In re: CITIZENS BANK, N.A., Petitioner
No. 19-3046
UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT
October 5, 2021
PRECEDENTIAL
On Petition for a Writ of Mandamus from the United States District Court for the Western District of Pennsylvania
Related to District Court No. 2-15-cv-01541
District Judge: The Honorable Arthur J. Schwab
Submitted Pursuant to Third Circuit L.A.R. 34.1(a)
Before: SMITH, Chief Judge, SHWARTZ and SCIRICA, Circuit Judges
(Filed: October 5, 2021)
Thomas E. Hill
Holland & Knight
400 South Hope Street
8th Floor
Los Angeles, CA 90071
Brian A. Sutherland
Reed Smith
101 Second Street
Suite 1800
San Francisco, CA 94105
Christina Tellado
Holland & Knight
400 South Hope Street
8th Floor
Los Angeles, CA 90071
Kim M. Watterson
Reed Smith
225 Fifth Avenue
Suite 1200
Pittsburgh, PA 15222
Counsel for Petitioner
Justin L. Swidler
Joshua S. Boyette
Swartz Swidler
1101 Kings Highway North
Suite 402
Cherry Hill, NJ 08034
Daniel A. Horowitz
O‘Brien Belland & Bushinsky
509 South Lenola Road
Building 6
Moorestown, NJ 08057
Robert D. Soloff
7805 Southwest 6th Court
Plantation, FL 33324
Counsel for Respondents
SMITH, Chief Judge.
Twelve current and former mortgage loan officers (MLOs) claim that Citizens Bank forced them—and more than a thousand of their colleagues—to work over forty hours a week without paying them the overtime they were due under state and federal law. They filed a single complaint bringing a collective action under the Fair Labor Standards Act (FLSA),
The District Court scheduled a trial on the primary factual issue in the FLSA opt-in collective action but left unresolved whether it would certify a class for the state-law opt-out Rule 23 action. Because the FLSA collective action and the Rule 23 class action turn on the same facts, Citizens strongly objected to that procedural order of business. Yet the District Court essentially ignored Citizens’ objections.
With a trial date looming, Citizens filed a petition in our Court for a writ of mandamus. We stayed the case to decide that petition. This opinion explains our decision to issue the stay.
I.
Before discussing the specifics of the parties’ dispute, we will first compare and contrast the two types of aggregate litigation that Plaintiffs are simultaneously pursuing: an FLSA opt-in collective action and a Rule 23(b)(3) opt-out class action.
We begin with the FLSA, which provides a private cause of action against an employer for failing to pay overtime for a workweek of more than forty hours.
Accordingly, after a “modest factual showing” by the named plaintiffs, a district court must first conditionally certify that the proposed collective action plaintiffs are “similarly situated.”2 Halle, 842 F.3d at 224 (citation omitted);
Once the FLSA plaintiffs provide written notice that they have opted in to the collective, the parties conduct certification-related discovery and, eventually, the group of plaintiffs moves for final certification. Id. at 225. The group then bears the burden of demonstrating by a preponderance of the evidence that they are all “similarly situated” under the FLSA. Id. at 226. If the District Court finally certifies the FLSA collective action, the matter goes forward with the participation of all plaintiffs who have opted in. Id. If, on the other hand, final certification is denied, the opt-in plaintiffs are dismissed as plaintiffs and only the original named plaintiffs proceed to trial. Id.
These issues must be resolved when a District Court decides whether or not to certify a class. Certification requires a two-step analysis in which the District Court must first determine whether the putative class satisfies the numerosity, commonality, typicality, and adequacy of representation provisions of
Certification of a class means that all individuals falling within the class definition will be bound by the judgment unless they affirmatively request to be excluded.
Despite these marked differences, we have held that an FLSA opt-in collective action is not, by its nature, incompatible with a parallel state law Rule 23 opt-out class action. Knepper v. Rite Aid Corp., 675 F.3d 249, 261 (3d Cir. 2012). Yet the present mandamus petition brings into sharp relief some of the potential challenges of trying a case that simultaneously includes both forms of aggregate litigation.
II.
With these differences between the FLSA opt-in collective action and the Rule 23 opt-out class action firmly in mind, we return to the procedural history of the parties’ dispute.
In November 2015, three current and former MLOs, Alex Reinig, Ken Gritz, and Bob Soda, filed a complaint alleging that Citizens maintains an unofficial policy or practice requiring MLOs to work off the clock in excess of forty hours per week without paying overtime wages due in accordance with the FLSA,
Plaintiffs moved for conditional certification of an FLSA opt-in collective action, which the District Court granted in May 2016. Mem. Order May 3, 2016. The District Court concluded that, for FLSA certification purposes, Plaintiffs “established that the ‘off the clock’ claims are related to Citizens’ policy....” Id. at 5. Shortly thereafter, the District Court scheduled a trial for September 25, 2017.
