Labor Relations & Wages Hours Update August 2013

By Ronald Miller, J.D.

The First Circuit vacated a district court dismissal of a “hospital compensation” case after finding that the complaint allegations were sufficient to survive a hospital’s motion to dismiss (Manning v Boston Medical Center Corp, August 1, 2013, Lipez, K). In a suit seeking class and collective certification for claims that a hospital system failed to compensate employees by making automatic deductions for meal breaks and for work performed during pre- and post-shift periods, as well as mandatory training sessions, the appeals court found that the essence of the plaintiffs’ complaint contained sufficient factual allegations to make their entitlement to relief plausible.

Employees of Boston Medical Center alleged that the hospital deprived them of their wages through the use of timekeeping policies and employment practices that required them to work through their meal and rest periods, put in extra work time before and after regularly scheduled shifts, and attend mandatory training sessions. The employees sought recovery under the FLSA and Massachusetts common law. They also sought certification of their wage claims as an FLSA collective action and a Rule 23 class action. In response, the hospital moved to dismiss both the federal and state claims and to strike the employees’ class and collective action allegations. The district court granted the hospital’s motion in its entirety. The employees appealed.

However, the First Circuit vacated the dismissal of the FLSA claims against Boston Medical, as well as the Massachusetts common law claims. It also vacated the striking of the employee’s class and collective action allegations. This action was filed against a health care system that operated related organizations in the Boston area. The plaintiffs worked in various capacities at several locations and sought to represent 4,000 hourly workers of Boston Medical, including a broad range of positions. The crux of the employees’ complaint was that Boston Medical did not properly compensate employees for the time spent working during their regular scheduled breaks, as well as time spent before and after scheduled shifts. The employees alleged that they were not allowed to record all their work performed. Additionally, employees were not paid for time spent in required training sessions.

The case numbers are 12-1573 and 12-1653.

Attorneys: Guy A. Talia (Thomas & Soloman) for Elizabeth Manning. C.J. Eaton (Seyfarth Shaw) for Boston Medical Center.

1st Cir.: Failure to offer medical records to support FMLA claim not “excusable;” no fraud in defense argument hemorrhoids not “serious health condition”

By Lorene D. Park, J.D.

Finding that an employee “conspicuously failed” to proffer readily available medical records to support her claim that her hemorrhoids were a “serious health condition” under the FMLA, and that she could not blame defense counsel when the evidence was not taken into account by a district court that granted summary judgment to her employer, the First Circuit affirmed the lower court’s denial of her Rule 60(b) motion for relief from judgment (Nansamba v North Shore Medical Center, Inc, August 12, 2013, Selya, B).

The technical nursing assistant developed hemorrhoids. She told her manager she needed time off to have a colonoscopy and the manager agreed. Three days later, she was fired for performance-related reasons, including patient complaints. The employee filed suit, alleging that her termination was in retaliation for her hemorrhoids-induced absences and violated the FMLA and state law. Finding that the employee failed to show she suffered a “serious health condition,” the court granted summary judgment for the employer on the FMLA claims and declined to exercise jurisdiction over the state law claims.

“New” evidence. The employee moved for reconsideration, alleging her medical records constituted newly discovered evidence that her hemorrhoids satisfied the definition of a “serious health condition.” Specifically, in pre-trial discovery, the defendants repeatedly requested her complete medical records. They first received only records responsive to her release of a “medical record abstract.” A second release signed by the employee was broader but excluded photographs, radiation and x-ray reports, and “personal information not related to treatment.” The records were sent to defense counsel, who forwarded the records as an attachment to an email to the employee’s attorney, along with a note that once again the records were not complete.

The employee’s attorney did not look at the attached records but did have the employee execute a third release. With this release, the defendants obtained more records in, but the records were not substantially different from what was sent to the employee’s attorney in the email. Not realizing the records were basically the same, her attorney argued that the later records were newly discovered evidence. Rejecting this claim, the district court observed that virtually all the records upon which the employee’s motion for reconsideration relied had languished in her attorney’s possession.

The email at issue complained that the defense had “received part of [the plaintiff’s] medical record — but, once again, only part of it.” To the court, the argument that her lawyers believed, based on this, that the records were the same ones first produced (and thus not worth reviewing) was unpersuasive. The text of the email was silent on the issue. Thus, the employee relied on her lawyers’ subjective belief that the two productions were identical. Such unilateral assumptions, without more, were not enough to excuse neglect.

