Hoover v. Cyber Litigation Inc.

UNITED STATES BANKRUPTCY COURT

DISTRICT OF DELAWARE

CRAIG T. GOLDBLATT pp, 824 N. MARKET STREET

JUDGE 4 WILMINGTON, DELAWARE

CA fy. (302) 252-3832

oe

Ale, &

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August 19, 2022

VIA CM/ECF

Re: Hoover v. Drivetrain LLC, Adv. Pro. No. 20-509661

Dear Counsel:

In bankruptcy cases that are preceded by mass layoffs or plant shutdowns, it

is commonplace for former employees who assert claims arising under the WARN Act,

29 U.S.C. § 2101, et seq., to file adversary proceedings and to seek the certification,

under Rule 23 of the Federal Rules of Civil Procedure, of a class of affected employees.

Indeed, in many cases, the propriety of treating the affected employees as part of a

class is noncontroversial, and class certification is often accomplished by stipulation

of the parties. This case, however, is different. While many of the debtor’s employees

worked at its principal location in Las Vegas, Nevada, it also had a substantial

number of employees who worked remotely. The application of the WARN Act to

remote employees is an issue of increasing importance as remote work becomes more

prevalent and raises reasonably complex issues. Particularly in a case (like this one)

that involves some employees who worked at the debtor’s facility and others who were

remote employees, the proper use of the class action raises questions over which there

is substantial room for fair disagreement.

In this case, the named plaintiffs (who themselves worked at the debtor’s Las

Vegas facility) originally moved to certify a class in August 2021.2 That motion was

1 Drivetrain LLC, as the plan trustee, is the successor to Cyber Litigation, Inc. (“Cyber”), which was

the debtor in the main bankruptcy case, In re Cyber Litigation Inc., No. 20-12702, and is the defendant

in this adversary proceeding.

2 The initial proposed class was to be made up of “Plaintiffs and all persons G) who worked at, reported

to, or received assignments from Defendant’s Las Vegas Facility, Gi) who were terminated without

cause beginning on or about September 11, 2020, and within 30 days of that date, or were terminated

without cause as the reasonably foreseeable consequence of the mass layoff and/or plant closing

ordered by Defendant on or about are ‘affected employees’ within the meaning of

Page 2 of 17

fully briefed in December 2021 and set for argument in January 2022. Following that

argument, the Court concluded that while the record before it would warrant the

certification of a class of employees who worked at the debtor’s Las Vegas facility, the

record was insufficient to permit the Court to determine whether debtor’s remote

employees could be included in the class. The parties thus engaged in additional

discovery and submitted supplemental briefs addressing the results of that discovery.

The Court heard the parties renewed arguments on August 11, 2022. At that

argument, the Court expressed its tentative conclusion that the evidentiary record

did support the certification of classes that included remote employees. The Court,

however, raised the question, in view of the distinct legal questions regarding the

application of the WARN Act to remote employees, whether the remote employees

ought to be included in a separate subclass. As further described below, however, the

Court has concluded that the named plaintiffs can properly and adequately represent

a class that includes remote employees, and that common issues predominate over

individual issues despite the presence of a few factual or legal wrinkles that may

apply to some but not all of the class. The Court is persuaded that those specific

issues may properly be addressed by an appropriate case management order issued

under Rule 23(d)(1).

The Court did, however, express the concern that in view of the record as it

developed, the question of which employees “received assignments from Defendant’s

Las Vegas Facility” was itself a disputed issue such that a class was defined by

reference to the location from which an employee received assignments would not be

sufficiently “ascertainable” to satisfy the requirement of Rule 23.3 In light of the

record before the Court and for the reasons more fully set forth 2Fbelow, the Court

believes that the more appropriate definition of the class would replace the existing

clause (i) so that the description of the class would begin: “Plaintiffs and all persons

(i) who worked at Defendant’s Las Vegas Facility and/or who worked in Defendant’s

sales or engineering departments, (ii) who were terminated….”

For the reasons described more fully below, the Court is satisfied that the

record before it supports the certification of such a class. The Court will enter an

appropriate order certifying such a class.

Factual and Procedural Background

The debtor was a cyber-fraud prevention company. Its business collapsed in

September 2020 when its founder, Adam Rogas, was indicted on fraud charges. It is

29 U.S.C. § 2101(a)(5), and (iv) who have not filed a timely request to opt-out of the class.” D.I. 26 at

1.

3 See Marcus v. BMW of N. Am., LLC, 687 F.3d 583, 592-593 (3d Cir. 2012) (Rule 23(b)(3) class must

be ascertainable based on objective criteria).

