Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_06-cv-07725/USCOURTS-cand-4_06-cv-07725-1/pdf.json

Nature of Suit Code: 791
Nature of Suit: Employee Retirement Income Security Act (ERISA)
Cause of Action: 28:1331 Fed. Question: Fair Labor Standards

---

United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

For the Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

ANN DAUGHERTY,

Plaintiff, No. C 06-7725 PJH

v. ORDER GRANTING DEFENDANT’S

MOTION TO STAY THIRD THROUGH

OPPENHEIMER & CO., INC., ELEVENTH CAUSES OF ACTION

Defendant.

_______________________________/

Before the court is defendant’s motion for an order dismissing the third through

eleventh causes of action, or staying those claims pending resolution of similar claims

pending in a concurrent state court action. Having read the parties’ papers and carefully

considered their arguments and the relevant legal authority, and good cause appearing, the

court hereby GRANTS the motion to stay. 

BACKGROUND

This proposed class/collective action alleges claims under both federal and state

law. Plaintiff Ann Daugherty was employed as a securities broker by defendant

Oppenhiemer & Co., Inc. (“Oppenheimer”). Oppenheimer – a registered broker-dealer and

investment advisory firm – provides financial services and advice to high net-worth

individuals, businesses, and institutions. 

The complaint in the present action was filed on December 18, 2006. Plaintiff brings

the class action on behalf of all current and former brokers in the State of California, who

Case 4:06-cv-07725-PJH Document 25 Filed 07/05/07 Page 1 of 10
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28 1

 There is no fifth cause of action.

2

are or were employed by Oppenheimer, to recover overtime compensation and other

wages due under California law. Plaintiff seeks to represent two California sub-classes –

all current securities brokers who worked for Oppenheimer in California selling financial

products (or being trained to sell financial products) from December 16, 2002, up to the

time the action is certified as a class action; and all former securities brokers who worked

for Oppenheimer in California selling financial products (or being trained to sell financial

products) during any period from December 16, 2002, up to the time the action is certified

as a class action. 

Plaintiff also brings the action as a nationwide collective action on behalf of all

securities brokers, financial advisors, financial services representatives, investment

executives, and financial consultants who are or were employed by Oppenheimer during

the period from December 18, 2003, except those employed in the State of New York, to

recover unpaid overtime compensation under federal law. 

Plaintiff alleges ten causes of action, numbered as Nos. 1-4 and 6-11.1

 Plaintiff

asserts (1) a claim under the Fair Labor Standards Act, 29 U.S.C. §§ 201, et seq. (“FLSA”),

for failure to pay overtime compensation; (2) a claim under the FLSA, for failure to pay for

actual hours worked (payment on commission basis, regardless of actual hours worked); 

(3) a claim under California Business & Professions Code §§ 17200 and 17203 for

restitution of overtime pay, due to plaintiff and the members of the proposed California

class under the FLSA; (4) a claim under Business & Professions Code §§ 17200 and

17203 for restitution of overtime pay, due to plaintiff and members of the proposed

California class under the California Labor Code and California Wage Orders; (6) a claim

under California Labor Code § 1194 to recover overtime wages; (7) a claim under California

Wage Order 4-2001, 8 C.C.R. § 11000, to recover wages paid for each hour worked; (8) a

claim under California Labor Code §§ 201 and 202 for wages owed, but not paid, to class

members when they left their employment with Oppenheimer; (9) a claim under California

Case 4:06-cv-07725-PJH Document 25 Filed 07/05/07 Page 2 of 10
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

3

Labor Code § 226.7, for compensation for meal breaks; (10) a claim under IWC Wage

Order 4, § 12, and California Labor Code § 226.7, for compensation for rest breaks; and

(11) a claim under California Labor Code § 226(a), for failure to provide members of the

California classes with accurate and detailed records of hours worked and wages earned. 

On November 28, 2005, more than a year before the present action was filed, a

proposed class action was filed in a California state court by plaintiff Gary Handler

(“Handler”), against Oppenheimer (Handler v. Oppenheimer, Los Angeles Superior Court,

Case No. BC343542). The proposed class consists of all California residents who were

employed by Oppenheimer as securities brokers or broker trainees in the State of

California at any time during the period beginning on November 28, 2001, and continuing

through the filing of the complaint (or possibly through the certification of the class).

Handler asserts that Oppenheimer failed to pay its securities brokers and broker

trainees overtime pay, failed to maintain adequate records of the proposed class members’

work hours, and subjected the proposed class members to unlawful wage deductions. 

