In the

United States Court of Appeals

For the Seventh Circuit

No. 09-2020

DEBORAH A. ALVAREZ, et al.,

Plaintiff-Appellants,

v.

CITY OF CHICAGO,

a Municipal Corporation,

Defendant-Appellee.

Appeal from the United States District Court

for the Northern District of Illinois, Eastern Division.

No. 06-cv-4639—William J. Hibbler, Judge.

No. 09-2021

ALEXANDER CARABALLO, et al.,

Plaintiff-Appellants,

v.

CITY OF CHICAGO,

a Municipal Corporation,

Defendant-Appellee.

Appeal from the United States District Court

for the Northern District of Illinois, Eastern Division.

No. 07-cv-2807—William J. Hibbler, Judge.

ARGUED NOVEMBER 4, 2009—DECIDED MAY 21, 2010
2 Nos. 09-2020 & 09-2021

Before CUDAHY, FLAUM, and EVANS, Circuit Judges.

FLAUM, Circuit Judge. This is the consolidated appeal

from the dismissal of two lawsuits brought by paramedics

in Chicago. The plaintiffs claim that the City of Chicago

systemically miscalculated their overtime pay in a total

of ten different ways. Not all claims, however, are

common to all plaintiffs. Relying on our decision in

Jonites v. Exelon Corp., 522 F.3d 721 (7th Cir. 2008), the

district court dismissed the plaintiffs’ collective action

as “hopelessly heterogenous” and directed the plaintiffs

to proceed through arbitration. Because the named

plaintiffs have the right to proceed individually, we

reverse the judgment of dismissal.

I. Background

On August 28, 2006, a group of fifty-four

paramedics employed by the Chicago Fire Department

filed a two-count collective action against the City of

Chicago, alleging that it willfully failed to properly

compensate them for overtime, in violation of the Fair

Labor Standards Act (“FLSA”), 29 U.S.C. §§ 201-219 (2006).

See Alvarez v. City of Chicago, No. 06-cv-4639 (N.D. Ill.).

The district court granted the Alvarez plaintiffs’ motion to

begin distributing notices of the action to prospective

plaintiffs and provided them with 60 days in which to

add additional plaintiffs.

More than three hundred additional plaintiffs opted

in. On the City’s motion, the district court dismissed

several of them because the 60-day deadline had passed.

Four of those plaintiffs, along with eight new plaintiffs,
Nos. 09-2020 & 09-2021 3

then filed a new action. See Caraballo v. City of Chicago,

No. 07-cv-2807 (N.D. Ill). The Caraballo plaintiffs assert

the same claims as the Alvarez plaintiffs, but did not

style their lawsuit as a collective action or seek class

certification. On September 13, 2007, the district court

consolidated Alvarez and Caraballo.

On June 6, 2008, the Caraballo plaintiffs moved for

summary judgment. In their motion for summary

judgment, the Caraballo plaintiffs identified a total of ten

subclaims under FLSA. Briefly summarized, these

claims are:

1. Payments excluded from employees’ “regular

rate” for determining overtime compensation.

FLSA requires overtime at the rate of one-and-ahalf times an employee’s “regular rate,” which is

defined as “all remuneration for employment paid

to . . . an employee,” with several exceptions

including “payments to an employee which are not

made as compensation for his hours of employment.”

The paramedics identify six types of pay that they

believe were wrongly excluded from their “regular

rate.”

a. Duty availability pay. This is a quarterly lump-sum

payment of $175 made to all emergency medical

services employees who work in 24-hour shifts

pursuant to the collective bargaining agreement

(“CBA”).

b. Fitness pay. Also made pursuant to the CBA, this

is a lump-sum payment of $350 to employees

who meet certain physical qualifications measured
4 Nos. 09-2020 & 09-2021

by a voluntary fitness test, which employees may

take yearly.

c. Specialty pay. Specialty pay is provided under the

CBA to paramedics who are also hazardous materials

technicians and certified drivers. The compensation

is equal to 5% of the employee’s annual salary and

is paid quarterly on a pro rata basis.

d. Uniform pay. Pursuant to the CBA, all paramedics

receive two lump-sum payments during the course

of a year “for cleaning and maintenance of dress

uniforms, work clothes and protective clothing.”

e. Acting pay. If a paramedic temporarily works in a

higher rank, he receives additional compensation

known as acting pay.

f. Driving pay. Paramedics receive additional

compensation, known as driving pay, if they drive

the ambulance. 

