Dardarian v. Nordstrom, Inc.

Filing 17

ORDER by Judge Hamilton DENYING 6 Motion to Dismiss, GRANTING motion to stay (pjhlc1, COURT STAFF) (Filed on 5/5/2011)

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UNITED STATES DISTRICT COURT
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NORTHERN DISTRICT OF CALIFORNIA
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NANCY DARDARIAN,

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For the Northern District of California

United States District Court

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Plaintiff,
v.

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ORDER GRANTING MOTION FOR STAY

NORDSTROM, INC.,

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No. C 11-0949 PJH

Defendant.
_______________________________/

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The motion of defendant Nordstrom, Inc. (“Nordstrom”) for an order dismissing or

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staying the above-entitled action came on for hearing before this court on May 4, 2011.

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Plaintiff Nancy Dardarian appeared by her counsel Arthur Lazear and Chad Saunders, and

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Nordstrom appeared by its counsel John C. Dineen. Having read the parties’ papers and

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carefully considered their arguments and the relevant legal authority, and good cause

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appearing, the court hereby GRANTS the motion to stay and DENIES the motion to

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dismiss, as follows and for the reasons stated at the hearing.

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This is a case filed as a proposed class action, alleging violation of California Civil

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Code § 1747.08 (part of the Song-Beverly Credit Card Act of 1971). Among other things,

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§ 1747.08 (which was added in 1990) prohibits anyone who accepts credit cards as

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payment for goods or services from recording credit card customers’ “personal identification

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information” as part of the credit card transaction (with certain exceptions listed in the

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statute).

Plaintiff alleges that she made a purchase using a credit card at a store operated by

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Nordstrom, and that she was asked at the time of the sale for her zip code, which

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information the sales clerk then entered into the store’s computer system. The California

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Supreme Court has ruled that zip codes are “personal identification information,” and that

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recording such information as part of a credit card transaction violates the Song-Beverly

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Credit Card Act. See Pineda v. Williams-Sonoma Stores, Inc., 51 Cal. 4th 524, 536 (2011).

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The proposed class consists of “all persons in California from whom [Nordstrom]

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requested and recorded personal identification information in conjunction with a credit card

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transaction within one (1) year of the filing of this case, or any other case in which the
plaintiff is a member of a proposed class.” Cplt ¶ 20.

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For the Northern District of California

United States District Court

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Nordstrom now seeks an order dismissing or staying the case, based on Colorado

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River abstention, in light of multiple earlier-filed state court actions, the first of which was

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filed a number of months before the present case was filed, and all of which have been

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coordinated in Los Angeles Superior Court under the state court coordination procedures.

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DISCUSSION
A.

Legal Standard
A district court has inherent power to stay proceedings and “to control the disposition

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of the causes on its docket with economy of time and effort for itself, for counsel, and for

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litigants.” Landis v. North American Co., 299 U.S. 248, 254 (1936).

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Courts look to the Colorado River doctrine when determining whether to stay a

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federal action in light of a pending state action. Under the Colorado River doctrine, a

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federal court may abstain from exercising its jurisdiction in favor of parallel state

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proceedings where doing so would serve the interests of “[w]ise judicial administration,

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giving regard to the conservation of judicial resources and comprehensive disposition of

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litigation.” Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 817

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(1976). “Exact parallelism” between the state and federal actions is not required; it is

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enough if the two actions are “substantially similar.” Nakash v. Marciano, 882 F.2d 1411,

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1416 (9th Cir. 1989).
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In general, abstention is a narrow doctrine.1 Unless “vital state interests” are at

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stake, federal courts have an “unflagging obligation” to exercise their jurisdiction.

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Abstention is “an extraordinary and narrow exception to the duty of a district court to

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adjudicate a controversy properly before it.” Quackenbush v. Allstate Ins. Co., 517 U.S.

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706, 728 (1996). Thus, “the Colorado River doctrine is a narrow exception to ‘the virtually

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unflagging obligation of the federal courts to exercise the jurisdiction given them.’” Holder

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v. Holder, 305 F.3d 854, 867 (9th Cir. 2002) (quoting Colorado River, 424 U.S. at 817).

