SOLIS v. HOTELS.COM TEXAS, INC. (N.D.Tex. 2003)

WILLIAM SANDERSON, Magistrate Judge

Pursuant to the provisions of 28 U.S.C. § 636(b)(1)(B) and (C) and the District Court's standing order of reference filed on August 25, 2003, on September 24, 2003 came on to be heard Plaintiffs' Motion to Facilitate § 216(b) Notice filed on July 18, 2003, and having considered the relevant pleadings and appendices submitted by the parties and the statements and arguments of their counsel, the magistrate judge finds and recommends as follows, as evidenced by his signature thereto:

Plaintiffs seek authorization to give notice to similarly situated former and current employees of Defendant to permit such persons to "opt in" to this case which the named Plaintiffs seek to pursue as a "collective or representative action," pursuant to 29 U.S.C. § 216(b). Defendant joins issue on (1) the persons entitled to receive notice and (2) the language which should be incorporated in the court-authorized notice.

With respect to the first issue, Plaintiffs wish to serve notice on approximately 900 persons who were employed at Defendant's call centers in Fort Worth, Dallas and Pharr from June 18, 2000 to the present. Defendant in turn argues that 743 of these individuals have executed settlements and have accepted back wage payments under the auspices and supervision of the U.S. Department of Labor (D.O.L.), which as a matter of law precludes their participation in this case brought under the Fair Labor Standards Act (FLSA).

Defendant points out that a properly executed waiver by an employee forecloses the employee's right to later sue his employer for additional compensation under the FLSA. Eg. See Snead v. Snead's Shipbuilding Inc. 545 F.2d 537, 539 (5th Cir. 1977). Plaintiffs, on the other hand, submit that the holding in Snead is inapplicable, claiming that the settlements and waivers of the 743 individuals were fraudulently obtained because the time records on which the settlement amounts were calculated were inaccurate and the spread sheets, approved by the D.O.L., calculated overtime amounts at rates which were inconsistent with the D.O.L.'s regulations and the terms of 29 U.S.C. § 207(a).

In determining the persons to whom notice should be given, the court has a "responsibility to avoid the `stirring up' of litigation through solicitation." Severtson v. Phillips Beverage Co., 137 F.R.D. 264, 266-7 (D. Minn. 1991). However, the standard for a collective action is less stringent than the burden imposed under Rule 20(a) or Rule 23, F.R.Civ.P. Grayson v. K Mart Corp., 79 F.3rd 1086, 1096 (11th Cir. 1996). Parties seeking to pursue a collective action under the FLSA need only make a moderate factual showing that they are similarly situated to those persons to whom they seek to give notice. Eg. Roebuck v. Hudson Valley Farms, 239 F. Supp. 2nd 234 (N.D.N.Y. 2002).

In the present action, Plaintiffs have not merely alleged that the settlements and waivers were not properly obtained, rendering them unenforceable, but they have presented the court with affidavits of former employees of Defendant who were approached to execute waivers which call into question the calculations on which their overtime hours were calculated. In the magistrate judge's opinion, the enforceability of waivers cannot be determined under the present record.

Therefore, I am of the opinion that notice should be sent to all former employees without respect to whether or not they previously executed waivers and accepted settlements.

When the "opt in" period has expired, the court can then determine whether any "opt in" claimants are similarly situated or not, and if not decertify those not similarly situated. The procedure follows the "Two-Stage Class Certification" process described in Mooney v. Aramco Services Co., 54 F.3rd 1207, 1213-14 (5th Cir. 1995).

Having concluded that notice should be served on persons employed at Defendant's call centers in Fort Worth, Dallas and Pharr, the magistrate judge next addresses the language to be included in the notice. "In exercising the discretionary authority to oversee the notice giving process, courts must be scrupulous to respect judicial neutrality. To that end, trial courts must take care to avoid even the appearance of judicial endorsement of the merits of the action." Hoffman-La Roche Inc. v. Sperling, 493 U.S. 165, 174, 110 S.Ct. 482, 488 (1989). To this end, the magistrate judge has carefully reviewed the respective notices proposed by the parties, and recommends that the District Court approve the proposed notice attached to the magistrate judge's recommendation (Exh. 1).

RECOMMENDATION:

For the foregoing reasons it is recommended that the District Court enter its order granting Plaintiffs' Motion to Facilitate § 216(b) Notice filed on July 18, 2003 and directing that the notice submitted herewith (Exh. 1) be served on all persons who were employed at Defendant's call centers in Fort Worth, Dallas and Pharr.

