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Osterholt v. CorePower Yoga, LLC

United States District Court, N.D. Illinois, Eastern Division

May 18, 2017

Zuri Osterholt and Michelle Benikov, Plaintiffs,
CorePower Yoga, LLC, Defendant.


          Manish S. Shah United States District Judge

         Plaintiffs Zuri Osterholt and Michelle Benikov taught yoga classes for defendant CorePower Yoga, LLC, first as interns and later as instructors. They were paid for their time spent in the yoga studio, but plaintiffs say that when accounting for the time they were required to spend outside the studio preparing for each class, the equivalent hourly rate of their wages fell below the federal minimum. Plaintiffs brought claims against CorePower under the Fair Labor Standards Act, 29 U.S.C. § 201, et seq., the Illinois Minimum Wage Law, 820 ILCS 105/1 et seq., and the Chicago Minimum Wage Ordinance, Chicago, IL, Municipal Code, § 1-24-020. They want to pursue their federal claims as a collective action, and they now move to conditionally certify two classes-one for interns and one for instructors. For the following reasons, plaintiffs' motion is granted.

         I. Legal Standards

         The Fair Labor Standards Act allows plaintiffs to recover unpaid minimum wages on behalf of a class of similarly situated employees in a collective action against their employer. See 29 U.S.C. § 216(b). Unlike the class members in a Rule 23 class action, unnamd plaintiffs must opt in to be bound by an FLSA collective action. Espenscheid v. DirectSat USA, LLC, 705 F.3d 770, 771 (7th Cir. 2013). Most district courts use a two-stage process for determining if named plaintiffs are similarly situated to class members with respect to whether an FLSA violation has occurred, such that a case may proceed as a collective action. See, e.g., Jirak v. Abbott Labs., Inc., 566 F.Supp.2d 845, 847 (N.D. Ill. 2008) (collecting cases). In the first stage, plaintiffs must make a modest factual showing sufficient to demonstrate that “the putative class members were together the victims of a single decision, policy, or plan.” Id. at 848 (quoting Thiessen v. Gen. Elec. Capital Corp., 267 F.3d 1095, 1102 (10th Cir. 2001)). The purpose of the first stage is to determine whether any similarly situated class members exist. See Myers v. Hertz Corp., 624 F.3d 537, 555 (2d Cir. 2010). If plaintiffs meet their burden, then they may send notice to potential class members, giving those individuals the opportunity to opt in to the collective action. See id.

         In the second stage, after the opt-in plaintiffs are identified and discovery is complete, defendants may move for decertification. Plaintiffs then must meet a higher standard for the collective action to proceed, and courts generally consider three factors: “(1) whether the plaintiffs share similar or disparate factual and employment settings; (2) whether the various affirmative defenses available to the defendant would have to be individually applied to each plaintiff; and (3) fairness and procedural concerns.” Mielke v. Laidlaw Transit, Inc., 313 F.Supp.2d 759, 762 (N.D. Ill. 2004). Ultimately, the standard for proceeding as a collective action is no different from the standard for certifying a class action under Federal Rule of Civil Procedure 23. See Espenscheid, 705 F.3d at 772.

         CorePower argues that, because the parties have conducted limited discovery, the flexible, lenient standard typically applied at the first stage should be heightened to a standard more stringent than the lenient standard but less stringent than the second-stage, post-discovery standard. Plaintiffs object to this approach, as they filed this motion early in the case and, at the time, the parties' discovery efforts were limited to information necessary to meet the lenient standard. Since then, however, the two named plaintiffs and a third-party witness were deposed, the parties submitted multiple declarations from other CorePower employees, and CorePower produced over 10, 000 documents. Plaintiffs were given the opportunity to file both a reply and a sur-surreply with much of that discovery in hand. The limited discovery conducted so far is sufficient to warrant an intermediate standard. Like other courts that have applied such an intermediate standard to conditional certification, I consider the evidence put forth by both parties but remain mindful of the fact that CorePower has greater access to evidence than plaintiffs. See, e.g., Steger v. Life Time Fitness, Inc., No. 14-CV-6056, 2016 WL 245899, at *2 (N.D. Ill. Jan. 21, 2016); Bergman v. Kindred Healthcare, Inc., 949 F.Supp.2d 852, 856 (N.D. Ill. 2013).

         II. Background

         Plaintiffs Michelle Benikov and Zuri Osterholt trained to be yoga teachers by enrolling in and completing a training program administered by defendant CorePower Yoga, LLC. [54-3] at 11, Tr. at 43:7-16; [54-4] at 8, Tr. 29:9-30:2.[1] After completing their training, they joined the CorePower internship program, which required that they teach 30 yoga classes and qualified them to be CorePower instructors. See [37-10]. Benikov began the internship program in Chicago in November 2011, and taught her 30th class in January 2012. [54-3] at 11-12, Tr. at 43:17-45:22. Osterholt taught classes as an intern in Chicago from June 15, 2015 until August 9, 2015. [37-1] ¶ 2. Following their internships, Osterholt and Benikov worked for CorePower as instructors. Osterholt worked in Chicago from August 10, 2015, until February 4, 2016. Id. Benikov started out in Chicago but later moved to Portland, Oregon, working as an instructor there from November 2014 to January 2016. [37-2] ¶ 4. In addition to teaching yoga classes, Benikov also trained new CorePower teachers in both cities. [37-2] ¶ 10.

