United States District Court, S.D. Texas, Houston Division
David Aguirre, Individually and on Behalf of Similarly Situated Individuals, Plaintiff,
Tastee Kreme #2, Inc. and Vahid Karami, Defendants.
MEMORANDUM OPINION AND ORDER
H. Miller United States District Judge
before the court is a memorandum, recommendation, and order
filed by Magistrate Judge Nancy Johnson
(“M&R”). Dkt. 36. The M&R recommends
granting plaintiff David Aguirre's motion to
conditionally certify a Fair Labor Standards Act
(“FLSA”) class. Id. Defendants Tastee
Kreme #2, Inc. (“Tastee”) and Vahid Karami filed
objections to the M&R. Dkt. 38. After considering the
M&R, related documents, objections, and the applicable
law, the court is of the opinion that the objections should
be SUSTAINED IN PART and OVERRULED IN PART.
an FLSA case. Aguirre claims that Tastee and Karami
wrongfully classified him and other similarly situated
employees as exempt from FLSA overtime requirements. Dkt. 36.
Karami is the director of operations, owner, and manager of
Tastee. Id. Tastee employs drivers to deliver ice
cream to gas stations and convenience stores and perform
various services related to Tastee's products at the
delivery locations. Id. Aguirre contends that he was
a driver for Tastee and that from the time period of July 26,
2013, through January 2016, Tastee did not provide overtime
pay to him and other Tastee drivers who worked more than
forty hours a week. Dkt. 14. According to Aguirre, Tastee
wrongfully classified him and the other drivers as outside
salesmen who were exempt from the FLSA overtime requirements
even though he and the other drivers do not make
“sales” within the meaning of the FLSA.
Id. Aguirre filed a complaint against Tastee and
Karami on behalf of himself and other similarly situated
individuals on August 26, 2016. Dkts. 1, 36. Five other
Tastee employees or previous employees have opted into this
lawsuit. Dkts. 3-5, 35, 37.
court referred all pretrial management of this case to
Magistrate Judge Nancy K. Johnson pursuant to 28 U.S.C.
§ 636(b)(1)(A) and (B). Dkt. 7. On December 20, 2016,
Aguiree filed a motion for conditional certification of a
collective action under the FLSA. Dkt. 22. Tastee and Karami
filed a response and objections to Aguirre's proposed
notice to potential collective action members, and Aguirre
filed a reply. Dkts. 27, 28, 30. The Magistrate Judge filed
an M&R on April 13, 2017. Dkt. 36. She recommends
conditionally certifying the collective action and approving
the proposed notice, with minor changes. See id.
and Karami timely filed objections to the M&R. Dkt. 38.
They contend that the Magistrate Judge erred in the following
ways: (1) refusing to strike defective evidence submitted by
Aguirre; (2) accepting Aguirre's claim that he is a
delivery driver; (3) failing to require Aguirre to show other
employees are similarly situated and want to join the
lawsuit; (4) recommending that the court allow claims after
the date Tastee started paying all drivers an hourly rate;
(5) defining the class; (6) approving the notice and allowing
a three-year notice period; (7) approving notice methods; and
(8) allowing putative class members to use electronic
signatures on opt-in notices. Id. Aguirre did not
file a response to the objections, which are not ripe for
Review of an M&R
may file objections to a nondispositive motion within
fourteen days of being served with a copy of a written order.
Fed.R.Civ.P. 72(a). Upon the filing of timely objections, the
court will “modify or set aside any part of the order
that is clearly erroneous or is contrary to law.”
Id.; see also 28 U.S.C. §
636(b)(1)(A). The court must review factual findings under a
clearly erroneous standard and legal conclusions de novo.
Moore v. Ford Motor Co., 755 F.3d 802, 806 (5th Cir.
207(a) of 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) creates a cause of action against
employers who violate the overtime compensation requirements.
29 U.S.C. § 216(b). Section 216(b) also permits an
employee to bring a collective action lawsuit against an
employer on “behalf of himself . . . and other
employees similarly situated.” 29 U.S.C. § 216(b).
Employees who wish to participate in a § 216(b)
collective action must affirmatively “opt in” by
filing a written consent to become a party with the court .
Id. The “opt-in” procedure of §
216(b) illustrates its “fundamental, irreconcilable
difference” from a class action under Federal Rule of
Civil Procedure 23(c); in a Rule 23 proceeding, persons
within the class description are automatically considered
class members and must “opt out” of the suit if
they do not wish to participate. LaChapelle v.
Owens-Illinois, Inc., 513 F.2d 286, 288 (5th Cir. 1975).
Fifth Circuit has declined to adopt a specific test to
determine when a court should certify a class or grant notice
in a § 216(b) action, but most federal courts (including
this court) have adopted the Lusardi test. See
Mooney, 54 F.3d at 1214 (discussing but declining to
adopt the test applied in Lusardi v. Xerox Corp.,
118 F.R.D. 351 (D.N.J. 1987)); Badgett v. Tex. Taco
Cabana, L.P., No. H-05-3624, 2006 WL 2934265, at *1-2
(S.D. Tex. Oct. 12, 2006). Under the Lusardi test, a
district court approaches the question of whether the
potential plaintiffs are “similarly situated”
through a two-stage analysis: the “notice stage”
and the “decertification stage.” Mooney,
54 F.3d at 1213. At the notice stage, the court makes a
decision, usually solely based on the pleadings and any
submitted affidavits, whether to certify the class
conditionally and give notice to potential class members.
