UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF VIRGINIA

Alexandria Division

-------------------------------:

:

RONALD E. HOUSTON, et al., :

Plaintiffs, ::

-vs- : Case No. 1:08-cv-203

::

URS CORPORATION, et al., :

Defendant. ::

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HEARING ON MOTIONS

July 11, 2008

Before: Liam O'Grady, Judge

APPEARANCES:

Richard P. Kinnan and Gary Mims, Counsel for Plaintiffs

Paul L. Siegel and Andrew Cabana,

Counsel for Defendants Parsons Brinckerhoff and Alltech

Stephen M. Sayers, Counsel for Defendants D&D and PaRR

Norman B. Linnell OCR-USDC/EDVA (703)549-4626

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THE CLERK: Civil action 1:08-203, Ronald E.

Houston, et al. versus URS Corporation, et al. Counsel please

identify themselves for the record

MR. MIMS: Good morning, Judge. Gary Mims on behalf

of plaintiffs. I am here with Mr. Kinnan, who has been

admitted pro hac vice and will be arguing on behalf of the

plaintiffs.

THE COURT: All right, good morning, sir.

MR. KINNAN: Good morning.

MR. CABANA: Good morning, Your Honor. Andrew

Cabana on behalf of Parsons Brinckerhoff and defendant

Alltech. And I am here with Mr. Paul Siegel, who has been

admitted pro hac vice and will be arguing for defendants.

MR. SIEGEL: Good morning.

THE COURT: All right, good morning to all of you.

MR. SAYERS: Good morning, Your Honor. Stephen

Sayers on behalf of the defendants Partnership for Response

and Recovery and Dewberry & Davis, LLC.

THE COURT: All right, good morning, Mr. Sayers.

All right. Well, there are a couple different

things going on here. One is the request by plaintiffs for an

opt-in provision under the FLSA, Fair Labor Standards Act, and

a request for discovery on all investigators similarly

situated.

I guess yesterday at some stage we got an additional

motion from defendants to sever the cases under Rule 21. I

don't know whether, Mr. Mims, you are prepared to argue that

this morning or not.

All right. Why don't I have plaintiffs go forward

then first. I have read the pleadings and the cases, and I

will hear anything on your motion, sir.

MR. KINNAN: Richard Kinnan for the plaintiffs. And

let me clarify, Your Honor. It is not that I am fully

prepared to present our case on the severance motion; however,

Mr. Siegel and I have discussed and it may very well be a good

idea, assuming this Court retains both cases.

So, I may not put up much, if any, objection to it,

I haven't even read the motion yet, but I am prepared to talk

about it and give the Court our thoughts.

I think it probably is appropriate. Previously Mr.

Siegel sent me a letter and kind of outlined his thoughts, and

we didn't make any decision at that point. Okay.

Now, I will be brief because we did file lots of

paperwork. But I would submit to this Court, having studied

all the cases and talked to all these inspectors, that this

really is a classic case for collective action certification.

Respectfully, I think it is almost a no-brainer if you look at

what these inspectors were doing.

And I want to start with Alltech's senior

vice-president who said, "the inspector makes all on site

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inspection decisions in accordance with the guidelines issued

by FEMA."

Similarly a PaRR vice-president in his declaration

said, "the housing inspection services involved collecting and

reporting certain information that FEMA requires to be

collected by the applicants."

This job that the inspectors did was basically

filling out a checklist. They had software, guidelines. They

are not professionals, the inspectors are not professionals.

They have no particular skill. Almost anybody-- Frankly, I

don't know if they even need to be 18, but I believe they need

to be over 18, they go through some training and they just

follow a check-list.

And so, they were all put as independent

contractors, they all signed an independent contractor

agreement. So, half of the equation is that they were

similarly situated or treated by the employer as independent

contractors.

The other half is, does one inspector do the same

work as the other inspector? And I submit to this Court that

absolutely positively they all do the same thing. They cannot

but do the same thing or, in talking to these inspectors, FEMA

or up the chain just gets rejected, you didn't fill out line

16 properly.

THE COURT: So, to your knowledge, there is no Level

1, Level 2, Level 3 inspectors who perform different roles for

FEMA and for these companies?

