Free Opening Brief in Support - District Court of Delaware - Delaware

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE

WILLIAM WERSINGER, Plaintiff, v. BANK OF AMERICA CORPORATION, Defendant.

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C.A. No. 07-262-GMS

DEFENDANT'S OPENING BRIEF IN SUPPORT OF ITS MOTION TO DISMISS

YOUNG CONAWAY STARGATT & TAYLOR, LLP Sheldon N. Sandler (I.D. No. 245) Scott A. Holt (I.D. No. 3399) The Brandywine Building, 17th Floor 1000 West Street Wilmington, DE 19801 Telephone: (302) 571-6673; (302) 571-6623 Facsimile: (302) 576-3330; (302) 576-3299 Email: [email protected];[email protected] Attorneys for Defendant

Date: June 5, 2007

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TABLE OF CONTENTS Page TABLE OF AUTHORITIES .................................................................................................... ii NATURE AND STAGE OF PROCEEDINGS .........................................................................1 SUMMARY OF ARGUMENT .................................................................................................2 STATEMENT OF FACTS ........................................................................................................3 ARGUMENT.............................................................................................................................5 I. THIS COURT SHOULD DECLINE TO EXERCISE SUPPLEMENTAL JURISDICTION BECAUSE THE STATE LAW CLAIMS PRESENT NOVEL ISSUES OF LAW, SUBSTANTIALLY PREDOMINATE OVER THE FEDERAL CLAIMS, AND INVOLVE EXCEPTIONAL CIRCUMSTANCES. ...................................................................................................5 A. B. Overview of Supplemental Jurisdiction.............................................................5 The Plaintiff's State-Law Claims Present Novel And Complex Issues Which Have Yet To Be Addressed By A Delaware State Court.......................7 1. Class actions are not permitted under the DWPCA...............................7 2. A private cause of action does not exist under the Delaware Meal Break Statute..........................................................................................9 C. The State-Law Claims Substantially Predominate Over The FLSA Claim.....11 1. The state law claims are broader in scope and in terms of proof.........11 2. The state law claims are broader in remedies. .....................................14 3. The size of the state claims classes would predominate over the federal class..........................................................................................15 D. Plaintiff Should Not Be Permitted To Use Rule 23's Opt-Out Provisions As An End Run Around the FLSA's Clear Congressional Mandate of Collective Opt-In Actions. ...............................................................................16

CONCLUSION........................................................................................................................20

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TABLE OF AUTHORITIES Cases De Asencio v. Tyson Foods, Inc., 342 F.3d 301 (3d Cir. 2003) ........................................................................................ passim Foster v. The Food Emporium, 2000 U.S. Dist. LEXIS 6053, (S.D.N.Y. April 26, 2000) ...................................................................................................17 Greylag 4 Maint. Corp. v. Lynch-James, 2004 Del. Ch. LEXIS 145, (Del. Ch. Oct. 6, 2004)...........................................................................................................9 Heller v. Dover Whse. Mkt., Inc., 515 A.2d 178 (Del. Super. Ct. 1986) ...................................................................................10 Isaac v. Wm. H. Pflaumer & Sons, Inc., 1990 U.S. Dist. LEXIS 8892, (E.D. Pa. July 17, 1990).......................................................................................................18 Leuthold v. Destination America, Inc., 224 F.R.D. 462 (N.D. Cal. 2004).........................................................................................19 Local 435 v. General Motors Corp., 1985 Del. Super. LEXIS 1045 (Del. Super. Ct. Aug. 8, 1985) ...............................................................................................7 Lyon v. Whisman, 45 F.3d at 758 (3rd Cir. 1995) .............................................................................................13 Marine v. State, 607 A.2d 1185 (Del. 1990) ....................................................................................................7 Mossman v. CNC Ins. Assoc., Inc., 1993 Del. Ch. LEXIS 170, (Del. Ch. Aug. 19, 1993) .......................................................................................................8 Pirrone v. North Hotel Assocs., 108 F.R.D. 78 (E.D. Pa. 1985).............................................................................................18 Robbins v. Tremont Medical, Inc., 1997 Del. Ch. LEXIS 6, (Del. Ch. Jan. 16, 1997) .........................................................................................................8

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Rodriguez v. The Texan. Inc, 2001 U.S. Dist. LEXIS 24652, (N.D. Ill. 2001) ....................................................................................................................19 United Mine Workers of America v. Gibbs, 383 U.S. 715 (1966).......................................................................................................11, 17

