Franklin v. Scripps Health

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 MICHELLE FRANKLIN, individually Case No. 22-cv-367-MMA (MDD) and on behalf of all others similarly 12 situated, ORDER GRANTING IN PART 13 DEFENDANT SCRIPPS HEALTH’S Plaintiffs, MOTION TO STAY 14 v. 15 [Doc. No. 15] SCRIPPS HEALTH, et al., 16 Defendants. 17 18

19 20 On March 21, 2022, Plaintiffs Michelle Franklin and Irene Gamboa initiated this 21 putative class action against Scripps Health (“Scripps” or “Defendant”) and DOES 1 22 through 10. See Doc. No. 1 (“Compl.”). Scripps now moves the Court to stay this case 23 pending resolution of parallel state court actions. See Doc. No. 15. Plaintiffs filed a 24 statement of non-opposition. See Doc. No. 18. On August 23, 2022, the Court issued an 25 interim order on the motion, see Doc. No. 19 (“Interim Order”), to which Scripps and 26 Plaintiffs responded, see Doc. Nos. 20, 21. For the reasons set forth below, the Court 27 GRANTS IN PART Scripps’ motion and STAYS this case pursuant to Landis v. N. Am. 28 Co., 299 U.S. 248, 254 (1936). 1 I. BACKGROUND 2 Scripps is a San Diego-based health care organization providing medical care to 3 individuals in Southern California. See Compl. ¶ 45. In March 2021, Plaintiffs began 4 their employment with Scripps. Compl. ¶¶ 18, 22. According to Plaintiffs, Scripps’ 5 timekeeping software, Kronos, was hacked with ransomware on December 11, 2021. Id. 6 ¶¶ 48–49. The hack interfered with the Scripps’ ability to use the software, including 7 track hours and pay employees. Id. ¶ 50. Plaintiffs allege, generally, that Scripps has 8 since failed to accurately keep track of employee hours and instead uses various methods 9 to estimate the number of hours employees worked during the pay periods. Id. ¶¶ 51–52. 10 As a result, according to Plaintiffs, Scripps failed to pay Plaintiffs for their overtime 11 hours in violation of California and state law. Id. ¶¶ 77–78. On this basis, Plaintiffs 12 bring six causes of action on behalf of a putative class of similarly situated Scripps 13 employees: (1) failure to pay overtime in violation of the Fair Labor Standards Act 14 (“FLSA”), 29 U.S.C. § 207(a); (2) failure to pay overtime, Cal. Lab. Code § 510; 15 (3) violation of recordkeeping requirements, Cal. Labor Code § 226; (4) waiting time 16 penalties, Cal. Labor Code § 203; (5) violation of California’s Unfair Competition Law 17 (“UCL”), Cal. Bus. & Prof. Code §§ 17200, et seq.; and (6) civil penalties pursuant to the 18 Private Attorneys General Act of 2004 (“PAGA”), Cal. Lab. Code §§ 2698, et seq. 19 II. LEGAL STANDARDS 20 Federal courts have a “virtually unflagging obligation . . . to exercise the 21 jurisdiction given them.” Colorado River Water Conservation Dist. v. United States, 424 22 U.S. 800, 817–18 (1976). In Colorado River, the Supreme Court observed that “there 23 may be circumstances in which traditional abstention principles do not apply, yet 24 considerations of ‘wise judicial administration, giving regard to conservation of judicial 25 resources and comprehensive disposition of litigation,’ nonetheless justify a decision to 26 stay or dismiss federal proceedings pending resolution of concurrent state court 27 proceedings.” Smith v. Cent. Ariz. Water Conservation Dist., 418 F.3d 1028, 1032–33 28 (9th Cir. 2005) (quoting Colorado River, 424 U.S. at 817). “Such circumstances are, 1 however, exceedingly rare.” Smith, 418 F.3d at 1033; see also Holder v. Holder, 305 2 F.3d 854, 867 (9th Cir. 2002) (stating that “the Colorado River doctrine is a narrow 3 exception”). The decision of whether to grant a Colorado River stay “does not rest on a 4 mechanical checklist, but on a careful balancing of the important factors as they apply in 5 a given case, with the balance heavily weighted in favor of the exercise of jurisdiction. 6 Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 16 (1983). 7 The Ninth Circuit has recognized eight factors to be considered when reviewing a 8 district court’s decision regarding a Colorado River stay or dismissal. See Montanore 9 Minerals Corp. v. Bakie, 867 F.3d 1160, 1165-66 (9th Cir. 2017). They are: 10 (1) which court first assumed jurisdiction over any property at stake; (2) the 11 inconvenience of the federal forum; (3) the desire to avoid piecemeal 12 litigation; (4) the order in which the forums obtained jurisdiction; (5) whether federal law or state law provides the rule of decision on the merits; (6) whether 13 the state court proceedings can adequately protect the rights of the federal 14 litigants; (7) the desire to avoid forum shopping; and (8) whether the state court proceedings will resolve all issues before the federal court. 15

