Zounds Hearing Franchising LLC et al v. Bower et al

Filing 23

ORDER granting Defendants' (16) Motion to Consolidate Cases. Case CV-16-01462-PHX-NVW is now consolidated with cases CV-16-01465-PHX-SRB, CV-01467-PHX-NVW, and CV-16-01470-DLR for all further proceedings pursuant to Federal Rule of Civil Proce dure 42(a)(2). In accordance with LRCiv 42.1, all pleadings shall be filed in the lower numbered case. Therefore, future pleadings pertaining to any of these actions shall be filed in CV-16-01462-PHX-NVW and all cases are now assigned to the undersigned. (See document for details.) Signed by Judge Neil V Wake on 06/30/2016. (Associated Cases: 2:16-cv-01462-NVW, 2:16-cv-01465-SRB, 2:16-cv-01467-NVW, 2:16-cv-01470-DLR) (ATD)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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Zounds Hearing Franchising, LLC, an Arizona
limited liability company; and Zounds Hearing
Inc., a Delaware corporation,
Plaintiffs,

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No. CV-16-01462-PHX-NVW
(Consolidated)
ORDER
[Re: No. CV-16-01462-PHX-NVW]

v.
Edward T. Bower and Barbara Bower, husband
and wife; and Lend Me Your Ears, Inc., an Ohio
corporation;

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Defendants.

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Zounds Hearing Franchising, LLC, an Arizona
limited liability company; and Zounds Hearing
Inc., a Delaware corporation,

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Plaintiffs,

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v.

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Frank R. Graziano and Mary E. Graziano,
husband and wife; and FNM Enterprises, Inc., an
Ohio corporation,

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Defendants.

No. CV-16-01465-PHX-SRB

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Zounds Hearing Franchising, LLC, an Arizona
limited liability company; and Zounds Hearing
Inc., a Delaware corporation,

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No. CV-16-01467-PHX-NVW

Plaintiffs,

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v.
Glenn Harbold, an individual; and Perfect Clarity
LLC, an Ohio limited liability company,

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Defendants.

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Zounds Hearing Franchising, LLC, an Arizona
limited liability company; and Zounds Hearing
Inc., a Delaware corporation,

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No. CV-16-01470-PHX-DLR

Plaintiffs,

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v.

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Lawrence R. Woerner and Nancy Woerner,
husband and wife; Susan Steigerwald and David
Steigerwald, husband and wife; Lawrence W.
Woerner and Rosemarie Woerner, husband and
wife; and WOCO Franchise LLC, an Ohio
limited liability company,

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Defendants.

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Before the Court is Defendants’ Motion to Consolidate the four cases captioned
above. (Doc. 16.) For the reasons that follow, the Motion will be granted.
I.

BACKGROUND
Zounds Hearing, Inc. supplies Zounds-brand hearing aid devices. Zounds Hearing

Franchising, LLC allows franchisees to operate hearing aid centers under the Zounds
trade name. Both companies identify Arizona as their principal place of business. They
will be individually and collectively referred to as “Zounds.”
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Zounds entered into franchise agreements with four Ohio companies and their

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owners: (1) Lend Me Your Ears, Inc., owned by Edward T. Bower and Barbara Bower,

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(2) FNM Enterprises, Inc., owned by Frank R. Graziano and Mary E. Graziano, (3)

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Perfect Clarity, LLC, owned by Glenn Harbold, and (4) WOCO Franchise, LLC, owned

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by Lawrence R. Woerner, Susan Steigerwald, and Lawrence W. Woerner.

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agreement allows the respective franchisee to operate hearing aid centers in Ohio under

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the Zounds trade name.

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Each

On May 11, 2016, the franchisees jointly brought a lawsuit against Zounds and
other parties in Ohio state court.

Edward T. Bower, et al. v. Zounds Hearing

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Franchising, LLC, et al., Cuyahoga C.P. CV-16-863098. The lawsuit alleges, among

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other things, that Zounds violated Ohio law by failing to disclose certain information

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relevant to the franchise agreements. Accordingly, the franchisees seek to rescind the

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agreements and recover damages.

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On May 12, Zounds responded to the Ohio lawsuit by filing four separate actions

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in this Court, captioned above. Each action corresponds to one of the four franchise

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agreements. All four actions rely on a clause present in all the agreements. The clause,

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according to Zounds, requires the franchisees to mediate their dispute with Zounds in

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Arizona before bringing a lawsuit. Accordingly, Zounds asks this Court for a judgment

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(1) declaring that mediation in Arizona is a condition precedent to the Ohio lawsuit and

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(2) staying or dismissing the Ohio lawsuit until such mediation occurs.

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The franchisees move to consolidate the four actions filed by Zounds pursuant to

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Federal Rule of Civil Procedure 42(a). (Doc. 16.) Zounds opposes consolidation but

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does not object to the actions being decided by the same judge. (Doc. 18.)

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II.

ANALYSIS

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Rule 42(a) authorizes the Court to consolidate actions that “involve a common

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question of law or fact.” Fed. R. Civ. P. 42(a). The Court has “broad discretion under

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this rule to consolidate cases pending in the same district.” Inv’rs Research Co. v. U.S.

