Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_06-cv-02056/USCOURTS-cand-4_06-cv-02056-1/pdf.json

Nature of Suit Code: 442
Nature of Suit: Civil Rights Employment
Cause of Action: 28:1441 Petition for Removal- Civil Rights Act

---

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

In mid-2006, after this suit was filed and after the class

period ended, ADP Claims Services Group was sold and renamed Claims

Services Group, Inc. Claims Services Group, Inc. is a wholly-owned

subsidiary of Audatex North America, Inc. Defendant refers to

itself as Claims Services Group or CSG in its papers, while

Plaintiff refers to it as ADP Claims Services Group, Inc. The

Court refers to it as ADP Claims Services Group, Inc., in this

order. 

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

VINCENT REYNOV, an individual, on

behalf of himself, and on behalf of

all persons similarly situated,

Plaintiff,

v.

ADP CLAIMS SERVICES GROUP, INC.,

AUTOMATIC DATA PROCESSING, INC., and

DOES 1 through 100,

Defendants.

 /

No. C 06-2056 CW

ORDER DENYING

DEFENDANT'S MOTION

TO DISMISS AND

GRANTING PLAINTIFF'S

MOTION FOR LEAVE TO

FILE A FIRST AMENDED

COMPLAINT

Defendant Claim Services Group1 has filed a motion to dismiss 

this putative class action pursuant to Federal Rules of Civil

Procedure 12(c) and 56. Plaintiff Victor Reynov opposes the motion

and has filed a simultaneous motion for leave to file a first

amended complaint. Defendant opposes the motion for leave to

amend. The matter was heard on December 1, 2006. Having

Case 4:06-cv-02056-CW Document 42 Filed 12/20/06 Page 1 of 11
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

considered all of the papers filed by the parties and oral argument

on the motions, the Court DENIES Defendant's motion to dismiss and

GRANTS Plaintiff's motion for leave to file an amended complaint.

BACKGROUND

Reynov worked as a senior software quality assurance (QA)

engineer for ADP Claims Services Group, Inc. in San Ramon,

California from November, 2003 through June, 2005. At that time,

ADP Claims Services Group was a wholly-owned corporate subsidiary

of Automatic Data Processing, Inc. On April 20, 2005, Reynov

signed an agreement to retain Scott Miller to represent him "in

all claims for violations of the Labor Code and any other related

laws against Automatic Data Processing, Inc." Faustman Decl. Ex.

8. The agreement "authorizes the attorney(s) to do whatever the

attorney(s) deem advisable in this matter" and "to associate any

other attorney in representing the client(s), without additional

costs." Id.

Miller associated other attorneys, including the Thierman Law

Firm, to assist him with the case. The attorneys drafted a

complaint alleging violations of several California statutes based

on an alleged misclassification of Reynov and all others with his

job title as salaried exempt employees and names "ADP Claims

Services Group, Inc., Automatic Data Processing, Inc., and each of

their subsidiaries doing business in California, and DOES 1 through

50" as defendants. The complaint, signed by Mark Thierman, was

filed in Contra Costa County Superior Court on January 31, 2006. 

The case was removed to this Court on March 17, 2006. Miller

declares that, consistent with his usual practice, he did not send

Case 4:06-cv-02056-CW Document 42 Filed 12/20/06 Page 2 of 11
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

a copy of the complaint to Reynov. Thierman declares that it was

his practice to send the complaint to his clients, but that he

assumed Miller would do so. Reynov declares that he never received

a copy of the filed complaint. 

Because he had not heard from Miller in several months, Reynov

assumed that Miller had decided not to proceed with the case. 

Therefore, he sought out new counsel, the United Employees Law

Group. The United Employees Law Group associated two other law

firms to assist with the case. Neither Reynov nor the newly hired

attorneys were aware that the earlier case had already been filed. 

The newly hired attorneys filed a similar complaint in Alameda

County Superior Court on May 6, 2006. 

Reynov and both sets of his attorneys remained unaware that

the duplicate suits had been filed until August 16, 2006, when

Defendant's counsel deposed Reynov in the Alameda County suit and

asked him whether he was a party in any other lawsuit. When Reynov

replied that he was not, counsel produced a copy of the complaint

in this suit. Jonathan Gertler, the attorney representing Reynov

at the deposition took a recess to contact Thierman and later

suspended the deposition in order to communicate with the attorneys

who originally represented Reynov in this suit. 

