Opinion
3:18-cv-02219-AC
02-03-2022
JULIANNE HUNTER, individually and on behalf of all others similarly situated, Plaintiff, v. LEGACY HEALTH; LEGACY EMANUEL MEDICAL CENTER; LEGACY EMANUEL HOSPITAL & HEALH CENTER; LEGACY HEALTH PARTNERS, LLC; RANDALL CHILDREN'S HOSPITAL AT LEGACY EMANUEL, Defendants.
OPINION AND ORDER
JOHN V. ACOSTA UNITED SLATES MAGISTRATE JUDGE
Introduction
Plaintiff Julianne Hunter ("Hunter"), individually and on behalf of others similarly situated, brings this action against defendants Legacy Health, Legacy Emanuel Medical Center, Legacy Emanuel Hospital & Health Center, Legacy Health Partners, LLC, and Randall Children's Hospital at Legacy Emanuel (collectively, "Legacy"), under the Fair Labor Standards Act (29 U.S.C. §§ 201-219) ("FLSA"), and Oregon law. Hunter filed a Motion for Conditional Certification and to Facilitate Notice Under 29 U.S.C. § 216(b) ("Certification Motion"). The court found Hunter met the lenient preliminary standard for conditional certification and granted the Certification Motion with respect to conditional certification and notice, but denied Hunter's request for equitable tolling ("Certification Order"). Hunter v. Legacy Health, Case No. 3:18-CV-02219-AC, 2021 WL 24553 (D. Or. Jan. 4, 2021) ("Hunter II).
Currently before the court is Legacy's motion to certify an interlocutory appeal of the Certification Order ("Motion"), specifically the application of the lenient preliminary standard, based on the recent decision by the United States Court of Appeals for the Fifth Circuit in Swales v. KLLM Transport Services, LLC, 985 F.3d 430 (5th Cir. 2021). Legacy contends Swales casts "doubt on the authority of districts courts to distribute notice in collective actions without first determining whether the potential plaintiffs are 'similarly situated' under the [FLSA]." (Defs.' Mot. to Certify Interlocutory Appeal and Stay FLSA-Related Discovery, ECF No. 121 ("Mot."), at 1.) Legacy also seeks a stay of FLSA-related discovery pending resolution of the interlocutory appeal.
The court finds Legacy has failed to establish the Certification Order presented a controlling question of law, substantial ground for a difference of opinion on that controlling question, or that granting the Motion would materially advance the termination of the litigation. Accordingly, Legacy has filed to meet its heavy burden to establish the existence of the exceptional circumstances necessary to justify certification of an interlocutory appeal and the Motion is denied.
The parties have consented to jurisdiction by magistrate judge in accordance with 28 U.S.C. § 636(c)(1).
Background
Legacy is a nonprofit health system with facilities spread across southern Washington and the Willamette Valley in northern Oregon. (Logsdon Decl. dated June 20, 2020, ECF No. 103 ("Logsdon Decl."), ¶ 2.) Hunter alleges Legacy failed to pay overtime compensation for automatic time deductions and "off-the-clock" work performed by non-exempt employees during meal periods, before clocking in, and after clocking out in violation of the FLSA. (Class and Collective Action Compl.; FLSA Overtime Law; Oregon Wage and Hour Laws; Oregon Meal and Rest Period, ECF No. 1 ("Compl.").)
Legacy used the L-Time timekeeping system for non-exempt employees from December 26, 2012, to June 13, 2015. (Logsdon Decl. ¶ 6.) The system automatically deducted meal periods from an employee's shift after the employee worked six or more hours. (Logsdon Decl. Ex. A, at 1.) According to Legacy, "[t]he L-Time system was designed to recognize and give effect to hourly, non-exempt employees' right to take a 30-minute unpaid, uninterrupted meal break when working a shift of six hours or longer." (Logsdon Decl. ¶ 6.) However, under the L-Time system, "[i[f an employee works six or more hours, and, due to the nature or circumstances of the work, is required to remain on duty or perform any tasks during the 30-minute meal period," the employee should enter a special code to indicate the employee did not take a lunch break when the employee "badges out" at the end of the shift. (Logsdon Decl. Ex. B, at 21.) Under these circumstances, the employee would be paid for the interrupted meal period. (Logsdon Decl. Ex. B, at 20.) If an employee forgot to enter the special code at the end of a shift, then the employee was required to submit a "correction form" to a manager. ((Logsdon Decl. Ex. B, at 21.)
On June 14, 2015, Legacy switched to the My Time timekeeping system. (Logsdon Decl. f 7.) The MyTime system does not automatically deduct meal periods from employee shifts. (Logsdon Decl. Ex. D, at 17.) Instead, the system requires hourly, non-exempt employees "to clock in and out for meal breaks using a code designated for meal periods." (Logsdon Decl. ¶ 7.) Thus, "[u]nlike the L-Time system, under the MyTime system, hourly, non-exempt employees are automatically paid for their meal breaks unless they clock out for a full, uninterrupted 30 minutes." (Logsdon Decl. ¶ 7.) Legacy's MyTime policy states: "If the employee is required to remain on duty during the meal period or performs any tasks during the meal period, the meal period must be paid, and the employee would not clock out." (Logsdon Decl. Ex. C, at 2.) If an employee's meal period is interrupted and the employee is required to return to work, the employee should badge back in to work and enter a special code. (Logsdon Decl. Ex. D, at 18.)
