Duane Morris Takeaway: This week's episode of the Class Action Weekly Wire features Duane Morris partner Jerry Maatman and associates George Schaller and Ryan Garippo with their discussion of a significant ruling handed down by the Seventh Circuit in Richards v. Eli Lilly & Co setting a new standard for the conditional certification of collective actions.
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Episode Transcript
Jerry Maatman: Thank you, loyal blog readers for joining us for our next episode of our weekly wire podcast called the Class Action Weekly Wire. I'm Jerry Mammon, of Duane Morris, and joining me today are my associates and colleagues, Ryan, Garippo, and George. Thanks so much, gentlemen, for being on this week's Podcast.
Ryan Garippo: Great to be here. Thanks for having me, Jerry.
George Schaller: Thanks, Jerry, always good to be on the podcast.
Jerry: Today we're unpacking a bombshell of a decision by the Seventh Circuit earlier this week, entitled Richards v. Eli Lilly. Ryan, can you give us a high-level overview of what this case is all about, and the ruling and holding of the Seventh Circuit?
Ryan: Yeah, of course, Jerry. So, this case started back in 2022, when Monica Richards, a former employee of Eli Lilly, sued the company for age discrimination under the ADEA, the Age Discrimination in Employment Act. The plaintiff brought the case as a collective action, which means that she wanted to send notice to potentially affected employees and give them a chance to join the lawsuit. The ADEA incorporates the FLSA's enforcement provision, which allows for employees to band together in collective actions when suing an employer for either age discrimination or wage and hour violations. Richards, as a result, alleged that Eli Lilly promoted younger employees in violation of the Act.
Jerry: So, although this is about the Age Discrimination in Employment Act, it has application to wage and hour collective actions, and I'd say, for every one age discrimination lawsuit, there are probably 100 wage and hour cases being brought. So, what's at issue is 29 U.S.C. § 216(b) – In other words, in what circumstances should a court conditionally certify a collective action and send notice to those who are at issue in the lawsuit. So, in terms of conditional certification, I think that's where the rubber meets the road in this decision. George, how do you view that issue?
George: Well, here, Jerry, after the plaintiff moved for conditional certification of the collective action, the district court followed the widely-used approach called the Lusardi two-step process, which is from a district court of New Jersey opinion in 1987, called Lusardi v. Xerox Corp. Under this framework the courts hold that the employee has a light burden at the first stage, and thus may rely solely on the plaintiff's allegations and courts do not consider competing evidence submitted by the employer. In recent years, the Fifth and Sixth Circuit Courts of Appeals have found that the Lusardi two-step approach is inconsistent with the text of the FLSA. But in contrast, the Second, Ninth, Tenth, and Eleventh Circuits continue to either follow or allow the district court to adopt the two-step framework outlined in Lusardi. Here, the district court followed the two-step framework, granting conditional certification of the collective action and allowing notice to be sent to all potential collective action members.
Jerry: I know to get up to the Seventh Circuit there was an interesting route, unlike a class action under Rule 23(f) where one may file a petition with a court of appeal to examine a class certification order. There's no such right of appeal under the rules or under the statute under 216(b). And yet Eli Lilly filed a motion for interlocutory appeal, and the Seventh Circuit accepted it, hence its realization of how important this issue is. What exactly did the Seventh Circuit decide in construing the parameters of 216(b)?
Ryan: Well, Jerry, the Seventh Circuit agreed that Lusardi was too permissive, and reformed the approach under 216(b). As a result, it held that the standard allowed for abuse, mainly by encouraging settlements based on the pressure of having a massive case brought against an employer rather than their merit. But, interestingly, the Seventh Circuit also stopped short of adopting the stricter frameworks adopted by both the Fifth and Sixth Circuits, and adopted a standard that's primarily focused on flexibility. The idea is that instead of a hard rule, the Seventh Circuit gave district courts more discretion. It observed that the notice process should be facilitated by three guiding principles, namely, the timing and accuracy of notice; judicial neutrality; and the prevention of abuses of joinder. And now, plaintiffs have to show that there's a material factual dispute as to whether employers are similarly situated, and actually bring forward some evidence of a common unlawful policy, as opposed to just relying on the allegations in their complaint. Of course, employers can introduce rebuttal evidence in response to that, and the employee has to engage with it, and the court can consider it as a whole.
Jerry: Sure sounds like a big win, to me, for employers. Given that the devil is in the details when it comes to allowing district courts to exercise their discretion, how do you think this is going to work in practice in the future in the Seventh Circuit at the district court level?
George: All that's the details, Jerry. It's definitely a win for employers, because in Illinois, Indiana, and Wisconsin employers can now challenge collective actions earlier and more effectively. But the Seventh Circuit left a lot of questions unanswered, including the level of scrutiny courts should apply when plaintiffs should get limited discovery to meet this new standard. What happens if plaintiffs want to submit supplemental evidence, all that's left to the court's discretion? It does remove the automatic green light plaintiffs used to get at the first step, but now it opens the door to new fights about process. How much is enough evidence? When is the case strong enough to notify other employees? Nobody really knows yet.
Ryan: That's right, and the federal courts are deeply divided, and this is a hot debate amongst the courts of appeal. You've got the Fifth and Sixth Circuits rejecting this already, and the Seventh join that group, albeit taking a middle road. Meanwhile, the Second, Ninth, Tenth, and Eleventh Circuits still allow it. Add to that about a second disagreement about whether or not Bristol Myers Squibb, a seminal U.S. Supreme Court case from a few years ago, applies to collective actions, and you've got a lot of uncertainty.
Jerry: You know, it's remarkable that this is a piece of new deal legislation passed in 1938, and yet here we are, 85 years or more later, in 2025, and there are now four different standards to determine when to conditionally certify a collective action under 216(b). And if you're an employer operating throughout the United States, you could be litigating the same case in one of those jurisdictions in a completely different manner than another one, because the standards are different. So, it does seem to scream out for Supreme Court review eventually, so that there's one national, unified standard. In the interim, what can employers do?
George:Well, first, if you're facing a collective action in the Seventh Circuit, this ruling does give you a stronger basis to oppose conditional certification early, and employers should use that opportunity to gather rebuttal evidence and be prepared to challenge the similarly situated claims head on. Second, consult outside counsel early – this area is in flux and procedural missteps can have real consequences.
Jerry: Well, thanks for those insights, and I would commend our listeners and readers to the blog post you gentlemen did earlier this week in elucidating the Seventh Circuit's opinion. And we'll be following these issues throughout the year, culminating in publication of the 2026 Duane Morris Class Action Review. So, thanks so much for joining our podcast this week.
Ryan: Thanks for having me on the podcast and thanks to the listeners for being here.
George: Thanks everyone. Great to be here.
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