Sliger et al v. Prospect Mortgage, LLC et al

Filing 157

ORDER signed by Judge Lawrence K. Karlton on 11/29/12 DECLINING to enter 155 Stipulation and Proposed Order filed by Prospect Mortgage, LLC. (Meuleman, A)

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UNITED STATES DISTRICT COURT
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FOR THE EASTERN DISTRICT OF CALIFORNIA
9
10 ELIZABETH SLIGER, CAROL
DION and SCOTT AVILA,
11 individually, on behalf
of others similarly situated,
12 and on behalf of the general
public,
13
Plaintiffs,
14
v.
15
PROSPECT MORTGAGE, LLC, and
16 DOES 1 through 50, inclusive,
17

NO. CIV. S-11-465 LKK/EFB

O R D E R

Defendants.
/

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19

Presently before the court is the parties’ joint stipulation

20 to decertify the collective action herein. The court declines to
21 enter the parties’ proposed order for the reasons set forth below.
22 I. Procedural Background
23

On October 18, 2010, plaintiffs Elizabeth Sliger,1 Carol Dion,

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25
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Sliger was dismissed without prejudice as a named plaintiff
by order dated November 2, 2011. (ECF No. 80.) Dion and Avila
remain as named plaintiffs and class representatives.
1

1 and

Scott

2 collective

Avila
action

filed

the

against

instant
defendant

wage

and

hour

Prospect

class

Mortgage,

and
LLC.

3 Plaintiffs were formerly employed as loan officers by Prospect.
4

In

their

First

Amended

Complaint

(“FAC,”

ECF

No.

25),

5 plaintiffs pleaded two causes of action under the federal Fair
6 Labor Standards Act, 29 U.S.C. § 201, et seq. (“FLSA”): 1) failure
7 to pay overtime and 2) failure to pay minimum wage. They also
8 pleaded six causes of action under California law: 1) failure to
9 pay overtime; 2) failure to pay minimum wage; 3) waiting time
10 penalties;

4)

failure

to

provide

itemized

wage

statements;

11 5) failure to provide and/or authorize meal and rest periods; and
12 6) violations of the unfair competition law.
13

On June 28, 2011, plaintiffs filed a motion for conditional

14 certification of the case as a collective action under FLSA, 29
15 U.S.C. § 216(b). (ECF No. 58.) After hearing oral argument, the
16 court granted plaintiffs’ motion, and directed the parties to file
17 a joint proposal for notice to the collective. (ECF No. 71.) On
18 October 13, 2011, the court entered its order approving the
19 parties’ proposed procedure for notice and the form of notice. (ECF
20 No. 77.) According to the parties, approximately 595 individuals
21 have subsequently opted in to the collective as plaintiffs. (ECF
22 No. 155.)
23

The parties now wish to decertify the case as a collective

24 action. Their stipulation (ECF No. 155) recites the following
25 facts:
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•

Over the past year, the parties have conducted written
2

1
2

discovery and taken a number of depositions.
•

Despite

two

3

mediation,

4

settlement

•

6
7

parties

have

been

and

a

unable

day-long

settlement.

5

the

conferences

to

reach

Defendant has notified plaintiffs that it intends to file
a motion to decertify the collective action.

•

The parties wish to avoid the “cost and expense of

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discovery and motion practice associated with a motion to

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decertify [and therefore] stipulate that this matter

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should no longer proceed as a collective action under 29

11

U.S.C.

12

plaintiffs, who so choose, may pursue their individual

13

claims in other forums.”

14

•

15

§

216(b)

and

that

the

individual

opt-in

The remaining named plaintiffs, Avila and Dion, will
continue to proceed individually in this action.

16 II. Analysis of the Proposed Order
17

The terms of the proposed order submitted to the court are

18 discussed in turn below.
19

A. Decertification

20

The

proposed

order

provides:

“(1)

The

collective

action

21 previously conditionally certified on August 24, 2011...is hereby
22 decertified and this case shall no longer proceed as a collective
23 action under 29 U.S.C. § 216(b).”
24

The court has no objection to entering such an order on the

25 parties’ stipulation.
26 ////
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B. Dismissal of opt-in plaintiffs without prejudice

2

The proposed order also provides: “(2) All opt-in plaintiffs

3 (other than the named Plaintiffs Carol Dion and Scott Avila) who
4 have filed consent forms in this action are hereby dismissed
5 without prejudice so that those who so choose may refile their
6 individual claims in other forums.”
7

Again, the court has no objection to entering such an order on

8 the parties’ stipulation.
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C. Tolling of statute of limitations
The

proposed

order

then

provides:

“(3)

The

statute

of

11 limitations on the opt-in plaintiffs’ individual claims alleged in
12 this lawsuit, including California state law claims for opt-in
13 plaintiffs who worked in California, is hereby tolled for ninety
14 (90) days from the date of this Order to allow those opt-in
15 plaintiffs, who so choose, to refile their individual claims in
16 other forums.”
17

The court declines to enter such an order. The statute of

18 limitations

for

collective

actions

under

29

U.S.C.

