A former employee of an Evansville-based transportation company who sued under the Fair Labor Standards Act will be allowed to move forward with her individual claims after the 7th Circuit Court of Appeals ruled she was entitled to do so. However, it declined to address the complexities of her failed collective action.
After two years of working for Professional Transportation Inc., a company that transports railroad crews to and from their jobs, Peggy Jo Smith decided to sue. She filed “individually and on behalf of similarly situated individuals,” arguing that her job was misclassified for purposes of the Fair Labor Standards Act and that she wasn’t being paid enough for overtime work.
The FLSA collective action requires group members affirmatively to opt into the collective action in order to participate. More than 100 current and former PTI employees consented to the group action.
But while Smith’s effort to serve as a named representative of a collective action under the FLSA chugged along smoothly for a time, the suit came to a halt when PTI pointed out that Smith did not submit an additional written consent form indicating her desire to join her own suit.
The U.S. District Court for the Southern District of Indiana found that to be a fatal flaw for the collective action and halted all forward movement until Smith filed her consent. But by the time the court made its ruling, both the FLSA’s two-year and the three-year statutes of limitations had run out. When the court then concluded that Smith’s complaint also failed to allege timely individual claims, it dismissed the case altogether.
Smith appealed the district court’s refusal to allow her individual action to move ahead, prompting the 7th Circuit Court of Appeals in a Friday decision to partially part ways with the Southern District Court on the issue.
It concluded that the district court erred by dismissing Smith’s individual claim along with her collective claims in the case of Peggy Jo Smith v. Professional Transportation and Ronald D. Romain, 20-2046.
“The question is whether section 216(b) authorizes ‘dual capacity’ suits, in which a plaintiff sues simultaneously as a group representative and as an individual. The answer is yes, for a number of reasons,” Circuit Judge Diane Wood wrote for the 7th Circuit.
First, it noted that the district court erred when it thought that the facts alleged in Smith’s second amended complaint related only to the collective action and not to her individual claims. Although the captions of the two substantive sections of her complaint were titled “Collective Action Allegations” and “National Collective Action Pursuant to the FLSA,” the 7th Circuit noted that the first paragraph of the complaint said that she was also proceeding in an individual capacity.
“We should be long past the point when the label attached to a group of allegations in a complaint displaces the content taken as a whole,” the 7th Circuit wrote.
It also found sufficient factual allegations related to her individual claims in the second amended complaint that should have “put PTI on notice that she intended to sue it both in an individual and a representative capacity.”
“The operative complaint and later developments in the case indicate that PTI was under no illusions about Smith’s intentions to bring individual claims,” the 7th Circuit wrote. “Regardless of what happens to the collective action, she is entitled to proceed individually.”
It therefore vacated in part the district court’s summary judgment order and remanded with instructions to permit Smith’s individual claims to proceed.
Acknowledging its decision not to address the complex collective aspect of Smith’s case as to whether “a named plaintiff, or plaintiffs, must file a separate written consent form in addition to indicating their desire to proceed collectively in the pleadings… ,” the 7th Circuit concluded that the state of the law on the issue is “far too unsettled” for it to decide on the issue.
It took note of “the somewhat awkward language” of 29 U.S.C. § 256(a) in comparison to Section 256(b). The former establishes a rule for specifically named plaintiffs whose written consent to become a party plaintiff is filed with the complaint, while latter addresses the unnamed members of the group, it observed.
“We leave for another day the question whether the statute requires that written consent to be in a separate document, or if instead it is enough if the complaint itself clearly indicates the intent of the plaintiff to proceed collectively,” it wrote, noting that its case law is somewhat inconsistent on whether a separate form must be filed.
“Collective actions under the FLSA are relatively common, and we are confident that this issue will return to us in a fully briefed form at some point,” it concluded.