Wage and Hour Litigation: Effective Use of Expert Witnesses

Wage and Hour Litigation:

Effective Use of Expert Witnesses Selecting an Appropriate Expert and Leveraging Expert Testimony

During Class Certification, Motion Hearings and Trial

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THURSDAY, MAY 24, 2012

Presenting a live 90-minute webinar with interactive Q&A

Neil A. Capobianco, Partner, SNR Denton, New York

Michael A. Alaimo, Principal, Miller Canfield, Detroit

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Wage and Hour Litigation:

Effective Use of Expert Witness

Michael A. Alaimo

Principal

Miller Canfield

(313) 496-8447

[email protected]

http://www.millercanfield.com/

mailto:[email protected]

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To Use or Not to Use an Expert

• Initial Considerations

– Case Size (single plaintiff, multiple plaintiffs,

collective action)

– Case Complexity

– Potential Damages

– Cost

– Special Concerns of defendant


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What Kind of Experts?

• Economic

• Statistical (often same as economic expert)

• Industrial Organization – misclassification, time

& motion

• Survey experts

• Government agency experts (state and federal)

• Consulting experts vs. testifying expert


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Sources Experts Rely Upon

• Timekeeping data - Time in & out (shifts and breaks) - Employee failure to clock in all the time - Exempt employees - Management edits • Payroll data - Credited hours and pay (by pay type) - Accuracy - Often bi-weekly • Work history data - Jobs held and when


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Sources Experts Rely Upon (con’t.)

• Other time-stamped data sources:

– Emails/text messages

– Security badges

– Point of Sale

– GPS

– Credit cards

– Personal observation-shadowing, video surveillance

– Any other data source that contains time stamps

• Policy documents, legal documents, interviews,

deposition testimony


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Concerns when selecting an expert:

• Issues to be addressed by expert

• Proposed expert’s credentials? background?

• How often has the proposed expert testified

about this issue?

• How often testified for plaintiffs; for

defendants?

• Impeached in prior cases?

• Presence in front of a jury: pompous vs

educating the jury


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Best Practices

• Managing Expert’s Work Product – Close communication at all times (methodology, data, scope)

– Start data work early in the case

• Discovery (data collection and review)

• Preview analyses before turning data over to plaintiffs

• Opposing expert rebuttal

• Own analyses/testimony

– Know weaknesses of your witness’ analyses, challenge your own witnesses

– Make sure your witness’ analyses reflect reality.

– Recognize the implicit assumptions behind your witness’ analyses.

– Don’t underestimate the amount of time it takes to gather data, learn about the process, and conduct analyses.

– Don’t automatically accept results of your own witness.


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Best Practices (cont.)

• Managing Costs

– Ask for cost estimates up-front

• Expert’s estimate should clearly state what is and is not covered

• Request regularly-scheduled updates (verbal or written) that justify

costs

• Understand how the case will be staffed

– Leveraging much of the work to lower-cost staff

– Billing rate of each team member

• Ask to be notified before costs exceed estimate

• Fixed-price estimates

• Volume discounts

– Keep expert aware of case developments, schedules


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Litigation Strategy: What Lies Ahead

• Conditional Certification

• Final Certification/De-Certification

• Rule 23 Class Certification (e.g. State Wage & Claims)

• Mediation/Settlement Discussions

• Summary Judgment/Partial Summary Judgment

• Trial


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Conditional Certification

• Often not the best opportunity to utilize expert

• Standard is generally lenient

– Named Plaintiffs must demonstrate that they are

similarly situated to the putative plaintiffs

– Similarly situated = must make a modest factual

showing sufficient to demonstrate that they and

potential plaintiffs together were victims of a common

policy or plan that violate the law

– Little, if any discovery, at this point

– Often times the court’s decision based on the pleadings and affidavits


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Conditional Certification (con’t)

• Exception to General Rule: more stringent standard sometimes applied where

discovery has already occurred

– Court considers several factors including (1) the extent and consequences of

disparate factual and employment settings; (2) various defenses available to

defendant that appear to be individual to each plaintiff; and (3) other fairness and

procedural questions

– Where plaintiff does not immediately seek conditional certification, this may be

an opportunity to pursue discovery aggressively

– Utilize experts to demonstrate differences amongst the named plaintiffs, and

therefore not suitable for collective action treatment

• Alternative: Where you and client have determined that named plaintiffs have weak

claims:

– Take deposition of each named plaintiff

– Move for summary judgment


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Conditional Certification Granted

