Opinion
Case No. 2:22-cv-3969
06-30-2023
Sheila HINE, Plaintiff, v. OHIOHEALTH CORPORATION, Defendant.
Michael Fradin, Fradin Law Office, Athens, OH, James L. Simon, Simon Law Co., Chagrin Falls, OH, for Plaintiff. Manuel Jose Asensio, III, Samuel E. Endicott, Baker & Hostetler LLP, Columbus, OH, for Defendant.
Michael Fradin, Fradin Law Office, Athens, OH, James L. Simon, Simon Law Co., Chagrin Falls, OH, for Plaintiff. Manuel Jose Asensio, III, Samuel E. Endicott, Baker & Hostetler LLP, Columbus, OH, for Defendant. OPINION AND ORDER MICHAEL H. WATSON, JUDGE
Sheila Hine ("Plaintiff") brings a putative class and collective action against OhioHealth Corporation ("Defendant") based on Defendant's alleged failure to pay Plaintiff and similarly situated employees the proper minimum and overtime wages. Am. Compl., ECF No. 9. Plaintiff's claims arise under the Fair Labor Standards Act ("FLSA") and the Ohio Minimum Fair Wage Standards Act ("OMFWSA"). Id. ¶ 1. Defendant moves to dismiss Plaintiff's state-law, opt-out class claims for unpaid overtime. Mot. Dismiss, ECF No. 11. For the following reasons, that motion is GRANTED.
I. FACTS
The Court accepts Plaintiff's factual allegations as true for the purposes of Defendant's motion. See Wamer v. Univ. of Toledo, 27 F.4th 461, 466 (6th Cir. 2022).
Defendant is a healthcare enterprise in Ohio. Am. Compl. ¶ 22, ECF No. 9. Plaintiff is an Ohio resident who was, at all relevant times, employed by Defendant as a Licensed Practical Nurse ("LPN"). Id. ¶ 13. As an LPN, Plaintiff worked both in patients' homes as well as in Defendant's facilities. Id. ¶ 23.
Further, as an LPN, Plaintiff was a nonexempt, hourly employee. Id. ¶ 23. Defendant had an official "Break and Meal Policy" ("Policy"). Id. ¶ 29. Pursuant to the Policy, Defendant automatically deducted a thirty-minute meal break for every shift Plaintiff worked that exceeded six hours. Id. ¶ 30. Due to the demands of her job, Plaintiff was often unable to take any meal break, let alone a thirty-minute, uninterrupted break. Id. ¶ 32. Yet, Defendant made the deduction regardless of whether Plaintiff took an uninterrupted, thirty-minute break. Id. ¶ 31. Because she was often required to work during the meal break, Plaintiff regularly worked more than forty hours in a workweek. Id. ¶ 27. But, due to the automatic deduction, Plaintiff was deprived of overtime pay. Id. ¶ 33. The Policy caused the similarly situated employees to be deprived of overtime pay for the same reason. Id. ¶¶ 29-33.
Moreover, Defendant paid Plaintiff and other similarly situated employees non-discretionary bonuses but failed to factor those nondiscretionary bonuses into Plaintiff's and other similarly situated employees' overtime wage rate. Id. ¶¶ 39-40. This resulted in the overtime wage rate, when it was paid, being incorrect. Id. ¶ 40.
Additionally, there was a time when Defendant failed entirely to pay Plaintiff and similarly situated employees for hours worked. Id. ¶ 37. This failure stemmed from Defendant's cloud-based timekeeping and payroll software having been hacked and the concomitant switch to paper records. Id. ¶¶ 34-37.
II. OVERVIEW OF OHIO OVERTIME CLAIM
Although Plaintiff brings claims for minimum wage and overtime wage violations and asserts those claims under both federal and state law, only her state-law overtime claims are pertinent to this Opinion and Order.
Plaintiff's Amended Complaint asserts a violation of OMFWSA's overtime wage provision, Ohio Revised Code Section 4111.03.
