Orrick Submits Amicus Brief on Behalf of SIFMA Urging Fifth Circuit to Reject Two-Step FLSA Certification Procedure

Orrick, on behalf of its client, the Securities Industry and Financial Markets Association (“SIFMA”), recently filed an amicus brief in support of a petition for writ of mandamus filed by Wells Fargo in the Fifth Circuit Court of Appeals.  Wells Fargo requests vacatur of a federal district court’s order granting conditional certification of FLSA claims filed by home mortgage consultant plaintiffs seeking unpaid overtime. In its amicus brief, SIFMA argues that the court should reject the two-step certification standard applied by most district courts in FLSA actions and instead adopt a procedure that calls for meaningful certification review at the earliest feasible opportunity. 

Under the two-step FLSA certification standard, courts first determineusually based only on pleadings and pro forma affidavitswhether the action should be conditionally certified. Because a lenient standard and cursory review is applied, this first step typically results in conditional certification of a representative class. Upon conditional certification, court-assisted notice is sent inviting potential plaintiffs to join the action and the action proceeds forward as a representative action. The determination as to whether the action is, in fact, amenable to representative litigation is delayed until step two (decertification), which generally does not occur until full merits discovery is complete or nearly complete and the matter is ready for trial.

In its brief, SIFMA argues that the two-step certification procedure puts the “cart before the horse” because it permits the case to proceed as a collective action without first addressing the fundamental issue in representative litigationwhether the case can be resolved by means of common questions with common answers.

SIFMA’s brief goes on to describe the significant undesirable consequences that result from application of the two-step certification procedure. For example, because the first step analysis is so lenient, a single plaintiff can commence an action and obtain certification of nationwide FLSA claims on behalf of thousands of employees with only the thinnest of support, thereby exerting tremendous settlement pressure on defendant-employers. Additionally, because the conditional certification bar is so low, courts will waste significant time and resources adjudicating motions, holding conferences, and addressing other procedural issues in cases that will eventually be decertified.

SIFMA concludes by urging the court take the opportunity presented by the petition for mandamus to reject the flawed two-step FLSA certification process and instruct the district courts to determine whether collective action litigation can be resolved on a representative basis before facilitating the joinder of thousands of additional party plaintiffs.

SIFMA’s amicus brief can be found here.