United States District Court, N.D. Texas, Dallas Division
JAMES PARKER, CAITLIN COLLINS, TAYLOR JACKSON, and ZACHARY OWENS, on behalf of themselves and others similarly situated, Plaintiffs,
SILVERLEAF RESORTS, INC., CERBERUS CAPITAL MANAGEMENT L.P., SL RESORT HOLDINGS, INC., ORANGE LAKE COUNTRY CLUB, INC., and ORANGE LAKE HOLDINGS, LLLP, Defendants.
MEMORANDUM OPINION AND ORDER
J. Boyle UNITED STATES DISTRICT JUDGE
the Court is Plaintiffs' Motion for FLSA Conditional
Certification. Doc. 116. Also before the Court is
Defendants' Opposed Motion to Strike Declarations File in
Support of Plaintiffs' Motion for FLSA Conditional
Certification. Doc. 122. For the following reasons, the Court
GRANTS Plaintiffs' Motion (Doc. 116) but limits
Plaintiffs' proposed class definition as described below.
And the Court DENIES Defendants' Motion (Doc. 122).
a Fair Labor Standards Act (FLSA) case brought by four former
employees of Silverleaf Resorts, Inc. (Silverleaf) who allege
that they were wrongfully denied overtime compensation and
minimum wages. Doc. 91, Pls.' 3d Am. Compl. ¶¶
3, 5-6, 8-9. Silverleaf is in the business of developing,
marketing, and operating timeshare resorts in various markets
nationwide.Id. ¶ 19. Before May 2011,
Silverleaf operated as a stand-alone company. See
Id. ¶ 20. In May 2011, however, it was acquired by
SL Resort Holdings, Inc. (SL Holdings), a wholly-owned
subsidiary of Cerberus Capital Management L.P. (Cerberus).
Id. For four years, Silverleaf operated directly
under SL Holdings and Cerberus, but in May 2015, Silverleaf
was acquired by Orange Lake Country Club, Inc., a
wholly-owned subsidiary of Orange Lake Holdings, LLLP
(collectively Orange Lake). Id. ¶ 22.
working as employees of Silverleaf, Plaintiffs assert they
held similar jobs to one another and had job titles including
“sales representative” and “closer.”
Id. ¶¶ 5-6, 8-9. Plaintiffs say that they
were paid on a commission only basis and worked more than
forty hours in a work week without being paid overtime
compensation. Id. Plaintiffs contend that Defendants
violated the FLSA by failing to pay Plaintiffs' wages and
overtime compensation. Id. ¶ 93. Plaintiffs
further allege that Defendants violated the FLSA by failing
to maintain accurate employee pay records. Id.
explain that sales employees were non-exempt employees who
were paid weekly on a draw versus commission basis. Doc. 120,
Defs.' Resp. 6. The draw amount was an hourly rate
intended to cover an employee's minimum wage plus
overtime for all hours worked. Id. If a sales
employee's commission exceeded the amount of his or her
draw, he or she would be paid only the commission amount for
the week. Id. If the employee's commission did
not exceed the amount of his or her draw, then he or she
would earn the amount of commission plus an additional amount
of draw depending on the number of hours worked. Id.
stopped working at Silverleaf before Orange Lake acquired it.
In order to connect their case to Orange Lake, Plaintiffs
argue that upon acquisition of Silverleaf, Orange Lake
acquired all of Silverleaf s debts and liabilities under the
successor liability doctrine. Doc. 91, Pls.' 3d Am.
Compl. ¶ 47.
originally filed their lawsuit against only Cerberus and
Silverleaf on March 13, 2014, with the intent that it would
eventually be certified as a collective action. Doc. 1,
Pls.' Orig. Compl. Plaintiffs then filed their First
Amended Complaint and added SL Holdings as a defendant. Doc.
12, Pls.' 1st Am. Compl. In October 2015, Plaintiffs
filed a Motion for FLSA Conditional Certification and Notice
to Collective Action Members (First Motion for
Certification). Doc. 74. In February 2016, Plaintiffs filed a
Third Amended Complaint that asserted almost identical
allegations against two new Defendants, Orange Lake Country
Club and Orange Lake Holdings. Doc. 91, Pls.' 3d Am.
Compl. When Plaintiffs first filed suit in 2014, it would
have been impossible to have included Orange Lake as
defendants because they did not acquire Silverleaf until May
2015. Id. ¶ 22.
April 2016, the case was reassigned to a different judge for
all further proceedings. Doc. 97, Special Order No. 3-304. In
May 2016, the parties jointly moved to continue the deadlines
in their Scheduling Order because the Court had not yet ruled
on Plaintiffs' First Motion for Certification. Doc. 99,
Joint Mot. to Continue. The Court granted the continuance and
extended, among others, the deadline for discovery from May
2016 to November 2016. Doc. 101, Order. The Court also denied
without prejudice Plaintiffs' First Motion for
Certification as Plaintiffs' Third Amended
Complaint-adding Orange Lake as defendants-was filed several
months after Plaintiffs filed their First Motion for
Certification. Doc. 100, Order.
the Court granted in part and denied in part Orange
Lake's Motion to Dismiss Plaintiffs' Third Amended
Complaint, Plaintiffs refiled their Motion for FLSA
Conditional Certification (Second Motion for Certification)
in October 2016. Doc. 116. Defendants filed a Response (Doc.
