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Morano v. Intercontinental Capital Grp., Inc.

Jul 17, 2012
10 CV 02192 (KBF) (S.D.N.Y. Jul. 17, 2012)


decertifying in part based on "differences in . . . supervising directives"

Summary of this case from Lynch v. City of N.Y.


10 CV 02192 (KBF)





Plaintiffs Jason Morano, Avin Samtani, Kyle O'Keefe, Muniram Boodram, John Yurkovich, Jodi Ricciardi, Matthew Puccio, and Jeremy LaSacco (collectively, "plaintiffs" or "named plaintiffs"), and approximately 75 opt-in plaintiffs seek relief from their former employer, Intercontinental Capital Group, Inc. ("ICG"), under the Fair Labor Standards Act, 29 U.S.C. §§ 201 et seq ("FLSA"), and New York state labor laws to recover unpaid minimum wages, overtime compensation, and spread of hours pay.

Plaintiffs brought this action as a nationwide collective action pursuant to 29 U.S.C. § 216(b), alleging that defendants ICG, Richard Steinberg, Robert Tuzzo, Kola Lulgjuraj, and Dustin Dimisa (collectively, "defendants") required ICG loan officers to work in excess of forty hours per week without paying them overtime compensation and/or minimum wages as required by federal and state law.

On October 1, 2010, plaintiffs moved for "conditional certification" to proceed as a collective action under § 216(b) of the FLSA, and sought authorization to disseminate notice to other putative class members. (Dkt. No. 52.) This Court conditionally certified a class of "any employee who is or has been, at any time within the past three (3) years, employed by Defendants as a loan officer" ("the Class") on October 28, 2010, finding that plaintiffs had demonstrated they were "similarly situated" to a sufficient number of other potential class members. (Id.) Subsequent to distribution of the class-wide notice, approximately 75 plaintiffs opted in to the action. (Joint Appendix (hereafter "Appx.") 1-8.)

On April 2, 2012, defendants moved for decertification of the Class, alleging that individual class members are not "similarly situated." (Dkt. No. 125.) On April 30, 2012, plaintiffs opposed the motion. (Dkt. No. 133.)

Courts often refer to this step in FLSA litigation as "decertification." This term is not precise as the first stage of the process is not a true "certification," but rather a "conditional certification" that only allows for the sending of notice to potential class members. See Hernandez v. Merrill Lynch & Co., Inc., No. 11 Civ. 8472, 2012 WL 1193836, at *3 n.4 (S.D.N.Y. Apr. 6, 2012); see also Pefanis v. Westway Diner, Inc., No. 08 Civ. 002, 2010 WL 3564426, at *4 n.5 (S.D.N.Y. Sept. 7 2010).

Although similarities exist amongst plaintiffs in the Class and there is evidence of ICG's "unified policy" of FLSA violations, there are factual differences and disparate defenses that negate a finding that the plaintiffs are "similarly situated." Accordingly, a Class-wide trial is impracticable. First, plaintiffs worked in no fewer than seven branch locations, each with its own branch manager who independently hired his team's loan officers and instructed them on their work hours. Next, plaintiffs also differ in how they were paid; ICG paid one group on a commission-only basis, and another group $628.00 every two weeks. If these were the only differences, fashioning a class might have been possible; but other differences create defenses as to individual class members that would defeat any efficiency in trying this case as a Class.

For instance, ICG had its employees to sign an employment agreement requiring advance written approval for loan officers to work overtime, as well as submissions of accurate timesheets at the end of each week. Some plaintiffs signed the agreement while others did not; some plaintiffs worked prior to the time when ICG required its employees sign the new agreement while others worked exclusively afterwards; some plaintiffs turned in timesheets while others did not; and some plaintiffs turned in timesheets marked with overtime hours which were ultimately rejected while others did not. As a result of the various permutations, defendants would have defenses that are individual to each plaintiff or group of plaintiffs. Accordingly, the Court would be unable to conduct an efficient and fair trial.

For the reasons set forth below, defendants' motion is GRANTED.



