Jin v. Shanghai Original Inc.

Opinion & Order On April 2, 2018, I certified a class of workers employed by Joe’s Shanghai restaurant in Flushing, Queens. See Jin v. Shanghai Original, Inc., 2018 WL 1597389 (E.D.N.Y. Apr. 2, 2018).¹ For the reasons outlined below, I find that the requirements of Rule 23 are no longer met, and the class is therefore decertified.BACKGROUNDIn my April 2, 2018 order, I granted plaintiffs’ motion to certify a New York Labor Law (“NYLL”) class of all non-managerial employees at Joe’s Shanghai restaurant in Flushing, Queens (“Flushing restaurant”). See 2018 WL 1597389, at *10-14. The overarching class claim is that the Flushing restaurant had a practice of paying its employees an illegally low flat rate of pay that did not account for minimum wage, overtime, or spread-of-hours requirements. See id. at *11-12, *14. I certified the class under Federal Rules of Civil Procedure 23(a) and 23(b)(3). See id. at *10-14. Subsequently, Judge Orenstein directed the parties to file a joint pretrial order (“JPTO”). See May 3, 2018 Order. After a number of unsuccessful attempts,² Judge Orenstein determined that the parties had submitted a JPTO that “substantially complie[d]” with my individual practice requirements and issued an order closing discovery and deeming the case ready for trial. See Oct. 29, 2018 Order, ECF No. 136.On January 14, 2019, I ordered the parties to supplement the JPTO with proposed conclusions of law. See January 14, 2019 Order. The parties submitted an updated JPTO on January 22, 2019. See JPTO, ECF No. 142. At approximately the same time, plaintiffs came forward with allegations that defendants had inappropriately contacted class members and interfered with the formation of the class. See ECF Nos. 140, 143-44. Plaintiffs sought leave to file a sealed motion for sanctions or to reopen discovery (see id.), which I denied (see Feb. 4, 2019 Order, ECF No. 146). I then set a briefing schedule for plaintiffs’ unsealed motion, which I respectfully referred to Judge Orenstein. See id. On March 1, 2019, Judge Orenstein held a conference, at which he reopened discovery until May 10, 2019 so that plaintiffs’ counsel could conduct dozens of depositions relating to defendants’ alleged misconduct. See Mar. 1, 2019 Minute Entry, ECF No. 155; Joint Discovery Plan, ECF No. 160. During the May 10, 2019 conference, it came to light that “[o]ver a month ago, after conducting just a few depositions of the defendants’ managers (and apparently none of the affected workers), and without notice to the court, the plaintiffs’ counsel decided not to complete the remaining depositions or to prosecute their previously filed motion for sanctions and to annul class opt-outs.” May 10, 2019 Minute Entry, ECF No. 160. Judge Orenstein noted that “[t]here [was] no motion before [him] as to whether, in these circumstances, the plaintiffs’ counsel can properly advocate the interests of the class or whether the court should reconsider its decision to certify a class, which necessarily rests on a finding, among others, that the class representatives and their counsel are adequate.” Id. Following the conference, plaintiffs’ motion for sanctions was withdrawn (see May 10, 2019 Order), and the case returned to me for trial.After carefully reviewing that parties’ JPTO and proposed exhibits, I held a pretrial phone conference. See June 25, 2019 Minute Entry, ECF No. 168. I scheduled the trial for July 15, 2019³ and requested additional information from the parties, including an updated class list and revised witness lists with details regarding each witness’s anticipated testimony. See id.⁴ Plaintiffs’ revised list, which included 34 witnesses, did not comply with my order in that it failed to provide adequate details. See Pls.’ Revised Witness List I, ECF No. 169. I thus directed plaintiffs to file “a complete witness list with detailed and specific descriptions of anticipated testimony for all witnesses, who must be available for in-person testimony.” June 28, 2019 Order. In response, plaintiffs submitted a second revised witness list. See Pls.’ Revised Witness List II, ECF No. 172. The second revised witness list reveals that plaintiffs’ counsel plans to call four witnesses, only two of whom are members of the class. See id. at 1-5; see also Letter re Class Membership, ECF No. 175; Letter re Jin’s Class Membership, ECF No. 177. The two witnesses who are not members of the class — Hai Hua Zhai and Baofu Yan — were never even employed by the Flushing Restaurant. See Pls.’ Revised Witness List II 4-5; see also Defs.’ Objection Letter, ECF No. 180 (objecting to the testimony of Zhai and Yan on the grounds that they were not disclosed as witnesses in the JPTO, never worked at the Flushing restaurant, and do not appear to be providing relevant testimony). In fact, Yan’s anticipated testimony appears to undermine plaintiffs’ class claim, as it states that he was paid an hourly wage — not a flat wage — in 2016. See Pls.’ Revised Witness List II 5. While plaintiffs’ witness list includes 24 “adverse” witnesses, plaintiffs provide no details as to their anticipated testimony. See id. at 5-8.⁵ Finally, on July 3, 2019, the parties jointly submitted a final class list, which includes 38 class members and clarifies that two individuals were paid by check only, two were paid by cash only, and the rest were paid by a combination of cash and check. See Final Class List, ECF No. 179.