NO. 14-1331
_______________
IN THE
SUPREME COURT OF THE UNITED STATES
SPRING TERM, 2014
_______________
SAUL GOODMAN,
WALTER WHITE,
LYDIA RODARTE-QUAYLE,
and JESSE PINKMAN,
individually and on behalf of
all others similarly situated,
Petitioners,
— against —
GUS CORPORATION, INC.,
Respondent.
_______________
On Writ of Certiorari to the
United States Court of Appeals
for the Thirteenth Circuit
_______________
BRIEF FOR PETITIONERS
_______________
TEAM 35
Attorneys for Petitioners
35
QUESTIONS PRESENTED
I. Whether unpaid interns at a private employer are ―employees‖ under the Fair Labor
Standards Act and Wagner State Labor Law where the interns performed substantive labor
beneficial to the employer that is normally required of paid employees.
II. Whether class action certification under Federal Rule of Civil Procedure 23 and collective
action certification under section 216(b) of the Fair Labor Standards Act should be granted
where the prospective class and collective members have alleged common legal questions
arising out of similar factual circumstances.
i
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TABLE OF CONTENTS
Page
QUESTIONS PRESENTED ............................................................................................................ i
TABLE OF AUTHORITIES ...........................................................................................................v
OPINIONS BELOW ........................................................................................................................1
STATEMENT OF THE CASE........................................................................................................1
SUMMARY OF THE ARGUMENT ..............................................................................................3
ARGUMENT AND AUTHORITIES ..............................................................................................4
I. THE COURT OF APPEALS INCORRECTLY HELD PETITIONERS ARE NOT
―EMPLOYEES‖ UNDER THE FAIR LABOR STANDARDS ACT AND WAGNER STATE
LABOR LAW .......................................................................................................................5
A. The Department of Labor Six-Factor Standard Is the Correct Legal
Standard for Determining ―Employee‖ Status Under the FLSA and State
Labor Law ...................................................................................................................6
1. Statutory interpretation principles justify a broad standard for
determining ―employee‖ status .............................................................................7
a. The FLSA’s plain language supports a broad interpretation of the
term “employee” which includes unpaid interns............................................7
b. The FLSA provides employers with a mechanism for dealing with
inexperienced workers ....................................................................................9
c. The FLSA’s legislative history justifies a broad interpretation of
the term “employee” that includes unpaid interns .......................................10
2. The FLSA‘s underlying purpose justifies a broad standard for
determining employee status that includes unpaid interns .................................11
3. This Court‘s prior precedent supports a broad interpretation of the term
―employee‖ that includes unpaid interns ............................................................12
4. The Department of Labor‘s six-factor test is entitled to substantial
deference .............................................................................................................12
ii
35
B. Under the Department of Labor Six-Factor Standard, Petitioners Are
―Employees‖ .............................................................................................................14
C. Even if This Court Adopts a Narrow ―Primary Benefit‖ Standard for
Determining ―Employee‖ Status Under the FLSA, Petitioners Are
Employees .................................................................................................................17
II. THE COURT OF APPEALS INCORRECTLY HELD PETITIONERS DO NOT SATISFY
CLASS AND COLLECTIVE ACTION CERTIFICATION REQUIREMENTS .................................18
A. Petitioners Satisfy the Requirements for Class Certification Under Federal
Rule of Civil Procedure 23 .......................................................................................19
1. Petitioners satisfy the class action certification requirements under
Rule 23(a)............................................................................................................19
a. Petitioners’ class is so numerous that joinder of all members is
impracticable ................................................................................................19
b. Petitioners’ claims present questions of law and fact common to
the prospective class .....................................................................................20
c. The claims of the representative parties are typical of the claims of
the prospective class .....................................................................................22
d. Petitioners will fairly and adequately protect the interest of the
class...............................................................................................................23
2. Petitioners satisfy the requirements for class certification under
Federal Rule of Civil Procedure 23(b) ................................................................23
a. Petitioners’ claims present common questions of law that
predominate over issues affecting individual class members .......................24
b. Class representation is the superior method for resolving
Petitioners’ claims ........................................................................................25
B. Petitioners Satisfy the Requirements for Collective Action Certification
Under Section 216(b) of the FLSA ...........................................................................25
1. The ad hoc cases-by-case approach is the correct legal standard for
determining whether FLSA claimants are ―similarly situated‖ under
section 216(b)......................................................................................................26
2. Under the ad hoc case-by-case approach, Petitioners are ―similarly
situated‖ ..............................................................................................................28
iii
35
3. Even if this Court adopts the minority Rule 23 approach for
determining the ―similarly situated‖ requirements under section
216(b), Petitioners‘ claims are sufficient ............................................................30
CONCLUSION ..............................................................................................................................30
iv
35
TABLE OF AUTHORITIES
Page(s)
CASES:
Amchem Prods., Inc. v. Windsor,
521 U.S. 591 (1997) .....................................................................................................23, 24
Anderson v. Liberty Lobby, Inc.,
477 U.S. 242 (1986) .............................................................................................................5
Atkins v. Gen. Motors Corp.,
701 F. 2d 1124 (5th Cir. 1983) ..........................................................................................16
Baffa v. Donaldson, Lufkin & Jenrette Sec. Corp.,
222 F.3d 52 (2d Cir. 2000).................................................................................................23
Barlow v. Marion Cnty. Hosp. Dist.,
88 F.R.D. 619 (M.D. Fla. 1980).........................................................................................19
Bolanos v. Norwegian Cruise Lines Ltd.,
212 F.R.D. 144 (S.D.N.Y. 2002) .......................................................................................22
Brooklyn Sav. Bank v. O’Neil,
324 U.S. 697 (1945) ...........................................................................................................17
Comcast Corp. v. Behrend,
133 S. Ct. 1426 (2013) .................................................................................................23, 24
Consol. Rail Corp. v. Town of Hyde Park,
47 F.3d 473 (2d Cir. 1995).................................................................................................20
Damassia v. Duane Reade, Inc.,
250 F.R.D. 152 (S.D.N.Y. 2008) .......................................................................................23
Deposit Guar. Nat’l Bank v. Roper,
445 U.S. 326 (1980) ...........................................................................................................20
Donovan v. Am. Airlines, Inc.,
686 F.2d 267 (5th Cir. 1982) ...............................................................................................7
Donovan v. New Floridian Hotel Inc.,
676 F.2d 468 (11th Cir. 1982) ...........................................................................................16
v
35
Espenscheid v. DirectSat USA, LLC,
705 F.3d 770 (7th Cir. 2013) .......................................................................................26, 28
Falcon v. Starbucks,
580 F. Supp. 2d 528 (S.D. Tex. 2008) ...............................................................................29
Gen. Tel. Co. of the Nw., Inc. v. Equal Emp’t Opportunity
Comm’n,
446 U.S. 318 (1980) ...........................................................................................................19
Genesis Healthcare Corp. v. Symczyk,
133 S. Ct. 1523 (2013) .......................................................................................................28
Glatt v. Fox Searchlight Pictures, Inc.,
No. 11 Civ. 6784 WHP, 2013 WL 2495140
(S.D.N.Y. June 11, 2013) ...................................................................................7, 16, 21, 25
Grayson v. K Mart Corp.,
79 F.3d 1086 (11th Cir. 1996) ...........................................................................................28
Hartford Underwriters Ins. Co. v. Union Planters
Bank, N.A.,
530 U.S. 1 (2000) .................................................................................................................8
Herman v. RSR Sec. Servs. Ltd.,
172 F.3d 132 (2d Cir. 1999).................................................................................................9
Hoffmann-La Roche Inc. v. Sperling,
493 U.S. 165 (1989) ...............................................................................................26, 27, 30
Kaiser Aluminum & Chem. Corp. v. Bonjorno,
494 U.S. 827 (1990) .............................................................................................................7
Kaplan v. Code Blue Billing & Coding, Inc.,
