Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_10-cv-01968/USCOURTS-casd-3_10-cv-01968-1/pdf.json

Nature of Suit Code: 790
Nature of Suit: Other Labor Litigation
Cause of Action: 28:1331 Fed. Question: Fair Labor Standards

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United States District Court

For the Northern District of California

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United States District Court

For the Northern District of California

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

KEVIN FOSSUM, on behalf of himself, all

others similarly and situated and the general

public,

Plaintiff,

 v.

NORTHWESTERN MUTUAL LIFE

INSURANCE COMPANY,

Defendant. /

No. C 10-2657 SI

ORDER GRANTING DEFENDANT’S

MOTION TO TRANSFER VENUE TO

THE SOUTHERN DISTRICT OF

CALIFORNIA

Defendant’s motion to transfer venue is scheduled for a hearing on September 17, 2010.

Pursuant to Civil Local Rule 7-1(b), the Court determines that the matter is appropriate for resolution

without oral argument, and VACATES the hearing. For the reasons set forth below, the Court GRANTS

the motion and TRANSFERS this case to the Southern District of California. 

BACKGROUND

On June 17, 2010, plaintiff Kevin Fossum filed this putative class action against Northwestern

Mutual Life Insurance Company. The complaint alleges that from April 2007 until March 2009, Fossum

was employed as a Financial Representative by Northwestern in its Irvine, California office. Compl.

¶¶ 4, 31. The complaint challenges Northwestern’s classification of Financial Representatives as

independent contractors, and alleges that “[u]nder the guise of their being independent contractors,

[Northwestern] would regularly charge its Financial Representatives for necessary business expenses,

including, without limitation, fees for cubical rent, telephone, computer, faxes, parking, marketing

Case 3:10-cv-01968-DMS-RBB Document 31 Filed 09/16/10 Page 1 of 4
United States District Court

For the Northern District of California

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materials, and clerical assistance, and would deduct such ‘expenses’ from their earnings.” Id. ¶ 1. The

complaint alleges a claim for conversion, as well as claims under California Labor Code §§ 203, 226,

1174, 1174.5, 2802, California Wage Order 4-2001, and California Business & Professions Code §

17200. The complaint seeks to represent a Rule 23 class of all Financial Representatives employed in

California at any time from four years prior to the filing of the complaint to entry of judgment in this

case. Id. ¶ 43.

On June 25, 2009, plaintiffs Lola Lint, Norma Waddell, and David Yang filed a putative

collective action under the Fair Labor Standards Act (“FLSA”), and a Rule 23 class action under various

California wage and hour laws in the Southern District of California, Lint v. Northwestern Mutual Life

Ins. Co., Case No. 09 CV 1373 DMS (RBB). The Lint complaint alleges that Northwestern

misclassified Financial Representatives as independent contractors, and alleges that because Financial

Representatives are actually “employees” of Northwestern, they are owed overtime and minimum

wages. The Lint complaint seeks to represent a nationwide opt-in class pursuant to the FLSA, and a

Rule 23 class of all Financial Representatives employed in California at any time from four years prior

to the filing of the complaint to entry of judgment. Lint Compl. ¶ 31 (attached as Exhibit A to

defendant’s motion).

DISCUSSION

Defendant moves to transfer this action pursuant to both the “first-to-file” rule and 28 U.S.C.

§ 1404(a). Under the “first-to-file” rule, a district court has discretion to “transfer, stay, or dismiss an

action when a similar complaint has already been filed in another federal court.” Alltrade, Inc. v.

Uniweld Prods., Inc., 946 F.2d 622, 623 (9th Cir. 1991). The rule applies when “a complaint involving

the same parties and issues has already been filed in another district.” Id. at 625. The parties and issues

need not be identical for the first-to-file rule to apply. Save Power Ltd. v. Syntek Finance Corp., 121

F.3d 947, 950-51 (5th Cir. 1997). Rather, the crucial inquiry is whether the parties and issues

substantially overlap. Id. The rule was designed to promote judicial economy, and therefore “is not a

rigid or inflexible rule to be mechanically applied, but rather is to be applied with a view to the dictates

of sound judicial administration.” Pacesetter Sys., Inc. v. Medtronic, Inc., 678 F.2d 93, 95 (9th Cir.

