Swales v. KLLM Transport Services
5th Cir.
Case: 19-60847 Document: 00515703469 Page: 1 Date Filed: 01/12/2021
United States Court of Appeals
for the Fifth Circuit
United States Court of Appeals
Fifth Circuit
FILED
January 12, 2021
No. 19-60847 Lyle W. Cayce
Clerk
Harry Swales; Corey Lilly; Kyle Shettles; and John
McGee, on behalf of themselves and all others similarly situated,
Plaintiffs—Appellees,
versus
KLLM Transport Services, L.L.C.,
Defendant—Appellant,
_____________________________
Marcus Brent Jowers, and others similarly situated,
Plaintiff—Appellee,
versus
KLLM Transport Services, L.L.C.,
Defendant—Appellant.
Appeal from the United States District Court
for the Southern District of Mississippi
USDC No. 3:17-CV-490
Before Jolly, Jones, and Willett, Circuit Judges.
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Don R. Willett, Circuit Judge:
Group litigation takes various forms, with varying formality.
Traditional class actions under Federal Rule of Civil Procedure 23, for
example, proceed under well-established procedural safeguards to ensure
that the named plaintiffs are appropriate class representatives. 1 But so-called
“collective actions” under the Fair Labor Standards Act proceed, well,
differently, with district courts applying ad hoc tests of assorted rigor in
assessing whether potential members are “similarly situated”—a phrase that
§ 216(b) of the FLSA leaves undefined. 2 The precision of Rule 23 provides
useful guidance for when and how to certify a class; the imprecision of
§ 216(b), not so much. This interlocutory appeal concerns the threshold
dispute of any wage-claim collective: How rigorously, and how promptly,
should a district court probe whether potential members are “similarly
situated” and thus entitled to court-approved notice of a pending collective
action? Our circuit has neither adopted nor rejected a definitive legal
standard. Today we do both, hopefully providing a workable, gatekeeping
framework for assessing, at the outset of litigation, before notice is sent to
potential opt-ins, whether putative plaintiffs are similarly situated—not
abstractly but actually.
* * *
In this minimum-wage dispute, Plaintiffs claim that KLLM
Transport Services misclassified them, and all other truck drivers, as
independent contractors. They allege that KLLM controls their work to
such an extent that they are, in fact, employees entitled to the minimum
wage. Plaintiffs want to pursue their wage claims as a collective action, which
1
Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 349 (2011) (“The Rule’s four
requirements—numerosity, commonality, typicality, and adequate representation—
effectively limit the class claims to those fairly encompassed by the named plaintiff’s
claims.”) (internal quotation marks omitted).
2
29 U.S.C. § 216(b).
2
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the FLSA allows for those “similarly situated,” 3 the only two words in the
FLSA that imply a standard. As is common practice, Plaintiffs moved for
“conditional certification” of their proposed collective. Such certification
results in “the sending of court-approved written notice to employees who
in turn become parties to a collective action only by filing written consent
with the court.” 4
The district court granted Plaintiffs’ certification request, applying
the widely used Lusardi test, a two-step method for certifying a collective.
The court, however, conceded uncertainty given Lusardi’s variable forms
and our circuit’s relative silence on the legal standard for collective-action
certification.
On appeal, the parties ask us to delineate—within Lusardi—the
district court’s notice-sending discretion. We decline, as Lusardi has no
anchor in the FLSA’s text or in Supreme Court precedent interpreting it.
Indeed, the word “certification,” much less “conditional certification,”
appears nowhere in the FLSA. We therefore reject Lusardi’s two-step
certification rubric.
Instead, we embrace interpretive first principles: (1) the FLSA’s text,
specifically § 216(b), which declares (but does not define) that only those
“similarly situated” may proceed as a collective; and (2) the Supreme
Court’s admonition that while a district court may “facilitat[e] notice to
potential plaintiffs” for case-management purposes, it cannot signal approval
of the merits or otherwise stir up litigation. 5 These are the only binding
3
Id.
4
Tyson Foods, Inc. v. Bouaphakeo, 136 S. Ct. 1036, 1043 (2016) (cleaned up).
5
Hoffmann-La Roche Inc. v. Sperling, 493 U.S. 165, 169(1989); In re JPMorgan Chase & Co.,916 F.3d 494
, 500–02 (5th Cir. 2019).
