Second Circuit upholds hybrid class and collective actions

Posted on: October 6th, 2011 by Steve Larson

On September 26, 2011, the Second Circuit Court of Appeals joined the Seventh, Ninth, and District of Columbia Circuits in holding that wage and hour plaintiffs can pursue state law class actions under Rule 23 along with their collective actions under the Fair Labor Standards Act (FLSA). See Shahriar, et al., v. Smith & Wollensky, et al., Case No. 10-1884 (2nd Cir. Sept. 26, 2011). In Shahriar, the plaintiffs claim that famed steakhouse Smith & Wollensky violated the FLSA and the New York Labor Law (NYLL) by requiring waiters to share tips with “tip-ineligible employees,” and failed to “pay waiters for an extra hour’s work when their workdays lasted more than ten hours.”

The plaintiffs originally obtained collective action certification of their FLSA claims and, later, class certification of their NYLL claims as a class action under Rule 23. Most notably, the Court of Appeals rejected Smith & Wollensky’s claim of an “inherent conflict” between maintaining an opt-in and opt-out proceeding in the same federal court case. The Circuit Court noted that: (1) “nothing in the language of the FLSA prevents the exercise of supplemental jurisdiction over Plaintiffs’ state law wage claims”; but rather (2) “the FLSA’s ‘savings clause'” made it clear Congress did not intend to limit state law rights that were more favorable to workers; (3) the legislative history to the Portal-to-Portal Act (that created the collective action process) provides “no support for precluding joint prosecution of FLSA and state law wage claims in the same federal action”; and (4) the “Seventh, Ninth, and District of Columbia Circuits all have determined that supplemental jurisdiction is appropriate over state labor law class claims in an action where the court has federal question jurisdiction over FLSA claims in a collective action.”