Nelson v. Fedex Ground Package System, Inc.

          RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE

          Nina Y. Wang United States Magistrate Judge.

         This civil action comes before the court on Plaintiff Phillip Nelson's (“Plaintiff” or “Mr. Nelson”) Motion for Approval of Hoffman-LaRoche [sic] Notice (“the Motion” or “Motion for Conditional Certification”) [#18, filed July 30, 2018]. The Motion is before the undersigned Magistrate Judge pursuant to 28 U.S.C. § 636(b), the Order Referring Case dated July 16, 2018 [#16], and the Memorandum dated September 24, 2018 [#31]. Defendant FedEx Ground Package System, Inc. (“Defendant” or “FedEx”) filed a Response on September 10 [#30], and Plaintiff filed a Reply brief on September 24 [#32]. On December 5, 2018 Plaintiff filed a Notice of Supplemental Authority [#47], directing this court's attention to the decision in a similar case in Massachusetts: Roy v. FedEx Ground Package System, Inc., 3:17-cv-30116-KAR, 2018 WL 6179504 (D. Mass. Nov. 27, 2018). The Parties then engaged in further briefing regarding application of Roy. [#51; #53]. The Motion is now fully briefed and ready for decision. The court has carefully considered the Motion and related briefing, the entire case file, and the applicable case law. For the following reasons, it is respectfully RECOMMENDED that the Motion for Conditional Certification be DENIED.

         FACTUAL AND PROCEDURAL BACKGROUND^[1]

         Plaintiff Phillip Nelson filed this action under the Fair Labor Standards Act, 29 U.S.C. § 201, et seq., (the “FLSA”); the Colorado Wage Claim Act, § 8-4-101, et seq; and the Colorado Minimum Wage Act, C.R.S. § 8-6-101, et seq., as implemented by the Colorado Minimum Wage Order, on June 5, 2018. [#1]. Plaintiff is a delivery driver who worked for Harmony Express, Inc. (“Harmony Express”), an independent service provider (“ISP”)^[2] in the broader FedEx distribution network that makes deliveries to individual recipients, i.e., the final phase of a package's shipment. [Id. at ¶ 2, 7].^[3] FedEx's business model relies on the use of ISPs, who in turn hire drivers like Plaintiff, to deliver packages to customers, and to this end FedEx utilizes standardized operating agreements with ISPs. [Id. at ¶¶ 7-8].

         The relationship between FedEx and an ISP is deep and comprehensive, with the former directing nearly every operational detail of the latter's business. [Id. at ¶¶ 8-37]. Although nominally employees of the ISP, Plaintiff and other such employees had nearly every detail of their working life dictated by FedEx, including hiring and firing standards, training protocols, employee uniforms and signage for the vehicles, delivery schedules, and pickup windows. [Id.]. Plaintiff and other ISP employees carried electronic scanners owned directly by FedEx that they used to scan the packages and log them into FedEx's network. [Id. at ¶ 18]. In addition to giving weekly safety briefings, FedEx managers conduct periodic “ride-alongs” to review driver performance and ensure FedEx protocols are followed. [Id. at ¶¶ 21-22]. While the court does not accept that this constitutes a co-employer or joint venture relationship as Plaintiff maintains [id. at ¶¶ 2, 7], the factual allegations establish a close working relationship where FedEx dictates most if not all relevant practices by the ISPs and drivers like Mr. Nelson. FedEx is the only client of, and exclusive source of income for, Harmony Express. [Id. at ¶ 10]

         In the course of performing this work for Harmony Express, Plaintiff was not paid for hours he worked in excess of forty per week or twelve per day. [Id. at ¶ 36]. This non-payment forms the basis of this litigation and the putative collective class. Plaintiff has provided declarations from other ISP drivers (and putative opt-in Plaintiffs) to support this contention and in support of the instant Motion.

         Declarant Shad Newton has worked for over ten different ISPs in his professional career and states that “the pay formula is the same for drivers” and is “basically universal” from his experience.^[4] [#18-1 at ¶¶ 3, 4]. Mr. Newton states that drivers in Colorado are subject to the same overtime and employment scheme that fails to compensate them for overtime hours. [Id. at ¶¶ 11-12]. Declarant Nick Parks makes a similar declaration, alleging that he works at an unnamed ISP in Fort Collins, Colorado and has not been paid an overtime rate despite working overtime hours. [#18-2 at ¶¶ 2, 9]. Declarant Edward Lopez states that he worked in an unspecified Colorado terminal-presumably for another ISP that may or may not be the same as Mr. Parks's ISP-and he was never paid overtime. [#18-3 at ¶¶ 3, 9]. Mr. Lopez states that he “had discussions with many drivers over the course of [his] tenure with FedEx, and without exception, [he] never encountered a driver that received an overtime rate.” [Id. at ¶ 10].

         On July 30, 2018 Plaintiff filed this Motion for Approval of Hoffman-LaRoche [sic] Notice [#18] with the attached affidavits discussed above. Plaintiff seeks conditional collective action certification for “[a]ll current or former Colorado FedEx drivers from June 5, 2015 to present.” [Id. at 4]. Defendant opposes this Motion.