ICG is a mortgage bank that is licensed in approximately 30 states. (Appx. 191.) Dustin Dimisa is President, Chief Executive Officer, and 95 percent owner of ICG. (Appx. 189.) Richard Steinberg is 5 percent owner of ICG. (Appx. 243.) Robert Tuzzo is the company's Vice President of Retail Sales. (Appx. 192.) Kola Lulgjuraj is its head of Human Resources. (Appx. 193.)

Named plaintiffs were all employed as loan officers at ICG's Manhattan headquarters. (Appx. 1-8.) Dimisa describes a loan officer as someone who interviews applicants for residential home loan applications. (Appx. 190.) Some plaintiffs, including named plaintiffs Morano and Samtani, were involved in overseeing other loan officers as "Team Leaders." (Appx. 172-73.) The opt-in plaintiffs were loan officers employed at no fewer than seven different branches of ICG located in: Massachusetts; Arizona; Pennsylvania; New York, New York; Melville, New York; Garden City, New York; and Smithtown, New York. (Id.) Each branch was supervised by a different manager. (Appx. 176-82.) The branch managers at each of the seven branches had the authority to hire their own loan officers. (Appx. 177, 183.) The branch managers or the "team leaders" - loan officers with some managerial responsibilities - would typically instruct the loan officers who were members of their "team" about work hours. (Appx. 33-35, 174-75.)

Defendant Tuzzo, however, dismisses the importance of the management titles given to plaintiffs Morano and Samtani, as "it is well known that titles mean nothing in the mortgage business. Jason Morano and Avin Samtani sold loans like everyone else." (Appx. 389.)

Named plaintiffs Morano and Samtani were paid on a commission-only basis. (Appx. 241, 389.) Named plaintiffs O'Keefe, Boodram, Yurkovich, Ricciardi, Puccio, and Lasacco were all paid $628.00 twice a month which was a draw against commissions. (Appx. 421-59.) The opt-in plaintiffs likewise received pay on a commission-only basis or were paid $628.00 every two weeks which was a draw against commissions. (Appx. 199-200, 206-07, 236, 239-40, 460-97.)

There is a dispute between the parties as to whether all named or opt-in plaintiffs were exempt from the overtime requirements of the FLSA. (Compare Mem. of Law In Opp'n to the Defs' Mot. for Decert ("Opp'n") (Dkt. No. 133) at 6 with Mem. of Law In Support of Defs.' Mot. for Decert. ("Decert. Mem.") (Dkt. No. 126) at 22-24.) Plaintiffs contend that all opt-in plaintiffs are non-exempt. (Decert. Mem. at 22.) Defendant Steinberg testified that ICG treated its loan officers as exempt prior to June 1, 2009 (Appx. 244, 245-48); Dimisa, however, testified that the loan officers were not exempt (Appx. 202).

Around May 27, 2009, ICG had its loan officers sign employment agreements that included the stipulations, "Employee shall work no more than 40 hours per week, unless additional hours are approved in advance and in writing by his or her Supervisor" and "[e]mployee must at the end of each week submit a time sheet, initialed by him/her that accurately reflects all hours worked." (Appx. 471.) All named, and most opt-in, plaintiffs signed that agreement; however, two opt-in plaintiffs did not sign the agreement and there is nothing in the record regarding whether another 34 plaintiffs signed such an agreement or not. (Appx. 1-8.) A subset of the Class worked exclusively before these employment agreements were in place, a subset worked exclusively after the agreements were in place, and a subset of the Class spans across both periods of time. (Appx. 1-8.)

Prior to June 1, 2009, ICG did not record the hours that its loan officers worked. (Appx. 498.) After putting the May 2009 employment agreements in place, around June 1, 2009, ICG began creating time sheets for the loan officers to sign that pre-generated hours of 9am-6pm; the pre-populated forms did state, "[i]f [Loan Officer] did not work the schedule or take the scheduled breaks, please indicate all deviations from schedule and initial such changes." (Appx. 247-48, 391; see also Appx. 9 (Sample Timesheet).) Most named and opt-in plaintiffs turned in timesheets, but several did not. (Appx. 1-8.) Most plaintiffs who turned in timesheets reported not working overtime; however fifteen named plaintiffs and opt-in plaintiffs had changed their timesheets to indicate that they worked more than 40 hours a week. (Appx. 509-28.) Opt-in plaintiffs from some branches testified that their managers told them not to report overtime. (Appx. 1-8.) Defendant Lulgjuraj, Director of Human Resources, ultimately collected every timesheet. (Appx. 231.)

