{"id":1711,"date":"2024-08-28T18:39:24","date_gmt":"2024-08-28T22:39:24","guid":{"rendered":"https:\/\/blogs.duanemorris.com\/classactiondefense\/?p=1711"},"modified":"2024-08-28T18:39:24","modified_gmt":"2024-08-28T22:39:24","slug":"wisconsin-federal-court-rejects-two-step-conditional-certification-flsa-process","status":"publish","type":"post","link":"https:\/\/blogs.duanemorris.com\/classactiondefense\/2024\/08\/28\/wisconsin-federal-court-rejects-two-step-conditional-certification-flsa-process\/","title":{"rendered":"Wisconsin Federal Court Rejects Two-Step \u201cConditional Certification\u201d FLSA Process"},"content":{"rendered":"

\"\"<\/a>By Gerald L. Maatman, Jr., Jennifer A. Riley, and Derek S. Franklin<\/strong><\/p>\n

Duane Morris Takeaways<\/em><\/strong>: <\/strong>On August 21, 2024, Judge William C. Griesbach of the U.S. District Court for the Eastern District of Wisconsin joined in the fray over whether the long-used two-step process for issuing notice of a Fair Labor Standards Act (\u201cFLSA\u201d) collective action is consistent with the text of the statute.\u00a0 In Laverenz v. Pioneer Metal Finishing, LLC, No. 1:22-CV-00692 (E.D. Wis. Aug. 21, 2024), Judge Griesbach <\/em>held<\/em><\/a> that it is not.\u00a0 He ruled that in actions brought under the FLSA, plaintiffs must show by a preponderance of evidence that they are \u201csimilarly situated\u201d to other individuals allegedly subject to the same violations of the statute in order to secure certification of a collective action.\u00a0 The decision in Laverenz reflects potential growing momentum among district courts toward rejecting a two-step \u201cconditional certification\u201d approach in favor of \u201cone-step\u201d standard placing the \u201csimilarly situated\u201d burden in Plaintiff\u2019s court at all relevant times.\u00a0 The ruling should be required reading for all businesses defending wage & hour litigation in the states comprising the Seventh Circuit.<\/em><\/p>\n

Case Background<\/strong><\/p>\n

Plaintiff Amanda Laverenz filed a class and collective action lawsuit under the FLSA and Wisconsin state law alleging that Defendant Pioneer Metal Finishing, LLC (\u201cPioneer\u201d) deprived her and other similarly situated hourly employees of wages through its practice of rounding employees\u2019 time clock entries to the nearest quarter hour and paying employees based on that rounded time.\u00a0 Id.<\/em> at 2.\u00a0 In connection with her proposed FLSA collective action, Plaintiff filed a motion with the Court seeking conditional certification of a collective of employees whom she claimed Pioneer subjected to the same rounding practice.\u00a0 Id.<\/em> at 3.<\/p>\n

As is typical, Plaintiff argued that her lawsuit should proceed immediately as a collective action by issuance of an order sending notice to include hourly-paid employees at seven of Pioneer\u2019s divisions around the country who she claimed were similarly situated.\u00a0 Id.<\/em>\u00a0 She maintained that the Court should employ a lenient two-step certification process established in 1987 by a Third Circuit district court in Lusardi v. Xerox Corp<\/em>.\u00a0\u00a0 Id.<\/em><\/p>\n

Under the Lusardi<\/em> framework, named plaintiffs need only present what courts have described as a \u201cmodest factual showing\u201d that similar potential plaintiffs exist to satisfy the first step,\u00a0i.e<\/em>., certification of a collective action on a conditional basis.\u00a0 In the second step, assuming others have joined the lawsuit as opt-in plaintiffs and the parties have completed discovery on the merits, the court would then make 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.\u00a0 Plaintiff claimed that she offered sufficient evidence of similarity and a violation of law to satisfy that standard at the conditional certification stage.\u00a0 Id.<\/em><\/p>\n

Pioneer responded that the Court should follow the Fifth Circuit\u2019s 2021 decision in\u00a0Swales v. KLLM Transp. Servs., LLC<\/em>, which rejected the longstanding approach developed in\u00a0Lusardi<\/em>.\u00a0 985 F.4th 430 (5th Cir. 2021). Pioneer argued that the two-step approach \u201cis inconsistent with the FLSA\u2019s purpose and Seventh Circuit case law stressing the similarities of FLSA certification to Rule 23 class certification, which requires \u2018rigorous\u2019 scrutiny.\u201d\u00a0 Id.<\/em> at 3.<\/p>\n

The Court\u2019s Decision<\/strong><\/p>\n

Judge Griesbach sided with Pioneer.\u00a0 He adopted the Fifth Circuit\u2019s FLSA collective certification approach in Swales<\/em> and denied Plaintiff\u2019s motion for conditional certification on August 21, 2024.<\/p>\n

