Dolan v. Project Const. Corp.

• Decision Date: 20 January 1984
• Docket Number: No. 83-1704,83-1704
• Citation: 725 F.2d 1263
• Parties: 26 Wage & Hour Cas. (BN 984, 99 Lab.Cas. P 34,493 James V. DOLAN and Milton L. Lee, individually and on behalf of all others similarly situated, Plaintiffs-Appellants, v. PROJECT CONSTRUCTION CORPORATION, A subsidiary of Stearns-Roger Corporation, Defendant-Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1263

725 F.2d 1263

26 Wage & Hour Cas. (BN 984, 99 Lab.Cas. P 34,493

James V. DOLAN and Milton L. Lee, individually and on behalf

of all others similarly situated, Plaintiffs-Appellants, v. PROJECT CONSTRUCTION CORPORATION, A subsidiary of

Stearns-Roger Corporation, Defendant-Appellee.

No. 83-1704.

United States Court of Appeals, Tenth Circuit.

Jan. 20, 1984.

Sander N. Karp, of Karp, Goldstein & Stern, Denver, Colo., for plaintiffs-appellants.

Bruce W. Sattler, Denver, Colo. (Warren L. Tomlinson and Jeffrey T. Johnson, Denver, Colo., with him on brief), of Holland & Hart, Denver, Colo., for defendant-appellee.

Before BARRETT and LOGAN, Circuit Judges, and BOHANON, Senior District Judge ^*.

BOHANON, District Judge.

Beginning in March, 1980, the defendant-appellee began construction on a 226 Million Dollar natural gas processing plant located approximately fifteen miles northwest of Evanston, Wyoming. This plant was known as the Amoco-Whitney Canyon Project. To construct this facility, defendant Project Construction Corporation employed approximately 1,500 hourly employees on a daily basis until the work was substantially completed in December, 1982.

The plaintiffs herein were employed during the construction of the natural gas processing plant and allege that they were denied certain wages and overtime compensation pursuant to Secs. 6 and 7 of the Fair Labor Standards Act (hereinafter FLSA), 29 U.S.C. Secs. 206 and 207. ¹

Upon the filing of the complaint, plaintiff served upon the defendant a set of interrogatories including the following demand for information:

"State the name and last known address of each employee of the defendant who was employed by said defendant at the the Amoco-Whitney Canyon Project near Evanston, Wyoming and who was employed at said site within the last two years including the date of hire, date of termination, days and hours of each day worked, the wage paid said employee on each date of employment within the last two years or until terminated or laid off, the classification or job description of said employee, and said employee's last known address. In lieu thereof, the defendant may produce copies of employment, payroll, and/or hourly time records which reflect the above information pursuant to the above rule."

Plaintiffs' First Set of Interrogatories.

Defendant immediately moved for a Protective Order in lieu of answering the interrogatories. Plaintiffs, meanwhile, moved for Leave to Give Notice to Class Members. Both of these motions were set before the federal magistrate pursuant to an Order of Reference by the district court.

During the hearing on the motions, the magistrate held that the power to authorize the sending of notice to putative plaintiffs in collective employee suits under the FLSA could not be inferred from Section 216(b), 29 U.S.C. Sec. 216(b), which does not expressly provide for such notice. He therefore denied plaintiffs' Motion for Leave to Give Notice.

Upon making the determination that notice could not be given, the magistrate held that no purpose would be served by the defendants' response to the first set of interrogatories and consequently granted the protective order.

The plaintiffs sought review of the magistrate's ruling before the district court and upon review of the record, the district court issued an Order Affirming the Magistrate. ²

Pursuant to the provisions of 28 U.S.C. Sec. 1292(b) plaintiffs-appellants present this interlocutory appeal from the district court order denying the sending of notice to potential plaintiffs in a collective action described in 29 U.S.C. Sec. 216(b). We affirm.

Initially, this case must be distinguished from a class action under Rule 23 of the Federal Rules of Civil Procedure. Rule 23 provides that upon the establishment of a class a subsequent judgment binds all members of the class unless they have expressly opted out of the class action. Therefore, due to the res judicata effect of a class action under the provisions of Rule 23, notice to the putative class of the pendency of the action is required to protect the individual interests of the class members.

However, 29 U.S.C.A. Sec. 216(b) (hereinafter Sec. 216(b)) provides, inter alia:

"... An action to recover the liability prescribed in [this act] ... may be maintained ... by any one or more employees for and in behalf of himself or themselves 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...."

