New Notice Standard Established in FLSA Collective Actions

• Author: John M. McNichols
• Pages: 24-24

Published in Litigation News Volume 47, Number 1, Fall 2021. © 2021 by the Ameri can Bar Association. Re produced with per mission. All rights re served. This info rmation or any porti on thereof may not be c opied or disseminated in any f orm or

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New Notice Standard

Established in FLSA

Collective Actions

By John M. Mc Nichols, Litigation News

Associa te Editor

Employers now have expand ed pro-

tection from broad co llective actions

under the Fair Lab or Standards Act

(FLSA). Before a cou rt can authorize

notice of a collective a ction to poten-

tial plaintis , their employer must

have an opportun ity to show that

those plainti s are subject to arbitra-

tion agreemen ts waiving their rights

to sue, the U.S . Court of Appeals for

the Seventh Circuit he ld. Because

notice often drives s ettlement discus-

sions in FLSA coll ective actions, ABA

Litigation Secti on leaders expect that,

if followed, the rul ing will increase

employers’ settlement leverage.

In Bigger v. Faceboo k, a Facebook

employee f‌iled a pu tative collec-

tive action agains t Facebook alleg-

ing violations of th e overtime-pay

requirements. Facebook objected

to the plainti ’s motion to certif y on

the ground that ma ny employees had

signed arbitration agreements waiv-

ing their rights to p articipate. The U.S.

District Cour t for the Northern Distric t

of Illinois grante d the plainti’s motion.

The Seventh Circuit rever sed, hold-

ing that before the di strict court could

send notice to the pla inti’s proposed

group, the employe r should have an

opportunit y to show that individual

members of the g roup were sub-

ject to valid and e nforceable arbitra-

tion agreements. The court reasoned

that although col lective actions can

enhance eci ency by resolving com-

mon issues in a sin gle proceeding, they

also present dan gers, including the

potential for addi ng pressure to settle

simply by increasi ng the number of

claimants, re gardless of the merits of

their claims.

Litigation Section leaders high-

light the decisio n’s emphasis on the

import of notice i n FLSA collective

actions. “ The decision is very impor-

tant because i t focuses on the notice

stage, which is a co ntroversial stage

in this type of cas e,” observes David

E. Gevertz, co chair of the Section’s

Employment & Lab or Relations

Committee. “ The danger to a corporate

defendant in an F LSA collective action

is that the notice can re ally expand

the number of claimants, because it’s

an opt-in format,” agre es Adam Polk,

cochair of the Sec tion’s Class Actions &

Derivative Suits Co mmittee.

The Bigger decisi on is notable in its

willingness to address the realities of

litigation. “T he value of the decision is

that it explicitly ackn owledges what

practitioner s already know, which is

that the collecti ve action notice ca n

be the tail that wags th e dog in wage

and hour case s,” Gevertz comments.

“There is not an i nsignif‌icant cost

to gathering all of th e information

required by the notice , and the notice

will solicit pers ons who may have

other types of cla ims, all of which can

create a host of satellite p roblems for

the employer,” he adds.

Polk agrees that “disproportionate

discovery can be a f actor in this type

of case,” but notes th at the Seventh

Circuit’s reme dy may be unneces-

sary. “In an ordi nary class action, the

existence of arbitration agreements

among potential class members would

be addressed a s a typicality problem.

That would work und er FLSA, too,” he

states. Polk als o warns that by litigat-

ing the validity of a rbitration agree-

ments at the notice s tage, a court

“may be establishing an arbitration

requirement for absent class members,

who may not even be repres ented.

That’s a problem.”

For FLSA litigant s and their coun-

sel, Bigger helps set expectations

about the role that a rbitration agree-

ments will play in litig ation. This deci-

sion “is the f‌irst o ne to lay out the

steps to determine whether arbitra-

tion agreemen ts will limit the scope

of the lawsuit. So for p ractitioners, it

gives us a higher de gree of conf‌idence

when we’re talking w ith a client about

the arbitration ag reements that it has

with its employees ,” notes Gevertz. “If

you’re a plainti ’s attorney, be cog-

nizant of how you def‌in e your class,

as certain pote ntial members may be

subject to arbitr ation. But if you’re a

defense lawyer, get the i ssue of arbi-

trability goin g right out of the gate,

because the c ase gives you an oppor-

tunity to take a stan d at an earlier

juncture,” Polk counsels.

DOJ Can Convict—

But Can It Imprison?

By Ashlee E. H amilton, Litigation

News Contributing Editor

A person convicte d of distributing

marijuana may now a ssert that an

annual rider for congressional appro-

priations bars h is or her federal impris-

onment. In Sandusk y v. Goetz, the U.S.

Court of Appe als for the Tenth Circuit

allowed a man who ha d been impris-

oned for opera ting a medical mari-

juana company to se ek his immediate

freedom on this b asis.

In 2012, Aaron S andusky, who was

the president of a m edical marijuana

cooperative, was co nvicted in the U.S.

District Cour t for the Central District of

California of t wo counts of marijuana

tracking in C alifornia, where medica l

marijuana is le gal. Sandusky was sen -

tenced to 120 months i n prison.

Sandusky f‌i led a motion pursu-

ant to 28 U.S.C . § 2255 to set aside

or correct his se ntence. A section

2255 motion mu st raise a challenge

based on alleg ed violations of fed-

eral law. Sandusk y argued that the

Rohrabacher-Farr amendment bars

his incarcerati on because it prohibits

the U.S. De partment of Justice (DOJ)

from using fun ds to prevent states

from “implem enting their own State

laws that authorize the us e, distribu-

tion, possess ion, or cultivation of med-

ical marijuana.”

Sandusky argued that the Federal

Bureau of Prison s, an agency of the

DOJ, violated the amendment by

incarcerating h im. The district court

dismissed his m otion, holding that his

incarceration wa s not an expenditure

of funds that prevente d California

from impleme nting its medical mari-

juana laws.

Because Sandusky was imprisoned

in Colorado, h e f‌iled a petition for writ

of habeas corpu s in the U.S. District

Court for the Di strict of Colorado pur-

suant to 28 U.S .C. § 2241. “A section

2241 petition is f‌iled i n the place of

incarceration a nd directly attacks exe-

cution of a federal s entence,” explains

David Schoen, Montgomery, AL,

chair of the ABA Litig ation Section’s

Criminal Jus tice Subcommittee of the

Civil Rights Litigation Committee.

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