Opinion ID: 4521334
Heading Depth: 2
Heading Rank: 3

Heading: Collective Action Decertification

Text: Collective plaintiffs principally argue that the district court committed legal error by improperly analogizing the standard for maintaining a collective action under the FLSA to Rule 23 procedure, and relying on that improper analogy in concluding that named plaintiffs and opt-in plaintiffs are not similarly situated. For the reasons that follow, we agree.
We have not ruled on the appropriate standard of review to be applied to a district court's decertification of a conditionally certified collective 25 action. The parties agree, as do we, that [l]ike the district court's certification determination pursuant to Rule 23, we review its decision to decertify an FLSA collective action for abuse of discretion. See Glatt v. Fox Searchlight Pictures, Inc., 811 F.3d 528, 539 (2d Cir. 2015). Thus, we will only find 'abuse' when the district court's decision 'rests on an error of law or a clearly erroneous factual finding, or its decision cannot be located within the range of permissible decisions.' Myers, 624 F.3d at 547 (alterations omitted) (quoting Zervos, 252 F.3d at 169). We review de novo the district court's selection and application of the legal standards that led to its conclusion to decertify. Parker v. Time Warner Entm't Co., 331 F.3d 13, 18 (2d Cir. 2003) (discussing Rule 23 standard of review).
The FLSA provides that an action to recoup unpaid overtime wages may be maintained against any employer . . . by any one or more employees for and in behalf of himself or themselves and other employees similarly situated. No employee shall be a party plaintiff to any such action unless he gives his consent in writing to become such a party and such consent is filed in the court in which such action is brought. 29 U.S.C. § 216(b) (emphasis added). The Supreme Court has characterized § 216(b) as a joinder process. Genesis Healthcare Corp. v. Symczyk, 569 U.S. 66, 75 n.1 (2013). Rather than providing for a mere procedural mechanism, as is the 26 case with Rule 23, § 216(b) establishes a right . . . to bring an action by or on behalf of any employee, and [a] right of any employee to become a party plaintiff to any such action, so long as certain preconditions are met. 29 U.S.C. § 216(b) (emphasis added); see also Hoffman-La Roche Inc. v. Sperling, 493 U.S. 165, 173 (1989) (noting that Congress gave employees the right to proceed collectively) One of the principal conditions to proceeding collectively under § 216(b) is that the named plaintiffs be similarly situated to the opt-in party plaintiff[s]. See 29 U.S.C. § 216(b). Procedurally, we have endorsed a two-step process for certifying FLSA collective actions based on the similarly situated requirement: At step one, the district court permits a notice to be sent to potential opt-in plaintiffs if the named plaintiffs make a modest factual showing that they and others together were victims of a common policy or plan that violated the law. At step two, with the benefit of additional factual development, the district court determines whether the collective action may go forward by determining whether the opt-in plaintiffs are in fact similarly situated to the named plaintiffs. Glatt, 811 F.3d at 540 (citing Myers, 624 F.3d at 555). Substantively, however, we have said little regarding what it means to be similarly situated and how district courts should analyze whether named and party plaintiffs are so situated, particularly at Step Two. 27