Statutes 19 Del. C. § 1101 .................................................................................................................1, 12 19 Del. C. § 1102 ...........................................................................................................3, 12, 14 19 Del. C. § 1112 .....................................................................................................................10 19 Del. C. § 1113 .....................................................................................................7, 10, 12, 14 19 Del. C. § 707 ............................................................................................................... passim 28 U.S.C. § 1331........................................................................................................................1 28 U.S.C. § 1367.............................................................................................................. passim 29 U.S.C. § 201..........................................................................................................................1 29 U.S.C. § 207..........................................................................................................................3 29 U.S.C. § 216....................................................................................................................3, 18 43 P.S. § 260.9 ...........................................................................................................................8

Rules Fed. R. Civ. P. 23...........................................................................................................6, 16, 17 Super. Ct. Civ. R. 23 ..................................................................................................................8

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NATURE AND STAGE OF PROCEEDINGS Plaintiff William Wersinger filed this action on May 15, 2007 against Defendant Bank of America Corporation ("Bank of America"). The Plaintiff seeks relief individually and on behalf of a purported class1 of Bank of America employees under the Fair Labor Standards Act (FLSA), 29 U.S.C. §§ 201 et seq., Delaware's Wage Payment and Collection Act (DWPCA), 19 Del. C. §§ 1101 et seq., and Delaware's Meal Break Statute, 19 Del. C. § 707. Subject matter jurisdiction exists over the FLSA claim pursuant to 28 U.S.C. § 1331 (federal question). Although not specifically pled, supplemental jurisdiction over the state law claims would have to exist, if at all, under 28 U.S.C. § 1367. This is Defendant's Opening Brief in support of its Motion to Dismiss the state law claims on subject matter jurisdictional grounds.

1

Plaintiff did not designate this case as a "Class Action" in the caption as required by Delaware Local Rule 23.1. However, a review of the allegations makes it clear that the case is filed as a class action.

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SUMMARY OF ARGUMENT 1. There are overwhelming reasons to decline supplemental jurisdiction over Plaintiff's state law claims under 28 U.S.C. § 1367(c). 2. Both state law claims present novel and complex issues that have not been decided by a Delaware state tribunal. First, there is significant evidence that the Delaware General Assembly never intended that class actions be available under the Delaware Wage Payment and Collection Act. In addition, there is no indication that a private cause of action exists under the Delaware Meal-Break Statute. 3. The state law claims also substantially predominate over the federal claims in terms of proof and potential scope. The state claims have significant differences in the standard of proof, scope of issues, and the remedies available in comparison to the FLSA claim. There also will be a likely disparity in numbers between an FLSA opt-in class and the opt-out classes for both state law claims. 4. Finally, the case presents compelling circumstances for this Court to decline jurisdiction in view of the concerns regarding its exercise of jurisdiction over individual members of the state-law claim classes who would not be asserting a federal claim.

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STATEMENT OF FACTS Plaintiff alleges he is an employee of Defendant who worked as a paralegal up until November 2006. D.I. 1, Complaint, ¶ 34. The essence of his claim is that Defendant failed to pay him overtime compensation and wages as required under federal and state law, and that he was denied his Delaware statutory entitlement to meal breaks during the work day. D.I. 1, ¶¶ 40 - 47. Counts I and II of the Complaint are brought under the FLSA. In Count I, Plaintiff alleges that the Defendant failed to pay the required overtime wages in violation of 29 U.S.C. § 207 (a)(1). D.I. 1, ¶ 57. The Plaintiff alleges in Count II that Defendant violated the FLSA by not paying him for work performed during meal periods, in other departments, and at a mandatory off-site company-sponsored event. D.I. 1, ¶ 63. Counts I and II are brought as collective or "opt-in" actions pursuant to 29 U.S.C. § 216 (b) on "behalf of and to protect the rights of all similarly situated employees for the three years preceding the filing of this Complaint." D.I. 1, ¶¶ 59; 65. The FLSA claim constitutes the sole basis for original subject matter jurisdiction with this Court. The state law claims are contained in Counts III and IV of the Complaint. Plaintiff alleges in Count III that Defendant violated 19 Del. C. § 1102 of the DWPCA by failing to pay him and purported members of a "class" for all hours worked. D.I. 1, ¶ 67. In Count IV, the Plaintiff alleges Defendant violated Delaware's Meal Break Statute, 19 Del. C. § 707(a), by failing to provide him and "class members" with a 30 minute meal break when they worked over 7.5 hours in a workday. D.I. 1, ¶ 72. Plaintiff requests that Counts III and IV proceed as an "opt-out" class action under Federal Rule of Civil Procedure 23. D.I. 1, ¶¶ 70, 73. He contends that the prerequisites of Rule 23 have been met because the class is allegedly too numerous to practicably join, 3
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significant common questions of law and fact exist, his claims are typical of those of the proposed class, and that he will fairly and adequately represent the class. D.I. 1, ¶ 21-29. Plaintiff also alleges that a Rule 23 class action concerning state law claims is the superior method for handling the case because individual joinder of all class members is not practicable and common class questions of law and fact predominate over any questions affecting only individual members of the proposed class. D.I. 1, ¶ 30.