3
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commands on district courts. But they are unequivocal. And they have
significant implications. In our view, a district court must rigorously
scrutinize the realm of “similarly situated” workers, and must do so from the
outset of the case, not after a lenient, step-one “conditional certification.”
Only then can the district court determine whether the requested opt-in
notice will go to those who are actually similar to the named plaintiffs. These
bedrock rules, not Lusardi, define and delimit the district court’s discretion.
Because we are articulating these standards for the first time, we
vacate the district court’s grant of conditional certification and remand for
further proceedings consistent with this opinion.
I
Before explaining why we reject Lusardi, we must explain how Lusardi
came about. We first recount the legal history of FLSA collective actions and
the widespread confusion regarding whether, when, and to whom to send
court-approved notice of a putative FLSA collective. We then explain how
the district court navigated its way through these muddy waters.
A
The FLSA protects employees (not independent contractors) by
establishing a minimum hourly wage, maximum work hours, and overtime
compensation for work beyond 40 hours per week. 6 Section 216(b) of the
FLSA is a catch-all provision titled “Damages; right of action; attorney’s
fees and costs; termination of right of action.” The middle of the provision
states that employees may proceed collectively when they are “similarly
6
29 U.S.C. §§ 206(a)(1), 207(a).
4
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situated.” 7 That’s it. The statute doesn’t define “similarly situated.” And
critical to this case, it says nothing about “certification” or “notice.”
Congress amended the FLSA’s collective-action procedure through
the 1947 Portal-to-Portal Act, requiring similarly situated employees to opt-
in via written consent. 8 Section 216(b)’s opt-in mechanism differs from Rule
23 class actions, where members are bound by the judgment or settlement
unless they affirmatively opt out. 9 As the Supreme Court explained, this opt-
in requirement was a response “to excessive litigation spawned by plaintiffs
lacking a personal interest in the outcome” of FLSA cases. 10 Thus, “the
representative action by plaintiffs not themselves possessing claims was
abolished, and the requirement that an employee file a written consent was
added.” 11
The Portal-to-Portal Act takes into account the dual goals of collective
actions: (1) enforcement (by preventing violations and letting employees pool
resources when seeking relief); and (2) efficiency (by resolving common
issues in a single action). 12 But collective actions also pose dangers: (1) the
opportunity for abuse (by intensifying settlement pressure no matter how
meritorious the action); and (2) the appearance of court-endorsed
solicitation of claims (by letting benign notice-giving for case-management
7
29 U.S.C. § 216(b).
8
Hoffmann-La Roche, 493 U.S. at 173.
9
Id. at 177 (Scalia, J., dissenting).
10
Id. at 173.
11
Id.
12
Bigger v. Facebook, 947 F.3d 1043, 1049 (7th Cir. 2020).
5
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purposes warp into endorsing the action’s merits, or seeming to, thus stirring
up unwarranted litigation). 13
The trial court’s notice-giving role is pivotal to advancing the goals
and evading the dangers of collective actions. An employee cannot benefit
from a collective action without “accurate and timely notice,” as the
Supreme Court put it in Hoffman-La Roche, Inc. v. Sperling. 14 The Court
never mentioned any “certification” process, but stated that district courts
may oversee the notice and opt-in process. And since written consent is
required by statute, a court’s notice-sending authority is “inevitable” in
cases involving numerous potential plaintiffs. 15 “Permitting the court to
facilitate notice helps ensure” efficient resolution of common issues. 16
Further, a trial court can better manage a collective action “if it ascertains
the contours of the action at the outset,” and “[b]oth the parties and the
court benefit from settling disputes about the content of the notice before it
is distributed.” 17
To be sure, Hoffman-La Roche “nowhere suggests that employees
have a right to receive notice of potential FLSA claims.” 18 It’s discretionary
with the district court. The Court cautioned, however, that trial courts do
not possess “unbridled discretion” in overseeing collective actions and
13
Id.
14
493 U.S. at 170.
15
Id. at 171. Hoffman-La Roche involved the Age Discrimination in Employment Act, which contains a provision identical to § 216(b) of the FLSA. Courts, including this one, have consistently applied Hoffman-La Roche to FLSA cases. See, e.g., In re JPMorgan,916 F.3d at 500
.
16
In re JPMorgan, 916 F.3d at 500(citing Hoffmann-La Roche,493 U.S. at 170
).