§

216(b)

19 operates quite differently from that for class actions certified
20 under Fed. R. Civ. P. 23:
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Unlike Rule 23 class actions in which the statute of
limitations will be tolled for all class members until
the class-certification decision has been made, or until
an individual class member opts out, the statute of
limitations for a plaintiff in a collective action will
be tolled only after the plaintiff has filed a consent to
opt in to the collective action. Like class suits,
however, the statute of limitations for opt-in plaintiffs
will begin to run again if the court later decertifies
the collective action.

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1 7B Charles Alan Wright & Arthur Miller, Federal Practice and
2 Procedure § 1807 (3d ed. 2012). In other words, the statute of
3 limitations is tolled for a shorter period for plaintiffs who opt
4 in to a collective action than it would be if their claims were
5 brought as part of a federal class action. Upon decertification of
6 the collective, therefore, it is critical to preserve opt-in
7 plaintiffs’ ability to timely file individual actions.
8

Defendant Prospect previously filed a declaration by Kevin

9 Tackaberry, its Chief Human Capital Officer, which provided that
10 the firm has 160 offices in 27 states. (ECF No. 65-3.) The court is
11 reluctant to enter an order that would presume to equitably toll
12 the applicable statute of limitations in state and federal courts
13 in so many jurisdictions.2
The question of whether a court should exercise its equitable

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15 powers to toll the statute of limitations calls for nuanced
16 inquiry, not mechanical application of another court’s order. See,
17 e.g., Lantzy v. Centex Homes, 73 P.3d 517, 523 (Cal. 2003) (“This
18 court

has

applied

equitable

tolling

in

carefully

considered

19 situations”); Cada v. Baxter Healthcare Corp., 920 F.2d 446, 452
20 (7th Cir. 1990) (“We do not think equitable tolling should bring
21 about an automatic extension of the statute of limitations by the
22 length of the tolling period or any other definite term. It is,
23 after all, an equitable doctrine”); Hooper v. Ebenezer Sr. Services
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2

29 U.S.C. § 216(b) provides that “[a]n action to recover
... may be maintained ... in any Federal or State court of
competent jurisdiction....”
5

1 and

Rehabilitation

Center,

687

S.E.2d

29,

33

(S.C.

2009)

2 (“Equitable tolling may be applied where it is justified under all
3 the circumstances”).
4

It is admittedly common for federal district courts to toll

5 the statute of limitations for individual actions in granting
6 decertification motions in collective actions under FLSA. See,
7 e.g., Beauperthuy v. 24 Hour Fitness USA, Inc., 772 F.Supp.2d 1111,
8 1134 (N.D.Cal. 2011) (“To avoid prejudice to individual opt-in
9 Plaintiffs who may choose to file their own cases, the Court
10 invokes its equity powers to toll the applicable statutes of
11 limitations for 30 days after the entry of this Order”); Proctor v.
12 Allsups Convenience Stores, Inc., 250 F.R.D. 278, 284 (N.D.Tex.
13 2008) (tolling statute of limitations for opt-in plaintiffs for 30
14 days); Ulvin v. Northwestern Nat. Life Ins. Co., 141 F.R.D. 130
15 (D.Minn. 1991) (“The claims of the thirty opt-ins are DISMISSED
16 with leave to file individual claims within sixty days of entry of
17 this order”).
18

Moreover, the court is of the view that the opt-in plaintiffs

19 ought to have a reasonable period of time to file their individual
20 lawsuits after they receive notice of decertification.
21

But rather than achieving this goal through court order, the

22 better approach would be for defendant Prospect to stipulate that,
23 in the event that it raises the statute of limitations in an action
24 brought by one of the opt-in plaintiffs, it will agree to extend
25 any limitations period it asserts by 90 days.
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Accordingly, the court declines to enter the proposed order.
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D. Restrictions on seeking class or collective relief

2

The

proposed

order

goes

on

to

provide:

“(4)

