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NJWHL | Overtime Law Blog | FLSA Decisions
Tag Archives: NJWHL	February 11, 2011 · 8:17 am	3d Cir.: Enforceability Of Class/Collective Action Waiver In Agreement To Arbitrate Is Issue For Arbitrator Not The Court	Vilches v. Travelers Companies, Inc.
This appeal raised the issue of whether the District Court properly determined that the Plaintiff-Appellant (employee) assented to the insertion of a class arbitration waiver into an existing arbitration policy, and that the waiver was not unconscionable. The District Court ordered the parties into arbitration to individually resolve the claims brought by Plaintiff under the Fair Labor Standards Act of 1938, 29 U.S.C. § 201, et seq. (“FLSA”), and New Jersey Wage and Hour Law, N.J.S.A. § 34:11-4.1, et seq. (“NJWHL”). While it held that the class arbitration waiver was not unconscionable, the Third Circuit vacated the District Court’s order and referred the matter to arbitration to determine whether Vilches can proceed as a class based upon the parties’ agreements.
Discussing the relevant procedural and factual background the court stated:
“We briefly summarize the allegations pertinent to our decision. Appellants Vilches filed a class and collective action in the Superior Court of New Jersey to recover unpaid wages and overtime allegedly withheld in violation of the FLSA and the NJWHL, contending that Travelers consistently required its insurance appraisers to work beyond 40 hours per week but failed to properly compensate the appraisers for the additional labor. Travelers removed the matter to the United States District Court for the District of New Jersey, and filed a Motion for Summary Judgment seeking the dismissal of the complaint and an order compelling Vilches to arbitrate their individual wage and hour claims.
Upon commencing employment with Travelers, Vilches agreed to an employment provision making arbitration “the required, and exclusive, forum for the resolution of all employment disputes that may arise” pursuant to an enumerated list of federal statutes, and under “any other federal, state or local statute, regulation or common law doctrine, regarding employment discrimination, conditions of employment or termination of employment.” (App’x at 79.) The agreement did not expressly reference class or collective arbitration or any waiver of the same. The agreement reserved to Travelers the right to alter or amend the arbitration policy at its discretion with appropriate notice to employees.
In April 2005, Travelers electronically published a revised Arbitration Policy. In addition to restating the expansive scope of the Policy, the update also included an express statement prohibiting arbitration through class or collective action:
The Policy makes arbitration the required and exclusive forum for the resolution of all employment-related and compensation-related disputes based on legally protected rights (i.e ., statutory, contractual or common law rights) that may arise between an employee or former employee and the Company…. [T]here will be no right or authority for any dispute to be brought, heard or arbitrated under this Policy as a class or collective action, private attorney general, or in a representative capacity on behalf of any person. (App’x at 88) (emphasis added). Travelers communicated the revised Policy to Vilches in several electronic communications.
Before the District Court, Vilches initially alleged that they never agreed to arbitrate any claims against Travelers; their position changed, however, during the course of proceedings and they ultimately conceded that all employment disputes with Travelers must be arbitrated pursuant to the arbitration agreement they signed at commencement of employment. They nevertheless insisted that the revised Arbitration Policy introduced by Travelers in April 2005 prohibiting class arbitration, which Travelers attempted to enforce, did not bind them because they never assented to its terms. Vilches further argued that, even assuming that the updated Policy did bind them, the revision was unconscionable and unenforceable.
Notwithstanding the fact that the parties agreed to arbitrate all employment disputes, as we discuss below, the District Court addressed the question of whether Vilches agreed to waive the right to proceed by way of class arbitration. In an oral decision, the District Court granted Travelers’ motion for summary judgment, finding that the various forms of correspondence from Travelers provided sufficient notice to Vilches of the revised Policy, and that their electronic assent and continued employment constituted agreement to the update. As such, the Court held that Vilches waived the ability to proceed in a representative capacity through class arbitration. The Court’s opinion only briefly touched upon the unconscionability claims, stating that “there was no adhesion that was part of that process.” (App’x at 23.) The Court ordered the parties to individually arbitrate the employment disputes, and this appeal followed.”
