Justia Class Action Opinion Summaries

The United States Court of Appeals for the Fifth Circuit reviewed a case involving the Cenikor Foundation, a nonprofit drug rehabilitation center. The foundation had been sued by a group of its rehabilitation patients for alleged violations of the Fair Labor Standards Act (FLSA). The patients contended that they were effectively employees of the foundation, as they were required to work as part of their treatment program without receiving monetary compensation. The foundation contested the lawsuit and appealed a district court's decision to certify the case as a collective action under the FLSA.The Court of Appeals found that the district court had applied the incorrect legal standard in determining whether the patients were employees under the FLSA. Specifically, the court should have applied a test to determine who was the primary beneficiary of the work relationship, rather than a test typically used to distinguish employees from independent contractors.The appellate court remanded the case back to the district court to apply this primary beneficiary test and to consider the foundation's defense that any benefits provided to the patients offset any requirement to pay them a wage. The court emphasized that the question of whether the foundation's patients were employees under the FLSA was a threshold issue that needed to be resolved before the case could proceed as a collective action. View "Klick v. Cenikor Foundation" on Justia Law

Appellant Robert Petty is sole owner of Co-Appellant R.G. Petty Masonry. Appellants contracted with Respondent Blue Cross of Northeastern Pennsylvania (Blue Cross), a nonprofit hospital corporation that provides health insurance coverage for its employees. Appellants are covered under the group policy as subscribers. Appellants filed a four-count class action suit against Blue Cross, alleging that it violated the state Nonprofit Law by accumulating excessive profits and surplus well beyond the "incidental profit" permitted by statute. The second count alleged Blue Cross breached its contract with Appellants by violating the Nonprofit Law. The third count alleged Blue Cross owed appellants a fiduciary duty by virtue of their status as subscribers, and that duty was breached when it accrued the excess surplus. The fourth count requested an inspection of Blue Cross' business records. The trial court found Appellants lacked standing to challenge Blue Cross' alleged violations of the Nonprofit Law and dismissed the suit. The Commonwealth Court affirmed the trial court. Upon careful consideration of the briefs submitted by the parties in addition to the applicable legal authorities, the Supreme Court found that Appellants indeed lacked standing under the Nonprofit Law to challenge Blue Cross by their four-count complaint. Accordingly, the Court affirmed the lower courts' decisions and dismissed Appellants' case.