The Seventh Circuit on Tuesday shot down the denial of class certification in an Outback Steakhouse wage dispute, rejecting the argument that Fair Labor Standards Act collective action claims and state class action claims cannot coexist in the same suit.

A three-judge panel in the U.S. Court of Appeals for the Seventh Circuit held there was no categorical rule against certifying a Rule 23(b)(3) state law class action in a proceeding that also includes an FLSA collective action.

The decision not to certify proposed classes for the plaintiffs' state law claims amounted to an abuse of discretion, the appeals court said, reversing the July 2009 denial of class certification and remanding the matter for further proceedings.

The plaintiffs brought the suit on behalf of current and former tipped employees at Outback — such as bartenders and servers — and claimed Outback disregarded the applicable tip-credit provisions of state and federal law by requiring them to perform an array on non-tipped duties.

"Nothing in the text of the FLSA or the procedures established by the statute suggests either that the FLSA was intended generally to oust other ordinary procedures used in federal court or that class actions in particular could not be combined with an FLSA proceeding," the Seventh Circuit said. (click on link to read full story)