The Quest for Class Certification

Historically, distinctions between Section 216(b) actions and FRCP Rule 23 matters were far more fundamental than whether parties were required to opt out or opt in to the action, what events tolled the limitations period and what variances existed between these rules with regard to the “similarly situated” standard. Even following sweeping amendments to Section 216(b) through enactment of the Portal-to-Portal Act, which amended Section 216(b) by requiring named plaintiffs to have a stake in the outcome of the litigation and providing for an “opt-in” scheme, there was no Congressional statement as to the propriety of applying Rule 23 standards to FLSA actions. Moreover, prior to Hoffmann-La Roche, Inc. v. Sperling, 493 U.S. 165 (1989), the circuit courts were divided as to what authority federal trial judges had to facilitate class notice.

Hoffman-La Roche

Before Hoffmann La-Roche, many lower courts refused to sanction court-facilitated notice in FLSA opt-in actions on the basis that, since Congress had not expressly authorized distribution of such notice, the courts' contact of non-parties was tantamount to a solicitation of claims. (McKenna v. Champion International Corp., 747 F.2d 1211 [8th Cir. 1984]) Other courts reasoned that Congress' silence on this issue permitted notice in appropriate cases. (Braunstein v. Eastern Photographic Laboratories, Inc., 600 F.2d 335 [2nd Cir. 1978]; Woods v. New York Life Ins. Co., 686 F.2d 578 [7th Cir. 1982]). In Hoffmann, however, the court found that lower courts held the procedural authority to manage the joinder of multiple parties in Section 216(b) actions, and did so by looking to Section 216(b)'s own language authorizing representative suits as well as to the notice procedure of FRCP Rule 83, which vests in trial judges the inherent power to regulate proceedings before them. More importantly, however, was the Hoffmann court's comparison of Section 216(b) with Rule 23. Relying on its 1981 decision in Gulf Oil Co. v. Bernard (1981) 452 U.S. 89, a Rule 23 case, the court explained that, not only did the trial court have the authority to regulate complex proceedings, it had a duty to exercise control in class actions. (Hoffmann-La Roche, 493 U.S. at 171) With such language, Hoffmann put to rest any question regarding the district courts' powers to facilitate class notice.

No Uniform Expression

Following Hoffmann, FLSA practitioners were clear as to the powers of the district courts to facilitate class notice and the mechanics of prosecuting federal wage claims, yet still lacked a uniform expression of whether and/or to what extent the Rule 23 requirements for numerosity, commonality, typicality and adequacy of representation applied in Section 216(b) certification motions. Moreover, assuming that these factors were considered, what evidentiary support was required to meet these standards, particularly given other discrepancies between the FLSA and other forms of federal class actions?

Rule 23 Standards

The question of whether analysis of Section 216(b) certification motions should be tied to Rule 23 standards has led to at least two seemingly irreconcilable approaches. Many of the lower courts within the Tenth and Eleventh Circuit, for example, have followed a pre-Hoffmann line of authority, commencing with Lusardi v. Xerox Corp., 118 F.R.D. 351 (D. N.J. 1987), that considers Rule 23 and Section 216(b) to be “mutually exclusive” and calls for a case-by-case analysis of the “similarly situated” standard at two separate stages of the litigation. This approach has been referred to as the “ad-hoc” approach due to its lack of defined standards and has been followed even outside the Tenth and Eleventh Circuits with some regularity. (Schwed v. General Elec. Co., 1997 U.S. Dist. LEXIS 5103 [N.D.N.Y. 1997]; Jackson v. New York Tel. Co., 163 F.R.D. 429 [S.D.N.Y. 1995]; Severtson v. Phillips Beverage Co., 137 F.R.D. 264 [D. Minn. 1991]) Because of its lack of direction with regard to the sufficiency of evidence required for certification and silence on the issue of how to apply the “similarly situated” standard, it is debatable whether this line of cases can even be deemed to have produced much of a recognizable standard at all.

