Whitlock et al v. FSL Management, Inc. et al
Filing
105
MEMORANDUM OPINION AND ORDER granting 100 Motion to Stay; The litigation of Plaintiffs claims are hereby stayed until the Sixth Circuit Court of Appeals rules on Defendants Petition for Permission to Appeal and, if granted, the resolution of Defen dants appeal. IT ISFURTHER ORDERED that the Defendants shall notify the Court of the resolution of Defendants Petition for Permission to Appeal within seven days of receipt of the decision. Signed by Chief Judge Joseph H. McKinley, Jr on 12/21/12. cc:counsel (JBM)
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
LOUISVILLE DIVISION
CIVIL ACTION NO. 3:10CV-00562-JHM
WILLIAM WHITLOCK, et al.
PLAINTIFFS
VS.
FSL MANAGEMENT, LLC, et al.
DEFENDANTS
MEMORANDUM OPINION AND ORDER
This matter is before the Court on the Motion of Defendants to stay class proceedings
pending the Sixth Circuit Court of Appeals’ resolution of Defendants’ Petition for Permission to
Appeal this Court’s certification order and any subsequent appeal [DN 100]. Fully briefed, this
matter is ripe for decision.
I. BACKGROUND
Plaintiffs, William Whitlock, David Skyrm, Michael Brown, Holly Goodman, Kristin Moore,
and Gary Muncy, brought an action against Defendants, FSL Management, LLC, FSH Management,
LLC, Entertainment Concepts Investors, LLC, and Cordish Operating Ventures, LLC (“Cordish”)
alleging wage and hour violations and defamation. By Memorandum Opinion and Order dated
August 10, 2012, the Court granted Plaintiffs’ motion for class certification of the wage and hour
claims pursuant to Fed. R. Civ. P. 23(a) and (b)(3). The Court certified (1) a class for all nonsalaried employees of FSL Management, LLC, and FSH Management, LLC, who worked without
receiving hourly wages from January 30, 2007, through January 1, 2010, and (2) a subclass for all
tipped employees of FSL Management, LLC, and FSH Management, LLC, who were required to
pay a portion of their tips to other employees and were required to participate in a mandatory tip
pool from January 30, 2007, through January 1, 2010.
On August 24, 2012, Defendants filed a Petition for Permission to Appeal with the Sixth
Circuit Court of Appeals requesting the Sixth Circuit grant Defendants leave under Fed. R. Civ. P.
23(f) to immediately appeal this Court’s class certification order. On September 18, 2012,
Defendants moved the Court to stay the district court proceedings until the petition for leave to
appeal has been resolved, or if the petition is granted, until their appeal has concluded. Plaintiffs
object to Defendants’ motion.
II. STANDARD
Pursuant to Federal Rule of Civil Procedure 23(f), “A court of appeals may permit an appeal
from an order granting or denying class-action certification . . . .” However, “[a]n appeal does not
stay proceedings in the district court unless the district judge or the court of appeals so orders.” Fed.
R. Civ. P. 23(f). Ordinarily, a party must “move first in the district court for . . . a stay of the
judgment or order of a district court pending appeal.” Fed. R. App. P. 8(a)(1). See Powell v. Tosh,
2012 WL 1202289, *1 (W.D. Ky. April 10, 2012).
A district court balances the following factors in determining whether to enter a stay pending
resolution of an appeal: “‘(1) whether the stay applicant has made a strong showing that he is likely
to succeed on the merits; (2) whether the applicant will be irreparably injured absent a stay; (3)
whether issuance of the stay will substantially injure the other parties interested in the proceeding;
and (4) where the public interest lies.’” Powell, 2012 WL 1202289, *1 (quoting Hilton v. Braunskill,
481 U.S. 770, 776 (1987)). “‘These factors are not prerequisites that must be met, but are interrelated
considerations that must be balanced together.’” Powell, 2012 WL 1202289, *1(quoting Michigan
Coalition of Radioactive Material Users, Inc. v. Griepentrog, 945 F.2d 150, 153 (6th Cir.1991)
(citing In re Delorean Motor Co., 755 F.2d 1223, 1229 (6th Cir.1985)).
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III. DISCUSSION
A. Success on the Merits
The Defendants have not made a strong showing that they are likely to succeed on appeal.