No

opt-in

3 plaintiff who chooses to file his/her individual claims in another
4 forum may file any claims on behalf of a proposed collective or
5 proposed class, but rather all opt-in plaintiffs who choose to file
6 individual

claims

in

other

forums

may

do

so

on

behalf

of

7 himself/herself and not on behalf of any proposed collective or
8 class.”
9

It would be entirely inappropriate for the court to enter such

10 an order. According to the parties’ July 1, 2011 joint status
11 report, “Plaintiffs bring their federal claims as a collective
12 action under the FLSA, 29 U.S.C. § 216(b), and they bring their
13 state claims as a class action under Fed. R. Civ. P. 23.” (ECF
14 No. 59.) The report adds: “If the Court conditionally certifies
15 this action as a collective action, Plaintiffs anticipate that
16 other current and former loan officers will join the action
17 pursuant to 29 U.S.C. § 216(b). Plaintiffs also anticipate filing
18 a motion for class certification of their state law claims.” (Id.)
19 The

parties’

subsequent

filings

indicate

no

change

in

this

20 position.
21

The court conditionally certified the § 216(b) collective

22 action on August 24, 2011. (ECF No. 71.) Plaintiffs have not yet
23 moved for class certification on their state law claims. The law
24 and motion deadline in this matter is February 22, 2013. (ECF
25 No. 149.)
26

The central inquiry in considering a motion to decertify a
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1 collective

action

is

whether

the

plaintiffs

are

“similarly

2 situated.” Leuthold v. Destination America, Inc., 224 F.R.D. 462,
3 467 (N.D.Cal. 2004) (V.Walker, J.). To make this determination, the
4 court examines the complete factual record, and evaluates the
5 record in light of “(1) the disparate factual and employment
6 settings of the individual plaintiffs; (2) the various defenses
7 available

to

the

defendants

with

respect

to

the

individual

8 plaintiffs; and (3) fairness and procedural considerations.” Id.
9

If the court were to decertify based on defendant’s motion,

10 its

decision

11 submitted

by

would
the

be

based

parties,

on

the

the

complete

parties’

factual

arguments,

record

and

the

12 applicable law. As a decision on the merits, such an order would
13 likely preclude other courts from certifying a FLSA collective
14 action brought by opt-in plaintiffs against defendant.3
By contrast, decertification based on the parties’ stipulation

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16 forestalls determination of the merits of allowing plaintiffs to
17 proceed as a FLSA collective. “Judicial actions must achieve a
18 basic

minimum

quality

to

become

eligible

for

res

judicata

19 effects.... The traditional words used to describe this quality
20 require that there be a judgment that is valid, final, and on the
21 merits.” 18A Charles Alan Wright & Arthur Miller, Federal Practice
22 and Procedure § 4427 (2d ed. 2012). Some judicial resolution of
23 ////
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As for those individuals who did not opt in, the Ninth
Circuit has made clear that “non-parties to a collective action are
not subject to claim preclusion.” McElmurry v. U.S. Bank Nat.
Ass'n, 495 F.3d 1136, 1139 (9th Cir. 2007).
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1 disputed matters is necessary for a judgment to be res judicata.4
2 See id. at § 4443 (“To the extent that individual issues or entire
3 judgments rest on admission or consent, however, a major element of
4 preclusion is missing.”). If the court were to merely enter an
5 order that precluded the opt-in plaintiffs from seeking collective
6 relief elsewhere, without making a determination as to the merits,
7 other courts would likely be forced to interpret the validity of
8 this

court’s

order,

thereby

raising

a

significant

risk

of

9 inconsistent determinations.
10

These

difficulties

are

exacerbated

when

considering

11 plaintiffs’ state law claims. The FLSA causes of action received
12 some airing when plaintiffs moved for, and the court granted,
13 conditional certification of the collective action. But plaintiffs
14 have not sought class certification on their state law causes of
15 action. Without any consideration of the merits, it is questionable
16 whether

the

court’s

order

could

be

enforced

to

bar

class

17 certification in other forums. To terminate plaintiffs’ rights to
18 seek class relief in any state or federal forum based solely on the
19 parties’ stipulation seems like a gross overreach.
20

Not having had the opportunity to consider the merits of the

21 opt-in plaintiffs’ claims, the court declines to terminate their
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4

Wright & Miller use the term “res judicata” to encompass the
dual doctrines of issue and claim preclusion. See id. at § 4402
(“Although the time has not yet come when courts can be forced into
a single vocabulary, substantial progress has been made toward a
convention that the broad ‘res judicata’ phrase refers to the
distinctive effects of a judgment separately characterized as
‘claim preclusion’ and ‘issue preclusion.’”).
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1 ability to seek class or collective relief in another proceeding.
2

E. Named plaintiffs shall proceed individually

3

The proposed order next provides: “(5) The named Plaintiffs,

4 Scott Avila and Carol Dion, will continue to proceed individually
5 without any tolling in this Court on the schedule set forth in the
6 Court’s latest scheduling order.”
7

