Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_03-md-01541/USCOURTS-azd-2_03-md-01541-3/pdf.json

Nature of Suit Code: 710
Nature of Suit: Fair Labor Standards Act
Cause of Action: 29:201 Denial of Overtime Compensation

---

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

WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

In re Allstate Insurance Company ) MDL No. 1541 (2:03-md-1541)

Fair Labor Standards Act Litigation )

 ) ALL CASES

ORDER

Pending before the Court is Defendant’s Motion to Determine Basis on

Which Plaintiffs Should be Permitted to Dismiss Claims (doc. #199). Having

considered the parties’ memoranda filed in connection with the defendants’

motion, as well as the Parties’ Joint Memorandum in Response to Court Order of

January 30, 2008 (doc. #211), the Court finds that any plaintiff, whether a named

plaintiff or an opt-in plaintiff, wishing to withdraw his or her consent-to-join form,

thereby in effect voluntarily dismissing his or her federal Fair Labor Standards Act

claim, shall be permitted to do so only in the conditional manner established

herein.

Inasmuch as the Court has already entered one summary judgment order

in this MDL action, the Court initially notes that any request by any plaintiff

seeking to withdraw from this action will be construed, and resolved, as a motion

for voluntary dismissal pursuant to Fed.R.Civ.P. 41(a)(2). 

Case 2:03-md-01541-PGR Document 213 Filed 07/15/08 Page 1 of 4
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 -

Rule 41(a)(2) permits the Court to grant a voluntary dismissal under the

current circumstances “on terms that the court considers just.” The Court is

unpersuaded by the plaintiffs’ contention that any subsequent voluntary dismissal

should simply be unconditional and without prejudice. While a dismissal under

Rule 41(a)(2) is normally without prejudice, such a dismissal is not appropriate if

the defendants will “suffer clear legal prejudice, other than the prospect of a

subsequent suit on the same facts.” Phillips v. Illinois Central Gulf Railroad, 874

F.2d 984, 986 (9th Cir. 1996). In the Ninth Circuit, “legal prejudice” means

“prejudice to some legal interest, some legal claim, some legal argument.” 

Wetlands Water District v. United States, 100 F.3d 94, 97 (9th Cir.1996). In

determining whether legal prejudice exists, the Court considers it appropriate to

consider the present stage of this litigation. Phillips USA, Inc. v. Allflex USA, Inc.,

77 F.3d 354, 358 (10th Cir. 1996).

The Court deems this action to be to a significant degree in a postsummary judgment procedural posture. While the plaintiffs are correct that the

Court’s summary judgment order (doc. #188), 2007 WL 2274802 (D.Ariz. Aug. 7,

2007), technically only granted summary judgment against the named plaintiffs in

the Gaglione v. Allstate Insurance Company member case, the consequences of

that order are more far-reaching given that the order resolved some significant

substantive issues that effect the entirety of this MDL action, e.g. that at least

Allstate property and casualty adjusters are administrative workers and not

production workers. It is clear from the plaintiffs’ response to the defendants’

motion that a major motivation for a plaintiff to now withdraw from this action is to

obtain more favorable rulings in a new action in some other court. While legal

prejudice for purposes of Rule 41(a)(2) will not result from a defendant having to

defend in another forum or from a plaintiff gaining a tactical advantage from a

voluntary dismissal, Smith v. Lenches, 263 F.3d 972, 976 (9th Cir.2001), an

Case 2:03-md-01541-PGR Document 213 Filed 07/15/08 Page 2 of 4
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 -

unconditional dismissal without prejudice is not appropriate if the purpose of the

dismissal is to avoid the consequences of a summary judgment ruling. Phillips

USA, Inc. v. Allflex USA, Inc., 77 F.3d at 358 (“We agree with the district court

that a party should not be permitted to avoid an adverse decision on a dispositive

motion by dismissing a claim without prejudice.”) 

The Court also considers it appropriate to consider the fact that this is an

MDL action in determining whether an unconditional dismissal without prejudice

of a withdrawing plaintiff’s FLSA claim filed pursuant to 29 U.S.C. § 216(b) should

be allowed. Permitting a plaintiff to withdraw from this action in order to

commence a new federal FLSA collective action would only defeat the purpose

behind the institution of this MDL action. Furthermore, as the defendants point

out, it is more likely than not that any refiled FLSA collective action by one of the

current plaintiffs in another federal court would ultimately be determined by the

Judicial Panel on Multidistrict Litigation to be a tag-along case to this MDL action,

resulting in nothing more than a waste of scarce judicial resources.

The Court, in the exercise of its broad discretion, thus concludes that the

only manner of dismissal that would not cause legal prejudice to the defendants

is a conditional dismissal that forbids any dismissing plaintiff from reasserting in

another federal suit any FLSA collective claim for overtime pay that is resolvable

in this action. Cf. Smith v. Lenches, 263 F.3d at 976 (“That the district court here

dismissed, with prejudice, the federal claims so that they cannot be reasserted in

another federal suit only strengthens our conclusion that the dismissal [of the

state law claims without prejudice] caused no legal prejudice and was not an

abuse of discretion.”)

While the plaintiffs argue in the Parties’ Joint Memorandum that in order for

a conditional dismissal to be fair to them the Court must toll the statute of

limitations on any state law claims that a withdrawing plaintiff might have, the

Case 2:03-md-01541-PGR Document 213 Filed 07/15/08 Page 3 of 4
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 -

Court disagrees. As the defendants correctly point out, this action involves only

federal FLSA claims and the mere pendency of this action has never prevented

any plaintiff from pursuing any state court remedy that he or she may have had. 

It is not for this Court to foreclose the defendants from raising any appropriate

statute of limitations defense should a withdrawing plaintiff subsequently

commence a state law overtime pay action. The Court will also not foreclose the

defendants from raising any appropriate statute of limitations defense should any

withdrawing plaintiff subsequently file an individual overtime pay claim under the

FLSA. Therefore,

IT IS ORDERED that Defendant’s Motion to Determine Basis on Which

Plaintiffs Should be Permitted to Dismiss Claims (doc. #199) is granted to the

extent that any named or opt-in plaintiff hereinafter filing a motion for voluntary

dismissal pursuant to Fed.R.Civ.P. 41(a)(2) shall be permitted to withdraw from

this action only upon the condition that he or she shall be barred from asserting

as a member of a collective action any claim for overtime pay he or she might

have against any defendant herein under the Fair Labor Standards Act, 29 U.S.C.

§ 201, et seq., if that FLSA claim can be litigated as a part of this MDL action.

IT IS FURTHER ORDERED that the parties, in accordance with the parties’

Joint Report to Court Re Case Management/Status Conference (doc. #193), shall

file with the Court no later than August 11, 2008, a jointly prepared proposed form

of Order to Show Cause and Notice to the remaining named and opt-in plaintiffs

regarding their continued participation in this MDL action. 

DATED this 14th day of July, 2008.

Case 2:03-md-01541-PGR Document 213 Filed 07/15/08 Page 4 of 4