Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_06-cv-02857/USCOURTS-cand-4_06-cv-02857-2/pdf.json

Parties Involved:
Beverly Gintz
Plaintiff
Jack in the Box
Defendant
Maria Macias
Plaintiff
Sherry Owen
Plaintiff

Document Text:

United States District Court

For the Northern District of California

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

BEVERLY GINTZ, SHERRY OWEN and

MARIA MACIAS, individually and on

behalf of all others similarly

situated,

Plaintiffs,

v.

JACK IN THE BOX, INC., and DOES 1

through 25, inclusive,

Defendant.

 /

No. C 06-02857 CW

ORDER GRANTING IN

PART DEFENDANT'S

MOTION TO STAY OR

DISMISS AND

DENYING IT IN

PART 

Defendant Jack In The Box, Inc. moves to stay or dismiss this

action pursuant to the Colorado River doctrine. Colorado River

Water Conservation Dist. v. United States, 424 U.S. 800, 818

(1976). Plaintiffs oppose the motion. The matter was decided on

the papers. The Court has considered all of the papers filed by

the parties. With respect to the California class, the Court

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grants Defendant's motion to stay the federal claims and grants its

motion to dismiss the State claims. With respect to the nationwide class, the Court denies Defendant's motion to stay or dismiss

the federal claims made on behalf of class members who worked at a

JIB outside of California.

BACKGROUND

On April 21, 2004, as a representative plaintiff, Beverly

Gintz filed a class action lawsuit against Defendant Jack In the

Box, Inc. (JIB) in Orange County Superior Court, Case No. 04CC00204

(State action). Gintz has amended that complaint twice since then. 

The second amended complaint (SAC) in State court asserts two

causes of action on behalf of a class of non-exempt employees who

worked the night shift in any JIB in California at any time since

January 1, 2001. The first cause of action alleges violation of

the California Labor Code §§ 226.7 and 512 for JIB's failure to

provide meal and rest periods. Freudenberger Dec., Ex. A, State

SAC ¶ 31-36. The second cause of action alleges violation of the

Unfair Competition Act, California Business & Professions Code 

§§ 17200-17208, for unfair business practices. State SAC ¶ 37-42. 

The common factual allegations in the complaint are that JIB

"failed to provide net ten minute rest periods for work shifts

exceeding four hours or a major fraction thereof . . . and/or

uninterrupted, unrestricted meal periods of not less than thirty

minutes for work shifts exceeding five hours to those non-exempt

restaurant employees within the class definition . . . thereby

enjoying a significant competitive edge over other corporations

within its industry." State SAC ¶ 24. Gintz also alleges that

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1

 Gintz filed a first amended complaint (FAC) in the instant

case on October 10, 2006 adding Sherry Owen and Maria Macias as

Representative Plaintiffs. Complaint ¶¶ 14; FAC ¶¶ 14. 

3

"upon termination or resignation of the employment of numerous

Class Members, JIB has declined to compensate these employees." 

Id. Gintz alleges that "as a direct and proximate result of

Defendant's unlawful conduct . . . the Representative Plaintiff and

members of the Plaintiff Class have sustained damages . . .

including a loss of compensation, in amounts to be established at

trial." Id. ¶ 30.

On January 26, 2006, the parties to the State court case

participated in a settlement negotiation with mediator Lynne Frank. 

That same day, the parties signed a Memorandum of Understanding

(MOU) agreeing to "a limited release by the class members of all

claims in the Second Amended Complaint . . . and a General Release

including a Section 1542 waiver by Plaintiff Gintz and specifically

including Plaintiff Gintz's retaliation claim." Freudenberger

Dec., Ex. B ¶ 10. JIB agreed to pay up to $5 million on a claimsmade basis with $1.25 million of that settlement amount to be paid

to Gintz's counsel and $20,000 paid as an enhancement to Gintz. 

Freudenberger Dec., Ex. B ¶¶ 1, 3, 11.

