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Certification standard met in ‘reporting pay’ lawsuit

Class action bar scores win in Wage Act case

One of the restaurants in defendant P.F. Chang’s chain

One of the restaurants in defendant P.F. Chang’s chain

A former worker for a Chinese restaurant chain could satisfy the numerosity requirement for certification of a class action claim for unpaid “reporting pay,” even though the number of putative class members was unclear, the Massachusetts Supreme Judicial Court has found.

The plaintiff argued that the state’s wage laws provided a more lenient class certification standard than Massachusetts Rule of Civil Procedure 23.

According to the plaintiff, certification was appropriate under the less rigorous statutory standard despite the fact that the number of the defendant’s employees who may have unlawfully received less than three hours’ pay after arriving for a work shift remained unclear following the parties’ discovery.

The court rejected the notion of a less rigorous class certification standard for state wage claims. It nonetheless concluded that Superior Court Judge Peter M. Lauriat abused his discretion in denying class certification on the ground that the plaintiff could not satisfy Rule 23’s numerosity requirement.

“Uncertainty as to the number of plaintiffs, due to the possibility of affirmative defenses regarding some of the plaintiffs, is not a ground for denying class certification, at least when hundreds of employees are affected by an apparent prohibited ‘class-wide practice’ and the employer’s own recordkeeping deficiencies cause the uncertainty,” Justice Scott L. Kafker wrote for the unanimous court.

“[Gammella] clarified that the ‘similarly situated’ language in the Wage Act did not signal a legislative intent to create a lesser standard for class certification.”

— Benjamin Robbins, New England Legal Foundation

The SJC further rejected defendant P.F. Chang’s contention that the restaurant chain’s offers of settlement mooted the plaintiff’s case.

“[B]ecause the plaintiff did not accept either of the defendant’s offers and informed the court of his intention to appeal from the denial of class certification, we … hold that the defendant’s motion to dismiss for mootness was improperly granted,” Kafker wrote.

The 35-page decision is Gammella v. P.F. Chang’s China Bistro, Inc.

Helpful lessons

The plaintiff’s attorney, Stephen S. Churchill, said the SJC’s decision on the applicability of the Rule 23 certification standards was consistent with the Legislature’s recognition of the key role that representative actions play in enforcing the state’s wage laws.

“It is a recognition that Rule 23 itself can accommodate the Legislature’s desire to have the [wage] statutes enforced aggressively,” Churchill said.

The Boston lawyer added that the court’s decision that the defendant could not moot the case by its settlement offers was important.

“If a defendant were able to end a class action by picking off a named plaintiff, that would effectively render class actions toothless,” he said.

Daniel S. Field, a Boston management-side lawyer, said Gammella falls in line with the SJC’s 2008 decision in Salvas v. Wal-Mart Stores, Inc.

“On the one hand, it puts to rest once and for all the argument that the Wage Act as well as the overtime and minimum wage law in Massachusetts have a different class certification standard that is more lenient than Rule 23,” he said. “On the other hand, the court’s analysis of Rule 23 continues along the lines of Salvas, seeming to create a more lenient standard for class certification in Massachusetts than the U.S. Supreme Court has found to be applicable under the federal rule.”

Boston class action attorney Shannon Liss-Riordan appeared in Gammella on behalf of the Massachusetts Employment Lawyers Association, which joined in the filing of an amicus brief in support of the plaintiff.

Liss-Riordan called Gammella a good, “substantive” decision for plaintiffs, even though the SJC’s decision to apply Rule 23 standards to wage claims amounted to a rejection of the same statutory argument she had been making with some success for more than 15 years.

According to Liss-Riordan, the SJC reached several key conclusions that will help future plaintiffs achieve Rule 23 certification.

“The court made clear that the state of the defendant’s records should not be a reason for denying class certification,” she said. “The court also made clear that the standard for showing commonality is not the same as proving the claim at trial.”

Liss-Riordan said it was also important that the SJC recognized that a class may contain “uninjured” class members.

“We see defendants all the time making the argument that a class can’t be certified because there may be some class members in the definition who don’t actually have a legal claim,” she said.

Benjamin Robbins argued in favor of the applicability of the Rule 23 standards to wage claims in an amicus brief filed on behalf of the New England Legal Foundation.

“[Gammella] shows that Rule 23 is indeed consistent with the Wage Act and its remedial purposes,” Robbins said. “It clarified that the ‘similarly situated’ language in the Wage Act did not signal a legislative intent to create a lesser standard for class certification.”

