Ahead of the Class

In a case of first impression, the Third Circuit has ruled that plaintiffs in Fair Labor Standards Act collective actions may not, after a district court decertifies a collective-action class, obtain appellate review of the decertification order by voluntarily dismissing their claims with prejudice and filing a notice of appeal.  Rather, after the voluntary dismissal, the case is “gone forever” and any possibility of appeal is foreclosed.  Camesi v. Univ. of Pittsburgh Med. Ctr., Nos. 12-1446 & 12-1903, 2013 WL 4734027 (3d Cir. Sept. 4, 2013) (slip opinion here).  In contrast to class actions, where parties may petition for interlocutory review of class certification orders under Fed. R. Civ. P. 23(f), Camesi closes the door to review of certification rulings in FLSA collective actions through attempts to contrive finality by voluntarily dropping the case.

Four employees of the University of Pittsburgh Medical Center and related entities (“UPMC”) filed a proposed collective action under the Fair Labor Standards Act, 29 U.S.C. § 201 et seq. (“FLSA”), claiming that UPMC failed to ensure that employees were paid for time worked during meal breaks.  Separately, three employees brought the same claim against West Penn Allegheny Health System and related entities (“West Penn”).  The district court “conditionally” certified both cases as collective actions, and directed notice to employees to allow them to opt in to the litigation.  And in both cases, the district court later granted UPMC’s and West Penn’s motions to decertify the collective actions.  2013 WL 4734027, at *1-2, slip op. at 9-11.

In class actions under Fed. R. Civ. P. 23, Rule 23(f) allows a party to seek interlocutory review of a ruling on class certification.  In a collective action under FLSA, however, there is no corresponding procedural vehicle.  Instead, in these two cases the seven employees, after the decertification orders, voluntarily dismissed their claims with prejudice so that, in their words, they could “secure a final judgment for purposes of appeal.”  The district court dismissed their claims with prejudice, and dismissed the opt-in employee-plaintiffs’ claims without prejudice.  Id. at *1-2, slip op. at 9-11.

The seven employees then filed their appeals with the Third Circuit in order to challenge the decertification orders.  UPMC and West Penn contested the appeals, arguing that the voluntary dismissals with prejudice were attempts “to manufacture finality” and obtain appellate review of otherwise unreviewable interlocutory orders.  Id. at *2-3, slip op. at 11-12.

The Third Circuit agreed with the UPMC and West Penn and dismissed both appeals for lack of jurisdiction.  Id. at *6, slip op. at 20.  First, the court regarded a prior opinion, Sullivan v. Pacific Indemnity Co., 566 F.2d 444 (3d Cir. 1977), as “so similar . . . as to be controlling.”  Id. at *3, slip op. at 14.  In Sullivan, the district court denied class certification under Fed. R. Civ. P. 23, and when the plaintiffs failed to present any evidence at trial, dismissed the action for failure to prosecute under Rule 41(b).  Finding the dismissal in Sullivan analogous in the FLSA collective-action setting, the Third Circuit refused to allow the use of “procedural sleight-of-hand to bring about finality.”  That would open the door to use of voluntary dismissal “to obtain review of discovery orders, evidentiary rulings, or any of the myriad decisions a district court makes before it reaches the merits of an action.”  “This would greatly undermine the policy against piecemeal litigation embodied by [28 U.S.C.] § 1291.”  Id.

The Third Circuit rejected the employees’ reliance on Fassett v. Delta Kappa Epsilon, 807 F.2d 1150 (3d Cir. 1986), and Trevino-Barton v. Pittsburgh National Bank, 919 F.2d 874, 878 (3d Cir. 1990), where appeals of partial summary judgment were heard after the plaintiffs voluntarily dismissed the remaining claims without prejudice.  In those cases, the remaining claims were either barred by the statute of limitations or abandoned.  Id. at *4, slip op. at 14-16.  Here, in contrast, the employees dismissed their substantive claims to obtain review of an interlocutory decertification order, not a ruling on their claims.  That ran afoul of the policy against piecemeal appeals.

Second, the court ruled that voluntary dismissal of the substantive claims with prejudice “rendered the cases moot,” so that no Article III case or controversy remained pending.  “The claims that Appellants dismissed with prejudice are gone forever—they are not reviewable by this Court and may not be recaptured at the district court level.”  Id. at *5, slip op. at 18 (citing Fairley v. Andrews, 578 F.3d 518, 522 (7th Cir. 2009)).  And with the seven employees having dismissed their individual claims, the court left “for another day” the question whether the “personal-stake requirement of Article III” may be satisfied by a named plaintiff’s claimed interest in representing others who have opted into a collective action.  Id. at *6, slip op. at 19-20.

Camesi is important in recognizing that interlocutory review of an order denying final certification of a FLSA collective action is not available through voluntary dismissal of the substantive claims.  In addition, the Third Circuit left open whether, standing alone, an asserted interest in representing FLSA opt-in plaintiffs is a personal stake in the litigation sufficient to confer Article III standing.  While the Seventh and Ninth Circuits, in opinions not discussed in Camesi, have allowed appeals of FLSA decertification to go forward after the named plaintiffs dismissed their claims, in both of those cases the named plaintiffs had settled their individual claims by agreements that reserved some monetary interest in a recovery that might be obtained after a successful appeal and further litigation.  See Espenscheid v. DIRECTSAT USA, LLC, 688 F.3d 872 (7th Cir. 2012); Narouz v. Charter Commcn’s, LLC, 591 F.3d 1261 (9th Cir. 2010).  Here, the seven employees who commenced the actions did not settle their claims; they dismissed them outright and proceeded directly to the Third Circuit.  Whether, in the Third Circuit, reservation of some residual monetary interest in the litigation would have sufficed to confer standing remains to be determined.