HISTORY OF THE ADOPTION AND AMENDMENT OF FLSA SECTION 16(B), RELATED PORTAL ACT PROVISIONS, AND FED. R. CIV. P. 23

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1 HISTORY OF THE ADOPTION AND AMENDMENT OF FLSA SECTION 16(B), RELATED PORTAL ACT PROVISIONS, AND FED. R. CIV. P. 23 Unique Aspects of Litigation and Settling Opt-In Class Actions Under The Fair Labor Standards Act, The Age Discrimination in Employment Act And The Equal Pay Act Stephen W. Skrainka Gallop, Johnson & Neuman, L.C. 101 South Hanley, Suite 1600 St. Louis, MO , (Fax)

2 FLSA SECTION 16(b) ACTIONS HISTORY OF THE ADOPTION AND AMENDMENT OF FLSA SECTION 16(b), RELATED PORTAL ACT PROVISIONS, AND FED. R. CIV. P. 23 STEPHEN W. SKRAINKA Attorney at Law GALLOP, JOHNSON & NEUMAN, L.C. 101 South Hanley Road, Suite 1600 St. Louis, MO , (Fax)

3 : Fair Labor Standards Act ( FLSA ), 29 U.S.C is adopted effective June 25, 1938, 1, 52 Stat ORIGINAL (1938) FLSA 16(b) 216. Penalties * * * (b) Damages; right of action; attorney s fees and costs; termination of right of action, * * * An action to recover the liability [for certain violations of FLSA] may be maintained against any employer (including a public agency) in any Federal or State court of competent jurisdiction by any one or more employees for and in behalf of himself or themselves and other employees similarly situated or such employee or employees may designate an agent or representative to maintain such action for an in behalf of all employees similarly situated. The court in such action shall, in addition to any judgment awarded to the plaintiff or plaintiffs, allow a reasonable attorney s fee to be paid by the defendant, and costs of the action. * * * : Federal Rules of Civil Procedure ( Fed. R. Civ. P. ) is adopted (by Congress failure to object) effective September 16, Fed. R. Civ. P. 86, history; McCrone v. U.S., 307 U.S. 61, 83 L. Ed. 1108, 59 S. Ct. 685 (1939). Original Fed.R.Civ.P. 23 (Prior to 1966 Amendment) (a) Representation. If persons constituting a class are so numerous as to make it impracticable to bring them all before the court, such of them, one or more, as will fairly insure the adequate representation of all may, on behalf of all, sue or be sued, when the character of the right sought to be enforced for or against the class is (1) jointly, or common, or secondary in the sense that the owner of a primary right refuses to enforce that right and a member of the class thereby becomes entitled to enforce it; (2) several, and the object of the action is the adjudication of claims which do or may affect specific property involved in the action; or (3) several, and there is a common question of law or fact affecting the several rights and a common relief is sought. (b) Secondary Action by Shareholders. * * *. (c) Dismissal or Compromise. A class action shall not be dismissed or compromised without the approval of the court. If the right sought to be enforced is one defined in paragraph (1) of subdivision (a) of this rule notice of the proposed dismissal or compromise shall be given to all members of the class in such manner as the court directs. If the right is one defined in paragraphs (2) or (3) of subdivision (a) notice shall be given only if the court requires it : The Portal-to Portal Act, 29 U.S.C , adopted, effective May 14, Section 16(b), amended. See also, Section 7 of Act, 29.U.S.C. 256 (regarding commencement of actions). Suits by agent or representative deleted from 16(b). Optin requirement of filing written consents in court added in both 16(b) and in 7 of the Portal Act. 3