Hunter worked for Legacy as a registered nurse ("RN"), classified as a non-exempt employee, from March 2009 to April 2016. (Hunter Decl. dated May 2, 2020, ECF No. 81 ("Hunter Decl"), ¶ 2.) Hunter contends she regularly worked more than forty hours per week and was required to perform work before she clocked-in and after she clocked-out. (Hunter Decl. ¶ 7.) Hunter asserts Legacy told her she could not clock-in before her scheduled start time or after her scheduled end time, even if she was required to work. (Hunter Decl. ¶ 8.) Hunter estimates she worked, on average, fifteen minutes before she clocked in for a scheduled shift, and for thirty minutes after she clocked out. (Hunter Decl. ¶ 9.) Hunter contends "this was a common and widely-known problem amongst the nursing staff, charge nurses, and supervisors at Legacy." (Hunter Decl. ¶ 9.) Hunter also asserts she was regularly interrupted when she attempted to take meal breaks. (Hunter Decl. ¶ 12.) Moreover, she claims Legacy "never trained nursing staff that we could reverse or correct the automatic meal deduction based on the mere fact that nursing staff were required to remain responsible for the health and safety of our patients." (Hunter Decl. ¶13.)
Hunter filed a Class and Collective Action Complaint on December 26, 2018 ("Complaint"). In the Complaint, Hunter defined the FLSA collective members as "people who are or have been employed by [Legacy] as nurses, nurse aides, nurse assistants, and other similar hourly and non-exempt employees" working in either the United States or in the State of Oregon "that have been subject to an automatic time deduction by [Legacy]" within either the three years (FLSA) or six years (Oregon) preceding the filing of the Complaint. (Compl. ¶¶13, 14.)
On July 23, 2019, the parties filed competing discovery motions. Legacy sought a protective order to significantly limit the scope of discovery requested, and Hunter sought an order to compel production of class and collective lists to support certification. The court directed Legacy to provide Hunter with the name, job title, unit, last-known phone number, last-known email address, and dates of employment for a random sample of 600 individuals who worked at two of Legacy's hospitals, Legacy Emanuel Medical Center ("Emanuel") or Randall's Children's Hospital ("Randall"), during the relevant time period and met the definition of "nursing staff." Hunter v. Legacy Health, Case No. 3:18-CV-002219-AC, 2019 WL 4803225, at *9 (D. Or. Sept. 20, 2019) (Hunter I"). The parties eventually agreed on the process for selecting a random sample of employees and on January 30, 2020, notice was mailed to 600 randomly selected employees. Hunter II, 2021 WL 24553, at *3. On March 18, 2020, Legacy produced more than 10, 000 pages of discovery, including Legacy's wage and hour polices; personnel files; timekeeping records;
Legacy's new employee orientation materials; job descriptions; overtime logs from Randall; document retention policies; and organizational charts. Id.,
Two months later, Hunter filed the Certification Motion for the purpose of providing notice to prospective collective class members. Id. Hunter sought authority from the court to send notice of the prospective collective action to: "All individuals who have worked for Defendant as non-exempt, hourly paid employees with patient care responsibilities, such as nurses, nursing aides, nursing assistants, and other similarly situated workers in the United States at any time within the three[-]year statute of limitations period [f]or FLSA claims under 29 U.S.C. § 225(a)." Id. at *7-*8. In support of the Certification Motion, Hunter submitted declarations from nine current and former Legacy employees, each representing he or she was interrupted during meal breaks and several stating they were required to perform work before or after they had clocked in or out for their scheduled shifts. Id. at *3. In opposition, Legacy offered declarations from Chief Nursing Officers at Emanuel and Randall distinguishing the responsibilities of RNs, certified nursing assistants ("CNA"), licensed practical nurses ("LPN"), and technicians, and making clear the greater and broader responsibilities of the RNs. Id. at *4. Legacy acknowledged "shift-to-shift unit huddle[s]" occur at the beginning and end of nurses' shifts to discuss and allocate assignments but explained "[t]here is no expectation that CNAs, LPNs, or technicians arrive earlier than, or leave later than, their scheduled shift." Id. Legacy represented CNAs, LPNs, and technicians "are rarely (if ever) interrupted during their meal breaks" because "there is always a Registered Nurse assigned to that patient who can cover the patient care needs during the CNA, LPN, and Technician breaks." Id. Finally, Legacy stated its policy prohibits employees from continuing to work after "badgpng] out" at the scheduled end of a shift. Id.
The court considered the Certification Motion under the two-tiered approach used by most courts and identified by the Ninth Circuit as the generally accepted test. Specifically, the court explained:
the Ninth Circuit has held, "it is now the near-universal practice to evaluate the propriety of the collective mechanism - in particular, plaintiffs' satisfaction of the 'similarly situated' requirement - by way of a two-step 'certification process.'" First, "plaintiffs will, at some point around the pleading stage, move for 'preliminary certification' of the collective action, contending that they have at least facially satisfied the 'similarly situated requirement.'" Second, "after the necessary discovery is complete, defendants will move for 'decertification' of the collective action on the theory that the plaintiffs' status as 'similarly situated' was not borne out by the fully developed record."Hunter II, 2021 WL 24553, at *4 (quoting Campbell v. City of Los Angeles, 903 F.3d 1090, 1100 (9th Cir. 2018). Hunter and Legacy both acknowledged the two-tiered approach described in Campbell applied to the certification of a collective class under the FLSA but differed on the standard to be applied in the first tier. Hunter argued the level of scrutiny depends on how much discovery has been completed, and contended that the court should evaluate the Certification Motion for conditional certification under a "lenient" standard because discovery is ongoing. Hunter II, 2021 WL 24553, at *6. Legacy countered that "the court should adopt the 'modest "plus" standard'... a 'lenient standard with some consideration of the stage-two factors' because the parties had conducted 'several months of limited discovery."' Id. (quoting Creely v. HCR ManorCare, Inc., 789 F.Supp.2d 819, 826-27 (N. D. Ohio 2011).