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ARGUMENT I. THIS COURT SHOULD DECLINE TO EXERCISE SUPPLEMENTAL JURISDICTION BECAUSE THE STATE LAW CLAIMS PRESENT NOVEL ISSUES OF LAW, SUBSTANTIALLY PREDOMINATE OVER THE FEDERAL CLAIMS, AND INVOLVE EXCEPTIONAL CIRCUMSTANCES. A. Overview of Supplemental Jurisdiction.

At issue in this case is whether this Court should exercise supplemental jurisdiction over the state law claims brought in the Complaint. 28 U.S.C. § 1367, which was enacted in 1990, governs this Court's ability to assert supplemental jurisdiction over non-federal claims. In determining whether supplemental jurisdiction is appropriate, a district court must make two inquiries. The first inquiry relates to whether the district court has the authority to exercise supplemental jurisdiction as required under 28 U.S.C. § 1367(a). Section 1367(a) provides that the district court, subject to certain exceptions, "shall have supplemental jurisdiction over all other claims that are so related to claims in the action within [the court's] original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution." 28 U.S.C. § 1367(a). The second inquiry focuses on whether the district court should, in the exercise of its sound discretion, decline supplemental jurisdiction over the non-federal claims. Section 1367(c) provides a list of four circumstances in which a district court may decline to exercise supplemental jurisdiction: (1) the claim raises a novel or complex issue of State law, (2) the claim substantially predominates over the claim or claims over which the district court has original jurisdiction, (3) the district court has dismissed all claims over which it has original jurisdiction, or

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(4) in exceptional circumstances, there are other compelling reasons for declining jurisdiction. 28 U.S.C. § 1367(c). The Court of Appeals for the Third Circuit has considered the precise statutory circumstances under which a district court should decline supplemental jurisdiction pursuant to Section 1367(c). The case involved remarkably similar claims as the present case and required the court to address the scope of supplemental jurisdiction for class action cases involving the FLSA. In De Asencio v. Tyson Foods, Inc., the plaintiffs filed suit under both federal law (FLSA) and state law (Pennsylvania's Wage Payment & Collection Law (WPCL)) alleging the defendant failed to pay its employees for time spent donning and doffing work clothes. 342 F.3d 301, 304 (3d Cir. 2003). As in the instant case, the plaintiffs in De Asencio sought class certification of an "opt in" class under the FLSA, and an "opt out" class for the WPCL claim under Fed. R. Civ. P. 23. Id. at 304. The Third Circuit, after granting an interlocutory appeal, found that the district court had abused its discretion by exercising supplemental jurisdiction over the plaintiffs' state law claim. 342 F.3d 301. It held that the claims under the Pennsylvania WPCL substantially predominated over the plaintiffs' FLSA claim in terms of proof and the scope of the issues. Id. at 311-312. The Court of Appeals also found that relegating the Pennsylvania WPCL claims to state court was in line with the Congressional preference to limit the jurisdictional scope of federal courts for cases involving FLSA collective actions. Id. at 310. As explained more fully below, the circumstances of the instant case provide an even more compelling case than De Asencio to decline the exercise of supplemental jurisdiction. Not only does the instant case contain many of the same factors that prompted the Third

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Circuit to reject supplemental jurisdiction, the state law claims in this case present issues of first impression not previously addressed by a Delaware state court. The unique and complex nature of these issues alone provides sufficient justification for this Court to decline the exercise of supplemental jurisdiction.

