United States Court of Appeals 

for the Fifth Circuit ____________ 

No. 22-20434 

____________ 

Timothy Klick; Wilton Chambers; Malik Aleem; John 

Potter; Anthony D. Woods, 

Plaintiffs—Appellees, 

versus

Cenikor Foundation, 

Defendant—Appellant. 

______________________________ 

Appeal from the United States District Court 

for the Southern District of Texas 

USDC No. 4:19-CV-1583 

______________________________ 

Before Graves, Higginson, and Douglas, Circuit Judges.

Dana M. Douglas, Circuit Judge: 

As neither a member of this panel, nor judge in active service, 

requested that the court be polled on rehearing en banc, the petitions for 

rehearing en banc are DENIED. Fed. R. App. P. 35 and 5th Cir. R.

35. The petition for panel rehearing is GRANTED. We withdraw our 

previous opinion and substitute the following:

Cenikor Foundation brings this interlocutory appeal challenging the 

district court’s threshold determination that a collective action of its drug 

rehabilitation patients may proceed under the Fair Labor Standards Act 

United States Court of Appeals 

Fifth Circuit 

FILED 

August 16, 2023 

Lyle W. Cayce 

Clerk 

Case: 22-20434 Document: 00517061282 Page: 1 Date Filed: 02/09/2024
No. 22-20434 

2 

(“FLSA” or “the Act”), 29 U.S.C. § 201, et seq. Finding that the district 

court applied the incorrect legal standard in assessing employee status, we 

REMAND for consideration consistent with this opinion. Additionally, we 

REMAND for the district court to consider whether Cenikor Foundation’s 

offset defense precludes collective certification. 

I. 

A. 

 Cenikor Foundation is a 501(c)(3) nonprofit rehabilitation center 

assisting individuals with alcohol and/or drug addiction, as well as behavioral 

health issues, with locations throughout Texas and Louisiana. At issue in this 

lawsuit is an adult long-term inpatient treatment program (“the Program”) 

run by Cenikor, in which patients were assigned jobs and required to work.1

 

Cenikor describes the Program in therapeutic language, calling it 

“vocational therapy” which involves a “highly regulated regimen with 

clearly stated expectations for behavior and psychological and behavioral 

rewards,” including “morning and evening house meetings, job assignments, 

group sessions, seminars, personal time, recreation, and individual 

counseling.” Appellees describe Cenikor as a “staffing agency” who has 

“outsourced its patients through its Work Program to work for various 

private companies” to its benefit. 

The Program includes three specific phases: orientation, primary 

treatment, and reentry. During the orientation phase, lasting up to 60 days, 

patients “learned the rules of the program, participated in group and 

individual therapy, and worked with counselors to develop an individualized 

treatment plan.” When patients entered the primary treatment phase, 

_____________________ 

1

 Since the summer of 2021, Cenikor had discontinued the Program. 

Case: 22-20434 Document: 00517061282 Page: 2 Date Filed: 02/09/2024
No. 22-20434 

3 

lasting 16 to 18 months, Cenikor added “vocational therapy and training to 

the patients’ program.” The “vocational therapy” took place either in 

Cenikor’s own facilities2

 or with one of the “community businesses” that 

partnered with Cenikor, and patients did not keep any of the money from 

their work. If patients reached the reentry phase, they were required to find 

full-time employment and arrange for a permanent residence and reliable 

transportation to complete the Program. It was only during this phase that 

patients began earning wages from their employer directly. 

Many long-term patients received treatment for free or at a reduced 

rate. All patients received access to room, board, food, clothing, security, 

counseling, transportation, and medical care during their tenure. Every 

patient signed a form explaining that Cenikor’s “comprehensive therapeutic 

treatment program includes work assignments as part of rehabilitation” and, 

“[r]esidents receive no monetary compensation for assigned responsibilities 

in the facility, or any on-the-job training during the primary treatment 

phase.” By signing, the patients attested that “I further understand that 

under no circumstances can Cenikor be under any obligation to me; that I am 

a beneficiary and not an employee.” Instead of making money off their 

“vocational therapy,” patients attested that they understood that the funds 

paid to Cenikor “go directly back to the Foundation to help offset the cost of 

treatment services.” To further offset costs, Cenikor also required patients 

to apply for government assistance, such as food stamps, and assign those 

benefits to Cenikor. 

