PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

_____________

No. 18

- 3143

_____________

DANIEL FERRERAS; EDWIN GONZALEZ; DOUG

BILLITZ; RUEBEN RAMIREZ; RAMON COCA; CHRISTOPHER FAUST; MASOUD ZABIHIALAM; SCOTT ELLENTUCK; DENIS LIPPENS, On Behalf of themselves and all others similarly situated

v.

AMERICAN AIRLINES, INC., Appellant

_______________

On Appeal from the United States District Court for the District of New Jersey (D.C. No. 2

- 16

- cv

- 02427) District Judge: Hon. Jose L. Linares

_______________
Argued
Octo ber 1 5 , 2019

Before: CHAGARES, JORDAN, and RESTREPO, Circuit Judges.2 (Filed : December 24, 2019 )

_______________
Jeffrey I. Kohn Anton Metlitsky [ARGUED]
Mark W. Robertson O’Melveny & Myers 7 Times Square Time Square Tower, 33rd Floor New York, NY 10036

Jason Zarrow O’Melveny & Myers 1625 I Street, N.W. Washington, DC 20006 Counsel for Appellant

Brett R. Gallaway Steven J. Hyman
Lee S. Shalov [ARGUED]
Wade C. Wilkinson McLaughlin & Stern
260 Madison Avenue New York, NY 10016 Counsel for Appellees

Adam G. Unikowsky
Jenner & Block
1099 New York Avenue

– Suite 900 Washington, DC 20001 Counsel for Amicus Appellant

_______________3 OPINION OF THE COURT

_______________

JORDAN, Circuit Judge

.

This case involves claims for overtime wages brought by employees of American Airlines , Inc. (“American”) . The employees allege that American violated the New Jersey Wage and Hour Law (“NJWHL”) because the airline’s timekeeping system defaults to paying employees based on their work
schedules

, even if they work additional hours outside of their
shifts and in excess of 40 hours per week

.

The employees brought their claims as a putative class
action and moved for class certification. T he District Court
decided that all of the requirements for class certification, as
set forth in Federal Rule of Civil Procedure 23

, were met

, and
it thus certified the class. American appeals that order, arguing that the District Court did not conduct a rigorous analysis and
that several of the requirements of Rule 23 , including commonality and predominance, were not met. American argues that this case cannot proceed as a class action because
d etermining when each employee was actually working will necessarily require individual ized inquiries. We agree and will
therefore reverse the order of the District Court.

I. B ACKGROUND

American’s timekeeping system is programmed to calculate pay for employees only for the duration of their shifts

, excluding an automatic deduction for a 30

- minute meal break. If an employee clocks in before the employee’s shift begins or clocks out after the shift ends, the timekeeping system defaults4 to assuming that the employee only worked during the shift,
rath er than working any extra time. American calls those pre

and post

- shift clock

- in time durations “grace periods.” The

grace periods allow employees to avoid having to clock in exactly when their shift begins or clock out exactly when their
shift ends. S imilarly, the timekeeping system’s assumption that an employee takes a 30

- minute meal break during a shift means that employee s do not have to return to the time clock
before and after e ach meal break.

If employees actually do perform work during gr ace periods or meal breaks, American’s policy requires them to identify for a supervisor the time they worked outside of their
shift and ask for approval of that time as an “exception ” to the ir ordinary work hours. Otherwise, they are not paid for the tim e work ed outside of their shift.

T he class as certified includes all non

- exempt, hourly employees at American’s Newark Liberty International
A irport (“Newark airport”) station, who were employed at any time from April 29, 2014 through the present

. The n amed plaintiffs are two fleet service employees and seven mechanics

at that airport . Fleet service employees handle cargo, assist with lavatory services, and help maneu ver aircrafts in and around hangars

. Mechanics perform repairs and updates on airplanes. A third category of non

- exempt hourly

- paid employees included in the class is passenger service agents

, who check passengers in and manage boarding at the gate s

. N o ne of the named plaintiffs are passenger service agents.

The p laintiffs complain that , in violat ion of the

NJWHL

, American did not pay its employees for all time
worked because its timekeeping system defaults to paying5 employees based on their work schedules rather than on the time they actually spent working

. The p laintiffs also allege that, although American purports to have procedures to compensate employees for unpa id time, management regularly refuses to pay employees for pre

- and post

- shift work and work done during meal breaks. The claims in the complaint focus on three periods of the workday: (1) while the plaintiffs were clocked in but before or after their sch eduled shift time ; (2) during their scheduled meal breaks ; and (3) while off

- the

clock.

