Under the federal Fair Labor Standards Act (FLSA), employees have the right to bring civil actions against their employers to recover unpaid minimum wages, back compensation for overtime not paid, and liquidated damages. Section 216(b) of the FLSA allows employees to bring a collective or class action on behalf of themselves and other similarly situated employees. Class actions under § 216(b) are not true class actions within the meaning of Rule 23 of the Federal Rules of Civil Procedure. Instead of having an opt-out proceudre as in a Rule 23 class action (in which employees are part of the suit unless they take action to get out of it), there is a opt-in procedure under § 216(b) (in which employees have to affirmatively state that they want to be part of the lawsuit).
To have these collective actions certified, the employee(s) must show that the other employees that wish to join the lawsuit are “similarly situated” to the original plaintiff(s). The current problem courts are having is that “similarly situated” is not adequately defined in the statute, and the United States Supreme Court gives no guidance to this issue in Hoffman-La Roche Inc. v. Sperling. District courts have to interpret “similarly situated” with little guidance.
There are two major differences between a Federal Rules of Civil Procedure 23 class action and a collective action under Section 216(b) of the FLSA. The first difference is that the standard for allowing a collective action to proceed under Section 216(b) is far less strict than the standard for certifying a class under Rule 23. The second is that in Rule 23 class actions everyone who is covered by the class is automatically a plaintiff once the class is certified.
In a § 216(b) conditional class action, employees that may be covered by the class have to file a consent form with the court to become a party plaintiff. Section 216(b) of the FLSA expressly provides the procedure for representative actions:
…An action to recover…liability…may be maintained against any employer (including public agency) in any Federal or State court of competent jurisdiction by any one or more employees for an in behalf of himself or themselves and other employees similarly situated. No employee shall be a party plaintiff to any such action unless he gives his consent in writing to become such a party and such consent is filed in the court in which such action is brought.
That is all the help Congress gave the courts in the actual operation of an FLSA representative suit. The lack of express procedure has, naturally, created plenty of litigation opportunities. However, some observations can be made. The act creates the option of representative lawsuits, but in order to be bound by any judgment, the putative class members must expressly “opt-in” to the class.
The problem with using the modern Rule 23, even as an analytical tool, also has many problems. The first is that certain “prerequisites” must be met: (1) the class must be so numerous that joinder is impracticable; (2) there must be questions of law or fact common to the class members; (3) the claims of the representative must be typical of the class’ claims; and (4) the representative must be “adequate” to represent and protect the class’ interests.
With Rule 23’s relatively well-tuned apparatus inapplicable, at least directly, to Section 216(b) cases, parties and courts were left to develop some reasonable ad hoc procedures. Typically, plaintiffs’ lawyers wished to avoid awkward “solicitation” and ethics consequences and expedite production of potential plaintiffs’ names by having court-supervised notice be sent to putative class members based on a conditional “class” definition.
Once a conditional class is certified under § 216(b), there is a notice and opt-in period set up by the court. During this period the court will supervise notice to all possible plaintiffs. Those noticed of the conditional class actions are usually given anywhere from thirty (30) to ninety (90) days to file a consent to become a party plaintiff with the court. The chief purpose behind the opt-in procedure set forth in § 216(b) of the FLSA, and as interpreted and adopted in subsequent acts, such as the Age Discrimination Employment Act (hereinafter ADEA), is that of judicial economy. As a general rule the FLSA was, and is designated to protect the working class individuals. The potential plaintiffs in this action are unsophisticated and often uneducated.
A central purpose of the FLSA is to allow employees - all of whose claims may be different in amount but arise out of the similar nature of their employment - to be represented and adjudicated in one lawsuit, regardless of the fact that they are separate and independent of each other. A district court in Georgia in Bradford v. Bed Bath & Beyond, Inc., recognized the practical reality that, absent a collective action, an individual’s claims under the FLSA likely would not be subject to redress. By issuing court supervised notice, potential plaintiffs will be advised of their rights under the FLSA and the courts will promote judicial economy by avoiding the possible filing of hundreds of lawsuits. However, employers have no interests in giving widespread knowledge of the wage and hour suits filed against them.