Page 3 of 17

alleged that Rogas falsified the debtor’s financial records in order to raise more than

$100 million from investors. Soon after Rogas’ arrest, the debtors terminated the

majority of its approximately 200 employees and soon thereafter filed for

bankruptcy.4

3F

Plaintiffs filed this WARN Act adversary proceeding in October 20205 and

moved to certify it as a class action in August 2021.6 Declarations submitt4Fed in

support of the class certification motion established that5F the debtor’s principal facility

was located in Las Vegas, Nevada, but that the debtor also had a number of

employees who worked remotely.7 As described above, after the January 2022 ruling

denying class certification witho6F ut prejudice,8 the parties engaged in additional

discovery, much of which has been presented 7Fto the Court in connection with the

renewed motion to certify.

In broad strokes, that discovery revealed that in addition to its Las Vegas

employees, the debtor employed approximately 128 remote employees working in one

of four departments: engineering, general and administration, marketing, and sales.

D.I. 35-1. The two largest departments, the sales and engineering departments,

collectively made up the vast majority of those employees. Additional factual

material is set forth below, in the analysis section of this letter ruling, as appropriate.

Jurisdiction

Because the plaintiffs seek, in this adversary, allowed claims in the bankruptcy

case, the district court has subject-matter jurisdiction under 28 U.S.C. § 1334(b), as

a dispute “arising under” § 502 of the Bankruptcy Code. The case has been referred

to this Court under 28 U.S.C. § 157(a) and the district court’s standing order of

February 29, 2012.

4 See generally the first-day declaration of Daniel P. Wikel, filed in the main bankruptcy case, In re

Cyber Litigation, No. 20-12702 (Bankr. D. Del. Oct. 27, 2020), D.I. 9.

5 D.I. 1.

6 D.I. 26.

7 D.I. 26-2.

8 D.I. 58.

Page 4 of 17

Overview of Applicable Law

A. Class certification generally

Rule 23 of the Federal Rules of Civil Procedure governs class certification

decisions.9 Under Rule 23(a), the party seeking to certify a class bears the burden of

demonstra8F ting 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.

In addition to satisfying the requirements of Rule 23(a), a proposed class must

satisfy at least one of the requirements of Rule 23(b). Here, the plaintiffs invoke Rule

23(b)(3), which requires, among other things, a finding that “questions of law or fact

common to class members predominate over any questions affecting only individual

members, and that a class action is superior to other available methods for fairly and

efficiently adjudicating the controversy.”10 The party seeking class certification has

the burden of demonstrating that all the9F requirements for a class action under Rule

23(a) and (b) have been met and that the action should be certified as a class action.11

10F

Courts must resolve all factual or legal disputes relevant to class certification

and may allow discovery and consider evidence where appropriate in order to make

the required factual findings.12 Class certification is proper only if the trial court is

satisfied that the requirement11Fs of Rule 23 are met.13

12F

In cases like this one, there is certainly some overlap between the class

certification question and the merits issues. The analyses, however, are distinct. So

even if the trial court must consider evidence that bears on a merits question, the

focus of the analysis on a class certification motion is on the Rule 23 standards; the

merits may be considered only to the extent necessary to resolve the issue of class

certification.14

13F

9 Rule 23 is made applicable to adversary proceedings under Rule 7023 of the Federal Rules of

Bankruptcy Procedure.

10 Fed. R. Civ. P. 23(a). See also Comcast v. Behrend, 569 U.S. 27 (2013).

11 Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 350 (2011).

12 Marcus, 687 F.3d at 591; Landsman & Funk PC v. Skinder-Strauss Assocs., 640 F.3d 72, 93 (3d Cir.

2011).

13 In re Hydrogen Peroxide Antitrust Litigation, 552 F.3d 305, 309 (3d Cir. 2008).

14 Id. at 316-317 (citing Eisen v. Carlisle & Jacquelin, 417 U.S. 156 (1974)); Wal-Mart Stores, 564 U.S.

at 351 & n.6.

Page 5 of 17

In a Rule 23(b)(3) case, the question of “predominance” focuses on whether the

class is sufficiently cohesive to warrant collective adjudication. If proof of an essential

element of the cause of action requires individual treatment, then class certification

is unsuitable.15 On the other hand, if proof of the essential elements of the cause of

action does no14Ft require individual treatment, then class certification may be suitable.

