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Marquez v. PartyLite Worldwide

August 27, 2007

JOSE MARQUEZ, INDIVIDUALLY AND ON BEHALF OF ALL PERSONS SIMILARLY SITUATED, PLAINTIFFS,
v.
PARTYLITE WORLDWIDE, INC., DEFENDANT.



The opinion of the court was delivered by: Judge Virginia M. Kendall

MEMORANDUM OPINION AND ORDER

Plaintiff Jose Marquez alleges that he and other similarly situated employees of Defendant PartyLite Worldwide, Inc. were wrongfully denied overtime pay when PartyLite misclassified them as "exempt" employees to avoid federal and state overtime laws. Plaintiff asserts his claims under the Illinois Minimum Wage Law ("IMWL"), 820 ILCS 105/1 et seq., the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 201 et seq., and the state common law remedies of quantum meruit and unjust enrichment. Defendant now moves to strike Plaintiff's class allegations related to his IMWL claim pursuant to Rule 12(f), and to dismiss Plaintiff's quantum meruit and unjust enrichment claims pursuant to Rule 12(b)(6).

Because the FLSA does not expressly preclude class relief for wage claims brought under other statutes, Plaintiff's class allegations related to his IMWL claim are not "immaterial matters" that should be stricken under Rule 12(f). However, given the history of the FLSA and Rule 23, any class that does not follow the procedures set forth in § 216(b) of the FLSA is not likely to meet Rule 23's superiority requirement. As to Plaintiff's quantum meruit and unjust enrichment claims, Rule 8(e)(2) permits a party to plead alternative, even inconsistent, theories of relief. Thus, although Plaintiff's state common law claims are based upon the same facts as his FLSA claim, dismissal under Rule 12(b)(6) is not appropriate.

Standard of Review

When considering a Rule 12(b)(6) motion, the court must accept as true all the allegations in the complaint and construe all reasonable inferences in favor of the plaintiff. Murphy v. Walker, 51 F.3d 714, 717 (7th Cir. 1995). In order to state a claim, a plaintiff must allege facts that plausibly suggest he is entitled to relief. Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955, 1965 (2007). Rule 12(f) provides that a "court may order stricken from any pleading any insufficient defense or any redundant, immaterial, impertinent, or scandalous matter."

Discussion

The Fair Labor Standards Act of 1938 sets the requirements for minimum wages, overtime pay, equal pay, recordkeeping and child labor standards for covered employees -- in the words of Franklin D. Roosevelt, the FLSA ensures "[a] fair day's pay for a fair day's work." Subject to certain exemptions, the FLSA requires employers to pay their employees at least time-and-a-half for each hour the employee works over forty hours during a week. 29 U.S.C. § 207(a)(1). If an employer violates this provision, an employee may bring "a collective action" on behalf of himself and other employees similarly situated to recover unpaid overtime compensation. 29 U.S.C. § 216(b); see Harkins v. Riverboat Services, Inc., 385 F.3d 1099, 1101 (7th Cir. 2004). The procedures in Rule 23 usually govern class actions in federal court. Under Rule 23(c)(2)(B), an individual becomes a member of the class, and thereby bound by any judgment in the matter, unless he expressly opts-out. See Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 807-09 (1985). The FLSA, in contrast, provides that no employee may join the collective 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." 29 U.S.C. § 216(b). Under this language, members of a collective action opt-in, rather than opt-out, of the class. See King v. General Electric Co., 960 F.2d 617, 621 (7th Cir. 1992); Woods v. New York Life Ins. Co., 686 F.2d 578, 580 (7th Cir. 1982).

I. Motion to Strike Plaintiff's Allegations Related to His State Law Claims

Plaintiff alleges class claims under both the FLSA and state law. While § 216(b)'s collective action procedure will govern the FLSA claims, the state law claims would proceed under Rule 23. Defendant argues that a Rule 23(b)(3) opt-out class will subvert Congress' intent to limit wage actions to those employees that affirmatively opt-in. Judge Shadur raised this concern in an order entered shortly after a complaint containing FLSA and IMWL claims was filed:

There are powerful policy considerations that led Congress to change the original version of the Fair Labor Standards Act by enacting the Portal to Portal Act of 1947 so as to require the opt-in procedure via individualized written consents by employees wishing to join such actions (see Hoffman-La Roche Inc. v. Sperling, 493 U.S. 165, 173 (1989)). That policy and the underlying congressional intent would be thwarted if a plaintiff were permitted to back door the shoehorning in of unnamed parties through the vehicle of calling upon similar state statutes that lack such an opt-in requirement.

