Alex Reinig v. RBS Citizens NA

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_____________
No. 17-3464
________
ALEX REINIG; KEN GRITZ; BOB SODA;
MARY LOU GRAMESKY; PETER WILDER SMITH;
WILLIAM KINSELLA; DANIEL KOLENDA;
VALERIE DAL PINO; AHMAD NAJI; ROBERT
PEDERSON; TERESA FRAGALE; DAVID HOWARD;
DANIEL JENKINS; MARK ROSS
v.
RBS CITIZENS, N.A.,
Appellant
_____________
On Appeal from the United States District Court
for the Western District of Pennsylvania
District Judge: Honorable Arthur J. Schwab
(D.C. Civil No. 2-15-cv-01541)
______________
Argued July 19, 2018
______________
Before: McKEE, VANASKIE, and RESTREPO, Circuit
Judges
(Opinion Filed: December 31, 2018)
Kim M. Watterson [ARGUED]
Robert J. Tyler, III
Gretchen W. Root
Reed Smith
225 Fifth Avenue
Suite 1200
Pittsburgh, PA 15222
Thomas E. Hill
Christina Tellado
Holland & Knight
400 South Hope Street
8th Floor
Los Angeles, CA 90071
Counsel for Appellant
Joshua S. Boyette [ARGUED]
Daniel A. Horowitz
Justin L. Swidler
Swartz Swidler
1101 Kings Highway North
Suite 402
Cherry Hill, NJ 08034
Robert D. Soloff
Soloff Law
7805 Southwest 6th Court
Plantation, FL 33324
Counsel for Appellees
2
________________
OPINION
________________
VANASKIE, Circuit Judge.
This interlocutory appeal authorized by Rule 23(f) of
the Federal Rules of Civil Procedure presents us with two
significant questions. First, did the District Court err in
certifying a class of Citizens Bank (N.A.) Mortgage Loan
Officers from ten different states who bring claims alleging
that they were unlawfully denied overtime pay? And second,
may we exercise pendent appellate jurisdiction over the
District Court’s order certifying a collective action under §
216(b) of the Fair Labor Standards Act (“FLSA”), 29 U.S.C. §
216(b), an otherwise non-appealable order? We hold that the
District Court’s class certification decision cannot stand and
that we may not consider the merits of the decision to certify a
collective action under the FLSA.
I. BACKGROUND
Between November 2012 and April 2017, Plaintiffs,
working as Mortgage Loan Officers (MLOs) at Citizens, were
responsible for bringing in business by generating customer
leads, completing loan applications, and building a book of
business of referrals for new mortgage lending opportunities.
To facilitate fulfillment of their work responsibilities, Citizens
afforded MLOs considerable flexibility to determine their own
working hours and where to perform their work.
Citizens paid MLOs in three ways. First, MLOs
received a base salary of $11.50 an hour. Second, some MLOs,
3
depending on their eligibility, earned a monthly commission
based on the number of loan products sold in a given month.
Third, and most relevant to this appeal, MLOs were entitled to
overtime pay by virtue of their “non-exempt” status under
federal and state wage-and-hour laws, including the FLSA.
As non-exempt employees, MLOs were entitled to 1.5 times
their base wage of $11.50/hour ($17.25/hour) for each hour
worked in excess of forty during a given workweek. See 29
C.F.R. § 778.107.
On paper, the process for requesting overtime payments
worked as follows: MLOs recorded their hours in a
computerized timekeeping application. A typical work day
included four separate entries: “the morning clock-in; a clock-
out and clock-in for the lunch period; and the evening clock-
out.” (App. 106). MLOs were required to submit their total
hours worked in a particular week by Sunday at midnight. A
Producing Sales Manager—who oversaw the work of eight
individual MLOs—was responsible for ensuring the accuracy
and completeness of the timesheet information. Under this
“Time Sheet Policy,” the Producing Sales Manager was
required to approve any hours the MLOs submitted by Monday
at noon, i.e., the day after MLOs were required to submit their
hours.
While the Time Sheet Policy obligated MLOs to report
all hours worked, including overtime, a separate but related
policy governed an MLO’s ability to work overtime.
Specifically, each MLO’s letter of employment contained a
provision stating that the MLO was “required to obtain prior
approval from [his or her] supervisor for any hours worked in
excess of 40 hours per week.” (Appellant’s Br. 13) (citations
omitted). If an MLO disregarded this policy by not seeking
4
approval of overtime hours, the MLO could be subject to
discipline.
According to Plaintiffs, Citizens’ on-paper overtime
policy was a ruse. In reality, Plaintiffs aver, Citizens endorsed
a “policy-to-violate-the-policy,” i.e., the company maintained
an unofficial, companywide policy of requiring MLOs to work
in excess of 40 hours per week while discouraging MLOs from
actually reporting those overtime hours. This practice,
Plaintiffs contend, was carried out at Citizens “through a
single, coordinated, overarching scheme.” (Appellees’ Br. 5).
As outlined by Plaintiffs, the scheme consisted of the following
measures:
(1) an overtime preapproval policy,
whereby MLOs would be subject to
discipline if they reported overtime
without having it preapproved;
(2) restrictions on the amount of overtime
hours that managers could approve;
(3) allowing MLOs to submit fictitious
attendance records that block-reported
time and did not show night or weekend
work through management’s violations of
Citizens’ attendance monitoring and
timesheet approval policies; and
(4) upper-level management’s tracking of
overtime reported and
discouragement/harassment/discipline of
MLOs who reported or requested
overtime.
