Peggy Jo Smith v. Professional Transportation

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In the

United States Court of Appeals For the Seventh Circuit ____________________

No. 20-2046 PEGGY JO SMITH, individually and on behalf of similarly situated individuals, Plaintiff-Appellant,

PROFESSIONAL TRANSPORTATION, INC., and RONALD D. ROMAIN, Defendants-Appellees. ____________________ Appeal from United States District Court for the Southern District of Indiana, Evansville Division. No. 3:13-cv-00221-RLY-MPB — Richard L. Young, Judge. ____________________

ARGUED DECEMBER 9, 2020 — DECIDED JULY 16, 2021 ____________________

Before WOOD, BRENNAN, and ST. EVE, Circuit Judges. WOOD, Circuit Judge. Between November 2011 and August 2013, Peggy Jo Smith worked for Professional Transportation Inc. (PTI), a company that transports railroad crews to and from their places of work. Believing that her position was mis- classiﬁed for purposes of the Fair Labor Standards Act (“the

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Act”) and that she was not receiving proper overtime wages, she ﬁled this action “individually and on behalf of similarly situated individuals” on December 26, 2013. The Act permits both individual actions and collective proceedings. See 29 U.S.C. § 216(b). Unlike the better-known class action under Federal Rule of Civil Procedure 23(b)(3), however, which in- cludes everyone in the class who does not opt out, the FLSA collective action requires group members aﬃrmatively to opt into the collective action in order to participate. At ﬁrst, it seemed that Smith’s eﬀort to serve as a named representative of a collective action under the Act was pro- ceeding well. Her initial ﬁling was well within the two years that the Act provides for the commencement of litigation. See 29 U.S.C. § 255(a). (Indeed, the Act has a three-year limitation period for allegations of willful conduct. Id.) The parties ﬁled a joint case management plan on March 25, 2014, three months after the case was ﬁled, and the district court promptly approved it. Docs. 15, 16. Part IV of that plan ad- dressed “class certiﬁcation matters.” And the district court’s docket sheet shows numerous putative group members con- senting to opt into the litigation.¹ The case went oﬀ the rails, however, when PTI pointed out that Smith herself had not ﬁled anything in addition to her

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complaint indicating that she herself wished to participate in the group action. Relying on our decision in Harkins v. River- boat Services, Inc., 385 F.3d 1099 (7th Cir. 2004), the district court deemed this a fatal ﬂaw for the collective action. It held that Smith’s group action could not “commence” until such a consent was ﬁled. 29 U.S.C. § 256. Moreover, by the time the court reached this conclusion, both the two-year and the three-year statutes of limitations had run. The court then con- cluded that Smith’s complaint also failed to allege timely in- dividual claims, and on that basis it dismissed the case in its entirety. Aside from some stray references to the underlying puta- tive collective action, Smith’s appeal contests only the district court’s refusal to allow her individual action to move ahead. We thus do not have before us the diﬃcult question whether every member of a collective action, including the named plaintiﬀ(s), must ﬁle a separate document entitled a Consent, or if it is enough for the named plaintiﬀ(s) to indicate in the complaint that they aﬃrmatively wish to proceed in that ca- pacity. We conclude, however, that the court erred by refusing to allow Smith to proceed on her individual claims, and so we vacate that part of its judgment and remand for further pro- ceedings. I PTI is an Indiana-based corporation that provides ground transportation to the people who service the nation’s rail- roads. By providing 24-hour shuttles and drivers, PTI helps railroad crews and train workers get to their destinations and back home after their shifts’ end. Peggy Jo Smith began her career there as a driver. Two years later, she was promoted to an administrative role. But a few months into this new