Other lower courts, even within the Tenth Circuit, have taken a different approach to the one first endorsed by Lusardi. In Shushan v. University of Colorado (Shushan v. University of Colorado, 132 F.R.D. 263 [D. Colo. 1990]), the plaintiffs were required to satisfy those requirements of Rule 23 that did not conflict with Section 216(b) on the ground that the procedure for the joinder of parties in a FLSA action shares qualities with the permissive joinder procedures of Rule 20 as well as the class action procedures of Rule 23. Shushan, a post-Hoffmann decision, stands for the proposition that Rule 23 provides a reasonable framework for evaluating the propriety of class treatment in FLSA actions and, as a practical consideration, adoption of this approach permits the parties to more easily forecast the likelihood of success of a motion for certification. Just as the reasoning in the Lusardi line of decisions has been followed by numerous courts, so has the rationale articulated in Shushan. Finally, Ninth Circuit practitioners should take note that, in Church v. Consolidated Freightways, 137 F.R.D. 294 [N.D. Cal. 1991]), the Northern District of California agreed to apply some, but not all of the Rule 23 prongs, although it otherwise looked to Shushan as persuasive.

Practical Result of Evidentiary Leniency and the Two-step Approach

In non-FLSA matters, once a class action lawsuit has been filed, the parties typically engage in extensive pre-certification discovery to determine whether the prerequisites for class treatment are satisfied, although defendants may, and often do, elect to attack the pleadings by filing a demurrer or motion to dismiss for failure to state a claim at the outset of litigation. In the Ninth Circuit's trial courts, however, it is becoming quite clear that, for federal wage and hour actions, the lenient standard first suggested by Bonilla, and later pronounced distinctly in Thiebes and Ballaris, permits certification of FLSA classes with as little support as the representative plaintiffs' affidavits alleging an unlawful employment pattern or practice and that any further documentation of the conduct may be overkill and disregarded. These holdings, along with the Ballaris court's outright refusal to look beyond plaintiff testimony, suggests the early stages of a trend in this jurisdiction in contravention of the methodology otherwise commonplace in Rule 23 and state court actions for achieving certification.

Under the Section 216(b) approach, then, the real test of propriety of class treatment comes, not at the time of the initial motion for class status, but after substantial and often protracted discovery has occurred, at which point in time the defendant would most certainly be expected to seek decertification of the action and the court can determine class membership with precision. Insofar as federal courts have long-since recognized that the decision to certify a class may be altered or amended at any time before the case is decided on the merits (Fed. R. Civ. P. 23(c)(1); Forehand v. Florida State Hosp., 89 F.3d 1562 [11th Cir. 1996]; Lowrey v. Circuit City Stores, 158 F.3d 742 [4th Cir. 1998]; See also, 2 Newberg ''7.17-7.22), a defendant should be expected to argue, on a motion for decertification, that the district court's earlier grant of class status was pro forma and hardly the product of an adversarial proceeding. This two-step approach of applying a lenient standard for the initial “similarly situated” determination or “notice” stage, and employment of a more onerous standard at the decertification stage, generally results in the conditional certification of the class and opportunity for putative class members to join the action with the delayed threat of a far more exhaustive and higher-stakes inquest, often on the eve of trial.

Conclusion

Clearly, many recent district court rulings have made bold statements in support of a lenient burden for the use of plaintiff affidavits as the primary, if not exclusive, item of admissible evidence in the Section 216(b) certification context. Until a consensus is reached between the Circuits and/or the United States Supreme Court says otherwise, practitioners in the wage and hour field are forced to look carefully if not exclusively to the particular line of opinions within their jurisdiction as their measuring stick for the likelihood of securing class certification of their FLSA claims. As a result, attorneys seeking class certification of FLSA actions should look closely to the sufficiency of affidavits for the lead plaintiffs and carefully consider the advisability of offering additional evidence, particularly in cases where further evidence may potentially undermine the strength of the named plaintiffs' testimony. As state court practitioners begin to see the bottom of the wage and hour well, the clarity provided by the opinions cited in this article, at least with regard to FLSA certification standards, will only serve as a catalyst for the migration of the plaintiffs' employment bar toward the district courts.

Part Two of a Two-Part Article

Last month, we introduced our primer on the “leniency” standard for FLSA actions, and its interplay with Rule 23 guidelines. We called the quest for class certification “the most feared battle waged in litigation,” and went on to explain that if well-regarded class action practitioners were surveyed, there would almost assuredly be a consensus that the quest for class certification is exactly that to a targeted defendant. We discussed the FLSA's opt-in burden, and the liberal standard in our previous article. This month, we address the seemingly irreconcilable approaches taken by some courts.