CEO Dimisa testified that it is his "strong belief" that nobody at ICG has ever worked more than 40 hours a week. (Appx. 215, 219.) He further testified that no loan officer has ever received overtime compensation. (Id.) He testified that he is unaware of any loan officer ever working before 9:00am and past 6:00pm during the week, or on Saturdays. (Appx. 209-210.) Dimisa further testified to never directing night coverage by loan officers. (See Appx. 214.) Dimisa also stated that branch managers had individual discretion to approve anyone working over 40 hours per week. (Appx. 208.)

Dimisa's assertions are belied by evidence in the record showing that he told Tuzzo, VP of Retail Sales, on a Sunday, "CA is hitting. We will need night coverage next week." (Appx. 340.) Another email from Frank Capobianco sent at 9:10pm with defendant Dimisa in the "CC" line says, in part, "we have a strong night crew still here." (Appx. 303.)

Defendant Tuzzo, Vice President of Retail Sales, contradicts much of Dimisa's testimony. Tuzzo managed all branch managers, according to defendant Dimisa. (Appx. 203.) Tuzzo was also unaware of the company ever paying loan officers overtime compensation. (Decl. of Robert Tuzzo, dated April 2012 ("Tuzzo Decl.") ¶ 12 (Appx. 388-96).) But he averred in his declaration that loan officers sometimes worked as early as 8:00am and as late as 9:00pm during the week, as well as on Saturdays. (Tuzzo Decl. ¶ 19.) He asserted that loan officers worked well in excess of 40 hours every week and that defendants Simisa and Steinberg were present to observe the loan officer working these hours. (Tuzzo Decl. ¶ 25.) Defendant Tuzzo averred that Dimisa pressured him to have the loan officers working early in the morning, in the evening hours, and on weekends to ensure that calls from potential customers were answered. (Tuzzo Decl. ¶¶ 28, 31.) He also asserted that supervisors were unable to approve overtime pay for loan officers, and that defendants Dimisa and Steinberg "state[d] on more than one occasion that ICG does not pay overtime to loan officers and that any overtime for the loan officers would have had to be approved by them [i.e. Dimisa and Steinberg]." (Tuzzo Decl. ¶ 33.)

Furthermore, emails in the record indicate that various ICG executives requested that loan officers work longer than their scheduled hours. Tuzzo, Smithtown sales manager William Forte, Garden City branch manager Frank Capobianco, Arizona branch manager Jason Mitchell, and Massachusetts branch manager Todd Pezzi all, at one time or another, directed loan officers to stay late into the evenings and on the weekends. (Appx. 291-384; see, e.g., Appx. 303 (email sent from Frank Capobianco at 9:10pm saying, "The long island guys are leaving, but we have a strong night crew still here"), 343 (email sent from Robert Tuzzo from Frank Capobiano's account at 1:22pm on a Friday saying, "DON'T LOOK LIKE ASSHOLES - FRANK HAS HIS WHOLE OFFICE COMING IN TOMORROE [sic] THIS IS THE MOST CALLS WE HAVE EVER GOTTEN EVER. BOSTON AND ARIZONA HAVE ALL THEIR PEOPLE COMING IN - WE NEED COVERAGE!"), 364 (email sent from William Forte at 9:33am on a Friday instructing his team to come in on Saturday as, "I need EVERYONE here, regardless or [sic] the weather, religious beliefs, etc, etc. If I can be here extremely hung over from the wedding, then so can everyone else."), 372 (email from William Forte at 12:14 on a Saturday telling his team, "Saturdays are crucial in this business. I need 2 Saturdays a month guys, just during the winter. Sounds fair to me. ANYONE THAT DID NOT SHOW UP EITHER THIS WEEK OR LAST IS HAVING THEIR LEADS TURNED OFF UNTIL TUESDAY. NO MORE GAMES.").)

