Court Green Lights Immediate Appeal of Chipotle Collective Action Decertification Order

As noted in earlier postings, in March of this year, a federal judge in New York handed Chipotle Mexican Grill a significant victory, denying a request by salaried management apprentices alleging misclassification as exempt from overtime to certify claims for class action treatment under the laws of six states, as well as granting Chipotle’s motion to decertify an opt-in class of 516 apprentices under the Fair Labor Standards Act (“FLSA”).  The plaintiffs then sought—and in July 2017 the U.S. Court of Appeals for the Second Circuit granted—a discretionary interlocutory appeal of the ruling concerning the six state-law putative classes, allowing the plaintiffs to obtain immediate review of that decision under Rule 23(f) of the Federal Rules of Civil Procedure rather than waiting until after final judgment in the case to pursue an appeal as of right.

The plaintiffs also asked the district court for permission to appeal the order decertifying the FLSA collective action.  Under the pertinent statute, 28 U.S.C. § 1292(b), a district court may certify a non-final ruling for immediate appeal if the “order involves a controlling question of law as to which there is substantial ground for difference of opinion and ... an immediate appeal from the order may materially advance the ultimate termination of the litigation[.]”  The plaintiffs argued that “a conflict exists in this Circuit between Rule 23 standards for class certification and FLSA Section [16(b)] standards for certification of a collective action” and that the court’s rulings regarding the FLSA and the state-law classes reflect uncertainty regarding the differences, if any, between the class certification standard and the FLSA decertification standard.

On September 25, 2017, the district court granted the plaintiffs’ motion for an interlocutory appeal.  Although the court “disagrees with Plaintiffs’ argument that there is a ‘rift’ between” those standards, the court nevertheless concluded that the “Plaintiffs’ assertions do point to controlling questions of law which may have substantial grounds for a difference of opinion.”  (Order at 2.)  The court emphasized that “[t]he Second Circuit will review this Court’s Rule 23 class certification decision pursuant to Rule 23(f)” but that this review “would not likely encompass the portion of this Court’s decision decertifying the . . . collective action.”  (Id.)  Because “Plaintiffs are adamant that the two standards need elucidation and that this Court erred in applying the standards, it seems proper to grant Section 1292(b) relief in order for the Circuit to review the entire” ruling—i.e., both the FLSA and the state-law class aspects of the decision—and thereby “avoid the possibility of conflicting decisions on Plaintiffs’ class motions, promote judicial efficiency, and avoid piecemeal appellate litigation.”  (Id.)  The court also remarked that “the Second Circuit has recognized that class certification decisions have the potential to materially advance the ultimate termination of the litigation which the Second Circuit has held may warrant Section 1292(b) relief.”  (Id. at 3.)

Stepping back from the specific wording of the court’s decision, the ruling reflects a pragmatic approach to the matter: because the Second Circuit has already decided to take up the Rule 23 class certification issue in the case, there is no real harm in allowing the appellate court the opportunity to decide whether it also wants to address the FLSA decertification issue at the same time.  The district court’s decision certifying the matter for interlocutory appeal does not require the Second Circuit to hear the full case at this time; instead, it authorizes the plaintiffs to proceed with a petition for permission to that court to appeal the decertification order.

It remains to be seen to what extent this court and other courts will apply the actual verbiage of this decision even-handedly when employers seek review of orders granting class certification or conditionally certifying FLSA collective actions.  Will being “adamant” that the law needs “elucidation” and that the court "erred" features of nearly every employer-side request for interlocutory review—or the “potential” for class certification decisions “to materially advance the ultimate termination of the litigation” similarly lead to interlocutory review when employers make comparable requests?  Stay tuned for further developments.