16 Id. Some factors may not apply in some cases, and “[a]ny doubt as to whether a factor 17 exists should be resolved against a stay” or dismissal. Seneca Ins. Co. v. Strange Land 18 Inc., 862 F.3d 835, 842 (9th Cir. 2017) (quoting Travelers Indem. Co. v. Madonna, 914 19 F.2d 1364, 1369 (9th Cir. 1990)). Moreover, the Ninth Circuit has repeatedly held that 20 “the existence of a substantial doubt as to whether the state proceedings will resolve the 21 federal action precludes the granting of a [Colorado River] stay.” Smith, 418 F.3d at 22 1033 (quoting Intel Corp. v. Advanced Micro Devices, Inc., 12 F.3d 908, 913 (9th Cir. 23 1993) (internal quotation marks omitted)). When it is appropriate for a court to decline to 24 exercise jurisdiction pursuant to the Colorado River doctrine, the Ninth Circuit generally 25 requires a stay rather than a dismissal. See Attwood v. Mendocino Coast Dist. Hosp., 886 26 F.2d 241, 243 (9th Cir. 1989). A stay “ensures that the federal forum will remain open if 27 for some unexpected reason the state forum . . . . turn[s] out to be inadequate.” Id. 28 (internal quotation marks omitted). 1 Additionally, “[a] district court has discretionary power to stay proceedings in its 2 own court.” Lockyer v. Mirant Corp., 398 F.3d 1098, 1109 (9th Cir. 2005) (citing 3 Landis, 299 U.S. at 254). “[T]he power to stay proceedings is incidental to the power 4 inherent in every court to control the disposition of the causes on its docket with 5 economy of time and effort for itself, for counsel, and for litigants.” Landis, 299 U.S. at 6 254. A district court may stay a case “pending resolution of independent proceedings 7 which bear upon the case,” even if those proceedings are not “necessarily controlling of 8 the action before the court.” Leyva v. Certified Grocers of Cal., Ltd., 593 F.2d 857, 863– 9 64 (9th Cir. 1979) (citations omitted). 10 In determining whether to grant a stay, courts in the Ninth Circuit weigh the 11 “competing interests which will be affected by the granting or refusal to grant a stay,” 12 including: 13 [1] the possible damage which may result from the granting of a stay, [2] the 14 hardship or inequity which a party may suffer in being required to go 15 forward, and [3] the orderly course of justice measured in terms of the simplifying or complicating of issues, proof, and questions of law which 16 could be expected to result from a stay. 17 18 Lockyer, 398 F.3d at 1110 (quoting CMAX, Inc. v. Hall, 300 F.2d 265, 268 (9th Cir. 19 1962) (identifying the Landis factors)). “‘[I]f there is even a fair possibility that the stay . 20 . . will work damage to someone else,’ the stay may be inappropriate absent a showing by 21 the moving party of ‘hardship or inequity.’” Dependable Highway Express, Inc. 22 v. Navigators Ins. Co., 498 F.3d 1059, 1066 (9th Cir. 2007) (quoting Landis, 299 U.S. at 23 255). The burden is on the movant to show that a stay is appropriate. See Clinton 24 v. Jones, 520 U.S. 681, 708 (1997) (citing Landis, 299 U.S. at 255). 25 III. DISCUSSION 26 Scripps asks the Court to stay this action pending resolution of three pending state 27 court actions: Bell v. Scripps Health, Inc., California Superior Court, San Diego County, 28 Case No. 34-2022-00005620-CU-OE-CTL (the “Bell Action”); Monreal v. Scripps 1 Health, et al., California Superior Court, San Diego County, Case No. 37-2022- 2 00006729-CU-OE-CTL (the “Monreal Action”); and Kimble v. Scripps Health, 3 California Superior Court, San Diego County, Case No. 37-2022-00010056-CU-OE-NC 4 (the “Kimble Action” and collectively with the Bell Action and the Monreal Action, the 5 “State Court Actions”).1 Before delving into the analysis, the Court provides summary 6 overviews