The Portal-to-Portal Act

Historically, distinctions between Section 216(b) actions and FRCP Rule 23 matters were far more fundamental than whether parties were required to opt out or opt in to the action, what events tolled the limitations period and what variances existed between these rules with regard to the “similarly situated” standard. Even following sweeping amendments to Section 216(b) through enactment of the Portal-to-Portal Act, which amended Section 216(b) by requiring named plaintiffs to have a stake in the outcome of the litigation and providing for an “opt-in” scheme, there was no Congressional statement as to the propriety of applying Rule 23 standards to FLSA actions. Moreover, prior to Hoffmann-La Roche, Inc. v. Sperling , 493 U.S. 165 (1989), the circuit courts were divided as to what authority federal trial judges had to facilitate class notice.

Hoffman-La Roche

Before Hoffmann La-Roche , many lower courts refused to sanction court-facilitated notice in FLSA opt-in actions on the basis that, since Congress had not expressly authorized distribution of such notice, the courts' contact of non-parties was tantamount to a solicitation of claims. ( McKenna v. Champion International Corp. , 747 F.2d 1211 [8th Cir. 1984]) Other courts reasoned that Congress' silence on this issue permitted notice in appropriate cases. ( Braunstein v. Eastern Photographic Laboratories, Inc. , 600 F.2d 335 [2nd Cir. 1978]; Woods v. New York Life Ins. Co. , 686 F.2d 578 [7th Cir. 1982]). In Hoffmann, however, the court found that lower courts held the procedural authority to manage the joinder of multiple parties in Section 216(b) actions, and did so by looking to Section 216(b)'s own language authorizing representative suits as well as to the notice procedure of FRCP Rule 83, which vests in trial judges the inherent power to regulate proceedings before them. More importantly, however, was the Hoffmann court's comparison of Section 216(b) with Rule 23. Relying on its 1981 decision in Gulf Oil Co. v. Bernard (1981) 452 U.S. 89, a Rule 23 case, the court explained that, not only did the trial court have the authority to regulate complex proceedings, it had a duty to exercise control in class actions. (Hoffmann-La Roche, 493 U.S. at 171) With such language, Hoffmann put to rest any question regarding the district courts' powers to facilitate class notice.

No Uniform Expression

Following Hoffmann, FLSA practitioners were clear as to the powers of the district courts to facilitate class notice and the mechanics of prosecuting federal wage claims, yet still lacked a uniform expression of whether and/or to what extent the Rule 23 requirements for numerosity, commonality, typicality and adequacy of representation applied in Section 216(b) certification motions. Moreover, assuming that these factors were considered, what evidentiary support was required to meet these standards, particularly given other discrepancies between the FLSA and other forms of federal class actions?

Rule 23 Standards

The question of whether analysis of Section 216(b) certification motions should be tied to Rule 23 standards has led to at least two seemingly irreconcilable approaches. Many of the lower courts within the Tenth and Eleventh Circuit, for example, have followed a pre- Hoffmann line of authority, commencing with Lusardi v. Xerox Corp. , 118 F.R.D. 351 (D. N.J. 1987), that considers Rule 23 and Section 216(b) to be “mutually exclusive” and calls for a case-by-case analysis of the “similarly situated” standard at two separate stages of the litigation. This approach has been referred to as the “ad-hoc” approach due to its lack of defined standards and has been followed even outside the Tenth and Eleventh Circuits with some regularity. (Schwed v. General Elec. Co., 1997 U.S. Dist. LEXIS 5103 [N.D.N.Y. 1997]; Jackson v. New York Tel. Co. , 163 F.R.D. 429 [S.D.N.Y. 1995]; Severtson v. Phillips Beverage Co. , 137 F.R.D. 264 [D. Minn. 1991]) Because of its lack of direction with regard to the sufficiency of evidence required for certification and silence on the issue of how to apply the “similarly situated” standard, it is debatable whether this line of cases can even be deemed to have produced much of a recognizable standard at all.