“‘The district court’s decision certifying the class is subject to a very limited review and will be
reversed only upon a strong showing that the district court’s decision was a clear abuse of
discretion.’” Jenkins v. Hyundai Motor Financing Co., 2008 WL 2268319, *2 (S.D. Ohio June 2,
2008) (quoting Olden v. LaFarge Corp., 383 F.3d 495, 507 (6th Cir. 2004) (internal quotation marks
omitted). Contrary to Defendants’ argument, the Court conducted a rigorous analysis before
granting class certification. In the Court’s view, the issues raised by the Defendants reflect their
disagreement with the Court’s determination and are an attempt to reargue the merits of the motion.
However, as with any appeal, the Court recognizes that the Sixth Circuit may disagree with its
findings on these issues. See Brown v. Wal-Mart Stores, Inc., 2012 WL 5818300, *2-*3 (N.D. Cal.
Nov. 15, 2012)(discussing implications of Wal-Mart Stores, Inc. v. Dukes, 131 S.Ct. 2541 (2011)).
B. Irreparable Injury
Defendants assert that they will be irreparably harmed if the Court does not stay the
proceeding pending resolution of the appeal. Defendants argue that class litigation will be
incredibly expensive and could potentially involve hundreds of depositions to address the individual
issues of the class. Additionally, Defendants contend that if the Court does not stay this litigation,
Defendants may be forced to settle in the face of the enormous class litigation costs without having
their certification issues ruled upon by the Sixth Circuit. The Court disagrees. “‘[M]ere injuries,
however substantial, in terms of money, time and energy necessarily expended in the absence of a
stay, are not enough.” Powell, 2012 WL 1202289, *4 (quoting Michigan Coalition, 945 F.2d at 154).
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Furthermore, with respect to Defendants’ argument that it will suffer irreparable harm because the
class certification may force them to settle without having their certification issue ruled upon by the
Sixth Circuit, the record does not demonstrate that Defendants face any different risk than any
defendant to a class action faces. “Were these concerns enough to signal the death knell of a
defendant’s case, stays would become automatic.” Griffiths v. Ohio Farmers Ins. Co., 2010 WL
2774446,*3 (N.D. Ohio. July 12, 2010).
C. Harm to Others
Plaintiffs argue that a delay in the start of the trial is substantially harmful to the Plaintiffs
especially since the length of the delay is unknown. Plaintiffs contend that the Sixth Circuit will
take 11 months to rule on the petition and another 11 months to rule on the subsequent appeal.
Plaintiffs maintain that the class representatives as well as the class members are due wages dating
back to 2007. According to Plaintiffs, being denied lawful wages affects this group of employees
to a greater degree because these positions were low paying positions typically filled by young
people with limited financial resources.
“The purpose of Rule 23(f), in part, is to ensure that interlocutory appeals of class
certification decisions are heard and decided in a timely manner, so as not to disrupt the proceedings
at the district court level.” Gutierrez v. Johnson & Johnson, 523 F.3d 187, 199 (3d Cir. 2008)(citing
Fed. R. Civ. P. 23(f) advisory committee’s note). “The Rule specifically cautions the appellate courts
to act expeditiously on such petitions for permission to appeal.” Id. In the present case, Defendants
filed their Petition for Permission to Appeal on August 24, 2012 and Plaintiffs filed their response
on October 10, 2012. Given the advisory committee’s note to Rule 23(f), there is no reason to think
that the Sixth Circuit will not resolve Defendants’ appeal petition in a timely manner. Further, in
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the present case, Plaintiff does not allege a continuing harm. The end date for the class definition
is January 1, 2010. Thus, a stay would at most delay the Plaintiffs’ recovery of damages for a past
harm. While the Court recognizes that a stay will cause a delay in the trial of this matter and will
prolong the potential recovery of past wages or tips, these injuries are not irreparable.
D. The Public Interest
Defendants contend that granting a stay of this matter is in the public interest because
proceeding with this action during the pendency of the petition and the appeal would be an
inefficient use of judicial resources and efficiency. Defendants argue that if the parties proceed with
the class litigation, the Court will bear the burden of developing a class litigation plan, overseeing
class-wide discovery, and overseeing class notification, which would be for naught if the Sixth
Circuit decertifies the class. Furthermore, Defendants argue that issuance of the class notice prior
to a decision by the Sixth Circuit would cause substantial confusion and impairment of potential
class members’ rights. Plaintiff’s respond that granting a stay would not be in the public interest
because the legitimate expectation of employees to be paid properly for their time worked in
accordance with Kentucky wage and hour statutes would be frustrated by the stay. Plaintiffs also
argue that even if the Sixth Circuit reverses the class certification, denying the stay would have the
“salutary effect of notifying members of their individual statutory rights.” (Plaintiffs’ Response at
16.)