17
Hoffman La-Roche, 493 U.S. at 172.
18
In re JPMorgan, 916 F.3d at 501.
6
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sending notice to potential opt-in plaintiffs. 19 Given the real risk of abuse of
the collective-action device, a court’s “intervention in the notice process”
cannot devolve into “the solicitation of claims.” 20 In overseeing the process,
the district court “must be scrupulous to respect judicial neutrality. To that
end, district courts must take care to avoid even the appearance of judicial
endorsement of the merits of the action.” 21 No judicial thumbs (or anvils) on
the scale. In sum, the Court held that a district court must oversee the notice
process agnostically. But it didn’t prescribe how district courts should do
that: “We confirm the existence of the trial court’s discretion, not the details
of its exercise.” 22
The Court has provided no further guidance regarding the notice-
giving process. Nor is there much federal appellate precedent across the
country. 23 Indeed, FLSA collective actions rarely (if ever) reach the courts
of appeals at the notice stage because “conditional certification” is not a final
judgment. 24 Plus, the leniency of the stage-one standard, while not so
toothless as to render conditional certification automatic, exerts formidable
settlement pressure.
B
Without “statutory or case law guidance, the district courts, both
within this circuit and without, have arrived at a loose consensus as to the
19
Hoffman La-Roche, 493 U.S. at 174.
20
Id.
21
Id.
22
Id. at 170
23
See Campbell v. City of Los Angeles, 903 F.3d 1090, 1111 (9th Cir. 2018).
24
In this case, the district court certified its certification decision for interlocutory
appeal, and we agreed to decide it. 28 U.S.C. § 1292(b).
7
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proper procedure” for certifying collective actions. 25 With some variations,
district courts generally look to one of two general approaches.
The first approach, “the near-universal practice” 26 of the district
courts, comes from the 1987 New Jersey district court opinion in Lusardi v.
Xerox Corporation. 27 Lusardi laid out a two-step process to determine, “on an
ad hoc case-by-case basis,” whether prospective opt-in plaintiffs in a
proposed collective are “similarly situated” enough to satisfy the FLSA. 28
Step one involves “an initial ‘notice stage’ determination” that
proposed members of a collective are similar enough to receive notice of the
pending action. 29 This initial step is referred to as “conditional certification”
of a putative class.30 District courts typically base their decisions at the first
step “on the pleadings and affidavits of the parties.” 31 And they may require
little more than “substantial allegations that the putative [collective]
members were together the victims of a single decision, policy, or plan.” 32
Step two occurs at “the conclusion of discovery (often prompted by a motion
to decertify).” 33 Because it has the benefit of full discovery, the court makes
a second and final “determination, utilizing a stricter standard,” about
whether the named plaintiffs and opt-ins are “similarly situated” and may
25
Campbell, 903 F.3d at 1108–09.
26
Id. at 1100.
27
118 F.R.D. 351 (D.N.J. 1987).
28
Thiessen v. Gen. Elec. Capital Corp., 267 F.3d 1095, 1102 (10th Cir. 2001).
29
Id.
30
In re JPMorgan, 916 F.3d at 500–01.
31
Id. at 501.
32
Thiessen, 267 F.3d at 1102.
33
Id. at 1102–03.
8
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therefore proceed to trial as a collective. 34 If the court finds that the opt-ins
are not sufficiently similar to the named plaintiffs, it “must dismiss the opt-
in employees, leaving only the named plaintiff’s original claims.” 35 Factors
considered at this second step include: “(1) [the] disparate factual and
employment settings of the individual plaintiffs; (2) the various defenses
available to [the] defendant which appear to be individual to each plaintiff;
[and] (3) fairness and procedural considerations.” 36
The second approach, which only a few courts apply, comes from the
1990 Colorado district court opinion in Shushan v. University of Colorado. 37 In
Shushan, the court held that for conditional certification, plaintiffs “must
satisfy all of the requirements of [R]ule 23, insofar as those requirements are
consistent with [] § 216(b).” 38 The court acknowledged the difference
between § 216(b)’s opt-in feature and Rule 23’s opt-out feature, but it
concluded “that Congress intended [§ 216’s] ‘similarly situated’ inquiry to
be coextensive with Rule 23 class certification.” 39 That means courts
applying this test consider “numerosity,” “commonality,” “typicality,”
34
Id.