During Gintz's investigation of the State claims, it appeared

that JIB's unlawful policies and practices were "ubiquitous,

affecting employees throughout the United States, not just within

California." Charlton Dec. ¶ 4. On April 27, 2006, Gintz filed

the instant case against JIB asserting four causes of action.1

 The

first cause of action alleges, on behalf of a nation-wide class and

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a California class, violations of the Fair Labor Standards Act

(FLSA), 29 U.S.C. §§ 206-207, and/or the California Labor Code for

unlawful failure to pay wages due, based on being required to work

in excess of eight hours per day or forty hours per week and to

work through paid or unpaid meal and rest breaks. Complaint ¶ 35-

37. The second, third and fourth causes of action are asserted on

behalf of the California class only. The second cause of action

alleges failure to provide meal and rest periods in violation of

California Labor Code §§ 226.7 and 512, and §§ 11 and 12 of the

applicable Industrial Welfare Commission Wage Orders. Id. ¶ 42-45. 

The third cause of action asserts violations of California Labor

Code §§ 226 and 1174 for failure to provide accurate itemized wage

statements. Id. ¶ 48-51. The fourth cause of action asserts

violations of the California Business & Professions Code §§ 17200-

17208 for unfair business practices. Id. ¶ 55-58. 

The California class includes all non-exempt employees of JIB

working the night shift at any JIB in California, at any time since

April 27, 2002. Id. ¶ 22. The nation-wide class includes all nonexempt employees of JIB working the night shift at any JIB in the

United States, at any time since April 27, 2003. Id. 

The common factual allegations in the federal complaint are

that JIB "knowingly failed to pay all compensation" to members of

both the nation-wide and California classes by failing to pay

minimum wages and/or overtime wages due under State and federal

law. Complaint ¶ 25. Plaintiffs also allege that JIB "failed to

provide net ten minute rest periods for work shifts exceeding four

hours or a major fraction thereof . . . and/or uninterrupted,

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unrestricted meal periods of not less than thirty minutes for work

shifts exceeding five hours to the California Class Members" and

"JIB has thereby enjoyed a significant competitive edge over other

corporations within its industry." Id. Plaintiffs allege that

"upon termination or resignation of the employment of numerous

Class Members, JIB has declined to pay these wages, in blatant

violation of the law . . ." Id. ¶ 26. Plaintiffs also allege that

"as a direct and proximate result of JIB's unlawful conduct, as set

forth herein, the Representative Plaintiffs and Class Members have

sustained damages . . . including loss of earnings for unpaid

minimum wages and unpaid hours of overtime worked on behalf of

Defendant, in an amount to be established at trial." Id. ¶ 32.

After Plaintiffs filed the federal action, Defendant brought a

motion for summary judgment in the State action to enforce the MOU

and Gintz filed a motion to dismiss the State action, seeking to

proceed only with the federal action. On September 15, 2006, Judge

Stephen Sundvold of the Orange County Superior Court denied

Defendant's summary judgment motion on the ground that the MOU did

not contain the essential elements of a class action settlement. 

Charlton Dec., Ex. A, State Order at 1. Gintz's motion to dismiss

was also denied on the ground that allowing Plaintiff to proceed

only in her federal action, which covers a more limited time

period, would cause an abandonment of a large portion of the

putative class to which the State court and Gintz have a fiduciary

obligation. State Order at 2. Gintz then filed a motion for leave

to file a third amended complaint (TAC) in the State action to

limit the class period to January 1, 2001 to April 27, 2002, the

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time period immediately preceding the class period for the

California class in the federal action. Charlton Dec., Ex. B,

State TAC ¶ 21. Her motion was denied at a hearing before Judge

Sundvold on October 27, 2006. In the court's tentative ruling,

which was later adopted at the hearing, Judge Sundvold stated that

granting the motion would "lead to multiple lawsuits with regard to

the same claims" in federal and State court and "[d]ismissing the

redundant causes of action in the federal action would solve the

problems of the duplicate causes of action." Defendant's Notice of

Ruling on Plaintiff's Motion to Amend Complaint in Parallel Action,

Ex. A at 2.

DISCUSSION

I. Motion to Stay or Dismiss Action under the Colorado River

Doctrine

In situations involving the contemporaneous exercise of

jurisdiction by different courts over sufficiently parallel

actions, a federal court has discretion to stay or dismiss an

action based on considerations of wise judicial administration,

giving regard to conservation of judicial resources and

comprehensive disposition of litigation. 424 U.S. at 817. The two

actions need not exactly parallel each other to invoke the Colorado

River doctrine; it is enough that the two cases are substantially

similar. Nakash v. Marciano, 882 F.2d 1411, 1416 (9th Cir. 1989). 

