Redefining Early FLSA Litigation: The Impact of Eli Lilly

While styled as a procedural decision, Eli Lilly marks a sharp doctrinal shift. The court squarely rejected the longstanding Lusardi standard, which had allowed plaintiffs to obtain notice by making a minimal “modest factual showing,” instead holding that plaintiffs must demonstrate a “material factual dispute” as to whether the proposed collective is similarly situated. Crucially, courts must now consider both parties’ evidence at the notice stage before any collective is conditionally certified.

A New Standard in the Seventh Circuit: From Lusardi to Eli Lilly

For decades, courts across the country used a two-step framework for managing collective actions under the FLSA. Unlike a class action, where a named plaintiff represents the interests of absent non-party plaintiffs who are then bound by the outcome of the case unless they choose to opt out, a collective action aggregates individual claims brought by individual plaintiffs into a single proceeding. First articulated in Lusardi v. Xerox Corp., step one requires plaintiffs requesting court approval to notify potential opt-in members in a collective action to provide only a “modest factual showing” that they and others have been affected by the same unlawful policy or practice. 118 F.R.D. 351 (D.N.J. 1987). Courts applying the Lusardi standard typically avoided evaluating conflicting evidence and often approved sending notice based on just a few sworn statements or general, standard claims. At step two, following discovery, the court would revisit whether the opt-in plaintiffs were in fact similarly situated.

This approach, though widely adopted, including by many district courts in the Seventh Circuit, came under fire for being vague, inconsistently applied, and unduly favorable to plaintiffs. Courts and commentators described the “modest” or “modest-plus” standard as amorphous and increasingly unworkable. See, e.g., McColley v. Casey’s Gen. Stores, Inc., 559 F. Supp. 3d 771, 775–76 (N.D. Ind. 2021). Some courts experimented with heightened scrutiny. Others, like Fillipo v. Anthem Cos., even borrowed class certification standards from Rule 23. No. 1:22-cv-00926, 2022 WL 18024818 (S.D. Ind. Dec. 30, 2022). The Fifth Circuit departed from Lusardi in Swales v. KLLM Transport Services, L.L.C., 985 F.3d 430 (5th Cir. 2021), requiring plaintiffs to prove that notice recipients were “actually similar” by a preponderance of the evidence before any notice could issue. The Sixth Circuit followed with a “strong likelihood” standard in Clark v. A&L Homecare & Training Center, LLC, 68 F.4th 1003 (6th Cir. 2023). These circuits viewed the permissiveness of Lusardi as incompatible with the goals of judicial neutrality and efficiency. Against this backdrop, the Seventh Circuit had not definitively weighed in—until now.

In Richards v. Eli Lilly & Co., the court squarely addressed the standard for issuing notice in FLSA and ADEA collective actions. The plaintiff, Monica Richards, alleged that Eli Lilly’s promotion practices disadvantaged older employees in favor of younger “Early Career Professionals.” She sought notice to all employees aged 40 or older who had been denied promotions since February 2022. The district court applied Lusardi, disregarded Eli Lilly’s rebuttal evidence, and conditionally certified the collective. On interlocutory appeal under 28 U.S.C. § 1292(b), the Seventh Circuit vacated and remanded, rejecting Lusardi’s “modest showing” and crafting a new standard.

The court held that to obtain notice, a plaintiff must establish a “material factual dispute” as to whether the proposed opt-in plaintiffs are similarly situated by producing some evidence that the members of the proposed collective are “victims of a common unlawful employment practice or policy.” Crucially, the court emphasized that defendants are entitled to present rebuttal evidence and that courts must evaluate both sides’ submissions before authorizing notice. See Richards, at 17–18. This “material dispute” standard represents a deliberate middle ground. The Seventh Circuit declined to adopt the Fifth Circuit’s preponderance standard or the Sixth Circuit’s strong likelihood threshold, citing concerns about inefficiency and access to evidence that often lies with not-yet-noticed plaintiffs. At the same time, the court reaffirmed the principles from Hoffmann-La Roche Inc. v. Sperling, 493 U.S. 165 (1989): judicial neutrality, timely and accurate notice, and efficient case management. The decision does more than shift standards. It rebalances early-stage litigation power, curbs judicial endorsement of overbroad collectives, and empowers district courts to tailor notice or deny it altogether based on the specific evidentiary record.

Looking Ahead

The Seventh Circuit’s decision in Richards v. Eli Lilly offers a meaningful shift in the early procedural landscape of collective action litigation, particularly for employers facing FLSA or ADEA claims. Most notably, the decision rejects the long-standing Lusardi framework and replaces it with a more structured, evidence-based approach that requires plaintiffs to demonstrate a “material factual dispute” as to whether they and other proposed opt-in plaintiffs are similarly situated.

This is a significant development for employers. For the first time in this circuit, defendants now have a recognized right to introduce counterevidence at the notice stage, and courts are required to consider it. This opens a valuable strategic window for employers. Whereas conditional certification had previously become a procedural formality in many cases, the Eli Lilly standard creates a genuine opportunity to defeat, or significantly narrow, collective claims at the outset. Employers can now point to individualized job duties, location-specific policies, variations in supervision, and differences in compensation practices to challenge similarity, often without the need to wait for post-discovery motions. The decision also validates the need for limited, targeted pre-notice discovery in appropriate cases, providing another tool for defense counsel to delay or defeat premature or overbroad certification efforts.

Importantly, the court declined to adopt the heightened standards articulated in Swales and Clark, which respectively require a showing by a preponderance of the evidence or a strong likelihood of similarity before notice may issue. Still, by elevating the standard beyond the prior “modest factual showing” and requiring meaningful judicial engagement with both parties’ evidence, Eli Lilly places a judicial gatekeeper between a complaint and mass litigation. This will likely reduce the frequency of conditional certification based on thin affidavits and vague policy allegations.

That said, the decision leaves some questions open. For example, while the majority opinion suggests that plaintiffs must ultimately prove similarity by a preponderance of the evidence at final certification, Judge Hamilton’s concurrence questions whether that standard should apply in what is fundamentally a permissive joinder mechanism under 29 U.S.C. § 216(b). The issue may be further litigated, particularly if district courts begin using the final certification stage as a second merits checkpoint. Employers should be prepared to revisit similarity questions post-discovery, with evidence refined through individualized depositions and fact development. From a broader perspective, Eli Lilly deepens the circuit split on how to manage collective actions at the notice phase. Plaintiffs may increasingly shop for friendlier forums, particularly in jurisdictions that still adhere to Lusardi’s permissive threshold. But within the Seventh Circuit, the ruling provides clear instruction: notice is not automatic, and courts must function as neutral arbiters, not passive conduits for opt-in recruitment. That shift will likely lead to greater efficiency, narrower collectives, and more reasoned case development in early litigation stages.

For employers, the practical takeaway is clear. Defending against collective actions now begins at the very first procedural stage, not after months of opt-ins and discovery. Employers should prepare accordingly by identifying job-specific differences, preserving organizational charts, gathering policy variations, and securing declarations where appropriate. With the right approach, defendants are now positioned to challenge certification early and with far greater effect.