DISTRICT COURTS’ AUTHORITY
One of the first problems federal district courts ran into was whether they had the authority to grant these conditional “class” certifications under Section 216(b). The Eighth Circuit, in McKenna v. Champion Int’l Corp., held that while Section 16 provided for representative class suits, the Portal-to-Portal Act had limited the availability of class actions pursuant to Section 16, and therefore, district courts lacked the authority to supervise notice to potential class members. To resolve a split in the circuit courts of appeals on the issue, the Supreme Court of the United States decided that, in appropriate cases, district courts had the authority, pursuant to Section 16, to control notice to class members and other aspects of the procedure.
The Sperling decision was rather narrow, however, only deciding that, where Congress has authorized representative suits, district courts necessarily have the authority to facilitate notice to potential class members and to permit discovery of names and addresses of potential plaintiffs. Otherwise, districts were still left to their own devices. As the Court said, “We confirm the existence of the trial court’s discretion, not the details of its exercise.”
The Supreme Court was not, however, averse to giving some hints following its holding. The Court observed that Section 216 provided advantages of both court and party economies. “Plaintiffs the advantage of lower individual costs to vindicate rights by the pooling of resources. The judicial system benefits by efficient resolution in one proceeding of common issues of law and fact arising from the same alleged discriminatory practice.”
Justice Kennedy, writing for the Court, recognized that where such power exists, there is the possibility of its abuse. Because of that potential, the Supreme Court encouraged district courts to recognize their “duty and broad authority to exercise control.” For example, to avoid misleading communications, from any person, “it lies within the discretion of a district court to begin its involvement early, at the point of the initial notice, rather than at some later time.”
According to the Supreme Court, the benefits of early involvement at the notice stage were manifold: the notice would be timely and accurate; any dispute about its content could be resolved at an early stage prior to dissemination; consequently, no consents based on an inaccurate notice need ever be invalidated. The Court concluded its list of benefits from early intervention by the district courts to observe that such intervention could serve to avoid multiple lawsuits, that cut-off dates for “opting-in” could be set, and that these procedures would avoid inaccurate communications to employees about what they had to do to enter into or remain apart from the lawsuit.
With respect to the Eighth Circuit’s concern – that Congress had expressly limited the availability of class actions via the Portal to Portal Act’s amendments to the FLSA – the Sperling Court explained that Congress had intended to abolish representative actions by persons without an interest in the outcome by requiring that potential plaintiffs “opt-in.” The availability of representative actions was not limited, but the representative action was limited to employees who could assert claims in their own right: “Congress left intact the ‘similarly situated’ language providing for collective actions…”
The Court concluded by saying that “he broad remedial goal of the statute should be enforced to the full extent of its terms.” This last remark seems to have been directed to courts which had concluded that an act expressly authorizing class actions somehow did not necessarily also imply the authority to control the litigation. The Supreme Court seems to have been firing a shot across the bow of courts expressing nothing more than hostility to collective litigation, or at least to its burdens.
Sperling’s “suggestions” may have resolved any question about a district court’s discretion to intervene at the “notice” stage, but left many questions unanswered about the “details of exercise.” As the Court of Appeals for the Fifth Circuit recognized in 1995 – and which condition still obtains today – “the proper class certification procedure for is largely a matter of first impression for the circuit courts.”
APPROACHES TO SIMILARLY SITUATED QUESTION
The Court’s decision in the Sperling case left district courts with a wide discretion to manage these “opt-in” notices. The question district courts had to answer to grant the conditional class certification was whether the plaintiff(s) and potential opt-ins were similarly situated. Since the FLSA itself gave no definition or standard for the term, and the Supreme Court also did not provide any guidance on the issue in the Sperling case, the district courts came up with three general approaches to the similarly situated determination. The first line of cases is characterized by the two-tier approach in Lusardi v. Xerox Corporation.
TWO-TIER APPROACH
In the Lusardi case the trial court created a two-tier analysis to the “similarly situated” problem. The first step in this analysis is the notice stage. At the notice stage the district court decides whether notice of the action should be given to potential class members. This decision is based upon pleadings, affidavits, and in some cases expert reports. Since the parties have normally not begun the discovery process at the first step, there is little evidence. Also, because the decision for the opt-in notice is made using a fairly lenient standard the court will usually order a conditional certification of a representative class. The Fifth Circuit has said that “’imilarly situated’ does not mean identically situated.” Instead, a class should be conditionally certified “when there is a demonstrated similarity among the individual situations…some factual nexus which bind the named plaintiffs and the potential class members together as victims of a particular alleged .” Therefore, a court will foreclose a plaintiff’s right to proceed collectively only if it can be shown the action relates to specific circumstances personal to the plaintiff rather than a general policy or practice that affects all. If the district court grants the plaintiff(s) motion for conditional class certification, the putative class members are given notice and the opportunity to “opt-in.” Throughout the discovery process the action remains as a representative action.