         Defendant argues that conditional certification is not warranted at this stage because, however light the burden, Plaintiff has failed to make substantial allegations that the putative class was subject to a single policy, decision, or plan that resulted in the harm, and additionally the putative class is not similarly situated. See generally [#30]. Defendant argues that Plaintiff has failed to demonstrate that the putative class is similarly situated because there are scores of ISPs in the State of Colorado and Plaintiff does not make substantial allegations that all drivers working for these independent entities are subject to a commonly applicable compensation policy. [Id. at 10-11].

         Defendant contends that nowhere in the Motion for Conditional Certification does Plaintiff make an allegation that he and others were subject to a single policy, decision, or plan that resulted in the harm at issue, i.e., the lack of overtime. [Id. at 11] (“The complaint, in fact, contains no allegations regarding any commonly applicable compensation policy.” (emphasis in original)). Instead, Plaintiff's and affiants' numerous allegations pertain to the extent of control FedEx exerts over ISPs, without alleging facts to establish that a single policy or decision of FedEx resulted in any sort of commonly applicable pay structure. [Id. at 11-12]. leaving the factfinder to connect the dots and assume that ISPs who failed to pay overtime to their drivers did so as the result of this control, and further that this control may be characterized as a single decision, policy, or plan. [Id. at 12-13]. But FedEx maintains separate contracts with each of the many ISPs in its network, and thus the pay structure available to the drivers “is not the result of a single decision, policy, or plan, but of the many separate decisions, policies, or plans made and implemented by individual ISPs.” [Id.] (emphasis in original).

         Defendant further objects to conditional certification on the basis that the FLSA overtime requirements will not apply to all ISP drivers, as at last some drivers qualify for exemptions from overtime requirements under Motor Carrier Act (“MCA”) exemptions. Defendant paints a complex legal and factual landscape, arguing that the MCA will exempt those Plaintiffs who work for “motor carriers” under the MCA and those whose work duties directly affect the safety of vehicles in interstate commerce. [Id. at 14]. These exceptions are themselves subject to exceptions if the employee drives a light or heavy vehicle. [Id.]. Concluding whether a driver is entitled to overtime payment under the FLSA is a difficult, fact-specific exercise that may be subject to any number of potential defenses or legal caveats.

         LEGAL STANDARD

         The FLSA governs the payment of minimum wages and overtime compensation between an employer and its employees. See 29 U.S.C. §§ 206-207. Under the statute, a covered employer must pay its employees for the time that it employs them; and the FLSA generally requires covered employers to compensate employees for work in excess of forty hours in a work week. See 29 U.S.C. §§ 206(a), 207(a). The required overtime compensation is one and one-half times an employee's “regular rate” of pay. 29 U.S.C. § 207(e). The FLSA defines an “employer” as “any person acting directly or indirectly in the interest of an employer in relation to an employee.” 29 U.S.C. § 203(d). The FLSA “defines the verb ‘employ' expansively to mean ‘suffer or permit to work.'” Nationwide Mut. Ins. Co. v. Darden, 503 U.S. 318, 326 (1992) (quoting 29 U.S.C. § 203(g)).

         In the FLSA, § 216(b) authorizes private individuals to recover damages for violations of minimum wage and overtime provisions. It provides that “[a]n action to recover the liability [for unpaid overtime compensation, retaliation and liquidated damages] may be maintained against any employer . . . in any Federal or State court of competent jurisdiction by any one or more employees for and in behalf of himself or themselves and other employees similarly situated.” 29 U.S.C. § 216(b). The FLSA thus provides plaintiffs the opportunity to proceed collectively, which allows “plaintiffs the advantage of lower individual costs to vindicate rights by the pooling of resources.” Hoffmann-La Roche Inc. v. Sperling, 493 U.S. 165, 170 (1989) (interpreting the ADEA, which explicitly incorporates the collective action provisions of the FLSA). Plaintiffs who wish to participate in an FLSA collective action must opt in to the action. 29 U.S.C. § 216(b) (“No employee shall be a party plaintiff to any such action unless he gives his consent in writing to become such a party and such consent is filed in the court in which such action is brought.”); see also In re Am. Family Mut. Ins. Co. Overtime Pay Litig., 638 F.Supp.2d 1290, 1298 (D. Colo. 2009).

         In Thiessen v. General Electric Capital Corp., the United States Court of Appeals for the Tenth Circuit (“the Tenth Circuit”) approved a two-step process for determining whether putative class members are similarly situated to the named plaintiff. 267 F.3d 1095, 1105 (10th Cir. 2001). Pursuant to this approach, the trial court determines at the initial “notice stage” whether the plaintiff has asserted “substantial allegations that the putative class members were together the victims of a single decision, policy, or plan.” Id. at 1102. The court may rely on the allegations of the complaint and any supporting affidavits filed by the plaintiff. Brown v. Money Tree Mortgage, Inc., 222 F.R.D. 676, 680 (D. Kan. 2004); see also Smith v. Pizza Hut, Inc., No. 09-cv-01632-CMA-BNB, 2012 WL 1414325 (D. Colo. Apr. 21, 2012). A court may not ...