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Dominic Vargas, Anne Hickok On Behalf of Themselves and All Others Similarly Situated v. General Nutrition Centers

August 16, 2012

DOMINIC VARGAS, ANNE HICKOK ON BEHALF OF THEMSELVES AND ALL OTHERS SIMILARLY SITUATED,
PLAINTIFFS,
v.
GENERAL NUTRITION CENTERS, INC. A DELAWARE CORPORATION AND GENERAL NUTRITION CORPORATION, DEFENDANTS.



The opinion of the court was delivered by: McVerry, J.

MEMORANDUM OPINION AND ORDER OF COURT

Now pending before the Court is PLAINTIFFS' MOTION FOR CONDITIONAL CERTIFICATION, Doc. No. 53, with brief in support, Doc. No, 57, and an appendix comprised of numerous volumes of various records, documents, and transcripts filed in support of the motion, Doc. Nos. 72, 79 -- 94, as well as DEFENDANTS' OPPOSITION TO MOTION FOR CONDITIONAL CERTIFICATION, Doc. No. 60, along with an appendix, Doc. No. 61. On April 11, 2012, oral argument on the motion for conditional certification was held in open court.

Following the argument, other documents germane to the motion to conditionally certify the class were filed. On three separate occasions, Plaintiffs filed a written consent on behalf of individuals to opt into the class, see Doc. Nos. 75, 95, & 99. Related to those filings, Plaintiffs filed the MOTION FOR LEAVE TO FILE DECLARATION OF MATTHEW HARMENING UNDER SEAL, Doc. No. 76, the MOTION FOR LEAVE TO FILE DECLARATION OF DIETRICH BLICKENDERFER, Doc. No. 96, and the MOTION FOR LEAVE TO FILE DECLARATION OF DORIS BRINCEFIELD, Doc. No. 100. Defendants opposed two of the motions, Doc. Nos. 77 & 97, and Plaintiffs replied to Defendants' briefs in opposition to those responses, Doc. Nos. 78 & 98. The Court subsequently granted the three motions for leave to file the declarations, Doc. Nos. 102 -- 104, and said declarations have since been filed by Plaintiffs, Doc. Nos. 106 -- 108.

The issues have been fully briefed and well argued on behalf of the parties and are ripe for disposition. For the reasons that follow, Plaintiffs' motion will be granted, albeit not to the complete extent sought.

Background

Defendants General Nutrition Centers, Inc. ("GNCI") and General Nutrition Corporation ("GNC") operate a chain of approximately 2,800 stores in the United States in which they sell health and wellness products such as vitamins and herbal supplements. In terms of the relationship between the two Defendants, GNCI is the parent company, and is responsible for the promulgation of various policies, administrative and legal functions. GNC, the wholly owned subsidiary, is responsible for the retail sales aspect of the business. Plaintiff Dominic Vargas worked for GNC for approximately four years. From May 2008 until January 2010, he was the Manager of a GNC retail store in a suburb of Pittsburgh, Pennsylvania. Plaintiff Anne Hickok, a resident of Greensboro, North Carolina, was employed between April 2007 and February 2009 as a Manager of a GNC store in that area.

GNC is headed by the Executive Vice President of the company, who, in turn, reports to the Chief Executive Officer of GNCI. Under the Executive Vice President of GNC are a number of management levels, proceeding from Divisional Vice Presidents ("DVP"), to District Sales Directors ("DSD"), and Regional Sales Directors ("RSD"). RSDs supervise both Senior Store Managers ("SSM"), Managers, and Assistant Managers. The operations of GNC are divided into three Divisions, each of which is headed by a DVP, and each Division is divided into three Districts, which are headed by DSDs. Districts are divided into many different Regions (in all, GNC has 109 Regions), which are managed by RSDs. The number of stores in a region can vary, but average 27 stores per region. In GNC's employment hierarchy, store Managers are classified as "non-exempt" employees.