There is no bright-line test for determining whether common questions of law

or fact predominate. As the Third Circuit has explained, “[a] plaintiff must

demonstrate that the element of the legal claim is capable of proof at trial through

evidence that is common to the class rather than individual to its members. Because

the nature of the evidence that will suffice to resolve a question determines whether

the question is common or individual, a district court must formulate some prediction

as to how specific issues will play out in order to determine whether common or

individual issues predominate in a given case.”16

15F

The Moore’s Federal Practice treatise identifies eight considerations that might

support a determination that common issues predominate over individual issues:

(1) the plaintiff can establish that resolution of some of the

legal or factual questions that qualify each class member’s case

as a genuine controversary can be achieved through

generalized proof, and that these issues are more substantial

than the issues subject to individualized proof; (2) the

substantive elements of the class members’ claim require the

same proof for each class member; (3) the proposed class is

bound together by a mutual interest in resolving common

questions more than it is divided by individual interest; (4) the

resolution of an issue common to the class would significantly

advance the litigation; (5) one or more common issues

constitute significant parts of each class member’s individual

cases; (6) the common questions are central to all of the

members’ claims; (7) the same theory of liability is asserted by

or against all class members, and all defendants raise the same

basic defenses; and (8) it is more efficient, in terms of both

judicial resources and litigation expenses, to decide some

issues on a class basis, rather than individual trials.17

16F

15 Hydrogen Peroxide, 552 F.3d at 311.

16 Marcus, 687 F.3d at 600 (internal quotations and citations omitted).

17 5 Moore’s Federal Practice ¶ 23.45.

Page 6 of 17

The fact that there may be some number of individual issues does not preclude

a finding of predominance.18 Rather, it is left to the trial court to make a fact-specific

determination, in light of i1t7F s understanding and assessment of how the case is likely

to proceed, about the relative importance of the individual issues as compared to

those that are common to the class.

B. Remote employees under the WARN Act

The WARN ACT provides (subject to certain exceptions) that an “employer

shall not order a plant closing or mass layoff until the end of a 60-day period after the

employer serves written notice of such an order” to the employee (or, if there is one,

the employee’s representative).19 The term “mass layoff” is defined by statute as one

that (subject to other requireme18F nts) “results in an employment loss at the single site

of employment” of “at least 33 percent of the employees” and “at least 50 employees,”

with part-time employees being excluded from the calculation for both purposes.20

19F

These statutory terms then give rise to the question of what counts as the

“single site of employment.” That issue is not addressed in the text of the statute but

is the subject of a Department of Labor regulation.21 That regulation, commonly

referred to as “Subpart 6,” provides: 20F

For workers whose primary duties require travel from point to point,

who are outstationed, or whose primary duties involve work outside

any of the employer’s regular employment sites (e.g., railroad workers,

bus drivers, salespersons), the single site of employment to which they

are assigned as their home base, from which their work is assigned, or

to which they report will be the single site in which they are covered

for WARN purposes.22

21F

While the focus of this regulation, which apparently dates back to 1989,23

appears to be more on “mobile” employees – those who travel regularly rather tha22Fn

18 Gavron v. Blinder Robinson & Co., 115 F.R.D. 318, 325 (E.D. Pa. 1987) (determining presence of

individual damages issues does not prohibit certification if common issues of liability predominate

over individual issues of damages).

19 29 U.S.C. § 2102(a)(1).

20 Id. § 2101(a)(3).

21 The Department of Labor is granted, by statute, the express authority to “prescribe such regulations

as may be necessary to carry out this chapter.” Id. § 2107.

22 20 C.F.R. § 639.3(i)(6).

23 See 54 Fed. Reg. 16064 (Apr. 20, 1989).

Page 7 of 17

reporting to an office – than those who telecommute from home offices, the text of the

regulation undoubtedly covers remote employees.

The leading Third Circuit opinion on the meaning of this regulation is

Ciarlante v. Brown & Williamson Tobacco Corp.24 The district court in that case

granted summary judgment in favor of a class of m23oF re than 100 travelling salespeople

who sold Brown & Williamson tobacco products to wholesalers and retailers located

in the specific geographic regions to which they were each assigned (the nation was

divided into 150 such districts). The summary judgment record suggested that the

employees were typically in regular contact with both the sales manager for the

particular district (who typically worked from home) as well as with other company

employees who worked at the company’ administrative center in Chester, Virigina.

