What about a scenario in which you join a group of employees in a class action? Can you still seek liquidated damages as a group? A federal judge in Brooklyn recently addressed this issue.

The plaintiff in this case worked as a laborer for the defendant. She alleges that despite working between 70 and 80 hours per week, she did not receive overtime pay for any hours worked beyond 40. As a result, she filed a class action complaint in Queens Supreme Court, accusing the defendant of violating New York Labor Law.

The defendant, a corporation based in New Jersey, then “removed” the case to Brooklyn federal court. When a case is removed in this manner, a judge is expected to apply the substantive law of the originating state (New York) but the procedural rules used in federal court. This is important because after removing the case, the defendant then moved to dismiss the complaint because “it seeks liquidated damages,” which New York State court rules prohibit in these type of class actions. In response, the plaintiff argued that under federal court rules, which now apply to this case, there is no such bar.

The judge agreed with the plaintiff. He said the defendant “misapprehends” the relevant case-law on this subject. In fact, the U.S. Supreme Court addressed this exact issue in a 2010 decision, Shady Grove Orthopedic Associates v. Allstate Insurance, when it held New York’s prohibition of class actions under state law did not prevent “a federal court sitting in diversity from entertaining a class action” under federal rules.

As the judge in the present case noted, the defendant “chose to remove the case to federal court.” If the defendant had wanted to avoid a class action, it should have kept the plaintiff’s complaint in state court. But by opting for federal jurisdiction, the defendant must now accept the consequences of its decision.