Chen et al. v. Allstate Insurance Company
Filing
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ORDER by Judge Hamilton granting 28 Motion to Amend June 10, 2013 Order; ORDER Staying Action. (pjhlc1, COURT STAFF) (Filed on 7/31/2013)
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UNITED STATES DISTRICT COURT
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NORTHERN DISTRICT OF CALIFORNIA
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RICHARD CHEN, et al.,
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No. C 13-0685 PJH
v.
ORDER AMENDING JUNE 10, 2013
ORDER; ORDER STAYING ACTION
ALLSTATE INSURANCE COMPANY,
Defendant.
_______________________________/
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For the Northern District of California
United States District Court
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Plaintiffs,
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Before the court is the motion of defendant Allstate Insurance Company (“Allstate”)
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for an order amending the June 10, 2013 order to certify it for interlocutory appeal under 28
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U.S.C. § 1292(b), and for an order staying this action pending the Ninth Circuit’s decision
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on interlocutory appeal. Plaintiffs oppose the motion. Having read the parties’ papers and
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carefully considered their arguments, and the relevant legal authority, the court hereby
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GRANTS the motion.
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BACKGROUND
This is a case filed as a proposed class action, alleging violations of the Telephone
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Consumer Protection Act, 47 U.S.C. § 227, et seq. (“TCPA”). The complaint asserts that
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defendant Allstate Insurance Company engaged in unlawful activities by contacting the two
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named plaintiffs and the members of the proposed class on their cell phones without their
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consent.
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Allstate made a Rule 68 offer of judgment to the two named plaintiffs, Richard Chen
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(“Chen”) and Florencio Pacleb (“Pacleb”). Chen accepted the offer, but Pacleb did not.
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Allstate then filed a motion to dismiss Pacleb’s claims (and the entire case) for lack of
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subject matter jurisdiction, arguing that because the offer made to Pacleb was in complete
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satisfaction of his claims, his claims had become moot as there was no longer a case or
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controversy.
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On June 10, 2013, the court issued an order denying the motion to dismiss for lack
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of subject matter jurisdiction. Relying on Pitts v. Terrible Herbst, Inc., 653 F.3d 1081 (9th
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Cir. 2011), the court held that even if Pacleb’s claims were moot, the entire case could not
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be dismissed because it was filed as a proposed class action, and Pacleb could still move
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for class certification on behalf of the members of the proposed class.
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In its motion, Allstate argued that Pitts had been overruled “sub silentio” by the
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Supreme Court’s recent decision in Genesis Healthcare Corp. v. Symczyk, __ U.S. __, 133
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S.Ct. 1523 (2013). In that case, the Court held that in a collective action under the Fair
Labor Standards Act (“FLSA”), where the employer extends a Rule 68 offer of judgment in
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For the Northern District of California
United States District Court
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full satisfaction of the named plaintiff-employee’s claimed damages and fees, the named
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plaintiff’s FLSA claim becomes moot and the collective action is no longer justiciable
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because the named plaintiff no longer has any personal interest in representing others in
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the collective action.
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On July 2, 2013, Allstate filed the present motion to amend the June 10, 2013 order
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to certify it for interlocutory appeal under 28 U.S.C. § 1292(b), and to stay this litigation
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pending the interlocutory appeal.
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DISCUSSION
A.
Legal Standard
The rule allowing a party to seek certification to appeal an interlocutory order, 28
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U.S.C. § 1292(b), is a departure from the normal rule that only final judgments are
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appealable, and therefore it must be construed narrowly. James v. Price Stern Sloan, Inc.,
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283 F.3d 1064, 1067-68 n.6 (9th Cir. 2002). A district court may certify an order for
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interlocutory review pursuant to § 1292(b), but “only in exceptional situations in which
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allowing an interlocutory appeal would avoid protracted and expensive litigation.” In re
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Cement Antitrust Litigation, 673 F.2d 1020, 1026 (9th Cir. 1982) (emphasis added).
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To obtain interlocutory review under § 1292(b), the party seeking relief must satisfy
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certain requirements. Couch v. Telescope, 611 F.3d 629, 633 (9th Cir. 2010). The district
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court must find that the party has established the existence of a controlling question of law,
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and substantial grounds for difference of opinion, and that the party has shown that an
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immediate appeal may materially advance the ultimate termination of the litigation. In re
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Cement, 673 F.2d at 1026 (citing 28 U.S.C. § 1292(b)).
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An issue is “controlling” if “resolution of the issue on appeal could materially affect
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the outcome of litigation in the district court.” Id. (citation and quotation omitted). “Although
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resolution of the issue need not necessarily terminate an action in order to be ‘controlling,’ .
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. . it is clear that a question of law is ‘controlling’ if reversal of the district court's order would
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terminate the action.” Klinghoffer v. S.N.C. Achille Lauro, 921 F.2d 21, 24 (1990).