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Accordingly, a stay of proceedings pursuant to the Colorado River doctrine is appropriate

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only where “exceptional circumstances” are present. Id.
If state and federal actions are parallel, the court should consider several non-

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For the Northern District of California

United States District Court

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exclusive factors that are relevant to whether a stay is appropriate under Colorado River

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and its progeny: (1) whether the state court first assumed jurisdiction or a res or property;

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(2) whether the inconvenience of the federal forum is so great that abstention is warranted;

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(3) whether piecemeal litigation is likely to result if the federal court does not abstain; (4) in

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which forum proceedings were first commenced and jurisdiction obtained, and how much

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progress has been made in the first-filed case; (5) which law (federal or state) provides the

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rule of decision; (6) whether the state court proceedings are inadequate to protect the

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federal litigants’ rights; and (7) whether exercising jurisdiction would promote forum

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shopping. See Schwarzer, Tashima & Wagstaffe, Federal Civil Procedure Before Trial

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(2011 ed.) §§ 2:4531-41; see also Holder, 305 F.3d at 870; Travelers Indem. Co. v.

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Madonna, 914 F.2d 1364, 1367-68 (9th Cir. 1990).

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The decision to abstain rests on a “careful balancing” of these factors as they apply

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in a given case, with the balance heavily weighted in favor of exercising jurisdiction. Moses

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H. Cone Mem. Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 16 (1983). “Any doubt as to

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whether a factor exists should be resolved against a stay, not in favor of one.” Madonna,

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914 F.2d at 1369. In addition, when a district court declines to exercise jurisdiction under

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Although the Colorado River doctrine is referred to as an abstention doctrine, the
Supreme Court has rejected this characterization. See Nakash, 882 F.2d at 1415 n.5.
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Colorado River, it should stay rather than dismiss the federal action. Coopers & Lybrand v.

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Sun-Diamond Growers of Cal., 912 F.2d 1135, 1138 (9th Cir. 1990). This ensures that the

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federal forum will remain open if, for some unexpected reason, the state forum proves

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inadequate. Attwood v. Mendocino Coast Dist. Hosp., 886 F.2d 241, 243 (9th Cir. 1989).

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“Only the clearest of justifications will warrant dismissal.” Colorado River, 424 U.S. at 818-

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19.

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B.

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Defendant’s Motion
Nordstrom argues that the state and federal actions are substantially identical, and

that a majority of the relevant factors support the court’s exercise of abstention. In
opposition, plaintiff argues that abstention by the federal courts is highly disfavored, and is

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For the Northern District of California

United States District Court

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not appropriate in this case, because this case does not present the necessary

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“extraordinary circumstances.”

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The motion to stay is GRANTED. In general terms, staying this case and allowing

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the earlier-filed state court actions to proceed will eliminate duplicative discovery; preclude

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inconsistent pretrial rulings, including with respect to class certification; and conserve the

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resources of the court.

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As for the list of non-exclusive factors, this case does not involve a dispute over

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tangible personal property, and neither the state courts nor the federal court have assumed

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jurisdiction over a res or property. Thus, the first factor does not apply. At the hearing on

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this motion, plaintiff’s counsel asserted that the fact that a particular factor does not apply

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means that that factor weighs against a stay. As Nordstrom’s counsel noted, however,

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under Nakash v. Marciano, 882 F.2d at 1415 & n.7, the court does not consider factors that

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are not relevant to a particular case.

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The second factor – inconvenience of the federal forum – is neutral, and therefore

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does not favor a stay. Plaintiff argues that this court is more convenient for her than the

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state court in Los Angeles. In the court’s view, however, (1) plaintiff is simply expressing a

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preference for a federal forum, not stating that the state court is inconvenient wherever

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located, and (2) the inconvenience that is stated is as to the location and not the nature of
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the forum. Additionally, as an out-of-state defendant, Nordstrom would find both state and

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federal fora to be equally inconvenient.

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The third factor is whether piecemeal litigation is likely to result if the case is allowed

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to proceed here. Piecemeal litigation occurs when different tribunals consider the same

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issue, thereby duplicating efforts and possibly reaching different results. Madonna, 914

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F.2d at 1368. Here, while there may be no certainty that efforts will be duplicated, such

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duplication is highly likely, given (among other things) that both courts will be required to

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determine whether to certify the proposed class. Thus, this factor strongly favors a stay.

