District Court Holds Class Action under Nevada State Law is Precluded by FLSA

February 8, 2012
By Parker | Scheer | Lagomarsino on February 8, 2012 9:22 AM |

Kimberley Daprizio was a dealer at Harrah's Las Vegas, which is owned by Harrah's Entertainment, Inc. Harrah's required Daprizio and other dealers to attend a short meeting before each shift. Daprizio and other dealers were not compensated for the time spent in these mandatory meetings.

Daprizio sued Harrah's Las Vegas and their parent company for violating the Fair Labor Standards Act (FLSA) and Nevada Revised Statutes (NRS), and invoked the Class Action Fairness Act (CAFA) to extend the lawsuit to any other Harrah employees who were not compensated during the previous three years. Harrah's argued that Daprizio's complaint was legally insufficient and requested the District Court to dismiss the lawsuit. Federal Rule of Civil Procedure 12(b)(6) mandates that a court dismiss a cause of action that fails to state a claim upon which relief can be granted. See N. Star Int'l v. Ariz. Corp. Comm'n, 720 F.2d 578, 581 (9th Cir. 1983).

First, the District Court determined jurisdictional law. Section 216(b) of the FLSA grants jurisdiction to "any Federal or State court of competent jurisdiction." 29 U.S.C. § 216(b). The primary difference between the FLSA and Nevada state labor class action laws is the process parties use to become members of a class action suit. Under the FLSA, "No employee shall be a party plaintiff to any such action unless he gives 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). In other words, a party to the action must opt in to an FLSA collective action. Fed.R.Civ.P. 23(c)(2)(B)(v) governs other class action suits, such as Nevada state labor class action suits, and requires that any member who does not want to be part of a class action suit must opt-out.

The District Court found that because of the divergence in the opt-in and opt-out procedures the FLSA precludes state law labor class actions. The District Court also noted that if Rule 23 was applied, the 1100 California employees who did not affirmatively opt-in to the lawsuit would have been made part of the case. Finally, the District Court found that while the FLSA preempted a state class action, Daprizio still had an individual claim under Nevada state law.

Next the District Court reviewed whether the amount of time required to attend the mandatory meetings was "de minimis." In Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 692 (1946), the United States Supreme Court held, "it is only when an employee is required to give up a substantial measure of his time and effort that compensable working time (which is covered by the FLSA) is involved" In Lindow v. United States, 738 F.2d 1057, 1062 (9th Cir. 1984) three requirements were identified to determine whether time was de minimis: (1) the practical administrative difficulty of recording the additional time; (2) the aggregate amount of compensable time; and (3) the regularity of the additional work. The District Court found the time required to attend the mandatory meetings was not de minimis.

The District Court held that Harrah's motion to dismiss the class action suit under state law was granted, but denied in regard to Daprizio's individual FLSA claim.

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