The Massachusetts Supreme Judicial Court (SJC) recently discussed class certification in state court wage and hour cases in Gammella v. P.F. Chang’s China Bistro.¹  The SJC held that the same civil procedure rules applicable to other class actions also apply to wage claims.  It also found that uncertainty in the exact number of persons who might have a valid claim is not a reason for denying class action treatment.  The SJC further held that making an offer of judgment to a class action plaintiff that includes all potential relief she might recover does not extinguish that person’s claims.

Background

Under Massachusetts law, if an employee arrives for a shift scheduled for three hours or longer, but then is sent home before working three hours, the employee is entitled to three hours’ wages of at least the minimum wage.  This provision is often called the “reporting pay” or “three-hour” rule. 

The plaintiff in Gammella, a restaurant server, claimed that she was sent home early numerous times without being given the required reporting pay.  She filed suit on her own behalf and on behalf of other restaurant employees.  She moved to certify a class, but the trial court denied this motion.  Soon thereafter, the defendant made an offer to the plaintiff of the money she was owed.  Even though the plaintiff refused this offer, the trial court dismissed her claims because it found her claims were rendered moot by the offer.

The Class Action Standard in Massachusetts

The first issue the SJC addressed is whether a relaxed standard applies for certifying a class alleging violations of Massachusetts’ wage and hour laws.  The Massachusetts Wage Act states that an employee may bring a claim on behalf of “others similarly situated.”  The plaintiff in Gammella argued that this language means that courts should apply a more lenient standard in certifying a class action. 

The SJC disagreed.  It held that this “similarly situated” language means that a plaintiff has the right to bring a class action, but does not change what the plaintiff has to prove to get that class certified.  Rather, Massachusetts Rule of Civil Procedure 23 (Rule 23) applies to class certification for Wage Act claims – the same rule that applies to class actions under most other laws in state court.

The Numerosity Requirement

Having established that Rule 23 applied to the plaintiff’s claims, the SJC next applied the specific requirements of that rule to the case.  One of the requirements of Rule 23 is that the class be “so numerous that joinder of all members is impracticable.”  That is, the plaintiff must prove that there are so many members of the class that requiring each person to individually join the case as a named plaintiff would be impractical.  This standard is often called the “numerosity” requirement. 

In denying class certification, the trial court in Gammella found that the numerosity requirement was not met.  The trial court noted that reporting pay is not owed to an employee who leaves a shift early “completely on a voluntary basis.”  Because there was no way to determine how many employees had left their shifts voluntarily versus involuntarily, the trial court held that it could not determine whether there were enough employees who could state a claim so as to make the class sufficiently numerous.

The SJC disagreed with this reasoning.  It found that there was evidence that hundreds of employees had left their shifts early, on thousands of occasions.  While it was possible that some (or even all) of those early departures were voluntary, that fact could be a defense to the employees’ claim.  According to the court, the possibility of a defense, by itself, does not equal uncertainty as to the number of persons with a claim, and therefore cannot be used to undermine a claim of numerosity.  The SJC also found that the employer had not maintained records about why employees left early, and the lack of records could not be used to deny class certification.  The SJC thus sent the case back to the trial court to re-assess whether it could be certified as a class action.

Does An Offer of Full Relief Extinguish a Plaintiff’s Claim?

Lastly, the SJC considered the trial court’s dismissal of the plaintiff’s claim.  After class certification was denied, the defendant made a formal offer (called an offer of judgment) under Massachusetts Rule of Civil Procedure 68 (Rule 68) to pay plaintiff all amounts the plaintiff claimed to be owed and to have judgment entered against it.  The plaintiff rejected the offer of judgment.  After that effort failed, the defendant made a settlement offer (a tender offer) to the plaintiff, accompanied by a certified check, in an amount sufficient to cover potential wages on the plaintiff’s individual claim, along with her fees and costs.  The plaintiff refused the tender offer and did not cash the check.  The trial court held that because the plaintiff had been offered everything she could receive at trial, there was no more claim for her to pursue, and therefore dismissed the case. 

The SJC reversed this ruling as well.  It found that neither the rejected Rule 68 offer nor the tender offer – even for the full amount claimed – cut off the plaintiff’s claims. After all, the plaintiff had not received anything from the defendant.  The SJC further noted that the plaintiff had previously moved to certify a class, and that her class-wide claims survived the defendant’s offer to pay for plaintiff’s individual claims. 

Takeaways

The Gammella decision offers a mixed bag for employers.  On one hand, the SJC rejected an attempt to put in place a broader, more lenient standard for granting class action status to wage and hour plaintiffs.  On the other hand, the SJC found that a rejected offer of judgment and tender offer, despite being for the full amount sought, did not moot the plaintiff’s claims under the circumstances.  The portion of the SJC’s decision that addressed the numerosity requirement essentially re-affirmed existing law.

While not addressed directly by the Gammella decision, the case serves as a reminder that while employees may not be owed reporting pay if they voluntarily leave their shift early, an employer should maintain some documentation about such early departures in case there is a future dispute.