As shown from the emails quoted above, some of the named and opt-in plaintiffs testified that ICG executives would threaten to withhold pay or leads if they failed to submit a time sheet. (See, e.g., Appx. 530, 552, 605, 630, 632.) Some of the named and opt-in plaintiffs also testified that their respective branch managers instructed them not to change the pre-populated timesheets, or that they would reject the timesheet if it stated overtime. (See, e.g., Appx. 535-36, 540, 542-44, 552-53, 563, 605, 630.)

Named or opt-in plaintiffs from four branches (i.e., Manhattan, Garden City, Massachusetts, Arizona) testified to working over 40 hours a week without proper overtime compensation. (See, e.g., Appx. 403-04, 531, 539, 550-51, 556-61, 567-68.) At least six loan officers from the Smithtown branch opted into the action, but none has testified about executives specifically requesting employees at that branch to work extra hours. At least seven loan officers from the Pennsylvania branch opted into the action, but none has testified and no documentation has been presented about executives specifically requesting employees at that branch to work extra hours. At least one loan officer from the Melville branch has opted into the action, but he has not testified and no documentation has been presented about executives specifically requesting him to work extra hours. B. PROCEDURAL BACKGROUND

The record does include emails from Smithtown Sales Manager William Forte, who was paid a commission based upon the production of the loan officers on his team (Appx. 250-52), demanding that his team work on nights and Saturdays (Appx. 364-78).

On March 12, 2010, named plaintiffs filed a complaint seeking recovery for alleged violations of state and federal overtime and minimum wage laws. (Dkt. No. 1.) Plaintiffs seek compensation for the alleged overtime they worked or their unpaid minimum wages or both, plus interest, statutory penalties, reasonable attorney's fees and litigation costs. (See id.)

This Court conditionally certified the Class on October 28, 2010. (Dkt. No. 52.) The ensuing discovery period has yielded facts that now allow this Court to rule on defendants' motion for decertification, by determining whether individual members of the Class are, in fact, "similarly situated."


Section 216(b) of the FLSA authorizes employees to maintain collective actions to recover damages for unpaid wages where all employees are "similarly situated." 29 U.S.C. § 216(b). "Similarly situated" employees must "opt in" to an action by filing a "consent in writing to become [] a party" to the action. Id. "'[D]istrict courts have discretion, in appropriate cases, to implement § 216(b) by facilitating notice to potential plaintiffs of the pendency of the action and of their opportunity to opt-in as represented plaintiffs.'" Myers v. Hertz Corp., 624 F.3d 537, 554 (2d Cir. 2010) (quoting Hoffman-La Roche Inc. v. Sperling, 493 U.S. 165, 169 (1989)) (brackets and alterations omitted).

When deciding whether to certify a class under 29 U.S.C. § 216(b), district courts in the Second Circuit apply a two-step process. See Myers, 624 F.3d at 555.

This process, which is not the same process as notice to class members under Rule 23 of the Federal Rules of Civil Procedure, is frequently termed certification of a "collective action."

The first step requires the court to determine whether "to send notice to potential opt-in plaintiffs who may be 'similarly situated' to the named plaintiffs with respect to whether a FLSA violation has occurred." Id. at 555. That burden can be satisfied with only a "modest factual showing" that the plaintiff and potential opt-in plaintiffs "'together were victims of a common policy or plan that violated the law.'" Id. (quoting Hoffman v. Sbarro, Inc., 982 F. Supp. 249, 261 (S.D.N.Y. 1997)); see also Realite v. Ark Restaurants Corp., 7 F.Supp.2d 303, 306 (S.D.N.Y. 1998) (Sotomayor, J.). Under this "low standard of proof," Myers, 624 F.3d at 555, "the court does not resolve factual disputes, decide ultimate issues on the merits, or make credibility determinations." Diaz v. S&H Bondi's Dep't Store, Inc., No. 10 Civ. 7676, 2012 WL 137460, at *3 (S.D.N.Y. Jan. 18, 2012). The court only exercises its "discretionary power . . . to facilitate the sending of notice to potential class members." Myers, 624 F.3d at 555 n.10.

