18th Annual Workplace Class Action Report - 2022 Edition

Annual Workplace Class Action Litigation Report: 2022 Edition 291 (xxx) Sanctions In Wage & Hour Class Actions Ayinola, et al. v. Lajaunie, 2021 U.S. App. LEXIS 14146 (2d Cir. May 13, 2021) . Plaintiffs, a group of former restaurant employees, filed a class and collective action alleging that Defendants failed to pay overtime compensation and minimum wage in violation of the FLSA and the New York Labor Law (“NYLL”). During discovery, Defendants failed to meet their discovery obligations, and the District Court held Defendants in contempt and entered a default judgment against them. The District Court awarded judgement to Plaintiffs in the amount of $6,091,040.40. Following the corporate Defendants going out of business, individual Defendant Lajaunie appealed from the entry of judgment against him. The Second Circuit vacated and remanded the District Court’s ruling. The discovery request in question required Defendants, including Lajaunie, to produce: (i) a class list to Plaintiffs by June 1, 2016; and (ii) time records, payroll records, and dates of employment for all maître d’s by June 16, 2016. Lajaunie failed to comply with the production deadlines of June 1 and June 16, and the District Court warned him that he would be in danger of being held in default or otherwise sanctioned if he continued to fail to comply with the District Court’s orders. On June 27, Lajaunie produced a class list, un- redacted tip sheets spanning the class period, and five boxes of documents. On June 28, Lajaunie also produced an additional five boxes of documents. On June 29, Plaintiffs informed the District Court that the documents produced by Defendants were mostly irrelevant or unresponsive. On or about July 6, Lajaunie produced 12 more boxes of documents, however, Plaintiffs contended that some discovery ordered was still outstanding. On July 14, the District Court issued its first order imposing contempt sanctions on Defendants for their failure to comply with the discovery orders. On August 10, 2016, the District Court ordered Defendants to pay a $7,000 sanction for failing to comply with its discovery orders and referring the case to a Magistrate Judge for a damages hearing. The District Court thereafter entered a judgment awarding damages of $6,091,040.40 to Plaintiffs. The Second Circuit opined that while Lajaunie’s failure to comply with his discovery obligations was not acceptable, it was not apparent from this record that his non-compliance was willful or the result of bad faith, and a sanction in excess of $6 million was unduly harsh. The Second Circuit reasoned that when the District Court imposed the sanction on August 10, 2016, Lajaunie had been non-compliant for less than two months. Moreover, the Second Circuit observed that Lajaunie had produced some documents, and seemed to be making an effort to comply with the District Court’s orders. Accordingly, the Second Circuit concluded that the District Court abused its discretion in entering a default judgment against Lajaunie and imposing sanctions of $6,091,040.40. For these reasons, the Second Circuit vacated and remanded the District Court’s ruling. Editor ’ s Note : The Second Circuit’s ruling vacated the largest monetary sanction order of 2021. Buzzell, et al. v. Florida Keys Ambulance Services, 2021 U.S. Dist. LEXIS 65914 (S.D. Fla. April 1, 2021). Plaintiff, a former employee, filed a collective action alleging that Defendants failed to pay overtime compensation in violation of the FLSA. The Court previously had granted Plaintiff’s motion for conditional certification of a collective action. As part of the Court’s order approving notice to the putative collective action members, Defendants were required to provide with a complete computer readable data file containing the names, addresses, and telephone numbers of current and former on-call employees who fell within the collective cation definition by December 14, 2020. Id . at *4. On December 14, 2020, Defendants provided a list of current and former on-call personnel. Plaintiff’s counsel’s asserted that the list was incomplete, and Defendants thereafter supplemented the previous list. Id . at *5. Plaintiff subsequently determined that the newly supplemented was still incomplete. Id . Plaintiff thereafter filed a motion for sanctions and argued that Defendants failed to comply with the Court’s order. Defendants supplemented the list a third time, and Plaintiffs again asserted that the list was not complete. At an evidentiary hearing on the dispute, Defendants conceded that several names should have been provided with the first list of employees. The Court held that given Defendants’ concessions, there was no dispute that the its previous order was not complied with in a timely fashion. Defendants contended that some names were excluded from the list because they were compensated on an hourly basis and therefore received overtime compensation, or because they never worked any overtime hours. The Court, however, determined that Defendants’ testimony was unpersuasive. The Court ruled that sanctions were warranted given the fact that Defendants failed to comply with the Court’s order on four separate occasions. The Court explained that Defendants would be required to produce complete payroll records for any person employed three years from the date the lawsuit suit was filed. Further, if any additional putative collective action members were identified, those individuals should be allowed 60 days from the mailing of the notice to opt-in, and all discovery deadlines would be extended 90 days. Id . at *11. The Court also ordered Defendants to