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Ascertainability case law misapplied in denying Sleepy’s drivers’ renewed motion for certification of class wage claims

By Ronald Miller, J.D.

The Third Circuit declined to import the stringent motion-for-reconsideration standard to a renewed motion for class certification under Rule 23(c)(1)(C).

A federal district court erred in denying delivery drivers’ renewed motion for certification of a proposed class by misapplying the Third Circuit’s ascertainability case law, ruled the Third Circuit. The district court essentially demanded that the drivers identify the class members at the certification stage, while the appeals court has held that a plaintiff need only show that “class members can be identified.” Further, the district court improperly treated the renewed motion for class certification as a motion for reconsideration. “An order that grants or denies class certification may be altered or amended before final judgment,” so courts cannot apply the heightened motion-for-reconsideration standard that requires plaintiffs to show there was a change in controlling law, new evidence, or a clear error. Judge Hardiman filed a separate dissenting opinion (Hargrove v. Sleepy’s LLC, September 9, 2020, Ambro, T.).

Class certification. The plaintiffs in this action were individuals who performed mattress deliveries for Sleepy’s. To work for Sleepy’s, they had to sign a standardized Independent Driver Agreement (IDA). The IDA “required that the delivery drivers could not perform any other business while on duty with Sleepy’s.” However, the IDAs also stated that the relationship was entered on a “non-exclusive basis.” Some drivers in the proposed class signed IDAs on their own behalf, while others signed on behalf of a separate corporate entity.

The drivers alleged that Sleepy’s misclassified them as independent contractors, brought a lawsuit alleging violations of New Jersey’s Wage Payment Law and New Jersey Wage and Hour Law, and sought certification of a class of delivery drivers. According to the drivers, Sleepy’s made unlawful deductions from their pay for damage claims, uniforms, customer claims, and other fines, and failed to pay them overtime.

Employer records. In seeking class certification, the drivers argued they could piece together who the proposed class members were from Sleepy’s available records, including driver identification codes, load sheets and manifests, driver expense reports, and gate logs. After reviewing Sleepy’s records produced in discovery, they concluded that approximately 193 individuals were hired by Sleepy’s to make deliveries. For its part, Sleepy’s argued that substantial gaps in the record foreclosed class certification.

After preliminary discovery, the district court granted Sleepy’s motion for summary judgment, holding that, under then-controlling New Jersey law, the drivers were independent contractors and not employees. In May 2015, the Third Circuit vacated and remanded so that the district court could apply the proper test adopted by the New Jersey Supreme Court in response to a certified question.

On remand, the district court granted the drivers’ motion for summary judgment, holding that the three named plaintiffs were employees of Sleepy’s. Specifically, it held that Sleepy’s exercised considerable control over the work of the drivers under the IDAs. Left to be decided were the issues of class certification and damages.

Class certification. In February 2018, the district court denied the drivers’ first motion to certify the class. It held that the drivers had not demonstrated the ascertainability of the proposed class. Thereafter, the drivers filed a renewed motion for certification of a class of only the 111 individuals who performed deliveries on a full-time basis and who drove one truck for Sleepy’s. In denying the renewed motion for class certification, the district court construed the motion as a motion for reconsideration. Under the standard of review for reconsideration motions, the district court would reconsider its prior denial of class certification only if the drivers pointed to a change in controlling law, new evidence, or a clear error.

Nonetheless, the district court engaged in the Rule 23 certification analysis, and held that the narrower class was still not ascertainable because the records kept by Sleepy’s regarding the identity of the drivers lacked critical information. This appeal followed.

Standard for renewed motion. The Third Circuit agreed with the drivers that the district court erred in treating their renewed motion for class certification as a motion for reconsideration. As an initial matter, the appeals court noted that it had not previously decided what standard applies when reevaluating an initial denial of a motion for certification. Here, the district court required the drivers not only to satisfy the requirements of Rule 23, but also to show that there had been a change in controlling law, new evidence, or a clear error.

However, the appeals court determined that district courts should treat renewed motions for class certification as they would initial motions under Rule 23. The language of Rule 23(c)(1)(C), allows for multiple opportunities for a renewed motion for certification throughout the litigation, and does not impose an additional requirement on parties to prove a change in law or show new evidence to succeed. Accordingly, the Third Circuit declined to import the stringent motion-for-reconsideration standard to a renewed motion for class certification under Rule 23(c)(1)(C).

Ascertainability. Additionally, the appeals court concluded that the district court misapplied Third Circuit ascertainability case law in demanding that the drivers identify the class members at the certification stage. In the Third Circuit, a Rule 23(b)(3) class must also be “currently and readily ascertainable based on objective criteria.” However, a plaintiff need not “be able to identify all class members at class certification—instead, a plaintiff need only show that ‘class members can be identified.’”

Here, the drivers produced evidence that could be used to identify which drivers worked for Sleepy’s full time. Pay statements showed that delivery drivers completed multiple deliveries each day, five to six days a week, and Sleepy’s manifests listed the driver of the truck and how many deliveries they were assigned each day. Pay statements also listed amounts that were deducted from the driver’s pay, including the reason for the deductions. Thus, the drivers identified several distinct data sets that, taken together with the affidavits, establish a “reliable and administratively feasible mechanism” for determining class membership. Accordingly, the appeals court reversed the district court’s holding with respect to ascertainability.

Dissent. In a dissenting opinion, Judge Hardiman would affirm the judgment of the district court. With respect to the drivers’ renewed motion for class certification, the dissent argued that the drivers failed to present the issue of whether the district court erred in applying the higher standard for a motion for reconsideration. Consequently, because the majority neglected the principle that courts normally decide only questions presented by the parties, Hardiman dissented from the majority opinion.