Weeks v. Matrix Absence Management Incorporated

Opinion

1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8

Tina We eks, et al., ) No. CV-20-00884-PHX-SPL ) 9 ) 10 Plaintiffs, ) ORDER vs. ) ) 11 ) Matrix Absence Management ) 12 Incorporated, ) 13 ) ) 14 Defendant. )

15 Before the Court are Defendant’s Motion for Decertification of Collective Action 16 (Doc. 112) and Plaintiffs’ Motion for Class Certification (Doc. 121). The Motions are 17 fully briefed, and the Court rules as follows. 18 I. BACKGROUND 19 On May 6, 2020, Plaintiffs initiated this action alleging they and other similarly 20 situated employees of Defendant were improperly classified as exempt under the Fair 21 Labor Standards Act (“FLSA”), 29 U.S.C. § 201, et seq., and had therefore been denied 22 overtime wages. (Doc. 1). Defendant provides third-party administration of disability and 23 leave-of-absence claims. (Doc. 60 at 2). Plaintiffs worked as “Claims Examination 24 Employees” with the primary duty of “reviewing employee disability and leave of 25 absence claims . . . [to] determine benefit eligibility.” (Doc. 60 at 2). Defendant classified 26 Plaintiffs as exempt from overtime pay under the FLSA. (Doc. 60 at 3). Plaintiffs’ First 27 Amended Complaint alleges that Plaintiffs “regularly worked over 40 hours per work 28 week” and that, due to “Defendants’ misclassification scheme,” they were wrongfully 1 denied the one and one-half times premium pay required by the FLSA for overtime hours 2 worked by non-exempt employees. (Doc. 60 at 3). 3 On October 15, 2020, the Court conditionally certified the following collective 4 class of employees pursuant to the FLSA: “all individuals employed by Matrix as Claims 5 Examination Employees in the last three years who were paid on a salary basis and 6 classified by Defendant as exempt from overtime compensation.” (Doc. 36 at 10). 7 “Claims Examination Employees” was defined to include 22 job titles that allegedly 8 shared the duty of “utilizing [Defendant’s] guidelines to determine whether to approve 9 Claims based on whether they meet specific, predetermined criteria.” (Doc. 36 at 2 10 (internal quotation marks omitted)). Further, the Court granted Plaintiff’s Motion for 11 Step-One Notice under the FLSA and ordered Plaintiff to notify all members of the class 12 within 21 days. (Doc. 36 at 10). The members then had 63 days to opt into the action. 13 (Doc. 63 at 10). 14 On February 16, 2021, Plaintiffs moved to amend the Complaint to add an 15 additional named plaintiff, Samantha Stocklein, seeking to bring a claim for failure to pay 16 overtime under Oregon law on behalf of herself and other putative class members 17 employed by Defendant as claims examiners in Oregon, in addition to the FLSA claim. 18 (Doc. 53). On April 22, 2021, the Court granted the Motion to Amend (Doc. 59), and 19 Plaintiff subsequently filed the First Amended Complaint, alleging both the FLSA claim 20 and the Oregon state-law claim. (Doc. 60). On February 22, 2022, the Court denied 21 Defendant’s Motion for Judgment on the Pleadings as to the Oregon state-law claim, 22 finding that it is not preempted by the FLSA. (Doc. 91). 23 After the close of discovery, Defendant filed the instant Motion for Decertification 24 (Doc. 112), asking the Court to decertify the FLSA collective action that it previously 25 certified. In addition, Plaintiffs filed the instant Motion for Class Certification (Doc. 121), 26 seeking class certification under Federal Rules of Civil Procedure (“Rule”) 23 with 27 respect to the Oregon state-law claim. The Court now addresses the pending Motions. 