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Party On? Workers, Employers Cheer Potential for Wage Cases

Bloomberg Law—Jon Steingart

Reproduced with permission. Apr. 20, 2018. Copyright 2018 by The Bureau of National Affairs, Inc. (800-372-1033) <http://www.bna.com>

Lawyers on opposite sides of the courtroom are cheering a recent appeals court ruling, and it’s all about procedure. That procedure deals with who can partici-pate in lawsuits involving multiple plaintiffs seeking backpay or overtime.

Workers who opt into a lawsuit over pay because they allegedly experienced a similar violation are par-ties in the case as soon as they file a form to join the action, and they have the same rights to participate in the litigation as any other plaintiff, the U.S. Court of Appeals for the Eleventh Circuit said.

That’s different from the process in the better-known class action litigation. Under most laws, a case with multiple plaintiffs may proceed as a class action. In those cases, additional people who participate are class members, not parties, and have a class representative, or representatives, who partake in the litigation on their behalf. Cases under the FLSA, however, follow a different procedure called a collective action. And under the Eleventh Circuit’s ruling, if you opt in, you’re a party to the lawsuit.

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Litigation rules allow parties on both sides of a case to move the court to compel a party on the other side to respond to discovery. Rules also permit sanctions for noncompliance. Parties face higher expectations to comply with discovery requests than nonparties who may possess relevant information.

Opt-In Plaintiffs Don’t Lose Right to Sue

Another effect is that the time limit for filing a lawsuit on one’s own behalf is paused while a case an individual opts into proceeds. The time limit for an FLSA case is gener-ally two years, although it may be three years if the plaintiff can show a defendant’s noncompliance was willful.

In the Eleventh Circuit case, a dance club owner asked a lower court court to clarify an order that decertified a collective action against it. The lower court ruled that the opt-in plaintiffs couldn’t participate in a collective action because their claims weren’t similar enough to the underlying lawsuit filed by a different individual. That had the effect of dismissing the opt-in plaintiffs’ claims entirely, the lower court said.

The lower court refused to let the decertified plaintiffs proceed with their own case because the time to file a lawsuit ran out while they participated in a collective action they shouldn’t have opted into, the judge ruled.

In the Eleventh Circuit case, the lead plaintiff went ahead without the opt-ins and settled with the business. The appeals court ordered the lower court to allow the opt-ins to pursue a lawsuit of their own, vacating its prior ruling that they were time-barred.

The appeals court ruling is beneficial for employees because it preserves their right to file a lawsuit, Justin Swartz, co-chair of worker law firm Outten and Golden LLP’s class action practice group, said.

‘‘It is important because it rejects yet another creative attempt by defendants to extinguish workers’ rights without facing the merits of their claims,’’ Swartz, who is a partner in the firm’s New York office, said. Declaring a worker who opts into a lawsuit a party in the case pauses the statute of limitations for her to file a lawsuit on her own behalf, he said.

That can be advantageous if the defendant later wins a motion to decertify a collective action. A court may decertify an action if the employer demonstrates that the lead and opt-in plaintiffs aren’t similar enough to justify collective action status. Following decertification, a worker for whom the clock was paused may still have an opportunity to file her own lawsuit.

If plaintiffs don’t get the benefit of pausing the clock, ‘‘each would have to file her or his own lawsuit to toll the statute,’’ Swartz said. This would be a less efficient way to manage FLSA cases, especially when the law provides collective action as a more efficient method for handling multiple plaintiffs, he said.