Some forty years ago this author litigated a precedent setting case in the United States District Court in Newark, New Jersey and in the Third Circuit Court of Appeals in Philadelphia. Among numerous reported decisions in that case was one that guided federal courts across the nation concerning the standard for class certification in age discrimination collective actions. See Lusardi et al. v. Xerox Corp., 99 F.R.D. 89 (D.N.J. 1983); 747 F.2d 174 (3d Cir. 1984). Now, decades later, various federal circuit courts of appeal are rethinking what came to be known as the “Lusardi Two-Step.”
At the time, the Lusardi case was one of the largest age discrimination collective (class action) lawsuits, if not the largest, ever filed with over 1300 plaintiffs. The case involved various “voluntary” and involuntary reductions in force (“RIFs”) at Xerox that plaintiffs claimed had a disparate impact on older employees. Unlike class actions under Fed. R. Civ. P. 23, age discrimination collective actions employ the standard for class certification set forth in the Fair Labor Standards Act (“FLSA”) that requires only that a named plaintiff bring suit on his own behalf and on behalf of all other employees who are “similarly situated.”
In Lusardi, the District Court held that certification of an age discrimination class action should involve two steps, first “conditional certification” where a plaintiff must simply show that the proposed “opt-in” plaintiffs held similar job duties or were subjected to the same policies as the named plaintiff. If conditional certification is granted, notice is sent to other current or former allegedly similarly situated employees for them to decide whether to join (opt-in to) the case. The second step occurs after discovery and requires the Court to apply a more stringent standard. At that time, when defendant files a motion to decertify the conditional class, a court must decide whether the named plaintiff and the opt-in class are indeed “similarly situated.” If not, the named plaintiff may only bring the lawsuit on his own behalf and not on behalf of the opt-in plaintiffs. This decades-old-approach, dividing the class notice and the class certification processes into two steps (hence the name the “Lusardi Two-Step”), became the de regueur of federal courts across the United States.
Beginning a few years ago, courts started questioning the Lusardi Two Step as too lenient because it could result in conditionally certifying for class treatment claims that lack merit. In May 2023, the Sixth Circuit Court of Appeals in Clark v. A&L Home Care and Training Center, LLC, Nos. 22-3101/3102, WL 3559657 (6th Cir. May 19, 2023), held that employees needed to satisfy a more stringent standard before class notice is sent. In Clark, the Sixth Circuit held that a named plaintiff must show a “strong likelihood” that other employees are similarly situated to the named plaintiff before notice can be sent to potential class members. The Fifth Circuit Court of Appeals in Swales v. KLLM Transport Services, LLC, 985 F.3d 430 (5th Cir. 2021) held likewise, indicating that to determine whether plaintiffs met the “similarly situated” standard, district courts must review the factual record developed by the parties before class notice is sent. The Fourth Circuit had a split of authority concerning whether to apply the Lusardi Two-Step. See Thomas v. Maximus, Inc., 2022 U.S. Dist. LEXIS 84827 (E.D. Va. 2022) and Mathews v. USA Today Sports Media Group, LLC, Nos. 1:22-cv-1407 (E.D. Va. Apr. 14, 2023). Just last week, the Seventh Circuit indicated it will review the issue whether more than a “modest factual showing” must be made before conditional class certification is granted. Richards v. Eli-Lilly, __F.3d __ (7th Cir. 2024).
On the other hand, some courts still are in lock-step with Lusardi. On August 28, 2024, a California federal judge in Zeman v. Twitter, Inc., 23-cv-01786 (N.D. Cal. Aug. 28, 2024) conditionally certified a collective action on behalf of former Twitter workers age 50 and older who were fired after Elon Musk acquired Twitter, holding while this is not the stage to “weigh the evidence,” the Complaint showed “beyond mere speculation” that Twitter may have discriminated against older employees.
The recent trend, however, of rejecting the Lusardi Two-Step, frankly, under most circumstances, makes the most sense. It avoids the delay and expense caused by the notice process and issues that may ensue if the class is decertified, such as the statute of limitations and laches. Nothing in the FLSA requires such a two-step approach. Accordingly, there are good reasons why the certification of age discrimination collective actions should be treated the same as Rule 23 class actions that require certification motions to be made at a reasonably practicable time.