THE IMPACT OF DUKES ON WAGE AND HOUR COLLECTIVE ACTIONS

Transcription

1 THE IMPACT OF DUKES ON WAGE AND HOUR COLLECTIVE ACTIONS ABA SECTION OF LABOR AND EMPLOYMENT LAW EMPLOYMENT RIGHTS AND RESPONSIBILITIES COMMITTEE MID-WINTER MEETING Las Vegas - March 27-31, 2012 Richard L. Alfred Jessica M. Schauer SEYFARTH SHAW LLP World Trade Center East Two Seaport Lane, Suite 300 Boston, MA Seyfarth Shaw LLP. All rights reserved.

2 TABLE OF CONTENTS Page INTRODUCTION... 1 I. THE HISTORY OF 216(B)... 3 II. COLLECTIVE V. CLASS ACTIONS... 6 III. DUKES' S IMPACT ON 216(B) COLLECTIVE ACTIONS... 8 A. APPLYING DUKES S COMMONALITY STANDARD TO 216(B)... 8 B. APPLYING DUKES S DUE PROCESS CONSIDERATIONS TO 216(B) IV. DUKES S EFFECT ON LITIGATION OF A WAGE AND HOUR COLLECTIVE ACTION A. CONDITIONAL CERTIFICATION...12 B. DECERTIFICATION C. TRIAL...20 D. DUKES IN RULE 23 CLASS ACTIONS IN WAGE HOUR CASES CONCLUSION... 24

3 The Impact of Dukes On Wage and Hour Collective Actions Richard L. Alfred Jessica M. Schauer SEYFARTH SHAW LLP 1 The Supreme Court s holdings in Wal-Mart Stores, Inc. v. Dukes, while expressly in the context of a Rule 23 class action, substantially impact FLSA collective actions by heightening the standard that courts should apply for conditional certification and decertification, and by elevating the level of proof required at trial. The rigorous analysis mandated by Dukes under Rule 23(a) s commonality prerequisite is equally applicable to the conceptually tied similarly situated requirement of Section 216(b) of the Fair Labor Standards Act. The Court s ruling that a greater quantum of evidence than an insignificant sampling from class members to prove a companywide unlawful policy or practice that is required to establish commonality is just as compelling for purposes of the similarly situated standard. Further, the due process concerns expressed unanimously in Dukes that require individualized proof of money damages and prohibit a trial by formula apply with even greater force to collective actions. To be sure, claims under Rule 23 differ from those under Section 216(b) in many respects. However, the fundamental principles of commonality and due process established in Dukes serve to increase plaintiffs burdens in maintaining a wage and hour collective action. Introduction In Wal-Mart Stores, Inc. v. Dukes, 2 the Supreme Court altered the landscape for class actions under Fed. R. Civ. P. 23. It will take years for the full impact of Dukes to unfold, but it is already abundantly clear that the decision s heightening of the commonality standard of Fed. R. Civ. P. 23(a) and rejection of the notion of trial by formula as violative of due process rights will have effects on all types of complex litigation. In Dukes, the Court reversed the certification of a class of approximately 1.5 million current and former female employees of Wal-Mart in diverse job positions alleging gender discrimination in violation of Title VII. Dukes reiterates that because class actions are an exception to the usual rule that litigation is conducted by and on behalf of the individual named 1 Richard L. Alfred (ralfred@seyfarth.com) is a partner in the Boston office of Seyfarth Shaw LLP, where he chairs the firm s national Wage & Hour Litigation Practice Group and the Boston office Labor & Employment Department. Jessica M. Schauer (jschauer@seyfarth.com) is a managing associate in the Boston office of Seyfarth Shaw LLP focusing her labor and employment practice on the defense of complex wage and hour lawsuits. The authors wish to thank Kristin G. McGurn, a partner in the firm s Boston office, for her contributions to this paper U.S., 131 S.Ct. 2541, 180 L.Ed.2d 374 (2011) Seyfarth Shaw LLP. All rights reserved. 1

4 parties only[,]... a class representative must be part of the class and possess the same interest and suffer the same injury as the class members. 3 Accordingly, Dukes holds that courts must conduct a rigorous analysis of Rule 23(a) s commonality prerequisite as one means to gauge whether this requirement has been met. In addition, Dukes instructs that in class actions seeking monetary relief, constitutional due process rights entitle the defendant to individualized determinations of each employee s eligibility for backpay. 4 Courts have not yet reached consensus on the application of Dukes in the context of wage and hour class and collective actions. Although Dukes directly concerns Rule 23 class actions, courts and litigants have put forward strong arguments in favor of application of the decision s core holdings in the context of collective actions under 216(b) of the Fair Labor Standards Act. The similarly situated requirement of that statute is linked by a sufficiently common nexus to Rule 23(a)(2) s commonality requirement, imbedding in 216(b) the same principles adopted in Dukes. In addition, the due process rights announced by the Court as entitling a defendant to litigate its statutory defenses to individual claims apply with greater force to the litigation of a collective action, where putative class members are not absent from the litigation as they are under Rule 23, but instead must affirmatively opt in as parties plaintiff. Some courts have begun to accept this reasoning, while others, taking an overly narrow view of Dukes have rejected it. Some courts have even rejected application of Dukes holdings to wage and hour class actions under Rule 23. Such cases ignore the fundamental precepts of Dukes and are wrongly decided. The first section of this paper explores the history of 216(b) s similarly situated standard, arguing that much of the reasoning cited by courts to avoid application of Rule 23 principals to 216(b) is ill-founded. We then examine the fundamental principles of 216(b) collective and Rule 23 class actions as they exist today. Next, we look at the Dukes Court s analysis and argue that it applies to federal wage and hour collective actions. Finally, we review the three primary procedural phases of a collective action conditional certification, decertification, and trial illustrating that the proper reading and application of Dukes to collective wage and hour claims is even more compelling than the effect of that decision on Rule 3 Dukes, 131 S.Ct. at 2250 (internal quotations and citation omitted). 4 Id. at