• Notice to potential Opt-Ins

• Aggressively pursue discovery

– How this is handled will depend on the number of opt–ins

– Consult with expert in preparing written discovery

• Depositions of named plaintiffs (if not already taken) and

representative number of other plaintiffs

– Consult with expert re: questions

– Consult with expert re: selection of opt-in plaintiffs for deposition


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Motion to Decertify/Final Certification

• Whether or not Plaintiffs file a motion for final certification, defendant

should file a motion to decertify

– Defendant has greater flexibility in framing the issues

– Defendant has the opportunity to argue its position twice

– Affidavit from expert demonstrating that individualized nature of

claims by named plaintiffs and representative plaintiffs

– Too much variation in the evidence precludes the court from

making a decision on the merits based on representative

evidence.

– Decertification as to entire collective action or some portion of it.


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Use of Experts at Mediation/Settlement

• Rough Estimate vs Refined Damage Calculations

• Rough Estimate

– Number of class members x average OT rate X

average OT hours per week x number of weeks in

time period in question = back wages (before

penalties)

– Additional Variables

° Liquidated damages (good faith belief and reasonable

basis)

° Additional work weeks if alleged violation willful


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Use of Experts at Mediation/Settlement (con’t)

• More Refined Damage Calculations – IT experts regarding type of data available

– Liability Experts

– Damage Experts

• Expert Information regarding Damages – Work History

• Accounts for employee turn over

• Account for leaves of absence, vacations and/or not in relevant job

– Payroll Data

• Fluctuations in individual wages

• Overtime already paid


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Motion for Summary Judgment

• Where Motion to Decertify denied in part or in its

entirety, Motion for Summary Judgment may be

possible.

– Although in deciding Motion to Decertify, the court must

consider whether defendant has individualized defenses to

the plaintiffs’ claim, it does not decide their validity

– All or some of what remains of the case once the motion to

decertify has been decided, may be addressed by a

summary judgment motion

– Expert may provide bases for all or some portion of

defendant’s summary judgment motion e.g. de minimus

defense


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Use of Experts at Trial

• If you do use experts at this stage

– Using experts in selecting representative class members and determining the reliability of representational evidence

– Liability arguments

– Damages arguments

– Representative class members vs. the entire class?

– Preparing the expert for testimony at trial

– Countering opposing side’s expert at trial


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Wage and Hour Litigation Effective Use of Expert Witnesses

Neil A. Capobianco

Partner

T +1 212 398 5781

[email protected]

snrdenton.com

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Wage and Hour Litigation: Effective Use of Expert Witnesses

SNR Denton is a client-focused international legal practice delivering quality and

value.

We serve clients in key business and financial centers from more than 60 locations

worldwide, through offices, associate firms and special alliances across the US, the

UK, Europe, the Middle East, Russia and the CIS, Asia Pacific and Africa, making

us a top 25 legal services provider by lawyers and professionals.

Joining the complementary top tier practices of its founding firms—Sonnenschein

Nath & Rosenthal LLP and Denton Wilde Sapte LLP—SNR Denton offers business,

government and institutional clients premier service and a disciplined focus to meet

evolving needs in eight key industry sectors: Energy, Transport and Infrastructure;

Financial Institutions and Funds; Government; Health and Life Sciences; Insurance;

Manufacturing; Real Estate, Retail and Hotels; and Technology, Media and

Telecommunications.

About SNR Denton

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Our Locations

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Neil Anthony Capobianco

Neil Capobianco is a member of SNR Denton’s Litigation and Arbitration practice in New

York, where he specializes in Employee Retirement Income Security Act (ERISA),

employment and commercial litigation.

For more than 20 years, Neil has regularly counseled employers on day-to-day

employment issues and negotiated and litigated on behalf of employers, executives and

professionals. He has successfully handled complex commercial litigation involving

advancement and indemnification of corporate officers and directors, class actions, ERISA

breach of fiduciary duty, restrictive covenants, trade secrets, executive contracts,

professional liability, collective bargaining grievances and statutory claims. Neil’s extensive

litigation experience encompasses the Age Discrimination in Employment Act; the

Americans with Disabilities Act; the Civil Rights Acts of 1866, 1964 and 1991; ERISA; the

Equal Pay Act; the Fair and Accurate Credit Transactions Act; the Fair Labor Standards

Act; the Family and Medical Leave Act; the Racketeer Influenced and Corrupt

Organizations Act; Sarbanes-Oxley Act whistleblower claims; Title VII of the Civil Rights Act

of 1964; the Worker Adjustment and Retraining Notification Act; and state and common law

claims for breach of contract, breach of fiduciary duty, defamation, discrimination, fraud,

professional malpractice, retaliation, sexual harassment, unfair competition, and wage and

hour violations.

