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Victor Zavala; Eunice Gomez v. Wal Mart Stores Inc.

August 9, 2012

VICTOR ZAVALA; EUNICE GOMEZ; MAXIMILIANO MENDEZ; CARLOS ALBERTO TELLO; ANTONIO FLORES; OCTAVIO DENISIO; MARTIN MACAK; PAVEL KUNC; HANA PFAUSEROVA; JIRI PFAUSER; TERESA JAROS; PETR ZEDNEK; DANIEL ANTONIO CRUZ; LUIS GUTIERREZ; FILIPE CONDADO; ARTURO ZAVALA; HIPOLITO PALACINOS, APPELLANTS
v.
WAL MART STORES INC.



On Appeal from the United States District Court for the District of New Jersey District Court No. 2-03-cv-05309 District Judge: Honorable Garrett E. Brown, Jr.

The opinion of the court was delivered by: Smith, Circuit Judge.

PRECEDENTIAL

Argued March 26, 2012

Before: FUENTES, SMITH, and JORDAN, Circuit Judges

OPINION

I.Introduction

This suit was brought in the U.S. District Court for the District of New Jersey by Wal-Mart cleaning crew members who are seeking compensation for unpaid overtime and certification of a collective action under the Fair Labor Standards Act (FLSA), civil damages under RICO, and damages for false imprisonment. The workers -- illegal immigrants who took jobs with contractors and subcontractors Wal-Mart engaged to clean its stores -- allege: (1) Wal-Mart had hiring and firing authority over them and closely directed their actions such that Wal-Mart was their employer under the FLSA; (2) Wal-Mart took part in a RICO enterprise with predicate acts of transporting illegal immigrants, harboring illegal immigrants, encouraging illegal immigration, conspiracy to commit money laundering, and involuntary servitude; (3) Wal-Mart's practice of locking some stores at night and on weekends -- without always having a manager available with a key -- constituted false imprisonment.

Over the course of eight years and a minimum of four opinions, the District Court rejected final certification of an FLSA class, rejected the RICO claim on several grounds, and rejected the false imprisonment claim on the merits. We will affirm.

II.Facts

This case has been pending for over eight years and ultimately comes to us from a grant of summary judgment. Not surprisingly, it carries with it a substantial record.*fn1 To help organize the relevant facts in a useful manner, we have divided them into groups corresponding to Plaintiffs' claims. We focus only on the facts relevant to our bases for deciding the appeal.

A.RICO

Plaintiffs allege that Wal-Mart paid its contractors with full knowledge that the contractors were hiring illegal immigrants to work in Wal-Mart's stores. Plaintiffs support this contention with further allegations that two senior Wal-Mart executives made comments that could be understood as acknowledging that the contractors had hired and would continue to hire illegal immigrants. In addition, Plaintiffs allege that Wal-Mart managers and executives were regularly informed that their contractors were employing illegal immigrants.

In support of their RICO transporting predicate, Plaintiffs allege that contractors would sometimes pick workers up from the airport and transport them across state lines for work. They also allege that when a work crew was arrested by federal authorities, fired / ejected by the store manager, or otherwise unavailable to work, another work crew would be brought in within hours, often from out of state. In support of their RICO harboring predicate, Plaintiffs allege at least one instance in which work crews were permitted to sleep in the store and keep their personal belongings there with the knowledge of store management. In support of their RICO encouraging predicate, Plaintiffs allege that contractors advertised for Wal-Mart cleaning jobs in the Czech Republic and elsewhere. In support of their RICO involuntary servitude predicate, Plaintiffs allege that they were coerced into working by threats to report their immigration status to authorities. Plaintiffs also use the facts supporting their false imprisonment claims to support their involuntary servitude claims. Those facts will be discussed below.

The record indicates that Plaintiffs did not work exclusively for Wal-Mart, nor did Wal-Mart hire its cleaners exclusively from the pool of illegal immigrants it allegedly transported, harbored, and encouraged. For example, documents and deposition testimony provided by Plaintiffs demonstrate that they held a variety of jobs, including work at a Marriott hotel, work at a movie theater, and work remodeling homes. And the record indicates that Wal-Mart often used store associates (regular, non-contract employees) to clean its stores.