Holding that the Arbitrator and not the Court should decide the issue of enforceability of the class/collective action waiver, the Third Circuit reasoned:
“The parties agree that any and all disputes arising out of the employment relationship-including the claims asserted here-are to be resolved in binding arbitration. Accordingly, the role of the Court is limited to deciding whether the revised Arbitration Policy introduced in April 2005-and the class arbitration waiver included within that revision-governed this dispute. We conclude that the District Court should not have decided the issue presented as to the class action waiver, and, as we explain below, we will refer the resolution of this question to arbitration in accordance with governing jurisprudence. The District Court should have, however, ruled on the issue of unconscionability and we will address it.
We have repeatedly stated that courts play a limited role when a litigant moves to compel arbitration. Specifically, “whether the parties have submitted a particular dispute to arbitration, i.e., the question of arbitrability, is an issue for judicial determination unless the parties clearly and unmistakably provide otherwise.’ “ Puleo, 605 F.3d at 178 (quoting Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83 (2002)). “[A] question of arbitrability arises only in two circumstances-first, when there is a threshold dispute over whether the parties have a valid arbitration agreement at all,’ and, second, when the parties are in dispute as to whether a concededly binding arbitration clause applies to a certain type of controversy.’ “ Id. (quoting Green Tree Fin. Corp. v. Bazzle, 539 U.S. 444, 452 (2003)). In contrast, the Supreme Court has distinguished “questions of arbitrability with disputes over arbitration procedure, which do not bear upon the validity of an agreement to arbitrate.” Id. at 179. We noted in Puleo that “procedural questions”-such as waiver or delay-“which grow out of the dispute and bear on its final disposition are presumptively not for the judge.” Id.
This matter satisfies neither of the Puleo arbitrability circumstances. As stated, neither party questions “whether the parties have a valid arbitration agreement at all.” Id.; (see also Appellants’ Br. at 15 (“Plaintiffs do not challenge the validity of the arbitration agreements they entered into when they first began their employment”); Appellees’ Br. at 6 (“At the outset of employment, Appellants agreed to the Travelers Employment Arbitration Policy”).) The original arbitration provision to which Vilches admittedly agreed provided that “the required, and exclusive, forum for the resolution of all employment disputes ” would be arbitration. (App’x at 79 (emphasis added).) Here, the issue of whether an employee is bound by a disputed amendment to existing employment provisions falls within the scope of this expansive agreement to arbitrate. Indeed, the language makes clear that the “concededly binding arbitration clause applies” to the particular employment claims at stake here, and the parties do not advance a cognizable argument to suggest otherwise. Puleo, 605 F.3d at 178. Accordingly, the second Puleo arbitrability element is also unfulfilled.
While the parties framed their arguments so as to invite the Court’s attention to the class action waiver issue-namely, whether the revised Arbitration Policy expressly prohibiting class arbitration governs the relationship between Travelers and Vilches-we conclude that “the relevant question here is what kind of arbitration proceeding the parties agreed to.” Bazzle, 539 U.S. at 452 (emphasis in original). As stated, the addition of the disputed class arbitration waiver did not disturb the parties’ agreement to refer “all employment disputes” to arbitration, and, thus, “does not bear upon the validity of an agreement to arbitrate.” Puleo, 605 F.3d at 179. Assuming binding arbitration of all employment disputes, the contested waiver provision solely affects the type of procedural arbitration mechanism applicable to this dispute. “[T]he Supreme Court has made clear that questions of contract interpretation’ aimed at discerning whether a particular procedural mechanism is authorized by a given arbitration agreement are matters for the arbitrator to decide .” Id. (emphasis in original). Where contractual silence is implicated, “the arbitrator and not a court should decide whether a contract [ was] indeed silent’ on the issue of class arbitration,” and “whether a contract with an arbitration clause forbids class arbitration.” Stolt-Nielsen S.A. v. Animalfeeds Int’l Corp., 130 S.Ct. 1758, 1771-72 (2010).