After conversations between Reynov and the attorneys on both

suits, Reynov elected to proceed with this case, and the attorneys

from the Alameda County suit entered their appearance in this case

on September 5, 2006. At the Court's request, Reynov filed an

authorization for "the maintenance of this action and the

engagement of the attorneys" on September 22, 2006. Faustman

Case 4:06-cv-02056-CW Document 42 Filed 12/20/06 Page 3 of 11
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

Declaration Ex. 6.

Plaintiff filed a motion for leave to file a first amended

complaint on October 16, 2006, and Defendant filed a motion to

dismiss the case on October 17, 2006. Plaintiff states that he

intends to move to dismiss the Alameda County action if the motion

to dismiss this action is denied. 

LEGAL STANDARD

I. Motion to Dismiss

A motion for judgment on the pleadings under Rule 12(c), like

a motion to dismiss for failure to state a claim, addresses the

sufficiency of a pleading. Judgment on the pleadings may be

granted when the moving party clearly establishes on the face of

the pleadings that no material issue of fact remains to be resolved

and that the moving party is entitled to judgment as a matter of

law. Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d

1542, 1550 (9th Cir. 1989). The court may consider, in addition to

the face of the pleadings, exhibits attached to the pleadings,

Durning v. First Boston Corp., 815 F.2d 1265, 1267 (9th Cir. 1987),

and facts which may be judicially noticed. Mullis v. United States

Bankr. Court, 828 F.2d 1385, 1388 (9th Cir. 1987). 

II. Motion for Summary Judgment

Under Rule 56, summary judgment is properly granted when no

genuine and disputed issues of material fact remain, and when,

viewing the evidence most favorably to the non-moving party, the

movant is clearly entitled to prevail as a matter of law. Fed. R.

Civ. P. 56; Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986);

Eisenberg v. Ins. Co. of N. Am., 815 F.2d 1285, 1288-89 (9th Cir.

Case 4:06-cv-02056-CW Document 42 Filed 12/20/06 Page 4 of 11
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

1987).

III. Motion for Leave to File an Amended Complaint

Federal Rule of Civil Procedure 15(a) provides that leave of

the court allowing a party to amend its pleading "shall be freely

given when justice so requires." Leave to amend lies within the

sound discretion of the trial court, which discretion "must be

guided by the underlying purpose of Rule 15 to facilitate decision

on the merits, rather than on the pleadings or technicalities." 

United States v. Webb, 655 F.2d 977, 979 (9th Cir. 1981) (citations

omitted). Thus, Rule 15's policy of favoring amendments to

pleadings should be applied with "extreme liberality." Id.; DCD

Programs, Ltd. v. Leighton, 833 F.2d 183, 186 (9th Cir. 1987)

(citations omitted).

The Supreme Court has identified four factors relevant to

whether a motion for leave to amend should be denied: undue delay,

bad faith or dilatory motive, futility of amendment, and prejudice

to the opposing party. Foman v. Davis, 371 U.S. 178, 182 (1962). 

The Ninth Circuit holds that these factors are not of equal weight;

specifically, delay alone is insufficient ground for denying leave

to amend. Webb, 655 F.2d at 980. Further, the "liberality in

granting leave to amend is not dependent on whether the amendment

will add causes of action or parties." DCD Programs, 833 F.2d at

186. Rather, the court should consider whether the proposed

amendment would cause the opposing party undue prejudice, is sought

in bad faith, or constitutes an exercise in futility. Id. (citing

Acri v. Int’l Ass'n of Machinists & Aerospace Workers, 781 F.2d

1393, 1398-99 (9th Cir. 1986); United States v. City of Twin Falls,

Case 4:06-cv-02056-CW Document 42 Filed 12/20/06 Page 5 of 11
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

806 F.2d 862, 876 (9th Cir. 1986); Howey v. United States, 481 F.2d

1187, 1190-91 (9th Cir. 1973); Klamath-Lake Pharm. Ass’n v. Klamath

Med. Serv. Bureau, 701 F.2d 1276, 1293 (9th Cir. 1983)).

