Category Archives: State Law Claims

10th Cir.: Award of Liquidated Damages Under FLSA Does Not Preclude Award of Similar Penalties Under Colorado Law (CWCA)

Evans v. Loveland Auto. Invs.

Following the entry of judgment on his behalf on both his FLSA and Colorado wage and hour claims, plaintiff appealed the district court’s judgment. Specifically, plaintiff appealed the district court’s holding that an award of liquidated damages under the FLSA precluded an award of penalties under the CWCA. Whereas the district court had held that plaintiff was entitled to an award of one or both because awarding both would have constituted a double recovery, the Tenth Circuit disagreed. Rather, the Tenth Circuit held that because liquidated damages under the FLSA and penalties under the CWCA serve different purposes, an employee who prevails on claim under both statutes may be awarded both liquidated damages and penalties.

Framing the issue before it, the Tenth Circuit explained:

The court then stated that “these claims give rise to similar and, at least partially, overlapping damages.” Aplt. App. at 15. The court cited Mason v. Oklahoma Turnpike Authority, 115 F.3d 1442, 1459 (10th Cir. 1997) (quoting U.S. Indus., Inc. v. Touche Ross & Co., 854 F.2d 1223, 1259 (10th Cir. 1988)), overruled on other grounds by TW Telecom Holdings Inc. v. Carolina Internet Ltd., 661 F.3d 495 (10th Cir. 2011), for the principle that “‘[i]f a federal claim and a state claim arise from the same operative facts, and seek identical relief, an award of damages under both theories will constitute double recovery.'” Then without evaluating the nature of relief available under FLSA and CWCA, the court further concluded that Mr. Evans could “recover damages only on the statute which provides the greatest relief.” Aplt. App. at 15.

Without explaining why it believed CWCA provided greater relief than FLSA, the district court awarded Mr. Evans $7,248.75 in compensatory damages for unpaid wages under CWCA. Further, after finding that Mr. Evans had made a proper, written demand for payment under CWCA and that the defendants had willfully failed to pay the owed wages, the district court also awarded Mr. Evans a penalty under CWCA of 175% of the unpaid wages: $12,685.31. See Colo. Rev. Stat. § 8-4-109(3). Although noting that Mr. Evans had provided no support for his prejudgment-interest claim, the court nevertheless exercised its discretion and [*4]  awarded prejudgment interest—solely on the compensatory damages—in the amount of $1077.18, together with postjudgment interest. In addition, it ruled that Mr. Evans was entitled to his attorney fees and costs.

In reaching its holding that liquidated damages under the FLSA and penalties under the CWCA are not mutually exclusive, the Tenth Circuit differentiated the reasons underlying both types of damages, and explained:

On appeal, Mr. Evans contends that he is entitled to FLSA liquidated damages in addition to the CWCA penalty because the two monetary awards serve different purposes. More specifically, he contends that FLSA liquidated damages are meant to compensate employees wrongly unpaid their wages, but that the CWCA penalty is meant to punish employers that wrongly fail to pay their employees’ earned wages. We agree with Mr. Evans’s position.

In addition to requiring employers to pay wages owed, FLSA authorizes the imposition of an equal amount as liquidated damages unless “the employer shows both that he acted in good faith and that he had reasonable grounds for believing that his actions did not violate the Act.” Doty v. Elias, 733 F.2d 720, 725-26 (10th Cir. 1984); see also 29 U.S.C. §§ 216(b), 260. Liquidated damages awarded under FLSA are compensatory rather than punitive. Brooklyn Sav. Bank v. O’Neil, 324 U.S. 697, 707 (1945). In other words, [*5]  they “‘are not a penalty exacted by the law, but rather compensation to the employee occasioned by the delay in receiving wages due caused by the employer’s violation of the FLSA.'” Jordan v. U.S. Postal Serv., 379 F.3d 1196, 1202 (10th Cir. 2004) (quoting Herman v. RSR Sec. Servs. Ltd., 172 F.3d 132, 142 (2d Cir. 1999)); see also Renfro v. City of Emporia, 948 F.2d 1529, 1540 (10th Cir. 1991) (“The purpose for the award of liquidated damages is ‘the reality that the retention of a workman’s pay may well result in damages too obscure and difficult of proof for estimate other than by liquidated damages.'” (quoting Laffey v. Northwest Airlines, Inc., 567 F.2d 429, 463 (D.C. Cir. 1976))).