The burden imposed at this first "conditional certification" stage is minimal precisely because the second step allows for a full review of the factual record developed during discovery. Id. at 555. The second stage, at issues on this motion, typically proceeds after the defendant moves for the decertification of the class. "At the second stage, the district court will, on a fuller record, determine whether a so-called 'collective action' may go forward by determining whether the plaintiffs who have opted in are in fact 'similarly situated' to the named plaintiffs." Id.

The court must apply a more "stringent standard" of proof in this second stage for determining whether plaintiffs are similarly situated for the purposes of the FLSA. See Damassia v. Duane Reade, Inc., No. 04 Civ. 8819, 2006 WL 2853971, at *3 (S.D.N.Y. Oct. 5, 2006). The Second Circuit has yet to prescribe a particular method for determining whether members of a class are similarly situated; however, district courts typically look to the "'(1) disparate factual and employment settings of the individual plaintiffs; (2) defenses available to defendants which appear to be individual to each plaintiff; and (3) fairness and procedural considerations counseling for or against [collective action treatment].'" Zivali v. AT&T Mobility, LLC, 784 F. Supp. 2d 456, 460 (S.D.N.Y. 2011) (quoting Laroque v. Domino's Pizza, LLC, 557 F. Supp. 2d 346, 352 (E.D.N.Y. 2008)).

The burden is on the named plaintiff to prove that all class members are similarly situated. See Ayers v. SGS Control Servs., No. 03 Civ. 9078, 2007 WL 646326, at *4 (S.D.N.Y. Feb 26, 2007). "All that is required is a persuasive showing that the original and opt-in plaintiffs were common victims of a FLSA violation pursuant to a systematically-applied company policy or practice such that there exist common questions of law and fact that justify representational litigation." Pefanis v. Westway Diner, Inc., No. 08 Civ. 002, 2010 WL 3564426, at *4 (S.D.N.Y. Sept. 7 2010). "Plaintiffs need not present evidence for 'each and every' opt-in Plaintiff so long as they can show that Defendants engaged in a policy, plan, or scheme of FLSA violations." Gayle v. Harry's Nurses Registry, Inc., No. 07 Civ. 4672, 2012 WL 686860, at *5 (E.D.N.Y. Mar. 2, 2012); see also Ayers, 2007 WL 646326, at *5.

Plaintiffs assert that defendants have failed to meet their burden for the collective action to be decertified (Opp'n at 7); however, they misstate the standard. As stated, the burden rests with the named plaintiffs to prove that the other employees are "similarly situated." See Ayers, 2007 WL 646326, at *4. As discussed below in Part B, plaintiffs have not met their burden.

If the record shows all putative class members are "similarly situated," the "conditional" aspect is removed, the collective action is finally certified, and the matter proceeds to trial. See Canales v. 115 Broadway Corp., No. 09 Civ. 4674, 2009 WL 3029333, at *2 (S.D.N.Y. Sept. 22, 2009). If the court finds all class members are not similarly situated, "the class is decertified, the claims of the opt-in plaintiffs are dismissed without prejudice, and the class representative may proceed on his or her own claims." Lee v. ABC Carpet & Home, 236 F.R.D. 193, 197 (S.D.N.Y. 2006).


Despite evidence in the record demonstrating ICG's "systematically-applied" practice of not compensating employees for overtime work, certification of the Class is not appropriate for two reasons. First, and most importantly, members of the Class are not "similarly situated." The facts regarding the various employment terms and conditions unique to plaintiffs or groups of plaintiffs make it clear that a combination of inquiries would be necessary for sorting through the claims of different plaintiffs; orchestrating an efficient trial of all plaintiffs as a group would therefore be impracticable. Second, and related, those differences raise a number of "defenses available to defendants which appear to be individual to each plaintiff." See Zivali, 784 F. Supp. 2d at 460.