After granting conditional FLSA certification, the District Court ordered Plaintiffs to notify the potential members of the collective that they would have 100 days to opt in to the FLSA action. In accordance with the District Court‘s order, Plaintiffs sent notice to over 1,000 current and former MLOs. Of those, 351 provided the requisite consent forms allowing them to opt in.
After the 100-day period expired, Plaintiffs filed an amended complaint adding nine named plaintiffs to the lawsuit, alleging state law claims arising from the laws of Connecticut, Illinois, Massachusetts, Michigan, New Hampshire, New York, North Carolina, Ohio, and Rhode Island as well as Pennsylvania.4 Shortly after filing the amended complaint, Plaintiffs filed a motion for class certification under Rule 23, seeking certification of ten classes, each of which would pursue claims under the overtime laws of a particular state. Citizens responded with two related submissions: one opposing the class certification motion and the other seeking decertification of the FLSA collective action. The parties also filed cross-motions for summary judgment.
By stipulation, the parties agreed to the appointment of a Special Master, who recommended, inter alia, certifying a class for Plaintiffs’ state law claims under Rule 23, denying Citizens’ motion for decertification of the FLSA collective action, and granting final FLSA certification. In its objections to the Special Master‘s recommendations, and central to the matter before us, Citizens argued that the scheduled FLSA trial date must be postponed because the putative class had not yet been notified of the Rule 23 certification decision, and therefore had not been given a chance to opt out.
The District Court adopted the Special Master‘s report and recommendations in full. In addition to certifying the Rule 23 state law classes, the District Court granted final FLSA collective action certification, concluding that the FLSA opt-in plaintiffs are similarly situated because “the MLOs share the same job description with similar (if not identical) job duties, are paid pursuant to the same compensation plan(s), are subject to the same policies, and assert the same claims for unpaid off-the-clock overtime wages in this lawsuit.” Reinig v. RBS Citizens, 2017 WL 3599489, at *3 (W.D. Pa. Aug. 22, 2017).
The District Court also rejected Citizens’ objection to proceeding with the previously scheduled FLSA trial:
The remainder of Defendant‘s arguments are procedural and regard matters within the sound discretion of the
District Court to manage litigation before it. Trial of a single issue regarding Plaintiffs’ FLSA off-the-clock claims is scheduled to commence, and will commence, on September 25, 2017. This in no way interferes with the state subclasses[‘] right to receive notice of the pending state-law claims and to opt-out of the action if they so choose.
Id. (citation omitted). The scheduled FLSA trial would address whether “Citizens Bank had a policy or practice that caused [MLOs] to not report all of the hours they worked.” JA 255.
Citizens timely filed a Rule 23(f) petition objecting to class certification, and we granted that petition.5 In resolving the petition, we discerned numerous flaws in the District Court‘s consideration of the Rule 23 class certification issues. For instance, we concluded that the District Court had not adequately defined any class or subclasses as required by
In addition, we could not determine what evidence the District Court relied on to conclude that Plaintiffs had satisfied
In its Rule 23(f) petition, Citizens also asked us to exercise pendent appellate jurisdiction to consider the District Court‘s FLSA collective action certification. We declined to do so. Although we acknowledged “that some of the factors and evidence necessary to satisfy the prerequisites of Rule 23 and § 216(b) may overlap,” id. at 132, we determined that “Rule 23 class certification and FLSA collective action certification are fundamentally different creatures.” Id. at 131. Each is governed by its own legal standard—for the class action, Rule 23 applies, while for the FLSA collective action,
On remand, despite our express instruction to the District Court to “conduct a
Citizens raised numerous objections to the District Court‘s planned FLSA trial, moving to stay it until after a Rule 23 class certification decision had been made. The District Court declined to stay the trial and failed to meaningfully address the merits of the objections. Instead, it characterized Citizens’ position as a delay tactic and an effort to undermine the District Court‘s ability to manage its own docket.
Citizens then came to us seeking a writ of mandamus. Specifically, Citizens asked us (1) to direct the District Court to refrain from proceeding with the FLSA collective action trial until the Rule 23 class certification motion is decided; (2) if a Rule 23 class is certified, to direct the District Court to refrain from proceeding with trial until after class members have been notified and given an opportunity to opt out; and (3) to reassign the case to a new District Judge. Citizens also sought a stay pending our decision, which we granted.
