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Barchrach v. Chase Investment Services Corp.

November 1, 2007

BACHRACH, ET AL.
v.
CHASE INVESTMENT SERVICES CORP., ET AL.



The opinion of the court was delivered by: William J. Martini Judge

LETTER OPINION

Dear Counsel:

Plaintiffs David Bachrach and Lawrence Kaufmann ("Plaintiffs") bring this Motion for Class Certification, pursuant to Federal Rule of Civil Procedure 23. This Court declines to certify the class for three reasons: (1) many members have no claims, rendering the class overinclusive, (2) many remaining members will opt out, rendering the class insufficiently numerous, and (3) the class does not fit within any category of classes allowed by Rule 23(b). Accordingly, Plaintiffs' Motion is DENIED.

FACTS AND PROCEEDINGS

Plaintiffs are former financial advisors in Defendants' New Jersey office.*fn1 (Am. Compl. ¶¶ 9--11.) As financial advisors, Plaintiffs' duties consisted of soliciting clients, gathering their financial information, preparing a financial plan for those clients, and selling them the desired plan. (Ross Certification Ex. B.)

Plaintiffs now allege that during this employment Defendants violated two categories of New Jersey employment law. (Am. Compl.) First, Plaintiffs allege that Defendants illegally failed to pay them overtime rates. (Am. Compl. ¶¶ 72--78.) Second, Plaintiffs allege that Chase illegally deducted money from their paychecks to pay for office expenses and to reimburse dissatisfied customers. (Am. Compl. ¶¶ 61--71.)

Plaintiffs now seek to certify a class comprising all financial advisors employed by JP Morgan in New Jersey since June 21, 2000. (Mt. for Class Certification. 1.) The Motion alleges that this class comprises over 200 members (Mt. ), but the evidence suggests that Defendants employed only seventy-five securities brokers in New Jersey between 2000 and 2006, only a dozen or so of whom worked there between 2004 and 2006. (Ross Certification Ex. H ¶¶ 3, 5, 7; Ross Certification Ex. O ¶¶ 5--7.) For the following reasons, Plaintiffs' Motion is denied.

DISCUSSION

I. The Elements of Plaintiffs' Claims

Before directly addressing Plaintiffs' Motion, this Court briefly considers the elements of Plaintiffs' claims. See Newton v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 259 F.3d 154, 166 (3d Cir. 2001). This consideration suggests that Plaintiffs' first type of claim, the overtime claim, is legally unlikely to succeed. This consideration also suggests that Plaintiffs' second type of claim, the illegal deductions claim, is legally viable but factually tenuous.

With respect to the first category of claims, Plaintiffs allege that Defendants failed to pay overtime rates, violating New Jersey law. (Am. Compl. ¶¶ 72--78.) N.J. STAT. ANN. § 34:11- 56a4 (West Supp. 2007). Section 56a4 states that employers must pay employees overtime unless those employees are employed in an "administrative" capacity. Plaintiffs' overtime claims depend upon whether financial advisors are administrative employees.

They likely are. Federal overtime law, which New Jersey incorporates into its own overtime law, Marx v. Friendly Ice Cream Corp., 882 A.2d 374, 379 & n.5 (N.J. Super. Ct. App. Div. 2005), also contains an exemption for "administrative" employees. 29 U.S.C. § 213(a)(1) (2000). As an example of administrative employees, federal regulations list "[e]mployees in the financial services industry" whose duties include collecting information about customers' finances, preparing a financial plan for their customers, and ultimately selling the plan. 29 C.F.R. § 541.203 (2007). This is precisely what the class members do. It is thus likely that the members do not have a viable claim to overtime.

The class faces one more barrier to asserting overtime claims: the statute of limitations. The statute of limitations on overtime claims is two years. § 34:11-56a25.1. The class, however, comprises financial advisors who have worked for Chase at any time since 2000. (Mt. 1.) Any members who left Chase at least two years prior to the commencement of this action are barred from even asserting their overtime claims.

With respect to the second category of claims, Plaintiffs allege that Chase illegally deducted money from their paychecks to pay for office expenses and to reimburse dissatisfied customers. (Am. Compl. ¶¶ 61--71.) If these allegations are true, they are violations of New Jersey law, which prohibits withholding portions of employees' wages. N.J. STAT. ANN. § ...


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