GNC categorizes its stores based on sales volume using an identification scale of "A", "B", "C", or "D". Stores designated as "A" are high volume stores, and "D" are GNC's lowest volume stores. From a staffing perspective, "A" stores are allocated a greater number of budgeted clerical hours, whereas "B", "C" and "D" stores are allocated fewer budgeted hours. Employees are generally expected to complete the requirements associated with operating the store within the given allotments of time. According to Defendants, RSDs receive a total number of clerical (part-time sales associate) hours to use in a given month across all stores in their region. See Doc. No. 61, Decl. of RSD Jeffers, at ¶¶ 25 - 35. The RSD has the discretion to assign those hours to individual stores as he or she deems appropriate. Id. In turn, the managers allocate that allotment to assign the work schedule for their respective stores in advance of the workweek, and, at the end of the week, review the hours worked by store employees as part of the approval process for the Final Payroll Report, which is sent to the RSDs. Each GNC store also has part-time employees often referred to as clerical staff. The number of clerical staff and the number of hours they work varies from store to store. Regardless of the type of store, GNC expects its store Managers to control costs by effectively managing their staffing expenses. Id.

Like other GNC store Managers, Mr. Vargas and Ms. Hickok were required to perform a variety of duties, including customer sales, inventory, recordkeeping, and store maintenance. They and other GNC employees recorded the time they worked by using a centralized computer system known as the "Point of Sales" or POS system which Defendants oversaw via cash registers in each store. GNC store Managers would report to a Senior Store Manager ("SSM") who was responsible for approximately four outlets and to a Regional Sales Director ("RSD") who in turn supervised a number of SSMs. Both SSMs and RSDs monitored the amount of base and overtime work hours recorded by employees at each store.

Plaintiffs allege that GNC policies "tended to encourage" off-the-clock work by their employees in that Managers were not permitted to allow employees to exceed the number of working hours budgeted for the store and if part-time or clerical employees could not complete the necessary work within the time allotted, the Manager was expected to perform the work without incurring overtime. If the Manager failed to remain within the budgeted hours for his or her store, the Manager would be publicly criticized ("called out") during weekly management conference calls or would receive a telephone call of reprimand from the SSM or RSD for exceeding the clerical hours budgeted.

According to Plaintiffs, store Managers often could not complete the assigned work within the forty hours per week for which they were paid and consequently were expected to complete their work "off-the-clock." In order to recoup some of the unpaid time, Managers would make adjusting time entries through the POS system, a practice that was known and, in fact, recommended by GNC supervisors. For example, Plaintiff Vargas alleges that he received "informal training" from other managers and SSMs regarding this practice and was told that he should also use this method to account for time spent on GNC business when not actually present at the store, such as during the weekly management conference calls. These adjusting time entries could easily be identified in the POS system because they appeared with an asterisk.

Procedural History

Plaintiffs filed this suit on June 29, 2010, on behalf of themselves and all others similarly situated alleging that the practices of GNC which required former and current Managers, Assistant Managers and other non-exempt employees to work off-the-clock without being paid at overtime rates violated the Fair Labor Standards Act ("FLSA"), as amended, 29 U.S.C. § 201 et seq. Plaintiffs filed a First Amended Complaint on September 22, 2010. Doc. No. 14. Count I of the First Amended Complaint seeks overtime pay for work in excess of forty hours per week which GNC had willfully refused to pay through its unwritten policy of requiring management employees to work on off-the-clock. Count II alleges retaliatory dismissal in violation of FLSA § 15(a)(3). Defendants answered Count I of the First Amended Complaint, Doc. Nos. 17 & 18, and moved to dismiss Count II, Doc. No. 15. On January 6, 2011, the Court granted GNC's motion to dismiss Count II. Doc. No. 20.

The parties engaged in limited fact discovery pursuant to a case management plan in order to address the issue of conditional certification. During this phase, discovery was limited to stores in North Carolina and Pennsylvania. Plaintiffs now move for conditional certification of a collective class consisting of "all present or former managers, assistant managers, and other non-exempt employees of Defendants General Nutrition Centers, Inc. and/or General Nutrition Corporation (collectively "GNC") in the United States who, during the three years prior to the commencement of this ...


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