Free Memorandum - District Court of Arizona - Arizona

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McINERNEY & JONES Kelly McInerney (Nevada SBN 7443) (admitted pro hac vice) [email protected] Charles A. Jones (Nevada SBN 6698) (admitted pro hac vice) [email protected] 18124 Wedge Parkway, Suite 503 Reno, Nevada 89511 Telephone: (775) 849-3811 Facsimile: (775) 849-3866 Attorneys for Plaintiffs LATHAM & WATKINS LLP Joel E. Krischer (California SBN 066489) (admitted pro hac vice) [email protected] 633 West Fifth Street, Suite 4000 Los Angeles, California 90071-2007 Telephone: (213) 485-1234 Facsimile: (213) 891-8763 LATHAM & WATKINS LLP Joanna R. Wolfe (New York SBN 4436960) (admitted pro hac vice) [email protected] 885 Third Avenue, Suite 1000 New York, New York 10022-4802 Telephone: (212) 906-1200 Facsimile: (212) 751-4864 Attorneys for Defendants [continued on next page]

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA

IN RE ALLSTATE INSURANCE CO. FAIR LABOR STANDARDS ACT LITIGATION

MDL NO. 1541 ALL CASES PARTIES' JOINT MEMORANDUM IN RESPONSE TO COURT ORDER OF JANUARY 30, 2008 Assigned To: Hon. Paul G. Rosenblatt

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LATHAM & WATKINS LLP John R. Hayes (Illinois SBN 6286365) (admitted pro hac vice) [email protected] 233 South Wacker Drive, Suite 5800 Chicago, Illinois 60606 Telephone: (312) 876-7700 Facsimile: (312) 993-9767 SEYFARTH SHAW LLP Andrew M. Paley (California SBN 149699) (admitted pro hac vice) [email protected] 2029 Century Park East, Suite 3300 Los Angeles, California 90067-3063 Telephone: (310) 277-7200 Facsimile: (310) 201-5219 Attorneys for Defendants

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I.

INTRODUCTION

Pursuant to this Court's Order filed on January 30, 2008, that the parties file a joint memorandum discussing why the Court should not resolve Defendants' Motion to Determine Basis on Which Plaintiffs Should be Permitted to Dismiss Claims (Doc. #199) ("Motion re Dismissal") on terms similar to those stipulated to by the parties in the dismissals of the claims of Edward Czarnecki and Dennis Day, Plaintiffs and Defendants (the latter collectively referred to as "Allstate") have set forth their respective positions below. II. PLAINTIFFS' POSITION

Edward Czarnecki and Dennis Day were permitted to withdraw their consent-to-join forms in the instant In re Allstate Insurance Co. Fair Labor Standards Act Litigation ("MDL") action so long as they agreed to refrain from asserting, either on their own behalf or as a member of a collective action, any claim for overtime they might have against Allstate under the Fair Labor Standards Act ("FLSA"). However, their dismissal specifically did not affect any claim they might have under any law other than the FLSA, including, but not limited to, the claims Czarnecki and Day are currently litigating against Allstate in the Nettles, et al. v. Allstate Ins. Co., et al., No. 02 CH 14426 (Ill. Cir. Ct. Cook Cty), action brought pursuant to Illinois state law. After Czarnecki and Day dismissed their claims in the instant case, they still had a forum in which to assert that Allstate should have paid them overtime compensation. Their state law claims, though not yet proven, are not time-barred. Plaintiffs cannot consent to the dismissal of their claims under terms similar to those of Czarnecki and Day for two main reasons: (1) Plaintiffs were not a "party" to those stipulated dismissals; and (2) Plaintiffs do not have existing state-law class actions to fall back on, unlike Czarnecki and Day. Czarnecki and Day are already members of the class in Nettles, which is an opt-out overtime class action brought under Illinois state law. The stipulated dismissals of Czarnecki and Day from the instant MDL case were negotiated and entered into
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between the attorneys in the Nettles case and Allstate's defense counsel. Counsel for Rosa, Montano, Gaglione, and Wunder, Plaintiffs in the instant MDL case, did not participate in the negotiations leading to the stipulated dismissals of Czarnecki and Day and did not sign those stipulated dismissals. As such, Plaintiffs in the instant MDL action were not a "party" to those stipulated dismissals and should not be bound by those terms. The Court's Order of February 4, 2008, specifically directed the parties to prepare a memorandum which addresses "why the Court should not resolve Defendants' [Motion re Dismissal] on terms similar to those stipulated by the parties in the dismissals of Edward Czarnecki and Dennis Day." The question is: How can the claims of the remaining Plaintiffs be dismissed that will put them in the same or similar legal position as Plaintiffs Czarnecki and Day? One solution is to permit them to dismiss their FLSA claims while simultaneously providing them with a forum in which to pursue overtime claims under their respective state laws with equitable tolling. To the best of our knowledge, there are no Plaintiffs other than Czarnecki and Day who have currently pending overtime cases against Allstate. So while Czarnecki and Day already have their interests in seeking overtime against Allstate protected, the other class members do not. Czarnecki and Day are able to pursue their state law claims in the Nettles action because the filing of that opt-out class action automatically tolled the statute of limitations for Czarnecki's and Day's state law claims, whereas the remaining Plaintiffs have no such tolling protection. Plaintiffs, in meeting and conferring with defense counsel for this Joint Memorandum, proposed an agreement to stipulate to terms similar to those of Czarnecki and Day if Allstate agreed to toll the statute of limitations on the state law claims, similar to Czarnecki and Day. Again, this would be the only way to put the remaining Plaintiffs in this action on the same legal footing as Czarnecki and Day. Allstate refused this proposal, arguing that would be a decision for the court in any newly-filed action. But, without such a tolling agreement, the remaining Plaintiffs in the instant MDL action would not be on equal footing with Czarnecki and Day and would, instead, be prejudiced. 4