5
(Id. at 7).
In November 2015, three former MLOs—Alex Renig,
Ken Gritz, and Bob Soda—filed a class action complaint
alleging that Citizens, by maintaining “an unofficial policy or
practice requiring MLOs to work ‘off the clock[]’ in excess of
forty hours per week,” failed to pay overtime wages in
accordance with the FLSA and Pennsylvania law. (App. 101).
Because this work went unreported, Plaintiffs claimed that they
were not paid for their off-the-clock hours in violation of the
FLSA, 29 U.S.C. § 207, and Pennsylvania’s wage-and-hour
law, 43 Pa. Stat. and Cons. Stat. § 260.1 et seq., and § 333.101
et seq.
Plaintiffs moved for conditional certification of a
collective action under the FLSA,1 which the District Court
1
“The FLSA establishes a federal minimum-wage,
maximum-hour, and overtime guarantees that cannot be
modified by contract.” Genesis Healthcare Corp. v. Symczyk,
569 U.S. 66, 69 (2013). Under § 216(b), the so-called
collective action provision of the FLSA, employees may “bring
a private cause of action on their own behalf and on behalf of
‘other employees similarly situated’ for specified violations of
the FLSA.” Id. Similarly, aggrieved employees may also
commence a “class action” under Federal Rule 23 which
permits “a class representative” to bring suit for violations of
other state and federal law on behalf of those in the same class
and who “possess the same interest and suffer the same
injury[.]” Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 348
(2011) (citations and internal quotation marks omitted).
Employees bringing collective actions under the FLSA and
those bringing class actions under Rule 23 must be granted
certification by the district court in order for their action to
6
proceed as a “collective action” or “class action,” respectively.
See, e.g., Marcus v. BMW of N. Am., LLC, 687 F.3d 583, 590–
91 (3d Cir. 2012); Halle v. W. Penn Allegheny Health Sys. Inc.,
842 F.3d 215, 224 (3d Cir. 2016). However, as further
discussed in Part C, infra, the certification process and
standards for collective actions and class actions differ. For
example, unlike class actions under Rule 23, collective actions
under the FLSA must first be “conditionally” certified by the
district court, which “requires a named plaintiff to make a
‘modest factual showing’—something beyond mere
speculation—to demonstrate a factual nexus between the
manner in which the employer’s alleged policy affected him or
her and the manner in which it affected the proposed collective
action members.” Halle, 842 F.3d at 224 (quoting Zavala, 691
F.3d at 536 n.4). Once a district court grants conditional
certification, putative class members are provided an
opportunity to opt into the case pursuant to § 216(b). Id. at
225. “This ‘opt-in’ requirement—mandating that each
individual must file an affirmative consent to join the collective
action—is the most conspicuous difference between the FLSA
collective action device and a class action under Rule 23.” Id.
(citation omitted). “This difference means that every plaintiff
who opts in to a collective action has a party status, whereas
unnamed class members in Rule 23 class actions do not.” Id.
(citation omitted). As relevant to this case, Citizens claims that
the District Court erred when it granted final collective action
certification based on its finding that the opt-in plaintiffs were
“similarly situated” to the named plaintiffs, i.e., that all
plaintiffs “‘were subjected to some common employer practice
that, if proved, would help demonstrate a violation of the
FLSA.’” Id. at 225–26 (quoting Zavala, 691 F.3d at 538).
Conversely, the Rule 23 certification process involves a two-
7
granted in May 2016. The District Court then ordered
Plaintiffs to serve notice to the conditional FLSA class
informing them that they would have 100 days to opt in to the
action. In accordance with the District Court’s order, Plaintiffs
sent notice to over 1,000 current and former MLOs. Of those,
351 filed consent forms opting in to the FLSA collective
action.
After the 100-day period expired, Plaintiffs filed an
amended complaint that added nine named plaintiffs to the
lawsuit. In conjunction with the amended complaint, Plaintiffs
filed a motion for class certification under Rule 23, seeking
certification of ten distinct classes, each of which alleged
claims under the laws of their respective states. Citizens
responded with two separate, but related, motions: one
opposing the class certification motion and the other seeking
decertification of the FLSA collective action.2
The parties, via stipulation, agreed to the appointment
of a Special Master to address the pending motions. The
Special Master recommended denying Citizens’ motion for
summary judgment, certifying Plaintiffs’ off-the-clock claims
under Rule 23(b)(2) and (b)(3), and denying Citizens’ motion
for decertification of the FLSA collective action. The District
step procedure outlined in the text of the Rule itself, see
Marcus, 687 F.3d at 590 (citing Fed. R. Civ. P. 23(a)–(b)), as
discussed in more detail in Part B, infra.
2
The parties also cross-moved for summary judgment.
The District Court granted summary judgment in Citizens’
favor as to Plaintiffs’ so-called “Recapture Claims,” (see App.
49-50), but denied Citizens’ motion as to Plaintiffs’ off-the-
clock claims, at issue in this appeal.
8
Court adopted the Special Master’s reports and
recommendations (hereinafter “SM Reports”) in full. Citizens
then timely filed a Rule 23(f) petition, which we granted.
