On January 3, 2024, the defendant in Heppard v. Dunham’s Athleisure Corporation filed an interlocutory appeal to the U.S. Court of Appeals for the Sixth Circuit, arguing that the U.S. District Court for the Eastern District of Michigan departed from precedent in holding that employees could pursue Ohio wage claims under federal class action rules, which require putative plaintiffs to opt out of such lawsuits.

According to the defendant, Dunham’s Athleisure Corp., the Ohio Minimum Fair Wage Standards Act (OMFWSA), which governs minimum wage and overtime requirements in Ohio, contains a substantive requirement that potential plaintiffs affirmatively opt in to lawsuits seeking redress under that statute. If the Sixth Circuit decides to resolve this issue, it would provide clarity with regard to federal wage litigation under the OMFWSA.

Quick Hits

• The Sixth Circuit may decide whether the OMFWSA’s opt-in requirement is substantive or procedural.
• If substantive, potential plaintiffs would be required to affirmatively opt in to lawsuits seeking redress under the OMFWSA.
• If procedural, plaintiffs may file lawsuits under the OMFWSA as putative class actions under Federal Rule of Civil Procedure 23, which requires only that plaintiffs affirmatively opt out of claims.
• There is currently a split among federal district courts on this issue.

Summary

Jessica Heppard filed a complaint alleging that her former employer, Dunham’s Athleisure Corp., had failed to pay her and similarly situated employees overtime wages in violation of the federal Fair Labor Standards Act (FLSA) and the OMFWSA. Heppard brought her suit as a class action pursuant to Federal Rule of Civil Procedure (Fed. R. Civ. P. 23) to “remedy violations of the [OMFWSA].” Dunham’s Athleisure Corp. moved for judgment on the pleadings, maintaining that Heppard’s pursuit of claims for alleged violations under the OMFWSA required an affirmative filing of a consent to opt in to the collective action, as described in the statute.

On December 8, 2023, the U.S. District Court for the Eastern District of Michigan denied Dunham’s Athleisure Corp.’s motion. While the district court acknowledged that Fed. R. Civ. P. 23’s opt-out mechanism and OMFWSA’s opt-in requirement were in conflict, it concluded that the OMFWSA’s opt-in requirement was procedural and not substantive, because the OMFWSA does not “define the scope of a substantive right or remedy.” As such, application of Fed. R. Civ. P. 23 to the OMFWSA did not exceed the federal Rules Enabling Act and Heppard could structure her Ohio state law claim under the federal rule. In other words, according to the district court, plaintiffs may file lawsuits under the OMFWSA as putative class actions under Fed. R. Civ. P. 23, which requires that plaintiffs who want to exclude themselves from a class affirmatively opt out of such a lawsuit.

Dunham’s Athleisure Corp. filed an interlocutory appeal to the U.S. Court of Appeals for the Sixth Circuit, contending that the district court’s underlying decision incorrectly departed from applicable precedent. Because the OMFWSA’s opt-in requirement is substantive, Dunham’s Athleisure Corp. argued, potential plaintiffs should be required to affirmatively opt in to lawsuits seeking redress under the OMFWSA.

Key Takeaways

If the Sixth Circuit chooses to hear the interlocutory appeal, its decision could significantly impact claims asserted under the OMFWSA in federal court. Such claims are often brought in conjunction with wage claims brought under the FLSA, which requires that putative plaintiffs opt in to collective action lawsuits seeking redress under federal law. In the interim, whether Ohio plaintiffs can simultaneously seek redress via both an opt-in and an opt-out mechanism remains unclear.