Ortiz v. Goya Foods, Inc.

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JOSE ORTIZ and SAUL HERNANDEZ, Individually and On Behalf of All Others Similarly Situated, Plaintiffs, v. GOYA FOODS, INC., and A.N.E. SERVICES, INC., Defendants.

No. 2:19-cv-19003-SRC-CLW

United States District Court, D. New Jersey

August 2, 2022

NOT FOR PUBLICATION

OPINION

STANLEY R. CHESLER UNITED STATES DISTRICT JUDGE

This matter comes before the Court on the motion for class certification brought by Plaintiffs Jose Ortiz and Saul Hernandez (“Plaintiffs”) against Defendants Goya Foods, Inc. (“Goya”) and A.N.E. Services, Inc. (“A.N.E.” and, collectively with Goya “Defendants”). Defendants oppose the motion. The Court has considered the Parties' written submissions and, for the reasons that follow, will deny Plaintiffs' motion.

I. Background

Goya is an international company that distributes, and sells a variety of food products all around the world. Goya utilizes a workforce of sales representatives (“Brokers”), to distribute Goya products to supermarkets, grocery stores and restaurants. Goya engages the Brokers to perform their work pursuant to a “Broker Agreement” between a Broker and A.N.E., Goya's distribution arm. (See Broker Agreement (ECF No. 109 Ex. 1); Milstrey Dep. at 25:04-12, 27:1120 (ECF No. 109 Ex. 5); Lopez Dep. at 18:16-23 (ECF No. 109 Ex. 8).) As described within the Broker Agreement, all Brokers are deemed to non-employee “independent contractors.” (See Broker Agreement.) According to Plaintiffs, Defendants unlawfully misclassify their Brokers in Pennsylvania as independent contractors and have taken unlawful deductions from the Brokers' pay in violation of the Pennsylvania Wage Payment and Collection Law. (Am. Compl. ¶¶ 2, 8189 (ECF No. 43).)

During the pendency of this litigation, Defendants introduced an amendment to the Broker Agreement which the Brokers had the opportunity to, but were not required to, enter into with Defendants (“the Arbitration Amendment”). (Milstrey Decl., Exs. 1-2.) Among other things, Brokers who entered into the Arbitration Amendment received a $2,000 payment in return for waiving their right to participate in the instant litigation. (Milstrey Decl., Exs. 1-2.) Attendant with the Arbitration Amendment the Brokers received a notice which explicitly informed the PA brokers of this lawsuit, the claims asserted and damages sought, and that they were potential putative class members. (Milstrey Decl. (ECF No. 119 Ex. 2), Exs. 1-2.)^[1] 16 of the 31 Brokers eligible to enter into the Arbitration Amendment did so. (Milstrey Decl., Exs. 1-2.) Six putative class members ended their relationship with Defendants prior to the time Defendants rolled out the Amendment. (Milstrey Decl. ¶¶ 7-11.)

On May 12, 2022, Plaintiffs filed the instant Motion for Class Certification pursuant to Federal Rule of Civil Procedure 23, seeking to certify a putative class of: “All persons who worked, on a full time basis, for Defendants in the Commonwealth of Pennsylvania from October 15, 2016 to the time of trial as sales representatives and signed a Broker Agreement, directly or on behalf of a business entity.” (ECF No. 109.)

II. DISCUSSION

Under Rule 23(a), before proceeding as a class Plaintiffs must “demonstrate, first, that ‘(1) the class is so numerous that joinder of all members is impracticable; ‘(2) there are questions of law or fact common to the class; ‘(3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and ‘(4) the representative parties will fairly and adequately protect the interests of the class.'” Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 345 (2011) (quoting Fed.R.Civ.P. 23(a)). Defendants contend that Plaintiffs are unable to meet any of these four requirements. Because Plaintiffs have failed to demonstrate that they can establish the numerosity element of Rule 23(a), the Court declines to consider Defendants remaining arguments.

The numerosity requirement of Rule 23(a) “prevents putative class representatives and their counsel, when joinder can be easily accomplished, from unnecessarily depriving members of a small class of their right to a day in court to adjudicate their own claims.” Marcus v. BMW of N. Am., LLC, 687 F.3d 583, 594-95 (3d Cir. 2012). “[T]he number of class members is the starting point of [the] numerosity analysis.” In re Modafinil Antitrust Litig., 837 F.3d 238, 250 (3d Cir. 2016). Rule 23(a)(1) is “conspicuously devoid of any numerical minimum required for class certification,” id. at 249, but joinder is presumed to be impracticable when the potential number of class members exceeds forty. Allen v. Ollie's Bargain Outlet, Inc., 37 F.4th 890, 896 (3d Cir. 2022). However, this is “a guidepost: showing the number of class members exceeds forty is neither necessary nor always sufficient.” In re Modafinil Antitrust Litig., 837 F.3d at 250. Where a putative class consists of fewer than forty members, “the inquiry into impracticability should be particularly rigorous.” Id. at 249. Plaintiffs must show the class is numerous enough by a preponderance of the evidence. Mielo v. Steak 'n Shake Operations, Inc., 897 F.3d 467, 483-84 (3d Cir. 2018). As the Third Circuit has repeatedly emphasized, the numerosity requirement is meant to have “real teeth.” Allen, 37 F.4th at 896 (citing id. at 484).