Well, that's just not the case. First of all, they

don't have a business. I mean, these are guys just showing up

to do these inspections and grabbing the software from, it is

a national information something something software, and

looking at the computer that the Government gives them and it

just pops up and they just start filling it out. It is the

save every, every time.

So, with the standard-- Because this is conditional

certification, this isn't the whole enchilada, this is opt in,

I have to simply meet a certain burden to show a colorable

claim that they are similarly situated.

And I really think that they are. There is

absolutely no question the Court should issue the notice and

then we do discovery. The one thing I don't want to do is put

this hearing off to do discovery because I think we know, I

mean, I have submitted all the FEMA guidelines, the reference

manuals, that's it, that's basically what the Court needs.

Because unlike a regular class action where I file a class

action and the statute of limitations tolls for all these

potential plaintiffs. Here the statute of limitations is

running as to all these people until they opt in.

I filed two, I forget what we call them, for the two

plaintiffs, their statute has run. I mean, the statute has

been tolled, but the others, it's running. And that relates,

I mean, they just deployed thousands of people for the floods

in the Midwest, so those are plaintiffs or potential

plaintiffs. But Katrina was a big disaster and there were a

lot of inspectors there, and their statute of limitations, as

the Court may or may not know, is three years for the--

THE COURT: Two years and three years, right.

MR. SIEGEL: -- and two for negligence. So, that's

an issue that I am concerned with and I would like to move it

along.

Are there any other questions that I can answer

factually before I sit down and listen to what they have to

say and maybe respond?

THE COURT: No. I will give you an opportunity to

respond. I don't have any further questions.

MR. KINNAN: Thank you very much.

THE COURT: Thank you.

MR. SIEGEL: Good morning, Your Honor. I guess it

is rare, but I guess this time we agree on some things and

disagree on others. I do agree it is a good idea if this be

severed and they proceed on two separate tracks. If the

Court--

THE COURT: Why should discovery not be, you know--

Well, regardless of the names, whether it is severed or not,

you can-- I am not sure that separate discovery is going to

be necessary, but you can handle discovery the way you want.

I think clearly Rule 21 requires that these cases be severed

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at some stage for trial at the very least. If you wanted to

go along for now on discovery, I wouldn't be adverse to that

either.

MR. SIEGEL: My concern was from the threshold if

notice is issued in some format, whether in the three states

where Mr. Lomascolo conducted inspections because he was only

in Louisiana, Massachusetts and Pennsylvania, he was not in

the other 18 states where inspections were conducted in the

last three years, per the Household International case that

seemed to be where he had knowledge. Perhaps if there was

notice, where it might be limited. There is the risk of

confusion unless there were two separate notices.

And then one of the concepts I had floated to Mr.

Kinnan was that if a notice were issued, that its content

would direct and say to someone, if you want to join and

understand you will have to respond to written discovery,

there is a deposition to be given in the Eastern District of

Virginia, there will be requests for admissions,

interrogatories, so that persons when they opt in understand

what it is they are opting into and the burdens they would

have. There is a risk of confusion unless there are two

separate notices and two separate lists.

So, it seemed that there should be two separate

tracks. The same magistrate and certainly the same judge

could be monitoring both since when one mastered case A, case

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B in terms of what the Court needs to do is not going to be

different or terribly difficult. And so, it seemed like they

should stay near each other, but not together.

And I don't know that Mr. Kinnan disagrees. I know

Mr. Sayers agrees. It seemed the most efficient and yet to

avoid the least confusion or crossover.

With regard to what inspectors do or don't do, what

seems to get glossed over and shouldn't be lost is that if an

inspector went to Louisiana or to California for a flood or a

fire or if he or she elected to go because it was their choice

whether to go or not go, they could hire people to drive them,

translate for them, do subinspections, do almost anything,

there was no prohibition against that. And indeed, some

inspectors, it is our understanding based on the affidavits,

did so.

Second, there was an opportunity for gain or risk of

loss in how they managed their on site business. They

provided their own lodging and food and transportation and

materials, and how everyone ran that affected greatly how much

money one made. It was more than just the quality of what I

did. If I did a good inspection, I got paid. If I did an

inspection that failed QC, FEMA wouldn't pay me.

