[co-author: Samantha Goldstein]*

The Sixth Circuit will soon tell us whether it will follow the Fifth Circuit’s lead in Swales v. KLLM Transport Services LLC and adopt a more exacting, one-stage certification approach for Fair Labor Standards Act collective actions, or instead officially adopt the two-stage certification process set out in Lusardi v. Xerox Corp., which is currently followed by most district courts.

In Holder v. A&L Home Care & Training Center LLC, former aides claimed that A&L failed to properly pay them overtime premiums or properly compensate them for travel time during shifts in violation of 216(b) of the FLSA. On August 4, 2021, U.S. District Judge Matthew W. McFarland of the Southern District of Ohio granted conditional certification to two out of three proposed FLSA collectives.

In reaching his decision, Judge McFarland employed the two-stage judicially created collective certification process set forth in Lusardi. Under Lusardi, courts, often without the benefit of discovery, must first decide whether named plaintiffs made a “modest factual showing” that other employees are “similarly situated.” If the court agrees and grants conditional certification, opt-in notice is then sent to all employees deemed similarly situated. Once all the collective plaintiffs have opted in, and typically at the close of discovery, only then will the court take a closer look at whether the members of a collective class are actually similarly situated and whether the matter can be tried collectively based upon common proof.

A&L had asked the district court to abandon this two-stage collective certification process and instead adopt the Fifth Circuit’s approach in Swales. In Swales, the Fifth Circuit rejected the liberal Lusardi analysis as the law of the land, deciding that a more searching analysis at the collective certification stage was necessary. Specifically, the Fifth Circuit employed a single-stage analysis, requiring district courts to apply “rigorous scrutiny” in identifying similarly situated employees at the outset of a case. The Fifth Circuit reasoned that the lenient Lusardi approach results in sending notice to employees who are not actually potential plaintiffs, which risks “using notice as a claims-solicitation tool.” According to the Swales court, Lusardi’s test “has no anchor in the FLSA’s text or in Supreme Court precedent interpreting it,” nor did it provide the well-established procedural safeguards under Rule 23 of the Federal Rules of Civil Procedure to ensure that named plaintiffs are appropriate class representatives.

Judge McFarland noted that while the Sixth Circuit recognized that district courts certify FLSA collective actions in two stages, it has never required district courts to do so, as the Fifth Circuit now prohibits. Thus, finding the matter “ripe for review,” Judge McFarland certified its order for immediate interlocutory appeal. Specifically, Judge McFarland asked the Sixth Circuit to decide “whether a district court is bound to follow the two-step certification process created in Lusardi v. Xerox Corp.”

Additionally, Judge McFarland held that opt-in notice should not go out to employees who have signed arbitration agreements. Noting an intra-circuit split on the issue, Judge McFarland also certified the question whether courts should consider arbitration agreements when conditionally certifying FLSA collectives.

A decision by the Sixth Circuit adopting the Swales standard could serve as a catalyst for changing the way courts certify FLSA collective actions. Of course, a decision by the Sixth Circuit officially adopting the Lusardi approach will create a circuit split that could ultimately land the question before the Supreme Court, and provide more certainty and guidance to courts hearing FLSA cases nationwide.

Indeed, this month, call center operator Maximus Inc. petitioned the Fourth Circuit Court of Appeals to adopt the one-step certification framework established by the Fifth Circuit in Swales, urging the court to “provide clarity on the proper standard for certifying an FLSA collective action.”

*summer associate