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Chin v. Tile Shop, LLC

United States District Court, D. Minnesota

October 27, 2014

Christopher Chin, on behalf of himself and all others similarly situated, Plaintiff,
v.
The Tile Shop, LLC, Defendant

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[Copyrighted Material Omitted]

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For Plaintiff: J. Derek Braziel, Lee & Braziel, LLP, Dallas, TX; Rowdy B. Meeks, Rowdy Meeks Legal Group, LLC, Leawood, KS; Paul J. Lukas and Michele R. Fisher, Nichols Kaster, PLLP, Minneapolis, MN.

For Defendant: Joseph M. Sokolowski, Lindsay J. Sokolowski, Pamela Abbate-Dattilo, Fredrikson & Byron, PA, Minneapolis, MN.

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MEMORANDUM OPINION AND ORDER

SUSAN RICHARD NELSON, United States District Judge.

This matter is before the Court on Plaintiff's Motion for FLSA Conditional Certification and Judicial Notice [Doc. No. 23]. For the reasons tat follow, the Court grants Plaintiff's Motion.

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I. BACKGROUND

On October 29, 2013, Plaintiff Christopher Chin (" Plaintiff" or " Chin" ) filed this action against Defendant The Tile Shop (" Defendant" or " The Tile Shop" ) to recover alleged unpaid minimum wage and overtime on behalf of himself and others similarly situated pursuant to the Fair Labor Standards Act (" FLSA" ), 29 U.S.C. § 201 et seq. " The Tile Shop is a leading specialty retailer of manufactured and natural stone tiles, setting and maintenance materials, and related accessories in the United States." (Compl. ¶ 1 [Doc. No. 1].) As of May 2, 2014, Defendant operated 90 retail stores in 28 states. (Def.'s Mem. in Opp'n at 2 [Doc. No. 31].) The Tile Shop is headquartered in Plymouth, MN. (Id.)

Plaintiff was employed as a Sales Associate and as an Assistant Store Manager from approximately February 15, 2013 through August 15, 2013 at The Tile Shop in Sterling, Virginia. (Compl. ¶ 4 [Doc. No. 1].) According to the The Tile Shop's website, Sales Associates, who are also known as Manager Trainees, are responsible for " [s]elling tile and related products to exceed customer expectations" and " restocking store inventory." (Id. ¶ 13.) Chin alleges that Sales Associates do not regularly supervise the work of two or more employees, nor do they " exercise discretion and independent judgment as to matters of significance or perform office work related to The Tile Shop's general business operations." (Id. ¶ 22.) Additionally, Chin alleges that Sales Associates " have no advanced knowledge in a field of science or learning which requires specialized instruction which is required to perform their jobs." (Id.)

Like Sales Associates, Assistant Store Managers are also responsible for " selling tile and related products." (See, e.g., Lessner Decl. ¶ 8; Reliford Decl. ¶ 7; Cornell Decl. ¶ 7; Chin Decl. ¶ 7 [Doc. No. 26-2].) However, Assistant Store Managers also perform other non-sales related tasks such as " loading and filling customer orders, performing inventory, and cleaning the store and bathrooms." (Id.)

Sales Associate/Manager Trainee employees are expected to work evenings and weekends, for a total of 45-55 hours per week. (Compl. ¶ 13 [Doc. No. 1].) Plaintiff alleges that he and other Sales Associates and Assistant Store Managers " routinely worked more than 40 hours in [a] work week." (Id. ¶ 17.) In fact, Chin claims that he and other Sales Associates would sometimes work more than 60 hours a week. (Id.) The exact number of hours each employee works is tracked by The Tile Shop on " bi-monthly check stubs." (Id.)

Chin not only contends that all Sales Associates employed by Defendant nationwide are similarly situated, but he also asserts that all Sales Associates are similarly situated to all Assistant Store Managers, nationwide, because they share common job duties, job descriptions, and pay. (Id. ¶ 25.) As to proof of similarity among Sales Associates across the country, Plaintiff presents evidence that The Tile Shop uses the same job posting to advertise for the Sales Associate/Manager Trainee job position nationwide. (Id. ¶ 26.) As to evidence of uniformity among Sales Associates and Assistant Store Managers, Chin points to declarations by former employees who have opted into this suit and who previously served as both Sales Associates and Assistant Store Managers. (Pl.'s Mem., Ex. 2 [Doc. No. 26-2].) The four other employees, April Cornell, Carlos Galeas, Donald Lessner, and Antonio Reliford, collectively worked in at least six stores in at least three states. (Lessner Decl.; Reliford Decl.; Cornell Decl.; Galeas Decl. [Doc. No. 26-2].) In these declarations, the employees allege that the

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duties they performed as Sales Associates were nearly identical to those performed when they were Assistant Store Managers. (Id.)