5 23 class claims that the opinion expressly addresses. We conclude, as some lower courts already have done, that plaintiffs asserting a 216(b) collective action now must carry similar burdens as those articulated in Dukes. 5 I. The History of 216(b) When the FLSA first became law in 1938, 216(b) stated that civil actions to recover unpaid minimum wage or overtime could be asserted, 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 and in behalf of all employees similarly situated. 6 The representative actions permitted by this provision many of which were led by union officials 7 almost immediately proved problematic, spawning excessive litigation... by plaintiffs lacking a personal interest in the outcome. 8 Citing this excessive and needless litigation, 9 Congress substantially revised 216(b) in the Portal-to- Portal Act of 1947, eliminating the language permitting representative actions and requiring parties to consent in writing filed with the court to become parties plaintiff Many wage and hour claims are brought under state law, in state court under Rule 23 analogues, in federal court initially or as a result of removal. In those cases, the Dukes discussion of commonality and its tightening of the requirements to meet the Rule 23(a)(2) standard is directly applicable and, as a result, will not be discussed in detail here. The focus of this paper is Dukes s impact on the 216(b) collective action U.S.C. 216(b) (1938). 7 See e.g., Bartels v. Sperti, Inc., 73 F. Supp. 751, 752 (S.D.N.Y 1947) (addressing motion of union officials who had served as representative of brewery employees to add employees as named plaintiffs following effective date of Portal-to-Portal Act); Grospian v. Pan Am. Refining Corp., 6 F.R.D. 453, 454 (S.D. Tex. 1947) (noting in pre-portal-to-portal Act case that officials of official Oil Workers International Union Local No. 449 could serve as representatives or agents of employees in FLSA overtime case, so long as they set forth in their Complaint their authority so to do ). 8 Hoffmann-La Roche, Inc. v. Sperling, 493 U.S. 165, 173 (1989) (citing 93 Cong. Rec. 538, 2182 (1947) (remarks of Sen. Donnell)) U.S.C. 251(a)(5) (finding that the courts of the country would be burdened with excessive and needless litigation and champertous practices would be encouraged if the original version of the statue, as interpreted by the courts, were to persist). 10 Prior to 1947, the FLSA did not require an employee to file a written consent to join an action under the Act. Hoffmann-La Roche, 493 U.S. at 173. In part responding to excessive litigation spawned by plaintiffs lacking a personal interest in the outcome, the representative action by 3

6 Although 216(b) s opt-in procedure is the key feature that distinguishes it from Rule 23 today, in 1947, that revision actually made FLSA actions more similar to Rule 23 class actions as they existed at that time. When Rule 23 was first codified in 1937, it permitted three kinds of class actions. The first two applied in relatively narrow situations where the litigation concerned commonly owned property or a common right (such as the rights of shareholders in a corporation). The third, known as a spurious class action, was analogous to a joinder device for litigation of claims where numerous parties shared common questions of law or fact and sought common relief. The judgment in a spurious class action had no res judicata effect on absent parties unless they intervened, essentially creating an opt-in requirement. 11 Indeed, even before the Portal-to-Portal Act, some federal courts had held that FLSA cases should be treated like Rule 23 spurious class actions. 12 In 1966, the Supreme Court Advisory Committee revised Rule 23 to drop its opt in requirement, adding the four threshold prerequisites in subpart (a), 13 and requiring the prospective class to fit into one of three categories in subpart (b). 14 Rule 23(b)(3) was an innovation of the 1966 amendments. It allowed class certification by a representative plaintiff simply where the questions of law or fact common to class members predominate... and... a class action is superior to other available methods for fairly and efficiently adjudicating the plaintiffs not themselves possessing claims was abolished, and the requirement that an employee file a written consent was added. Id. 11 See 5 JAMES WM. MOORE ET AL., MOORE S FEDERAL PRACTICE, 23App.02[1] (3d ed. 2003) 12 See, e.g., Pentland v. Dravo Corp., 152 F.2d 851, (3d Cir. 1945). 13 Typicality, commonality, numerosity, and adequacy of representation. Fed. R. Civ. P. 23(a). 14 Rule 23(a) states: One or more members of a class may sue or be sued as representative parties on behalf of all only if... (2) there are questions of law or fact common to the class, which overlaps with Rule 23(a)(1) in that a class action is proper only when there is a group of persons who share a common issue and are so numerous that joinder of them all would be impracticable. Newberg on Class Actions 3:10 (Vol. 2, 4th ed.). Each of these categories, as Dukes instructs, require the Rule 23(a) prerequisites to be met. Classes certified under (b)(1) and (b)(2) share the most traditional justification for class treatment that individual adjudications would be imposed or unworkable, as in a (b)(1) class, or that the relief must perforce affect the entire class at once, as in a (b)(2) class. Dukes, 131 S.Ct. at Both of these types of class claims are mandatory with no requirement for notice to the class or opportunity for class members to opt out. 4