504 F. App‘x 831 (11th Cir. 2013) ................................................................................6, 15
LaChapelle v. Owens-Ill., Inc.,
513 F.2d 286 (5th Cir. 1975) .............................................................................................28
Marisol A. v. Giuliani,
126 F.3d 372 (2d Cir. 1997)...............................................................................................22
McLaughlin v. Ensley,
877 F.2d 1207 (4th Cir. 1989) ...................................................................................6, 7, 18
vi
35
Moore v. PaineWebber, Inc.,
306 F.3d 1247 (2d Cir. 2002).............................................................................................24
O’Brien v. Ed Donnelly Enters., Inc.,
575 F.3d 567 (6th Cir. 2009) .............................................................................................29
Perrin v. United States,
444 U.S. 37 (1979) .............................................................................................................27
Rawls v. Augustine Home Health Care, Inc.,
244 F.R.D. 298 (D. Md. 2007) ...........................................................................................29
Reich v. Parker Fire Prot. Dist.,
992 F.2d 1023 (10th Cir. 1993) ...............................................................................7, 13, 15
Robidoux v. Celani,
987 F.2d 931 (2d Cir. 1993)...............................................................................................20
Robinson v. Shell Oil Co.,
519 U.S. 337 (1997) .............................................................................................................8
Se. Cmty. Coll. v. Davis,
442 U.S. 397 (1979) ...........................................................................................................27
Skidmore v. Swift & Co.,
323 U.S. 134 (1944) .....................................................................................................12, 13
Solis v. Laurelbrook Sanitarium & Sch. Inc.,
642 F.3d 518 (6th Cir. 2011) .........................................................................................6, 18
Thiessen v. Gen. Elec. Capital Corp.,
267 F.3d 1095 (10th Cir. 2001) ...................................................................................26, 27
Tony & Susan Alamo Found. v. Sec’y of Labor,
471 U.S. 290 (1985) ...........................................................................................................17
United States v. Mead Corp.,
533 U.S. 218 (2001) ...........................................................................................................14
United States v. Rosenwasser,
323 U.S. 360 (1945) .............................................................................................................8
Walling v. Portland Terminal Co.,
330 U.S. 148 (1947) ................................................................................................... passim
vii
35
Walling v. Shenandoah-Dives Mining Co.,
134 F.2d 395 (10th Cir. 1943) ...........................................................................................13
Wal-Mart Stores, Inc. v. Dukes,
131 S. Ct. 2541 (2011) .................................................................................................20, 21
Xuedan Wang v. Hearst Corp.,
293 F.R.D. 489 (S.D.N.Y. 2013) .......................................................................................22
Zheng v. Liberty Apparel Co.,
355 F.3d 61 (2d Cir. 2003)...................................................................................................6
STATUTES:
29 U.S.C. § 202 (2006) ..................................................................................................................11
29 U.S.C. § 203 (2006) ..........................................................................................................5, 8, 10
29 U.S.C. § 206 (2006) ....................................................................................................................8
29 U.S.C. § 207 (2006) ....................................................................................................................8
29 U.S.C. § 214 (2006) ....................................................................................................................9
29 U.S.C. § 216(b) (2006) ..................................................................................................... passim
29 C.F.R. § 520.300 (1978) .............................................................................................................9
29 C.F.R. § 520.408(a) (1978) .........................................................................................................9
RULES:
Fed. R. Civ. P. 23(a) .............................................................................................................. passim
Fed. R. Civ. P. 23(b) ..............................................................................................19, 23, 24, 25, 27
Fed. R. Civ. P. 56(c) ........................................................................................................................5
viii
35
DEPARTMENT OF LABOR OPINIONS:
U.S. Dep‘t of Labor, Wage & Hour Div.,
Fact Sheet No. 71: Internship Programs Under the
Fair Labor Standards Act (Apr. 2010) ....................................................................... passim
LEGISLATIVE MATERIALS:
81 Cong. Rec. 7656–57 (1937) ......................................................................................................10
INTERNET SOURCES:
Ross Eisenbrey,
Unpaid Internships: A Scourge on the Labor
Market,
http://www.epi.org/blog/unpaid-internshipsscourge-labor-market/ (last visited Feb. 1, 2014) ..............................................................11
Nicolas Pologeorgis,
The Impact Unpaid Internships Have on the Labor
Market,
http://www.investopedia.com/articles/economics/
12/impact-of-unpaid-internships.asp
(last visited Feb. 5, 2014) ...................................................................................................11
OTHER SOURCES:
William G. Whittaker,
The Fair Labor Standards Act (2003) ...............................................................................11
ix
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OPINIONS BELOW
The unreported opinion of the United States District Court for the District of Wagner
appears in the record at pages 1–33, 54. The unreported opinion of the United States Court of
Appeals for the Thirteenth Circuit appears in the record at pages 34–53.
STATEMENT OF THE CASE
I.
STATEMENT OF THE FACTS
Gus Corporation is incorporated in the State of Wagner and manufactures, markets and
sells electronic cigarettes (―e-cigarettes‖). R. at 2. After experiencing financial hardships due to
the economic downturn in 2008, the company created an unpaid internship program for
undergraduate and law students at Wagner State University (―WSU‖) and Wagner State
University School of Law (―WSUSOL‖). R. at 2. Through this program, the company hired
interns to work in each of its four major divisions: (1) Legal, (2) Research and Development
(―R&D‖) (3) Corporate, and (4) Manufacturing. R. at 2. This case involves issues arising out of
this internship program.
Gus Corporation’s Internship Program.
To facilitate its internship program, Gus
Corporation appointed one supervisor for each division and gave them discretion to structure
their internship program based on the division‘s needs. R. at 2. Manufacturing and R&D interns
used technology specific to Gus Corporation‘s products. R. at 5–6. Legal interns assisted in the
company‘s legal representation. R. at 15. Corporate interns marketed the company‘s products.
R. at 15.
Moreover, interns from each division were required to attend Summer Intern
Orientation to learn about the company and all interns were scheduled to attend weekly
company-wide seminars with current employees. R. at 3.
1
35
The 2012 Intern Class. In 2012 the company accepted sixteen interns, designating four
interns to each company division. R. at 3. Saul Goodman, Walter White, Lydia Rodarte-Quayle,
and Jesse Pinkman (―Petitioners‖) were among the sixteen hired and each worked in a different
division. R. at 3. Saul Goodman was hired to work in the company‘s Legal division. R. at 3.
Walter White was hired to work in the company‘s R&D division. R. at 4. Lydia Rodarte-Quayle
was hired to work in the company‘s Corporate division. R. at 5. Jesse Pinkman was hired to
work in the company‘s manufacturing division. R. at 6.
The Email Giving Rise to This Lawsuit.
During her internship, Rodarte-Quayle
discovered an email stating that the company was planning to have interns market products at
nightclubs on Saturday nights. R. at 6. After disclosing this information to the other interns,
Petitioners decided this was the last straw in an already unfair system that allowed Gus
Corporation to acquire free substantive labor. R. at 6–7. Petitioners subsequently filed this
lawsuit.
II.
NATURE OF PROCEEDINGS
The District Court.
Petitioners sued on behalf of all interns who worked for Gus
Corporation between May 1, 2008 and September 1, 2012, requesting relief under the FLSA and
Wagner state labor law, and for class and collective action certification under Federal Rule of
Civil Procedure 23 and section 216(b) of the FLSA. R. at 1–2. Both parties filed summary
judgment motions. R. at 1. The district court granted Petitioners‘ summary judgment motion,
holding Petitioners were ―employees‖ under the FLSA and state labor law and had satisfied the
requirements for class and collective action certification. R. at 33.
The Court of Appeals. Gus Corporation appealed to the Thirteenth Circuit Court of
Appeals. R. at 34. The court of appeals reversed on both issues. R. at 53.
2
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SUMMARY OF THE ARGUMENT
The court of appeals incorrectly reversed the district court‘s grant of Petitioners‘ summary
judgment motion. Under the correct legal standards, Petitioners are ―employees‖ within the
meaning of the FLSA and Wagner state labor law, and have satisfied the requirements for class
certification under Federal Rule of Civil Procedure 23 and collective action certification under
section 216(b) of the FLSA. This Court should reverse the court of appeals‘ judgment.
I.
The Department of Labor six-factor standard is the correct legal standard for determining
whether unpaid interns are ―employees.‖ It is a broad standard and is supported by this Court‘s
prior precedent and the FLSA‘s plain language, legislative history and underlying purposes.
Moreover, the Department of Labor has extensive experience dealing with issues arising under
the FLSA and created its six-factor test for the specific purpose of determining whether unpaid
interns are ―employees‖ under the Act.
