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Beltran v. Interexchange, Inc.

United States District Court, D. Colorado

January 24, 2018

JOHANA PAOLA BELTRAN, LUSAPHO HLATSHANENI, BEAUDETTE DEETLEFS, DAYANNA PAOLA CARDENAS CAICEDO, ALEXANDRA IVETTE GONZALEZ, SARAH CAROLINA AZUELA RASCON, LAURA MEJIA JIMENEZ, JULIANE HARNING, NICOLE MAPLEDORAM, and those similarly situated, Plaintiffs,
v.
INTEREXCHANGE, INC, USAUPAIR, INC., GREAT AUPAIR, LLC, EXPERT GROUP INTERNATIONAL INC., d/b/a Expert AuPair, EURAUPAIR INTERCULTURAL CHILD CARE PROGRAMS, CULTURAL HOMSTAY INTERNATIONAL, CULTURAL CARE, INC. d/b/a Cultural Care Au Pair, AUPAIRCARE INC., AU PAIR INTERNATIONAL, INC., APF GLOBAL EXCHANGE, NFP, d/b/a AuPair Foundation, AMERICAN INSTITUTE FOR FOREIGN STUDY d/b/a Au Pair in America, AMERICAN CULTURAL EXCHANGE, LLC, d/b/a GoAuPair, GOAUPAIR OPERATIONS, LLC, d/b/a GoAuPair, AGENT AU PAIR, A.P.EX. AMERICAN PROFESSIONAL EXCHANGE, LLC d/b/a/ ProAuPair, and 20/20 CARE EXCHANGE, INC. d/b/a The International Au Pair Exchange, Defendants.

          ORDER

          KATHLEEN M. TAFOYA, UNITED STATES MAGISTRATE JUDGE.

         This matter is before the court on “Defendants' Motion to Exclude Expert Testimony of William Kerr Pursuant to F.R.E. 702” [Doc. No. 606]. “Plaintiffs' Opposition to Defendants' Daubert Motion as to Class Certification Opinions” [Doc. No. 650] was filed on August 8, 2017 and Defendants' Reply in Support of Defendants' Motion to Exclude Expert Testimony of William Kerr Pursuant to F.R.E. 702 (ECF No. 606)” [Doc. No. 666] was filed on August 21, 2017. A hearing was conducted on January 9, 2018.

         A detailed and lengthy motion for Fed.R.Civ.P. 23 class certification has been filed by the Plaintiffs.[1] [Doc. No. 562/559.] Defendants vigorously oppose such certification. The class action is “an exception to the usual rule that litigation is conducted by and on behalf of the individual named parties only.” Califano v. Yamasaki, 442 U.S. 682, 700-701 (1979). To come within the exception, a party seeking to maintain a class action “must affirmatively demonstrate his compliance” with Rule 23. Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 350 (2011). The Rule “does not set forth a mere pleading standard.” Id. Rather, a party must not only be prepared to prove that there are, in fact, sufficiently numerous parties, common questions of law or fact, typicality of claims or defenses, and adequacy of representation, as required by Rule 23(a), but also satisfy through evidentiary proof at least one of the provisions of Rule 23(b). Rule 23(b)(3) requires a court to find that “the questions of law or fact common to class members predominate over any questions affecting only individual members.” Comcast Corp. v. Behrend, 569 U.S. 27, 33 (2013). As stated by the dissent in Comcast, “it remains the ‘black letter rule' that a class may obtain certification under Rule 23(b)(3) when liability questions common to the class predominate over damages questions unique to class members.” Id. at 42-43.

         In attempting to meet the burden to show treatment as a class action is justified in this case, the plaintiffs presented two expert reports from William O. Kerr. (See “Expert Report of William O. Kerr” (“Kerr Rpt.”) [Doc. No. 560-65] and “Rebuttal Expert Report of William O. Kerr” (“Kerr Rebut. Rpt.”) [Doc. No. 560-66].) As it relates to Dr. Kerr's reports and expert testimony, the District Court will be required to consider the common impact on the members of the proposed class from the complained-of activities. The activity is allegedly conspiring to fix the stipend paid to au pairs at an artificially and illegally low $195.75 per week. Dr. Kerr, an economist, presents two models which address the harm (or damages) to the au pair class(es) caused by Defendants' alleged anti-competitive behavior. Both models utilize the so-called “but-for” comparative analysis, meaning that the expert looks to the economic circumstances that would likely have transpired absent the wrongdoing by Defendants.

         Dr. Kerr concludes that “but-for the actions of the defendants, standard au pairs would have been paid at least the legally required amount of weekly stipend.”[2] (Kerr Rebut. Rpt. at 11, ¶ 20, emphasis added.) Given this conclusion, Dr. Kerr presents the court with a model for calculation of damages for the proposed classes at the floor - to wit: at least the legally required amount of stipend pursuant to federal and state minimum wage laws - and another model applicable to the competitive ceiling - to wit: comparing the au pair class in this case against benchmark groups of workers operating in the free market of the United States, which includes within it, the market's legislative restrictions such as minimum wage laws.

