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Chenensky v. N.Y. Life Ins. Co.

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK
Apr 27, 2011
07 Civ. 11504 (WHP) (S.D.N.Y. Apr. 27, 2011)

Summary

declining to consider the predominance requirement before class discovery, because any conclusion will be "based on assumptions of fact rather than on findings of fact" and the plaintiffs may redraw "class boundaries that obviate the need for individual proof" after discovery

Summary of this case from In re Allergan Biocell Textured Breast Implant Prods. Liab. Litig.

Opinion

07 Civ. 11504 (WHP)

04-27-2011

BRIAN CHENENSKY, individually and on behalf of all others similarly situated, Plaintiff, v. NEW YORK LIFE INSURANCE COMPANY, et al., Defendants.


MEMORANDUM & ORDER

:

Defendants New York Life Insurance Company, et al. ("New York Life") move, prior to class discovery, to deny class certification and strike class allegations relating to Plaintiff Brian Chenensky's ("Chenensky") claim under New York Labor Law § 193. For the following reasons, Defendants' motion is denied.

BACKGROUND

The pertinent facts of this case are set forth in this Court's prior Memorandum and Order, Chenensky v. N.Y. Life, 07 Civ. 11504 (WHP), 2009 WL 4975237 (S.D.N.Y. Dec. 22, 2009).

DISCUSSION

II. New York Labor Law § 193

Under New York law, employers are prohibited from making "any deduction from the wages of an employee" unless "in accordance with the provisions of any law or any rule or regulation issued by any governmental agency" or "expressly authorized in writing by the employee." N.Y. Lab. Law § 193(1)(a-b); see also Pachter v. Bernard Hodes Grp., Inc., 891 N.E.2d 279, 283-84 (N.Y. 2008). Where an employer makes deductions from an employee's final compensation outside the categories in § 193, their legality depends on whether they were deducted before or after the employee "earned" his wage. See Pachter, 891 N.E.2d at 284. Where an employee earns a commission, § 193 does not prohibit deductions "if [they] were made before the commissions were earned." Pachter, 891 N.E.2d at 284. However, when the deductions are made after the employee earned his commission, § 193 prohibits them. Pachter, 891 N.E.2d at 284. An employer and employee can agree about the point in time when a commission becomes "earned" and, therefore, a "wage." Pachter, 891 N.E.2d at 285. Absent such agreement, courts apply the New York rule that a commission is earned when "a ready, willing and able purchaser of services" is produced. Pachter, 891 N.E.2d at 284-85.

I. Legal Standard

In order to certify [a] proposed class, [a] plaintiffs[] must demonstrate that the class and its proposed representatives meet all of the requirements of both Rule 23(a) and one of the subsections of Rule 23(b)." Damassia v. Duane Reade, Inc., 250 F.R.D. 152, 154-55 (S.D.N.Y. 2008). "Rule 23[(a)] requires that a proposed class action (1) be sufficiently numerous, (2) involve questions of law or fact common to the class, (3) involve class plaintiffs whose claims are typical of those of the class, and (4) involve a class representative or representatives who adequately represent the interests of the class." Myers v. Hertz Corp., 624 F.3d 537, 547 (2d Cir. 2010). "Moreover, Rule 23(b)(3) . . . requires the party seeking certification to show that questions of law or fact common to class members predominate over any questions affecting only individual members and that class treatment would be superior to individual litigation." Myers, 624 F.3d at 547.

"Motions to strike are generally looked upon with disfavor." Ironforge.com v. Paychex, Inc., 747 F. Supp. 2d 384, 404 (W.D.N.Y. 2010); In re Tronox Secs. Litig, 09 Civ. 6220 (SAS), 2010 WL 2835545, at *4 (S.D.N.Y. Jun. 28, 2010). "A motion to strike class allegations . . . is even more disfavored because it requires a reviewing court to preemptively terminate the class aspects of . . . litigation, solely on the basis of what is alleged in the complaint, and before plaintiffs are permitted to complete the discovery to which they would otherwise be entitled on questions relevant to class certification." Ironforge.com, 747 F. Supp. 2d at 404; see also Kazemi v. Payless Shoesource, Inc., 09 Civ. 5142, 2010 WL 963225, at *2 (N.D. Cal. Mar. 16, 2010); Francis v. Mead Johnson & Co., 10 Civ. 701, 2010 WL 3733023, at *1 (D. Colo. Sept. 16, 2010); Schaefer v. Gen. Elec. Co., 07 Civ. 858 (PCD), 2008 WL 649189 (D. Conn. Jan. 22, 2008); Bryant v. Food Lion, Inc., 774 F. Supp. 1484, 1495 (D.S.C. 1991); ("[M]otions to strike class allegations are disfavored because a motion for class certification is a more appropriate vehicle for making arguments pertaining to the class allegations.").

