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Biden Judge Writes Unanimous Opinion Upholding Collective Action by Former Patients Required to Work for No Pay

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Judge Dana Douglas, nominated by President Biden to the US Court of Appeals for the Fifth Circuit, wrote a unanimous opinion that upheld a lower court ruling that numerous former rehabilitation patients could proceed with a collective action against the organization that had required them to work for outside businesses for no wages, with compensation being paid instead to the organization itself. The decision in  Klick v Cenikor Foundation was issued in August, 2023

 

What is this Case About?  

 Cenikor Foundation is a rehabilitation center that assists people in Texas and Louisiana with alcohol and drug abuse problems. For a number of years, it had operated a long-term inpatient treatment program in which patients were assigned outside jobs and required to work, sometimes long hours, as part of their therapy. The patients received room, board, and medical treatment, but no wages for their work. Instead, the outside businesses paid Cenikor for the patients’ work. Over a two-year period, Cenikor “collected nearly $14 million for the labor” of its program participants.

In 2019, the Center for Investigative Reporting publicly reported on the Cenikor arrangement, stating in one report that Cenikor “sent thousands” of participants “to work without monetary compensation at major companies such as Walmart, Shell, and Exxon-Mobil.” Cenikor discontinued the program in 2021. Before that happened, however, six federal lawsuits were filed on behalf of former participants against Cenikor for wages that were never paid under the federal Fair Labor Standards Act (FLSA). The lawsuits were consolidated, some 226 people found out about and consented to join the litigation, and a district court certified that the case could proceed as a collective or class action. Cenikor filed an appeal, arguing that the litigation should not go forward as a class action, which would make it much more difficult for the litigation against it to proceed.

 

How did Judge Douglas and the Fifth Circuit Rule and Why is it Important?                                                                     

Judge Douglas’ opinion for the Fifth Circuit affirmed the lower court and sent the case back so it could proceed as a class or collective action. Douglas carefully analyzed the record and rulings below, and agreed with the district court that the participants were “similarly situated” and that the ultimate issue of “whether rehabilitation patients are considered employees entitled to compensation under the FLSA”  could and should be resolved collectively, instead of on a costly and time-consuming case-by-case basis. Douglas also agreed that the district court had properly required Cenikor to turn over contact information of other participants so that they could be told about the litigation and given the opportunity to participate.

Judge Douglas noted the strong “public interest in enforcing federal labor laws against employers who violate them.” She wrote that Congress intended the FLSA to “protect all covered workers from substandard wages and oppressive working hours.” She made clear that workers covered by the FLSA, who may well include Cenikor’s participants, “are entitled to a minimum wage and overtime compensation.”

The decision is obviously important to give participants in the Cenikor program their day in court to proceed collectively to try to obtain justice from Cenikor. Judge Douglas’ opinion is also significant because it makes clear the standards for determining whether FLSA claims can proceed collectively, whether against non-profts or corporations. In addition, the ruling serves as another reminder of the importance of promptly confirming fair-minded Biden nominees like Judge Douglas to our federal courts.