In the
United States Court of Appeals
For the Seventh Circuit
No. 09-2020
D EBORAH A. A LVAREZ, et al.,
Plaintiff-Appellants,
v.
C ITY OF C HICAGO,
a Municipal Corporation,
Defendant-Appellee.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 06-cv-4639—William J. Hibbler, Judge.
No. 09-2021
A LEXANDER C ARABALLO , et al.,
Plaintiff-Appellants,
v.
C ITY OF C HICAGO,
a Municipal Corporation,
Defendant-Appellee.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 07-cv-2807—William J. Hibbler, Judge.
A RGUED N OVEMBER 4, 2009—D ECIDED M AY 21, 2010
2 Nos. 09-2020 & 09-2021
Before C UDAHY, F LAUM, and E VANS, Circuit Judges.
F LAUM, Circuit Judge. This is the consolidated appeal
from the dismissal of two lawsuits brought by paramedics
in Chicago. The plaintiffs claim that the City of Chicago
systemically miscalculated their overtime pay in a total
of ten different ways. Not all claims, however, are
common to all plaintiffs. Relying on our decision in
Jonites v. Exelon Corp., 522 F.3d 721 (7th Cir. 2008), the
district court dismissed the plaintiffs’ collective action
as “hopelessly heterogenous” and directed the plaintiffs
to proceed through arbitration. Because the named
plaintiffs have the right to proceed individually, we
reverse the judgment of dismissal.
I. Background
On August 28, 2006, a group of fifty-four
paramedics employed by the Chicago Fire Department
filed a two-count collective action against the City of
Chicago, alleging that it willfully failed to properly
compensate them for overtime, in violation of the Fair
Labor Standards Act (“FLSA”), 29 U.S.C. §§ 201-219 (2006).
See Alvarez v. City of Chicago, No. 06-cv-4639 (N.D. Ill.).
The district court granted the Alvarez plaintiffs’ motion to
begin distributing notices of the action to prospective
plaintiffs and provided them with 60 days in which to
add additional plaintiffs.
More than three hundred additional plaintiffs opted
in. On the City’s motion, the district court dismissed
several of them because the 60-day deadline had passed.
Four of those plaintiffs, along with eight new plaintiffs,
Nos. 09-2020 & 09-2021 3
then filed a new action. See Caraballo v. City of Chicago,
No. 07-cv-2807 (N.D. Ill). The Caraballo plaintiffs assert
the same claims as the Alvarez plaintiffs, but did not
style their lawsuit as a collective action or seek class
certification. On September 13, 2007, the district court
consolidated Alvarez and Caraballo.
On June 6, 2008, the Caraballo plaintiffs moved for
summary judgment. In their motion for summary
judgment, the Caraballo plaintiffs identified a total of ten
subclaims under FLSA. Briefly summarized, these
claims are:
1. Payments excluded from employees’ “regular
rate” for determining overtime compensation.
FLSA requires overtime at the rate of one-and-a-
half times an employee’s “regular rate,” which is
defined as “all remuneration for employment paid
to . . . an employee,” with several exceptions
including “payments to an employee which are not
made as compensation for his hours of employment.”
The paramedics identify six types of pay that they
believe were wrongly excluded from their “regular
rate.”
a. Duty availability pay. This is a quarterly lump-sum
payment of $175 made to all emergency medical
services employees who work in 24-hour shifts
pursuant to the collective bargaining agreement
(“CBA”).
b. Fitness pay. Also made pursuant to the CBA, this
is a lump-sum payment of $350 to employees
who meet certain physical qualifications measured
4 Nos. 09-2020 & 09-2021
by a voluntary fitness test, which employees may
take yearly.
c. Specialty pay. Specialty pay is provided under the
CBA to paramedics who are also hazardous materials
technicians and certified drivers. The compensation
is equal to 5% of the employee’s annual salary and
is paid quarterly on a pro rata basis.
d. Uniform pay. Pursuant to the CBA, all paramedics
receive two lump-sum payments during the course
of a year “for cleaning and maintenance of dress
uniforms, work clothes and protective clothing.”
e. Acting pay. If a paramedic temporarily works in a
higher rank, he receives additional compensation
known as acting pay.
f. Driving pay. Paramedics receive additional
compensation, known as driving pay, if they drive
the ambulance.