The Policy originally in force made no mention of class action or class arbitration, and was entirely silent on whether the parties had a right to proceed through class or collective arbitration. In contrast, the amended Policy explicitly precludes class arbitration. Accordingly, we must “give effect to the contractual rights and expectations of the parties,” and refer the questions of whether class arbitration was agreed upon to the arbitrator. Stolt-Nielsen, 130 S.Ct. at 1774.
Although we offer no forecast as to the arbitrator’s potential resolution of these questions, assuming arguendo that the arbitrator finds the class action waiver binding, we will address Vilches’ alternative argument that the addition of the class action waiver was unconscionable for the sake of judicial efficiency, and because it does concern “arbitrabillity.” See Puleo, 605 F.3d at 179.”
The Third Circuit went on to hold that, in the event the class action waiver language was binding, it was not unconscionable.
Click Vilches v. Travelers Companies, Inc., to read the entire opinion.
Tagged as Class Action Waiver, Collective Action Waiver, Enforceability of Class/Collective Waivers, Fair Labor Standards Act, FLSA, N.J.S.A. § 34:11-4.1, New Jersey Wage and Hour Law, NJWHL, Overtime Law, Third Circuit
July 30, 2010 · 7:06 am	D.N.J.: Following 3rd Circuit Precedent Pharma Reps Found To Be Administrative Exempt	Jackson v. Alpharma, Inc.
Less than a month after the Second Circuit held that pharmaceutical representatives, who performed typical marketing duties, were non-exempt and entitled to overtime pay, a District Court in New Jersey reminds us that the Third Circuit disagrees, and believes that pharma reps are administrative exempt. However, like some other courts before it, the Court declined to address whether such employees qualify for the outside sales exemption as well.
“The plaintiffs worked as PSRs for Alpharma, which manufactures Kadian and Flector, two treatments for pain. (Def.’s 56.1 Stmt. at ¶¶ 2-4; Doc. No. 81-4.) Because of federal statutes and regulations, Kadian and Flector can be sold or dispensed to the public only by a prescription written by a licensed healthcare professional. (Id. at ¶ 4.) Therefore, plaintiffs did not “sell” the drugs, but rather called on doctors and pharmacies to encourage them to prescribe or stock Alpharma’s products over the products of its competitors. (Id. at ¶¶ 5, 6.)
Defendant paints a picture of the PSR with unlimited autonomy, given only a list of doctors and an expense account with which to effectuate their goal. (Def.’s 56.1 Stmt. at ¶¶ 38-71.) The facts that defendant highlights to pinpoint the PSRs’ discretion include: (1) that each PSR worked alone and not with partners or on teams; (2) that plaintiffs spent only two days with their District Manager every one to two months; (3) that upon the beginning of their employment with Alpharma, each plaintiff was given a list of 500 physicians in their territory, and it was up to each PSR to narrow this list to approximately 120 physicians, and further that it was up to each PSR to decide how best to contact these doctors and move their business; (4) that PSRs had similar experiences when dealing with pharmacies; (5) that the PSRs planned their own routing, the process by which they would map out what their activities would be for the upcoming weeks; and (6) that each PSR prepared an annual business plan, which laid out how the PSR intended to grow his or her business in the coming year.
