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9th Cir.: Hybrid Actions Permissible; State Law Opt-out Class May Proceed In Same Case As FLSA Opt-in Collective

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.

M.D.Fla.: Opt-in Plaintiffs Who Filed Consents to Join Have Same Legal Status As Named Plaintiff Under FLSA

Norena-Giraldo v. Inglese Worldwide Corporation

In this case the court was faced with the issue of what exactly the legal status Opt-in Plaintiffs are, with respect to the named-Plaintiff, in a case that has not been certified as a collective action.  Initially, the court had denied Plaintiff’s Motion for a Final Default Judgment as to Opt-in Plaintiffs, while entering same as to the named-Plaintiff only.  However, the court invited reconsideration of the issue of the Opt-in Plaintiffs’ status.  Upon reconsideration, the court agreed that the Opt-in Plaintiffs shared the same legal status under the Fair Labor Standards Act (FLSA) as the named Plaintiff and thus, amended its prior order and entered judgment (as to liability) on behalf of the Opt-in Plaintiffs as well.

Noting that the issue was not so much whether the Opt-ins were party Plaintiffs, but rather what “sum certain” such Opt-in Plaintiffs were entitled to, the court, upon reconsideration set the case for a hearing to determine the amounts of same, recognizing that such Opt-in Plaintiffs essentially stood in the same shoes as the named-Plaintiff.

Click Norena-Giraldo v. Inglese Worldwide Corporation, to read the entire opinion.


N.D.Tex.: FLSA Plaintiffs In Second-Filed Case Cannot Be Consolidated Into First-Filed Case, Where They Oppose Such Consolidation

Mumphrey v. CSA-Credit Solutions of America, Inc.

This case presented an interesting issue to the Court:  where 2 similar FLSA claims are filed by similarly situated employees in separate cases, may the Court consolidate the second-filed case into the first-filed case, notwithstanding Plaintiff (and opt-in Plaintiffs’) opposition to same.  The Court answered the question in the negative, and denied Defendant’s Motion to bifurcate the Plaintiff’s claims (separate FLSA unpaid wages claims that were identical to the first-filed case from the retaliation claims brought solely in the second case).

The Court reasoned, “[t]he collective action provision of the FLSA explicitly states that “[n]o employee shall be a party plaintiff to any such action unless he gives his consent in writing to become such a party and such consent is filed in the court in which such action is brought.”  Consolidation of the Mumphrey FLSA claims with the Willins FLSA claims would de facto force Plaintiffs to opt in to a collective action without their consent, in contravention of the FLSA.  The Court therefore finds that the Plaintiffs’ FLSA claims should not be bifurcated from their retaliatory termination claims and consolidated with the Willins case against Plaintiffs’ wishes.

For the reasons stated above, CSA’s Motion to Bifurcate is DENIED. Plaintiffs’ claims will proceed as filed in this case.”

D.Mass.: Equitable Tolling Applied To Preserve Statute Of Limitations Of Plaintiffs Who Previously Filed Opt-in Consents And Promptly Re-filed Their Consents In New Case

McLaughlin v. Harbor Cruises LLC

The defendants moved for summary judgment as to seven individuals who have purported to opt into this collective action brought pursuant to the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 216(b). There was no dispute that these plaintiffs did not file their “opt in” consents within the applicable limitations period. See29 U.S.C. § 255(a) (stating that an action for unpaid overtime compensation must be commenced within two years after the cause of action accrued, or within three years if the cause of action arises out of a willful violation). However, the plaintiffs opposed the motion and argued that the statute of limitations should be equitably tolled to permit them to remain in the FLSA class. The Court held that 2 opt-ins who had previously attempted to opt-in to a prior case, which was not ultimately certified reasonably relied on their prior consents and thus their statute of limitations was equitably tolled.

“Equitable tolling is justified as to two of the seven opt-in plaintiffs at issue, however. Both Susan Cardenas and John J. Hamm III filed consents in the previous McLaughlin action that would be timely under the possible three year statute of limitations for willful violations. SeeNo. 03-CV-10905 (D. Mass. Jan 20, 2006) (notices of consent to opt in). This Court subsequently ruled that the previous McLaughlin action could not proceed a collective action under the FLSA, see No. 03-CV-10905-GAO, 2006 WL 1998629 (D.Mass. July 17, 2006), but it was reasonable for Cardenas and Hamm to have relied on their consents filed in that case, rather than to file their own individual actions. They promptly re-filed their consents in this action. The statute of limitations is therefore equitably tolled as to both Cardenas and Hamm from the filing of their consents in the previous action on January 20, 2006 to this Court’s order dismissing the previous action on July 17, 2006.”