As part of the Program, Cenikor had contracts with community 

business partners (“outside businesses” throughout) to provide Program 

_____________________ 

2

 The patients who worked within Cenikor’s facilities are not a part of the proposed 

collective. 

Case: 22-20434 Document: 00517061282 Page: 3 Date Filed: 02/09/2024
No. 22-20434 

4 

participants for particular jobs. These outside businesses were then billed by 

Cenikor for the hours worked by the Program participants. In 2017, Cenikor 

billed these outside businesses more than $7 million for the labor of the 

Program participants. In 2018, Cenikor invoiced $6.9 million to these outside 

businesses. Cenikor was paid directly for the labor provided by the Program 

participants at rates contractually agreed upon between Cenikor and the 

outside businesses. In accordance with labor laws governing overtime pay, 

Cenikor also charged outside businesses an overtime premium of 1.5 times 

the regular hourly rate when participants worked more than 40 hours a week.3

 

 Cenikor paid for workers’ compensation insurance for all Program 

participants and marketed this benefit to potential outside business partners. 

The Program did not vary across locations. Cenikor decided which outside 

businesses its patients were assigned to, and if an outside business wished to 

change the job duties of a patient, it was required to first obtain Cenikor’s 

permission to do so. 

If a patient is unwilling to perform a work assignment, they would be 

disciplined by Cenikor, up to and including termination from the Program 

and removal from the facilities. Cenikor’s intake forms indicated that if 

“unable to participate” in the Program, participants would “be subject to 

termination from Cenikor.” 

B. 

_____________________ 

3

 The contract with the outside businesses regarding overtime pay provided: 

“Vocational workers are presumed to be nonexempt from laws requiring premium pay for 

overtime and holiday work, or weekend work.” (emphasis added). Although the contract 

clearly identified Cenikor’s patients as “nonexempt” from laws requiring premium pay, its 

CFO testified that it was intended to mean the patients were considered “volunteers.” 

However, Cenikor could and did bill these outside businesses overtime whenever a patient 

worked more than 40 hours in a week. 

Case: 22-20434 Document: 00517061282 Page: 4 Date Filed: 02/09/2024
No. 22-20434 

5 

In 2019, after the Center for Investigative Reporting published a series 

of podcasts and articles “reporting that Cenikor had sent thousands of 

individuals in Louisiana and Texas to work without monetary compensation 

at major companies such as Walmart, Shell, and ExxonMobil,” various 

plaintiffs filed six different lawsuits against Cenikor in three different federal 

district courts. Named plaintiff Klick filed the first suit in the Southern 

District of Texas, and all lawsuits were transferred to that court and 

consolidated on February 25, 2020. Shortly after the case was filed, the 

plaintiffs filed motions for conditional certification under the then-widely 

used framework for conditional certification established in Lusardi v. Xerox 

Corp., 118 F.R.D. 341 (D.N.J. 1987). Following this court’s decision in Swales 

v. KLLM Transp. Servs., LLC, 985 F.3d 430, 434 (5th Cir. 2021), which 

rejected the Lusardi framework, and because Plaintiffs indicated that they 

would file an amended motion for certification following pre-certification 

discovery, the district court found the pending motions were moot and 

denied them without prejudice. 

The parties then exchanged written discovery and held depositions of 

the named plaintiffs and a Rule 30(b)(6) corporate representative of Cenikor. 

A total of 226 individuals consented to join the lawsuit as plaintiffs of the 

2,736 individuals that had participated in the Program since May of 2016. 

Following a renewed motion for certification, the district court 

certified a collective action under the FLSA. Specifically, the district court 

certified a “proposed class of individuals who participated in the primary 

phase of Cenikor’s long-term residential program from May 2016 to the 

present and performed work for outside businesses or individuals without 

monetary compensation.” Cenikor filed this interlocutory appeal pursuant 

to 28 U.S.C. § 1292 and now asks this court to reverse the district court’s 

decision to certify a collective action. 