B.

The Plaintiff's State-Law Claims Present Novel And Complex Issues Which Have Yet To Be Addressed By A Delaware State Court. 1. Class actions are not permitted under the DWPCA.

One of the unique features of this case that was not present in De Asencio is whether class actions are even permissible under the state wage claim asserted by Plaintiff. The legislative history of the DWPCA shows that the Delaware General Assembly expressly amended the statute so as to preclude claims brought by more than one employee. Marine v. State, 607 A.2d 1185, 1203 (Del. 1990) (""[i]n seeking legislative intent, it is frequently helpful at the outset to trace the legislative history of the statutory scheme.") The current statute provides that "[a] civil action to recover unpaid wages and liquidated damages may be maintained in any court of competent jurisdiction." 19 Del. C. § 1113(a). This language derives from an amendment passed by the Delaware General Assembly in 1984. See Local 435 v. General Motors Corp., 1985 Del. Super. LEXIS 1045, *4 n.1 (Del. Super. Ct. Aug. 8, 1985); 64 Del. Laws C. 226 §§ 2, 3. The pre-1984 language of Section 1113(a), however, was significantly different. It provided: (a) A civil action to recover unpaid wages and liquidated damages may be maintained in any court of competent jurisdiction by any 1 or more employees for and in behalf of himself or themselves, or such employee or employees may designate an agent or representative to maintain such action.

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Local 435, 1985 Del. Super. LEXIS 1045 at *4 (emphasis added). Thus, Section 1113(a) of the DWPCA formerly authorized actions by one or more employees, and provided that employees could designate an agent or representative to maintain the action. In 1984, however, the Delaware General Assembly removed the language authorizing employees to bring suits on behalf of themselves and permitting the designation of agents or representatives to maintain DWPCA actions, creating the present version of Section 1113. Even prior to its amendment in 1984, Section 1113 never authorized employee suits on behalf of others similarly situated under the DWPCA. The absence of such language from the DWPCA stands in sharp contrast to other state wage payment and collection laws, such as Pennsylvania's, which expressly authorize employee class action suits. See e.g., 43 P.S. § 260.9a(b) (authorizing suits to recover unpaid wages and liquidated damages under the Pennsylvania Wage Payment and Collection Law by "any one or more employees for and in behalf of himself or themselves and other employees similarly situated...") (emphasis added). Additional evidence from the structure of the Delaware state court system supports the conclusion that class actions were not intended to be authorized under the DWPCA. First, actions under the DWPCA are actions at law, and thus must ordinarily be brought in the Superior Court. See e.g., Mossman v. CNC Ins. Assoc., Inc., 1993 Del. Ch. LEXIS 170, *3-4 (Del. Ch. Aug. 19, 1993) (recognizing that claims under the DWPCA are actions at law which ordinarily may not be brought in the Court of Chancery); see also Robbins v. Tremont Medical, Inc., 1997 Del. Ch. LEXIS 6, *11 (Del. Ch. Jan. 16, 1997). Yet, prior to 1994, class actions could not be maintained in the Superior Court. See Super. Ct. Civ. R. 23 (added, effective Sept. 30, 1994). Thus, at the time of enactment of the DWPCA, class actions at law were not available in Delaware. This fact, coupled with the amendment of Section 1113 in

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1984, and the absence of clear statutory language authorizing the maintenance of actions on behalf of others similarly situated, demonstrates the legislative intent that class actions are not permitted under the DWPCA. In any case, no Delaware court has addressed the availability of class actions under the DWPCA. Given the lack of guidance from the Delaware courts, no doubt because it is clear that class actions are not permitted, this Court should decline to exercise its supplemental jurisdiction under 28 U.S.C. § 1367(c) because it presents a novel and complex issue of state law. Cf., De Asencio, 342 F.3d at 311 (finding that the need to resolve novel and complex issues of Pennsylvania law, "which are better left to the Pennsylvania state courts, weighs in favor of declining supplemental jurisdiction."). 2. A private cause of action does not exist under the Delaware Meal Break Statute.