New York Life argues that class certification should be denied at this stage as a matter of law, and the class allegations stricken, for several reasons: individual issues predominate; the class lacks commonality and typicality; and Chenensky is not an adequate class representative.

III. Commonality

"The commonality requirement is met if there is a common question of law or fact shared by the class." Brown v. Kelly, 609 F.3d 467, 475 (2d Cir. 2010). "Rule 23(a)(2) has been construed permissively. All questions of fact and law need not be common to satisfy the rule. The existence of shared legal issues with divergent factual predicates is sufficient, as is a common core of salient facts coupled with disparate legal remedies within the class." Dukes v. Wal-Mart, Inc., 509 F.3d 1168 (9th Cir. 2007); see also Berwecky v. Bear, Stearns & Co., 197 F.R.D. 65, 68 (S.D.N.Y. 2000) ("Rule 23(a)(2) demands that the prospective class members share common questions of law or fact but does not require that every question of law or fact be common to every class member."); Charles A. Wright et al., Federal Practice & Procedure § 1763. The present allegations—that class members were paid pursuant to standard practices and policies and suffered similar legal injury under § 193—undoubtedly meets this permissive standard.

IV. Typicality

"Typicality requires that the claims or defenses of the class representatives be typical of the claims or defenses of the class members." Brown, 609 F.3d at 475. "This requirement is satisfied when each class member's claim arises from the same course of events, and each class member makes similar legal arguments to prove the defendant's liability." Brown, 609 F.3d at 475 (quotation omitted). "The commonality and typicality requirements often tend to merge into one another, so that similar considerations animate analysis of both." Brown, 609 F.3d at 475 (quotation omitted). Thus, for substantially the same reasons that Chenensky's claim satisfies "commonality," it also satisfies "typicality": the class members' claims would be based on identical legal theories arising out of common practices, policies, and contracts.

V. Predominance

"The 'predominance' requirement of Rule 23(b)(3) 'tests whether proposed classes are sufficiently cohesive to warrant adjudication by representation.'" Myers, 624 F.3d at 547 (quoting Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 623 (1997)). Its purpose is to "ensure[] that the class will be certified only when it would achieve economies of time, effort, and expense, and promote uniformity of decision as to persons similarly situated, without sacrificing procedural fairness or bringing about other undesirable results." Cordes & Co. Fin. Servs., Inc. v. A.G. Edwards & Sons, Inc., 502 F.3d 91, 104 (2d Cir. 2007) (internal quotation marks and citation omitted). The predominance requirement is therefore satisfied "if resolution of some of the legal or factual questions that qualify each class member's case as a genuine controversy can be achieved through generalized proof, and if these particular issues are more substantial than the issues subject only to individualized proof." Moore v. Paine Webber, Inc., 306 F.3d 1247, 1252 (2d Cir. 2002). "[C]ourts must consider potential defenses in assessing the predominance requirement." Myers, 624 F.3d at 551.

Chenensky argues that he does not intend to offer any individualized proof to establish his claim. New York Life's primary defense, however, relies heavily on individualized proof. In its prior Memorandum and Order, this Court ruled that the employment agreement between New York Life and Chenensky was ambiguous as to when commissions became earned. Chenensky, 2009 WL 4975237, at *8-9. New York Life will therefore likely assert that (1) extrinsic evidence to the employment agreement shows that the parties intended commissions to be earned at a point later than under the common law rule, and/or (2) the parties reached separate implied agreements as to when commissions became earned, as permitted under Pachter.

The interpretation of ambiguous contract language is a question of fact. Dist. Lodge 26, Int'l Ass'n of Machinists & Aerospace Workers, AFL-CIO v. United Techs. Corp., 610 F.3d 44, 54 (2d Cir. 2010). And "[t]here is no surer way to find out the intent of the parties to a contract than to see what they have done." N.Y. Marine & Gen. Ins. Co. v. Lafarge N. Am., Inc., 599 F.3d 102, 119 (2d Cir. 2010) (alterations omitted). Thus, "[i]n determining the meaning of the language at issue, the jury may consider extrinsic evidence such as the parties' course of conduct throughout the life of the contract." Hoyt v. Andreucci, 433 F.3d 320, 331 (2d Cir. 2006). Some of this evidence will be of company-wide practices and policies, which will be common to all potential class members. But much of this evidence must necessarily come in the form of individualized determinations of the individual class members' knowledge and understanding of their employment contracts with New York Life, as demonstrated through their individual conduct.