Under the Department of Labor six-factor standard, Petitioners are ―employees.‖
Petitioners‘ internships were structured around Gus Corporation‘s actual operations. These
internships provided Gus Corporation with free substantive labor normally performed by fulltime paid employees, increased the marketability of the company‘s products and assisted the
development of the company‘s proprietary technology. Petitioners accepted internships with the
expectation of being offered full-time employment and provided Gus Corporation with an
immediate advantage while the company was experiencing financial hardship. Even under the
narrow ―primary benefit‖ standard, these circumstances justify ―employee‖ status under the
FLSA. This Court should reverse the judgment of the court of appeals.
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II.
Petitioners also satisfy the requirements for class action certification under Rule 23 and
collective action certification under section 216(b) of the FLSA. Petitioner‘ state labor law
claims satisfy the requirement for class certification under Rule 23.
Petitioners‘ class is
sufficiently numerous to make joinder impracticable and ever class member has asserted the
same legal theory. Moreover, the factual circumstances surrounding each member‘s claim are
sufficiently similar to allow for class-wide resolution of common issues. Petitioners‘ FLSA
claims satisfy the requirements for collective action certification under section 216(b). The
section‘s plain language and legislative history justify holding the collective action certification
process to a different and lesser standard than Rule 23 class actions. Under the appropriate legal
standard, Petitioners‘ claims are sufficient. Petitioners have alleged similar legal theories and
factual circumstances and Gus Corporation has failed to allege defenses against individual
members of Petitioners‘ collective. Even under Rule 23 standards, Petitioners satisfy section
216(b)‘s requirements. This Court should reverse the court of appeals‘ judgment.
ARGUMENT AND AUTHORITIES
Petitioners challenge the court of appeals‘ reversal of its summary judgment motion
requesting relief under the FLSA and state labor law and for class and collective action
certification pursuant to Federal Rule of Civil Procedure 23 (―Rule 23‖) and section 216(b) of
the FLSA. This appeal focuses on the court of appeals‘ erroneous interpretation of the term
―employee‖ under the FLSA and state labor law, and its improper application of the
requirements for class action certification under Rule 23 and collective action certification under
section 216(b). Both issues concern purely legal questions.
4
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The court of appeals incorrectly reversed the district court‘s grant of Petitioners‘ motion for
summary judgment. Summary judgment is proper when no genuine issue exists as to any
material fact, and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P.
56(c). Genuine issues of material fact exist only when a ―fair minded jury could return a verdict
for the [non-moving party] on the evidence presented.‖ Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 255 (1986). This Court reviews the denial of summary judgment de novo, applying
the same standard as the district court. Id.
Under the applicable standard of review, the court of appeals erred. Because Petitioners
are ―employees‖ under the FLSA and state labor law, and because Petitioners satisfy the
requirements for class certification under Rule 23 and collective certification under section
216(b) of the FLSA, this Court should reverse the court of appeals‘ judgment.
I.
THE COURT OF APPEALS INCORRECTLY HELD PETITIONERS ARE NOT “EMPLOYEES”
UNDER THE FAIR LABOR STANDARDS ACT AND WAGNER STATE LABOR LAW.
Petitioners are ―employees‖ under the FLSA and state labor law.1 The FLSA sets forth the
standards employers must meet when paying employees. See 29 U.S.C. §§ 201–219 (2006). It
establishes baseline labor standards—including minimum wage and overtime provisions—for all
non-exempt ―employees.‖ 29 U.S.C. § 203. Petitioners‘ appeal concerns whether their status as
interns qualifies them as ―employees‖ under the FLSA and state labor law. Because Petitioners
satisfy this standard, this Court should reverse the court of appeals‘ judgment.
1
The statutory definition of ―employee‖ and ―employ‖ are nearly identical under the FLSA and
state labor law and are evaluated under the same legal analysis. R. at 8, 35.
5
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A. The Department of Labor Six-Factor Standard Is the Correct Legal
Standard for Determining “Employee” Status Under the FLSA and State
Labor Law.
In Walling v. Portland Terminal Co., this Court established the framework for the different
legal standards courts have used to analyze FLSA cases involving unpaid interns. 330 U.S. 148,
150–51 (1947). There, this Court determined that a ―trainee‖ is not an ―employee‖ within the
meaning of the FLSA if the trainee provides the employer with no ―immediate advantage‖ and
works ―solely for his personal purpose or pleasure . . . without the promise or expectation of
compensation.‖ Id. at 152–53.
Since Portland Terminal, different standards for determining whether unpaid interns
qualify as ―employees‖ under the FLSA have emerged. The Department of Labor applies a
broad six-factor test for determining whether an intern is an employee.2 See U.S. Dep‘t of Labor,
Wage & Hour Div., Fact Sheet No. 71: Internship Programs Under the Fair Labor Standards Act
(Apr. 2010) (―Fact Sheet # 71‖). The Second and Eleventh Circuit courts apply an ―economic
realities‖ test.3 See, e.g., Kaplan v. Code Blue Billing & Coding, Inc., 504 F. App‘x 831, 834
(11th Cir.), cert. denied, 134 S. Ct. 618 (2013); Zheng v. Liberty Apparel Co., 355 F.3d 61, 66
(2d Cir. 2003). The Fourth, Fifth and Sixth Circuit courts apply a ―primary benefit‖ test.4 See,
e.g., Solis v. Laurelbrook Sanitarium & Sch. Inc., 642 F.3d 518, 529 (6th Cir. 2011); McLaughlin
2
See infra § I(B) for full six-factor test.
3
This standard focuses on the ―economic realities‖ of the situation at hand, treating the
Department of Labor factors as relevant factors in the overall consideration. See Zheng v.
Liberty Apparel Co., 355 F.3d 61, 66 (2d Cir. 2003). The Eleventh Circuit court has also applied
the Department of Labor six-factor test as an alternative standard to the ―economic realities‖ test.
See Kaplan v. Code Blue Billing & Coding, Inc., 504 F. App‘x 831, 834–35 (11th Cir.), cert.
denied, 134 S. Ct. 618 (2013).
4
This standard focuses ―on the benefits flowing to each party‖ as a result of the internship. See
Solis v. Laurelbrook Sanitarium & Sch. Inc., 642 F.3d 518, 529 (6th Cir. 2011).
6
35
v. Ensley, 877 F.2d 1207, 1209 (4th Cir. 1989); Donovan v. Am. Airlines, Inc., 686 F.2d 267, 272
(5th Cir. 1982). The Tenth Circuit court and district courts in the Second Circuit apply a totality
of the circumstances test.5 See, e.g., Reich v. Parker Fire Prot. Dist., 992 F.2d 1023, 1027 (10th
Cir. 1993); Glatt v. Fox Searchlight Pictures, Inc., No. 11 Civ. 6784 WHP, 2013 WL 2495140,
at *12 (S.D.N.Y. June 11, 2013). By applying the ―primary benefit‖ standard to conclude
Petitioners are not ―employees,‖ the court of appeals joined this circuit split. R. at 38, 45.
This Court should clarify this circuit split and adopt the Department of Labor six-factor
standard because it is consistent with the principles of statutory interpretation, is supported by
public policy and this Court‘s prior precedent and is entitled to deference.
1. Statutory interpretation principles justify a broad standard for
determining “employee” status.
Congress unambiguously intended to create a broad standard for determining whether
claimants are ―employees‖ under the FLSA. The Act‘s plain language broadly defines the terms
―employee‖ and ―employ‖ and provides employers with mechanisms for dealing with
inexperienced workers. Further, the FLSA‘s legislative history provides additional evidence that
Congress intended for the ―employee‖ standard to apply broadly.
The court of appeals
incorrectly applied a narrow ―primary benefit‖ standard.
a. The FLSA’s plain language supports a broad interpretation of the
term “employee” which includes unpaid interns.
The FLSA‘s plain language supports a broad standard for determining ―employee‖ status
that includes unpaid interns. To interpret a statute, this Court begins with ―the language of the
statute itself.‖ Kaiser Aluminum & Chem. Corp. v. Bonjorno, 494 U.S. 827, 835 (1990). When
5
This standard was adopted by the district court and considers the same six factors articulated in
the Department of Labor six-factor test, but rejects the contention that all six factors must be
satisfied. See Reich v. Parker Fire Prot. Dist., 992 F.2d 1023, 1027 (10th Cir. 1993).
