Busk v. Integrity Staffing Solutions, Inc.

The Fed. R. Civ. P. 23 class action opt-out mechanism does not conflict with the Fair Labor Standards Act opt-in mechanism and therefore state law claims must not be dismissed; additionally anti-theft security checks are “integral and indispensable” to the warehouse employees’ duties and must be compensated.

Plaintiffs Jesse Busk and Laurie Castro (“Buck and Castro”), former employees of the Defendant, Integrity Solutions, Inc., (“Integrity”) sued on behalf themselves and the other warehouse workers under the Fair Labor Standards Act ("FLSA") and Nevada labor laws. Busk and Castro claimed that Integrity warehouse employees were not being paid for the 25-minute security check that Integrity performed on each employee at the end of every shift as an anti-theft measure. The district court granted Integrity´s motion to dismiss for failure to state a claim under Fed. R. Civ. P. 12(b)(6), stating that the failure to pay for the security check time did not constitute unpaid wages. Additionally, the district court held that “state law claims must be dismissed due to ‘conflicting’ class certification mechanisms,” because while “plaintiffs must opt into a collective action under FLSA, they must opt out of a class action under Rule 23." The Ninth Circuit joined the Second, Third, Seventh and DC Circuits in holding that the Rule 23 class actions opt-out mechanism does not conflict with the FLSA collective actions opt-in mechanism, and therefore the district court erred in dismissing the state law claims. The panel also held that the security checks were "integral and indispensable" to the employees’ principle activities, and therefore Busk and Castro did not fail to state a claim. AFFIRMED in part; REVERSED in part; and REMANDED.