2. Treatment of continuing education time. Plaintiffs
make two arguments regarding the way the city
handled time spent in continuing education. First,
plaintiffs argue that the city improperly counted
time spent in continuing education as “hours
worked” for purposes of calculating the regular rate,
since continuing education was compensated on an
annual basis. Because the City calculated plaintiffs’
regular rate (and, in turn, overtime rate) by dividing
paramedics’ salary by the number of hours worked,
an increase in “hours worked” decreases the rate
at which plaintiffs are compensated for overtime.
Second, plaintiffs argue that the city could not use
Nos. 09-2020 & 09-2021 5
payments made for continuing education as
credits against overtime owed.
3. Treatment of additional shifts. The plaintiffs also
argued that the City could not count hours spent
working additional shifts as “hours worked” for
purposes of determining the regular rate and that
the City was not permitted to use them as credits
against overtime owed.
4. Human computation errors. The plaintiffs argued
that the city committed various human errors in
calculating their overtime compensation.
5. Salary method of computing weekly regular rates.
Plaintiffs argue that the city violated the FLSA by
using the fixed salary method to determine regular
rates.
The City filed a cross-motion for summary judgment
against all parties, including the Alvarez plaintiffs. In
addition to responding on the merits, defendant moved
to decertify plaintiffs’ collective action and dismiss their
claims on the grounds that they were “hopelessly
heterogenous.” On March 20, 2009, the district court
granted the city’s motion for summary judgment against
all plaintiffs, reasoning that the plaintiffs were not
similarly situated because each plaintiff raised a different
combination of the ten subclaims, such that the plaintiffs
could not be readily divided into homogenous subgroups.
The district court also noted that arbitration pursuant to
the collective bargaining agreement, while not mandatory,
might be a more efficient way to resolve the paramedics’
claims. The court did not reach the merits of the ten
subclaims raised by the plaintiffs. Instead, it dismissed
6 Nos. 09-2020 & 09-2021
the claims of all plaintiffs, without prejudice, and
directed them to pursue arbitration.
II. Analysis
The Fair Labor Standards Act gives employees the
right to bring their FLSA claims through a “collective
action” on behalf of themselves and other “similarly
situated” employees. 29 U.S.C. § 216(b) (2006). A collective
action is similar to, but distinct from, the typical class
action brought pursuant to Fed. R. Civ. P. 23. The principle
difference is that plaintiffs who wish to be included in
a collective action must affirmatively opt-in to the suit
by filing a written consent with the court, while the
typical class action includes all potential plaintiffs that
meet the class definition and do not opt-out.
The City—and the district court’s opinion—relies heavily
on our decision in Jonites v. Exelon Corp., 522 F.3d 721 (7th
Cir. 2008). In Jonites, we affirmed the dismissal of a
collective action brought on behalf of more than a
thousand lineman and other hourly workers employed
by Commonwealth Edison. The Jonites plaintiffs alleged
that two types of purportedly off-duty time were really
compensable work. The first involved Com Ed’s “call-out”
policy, which required off-duty workers to respond to
at least 35% of the calls from their employer for addi-
tional manpower on an emergency basis. The frequency
of these call-outs varied widely among workers; some
were called as often as once every five and a half days
on average, and others no more than once a month. The
employees took the position that they were entitled to
be paid for “some of the time” during which they were
Nos. 09-2020 & 09-2021 7
subject to call, with the amount to be determined by the
trier of fact. The second challenge was to the lunch
policy, which required workers at job sites to remain
awake and be alert for trespassing and the theft of tools.
However, only part of the class worked the daytime
shift, to which the lunch policy applied. We held that as
to both of these claims, the purported class was “hope-
lessly heterogenous” because liability would require
significant individual fact-finding and many of the
workers had no conceivable claim at all. Id. at 725-26. We
further held that the individual plaintiffs must either
file individual suits, create homogenous classes, or ask
the union to file grievance proceedings under the collec-
tive bargaining agreement. Id. at 726. Because the
purported class here is made up of plaintiffs who each
have a different combination of subclaims, defendants
argue that it is similarly heterogenous and was properly
dismissed in favor of arbitration.
