Recently, the United States Supreme Court in Comcast Corp. v. Behrend, an antitrust case, held that a class was improperly certified under Rule 23(b)(3) because the Third Circuit erred in refusing to decide whether the plaintiff class’ proposed damages model could show damages on a classwide basis (if properly analyzed, the model was inadequate and the class should not have been certified). The Supreme Court reversed the Third Circuit after examining the merits of the case as permitted by Wal-Mart v. Dukes and found that because plaintiffs were unable to show damages were measurable on a classwide basis, class certification was improper because “questions of individual damage calculations will inevitably overwhelm questions common to the class.”

In Roach et al., v. T.L. Cannon Corp., d/b/a Applebee’s et al., (N.D. NY, Case No.: 3:10-CV-591), plaintiffs filed a class action alleging, among other things, spread of hours and meal and rest period violations under the NYLL against 61 Applebee’s Neighborhood Grill and Bar Restaurants. Citing Comcast Corp. v. Behrend, the Court held that plaintiffs’ spread of hours claim cannot be certified because “[q]uestions of individual damage calculations will inevitably overwhelm questions common to the class.” The Court wrote:

… Plaintiffs contend that damages need not be considered for Rule 23 certification even if such damages might be highly individualized. [] This position is in contravention of the holding of Behrend. Furthermore, a demanding and rigorous analysis of the evidentiary proof on this claim does not yield a finding that damages are capable of measurement on a classwide basis. Rather, Plaintiffs’ proof that some employees, on various occasions, were denied their 10-hour spread payments indicates that damages in this putative class are in fact highly individualized. …

Plaintiffs’ meal and rest period claim also was not certified. Plaintiffs alleged they were denied pay for all hours worked as a result of managers altering time records to reflect that employees were given a rest period that they had not actually taken. The evidence submitted established that: (a) some employees had to sign a break log following which the manager had to manually enter the break time into the payroll system; (b) no forms were provided for employees to note instances in which they missed or worked through breaks to ensure they were not entered into the payroll system; (c) according to a former manager, she believed defendants trained their managers to improperly deduct breaks from the time records of hourly employees, even when the employees did not actually take a break; (d) based on a comparison of time records and pay stubs from plaintiff Roach, there is an indication that deductions were made from his time card for breaks not taken; (e) deposition testimony from another manager indicated that he heard complaints from hourly employees that their time records would reflect that they took a break when they had missed it; and, (f) of the 78 declarations submitted by plaintiffs, 45 revealed claims of improper deductions from pay for breaks that were not taken. The Court concluded:

“The proof of damages on this claim is highly individualized in that it is dependent on the circumstances of each individual employee such as whether: [a] each had access to a time clock or had to use the break log; [b] each actually used/signed the break log; and [c] the manager each worked under failed to enter the correct information onto the payroll records.

It is becoming clear that Comcast ultimately will stand for the proposition that a case cannot satisfy Dukes commonality standards if damages must be proven separately for each plaintiff. Wage and hour damages (for example off-the-clock work or overtime) often depend on individualized proof (schedules, management, seniority, etc.). If Comcast stands for the broad proposition that common issues predominate only when damages can be calculated on a classwide (rather than individualized) basis, Rule 23 (b)(3) wage and hour class certifications should be denied more often.

Recent history supports this conclusion. About a week after the Supreme Court’s ruling in Comcast, the Supreme Court in Ross v. RBS Citizens, N.A., vacated a Seventh Circuit decision certifying an Illinois Minimum Wage Law class and remanded the case for further consideration in light of Comcast. In Ross, a class of assistant managers alleged they were misclassified as exempt, and a class of hourly employees alleged they were subject to an unofficial policy of not paying for all time worked despite a lawful official overtime policy. The Seventh Circuit explicitly found that Dukes commonality standard did not affect the case’s commonality analysis (e.g., while the Dukes workers had to prove individual discriminatory intent to back up their claims under Title VII, the RBS plaintiffs had maintained a common claim that the company had an unlawful policy to deny overtime pay).

Not only is it clear that the Supreme Court views Dukes as applying to all Rule 23 class actions, but also there is movement that, for off-the-clock work (for example), it probably is inappropriate to certify a class when employees must prove the type and amount of extra work performed (especially when employers are entitled to prove they did not know about or approve of the extra work). For exemption cases, it probably is inappropriate to certify a class when employees claiming to have been misclassified must prove their specific duties. This is because, as precluded under Dukes, individual issues will more often than not predominate over class issues. Whether or not Comcast ultimately means that state law wage and hour claims requiring individualized proof of damages are inappropriate for class treatment, we certainly will be making this argument in all wage and hour class actions going forward.