Yesterday the Seventh Circuit Court of Appeals issued its decision in Richards v. Eli Lilly & Co., where it analyzed the standard a plaintiff must satisfy for notice to be issued to putative opt-in plaintiffs in a Fair Labor Standards Act collective action. Up until the last few years, most courts considering the propriety of collective action notice applied the lenient two-step standard set forth in Lusardi v. Xerox Corp., 118 F.R.D. 351, 361 (D.N.J. 1987), where at the outset a plaintiff had to make a “modest factual showing” that the named plaintiff and putative opt-in plaintiffs were victims of a common policy or plan in violation of the FLSA. Once the “modest factual showing” was made, notice would be sent out. This lenient standard was recently adopted by the Ninth Circuit in Harrington v. Cracker Barrell Old Country Store, Inc. But in the last few years the Fifth Circuit in Swales v. KLLM Transp. Servs., L.L.C. and the Sixth Circuit in Clark v. A&L Homecare & Training Ctr., LLC have rejected the Lusardi standard, and each adopted their own version of a heightened standard that considers an evidentiary record before sending notice to putative opt-in plaintiffs.

In Richards v. Eli Lilly & Co., Richards argued that the Seventh Circuit should adopt the Lusardi standard, while Eli Lilly argued that the Court should adopt either the Fifth or Sixth Circuit’s version of a heightened standard. The Seventh Circuit rejected each party’s invitation and instead adopted its own standard. Under the Seventh Circuit’s standard, in order for notice to be sent out a plaintiff must make a showing that there is a “material factual dispute” about whether the proposed collective is similarly situated, which will require a plaintiff to produce at least some evidence that plaintiff and members of the proposed collective suffered from a common policy that violates the FLSA. The defendant is also permitted to rebut that that evidence with its own evidence. And once a court determines there is a material factual dispute regarding similarity, the court can either

1. Issue notice to putative opt-in plaintiffs if the court believes evidence necessary to resolve that dispute is in the hands of the putative opt-in plaintiffs or
2. If the court believes the similarity dispute can be resolved by a preponderance of the evidence before notice, it can authorize limited discovery to assist in making this determination.

The Seventh Circuit’s standard falls somewhere in the middle of the lenient Lusardi standard recently adopted by the Ninth Circuit and the different heightened standards adopted by the Fifth and Sixth Circuits. The circuit split has deepened on this issue given there are now four different collective action notice standards throughout the Circuit Courts of Appeal, making this an issue that is prime for guidance from the U.S. Supreme Court. As the Seventh Circuit aptly stated in its opinion “[c]onsensus as to the proper standard for notice remains elusive.”

For more information, please contact Chip Andrewscavage, Andy Butcher, Jim Eckhart, or Adam Steel.