaintiff sues on *1247behalf of himself and other "similarly situated" employees.
The first determination is made at the so-called 'notice stage.' At the notice stage, the district court makes a decision-usually based only on the pleadings and any affidavits which have been submitted-whether notice of the action should be given to potential class members. Because the Court has minimal evidence, this determination is made using a fairly lenient standard, and typically results in 'conditional certification' of a representative class. If the district court 'conditionally certifies' the class, putative class members are given notice and an opportunity to 'opt-in.' The action proceeds as a representative action throughout discovery.
The second determination is typically precipitated by a motion for 'decertification' by the defendant usually filed after discovery is largely complete and the matter is ready for trial. At this stage, the court has much more information on which to base its decision, and makes a factual determination on the similarly situated question. If the claimants are similarly situated, the district court allows the representative action to proceed to trial. If the claimants are not similarly situated, the district court decertifies the class, and the opt-in plaintiffs are dismissed without prejudice. The class representatives-i.e. the original plaintiffs-proceed to trial on their individual claims.
Hipp,
This case is before the Court for the "first determination" of class certification. In deciding whether to conditionally certify the proposed class, the Court must determine (1) whether the employees sought to be included in the putative class are "similarly situated" with respect to their job requirements and pay provisions, and (2) whether there are other employees who wish to opt into the action. Dybach,
B. Analysis
1. Similarly-Situated Requirement
Plaintiffs bear the burden of showing, under § 216(b), that they are "similarly situated" to the members of the putative class they seek to represent. Grayson v. K Mart Corp.,
*1248a. Plaintiffs' Evidence
Plaintiffs argue that the Court should certify three subclasses: (1) employees in all mortgage jobs at all MOCs whose nondiscretionary bonus payments were excluded from the calculation of overtime compensation; (2) employees in all mortgage jobs at the Gainesville MOC who worked off the clock and were not paid proper overtime compensation; and (3) employees in all mortgage jobs at the Gainesville MOC whose time records were falsified and who were not paid proper overtime compensation. (Third Am. Compl., Dkt. [41] ¶ 65.) Plaintiffs assert that all class members had the same primary job duties, were compensated in the same way, and worked overtime. Furthermore, Defendants used the same unlawful overtime practices against them. (See id. ¶ 122.)
In support of these allegations, Plaintiffs produce several declarations from Plaintiffs and other employees. According to these employees, "[a]t various times" throughout their employment they "worked in excess of 40 hours in a workweek"; Defendants were aware when they worked extra hours "because such work was apparent from documents, including electronic documents, or was performed in plain sight of management"; and "[at] various times" Defendants did not pay them for all the overtime hours worked in a workweek. (Colbert, Nesmith, Wick, & Wilson Decls., Dkt. [45-6, 45-7, 45-8, 45-9] ¶¶ 19-21.) The declarants state that Defendants failed to calculate overtime compensation properly by excluding nondiscretionary bonuses from the regular rate of pay. (Id. ¶ 21.) They also state that "[a]t various times" they "worked off-the-clock during lunch breaks and before and after regular business hours." (Id. ¶ 22.) Furthermore, two employees state that "REGIONS' managers could enter the timekeeping system to change the time records or enter new information into the time records of a [mortgage underwriter, processor, or closer] in order to decrease the amount of [their] compensable hours." (Colbert & Nesmith Decls., Dkt. [45-6, 45-7] ¶ 17.) Defendants routinely engaged in these practices and consequently underpaid employees' overtime compensation. (See Colbert, Nesmith, Wick, & Wilson Decls., Dkt. [45-6, 45-7, 45-8, 45-9] ¶ 23.) Plaintiffs thus argue that the class members are all similarly situated.
