The Fair Labor Standards Act (FLSA) of 1938 can be a procedural nightmare. Coupled with the broad discovery envisioned by Federal Rule of Civil Procedure 26(b), FLSA lawsuits can quickly turn expensive. Courts often grant plaintiff motions for conditional certification of a collective action class on thin evidence, and this can lead to inefficiency for both sides. These inefficiencies include increasing the burden of discovery, distorting case value estimations, and diverting resources from viable claims. One method to fashion better collective action classes is with bifurcated discovery.
A Brief Introduction to the FLSA
The FLSA sets both the minimum wage and maximum work hours for most employees performing “non-exempt” duties. An employer must pay its employees at least $7.25 per hour, and if a non-exempt employee works more than 40 hours in a given workweek, her employer must pay her an hourly wage of at least 150 percent of the regular wage for those hours.
An unusual feature of the FLSA is that it authorizes “collective actions” under 29 U.S.C. § 216 instead of the typical “class actions” allowed by Rule 23. (The Age Discrimination in Employment Act (ADEA) incorporates 29 U.S.C. § 216, so I will treat ADEA decisions as relevant to FLSA collective actions). Collective actions, unlike class actions, are “opt-in” in nature; that is, once the court certifies a collective action class, potential members must affirmatively choose to join the litigation. Also, unlike class action practice under Rule 23, there is no interlocutory appeal of a decision certifying or denying a collective action class. See Killion v. KeHE Dists., LLC, 761 F.3d 574, 589 (6th Cir. 2014). As a result, parties have to live with wrong decisions through trial. Getting the trial court to the right decision on certification is therefore one of, if not the, most important considerations in FLSA litigation.
The Two-Step Process for Collective Class Certification
Most federal courts agree that a two-step approach to collective action class certification is appropriate, if not mandatory. See, e.g., Myers v. Hertz Corp., 624 F.3d 537, 554-56 (2d Cir. 2010); Cameron-Grant v. Maxim Healthcare Servs., Inc., 347 F.3d 1240, 1244 n.2 (11th Cir. 2003); Thiessen v. Gen. Elec. Capital Corp., 267 F.3d 1095, 1102 n.4 (10th Cir. 2001). Though the language used between circuits differs, the general contours are the same.
At the first, or “conditional certification” step, the plaintiff must show that
- a class of similarly situated employees exists; and
- other members of the class want to join the case.
Courts describe the plaintiff’s burden here as low, or lenient, and the plaintiff’s evidence does not have to be admissible. Though standards vary some between circuits, a plaintiff may use hearsay testimony, her own declarations, and even the unsworn allegations of her complaint. Courts justify this low standard by noting that conditional certification usually happens before much, if any, discovery takes place. Unsurprisingly, this low burden often leads to conditional certification of an inappropriately large class.
Once the court conditionally certifies a collective action class, it will order the employer to give the plaintiff a list of employees meeting the class definition, along with contact information. The plaintiff will then have some time to solicit “opt-in” plaintiffs. While this is going on, the parties are still exchanging information through discovery. This can present some issues, because neither side knows exactly who is and who isn’t going to be a plaintiff in the case, and the parties end up serving and responding to piecemeal discovery.
Finally, after the opt-in period closes and the parties have had time to conduct discovery, the employer will move for decertification. In this motion, the employer argues that the court should not treat individual employees, or groups of employees, as similarly situated. This usually involves showing that the employer did not subject the employees to the pay practice at issue, or that particular employees were exempt from the FLSA. At this stage, because the parties have engaged in significant discovery, the plaintiff has a much higher bar. She must introduce more than hearsay and conclusory declarations to maintain the integrity of her class.
But, as mentioned, this process is time-consuming and expensive. Worse, if the district court refuses to certify an appropriate class, there is no recourse—the parties just have to fight it out through discovery until a decertification motion. If courts conditionally certify better classes, parties would avoid some of this expense and effort.
Using Bifurcated Discovery to Get Better Classes
Getting better classes requires better motion practice at the conditional certification stage. If the parties have better information at this stage, they can provide the court with better developed fact records and briefs. One way to get this information is with a bifurcated discovery plan.
In a bifurcated plan, the parties agree to a period of limited discovery on class certification issues—similar situation and willingness to opt in. The parties’ planning meeting report should make it plain that this initial period is limited to those issues, with full discovery coming after the motion for conditional certification. Company policies (formal or informal), employee work schedules, and employee job duties, and employees who have expressed interest are all fair game. What’s important here is what the “right” class looks like. This narrow discovery should take less time and involve fewer disputes than full discovery.
