On November 3, 2010, the Ninth Circuit Court of Appeals refused to hear an appeal brought by a Harrah’s Las Vegas casino dealer challenging the District Court’s ruling that her proposed state wage-and-hour class action was preempted by the Fair Labor Standards Act (FLSA). In so doing, the Ninth Circuit chose not to revisit the District Court’s ruling that the plaintiff could not assert parallel federal and state wage-and-hour class actions. This ruling provides welcome relief to employers threatened by such a multiplicity of claims.
In Daprizio v. Harrah’s Las Vegas Inc., 2010 U.S. Dist. LEXIS 84307 (D. Nev. Aug. 17, 2010), the District Court held that the FLSA, which requires putative class members to affirmatively opt-in to a collective action lawsuit, preempts California state law, under which class members are automatically included in a certified class unless they affirmatively opt-out. The Court found these two schemes to be inconsistent and contrary to Congress’s intent that collective actions under the FLSA have an opt-in procedure. In this case, the plaintiff argued that by requiring casino dealers to attend mandatory, work-related meetings before each shift without being compensated, the employer breached both its state and federal legal obligations to her and her fellow dealers. As a result of the Ninth Circuit’s ruling, only the federal FLSA claim will be allowed to go forward.
The Ninth Circuit’s support of the District Court’s holding means that employers can expect smaller plaintiff classes when sued under the FLSA, because opt-in procedures typically result in small class sizes. Nevertheless, employers should still exercise caution. While the Ninth Circuit has provided additional guidance in this area, some questions remain unresolved. For example, the plaintiff in Daprizio now argues that the Ninth Circuit’s September 2010 ruling in Wang v. Chinese Daily News Inc, 435 F. Supp. 2d 1042 (C.D. Cal. 2006), which held that the FLSA does not preempt parallel state law claims, is an intervening change in controlling law, thereby meriting reconsideration of the case by the District Court. Stay tuned to Proskauer’s California Employment Law Update for future developments.
(Special thanks to Adam Freed for his contributions to this post.)