7 controversy. 15 The basic structure of Rule 23 has remained unchanged since The two-step procedure of conditional certification and decertification typically applied in 216(b) cases is of somewhat more recent vintage. Prior to the Supreme Court s 1989 decision in Hoffman-LaRoche, the federal courts had split on the question of whether they had authority to supervise notice to the putative members of a collective action. 16 Hoffman-LaRoche answered that question in the affirmative. Far from mandating the two-step procedure or any particular procedure the Court merely held that district courts have discretion, in appropriate cases, to implement 29 U.S.C. 216(b)... by facilitating notice to potential plaintiffs. 17 The Court carefully noted that its decision did not imply that trial courts have unbridled discretion in managing claims under 216(b), and that the facilitation of notice must remain separate in form and function from the solicitation of claims. 18 Even with those limitations, the dissent strenuously criticized the decision as an extraordinary application of the federal judicial power given that putative members of a collective action are not parties and thus not within the federal court s jurisdiction unless and until they consent to join the case. 19 By the late-1990 s, following the example of the district court decision approved in Hoffman-LaRoche and other courts in the District of New Jersey, 20 courts around the country were addressing whether notice should be given to putative members of the collective class early in the case and reserving the question of whether the case could proceed on a collective basis closer to trial. 21 These courts held plaintiffs to a fairly lenient standard at the first stage, which became known as conditional certification, for the practical reason that they generally had little 15 Evolving from the antecedent spurious class, Rule 23(b)(3) class claims are not mandatory, and class members must be afforded an opportunity, after notice, to withdraw from the class by opting out. Rule 23(c)(2)(B). See Dukes, 131 S.Ct. at Compare Kinney Shoe Corp v. Vorhees, 564 F.2d 859 (9th Cir. 1977) with Braunstein v. Eastern Photographic Labs, Inc., 600 F.2d 335 (2d Cir. 1978) U.S. at Id. at Id. at Lusardi v. Xerox Corp., 118 F.R.D. 351, 361 (D.N.J. 1987); Sperling v. Hoffmann-La Roche, Inc., 118 F.R.D. 392 (D.N.J. 1988). 21 See, e.g., Mooney v. Aramco Servs. Co., 54 F.3d 1207, 1214 (5th Cir. 1995) (adopting two-step procedure); Reeves v. Alliant Techsystems, Inc., 77 F. Supp. 2d 242, 246 (D.R.I. 1999) (same) 5

8 information available at the early stages of the case. 22 In sum, modern Rule 23 and 216(b) differ as they do because of the decision of the Rules Advisory Committee, approved by the Supreme Court, to modify Rule 23, and not because of Congress s choices in drafting or amending 216(b). Although courts have sometimes refused to apply Rule 23 concepts to FLSA collective actions by reasoning that, Congress could have imported the more stringent criteria for class certification under Fed. R. Civ. P. 23, [but] it has not done so in the FLSA, 23 such arguments misunderstand the history of the two provisions. Likewise, nothing in 216(b) or its history mandates the two-step process that is now characteristic of collective actions. Thus a second common argument for distinguishing Rule 23 and 216(b) the supposed leniency of the 216(b) conditional certification standard also rests on faulty ground. 24 As envisioned by Hoffman-LaRoche, the decision to facilitate class notice under 216(b) should be a discretionary exercise that results in class notice only in appropriate cases where it will assist in expedit[ing] disposition of the action. 25 courts have recognized the degree to which an excessively lax standard undermines the Too few efficiency concerns underpinning Hoffman-LaRoche: [i]t would be a waste of... time and resources to notify a large and diverse class only to later determine that the matter should not proceed as a collective action because the class members are not similarly situated. 26 II. Collective v. Class Actions A class action under each of the subsection 23(b) categories is a true representative action; the named plaintiff must be representative of the certified class. The absent class members have little, if anything, to do with the litigation but are bound by the result, win or lose, unless they opt out under Rule 23(b)(3). A collective action, on the other hand, is not a representative action, at least in the same sense as in a class action, but calls for joinder of nonparties to the litigation to create efficiencies for the parties and courts. There are no truly absent class members, because to share in the result, an individual must consent to become a 22 See Mooney, 54 F.3d at O Brien v. Ed Donnelly Enterprises, Inc., 575 F.3d 567, 586 (6th Cir. 2009). 24 See, e.g., Ware v. T-Mobile USA, 2011 WL , at *6 (M.D.Tenn. 2011) (declining to apply Dukes to 216(b) case because Rule 23 s standard is more stringent ) U.S. at Freeman v. Wal Mart Stores, 256 F. Supp. 2d. 941, 945 (W.D. Ark. 2003). 6

9 party plaintiff. The Supreme Court addressed the nature of a 216(b) collective action in Hoffmann-La Roche. 27 The dissent in that case, delivered by Justice Scalia, who penned the majority opinion in Dukes, and joined by Chief Justice Rehnquist, is instructive in understanding the dichotomy between these two procedural mechanisms. In rebutting the majority s holding that district courts have the authority to facilitate notice and intervene in the 216(b) notice process, 28 the Hoffmann-La Roche dissent focused on the basic principle of a collective action: the alleged group of similarly situated individuals to which the plaintiffs seek the court s facilitation of notice has no relation to the pending lawsuit because, by definition, they have not yet opted in to the action. As a result, any claims the members of that group may have against the defendant are best characterized as future cases that have no existing relationship to the actual case before the court. 29 Whether or not the federal courts could constitutionally 30 exercise the expansive authority to manage the process of joining multiple parties, the majority s primary rationale for its holding, the statute does not confer that power. Section 216(b) merely provides a mechanism for the joinder of individual nonparties to whom the named plaintiff establishes he or she is similarly situated and who file with the court a written consent to join the lawsuit. Once those individuals join the case as parties plaintiff, their individual claims may then be litigated along with the named plaintiff s and the opt-ins claims. Justices Scalia and Rehnquist point out, in this regard, that the joinder process for collective actions established by the statute is comparable to the permissive joinder process for individual claims pursuant to Rule 20 in all other litigation. 31 The Hoffmann-La Roche majority does not take issue with the dissent s view regarding 27 Id. 28 Hoffman-LaRoche arises in the context of an ADEA claim. However, 7(b) of that statute incorporates enforcement provisions of the FLSA, including 216(b) and the collective action opt-in process provided therein. Hoffmann-La Roche, 493 U.S. at Id. at 175 (emphasis in original). 30 The Court raises, but does not analyze whether such an exercise of authority, if granted by statute, would violate Art. III, 2, cl. 1 of the Constitution limiting judicial power to actual cases or controversies. Hoffmann-La Roche, 493 U.S. at Id. at 181. As described above, it is also comparable to the pre-1966 version of Rule 23. See Moore, 23App.02[1], supra note 11. 7

