Neary v. Metropolitan Property and Cas. Ins. Co.

472 F.Supp.2d 247

James NEARY, individually and on behalf of other similarly situated individuals, Plaintiffs, v. METROPOLITAN PROPERTY AND CASUALTY INSURANCE COMPANY, Defendant.

No. 3:06cv536 (JBA).

United States District Court, D. Connecticut.

February 8, 2007.

Daniel S. Blinn, Consumer Law Group, Rocky Hill, CT, Richard Eugene Hayber, Anthony J. Pantuso, III, Hayber & Pantuso, Hartford, CT, for Plaintiffs.

Carrie Gonell, Christopher A. Parlo, Morgan, Lewis & Bockius, New York, NY, Hugh F. Murray, III, Murtha Cullina LLP, Stacy Smith Walsh, Victoria Woodin Chavey, Day Pitney LLP, Hartford, CT, for Defendant.

RULING ON DEFENDANT'S MOTION TO DISMISS AND TO STRIKE CLASS ALLEGATIONS [DOCS. ## 25, 29] AND DEFENDANT'S MOTION FOR PERMISSION TO FILE NEW SUPPLEMENTAL FACTS [DOC. # 46]

ARTERTON, District Judge.

Plaintiff James Neary initiated this action on behalf of himself and other similarly situated individuals, "i.e., Field Adjusters, Field Appraisers, and/or Outside Adjusters," against his employer, Metropolitan Property and Casualty Insurance Company ("Metropolitan"), alleging failure to pay overtime compensation and asserting an individual claim for violation of the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 216(b) (Count 1), a collective action for violation of the FLSA (Count 2), an individual claim for violation of Connecticut's wage and hour statute, Conn. Gen.Stat. § 31-58, et seq. (Count 3), a class action claim under Fed.R.Civ.P. 23(b)(3) for violation of state wage and hour laws "in each state in which each [p]laintiff worked" (Count 4), and a class action claim under Fed.R.Civ.P. 23(b)(1) for violation of state wage and hour laws "of the various states in which [p]laintiffs worked" (Count 5). See Am. Compl. [Doc. # 5].

Defendant now moves to dismiss Counts Four and Five of the Amended Complaint and to strike plaintiffs Fed.R.Civ.P. 23 class allegations, contending that plaintiffs opt-out state law claims "irreconcilably conflict with federal law [and][a]s a result, these claims are barred by the Rules Enabling Act, 28 U.S.C. § 2072(b)" as "Section 216(b) of the FLSA expressly limits the scope of representative lawsuits seeking overtime pay by requiring putative class members to affirmatively opt-in to the action," and also arguing "the Court should strike [p]laintiffs state law class claims because [p]laintiff cannot meet the adequacy and superiority requirements of Rule 23." Def. Mot. [Doc. # 25/29]; Def. Mem. [Doc. # 26] at 1-2.¹ For the reasons that follow, defendant's Motion to Dismiss will be granted, and its Motion to Strike will be denied as moot.

I. Factual and Procedural Background

The allegations of the Amended Complaint, which the Court must accept as true at this stage, reveal the following facts. At all times relevant to this action, plaintiff was a field adjuster in the defendant's Rocky Hill, Connecticut Field Claim Office. Am. Compl. ¶ 2. Defendant Metropolitan "has been in the business of insuring automobiles and drivers throughout the United States" and transacts business in all fifty states, including Connecticut. Id. ¶ 7. "During various times between April 6, 2003 and the present, [d]efendant, pursuant to a common policy and/or practice, designated [p]laintiff and other similarly situated individuals ... as `exempt,' i.e., not entitled to overtime premium pay, when he and/or they should have been designated as `non-exempt,' i.e., entitled to overtime premium pay, in accordance with the Fair Labor Standards Act (FLSA) and the wage and hour laws of the various states in which [p]laintiffs performed work for [d]efendant." Id. ¶ 15. Plaintiff claims that during these times, Metropolitan was fully aware of the duties and responsibilities assigned to the plaintiffs, and of the law regarding payment of overtime, and therefore knew or should have known that plaintiffs were "illegally designated as exempt." Id. ¶¶ 16-17. Plaintiff alleges that "[d]espite this knowledge [d]efendant willfully, and/or negligently, failed and refused to correct its illegal exempt classification of these employees and instead continued to deny [p]laintiffs overtime premium pay" when they worked more than 40 hours per week. Id. ¶¶ 18-19.