The Ninth Circuit observed: "[M]uch of collective action practice is a product of interstitial judicial lawmaking or ad hoc district court discretion. In particular, although nothing in section 216(b) expressly compels it, it is now the near-universal practice to evaluate the propriety of the collective mechanism - in particular, plaintiffs' satisfaction of the 'similarly situated' requirement - by way of a two-step 'certification' process. See 1 McLaughlin on Class Actions § 2:16 (14th ed. 2017)." Campbell, 903 F.3d at 1100.
The court agreed with Hunter, noting that Legacy provided the 10, 000 pages of discovery only two months before Hunter filed the motion for conditional certification; that Hunter received information on a very small percentage of possible collective class members and personnel, payroll, and timekeeping records on some, but not all, of the opt-in plaintiffs; and that the parties had not yet taken depositions. Hunter II, 2021 WL 24553, at *6. The court explained "[b]ecause extensive discovery has not occurred, the court concludes the first-tier analysis is the appropriate standard to evaluate Hunter's current motion." Id.,
The court then considered the "similarly-situated" requirement under the lenient first-tier standard and found "Hunter has established a common policy or plan in violation of FLSA sufficient to satisfy the lenient standard for a motion to conditionally certify a collective action." Id. at *7. The court explained:
A plaintiff seeking conditional certification must produce sufficient evidence to create a reasonable inference she and her fellow class members are "similarly situated." The Ninth Circuit [in Campbell] has held plaintiffs are similarly situated when they are "alike with regard to some material aspect of their litigation." Plaintiffs may establish they are similarly situated by demonstrating defendants followed a "common policy or plan" in violation of FLSA.
Plaintiffs must demonstrate "a factual nexus which binds [plaintiffs] together as victims of an alleged policy or practice." This showing, at the first tier, "is based on the pleadings and affidavits submitted by the parties."Id. at *6 (internal citations omitted; italics in original). It then found Hunter adequately alleged Legacy violated the FLSA overtime and wage provisions based on a policy requiring non-exempt employees, specifically nurses and other employees responsible for patient care, "to deduct meal periods from their hours when Legacy knows they do not receive uninterrupted meal periods" and pressure on "nursing staff to clock in and clock out at certain times, regardless of whether nursing staff perform work while off-the-clock," which allegations were supported by "declarations from non-exempt employees alleging they were not compensated for work performed during meal breaks and before and after they clocked in to work." Id. at *6-*7. The court concluded "Hunter has alleged plausible legal theories based on a common scheme: employees responsible for patient care, such as RNs, were not compensated for work performed "off the clock," whether the time was during a meal period or before or after a scheduled shift." Id. at *7.
The court rejected Legacy's assertion that Hunter failed to establish the claims of the collective class were substantially similar or the class members were subject to a common policy or plan. In support of this argument, Legacy relied on evidence "the declarants' meal periods were disrupted in different ways and for different reasons," which required a "fact-laden inquiry," and on the assertion "nursing staff who clocked out for meal breaks but were interrupted at any time during those 30 minutes, were required to clock back in and compensated for that missed meal period and any overtime that may have resulted from it." Id. The court noted the "Ninth Circuit has held, 'as long as the proposed collective's "factual or legal similarities are material to the resolution of their case, dissimilarities in other respects should not defeat collective treatment." Id. (quoting Serine v. Kansas City Royal Baseball Corp., 934 F.3d 918, 948 (2019). It then found the factual dissimilarities identified by Legacy went to the merits of the claims, were not relevant to the issues then before the court, and did not defeat conditional certification. Id.
A week later, the United States Court of Appeals for the Fifth Circuit addressed the two-tier analysis described by the Ninth Circuit in Campbell and, specifically, the use of first-tier conditional certification in FLSA collective actions. See Swales v. KLLM Transport Services, 985 F.3d 430 (5th Cir. 2021). The Swales court expressly rejected the "two-step certification rubric," or what if referred to as the "Lusardi test," and noted that "we agree with the Ninth Circuit that Lusardi should be rejected." Id. at 434, 439. Legacy now moves for an interlocutory appeal contending "with the Fifth Circuit's decision in Swales picking up where the Ninth Circuit left off in Campbell, the issue of'how stringently, and how soon, district courts should enforce § 216(b)'s "similarly situated" mandate' is ripe for consideration." (Mot. at 2.)