The relief available under FLSA and CWCA does partially overlap because both laws allow employees to recover unpaid wages as compensatory damages. And Mr. Evans concedes that he can recover his unpaid wages only once. But, as discussed above, FLSA allows for additional compensatory damages as liquidated damages. In contrast, CWCA imposes a penalty on an employer who receives an employee’s written demand for payment and fails to make payment within fourteen days, and it increases the penalty if the employer’s failure to pay is willful. See Graham v. Zurich Am. Ins. Co., 296 P.3d 347, 349-50 (Colo. App. 2012). No Tenth Circuit case directly addresses whether these damages duplicate one another.

Other jurisdictions have concluded that an award of both a state statutory penalty and FLSA liquidated damages does not constitute a double [*6]  recovery. See, e.g., Mathis v. Housing Auth., 242 F. Supp. 2d 777, 790 (D. Or. 2002) (“[A]n award of the penalty under [the state law] and an award of liquidated damages under the FLSA do not constitute a double recovery.”); Morales v. Cancun Charlie’s Rest., No. 3:07-cv-1836 (CFD), 2010 WL 7865081, at *9 (D. Conn. Nov. 23, 2010) (unpublished) (allowing recovery of liquidated damages under both FLSA and state law because the provisions “serve different purposes—the FLSA damages are compensatory and the [state law] damages serve a punitive purpose”); Do Yea Kim v. 167 Nail Plaza, No. 05 CV 8560 (GBD), 2008 WL 2676598, at *3 (S.D.N.Y. July 7, 2008) (unpublished) (“New York Labor Law provides separately for liquidated damages in overtime compensation claims, in addition to federal liquidated damages.”). We agree with the rationale of these cases.

We note further that, like FLSA liquidated damages, prejudgment interest also is meant “‘to compensate the wronged party for being deprived of the monetary value of his loss from the time of the loss to the payment of the judgment.'” Greene v. Safeway Stores, Inc., 210 F.3d 1237, 1247 (10th Cir. 2000) (quoting Suiter v. Mitchell Motor Coach Sales, Inc., 151 F.3d 1275, 1288 (10th Cir. 1998)). It follows that “a party may not recover both liquidated damages and prejudgment interest under the FLSA.” Doty, 733 F.2d at 726. Thus, on remand, if the district court awards FLSA liquidated damages it must vacate its award of prejudgment interest. See Dep’t of Labor v. City of Sapulpa, 30 F.3d 1285, 1290 (10th Cir. 1994) (“If the district court finds that liquidated damages should be awarded it must vacate [*7]  its award of prejudgment interest, because it is settled that such interest may not be awarded in addition to liquidated damages.”).

Therefore, we remand to the district court to recalculate the amount of damages in light of our determination that it is permissible for the court to award both FLSA liquidated damages and a CWCA penalty. If the court awards FLSA liquidated damages, it must vacate the award of prejudgment interest.

While this decision is limited in application to cases in which employees make claims simultaneously under the FLSA and CWCA, it’s application and reasoning can certainly be applied to other so-called “hybrid” cases in which FLSA claims are paired with state wage and hour law claims.

Click Evans v. Loveland Auto. Invs. to read the entire decision.

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W.D.N.Y.: Common Law Claims Not Preempted To the Extent They Provide a Remedy Not Available Under the FLSA

Gordon v. Kaleida Health

In an unusual procedural posture, this case was before the court on plaintiffs’ motion to remand their state common law claims, based on lack of subject matter jurisdiction.  The court held that it had subject matter jurisdiction however, because of FLSA preemption considerations.  As discussed here, the court held that common law claims seeking to recover straight-time compensation otherwise not covered under the FLSA are not preempted by the FLSA.

