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Gortat v. Capala Brothers

April 9, 2010


The opinion of the court was delivered by: Glasser, United States Senior District Judge


Defendants object to a combined report and order by Magistrate Judge Steven M. Gold certifying a collective action under the Fair Labor Standards Act ("FLSA") and recommending that the Court certify a class action for claims under the New York State Labor Law ("NYLL"). For the reasons stated below, the Court overrules defendants' objections to Magistrate Judge Gold's report and recommendation, adopts the report and recommendation substantially in its entirety, and grants plaintiffs' motion for class certification pursuant to Rule 23 of the Federal Rules of Civil Procedure. For the reasons stated below, the Court also overrules defendants' objections to Magistrate Judge Gold's order certifying the collective action and directing plaintiffs to submit a proposed notice of the collective and class actions.


Plaintiffs are laborers and foremen formerly employed by Capala Brothers, Inc. ("Capala"), a construction firm. They allege that they were illegally underpaid and bring claims against Capala and its principals, Pawel and Robert Capala, under the Fair Labor Standards Act ("FLSA"), 29 U.S.C. §§ 201 et seq., the Portal-to-Portal Act, 29 U.S.C. § 254, and the New York State Labor Law ("NYLL"). On June 11, 2009, plaintiffs filed separate motions asking the Court to certify a class action with respect to the NYLL claims and to certify a collective action with respect to the FLSA claims.*fn1 On October 16, 2009, Magistrate Judge Gold issued a single opinion ("Order & Report") which both authorized plaintiffs to proceed on the FLSA collective action and recommended the certification of the NYLL class action.*fn2 In addition to certifying the collective action and recommending class certification, Magistrate Judge Gold issued instructions regarding the proposed notice to be sent to putative members of the collective and class actions. On October 28, 2009, defendants filed objections to Magistrate Judge Gold's order ("Defs.' Objs. to Collective Action"), contesting both the certification of the collective action and the form and contents of the proposed notice. On November 3, 2009, defendants filed objections to Magistrate Judge Gold's recommendation of class certification ("Defs.' Objs. to Class Cert."). Plaintiffs have not responded to either set of objections. The Court assumes familiarity with this litigation generally, and with Magistrate Judge Gold's October 16, 2009 Order & Report specifically.


1. Class Action

a. Standard of Review

Under 28 U.S.C. § 636(b)(1)(A), a magistrate judge may not decide a motion "to dismiss or to permit maintenance of a class action." The district judge may, however, refer such a motion to the magistrate judge for a report and recommendation. 28 U.S.C. § 636(b)(1)(B). When a magistrate judge issues a report and recommendation regarding such a dispositive motion, "[t]he district judge must determine de novo any part of the magistrate judge's disposition that has been properly objected to." Fed. R. Civ. Proc. 72(b)(3).

b. Ascertainability

Defendants first challenge the class certification on the grounds of ascertainability. Although it is not one of the formal prerequisites for class certification defined in Rule 23(a) of the Federal Rules of Civil Procedure, "courts have held that in order for a class to be certified, the named plaintiffs must demonstrate that there is an 'identifiable class.'" Cortigiano v. Oceanview Manor Home For Adults, 227 F.R.D. 194, 207 (E.D.N.Y. 2005) (quoting In re Methyl Tertiary Butyl Ether Prods. Liab. Litig., 209 F.R.D. 323, 336 (S.D.N.Y. 2002)). This standard, however, is not demanding. It is designed only to prevent the certification of a class whose membership is truly indeterminable. See, e.g., Rios v. Marshall, 100 F.R.D. 395, 403 (S.D.N.Y. 1983) (narrowing class definition when proposed class would require determination of the state of mind of numerous putative class members). It does not require that every class member be identifiable prior to class certification. See Ashe v. Bd. of Elections in New York, 124 F.R.D. 45, 47 (E.D.N.Y. 1989); Somerville v. Major Exploration, Inc., 102 F.R.D. 500, 503 (S.D.N.Y. 1984). Rather, the Court need only "be able to ascertain the general boundaries of the proposed class." In re Methyl Tertiary Butyl Ether Prods. Liab. Litig., 241 F.R.D. 185, 194 (S.D.N.Y. 2007) (internal quotations omitted). Here, plaintiffs' proposed class is limited to persons employed by the defendants during a definite period of time. This easily satisfies the ascertainability requirement.

