Class Action & FLSA Collective Action & Arbitration Flashcards
What is the difference between Class Action and Collective Action in the FLSA?
Who can joing?
What is the process for filing one on behalf of FLSA employees?
Employers should be aware of the potential liability of collective action suits under the FLSA. Although it is similar to a “representative” class action, where one person can sue on behalf of many, the FLSA explicitly prohibits traditional “class actions.” Instead, the FLSA permits
“collective” actions,
(1) where “similarly situated” employees can join a suit by
(2) filing a notice of consent with the presiding court (an “opt-in”). Bringing a collective action suit requires satisfying a
two-step process: conditional certification and actual certification.
Bringing a COLLECTIVE ACTION FLSA suit requires a two step process, what are the two steps and what is the difference between the two?
What defenses could the Emplolyer use to stop it?
TWO STEP PROCESS
CONDITIONAL CERTIFICATION (First Step)
The first step in determining whether a group of employees claiming an FLSA violation can be collectively certified as a class occurs,
- PRELIMINARY HEARING - during a preliminary trial hearing, when the court decides whether notice of the suit should be given to potential class members. Unlike normal class actions, where members must “opt out” of the lawsuit, the FLSA requires class members to OPT INTO THE ACTION. Thus, the court must consider whether there is enough evidence presented to allow notice to potential class members.
- “Enough evidence” is a very minimal showing that the employees are similarly situated (that is, all hourly employees who performed the same tasks) and have similar claims (that is, FLSA overtime violation). BURDEN ON EMPLOYEES - The burden for satisfying this “minimal showing” is placed on the employees claiming they are a class, and this burden is very low. Often, the court will rely on pleadings and affidavits, and contrary evidence rarely supports denying certification.
If an employee convinces the court to grant conditional certification, notification of the lawsuit is sent to all similarly situated employees (current and former) giving them an opportunity to opt in.
Conditional class certification - NOT AUTOMATIC- although usually granted by district courts, is not automatic.
-Ex. Employers can defeat: conditional class certification when allegations are not supported by affidavits or when the members of the proposed class work in separate departments, have separate supervisors and when no company-wide policies are at issue.
ACTUAL CERTIFICATION (SECOND STEP)
After conditional certification and notice, pretrial discovery begins. After discovery and completion of the opt-in process, the court must again evaluate the class to determine if a collective action is appropriate. (At this point, many employers move to decertify the class.)
Must Prove SIMILARLY SITUATED (After discovery) - This second step requires the court to determine whether the potential class members are similarly situated and if the case should continue as a collective action. Because this occurs after discovery, when the court has more information than it did when the conditional certification was granted, the court’s inquiry is stricter and requires more persuasive proof. Although the inquiry is very fact-intensive, courts frequently consider factors such as,
- class members’ work location,
- job titles and supervisors,
- use of a uniform employment policy across the class and
- similarity of the claims.
- Thus, class members who work at the same location, with the same job titles and supervisors, under a uniform policy are often deemed similarly situated. Employees with individual claims, working at different locations under different supervisors under localized policies, likely are not.
In the past, employers have successfully decertified a class by establishing that individual (not common) issues predominate, separate defenses exist, and/or employment decisions were made by different supervisors.
If the decertification motion is denied, then the case proceeds to trial as a collective action. If the motion is granted, and the claim is decertified, then the opt-in plaintiffs are dismissed from the case and must pursue individual actions if they wish to proceed.
What happens if the collective action passes the two step process?
What if it does not and it is decertified?
In the past, employers have successfully decertified a class by establishing that individual (not common) issues predominate, separate defenses exist, and/or employment decisions were made by different supervisors.
If the decertification motion is denied, then the case proceeds to trial as a collective action. If the motion is granted, and the claim is decertified, then the opt-in plaintiffs are dismissed from the case and must pursue individual actions if they wish to proceed.
What is the “opt-in” rule and how does the process work for an employee to “opt-in”?
The ‘opt-in’ rule
One important way FLSA collective actions differ from traditional “class actions” is the “opt-in” rule. Under the FLSA, if a class of employees are collectively certified by the presiding court, those employees must opt in to the class by filing a written consent with the court. Without express consent, such an employee is not affected by the case’s outcome. This is opposite of traditional class actions, which require plaintiffs to opt out of the case.
The FLSA’s opt-in provision was intended by Congress to help employers avoid large judgments (since fewer employees will make the effort to actually opt in). The provision dates back to 1946, when the U.S. Supreme Court determined that the FLSA required employers to compensate workers for the time they were in transit to and from work stations. This interpretation gave rise to thousands of lawsuits against employers to recover wages, jeopardizing the financial stability of many companies. Fearing the effects of so many lawsuits in so little time, Congress enacted the Portal-to-Portal Act of 1947 to prohibit representative class actions under the FLSA and instead created the opt-in provision.
