Busk v. Integrity Staffing Solutions, Inc.

As more and more circuit courts come into conformity and hold that so-called hybrid actions—where employees seek to certify state law claims as opt-out class actions, along with seeking to certify opt-in FLSA collective actions—are permissible, each such decision becomes less notable on its own. However, because employers continue to argue that such hybrids raise so-called incompatible issues in circuits where the issue remains undecided, this recent case from the Ninth Circuit is an important one.

In this case, the plaintiff-employees brought a putative class action against their former employer, alleging violations of the Fair Labor Standards Act (FLSA) and Nevada labor laws. Citing the incompatibility of the state-law claims, the District Court granted the defendant-employer’s motion to dismiss same. The plaintiff-employees appealed and the Ninth Circuit reversed and remanded, holding that, as a matter of first impression, a FLSA collective action and a state law class action could be brought in the same federal lawsuit.

Agreeing with the other circuit court’s to have already decided the issue, the Ninth Circuit reasoned:

Our sister circuits have correctly reasoned that FLSA’s plain text does not suggest that a district court must dismiss a state law claim that would be certified using an opt-out procedure. Its opt-in requirement extends only to “any such action”—that is, a FLSA claim. See 29 U.S.C. § 216(b); Knepper, 675 F.3d at 259–60 (noting Section 216(b) “explicitly limits its scope to the provisions of the FLSA, and does not address state-law relief”); Ervin, 632 F.3d at 977 (“Nothing” about FLSA’s text “suggests that the FLSA is not amenable to state-law claims for related relief in the same federal proceeding.”). FLSA also expressly permits more protective state labor laws. See 29 U.S.C. § 218(a) (“No provision of this chapter … shall excuse noncompliance with any Federal or State law or municipal ordinance establishing a minimum wage higher than the minimum wage established under this chapter or a maximum work week lower than the maximum workweek established under this chapter….”). This savings clause provides further evidence that a federal lawsuit combining state and federal wage and hour claims is consistent with FLSA. See Ervin, 632 F.3d at 977;Shahriar, 659 F.3d at 247–48.

 Nor does the legislative history of Section 216(b) support the view of some district courts that allowing both actions to proceed simultaneously “would essentially nullify Congress’s intent in crafting Section 216(b) and eviscerate the purpose of Section 216(b)‘s opt-in requirement.” Otto v. Pocono Health Sys., 457 F.Supp.2d 522, 524 (M.D.Pa.2006), overruled by Knepper, 675 F.3d at 253–62. We agree with the Third Circuit that the “full legislative record casts doubt” on the contention that Section 216(b) was intended to eliminate opt-out class actions. Knepper, 675 F.3d at 260; see also Ervin, 632 F.3d at 977–78;Shahriar, 659 F.3d at 248. When Congress created Section 216(b)‘s opt-in requirement as part of the Portal–to–Portal Act of 1947, it was responding to concerns about third parties filing “representative” FLSA actions on behalf of disinterested employees. See Hoffman–La Roche, 493 U.S. at 173. Accordingly, it amended FLSA “for the purpose of limiting private FLSA plaintiffs to employees who asserted claims in their own right and freeing employers of the burden of representative actions.” See id.

This purpose does not evince an intent to eliminate opt-out class actions for state wage and hour claims brought in federal court. Even if it did, Congress has expressed a contrary intent in the Class Action Fairness Act of 2005, which confers federal jurisdiction over class actions where certain diversity and amount-in-controversy requirements are met. See Class Action Fairness Act of 2005, Pub.L. No. 109–2, 119 Stat. 4. Because the Class Action Fairness Act provides that federal courts should exercise jurisdiction over certain class actions (including those alleging violations of state wage and hour laws), and these class actions are certified pursuant to Rule 23‘s opt-out procedure, we cannot conclude that Congress intended such claims be dismissed simply because they were brought in conjunction with FLSA claims.

While no longer groundbreaking, it is still significant that an issue once very much uncertain is further clarified by this decision.

Click Busk v. Integrity Staffing Solutions, Inc. to read the entire Opinion.