Here, Defendants submit evidence sufficient to determine with precision the number of putative class members: At its maximum possible size, Plaintiffs proposed class would amount to 37 members, including the two Plaintiffs. (Milstrey Decl. ¶¶ 7-11.)^[2] However, Plaintiffs have failed to establish that nearly half of these individuals are eligible to participate in this lawsuit and, even if they had, joinder of the 37 brokers would not be impracticable in light of the facts here.

A. Any Putative Class Excludes Individuals Who Executed the Arbitration Amendment^[3]

The Parties disagree whether the Court may include in its consideration of the putative class size the brokers who signed the Arbitration Amendment. Plaintiffs urge the Court to reserve until after class certification the question of whether the arbitration agreements signed by the potential class members are valid and enforceable, and contend that “courts have consistently held that the question of whether an absent class member has an enforceable arbitration agreement is a merits question that cannot be resolved at the class certification stage.” (Pltfs.' Br. at 3 n.1; see also Pltfs.' Reply at 6 (“Courts have repeatedly held that at the class certification stage, it is improper to determine the enforceability of an arbitration agreement or a release because this presents a merits issue that should be dealt with once a class is certified.”).)

Despite the unequivocal nature of Plaintiffs' assertion, the authorities on which Plaintiffs rely stand for no such proposition: Rather, they allow the Court to punt the question of an arbitration agreement's enforceability until after the class certification stage. See, e.g., Slamon v. Carrizo (Marcellus) LLC, 2020 WL 2525961, at *22 (M.D. Pa. May 18, 2020) (“Courts have held that issues related to arbitration agreements do not have to be resolved at the class certification stage, but can be resolved through the creation of subclasses or the elimination of some members of the class at a later stage.”) (emphasis added). In fact, the Third Circuit's ruling in Allen flatly contradicts Plaintiffs' position. In determining whether a putative class meets the numerosity requirement under Rule 23, “the court cannot be bashful. It must resolve all factual or legal disputes relevant to class certification, even if they overlap with the merits . . . .” Allen, 37 F.4th at 900 (citing Marcus, 687 F.3d at 591).^[4] In any event, the case on which Plaintiffs rely for their position are cases in which the arbitrability-or lack thereof -did not factor into the calculation of numerosity: In each of these cases, the putative class was sufficiently numerous even if the court discounted those individuals with the arbitration clauses. Slamon, 2020 WL 2525961, at *22 (potential subclasses each consisted of at least 139 putative members); see also Finnan v. L.F. Rothschild & Co., 726 F.Supp. 460, 465 (S.D.N.Y. 1989) (certified class included at least 127 members); Rehberg v. Flowers Baking Co. of Jamestown, LLC, 2015 WL 1346125 at *10 (W.D. N.C. Mar. 24, 2015) (certified class included at least 100 members). Such is not the case here, given that any potential subclass consisting of Brokers who agreed to arbitrate their claims would inevitably be too small to survive Rule 23's numerosity requirement. Fanty v. Com. of Pa., Dep't of Pub. Welfare, 551 F.2d 2, 7 (3d Cir. 1977) (“[E]ach subclass must independently meet the requirements of Rule 23 for maintenance of a class action . . .”); see infra Section II.B.

Ultimately it is Plaintiffs' burden to establish the existence of a class by a preponderance of the evidence, a burden which they have failed to meet. Steak ‘n Shake, 897 F.3d at 483-84. The Federal Arbitration Act (“FAA”) governs written contracts concerning commercial transactions that contain an arbitration clause. 9 U.S.C. § 2; see also Dluhos v. Strasberg, 321 F.3d 365, 369 (3d Cir. 2003) (“The [FAA] explicitly permits the use of arbitration and specifically authorizes individuals in commercial transactions to contract for arbitration.”). Section 2 of the FAA provides that written agreements to arbitrate “shall be valid, irrevocable, and enforceable, save upon grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2; Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 218 (1985); see also Doctor's Assocs., Inc. v. Casarotto, 517 U.S. 681, 687 (1996) (“Thus, generally applicable contract...