Rule 23 classes require class members to opt out if they do not want to participate in the litigation. Fair Labor Standards Act classes require class members to affirmatively opt in. Are the two compatible?
No, according to a recent pair of cases from the Middle District of Pennsylvania. In fact, the court held that when an FLSA collective action is being pursued, the FLSA collective action remedies preempt class action remedies under state law. In Fisher v. Rite Aid Corporation, Case No 09-cv-2069 (M.D. Pa. Feb. 16, 2011), and Fisher v. Rite Aid Corporation.pdf, Case No. 10-cv-1865 (M.D. Pa. Feb 16, 2011), the plaintiffs were assistant managers who had worked for the Rite Aid pharmacy chain as assistant managers. The two cases raised similar allegations, one under Maryland state law and the other under the law of Ohio. The plaintiffs in both cases claimed, essentially, that they were misclassified as exempt employees and that they and others were improperly denied overtime. Both asserted claims under state law and sought class action treatment. While neither asserted claims under federal law, and specifically the FLSA, such claims were raised in a third case pending before the same court, Craig v. Rite Aid. The defendant moved to dismiss the state law claims on the grounds that the pursuit of state law claims under Rule 23 would conflict with the FLSA.
In both cases, the court found that a state law class action for overtime wages was incompatible with the FLSA's enforcement procedures. It noted a split of authority on whether plaintiffs could pursue both class and collective action remedies, but found that the better view was that a class action could not be maintained over matters covered by the FLSA. It noted that Congress had adopted the FLSA section 16(b) procedure specifically to control the volume of litigation by avoiding the application of Rule 23 and also intended that only those who wanted to be involved in the litigation to be made a party. It found that permitting a state law overtime class action to proceed while FLSA claims were pending, even if in a different case, would "eviscerate the purpose of Section 216(b)'s opt-in requirement," citing Otto v. Pocono Health Sys., 457 F. Supp. 2d 522, 524 (M.D. Pa. 2006).
Concluding that a Rule 23 class action as to the state law claims would conflict with the collective action remedies of the FLSA, the court dismissed both state law cases without prejudice.
The Bottom Line: Many, but not all, courts have found that state law class action remedies for wage and hour violations are incompatible with the collective action procedure under the FLSA and cannot be maintained.