It to me makes no sense to say, well, since FEMA set

forth guidelines, you are an employee of Alltech, because no

one is arguing that they are employees of FEMA. But they are

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FEMA's guidelines, they are not Alltech's rules. FEMA said,

this is how inspections of a Presidentially declared disaster

must be done. It is not Alltech's rules. And so, that

software is FEMA required and FEMA compliant.

THE COURT: Their argument is that because FEMA

controls the investigations, hands out the software or the

computers, the questions to be asked, the issues to be

addressed, that by definition they are similarly situated

regardless of what company they work for because the company

isn't imposing any separate guidelines.

So, there may be variances in how they do their

jobs, how they handle the merits of the work that they do may

change, but the task assigned doesn't change.

And so, that's where we vary from the case law that

I read. And it is a little unique because of the controls

that FEMA puts on any company who is assigning investigators

to these national disasters.

MR. SIEGEL: But again, FEMA is not assigning a

investigator. What FEMA is doing is saying, there is a

Presidentially declared disaster. There are residential

dwellings to be looked at.

THE COURT: Right, they are identifying locations

where disasters may have occurred and they are contracting

with private entities to go do the work.

MR. SIEGEL: And they are saying, we need, we, FEMA,

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need certain information before the applicant, the homeowner

or renter, can receive any money or assistance.

And so, it then gets to the inspector himself or

herself, we will have an individualized inspection, analysis

of did you hire others because you had the right, did you act

as an independent contractor, how much did you work. And we

have raised as well the Motor Carrier exemption saying if you

drove interstate to get there carrying your tools, which if

you were an employee I guess the argument is you were lending

them to the company; or when you were on site, if you are

doing a flood you may on both sides of a river and you could

be in Kansas and Missouri depending upon who opts in, that

will be the individual analysis.

So, what we are going to wind up with is a

significant degree of individualized analysis more than the

FEMA set guidelines. So, therefore, you must be the same as

him because you had to give FEMA data in order for FEMA to

pay. So, it is a lot more personalized then that.

Just before I forget, in our brief we cited the

Motor Carrier exemption and noted that there was a seemingly

sunset date of August of '05. President Bush signed recently

a statute extending that date to August of '06. Which would

make it more applicable to a greater period of the potential

statute of limitations.

I know there was some recent case law where one

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Court declined to address it saying it only applied to a

potential collective action for a few months, but now it would

be August '06. So, that is a change in the shadow it casts

over this.

THE COURT: Okay.

MR. SIEGEL: I don't want to dwell on it too long,

but the information provided by the four affiants with respect

to Alltech couldn't be more vague. It doesn't cite where

those four people worked, how much they worked, what

inspections they did, whether they were at those three state

sites with Lomascolo or elsewhere.

And so, what is coming out is the thought of how can

we justify a nationwide invitation to a collective action when

the lead plaintiff is not likely to be all that similarly

situated in terms of he wasn't at those sites, he didn't work

at those sites, he has no knowledge of those sites, he has no

contact with those people. He is going to be, as it sets up

as a collective action, and the notice explains routinely in

this case is their agent, their representative, someone who is

going to make decisions about settlement, about counsel, about

discovery, and he seems to have precious little in common with

people who worked or rendered inspections in 18 different

states.

THE COURT: How does Mr. Kinnan go about determining

whether these investigators are similarly situated without

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some discovery? If I don't grant the notice, what is your

idea on what should occur? How far should initial discovery

go in this case? Should it include the names of all the

investigators? Should it include discovery on what roles

different investigators played in different regions?

How does he get his discovery short of issuing the

notice?

MR. SIEGEL: It would seem to be that if the Court

determined that more was needed, as we both agree because of

the limited nature of Mr. Lomascolo's contacts and the absence

of facts in the four affiants with respect to Alltech--

THE COURT: Well, how about a couple of 30(b)(6)'s,

require Alltech and PaRR to identify either by-- I don't know

whether Alltech and PaRR have records as to the hours that

these investigators worked because they were independent

contractors and being paid by either job or the number of

investigations they did or the number of days they worked at a

specific site. And Mr. Kinnan has ideas about how that has

occurred because of the limited number of people that he--

But how do you suggest that we go forward--

MR. SIEGEL: Well, as to the hours worked, my

understanding is the same as the Court's, that since they were

treated as nonemployees, the records are of the inspections

conducted, not of the time spent doing it.