At the second step the court makes an assessment on the similarly situated question. The second stage of the two-tier method is only initiated if the defendant(s) file a motion to decertify the class after discovery is completed and the matter is ready for trial. “At this stage, the court has much more information on which to base its decision, and makes a factual determination on the similarly situated question.” If the “opt-in” plaintiffs are found to be “similarly situated,” the case proceeds to trial as a representative action. If not, then the class is decertified and all opt-in plaintiffs are dismissed without prejudice. If the opt-in plaintiffs are dismissed they may have a problem, though, with bringing a new claim because the statute of limitations on their claims may have run by the time the class is decertified. Just because opt-in plaintiffs are not similarly situated to the original plaintiff(s) does not mean they do not have valid claims. One possible solution to this problem would be to toll the statute of limitations of opt-in plaintiffs that have been dismissed because of decertification to the time when their consents were filed with the court. This would allow the opt-in plaintiffs to bring their claims individually as if they had done so originally. The next approach to be discussed is the semi-class action approach.
SEMI-CLASS ACTION APPROACH
The second style of case examined is typified by Shushan v. University of Colorado. Adopting the view that “similarly situated” is coextensive with a Rule 23 class certification, the Shushan court reviewed numerosity, commonality, typicality and adequacy of representation in determining whether a class should be certified. Under this methodology the only difference between a conditional class certification and a Rule 23 class action is that potential plaintiffs who do not “opt-in” to a conditional class are not bound by its results, while class members are bound in a Rule 23 action unless they opt out.
Even though Mooney found it unnecessary to choose between these two methods, the Fifth Circuit has found “a fundamental irreconcilable difference between the class action described by Rule 23 and that provided for by FLSA §216(b) because Rule 23 provides for “opt-out” class actions and §16(b) provides for “opt-in” class actions.” The Fifth Circuit states very bluntly “that §16(b) precludes pure Rule 23 class actions in FLSA suits”, and that the two-tier approach is the preferred method.
SPURIOUS CLASS ACTION APPROACH
The last approach to the similarly situated question is the “spurious” class action approach, which is exemplified by Bayles v. American Medical Response of Colorado, Inc. Before 1966, Rule 23 provided for a class action where “the character of the right sought to be enforced against the class is several, and there is a common question of law or fact affecting the several rights and a common relief is sought.” This became known as a “spurious” class action. The only thing that joined these “spurious” classes together were common questions of fact or law, and that they did not allow the disposition of one class member’s rights to affect the rights of others in the class. For the court to grant a motion for “spurious” class certification, the plaintiff only had to show that one common question of fact or law existed among the class and that the members of the class sought a common relief. Certifying of these “spurious” classes was not always so simple in all cases. The court could decline to certify a spurious class when it would waste judicial resources or unfairly prejudice the party opposing the class.
The problem with “spurious” classes – at least for Section 16’s purposes – was that “similarly situated” became amorphous. A class tied by a common question of fact (e.g., whether a defendant had a policy of improper salary deductions) could be quite confused where different job categories, or other “individual” questions, actually predominated.
Obviously, Section 16(b) requires a class member to “opt-in” which effectively eliminates the “numerosity” requirement. Even if “similarly situated” can be relatively well outlined by commonality, typicality, and the original named plaintiff’s adequacy as a representative, Rule 23(b) presents additional hurdles. There is the risk of inconsistent or varying adjudications with respect to members of the class, the risk that adjudications for individual members of the class would practically harm interests of other class members, and the fact that most Rule 23(b)(2) class actions require injunctive relief.
Rule 23(b)(3) requires a putative class to show that the “questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy.” Rule 23(b)(3), Fed.R.Civ.P. Whether (b)(3)’s “predominate” standard is an improvement on former Rule 23’s “spurious” class, in the context of a wage and hour case, is problematical. For example, a “common” question of law, whether a defendant employer had a policy or practice of incorrectly categorizing non-exempt employees as exempt, might evaporate in the context of different managers’ application of the purported policy at different times and in different locations.