B.Certification of the FLSA Collective Action

The District Court's decision to decertify the collective action followed substantial discovery into the potential class plaintiffs, their employment history, their work hours, their working conditions, and other relevant factors. Magistrate Judge Arleo, to whom some of the proceedings below were assigned, required each opt-in plaintiff to file a questionnaire in a specific format detailing his / her personal information, working conditions, compensation, etc. Over one hundred individuals filed this questionnaire before the deadline. The questionnaires demonstrate that the opt-in plaintiffs worked at dozens of different stores, for numerous different contractors, with various pay amounts and methods. Though most worked every evening from roughly 11pm -- 7am, their hours sometimes varied.

In an effort to demonstrate that the proposed class is similarly situated, Plaintiffs proffer a Wal-Mart Maintenance Manual (and a translation of that manual into Polish), which appears to establish uniform standards and procedures for cleaning Wal-Mart stores. The manual is comprehensive. Among other things, it specifies the products and methods to be used, as well as the procedure for obtaining new supplies or equipment. In a similar vein, Plaintiffs provide declarations and deposition testimony establishing that Wal-Mart provided the cleaning materials used by the crew, though at least one Wal-Mart store manager asserts that contractors provided their own equipment.

In an effort to demonstrate that Wal-Mart exercised control over the proposed class and that this control was common across Wal-Mart stores, Plaintiffs provide declarations and deposition testimony supporting their contention that Wal-Mart managers directed them where and how to clean and often scrutinized their work, requiring them to clean an area more thoroughly before leaving. Wal-Mart provides declarations from store managers insisting that their interactions with crews were limited to general instructions. They insist that they did not supervise the cleaners and that issues were usually raised with the crew chief or the contracting company. Plaintiffs concede in their own deposition testimony that cleaners did not receive training from Wal-Mart staff. Generally, cleaners were trained by other members of the work crew or learned simply by observing.

Plaintiffs also claim that Wal-Mart asserted and exercised the right to hire and fire the cleaning crews. Plaintiffs point first to a form contract distributed to Wal-Mart stores to be used in hiring cleaning crews. The letter accompanying the contract and the contract itself specify that the Wal-Mart store manager shall have final authority to approve or disapprove members of the cleaning crew. In addition, Plaintiffs provide declarations and deposition testimony establishing that Wal-Mart management would occasionally fire individual workers or whole work crews. Multiple Wal-Mart managers provide declarations asserting that they did not have the authority to hire and fire crew members.

C.False Imprisonment

In support of their false imprisonment claims, Plaintiffs allege that they often worked at stores that were shut down at night and on weekends, during which time the exits were locked. At these stores, they needed to seek out managers to open the doors. Managers were often unavailable and were sometimes not even in the store. However, Plaintiffs' deposition testimony shows that they could and sometimes did leave for breaks. Testimony also shows that they occasionally left for work-related tasks like retrieving propane (necessary for the buffing equipment).

Plaintiffs cite two specific instances in which they wanted to leave but were unable to do so: (1) Plaintiff Petr Zednik had a toothache and wanted to leave early, but his manager, Steve, refused to permit him to leave; (2) Plaintiff Teresa Jaros had abdominal pain and bleeding and wanted to leave, but no managers were in the store. In Zednik's case, he further asserts that "Steve is a muscular man (with blond hair), and I knew that he would assault me if I tried to escape through any door that would let me out[.]"

In response, Wal-Mart provides two declarations from store managers. The declarations attest that managers were available to unlock doors "when necessary"; that the stores had properly-marked emergency exits; and that -- to the managers' knowledge -- the emergency exits were neither concealed nor obstructed at any time and were always in proper working order.

In reply to these declarations, Plaintiffs assert that managers were often unavailable. They also assert that they did not know how to leave. Plaintiffs claim that they were never informed of the location of emergency exits. Plaintiffs also speculate that Wal-Mart had motive to conceal these exits.