My understanding as well, and I believe it's Mr.

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Kinnan's understanding and Mr. Sayers' inspection, that an

average inspection probably took about 45 minutes. An

experienced inspector was probably faster.

So, unless someone did--

THE COURT: 45 minutes?

MR. SIEGEL: Per inspection. You are mostly

measuring the, looking at height of water and some other

factors. It is my understanding it is about 45 minutes.

And so, if you are in a flood, which would be

therefore closer to a river or a creek, you would be much

closer together from site to site with meager travel which

would be compensable travel. If one assumed a lunch break,

one assumed a dinner break, and you can only work during hours

of light to see where things were, you probably need the

better part of 50 inspections to hit overtime, give or take.

There was not a lot of prep time since you did

everything once you got there other than contacting the

homeowner applicant to make sure they are there, getting them

to sign off. Because you just can't come and go, somebody

needs to sign and verify.

And so, we are looking probably at, if there were a

group that a 30(b)(6) identified, it would probably be

inspectors who had done at least 45 to 50 inspections in a

week. And one of the suggestions that I was going to make if

notice were to be issued or a 30(b)(6) were to be done, is

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that we define, since there are no employee inspectors, there

are only contractor inspectors, that we define a workweek so

that everybody can kind of say, okay, well, it is Sunday

through Saturday.

So, at least if we are looking at did you do

approximately 45 or 50 inspections, that we are all looking at

the same workweek. Because in an employment scenario, it

would be a workweek, everybody would know my overtime week

starts 12:01 a.m. on Sunday and ends Saturday night or

whatever the seven day 168-hour period was in play.

And so, a 30(b)(6) deposition, while it couldn't go

necessarily into hours of work, it could certainly ask to

identify a cut-off number of inspections to limit the

universe. Otherwise we are talking about thousands of people

who are working in 21, who rendered inspections in

approximately 21 states for Alltech. I can't speak for PaRR

on that. And it could be a giant universe that belongs. At

best, there is a much smaller, more circumscribed universe.

THE COURT: Have you discussed possibly identifying

a core group of investigators and trying that case and then

binding the companies to the results of some sampling of

investigators?

I mean, we are looking at a fairly significant

undertaking discoverywise and trialwise, and I don't know if

you have discussed trying to pare that down into a sampling so

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that you can--

MR. SIEGEL: We haven't. In a case we are handling

for the City of New York, an opt-in class, what was done was

once, and they all sort of opted in immediately, there was not

even a notice, but once 1,500 people showed up at the

courthouse with their opt-in forms, we then came to a sampling

protocol of one in ten, maybe it was one in 12. And then

depending upon certain things that happened, there was a

follow-up group of one in ten otherwise randomly selected.

But we came to, at least in that case arrived at

that protocol after we knew the universe of who wanted to be

involved in the case.

Because in this case certainly it would be Alltech's

position that they don't believe that if even if inspectors A,

B and F were employees, that D, C and G weren't different

because they hired people and made decisions as to whether I

am going to work and how I am going to work and how much I am

going to work and what I feel like doing and don't do, et

cetera. And the individualized Motor Carrier question would

still be out there.

But I think if there was an opt-in group, it would

seem efficient once that group, however big or small it was,

could then go to a sampling protocol with maybe written

initial discovery for the claimants to true to figure out the

Motor Carrier questions, how did you travel there, what did

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you carry, what did you travel when you were there. And as to

soup grouping of it, did you have employees, did you have an

independent business, were you in the inspection business,

were you in a trade of construction and this was an extension

of what you held out to the public?

So, I think that would be step two.

THE COURT: All right. So, if I don't order the

notice today, how much time would it take you to come up with,

working with Mr. Kinnan, to identify a reasonable 30(b)(6)

number of categories and then answer those questions and come

back here to determine whether notice should issue or not or

whether there is so many disparate issues involved that we are

just not going to find similarly situated, a large similarly

situated group?

MR. SIEGEL: Richard, would you submit we could do

that in 60 or 90 days or what you would think?