b. Defendants' Contentions
In opposing conditional certification, Defendants stress that Plaintiffs' off-the-clock claims are inherently individualized, and the subclasses fail to remedy this problem. (See Defs.' Resp., Dkt. [75] at 11-12.) According to Defendants, the factual determinations as to each opt-in would be unique. (Id. at 12-13.) What is more, Plaintiffs and the putative opt-ins held three different jobs with different duties, while the extent to which employees worked overtime depended on the position they held. (Id. at 14-16.) Defendants point to several other issues, including that Plaintiffs had different supervisors who approved overtime hours; Defendants had policies requiring accurate timekeeping and prohibiting work off the clock; and Plaintiffs' allegations are vague and conclusory because none of the declarations specifies when or how often the employee worked off the clock, nor do they identify any policy requiring work off the clock. (See id. at 17-20.) Finally, Defendants note that there is evidence Plaintiffs were paid for a substantial number of overtime hours, meaning numerous individualized questions exist about why each Plaintiff was not paid for certain overtime hours. (Id. at 20-21; Pearce Decl., Dkt. [75-5] ¶ 21.)
As for the time-falsification claims, Defendants deny that Plaintiffs and opt-ins *1249are similarly situated because only two declarants mention that their time records were falsified. (See Colbert & Nesmith Decls., Dkt. [45-6, 45-7] ¶ 23.) Moreover, Defendants point out that neither one states who falsified their records, only that managers could change the time records in the time keeping system. (Id. ¶ 17.) Defendants also argue that resolving time-falsification claims would involve individual inquiries into each class member's pay discrepancies to identify whether anyone altered time records to reduce overtime pay. (See Defs.' Resp., Dkt. [75] at 23-24.)
Last, Defendants argue that certification is improper for the subclass of employees whose bonuses were excluded from their regular pay-rate calculation because all three Plaintiffs' regular rates were properly calculated to include non-discretionary bonuses. (Id. at 26; Pearce Decl., Dkt. [75-5] ¶¶ 16-17.)
c. Certification
After reviewing the Third Amended Complaint and the parties' submissions, the Court finds that Plaintiffs make an adequate showing of similarity at this stage to warrant conditional certification as to certain claims. First, the Court finds that the mortgage processors, mortgage underwriters, and mortgage closers are similarly situated in terms of their job duties and pay provisions. Although there is variation in the duties of the different positions, all putative class members had non-supervisory mortgage jobs at Defendants' MOCs. More importantly, Defendants state that "MOC employees"-presumably including all putative class members-were all non-exempt and were paid at an hourly rate plus non-discretionary bonus payments. (Pearce Decl., Dkt. [75-5] ¶¶ 5, 16-17.) Policies violating the FLSA could thus affect employees in the same way. Even though the job duties among the different mortgage jobs vary, "variations in specific duties, job locations, working hours, or the availability of defenses are examples of factual issues that are not considered at this stage." Scott v. Heartland Home Fin., Inc., No. 1:05-CV-2812-TWT,
Turning to Plaintiffs' first subclass, which includes mortgage employees at all MOCs, Plaintiffs allege they were subject to a common unlawful policy when Defendants excluded their bonuses from the calculation of their regular pay rate. However, Defendants submitted evidence that Plaintiffs were paid a "true up" payment in March 2013 that compensated them for overtime based on a rate of pay that included production bonus payments. (Defs.' Resp., Dkt. [75] at 26; Pearce Decl., Dkt. [75-5] ¶¶ 18-19). Thereafter, Defendants have included the production bonus in the regular pay rate used to calculate overtime payments. (Id. ¶¶ 16-17). In their Reply, Plaintiffs assert that even if there were a "true up" payment, it went only to current employees and did not address former employees. (Pl.'s Reply [81] at 3, n.1). Plaintiffs do not represent that they did not receive the payment. Therefore, the Court finds that Plaintiffs are not similarly situated to these putative members of the class that they seek to represent. While the Court would not typically consider merits at this stage of certification, the substantial number of potential plaintiffs who would have to be served with notice and yet, who appear not to have valid claims causes the Court to consider the merits at this time. Inclusion of this claim would require notice to be sent to hundreds of employees in Alabama, Indiana, *1250Tennessee, Florida, and Mississippi, and apparently, those who have been employed since March 2013, would not have valid claims. In light of these circumstances and Plaintiffs appearing not to be similarly situated to putative plaintiffs who may have a claim, certification of Plaintiffs' first subclass is DENIED .