In seeking class certification , the plaintiffs argued that

, according to the record, once an American employee clocks in, the employee begins working until he or she clocks out , and the “[e]mployees do not delay or engage in non

- job

- related personal activities while on the clock.” (D.I. 104

- 1 at 5 .) American responded that class certification was inappropriate
because the record evidence show s that employees arri ved early and left late for a variety of reasons and engaged in personal activities before and after their shifts. For example, American cited one employee as saying that he sometimes
watche d TV before his shift, and another as saying he chat ted
with othe r mechanics in the break room before his shift beg an

. Thus, American argued, the District Court would have to engage in individual ized inquiries to determine if and when there were occasions when a particular employee w as not compensated for time periods d uring which he or she was actually working while clocked in, and the Court would
likewise have to engage in individual ized inquiries to
determine when employees were actually working while off
the clock.6 The District Court granted the plaintiffs’ motion for
class certification and created three subclasses . The first subclass was defined as employees who “ have been denied compensation for work performed before and after their shifts
while on the clock ” ( the “Grace Period Subclass” ). ( App. at 3.) The second subclass was defined as employees “ who have been denied compensation for work performed during meal periods ” ( the “Meal Break Subclass” ). (App. at 4.) The third subclass was defined as employees “ who have been denied compensation for work performed before their shifts before clocking in, and for work performed after their shifts after clocking out ” ( the “Off

- the

- Clock Subclass” ). ( Id. )

In its order granting class certification, the District
Court identified two questions it said are common to the class : first, whether “hourly

- paid American employees at Newark Liberty International Airport are not being compensated for all hours worked due to the manner in which American operates its timekeeping system[,]” and second, “whether American is violating the NJWHL by imposing a schedule

- based compensation system that in theory permits a supervisor to authorize compensation for work performed outside of a scheduled shift, but in practice discourages empl oyees from seeking such authorization[.]” (App. at 13.)

In determining that the commonality and predominance require ments had been met, the District Court cited favorably to caselaw regarding conditional certification under the Fair
Labor Standards Act (“FLSA”) and said that plaintiffs had presented sufficient “allegations and initial evidence” to certify
the sub class es “at this juncture.” (App. at 13, 14.) The Court
also said American’s argument that whether the plaintiffs were actually working

– rat her than engaging in personal activities7 – when clocked in pre

- and post

- shift was “to be addressed during discovery, and does not merit a denial of class certification at this juncture[.]” (App. at 15.)

American petitioned us under Federal Rule of Civ il Procedure 23(f) for review of the class certification decision

, and we granted that petition

. This appeal followed.

II. D ISCUSSION 1

A party seeking class certification must satisfy the four requirements of Rule 23(a) , as well as the requirements of
either Rule 23(b) (1), (b) (2), or (b) (3)

. In re Hydrogen Peroxide Antitrust Litig. , 552 F.3d 305, 309 n.6 (3d Cir. 2008). Under Rule 23(a)

,

1 The District Court had jurisdiction under 28 U.S.C. § 1332(d). Although we conclude that a class cannot be certified, that does not mean that the District Court lacked jurisdiction. See Coba v. Ford Motor Co. , 932 F.3d 114, 118

- 19 ( 3d Cir. 2019) (holding that a subsequent denial of class
certification does not divest the district court of subject

- matter jurisdiction when the court properly exercised jurisdiction pursuant to § 1332(d) at the time a claim was filed). We have jurisdiction under 28 U.S.C. § 1292(e). “ We review a class
certification order for abuse of di scretion, which occurs if the district court’s decision rests upon a clearly erroneous finding of fact, an errant conclusion of law or an improper application
of law to fact. [W]hether an incorrect legal standard has been
used is an issue of law to be rev iewed de novo. ” In re Hydrogen Peroxide Antitrust Litig. , 552 F.3d 305, 312 (3d Cir. 2008) (alteration in original) ( internal quotation marks and citation omitted).8 (1) the class must be so numerous that joinder of all members is impracticable (numerosity); (2 ) there must be questions of law or fact common to the class (commonality); (3) the claims or defenses of the representative parties must be typical of the claims or defenses of the class (typicality); and (4) the named plaintiffs must fairly and adequatel y protect the interests of the class (adequacy of representation, or simply adequacy).