c. Numerosity

Defendants next challenge the magistrate judge's finding of numerosity. According to records submitted by defendants, seventy-four foremen and laborers were employed by Capala during the relevant time period.*fn3 Under Second Circuit case law, a presumption of numerosity arises when a putative class contains at least forty members. Consolidated Rail Corp. v. Town of Hyde Park, 47 F.3d 473, 483 (2d Cir. 1995). The primary area of contention is the significance of affidavits submitted by defendants purporting to demonstrate that forty-one of the potential class members are not properly within the class. The affidavits, characterized by defendants as "non-joinder affidavits," are largely identical and contain the following language:

1. I [was/am] an employee of defendant in this action, Capala Brothers, Inc and I am aware of the litigation started in Federal Court by my former co-employees in this action claiming unpaid hours and wages from my employer.

2. With such awareness and knowledge of these claims by them, I hereby provide notice of my knowledge of such litigation, the types of claims presented and what they are for, and declare that I do not join in claiming any unpaid hours or wages from the defendants in this action.

It is well-settled that prior to the certification of a class action, a defendant may seek settlements with potential class members. Weight Watchers of Philadelphia, Inc. v. Weight Watchers Int'l, Inc., 455 F.2d 770, 773 (2d Cir. 1972). This is so even if the settlements might have the effect of destroying numerosity and thus preventing class certification. Id. There is a "strong judicial policy in favor of settlements, particularly in the class action context," In re Painewebber Ltd. P'ships Litig., 147 F.3d 132, 138 (2d Cir. 1998). This policy applies with equal force to settlements entered into prior to class certification.

In this case, however, the non-joinder affidavits do not purport to be releases or to otherwise settle the claims that are the subject of this proposed class action. Defendants are quite clear about this, stating that "the 41 (forty-one) submitted non-joinder affidavits . . . do not constitute either a stipulation, or a settlement or any waiver of any statutory rights."*fn4 Defs.' Objs. to Class Cert. 15; see also id. at 10 ("[T]he affidavits executed retained legal rights for such affiants."). Rather, defendants are attempting via these affidavits to preemptively and vicariously opt these potential plaintiffs out of any class action that might be certified. Defendants have cited no precedent for such an approach and this Court is aware of none.*fn5 See 5 Newberg on Class Actions § 15:19 (4th ed.) ("Generally, affidavits of noninterest are inappropriate at the class certification hearing."); see also Fed. R. Civ. Proc. 23(c)(2)(B)(vi) (implicitly authorizing the court to define "the time and manner for requesting exclusion" (emphasis added)). Not only would giving effect to these non-joinder affidavits fail to serve the purposes behind the courts' preference for settlements, but it would be contrary to the policy behind "the liberal provisions of the Federal Rules of Civil Procedure for joinder of parties and claims," Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 581 (2005). This policy favoring the resolution of related claims in a single litigation also lies behind the availability of "opt out," but not "opt in" class actions under Rule 23, see Kern v. Siemens Corp., 393 F.3d 120, 124-25 (2d Cir. 2004). Defendants ask this Court to endorse a novel procedure which undermines these policies.

It is for this Court, not the defendants, to designate the appropriate means by which class members may opt out of a certified class action. The Federal Rules of Civil Procedure provide for court-approved notice to class members informing them not only of their right to opt out, but also of the nature of the action and their right to participate in it. See Fed. R. Civ. Proc. 23(c)(2)(B). The district court has broad supervisory authority over class actions, which extends even to communications with potential class members before an action has been certified. See In re Currency Conversion Fee Antitrust Litig., 361 F. Supp. 2d 237, 252 (S.D.N.Y. 2005). It is certainly within this Court's discretion to disregard affidavits purporting to opt potential plaintiffs out of a class action when this Court had no role in supervising the communications that led to their creation.

