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Duane Morris Takeaway: This week's episode of theClass Action Weekly Wire features Duane MorrispartnersJerry Maatman and Alex Karasik with their discussion of a North Carolina federal court decision adopting a magistrate judge's recommendation to deny a motion for decertification of FLSA claims and grant the certification motion for state law claims.
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Episode Transcript
Jerry Maatman: Thank you, loyal blog readers and listeners, for joining us again this week for the next episode of our weekly podcast series entitled The Class Action Weekly Wire. I'm Jerry Maatman, a partner at Duane Morris, and joining me today is my colleague and partner Alex Karasik. Welcome so much, Alex, for being on the podcast.
Alex Karasik: Great to be here, Jerry. Thank you for having me.
Jerry: Today, we're going to discuss an important ruling that emanated from North Carolina. It's in a case called Landis v. The Elevance Health Cos., and it involves a Fair Labor Standards Act (FLSA) case and a North Carolina wage and hour law case. It involves a recommendation made by a magistrate judge to not decertify a FLSA conditionally certified collective action, and then on top of it, to certify a Rule 23 class under state law. From your perspective, Alex, in terms of following these sorts of rulings, what stands out to you, and what should employers take away from this ruling?
Alex: What stands out is the court's straightforward endorsement. By finding no clear error, Judge Boyle confirmed that both the FLSA collective action and the North Carolina Wage and Hour Act class claims should remain intact. That was certainly a unique ruling to me.
Jerry: Well, these are misclassification claims by the plaintiff, Kathy Landis. Could you give our listeners a quick recap of what this lawsuit was all about?
Alex: Yeah, certainly, Jerry. Landis alleged that Elevance, formerly the Anthem Companies and its subsidiary, Amerigroup, misclassified utilization reviewers in the Nurse Medical Management (NMM) job titles as exempt employees. Landis and the other plaintiffs alleged that they were salaried, classified as exempt, and routinely worked more than 40 hours in a work week, and therefore did not receive overtime compensation for the hours worked beyond 40. Their primary job duty was utilization review, which is essentially assessing whether requested healthcare services are medically necessary using objective clinical criteria.
Jerry: The study we do each year in the Duane Morris Class Action Review gathers statistics on decertification motions, and in past years, basically a jump ball, 50-50 between plaintiffs and defendants. In this particular case, what were the factors that led the court to deny decertification of the collective action?
Alex: In this instance, the magistrate judge found that similarities across all NMM rules outweighed the differences. All NMMs used the same software systems, they reported with a common supervisory structure, they performed standardized utilization review, they followed similar approval and escalation procedures. So even though sometimes there were different guidelines, the main functions remained the same. The magistrate judge stated that the differences were not meaningful to the core question of exempt status and whether or not they were misclassified. In other words, even if the day-to-day details varied among the people in the case, the variations did not alter the legal inquiry under the FLSA.
Jerry: One way to think about decertification is the concept of chaos. You can't put one person on the stand, they tell their story, and it transposes to everyone else. What was the court's take on the defendant's argument about the individualized nature of the duties, the jobs, the tasks at issue here?
Alex: Yeah, the court didn't find that persuasive in this case. Judge Swank found that the defendants overstated the amount of individualized analysis that would be required. She concluded that the collective could be analyzed efficiently and because the exemption issue was common across the group. The court opined that the central question was whether the utilization reviewers were exempt, or were they performing exempt or non-exempt work, and minor variations among the work performed wouldn't alter that inquiry. The magistrate judge also found that collective treatment would be a more efficient method in terms of adjudicating these claims as opposed to an individual case. The magistrate judge concluded that all factors weighed against decertification.
Jerry: Many believe that obtaining conditional certification of a collective action is easier than obtaining Rule 23 certification of a class action. How did the court treat theories that the plaintiffs offered here for Rule 23 certification of their state law wage and hour claims?
Alex: Yeah, the court here essentially rejected the defendant's arguments in terms of what they disputed in the case of the Rule 23 factors. She stated that the class shared a central question of whether individuals in these roles whose primary job was utilization review. We're properly classified as exempt. The court held that the variations in hours worked or guidelines used did not defeat commonality, because the exemption question could be answered with common evidence.
Jerry: Commonality under Rule 23(a)(2) is one thing, but predominance under Rule 23 is another, and a very exacting, difficult test. How did the court react to the defenses of predominance and superiority in this context?
Alex: Judge Swank found that common issues predominated because the exemption question was common across the class, and it could be resolved using largely uniform evidence, such as their job descriptions, the deposition testimony about the review process, and Elevance's uniform exemption policy. In other words, the judge concluded that a class action would be the superior method for adjudicating these claims.
Jerry: Well, thanks so much, Alex, for your overview and thought leadership in this area. The Duane Morris Class Action Review is about a month out from being launched. Chapter 23 is the wage and hour chapter, probably the meatiest chapter in the entire book in terms of the volume of rulings, and this certainly is a good case study of how plaintiffs have succeeded, at least in North Carolina, in certifying their cases. So, thanks so much for being here today, and being our guest speaker on this week's podcast.
Alex: Well, thank you, Jerry. I'm grateful for the opportunity to be here, and thank you to our listeners.
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