Busk v. Integrity Staffing Solutions, Inc.

• Decision Date: 12 April 2013
• Docket Number: No. 11–16892.,11–16892.
• Citation: 713 F.3d 525
• Parties: Jesse BUSK; Laurie Castro, on behalf of themselves and all others similarly situated, Plaintiffs–Appellants, v. INTEGRITY STAFFING SOLUTIONS, INC., Defendant–Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

713 F.3d 525

Jesse BUSK; Laurie Castro, on behalf of themselves and all others similarly situated, Plaintiffs–Appellants,

v.INTEGRITY STAFFING SOLUTIONS, INC., Defendant–Appellee.

No. 11–16892.

United States Court of Appeals,Ninth Circuit.

Argued and Submitted Feb. 12, 2013.

Filed April 12, 2013.

Mark R. Thierman, Jason J. Kuller, Joshua D. Buck (argued), Thierman Law Firm, P.C., Reno, NV, for Plaintiffs–Appellants.

Rick D. Roskelley (argued), Roger L. Grandgenett II, Cory Glen Walker, Littler Mendelson, P.C., Las Vegas, NV, for Defendant–Appellee.

Appeal from the United States District Court for the District of Nevada, Roger L. Hunt, Senior District Judge, Presiding. D.C. No. 2:10–cv–01854–RLH–RJJ.

Before: JEROME FARRIS, SIDNEY R. THOMAS, and N. RANDY SMITH, Circuit Judges.

OPINION

THOMAS, Circuit Judge:

In this appeal, we consider whether the district court erred in dismissing the plaintiffs' state law claims for unpaid wages because those claims would be certified using different class certification procedures than their federal wage and hour claims. We also consider whether the plaintiffs have alleged plausible claims for unpaid wages under federal and Nevada law for undergoing a security screening meant to prevent employee theft and for unpaid lunch periods shortened by five-minute walks to the cafeteria. We affirm the district court in part, reverse in part, and remand for further proceedings.

I

Plaintiffs Jesse Busk and Laurie Castro are former employees of Integrity Staffing Solutions, Inc., which provides warehouse space and staffing to clients such as Amazon.com.¹ Busk and Castro worked as hourly employees at warehouses in Las Vegas and Fernley, Nevada, respectively, filling orders placed by Amazon.com customers. In 2010, Busk and Castro sued Integrity on behalf of a putative class of workers in both warehouses, claiming violations of the Fair Labor Standards Act (FLSA) and Nevada labor laws.

Busk and Castro alleged Integrity violated federal and state labor laws by requiring them to pass through a security clearance at the end of each shift, for which they were not compensated. Employees waited up to 25 minutes to be searched; removed their wallets, keys, and belts; and passed through metal detectors. The plaintiffs alleged the clearances were “necessary to the employer's task of minimizing ‘shrinkage’ or loss of product from warehouse theft.”

The plaintiffs also sought compensation under FLSA and Nevada law for their entire 30–minute unpaid lunch periods because they spent up to 10 minutes of the meal period “walking to and from the cafeteria and/or undergoing security clearances.” They said it took them about five minutes after punching out “to walk to the facility cafeteria and/or pass through security clearances” and “approximately five minutes to walk from the cafeteria to the time keeping system to clock back in.” Additionally, managers would frequently “remind” workers to “finish their meal period quickly so that they would clock back in on time.”

The district court granted Integrity's motion to dismiss the amended complaint for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). The court held that the time spent clearing security was not compensable under FLSA, relying on out-of-circuit cases finding the time employees spent passing through security screenings noncompensable.The court also held that the plaintiffs' allegations about shortened meal periods did not state a claim under FLSA because the plaintiffs did not allege that they performed “any duty related to their job as warehouse workers” during their lunch breaks.

The district court also held that the state law claims “must be dismissed” due to “conflicting” class certification mechanisms, namely that while plaintiffs must opt into a collective action under FLSA, plaintiffs must opt out of a class action under Federal Rule of Civil Procedure 23. Alternatively, the court dismissed the state claims on the merits. It held that since the claims were based entirely on the security clearance and lunch allegations, the “Plaintiffs have failed to allege fact scenarios that would support a valid claim” under Nevada law.

II

We review de novo the district court's conclusion that a FLSA collective action and state law class action are inherently incompatible as a matter of law. See Miranda v. Anchondo, 684 F.3d 844, 849 (9th Cir.2012) (questions of statutory construction and interpretation reviewed de novo ). We agree with all other circuits to consider the issue that such actions can peacefully coexist. Therefore, the district court erred in dismissing the state law claims based on a perceived conflict.

