A Chicago federal appeals court has ruled 252 Facebook employees may be cut from a class action, which alleges Facebook shorted them on overtime pay, saying the employees may have waived their right to sue, because they signed agreements to instead arbitrate pay disputes with the company.
The Jan. 24 decision was authored by Judge Michael Kanne, with agreement from Chief Judge Diane Wood and Judge Amy Barrett of the U.S. Court of Appeals for the Seventh Circuit.
The ruling favored Facebook in a class action brought by Susie Bigger in 2017 in Chicago federal district court. Bigger, who worked for Facebook in Chicago, alleged Facebook did not pay overtime to her and 450 other client solutions managers (CSMs). Bigger claimed Facebook breached the federal Fair Labor Standards Act and Illinois Minimum Wage Law. Facebook countered the managers did not qualify for overtime pay, because the law allows an exception for such high-income workers, who handle administrative duties with considerable autonomy.
District Judge Harry Leinenweber allowed the case to go forward as a class action, but Facebook then challenged that 252 of the 450 CSMs were barred from the action, because they signed agreements to waive class actions and instead individually arbitrate any claims over compensation.
Leinenweber agreed to refrain from allowing notice of the class action to the 252 CSMs, while Facebook in the meantime went to appellate court to contest the merits of the case and the notice.
Judge Kanne rejected Facebook’s contention Bigger did not qualify for overtime pay, saying her autonomy was limited to applying “well-established techniques, procedures, or specific standards prescribed by Facebook.”
On the other hand, Kanne accepted Facebook’s argument the 252 CSMs should not be notified. Kanne ordered the case remanded, with Facebook allowed to present evidence of the waivers. Any CSMs who signed such waivers are not to be notified of the class action, Kanne ordered.
Kanne explained that if Leinenweber had gone ahead and authorized the notice, Leinenweber's action could have appeared to have endorsed the merits of Bigger’s case.
Noting that judges “must be scrupulous to respect judicial neutrality,” Kanne said issuing notice may sometimes be "indistinguishable from the solicitation of claims."
Kanne further said authorizing notice can let plaintiffs "wield the collective-action format for settlement leverage," explaining that "expanding the litigation with additional plaintiffs increases pressure to settle, no matter the action’s merits." Kanne pointed out judges have "discretion to monitor the preparation and distribution of notice to potential plaintiffs," as a counterweight to such hazards.
Kanne said Facebook must be given the opportunity to show the CSMs signed the waiver agreements, noting, "The goal of efficiency neither favors nor disfavors this result."
Bigger is represented by the Chicago firm of Stephan Zouras LLP.
Facebook is defended by the Chicago and San Diego offices of the Philadelphia-based firm Cozen O'Connor.