United States District Court, N.D. California
JAMES KARL, individually and on behalf of all others similarly situated, Plaintiff,
ZIMMER BIOMET HOLDINGS, INC., a Delaware corporation; ZIMMER US, INC., a Delaware corporation; BIOMET U.S. RECONSTRUCTION, LLC, an Indiana limited liability company; BIOMET BIOLOGICS, LLC, an Indiana limited liability company; and BIOMET, INC., an Indiana corporation, Defendants.
ORDER RE MOTION TO CONDITIONALLY CERTIFY COLLECTIVE
ACTION AND MOTION TO FILE UNDER SEAL
William Alsup, United States District Judge.
putative employment class action, plaintiff moves for
conditional certification of an FLSA collective action and to
file under seal. To the extent stated below, the motions are
August 2015, plaintiff James Karl signed a sales associate
agreement with defendants Zimmer US, Inc. (“Zimmer
US”); Biomet U.S. Reconstruction, LLC (“Biomet
Reconstruction”); and Biomet Biologicals, LLC
(“Biomet Biologics”). He thereafter began working
for those three entities as a sales representative in
California. Pursuant to the agreement, plaintiff sold medical
devices in the surgical field - particularly, orthopedics -
such as replacement hips and surgical tools. The agreement
also classified plaintiff as an independent contractor. Sales
representatives such as plaintiff were primarily paid on
commission (Dkt. No. 53-1, Exhs. 1 at 164:15-165:22; 13
¶ 1; 21 ¶ 1).
Zimmer Biomet Holdings, Inc. (“Zimmer Biomet
Holdings”) was formed in June 2015 as a result of a
merger between two previous competitors, Zimmer Holdings,
Inc. and Biomet, Inc. Zimmer Biomet Holdings is a holding
company and the parent corporation of various subsidiaries,
including the three subsidiary entities plaintiff contracted
with. It did not have any employees or directly contract with
independent contractor sales representatives who sell
orthopedic products (Dkt. Nos. 53-1, Exh. 1 at 110:19-111:7;
57-14 ¶ 3).
subsidiaries of Zimmer Biomet Holdings were responsible for
selling and distributing various product lines (with each
subsidiary selling different products). These products
included orthopedic reconstructive products, sports medicine,
biologics, extremities, and trauma products, office-based
technologies, spine, craniomaxillofacial and thoracic
products, dental implants, and related surgical products. The
primary customers were surgeons, other specialists,
hospitals, and other health care dealers (Dkt. No. 53-1, Exh.
1 at 22:4-21, 110:17-24).
the three subsidiary entities plaintiff directly contracted
with, Zimmer U.S. engaged Biomet Reconstruction and Biomet
Biologics in designing, manufacturing, and marketing medical
devices and biologics related to knees, hips, sports
medicine, foot and ankle, extremities, and trauma. These
three entities (and Zimmer Biomet Holdings' subsidiaries
generally) used two different sales models relevant to this
action: (1) direct, and (2) distributor (Dkt. No. 57-14
¶¶ 4, 6, 14).
the direct territory sales model, the Zimmer Biomet Holdings
subsidiaries contracted directly with independent contractor
sales representatives who sold primarily their products.
Under the distributor sales model, the subsidiary entities
contracted with a third-party distributor - who owned and
operated its independent business - who was in turn
responsible for all sales within a geographic territory,
including hiring sales representatives (id.
¶¶ 6, 14).
filed the instant action in July 2018, alleging that
defendants misclassified him and others similarly situated as
independent contractors. Relevant to this motion, plaintiff
seeks to represent other sales representatives who were
classified as independent contractors and allegedly
subsequently denied overtime pay under the FLSA. Plaintiff
now moves under Section 216(b) of the FLSA to conditionally
certify a collective action and to disseminate notice.
Plaintiff's proposed FLSA class is defined as follows
(Dkt. No. 53 at 3):
Any person who signed a contract, from three years prior to
the date on which notice is issued to the date on which
notice is issued, with Zimmer Biomet, or any of its
subsidiaries, that engages the person as an independent
contractor for the solicitation of sales of Zimmer Biomet
products and/or services in the market segments or product
lines: Orthopedics, S.E.T., Biologics, Reconstructive, Spine,
CMF, Thoracic, Knee, Hip, Foot & Ankle, Sports Medicine,
Extremities, Surgical, Microfixation, Bone Healing, Cement,
oppose. They contend that (1) those individuals who have not
contracted with the same entities as plaintiff
(i.e., Zimmer US, Biomet Reconstruction, and Biomet
Biologicals) should be excluded from the collective; (2)
those individuals who contracted with third-party
distributors should be excluded from the collective; (3) the
forum-selection clause narrows the scope of the collective;
and (4) fact-intensive inquiries bar conditional
certification. This order follows full briefing and oral
argument, followed by supplemental briefing.
