Court Adopts "Relaxed Evidentiary Standard" to Allow Hearsay Statements to Support Conditional Class Certification for FLSA Claim

Contreras et al. v. Land Restoration LLC et al. - United States District Court for the Western District of Texas, Austin Division

Facts:  Sergio Contreras and Alberto Sanchez ("Plaintiffs") brought suit on behalf of themselves and on all others similarly situated against Land Restoration LLC and Land Restoration Holdings LLC ("Defendants") on the grounds that Defendants violated the Fair Labor Standards Act ("FLSA").  The Plaintiffs alleged that Defendants, who run a residential and commercial landscaping business, violated the FLSA by failing to pay Plaintiffs overtime pay.  Plaintiffs alleged that even though complaints were made, Defendants ignored the complaints regarding compensation...an experience that was apparently typical of similarly situated laborers employed by Defendants.

After suit was filed, Plaintiffs sought conditional certification as a collective action under the FLSA.  The Defendants subsequently opposed the Plaintiffs' attempt to obtain conditional certification.

Holding:  The Court began its analysis with a nod to the FLSA which requires a plaintiff to show the existence of a class whose members are "similarly situated" in order to certify a collective action under the FLSA.  The "similarly situated" analysis involves a two part test:

• First, the court determines whether the putative class members' claims are sufficiently similar to merit sending notice of the action to possible members of the class.  If they are, notice is sent and new plaintiffs are permitted to "opt in" to the suit;
• Second, after discovery is largely complete and more information on the case is available, the court makes a final determination of whether all plaintiffs are sufficiently similarly situated to proceed together in a single action.

In this case, the Plaintiffs sought certification in regard to Defendants' current and former employees who worked as manual laborers and were paid an hourly or daily rate at any time during the three year period before the filing of the suit.  In their pleadings, the Plaintiffs claimed they worked for Defendants from 2012 to 2014 as manual laborers, that neither they nor their coworkers were paid overtime, and that a number of potential class members fear both work and immigration status related retaliation if they came forward as interested parties in joining the suit.  The Defendants objected to the Plaintiffs' attempt to obtain class certification on the grounds that the Plaintiffs' pleadings and declarations were not based on personal knowledge.  For instance, the Defendants pointed out that the Plaintiffs did not indicated how they had personal knowledge about their coworkers' work hours.  As well, the Plaintiffs' claim that they knew their coworkers were not paid overtime "from their 'conversations with other coworkers where [they] talked about how [they] were paid and how [they] did not get paid overtime'" was conclusory and also hearsay.

The Court acknowledged that although the standard to obtain conditional certification is lenient, there must be some factual support to support allegations made in pleadings.  However, the Court pointed out that other district courts in Texas have previously held that affidavits submitted at the notice stage of class certification need not be in a form admissible at trial and instead only need to show that the declarant (the plaintiff) to have demonstrated that the allegations in the declaration are based on personal knowledge.  (As a streamlined reference, presumably, an affidavit that contained hearsay statements would not be admissible at trial...but would be sufficient support at this notice stage when a plaintiff attempts to obtain class certification).  

With that being said, while the Plaintiffs need not present evidence that would meet all the requirements of the Federal Rules (to be admissible at trial), declarations and affidavits must be based on personal knowledge.  In this case, the Court held that an employee can have personal knowledge of employment conditions of other employees by virtue of their work experience.  As a result, while hearsay statements do not meet the evidentiary standards of the Federal Rules, hearsay does in fact provide some factual support for a plaintiff's allegations, such as in this case to establish the existence of other similarly situated potential class members.

Judgment:  The District Court adopted a "relaxed evidentiary standard" at the notice stage of FLSA class certification and subsequently held that so long as declarations or affidavits are based on personal knowledge, even if the declarations or affidavits include hearsay, conditional class certification can still be granted to the Plaintiffs.

The Takeaway:  For readers of the blog who consider themselves to be "policy wonks" or prefer a more in depth analysis of the rules in regard to pleadings or class certification, this case is right up your alley.  I think it is important to note that although the District Court adopted a "relaxed evidentiary standard" in regard to the pleadings necessary to support a class certification, the Court did not take a stand in regard to the validity of this claim.  

In fact, the Court was careful to establish that while hearsay could support a claim for class certification, that did not mean that a plaintiff could rely upon hearsay statements at the trial stage to prevail upon its claim.  (Remember the Court made sure to clarify that the standard to obtain conditional certification is lenient and there must be some factual support to support allegations made in pleadings.  However, the Court was clear that the type of hearsay evidence used at this stage would not necessarily be admissible at trial to prove an FLSA violation).  If anything, the big takeaway here is to note the leniency of evidentiary standards at this stage of litigation when a plaintiff seeks class certification.

Majority Opinion Judge:  Judge Pitman

Date:  February 17, 2017

Opinion:  cases.justia.com/federal/district-courts/texas/txwdce/1:2016cv00883/828514/21/0.pdf?ts=1487521224