III.Procedural Timeline

The initial complaint in this case was filed on November 10, 2003, and the case was assigned to then-District Judge Joseph A. Greenaway, Jr. The original complaint was followed by a First Amended Class Action Complaint on February 2, 2004. This complaint sought damages for: (1) RICO (with predicate acts of transporting, harboring, encouraging, and hiring illegal immigrants, conspiracy / aiding and abetting transporting, harboring, and encouraging illegal immigrants, committing immigration offenses for financial gain, involuntary servitude, money laundering, mail and wire fraud, and conspiracy to launder money);

(2) RICO conspiracy; (3) conspiracy to violate civil rights under 42 U.S.C. § 1985; and (4) violations of the Fair Labor Standards Act. On December 29, 2004, the District Court conditionally certified the FLSA collective action.

On October 7, 2005, ruling on a motion to dismiss, the District Court concluded that: (1) Plaintiffs failed to state a claim for any of their alleged RICO predicates; (2) Plaintiffs were not members of a class protected by 42 U.S.C. § 1985; and (3) Plaintiffs' FLSA and false imprisonment claims could proceed. In response, Plaintiffs filed a Second Amended Complaint on November 21, 2005. This complaint abandoned Plaintiffs' civil rights claim under 42 U.S.C. § 1985, the RICO predicate of hiring illegal immigrants, the RICO predicate of money laundering (but not conspiracy to launder money), and the RICO predicate of mail and wire fraud.

On August 28, 2006, deciding a partial motion to dismiss the Second Amended Complaint, the District Court dismissed Plaintiffs' RICO and RICO conspiracy claims. The District Court held: (1) Plaintiffs failed to satisfy the RICO requirement of showing "distinctness" between the "person" and the "RICO enterprise"; (2) Plaintiffs failed to state a claim for their RICO predicate of involuntary servitude; and (3) Plaintiffs failed to establish a causal nexus between their RICO predicates of immigration violations and money laundering and their alleged injury.

On March 10, 2010, this case was reassigned to then-Chief District Judge Garrett E. Brown, Jr. On June 25, 2010, the District Court granted Wal-Mart's motion to decertify Plaintiffs' provisionally-certified FLSA collective action. The District Court concluded that the breadth of factual circumstances underlying each individual's claim did not permit trial of the case as a collective action. On December 1, 2010, the District Court denied Plaintiffs' motion for summary judgment on their FLSA and false imprisonment claims. The District Court concluded that the motion was procedurally improper because it was filed well beyond the deadline provided by the federal rules. The District Court also concluded that the motion failed on the merits because material facts remained in contention on both claims.

On April 7, 2011, the District Court granted WalMart's motion for partial summary judgment on the false imprisonment claim. It first concluded that Wal-Mart had shown adequate grounds for seeking summary judgment beyond the time limit provided by the federal rules. It then held that Plaintiffs' false imprisonment claims failed on the merits because Wal-Mart had adequately demonstrated the availability of emergency exits and Plaintiffs failed to rebut this evidence. Following that decision, Wal-Mart resolved the individual FLSA claims of named Plaintiffs through a series of settlements and an offer of judgment.

This appeal followed. Plaintiffs challenge the District Court's dismissal of their RICO claims, its decertification of the conditionally-certified FLSA action, and its grant of summary judgment for Wal-Mart on Plaintiffs' false imprisonment claims. The District Court had jurisdiction under 28 U.S.C. § 1331, 29 U.S.C. § 216(b), 18 U.S.C. § 1964(c), and 28 U.S.C. § 1367(a). We have appellate jurisdiction under 28 U.S.C. § 1291.

IV.Analysis

A.Certification of the FLSA Collective Action

The District Court conditionally certified this as a collective action under the FLSA. Following discovery, a "motion for decertification" was brought, and the District Court "decertified"*fn2 the class. As the District Court explained, two different standards apply for certification under the FLSA, one for conditional certification, and another for final certification. While we have made clear that the standard for final certification is more stringent than the standard for conditional certification, the exact test to be applied has been left specifically unresolved by our Court. We decide today that to certify an FLSA collective action for trial, the District Court -- after considering the claims and defenses of the parties and all the relevant evidence -- must make a finding of fact that the members of the collective action are "similarly ...


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