Case: 22-20434 Document: 00517061282 Page: 5 Date Filed: 02/09/2024
No. 22-20434 

6 

II. 

 This court reviews the appropriate legal standard to apply when 

determining whether an individual is an employee under the FLSA de novo. 

Swales, 985 F.3d at 439. Once the correct legal standard is ascertained, we 

review the district court’s decision certifying a collective action for abuse of 

discretion. Id. “A district court abuses its discretion if it bases its decision on 

an erroneous view of the law or on a clearly erroneous assessment of the 

evidence.” Hesling v. CSX Transp., Inc., 396 F.3d 632, 638 (5th Cir. 2005). 

III. 

The Fair Labor Standards Act of 1983 created “a comprehensive 

federal wage-and-hour scheme.” Aldridge v. Miss. Dept. of Corrs., 990 F.3d 

868, 871 (5th Cir. 2021). Congress enacted the FLSA to eliminate “labor 

conditions detrimental to the maintenance of the minimum standard of living 

necessary for health, efficiency, and general wellbeing of workers.” Id. The 

principal purpose of the Act is “to protect all covered workers from 

substandard wages and oppressive working hours.” Id. (quoting Barrentine 

v. Arkansas-Best Freight Sys., Inc., 450 U.S. 728, 739 (1981)). Workers 

covered under the Act are entitled to a minimum wage and overtime 

compensation. 29 U.S.C. §§ 206-07. 

 “The FLSA protects employees (not independent contractors) . . . .” 

Swales, 985 F.3d at 434. Moreover, collective actions may only proceed 

under the FLSA so long as the potential members are “similarly situated.” 

Id. at 433. “District courts should ‘rigorously enforce [the FLSA’s similarity 

requirement] at the outset of the litigation.” Id. at 443. In determining 

whether “employees” are “similarly situated,” district courts must

scrutinize all facts and legal considerations material to determining such 

status, including merits questions. Id. at 434, 441-42. Here, where a merits 

question is wrapped up in a threshold determination—whether the 

Case: 22-20434 Document: 00517061282 Page: 6 Date Filed: 02/09/2024
No. 22-20434 

7 

rehabilitation patients are considered employees entitled to compensation 

under the FLSA—the dispositive threshold issue must be resolved before a 

collective can be certified and notice can be sent. See id. at 441 (“The fact 

that a threshold question is intertwined with a merits question does not itself 

justify deferring those questions until after notice is sent out.”). 

 However, we emphasize that a threshold determination is not a 

resolution of the merits question itself. Instead, a threshold determination 

should consider whether the merits question may be answered on a collective 

basis and should not serve as an endorsement of the ultimate outcome in the 

case. Swales, 985 F.3d at 434 (discussing the importance of avoiding 

“signal[ing] approval of the merits”); Hoffman-La Roche, Inc. v. Sperling, 493 

U.S. 165, 174 (1989) (“[T]rial courts must take care to avoid even the 

appearance of judicial endorsement of the merits of the action.”). 

A. 

Cenikor argues that the district court applied the wrong legal standard 

to determine whether Cenikor’s patients were FLSA “employees.” 

Appellees argue that the district court properly applied binding Supreme 

Court precedent to the facts of this case in finding that the employment 

question may be decided on a collective-wide basis. 

Collective actions can be certified as to the very question of whether a 

specific group of individuals qualify as “employees” under the FLSA. See 

Hobbs v. Petroplex Pipe and Const., Inc., 946 F.3d 824, 828-29 (5th Cir. 2020). 

While the determination of whether an individual is an “employee” is a 

matter of law, there are often associated factual inquiries required before such 

a determination can be made. The ultimate determination turns on the 

“economic reality” of the relationship between the parties involved. See 

Tony & Susan Alamo Found. v. Sec’y of Lab., 471 U.S. 290, 301 (1985). An 

evaluation of economic reality, in turn, depends on the totality of the 

Case: 22-20434 Document: 00517061282 Page: 7 Date Filed: 02/09/2024
No. 22-20434 

8 

circumstances. See Rutherford Food Corp. v. McComb, 331 U.S. 722, 730 

(1947). Two Supreme Court decisions are central to this analysis—Walling 

v. Portland Terminal Co., 330 U.S. 148 (1947) and Tony & Susan Alamo 

Foundation v. Secretary of Labor, 471 U.S. 290 (1985). 