The ‘opt-in’ notice
In Hoffman-La Roche Inc. v. Sperling (493 U.S. 165 (1989)), the Supreme Court ruled that trial courts have authority to compel defendant-employers to provide the names and addresses of potential plaintiffs through pre-trial discovery. The Court also held that this authority includes sending court-authorized consent forms to those potential plaintiffs. Although the case involved the ADEA, the ADEA incorporates the FLSA’s remedial provisions; thus, the notice requirements should be the same under either statute.
HISTORY: The Hoffman-La Roche decision rests on the opinion that the court retains authority in collective actions to “facilitate notice to potential plaintiffs.” This authority arises from the court’s broad discretionary power to manage the process of joining multiple parties in an orderly manner, as well as avoiding duplicative litigation. The decision rejected the contention that the Portal-to-Portal Act and the “opt-in” rule was intended to relieve employers of excessive discovery burdens or protect them from liability to employees who were unaware of their rights.
What damages are allowed in FLSA claims (including in a collective action)?
What damages are NOT ALLOWED?
FLSA are limited to back wages, liquidated (or double) damages, and attorneys’ fees.
NOT ALLOWED - Although State law, however, may allow for interest, punitive damages, and/or penalties.
What happens when an employee tries to bring a hybrid claim that has state law wage claims and federal FLSA wage claims?
Collective Action - ONLY allowed in FLSA, State law may allow for Class Action (involves the opt out - more $$$ option)
When a hybrid suit occurs, courts reach only one of two outcomes: either (1) the court finds that the state claim cannot appropriately exist in the same suit as the FLSA action and dismisses the state claim without prejudice; or (2) the court maintains the state and FLSA claims together. Of course, even if the court takes option (1) and severs the state claim, the state-law claim is still available within a state court, and the plaintiff only needs to refile the claim.
***Remember - NO DOUBLE RECOVERY with State Law Claims and Federal Law wage claims
How can an employer defend FLSA Collective Action? (List 4 options)
Despite Hoffman-La Roche’s sweeping language, employers facing collective action suits under the FLSA still have several avenues of defense that may limit their exposure, in addition to the defenses available during the two-part collective action process (discussed earlier).
- An employer may limit the scope of a discovery request by showing that the request is overly broad and burdensome. Generally, a court will limit discovery if (a) it is unreasonably cumulative or duplicative or the discovery is obtainable from some other source that is more convenient, less burdensome or less expensive; (b) the requesting party has had ample opportunity in discovery to obtain the information; or (c) the burden or expense of the discovery outweighs its likely benefit. The court will examine the relative costs and burdens to the parties, the need for the information and whether the party requesting the discovery will benefit from the information. To convince the court to limit discovery, employers must demonstrate the costs and burdens of the requests, argue that these costs and burdens outweigh the value and offer reasonable alternatives.
- An employer should be sure that the employees seeking collective certification are in fact “similarly situated.” Determining whether employees are “similarly situated” is a very fact-specific inquiry, but often requires employees to be employed within the same job category and engaged in the same type of work. Defendant employers should not hesitate to explore this avenue if they feel that a discovery request is overly burdensome. Not only does an employer stand to save time and resources, but its amount of exposure may be greatly limited as fewer names of employees would be provided to the plaintiff’s attorneys.
- The last area of concern for a defendant-employer involved in an opt-in collective action is the court-authorized notice/consent form to be sent to each potential plaintiff. Such forms should not suggest that the court views the action as meritorious. It is in the plaintiff’s best interest that the notice bear the court’s authorization, however, and this is permissible. What is impermissible is the court appearing biased. The Supreme Court has instructed trial courts to “take care to avoid even the appearance of judicial endorsement of the merits of the action.”
- Rule 68 offer of judgment
Rule 68 offer of judgment
When a defendant offers to settle with a plaintiff, it normally uses Rule 68 of the Federal Rules of Civil Procedure to make that offer (See Fig. 937.) Rule 68, which governs how those settlement offers are to be made, accepted and used in litigation, is most often used to end (moot) a case by fully satisfying the plaintiff’s claim. The logic of a Rule 68 settlement is that, when a plaintiff receives an offer to settle in the full amount requested, the case should be over (mooted) because there is no need to litigate over a non-issue. In such a case, because the plaintiff received what he/she had asked for, litigating the issue would be pointless and a waste of the court’s time.