Finally, the mere possibility that members of a potential class may choose to opt out in the future is not enough to preclude a finding of numerosity. See Sunrise Toyota, Ltd. v. Toyota Motor Co., 55 F.R.D. 519, 533 (S.D.N.Y. 1972) ("Defendants' suggestion that many members of the class will elect to opt out after notice offers no basis for declining to make the class determination now."). Plaintiffs have met their burden of showing that "the class is so numerous that joinder of all members is impracticable." Fed. R. Civ. Proc. 23(a)(1).

d. Typicality and Commonality

Defendants also challenge the magistrate judge's findings of typicality and commonality. Defendants' primary concern is the potential inclusion of cash employees within the certified class. As an initial matter, because numerosity can be satisfied on the basis of the seventy-four on-the-books employees acknowledged by defendants, findings of typicality and commonality with respect to hypothetical cash employees are not necessary for class certification. Nevertheless, whether typicality and commonality are satisfied with respect to cash employees' claims may be relevant to the scope of the class defined by the Court.

Defendants argue that cash employees cannot be included within the class certified by the court on two related grounds: (1) defendants would have defenses to the claims of cash employees not applicable to the named plaintiffs; and (2) plaintiffs do not have standing to raise claims by cash employees. Neither of these arguments has merit.

First, while it is true that unique defenses may preclude a particular plaintiff from serving as a class representative, Baffa v. Donaldson, Lufkin & Jenrette Sec. Corp., 222 F.3d 52, 59 (2d Cir. 2000), Gary Plastic Packaging Corp. v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 903 F.2d 176, 180 (2d Cir. 1990), there is no requirement that all members of a class be subject to the same defenses, In re Nassau County Strip Search Cases, 461 F.3d 219, 225 (2d Cir. 2006). Rather, to establish typicality plaintiffs need only show that "each class member's claim arises from the same course of events and each class member makes similar legal arguments to prove the defendant's liability." In re Flag Telecom Holdings, Ltd. Sec. Litig., 574 F.3d 29, 35 (2d Cir. 2009) (quotations omitted). "When it is alleged that the same unlawful conduct was directed at or affected both the named plaintiff and the class sought to be represented, the typicality requirement is usually met irrespective of minor variations in the fact patterns underlying individual claims." Robidoux v. Celani, 987 F.2d 931, 936--37 (2d Cir. 1993). The NYLL claims of cash employees, if any such employees exist, are fairly encompassed within the class action brought by the named plaintiffs.

Second, in order to have standing to bring claims on behalf of a class, it is necessary only that at least one named plaintiff have standing to bring each separate claim. Comer v. Cisneros, 37 F.3d 775, 788 (2d Cir. 1994) ("For federal courts to have jurisdiction over any of these claims, only one named plaintiff need have standing with respect to each claim."). In order for standing to exist, three elements must be present: "(1) an injury in fact, by which is meant an invasion of a legally protected interest; (2) a causal connection between the injury and the conduct complained of; and (3) a likelihood that the injury will be redressed by a favorable decision." Fulton v. Goord, 591 F.3d 37, 41 (2d Cir. 2009) (internal quotations omitted). If potential class members allege the same injury as a named plaintiff, i.e. an invasion of the same legal right, caused by the same conduct, then the named plaintiff has standing to bring claims on their behalf in a class action. There is no requirement that the precise factual circumstances of each class plaintiff's claim be shared by a named plaintiff. In this case, if any cash employees exist, as long as they have claims under the same provisions of New York law for substantially similar conduct by defendants, the named plaintiffs have standing to represent them.

Defendants' argument that recent employees cannot be part of the same class action fails for the same reasons. Defendants argue that because recent employees have signed an employment contract, defendants would have "separate and distinct defenses against these employees," which would prevent them from being part of a single class with named plaintiffs.*fn6

Defs.' Objs. to Class Cert. 4. As noted above, the existence of different defenses to the claims of different class members will ...

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