Liability for a violation of the overtime wage provision is found in Ohio Revised Code Section 4111.10 and states that "[a]ny employer who pays any employee less than the wages to which the employee is entitled under section 4111.03 of the Revised Code, is liable to the employee affected for the full amount of the overtime wage rate . . . and for costs and reasonable attorney's fees . . . ." The liability section of the statute was amended on July 6, 2022 ("the Amendment"), and the following provision was added:
No employee shall join as a party plaintiff in any civil action that is brought under this section by an employee, person acting on behalf of an employee, or person acting on behalf of all similarly situated employees unless that employee first gives written consent to become such a party plaintiff and that consent is filed with the court in which the action is brought.Ohio Rev. Code § 4111.10(C).
An analogous provision exists for Ohio minimum wage claims. Ohio Rev. Code § 4111.14(K)(2). Plaintiff apparently does not seek to certify an opt-out class on the state-law minimum wage violations.
Plaintiff's Amended Complaint asserts a putative "opt-out" class under Federal Rule of Civil Procedure 23 ("Federal Rule 23") for the Ohio overtime claims that arose prior to the Amendment and a putative "opt-in" class for overtime claims that arose after the Amendment. Am. Compl. ¶ 56, ECF No. 9.
Plaintiff also seeks injunctive relief pursuant to a Federal Rule 23(b)(2) class. Am. Compl. ¶ 63.
Defendant moves to dismiss Plaintiff's "opt-out" class claims on the basis that such claims violate the Amendment's opt-in provision. Mot. Dismiss, ECF No. 11.
III. STANDARD OF REVIEW
A claim survives a motion to dismiss under Rule 12(b)(6) if it "contain[s] sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.' " Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). "The plausibility standard is not akin to a 'probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Id. (quoting Twombly, 550 U.S. at 556, 127 S.Ct. 1955). This standard "calls for enough fact to raise a reasonable expectation that discovery will reveal evidence of [unlawful conduct]." Twombly, 550 U.S. at 556, 127 S.Ct. 1955. A pleading's "[f]actual allegations must be enough to raise aright to relief above the speculative level, on the assumption that all the allegations in the [pleading] are true (even if doubtful in fact)." Id. at 555, 127 S.Ct. 1955 (internal citations omitted). At the motion to dismiss stage, a district court must "construe the complaint in the light most favorable to the plaintiff, accept its allegations as true, and draw all reasonable inferences in favor of the plaintiff." Wamer v. Univ. of Toledo, 27 F.4th 461, 466 (6th Cir. 2022) (internal quotation marks and citations omitted). However, the non-moving party must provide "more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555, 127 S.Ct. 1955.
Defendant moved to dismiss under Rule 12(b)(6). Mot. Dismiss, ECF No. 11. Plaintiff argues Defendant should have filed a motion to strike under Rule 12(f). Resp., ECF No. 15. Either way, the outcome would be the same.
IV. ANALYSIS
As noted above, Defendant argues that Plaintiff's putative Federal Rule 23 "opt-out" class claims based on Ohio's overtime law must be dismissed because they are prohibited under Ohio Revised Code Section 4111.10(C), as amended. See generally Mot. Dismiss, ECF No. 11.
Plaintiff asserts two arguments in opposition. First, she argues that, if the Amendment is procedural as opposed to substantive, it should not apply to this litigation in federal court. Resp. 4-5, ECF No. 15. Second, she argues in the alternative that, if the Amendment is substantive, application of the same to claims that arose prior to the Amendment's effective date would amount to an impermissible retroactive application of the Amendment. Resp. 4, ECF No. 15.
Defendant contends that Plaintiff's arguments confuse two distinct concepts of "procedural" and "substantive." See generally Reply, ECF No. 16. In short, Defendant argues the Amendment is "substantive" for Erie purposes but "procedural" for retroactivity purposes. Id.
Although Defendant references Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), Reply, ECF No. 16, the Court notes that the proper analysis begins under the Rules Enabling Act because the analysis involves a specific Federal Rule of Civil Procedure. Hanna, 380 U.S. at 471, 85 S.Ct. 1136.