4 216. Penalties FLSA 16(b) (as amended 1947) * * * (b) Damages; right of action; attorney s fees and costs; termination of right of action, * * * An action to recover the liability [for certain violations of FLSA, Equal Pay or ADEA] may be maintained against any employer (including a public agency) in any Federal or State court of competent jurisdiction by any one or more employees for and in behalf of himself or themselves and other employees similarly situated or such employee or employees may designate an agent or representative to maintain such action for an in behlf of all employees similarly situated. No employee shall be a party plaintiff to any such action unless he gives his consent in writing to become such a party and such consent is filed in the court in which such action is brought. The court in such action shall, in addition to any judgment awarded to the plaintiff or plaintiffs, allow a reasonable attorney s fee to be paid by the defendant, and costs of the action. * * * Note: Sentence in italics added and struck out sentence deleted by 1947 Portal-to-Portal Act. Portal-to-Portal Pay, 29 U.S.C Determination of commencement of future actions In determining when an action is commenced for the purposes of section 6 [29 USCS 255], an action commenced on or after the date of enactment of this Act [May 14, 1947) under the Fair Labor Standards Act of 1938, as amended shall be considered to be commenced on the date when the complaint is filed; except that in the case of a collective or class action instituted under the Fair Labor Standards Act of 1938, as amended, it shall be considered to be commenced in the case of any individual claimant (a) on the date when the complaint is filed, if he is specifically named as a party plaintiff in the complaint and his written consent to become a party plaintiff is filed on such date in the court in which the action is brought ; or (b) if such written consent was not filed or if his name did not so appear on the subsequent date on which such written consent is filed in the court in which the action was commenced. (May 14, 1947, ch 52, Part IV, 7, 61 Stat. 88.) : The Equal Pay Act of 1963, 29 U.S.C. 206(d), effective June 10, 1964 (or later in the case of employees covered by certain collective bargaining agreements) amends 6 of the FLSA and thus incorporates 16(b) as the private enforcement mechanism and 17 as the public enforcement mechanism: 6(d)(3) For purposes of administration and enforcement, any amounts owing to any employee which have been withheld in violation of this subsection [the Equal Pay Act] shall be deemed to be unpaid minimum wages or unpaid overtime compensation under this [Fair Labor Standards ] Act.... 4

5 : Fed. R. Civ. P. 23 is substantially revised, deleting spurious class actions as a type, providing for res judicata of all class members, requiring common issues of law or fact to predominate, and adding flexible case management procedures, class certifications, mandatory settlement notices and other changes. Fed.R.Civ.P. 23 (As amended 1966 through 1998) IV. PARTIES Rule 23. Class Actions (a) Prerequisites to a Class Action. One or more members of a class may sue or be sued as representative parties on behalf of all only if (1) the class is so numerous that joinder of all members is impracticable, (2) there are questions of law or fact common to the class, (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class, and (4) the representative parties will fairly and adequately protect the interests of the class. (b) Class Actions Maintainable. An action may be maintained as a class action if the prerequisites of subdivision (a) are satisfied, and in addition: (1) the prosecution of separate actions by or against individual members of the class would create a risk of (A) inconsistent or varying adjudications with respect to individual members of the class which would establish incompatible standards of conduct for the party opposing the class, or (B) adjudications with respect to individual members of the class which would as a practical matter be dispositive of the interests of the other members not parties to the adjudications or substantially impair or impede their ability to protect their interests; or (2) the party opposing the class has acted or refused to act on grounds generally applicable to the class, thereby making appropriate final injunctive relief or corresponding declaratory relief with respect to the class as a whole; or (3) the court finds that the questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy. The matters pertinent to the findings include: (A) the interest of members of the class in individually controlling the prosecution or defense of separate actions; (B) the extent and nature of any litigation concerning the controversy already commenced by or against members of the class; (C) the desirability or undesirability of concentrating the litigation of the claims in the particular forum; (D) the difficulties likely to be encountered in the management of a class action. (c) Determination by Order Whether Class Action to be Maintained; Notice; Judgment; Actions Conducted Partially as Class Actions. (1) As soon as practicable after the commencement of an action brought as a class action, the court shall determine by order whether it is to be so maintained. An order under this subdivision may be conditional, and may be altered or amended before the decision on the merits. (2) In any class action maintained under subdivision (b)(3), the court shall direct to the 5