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1982). 

Courts look to three factors when applying the first-to-file rule: “(1) the chronology of the two

actions; (2) the similarity of the parties, and (3) the similarity of the issues.” Z-Line Designs, Inc. v.

Bell’O Int’l, LLC, 218 F.R.D. 663, 665 (N.D. Cal. 2003). Plaintiff argues that although Lint was filed

first, the first-to-file rule does not apply because the second and third factors are not met here. With

regard to the similarity of the parties, plaintiff emphasizes the facts that Lint includes a nationwide optin FLSA class, that Lint’s California Rule 23 class period goes back to July 25, 2005 whereas the

Fossum California Rule 23 class period only goes back to June 17, 2006, and that the Lint class consists

of Financial Representatives who were denied overtime and minimum wages, while the Fossum class

consists of Financial Representatives from whom unlawful deductions for necessary business expenses

were made. Relatedly, plaintiff argues that the third factor is not satisfied because Lint involves claims

for overtime and minimum wages, while Fossum challenges business expenses deductions. 

The Court finds that the distinctions drawn by plaintiff are not meaningful and do not preclude

the application of the first-to-file rule. The Fossum putative class is entirely subsumed within the Lint

class, and the fact that Fossum includes a nationwide FLSA class and a longer Rule 23 California class

period does not lessen the similarity of the two California classes. The central issue in both of these

lawsuits is whether Financial Representatives are properly classified as independent contractors or

employees, and both complaints allege that as a matter of “economic reality” Financial Representatives

are employees. Lint Compl. ¶ 7; Fossum Compl. ¶ 11. Thus, both cases will involve common proof

regarding, inter alia, the job duties of Financial Representatives and the degree of control exercised by

Northwestern over Financial Representatives’ performance of their jobs. 

The fact that Lint seeks overtime and minimum wages while Fossum seeks unreimbursed

business expenses does not defeat a finding of substantial similarity. “Exact parallelism between the

two actions need not exist; it is enough if the parties and issues in the two actions are ‘substantially

similar.’” Walker v. Progressive Cas. Ins. Co., No. C03-656R, 2003 WL 21056704, at *2 (W.D. Wash.

May 9, 2003) (quoting Nakash v. Marciano, 882 F.2d 1411, 1416 (9th Cir. 1989)). In both cases, the

class members’ entitlement to the damages and restitution sought turns on whether Financial

Representatives are independent contractors or employees; the putative class members in Lint are not

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entitled to overtime or minimum wages if they are properly classified as independent contractors, see

Cal. Labor Code § 510, and the putative class members in Fossum are not entitled to business expense

reimbursement if they are properly classified as independent contractors, see Cal. Labor Code § 2802.

The Court finds that transferring this action to the Southern District for coordination or consolidation

with Lint will avoid the possibility of inconsistent rulings regarding the independent contractor vs.

employee question. 

Plaintiff also argues that transfer will not result in greater judicial efficiency because Lint is at

a more advanced stage of litigation. Plaintiff notes that Lint has been litigated for over a year, and that

discovery is set to close this fall. However, defendant has submitted the declaration of Barbara Miller,

one of the attorneys of record in Lint, which states that the Lint trial date is not until August 22, 2011,

that the Lint parties are in the process of applying for an extension of discovery and other pretrial

deadlines, and that at the August 13, 2010 status conference in Lint, Judge Sabraw stated that he was

aware of the instant motion to transfer venue and that he might further continue relevant deadlines in

Lint if this case was transferred to the Southern District. Given the substantial overlap in issues, the

Court finds that transfer would result in greater judicial efficiency because the discovery and litigation

can be coordinated.

Accordingly, the Court concludes that the “first-to-file” rule applies here and that this action

should be transferred to the Southern District of California. The Court does not reach the parties’

arguments about the alternative ground for transfer under 28 U.S.C. § 1404(a).

CONCLUSION

For the foregoing reasons and good cause shown, the Court hereby GRANTS defendant’s motion

to transfer. (Docket No. 10). 

IT IS SO ORDERED.

Dated: September 16, 2010 

SUSAN ILLSTON

United States District Judge

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