Free Reply - District Court of Arizona - Arizona

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26

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 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 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 REPLY TO PLAINTIFFS' OPPOSITION TO ALLSTATE'S MOTION TO DETERMINE BASIS ON WHICH PLAINTIFFS SHOULD BE PERMITTED TO DISMISS CLAIMS Assigned To: Hon. Paul G. Rosenblatt Oral Argument Requested1
1

27 28

As the Court will see in the body of Allstate's reply, in light of Plaintiffs' change of position from that articulated at the status conference Allstate now believes that oral argument should be scheduled if the Court finds it will be helpful.

Case 2:03-md-01541-PGR

Document 207

Filed 10/29/2007

Page 1 of 11

1 2 3 4 5

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

6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2
Case 2:03-md-01541-PGR Document 207 Filed 10/29/2007 Page 2 of 11

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

Allstate is prepared, and in fact would prefer, to go forward with this case and have this Court address the merits of the claims of all of the opt-in Plaintiffs. Based, however, on the parties' joint representations to, and discussions with, the Court at the status conference on September 12, 2007, Allstate brought this motion as ordered by the Court and limited its discussion to the narrow issues framed by that conference ­ whether any Plaintiffs who choose to withdraw their claims at this point should do so with prejudice, or without prejudice subject to some lesser conditions. Accordingly, Allstate's moving papers demonstrated that, since the plaintiffs were already before this Court and could pursue their claims to conclusion in this already-pending case, the simplest, clearest, and fairest approach would be to require any dismissal to be with prejudice pursuant to Federal Rule of Civil Procedure 41(a)(2). In the alternative, Allstate argued that any dismissal without prejudice must at least be subject to certain conditions to prevent unfair prejudice to Allstate. Dismissing the status conference statements as "off the cuff" remarks, Plaintiffs now contend that they should be permitted to dismiss their claims without prejudice or conditions. [Plaintiffs' Opposition, p. 2, lines 2-3]. This is not only contrary to what Plaintiffs' counsel stated at the status conference held on September 12, 2007, [Document 197, p. 21, lines 1-6] ("And maybe `with conditions' is really going to be the best alternative, because it's not as onerous as `with prejudice,' but it would address some of defendant's concerns."), but is, despite Plaintiffs' disingenuous denial, the most blatant form of forum shopping imaginable. Plaintiffs' claims are already pending before this Court. To suggest, as Plaintiffs now belatedly do, that they should be permitted to abandon this suit and start fresh in another court as if this case had never been brought, is nothing but forum shopping. The only thing they want to change is the court before which the identical claims would be decided. If Plaintiffs want to litigate these claims, they should and must be required to do so here, in a case that has been pending for years and in which key substantive decisions have already been made. If they want to get out of this case they should do so 3

Case 2:03-md-01541-PGR

Document 207

Filed 10/29/2007

Page 3 of 11

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26

with prejudice, or at a minimum, with the conditions suggested by Allstate. I. DISMISSAL WITHOUT PREJUDICE WOULD LEAD TO FORUM SHOPPING In its moving papers, Allstate demonstrated that the opt-in Plaintiffs are active participants in this action, are bound by any decisions made by the Court, and that at this stage of the proceeding it would be improper, under well-established authority, to permit them to withdraw their claims without prejudice. [Allstate's Motion, p. 6-8].; see Kern Oil and Refining Co. v. Tenneco Oil Co., 792 F.2d 1380, 1389-90 (9th Cir. 1986) (upholding district court's finding that a party's motion for voluntary dismissal without prejudice after the granting of summary judgment on a count constitutes impermissible forum shopping and denying the motion). Plaintiffs do not even purport to argue that Allstate has misstated the law. Instead, without citing any authority, they argue that they should be permitted to dismiss their claims without prejudice because (1) relatively little work has been done by Allstate since most of the opt-in plaintiffs have joined the case [Plaintiffs' Opposition, p. 2-3]; (2) despite this Court's ruling in the Gaglione summary judgment motion, an Allstate victory is not imminent, [Plaintiffs' Opposition, p. 3, lines 1-2], and that there will be a "massive amount of discovery" before the Court could decide whether to extend its summary judgment ruling to the remaining Plaintiffs [Plaintiffs' Opposition, p. 3-6]; and (3) that a dismissal with prejudice could bar potential state law claims. [Plaintiffs' Opposition, p. 3, lines 6-8]. None of the arguments even addresses the authorities cited by Allstate or the principles on which those authorities are based. Allstate is happy to have the enormous amount of work it has done in these cases measured by any standard imaginable;2 indeed, ignoring all of the work Allstate did in Rosa and Gaglione prior to
2