The availability of a class action remedy under the Meal Break Statute is also unlikely. This is because the Statute does not even provide a basis for relief for the Plaintiff. The Meal Break Statute only mandates, in certain situations, that Delaware employers provide an "unpaid meal break of at least 30 consecutive minutes, if the employee works 7 ½ or more consecutive hours." 19 Del. C. § 707 (emphasis added). Unlike the DWPCA, however, the statutory language of Section 707 does not explicitly confer a private right of action. "[T]he mere existence of a violation of a code or statute does not automatically confer" a private right of action. Greylag 4 Maint. Corp. v. Lynch-James, 2004 Del. Ch. LEXIS 145, *31 (Del. Ch. Oct. 6, 2004). Absent an express statutory authorization, Delaware utilizes a three-part test to determine whether an implied private right of action exists under a statute. Id. A court must consider whether (1) the plaintiff is one of a class for whose benefit the statute was enacted,

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(2) whether there is any indication of a legislative intent, explicit or implicit, either to create a private right of action or to deny one, and (3) whether a private right of action is consistent with the underlying purposes of the legislative scheme. Heller v. Dover Whse. Mkt., Inc., 515 A.2d 178, 180 (Del. Super. Ct. 1986). Here, a private right of action for monetary damages is inconsistent with the underlying purpose of 19 Del. C. § 707. Instead, the statute appears to provide the Attorney General with an exclusive remedy to obtain a civil penalty of between $1,000 and $5,000 for violations. 19 Del. C. § 707(c). The absence of a private cause of action under Section 707 is further supported by a comparison between it and the DWPCA. Specifically, Section 1113 of the DWPCA explicitly enumerates the remedies available to employees and expressly authorizes a private cause of action. 19 Del. C. § 1113. At the same time, Section 1112 of the DWPCA sets forth the civil penalties available for violations of the DWPCA. 19 Del. C. § 1112. Section 1112(c) states, in pertinent part, that employers who are in violation of the DWPCA "shall be subject to a civil penalty of not less than $1,000 nor more than $5,000 for each such violation"- language that is virtually identical to the penalty provision contained in 19 Del. C. § 707(c). The presence of a civil penalty provision in both Section 1112 and Section 707, and the absence of any language regarding remedies for individual employees under the latter statute, strongly supports the argument that a private remedy is not available for violations of Section 707. At the very least, the determination of whether a private remedy under Section 707 is available is a novel question of law. No Delaware court has addressed this issue and it makes little sense to require a district court to make this determination by predicting how a

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Delaware state court might rule. Again, this provides a compelling reason for this Court to decline supplemental jurisdiction over the state law claims under 28 U.S.C. § 1367(c)(1).

C.

The State-Law Claims Substantially Predominate Over The FLSA Claim.

Another dispositive reason for this Court to decline the exercise of supplemental jurisdiction is because the state-law causes of action substantially predominate over Plaintiff's FLSA claim. See, 28 U.S.C. § 1367(c)(2). The Third Circuit in De Asencio found that where "the state issues substantially predominate, whether in terms of proof, of the scope of the issues raised, or of the comprehensiveness of the remedy sought, the state claims may be dismissed without prejudice and left for resolution to state tribunals." De Asencio, 342 F.3d at 309 (quoting United Mine Workers of America v. Gibbs, 383 U.S. 715, 726 (1966)). 1. The state law claims are broader in scope and in terms of proof.

In De Asencio, the Third Circuit focused its inquiry on the terms of proof and scope of issues raised in the FLSA and Pennsylvania WPCL. De Asencio, 342 F.3d at 310. It noted that the Pennsylvania WPCL does not create a right to compensation, but rather provides a statutory remedy when the employer breaches a "contractual obligation" to pay earned wages. De Asencio, 342 F.3d at 310. The Third Circuit found that the additional testimony and proof necessary for the proposed class of plaintiffs to establish their contractual entitlement to wages under the Pennsylvania WPCL would substantially predominate over the more straightforward FLSA claims. De Asencio, 342 F.3d at 310. The same issue applies in the present case to Plaintiff's claims under Delaware's version of the WPCL.

