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Chester Marshall and v. Amsted Rail Company

November 13, 2012


The opinion of the court was delivered by: Reagan, District Judge:


A. Introduction

The Fair Labor Standards Act (FLSA), 29 U.S.C. 201, et seq., provides that employers "must pay overtime to employees working on an hourly basis." Kennedy v. Commonwealth Edison Co., 410 F.3d 365, 369 (7th Cir. 2005). If an employee works more than 40 hours a week, he is entitled to one and one-half times his regular wage for every extra hour worked. See 29 U.S.C. 207(a)(1).The employee bears the burden of proving that he performed overtime work for which he was not properly compensated.

Kellar v. Summit Seating Inc., 664 F.3d 169, 173 (7th Cir. 2011).

Amsted Rail, Inc. (Amsted) manufactures freight car and locomotive undercarriage components at a production facility in Granite City, Illinois. In January 2010, two hourly-paid employees, both union members working at the Granite City plant (Chester Marshall and Richard Whitby), filed suit in this District Court alleging that they and similarly situated co-workers are entitled to recover unpaid wages and overtime compensation from Amsted under the FLSA and the Illinois Minimum Wage Law, 820 ILCS 105/1, et seq.

The original complaint listed 65 employees other than Marshall and Whitby who had opted into the lawsuit, as is required for a plaintiff to join an FLSA collective action. The count based on Illinois law was dismissed in an Order which directed Plaintiffs to file an amended complaint (see Doc. 72). They did so, various motions were filed and resolved, more Plaintiffs opted into the suit (by last count, totaling 478, see Doc. 229), and the Court conditionally certified this suit as a collective action. Additional motions were filed, briefed, and ruled on by the Court.

In November 2011, the undersigned Judge stayed this action pending resolution by the United States Court of Appeals for the Seventh Circuit of an employer's interlocutory appeal of a summary judgment ruling in a FLSA case pending in the Northern District of Indiana -- Sandifer v. United States Steel Corp., 678 F.3d 590 (7th Cir. 2012). After Sandifer was decided on May 8, 2012, the undersigned District Judge lifted the stay of this action, granted a motion to reconsider a summary judgment ruling issued herein, and adjusted the schedule for filing the remaining motions (see Doc. 204).

Jury trial now is set for December 3, 2012, and two motions are pending. First, the Court addresses Amsted's July 16, 2012 motion for class decertification (Doc. 210), which was extensively briefed, became ripe with the filing of supplemental reply briefs on November 2 and 9, 2012, and was the subject of oral arguments on October 26, 2012. As explained below, the Court grants the motion.

B. Factual and Procedural Overview

Amsted, who employs hundreds of hourly workers at the Granite City facility, pays its employees based on their scheduled shift times, not their actual hours worked. Plaintiffs allege that during the time period relevant to this lawsuit, Amsted required them to work before and after their paid shifts (as well as during lunch breaks) without compensation. The pre-shift work included donning protective gear, obtaining tools and supplies, testing equipment, obtaining tool repairs or replacements, and organizing their work areas. The post-shift work included shutting down machinery, storing tools, cleaning work areas for the following day/shift, shoveling sand, blowing debris off themselves, and doffing protective gear.

Plaintiffs contend that these tasks are integral and indispensable to the performance of their assigned duties, meriting compensation. They assert that Amsted willfully failed to pay wages and overtime compensation, while enjoying substantial profits at the expense of the hourly-paid employees undertaking these tasks, and also that Amsted failed to keep accurate payroll records. Plaintiffs seek to recover compensatory damages (the unpaid wages and overtime compensation), plus liquidated damages, attorney's fees and costs under § 16(b) of the FLSA, and prejudgment and post-judgment interest.

Amsted filed a motion for partial summary judgment directed to Plaintiff's claims for donning and doffing personal protective equipment (PPE). Amsted sought summary judgment on two separate grounds. In September 2011, the undersigned Judge granted the motion on the first ground, finding Plaintiffs' claims for compensation based on time donning and doffing PPE barred by § 203(o) of FLSA, because Amsted had proven a custom or practice under a bona fide collective-bargaining agreement which excluded the time spent donning and doffing from the "hours worked" by Plaintiffs (see Doc. 180, pp. 22-23).

