Fail-Safe Definition Dooms State Wage And Hour Class


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Fail-safe class definitions are a hot topic. Once treated as little more than a formality, there is increasing judicial awareness that a flawed class definition may reveal flaws in the class itself. Given the enormous costs of class certification—to courts, plaintiffs, and defendants alike—there is good reason to scrutinize class definitions early in the process. Like any good carpenter, when it comes to the class definition, a good judge will measure twice, and cut once.

The Sixth Circuit recently recognized these concerns. In Randleman v. Fidelity Title Ins. Co., 646 F.3d 347 (6th Cir. 2011) (discussed in detail in our September 8, 2011 article Heads I Win, Tails You Lose: Fail-Safe Class Definitions) the court affirmed decertification of a class alleging entitlement to a discount on a title insurance policy where a borrower refinanced the same property with the same lender within 10 years. A class of those “entitled to relief” was deemed fail-safe because “[e]ither the class members win or, by virtue of losing, they are not in the class and, therefore, not bound by the judgment.” Id. at 352. The court stated that the fail-safe class definition was an “independent ground for denying class certification.” Id.

Most recently, in Jones-Turner v. Yellow Enters. Systems, LLC, 2011 WL 4861882 (W.D. Ky. Oct. 13, 2011), a Kentucky District Court Judge decertified a conditionally certified class asserting state wage and hour claims. This is the latest case within the Sixth Circuit to strike a fail-safe class definition, and the first to do so relying on Randleman. The case is important because it reflects a judicial willingness to revisit crucial threshold issues even after a preliminary decision on class certification, and without the necessity of an appeal to the Sixth Circuit. Perhaps more important, it suggests that the Randleman decision is empowering district judges to root out fail-safe class definitions. Here’s what happened.

Yellow Enterprise Systems, LLC (“Yellow Ambulance”), operates an ambulance service in Kentucky. It employs emergency medical technicians and ambulance drivers whose working conditions are covered by the Fair Labor Standards Act and its Kentucky state law counterpart. Jones-Turner, 2011 WL at *1.

The proposed class of ambulance drivers complained of an “intentional or reckless pattern and practice of violating Kentucky law with regard to its employees’ rights to lunch breaks, rest breaks, and overtime pay.” Id. The plaintiffs were entitled to thirty minutes of uninterrupted time for breaks and lunch and, if their shifts were too busy to permit the breaks, they were entitled to overtime pay for the extra thirty minutes. Id. They claimed that they had not been paid or were entitled to overtime pay for lunches taken while “on call.”

Following conditional class certification of the state law claims, it came to light that the plaintiffs’ claims were highly individualized. For example, they were required to request approval for meal breaks that, depending on call volume, might or might not be allowed. The defendant produced evidence showing that:

  • Whether plaintiffs called in for a meal break or turned in a “missed lunch slip” varied from person to person;
  • All employees were encouraged to take meals during slow periods;
  • Only some employees followed company policy and were compensated for missed lunches;
  • It was unclear what happened if a dispatcher approved a lunch break, i.e., whether they were “off duty” or remained “on call”; and
  • Remaining “on call,” by itself, did not require a finding that the employee’s meal was compensable.

Id. at *2.

The plaintiffs conceded that none of the defendant’s policies were illegal on their face. Rather, the “alleged injury results from a failure to pay EMTs for compensable meal time (i.e., a missed or otherwise FLSA-unsatisfactory meal) if and when it occurs.” Id.

On cross motions on the issue of class certification, the court agreed that decertification was proper. It first noted that “a multitude of factors are implicated in determining whether EMTs at Yellow Ambulance were properly paid. The analysis is highly individualized in this case.” Id. This conclusion was supported by the court’s finding that there had been no showing of a single decision, policy or plan resulting in the alleged failure to properly compensate the plaintiffs. Id.

Of greater interest is what happened next. The court noted that the proposed class for the state wage and hour claims consisted of those plaintiffs:

  1. Who were not paid for all time worked and/or not paid overtime wages for work in excess of forty (4) [sic] hours per week as required by Kentucky law;
  2. Who were not granted meal breaks in accordance with KRS 337.355;
  3. Who were not granted rest breaks every four hours as mandated by KRS 337.365; and
  4. Who were subjected to automatic pay deductions for meals without verification of whether or not they received uninterrupted meal breaks as required by Kentucky law.

Id. at *3.

The court said that this was an improper fail-safe definition. Id. Quoting Randleman, the court said that the class definition:

shields the putative class members from receiving an adverse judgment. Either the class members win, or by virtue of losing, they are not in the class and, therefore, not bound by the judgment.” Thus, in order to ascertain who is a member of the class, the merits of each individual employee’s claims would need to be reached, thus defeating the suggestion that class treatment would be appropriate.

Id. (citations omitted).

The court was right. Whether a class member was “not paid for all time worked,” “not granted meal breaks,” “not granted rest breaks every four hours,” or was “subjected to automatic pay deductions for meals without verification of whether or not they received uninterrupted meal breaks,” are all questions that go to the merits of the class claims.

The issue was not whether the class definition contained “subjective” terms—plaintiffs often argue that “objective” terms will save an otherwise flawed definition. Rather, each element of the proposed definition required a detailed factual inquiry that resolved part or all of an element of the plaintiffs’ case.

Nor did the court give the plaintiffs leave to amend the definition. Perhaps the court believed that enough time had elapsed to foreclose that option. Or perhaps the court recognized that the flaw could not be fixed without creating a class containing many who had not been injured at all. Whatever the reason, the case provides authority for denying a plaintiff an opportunity to amend the class definition under appropriate circumstances. See also Pipefitters Local 636 Insurance Fund v. Blue Cross Blue Shield of Michigan, 654 F.3d 618, 630 (6th Cir. 2011) (refusing leave to amend definition where “class action is not a superior method of adjudication”).

These lessons are of critical importance for those defending motions seeking class certification. While the Jones-Turner decision turned primarily on the lack of commonality, i.e., too many individualized claims, the fail-safe definition was an independent basis for decertifying the class.

In fact, fail-safe definitions often occupy the other side of the commonality coin. Classes that assert highly individualized claims—especially those that seek individual money damages—frequently implicate fail-safe issues precisely because the heightened precision required to establish the common issues often answers the ultimate questions, too. Judge Simpson’s recognition of this phenomenon suggests a multi-prong attack on Rule 23(b)(3) class definitions.

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