This is a standard provision in orders decertifying collective

8 actions. See, e.g., Proctor, 250 F.R.D. at 284 (“The claims of
9 Plaintiffs Lesa Proctor and Duncan Proctor remain pending herein
10 for trial.”). Accordingly, the court has no objection to entering
11 such an order on the parties’ stipulation.
12

F. Joinder

13

The proposed order finally provides: “(6) Nothing in this

14 Order shall preclude any opt-in plaintiffs from seeking non15 class/non-collective joinder in another forum pursuant to Federal
16 Rule of Civil Procedure or any other applicable Federal Rule of
17 Civil Procedure or Local Rule governing joinder. Moreover, nothing
18 in this Order shall preclude Prospect from objecting or otherwise
19 opposing joinder.”
20

The opt-in plaintiffs and defendant Prospect would have these

21 rights irrespective of any order. Accordingly, the court has no
22 objection to entering such an order on the parties’ stipulation.
23

G. Notice

24

The court is additionally concerned that the stipulation and

25 proposed order do not provide for notice to the opt-in plaintiffs
26 of the proposed decertification and their rights to file individual
10

1 lawsuits. When granting motions to decertify collective actions,
2 district courts regularly require that notice of decertification be
3 provided to opt-in plaintiffs. See, e.g., Smith v. Heartland
4 Automotive Services, Inc., 404 F.Supp.2d 1144, 1155 n.9 (D.Minn.
5 2005) ("The Court assumes that Plaintiffs' counsel will furnish a
6 copy of this Order to the opt in plaintiffs and advise them of
7 their rights with respect to individual claims...."); Johnson v.
8 TGF Precision Haircutters, Inc., No. H-03-3641, 2005 WL 1994286
9 at *8, 2005 U.S. Dist. LEXIS 44259 (S.D.Tex. 2005) (“The Clerk
10 shall notify all parties and provide them with a signed copy of
11 this Order”). Particularly instructive is Lusardi v. Lechner, 855
12 F.2d 1062 (3rd Cir. 1988), in which the plaintiffs sought a writ of
13 mandamus following a district court’s decertification of an opt-in
14 collective action under the Age Discrimination in Employment Act,
15 29 U.S.C. § 621, et seq. (“ADEA”).5 The Third Circuit reviewed the
16 notice that the district court had ordered the parties to send to
17 the opt-in claimants after decertification, and found it both
18 confusing

(in

its

statement

of

the

applicable

statute

of

19 limitations) and erroneous (in its statement that ADEA required
20 exhaustion

of

administrative

remedies).

The

appeals

court

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5

Because the ADEA (specifically, 29 U.S.C. § 626(b))
incorporates the FLSA enforcement provisions set forth in
29 U.S.C. § 216(b), courts commonly apply caselaw interpreting
§ 216(b) under one statutory scheme in deciding cases involving the
other statutory scheme. See, e.g., Hoffman v. Construction
Protective Services, Inc., No. 03-1006, 2004 WL 5642136 (C.D.Cal.
2004) (applying Hoffmann–LaRoche Inc. v. Sperling, 493 U.S. 165,
110 S.Ct. 482, 107 L.Ed.2d 480 (1989) in approving conditional
certification of FLSA collective action).
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1 ultimately issued a writ of mandamus that, in pertinent part,
2 ordered the district court to modify the notice to clarify the
3 applicable statute of limitations and to correct the error of law.
4 Given the rarity with which the federal Circuit Courts issue writs
5 of mandamus, the Lusardi decision speaks to the importance of
6 proper notice in the context of decertification.
7

Any order to decertify the collective action must provide for

8 clear, accurate, and timely notice to the opt-in plaintiffs of
9 their rights upon decertification.
10

H. Final notes

11

The court commends the parties’ desire to avoid spending

12 unnecessary resources — both their own and the court’s — on a
13 decertification motion, particularly when they already agree that
14 the

collective

action

should

be

decertified.

But

the

15 decertification order cannot be gilded with terms that could not be
16 obtained through a motion. Specifically, the court will not approve
17 a decertification order that requires other courts to toll the
18 statute of limitations, that bars the opt-in plaintiffs from
19 seeking collective or class relief if they so choose, and that does
20 not

provide

opt-in

plaintiffs

with

adequate

notice

of

21 decertification and their rights thereon.
22

Finally, plaintiffs’ counsel should keep in mind that, so long

23 as this collective action remains certified, they owe a fiduciary
24 duty to the opt-in plaintiffs. Any future stipulation to decertify
25 the collective ought not prejudice these plaintiffs’ ability to
26 seek relief in future actions.
12

1 V. Conclusion
2

Accordingly, the court DECLINES to enter the parties’ proposed

3 order.
4

IT IS SO ORDERED.

5

DATED:

November 29, 2012.

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