Myles v. Prosperity Mortgage: Dukes Inapplicable to FLSA Certification

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Federal courts continue to interpret last year’s Wal-Mart v. Dukes Supreme Court decision more narrowly than many had expected, surprising those who viewed Dukes (in concert with AT&T v. Concepcion) as a virtual death knell for class actions.  In Myles v. Prosperity Mortgage Co., Judge Catherine C. Blake granted conditional class certification in an action alleging that the defendant misclassified its loan officers as exempt from overtime pay.  See Myles, No. 11-01234 (D. Md. May 31, 2012) (memorandum opinion re: class certification) (available here).  And of greater general significance, the court held that Dukes is inapplicable at the certification stage of an FLSA action.  Id. at 10-11.  Although Dukes did not address FLSA claims, the Myles defendant, Prosperity Mortgage Company (PMC), argued for the application of the more rigorous certification criteria articulated in Dukes, which would result in a radical remaking of the long-established, two-stage FLSA certification process.  Id. at 9-10.  PMC maintained that Dukes applies to “all aggregate claims,” including both class actions and collective FLSA actions. Id. at 9.

After considerable reasoning, however, the Myles court concluded that Dukes not only does not apply to FLSA certification determinations, but is also factually distinguishable from Myles, stating, “Dukes does not mention the FLSA or the two-step certification process, and such a conclusion does not necessarily follow from any particular language in the opinion.”  Id. at 9.  Judge Blake also pointed out that the first stage of FLSA certification requires only “relatively modest” evidence of commonality, in contrast to the far more demanding Dukes criteria.  Id. at 8-9.  Finally, she noted that in Dukes, there was no corporate discriminatory policy common to the class, and the class claims were based on individual, discretionary decisions made by many different managers, whereas in Myles, “PMC has acknowledged that it had an express policy of considering its loan officers to be exempt under the FLSA; thus, no local management discretion is at issue and no individualized inquiry is necessary to determine why individual loan officers were disfavored.”  Id. at 11.

Buttressing its analysis, the court noted that “‘numerous courts . . . have refused to apply Dukes on motions for conditional certification under the FLSA, concluding that the Rule 23 analysis had no place at this stage of the litigation.’”  Id. at 10, citing Winfield v. Citibank, N.A., ¬¬___ F. Supp. 2d ___, 2012 WL 423346 at *10 (S.D.N.Y. Feb. 9, 2012).