Also cutting against the employee’s position was the fact that her attorneys never sought clarification of the email she now argued was ambiguous. Moreover, she never offered a plausible rationale for bringing an FMLA claim but failing to obtain her full medical record in order to prosecute it. For these reasons, the district court acted within its discretion in denying her motion under Rule 60(b)(1).

No fraud. Likewise, the appeals court found no error in the rejection of the employee’s argument that relief from judgment was appropriate due to fraud, misrepresentation, or misconduct under Rule 60(b)(3). She pointed to the defendants’ summary judgment argument that her hemorrhoids were not a “serious health condition,” and claimed this was “fraudulent” because the defense must have read the earlier medical records (though her attorneys did not) and thus knowingly made an untrue argument.

Finding the employee’s thesis to be a “house of cards,” the appellate court pointed out that it is the burden of the nonmoving party (here, the employee) to proffer sufficient facts to defeat a motion for summary judgment. She was free to counter the defendants’ assertion but she failed to do so, even though her medical records were readily available to her. That the defense did not scour discovery for facts supporting her position was “not a badge of fraud,” it was a “prudent refusal to make their adversary’s case for her.”

The same reasoning undermined the employee’s reliance on statements made by defense counsel at the summary judgment hearing that the employee had “received no medical treatment” or medication for hemorrhoids since her colonoscopy. Such statements were properly viewed as counsel’s characterization of the record, particularly since the employee testified in deposition that she had received neither.

Moreover, the employee failed to show that any misconduct by defense counsel inhibited her from fully and fairly preparing her case. “The short of it is that the plaintiff, through her attorneys, had in her possession prior to crafting her opposition to the summary judgment motion all the medical records that she now claims should have been submitted to the district court.” Their failure to proffer those records was no one’s fault but their own. Consequently, the lower court did not abuse its discretion in denying their motion.

The case number is 13-1266.

Attorneys: Godfrey K. Zziwa (Law Office of Godfrey K. Zziwa) and Alanna G. Cline (Law Office of Alanna G. Cline) for Janat Nansamba. Eugene J. Sullivan, III (Holtz & Reed) for North Shore Medical Center, Inc.

By Lisa Milam-Perez, J.D.

Noting that the adequacy of FLSA complaints against healthcare employers was before it for a third time in recent months, the Second Circuit rearticulated its pleading standards in light of Twombly and Iqbal and the spate of similar litigation within the circuit (DeJesus v HF Management Services, LLC, August 5, 2013, Sack, R). By simply hewing to the language of the FLSA, the plaintiff in the case at hand came up short, the appeals court said, affirming dismissal of her federal and state law overtime claims. “Whatever the precise level of specificity that was required of the complaint,” the court said, the plaintiff “at least was required to do more than repeat the language of the statute.” Contrary to the district court, however, the Second Circuit found the employee sufficiently alleged that she was an “employee” within the meaning of the Act, a hollow victory, however, in light of its other holding.

Overtime suit. The plaintiff worked as a promoter for a company that provides support and administrative services to nonprofit healthcare organizations. Her job involved promoting the insurance programs offered by the employer and recruiting individuals to sign up. As a part of her wage agreement, the employee received a commission for each person she recruited to join the company's programs, in addition to her regular wage. She filed suit alleging that she was denied overtime pay for those weeks that she worked more than 40 hours. She also asserted that, during the few weeks where she did receive overtime pay, the employer failed to include her commission payments in calculating her overtime rate.

The district court held the employee did not sufficiently allege that she was an “employee” within the meaning of the FLSA; also, through her “sole allegation” that she worked more than 40 hours “in some or all weeks,” she failed to make an approximation of her overtime hours that “would render her claim plausible rather than merely conceivable.” While the court below dismissed her complaint without prejudice, the employee chose not to replead. In fact, she disclaimed any intent to amend her complaint, rendering the non-final order “final” so that she could immediately appeal. (The Second Circuit looked upon the tactic with disfavor. “We would like to believe that the decision not to amend was made for some reason that benefitted [the client], rather than as an effort on counsel's part to obtain a judicial blessing for plaintiffs' counsel in these cases to employ this sort of bare-bones complaint.”) At any rate, the misstep proved fatal to her claim. On review, the appeals court agreed that the employee did not plausibly allege that she worked overtime without being properly paid.

