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Chado v. Nat'l Auto Inspections, LLC

United States District Court, D. Maryland

May 2, 2019

IAN CHADO et al., Plaintiffs
v.
NAT'L AUTO INSPECTIONS, LLC, trading as Carchex, et al., Defendants

          MEMORANDUM

          JAMES K. BREDAR CHIEF JUDGE.

         I. Background

         This case was filed pursuant to the Fair Labor Standards Act of 1938 ("FLSA"), as amended, 29 U.S.C. §§ 201 et seq., the Maryland Wage and Hour Law ("MWHL"), Md. Code Ann., Lab. & Empl. §§ 3-401 et seq., and the Maryland Wage Payment and Collection Law ("MWPCL"), Md. Code Ann., Lab. & Empl. §§ 3-501 et seq. It claims a failure to pay overtime wages to Plaintiffs during their employment as Vehicle Protection Specialists ("Specialists") working out of a call center in Hunt Valley, Maryland. The case was brought against National Auto Inspections, LLC, t/a Carchex ("NAI"), by Ian Chado, Nancy Nguyen, and William Rush individually and on behalf of all similarly situated employees. (Compl., ECF No. 1.)

         After NAI filed an answer (ECF No. 7), the Court held a scheduling conference with Plaintiffs' and NAI's counsel, who informed the undersigned that the parties consented to a magistrate judge's conduct of all further proceedings. The same day, the parties filed their consent forms (ECF Nos. 16, 17), and the case was duly reassigned to Magistrate Judge David Copperthite (ECF No. 18). Already pending at the time of reassignment was Plaintiffs' motion for conditional certification of the case as a collective action under the FLSA and to facilitate identification and notice to similarly situated individuals. (ECF No. 15.) In its response to this motion, NAI, while denying the allegations in the complaint, recognized "that the Plaintiffs need only satisfy the low threshold of conditional certification at this stage by setting forth 'relatively modest evidence that they are similarly situated, '" and it did not dispute that the employees at issue were similarly situated. (NAI's Resp. 2-3, ECF No. 23.) Shortly thereafter, Judge Copperthite granted Plaintiffs' motion (ECF No. 25) and approved a notice of collective action to be sent to similarly situated individuals (ECF No. 29).

         More than thirty people filed "opt-in" notices and were thereby added to the case as Plaintiffs. (ECF No. 30 et seq.) Plaintiffs filed a motion to amend the complaint (ECF No. 64), which was granted (ECF No. 78). The amended complaint (ECF No. 79) included not only the three putative class representatives but also all of the FLSA opt-in Plaintiffs as named plaintiffs for a total number of thirty-eight Plaintiffs listed in the amended complaint. In addition, the amended complaint added Carchex, LLC ("Carchex"), and Jason Goldsmith as Defendants.[1]

         In the same order granting the amended complaint, Judge Copperthite also granted another motion by Plaintiffs (ECF No. 72) to certify the case as a class action for the MWHL and MWPCL claims under state law. (ECF Nos. 77, 78.) He defined the certified class as the following:

All persons that work or worked for Defendant as a Vehicle Protection Specialist between October 5, 2014 and the present and who were not paid an overtime rate of "time and a half their regular rate for all hours worked over forty (40) in a workweek.

(Order, July 13, 2018, ECF No. 78.) He also appointed all thirty-eight Plaintiffs named in the amended complaint plus one of the additional opt-in Plaintiffs, Robert Woods, as class representatives. (Id. 2.)[2]

         After the amended complaint was docketed, NAI filed its answer (ECF No. 80), Goldsmith filed his answer (ECF No. 97), and Carchex filed a motion to dismiss for failure to state a claim (ECF No. 89) and a motion to vacate all of Judge Copperthite's orders, based on Carchex's lack of consent to a magistrate judge conducting all proceedings in the case (ECF No. 91).[3] After Carchex's motions became ripe, the case was reassigned to Chief Judge Bredar, who denied both motions, but allowed Carchex to file a motion for reconsideration of Judge Copperthite's orders granting conditional certification of a collective action (ECF No. 25) and granting class certification on the state law claims (ECF No. 78). (Mem. Nov. 28, 2018, ECF No. 104; Order, Nov. 28, 2018, ECF No. 105.) The Court subsequently granted limited discovery on the question of class certification. (ECF No. 112.) Following the limited discovery, Carchex, Goldsmith, and NAI filed motions for reconsideration of the two certification orders. (ECF Nos. 120, 121.) The motions have been briefed (ECF Nos. 122, 123, 124) and are ripe for decision. No. hearing is necessary. Local Rule 105.6 (D. Md. 2018). The motions will be granted in part and denied in part.

         II. Conditional Certification of a Collective Action under the FLSA

         A. Standard

         In Title 29, United States Code, Section 216(b), it is stated, "An action to recover the liability prescribed in the preceding sentences [as to unpaid minimum wages or unpaid overtime wages] 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." Further, other employees who are similarly situated may "opt in" to the suit by filing their statements of consent with the court. Id. However, it is not necessary for a suit to be certified as a collective action before employees may "opt in" to it. Myers v. Hertz Corp., 624 F.3d 537, 555 n.10 (2d Cir. 2010), cited in Blake v. Broadway Servs., Inc., Civ. No. CCB-18-086, 2018 WL 4374915, at *2 (D. Md. Sept. 13, 2018). Certification of a collective action under the FLSA "is merely the trial court's exercise of discretionary power to notify potential class members." Blake, 2018 WL 4374915, at *2 (citing Hoffmann-La Roche Inc. v. Sperling, 493 U.S. 165, 169 (1989)).