II. JURISDICTION AND STANDARD OF
REVIEW
The District Court had original jurisdiction over
Plaintiffs’ FLSA claims under 28 U.S.C. § 1331, and
supplemental jurisdiction over their state-law claims pursuant
to 28 U.S.C. § 1367. Because we granted Citizens’ Rule 23(f)
petition, we have jurisdiction over the District Court’s Rule 23
order pursuant to 28 U.S.C. § 1292(e). “We review the grant
of class certification for an abuse of discretion, which occurs if
the certification ‘rests upon clearly erroneous finding of fact,
an errant conclusion of law or an improper application of law
to fact.’” In re Blood Reagents Antitrust Litig., 783 F.3d 183,
185 n.1 (3d Cir. 2015) (quoting In re Hydrogen Peroxide
Antitrust Litig., 552 F.3d 305, 312 (3d Cir. 2008)).
An additional question raised in this appeal is whether
we have pendent appellate jurisdiction to review the District
Court’s FLSA certification order, a question of first impression
for our Court. As a general matter, an order certifying a
collective action under the FLSA is non-final and therefore not
reviewable. See Halle, 842 at 227. However, under certain
limited circumstances, the Court may, in its discretion, exercise
pendent appellate jurisdiction “over issues that are not
independently appealable[.]” E.I. DuPont de Nemours & Co.
v. Rhone Poulenc Fiber & Resin Intermediates, S.A.S., 269
F.3d 187, 202–03 (3d Cir. 2001) (citing In re Tutu Wells
Contamination Litig., 120 F.3d 368, 382 (3d Cir. 1997)). For
the reasons stated in Part C, infra, we decline to exercise
9
pendent appellate jurisdiction to review the District Court’s
Order granting final collective certification under the FLSA.
III. DISCUSSION
On appeal, Citizens argues that the District Court erred
in certifying Plaintiffs’ state-law claims under Rule 23.
Although we express reservations about the District Court’s
ultimate findings, we cannot say at this juncture that the
District Court abused its discretion in certifying the putative
class based upon the record before us. Rather, we find only
that the District Court failed to provide a sufficiently rigorous
analysis to support its conclusions and will therefore vacate
and remand its order granting class certification under Rule 23.
“The class action is an exception to the usual rule that
litigation is conducted by and on behalf of the individual
named parties only.” Dukes, 564 U.S. at 348 (citation and
internal quotation marks omitted). To invoke this exception,
every purported class action must satisfy the requirements of
Rule 23. See id.Courts determine whether class certification is
appropriate by conducting a two-step analysis. First, the court
must ascertain whether the putative class has satisfied the
requirements of Rule 23(a). Marcus, 687 F.3d at 590 (citing
Fed. R. Civ. P. 23(a)–(b)). And second, the court must
determine whether the requirements of Rule 23(b) have been
met. Id. To satisfy Rule 23(a), the purported class must
establish that there are “questions of law or fact common to the
class.” In re Cmty. Bank of N. Va., 622 F.3d 275, 291 (3d Cir.
2010) (quoting Fed. R. Civ. P. 23(a)(2)). If the district court is
satisfied that Rule 23(a)’s requirements are met, then it must
proceed to the second step and determine whether “the class
10
fits within one of the three categories of class actions in Rule
23(b).”3 Id.3
Rule 23(b) provides:
Types of Class Actions. A class action may be
maintained if Rule 23(a) is satisfied and if:
(1) prosecuting separate actions by or against individual
class members would create a risk of:
(A) inconsistent or varying adjudications with
respect to individual class members that would
establish incompatible standards of conduct for
the party opposing the class; or
(B) adjudications with respect to individual class
members that, as a practical matter, would be
dispositive of the interests of the other members
not parties to the individual adjudications or
would substantially impair or impede their
ability to protect their interests;
(2) the party opposing the class has acted or refused to
act on grounds that apply generally to the class, so
that final injunctive relief or corresponding
declaratory relief is appropriate respecting the class
as a whole; or
(3) the court finds that the questions of law or fact
common to class members predominate over any
questions affecting only individual members, and
11
Class certification is proper only if the district court is
satisfied, “after a rigorous analysis,” that the plaintiffs
“established each element of Rule 23 by a preponderance of
the evidence.” Marcus, 687 F.3d at 591. When conducting the
Rule 23 analysis, we have instructed that district courts
“resolve all factual or legal disputes relevant to class
certification, even if they overlap with the merits—including
disputes touching on the elements of the [plaintiffs’ claims].’”
Id. (quoting Hydrogen Peroxide Litig., 552 F.3d at 307).
that a class action is superior to other available
methods for fairly and efficiently adjudicating the
controversy. The matters pertinent to these findings
include:
(A) the class members' interests in individually
controlling the prosecution or defense of
separate actions;
(B) the extent and nature of any litigation
concerning the controversy already begun by
or against class members;
(C) the desirability or undesirability of
concentrating the litigation of the claims in
the particular forum; and
(D) the likely difficulties in managing a class
action.
Fed. R. Civ. P. 23.
12
Citizens contends that the District Court failed to
properly “define the class or class claims” as mandated by Rule
23(c)(1)(B). (Appellant’s Br. 65-66). Furthermore, Citizens
asserts that the District Court erred in finding that Plaintiffs’
evidence satisfied Rule 23(a)’s commonality requirement, and
that it incorrectly certified this class action under Rule
23(b)(3).4 We address each of these contentions in turn.