Therefore, the principal difference between a Rule 23 class action and a Sec. 216(b) collective action is that the similarly situated employee must "opt-in" to be bound by a judgment in a Sec. 216(b) suit. Correspondingly, Sec. 216(b) fails to provide for mandatory notice to similarly situated employees since no individual rights are jeopardized by the FLSA procedures. See Price v. Maryland Casualty Co., 561 F.2d 609 (5th Cir.1977); LaChapelle v. Owens-Illinois, Inc., 513 F.2d 286 (5th Cir.1975).

While this court has never ruled on the procedural ramifications of Sec. 216(b), the issue has been before other circuit courts. The Ninth Circuit in Kinney Shoe Corp. v. Vorhes, 564 F.2d 859 (9th Cir.1977), was the first circuit to examine the question of notice in the Sec. 216(b) situation. Kinney held that neither the named plaintiffs, their counsel, nor the court has the power to provide notice to similarly situated employees. See also Partlow v. Jewish Orphans' Home of Southern Cal., 645 F.2d 757 (9th Cir.1981).

The second circuit was the next to consider the issue of notice. In Braunstein v. Eastern Photographic Laboratories, Inc., 600 F.2d 335 (2nd Cir.1979) the court held that Sec. 216(b) permitted court sponsored notice in appropriate cases.

Finally, the seventh circuit examined the issue and a third viewpoint on Sec. 216(b) notices was formulated. In Woods v. New York Life Ins. Co., 686 F.2d 578 (7th Cir.1982) the court ruled that plaintiffs and their counsel can communicate with prospective parties under terms and conditions prescribed by the court, but the notice must not bear the imprimatur of the court.

Two other circuits have been presented the issue but have declined to choose between the various judicial interpretations of Sec. 216(b). See Haynes v. Singer Co., Inc., 696 F.2d 884 (11th Cir.1983); Thompson v. Sawyer, 678 F.2d 257 (D.C.Cir.1982).

This court is now presented with the issue and must formulate an opinion on the procedural scope of a Sec. 216(b) action.

Historical Background

The relevant portions of Sec. 216(b) were originally enacted as Section 5 of the Portal-to-Portal Act of 1947, Pub.L. 49, ch. 52, 61 Stat. 87. The primary purpose of the Portal-to-Portal Act was to remedy deficiencies in the interpretation and procedural management of the FLSA as originally formulated in 1938.

In its original form, the FLSA made provision for an action by an employee in behalf of himself and other employees similarly situated. However, after decisions by the United States Supreme Court interpreted the FLSA to provide for compensation that historically had not been reimbursed, see Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 66 S.Ct. 1187, 90 L.Ed. 1515 (1946), a virtual flood of litigation ensued in the form of class actions. Perceiving the flood of litigation as a serious threat to interstate commerce the Congress moved to limit the applicability of the FLSA to certain industry practices. Particularly relevant here, the Congress also limited the class action procedures for filing representative actions. In describing the financial burdens affecting interstate commerce, the House of Representatives' Report stated:

"The procedure in these suits follows a general pattern. A petition is filed under section 16(b) [providing for representative actions] by one or two employees in behalf of many others. To this is attached interrogatories calling upon the employer to furnish specific information regarding each employee during the entire period of employment. The furnishing of this data alone is a tremendous financial burden to the employer."

H.R.Rep. No. 71, 80th Cong., 1st Session 4 (1947); 1947 U.S.CODE CONG. & AD.NEWS, (80th Cong., 1st Session) 1029, 1032.

Not only did Congress disapprove of the normal discovery practices associated with class actions but it also made the specific finding that unless the provisions of the FLSA of 1938 were changed "the courts of the country would be burdened with excessive and needless litigation and champertous practices would be encouraged." Sec. 1(a)(7) Portal-to-Portal Act of 1947.

The opt-in language of Sec. 216(b) was a direct result of this clear congressional dissatisfaction with the original class action provisions of the FLSA. In fact, the relevant language of Sec. 216(b) was entitled "Representative Actions Banned" in the Portal-to-Portal Act.

Clearly, Congress sought to limit the nature of a class action suit based upon an alleged FLSA violation. While still providing for collective and representative actions, it intended to severely limit the burden on the defendant and the participation of the court. Indeed, within the policy statements of the Portal-to-Portal Act of 1947, the following statement is included:

Section 1(b)(3)--"[A policy of this Act is] to define and limit the jurisdiction of the courts."

Further evidence of the intent to remove the court from active participation in a representative action under Sec. 216(b) is Congress' careful drafting to avoid due process difficulties for potential class members who do not participate in the filed representative actions. See Webster Eisenlohr Inc. v. Kalodner, 145 F.2d 316 (3rd Cir.1944).

Notice

It is upon this historical background that we must structure procedural rules for the administration of actions based upon Sec. 216(b). ³ The...