2. Treatment of continuing education time. Plaintiffs

make two arguments regarding the way the city

handled time spent in continuing education. First,

plaintiffs argue that the city improperly counted

time spent in continuing education as “hours

worked” for purposes of calculating the regular rate,

since continuing education was compensated on an

annual basis. Because the City calculated plaintiffs’

regular rate (and, in turn, overtime rate) by dividing

paramedics’ salary by the number of hours worked,

an increase in “hours worked” decreases the rate

at which plaintiffs are compensated for overtime.

Second, plaintiffs argue that the city could not use
Nos. 09-2020 & 09-2021 5

payments made for continuing education as

credits against overtime owed.

3. Treatment of additional shifts. The plaintiffs also

argued that the City could not count hours spent

working additional shifts as “hours worked” for

purposes of determining the regular rate and that

the City was not permitted to use them as credits

against overtime owed.

4. Human computation errors. The plaintiffs argued

that the city committed various human errors in

calculating their overtime compensation. 

5. Salary method of computing weekly regular rates.

Plaintiffs argue that the city violated the FLSA by

using the fixed salary method to determine regular

rates.

The City filed a cross-motion for summary judgment

against all parties, including the Alvarez plaintiffs. In

addition to responding on the merits, defendant moved

to decertify plaintiffs’ collective action and dismiss their

claims on the grounds that they were “hopelessly

heterogenous.” On March 20, 2009, the district court

granted the city’s motion for summary judgment against

all plaintiffs, reasoning that the plaintiffs were not

similarly situated because each plaintiff raised a different

combination of the ten subclaims, such that the plaintiffs

could not be readily divided into homogenous subgroups.

The district court also noted that arbitration pursuant to

the collective bargaining agreement, while not mandatory,

might be a more efficient way to resolve the paramedics’

claims. The court did not reach the merits of the ten

subclaims raised by the plaintiffs. Instead, it dismissed
6 Nos. 09-2020 & 09-2021

the claims of all plaintiffs, without prejudice, and

directed them to pursue arbitration.

II. Analysis

The Fair Labor Standards Act gives employees the

right to bring their FLSA claims through a “collective

action” on behalf of themselves and other “similarly

situated” employees. 29 U.S.C. § 216(b) (2006). A collective

action is similar to, but distinct from, the typical class

action brought pursuant to Fed. R. Civ. P. 23. The principle

difference is that plaintiffs who wish to be included in

a collective action must affirmatively opt-in to the suit

by filing a written consent with the court, while the

typical class action includes all potential plaintiffs that

meet the class definition and do not opt-out. 

The City—and the district court’s opinion—relies heavily

on our decision in Jonites v. Exelon Corp., 522 F.3d 721 (7th

Cir. 2008). In Jonites, we affirmed the dismissal of a

collective action brought on behalf of more than a

thousand lineman and other hourly workers employed

by Commonwealth Edison. The Jonites plaintiffs alleged

that two types of purportedly off-duty time were really

compensable work. The first involved Com Ed’s “call-out”

policy, which required off-duty workers to respond to

at least 35% of the calls from their employer for additional manpower on an emergency basis. The frequency

of these call-outs varied widely among workers; some

were called as often as once every five and a half days

on average, and others no more than once a month. The

employees took the position that they were entitled to

be paid for “some of the time” during which they were
Nos. 09-2020 & 09-2021 7

subject to call, with the amount to be determined by the

trier of fact. The second challenge was to the lunch

policy, which required workers at job sites to remain

awake and be alert for trespassing and the theft of tools.

However, only part of the class worked the daytime

shift, to which the lunch policy applied. We held that as

to both of these claims, the purported class was “hopelessly heterogenous” because liability would require

significant individual fact-finding and many of the

workers had no conceivable claim at all. Id. at 725-26. We

further held that the individual plaintiffs must either

file individual suits, create homogenous classes, or ask

the union to file grievance proceedings under the collective bargaining agreement. Id. at 726. Because the

purported class here is made up of plaintiffs who each

have a different combination of subclaims, defendants

argue that it is similarly heterogenous and was properly

dismissed in favor of arbitration.

