In a chicken-and-egg type of case, an unusual case, the Third Circuit has emphatically held a Judge taking over a class action case must deal with the threshold issue of whether a class should be certified prior to a trial commencing on the collective claims of the class. The Court sternly warned that if this is not done, it would be contrary to Court rules and Supreme Court precedent. The case is entitled In re: Citizens Bank NA, and issued from the U.S. Court of Appeals for the Third Circuit.
The case involves a group of Loan Officers suing under the Fair Labor Standards Act, alleging they were compelled to perform off the clock work. They sought certification under both the FLSA and state law, pursuant to Rule 23 of the Federal Rules of Civil Procedure. The trial court Judge wanted to proceed directly to a trial on these allegations, prior to determining whether a Rule 23 class was appropriate. The Court stated that this approach was a “win-win for the employees and disadvantages Citizens at every turn.”
This kind of skewed approach, held the Third Circuit, would essentially guarantee class certification if the plaintiffs won at trial. If, on the other hand, the Company prevailed at trial, the individual class members would be able to then file their own individual lawsuits. The Court decried this order of events, because even if the lawsuit encompassed only Rule 23 claims, and no class action, the trial first, certification second, concept should be met with the “utmost skepticism.” The Court aptly stated that “such a procedural sequence would be ignoring Rule 23’s text and history, flouting Supreme Court precedent, and departing from the case law of seven circuits while undercutting four others.”
Now, the stay that had been issued is dissolved and a new Judge will be assigned. The Third Circuit made plain that it expects the new Judge will consider “our ensuing discussion of the interests at stake here and the factors that motivated our grant of a stay in the first place.” There are, as the Court noted, “weighty concerns” regarding a trial prior to the certification process and the “complexities unique” to these hybrid cases.
The lawsuit concerns an alleged scheme by the bank to avoid paying overtime to Loan Officers. They allege that even though the employees could claim overtime, the employer had an unofficial policy that capped how much overtime could be approved, leading to the performance of this off-the-clock work.
I don’t understand how this could have even been contemplated. It put the plaintiffs in a no-lose situation and placed the employer at a great legal and tactical disadvantage. Luckily, the Third Circuit, a highly respected federal appellate court, put an end to this nonsense.
What will plaintiffs think of next…