Third Circuit Adopts a Standard for Reevaluating an Initial Denial of Class Certifications
District courts within the Third Circuit have historically applied different standards when analyzing a renewed motion for class certification. The Third Circuit used the recently issued Hargrove v. Sleepy's LLC1 as an opportunity to define the standard of evaluation that will be used in that Circuit. The court ruled that when an initial motion for class certification is denied without prejudice, and a renewed motion for class certification is filed, it should be analyzed the same way as the initial motion, against the perquisites for class certification in the Federal Rule of Civil Procedure Rule 23 (F.R.C.P. Rule 23”).2
In this case, a putative class of delivery drivers for Sleepy’s LLC (“Sleepy’s”) sued their employer in a New Jersey federal court, alleging that Sleepy’s misclassified them as independent contractors rather than employees, thus denying them benefits under state and federal leave, retirement, and wage and hour laws. The district court denied without prejudice the named plaintiff employees’ initial motion for class certification. The court considered the initial class inadequate because it was difficult to ascertain the number of drivers impacted and their damages, based on the records and data available. The employees thus proposed a new, limited class in an amended complaint and then sought certification of that class. The district court construed the employees’ new motion as one for reconsideration of its prior ruling denying class certification. Reconsideration of class certification requires satisfaction of not only the prerequisites to certify a class under F.R.C.P. Rule 23 but also a showing that there was an intervening change in the controlling law, new evidence has become available, or a need to correct a clear error of law of fact or to prevent manifest injustice. The district court ruled the employees were unable to meet the requirements for reconsideration and deemed the new, limited class unascertainable due to the paucity and inconsistency of Sleepy’s records, and declined to certify the newly proposed class.
On appeal, the Third Circuit reversed and remanded the case to the district court for two reasons:
- A renewed motion for class certification is to be treated as an initial motion for certification under Rule 23, and
- An employer’s poor recordkeeping cannot be used to determine whether the putative class can adequately identify class members or assess damages.
The Third Circuit explained that when class certification is initially denied, without prejudice, prior to a final judgment being rendered in the case, any alteration or amendment to the class should solely be reviewed based on the requirements of Rule 23. Reconsideration of a class, however, occurs after a class has already been certified, and requires contemplation of Rule 23, plus the additional facts defined above.
The Third Circuit also noted that the district court erred by misapplying the case law on ascertainability. A “reliable administratively feasible mechanism”3 is all that is required to meet the ascertainability prong of Rule 23. In determining that the new, limited class was unascertainable based on Sleepy’s inadequate personnel records, the district court “was too exacting and essentially, demanded that the class members be identified at the certification stage”.4 All that is required at the certification stage is that members may be identified based on the mechanism provided, not that they are identified. Furthermore, the Third Circuit stated, “that where an employer’s lack of records makes it more difficult to ascertain members of an otherwise objectively identifiable class, the employees who make up that class will not be made to bear the cost of the employer’s faulty recordkeeping”.5 Employees can meet their burden of proof by producing enough evidence for a reasonable inference to be made about the amount and extent of work performed without compensation.
- Plaintiffs seeking class certification may have multiple bites at the apple and may attempt to certify one or more iterations of a putative class until a final judgment is rendered in the case.
- Employers should implement a strict recordkeeping policy so that all policies regarding pay and overtime, and payroll payments can be produced to demonstrate that employees were properly compensated.
1. Hargrove v. Sleepy's LLC, No. 19-2809, 2020 WL 5405596 (3d Cir. Sept. 9, 2020).
2. Fed. R. Civ. P 23.
3. Hargrove, No. 19-2809, 2020 WL 5405596, at *10.
4. Id. at *10.
5. Id. at *13.
This document provides a general summary and is for information/educational purposes only. It is not intended to be comprehensive, nor does it constitute legal advice. Specific legal advice should always be sought before taking or refraining from taking any action.