ALEX REINIG; KEN GRITZ; BOB SODA; MARY LOU GRAMESKY; PETER WILDER SMITH; WILLIAM KINSELLA; DANIEL KOLENDA; VALERIE DAL PINO; AHMAD NAJI; ROBERT PEDERSON; TERESA FRAGALE; DAVID HOWARD; DANIEL JENKINS; MARK ROSS
RBS CITIZENS, N.A., Appellant
July 19, 2018
Appeal from the United States District Court for the Western
District of Pennsylvania District Judge: Honorable Arthur J.
Schwab (D.C. Civil No. 2-15-cv-01541)
Watterson [ARGUED] Robert J. Tyler, III Gretchen W. Root Reed
Smith Thomas E. Hill Christina Tellado Holland & Knight
Counsel for Appellant
S. Boyette [ARGUED] Daniel A. Horowitz Justin L. Swidler
Swartz Swidler Robert D. Soloff Soloff Law Counsel for
Before: McKEE, VANASKIE, and RESTREPO, Circuit Judges
VANASKIE, CIRCUIT JUDGE.
interlocutory appeal authorized by Rule 23(f) of the Federal
Rules of Civil Procedure presents us with two significant
questions. First, did the District Court err in certifying a
class of Citizens Bank (N.A.) Mortgage Loan Officers from ten
different states who bring claims alleging that they were
unlawfully denied overtime pay? And second, may we exercise
pendent appellate jurisdiction over the District Court's
order certifying a collective action under § 216(b) of
the Fair Labor Standards Act ("FLSA"), 29 U.S.C.
§ 216(b), an otherwise non-appealable order? We hold
that the District Court's class certification decision
cannot stand and that we may not consider the merits of the
decision to certify a collective action under the FLSA.
November 2012 and April 2017, Plaintiffs, working as Mortgage
Loan Officers (MLOs) at Citizens, were responsible for
bringing in business by generating customer leads, completing
loan applications, and building a book of business of
referrals for new mortgage lending opportunities. To
facilitate fulfillment of their work responsibilities,
Citizens afforded MLOs considerable flexibility to determine
their own working hours and where to perform their work.
paid MLOs in three ways. First, MLOs received a base salary
of $11.50 an hour. Second, some MLOs, depending on their
eligibility, earned a monthly commission based on the number
of loan products sold in a given month. Third, and most
relevant to this appeal, MLOs were entitled to overtime pay
by virtue of their "non-exempt" status under
federal and state wage-and-hour laws, including the FLSA. As
non-exempt employees, MLOs were entitled to 1.5 times their
base wage of $11.50/hour ($17.25/hour) for each hour worked
in excess of forty during a given workweek. See 29
C.F.R. § 778.107.
paper, the process for requesting overtime payments worked as
follows: MLOs recorded their hours in a computerized
timekeeping application. A typical work day included four
separate entries: "the morning clock-in; a clock-out and
clock-in for the lunch period; and the evening
clock-out." (App. 106). MLOs were required to submit
their total hours worked in a particular week by Sunday at
midnight. A Producing Sales Manager-who oversaw the work of
eight individual MLOs-was responsible for ensuring the
accuracy and completeness of the timesheet information. Under
this "Time Sheet Policy," the Producing Sales
Manager was required to approve any hours the MLOs submitted
by Monday at noon, i.e., the day after MLOs were
required to submit their hours.
the Time Sheet Policy obligated MLOs to report all hours
worked, including overtime, a separate but related policy
governed an MLO's ability to work overtime. Specifically,
each MLO's letter of employment contained a provision
stating that the MLO was "required to obtain prior
approval from [his or her] supervisor for any hours worked in
excess of 40 hours per week." (Appellant's Br. 13)
(citations omitted). If an MLO disregarded this policy by not
seeking approval of overtime hours, the MLO could be subject
to Plaintiffs, Citizens' on-paper overtime policy was a
ruse. In reality, Plaintiffs aver, Citizens endorsed a
"policy-to-violate-the-policy," i.e., the
company maintained an unofficial, companywide policy of
requiring MLOs to work in excess of 40 hours per week while
discouraging MLOs from actually reporting those overtime
hours. This practice, Plaintiffs contend, was carried out at
Citizens "through a single, coordinated, overarching
scheme." (Appellees' Br. 5). As outlined by
Plaintiffs, the scheme consisted of the following measures:
(1) an overtime preapproval policy, whereby MLOs would be
subject to discipline if they reported overtime without
having it preapproved;
(2) restrictions on the amount of overtime hours that
managers could approve;
(3) allowing MLOs to submit fictitious attendance records
that block-reported time and did not show night or weekend
work through management's violations of Citizens'
attendance monitoring and timesheet approval policies; and
(4) upper-level management's tracking of overtime
reported and discouragement/harassment/discipline of MLOs who
reported or requested overtime.
(Id. at 7).
November 2015, three former MLOs-Alex Renig, Ken Gritz, and
Bob Soda-filed a class action complaint alleging that
Citizens, by maintaining "an unofficial policy or
practice requiring MLOs to work 'off the clock' in
excess of forty hours per week," failed to pay overtime
wages in accordance with the FLSA and Pennsylvania law. (App.
101). Because this work went unreported, Plaintiffs claimed
that they were not paid for their off-the-clock hours in
violation of the FLSA, 29 U.S.C. § 207, and
Pennsylvania's wage-and-hour law, 43 Pa. Stat. and Cons.
Stat. § 260.1 et seq., and § 333.101
moved for conditional certification of a collective action
under the FLSA,  which the District Court granted in May
2016. The District Court then ordered Plaintiffs to serve
notice to the conditional FLSA class informing them that they
would have 100 days to opt in to the action. In accordance
with the District Court's order, Plaintiffs sent notice
to over 1, 000 current and former MLOs. Of those, 351 filed
consent forms opting in to the FLSA collective action.
the 100-day period expired, Plaintiffs filed an amended
complaint that added nine named plaintiffs to the lawsuit. In
conjunction with the amended complaint, Plaintiffs filed a
motion for class certification under Rule 23, seeking
certification of ten distinct classes, each of which alleged
claims under the laws of their respective states. Citizens
responded with two separate, but related, motions: one
opposing the class certification motion and the other seeking
decertification of the FLSA collective action.
parties, via stipulation, agreed to the appointment of a
Special Master to address the pending motions. The Special
Master recommended denying Citizens' motion for summary
judgment, certifying Plaintiffs' off-the-clock claims
under Rule 23(b)(2) and (b)(3), and denying Citizens'
motion for decertification of the FLSA collective action. The
District Court adopted the Special Master's reports and
recommendations (hereinafter "SM Reports") in full.
Citizens then timely filed a Rule 23(f) petition, which we
JURISDICTION AND STANDARD OF REVIEW
District Court had original jurisdiction over Plaintiffs'
FLSA claims under 28 U.S.C. § 1331, and supplemental
jurisdiction over their state-law claims pursuant to 28
U.S.C. § 1367. Because we granted Citizens' Rule
23(f) petition, we have jurisdiction over the District
Court's Rule 23 order pursuant to 28 U.S.C. §
1292(e). "We review the grant of class certification for
an abuse of discretion, which occurs if the certification
'rests upon clearly erroneous finding of fact, an errant
conclusion of law or an improper application of law to
fact.'" In re Blood ...