Authored by Brandon McKelvey
Last year employers were pleased with an order of a Nevada federal court that dismissed a state law class action on the grounds that it was preempted by a federal law collective action brought in the same suit. In December, however, the court reconsidered and reversed its earlier order allowing both the state class and collective federal action to proceed simultaneously.
In its earlier order, the court determined that a collective action under the Fair Labor Standards Act (“FLSA”), which requires employees to opt in to participate, was inconsistent with a state law class action under Federal Rule of Civil Procedure 23, which permits employees to participate unless they affirmatively opt out of the action. Daprizio v. Harrah’s Las Vegas, Inc., Case No. 10-0604 (D. Nev. Aug. 17, 2010). The court dismissed the plaintiff’s state law class action for off-the-clock work on grounds that it was preempted by the FLSA.
Just over a month after the court issued its order, the Ninth Circuit published its decision in Wang v. Chinese Daily News, 623 F. 3d 743 (9th Cir. 2010). In that case, the Ninth Circuit held that substantive protections of the FLSA do not preempt state law claims that derive their standards from the FLSA. Shortly after the Wang decision was issued, plaintiff in the Daprizio case moved for reconsideration of the order dismissing her state law class action.
In December, the Nevada District Court issued an order reversing and vacating its earlier motion to dismiss the state class action. Daprizio v. Harrah’s Las Vegas, Inc., Case No. 10-0604 (D. Nev. Dec. 7, 2010). While the court held that Wang did not directly address the issue of whether the procedural opt in provisions of the FLSA preempt state opt out class actions, the court nonetheless found Wang helpful in resolving the issue. The court noted that the district court in Wang had not used an opt-in procedure to the exclusion of an opt-out procedure but certified two separate classes allowing one to proceed under the FLSA opt-in procedure and the other to proceed under Rule 23’s opt-out procedure. The Daprizio court concluded that the “proper way to proceed in this case” was to allow plaintiff to attempt to certify two separate classes – one using the opt-in procedures of FLSA and the other utilizing Rule 23’s opt-out procedures.
The Daprizio court recognized that another court in the District of Nevada had determined that the procedural requirements of the FLSA preempt class actions based on state law claims. The Daprazio court did not distinguish the case or squarely address the issue of whether the FLSA opt-in procedure preempts the Rule 23 opt-out procedure. Instead, the court simply said that its ruling “would allow both the FLSA and state law claims to go forward without creating the sort of procedural conflict about which this Court was initially concerned.” The court believed that by allowing for the possibility of two separate state law and FLSA classes it could prevent the Rule 23 procedures from standing as an obstacle to the fulfillment of the FLSA and could allow both sets of claims to move forward simultaneously.
Although the court’s reversal may make it more difficult for employers in the Ninth Circuit to argue preemption in state/federal hybrid class suits, the extent to which procedural opt in provisions of the FLSA preempt state opt out class actions is still an open question.