Mooney v. Aramco Services Co., 94-20040

• Citation: 54 F.3d 1207
• Decision Date: 20 June 1995
• Docket Number: No. 94-20040,94-20040
• Parties: 68 Fair Empl.Prac.Cas. (BNA) 421, 32 Fed.R.Serv.3d 994, 42 Fed. R. Evid. Serv. 752 Robert R. MOONEY, et al., Plaintiffs-Appellants, v. ARAMCO SERVICES CO., et al., Defendants, Arabian American Oil Co., Defendant-Appellee. James Elliott McMILLAN, et al., Plaintiffs, Raymond V. Aberle, et al., Plaintiffs-Appellants, v. ARAMCO SERVICES CO., et al., Defendants, Arabian American Oil Co., Defendant-Appellee. Thomas F. KAUS, et al., Plaintiffs, Raymond V. Aberle, et al., Plaintiffs-Appellants, v. ARAMCO SERVICES CO., et al., Defendants, Arabian American Oil Co., Defendant-Appellee. Arthur G. BRUNST, et al., Plaintiffs, Raymond V. Aberle, et al., Plaintiffs-Appellants, v. ARABIAN AMERICAN OIL CO., Defendant-Appellee. Robert OLSON, et al., Plaintiffs, Raymond V. Aberle, et al., Plaintiffs-Appellants, v. ARABIAN AMERICAN OIL CO., Defendant-Appellee. John R. RICHARDS, et al., Plaintiffs, Raymond V. Aberle, et al., Plaintiffs-Appellants, v. ARABIAN AMERICAN OIL CO., Defendant-Appellee. William V. OZOLIN, et al., Plaintiffs, Kenneth O. Olson, et al., Plaintiffs-Appellants, v. ARABIAN AMERICAN OIL CO., Defendant-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

Page 1207

54 F.3d 1207

68 Fair Empl.Prac.Cas. (BNA) 421, 32

Fed.R.Serv.3d 994,

42 Fed. R. Evid. Serv. 752

Robert R. MOONEY, et al., Plaintiffs-Appellants, v. ARAMCO SERVICES CO., et al., Defendants, Arabian American Oil Co., Defendant-Appellee.

James Elliott McMILLAN, et al., Plaintiffs, Raymond V. Aberle, et al., Plaintiffs-Appellants, v. ARAMCO SERVICES CO., et al., Defendants, Arabian American Oil Co., Defendant-Appellee.

Thomas F. KAUS, et al., Plaintiffs, Raymond V. Aberle, et al., Plaintiffs-Appellants, v. ARAMCO SERVICES CO., et al., Defendants, Arabian American Oil Co., Defendant-Appellee.

Arthur G. BRUNST, et al., Plaintiffs, Raymond V. Aberle, et al., Plaintiffs-Appellants, v. ARABIAN AMERICAN OIL CO., Defendant-Appellee.

Robert OLSON, et al., Plaintiffs, Raymond V. Aberle, et al., Plaintiffs-Appellants, v. ARABIAN AMERICAN OIL CO., Defendant-Appellee.

John R. RICHARDS, et al., Plaintiffs, Raymond V. Aberle, et al., Plaintiffs-Appellants, v. ARABIAN AMERICAN OIL CO., Defendant-Appellee.

William V. OZOLIN, et al., Plaintiffs, Kenneth O. Olson, et al., Plaintiffs-Appellants, v. ARABIAN AMERICAN OIL CO., Defendant-Appellee.

No. 94-20040.

United States Court of Appeals Fifth Circuit.

June 20, 1995.

Michael M. Mulder, Thomas R. Meites, Paul W. Mollica, Meites, Frackman, Mulder & Burger, Raymond C. Fay, Alan M. Serwer, Bell, Botd & Lloyd, Chicago, IL, Gregg M. Rosenberg, Rosenberg & Assoc., Houston, TX, for appellants.

V. Scott Kneese, Elizabeth A. Hall, Nathan Wesely, Michelle Hoogendam Cash, Bracewell & Patterson, Houston, TX, for appellees.

Samuel A. Marcosson, Washington, DC, for amicus curiae EEOC.

Reagan Burch, Houston, TX, for amicus curiae Texas Ass'n of Business.

Appeal from the United States District Court for the Southern District of Texas.

Before REAVLEY, DUHE and PARKER, Circuit Judges.

DUHE, Circuit Judge:

Appellants appeal from the "decertification" of their Age Discrimination in Employment Act representative action and from certain rulings made by the district court during the trial of six individual plaintiffs. We affirm.

I. BACKGROUND

Appellants ¹ are eighty-five ² former managerial and skilled employees terminated under Aramco's "Manpower Control Program" during 1984-87. In 1987, Robert Mooney, William Holcomb and John Marcum filed their representative complaint alleging unlawful termination in violation of the Age Discrimination in Employment Act (ADEA). Other plaintiffs filed similar ADEA complaints in the same court and in the District of Delaware.

On Aramco's motion, the Delaware court transferred its cases to Texas. After the transfer, on Appellants' motion, the Texas court (hereinafter district or trial court) ordered consolidation of the cases. In November 1989, Judge Lynn Hughes authorized notice of the ADEA class proceeding to persons age 40 and over who were terminated under the Aramco Manpower Control Program on or after October 9, 1984. ³ Eventually, 154 persons (including the original 18 plaintiffs in the consolidated action) elected to "opt-in" to the representative action. Thereafter, the case proceeded on a collective basis. Aramco deposed many of the plaintiffs, and all parties conducted extensive, class-wide discovery.