Appellants argue that this case is different from Jonites
because the plaintiffs here appear to be similarly
situated with regard to individual subclaims, but are
heterogenous only because there are several different
combinations of those subclaims. For example, whether
any given paramedic is entitled to recover on the
uniform pay theory depends on the legal question of
whether such pay should have been included in the base
rate, and the simple factual question of whether the
particular paramedic received uniform pay. Instead of
dismissing their claims as heterogenous, plaintiffs
argue, the district court should have allowed them to
split their claims into homogenous subclasses. See, e.g.,
Fravel v. County of Lake, No. 2:07-cv-253, 2008 WL 2704744
8 Nos. 09-2020 & 09-2021
(N.D. Ind. July 7, 2008) (allowing plaintiffs to proceed
collectively and grouping the plaintiffs into four distinct
subclasses depending on which theory of liability
applied to them). Plaintiffs suggest that here, as in Fravel,
“[r]esolving common questions as a class, even through
the additional mechanism of sub-classes, remains
inherently more efficient” than splitting the action into
four separate collective actions or allowing individual
claims by each plaintiff. Id. at *3.
The district court appeared to agree with the plain-
tiffs’ characterization of their subclaims, noting that the
City’s liability to any particular plaintiff on any given
subclaim turns only upon a single uniform policy and
whether that policy impacted that particular plaintiff.
However, the district court refused to adopt the Fravel
approach, concluding that the number of subclaims
made the plaintiffs “hopelessly heterogenous” and that
arbitration would be more efficient.
A district court has wide discretion to manage collec-
tive actions. See Hoffmann-La Roche v. Sperling, 493 U.S.
165, 171 (1989). However, it appears that here the
district court may have mistakenly read Jonites to forbid it
from adopting a subclaim approach merely because the
variety of subclaims renders the class “heterogenous.” The
problem with the Jonites class, however, was not that
the plaintiffs had different subclaims, but rather that
determining whether any given plaintiff had a viable
claim depended on a detailed, fact-specific inquiry, and
many plaintiffs lacked any conceivably viable claim
altogether. Jonites, 522 F.3d at 723, 725-26; see also Mooney
Nos. 09-2020 & 09-2021 9
v. Aramco Services Co., 54 F.3d 1207, 1214-15 (5th Cir.
1995), overruled on other grounds by Desert Palace, Inc. v.
Costa, 539 U.S. 90 (2003) (affirming decertification of
collective action where employees who brought ADEA
claim were subject to “vastly disparate employment
situations” and defense was likely to center on pur-
ported reasonable factors other than age specific to each
employee). If common questions predominate, the
plaintiffs may be similarly situated even though the
recovery of any given plaintiff may be determined by
only a subset of those common questions.1
1
There may also be cases where despite common questions
as to liability, the remedy is so tailored to each particular
plaintiff that a collective action is inappropriate. Cf. Andrews
v. Chevy Chase Bank, 545 F.3d 570, 578 (7th Cir. 2008) (holding
that Truth in Lending Act claims for rescission may not, as
a matter of law, be brought as a class action). In Andrews,
however, the statutory rescission remedy at issue required
“unwinding the transaction in its entirety and . . . returning
borrowers to the position they occupied prior to the
loan agreement.” Id. at 573. This individualized equitable
remedy posed more significant obstacles to class resolution
than the claims for damages here. If the paramedics in this
litigation ultimately recover, their recovery will be determined
by the application of mathematical formulae common to all
class members, although the specific variables (number of
hours worked, hourly wage, etc.) will vary from individual to
individual. However, the individualized facts will likely
come in the form of undisputed payroll and time records.
Moreover, if necessary, Fed. R. Civ. P. 53(a)(1)(B)(ii)
(continued...)