The district court, finding that “all instructions, assignments, rules and orders

to the plaintiff salesmen emanated from the Chester, Virginia headquarters,”25

concluded that the administrative center was the “single site of employment” for th24Fe

class of 100 employees who had been terminated in a mass layoff.26

25F

The Third Circuit reversed the entry of summary judgment, finding that on

the record before the district court, there was a genuine dispute of material fact on

that issue. The court noted that the question of “single site of employment” was

controlled by the Department of Labor regulation, and that a location will qualify as

an employee’s “single site of employment” if it is the employee’s home base, the site

from which the employee’s work was assigned, or the site to which they employee

reported.27

26F

The Third Circuit found that Chester could not be the employees’ “home base,”

but that there were genuine issues of fact on whether it was the site from which their

work was assigned and whether it was the site to which they reported. On the issue

of whether the headquarters was the basis from which work was assigned (which is

the basis on which plaintiffs in this case claim that the debtor’s Las Vegas

headquarters was its single site of employment), the court explained that is concerned

“with the source of the ‘day-to-day instructions received by the sales

representatives.”28 Noting that the employees emphasized the centralized control

from corporate h27eF adquarters while the company focused on the role played by the

regional sales managers (who were located in the individual districts), the court

24 143 F.3d 139 (3d Cir. 1998).

25 Id. at 144.

26 Id.

27 Id. at 146.

28 Id. at 147 (internal quotations omitted).

Page 8 of 17

explained that answering the question “may require a developed factual record in

order to distinguish the true source of the instructions from mere conduits through

which the instructions passed.”29

28F

Ciarlante thus makes clear that where a direct supervisor who is resident in a

location other than the main headquarters is the “true source of the instructions,” the

location of that direct supervisor is the “single site of employment” as the site from

which the employee’s work was assigned. Where the direct supervisor is a “mere

conduit,” then the location of the original source of that instruction is the single site

of employment. The degree of autonomy that an intervening supervisor must have

to break the chain is a disputed question of law.

Plaintiffs argue that so long as corporate headquarters is playing any

substantive role at all – as opposed to merely providing back-office support for the

true decisionmakers who are in the field – the headquarters is the single site of

employment. While it is not clear to the Court that the caselaw requires that

construction of the Subpart 6 language, that is ultimately a merits question, which

need not (and therefore should not) be resolved at the class certification stage.30 As

further addressed below, the key takeaways for the purpose of the current motio29Fn are

that the plaintiffs will seek to meet their burden primarily by relying on evidence

that the heads of the debtor’s engineering and sales departments, both of whom were

physically located in the company’s Las Vegas headquarters, had sufficient

substantive involvement that the headquarters should be treated as the site from

which the employee’s work was assigned, while defendants will respond by arguing

that for some number of members within the class, lower level employees, who were

not located in Las Vegas, were sufficiently “autonomous” such that those employees’

single site of employment was not Las Vegas.

* * *

In opposing class certification, defendant’s principal arguments are that

plaintiffs cannot satisfy the commonality or typicality requirements of Rule 23(a) or

the predominance requirement of Rule 23(b). Alternatively, defendant argues that a

separate subclass of remote employees should be required. For the reasons described

below, this Court disagrees with those contentions and concludes that class

certification (of the class as described above) is appropriate based on the record now

before the Court. For the sake of completeness, however, the Court will also briefly

address those requirements of Rule 23 that defendant is not contesting.

29 Id.

30 See, e.g., Wal-Mart, 564 U.S. at 352 n.6.

Page 9 of 17

I. The requirements of Rule 23(a) are satisfied.

A. The class is so numerous that joinder of all members is

impracticable.

The record before the court makes clear that the class as defined contains more

than 150 members.31 There is no dispute that this satisfied the numerosity

requirement. “No mi30Fnimum number of plaintiffs is required to maintain a suit as a

class action, but generally if the named plaintiff demonstrates that the potential

number of plaintiffs exceeds 40, the first prong of Rule 23(a) has been met.”32 The

requirements of Rule 23(a)(1) are thus met. 31F

B. There are questions of law or fact common to the class.

Defendant does not contest the fact that there are some common questions of

law or fact, as Rule 23(a)(2) requires. “The commonality requirement will be satisfied

if the named plaintiffs share at least one question of fact or law with the grievances

of the prospective class.”33 Plaintiff’s motion to certify identifies eight such questions:

32F

(a) whether Defendant employed more than 100 employees; (b) whether

all the class members are protected by the WARN Act; (c) whether the

class members were employees of Defendant; (d) whether Defendant

discharged the class members within 30 days in connection with a mass

layoff or plant closing or as the reasonably foreseeable result thereof; (e)

whether the class members were ‘affected employees’; (f) whether

Defendant terminated the employment of the class members without

cause; (g) whether Defendant terminated the employment of the class

members without giving them at least 60 days’ prior written notice as

required by the WARN Act; and (h) whether Defendant owes the class

members each 60 days’ wages and benefits.34

33F

This is sufficient to satisfy Rule 23(a)(2)’s commonality requirement.