Prior to joining SNR Denton, Neil was a partner, or of counsel, at other law firms. Neil

speaks and writes frequently to provide practical, business-oriented advice to employers

seeking to navigate the complex web of employment law. He conducts internal

investigations, spearheads anti-harassment training for employees and has represented

employers before the Equal Employment Opportunity Commission, state and local human

rights agencies, the unemployment division, and the federal and state departments of

labor.

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© 2012 SNR Denton. SNR Denton is the collective trade name for an international legal practice. Any reference to a "partner" means a partner, member, consultant or employee with equivalent standing and qualifications in one of

SNR Denton's affiliates. This publication is not designed to provide legal or other advice and you should not take, or refrain from taking, action based on its content. Attorney Advertising. Please see snrdenton.com for Legal

Notices.

SNR Denton US LLP

1221 Avenue of the Americas

Suite 2500

New York, New York 10020

USA

snrdenton.com

27


Morales v. Greater Omaha Packing Co., Inc., No. 08 CV 88 (D. Neb. Feb. 15,

2011)

FLSA and state law action alleging donning, doffing, and cleaning are

compensable.

Plaintiffs offer William J. Cutler, Jr. as expert, who conducted a “time study.”

Company moves to strike Cutler’s report, including his time study, which

measured the amount of time, pre- and post-shift and during the daily meal period

where plaintiffs were not paid.

Company also objected to Cutler offering opinions about whether the Company

complied with the FLSA and its regulations.

Company claimed that Cutler lacks qualifications to testify, his study methodology

is not scientifically valid, his opinions are unreliable in terms of sample sizes,

selection methods, and data gathering.

Cutler’s opinions are inadmissible because they usurp the fact-finder’s function.

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2011)

Cutler = U.S. DOL Wage & Hour Compliance Specialist for 24 years.

Witness may qualify to render an expert opinion by knowledge, skill, experience,

training, or education.

“Mr. Cutler is clearly qualified to testify.”

Company contends subjective bias in samples chosen not statistically random,

made group assumptions instead of collecting individual data, and used small

samples.

“Mr. Cutler testified that the use of this time study technique was the same as he

used in the Department of Labor.”

Court notes Cutler would have had more objective material to work with if the

records included the donning and doffing time.

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2011)

Cutler, his assistant, and Plaintiffs’ attorneys were only given 2 days to make their

observations and were not permitted to split up.

Cutler can be cross-examined at trial.

However, no legal conclusions.

“As a general matter an expert cannot offer conclusions of law. The expert must

testify as to facts but should not focus on issues of law.”

Cutler may “testify as to the regulations he bases his opinions on so long as this

testimony does not cross over into conclusions regarding whether defendant acted

within the law or not.”

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Marting v. Crawford & Co., 9 WH Cases2d 554 (N.D. Ill. Jan. 8, 2004)

FLSA/Cal. class action claiming insurance adjusters are non-exempt.

Brian H. Kleiner, Ph.D, a tenured professor in the College of Business and

Economics at California State University.

Published hundreds of articles in the field of human resource management.

Specialties include “job analysis.”

Articles include Determining Exempt Or Non-Exempt Status Under California Law

for Managers and California Minimum Wage and Overtime.

Kleiner reviewed Plaintiff’s tasks on daily time cards, reviewed Company’s training

and operations systems and analyzed deposition transcript of Company’s

corporate designee.

Kleiner concluded that Plaintiff “did not customarily or regularly exercise discretion

and independent judgment.”

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Marting v. Crawford & Co., 9 WH Cases2d 554 (N.D. Ill. Jan. 8, 2004)

Court concludes Kleiner’s report lacks reliability and should be excluded.

“not verified by the scientific method through scientific facts or experiments.”

Kleiner published no articles regarding his methodology of analyzing jobs to

determine if they are exempt or non-exempt.

Kleiner admits he does not know if his methods are widely accepted.

Implausible that Kleiner is an expert in FLSA job classifications “where he admits

that he has not even read the law itself.”

Kleiner admitted that he did not know the rates of error in his analysis.

Kleiner’s analysis was not based on extensive empirical studies and statistics.

Kleiner’s analysis goes to the ultimate legal issue of the case.

