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Getchman v. Pyramid Consulting, Inc.

United States District Court, E.D. Missouri, Eastern Division

February 23, 2017

DEBORAH LYNN GETCHMAN, individually and on behalf of others similarly situated, Plaintiff,
v.
PYRAMID CONSULTING, INC., Defendants.

          MEMORANDUM AND ORDER

          CATHERINE D. PERRY, UNITED STATES DISTRICT JUDGE

         In this collective action named plaintiff Deborah Lynn Getchman claims that defendant Pyramid Consulting violated the Fair Labor Standards Act, 29 U.S.C. § 201 et seq., when it failed to properly calculate and pay overtime to its employees, including Getchman. Before me now are a motion to dismiss based on lack of subject matter jurisdiction filed by Pyramid, a motion for conditional certification of the class, and a motion for equitable tolling of the statute of limitations for the collective action claims. For the reasons discussed below, I am denying the motion to dismiss for lack of subject matter jurisdiction, granting the motions for conditional certification, and granting in part the motion for equitable tolling of the statute of limitations.

         Background

         Pyramid is a company based in Alpharetta, Georgia that provides information technology staffing and enterprise solutions to small and medium-sized businesses. Getchman began working as a consultant for Pyramid in June 2014. In accordance with her employment agreement, she worked on site at one of Pyramid's client locations as a contract project coordinator/manager. The terms of Getchman's employment, including her hourly compensation, were set out in a Consultant Agreement and Work Order. Prior to July 23, 2015, Getchman's work order indicated a split between her taxable hourly wages (the “Consultant's Rate”) and her “per diem” hourly wages, which were untaxed and purportedly meant to cover her daily expenses. For instance, as a hypothetical illustration, Getchman's total hourly rate of pay would be $15, but that would be split into a “Consultant's Rate” of $10, and a per diem rate of $5. From the time she was hired in July 2014 through early July 2015 Getchman's hours were split in this manner. During this period, Getchman's overtime pay was calculated using only the consultant's rate and excluding the per diem rate. Using the above hypothetical rates, this means she would have been paid an overtime rate of $15 ($10 x 1.5) instead of $22.5 ($15 x 1.5).

         Apparently, Pyramid stopped separating Getchman's consultant and per diem rates and began paying her overtime based on a combined rate calculation in mid-July 2015. In August 2015 Getchman contacted Pyramid's human resources department informing them that she believed her overtime rate had been improperly calculated during the previous year. After some back and forth communication, Pyramid sent her a check, which Getchman deposited, for $2708.91. The memo line of the check stated “OT hrs arrear.” Pyramid indicated that that it had arrived at this amount by first identifying the amount Getchman was owed in overtime pay[1] as $11, 945.91. It then calculated and subtracted $8564.73 as the amount of taxes that would have been due on Getchman's per diem pay for the entire year if her per diem pay had been included in her consultant's rate.[2]Getchman disputed that the amount of the check was sufficient, and ultimately, she filed this lawsuit in July 2016 on behalf of herself and a class of similarly situated “hourly, non-exempt consultants” alleging violations of the overtime wage provisions of the FLSA. Simultaneously with her complaint, Getchman filed a motion to certify a class conditionally for an FLSA collective action. She seeks to certify this case as a collective action and receive authorization to send notice under § 216(b) of the FLSA to all current and former “hourly non-exempt employees [of Pyramid] paid per diem amounts or rates by defendant within the last three years.” On or around September 30, 2016, two months after Getchman's complaint and motion for conditional certification was filed, Pyramid served a Rule 68 offer of judgment on Getchman, in which Pyramid offered to have judgment taken against it and have the court determine reasonable attorneys' fees and costs. Stapled to the offer of judgment was a $15, 000 check, which Pyramid contends “exceeds the overtime and liquidated damages that Plaintiff ever could possibly recover in this case.” The memo line on the check read “Settlement.” The check was returned to defendant's counsel with a letter from Getchman's counsel stating the offer of settlement was rejected. Pyramid then filed a motion to dismiss this case for lack of jurisdiction and requested a stay of discovery and pending deadlines while that motion was under consideration by the Court. I granted Pyramid's motion for a stay.

         Pyramid's Motion to Dismiss

         In its motion to dismiss, Pyramid claims it has tendered to Getchman everything she is asking the Court to award her in her individual claim. As a result, Pyramid asserts there is no remaining Article III controversy and Getchman's lawsuit is moot. In response, Getchman argues Pyramid's tender does not moot her claim because it does not constitute an offer of full and complete relief and because a defendant cannot unilaterally moot a plaintiff's claim with a rejected tender of relief.

         Article III of the Constitution limits federal court jurisdiction to “cases” and “controversies.” U.S. Const. Art. III, § 2. This has been interpreted by the Supreme Court to mean that an actual controversy must be “extant at all stages of review, not merely at the time the complaint is filed.” Arizonans for Official English v. Arizona, 520 U.S. 43, 67 (1997). Pyramid's argument here is that a tender of full relief on Getchman's individual claim in addition to an offer of judgment leaves no existing case or controversy as to Getchman herself, and because no class has been certified, the entire case is moot. The Supreme Court of the United States recently addressed Article III standing under similar circumstances in Campbell-Ewald Co. v. Gomez, 136 S.Ct. 663 (2016). The plaintiff in Campbell-Ewald filed a putative class action complaint under the TCPA. Id. at 667. Defendant in that case proposed to settle plaintiff's individual claim through a Rule 68 offer of judgment and simultaneous settlement offer. Id. at 667-68. The plaintiff rejected the offers, and the defendant moved to dismiss pursuant to FRCP 12(b)(1) for lack of subject matter jurisdiction, arguing no “case or controversy” existed because plaintiff had been offered complete relief. Id. at 668. The Court rejected defendant's “pick off” attempt, holding that an unaccepted settlement offer simply has “no force, ” and like other unaccepted contract offers “creates no lasting right or obligation.” Id. at 666. Furthermore, the Court opined, “[A] would-be class representative with a live claim of her own must be accorded a fair opportunity to show that certification is warranted.” Id. at 672.[3]