27 28

In opposing the motion to facilitate notice, Allstate submitted over thirty declarations and testimony from nine depositions. In support of its motion for summary judgment in Gaglione, Allstate established over thirty-three undisputed facts and further

4
Case 2:03-md-01541-PGR Document 207 Filed 10/29/2007 Page 4 of 11

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

consolidation, this Court itself is well aware of the amount of work that went into briefing and deciding the heavily contested motions to facilitate notice in all of the consolidated cases and the motion for summary judgment in Gaglione. Because Plaintiffs' have brought this as a representative action, the timing of that effort ­ that it occurred when there were fewer opt-in Plaintiffs in the case than there are now ­ is irrelevant. Neither that timing issue nor the fact that some discovery will have to be done changes the fact that the issues before the Court have been actively and vigorously litigated. This leads to the most fundamental and disingenuous of Plaintiffs' arguments ­ that Allstate's victory is not "imminent." If Plaintiffs truly believed that, why have they even raised the issue of withdrawal? Indeed, the fact that they have cited two recent decisions of other courts that have decided not to grant summary judgment against the auto adjusters in those cases merely underscores that the Plaintiffs' only objective here is to get their claims before a different court. And while Allstate disagrees that there is "massive" discovery to be done regarding auto adjusters or any other aspect of this case, there is nothing preventing Plaintiffs from taking it in this case. Indeed, if Plaintiffs were permitted to dismiss without prejudice and start fresh cases, that same amount of discovery would still have to be done in addition to likely redoing the discovery that has already been done, and doing it in who knows how many different forums. Finally, whether dismissal with prejudice would or would not impact any potential state law claims has no impact on what should happen to their federal claims that are already pending in this Court. Allstate willingly permitted Mr. Czarnecki to dismiss his claim "without prejudice" but with a binding commitment never to assert an FLSA claim against Allstate. That agreement gave Allstate the exact same thing as a demonstrated that none of Plaintiffs' purported 291 additional facts created a disputed issue of material fact. Moreover, as Plaintiffs' Opposition points out, Allstate has taken the deposition of each of the named plaintiffs in each of the cases, an additional six depositions of opt-in plaintiffs in Rosa and defended six depositions in Gaglione. [Plaintiffs' Opposition, p.3, fn. 2].

5
Case 2:03-md-01541-PGR Document 207 Filed 10/29/2007 Page 5 of 11

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

dismissal with prejudice; Czarnecki's FLSA claims are forever barred.3 Allstate has since expressed its willingness to do the exact same thing for any other Plaintiff that wants to withdraw at this point. This action involves purely federal claims. A dismissal without prejudice coupled with a binding commitment never to reassert those claims is exactly the same thing as a dismissal with prejudice from Allstate's perspective. It means that those claims must be decided by this Court, in this case, or that they disappear forever.4 While Plaintiffs claim they "in no way condone forum shopping," [Plaintiffs' Opposition, p. 9, line 2], it is obvious that Plaintiffs' sole motivation for asking to be permitted to dismiss their claims without prejudice is nothing else but forum shopping. If they want to litigate their FLSA claims against Allstate, they may, can and should do so in this already-pending action. The only conceivable reason for taking those claims out of this Court without prejudice is for the purpose of shopping for a different court. Stated differently, since the claims are already pending here, the issue is not whether they can have their claims litigated, but where. Plaintiffs' arguments merely reconfirm that if they do not want their claims determined by this Court, in an action that has been pending for years, the simplest, fairest, and clearest manner to deal with the optin Plaintiffs' decision to withdraw from this case is for the Court to dismiss their claims with prejudice. A dismissal with prejudice prevents unfair legal prejudice to Allstate by
3

