Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_06-cv-04444/USCOURTS-cand-3_06-cv-04444-6/pdf.json

Nature of Suit Code: 710
Nature of Suit: Fair Labor Standards Act
Cause of Action: 28:1331 Fed. Question: Fair Labor Standards

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States District C

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For the Northern District of California

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

NEIL WEINSTEIN,

Plaintiff,

 v.

METLIFE INC., et al.,

Defendants.

 /

No. C 06-04444 SI

ORDER GRANTING DEFENDANTS'

MOTION TO STAY, AND DENYING

DEFENDANTS' MOTION TO DISMISS

Defendants Metlife Inc., Metropolitan Life Insurance Company, and Metlife Securities, Inc.,

move to dismiss, or in the alternative, stay plaintiff's third cause of action on behalf of plaintiff

Weinstein and the proposed California class. Defendants argue that the claim is duplicative of Sims v.

Metropolitan Life Insurance Co., 05-cv-2980 ("Sims"), an action currently pending before Judge

Henderson, of this court. Defendants argue that there is no significant difference between the parties,

issues, or relief sought; therefore, allowing plaintiff's third cause of action to move forward would be

a waste of judicial resources, and the Court should exercise its judicial discretion to either dismiss or stay

this cause of action. On November 3, 2006, the Court heard oral argument on defendants' motion to

dismiss, or in the alternative, to stay plaintiff's third cause of action. Having carefully considered the

arguments of counsel and the papers submitted, the Court hereby GRANTS defendants' motion to stay

and DENIES defendants' motion to dismiss. 

BACKGROUND

Plaintiff Neil Weinstein filed the instant action on July 20, 2006 against defendants Metlife, Inc.,

Metropolitan Life Insurance Company and Metlife Securities, Inc. ("defendants"). Weinstein brought

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this action individually and on behalf of all persons similarly situated. See Weinstein Compl. ¶ 2.

Weinstein's complaint sets forth eight causes of action: (1) unlawful failure to pay overtime wages,

under the Fair Labor Standards Act ("FLSA"); and the following causes of action under California law:

(2) unlawful failure to pay overtime wages; (3) failure to reimburse expenses and/or failure to refund

plaintiffs' contributions to the capital and expenses of the defendants' business (alleged to constitute a

"cash bond"); (4) prohibited wage chargebacks; (5) failure to provide meal and rest periods; (6) failure

to provide accurate itemized wage statements; (7) failure to pay wages on termination; and (8) unfair

business practices. See id. ¶¶ 34-95. The complaint defines two classes of plaintiffs: a California class,

for the California-law claims, and a nationwide FLSA class, for the alleged FLSA violation. See id. ¶

3. 

In support of the third cause of action, Weinstein alleges that defendants required Weinstein and

California class members to "pay other agents/employees of [d]efendants for their services to the clients

in processing orders, assisting in sales, or otherwise handling business matters of the employer." Id.

In addition, it is alleged that defendants required Weinstein and California class members to make "cash

contributions" from their earned and paid commission to defendants for "previously paid and for claimed

customer losses by [d]efendants' customers." Id. Further, Weinstein alleges that defendants required

him and other class members to pay for the normal business expenses of defendants. See id. Weinstein

claims that by doing this, defendants violated California Labor Code § 2802(a), which provides:

An employer shall indemnify his or her employee for all necessary expenditures or losses

incurred by the employee in direct consequence of the discharge of his or her duties, or

of his or her obedience to the directions of the employer, even though unlawful, unless

the employee, at the time of obeying the directions, believed them to be unlawful. 

Id. ¶ 51. Weinstein also claims that defendants violated California Labor Code § 406, which provides:

Any property put up by an employee, or applicant as a part of the contract of

employment, directly or indirectly, shall be deemed to be put up as a bond and is subject

to the provisions of this article whether the property is put up on a note or as a loan or

an investment and regardless of the wording of the agreement under which it is put up.

Id. ¶ 52. Lastly, Weinstein claims that this was a violation of California Labor Code § 407, which

provides:

Investments and the sale of stock or an interest in a business in connection with the

securing of a position are illegal as against the public policy of the State and shall not be

advertised or held out in any way as a part of the consideration for any employment.

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Weinstein Compl. ¶ 53.

In connection with the third cause of action, Weinstein seeks reimbursement for "expenditures

or losses incurred by the employee in direct consequence of the discharge of his or her duties, or of his

or her obedience to the directions of the employer, plus return of all cash bonds or other coerced

investments in the business of the employer, with interest at the statutory rate and attorneys' fees." Id.

¶ 36. 