Prejudice typically arises where the opposing party is

surprised with new allegations which require more discovery or will

otherwise delay resolution of the case. See, e.g., Acri, 781 F.2d

at 1398-99; Guthrie v. J.C. Penney Co., 803 F.2d 202, 210 (5th Cir.

1986). The party opposing the motion bears the burden of showing

prejudice. DCD Programs, 833 F.2d at 186; Beeck v. Aquaslide 'N'

Dive Corp., 562 F.2d 537, 540 (8th Cir. 1977).

DISCUSSION

I. Motion to Dismiss

Defendant's arguments for dismissal stem from its assertions

that the original filing of the complaint in this case was

unauthorized and that the attorneys representing Plaintiff have

acted or are acting in bad faith. 

Defendant first asserts that Reynov had the absolute right to

terminate his attorneys and that he must have believed that his

relationship with them had been terminated when he elected to hire

additional attorneys. Therefore, Defendant argues that "any

authority conveyed to Mr. Miller [under the retainer agreement] had

expired and was ineffective when this lawsuit was filed in February

of 2006." Defendant's Motion to Dismiss 7-8.

However, Defendant does not cite any authority to support its

claim that a subjective belief that an attorney-client relationship

has ended can act to terminate such a relationship. Further,

Defendant appears to confuse authorization with knowledge. 

Case 4:06-cv-02056-CW Document 42 Filed 12/20/06 Page 6 of 11
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

Although Reynov was unaware that this suit had been filed, he had

clearly authorized counsel to act on his behalf. As Reynov points

out, California courts have held that even unauthorized acts are

binding on a client if he later ratifies those acts. See, e.g.,

Norcal Mut. Ins. Co. v. Newton, 84 Cal. App. 4th 64 (2000); Blanton

v. Womancare, 38 Cal. 3d 396 (1985). Therefore, the Court finds

that, although Reynov was unaware of the filing because of a lack

of communication by his attorneys, he authorized the original

complaint.

Because the Court finds that the suit was authorized,

Defendant's argument for dismissal based on the statute of

limitations also fails. This action was originally filed in Contra

Costa County Superior Court on February 2, 2006, less than one year

after Reynov's employment was terminated on June 3, 2005. 

Defendant also suggests that Reynov lacks standing because he

cannot have an interest in the outcome of the suit if he was

unaware that the suit was filed. However, the fact that Reynov

hired the second set of attorneys to file a nearly identical suit

when he did not know this one had been filed clearly demonstrates

that he has an interest in the outcome of this suit. This

demonstrated interest also undermines Defendant's argument that

this Court lacks jurisdiction over Reynov's case because there is

no case or controversy. Reynov's cause of action against Defendant

clearly existed when he hired the original attorneys in this suit,

when the original complaint was filed, and when he later mistakenly

hired the second group of attorneys. 

Finally, the Court finds Defendant's allegations of misconduct

Case 4:06-cv-02056-CW Document 42 Filed 12/20/06 Page 7 of 11
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

Similarly, Defendant's claim that this case should be

dismissed under the abstention doctrine is unconvincing. Reynov's

intent to dismiss the State court suit if this Court denies

Defendant's motion to dismiss eliminates the need to consider

abstention. Further, neither Defendant's allegation of misconduct

nor the fact that this case is a class action is sufficient to

establish the "exceptional circumstances" under which abstention is

appropriate. See Colorado River Water Conservation Dist. v. United

States, 424 U.S. 800, 817-21 (1976); Travelers Indemnity Co. v.

Madonna, 914 F.2d 1364, 1369 (9th Cir. 1990). 

8

by Reynov's counsel unconvincing. The Court finds that any

irregularities in the filing of this suit were caused by a lack of

communication between Reynov and his attorneys rather than acts of

bad faith. For example, Defendant charges Reynov with judgeshopping, in part because he has not yet dismissed either of the

cases filed on his behalf. However, the Court finds that

Plaintiff's decision not to dismiss the Alameda County action until

he is sure that this case will proceed is a prudent decision to

protect his ability to go forward with one of his suits rather than

an effort improperly to select the judge of his choice.2

 This is

particularly true given that Reynov was clearly unaware that this

case had been filed when the second case was filed in another

court. 