Somerville employment lawyer Mark D. Stern, who also filed an amicus brief in Gammella, said he was disappointed that the SJC failed to recognize a less rigorous certification standard for class actions arising under Massachusetts wage laws.

According to Stern, applying the Rule 23 numerosity requirement to representative actions under state wage laws means it will be up to the whim of individual judges whether employees of smaller businesses will have access to class-wide relief.

“These are laws that are supposed to protect people who are being cheated by their employers,” Stern said. “What is the policy for protecting those people who work for large employers and not protecting those people who work for small employers?”

Counsel for defendant P.F. Chang’s did not respond to a request for comment prior to deadline.

Unpaid reporting pay

Massachusetts employment regulations require employers to pay employees three hours’ wages at no less than the minimum wage if they report for a scheduled shift but are involuntarily dismissed before they have worked three hours.

From 2007 to 2015, plaintiff Felice Gammella worked as a greeter and server at several Boston area restaurants operated by the defendant. The plaintiff testified at his deposition that on numerous occasions he was involuntarily dismissed and forced to clock out before he had worked three hours for a scheduled shift.

The plaintiff sued the defendant under the Massachusetts Wage Act, G.L.c. 149, §150, and the state’s minimum fair wage law, G.L.c. 151, §20, for violating the reporting pay requirement.

According to court records, the defendant was unable to produce any evidence in discovery showing that the restaurant chain had ever paid reporting pay.

The defendant did produce records showing approximately 7,000 instances involving “hundreds” of employees in which the employer failed to pay reporting pay to those employees who had clocked out before working three hours in a scheduled shift. In particular, the defendant’s records showed that the plaintiff was denied reporting pay on 20 occasions.

The defendant’s vice president of operations in his deposition testified that employees frequently asked to clock out early and that the company’s practice was not to provide reporting pay in such cases.

The defense witness also testified that the company did not pay reporting pay when a restaurant manager: (1) decided to close early due to inclement weather; (2) ordered an employee to leave work for violating company policy; or (3) solicited volunteers to leave early when a restaurant was not busy.

Following discovery, the plaintiff moved to certify a class of all P.F. Chang’s hourly employees who worked in Massachusetts beginning in Nov. 25, 2011, and who clocked out early from at least one scheduled shift without receiving reporting pay.

Judge Lauriat denied the motion to certify, concluding that the proposed class was insufficiently numerous to satisfy Rule 23. The judge reasoned that because the defendant’s employment records failed to disclose whether a particular employee clocked out early voluntarily, which was critical to deciding the worker’s entitlement to damages, it was “impossible” to determine “whether there are any employees who would fall into this class.”

Upon the denial of the motion to certify, the defendant made two offers to settle the plaintiff’s individual claim. Pursuant to Rule 68, the defendant first offered to have judgment entered against it for $962 plus pre-judgment interest, costs and attorneys’ fees. In another attempt to settle, the defendant delivered a certified check for $1,732.50 to the plaintiff’s counsel.

The plaintiff rejected both offers.

Superior Court Judge Mark A. Hallal granted the defendant’s motion to dismiss on the ground that the action had been mooted by the restaurant chain’s offers to settle.

Rule 23 satisfied

Both Chapters 149 and 151 authorize an employee to prosecute wage claims in a civil action brought on his own behalf “or for himself and for others similarly situated.”

The plaintiff argued that the statutory language evinced a legislative intent to recognize a generalized, more lenient class certification standard for wage claims, one that departs from the strict requirements of Rule 23, which include that the plaintiff show “the class is so numerous that joinder of all members is impracticable.”

But the SJC was unpersuaded by the plaintiff’s argument.

Kafker explained that the legislative history of Chapters 149 and 151 made clear that the primary purpose of the statutory language at issue was to authorize class actions in statutes that did not previously provide for such relief.

He wrote that “it is clear that a ‘civil action’ for ‘others similarly situated’ simply refers to the ‘substantive right to bring a class proceeding.’ It does not define the class certification standards themselves. Those standards are provided by rule 23.”

Kafker next turned to the motion judge’s denial of class certification on the ground that the plaintiff could not satisfy Rule 23(a)(1)’s numerosity requirement. The justice found an abuse of discretion in that regard.

“The combination of thousands of instances of nonpayment to hundreds of employees, the absence of any record keeping justifying the nonpayments, and a refusal to provide the names of the employees involved, made it reasonable to infer that the number of plaintiffs would satisfy the numerosity requirement,” Kafker wrote.

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