By Michael DeMarino and Gerald L. Maatman, Jr.
Duane Morris Takeaways – In McCarthy v. Medicus Healthcare Sols., LLC, No. 1:21-CV-668, 2023 WL 2989051, at *1 (D.N.H. Apr. 18, 2023), the U.S. District Court for the District Court of New Hampshire granted conditional certification of a collective action consisting of physician recruiters who alleged that they did not receive overtime wages for all earned overtime hours in violation of the FLSA. Although the plaintiff’s motion for conditional certification came late in the procedural posture of the case, the Court nonetheless applied the more lenient first-stage conditional certification standard often relied upon in FLSA collective actions. The decision in McCarthy is an important one as it highlights the ongoing battle between litigants over the standard for conditional certification of a FLSA collective action when the parties have engaged in significant discovery.
Background Of The Case
Plaintiff, a recruiter, worked for Medicus, a nationwide physician recruitment and medical staffing company. Plaintiff alleged that Medicus misclassified him and other alleged similarly-situated employees as a “non-exempt” employee under the FLSA, and failed to pay him overtime compensation for working over 40 hours in a workweek in violation of the FLSA.
Prior to answering the complaint, Medicus twice moved to dismiss the original complaint on statute of limitations grounds. The Court denied those motions, Medicus answered the complaint, and the parties proceeded to discovery. During discovery, the parties unsuccessfully attempted to resolve the dispute at mediation. Afterwards, Plaintiff filed his motion for conditional certification of a collective action.
The Court’s Ruling
In opposing Plaintiff’s motion for conditional certification, Medicus argued that because Plaintiff filed the motion “near the end of the case” and the parties had engaged in “extensive discovery,” the Court should apply the heightened standard applicable to the later, decertification stage. Under that standard, which typically occurs after the defendant moves to decertify the collective action, the Court makes “a factual determination as to whether there are similarly-situated employees who have opted in.” Id. at *2.
In response, Plaintiff argued that he should “not be prejudiced for pausing the litigation (and delaying the filing of this motion) to attempt to resolve the case at a pre-certification mediation, and the more lenient first-stage standard should apply.” Id. Under this standard, “Plaintiffs bear the light burden of demonstrating that there is a reasonable basis for their claim that there are other similarly-situated employees.” Id. at *1.
The Court agreed with Plaintiff. It concluded that Plaintiff provided a “reasonable explanation for the alleged delay in filing.” Id. at *4. The Court also noted that numerous case law authorities had “applied the lenient standard under similar procedural circumstances, including after the parties engaged in substantial discovery.” Id. at *3. The Court opined that because conditional certification is ultimately a “case management tool,” it has broad discretion to manage its cases and apply the lenient first-stage standard. Id. at *4.
Applying the lenient first-stage standard, the Court rejected Medicus’s arguments that inconsistencies in Plaintiff’s evidence precluded conditional certification and that certain facts admitted in Plaintiff’s deposition give rise to individualized defenses. Instead, the Court held that for “purposes of this motion,” it need not “resolve factual disputes, decide substantive issues going to the ultimate merits, or make credibility determinations.’” Id. at *8. Over Medicus’s objection, the Court granted Plaintiff’s motion for conditional certification.
Implications For Companies Facing FLSA Collective Actions
The ruling in McCarthy underscores how the first-stage and second-stage certification standards in FLSA actions can impact the case and drive the decision whether to send FLSA notice to potential collective action members. Although the defendant was ultimately unsuccessful in getting out from under the lenient first-stage standard, corporate defendants facing FLSA collective actions still should push for the heightened second-stage standard when the parties have engaged in some amount of discovery. Whether a court will apply the first or second-stage standard generally will turn on the amount of discovery conducted and the reason for plaintiff’s delay in moving for conditional certification.