Other lower courts, even within the Tenth Circuit, have taken a different approach to the one first endorsed by Lusardi. In Shushan v. University of Colorado (Shushan v. University of Colorado , 132 F.R.D. 263 [D. Colo. 1990]), the plaintiffs were required to satisfy those requirements of Rule 23 that did not conflict with Section 216(b) on the ground that the procedure for the joinder of parties in a FLSA action shares qualities with the permissive joinder procedures of Rule 20 as well as the class action procedures of Rule 23. Shushan, a post-Hoffmann decision, stands for the proposition that Rule 23 provides a reasonable framework for evaluating the propriety of class treatment in FLSA actions and, as a practical consideration, adoption of this approach permits the parties to more easily forecast the likelihood of success of a motion for certification. Just as the reasoning in the Lusardi line of decisions has been followed by numerous courts, so has the rationale articulated in Shushan. Finally, Ninth Circuit practitioners should take note that, in Church v. Consolidated Freightways , 137 F.R.D. 294 [N.D. Cal. 1991]), the Northern District of California agreed to apply some, but not all of the Rule 23 prongs, although it otherwise looked to Shushan as persuasive.

Practical Result of Evidentiary Leniency and the Two-step Approach

In non-FLSA matters, once a class action lawsuit has been filed, the parties typically engage in extensive pre-certification discovery to determine whether the prerequisites for class treatment are satisfied, although defendants may, and often do, elect to attack the pleadings by filing a demurrer or motion to dismiss for failure to state a claim at the outset of litigation. In the Ninth Circuit's trial courts, however, it is becoming quite clear that, for federal wage and hour actions, the lenient standard first suggested by Bonilla, and later pronounced distinctly in Thiebes and Ballaris, permits certification of FLSA classes with as little support as the representative plaintiffs' affidavits alleging an unlawful employment pattern or practice and that any further documentation of the conduct may be overkill and disregarded. These holdings, along with the Ballaris court's outright refusal to look beyond plaintiff testimony, suggests the early stages of a trend in this jurisdiction in contravention of the methodology otherwise commonplace in Rule 23 and state court actions for achieving certification.

Under the Section 216(b) approach, then, the real test of propriety of class treatment comes, not at the time of the initial motion for class status, but after substantial and often protracted discovery has occurred, at which point in time the defendant would most certainly be expected to seek decertification of the action and the court can determine class membership with precision. Insofar as federal courts have long-since recognized that the decision to certify a class may be altered or amended at any time before the case is decided on the merits (Fed. R. Civ. P. 23(c)(1); Forehand v. Florida State Hosp. , 89 F.3d 1562 [11th Cir. 1996]; Lowrey v. Circuit City Stores , 158 F.3d 742 [4th Cir. 1998]; See also, 2 Newberg ''7.17-7.22), a defendant should be expected to argue, on a motion for decertification, that the district court's earlier grant of class status was pro forma and hardly the product of an adversarial proceeding. This two-step approach of applying a lenient standard for the initial “similarly situated” determination or “notice” stage, and employment of a more onerous standard at the decertification stage, generally results in the conditional certification of the class and opportunity for putative class members to join the action with the delayed threat of a far more exhaustive and higher-stakes inquest, often on the eve of trial.

Conclusion

Clearly, many recent district court rulings have made bold statements in support of a lenient burden for the use of plaintiff affidavits as the primary, if not exclusive, item of admissible evidence in the Section 216(b) certification context. Until a consensus is reached between the Circuits and/or the United States Supreme Court says otherwise, practitioners in the wage and hour field are forced to look carefully if not exclusively to the particular line of opinions within their jurisdiction as their measuring stick for the likelihood of securing class certification of their FLSA claims. As a result, attorneys seeking class certification of FLSA actions should look closely to the sufficiency of affidavits for the lead plaintiffs and carefully consider the advisability of offering additional evidence, particularly in cases where further evidence may potentially undermine the strength of the named plaintiffs' testimony. As state court practitioners begin to see the bottom of the wage and hour well, the clarity provided by the opinions cited in this article, at least with regard to FLSA certification standards, will only serve as a catalyst for the migration of the plaintiffs' employment bar toward the district courts.