The United States Court of Appeals for the Fifth Circuit’s opinion, Swales v. KLLM Transport Services, LLC, 985 F.3d 430 (5th Cir. 2021), discarded and rejected the conditional certification process used in the collective action case Lusardi v. Xerox Corporation, 118 F.R.D. 351 (D. N.J. 1987). Under Lusardi, courts would use a two-step approach where courts would first consider whether a collective should be conditionally certified, followed by notice and an opt-in timeframe, followed by a decertification stage. While the Lusardi procedure provided flexibility, it was also unpredictable. Swales changed all of that.
The Fifth Circuit’s opinion in Swales directed that a district court must rigorously scrutinize the universe of “similarly situated workers and that it had to be done from the beginning of the case, not after a “lenient, step-one conditional certification.” See Alvarez v. Nes Global LLC, 2021 U.S. Dist. LEXIS 151860, *5 (S.D. Tex. Aug. 11, 2021), citing, Swales v. KLLM Transport Services, LLC, 985 F.3d 430, 434. Only after the court scrutinizes the similarly situated workers can the court determine whether the requested opt-in notice will go to those who are actually similarly situated to the named plaintiffs. The new structure of a court’s analysis is to skip the first step of the Lusardi analysis and go directly to the issue of similarly situated with the benefit of pre-certification discovery if necessary.
As stated by the United States District Court in applying Swales in Alvarez and granting certification, “While [the similarly situated] inquiry does not mean that the class members must be identically situated, it does mean that the Plaintiff must show a “demonstrated similarity” among purported class members, and a “factual nexus” that binds the class members’ claims together such that hearing the claims in one proceeding is fair to all parties and does not result in an unimaginable trial of individualized inquires.” See Alvarez v. Nes Global LLC, 2021 U.S. Dist. LEXIS 151860, *5-6 (S.D. Tex. Aug. 11, 2021).
To determine if purported class members are similarly situated, courts must consider (1) the factual and employment settings of the purported class members; (2) the various defenses available to the defendant and if any defenses are individualized rather than applicable to the class as a whole; and (3) fairness and procedural considerations. See Alvarez v. Nes Global LLC, 2021 U.S. Dist. LEXIS 151860, *5 (S.D. Tex. Aug. 11, 2021), citing, Swales v. KLLM Transport Services, LLC, 985 F.3d 430, 437.
Having defended class and collective actions in a past life, the real battle, in my opinion, is at the certification stage. The Fifth Court of Appeals opinion in Swales will make certification less expensive for the Defendant and harder for Plaintiffs, but as the Alvarez opinion shows, not impossible. The opinions in this blog are solely the author’s and any comments, replies, or suggestions for this or future blogs should be sent to john@jrjoneslaw.com.
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