Before discussing these reasons for decertification, however, the Court deems it important to note that evidence in the record allows the Court to find a "unified policy, plan, or scheme of FLSA violations," within ICG. See Gayle 2012 WL 686860, at *5. Proving a "unified policy, plan or scheme of FLSA violations" does not require plaintiffs to produce documentation from a company handbook explicitly outlining its policy to have employees work uncompensated overtime hours: such a scheme would never be found. Instead, plaintiffs must show in some way that they were all impacted by a "single decision, policy, or plan." See id.

The overwhelming evidence indicates that overtime was worked at ICG but not paid, and that this practice permeated the company. Although no organizational chart of the company exists, it appears that loan officers reported either to branch managers or "team leaders," who in turn reported to branch managers. (Appx. 183.) The branch managers reported to defendant Tuzzo (Appx. 203), who reported to the owners -- defendants Dimisa and Steinberg (Appx. 175). The record shows that Dimisa put intense pressure on Tuzzo to have loan officers work longer hours, and, in his capacity as manager, Tuzzo relayed the directive downward to the loan officers. (Tuzzo Decl. ¶¶ 28, 31 (Appx. 390-91).) Many of the loan officers complain of being told that they could not submit an overtime sheet indicating extra hours. (Appx. 530.)

The combination of testimony from employees at various levels and email documentation makes it clear that there was a practice of unpaid overtime work at ICG. (Appx. 291-384.) At every level of this hierarchy, with the exception of the owners, employees at ICG have testified that loan officers worked more than 40 hours per week without being appropriately compensated. (See, e.g., Tuzzo Decl. ¶ 19 (Appx. 390); Appx. 276, 509-528.) Emails in the record support that testimony by showing executives discussing the need for "coverage" on nights and Saturdays, and branch managers directing the loan officers on their teams to work such hours. (Appx. 291-384.)

Testimony by Dimisa that no loan officer ever worked before 9:00am or after 6:00pm or at all on Saturdays is simply not credible in light of that evidence. His assertion is not only belied by the testimony of employees at every other level of the company, but by his own email directing a branch manager to have loan officers come in at night. (Appx. 214; see also Appx. 276 (testimony from Frank Capobianco that defendant Dimisa told him to have loan officers work between the hours of 6:00pm and 9:00pm during the week and between the hours of 10:00am and 2:00pm on Saturdays).)

Despite the finding of a "systematically-applied company policy or practice," as noted above, the Court nevertheless, and after many attempts to find an efficient manner in which these claims could be tried as a collection action, finds it impracticable and inefficient to allow the Class to move forward as a collective action. This large group of plaintiffs contains too many differential circumstances; plaintiffs are not "similarly situated" and defendants have a number of defenses that go to some plaintiffs and not others.

As for the plaintiffs being "similarly situated" with regards to each other, there are four variables that divide members of the Class: (1) branch location, (2) payment structure, (3) whether the plaintiff signed the employment agreement, and (4) timekeeping procedure. Those factors demand asking different "questions of law and fact" for subsets of the Class, meaning the Class itself is not "similarly situated." See Pefanis, 2010 WL 3564426, at *4. The Court would be unable to conduct an efficient and fair trial given the various permutations of the Class. See Zivali, 784 F. Supp. 2d at 460. In addition, the differences with regards to the third and fourth variables give rise to "defenses available to defendants which appear to be individual to each plaintiff," also necessitating decertification. Zivali, 784 F. Supp. 2d at 460.