Five additional former Store managers who worked in at least 15 stores in at least five states have also submitted supporting declarations. (Pl.'s Mem., Ex. 3 [Doc. No. 27].) Plaintiff contends that these declarations, coupled with Plaintiff's Complaint and Defendant's nationwide pay plans and job postings, " establish that Sales Associates and pre-2012 Assistant Store Managers are similarly situated because they have the same job duties and are paid pursuant to the same pay plan throughout the United States." (Pl.'s Mem. at 4 [Doc. No. 26].) However, at least one distinction between Sales Associates and Assistant Store Managers exists. In addition to working in a sales capacity, Assistant Store Managers are also responsible for helping the Store Manager supervise the retail store. (Pl.'s Mem., Ex. 3 ¶ ¶ 7-8 [Doc. No. 27]; Behrman Aff. ¶ 3 [Doc. No. 32].)

Sales Associates and Assistant Store Managers not only have similar job duties, but they also are compensated in the same manner. Leigh Behrman, Defendant's Vice President of Human Resources and Compliance, explains that " Assistant Managers and [S]ales [A]ssociates are compensated primarily by commission." (Behrman Aff. ¶ 4 [Doc. No. 32].) According to Carl Randazzo, Defendant's Senior Vice President of Retail, employees' commissions are based on the gross profit of the sales orders employees procure, once the customer has paid in full. (Randazzo Aff. ¶ ¶ 3, 15 [Doc. No. 31].) However, if a customer returns product, The Tile Shop deducts from the employee's next paycheck to compensate for the loss in profit from the return. (Id. ¶ 16.) Chin alleges that " The Tile Shop frustrated the ability of its Sales Associates and Assistant Store Managers to sell products and thus earn commissions by requiring them to perform many non-sales related [administrative and cleaning] tasks." (Compl. ¶ 20 [Doc. No. 1].)

In addition to commission, Assistant Store Managers and Sales Associates are paid a bi-monthly draw or subsidy. Before 2012, regardless of the number of hours an employee worked, Sales Associates' and Assistant Store Managers' bi-monthly draw was $866.67. (Id. ¶ 15.) After 2012, regardless of the number of hours an employee worked, Sales Associates' and Assistant Store Managers' bi-monthly draw was $1,000. (Id. ¶ 16.) Although the monthly draw is ostensibly consistent, The Tile Shop deducts future compensation in excess of the draw amount if a Sales Associate or Assistant Store Manager receives a commission amount during a period that is less than the draw amount for that period.[1] (Behrman Aff. ¶ 4 [Doc. No. 32].) Although Assistant Store Managers have the same " recoverable draw against commissions" as Sales Associates, Assistant Store Managers are also eligible for bonuses based upon store performance. (Compl. ¶ 18 [Doc. No. 1].)

Pursuant to the FLSA, Defendant is considered an " employer," and Plaintiff and all Sales Associates and Assistant Store Managers were " employees" of The Tile Shop. See 29 U.S.C. § 203(d), (e). Therefore, The Tile Shop is subject to the FLSA overtime provisions. The FLSA requires

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that Defendant compensate its employees at a rate not less than minimum wage for the first 40 hours worked in a workweek. 29 U.S.C. § 207(a)(1). Throughout the time that Chin worked at The Tile Shop, the federal minimum wage was $7.25. See 29 U.S.C. § 206. For every hour worked in addition to the 40 hour workweek, the FLSA requires Defendant to pay its employees " one and one-half times the regular rate at which [they] are employed." See 29 U.S.C. § 207(a)(1). A rate of one and one-half times the applicable minimum wage is $10.88.

Section 7 of the FLSA exempts certain categories of employees from overtime pay obligations. See 29 U.S.C. § 207. For example, according to section 7(i) of the FLSA, employees are not entitled to overtime if: (1) they are employed by a retail sales establishment; (2) more than half their total earnings in a representative period consist of commissions; and (3) their regular rate of pay exceeds one and one-half times the applicable minimum wage. 29 U.S.C. § 207(i). However, Plaintiff contends that none of the FLSA exemptions apply to him or other Sales Associates or Assistant Store Managers. (Compl. ¶ 37 [Doc. No. 1].) Chin claims that The Tile Shop unlawfully misclassified Plaintiff and other Sales Associates and Assistant Store Managers as exempt. (Id. ¶ 21.) Due to this misclassification, Plaintiff alleges that Defendant failed to pay these employees minimum wage and overtime premiums. (Id. ¶ 21.) During the hearing, Defense counsel argued that Plaintiff failed to specifically allege that he and other Assistant Store Managers and Sales Associates " were paid less than $10.88." (Hr'g Tr. 4, May 23, 2014.) The Court disagrees. Although Chin does not specifically state that he and other members of the putative class were paid less than $10.88 per hour, it is clear that Plaintiff's Complaint incorporates this allegation. (See Compl. ¶ 23 (alleging that " The Tile Shop Associates and Assistant Store Managers do not qualify for the FLSA Section 7(i) exemption because The Tile Shop does not pay them 1.5 times the applicable minimum wage for every hour worked during each work week" ) [Doc. No. 1].)

