Class-Action

Northern District of Illinois Federal Court Grants Conditional Class Certification for Lawsuit for Unpaid Overtime

August 10, 2011 | Peter S. Lubin and James V. DiTommaso

One of the most important issues at the outset of every class-action lawsuit is determining the size of the class itself. In some instances, making such a determination can be accomplished through preliminary investigations by the named plaintiff in the suit. However, the true size and scope of the class can only be confirmed by documentation obtained from the defendant company. Our Berwyn overtime class-action attorneys recently encountered a case involving a dispute over the potential members of the class, and wanted to share it with our readers.

In Smallwood v. Illinois Bell Telephone, Plaintiffs held multiple different positions, but were all classified as Outside Plant Engineers (OSPs) at Defendant’s facilities in Elgin and Des Plains, Illinois. Plaintiffs generally performed design and analysis of Defendants plant facilities and Defendant’s network and were classified as exempt employees until 2009, when Defendant reclassified all OSP engineers as non-exempt employees, which entitled them to overtime. After this reclassification, Plaintiffs filed suit for unpaid overtime wages in violation of the Fair Labor Standards Act (FLSA) because they had regularly worked in excess of forty hours per week during the entirety of their employment and had never been paid overtime previously. Plaintiffs then filed a motion requesting conditional collective action certification under §216(b) of the FLSA for all persons who were employed by Defendant as OSPs during the previous three years. Plaintiffs also requested approval of a 90-day opt-in period and a 7-day time period for Defendant to supply them with a list of putative claimants.

Defendants argued that Plaintiffs were not similarly situated because the Plaintiffs had separate and distinct job duties despite being generally referred to OSPs, and provided job descriptions as evidence of these differences. The Court found that Defendant’s arguments regarding the day-to-day work activities of the individual Plaintiffs were premature at this early stage of the case, and because the case was not “clearly beyond the first tier” of FLSA class certification. Therefore, applying a stricter standard of review was inappropriate. The Court then granted the motion for conditional certification, finding that Plaintiffs – through their individual declarations — had met the statutorily required modest factual showing that Plaintiffs were the subject to the Defendant’s common policy or plan to violate the FLSA by failing to pay OSPs overtime wages. Defendants also requested that the notice period be limited to 30 days, but the Court found that an opt-in period of 60 days was appropriate, and gave Defendants two weeks to supply the putative member list, so that collective action notices could be mailed in a timely manner.

Northern District of Illinois Federal Court Grants Motion to Strike Putative Overtime Class-Action

July 25, 2011 | Peter S. Lubin and James V. DiTommaso

Class-action lawsuits are common in unpaid overtime cases because the misclassification of employees or miscalculation of overtime usually happens on a large scale because major companies have such sizable work forces. Because such lawsuits can prove to be quite costly, defendant employers will do whatever they can to dispose of those claims in any way possible. DiTommaso Lubin knows the ‘tricks of the trade’ that defendants use, and our Skokie overtime attorneys found a federal case the illustrates one of the tools that wage claim defendants utilize.

Wright v. Family Dollar Inc. is a putative class-action filed by former associates who worked for Defendant Family Dollar and were allegedly not paid regular and overtime wages that they earned in the course of their employment. The named plaintiff, a store manager, alleged that Defendant “withheld compensation from associates by giving its store managers unfeasibly low payroll budgets” that forced those managers to require associates to work without being paid. The case, which alleged violations of the Illinois Wage Payment and Collection Act, and the Illinois Minimum Wage Law, was initially filed in the Cook County Circuit Court, but was removed to the federal court by Defendant.

Defendant then filed a motion to strike class allegations pursuant to FRCP23(c)(1)(A) and (d)(1)(D), claiming that Plaintiffs could not establish typicality and adequacy of representation. The Court granted Defendant’s motion, holding that the named plaintiff, as a manager, participated in the wrongful conduct at issue and her counsel therefore had a conflict of interest with the class members who were associates. The Court also held that the typicality requirement was not met because there were defenses unique to the named plaintiff and other managers in the putative class that did not apply to associate class members.

Appellate Court Overturns Dismissal of Chicago Paramedics Unpaid Overtime Class-Action

July 15, 2011 | Peter S. Lubin and James V. DiTommaso

Every day there are hard working people who are denied the overtime wages that they have rightfully earned. At DiTommaso Lubin, we have much experience representing those with unpaid overtime claims in class-action litigation. As such, we track the changes in the wage laws and are always looking out for new court decisions in the field.