While an expert’s report won’t be rejected merely because it encompasses an

ultimate issue for the factfinder, report must offer more than “bottom line.”

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In re Wal-Mart Stores Inc., 505 F. Supp. 2d 609 (N.D. Cal. 2008)

Rule 23 class action alleging final pay was short or late under California law.

Damages expert Martin Shapiro analyzed 3 electronic databases:

– “Associate” database tracks employee time, attendance, and payment records.

– “Payroll” database contains details of employee’s payroll, including hours and

dollars.

– “PeopleSoft” database includes termination dates and termination reasons.

Shapiro claimed he could determine from these databases:

– Amount of PTO accrued but unpaid at time of termination (subclass 1).

– Amount of other wages due but unpaid at termination (subclass 2).

– Whether and when final pay was received late by any particular employee

(subclass 3).

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Wal-Mart attacked Plaintiffs’ class certification on 2 main grounds:

– Dr. Shapiro’s methodology and calculations are so rife with errors as to make

any reliance on them insufficient as a matter of law.

– Databases analyzed don’t contain requisite information necessary to determine

whether and when Wal-Mart’s statutory duties to tender final pay were

triggered, specifically, information related to the exact date an employee was

terminated and whether and when the employee made himself available to pick

up his final pay in-store.

“The precision with which [Wal-Mart’s expert] was able to identify and correct

errors in Dr. Shapiro’s calculations only illustrates the degree to which the needed

information can be extracted from the databases with the requisite precision.”

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After receiving the declaration from Wal-Mart’s expert, Dr. Shapiro re-performed

his calculations – taking into consideration the Cash Office Database, which

captures cash paid to employees – and concluded that his initial calculations were

only affected by 0.02 percent.

“Thus, while Wal-Mart makes heavy weather of the errors in Dr. Shapiro’s

calculations, the errors themselves are either negligible or easily identifiable and

correctable.”

At the class certification stage, “robust gatekeeping of expert evidence is not

required; rather, the court must query only whether expert evidence is ‘useful in

evaluating whether class certification requirements have been met.’”

“Whether or not his calculations are ultimately correct is a matter more

appropriately raised at the merits stage, and need not be reached at the class

certification stage.”

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REVISIONS TO RULE 26 EFFECTIVE DECEMBER 1, 2010

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Rule 26(a)(2)(B)(ii) requires expert witness disclosure of:

“the facts or data considered by the witness in forming [the expert’s

opinions].”

Prior rule required disclosure of “data or other information.”

“Many courts read the disclosure provision to authorize discovery of all

communications between counsel and expert witnesses and all draft reports” –

Advisory Committee Notes

This 2010 amendment effectively ends the 17-year experiment in requiring

disclosure of all expert-attorney communications.

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Rule 26(b)(4) is amended to provide work-product protection against discovery

regarding draft expert disclosures or reports and – with 3 specific exceptions –

communications between expert witnesses and counsel.

Specifically, attorney-expert communications are subject to work product

protections, except to the extent the communications:

Relate to compensation for the expert’s study or testimony.

Identify facts or data that the party’s attorney provided and that the expert

considered in forming the opinions to be expressed.

Identify assumptions that the party’s attorney provided and that the expert relied

on in forming the opinions to be expressed.

Rule 26(b)(4)(C).

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Rules 26(b)(3)(A) and (B) protect drafts of any report or disclosure required under Rule

26(a)(2), regardless of the form in which the draft is recorded.

Rule 26(b)(3)(A) protects “Documents and Tangible Things” prepared in anticipation of

litigation or for trial by or for another party or its representative, unless (i) they are otherwise

discoverable under Rule 26(b)(1); and (ii) the party shows that it has substantial need for the

materials to prepare its case and cannot, without undue hardship, obtain their substantial

equivalent by other means.

Rule 26(b)(3)(B) provides that even if the Court orders the disclosure of these

materials, it must protect against disclosure of the mental impressions, conclusions,

opinions, or legal theories of a party’s attorney or other representative concerning the

litigation.

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Intended Results:

Make discovery less expensive and time-consuming.

– Reduce wasteful discovery efforts focused on attorney-expert

communications.

– Remove duplication in expert duties.

Improve the quality of expert testimony.

– Encourage robust communications between attorney and expert.

– Focus challenges on substance of opinions.

Committee Note: “The refocus of disclosure on ‘facts or data’ is meant to limit

disclosure to material of a factual nature by excluding theories or mental

impressions of counsel.”

Wage and Hour Litigation: Effective Use of Expert Witnesses

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