C. The claims or defenses of the representative parties are typical

of the claims or defenses of the class.

As the Third Circuit has explained, to “evaluate typicality, we ask whether the

named plaintiffs’ claims are typical, in common-sense terms, of the class, thus

31 D.I. 78-5; D.I. 78-7; D.I. 78-11.

32 Stewart v. Abraham, 275 F.3d 220, 226-227 (3d Cir. 2001).

33 See Baby Neal for and by Kanter v. Casey, 43 F.3d 48, 56 (3d Cir. 1994).

34 D.I. 26 at 12.

Page 10 of 17

suggesting that the incentives of the plaintiffs are aligned with those of the class.

Factual differences will not render a claim atypical if the claim arises from the same

event or practice or course of conduct that gives rise to the claims of the class

members, and if it is based on the same legal theory.”35

34F

Defendant disputes the claim that the named plaintiffs’ claims are typical of

those of any class that includes remote workers, since demonstrating the “single site

of employment” for remote employees will require proof that will not be required to

establish the claims of the named plaintiffs, both of whom worked in the Las Vegas

facility.36

35F

In response, plaintiffs contend that the named plaintiffs will have every

incentive to establish that at least some of the remote employees’ single site of

employment was Las Vegas, since they otherwise might not meet the 50-employee

threshold necessary to establish their WARN Act claim on the merits.37

36F

It is certainly true that the claims of at least some of the remote employees

involve factual nuances beyond those necessary for the named plaintiffs to litigate

their own claims. But the Third Circuit has emphasized that when “an action

challenges a policy or practice, the named plaintiffs suffering one specific injury from

the practice can represent a class suffering other injuries, so long as all the injuries

are shown to result from the practice.”38 And it has added that “even relatively

pronounced factual differences will gen37Ferally not preclude a finding of typicality

where there is a strong similarity of legal theories.”39

38F

In view of this authority, the Court is satisfied that the factual differences do

not preclude a finding of typicality. Plaintiffs here contend that the same course of

events led to the termination of the named plaintiffs and the other members of the

class and that all class members suffered the same type of injury. The named

plaintiffs will indeed have an incentive to litigate that Las Vegas was the single site

of employment for at least some of the remote employees in order to establish their

own claims (which require a showing that at least 50 employees were affected). To

be sure (and as discussed further below, in the discussion of predominance), the

claims of some class members will involve wrinkles not raised by the claims of the

named plaintiffs. And as further described below, these considerations did lead the

Court to consider whether subclasses, with named plaintiffs whose own causes of

35 Beck v. Maximus, Inc., 457 F.3d 291, 295-296 (3d Cir. 2006) (internal quotations, citations, and

brackets omitted).

36 D.I. 34 at 11.

37 D.I. 35 at 12.

38 Baby Neal for and by Kanter, 43 F.3d at 58.

39 Id.

Page 11 of 17

action implicated each of these factual wrinkles, would be more appropriate. But in

light of the Third Circuit authority, the Court is persuaded that these wrinkles do not

preclude a finding of typicality in the face of the basic uniformity of the principal legal

theory that undergirds the claims of every member of the class. The requirements of

Rule 23(a)(3) are therefore satisfied.

D. The representative parties will fairly and adequately protect

the interests of the class.

The Third Circuit has explained that the “adequacy requirement has two

components: (1) concerning the experience and performance of class counsel; and (2)

concerning the interests and incentives of the representative plaintiffs.”40

39F

Defendant challenges the adequacy of the named plaintiffs only on the second

of these prongs, arguing that the differences between the claims of the named

plaintiffs and those of the remote employees render the named plaintiffs

inadequate.41 That contention, however, substantially overlaps with the argument

that the nam40F ed plaintiffs’ claims are not typical of those of the class, and fails for the

same reason. As to the first component, the declaration of René Roupinian, submitted

in support of the plaintiffs’ motion,42 persuasively sets forth class counsel’s expertise

in WARN Act litigation, which is n41Fot challenged by defendant. The requirements of

Rule 23(a)(4) are therefore satisfied.

II. The “predominance” and “superiority” requirements of Rule 23(b)(3)

are satisfied.

