Another Court Approves Hybrid Wage & Hour Class Actions and Rejects Defendants' Rules Enabling Act Argument

Piper Hoffman — Fri, 12 Oct 2007 14:56:00 +0000

In many suits against employers for underpayment of wages, plaintiffs assert both federal claims under the Fair Labor Standards Act ("FLSA") and state law claims. Where a number of employees were injured by the employers' unlawful wage practices, plaintiffs can bring their state law claims together as "opt-out" or "class" actions. In contrast, plaintiffs can bring their FLSA claims together only as an "opt-in" or "collective" action. The difference is in the treatment of absent class members: an employee who has no involvement in a wage lawsuit brought by her coworkers will not benefit from a court ruling that the employer violated the FLSA unless she actively opts into the case; but she will benefit from a court ruling that the employer violated state wage laws, unless she actively opts out of the case.

Defendants struggle mightily against hybrid wage suits because these suits have the potential to yield findings of liability and awards of damages for larger numbers of employees than FLSA opt-in cases alone. One of their more creative arguments against hybrid cases relies on the federal Rules Enabling Act ("REA"), which states that a procedural rule "shall not abridge, enlarge or modify a substantive right." Defendants' argument is that the FLSA's provision permitting only opt-in and not opt-out enforcement creates a substantive right, and by allowing plaintiffs to pursue their state law claims as opt-out class actions in the same case with opt-in FLSA claims, courts are permitting the opt-out procedure to abridge or modify that substantive right.

There are two primary problems with this argument. The first is that the FLSA's opt-in provision is a procedural rule, not a substantive right, and no court has ever held otherwise. The second is that the opt-out procedure in a hybrid case applies only to the state claims, not to the FLSA claims, which proceed only as opt-in claims even in hybrid cases.

Last month a district court in the Third Circuit issued the latest in a consistent line of rulings rejecting defendants' REA argument. The new opinion, Lehman v. Legg Mason, Inc., holds that the REA "does not preclude dual-filed suits," and notes that the REA argument "has been rejected by the courts" whenever it was raised. No. 06-cv-02484, 2007 U.S. Dist. 69648, *14-15 (M.D. Pa., Sept. 20, 2007). The federal court for the Eastern District of New York reached the same conclusion a couple months earlier in Westerfield v. Washington Mut. Bank, 2007 U.S. Dist. LEXIS 54830 (E.D.N.Y. July 26, 2007), in which Outten & Golden represented the plaintiffs. These rulings are a vindication of workers' ability to enforce their rights to the minimum wage, overtime premiums, and to be paid for all the time they work.

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Another Court Approves Hybrid Wage & Hour Class Actions and Rejects Defendants' Rules Enabling Act Argument