Legal Standard
Pursuant to 28 U.S.C. § 1291, appellate review is available only after a final judgment has been entered by a district court. However, Congress created a narrow exception to this rule, authorizing district courts to certify an order for interlocutory appeal if: (1) the "order involves a controlling question of law;" (2) there is "substantial ground for difference of opinion;" and (3) "an immediate appeal from the order may materially advance the ultimate termination of the litigation." 28 U.S.C. § 1292(b) (2020); In re Cement Antitrust Litig., 673 F.2d 1020, 1026 (9th Cir. 1982), aff'd sub nom Arizona v. Ash Grove Cement Co., 459 U.S. 1190 (1983). The requirements of 28 U.S.C. § 1292(b) are jurisdictional, so a district court may not certify an order for interlocutory appeal if all three are not met. Couch v. Telescope, Inc., 611 F.3d 629, 633 (9th Cir. 2010). The party seeking certification bears the burden of showing exceptional circumstances justifying a departure from the "basic policy of postponing appellate review until after the entry of a final judgment." Coopers & Lybrand v. Livesay, 437 U.S. 463, 475 (1978).
Congress did not intend district courts to certify interlocutory appeals "merely to provide review of difficult rulings in hard cases." United States Rubber Co. v. Wright, 359 F.2d 784, 785 (9th Cir. 1966). Rather, certification pursuant to 28 U.S.C. § 1292(b) is reserved for "the most extraordinary situations." Penkv. Or. State Bd. of Higher Educ, 99 F.R.D. 508, 509 (D. Or. 1982). Even when all three requirements are satisfied, the district court retains unfettered discretion to deny a motion to certify for interlocutory review. Mowat Constr. Co. v. Dorena Hydro, LLC, No. 6:14-CV-00094-AA, 2015 WL 5665302, at *5 (D. Or. Sept. 23, 2015).
Discussion
Legacy moves for conditional certification to allow the Ninth Circuit to address the "open question whether district courts can approve sending notice to potential opt-in plaintiffs in collective actions without first determining that the potential opt-ins are, in fact, similarly situated." (Mot. at 2.) Legacy asserts the Ninth Circuit "has never been presented with the question of whether the FLSA 'cabin[s]' that discretion to require an up-front assessment of the collective mechanism." (Mot. at 2.) Legacy posits the Ninth Circuit may reject the two-tier analysis relied on in the Certification Order in favor of the more focused, single-step test the Fifth Circuit articulated in Swales. Hunter contends Legacy cannot "meet the heavy burden of demonstrating that this is one of the exceptionally rare cases where the Court should allow an immediate, interlocutory appeal of [the Certification Order.]" (PL's Resp. to Defs.' Mot. to Certify Interlocutory Appeal and to Stay FLSA-Related Discovery, ECF No. 129 ("Resp."), at 2.) Hunter asserts Legacy ignores the Ninth Circuit's discussion of the standards for conditional certification Campbell and Senne, both of which "make clear[] a district court has broad discretion to conditionally certify a collective action and issue notice pursuant to the two-step conditional certification process." (Resp. at 15.)
The parties' briefing demonstrates that Swale, Campbell, and Senne inform their respective arguments and assertions. Accordingly, the court first summarizes the holdings of these cases.
In Campbell, the Ninth Circuit considered the propriety of the two-tier conditional certification process in the context of an appeal of a district court's decertification of a collective action. Campbell, 903 F.3d at 1099. The party plaintiffs, Los Angeles City police officers, filed a collective action under the FLSA based on an unwritten, department-wide policy that required officers to work short blocks of extra time, including pre-shift work, post-shift work, or work through meal breaks, yet discouraged or rejected overtime claims in amounts of less than one hour and, as a practical matter, prevented accurate time reporting. Id. at 1102. The court noted the allegations of the policy served two puiposes: 1) the allegations were relevant to the merits of the officers' claims; and 2) "credible allegations of a Department-wide policy should suffice to make the Officers similarly situated, as required to maintain a collective action." Id. at 1102.
In support of their motion for decertification, the defendants offered evidence of overtime claims of less than one hour, or even less than thirty minutes, and dissimilarity in the officers' tasks, geographic assignments, rank, and supervisors. Id. at 1103. The plaintiffs, on the other hand, submitted fifty declarations from different officers "listing types of uncompensated tasks and stating, generally, that workplace 'culture and policy' discouraged accurate time reporting," representing "supervisors were aware of the off-the-clock work," and indicating the "declarant learned from their first days with the Department that, notwithstanding written rules to the contrary, overtime in amounts of less than one hour was not to be reported." Id. The district court applied a three-prong test consisting of: (1) the factual and employment setting; (2) defenses available to the defendants; and (3) fairness and procedural considerations to determine whether the allegations and evidence established the officers were "similarly situated" with the meaning of the FLSA, found all three factors weighed in favor of decertification, and granted the defendants' motion. Id. at 1103-04.
On appeal, the Ninth Circuit commented on the absence of express guidance from the FLSA or case law in the circuit on collective action practice, specifically as to the certification process or on the definition of "similarly situated." Id. at 1108. It then recognized and summarized the two-tier procedure for determining whether collective mechanism is appropriate, that nearly all district courts utilize and that is "endorsed by eveiy circuit that has considered it." Id. 1108-10.
First, at or around the pleading stage, plaintiffs will typically move for preliminary certification. Preliminary certification, as noted, refers to the dissemination of notice to putative collective members, conditioned on a preliminary determination that the collective as defined in the complaint satisfies the "similarly situated" requirement of section 216(b). At this early stage of the litigation, the district court's analysis is typically focused on a review of the pleadings but may sometimes be supplemented by declarations or limited other evidence. The level of consideration is "lenient," - sometimes articulated as requiring "substantial allegations," sometimes as turning on a "reasonable basis," but in any event loosely akin to a plausibility standard, commensurate with the stage of the proceedings.