Walling involved a FLSA minimum wage claim against a railroad 

company that offered training for prospective yard brakemen, which would 

typically last seven or eight days. 330 U.S. at 149. Trainees were not paid for 

work they performed during the training program, nor did they expect any 

compensation, except that the railroad company might hire them at the end 

of the training period and retroactively compensate them for work performed 

during the training period. Id. at 150. The trainees’ work did “not expedite 

the company business” but sometimes impeded it. Id. The Court held that 

the trainees were not “employees” under the FLSA. Id. at 153. Holding 

otherwise would “deprive [the trainees] of all opportunity to secure work, 

thereby defeating one of the [FLSA’s] purposes, which was to increase 

opportunities for gainful employment.” Id. at 151. Further, a person who, 

“without promise or expectation of compensation, but solely for his personal 

purpose or pleasure, worked in activities carried on by other persons either 

for their pleasure or profit,” is outside the scope of the FLSA. Id. at 152. 

In Alamo, the Court expanded its Walling analysis. The Alamo 

Foundation, a nonprofit religious organization, derived its income largely 

from the operation of commercial businesses staffed by its “associates,” 

most of whom were “drug addicts, derelicts, or criminals” before their 

rehabilitation at the Foundation. Alamo, 471 at 292. The associates received 

no cash salaries, but were provided with “food, clothing, shelter, and other 

benefits.” Id. The Secretary of Labor filed an action against the Foundation 

alleging violations of the minimum wage, overtime, and recordkeeping 

provisions of the FLSA. Id. at 293. 

Case: 22-20434 Document: 00517061282 Page: 8 Date Filed: 02/09/2024
No. 22-20434 

9 

As in Walling, the Court stated that “an individual who, without 

promise or expectation of compensation, but solely for his personal purpose 

or pleasure, worked in activities carried on by other persons either for their 

pleasure or profit, is outside the sweep of the [FLSA].” Id. at 295 (internal 

quotation marks and citation omitted). Although the Foundation’s 

associates protested coverage under the Act, the Court determined this was 

not dispositive because the test of employment is one of “economic reality.” 

Id. at 301. The fact that the compensation was primarily in the form of 

benefits, rather than cash, was “immaterial” in this context since such 

benefits are “wages in another form.” Id. Because the associates received 

in-kind benefits and were dependent on the Foundation for long periods of 

time, the Court held that the district court did not clearly err in finding they 

were “employees” within the meaning of the Act. Id. 

Here, the district court concluded that it was appropriate to apply the 

economic realities test set forth by our court in Hopkins v. Cornerstone 

America, 545 F.3d 338 (5th Cir. 2008), to determine whether the 

rehabilitation patients were employees under the FLSA. Although it shares 

the same name as the Supreme Court’s test in Alamo, the economic realities 

test was established to distinguish employees from independent contractors. 

Hopkins, 545 F.3d at 343-44. The Hopkins test considers (1) the degree of 

control exercised by the alleged employer; (2) the extent of the relative 

investments of the worker and the alleged employer; (3) the degree to which 

the worker’s opportunity for profit or loss is determined by the alleged 

employer; (4) the skill and initiative required in performing the job; and (5) 

the permanency of the relationship. Id. at 343 (citing Brock v. Mr. W. 

Fireworks, Inc., 814 F.2d 1042, 1043-44 (5th Cir. 1987)). 

In some ways, this test is inapposite. For example, the opportunity for 

profit or loss, or the relative investment in the business, are unlikely to be 

relevant when considering whether a rehabilitation patient is an employee. 