A. Rules Enabling Act Analysis
The issue is whether the opt-out provision of Federal Rule 23 or the opt-in provision in Ohio Revised Code Section 4111.10(C) applies to Plaintiff's state-law overtime claims, over which this federal court is exercising supplemental jurisdiction. To answer that question, the Court undertakes the two-step analysis set forth in Hanna v. Plumer, 380 U.S. 460, 85 S.Ct. 1136, 14 L.Ed.2d 8 (1965). E.g., Smith v. Planned Parenthood of St. Louis Region, 225 F.R.D. 233, 238 (E.D. Mo. 2004) (applying Hanna when exercising supplemental jurisdiction over state-law claims).
Plaintiff argues the Amendment applies to claims that accrued after its effective date, but there is no reason to make such a distinction at this analytical juncture. Under the Rules Enabling Act, either Ohio law or the Federal Rules of Civil Procedure govern, period. Which version of Ohio law governs becomes an issue only in the event Ohio law is deemed to apply in the first instance.
The analysis begins by asking "whether [Federal] Rule 23 answers the question in dispute." Shady Grove Orthopedic Assoc., P.A. v. Allstate Ins. Co., 559 U.S. 393, 398, 130 S.Ct. 1431, 176 L.Ed.2d 311 (2010) (citation omitted). If it does, Federal Rule 23 governs "unless it exceeds statutory authorization [as established in the Rules Enabling Act] or Congress's rulemaking power." Id. (citations omitted).
Following this rubric, the Court concludes that it should apply Ohio law.
i. Does Federal Rule 23 Answer the Question in Dispute?
Step one asks whether Federal Rule 23 answers the same question as Ohio Revised Code Section 4111.10(C). It seems that, regardless of the how the Court frames the precise question here, the answer is "yes." At bottom, Federal Rule 23 permits a plaintiff to assert Ohio-law overtime claims via an opt-out class action, but Ohio Revised Code Section 4111.10(C) does not. This is because Federal Rule 23 empowers a federal court to certify a class "in each and every case where the Rule's criteria are met." Shady Grove, 559 U.S. at 399-400, 130 S.Ct. 1431 (cleaned up); id. ("[T]his creates a categorical rule entitling a plaintiff whose suit meets the specified criteria to pursue his claim as a class action."). But Ohio law requires an employee to file written consent before joining a suit under the overtime statute. Ohio Rev. Code § 4111.10(C). Thus, there is a direct collision between Federal Rule 23 and Ohio Revised Code Section 4111.10(C) vis-à-vis the viability of maintaining an opt-out class for Ohio overtime wage claims. See Driscoll v. George Washington Univ., 42 F. Supp. 3d 52, 60-61 (D.D.C. 2012) (applying Shady Grove to analogous District of Columbia law and finding a direct conflict). Federal Rule 23 answers the question in dispute.
ii. Does Federal Rule 23 Exceed Congress's Rulemaking Power or Statutory Authorization?
Because Federal Rule 23 answers the question, it governs in this case unless it exceeds statutory authorization or Congress's rulemaking power. See Shady Grove, 559 U.S. at 398, 130 S.Ct. 1431 (citations omitted). Hanna's second step thus asks whether it exceeds either.
Federal Rule 23 does not exceed Congress's rulemaking power under the Constitution. Congress has "the constitutional power to prescribe procedural rules that interfere with state substantive law in any number of respects[.]" Id. at 417-18, 130 S.Ct. 1431 (Stevens, J., concurring). Thus, Federal Rule 23 does not violate Congress's rulemaking power.
Rather, the big question is whether, as applied here, Federal Rule 23 exceeds statutory authority because it violates 28 U.S.C. § 2072(b) of the Rules Enabling Act, which prohibits any federal rules of practice and procedure that "abridge, enlarge, or modify any substantive right."
No majority in Shady Grove agreed on how to determine whether a federal rule of civil procedure violates § 2072(b). According to the plurality, "it is not the substantive or procedural nature or purpose of the affected state law that matters, but the substantive or procedural nature of the Federal Rule." Shady Grove, 559 U.S. at 410, 130 S.Ct. 1431 (Scalia, Roberts, Thomas, Sotomayor, JJ.) (plurality opinion). The plurality concluded that the group-claim nature of Federal Rule 23 was valid under § 2072(b) because that aspect of Federal Rule 23 regulated procedure. Id. at 408-410, 130 S.Ct. 1431.