Alvarez v. City of Chicago is a recent class-action case brought by paramedics in the city of Chicago for the systematic miscalculation of their overtime wages. In so doing, Plaintiffs alleged that Defendant willfully violated the Fair Labor Standards Act (FLSA) when it failed to properly compensate the Plaintiffs. The parties each filed motions for summary judgment, and the trial court ruled in favor of Defendant. In making the ruling, the trial court found that the Plaintiffs were not similarly situated and they could not be “readily divided into homogenous subgroups.” The lower court then dismissed the claims and directed the parties to arbitrate the dispute.

On appeal, the Appellate Court disagreed with the trial court’s decision, and held that the case could proceed by using sub-claims if the Plaintiffs were similarly situated and common questions predominated. The Court also held that the case should not have been dismissed; instead the Plaintiffs should be allowed to proceed individually if class certification is inappropriate. The Court then remanded the case with instructions for the district court to consider which form of judicial resolution would be most efficient.

Northern District of Illinois Federal Court Grants Motion to Send Notice to Expanded Class in Unpaid Overtime Class-Action Litigation

July 10, 2011 | Peter S. Lubin and James V. DiTommaso

Large corporations are often built upon the labor of many hard-working hourly employees. Unfortunately, such companies do not always pay their employees the wages that they have earned, and when such mistakes are made, those employees must do what they can to get what they are owed. When enough employees have been denied their earned wages, a class-action lawsuit may be the most efficient means to get everyone their unpaid wages, and our Naperville overtime class-action attorneys recently discovered another such lawsuit in the Northern District of Illinois federal court.

In Hundt v. DirectSat USA, Plaintiffs were employed by Defendant as warehouse managers who regularly worked more than forty hours per week, but were not paid any overtime because Defendant classified them as exempt employees. Plaintiffs believed that they were misclassified because their job duties did not meet the overtime exemption requirements under the Fair Labor Standards Act (FLSA) and the Illinois Minimum Wage Act (IMWA), and filed a class action lawsuit for the unpaid overtime. After sending out opt-in notices to the potential class members, Plaintiffs discovered that the class should not be limited to just those employees with the title of warehouse manager. Plaintiffs therefore amended the complaint to broaden the class to include warehouse supervisors and other workers in similar positions, and filed a motion to send notice to these additional putative class members.

Defendants opposed the motion, stating that there were significant differences between warehouse managers and supervisors and claimed that Plaintiffs failed to sufficiently allege the existence of a common decision, policy, or plan to deprive them of overtime wages. The Court disagreed with Defendants, holding that all of the putative plaintiffs were similarly situated despite their varied job titles. In making its decision, the Court cited several internal communication emails that indicated the titles were interchangeable, and that was enough to meet the minimal burden required. Thus, the Court granted the motion to send notice to the additional class members.

Class Members Don’t Need Identical Claims to Maintain a Class-Action Under the FLSA

June 15, 2011 | Peter S. Lubin and James V. DiTommaso

Our lawyers are passionate about protecting the rights of workers and are constantly researching new wage and hour decisions rendered by the federal courts here in Illinois. Our Buffalo Grove overtime class-action attorneys recently discovered a case that impacts potential clients seeking to certify wage and hour class actions under the Federal Labor Standards Act (FLSA).

The Plaintiff in Russell v. Illinois Bell Telephone Co. worked at Defendant’s call center in Arlington Heights, Illinois for five years and was paid hourly wages, commissions, and bonuses. Plaintiff and the other purported class members all had scheduled shifts and lunch breaks, but allegedly were required to perform work tasks both before their shifts and during their lunch breaks. Plaintiffs were not paid for the work they performed pre-shift and during lunch breaks, and filed suit for their unpaid wages. The trial court then conditionally certified the class, and additional discovery commenced.

Through discovery, Plaintiffs learned that Defendant has a written policy that hourly employees must obtain permission from a supervisor before working overtime and any employee who works overtime must be compensated accordingly. Defendant’s Code of Business Conduct also explicitly states that “managers are prohibited from requiring nonexempt employees to work off the clock.” However, after deposing 24 individual Plaintiffs, the record showed that the majority of Plaintiffs had to spend time logging into their computer systems prior to the start of their shift because their supervisors had instructed them to be “open and available” at the start of their shift. To be “open and available,” Plaintiffs had to boot up their computers and get several applications up and running. This system start-up process took between three and twenty minutes to complete depending upon the individual computer.

In addition to the pre-shift issues, the record showed that Plaintiffs would often have to work a few minutes past the end of their shifts to finish handling calls already in progress. Because Defendant has a policy that any overtime worked in an amount less than eight minutes is not compensable and many of the post-shift calls are resolved in less than eight minutes after the end of their shift, Plaintiffs were not compensated for the overtime worked while finishing calls at the end of the day.

