John Ayers-Mann and Kerry Friedrichs
Seyfarth Synopsis: In a recent decision, the Third Circuit Court of Appeals rebuked a Pennsylvania district court’s skeletal analysis of plaintiffs’ class action claims. Particularly, the court took issue with the district court’s failure to define the classes with sufficient specificity and failure to undertake a rigorous analysis of Rule 23’s predominance and commonality requirements.
In a recent decision, the Third Circuit strongly affirmed the rigorous analysis that courts must apply when determining whether wage-hour claims should be certified.
In Reinig v. RBS Citizens, N.A., the Third Circuit Court of Appeals reviewed a Pennsylvania district court’s order certifying classes of Mortgage Loan Officers (“MLOs”) in a wage-hour lawsuit against their employer, Citizens Bank. The MLOs argued that, although Citizens maintained a policy which allowed employees to work overtime with pre-approval, Citizens perpetuated a firm-wide “policy to violate the policy” by encouraging MLOs to work overtime hours off the clock. Certifying numerous subclasses under state laws, the district court found that the plaintiffs had introduced sufficient evidence to support certification. Citizens took an interlocutory appeal, contending that the certified classes were insufficiently definite and that the plaintiffs had failed to meet the commonality and predominance elements of Rule 23.
The Third Circuit first examined the lower court’s determination that plaintiffs had provided a sufficiently discernible class. The court found that the lower court’s certification order, which granted the state law subclasses in a conclusory fashion, failed to provide any analysis of the scope of plaintiffs’ class definition. The Third Circuit found that this lack of specificity required it to “comb through and cross-reference” multiple documents in an effort to “cobble together the parameters defining the class and a complete list of the claims, issues and defenses to be treated on a class basis.” Accordingly, the court found these definitions inadequate and remanded the issue of the class definitions back to the district court.
The court next examined the district court’s treatment of Rule 23’s commonality and predominance requirements, and found that the district court relied on insufficient evidence to support its finding that these requirements were met. Specifically, the Third Circuit took issue with the district court’s reliance upon the report of a special master overseeing the case, as this report merely summarily referred to testimony of two dozen MLOs that supported plaintiffs’ theory of a uniform “policy to violate the policy ” without actually identifying the testimony that supported this theory. The Third Circuit further noted the fact that the district court undertook no analysis of whether Citizens had actual or constructive knowledge of the alleged policy, and provided no explanation as to how it reconciled its conclusion with testimony from some plaintiffs that they were not required to work overtime off the clock. Expressing serious doubt as to whether the plaintiffs’ proffered evidence could meet the commonality and predominance requirements of Rule 23, the court remanded the issue and implored the district court to more rigorously examine the record and reconsider its ruling.
The Third Circuit’s decision in Reinig safeguards two critical protections for employers facing class action claims. First, it affirms that plaintiffs and courts must define class claims with a level of specificity that permits employers to gauge the scope of class action liability. Second, the decision affirms the rigorous analysis district courts must undertake when evaluating commonality and predominance under Rule 23 — requirements that often are the strongest lines of defense for employers against far-reaching class definitions and claims.