Court certifies case after reviewing impact of Swales

A federal court in Houston has certified an overtime case after considering the impact of the recent Swales decision.  Young v. Energy Drilling Company, Civil Action No. 4:20-cv-1716 (S.D. Tex. March 31, 2021). In Swales v. KLLM Transp. Servs., L.L.C., 985 F.3d 430 (5th Cir. 2021), the 5th Circuit expressly rejected the two-stage Lusardi approach. In doing so, the Fifth Circuit embraced “interpretative first principles: (1) the FLSA’s text, specifically § 216(b), which declares (but does not define) that only those `similarly situated’ may proceed as a collective; and (2) the Supreme Court’s admonition that while a district court may `facilitat[e] notice to potential plaintiffs’ for case-management purposes, it cannot signal approval of the merits or otherwise stir up litigation.” Under Swales, a district court should “identify, at the outset of the case, what facts and legal considerations will be material to determining whether a group of `employees’ is `similarly situated.’ And then it should authorize preliminary discovery accordingly.” After identifying the material facts and legal considerations at issue, the Court may decide (i) collective action is not appropriate; (ii) additional discovery is needed to make a determination; or (iii) a certain category of employees is similarly situated and should be given notice. “The bottom line is that the district court has broad, litigation-management discretion here.”

In the Young case, an hourly employee who worked as a driller and tool pusher sued Energy Drilling, alleging that he and others were paid discretionary job bonuses that were not included when calculating overtime, thus alleging violations of the FLSA.  He then asked the court to conditionally certify the collective action consisting of: All non-exempt hourly oilfield personnel who worked for, or on behalf of, Energy Drilling in the United States who were paid a non-discretionary bonus in the past three (3) years.

The parties’ initial briefing argued for (and against) conditional certification pursuant to Lusardi standards. The Court then gave the parties an opportunity for additional briefing to address Swales.  The magistrate judge found that this case was appropriate for certification as a collective action, stating:

Based on the evidence presented by Young—including the company pay policy alleged to have been applied universally to the listed job positions—the non-discretionary nature of the bonuses does not vary among job title, duties, or location. Thus, whether the employees in the identified positions were subjected to the same pay practice as Young, and therefore are similarly situated, does not depend on the employees’ specific job duties or where the employee worked…No further discovery is needed to conclude that Young is similarly situated to other employees who were subjected to the same pay practice. The evidence which Young has provided supports approval of a notice for the positions and bonuses discussed above. 

The court recommended overruling Energy Drilling’s objections to the notice, finding that they are reasonable, and allowed the notice to be texted and emailed to the class members.  The magistrate judge’s recommendation was subsequently adopted by Judge Lake.  

This case is another reminder that while Swales was unanimously viewed as being a pro-employer decision, it will likely not change the ultimate result of many motions to certify.  Most  that would have been granted under the Lusardi standard will likely still end up being granted, albeit after the parties conduct a significant amount of costly discovery.  While this seems like an inefficient and foolhardy approach, this is the result of the 5th Circuit’s unusual decision in Swales.  

Josh Borsellino represents workers suing for unpaid overtime.  If you have questions about overtime pay, call Josh at 817.908.9861 or email him here for a free, no-obligation evaluation of your overtime matter.

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