Plaintiffs mischaracterize this as Allstate realizing it is "unfair" to require dismissal with prejudice. [Plaintiffs' Opposition, p. 5, lines 22-23]. From Allstate's perspective, that stipulation was effectively the same as a dismissal with prejudice because it eliminated Czarnecki's FLSA claims. Similarly, Allstate did not challenge the withdrawal of Nattboy as he immediately decided to withdraw from the MDL, prior to any substantive rulings in this case, and agreed to file an individual action in his home state of Florida. 4 Indeed, Plaintiffs undermine their own argument by citing to cases in which courts have applied state laws that were substantially different from federal law, and that in fact could be "more advantageous" to Plaintiffs than the FLSA. [Plaintiffs' Opposition, p. 5, lines 7-8]. A dismissal with prejudice would prevent the Plaintiffs from filing another FLSA action in federal court, and therefore would prevent impermissible forum shopping and prejudice to Allstate. It would not, however, necessarily prevent Plaintiffs from filing state law actions in states where the law is potentially "more advantageous" to them.

6
Case 2:03-md-01541-PGR Document 207 Filed 10/29/2007 Page 6 of 11

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

prohibiting naked forum shopping. If, however, the Plaintiffs want to pursue their FLSA claims they should be required to do so in this Court. II. AT THE VERY LEAST THE COURT SHOULD DISMISS WITHOUT PREJUDICE BUT ONLY SUBJECT TO STRICT CONDITIONS In the alternative to a dismissal with prejudice, the Plaintiffs should be permitted to dismiss their claims only if the Court imposes the conditions listed by Allstate in its original Motion.5 [Allstate's Motion, p. 8-11.] Plaintiffs' argument that the substantive law of this case applies only to the three named Plaintiffs in the Gaglione action is simply wrong. Plaintiffs' Opposition, p.6, lines 17-18. In the Summary Judgment Order, this Court found that Allstate's adjusters perform work that is administrative in nature, that Allstate's "product" is the writing and selling of insurance polices, with the adjusting of claims being only ancillary to that product, [Order and Opinion, p. 16, lines 4-11], and that Allstate's claims handling policies and procedures ­ known as "CCPR" ­ did not diminish or lower the amount of judgment and discretion exercised by casualty and property adjusters below that required to qualify for the administrative exemption of the FLSA. [Id. at 20-23]. Taken together, these are the three key elements in this case that reject three principal arguments advanced by the Plaintiffs throughout the course of litigation that will now constitute the "law of the case" going forward. It is therefore disingenuous for Plaintiffs to now cry it is "impossible for Plaintiffs to even speculate what Allstate considers `law of the case.'" [Plaintiffs' Opposition, p. 6, fn.3]. Also, Plaintiffs argue that the condition applying all substantive decisions in this case to any subsequently filed FLSA action would unfairly bind other courts in deciding the re-filed claims. [Plaintiffs' Opposition, p. 7, lines 2-4].
5

Allstate again states that the best and most efficient and logical manner of dealing with the withdrawal of the opt-in Plaintiffs who choose to do so would be a dismissal with prejudice. The only way a dismissal without prejudice would not amount to legal prejudice against Allstate is with the conditions proposed by Allstate in its original Motion, or, as was done with Mr. Czarnecki, with an agreement never to assert those FLSA claims, and only their FLSA claims, elsewhere.