Although defendants also argue that the Court should decertify the Class because some members are exempt from the overtime provisions of FLSA while others are not (Decert. Mem. at 22-24), the Court notes that no plaintiff here is exempt (see Opp'n at 6). Individuals can be exempt if they are "employed in a bona fide executive, administrative, or professional capacity." 29 U.S.C. § 213(a)(1). In order to qualify for this exemption, an employee must satisfy a "duties test" and a "salary basis" test. 29 CFR §§ 541.100, 541.200, 541.300; see also Torres v. Gristede's Operating Corp., No. 04 Civ. 3316, 2006 WL 2819730, at *6 (S.D.N.Y. Sept. 29, 2006). Here, the plaintiffs do not satisfy the "salary basis" test, which consists of "a requirement that the exempt employee receive no less than a specified level of compensation, and a requirement that the employee's compensation be paid 'on a salary basis.'" Hoffman v. Sbarro, Inc., 982 F. Supp. 249, 250-51 (S.D.N.Y. 1997). The guaranteed rate cannot be less than $455 a week. 29 C.F.R. § 541.100. Loan officers at ICG were paid either on a commission-only basis or were paid $628.00 every two weeks, which was a draw against commissions. (Appx. 199-200, 206-07, 236, 239-40, 460-97.) With regards to either payment structure, the guaranteed salary is less than $455 a week and thus an inadequate guaranteed salary to satisfy the overtime provisions of the FLSA. 29 C.F.R. § 541.100. Despite the fact that all plaintiffs are non-exempt and thus "similarly situated" in that way, decertification is still appropriate for the reasons discussed below.

First, plaintiffs are not "similarly situated" because of differences in the supervising directives of loan officers at the respective ICG branches. Plaintiffs worked in no fewer than seven branch locations. (Appx. 1-8.) Although the Court found that top-down pressure on loan officers to work overtime hours shows a "unified policy," there is likewise evidence that each branch manager would typically hire the loan officers on his team and had autonomy to instruct them on their work hours. (Appx. 33-35, 174-75.) A trial would have to address different practices at the various branches.

More importantly, nothing in the record suggests that executives demanded opt-in plaintiffs from the Pennsylvania or Melville branches to work extra hours. While employee testimony and/or email documentation supports the assertion that loan officers in five branches (Manhattan, Garden City, Smithtown, Massachusetts, Arizona) worked overtime without being compensated, plaintiffs have failed to meet their burden with testimony or documentation that shows the opt-in plaintiffs from the other two branches were similarly victim to a unified company policy. See Ayers, 2007 WL 646326, at *4. While "[p]laintiffs need not present evidence for 'each and every' opt-in Plaintiff," Gayle, 2012 WL 686860, at *5, plaintiffs cannot assert that an entire branch of employees is "similarly situated" to the rest of the plaintiffs without offering evidence that at least one employee at that branch fell victim to the same policy of inadequate compensation.

Standing on its own, plaintiffs working at different branches is not enough to require decertification; but coupled with the other differences, discussed below, it provides a further reason for decertification.

Second, plaintiffs were paid in at least two different ways, creating another "disparate factual and employment setting of the individual plaintiff." See Zivali, 784 F. Supp. 2d at 460. Loan officers at ICG were typically paid $628.00 every two weeks which was a draw against commissions; but a few of the plaintiffs, including Morano and Samtani, had no set salary and were paid instead on a commission-only basis. (Appx. 199-200, 206-07, 236, 239-40, 460-97.) Commissions themselves varied, creating potentially numerous complexities and differences in calculating the appropriate payment owed. Such individualized inquiry adds an additional distinction within the Class.

Although the difference in pay structure lends itself to create subclasses, given the defenses against individual plaintiffs within the Class, discussed below, such subdivision would still make this litigation impracticable. --------

Third, decertification is appropriate because defendants have a defense that is particular to only the subset of plaintiffs who signed the employment agreement. See Zivali, 784 F. Supp. 2d at 460. Around May 27, 2009, ICG had its loan officers sign employment agreements stipulating that employees must get advance written approval to work overtime, and that they must submit an accurate timesheet at the end of each week. (Appx. 471.) There is variation in who signed those agreements and therefore in what defenses may be asserted as to those signatures. Most plaintiffs signed the agreement, but two plaintiffs did not and it is not in the record whether 34 plaintiffs signed. (Appx. 1-8.) For those plaintiffs that did sign the employment agreement, defendants could present a defense that these plaintiffs breached the contract either by working more than 40 hours a week without written approval, or by turning in inaccurate timesheets. Such a defense, however, is not appropriate across the entire Class, because part of the Class did not sign the agreement and is not subject to those terms.