MR. KINNAN: For the record, I don't think we should

do that for the reasons I stated, I really don't.

THE COURT: I understand.

MR. KINNAN: I am not exactly clear on what it is

defendants are going to produce to me. And then I can answer

that question.

THE COURT: Well, I think that you are going to have

a debate about how far reaching any 30(b)(6) should go based

on the number of inspections conducted by any inspector and

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the length of time somebody may have been employed.

And I think you both understand the case a whole lot

better than I ever will and it is up to you to come up with a

reasonable group of categories that are going to get you to

the next stage. I am not going to grant the notice today. I

don't think I know enough about the case to grant a notice

even though I am mindful of the fact that with FEMA over the

top of this, I think you are pretty close to getting what you

are asking for. But it's been objected to and I want you to

get enough information so that you can get to stage two and I

understand better. And I think a 30(b)(6) is the way to do

that.

If you can't agree on how broad the 30(b)(6) should

be, then you are very fortunate to have this case assigned to

Judge Anderson for nondispositive motions, and file a motion

to get heard in a week saying you need more than defendants

are willing to give you and why.

MR. KINNAN: Let me say that I do know from-- As

you know, the case was transferred from California, I filed in

California and it was moved over here. And in response to

that I learned, and I don't think the defendants will dispute,

that they really do have in the computer the names of all

these inspectors. But in addition to that, a really nice

spreadsheet for each one of when and where and exactly how

many inspections they did.

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And in fact, my people gave me their access code to

their Web site and I pulled for a few, it is just all laid

out, every disaster they did and exactly how many they did and

where they did them. And that's a spreadsheet.

And so, in answer to the Court's question, how long

do I need, I think they can do it right away. So, as soon as

possible they can give me that information.

MR. SIEGEL: I guess he has seen things of my client

that I haven't seen yet. I have no doubt that there are

records somewhere in the computer that say who inspected

where, otherwise they wouldn't have gotten paid. It doesn't

say who hired staff, who rented cars, who did all of those

things, who traveled interstate, who worked at small sites

where almost no one from Alltech was there and certainly no

one was there after probably the first day. None of that

would be in the computer in that format.

You are just talking about days I inspected and

where I inspected. And Mr. Lomascolo still remains the wrong

person to lead the class since he was in three of 21 states.

THE COURT: Well, let me hear from Mr. Sayers before

I get too far afield here.

MR. SAYERS: Good morning, Your Honor. I, frankly,

don't have very much to add beyond what we have said. Your

Honor seems to be asking all of the right questions.

The debate here today has sort of strayed into the

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merits somewhat, and I am sure that you saw from our papers

that we didn't go that route because we concede that the

burden that the plaintiffs bear, it has been variously

described, some call it, have said it is modest, some have

said it is not onerous, not rigorous. But other Courts have

said it is not invisible and you have got to come forward with

some facts.

And what you said, one of Your Honor's questions

was, well, how does Mr. Kinnan go about getting that

information. And I think it bears mentioning that there was

one case, the Persin case that was cited in the papers where

the Court ruled that simply because Mr. Persin has not had an

opportunity to seek specific information from Career Builders,

the defendant in that case, regarding its labor practices does

not mean he is absolved of making some factual assertions that

enable us to determine whether others within the company may

have been in the same boat as Persin.

And so, the Court said, well, even though this

standard is relatively lenient, its flexibility in application

does not absolve Persin of his burden to show some sort of

indication that he and the group he seeks to address share

some fundamental characteristics.

So, that is one case that addresses one of the

observations that Your Honor made.

THE COURT: Sure. Mr. Kinnan's comment, his

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foundation is, FEMA changes the equation here because FEMA

requires these investigators to follow the same protocols and

so that's really I need to get me up that first step.

MR. SAYERS: Well, addressing that point, Your

Honor, that's a good point. And of course, that's the

argument that anyone seeking conditional class certification

is effectively going to make. But Courts have said

nonetheless, well, that's all well and good, but you have

still got to make some factual showing, you can't merely rest

upon the rote incantations of legal conclusions in your

complaint.

And unfortunately in this case, the affidavit or the

declaration submitted by the plaintiffs really don't push the

inquiry much beyond the rote incantations in the complaint.