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The only other alternative is dismissal without prejudice, as argued by Plaintiffs in their Opposition to Allstate's Motion re Dismissal. The parties are seeking to determine how to permit the opt-in Plaintiffs to voluntarily dismiss their claims. The general rule pursuant to FRCP 41(a)(2) is to leave the situation the same as if the claim had never been brought. The only way to accomplish that is to permit Plaintiffs to dismiss their claims without prejudice, plain and simple. 1 If Allstate is truly desirous of allowing Plaintiffs to dismiss their claims subject to terms similar to Czarnecki and Day, then Allstate should stipulate not to raise the statute of limitations defense for any state law claims filed, so that Plaintiffs are on the same footing as Czarnecki and Day. Otherwise, a dismissal without such a stipulation is tantamount to a dismissal with prejudice for the FLSA and state law claims. As discussed in Plaintiffs' Opposition, Allstate reclassified its auto adjusters nationwide effective January 1, 2005. Under most states' overtime laws, the claims of the auto adjusters would be time-barred absent a tolling agreement. Such a result would be patently unfair. Unless Allstate stipulates not to raise a statute of limitations defense in any filed state law overtime claim (thus leaving the opt-in Plaintiffs in the same position as Czarnecki and Day), the claims of the opt-in Plaintiffs should be dismissed without prejudice, without any conditions. III. ALLSTATE'S POSITION

Allstate already stated in its Reply Memorandum in support of the Motion re Dismissal (Doc. #207) that it was willing to agree to a dismissal for every other Plaintiff that wants to withdraw at this point on the same terms it agreed to for Messrs. Czarnecki and Day. It explained that, because this action involves purely federal claims, a dismissal without prejudice, coupled with a binding commitment never to Allstate pretended to be shocked in its reply papers that Plaintiffs would argue that the claims should be dismissed without prejudice, even though defense counsel, Joel Krischer, contemplated that possibility on at least five (5) separate occasions during the last status conference. See Document 197, Page 6, line 14; Page 13, line 8; Page 14, line 1; Page 16, line 9; and Page 23, line 25, all of which discuss the possibility of dismissal without prejudice.
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reassert those claims, is exactly the same thing as a dismissal with prejudice from Allstate's perspective. It means that those claims (and only those claims) must be decided by this Court, in this case, or that they disappear forever. Allstate's position remains unchanged. While Allstate understands the distinction Plaintiffs seek to draw on the ground that the other Plaintiffs do not have a pending state law action to "fall back on" if they abandon these claims, that distinction has no relevance to the current issues. The relevant facts/issues regardless of the pendency of any other state law claim remain the same, namely: · This case is, and always has been, solely about federal claims. · Any Plaintiff who wants to continue to pursue those claims has the absolute right to do so in this Court in an action that is already pending and that has already been extensively litigated. Conversely, it is only fair that any Plaintiff who wants out at this stage, in exchange for Allstate's already-stated position to forego its right to recover costs against that Plaintiff, should be prohibited from reasserting the same federal claims in another forum. · Whether any Plaintiff who has opted into this case has any similar state law claim, and whether any claim such that has not yet been brought is viable as a matter of substance or timeliness is a matter of state law that must be decided in a separate suit under state law. But most importantly, those issues are not changed in any way if Plaintiffs opt out now or litigate this case to its conclusion. Certainly, the mere pendency of this suit has not prevented any Plaintiff from pursuing any state law remedy he or she may have chosen to pursue. One final point should be made regarding Plaintiffs' related argument that Allstate should be required to stipulate to forego any statute of limitations defense to any state law claim that may be brought. In its moving papers, Allstate expressly argued that any dismissal without prejudice must expressly preclude tolling regarding any new FLSA 6