28 /// 1 II. DECERTIFICATION OF FLSA COLLECTIVE ACTION 2 a. Legal Standard 3 The FLSA generally requires that employers pay their employees time and one- 4 half for work exceeding forty hours per week. 29 U.S.C. § 207(a)(1). “Any employer 5 who violates the provisions of . . . section 207 . . . shall be liable to the employee or 6 employees affected in the amount of . . . their unpaid overtime compensation.” 29 U.S.C. 7 § 216(b). A collective action to recover these damages may be brought “against any 8 employer . . . by any one or more employees for and on behalf of himself or themselves 9 and other employees similarly situated.” Id. 10 The Ninth Circuit has approved a two-step approach to the certification of FLSA 11 collective actions. See Campbell v. City of Los Angeles, 903 F.3d 1090, 1109–10 (9th Cir. 12 2018). At step one, the Court granted conditional certification and approved a notice and 13 consent form to be sent to all collective action members. (Doc. 36). At the second step, 14 “[t]he employer can move for ‘decertification’ of the collective action for failure to 15 satisfy the ‘similarly situated’ requirement in light of the evidence produced to that 16 point,” and “[t]he district court will then take a more exacting look at the plaintiffs’ 17 allegations and the record.” Campbell, 903 F.3d at 1109. Even at the decertification 18 stage, it is the plaintiffs’ burden to show that collective treatment is appropriate. See id. at 19 1117–18; Guanzon v. Vixxo Corp., No. 17-01157-PHX-DWL, 2019 WL 1586873, at *3 20 (D. Ariz. Apr. 12, 2019). 21 Employees are “similarly situated” under FLSA when they are “alike with regard 22 to some material aspect of their litigation”—in other words, if they “are alike in ways 23 that matter to the disposition of their FLSA claims.” Campbell, 903 F.3d at 1114. “If the 24 party plaintiffs’ factual or legal similarities are material to the resolution of their case, 25 dissimilarities in other respects should not defeat collective treatment.” Id.; see also 26 Guanzon, 2019 WL 1586873, at *3. Likewise, procedural considerations cannot prevent 27 certification “unless the collective mechanism is truly infeasible.” Campbell, 903 F.3d at 28 1116. 1 When decertification overlaps with the merits of a FLSA claim, the summary 2 judgment standard applies. Campbell, 903 F.3d at 1117. Thus, the Court cannot weigh 3 evidence going to the merits. Id. at 1119. “If collective treatment is premised on a 4 genuine dispute of material fact as to the merits of the party plaintiffs’ FLSA claims, the 5 collective action cannot be decertified unless the factual dispute is resolved against the 6 plaintiffs’ assertions by the appropriate factfinder.” Id. 7 b. Analysis 8 This case turns on whether Plaintiffs are subject to the FLSA’s administrative 9 exemption, which exempts from overtime pay any persons “employed in a bona fide 10 executive, administrative, or professional capacity.” 29 U.S.C. § 213(a)(1). To fall under 11 the administrative exemption, an employee “must (1) be compensated not less than 12 $[684] per week; (2) perform as her primary duty ‘office or non-manual work related to 13 the management or general business operations of the employer or the employer’s 14 customers;’ and (3) have as her primary duty ‘the exercise of discretion and independent 15 judgment with respect to matters of significance.’” McKeen-Chaplin v. Provident Sav. 16 Bank, FSB, 862 F.3d 847, 851 (9th Cir. 2017) (quoting 29 C.F.R. § 541.200(a)). 17 The third element is the material disputed issue in the case.1 Plaintiffs argue that 18 they are similarly situated with respect to this element because common evidence will 19 show that claims examiners uniformly did not exercise discretion or independent 20 judgment. Defendants counter that deposition testimony shows that claims examiners had 21 varying levels of discretion in performing their tasks. The Court agrees with Defendant. 22 Defendant details six areas where claims examiners had highly disparate levels of

