July 14, 2020

Volume X, Number 196

July 13, 2020

Subscribe to Latest Legal News and Analysis

Northern District of New York Denies Class Certification and Decertifies Collective, Confirming Common Answers Not Common Questions Are Required

On April 26, 2019, the Northern District of New York held that a group of Plaintiffs failed to satisfy their burden to establish commonality and predominance under Fed. R. Civ. P. 23 and failed to sustain their burden that they were similarly situated to continue as a FLSA collective with respect to their misclassification claims under state and federal law. Jan P. Holick Jr., et al. v. Cellular Sales of New York, LLC, Case No. 1:12 CV-584 (NAM/DJS), 2019 WL 1877176 (N.D.N.Y. Apr. 26, 2019). The Court determined that individualized issues predominated the resolution of the question as to whether a group of merchants, who contracted with Cellular Sales of New York to sell cellular service plans, devices, and accessories through various corporate entities, were independent contractors under New York law and the FLSA.

In 2010 and 2011, Cellular Sales of New York (CSNY), an authorized dealer that markets and sells cellular phone products and services in New York State, contracted with more than three hundred corporate entities, owned by many of the Named and Opt-in Plaintiffs, to sell cell phone service plans, devices, and accessories. These corporate entities and individuals who performed services for those entities were classified as independent contractors. CSNY paid commissions to those corporate entities for products and services sold under the contracts. Plaintiffs’ claimed that they were incorrectly classified as independent contractors. In order to determine whether the merchants had indeed been misclassified, discovery was conducted into the degree of control, if any, CSNY exercised over the Plaintiffs. Plaintiffs gave varying accounts of their ability to set their own work schedules, ability to work outside the retail stores, tax classifications, investment in equipment, supplies, and advertising, and use and hiring of other individuals.

In resolving Plaintiffs’ motion for class certification and CSNY’s motion to decertify the collective, the Court held that Plaintiffs could not satisfy the commonality requirement of Rule 23 of the Federal Rules of Civil Procedure because the amount of control CSNY exerted over each Plaintiff was highly individualized. Although the Court noted that Plaintiffs’ failure to satisfy Rule 23(a)’s commonality requirement was lethal to Plaintiffs’ motion, the Court also held that Plaintiffs’ individualized proof failed to satisfy Rule 23(b)’s predominance requirement. The Court then turned to whether Plaintiffs could sustain their FLSA collective action, determining that in light of the highly individualized, plaintiff-specific analysis required to adjudicate each claim, Plaintiffs and the collective were not similarly situated. The Court rejected Plaintiffs’ arguments that a common scheme of uniform classification under the Sales Agreements was enough to satisfy the FLSA’s similarly situated standard. The Court stated: “[B]lanket classification decisions and uniform corporate policies do not on their own render plaintiffs similarly situated.”

The Court’s ruling underscores the necessity of class discovery, even following an initial collective certification under FLSA §216(b). It is plaintiffs’ burden to show that class and collective certification are warranted. As the Supreme Court stated in Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011): “[t]he class action is an exception to the usual rule that litigation is conducted by and on behalf of the individual named parties.”

© 2020 Proskauer Rose LLP. National Law Review, Volume IX, Number 123

TRENDING LEGAL ANALYSIS


About this Author

Samantha Shear Labor Employment Attorney
Associate

Samantha Shear is an associate in the New Orleans office and a member of the Labor and Employment Department. Samantha graduated cum laude from Tulane Law School where she spent two years as a member of the Judge John R. Brown moot court team. She served as coach of the moot court team one year, leading her team to win multiple awards for excellence in oral advocacy.

Prior to law school, Samantha worked as a freelance journalist for music publications.

Education

  • Tulane University Law School, J.D., 2018

Admissions & Qualifications...

504.310.2046
Nicole A. Eichberger, Labor and Employment Attorney, Proskauer Law Firm
Senior Counsel

Nicole A. Eichberger is a Senior Counsel in the Labor and Employment Department, and a member of the Class/Collective Action Group and the Employee Benefits, Executive Compensation & ERISA Litigation Practice Center, resident in the New Orleans office. Nici assists clients in the defense of numerous complex employment and ERISA class and collective actions, including those alleging FLSA, ERISA and Executive Compensation Claims. Nici is also a member of the Firm’s eDiscovery Group and advises clients on eDiscovery matters, including day-to-day preservation, investigations, and litigation strategies. In addition to her litigation work, she counsels employers, fiduciaries, and trustees on employment, ERISA benefit and fiduciary issues.

Nici was recently appointed by immediate past ABA President Laurel Bellow to serve a three-year term on the ABA’s Standing Committee on Pro Bono & Public Service and serves as the Pro Bono Co-Coordinator for Proskauer’s New Orleans office.

504-310-2024