A. The Class Definition and the Claims to be Given Class
Treatment
Citizens argues that remand is necessary because the
Court failed to “define the class or class claims” as mandated
by Rule 23(c)(1)(B). (Appellant’s Br. 65-66). Plaintiffs
counter that the SM Reports “clearly set[] out the class
definition, and defined the classes as ‘identified in the
Amended Complaint[.]’” (Appellees’ Br. 52). We agree with
Citizens and find that the certification order here is deficient.
To satisfy Rule 23(c)(1)(B), an order granting class
certification must include: “(1) a readily discernible, clear, and
precise statement of the parameters defining the class or classes
to be certified, and (2) a readily discernible, clear, and
complete list of claims, issues or defense to be treated on a
class basis.” Wachtel v. Guardian Life Ins. Co., 453 F.3d 179,
187–88 (3d Cir. 2006). “Although a motion for class
4
We need not consider Citizens’ contention that the
District Court erred in certifying a class under Rule 23(b)(2)
for injunctive and declaratory relief because we conclude that
remand is necessary based upon the District Court’s failure to
properly define the class and claims to be certified under Rule
23(c) and to conduct a sufficiently rigorous analysis as to Rule
23(a) and (b)(3).
13
certification presents a discretionary question for a district
court, the court ‘must clearly articulate its reasons, in part, so
we can adequately review the certification decision on appeal
under Rule 23(f).’” Neale v. Volvo Cars of N. Am., LLC, 794
F.3d 353, 369 (3d Cir. 2015) (quoting Beck v. Maximus, Inc.,
457 F.3d 291, 297 (3d Cir. 2006)).
Our decision in Marcus is instructive on this issue. In
that case, after applying the Wachtel standard to the facts at
issue, we held that the district court failed to satisfy Rule
23(c)(1)(B) because the court’s order, “[r]ather than set[ting]
out its own [class] definition,” merely stated that “the New
Jersey sub-class is granted” and then cited to a docket entry for
the plaintiff’s amended notice of motion for class certification.
Marcus, 687 F.3d at 592. While recognizing that the district
court and counsel may have “share[d] [an] understanding of
the class definition,” we nevertheless emphasized that “post
hoc clarification is no substitute for a readily discernible, clear,
and precise statement of the parameters defining the class to be
certified.” Id. (internal quotation marks and citations omitted).
Additionally, we found that the district court’s failure to
define the particular subclasses was augmented by its failure to
provide a “readily discernible, clear, and complete list” of the
claims and issues presented.” Id. Rule 23(c)(1)(B), we
explained, is not satisfied when we are “force[d]” on appeal to
“comb the entirety of the text and cobble together the various
statements in search of . . . [a] readily discernible and complete
list of class claims, issues, or defenses required by the Rule.”
Id. (quoting Wachtel, 453 F.3d at 189). Accordingly, we
remanded the case to the district court with instructions to
provide a “more clearly defined class and set of claims, issues,
or defenses to be given class treatment.” Id.14
Here, as in Marcus, we are forced to comb through and
cross-reference multiple documents in an attempt to cobble
together the parameters defining the class and a complete list
of the claims, issues, and defenses to be treated on a class basis.
For example, there is no “readily discernible” statement or
complete list of the required Rule 23(c)(1)(B) information in
the District Court’s certification order. Instead, just as the
court’s order in Marcus merely stated that the “sub-class is
granted,” the order here summarily grants certification after
stating only that Plaintiffs’ “state law subclasses are for
Pennsylvania, Connecticut, New York, Massachusetts, Rhode
Island, Illinois, Michigan, New Hampshire, North Carolina,
and Ohio.” (App. 155 n.2). Furthermore, as to the specific
definition of the various subclasses, the certification order
merely provided cross-references to Plaintiffs’ First Amended
Complaint and the SM Reports, without defining the specific
subclasses or stating which provision of Rule 23 governs the
various claims. (Id. at 155 n.2).
However, wading through the SM Reports proves
equally unavailing. The second report, like the report in
Marcus, “does not define the claims, issues, or defense to be
treated on a class basis at all.” 687 F.3d at 592. Although the
first report contained a class definition, it does so merely by
cross-referencing Plaintiffs’ Amended Complaint.
Although we have declined to impose a strict format
necessary to meet Rule 23(c)(1)(B)’s requirements, we have
explicitly rejected orders that force us to “cobble together . . .
various statements” and “comb the entirety of its text” in search
of “isolated statements that may add up to a partial list of class
claims, issues, or defenses.” Wachtel, 453 F.3d at 188 n.10,
15
189.5 The District Court’s order here requires us to do just that,
and thus remand is warranted.
B. Rule 23’s Commonality and Predominance Class
Certification Prerequisites
Citizens contends that the District Court erred in
finding that Plaintiffs’ evidence satisfied Rule 23(a)’s
commonality requirement and Rule 23(b)(3)’s predominance
requirement. Rule 23(a)(2)’s commonality requirement
requires that the putative class members “share at least one
question of fact or law in common with each other.” In re
Warfarin Sodium Antitrust Litig., 391 F.3d 516, 258 (3d Cir.