Rule 23(b) provides that:

A class action may be maintained if Rule 23(a) is satisfied and if

… (3) the court finds that the questions of law or fact common to

class members predominate over any questions affecting only

individual members, and that a class action is superior to other

available methods for fairly and efficiently adjudicating the

controversy. The matters pertinent to these findings include:

(A) the class members’ interests in individually

controlling the prosecution or defense of separate

actions;

40 Dewey v. Volkswagen Aktiengesellschaft, 681 F.3d 170, 181 (3d Cir. 2012).

41 D.I. 82 at 18.

42 D.I. 26-3.

Page 12 of 17

(B) the extent and nature of any litigation concerning

the controversy already begun by or against class

members;

(C) the desirability or undesirability of concentrating

the litigation of the claims in the particular forum;

and

(D) the likelihood of difficulties in managing the class

action.43

42F

As described above, this analysis is focused on whether the class is sufficiently

“cohesive” to warrant having the claims heard together.44 That analysis typically

involves ascertaining whether the key legal or factual issu43Fes are susceptible to being

proven or disproven through common (rather than plaintiff-specific) evidence.

This was the question on which the Court concluded the plaintiffs had not

borne their burden of proof based on the affidavits submitted in support of the original

motion to certify, leading the court to deny the motion without prejudice. Based on

the supplemental record presented by the parties following discovery, the Court is

now satisfied that class certification is appropriate. The Court acknowledges,

however, that in view of the definition of the class to include all remote employees in

the sales and engineering departments, it finds the question of predominance to be

one that is fairly debatable. Indeed, during the August 11, 2022 hearing, the Court

expressed the tentative view that subclasses might be more appropriate in light of

the particular issues raised by the inclusion of these employees in the class definition.

After a more careful review of applicable caselaw, however, the Court has concluded

that subclasses are neither necessary nor appropriate. For the benefit of any

potential reviewing court, this Court will set forth its reasoning on this issue.

The Court begins its assessment of “predominance” by considering whether, on

the one hand, the evidence the Court will need to consider in weighing the merits of

the various claims will mostly be made up of evidence that is common to the class, or

whether, on the other, there will be a substantial body of plaintiff-specific evidence

that will need to be reviewed on a plaintiff-by-plaintiff basis. At some point (though

ascertaining precisely where the tipping point is located is mostly a matter of

judgment that is not susceptible to clear articulation), the individual issues will come

to predominate over the common ones, such that it no longer makes sense to litigate

the action on a class-wide basis.

43 Fed. R. Civ. P. 23(b)(3).

44 Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 594 (1997).

Page 13 of 17

As the discussion under Part I.B sets forth, there are a number of issues that

will be litigated on a class-wide basis. Indeed, in addition to issues raised by the

plaintiffs and described above, defendant’s answer also asserts affirmative defenses,

such as the claim that the terminations of employment resulted from unforeseeable

business circumstances,45 that will apply equally to all members of the class.

44F

At the same time, resolution of the single-site-of-employment issue will require

the consideration of some evidence that will apply to some but not all class members.

Plaintiffs contend that a relatively small body of evidence will be sufficient to resolve

the single-site-of-employment issue for a large swath of the class. Specifically,

plaintiffs point to the declarations of Spencer Fairbairn (who served as Chief

Technology Officer and headed the Engineering Department) and Tony Dawson (who

served as Chief Revenue Officer and headed the Sales Department), contending that

these witness’ testimony will be sufficient to show that Las Vegas was the single site

of employment for all of the employees in the sales and engineering departments.46

45F

The defendant responds by predicting that the testimony of Dawson and

Fairbairn will be insufficient, and that litigation of the single-site-of-employment

issue will require the consideration of testimony from every intermediate supervisor

to determine whether that supervisor exercised sufficient autonomy such that the

supervisor’s location (if that supervisor was not physically located in Las Vegas)

should be the employee’s single site of employment.

The case law makes clear that a determination of “predominance” requires the

trial court to make a prediction about how the trial is likely to unfold.47 And as Yogi

Berra famously observed, it is “tough to make predictions, especi46aF lly about the

future.” But based on the record before it, the Court’s assessment is that the presence

of individual issues is not likely to overwhelm the many common issues raised by this

action. That conclusion is driven not by any judgment the Court has reached on the

legal issue of what level of involvement from corporate headquarters is sufficient for

that to be a plaintiff’s single site of employment or from any conclusion drawn from

the declarations or deposition testimony about how “autonomous” any of the

supervisors who reported to Dawson and Fairbairn may have been. Those are both

merits issues, from which the case law makes clear the Court should endeavor to

steer clear, if at all possible, at the class certification stage.

