{"id":449,"date":"2023-04-19T10:17:07","date_gmt":"2023-04-19T14:17:07","guid":{"rendered":"https:\/\/blogs.duanemorris.com\/classactiondefense\/?p=449"},"modified":"2023-04-19T10:17:07","modified_gmt":"2023-04-19T14:17:07","slug":"federal-district-court-in-virginia-rejects-two-step-conditional-certification-flsa-process","status":"publish","type":"post","link":"https:\/\/blogs.duanemorris.com\/classactiondefense\/2023\/04\/19\/federal-district-court-in-virginia-rejects-two-step-conditional-certification-flsa-process\/","title":{"rendered":"Federal District Court in Virginia Rejects Two-Step \u201cConditional Certification\u201d FLSA Process"},"content":{"rendered":"

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

Duane Morris Takeaways<\/em><\/strong>: On April 14, 2023, U.S. District Court Judge T. S. Ellis, III 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 Mathews v. USA Today Sports Media Group, LLC, et al., No. 1:22-CV-1307 (E.D. Va.), he held<\/a> that it is not.\u00a0 Judge Ellis ordered the parties to engage in limited discovery to establish a factual record upon which he can decide whether members of the plaintiff\u2019s proposed collective action are, in fact, \u201csimilarly situated.\u201d \u00a0If – and only if – he concludes they are, he would then issue a notice allowing such persons to opt-in to the collective action.\u00a0 This ruling is significant because it follows a similar decision by the U.S. Court of Appeals for the Fifth Circuit in 2021, and the Sixth Circuit is currently considering an appeal raising the same issue.\u00a0 Thus, momentum may be building for the U.S. Supreme Court to ultimately step in and settle the issue. The one-step or two-step process is far from academic, for it has everything to do with litigation costs and risks, and the leverage flowing from a win or a loss in the certification battle.<\/em><\/p>\n

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

Plaintiff filed a collective action lawsuit under the FLSA alleging that USA Today Sports Media Group, LLC (\u201cUSA Today\u201d) and Gannett Co., Inc. unlawfully classified her and others like her as independent contractors, and thus denied them overtime pay.\u00a0 From January 2017 to August 2021, Plaintiff was the Site Editor for the Seahawks Wire website, USA Today\u2019s website covering the NFL franchise Seattle Seahawks.\u00a0 In her role, Plaintiff alleges that she and other \u201csimilarly situated\u201d Site Editors for other teams all signed the same \u201cEditor Agreement\u201d with USA Today, and that they all engaged in similar duties such as \u201cwriting, editing and publishing sports news articles regarding their respective teams; managing others; editing other people\u2019s articles; and making social media posts regarding articles they had written.\u201d\u00a0 (Slip Op. at 2.) \u00a0She submitted three declarations signed by herself and two others working as site editors for other teams, along with a motion for \u201cconditional certification\u201d of her FLSA collective.\u00a0 (Id<\/em>.)<\/p>\n

USA Today responded by submitting declaration evidence to show that Site Editors have freedom to create their content including how long their articles are, the tone they take, how many are posted each day, et cetera.\u00a0 (Id<\/em>. at 3.)\u00a0 It also noted that it did not provide any office space, tools, feedback, performance evaluations, or supervisors to Site Editors, and also allowed them to write for other websites. (Id.<\/em>)\u00a0 In other words, USA Today submitted evidence to show that under the applicable test for deciding whether someone is an independent contractor, Site Editors meet that standard, so they are not misclassified.<\/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 all of the other Site Editors around the nation.\u00a0 She maintained that she had submitted sufficient evidence under a lenient first step standard in a two-step process that they are all \u201csimilarly situated.\u201d\u00a0 (Id<\/em>. at 1, 4.)\u00a0 Under a test established in 1987 by Lusardi v. Xerox Corp<\/em>., 118 F.R.D. 351 (D.N.J. 1987), Plaintiff contended that step one is an \u201cinitial \u2018notice stage\u2019 determination\u201d that members of the proposed collective action are similar enough to receive a notice of the action and be given the opportunity to opt in.\u00a0 (Id<\/em>. at 4 (citing Thiessen v. Gen. Elec. Capital Corp<\/em>., 267 F.3d 1095 1102 (10th Cir. 2001).) \u00a0Under this view of the FLSA, a plaintiff need only show \u201csubstantial allegations\u201d that they are \u201cvictims of a single decision, policy or plan\u201d in order for a notice to be sent \u2013 in this case, to all Site Editors nationwide.\u00a0 (Slip Op. at 4.)\u00a0 Plaintiffs then usually receive the right to conduct complete discovery, after which defendants may file a motion to \u201cdecertify\u201d the collective action, based on evidence developed during the discovery process.<\/p>\n