In June 2012, after the Seventh Circuit decided Sandifer, the undersigned Judge granted summary judgment for Amsted on the second ground advanced. The Court found that because the time donning and doffing PPE fell under § 203(o), as a matter of law it could notconstitute a "principal activity" under the FLSA (see Doc. 204, p. 5). The Court solicited the parties' positions on what remained for trial at that point, speculating that with the donning/doffing claims out, what remained was the question of compensation for other pre-shift and post-shift activities, like starting machinery, obtaining supplies, and repairing tools. The parties filed a Joint Report (Doc. 203).

In that report, Plaintiffs identified the remaining issues as: "(1) Amsted's liability under the FLSA, (2) Amsted's willfulness in violating the FLSA, and (3) Plaintiffs' damages" (Doc. 203, p. 1). Plaintiffs acknowledged that Sandifer put the kibosh on their argument "that the uncompensated donning and doffing performed by the Plaintiff class starts or ends the compensable workday" but maintained that Sandifer left intact their "primary argument all along that Amsted's time clock records (which it does not use for payroll purposes) reasonably approximate the amount of work performed by the class" (id.).

Defendants identified two sets of questions remaining -- the first being whether the conditional class must be decertified, and the second focusing on the nature of each Plaintiff's pre-shift and post-shift activities (i.e., were those tasks integral and indispensable? were they de minimis? was Amsted entitled to a statutory credit/offset under one or more of the collective bargaining agreements for this work?). Counsel also moved for summary judgment and to exclude witnesses. Having denied Amsted's summary judgment motion on November 3, 2012, the Court now resolves the question of decertification.

C. Summary of FLSA Certification Process

Congress expressly authorized the certification of collective actions in the FLSA.

29 U.S.C. 216(b). Collective actions are treated as the equivalent of class actions in most aspects. The principal difference is that in a collective action, unnamed plaintiffs must opt in to be bound by a judgment, whereas in a class action plaintiffs must opt out to escape being bound. Epenscheid v. DirectSat USA, LLC, 688 F.3d 872, 877 (7th Cir. 2012). Collective actions are certified and decertified like class actions, "unaffected by the absence of a governing rule of procedure." Id. And if an FLSA collective action is decertified, "it reverts to one or more individual actions on behalf of the named plaintiffs." Id., quoting Alvarez v. City of Chicago, 605 F.3d 445, 450 (7th Cir. 2010).

Federal district courts enjoy wide discretion to manage collective actions. Alvarez, 605 F.3d at 449, citing Hoffmann-LaRoche v. Sperling, 493 U.S. 165, 171 (1989). As mentioned above, the FLSA authorizes employees to act together to seek redress for minimum wage and maximum hour provisions. Proceeding via collective action can be appropriate even if the plaintiffs have different subclaims. "If common questions predominate, the plaintiffs may be similarly situated even though the recovery of any given plaintiff may be determined by only a subset of those common questions." Alvarez, 605 F.3d at 449.

On the other hand, proceeding by collective action has been held inappropriate where: (a) determining whether any given plaintiff has a viable claim depends on a detailed, fact-specific inquiry (and some plaintiffs lack any conceivably viable claim altogether); (b) employees are subject to "vastly disparate employment situations," and the defense likely will center on factors specific to each employee; or (c) despite common questions as to liability, the remedy is narrowly tailored as to each particular plaintiff/employee. Alvarez, 605 F.3d at 449, citing Jonites v. Exelon Corp., 522 F.3d 721, 725-26 (7th Cir. 2008), and Mooney v. Aramco Services Co., 54 F.3d 1207, 1214-15 (5th Cir. 1995), overruled on other grounds by Desert Palace, Inc. v. Costa, 539 U.S. 90 (2003).

More specifically, the FLSA allows the claims of "similarly situated employees" to proceed in a collective action. But the FLSA and regulations promulgated thereunder do not define similarly situated or furnish a test for whether FLSA claims qualify to proceed as a collective action. As explained in a prior Order in this case, a majority of district courts employ an ad hoc two-step process to determine whether to certify a collective action under the FLSA (see Doc. 81, pp. 7-8, collecting cases).