Citing a 2022 Annual Class Action Report that Gerald L. Maatman, Jr., for which this post\u2019s co-author served as General Editor, Judge Griesbach noted that federal courts in 2021 granted FLSA conditional certification motions in 81% of rulings on such motions during the first stage of the two-step process despite \u2013 in that same year \u2013 granting 53% of FLSA decertification motions at the next stage.\u00a0 The Court gleaned from that data that \u201cover half of those conditionally certified putative classes failed to survive upon a more rigorous review\u201d and concluded, as a result, that the two-step certification process \u201cdefeats the very goal it set out to accomplish \u2014 efficiency.\u201d\u00a0 Id.<\/em><\/p>\n

The Court\u2019s adoption of the Swales <\/em>framework in Laverenz<\/em> required it to assess following factors to determine whether Plaintiff sufficiently proved similarly between she and proposed opt-in plaintiffs: \u201c(1) the disparate factual and employment settings of the individual plaintiffs; (2) the various defenses available to the defendant which appear to be individual to each plaintiff; and (3) fairness and procedural considerations.\u201d\u00a0 Id.<\/em> at 15-16.<\/p>\n

As to the first factor, the Court noted that \u201csignificant factual differences exist regarding how the [time rounding] policy affected each employee\u201d given that \u201c[t]he rounding benefitted some and negatively affected others.\u201d\u00a0\u00a0Id<\/em>. at 1.\u00a0 As to the second factor, the Court found that too many individualized claims remained in the matter that would necessarily involve fact-specific inquiries.\u00a0 Id.<\/em> at 20.\u00a0 As to the final factor, the Court explained that \u201cit would seem particularly inefficient and unfair to notify a broad class of employees,\u201d given its conclusion that Plaintiff\u2019s proposed collective action claims \u201cinvolve highly individualized inquiries and defenses.\u201d \u00a0Id.<\/em>\u00a0 Toward that end, the Court determined that \u201c[a]uthorizing notice in a case such as this would turn a tool into a sword,\u201d and that \u201c[m]any a plaintiff would likely join the line, requiring Pioneer to defend dozens \u2014 possibly hundreds \u2014 more claims despite the fact that Laverenz has not even showed a violation of law.\u201d\u00a0 Id.<\/em>\u00a0 at 20.<\/p>\n

Ultimately, the Court concluded that Plaintiff \u201cfailed to provide a sufficient basis for the court to facilitate notice to potential plaintiffs,\u201d and denied Plaintiff\u2019s motion for conditional certification.\u00a0 Id.<\/em> at 20.<\/p>\n

Implications For Employers<\/strong><\/p>\n

Our annual class action review analyzed FLSA conditional certification rates, and, in 2023, plaintiffs won 75% of first stage conditional certification motions.\u00a0 However, only 56% of those conditionally certified collective actions survived motions for decertification involving a more rigorous scrutiny.\u00a0 Our previous post on these statistics is\u00a0here<\/a>.\u00a0 Hence, the stakes are quite meaningful in terms of the approach outlined in the\u00a0Laverenz <\/em>ruling.<\/p>\n

As any employer who has been sued by a named plaintiff seeking to represent an FLSA collective action knows, the discovery burden imposed by application of the two-step\u00a0Lusardi<\/em>\u00a0standard is far more onerous than what Judge Griesbach established in this case.\u00a0 Full merits discovery lasting more than a year is common, as opposed to a narrowly-targeted investigation of the work performed by the plaintiffs along with facts relating to the relevant independent contractor factors.\u00a0 For that reason alone, employers with operations within the Seventh Circuit will be happy to know they can cite Judge Griesbach\u2019s ruling in the future.<\/p>\n

While no one can predict the future with any degree of certainty, it seems likely that this new legal trend regarding the collective action notice process may eventually need to be resolved by the U.S. Supreme Court.<\/p>\n","protected":false},"excerpt":{"rendered":"

By Gerald L. Maatman, Jr., Jennifer A. Riley, and Derek S. Franklin Duane Morris Takeaways: On August 21, 2024, Judge William C. Griesbach of the U.S. District Court for the Eastern District of Wisconsin joined in the fray over whether the long-used two-step process for issuing notice of a Fair Labor Standards Act (\u201cFLSA\u201d) collective … <\/p>\n

Continue reading “Wisconsin Federal Court Rejects Two-Step \u201cConditional Certification\u201d FLSA Process”<\/span><\/a><\/p>\n","protected":false},"author":583,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[42],"tags":[],"ppma_author":[30],"class_list":["post-1711","post","type-post","status-publish","format-standard","hentry","category-wage-hour-litigation"],"authors":[{"term_id":30,"user_id":583,"is_guest":0,"slug":"classactiondefense","display_name":"Class Action Defense","avatar_url":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-content\/uploads\/sites\/56\/2020\/10\/dmlogo.jpg","0":null,"1":"","2":"","3":"","4":"","5":"","6":"","7":"","8":""}],"_links":{"self":[{"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/posts\/1711","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/users\/583"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/comments?post=1711"}],"version-history":[{"count":0,"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/posts\/1711\/revisions"}],"wp:attachment":[{"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/media?parent=1711"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/categories?post=1711"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/tags?post=1711"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/ppma_author?post=1711"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}