In June 1992, the consolidated cases were reassigned to Judge Ewing Werlein. In response to a request from Judge Werlein, Plaintiffs proposed a two-phase "pattern or practice" trial, modeled on International Brotherhood of Teamsters v. United States, 431 U.S. 324, 97 S.Ct. 1843, 52 L.Ed.2d 396 (1977). Aramco argued that the cases should proceed as individual actions, and moved that the "class" be dissolved because plaintiffs were not "similarly situated." In May 1993, the district court ordered the parties to select eight "party plaintiffs" for "the first trial" in October 1992.

In August 1992, approximately six weeks before trial, the district court granted Aramco's motion to dissolve the "class" and dismissed all of the opt-in plaintiffs, including six of the eight plaintiffs who had been selected for trial. In September 1992, the district court denied Aramco's motion to dismiss Appellants' pattern and practice claim, and six individual plaintiffs proceeded to trial on October 4, 1992. The jury found for Aramco on all six claims.

II. DENIAL OF REPRESENTATIVE ACTION

The ADEA, at 29 U.S.C. Sec. 626(b), explicitly incorporates section 16(b) of the Fair Labor Standards Act, ⁴ which provides that a person may maintain an action on "behalf of himself ... 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. Sec. 216(b) (emphasis supplied). A difference between an ADEA representative action and a Fed.R.Civ.P. 23 class action is that the ADEA action follows an "opt-in" rather than an "opt-out" procedure. See La Chapelle v. Owens-Illinois, Inc., 513 F.2d 286, 289 (5th Cir.1975). However, in discussing the representative action, most courts utilize class action terminology from Rule 23 cases.

A. Standard of Review

In the Fed.R.Civ.P. 23 context, a district court's class certification or decertification decision is reviewed under a clearly erroneous standard. See Merrill v. Southern Methodist University, 806 F.2d 600, 607 (5th Cir.1986),

We review the district court's refusal to certify the class on an abuse of discretion standard. On appeal, however, we examine not only the evidence available to the district court, but also "the facts developed at the trial of plaintiffs' individual claims."

(citations omitted); Briggs v. Anderson, 796 F.2d 1009, 1017 (8th Cir.1986) (abuse of discretion review of district court's decision to decertify the class). Appellee argues that the same standard should be applied to an ADEA certification/decertification determination.

Appellants, on the other hand, argue that this court should exercise plenary review because the district court employed an incorrect legal standard. For this proposition, Appellants cite Forbush v. J.C. Penney Co., 994 F.2d 1101, 1104-06 (5th Cir.1993). Therein, we employed a de novo standard to review whether the district court properly applied Fed.R.Civ.P. 23 to a class certification question.

We hold that the ADEA decertification decision requires a two-part standard of review. The initial question--i.e. what legal standard should the district court have used--is a question of law to be reviewed de novo. Once the correct legal standard is ascertained, the district court's application of the standard must be reviewed for abuse of discretion.

B. The Meaning of "Similarly Situated"

The center of this dispute is what "similarly situated" means in the ADEA context. Although there are many district court cases addressing the issue, the proper class certification procedure for an ADEA representative action is largely a matter of first impression for the circuit courts. The district court cases seem to divide along two basic lines.

1. Two-Stage Class Certification

The first line of cases is typified by Lusardi v. Xerox Corp., ⁵ and represents the method followed by the trial court in this matter. ⁶ Lusardi and its progeny are remarkable in that they do not set out a definition of "similarly situated," but rather they define the requirement by virtue of the factors considered in the "similarly situated" analysis. ⁷ In other words, this line of cases, by its nature, does not give a recognizable form to an ADEA representative class, but lends itself to ad hoc analysis on a case-by-case basis.

Under Lusardi, the trial court approaches the "similarly situated" inquiry via a two-step analysis. The first determination is made at the so-called "notice stage." At the notice stage, the district court makes a decision-- usually based only on the pleadings and any affidavits which have been submitted--whether notice of the action should be given to potential class members.

Because the court has minimal evidence, this determination is made using a fairly lenient standard, ⁸ and typically results in "conditional certification" of a representative class. If the district court "conditionally certifies" the class, putative class members are given notice and the opportunity to "opt-in." The action proceeds as a representative action throughout discovery.

The second determination is typically precipitated by a motion for "decertification" by the defendant usually filed after discovery is largely complete and the matter is ready for trial. At this stage, the court has much more information on which to base its decision, and makes a factual determination on the similarly situated question. If the claimants are similarly situated, the district court allows the representative action to proceed to trial. If the claimants are not similarly situated, the district court decertifies the class, and the opt-in plaintiffs are dismissed without prejudice. The class representatives--i.e. the original plaintiffs--proceed to trial on their individual claims. Based on our review of the case law, no representative class has ever survived the second stage of review.

2. Spurious Class Action

The second line of cases is typified by Shushan v. University of Colorado, 132 F.R.D. 263 (D.Colo.1990). Shushan espouses the view that Sec. 16(b) of the Fair Labor Standards Act (FLSA) merely breathes new life into the so-called "spurious" class action procedure previously eliminated from Fed.R.Civ.P. 23. Building on this foundation, the court determined that Congress did not intend to create a completely separate class action structure for the FLSA and ADEA context, but merely desired to limit the availability of Rule 23 class action relief under either Act. In application, the court determined that Congress intended the "similarly situated" inquiry to be coextensive with Rule 23 class certification. In other words, the court looks at "numeros...