⁶DISCUSSIONAn order granting class certification “may be altered or amended before final judgment.” Fed. R. Civ. P. 23(c)(1)(C). A district court may decertify a class, either on motion or sua sponte, if at any point “it appears that the requirements of Rule 23 are not in fact met.” Doe v. Karadzic, 192 F.R.D. 133, 136 (S.D.N.Y. 2000) (quoting Sirota v. Solitron Devices, Inc., 673 F.2d 566, 572 (2d Cir. 1982)); see also Selby v. Principal Mut. Life. Ins. Co., No. 98 CIV. 5283(RLC), 2000 WL 1863760, at *6 (S.D.N.Y. Dec. 20, 2000) (“Certainly, a court’s authority to certify or modify a class sua sponte is indisputable.”); 7 Newberg on Class Actions §3:52 (5th ed. 2018) (“So important is a court’s oversight that the court need not await a party’s motion but can revisit certification on its own initiative.”). A court, however, “may not disturb its prior [certification] findings absent some significant intervening event, or a showing of compelling reasons to reexamine the question.” Jermyn v. Best Buy Stores, L.P., 276 F.R.D. 167, 169 (S.D.N.Y. 2011) (internal quotation marks omitted) (quoting Doe, 192 F.R.D. at 136-37).Under Federal Rule of Civil Procedure 23(a)(4), a class can only be maintained if “the representative parties will fairly and adequately protect the interests of the class.” The “representative parties” have long been understood to include both the class representatives and class counsel. See Newberg §3:52; see also Leber v. Citigroup 401(k) Plan Inv. Comm., 323 F.R.D. 145, 164 (S.D.N.Y. 2017). In 2003, Congress enacted Rule 23(g), which explicitly requires that “[c]lass counsel must fairly and adequately represent the interests of the class.” Fed. R. Civ. P. 23(g)(4). The adequacy factors listed in Rule 23(g) “mirror those that courts had developed” in applying Rule 23(a)(4) to counsel’s adequacy. Newberg §3:80. Thus, “[w]hile the move of the analysis of counsel’s adequacy from Rule 23(a)(4) to Rule 23(g) may…seem more stylistic than substantive, it is a step towards the fuller acknowledgement that it is class counsel, not the class representatives, who are truly litigating the class’s claims.” Id.; see also In re American Exp. Anti-Steering Rules Antitrust Litig., Nos. 11-MD-2221 (NGG)(RER), 13-CV-7355 (NGG)(RER), 2015 WL 4645240, at *12 (E.D.N.Y. Aug. 4, 2015) (“Indeed, class counsel’s integrity, loyalty, and adequacy generally are perhaps even more important than the adequacy of class plaintiffs, as ‘[e]xperience teaches that it is counsel for the class representative and not the named parties, who direct and manage these actions.’” (quoting Greenfield v. Villager Indus., Inc., 483 F.2d 824, 832 n.9 (3d Cir. 1973))).A court may decertify a class on inadequate representation grounds if “class counsel fails to ‘competently, responsibly, and vigorously prosecute the suit.’” Newberg §7:38 (quoting Sheinberg v. Sorensen, Civil Action No. 00-6041 (JLL), 2007 WL 496872, *3 (D.N.J. Feb. 8, 2007))). In fact, given the critical role that counsel plays in a class action, “the court remains under a continuing duty to monitor the adequacy of representation to ensure that class counsel provides zealous, competent representation through the proceedings.” In re Integra Realty Resources, Inc., 262 F.3d 1089, 1112 (10th Cir. 2001); see also Doe, 192 F.R.D. at 136 (noting that because an order certifying a class is “conditional,” courts have an obligation “to reassess their class rulings as the case develops” (quoting Boucher v. Syracuse Univ., 164 F.3d 113, 118 (2d Cir. 1999))).Here, I find that class counsel is no longer providing “zealous, competent representation.” In re Integra Realty Resources, Inc., 262 F.3d at 1112. While there have been numerous red flags over the past few months, including counsel’s failure to adequately respond to the court’s orders and apparent attempts to delay trial,⁷ the “significant intervening event” (Jermyn, 276 F.R.D. at 169) triggering decertification is counsel’s disclosure that he plans to call only two class members as witnesses at trial. As discussed above, substantial testimony by the Flushing restaurant’s non-managerial staff is crucial to the plaintiffs’ case, as the crux of the class claim involves the restaurant’s payment policy, the restaurant’s cash payment records prior to the filing of the lawsuit are missing, and all class members except two were paid at least partially in cash. Put simply, by calling only two relevant witnesses, counsel is failing to “fairly and adequately represent the interests of the class.” Fed. R. Civ. P. 23(g)(4). While decertification late in the litigation process is generally disfavored, the reason is that late decertification can “prejudice class members, who may be unable to protect their own interests.” Doe, 192 F.R.D. at 137 (quoting Langley v. Coughlin, 715 F. Supp. 522, 552 (S.D.N.Y. 1989)). In the instant case, the prejudice from late-stage decertification must be balanced against the prejudice class members face from inadequate representation. Because I conclude that the prejudice from inadequate representation is greater, I find that decertification is proper.CONCLUSIONFor the reasons stated in this opinion, the class of Flushing restaurant employees is decertified due to inadequacy of representation. Plaintiffs’ counsel is ordered to provide notice of decertification to all class members. The notice should explain their rights to pursue their individual claims and the fact that the statute of limitations is no longer tolled.⁸ Plaintiffs’ counsel is directed to submit a proposed decertification notice to the court by July 19, 2019. The trial on behalf of named plaintiff Jianmin Jin is still scheduled for Monday, July 15, at 9:30am in Courtroom 8C. The parties are directed to review this order and call Chambers at 10:30am on July 11, 2019 for a pre-trial phone conference.SO ORDERED.Dated: July 10, 2019Brooklyn, New York