Discussing the issue the court reasoned:

“In many district court cases where this issue has arisen, the plaintiffs’ common law claims were brought in conjunction with FLSA claims, based on the same facts, and seeking the same relief. In such cases, most courts have had no trouble dismissing the common law claims as preempted to the extent recovery is available under the FLSA, even where the plaintiff also brought wage claims under a parallel state statute. See, e.g., Guensel v. Mount Olive Bd. of Educ., Civ. No. 10–4452, 2011 U.S. Dist. LEXIS 132102, at *19, 2011 WL 5599717 (D.N.J. Nov. 16, 2011) (common law claims that are “directly covered” by FLSA must be brought under the FLSA); DeMarco v. Northwestern Mem. Healthcare, Civ. No. 10–C–397, 2011 U.S. Dist. LEXIS 88541, at *17–18, 2011 WL 3510905 (N.D.Ill. Aug. 10, 2011) (unjust enrichment and other state common law claims seeking relief available under the FLSA are preempted); Bouthner v. Cleveland Constr., Inc., Civ. No. RDB–11–244, 2011 U.S. Dist. LEXIS 79316, at *21–22, 2011 WL 2976868 (D.Md. July 21, 2011) (although common law claim made no reference to FLSA, it was preempted where claim sought wages mandated by FLSA).

Two courts in this Circuit have expressly concluded that common law claims are preempted to the extent they seek recovery available under the FLSA, but are not preempted to the extent that state law provides a remedy not available under federal law. DeSilva v. N. Shore–Long Island Jewish Health Sys., 770 F.Supp.2d 497, 532–33 (E.D.N.Y.2011) (finding common law claims preempted by FLSA to extent they sought overtime wages, but not preempted to extent they sought straight-time pay not available under the FLSA); Barrus v. Dick’s Sporting Goods, Inc., 732 F.Supp.2d 243, 263 (W.D.N.Y.2010)  (dismissing common law claims seeking unpaid overtime as preempted by FLSA, but allowing claim for unpaid straight time wages to go forward). Other district courts have held likewise. See, e .g., Monahan v. Smyth Auto., Inc., No. 10–CV–00048, 2011 Dist. LEXIS 9877, at *9–11, 2011 WL 379129 (S.D. Oh Feb. 2, 2011) (unjust enrichment claim not preempted where it was based on alleged failure to pay the state’s minimum wage, which was higher than FLSA minimum wage rate); Mickle v. Wellman Prods. LLC, No. 08–CV–0297, 2008 U.S. Dist. LEXIS 63697, at *10–11, 2008 WL 3925266 (N.D.Okla.2008) (while state statute created a distinct cause of action for overtime compensation, the plaintiffs’ common law claim seeking such relief was duplicative of remedies provided by the FLSA and was preempted).

The law on this issue is by no means settled—some courts have declined to find common law claims preempted where a state’s statute incorporates the FLSA’s minimum wage and/or overtime provisions, and others have dismissed entirely common law claims for which the FLSA provides only partial relief. However, I find the foregoing cases from within this Circuit persuasive. As the DiSilva court noted, the FLSA’s savings clause expressly provides that wage and hour actions may be brought under state wage statutes, “it says nothing about a party’s ability to pursue general common law claims that have no specific relevance to the labor law context.” 2011 U.S. Dist. LEXIS 27138, at *93 (emphasis in original).

Here, Plaintiffs common law claims are not brought in conjunction with any claim for relief under the FLSA or the NYLL. They refer generally to statutory law only as the basis for calculating damages. This vague reference to “state law” is not enough to draw purely common law claims into the ambit of the FLSA’s savings clause. Accordingly, to the extent Plaintiffs are seeking unpaid overtime wages that are available under the FLSA, their common law claims are preempted, and to the extent they are seeking straight-time wages for which no federal relief is available, they are not.”

Click Gordon v. Kaleida Health to read the entire Decision and Order.

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Florida’s Minimum Wage Increases to $7.31 Per Hour

The Florida minimum wage increased to $7.31 per hour, effective today, June 1, 2011.  Florida law requires the Agency for Workforce Innovation to calculate an adjusted minimum wage rate each year.  The annual calculation is based on the percentage change in the federal  Consumer Price Index for urban wage earners and clerical workers in the South Region for the 12-month period prior to September 1, 2010.

On November 2, 2004, Florida voters approved a constitutional amendment which created Florida’s minimum wage.  The minimum wage applies to all employees in the state who are covered by the federal minimum wage.