Handler alleges five causes of action under California law: (1) a claim under Business &

Professions § 17203 for restitution of overtime pay, due to plaintiff and the members of the

proposed class under the FLSA; (2) a claim under Business & Professions Code § 17203

for disgorgement and restitution of unpaid wages, based on unlawful deductions from

wages, in violation of California Labor Code §§ 221, 400-410, and 2802; (3) a claim for

recovery of penalties, pursuant to Labor Code §§ 2698-99 (the “Labor Code Private

Attorneys General Act of 2004"), including penalties for violations of Labor Code §§ 203,

210, 226.3, 558, and 1174.5; (4) a claim for recovery of “waiting time” penalties, pursuant

to Labor Code § 203, including penalties for failure to pay wages by the deadlines set forth

in Labor Code §§ 201 and 202; and (5) a claim under Labor Code § 226.7, for recovery of

compensation for rest and meal breaks.

Handler filed a motion for class certification in March 2007. The motion was set for

hearing on June 28, 2007.

DISCUSSION

Case 4:06-cv-07725-PJH Document 25 Filed 07/05/07 Page 3 of 10
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

4

A. Legal Standard

For reasons of “wise judicial administration,” federal courts may stay a federal action

based on “the presence of a concurrent state proceeding.” Moses H. Cone Mem. Hosp. v.

Mercury Constr. Corp., 460 U.S. 1, 15 (1983) (citing Colorado River Water Conservation

Dist. v. United States, 424 U.S. 800, 818 (1976)). Exact parallelism between the claims is

not required – for application of the Colorado River doctrine, it is enough if the two

proceedings are “substantially similar.” Nakash v. Marciano, 882 F.2d 1411, 1416-17 (9th

Cir. 1989). 

A stay in favor of state proceedings is appropriate only under “extraordinary

circumstances.” Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 716 (1996). A court must

consider and weigh several factors when determining the propriety of such a stay. These

include (1) whether either court has asserted jurisdiction over a res or property; (2) the

relative convenience of the forums; (3) the desirability of avoiding piecemeal litigation; (4)

the order in which the forums obtained jurisdiction and the progress of such proceedings;

(5) whether state or federal law controls; and (6) whether the state proceeding is adequate

to protect the rights of the parties. See Moses H. Cone, 460 U.S. at 21-22; Colorado River,

424 U.S. at 817-19; Nakash, 882 F.2d at 1415. The decision to abstain rests on a careful

balancing of these factors as they apply in a given case, “with the balance heavily weighted

in favor of exercising jurisdiction.” Moses H. Cone, 460 U.S. at 16. 

When a district court declines to exercise jurisdiction under Colorado River, it should

preferably stay rather than dismiss the federal action. This ensures that the federal forum

will remain open if, for some unexpected reason, the state forum proves to be inadequate. 

“Only the clearest of justifications will warrant dismissal.” Colorado River, 424 U.S. at 818-

19; see also Attwood v. Mendocino Coast Dist. Hosp., 886 F.2d 241, 243 (9th Cir. 1989).

B. Defendant’s Motion

Oppenheimer now seeks an order dismissing or staying the action as to the state

law claims (third through eleventh causes of action), pending the disposition of the Handler

action. Oppenheimer asserts that the third through eleventh causes of action are either

Case 4:06-cv-07725-PJH Document 25 Filed 07/05/07 Page 4 of 10
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

5

identical to or duplicative of the claims alleged in the Handler action, and that dismissing or

staying those claims will be in the interests of wise judicial administration because the

Handler action was filed more than a year before this action and is significantly further

along, and a decision on the merits in the Handler action will have a preclusive effect on the

duplicative claims here.

Oppenheimer argues that the third cause of action in the present case is identical to

the first cause of action in Handler; that the fourth, sixth, seventh, and eleventh causes of

action in the present case are subsumed in the third cause of action in Handler; that the

eighth cause of action in the present case is identical to the fourth cause of action in

Handler; and that the ninth and tenth causes of action in the present case are subsumed in

the fifth cause of action in Handler. 

Oppenheimer contends that the proposed class of California residents who worked

for Oppenheimer as securities brokers is exactly the same as the putative class in the

Handler action, and argues that determining whether claims are substantially similar turns

on whether the underlying issues are the same, not on whether the claims themselves are

identical. Oppenheimer submits that the exact same underlying issue is in dispute in both

the Handler action and this action – whether Oppenheimer properly classified its securities

brokers in California as exempt employees under federal and state law. 