The day we issued our stay, the District Judge filed a supplemental response to the mandamus petition, joining Citizen Bank‘s request that the case be reassigned.6 Because the District Judge joined Citizens’ request for relief, we will now dissolve our stay so that the Chief Judge of the United States District Court for the Western District of Pennsylvania may reassign this case. We will dismiss the mandamus petition in part as moot insofar as it requests reassignment. And given that pending reassignment, we expect that the District Judge who will assume management of this litigation will take into account our ensuing discussion of the interests at stake here and the factors that motivated our grant of a stay in the first place. We are confident that the District Court will heed our prior direction to “conduct a ‘rigorous’ examination of the factual and legal allegations underpinning [the] claims before deciding . . . class certification.” Reinig, 912 F.3d at 130. Such analysis is at the heart of Rule 23 practice and procedure. See In re Hydrogen Peroxide Antitrust Litig., 552 F.3d 305, 316 (3d Cir. 2008). Accordingly, we will deny the remainder of
the petition without prejudice because it is unnecessary for us to consider at this time.
III.
The parties agree that the standard framework for a stay pending appeal governs Citizens’ application for a stay pending resolution of its mandamus petition. We therefore considered:
- whether Citizens was sufficiently likely to obtain mandamus relief;
- whether Citizens would suffer irreparable injury absent a stay;
- whether a stay would substantially injure Plaintiffs; and
- where the public interest lies.
first two factors of th[is] traditional standard are the most critical.” Id. Here, both of those factors supported a stay, and the third factor did as well. The fourth did not, at the time we entered our order, impact our weighing process. Because the balance of the factors preponderated strongly in favor of relief, we granted the stay.
1. Citizens Had a Sufficient Likelihood of Success on its Mandamus Petition, and Mandamus Is the Only Relief Available
To prevail on the merits of a mandamus petition, the petitioner must show that the district court clearly and indisputably erred, and that no other adequate alternative remedy exists.8 See In re Howmedica Osteonics Corp., 867 F.3d 390, 401 (3d Cir. 2017). Although “the remedy of mandamus is a drastic one, to be invoked only in extraordinary situations,” Allied Chem. Corp. v. Daiflon, Inc., 449 U.S. 33, 34 (1980), the bar is set lower when we consider whether to grant a stay pending resolution of a petition. The stay applicant need show only “a reasonable chance, or probability, of winning” mandamus relief in
order to prevail. In re Revel AC, Inc., 802 F.3d 558, 568 (3d Cir. 2015). In other words, we may grant a stay even if the ultimate likelihood of granting the mandamus petition is below 50 percent, so long as it is “significantly better than negligible.” Id. at 571.
Here, for the reasons we will describe below, Citizens cleared that hurdle. In this hybrid wage-and-hour suit, the District Court refused to meaningfully engage with Citizens’ objections to the Court‘s proceeding with trial in the FLSA opt-in collective action without first considering whether to certify the related state-law Rule 23 opt-out class action—even though the planned trial would resolve a fact issue that is central to all the claims, and even though our Court had remanded the case specifically to require the District Court to conduct a rigorous analysis on Rule 23 class certification. Furthermore, mandamus is the only relief available to Citizens that can resolve that error.
A. Likelihood of Success
Even if this case had been filed as a Rule 23(b)(3) opt-out class action without the presence of an FLSA collective action, we would view a trial-before-certification approach with the utmost skepticism. 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. Yet the District Court‘s plan to try the main factual question in the FLSA collective action—that is, whether “Citizens Bank had a policy or practice that caused [MLOs] to not report all of the hours they worked,” JA 255—would inevitably encroach on the merits of a Rule 23 class action that, thus far, is without a certified class. Such a course of action triggers all of the same weighty
We begin, of course, with the text of Rule 23 which obliges district courts to decide certification “[a]t an early practicable time after a person sues or is sued as a class representative.”
True enough, “practicable” means “feasible,” so a district court has discretion in its choice of timing.
Practicable, Oxford English Dictionary (3d ed. 2015). But the District Court‘s plan to conduct a full trial cannot satisfy any definition of “early.” The District Court‘s planned FLSA trial on whether “Citizens Bank had a policy or practice that caused [MLOs] to not report all of the hours they worked,” JA 255, would resolve many, if not all, of the factual issues pertaining to the Rule 23 class. Yet under the District Court‘s approach,[M]embers of the claimed class could in some situations await developments in the trial or even final judgment on the merits in order to determine whether participation would be favorable to their interests. If the evidence at the trial made their prospective position as actual class members appear weak, or if a judgment precluded the possibility of a favorable determination, such putative members of the class who chose not to intervene or join as parties would not be bound by the judgment.
Id. at 547. The “unfair” upshot allowed class members “to benefit from a favorable judgment without subjecting themselves to the binding effect of an unfavorable one.” Id.