35
Sandoz v. Cingular Wireless LLC, 553 F.3d 913, 915 n.2 (5th Cir. 2008).
36
Thiessen, 267 F.3d at 1103.
37
132 F.R.D. 263(D. Colo. 1990). A third “certification” test comes from Bayles v. American Medical Response of Colorado, Inc.,950 F. Supp. 1053, 1063
(D. Colo. 1996). In
Bayles, however, the court was deciding whether to “decertify” the collective after
discovery was complete. The question here—whether and when to send out notice—is
different.
38
Id. at 265 (emphasis omitted).
39
Mooney v. Aramco Servs. Co., 54 F.3d 1207, 1214 (5th Cir. 1995) (describing
Shushan).
9
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and “adequacy of representation” to determine whether to certify a
collective action. 40
Our sister circuits have pointed out perceived flaws in both
approaches. 41 As for Lusardi, it is an abstract and ad-hoc “balancing test with
no fulcrum.” 42 As for Shushan, it “rests improperly on an analogy to Rule
23 lacking in support in [] the FLSA.” 43 While no circuit court has formally
adopted Shusan, some have endorsed Lusardi. 44
We now turn to the history of this case and the approach the district
court took.
C
KLLM transports refrigerated goods throughout the country, using
either company-owned trucks operated by its employee–drivers or trucks
provided by other drivers classified as independent contractors. Independent
contractors can also lease their trucks directly from KLLM.
Between 2015–2017, Plaintiffs Harry Swales, Corey Lilly, Kyle
Shettles, John McGee, and Marcus Jowers drove trucks under an
Independent Contractor Agreement for KLLM. Without any notice going
out, six additional drivers have already opted into the lawsuit.
Plaintiffs argue that KLLM misclassified them—and other “similarly
situated” drivers—as independent contractors rather than as employees. So
they sued for violation of the FLSA’s minimum-wage requirement. The
40
Id.
41
See Campbell, 903 at 1111–1116 (collecting cases).
42
Id. at 1114.
43
Id. at 1111.
44
Id. at 1111, 1114.
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district court authorized discovery “limited to the issue of § 216(b)
certification” to determine whether to conditionally certify a collective and
facilitate notice to potential members. After the discovery deadline expired,
Plaintiffs moved for conditional certification, which KLLM opposed.
The district court observed, correctly, that “[f]ew areas of the law are
less settled than the test for determining whether a collective action should
be certified under § 216(b).” The court then applied its own version of
Lusardi.
Because the parties had already engaged in substantial, although not
complete, discovery on whether Plaintiffs and potential opt-ins were
similarly situated, KLLM urged the district court to apply the stricter
standard usually reserved for the second step of Lusardi, once discovery is
complete. At that step, the district court makes “a final determination of
whether all plaintiffs are sufficiently similarly situated to proceed together in
a single action,” either greenlighting the action or instead “decertifying” it
and allowing only the named plaintiffs to proceed. 45
Recognizing the significant discovery that had already taken place, the
district court applied a Goldilocks version of Lusardi, something in between
lenient and strict. It decided that Plaintiffs and Opt-ins needed to show
“more than minimal evidence” of their similarities to justify conditional
certification. The court noted that Plaintiffs and Opt-ins all drove trucks for
KLLM under an independent-contractor agreement, received
compensation based on the number of miles they drove, and leased their
trucks from KLLM. The court also acknowledged the differences, including
different per-mile compensation rates and hours worked. The court
concluded that despite these differences, “the claims and defenses largely
45
Reyna v. Int’l Bank of Commerce, 839 F.3d 373, 375 n.2 (5th Cir. 2016).
11
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turn on the same questions, like whether the drivers were misclassified as
independent contractors,” a decision determined by the “economic-realities
test.”
KLLM pointed to evidence showing that the application of the
economic-realities test to Plaintiffs and Opt-ins would require a highly
individualized inquiry. This evidence, according to KLLM, counseled
against certification (conditional or otherwise) of the collective. The district
court believed it could not consider anything related to the economic-realities
test at the pre-notice stage because the test was a “merits issue” to be dealt
with after discovery was complete. But the court acknowledged that
“KLLM may ultimately have a point” that, because each plaintiff would
have to present different facts under the economic-realities test, they might
not be “similarly situated.”