The mere presence of additional parties or issues in one of the

cases will not necessarily preclude a finding that they are

parallel. Caminiti & Iatarola, Ltd. v. Behnke Warehousing, Inc.,

962 F.2d 698, 700-701 (7th Cir. 1992); see also Interstate Material

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Corp. v. City of Chicago, 847 F.2d 1285, 1288 (7th Cir. 1988)

(noting that the requirement is for parallel suits, not identical

ones). 

The federal district courts have a "virtually unflagging

obligation" to exercise their jurisdiction, Moses H. Cone Hospital

v. Mercury Constr. Corp., 460 U.S. 1, 19 (1983), and should only

invoke a stay or dismissal under the Colorado River doctrine in

"exceptional circumstances." Colorado River, 424 U.S. at 817. In

Colorado River, the Supreme Court announced a balancing test

weighing four factors to determine whether sufficiently exceptional

circumstances exist: (1) whether either court has assumed

jurisdiction over property in dispute; (2) the relative convenience

of the forums; (3) the desirability of avoiding piecemeal

litigation; and (4) the order in which the concurrent forums

obtained jurisdiction. 424 U.S. at 818. The Court stated: "No one

factor is necessarily determinative; a carefully considered

judgment taking into account both the obligation to exercise

jurisdiction and the combination of factors counseling against that

exercise is required." Id. at 818-19. 

Subsequently, in Moses H. Cone, the Supreme Court added two

more factors: whether State or federal law provides the rule of

decision on the merits, and whether the State proceeding is

adequate to protect the parties' rights. 460 U.S. at 23, 26. The

Court stated that the decision to defer to a parallel action does

not rest on a mechanical checklist, but on a careful balancing of

the important factors as they apply in a given case. Id. at 16. 

The weight to be given to any one factor may vary greatly from case

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to case, depending on the particular setting of the case. Id. The

decision whether to stay an action is necessarily left to the

discretion of the district court in the first instance. Id. at 19.

A court may also consider whether the federal plaintiff is

engaged in “forum shopping” or seeking to avoid adverse State court

rulings. Nakash, 882 F.2d at 1417. 

In some circumstances, a stay may be preferable to a dismissal

because it "ensures that the federal forum will remain open if 'for

some unexpected reason the State forum does not turn out to be

adequate.'" Attwood v. Mendocino Coast Dist. Hospital, 886 F.2d

241, 243 (9th Cir. 1989) (quoting Moses H. Cone, 460 U.S. at 28).

A. Substantially Similar Cases

Plaintiffs contend that the State proceeding is not

substantially similar to the instant case because the cases cover

different claims and different class periods, and involve two

different Representative Plaintiffs and different class members.

In Nakash, the State and federal actions were substantially

similar because, even though the claims and parties were different, 

all of the disputes concerned the same factual issue of how the

parties conducted themselves after the sale of a family business

and the parties in both actions were all related to the

transaction. 882 F.2d at 1416. 

Although the federal action cites violations of statutes not

included in the State action, both actions allege the same factual

conditions and all of the claims involve the central factual issue

of whether or not JIB denied meal and rest period breaks to nonexempt night shift workers, resulting in damages for work that was

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performed "off the clock." 

The class periods for the California class in the State and

federal actions overlap. In the State action, Plaintiff Gintz

filed a motion for leave to file a TAC to avoid this duplication by

alleging a California class period from January 1, 2001 to April

27, 2002, which would precede the California class period in the

federal action, beginning on April 27, 2002. As noted above, that

motion was denied on October 27, 2006.

Plaintiffs also assert that the suits are brought by different

plaintiffs and different class members. This argument is

unavailing because the Colorado River doctrine does not require

parties in both actions to be identical. Nakash, 882 F.2d at 1416. 

Gintz is a representative plaintiff in both actions and the

addition of Macias and Owen as Representative Plaintiffs in the

federal action does not change the identity of the California class

members represented. Both actions represent non-exempt, night

shift workers at JIB. The only difference between the classes in

the State and federal actions is that the federal action includes a

nation-wide class which consists of workers throughout the United

States including California, as well as a California class. 