Rodriguez v. The Texan, Inc., 2001 WL 1829490, *2 (N.D. Ill. 2001). Since that cautionary order, at least eight opinions in this district have addressed directly whether a plaintiff may pursue a Rule 23(b)(3) opt-out class on a state-law claim when he also asserts a claim under the FLSA.

Three primary reasons are given for refusing to certify such a state-law class: (1) that it would undermine Congress' creation of the "collective action" procedure in the FLSA, see, e.g., McClain v. Leona's Pizzeria, Inc., 222 F.R.D. 574, 578 (N.D. Ill. 2004) (certifying class on state-law claims "would undermine Congress's directive that FLSA collective actions are limited to those parties who opt in to the action"); (2) the concern that absent class members would be confused by "a notice that both calls for a decision whether to opt-in to the collective action and also whether to opt-out of the class action," De La Fuente v. FPM Ipsen Heat Treating, Inc., 2002 WL 31819226, *2 (N.D. Ill. 2002); and (3) the prudential limits of a federal court's exercise of supplemental jurisdiction, see, e.g., Harper v. Yale Int'l Insur. Agency, Inc., 2004 WL 1080193, *5 (N.D. Ill. 2004) (noting that a large class of state law claimants would cause "the federal tail represented by a comparative small number of plaintiffs to wag what is in substance a state dog"), quoting De Asencio v. Tyson Foods, Inc., 342 F.3d 301, 311 (3rd Cir. 2003). Reflecting several of these concerns, Judge Kennelly noted that if only a few employees exercise their opt-in and opt-out rights "we would be left with the rather incongruous situation of an FLSA 'class' including only a tiny number of employees who are interested in seeking back wages, with a state-law class that nonetheless includes all or nearly all of the companies' present or former employees." Muecke v. A-Reliable Auto Parts and Wreckers, Inc., 2002 WL 1359411, *2 (N.D. Ill. 2002). Attempting to deal with some of these problems, several courts have waited until the FLSA's opt-in period is complete before deciding whether to certify an opt-out class on any state-law claims. See Harper, 2004 WL 1080193 at *5 (citing cases).

The opinions that certified state-law classes relied on the facts that: (1) nothing in the FLSA seeks to limit wage claims or remedies available under other statutes, see, e.g., Acosta v. Scott Labor, LLC, 2006 WL 27118, *5 (N.D. Ill. 2006); see also Lindsey v. Government Employees Insur. Co., 448 F.3d 416, 421 (D.C. Cir. 2006) (rejecting the argument that § 216(b) "manifests that the Congress intended to require opting-in for the entire litigation, not merely the FLSA claims"); (2) supplemental jurisdiction should be exercised because it would be inefficient to proceed with the FLSA collective action in federal court, while requiring the employees to pursue class relief under state law -- based upon the same facts -- in the state courts, see O'Brien v. Encotech Constr. Srvcs., 203 F.R.D. 346, 352 (N.D. Ill. 2001), and (3) defendants, who removed the case to federal court, cannot complain about a plaintiff utilizing a remedy that would have been available to him in the state courts, see, e.g., Yon v. Positive Connections, Inc., 2005 WL 628016, *4 (N.D. Ill. 2005).

In determining whether Plaintiff may pursue an opt-out class on his state-law claims, this Court begins with the assumption that the usual federal procedures apply in each case or controversy. See Califano v. Yamasaki, 442 U.S. 682, 700 (1979) ("In the absence of a direct expression by Congress of its intent to depart from the usual course of trying 'all suits of a civil nature' under the Rules established for that purpose, class relief is appropriate"). An opt-out class under Rule 23 is the federal procedure usually applicable to claims seeking monetary relief on behalf of similarly situated individuals. The FLSA modifies this procedure for claims brought pursuant to its provisions.*fn1 See King, 960 F.2d at 621. Because the FLSA does not expressly provide that its modified procedure applies to all wage disputes, Rule 23's "usual course" applies to Plaintiff's state law claims. For this reason, this Court will not strike Plaintiff's class allegations related to his IMWL claim. Nevertheless, as part of Rule 23's usual course, Plaintiff will be required to show that an opt-out class is ...


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