After more discovery and the deposition of thirty-nine individual Plaintiffs, Defendants moved to decertify the class based upon individual issues embedded in the case and the absence of a company-wide policy that violates the FLSA. The Court found that the class members shared enough of a factual and legal nexus that pursuing a class-action was proper through the use of subclasses where necessary. The Court went on to decertify the individual claims that did not fall into the enumerated subclasses of pre-shift overtime, post-shift overtime, and work performed while on lunch breaks. Finally, the Court stated that due to the large amount of discovery still to be performed, that they reserved the right to revisit the decertification issue should it become apparent that the case was unmanageable as a class-action.

Indiana District Court Certifies Class-Action Under FLSA for Untimely Overtime Payments

June 13, 2011 | Peter S. Lubin and James V. DiTommaso

Filing a lawsuit requires some legwork up front, but overall is a relatively painless process. Getting a class-action lawsuit certified by a federal court, however, is neither easy nor straightforward. DiTommaso Lubin focuses on getting major wage and hour lawsuits certified as class-actions and getting them resolved. Our Buffalo Grove overtime attorneys unearthed a federal case from the Northern District of Indiana regarding class certification that is of interest to both our present and future wage claim clients.

The dispute in Powers v. Centennial Communications Corp. arises out of claims for unpaid overtime and overtime adjustments for sales commissions for work performed by Plaintiffs in their capacity as a sales representatives for Defendant. Additionally, Plaintiffs claim that when they were paid commission-based overtime, the timing of those payments also violated federal law. The named Plaintiff filed suit as a result, and she alleged violations of the Indiana Wage Payment Satute and the federal Fair Labor Standards Act (FLSA), and sought to certify a class-action on the federal claim under FLSA.

The District Court found that, in spite of the fact that she was not paid owed overtime wages, Plaintiff failed to make FLSA’s required initial showing that she and her putative class members were “victims of a common policy or plan” to do so. Finding fault with the fact that Plaintiff had only shown that one person (the named Plaintiff) had not been paid correctly, the Court declined to certify the class as to the unpaid overtime claim, as it would “have the effect of turning every individual violation of the FLSA into a bulky collective action.”
The Court then turned to the unpaid commissions-bassed overtime claim and determined that it could proceed to the opt-in stage because Defendant had systematically deferred the commission-based payments pursuant to its stated Sales Compensation Plan. Because the applicable statutes allow only for a limited delay in the payment of overtime adjustment payments and Defendant had repeatedly waited weeks to make the required payments after they were earned, the case could proceed as a class-action.

New York Times reports: “Truck Dealers Win $2 Billion in Ford Suit”

June 12, 2011 | Peter S. Lubin and James V. DiTommaso

The New York Times reports that Ford truck dealers won a $2 billion class action judgment against Ford for failing to honor its dealership contracts to provide the same pricing for medium and heavy size trucks to all dealers.

The article states:

The ruling, by Judge Peter J. Corrigan, of the Cuyahoga County Common Pleas Court in Cleveland, said that Ford made the dealers pay a total of $800 million more than they should have for nearly 475,000 medium- and heavy-duty trucks, including tractor-trailers and bulldozers.

The damages include $1.2 billion in interest and were calculated based on the formula that was used by a jury in February to award $4.5 million to the lead plaintiff in the lawsuit, Westgate Ford in Youngstown, Ohio.

Judge Corrigan upheld the February ruling and added $6.7 million in interest to the jury’s award. “Ford’s breach of its obligation to sell Westgate trucks only at prices published to any dealer,” Judge Corrigan wrote in his ruling, shifted “any surplus in profit from Westgate to Ford.”

You can read the full article by clicking here.

New York Times Reports That Nation’s Second Largest For Profit University is the Target of a Whistle Blower Suit for Allegedly Defrauding Government into Funding Student Loans

May 29, 2011 | Peter S. Lubin and James V. DiTommaso

Questions Follow Leader of For-Profit Colleges
By TAMAR LEWIN
Published: May 26, 2011
A whistle-blower case charges that an education company encouraged aggressive recruitment of unqualified students for their federal student aid.

Our law firm is pursuing class actions and putative class actions against for profit vocational schools in the Chicago area. We have interviewed many students of for profit universities, colleges and vocational schools who believe that various for profit colleges and Universities have cheated them along with the government in getting the students to borrow money with government backed loans for essentially a worthless education.. We have been looking into whistle blower allegations similar to those reported in a recent New York Times article and are interested in speaking to employee/whistle blowers at for profit colleges, universities and vocational schools who know about similar frauds to that reported by the New York Times engaged in by other for profit colleges, universities and vocational schools.