2004) (citation omitted). “Rule 23(b)(3)’s predominance
element in turn requires that common issues predominate over
issues affecting only individual class members.” Id. at 528
(citing Fed. R. Civ. P. 23(b)(3)).
We have held that Rule 23(b)’s predominance
requirement incorporates Rule 23(a)’s commonality
requirement because the former, although similar, is “far more
demanding” than the latter. Id. Like the commonality
requirement, “[p]redominance tests whether proposed classes
are sufficiently cohesive to warrant adjudication by
5
In Wachtel, we provided explicit guidance regarding
best practices for drafting class certification orders. See 453
F.3d at 187 n.10 (stating that “the appearance within a
certification order of a concise paragraph—similar to
paragraphs often drafted to define the class itself and fully
listing the claims, issues or defenses to be treated on a class
basis—would come well within the parameters of the ‘readily
discernible’ requirement”).
16
representation.” In re Hydrogen Peroxide, 552 F.3d at 310–11
(quotation omitted). However, the “predominance requirement
imposes a more rigorous obligation upon a reviewing court to
ensure that issues common to the class predominate over those
affecting only individual class members.”6 Sullivan v. DB Inv.,
Inc., 667 F.3d 273, 297 (3d Cir. 2011). Accordingly, we will
analyze the two elements together, with particular focus on the
more stringent predominance requirement. See, e.g., In re
LifeUSA, 242 F.3d at 144 (evaluating the predominance and
commonality requirements together) (citing Anchem Products,
521 U.S. at 623–24).
At the class certification stage, the predominance
requirement is met only if the district court is convinced that
“the essential elements of the claims brought by a putative class
are ‘capable of proof at trial through evidence that is common
to the class rather than individual to its members.’” Gonzalez
v. Corning, 885 F.3d 186, 195 (3d Cir. 2018); Tyson Foods,
Inc. v. Bouaphakeo, 136 S. Ct. 1036, 1045 (2016) (citation
omitted). In practice, this means that a district court must look
first to the elements of the plaintiffs’ underlying claims and
6
The predominance requirement also provides that
“class resolution must be superior to other available methods
for the fair and efficient adjudication of the controversy.” In
re LifeUSA Holding Inc., 242 F.3d 136, 144 (3d Cir. 2001)
(quoting Anchem Products, Inc. v. Windsor, 521 U.S. 591, 615
(1997)). We will not discuss this particular facet of the
requirement as the crux of Citizens’ argument, and, in turn, the
bulk of Plaintiffs’ discussion, deals with whether the District
Court, based on the representative evidence before it, could
have found the class sufficiently cohesive so as to warrant a
class action.
17
then, “through the prism” of Rule 23, undertake a “rigorous
assessment of the available evidence and the method or
methods by which [the] plaintiffs propose to use the evidence
to prove” those elements. Marcus, 687 F.3d at 600 (citing In
re DVI, Inc. Sec. Litig., 639 F.3d 623, 630 (3d Cir. 2011)). “If
proof of the essential elements of the [claim] requires
individual treatment, then class certification is unsuitable.”
Newton v. Merrill Lynch, Pierce, Fenner & Smith Inc., 259
F.3d 154, 172 (3d Cir. 2001) (citation omitted).
To satisfy their wage-and-hour claims, Plaintiffs must
show that: (1) pursuant to Citizens’ unwritten “policy-to-
violate-the-policy,” the class MLOs performed overtime work
for which they were not properly compensated; and (2)
Citizens had actual or constructive knowledge of that policy
and of the resulting uncompensated work. See Kellar v.
Summit Seating Inc., 664 F.3d 169, 177 (7th Cir. 2011) (citing
Reich v. Dep’t of Conservation & Natural Res., 28 F.3d 1076,
1082 (11th Cir. 1994)); see generally Davis v. Abington
Memorial Hosp., 765 F.3d 236, 240–41 (3d Cir. 2014). Thus,
to satisfy the predominance inquiry, Plaintiffs must
demonstrate (1) that Citizens’ conduct was common as to all
of the class members, i.e., that Plaintiffs’ managers were
carrying out a “common mode” of conduct vis-à-vis the
company’s internal “policy-to-violate-the-policy,” and (2) that
Citizens had actual or constructive knowledge of this conduct.
See Sullivan, 667 F.3d at 299; Dukes, 564 U.S. at 358; see also
Tyson Foods, Inc., 136 S. Ct. at 1046 (explaining that, although
a plaintiff’s suit may raise “important questions common to all
class members,” class certification is proper only if proof of
the essential elements of the class members’ claims does not
involve “person-specific inquiries into individual work time
[that] predominate over the common questions”).
18
Here, Citizens contends that Plaintiffs’ representative
evidence fails to satisfy either the commonality or
predominance requirements because it is insufficient to
“permit a reasonable jury to determine that high-level officers
or executives of Citizens with responsibility for formulating
companywide policies knew or should have known that each
class member was working overtime off the clock, i.e., without
reporting hours.” (Appellant’s Br. 44). This is so, Citizens
claims, because each MLO’s experience is too individualized
for a jury to reach a common answer regarding whether
Citizens maintained a companywide policy against reporting
overtime. (Id.). Plaintiffs disagree, contending that the record
evidence is “more than sufficient” for a jury to conclude that
“Citizens operated a ‘broader company policy’ to discourage
MLOs from accurately reporting their overtime hours.”