The FLSA does not define the term similarly situated. The Supreme Court, analyzing the same similarly situated standard of § 216(b) that is incorporated into both the FLSA and the Age Discrimination in Employment Act (the ADEA), has held that Congress's goal in granting employees the right to proceed as a collective was to provide them the advantage of lower individual costs to vindicate rights by the pooling of resources. Hoffmann-La Roche Inc., 493 U.S. at 170. This results in the efficient resolution in one proceeding of common issues of law and fact arising from the same alleged FLSA violation. See id. This result -- the efficient resolution in one proceeding of common issues of law and fact arising from the same alleged FLSA violation -- can only be achieved to the extent that named plaintiffs and opt-in plaintiffs share one or more issues of law or fact that are material to the disposition of their FLSA claims. Thus, to be similarly situated means that named plaintiffs and opt-in plaintiffs are alike with regard to some material aspect of their litigation. See Campbell v. City of Los Angeles, 903 F.3d 1090, 1114 (9th Cir. 2018). That is, party plaintiffs are similarly situated, and may proceed in a collective, to the extent 28 they share a similar issue of law or fact material to the disposition of their FLSA claims. 4 It follows that if named plaintiffs and party plaintiffs share legal or factual similarities material to the disposition of their claims, dissimilarities in other respects should not defeat collective treatment. Id. If the opt-in plaintiffs are similar to the named plaintiffs in some respects material to the disposition of their claims, collective treatment may be to that extent appropriate, as it may to that extent facilitate the collective litigation of the party plaintiffs' claims. 5 This similarly situated standard is consistent with that endorsed by our sister circuits as well as district courts within this circuit. See, e.g., Campbell, 903 F.3d at 1117 (holding that, at Step Two, [p]arty plaintiffs are similarly situated, and may proceed in a collective, to the extent they share a similar issue of law or fact material to the disposition of their FLSA claims); Halle v. W. Penn 4 In contending that we have equat[ed] 'similarly situated' with 'any similarity,' Dissent at 2, the Dissent criticizes a standard that -- although helpful to the critique -- is nowhere to be found in our text. As clearly set forth above, we do not hold that the named plaintiffs and opt-in plaintiffs are similarly situated for purposes of a collective action under 29 U.S.C. § 216(b) when they share any similarity; rather, we hold that the standard is met when there is similarity with respect to an issue of law or fact material to the disposition of their FLSA claim. Contrary to the Dissent's assertions, the standard established here is meaningfully circumscribed. 5 District courts are well equipped to manage cases in this way. For example, Rule 42 provides for the possibility of partial consolidation for trial, to the extent separate actions involve common questions of law or fact. Fed. R. Civ. P. 42(a)(1). 29 Allegheny Health Sys. Inc., 842 F.3d 215, 226 (3d Cir. 2016) (noting that, at Step Two, [b]eing 'similarly situated' means that one is subjected to some common employer practice that, if proved, would help demonstrate a violation of the FLSA (internal quotation marks omitted)); McGlone v. Contract Callers, Inc., 49 F. Supp. 3d 364, 367 (S.D.N.Y. 2014) (noting that, at Step Two, named and opt-in plaintiffs are similarly situated to the extent they were common victims of a FLSA violation pursuant to a systematically-applied company policy or practice such that there exist common questions of law and fact that justify representational litigation (quoting Pefanis v. Westway Diner, Inc., No. 08-cv7813, 2010 WL 3564426, at  (S.D.N.Y. Sept. 7, 2010)); see also Newberg on Class Actions § 23:39 (5th ed. 2017) (noting that under § 216(b), the plaintiffs must demonstrate that they have all been subjected to some common employer practice that, if proved, would help demonstrate a violation of the FLSA). 6 6 The Dissent goes to great lengths to distinguish these cases and argue that the standard we set forth today is newly minted. Dissent at 1. But providing clarity is not making something new. The standard we adopt here is plainly compelled by the statutory text and Supreme Court precedent and has been endorsed by courts outside of this circuit along with lower courts within this Circuit. In selectively quoting language from these opinions to argue that they nonetheless employ elements of the ad hoc test, see Dissent at 4-5, the Dissent only further underscores the absence of a clear standard, and the need for clear guidance from this Court. 30
