United States District Court, W.D. North Carolina, Charlotte Division
JARED MODE, on behalf of himself and all others similarly situated, Plaintiffs,
S-L DISTRIBUTION COMPANY, LLC, S-L DISTRIBUTION COMPANY, INC., and S-L ROUTES, LLC, Defendants.
J. CONRAD, JR., UNITED STATES DISTRICT JUDGE
MATTER comes before the Court on Plaintiffs'
Motion for Conditional Certification, (Doc. No. 109), and the
parties' associated briefs and exhibits, (Doc. Nos.
109-10, 136-37, 140-41).
a class/collective action lawsuit centering on Plaintiff
Jared Mode's (“Plaintiff”) allegation that
Defendants S-L Distribution Company, LLC, S-L Distribution
Company, Inc., and S-L Rouse, LLC (collectively,
“Defendants” or “S-L”) intentionally
misclassified him and a putative class of Defendants'
distributors as independent contractors in violation of
federal wage and hour laws.
collectively manufactures and distributes snack foods to
retail stores in North Carolina and other states. (Doc. No. 1
¶ 10). Plaintiff Jared Mode is a member of J&M Mode
Distribution, LLC (“J&M”), a North Carolina
limited liability company, and worked as an
“Independent Business Operator”
(“IBOs”). (Id. ¶ 12; Doc. No. 26
¶ 2). S-L entered into similar Distributor Agreements
(“Agreements”) with various distribution
companies of which the putative class are principals,
officers, and/or employees. (See, e.g., Doc. No.
23-1: Distributor Agreement between S-L and J&M). These
Agreements expressly state that the Distribution Companies
are independent contractors and further provide that in the
event a court finds the parties did not have an independent
contractor relationship, either party would be entitled to
declare the Agreements null and void. (Id. at 2;
id. at Art. 2A).
to these Agreements, S-L granted the Distribution Companies
rights for its snack food products. Under the Agreements, the
Distribution Companies would purchase the products at
wholesale from S-L and then sell the products to various
stores at a higher price. The Distribution Companies were
responsible for ordering, selling, distributing, and
merchandising S-L's products to customers in their
respective geographic territories. (Id. at Arts.
3-5, 9). The Distribution Companies also agreed to be
financially responsible for certain aspects of the
distributorship, including the costs associated with stale
products and product delivery. (Id. at Arts. 3-4,
9). The Agreements provide that the Distribution Companies
control the schedule, hours, and operations of their
businesses, claim tax deductions for the expenses associated
with running their businesses, and are allowed to distribute
other products in addition to S-L's snack foods.
(Id. at Arts. 2, 4-5). The Distribution Companies
also agreed to comply with all federal, state, and local laws
including wage, overtime and benefit provisions for their
employees. (Id. at Art. 2E). The Agreements also
contain indemnification provisions. (Id. at Art.
March 22, 2018, Plaintiff Jared Mode filed this action
alleging that he and a putative class of Defendants'
distributors are actually employees and thus are entitled to
various protections under the Fair Labor Standards Act, 29
U.S.C. §§ 201, et seq., and North
Carolina's Wage and Hour Act (“NCHWA”), N.C.
Gen. Stat. §§ 95-25 et seq. (Doc. No. 1).
Plaintiff alleges that Defendants violated these wage and
hour laws by failing to pay minimum wage and overtime pay
under the FLSA and by making illegal wage deductions under
the NCWHA. (Doc. No. 1 ¶¶ 27-39). In response, S-L
(i.e., “Third-Party Plaintiff”) filed an Answer
and Counterclaim of unjust enrichment against Plaintiffs in
the event that the Court determines that (1) Plaintiffs
and/or their Distribution Companies were misclassified as
independent contractors and (2) the Agreements are voided.
