Class Action Defense Cases-Thorpe v. Abbott Labs: California Federal Court Denies Defense Motion To Dismiss Class Action Finding California State Law Class Action Claims Were Not Incompatible With Illinois FLSA Class Action

Feb 27, 2008 | By: Michael J. Hassen

Defense Motion to Dismiss California Class Action Alleging Misclassification of Employees and Seeking Damages under California State Law Fails because Class Action was not Incompatible with Illinois Class Action by Same Plaintiff Lawyer Alleging Misclassification of Same Group of Employees and Seeking Damages under Federal Fair Labor Standards Act (FLSA) California Federal Court Holds

Plaintiff filed a putative class action against Abbott Laboratories in California state court on September 25, 2007, and defense attorneys removed the class action complaint to federal court on November 7, 2007, arguing that removal jurisdiction existed under the Class Action Fairness Act of 2005 (CAFA). Thorpe v. Abbott Laboratories, Inc., ___ F.Supp.2d ___ (N.D. Cal. February 12, 2008) [Slip Opn., at 1]. The class action complaint stated that plaintiff formerly had been employed by Abbott as a Pharmaceutical Representative, and alleged that improperly classified him and other Pharmaceutical Representatives as “exempt” employees and that he was required to work more than 8 hours per day or 40 hours per week without overtime, and was denied meal and rest periods. Id., at 2. The class action further alleged that Abbott failed to provide accurate wage statements as required by California law. Id. Defense attorneys moved to dismiss the class action or, in the alternative, to strike the class action allegations, id., at 1-2. The federal court denied the motion.

The defense argued that the class action complaint must be dismissed, or the class action allegations stricken, “because plaintiff’s claims for unpaid overtime for Pharmaceutical Representatives at Abbott are based on the same facts and circumstances as those alleged in a parallel federal action, Jirak v. Abbott Laboratories, et al., 07-03636 (‘Jirak action’), filed by plaintiff’s counsel and currently pending in the District Court in the Northern District of Illinois.” Thorpe, at 2. Defense attorneys argued that even though Thorpe was not a plaintiff in the Jirak action, “the present complaint is an attempt by plaintiff’s counsel to circumvent the requirements for maintaining a class action under the Fair Labor Standards Act (‘FLSA’)… by filing two class actions based on the same circumstances, namely that Abbott mis-classified Pharmaceutical Representatives as exempt employees.” Id., at 2-3. In essence, the defense argued “the opt-out class action that plaintiff seeks to maintain for his claims under California law is incompatible with the FLSA opt-in class action proceeding concurrently in the Northern District of Illinois.” Id., at 3.

Preliminarily, the district court observed that plaintiff in the California action was not pursuing claims under the FLSA but, rather, seeks “to pursue a class action for his California state claims under Federal Rule of Civil Procedure 23.” Thorpe, at 3. The court summarized the defense argument at page 4 as follows: “Abbott argues that the ‘opt-in’ and ‘opt-out’ certification procedures under the FLSA and Rule 23 are incompatible. According to Abbott, because the Jirak action involves FLSA claims alleging as their basis the same employment practices as challenged in this action under state law, and that action is proceeding as an opt-in class action under § 216(b) of the FLSA, the present action cannot be maintained.” Id., at 4. While the defense cited out-of-circuit and California district court cases in support of the argument that a plaintiff “may not maintain the instant case as a Rule 23 opt-out class action while an FLSA opt-in action is underway in another district,” id., the district court held that it was “unpersuaded that permitting a separate suit to go forward on state law claims somehow undermines the Congressional intent in providing an opt-in class action format under the FLSA, id., at 5. The court relied on cases that “support the conclusion that the opt-out class that plaintiff will seek under Rule 23 in this case is not fundamentally incompatible with the FLSA opt-in class sought in the Jirak action.” Id., at 6.

Finally, the district court addressed the defense argument that the class action should be dismissed or the class allegations stricken because the requirements of Rule 23(b) cannot be met. Thorpe, at 6. Specifically, defense attorneys argued that Rule 23(b)(1) does not apply because there is no risk of inconsistent judgments, that (b)(2) does not apply because the monetary relief sought in the class action predominates over any injunctive relief sought, and that (b)(3) does not apply because the existing Illinois FLSA class action means that the California class action is not the superior method for resolving plaintiff’s claims. Id., at 6-7. The district court ruled that these arguments were more appropriately addressed as part of a motion for class certification and therefore denied the motion without prejudice. Id., at 7. Accordingly, the district court denied the motion to dismiss the class action and the motion to strike the class action allegations. Id.

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