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The fourth factor is the order in which proceedings were first commenced and
jurisdiction obtained, and the amount of progress in the cases. At least four of the

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For the Northern District of California

United States District Court

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coordinated state court actions were filed before this action was filed, with the first state

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court action having been filed eight months ago. However, priority is not measured totally

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by the time of filing (and an eight-month gap is not necessarily significant), but rather by

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how much progress has been made in each action. Id. at 1370. Here, while it does not

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appear that the state court has issued any dispositive rulings, the state court actions have

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been consolidated in a single Superior Court, as a consolidated action, and discovery has

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commenced. By contrast, the only thing that has happened in this case is the filing of the

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present motion. Thus, this factor slightly favors a stay.

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The fifth factor is whether state or federal law provides the rule of decision. In

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general, the existence of routine issues of state law will not, standing alone, justify a stay by

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the federal court. Id. at 1369-70. However, in this case, the only claim raised is a claim of

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violation of a state statute. There are no federal claims. On the other hand, the state law

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claim appears to be fairly routine, given the California Supreme Court’s clear ruling in the

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Pineda case. The fact that there are no federal issues may slightly favor a stay, but the

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fact that the state law claim is simple and fairly routine does not favor a stay. The court

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finds that overall, this factor only slightly favors a stay.

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The sixth factor is whether the state court proceedings are adequate to protect the
federal litigants’ rights. Since the “rights” of Nordstrom in state court are the same as in
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federal court, and since the claims asserted by the plaintiffs in each case raises only state

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law issues, there is no reason to believe that Nordstrom’s rights will not be protected in

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state court. Similarly, plaintiff’s rights will be adequately protected in the state court

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litigation (which includes the very claim plaintiff asserts in this litigation), as plaintiff is a

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putative class member of the state court class. Thus, this factor slightly favors a stay.

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The seventh factor is whether exercising jurisdiction would encourage forum

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shopping. Forum shopping weighs in favor of a stay when the party opposing the stay

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seeks to avoid adverse rulings made by the state court, or to gain a tactical advantage from

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the application of federal court rules. Madonna, 914 F.2d at 1370. Here, Nordstrom
suggests that plaintiff might be forum shopping. However, plaintiff asserts that she cannot

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For the Northern District of California

United States District Court

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be forum shopping if did not know prior to filing this case that similar suits had been filed in

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the state forum. She claims that she filed the case in this court only because she has a

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“preference for federal procedure.”2 As there is no basis upon which to conclude that there

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has been or will be forum shopping, this factor does not favor a stay.

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On balance, as the court explained at the hearing, a majority of the applicable

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factors favor a stay. These are the likelihood of piecemeal litigation if the case proceeds in

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this court; the degree of progress in the first-filed state court case and lack of progress in

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this case; the fact that the state court is adequate to protect the rights of both parties; and

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the fact that state law provides the rule of decision. There is no evidence that plaintiff has

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engaged in forum shopping, and it is not clear that allowing the case to proceed in this

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forum will lead to forum shopping by others. The factor of convenience/inconvenience

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appears to be neutral, and does not favor a stay.

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In addition, the court finds it significant that the plaintiff in this action purports to

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represent a class that is almost identical (except for starting date) to the class in the state

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court actions. The members of the class in the present action will also be members of the

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class in the coordinated state court proceeding (although the converse will not be true as to

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At the hearing, Nordstrom modified its argument, asserting that allowing this case to
proceed here would encourage forum-shopping by other litigants.
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all members of the state court class, given that the first state court action was filed in

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August 2010).

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Permitting parallel proceedings in both state and federal court against the same

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defendant with the same state law claim at issue will at a minimum invite confusion among

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the members of the proposed class. In addition, given that the definitions of the proposed

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class are virtually identical (except for the beginning date of the class period), running

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parallel motions for class certification will result in a colossal waste of judicial resources. In

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the court’s view, the fact that these parallel actions were all filed as proposed class actions

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purporting to represent the same putative class members provides the necessary
“extraordinary circumstances” warranting the court’s exercise of abstention.

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For the Northern District of California

United States District Court

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CONCLUSION
In accordance with the foregoing, the court hereby GRANTS Nordstrom’s motion for

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a stay, and DENIES the alternative motion to dismiss. The action will be stayed pending

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the outcome of the state court litigation, or a denial of class certification, whichever occurs

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first. Every six months during the pendency of the stay, Nordstrom shall file a status

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statement apprising the court of the progress of the state court litigation, so that the court

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can determine whether the present order should be revisited.

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IT IS SO ORDERED.

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Dated: May 5, 2011
______________________________
PHYLLIS J. HAMILTON
United States District Judge

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