In his concurrence, Justice Stevens applied a different test for determining when a federal rule of civil procedure violates § 2072(b). Under Justice Stevens's test, a federal rule of civil procedure violates § 2072(b) if its application "effectively abridges, enlarges, or modifies a state-created right or remedy[.]" Id. at 422, 130 S.Ct. 1431 (Stevens, J., concurring). In other words, if the federal rule "would displace a state law that is procedural in the ordinary use of the term but is so intertwined with a state right or remedy that it functions to define the scope of the state-created right[,]" its application would violate § 2072(b). Id. at 423, 130 S.Ct. 1431. Under his test, the "plain textual reading" of the conflicting state law demonstrated that it was procedural, such that application of Federal Rule 23 in Shady Grove did not abridge, enlarge, or modify any state substantive right. Id. at 436, 130 S.Ct. 1431.
The Sixth Circuit has directed that Justice Stevens's concurrence is controlling because it comprises the narrowest ground for the second portion of the Shady Grove analysis. E.g., Albright v. Christensen, 24 F.4th 1039, 1044 (6th Cir. 2022) ("If a state law collides with a federal rule, we must determine whether the federal rule applies under the Rules Enabling Act (REA) and relevant constitutional standards per Justice Stevens's controlling concurrence in Shady Grove . . . ."); id. at 1044 n.1 ("[T]o avoid future confusion, we restate our conclusion in Whitlock that Justice Stevens's concurrence in Shady Grove controls the test governing the REA and constitutional standards."); Whitlock v. FSL Mgmt., LLC, 843 F.3d 1084, 1091 n. 2 (6th Cir. 2016) ("As Justice Stevens's opinion is the narrowest in support of the judgment, it technically controls." (citation omitted)); see also Stein v. Regions Morgan Keegan Select High Income Fund, Inc., 821 F.3d 780, 794 (6th Cir. 2016) (citing the plurality opinion but finding a Rules Enabling Act problem where the federal rule affected a substantive right).
Other panels of the Sixth Circuit discuss the plurality's test as if it were applicable at part two, sometimes without acknowledging that it is a plurality and not a majority opinion. E.g., Turner v. Marathon Petroleum Co., LP, 804 F. App'x 375, 377 (6th Cir. 2020) (citing Shady Grove's plurality opinion for the proposition that a federal burden-shifting approach would apply to a state-law discrimination claim if the federal approach is procedural rather than substantive); Am. Copper & Brass, Inc. v. Lake City Indus. Prods., Inc., 757 F.3d 540, 546 (6th Cir. 2014) (characterizing the plurality opinion's language that "a Federal Rule governing procedure is valid" as Shady Grove's holding). And one panel simply noted the outcome would be the same under either the plurality's approach or Justice Stevens's approach. Scola v. Publix Supermarkets, Inc., 557 F. App'x 458, 463-65 (6th Cir. 2014).
Although courts across the country reach varying conclusions as to which opinion in Shady Grove is controlling (if any), this Court must follow the Sixth Circuit's directive to apply Justice Stevens's test.
Charles Alan Wright, Arthur R. Miller, & Edward H. Cooper, Federal Practice and Procedure § 4509 (2d ed. 2011) (noting that "federal courts have differed in applying" Shady Grove and that some treat Justice Stevens's concurrence as the controlling opinion, some apply both Justice Stevens's and the plurality's test, and some apply the plurality test without mentioning that it is merely a plurality).
a. Is Ohio Revised Code Section 4111.10(C) so Intertwined with the Ohio Overtime Wage Right or Remedy that it Functions to Define the Scope of the State-Created Right?