Case: 22-20434 Document: 00517061282 Page: 9 Date Filed: 02/09/2024
No. 22-20434 

10 

See Purdham v. Fairfax Cnty. Sch. Bd., 637 F.3d 421, 433 (4th Cir. 2011) 

(“[T]he test is best suited to determine whether, as a matter of economic 

reality, an individual is in business for himself or herself as an independent 

contractor . . . [and] is of limited utility in determining whether an individual 

is an employee, as opposed to a volunteer.”) (internal quotation marks 

omitted). There is also some tension between this test and the instruction in 

Walling and Alamo that a court must consider whether the employee had an 

“expectation of compensation.” Walling, 330 U.S. at 152; Alamo, 471 U.S. at 

302. Whether a worker is an independent contractor or an employee, there 

is no doubt that both have an expectation of compensation. 

Circuit courts applying Walling and Alamo to rehabilitation patients 

have relied on a primary beneficiary analysis, a test commonly applied when 

evaluating whether volunteers, trainees, and interns are “employees” under 

the FLSA. See, e.g., Vaughn v. Phoenix House New York Inc., 957 F.3d 141, 

145-46 (2d Cir. 2020); Fochtman v. Hendren Plastics, Inc., 47 F.4th 638, 645 

(8th Cir. 2022); Armento v. Asheville Buncombe Cmty. Christian Ministry, Inc., 

856 F. App’x 445, 452 (4th Cir. 2021) (unpublished). 

In Vaughn, the plaintiff entered a residential drug and alcohol 

treatment program at Phoenix House pursuant to a state-court-approved 

agreement to participate in a rehabilitation program, in lieu of incarceration 

for existing criminal charges. 957 F.3d at 144. Vaughn did not want to 

perform his work duties but was told that if he was removed from the program 

for noncompliance, he would go to jail, so he performed work responsibilities 

at Phoenix House for a little less than a year. Id. Vaughn then attempted to 

bring claims under the FLSA, but the Second Circuit held that he was not an 

“employee” under the FLSA. Id. at 146. 

The Second Circuit endorsed the district court’s application of a 

primary beneficiary test. Id. at 145. It emphasized the “three salient 

Case: 22-20434 Document: 00517061282 Page: 10 Date Filed: 02/09/2024
No. 22-20434 

11 

features” of its primary beneficiary analysis, previously used to assess the 

nature of the relationship between an intern and his employer: (1) its focus 

on what the intern receives in exchange for work, (2) its flexibility to evaluate 

the economic reality of the relationship, and (3) its acknowledgement of 

considerations unique to intern-employer relationships, such as the 

educational or vocational benefits to the intern.4

 Id. In applying the primary 

beneficiary test, the Second Circuit noted that Vaughn was not an employee 

despite having “received significant benefits from staying at Phoenix House, 

in large part because he was permitted to receive rehabilitation treatment in 

lieu of a jail sentence, and was provided with food, a place to live, therapy, 

vocational training, and jobs that kept him busy and off drugs.” Id. (quotation 

marks and citation omitted). 

_____________________ 

4

 The Second Circuit applies the following non-exhaustive list of factors: 

1. The extent to which the intern and the employer clearly understand that there is 

no expectation of compensation. Any promise of compensation, express or implied, 

suggests that the intern is an employee—and vice versa. 

2. The extent to which the internship provides training that would be similar to 

that which would be given in an educational environment, including the clinical and other 

hands-on training provided by educational institutions. 

3. The extent to which the internship is tied to the intern’s formal education 

program by integrated coursework or the receipt of academic credit. 

4. The extent to which the internship accommodates the intern’s academic 

commitments by corresponding to the academic calendar. 

5. The extent to which the internship’s duration is limited to the period in which 

the internship provides the intern with beneficial learning. 

6. The extent to which the intern’s work complements, rather than displaces, the 

work of paid employees while providing significant educational benefits to the intern. 

7. The extent to which the intern and the employer understand that the internship 

is conducted without entitlement to a paid job at the conclusion of the internship. 

Vaughn, 957 F.3d at 145-46. 

Case: 22-20434 Document: 00517061282 Page: 11 Date Filed: 02/09/2024
No. 22-20434 

12 

Likewise in Fochtman v. Hendren Plastics, Inc., the Eighth Circuit did 

not extend employee status to court-ordered participants of a nonprofit drug 

and alcohol recovery program (“DARP”). 47 F.4th 638, 641 (8th Cir. 2022). 

