Valverde v. Xclusive Staffing, Inc.

          ORDER

          RAYMOND P. MOORE, UNITED STATES DISTRICT JUDGE

         This matter is before the Court on Plaintiffs' (excepting Plaintiff Simon) Motion for Preliminary Approval of Proposed Class and Collective Action Settlement Agreement (the “Motion”) (ECF No. 296). The Plaintiffs are parties in the two civil actions captioned above and pending before this Court: Valverde v. Xclusive, No. 16-cv-00671-RM-NRN, and Trejo v. Xclusive, No. 17-cv-01602-RM-NRN. At the parties' request, these actions have been consolidated for settlement approval process.

         Defendants filed a Response, but are unopposed to the Motion. Plaintiff Simon has indicated she opposed the Motion but filed no response in opposition and did not appear at the July 3, 2019, hearing the Court held on the Motion. The Court has considered the Motion and the record in this case, heard the parties' position and arguments, and reviewed the relevant rules and case law. After such consideration, and being otherwise fully advised, the Motion is denied without prejudice.

         I. BACKGROUND^[1]

         Defendants Xclusive Staffing, Inc. and Xclusive Staffing of Colorado, LLC (collectively, “Xclusive”) are staffing agencies based in Colorado which are owned and controlled by Defendant Diane Astley. Defendant Xclusive Management, LLC is an affiliate of Xclusive. Xclusive provides low-wage workers for their clients which are mostly hotels like Defendants Omni, JMIR (Hyatt), Marriott, and Westin. Plaintiffs allegedly work or worked at one or more of Xclusive's client locations in Colorado providing various services such as being a cook or server at banquets.

         Plaintiffs allege Xclusive maintains various policies and practices which violate state and federal wage and hour laws. As relevant here, they consist allegedly of: (1) the $3.00 deduction as an administrative charge per paycheck policy; (2) the automatic 30-minute break deduction policy, regardless of whether the employee was given or took a break; and (3) the failure to provide a 10-minute break policy (as required under Colorado law).

         In the Valverde Action, Plaintiffs named in that case brought six claims for relief under federal and state law seeking collective and class action certification. Former Defendant HealthONE was dismissed after it settled the claims brought by Plaintiff Simon on a collective and class action bases. (Valverde, ECF No. 217.) Other claims (or parts of claims) were dismissed by order of the Court or voluntarily. Further, the Court ordered as follows as to the FLSA collective action claim: (1) the $3.00 deduction policy was certified on a nationwide basis; and (2) the 30-minute break deduction policy was certified for Colorado workers (w/o prejudice for nationwide certification).^[2] (ECF No. 248.)

         In the Trejo Action, Plaintiffs named in that case raised eight (8) claims under federal and state law seeking collective and class action certification.^[3] To effectuate the proposed settlement, the parties stipulated to dismissal without prejudice of Counts IV, V, and VIII to the extent the class action claims are based on conduct occurring outside of Colorado. (ECF Nos. 73, 74.)

         Before notices were sent in the Valverde Action, upon the request of the parties, the Court stayed all matters in both cases and tolled the statute of limitations for all members of the conditionally certified collective classes. (ECF Nos. 251, 252.) That stay has been continued. (ECF Nos. 256, 259, 264.)

         The Motion now before the Court is filed by Plaintiffs Isabel Valverde, Jose Trejo, Marisol Trejo, Vilma de Jesus Alvarenga Carranza, and Obdulia Julie Cortez (collectively, “Movants”). Movants seek, for purposes of settlement only and for Colorado employees only, certification of a Rule 23 class action, preliminary approval of the Settlement Agreement and Release (“Settlement”), and approval of the parties' proposed notices and forms. The Motion also relies on the Court's prior order conditionally certifying an FLSA collective action (the “FLSA Order”). (ECF No. 248.) For the reasons stated herein, the Court finds approval may not be had on the papers as they currently stand.

         II. LEGAL STANDARD

         A. Rule 23 Class Certification

         A party seeking class certification must show first show the existence of the four threshold requirements of Rule 23(a). Shook v. El Paso Cnty., 386 F.3d 963, 971 (10th Cir. 2004); see also Vallario v. Vandehey, 554 F.3d 1259, 1267 (10th Cir. 2009). These requirements are: “(1) the class is so numerous that joinder of all members is impracticable; (2) there are questions of law or fact common to the class; (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and (4) the representative parties will fairly and adequately protect the interests of the class.” Fed.R.Civ.P. 23(a). These requirements are frequently referred to as numerosity, commonality, typicality, and adequacy of representation. Harper v. C.R. England, Inc., 746 Fed.Appx. 712, 720 (10th Cir. 2018). In the Court's Rule 23 analysis, “[a]lthough the party seeking to certify a class bears the burden of proving that all the requirements of Rule 23 are met … the district court must engage in its own rigorous analysis of whether the prerequisites of Rule 23(a) have been satisfied.” Shook, 386 F.3d at 968 (quotation marks and citations omitted). The court must accept the substantive allegations of the complaint as true and may consider the legal and factual issues presented by plaintiff's complaints. Id.