While this might help define a collective group of employees who are not similarly situated, it provides only help by way of negative implication with identifying those who are. In other words, the “spurious” class might be over-inclusive in identifying those “similarly situated,” and the Rule 23(b)(3) class might be under inclusive. Also, the fundamental analytical problem here is that this part of Rule 23 was not part of Rule 23 until 1966 and the Advisory Committee Notes expressly state that the amendments are not intended to affect Section 16 actions.
So far as research has revealed, only the Fifth, Tenth, and Eleventh Circuits have discussed at any length just how district courts should or may exercise their discretion.
FIFTH CIRCUIT
In Mooney, the Fifth Circuit observed that the various procedures used by district courts in Section 16 cases generally divided along two basic lines: (1) a “two-tier” class certification process beginning with the district court’s supervising notice, and then after discovery determining whether the collective class was comprised of “similarly situated” persons; and (2) somewhat different processes unified by analogy to Rule 23, either as currently amended or as it existed at the time the Rules of Federal Procedure and the Fair Labor Standards Act both came into being in 1938.
The Fifth Circuit described the two-stage method as having a conditional certification or “notice stage,” and later, usually on a defense motion, a “(de)certification stage.” At the first stage,
The district court makes a decision – usually based only on the pleadings and any affidavits which have been submitted – whether notice of the action should be given to potential class members….Because the court has minimal evidence, this determination is made using a fairly lenient standard, and typically results in ‘conditional certification’ of a representative class putative class members are given notice and the opportunity to ‘opt-in.’ Mooney;
The second stage occurs following discovery and “is typically precipitated by a motion for ‘decertification’ by the defendant…” Because discovery will be complete and the case essentially ready for trial, the district court has much more information on which to base a decision as to whether the collective group of plaintiffs are sufficiently “similarly situated” for the case to proceed to trial as a representative action. Mooney.
The Fifth Circuit viewed the line of cases using some version of Rule 23 and observed that they generally conclude that either some or all of the modern Rule 23 elements must be considered in determining whether a group of persons is “similarly situated” (i.e., commonality, typicality, and adequacy of representation), or conclude that the earliest version of Rule 23, providing for “true,” “hybrid,” and “spurious” classes, should be used.
The Fifth Circuit also saw that once those cases reached the Courts of Appeals they all used the two-tier approach, apparently for both practical and analytical reasons. For example, it is true that prior to Rule 23’s overhaul in 1966, many courts regarded Section 16 actions as “spurious class actions where the right sought to be enforced was “several, and there is a common question of law or fact affecting the several rights and a common relief is sought.” No law student, at least since 1966, has failed to shudder over the confusing history of “true,” “hybrid,” and “spurious” class actions – or failed to be thankful for the 1966 amendments. See Rule 23 Advisory Committee Notes, 1966 Amendment. In the end the Fifth Circuit decided that the two-tier approach would be a better choice for handling conditional class certifications.
ELEVENTH CIRCUIT
Dybach v. State of Florida Department of Corrections, addressed the appropriate process for class certification in FLSA collective actions. The Eleventh Circuit held:
he district court should satisfy itself that there are other employees of the department-employer who desire to “opt-in” and who are “similarly situated” with respect to their job requirements and with regard to their pay provisions. If the district concludes that there are such other employees, we leave it to the district court to establish the specific procedures to be followed with respect to such possible “opting-in.”
The burden for showing similarly situated is not great and the “laintiffs need show only ‘that their positions are similar, not identical’ to the positions held by the putative class member.” The Grayson decision came out a year after the Fifth Circuit had set its standard in the Mooney case. “Grayson held that §216(b)’s similarly situated requirement is more elastic and less stringent than the requirements found in Rule 20 (joinder) and Rule 42 (severance).” This still left the burden of showing a reasonable basis for the court to grant their motion for conditional class certification, but what it did do was to explain that the burden for the plaintiff was not heavy and could be accomplished by making substantial allegations of class-wide discrimination that is supported by affidavits.
The two leading Eleventh Circuit cases on conditional class certification are Hipp v. Liberty National Life Insurance Company and Grayson v. K-Mart Corporation. The Hipp and Grayson decisions both advocate that use of a two-tiered methodology in making class certification determinations.
