Aaronii v. Directory Distrib. Assocs., Inc.

• Citation: 462 S.W.3d 190
• Decision Date: 26 February 2015
• Docket Number: NO. 14–13–00784–CV,14–13–00784–CV
• Parties: Gary Aaronii, et al., Appellants v. Directory Distributing Associates, Inc., Richard Price, Steve Washington, Laura Washington, Roland E. Schmidt, Sandy Sanders, and AT & T Corporation, Appellees
• Court: Court of Appeals of Texas

462 S.W.3d 190

Gary Aaronii, et al., Appellants

v.Directory Distributing Associates, Inc., Richard Price, Steve Washington, Laura Washington, Roland E. Schmidt, Sandy Sanders, and AT & T Corporation, Appellees

NO. 14–13–00784–CV

Court of Appeals of Texas, Houston (14th Dist.).

Opinion filed February 26, 2015

Rehearing En Banc Overruled April 9, 2015

Cynthia Thomson Diggs, Judith Batson Sadler, Richard Warren Mithoff, Russell S. Post, Houston, TX, for Appellant.

L. Don Luttrell, Walter J. Kronzer, III, Carolyn Ann Russell, Houston, TX, for Appellee.

Panel consists of Chief Justice Frost and Justices Jamison and Wise.

OPINION

Kem Thompson Frost, Chief Justice

In this appeal we address two issues of first impression. The first relates to the potential federal preemption of a Texas venue statute. The second involves the constitutionality of applying the state venue statute in the context of the federal statute's collective-action procedure. Acting under section 15.003 of the Texas Civil Practice and Remedies Code, which governs venue in civil cases involving multiple plaintiffs, the trial court dismissed, without prejudice, the claims of thousands of “opt-in plaintiffs” in a collective action filed under the federal Fair Labor Standards Act. We affirm the dismissal of the opt-in plaintiffs' claims.

I. Factual and Procedural Background

Various Harris County residents who delivered AT & T telephone directories (hereinafter, the “Named Plaintiffs”) asserted claims in the trial court below against appellees Directory Distributing Associates, Inc., AT & T Corporation, and five natural persons (hereinafter, collectively the “Defendants”) alleging various violations of the federal Fair Labor Standards Act (hereinafter, the “Act”). The Named Plaintiffs alleged that Directory Distributing Associates, Inc. engaged in a pattern and practice of classifying individuals as independent contractors, when the individuals actually were employees of Directory Distributing Associates, Inc., to avoid paying the individuals the minimum wage and overtime wages to which they were entitled under the Act. The Named Plaintiffs made allegations seeking to invoke the “collective action” procedure under the Act. See 29 U.S.C. § 216(b) (West, Westlaw through P.L. 113–234).

The trial court conditionally certified a collective action and ordered that notice be sent to all current and former individuals hired by Directory Distributing Associates, Inc. during the period from June 25, 2009, to November 26, 2012, who were classified as independent contractors and hired to deliver telephone directories. This notice allowed these individuals an opportunity to “opt in” to the collective action by filing written consents. Thousands of individuals, from at least thirty-eight states, availed themselves of this opportunity and filed written notices of consent to participate as plaintiffs in the collective action, thus “opting in.” (hereinafter, collectively, the “Opt–In Plaintiffs”).

The Defendants filed a motion to dismiss all Opt–In Plaintiffs who are not Texas residents and who did not deliver telephone directories in Texas (hereinafter, collectively, the “Non–Texas Opt–In Plaintiffs”). There are more than 15,000 Non–Texas Opt–In Plaintiffs. The Defendants asserted that no Texas county is a county of proper venue for the claims of any of these plaintiffs and that, under section 15.003 of the Texas Civil Practice and Remedies Code, entitled “Multiple Plaintiffs and Intervening Plaintiffs,” each of the Non–Texas Opt–In Plaintiffs independently must establish proper venue.

The Non–Texas Opt–In Plaintiffs asserted that the collective-action procedure under the Act preempts section 15.003 of the Texas Civil Practice and Remedies Code. The trial court granted the motion to dismiss, and dismissed all of the Non–Texas Opt–In Plaintiffs without prejudice to the refiling of these claims in a court of proper venue that has subject-matter jurisdiction over the claims. The Non–Texas Opt–In Plaintiffs now challenge that ruling in this interlocutory appeal.

II. Issues and Analysis

On appeal, the Non–Texas Opt–In Plaintiffs do not assert that they satisfied the requirements of section 15.003. Instead, they argue that section 15.003 does not apply to this case because this state statute is preempted by the collective-action procedure under the Act or, in the alternative, because applying section 15.003 in the context of this case would violate the Privileges and Immunities Clause of the United States Constitution.

