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Saturday, November 26, 2011

Q. “Federal Question, Diversity, CAFA, and Supplemental.” A. “What are four ways to get subject matter jurisdiction in an overtime case?”

By Dale R. Burmeister

There are at least four ways that federal courts have subject matter jurisdiction over overtime cases. First, federal court have federal question subject-matter jurisdiction over FLSA collective actions and the Rule 23 class actions to the extent that the latter arise under a separate federal law, such as RICO. Pursuant to 28 U.S.C. § 1331, federal district courts have original subject-matter jurisdiction over all civil actions arising under the laws of the United States. The FLSA is a law of the United States, and the FLSA collective action seeking to recover overtime arises under that law.

Second, federal district courts have original subject-matter jurisdiction over claims brought by parties from different states – diversity jurisdiction. In some overtime cases, all of the named plaintiffs are from states other than the state where suit is filed. Under those circumstances, a federal districti court has original subject matter jurisdiction.

It is important to point out that removal jurisdiction is narrower than original jurisidition. As a result, if all the plaintiffs in an overtime time case are from states other than where the defendant, often a corporation, resides and has it principal place of business, the plaintiffs can file the case in state court and it can not be removed by a defendant that resides or has its principal place of business in that state, unless, of course, there is another basis for jurisdiction, such as federal question jurisdiction.

Third, a federal court may also have jurisdiction over all the claims pursuant to the Class Action Fairness Act of 2005, 28 U.S.C. § 1332(d) (“CAFA”). CAFA provides: "The district courts shall have original jurisdiction of any civil action in which the matter in controversy exceeds the sum or value of $5,000,000 exclusive of interest and costs, and is a class action in which . . . any member of a class of plaintiffs is a citizen of a State different from any defendant.” 28 U.S.C. § 1332(d)(2). CAFA applies to actions commenced on or after the Act's effective date of February 18, 2005. Prime Care of Ne. Kan., LLC v. Humana Ins. Co., 447 F.3d 1284, 1285 (10th Cir. 2006). Thus, if even one of the named members of the class are citizens of a state other than where the employer is incorporated and has its principal place of business, there is jurisdiction.

Finally, if a district court has jurisdiction over some of the claims, it can also exercise supplemental jurisdiction over others, such as state law claims. In 1990, Congress enacted the supplemental jurisdiction statute, 28 U.S.C. § 1367, which essentially codified common law doctrines of pendent, ancillary, and pendent-party jurisdiction. The statute provides that “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.”

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