On June 14, 2005 Jon Paul Sims ("Sims") filed an action individually and on behalf of all those

similarly situated in the Superior Court for the State of California, County of Sonoma, against defendant

Metropolitan Life Insurance Company. The action was removed, and is currently pending before the

Judge Henderson of this court. Sims v. Metropolitan Life Insurance Co., No. 05-2980 (N.D. Cal. filed

July 21, 2005). The complaint in Sims states two causes of action: (1) violation of § 2802 of California

Labor Code; and (2) injunctive relief and restitution under California Business and Professions Code

§ 17200, et seq. See White-Sperling Decl., Ex. 1, Sims Compl. [hereinafter Sims Compl.]. 

The plaintiffs in Sims allege that defendant Metropolitan Life Insurance Company failed to

indemnify plaintiffs for expenses and losses incurred as a result of discharging their duties. See id. ¶ 17.

These expenses included a "Rent Charge" for office space, a "Support Charge" for clerical staff, a

"Basic Expense Charge" and "Extra Charges." See id. ¶ 18. The plaintiffs in Sims allege that defendants

imposed these charges pursuant to a Metropolitan Life Insurance Company policy called the "Expense

Allowance Plan" ("EAP"). See id. ¶ 18.

The Sims complaint proposes the following class: 

All California employees of Metropolitan Life Insurance Company whose job title was

Financial Services Representative, during the period from June 14, 2001 to the present,

who's [sic] compensation was subject to deductions for business expenses, including

office space "Rent Charge", clerical staff "Support Charge", "Basic Expense Charge" and

"Extra Charges", according to a MetLife policy called the Expense Allowance Plan.

 

See id. ¶ 10 (emphasis added). The class period in the Sims action is from June 14, 2001 through the

present. See id. 

The Weinstein action defines its proposed California class as:

All persons who are, or have been, employed by the defendants Metlife, Inc.,

Metropolitan Life Insurance Company, and/or Metlife Securities, Inc. in the State of

California to sell and/or assist in selling and/or to market and/or assist in marketing

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 The notice of related case was made pursuant to Civil Local Rule 3-12, which provides that

"[a]n action is related to another when . . . [t]he actions concern substantially the same parties, property,

transaction or event; and . . . [i]t appears likely that there will be an unduly burdensome duplication of

labor and expense or conflicting results if the cases are conducted before different Judges." 

It is important to note that pursuant to Civil Local Rule 3-12, Judge Henderson’s ruling was

based on a comparison of the entire Sims action to the entire instant action, which is not the issue here.

Judge Henderson's refusal to relate the cases is therefore not dispositive. 

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securities and other financial products on their behalf to the public within the applicable

statutory periods.

Weinstein Compl. ¶ 20. The California class period in the instant action is from July 20, 2002 through

the trial date. See id. ¶ 3. 

On August 21, 2006, the Sims defendant filed a notice of related case in the Sims action,

notifying Judge Henderson of the Weinstein action. The notice was unopposed by plaintiffs in Sims.

On September 13, 2006, Judge Henderson issued an order finding that the instant action was not related

to the Sims action.1 See Pl.'s Opp'n to Defs.' Mot. Dismiss or, Alternative to Stay, Ex. C. 

The Sims action is substantially further along than the instant action. In Sims, the parties have

deposed plaintiffs Jon Paul Sims, Michael B. Bagley and Jeffrey A. Pfeiffer, as well as some of the

Metropolitan Life Insurance Company representatives. See White-Sperling Decl. 1:12-14. 

"[T]housands of pages of documents" have been produced in Sims. Id. 1:14-16. The parties in Sims

have fully briefed a summary judgment motion and a motion for class certification. Both motions are

scheduled for oral argument on November 27, 2006. In Weinstein, no discovery has been conducted and

defendants have responded to the complaint only with the instant motion.

 

LEGAL STANDARD

Defendants' arguments turn on relatively underdeveloped law regarding duplicative lawsuits.

The Ninth Circuit has stated the following regarding duplicative suits: 

The principles of comity allow a district court to decline jurisdiction over an action

where a complaint involving the same parties and issues has already been filed in another

district. "While no precise rule has evolved, the general principle is to avoid duplicative

litigation," and promote judicial efficiency. 

Barapind v. Reno, 225 F.3d 1100, 1109 (9th Cir. 2000) (citations omitted); see also Nakash v. Marciano,

882 F.2d 1411, 1416 (9th Cir. 1989) ("It is enough if the two proceedings are 'substantially similar.'").

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 In the instant motion, it is undisputed that the Sims action was filed first. 

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In the Ninth Circuit, the principles of federal comity are also embodied in the "first-to-file" rule.

Pacesetter Systems, Inc. v. Medtronic Inc., 678 F.2d 93, 94-95 (9th Cir. 1982). Under the first-to-file

rule, a district court may transfer, stay or dismiss an action when a similar action has been filed in

another district court. Alltrade, Inc. v. Uniweld Products, Inc., 946 F.2d 622, 625-26 (9th Cir. 1991).