Under FLSA, a potential plaintiff does not benefit from (and is not bound by) a judgment unless he or she “affirmatively ‘opts in’ ” to the lawsuit. Kinney Shoe Corp. v. Vorhes, 564 F.2d 859, 862 (9th Cir.1977), overruled on other grounds by Hoffmann–La Roche Inc. v. Sperling, 493 U.S. 165, 110 S.Ct. 482, 107 L.Ed.2d 480 (1989); see also29 U.S.C. § 216(b) ( “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.”). This rule is in contrast to a typical Rule 23 class action, where a potential plaintiff must opt out to be excluded from the class. SeeFed.R.Civ.P. 23(c)(2)(B)(v) (“the court will exclude from the class any member who requests exclusion”). Although some district courts have held that a FLSA collective action cannot be brought in the same lawsuit as a state-law class action based on the same underlying allegations,² all circuit courts to consider the issue have held that the different opting mechanisms do not require dismissal of the state claims. Knepper v. Rite Aid Corp., 675 F.3d 249, 253–62 (3d Cir.2012); Ervin v. OS Rest. Servs., Inc., 632 F.3d 971, 976–79 (7th Cir.2011); Shahriar v. Smith & Wollensky Rest. Grp., 659 F.3d 234, 247–49 (2d Cir.2011); Lindsay v. Gov't Emps. Ins. Co., 448 F.3d 416, 424 (D.C.Cir.2006).

Our sister circuits have correctly reasoned that FLSA's plain text does not suggest that a district court must dismiss a state law claim that would be certified using an opt-out procedure. Its opt-in requirement extends only to “any such action”—that is, a FLSA claim. See29 U.S.C. § 216(b); Knepper, 675 F.3d at 259–60 (noting Section 216(b) “explicitly limits its scope to the provisions of the FLSA, and does not address state-law relief”); Ervin, 632 F.3d at 977 (“Nothing” about FLSA's text “suggests that the FLSA is not amenable to state-law claims for related relief in the same federal proceeding.”). FLSA also expressly permits more protective state labor laws. See29 U.S.C. § 218(a) (“No provision of this chapter ... shall excuse noncompliance with any Federal or State law or municipal ordinance establishing a minimum wage higher than the minimum wage established under this chapter or a maximum work week lower than the maximum workweek established under this chapter....”). This savings clause provides further evidence that a federal lawsuit combining state and federal wage and hour claims is consistent with FLSA. See Ervin, 632 F.3d at 977;Shahriar, 659 F.3d at 247–48.

Nor does the legislative history of Section 216(b) support the view of some district courts that allowing both actions to proceed simultaneously “would essentially nullify Congress's intent in crafting Section 216(b) and eviscerate the purpose of Section 216(b)'s opt-in requirement.” Otto v. Pocono Health Sys., 457 F.Supp.2d 522, 524 (M.D.Pa.2006), overruled by Knepper, 675 F.3d at 253–62. We agree with the Third Circuit that the “full legislative record casts doubt” on the contention that Section 216(b) was intended to eliminate opt-out class actions. Knepper, 675 F.3d at 260;see also Ervin, 632 F.3d at 977–78;Shahriar, 659 F.3d at 248. When Congress created Section 216(b)'s opt-in requirement as part of the Portal–to–Portal Act of 1947, it was responding to concerns about third parties filing “representative” FLSA actions on behalf of disinterested employees. See Hoffmann–La Roche, 493 U.S. at 173, 110 S.Ct. 482. Accordingly, it amended FLSA “for the purpose of limiting private FLSA plaintiffs to employees who asserted claims in their own right and freeing employers of the burden of representative actions.” See id.

This purpose does not evince an intent to eliminate opt-out class actions for state wage and hour claims brought in federal court. Even if it did, Congress has expressed a contrary intent in the Class Action Fairness Act of 2005, which confers federal jurisdiction over class actions where certain diversity and amount-in-controversy requirements are met. See Class Action Fairness Act of 2005, Pub.L. No. 109–2, 119 Stat. 4. Because the Class Action Fairness Act provides that federal courts should exercise jurisdiction over certain class actions (including those alleging violations of state wage and hour laws), and these class actions are certified pursuant to Rule 23's opt-out procedure, we cannot conclude that Congress intended such claims be dismissed simply because they were brought in conjunction with FLSA claims.³

Integrity argues that allowing both classes to proceed simultaneously would cause “unnecessary confusion” for potential class members who would receive notices “stating both that they must opt in to have their compensation issues adjudicated and that they must opt out to avoid having their compensation issues adjudicated.” While we do not minimize this practical concern, we agree with the Seventh Circuit that district courts should be able to “work[ ] out an adequate notice in this type of case.” Ervin, 632 F.3d at 978. Furthermore, “if these actions were to proceed separately—the FLSA in federal court and the state-law class action in state court—an entirely different and potentially worse problem of confusion would arise, with uncoordinated notices...