120), and Plaintiffs filed a Reply (Doc. 125). Therefore the
Second Motion for Certification is ripe for the Court's
216(b) of the FLSA “authorizes a plaintiff to bring a
collective action on behalf of similarly situated persons,
provided that any person who desires to become a part of the
collective action files a written consent in the
court.” Valcho v. Dall. Cty. Hosp. Dist., 574
F.Supp.2d 618, 621 (N.D. Tex. 2008) (citing 29 U.S.C. §
216(b)). When a plaintiff seeks to bring a collective action,
district courts have the discretion to implement §
216(b) by facilitating notice to potential plaintiffs.
Hoffmann-La Roche Inc. v. Sperling, 493 U.S. 165,
the FLSA authorizes a plaintiff to bring an action on behalf
of similarly situated persons, the term “similarly
situated” is not defined. See 29 U.S.C. §
216(b). And the Fifth Circuit has declined to adopt any
specific test to determine when plaintiffs are similarly
situated. Acevedo v. Allsup's Convenience Stores,
Inc., 600 F.3d 516, 519, 519 n.1 (5th Cir. 2010);
Mooney v. Aramco Servs. Co., 54 F.3d 1207, 1216 (5th
Cir. 1995) (“[W]e specifically do not endorse
the methodology employed by the district court, and do
not sanction any particular methodology.”),
overruled on other grounds by Desert Palace, Inc. v.
Costa, 539 U.S. 90 (2003). The prevailing test used
among courts in the Northern District of Texas, however, is
the two-step approach outlined in Lusardi v. Xerox
Corp., 118 F.R.D. 351 (D.N.J. 1987), consisting of: (1)
a notice stage; and (2) a decertification
stage. See, e.g., Oliver v. Aegis
Commc'ns Grp., Inc., No. 3:08- cv-828-K, 2008 WL
7483891, at *2, 3 (N.D. Tex. Oct. 30, 2008) (collecting
the Lusardi approach, the first step-the notice
stage-requires a preliminary determination, usually based
only on the pleadings and submitted affidavits, of whether
potential class members are similarly situated to named
plaintiffs. Mooney, 54 F.3d at 1213-14. If they are
similarly situated, then the court can conditionally certify
the action and authorize notice to potential plaintiffs to
opt in, and the suit “proceeds as a representative
action throughout discovery.” Id. at 1214.
After discovery is largely complete, the defendant may move
for decertification, at which point the court proceeds to the
second step-the decertification stage-and again considers
again whether plaintiffs are similarly situated. Id.
If the court finds that the plaintiffs who opted in are not
similarly situated, then the class is decertified, the opt-in
plaintiffs are dismissed without prejudice, and the original
named plaintiffs proceed to trial on their individual claims.
Id. at 1213-14.
use different standards to determine whether plaintiffs are
similarly situated depending on whether the case is at the
notice or decertification stage. At the notice stage, the
court usually has minimal evidence, so “the
determination is made using a fairly lenient standard and
typically results in conditional certification of a
representative class.” Jones v. SuperMedia
Inc., 281 F.R.D. 282, 287 (N.D. Tex. 2012); see also
Mooney, 54 F.3d at 1214.
stage, courts generally “require nothing more than
substantial allegations that the putative class members were
together victims of a single decision, policy, or
plan.” Mooney, 54 F.3d at 1214 n.8. A factual
basis, however, must exist and a plaintiff must show some
“identifiable facts or legal nexus that binds the
claims so that hearing the cases together promotes judicial
efficiency.” Jones, 281 F.R.D. at 287 (quoting
Tolentino v. C & J Spec-Rent Servs. Inc., 716
F.Supp.2d 642, 647 (S.D. Tex. 2010)). In conducting its
analysis, the court has “a responsibility to avoid the
‘stirring up' of litigation through unwarranted
solicitation.” Valcho, 574 F.Supp.2d at 622
(quoting D'Anna v. M/A-COM, Inc., 903 F.Supp.
