Massachusetts SJC: Rule 23 Governs Wage Act Claims, Rejected Offers of Judgment Do Not Moot Claims, and More

Every now and then a case comes along that rewards us class action nerds with an embarrassment of riches. Gammella v. P.F. Chang’s China Bistro, Inc., decided last week by the Massachusetts Supreme Judicial Court, is one such case. In it, the Court addressed a number of important class certification issues, some unique to Massachusetts law, and some that have close federal procedural analogues. And its resolution of those issues offers something to both plaintiffs and defendants.

Gammella is a wage and hour case. Plaintiff brought a claim under the Massachusetts Wage Act and the minimum fair wage law for his employer’s alleged violations of the “reporting pay” provision of Massachusetts regulations which, the Court explains, “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.” He alleged that, on numerous occasions, he reported to work at defendant’s restaurants for a shift of at least three hours but was forced to clock out before three hours were reached and was not paid in accordance with the regulations.

After discovery, plaintiff moved for certification of a class of Massachusetts workers who, based on defendant’s records, had shown up to work a scheduled shift of at least three hours but worked less than three hours and received no reporting pay. The reporting pay requirement had been interpreted not to apply where the premature termination of the shift was the employee’s voluntary choice, so the Superior Court redefined the class to include only employees who either were involuntarily cut before three hours or were pressured to accept a shorter-than-three-hours shift. Because it was impossible to tell from defendant’s records whether any employees would fit the revised class definition, the trial court denied class certification for plaintiff’s failure to establish numerosity under Mass. R. Civ. P. 23(a)(1).

But that is only the beginning of the story. As the Court explains, “[a]fter 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.” The first was an offer of judgment under Mass. R. Civ. P. 68. After the plaintiff allowed it to expire, the defendant sent his counsel a certified check and cover letter that would have provided plaintiff complete relief on his individual claim. Defendant then moved to dismiss, arguing that these tenders rendered the case moot.  The trial court agreed and granted the motion to dismiss.

On appeal, the SJC addressed three issues: 1) whether Rule 23’s class certification standards apply to claims under the two state wage statutes; 2) whether plaintiff satisfied the numerosity requirement of Rule 23; and 3) whether defendant’s rejected offers mooted the plaintiff’s claim.

Applicability of Rule 23. First, the Court held that Rule 23 governed the class certification analysis. The two state wage statutes expressly provide that plaintiffs can bring actions on their own behalf and “for others similarly situated.” Plaintiff argued that the statutes established a lower standard for certifying classes of employees invoking their provisions. The SJC held that while the statutes authorize class actions, they do “not define the class certification standards themselves. Those standards are provided by rule 23.”

The Court contrasted the “similarly situated” language of the wage statutes with the more detailed language of the Massachusetts Consumer Protection Act, Chapter 93A, which, unlike the wage statutes, “contains highly detailed language that closely follows the specific certification requirements of rule 23, while deliberately omitting some of those requirements.” It thus held that the trial court was correct to apply Rule 23, rather than a lower standard, to plaintiff’s class certification motion.

Numerosity. Although it held that Rule 23 applied, the SJC concluded that the trial court had applied it incorrectly. The Court explained:

“[T]he plaintiff identified as putative class members hundreds of unnamed employees who, on approximately 7,000 occasions, worked less than three hours on shifts scheduled for three or more hours but did not receive reporting pay. The defendant did not maintain records explaining why any of these employees left early and admitted it could not know if they had been involuntarily dismissed. And the defendant refused to provide the identities of these employees to the plaintiff in response to his discovery requests.”

This was enough, the Court held, to establish a reasonable inference of numerosity, which was all that was required:

“Uncertainty as to the number of plaintiffs, due to the possibility of affirmative defenses regarding some of the plaintiffs, is not a grounds for denying class certification, at least when hundreds of employees are affected by an apparent prohibited ‘class-wide practice’ and the employer’s own record-keeping deficiencies cause the uncertainty.”

The Court observed that the trial court retained discretion to decertify the class if it later learns that numerosity is not met, and criticized the trial court’s redefinition of the proposed class because the class as redefined was an improper “fail-safe” class.

Mootness. Finally, the SJC reversed the trial court’s holding that the Rule 68 offer of judgment and the subsequent tender of payment to satisfy in full plaintiff’s individual claim rendered that claim moot. It chose to follow the United States Supreme Court’s decision in Campbell-Ewald v. Gomez that an unaccepted Rule 68 offer cannot moot a plaintiff’s claim, and extended that reasoning to the unaccepted tender of payment as well. It also rejected defendant’s argument that plaintiff’s failure to seek an interlocutory appeal from the order denying class certification supported a finding of mootness, pointing out that the plaintiff had not waived his appellate rights and that “class claims may remain live where the plaintiff has yet to appeal from the denial of a motion for class certification.” Ultimately, the SJC remanded the case to the trial court to determine whether the remaining standards of Rule 23 (other than numerosity) had been satisfied.

Written by former litigation partner, Donald R. Frederico.