The existence of an implied contract is also a question of fact. New Windsor Volunteer Ambulance Corps v. Meyers, 442 F.3d 101, 112 (2d Cir. 2006). As with the interpretation of an ambiguous agreement, a "contract implied in fact may result as an inference from the facts and circumstances of the case, although not formally stated in words, and is derived from the 'presumed' intention of the parties as indicated by their conduct." Leibowitz v. Cornell Univ., 584 F.3d 487, 506-07 (2d Cir. 2009). And as with contracts generally, "[t]o form a valid contract . . . , there must be an offer, acceptance, consideration, mutual assent and intent to be bound." Leibowitz, 584 F.3d at 507. "The manifestation or expression of assent necessary to form a contract may be by word, act, or conduct which evinces the intention of the parties to contract." Leibowitz, 584 F.3d at 507 (alterations omitted), and it is necessary that the totality of all acts of the parties, their relationship and their objectives be considered." Tractebel Energy Mktg., Inc. v. AEP Power Mktg., Inc., 487 F.3d 89, 97 (2d Cir. 2007). Again, although some of this proof will be common to all potential class members, New York Life's defense appears to rely heavily on individualized proof.

Despite these concerns, however, the harsh remedy of denial of class certification at this early stage, prior to any class discovery, is premature. Although the above analysis indicates that Chenensky may have difficulty meeting Rule 23's "predominance" requirement, such a conclusion, in the absence of any class discovery, would be "based on assumptions of fact rather than on findings of fact," and "it remains unknown what class [Chenensky will seek] to certify." Parker v. Time Warner Entm't Co., 331 F.3d 13, 21 (2d Cir. 20031; see also Schaefer, 2008 WL 649189, at *6 ("[Defendant's] motion to strike includes several assumptions and premature conclusions about the factual basis for [Plaintiff's] class allegations. The Court finds it improper to take such assumptions at face value and inappropriate to make a factual determination based on the limited record at this stage in the litigation."). Although class discovery may fail to resolve Chenensky's predominance problems, it may also inform the drawing of class boundaries that obviate the need for individual proof. It is simply too soon to tell, and this Court will not speculate as to boundaries of the class that Chenensky may ultimately seek to certify.

VI. Adequate Class Representative

New York Life also argues that Chenensky is not an adequate class representative for Established Agents because he was only an Established Agent for five weeks, during which time he made only two sales appointments. However, given that Chenensky has not yet sought to certify any particular class, any inquiry into whether he is in fact an adequate representative for that class is premature.

VI. Independent Contractor Status

Lastly, New York Life argues—at least with respect to Established Agents—that issues relating to independent contract status preclude class certification for reasons of commonality, typicality, and predominance. Independent contractors are immune from the protections of § 193. See N.Y. Labor Law § 193; Akgul v. Primetime Transp., Inc., 741 N.Y.S.2d 553, 556 (N.Y. App. Div. 2002). Although New York Life treats certain agents as employees, it treats Established Agents as independent contractors. Thus, in order for Established Agents to recover under § 193, future Established Agent class members must argue that they were misclassified as independent contractors. "[T]he critical inquiry in determining whether an employment relationship [as opposed to an independent contractor relationship] exists pertains to the degree of control exercised by the purported employer over the results produced or the means used to achieve the results." Bynog v. Cipriani Grp., Inc., 1 N.Y.3d 193, 198 (2003). "Factors relevant to assessing control include whether the worker (1) worked at his own convenience, (2) was free to engage in other employment, (3) received fringe benefits, (4) was on the employer's payroll and (5) was on a fixed schedule." Bynog, 1 N.Y.3d at 198. New York Life argues that this is an inherently individual determination that must be made separately for each potential class member. However, the validity of this argument depends on the extent to which Established Agents were treated similarly to each other in terms of the factors relevant to an independent contractor determination. Chenensky has had no discovery on this issue.

CONCLUSION

For the foregoing reasons, Defendant New York Life Insurance Co.'s motion to deny class certification and strike Plaintiff Brian Chenensky's class allegations is denied. This Court will hold a conference on May 20, 2011, at 5:00 p.m. to set a class discovery schedule. Dated: April 27, 2011

New York, New York

SO ORDERED:

/s/_________

WILLIAM H. PAULEY III

U.S.D.J. All Counsel of Record


Summaries of

Chenensky v. N.Y. Life Ins. Co.

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK
Apr 27, 2011
07 Civ. 11504 (WHP) (S.D.N.Y. Apr. 27, 2011)

declining to consider the predominance requirement before class discovery, because any conclusion will be "based on assumptions of fact rather than on findings of fact" and the plaintiffs may redraw "class boundaries that obviate the need for individual proof" after discovery

Summary of this case from In re Allergan Biocell Textured Breast Implant Prods. Liab. Litig.
Case details for

Chenensky v. N.Y. Life Ins. Co.

Case Details

Full title:BRIAN CHENENSKY, individually and on behalf of all others similarly…

Court:UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

Date published: Apr 27, 2011

Citations

07 Civ. 11504 (WHP) (S.D.N.Y. Apr. 27, 2011)

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