Case of the Month: Hospital Employees’ Wage Class Action Lawsuit Goes Terribly Wrong

It wasn’t the outcome the four hospital employees envisioned when they filed their lawsuit charging the University of Pittsburgh Medical Center of violating the federal Fair Labor Standards Act (FLSA) by wrongfully deducting 30-minute lunch breaks from their wages. What made the case particularly scary to UPMC was that the employees wanted to bring it as a class action on behalf of the roughly 2,800 other employees they claimed the hospital also shafted.

Lower Court Loss Leads to Risky Maneuver

Things went wrong for the employees when the trial court refused to certify the case as a class action. The ruling didn’t apply to the merits of the case, only whether it could be brought as a class action. In other words, the employees could have still gone forward with their individual lawsuits. But suing as individuals would have meant forfeiting the enormous leverage they’d have by representing a class of nearly 3,000 employees.

The problem was that they couldn’t appeal unless and until the lower court ruled on the merits of the case. So, they decided to roll the dice by agreeing to have the entire case tossed out to clear the way for an appeal.

Employees Not Only Lose but Also Must Pay Legal Costs

The maneuver backfired when the Third Circuit Court of Appeals rejected the employees’ certification challenge and the false closure legal tactics they used to bring it. But things were about to get a whole lot worse for the employees when the Third Circuit ordered them to repay UPMC’s legal costs, specifically the $317,572 the hospital spent to produce the literally millions of pages of documents the employees’ attorneys demanded during the pre-trial discovery phase of the case.

Although courts can award legal fees to the winning side in an FLSA case, such awards are fairly unusual, especially when the loser who has to pay up is the employee. But the Third Circuit saw fit to go that route in this case, noting that UPMC had warned the employees that producing the records would be massively expensive. The employees claimed they couldn’t afford to reimburse UPMC but the Third Circuit disagreed, noting that they weren’t exactly indigent. Finally, the court pooh-poohed their argument that saddling them with legal costs would discourage other employees from filing FLSA claims.