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Zachary v. Cobalt Mortgage, Inc.

United States District Court, E.D. Texas, Sherman Division

March 22, 2017




         Pending before the Court is Plaintiff's Motion for Notice and FLSA Conditional Certification (Dkt. #18). Having considered the pleadings, the Court finds that the motion should be granted.


         Plaintiff is a former employee of Defendant Cobalt Mortgage, Inc. Defendant was a nationwide mortgage lender that ceased operations in November 2014. Defendant employed Plaintiff as a Senior Processor in its Plano, Texas office from September 2012 through February 2013 and from August 2013 through July 2014. Processors, Senior Processors, and other employees with similar titles (collectively, “Processors”) assisted Defendant's mortgage loan officers in processing and closing mortgage products.

         Plaintiff alleges that Defendant did not pay Processors overtime compensation for hours worked over forty per week in violation of the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201, et seq. Plaintiff moves for conditional certification as a collective action under the FLSA. Defendant opposes conditional certification on the ground that Plaintiff has not provided evidence of a common policy or plan affecting Processors.

         Plaintiff and nine opt-in Plaintiffs from seven offices state that they “usually worked in excess of forty (40) hours per workweek” and that Defendant did not pay them overtime for these excess hours. Plaintiff and opt-in Plaintiffs further allege that their managers discouraged them from reporting overtime hours and told them not to report overtime hours. Plaintiff and opt-in Plaintiffs state that their managers knew they were not fully reporting all of their hours.

         Defendant classified Processors as non-exempt, hourly employees under the FLSA. Defendant concedes that Processors had the same job descriptions and generally shared common job duties. Defendant argues that it did not have a company-wide policy or practice of requiring Processors to work overtime off the clock and did not permit non-exempt employees to work off the clock. Defendant states it required non-exempt employees to report all time worked in its timekeeping software. According to Defendant, it paid non-exempt employees overtime when required by law, regardless of whether it had authorized employees to work overtime. Defendant's timekeeping records indicate that it paid Plaintiff and five opt-in Plaintiffs overtime from September 2013 to November 2014.

         Plaintiff further alleges that Defendant failed to include non-discretionary bonuses in Processors' regular rate of pay for overtime calculations. Defendant concedes that it did not include non-discretionary bonuses in Processors' regular rates of pay and does not oppose conditional certification of the bonus collective groups.

         On December 8, 2016, Plaintiff filed the pending Motion for Notice and FLSA Conditional Certification (Dkt. #18). On January 17, 2017, Defendant filed a response (Dkt. #20). On January 31, 2017, Plaintiff filed a reply (Dkt. #21). Defendant filed a sur-reply on February 3, 2017 (Dkt. #22).


         The FLSA requires covered employers to compensate nonexempt employees at overtime rates for time worked in excess of statutorily defined maximum hours. 29 U.S.C. § 207(a). Section 216(b) of the FLSA gives employees the right to bring an action on behalf of themselves, as well as “other employees similarly situated” for violations of the FLSA. 29 U.S.C. § 216(b). “Under § 216(b), district courts have the discretionary power to conditionally certify collective actions and authorize notice to potential class members.” Tice v. AOC Senior Home Health Corp., 826 F.Supp.2d 990, 994 (E.D. Tex. 2011).

         While the Fifth Circuit has not specifically addressed the meaning of “similarly situated” in this context, “[t]wo approaches are used by courts to determine whether collective treatment under § 216(b) is appropriate: (1) the two-stage class certification set forth in Lusardi v. Xerox, Corp., 118 F.R.D. 351 (D. N.J. 1987); and (2) the ‘Spurious Class Action' method outlined in Shushan v. Univ. of Colorado, 132 F.R.D. 263 (D. Colo. 1990).” Cripe v. Denison Glass Mirror, Inc., No. 4:11-CV-224, 2012 WL 947455, at *3 (E.D. Tex. Jan 27, 2012) report and recommendation adopted, 2012 WL 947362 (E.D. Tex. Mar. 20, 2012); Villatoro v. Kim Son Rest, L.P., 286 F.Supp.2d 807, 809 (S.D. Tex. 2003). “The Lusardi two-stage approach is the prevailing standard among federal courts.” Tice, 826 F.Supp.2d at 994 (citations omitted). This Court has applied the Lusardi approach in a number of other cases. See Halleen v. Belk, Inc., No. 4:16-CV-00055, 2016 WL 5118646, at *2 (E.D. Tex. Sept. 21, 2016); Miranda v. Mahard Egg Farm, Inc., No. 4:15-CV-406, 2016 WL 1704861, at *1 (E.D. Tex. Apr. 28, 2016); Stier v. Great Plains Nat'l Bank, No. 4:15-CV-519, 2016 WL 1572194, at *1 (E.D. Tex. Apr. 19, 2016). As such, the Court will apply the Lusardi approach in this case.

         Under Lusardi, “certification for a collective action under § 216(b) is divided into two stages: (1) the notice stage; and (2) the merits stage.” Id. “At the notice stage, the district court makes a decision-usually based only on the pleadings and any affidavits which have been submitted-whether notice of the action should be given to potential class members.” Mooney v. Aramco Servs. Co., 54 F.3d 1207, 1213-14 (5th Cir. 1995), overruled on other grounds by Desert Palace, Inc. v. Costa, 539 U.S. 90 (2003). Because the Court has minimal evidence before it at this stage, “the determination is made using a fairly lenient standard requiring nothing more than substantial allegations that the putative class members were victims of a single decision, policy or plan.” Tice, 826 F.Supp.2d at 995. “Notice is appropriate if the court concludes that there is ‘some factual nexus which binds the named plaintiffs and potential class members together as victims of a particular alleged [policy or practice].'” Allen v. McWane, Inc., No. 2:06-CV-158 (TJW), 2006 WL 3246531, at *2 (E.D. ...

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