Plaintiffs, on the other hand, paint a picture of Alpharma “micro-managing” its PSRs. Alpharma notes that from the beginning of their employment, Alpharma PSRs receive training and instruction from Alpharma specifically designed to ensure the Alpharma Representatives did not deviate from corporate-approved messages about the drugs. (Pl.’s 56.1 Stmt. at ¶ 22; Doc. No. 83-1.) Plaintiffs also state that they had no discretion concerning, and did not exercise independent judgment in framing Alpharma’s message, and Alpharma explicitly directed its PSRs to use company scripted messages. (Id. at ¶¶ 23-25.) Further, with respect to Kadian, plaintiffs state that they had no discretion in describing its effectiveness, but instead were trained to adhere to the information that was already on the package insert. (Id. at ¶ 27.) Alpharma also provided specific information in the form of handouts and promotional literature that could not be altered or modified by the PSRs, nor could the PSRs develop their own aids to use in their work. (Id. at ¶ 31.) Further, according to plaintiffs, their direct supervisors were micro-managers that “wanted to know everything you were doing” and required plaintiffs to check in with management at least three times per day. (Id. at ¶¶ 34-35.)”
Reasoning that that Plaintiffs were exempt under the administrative exemption, the Court stated:
“The parties concede that the plaintiffs in this case meet the salary requirement of the rules. (Pl.’s Br. in Opp. at Fn. 8; Doc. No. 83.) The main disputes are the second and third prongs: whether the PSRs work is directly related to management or general business operations, and whether the PSRs exercise discretion and independent judgment with respect to matters of significance.
With respect to the second prong, the phrase “directly related to the management or general business operations” refers to the type of work performed by the employee. “To meet this requirement, an employee must perform work directly related to assisting with the running or servicing of the business.” 29 C.F.R. § 541.201(a). The regulations distinguish this type of work from, for example, “working on a manufacturing production line” or “selling a product in a retail or service establishment.” Id. The regulations state that “[w]ork directly related to management or general business operations includes, but is not limited to, work in functional areas such as … advertising; marketing … and similar activities.” 29 C.F.R. § 541.201(b). The regulations specifically include “marketing” and “promoting sales” in the definition of general business operations. Id. Because the PSRs in this case were clearly marketing and promoting the sale of Alpharma’s products, the Court concludes that they were performing work “directly related to the management or general business operations” of Alpharma.
With respect to the third prong:
In general, the exercise of discretion and independent judgment involves the comparison and the evaluation of possible courses of conduct, and acting or making a decision after the various possibilities have been considered. The term “matters of significance” refers to the level of importance or consequence of the work performed. 29 C.F.R. § 541.202(a).
Defendant argues that the primary duties of the PSRs require discretion and independent judgment with respect to matters of significance. (Def.’s Br. at 24; Doc. No. 81-2.) Defendant relies heavily on Smith v. Johnson & Johnson, 593 F.3d 280 (3d Cir.2010), the pending outcome of which caused this matter to be stayed. In Smith, the Third Circuit held that a pharmaceutical sales representative was not entitled to overtime pay because she qualified for the administrative exemption under the FLSA. Id. at 285. In Smith, the plaintiff testified regarding the independent and managerial qualities that her position required. Smith described herself as “the manager of her own business who could run her own territory as she saw fit.” Id. Though the duties of a particular position is a fact-sensitive inquiry, the facts in Smith are startlingly similar to the case at bar. Johnson & Johnson (“J & J”), Smith’s employer, gave her a list of target doctors that it created and told her to complete an average of ten visits for day. Id. at 282. J & J left the itinerary and order of Smith’s visits to the target doctors to her discretion. Id. The J & J target list identified “high-priority” doctors that issued a large number of prescriptions for the drug that Smith was promoting, or a competing product. Id. While meeting with doctors, Smith worked off of a prepared “message” that J & J provided, although she had “some discretion when deciding how to approach the conversation. Id. J & J gave her visual aids and did not permit her to use other aids.” Id.