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As with Pennsylvania's WPCL, the DWPCA does not provide a statutory right to compensation. Instead, it merely requires that employers "pay all wages due to the employer's employees on regular paydays," and provides penalties and a private right of action for the employer's breach of its contractual obligation to pay wages. 19 Del. C. §§ 1102, 1113. Additionally, as with the WPCL, it is the contract between the employee and the employer that governs whether specific wages are earned. See, 19 Del. C. § 1101(a)(4) (defining an "employee" as "any person suffered or permitted to work by an employer under a contract of employment either made in Delaware or to be performed wholly or partly therein.")(emphasis supplied). Thus, where Plaintiff's FLSA claim requires no more proof than the wages paid and the time periods involved, proving the claim under the DWPCA will be much more fact intensive. Each plaintiff will need to show the individual basis for the alleged contract formation and the agreed upon terms. Theses issue are distinct and separate from whether a class of plaintiffs were denied overtime compensation for hours worked over forty in a workweek. The difference in the state and federal wage laws and the mere potential that the state claims might predominate was enough to convince the Third Circuit in De Ascenio that the district court had abused its discretion in exercising supplemental jurisdiction. De Asencio, 342 F.3d at 311 ("Because the FLSA claim does not require an intent to form a contract, individual questions of implied contract formation with respect to each member of the WPCL class might conceivably predominate over the issues common to the claims of the FLSA plaintiffs.") The terms of proof and scope issues in the Delaware Meal Break Statute claim would also predominate over the FLSA claim. Indeed, the claim for violation of the Meal Break

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Statute has nothing whatsoever in common with the payment of wages to employees. 19 Del. C. § 707. Rather, Section 707 mandates that Delaware employers, subject to certain enumerated exceptions, provide "an unpaid meal break of at least 30 consecutive minutes, if the employee works 7 ½ or more consecutive hours." 19 Del. C. § 707(a). The statute provides further guidance on when during the work day the required meal break must be taken: "[t]he meal break must be given some time after the 1st 2 hours of work and before the last 2 hours." Id. There also are certain exemptions from the statute which may be applicable that excuse an employer from providing the break. See 19 Del. C. § 707(a)(1)-(4). The individual facts necessary to support the Delaware Meal Break Statute claim will require a specific analysis of whether each plaintiff worked the requisite 7.5 hour shift to qualify for the break, whether he or she took the break, whether the Defendant was excused from the requirement to provide a break under the exceptions enumerated in 19 Del. C. § 707(a)(1)-(4), and whether the break was offered but the plaintiff chose to work instead. None of these factors have anything in common with Plaintiff's FLSA claim. Indeed, the only commonality between the operative facts of the Meal Break Statute claim and the FLSA claim is that they all arose in the context of the employment relationship with Defendant. Such a loose nexus was so tenuous that the Third Circuit, in Lyon v. Whisman, ruled that it was insufficient to make the state law claims part of the "same case or controversy" for purposes of conferring supplemental jurisdiction under 28 U.S.C. § 1367(a). Lyon v. Whisman, 45 F.3d at 758, 762 (3rd Cir. 1995) (finding that the "only link between Lyon's FLSA and state law claims" was "the general employer-employee relationship between the parties.") At a minimum, then, the individual questions with respect to each member of the

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Meal Break Statute class will substantially predominate over the issues common to the FLSA class plaintiffs. 2. The state law claims are broader in remedies.

Differences between the comprehensiveness of the remedies available under the DWPCA and the FLSA also exist and weigh against the exercise of supplemental jurisdiction over a large and amorphous state law opt-out class. Specifically, the FLSA remedy sought here is only for overtime compensation for hours worked over 40 in a workweek, while the scope of the remedies available to a class of plaintiffs under the DWPCA is broader, encompassing the recovery of their purported contracts for unpaid wages. 19 Del. C. § 1113; cf., De Asencio, 342 F.3d at 310 n.13 (noting that "the FLSA remedy is only for overtime pay and the WPCL remedy is broader."). Moreover, unlike the FLSA, the DWPCA does not itself provide a right to overtime compensation - instead, it merely provides for the timely payment of compensation that is due to employees pursuant to their "contract." 19 Del. C. § 1102; De Asencio, 342 F.3d at 311. As in De Asencio, individual questions of contract formation with each of the plaintiffs in this case will likely predominate over the FLSA issues. Even starker contrasts exist between the remedies available under the FLSA and the Meal Break Statute. As previously addressed, Section 707 does not expressly authorize a private cause of action. Instead, the sole remedy is limited to a "civil penalty" of up to $5,000 per violation. 19 Del. C. § 707(c). Whatever remedies, if any, that are available under the Meal Break Statute have nothing in common with those afforded under the FLSA.

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3.

The size of the state claims classes would predominate over the federal class.

