United States District Court, W.D. New York
DECISION AND ORDER
WILLIAM M. SKRETNY, Chief District Judge.
Four Plaintiffs commenced this putative collective/class action on May 22, 2008, claiming that Defendants, a health care network and certain of its officers and member entities, violated the: Fair Labor Standards Act ("FLSA"), New York Labor Law ("NYLL"), Employee Retirement Income Security Act ("ERISA"), Racketeering Influenced Corrupt Organizations Act ("RICO"), and New York common law by failing to pay hourly employees for all hours worked and/or overtime for hours worked over 40 per week.
There are five motions presently before the Court: (1) Plaintiffs' motion for Rule 23 class certification (Docket No. 356), (2) Defendants' motion for summary judgment dismissing certain of the New York minimum wage order and labor law claims of Plaintiffs Hinterberger and Williams (Docket No. 385), (3) Defendants' motion to decertify Plaintiffs' conditionally certified FLSA collective action (Docket No. 397), (4) Plaintiffs' cross motion to finally certify a FLSA class (Docket No. 414), and (5) Plaintiffs' motion for partial summary judgment on liability (Docket No. 466). For the reasons stated below, Plaintiffs' motions are denied and Defendants' motions are granted.
A. Procedural Background and Pending Motions
In their Complaint, Plaintiffs alleged that Defendants were applying three policies within their facilities that gave rise to, inter alia, violations of statutory wage and overtime requirements. Only two are relevant to the pending motions. First is a "Break Deduction Policy, " pursuant to which a meal break is deducted automatically from the pay of hourly workers. According to Plaintiffs, this policy is applied even when employees are required to perform patient care duties during all or some portion of the meal period. Next is an "Unpaid Preliminary and Postliminary Work Policy" under which Defendants do not pay employees for work performed before and/or after their scheduled shifts.
Within one week after filing their Complaint, Plaintiffs moved for conditional certification of a FLSA collective action, under 29 U.S.C. § 216(b). On July 1, 2008, Defendants responded by moving to dismiss the Complaint in its entirety. Thereafter, Plaintiffs voluntarily dismissed all but their FLSA and NYLL claims. These statutory claims survived Defendants' motion to dismiss, and Plaintiffs were directed to file an Amended Complaint that included only the claims that remain. (Docket No. 147, as amended by Docket No. 222.)
On October 21, 2009, this Court issued a decision on Plaintiffs' motion for conditional FLSA certification and concluded that the class description Plaintiffs had proposed was overly vague and not supported by the allegations and affirmations on record. The Court did, however, find there was a sufficient basis to conditionally certify a class that included a limited number of job titles and work locations-more specifically, "all present and former hourly registered nurses, charge nurses, staff nurses, licensed practical nurses, and respiratory therapists who perform(ed) patient care duties" at eleven CHS hospitals, adult homes, and nursing homes. (Docket No. 221.)
Plaintiffs filed their Amended Complaint on December 15, 2009 (Docket No. 227, "Am. Compl."), naming as Defendants Catholic Health System, Inc., twenty of its network entities, and two of its officers (id. Caption, ¶¶ 23, 48), which will together be referred to as "CHS." Discovery had commenced prior to filing of the Amended Complaint and continued for nearly three more years.
On October 5, 2012, Plaintiffs moved, under Rule 23 of the Federal Rules of Civil Procedure, for certification of two classes of claims under the New York Labor Law. The first involves the Break Deduction Policy, which Plaintiffs now appear to concede is not an unlawful practice in and of itself. Rather, they urge that CHS relies on hourly employees "to provide urgent and around-the-clock services" at its locations, but has a policy of paying for time worked during meal breaks only when an employee affirmatively reports having missed or been interrupted during a meal period. According to Plaintiffs, CHS knows employees do not always report missed or interrupted meal breaks, but it does not take steps to ensure they are compensated for the unreported time. (Docket No. 357 at 1.)
The second class involves what Plaintiffs refer to as a "Rounding Policy, " described as a timekeeping policy/system whereby the times clocked by hourly employees to record the start and end of their shifts are rounded forward and backward to the top of the hour, resulting in a loss of credit for time worked. (Id. at 1-2.) Each class is described as including all CHS hourly workers.
On October 31, 2012, CHS moved for summary judgment on certain of the New York Minimum Wage Order and Labor Law claims of Plaintiffs Hinterberger and Williams. (Docket No. 385.) Essentially, CHS contends these named Plaintiffs are exempt, or largely exempt, from state law wage and overtime provisions. (Docket No. 385-2.) CHS next moved, on November 26, 2012, to decertify Plaintiffs' conditionally certified FLSA collective action on the ground that "claims of the named and opt-in plaintiffs are highly-individualized and cannot be adjudicated in any meaningful or reliable manner based on representative testimony." (Docket Nos. 397, 397-1 at 2.)
On November 28, 2012, Plaintiffs moved for a stay of "merits discovery" pending resolution of the three motions then filed, on the ground those determinations "may impact the scope of the claims that proceed in this lawsuit." (Docket No. 403-1 at 1.) Defendants joined in the request (Docket No. 416), and the stay was granted (Docket No. 437).
