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Swank v. Wal-Mart Stores, Inc.

United States District Court, W.D. Pennsylvania

June 5, 2018

ANDREW SWANK, et al, Plaintiffs,
v.
WAL-MART STORES, INC., Defendant.

          OPINION

          MARK R. HORNAK, UNITED STATES DISTRICT JUDGE.

         On June 1, 2015, Plaintiffs Andrew Swank, Sean McCracken, and James Paolicelli filed the operative complaint in this case, the Third Amended Individual and Collective/Class Action Complaint ("TAC"), against Defendant Wal-Mart Stores, Inc. ("Wal-Mart").[1] In the TAC, the Plaintiffs, all former Assistant Managers of Wal-Mart ("AMs"), allege that Wal-Mart violated the Fair Labor Standards Act ("FLSA") and the Pennsylvania Minimum Wage Act ("PMWA") by not paying overtime wages to its AMs. (TAC, ECF No. 59, at 1-2.) In essence, the Plaintiffs argue that they were managers in name only, and they allege that Wal-Mart relied on its AMs to perform the work of hourly associates without overtime pay as a cost-savings method. Pending before the Court is the Plaintiffs' Motion for Rule 23 Class Certification and 29 U.S.C. § 216(b) Conditional Certification, ECF No. 143. For the reasons that follow, the Plaintiffs' Motion is denied.

         I. BACKGROUND

         Wal-Mart is a large corporation with its headquarters ("Home Office") in Bentonville, Arkansas. (Pls.' Mem. in Supp., ECF No. 144, at 12 ("ECF No. 144").) Because Wal-Mart has so many stores across the country, Wal-Mart divides the United States into six Divisions, each of which is composed of Regions. (Id.) Each Region has a Regional Manager who reports to the Home Office. (Id.) Each Region is composed of Markets, which are managed by the Market Managers, who report to the Regional Managers. (Id.) Individual stores are in turn managed by the Store Managers, who report to the Market Managers. (ECF No. 144, at 13; Def's Resp. in Opp'n, ECF No. 159, at 11 ("ECF No. 159").) The Store Managers manage the Co-Managers, of which there are typically two to four per store, and the Co-Managers manage the AMs. (ECF No. 144, at 13-14; ECF No. 159, at 11.) There are generally nine or ten AMs per store, but, depending on its specific characteristics, a store can have fewer or more than ten AMs. (ECF No. 144, at 13-14; ECF No. 159, at 4.) Each AM is responsible for a particular area or areas of the store. (ECF No. 159, at 12.) Below the AMs there are Department Managers, and until the spring of 2015, there were also Zone Merchandise Supervisors. (ECF No. 144, at 14.) Finally, each store has hourly associates. (Id.)

         There are approximately 140 Wal-Mart stores in Pennsylvania. (ECF No. 144, at 12; ECF No. 159, at 11.) Some are smaller stores called Division 01 Discount Stores, while others are larger stores called Supercenters. (ECF No. 159, at 10-11.) Each of the Plaintiffs was formerly an AM at one or more Wal-Mart stores in Pennsylvania. (TAC, ECF No. 59, at 2.) According to Wal-Mart's "Job Description, " the essential functions of AMs include tasks such as:

• "Providing] supervision and development opportunities for hourly Associates in assigned area by hiring, training, mentoring, assigning duties, evaluating performance, providing recognition, and ensuring diversity awareness."
• "Ensuring] compliance with Company policies and procedures by holding hourly Associates accountable; analyzing and interpreting reports; implementing and monitoring asset protection and safety controls; maintaining quality assurance standards; overseeing safety and operational reviews; developing and implementing action plans to correct deficiencies; and providing direction and guidance on executing Company programs and strategic initiatives."
• "Model[ing], enforcing], and providing] direction and guidance to hourly Associates on proper Customer service approaches and techniques to ensure Customer needs, complaints, and issues are successfully resolved within Company guidelines and standards."

(Pls.' App. of Confidential Evid. in Supp. of Mot, ECF No. 148-3, at 67 ("Pls.' App.").)

         Under both the FLSA and the PMWA, employers must pay their employees overtime wages for any hours worked over forty in a given workweek, unless an exemption applies. 29 U.S.C. § 207(a)(1); 29 U.S.C. § 213; 43 Pa. Stat. § 333.104(c); 43 Pa. Stat. § 333.105. Wal-Mart admits that during the relevant time period it classified its AMs as "exempt employees who were not eligible to receive overtime pay [under the FLSA and the PMWA]." (Answer to TAC, ECF No. 61, at 5.) The Plaintiffs argue that they were incorrectly classified as exempt and that Wal-Mart's failure to give them overtime wages violated the FLSA and the PMWA. The federal and state exemption at issue in this case is the bona fide executive exemption, which exempts employees in certain executive, managerial, and other decision-making roles from overtime wage requirements under the FLSA and the PMWA. 29 U.S.C. § 213(a)(1); 43 Pa. Stat. § 333.105(a)(5).

         Because both parties agree that the AMs earn more than $455 per week, to prove that the AMs are exempt as executives under the FLSA, Wal-Mart must show that: (1) the AMs' "primary duty is management of the enterprise in which [they are] employed or of a customarily recognized department or subdivision"; (2) the AMs "customarily and regularly direct[] the work of two or more other employees"; and (3) the AMs have "the authority to hire and fire other employees or [their] suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees are given particular weight." 29 C.F.R. § 541.100(a)(2)- (4).