When deciding whether to apply the first-to-file rule, the court must look at three factors: (1) the

chronology of the two actions; (2) the similarity of the parties; and (3) the similarity of issues. Alltrade.,

946 F.2d at 625-26 (9th Cir. 1991).

The fact that there are additional defendants in one of these actions is not dispositive. Barapind

v. Reno, 72 F.Supp.2d 1132, 1145 (E.D. Cal. 1999)("If the parties 'represent the same interests' the court

may determine the second action is duplicative.") (citation omitted). In a class action, the classes, and

not the class representatives, are compared. See Cal. Jur. 3d Actions § 284 (citing to Gamble v. San

Diego, 79 Fed. 487 (C.D. Cal. 1897)). 

DISCUSSION

Defendants argue there is no significant difference between the parties, issues, or relief sought

in the Sims action and Weinstein's third cause of action.2 In response, Weinstein first argues that the

actions are distinguishable because Sims only names defendant Metropolitan Life Insurance Company,

whereas Weinstein also names Metlife Inc. and Metlife Securities as defendants. The addition of

defendants is not dispositive, especially where, as here, the parties represent the same interests. See

Barapind, 72 F.Supp.2d at 1145 (quoting Walton, 563 F.2d at 70).

In addition, Weinstein notes that the instant action involves a different plaintiff than the Sims

action. In a class action, however, it is the class, not the representative, that is compared. See Cal. Jur.

3d Actions § 284 (citing to Gamble, 79 Fed. 487). The instant action defines the proposed California

class members as those employees who worked for defendants "to sell and/or assist in selling and/or to

market and/or assist in marketing securities and other financial products on their behalf to the public."

Weinstein Compl. ¶ 20. The complaint in the Sims action defines its class members as: "All California

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employees of Metropolitan Life Insurance Company whose job title was Financial Services

Representative." Sims Compl. ¶ 10. Weinstein has not explained, and the Court does not see, how these

two classes differ. There is thus no significant difference between the parties. 

Weinstein's remaining arguments are primarily based on the contention that the instant action

as a whole is different from the Sims action. However, as the instant motion is only concerned with

Weinstein's third cause of action, it is irrelevant whether as a whole, the instant action differs from the

Sims action. For example, Weinstein argues that this action is broader since it also names a nationwide

class under the FLSA. This argument is not persuasive, as Weinstein's third cause of action is brought

only on behalf of a proposed California class of plaintiffs.

In addition, Weinstein argues that the Weinstein and Sims actions involve different issues and

different class action allegations. In support of this contention, Weinstein argues that Sims only alleges

damages arising out of the defendant's EAP program. Weinstein claims that the instant cause of action

is broader since it includes unlawful charges made by defendants above and beyond those made under

the EAP. Weinstein, however, has not provided any specific examples of these alleged additional

charges. It does appear that there may be some differences in the claims; however, there is a significant

overlap, the extent of which will be better understood after Judge Henderson's motions are resolved.

Lastly, Weinstein claims that the relief sought in the instant action is different from the relief

sought in the Sims action. In the third cause of action, Weinstein seeks reimbursement for the allegedly

unlawful charges made by defendants. Weinstein Compl. ¶ 56. In addition, Weinstein seeks a return

of all cash bonds or other "coerced investments." Id. The Sims action seeks damages on behalf of the

plaintiffs and the proposed class for defendant's failure to indemnify plaintiffs and members of the class

for the unlawful charges that were made by defendant in violation of California Labor Code § 2802,

and/or California Business and Professions Code § 17200, et seq. Sims Compl., Prayer for Relief.

Plaintiffs in Sims also seek to enjoin defendant from continuing to violate California Labor Code § 2802.

Id. The relief sought thus appears to be identical: Sims and Weinstein both seek reimbursement of

illegal charges allegedly made by defendants.

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CONCLUSION

The issues and parties appear to substantially (if not completely) overlap. Judge Henderson

should rule on the class certification and summary judgment motions very shortly. A stay therefore

benefits all the parties, and the Court, as Judge Henderson's rulings may narrow the issues that need to

be litigated here. The Court therefore GRANTS defendants' motion to stay proceedings on the third

cause of action of this case, pending Judge Henderson's rulings on the motion for summary judgment

and motion for class certification in the Sims action. In the event that Judge Henderson certifies the

class, as currently defined, in the Sims action, the Court will grant the motion to dismiss in the instant

action with leave to amend; plaintiff Weinstein may then attempt to plead around the Sims action.

(Docket No. 10).

This stay applies only to the third cause of action; proceedings may continue normally as to the

other claims.

IT IS SO ORDERED.

Dated: November 6, 2006

 

SUSAN ILLSTON

United States District Judge

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