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position, Smith began to suspect that PTI was not paying her what she was due. Unable to secure what she perceived to be her proper wages—particularly her overtime wages—she re- signed on August 20, 2013. On December 26, 2013, Smith ﬁled this lawsuit. The Fair Labor Standards Act authorizes a worker to sue a noncompliant employer on “behalf of [her]self or themselves and other employees similarly situated.” 29 U.S.C § 216(b). Tracking this authorization, Smith stated in the opening par- agraph of her second amended complaint that her suit was brought by “plaintiﬀ, Peggy Jo Smith, individually and on be- half of similarly situated opt-in persons who are current or former [PTI] employees.” Doc. 87 (emphasis added). In contrast to the more familiar mechanisms for class ac- tion contained in Federal Rule of Civil Procedure 23, collective actions under the Act require putative group members aﬃrm- atively to opt into the action by giving their “consent in writ- ing to become such a party.” 29 U.S.C. § 216(b). “Such con- sent” must be “ﬁled in the court in which such action is brought.” Id. In addition to evincing consent to become a party to a collective action, the ﬁling itself “commences” the action for statute of limitations purposes: In determining when an action is commenced for the purposes of section 255 of this title [i.e., the statute of limitations], an action commenced on or after May 14, 1947 under the Fair Labor Standards Act of 1938, as amended … shall be considered to be commenced on the date when the complaint is ﬁled; except that in the case of a collective or class action instituted under the Fair Labor Standards Act of 1938, as amended …, it

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shall be considered to be commenced in the case of any individual claimant— (a) on the date when the complaint is ﬁled, if he is speciﬁcally named as a party plaintiﬀ in the complaint and his written consent to become a party plaintiﬀ is ﬁled on such date in the court in which the action is brought; or (b) if such written consent was not so ﬁled or if his name did not so appear—on the subsequent date on which such written consent is ﬁled in the court in which the action was commenced. 29 U.S.C. § 256 (emphasis added). The Act has a two- or three- year statute of limitations, 29 U.S.C. § 255(a), which means that, if the written consent requirement applies, plaintiﬀs seeking to be represented in the collective action need to ﬁle the written consent within that time. Over one hundred current and former PTI employees opted into Smith’s collective action by ﬁling timely written consent forms. But Smith herself, having already ﬁled her complaint, did not submit an additional written consent form indicating her desire to join her own suit. As we indicated, the district court regarded this as the kiss of death for both her collective and her individual actions, and it dismissed the case, paving the way for this appeal. II Before turning to Smith’s individual claim, we think it prudent to say a few words about our decision not to address the collective aspect of her case. The question whether a named plaintiﬀ, or plaintiﬀs, must ﬁle a separate written con- sent form in addition to indicating their desire to proceed

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collectively in the pleadings turns out to be a complex one. Some things, however, are clear. Congress chose the opt-in format for FLSA collective actions because it wished to “pre- vent the ﬁling of claims on behalf of a large group of unnamed and nonparticipating plaintiﬀs.” Anderson v. Montgomery Ward & Co., Inc., 852 F.2d 1008, 1016 (7th Cir. 1988). The writ- ten consent forms assure the court that the signers “want to have their rights adjudicated in [a collective] proceeding or be represented by counsel chosen by other plaintiﬀs.” Harkins v. Riverboat Servs., Inc., 385 F.3d 1099, 1101 (7th Cir. 2004). A ﬁled written consent is “important” because it protects plaintiﬀs from binding judgments obtained by counsel whom they may not fully trust. Id. The named representative, however, diﬀers in certain ways from the other members of the group. Note, for exam- ple, the somewhat awkward language of section 256(a) of the statute, reproduced above, and compare it to the language of section 256(b). Section 256(a) establishes a rule for speciﬁcally named plaintiﬀs whose written consent to become a party plaintiﬀ is ﬁled with the complaint, while subpart (b) ad- dresses the unnamed members of the group. We leave for an- other day the question whether the statute requires that writ- ten 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. Complaints, after all, are either signed by the plaintiﬀ’s attorney or personally, if the litigant is unrepresented. See FED. R. CIV. P. 11(a). It is impos- sible for a named plaintiﬀ to be surprised with an unwanted collective action, and she herself selected her lawyer. But the language of section 256(a), which admittedly ad- dresses not the processing of a collective action, but instead