10 the nature of a collective action. Like the dissent, the Court s opinion refers to the 216(b) consent process as joining multiple parties and as the joinder of additional parties. 32 There is, accordingly, no dispute in either of the Hoffmann-La Roche opinions that a collective action is merely the aggregation of similarly situated individuals to enable the litigation of their individual claims in a manner that assure[s] that the task is accomplished in an efficient and proper way. 33 This conclusion helps inform the impact of Dukes on 216(b) collective actions. The due process rights of defendants to individualized determinations of each class member s eligibility for backpay, 34 established unanimously by the Court in the context of a Rule 23 class action, applies with even greater force to the litigation of individual claims in a collective action. While class members following class certification may technically be deemed parties, the joinder process of individuals in a collective action as actual parties plaintiff makes the Court s due process ruling even more compelling. III. Dukes s Impact On 216(b) Collective Actions A. Applying Dukes s Commonality Standard to 216(b) The core of the Rule 23(a)(2) commonality requirement is that to establish a class action, a plaintiff must demonstrate that the putative class members have suffered the same injury. 35 In Dukes, the Court clarified that the same injury, exists only where the claims depend upon a common contention. That contention, in turn, must be amenable to classwide resolution. As the Court stated in what has become one of the most often quoted parts of the opinion, determination of [the] truth or falsity [of that common contention] will resolve an issue that is central to the validity of each one of the claims in one stroke. 36 Class certification is only proper after the trial court applies a rigorous analysis and concludes that the Rule 23(a) 32 Id. at Id. at Dukes, 131 S.Ct. at Gen. Tel. Co. of Southwest v. Falcon, 457 U.S. 147, 156 (1982) (quoting Gen. Tel. Co. of Northwest v. EEOC, 446 U.S. 318, 330 (1980)). 36 Dukes, 131 S.Ct. at

11 prerequisites, including commonality, have been met. 37 The Court rejected the plaintiffs attempts to demonstrate commonality, finding that the evidence they had produced could not raise an inference of a uniform policy or practice of discrimination, particularly in light of the undisputed fact that local managers had complete discretion with respect to the hiring and promotion practices at issue in the lawsuit. 38 Among the specific evidence the Court rejected was a series of affidavits reporting experiences of discrimination in approximately 235 of the 3,400 stores at issue in the lawsuit, more than half of which were concentrated in six states, which the Court found to be too insubstantial and statistically insignificant a selection to demonstrate a general policy. 39 Although the Dukes class had been certified under Rule 23, the Court s analysis is equally applicable to the similarly situated standard for 216(b) collective action certification. First, due in part to the fact that the FLSA does not define the term similarly situated, many courts have borrowed from Rule 23(a)(2) s commonality standard in determining whether to grant conditional certification under 216(b). 40 Even accepting that courts are not required to 37 In clarifying its holding in Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 177 (1974), the Court in Dukes recognized that the merits of plaintiffs claims may overlap with the required rigorous analysis. Dukes, 131 S.Ct. at Id. at 2251, Id. at See, e.g., Trezvant v Fidelity Employer Servs. Corp., 434 F. Supp. 2d 40, 45 (D. Mass. 2006) (before granting conditional certification, court must be satisfied that there is a basis to conclude that questions common to a potential group of plaintiffs would predominate a determination of the merits in this case ) (quoting Mike v. Safeco Ins. Co., 274 F. Supp, 2d 216, 220 (D. Conn. 2003)); Kane v. Gage Merch. Servs., Inc., 138 F. Supp. 2d 212, 214 (D. Mass. 2001) (aspects of Rule 23 are subsumed in the similarly situated inquiry ); Alvarez v. City of Chicago, 605 F.3d 445, 449 (7th Cir. 2010) ( [i]f common questions predominate, the plaintiffs may be similarly situated ); Houston v. URS Corp., 591 F. Supp. 2d 827, 832 (E.D. Va. 2008) (in making similarly situated determination, the inquiry is whether the presence of common issues allows the class-wide claims to be addressed without becoming bogged down by individual differences among class members ); Vondriska v. Premier Mortg. Funding, Inc., 564 F. Supp. 2d 1330, (M.D. Fla. 2007) ( In determining whether employees are similarly situated, the court must consider whether the employees are similar with respect to their job requirements and pay provisions and the commonality of their claims. ); Holt v. Rite Aid Corp., 333 F. Supp. 2d 1265, 1270 (M.D. Ala. 2004) (under 216(b), a plaintiff must make some rudimentary showing of commonality between the basis for his claims and that of the potential claims of the proposed class ); Burns v. Village of Wauconda, 1999 WL , at *2 (N.D. Ill. 1999) ( [i]ndeed, the requirement of an FLSA class action that all putative class 9

