GOODRICH, Circuit Judge.
This case presents an interesting question growing out of the language used in § 16(b) of the Fair Labor Standards Act of 1938, 29 U.S.C.A. § 216(b). Certain named plaintiffs brought an action against the defendant to recover unpaid overtime compensation, liquidated damages and counsel fees, as provided in the statute. They said they were members of a class of about five hundred employees (which class was clarified by amendment) and that they sued on behalf of themselves and as representatives of other employees and former employees
The problem producing language is the following from § 16: "Action to recover such liability may be maintained * * * by any one or more employees for * * * themselves and other employees similarly situated * * *."
"Other employees similarly situated" are manifestly the words whose legal effect must be determined. Do they create what we already have under the federal rules as a true class suit, a hybrid class suit, or a spurious class suit? We have struggled with these distinctions on previous occasions. See Pennsylvania Co. etc. v. Deckert, 3 Cir., 1941, 123 F.2d 979. It may be admitted that the terminology shocks the aesthetic sense and the succession of adjectives before the noun shows the poverty of imagination in choice of terms characteristic of the legal profession. But back of the unedifying nomenclature there is substance. If our categories are carefully chosen it makes a great difference into which one our facts fall. It matters here.
With hybrid class suits we are not concerned. Such a suit has to do with individual plaintiffs and a claim to a common fund. See the discussion in the Deckert case, supra.
The District Court thought the instant suit was a spurious class action.
A true class action is described in the Restatement, Judgments, § 86 (b) as "an illustration of a situation where it is not feasible for all persons whose interests may be affected by an action to be made parties to it. It was invented by equity for situations in which the number of persons having substantially identical interests in the subject matter or litigation is so great that it is impracticable to join all of them as parties, in accordance with the usual rules of procedure, and in which an issue is raised which is common to all of such persons." A typical case to illustrate the general situation covered is that of a taxpayer who sues county tax assessors on behalf of himself and all other taxpayers alleging that his assessment is invalid because a wrong method of assessment was used.
Some of the consequences of a class action are very important. Section 86, Restatement, Judgments, states the effect on all parties in the class:
"A person who is one of a class of persons on whose account action is properly brought or defended in a representative action or defense is bound by and entitled to the benefits of the rules of res judicata with reference to the subject matter of the action."
The learned district judge was in error when he said, in his opinion in this case it was "too astonishing to be accepted" that one unwilling to appear in a suit might be bound by the judgment therein. That is just what does happen in case of a true class action.
When do we have a "real" or "true" or "genuine" class action, as distinguished from those described by other adjectives? Moore (2 Federal Practice 2236) gives an explicit answer. He says this action is one wherein, "but for the class action device, the joinder of all interested persons would be essential. This would be in cases where the right to be enforced was joint, common or derivative."
If we keep this language in mind and think for a moment about the rights an employee has against his employer for violation of the Fair Labor Standards Act, we will find the answer to our problem. If
A does not need any class action device either under Federal Rule 23, 28 U. S.C.A. following section 723c, or § 16 of the statute to let him sue his employer to enforce rights under the Act. His claim is individual. He may or may not have common questions of law or fact with fellow employees in a claim against the employer. If he should lose his lawsuit, it certainly would be a startling result to find that every fellow employee was bound by the estoppel of that judgment when he came to sue the employer. The conclusion is irresistible that no true class suit is either possible or intended to be created by the quoted language of § 16 of the Act.
A decision to the same effect by a district court has been said to vitiate the class suit provision of the statute.
We think to classify the proceeding as a spurious class suit, as the District Court did in the instant case is correct and gives two effects to the language in § 16 which it is very likely the Congress had in mind. One is that employees, if they wish, can join in their litigation so that no one of them need stand alone in doing something likely to incur the displeasure of an employer. It brings something of the strength of collective bargaining to a collective lawsuit.
The other and stronger point becomes apparent when one looks at the statute and then goes back to Moore again. The rights under this Act are not enforcible alone in federal courts but in "any court of competent jurisdiction." Spurious class actions are of modern development; in some states they have been refused when they involved tort claims. State practice varies widely.
The view expressed here is, in general, that of the courts which have considered the question. Language varies, of course, for we are blazing new trails here and signs do not always mean the same to us even when we agree upon the direction in which they point the path. The decisions line up as follows:
We find three groups. The first two are alike in that they agree with each other and with us in their conclusion as to the nature of § 16(b). They differ from each other in form. The first group attains an expression much closer to our own in that it draws the distinction between a true class action and the form which we have here. The second group labels the suit provided for in § 16(b) a class action but indicates by the body of the opinion that a spurious class action is actually what is meant. The third group treats the section as though it were a true class action.
Within the first group there is considerable variation in method of drawing the distinction between what is being dealt with by the court and a true class action. In Smith et al. v. Stark Trucking Inc., D. C.N.D., Ohio 1943, 53 F.Supp. 826, 828, the court recognizes the problem but declines to discuss the question of true class suit or spurious,
The second group of cases talks about class action as though they had a true class suit in mind. Their actions in delimiting the areas of the statute indicate otherwise. Thus the Supreme Court of Tennessee in Hunt v. National Linen Service Corporation, 1941, 178 Tenn. 262, 157 S.W.2d 608 not only calls suit under the Act a class action but concludes that the majority of cases are with it in such expression.
The third group of cases is smaller in number. It varies from an opinion such as Cissell v. Great Atlantic & Pacific Tea Co., D.C.W.D.Ky.,1941, 37 F.Supp. 913 which was decided by the same district judge as the Shain case of group one and therefore only reflects a viewpoint later changed, to an opinion such as Clint v. Franklin Bargain House, Com.Pl., Lucas County 1941, 6 Ohio Supp. 299, 301, which
Appellate federal courts have not had the problem squarely before them in the sense that this Court now has or many of the district courts had. Culver et al. v. Bell & Loffland Inc., 9 Cir., 1944, 146 F.2d 29 overruled a district court refusal to permit amendment of complaint, brought in behalf of plaintiff and those similarly situated, so as to include 38 of these by name. The Court adds that "representative suits" should be "liberally administered." We conclude that this analysis of the cases so far decided shows the overwhelming weight of decision supports the conclusion here reached. As already indicated, there is divergence in the reasons assigned for the result.
Upon one point, however, we disagree with the learned District Judge. We think the granting of the defendant's motion for judgment was premature. The fact that the suit had been started six months before is not, to our minds, a sufficient reason for precluding other persons who care to join from coming in later. It is arguable, though we do not now decide, that the statutory language already discussed makes intervention a matter of right under Rule 24(a). It is arguable, as amici have argued in this case, that the proper procedure is to keep the case open until time of final judgment, and determine then whether the judgment shall be binding only upon those who have joined or whether to bring in all others similarly situated by supplementary proceedings. Those questions have not been thoroughly explored in the argument of this case and we do not want to preclude further consideration by a premature decision on them now. All we say now is that the judgment on the pleadings as to unnamed parties should not have been granted merely because it was convenient for the defendant to have the case closed as to parties at this stage in the proceedings.
"That a class suit can be maintained under the Fair Labor Standards Act, 29 U.S.C.A. § 201 et seq. * * *."
"Argument is made that the term `similarly situated' refers to employes of the same class or in the same department as the plaintiff. The Court is of the opinion, as above indicated, that taking the purpose of the Act into consideration it means all employes who have not been paid according to the provisions of the Act."