The majority of courts in this Circuit, including the district court below, employ what has been termed an ad hoc approach to the similarly situated inquiry at Step Two. 7 Under this flexible approach, courts consider the (1) disparate factual and employment settings of the individual plaintiffs; (2) defenses available to defendants which appear to be individual to each plaintiff; and (3) fairness and procedural considerations counseling for or against collective action treatment. See, e.g., Buehlman v. Ide Pontiac, Inc., 345 F. Supp. 3d 305, 313 (W.D.N.Y. 2018). Thus, rather than considering the ways in which the opt-in plaintiffs are similar in ways material to the disposition of their FLSA claims, district courts employing the ad hoc factors consider the ways in which the plaintiffs are factually disparate and the defenses are individualized. We question whether the ad hoc approach is consistent with the notion that party plaintiffs are similarly situated, and may proceed in a collective, to the extent they share a similar issue of law or fact material to the 7 The ad hoc approach appears to have originated in Lusardi v. Xerox Corp., 118 F.R.D. 351 (D.N.J. 1987), in the context of an ADEA claim. There, the district court considered collective plaintiffs' disparate employment situations; defendant's defenses and the applicability of the defenses to the instant facts; and, more generally, considerations of fairness [and] efficiency in concluding that collective plaintiffs were not similarly situated at Step Two. Id. at 361-72. 31 disposition of their FLSA claims. First, it is abstract in a way that risks losing sight of the statute underlying it by tend[ing] to explain what the term 'similarly situated' does not mean [rather than] what it does mean. Campbell, 903 F.3d at 1114. Second, its open-ended inquiry into the procedural benefits of collective action invites courts to import, through a back door, requirements with no application to the FLSA, like Rule 23(a)'s requirements of adequacy and typicality and Rule 23(b)(3) requirements of superiority and predominance. Id. at 1115. This flaw undermines what is supposed to be one of the chief advantages of the ad hoc approach, that it is not tied to the Rule 23 standards. Thiessen v. Gen. Electric Capital Corp., 267 F.3d 1095, 1105 (10th Cir. 2001); accord Morgan v. Family Dollar Stores, Inc., 551 F.3d 1233, 1260 n.38 (11th Cir. 2008) (citing cases); Scott, 2017 WL 1287512, at  (employing the ad hoc approach [t]o avoid conflating § 216(b) collective certification with Rule 23). Indeed, as discussed below, the district court's ad hoc analysis in this case suffered from this very flaw. It imported through the back door requirements with no application to the FLSA -- namely, that because there were a relatively large number of opt-in plaintiffs, the similarly situated inquiry mirrored the requirements of Rule 23. 32 See infra Part III.C. We discuss this sliding scale analogy to Rule 23 in more detail.
Some district courts in this circuit, including the district court below, have grafted onto the ad hoc approach additional considerations. One such consideration is what collective plaintiffs describe as a sliding scale analogy, because the district courts employing the analogy reason that [t]he similarly situated analysis can be viewed, in some respects, as a sliding scale. Gardner v. W. Beef Props., Inc., No. 7-cv-2345, 2013 WL 1629299, at , 6 (E.D.N.Y. Mar. 25, 2013). The analogy is straightforward: The more opt-ins there are in the class, the more the analysis under § 216(b) will mirror the analysis under Rule 23. Id. at . As a result, the court will import the more rigorous requirements of Rule 23 into the similarly situated inquiry in rough proportion to the number plaintiffs who have chosen to opt-in. In so doing, the courts relying on this analogy conflate the requirements for class certification under Rule 23 with the requirements to proceed as a collective under § 216(b). 