The Court next considers the other two proposed subclasses, consisting of mortgage employees at the Gainesville MOC (1) who worked off the clock in excess of 40 hours per week and (2) whose time records were altered to reduce the number of compensable overtime hours. Most of Defendants' objections to certification apply to these subclasses and how the Court would have to make independent inquires into each employee's records to determine liability and damages.
The Court recognizes Defendants' concern that distinct proofs could be required to determine liability for each class member. Defendants submit several affidavits of employees who state they were paid all their overtime. But again, resolving these factual disputes is not appropriate at this stage. See, e.g., Kreher,
The cases Defendants cite do not alter this conclusion. Defendants cite Williams v. Accredited Home Lenders, Inc. in arguing that certification of this class is improper. No. 1:05-CV-1681-TWT,
Defendants argue that the same is true here. But in Williams, the court skipped the first stage of conditionally certifying the class and instead proceeded with a factual determination of the similarly-situated question. The court did so because the plaintiffs had "short circuited the process first by disseminating informal notice of the lawsuit," then about 150 current or former employees filed forms to opt in, the defendant deposed about 20 of the opt-in plaintiffs, and the plaintiffs deposed the defendant's senior managers. Id. The defendants also submitted declarations of 50 loan officers testifying that they always accurately recorded their hours and had been properly paid. Id. at *4. Here, although there are several declarations in the record, the Court does not have the benefit of discovery to make a final certification decision. Discovery could reveal factual circumstances that could make the liability question suitable for a collective action.
Williams is further distinguishable because the plaintiffs there sought a nationwide collective action, and so the court found that such a case would be unmanageable *1251because it would involve hundreds of overtime claims from many different offices around the country with different supervisors. See id. at *5. Here, by contrast, Plaintiffs limit their off-the-clock and time-falsification claims to Gainesville MOC employees only, thus greatly narrowing the scope of the class. Based on Plaintiffs' allegations and evidence, it is plausible Plaintiffs could prove Defendants had a common policy at the Gainesville MOC of ordering employees to work off the clock and of altering their recorded hours to reduce their overtime pay. Cf. Randle v. Allconnect, Inc., No. 1:14-cv-245-WSD,
In Hart v. JPMorgan Chase Bank, N.A., another case Defendants cite, the court declined to certify a collective action "of hundreds or thousands of current and former JP Morgan employees based on divergent 'off the clock' violations" with "varying factual circumstances including geography, line of business, supervisors and managers, duties, and time keeping and pay practices." No. 8:12-cv-00470-T-27TBM,
In sum, the above cases either had the benefit of more evidence or involved class members who were clearly not similarly situated to one another in terms of pay, duties, or even alleged FLSA violations. In this case, because Plaintiffs do show the class members are similarly situated, it is more appropriate to evaluate the manageability of the class's claims after the Court has the benefit of discovery. See Morgan v. Family Dollar Stores, Inc.,
2. Subclasses
Defendants argue that the proposed subclasses are inappropriate, however, because they do not remedy the individualized inquiries required in this case. As explained above, at this stage the Court finds that the putative class members are similarly situated. Still, the Court notes that the proposed subclasses would not aid in the resolution of claims because they are largely overlapping. For example, some Gainesville MOC employees could be members of both remaining subclasses if they experienced both types of FLSA violations. Consequently, the Court finds that *1252the use of subclasses is not appropriate and DECLINES to establish subclasses. The Court finds that the class should be defined as follows:
All current and former employees of REGIONS BANK and/or REGIONS FINANCIAL CORPORATION at the Gainesville, Georgia mortgage operations center, including the Commerce, Georgia satellite office, who performed the primary job duties of either a mortgage processor, mortgage underwriter, or mortgage closer, at any time from [three years prior to the mailing date of notice] to [date of notice], who did not receive all the overtime compensation legally owed them because REGIONS BANK and/or REGIONS FINANCIAL CORPORATION:
1. Altered employees' time records by entering inaccurate clock-in and clock-out times to reduce the amount of overtime hours actually worked; and/or
2. Required employees to work off the clock in order to complete assignments but did not pay for the off-the-clock time worked.