         Once a plaintiff has met the Rule 23(a) threshold requirements, it must then show the action falls within one of the three categories of suits set forth under Rule 23(b). Vallario, 554 F.3d at 1267. In this case, Movants seek certification under Rule 23(b)(3) (see ECF No. 296, p. 5). Rule 23(b)(3) lays out four matters the Court considers before certifying such a class. Fed.R.Civ.P. 23(b)(3)(A)-(D). However, where the Court is certifying a class for settlement purposes, Rule 23(b)(3)(D) need not be considered. Harper, 746 Fed.Appx. at 720 (citing Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 520 (1997)).

         Once a class is certified, notice must be given to the class members. Fed.R.Civ.P. 23(e). Because class members would be bound by any judgment or settlement, they must be afforded an opportunity to be excluded from the class, i.e., opt-out. See Fed. R. Civ. P. 23(c)(2)(B)(v) (Notice must advise “that the court will exclude from the class any member who requests exclusion.”).

         B. FLSA Conditional Collective Action Certification

         The FLSA permits collective actions where the allegedly aggrieved employees are “similarly situated.” 29 U.S.C. § 216(b). Under Thiessen v. Gen. Electric Capital Corp., 267 F.3d 1095, 1105 (10th Cir. 2001), a district court may apply a two-stage “ad hoc” process to determine whether putative collective action members were “similarly situated” for purposes of § 216(b). At the initial “notice” stage, this Court “requires nothing more than substantial allegations that the putative class members were together the victims of a single decision, policy, or plan.” Id. at 1102 (quotation marks and alteration omitted). If a movant meets this burden, the district court has discretion to facilitate notice to potential plaintiffs, such as ordering the employer to provide the names and addresses of current and former employees who may be eligible to participate in the collective action and authorizing court approved notice and consent documents be sent to such employees. See Hoffman-La Roche Inc. v. Sperling, 493 U.S. 165, 169-174 (1989). The judicial system benefits of a collective action, however, depend on the employees receiving accurate and timely notice of the pendency of the collective action, so they can make informed decisions on whether to participate by consenting to become a party, i.e., opt-in to the action. Id. at 170.

         III. THE PROPOSED CLASSES

         Movants and Defendants have agreed to the following collective or class action “classes” and “subclass” definitions:

(1) The Fed.R.Civ.P. 23 Class (the “Rule 23 Class”):

ALL CURRENT AND FORMER HOURLY EMPLOYEES OF XCLUSIVE STAFFING, INC., XCLUSIVE STAFFING OF COLORADO, LLC, OR ANY OF THEIR AFFILIATES, WHO WORKED AT ONE OF THEIR CLIENTS' COLORADO LOCATIONS (EXCEPT SKY RIDGE MEDICAL CENTER HCA-HEALTHONE LLC) AND WERE EMPLOYED ON OR AFTER MARCH 22, 2013 AND UP TO AND INCLUDING FEBRUARY 3, 2019.

(2) The Rule 23 $3 Deduction Subclass (the “$3 Subclass”):

ALL CURRENT AND FORMER HOURLY EMPLOYEES OF XCLUSIVE STAFFING, INC., XCLUSIVE STAFFING OF COLORADO, LLC, OR ANY OF THEIR AFFILIATES, WHO WORKED AT ONE OF THEIR CLIENTS' COLORADO LOCATIONS (EXCEPT SKY RIDGE MEDICAL CENTER HCA-HEALTHONE LLC) AND WERE EMPLOYED ON OR AFTER MARCH 22, 2013 AND UP TO AND INCLUDING JULY 1, 2016.

(3) The FLSA Class:

ALL CURRENT AND FORMER HOURLY EMPLOYEES OF XCLUSIVE STAFFING, INC., XCLUSIVE STAFFING OF COLORADO, LLC, OR ANY OF THEIR AFFILIATES, WHO WORKED AT ONE OF THEIR CLIENTS' COLORADO LOCATIONS (EXCEPT SKY RIDGE MEDICAL CENTER HCA-HEALTHONE LLC) AND WERE EMPLOYED ON OR AFTER MARCH 22, 2013 AND UP TO AND INCLUDING FEBRUARY 3, 2019.

         The Rule 23 Class and FLSA Class are coextensive.

         IV. ...