7
35
the statutory language is clear, this Court enforces ―it according to its terms.‖
Hartford
Underwriters Ins. Co. v. Union Planters Bank, N.A., 530 U.S. 1, 6 (2000). In determining
whether statutory language is clear or ambiguous, this Court considers ―the language of the
statute itself, the specific context in which that language is used, and the broader context of the
statute as a whole.‖ Robinson v. Shell Oil Co., 519 U.S. 337, 341 (1997).
Section 206(a) of the FLSA requires an employer to pay ―each of his employees who in
any workweek is engaged in commerce or in the production of goods for commerce, or is
employed in an enterprise engaged in commerce or in the production of goods for commerce
. . . .‖ 29 U.S.C. § 206. Section 207(a) prohibits an employer from employing any employee for
a period longer than the specified hours in any week without paying overtime compensation ―at a
rate not less than one and one-half times the regular rate at which he is employed.‖ 29 U.S.C.
§ 207. The term ―employee‖ is defined in section 203(e) to include ―any individual employed by
an employer‖ and the term ―employ‖ is defined in section 203(g) as ―to suffer or permit to
work.‖ 29 U.S.C. § 203 (e)(1), (g).
This expansive language clearly evidences a congressional directive that the FLSA provide
broad coverage. As this Court stated in United States v. Rosenwasser,
A broader or more comprehensive coverage of employees within the stated categories
would be difficult to frame. The use of the words ‗each‘ and ‗any‘ to modify
‗employee,‘ which in turn is defined to include ‗any‘ employed individual, leaves no
doubt as to the Congressional intention to include all employees within the scope of
the Act unless specifically excluded.
323 U.S. 360, 363 (1945) (emphasis added). The FLSA does not specifically exclude unpaid
interns.
Moreover, this Court and other courts have repeatedly recognized the expansive nature of
this language as well. See Portland Terminal Co., 330 U.S. at 150–51 (noting the definition of
8
35
the term ―employee‖ under the FLSA is ―comprehensive enough to require its application to
many persons and working relationships, which prior to this Act, were not deemed to fall within
an employer-employee category‖); Herman v. RSR Sec. Servs. Ltd., 172 F.3d 132, 139 (2d Cir.
1999) (recognizing the plain language and the remedial nature of the FLSA supports an
expansive interpretation of ―its provisions so that they will have the widest possible impact‖).
The FLSA‘s plain language supports a broad interpretation that includes unpaid interns.
b. The FLSA provides employers with a mechanism for dealing with
inexperienced workers.
To justify its application of the narrow ―primary benefit‖ standard, the court of appeals
reasoned that Petitioners should not be ―employees‖ because they received non-monetary
benefits through Gus Corporation‘s internship program while providing minimal benefit to the
company through their work product. R. at 44–45. This analysis is flawed and contrary to
Congress‘ intent.
The FLSA‘s plain language reveals that Congress specifically resolved the ―inexperienced
worker‖ issue by providing employers with mechanisms for dealing with these workers in the
FLSA‘s plain language.
See 29 U.S.C. § 214(a); 29 C.F.R. § 520.300 (1978); 29 C.F.R.
§ 520.408(a) (1978). These mechanisms permit employers to pay subminimum wage to learners,
apprentices and other workers with little to no experience. No FLSA provision allows employers
to avoid paying inexperienced workers due to their lack of experience. No FLSA provision
allows employers to avoid paying inexperienced workers due to the minimal benefit an employer
may receive from their work.
No FLSA provision allows employers to avoid paying
inexperienced workers due to the corresponding benefit these workers may receive from an
employment setting.
9
35
Moreover, the policy behind Congress‘ creation of these mechanisms reinforces the
argument that inexperienced workers like unpaid interns should be included within the FLSA‘s
coverage. As this Court recognized in Portland Terminal,
[m]any persons . . . have so little experience in particular vocations that they are
unable to get and hold jobs at standard wages. Consequently, to impose a minimum
wage as to them might deprive them of all opportunity to secure work, thereby
defeating one of the Act‘s purposes, which was to increase opportunities for gainful
employment.
330 U.S. at 151. Although a worker may be ―inexperienced,‖ may provide little benefit to an
employer, or may increase his ―opportunities for gainful employment‖ due to the employment
position, exclusion from FLSA coverage is not justified. Congress intended that inexperienced
workers like unpaid interns to be included within the FLSA‘s coverage.
c. The FLSA’s legislative history justifies a broad interpretation of the
term “employee” that includes unpaid interns.
Under the FLSA‘s current version, Congress gave the terms ―employee‖ and ―employ‖ the
broadest definitions possible. See 29 U.S.C. § 203(e)(1), (g); see also Portland Terminal Co.,
330 U.S. at 150–51 (establishing the definition of ―employee‖ encompasses working
relationships, which were not previously ―deemed to fall within an employer employee
category‖). Legislative history reveals the creation of an expansive definition was a conscious
choice by Congress. See, e.g., 81 Cong. Rec. 7656–57 (1937) (―The committee . . . reached the
conclusion that the definition of employee as given . . . is the broadest definition that has ever
been included in one act . . . .‖) (emphasis added) (statement of Sen. Hugo Black). To construe
coverage under FLSA narrowly under a ―primary benefit‖ standard would subvert this intent.
The FLSA‘s legislative history supports a broad standard that includes unpaid interns.
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2. The FLSA’s underlying purpose justifies a broad standard for
determining employee status that includes unpaid interns.
The FLSA‘s underlying purpose also weighs in favor of adopting a broad interpretation of
the term ―employee‖ that includes unpaid interns. Congress enacted the FLSA to correct poor
―labor conditions detrimental to the maintenance of the minimum standard of living necessary
for health, efficiency, and general well-being of workers.‖ 29 U.S.C. § 202. Adopting a narrow
standard that excludes unpaid interns from FLSA coverage would undermine this purpose.
Unlike paid internships, unpaid internships do very little for the job prospects of the
students who take them, lead to the displacement of paid workers, and stagnate the economy by
depressing future wages and labor markets. See, e.g., Nicolas Pologeorgis, The Impact Unpaid
Internships Have on the Labor Market, http://www.investopedia.com/articles/economics/12/
impact-of-unpaid-internships.asp (last visited Feb. 5, 2014) (recognizing employers can use
unpaid internship programs as mechanisms for obtaining free labor, resulting in the displacement
of paid employees, increases in unemployment and depression in wages); see Ross Eisenbrey,
Unpaid Internships: A Scourge on the Labor Market, http://www.epi.org/blog/unpaidinternships-scourge-labor-market/ (last visited Feb. 1, 2014) (noting studies show unpaid
internships provide no advantage to full-time job prospects and, on average, students who had
taken unpaid internships receive a starting salary $18,000 less than students with paid internships
and $3,700 less than students who never interned).
These are the type of problems Congress specifically sought to prevent by creating the
FLSA. See William G. Whittaker, The Fair Labor Standards Act, at 3 (2003) (recognizing
creation of minimum wage marked a conscious decision by Congress to curb deflationary forces,
increase the purchasing power of many of the nation‘s workers, and improve many workers‘
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standard of living). The FLSA‘s underlying purpose justifies a broad interpretation that includes
unpaid interns.
3. This Court’s prior precedent supports a broad interpretation of the
term “employee” that includes unpaid interns.
In Walling v. Portland Terminal Co., this Court held that railroad ―trainees‖ were not
―employees‖ because the railroad received no ―immediate advantage‖ from any work done by
the trainees, the trainees worked solely for their own personal purposes and their work served
only their own interest. 330 U.S. at 153. The court of appeals reasoned this holding justified
using a narrow ―primary benefit‖ test for determining ―employee‖ status under the FLSA. R. at
38. It does not. Instead, this Court‘s holding in Portland Terminal established a narrow
exception to FLSA coverage for non-employee ―trainees‖ not applicable in this case. R. at 12.
