Ervin v. OS Restaurant Services, Inc.Ervin v. OS Restaurant Services, Inc.
In this appeal we consider whether employees who institute a collective action against their employer under the terms of the Fair Labor Standards Act of 1938, as amended,
The question whether these two distinct types of aggregate litigation may co-exist within one case has divided the trial courts in this circuit and elsewhere. In the Northern District of Illinois alone, compare
Barragan v. Evanger’s Dog and Cat Food Co.,
We conclude that there is no categorical rule against certifying a
I
The plaintiffs are former employees of an Outback Steakhouse in Calumet City, Illinois. The restaurant is owned and operated by the defendant, OS Restaurant Services, Inc.; we refer to the defendant as “Outback” throughout this opinion. The employees sued Outback on behalf of themselves and all others who had previously worked or were currently employed at the restaurant as hourly or tipped employees. (A tipped employee, like a waiter or bartender, is paid a tip-credit wage, which is less than the minimum wage; the expectation is that her earnings for each pay period, including both the base wage and tips, will equal or exceed the minimum wage.)
The complaint alleges that Outback’s employee policies run afoul of the FLSA, the Illinois Minimum Wage Law,
The plaintiffs moved for conditional approval of a federal collective action under section 16(b) of the FLSA,
A magistrate judge recommended that the district court permit the federal collective action to proceed but deny without prejudice certification of the
The district court adopted the magistrate judge’s recommendation. It refused to certify the class because there was “clear incompatibility between the ‘opt out’ nature of a
II
Outback rests its case for affirming the district court’s class-certification decision exclusively on the argument that the plaintiffs cannot satisfy the requirements set out in
In fact, we can be more specific than that. Outback argues that even if we were inclined to reverse the district court’s determination that class treatment is not a superior mechanism here, we could still affirm on the ground that individual issues predominate over class issues with respect to each of the plaintiffs’ state-law claims. Although appellees are normally entitled to advance any argument that was presented before the district court in support of the order on appeal, see,
e.g., Newsome v. McCabe,
We review class-certification decisions deferentially, in recognition of the fact that
Ill
This appeal requires us to delve into the differences between an FLSA collective action and a
As far as the district court was concerned, this distinction, and this distinction alone, rules out any chance of finding that class treatment under
Before examining the district court’s class-certification analysis in greater detail, we pause briefly to address what appears to be an exception that the district
The district court was concerned that the collective action authorized by the FLSA would be undermined if supplemental state-law class actions were being pursued in the same ease at the same time. By requiring people to opt in to the federal action, Congress limited the collective action under the FLSA to those who actively sought to assert their federal rights. As we have mentioned, however,
In our view, the court jumped too quickly to congressional intent. Before taking that step, we must examine the text of the FLSA itself. Nothing we find suggests that the FLSA is not amenable to state-law claims for related relief in the same federal proceeding. Section 16(b) of the FLSA allows employees to bring collective actions to supplement the enforcement powers of the Secretary of Labor under the statute. See
There is ample evidence that a combined action is consistent with the regime Congress has established in the FLSA. The Supreme Court’s early decisions interpreting the FLSA led to a great rush of litigation under the statute. See generally
Hoffmann-La Roche Inc. v. Sperling,
Outback complains that permitting a plaintiff who ends up in only the
With commendable concern for its employees’ interests, Outback also urges that a combined action carries too high a potential for confusing notice to potential group members. It notes that the notice sent for purposes of the FLSA must inform recipients that they are required to opt in to the action if they wish to be included, but the notice sent for the
It does not seem like too much to require potential participants to make two binary choices: (1) decide whether to opt in and participate in the federal action; (2) decide whether to opt out and
not
participate in the state-law claims. Other courts in this circuit appear to have had little trouble working out an adequate notice in this type of case. See,
e.g., O’Brien v. Encotech Const. Servs., Inc.,
IV
Before concluding, we need to return to the subject of supplemental jurisdiction. The district court did not dispose of the plaintiffs’ state-law claims by declining to exercise supplemental jurisdiction, but it did refer to supplemental jurisdiction as part of its
As we have implied, supplemental jurisdiction was the only basis for the district court’s authority over these particular state-law claims; it appears that diversity jurisdiction, which in other cases might also have been an option, was not available to these plaintiffs. While there is diversity of citizenship between the parties in this case — the defendant is a Delaware corporation with its principal place of business in Florida, see
Hertz Corp. v. Friend,
— U.S. -,
Once the requirements of
(1) the claim raises a novel or complex issue of State law,
(2) the claim substantially predominates over the claim or claims over which the district court has original jurisdiction,
(3) the district court has dismissed all claims over which it has original jurisdiction, or
(4) in exceptional circumstances, there are other compelling reasons for declining jurisdiction.
That leaves subsection (c)(2), which permits a court to decline supplemental jurisdiction if the state-law claims “substantially predominate” over the federal action. The district court concluded that the difference in size between the larger state-law class and the smaller FLSA collective action made a difference in the supplemental jurisdiction analysis. If all it meant by this was that the need to include additional parties was disfavored, then its decision was in conflict with the statute.
There are other problems with the district court’s approach to predominance as well. A simple disparity in numbers should not lead a court to the conclusion that a state claim “substantially predominates” over the FLSA action, as
It is true that the Third Circuit concluded in
De Asencio
that the number of state-law plaintiffs might — and did in the case before it — so far outnumber those engaged in the FLSA collective action that “the federal action [was] an appendage to the more comprehensive state action.”
We agree with the D.C. Circuit in Lindsay and the Ninth Circuit in Wang that the Third Circuit decision in De Asencio represents only a fact-specific application of well-established rules, not a rigid rule about the use of supplemental jurisdiction in cases combining an FLSA count with a state-law class action. In our case, the record reflects no reason to doubt that it is sensible to litigate all theories in a single federal proceeding. The identity of the issues, the convenience to both plaintiffs and defendants of not having to litigate in multiple forums, and the economy of resolving all claims at once suggests that an exercise of supplemental jurisdiction will normally be appropriate. In all but the most unusual cases, there will be little cause for concern about fairness or comity.
We conclude that the district court’s decision denying certification of plaintiffs’ proposed classes under