A substantial ground for difference of opinion is not established by a party's strong
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For the Northern District of California
United States District Court
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disagreement with the court's ruling; the party seeking an appeal must make some greater
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showing. Mateo v. M/S Kiso, 805 F.Supp. 792, 800 (N.D. Cal. 1992), abrogated on other
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grounds by Brockmeyer v. May, 361 F.3d 1222, 1226-27 (9th Cir. 2004). Substantial
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grounds for a difference of opinion required to certify an order for interlocutory review arise
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when an issue involves one or more difficult and pivotal questions of law not settled by
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controlling authority. See 28 U.S.C. § 1292(b).
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The third requirement – that the appeal be likely to materially speed the termination
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of the litigation – is linked to the question whether an issue of law is “controlling,” in that the
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district court should consider the effect of a reversal on the management of the case.
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Mateo, 805 F.Supp. at 800 (citing In re Cement, 673 F.2d at 1026). If, on the other hand,
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an interlocutory appeal would delay resolution of the litigation, it should not be certified.
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See Shurance v. Planning Control Int'l, Inc., 839 F.2d 1347, 1348 (9th Cir. 1988).
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B.
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Defendant’s Motion
Allstate argues that the requirements for certification under § 1292(b) are met. First,
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Allstate contends that the June 10 order involves a controlling issue of law because if the
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Ninth Circuit holds that this putative class action is rendered moot by Allstate’s Rule 68
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offer, this case will be dismissed for lack of subject matter of jurisdiction.
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Second, Allstate asserts that there are substantial grounds for a difference of
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opinion. Allstate contends that before Genesis Healthcare, the Circuits were divided on this
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issue – e.g., the Seventh Circuit differed from the Ninth Circuit. In addition, district court
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opinions issued after Genesis Healthcare have reached different conclusions as to the
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Genesis decision’s applicability to Rule 23 putative class actions. Allstate notes that even
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this court acknowledged that the question whether a Rule 68 offer moots a Rule 23 putative
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class action where a class has not yet been certified “remains unsettled.” Allstate argues
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that certification will enable the Ninth Circuit to determine whether Pitts is good law in light
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of Genesis Healthcare – an issue on which there is substantial difference of opinion, and
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which is also an important jurisdictional issue that will affect other cases.
Third, Allstate contends that an immediate appeal may materially advance the
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For the Northern District of California
United States District Court
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ultimate termination of this litigation because, if the Ninth Circuit determines that Pacleb’s
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claim is moot, there will be no subject matter jurisdiction over the case and it will be
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dismissed.
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In opposition, plaintiffs assert that the Ninth Circuit has already determined (in Pitts)
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that a Rule 68 offer of judgment that fully satisfies a named plaintff’s individual claim before
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a class is certified does not moot the entire case. Plaintiff contends that because Genesis
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did not address whether an unaccepted offer that fully satisfies a plaintiff’s claim is
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sufficient to render the claim moot – finding that that specific issue was not before it – it is
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impossible for Genesis to have overruled Pitts.
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Second, plaintiffs contend that there are no grounds for a difference of opinion – that
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neither the fact that Allstate disagrees with the court’s June 10, 2013 order, nor the fact that
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some other Circuits (such as the Seventh) have taken a different approach than the Ninth
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Circuit is sufficient to establish a substantial ground for difference of opinion, as the
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standard requires. Plaintiffs also cite two district court decisions from within the Ninth
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Circuit, in which the courts held that Genesis did not overrule Pitts, and that the Supreme
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Court’s ruling regarding FLSA collective actions is not clearly applicable in Rule 23 class
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actions.
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In reply, Allstate argues that the Ninth Circuit has not decided the exact issue posed
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by Allstate – whether Genesis overruled Pitts. Allstate also reiterates that there are
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substantial grounds for a difference of opinion, primarily based on this court’s comment that
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the controlling law is unclear, but also based on the split in the Circuits. Allstate also notes
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that plaintiffs have not opposed Allstate’s request for a stay pending appeal.
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The court finds that the motion must be GRANTED. While the Supreme Court did
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not clearly overrule Pitts, it did take issue with the precedent on which Pitts relies. Thus,
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resolution of the issue raised by Allstate on appeal could materially affect the outcome of
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the litigation in this court – even to the point of materially speeding the outcome of the
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litigation. Moreover, while it is not entirely clear that there is a substantial ground for
difference of opinion within the Ninth Circuit, the lack of decisions by other courts on this
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For the Northern District of California
United States District Court
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issue is no doubt attributable to the fact that the decision in Genesis Healthcare was issued
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only three and a half months ago.
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The court would welcome the Ninth Circuit’s view as to whether its Pitts decision
remains good law in light of Genesis Healthcare.
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CONCLUSION
In accordance with the foregoing, the motion is GRANTED. Further, the case is
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STAYED pending a decision by the Ninth Circuit. Defendant shall advise the court
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immediately regarding the Ninth Circuit’s decision whether to permit the appeal.
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IT IS SO ORDERED.
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Dated: July 31, 2013
______________________________
PHYLLIS J. HAMILTON
United States District Judge
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