Massachusetts Client Alert: MA High Court Ruling (i) Settles Debate Over The Standard Applicable To Wage-Hour Class Certification (ii) Provides Guidance On Evaluating The Numerosity Of A Class And (iii) Details How An Offer of Full Judgment To A Named Plaintiff Will Not Moot A Class Plaintiff’s Claims And Thereby The Class Action
On April 12, 2019, in Gammella v. P.F. Chang’s China Bistro, Inc., No. SJC-12604, 2019 WL 1575527, the Massachusetts Supreme Judicial Court (“SJC”) issued a decision settling a long-standing debate amongst opposing parties in wage-hour class actions, definitively establishing that Mass. R. Civ. P. 23 provides the standard for determining class certification. Prior to Gammela, Plaintiffs often advocated for a ruling that the Wage Act, G. L. c. 149, § 150, and G.L. c. 151, § 20, do not require proof of the Rule 23 standards (i.e., numerosity, commonality, typicality, adequacy, etc.) in order to certify a class action because it authorizes an action individually and on behalf of others “similarly situated.” Thus, reviewing 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 argued that their motions for class certification should be reviewed similarly to Chapter 93A actions. The claimed benefit in the Chapter 93A standard was an alleged easier standard with which to certify a class. See, e.g., Feeney v. Dell Inc, 454 Mass. 192, 201 (2009). In Gammela, the SJC put this debate to rest. The standards of Rule 23 apply to wage-hour class actions.
Gammela is a significant ruling for two other reasons as well. As background, in the case, the plaintiff-employee asserted claims under the Wage Act, G. L. c. 149, § 150 alleging on behalf of himself and other similarly situated employees, that his employer, P.F. Chang’s, violated 454 Code Mass. Regs. § 27.04(1), by failing to provide the mandatory 3-hours of “reporting pay” to employees who were involuntarily dismissed before they worked three hours. The Superior Court denied class certification, and also dismissed the case after the defendant offered the individual named class plaintiff full relief under Mass. R. Civ. P. 68 and with a tender offer of “cash,” finding that the plaintiff’s rejection of that offer mooted his claim.
On the first issue – denial of class certification – the court found that the class was not “numerous” because, among other things, the plaintiff (and others) frequently arrived at work but left before working voluntarily (e.g., when they arrived, they learned the restaurant was slow and did not need them). The court relied on an Opinion Letter from the Executive Office of Labor and Workforce from January 26, 2009 which took the position that an employer did not have to provide reporting pay in these circumstances. Thus, the Superior Court felt that the class, if any, should only be defined to include employees whose shift was “involuntarily” not worked (or cut short), free from any pressure by the employer. Given the lack of any records identifying any employees on this issue, the court denied class certification finding that the class was not “numerous.”
The SJC reversed and remanded for further analysis, finding that the Superior Court abused its discretion on “numerosity” for two reasons: (1) there were hundreds of employees who did work less than 3 hours, but did not receive reporting pay, and (2) the defendant’s lack of records on this issue was not a problem, and the class had been improperly defined by the trial court on the issue of “voluntary” no-shifts or short shifts. The plaintiff had proved “numerosity” simply by virtue of the records that did exist that employees showed up but did not receive “reporting pay.” The SJC also took note of the defendant’s refusal to provide (or inability to provide) plaintiff’s counsel with the discovery that might have helped further assess this issue. Given the low dollar amount of putative class members’ claims, the SJC felt that the lower court should have also found “numerosity” because of the impracticability of employees bringing suits for small damages individually. As the SJC noted in its opinion, the sheer number of employees impacted by the alleged unlawful policy is really not the issue on “numerosity”; it is whether joinder of all plaintiffs is “impracticable,” and it was impracticable to think that individual plaintiffs would line up to bring suits for such small sums of money. (See Slip Opinion at 18-19, n.15) In sum, there was “numerosity” in the case due to the number of potentially impacted employees, and the impracticality of joining them to the case. The defendant’s own record-keeping deficiencies on voluntary versus involuntarily not working their shifts could not defeat the class. On a motion for class certification, the plaintiff proved all he needed on the issue of numerosity, because later, if appropriate, the defendant always had the option to move for decertification.
Further important to this holding, the SJC embraced the more general concept recently articulated by the Seventh Circuit Court of Appeals that the standard for class certification (e.g., numerosity) is not contingent upon the plaintiff demonstrating that every member of the class suffered a harm. See McCaster v. Darden Restaurants, Inc., 845 F.3d 794, 799 (7th Cir. 2017) (“A case can’t proceed as a class action if the plaintiff seeks to represent a so-called fail-safe class — that is, a class that is defined so that whether a person qualifies as a member depends on whether the person has a valid claim.” (quotation and citation omitted)). In other words, defining the class to be only those who “involuntarily” did not work their shift or left before 3-hours had been worked is defining a “fail-safe class” – i.e., a class whereby every member necessarily has a valid claim and definite injury. If that occurs, class members necessarily “win or lose” based on whether they are defined to be a part of the class. (See Slip Opinion at 24, n.18)
On the final issue the SJC decided – whether an unaccepted offer of full judgment to a named plaintiff moots a plaintiff’s case, and thereby the class action – the SJC held that the Superior Court committed error again. Here, the court dismissed the case because after class certification was denied, the defendant offered the plaintiff full relief, first under Rule 68 and then by way of a certified check, but the plaintiff rejected both offers. 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 retain vitality, even if there is an unaccepted Rule 68 offer. A defendant cannot moot a plaintiff’s case, and thereby eliminate the threat of a class action, by that strategy.
In Campbell-Ewald v. Gomez, however, the defendant’s offer had been made, and not accepted, before the plaintiff had moved for class certification. In Gammela, the SJC was faced with a situation where class certification had been denied. The defendant tried to argue that this situation distinguished its case from that before the U.S. Supreme Court; further, in Gammela, the defendant had tendered to the plaintiff the maximum amount of money to which he might be entitled by certified check, a second distinguishing feature, the defendant argued. The SJC recognized these distinctions from the case before the U.S. Supreme Court, but held that because the plaintiff retained the right to appeal the denial of class certification, whether the plaintiff could represent the class was still a live controversy. The SJC was also unpersuaded that this defense tactic should be viable in general, citing substantial authority in that regard, and ultimately appearing to all but close the door on the defense strategy of mooting a class plaintiff’s case with an offer of judgment.
Ultimately, as noted above, the Gammela case has now been remanded to the Superior Court to examine issues other than numerosity as to whether class certification is proper. Further rulings will be forthcoming in that regard. In the meantime, practitioners and litigants must follow the substantial guidance offered by the SJC in Gammela on issues pertinent to class certification and offers of judgment.