In a recently issued opinion, the United States District Court for the Western District of Arkansas refused to adopt the Fifth Circuit’s new approach to conditional certification under the Fair Labor Standards Act (“FLSA”). See McCoy v. Elkhart Products Corp., No. 5:20-cv-05176, 2021 WL 510626 (W.D. Ark. Feb. 11, 2021).
In McCoy, the plaintiff-employee asked the Court to certify a group of hourly production workers at the defendant-employer’s production facilities. The employer opposed the request, urging the Court to adopt a new approach to conditional certification motions as recently set forth by the Fifth Circuit Court of Appeals in Swales v. KLLM Transport Services, 985 F.3d 430 (5th Cir. 2021).
Background on Swales
In Swales, the plaintiffs asked the trial court to certify a group of truck drivers, alleging the defendant-employer had misclassified the drivers as independent contractors. The trial court in Swales entered its decision,granting the request and conditionally certifying the group. However, in a somewhat unusual move, the trial court—on its own—certified its decision for interlocutory appeal before the Fifth Circuit.
The Fifth Circuit then took up the Swales appeal and issued an opinion that expressly rejected what has become known as a “two-step” approach to conditional certification. For decades, most courts across the country have adopted and applied some form of this “two-step” approach.
In general, the “two-step” approach involves the trial court initially applying a lenient standard to determining whether a group of employees is “similarly situated.” The standard is considered lenient because this determination is usually made before the parties to a lawsuit have had the chance to engage in meaningful discovery.
Nonetheless, under this “two-step” approach, if conditional certification is initially granted, the trial court will then apply a more rigorous analysis of the same “similarly situated” question after notice is sent to the proposed class members and the evidentiary record is developed, typically at or after the close of the discovery process in the lawsuit.
A key result of obtaining conditional certification early in a lawsuit is the plaintiff having the authority to disseminate notice of the lawsuit to the group of workers certified and to seek group-wide evidence. Some commentators suggest this procedural reality forces employers to settle early, regardless of the merits of the claims against them, in order to, for example, avoid such notice going out to employees or having to engage in potentially expensive discovery.
However, in rejecting this “two-stage” approach, the Swales court did not articulate a clear standard for how such cases should proceed in the absence of the “two-step” approach. Instead, the Swales court generally suggested trial courts should rely on their “broad, litigation-management discretion” and “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’…[a]nd then it should authorize preliminary discovery accordingly.”
McCoy: “Two-Step” Approach or Swales?
This brings us back to McCoy. In McCoy, the employer argued “the Court should not follow the two-stage approach because the two-stage approach has resulted in courts approving conditional certification without reviewing if potential class members are similarly situated.” The employer also contended “that any argument raised in opposition to conditional certification ‘is met with a dismissive citation that no consideration of the merits…is appropriate at the initial notice stage.’”
The Court in McCoy, however, rejected these arguments and refused to follow the Fifth Circuit. In doing so, the Court noted that, in the Eighth Circuit (which serves as the federal court of appeals for states including Arkansas and Missouri), a “two-stage” approach to conditional certification was well-established as a matter of precedent and “proven to be an efficient means of resolution of this issue.”
The McCoy court’s rejection of Swales is somewhat unsurprising. The recent Swales decision remains an outlier and its alternative standard is not clear from a case management perspective. In any event, Swales is not controlling law or binding on district courts in the Eighth Circuit. And it is not clear at this point whether other district courts in the Eighth Circuit will find it persuasive or useful.
For now, it is relatively safe to say that district courts within the Eighth Circuit will continue to apply the “two-step” approach to FLSA conditional certification. However, the tide could theoretically turn, but only time will tell. Stay tuned for further developments.