Because the State action class period overlaps with the class

period in the federal action, California non-exempt night-shift

workers who worked at JIB on or after April 27, 2002 are

represented in both actions.

For the above-mentioned reasons, the Court finds that the

cases are substantially similar, at least with respect to the

California class, and considers the Colorado River doctrine.

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B. Balance of Relevant Factors

1. Jurisdiction Over Property and Convenience of

Forums.

Citing Kelley Investment v. Continental Common Corp., 315 F.3d

494, 498 (5th Cir. 2002), Plaintiffs argue that the facts that

there is no jurisdiction over property in this case and that either

forum is equally convenient weigh in favor of allowing this case to

proceed.

However, in Nakash, the court held that when "there is no res

in the control of either court and the forums are equally

convenient" those factors become irrelevant to the analysis. 882

F.2d at 1415, 1415 n.6. Therefore, these factors will not be

weighed in the Colorado River doctrine balancing test.

2. Desirability of avoiding piecemeal litigation.

As stated above, the concurrent State and federal jurisdiction

over the claims set forth in the State action will result in

piecemeal litigation, at least with respect to the California

class. Although the State action does not include federal and

State minimum wage and hour claims or State claims for failure to

provide accurate itemized wage statements on behalf of the

California class, Plaintiffs have failed to explain why those

claims cannot be added to the State action, at least on behalf of

the California class. The California claims can be brought in a

California court and the federal courts do not have exclusive

jurisdiction over FLSA claims. See 29 U.S.C. §216(b) (actions for

violations of section 206 and 207 may be brought against an

employer in any federal or State court). By failing to bring all

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of her claims in her State court litigation, Plaintiff Gintz's

actions create the kind of piecemeal litigation that the Colorado

River doctrine was developed to prevent. Therefore, this factor

weighs in favor of staying or dismissing this action at least with

respect to the California class.

3. Order in which the concurrent forums obtained

jurisdiction.

Plaintiffs rely on Moses H. Cone for the proposition that the

court must consider "how much progress has been made in the two

actions" when weighing the desirability of avoiding piecemeal

litigation. 460 U.S. at 21. Plaintiffs argue that the parties in

the State action have made very little progress because no

depositions have been taken and no class has been certified. 

The State action was filed approximately two years prior to

the filing of the federal action. The State court has ruled on

"substantive matters and discovery matters" and the case was close

to settlement in January, 2006. Freudenberger Dec. ¶¶ 2, 5. The

federal action has merely proceeded to this motion. Because the

State court action was filed two years prior to the federal action

and little progress has been made in the federal action, this

factor weighs in favor of staying or dismissing the State law

claims made on behalf of the California class. This factor does

not weigh in favor of staying or dismissing the federal claims made

on behalf of the nation-wide class members who are not concurrently

represented by the California class because they are not parties to

the State action and that action does not include federal minimum

wage and hour claims.

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2 California State law requires compensation of one and onehalf times an employee's regular rate of pay for work in excess of

eight hours a day or forty hours a week, whereas federal law only

requires compensation for work in excess of forty hours per week. 

California Labor Code § 510; 29 U.S.C. § 207(a)(1). The California

minimum wage, effective January 1, 2002, is $6.75 per hour, whereas

the federal minimum wage, effective September 1, 1997, is $5.15 per

hour. California Labor Code § 1194; 29 U.S.C. § 206(a)(1).

12

4. Whether State or federal law provides the rule of

decision on the merits.

Plaintiffs argue that, although State law provides the rule of

decision in the California claims and federal law provides the rule

of decision in the federal claims, "the presence of a federal law

issue must always be a major consideration weighing against

surrender of jurisdiction." Moses H. Cone, 460 U.S. at 26. 

Because both federal and California law apply to the first

cause of action in the instant case, but California law is

controlling in each of the remaining three causes of action,

federal law plays a lesser role in this case. This factor weighs

in favor of dismissing the State law claims made on behalf of the

California class, allowing the State court to make decisions as to

the proper application of State law. 