(Appellees’ Br. 31).
In order for Plaintiffs’ representative evidence to satisfy
the commonality/predominance requirements of Rule 23, that
evidence must be sufficiently representative of the class as a
whole such that each individual Plaintiff “could have relied on
[the] sample to establish liability if he or she had brought an
individual action.” Tyson Foods, Inc., 136 S. Ct. 1046–47.
That is to say, “[i]f the sample could have sustained a
reasonable jury finding as to hours worked in each employee’s
individual action, that sample is a permissible means of
establishing the employees’ hours worked in a class action.”
Id. at 1043, 1046–47, 1048 (finding the predominance element
met because plaintiffs’ representative evidence was “sufficient
to sustain a jury finding as to hours worked if it were
introduced in each employee’s action”).
Based on the District Court’s analysis before us, we
cannot make a definitive determination as to whether
19
Plaintiffs’ representative evidence is sufficient to satisfy Rule
23’s commonality and preponderance requirements. First,
from an evidentiary standpoint, we find it difficult to discern
how the District Court arrived at its conclusion that Plaintiffs’
representative evidence was sufficient to establish either the
existence of a companywide policy or Citizens’ knowledge of
it. The Special Master’s predominance analysis merely states
that “Plaintiff[s] have demonstrated that the unofficial policy
upon which their . . . claims are predicated is amenable to
common proof and that this common question will
predominate over any individualized questions,” and cites
Plaintiffs’ “substantial evidence” in the form of testimony from
“roughly two dozen MLOs.” (App. 142). Yet, the SM Reports
do not specify what testimony in particular was relied upon to
reach that conclusion. The reports state that the “MLOs
generally testify that, while Citizens maintained an official
policy that required all hours worked to be reported and paid,
and while Citizens officially required overtime to be requested
and approved in advance, Citizens’ managers nonetheless
regularly and almost uniformly instructed MLOs not to report
all the hours that they worked.” (Id. at 142-43). Furthermore,
the SM Reports do not provide any discussion at all regarding
how Plaintiffs have shown that knowledge of the purported
policy can be imputed to Citizens. Such a barebones analysis,
without citations to specific, factual support in the record,
simply does not permit a reviewing court to conclude that the
District Court in fact undertook the “rigorous” review
mandated by our precedents.
Moreover, it is unclear how the District Court
reconciled contradictory testimony and other evidence
explicitly undermining Plaintiffs’ assertion that Citizens
maintained a companywide “policy-to-violate-the policy.” For
20
example, not only were Plaintiffs’ experiences confined to
interactions with specific managers in distinct offices, but their
statements are dissimilar and oftentimes ambiguous, reflecting
in many instances nothing more than typical workplace
concerns about MLO work ethic and effectiveness. See, e.g.,
Bolden v. Walsh Const. Co., 688 F.3d 893, 896 (7th Cir. 2012)
(“[W]hen multiple managers exercise [arguably] independent
discretion, conditions at different stores (or sites) do not
present a common question.”). For instance, Illinois MLO
Valerie Dal Pino testified that, although her manager informed
her and other MLOs that “overtime needed to be preapproved
by [a] manager,” Dal Pino specifically stated that she was
never instructed by her managers not to record “all of the hours
that [she] worked in a work week[.]” (App. 2308, 51:9-12;
53:13-22). Similarly, Rhode Island MLO Cheryl Roach
testified that she was instructed to “request pre-approval”
before seeking overtime payment, but was never “den[ied]
permission to work more than 40 hours.” (Id. at 1909, 73:5-
29). The same is true for several other Plaintiffs, including
Ohio MLO Larry Heydon, (see id. at 2022, 62:19-22); Ohio
MLO Teresa Fragale, (see id. at 1704, 69:15-19); and New
Hampshire MLO William Ziminksy, (see id. at 2498, 95:21-
96:4). Far from supporting the District Court’s assertion that
MLOs “generally testified” to the existence of the unlawful
policy and that their managers “almost uniformly” instructed
MLOs not to report the hours they worked, the examples
undermine commonality/predominance conclusions. That is,
in contrast to the plaintiffs’ proffered evidence in Tyson,
Plaintiffs evidence here comes not from a similarly situated
group of MLOs but from individual employees who worked in
distinct offices at various times throughout the relevant class
period. Given the diversity of their testimony, we have serious
doubts whether the evidence tendered by Plaintiffs is
21
sufficiently representative of the class as a whole such that each
individual plaintiff “could have relied on [the] sample to
establish liability if he or she had brought an individual action.”
Tyson, 136 S. Ct. at 1046–47.
Accordingly, the class certification order cannot stand.
We will remand with instructions that the District Court
conduct a “rigorous” examination of the factual and legal
allegations underpinning Plaintiffs’ claims before deciding if
class certification is appropriate.