In fact, this Court specifically warned against adopting a narrow construction like the one
advocated by the court of appeals:
We have not ignored the argument that such a holding may open up a way for evasion
of the law. But there are neither findings nor charges here that these arrangements
were either conceived or carried out in such a way as to violate either the letter or the
spirit of the minimum wage law. We therefore have no case before us in which an
employer has evasively accepted the services of beginners at pay less than the legal
minimum without having obtained permits from the administrator. It will be time
enough to pass upon such evasions when it is contended that they have occurred.
Id. Clearly, the ―trainee‖ exception was not intended to create a narrow standard for determining
―employee‖ status that would exclude unpaid interns. This Court‘s prior precedent supports the
inclusion of unpaid interns within the FLSA‘s coverage.
4. The Department of Labor’s six-factor test is entitled to substantial
deference.
In Skidmore v. Swift & Co., this Court set forth the standard for proper judicial treatment of
non-regulatory guidelines issued by federal agencies. 323 U.S. 134, 140 (1944). There, this
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35
Court established that the level of deference afforded to agency interpretations depends on ―the
thoroughness evident in its consideration, the validity of its reasoning, its consistency with
earlier and later pronouncements, and all those factors which give it power to persuade, if
lacking power to control.‖ 323 U.S. 134, 140 (1944). Under this standard, the Department of
Labor six-factor test is entitled to substantial deference.
Congress created the Department of Labor for the purpose of administering and enforcing
the FLSA. Walling v. Shenandoah-Dives Mining Co., 134 F.2d 395, 397 (10th Cir. 1943).
Through this authority, the Department of Labor has gained extensive experience dealing with
employment issues arising under the Act. See Reich, 992 F.2d at 1026 (recognizing the Wage
and Hour Administrator of the Department of Labor has issued numerous letter opinions in
response to ―inquiries concerning trainees‘ employment status‖). In fact, the Department of
Labor issued its six-factor standard for the specific purpose of clarifying when unpaid interns are
employees under the FLSA.6 See Fact Sheet #71. This six-factor standard is derived from this
Court‘s analysis in Portland Terminal and is consistent with the FLSA‘s plain language,
legislative history and underlying purpose. See supra § I(A)(1), (2), (3). Moreover, it is a
bright-line approach that can be easily applied by employers.
Under similar circumstances, this Court has afforded agency interpretations substantial
deference.
See, e.g., Skidmore, 323 U.S. at 139–40 (giving deference to the rulings,
interpretations and opinions of the Department of Labor relating to overtime compensation
because they were made ―in pursuance of official duty, based upon more specialized experience
and broader investigations and information than is likely to come to a judge in a particular
6
Although issued in 2010, Fact Sheet #71‘s six-factor test has been used ―in Wage and Hour
Administration opinions since at least 1967‖ to determine ―trainee‖ status under the FLSA.
Reich, 992 F.2d at 1027.
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case‖); United States v. Mead Corp., 533 U.S. 218, 235 (2001) (holding an agency‘s
classification ruling was entitled to substantial deference where the regulatory scheme was
―highly detailed‖ and could ―bring the benefit of specialized experience to bear on the subtle
questions in the case‖). The Department of Labor six-factor test is entitled to deference.
B. Under the Department of Labor Six-Factor Standard, Petitioners Are
“Employees.”
Fact Sheet #71 sets forth a broad six-factor standard for determining whether an unpaid
intern is an ―employee.‖ See Fact Sheet #71. The standard acts as an exclusion to coverage
under the FLSA and establishes that unpaid interns are not ―employees‖ if all six factors are
satisfied. 7 Id. Under this standard, Petitioners are employees as a matter of law.
First, Petitioners‘ internships were not structured around a classroom or academic
experience. This factor considers whether a company‘s internship program is ―structured around
a classroom or academic experience as opposed to the employer‘s actual operations.‖
Id.
Petitioners‘ internships were structured around Gus Corporation‘s actual operations. R. at 14.
Every intern performed work required by full-time Gus Corporation employees and no intern
received training similar to that of a classroom setting. R. at 14, 16. These are the type of
circumstances necessary to satisfy this standard. See Fact Sheet #71 (recognizing that this factor
is satisfied where interns are required to perform work effectuating employers‘ normal
7
Interns are employees if any of the following elements are not met: (1) the internship, even
though it includes actual operation of the facilities of the employer, is similar to training which
would be given in an educational environment; (2) the internship experience is for the benefit of
the intern; (3) the intern does not displace regular employees, but works under close supervision
of existing staff; (4) the employer that provides the training derives no immediate advantage
from the activities of the intern; and on occasion its operations may actually be impeded; (5) the
intern is not necessarily entitled to a job at the conclusion of the internship; and (6) the employer
and the intern understand that the intern is not entitled to wages for the time spent in the
internship. Id.
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operations). Moreover, the fact that some interns received academic credit is not dispositive
under this analysis. See Kaplan, 504 F. App‘x at 834 (recognizing receipt of academic credit is
only one factor in the ―employee‖ analysis).
This factor weighs in favor of classifying
Petitioners as ―employees.‖
Second, Gus Corporation‘s internship program did not benefit Petitioners. This factor
considers whether an ―internship provides the individual with skills that can be used in multiple
employment settings, as opposed to skills particular to one employer‘s operation.‖ Fact Sheet
#71. Petitioners did not receive skills applicable in multiple employment settings. Manufacturing and R&D interns used technology specific to Gus Corporation. R. at 5–6. Legal interns
worked to protect Gus Corporation from liability.
R. at 15. Corporate interns made Gus
Corporation products more marketable. R. at 15. These are the type of circumstances necessary
to satisfy this standard. See e.g., Reich, 992 F.2d at 1028 (recognizing to satisfy this factor,
interns must be provided with ―skills that are fungible within the industry‖). This factor weighs
in favor of classifying Petitioners as employees.
Third, Petitioners displaced paid employees. This factor considers whether an employer
used ―interns as substitutes for regular workers or to augment its existing workforce during
specific time periods.‖ Fact Sheet #71. Gus Corporation was hit hard by the 2008 financial
crisis. R. at 2. This is when it created its unpaid internship program. R. at 2. The company
specifically used interns to replace one employee on maternity leave and every intern performed
work full-time company employees were traditionally required to perform. R. at 16. This
justifies classifying Petitioners as employees. See Fact Sheet #71 (recognizing that interns will
be viewed as employees ―if an employer would have hired additional employees or required
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existing staff to work additional hours had the interns not performed the work‖). This factor
weighs in favor of classifying Petitioners as employees.
Fourth, Gus Corporation derived an immediate advantage from Petitioners. This factor
considers whether interns are ―performing productive work‖ for the employer in the form of
filing, clerical work, or assisting customers.
Fact Sheet #71.
Petitioners provided Gus
Corporation with free labor. Legal interns saved Gus Corporation costs by using their schoolprovided LeiboLaw and PegsusNexus accounts to perform research projects, instead of company
accounts.8 R. at 17. R&D interns provided insight into the positive health effects of e-cigarettes.
R. at 17. Manufacturing interns helped increase the company‘s efficiency by assisting engineers
in improving clerical and industrial workflows. R. at 6. Corporate interns performed work for
absent paid employees.
R. at 5.
These circumstances justify classifying Petitioners as
employees. See Atkins v. Gen. Motors Corp., 701 F. 2d 1124, 1129 (5th Cir. 1983) (recognizing
employers may derive no immediate advantage from interns‘ work unless the advantage is de
minimis). Moreover, the fact that some interns were supervised or that other employees could
have performed the duties more efficiently is not dispositive of the ―immediate advantage‖
inquiry. See Donovan v. New Floridian Hotel, Inc., 676 F.2d 468, 471 n.3 (11th Cir. 1982);
Glatt, 2013 WL 2495149, at *13. This factor weighs in favor of classifying Petitioners as
―employees.‖
Fifth, Petitioners accepted positions for the purpose of obtaining full-time employment.
This factor considers whether the internships were ―used by the employer as a trial period for
individuals seeking employment at the conclusion of the internship period.‖ Fact Sheet #71.
Nearly half of all students participating in Gus Corporation‘s internship program were offered
8
LeiboLaw and PegsusNexus are legal databases similar to Westlaw and LexisNexis. R. at 4.
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full-time employment. R. at 3. Petitioners accepted positions with this purpose in mind. R. at
18. As recognized in Fact Sheet #71, when an ―intern is placed with the employer for a trial
period with the expectation that he or she will then be hired on a permanent basis, that individual
generally would be considered an employee under the FLSA.‖ Fact Sheet # 71. This factor
weighs in favor of classifying Petitioners as employees.