10 Nos. 09-2020 & 09-2021
Similarly, the district court mistakenly compared the
efficiency of proceeding through subclaims only to the
perceived efficiency of arbitration.2 Plaintiffs have the
right to proceed individually and may be able to form
more tailored classes. See Jonites, 522 F.3d at 725 (noting
that a collective bargaining agreement cannot preempt
or waive a worker’s right to a judicial remedy for FLSA
violations). Thus, if it appears plaintiffs are prepared
to proceed individually or through separate classes, the
district court must consider whether these other
mechanisms for judicial resolution of their claims
are more or less efficient than a collective action
comprised of various subclaims. Cf. Fravel, supra. In
Jonites, the circumstances suggested that plaintiffs had “no
stomach for proceeding case by case.” Id. at 726. Here,
the twelve Caraballo plaintiffs filed their complaint as
individuals and moved for summary judgment as
individuals. Indeed, there is nothing apparent from the
record to indicate that the fifty-four named plaintiffs in
Alvarez were unwilling to proceed individually. Yet
the district court dismissed their claims in favor of
arbitration without considering whether it was better to
1
(...continued)
authorizes the district court to appoint a special master to
“resolve a difficult computation of damages.”
2
The parties dispute whether arbitration of these FLSA claims
is permissible under the terms of the paramedics’ collective
bargaining agreement. We need not reach this issue, as it has
no bearing on whether the plaintiffs are in fact similarly situ-
ated or whether they have the right to proceed individually.
Nos. 09-2020 & 09-2021 11
address sixty-five individual claims or one collective
action comprised of ten subclaims.
Finally, the district court erred when it dismissed
the claims of the named plaintiffs. When a collective
action is decertified, it reverts to one or more individual
actions on behalf of the named plaintiffs. See Hipp v. Liberty
Nat’l Life Ins. Co., 252 F.3d 1208, 1218 (11th Cir. 2001) (citing
Mooney, 54 F.3d at 1213-14); see also Fox v. Tyson Foods,
Inc., 519 F.3d 1298, 1301 (11th Cir. 2008) (affirming
decertification of an FLSA collective action, dismissal
of the opt-in plaintiffs, and severance of each of the
named plaintiffs into separate individual actions).3
Defendants do not argue that arbitration under the
collective bargaining agreement preempts litigating these
3
The City argues that plaintiffs have waived this argument.
But in response to the City’s claim, in its cross-motion for
summary judgment, that the collective action was “hopelessly
heterogenous,” the Caraballo plaintiffs argued that they were
proceeding individually and that this argument was thus
inapplicable to them. Because of the course of litigation
below, plaintiffs did not have an opportunity to present this
argument more fully. With only the Caraballo plaintiffs’ motion
for summary judgment before it, the district court addressed
both the Alvarez and Caraballo actions, deemed the Caraballo
plaintiffs to be proceeding as a class, and not only decertified
both classes but entered its judgment of dismissal without
prejudice that same day. While plaintiffs do not argue that
treating Caraballo as a collective action was error (indeed, it
appears that at least one plaintiff attempted to opt in to the
Caraballo action), this procedural posture does explain why
the right to proceed individually was not addressed below.
12 Nos. 09-2020 & 09-2021
issues in federal court. Plaintiffs are entitled, at mini-
mum, to pursue their claims individually. Whether
they are permitted to do so in one action or several is
committed to the sound discretion of the district court,
but misjoinder of parties is never a ground for dismissing
an action. See Fed. R. Civ. P. 21. We therefore reverse
the district court’s dismissal of the named plaintiffs’
claims in both the Alvarez and Caraballo actions.
Sifting through the subclaims of each of the myriad
plaintiffs is an unenviable task. But plaintiffs are
nonetheless entitled to their day in court. Moreover, it
appears that here, common questions predominate with
regard to each theory of liability. The parties have
already filed cross-motions for summary judgment on
the merits of these common questions. After the district
court determines the validity of these subclaims,
calculation of each plaintiff’s award (if any) will be
largely mechanical. On remand, given that the claims of
the named plaintiffs will still be before it, the district
court should consider whether a collective action might
be the most efficient judicial resolution of this matter
after all.
III. Conclusion
We R EVERSE the district court’s dismissal of the named
plaintiffs’ claims and R EMAND for proceedings consistent
with this opinion.
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