3. Others Desire to Join the Suit
Beyond demonstrating that other members of the putative class are similarly situated, Plaintiffs must also demonstrate that other employees wish to opt in before the Court will grant conditional certification. Dybach,
Defendants further argue that Plaintiffs fail to demonstrate employees from MOCs other than the Gainesville MOC are interested in joining. Based on the Court's denial of certification of a class including employees from MOCs other than the Gainesville MOC, geographic diversity is no longer an issue. Accordingly, the lack of geographic diversity of the opt-ins does not defeat certification. Plaintiffs sufficiently demonstrate that others wish to join the litigation.
4. Notice
Defendants object to Plaintiffs' proposed single notice (Dkt. [45-2] ) because one subclass includes all MOC employees while the others include Gainesville MOC employees only. Based on the Court's decision to certify the claims of Gainesville MOC employees only, Defendants' concern is removed. Plaintiffs are DIRECTED to prepare a notice defining the class as defined in this Order. Otherwise, the proposed notice is approved.
Plaintiffs request permission to include the following legend on the front of each envelope containing a notice packet:
LEGAL NOTICE:
UNPAID OVERTIME LAWSUIT AGAINST:
REGIONS BANK and/or REGIONS FINANCIAL CORPORATION
• You could get additional overtime pay for some of the hours you worked.
• Your prompt attention is required.
(Dkt. [45-4].) Plaintiffs also request permission to include in the notice packet a postage-paid return envelope pre-addressed to Plaintiffs' counsel. (Pls.' Br., *1253Dkt. [45-1] at 23.) Defendants do not object to either request. The Court will permit Plaintiffs to print the legend on each envelope and to include a return envelope with the notice packet.
For all these reasons, Plaintiffs' Motion for Conditional Certification [45] is GRANTED, in part and DENIED, in part .
II. Motion for Judgment on the Pleadings
Next, the Court addresses Defendants' Motion for Judgment on the Pleadings [63] as to Plaintiffs' Georgia RICO claims.
A. Legal Standard
"Judgment on the pleadings is appropriate where no issue of material fact remains unresolved and the moving party is entitled to judgment as a matter of law." Mergens v. Dreyfoos,
In order to determine whether a plaintiff has stated a claim, a federal court is to accept as true "all facts set forth in the plaintiff's complaint." Grossman v. Nationsbank, N.A.,
B. Analysis
In support of their Georgia RICO claim, Plaintiffs allege that Defendants "have systematically taken and converted" the labor and services of their employees through the falsification of electronic time records "in order to decrease compensable hours in excess of 40 in a workweek while *1254still obtaining essentially the same level of employee production." (Third Am. Compl., Dkt. [41] ¶¶ 140-41.) They also allege that Defendants denied them "all the overtime compensation due at 1.5 times their regular rate of pay for all work performed in excess of 40 hours in a workweek." (Id. ¶ 121.) Defendants argue that Plaintiffs' Georgia RICO claim is preempted by the FLSA, and that, in any event, Plaintiffs fail to state a claim.