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Dist. Court for Cent. Dist. of California, 877 F.2d 777, 777 (9th Cir. 1989).
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In

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determining whether to consolidate, the Court “weighs the saving of time and effort

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consolidation would produce against any inconvenience, delay, or expense that it would

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cause.” Huene v. United States, 743 F.2d 703, 704 (9th Cir. 1984).

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Here, consolidation is appropriate.

All four actions filed by Zounds share a

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common factual background. In each, Zounds seeks declaratory judgment with respect to

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franchisees who sued Zounds for failing to make disclosures required by Ohio law.

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In addition, all four actions present the same legal issue: whether the mediation

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clause in the franchise agreements requires the franchisees to mediate in Arizona before

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initiating litigation. Moreover, the franchisees intend to move to dismiss all four actions

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based on another common legal issue: whether the mediation clause should be interpreted

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by the Ohio court instead of this Court because the Ohio lawsuit was filed first. Thus,

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consolidating these actions would benefit the Court as well as the parties, without causing

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any undue inconvenience, delay, or expense.

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Zounds opposes consolidation for two reasons. First, Zounds says the parties
agreed not to consolidate, by way of a clause in the franchise agreements:
THE PARTIES AGREE THAT . . . ANY PROCEEDING BETWEEN
FRANCHISEE, FRANCHISEE’S GUARANTORS AND FRANCHISOR
OR ITS AFFILIATES/OFFICERS/EMPLOYEES MAY NOT BE
CONSOLIDATED WITH ANY OTHER PROCEEDING BETWEEN
FRANCHISOR AND ANY OTHER THIRD PARTY.
But the Court’s power to consolidate actions under Rule 42(a) depends on considerations
of efficiency, not the parties’ positions on the matter. Indeed, even if all parties opposed
consolidation, the Court could do it anyway. See In re Air Crash Disaster at Florida
Everglades, 549 F.2d 1006, 1013 (5th Cir. 1977) (“A court may order the consolidation
of cases despite the opposition of the parties.”); Midwest Cmty. Council, Inc. v. Chicago
Park Dist., 98 F.R.D. 491, 500 (N.D. Ill. 1983) (“The fact that one or all of the parties
object, or that the issue of consolidation is raised by the court sua sponte, is not
dispositive.”); accord In re Adams Apple, Inc., 829 F.2d 1484, 1487 (9th Cir. 1987)
(noting “trial courts may consolidate cases sua sponte”).

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Second, Zounds says consolidation would be prejudicial because the franchisees’

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claims in the Ohio lawsuit do not all arise out of the same factual situation. But that is

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irrelevant. The question is whether there is enough commonality among the actions in

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this Court to merit consolidation. As explained, the actions in this Court raise identical

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legal issues in materially identical factual contexts. Thus, consolidation is warranted.

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IT IS THEREFORE ORDERED that Defendants’ Motion to Consolidate (Doc.
16) is granted.

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IT IS FURTHER ORDERED that case CV-16-01462-PHX-NVW is now

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consolidated with cases CV-16-01465-PHX-SRB, CV-01467-PHX-NVW, and CV-16-

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01470-DLR for all further proceedings pursuant to Federal Rule of Civil Procedure

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42(a)(2). In accordance with LRCiv 42.1, all pleadings shall be filed in the lower-

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numbered case. Therefore, future pleadings pertaining to any of these actions shall be

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filed in CV-16-01462-PHX-NVW and all cases are now assigned to the undersigned.

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Every document filed shall state the case or cases to which it pertains as set forth in

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Attachment “A”. The title page of these documents shall be prepared as shown above.

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Any documents for filing that do not conform to these instructions may be stricken.

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Dated this 30th day of June, 2016.

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Neil V. Wake
United States District
Judge

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ATTACHMENT “A”

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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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Zounds Hearing Franchising, LLC, an Arizona
limited liability company; and Zounds Hearing
Inc., a Delaware corporation,

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No. CV-16-01462-PHX-NVW
(Consolidated)
TITLE OF FILING

Plaintiffs,

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[Re: No. CV-XX-XXXXX-PHXNVW]

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v.

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Edward T. Bower and Barbara Bower, husband
and wife; and Lend Me Your Ears, Inc., an Ohio
corporation;

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Defendants.

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Zounds Hearing Franchising, LLC, an Arizona
limited liability company; and Zounds Hearing
Inc., a Delaware corporation,

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Plaintiffs,

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v.
Frank R. Graziano and Mary E. Graziano,
husband and wife; and FNM Enterprises, Inc., an
Ohio corporation,
Defendants.

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No. CV-16-01465-PHX-SRB

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2
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Zounds Hearing Franchising, LLC, an Arizona
limited liability company; and Zounds Hearing
Inc., a Delaware corporation,

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No. CV-16-01467-PHX-NVW

Plaintiffs,

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7

v.
Glenn Harbold, an individual; and Perfect Clarity
LLC, an Ohio limited liability company,

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Defendants.

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Zounds Hearing Franchising, LLC, an Arizona
limited liability company; and Zounds Hearing
Inc., a Delaware corporation,

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Plaintiffs,

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15

v.

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Lawrence R. Woerner and Nancy Woerner,
husband and wife; Susan Steigerwald and David
Steigerwald, husband and wife; Lawrence W.
Woerner and Rosemarie Woerner, husband and
wife; and WOCO Franchise LLC, an Ohio
limited liability company,

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Defendants.

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No. CV-16-01470-PHX-DLR