Marcus v. BMW of N. Am., LLC , 687 F.3d 583, 590

- 91 (3d Cir. 2012) (internal quotation marks omitted). Assuming a plaintiff
can show that all of those conditions exist, the requirements of Rule 23(b) come into play. Here, the plaintiffs are proceeding under Rule 23(b)(3), which requires proving , first, that questions of law or fact common to class members predominate over individualized question s , which is commonly called the “predominance” requirement, and

, second, that the class action device is superior to other methods for resolving the claims , which is often referred to as the “superiority” requirement. Fed. R. Civ. P. 23(b)(3).

Class “ce rtification is proper only if the trial court is satisfied, after a rigorous analysis” that all of the necessary Rule 23 requirements have been fulfilled

. Wal

- Mart Stores,
Inc. v. Dukes , 564 U.S. 338, 350

- 51 (2011). The Rule “does not set forth a mere pleading standard.” Id. at 350. As we explained in In re Hydrogen Peroxide

, “the decision to certify a class calls for findings by the court, not merely a ‘ threshold showing ’ by a party, that each of the requirements of Rule 2 3
is met. ” In re Hydrogen Peroxide , 552 F.3d at 307. A rigorous analysis requires that factual determinations be made by a9 preponderance of the evidence. Mielo v. Steak ‘n Shake Operations, Inc. , 897 F.3d 467, 483

- 84 (3d Cir. 2018). Thus, although a tr ial court has “broad discretion to control proceedings and frame issues for consideration under Rule
23 [,] ” “a class may not be certified without a finding that each Rule 23 requirement is met.” In re Hydrogen Peroxide , 552
F.3d at 310. P rior to certifying a class, a district court must resolve every dispute that is relevant to class certification

. Id.
at 3 20

.

American argues that the District Court did not apply the proper class certification standard and that commonality

, under Rule 23(a)

, and predominance , under Rule 23(b)(3),
were not met. We address those argument s in turn. 2

A. The District Court Did Not Apply the Proper
Standard for Class Certification

.

The District Court’s analysis departed from the
standards we have articulated for evaluating a motion for class

2 American also says that the District Court erred in finding that the superiority require ment was met and that the class was ascertainable, as required by our precedent

. See

Marcus , 687 F.3d at 592

- 93 (“ [A] n essential prerequisite of a class action, at least with respect to actions under Rule 23(b)(3) , is that the class must be currently and readily ascertainable based on objective criteria .” ). Because we find that commonality and predominance were not met and

, in this case, cannot be met, we do not reach those arguments. Nor do we address the question of adequacy of representa tion raised by the absence of any named plaintiff from among the passenger service agents.10 certification. Specifically, the re are three problems with the
Court’s decision: f irst, it in effect certified the class conditionally ; s econd, it applied a “pleading” and “initial
evidence” standard ; and t hird, it failed to resolve conflict s in
the evidence.

The first problem may spring from confus ion about
class certification under Rule 23 and collective actions under
the FLSA

. Rule 23, unlike the FLSA , does not allow for
conditional certification

. S ee Genesis Healthcare Corp. v. Symczyk , 569 U.S. 66, 74 (2013) (“Rule 23 actions are fundamentally different from collective actions under the FLSA[.]”) . As we have cautioned before, “ [c] ertification may not be granted because the plaintiff promises the class will be
able to fulfill Rule 23’s requirements, with the caveat that the
class c an always be decertified if it later proves wanting. To certify a class in this manner is effectively to certify the class conditionally, which Rule 23 does not permit.” Hayes v. Wal

Mart Stores, Inc. , 725 F.3d 349, 358 (3d Cir. 2013)

. Instead

, class ce rtification under Rule 23 requires a district cou rt to be
satisfied by a preponderance of the evidence that the plaintiff
has proven each of the R ule’s requirements is met

. S ee Fed. R. Civ. P. 23 advisory committee’s note to 2003 a mendments (“ A
court that is not satisfied that the requirements of Rule 23 have been met should refuse certification until they have been met.”) . The District Court here cited approvingly to a case dealing with conditional certifications under the FLSA