After class-based discovery, the plaintiff moves for conditional certification. Now the plaintiff has armed herself with more than hearsay and supposition. Instead, she has documentary and testimonial evidence showing what the class should be. Rather than seek a massive and unwieldy class, the plaintiff has an opportunity to mold her class to the facts of the case. This leads to increased efficiency for the plaintiff. For example, a plaintiff alleging illegal pay practices in several locations may find out that one supervisor at a single location is at fault. This spares the plaintiff the time and expense involved in finding this out after certification—she does not have to solicit plaintiffs outside that location. The plaintiff also saves time responding to discovery directed at class members the court will decertify later. The plaintiff’s attorneys can spend their time and effort on behalf of the employees affected, and tailor future discovery to that end.
The employer also gains some significant advantages. First, once the plaintiff has access to the employer’s records and can verify the extent of the FLSA issue, they may be more open to stipulating to a narrower class. Second, and most importantly, should the plaintiffs seek an inappropriate class, it can persuade the district court to use a higher standard of proof than the usual lenient one. See Campbell v. Sys. Dynamics Int’l, Inc, No. 5:18-cv-233-UJH-RDP, 2018 WL 4215632, at *2-3 (N.D. Ala. Sept. 5, 2018); Walker v. Jefferson Cnty. Bd. of Educ., No. 2-13-cv-524-RDP, 2016 WL 1117643, at *4 (N.D. Ala. March 22, 2016). Courts refer to this practice as an “intermediate” standard of proof. See Blaney v. Charlotte-Mecklenburg Hosp. Auth., No. 3:10-cv-592-FDW-DSC, 2011 WL 4351631, at *5 (W.D.N.C. Sept. 16, 2011) (collecting cases). If the employer can persuade the court to apply the less lenient, more stringent intermediate standard, it stands a much better chance of narrowing (or even defeating) the plaintiff’s overbroad class.
Of course, this assumes that the parties even need motion practice for class certification. Another advantage to bifurcated discovery is that the employer has put at least some of its cards on the table. The plaintiff may now know that the class she would have proposed is too large. The employer may know that a class is appropriate, even if it denies any wrongdoing. The parties now have a basis for negotiating an agreed class. This benefits both sides; the employer saves money fighting over the class size, while the plaintiff gets faster class certification. Perhaps most importantly, both sides build credibility with the court.
Once a conditional class exists, the parties move to merits-based discovery. But instead of blindly fumbling, the parties now have a well-defined collective action class and know what issues that class presents. This leads to narrower, better discovery, saving both parties—and the court—from unending discovery fights. And of course, once the court certifies a collective action class under this method, it may no longer be necessary for an employer to seek decertification. At least aspirationally, the collective action class is appropriate. All of the opt-in plaintiffs had the same job duties, and the employer’s policies were the same toward all of the opt-in plaintiffs. Instead of an involved (and expensive) fight over decertification, the parties can move forward to dispositive motions or trial.
Practitioners should know that federal courts disfavor bifurcated discovery in Rule 23 class actions. This is because the lenient standard under § 216(b) collective actions differs from the “rigorous analysis” that district courts must perform to satisfy itself that the proposed class meets all the requirements of Rule 23 class action before certifying a class. Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 350–51 (2011). That analysis will usually “entail some overlap with the merits of the . . . underlying claim.” Id. And, unlike a conditional certification motion under the FLSA, Rule 23 class certification requires evidence meeting the standards of the Federal Rules of Evidence. Comcast Corp. v. Behrend, 569 U.S. 27, 33 (2013). (For a full discussion of why bifurcated discovery in Rule 23 class certification is inappropriate, see Lawrence Deutsch, Glen L. Abramson, and Jacob Polakoff’s “Class Actions: Evolution Toward Merits and Class Discovery Proceeding Together.”) In contrast, courts certifying collective action classes do not generally look to the merits. If a judge questions the use of bifurcated discovery, a practitioner should highlight these differences.
Better information leads to better outcomes. When both sides to an FLSA collective action go into conditional certification knowing what the class should be, it can save everyone a lot of time, effort, and expense.
Michael W. Rich is an associate attorney at Maynard Cooper & Gale in Huntsville, Alabama.
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