The California minimum wage and hour laws are more beneficial

to the California class than the federal minimum wage and hour laws

because the State requirements are inclusive of, but more stringent

than, the federal requirements and the State minimum wage is higher

than the federal minimum wage.2 This factor weighs in favor of

granting a stay of the federal claims of the California class to

allow the State court to proceed to a decision on the State court

claims which will likely cause the federal claims to become moot.

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 Because nation-wide class members who worked at JIB outside

of California are not protected by the more beneficial California

State laws, a decision on the State minimum wage and hour claims by

the State court will not resolve the federal claims of those

members of the nation-wide class. Therefore, this factor weighs in

favor of allowing those claims to proceed in this Court, as long as

Plaintiffs do not wish to bring them in the State action.

5. Whether the State proceeding is adequate to protect

the parties' rights.

Plaintiffs argue that the State proceeding is not adequate to

protect the rights of the parties because the federal law claims

will not be addressed in the State court proceeding and that this

Court should not stay the action because there is "substantial

doubt as to whether the State proceedings will resolve the federal

action." Intel Corporation v. Advanced Micro Devices, 12 F.3d 908,

913 (9th Cir. 1993).

Because the State law claims could be brought in the State

action and the determinative factual issues are the same in both

cases, the State court can adequately protect the parties' rights

as to those claims. Although Plaintiffs have not added all of

their State claims to the State action, it would appear that they

could do so. A dismissal of these claims in the federal action

would allow the State court the opportunity to make decisions as to

the proper application of its own laws. 

Because, as noted above, the California minimum wage and hour

laws are more beneficial to the California class than the federal

laws, this factor weighs in favor of a stay of the federal minimum

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wage and hour claims of the California class until resolution of

the State action. As stated above, a decision in the State court

will likely cause the federal claims of the California class to

become moot.

A stay or dismissal of the federal claims on behalf of members

of the nation-wide class who worked at a JIB outside of California

is not appropriate because they are not included in the State

action. This factor weighs in favor of allowing these federal

claims to proceed.

6. Forum Shopping

On December 23, 2005, JIB's counsel and Gintz's counsel were

before Judge Sundvold for a fairness hearing in an unrelated class

action. Freudenberger Dec. ¶ 6. At the hearing, Judge Sundvold

reduced the agreed-upon enhancement for the named plaintiff from

$10,000 to $1,500 and reduced the attorneys' fees for the

plaintiff's counsel from $116,666.00 to $60,000. Freudenberger

Dec. ¶ 6; Freudenberger Dec., Ex. C, State Court Order Re: Final

Approval of Class Action Settlement and Final Judgment Thereon at

4.

Defendant argues that Plaintiffs filed the federal action to

avoid adverse rulings in the State court, citing the abovementioned decision by Judge Sundvold. Plaintiffs deny forum

shopping.

Because Plaintiffs have failed to provide a reason why all of

their claims were not brought in State court, an inference could be

drawn that the adverse ruling in the unrelated case instigated

Plaintiffs' decision to file the federal action. Without deciding

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whether Plaintiffs are indeed forum shopping, the Court finds that

allowing a substantially similar federal action to proceed would

likely encourage forum shopping. Therefore, this factor weighs in

favor of granting a stay or dismissal in this case.

7. Summary

All of the relevant factors weigh in favor of dismissing the

State claims and staying the federal claims made on behalf of the

California class. The majority of relevant factors weigh in favor

of allowing the federal claims made by members of the nation-wide

class who worked at JIBs outside of California to proceed, if

Plaintiffs can represent that class. 

Within thirty days after resolution of the State action, if

there are issues that must be resolved regarding the federal claims

made by the California class, Plaintiffs may move to lift the stay

and proceed with the remaining issues.

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CONCLUSION

For the foregoing reasons, Defendant's motion to dismiss the

California claims is granted. Defendant's motion to stay the

federal claims made on behalf of California class members is

granted. Defendant's motion to stay or dismiss the federal claims

made on behalf of members of the nation-wide class who worked

outside of California is denied. A case management conference will

be held on January 26, 2007 at 1:30 p.m. 

IT IS SO ORDERED.

Dated: 11/28/06 

CLAUDIA WILKEN

United States District Judge

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