Costa v. Apple, Inc.

Background

Francis Costa, Amanda Hoffman, and Olivia McIlravy-Ackert are or were hourly-paid, non-exempt Apple employees eligible for overtime. They alleged that Apple paid them restricted stock units, or RSUs, and did not include the value of vested RSUs when calculating their regular rate of pay for overtime. They alleged violations of the Fair Labor Standards Act (FLSA) and California and New York laws.

The plaintiffs asked the court to authorize court-approved notice to other Apple employees who might have similar FLSA claims. They proposed notifying current and former employees whom Apple classified as non-exempt and overtime eligible, who received RSUs, and who worked for Apple during the relevant period. Apple opposed the request, arguing that the plaintiffs’ evidence was insufficient, that the proposed group was too broad, and that some employees might be bound by arbitration agreements.

Legal standard

Under the FLSA, workers may litigate together if they claim an FLSA violation, are similarly situated, and affirmatively opt in in writing. At the preliminary certification stage, the standard is lenient. The plaintiffs had to provide substantial allegations and some evidence that they and potential members were affected by a common policy or plan.

Court’s analysis

The court held that the plaintiffs met the preliminary standard. Their declarations stated that the employees were hourly-paid, overtime eligible, received RSUs that vested during the relevant period, and were subject to Apple’s policy or practice of not including vested RSU value in overtime calculations. The court rejected Apple’s argument that the declarations were entitled to no weight merely because they were similar or allegedly boilerplate, explaining that the issue at this stage was whether the plaintiffs made an adequate threshold showing rather than whether their evidence was ultimately believable.

The court modified the proposed collective. The definition could not assume that RSUs were legally “compensation” that Apple was required to include in the regular rate, because that would improperly define the group based on the ultimate liability question. The plaintiffs therefore had to use different wording, such as employees who received RSUs. The group also had to be limited to employees who recorded more than 40 hours in a workweek after receiving an RSU but before that RSU vested.

The court declined to delay notice until deciding Apple’s pending motion to compel arbitration. Apple had shown that four of the opt-in plaintiffs had signed arbitration agreements, but it had not shown how many other employees were bound by agreements or demonstrated that sending notice to the broader group would improperly include people who were not similarly situated. The court directed the parties to discuss notice language informing potential opt-in plaintiffs that their claims might be subject to binding arbitration. It did not decide whether the agreements were enforceable.

Notice procedures and modifications

The court authorized notice by mail, email, and text message. It also permitted a reminder postcard and reminder text message 60 days after the initial notice was mailed. The notice could include a quick-response, or QR, code allowing recipients to complete the consent form electronically.

The notice had to remove language stating that it was “important” for potential plaintiffs to receive notice and had to state that Apple denied the allegations. These changes were intended to avoid the appearance that the court endorsed either side’s position.

Apple was required to provide last-known addresses, telephone numbers, and email addresses. It had 20 days from the order to produce the requested contact information. The court did not grant the plaintiffs’ request that Apple provide the last four digits of non-contacted employees’ Social Security numbers when mail was returned.

Disposition

The court granted the plaintiffs’ Motion for Distribution of Judicial Notice, pending the modifications described in the order. The modified collective covered current and former Apple employees classified as non-exempt and overtime eligible who received RSUs from March 23, 2020, to the present and recorded more than 40 hours in a workweek after receiving an RSU but before it vested. The order authorized notice and preliminary collective participation; it did not resolve the merits of the plaintiffs’ wage claims.