6 members of the class the best notice practicable under the circumstances, including individual notice to all members who can be identified through reasonable effort. The notice shall advise each member that (A) the court will exclude the member from the class if the member so requests by a specified date; (B) the judgment, whether favorable or not, will include all members who do not request exclusion; and (C) any member who does not request exclusion may, if the member desires, enter an appearance through counsel. (3) The judgment in an action maintained as a class action under subdivision (b)(1) or (b)(2), whether or not favorable to the class, shall include and describe those whom the court finds to be members of the class. The judgment in an action maintained as a class action under subdivision (b)(3), whether or not favorable to the class, shall include and specify or describe those to whom the notice provided in subdivision (c)(2) was directed, and who have not requested exclusion, and whom the court finds to be members of the class. (4) When appropriate (A) an action may be brought or maintained as a class action with respect to particular issues, or (B) a class may be divided into subclasses and each subclass treated as a class, and the provisions of this rule shall then be construed and applied accordingly. (d) Orders in Conduct of Actions. In the conduct of actions to which this rule applies, the court may make appropriate orders: (1) determining the course of proceedings or prescribing measures to prevent undue repetition or complication in the presentation of evidence or argument; (2) requiring, for the protection of the members of the class or otherwise for the fair conduct of the action, that notice be given in such manner as the court may direct to some or all of the members of any step in the action or of the proposed extent of the judgment, or of the opportunity of members to signify whether they consider the representation fair and adequate, to intervene and present claims or defenses, or otherwise to come into the action; (3) imposing conditions on the representative parties or on intervenors; (4) requiring that the pleadings be amended to eliminate therefrom allegations as to representation of absent persons, and that the action proceed accordingly; (5) dealing with similar procedural matters. The orders may be combined with an order under Rule 16, and may be altered or amended as may be desirable from time to time. (e) Dismissal or Compromise. A class action shall not be dismissed or compromised without the approval of the court, and notice of the proposed dismissal or compromise shall be given to all members of the class in such manner as the court directs. (Amended July 1, 1966; Aug. 1, 1987.) (f) Appeals. A court of appeals may in its discretion permit an appeal from an order of a district court granting or denying class action certification under this rule if application is made to it within ten days after entry of the order. An Appeal does not stay proceedings in the district court unless the district judge or the court of appeals so orders. (Amended Dec. 1, 1998) The 1966 Advisory Committee Notes amended Rule 23 stated: Factors (A)-(D) [of subsection (b)(3) of Rule 23] are listed, nonexhaustively, as pertinent to the findings. The court is to consider the interests of individual members of the class in controlling their own litigations and carrying them on as they see fit. See Weeks v Bareco 6

7 Oil Co., 125 F.2d 84, 88-90, (7 th Cir. 1941) (antitrust action); see also Pentland v Dravo Corp., 152 F.2d 851 (3d Cir. 1945), and Chaffee, supra [Some Problems of Equity, , (1950)], regarding policy of Fair Labor Standards Act of 1938, 16(b), 29 USC 216(b). prior to amendment by Portal-to-Portal Act of 1947, 5(a). [The present provisions of 29 USC 216(b) are not intended to be affected by Rule 23, as amended] In this connection the court should inform itself of any litigation actually pending by or against the individuals. The interests of individuals in conducting separate lawsuits may be so strong as to call for denial of a class action. On the other hand, these interests may be theoretical rather than practical: the class may have a high degree of cohesion and prosecution of the action through representatives would be quite unobjectionable, or the amounts at stake for individuals may be so small that separate suits would be impracticable. The burden that separate suits would impose on the party opposing the class, or upon the court calendars, may also fairly be considered. (See the discussion, under subdivision (c)(2) below, of the right of members to be excluded from the class upon their request.) (emphasis added, brackets in original) : Age Discrimination in Employment Act ( ADEA ), adopted, 29 U.S.C (b) adopts FLSA 16(b) as the private enforcement mechanism and 17 as the public enforcement mechanism, except that liquidated damages are available only in case of willful violations and private plaintiffs may obtain appropriate equitable relief. The private action is supplemented by provisions not here relevant in 626(c) 7

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