On August 29, 2024, a Seventh Circuit panel granted a midsuit request from Eli Lilly & Company to review a district court order granting collective certification to a sales representative in her age discrimination lawsuit. The Seventh Circuit’s ultimate decision in the matter could significantly impact collective action litigation.
For years, courts addressing collective action claims brought under 29 U.S.C. § 216(b), such as those under the Fair Labor Standards Act (FLSA) or the Age Discrimination in Employment Act (ADEA), employed the familiar two-step process in determining whether the claim could proceed on a collective basis. The plaintiff first must move for conditional certification and make a minimal showing that putative collective members are “similarly situated.” If the court grants conditional certification, which occurs more often than not given the relatively low bar set for plaintiffs, notice then goes out to putative collective members who may then opt into the case by filing a consent to join form. At the second step, the defendant may move to decertify the collective, at which time the court performs a more rigorous analysis akin to that utilized in determining whether Rule 23 class certification is appropriate.
In 2021, the Fifth Circuit in Swales v. KLLM Transport Services, LLC, 985 F.3d 430 (5th Cir. 2021), altered the landscape by rejecting the lenient two-step process. The Fifth Circuit held that the district court should, with the aid of discovery, perform a fulsome analysis in determining whether the plaintiff and putative collective members are similarly situated before notice is sent to putative collective members. Since then, while employers have advocated for courts across the country to adopt the Fifth Circuit’s more rigorous process, most district courts have been unwilling to depart from the traditional two-step method. Since Swales,only the Sixth Circuit in Clark v. A&L Homecare & Training Center LLC, 68 F.4th 1003 (6th Cir. 2023), has rejected the two-step process, though it did not adopt the Swales standard. Instead, the court adopted “part of the preliminary-injunction standard” and held that “for a district court to facilitate notice of an FLSA suit to other employees, the plaintiffs must show a ‘strong likelihood’ that those employees are similarly situated to the plaintiffs themselves. That standard requires a showing greater than the one necessary to create a genuine issue of fact, but less than the one necessary to show a preponderance.”
Until now, the Seventh Circuit has not embraced an opportunity since Swales to evaluate whether district courts should continue to employ the familiar two-step process, perform the Fifth Circuit’s more rigorous analysis, or utilize something else such as the Sixth Circuit’s approach. As a result, courts within the Seventh Circuit—including the district court in Eli Lilly & Company, et al. v. Richards (7th Cir. Case No. 24-8017)—have continued to analyze collective certification using the two-step process. How the Seventh Circuit resolves the appeal in Eli Lilly & Co. could have a dramatic effect on the way collective action claims are litigated within the Seventh Circuit, and we will continue to monitor the case (and others across the country) as the litigation landscape regarding collective certification under Section 216(b) evolves.
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