of the three State Court Actions as well as the present case.2 7 A. The Bell Action 8 The Bell Action was initiated on February 10, 2022. Scripps is named as a 9 defendant along with DOES 1 through 100. By way of a first amended complaint, Bell 10 brings eight causes of action: (1) failure to pay overtime, Cal. Labor Code § 510; 11 (2) failure to provide accurate wage statements, Cal. Lab. Code § 226(a); (3) failure to 12 pay minimum wage, Cal. Lab. Code § 1194; (4) failure to provide meal periods, Cal. Lab. 13 Code § 512; (5) failure to provide rest periods; (6) unfair business practices, Cal. Bus. & 14 Prof. Code §§ 17200, et seq.; (7) unfair business practices, Cal. Bus. & Prof. Code 17200; 15 and (8) PAGA penalties. Bell seeks to represent a class of employees beginning 16 November 7, 2021. Bell seeks declaratory relief, restitution in the form of due and 17 overtime wages, California Labor Code civil penalties, and PAGA penalties. 18 B. The Monreal Action 19 The Monreal Action was initiated on February 22, 2022. Scripps is named as a 20 defendant along with Scripps Memorial Hospital, La Jolla and DOES 1 through 100. In 21 the Monreal Action, Monreal brings nine causes of action: (1) failure to pay overtime, 22 Cal. Lab. Code § 510; (2) failure to pay minimum wage, Cal. Lab. Code § 1194; 23 (3) failure to pay sick leave, Cal. Lab. Code § 246; (4) failure to provide meal periods, 24 Cal. Lab. Code § 512; (5) failure to provide rest periods, Cal. Lab. Code § 226.7; 25

26 1 The Court GRANTS Defendant’s unopposed request for judicial notice of the State Court Actions’ 27 operative complaints and Notice of Ruling, relating the actions. See Doc. No. 15-4. 2 The following summaries of the State Court Actions are derived from the superior court dockets, as 28 1 (6) failure to pay all wages upon termination, Cal. Lab. Code § 203; (7) failure to provide 2 accurate wage statements, Cal. Lab. Code § 226; (8) unfair competition, Cal. Bus. & 3 Prof. Code §§ 17200, et seq.; and (9) PAGA penalty. Monreal seeks to represent a class 4 of Scripps employees beginning February 22, 2018. Monreal seeks restitution in the 5 form of due wages and overtime, liquidated damages for unpaid minimum wages, and 6 California Labor Code civil penalties. 7 C. The Kimble Action 8 The Kimble Action was initiated on March 15, 2022. Kimble brings four claims 9 against Scripps as the only named defendant: (1) failure to provide meal periods, Cal. 10 Labor Code § 512; (2) failure to pay all wages due at end of employment, Cal. Labor 11 Code § 203; (3) failure to provide accurate wage statements, Cal. Labor Code § 226; and 12 (4) unfair business practices, Cal. Bus. & Prof. Code §§ 17200, et seq. Kimble seeks to 13 represent several subclasses of employees beginning March 15, 2018. Kimble prays for 14 compensatory damages, restitution in the form of all due wages, injunctive relief, and 15 California Labor Code penalties. 16 D. The Present Action 17 Plaintiffs filed their Complaint on March 21, 2022. The only named defendant is 18 Scripps. As noted above, Plaintiffs assert six causes of action against Scripps: (1) failure 19 to pay overtime in violation of the FLSA; (2) failure to pay overtime, Cal. Lab. Code 20 § 510; (3) violation of recordkeeping requirements, Cal. Labor Code § 226; (4) waiting 21 time penalties, Cal. Labor Code § 203; (5) violation of California’s UCL, Cal. Bus. & 22 Prof. Code §§ 17200, et seq.; and (6) civil penalties pursuant to PAGA, Cal. Lab. Code 23 §§ 2698, et seq. Plaintiffs seek to represent a class of Scripps employees beginning 24 December 11, 2021. Plaintiffs pray for declaratory relief, restitution in the form of 25 unpaid wages, liquidated damages, and civil penalty damages. 26 E. Colorado River Analysis 27 It is clear that the present case is substantially similar to the State Court Actions. 