Estrada et al v. CleanNet USA, Inc. et al

Filing 26

ORDER DENYING TRANSFER re: pldg. ( 1 in MDL No. 2560) The motion to transfer, pursuant to 28 U.S.C. 1407, is DENIEDSigned by Judge John G. Heyburn II, Chairman, PANEL ON MULTIDISTRICT LITIGATION, on 8/12/2014. Associated Cases: MDL No. 2560, CAN/4:14-cv-01785, ILN/1:14-cv-02143, PAE/2:14-cv-02818 (TL)

UNITED STATES JUDICIAL PANEL
on
MULTIDISTRICT LITIGATION

IN RE: CLEANNET FRANCHISE AGREEMENT
CONTRACT LITIGATION

MDL No. 2560

ORDER DENYING TRANSFER

Before the Panel:* Pursuant to 28 U.S.C. § 1407, defendants CleanNet USA, Inc., CleanNet
of Illinois, Inc., CleanNet of Southern California, Inc., CleanNet Systems of Pennsylvania, Inc., and
Mark Salek (collectively, CleanNet) move for centralization of this litigation in the Northern District
of Illinois. This litigation currently consists of three actions pending in the Northern District of
California, the Northern District of Illinois, and the Eastern District of Pennsylvania, as listed on
Schedule A.
Defendants FCDK, Inc. d/b/a CleanNet of Sacramento, PaqNet, Inc. d/b/a CleanNet of San
Diego, D&G Enterprises, Inc. d/b/a CleanNet of the Bay Area, and David Crum join the motion.
Plaintiffs in all the actions oppose centralization. Plaintiffs in the California action alternatively
request that, if the Panel decides that centralization is appropriate, we defer transfer of the California
action until defendants’ motions to dismiss are resolved.
On the basis of the papers filed and hearing session held, we are not persuaded that Section
1407 centralization is necessary either to assure the convenience of the parties and witnesses or for
the just and efficient conduct of this litigation. Plaintiffs in all three actions allege CleanNet’s business
plan—in which CleanNet USA purportedly licenses “Area Operators” (its co-defendants) to sell
commercial cleaning franchises—is both illusory and predatory, resulting in the misclassification of
the “franchisees” as independent contractors rather than employees. While the business plan is a
common element, each action involves different Area Operator defendants—who are alleged to be
the signatories to the challenged franchise agreements—and different causes of action. CleanNet’s
primary motivation for centralization of these actions is to obtain a uniform determination of the
applicability of the arbitration provisions in the various franchise agreements. Seeking a uniform legal
determination, though, generally is not a sufficient basis for centralization. See In re Real Estate
Transfer Tax Litig., 895 F. Supp. 2d 1350, 1351 (J.P.M.L. 2012).
Furthermore, only three actions are pending, and there is little overlap among the putative
classes, which are primarily brought on behalf of putative state classes and assert claims under state
law (the exception being a putative nationwide collective action under the Fair Labor Standards Act
in the Illinois action in addition to Illinois state law claims). At oral argument, counsel for the
plaintiffs stated that they will coordinate with one another for purposes of any common discovery of
*

Judge Ellen Segal Huvelle took no part in the decision of this matter.

-2the sole common defendant—CleanNet USA. Accordingly, available alternatives to centralization,
in particular informal cooperation among the involved attorneys and coordination between the
involved courts, appear likely to minimize whatever possibilities may arise of duplicative discovery
or inconsistent pretrial rulings. See, e.g., In re Boehringer Ingelheim Pharms., Inc., Fair Labor Stds.
Act (FLSA) Litig., 763 F. Supp. 2d 1377, 1378–79 (J.P.M.L. 2011).
IT IS THEREFORE ORDERED that the motion, pursuant to 28 U.S.C. § 1407, for
centralization of these actions is denied.

PANEL ON MULTIDISTRICT LITIGATION

__________________________________________
John G. Heyburn II
Chairman
Marjorie O. Rendell
Lewis A. Kaplan
R. David Proctor

Charles R. Breyer
Sarah S. Vance

IN RE: CLEANNET FRANCHISE AGREEMENT
CONTRACT LITIGATION

MDL No. 2560

SCHEDULE A

Northern District of California
ESTRADA, ET AL. v. CLEANNET USA, INC., ET AL., C.A. No. 3:14-01785
Northern District of Illinois
SANCHEZ v. CLEANNET USA, INC., ET AL., C.A. No. 1:14-02143
Eastern District of Pennsylvania
TORRES v. CLEANNET USA, INC., ET AL., C.A. No. 2:14-02818