Seyfarth Synopsis: Last month, the Third Circuit and New Jersey Appellate Division dismissed two separate cases filed by plaintiffs trying to circumvent unfavorable holdings in putative class and collective actions.

Last month, the Third Circuit in Halle v. West Penn Allegheny Health Sys., and the New Jersey Appellate Division in Mungiello v. Federal Express Corporation issued employer favorable decisions, rejecting plaintiffs arguments to circumvent earlier unfavorable rulings in collective actions.

Halle v. West Penn Allegheny Health System, Inc., et al.

Halle began with two collective actions in Western Pennsylvania, Camesi v. Univ. of Pitt. Med. Ctr. and Koznyetsov v. West Penn Allegheny Health Sys., Inc., in which the court granted conditional certification for hourly employees who alleged that the hospitals had violated the Fair Labor Standards Act (“FLSA”) by failing to properly pay employees for work performed during scheduled meal breaks. Following discovery, plaintiffs moved for second-stage certification and defendants cross-moved to decertify. In both cases, the court granted the employers’ motion to decertify the collective action holding that the plaintiffs were not similarly situated as there were too many variations between the employees’ job duties, supervisors, and the manner in which they were paid. Thereafter, the named plaintiffs in both cases voluntarily dismissed their claims with prejudice in a failed attempt to seek immediate appellate review of the decertification orders.

The Third Circuit determined that it did not have jurisdiction to even hear the appeal in Camesi and Koznyetsov, because a decertification order is interlocutory, and not a final order. The court held that the named plaintiffs should have either proceeded until a final decision on the merits, or sought leave to file an interlocutory appeal. Further, by voluntarily dismissing their claims with prejudice, the named plaintiffs mooted their claims in both cases, and thus, extinguished their interest in the collective actions.

Subsequent to the Third Circuit’s decision in Camesi and Koznyetsov, the same law firm that represented the Camesi/Kuznyetsov plaintiffs filed two new collective actions against the same defendants, raising the same issues, Belle v. Univ of Pittsburgh Med. Ctr. and Halle v. West Penn Allegheny Health Sys. In both cases, prior to the conditional certification of the collective action, the district court granted the defendants’ motion to dismiss based on issue preclusion.

In Halle, one of the named plaintiffs accepted an offer of judgment, and three other named plaintiff’s thereafter appealed. The Third Circuit once again found that it lacked jurisdiction to consider plaintiffs’ appeal, even though the appeal arose from a motion to dismiss, rather than a motion to decertify. The court reasoned that the motion to dismiss the collective action was functionally equivalent to the decertification motion, and accordingly, not a final order. In fact, the court held that the appellants were no longer “parties” to the case after the court dismissed them without prejudice following the named plaintiff’s acceptance of the offer of judgment.

Mungiello v. Federal Express Corporation

The three plaintiffs in Mungiello were all former FedEx couriers in New Jersey. In February 2006, two of the plaintiffs opted in to a collective action pending in California alleging violations of the federal Age Discrimination in Employment Act. The third plaintiff joined that lawsuit in May 2007. The California federal court denied plaintiffs’ motion for conditional certification on October 19, 2007, holding that the plaintiffs were not “similarly situated,” due to inherent differences amongst the plaintiffs’ ages and lengths of employment, which weighed against collective treatment as a class. After a lengthy period of motion practice and procedural hurdles, including an unsuccessful appeal in the Ninth Circuit, and a separate collective action filed with the same plaintiffs, the two putative collective actions were eventually dismissed.

The three plaintiffs then filed a similar lawsuit in the Superior Court of New Jersey, in October 2012, this time under the state analog, Law Against Discrimination. The trial court ultimately granted Fed Ex’s summary judgment motion in February 2015, and dismissed all three plaintiff’s claims because they were time barred. The Plaintiffs had previously received the benefit of tolling due because they had opted into the California actions. However, the court found that the tolling period actually ended for certain of the plaintiffs back in October 2007, and others in December 2009 when the California federal court denied certification on the same claims.

Following New Jersey precedent, Judge Powers ruled that tolling ended on the day conditional certification was initially denied in California. Thus, the statute of limitations began to run again from that period. Importantly, plaintiffs’ choice to opt into the second collective action did not continue to toll their claims since the second action was substantially similar as in the first action. The plaintiffs appealed from the grant of summary judgment dismissing their complaints on statute of limitations grounds.

The Appellate Division upheld the trial court’s ruling, holding that the three Plaintiffs were barred from bringing their age discrimination claims against Fed Ex because they did not timely file their claims within the two-year statute of limitations period. The panel expressly rejected plaintiffs’ arguments that the statute of limitations period began to run only when their individual claims were dismissed without prejudice in the second class action, and instead affirmed that tolling ended when the question of collective certification was first decided, and rejected. The Court also denied Plaintiffs equitable tolling, finding that there was no evidence that they were prevented from asserting their rights by defendant.

Outlook

These cases give employers another weapon to defend collective actions, and send the message that plaintiffs should be mindful of filing deadlines and jurisdictional issues. However, employers should not understate how serious and damaging a potential collective or class action may be. Aside from the substantial costs involved in defending such litigation, even where a court decertifies a class, the named plaintiffs may still proceed with their individual claims.