Assuming the collective action has survived its earlier scrutiny, the second stage will come at or after the close of relevant discovery. The employer can move for "decertification" of the collective action for failure to satisfy the "similarly situated" requirement in light of the evidence produced to that point. The district court will then take a more exacting look at the plaintiffs' allegations and the record. Because of its purpose and timing, decertification can resemble a motion for partial summary judgment on the "similarly situated" question, and may be combined with cross-motions for summary judgment.Id. at 1109 (internal citations omitted). The court recognized that the two-tiered analysis, explaining "as a general rule, the two-step process, culminating in a decertification motion on or after the close of relevant discovery, has the advantage of ensuring early notice of plausible collective actions, then eliminating those whose promise is not borne out by the record" and found "the present case fits this mold well." Id. at 1110.
Noting that "there is no established definition of the FLSA's 'similarly situated' requirement" (id. at 1111), the Campbell court then addressed the meaning of the term. The court first noted "two approaches to the 'similarly situated' requirement have emerged": the minority approach, that treats "a collective as an opt-in analogue to a Rule 23(b)(3) class" requiring numerosity, commonality, typicality, adequacy, predominance, and superiority; and the majority approach, that "is a flexible inquiry into the factual differences between the party plaintiffs and the desirability of collective treatment," comprised of the "three-prong test that focuses on points of potential factual or legal dissimilarity between party plaintiffs" utilized by the district court. Id. at 1111, 1113.
The minority approach finds its origin in Shushan v. University of Colorado, 132 F.R.D. 263 (D. Colo. 1990), and majority approach originates from Lusardi v. Xerox Corporation, 118 F.R.D 351 (D.N.J. 1987). Swales, 985 F.3d at 436-37.
The court rejected the minority test, distinguishing between collective actions and class actions, explaining they "are creatures of distinct texts . . . that impose distinct requirements" and should not, necessarily, "be handled in procedurally parallel ways," and concluding "mimicking the Rule 23 standards in evaluating section 216(b) collective actions is not appropriate." Id. at 1101, 1111-1113. The court opined the majority test "better accommodates the party plaintiffs' broad right to proceed collectively" by "omitting conditions with no grounding in the FLSA," but identified two flaws and rejected the majority test as well. Id. at 1113, 1117.
First, the court noted while the majority test properly gauged the legal or factual similarities between party plaintiffs, "it does so a such a high level of abstraction that it risks losing sight of the statute underlying it" and "offers no clue as to what kinds of 'similarity' matter under the FLSA." Id. at 1114 (emphasis in original). The court noted "similarly situated" must be considered "in light of the collective action's reason for being within the FLSA, that party plaintiffs must be alike with regard to some material aspect of their litigation." Id. at 1114 (emphasis in original). The court reasoned: "Under section 216(b), if the party plaintiffs are similar in some respects material to the disposition of their claims, collective treatment may be to that extent appropriate, as it may to that extent facilitate the collective litigation of the party plaintiffs' claim. Id. at 1115 (emphasis in original).
Second, the court found the "fairness and procedural considerations" prong too "open-ended" and that it "invite[d] courts to import, through a back door, requirements with no application to the FLSA." Id. at 1115. The Ninth Circuit cautioned against using procedural considerations to decertify a collective action, relying on the power the FLSA gives plaintiffs "to decide in what form they wish to proceed, for 'Congress has stated its policy that [party] plaintiffs should have the opportunity to proceed collectively." Id. at 1115 (quoting Hoffman-La Roche v. Sperling, 493 U.S. 16, 170 (1989)). "[I]f the party plaintiffs' FLSA right to choose collective litigation has any force, 'procedural considerations' must mean more than the inconvenience, from the court's or defendant's viewpoint, of the party plaintiffs choice." Id. at 1116. The court concluded "decertification of a collective action of otherwise similarly situated plaintiffs cannot be permitted unless the collective mechanism is truly infeasible." Id. It expressly rejected the three-prong majority test, at least as "typically articulated," reiterating that when party plaintiffs share a similar issue of law or fact material to the disposition of their FLSA claim, they may proceed in a collective and a court may not decertify based solely on its perception of likely inconvenience. Id. at 1117.
The court found the district court erred by focusing on the factual differences of the party plaintiffs rather than evidence establishing the existence of a department-wide policy against submitting small overtime claims. Id. It noted proof of the existence of a department-wide policy would have met the similarly situated requirement despite evidence of different employment circumstances. Id. The court explained distinctions between party plaintiffs based on specific employment circumstances "go to the individualized calculation of damages or the individualized application of defenses" and "do not preclude collective treatment for the imposes of resolving the common issue that does exist, and that must be answered in the first instance." Id.
The court found the summary judgment motion standard applied to motions to decertify a collective action where the decertification question overlaps with the merits of the underlying FLSA claims. Id. at 1118. It emphasized "that as with a motion formally styled as a summary judgment, the district court may not, on a merits-dependent decertification motion, weigh evidence going to the merits. If collective treatment is premised on a genuine issue of material fact as to the merits of the party plaintiffs' FLSA claim, the collective action cannot be certified unless the factual dispute is resolved against the plaintiffs' assertions by the appropriate factfinder." Id. at 1119.
