On February 10, 2015, in Roach v. T.L. Cannon Corp., the Court of Appeals for the Second Circuit reversed a district court’s denial of Rule 23 class certification in a wage and hour case, holding that the Supreme Court's decision in Comcast Corp. v. Behrend did not require that class certification only be granted when damages are measurable on a classwide basis. As the district court’s decision was based solely on a misreading of Comcast, the Second Circuit remanded and reaffirmed existing Second Circuit case law holding that Rule 23 class certification cannot be denied solely because damages must be determined on an individual basis. (No. 13-3070-CV, (2d Cir. Feb. 10, 2015)).

Four employees of an Applebee’s franchise in upstate New York filed a wage lawsuit in the U.S. District Court, Northern District, alleging violations under the FLSA and the New York Labor Law (NYLL). After discovery was exchanged, the plaintiffs sought to certify Rule 23 sub-classes for the two main NYLL claims. One claim involved allegations that the employer failed to pay a statutorily-required extra hour’s pay for employees who worked a ten-hour workday (the "spread-of-hours" claim). The other claim involved allegations that the employer automatically subtracted pay from employees to account for statutorily-required rest breaks, even when the employees did not take those breaks.

The magistrate judge issued a report and recommendation on the Rule 23 class certification motion. The magistrate judge recommended that the court grant class certification on the spread-of-hours claim with respect to minimum wage employees only, and deny class certification on the rest break claim because three of the four plaintiffs were managers who had engaged in the pay deduction practice on the employer’s behalf and thus were not adequate representatives of the class. The plaintiffs filed objections to the magistrate’s report and recommendation.

The district court denied class certification on both the spread-of-hours and the rest break claims. The district court’s decision was based on the Supreme Court’s opinion in Comcast Corp. v. Behrend (Comcast), which had been issued after the magistrate judge’s report and recommendation (133 S. Ct. 1426, 185 L. Ed. 2d 515 (2013)).

In the district court's view, Comcast required the plaintiffs to present a model for ascertaining damages that can be measured across the entire class. The district court based its denial of class certification solely on this reading of Comcast, finding that damages on the plaintiffs’ claims were individualized and thus did not meet the predominance requirement under Rule 23(b)(3) (that questions of law or fact of the class predominate over questions affecting individual class members).

The district court did not consider whether there were other common questions of law and fact on the plaintiffs’ claims under Rule 23(a)(2), nor did the district court consider the plaintiffs’ objections to the magistrate judge’s recommendation and report. The plaintiffs filed an interlocutory appeal to the district court’s decision on the class certification motion.

The Second Circuit vacated the district court’s denial of the plaintiffs’ class certification motion and remanded the case. The Court held that the Supreme Court’s decision in Comcast:

In reaching its decision in Roach, the Second Circuit examined the Supreme Court’s decision in Comcast, noting that Comcast involved antitrust allegations where the plaintiffs, in seeking class certification, had put forth several liability theories but proposed a model for assessing antitrust damages that did not distinguish between the liability theories. The Second Circuit noted that the Supreme Court:

The Second Circuit went on to assert that the Supreme Court, in Comcast, did not hold that:

Based on its examination of the Supreme Court’s opinion, the Second Circuit asserted that the district court construed the holding in Comcast too broadly. As the Second Circuit clarified, the fact that damages must be measured on an individualized basis is not, in and of itself, a bar to class certification.

The Second Circuit’s decision in Roach is useful, particularly in the context of employment discrimination and wage and hour cases. These cases typically involve individualized determinations on damages, even where employees were the victims of a common violation. The Roach decision clarifies that while individualized damages may be one factor that could weigh against class certification, it is not a complete bar to certifying a class that has other common questions of law and fact.