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Gammella v. P.F. Chang's China Bistro, Inc.

Supreme Judicial Court of Massachusetts, Suffolk

April 12, 2019

FELICE GAMMELLA [1]
v.
P.F. CHANG'S CHINA BISTRO, INC.

          Dated: December 6, 2018.

         Civil action commenced in the Superior Court Department on November 25, 2014.

         A motion for class certification was heard by Peter M. Lauriat, J., and a motion to dismiss was heard by Mark A. Hallal, J., and entry of separate and final judgment was ordered by him. The Supreme Judicial Court on its own initiative transferred the case from the Appeals Court.

          Stephen S. Churchill for the plaintiff. Lisa Stephanian Burton (Danielle Y. Vanderzanden also present) for the defendant.

          The following submitted briefs for amici curiae: Mark D. Stern for Mark D. Stern P.C.

          Audrey Richardson, Joseph Michalakes, & Shannon Liss-Riordan for Immigrant Worker Center Collaborative & another.

          Ben Robbins & Martin J. Newhouse for New England Legal Foundation.

          Kevin Costello for Center for Health Law & Policy Innovation of Harvard Law School.

          Present: Gants, C.J., Lenk, Gaziano, Lowy, Budd, Cypher, & Kafker, JJ.

          KAFKER, J.

         The plaintiff Felice Gammella worked greeting customers, helping out behind the bar, taking food to tables, and assembling delivery orders at several Boston-area restaurants operated by the defendant P.F. Chang's China Bistro, Inc. He alleges on behalf of himself and a putative class of similarly situated employees that the defendant had a common practice of violating the "reporting pay" or "three-hour" requirement of 454 Code Mass. Regs. § 27.04(1) (2015), which requires employers to pay employees three hours' wages at no less than the minimum wage if they report for a scheduled shift of three or more hours but are involuntarily dismissed before they have worked three hours. The plaintiff brings suit under the Wage Act, G. L. c. 149, § 150 (Wage Act), and what is known as the minimum fair wage law, G. L. c. 151, § 20 (collectively, wage laws).[2]

         At issue is whether (1) either of the wage laws specify a different standard for class certification from that set forth in Mass. R. Civ. P. 23, as amended, 471 Mass. 1491 (2015) (rule 23); (2) the numerosity requirement for class certification under rule 23 is satisfied when a plaintiff provides reasonable information to infer that there are hundreds of employees who reported for their scheduled shifts of three or more hours but received less than three hours of pay, but there are a variety of potential reasons why an employee would not receive the three hours of pay, some of which are justified and others of which are not, and the defendant has failed to identify in its records why any employee received less than three hours of pay and refused to provide in discovery the names of the employees involved; (3) an offer of judgment pursuant to Mass. R. Civ. P. 68, 365 Mass. 835 (1974) (rule 68) or tender of an offer to the only named plaintiff in a putative class action can cause the plaintiff's claim to become moot when the plaintiff rejects the offers and informs the court of his intention to appeal the denial of class certification.

         We conclude that rule 23 provides the correct standard for determining class certification in a claim under the wage laws. Because we hold that the plaintiff met his burden of demonstrating numerosity under that rule, we reverse the denial of the plaintiff's motion for class certification on this ground. And because the plaintiff did not accept either of the defendant's offers and informed the court of his intention to appeal from the denial of class certification, we also hold that the defendant's motion to dismiss for mootness was improperly granted. We accordingly reverse the motion judges' orders and remand the case for further proceedings consistent with this opinion.[3]

         1. Background and procedural history.

         The plaintiff worked at the defendant's restaurants for most of the period from 2007 to 2015. As required by the employer, the plaintiff and other employees clocked in and out of a timekeeping system. The hours recorded in the timekeeping system formed the basis for the employees' compensation. Like the servers, bartenders, hosts, and other staff employed by the defendant, the plaintiff was compensated on an hourly basis at the minimum wage.

         The plaintiff brought suit in November 2014 under the wage laws on behalf of himself and a putative class of employees who allegedly had been denied pay for reporting to work (reporting pay) in violation of a regulation of the Division of Occupational Safety, issued pursuant to G. L. c. 151, requiring that "[w]hen an employee who is scheduled to work three or more hours reports for duty at the time set by the employer, and that employee is not provided with the expected hours of work, the employee shall be paid for at least three hours on such day at no less than the basic minimum wage." 454 Code Mass. Regs. § 27.04(1) .[4] In his deposition, the plaintiff testified that, on numerous occasions, despite being scheduled to work three or more hours, he was involuntarily dismissed and forced to clock out before he had worked three hours.[5] He stated that, in these instances, he was not given three hours' pay but only paid for his actual hours worked.