The Ninth Circuit concluded the district court erred by applying an "overly demanding test of the FLSA's 'similarly situated' requirement" and by "weighing] evidence regarding the existence of a Department-wide policy." Id. at 1120. However, it affirmed decertification of the collective action based on the party plaintiffs' failure, as a matter of law, to create a triable question of fact regarding the existence of a Department-wide policy or practice. Id. at 1120. The court noted the proffered evidence, comprising numerous individual declarations, spoke to the variable practices of immediate supervisors at discrete worksites, "not of a uniform practice from which one might infer direction from a higher level." Id. In the absence of clear evidence of a tacit, top-down, department-wide policy, and contrary evidence of a widely disseminated written policy governing overtime, more than 3330, 000 overtime claims in amounts of less than one hour during the relevant period, and wide-spread FLSA compliance, "no reasonable trier of fact could conclude that the City fostered or tolerated a tacit policy of noncompliance." Id. at 1120-21. Consequently, the party plaintiffs were not subject to a tacit, systemic policy against the reporting of overtime foster by the defendants, not "similarly situated" within the meaning of the FLSA, and not entitled to pursue their claims in a collective action. Id. at 1121.
The Sennne court similarly considered certification of a class under the FLSA following extensive discovery and, essentially, at the decertification step. The district court conditionally certified a collective class and authorized notice to prospective class members. Senne, 934 F.3d at 924. A year later, defendants moved to decertify the class. Id. at 925. The district court granted the motion for decertification, finding choice-of-law issues and extensive individual inquiries established the party plaintiffs were not similarly situated. Id. The plaintiffs reworked the definition of their FLSA collective and sought recertification of the new collective. Id. The district court re certified the narrowed FLSA collective, finding the "'similarly situated' requirement!] could be met with the use of representative evidence and application of the continuous workday rule." Id. at 926.
On appeal, the Ninth Circuit adopted the standard for FLSA collective certification enunciated in Campbell - "'[p]arty plaintiffs are similarly situated, and may proceed in a collective, to the extent they share a similar issue of law or fact material to the disposition of the FLSA claims, '" - and "affirmed the collective's certification." Id. at 948 (quoting Campbell, 903 F.3d at 1117). The court expressly found the district court's reliance on the "ad hoc approach rejected in Campbell to be legally incorrect but found the error harmless under the circumstances. Senne, 934 F.3d at 948.
In Swales, the Fifth Circuit addressed the district court's approval of the plaintiffs motion for conditional certification in a minimum wage lawsuit under the FLSA. Swales, 985 F.3d at 435. The question certified for interlocutory appeal was: "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?" Id. at 433. The court expressly rejected "Lusardfs two-step certification rubric" and held "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.'" Id. at 434.
The Swales court identified the same minority and majority tests applicable to decertification motions the Ninth Circuit identified in Campbell and rejected both, as had the Campbell court. Swales, 985 F.3d at 436. 441. However, the Swales court went beyond consideration of the proper standard for decertification, finding the "real issues Lusardi creates occur not at decertification but from the beginning of the case" and "Lusardi frustrates, rather than facilitates, the notice process." Swales, 985 F.3d at 439. Specifically, the Fifth Circuit believed district courts applying the two-step process described in Lusardi were wrongfully refusing to consider dispositive merit-based issues, such as the execution of arbitration agreements by prospective collective members or the classification of prospective collective members as independent contractors, at step one before authorizing notice to potential party plaintiffs. Id. at 440-441.
The court explained:
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 to make that determination will vary case by case, but the initial determination must be made, 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.Id. at 441. It then acknowledged some cases, such as donning and doffing cases where "the plaintiffs all have the same job description, and the allegations revolve around the same aspect of that job" may not require extensive discovery to determine if notice is appropriate, while other cases, such as those involving potential plaintiffs with demonstrably difference work experiences, "will necessarily need more discovery to determine whether notice is going out to those 'similarly situated.'" Id. at 441-42. Because the threshold issue before the Swales court depended "on the economic-realities test, which asks how much control the employer had over the independent contractor[, ] ... the district court needed to consider the evidence relat[ed] to this threshold question in order to determine whether the economic-realities test could be applied on a collective basis" or "require[d] a highly individualized inquiry into each potential option's circumstances." Id., at 442.
I. Controlling Question of Law
Legacy asserts "the issue of whether potential opt-in plaintiffs must be found 'similarly situated' before the named plaintiff may avail herself of the collective mechanism is directly tied to whether, and in what form, the litigation may proceed." (Mot. at 3.) Legacy claims this analysis effectively identifies necessary and proper parties, impacts the costs and logistics of the action, instructs the claims and defenses at issue and, accordingly, is a fundamental determination. Hunter contends, '""[t]he sole consequence" of a successful motion for preliminary certification is "the sending of court-approved written notice" to workers who may wish to join the litigation as individuals, '" and argues the "mere sending of written notice to putative class members does not constitute a controlling question of law." (PL's Resp. to Defs.' Mot. to Certify Interlocutory Appeal and to Stay FLSA-Related Discovery, ECF No. 129 ("Resp."), at 4 (quoting Campbell, 903 F.3d at 1101).)