In Grayson, demoted and terminated K-Mart store managers sued K-Mart Corporation under the ADEA for age discrimination. The action began as two separate district court actions and was consolidated on appeal. The plaintiffs charged K-Mart with building a file against each store manager before demotion as part of a corporate plan to upgrade the store’s image. The plaintiff’s complaint indicated the action was filed on behalf of them as well as all others similarly situated. One district court severed the claims while the other granted the motion for an opt-in class.
On appeal, K-Mart’s charge that the district court violated “comity” was denied because the Eleventh Circuit said “the standard for allowing an opt-in joinder class under §216(b) differs from, and is more lenient than, the standards for joinder and severance under Rule 20(a) and 42(b)….” Grayson. The court subsequently found the plaintiffs met the similarly situated requirement through substantial allegations and evidence. The plaintiff in Grayson presented an affidavit of a statistical expert that stated “hat because of the hiring and termination decisions of Kmart, 57.1% of the store manager workforce were over forty years old in December 1992, in contrast to the 74.2% that would have been in place in the absence of K Mart's hiring and termination decisions.” This was shown to be a significant statistical difference in hiring and firing.
In Hipp, former insurance employees sued Liberty National under the ADEA for age discrimination. Plaintiffs then sought to pursue a collective action under Section 216(b). The district approved the plaintiffs’ proposed notice. After a jury trial on ten (10) plaintiffs, seven (7) plaintiffs’ and three (3) defense verdicts were returned by the jury.
Thereafter, Liberty appealed. On appeal, among other issues, Liberty challenged the district court’s permitting the plaintiffs to pursue a collective action under Section 216(b). The employer’s main arguments in regards to the opt-in were that the plaintiffs worked in different geographical locations and that each plaintiff’s case was unique and required an individual analysis of his or her working condition. Essentially the employer argued that employees were managed differently at each location, and this would make them not “similarly situated” because they had different claims.
In affirming the district court’s order allowing notice under Section 216(b), the Eleventh Circuit set forth the “preferred” approach for dealing with class certification under Section 216(b) of the FLSA.
In addressing the issue of class certification under Section 216(b) the Hipp court recommended a “two-tiered’ approach. In that regard, the Hipp court held that for an opt-in class to be created under Section 216(b), the plaintiffs need only to sue on behalf of themselves and other “similarly situated” employees. Then, “Plaintiffs need only show that their positions are similar, not identical, to the positions by the putative class members.” This requirement of “similarly situated” is less stringent than the requirements for Rule 20 joinder and Rule 42 severance. Moreover, a “unified policy, plan, or scheme” is not required to satisfy the “fairly lenient standard.”
The Middle District of Alabama addressed the “opt-in” procedure in Harper v. Lovett’s Buffet, Inc. Briefly, in Harper, several hourly-wage employees of the defendant’s Dothan, Alabama location filed suit on behalf of themselves and other similarly situated alleging violations of the minimum wage and maximum hour provisions of the FLSA. The plaintiffs then filed a motion for conditional class certification and authorization to send notice of suit to potential opt-in plaintiffs. The plaintiffs requested the court to authorize the sending of notice to all hourly employees of defendant at all the defendant’s stores throughout the southeast.
In the complaint and motion for conditional class certification, the plaintiffs described several practices which they alleged violated the FLSA. The plaintiffs produced affidavits to support their allegations regarding the FLSA violations and the existence of others “similarly situated.” As additional proof, the plaintiffs also consented to become party-plaintiffs with other employees of the defendant’s Dothan location and affidavits detailing some of the questioned employment practices. The defendant opposed the motion, which asserted that the plaintiffs had not met their burden of showing that others were similarly situated existed. In that regard, the defendant pointed out that the plaintiffs did not make any showing regarding the employees in different states/locations or the different managerial personnel in the different states/locations.
With regard to determining whether notice should be given to other potential class members, the court held that “Plaintiffs have the burden of demonstrating reasonable basis for crediting their assertions that aggrieved individuals exist in the broad class that they propose.” The court went on to state that the burden is “not heavy” and may be satisfied by “detailed allegations supported by affidavits.” The court eventually granted the plaintiffs’ motion in part, holding that notice should be issued to defendant’s present and former hourly employees at its Dothan locations. The court denied plaintiffs’ request to include all of the defendant’s locations throughout the Southeast on the basis of the plaintiffs’ failure to provide any proof of corporate wide violations.
