Res Judicata Applied To FLSA Plaintiffs Based On Prior Opt-Out Class Action Settlement

Case:    Richardson, et al. v. Wells Fargo Bank, N.A.
             United States Fifth Circuit
             No. 15-20711, (5th Cir. Oct. 28, 2016)

On October 14, 2016, the U.S. Court of Appeals for the Fifth Circuit affirmed summary judgment dismissal of FLSA claims. The Fifth Circuit held that a class action settlement using an opt-out procedure, even if based on state-law claims, may bar later-filed FLSA claims. The Fifth Circuit further held that applying res judicata to bar the later-filed FLSA claims based on the settlement from an opt-out class action was not inconsistent with the FLSA's opt-in requirement.

Wells Fargo Bank N.A., et al, allegedly violated the FLSA by misclassifying home mortgage consultants ("HMCs") as exempt workers and failing to make appropriate overtime payments. The purported class filed suit in the U.S. District Court, Southern District of Texas. After the district court conditionally certified two collective actions, the majority of