12 apply Rule 23 as a whole to their analysis of conditional certification under 216(b), they certainly have drawn from the Rule s commonality element in crafting the contours of the 216(b) analysis. As one court described the connection between these standards, [t]he various inquiries concerning a Rule 23 class... while not controlling... are instructive and lend useful guidance in considering the similarly situated requirement of a section 216(b) class. 41 For this reason, decisions under Rule 23 and 216(b) often go hand in hand. 42 Second, even putting aside the conceptual overlap between Rule 23(a)(2) and 216(b), Dukes provides useful guidance regarding the manner in which courts should evaluate the existence of a common employment policy. The Court rejected the proposition that a nationwide class could be certified based on affidavits from only a small fraction of the putative class and only from several work locations in question, because [e]ven if every single one of these accounts is true, that would not demonstrate that the entire company operate[s] under a general policy of discrimination. 43 The Court called this showing too weak to raise any inference of a uniform discriminatory policy or practice. 44 This rationale applies to a court s analysis of whether a plaintiff has met his or her similarly situated burden. Applying the rationale in Dukes, that burden can no longer be met merely by introducing, as is often done in wage and hour collective actions, an insignificant number of affidavits of employees in the alleged collective group, often reporting to the same supervisor or manager in the same or a small fraction of the employer s locations, sought to be included in a nationwide certification. members be similarly situated to the representatives is, on its face, entirely consistent with the requirements of commonality... under Rule 23(a)(2) ). 41 Villanueva-Bazaldua v. TruGreen Ltd. Partners, 479 F. Supp. 2d 411, 416 n.1 (D. Del. 2007). 42 See, e.g., Diaz v. Elecs. Boutique of Am., 2005 WL , at *6 (W.D.N.Y. 2005) ( For the same reasons that plaintiffs cannot meet the similarly situated requirements of class certification under the FLSA... plaintiffs fail to meet the commonality requirement of FRCvP 23(a). ); Lentz v. Spanky s Restaurant II, Inc., 491 F. Supp. 2d 663, 670 (N.D. Tex. 2007) ( Plaintiff has failed to show commonality because he has failed to show how he is similarly situated to other potential plaintiffs. ); Krueger v. New York Tel. Co., 163 F.R.D. 433, 445 (S.D.N.Y. 1995) ( because the representative plaintiffs have satisfied the commonality and typicality requirements of Rule 23(a)(2) and (a)(3), it is equally true that the named plaintiffs are similarly situated to the other members of the ADEA class [under 216(b)] ). 43 Dukes, 131 S.Ct. at Id. (emphasis added). 10

13 B. Applying Dukes s Due Process Considerations to 216(b) The Court s instruction in Dukes regarding individualized proof with respect to claims for back wages 45 applies with even greater force to wage and hour collective claims. In rejecting trial by formula at least for damages, the Court held that such an approach prevents the employer from litigating its defenses to individual claims and thereby violates due process. 46 The plaintiffs class recovery methodology in Dukes selecting a sample set of class members, establishing at deposition the backpay exposure of each, applying the percentage of valid claims from the sample set to the entire class, and then multiplying the average backpay award to that percentage calculation was disapproved by the Court as a novel project. Following Dukes, a class action for money damages must include procedural protections of the sort provided in Rule 23(b)(3), which requires, among other things, that the court evaluate whether common issues predominate in the case. 47 The Constitutional requirement at the heart of this decision that defendants must be provided with an adequate opportunity to defend on an individual basis the claims made against them are no less applicable to FLSA collective claims where plaintiffs typically seek to apply the same failed methodology rejected in Dukes. While the posture of Dukes caused the Court to focus on the implications of bringing a class action for back wages to trial, the due process concerns cited by the Court have effects on all stages of a collective action, including the earliest phase. It is manifestly unjust, for example, to saddle a defendant with the often extreme burden, expense, and workplace disruption caused by engaging in the notice process and discovery of opt-ins following conditional certification, and by having to litigate decertification where there is no evidence whatsoever that issues common to all putative collective members exist. As a practical matter, the burden, expense, and 45 Id. at Id. 47 At least one court since Dukes has decertified a class based on this aspect of the Court s decision. See Cruz v. Dollar Tree Stores, Inc U.S. Dist. LEXIS 73938, at *19 (N.D. Cal. July 8, 2011) ( In light of the Supreme Court s rejection of [the trial by formula ] approach, it is not clear to the Court how, even if class-wide liability were established, a week-by-week analysis of every class member s damages could be feasibly conducted. ). The Cruz court also noted that plaintiffs provided no reliable means of extrapolating from the testimony of a few exemplar class members to the class as a whole regarding how they spent their time. Id. at *24. Although this case concerned a Rule 23 class based on state wage law, the same analytical difficulties identified by the court apply to an FLSA collective action. 11

14 risks from such broad discovery often leave an employer with little choice other than to settle. IV. Dukes s Effect on Litigation of Wage and Hour Collective Actions From the preceding discussions, we conclude that the commonality and due process holdings of Dukes apply to 216(b) collective actions. The question remains, however, how this conclusion actually impacts the litigation of a collective action in its three primary procedural phases: conditional certification, decertification, and trial. Since the Supreme Court s decision in Hoffmann-La Roche, the lower federal courts have reached a consensus in applying the wellrecognized, court-created two-stage process for certification of a wage and hour collective action. 48 First, the plaintiff seeks conditional certification, also referred to as a motion to facilitate notice, at an early point in the litigation. At the second stage following more fulsome discovery, the defendant may move for decertification and the plaintiff may seek final certification. If the decertification motion fails and the plaintiff prevails at final certification, the case may proceed to trial as a collective action with a number of procedural, practical, and, following Dukes, due process problems. 49 A. Conditional Certification It is routine for courts, in considering a motion for conditional certification, to articulate the plaintiff s burden at this stage of demonstrating that he or she is similarly situated to the members of the alleged collective group as lenient 50 or fairly lenient. 51 However, absent 48 Myers v. Hertz Corp., 624 F.3d 537, , n.10 (2d Cir. 2010) ( [T]he district courts of this Circuit appear to have coalesced around a two-step method which, while again not required by the terms of FLSA or the Supreme Court s cases, we think is sensible and citing Hoffmann- La Roche); Monroe v. FTS USA, LLC, 257 F.R.D. 634, 637 (W.D. Tenn. 2009) (courts utilize the two-phase inquiry in FLSA certification proceedings ); Hill v. R+L Carriers, Inc. 690 F. Supp. 2d 1001, 1009 (N.D. Cal (adopting ad hoc, two-tiered approach ). 49 The leading case that explicitly declines the two-stage approach and requires a more rigorous standard before certifying a 216(b) class (in the ADEA context) is Shushan v. Univ. Colorado at Boulder, 132 F.R.D. 263, 269 (D. Colo. 1990), in which plaintiffs were required to satisfy the court that there exists a definable, manageable class and that [plaintiffs] are proper representatives of the class before certifying any class conditionally or finally. Dukes lends persuasiveness to the Shushan approach. 50 Bayles v. Am. Med. Response of Colo., Inc. 950 F. Supp. 1053, (D. Colo. 1996) (requiring no more than substantial allegations that putative class members were together the victims of a single decision, policy or plan ) (internal quotations and citations omitted); McKinney v. United Stor-All Centers, Inc., 585 F. Supp. 2d. 6, 8 (D.D.C 2008) (applying a 12