Employers must pay their employees the hourly state minimum wage for all hours worked in Florida.  The definitions of “employer”, “employee”, and “wage” for state purposes are the same as those established under the federal Fair Labor Standards Act (FLSA).  Employers of “tipped employees” who meet eligibility requirements for the tip credit under the FLSA, may count tips actually received as wages under the Florida minimum wage.  However, the employer must pay “tipped employees” a direct wage.  The direct wage is calculated as equal to the minimum wage ($7.31) minus the 2003 tip credit ($3.02), or a direct hourly wage of $4.29 as of June 1, 2011.

Go to the Palm Beach Post’s website or the State of Florida’s Agency for Workforce Innovation to read more about the increase.

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Pennsylvania Laborers Like New Law That Defines “Employees,” Pittsburgh Post-Gazette Reports

The Pittsburgh Post-Gazette reports that a new law defining who is an employee (versue independent contractor) is being greated enthusiastically by Pennsylvania workers:

“Union laborers are claiming victory now that Gov. Ed Rendell has signed a law aimed at curtailing construction companies’ ability to skirt taxes — and cut its own costs and liability — by labeling its workers independent contractors.

By classifying their workers as “independent contractors” instead of employees, companies can avoid paying unemployment compensation and workers’ compensation taxes.

Avoiding those taxes, according to labor groups, reduces employer costs and allows such companies to underbid contracting companies that are following the letter of the law.

The new law — formerly House Bill 400 and now Act 72 — is called the Construction Workplace Misclassification Act. Contracting companies that violate the act could be subject to fines and criminal prosecution. There’s also an “acting in concert” provision, which would penalize anyone who knowingly hires a contractor that is in violation of the act.

“It really will start to separate responsible contractors from irresponsible contractors,” said Jason Fincke, executive director of the Builders Guild of Western Pennsylvania, a labor management and contractor association group.

The point of the law isn’t to eliminate the use of independent contractors in the construction industry, he said.

“If there’s a service that you need that you don’t normally provide, you would get someone to do that for you,” Mr. Fincke said. “That’s a legitimate independent contractor.”

The law applies to the construction field only, to the regret of the Teamsters, who had hoped the law would be expanded to include truck drivers (and other kinds of workers) as well. The Teamsters have been fighting with Moon-based FedEx Ground, which classifies its drivers independent contractors. FedEx says its drivers are “small business owners” because they own their own equipment.”

To read the entire article go to Pittsburgh Post-Gazette.

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Oregon State Minimum Wage To Rise By .10¢ Per Hour In January, Stateman Journal Reports

StatemanJournal.com is reporting that Oregon is set to raise the State Minimum Wage by .10¢ per hour in January.

“Oregon’s minimum wage will rise to $8.50 per hour on Jan. 1, State Labor Commissioner Brad Avakian said Monday.

The 10-cent increase mirrors a 1.15 percent increase in the Consumer Price Index since August 2009. Oregon’s minimum wage rate has been $8.40 per hour since January 2009.

Washington, where the minimum wage is currently $8.55 per hour, will announce its adjustment on Sept. 30.”

According to the story, “Ballot Measure 25, enacted by Oregon voters in 2002, requires a minimum wage adjustment annually based on changes in inflation as measured by the Consumer Price Index. The Commissioner of the Bureau of Labor and Industries is directed to adjust the minimum wage for inflation every September, rounded to the nearest five cents.”

To read the entire article, click here.

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S.D.N.Y.: NYLL Unpaid Gratuities and FLSA Overtime Claims Not Precluded By LMRA or CBA; No Interpretation of CBA Required To Determine Whether Defendant Violated Law

Alderman v. 21 Club Inc.

Plaintiffs, unionized waitstaff who worked Defendant’s private banquets filed suit seeking the recover of unpaid tips, pursuant to the New York Labor Law, and unpaid overtime, pursuant to the FLSA.  Plaintiffs specifically sought the portion of service charges charged by Defendant, but not paid to Plaintiffs as “tips” as required by New York law.  The Defendant moved to dismiss, asserting that Plaintiffs’ claims for unpaid tips were precluded by the LMRA (the CBA stated that banquet waitstaff would receive the equivalent of 18% of the gross price of any banquet they worked).  The Court denied Defendant’s Motion, because the claims were pendant not on the CBA, but on the NYLL.