A "question of law" is "controlling" under § 1292(b) if resolving it on appeal could materially affect the outcome of litigation in the district court. In re Cement Antitrust Li tig., 673 F.2d at 1026. The Ninth Circuit expressly rejected the "view that a question is controlling if it is one the resolution of which may appreciably shorten the time, effort, or expense of conducting a lawsuit," noting such view "essentially read[s] the 'controlling question of law' requirement out of section 1292(b)." Id. at 1027.
While the timing of the ultimate determination of the proper collective party plaintiffs may affect the cost and logistics of the litigation, it will not materially affect the outcome of the litigation because, under either a one- or a two-step test, the same parties, claims, and defenses will be ultimately litigated. Under the two-step process used in the Certification Order, the court determined at step one that the allegations of the Complaint and preliminary evidence offered by Hunter, viewed under a lenient standard, supported a finding that prospective collective members are similarly situated based on the existence of a common policy. This step-one finding merely allowed Hunter to send notice to members of the defined collective class. Legacy may move to decertify the class after additional discovery and the court may address Legacy's objections to the existence or definition of the class of similarly situated employees in the second step, during which the court will consider additional evidence produced and submitted under the summary judgment standard found applicable by the Campbell court. Under the single-step process preferred by Legacy, the court would make the same determinations - identifying similarly situated parties and authorizing notice to those parties - in a single step, considering arguments and evidence relevant to potential collective members' employment status or work duties under a substantial evidence or summary judgment standard before sending notice. However, the litigation would ultimately proceed in the same posture as it would under the two-step process after resolution of the decertification motion.
The only difference between the two proffered tests is the timing and breadth of the notice. This difference may lessen the parameters and expense of discovery, but it will not materially affect the outcome of the litigation. Consequently, Legacy failed to establish the Certification Order involves a controlling question of law.
This finding is consistent with those of other district courts in the Ninth Circuit. In Lillehagen v. Alorica, Inc., No. SACV 13-0092-DOC (JPRx), 2014 WL 2009031 (CD. Cal. May 15, 2014), the defendant presented two questions for certification for interlocutory review:
(1) Does the "two-step approach" applied by the Court still remain appropriate as a general procedure for conditional certification of a collective action under the FLSA?
(2) If so, does the "fairly lenient" standard applied by the Court still remain the appropriate burden that plaintiffs must meet for conditional certification when they are seeking to sue under 29 U.S.C. § 216(b) of the FLSA on behalf of themselves and other employees similarly situated?Id., at *2. The district court noted "neither the Supreme Court nor courts within the Ninth Circuit have directly addressed whether an order granting conditional certification presents a controlling question of law." Id., It then found guidance from other courts finding an order granting conditional certification did not present a controlling question of law persuasive and denied the request for interlocutory review. Id. See also Ambrosia v. Cogent Comma 'n, Inc., Case No. 14-cv-02182-RS, 2016 WL 777775, at * 3 (N.D. Cal. Feb. 29, 2016) (court found defendant did not show "conditional certification standard presents a controlling question of law" explaining "although the appeal could have some minimal impact on this litigation, the certification was temporary, step-two is looming, and the question of law accordingly is not controlling."); Villarreal v. Caremark LLC, 85 F.Supp.3d 1063, 1070 (D. Ariz. 2015) ("In sum, the Court agrees with the weight of authority that FLSA conditional class certification orders do not involve controlling questions of law. Hence they are not appealable under 28 U.S.C. § 1292(b).").
II. Substantial Ground for Difference of Opinion
Even assuming the Certification Order involved a controlling question of law, the court is not convinced substantial ground for a difference of opinion exists, as that requirement is applied under 28 U.S.C. § 1292(b). Legacy asserts the Fifth Circuit's creation of a third method for determining if prospective parties are similarly situated in Swales, and the lack of a clear holding from the Ninth Circuit that "a two-step certification process is required in FLSA collective actions," establish the requisite substantial ground for a difference of opinion. (Mot. at 6.) Hunter contends Legacy, at most, has "identified some ground for difference of opinion, which does not suffice for §1292(b)." (Resp. at 13.) Hunter argues the Ninth Circuit recognized and implicitly adopted the two-step approach in Campbell and Senne by affirming the district courts' consideration of the similarly situated requirement under that approach.
To determine if a "substantial ground for difference of opinion" exists under § 1292(b), courts must examine to what extent the controlling law is unclear. Courts traditionally will find a substantial ground for difference of opinion exists where "the circuits are in dispute on the question and the court of appeals of the circuit has not spoken on the point, if complicated questions arise under foreign law, or if novel and difficult questions of first impression are presented." Couch, 611 F.3d at 631 (quoting 3 Federal Procedure, Lawyers Edition § 3:212 (2010)). "Just because counsel contends that one precedent rather than another is controlling does not mean there is such a substantial difference of opinion as well support an interlocutory appeal." Couch, 611 F.3d at 633. Additionally, the mere possibility "[f]hat settled law might be applied differently does not establish a substantial ground for difference of opinion." Id.
A dispute may well exist among the circuits on the proper mechanism for certification of a collective action under the FLSA. The Ninth Circuit, however, has clearly spoken on the point and essentially endorsed the two-tier analysis in Campbell, touting the "advantage of ensuring early notice," and finding the officers' case, which is nearly identical to that currently before the court, fit the two-tier mold well. Campbell, 903 F, 3d at 1110.
