Sixth Circuit Adopts Heightened Standard For Certification Of FLSA Collective Actions

By Gerald L. Maatman, Jr., Jennifer A. Riley and Kathryn R. Brown

Duane Morris Takeaways: In Clark v. A&L Homecare and Training Center, LLC, Nos. 22-3101, 3102 & 2023 WL 3559657 (6th Cir. May 19, 2023) a split three judge-panel for the U.S. Court of Appeals for the Sixth Circuit held that in actions brought under the Fair Labor Standards Act (FLSA), plaintiffs must show a “strong likelihood” of being “similarly situated” to other individuals allegedly subject to the same violations of the statute in order to secure certification of a collective action. The ruling should be a required read for companies involved in wage & hour litigation.

The new approach announced by the Sixth Circuit disrupts the plaintiff-friendly framework courts have applied for years to conditionally certify FLSA collective actions based on minimal evidence.  As the majority of the panel recognized, a court’s decision to issue notice in an FLSA collective action has the potential to expand the scope and cost of discovery to such a degree that defendants are compelled to settle, regardless of the merits of the claims at issue.  The “strong likelihood” standard gives district courts greater authority to test a plaintiff’s assertions of similarity before approving notice in an FLSA collective action.  As such, the ruling has major consequences for litigants in the Sixth Circuit, which covers Ohio, Kentucky, Tennessee and Michigan.

Case Background

The named plaintiffs brought a putative collective action under the FLSA against their former employer and its owners, challenging pay practices they alleged ran afoul of the FLSA’s overtime and minimum wage requirements.  The named plaintiffs filed a motion with the district court seeking conditional certification of three collective actions of employees alleged to have been subject to the same pay practices.  In an August 4, 2021 opinion, the district court granted plaintiffs’ motion as to two of the three proposed collective actions.  Holder v. A&L Home Care & Training Ctr., LLC, 552 F. Supp. 3d 731, 740 (S.D. Ohio 2021).  In conditionally certifying two collective actions, the district court applied the oft-used two-step framework set forth in Lusardi v. Xerox Corp., 118 F.R.D. 351 (D.N.J. 1987).

Under the Lusardi framework, named plaintiffs need only present what courts have described as a “modest factual showing” that similar potential plaintiffs exist to satisfy the first step, i.e., certification of a collective action on a conditional basis.  In the second step, assuming others have joined the lawsuit as opt-in plaintiffs and the parties have completed discovery on the merits, the district court makes a final determination whether the opt-in plaintiffs actually qualify as parties to the litigation on the basis of substantial similarity to the named plaintiffs in what is known as a second-stage final certification order.

The district court acknowledged that the Fifth Circuit in Swales v. KLLM Transport Services, L.L.C., 985 F.3d 430, 443 (5th Cir. 2021), had rejected the Lusardi approach in favor of “rigorous” enforcement of the similarity requirement in a single step, after a period of preliminary discovery. The Sixth Circuit declined to follow suit.  Recognizing district courts’ need for guidance on the standard for sanctioning notice to putative opt-in plaintiffs in FLSA cases, however, the district court certified its decision for immediate interlocutory review by the Sixth Circuit under 28 U.S.C. § 1292(b).  The Sixth Circuit accepted the appeal in order to address, for the first time, the legal issue of what a plaintiff needs to show in order to convince a court to allow notice to others of their ability to join the plaintiff’s FLSA lawsuit.

The Sixth Circuit’s Decision

The two-judge majority of the Sixth Circuit panel rejected both the Lusardi approach and the Swales approach.  Judges Kethledge and Bush endorsed a “strong likelihood” standard as the new framework to guide courts in the Sixth Circuit.  In an opinion concurring in part and dissenting in part, Judge White denounced the single-step approach in Swales and criticized the Lusardi approach as flawed, but found it unnecessary to adopt a new standard.

The majority opinion suggests that the new standard involves two steps.  Writing for the two-judge majority, Judge Kethledge analogized the showing of similarity required under the new standard to what a movant must show to secure a preliminary injunction, i.e., that, to a certain degree of probability, the movant will prevail on the underlying issue when the court makes its final decision whether to enjoin or not.  Judge Kethledge’s opinion focuses on the first step, which requires a named plaintiff to show it is strongly likely that members of the putative collective action are “in fact similarly situated” to the named plaintiff, without stating the contours of the second step.  The opinion cautions district courts to “expedite” ruling on motions for such notice in FLSA cases in light of the general two-year statute of limitations period for FLSA claims.  See 29 U.S.C. § 255(a).

Importantly, as to what district courts should consider in applying the new standard, the three judges on the Sixth Circuit panel found common ground.  The panel agreed that district courts should consider the impact of the different defenses to which potential members of the collective action may be subject in making the notice determination.  For example, whether some potential plaintiffs signed arbitration agreements and whether the statute of limitations would bar some potential plaintiffs’ claims are fair game in a district court’s decision whether to allow notice.

The two-judge majority of the panel vacated the district court’s August 2021 order and remanded for the district court to apply the new standard of “strong likelihood” of similarity to the named plaintiffs’ motion to notify members of the putative collectives.

Implications For Employers

The A&L Homecare decision is consequential because it ushers in a new, more defense-friendly threshold for sanctioning notice of a putative FLSA collective action lawsuit.  Plaintiffs litigating FLSA cases in the Sixth Circuit face a heavier burden to show they are similarly situated to the individuals they seek to notify of the lawsuit.  The ruling is also significant because it confirms that district courts should account for defenses that potentially differentiate the named plaintiffs from the putative opt-in plaintiffs in deciding whether the named plaintiffs have satisfied their burden to issue notice.

In A&L Homecare, the Sixth Circuit becomes the latest federal appellate court to abandon the long-used two-step approach set forth in Lusardi.  Just a month ago, in Matthews v. USA Today Sports Media Group, LLC, et al., No. 1:22-CV-1307 (E.D. Va.), a district court in the Fourth Circuit followed the Fifth Circuit’s approach in Swales, as we previously reported.

The absence of a unified approach among federal courts to the question of notice in collective actions derives in part from the FLSA statute itself.  The statute contemplates that “similarly situated” others may join a lawsuit asserting claims under the FLSA, but says nothing about the process by which they may do so.  See 29 U.S.C. § 216(b).

It remains to be seen whether other federal courts will abandon the plaintiff-friendly approach of Lusardi in favor of the one-step standard in Swales, the “strong likelihood” standard in A&L Homecare, or yet another standard.  Given the disparate approaches of federal district and appellate courts, the legal question of a plaintiff’s showing of similarity to members of a putative collective action may well land on the Supreme Court’s docket.



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