45 D.I. 20 at 7.

46 D.I. 78-5; D.I. 78-11.

47 See, e.g., Waste Mgt. Holdings Inc. v. Mowbray, 208 F.3d 288, 298 (1st Cir. 2000) (“A district court

must formulate some prediction as to how specific issues will play out in order to determine whether

common or individual issues predominate in a given case.”).

Page 14 of 17

Instead, the Court’s conclusion is based on the census document48 and the

engineering department organizational chart,49 both of which suggest tha47Ft the total

number of potential supervisors whose testim48F ony would need to be considered in

order to determine whether some number of class members had “autonomous” remote

supervisors (such that Las Vegas was not their single site of employment) seems

manageable. And the conclusion is bolstered by the testimony of Dawson and

Fairbairn, both of whom suggested that they dealt in a uniform manner with each of

their direct reports50 – which at least gives rise to some possibility that the testimony

of those two witnes49Fses may be sufficient.

It is for this reason, however, that the Court has concluded that the class is

more appropriately limited to the sales and engineering departments. While

plaintiffs propose a broader class made up of all United States employees (thus

including the marketing and the general and administrative departments),51 the

Court is not persuaded that the existing record demonstrates that a class50F that

includes those departments would be sufficiently cohesive for common issues to

predominate. Including those departments would (based on the census document)

add a meaningful number of additional supervisors. And while, as the Court has

noted, it is difficult to identify the precise point at which individual issues outweigh

the common ones, the Court’s judgment is that adding these departments risks

crossing that line.

That conclusion is reinforced by the paucity of the record before the Court

regarding the operation of the marketing and the general and administrative

departments. While the Court has the declarations of Dawson and Fairbairn

regarding the way in which assignments were made and monitored in the sales and

engineering departments, the record provided to the Court contains virtually nothing

about the operation of the other departments. Nor does the plaintiff’s supplemental

brief address the issue. And while counsel for the plaintiffs ably set forth, at the

August 18, 2022 status conference, the reasons the Court might infer that a class that

included those additional departments would be sufficiently cohesive, counsel

candidly acknowledged that those points were not addressed in its briefing. In

response, counsel for the defendant fairly argued that if the Court were going to

consider points that the plaintiff did not make in its brief, it should be entitled to the

opportunity to consider the arguments and respond to them in writing. Having

48 D.I. 78-7.

49 D.I. 78-4.

50 See D.I. 78-5 (Fairbairn declaration stating that team members within engineering were treated

alike); D.I. 78-6 at 208-209 (Fairbairn deposition testimony about uniform treatment in engineering

department); D.I. 78-12 at 136-137 (Dawson deposition testimony that the level of instruction he

provided to his reports applied equally to each of the sales department’s team leaders).

51 See D.I. 104

Page 15 of 17

already afforded the plaintiffs a further opportunity to supplement the record after

concluding that they had not met their burden of satisfying the requirements of Rule

23, the Court believes it appropriate to call the question based on the briefs the

parties have filed. And based on the briefing and the record before it, the Court finds

that the plaintiffs have not met their burden of showing how a class that includes

employees in the defendant’s marketing and general and administrative departments

would satisfy the predominance requirement. The class this Court will certify will

therefore be limited as set forth on page 2 of this letter opinion.

The other requirement of Rule 23(b)(3) is that class adjudication be superior to

the alternatives. For the same reasons provided by Judge Silverstein in In re Pacific

Sunwear of California, Inc.52 and by Judge Walrath in In re United Companies

Financial Corporation,53 the 51FCourt is satisfied that this requirement is satisfied here.

52F

III. Factual wrinkles among the claims of the class members are most

appropriately addressed through a case administration order.

For the reasons described above, the Court is persuaded that, despite the

presence of individual issues that some class members (though not the named

plaintiffs) will face on the single-site-of-employment issue, the named plaintiffs

nevertheless satisfy the typicality requirement and that common issues predominate

over individual ones. The Court acknowledges, however, that along the (perhaps

unnecessarily winding) path it took reaching that conclusion, it gave serious

consideration to the possibility that it might be more appropriate to require a

separate subclass of remote employees whose team leaders were themselves remote

– perhaps even separate subclasses for remote employees in each of the engineering

and the sales departments (in light of the possibilities that the team leaders’ levels of

autonomy might differ between departments). In the end, the Court was persuaded

otherwise. But in light of the plausibility of the arguments for requiring such

separate subclasses, the issue warrants a word of explanation.