         Similarly, because it is undisputed that the AMs earn more than $250 per week, to prove that AMs are exempt as executives under the PMWA, Wal-Mart must demonstrate that the AMs' primary duty (1) "consists of the management of the enterprise in which [they are] employed or of a customarily recognized department or subdivision" and (2) "includes the customary and regular direction of the work of two or more other employees." 34 Pa. Code § 231.82(6).

         Under both the PMWA and the FLSA, [2] "[t]he term 'primary duty' means the principal, main, major or most important duty that the employee performs. Determination of an employee's primary duty must be based on all the facts in a particular case, with the major emphasis on the character of the employee's job as a whole." 29 C.F.R. § 541.700(a). Some factors that the Court can consider to determine the primary duty of an employee include: (1) "the relative importance of the exempt duties as compared with other types of duties"; (2) "the amount of time spent performing exempt work"; (3) "the employee's relative freedom from direct supervision"; and (4) "the relationship between the employee's salary and the wages paid to other employees for the kind of nonexempt work performed by the employee." Id.

         In this case, the Plaintiffs seek class certification under Rule 23 of the Federal Rules of Civil Procedure and conditional certification under the FLSA, 29 U.S.C. § 216(b). (Pls.' Mot. for Certification, ECF No. 143.) The Plaintiffs originally sought a class that included "[a]ll persons employed by Wal-Mart as Assistant Managers within the State of Pennsylvania from August 16, 2010, until the date of the Court's class certification order." (Id.) However, in their Reply brief, the Plaintiffs explain that they wish to narrow their proposed class to include only those AMs who worked in Pennsylvania from August 16, 2010, through April 1, 2015, when Wal-Mart changed certain compensation and bonus policies. (Pls.' Reply Mem., ECF No. 187, at 6-7.) Wal-Mart opposes such class redefinition. Wal-Mart argues that the new class definition would be substantially prejudicial because Wal-Mart conducted extensive discovery in reliance on the Plaintiffs' initial class definition and did not have cause to question either side's witnesses about the April 2015 policy changes or defend against the Plaintiffs' new theory in any way. (Def.'s Sur- Reply Br., ECF No. 208, at 15-16.) Furthermore, Wal-Mart asserts that the Plaintiffs were aware of the policy changes before they moved for class certification and that the Plaintiffs have not cited any statements by any witnesses to support their theory that the duties of AMs changed in April 2015. (Id. at 18.) In fact, Wal-Mart argues that the 2015 policy changes did not affect the AMs' duties in any material way. (Id. at 19.)

         The Court accepts the Plaintiffs' narrowed class definition for the purposes of deciding the pending Motion. The Court does so because its conclusion as to class certification will not change based on which class definition it uses-in either case, the Court cannot certify the class. In addition, the Court concludes that Wal-Mart is not substantially prejudiced by the Court's class definition decision. Under the Plaintiffs' narrowed class definition, Wal-Mart is exposed to less potential liability and damages, not more. Furthermore, given that, as Wal-Mart points out, the Plaintiffs have not cited any statements to demonstrate that the AMs' duties changed in April 2015, Wal-Mart is not substantially prejudiced by the fact that it did not know to question the witnesses about the policy change. Instead, the discovery that Wal-Mart has conducted continues to be relevant for the Plaintiffs' more narrow time period because, as Wal-Mart explained, "Wal-Mart gathered dozens of declarations from current and former [AMs] in Pennsylvania, and all but four of them worked as [AMs] or as [AMs] and co-managers before and after April 2015 ... . [N]ot one of them limited his or her testimony to a period after April 2015 or suggested their primary duties changed at that time." (Def.'s Sur-Reply Br., ECF No. 208, at 20 (emphasis in original).) Accordingly, the Court will use the narrowed class of AMs who worked in Pennsylvania from August 16, 2010, through April 1, 2015, for the purposes of deciding the pending Motion. See Wiesfeldm v. Sun Chem. Corp., 84 Fed.Appx. 257, 259 (3d Cir. 2004) (quoting Robidoux v. Celani, 987 F.2d 931, 937 (2d Cir. 1993) as stating that a court "is not bound by the class definition proposed in the complaint"), aff'g 210 F.R.D. 136, 138 (D.N.J. 2002) ("Despite the failure of Plaintiff to amend his complaint to reflect the proposed change in the class, this Court will use the modified class definition for purposes of this class certification motion ... .").

         II. DISCUSSION

         Plaintiffs' Motion asks the Court to certify their proposed class under Rule 23 as well as to conditionally certify their proposed collective action under § 216(b). The Court will address each request in turn.

         A. Class Certification Under Rule 23

         In order for the Court to certify their proposed class under Federal Rule of Civil Procedure 23, the Plaintiffs must demonstrate by a preponderance of the evidence that the "four threshold requirements" delineated in Rule 23(a) are met: "(1) numerosity; (2) commonality; (3) typicality; and (4) adequacy of representation." In re Nat 7 Football League Players Concussion Injury Litig., 821 F.3d 410, 426 (3d Cir. 2016) (citing Fed.R.Civ.P. 23(a)). Because the Plaintiffs are seeking certification under Rule 23(b)(3), if the Court concludes that the Plaintiffs have satisfied the requirements of Rule 23(a), the Court must then "consider whether (1) common questions predominate over any questions affecting only individual class members (predominance) and (2) class resolution is superior to other available methods to decide the controversy (superiority)." Id.

         1 Rule 23(a)

         To satisfy the numerosity requirement under Rule 23(a)(1), a class must be "so numerous that joinder of all members is impracticable." Id. (quoting Fed.R.Civ.P. 23(a)(1)). In this case, Wal-Mart does not dispute that the numerosity ...


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