The Court finds that Reynov authorized this suit and that any

irregularities in the filing of this suit were caused by a lack of

communication between Reynov and his attorneys rather than acts of

bad faith. Therefore, the Court denies Defendant's motion to

dismiss. 

II. Motion for Leave to File an Amended Complaint

Plaintiff moves for leave to file an amended complaint that

includes Jeffrey Sparks as an additional named plaintiff. The

Case 4:06-cv-02056-CW Document 42 Filed 12/20/06 Page 8 of 11
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

proposed amended complaint includes two subclasses covering two

additional job titles that Reynov alleges were also misclassified

as exempt from overtime. Reynov alleges that, during the class

period, Sparks worked as both a client service representative and

an implementation specialist for Defendant Automatic Data

Processing, Inc., while Reynov worked as a senior software QA

engineer for ADP Claims Services Group, Inc., a wholly owned

subsidiary of Automatic Data Processing, Inc. Plaintiff's Motion

for Leave to File a First Amended Complaint at 2. 

Defendant argues that Sparks cannot be added as a class

representative because he is an employee of ADP, Inc., which is a

different subsidiary of Automatic Data Processing, Inc. In

response, Reynov argues that he should be allowed to amend his

complaint to add Sparks as a Plaintiff and ADP, Inc. as Defendant,

in part because the current complaint names as defendants "ADP

Claims Services Group, Inc., Automatic Data Processing, Inc., and

each of their subsidiaries doing business in California." 

(emphasis added). Reynov argues that the appropriate time to

consider whether Sparks is an appropriate named plaintiff is when

the Court considers class certification. 

Defendant argues only that Reynov cannot add Sparks as a

plaintiff because of Rule 15(c). However, Rule 15(c) concerns

whether an amendment can relate back to the date of the original

pleading, not whether an amendment can be made in the first

instance. Because Sparks is currently employed at ADP, Inc., his

claims do not rely upon Reynov's claims to meet the statute of

limitations. Therefore, the only standard in determining whether

Case 4:06-cv-02056-CW Document 42 Filed 12/20/06 Page 9 of 11
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 10

Reynov should be granted leave to amend the complaint is that found

in Rule 15(a). See Besig v. Dolphin Boating & Swimming Club, 683

F.2d 1271, 1278 (9th Cir. 1982) ("The relation back theory applies

almost exclusively to avoid the statute of limitations."). 

The Court finds that the amendment to include Sparks as a

plaintiff has not been unduly delayed, nor is it made in bad faith,

an exercise in futility, or unduly prejudicial to Defendant. This

case is in the very early stages of discovery, and Defendant will

have an opportunity to challenge whether Sparks is an appropriate

named plaintiff and whether the newly added subclasses are

appropriately joined in this action when Reynov moves for class

certification. However, Sparks would not be properly joined in

this action if there is no commonality between his claims and

Reynov's because they were employed by different entities with

different practices and policies. Barefield v. Chevron U.S.A.,

Inc., 1987 U.S. Dist. LEXIS 15125, *10-11 (N.D. Cal. 1987).

Therefore, the Court grants Reynov's motion for leave to file an

amended complaint adding Sparks as a named plaintiff, provided he

can allege, consistent with the requirements of Rule 11, that

either or both ADP Claims Services Group, Inc. and Automatic Data

Processing, Inc. shared managerial practices or policies with ADP,

Inc.

CONCLUSION

For the foregoing reasons, the Court DENIES Defendants' motion

to dismiss (Docket No. 25) and GRANTS Plaintiff's motion for leave

to file an amended complaint (Docket No. 21). Plaintiff shall file

its amended complaint by January 16, 2007. If Plaintiff does so,

Case 4:06-cv-02056-CW Document 42 Filed 12/20/06 Page 10 of 11
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 11

the Court will vacate its current case management order and any

motion to dismiss will be filed by February 9, 2007, which will be

heard on March 16, 2007 at 10:00 AM. If Plaintiff elects not to

file an amended complaint, he will notify the Court and Defendant

promptly, and the case will proceed according to the dates in the

current case management order.

IT IS SO ORDERED.

12/20/06

Dated: ________________________ 

CLAUDIA WILKEN

United States District Judge

Case 4:06-cv-02056-CW Document 42 Filed 12/20/06 Page 11 of 11