15 guidance in the statute or from the Supreme Court, courts have applied different and inconsistent standards that the plaintiff had to meet to obtain the court s authority to send notice. 52 Some courts have held that a plaintiff can show a colorable basis for his or her claim that similarly situated parties exist without requiring any factual showing that the named plaintiff has similarities to the putative collective members; 53 others require only extremely modest allegations of similarity in the complaint or in one or more affidavits hardly representative of the entire alleged collective group. 54 Other courts require broader and more exacting evidence. 55 On one end of the spectrum, a court in the Fifth Circuit ruled that it may deny a plaintiff s right to proceed collectively only if the action arises from circumstances purely personal to the plaintiff, and not from any generally applicable rule, policy, or practice. 56 The Sixth Circuit considers plaintiffs similarly situated when they suffer from a single, FLSA-violating policy but, as Dukes would require, demands that proof of that policy or of conduct in conformity with that policy [would] prove a violation as to all the plaintiffs. 57 Similarly, in the Fourth Circuit, sweeping generalized allegations do not suffice. 58 There courts have held that the standard is not lenient standard ); Bouaphakeo v. Tyson Foods, Inc., 564 F. Supp. 2d 870, 891 (N.D. Iowa 2008) (same). 51 O Donnell v. Robert Half Int l, Inc 534 F. Supp. 2d 173, 178 (D. Mass. 2008); Houston v. URS Corp., 591 F. Supp. 2d 827, 831 (E.D. Va. 2008); Pedigo v South Lamar, LLP, 666 F. Supp. 2d 693, 697 (W.D. Tex. 2009); Laichev v. JBM, Inc., 269 F.R.D. 633, 637 (S.D. Ohio 2008); Parker v. Rowland Express, Inc., 492 F. Supp.2d 1159, 1164 (D. Minn. 2007); Vasquez v. Coast Valley Roofing, Inc., 670 F. Supp. 2d 1114, 1123 (E.D. Cal. 2009); Garcia v. Tyson Foods, 255 F.R.D. 678, 685 (D. Kan. 2009). 52 Myers v. Hertz Corp., 624 F.3d at Belcher v. Shoney s, Inc., 927 F. Supp. 249, 251 (M.D. Tenn. 1996). 54 In re Tyson Foods, Inc., 694 F. Supp. 2d. 1372, 1378 (M.D. Ga. 2010). 55 Holt v. Rite Aid Corp., 333 F. Supp. 2d. 1265, 1272, 1274 (M.D. Ala. 2004) (exemption defense required fact-intensive determination and examination of employees daily tasks); Poreda v. Boise Cascade, LLC, 532 F. Supp. 2d 234, (D. Mass. 2008) (acknowledging modest factual showing and substantial allegations approaches). 56 Villarreal v. St. Luke s Episcopal Hosp., 751 F. Supp. 2d 902, 918 (S.D. Tex. 2010) (emphasis added). 57 O Brien v. Ed Donnelly Enters, Inc. 575 F.3d 567, 585 (6th Cir. 2009). 58 Williams v. Long, 585 F. Supp. 2d 679, 684 (D. Md. 2008) (plaintiffs can show similarity through affidavits or other factual evidence but mere allegations in the complaint are insufficient): Camper v. Home Quality Mgmt, Inc. 200 F.R.D. 516, 520 (D. Md. 2000) (issuing 13

16 met until plaintiffs raise a similar legal issue as to coverage, exemption or non-payment arising from a factual setting that is manageably similar. 59 Recognizing the burden that notice imposes, other courts have noted that [i]t would be a waste of... time and resources to notify a large and diverse class only to later determine that the matter should not proceed as a collective action because the class members are not similarly situated. 60 Even at the notice stage, courts acknowledge that a defendant should not be unduly burdened by a frivolous fishing expedition conducted by plaintiff at the [defendant s] expense. 61 While the similarly situated standard for plaintiffs burden at the conditional certification stage has varied by court and judge, plaintiffs typically rely on the complaint and a very limited number of affidavits often from only one or, at most, a handful of locations, divisions, departments, units, and from employees who report to the same or few supervisors or managers when seeking broad, often nationwide, conditional certification and notice. Where such affidavits contain any information about other employees, they typically are premised solely on hearsay. 62 Such a small sampling of data requires courts to make assumptions (often with no notice to employees at only one facility where plaintiffs evidence that supervisor were aware of uncompensated work did not extend to other facilities). 59 McLaurin v. Prestage Foods, Inc., 271 F.R.D 465, 469 (E.D.N.C. 2010); Houston v. URS Corp., 591 F. Supp. 2d 827, 834 (E.D. Va. 2008). 60 Freeman v. Wal-Mart Stores, Inc., 256 F. Supp. 2d. 941, 945 (W.D. Ark. 2003); see also Diaz, 2005 WL , at *4 (denying conditional certification where analysis of exemption would require determination of every individual [plaintiff s] exempt or noexempt status ). 61 D Anna v. M/A-COM, Inc., 903 F. Supp. 889, 894 (D. Md. 1995). 62 See, e.g., Winfield v. Citibank, --- F. Supp. 2d ----, 2012 WL , at *2 (S.D.N.Y. 2012) (permitting use of hearsay in affidavits in support of conditional certification); White v. Rick Bus Co., 2010 WL (D.N.J. 2010) (declining to consider certification by plaintiff in addressing conditional certification motion because it contains... blanket assertions without factual matter and, in any event, is based on hearsay ); Colson v. Avnet, Inc., 687 F. Supp. 2d 914, 928 (D. Ariz. 2010) (denying conditional certification motion where plaintiff s affidavit was based on nothing more than her opinions, which are vague and appear to be based on unspecified hearsay from unidentified sources ); Wright v. Lehigh Valley Hospital, 2010 WL , at *2 (W.D. Pa. 2010) (refusing to consider inadmissible hearsay evidence and denying conditional certification motion where Plaintiff offers no first-hand evidence from any other employee alleging in their own words that the[] practices [at issue] were regularly applied ); Harrison v. McDonald s Corp., 411 F. Supp. 2d 862, 871 (S.D. Ohio 2005) (denying motion for conditional certification because [o]nce the hearsay statements are stricken from [the] affidavits 14