Regardless of whether Ohio Revised Code Section 4111.10(C)'s opt-in provision takes the form of substance or procedure, the Court must determine whether it "actually is part of a State's framework of substantive rights or remedies." Shady Grove, 559 U.S. at 419, 130 S.Ct. 1431 (Stevens, J., concurring) (citations omitted). This is because "[a] state procedural rule, though undeniably 'procedural' in the ordinary sense of the term, may exist to influence substantive outcomes, and may in some instances become so bound up with the state-created right or remedy that it defines the scope of that substantive right or remedy." Id. at 419-20, 130 S.Ct. 1431 (cleaned up); id. at 423, 130 S.Ct. 1431 ("A federal rule, therefore, cannot govern a particular case in which the rule would displace a state law that is procedural In the ordinary use of the term but is so intertwined with a state right or remedy that it functions to define the scope of the state-created right.").
Although there is much case law addressing whether the FLSA's opt-in mechanism prohibits simultaneously maintaining a Federal Rule 23 opt-out, state-law class claim due to a supposed inherent conflict between the FLSA and Federal Rule 23, that is not at issue here. Rather, the issue is the fact that Ohio law provides for opt-in joinder, and the Rules Enabling Act analysis here thus focuses on the interplay between Federal Rule 23 and Ohio law, not Federal Rule 23 and the FLSA. There is much less pertinent authority on the latter issue.
The determination can be a difficult one, and it is a high bar to show that a state procedural rule "was really some part of the State's definition of its rights or remedies." Id. at 432, 130 S.Ct. 1431. For example, the fact that a state procedural rule has a "significant effect on the outcome of a case" is not enough. Id. at 431-32, 130 S.Ct. 1431 (citation omitted); id. at 432, 130 S.Ct. 1431 ("The mere possibility that a federal rule would alter a state-created right is not sufficient. There must be little doubt.").
In Shady Grove, Justice Stevens considered: (1) whether the state procedural rule was located in the general code of procedure or with the substantive law; (2) whether the state procedural rule applied to only claims brought under the substantive laws of that state (suggesting the state procedural law defined the state rights or remedies) or all claims (suggesting it did not); and (3) whether the legislative history suggested the state procedural rule was "intimately bound up in the scope of a substantive right or remedy." Id. at 432-36, 130 S.Ct. 1431.
Although it is a very close call, the Court concludes that Ohio's opt-in provision is so bound up in the rights or remedies of its overtime liability scheme that it is substantive for Rules Enabling Act purposes.
On one hand, the provision clearly is procedural in form. By its terms, it governs only how an employee becomes bound by the result of a lawsuit. It does not, in any way, affect whether an employer becomes liable for overtime payment and, thus, does not directly impact the substance of an employee's overtime claim. In other words, an employee's private right of action, and an employer's liability, rise and fall on factors wholly unrelated to the opt-in provision.
On the other hand, the opt-in provision defines the scope of the remedies available for the substantive rights. First, the opt-in provision is located within the text of the statute providing for liability for underpayment, not in a separate procedural code. See Ohio Rev. Code § 4111.10(C). Second, it applies to only civil actions brought under Ohio's overtime statute. Id. These two factors distinguish Ohio's opt-in provision from the New York law deemed procedural in Shady Grove. Moreover, the Ohio opt-in mechanism confers a right on employee plaintiffs to not have their substantive rights litigated and released without their affirmative consent, and application of Federal Rule 23 would abridge that right.
The third factor in Justice Stevens's test—legislative history—is unhelpful. Several Fiscal Note & Local Impact Statements from the Ohio Legislative Service Commission refer to the amendment as a "procedural change," but that is by no means dispositive.
On balance, the Court finds Ohio's opt-in provision clears the "high bar" for finding a federal rule of civil procedure violates the Rules Enabling Act.
To be sure, other courts have reached the opposite conclusion and found opt-in mechanisms are procedural, rather than substantive, for Rules Enabling Act purposes. E.g., Glennon v. Anheuser-Busch, Inc., 2022 WL 18937383, at *3 (E.D. Va. Sept. 22, 2022) ("[T]he Court finds that the opt-in requirement of the VWPA is procedural, and thus the opt-out mechanism of Rule 23 applies to Plaintiff's state-law claims."); Gandy v. RWLS, LLC, 308 F. Supp. 3d 1220, 1229 (D.N.M. 2018) ("[T]he Court concludes that the opt-in collective action requirement is not substantive in nature to the rights and remedies created by the [state statute]."); cf. Knepper v. Rite Aid Corp., 675 F.3d 249, 264-65 (3d Cir. 2012) (suggesting, generally, that an opt-in provision is procedural rather than substantive); Roberts v. C.R. England, Inc., 321 F. Supp 3d 1251, 1257-59 (D. Utah 2018) (finding opt-in provision in Utah's consumer protection statute procedural); Fochtman v. DARP, Inc., No. 5:18-cv-5047, 2019 WL 1917245, at *2 (W.D. Ark. Apr. 30, 2019) (finding "the Act's opt-in provision is trumped by Rule 23" because the state opt-in provision was procedural).