A. Preemption Analysis: Does the collective-action procedure under the Act preempt section 15.003 ?

The Non–Texas Opt–In Plaintiffs assert that the collective-action procedure under the Act impliedly preempts section 15.003(a). The parties have not cited and research has not revealed any federal or state case addressing this specific preemption issue.

Under the Supremacy Clause of the United States Constitution, the laws of the United States are the supreme law of the land, and a state law that conflicts with federal law is preempted and “without effect.” U.S. Const. art. VI, cl. 2 ; Maryland v. Louisiana, 451 U.S. 725, 746, 101 S.Ct. 2114, 2128–29, 68 L.Ed.2d 576 (1981). A federal law may expressly preempt state law. See Cipollone v. Liggett Group, Inc., 505 U.S. 504, 516, 112 S.Ct. 2608, 2617, 120 L.Ed.2d 407 (1992). Preemption also may be implied if the scope of the statute indicates that Congress intended federal law to occupy the field exclusively or if state law actually conflicts with federal law. Freightliner Corp. v. Myrick, 514 U.S. 280, 287, 115 S.Ct. 1483, 1487, 131 L.Ed.2d 385 (1995). A state law presents an actual conflict with federal law when “it is ‘impossible for a private party to comply with both state and federal requirements' or where state law ‘stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.’ ” Myrick, 514 U.S. at 287, 115 S.Ct. at 1487 (quoting, respectively, English v. General Elec. Co., 496 U.S. 72, 78–79, 110 S.Ct. 2270, 2274–75, 110 L.Ed.2d 65 (1990) and Hines v. Davidowitz, 312 U.S. 52, 67, 61 S.Ct. 399, 404, 85 L.Ed. 581 (1941) ). The Non–Texas Opt–In Plaintiffs do not assert that the Act expressly preempts section 15.003(a) or that Congress intended the Act to exclusively occupy the field.¹ We need only decide (1) whether it is impossible to comply with both section 15.003(a) and the collective-action procedure of the Act and (2) whether section 15.003(a) stands as an obstacle to the accomplishment and execution of the full purposes of Congress. See Myrick, 514 U.S. at 287, 115 S.Ct. at 1487.

1. The Texts of the Two Statutes

The starting point for the preemption analysis is the relevant texts of the two statutes.² Section 216(b) of the Act, which falls under the “Penalties” provision, reads in its entirety as follows:

Any employer who violates the provisions of section 206 or section 207 of this title shall be liable to the employee or employees affected in the amount of their unpaid minimum wages, or their unpaid overtime compensation, as the case may be, and in an additional equal amount as liquidated damages. Any employer who violates the provisions of section 215(a)(3) of this title shall be liable for such legal or equitable relief as may be appropriate to effectuate the purposes of section 215(a)(3) of this title, including without limitation employment, reinstatement, promotion, and the payment of wages lost and an additional equal amount as liquidated damages. An action to recover the liability prescribed in either of the preceding sentences may be maintained against any employer (including a public agency) in any Federal or State court of competent jurisdiction by any one or more employees for and in behalf of himself or themselves and other employees similarly situated. No employee shall be a party plaintiff to any such action unless he gives his consent in writing to become such a party and such consent is filed in the court in which such action is brought. The court in such action shall, in addition to any judgment awarded to the plaintiff or plaintiffs, allow a reasonable attorney's fee to be paid by the defendant, and costs of the action. The right provided by this subsection to bring an action by or on behalf of any employee, and the right of any employee to become a party plaintiff to any such action, shall terminate upon the filing of a complaint by the Secretary of Labor in an action under section 217 of this title in which (1) restraint is sought of any further delay in the payment of unpaid minimum wages, or the amount of unpaid overtime compensation, as the case may be, owing to such employee under section 206 or section 207 of this title by an employer liable therefor under the provisions of this subsection or (2) legal or equitable relief is sought as a result of alleged violations of section 215(a)(3) of this title.

29 U.S.C. § 216(b) (West, Westlaw through P.L. 113–234) (emphasis added). The first two sentences of section 216(b) establish liabilities for an employer who violates various provisions of the Act. See id. In the third sentence, Congress provides that an action to recover the liability prescribed in either of the previous sentences may be maintained against an employer in any federal or state court of competent jurisdiction by any one or more employees for and in behalf of himself or themselves and other employees similarly situated.See id. This action against an employer for and on behalf of other employees similarly situated is what is known as a collective action. See id. But, rather than providing for an opt-out mechanism, section 216(b) states that, in a collective action, no employee shall be a party plaintiff unless the employee gives consent in writing to become such a party and this consent is filed in the court in which such action is brought. See id. The statute also provides that, in addition to any judgment awarded to the plaintiff in such...