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Hollins v. Regency Corp.

United States Court of Appeals, Seventh Circuit

August 14, 2017

Venuia Hollins, Plaintiff-Appellant,
Regency Corporation and Hayes Batson, Defendants-Appellees.

          Argued May 25, 2017

         Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 13 C 07686 - John J. Tharp, Jr., Judge.

          Before Wood, Chief Judge, and Bauer and Hamilton, Circuit Judges.

          WOOD, Chief Judge.

         Regency Corporation operated for-profit cosmetology schools in 20 states. Each Regency Beauty Institute offered both classroom instruction and practical instruction in a "Regency Salon, " where members of the public could receive cosmetology services at low prices. Venitia Hollins was a Regency student, first at its Merrillville, Indiana, location, and later at its Tinley Park, Illinois, facility. In this case, Hollins asserts that the work she performed in the Salon was compensable for purposes of the Fair Labor Standards Act (FLSA), 29 U.S.C. § 201; she also asserts that Regency violated various state laws, including the Illinois Minimum Wage Law, 820 ILCS 105/1 et seq., the Illinois Wage Payment and Collection Act, 820 ILCS 115/1 et seq., and the Indiana Wage Payment Statute, Ind. Code § 22-2-5-1 et seq., among many others. Her complaint indicates that she wanted to bring her suit as a collective action under the FLSA and a class action under the state statutes, but the district court denied her motion conditionally to certify the FLSA action and never certified a class action under Federal Rule of Civil Procedure 23. Instead, it addressed the individual merits of her case on summary judgment and ruled in Regency's favor. Hollins has appealed. She now argues that this court lacks jurisdiction over her own appeal, because the claims of other putative members of her collective and class actions are still before the district court. In the alternative, she contends that she and her fellow students should have been recognized as employees entitled to proper payment under the relevant statutes.


         Regency, which has since closed its doors, at one time operated nearly 80 cosmetology schools around the country. Its students were required by state law to complete 1, 500 hours of a combination of classroom and "hands-on" work. They accomplished the latter task by working in the school's salon, at which they provided services-at discounted prices-for customers. Regency gave them credits for hours worked at the salon, which it also called the "Performance Floor, " but it did not otherwise pay them for their work. Believing that she and her fellow students were entitled to wages, Hollins sued under the FLSA and state-law wage statutes to recover the monies she believed were owed.

         Hollins filed her initial complaint on October 25, 2013, against Regency and Hayes Batson, its owner and chief executive officer (we refer to them collectively as Regency); three days later she filed a motion for class certification under Federal Rule of Civil Procedure 23 and for conditional certification of the FLSA collective action, 29 U.S.C. § 216. The district court took no action on either part of her motion. Instead, the parties filed a proposed case-management plan, in which they suggested that the court rule first on the liability issues for the named plaintiff (Hollins), and then decide any class or collective certification issues. Over the next year, discovery proceeded. During that time, a number of people filed consent forms indicating that they wanted to opt in to the FLSA collective action. The district court did nothing with those forms. Instead, on October 27, 2015, it granted summary judgment in favor of Regency and denied as moot Hollins's pending motions for conditional certification of the FLSA collective action and class certification on the other theories. (The issues presented in the motions were not really moot, since they still could be affected by our ruling. The most one can say is that by not granting them, the district court effectively limited the case to Hollins's individual claims.)

         Hollins filed a notice of appeal on November 20, 2015, well within the 30 days provided by Federal Rule of Appellate Procedure 4(a)(1)(A). But she became worried about appellate jurisdiction because of the presence of the people who had expressed an interest in opting into the FLSA action. To resolve that question, she moved on May 23, 2016, to dismiss the appeal or to confirm appellate jurisdiction. At our request Regency responded, and in an order issued on December 21, 2016, we decided to carry the jurisdictional issue with the case.


         Federal litigants normally must wait for a final judgment before they can bring a matter to the court of appeals. See 28 U.S.C. § 1291; Mohawk Indus, v. Carpenter, 558 U.S. 100, 106-07 (2009). Although there are some exceptions to that rule, see, e.g., 28 U.S.C. § 1292(a)(1) (preliminary injunctions), 28 U.S.C. § 1292(b) (questions of exceptional importance), Fed. R. Civ. R 23(f) (class-certification decisions), none of those exceptions applies to the present case. The question before us instead is whether the judgment that Hollins wants to challenge is truly final-that is, does it dispose of all claims of all parties? See Fed.R.Civ.P. 54; see also Gelboim v. Bank of Am. Corp., 135 S.Ct. 897, 902 (2015).

         The analysis that applies to the putative Rule 23 class differs somewhat from that which applies to the FLSA collective action, but those differences are not material for our purposes. The critical question for both is whether the existence of the unnamed Rule 23 class members, or the aspiring members of the collective action who have signaled their interest in participating, defeats the finality of the district court's judgment for purposes of appeal. In other words, are those people additional "parties" whose claims have not yet been resolved? If so, then we do not have a final judgment. If not, then we may proceed.

         Looking first at the Rule 23 part of the case, we see a common situation: a person files an action on behalf of herself and others similarly situated, but the district court dismisses the individual case before ruling on class certification (either because there is no pending motion for certification, or because the district court chooses not to reach that issue). In such a case, the Supreme Court has said that "no one [is] willing to advance the novel and surely erroneous argument that a nonnamed class member is a party to the class-action litigation before the class is certified." Smith v. Bayer Corp., 564 U.S. 299, 314 (2011) (quotation marks and citation omitted); see also Standard Fire Ins. Co. v. Knowles, 568 U.S. 588, 593 (2013) ("[A] plaintiff who files a proposed class action cannot legally bind members of the proposed class before the class is certified."). This does not mean that the rights of the unnamed putative class members are unaffected by the filing of the action. For example, the statute of limitations on their claims is suspended during the pendency of the putative class action. Am. Pipe & Constr. Co. v. Utah, 414 U.S. 538 (1974). And if an unnamed member wants to appeal the denial of class certification, the Supreme Court has said that she may do so without first formally intervening in the district court. Devlin v. Scardelletti, 536 U.S. 1 (2002). But neither of these cases even hints that appellate review is impossible without some kind of order from the district court disposing of the claims of the unnamed members of an uncertified class.

         We conclude that the same result should follow for the claims of potential members of an FLSA collective action, if the collective action has never been conditionally certified and the court has not in any other way accepted efforts by the unnamed members to opt in or intervene. (Hollins did not argue that the outsiders' efforts to opt into her case should have been construed as motions to intervene under Federal Rule of Civil Procedure 24, nor is it clear that intervention of right under Rule 24(a), ...

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