Nonetheless, courts are divided on the issue, and this Court's conclusion is consistent with other district courts. E.g., Driscoll v. George Washington Univ., 42 F. Supp. 3d 52, 62 (D.D.C. 2012) (concluding that the state law's opt-in mechanism was substantive and that application of Federal Rule 23's opt-out provision would abridge or violate that state-law substantive right, violating the Rules Enabling Act); Harris v. Reliable Reports, Inc., No. 1:13-CV-210, 2014 WL 931070, at *8 (N.D. Ind. Mar. 10, 2014) ("The opt-in provisions [under Indiana and Ohio law] are so intertwined with the rights created by these statutes that they function to define the scope of the state-created rights." (cleaned up)); Williams v. King Bee Delivery, LLC, 199 F. Supp. 3d 1175, 1183 (E.D. Ky. 2016) ("This Court agrees . . . that KRS 337.385 does not permit suits in a representative capacity and that Rule 23 does not override substantive Kentucky law."); Green v. Platinum Restaurants Mid-America LLC, No. 3:14-CV-439-JGH, 2015 WL 13548457, at *8 (W.D. Ky. Feb. 24, 2015) ("The [Kentucky] prohibition of suits in a representative capacity is so intertwined with the [Kentucky Act's] rights and remedies that allowing certification under Rule 23 would violate the Rules Enabling Act."); Davenport v. Charter Commc'ns, 35 F. Supp. 3d 1040, 1051 (E.D. Mo. 2014) ("The class action restriction in [the Kentucky statute] functions to define the scope of Plaintiffs' substantive rights under the Kentucky Act; therefore, Rule 23 does not apply."); cf. Whitlock v. FSL Mgmt. LLC, 843 F.3d 1084, 1092 (6th Cir. 2016) (stating the fact that the Kentucky law "only applies to claims brought under the Kentucky Wage and Hour Act, and it appears within the same statutory provision that creates the private cause of act" makes "a strong case" for the state law being substantive under Shady Grove and assuming without deciding that the law was substantive for purposes of the Rules Enabling Act).
Finally, the Court's conclusion is logical. An overtime claim brought under the FLSA cannot be maintained via a Federal Rule 23 opt-out class. An Ohio overtime claim brought in an Ohio court cannot be maintained as an opt-out class action either. But, a contrary conclusion here would permit a plaintiff to circumvent the plain restrictions in both the FLSA and Ohio law by simply bringing the Ohio overtime claim in federal court. Although forum shopping is "the inevitable . . . result of a uniform system of federal procedure," Shady Grove, 559 U.S. at 416, 130 S.Ct. 1431 (plurality opinion), it is quite odd that the same plaintiff would be prohibited from applying Federal Rule 23 to her own federal wage and hour claim, and yet may apply Federal Rule 23 to her state wage and hour claims—in contravention of state law. The absurdity that such a result would create further counsels in favor of finding the opt-in mechanism substantive under this Rules Enabling Act analysis.
Glennon's discussion about the FLSA's relationship to the Federal Rules of Civil Procedure and, separately, the Federal Rules of Civil Procedure's relationship to state laws under the Rules Enabling Act, 2022 WL 18937383 at *4, explains how such a strange "anomaly" may result. But the fact that only those plaintiffs who bring their state claims in federal court can eschew other employees' rights to affirmatively chose whether to join the lawsuit is too concerning to ignore.