28 The state court has already ordered the State Court Actions related, see Doc. No. 15-6, 1 and it is expected that they will be consolidated, see Doc. No. 15-1 at 5. Generally 2 speaking, the State Court Actions involve the same core theory: that over some period of 3 time, beginning as early as 2018 and as recent as the end of 2021, Scripps failed to 4 comply with California labor laws. In particular, the State Court Actions involve 5 overlapping allegations that Scripps failed to pay its employees accurate and minimum 6 wages and overtime and provide meal and rest breaks. Further, the claims in the State 7 Court Actions are all based upon alleged violations of the California Labor Code and the 8 California Business & Professions Code, and many of the claims are exactly the same. 9 These allegations and claims in the State Court Actions are virtually the same in 10 this case. Here, Plaintiffs allege that Scripps failed to accurately track employees’ hours 11 and pay wages and overtime in violation of—primarily—California labor laws. In fact, 12 the Monreal and Bell Actions involve all of the same claims Plaintiffs put forth in this 13 case but for Plaintiffs’ FLSA claim. However, Plaintiffs’ FLSA claim is based upon a 14 failure to pay overtime, which is the same basis for their violation of California Labor 15 Code § 510 claim. And this California law claim is similarly set forth in the Bell and 16 Monreal Actions. The Ninth Circuit has stated that it is “particularly reluctant to find that 17 the actions are not parallel when the federal action is but a ‘spin-off’ of more 18 comprehensive state litigation.” Montanore, 867 F.3d at 1170 (quoting Nakash v. 19 Marciano, 882 F.2d 1141, 1147 (9th Cir. 1989) (internal quotation marks omitted)). 20 Moreover, all four actions are brought on behalf of putative classes. In fact, Plaintiffs 21 and the class members they seek to represent in this action fall within the State Court 22 Actions’ class definitions. Accordingly, the Court is sufficiently persuaded that the 23 factual allegations and claims set forth in all four actions are substantially similar. 24 Further, although all four cases were filed within less than two months’ time, all three 25 State Court Actions were filed prior to the Complaint in this case and thus, this Court was 26 last to obtain jurisdiction. Moreover, California state law provides the rule of decision on 27 the merits of nearly all of Plaintiffs’ claims and the Court agrees that a stay would 28 certainly avoid piecemeal litigation. 1 However, the Court has serious concerns as to whether the State Court Actions will 2 fully dispose of the present case, which it noted in the Interim Order. See Doc. No. 19 at 3 3. If the State Court Actions settle out of court, and if Plaintiffs opt out of those classes, 4 this case will need to be litigated in full upon return. Although Plaintiffs did not oppose 5 Defendant’s request for a stay under Colorado River, see Doc. No. 18, they now inform 6 the Court they are likely to opt-out of any settlement, see Doc. No. 21 at 6. 7 Consequently, the Court has substantial doubt that it will have “nothing further to do in 8 resolving any substantive part of the case,” Intel Corp. v. Advanced Micro Devices, Inc., 9 12 F.3d 908, 913 (9th Cir. 1993), when the stay is lifted upon resolution of the State 10 Court Actions and therefore the present situation does not pose the “exceptional 11 circumstances” required for the Court to invoke the Colorado River doctrine. Moses H. 12 Cone Mem. Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 19 (1983). Accordingly, 13 because the Court cannot “conclude[] that the parallel state-court litigation will be an 14 adequate vehicle for the complete and prompt resolution of the issues between the 15 parties,” and instead has “substantial doubt,” id. at 28, the Court DENIES Scripps’ 16 motion for a stay under Colorado River. 17 F. Landis Analysis 18 Nonetheless, the Court has the inherent power and discretion to stay this case 19 under Landis. See Lockyer, 398 F.3d at 1109 (citing Landis, 299 U.S. at 254). In the 20 Interim Order, the Court provided Scripps the opportunity to submit supplemental 21 briefing either addressing the Court’s concerns or indicating that a stay under Landis is 22 appropriate. In response, Scripps chose the latter, agreeing that a discretionary stay is 23 warranted. See Doc. No. 20. The Court also, in the interest of fairness, invited Plaintiffs 24 to respond. Plaintiffs oppose a stay under Landis. See Doc. No. 21. 