Appellants argue that this case is different from Jonites

because the plaintiffs here appear to be similarly

situated with regard to individual subclaims, but are

heterogenous only because there are several different

combinations of those subclaims. For example, whether

any given paramedic is entitled to recover on the

uniform pay theory depends on the legal question of

whether such pay should have been included in the base

rate, and the simple factual question of whether the

particular paramedic received uniform pay. Instead of

dismissing their claims as heterogenous, plaintiffs

argue, the district court should have allowed them to

split their claims into homogenous subclasses. See, e.g.,

Fravel v. County of Lake, No. 2:07-cv-253, 2008 WL 2704744
8 Nos. 09-2020 & 09-2021

(N.D. Ind. July 7, 2008) (allowing plaintiffs to proceed

collectively and grouping the plaintiffs into four distinct

subclasses depending on which theory of liability

applied to them). Plaintiffs suggest that here, as in Fravel,

“[r]esolving common questions as a class, even through

the additional mechanism of sub-classes, remains

inherently more efficient” than splitting the action into

four separate collective actions or allowing individual

claims by each plaintiff. Id. at *3.

The district court appeared to agree with the plaintiffs’ characterization of their subclaims, noting that the

City’s liability to any particular plaintiff on any given

subclaim turns only upon a single uniform policy and

whether that policy impacted that particular plaintiff.

However, the district court refused to adopt the Fravel

approach, concluding that the number of subclaims

made the plaintiffs “hopelessly heterogenous” and that

arbitration would be more efficient.

A district court has wide discretion to manage collective actions. See Hoffmann-La Roche v. Sperling, 493 U.S.

165, 171 (1989). However, it appears that here the

district court may have mistakenly read Jonites to forbid it

from adopting a subclaim approach merely because the

variety of subclaims renders the class “heterogenous.” The

problem with the Jonites class, however, was not that

the plaintiffs had different subclaims, but rather that

determining whether any given plaintiff had a viable

claim depended on a detailed, fact-specific inquiry, and

many plaintiffs lacked any conceivably viable claim

altogether. Jonites, 522 F.3d at 723, 725-26; see also Mooney
Nos. 09-2020 & 09-2021 9

There may also be cases where despite common questions 1

as to liability, the remedy is so tailored to each particular

plaintiff that a collective action is inappropriate. Cf. Andrews

v. Chevy Chase Bank, 545 F.3d 570, 578 (7th Cir. 2008) (holding

that Truth in Lending Act claims for rescission may not, as

a matter of law, be brought as a class action). In Andrews,

however, the statutory rescission remedy at issue required

“unwinding the transaction in its entirety and . . . returning

borrowers to the position they occupied prior to the

loan agreement.” Id. at 573. This individualized equitable

remedy posed more significant obstacles to class resolution

than the claims for damages here. If the paramedics in this

litigation ultimately recover, their recovery will be determined

by the application of mathematical formulae common to all

class members, although the specific variables (number of

hours worked, hourly wage, etc.) will vary from individual to

individual. However, the individualized facts will likely

come in the form of undisputed payroll and time records.

Moreover, if necessary, Fed. R. Civ. P. 53(a)(1)(B)(ii)

(continued...)

v. Aramco Services Co., 54 F.3d 1207, 1214-15 (5th Cir.

1995), overruled on other grounds by Desert Palace, Inc. v.

Costa, 539 U.S. 90 (2003) (affirming decertification of

collective action where employees who brought ADEA

claim were subject to “vastly disparate employment

situations” and defense was likely to center on purported reasonable factors other than age specific to each

employee). If common questions predominate, the

plaintiffs may be similarly situated even though the

recovery of any given plaintiff may be determined by

only a subset of those common questions.1
10 Nos. 09-2020 & 09-2021

(...continued) 1

authorizes the district court to appoint a special master to

“resolve a difficult computation of damages.”