In sum, the Court concludes Ohio Revised Code Section 4111.10(C)'s opt-in provision is substantive, rendering Federal Rule 23 invalid in this case under the Rules Enabling Act. So, the Court must next "wade into Erie's murky waters[.]" Shady Grove, 559 U.S. at 398, 130 S.Ct. 1431 (majority opinion).
iii. Erie Analysis
Because there is no valid Federal Rule of Civil Procedure that governs here, the Court follows the Rules of Decision Act, as interpreted by Erie and its progeny. E.g., Shady Grove, 559 U.S. at 438, 130 S.Ct. 1431 (Ginsburg, Kennedy, Breyer, Alito, JJ., dissenting). As with the Rules Enabling Act analysis, "[c]lassification of a law as 'substantive' or 'procedural' for Erie purposes is sometimes a challenging endeavor." Gasperini v. Ctr. for Humanities, Inc., 518 U.S. 415, 427, 116 S.Ct. 2211, 135 L.Ed.2d 659 (1996).
Early on, the Supreme Court applied an "outcome-determination" Erie test, whereby it would ask the following question: "does it significantly affect the result of a litigation for a federal court to disregard a law of a State that would be controlling in an action upon the same claim by the same parties in a State court?" Guaranty Trust Co. of N.Y. v. York, 326 U.S. 99, 109, 65 S.Ct. 1464, 89 L.Ed. 2079 (1945). A positive answer to that question meant state law should apply. Id.
Later, the Supreme Court clarified that York's "outcome-determination" test "was never intended to serve as a talisman." Hanna, 380 U.S. at 467, 85 S.Ct. 1136 (citation omitted). Indeed, in one sense, "every procedural variation is 'outcome-determinative' " but may be insubstantial. Id. at 468, 85 S.Ct. 1136. "The 'outcome-determination' test therefore cannot be read without reference to the twin aims of the Erie rule: discouragement of forum-shopping and avoidance of inequitable administration of the laws." Id.
Thus, the Supreme Court now asks whether the state law "is outcome affective in this sense: Would application of the standard have so important an effect upon the fortunes of one or both of the litigants that failure to apply it would unfairly discriminate against citizens of the forum State, or be likely to cause a plaintiff to choose the federal court?" Gasperini, 518 U.S. at 428, 116 S.Ct. 2211 (cleaned up) (quoting Hanna, 380 U.S. at 468 n.9, 85 S.Ct. 1136); see also Shady Grove, 559 U.S. at 438, 130 S.Ct. 1431 (Ginsburg, Kennedy, Breyer, Alito, JJ., dissenting) ("Th[e Rules of Decision Act]" directs federal courts, in diversity cases, to apply state law when failure to do so would invite forum shopping and yield markedly disparate litigation outcomes." (citations omitted)).
It applies the same when a federal court exercises supplemental jurisdiction. E.g., Hoyos v. Telecorp Commc'ns, Inc., 488 F.3d 1, 5 (1st Cir. 2007) ("[A] federal court sitting in diversity or exercising supplemental jurisdiction over state law claims must apply state substantive law, but a federal court applies federal rules of procedure to its proceedings." (citations omitted)).
Here, it is obvious that application of Ohio's opt-in provision "would have so important an effect upon the fortunes of one or both of the litigants that failure to [apply] it would be likely to cause a plaintiff to choose the federal court." See id.; Hanna, 380 U.S. at 467, 85 S.Ct. 1136 ("The Erie rule is rooted in part in a realization that it would be unfair for the character o[r] result of a litigation materially to differ because the suit had been brought in a federal court."); York, 326 U.S. at 109, 65 S.Ct. 1464 ("The nub of the policy that underlies Erie R. Co. v. Tompkins is that for the same transaction the accident of a suit by a non-resident litigant in a federal court instead of in a State court a block away, should not lead to a substantially different result."). Were Federal Rule 23 to apply, a plaintiff may de facto avoid the opt-in requirements of both the FLSA and Ohio's law by simply bringing an Ohio-law claim for lost overtime wages in federal court as a tag-along to an identical FLSA overtime claim. No diversity of citizenship is required, and any Ohio plaintiff could effectively skirt both opt-in requirements by flooding federal courts with state-law claims. Defendant-employers would be significantly incentivized to settle the Ohio class's claims because the class members would be bound by any resolution if they fail to opt out, instead of only in the event they opt in. Moreover, any such settlement would provide the defendant-employer substantial protection against even the FLSA claims of those class members who failed to opt into any FLSA collective settlement but also failed to opt-out of the class, due to principles of res judicata. Both of Erie's twin aims would be drastically undermined by applying the federal rule here. The Court thus finds Ohio's opt-in provision is substantive for Erie purposes as well as for Rules Enabling Act purposes.