See Mooney, 54 F.3d at 1213. The decision is made
using a “fairly lenient standard, ” because the
court often has minimal evidence at this stage of the
litigation. Id. at 1214. Courts, in fact,
“appear to require nothing more than substantial
allegations that the putative class members were together the
victims of a single decision, policy or plan.”
Id. (quoting Sperling, 118 F.R.D. at 407).
Thus, the notice stage analysis typically results in
conditional certification of a representative class.
Badgett, 2006 WL 2934265, at *1. After conditional
certification, the “putative class members are given
notice and the opportunity to ‘opt-in'” and
the case proceeds as a representative action.
Mooney, 54 F.3d at 1214.
second stage of the Lusardi approach-the
“decertification stage”-is typically precipitated
by the defendant filing a motion to decertify after the
opt-in period has concluded and discovery is largely
complete. Id. “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.” Id. If the court finds the
claimants are no longer made up of similarly situated
persons, it decertifies the class and dismisses the opt-in
plaintiffs without prejudice. Id. If the class is
still similarly situated, the court allows the collective
action to proceed. Id.
“decision to certify, even if subject to correction at
the decertification stage, is not without
consequences.” Lang v. DirecTV, Inc., No. No.
10-1085, 2011 WL 6934607, at *6 (E.D. La. Dec. 30, 2011)
(citations omitted). “Too much leniency at the notice
stage can lead to a ‘frivolous fishing expedition
conducted by the plaintiff at the employer's
expense'” and “extreme leniency at the notice
stage can result in conditional certification that must later
be revoked at the eve of trial . . . when it becomes obvious
that manageability concerns make collective action
impossible.” Id. For this reason, in cases in
which parties have had the opportunity to conduct discovery
prior to filing the motion for notice and conditional
certification, some courts apply a more stringent inquiry.
See, e.g., McKnight v. D. Hous., Inc., 756
F.Supp.2d 794, 802-03 (S.D. Tex. 2010) (Rosenthal, J.)
(noting that courts may increase the plaintiffs' burden
at the notice stage if discovery is largely complete);
Basco v. Wal-Mart Stores, Inc., No. 00-3184, 2004 WL
1497709, at *4 (E.D. La. Jul. 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 this
matter.”). If there has been extensive discovery, some
courts collapse the Lusardi two-stage process and
subject the plaintiffs to the more stringent second-stage
burden. See, e.g., Harris v. FFE Transp. Servs.,
Inc., No. 3:05-CV-0077-P, 2006 U.S. Dist. Court LEXIS
51437, at *7 (N.D. Tex. May 15, 2006) (applying the second
stage of the Lusardi approach after the court gave
the parties seven months to conduct discovery related to the
certification issue); Pfohl v. Farmers Ins. Grp.,
No. CV03-3080 DT (RCX), 2004 WL 554834, at *2-3 (C.D. Cal.
Mar. 1, 2004). However, it is only appropriate to increase
the plaintiffs' burden “after discovery is largely
complete and the matter is ready for trial.”
Mooney, 54 F.3d at 1214; McKnight, 756
F.Supp.2d at 802-03.
court will first address Tastee and Karami's evidentiary
objections. It will then consider the objections related to
the Magistrate Judge's recommendation to conditionally
certify the collective action and the objections related to
the proposed substance and logistics of issuing notice.
their response to the motion to conditionally certify, Tastee
and Karami objected to the declarations Aguirre submitted in
favor of his motion as containing misstatements, being
misleading, and not being based on personal knowledge. Dkt.
27. The Magistrate Judge overruled these objections,
reasoning that the declarants had worked for Tastee long
enough to base their declarations on personal knowledge, and
that any disputes about the substantive issues raised in the
declarations should be considered at later stages of the
litigation. Dkt. 36. She noted that Tastee and Karami's
objections related to whether the declarants were exempt from
the FLSA, and exemptions are merits-based defenses and not
typically considered at the notice stage. Id.
the court notes that Tastee and Karami submit additional new
evidence obtained during discovery to support their
assertions regarding Aguirre's declaration. See
Dkt. 38 & Exs. The court has discretion to consider the
additional evidence even though it was not presented to the
Magistrate Judge. See Freeman v. Cnty. of Bexar, 142
F.3d 848, 852 (5th Cir. 1998) (“[I]t is clear that the
district court has wide discretion to consider and reconsider
the magistrate judge's recommendation. In the course of
performing its open-ended review, the district court need not
reject newly-proffered evidence simply because it was not
presented to the magistrate judge. Litigants may not,
however, use the magistrate judge as a mere sounding-board
for the sufficiency of the evidence.”). In this case,
the additional evidence was not available during the original
round of briefing. The court thus finds, in the interest of
justice and judicial efficiency, that it makes sense under
the facts of this case to exercise the court's discretion
and consider the testimony.