FLSA provides employees with a private right of action to
enforce the minimum wage and overtime provisions of the Act.
See 29 U.S.C. § 216(b). “[W]orkers may
litigate jointly if they (1) claim a violation of the FLSA,
(2) are ‘similarly situated,' and (3) affirmatively
opt in to the joint litigation, in writing.”
Campbell v. City of Los Angeles, 903 F.3d 1090, 1100
(9th Cir. 2018). “Similarly situated” means
“plaintiffs must be alike with regard to some
material aspect of their litigation.”
Id. at 1114. “[W]hat matters is not just any
similarity between party plaintiffs, but a legal or factual
similarity material to the resolution of the party
plaintiffs' claims, in the sense of having the potential
to advance these claims, collectively, to some
resolution.” Id. at 1115. In other words,
“[p]arty plaintiffs are similarly situated, and may
proceed in a collective, to the extent they share a similar
issue of law or fact material to the disposition of their
FLSA claims.” Id. at 1117.
majority of district courts in our circuit employ a two-step
approach to collective actions. See Leuthold v.
Destination Am., Inc., 224 F.R.D. 462, 466-67 (N.D. Cal.
Aug. 16, 2004) (Judge Vaughn Walker); Campbell, 903
F.3d at 1109-10 (noting the two-step approach favorably). In
the first step of this approach, plaintiffs move for
preliminary certification and show that the members of the
defined collective are “similarly situated” for
purposes of providing notice of the action. At this early
stage, the standard is “lenient” and district
courts simply evaluate whether there is “some factual
basis beyond the mere averments in their complaint for the
class allegations.” Adams v. Inter-Con Sec. Sys.,
Inc., 242 F.R.D. 530, 536 (N.D. Cal. Apr. 11, 2007)
(Judge Marilyn Patel); see also Campbell, 903 F.3d
at 1109. The second stage occurs when discovery is complete
and the case is ready to be tried. The party opposing
collective certification may then move for decertification.
Leuthold, 224 F.R.D. 466-67.
plaintiff alleges that each member of the putative collective
signed an independent contractor agreement, subjecting them
to a uniform company policy of treating them as exempt
workers under FLSA. Plaintiff thus argues that “all of
Zimmer Biomet's Sales Representatives are similarly
situated to himself because they are victims of a common
policy that misclassified them as independent contractors
when they are in fact employees” (Dkt. No. 53 at 21).
This order agrees (in accepting plaintiff's broad
allegation as true) that there is sufficient material
similarity between plaintiff and the putative collective
members with respect to the disposition of their FLSA claim.
This order also agrees with defendants, however, that the
proposed FLSA class should be narrowed in scope, as discussed
Sales Representatives Who Sold Products for Non-Party
addressing the scope of the proposed FLSA class, defendants
argue that plaintiff failed to show that he is
“similarly situated” to putative members who sold
products for non-party entities (i.e., other
subsidiaries of Zimmer Biomet Holdings) with which he did not
contract (Dkt. No. 56 at 11).
proposed FLSA class includes sales representatives who
contracted to sell spine, CMF, thoracic, microfixation, and
surgical products, which are sold by non-party entities
Zimmer Biomet Spine, Inc. (“ZB Spine”), Zimmer
Biomet CMF and Thoracic, LLC (“CMF&T”),
MedTech Surgical, Inc. (“MedTech”), and Zimmer
Biomet Surgical, Inc. (“ZB Surgical”) (Dkt. No.
56 at 1, 11). Defendants thus contend that, even assuming
that plaintiff was an employee of the entities he contracted
with, he failed to offer evidence that parent company Zimmer
Biomet Holdings or the non-parties entities was a
“joint employer” of the entities with which he
contracted with and, as such, plaintiff is not similarly
situated to the individuals selling products manufactured by
these non-party entities (Dkt. No. 56 at 11-12). This order
more employers may be considered “joint
employers” for purposes of the FLSA. Bonnette v.
Cal. Health & Welfare Agency, 704 F.2d 1465, 1469-70
(9th Cir. 1983), abrogated on other grounds by Garcia v.
San Antonio Metro. Transit Auth., 469 U.S. 528 (1985).
“All joint employers are individually responsible for
compliance with the FLSA.” Ibid.; see
29 C.F.R. § 791.2(a). Whether an entity is a