C. Pendent Appellate Jurisdiction
In addition to challenging the District Court’s Rule 23
ruling, Citizens also contests the District Court’s non-final
FLSA certification order under the doctrine of pendent
appellate jurisdiction. This doctrine “‘allows [us] in [our]
discretion to exercise jurisdiction over issues that are not
independently appealable but that are intertwined with issues
over which [we] properly and independently exercise[] [our]
jurisdiction.’” Aleynikov v. Goldman Sachs Grp., Inc., 765
F.3d 350, 357 (3d Cir. 2014) (citing E.I. DuPont, 269 F.3d at
202-03). The doctrine is a narrow one that “should be used
‘sparingly,’ and only when there is sufficient overlap in the
facts relevant to both . . . issues to warrant plenary review.” Id.(quoting E.I. DuPont, 269 F.3d at 203 (internal quotation
omitted)); see also In re Montgomery County, 215 F.3d 367,
375–76 (3d Cir. 2000) (citation omitted). Further, the doctrine
is “available only to the extent necessary to ensure meaningful
review of an unappealable order.” Nat’l Union Fire Ins. Co. of
Pittsburgh, Pa. v. City Sav., F.S.B., 28 F.3d 376, 382 (3d Cir.
1994) as amended (Aug. 29, 1994) (citation omitted).
22
Following the Supreme Court’s decision in Swint v.
Chambers County Commission, 514 U.S. 35 (1995), we
concluded that pendent appellate jurisdiction is restricted to
two circumstances: (1) “inextricably intertwined” orders or (2)
“review of [a] non-appealable order where it is necessary to
ensure meaningful review of [an] appealable order.” CTF
Hotel Holdings, Inc. v. Marriott Int’l, Inc., 381 F.3d 131, 136
(3d Cir. 2004) (citing E.I. DuPont, 269 F.3d at 203). “Issues
are ‘inextricably intertwined’ only when the appealable issue
‘cannot be resolved without reference to the otherwise
unappealable issue.’” Invista S.A.R.L. v. Rhodia, S.A., 625
F.3d 75, 88 (3d Cir. 2010) (quoting Am. Soc’y for Testing &
Materials v. Corrpro Companies, Inc., 478 F.3d 557, 580–81
(3d Cir. 2007) (citations omitted)). “[T]he existence of an . . .
appealable order [does not] confer pendent appellate
jurisdiction over an otherwise unappealable order just because
the two orders arise out of the same factual matrix . . .” even if
considering the orders together may be encouraged under
“considerations of efficiency.” Hoxworth v. Blinder,
Robinson & Co., 903 F.2d 186, 209 (3d Cir. 1990). “[T]he
pendent appellate jurisdiction standard is not satisfied when we
are confronted with two similar, but independent, issues, and
resolution of the non-appealable order would require us to
conduct an inquiry that is distinct from and ‘broader’ than the
inquiry required to resolve solely the issue over which we
properly have appellate jurisdiction.” Myers v. Hertz Corp.,
624 F.3d 537, 553-54 (2d Cir. 2010) (citation omitted). Thus,
if the appealable order may be properly “dispose[d] of . . .
without venturing into otherwise nonreviewable matters[,]”
Kershner v. Mazurkiewicz, 670 F.2d 440, 449 (3d Cir. 1982)
(en banc), we “have no need—and therefore no power—to
examine the [nonreviewable] order,” Hoxworth, 903 F.3d at
208.
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Here, we must determine, as a matter of first impression,
whether an order granting certification under Rule 23 is
“inextricably intertwined” with an order granting final
collective action certification under the FLSA. Citizens claims
that we may do so because review of the FLSA certification
order is necessary to ensure meaningful review of the Rule 23
order. Plaintiffs maintain that, although we have jurisdiction
to review the class certification order, our jurisdiction does not
extend to the FLSA order because “Rule 23 actions are
fundamentally different from collective actions under the
FLSA” and thus cannot be considered “inextricably
intertwined” for purposes of exercising pendent appellate
jurisdiction. (Appellees’ Br. 55) (citations omitted).
We find the Second Circuit’s opinion in Myers
instructive on the issue. There, after affirming the denial of
class certification on predominance grounds, the Second
Circuit declined to exercise pendent appellate jurisdiction to
review the District Court’s decision denying certification of an
FLSA collective action because “the two rulings [were] . . . not
‘inextricably intertwined.’” Myers, 624 F.3d at 556.
Specifically, the court found that the exercise of pendent
appellate jurisdiction was unwarranted because the question of
whether the potential plaintiffs had met the FLSA’s less
burdensome “similarly situated” standard was “quite distinct
from the question whether plaintiffs ha[d] satisfied the much
higher [Rule 23 predominance] threshold. . . .” Id. at 555–56.
Although the court recognized that “the two issues . . . [were]
admittedly similar,” it nevertheless concluded that the FLSA
and Rule 23 certifications orders were not inextricably
intertwined because the court “[could] easily[] determine[] that
the higher predominance standard ha[d] not been met without
addressing whether the same evidence plaintiffs have put
24
forward in support of Rule 23 class certification could satisfy
the lower [FLSA] standard.” Id. at 556.
We join the Second Circuit and conclude that Rule 23
certification is not “inextricably intertwined” with an FLSA
collective action certification so as to permit us to exercise
pendent appellate jurisdiction over the FLSA certification. In
so holding, we are persuaded by our prior precedent and the
Second Circuit’s well-reasoned decision in Myers that Rule 23
class certification and FLSA collective action certification are
fundamentally different creatures. Further, judicial efficiency
notwithstanding, the myriad problems that could result from
exercising jurisdiction in this context counsel against
expanding the narrow doctrine of pendent appellate
jurisdiction in the way Citizens proposes.