Plaintiff brings his FLSA claims as an opt-in action pursuant to 29 U.S.C. § 216(b) on behalf of: (1) Sales Associates, Manager Trainees, Sales Representatives, and other employees holding comparable positions who were employed by The Tile Shop nationwide within the three years preceding this action (" Sales Associate Collective Action Members" ); and (2) Assistant Store Managers and others holding comparable positions with different titles who were employed by The Tile Shop nationwide within the three years preceding this action and who were paid a bi-monthly subsidy of $866.67 (" Assistant Store Manager Collective Action Members" ).[2] (Id. ¶ 9; Pl.'s Mem. at 4 [Doc. No. 26].)

In Chin's Complaint, he states two counts against Defendant: (1) Count I is his FLSA collective action overtime claim, (Compl. ¶ 30 [Doc. No. 1]); and (2) Count II is his FLSA collective action minimum wage claim, (id. ¶ 44). Both counts are opt-in collective actions pursuant to 29 U.S.C. § 216(b) on behalf of all others similarly situated. (Id. ¶ ¶ 30, 44.)

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II. DISCUSSION

A. Conditional Class Certification

The FLSA authorizes employees to bring a collective action against employers to recover unpaid overtime. 29 U.S.C. § 216(b). Unlike a Rule 23 class action, under the FLSA, no employee shall be a party to a collective action unless " he gives consent in writing to become such a party and such consent is filed in the court in which such action is brought." Jennings v. Cellco Partnership, No. 12-cv-00293 (SRN/TNL), 2012 WL 2568146, at *3 (D. Minn. July 2, 2012) (citing Smith v. Heartland Auto. Servs., Inc., 404 F.Supp.2d 1144, 1149 (D. Minn. 2005)). Courts have discretion, in " appropriate cases," to facilitate the opt-in process by conditionally certifying a class and authorizing court-supervised notice to potential opt-in plaintiffs. Saleen v. Waste Mgmt., Inc., 649 F.Supp.2d 937, 939 (D. Minn. 2009) (quoting Hoffmann-La Roche Inc. v. Sperling, 493 U.S. 165, 169, 110 S.Ct. 482, 107 L.Ed.2d 480 (1989)).

To proceed with a collective action, plaintiffs must demonstrate that they are similarly situated to the proposed FLSA class. Brennan v. Qwest Communications Int'l, Inc., No. 07-cv-2024 (ADM/JSM), 2008 WL 819773, at *3 (D. Minn. Mar. 25, 2008). Determining whether Plaintiffs are similarly situated to the proposed class requires a two-step inquiry. Burch v. Qwest Communications Int'l, Inc., 500 F.Supp.2d 1181, 1186 (D. Minn. 2007) (citations and quotations omitted). First, the court determines whether the class should be conditionally certified for notification and discovery purposes. Id. The plaintiffs need only establish at that time a colorable basis for their claim that the putative class members were the victims of a single decision, policy, or plan. Id. Determination of class status at the notice stage is granted liberally because the court has minimal evidence for analyzing the class. Ray v. Motel 6 Operating, Ltd. Partnership, No. 3-95-828 (RHK), 1996 WL 938231, at *2 (D. Minn. Mar. 18, 1996).

After discovery is completed, the court conducts an inquiry into several factors if there is a motion to decertify the class. Burch, 500 F.Supp.2d at 1186. These factors include: (1) the extent and consequences of disparate factual and employment settings of the individual plaintiffs; (2) the various defenses available to the defendant that appear to be individual to each plaintiff; and (3) other fairness and procedural considerations. Id. If the class is decertified, opt-in class members are dismissed without prejudice and the case proceeds only in the putative class representatives' individual capacities. Keef v. M.A. Mortenson Co., No. 07-cv-3915 (JMR/FLN), 2008 WL 3166302, at *2 (D. Minn. Aug. 4, 2008).

Since the parties here have not completed discovery, this case is at the first step of the two-step inquiry.[3] Thus, the Court must only determine whether Plaintiff has come forward with evidence establishing a colorable basis that the putative class members are victims of a single decision, policy, or plan. Frank v. Gold'n Plump Poultry, Inc., No. 04-cv-1018 (JNE/RLE), 2005 WL 2240336, at *2 (D. Minn. Sept. 14, 2005). At this stage, courts usually rely on the pleadings and any affidavits submitted by the plaintiff to determine whether to grant conditional

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certification. SeeParker v. Rowland Express, Inc., 492 F.Supp.2d 1159, 1164 (D. Minn. 2007) (citing Hipp v. Liberty Nat'l Life Ins. Co., 252 F.3d 1208, 1218 (11th Cir. 2001). However, the Court " does not make any credibility determinations or findings of fact with respect to contrary evidence presented by ...


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