, and twice explained that the plaintiffs had met their burden “ at this juncture. ” (App. at 14, 15 (emphasis added). ) Th at reliance on, and application of

, principles of conditional certification in
the Rule 23 context cannot be permitted

.11 Similarly, the Court deviated from our precedent by employing a pleading and initial evidence standard, rather than requiring proof by a preponderance of the evidence. The
District Court referred to R u le 23(b)’s requirements as “pleading requirements” and said that the plaintiffs had met th ose requirements by setting forth “ allegations and initial evidence.” (App. at 8, 12

- 13

. ) But Rule 23 does not set forth a mere pleading obligation

. Wal

- Mart , 564 U.S. at 350

. The
District Court’s acceptance of pleading and initial evidence as an acceptable standard is similar to the “threshold showing” standard we rejected in In re Hydrogen Peroxide , 552 F.3d at 321. There we explained that “[a] ‘threshold showing’ could sig nify , incorrectly, that the burden on the party seeking certification is a lenient one (such as a prima face showing or a burden of production) or that the party seeking certification receives deference or a presumption in its favor.” Id. So too with a p leading or initial evidence standard. Rule 23 requires more than allegations, initial evidence, or a threshold showing. It requires a showing that each of the Rule 23 requirements ha s been met by a preponderance of the evidence at the time of
class certification

. The District Court thus should not have
determin e d that the Rule 23 requirements had been met based

on “ allegations and initial evidence. ”

Finally, it was error for the District Court to leave

un resolve d conflict s in the evidence before it. For example, the Court did not engage with American’s argument that predominance was not met because individual ized proof would be required to prove that employees were actually w orking during the various time periods for which they claim they were not paid . Instead, the Court noted that the issue would be “addressed during discovery and that it does not merit a denial of class certification at this juncture[.]” (App. at 15.) Th e12 rigorous analysis demanded by Rule 23 requires a court to
resolve such disputes relevant to class certification

, before being satisfied that each of the Rule ’s requirements has been

met. Marcus , 687 F.3d at 591.

Because the District Court did not engage in that type
of analysis, we could vacate and remand for further application
of the Rule 23 standards

. But because discovery was essentially complete when the District Court ruled on the
motion for class certifica tion, and the plaintiffs have stated that no additional discovery is needed to decide the certification issue, we will reverse rather than remand , as, based on our review of the record, it is clear that commonality and predominance cannot be met.

B. Common ality and Predominance Cannot Be
Met

.

Rule 23 requires a showing that “there are questions of law or fact common to the class.” Fed. R. Civ. P. 23(a)(2).
“What matters to class certification ... is not the raising of common ‘questions’

— even in droves

— but rather, the capacity
of a class

- wide proceeding to generate common answers apt to drive the resolution of the litigation. Dissimilarities within the proposed class are what have the potential to impede the generation of common answers.” Wal

- Mart , 564 U.S. at 350 (emphasis in original )

.

T he predominance requirement “asks whether the common, aggregation

- enabling, issues in the case are more prevalent or important than the non

- common, aggregation

defeating, individual issues.” Tyson Foods, Inc. v. Bouaphakeo , 136 S. Ct. 1036, 1045 (2016). Courts must “give13 careful scrutiny to the relation between common and individual questions in a case. An individual question is one where members of a proposed class will need to present evidence that varies from member to member, while a common question is one where the same evidence will suffice for each member[.]”
Id. (internal quotation marks omitted).

The commonality and predominance requirements are closely linked. But t he Rule 23(b)(3) predominance requirement is “far more demanding than the commonality requirement” found in Rule 23(a). In re Hydrogen Peroxide

, 552 F.3d at 311 (internal quotation marks omitted). In fact,

“ w here an action is to proceed under Rule 23(b)(3), the commonality requirement is subsumed by the predominance requiremen t

. ” Danvers Motor Co., Inc. v. Ford Motor Co. , 543 F.3d 141, 148 (3d Cir. 2008) (internal quotation marks omitted). If the commonality requirement cannot be met, the n the more stringent predominance requirement obviously
cannot be met either. Cf. Amchem Prods., Inc. v. Windsor , 521 U.S. 591, 623

- 24 (1997) (“Even if Rule 23(a)’s commonality requirement may be satisfied ..., the predominance criterion is far more demanding.”).