23 1 Plaintiffs’ argument as to the second element is “both inaccurate and irrelevant.” 24 Guanzon, 2019 WL 1586873, at *5 (rejecting a similar argument). This element is met when an employee’s primary duty is performing work “directly related to the 25 management or general business operations of employer or the employer’s customers.” 29 C.F.R. § 541.201(a). This includes work in areas such as “personnel management; 26 human resources; [and] employee benefits.” Id. § 541.201(b). The Ninth Circuit has made clear that this element turns on the substance of an employee’s work, not on corporate 27 form. In re Farmers Ins. Exch., Claims Representatives’ Overtime Pay Litig., 481 F.3d 1119, 1132 (9th Cir. 2007). Thus, the fact that claims examiners work for a third-party 28 company that administers claims for its clients has no bearing on this element. 1 authority, and Plaintiffs do not dispute those facts. For example, some claims examiners 2 made most or all claims decisions on their own without supervisor input or review, while 3 others merely made recommendations to supervisors or simply provided supervisors with 4 information without making any recommendation. (Doc. 112 at 6–9). In Julian v. 5 MetLife, the court held that such a discrepancy required decertification.2 No. 17-cv-957 6 (AJN), 2021 WL 3887763, at *3 (S.D.N.Y. Aug. 31, 2021) (decertifying a collective of 7 long-term disability claims specialists). Further, claims examiners had varying levels of 8 authority to determine and approve the amount of benefits owed: new employees had no 9 such authority, but with experience, some claims examiners received authority to approve 10 increasing amounts of benefits; still others handled claims that did not require a 11 calculation of benefits at all. (Doc. 112 at 13–15). Deposition testimony shows similar 12 variations in the level of discretion exercised by claims examiners with respect to 13 diverging from guidelines, sending cases to and relying on the opinions of in-house 14 nurses, interviewing claimants, and drafting denial letters. (Doc. 112 at 9–16). 15 All of these differences are material as they go to whether or not the third element 16 is met and thus whether the administrative exemption applies. See Guanzon, 2019 WL 17 1586873, at *6–7 (granting decertification where employees had varying levels of 18 discretion in performing several job functions); Julian, 2021 WL 3887763, at *11 19 (finding claims specialists were subject to the administrative exemption where they 20 gathered information and used it to evaluate whether a claim should be approved and 21 what the amount of benefits should be); 29 C.F.R. § 541.202 (listing factors to consider 22 with respect to this element). Because of the dissimilarities between the members of the 23 collective class, “a factfinder would be unable to determine that all plaintiffs in the 24 collective are either exempt or non-exempt in one swoop,” and the collective action must 25 be decertified. Julian, 2021 WL 2887763, at *3. 26 27 2 The Second Circuit applies the same “similarly situated” standard as the Ninth Circuit. See Julian, 2021 WL 3887763, at *2; Scott v. Chipotle Mexican Grill, 954 F.3d 28 502, 516 (2d Cir. 2020). 1 Plaintiffs argue that common proof shows that claims examiners “had no policy 2 making authority, did not carry out major assignments of the business, negotiate or bind 3 the company with respect to significant matters.” (Doc. 123 at 11). In support of that 4 assertion, Plaintiffs cite to deposition testimony in which Defendant’s Rule 30(b)(6) 5 representative was asked about a laundry list of specific tasks that claims examiners do 6 not perform. But the third element of the administrative exemption is concerned with an 7 employee’s primary duty—not what the employee does not do. Plaintiff further argues 8 that the discretion of claims examiners was constrained by customer plan criteria, 9 Defendant’s policies setting timeframes for performing duties, and audits by 10 supervisors—but as explained, their discretion was constrained to varying degrees such 11 that the administrative exemption may apply to some members of the collective class and 12 not others. Plaintiffs correctly note that the Campbell standard focuses more on 13 similarities than differences, but here, Plaintiffs have failed to demonstrate any material 14 factual or legal similarities within the collective class. Accordingly, the Court must 15 decertify the collective action. 16 III. CERTIFICATION OF RULE 23 CLASS ACTION 17 Oregon’s overtime wage laws “essentially mirror the FLSA.” Bennett v. SLT/TAG 18 Inc., No. CV02-65-HU, 2003 WL 23531402 (D. Or. May 8, 2003); see also Colson v. 19 Avnet, Inc., 687 F. Supp. 2d 914, 924 (D. Ariz. 2010) (stating that the plaintiff’s Oregon 20 state-law overtime claim “essentially seeks to piggy-back thirty days’ wages worth of 21 waiting-time penalties onto any alleged FLSA violation”). The FLSA, “by omitting most 22 of the requirements in Rule 23 for class certification, necessarily impose[s] a lesser 23 burden” for certification. Campbell, 903 F.3d at 1112. In Campbell, the Ninth Circuit 24 rejected reliance on Rule 23 class-action cases in the FLSA context because “it risks 25 importing into the FLSA, contrary to its terms, the ‘rigorous analysis’ uniquely applied 26 under Rule 23.” Id. at 1115 (quoting Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 350– 27 51 (2011)). It follows that if plaintiffs cannot satisfy the standard for FLSA certification, 28 they cannot meet the higher standard for Rule 23 certification of analogous state-law claims. See Santiago v. Amdocs, Inc., No. C 10-4317 SI, 2013 WL 5444324, at *8 (N.D. 2| Cal. Sept. 30, 2013) (“The Court’s conclusion that plaintiffs have failed to demonstrate 3 | that the class members are ‘similarly situated’ for purposes of the FLSA overtime claims 4| forecloses certification of a similarly defined Rule 23 class for plaintiffs’ state law overtime claims.”). Because Plaintiffs are not “similarly situated” with respect to their 6 | FLSA overtime claims, they cannot meet the commonality or typicality requirements for 7 | certification of a Rule 23 class, either. See Parsons v. Ryan, 754 F.3d 657, 675, 685 (9th 8 | Cir. 2014). Accordingly, 9 IT IS ORDERED that Defendant’s Motion for Decertification of Collective 10| Action (Doc. 112) is granted. The claims of all opt-in plaintiffs are dismissed without 11 | prejudice. 12 IT IS FURTHER ORDERED that Plaintiffs’ Motion for Class Certification 13 | (Doc. 121) is denied. 14 IT IS FURTHER ORDERED that pursuant to the Court’s July 6, 2022 Order 15 | (Doc. 106), any dispositive motions shall be filed no later than December 21, 2022. 16 Dated this 21st day of November, 2022. 17

19 United States District Judge 20 21 22 23 24 25 26 27 28