Sixth, although Petitioners understood they were not entitled to payment, this factor bears
little weight in this analysis and has often been disregarded. In fact, this Court has consistently
noted the dangers of adopting a standard that excludes persons who understand they are not
entitled to compensation from FLSA coverage. See Tony & Susan Alamo Found. v. Sec’y of
Labor, 471 U.S. 290, 301–02 (1985) (recognizing the purposes of the FLSA require its
application even to persons who willingly decline its protections because any other standard
would allow employers ―to use superior bargaining power to coerce employees‖ into waiving
their rights under the Act); Brooklyn Sav. Bank v. O’Neil, 324 U.S. 697, 710 (1945) (recognizing
that prohibiting such exclusions protects employers from anticompetitive behavior as some
employers may have employees more willing to waive FLSA coverage than others).
Because each factor weighs in favor of employee status, under either the all-inclusive
Department of Labor six-factor standard or the totality of the circumstances test adopted by the
district court, Petitioners are employees under the FLSA as a matter of law.
C. Even if This Court Adopts a Narrow “Primary Benefit” Standard for
Determining “Employee” Status Under the FLSA, Petitioners Are
Employees.
To determine ―employee‖ status under the ―primary benefit‖ standard, courts weigh the
―benefits flowing to each party‖ to determine who most greatly benefited from the internship
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experience. See Laurelbrook, 642 F.3d at 529; Ensley, 877 F.2d at 1209. Gus Corporation
received the greatest benefit from Petitioners‘ internships.
Any benefit Petitioners may have received while interning—either through exposure to
new skills or improved work habits—were minimal compared to those received by Gus
Corporation. Gus Corporation saved costs and avoided paying full-time employees by requiring
interns perform substantive labor. R. at 16. The company reaped public relation benefits from
intern publications regarding the positive health effects of e-cigarettes. R. at 15. It received
substantial increases in revenue due to intern assistance in designing proprietary technology. R.
at 15.
It received free legal representation by requiring interns to assist in protecting the
company from liability. R. at 15. Its products became more popular on a global scale due to
intern marketing. R. at 15. This is the type of ―primary benefit‖ necessary to satisfy this
standard. See Ensley, 877 F.2d at 1210 (concluding that workers were ―employees‖ where the
workers received general skills from job experience and the employer ―received the benefit of
aid to his regular employees while they performed their normal duties‖).
Petitioners are
―employees‖ under the ―primary benefit‖ standard.
II.
THE COURT OF APPEALS INCORRECTLY HELD PETITIONERS DO NOT SATISFY CLASS
AND COLLECTIVE ACTION CERTIFICATION REQUIREMENTS.
Petitioners also satisfy the requirements for class and collective action certification.
Petitioners‘ claims request class action certification for its state labor law claims and collective
action certification for its FLSA claims on behalf of all unpaid interns working at Gus
Corporation between May 1, 2008 and September 1, 2012. R. at 21. The court of appeals
incorrectly denied Petitioners‘ request for certification under both standards. Because Petitioners
satisfy the requirements for class and collective action certification under Rule 23 and section
216(b) of the FLSA, this Court should reverse the court of appeals‘ judgment.
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A. Petitioners Satisfy the Requirements for Class Certification Under Federal
Rule of Civil Procedure 23.
Petitioners satisfy the requirements for class certification under Rule 23. Rule 23 governs
class actions and provides a two-step analysis claimants must satisfy for class certification. Fed.
R. Civ. P. 23. The party seeking certification must first satisfy the requirements under Rule
23(a) and second, must satisfy at least one of the three requirements under Rule 23(b). Id.
Petitioners satisfy both steps of this analysis.
1. Petitioners satisfy the class action certification requirements under
Rule 23(a).
Rule 23(a) is the first stage of the class action certification process and requires claimants
meet the following four elements for class certification: (1) that the class is so numerous that
joinder of all members is impracticable; (2) that there are questions of law and fact common to
the class; (3) that the claims or defenses of the representative parties are typical of the claims or
defenses of the class; and (4) that the representative parties will fairly and adequately protect the
interests of the class. Fed. R. Civ. P. 23(a). Petitioners satisfy this standard as a matter of law.
a. Petitioners’ class is so numerous that joinder of all members is
impracticable.
Petitioners satisfy the first requirement under Rule 23(a)—that the class is so numerous
joinder of all members is impracticable. See Fed. R. Civ. P. 23(a)(1). To determine the
―numerosity‖ requirement, this Court considers the specific facts of each case, focusing on the
number of members in the class and the practicability of joining those members as parties to the
lawsuit. See Gen. Tel. Co. of the Nw., Inc. v. Equal Emp’t Opportunity Comm’n, 446 U.S. 318,
330 (1980). Although the party seeking class certification must establish a particular class size,
an exact number is unnecessary. Barlow v. Marion Cnty. Hosp. Dist., 88 F.R.D. 619, 625 (M.D.
Fla. 1980). Further, when considering the practicability of joinder, courts consider factors like
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35
―the judicial economy arising from the avoidance of a multiplicity of actions, geographic
dispersion of class members, financial resources of class members, the ability of claimants to
institute individual suits, and requests for prospective injunctive relief which would involve
future class members.‖ Robidoux v. Celani, 987 F.2d 931, 935–36 (2d Cir. 1993). Under this
standard, Petitioners‘ class size is sufficiently numerous.
Petitioners offered proof of at least sixty-seven class interns who worked at Gus
Corporation between May 1, 2008 and September 1, 2012. R. at 24. This is far more than the
number courts have required for class certification in other cases. See Consol. Rail Corp. v.
Town of Hyde Park, 47 F.3d 473, 483 (2d Cir. 1995) (recognizing numerosity is presumed where
a class has forty members). Moreover, the minimal damages each class member will likely
recover in this case reinforces the conclusion that joinder is impracticable. On average, class
members will recover $2,320 for regular hours and $870 for overtime hours before taxes. R. at
24.
These are the circumstances this Court has recognized as sufficient to justify class
certification.
See e.g., Deposit Guar. Nat’l Bank v. Roper, 445 U.S. 326, 339 (1980)
(recognizing that ―[w]here it is not economically feasible to obtain relief within the traditional
framework of a multiplicity of small individual suits for damages, aggrieved persons may be
without any effective redress unless they may employ the class-action device‖). Petitioners
satisfy the ―numerosity‖ requirement as a matter of law.
b. Petitioners’ claims present questions of law and fact common to the
prospective class.
Petitioners satisfy the second requirement under Rule 23(a)—that there are questions of
law or fact common to the class. See Fed. R. Civ. P. 23(a)(2). The ―commonality‖ requirement
considers whether claims of the prospective class are dependent upon common contentions
capable of class-wide resolution. See Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2551
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35
(2011). This analysis focuses on the capacity of a class-wide proceeding to generate common
questions with common answers and is satisfied when the determination of a common
contention‘s truth or falsity will resolve issues central to the validity of class-wide claims. Id.
Petitioners satisfy this standard as a matter of law.
Petitioners‘ motion for class certification identifies several questions of law common to the
class which, if answered, would resolve this case‘s overriding issue: whether Petitioners are
employees under FLSA and state labor law. R. at 27. These questions include: (1) whether Gus
Corporation derived an immediate advantage from interns‘ work; (2) whether interns displaced
paid employees; (3) whether Gus Corporation‘s internship program was for the benefit of the
interns. R. at 27. These are the type of common questions other courts have held to satisfy the
―commonality‖ requirement. See, e.g., Glatt, 293 F.R.D. at 537 (granting class certification
where class of unpaid interns demonstrated that they ―were recruited to help with busy periods,
that they displaced paid employees, and that those who oversaw the internships did not believe
they complied with applicable law‖).
