The Fair Labor Standards Act (FLSA) requires in a collective action that each claimant affirmatively opt-in to the suit to join the action and obtain relief. A state law class action under the Class Action Fairness Act (CAFA) and Federal Rule of Civil Procedure 23(b)(3), on the other hand, has an affirmative opt-out procedure. Are these conflicting procedures inherently incompatible in the same suit? Does a FLSA collective action pre-empt a state law class action based on the same conduct and facts? "No" to both questions answered the Third Circuit recently in Knepper v. Rite Aid Corporation, Nos. 11-1684 & 11-1685 (March 27, 2012).
The suits were filed by assistant managers of Rite-Aid claiming that they were misclassified as exempt from overtime pay requirements. After a collective action suit was filed under the FLSA in the Middle District of Pennsylvania, a separate class action suit was filed in federal district court in Maryland claiming that the misclassification violated Maryland's state wage and hour law; it was dismissed and then refiled in the Middle District of Pennsylvania. Another class action suit was filed in federal district court in Ohio claiming that the misclassification violated Ohio's state wage and hour law; this case was transferred to the Middle District of Pennsylvania. The district court then dismissed both suits reasoning that the opt-in procedures for an FLSA collective action and the opt-out procedures for a Rule 23(b)(3) class action were "inherently incompatible."
The Third Circuit reversed. First, the Court observed that the plain statutory language of the FLSA applied its affirmative opt-in procedures only to claims brought under the FLSA, saying nothing about causes of action for relief under state employment law. The Third Circuit joined the Second, Seventh, Ninth and DC Circuits in this ruling.
Second, the Third Circuit held that the FLSA does not preempt the state wage and hour laws. The FLSA's savings clause, the court noted, "evinces a clear intent to preserve rather than supplant state law." The court also rejected Rite Aid's argument that the FLSA's opt-in procedure preempted the opt-out procedures under CAFA observing that "federal law cannot preempt another federal law, and a statute from 1947 cannot impliedly repeal a law from 2005[.]"
Robert L. Abell
www.RobertAbellLaw.com