The Court explained:

“As described earlier, plaintiffs’ first claim is under NYLL § 196-d for unpaid gratuities to plaintiffs who worked banquet events at the ’21’ Club. Defendants contend that this claim in reality is one under Section 301 of the LMRA, 29 U.S.C. § 185, which preempts the application of state labor law. Section 301 of the LMRA provides:

Suits for violation of contracts between an employer and a labor organization representing employees in an industry affecting commerce … may be brought in any district court of the United States having jurisdiction of the parties, without respect to the amount in controversy or without regard to the citizenship of the parties.

The Supreme Court has interpreted Section 301 “as a congressional mandate to the federal courts to fashion a body of federal common law to be used to address disputes arising out of labor contracts.” Allis-Chalmers Group v. Lueck, 471 U.S. 202, 209 (1985). When a state law claim alleges a violation of a labor contract or when the resolution of a state law claim depends on an interpretation of a collective bargaining agreement, Section 301 preempts that claim. See Hawaiian Airlines, Inc. v. Norris, 512 U.S. 246, 261 (1994). But if a state “prescribes rules or establishes rights and obligations that are independent of a labor contract, actions to enforce such independent rights or rules would not be preempted by section 301.” Vera v. Saks & Co., 335 F.3d 109, 115 (2d Cir.2003). Indeed, the “bare fact that a collective-bargaining agreement will be consulted in the course of state-law litigation plainly does not require the claim to be extinguished.” Livadas v.. Bradshaw, 512 U.S. 107, 124 (1994). In order to determine whether a state law claim is preempted because it requires interpretation of a collective bargaining agreement, the court must analyze whether the “legal character” of the state law claim is truly independent of the rights conferred under the collective bargaining agreement. Salamea v. Macy’s East, Inc., 426 F.Supp.2d 149, 153-54 (S.D.N .Y.2006).

In the present case, plaintiffs bring their gratuities claim under NYLL § 196-d and not under the CBA. Both § 196-d and the CBA give employees rights in respect to gratuities, although they are worded differently in ways that have significance in this case. Specifically, the CBA guarantees gratuities in the amount of 18% of the total bill for the function. Section 196-d guarantees to the employees whatever has been charged to provide gratuities, without reference to a specific percentage. It is necessary, therefore, for the court to define exactly what plaintiffs’ claim is and then to determine whether it fits under § 196-d or under the CBA or both.

The relevant portions of the complaint are paragraphs 21 and 22 in the factual allegations and paragraphs 33 and 34 stating the claim:

21. For private events, Defendants charged gratuities to the hosts of the events equal to a percentage of the cost of the events.

22. While Defendants distributed a potion of these gratuities to the service staff that worked these parties, Defendants did not distribute all of the gratuities. Thus, Defendants illegally retained substantial portions of the gratuities paid by private event hosts, instead of distributing them in their entirety to service staff.

33. Defendants received gratuities from customers for all private banquets.

34. Defendants retained portions of Plaintiffs’ tips and Class members’ tips.

On their face, the allegations of the complaint do not refer to 18%. However, they are not precise in excluding the possibility that in fact plaintiffs are seeking the 18% referred to in the CBA. But the court believes that the December 29, 2008 letter of union president Bill Granfield is relevant in construing the nature of the gratuities claim. This letter makes a demand that the ’21’ Club pay to employees “the difference between your service charge rate and the 18% gratuity rate contained in the contract.” The reference to “the contract” presumably means the CBA. Thus, in late 2008, the Union was claiming that the service charges were greater than the 18% referred to in the CBA and was demanding that the entire amount be paid to the employees.

The court concludes that the complaint should be taken on its own terms and cannot properly be construed as actually referring only to the 18%.

The complaint asserts that it is made under NYLL § 196-d. That statute provides:

No employer or his agent or an officer or agent of any corporation, or any other person shall demand or accept, directly or indirectly, any part of the gratuities, received by an employee, or retain any part of a gratuity or of any charge purported to be a gratuity for an employee. This provision shall not apply to the checking of hats, coats or other apparel. Nothing in this subdivision shall be construed as affecting the allowances from the minimum wage for gratuities in the amount determined in accordance with the provisions of article nineteen of this chapter nor as affecting practices in connection with banquets and other special functions where a fixed percentage of the patron’s bill is added for gratuities which are distributed to employees, nor to the sharing of tips by a waiter with a busboy or similar employee.