17 admissible evidentiary support) that the employer s policies and practices at issue in the lawsuit are uniform throughout the geographical region of the proposed collective action. The evidence routinely represents only an insignificant percentage of the total number of putative collective group members. 63 As Dukes teaches, such vague, localized showings are not sufficient to justify extrapolation of the plaintiffs experiences to the much larger collection of putative opt-ins. Further, FLSA cases by their nature seek the recovery of back wages, but collective action plaintiffs routinely fail to produce evidence to demonstrate that their claims for back wages can be analyzed alongside the claims of other putative collective action members. Under Dukes, even at the conditional certification stage, a plaintiff should be required to establish a higher quantum of evidence that parties plaintiff suffered a common injury before being permitted to submit the defendant to the disruption, expense, and settlement pressures caused by notice. Recognizing the conceptual link between 216(b) s similarly situated standard and case management concerns and the Rule 23 commonality prerequisite and due process protections outlined in Dukes, district courts have begun to apply Dukes s commonality and individualized proof concepts to their conditional certification analysis, requiring a higher quantum of proof at the initial stage of proceedings. 64 For example, in MacGregor v. Farmers Insurance Exchange, 65 [submitted by plaintiff in support of the motion], there is scant evidence that any employee, other than Plaintiff, was not fully compensated for all the hours he or she worked. ). 63 Examples of policies and practices about which courts must extrapolate from the plaintiffs allegations and affidavits include: the actual duties employees perform; how much discretion and judgment they exercise; how many hours a week sales employees work away from the employer s premise; and, in off-the-clock cases, the nature of and reasons for the uncompensated pre- and post-shift or meal break activities they perform. 64 Some courts, however, have summarily rejected or ignored application of Dukes to 216(b). See Creely v. HCR Manorcare, Inc., 2011 WL , at *1 (N.D. Ohio July 1, 2011) ( the plaintiffs claims in Dukes are fundamentally different from those in this case ); Sliger v. Prospect Mortg., LLC 2011 WL , at *2 n.25 (E.D. Cal. 2011) ( This court declines the invitation [to address Dukes in conditional certification] as it appears inconsistent with the Ninth Circuit s apparent view that the Rule 23 standards should not be used. ); Mitchell v. Acosta Sales, LLC, --- F. Supp. 2d ----, 2011 WL , at *8 n.2 (C.D.Cal. 2011) ( The Court is not persuaded that Wal-Mart alters the first-tier inquiry for FLSA certification decisions. ); Pippins v. KPMG, LLP, 2012 WL at *7 (S.D.N.Y. 2012); Faust v. Comcast Cable Commc ns Mgmt. LLC, 2011 WL , at *1 n.1 (D. Md. 2011); Ware v. TMobile USA, 2011 WL , at *6 (M.D. Tenn. 2011). 15

18 three former claims representatives asked the court to approve notice to a nationwide class in a case challenging an overtime policy that allegedly required supervisor pre-approval. The plaintiffs tried to show that they were victims of a common unlawful policy by claiming that supervisors refused to pre-approve overtime and discouraged them from reporting unauthorized overtime. They admitted that company policy prohibited them from working off-the-clock, mandated that they accurately report their time, and required that all hours worked be paid, including unapproved overtime. While acknowledging that Rule 23 and collective actions are distinct, the court nonetheless found Dukes illuminating and refused to conditionally certify because plaintiffs claims lacked commonality, rooted as they were in decentralized and independent action by supervisors that is contrary to the company s established policies. 66 Similarly, a Wisconsin district court applied Dukes teachings when refusing to facilitate notice in Ruiz v. Serco Inc. The Ruiz court likewise acknowledged the differences between Rule 23 and 216(b) standards, but stated: [A]lthough collective actions under the FLSA are not subject to the provisions generally associated with class actions under Fed. R. Civ. P. 23 (such as numerosity, commonality and typicality), the [Supreme] Court s discussion [in Dukes] of the propriety of class actions generally provides guidance in deciding when certification of a collection action under the FLSA is appropriate. 67 Scrutinizing whether a collection of employees was similarly situated, the Ruiz court observed that [i]n Dukes, the Court noted that [w]hat matters to class certification is not the raising of common questions even in droves but rather the capacity of a classwide proceeding to generate common answers apt to drive the resolution of the litigation. 68 Dissimilarities within the proposed class are what have the potential to impede the generation of common answers. Recognizing that the requirements of conditional certification are lenient, the Ruiz WL (D.S.C July 22, 2011). 66 Id. at *4. In another recent case, Blaney v. Charlitte-Mecklenburg Hosp., 2011 WL , at *8 (W.D.N.C. 2011), the court cited both MacGregor and Dukes in holding that the defendant s decentralized management practices with respect to the timekeeping systems at issue in the lawsuit precluded conditional certification. 67 Ruiz v. Serco, Inc., 2011 U.S. Dist. LEXIS 91215, at *18-19 (W.D. Wis. Aug. 5, 2011). Ruiz may be called into question as the result of a recent Seventh Circuit decision severely circumscribing the effect of Dukes, even in Rule 23 Class Actions. That decision, Ross v. RBS Citizens, --- F.3d ---, 2012 WL (7th Cir. 2012), is discussed below. 68 Id. at *19 (emphasis in original). 16