A further complicating factor is that some plaintiffs who signed the agreement began their employment after May 27, 2009; thus, the employment agreement governed their entire tenure with ICG. However, other plaintiffs who signed the agreements had been working at ICG prior to that date and became subject to the provisions of the agreement after they had already been working without such rules in place. (Appx. 498-501.) Accordingly, defendants can make an argument consistently across that first group; as to the second group, the defense would certainly be different. That highly individualized inquiry makes class treatment inappropriate.

In addition, defendants have a particular breach of contract defense against the plaintiffs who signed the employment agreement stipulating that they would hand in an accurate timesheet every week, but did not submit timesheets at all. Defendants have a different breach of contract defense against those who signed the employment agreement, but turned in inaccurate timesheets that underreported the hours worked.

Fourth, disparate timekeeping practices across the plaintiffs offer defendants individual defenses to different subsets of the Class. This distinction in timekeeping practice further divides the group of employees who signed the employment agreement, as discussed above, and those who did not. The first timekeeping distinction is that most plaintiffs turned in timesheets, but several did not. (Appx. 1-8.) Next, most plaintiffs who turned in timesheets reported not working overtime; but fifteen named plaintiffs and opt-in plaintiffs changed their timesheets to indicate that they worked more than 40 hours a week. (Appx. 509-28.) Finally, some plaintiffs claim that they were told to falsify timesheets. (Appx. 530.) Sorting through those groups involves different questions of "law and fact." See Pefanis, 2010 WL 3564426, at *4. The inquiry for the plaintiffs who turned in timesheets showing overtime work is different from the inquiry for plaintiffs who turned in timesheets that did not reflect the overtime they now claim to have worked.

These various different questions of "law and fact" prevent this Court from determining that the Class is "similarly situated" for the purposes of FLSA class certification. Accordingly, defendant's motion for decertification is granted.


For the aforementioned reasons, defendants' motion for decertification is GRANTED.

Opt-in plaintiffs' claims are dismissed without prejudice and the statute of limitations has been tolled for their claims between the filing of the original complaint and the filing of this Order. This ruling does not mean that opt-in plaintiffs do not have legitimate claims for unpaid work. The Court has simply exhausted its ability to divide the Class into easily-administrable classes of plaintiffs.

Plaintiffs have two avenues for redress before them. First, the Court invites plaintiffs, with their knowledge of the record, to propose workable classes, in accordance with the guidance provided in this Opinion. They could do so in a motion for reconsideration filed in accordance with Local Rule 6.3. Second, any opt-in plaintiff who wishes to file a new, standalone action may of course do so. The Court assumes that plaintiffs would designate such a case "related" to the instant action and would accept it as such. The Court would then proceed to trial on such actions seriatim but as expeditiously as possible.

The Clerk of Court is directed to terminate the motion at Docket No. 125. SO ORDERED: Dated: New York, New York

July 17, 2012


Katherine B. Forrest

United States District Judge

Summaries of

Morano v. Intercontinental Capital Grp., Inc.

Jul 17, 2012
10 CV 02192 (KBF) (S.D.N.Y. Jul. 17, 2012)

decertifying in part based on "differences in . . . supervising directives"

Summary of this case from Lynch v. City of N.Y.

describing the second-stage standard as "stringent"

Summary of this case from Chhab v. Darden Rests., Inc.

describing the second-stage standard as “stringent”

Summary of this case from Morris v. Lettire Constr., Corp.
Case details for

Morano v. Intercontinental Capital Grp., Inc.

Case Details



Date published: Jul 17, 2012


10 CV 02192 (KBF) (S.D.N.Y. Jul. 17, 2012)

Citing Cases

Shillingford v. Astra Home Care, Inc.

District courts in the Second Circuit apply a two-step process when presented with an application for…

Ruiz v. Citibank, N.A.

“When deciding whether to certify a class under 29 U.S.C. § 216(b), district courts in the Second Circuit…