8 8 See, e.g., Mendez v. U.S. Nonwovens Corp., No. 12-5583, 2016 WL 1306551, at  (E.D.N.Y. Mar. 31, 2016) (noting that [a]lthough the standard for establishing that the collective members are similarly situated under the FLSA is less stringent than the Rule 23 commonality standard, courts in this district have noted that these two standards are 33 This has led, in turn, to courts assessing the predominance requirement . . . almost always reach[ing] the same conclusion about whether proceeding collectively is appropriate. Whilliam C. Jhaveri-Weeks & Austin Webbert, Class Actions Under Rule 23 and Collective Actions Under the Fair Labor Standards Act, 23 Geo. J. on Poverty L. & Pol'y 233, 264 (2016); see also Ruiz v. CitiBank, N.A., 93 F. Supp. 3d 279, 298-99 (S.D.N.Y. 2015) ([I]t is not mere coincidence that courts facing parallel motions to decertify an FLSA collective action under Section 216(b) and to certify a class action under Rule 23 have tended to allow either both actions or neither to proceed on a collective basis.). For the reasons discussed below, we hold that analogies to Rule 23, including the sliding scale analogy, are inconsistent with the language of § 216(b) and that the question of whether plaintiffs may proceed as a collective under the FLSA is to be analyzed under the separate and independent requirements of § 216(b). functionally similar); Ruiz v. CitiBank, N.A., 93 F. Supp. 3d 279, 298-99 (S.D.N.Y. 2015) (noting the harmony of animating principles underlying collective actions under § 216(b) and class actions proceeding under Rule 23); Indergit v. Rite Aid Corp., 293 F.R.D. 632, 651 (S.D.N.Y. 2013) (noting that although conditional certification, decertification, and Rule 23 class certification are subject to disparate legal standards, courts nonetheless have recognized that the 'similarly situated' analysis for purposes of FLSA certification can be viewed, in some respects, as a sliding scale). 34 First and foremost, it is already well established that the FLSA's similarly situated requirement is independent of, and unrelated to Rule 23's requirements, Kern v. Siemens Corp., 393 F.3d 120, 128 (2d Cir. 2004), and that it is quite distinct from the much higher threshold of demonstrating that common questions of law and fact will 'predominate' for Rule 23 purposes, Myers, 624 F.3d at 555-56. Nearly every circuit to consider the relationship between the modern Rule 23 and § 216(b) has reached the same conclusion. See Campbell, 903 F.3d at 1111 (holding that § 216(b) analogies to Rule 23 lack[] support in either the FLSA or the Federal Rules of Civil Procedure); Calderone v. Scott, 838 F.3d 1101, 1104 (11th Cir. 2016) (describing Rule 23 as more demanding than § 216(b)); O'Brien v. Ed Connelly Enters., Inc., 575 F.3d 567, 584-85 (6th Cir. 2009) (describing Rule 23 as a more stringent standard than § 216(b)); Thiessen v. Gen. Electric Capital Corp., 267 F.3d 1095, 1105 (10th Cir. 2001) (Congress clearly chose not to have the Rule 23 standards apply to [collective actions], and instead adopted the 'similarly situated' standard. To now interpret this 'similarly situated' standard by simply incorporating the requirements of Rule 23 . . . would effectively ignore Congress' directive.); LaChapelle v. Owens-Illinois, Inc., 513 F.2d 286, 289 (5th Cir. 1975) (describing actions under § 216(b) and Rule 23 as 35 mutually exclusive and irreconcilable); see also Lusardi v. Lechner, 855 F.2d 1062, 1078 (3d Cir. 1988). But see Espenscheid v. DirectSat USA, LLC, 705 F.3d 770, 772 (7th Cir. 2013) (noting that the provisions of Rule 23 are intended to promote efficiency . . . , and in that regard are as relevant to collective actions as to class actions because there isn't a good reason to have different standards for the certification of the two different types of action[s]). This conclusion is supported by the language and structure of § 216(b) and the modern Rule 23, which bear little resemblance to each other. Compare 29 U.S.C. § 216(b), with Fed. R. Civ. P. 23. Under § 216(b) of the FLSA, employees have a right to maintain a collective action for and in behalf of . . . themselves and other employees similarly situated. Section 216(b) has nothing comparable to Rule 23(b)(3)'s requirements of