Hunton Employment & Labor Perspectives

Earlier this month, the Massachusetts Supreme Judicial Court (“SJC”) settled a long-standing debate amongst opposing parties in wage-hour class actions regarding the standard for class certification. The SJC’s decision in Gammella v. P.F. Chang’s China Bistro, Inc., No. SJC-12604, 2019 WL 1575527, definitively establishes that Rule 23 of the Massachusetts Rules of Civil Procedure – viewed as a stricter standard for certification and the same civil standard applicable to most other Massachusetts state court class actions – is the applicable standard for determining class certification in wage and hour cases.   The SJC also weighed in on satisfaction of the “numerosity” requirement for certification under Rule 23 and held that a rejected offer of judgment to a named plaintiff that covers all potential damages does not cut off that plaintiff’s claims.

Background

 Felice Gammella, who worked at several P.F. Chang's China Bistro locations in the Boston area, brought suit in 2014 under the Massachusetts Wage Act (“Wage Act”) alleging his employer regularly violated the state requirement to pay employees for three hours of work at no less than minimum wage if they reported for a scheduled shift but were dismissed before working three hours, known as “reporting pay” and the “three-hour rule.”  Plaintiff moved to certify a class, but the Superior Court denied class certification.

P.F. Chang's then offered Gammella relief in two forms. First, through a technical offer to have judgment entered against it for $962.08, plus pre-judgment interest, cost and fees, which was the amount of wages allegedly owed (a Rule 68 offer of judgment), and second, through delivery of a certified check for $1,732.50, with a letter, which was “more than” plaintiff could have hoped to recover (a tender offer).  Despite Gammella’s refusal to accept either offer, the Superior Court dismissed his case as moot.

Following the filing of an appeal to the Massachusetts Court of Appeals, the SJC took the case under review on its own motion.

 Class Certification Standard

The first issue addressed by the SJC was whether to apply a more “lenient” standard for certifying a class based on language in the Wage Act that authorizes an employee to bring a claim individually and on behalf of others “similarly situated.”  Prior to Gammella, plaintiffs often advocated that the Wage Act does not require proof of the Rule 23 standards (i.e., numerosity, commonality, typicality, adequacy) in order to certify a class action.  Relying on similar language in the Massachusetts Consumer Protection Statute, G.L. c. 93A, which had already been held not to require proof under Rule 23, plaintiffs in wage-hour cases have argued that motions for class certification should be reviewed similarly to Chapter 93A actions.  The claimed benefit in the Chapter 93A standard is an alleged “easier” standard with which to certify a class. See, e.g., Feeney v. Dell Inc., 454 Mass. 192, 201 (2009).

The SJC rejected this argument.  Although the “similarly situated” language means that a plaintiff has the right to bring a class action, the SJC held this does not change the elements a plaintiff must prove in order to get the class certified. The SJC’s order clarifies that the “stricter” standards of Rule 23 apply to state wage-hour class actions.

 Denial of Class Certification: the “Numerosity” Requirement

 After determining that Rule 23 applied to plaintiff’s claims, the SJC examined each requirement, including that a plaintiff must prove there are so many members of the class that requiring each person to individually join the case as a named plaintiff would be impractical. This is known as “numerosity.”

 In previously denying certification, the Superior Court found that the class did not meet the numerosity requirement because, among other things, there was evidence that plaintiff (and others) frequently arrived at work but left before working voluntarily, and the class, if any, should only be defined to include employees whose shift was “involuntarily” not worked.  Due to a lack of records differentiating the “reason” for leaving the shift, the Superior Court held that numerosity was not met.

The SJC held that defining the class to be only workers who left a shift “involuntarily” was improper.  According to the SJC, while some of the departures may have been voluntarily - a defense to the employees’ claim- the possibility of this defense did not amount to uncertainty as to the number of putative plaintiffs that could then in turn be used to undermine the Rule 23 numerosity requirement.  The SJC further noted that the employer’s lack of records stating “why” employees had left early could not be relied up to the employer’s benefit in denying class certification based on uncertainty from determining how many employees had left voluntarily versus involuntarily.

 The Impact of Unaccepted Offers of Judgment to a Named Plaintiff

 The final issue address by the SJC was the dismissal of plaintiff’s claims as moot based on an unaccepted Rule 68 offer and tender offer.  The SJC reversed the Superior Court’s decision, finding that neither a rejected Rule 68 offer nor tender offer – regardless of the amount – operated to cut off the plaintiff’s claims.

The SJC’s reversal on this issue was guided by the principles expressed by the U.S. Supreme Court in Campbell-Ewald Co. v. Gomez, 136 S. Ct. 663 (2016).  There, the U.S. Supreme Court held that, in a class action, individual claims are not moot and remain viable even if there is an unaccepted Rule 68 offer. In Campbell-Ewald, however, the defendant’s offer had been made, and not accepted, before the plaintiff had moved for class certification. In Gammella, the SJC was faced with a situation where class certification had been denied already and where defendant had tendered to the plaintiff the maximum amount of money to which he might be entitled by certified check.  Despite these two distinctions, the SJC determined that the plaintiff had ultimately received nothing from the employer and retained the right to appeal the denial of class certification, so his claims were not moot. The SJC’s decision follows the general trend of courts closing the door on the defense tactic of mooting a class plaintiff’s case with an offer of judgment.

Ultimately, Gammella has been remanded to the Superior Court to examine whether class certification is proper as to the Rule 23 requirements other than numerosity.

Key Takeaways

 At first blush, the SJC’s Gammella decision appears to be somewhat of a “mixed bag” for employers; however, the SJC rejected the frequently advanced plaintiff’s argument that a broader, more lenient standard for certifying class status in Massachusetts wage and hour cases should be applied.  This provides long-awaited clarity regarding the appropriate certification standard for employers facing Wage Act claims, and is a very positive development for employers.

Although the SJC’s decision addressing numerosity is effectively a reaffirmation of existing case law, it reminds employers facing a reporting pay situation that even if an employee leaves voluntarily and may not be entitled to reporting pay, the employer should maintain some documentation about early departures.