A copy of this recommendation shall be transmitted to counsel for the parties.

NOTICE

In the event that you wish to object to this recommendation, you are hereby notified that you must file your written objections within ten days after being served with a copy of this recommendation. Pursuant toDouglass v. United Servs. Auto Ass'n, 79 F.3d 1415 (5th Cir. 1996) (en banc), a party's failure to file written objections to these proposed findings of fact and conclusions of law within such ten-day period may bar a de novo determination by the district judge of any finding of fact or conclusion of law and shall bar such party, except upon grounds of plain error, from attacking on appeal the unobjected to proposed findings of fact and conclusions of law accepted by the district court.

EXHIBIT 1 IMPORTANT NOTIFICATION TO POTENTIAL CLASS MEMBERS

TO: ALL CURRENT OR FORMER HOURLY NON-EXEMPT CALL CENTER EMPLOYEES OF HOTELS.COM WHO WERE EMPLOYED BY HOTELS.COM AT ANY TIME SINCE JUNE 18, 2000 FROM: JONES ASSOCIATES, P.C. RE: RIGHT TO JOIN A LAWSUIT SEEKING TO RECOVER UNPAID OVERTIME COMPENSATION DATE: OCTOBER __, 2003. 1. PURPOSE OF NOTICE

The purpose of this Notification is to inform you of the existence of a collective action lawsuit in which you are potentially eligible to participate because you may be "similarly situated" to the named Plaintiffs. This Notification is also intended to advise you how your rights under the Federal Fair Labor Standards Act (the "Act") may be affected by this lawsuit, and to instruct you on the procedure for participating in this suit, should you decide that it is appropriate and you choose to do so.

2. DESCRIPTION OF THE LAWSUIT

A lawsuit has been brought by Isabel Solis and Trisha Holloway ("Plaintiffs") against Hotels.com, David Litman, Robert Diener and Sandra D'Arcy (collectively referred to as "Hotels.com") in the United States District Court for the Northern District of Texas as Cause No. 3:03-CV-00618. The lawsuit alleges that Hotels.com failed to provide overtime compensation as required by the Act. Plaintiffs lead counsel in this case is:

James A. Jones (titlevii@1scom.net) Jones Associates, P.C. 5015 Tracy, Suite 100 Dallas, Texas Telephone: (214) 219-3456 Facsimile: (817) 430-8778

Generally, the overtime provisions of the Act require that, for all hours over forty hours per week that an employee works, the employer must compensate the employee at the rate of one and one-half times his or her regular hourly rate, unless that employee is properly classified as "exempt" from the overtime provisions of the Act. The Plaintiffs in this lawsuit claim that during one or more weeks of their employment with Hotels.com, they worked in excess of forty hours, but were not paid overtime at the rate of one and one-half times their hourly rate for the hours they worked in excess of forty. Specifically, Plaintiffs allege that 1) they were not paid for two fifteen-minute breaks each day of their workweek and 2) they were not otherwise paid for other overtime they worked. Plaintiffs are suing to recover unpaid overtime compensation for the period from June 18, 2000, to present.

3. COMPOSITION OF THE CLASS

The named Plaintiffs seek to sue on behalf of themselves and also on behalf of other employees with whom they are similarly situated. Those that Plaintiff alleges are similarly situated are those current and former hourly non-exempt call center employees of Hotels.com who were employed by Hotels.com at any time from June 18, 2000, to the present, at Hotels.com's Dallas, Fort Worth or Pharr call centers.

This Notification is only for the purpose of determining the identity of those persons who wish to be involved in this case and has no other purpose. Your right to participate in this suit may depend upon a later decision by the United States District Court that you and the representative Plaintiffs are actually "similarly situated."

4. YOUR RIGHT TO PARTICIPATE IN THIS SUIT

If you fit the definition above, that is, you were employed as an hourly non-exempt employee of Hotels.com (or a combination of hourly and commission) at any time from June 18, 2000, to the present, at Hotels.com's Dallas, Fort Worth or Pharr call centers, you may have a right to participate in this lawsuit.