Nevertheless, the court of appeals concluded the questions advocated by Petitioners were
likely to render inconsistent results when applied to different members of the class. R. at 48. To
justify this conclusion, the court of appeals relied on this Court‘s decision in Wal-Mart. R. at
47–48. However, the factual circumstances that led this Court to deny class certification in WalMart are not present in this case. There, the prospective class consisted of 1.5 million female
employees claiming thousands of store managers had violated written corporate policies relating
to non-discrimination in stores across the country. Wal-Mart, 131 S. Ct. at 2547. This Court
reasoned that because every store manager, in every store across the country exercised individual
discretion in making employee payment and promotion decisions, the prospective class did not
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satisfy the ―commonality‖ requirement. Id. at 2556–57. Here, Petitioners‘ claims arise out of
one unpaid internship program located at a single office location. R. at 2. All the Interns were
recruited from WSU and WSUSOL.
R. at 32. All the Interns were recruited when Gus
Corporation was facing financial hardship. R. at 2. All the Interns performed work normally
performed by paid employees. R. at 16. These factual similarities are common to every member
of Petitioners‘ class and allow for the resolution of issues central to class claims under any
standard for determining ―employee‖ status.
See supra § I(B)–(C). Petitioners satisfy the
―commonality‖ requirement as a matter of law.
c. The claims of the representative parties are typical of the claims of
the prospective class.
Petitioners satisfy the third requirement under Rule 23(a)—that the claims of the
representative parties are typical of the claims of the class. See Fed. R. Civ. P. 23(a)(3). To
determine whether a prospective class has satisfied the ―typicality‖ requirement, courts consider
whether each class member‘s claim arises from the same course of events, and whether each
class member makes similar legal arguments to prove the defendant‘s liability. Marisol A. v.
Giuliani, 126 F.3d 372, 376 (2d Cir. 1997). This standard is not overly demanding and only
requires claims ―to share the same essential characteristics.‖ Bolanos v. Norwegian Cruise Lines
Ltd., 212 F.R.D. 144, 155 (S.D.N.Y. 2002). Minor variations in the fact patterns underlying
individual claims are immaterial. Id. Petitioners satisfy this standard as a matter of law.
The only claim available to any intern privy to this litigation asserts that Gus Corporation
failed to pay interns it was required to pay.
R. at 28.
Moreover, every member of the
prospective class was recruited in the same manner by the same company. R. at 28. These
circumstances satisfy the ―typicality‖ requirement as a matter of law. See, e.g., Xuedan Wang v.
Hearst Corp., 293 F.R.D. 489, 495 (S.D.N.Y. 2013) (holding that the typicality requirement was
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35
satisfied where plaintiffs and unnamed members of the class all worked as unpaid interns at the
same company and all were suing under the same legal theory: that they were employees under
New York Labor Law). Because Petitioners satisfy the ―typicality‖ requirement as a matter of
law, this Court should reverse the court of appeals‘ judgment.
d. Petitioners will fairly and adequately protect the interest of the class.
Petitioners satisfy the fourth requirement under Rule 23(a)—that the representative parties
will fairly and adequately protect the interest of the class. See Fed. R. Civ. P. 23(a)(4). To
determine whether the ―adequacy‖ requirement has been satisfied, courts consider two factors:
(1) whether the interests of class representatives are antagonistic to the interest of other members
of the class; and (2) whether the attorneys representing the class are qualified and experienced
enough to conduct the litigation. Baffa v. Donaldson, Lufkin & Jenrette Sec. Corp., 222 F.3d 52,
60 (2d Cir. 2000). Gus Corporation does not dispute either consideration. R. at 29. Moreover, it
is well recognized that satisfying the ―typicality‖ requirement is strong evidence that the interests
of class representatives are in line with those of the class. See Damassia v. Duane Reade, Inc.,
250 F.R.D. 152, 158 (S.D.N.Y. 2008). Because Petitioners satisfy the ―adequacy‖ requirement
as a matter of law, this Court should reverse the court of appeals‘ judgment.
2. Petitioners satisfy the requirements for class certification under
Federal Rule of Civil Procedure 23(b).
Petitioners also satisfy the requirements under Rule 23(b). In addition to the requirements
under Rule 23(a), parties seeking class certification must also satisfy at least one requirement
under Rule 23(b). Comcast Corp. v. Behrend, 133 S. Ct. 1426, 1432 (2013). Rule 23(b)(3)
requires the party seeking certification to show that common questions of law ―predominate over
questions affecting only individual members‖ and that class representation is superior to other
methods of litigation. Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 615 (1997). Because
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Petitioners satisfy this standard as a matter of law, this Court should reverse the court of appeals‘
judgment.
a. Petitioners’ claims present common questions of law that
predominate over issues affecting individual class members.
Petitioners satisfy the first requirement under Rule 23(b)(3)—that common questions of
law predominate over questions affecting individual class members. See Fed. R. Civ. 23(b). The
―predominance‖ requirement considers whether a proposed class is ―sufficiently cohesive to
warrant adjudication by representation.‖ Amchem, 521 U.S. at 623. A class is sufficiently
cohesive ―if resolution of some of the legal or factual questions that qualify each class member‘s
case as a genuine controversy can be achieved through generalized proof, and if these particular
issues are more substantial than the issues subject only to individualized proof.‖ Moore v.
PaineWebber, Inc., 306 F.3d 1247, 1252 (2d Cir. 2002).
Petitioners have demonstrated generalized proof relating to Gus Corporation‘s liability.
Every claim in the proposed class stems from a single legal theory of liability: Gus Corporation
violated state labor law by failing to pay interns minimum wage and overtime pay. R. at 31.
Every intern‘s training was different from that received in an educational environment. R. at 14.
Every intern performed tasks that paid employees were normally required to perform. R. at 15.
These common factors are dispositive of the ―employee‖ analysis as a matter of law.
Moreover, any individualized proof necessary to show each class member‘s damages is
minimal and immaterial. In fact, Petitioners‘ expert calculated damages for each member of
Petitioners‘ class using simple arithmetic.
R. at 24.
These are not the type of complex
individualized issues that have led this Court to deny class certification. See Comcast, 133 S. Ct.
at 1433 (denying class certification because the damage model created by the plaintiffs expert
did not provide a method of calculating damages across the entire class). Because Petitioners
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satisfy the ―predominance‖ requirement as a matter of law, this Court should reverse the court of
appeals‘ judgment.
b. Class representation is the superior method for resolving Petitioners’
claims.
Petitioners satisfy the second requirement under Rule 23(b)—that class representation is
superior to individual litigation. To determine whether a class action is a superior method of
resolving a controversy, courts consider the following factors:
(A) the class members‘ interests in individually controlling the prosecution or defense
of separate actions; (B) the extent and nature of any litigation concerning the
controversy already begun by or against class members; (C) the desirability or
undesirability of concentrating the litigation of the claims in the particular forum; and
(D) the likely difficulties in managing a class action.
Fed. R. Civ. P. 23(b)(3). Petitioners satisfy this standard as a matter of law.
Every member of the prospective class was educated in Wagner, worked for Gus
Corporation in Wagner and is a resident of the state of Wagner. R. at 29. Moreover, every
member of the class has asserted the same claim and will receive minimal damages. R. at 29.
These circumstances satisfy the ―superiority‖ requirement as a matter of law. See Glatt, 293
F.R.D. at 538 (holding superiority element satisfied where class of unpaid interns demonstrated
that every member of the class worked in the forum state and would be entitled to a ―relatively
small recovery‖ if successful). Because Petitioners satisfy the ―superior‖ requirement as a matter
of law, this Court should reverse the court of appeals‘ judgment.
B. Petitioners Satisfy the Requirements for Collective Action Certification
Under Section 216(b) of the FLSA.
Petitioners‘ FLSA claims also satisfy the requirements for ―collective action‖ certification
under section 216(b) of the FLSA. Section 216(b) allows employees to bring private causes of
action on behalf of themselves and other ―similarly situated‖ employees. 29 U.S.C. § 216(b).
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Suits brought on behalf of other ―similarly situated‖ employees are known as collective actions.9
See Hoffmann-La Roche Inc. v. Sperling, 493 U.S. 165, 169–70 (1989).
To determine whether plaintiffs are ―similarly situated‖ the circuit courts have applied
different standards. See, e.g., Thiessen v. Gen. Elec. Capital Corp., 267 F.3d 1095, 1102–03
(10th Cir. 2001) (describing three different approaches courts have applied to determine the
―similar situated‖ requirement under section 216(b) of the FLSA). The majority of courts have
adopted an ad hoc case-by-case approach to determine the ―similarly situated‖ requirement. Id.
