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Lopes v. HESO, Inc.

United States District Court, E.D. New York

October 27, 2017

VALDINEI LOPES and EDISON NARANJO On Behalf of Themselves and All Others Similarly Situated, Plaintiffs,
v.
HESO, INC., HAVANA WIRING & ELECTRICAL CORP., QUALITY USED ELECTRICAL EQUIPMENT INC., EMPIRE ELECTRICAL SOLUTION INC. and HERNAN F. SOCARRAS a/k/a FRANK SOCARRAS, Defendants.

          ORDER

          LEVY, UNITED STATES MAGISTRATE JUDGE.

         In lieu of a motion for conditional certification, the parties in this combined Fair Labor Standards Act and New York Labor Law action request that the court provide rulings on several points of disagreement. (See Status Report requesting rulings, dated June 20, 2017 (“Status Report”), Dkt. No. 22.) The parties raise four legal issues, whether: (1) the recipients of a court-approved notice should be determined based on a three- or six-year notice period; (2) the proper date for calculating the look back period is the date the complaint was filed or the date notice is issued; (3) defendants should be required to post notice in conspicuous areas in the workplace; and (4) a reminder notice may be sent. For the reasons stated below, I conclude that (1) a six-year notice period is permissible and serves the best interests of judicial economy in this case, so long as the notice is carefully crafted to minimize confusion among potential class members; (2) while the date notice is issued is typically used to calculate the look back period, the date the complaint was filed may be used, to ensure that potential plaintiffs whose claims may be equitably tolled receive notice; (3) defendants may indeed be required to post the notice in conspicuous areas in the workplace, including the corporate office; and (4) a reminder notice may be sent, so long as it contains a disclaimer stating that the court neither encourages nor discourages participation in the collective action.

         Background

         Plaintiff Valdinei Lopes initiated this collective and class action under the Fair Labor Standards Act (“FLSA”) and the New York Labor Law (“NYLL”) on December 8, 2016. (Complaint, dated Dec. 8, 2016, Dkt. No. 1.) Plaintiff Edison Naranjo became an additional class representative on June 7, 2017. (First Amended Complaint, dated June 7, 2017, Dkt. No. 20.) Hess, Inc., Havana Wiring & Electrical Corp., Quality Used Electrical Equipment Inc., and Empire Electrical Solution Inc. are domestic business corporations whose principal place of business is at 30-36 41st Street, Astoria, New York, and are allegedly all directed or controlled by Hernan F. Socarras a/k/a Frank Socarras. (Id. ¶¶ 20-76).[1] Plaintiffs allege that they were employed by defendants as electricians and working foremen, and were paid on an hourly basis. (Id. ¶¶ 4, 6.) Plaintiffs seek to represent themselves and all similarly situated current and former electricians and working foremen who opt into the action, pursuant to 29 U.S.C. § 216(b), to remedy FLSA violations. (Id. ¶ 8.) Plaintiffs also seek to represent an opt-out class, pursuant to Federal Rule of Civil Procedure 23, to remedy NYLL violations. (Id. ¶ 9.)

         Following a pre-motion conference on plaintiffs' proposed § 216(b) motion, the parties asked for rulings on several issues in order to obviate the need for a formal motion for conditional certification and allow them to finalize a stipulation for preliminary certification without further court intervention. (See Status Report at 1.) The issues requiring rulings are whether: (1) the recipients of the court-approved notice should be determined based on a three-or six-year notice period; (2) the proper date for calculating the look back period is the date the complaint was filed or the date notice is issued; (3) defendants should be required to post the notice in conspicuous areas in the workplace; and (4) a reminder notice may be sent. (Id.)

         Discussion

         A. Time Period to Be Covered by Notice

         The parties disagree as to whether the conditional certification and the mailing of a court-approved notice should encompass a three-year or six-year period. (Id. at 1-2.) The FLSA has a three-year statute of limitations, while the NYLL has a six-year statute of limitations.[2] Compare 29 U.S.C. § 255(a) (three-year limitations period for willful violations), with N.Y. Lab. Law § 198(3) (six-year limitations period). Plaintiffs contend that a six-year notice period is appropriate, but acknowledge a split within the Second Circuit on this issue.[3] (Id. at 1.) Defendants counter that the six-year statute of limitations under the NYLL has no bearing on conditional class certification under the FLSA. (Id. at 2.)

