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One of the hottest topics in class/collective action litigation this year has been the availability of both an FLSA collective action and a state law class action in the same suit. We've already written several times about some of these cases, with a distinct difference in approach and outcome among the various courts. Some courts have found the two schemes incompatible, while others have found that the two different schemes could be maintained in the same lawsuit.
The arguments in favor of incompatibility are compelling. Section 16(b) of the FLSA, 29 U.S.C. &sect; 16(b), the statute creating the collective action vehicle, was passed in response to "a national emergency spawned by out-of-control litigation of employee minimum wage and overtime claims." Ellis v. Edward D. Jones &amp; Co., 527 F. Supp. 2d 439, 450 (W.D. Pa. 2007). Indeed, the legislative history reflects that section 16(b) was passed to limit collective claims. In addition, having simultaneous opt-in and opt-out classes will invariably breed confusion, as class members will need to make opposite elections regarding which, both, or either of the two claims they may elect to participate in.
On September 26, 2011, the Second Circuit swept these concerns aside and held that state law claims could be maintained as a class. In <a href="http://op.bna.com/dlrcases.nsf/id/jaca-8m3n7c/$File/Shahriar.pdf">Shahriar v. Smith &amp; Wollensky</a>, Case No. 10-1884-cv (2d Cir. 2011), the plaintiffs were waiters working for the Smith &amp; Wollensky Park Avenue restaurant in New York. They contended that certain of the restaurant's tipping practices, such as requiring the sharing of tips with non-service workers, violated the FLSA, New York law, or both. While the opinion is not entirely clear on this point, it appears that the district court conditionally certified the FLSA class in 2008, and a total of 25 plaintiffs (including the original plaintiffs) opted in. The defendant took no further steps with respect to class action treatment of the state law claims until the eve of trial, when the court granted certification on the New York claims. The district court expressed concern over the late challenge to a state law class and practical concerns as to what would happen with respect to the state law claims. While finding it a close call, the court certified the case for a class of 275 wait staff employees. The Second Circuit granted review of that decision under Federal Rule 23(f).
The court of appeals affirmed. It largely ignored the statements in the legislative history over the need to limit FLSA classes and instead attributed section 16(b)'s opt-in requirement to a fear of retaliation by employers. Curiously, all of the cases cited by the court cited for this proposition about Congress&rsquo;s intent from the 1940s were from district courts in the Second Circuit from at least 50 years after section 16(b)'s passage. Analyzing the issue as one of the exercise of supplemental jurisdiction under 28 U.S.C. section 1367, it therefore found no compelling reason why the district court could not hear the state law claims as a class. It also noted holdings of other courts finding the two schemes compatible, such as Ervin v. OS Restaurant Services, Inc., 632 F.3d 971 (7th Cir. 2011), a decision <a href="http://www.employmentclassactionreport.com/flsa/seventh-circuit-finds-that-overtime-state-class-actions-and-flsa-collective-actions-are-not-incompat/" target="_blank" rel="noopener">we wrote about on January 26</a>.
Since it ignored the statute's legislative history, the Second Circuit reached the unsurprising conclusion that in most cases section 16(b) and Rule 23 would not be incompatible. It also analyzed the district court's application of Rule 23 and found there was no abuse of discretion in certifying the class because all of the wait staff were subject to the same challenged tip practices. What may have made the case easier for the court was the fact that all of the plaintiffs were from the same facility and the same state, thus minimizing potential differences among them.
The bottom line: There remains a split of authority as to whether a plaintiff can maintain both a state law class action and a federal collective action in the same case.

Second Circuit Finds FLSA Collective Actions and State Law Class Actions Compatible