IN RE: FSL MANAGEMENT (2015)

ORDER

Plaintiffs in this diversity case allege that Defendants violated Kentucky's wage and hour statute by requiring non-salaried employees to work “off-the-clock” and participate in a mandatory tip pool. The district court granted class-action certification in 2012. The parties reached a settlement, which the district court preliminarily approved on July 13, 2015 (the July 2015 Order). On July 27, 2015, Defendants filed this petition for an immediate appeal under Federal Rule of Civil Procedure 23(f). Plaintiffs move to dismiss the petition for lack of jurisdiction. Defendants oppose dismissal. Plaintiffs reply.

“A court of appeals may permit an appeal from an order granting or denying class-action certification under this rule if a petition for permission to appeal is filed with the circuit clerk within 14 days after the order is entered.” Fed. R. Civ. P. 23(f). The July 2015 Order was issued under Federal Rule of Civil Procedure 23(e) governing settlement, voluntary dismissal or compromise. Plaintiffs argue that only orders issued under Federal Rule of Civil Procedure 23(c)(1) are eligible for immediate review and that Defendants' petition must be dismissed. See In re Nat'l Football League Players Concussion Injury Litig., 775 F.3d 570, 578 (3d Cir. 2014).

The plain language of Rule 23(f) limits our jurisdiction to appeals from orders “granting or denying class-action certification.” Fed. R. Civ. P. 23(f) (emphasis added). The Advisory Committee's Notes clarify that “[n]o other type of Rule 23 order is covered by [the appeal] provision.” The court granted class-action certification in this case on August 10, 2012, making this appeal untimely.

To save their petition, Defendants argue that the court materially altered the class definition in the July 2015 order, thus transforming the order into a class-certification grant. See, e.g., Matz v. Household Int'l Tax Reduction Inv. Plan, 687 F.3d 824, 826 (7th Cir. 2012) (“[A]n order materially altering a previous order granting or denying class certification is within the scope of Rule 23(f) even if it doesn't alter the previous order to the extent of changing a grant into a denial or a denial into a grant.”). The 2012 class definition embraced non-salaried employees who worked without receiving hourly wages and a subclass of tipped employees who participated in a mandatory tip pool. At Defendants' request, the parties modified the class definitions to include seven non-salaried employees who never worked without receiving hourly wages and never participated in the tip pool. When Plaintiffs moved to approve the settlement for the redefined class and subclass, Defendants took no issue with the new definition. (See R. 166, ID 1644–54.)

Nor do Defendants challenge the redefined class on appeal.¹ Rather, they contest “the initial grant of class certification on grounds derived from developments in the litigation since that grant.” Driver v. AppleIllinois, LLC, 739 F.3d 1073, 1076 (7th Cir. 2014) (denying permission to appeal when the defendants used a change in the class definition to appeal on unrelated grounds). Specifically, Defendants insist that a not-yet-finalized Kentucky appellate decision forecloses class-action litigation in Kentucky wage-and-hour claims. See McCann v. Sullivan Univ. Sys., Inc., No. 2014-CA-000392-ME, 2015 WL 832280 (Ky. Ct. App. Feb. 27, 2015). The intervening appellate decision “may for all we know have undermined the reasons for certifying a class in the first place, and the defendant[s] can always move the [district court] to decertify the class on the basis of new developments.” Driver, 739 F.3d at 1077. But under Rule 23(f), Defendants may appeal only orders granting or denying class certification, and they present us with none.

Defendants' Rule 23(f) petition is DENIED. Plaintiffs' motion to dismiss is DENIED AS MOOT.

ENTERED BY ORDER OF THE COURT

Deborah S. Hunt, Clerk

FOOTNOTES

1.   The redefined class adds seven members, whose recovery comprises $7,432.64 of a $1.2 million settlement. Even if Defendants had challenged the class redefinition itself, they offer no compelling argument that the redefinition materially altered the class. See Matz, 687 F.3d at 825 (finding a material alteration when a class decertification order eliminated 3000 to 3500 members).