         Although the defendant claimed that its policy was to comply with the three hour reporting pay requirement, it produced no evidence in discovery that it had ever done so.[6] In particular, the defendant produced reports revealing that, in twenty instances involving the plaintiff, and in approximately 7, 000 instances involving hundreds of other employees, the defendant did not provide reporting pay when the plaintiff and these employees were scheduled to work a shift of three or more hours but clocked out before they had worked three hours.[7] These reports did not reflect why the employees clocked out before working three hours of a scheduled shift. Nor did the defendant have a system in place to record the reasons why such employees would leave early. Moreover, the reports only identified the other employees by their employee number, and the defendant did not fulfill the plaintiff's discovery requests for the identity of all the employees.[8]

         In his deposition testimony, the defendant's regional vice-president of operations admitted that he had no way of knowing if the hundreds of employees on the report had been involuntarily dismissed. Nonetheless, the vice-president claimed that employees often voluntarily asked and were granted permission to leave before three hours of their shifts had elapsed. He further testified that the defendant's practice was not to provide reporting pay in those circumstances, or in cases where the defendant's managers decided to close a restaurant early due to inclement weather, ordered an employee to leave work early for violating company policy, or solicited volunteers to leave early because a restaurant was not busy.

         Following discovery, the plaintiff moved to certify a class comprising "[a]11 [defendant's] hourly employees who worked in Massachusetts at any time from November 25, 2011 to the present, and who had at least one shift where they were scheduled to work three or more hours but worked less than three hours, including without limitation" all the employees identified by employee number on the defendant's report who had worked less than three hours of a scheduled shift without receiving reporting pay. The defendant opposed the motion.[9] After a hearing on the motion, the judge denied class certification.

         In his written decision, the judge determined that the defendant neither provided the plaintiff with reporting pay nor, based on its timekeeping records, had it "identified a single instance" from 2011 to 2015 where it had provided reporting pay to any other Massachusetts employee who had been scheduled for a shift of three or more hours but worked less than three hours. The judge nonetheless concluded that, pursuant to an opinion letter from the Executive Office of Labor and Workforce interpreting the reporting pay requirement, an employer did not have to provide reporting pay where an employee chose to leave work before three hours of a scheduled shift had elapsed "'completely on a voluntary basis,' free from any express or implied pressure from the employer."[10] Relying on the opinion letter, the judge redefined the plaintiff's proposed class to "contain only employees who were involuntarily cut before three hours and employees who were offered a choice to leave before three hours, but that choice was 'not free from express or implied pressure from the employer' (i.e., the employee was essentially involuntarily cut)." He found that it was "impossible ... to determine from the time-keeping records . . . whether there are any employees who would fall into this class." He thus concluded that the class was insufficiently numerous to satisfy the certification requirements of rule 23.

         After the plaintiff's class certification motion had been denied, the defendant made two offers to the plaintiff that purported to provide complete relief on his individual claim. Pursuant to rule 68, the defendant first made an offer (rule 68 offer) to have judgment entered against it for $962.08 plus prejudgment interest as well as costs and attorney's fees associated with the plaintiff's individual claim, while expressly excluding any fees related to his class-based claims. In the rule 68 offer, the defendant "expressly denie[d] all . . . liability and denie[d] [p]laintiff's allegations," and explained that the offer would "resolve, finally and fully, the claims and causes of action alleged by [p]laintiff" and that "[i]f this offer is accepted, no further relief shall be granted to [p]laintiff." The offer provided that it "shall expire if not accepted in the manner and within the timeframe provided in Rule 68," specifically that if the plaintiff did not accept the offer within ten days, "it is deemed withdrawn."[11] The plaintiff did not accept the offer.

         Subsequently, the defendant made an offer in the form of a certified check for $1, 732.50 and an accompanying letter (tender offer) that were both hand delivered to the plaintiff's counsel. The letter explained that the offer would "tender[] complete relief on the individual claim" because the "amount tendered is more than what [the plaintiff] could hope to obtain if he were to prevail at trial." Like the rule 68 offer, the letter stated that the defendant would pay reasonable attorney's fees, costs, and interest with respect to the plaintiff's individual claim. The letter further stated that "[s]hould you choose to not respond to or reject this tender, we will seek to dismiss this action." As with the rule 68 offer, the tender offer was rejected by the plaintiff.

         The defendant then moved to dismiss the case on the grounds that through its rule 68 offer and tender offer it had "voluntarily presented [the plaintiff] all available statutory damages for his individual claims."[12] Regardless of the plaintiff's refusal to accept those offers, the defendant argued, "[d]ismissal is appropriate as to the named [p]laintiff's individual claims because they are moot and [the plaintiff] no longer has a concrete, personal stake in this matter. Moreover, there are no class claims pending because the Court denied [p]laintiff's Motion for Class Certification" and plaintiff "had the opportunity to file an interlocutory appeal of the class certification denial and elected not to do so." In short, the defendant argued, the plaintiff "does not have standing to serve as a class representative for any putative class" he might seek to revive. The plaintiff opposed the motion, arguing that unaccepted settlement offers could not render moot the claims of a named plaintiff in a class action and that, because he had no right to take an interlocutory appeal, his right to appeal the denial of his motion for class certification "remain[ed] a live issue."

         The motion judge held a hearing on the motion to dismiss. The defendant's counsel stated at the hearing that, if its motion were granted, the plaintiff still could take "an appeal of the denial of class certification." The judge granted the defendant's motion on the grounds that the "plaintiff has been provided with complete relief as to his individual claims by the defendant and accordingly those claims are moot. The court therefore lacks subject matter jurisdiction over this matter." The judge also noted that the plaintiff's motion for class certification had earlier been denied. In his order of dismissal, the judge instructed the plaintiff to submit an affidavit and documents supporting an award of fees and costs. The parties subsequently entered into a stipulation for attorney's fees and costs with respect to ...


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