By Mark Crabtree, Attorney
In February 2005, Congress passed the Class Action Fairness Act in an effort to halt large, multi-plaintiff lawsuits in state courts. Although the Act is aimed primarily at products liability and consumer class actions, questions have arisen as to whether the Act will play a role in wage and hour litigation filed by public safety officers in state courts. For technical reasons, the answer is that the Act is unlikely to have much of an impact in the area.
The Act diverts large, multi-state class actions filed in state court into federal court to stop lawyers from shopping their cases around the country in search of generous state judges and juries known for awarding huge verdicts. To provide an example, two counties in Illinois have been labeled the “judicial hellholes” of the nation by the American Tort Reform Foundation due to the counties’ lenient venue rules and reputation for being plaintiff-oriented. A nationwide class action on behalf of longshoremen, for example, arising out of asbestos-related exposures, may well end up in Illinois, even if a relatively small proportion of the plaintiffs live or work in the state. The Act vests the federal courts with original jurisdiction over such actions and requires they be filed in federal court.
Public sector wage and hour litigation is almost uniformly centered around a single employer – be it a municipality, city, or county – whose employees are relatively geographically homogeneous. That is, most, if not all, plaintiffs in a wage and hour lawsuit against their public employer will reside in the same state as the defendant employer.
Section 2(A) of the Act provides that federal courts have original jurisdiction over actions in which “any member of a class of plaintiffs is a citizen of a State different from any defendant.” Take, for example, Portland, Oregon, where numerous city employees live across the Columbia River in Washington State. The Act’s new requirements provide that if Portland firefighters wanted to sue their employer for state wage and hour violations, the federal court is the only court in which the claim can be brought. The Act backs off this requirement to a substantial degree: If two-thirds or more of the members of the proposed state court class action are citizens of the same state as the defendant, the original jurisdiction requirements in the Act do not apply. A second exemption applies if the number of members of the proposed class is less than 100.
The new legislation may result in large wage and hour litigation (such as nationwide litigation against Wal-Mart) being limited to federal courts, but the overall effect of the Act plays little role in department-wide or even county-wide litigation under state wage and hour laws.
The impact of the new legislation is further limited by the fact that most state wage and hour litigation is brought in conjunction with claims under the Fair Labor Standards Act. Many plaintiffs’ attorneys will opt to file in federal court to begin with or, if they do not, the plaintiffs’ claims are subject to removal to federal court by the defendant employer. This was so before and after enactment of the new legislation. Thus, while the Act has been labeled as a “major victory” and an “historic step” for class action reform, lawsuits for wage and hour violations will feel minimal impact.
This article appears in the April 2005 issue