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Sloane v. Rehoboth Mckinley Christian Health Care Services, Inc.

Court of Appeals of New Mexico

May 7, 2018

CLARK EVANS SLOANE, KIM E. DAVIS, QUEENA KIEN, MINDIM. SHULTZ, and ANTHNETTE SPENCER, on behalf of themselves and all others similarly situated, Plaintiffs-Appellants,
v.
REHOBOTH MCKINLEY CHRISTIAN HEALTH CARE SERVICES, INC. d/b/a REHOBOTH MCKINLEY CHRISTIAN HOSPITAL, a New Mexico Non-Profit Corporation, Defendant-Appellee.

          APPEAL FROM THE DISTRICT COURT OF MCKINLEY COUNTY Louis E. DePauli, Jr., District Judge

          Youtz & Valdez, P.C. Shane Youtz Stephen Curtice James A. Montalbano Albuquerque, NM for Appellants

          Moody & Warner, P.C. Repps D. Stanford Christopher M. Moody Albuquerque, NM for Appellee

          OPINION

          DANIEL J. GALLEGOS, JUDGE.

         {¶1} This is a wage-and-hour putative collective and class action alleging that Defendant, Rehoboth McKinley Christian Health Care Services, Inc. (Rehoboth), failed to pay Plaintiffs and other non-exempt employees for time they spent working during meal breaks. This Court granted Plaintiffs' application for interlocutory appeal to consider two questions: (1) whether the district court erred in denying conditional certification for a collective action under the Minimum Wage Act (MWA), NMSA 1978, §§ 50-4-19 to -30 (1955, as amended through 2013); and (2) whether the district court erred in denying class certification for Plaintiffs' unjust enrichment claim. For the reasons that follow, we reverse the district court's denial of conditional certification for the MWA claim, and we affirm the district court's denial of class certification for the unjust enrichment claim.

         BACKGROUND

         {¶2} Rehoboth is a non-profit, integrated healthcare delivery system that operates a sixty-bed acute care hospital in Gallup, New Mexico. Plaintiffs are a group of Rehoboth employees considered to be non-exempt for purposes of calculating minimum wage and overtime wages. During the relevant period, Rehoboth employed hundreds of such non-exempt employees at its Gallup facility. The non-exempt employees were all subject to Rehoboth's employee handbook. Particularly relevant to this case, the handbook outlined Rehoboth's policy on meal breaks.

         {¶3} Under Rehoboth's meal break policy, non-exempt employees involved in direct patient care or support services received unpaid meal breaks. In order to carry out this policy of unpaid meal breaks, Rehoboth's timekeeping system automatically deducted time for meal breaks in half-hour increments. Basically, this means that non-exempt employees were provided with an unpaid half hour during their shift in which to eat, and the purpose of the automatic deduction was to ensure that this period was accounted for without the employee having to clock out and then clock back in. If an employee had to work through a meal break, the policy provided that the employee must get his or her supervisor's permission and must affirmatively punch the "no lunch" button on the time clock at the end of his or her shift. The "no lunch" option thus allowed the employee to be compensated for a meal period for which he or she worked. In addition, the employee could also report-after the fact-that he or she had worked thro, ugh a meal break, and several avenues existed to reverse the automatic deduction. Specifically, the employee, supervisor, or payroll department could make changes to the employee's pay report.

         {¶4} Plaintiffs are five non-exempt employees of Rehoboth who allege that they worked through their meal periods, but due to the automatic deduction, they were not compensated for the time that they worked. They were employed in various capacities at Rehoboth's Gallup facility, including a technician on the overnight shift in the emergency department; a technician on the weekday shift in the radiology department; a certified nursing assistant (CNA) on the day shift in the medical/surgery department and emergency department; a CNA and patient care technician on the day shift in the emergency department; and a registered nurse on the overnight shift in the emergency department. The allegations common to all of Plaintiffs' claims are that supervisors at Rehoboth discouraged non-exempt employees from using the "no lunch" button and told employees that they were to find a way to take an uninterrupted meal break, but that employees were often called back to work or took calls for service during their meal breaks due to staffing issues. One Plaintiff alleges that he punched the "no lunch" button after one such occasion, but a supervisor revoked that entry.