The relative difference in size between the state law "opt out" classes and the FLSA "opt in" class also militates against exercising supplemental jurisdiction. "Generally, the distinction between opt-in and opt-out classes is crucial. Under most circumstances, the optout class will be greater in number, perhaps even exponentially greater." See De Asencio, 342 F.3d at 311. As the Third Circuit has recognized, "the inordinate size of the state-law class, the different terms of proof required by the implied contract state-law claim, and the general federal interest in opt-in wage actions suggest the federal action is an appendage to the more comprehensive state action." Id. at 312. While "[p]redomination under Section 1367 generally goes to the type of claim, not the number of parties involved," in some circumstances, "the disparity in numbers of similarly situated plaintiffs may be so great that it becomes dispositive by transforming the action to a substantial degree, by causing the federal tail represented by a comparatively small number of plaintiffs to wag what is in substance a state dog." Id. at 311. The reality is that under the opt-out class mechanism both state law classes will inevitably predominate in size over the FLSA class of claimants. In sum, the likely disparity in numbers between the FLSA opt-in class and the opt-out classes for both state law claims, the differences in the standard of proof, scope of issues, and the remedies available for the state law claims in comparison to the straightforward FLSA claim, as well as the congressional preference for limited opt-in actions, argue against the exercise of supplemental jurisdiction by this Court. Given the importance of these factors and the impact such rulings would have on the wage protection legal scheme in Delaware, the state claims should be dismissed without prejudice and left for resolution by state tribunals.

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D.

Plaintiff Should Not Be Permitted To Use Rule 23's OptOut Provisions As An End Run Around the FLSA's Clear Congressional Mandate of Collective Opt-In Actions.

Finally, 28 U.S.C. § 1367(c)(4) permits the Court to decline the exercise of supplemental jurisdiction if "in exceptional circumstances, there are other compelling reasons for declining jurisdiction." Although the Third Circuit in De Ascenio did not rely on this provision in reaching its decision, it indicated that compelling reasons may exist to decline supplemental jurisdiction on this ground for cases involving state wage claims. See, De Asencio, 342 F.3d at 309 n.12. One of those reasons is the risk of certifying a class of state law claimants -- some of whom will decline to opt-in to the FLSA class. The end result is that many of the state law class claimants would be a party to a federal lawsuit without any basis for federal jurisdiction. This lawsuit presents just such a circumstance. The three distinct claims brought by the Plaintiff on behalf of others leads to the high probability that there will be at least three classes of plaintiffs using two different class mechanisms. "The principal difference between FLSA class actions and Fed. R. Civ. P. 23 class actions is that prospective plaintiffs under the FLSA must consent to join the class." De Asencio, 342 F.3d at 306. However, since there is no assurance that every member of the Rule 23 class will opt in to the FLSA class, there is a real possibility that more than one class of plaintiffs will exist in this case. The mere possibility that the state and federal claims would be pursued by two different classes of plaintiffs was enough justification for the court in Zelaya v. J.M. Macias, Inc. to decline jurisdiction over a state wage payment act claim. 999 F. Supp. 778, 782 (E.D.N.C. 1998). In Zelaya, the plaintiffs brought a claim for overtime under the FLSA and a claim for unpaid wages under the North Carolina Wage and Hour Act. As here, the

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plaintiffs sought class certification under both the FLSA and Fed. R. Civ. P. 23. Zelaya, 999 F. Supp. at 782. The Zelaya court recognized that the dichotomy between the FLSA's opt-in procedures and the opt-out procedures in Rule 23 creates the possibility that two separate classes could exist. 999 F. Supp. at 782 ("There is no assurance that every member of the Rule 23 class will opt in to the FLSA class. Therefore, two different classes could exist."). The court found that "[t]he distinct possibility of two separate sets of plaintiffs" constituted an "exceptional circumstance" under 28 U.S. C. § 1367(c)(4) prompting it to decline supplemental jurisdiction over the state wage claims. Zelaya, 999 F. Supp. at 783. Here, the risk of multiple classes faced by this Court is even greater than in Zelaya. Retaining jurisdiction over the state law claims will require the Court to resolve the FLSA claims for opt-in plaintiffs in one proceeding, and then have a second and third proceeding to address the two distinct Rule 23 classes for the claims under the DWPCA and Meal Break Statute. This result runs contrary to the rationale for allowing district courts to exercise supplemental jurisdiction. See Gibbs, 383 U.S. at 726 (supplemental jurisdiction promotes "judicial economy, convenience and fairness to litigants."). The concerns expressed in Zelaya have prompted other district courts to refuse to certify state-law wage and hour classes in which the individual class members in the case are claiming relief only under state law and lack any federal claims. See Foster v. The Food Emporium, 2000 U.S. Dist. LEXIS 6053, *8-9 (S.D.N.Y. April 26, 2000) ("It would be improper to bring persons who have no Federal claims that they can assert into this Court under the guise of a collective action so they can pursue State law claims that they can only bring on their own and not collectively."); Isaac v. Wm. H. Pflaumer & Sons, Inc., 1990 U.S.

