By:  Jason E. Reisman & Betina Miranda, Obermayer Rebmann Maxwell & Hippel LLP (Philadelphia, PA)

A recent case out of the New Jersey federal district court clarifies the application of the “first-filed” rule to collective actions brought under the Fair Labor Standards Act (“FLSA”).  According to the June 7, 2010, opinion in Abushalieh v. American Eagle Express, Inc., No. 1:10-cv-00211, the “first-filed” rule is indeed applicable to two consecutively filed proposed FLSA collective actions, where the named plaintiffs are different but both sets of plaintiffs seek to represent the same class.  The remedy in such a situation is the transfer of the latter-filed case to the district where the first-filed case is pending.

The “First-Filed” Rule

The “first-filed” rule directs that, in cases of federal concurrent jurisdiction, the court which first has possession of the subject matter must decide it, for reasons of judicial economy and sound judicial administration.  To be applicable, the latter-filed case must be truly duplicative of the first-filed case, “on all fours” in material aspects.[1]  The issues do not have to be identical but must be so similar that a determination in one case would leave little or nothing to be resolved in the other.

The Pre-Abushalieh Cases

Prior to the filing of Abushalieh on January 14, 2010, two other similar cases were filed against American Eagle Express, Inc. (“AEX”).  All three cases allege that AEX improperly classifies delivery drivers as independent contractors when they are actually employees.  The first case, Sherman v. AEX, was filed February 10, 2009, in the U.S. District Court for the Eastern District of Pennsylvania, as a putative class action under Federal Rule of Civil Procedure (“FRCP”) 23.  The case was brought exclusively pursuant to Pennsylvania wage and hour laws, and was filed on behalf of all AEX delivery drivers in Pennsylvania between February 10, 2006, and the present, who were designated by AEX as independent contractors.

The second case, Spellman v. AEX, was filed in the U.S. District Court for the District of Columbia, on September 1, 2009, under the FLSA and Maryland and District of Columbia wage and hour laws.  The Spellman plaintiffs seek to represent all AEX delivery drivers who drove delivery vehicles of less than 10,001 pounds gross vehicle weight for AEX.  The Spellman plaintiffs also ask that two subclasses be designated for their Maryland and District of Columbia claims.  The Spellman case was later transferred on April 9, 2010, to the Eastern District of Pennsylvania at the plaintiffs’ request, principally because of the pending Sherman matter, although it has yet to be consolidated with that matter. 

Is Abushalieh on “All Fours” with Sherman and Spellman?

The Abushalieh plaintiffs bring claims solely under the FLSA as a collective action on behalf of all AEX delivery drivers who, between January 15, 2007, and the present, drove delivery vehicles with a gross vehicle weight of 10,000 pounds or less in New Jersey, Pennsylvania, Maryland, and Delaware.  AEX filed a motion to dismiss on the basis of the “first-filed” rule citing the Spellman action.  The Abushalieh plaintiffs opposed the motion, arguing that (1) the rule is inapplicable because the named plaintiffs were different; (2) the rule should not apply because of concerns about coordinating opt-in FLSA collective actions with opt-out state class actions under FRCP 23; (3) if the rule applies, then Sherman is the first-filed case; and (4) if the rule applies, transfer and not dismissal is the appropriate remedy. 

After considering the parties’ arguments, the court issued a ruling which essentially split the baby.  First, the court found that Spellman and Abushalieh brought virtually identical FLSA claims seeking the same relief.  While Spellman additionally sought relief under state law, its FLSA claim fully encompassed the entire Abushalieh matter.  However, Sherman did not encompass the Abushalieh matter, as Sherman brought only state law claims while Abushalieh only brought federal claims.  The court found that these facts precluded Sherman from being considered the “first-filed” case. 

Second, the Abushalieh court found that the plaintiffs’ concerns about coordinating FLSA collective actions with state law class actions to be inconsequential.  While the combination of an opt-out state law class action and an opt-in FLSA collective action could have the effect of nullifying the opt-in requirement, the court noted that there would be adequate remedies for such a conflict, including the dismissal or severing of the state law class action claim, or creating the state law class to include only those who opt in.

Third, and of particular interest, the court found that the parties in Spellman and Abushalieh were sufficiently similar for purposes of the “first-filed” rule despite the different named plaintiffs.  The Third Circuit has yet to address the situation where, in two proposed collective actions, the named plaintiffs are different but seek to represent the same class of individuals against the same defendant.  So, the Abushalieh court looked to a 2009 decision in the District of New Jersey, Alvarez v. Gold Belt, LLC, No. 08-4871, 2009 WL 1473933.  The Alvarez court, while technically not applying the “first-filed” rule because both cases at issue were pending before the same court, drew upon the principles of the rule, especially the importance of judicial economy and consistent judgments.  Applying these principles, the Alvarez court stayed proceedings on the case at bar until the judge in the other case ruled on the earlier class certification request. 

Relying on the principles of Alvarez, the Abushalieh court ruled that when different named plaintiffs seek to represent the same class against the same defendant with virtually identical FLSA claims, the “first-filed” rules applies.  The court further held that the appropriate remedy is transfer of the latter-filed case to the district where the first-filed case is pending, pursuant to the forum non conveniens requirements of 29 U.S.C. 1404(a).  Thus, the Abushalieh matter was ordered transferred to the U.S. District Court for the Eastern District of Pennsylvania, where it could be consolidated with the pending Spellman case.

[1]   The colorful phrase “on all fours with” has been explained by the story, perhaps apocryphal, of a case involving a dispute over a living cow.  One of the attorneys, in making his argument, cited a prior decision involving a dead cow.  Opposing counsel cited a different decision that involved a living cow. The judge sided with opposing counsel, stating that he had better authority because it was “on all fours” (i.e., alive).


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