Fig. 937 - Rule 68 Offer of Judgment
Rule 68 (of the Federal Rules of Civil Procedure) was written to encourage settlement and avoid litigation. Its provisions set out the procedure for offering, accepting, and rejecting settlements; how courts are to use settlement offers; and more. One of Rule 68’s most frequent uses is in mootness analyses (in other words, deciding whether a settlement offer is able to end the case), and there are a few generally accepted Rule 68 conclusions. Among them:
- A rejected Rule 68 offer of judgment for actual damages does not moot a case if the plaintiff did not initially quantify a specific amount of damages.
- A Rule 68 offer to satisfy the plaintiff’s entire quantified damages moots the plaintiff’s claims.
Recently, federal courts have been grappling with a new Rule 68 issue, this time in the area of FLSA collective actions. So far, two courts have held that making a Rule 68 offer of judgment does not moot the entire collective action:
- In Sandoz v. Cingular Wireless LLC, 553 F.3d 913 (5th Cir. 2008), the 5th Circuit ruled that an offer of judgment does not moot the action, so long as bringing the action is still available to other potential class members.
- The 9th Circuit reached a similar decision in Pitts v. Terrible Herbst, Inc., 653 F.3d 1081 (9th Cir. 2011), finding that the entire case should not be dismissed just because the employer made an offer of judgment.
The reason for these courts’ decisions is that Rule 68 was not meant to be a tool allowing employers to avoid collective actions. If an employer could simply pay one plaintiff employee’s claims off, and therefore end the collective action (which would certainly be more expensive because it would have more than one employee), then many groups of employees would be powerless against their employers. The opportunity to bring an FLSA collective action is valuable to employees because it permits them to group together and pool their resources, to bring the best possible claim against an employer that likely has more money and resources than a single plaintiff would.
What is a Rule 68 offer under an FLSA Collective Action?
Rule 68 offer of judgment
When a defendant offers to settle with a plaintiff, it normally uses Rule 68 of the Federal Rules of Civil Procedure to make that offer (See Fig. 937.) Rule 68, which governs how those settlement offers are to be made, accepted and used in litigation, is most often used to end (moot) a case by fully satisfying the plaintiff’s claim. The logic of a Rule 68 settlement is that, when a plaintiff receives an offer to settle in the full amount requested, the case should be over (mooted) because there is no need to litigate over a non-issue. In such a case, because the plaintiff received what he/she had asked for, litigating the issue would be pointless and a waste of the court’s time.
Fig. 937 - Rule 68 Offer of Judgment
Rule 68 (of the Federal Rules of Civil Procedure) was written to encourage settlement and avoid litigation. Its provisions set out the procedure for offering, accepting, and rejecting settlements; how courts are to use settlement offers; and more. One of Rule 68’s most frequent uses is in mootness analyses (in other words, deciding whether a settlement offer is able to end the case), and there are a few generally accepted Rule 68 conclusions. Among them:
- A rejected Rule 68 offer of judgment for actual damages does not moot a case if the plaintiff did not initially quantify a specific amount of damages.
- A Rule 68 offer to satisfy the plaintiff’s entire quantified damages moots the plaintiff’s claims.
Recently, federal courts have been grappling with a new Rule 68 issue, this time in the area of FLSA collective actions. So far, two courts have held that making a Rule 68 offer of judgment does not moot the entire collective action:
- In Sandoz v. Cingular Wireless LLC, 553 F.3d 913 (5th Cir. 2008), the 5th Circuit ruled that an offer of judgment does not moot the action, so long as bringing the action is still available to other potential class members.
- The 9th Circuit reached a similar decision in Pitts v. Terrible Herbst, Inc., 653 F.3d 1081 (9th Cir. 2011), finding that the entire case should not be dismissed just because the employer made an offer of judgment.
The reason for these courts’ decisions is that Rule 68 was not meant to be a tool allowing employers to avoid collective actions. If an employer could simply pay one plaintiff employee’s claims off, and therefore end the collective action (which would certainly be more expensive because it would have more than one employee), then many groups of employees would be powerless against their employers. The opportunity to bring an FLSA collective action is valuable to employees because it permits them to group together and pool their resources, to bring the best possible claim against an employer that likely has more money and resources than a single plaintiff would.
What is the time limit for a Collective Action under the FLSA?
2 Years (3 Years if willful)- Same as non-collective Action
**** NOTE - In Collective Action, an employee’s lawsuit starts when the employee OPTS into the case (NOT When the case is filed) So the employee MUST OPT IN to a collective lawsuit within 2 years of the alleged violations of the FLSA.