The plaintiffs here cannot satisfy even the commonality
standard. In its opinion

, the District Court identified two common questions: first, whether hourly

- paid American employees at Newark airport are not being compensated for all
hours worked

, and second, whether American has a policy that discourages employees from seeking e xceptions for work done
outside of their shifts. It is not clear, however, how those questions can “ generate common answers apt to drive the resolution of the litigation.” Wal

- Mart , 564 U.S. at 350 (emphasis in original)

. T he first question cannot be an swered14 by common evidence about the timekeeping system because a
yes or no answer tells us nothing about actual common work habits, if there are any . The p laintiffs will still need to go through the process of proving that each individual employee
worked overtime and is thus entitled to additional compensation , regardless of any common evidence about American’s timekeeping system

.

Similarly, the second question cannot drive resolution
of the plaintiffs’ case because, again, their claim s are, at bottom

, that they were not paid overtime compensation for hours worked, not that American’s overarching policy regarding exceptions has deprived anyone in particular of compensation to which he or she was entitled . Moreover, the record evidence only demonstrated that a policy of not paying employees who submitted requests for overtime may have existed for one group of employees

– the mechanic s . But the
District Court certified sub classes consisting of all non

exempt, hourly employees at American’s Newark airport
station

, not just mechanics . The passenger service agents and fleet service employees have different responsibilities and supervisors than the mechanics. Even if one of the groups was affecte d by such a policy , that would not drive the resolution of the litigation on a classwide basis , see Reinig v. RBS Citizens, N.A. , 912 F.3d 115, 129 (3d Cir. 2018) (expressing doubt that the conflicting testimony about a company

- wide policy from plaintiffs with different managers could establish commonality and predominance), and thus the second common question the District Court identified did not establish commonality.

Having failed to show commonality, the plaintiffs necessarily failed too in their effort to show predominance, and15 it was error for the District Court to conclude otherwise.
Plaintiffs will have to offer individual ized proof to show that they were actuall y working during the various time periods at issue, the main point of dispute in this case. For the Grace Period Subclass, the employees cannot rely on the time clock

to prove when they were actually working because there is conflicting evidence about whe ther they were working the entire time they were clocked in. For example, some employees testified that they began working immediately after clocking in. Others testified that they chatted with co

- workers or watched TV after clocking in but before their shifts began. Thus, whe ther they were actually working pre

- and post

- shift is an open and inherently individualized question

.

T he District Court also certified the Meal Break and
Off

- the

- Clock Subclasses. The record shows , however, that employees were n ot all working during meal break s

. A ny members of the Meal Break Subclass w ould have to offer
individual ized evidence regarding which meal breaks they
spent working and for how long. And, of course, any claim
that a n employee was working off

- the

- clock would require an
individual ized inquiry as to when and to what extent that happened . T here is no easy measure, like the time clock, to which the parties can turn to determine the amount of time a n employee may have been working. Accordingly , plaintiffs

w ould again need to provide particularized evidence to show
when employees were working, so common issues do not predominate over individual ones.

The District Court cited Tyson Foods, Inc. v. Bouaphakeo , 136 S. Ct. 1036 (2016), to support i ts conclusion
that individualized variations should not defeat class certification. But that case is clearly distinguishable. In Tyson16 Foods , the class consisted of employees at a pork processing plant who were not compensated for the time spent donning and doffing the protective equipment they had to wear at work.
136 S. Ct. at 1041

- 42. The issue before the Supreme Court was whether representative evidence could be used to prove the amount of time spent donning and doffing, even though individual emplo yees took different amounts of time to perform those tasks

. Id. at 1041. T here was , however, no dispute about what the activity was that Tyson and the employees were arguing over. It was the same for everyone

– donning and doffing protective gear. The record evidence
here , on the other hand, demonstrates that employees were not always working while clocked in and there was substantial variability in what they were doing, even if some of it could be
called work

. Accordingly, this case is unlike Tysons Foods

, and the employees would need individual ized , not representative, evidence to prove their case. Thus, predominance cannot be established.

III. C ONCLUSION

Because the District Court did not perform a rigorous analysis

, and because commonality a nd predominance cannot be met under a rigorous analysis , we will reverse the class
certification order

.