To be sure, some of our sister Courts of Appeals have
treated FLSA and Rule 23 certification as nearly one and the
same. See, e.g., Epenscheid v. DirectSat USA, LLC, 705 F.3d
770, 772 (7th Cir. 2013) (“[T]here isn’t a good reason to have
different standards for the certification of the two different
types of action, and the case law has largely merged for the
standards, though with some terminological differences . . .
[and] so we can, with no distortion of our analysis, treat [both
Rule 23 and FLSA actions] as if [they] were a single class
action.”); Thiessen v. Gen. Elec. Capital Corp., 267 F.3d 1095,
1105 (10th Cir. 2001) (opining that there is “little difference in
the various approaches” for evaluating Rule 23 and FLSA
certifications). On the other hand, other courts have concluded
that “[t]here [are] fundamental, irreconcilable difference[s]”
between Rule 23 class actions and FLSA collective actions that
preclude treating them as interchangeable. LaChapelle v.
Owens-Illinois, Inc., 513 F.2d 286, 288 (5th Cir. 1975) (per
curiam). For example, in a Rule 23 action “each person within
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the [class] description is considered to be a class member and,
as such is bound by the judgment . . . unless he has ‘opted out’
of the suit[,]” but [u]nder . . . [the FLSA,] no person can
become a party plaintiff and no person will be bound by or may
benefit from the judgment unless he has affirmatively ‘opted
into’ the class[.]” Id. (citations omitted). The Supreme Court
has also noted differences between Rule 23 class actions and
FLSA collective actions, such as the fact that although “a
putative class acquires an independent legal status once it is
certified under Rule 23[,] [u]nder the FLSA . . . ‘conditional
certification’ does not produce a class with an independent
legal status, or join additional parties to the action.” Symczyk,
569 U.S. at 75.
On balance, we believe that class certification under
Rule 23 and collective action certification under the FLSA are
not sufficiently similar or otherwise “inextricably intertwined”
to justify exercise of pendent appellate jurisdiction. This
conclusion is supported by our decisions in Zavala v. Wal Mart
Stores Inc., 691 F.3d 527 (3d Cir. 2012), and Kershner, along
with the Tenth Circuit’s analysis in Thiessen. When tasked
with elucidating the standard to be applied on final certification
under the FLSA in Zavala, we eschewed an approach derived
from Rule 23, holding instead that the standard to be applied to
determine whether FLSA final certification is appropriate is
“whether the proposed collective plaintiffs are ‘similarly
situated.’” Zavala, 691 F.3d at 536 (citation omitted). This
approach makes sense because “Congress clearly chose not to
have the Rule 23 standards apply to [statutory] class actions
[such as those under the FLSA]” by adopting not a
“commonality” or “predominance” requirement, but rather a
finding that the collective plaintiffs are “similarly situated.”
Thiessen, 267 F.3d at 1105. Holding otherwise would
26
“effectively ignore Congress’ directive.” Id. Thus, we have
previously concluded that, whereas a class action ruling is
grounded in the various procedural provisions found in Rule
23, a collective action under the FLSA hinges on “whether the
plaintiffs who have opted in are in fact ‘similarly situated’ to
the named plaintiffs.” Zavala, 691 F.3d at 537 (citing Myers,
624 F.3d at 555); see also Grayson v. K Mart Corp., 79 F.3d
1086, 1096 n.12 (11th Cir. 1996) (“[I]t is clear that the
requirements for pursuing [an FLSA] class action are
independent of, and unrelated to, the requirements for a class
action under Rule 23[.]”).
In practice, determining whether plaintiffs are
“similarly situated” under the FLSA involves considering all
relevant factors, such as, “whether the plaintiffs are employed
in the same corporate department, division, and location;
whether they advance similar claims; whether they seek
substantially the same form of relief; and . . . [whether they
have] individualized defenses.” Zavala, 691 F.3d at 536–37.
Although we acknowledge that some of the factors and
evidence necessary to satisfy the prerequisites of Rule 23 and
§ 216(b) may overlap and, as a consequence, our rulings with
respect to them may overlap as well, “a mere nexus between
the two orders is not sufficient to justify a decision to assume
jurisdiction.” Kershner, 670 F.2d at 449–50.
Finally, limiting the exercise of pendent appellate
jurisdiction avoids numerous potential problems that could
arise through its use. We stated in Kershner—as did the
Second Circuit in Myers—that expanding the doctrine would
serve to undermine the finality rule under 28 U.S.C. § 1292(a).
See Myers, 624 F.3d at 556; Kershner, 670 F.2d at 449. In
particular, parties could abuse the doctrine by bringing
“insubstantial interlocutory appeals in order to bring before
27
[us] issues which [we] ordinarily would not be able to review
until a final decision of the district court.” Myers, 624 F.3d at
556. Therefore, we hold that Rule 23 class certification and
FLSA final collective action certification are not “inextricably
intertwined.” Accordingly, we decline to exercise pendent
appellate jurisdiction over the FLSA collective action
certification order in this case.
IV. CONCLUSION
For the reasons set forth above, we will leave
undisturbed the District Court certifying a collective action
under the FLSA, vacate the District Court’s order granting
Plaintiff’s motion for class certification under Rule 23, and
remand this matter for further proceedings.
28