Duane Morris Takeaways: On August 5, 2025, in Richards, et al. v. Eli Lilly & Co., et al., No. 24-2574, 2025 U.S. App. LEXIS 19667 (7th Cir. Aug. 5, 2025), the Seventh Circuit issued an opinion that vacated and remanded a district court's decision to conditionally certify a group of potential opt-in plaintiffs in an Age Discrimination in Employment Act ("ADEA") collective action. The opinion breaks new ground on the contours of 29 U.S.C. Section 216(b), and as a result, also applies to conditional certification of wage & hour collective actions under the Fair Labor Standards Act ("FLSA"). The opinion elucidates the standards for notice in FLSA collective actions. While the opinion is undoubtedly a win for employers, only time will tell the scope of the win, as this opinion ultimately may create more questions than it answers.
Background
In 2022, Monica Richards ("Richards" or "Plaintiff") sued Eli Lilly & Co and Lilly USA, LLC (collectively, "Eli Lilly"), the international pharmaceutical manufacturers and her one-time employer, alleging discrimination under the ADEA. The ADEA incorporates the FLSA's "enforcement provision, permitting employees to band together in collective actions when suing an employer for age discrimination." Id. at *3. Richards, as a result, alleged that Eli Lilly promoted younger employees in violation of the ADEA.
Shortly after she filed her lawsuit, Richards "moved to conditionally certify a collective action, asserting that the unfavorable treatment she experienced was part of a broader pattern of age discrimination against Eli Lilly's older employees." Id. at *9. "Conditional certification" of such claims has traditionally been thought of in two steps. At the first step, an employee moves for conditional certification, i.e., to send notice of the lawsuit, to all individuals that he or she contends are similarly situated to him or her. Drawing on a District Court of New Jersey opinion from 1987, Lusardi v. Xerox Corp., 118 F.R.D. 351 (D.N.J. 1987), many courts hold that the employee has a light burden at this stage, and thus rely solely on the plaintiff's allegations, and do not consider competing evidence submitted by the employer.
If the employee's motion is granted, as they are with exceedingly high rates, those individuals covered by the collective action definition receive notice of the lawsuit and then have the ability to opt-in as party plaintiffs to the case and participate in discovery. At the close of discovery, if the case has not settled, the employer can then move to decertify the conditionally certified collective action, and prove the employees are not similarly situated, which results in the opt-in plaintiffs' claims being dismissed without prejudice if successful.
In this case, the fight over the applicability of Lusardi took center stage as it has in many other collective actions. In recent years, the Fifth and Sixth Circuit Courts of Appeal, have found that Lusardi's two step approach is inconsistent with the text of the FLSA. Swales v. KLLM Transp. Servs., LLC, 985 F.3d 430 (5th Cir. 2021); Clark v. A&L Homecare & Training Ctr., LLC, 68 F.4th 1003 (6th Cir. 2023). In Swales, 985 F.3d at 443, the Fifth Circuit rejected Lusardi's two-step approach outright, and required its district courts to "rigorously enforce" the FLSA's similarity requirement at the outset of the litigation in a one-step approach. Similarly, in Clark, 68 F.4th at 1011, the Sixth Circuit adopted a comparable, but slightly more lenient standard, requiring the employee to show a "strong likelihood" that others are similarly situated to him or her before the district court can send notice.
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. Harrington v. Cracker Barrel Old Country Store, Inc., 142 F.4th 678 (9th Cir. 2025); Thiessen v. Gen. Elec. Cap. Corp., 267 F.3d 1095 (10th Cir. 2001); Myers v. Hertz Corp., 624 F.3d 537 (2d Cir. 2010); Hipp v. Liberty Nat'l Life Ins. Co., 252 F.3d 1208 (11th Cir. 2001). This brewing circuit split gave rise to the dispute in Richards.
Against this backdrop, the district court in Richards ultimately followed Lusardi, and decided to send notice to the employees whom Richards contended were similarly situated to her. But Eli Lilly filed a motion for interlocutory appeal, which was subsequently granted, and the Seventh Circuit set out to opine on the circuit split for itself.
The Seventh Circuit's Opinion
The Seventh Circuit, in an opinion written by Judge Thomas Kirsch, rejected the Lusardi framework but declined to go as far as Clark or Swales. The Seventh Circuit observed that the notice process should be facilitated by three guiding principles: (1) the timing and accuracy of notice; (2) judicial neutrality; and (3) the prevention of abuses of joinder. Richards, 2025 U.S. App. LEXIS 19667 at *14. It reasoned that the Lusardi standard threatened the latter two principles by "incentivizing defendants to settle early rather than attempt to 'decertify' at step two . . . transforming what should be a neutral case management tool into a vehicle for strongarming settlements and soliciting claims." Id. at * 17. Thus, the Seventh Circuit rejected Lusardi, but what to do in the alternative was a more difficult question.
The Seventh Circuit decided that rather than endorse the rigid standards of Clark or Swales, its approach would be guided by "flexibility" and an analysis that is not an "all-or-nothing determination." Id. at *19. Indeed, a plaintiff must now "make a threshold showing that there is a material factual dispute as to whether the proposed collective is similarly situated." Id. at *21. Or, in other words, a plaintiff must "produce some evidence suggesting that they and the members of the proposed collective are victims of a common unlawful employment practice or policy." Id, at *21-22. To counter a plaintiff's evidence, an employer "must be permitted to submit rebuttal evidence and, in assessing whether a material dispute exists, courts must consider the extent to which plaintiffs engage with opposing evidence." Id., at *22.It is not clear, however, the burden a plaintiff must satisfy to refute the defendant's evidence to move forward.
In considering that threshold determination, the district court has the discretion to send notice or not.It also has the discretion to resolve some of the disputed issues, and narrow the scope of notice, or not. It also may authorize limited and expedited discovery to make the determination, or not. Id., at *24.It also has the discretion to allow a plaintiff to come forward with more evidence, or not. In essence, "[t]he watchword here is flexibility." Id. And, with those principles in mind, the Seventh Circuit vacated and remanded for further proceedings consistent with the opinion.
Implications For Employers
The Seventh Circuit's opinion is undoubtedly a win for employers, but the opinion introduces ambiguity into the equation with its focus on "flexibility." See id. Plaintiffs in Illinois, Wisconsin, and Indiana can no longer rely on mere allegations to send notice and must wrestle with an employer's evidence contradicting claims of a common unlawful policy or practice. This result is most certainly a win.
It is what comes next that is the problem. What is the level of scrutiny a district court must apply when deciding whether a plaintiff engaged with an employer's evidence? Should a district court apply a one-step approach or two-step approach? Should it allow limited and expedited discovery? What is the standard to obtain such discovery? When should a court allow a plaintiff to come forward with more evidence? When should it not? All these questions go unanswered.
These unanswered questions continue to contribute to the procedural morass that employers must navigate in wage-and-hour collective actions under the FLSA. In addition to these questions, employers are also now navigating the 4-way circuit split on whether Lusardi applies at all and a separate circuit split, also discussed on our blog, regarding the applicability of Bristol Myers Squibb Co. v. Super. Ct. of Cal., 582 U.S. 255 (2017) to collective actions. With both issues ripe for consideration by the U.S. Supreme Court, corporate counsel facing a collective action should consider hiring experienced outside counsel to help navigate these complicated procedural issues and monitor this blog for further developments.
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