1. Preemption
There are three categories of preemption: express preemption, field preemption, and conflict preemption. Fla. State Conference of the NAACP v. Browning,
The intent of the FLSA is "to protect all covered workers from substandard wages and oppressive working hours." Barrentine v. Ark.-Best Freight Sys., Inc.,
2. The Parties' Contentions
Defendants assert that conflict preemption bars the Georgia RICO claim because Plaintiffs seek relief under state law based on the failure to pay proper overtime wages, conduct that also violates the FLSA. (Defs.' Br., Dkt. [63-1] at 6-7.) Georgia RICO also permits recovery of treble and punitive damages, see O.C.G.A. § 16-14-6(c), whereas the FLSA only provides for unpaid overtime and liquidated damages, see
Plaintiffs respond that under Georgia RICO they seek only their straight-time pay for hours worked over 40 per week, not the 50% premium the FLSA requires employers to pay for overtime. Because they are independently entitled to straight-time pay under Georgia law,
3. Analysis
Courts hold that a state-law claim is preempted where it "depends on the finding of a violation of the FLSA and requires the same proof as is required to prove a violation of the FLSA, and the state law claim is only invoked to expand a plaintiff's remedies." Johnson v. WellPoint, Inc., No. 1:06-CV-2430-ODE,
While the Court recognizes Plaintiffs' argument that their RICO claim is based solely on straight-time pay they are entitled to under Georgia law, the Court is unpersuaded that they are permitted to enforce that right separately from the 50% premium provided by the FLSA. After all, the FLSA requires an employee to be compensated for overtime hours "at a rate not less than one and one-half times the regular rate at which he is employed."
*1256(Federal RICO and state-law claims preempted); Gordon v. Kaleida Health,
In contrast, state-law claims to enforce rights not protected under the FLSA are not preempted. For example, the FLSA provides no remedy if an employee is paid less than her actual hourly rate but in excess of the minimum wage for non-overtime hours. See, e.g., Thrower v. Peach Cnty., Ga. Bd. of Educ., No. 5:08-CV-176 (MTT),
The Court is also unpersuaded that Avery v. City of Talladega forecloses preemption under these circumstances. In Avery, the Eleventh Circuit held that a breach of contract claim was not preempted when the contract expressly provided that employees would be compensated in accordance with the FLSA.
In sum, because Plaintiffs seek to enforce part of the overtime pay required under the FLSA by using Georgia RICO, which permits recovery of more extensive damages, the Georgia RICO claims conflict with the FLSA, and it is impossible to comply with both statutes. Consequently, Plaintiffs' Georgia RICO claims are preempted and are due to be DISMISSED , and Defendants' Motion for Judgment on the Pleadings [63] is GRANTED .
Conclusion
For the foregoing reasons, Plaintiffs' Motion for Leave to File a Five-Page Sur-Reply in Opposition to Defendants' Rule 12(c) Motion [100] is DENIED as moot , and Plaintiff's Amended Motion for Leave to File a Sur-Reply [102] is DENIED . In addition, Defendants' Motion for Judgment *1257on the Pleadings [63] is GRANTED , and Plaintiffs' Georgia RICO claims are hereby DISMISSED from this action. Finally, Plaintiffs' Motion for Conditional Certification [45] is GRANTED, in part and DENIED, in part .
Plaintiffs are DIRECTED to prepare separate notices for the two subclasses consistent with Parts I.B.2 & 4 of this Order. Defendants are ORDERED to produce the names and addresses of all putative class members who worked for Defendants in a readily usable electronic format within 20 days of this Order. Defendants are also ORDERED to supply the last four digits of the Social Security numbers for all putative class members.
SO ORDERED , this 28th day of August, 2015.
Plaintiffs filed a Motion for Leave to File a Five-Page Sur-Reply [100] and Amended Motion to File a Sur-Reply [102]. Generally, the filing of surreplies is improper, although the Court may allow a surreply in its discretion where a valid reason for additional briefing exists, such as when a movant raises new arguments in its reply brief or a party wishes to inform the Court of a new decision or rule implicating the motion under review. See, e.g., Fedrick v. Mercedes-Benz USA, LLC,
Plaintiffs argue that they are entitled to straight-time pay based on a statutory right to be paid all wages earned under O.C.G.A. § 34-7-2.
Reference
- Full Case Name
- Betty WILSON v. REGIONS FINANCIAL CORPORATION and Regions Bank
- Status
- Published