Here, the plaintiffs were assigned a geographic territory for which they were solely responsible. (Def.’s 56.1 Stmt. at ¶ 40; Doc. No. 81-4.) They worked alone the majority of the time. (Id. at ¶ 42.) PSRs controlled their territory by developing business plans designed to grow their business and also by governing their own day-to-day activities (Id. at ¶ 72.) PSRs decided when and where to travel (their “routing”) and with whom to meet in order to effectuate the most business. (Def.’s 56.1 Stmt. at ¶¶ 51, 67-68.) In executing individual calls, the plaintiffs had discretion by deciding how to approach the physician, what topics to discuss with the physician, and what materials to use (though the universe of materials were provided to them, as in Smith ). (Def.’s 56.1 Stmt. at 59, 83, 97.)
Plaintiffs argue that this case is distinguishable from Smith, because here the plaintiffs worked under a “closely supervised and tightly controlled regime, exercising no independence and discretion in any important matters.” (Pl.’s Br. in Opp. at 35; Doc. No. 83.) Plaintiffs argue that the controlling nature of Alpharma, as noted in the facts section above, differs from the type of “freelancing” done by the plaintiff in Smith. (Id. at 36.) Further, plaintiffs note that the regulations provide a nonexhaustive list of factors for use in the Court’s examination of whether or not an employee exercises the requisite discretion and judgment to fit within the exemption. (Id. at 31.) The list includes: whether the employee carries out major assignments in conducting the operations of the business; whether the employee performs work that affects business operations to a substantial degree, even if the employee’s assignments are related to the operation of a particular segment of the business; … whether the employee has authority to waive or deviate from established policies and procedures without prior approval; … whether the employee provides consultation or expert advice to management; whether the employee is involved in planning long- or short-term business objectives; … and whether the employee represents the company in handling complaints, arbitrating disputes, or resolving grievances. 29 C.F.R. § 541.202(b). Plaintiffs argue that they do not meet a single one of the identified factors, nor any surrogates of those factors, and thus do not exercise discretion or independent judgment. (Pls.’ Br. at 32; Doc. No. 83.)
The Court concludes that the plaintiffs in this case, like the plaintiff in Smith, qualify for the administrative employee exemption. While this case lacks the direct testimony of the plaintiffs regarding their autonomy and independent nature, the underlying facts differ little from the facts in Smith. Through either stipulation or undisputed facts (not plaintiffs’ characterizations of those facts), it is clearly shown that the plaintiffs in this case (1) earn a salary high enough to qualify for the first prong of the exemption, (2) perform non-manual work directly related to the general business operations of their employer, and (3) exercise discretion and independent judgment with respect to matters of significance. Of the ten factors listed in § 541.202(b), the Court concludes that the plaintiffs satisfy the same two that Smith did: their work for advancing the sales of their products within their territories “affects business operations to a substantial degree,” and they are “involved in planning long- or short-term business objectives” related to the marketing of their products within their territories. 29 C.F.R. § 541.202(b). These conclusions are buttressed by the plaintiffs’ duties to write reports and business plans to determine where their business was coming from, to detect trends in the sales of the drug, and to generate ideas on how to grow the business. (Def.’s 56.1 Stmt. at ¶ 76; Doc. No. 81-4.)
In supplemental submissions, the plaintiffs direct the Court’s attention to two new cases: Jirak v. Abbott Laboratories, Inc., Civ. No. 07-3626 (N.D. Ill. June 10, 2010) (Doc. No. 85) and In re Novartis Wage and Hour Litigation, Civ. No. 09-0437 (2d Cir. July 6, 2010) (Doc. No. 87). In light of the Third Circuit’s clear opinion in Smith, and subsequent nonprecedential opinion in Baum v. Astrazeneca LP, 2010 U.S.App. LEXIS 6047 (3d Cir. Mar. 24, 2010), the Court does not find it necessary to discuss these other cases.”
Although the holding here should come as no surprise, given Third Circuit precedent, it does create a situation where abutting districts (New Jersey and the Eastern and Southern Districts of New York) ascribe entirely different meanings to the administrative exemption generally, and specifically its effect on the classification of pharmaceutical reps. With so much at stake, it’s likely this conflict of law is headed to the United States Supreme Court for resolution.