The district court granted Plaintiffs’ motion, conditionally certifying
a collective of potentially thousands of KLLM truck drivers. The putative
collective was limited to those who worked for KLLM “within three years
of the date” the order was entered and excluded those who signed an
arbitration agreement.
At the end of its opinion, the district court sua sponte certified its
certification decision for interlocutory appeal under 28 U.S.C. § 1292(b) and
stayed the case. Explaining why, the court stated that the certification and
notice processes were “controlling questions of law as to which there is
substantial ground for difference of opinion . . . . [T]here are open questions
regarding the applicable standards [of conditional certification], especially
when some discovery has occurred.” KLLM then filed a petition for appeal
by permission, which we granted.
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II
We review de novo the question of law at issue—the legal standard
that district courts should use when deciding whether to send notice in an
FLSA collective action. 46 And once the correct legal standard is ascertained,
we review the district court’s decision for abuse of discretion. 47
III
The parties assume that Lusardi (or some version of it) applies but
dispute whether the district court abused its discretion in refusing to consider
“decertification” evidence at step one. Plaintiffs even argue that we have
“affirmed use of the Lusardi two-step method for FLSA collective actions.”
This is mistaken. We have “carefully avoided adopting” Lusardi, and our
avoidance should not be misconstrued as acquiescence. 48 And now that the
question is squarely presented, we reject Lusardi.
While at least one of our sister circuits, the Eleventh Circuit, has
endorsed Lusardi, it did so only after a jury verdict. 49 And the question before
the Eleventh Circuit was whether the district court abused its discretion in
denying the employer’s motion to decertify the collective action. 50 The court
therefore did not address Lusardi in the notice-giving context. Even so, the
court only stated that Lusardi’s two-step method “appears to be an effective
tool,” but district courts aren’t required to use it. 51 The Ninth Circuit has, in
46
Mooney, 54 F.3d at 1213.
47
Steele v. Leasing Enters., Ltd., 826 F.3d 237, 248 (5th Cir. 2016).
48
See In re JPMorgan, 916 F.3d at 500 n.9.
49
Morgan v. Family Dollar Stores, Inc., 551 F.3d 1233 (11th Cir. 2008).
50
Id.
51
Hipp v. Liberty Nat. Life Ins. Co., 252 F.3d 1208, 1219 (11th Cir. 2001)
(considering the ADEA’s identical § 216(b) provision).
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reviewing a district court’s dismissal of a collective action, rejected Lusardi
because it “improperly sanctions the decertification of collective actions the
district court finds procedurally challenging.” 52
While we agree with the Ninth Circuit that Lusardi should be rejected,
we disagree as to the reasons why. The real issues Lusardi creates occur not
at decertification, but from the beginning of the case.
As this case demonstrates, Lusardi frustrates, rather than facilitates,
the notice process. The first problem is that the Lusardi test comes in many
varieties. The district court conceded confusion precisely because courts
“have taken different approaches” to Lusardi when some discovery has
occurred. The use of “Lusardi” or even collective-action “certification” has
no universally understood meaning. Thus, the amorphous and ad-hoc test
provides little help in guiding district courts in their notice-sending authority.
Second, Lusardi distracts from the FLSA’s text. The FLSA, and
§ 216(b) in particular, says nothing about “conditional certification” or any
of the requirements of Rule 23. We thus cannot read the statute as supporting
any of the certification tests that district courts have created to determine
whether a group of employees should receive notice about a collective action.
And there is no Supreme Court case stating otherwise.
In fact, the Court has only addressed “conditional certification”
twice, and both times it did so indirectly. In Genesis Healthcare Corporation v.
Symczyk, the Court addressed a mootness issue in an FLSA case. 53 The
respondent invoked cases about class certification under Rule 23, and the
Court said that “conditional certification” differed from class certification
52
Campbell, 903 F.3d at 1117.
53
569 U.S. 66 (2013).
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because the former “does not produce a class with an independent legal
status or join additional parties to the action.” 54 Unlike Rule 23 class
certification, “[t]he sole consequence of conditional certification is the
sending of court-approved written notice to employees, who in turn become
parties to a collective action only by filing written consent with the court.” 55
The Court concluded that “[w]hatever significance ‘conditional
certification’ may have in § 216(b) proceedings, it is not tantamount to class
certification under Rule 23.” 56 And in Tyson Foods, Incorporated v.
