Swales v. KLLM Transp. Servs., L.L.C.

• Decision Date: 12 January 2021
• Docket Number: No. 19-60847,19-60847
• Citation: 985 F.3d 430
• Parties: Harry SWALES; Corey Lilly; Kyle Shettles; and John McGee, on behalf of themselves and all others similarly situated, Plaintiffs—Appellees, v. KLLM TRANSPORT SERVICES, L.L.C., Defendant—Appellant, Marcus Brent Jowers, and others similarly situated, Plaintiff—Appellee, v. KLLM Transport Services, L.L.C., Defendant—Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

985 F.3d 430

Harry SWALES; Corey Lilly; Kyle Shettles; and John McGee, on behalf of themselves and all others similarly situated, Plaintiffs—Appellees,

v.KLLM TRANSPORT SERVICES, L.L.C., Defendant—Appellant,Marcus Brent Jowers, and others similarly situated, Plaintiff—Appellee,

v.KLLM Transport Services, L.L.C., Defendant—Appellant.

No. 19-60847

United States Court of Appeals, Fifth Circuit.

FILED January 12, 2021

Gary E. Mason, Danielle Lynn Perry, Mason Lietz & Klinger, L.L.P., Washington, DC, Michael Aschenbrener, KamberLaw, Denver, CO, John Dudley Butler, Butler Farm & Ranch Law Group, P.L.L.C., Benton, MS, for Plaintiffs - Appellees Harry Swales, Corey Lilly, Kyle Shettles, John McGee.

Joshua Haffner, Graham G. Lambert, Attorney, Haffner Law P.C., Los Angeles, CA, Joe Bradley Pigott, Pigott, Reeves, Johnson, P.A., Jackson, MS, for Plaintiff - Appellee Marcus Brent Jowers.

Grover Clark Monroe, II, Christopher G. Dunnells, DunbarMonroe, P.A., Ridgeland, MS, for Defendant - Appellant.

Scott A. Keller, Baker Botts, L.L.P., Austin, TX, for Amicus Curiae Chamber of Commerce of the United States of America.

Richard J. Burch, Bruckner Burch, P.L.L.C., Houston, TX, for Amicus Curiae National Employment Law Project.

Before Jolly, Jones, and Willett, Circuit Judges.

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 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 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 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 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 Hoffmann-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, Hoffmann-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 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 proper procedure" for certifying...