Tagged as Administrative Exemption, Alpharma, Fair Labor Standards Act, FLSA, New Jersey, NJWHL, Outside Sales Exemption, Overtime, Overtime Law, Pharmaceutical Reps
June 30, 2010 · 12:52 pm	D.N.J.: Plaintiffs’ State Law Claims Not “Inherently Incompatible” With FLSA Claims; Plaintiffs’ Motion to Remand Denied	Dare v. Comcast Corp
This matter was before the Court on the motion of Plaintiffs to sever and remand all state wage and hour claims pursuant to Fed.R.Civ.P. 21. In denying Plaintiffs’ motion, the Court discussed, at length the state of Third Circuit law applicable to so-called hybrid (state law and FLSA) cases.
Unlike many cases within the Third Circuit to have considered the viability of hybrid Wage and Hour cases, in this case it was the Plaintiffs arguing that State Law claims and FLSA claims were “inherently incompatible.” Rejecting this oft-raised argument the Court explained:
“Fed.R.Civ.P. 21 provides for the severance of claims “at any time, on just terms.” Courts must balance several considerations in determining whether severance is warranted, including “the convenience of the parties, avoidance of prejudice to either party, and promotion of the expeditious resolution of the litigation.” German v. Federal Home Loan Mortgage Corp., 896 F.Supp. 1385, 1400 n. 6 (2d Cir.1995); see also Official Committee of Unsecured Creditors v. Shapiro, 190 F.R.D. 352, 355 (E.D.Pa.2000). Specific factors that must be weighed are:
(1) whether the claims arise out of the same transaction or occurrence; (2) whether the claims present some common questions of law or fact; (3) whether settlement of the claims or judicial economy would be facilitated; (4) whether prejudice would be avoided if severance were granted; and (5) whether different witnesses and documentary proof are required for the separate claims. In re Merrill Lynch & Co., Inc. Research Reports Securities Litigation, 214 F.R.D. 152, 154-55 (S.D.N.Y.2003).
In this case, the factors all weigh against severance at this time. With regard to the first two factors, it is clear that both Plaintiffs’ state and federal claims arise from and are predicated upon the same set of core facts. Specifically, both claims are based on the fact that Defendants allegedly failed to pay its employees for overtime or off-the-clock hours worked, failed to provide the required minimum wage, and took unauthorized deductions from employee wages. As to the third factor, severance of the state claims would require the parties to litigate parallel cases with duplicative discovery, thereby frustrating judicial economy. Fourth, there is no indication that any of the parties would be prejudiced by not severing Plaintiffs’ state law claims at this time. Finally, there is no indication that the state and federal claims would require different witnesses or documentary proofs.
Although Plaintiffs have raised a number of arguments in support of their position that the claims should be severed, all are without merit. First, Plaintiffs argue that their state law claims should be severed and remanded in this case because “an FLSA opt-in collective action and a state law wage and hour opt-out class action are ‘inherently incompatible.’ “ (Pl. Br. at 3.) However, this is not an accurate statement of the law. Although Plaintiffs cite to De Asencio v. Tyson Foods, Inc., 342 F.3d 301 (3d Cir.2003) in support of their argument, this case does not stand for that proposition. To the contrary, the Third Circuit’s holding in De Asencio was premised on a case-specific analysis of supplemental jurisdiction, and not any alleged incompatibility between Rule 23 class actions and FLSA collective actions. See 342 F.3d at 312. Plaintiffs have failed to cite to any case in which the state class action claims were dismissed on the basis of their alleged inherent incompatibility with FLSA claims.