(Doc. No. 25 ¶¶ 68-73). Additionally, S-L filed
Third-Party Complaints stating claims for indemnification and
unjust enrichment against the Distribution Companies (i.e,
“Third-Party Defendants”). (Doc. Nos. 26-47,
March 6, 2019, the Court dismissed the NCWHA claim and denied
Plaintiffs and Third-Party Defendants' respective motions
to dismiss S-L's counterclaim and Third-Party Complaint.
(Doc. No. 141). Therefore, Plaintiffs now only have FLSA
claims pending before this Court. On August 14, 2018,
Plaintiffs filed a Motion for Conditional Certification under
the FLSA, (Doc. No. 109). The Court has reviewed the
parties' briefs and exhibits, (Doc. Nos. 109-10, 136-37,
140- 41), and the matter is ripe for adjudication.
FLSA CONDITIONAL CERTIFICATION STANDARD
FLSA, 29 U.S.C. § 201 et seq., “embodies a federal
legislative scheme to protect covered employees from
prohibited employer conduct.” Houston v. URS
Corp., 591 F.Supp.2d 827, 831 (E.D. Va. 2008). The FLSA
allows a plaintiff alleging a violation of the statute to
bring suit on his own behalf or on behalf of other employees
who are similarly situated. 29 U.S.C. § 216(b). Section
216(b) of the FLSA expressly provides for the procedure for
collective actions as follows:
An action to recover the liability prescribed [under the
FLSA] may be maintained against any employer . . . in any
Federal or State court of competent jurisdiction by any one
or more employees for and in behalf of himself or themselves
and other employees similarly situated. No. employee shall be
a party plaintiff to any such action unless he gives his
consent in writing to become such a party and such consent is
filed in the court in which such action is brought.
Id. Thus, there are two general requirements for the
certification of a FLSA collective action: (1) the members of
the proposed class must be “similarly situated, ”
and (2) the class members must “opt-in” by filing
their consent to suit. Id.; see also Romero v.
Mountaire Farms, Inc., 796 F.Supp.2d 700, 705 (E.D. N.C.
term “similarly situated” is not defined in the
FLSA and the Fourth Circuit has not provided guidance on how
“similarly situated” requirement of § 216(b)
should be applied. Holland v. Fulenwider Enterprises,
Inc., No. 1:17-CV-48, 2018 WL 700801, at *2 (W.D. N.C.
Feb. 2, 2018). However, federal district courts in the Fourth
Circuit typically follow a two-step approach when deciding
whether the named plaintiffs are similarly situated to
potential plaintiffs for the purposes of certifying the
collective action. See, e.g., Butler v.
DirectSAT USA, LLC, 876 F.Supp.2d 560, 566 (D. Md.
2012); Romero, 796 F.Supp.2d at 705; Choimbol v.
Fairfield Resorts, Inc., 475 F.Supp.2d 557, 562-63 (E.D.
first stage, the court makes a preliminary determination
whether to conditionally certify the class based upon the
limited record before the court. Romero, 796
F.Supp.2d at 705. “Consistent with the underlying
purpose of the FLSA's collective action procedure, this
initial inquiry proceeds under a ‘fairly lenient
standard' and requires only ‘minimal
evidence.'” Id. (quoting
Choimbol, 475 F.Supp.2d at 562); see also
Romero, 796 F.Supp.2d at 705 (“The standard for
conditional certification is fairly lenient and requires
nothing more than substantial allegations that the putative
class members were together the victims of a single decision,
policy, or plan.”). The primary focus in this inquiry
is whether the potential plaintiffs are “similarly
situated with respect to the legal and, to a lesser extent,
the factual issues to be determined.” De
Luna-Guerrero v. The North Carolina Grower's Assoc.,
338 F.Supp.2d 649, 654 (E.D. N.C. 2004) (quoting Ellen C.
Kearns, The Fair Labor Standards Act, §
18.IV.D.3, at 1167 (1999)). Several courts have reasoned that
“conditional certification is not really a
certification. It is actually the district court's
exercise of its discretionary power, upheld in
Hoffmann-La Roche . . . to facilitate the sending of
notice to potential class members, and it is neither