Second Circuit Upholds Plaintiff’s Motion for Class Certification in Minimum Wage and Overtime Case

Shahriar, et al., v. Smith and Wollensky, et al., No. 10-1884 (2nd Cir. Sept. 26, 2011)

On September 26, 2011, in Shahriar, et al., v. Smith and Wollensky, et al., Case No. 10-1884 (2nd Cir. Sept. 26, 2011), the Second Circuit Court of Appeals joined the Seventh, Ninth, and District of Columbia Circuits in holding that plaintiffs could bring state law class actions under FRCP 23 along with their collective actions under the Fair Labor Standards Act (“FLSA”).  Plaintiffs, waiters at the Smith and Wollensky steakhouse, alleged that the defendants violated the FLSA and the New York Labor Law (“NYLL”) since the defendants required 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.”

A collective action under the FLSA is an action that allows employees to sue on behalf of themselves and other employees who are “similarly situated.”  As the court noted, an employee may choose not to exercise her FLSA rights for fear of retaliation.  NYLL provides an avenue by which employees can recover lost wages without the risks of asserting an FLSA claim by pursuing an “opt-out” class action through class certification of their state law claims.  The defendant argued that a federal court could not exercise its supplemental jurisdiction over the state law NYLL claim since the number of employees ostensibly in the “opt-out” class was greater than those who signed on to the FLSA claim.  Additionally, the defendant argued that “dual actions are impractical, unfair and ‘offensive to the structure of the FLSA’ because those employees who do not opt-in to the FLSA collective action ‘could very well have their FLSA cause of action extinguished’ as their FLSA claims will be adjudicated by the dual (state) action.”  The Second Circuit disagreed.

The court was not persuaded that the state law claim predominated over the FLSA claim because there were more class members in the state law class action than the FLSA collective action.  Ultimately, the court held that because the claims did not involve “novel or complex issues of state law,” the state law claim did not “substantially predominate” over the federal claim, and the claims were based on the same set of operative facts, a determination as to the FLSA claims may decide the NYLL claim as well.   Additionally, the Second Circuit found that there was not an inherent conflict in maintaining an “opt in” and “opt out” proceeding in the same action.

A special thanks to Sean Gajewski for helping with this post.  Sean is a third-year law student at Hofstra University School of Law.  You can reach him by email at srgajewski [at] gmail dot com. Bio: www.sgajewski.com.