Courts Decline to Follow Swales in Certification Disputes

In Swales v. KLLM Transport Servs, LLC, 985 F.3d 430 (5th Cir. 2021), the 5th Circuit frowned on the long-standing two-stage approach to certification of FLSA overtime collective actions and instead found that 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 . . . [a]nd then it should authorize preliminary discovery accordingly.” The Swales decision declined to endorse the two-stage conditional certification standard that has been utilized for decades in virtually every district and circuit court in the country, while at the same time providing virtually no guidance as to what standard a district court should use to evaluate certification in overtime cases. 

While confusion reigns within the 5th Circuit following the appellate court’s rejection of the two-step collective certification process set forth in Lusardi, several district courts outside of the circuit have refused to follow the 5th Circuit’s lead in Swales. For example, in McCoy v. Elkhart Products Corp., No. 5:20-CV-05176 (W.D. Ark. Feb. 11, 2021), the plaintiff sought conditional certification to provide notice to all hourly-paid production facility employees, claiming that the company regularly required these employees work before and after their shifts and adjusted their time downward. The defendant urged the court to decline to 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, and without considering the merits of the case. The district court rejected this argument, finding that the two-stage approach “has proven to be an efficient means of resolution of this issue.” The Court continued: “Although the burden of proof is low at the first stage of the two-stage approach, it is not non-existent, and Defendant’s complaint that the two-stage approach leads courts to grant conditional certification without reviewing if potential opt-in plaintiffs are similarly situated is unfounded.” The Court found that the plaintiff had satisfied her lenient burden at the first stage of certification and conditionally certified the case.

Similarly, in Piazza v. New Albertsons, LP, No. 20-cv-03187 (N.D. Ill. Feb. 3, 2021), a former worked filed a collective action made up of all similarly situated current and former Assistant Store Directors as well as comparable salaried employees with different titles, who are or were employed by the Defendants at Jewel-Osco grocery stores. The plaintiff moved for conditional certification. The Defendant cited Swales and urged the Court to reject the Lusardi two-stage certification approach. The Court refused to do so, finding that it “disregards well-established precedent in this district and its sister circuits.” The Court also distinguished Swales because the decision was premised on a “concern about a threshold issue,” independent contractor agreements, which was not present in this case. 

Even within the 5th Circuit, courts have refused to apply Swales in a way that meaningfully deviates from past practices. For example, in Badon v. Berry’s Reliable Resources, No. 19-12317c/w20-584 (E.D. March 11, 2021), the case was conditionally certified before the Swales decision was issued. The defendant moved to decertify, arguing that because the case involved the issue of whether the workers were independent contractors or employees, the economic realities test could not be practically applied to the collective action members in the case. However, the Court denied the decertification motion, finding the defendant’s arguments unpersuasive. 

In Moore v. MW Servicing, LLC, No. 20-0217 (E.D. La. March 15, 2021), the plaintiff sought conditional certification, claiming that the defendants had a practice of refusing to pay overtime or final paychecks to employees who ceased working for them. The Court cited Lusardi and conditionally certified the motion. No mention is made in the case of the Swales decision, despite the fact that Swales was decided in January and the Moore decision was issued two months later in March. It is likely that the motion was filed prior to Swales, and the parties never briefed the new Swales decision.  But it is worth noting a district court citing and applying Lusardi (and granting conditional certification) after the Swales decision.  

About the author: Josh Borsellino is a Texas attorney that represents workers on unpaid overtime claims.  If you have been denied overtime pay within the past three years, call Josh at 817.908.9861 or email him here today for a free evaluation of your overtime claims.  

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