         There is some evidence that CorePower teachers nationwide received the same training, using a standardized training manual. [54-2] at 21, Tr. at 82:14- 82:22. In their training, plaintiffs learned that preparing for each class included developing and memorizing a choreography and sequence of yoga poses, the verbal cues they will use to lead students into the next pose, the type of physical assistance students may require for each pose, and the music to be played during the class. [54-3] at 43, Tr. at 169:19-170:17; id. at 93, Tr. at 369:14-371:14; [54-25]. It was also their responsibility to develop a theme to which each of these class components related. [54-18]-[54-20].

         The standard instructor employment agreement defines an instructor's essential job duties, one of which is as follows: “Provide superior yoga instruction by teaching CorePower Yoga classes, adhering to CPY sequencing expectations, structure, and quality standards at all times.” [37-14]. The agreement also requires that instructors provide students with individual assistance as appropriate, interact with them before and after each class, and promote additional CorePower trainings and classes. Id. And it directs instructors to “[c]omply with expectations for classroom environment, teacher substitution, format structure, and other guidelines” provided in other CorePower documents and communications. Id. Teaching manuals and other documents sent to teachers say that each class should provide a “World Class Experience, ” [54-15], and that “no two classes will be exactly the same.” [54-17]. To aid the teachers in preparing for their classes, CorePower regularly circulated sample playlists and suggested themes. [49-15] ¶ 13; [54-4] at 48, Tr. at 191:3-192:18.

         According to CorePower's standard intern and instructor employment agreements, CorePower also required interns and instructors to work at the front desk for thirty minutes before and after each class they taught. See [37-10], [37-11]. The CorePower employee manual states that while staffing the front desk, employees had to interact with students, market additional classes and training programs, and perform other non-teaching activities as required by the studio manager. [54-13]. Benikov testified that, in her training in Chicago, she was explicitly informed of a policy prohibiting class preparation while at the front desk, and that she in turn informed others of that policy while training teachers in Portland. [54-3] at 68-70, Tr. at 271:4-279:3. Plaintiffs also testified that CorePower required interns and instructors to spend time marketing their classes on social media and reviewing newsletters and email announcements from CorePower. [54-3] at 60, Tr. at 237:23-238:11; id. at 98, Tr. at 389:1-390:4. And if an intern or instructor could not teach a scheduled class, he had to solicit a substitute teacher via email. [54-32]. CorePower also provided the following instruction: “If you ask for a sub, return the Karma and sub for someone else when you are able.” Id.

         Osterholt testified that she spent an average of four hours preparing for each class. [54-4] at 43-44, Tr. at 172:4-173:9. Benikov testified that she spent between four and five hours preparing for each class. [54-3] at 102, Tr. at 407:4-13. Third-party witness Fitzgerald, a former studio manager, said she spent anywhere from three to five hours before each class preparing. [54-2] at 14, Tr. at 54:3-20. In their declarations, Osterholt and Benikov stated that CorePower paid them below all applicable minimum wages, but do not provide more detail than that. See [37-1] ¶ 12; [37-2] ¶ 19. And according to plaintiffs and Fitzgerald, their managers had some awareness of how much time and effort were required to prepare for a class. [54-2] at 11-12, Tr. at 44:7-45:22; [54-3] at 47, Tr. at 186:4-187:9; [54-4] at 55-56, Tr. at 220:16-221:16.

         Fitzgerald also testified, based on her experience as a studio manager and her attendance at corporate meetings, that CorePower paid interns and instructors only for their time spent in the studio-either teaching a class or managing the front desk before and after their classes-and not for any time spent working outside the studio. [37-3] ¶¶ 5-9. Plaintiffs provide CorePower documents related to the payroll system that directed interns and instructors to record their time spent working at the front desk before and after each class-one hour total-and their time spent actually instructing each class-generally, one more hour-, but do not mention time spent preparing for classes. See [54-9], [54-10]. Plaintiffs' payroll records reflect that for the vast majority of classes they taught, CorePower explicitly compensated them for two hours of work time. See [54-11], [54-12].

         According to plaintiffs, CorePower paid all of its interns for the time they report at an hourly rate equal to the minimum wage applicable to each jurisdiction in which they work. [37-2] ¶ 12. CorePower paid Osterholt between $8.25 and $10.00 per hour reported when she worked as an intern. [19] ¶¶ 38-39. CorePower paid instructors on a per-class basis; Osterholt received $30 ...

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