         Because FLSA and NYLL claims are frequently brought together in federal courts in New York, this issue has been addressed by many district courts.[4] There are three primary areas of concern district courts have raised in analyzing this question: subject-matter jurisdiction, judicial economy, and the practical effects of a more complex notice.

         Some courts focus their analysis on jurisdictional grounds alone, finding a six-year notice improper because it would bring before the court claims over which it has no jurisdiction. This argument rests on the belief that potential plaintiffs whose FLSA claims are time-barred are left with only NYLL claims that would necessarily be outside the court's subject matter jurisdiction. These courts conclude that notice going back six years would improperly bring those plaintiffs before the court. See, e.g., LeGrand v. Educ. Mgmt. Corp., No. 03 CV 9798, 2004 WL 1962076, at *3 n.2 (S.D.N.Y. Sept. 2, 2004) (“The longest applicable limitations period to plaintiffs' FLSA claim is three years if willful violations are established. Thus, any potential plaintiff whose claim is more than three years old has a state law claim only. In the absence of diversity and a claim for damages in excess of $75, 000 (which seems unlikely), the Court would have no subject matter jurisdiction over claims that are more than three years old since such claims would be pure state law claims. There is no reason to provide an opt-in notice to a plaintiff whose claims could not be asserted in this Court.”) (internal citations omitted); Foster v. Food Emporium, No. 99 CV 3860, 2000 WL 1737858, at *3 (S.D.N.Y. Apr. 6, 2000) (rejecting six-year notice period because persons who have no federal claim but a timely state law claim would not be properly before the federal court, because they have no federal claim and there would not be diversity jurisdiction over any state claim they might assert); see also Sobczak v. AWL Indus., Inc., 540 F.Supp.2d 354, 364-65 (E.D.N.Y. 2007) (citing LeGrand).

         While one of these courts goes so far as to assert that the “growing trend” in the Eastern District “appears to be limiting the notice period to three years, ” McBeth v. Gabrielli Truck Sales, Ltd., 768 F.Supp.2d 396, 400 (E.D.N.Y. 2011) (citing cases[5]), I find no evidence of such a trend in the Eastern District or beyond. Many district courts within the Second Circuit before and since McBeth have affirmed that there is no jurisdictional bar to extending the notice period to six years, given that the court may plainly exercise supplemental jurisdiction over the state-law claims of plaintiffs with timely FLSA claims.[6]

         Some of the cases finding that the court may not properly exercise supplemental jurisdiction also suggest that even these NYLL claims would not properly be before the court, on the theory that New York law does not permit NYLL class actions. See, e.g., Foster, 2000 WL 1737858, at *3 (“[CPLR] § 901(b) provides that a plaintiff may not seek class-wide relief that includes statutorily prescribed liquidated or punitive damages unless the statute in questions [sic] explicitly authorizes its enforcement by class actions. There is therefore no basis for this Court to authorize notice to potential class members going back six years . . . .”). However, the view that New York procedural law determines whether a federal district court could certify state law class actions was squarely rejected by the United States Supreme Court.[7] See Shady Grove Orthopedic Assocs., P.A. v. Allstate Ins. Co., 559 U.S. 393, 408-10 (2010) (holding that Fed R. Civ. P. 23 regulates procedure and is valid under the Rules Enabling Act; as such, Rule 23, not state law, governs the certification of state law class actions brought in federal court); see also Morris v. Alle Processing Corp., No. 08 CV 4874, 2013 WL 1880919, at *6 (E.D.N.Y. May 6, 2013) (plaintiffs need not waive claims to liquidated damages since class certification of NYLL claims seeking liquidated damages is permitted after Shady Grove). Because it is now firmly established that Rule 23, and not state law, governs the certification of state law class actions brought in federal court, NYLL claims may be brought as class actions, so long as the court otherwise has jurisdiction (either through supplemental jurisdiction, with FLSA claims as the anchor, or through diversity jurisdiction when they are brought as stand-alone actions).

