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Goode v. Nuance Communications, Inc.

United States District Court, N.D. Oklahoma

July 10, 2018

JENNIFER GOODE and KANDI FREY, individually, and on behalf of all others similarly situated, Plaintiffs,
v.
NUANCE COMMUNICATIONS, INC. and NUANCE TRANSCRIPTION SERVICES, INC., Defendants.

          OPINION AND ORDER

          GREGORY K. FRIZZELL, CHIEF JUDGE

         This matter comes before the court on the Motion to Dismiss, In Part, the Second Amended Complaint [Doc. No. 42] of defendants Nuance Communications, Inc. and Nuance Transcription Services, Inc. For the reasons set forth below, the motion is granted.

         I. Factual Allegations

         The Second Amended Complaint, which is the operative pleading, alleges the following facts.[1] Plaintiffs Jennifer Goode and Kandi Frey are current and/or former medical transcriptionists, also known as medical language specialists (hereinafter “MLSs”), employed by Nuance Transcription Services, Inc., a wholly owned subsidiary of Nuance Communications, Inc., a Delaware corporation with its headquarters in Burlington, Massachusetts. [Doc. No. 29, ¶¶ 5 and 9]. Goode resides in Claremore, Oklahoma, while Frey resides in Post Falls, Idaho. [Id. ¶ 8].

         MLSs employed by Nuance, including Goode and Frey, transcribe physician-generated recordings, which are uploaded by the physicians to Nuance's digital platform. [Id. ¶¶ 33 and 79]. Goode, Frey, and other similarly situated MLSs then access the uploaded files from their homes, transcribe the audio files, and enter the completed transcription into Nuance's platform, where it is accessed by the medical providers. [Id. ¶ 79]. Thus, Goode, Frey, and other MLSs are “remote” employees, in that they work from home. [Id. ¶¶ 33 and 78].

         Nuance hired Goode, Frey, and other MLSs specifically to work remotely and, prior to hiring, conducted interviews over the telephone. [Id. ¶ 80]. The Nuance employee who interviewed Frey was located in Massachusetts. [Id.] Once hired, MLSs received written communications regarding their employment relationship with Nuance on Nuance letterhead setting forth its Burlington, Massachusetts address. [Id. ¶ 82]. Nuance “transcription service managers” or “operations managers” located in Massachusetts supervised the transcriptionists, primarily through email, and Nuance's human resources and IT departments are located in Massachusetts. [Id. ¶¶ 83-85]. Goode and Frey's health insurance was out of Massachusetts. [Id. ¶ 81]. Nuance pays its MLSs based on the number of lines of dictations transcribed per week. [Id. ¶ 34]. Nuance also factors accuracy into the wage calculation. [Id.].

         Nuance corporate policy requires MLSs to take paid rest periods in an aggregate amount of thirty (30) minutes during each shift of more than six (6) hours, and one fifteen minute rest break per every four hours. [Id. ¶ 35]. Nuance policy states that Nuance “counts time spent on rest periods as hours worked.” [Id.]. However, Nuance failed to subtract mandated rest periods from hours worked in calculating lines produced per hour. [Id. ¶ 38]. The practice resulted in the artificial reduction of MLSs' production rates, and failure to pay monies owed to the MLSs for required rest periods. [Id. ¶ 42]. In weeks that MLSs worked over forty (40) hours, Nuance was obligated to pay one and half times the regular hourly wage for mandated rest periods, but failed to do so. [Id. ¶ 43].

         Additionally, Nuance failed to pay promised incentives to its MLSs. [Id. ¶ 44]. Specifically, Nuance implemented a policy pursuant to which, for the week ending July 7, 2017, pay for the first eight hours worked daily would be made “at 1.5 X hours worked X AHR, ” pay for hours worked daily in excess of eight hours would be made at “2.0 X hours worked X AHR, ” and an additional $1, 000 bonus would be given to employees who had at least forty productive hours within five consecutive days as of July 8. [Id.]. However, Nuance refused to pay the incentive compensation and improperly lowered the overtime rate by excluding the incentive compensation when calculating the overtime rate. [Id. ¶ 45].

         Based on these allegations, the Second Amended Complaint asserts four causes of action: (1) failure to provide compensation for mandated rest periods under the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201, et seq.; (2) violation of the Massachusetts Payment of Wages Act, Mass. Gen. Laws ch. 149, § 148 et seq. and the Massachusetts Overtime Law, Mass. Gen. Laws ch. 151, § 1A et seq.; (3) breach of contract; and (4) fraud. Relative to the FLSA claim, the Second Amended Complaint seeks FLSA class certification as to four subclasses:

1. All of defendants' current and former MLSs who worked at any time during the three (3) years before the filing of the original Complaint to the present who were not paid incentives and who, during weeks that the incentives were earned, worked more than 40 hours in a work week.
2. All of defendants' current and former MLSs who worked at any time during the three (3) years before the filing of the original Complaint to the present who were paid incentives for work performed during workweeks when the MLS worked more than 40 hours in a workweek, but such incentive payments were not calculated into the MLS's regular hourly rate in order to properly determine the overtime rate.
3. All of defendants' current and former MLSs who worked at any time during the three (3) years before the filing of the original Complaint to the present who were not paid for required rest periods, during a workweek that the MLS, with the inclusion of paid rest periods, worked more than 40 hours.
4. All of defendants' current and former MLSs who worked at any time during the three (3) years before the filing of the original Complaint to the present who were not paid for required rest periods, during a workweek that, with the inclusion of unpaid breaks as hours worked, earned less than the FLSA's minimum wage rate.

[Id. ¶ 59]. As for the Massachusetts statutory claim, breach of contract, and fraud, the Second Amended Complaint seeks Rule 23 class certification as to three subclasses:

1. All of defendants' current and former MLSs who worked at any time during the six (6) years before the filing of the original Complaint to the present who were not paid for at least one mandated rest period of less than 20 minutes;
2. All of defendants' current and former MLSs who worked at any time during the six (6) years before the filing of the original Complaint to the present who were paid an hourly wage that was artificially reduced by defendants, by including rest periods to determine line production per hour.
3. All of defendants' current and former MLSs who worked at any time during July 2017 who were not paid incentive compensation pursuant to a nation-wide company policy and agreement.

[Id. ¶ 58].

         Nuance moves to dismiss the Massachusetts statutory wage and overtime claim pursuant to Fed.R.Civ.P. 12(b)(6) and the fraud claim pursuant to both ...


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