predominance or superiority. And Rule 23's requirements of adequacy and typicality are intended to protect the due process rights of absent class members, which is not a consideration in a nonrepresentative action such as a collective action under § 216(b). See Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 811-12 (1985); see also Campbell, 903 F.3d at 1112. Indeed, Congress amended § 216(b) in 1947 expressly to put an end to representational litigation in the context of actions proceeding under §216(b), and 36 at the same time required that workers affirmatively opt-in by filing written consent as a condition to proceeding as a collective. Compare Fair Labor Standards Act of 1938, ch. 676, 52 Stat. 1060, 1069 (1938) (codified at 29 U.S.C. § 216(b)) (providing that employees proceeding under § 216(b) may designate an agent or representative to maintain such action for and in behalf of all employees similarly situated), with Portal to Portal Act of 1947, Pub. L. No. 8049, 61 Stat. 84, 87 (1947) (codified at 29 U.S.C. § 216(b) (1946 Supp. II)) (banning representative actions and providing that [n]o employee shall be a party plaintiff to any such action unless he gives consent in writing to become such a party and such consent is filed in the court in which such action is brought). In 1966, Rule 23 was amended to resemble its modern form, including for the first time Rule 23(a)'s requirements of commonality, typicality, numerosity, and adequacy, and Rule 23(b)(3)'s requirements of predominance and superiority. Fed. R. Civ. P. 23 (1966). Along with these revisions, the drafters also omitted the opt-in requirement contained in the former spurious class action device and replaced it with Rule 23(b)(3)'s opt-out requirement. Id. The opt-out requirement of the modern Rule 23(b)(3) directly conflicts with the express opt-in requirement of § 216(b). Accordingly, the drafters of the 1966 37 revisions explicitly noted that the present provisions of [§ 216(b)] are not intended to be affected. Fed. R. Civ. P. 23 advisory committee's notes to 1966 amendment; see also Knepper v. Rite Aid Corp., 675 F.3d 249, 257 (3d Cir. 2012). Moreover, Rule 23 and § 216(b) serve fundamentally different purposes. Rule 23 provides a general procedural mechanism for the resolution of claims on a class-wide basis subject to the sound discretion of the district court. See Fed. R. Civ. P. 23. Section 216(b), by contrast, is tailored specifically to vindicating federal labor rights, and where the conditions of § 216(b) are met, employees have a substantive right to proceed as a collective, a right that does not exist under Rule 23. See 29 U.S.C. § 216(b); see also Hoffman-La Roche, 493 U.S. at 173; Monroe v. FTS USA, LLC, 860 F.3d 389, 396–97 (6th Cir. 2017); O’Brien, 575 F.3d at 586. We conclude by noting that the FLSA not only imposes a lower bar than Rule 23, it imposes a bar lower in some sense even than Rules 20 and 42, which set forth the relatively loose requirements for permissive joinder and consolidation at trial. Campbell, 903 F.3d at 1112. Whereas [Federal Rules of Civil Procedure] 20 and 42 allow district courts discretion in granting joinder or consolidation, the FLSA, which declares a right to proceed collectively on 38 satisfaction of certain conditions, does not. Id.; see also O’Brien, 575 F.3d at 58485; Grayson, 79 F.3d at 1095-96; Lusardi, 855 F.2d at 1078. Furthermore, joinder under Rule 20 requires, in addition to a common question of law or fact, that the plaintiffs assert a right to relief arising from the same transaction[ ] [or] occurrence[]. Fed. R. Civ. P. 20(a)(1)(A). No such condition exists in the text of the FLSA. See 29 U.S.C. § 216(b); see also Campbell, 903 F.3d at 1112. For these reasons, we hold that the requirements for certifying a class under Rule 23 are unrelated to and more stringent than the requirements for similarly situated employees to proceed in a collective action under § 216(b). Accordingly, it is error for courts to equate the requirements of § 216(b) with those of Rule 23 in assessing whether named plaintiffs are similarly situated to opt-in plaintiffs under the FLSA.