The first sentence of the statute prevents an employer from taking the gratuities received by an employee. The relevant part of the last sentence states that nothing in the statute affects the practice in connection with functions where a fixed percentage is added to the patron’s bill for gratuities which are distributed to employees. The statute is somewhat confusing because the assurance of the employee’s rights in the first sentence is followed by the latter portion of the last sentence which states that the statute is not applicable to functions where an amount is added to the patron’s bill for gratuities.

Plaintiffs cite authorities that they contend give them rights under the statute. It is not the province of the court on the present motion to resolve questions which may arise as to the exact construction of the statute. It is sufficient to say that, as far as state law is concerned, plaintiffs would surely be entitled to attempt to recover under the statute. What defenses there may be under state law, and how the issues are resolved, remains to be seen. One thing is clear under § 196-d, and that is that there is no reference to 18% or any limit of 18%.

On the question of whether plaintiffs’ gratuities claim should be construed as in reality coming under the CBA so that federal law applies, the language of the CBA was quoted earlier in this opinion. The CBA only guarantees 18%. Consequently, a claim for more than 18% is not properly one under the CBA. It is properly made under § 196-d.

The result is, and the court so holds, that the gratuities claim is not preempted by federal law.

The court notes the contention that the history of the Union submissions by way of grievances constitutes an admission that the gratuities claim in the present case properly falls within the ambit of the CBA. The court rejects this argument. The employees did not give up their right to assert a gratuities claim under § 196-d in the present action.”

The Court also ruled that Plaintiffs were not required to submit their claims to arbitration, based on the language in the CBA.

To read the entire opinion, click here.

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D.Nev.: FLSA Precluded Nevada State Law Class Action

Daprizio v. Harrah’s Las Vegas, Inc.

This case was before the Court on Defendant’s Motion to Dismiss Plaintiffs’ state law claims on several grounds.  As discussed here, the Court ruled that the FLSA precludes Nevada State Law Class Action claims. 

“The Court finds that the FLSA precludes the state law class action. The conflict between the two mass action schemes involves the mechanisms by which parties become members of a suit. Defendant argues that “allowing the parallel claims to be pursued concurrently would allow the application of the collective action opt-out mechanism of Rule 23, invoked by the state law claims, to govern what Congress intended to be a more limited situation of opt-in collective action [under the FLSA].” (Mot. Dismiss 13, ECF No. 2). The Court agrees. The FLSA states that, “No employee shall be a party plaintiff to any such action unless he gives consent in writing to become such a party and such consent is filed in the court in which such action is brought.” 29 U.S.C. § 216(b). This is the “opt-in” provision used for FLSA collective actions, under which a putative class member is not bound unless he or she affirmatively opts in to the suit. Gardenvariety class actions, however, are governed by Rule 23, which states that “the court will exclude from the class any member who requests exclusion.” Fed.R.Civ.P. 23(c)(2)(B)(v). This is the “opt-out” provision, under which members of a certified class must affirmatively opt out of the class or be bound by the class action litigation. This divergence between the respective opt-in and opt-out procedures of a FLSA collective action and a garden-variety class action results in a class action under state labor laws being preempted by the FLSA’s collective action scheme.

The Ninth Circuit has based its preemption analysis on the Supreme Court’s three categories: (1) express preemption-“where Congress explicitly defines the extent to which its enactments preempt state law”; (2) field preemption-“where state law attempts to regulate conduct in a field that Congress intended the federal law exclusively to occupy”; and (3) conflict preemption-“where it is impossible to comply with both state and federal requirements, or where state law stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.”  Williamson v. Gen. Dynamics Corp., 208 F.3d 1144, 1149 (9th Cir.2000) (citing Indus. Truck Ass’n, Inc. v. Henry, 125 F.3d 1305, 1309 (9th Cir.1997) (citing English v. Gen. Elec. Co., 496 U.S. 72, 78-80 (1990))). “Consideration of the issues arising under the Supremacy Clause ‘start[s] with the assumption that the historical police powers of the states [are] not to be superseded by … Federal Act unless that [is] the clear and manifest purpose of Congress.’ “ Cipollone v. Liggett Group, Inc., 505 U.S. 504, 516 (1992) (quoting Rice v. Santa Fe Elevator Corp., 331 U.S. 218 (1947)). “Preemption issues must be decided on a case-by-case basis.”   Williamson, 208 F.3d at 1155.