         Defendants assert Dr. Kerr's opinions should be disallowed because he lacks any workable methodology for calculating damages on a class-wide basis. As a preliminary challenge, Defendants claim that a survey Dr. Kerr relied upon in determining that all the au pair classes nearly uniformly received $195.75 per week as a stipend did not comply with professional standards that govern survey research. Second, Defendants claim Dr. Kerr's “Wage and Hour Law Compliance Model” for computing damages for the classes is a mere restatement of Plaintiffs' legal position concerning labor law violations and is therefore inapplicable to an antitrust class. Third, Defendants claim Dr. Kerr's “Price Competition Model” lacks a reliable basis for calculating damages because the benchmark comparative groups chosen by Dr. Kerr are flawed and the Price Competition Model does not live up to the standards set by Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579 (1993) for the admissibility of expert opinion testimony. Defendants therefore urge that Dr. Kerr's reports and testimony should be stricken and not considered for any purpose in the court's determination regarding Rule 23 class certification.

         A. Dr. Kerr's Survey Results

         Commonality requires the plaintiffs to demonstrate that the class members have suffered the same injury. Gen. Tel. Co. of the Southwest v. Falcon, 457 U.S. 147, 157 (1982). This does not mean merely that they have all suffered a violation of the same provision of law. Dukes, 564 U.S. at 349-50. In considering the applicability of class treatment, the District Court's analysis will likely entail “overlap with the merits of the plaintiff[s'] underlying claim[s].” Id. That is so because the “‘class determination generally involves considerations that are enmeshed in the factual and legal issues comprising the plaintiff's cause of action.'” Falcon, 457 U.S. at 160 (internal quotations omitted); Comcast, 569 U.S. at 33-34. Dr. Kerr opines that the proposed classes suffered common harm from the complained-of actions of Defendant because the au pairs “were paid for employment at amounts below what they would have been paid had Defendants' complied with the law[.]” (Kerr Rebut. Rpt. at p. 5, ¶ 4.)

         Obviously, the amount of money the putative class members were paid is the first step in any analysis which seeks to prove that the payment was insufficient. To determine that amount, Dr. Kerr reviewed the extensive evidence of Defendants' business practices, which show that every one of the defendants consistently represented the stipend as “fixed, ” “set, ” or that it simply “is” $195.75. (Kerr Rep. at 16.) The evidence relied upon by Dr. Kerr included: contemporaneous business records of the actual stipend amount, including statements Defendants made about the stipend in their marketing materials, policies and guidelines (Kerr. Rebut. Rpt. at ¶ 14); Defendants' standard form contracts, which attempt to legally bind the au pairs to the represented stipend (id. at 17-18, 20); Defendants' own ordinary-course surveys, showing that host families uniformly adhere to Defendants' fixed wages (id. at 22); and the parties' depositions, which also support the proposition that au pairs were paid a fixed wage (id. at 17, 19-22). (See also Kerr Rep. ¶¶ 39-55 & Exs. 7-10.)

         Dr. Kerr also gathered information to support his findings from sponsor announcements to au pair candidates and potential host families, sponsor organization marketing material directed toward host families, a declaration from a host parent, deposition testimony of a foreign au pair agency director who worked with U.S. sponsors to place au pairs, monthly contact reports administered by certain sponsors and audit reports submitted to the Department of State. (Kerr Rebut. Rpt. at 7-8.) In paragraph 18, id., Kerr lists at least five other sources evidencing that au pairs were paid $195.75 per week by host families at the direction of all the sponsor organizations. All those sources-direct and indirect, contemporaneous and retrospective- show the same thing. Au pairs' wages were consistently fixed at or very near $195.75 per week. Id.; see also Rule 23 Mot. at 33 n.43 (Rodr. Decl. Ex. 30); Kerr Rep. ¶ 51. Into this broad mix of evidentiary sources comes the survey about which Defendants complain.

         Dr. Kerr's survey was provided to every host family for which Defendants provided an email. There was “no sampling involved at all.” (Resp. at 10.) A total of 8, 806 families responded, of which 4, 583 both (1) concerned an au pair within one of the alleged classes and (2) contained a specific response to the question “what was the typical weekly stipend amount paid?” (Id.) The only other question on the survey was the year the au pair worked and the type of au pair the host family employed. While the numbers of responses were in the thousands, as a percentage of the whole, the number of responding host families represented only an 18% response rate from the total number of surveys sent out. (Mot. at 13.)

         If the survey were the only evidence supporting the base finding that au pairs were paid $195.75 per week, such a low response rate would have to be carefully considered, even though it reached a very broad spectrum of host families in the au pair group.[3] But such is not the case here. The survey in question was merely some confirmation of all the other voluminous evidence supporting the conclusion that putative class member au pairs were almost uniformly paid $195.75 per week as a stipend by the host families.

         The court finds that even if the survey and its results were discounted entirely, Dr. Kerr's conclusion that “all, or a substantial majority of, au pairs were offered and paid a weekly stipend of approximately $195.75” (Kerr Rpt. ¶ 39) is amply supported by the other overwhelming evidence he considered. For class certification purposes, Dr. Kerr's expert opinion that the record demonstrates commonality with regard to the weekly stipend amount is based on sufficient facts, data and testimony to render it reliable. See Fed. R. Evid. 702.

         B. Wage and Hour Law ...


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