Bigger v. Facebook, Inc.

Decision Date24 January 2020
Docket NumberNo. 19-1944,19-1944
Citation947 F.3d 1043
Parties Susie BIGGER, Plaintiff-Appellee, v. FACEBOOK, INC., Defendant-Appellant.
CourtU.S. Court of Appeals — Seventh Circuit

Teresa M. Becvar, Ryan F. Stephan, Attorneys, Stephan Zouras, LLP, Chicago, IL, for Plaintiff-Appellee.

Jason Eric Barsanti, Attorney, Cozen O'Connor, San Diego, CA, Jenny R. Goltz, Anneliese Wermuth, Attorneys, Cozen O'Connor, Chicago, IL, Tamar S. Wise, Michael B. de Leeuw, Attorneys, Cozen O'Connor, New York, NY, for Defendant-Appellant.

Andrew John Pincus, Attorney, Mayer Brown LLP, Washington, DC, for Amicus Curiae Chamber of Commerce of the United States of America.

Shannon Erika Liss-Riordan, Attorney, Lichten & Liss-Riordan, P.C., Boston, MA, for Amicus Curiae National Employment Law Project.

Before Wood, Chief Judge, and Kanne and Barrett, Circuit Judges.

Kanne, Circuit Judge.

The Fair Labor Standards Act of 1938, as amended, 29 U.S.C. § 201 et seq. ("FLSA"), requires employers to pay overtime wages to certain employees, see id. §§ 207(a), 213. For enforcement, the Act allows employees to sue their employer for damages and to bring the action on behalf of themselves and other "similarly situated" employees, id. § 216(b), who may join the so-called "collective action."1 The court overseeing the action has discretion to authorize the sending of notice to potential plaintiffs, informing them of the opportunity to opt in. Hoffmann–La Roche Inc. v. Sperling , 493 U.S. 165, 170–71, 110 S.Ct. 482, 107 L.Ed.2d 480 (1989). But the court must respect judicial neutrality and avoid even the appearance of endorsing the action’s merits. Id. at 174, 110 S.Ct. 482.

This case presents the question whether a court may authorize notice to individuals who allegedly entered mutual arbitration agreements, waiving their right to join the action.

Facebook employee Susie Bigger sued Facebook for violations of the FLSA overtime-pay requirements. She brought the action on behalf of herself and all other similarly situated employees. The district court authorized notice of the action to be sent to the entire group of employees Bigger proposed. Facebook argued this authorization was improper because many of the proposed notice recipients had entered arbitration agreements precluding them from joining the action. Facebook also argued the court’s authorization of notice was improper because Facebook is entitled to summary judgment.

We hold that when a defendant opposing the issuance of notice alleges that proposed recipients entered arbitration agreements waiving the right to participate in the action, a court may authorize notice to those individuals unless (1) no plaintiff contests the existence or validity of the alleged arbitration agreements, or (2) after the court allows discovery on the alleged agreements’ existence and validity, the defendant establishes by a preponderance of the evidence the existence of a valid arbitration agreement for each employee it seeks to exclude from receiving notice.

Because the district court here did not apply this framework, we vacate the court’s order issuing notice and we remand for the court to apply the proper standard. We also affirm the court’s denial of summary judgment to Facebook.

I. BACKGROUND

Facebook generates revenue by selling advertisements on its electronic platforms. To help clients navigate various advertising options—which Facebook calls "solutions" to client objectives—Facebook employs "sales teams, or ‘pods.’ " Sales pods are made up of managers; "Client Partners"; and "Client Solutions Managers," or "CSMs."

Susie Bigger was a CSM. The CSM role was created by merging two positions: one focusing on "analytical work" (looking at data to make advertising recommendations), and the other focusing on "upselling" (increasing advertisement sales to existing clients).

Facebook categorizes all CSMs into numbered "Individual Contributor," or "IC," levels based on the experience and expectations involved in each CSM position. CSMs in levels 1 and 2 are deemed eligible for overtime pay, while CSMs in levels 3 and higher are deemed overtime ineligible.

Bigger was a level-4 CSM; when she worked over 40 hours in a week, she did not receive overtime compensation. In 2017, she brought an action against Facebook on behalf of herself and all other similarly situated employees. She claimed that, by not paying them overtime wages, Facebook violated the FLSA.2

After Bigger and Facebook engaged in some (but not complete) discovery, Bigger moved to conditionally certify a collective action, and asked the court to authorize notice to all members of the putative collective: "[a]ll individuals who were employed by Facebook as Client Solutions Managers at level IC-3 or IC-4 at any location in the United States" during the period three years before conditional certification to the present. The notice would inform recipients about the action and opportunity to opt in.

