Ninth Circuit Finds Rule 23 Class Actions and FLSA Collective Actions Compatible

by BakerHostetler

As we’ve noted before, circuit court authority on collective action issues is relatively sparse. Although we like to comment on such cases, the most recent such opinion is in many respects a nonevent.

Several lower courts have refused to combine state law Rule 23 class actions and federal FLSA collective actions in the same case, citing troublesome case management issues and likely confusion among class members due to the Rule 23 opt-out rights and FLSA opt-in requirements. Courts of appeal, however, have generally found no inherent conflict. See Knepper v. Rite-Aid Corp., 675 F.3d 249 (3d Cir. 2012); Ervin v. OS Res. Servs., Inc., 632 F.3d 971 (7th Cir. 2011).

On April 12, 2013, the Ninth Circuit joined the Third and Seventh Circuits in holding that there is no theoretical bar to maintaining both a class and collective action in the same case. Busk v. Integrity Staffing Solutions, Inc., Case No. 11-16882 (9th Cir. Apr. 12, 2013). In that case, Integrity Staffing operated warehouses in Nevada that filled orders for web retailer It required hourly warehouse employees to undergo security checks at the end of the day and upon leaving their work areas for lunch. They contended that they were not paid for the time waiting for the security checks, which could take upwards of 25 minutes. They sought a Rule 23 class action under Rule 23 and a collective action under section 16(b) of the FLSA. The district court dismissed the state law class action as incompatible with section 16(b) and dismissed the remaining claims on the merits.

On appeal, the Ninth Circuit found without much difficulty that the time waiting for security checks was at least arguably compensatory time, distinguishing the case from situations in which security was being undertaken for reasons other than the employer’s purposes. See, e.g,. Bonilla v. Baker Concrete Construction Co., 487 F.3d 1340 (11th Cir. 2007) (time spent in airport security not compensable). It did, however, find no claim for alleged disruptions in the employees’ lunch periods. Most importantly for purposes of this discussion, also found no inherent incompatibility between a Rule 23 state law class action and an FLSA collective action, and remanded the case.

So, is Busk a significant case? Not so much. While some plaintiffs have attempted to combine class and collective action claims, they frequently do not and for good reasons. Over a dozen states, for example, including Texas, have no FLSA equivalent. In California, generous state law penalties and, at least until recently, ready certification render FLSA claims far more complicated and less attractive. Even in other states, a plaintiff may prefer FLSA collective actions due to the lower standards for conditional certification and increasing difficulties in obtaining Rule 23 certification in the wake of Wal-Mart Stores, Inc. v. Dukes, 131 S.Ct. 2541 (2011), and other authority. Further, while orders granting conditional certification are not appealable, Rule 23 grants of certification may be under Rule 23(f). There are many other reasons not to include both types of claims, including the different standards under different state laws and the likelihood that trying to graft a Rule 23 class action onto an FLSA collective action may make the task of decertification of the FLSA claim that much easier for the employer.

At the same time, nothing in Busk or the other circuit court decisions requires the use of both a Rule 23 class and a section 16(b) collective action. When such situations are presented, employers are likely to raise a host of arguments related to commonality, typicality, predominance, superiority, and adequacy of representation that will tarnish the 16(b) collective claims as well. The Busk decision simply leaves these arguments to a different stage of the case.

The Bottom Line: The Ninth Circuit joins other courts of appeals in holding that a Rule 23 state law class action can theoretically be combined with an FLSA collective action, but the decision will have little practical impact in most cases.


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