On December 13, 2012, Plaintiffs filed a cross-motion in response to CHS's motion for decertification. They seek final certification of a FLSA collective action to include not just the titles and facilities conditionally certified, but all CHS hourly workers at all facilities. (Docket No. 414.) Thereafter, Plaintiffs moved for partial summary judgment on the question of CHS's liability relative to their meal break claims under both the FLSA and NYLL. (Docket No. 466.)
These five related motions were fully briefed as of November 1, 2013. In light of the extensive materials submitted, the Court determined there was no need for oral argument.
B. Factual Background
1. The Named and Putative Parties
CHS, a religious charitable organization, is a network of health care entities including: four hospitals,  fourteen primary care centers, several diagnostic and treatment centers, a freestanding surgery center, six long-term care facilities, two adult homes, three home care agencies, and several other community ministries. (Docket No. 386-3 ¶¶ 4-7.) CHS has a Board of Directors. (Id. ¶ 8.)
When Plaintiffs commenced this action in 2008, CHS's more than 30 facilities employed approximately 6, 800 persons in nonexempt positions. The employees worked in over 180 departments and more than 350 job titles. (Id. ¶ 38.) After the Court conditionally certified a FLSA class comprised of only certain job titles and facilities, CHS produced a notice list identifying 2, 940 potential class members. (Docket No. 358 ¶ 76.)
Network-wide, approximately 40-45 percent of CHS employees are represented by unions, and their terms and conditions of employment are governed by thirteen different collective bargaining agreements ("CBAs"). (Docket No. 386-3 ¶ 40.) The various entities pay overtime at different daily or weekly thresholds and, for unionized positions, that threshold is governed by the applicable union contract. (Id. ¶ 42.)
The four name Plaintiffs were each formerly employed at one of three CHS entities. Current and former employees falling within the conditionally certified FLSA class description were notified of this action and some have opted-in to this case (the "opt-in plaintiffs"). The putative plaintiffs, for purposes of both Rule 23 certification and also a broader proposed FLSA class, include all current and former hourly CHS employees at all CHS facilities who were employed during the relevant time period.
2. CHS Policies
Since 1991, CHS has had a network-wide Time and Attendance Policy which requires that employees accurately report all time worked using the reporting mechanism(s) in place at their respective work sites. (Id. ¶¶ 47, 52, Exh. B.) In the event that a portion of a CHS policy conflicts with any collective bargaining agreement, the CBA's provisions dictate the terms and conditions of employment. (Id. ¶ 56.)
The Time and Attendance Policy is distributed to all employees, who also receive instruction on the policy at orientation. (Id. ¶¶ 48, 63.) Individual supervisors and managers are responsible for: (a) instructing employees working in their department or unit on correct timekeeping procedures, (b) counseling employees who do not follow procedure, and (c) performing timekeeper duties, including reviewing, auditing and approving their employees' time records. (Id. ¶ 48.) Managers may designate timekeeping duties in their department. They or their designated timekeepers are expected to correct any hours an employee did not record, or recorded incorrectly, before submitting time records to the payroll department. (Id.)
For many years after CHS implemented its Time and Attendance Policy, different CHS work sites continued to use different systems for recording time worked. (Id. ¶ 44.) In 2005, CHS contracted with Kronos to provide a timekeeping system that would be used to record employee work hours at all its network facilities. (Id.) CHS implemented the Kronos system on a rolling basis from September 2005 to March 2006. (Id.) Since then, employees use a telephone access code system ("TACS"), or a badge swipe, to record their work day start and end times in Kronos. (Id. ¶ 45.) Employees are provided written instructions regarding the appropriate method for clocking in and out for their department or unit, and must verify receipt of those instructions. (Id. ¶51, Exh. C.) In addition, instructions are posted and are available for viewing on the CHS intranet. (Id. ¶¶ 51, 62.)
Under the Time and Attendance Policy, hourly employees are not permitted to clock in more than six minutes before the beginning of their shift or more than six minutes past the end of their shift unless authorized by their supervisor. The timekeeping system automatically rounds times that are entered within six minutes of the scheduled start or end time. (Id. ¶ 53, Exh. B; Docket No. 358-3 at 9.) In other words, when an employee clocks in up to six minutes before or after the beginning of his or her shift, or clocks out up to six minutes before or after the end of the shift, the time is rounded forward or backward to the scheduled shift time. (Id.) The six-minute grace period is applied at each hour, half-hour, and quarter-hour. If an employee clocks in or out in between these grace periods-i.e., at:06-:09, :21-:24, :36-:39, or:51-:54-he or she is paid from exactly the clocked time, calculated to the nearest hundredth of an hour. (Docket No. 358-3 at 9.) Under CHS's policies for "Conduct Principles and Corrective Action" and "Attendance" employees are subject to discipline for: (1) a pattern of clocking in more than six minutes prior to, or out more than six minutes after their scheduled shift times, as well as (2) a pattern of clocking in more than six minutes after, or out more than six minutes prior to their scheduled shift times. (Docket No. 358-1 at 46, 56.)
CHS acknowledges there was a period of approximately two months in 2005 during which certain of its facilities implemented a practice of rounding the six-minute grace times only in favor of the employer; they did not round clocked time if an employee arrived late or punched out early. (Docket No. 386-3 ¶ 53.) It is undisputed that the practice was discontinued and employees subjected to the two-month practice ...