Collective plaintiffs principally argue that the district court committed legal error in employing the sliding scale analogy to Rule 23 as it improperly conflated § 216(b) with Rule 23 and that rule's more stringent requirements. We agree. 39 After citing to the two-step approach endorsed by this Court in Myers, the district court proceeded to analyze whether collective plaintiffs were similarly situated using the ad hoc factors. Scott, 2017 WL 1287512, at . In its discussion of the ad hoc factors, the district court noted that their use is intended [t]o avoid conflating § 216(b) collective certification with Rule 23. Id. Despite this disclaimer, however, in the very next sentence of the opinion the district court did just that -- conflated § 216(b) with Rule 23 -- in analyzing the first ad hoc factor. The district court began its discussion of collective plaintiffs' disparate employment settings by noting that [c]ourts have recognized that the 'similarly situated' analysis for purposes of the FLSA certification can be viewed, in some respects, as a sliding scale. In other words, the more opt-ins there are in the class, the more the analysis under § 216(b) will mirror the analysis under Rule 23. Id. (quoting Indergit, 293 FR.D. at 651). In doing so, the district court imported through the back door of this ad hoc approach the more stringent requirements of Rule 23, which have no application to the FLSA. The district court assumed that the size of the collective required a heightened level of scrutiny mirroring Rule 23, which necessarily weighed in 40 favor of decertification -- particularly because the district court had concluded earlier in the same opinion that class plaintiffs failed to establish predominance under Rule 23. Indeed, after invoking the sliding scale analogy, the court proceeded to reference its conclusion with respect to predominance that Apprentices had vastly different levels and amounts of authority in exercising managerial tasks. Id. The district court then held that disparities in job duties are axiomatic considering that the 516 opt-in plaintiffs worked at 37 states across Chipotle's nine geographic regions. Id. at . On this basis, the district court decertified the collective action. This was error. In effect, the district court held that collective plaintiffs could not be similarly situated because class plaintiffs' common issues did not predominate over individualized ones. It is simply not the case that the more opt-ins there are in the class, the more the analysis under § 216(b) will mirror the analysis under Rule 23. Supra Part III.B.3; see also O'Brien, 575 F.3d at 584-85 (holding that the district court erred when it implicitly and improperly applied a Rule 23-type analysis to the FLSA); Morgan, 551 F.3d at 1265 (noting that the size of an FLSA collective action does not, on its own, compel the 41 conclusion that it should not be maintained). Accordingly, we vacate the district court's decertification of the collective action and remand. On remand, the district court shall reconsider whether named plaintiff and opt-in plaintiffs are similarly situated -- that is, whether they share one or more similar questions of law or fact material to the disposition of their FLSA claims. In doing so, the district court shall take into account its conclusion with respect to commonality that the question of whether Apprentices were misclassified as exempt employees is common to all class members because it can be answered with common proof. Scott, 2017 WL 1287512, at . This conclusion was based on the district court's findings that (1) Chipotle uniformly classified all Apprentices as exempt, (2) Chipotle has an expectation that the core duties of the Apprentice is the same, and (3) Chipotle uses a single job description for all Apprentices. Id. (internal quotation marks omitted). These facts, the court concluded, are unquestionably probative of whether an employee is properly classified as exempt.  Id. (internal quotation marks omitted). Though these findings were made with respect to the class plaintiffs, and though courts may not import the requirements of Rule 23 into their 42 application of § 216(b) in assessing whether named plaintiffs and opt-in plaintiffs are similarly situated under the FLSA, these findings are relevant to collective plaintiffs' argument that they are similarly situated. Indeed, the common question requirement of Rule 23(a) and the similarly situated requirement of § 216(b) serve comparable ends: to identify those shared issues that will collectively advance the litigation of multiple claims in a joint proceeding. 9 And as the district court correctly noted, the differences in the actual job duties of Apprentices are 'better suited to the predominance inquiry . . . together with an analysis of the Rule 23(b)(3) factors.' Chipotle, 2017 WL 1287512, at  (quoting Jacob v. Duane Reade, Inc., 289 F.R.D. 408, 415 (S.D.N.Y. 2013)). Thus, as the district court seems to acknowledge, these differences will not prove fatal to the similarly situated analysis in the same way they proved fatal to the 9 In analyzing commonality under Rule 23(a), [w]hat matters . . . 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. Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 350 (2011). In analyzing whether the similarly situated requirement is met under § 216(b), what matters is the extent to which named plaintiffs and opt-in plaintiffs share a similar issue of law or fact material to the disposition of their FLSA claims. See infra Part III.B.1. We caution that despite these similarities, courts should not overly rely on Dukes and other class action case law in considering collective actions. See 7B Wright & Miller, Fed. Prac. & Proc. Civ. § 1807 (observing that district courts have uniformly rejected the argument that Dukes affects the FLSA's similarly situated requirement). 43 predominance inquiry in this case. If named plaintiffs and opt-in plaintiffs are similar in some respects material to the disposition of their claims, collective treatment may be to that extent appropriate, as it may to that extent facilitate the collective litigation of collective plaintiffs' claims. Because the district court conflated the standards for maintaining a collective action under § 216(b) and a class action under Rule 23, we vacate the decision of the district court and remand for further proceedings consistent with this opinion.