         The Campbell-Ewald decision pointedly left open the question of whether a full tender of settlement would be sufficient to moot a plaintiff's claim. Id. (“[t]hat question is appropriately reserved for a case in which it is not hypothetical”). Since then, courts that have looked at the issue have been somewhat split. Compare Geisman v. American Homepatient, Inc., No. 4:14cv1538 RLW, 2016 WL 3407815 (E.D. Mo. June 16, 2016) (defendant not permitted to tender payment to a class representative on his individual claims, over plaintiff's objection, to incapacitate the class action before plaintiff has a fair opportunity to show that certification is warranted) and Ung v. Universal Acceptance Corp., Civ. No. 15-127 (RHK/FLN), 2016 WL 3136858 (D. Minn. June 3, 2016) (plaintiff's TCPA claims were not rendered moot by a tendered but rejected check for settlement of plaintiff's individual claims) and Brodsky v. HumanaDental Ins. Co., No. 1:10-CV-03233, 2016 WL 5476233 (N.D. Ill. Sept. 29, 2016) (plaintiff's claims in TCPA class action were not moot where defendant had placed full amount of plaintiff's expected individual recovery in escrow for payout to plaintiff upon entry of judgment by court) and O'Neal v. America's Best Tire LLC, No. CV-16-00056-PHX-DGC, 2016 WL 3087296 (D. Ariz. June 2, 2016) (rejecting defendants' argument that tender of checks for unpaid compensation and liquidated damages in FLSA putative collective action rendered the case moot because “[p]laintiffs have not accepted the checks tendered by [d]efendants”) and Martelack v. Toys R US, 13-CV-7098, 2016 WL 762656, at *3 (D. N.J. Feb. 25, 2016) (concluding that defendant's tender of an uncashed check in an attempted satisfaction of plaintiff's FLSA claim “do not moot [p]laintiff's claims for unpaid wages”) with McNerney v. A.M.T. Grp., Inc., No. 115CV1260 (GTS/DJS), 2016 WL 5107117, at *5 (N.D.N.Y. Sept. 20, 2016) (denying motion to dismiss on other grounds but noting “the Court is inclined to find that, where an FLSA plaintiff is tendered full relief in the form of a check, he cannot avoid mootness by refusing to cash that check”) and S. Orange Chiropractic Ctr., LLC v. Cayan LLC, No. CV 15-13069-PBS, 2016 WL 1441791 (D. Mass. Apr. 12, 2016) (named plaintiff no longer had “live claim” where defendant offered to deposit a check with the court satisfying all of plaintiff's individual claims and have the district court enter judgment in plaintiff's favor).

         Although the Eighth Circuit has not examined this question in the wake of Campbell-Ewald, it previously held that judgment could be “entered against a putative class representative on a defendant's offer of payment only where class certification [had] been properly denied and the offer satisfie[d] the representative's entire demand for injuries and costs of the suit.” Alpern v. UtiliCorp United, Inc., 84 F.3d 1525, 1539 (8th Cir. 1996) (further noting, the “[a]cceptance of a tendered offer need not be mandated … since the defendant has not offered all that has been requested in the complaint (i.e. relief for the class)”). Similarly, when another judge of this court addressed the question of whether a tender of full settlement can unilaterally moot a plaintiff's claim, he extended Campbell-Ewald's logic, finding there to be “no principled difference between a plaintiff rejecting a tender of payment and an offer of payment.” Giesmann, MD, P.C. v. American Homepatient, Inc., No. 4:14cv1538 RLW, 02016 WL 3407815, at *3 (E.D. Mo. June 16, 2016).

         I agree with the foregoing reasoning. The facts before me indicate that Pyramid made a tender offer of settlement via a check that was subsequently refused and returned by Getchman. This is not materially different than if Pyramid had communicated an offer of settlement that Getchman in turn rejected. In both scenarios, the “‘unaccepted [offer]-like any unaccepted contract offer-is a legal nullity, with no operative effect, '” and plaintiff is left without satisfaction of either her individual or her class claims. Campbell-Ewald, 136 S.Ct. at 670 (quoting Genesis Healthcare Corp., 133 S.Ct. 1523, 1533 (2013) (Kagan, J., dissenting)). Moreover, as noted by this court in Giesman, if I were to accept that a defendant's rejected tender of payment moots a plaintiff's individual claims, “[d]efendants would essentially have control of the putative class.” Giesmann, 02016 WL 3407815, at *3 (citing Ung v. Universal Acceptance Corporation, Civ. No. 15-127 (RHK/FLN), 2016 WL 3136858, at *7 (D. Minn. June 3, 2016)).

         “The law does not countenance the use of individual offers to thwart class litigation, because the class-action device is designed to allow similarly situated plaintiffs to aggregate smaller claims, promoting judicial efficiency.” Ung, 2016 WL 3136858, at *5 (internal quotation marks and citation omitted). Accordingly, I am denying Pyramid's motion to dismiss for lack of jurisdiction.

         Getchman's Motion to Conditionally Certify an FLSA Collective Action

         As noted, and based on the background described above, Getchman brings a collective action for unpaid compensation under the Fair Labor Standards Act (FLSA), 29 U.S.C. § 201, et seq., on behalf of herself and others similarly situated. She has moved for conditional certification of this case as a collective action under FLSA so that she may notify certain of Pyramid's past and present employees of this action and provide them the opportunity to “opt in” as ...


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