Bouaphakeo, the Court only referred to conditional certification when it
quoted Symczyk’s language that “conditional certification” just means
sending notice. 57
Two-stage certification of § 216(b) collective actions may be common
practice. But practice is not necessarily precedent. And nothing in the
FLSA, nor in Supreme Court precedent interpreting it, requires or
recommends (or even authorizes) any “certification” process. The law
instead says that the district court’s job is ensuring that notice goes out to
those who are “similarly situated,” in a way that scrupulously avoids
endorsing the merits of the case. A district court abuses its discretion, then,
when the semantics of “certification” trump the substance of “similarly
situated.” District courts have impermissibly zeroed in on “certification”
standards this way in the past, as explained in our recent decision in In re
JPMorgan Chase & Company.
54
Id. at 75.
55
Id. (internal citations omitted).
56
Id. at 78.
57
136 S. Ct. 1036, 1043 (2016).
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In JP Morgan, we held that it was beyond the district court’s
discretion to order notice to employees who had signed arbitration
agreements and were thus not potential participants of the FLSA collective
action. 58 We noted that some district courts waited until the second step of
Lusardi, after discovery was complete, to determine the applicability of
arbitration agreements. 59 “Because Hoffmann-La Roche strictly forbids
district courts from appearing to endorse the merits of the litigation by means
of facilitating notice, those district courts conclude that the existence of
arbitration agreements—as a merits-based issue—must not be addressed
until the decertification stage.” 60 We held that it was improper to refuse to
consider evidence about arbitration agreements before sending notice
because notice can only go to “potential participants.” 61 “And alerting those
who cannot ultimately participate in the collective ‘merely stirs up litigation,’
which is what Hoffmann-La Roche flatly proscribes.” 62 We thus concluded
that when there is a genuine dispute about an arbitration agreement, the
district court “should permit submission of additional evidence, carefully
limited to the disputed facts” before notice is sent. 63
The district court here, like the one in JPMorgan, felt that it could not
reach “merits” issues until Lusardi’s step two—after notice is sent out and
discovery is complete. The court had authorized preliminary discovery on
“certification” issues. There were eleven depositions, over 19,000
58
916 F.3d at 504.
59
Id. at 501.
60
Id.
61
Id. at 502.
62
Id.
63
Id. at 503.
16
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documents produced, and even expert evidence. But the court (in the
footsteps of many others) felt bound by the “conditional certification” step
of Lusardi to disregard some of this evidence, particularly the evidence that
went to the differences between Plaintiffs and Opt-ins. The court found that
it could not consider any of this evidence of dissimilarity “at the pre-notice
stage” because it went to the merits of the case.
But the merits issue here—whether Plaintiffs were misclassified as
independent contractors—resembles the issue of arbitration agreements in
JPMorgan. Both are potentially dispositive, threshold matters. Just as the
existence of a valid arbitration agreement bars an employee from bringing a
lawsuit in general, a valid independent-contractor classification bars
application of the FLSA. 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. Just as we held it was improper to ignore evidence of
the arbitration agreements in JPMorgan, it’s improper to ignore evidence of
other threshold matters, like whether the plaintiffs are “employees” such
that they can bring an FLSA claim.
We thus reject Lusardi because on the one hand, its flexibility has led
to unpredictability. And on the other hand, its rigidity distracts district courts
from the ultimate issues before it. Next, we’ll discuss what this means, on a
practical level, for this case.
IV
Instead of adherence to Lusardi, or any test for “conditional
certification,” 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.” And then it should authorize
preliminary discovery accordingly. The amount of discovery necessary to
make that determination will vary case by case, but the initial determination
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must be made, and as early as possible. In other words, the district court, not
the standards from Lusardi, should dictate the amount of discovery needed
to determine if and when to send notice to potential opt-in plaintiffs.
For example, in a donning and doffing case, notice might be justified
when the pleadings and only preliminary discovery show sufficient similarity
between the plaintiffs’ employment situations. In those types of cases, the
plaintiffs all have the same job description, and the allegations revolve around
the same aspect of that job. So, a district court will not likely need mountains
of discovery to decide whether notice is appropriate. In another case, such as
this one, where Plaintiffs have demonstrably different work experiences, the
district court will necessarily need more discovery to determine whether
notice is going out to those “similarly situated.”