To end the unfairness of what came to be known as “one-way intervention,”
In 2003, the language was altered to require certification “at an early practicable time.”
In the 1970s, the Supreme Court indicated a preference for early-in-the proceeding class certification in Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 178 (1974). Eisen concerned a plaintiff who wished to “obtain a determination on the merits of the claims advanced on behalf of the class without any assurance that a class action may be maintained.” Id. at 177–78. The Eisen court observed, with disapproval, that addressing the merits prior to certification “allow[s] a representative plaintiff to secure the benefits of a class action without first satisfying the requirements for it.” Id. at 177.10 And, in another case decided that same term, the Supreme Court succinctly reiterated: judges must decide certification questions early “to assure that members of the class [are] identified before trial on the merits and [] bound by all subsequent orders and judgments.” Am. Pipe & Constr. Co., 414 U.S. at 547.
Admittedly, the necessary “rigorous” certification analysis may “entail some overlap with the merits of the plaintiff‘s underlying claim.” Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 351 (2011); see also In re Hydrogen Peroxide, 552 F.3d at 316–18. But “[m]erits questions may be considered to the extent—[and] only to the extent—that they are relevant to determining whether the
Seven Courts of Appeals have gone further and held that, for
At all events, no Court of Appeals has approved foisting trial-before-certification on an unwilling
Failure to rule on class certification creates “an atmosphere of confusion.” Philip Morris, 214 F.3d at 134. And we think any confusion is compounded when what is scheduled for trial is a hybrid wage-and-hour case like this one.14
If the jury in the FLSA collective action trial had gone on to find that Citizens
If a
On the other side of the coin, a victory for Citizens in the FLSA collective action would bind only the 350 or so MLOs who opted into the FLSA collective action, not the 700 or so who chose not to participate. See Collins v. E.I. DuPont de Nemours & Co., 34 F.3d 172, 180 (3d Cir. 1994). Those roughly 700 remaining MLOs would be free to opt out of a (b)(3) class and pursue individual lawsuits. In other words, an FLSA trial victory could thwart Citizens’ hope for global peace via a class action, leave Citizens with a substantial amount of litigation remaining on its plate, and greatly increase Citizens’ litigation costs and potential liability exposure. As Citizens puts it, the planned FLSA trial before a class certification ruling “would arbitrarily deprive Citizens of the benefits of the class action device to which it is entitled under
All of this leads us to consider: if the practice of holding an FLSA trial before determining
Because we are addressing the reasons behind our grant of a stay motion, we need not definitively resolve the various difficulties that arise from the District Court‘s chosen approach, including whether its “order of battle” violates
B. Mandamus is the only available remedy
Given the reasonable probability that Citizens could successfully show that the District Court erred, mandamus was the only avenue with the remedial force to address the District Court‘s error. Citizens could not pursue an immediate appeal of the District Court‘s order scheduling the FLSA collective action trial because that order is not a final decision under
Waiting to review the issues presented in Citizens’ mandamus petition until the proceedings became final as to all causes of action and all parties for purposes of
2. Citizens Would Have Suffered Irreparable Injury Absent a Stay
Citizens petitioned for mandamus relief less than three weeks before the FLSA collective action trial was to begin. As already discussed, the trial would have irreparably injured Citizens by airing evidence pertaining to Citizens’ liability. So if we were to intervene at all, we had to do so before trial commenced. Yet we needed more than three weeks to consider the petition. A stay preserved the status quo and avoided the impending harm to Citizens.
3. A Stay Did Not Substantially Injure Plaintiffs
The stay did not substantially injure the MLOs. If they ultimately prevail and recover damages in the form of unpaid overtime, their damages either held constant during the stay period (for former employees) or kept growing (for current employees), and they may seek prejudgment interest as well. And if Plaintiffs are ultimately unsuccessful, the delay makes no difference at all. From a damages perspective, Plaintiffs emerge no worse off.
4. The Public Interest Did Not Weigh Against a Stay
The public interest did not weigh against a stay. If anything, because we have now had the opportunity to address the difficulties of prosecuting both an FLSA opt-in collective action and a
IV.
Having explained our decision to stay the case pending resolution of the mandamus petition, a stay is no longer necessary. Accordingly, we will dissolve the stay, dismiss Citizens’ mandamus petition in part as moot given the District Judge‘s withdrawal, and refer the matter to the Chief Judge of the Western District of Pennsylvania for reassignment.
Given the impending reassignment, we will deny the remainder of the petition as unnecessary at this time. We expect both parties to work with the newly assigned District Judge to resolve this case fairly and expeditiously, including by carefully considering the numerous procedural complexities of this hybrid action.