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Dist. LEXIS 8892, *5 n.3 (E.D. Pa. July 17, 1990) (declining to exercise pendent party jurisdiction over state wage-and-hour law class action); see also, Pirrone v. North Hotel Assocs., 108 F.R.D. 78, 84 (E.D. Pa. 1985) ("I do not believe that a plaintiff may assert claims under the [Pennsylvania] WPCL on the basis of jurisdiction pendent to claims under the FLSA unless those claims are asserted on behalf of a party plaintiff who has filed a written consent... This court, absent diversity jurisdiction, appears to have no power to entertain [Pennsylvania] WPCL claims on behalf of parties who do not assert FLSA claims."). An overriding concept in all of these cases is that the limited scope of the FLSA makes it inherently more susceptible to predomination by state law claims. The Third Circuit in De Asencio found that one of the interests supporting "relegating the [Pennsylvania] WPCL claims to state court is Congress's express preference for opt-in actions for the [FLSA claim]." De Asencio, 342 F.3d at 310; 29 U.S.C. § 216(b). The FLSA's opt-in procedures were adopted by Congress in response to the "thousands of portal-to-portal lawsuits" filed by employees under the FLSA following its enactment in 1947. See De Asencio, 342 F.3d at 306. Faced with a veritable flood of FLSA litigation, Congress "sought to define and limit the jurisdiction of the courts through the Portal-to-Portal Act." Id. Although the Portal-toPortal Act permitted actions by "one or more employees for and in behalf of himself or themselves and other employees similarly situated," it contained the express opt-in provision codified at 29 U.S.C. § 216(b). De Asencio, 342 F.3d at 306. The goal of this provision was to limit participation in the lawsuit to those who affirmatively give their "consent in writing to become a party." 29 U.S.C. § 216(b).

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Allowing the Plaintiff's state-law claims to proceed in a federal venue as a Rule 23 opt-out class action essentially circumvents Congress's express preference to limit FLSA class actions to those who affirmatively choose to "opt-in." Indeed, the Congressional intent of requiring FLSA plaintiffs to opt-in would essentially "be thwarted if a plaintiff were permitted to back door the shoe homing in of unnamed parties through the vehicle of calling upon similar state statutes that lack such an opt-in requirement." Leuthold v. Destination America, Inc., 224 F.R.D. 462, 470 (N.D. Cal. 2004) (quoting Rodriguez v. The Texan. Inc, 2001 U.S. Dist. LEXIS 24652, *3 (N.D. Ill. 2001)). For these reasons, supplemental jurisdiction should not be exercised in this case.

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CONCLUSION There are a plethora of compelling reasons for this Court to decline to exercise supplemental jurisdiction over the Plaintiff's state-law claims. The state law claims present novel and complex issues which have not been addressed by a Delaware state court. The state claims also will substantially predominate over the federal claim based on the differences in the standards of proof, the scope of issues, the remedies available for the state law claims in comparison to the straightforward FLSA claim, the likely disparity in size of the federal opt-in class and the two state-law opt-out classes, and the concerns regarding the exercise of jurisdiction over individual members of the state-law classes who have not opted into the FLSA class. All of these reasons favor dismissal of the state law claims without prejudice. For the foregoing reasons, the Defendant respectfully requests that the Court grant its motion to dismiss.

Respectfully submitted, YOUNG CONAWAY STARGATT & TAYLOR, LLP /s/ Scott A. Holt

Sheldon N. Sandler (No. 0245) Scott A. Holt, Esquire (No. 3399) The Brandywine Building 1000 West Street, 17th Floor P.O. Box 391 Wilmington, Delaware 19899-0391 Telephone: (302) 571-6673; (302) 571-6623 Facsimile: (302) 576-3330; (302) 576-3299 Attorneys for Defendant Dated: June 5, 2007

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