Rule 23(c)(5) expressly provides that “[w]hen appropriate, a class may be

divided into subclasses that are treated as a class under this rule.”54 And the Third

Circuit has explained that this device is “designed to prevent confl53Ficts of interest in

class representation.”55 But the court hastened to add that while

“subclasses can be us54Feful in preventing conflicts of interest, they have their

52 No. 16-10882 (LSS), 2016 WL 3564484, at *10 (Bankr. D. Del. June 22, 2016).

53 276 B.R. 368, 376 (Bankr. D. Del. 2002).

54 Fed. R. Civ. P. 23(c)(5).

55 In re Cendant Corp. Securities Litig., 404 F.3d 173, 202 (3d Cir. 2005).

Page 16 of 17

drawbacks.”56 In particular, the court quoted an article by Professor John Coffee that

explained th55Fat creating a subclass for “each material legal or economic difference”

among class members risks creating a “Balkanized” lawsuit that could prove difficult

to manage.57 Similarly, the Third Circuit noted in In re Insurance Brokerage

Antitrust Li56Ftigation that “subclasses are only necessary when members of the class

have divergent interests.”58 The court made the same point in In re Pet Food Products

Liability Litigation, where57F it concluded that the objectors “have not identified adverse

interests that would require the establishment of subclasses.”59

58F

Here, there is no immediate conflict or adversity between those claimants who

were physically resident in Las Vegas and remote employees. The only difference is

that the remote employees have a further obstacle to clear in order to establish the

“single site of employment” requirement of their WARN Act claims. And after giving

the matter careful thought, the Court’s judgment is that introducing one or more

subclasses would make the lawsuit unnecessarily complex and expensive, without

sufficient corresponding benefit to justify the effort.

In particular, the Court is satisfied that many of the purposes of the

contemplated subclass can be achieved through an appropriate case management

order. Indeed, Rule 23(d)(1)(b) expressly contemplates the entry of a case

management order designed to give class members notice to permit them to “present

claims or defenses, or to otherwise come into the action,”60 or to “impose conditions

on the representative parties.”61 The Court believe59Fs that appropriate case

management orders can be ente60Fred that will adequately protect the interests of

unnamed class members and ensure the various factual wrinkles on which some of

those members claims depend are considered in an appropriate manner. Indeed,

some cases refer to the use of Rule 23(d) to create a “case-management subclass” in a

setting where, as here, there is no actual conflict among the class members.”62

61F

On the record before it, the Court is persuaded that the distinct issues

applicable to some but not all members of the class are best addressed through an

appropriate Rule 23(d) case management order. As the Court stated during the

August 18, 2022 status conference, the Court does not express a view as to whether

56 Id.

57 Id. (citing John C. Coffee, Jr., Class Action Accountability: Reconciling Exit, Voice, and Loyalty in

Representative Litigation, 100 Colum. L. Rev. 370, 398 (2000)).

58 579 F.3d 241, 272 (3d Cir. 2009).

59 629 F.3d 333, 344 (3d Cir. 2010).

60 Fed. R. Civ. P. 23(d)(1)(B)(iii).

61 Fed. R. Civ. P. 23(d)(1)(C).

62 Casale v. Kelly, 257 F.R.D. 396, 408-409 (S.D.N.Y. 2009) (internal citations and quotations omitted).

Hoover v. Drivetrain LLC, Adv. Pro. No. 20-50966

August 19, 2022

Page 17 of 17

such an order should be entered promptly or would more appropriately await further

sharpening of the issues as merits discovery proceeds. On this (as with any other

matter affecting the conduct of the litigation), the Court would encourage the parties

to meet and confer. To the extent there is a disagreement between the parties with

respect to any case management issue, the parties are welcome to bring it to the

Court’s attention by letter, in the same manner set out in this Court’s Chambers

Procedures for the handling of discovery disputes.

Conclusion

For the reasons set forth above, the Court concludes that the record in this case

supports the certification of a class made up of “Plaintiffs and all persons (1) who

worked at Defendant’s Las Vegas Facility and/or who worked in Defendant’s sales or

engineering departments, (ii) who were terminated without cause beginning on or

about September 11, 2020, and within 30 days of that date, or were terminated

without cause as the reasonably foreseeable consequence of the mass layoff and/or

plant closing ordered by Defendant on or about are ‘affected employees’ within the

meaning of 29 U.S.C. § 2101(a)(5), and (iv) who have not filed a timely request to opt-

out of the class.” The Court will enter an appropriate order so providing.

Sincerely,

Craig T. Goldblatt

United States Bankruptcy Judge