889, 894 (D. Md. 1995)).
do not often engage in the second step-the decertification
process-until after “discovery is largely complete and
the matter is ready for trial. At this stage, the court has
much more information on which to base its decision, and
makes a factual determination on the similarly situated
question.” Mooney, 54 F.3d at 1214.
there are circumstances where courts will skip the first,
lenient analysis. Where parties have already conducted
discovery on the certification issue, courts have less cause
for leniency during the “notice” phase and may
choose to apply a more stringent standard. Valcho,
574 F.Supp.2d at 622; Basco v. Wal-Mart Stores,
Inc., No. Civ.A. 00-3184, 2004 WL 1497709, at *4 (E.D.
La. July 2, 2004) (“[I]n light of the substantial
discovery that has occurred in this matter, the Court will
consider the criteria for both the first and second steps in
deciding whether it should certify [the] matter.”);
Pfohl v. Farmers Ins. Grp., No. CV03-3080 DT (RCX),
2004 WL 554834, at *3 (C.D. Cal. Mar. 1, 2004) (proceeding
directly to the decertification stage of the analysis because
discovery on the issue of certification was complete).
seek to certify the following class: “all current and
former non-exempt ‘sales employees' of Defendants,
who worked onsite at Defendants' resort
properties.” Doc. 116, Pls.' Mot. for Certification
2 (footnote omitted). Plaintiffs assert that the term
“sales employees” encompasses a variety of
titles all dealing with the sale of
Defendants' resort timeshares. Id. at 1, 2 n.9.
Plaintiffs appear to assert that the class should include
sales employees who worked at every one of Defendants'
resort properties nationwide. See Id. at 4. The
named Plaintiffs stated in their declarations that they
worked at the following six of Defendants' resorts: (1)
Apple Mountain Resort; (2) Fox River Resort; (3) Lake O'
The Woods Resort; (4) Piney Shores Resort; (5) The Villages
Resort; and (6) Seaside Resort.
Conditional Certification Standard
conducting its analysis of whether potential opt-in
plaintiffs are similarly situated to named Plaintiffs, the
Court first must address Defendants' argument that a more
stringent standard, rather than the usual lenient one, should
be used. Defendants argue that substantial discovery occurred
prior to Plaintiffs moving for conditional certification, and
therefore, the Court should skip right to the more stringent
standard in its similarly situated inquiry. Doc. 120,
Defs.' Resp. 15-16. Defendants support their argument by
noting that discovery has been ongoing for 28 months and has
included responses to interrogatories, requests for
admission, 175 requests for production of documents-involving
the production of over 6, 000 documents-and depositions of
the four named Plaintiffs. Id. at 12-13, 16, 16
n.19. Defendants point out that Plaintiffs had the
opportunity to depose the Defendants' corporate
representatives-and indeed were ordered to schedule those
depositions in Dallas by October 21, 2016-but chose not to do
so. Id. at 13. Furthermore, Defendants note that the
discovery period was set to expire on November 21, 2016,
only weeks after Plaintiffs filed their Second Motion for
Certification. Id. at 16.
disagree and argue that Defendants fail to accurately
characterize the amount of discovery that has occurred in the
case. Doc. 125, Pls.' Reply 7. They posit that Defendants
make it appear that discovery is nearly complete, but
Plaintiffs have not deposed a single witness. Id.
Plaintiffs say that while some discovery has occurred, it is
far from complete and in no way ready for trial. Id.
at 8. Plaintiffs point to the fact that Defendants were only
recently ordered to produce the names of Defendants'
corporate representatives after Defendants refused to produce
them for deposition in Dallas, Texas. Id. Therefore,
according to Plaintiffs, the case is actually in the early
stages of discovery, regardless of time, and the Court should
apply a more lenient standard. See Id. at 7-8.
correct standard to apply in this case is not immediately
clear because the amount of discovery and the kind of
discovery that has been completed falls somewhere between
that of the cases applying the lenient standard and that of the
cases applying the stringent standard. There is
certainly more discovery than in Hernandez, where
six months remained in the discovery period and no
depositions had been taken, or in Williams, where no
discovery had taken place. Hernandez, 191 F.Supp.3d
at 682; Williams, 2015 WL 12533010, at *1. But it
appears that there is less discovery than in Blake,
where both parties had an opportunity to take a deposition,
the plaintiffs having taken four, or in Pfohl, where
the parties agreed that discovery on certification was
complete. Blake, 2013 WL 3753965, at *5;
Pfohl, 2004 WL 554834, at *3. Several other cases,
though, address situations that are not as clear cut.
Valcho the district court discussed the rationale
for using different evidentiary standards. Valcho,
574 F.Supp. 2d. at 622. When plaintiffs have not conducted
discovery, they cannot marshal their best evidence, so courts
should give them some leniency. But that rationale disappears
if they have conducted discovery because then the plaintiff
should be required to support his or her claim with evidence
in order to avoid a “frivolous fishing
expedition.” Id. (quoting D'Anna,
903 F.Supp. at 894).
Plaintiffs have engaged in a significant amount of discovery.