USA Today responded that the Court should follow the Fifth Circuit\u2019s recent decision in Swales v. KLLM Transp. Servs., LLC<\/em>, 985 F.4th 430 (5th Cir. 2021), which rejected the longstanding approach developed in Lusardi<\/em>.\u00a0 (Slip Op. at 4.)\u00a0 It argued that the two-step approach has no basis in the statutory language of the FLSA.\u00a0 Rather, it emphasized that the court must instead make a sound factual determination as to whether proposed opt-in plaintiffs are, in fact, similarly situated and that requires discovery targeted solely to that inquiry.\u00a0 (Id<\/em>.)<\/p>\n

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

Judge Ellis agreed with USA Today.\u00a0 He ruled that the parties must engage in discovery directed to establishing whether or not Site Editors around the country are similarly situated with regards to their work, the supervision provided (or not) by USA Today, along with the other relevant factors to establish that they were misclassified as independent contractors.\u00a0 He began by noting that the Fourth Circuit had not adopted the Lusardi<\/em> test, nor had it commented on the Fifth Circuit\u2019s decision in Swales<\/em>.\u00a0 Rather, the Fourth Circuit has simply stated that district courts have discretion to manage the notice process in FLSA collective actions.\u00a0 (Id<\/em>. at 5.)\u00a0 Judge Ellis decided that \u201cthe correct approach then, as noted by the Fifth Circuit, is the one authorized by FLSA\u2019s text.\u00a0 Courts must determine, at the outset, whether a proposed collective action is \u2018similarly situated\u2019 to the named plaintiffs.\u00a0 To make this determination, courts may require limited discovery, targeted only at the factual and legal considerations needed to make the \u2018similarly situated\u2019 determination.\u201d\u00a0 (Id<\/em>. at 6.)\u00a0 He then ordered discovery only of the following – from the plaintiffs the Schedule C or W-2 forms of the named plaintiff and two declarants relating to their work writing sports media blog posts; any employment contracts, offer letters or agreements relating to their work; and one three-hour deposition; and from the defendants the independent contractor agreements; policy documents relating to the independent contractor arrangement; an organizational chart; a three-hour long Rule 30(b)(6) deposition; and a three-hour long deposition of defendants\u2019 declarant filed in opposition to plaintiff\u2019s motion. \u00a0(Id<\/em>. at 6-7).\u00a0 The discovery must be completed by May 26, 2023.\u00a0 (Id<\/em>. at 6.)<\/p>\n

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

Our annual class action review analyzed FLSA conditional certification rates, and plaintiffs won 82% of first stage conditional certification motions, but only 50% of second stage motions. Our previous post on these statistics is here<\/a>. Hence, the stakes are quite meaningful in terms of the approach outlined in the Matthews<\/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 Lusardi<\/em> decision is far more onerous than what Judge Ellis 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 Fourth Circuit will be happy to know they can cite Judge Ellis\u2019 ruling in the future.\u00a0 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 Rebecca S. Bjork Duane Morris Takeaways: On April 14, 2023, U.S. District Court Judge T. S. Ellis, III 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 … <\/p>\n

Continue reading “Federal District Court in Virginia Rejects Two-Step \u201cConditional Certification\u201d FLSA Process”<\/span><\/a><\/p>\n","protected":false},"author":575,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[37],"tags":[],"ppma_author":[7,9,11],"class_list":["post-449","post","type-post","status-publish","format-standard","hentry","category-class-certification-motions"],"authors":[{"term_id":7,"user_id":575,"is_guest":0,"slug":"gmaatman","display_name":"Gerald L. Maatman, Jr.","avatar_url":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-content\/uploads\/sites\/56\/2022\/09\/maatmangerald-100x100.jpg","0":null,"1":"","2":"","3":"","4":"","5":"","6":"","7":"","8":""},{"term_id":9,"user_id":576,"is_guest":0,"slug":"jariley","display_name":"Jennifer A. Riley","avatar_url":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-content\/uploads\/sites\/56\/2023\/08\/rileyjennifer-100x100.jpg","0":null,"1":"","2":"","3":"","4":"","5":"","6":"","7":"","8":""},{"term_id":11,"user_id":579,"is_guest":0,"slug":"rsbjork","display_name":"Rebecca S. Bjork","avatar_url":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-content\/uploads\/sites\/56\/2022\/09\/bjorkrebecca-100x100.jpg","0":null,"1":"","2":"","3":"","4":"","5":"","6":"","7":"","8":""}],"_links":{"self":[{"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/posts\/449","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\/575"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/comments?post=449"}],"version-history":[{"count":0,"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/posts\/449\/revisions"}],"wp:attachment":[{"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/media?parent=449"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/categories?post=449"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/tags?post=449"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/ppma_author?post=449"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}