Second, Plaintiffs argue that the differences between the opt-in nature of their FLSA collective action and the opt-out nature of their state law class action warrants severance of the state law claim. However, the Court finds the procedural differences between the state and federal claims to be outweighed by the common questions of fact and substantive law. See De Asencio, 342 F.3d at 307-312 (noting that bringing state law class action in same case as FLSA claim “may be proper strategy where the state and federal actions raise similar issues and require similar terms of proof”); Cannon v. Vineland Hous. Auth., 627 F.Supp.2d 171, 176 n. 4 (D.N.J.2008) (noting that FLSA and New Jersey wage and hour laws employ same test for overtime claims).
Third, Plaintiffs argue that denial of the motion will prejudice them by delaying both class certification and the speedy trial of their state claims by a state court should this Court decline to exercise supplemental jurisdiction at some point in the future. However, the Court can conceive of no reason why the presence of both state and federal claims in this action would prevent Plaintiffs from seeking to certify the class in a timely manner. Indeed, since filing the instant motion Plaintiffs have moved to conditionally certify the class for their state claims. Further, any hypothetical delay Plaintiffs might suffer should the Court decline supplemental jurisdiction at some point in the future is outweighed by the very real prejudice of having to conduct parallel state and federal court actions with expensive, duplicative discovery that Defendants would face were this motion granted. Plaintiffs contention that Defendants would not be prejudiced by severing the state claims because any duplicative discovery, additional expense, or inconsistent results could have been avoided if they declined to remove the case is likewise unavailing. Plaintiffs have not cited any authority to suggest that a defendant waives its right to argue that it would be prejudiced by an action simply by exercising its right to remove a case involving a federal question.
Finally, Plaintiffs argue that the state claim should be severed because it will substantially predominate the FLSA claim. This argument implicates the Court’s exercise of supplemental jurisdiction over Plaintiffs’ state claim. District courts have supplemental jurisdiction over any claims that share a “common nucleus of operative fact” with a claim over which they have original jurisdiction. See 28 U.S.C. § 1367(a); De Asencio, 342 F.3d at 307-312. The courts may nonetheless decline to exercise supplemental jurisdiction if “the state law claim substantially predominates over the claim or claims over which the district court has original jurisdiction.” 28 U.S.C. § 1367(c)(2). Generally, a state claim will be found to substantially predominate where it “ ‘constitutes the real body of a case, to which the federal claim is only an appendage’-only where permitting litigation of all claims in the district court can accurately be described as allowing a federal tail to wag what is in substance a state dog.” Borough of W. Mifflin v. Lancaster, 45 F.3d 780, 789 (3d Cir.1995) (quoting United Mine Workers v. Gibbs, 383 U.S. 715, 727 (1966)); see also De Asencio, 342 F.3d at 309. In such instances, “the state claims may be dismissed without prejudice and left for resolution to state tribunals.” Gibbs, 383 U.S. at 726.
The Third Circuit has made clear that in examining supplemental jurisdiction over state wage and hour claims brought alongside an FLSA collective action:
[a] court must examine the scope of the state and federal issues, the terms of proof required by each type of claim, the comprehensiveness of the remedies, and the ability to dismiss the state claims without prejudice to determine whether the state claim constitutes the real body of the case. This is necessarily a case-specific analysis. De Asencio, 342 F.3d at 312. This analysis may only be conducted after the parties have completed substantial discovery, the opt-in procedure is completed, and the plaintiffs move for class certification of their state claims. See id. at 309-312.
In this case, the opt-in procedure for Plaintiffs’ FLSA claim has not been completed and discovery is ongoing. Further, although Plaintiffs have moved for conditionally certify the state law class, this motion is still pending before the Court. Accordingly, it is premature for the Court to consider whether Plaintiffs’ state law claim substantially predominates over its FLSA claim such that the Court should decline supplemental jurisdiction. Plaintiffs’ argument on this issue is therefore not a proper basis for severance at this time.”
Filed under Collective Actions, Hybrid
Tagged as 216(b), Collective Action, Fair Labor Standards Act, FLSA, Hybrid Action, Inherent Incompatability, New Jersey Wage and Hour Law, NJWHL, Overtime Law, Rule 23, Third Circuit
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