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The Swales Decision and Its Aftermath


The Houston Lawyer

By Don Foty

n January 12, 2021, the Fifth Circuit issued the decision of Swales v. KLLM Transport Servs., LLC.1 In Swales, the Fifth Circuit expressly rejected the Lusardi two-stage method for class certification under the Fair Labor Standards Act, which had been the general standard for certification across the country for approximately 30 years.2 Under Lusardi, a class notice is sent to potential members of the action informing them of the nature of the case.3 After discovery, the court makes a final determination as to whether those individuals who had joined the case are “similarly situated.”5 Unlike a Rule 23 class action, the claims of the potential class members under the Fair Labor Standards Act (“FLSA”) are not tolled until each member affirmatively joins the case.5 The Lusardi method was viewed as striking the necessary balance between preserving the statutes of limitations of the potential class members while allowing both sides sufficient discovery to identify whether the class members are similarly situated. Now, the Fifth Circuit stands as an island among the other circuits in having expressly rejected the Lusardi method. However, what was truly unique about the Swales decision was not the rejection of the Lusardi method, but the fact that the court did not expressly adopt any test for certification. The Fifth Circuit made clear that district courts are no longer “captive to Lusardi or any ‘certification’ test.”6 That means that the standards under Lusardi, Rule 23, or any other test for class certification do not apply to collective actions under the FLSA.7 While the Fifth Circuit did not expressly adopt a new test, it did provide some guidance to the district courts as to how 44 May/June 2021

to decide whether to authorize a collective action. 1. District courts are to evaluate potential collective actions on a “case by case basis.” First, the Fifth Circuit acknowledged that claims under the FLSA can be quite varied.8 Some FLSA claims can be resolved with little discovery while others are more fact intensive.9 Therefore, each potential collective action should be evaluated on a “case by case basis.”10 2. Class discovery can be permitted “as early as possible.” Second, after evaluating the nature of the FLSA claims raised by the plaintiff, district courts can authorize class discovery if needed.11 Following Swales, district courts have permitted broad discovery into the existence and identities of potential class members to allow an informed decision to be made.12 This is consistent with the Supreme Court’s guidance in HoffmanLaRoche.13 Other district courts have granted certification under the FLSA without any discovery following Swales.14 3. The test for deciding whether to grant a collective action is “whether merits questions can be answered collectively.” Third, the ultimate issue for the court in deciding whether to authorize a collective action is “whether merits questions can be answered collectively.”15 In other words, when the facts and legal issues relevant to proving the named plaintiff’s claims are the same facts and legal issues relevant to proving the class members’ claims, certification should likely be granted.16 The Fifth Circuit gave an example stating a collective action should likely be authorized when “the plaintiffs all have the same job description, and the allegations revolve around the same aspect of that job.”17

4. District courts have broad discretion in authorizing collective actions. Fourth, certification of a collective action is no longer a “yes” or “no” proposition. Now, district courts have broad discretion and can (1) authorize a collective action as requested, (2) determine that a smaller group or subset of the workers are similarly situated, (3) allow further discovery, or (4) decide the case cannot proceed collectively.18 When Swales was first issued, it was prematurely labeled by some practitioners as a pro-employer decision. Now that the dust has settled, it appears to be the opposite. Following Swales, the overwhelming majority of district courts in the Fifth Circuit have authorized collective actions.19 Also, under the Lusardi test, the employer has an automatic right to move for decertification following the close of discovery. Under Swales, that step appears to have been eliminated. While the full impact of the Swales decision remains to be seen, it is fair to say that collective actions in the Fifth Circuit are here to stay. Don Foty is a partner with the law firm of Hodges & Foty, LLP. He represents workers in wage and hour disputes across the country and has served as class counsel in nearly 100 class and/or collective actions. He is currently serving as class counsel on behalf of workers in cases pending in California, New Mexico, Ohio, and Texas. Endnotes

5. 985 F.3d 430 (5th Cir. 2021). 6. See id. at 439. 7. Lusardi v. Xerox Corp., 118 F.R.D. 351 (D.N.J. 1987); Mooney v. Aramco Servs. Co., 54 F.3d 1207, 1213-14 (5th Cir. 1995). 8. Id. 9. See Fed. R. Civ. P. 23; Mooney, 54 F.3d at 1212. 10. Swales, 985 F.3d at 443. 11. See id. 12. Id. at 441-42. 13. Id. 14. Id. at 441. 15. Id. 16. See, e.g., Rogers v. 12291 CBW, LLC, No. 1:19-CV-00266MJT, 2021 WL 1156629, at *2 (E.D. Tex. Mar. 15, 2021). 17. Sperling v. Hoffman-La Roche, 110 S. Ct. 482, 486 (1989) (stating: “The District Court was correct to permit dis-