Knepper v. Rite Aid Corp.
675 F.3d 249
3rd Cir.2012Background
- Fisher and Vasvari joined an FLSA §216(b) opt-in action in 2009; both alleged overtime misclassification as Rite Aid assistant managers.
- Fisher filed a Maryland Rule 23(b)(3) class action in 2009 alleging Maryland wage claims; Maryland court dismissed purely to the extent of the state claims but deferred to the Middle District of Pennsylvania under the first-filed rule.
- Vasvari filed an Ohio state-law class action (OMFWSA) in 2009, later transferred to the M.D. Pa. action by forum-selection clause and transfer order.
- Fisher and Knepper (replacing Vasvari) proceeded in M.D. Pa. under CAFA diversity jurisdiction for the opt-out state-law claims that parallel the FLSA.
- District Court, on 12(c) basis, dismissed the state-law claims as to pleading, holding no CAFA-based or FLSA-based jurisdictional issue preempted; it certified inherent incompatibility between opt-out state-law class actions and FLSA opt-in, and did not reach Rule 23/SEPARATE preemption analysis.
- Court of Appeals addressed whether (1) inherent incompatibility blocks CAFA-based opt-out state-law class actions alongside an FLSA opt-in action, (2) FLSA preempts state wage laws, and (3) Rule 23 certifies without violating the Rules Enabling Act; concluded no inherent incompatibility, no preemption, and rejection of Rule 23/REAs-based challenge, remanding for proceedings consistent with the opinion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether opt-out state-law class actions parallel to an FLSA opt-in action are inherently incompatible. | Fisher/Knepper argue CAFA jurisdiction over opt-out state-law class action is compatible with FLSA opt-in. | Rite Aid argues inherent incompatibility due to differing procedural regimes (opt-out vs opt-in). | Not inherently incompatible; CAFA/FLSA can coexist in dual-filed actions. |
| Whether the FLSA preempts the Maryland and Ohio state-law wage claims when enforced via opt-out class actions. | State-law claims parallel FLSA; not preempted due to savings clause. | State-law claims are preempted as obstacle to FLSA purposes or due to enforcement via opt-out. | Not preempted; savings clause preserves state wage laws under parallel enforcement. |
| Whether certifying an opt-out Rule 23 class action would abridge substantive rights under the Rules Enabling Act. | Ellis-style argument that Rule 23 encroaches on FLSA rights. | Shady Grove directs Rule 23 classification can coexist with federal rules; no abridgment. | Rejected; Shady Grove controls; Rule 23 certification does not abridge substantive rights. |
Key Cases Cited
- Portal-to-Portal Act of 1947 (Sperling), 493 U.S. 165 (1989) (explains written consent and abolition of representative actions)
- Ervin v. OS Rest. Servs., Inc., 632 F.3d 971 (7th Cir. 2011) (rejects categorical rule against dual opt-in/opt-out actions)
- Lindsay v. Gov't Emps. Ins. Co., 448 F.3d 416 (D.C. Cir. 2006) (addresses jurisdiction to hear related state-law claims under §1367)
- Wang v. Chinese Daily News, 623 F.3d 743 (9th Cir. 2010) (recognizes district court discretion to exercise supplemental jurisdiction in parallel actions)
- De Asencio v. Tyson Foods, Inc., 342 F.3d 301 (3d Cir. 2003) (discusses supplemental jurisdiction limitations under §1367 in dual-filed actions)
- Shady Grove Orthopedic Assocs., P.A. v. Allstate Ins. Co., 130 S. Ct. 1431 (2010) (class action certification governed by Federal Rules, not state law)
- Ellis v. Edward D. Jones & Co., 527 F. Supp. 2d 439 (W.D. Pa. 2007) (opinion relied on for inherent incompatibility arguments (distinguishable in later decisions))
- Anderson v. Sara Lee Corp., 508 F.3d 181 (4th Cir. 2007) (preemption context on whether state wage law rights can be enforced via FLSA)