The New York Times reports:

[T]he Justice Department and two state attorneys general are intervening in a whistle-blower lawsuit charging that EDMC also violated the ban on what is known as incentive compensation. That practice encourages aggressive recruitment of unqualified students for their federal student aid.

Given the cast of characters — … a half dozen former Phoenix executives are now at EDMC — the complaint against EDMC says that “senior management knows that the compensation system it administers violates the incentive compensation ban.”
This is the first time that prosecutors have joined a suit like the EDMC whistle-blower case, and the government’s unprecedented intervention in such a compensation case comes amid escalating controversy over for-profit colleges. Enrolling about 12 percent of the nation’s higher-education students, the colleges get a quarter of all federal student aid and account for nearly half of all student loan defaults. Last Friday, the Department of Education released new data showing that more than 15 percent of those who had attended for-profit colleges defaulted within two years — twice the rate of those who attended public institutions, and three times as many as those who went to private not-for-profit colleges.

You can view the full New York Times article by clicking here.

Court Rules that Expiration of Public Transit Passes is Legal

May 23, 2011 | Peter S. Lubin and James V. DiTommaso

DiTommaso Lubin prosecutes consumer protection class-action lawsuits on a regular basis, and in order to best serve our present and future clients, we are always mindful of new Illinois cases in the field. Howard v. Chicago Transit Authority is a consumer rights decision from the Appellate Court of Illinois that our attorneys found in the course of their research.

Howard v. Chicago Transit Authority is a case between those who ride public transportation in Chicago and the Chicago Transit Authority (CTA). Initially, the named Plaintiff started the litigation because of Defendant CTA’s policy of allowing the transit cards needed to ride on Defendant’s transit system to expire one year after the cards are issued. The named Plaintiff had purchased such a card, and when that card expired, he lost the remaining balance on his card. After discovering that he had lost the money on the card, Plaintiff filed a putative class-action lawsuit, alleging violations of the Consumer Fraud and Deceptive Business Practices Act and the Uniform Deceptive Trade Practices Act. Defendant then filed a motion to dismiss, which was granted by the trial court. Plaintiffs then appealed the lower court’s dismissal.

The Appellate Court reviewed the trial court’s dismissal de novo and examined the reasoning used by the lower court’s decision. The case was dismissed by the trial court because Defendant successfully argued that Plaintiff’s claims could not stand due to the terms and conditions of the card. These terms and conditions clearly stated that the transit card had an expiration date and could not be redeemed for cash, replaced, or refunded. Additionally, upon purchase of the transit card, the Court held that Plaintiff had entered into a valid contract of carriage and therefore Defendant had committed no wrongful conduct. Plaintiff claimed that the terms and conditions of the card referred only to the use of the card itself and not the use of money placed on the card. The Court disagreed and upheld the trial court’s ruling that use of the card was part and parcel of using the money on the card. The Court went on to state that “the terms on a fare pass are incorporated into the carrier’s contract for carriage and are enforceable as written.” Thus, because the contract for carriage contained the expiration clause and Plaintiffs accepted those terms, the contract was valid and the suit was properly dismissed.

Northern District of Illinois Denies Class Certification in an Action to Recover Unpaid Overtime Under FLSA

May 18, 2011 | Peter S. Lubin and James V. DiTommaso

There are many employees out there who should be getting paid overtime wages, but because they have been misclassified by their employers, those people are being paid on a salary basis instead. We at DiTommaso Lubin know that these things happen, which is why we fight for the rights of employees who have been paid incorrectly. Our Evanston overtime class action attorneys recently discovered one such case regarding the misclassification of employees and wanted to share it with our readers.

In Gromek v. Big Lots, the named Plaintiff worked for Defendant as an assistant store manager, and was never paid for any of the time he worked in excess of forty hours per week. Plaintiff regularly worked over forty hours, and spent most of his time performing non-managerial and non-exempt duties for Defendant, but was paid a salary and never received overtime wages. As such, Plaintiff filed suit to recover his unpaid overtime pursuant to the Fair Labor Standards Act (FLSA), and sought conditional class certification of the action under FLSA §216(b) to include all of his fellow assistant store managers who worked for Defendant.

The Court sought to determine whether Plaintiffs were similarly situated enough to meet the requirements of §216. Plaintiffs provided declarations from fifteen potential class members stating that they had all been misclassified and underpaid due to Defendant’s common policy, which weighed in favor of granting class certification. However, a previous and similar class-action filed by another group of Defendant’s assistant store managers was decertified because many of those Plaintiffs had significantly different job duties, which made the claims unsuitable for resolution by class-action. Due to this earlier case, the Court denied the class certification motion because Plaintiffs had failed to show why their case differed from the prior action, though the Court stated it would be willing to hear any such arguments the Plaintiffs could provide.