And that's why-- I mean, Your Honor has already said that you

are not going to issue a notice today, so there is no point in

me sort of beating that dead horse.

THE COURT: No. There is an old adage, you can

convince me that I am wrong if you want to go on and talk

about it.

MR. SAYERS: I certainly don't want to convince you

that you are wrong on that point, Your Honor.

THE COURT: Well, tell me why isn't just having

30(b)(6) notices issued and allow-- I think that it's

appropriate that discovery issue on the similarly situated

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issue, and that it ought to be, although not discreet because

of the numbers of people who were investigators during this

period of time, but I want to come back here in 60 or 90 days,

I will stay general discovery and not issue a scheduling

order, is what I am proposing to do, and let you come back

here in 60 or 90 days and tell me why or why not notice

shouldn't issue with more information so that I can make an

educated decision.

So, is 60 days enough time to do that?

MR. SAYERS: I would think it would be. We haven't

discussed it, but the Court's suggestion appears to me to be a

perfectly reasonable, sensible suggestion. And I have to say

we have worked very well with Mr. Kinnan, we have had no

difficulties at all, and I would be very surprised if we had

any difficulty in working out the contours of an acceptable

30(b)(6) notice.

THE COURT: All right, let's do that then. You pick

a day around 60 days out when you are all available to

renotice this for hearing if you can't agree at the end of

discovery on your own that notice or should not issue, and I

will certainly consider any consent order to that effect.

I will not issue a scheduling order for the next 60

days so you are not under the burden of doing general

discovery while this discovery, although there will be

overlap. Keep in mind the thought of doing a sampling for

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purposes of moving forward in this case so that it can be

handled discretely.

I will hold in abeyance for 60 days the severance

motion, but I think have indicated clearly that the cases

appear to me under Rule 21 to be required to be tried

separately.

And let's see if we can't agree on the categories of

the 30(b)(6) depositions. And if you can't agree, then Judge

Anderson will quickly rule on that.

MR. KINNAN: Could I address the Court one more

time? Not on the merits.

THE COURT: Yes, sir.

MR. SAYERS: And there is one administrative matter

that I would like to take up. One of our associates who was

on this case has flown the coop to Mr. DiMuro's firm, and

apparently we are required to file a motion allowing her to

withdraw. And I have a consent order permitting that. We

have filed the motion, Your Honor.

THE COURT: All right. Thank you, Mr. Sayers.

MR. SAYERS: Thank you, sir.

MR. KINNAN: Your Honor--

THE COURT: Yes, sir.

MR. KINNAN: Okay. I understand what the Court is

going to do, and I accept that, and we are going to work

together, no problem.

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However, let me just say that when I attached the

FEMA inspection manual and the FEMA reference manual and I

think PaRR's manual which kind of laid out the guidelines,

okay, I believe that lays it out, but I want to make sure I

understand because I want to help the Court, of course, make

the decision to issue notice, is there anything that you can

tell us or me, big broad picture, what you need in addition to

those sorts of things?

THE COURT: No.

MR. KINNAN: Well, at least I tried.

THE COURT: No, let's find out what these

investigators do, whether there are different levels of them,

whether anybody works eight hours a day. Those are the type

of things I am looking for.

You know when you got transferred to the Eastern

District of Virginia, that the world of class action is, you

know, we are all looking at the same Federal Rules books

whether civil or criminal, but they are applied in different

ways in different circuits around the country.

I consider the class certification to be a very

serious matter and it is only done when necessary. I think,

as I have indicated, I think you are very, very close in this

case, but I want more substantive information.

MR. KINNAN: Thank you very much.

THE COURT: All right. Anything else this morning?

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MR. SIEGEL: No, sir.

THE COURT: All right. I appreciate very much the

professionalism in the pleadings, they helped me a great deal.

And we will see you in about 60 days.

MR. SIEGEL: Thank you, Your Honor.

MR. MIMS: Thank you, Your Honor.

MR. KINNAN: Thank you, Your Honor, very much.

THE COURT: Thank you.

------------------------------------------------

HEARING CONCLUDED

I certify that the foregoing is a true and

accurate transcription of my stenographic notes.

___________________________________

Norman B. Linnell, RPR, CM, VCE, FCRR