Moreover, the Campbell court expressly acknowledged the standards applicable to preliminary certification and post-discovery certification are different. The court noted: "The district court took the view it had the same discretion in considering a motion for decertification as it had on a preliminary certification. It did not. Preliminary certification, to the extent it relates to the approval and dissemination of notice, is an area of substantial court discretion. Post-discovery decertification is not an inquiiy into the propriety of notice, and so operates under a different standard." Campbell, 903 F.3d at 1110 n.10. Consequently, the Campbell court expressly recognized, and implicitly approved, of the two-step inquiry that applies two separate standards. This is contrary to Swales, where the Fifth Circuit appeared to conflate the two-step analysis into a single step, at which the district court was required to consider evidence of the prospective members' individual situations where relevant to the similarly situated inquiry before authorizing notice to prospective collective members.
Finally, Legacy's apparent reliance on the Swales court's representation that the Campbell court rejected Lusardi to support its contention the test applicable to a motion for conditional certification is an open question in the Ninth Circuit, is misplaced. It is clear from a reading of Campbell the Ninth Circuit rejected the three-prong test applicable to a motion for decertification applied in Lusardi, not the generally accepted two-tiered test rejected by the Fifth Circuit in Swales but expressly endorsed by the Ninth Circuit in Campbell.
III. Materially Advance Ultimate Termination of Litigation
Legacy argues the two-step certification process will likely result in the sending of notice to many who are not potential plaintiffs, exerting formidable settlement pressure on Legacy, possibly "devolving] into a cacophony of individual actions" initiated by opt-in plaintiffs who are later dismissed in the decertification process, and "increasing Legacy's costs to defend this lawsuit.". (Mot. at 8.) Hunter argues regardless of the possible outcome of an interlocutory appeal, the Rule 23 class action would continue and a substantial amount of litigation on the FLSA claims remain. Moreover, resolution of Legacy's objections to the Certification Order would be resolved at the second stage via a decertification motion, placing the litigation in the same posture as if the interlocutory appeal was granted and the objections addressed in a single step.
Resolution of a question materially advances the termination of litigation if it "facilitate[s] disposition of the action by getting a final decision on a controlling legal issue sooner, rather than later in order to save the courts and the litigants unnecessary trouble and expense." United States v. Adam Bros. Farming, Inc., 369 F.Supp.2d 1180, 1182 (CD. Cal. 2004) (internal quotation marks and citation omitted). Where "a substantial amount of litigation remains in this case regardless of the correctness of the Court's ruling . . . arguments that interlocutory appeal would advance the resolution of this litigation are unpersuasive." Friedman v. 24 Hour Fitness USA, Inc., No. 06-cv-6282, 2009 WL 545783, at *2 (CD. Cal. Mar. 3, 2009); see also United States ex rel. Bagley v. TRW, Inc., No. 95-cv-4153, 2001 WL 369790, at *2 (CD. Cal. Mar. 26, 2001) (same). Additionally, "immediate appeal may be inappropriate where there is a good prospect that the certified question may be mooted by further proceedings." Dukes v. Wal-Mart Stores, Inc., No. C 01-02252 CRB, 2012 WL 6115536, at *5 (N.D. Cal. Dec. 10, 2012) (internal quotation marks and citations omitted).
Whether the court decides the issue of who is similarly situated to Hunter and allows notice to prospective members of the collective class preliminarily in the two-tier analysis or later in a single-step analysis, the parties will effectively engage in the same discovery to either support a decertification motion or a motion to certify, at which time the court will consider the evidence presented in the context of a summary judgment motion or under a substantial evidence standard. Either way, the collective class members at the time of trial will be the same. The only difference is that, in the two-tier analysis, some prospective class members who received notice and opted in may be dismissed from the lawsuit while in the single-step procedure, only those individuals found to be similarly situated under the more stringent analysis will receive notice and less likely dismissed at a later date. However, the litigation will continue with the same ultimate collective class members. Certification of an interlocutory appeal not materially advance the ultimate termination of the litigation.
Moreover, limitation of the collective class in one step will not materially advance litigation of the Rule 23 class action. Discovery related to the collective class inherently overlaps with discovery related to the Rule 23 claims. Even assuming the Ninth Circuit adopted the single-step analysis, such ruling would have little effect, if any, on discovery necessary for either, or both, classes and related claims.
Finally, Legacy argues that because the two-tier analysis gives earlier notice to a larger prospective collective class, it will be pressured to settle rather than to engage in discoveiy and move to decertify the collective class, but this argument overlooks that settlement would "materially advance the ultimate termination of the litigation." In any event, Legacy points to no controlling authority holding that a district court is to consider the possible "pressure to settle" in deciding whether or not to conditionally certify a class, or to allow an interlocutory appeal in an FLSA collective action case or in any other case.
IV. Summary
In light of the clear limitation of 28 U.S.C. § 1292(b) to exceptional circumstances and express direction to construe the statute narrowly and apply it sparingly, the court finds Legacy has failed to establish an interlocutory appeal to allow the Ninth Circuit to consider '"how stringently, and how soon, district courts should enforce § 216(b)'s "similarly situated" mandate'" is appropriate. (Mot. at 2.) With the denial of Legacy's request for certification of an interlocutory appeal, Legacy's justification for staying FLSA-related discovery pending resolution of such interlocutory appeal no longer exists. Legacy's request to stay FLSA-related discovery is denied as moot.
Conclusion
Legacy's motion (ECF No. 121) to certify an interlocutory appeal and stay FLSA-related discovery pending resolution of that appeal is DENIED.