         These courts are also incorrect that the lack of a timely FLSA claim automatically knocks a potential plaintiff out of this case with respect to the NYLL class action. In fact, their claims might ultimately be found to properly fall within the court's supplemental jurisdiction. The district courts' statutory authorization to exercise supplemental jurisdiction permits the courts to exercise jurisdiction over state law claims that form “part of the same case or controversy under Article III, ” meaning claims that emerge from the same common nucleus of operative fact. See 28 U.S.C. § 1367(a); United Mine Workers of Am. v. Gibbs, 383 U.S. 715, 725 (1966) (“The state and federal claims must derive from a common nucleus of operative fact. But if, considered without regard to their federal or state character, a plaintiff's claims are such that he would ordinarily be expected to try them all in one judicial proceeding, then, assuming substantiality of the federal issues, there is power in federal courts to hear the whole.”). Section 1367(a) authorizes what was traditionally known as pendent party jurisdiction, allowing the court to “adjudicate a claim against a party who is not otherwise subject to the court's jurisdiction, because the claim by or against that party arises from the same transaction or occurrence as another claim that is properly before the court.” Black's Law Dictionary 930 (9th ed. 2009).

         A number of courts have thus maintained jurisdiction over plaintiffs with exclusively NYLL claims in combined FLSA/NYLL actions. These courts hold that if a plaintiff's state law claims constitute part of the same common nucleus of operative fact, the court may exercise supplemental jurisdiction. Ouedraogo v. Durso Assocs., Inc, No. 03 CV 1851, 2005 WL 1423308, at *2 (S.D.N.Y. June 16, 2005) (Carter, J.) (exercising supplemental jurisdiction over a plaintiff with only NYLL claims, finding they “share too many common threads with the other plaintiffs' federal claims for them to be separated from one another”); see also Torres v. Gristede's Operating Corp., No. 04 CV 3316, 2006 WL 2819730, at *11 (S.D.N.Y. Sept. 29, 2006) (“This Court may exercise supplemental jurisdiction under 28 U.S.C. § 1367(a) of Plaintiffs' state law claims if they and the FLSA claims ‘derive from a common nucleus of operative fact, ' such that the parties ‘would ordinarily be expected to try them all in one judicial proceeding.'”) (quoting Gibbs, 383 U.S. at 725); Wraga v. Marble Lite, Inc., No. 05 CV 5038, 2006 WL 2443554, at *3 (E.D.N.Y. Aug. 22, 2006) (“[F]ederal courts may, and often do, exercise supplemental jurisdiction over state labor law claims even when those employees' [FLSA] claims have been dismissed as time-barred.”) (citing Godlewska v. HDA, No. 03 CV 3985, 2006 WL 1422410, at *9 (E.D.N.Y. May 18, 2006); Chen v. Street Beat Sportswear, Inc., 364 F.Supp.2d 269, 276 (E.D.N.Y. 2005); Ouedraogo, 2005 WL 1423308, at *2; Brzychanalski v. Unesco, Inc., 35 F.Supp.2d 351, 353-54 (S.D.N.Y. 1999)).

         If any potential plaintiffs opt into the FLSA collective action but do not have claims within the FLSA's statute of limitations, defendants can move to have them dismissed from the FLSA collective action. This is a low burden on defendants. If plaintiffs then decide to include such plaintiffs in the Rule 23 NYLL class, defendants may challenge the court's subject-matter jurisdiction over those claims. The burden would then be on plaintiffs to demonstrate that those claims emerge from the same common nucleus of operative fact. See McNutt v. Gen. Motors Acceptance Corp. of Indiana, 298 U.S. 178, 189 (1936) (“As [plaintiff] is seeking relief subject to this supervision, it follows that he must carry throughout the litigation the ...


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