A federal court in New Jersey recently decertified an FLSA class of 1,500 Home Depot merchandising assistant store managers (“MASMs”) who claimed they were misclassified as exempt executive employees. (Aquilino v. Home Depot, U.S.A., Inc.pdf., No. 04-04100 (D. N.J. Feb. 15, 2011). The court determined that because the job responsibilities and duties varied from MASM to MASM, proceeding as a class would require individualized inquiries to determine whether each specific opt-in qualified as an executive employee.

The court in Aquilino conditionally certified the class on September 6, 2006. The court noted that this initial certification inquiry uses a “fairly lenient standard” and “usually results in the grant of conditional certification.” The plaintiffs then sent notice of the collective action to approximately 12,728 current and former MASMs. Initially, 1,747 opt-in plaintiffs joined the litigation, or about 14 percent of the potential total. However, that number was even further reduced to 1,502 as a result of dismissals for failure to comply with discovery orders or voluntary withdrawal of claims. The defendants moved to decertify the class approximately four years after it was conditionally certified.

Consistent with settled authority, the court first noted that the plaintiffs’ burden to show that they are similarly situated is higher on decertification than on conditional certification. It stated that a conditional collective action certification should only be converted into a final collective action certification only where “the plaintiffs make some showing that the nature of the work performed by other claimants is at least similar to their own.” The court identified the following three factors as determinative to the similarly situated inquiry: “(1) the “disparate factual and employment settings of the individualized plaintiffs; (2) the various defenses available to defendants; and (3) fairness and procedural considerations.”

The court began its inquiry by noting that deposition testimony revealed a wide variation as to the type of duties and responsibilities among the class members as well as the amount of time they spent performing exempt and non-exempt tasks. The court specifically noted that the MASMs had differing testimony of how they directed and supervised employees and their level of authority over subordinate employees including hiring, promoting, evaluating performance, disciplining, and terminating employees. The court also noted that there were “great disparities” in the opt-ins’ testimony in regards to the amount of time that they spent performing exempt tasks.

With this testimony in mind, the court found the first factor did not favor certification because the testimony demonstrated that duties and responsibilities significantly varied from MASM to MASM. This variation would require the court to engage in numerous individualized determinations if the collective action were maintained. The court rejected as irrelevant the plaintiffs’ argument that Home Depot had not attempted to evaluate whether the MASMs were actually performing exempt work before classifying them as exempt executive employees.

The court found the second factor did not favor certification because the potential defenses of the defendant and the requisite individual inquiry would make the class unmanageable. The court noted that “defendant is entitled to question each individual opt-in about his or her managerial responsibilities to illustrate that MASMs qualify as exempt managers.” The court further found that the defendant’s anticipated attempt to impeach plaintiffs by questioning their inconsistent discovery responses would make it “difficult and confusing” for the fact finder to make credibility determinations and to discern whether each individual is exempt.

For the final factor, the court agreed with plaintiffs that allowing the litigation to proceed as a collective action would lower costs to the individual plaintiffs and promote judicial economy by having 1 instead of 1500 separate actions. However, the court found these considerations were outweighed by the “potential unfairness and procedural difficulties” of allowing such a case to proceed as a collective action. Due to the requisite individual inquiry necessary to determine whether each plaintiff was properly classified as exempt, the court stated it had “serious concerns as to whether a collective action would be most efficient” and whether it could “coherently manage” the collective action without prejudice to the parties.

The court therefore concluded that the plaintiffs had not met their burden of establishing that they were similarly situated to the opt-in plaintiffs. The court also refused to create subclasses for declaratory relief and for training period claims.

The Bottom Line: An employer faced with an adverse decision on conditional certification has options other than writing settlement checks. As this case demonstrates, an aggressive discovery strategy following conditional certification can provide enough evidence of differences among class members to later prevail on a decertification motion.