         "When deciding whether to certify a collective action pursuant to the FLSA, courts generally follow a two-stage process." Butler v. DirectSat USA, LLC, 876 F.Supp.2d 560, 566 (D. Md. 2012). This case was at the first stage when Judge Copperthite granted conditional certification. For conditional certification, it is only necessary for the Court to make a "threshold determination of whether the plaintiffs have demonstrated that potential class members are similarly situated, such that court-facilitated notice to the putative class members would be appropriate." Syrja v. Westat, Inc., 756 F.Supp.2d 682, 686 (D. Md. 2010) (internal quotation marks omitted). The statute does not define "similarly situated." But this Court has opined that "a group of potential FLSA plaintiffs is 'similarly situated' if its members can demonstrate that they were victims of a common policy, scheme, or plan that violated the law." Butler, 876 F.Supp.2d at 566. "To satisfy their burden at this stage, the plaintiffs must make 'a relatively modest factual showing' that such a common policy, scheme, or plan exists." Blake, 2018 WL 4374915, at *3 (quoting Randolph v. PowerComm Const., Inc., 7 F.Supp.3d 561, 575 (D. Md. 2014)). '"Plaintiffs may rely on affidavits or other means, such as declarations or deposition testimony,' to satisfy this legal standard." Veney v. John W. Clarke, Inc., Civ. No. JKB-13-2410, 2014 WL 4388541, at *1 (D. Md. Sept. 3, 2014) (quoting Parker v. StoneMor GP, LLC, Civ. No. CCB-12-223, 2013 WL 3804842, at *1 (D. Md. July 19, 2013)). The case's merits are not considered when a court rules upon conditional certification of an FLSA collective action. Blake, 2018 WL 4374915, at *3. Moreover, whether certification of such a suit should be made regarding FLSA claims is wholly independent of any determination as to whether the case should be certified under Federal Rule of Civil Procedure 23 for other claims in the case, and Rule 23 considerations are not relevant to collective action certification. Emkey v. W.S.C., Inc., Civ. No. RDB-18-1304, 2019 WL 1298478, at *2 (D. Md. Mar. 21, 2019).

         B. Analysis

         Carchex (and Goldsmith and NAI, by adoption of Carchex's motion) indicates it is asking this Court's reconsideration of the conditional certification order "[f]or substantively the same reasons" as Carchex is asking for reconsideration of the class certification order. (Carchex's Mot. Reconsideration 1, ECF No. 120.) Thus, Carchex provides no separate argument on whether Judge Copperthite correctly granted Plaintiffs' motion for conditional certification of the case as a collective action under the FLSA. Despite Defendants' failure to articulate a focused argument on the point, the Court has nonetheless reconsidered the question of conditional certification and has concluded the ruling is correct. As previously noted, whether the two rulings as to conditional certification of an FLSA collective action and as to class certification on the state law claims are correct is determined under different standards.

         The potential plaintiffs in this case all worked in the same position out of the same location. The depositions of eight Plaintiffs, excerpts of which were provided to the Court as exhibits, are consistent in establishing that all potential plaintiffs were subject to the same complex piece-rate compensation policy. The policy, submitted to the Court in the form of attachments to depositions, was silent as to overtime. The deposed Plaintiffs uniformly testified they worked well beyond forty hours per week in every week of their employment. Critically, a member of NAI's management testified that overtime was based upon scheduled hours, but scheduled hours were generally restricted to a forty-five-hour work week, with one hour each day for lunch. Thus, according to the evidence before the Court, every potential plaintiff was subject to an unwritten policy under which overtime was calculated using scheduled hours, not actual hours. Further, Plaintiffs' testimony indicated that NAI did not have a system for reliably capturing all hours worked for the purpose of determining overtime; the call records relied upon by Defendants only established when Plaintiffs were logged into the Carchex computer system and were on the telephone with prospective customers. Plaintiffs' testimony provided evidence that they were working at times other than when they were on the telephone. They also provided evidence that Carchex, in fact, has a system that tracks all of Plaintiffs' work time, but that system is not used for computing overtime.

         Thus, Plaintiffs established that they and all potential plaintiffs "were victims of a common policy, scheme, or plan that violated the law." See Butler, 876 F.Supp.2d at 566. Accordingly, they are appropriately regarded as "similarly situated" and this case is properly granted conditional certification as a collective action under the FLSA. Having considered the matter anew, the undersigned adopts Judge Copperthite's ruling (ECF No. 25) as the ruling of the Court. The parties shall advise the Court if they object to having a new "opt-in" period and, if so, the basis for any objection.

         III. Class Certification

         The true focus of Defendants' motion for reconsideration is the ruling in which the case was certified as a class action in reference to the state law claims.

         A. Standard

         Rule 23, Federal Rules of Civil Procedure, provides the framework for the Court's analysis on the question of class certification. It ...


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