Federal Court Refuses to Exercise Supplemental Jurisdiction over State Law Wage and Hour Class Action Claims Because of Substantial Variance in State Laws and Conflict with FLSA (Fair Labor Standards Act) Opt-In Provision
Employees filed a putative class action in Connecticut federal court against Metropolitan Property alleging that the employer failed to pay overtime in violation of the federal Fair Labor Standards Act (FLSA) and Connecticut state labor laws. Neary v. Metropolitan Prop. & Cas. Ins. Co., 472 F.Supp.2d 247, 248 (D. Conn. 2007). The class action complaint included causes of action for a class action claim under FRCP Rule 23(b)(3) “for violation of state wage and hour laws ‘in each state in which each [p]laintiff worked’ (Count 4),” as well as “a class action claim under [FRCP Rule 23(b)(1)] for violation of state wage and hour laws ‘of the various states in which [p]laintiffs worked’ (Count 5).” Id. Defense attorneys moved to dismiss these class action claims on the grounds that the state law opt-out claims presented an irreconcilable conflict with the FLSA’s opt-in requirement. Id., at 249. The district court agreed.
Plaintiff’s class action complaint alleged that defendant insures vehicles nationwide and engaged in the practice of classifying field adjusters, field appraisers and outside adjusters as exempt from overtime in violation of the FLSA “and the wage and hour laws of the various states in which [p]laintiffs performed work for [d]efendant.” Neary, at 249. Plaintiff purported to bring the class action on behalf of a nationwide class alleging that certification was appropriate under Rule 23(b)(3). Id., at 249-50. The defense moved to dismiss Counts 4 and 5 of the class action complaint “pursuant to the Rules Enabling Act, 28 U.S.C. § 2072(b), on the basis that the class action procedures in Rule 23 irreconcilably conflict with Section 216(b) of the FLSA which expressly limits the scope of representative lawsuits seeking overtime pay to individuals who affirmative opt-in to the action.” Id., at 250. The district court granted the defense motion, but not for the reasons advanced.
Rather than relying on the Rules Enabling Act, the federal court held that the irreconcilable conflict existed between state law opt-out requirements and the FLSA opt-in requirement. Neary, at 251. Indeed, the district court cited circuit court authority holding “that the FLSA does not preempt state wage and hour statutes,” id. (citing Overnite Transp. Co. v. Tianti, 926 F.2d 220, 222 (2d Cir. 1991)). The district court concluded that the better course of action was to dismiss the state wage and hour class action claims by “by declining to exercise supplemental jurisdiction over those claims.” Id. This ruling was particularly warranted in this case, because “the proposed class in this case involves not just one state’s wage and hour statute in addition to FLSA claims, but potentially involves claimed violations of fifty states’ wage and hour statutes, each with potential novelties … and complexities,” id., at 252-53. Given the variance among state wage and hour laws, the court concluded that litigation over individual state law issues would “substantially predominate,” and so refused to exercise supplemental jurisdiction over the state law claims. Id., at 253. Accordingly, the court granted the motion to dismiss the state law class action claims.
NOTE: Defense attorneys also moved to strike the class allegations on the grounds that the adequacy and superiority requirements could not be satisfied, but the district court did not reach this issue because its ruling on the motion to dismiss rendered moot the motion to strike. Neary, at 249, 253.
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