         {¶5} Plaintiffs brought suit under the MWA, alleging that Rehoboth's failure to compensate them for the time they worked during meal breaks resulted in a failure to pay them overtime wages. Plaintiffs also brought suit for unjust enrichment, basically alleging that Rehoboth was unjustly enriched by Plaintiffs' uncompensated labor. Relatively early in the litigation, Plaintiffs moved for conditional certification of a collective action under the MWA and certification of a class action for the unjust enrichment claim. After full briefing, the district court denied certification of both the collective action and the class action. The district court certified its order for interlocutory appeal, pursuant to NMSA 1978, Section 39-3-4 (1999). Plaintiffs filed an application for interlocutory appeal, which this Court granted.

         DISCUSSION

         Collective Action Under the New Mexico Minimum Wage Act

         {¶6} Plaintiffs allege that, as a result of Rehoboth's failure to pay them for the time they worked during meal breaks, they were not properly compensated under the MWA for time they worked beyond forty hours per week. See § 50-4-22(D) ("An employee shall not be required to work more than forty hours in any week of seven days, unless the employee is paid one and one-half times the employee's regular hourly rate of pay for all hours worked in excess of forty hours."). Plaintiffs brought suit on behalf of themselves and on behalf of other employees similarly situated. See § 50-4-26(C) ("[A]n employer who violates any provision of Section 50-4-22 . . . shall be liable to the employees affected in the amount of their unpaid or underpaid minimum wages plus interest, and in an additional amount equal to twice the unpaid or underpaid wages."); see also § 50-4-26(D) ("An action to recover such liability may be maintained in any court of competent jurisdiction by any one or more employees for and on behalf of the employee or employees and for other employees similarly situated[.]"). Later, Plaintiffs moved to conditionally certify a collective action. The district court's denial of Plaintiffs' motion is a subject of this interlocutory appeal.

         {¶7} This Court first dealt with MWA collective actions in Armijo v. Wal-Mart Stores, Inc., 2007-NMCA-120, ¶ 1, 142 N.M. 557, 168 P.3d 129. In Armijo, as in this case, the plaintiffs sought to certify the MWA claims for collective action on behalf of similarly situated employees. Id. ¶¶ 15, 47. Noting that no appellate decision in New Mexico had defined "similarly situated, " we looked to federal cases dealing with a similar provision in the Fair Labor Standards Act (FLSA), 29 U.S.C. § § 201 to 219 (2012).[1] Armijo, 2007-NMCA-120, ¶ 47. In so doing, we recognized that federal courts have adopted or discussed at least three approaches to the issue. Id. ¶ 48. After discussing each of the various approaches, we concluded that the two-tiered/ad hoc approach adopted in Thiessen v. General Electric Capital Corp., 267 F.3d 1095, 1105 (10th Cir. 2001), is the proper standard to apply to collective actions under the MWA. Armijo, 2007-NMCA-120, ¶ 50.

         {¶8} Under the two-tiered/ad hoc approach, "a court typically makes an initial notice stage determination of whether plaintiffs are similarly situated." Thiessen, 267 F.3d at 1102 (internal quotation marks and citation omitted). In effect, the court determines whether a collective action should be certified for purposes of sending notice of the action to potential class members who may wish to opt in. See Zavala v. Wal Mart Stores Inc., 691 F.3d527, 53 6 (3d Cir. 2012) (explaining that conditional certification is "not really a certification[, ]" but is simply the exercise of a district court's discretionary power to facilitate the sending of notice). At this initial stage, the court requires nothing more than "substantial allegations that the putative class members were together the victims of a single decision, policy, or plan.” Armijo, 2007-NMCA-120, ¶ 48 (internal quotation marks and citation omitted).

         {¶9} "At the second stage, which typically follows discovery and/or a motion to decertify the class, the court must revisit its initial determination, only now under a stricter standard of similarly situated." Id. (internal quotation marks and citation omitted). "Under this stricter analysis, the court should consider several factors in determining whether the putative class members are similarly situated, " including the following: "(1) whether the class members have disparate factual and employment settings, (2) whether the available defenses to the claims are ...


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