The participants could avoid imprisonment in a criminal case by agreeing to 

participate in DARP, which provided them with room, board, clothing, and 

other necessities, without charging costs or fees to participate. Id. DARP 

provided transportation to for-profit businesses, but did not compensate 

participants for their work, despite collecting an hourly rate from the forprofit businesses for the time worked by participants. Id. The Eighth Circuit 

found that “the overriding consideration is that the DARP participants 

undertook the recovery program for their own purposes to avoid 

imprisonment, and they had no reason to expect compensation from [the 

recovery program].” Id. at 646. 

Although not expressly described as a primary beneficiary analysis, we 

have utilized the primary beneficiary test when determining whether flight 

attendant trainees were employees entitled to FLSA protections. Donovan v. 

Am. Airlines, Inc., 686 F.2d 267 (5th Cir. 1982). In Donovan, American 

Airlines benefitted from requiring unpaid training, but the trainees were not 

employees because they attended “for their own benefit, to qualify for 

employment they could not otherwise obtain.” Id. at 272. Further, American 

Airlines did not receive an immediate benefit from the trainees’ activities, as 

they were not productive until after the training session ended. Id. In 

addressing an outlier decision that determined FLSA applied to a trainee, we 

noted that it reinforced our conclusion because the trainee “substituted for 

hired personnel, was included as a member of the full crew . . . and, during 

training, performed tasks necessary to the ship’s functioning.” Id. at 273 

(citing Bailey v. Pilots’ Assoc. for the Bay & River Del., 406 F.Supp. 1302 (E.D. 

Pa. 1976)). This bolstered our conclusion because in Bailey, the pilots’ 

association, rather than the trainee, was receiving the most benefit from the 

Case: 22-20434 Document: 00517061282 Page: 12 Date Filed: 02/09/2024
No. 22-20434 

13 

arrangement. See id. Thus, although the words were not explicitly used, we 

determined that the flight attendants were the primary beneficiaries of the 

relationship, not American Airlines. See id. 

The district court was understandably hesitant to apply this analysis 

because it “has not been endorsed by the Fifth Circuit in the context of 

rehabilitation services.” Today, we endorse it. In light of the court’s 

responsibility to assess the economic reality between the parties, a factintensive inquiry which requires a careful evaluation of the totality of the 

circumstances, we find that a primary beneficiary test provides a helpful 

framework for discerning employee status. Non-exhaustive factors to 

consider include the plaintiffs’ expectation of compensation, the therapeutic 

value of the Program, whether the relationship displaces paid employees, and 

any other considerations that may “shed light on which party primarily 

benefits from the relationship.” See Eberline v. Douglas J. Holdings, Inc., 982 

F.3d 1006, 1018 (6th Cir. 2020) (quoting Solis v. Laurelbrook Sanitarium and 

School, Inc., 642 F.3d 518, 529 (6th Cir. 2011) (applying primary beneficiary 

analysis to students in a training environment)). These considerations are 

remanded to the district court to apply in the first instance. 

B. 

Cenikor also takes issue with the district court’s finding that the 

rehabilitation patients were “similarly situated” to each other for purposes 

of certifying a collective action. As noted, plaintiffs bear the burden of 

proving a collective is similarly situated. Swales, 985 F.3d at 442-43. The 

statute, however, does not define “similarly situated.” Id. at 435. As this 

court explained in Swales, “to determine if and when to send notice to 

potential opt-in plaintiffs,” “a district court should identify, at the outset of 

the case, what facts and legal considerations will be material to determining 

whether a group of ‘employees’ is ‘similarly situated.’” Id. at 441. 

Case: 22-20434 Document: 00517061282 Page: 13 Date Filed: 02/09/2024
No. 22-20434 

14 

A showing that members of a collective action are similarly situated 

does not require members to be identically situated but requires plaintiffs to 

show a demonstrated similarity between the purported collective, such as a 

factual nexus that binds the claims together so that hearing all claims in one 

proceeding is fair to all parties and not beset with individual inquiries. See id. 

at 443. This requires a consideration of proposed defenses to determine 

whether they are so individualized that denial of certification is required. 