Oppenheimer contends that the Colorado River factors weigh heavily in favor of

dismissing or staying the duplicative claims. Oppenheimer notes that the first factor –

whether the court has assumed jurisdiction over a res or property – does not apply here,

and that the second factor – the relative convenience of the forums – is neutral, as both

courts are in California, and are equally convenient for litigating the duplicative claims. 

Regarding the remaining four factors, Oppenheimer contends that the third factor –

avoidance of piecemeal litigation – most strongly favors staying or dismissing the

duplicative claims, as any decision in the Handler action will have a preclusive effect on the

duplicative claims. 

Oppenheimer asserts that the fourth factor – the order in which the forums obtained

Case 4:06-cv-07725-PJH Document 25 Filed 07/05/07 Page 5 of 10
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

6

jurisdiction – also strongly favors dismissing or staying this action, as the Handler court

obtained jurisdiction in November 2005, and the state court action has progressed well

beyond the present case. 

In addition, Oppenheimer contends that the fifth factor – whether state or federal law

controls – favors stay or dismissal because state law controls the duplicative claims in the

present case; and that the sixth factor – the adequacy of the state proceeding – favors stay

or dismissal because the members of the proposed class are also members of the

proposed class in Handler, and the claims in Handler are substantially similar to the claims

in the present case.

In opposition, plaintiff argues first that the claims in the two cases are not

“substantially identical,” pointing to several differences between the two complaints. First,

plaintiff asserts that Handler action seeks recovery for violations of § 17200 based on

Oppenheimer’s having made “deductions from the wages of securities brokers and broker

trainees in violation of” various Labor Code provisions, while there is no such claim in the

present complaint. 

Second, plaintiff contends that the present complaint seeks recovery of overtime

wages, plus interest, attorney’s fees, and costs, pursuant to Labor Code § 1194, while the

Handler complaint does not mention § 1194. 

Third, plaintiff asserts that the present complaint alleges violations of California

Wage Order 4-2001, 8 C.C.R. § 11000 (requiring payment of a minimum wage per hour,

unless the employee falls under an enumerated exception), while the Handler complaint

does not mention the failure to pay minimum wages. 

In addition, plaintiff notes that Handler pleads various facts not at issue in the

present case – such as that Oppenheimer made improper “deductions from wages” – and

refers to various provisions in the Labor Code not mentioned in the present complaint. 

Plaintiff also contends that the number of potential class members in the present action is

greater because the plaintiff in Handler seeks to represent “all California residents who

were employed by [Oppenheimer] as securities brokers or broker trainees in the State of

Case 4:06-cv-07725-PJH Document 25 Filed 07/05/07 Page 6 of 10
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

7

California,” while plaintiff in the present case seeks to represent both California employees

of Oppenheimer, and, pursuant to the FLSA, “all current and former [s]ecurities [b]rokers

who have worked for [Oppenheimer].” 

Plaintiff argues that dismissal or stay under Colorado River is proper only if the

pending state proceeding will resolve all the issues in the federal suit (citing Holder v.

Holder, 305 F.3d 854 (9th Cir. 2002), and Intel Corp. v. Advanced Micro Devices, Inc., 12

F.3d 908 (9th Cir. 1993)). Plaintiff submits that because the present case alleges two

causes of action under the FLSA, application of the doctrine will not resolve all the issues in

this case. 

Plaintiff asserts that Oppenheimer has failed to demonstrate the existence of an

exceptional circumstance that justifies imposition of a stay or dismissal, and contends that

most if not all of the Colorado River factors do not exist in this case. Plaintiff agrees with

Oppenheimer that the first factor does not apply here, and that the second factor is neutral. 

With regard to the third factor – the desirability of avoiding piecemeal litigation –

plaintiff claims that a dismissal or stay will not avoid piecemeal litigation because plaintiff

will still be required to prove her claims under the FLSA. 

With regard to the fourth factor – the order in which the forums obtained jurisdiction

– plaintiff contends that it is irrelevant whether the Handler action was filed first, and that

the similarities between the two cases will further the defense of the present action. 

Plaintiff also disputes Oppenheimer’s characterization of the Handler case as further

advanced. 

Finally, plaintiff claims that the fifth factor – whether state or federal law controls –

favors her because she has pled federal claims in this suit; and contends that the sixth

factor – whether the state proceeding is adequate to protect the rights of the parties –

favors her because the Handler action does not plead all the claims asserted in the present

action, and the state court therefore cannot protect all the rights of the parties.