YOU MAY FILE A CONSENT FORM TO SEEK TO PARTICIPATE IN THIS LAWSUIT EVEN IF:

YOU WERE TOLD BY HOTELS.COM THAT YOU WERE NOT ELIGIBLE TO RECEIVE OVERTIME PAY YOU WERE TOLD BY HOTELS.COM THAT IT DID NOT HAVE TO PAY YOU FOR BREAKS

YOU WERE PAID FOR OVERTIME HOURS WORKED AT A RATE OF LESS THAN ONE AND ONE-HALF TIMES YOUR HOURLY RATE

YOU SIGNED AN AGREEMENT TO ARBITRATE CLAIMS AGAINST HOTELS.COM

YOU SIGNED A RELEASE OF CLAIMS AGAINST HOTELS.COM

YOU DID OR DID NOT KEEP RECORDS OF YOUR HOURS WORKED

If you signed an arbitration agreement, you should be aware that the parties have reached an agreement that will allow your claims to be tried in the United States District court rather than before an arbitrator. However, there are certain unlikely contingencies contained in that agreement that could result in your claim being tried to an arbitrator. If you have any questions or concerns regarding this matter, you may contact Plaintiffs' counsel listed on page one of this Notice.

If you signed a release of your claims against Hotels.com in return for payment of certain monies, you should be aware that your ultimate right to continue participation in this lawsuit may be affected by subsequent rulings by the Court. The Plaintiffs and those parties who have already opted into this lawsuit have challenged the validity of these releases based on fraud and on the failure to provide full payment. Hotels.com contends that the releases are valid and enforceable. The Court has yet to rule on this issue. If you signed such a release and you wish to challenge the validity of the release in order to participate in this lawsuit, you must timely submit a Consent Form as directed below.

5. HOW TO PARTICIPATE IN THIS LAWSUIT**

Enclosed you will find a form entitled "Consent to Become a Party Plaintiff ("Consent Form"). If you choose to join this lawsuit, and thus participate in any recovery that may result from this lawsuit, it is extremely important that you read, sign and return the Consent Form. An addressed and postage paid envelope is enclosed for your convenience. Should the envelope be lost or misplaced, the Consent Form should be sent to:

Overtime Lawsuit Against Hotels.com Jones Associates, P.C. P.O. Box 190669 Dallas, Texas 75219

The signed Consent Form must be postmarked by ___, 2003. If your signed Consent Form is not postmarked by ___, 2003, you will not participate in any recovery obtained against Hotels.com in this lawsuit. If you have any questions about filling out or sending in the Consent Form, please contact Plaintiffs counsel listed on page one of this notice.

**Plaintiffs' counsel requested 60 days for Consent to be postmarked; Defendant's counsel requested 30 days for consent; the magistrate judge recommends 45 days for consent.

6. NO RETALIATION PERMITTED

It is a violation of Federal law for Hotels.com to discharge, or in any manner discriminate or retaliate against you for taking part in this case. If you believe that you have been penalized, discriminated against or disciplined in any way as a result of your receiving this notification, considering whether to join this lawsuit or actually joining this lawsuit, you should contact Plaintiffs counsel immediately.

7. EFFECT OF JOINING THE LAWSUIT

If you choose to join this lawsuit, you will forego the right to participate in the DOL-supervised settlement and obtain a sum certain in exchange for the possibility of obtaining additional monies through this litigation.

If you choose to join in this lawsuit, you will be bound by the judgment, whether it is favorable or unfavorable. You will also be bound by, and will share in, any settlement that may be reached on behalf of the class.

By joining this lawsuit, you designate the representative Plaintiffs as your agents to make decisions on your behalf concerning the litigation, the method and manner of conducting this litigation, the entering of an agreement with Plaintiffs' counsel concerning fees and costs, and all other matters pertaining to this lawsuit. These decisions and agreements made and entered into by the representative Plaintiffs will be binding on you if you join this lawsuit.

The representative Plaintiffs in this matter have entered into a contingency fee arrangement with Plaintiffs' counsel, which means that if there is no recovery, there will be no attorneys' fees or costs chargeable to you. If there is a recovery, Plaintiffs' counsel will receive a part of any settlement or money judgment entered in favor of all members of the class. You may request a copy of the contingency fee agreement executed by the Plaintiffs in this matter from Plaintiffs' counsel at the address, telephone number, facsimile number, or e-mail that appears on page one of this notice.

8. NO LEGAL EFFECT IN NOT JOINING THIS SUIT

If you choose not to join this lawsuit, you will not be affected by any judgment or settlement rendered in this case, whether favorable or unfavorable to the class. You will not be entitled to share any amounts recovered by the class. You will be free to file your own lawsuit, subject to any defenses that might be asserted. The pendency of this suit will not stop the running of the statute of the limitations as to any claims you might have until you opt-in to it.

9. FURTHER INFORMATION

Further information about this Notification or the lawsuit may be obtained from Plaintiffs' counsel at the address, telephone number, facsimile number or e-mail identified on page one of this notice.