A court of this District has ruled that the FLSA precludes state-law labor class actions. In Williams v. Trendwest Resorts, Inc., the court found that “the class action mechanisms of the FLSA and Rule 23 are incompatible. It would be inappropriate to permit Plaintiff’s attempt to circumvent the restrictive opt-in requirement of the FLSA….” No. 2:05-CV-0605-RCJ-LRL, 2007 WL 2429149 at *4 (D.Nev. Aug. 20, 2007) (Jones, J.). In Trendwest Resorts, the defendant’s employees were attempting to recover overtime wages under the FLSA as well as under California state labor law. The court pointed out that notice was sent to 1578 employees of Trendwest Resorts in California and Nevada, but only 194 individuals had opted into the putative class. Id. Had Rule 23 been implemented, the other 1100 California employees who failed to affirmatively opt in would have been brought into the case. Id . In the present case, there is only one complaining party and an unknown number of potential class members. “[T]he policy behind requiring FLSA plaintiffs to opt in to the class would largely be thwarted if a plaintiff were permitted to back door the shoehorning in of unnamed parties through the vehicle of calling upon similar state statutes that lack such an opt-in requirement.” Leuthold v.. Destination Am., Inc., 224 F.R.D. 462, 470 (N.D.Cal.2004) (citation and internal quotation marks omitted).

Plaintiff argues that no preemption issue exists since none of the three types of preemption apply. Express and field preemption are not in dispute since neither side alleges that the federal law expressly preempts state law or that labor disputes are strictly a federal issue. Conflict preemption, Plaintiff argues, also does not apply because the “Nevada overtime and minimum wage claims do not ‘stand as an obstacle’ to Congress’ purpose in enacting the FLSA.” (Resp. Mot. Dismiss 9:11-12, ECF No. 14). In support of this argument, Plaintiff points to the “savings clause” of the FLSA which allows states to enact wage and hour laws more favorable to workers than the minimum requirements of the FLSA and quotes Williamson, which states that, “the FLSA’s ‘savings clause’ is evidence that Congress did not intend to preempt the entire field.” 208 F.3d at 1151 (citing 29 U.S.C. § 218(a)). This argument is unpersuasive for two reasons. First, the savings clause of the FLSA that Plaintiff mentions deals expressly with minimum wages and child labor laws. The language leaves little room for broader inference and probably no room for broader application. Second, the quote from Williamson Plaintiff mentions explicitly refers to field preemption, a type of preemption Plaintiff explicitly disclaims. The savings clause simply means that plaintiffs may bring FLSA collective actions based on violations of state wage and hour laws that are stricter than federal requirements. But the fact that Congress permits suit based on a state’s wage and hour requirements that are stricter than those in the FLSA does nothing to ameliorate the conflict between the FLSA opt-in provision and the Rule 23 opt-out provision.

Because of the tension between the opt-in procedure of an FLSA collective action and the opt-out procedure of a garden-variety Rule 23 class action, a conflict exists. See, e.g., Rose v. Wildflower Bread Co., No. CV09-1348-PHX-JAT, 2010 WL 1781011, at *3 (D.Ariz. May 4, 2010). The Ninth Circuit has stated even more broadly in dicta that “[c]laims that are directly covered by the FLSA (such as overtime and retaliation disputes) must be brought under the FLSA.” Williamson, 208 F.3d at 1154. This could be read as preempting even Plaintiff’s individual claim, but that question is not before the Court.”

There continues to be a rift between various circuits (and even within circuits) as to whether so-called hybrid FLSA Collective Actions may co-exist with State Law Class claims.  Stay tuned to see whether the Supreme Court will ultimately weigh in.

To read the entire decision, click here.

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