As wage and hour litigation continues to be the majority of litigation in the workplace law arena, many employers are faced with defending federal and state law claims in the same federal court lawsuit. This poses a practical issue as the FLSA provides for an opt-in class while state laws generally provide for opt-out classes. Many members of the defense bar feel that allowing the actions to coexist in a federal case renders the opt-in process practically irrelevant. Further, such dual actions often have the result of a minimal opt-in class and a large opt out class.
While district courts within the Second Circuit (which covers New York, Connecticut and Vermont) have held that such claims can coexist in a federal court action, the Second Circuit Court of Appeals has not yet ruled on the issue. Such a ruling is expected in the near future as the Second Circuit recently agreed to consider a restaurant employer’s appeal of the district court’s decision allowing federal and state claims to proceed in a situation where only 22 of approximately 300 of the putative plaintiffs who comprise the state law opt-out class opted in to the FLSA action. Shahriar et al. v. Smith & Wollensky Restaurant Group Inc. et al., Second Circuit Case No. 10-477-mv (Order dated May 14, 2010). Courts within other Circuits are divided as to the appropriateness of the “hybrid” opt-in/opt-out lawsuit which permits such claims to coexist. Compare De Asencio v. Tyson Foods, Inc., 342 F.3d 301, 306 (3d Cir. 2003)(upholding refusal to certify 4,000+ member state law opt-out class in wage case with 447 potential opt-in participants) with Lindsay v. Gov’t Emples. Ins. Co., 448 F.3d 416 (D.C. Cir. 2006)(reversing denial of certification of state law claim in certified federal action and holding that dual actions are permissible).
Should the Second Circuit rule that such claims cannot coexist in a federal court action, there may be a significant reduction in wage and hour actions initiated in federal court within the Circuit, as Plaintiffs’ counsel seek solely large opt-out state law classes in New York state courts. However, such a finding and strategic shift could also have the effect of requiring employers to simultaneously defend parallel cases in federal and state court. This site will keep you apprised of the Court’s decision.