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the statute of limitations, can be read otherwise. Our caselaw is somewhat inconsistent on the question whether a separate form must be ﬁled. We have held that in a representative ac- tion brought under the Age Discrimination in Employment Act—a statute that follows the FLSA opt-in model, 29 U.S.C. § 626(b)—the ﬁling of a “routine written consent” is not nec- essary when the named plaintiﬀs “hired a lawyer to ﬁle a complaint on their behalf and had thus clearly indicated their consent to suit.” Anderson, 852 F.2d at 1018–19 (cleaned up). On the other hand, in Harkins we did not follow Anderson’s approach to written consents. It is diﬃcult to reconcile these two cases, even though nothing in Harkins indicates that the panel invoked Seventh Circuit Rule 40(e) to overrule or mod- ify Anderson. Our sister circuits also appear to be split on this issue. The Eighth Circuit has followed the Harkins approach and has thus required even the named plaintiﬀ to ﬁle a separate con- sent form, in order to be entitled to proceed as a party in the collective action. Gomez v. Tyson Foods, Inc., 799 F.3d 1192, 1194 (8th Cir. 2015). Other circuits have apparently taken a diﬀerent path, although to be fair, the question has not always been squarely presented and thus the analysis has been some- what thin. That said, in decisions from the Fourth, Fifth, Ninth, and Eleventh Circuits, named plaintiﬀs were not re- quired to ﬁle a separate written consent. See Mickles v. Country Club Inc., 887 F.3d 1270, 1276 (11th Cir. 2018) (stating that named plaintiﬀs need only “ﬁle [a complaint] on behalf of herself and ‘other “similarly situated” employees’” to become a proper plaintiﬀ, whereas only ‘the opt-in employee’ ‘must give’ her written consent to become a party to the action”); Simmons v. United Mortg. & Loan Inv., LLC, 634 F.3d 754, 758 (4th Cir. 2011) (“[I]n a collective action under the FLSA, a

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named plaintiﬀ represents only himself until a similarly-situ- ated employee opts in as a ‘party plaintiﬀ’ by giving ‘his con- sent in writing.’”); Sandoz v. Cingular Wireless LLC, 553 F.3d 913, 916–17 (5th Cir. 2008) (“[I]n a FLSA collective action, the statute of limitations for a named plaintiﬀ runs from the date that the plaintiﬀ ﬁles the complaint, while the limitations pe- riod for an opt-in plaintiﬀ runs from the opt-in date.”); see also Partlow v. Jewish Orphans' Home of S. Cal., Inc., 645 F.2d 757, 758 (9th Cir. 1981) (“Under the FLSA, a member of the class who is not individually named in the complaint is not a party to the lawsuit unless he aﬃrmatively ‘opts in’ by ﬁling a written consent with the court.”); Kinney Shoe Corp. v. Vorhes, 564 F.2d 859, 862 (9th Cir. 1977) (same). The state of the law on this issue is thus far too unsettled for us to reach out and decide an issue that the appellant her- self has barely briefed. 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. III We turn, then, to the heart of the present case: whether the district court erred by dismissing Smith’s individual claim along with her collective claims. The question is whether sec- tion 216(b) authorizes “dual capacity” suits, in which a plain- tiﬀ sues simultaneously as a group representative and as an individual. The answer is yes, for a number of reasons. The Federal Rules of Civil Procedure permit a party to “join, as independent or alternative claims, as many claims as it has against an opposing party.” FED. R. CIV. P. 18(a). It is the federal pleading rules—not section 216(b)—that determine