Plaintiff alleges that he and "the putative class" are "similarly situated in that they are all subject to [d]efendant's common plan or practice of designating their work as automobile appraisers as exempt work when in fact it is non-exempt work under the law." Id. ¶ 11. As to the "claims for money damages, pursuant to Conn. Gen.Stat. § 31-58 et seq. and the wage and hours laws of the various states in which class members worked," plaintiff sues on behalf of himself and all members of the putative class, and contends that class certification for these state law claims is appropriate under Fed.R.Civ.P. 23(a) and 23(b)(3), alleging, inter alia, that "[u]pon information and belief, there are hundreds of Field Adjusters, Field Appraisers and/or Outside Adjusters who have worked for [d]efendant around the country." Id. ¶ 12.

II. Motion to Dismiss

As noted above, defendant contends that plaintiffs class action claims, Counts 4 and 5, should be dismissed pursuant to the Rules Enabling Act, 28 U.S.C. § 2072(b), on the basis that the class action procedures in Rule 23 irreconcilably conflict with Section 216(b) of the FLSA which expressly limits the scope of representative lawsuits seeking overtime pay to individuals who affirmative opt-in to the action. As another court in this District has described, "[t]here is a fundamental irreconcilable difference between the class action described by Rule 23 and that provided by for FLSA § 16(b)," specifically, "[i]n a Rule 23 proceeding a class action is described; if the action is maintainable as a class action, each person within the description is considered to be a class member and, as such, is bound by judgment, whether favorable or unfavorable, unless he has `opted out' of the suit. Under § 16(b) of the FLSA, on the other hand, no person will be bound by or may benefit from judgment unless he has affirmatively `opted into' the class; that is, given his written, filed consent." Vogel v. American Kiosk Mgmt., 371 F.Supp.2d 122, 127 (D.Conn.2005) (Hall, J.).

Although the Court agrees with the result urged by defendant, it disagrees with its analysis. The Rules Enabling Act, 28 U.S.C. § 2072(b) provides:

(a) The Supreme Court shall have the power to prescribe general rules of practice and procedure and rules of evidence for cases in the United States district courts (including proceedings before magistrate judges thereof) and courts of appeals.

(b) Such rules shall not abridge, enlarge or modify any substantive right. All laws in conflict with such rules shall be of no further force or effect after such rules have taken effect.

While the cases cited by defendant do not explicitly reference this statute, some do appear to rely on the conflict between the opt-in requirement of § 216(b) of the FLSA, and the opt-out scheme utilized in class actions maintained under Rule 23. These cases refer to the Congressional purpose in creating the opt-in procedure in the FLSA "for the purpose of limiting private FLSA plaintiffs to employees who asserted claim[s] in their own right and freeing employers from the burden of representative actions" and find that "No allow a Section 216(b) opt-in action to proceed accompanied by a Rule 23 opt-out state law class action claim would essentially nullify Congress's intent in crafting Section 216(b) and eviscerate the purpose of Section 216(b)'s opt-in requirement." See Otto v. Pocono Health Sys., 457 F.Supp.2d 522, 523-24 (M.D.Pa.2006) (granting motion to dismiss state law class claim); Himmelman v. Conn Casualty Co., No. Civ. 06-166(GEB), 2006 WL 2347873, at *2 (D.N.J. Aug.11, 2006) (striking class action allegations, finding the FLSA collective action and Rule 23 class action "schemes ... inherently incompatible," and stating, "to circumvent the opt-in requirement and bring unnamed parties into federal court by calling upon state statutes similar to the FLSA would undermine Congress's intent to limit these types of claims to collective actions"); Moeck v. Gray Supply Corp., No. 03cv1950 (WGB), 2006 WL 42368, at *5 (D.N.J. Jan. 6, 2006) (finding plaintiffs claim under the New Jersey Wage and Hour Law unsuitable for class action treatment, observing that "[a]llowing [p]laintiff Moeck to circumvent the opt-in requirement and bring unnamed parties into federal court by calling upon state statutes similar to the FLSA would undermine Congress's intent to limit these types of claims to collective actions").

As noted above, these decisions do not actually reference the Rules Enabling Act, and the Second Circuit has explicitly held that the FLSA does not preempt state wage and hour statutes, see Overnite Transp. Co. v. Tianti, 926 F.2d 220, 222 (2d Cir.1991) (affirming the district court's conclusion that the FLSA does not preempt Connecticut's overtime wage law), and therefore the better reasoned course is to dismiss class action claims grounded in state wage and hour laws in the context of a FLSA action by declining to exercise supplemental jurisdiction over those claims pursuant to 28 U.S.C. § 1367.

Section 1367(a) provides that "in any civil action of which the district courts have original jurisdiction, the district courts shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution." Here, it cannot be disputed that the class claims for violations of state wage and hour laws are sufficiently related to the FLSA claims that they form part of the same case or controversy, inasmuch as all of the claims relate to defendant's allegedly unlawful practice of designating plaintiff and other similarly situated individuals...