The court finds that the motion must be GRANTED, and that the third through

eleventh causes of action should be STAYED. The court finds that the claims asserted in

Case 4:06-cv-07725-PJH Document 25 Filed 07/05/07 Page 7 of 10
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

8

the third through eleventh causes of action in the present case are substantially similar to

the claims in the Handler action because the dispute between the parties concerns the

same core factual issues of whether Oppenheimer properly classified its securities brokers

in California as exempt employees under federal and state law, and whether Oppenheimer

denied overtime pay and meal and rest breaks to non-exempt workers. 

The court agrees with Oppenheimer that plaintiff is simply attempting to manufacture

differences between the duplicative claims in this case and the claims in Handler, by

arguing, for example, that the sixth and seventh causes of this action seek relief under

Labor Code § 1194 for failure to pay minimum wage, and that Handler doesn’t mention §

1194. Those claims, just like all the state law claims in this case, concern the core issue of

whether Oppenheimer’s securities broker employees in California are exempt employees. 

The sixth and seventh causes of action in this case are therefore substantially similar to the

claims in the Handler action regardless of whether Handler explicitly references § 1194 or

asserts a minimum wage claim.

Similarly, plaintiff’s argument that the Handler complaint includes additional claims

not included here raises no legitimate basis for denying Oppenheimer’s motion, because

the question under Colorado River is whether the claims in the federal court action are

substantially similar to the claims in the state court action, not whether the state court

action also includes claims not alleged in the federal action. 

In addition, contrary to the argument advanced by plaintiff, the court finds that

Colorado River applies even where a state court action will not resolve all the claims in the

federal action. Neither Holder nor Intel supports plaintiff’s argument that the Colorado

River doctrine may not be used to dismiss or stay only part of an action. Holder and Intel

simply stand for the proposition that a Colorado River motion may not be granted where a

defendant seeks to stay claims in the federal court action that are unrelated to the state

court claims. Here, by contrast, Oppenheimer does not seek to stay or dismiss the

nationwide collective action claims that will not be resolved by the Handler action.

The Colorado River factors are “to be applied in a pragmatic, flexible manner with a

Case 4:06-cv-07725-PJH Document 25 Filed 07/05/07 Page 8 of 10
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

9

view to the realities of the case at hand.” Moses H. Cone, 460 U.S. at 21. The court has

considered all the relevant factors in the context of the present case, and finds that they

weigh heavily in favor of staying the duplicative claims. 

The first two factors are not relevant here, but the third factor – avoidance of

piecemeal litigation – favors granting the stay. The dispute underlying the claims in

Handler is whether Oppenheimer improperly classified its brokers as exempt employees,

and the same dispute underlies the state law claims alleged in the present action. While it

is true that this factor, standing alone, might not constitute exceptional circumstances, see

Travelers Indem. v. Madonna, 914 F.2d 1364, 1369 (9th Cir. 1990), the remaining three

factors also favor granting a stay. 

The fourth factor – the order in which the forums obtained jurisdiction and the

progress of such proceedings – favors staying the state law claims in the present action. 

The Handler action had been pending for over a year when plaintiff filed this action, and the

parties in Handler have engaged in discovery and have briefed (and possibly argued) the

plaintiff’s motion for certification of the California class. No such progress has been made

in this case, where the parties’ activities have been limited to the exchange of initial

disclosures and the briefing of the present motion. 

Both the fifth factor – whether state or federal law controls provides the rule of

decision on the merits – and the sixth factor – the adequacy of the state court proceeding –

also weigh in favor of staying the state law claims in this case because California law

controls those claims, and the state court is manifestly competent to decide those California

claims. 

CONCLUSION

In the interest of “wise judicial administration, giving regard to conservation of judicial

resources and comprehensive disposition of litigation,” Colorado River, 424 U.S. at 817, the

court finds that the third through eleventh causes of action in plaintiff’s complaint should be

STAYED. The first and second causes of action, and the nationwide collective action, will

proceed as directed by the court in the initial case management conference.

Case 4:06-cv-07725-PJH Document 25 Filed 07/05/07 Page 9 of 10
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

2

 The court advised the parties at the March 29, 2007, case management conference

that defendant’s motion to dismiss/stay would be decided on the papers.

10

The hearing on this motion, noticed for July 11, 2007, is VACATED.2

IT IS SO ORDERED.

Dated: July 5, 2007 ______________________________

PHYLLIS J. HAMILTON

United States District Judge

Case 4:06-cv-07725-PJH Document 25 Filed 07/05/07 Page 10 of 10