Step one of the process is conditional certification, the purpose of which is to decide whether the proposed class should be notified of the pending action. At step one, with discovery not yet complete, the court's determination is made based on the pleadings and any declarations or affidavits submitted by the parties. The named or "representative" plaintiffs need only make a threshold showing that the putative plaintiffs are similarly situated. See, e.g., Morgan v. Family Dollar Stores, Inc., 551 F.3d 1233, 1260-61 (11th Cir. 2008), cert. denied, 130 S. Ct. 59 (2009) (representative plaintiff needs to show only a "reasonable basis" for his claim that there are similarly situated employees); Barfield v. New York City Health & Hosp. Corp., 537 F.3d 132, 137 (2nd Cir. 2008)("modest factual showing" needed at step one).

The standard for conditional certification is "fairly lenient," and the plaintiff's burden is "not a high one," requiring the representative plaintiff to merely show "some factual nexus that connects him to other potential plaintiffs as victims of an unlawful practice" (see Doc. 81, p. 9). If this showing is made, notice is mailed to potential opt-in claimants. In other words, conditional certification is the mechanism used by district court to establish whether potential plaintiffs in an FLSA action should be sent a notice of eligibility to participate in a collective action. Ervin v. OS Restaurant Services, Inc., 632 F.3d 971, 974 (7th Cir. 2011). This Court granted conditional certification in June 2010 (see Doc. 81).

Step two takes place later, typically at the close of discovery, at which point the court examines closely, on a fully developed record, whether the class members actually are similarly situated. See Anderson v. Cagle's, Inc., 488 F.3d 945, 953 (11th Cir. 2007), cert. denied, 553 U.S. 1093 (2008). "At this point, the district court has a much thicker record than it had at the notice stage, and can therefore make a more informed factual determination of similarity." Morgan, 551 F.3d at 1261.

Step two sometimes is referred to as final certification. See, e.g., Zavala v. Wal-Mart Stores, Inc., 691 F.3d 527, 534 (3rd Cir. 2012). A more stringent test governs step two. Zavala, 691 F.3d at 534 ("we have made clear that the standard for final certification is more stringent than the standard for conditional certification.."); Thiessen v. General Electric Capital Corp., 267 F.3d 1095, 1103 (10th Cir. 2001).

This past August, the Court of Appeals for the Third Circuit addressed this issue in detail, holding "that plaintiffs must satisfy their burden at this second stage by a preponderance of the evidence.. [And] the task on final certification is determining 'whether the plaintiffs who have opted in are in fact 'similarly situated' to the named plaintiffs.'" Zavala, 691 F.3d at 537, quoting Myers v. Hertz Corp., 624 F.3d 537, 555 (2nd Cir. 2010), cert. denied, 132 S. Ct. 368 (2011). See also O'Brien v. Ed Donnelly Enterprises, Inc., 575 F.3d 567, 584 ("The lead plaintiffs bear the burden of showing that the opt-in plaintiffs are similarly situated to the lead plaintiffs.").

Although the Seventh Circuit has not announced a test to determine this FLSA "similarly situated" question, other Courts of Appeal have identified or approved a number of factors to guide district courts at stage two of the certification process. Those factors are discussed below in Section D of this Order. Clearly, though, to secure final certification (or avoid decertification), plaintiffs "must rely on more than just 'allegations and affidavits'" and must show that the similarities among the potential class members "'extend beyond the mere facts of job duties and pay provisions' and encompass the defenses to some extent." Morgan, 551 F.3d as 1261-62, quoting Anderson, 488 F.3d at 953. See also Steinberg v. TD Bank, N.A., 2012 WL 2500331, **5-6 (D. N.J. 2012).

If the plaintiffs satisfy their burden, the case may proceed to trial as a collective action. Zavala, 691 F.3d at 537, citing Symczyk v. Genesis HealthCare Corp., 656 F.3d 189, 193 (3rd Cir. 2011). If the plaintiffs fail to shoulder their burden, the collective action must be decertified, at which point the case reverts to one ...

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