Federal courts have “diverged somewhat” as to the specificity required to state a plausible FLSA overtime claim, the court noted. Some courts require an approximation of the total number of uncompensated hours in a given week, others require no such estimate but simply an allegation that the plaintiff worked some amount over 40 hours in a workweek. In Lundy, the Second Circuit formulated its own standard: in order to state a plausible overtime claim, “a plaintiff must sufficiently allege 40 hours of work in a given workweek as well as some uncompensated time in excess of the 40 hours.” The appeals court did not make an approximation of overtime hours a necessity in all cases; however, it did advise that an approximation “may help draw a plaintiff's claim closer to plausibility.” The appeals court revisited the issue in Nakahata, where it found, again, that the employees did not adequately plead their claims.

In the case at hand, the employee provided even less factual specificity in her pleadings, the appeals court observed. She did not estimate her hours in any or all weeks or provide any other factual content. “Indeed, her complaint was devoid of any numbers to consider beyond those plucked from the statute.” She merely tracked the statutory language of the FLSA, “lifting its numbers and rehashing its formulation,” but asserting no specific facts sufficient to raise a plausible inference of an FLSA overtime violation. As such, her overtime claims were inadequate, held the court.

The Second Circuit in Lundy instructed that plaintiffs must allege they worked unpaid overtime in a “given” workweek; this was not “an invitation to provide an all-purpose pleading template alleging overtime in ‘some or all workweeks,’” the court explained. Rather, the standard was intended for employees to provide “some factual context that will ‘nudge’ their claim `from conceivable to plausible.’” While the circuit does not demand that employees keep careful records and plead their overtime hours “with mathematical precisions,” employees are expected to draw on their own memory and experience in preparing complaints with sufficiently developed factual allegations.

Paying heed to the broad interpretation of “employee” set forth in the FLSA, the appeals court noted that it was a “flexible concept” under the Act. Accordingly, district courts within the circuit have found that complaints sufficiently allege “employee” status when they state where the employee worked, outlined his or position, and provided dates of employment. Here, the plaintiff adequately pled that she was an employee and that the defendant was her employer under the FLSA, “especially in light of the expansive scope of the definition employed in the statute.”

The case number is 12-4565.

Attorneys: Abdul Karim Hassan (Law Office of Abdul K. Hassan) for Ramona DeJesus. Seth Laurence Levine (Levine Lee LLP) and Andrew Marks (Littler Mendelson) for HF Management Services, LLC.

By Ronald Miller, J.D.

In light of the Supreme Court’s ruling in American Express Co v Italian Colors Restaurant, the Second Circuit concluded that an employee cannot invalidate a class action waiver provision in an arbitration agreement when the waiver removed the financial incentive for an employee to pursue her FLSA claim in arbitration (Sutherland v Ernst & Young LLP, August 9, 2013, per curiam). Because Italian Colors abrogated the district court’s basis for invaliding the class action waiver provision in this case, the appeals court concluded that it erred in denying Ernst & Young’s motion to compel arbitration based on the fact that individual arbitration may be prohibitively expensive.

The plaintiff, an audit employee, brought a putative class action on behalf of herself and other similarly situated employees to recover “overtime” wages pursuant to the FLSA and the New York Department of Labor’s Minimum Wage Order. Ernst & Young compensated the employee on a “salary only” basis, which meant she was paid a fixed salary, regardless of how many hours she worked—she did not receive any additional compensation for working overtime. However, the employee alleged that she “regularly worked in excess of 40 hours in a work week. When the employee accepted her offer of employment with Ernst & Young, she signed an offer letter which stated that “if an employment related dispute arises between you and the firm, it will be subject to mandatory mediation/arbitration under the terms of the firm’s alternative dispute resolution program.”

The district court was persuaded, relying in large part on the Second Circuit’s analysis in Amex I. The district court denied the motion to compel because it found that the underlying class action waiver provision in the arbitration agreement was unenforceable pursuant to the Second Circuit’s decision in In re American Express Merchants’ Litigation (Amex I), which invalidated a class action waiver provision in an arbitration agreement.