7
Case 2:03-md-01541-PGR Document 207 Filed 10/29/2007 Page 7 of 11

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

Once again, Plaintiffs are essentially admitting that they want to be allowed to forum shop for a more favorable court and/or judge after substantive decisions have been made in this case. [Plaintiffs' Opposition, p. 7, lines 2-10]. This is unacceptable and should not be permitted. See Vaqueria Tres Monjitas, Inc. v. Rivera Cubano, 230 F.R.D. 278, 280 (D.P.R. 2005) (stating that "although no Supreme Court or First Circuit case or applicable federal or local rule expressly states that attorneys may not use Rule 41(a) as a vehicle for judge-shopping, any active litigating attorney would know that judgeshopping is not acceptable and thus sanctionable"). As stated above, forum shopping after substantive decisions have been issued by the Court creates legal prejudice to the defendant and therefore is grounds for denying a dismissal without prejudice. The condition that the substantive law of this case be binding on any subsequently filed federal action is necessary to prevent this prejudice to Allstate. Allstate also demonstrated in its original motion that the condition that any subsequent actions filed in federal court be an individual and not a collective action must also be imposed by this Court to prevent unfair prejudice to Allstate. [Allstate's Motion, p. 10, lines 4-16]. Plaintiffs now state that they "have no other option but to argue that this condition is overbroad" in light of two recent decisions regarding auto adjusters. [Plaintiffs' Opposition, p. 8, lines 15-21]. This is not only a non sequitur, it yet again shows Plaintiffs' forum shopping motivation. The reasoning and conclusions made by those judges can be brought before and argued to this Court, and has nothing to do with the prejudicial effect of allowing Plaintiffs to bring yet more collective actions against Allstate in federal courts throughout the country when they are presently in this consolidated collective action. To permit Plaintiffs to leave and start another collective action would be the most prejudicial thing imaginable to Allstate. Finally, Plaintiffs argue that the condition imposing no tolling on the statute of limitations is both "unnecessary" and "extraneous" and that it would be "a "remote possibility" that an opt-in Plaintiff re-filing in another forum would argue for tolling. [Plaintiffs' Opposition, p. 9, lines 22-27]. Setting aside the fact that this is most 8

Case 2:03-md-01541-PGR

Document 207

Filed 10/29/2007

Page 8 of 11

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

likely untrue, it is extremely prejudicial to Allstate to allow any Plaintiff withdrawing from this action to receive the benefit of tolling in a subsequently filed action in another court. Whatever tolling benefits the Plaintiffs may have in this case should be limited to this case, should they choose to remain. If any Plaintiffs voluntarily choose to withdraw based on a perceived tactical advantage or something similar, they should not be allowed to carry that benefit with them. Again, this amounts to blatant forum shopping and would create severe prejudice to Allstate in the process. III. CONCLUSION Plaintiff's opposition reveals far more clearly than their now-disavowed statements to the Court at the recent status conference that their desire to seek to dismiss the remaining Plaintiffs' claims is an attempt to forum shop their way away from this Court. It is nothing more and nothing less than that. This merely reconfirms what Allstate demonstrated in its moving papers: dismissal with prejudice ­ or no dismissal at all ­ presents the clearest, fairest and only logical choice at this stage. To permit any other dismissal, and especially a dismissal without prejudice, is contrary to the tenets of judicial economy and fairness and would unquestionably and improperly subject Allstate to very real and very substantial legal prejudice. Allstate, therefore, respectfully requests that this Court require that any voluntary dismissal at this stage be with prejudice.

DATED: October 29, 2007 By: s/Joel E. Krischer Joel E. Krischer LATHAM & WATKINS LLP Attorneys for Defendants LATHAM & WATKINS LLP Joel E. Krischer Joanne R. Wolfe John R. Hayes SEYFARTH SHAW LLP Andrew M. Paley

9
Case 2:03-md-01541-PGR Document 207 Filed 10/29/2007 Page 9 of 11

CERTIFICATE OF SERVICE I hereby certify that on October 29, 2007, I electronically transmitted the attached document described as REPLY TO PLAINTIFFS' OPPOSITION TO ALLSTATE'S MOTION TO DETERMINE BASIS ON WHICH PLAINTIFFS SHOULD BE PERMITTED TO DISMISS CLAIMS 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

Case 2:03-md-01541-PGR

Document 207

Filed 10/29/2007

Page 10 of 11

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

By: s/Joel R. Shields Paralegal to Joel E. Krischer

Case 2:03-md-01541-PGR

11 Document 207

Filed 10/29/2007

Page 11 of 11