Federal District courts inside and outside the Eleventh Circuit has attempted to formulate a list of factors to help to determine whether named and putative plaintiffs are similarly situated. The Eleventh Circuit codified the factors for second stage decertification that Grayson and Hipp used to determine similarly situated. The Southern District of Alabama incorrectly applied the factors used in Stone in Reed v. Mobile County School System, for the first stage conditional class certification. In the Reed case, the plaintiffs’ motion for conditional class certification was denied, even though the court agreed that the motion would be granted if the Eleventh Circuit’s two-tiered approach was used. Justice Butler stated in his opinion that the Eleventh Circuit’ opinion in the Hipp case was only a recommendation. The problem is that this case muddies the waters on the issue of conditional class certification that the courts of appeal have strived so hard to clarify.
The test for second stage decertification is much stricter than first stage conditional class certification because “the court has much more information on which to base its decision, and makes a factual determination on the similarly situated question.” Hipp. The action in Stone was an ADEA action and included additional factors relevant to age discrimination. The class in Stone had received first stage conditional class certification. The Stone court “synthesized the factors the Eleventh Circuit has deemed relevant to an assessment of whether the ‘similarly situated’ requirement is satisfied” in the decertification stage holding:
(1) Whether the plaintiffs all held the same job titles…;(2) whether the plaintiffs worked in different geographical locations…;(3) the extent to which the claimed discrimination occurred during different time periods and by different decision makers…; whether the plaintiffs all alleged similar, though not identical, discriminatory treatment…
Although the factors stated in Stone were used to decertify a class and were incorrectly applied in Reed, they do provide generalizations to determine whether named plaintiffs and putative plaintiffs are similarly situated. As Dybach stated, the court must determine that the putative plaintiffs “are ‘similarly situated’ with respect to their job requirements and with regard to their pay provisions.”
TENTH CIRCUIT
“Following close on the heels of Hipp, the Tenth Circuit decided Thiessen v. General Electric Capital Corporation,…explicitly adopting the two-step Lusardi approach.” In the Thiessen case an employee filed and ADEA claim alleging that General Electric Capital Corp. had engaged in a pattern or practice of discrimination adversely affecting him and other similarly situated employees. At the trial court level the district court certified a conditional class of twenty-three (23) plaintiffs. Later, after discovery was completed, the court granted the defendant’s motion to decertify the class. Once the class had been decertified the opt-in plaintiffs were dismissed without prejudice. The court then granted a motion for summary judgment in favor of the defendant that dismissed Thiessen’s individual claims. On appeal to the Tenth Circuit, the court reversed and remanded the case back to the district court for further proceedings.
Thiessen’s main claim was the class wide discriminatory use of a “blocker policy” by the defendant. The plaintiff asserted that older employees were viewed as blocking the younger employees from advancing in defendant’s management development program. The Tenth Circuit agreed with the district court that the two-tiered approach was the appropriate approach to this case. It states that “Congress clearly chose not to have the Rule 23 standards apply to class actions under the ADEA.” The problem with how the district court used the two-tiered approach was that during the second stage of decertification the court applied much stricter standards to the similarly situated issue using three factors:
(1) Whether a sufficient link existed between alleged blocker policy and the challenged employment decisions; (2) whether individual issues would predominate at trial; and (3) whether a trial of the action could be coherently managed and evidence presented in a manner that would not confuse the jury or unduly prejudice any party.
The Tenth Circuit stated that by the district court decertifying the class the district court essentially deprived opt-in plaintiffs of their right to have the issues decided by a jury. Since all the opt-in plaintiffs were dismissed from the lawsuit they were not able to file a new complaint on behalf of themselves because the statute of limitations had run on their claims, even though, their claims were dismissed without prejudice.
This is a major concern when using the two-tiered approach. Since the standard to certify the class is so lenient, once a class is certified anyone that is encompassed in the class can opt-in, even though they may not have a valid claim. The real problem occurs when at the second stage if the class is decertified and the opt-in plaintiffs are dismissed without prejudice; the opt-in plaintiffs may not be able to bring new lawsuits because their statute of limitations has run.
ANALYSIS
The courts of appeals have helped in determining whether opt-in plaintiffs are “similarly situated” in Mooney, Hipp, and Thiessen. However, there are still a few questions left unanswered. For instance, if a conditional class is decertified at the second stage of the two-tier approach, will opt-in plaintiffs that were dismissed be able to bring their claims individually if they are outside the statute of limitations? None of the courts of appeals has made a decision on this issue at this time, but it would seem there could be two possible solutions to the problem. First the court could issue an order that the statute of limitations for the opt-in plaintiffs is tolled when they filed their consents with the court until then. This would allow opt-in plaintiffs to bring their claims individually, and not be barred by the statute of limitations in some cases.
