March 5, 2015, Trial News
Individualized damages do not bar class certification, Second Circuit holds
In a collective action that former Applebee’s employees pursued against the restaurant chain, alleging violations of the Fair Labor Standards Act and New York labor law, the Second Circuit held that a court may not deny class certification merely because damages must be calculated on an individual basis.
The Second Circuit has held that a court may not deny class certification merely because damages must be calculated on an individual basis. (Roach v. T.L. Cannon Corp., 2015 WL 528125 (2d Cir. Feb. 10, 2015).)
Former Applebee’s employees pursued collective action against the restaurant chain, alleging violations of the Fair Labor Standards Act and New York labor law. They claim the company had a policy of denying employees an extra hour of pay when they worked a 10-hour shift (as New York law required) and a policy of forcing managers to subtract pay for rest breaks that were required by law but that employees didn’t actually take.
“Since all of the plaintiffs worked different hours at different stores at different rates of pay,” damages would have to be calculated individually, said Scott Michelman of Public Citizen in Washington, D.C., who argued on behalf of the plaintiffs.
A New York district court denied class certification based on its interpretation of the 2013 Supreme Court opinion Comcast Corp. v. Behrend. The Second Circuit had previously allowed class certification when damages were individualized, but the district court believed Comcast did not allow class certification unless damages could be calculated on a classwide basis. The Second Circuit disagreed.
“Comcast held that a model for determining classwide damages relied upon to certify a class under Rule 23(b)(3) must actually measure damages that result from the class’s asserted theory of injury,” the Second Circuit held. Because the calculation of damages in Comcast was based on four theories of injury—only one of which survived—the calculation was flawed, the Court held. But it never determined whether plaintiffs were required to prove damages on a classwide basis.
If the district court’s interpretation was allowed to stand, “then that would eviscerate most class actions, because requiring that level of uniformity among plaintiffs would make it very hard to certify a class,” Michelman said. “And it would therefore make it very difficult for wronged workers or consumers to join together and vindicate their rights.”
Michelman said damages are individualized in many types of class actions, not just wage and hour cases. If consumers and employees were prevented from bringing these claims, Michelman said employers would be shielded from accountability, and “many unlawful policies and practices would go unchallenged.”
Six other circuits—the First, Fifth, Sixth, Seventh, Ninth, and Tenth—have interpreted Comcast similarly to the Second Circuit. But because the Second Circuit confronted the issue squarely, “this may be the most explicit rejection of the theory that individual damages bar class certification,” Michelman said. No circuit courts have interpreted Comcast contrary to the Second Circuit, he said.
Courts in the Second Circuit may still consider individual damages as one factor in determining whether common questions of fact or law predominate over individual ones, but they cannot use them as the sole determining factor in denying class certification.
The case has been remanded to the district court to reevaluate class certification.