In Powell v. Tosh, 2012 WL 1202289 (W.D. Ky. April 10, 2012), Judge Russell stayed class
litigation pending a Rule 23(f) appeal. As in the present case, the class in Powell was certified under
Rule 23(b)(3) making it an opt out class. Id. at *5. In granting the stay, the Court found that
If class notice is published before resolution of Defendants’ appeal, and this Court’s
order is reversed, a corrective notice would need to be issued. This would create
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significant confusion among the potential class members. Because a potential
plaintiff in a Rule 23(b)(3) action is bound unless he or she opts out, voiding a
previously issued class notice could create significant issues regarding whether
additional action must be taken after any corrective notice is received by the class
members. Thus, a “district court should stay the dissemination of class notice to
avoid the confusion and the substantial expense of renotification that may result from
appellate reversal or modification.” Manual for Complex Litigation § 21.28 at 387
(4th ed. 2008).
Powell, 2012 WL 1202289, *5. See also Brown, 2012 WL 5818300, *5. Just as in Powell, similar
problems would be faced by the potential class members and parties in the present case.
Additionally, like in Powell, “the Court is not convinced that the class claims could
substantially and meaningfully progress while it is uncertain if the class will ultimately remain
certified.” 2012 WL 1202289, *5. In the present case, discovery of the individual wage and hour
claims and defamation claim should be substantially complete. The discovery deadline was July 30,
2012.1 Defendants represent that they have provided to Plaintiffs a list of the names, last known
addresses, and phone numbers for Defendants’ employees during the relevant time period. (FSL
1168-FSL 1197.) “Because the dissemination of class notice would be stayed while the petition and
any allowed appeal are pending, any progress on the class claims would likely be very limited.” Id.2
1
Given the class certification, Defendants state that additional class-wide discovery
would need to be conducted.
2
Some courts in dealing with this issue merely stay class notice until after the court of
appeals has acted on the petition and allow everything else to proceed – expert discovery,
Daubert motions, and summary judgment briefs. See In re Rail Freight Fuel Surcharge Antitrust
Litigation, ___ F.R.D. ___, 2012 WL 4127623 (D.D.C. Sept. 20, 2012); Jenkins v. Hyundai
Motor Financing Co., 2008 WL 2268319, *5 (S.D. Ohio June 2, 2008). Other courts stay both
class discovery and class notice, but permit discovery on the merits of the claims to proceed.
Johnson v. Geico Cas. Co., 269 F.R.D. 406, 413 (D. Del. 2010). In the present case, it would
appear that merit discovery has concluded. The Defendants state that due to the class
certification, they will need to conduct class-wide discovery. The Plaintiffs do not respond to
this statement. Instead, Plaintiffs argue that a stay will delay the trial. Accordingly, this action
is at a different stage of litigation than the above cases.
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Because the Court would at the very least stay the dissemination of the class notice, the trial
of the class claims would be delayed pending resolution of the petition and possible appeal. As a
result, just as in Powell, “[s]eparately proceeding with the individual claims and the class
claims—and possibly conducting two separate trials—would not be an efficient use of the parties’
and the Court’s time and resources.” Id. at * 6. As noted by the district court in Powell:
With respect to dispositive motions, the parties and the Court may expend
duplicative and wasted efforts. If two separate trials were ultimately conducted, the
parties’ expert witnesses and fact witnesses would be required to testify twice and
counsel for the parties would be required to try many of the same issues twice.
Furthermore, conducting two separate trials may raise issues concerning the
application of res judicata and may result in inconsistent verdicts.
Powell, 2012 WL 1202289, *6. See also Brown v. Charles Schwab & Co., Inc., 2010 WL 424031,
*1 (D.S.C. Feb. 1, 2010). For these reasons, the Court finds that it is in the public’s interest to grant
a stay of the entire case pending resolution of Defendants’ appeals.
IV. CONCLUSION
Balancing all of the factors, the Court finds that the public interest factor tips the scale
slightly in favor of granting Defendants’ motion for a stay. For the reasons set forth above, IT IS
HEREBY ORDERED that Defendants’ motion to stay [DN 100] is GRANTED. The litigation
of Plaintiffs’ claims are hereby stayed until the Sixth Circuit Court of Appeals rules on Defendants’
Petition for Permission to Appeal and, if granted, the resolution of Defendants’ appeal. IT IS
FURTHER ORDERED that the Defendants shall notify the Court of the resolution of Defendants’
Petition for Permission to Appeal within seven days of receipt of the decision.
cc: counsel of record
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December 21, 2012
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