19 court nevertheless concluded that it is no longer enough for plaintiffs to raise common questions such as whether [plaintiffs] and other employees with some similar job duties were properly classified as exempt. Instead, for conditional certification to be appropriate, the answer to that question must be susceptible to proof that can be extrapolated to the class plaintiffs seek to represent. The Ruiz court explained that it would be difficult to generate such common answers because individualized inquiries arising from the wide variations in duties, experience, responsibility, discretion and supervisors were required It concluded that where individual factual inquiries likely predominate and judicial economy would be hindered rather than promoted cases should not receive collective treatment. 70 These recent decisions suggest that, at a minimum, Dukes will raise the lenient conditional certification bar to require no less than the highest standard currently applied by any court. While Dukes likely will not single-handedly herald the end of the two-stage collective action certification process, courts analyzing whether to exercise their discretion to facilitate notice in a collective action should now require a showing, across the putative collective group, that potential parties plaintiff are similarly situated by geography, position, division, department, and experience based on a significant sampling of putative class members. 69 Id. at * The Creely court s rejection of Dukes principles at the conditional certification stage provides a compelling example of their alignment with the fundamental purpose of a collective action. In Creely, the court concluded that the concerns expressed in Dukes simply do not apply to the overtime collective action for several reasons. First, citing O Brien, it noted that the Sixth Circuit draws a distinction between Rule 23(a)(2) s commonality requirement and the FLSA s similarly situated requirement, [by] expressly declining to apply Rule 23 s standard to FLSA claims. As in Sliger, the Creely court focused on Rule 23 s prerequisites in totality, rather than on the commonality prerequisite at the heart of Dukes. The court in Creely also concluded that the FLSA claims before this Court do not require an examination of the subjective intent behind millions of individual employment decisions [as in Dukes]; rather, the crux of this case is whether the company-wide policies, as implemented, violated Plaintiffs statutory rights. Id. However, to the extent that the very implementation of the policies at issue demonstrates a lack of commonality among the parties plaintiff, the court failed to articulate why Dukes should not apply. Finally, the Creely court was unconcerned with the due process arguments outlined in Dukes, pointing out that the FLSA s opt-in procedure ensures that plaintiffs who wish to preserve their individual claims may readily do so. Id. The employers due process rights, however, were ignored. Similarly, in Troy v. Kehe Food Distributors, Inc., 276 F.R.D. 642 (W.D. Wash. 2011), the court rejected application of Dukes stating that 216(b) is less stringent than Rule 23 s commonality requirement. The court, however, cited only a case holding that Rule 23 requirements as a whole do not apply to 216(b) actions.

20 B. Decertification At the second stage of collective action proceedings, after purportedly similarly situated persons respond to notice by opting in and discovery has been conducted, courts have required a heavier burden of proof to determine whether the collection of parties is, indeed, similarly situated. While plaintiffs maintain that at the first stage their burden is not particularly stringent and less stringent than that for joinder under Rule 20(a) or for separate trials under 42(b), 71 courts consistently apply a much higher level of scrutiny at the second stage. 72 In light of this heightened burden, some courts have looked to Rule 23 directly in addressing decertification, utilizing an analysis that equates more closely to the rigorous scrutiny applied in Dukes. 73 After discovery relating to the opt-ins occurs, courts must make factual determinations whether the opt-ins are similarly situated to the named plaintiffs in assessing whether the court could manage and fairly resolve the case at trial as a collective action. 74 At this phase, courts examine the similarly situated question much more closely because they have more evidence on which to base the decision, 75 and consider factors such as (1) disparate (or similar) factual and employment settings of individual plaintiffs; (2) defenses available that appear individual to each plaintiff, and (3) fairness and procedural considerations. 76 At decertification, courts recognize 71 Morgan v. Family Dollar Stores, Inc., 551 F.3d 1233, 1260 (11th Cir. 2008). 72 White v. MPW Indus. Servs, Inc. 236 F.R.D 363, 367 (E.D. Tenn. 2006) ( The second stage of analysis is much more stringent, and to avoid decertification, a plaintiff must meet a stricter standard of proving similarly situated. ); Thiessen v. G.E. Capital Corp., 267 F.3d 1095, (10 th Cir. 2001), cert. denied 2002 WL (U.S. June 17, 2002) (courts ruling on motions to decertify utilizing a stricter standard of similarly situated. ); Pefanis v. Westway Diner, Inc., 2010 WL , *3-4 (S.D.N.Y. Sept. 7, 2010) (at decertification stage, the similarly situated inquiry turns on whether plaintiffs make a persuasive showing that their claims derive from a common practice or scheme that violated the law ). 73 Other courts have maintained that the procedures remain conceptually separate even at this stage. See Order on Motion to Decertify, Prise v. Alderwoods Grp, Inc., No , at (W.D. Pa. Sept. 9, 2011) (summarizing case law comparing Rule 23 standard with 216(b) decertification standard). 74 Sandoz v. Cingular Wireless LLC, 553 F.3d 913, 916 (5th Cir. 2008). 75 Comer v. Wal-Mart Stores, Inc. 454 F.3d 544, 547 (6th Cir. 2006). 76 Thiessen, 267 F.3d at , cert. denied 2002 WL (U.S. June 17, 2002); Jonites v. Exelon Corp., 522 F.3d 721, (7th Cir. 2008) (denying certification where hopelessly 18