Plaintiffs' emphasis of the fact that they have not taken
a single deposition and only just recently received the names
of corporate representatives concerns the Court. Doc. 125,
Pls.' Reply 8. The parties were ordered to set the
depositions of those corporate representatives on or before
October 21, 2016, but Plaintiffs chose not to. See
Doc. 110, Order. Plaintiffs have had the opportunity to
depose those corporate representatives, and they have also
received a significant amount of discovery from Defendants.
Therefore, it appears that the rationale explained in
Valcho-where a plaintiff who has been able to
conduct discovery should be expected to better support his or
her claim-applies here, and the Court should apply a more
stringent standard to its analysis.
even with that rationale in mind, other courts have applied a
lenient standard in the face of a substantial amount of
discovery. In McKnight v. D. Houston, Inc., the
district court determined that a lenient standard was
appropriate, even though the parties had deposed the
plaintiffs and one individual connected with the defendants,
because significant additional discovery had to be completed,
“including discovery into the nature and extent of the
relationships among the defendants.” 756 F.Supp.2d 794,
802 (S.D. Tex. 2010). Here, Plaintiffs' depositions have
been taken but, according to Plaintiffs, there remains a
significant amount of discovery because they have not had a
chance to depose any witness. Therefore, discovery remains
concerning the nature and extent of the relationships among
Defendants. As discussed above, though, Plaintiffs chose not
to set those depositions and have offered no explanation for
Lang v. DirecTV, the district court applied a
lenient standard, even though the defendants had produced
thousands of records over the course of twenty months. No.
10-1085 “G” (1), 2011 WL 6934607, at *7 (E.D. La.
Dec. 30, 2011). The court did so for two reasons: (1) the
court had earlier indicated that it would use the lenient
standard, so there was an issue of fairness, and (2) the
court also noted that it was “leery” to apply any
heightened standard because the Fifth Circuit has not yet
indicated that discovery warrants a heightened standard. No.
10-1085 “G” (1), 2011 WL 6934607, at *7 (E.D. La.
Dec. 30, 2011). Despite 20 months of discovery, other
considerations compelled the court to apply a more lenient
there have been 28 months of discovery, a substantial amount
of time. Doc. 120, Defs.' Resp. 16. The Court notes,
however, that circumstances outside the parties' control
contributed to at least some of the length of their discovery
period. Plaintiffs originally filed their First Motion for
Certification in October 2015-several months before the
discovery deadline. But after the case was reassigned to a
different judge, the Court denied the First Motion for
Certification without prejudice because Plaintiffs had filed
their Third Amended Complaint adding the Orange Lake
defendants after they acquired Silverleaf. Furthermore, the
live pleading was not settled as such until September 2016
when the Court ruled on Orange Lake's Motion to Dismiss
it. While the Court's denial of the First Motion for
Certification, by itself, does not compel the Court to
conduct its analysis using the lenient standard, it does
indicate that the sheer length of the discovery period should
not be given as much weight as Defendants propose.
the Court agrees with Defendants and finds that it is
appropriate to conduct its analysis using the more stringent
standard. Plaintiffs have received a substantial amount of
discovery from Defendants, including thousands of pages of
documents. This is not a scenario where the case was recently
filed and Plaintiffs have been able to produce only their own
declarations. This case was rapidly approaching its trial
date. And while the Court dismissed Plaintiffs First Motion
for Certification, causing some delay, there had been almost
two years of discovery prior to that.
point in the case, Plaintiffs should be able to better
support their claims. And with the significant amount of
discovery in front of the Court, the Court concludes that it
can “make an educated decision” as to whether
certifying the matter as a collective action would survive
the decertification process. See Basco, 2004 WL
1497709, at *4. Thus, the Court will apply a more stringent
standard to its similarly situated analysis below.
Defendants' Motion to Strike Plaintiffs'
turning to its similarly situated analysis, the Court must
first address Defendants' Motion to Strike Declarations
Filed in Support of Plaintiffs' Motion for Certification.
Doc. 122. Defendants argue that Plaintiffs' declarations
should be totally stricken, or in the alternative, certain
portions should be stricken because they are
“identical, boilerplate, rubber-stamped documents that
directly contradict Plaintiffs' sworn deposition
testimony.” Doc. 122, Defs.' Mot. to Strike 1.
Defendants also argue that large portions are unsupported by
the “declarants' personal knowledge; are vague,
speculative, and conclusory; lack foundation or personal
knowledge; present improper opinion testimony; or are based
on hearsay statements.” Id. at 1-2.
respond by arguing that Defendants' objections are
predicated on an incomplete reading of Plaintiffs'
depositions and that the objections are not proper for the
certification stage of litigation. Doc. 127, Pls.' Resp.
1. Plaintiffs then provide Plaintiffs' deposition