Considering, early in the case, whether merits questions can be
answered collectively has nothing to do with endorsing the merits. Rather,
addressing these issues from the outset aids the district court in deciding
whether notice is necessary. And it ensures that any notice sent is proper in
scope—that is, sent only to potential plaintiffs. When a district court ignores
that it can decide merits issues when considering the scope of a collective, it
ignores the “similarly situated” analysis and is likely to send notice to
employees who are not potential plaintiffs. In that circumstance, the district
court risks crossing the line from using notice as a case-management tool to
using notice as a claims-solicitation tool. Hoffman-La Roche flatly forbids such
line crossing.
In this case, applying Lusardi was inappropriate because the threshold
issue here depends on the economic-realities test, which asks how much
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control the employer had over the independent contractor. 64 Thus, the
district court needed to consider the evidence relating to this threshold
question in order to determine whether the economic-realities test could be
applied on a collective basis. If answering this question requires a highly
individualized inquiry into each potential opt-in’s circumstances, the
collective action would quickly devolve into a cacophony of individual
actions. As KLLM points out, the individualized nature of the economics-
realities test is why misclassification cases rarely make it to trial on a
collective basis.
To determine, then, whether and to whom notice should be issued in
this case, the district court needs to consider all of the available evidence. For
example, KLLM pointed to numerous variations among the Plaintiffs and
Opt-ins who joined before any notice, including the length of their contracts
with KLLM, which ranged from one month to four years. KLLM also noted
that the Plaintiffs and Opt-ins provided inconsistent discovery responses
about the control they had over their profitability—some drivers decided to
work only for specific customers or in certain regions, at least one Plaintiff
hired an employee to drive for him, and the drivers disagreed as to whether
they had to stop for fuel at KLLM’s recommended fuel stops or have their
trucks serviced by KLLM rather than third parties.
Regarding the potential opt-ins to whom the district court authorized
notice, the differences were even starker. Over 400 drivers with
independent-contractor agreements hired their own employees to help
operate the equipment. KLLM offered 41 different compensation
arrangements that the drivers could choose from. And drivers had different
64
Herman v. Express Sixty-Minutes Delivery Serv., Inc., 161 F.3d 299, 303 (5th Cir.
1998).
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options for leasing their trucks—they could do so from KLLM or lease or buy
a truck from a third party. The district court need not, and should not,
disregard this evidence. These facts affect whether all of KLLM’s
independent contractors can be grouped together for purposes of (later)
determining the level of control KLLM exercised over their work. The same
facts will also be relevant when (later) deciding the ultimate merits issue. And
that’s okay. In other words, the same evidence will often serve two purposes,
and the district court need not ignore that evidence to avoid using it for the
wrong purpose.
After considering all available evidence, the district court may
conclude that the Plaintiffs and Opt-ins are too diverse a group to be
“similarly situated” for purposes of answering whether they are in fact
employees, or at least that Plaintiffs have not met their burden of establishing
similarity. 65 If that is the case, it may decide the case cannot proceed on a
collective basis. The district court may instead decide that it needs further
discovery to make this determination. Or it may find that only certain
subcategories of drivers, depending on their economic dependence on
KLLM, should receive notice.
The bottom line is that the district court has broad, litigation-
management discretion here. To be sure, that discretion is cabined by the
FLSA’s “similarly situated” requirement and the Supreme Court’s
decision in Hoffman La-Roche. But it is not captive to Lusardi or any
“certification” test. It’s unnecessary for district courts, owing to inertia or
65
While the text of §216(b) is not explicit on this point, we hold that such a burden
follows from the general burden that a plaintiff bears to prove her case. This makes sense
as a practical matter as well, as a plaintiff should not be able to simply dump information on
the district court and expect the court to sift through it and make a determination as to
similarity.
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path-dependence, to continue to invoke and then stretch Lusardi beyond
recognition (or reason) to fit the case before it.
V
This case poses an issue that has been under-studied but whose
importance cannot be overstated: how stringently, and how soon, district
courts should enforce § 216(b)’s “similarly situated” mandate. As explained
above, the FLSA’s similarity requirement is something that district courts
should rigorously enforce at the outset of the litigation. Since we are
announcing this framework, and our rejection of Lusardi, for the first time,
we VACATE the district court’s order granting Plaintiffs’ motion for
conditional certification and REMAND for further proceedings consistent
with this opinion.
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