Facebook responded in two ways. First, it moved for summary judgment, arguing that Bigger—the only plaintiff at this point—was exempt from the FLSA overtime-pay requirements. Second, it argued that the authorization of notice was improper because most proposed recipients had entered mutual arbitration agreements making them ineligible to join the action.

In support of its opposition to the notice, Facebook supplied the district court with two templates of arbitration agreements: copies of arbitration-agreement forms that Facebook had given to two employees, whose names and signatures were redacted. Facebook also gave estimates about how many proposed notice recipients had signed comparable forms.3 But Facebook did not supply the actual documents that proposed recipients allegedly executed. Nor did Facebook otherwise show which proposed notice recipients entered mutual arbitration agreements.

The district court denied Facebook’s motion for summary judgment, and—conditionally certifying the proposed collective—authorized notice to be sent to all employees in the group Bigger proposed. Facebook sought and was granted interlocutory appeal of these decisions.4 See 28 U.S.C. § 1292(b).

II. ANALYSIS

We begin with Facebook’s argument that the district court abused its discretion by authorizing notice to all members of the proposed collective. We then turn to Facebook’s argument that the court improperly denied Facebook summary judgment.

A. Authorization of Notice

We review a district court’s management of a collective action—including the facilitation of notice—for abuse of discretion. See Hoffmann–La Roche , 493 U.S. at 169, 110 S.Ct. 482 ; Alvarez v. City of Chicago , 605 F.3d 445, 449 (7th Cir. 2010). In doing so, we review de novo legal conclusions underlying the court’s decision. See Weil v. Metal Techs., Inc. , 925 F.3d 352, 357 (7th Cir. 2019).

Arguing that the court abused its discretion by authorizing notice to the proposed group of employees, Facebook gives the following reasoning: Most employees in the group entered arbitration agreements waiving their right to participate in the action. Those agreements make the employees who entered them neither "potential plaintiffs" nor "similarly situated" to Bigger. Thus, the notice would misinform most recipients—by indicating that they may join the action when, in truth, they may not—and the notice would unfairly amplify settlement pressure.

Bigger responds that all employees in the proposed collective are "potential plaintiffs" because they, along with Bigger, "were victims of a common policy or plan that violated the law." Myers v. Hertz Corp. , 624 F.3d 537, 555 (2d Cir. 2010) (quoting Hoffmann v. Sbarro, Inc. , 982 F.Supp. 249, 261 (S.D.N.Y. 1997) ). She points out that the district court can determine later, after more discovery, whether anyone who opts in is not "similarly situated" to Bigger. She continues that the notice would not misinform recipients, because it says, "[i]f you file an ‘Opt-In Consent Form,’ your continued right to participate in this suit may depend upon a later decision by the Court that you and the Named Plaintiff are actually ‘similarly situated’ in accordance with federal law." Besides, she adds, Facebook did not propose changes to the notice.

The question we face is whether a court may authorize notice to individuals who, according to the defendant, entered valid arbitration agreements waiving their right to join the action. In addressing this issue of first impression for our court, we find guidance in the goals and dangers of collective actions and in the neutrality a trial court must maintain when facilitating notice to potential plaintiffs.

The twin goals of collective actions are enforcement and efficiency: enforcement of the FLSA, by preventing violations of the overtime-pay requirements and by enabling employees to pool resources when seeking redress for violations; and efficiency in the resolution of disputes, by resolving in a single action common issues arising from the same alleged illegal activity. Cf. Hoffmann–La Roche , 493 U.S. at 170–71, 110 S.Ct. 482. The FLSA invokes these goals by explicitly permitting collective actions in which "similarly situated" employees may join a lawsuit against their employer.5 29 U.S.C. § 216(b).

But collective actions also present dangers. Hoffmann–La Roche , 493 U.S. at 171, 110 S.Ct. 482. One is the opportunity for abuse of the collective-action device: plaintiffs may wield the collective-action format for settlement leverage. See id. Generally speaking, expanding the litigation with additional plaintiffs increases pressure to settle, no matter the action’s merits. A related danger is that notice giving, in certain circumstances, may become indistinguishable from the solicitation of claims—which is a process "distinguishable in form and function" from court intervention in the notice process for case management purposes. Id. at 174, 110 S.Ct. 482.

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