A minority approach applies Rule 23 class action standards in making the ―similarly situated‖
determination. See, e.g., Espenscheid v. DirectSat USA, LLC, 705 F.3d 770, 772 (7th Cir. 2013).
By relying on the minority standard to decertify Petitioners‘ collective action, the court of
appeals joined this growing circuit. This Court should reverse the court of appeals‘ judgment
and adopt the ad hoc case-by-case approach for determining the ―similarly situated‖ requirement.
1. The ad hoc cases-by-case approach is the correct legal standard for
determining whether FLSA claimants are “similarly situated” under
section 216(b).
This Court should adopt the ad hoc case-by-case approach for determining whether FLSA
claimants are ―similarly situated‖ under section 216(b) because unlike the minority Rule 23
approach, the ad hoc approach recognizes the fundamental differences between Rule 23 class
actions and section 216(b) collective actions intended by Congress.
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Collective actions require a two-step certification process. Thiessen v. Gen. Elec. Capital
Corp., 267 F.3d 1095, 1102–03 (10th Cir. 2001). The first step is known as ―conditional
certification‖ and requires a court to determine whether notice of the action should be given to
potential opt-in plaintiffs. Hoffmann-La Roche Inc. v. Sperling, 493 U.S. 165, 169–70 (1989).
The district court granted ―constitutional certification‖ on January 17, 2013. R. at 54–55. The
second step is usually predicated by a defendant‘s motion for decertification and requires the
court to more stringently evaluate whether members of the collective are ―similarly situated.‖
Thiessen, 267 F.3d at 1102–03. Petitioners‘ appeal focuses solely on the second step of the
collective action certification process.
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When interpreting a statute, this Court begins with the statute‘s plain language. Se. Cmty.
Coll. v. Davis, 442 U.S. 397, 405 (1979). Unless otherwise defined by Congress, this Court
interprets the words in a statute ―as taking their ordinary, contemporary, common meaning.‖
Perrin v. United States, 444 U.S. 37, 42 (1979). Section 216(b)‘s plain language justifies
holding the collective certification process to a different and lesser standard than Rule 23‘s class
certification requirements.
To satisfy section 216(b)‘s collective action standard, Congress only required claimants be
―similarly situated.‖ 29 U.S.C. 216(b). Conversely, under Rule 23(b)(3), claimants must prove
that their claims present common class questions that ―predominate‖ over individual questions.
Fed. R. Civ. P. 23(b)(3).
While Congress could have imported the more stringent
―predominance‖ criteria under Rule 23(b)(3) into section 216(b), it has not. In fact, when
Congress last amended Rule 23, it specifically stated that ―provisions of 29 U.S.C. § 216(b) are
not intended to be affected by Rule 23.‖ Fed. R. Civ. P. 23, advisory committee notes (1966).
As the Tenth Circuit court recognized in Thiessen v. General Electric Capital Corp.,
Congress clearly chose not to have the Rule 23 standards apply to class actions under
the ADEA,10 and instead adopted the ―similarly situated‖ standard. To now interpret
this ―similarly situated‖ standard by simply incorporating the requirements of Rule 23
(either the current version or the pre 1966 version) would effectively ignore
Congress‘ directive.
267 F.3d at 1105.
The fundamental procedural differences between Rule 23 and section 216(b) justify
holding the collective action certification process to a different and lesser standard as well.
Under Rule 23, ―each person within the description is considered to be a class member and, as
such, is bound by judgment, whether favorable or unfavorable, unless he has ‗opted out‘ of the
10
The ADEA directly incorporates section 216(b) of the FLSA. Sperling, 493 U.S. at 167
(1989). This Court evaluates them under the same standard. Id.
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suit.‖ LaChapelle v. Owens-Ill., Inc., 513 F.2d 286, 288 (5th Cir. 1975). Conversely, under
section 216(b), ―no person can become a party plaintiff and no person will be bound by or may
benefit from judgment unless he has affirmatively ‗opted into‘ the class; that is, given his
written, filed consent.‖ Id.
Still, the court of appeals held that Rule 23 requirements should be applied to determine the
―similarly situated‖ standard. R. at 53. To justify this assertion, the court of appeals relied on
the Seventh Circuit court‘s decision in Espenscheid, 705 F.3d at 772. There, the court reasoned
that Rule 23 standards should apply to the collective action certification process because there is
―no good reason‖ to have separate standards and the case law surrounding the two certification
processes has ―largely merged the standards.‖ Id. This reasoning is misguided.
Not only has Congress specifically mandated the two certification processes apply
differently, but this Court and other courts have routinely distinguished and separated the
standards. See, e.g., Genesis Healthcare Corp. v. Symczyk, 133 S. Ct. 1523, 1529 (2013)
(recognizing ―Rule 23 actions are fundamentally different from collective actions under the
FLSA‖); Grayson v. K Mart Corp., 79 F.3d 1086, 1096 n.12 (11th Cir. 1996) (same);
LaChapelle, 513 F.2d at 289 (same). Because the ad hoc case-by-case analysis is supported by
section 216(b)‘s plain language and recognizes the fundamental differences between section
216(b) and Rule 23, this Court should reverse the court of appeals‘ judgment.
2. Under the ad hoc case-by-case approach, Petitioners are “similarly
situated.”
To determine whether claimants are ―similarly situated‖ courts consider the following
factors: (1) the claimants‘ disparate factual and employment settings; (2) the various defenses
defendants may assert against individual claimants; (3) the degree of fairness and procedural
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impact of granting collective action certification. O’Brien v. Ed Donnelly Enters., Inc., 575 F.3d
567, 584 (6th Cir. 2009). Petitioners satisfy this standard as a matter of law.
First, the factual circumstances surrounding Petitioners‘ internship settings are similar. To
determine whether this factor is satisfied, courts consider the job duties, geographic locations,
employer supervision and compensation of class members and may also take into consideration
common employer policies, practices or plans that allegedly violate the FLSA.
Rawls v.
Augustine Home Health Care, Inc., 244 F.R.D. 298, 300 (D. Md. 2007). Here, the allegations of
both lead and opt-in claimants are identical: that Gus Corporation refused to compensate them as
employees. R. at 32.
Moreover, Gus Corporation required every intern to perform work
normally given to paid employees and recruited every intern from WSU and WSUSOL after the
company began experiencing financial hardships in a down economy. R. at 2, 16, 32. This is the
type of shared factual and legal nexus required to satisfy the ―similarly situated‖ requirement as a
matter of law. See Falcon v. Starbucks, 580 F. Supp. 2d 528, 535 (S.D. Tex. 2008) (holding
claimants were entitled to collective action certification because Starbucks required every
employee to work over-time hours off the clock).
Second, Gus Corporation has not alleged defenses against individual claimants. In fact,
Gus Corporation‘s only alleged defense states that the ―named and opt-in plaintiffs were not
employees under the ‗trainee exception‘ in Portland Terminal.‖ R. at 32. Simply put, courts
require greater disparity between individual defenses for decertification of a collective action.
See, e.g., Rawls, 244 F.R.D. at 300–02.
Third, fairness and procedural considerations justify collective action certification. This
factor requires courts to weigh the fairness and procedural consideration of adjudicating the
action collectively while keeping in mind the primary objectives behind collective action
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certification: (1) to lower burdens on individual claimants by pooling resources; and (2) to
promote judicial efficiency by resolving similar claims in one proceeding. Sperling, 493 U.S. at
170. Petitioners‘ potential for individual recovery are small, and Petitioners allege common
questions of law and fact. Collective adjudication is justified as a matter of law. Because
Petitioners satisfy the ad hoc case-by-case analysis for class certification as a matter of law, this
Court should reverse the court of appeals‘ judgment.
3. Even if this Court adopts the minority Rule 23 approach for
determining the “similarly situated” requirements under section
216(b), Petitioners’ claims are sufficient.
Even if this Court adopts the Rule 23 standard for determining collective action
certification under section 216(b) advocated by the court of appeals, Petitioners still satisfy the
collective action standard. See supra II(A). This Court should reverse the court of appeals‘
judgment.
CONCLUSION
This Court should reverse the judgment of the United States Court of Appeals for the
Thirteenth Circuit.
Respectfully submitted,
______________________________
ATTORNEYS FOR PETITIONERS
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