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whether multiple claims under the Fair Labor Standards Act may be joined together. To determine whether Smith has stated individual claims in her complaint against PTI, we must conduct a de novo re- view to determine whether she has included enough facts to put PTI on notice of her individual claims. See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). In contrast, when reviewing a deci- sion rendered on summary judgement, we need not limit our- selves to the pleadings. We may look at the full record that was developed on summary judgment, taking it in the light most favorable to Smith, to see if a trier of fact could rule in her favor. Moreover, to the extent that materials that were added to the record later show that PTI was aware of Smith’s intention to pursue her individual claims, we also may rely on those materials. The district court thought that the facts alleged in Smith’s second amended complaint related only to the collective ac- tion and not to her individual claims. This was error. While it is true that Smith captioned the two substantive sections of her complaint “Collective Action Allegations” and “National Collective Action Pursuant to the FLSA,” the very ﬁrst para- graph 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 com- plaint displaces the content taken as a whole. Read in the light most favorable to Smith, we conclude that the second amended complaint contained suﬃcient fac- tual allegations related to her individual claims to put PTI on notice that she intended to sue it both in an individual and a representative capacity. She explicitly stated as much in the

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caption of both her original complaint and in her second amended complaint, which was the operative pleading. Paragraphs 21 through 33 of Smith’s second amended complaint further demonstrate the district court’s error. There the complaint describes with speciﬁcity Smith’s role at PTI, her duties, and her pay and time allocations. Several of these allegations are unique to Smith and are not incorporated into the parts of the complaint that refer to the group. For example, Paragraph 25 alleges that Smith “was en- couraged to make over-the-road trips to supplement” any shortfall in her wages but was “forbidden from working as a driver so that she would be working over 40 hours in any week.” Paragraph 29 alleges that Smith was “paid $375 per week on a salary basis, for the performance of executive or managerial duties, regardless of the number of hours she was actually required to work to accomplish her duties.” Para- graph 33 explains how, after PTI began requiring more exten- sive time logging, Smith “was told not to submit claims for overtime, as that was what caused her predecessor to be ter- minated [sic], and that she would not be paid for such over- time.” And in the complaint’s prayer for relief, it is “plaintiﬀ Peggy Jo Smith, and all other similarly situated [employees]” that request a favorable judgment (emphasis added). The sec- ond amended complaint suﬃced to put PTI on notice that Smith was, among other things, pursuing her personal claim against the company. But there’s more. On August 14, 2014, defendant’s counsel deposed Smith and obtained the following clariﬁcation:

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Q: At the top of Exhibit 1, Ms. Smith, on the very ﬁrst page, on the top left, it says Peggy Jo Smith, in capital letters. Do you see that? A: Yes. Q: It says individually. What do you under- stand that means? That you’re individually su- ing the defendants? A: Yes. Q: And then it says, and Peggy Jo Smith on be- half of similarly situated individuals. Do you see that? A: Yes. Dkt. 210:6 at 18. Then a few years later, when moving to de- certify the class, defendant’s counsel implored the district court to “grant PTI’s motion to decertify this collective action, dismiss the Opt Ins without prejudice, and allow Smith’s claims to proceed individually.” Dkt. 217 (Jan. 20, 2017). Nothing more need be said. The operative complaint and later developments in the case indicate that PTI was under no illusions about Smith’s intentions to bring individual claims. Regardless of what happens to the collective action, she is en- titled to proceed individually. IV We VACATE the district court’s summary judgment order in part and REMAND with instructions to permit Smith’s indi- vidual claims to proceed. Each side is to bear its own costs on appeal.

Footnotes

[1] Some of the docket entries represent one person’s act of opting in, while others represent multiple people. The number of people is indicated in parentheses. See Docs. 5 (1), 11 (1), 12 (1), 17 (1), 18 (1), 19 (1), 36 (1), 37 (1), 38 (1), 39 (1), 40 (1), 41 (1), 53 (1), 75 (1), 93 (2), 94 (4), 96 (2), 99 (6), 101 (8), 103 (9), 106 (3), 108 (2), 110 (1), 112 (12), 114 (5), 116 (2), 118 (3), 120 (3), 122 (2), 124 (1), 128 (4), 130 (1), 132 (5), 134 (3), 136 (7), 138 (6), 140 (6), 142 (2), 144 (3), 146 (1), 148 (1). This was a healthy rate of opt-ins: 118 people in addition to Smith herself, whose status we discuss below.