Another approach to this problem would be for the court to separate each plaintiff into individual lawsuits at the time of decertification without dismissing their claims without prejudice. The court would be able to organize each individual case at the same time because the opt-in plaintiffs are all still there. However, in cases where the opt-in plaintiffs have been dismissed, the court would have no idea when each opt-in plaintiff intends to file his or her individual claim. Either approach to this problem could be a valid solution, but the first approach would seem judicially more economical. This is because, in cases where plaintiffs may work at different employer locations across the nation, they could file in different district courts. This would ease the pressure on one district judge who would otherwise have to handle possibly hundreds and thousands of opt-in plaintiffs in individual lawsuits.
The courts of appeals have failed to adequately define “similarly situated” in Mooney, Hipp, and Thiessen. The court in Dybach does give some glimpse as to what “similarly situated” means. The court here requires looking at the job requirements and pay provision of each potential class member to decide if they are “similarly situated.” However, if the court would include all employees that were not paid overtime in FLSA cases it would be more judicially economical because every plaintiff would be one manageable lawsuit. The attorneys’ fees for both sides would also be dramatically decreased. Plaintiffs would be able pool resources together for one lawsuit, where it may not be economically feasible for one plaintiff to bring a lawsuit because the attorneys’ fees would outweigh the damages received. Defendants’ attorney fees would also be decreased because they would only have to deal with one lawsuit instead of hundreds or thousands of individual lawsuits.
Employers will most likely argue against this proposal, claiming that they will have to deal with too many overtime scenarios to adequately defend themselves in one lawsuit. This is simply not the case. In conditional class certifications when it gets to trial time it is suggested in the Hipp case that it should proceed as a representative action like a Rule 23 class action. The real problem employers have with conditional class certifications is that it gives notice to employees of a potential lawsuit of which the employee had no knowledge prior to receiving the notice. By giving this notice to potential opt-in plaintiffs, employers will have to pay more damages. Employers will always fight for more stringent tests for the “similarly situated” question so they will not have to notify potential opt-in plaintiffs that will increase the damages they have to pay.
CONCLUSION
After close to sixty-six (66) years the courts still have a long way to go to accurately manage FLSA claims that use conditional class certification under Section 216(b) of the FLSA. Courts now have a consensus that court-authorized notice should be mailed to potential opt-in class members early on in the litigation of a FLSA claim. They also agree that the two-tiered approach is the most appropriate. The problem is that there are some rogue district court judges that do not like using recommendations from the court of appeals, such as the court in Reed v. Mobile County School System.
Since §216(b) of the FLSA is so vague the courts have had a hard time defining “similarly situated.” For instance, in Anna Barron, et al. v. Henry County School System, the Middle District of Alabama gave a conditional class certification to all the non-exempt employees in their school system that led to a settlement of $18,000 for six (6) employees. In the Southern District of Alabama in the Reed case, however, the court denied plaintiffs’ motion for conditional class certification to all the non-exempt employees in the school system, even though, the case had forty-nine (49) plaintiffs that settled for $295,000. These are just two examples of differences in approaches to similar cases in the same federal circuit. Until the United States Supreme Court makes a decision on the “similarly situated” question as they did in the Sperling case regarding district courts’ ability to certify conditional classes the “similarly situated” problem will not be solved. This may not be so far off in the future, however, recently district courts around the country have been flooded with wage and hour claims that are becoming large cases involving thousands of opt-in plaintiffs. Sooner or later one of these cases will be appealed and the United States Supreme Court will have to better define “similarly situated.” Until then courts will have to continue exploring management techniques of opt-in plaintiffs on a case by case method.
Currently the two-tier approach that was created in the Lusardi case seems to be the best approach to the “similarly situated” question that courts have adopted. The problem of opt-in plaintiffs being dismissed because of not being “similarly situated” is still apparent though. If the statute of limitations could be tolled to when the opt-in plaintiffs filed their consents it would solve this problem. Also if courts would leave the lenient standard of showing “similarly situated” as in Hipp through the second stage of the two-tier approach it would seem to solve many of the problems of determining whether employees are “similarly situated.”
