Roach v. T.L. Cannon Corp.

778 F.3d 401, 24 Wage & Hour Cas.2d (BNA) 173, 90 Fed. R. Serv. 3d 1732, 2015 U.S. App. LEXIS 2054, 2015 WL 528125
Court of Appeals for the Second Circuit·Decided February 10, 2015·No. No. 13-3070-cv·Published·Cited by 145 cases

Opinion

DRONEY, Circuit Judge:

This appeal presents the question of whether the Supreme Court’s decision in Comcast Corp. v. Behrend, — U.S. -, 133 S.Ct. 1426, 185 L.Ed.2d 515 (2013), overruled the law of this Circuit that class certification pursuant to Rule 23(b)(3) of the Federal Rules of Civil Procedure cannot be denied merely because damages have to be ascertained on an individual basis. The United States District Court for the Northern District of New York (McAvoy, J.) concluded that Comcast permits certification under Rule 23(b)(3) only when damages are measurable on a class-wide basis, and denied Plaintiffs-Appellants’ motion for class certification.

We hold that Comcast does not mandate that certification pursuant to Rule 23(b)(3) requires a finding that damages are capable of measurement on a classwide basis. Accordingly, we VACATE the order of the [403] district court denying class certification, and REMAND.

BACKGROUND

Plaintiffs-Appellants (“Plaintiffs”), four former employees at certain Applebee’s restaurants owned and operated in upstate New York by T.L. Cannon Corp. (“Cannon”), filed suit against Cannon in the United States District Court for the Northern District of New York.1 The amended complaint alleged a collective action for violation of the Fair Labor Standards Act and a putative class action for violations of the New York Labor Law. Plaintiffs alleged that Cannon had a policy of not paying hourly employees an extra hour of pay when working a ten-hour work day as was then required by N.Y. Comp. Codes R. & Regs. tit. 12, § 137-1.7 (the “spread-of-hours” claim).2 Plaintiffs also alleged that Cannon required its managerial staff to subtract pay for statutorily-mandated rest breaks that the employees did not actually take (the “rest-break” claim).3

Following discovery, Plaintiffs moved to certify subclasses corresponding to each New York Labor Law claim pursuant to Rule 23(b)(1) and Rule 23(b)(3) of the Federal Rules of Civil Procedure. With respect to Rule 23(b)(3), Plaintiffs argued that issues common to the question of liability predominated over any individual questions relating to damages. The district court referred Plaintiffs’ motion to Magistrate Judge David E. Peebles, who issued a report and recommendation on March 5, 2013.

With respect to Plaintiffs’ spread-of-hours claim, Magistrate Judge Peebles recommended that Plaintiffs’ motion be granted in part. Magistrate Judge Peebles found that Plaintiffs had satisfied the Rule 23(a) prerequisites to class certification, but only with respect to minimum-wage employees employed between April 2005 and August 2010. Magistrate Judge Pee-bles also found that the common question of whether Cannon had a policy of depriving minimum-wage employees the extra hour of pay was subject to generalized proof that predominated over individual questions, thus warranting class certification under Rule 23(b)(3).

With respect to the rest-break claim, Magistrate Judge Peebles recommended that Plaintiffs’ motion be denied. Magistrate Judge Peebles found that Plaintiffs had satisfied the commonality and typicality requirements of Rule 23(a), but that Plaintiffs could not satisfy the adequacy of representation requirement because three of the four Plaintiffs, when serving in a managerial capacity, had revised employee timecards to deduct pay for untaken rest breaks. Because Plaintiffs could not satisfy the prerequisites to class certification under Rule 23(a), Magistrate Judge Pee-bles did not consider whether their Test-[404] break claim warranted class certification under Rule 23(b).

Plaintiffs filed timely objections to Magistrate Judge Peebles’s report and recommendation. With respect to Plaintiffs’ spread-of-hours claim, Plaintiffs argued that the class should be certified for all claims arising after May 2004, when the statute of limitations first began to run. With respect to their rest-break claim, Plaintiffs argued that they were adequate representatives for a rest-break class because they were not “employers” within the meaning of the New York Labor Law who could be subject to liability for revising employee timecards. Moreover, Plaintiffs argued, Roach never worked in a managerial capacity and therefore was an adequate representative of the class.

On March 29, 2013, the district court issued a decision and order in response to Plaintiffs’ objections, denying certification on both Plaintiffs’ spread-of-hour and rest-break claims. See Roach v. T.L. Cannon Corp., No. 3:10-CV-0591 (TJM/DEP), 2013 WL 1316452 (N.D.N.Y. Mar. 29, 2013). The district court noted that the Supreme Court’s decision in Comcast Corp. v. Behrend, — U.S. -, 133 S.Ct. 1426, 185 L.Ed.2d 515 (2013), had issued after Magistrate Judge Peebles’s report and recommendation, and that, in light of Comcast, class certification was inappropriate. Roach, 2013 WL 1316452, at *3.

The district court construed Comcast as holding that “[t]he failure of the proponent of the class to offer a damages model that [is] ‘susceptible of measurement across the entire class for purposes of Rule 23(b)(3)’ [is] fatal to the certification question.” Id. (quoting Comcast, 133 S.Ct. at 1433). Plaintiffs’ view that the presence of individualized damages was not fatal to the predominance inquiry, the district court concluded, was therefore contrary to Com-cast. Id.

Having so construed Comcast, the district court analyzed whether either the spread-of-hours or rest-break claim merit,ed certification. Without considering whether there existed any common questions of law or fact with respect to Plaintiffs’ spread-of-hours claim, the district court explained that “damages in this putative class are ... highly individualized.” Id. Because Plaintiffs did not offer a “model of damages susceptible of measurement” across the putative class, the district court concluded that “Rule 23 certification must be denied for Plaintiffs’ failure to satisfy their requirements under Rule 23(b)(3).” Id. (citing Comcast). Given its exclusive reliance on Comcast, the district court did not address Plaintiffs’ objections to Magistrate Judge Peebles’s report and recommendation. Id. at *4.

The district court’s resolution of Plaintiffs’ rest-break claim was substantially identical. Without considering whether there existed any common questions of law or fact, the district court concluded that “proof of damages on this claim is highly individualized” and “[questions of individual damage calculations will inevitably overwhelm questions common to this class.” Id. at *4-5. Again, citing Comcast, the district court concluded that “class certification of this claim fails under Rule 23(b)(3).” Id. at *5. As with the spread-of-hours claim, the district court relied exclusively on Comcast and did not address Plaintiffs’ objections to the report and recommendation. Id. at *4.

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Roach v. T.L. Cannon Corp., 778 F.3d 401, 24 Wage & Hour Cas.2d (BNA) 173, 90 Fed. R. Serv. 3d 1732, 2015 U.S. App. LEXIS 2054, 2015 WL 528125 (2d Cir. 2015).

778 F.3d 401 (Roach v. T.L. Cannon Corp.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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