After the completion of preliminary discovery, the district court 

determined that the evidence and testimony showed that the key aspects in 

considering whether an employer-employee relationship exists may be 

resolved on a collective-wide basis because: (1) all patients signed the same 

paperwork disclaiming employee status and stating they would not be paid 

during the primary phase; (2) the paperwork promised that Cenikor would 

provide all basic personal needs including housing, food, emergency medical 

care, and clothing; (3) all plaintiffs agreed to perform work to receive these 

in-kind benefits; (4) all program participants received their work assignments 

and schedules from Cenikor; and (5) all plaintiffs were subject to the same 

organization-wide policies and procedures irrespective of location. 

Ultimately, the district court concluded that it could address whether the 

primary phase participants were FLSA employees on a collective basis 

because all proposed members were subject to a company-wide policy in 

which they performed labor without monetary compensation. 

Cenikor argues that its rehabilitation patients are not similarly situated 

and that the district court’s decision contravenes Swales. Appellees contend, 

however, that they have shown the patients were similarly situated and the 

district court correctly determined that these defenses could be addressed 

collectively. 

Case: 22-20434 Document: 00517061282 Page: 14 Date Filed: 02/09/2024
No. 22-20434 

15 

We turn to Cenikor’s three proposed defenses—the Motor Carrier 

Act (“MCA”) exemption, the Rooker-Feldman doctrine, and the offset 

defense. The district court concluded that these defenses were either 

inapplicable or that Cenikor had not, at this stage, demonstrated they would 

require individualized inquiries. 

To qualify for the MCA exemption, a loader aka “an employee of a 

carrier” must have duties that include, “among other things, the proper 

loading of his employer’s motor vehicles.” 29 C.F.R. § 782.5(a) (emphasis 

added). Here, there is no allegation that any of the outside businesses were 

the patients’ employer. Instead, Cenikor is the sole employer defendant. 

Accordingly, the MCA defense does not apply to any individual patient. 

As to the Rooker-Feldman doctrine, the Fifth Circuit recognizes, in 

conformity with the Supreme Court, that Rooker-Feldman is a narrow 

jurisdictional bar. See Truong v. Bank of America, N.A., 717 F.3d 377, 381-82 

(5th Cir. 2013) (citing Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 

280, 284 (2005)). The doctrine applies only “where a party in effect seeks 

to take an appeal of an unfavorable state-court decision to a lower federal 

court.” Lance v. Dennis, 546 U.S. 459, 466 (2006). Here, this doctrine has 

no bearing on the alleged FLSA claims. Appellees are not “state court 

losers” who are challenging state court decisions that require them to attend 

Cenikor’s rehabilitation treatment center in lieu of serving jailtime. Rather, 

they are challenging Cenikor’s decision not to pay them for their labor in 

violation of federal law. Thus, the Rooker-Feldman doctrine is inapplicable to 

this case. 

Regarding the offset defense, the district court credited plaintiffs’ 

argument that the calculations could be completed on a class-wide basis “by 

subtracting aggregate costs from aggregate payments and dividing by the 

number of participants to determine an average.” However, the evidence to 

Case: 22-20434 Document: 00517061282 Page: 15 Date Filed: 02/09/2024
No. 22-20434 

16 

support this is not fully developed. Because Swales requires that “[d]istrict 

courts . . . ‘rigorously enforce [the FLSA’s similarity requirement] at the 

outset of the litigation,” 985 F.3d at 443, we remand this defense for fuller 

consideration before concluding the proposed collective is similarly situated. 

The district court should explicitly consider whether there are wide and 

obvious liability variations that would pose a “threshold” issue “bar[ring] 

application of the FLSA.” Swales, 985 F.3d at 441. Accordingly, we 

REMAND to engage more with Cenikor’s offset defense. Because we 

remand, we do not address Cenikor’s arguments that the district court erred 

in requiring it to send notice to potential opt-in plaintiffs. 

IV. 

Because we conclude that the district court applied the incorrect legal 

standard in assessing employee status and did not engage directly with the 

offset defense as required prior to certifying a collective, we REMAND for 

consideration consistent with this opinion. 

Case: 22-20434 Document: 00517061282 Page: 16 Date Filed: 02/09/2024