iv. Applying Ohio Law, Does Pre- or Post- Amendment Law Apply?
Having concluded that Ohio law, rather than Federal Rule 23 applies as a general matter, the next issue is whether the Court may apply the Amendment's opt-in requirement to future proceedings in this case, including to claims that arose prior to the Amendment's enactment.
A brief timeline is helpful. This case was initiated on November 10, 2022, and Plaintiff sought to bring all Ohio overtime claims on an opt-out basis. Compl., ECF No. 1. The opt-in provision of the Ohio Revised Code had become effective on July 6, 2022, and Defendant therefore moved to dismiss Plaintiff's opt-out claims in their entirety. Mot. Dismiss, ECF No. 7. In response to the motion to dismiss, Plaintiff filed an Amended Complaint on January 17, 2023, seeking to bring her Ohio claims on an opt-in basis for claims accruing after July 6, 2022, but on an opt-out basis for claims accruing before July 6, 2022. Am. Compl. ¶ 56, ECF No. 9. Defendant again moved to dismiss any opt-out claims. Mot. Dismiss, ECF No. 11.
Plaintiff argues that the Amendment is not retroactive and that it would violate the Ohio Constitution to apply the Amendment to claims that accrued prior to its enactment. The Court agrees that the Amendment is not retroactive but concludes it can be applied prospectively to claims that accrued prior to its enactment.
Only two federal cases have considered the retroactivity of the Amendment. Both concluded that the Amendment was not retroactive, but they differed on whether the Amendment could be prospectively applied to an existing case. Oglesby v. FedEx Ground Package Sys., Inc., No. 3:20-cv-346, 2023 WL 2596030 (S.D. Ohio Mar. 22, 2023); Braun v. Coulter Ventures, LLC, No. 2:19-cv-5050, 642 F.Supp.3d 649, 651-52 (S.D. Ohio Nov. 21, 2022).
Having considered Oglesby, Braun, and the parties' memoranda, the Court concludes that the Amendment applies to any putative group action. Group resolution of Plaintiff's Ohio claims will occur, if at all, in the future. Application of the Amendment at that procedural junction will not violate the Ohio Constitution. See, e.g., State ex rel. Grendell v. Walder, 166 Ohio St. 3d 533, 539-41, 188 N.E.3d 152 (Ohio 2022) (concluding that the amended version of a statute applied even though the amendment occurred after the complaint for mandamus was filed and the amendment was not retroactive); EPI of Cleveland, Inc. v. Limbach, 42 Ohio St. 3d 103, 105-07, 537 N.E.2d 651 (Ohio 1989); cf. Buckeye Candy & Tobacco Co., Inc. v. Limbach, 28 Ohio St. 3d 40, 41, 501 N.E.2d 1202 (Ohio 1986) ("[A] procedural law is generally considered to be applied prospectively when it is applied to proceedings in which the particular procedural aspect regulated by the law has not yet occurred." (citations omitted)).
Plaintiff's arguments to the contrary conflate the distinct concepts of "substantive" and "procedural" for Rules Enabling Act/Erie purposes versus for unconstitutional retroactivity purposes.
In sum, the Amendment's opt-in provision applies to all of Plaintiff's Ohio-law overtime claims. The Court DISMISSES Plaintiff's opt-out claims.
V. CONCLUSION
For the above reasons, Defendant's motion, ECF No. 11, is GRANTED, and Plaintiff's Federal Rule 23 class claims are DISMISSED. The Clerk shall terminate ECF No. 11 as a pending motion.
IT IS SO ORDERED.