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Ninth Circuit Rejects Immediate Appeal From Denial of Motion For Notice in FLSA Collective Action

A District Court order denying a plaintiff's motion to issue notice of an FLSA collective action is not immediately appealable, according to a 9th Circuit opinion issued last week in McElmurry v. U.S. Bank National Association (9th Cir. 2007) __ F.3d __, an FLSA case filed in Oregon. Appellants twice asked the district court to approve notice to potential plaintiffs and to toll the statute of limitations pending the notice process. The district court denied both requests. The appeal was taken from the district court’s second order denying a request for notice and rejecting, as moot, a request to toll the statute of limitations. One of the court's bases for the decision was its finding that post-judgment appellate review provided an adequate remedy. We fail to see how.

The FLSA permits collective actions of "similarly situated” employees. 29 U.S.C. § 216(b). Unlike class actions under FRCP Rule 23, in a collective action, participants must affirmatively opt in: “no employee shall be a party plaintiff to any such action unless he gives his consent in writing to become such a party and such consent is filed in the Court in which such action is brought.” 29 U.S.C. §  216(b). More importantly, the statute of limitations is not automatically tolled by filing the action. Instead, unIess a court orders (which infrequently happens), or the parties stipulate (which happens even more infrequently), the statute of limitations continues to run for each individual until he or she files a written consent to participate in the litigation.

Because the statute of limitations on an FLSA claim continues to run until the employee files a written consent, it is important for potential participants to receive notice of the collective action so that they can decide whether or not to opt in. In a collective action, each participating members' claims do not relate back to when the complaint was filed. Most potential collective action members do not even know they have a claim until and unless they get a notice. Thus, as a practical matter, by the time any post-judgment appellate review is made, all the potential claimants aggrieved by the trial court's order (i.e, everyone who didn't already opt in) will have stale claims.

The appellants, of course, noticed this dilemma and brought it to the court's attention. The court was not persuaded.

The district court’s order denying Appellants’ motion for notice would not be “effectively unreviewable” if we do not exercise jurisdiction. An order is deemed effectively unreviewable only where “ ‘the legal and practical value of [the right at stake will] be destroyed if not vindicated before trial.’ ” Midland Asphalt Corp. v. United States, 489 U.S. 794, 799 (1989).

We cannot see that Appellants will forfeit the opportunity to raise their arguments on an appeal from a final judgment in this case. Appellants argue that the statute of limitations will continue to run, and that some employees may lose their opportunity to participate in a collective action if they wait until after an appeal from final judgment. Although employees who may be similarly situated but have not opted in to the action are not bound by its conclusion, and may pursue their actions individually, see Ballaris v. Wacker Siltronic Corp., 370 F.3d 901, 906 n.9 (9th Cir. 2004), we understand Appellants’ concern. However, these arguments have been made in the context of class action suits as well, and it is well established that there is no collateral order jurisdiction over a district court decision to certify or not to certify a class action under Rule 23. [citations] Although, as we have pointed out, there are differences between a collective action brought pursuant to § 216(b) and a class action brought under Rule 23, those differences are not relevant ..."

Thus, the appeal was dismissed for lack of jurisdiction, and the alternate petition for writ of mandamus was denied. The lesson for the defense: if you can defeat the motion for notice in an FLSA case, you just won damn near the whole case. The lesson for the plaintiffs: if you lose a motion for precertification notice, your only meaningful remedy is to renew your motion after gathering better evidence ("nothing in the district court orders would preclude the court from revisiting its decision during subsequent proceedings. See Comer, 454 F.3d at 548- 49; Baldridge, 404 F.3d at 931-32.")

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