Zulewski et al v. The Hershey Company

Filing 248

ORDER by Judge Kandis A. Westmore denying 244 Motion for Leave to Appeal. (kawlc1, COURT STAFF) (Filed on 3/29/2013)

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United States District Court
Northern District of California

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ORDER DENYING DEFENDANT’S
MOTION FOR CERTIFICATION OF
FEBRUARY 20, 2013 ORDER FOR
INTERLOCUTORY APPEAL

Plaintiffs,

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Case No.: CV 11-05117 KAW

RYAN ZULEWSKI, et al.,

v.
THE HERSHEY COMPANY,
Defendant.

United States District Court
Northern District of California

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On February 28, 2013, Defendant The Hershey Company (“Hershey”) filed its motion for

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an order certifying an interlocutory appeal of the Court’s February 20, 2013 order on the question

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of whether the one-and-one-half premium is the correct multiplier for the calculation of overtime

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damages in misclassification cases under the Fair Labor Standards Act. (Dkt. No. 244.) The

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matter is fully briefed by the parties, and, in accordance with Civil L.R. 7-1(b), is deemed suitable

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for disposition without hearing, so the April 4, 2013 hearing date is VACATED.

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Having considered all the papers submitted by the parties, and for the reasons set forth
below, the Court DENIES Defendant’s motion.

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I. LEGAL STANDARD
A district court, in its discretion, may certify an issue for interlocutory appeal under 28

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U.S.C. § 1292(b) if (1) there is a “controlling question of law,” (2) on which there is “substantial

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ground for difference of opinion,” and (3) “an immediate appeal...may materially advance the

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ultimate termination of the litigation....” See In re Cement Antitrust Litig. (MDL No. 296), 673

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F.2d 1020, 1026 (9th Cir. 1982).

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“Section 1292(b) is a departure from the normal rule that only final judgments are

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appealable, and therefore must be construed narrowly.” James v. Price Stern Sloan, Inc., 283 F.3d

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1064, 1068 n.6 (9th Cir. 2002). Thus, the court should apply the statute’s requirements strictly,

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and should grant a motion for certification only when exceptional circumstances warrant it.

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Coopers & Lybrand v. Livesay, 437 U.S. 463, 475 (1978). The party seeking certification to

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appeal an interlocutory order has the burden of establishing the existence of such exceptional

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circumstances. Id. Even then, a court has substantial discretion in deciding whether to grant a

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party’s motion for certification.
II. DISCUSSION

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As the moving party, Hershey bears the burden of establishing exceptional circumstances,

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which requires (1) a controlling question of law, (2) substantial grounds for difference of opinion,

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and (3) that immediate appeal may materially advance the ultimate termination of the litigation. In

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United States District Court
Northern District of California

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re Cement Antitrust Litig. (MDL No. 296), 673 F.2d 1020, 1026 (9th Cir. 1982).
First, as to whether there is a controlling question of law, Hershey asserts that the question

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of determining the proper overtime premium is controlling because it “dramatically affects the

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exposure in the case and thus any ability to negotiate a resolution at this time.” (Def.’s Mot., 5:11-

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12.) This is generally true in most litigation, as the more certainty the parties have, the greater the

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likelihood of settlement.

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In In re Cement, however, the Ninth Circuit explicitly rejected the view “that a question is

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controlling if it is one the resolution of which may appreciably shorten the time, effort, or expense

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of conducting a lawsuit.” In re Cement, 673 F.2d at 1027. The question of whether the Court

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determined the correct overtime premium in misclassification cases does not materially affect the

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outcome of the litigation, because it would not result in the wrong party prevailing, but rather the

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calculation of any potential final judgment. As Plaintiffs’ indicated, should the action proceed to

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final judgment, Hershey could appeal, and the Ninth Circuit could determine that the FLSA

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damages calculation was made in error, and either recalculate the damages or remand to this

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Court to do the same. (Pl.’s Opp., at 4:13-16.)

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Hershey asserts that the Court’s order will affect the conduct of discovery and trial.

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(Def.’s Mot., at 4-5.) This is based on the possibility that, in light of the Court’s order on FLSA

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damages, Plaintiffs may attempt to withhold discovery relating to whether each RSR understood

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that his or her salary was compensation for all hours worked. Id. The issue of actual
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misclassification has yet to be decided, so any such discovery pertaining to the misclassification

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claim would be relevant and discoverable. For that reason, the Court’s determination of the

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applicable overtime premium does not limit the scope of discovery and is not a basis for finding

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the existence of a controlling question of law.

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Second, as to whether there are substantial grounds for difference of opinion, Defendant

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argues, and the Court agrees, that there are such grounds based on the recognized split in the

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circuits, and that the Ninth Circuit has not definitively ruled on this point of law. See Couch v.

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Telescope Inc., 611 F.3d 629, 633 (9th Cir. 2010).

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Third, regarding whether immediate appeal may materially advance the ultimate
termination of the litigation, Hershey argues that this district has recognized that the

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United States District Court
Northern District of California

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determination of potential damages satisfies the “material advancement” factor. (Def.’s Mot.,

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7:26-8:3 (citing S.E.C. v. Mercury Interactive, LLC., 5:07-CV-02822-JF, 2011 WL 1335733, at

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*3 (N.D. Cal. Apr. 7, 2011)). Mercury is not necessarily a representative case for this district, as

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most courts have found that damages do not constitute “material advancement.” See, e.g., Sonoda

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v. Amerisave Mortg. Corp., C-11-1803 EMC, 2011 WL 3957436, at *3 (N.D. Cal. Sept. 7,

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2011)(unspecified damages insufficient to create exceptional circumstances); F.T.C. v. Swish

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Mktg., C 09-03814 RS, 2010 WL 1526483, at *4 (N.D. Cal. Apr. 14, 2010)(issue of remedy not

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exceptional when liability had not yet been established). Mercury involved a securities

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enforcement action pertaining to a years-long, fraudulent scheme to backdate stock options

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granted to Mercury’s senior employees and executives, and involved eleven claims for relief. The

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eleventh claim pertained to the disgorgement of bonuses and stock profits under § 304 of the

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Sarbanes-Oxley Act. Mercury Interactive, 2011 WL 1335733, at *1. The court denied the

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defendants’ motion to dismiss that claim and defendants appealed, so the question on appeal

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involved an entire cause of action, which happened to represent most of the potential damages.

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Unlike Mercury, while the instant question would affect the amount of damages, any reversal on

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appeal would only reduce the damages award rather than eliminate an entire cause of action, such

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that the parties would still have to litigate the FLSA claim. For that reason, the instant question

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does not satisfy the “material advancement” factor.
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Despite the existence of a difference of opinion, the question at issue does not satisfy

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Section 1292(b)’s other two factors, which precludes the existence of the exceptional

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circumstances required to warrant certification of the order for interlocutory appeal.
III. CONCLUSION

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For the foregoing reasons, the Court DENIES Defendant’s motion to certify its order for
interlocutory appeal. The April 4, 2013 hearing date is VACATED.
IT IS SO ORDERED.
Dated: March 29, 2013

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KANDIS A. WESTMORE
United States Magistrate Judge

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United States District Court
Northern District of California

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