The parties dispute whether arbitration of these FLSA claims 2

is permissible under the terms of the paramedics’ collective

bargaining agreement. We need not reach this issue, as it has

no bearing on whether the plaintiffs are in fact similarly situated or whether they have the right to proceed individually.

Similarly, the district court mistakenly compared the

efficiency of proceeding through subclaims only to the

perceived efficiency of arbitration. Plaintiffs have the 2

right to proceed individually and may be able to form

more tailored classes. See Jonites, 522 F.3d at 725 (noting

that a collective bargaining agreement cannot preempt

or waive a worker’s right to a judicial remedy for FLSA

violations). Thus, if it appears plaintiffs are prepared

to proceed individually or through separate classes, the

district court must consider whether these other

mechanisms for judicial resolution of their claims

are more or less efficient than a collective action

comprised of various subclaims. Cf. Fravel, supra. In

Jonites, the circumstances suggested that plaintiffs had “no

stomach for proceeding case by case.” Id. at 726. Here,

the twelve Caraballo plaintiffs filed their complaint as

individuals and moved for summary judgment as

individuals. Indeed, there is nothing apparent from the

record to indicate that the fifty-four named plaintiffs in

Alvarez were unwilling to proceed individually. Yet

the district court dismissed their claims in favor of

arbitration without considering whether it was better to
Nos. 09-2020 & 09-2021 11

The City argues that plaintiffs have waived this argument. 3

But in response to the City’s claim, in its cross-motion for

summary judgment, that the collective action was “hopelessly

heterogenous,” the Caraballo plaintiffs argued that they were

proceeding individually and that this argument was thus

inapplicable to them. Because of the course of litigation

below, plaintiffs did not have an opportunity to present this

argument more fully. With only the Caraballo plaintiffs’ motion

for summary judgment before it, the district court addressed

both the Alvarez and Caraballo actions, deemed the Caraballo

plaintiffs to be proceeding as a class, and not only decertified

both classes but entered its judgment of dismissal without

prejudice that same day. While plaintiffs do not argue that

treating Caraballo as a collective action was error (indeed, it

appears that at least one plaintiff attempted to opt in to the

Caraballo action), this procedural posture does explain why

the right to proceed individually was not addressed below.

address sixty-five individual claims or one collective

action comprised of ten subclaims.

Finally, the district court erred when it dismissed

the claims of the named plaintiffs. When a collective

action is decertified, it reverts to one or more individual

actions on behalf of the named plaintiffs. See Hipp v. Liberty

Nat’l Life Ins. Co., 252 F.3d 1208, 1218 (11th Cir. 2001) (citing

Mooney, 54 F.3d at 1213-14); see also Fox v. Tyson Foods,

Inc., 519 F.3d 1298, 1301 (11th Cir. 2008) (affirming

decertification of an FLSA collective action, dismissal

of the opt-in plaintiffs, and severance of each of the

named plaintiffs into separate individual actions).3

Defendants do not argue that arbitration under the

collective bargaining agreement preempts litigating these
12 Nos. 09-2020 & 09-2021

issues in federal court. Plaintiffs are entitled, at minimum, to pursue their claims individually. Whether

they are permitted to do so in one action or several is

committed to the sound discretion of the district court,

but misjoinder of parties is never a ground for dismissing

an action. See Fed. R. Civ. P. 21. We therefore reverse

the district court’s dismissal of the named plaintiffs’

claims in both the Alvarez and Caraballo actions.

Sifting through the subclaims of each of the myriad

plaintiffs is an unenviable task. But plaintiffs are

nonetheless entitled to their day in court. Moreover, it

appears that here, common questions predominate with

regard to each theory of liability. The parties have

already filed cross-motions for summary judgment on

the merits of these common questions. After the district

court determines the validity of these subclaims,

calculation of each plaintiff’s award (if any) will be

largely mechanical. On remand, given that the claims of

the named plaintiffs will still be before it, the district

court should consider whether a collective action might

be the most efficient judicial resolution of this matter

after all.

III. Conclusion

We REVERSE the district court’s dismissal of the named

plaintiffs’ claims and REMAND for proceedings consistent

with this opinion.

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