Chen et al. v. Allstate Insurance Company

Filing 31

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
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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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