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claim and that any other result would prejudice Allstate by putting Plaintiffs in a better position than if their claim had never been brought. Plaintiffs' proposed stipulation regarding the state law claims would be at least as unfair, if not more so. If Plaintiffs retain all existing rights to bring a state law claim, which the Court's proposal would provide, it would be colossally unfair to restrict Allstate from asserting every available defense it currently has to any such claim. That unfairness is further heightened by the fact that this case has always been solely about federal claims, separate and distinct from any state law claims; accordingly, there is no justification for now suddenly making any party's rights under state law contingent on their rights under federal law. Stated somewhat differently, if the instant case had never been brought, Plaintiffs' and Allstate's rights under the various state laws at this point in time would be whatever they are. The fact that this case has been brought, and that it is now being dismissed is no justification for leaving Plaintiffs with whatever those rights may be while diminishing Allstate's rights under the very same laws. In short, Allstate respectfully submits that it is entirely fair to the remaining Plaintiffs to permit them to voluntarily dismiss their current claims at this point only if they agree to the same restrictions as Messrs. Czarnecki and Day that prevents them only from refiling the exact FLSA claims that they are voluntarily abandoning. And that result is not in any way less fair just because they have or have not, prior to this time, brought or participated in any state law claims. There is no need or justification for this Court to go beyond the scope of the currently-pending FLSA claims to address state law claims that were never brought anywhere and are not before the Court. /// /// /// /// /// /// 7

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Accordingly, Allstate respectfully submits that the Court should issue an order that gives the remaining Plaintiffs the option of (a) continuing to pursue their claims in this Court; or (b) voluntarily dismissing their pending claims at this time on terms similar to those stipulated to by Edward Czarnecki and Dennis Day. DATED: February 28, 2008 MCINERNEY & JONES Kelly McInerney Charles A. Jones

By: s/Kelly McInerney with permission Kelly McInerney MCINERNEY & JONES Attorneys for Plaintiffs DATED: February 28, 2008 LATHAM & WATKINS LLP Joel E. Krischer Joanne R. Wolfe John R. Hayes SEYFARTH SHAW LLP Andrew M. Paley

By: s/Joel E. Krischer Joel E. Krischer LATHAM & WATKINS LLP Attorneys for Defendants

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CERTIFICATE OF SERVICE I hereby certify that on February 28, 2008, I electronically transmitted the attached document described as PARTIES' JOINT MEMORANDUM IN RESPONSE TO COURT ORDER OF JANUARY 30, 2008, to the Clerk's Office using the CM/ECF System for filing and transmittal of a Notice of Electronic Filing to the following CM/ECF registrants: Clerk, United States District Court Sandra Day O'Connor U.S. Courthouse 401 West Washington Street, Suite 130, SPC 1 Phoenix, AZ 85003-2118 Kelly McInerney, Esq. McInerney & Jones 18124 Wedge Parkway, Suite 503 Reno, NV 89511 [email protected] Attorneys for Plaintiffs in Rosa v. Allstate George Sintsirmas, Esq. George Sintsirmas, LLC 6212 Coldstream Road Highland Heights, OH 44143 [email protected] Attorneys for Plaintiffs in Gaglione v. Allstate Mark Wintering, Esq. Robert E. Sweeney Co., LPA 55 Public Square, Suite 1500 Cleveland, OH 44113 [email protected] Attorneys for Plaintiffs in Gaglione v. Allstate Steven M. Weiss, Esq. Law Offices of Steven M. Weiss 1250 Illuminating Building 55 Public Square, Suite 1009 Cleveland, OH 44113 [email protected] Attorneys for Plaintiffs in Gaglione v. Allstate James A. Jones, Esq. Karla S. Jackson, Esq. Gillespie, Rozen, Watsky, Motley & Jones 3402 Oak Grove Avenue, Suite 200 Dallas, TX 75204 [email protected] [email protected] Attorneys for Plaintiffs in Wunder v. Allstate

Andrea Elisabeth Watters, Esq. Watters Law Office, PC 2807 East Broadway Boulevard Tucson, AZ 85716 [email protected] Attorneys for Plaintiffs in Montano v. Allstate

By: s/Linda M. Enriquez Secretary to Joel E. Krischer

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