25 It is undeniable that Scripps will face hardship if it is required to simultaneously 26 defend against multiple putative class actions involving entirely overlapping California- 27 based wage and hour claims on multiple fronts. And due to the significant overlap, the 28 possibility of inconsistent rulings would present great inequity. Further, the orderly 1 course of justice certainly supports granting a stay. As discussed above, the present 2 action is largely duplicative of the pending State Court Actions, and it would be 3 inefficient for the Court and the parties to proceed with this case in the wake of the State 4 Court Actions. See Leyva, 593 F.2d at 863–64 (“A trial court may, with propriety, find it 5 is efficient for its own docket and the fairest course for the parties to enter a stay of an 6 action before it, pending resolution of independent proceedings which bear upon the case 7 . . . . In such cases, the court may order a stay of the action pursuant to its power to 8 control its docket and calendar and to provide for a just determination of the cases 9 pending before it.”). 10 Plaintiffs now argue that they will be harmed if a stay is granted, namely, that their 11 claims and evidence will not be preserved in the State Court Actions. However, Plaintiffs 12 did not oppose a stay under Colorado River. By filing a statement of non-opposition, 13 Plaintiffs conceded that their claims would be adequately prosecuted in and disposed of 14 by the State Court Actions and seemingly saw no issue with the State Court’s ability to 15 manage discovery and Defendant’s capacity to preserve evidence. Plaintiffs have taken 16 inconsistent positions on whether a stay is warranted; Plaintiffs’ response to the Interim 17 Order does not render their prior statement of non-opposition moot. The Court is dubious 18 of Plaintiffs’ change in position, particularly since a discretionary stay would appear to be 19 the more favorable of the two options as a Colorado River stay would have wholly 20 foreclosed any future litigation in this case. Nonetheless, it is clear that as the State Court 21 Actions proceed, the litigation will encompass Plaintiffs and their claims, fact discovery 22 will overlap, and evidence will be preserved. The argument that the State Court will not 23 adequately protect all litigants in the State Court Actions—which includes Plaintiffs and 24 their proposed class members—is unpersuasive. Accordingly, the Court finds that there 25 will be no possible damage to Plaintiffs should the Court grant a stay. 26 That said, Plaintiffs bring a claim under the FLSA, which poses a statute of 27 limitations problem to granting a stay and therefore possible damage to the putative 28 collective members. Plaintiffs are correct that collective actions under the FLSA differ 1 from Rule 23 class actions. See Genesis Healthcare Corp. v. Symczyk, 133 S. Ct. 1523, 2 1529 (2013) (“Rule 23 actions are fundamentally different from collective actions under 3 the FLSA”). Generally, a two-year statute of limitations applies to FLSA claims, 4 however the deadline may be extended to three years for claims arising out of willful 5 violations. See 29 U.S.C. § 255(a). Due to the FLSA’s “opt-in,” as opposed to Rule 23’s 6 “opt-out,” procedure, the statute of limitations for each individual employee runs until he 7 or she files a written consent to opt into the action; unnamed collective members’ FLSA 8 claims do not relate back to the filing of the complaint. See 29 U.S.C. § 256(b). 9 Consequently, a stay lasting longer than the statute of limitations deadline could deprive 10 putative collective members of the ability to bring their FLSA claims. 11 However, any potential damage to the putative collective members’ FLSA claims 12 can be sufficiently negated and thus does not tip the balance of factors against granting a 13 stay. The Ninth Circuit has interpreted the FLSA statute of limitations as a procedural 14 limitation that may be tolled when equity warrants. See Partlow v. Jewish Orphan’s 15 Home of S. Cal., Inc., 645 F.2d 757, 761 (9th Cir. 1981), abrogated on other grounds by 16 Hoffman-La Roche v. Sperling, 493 U.S. 165 (1989). Plaintiffs do not ask the Court to 17 prospectively equitably toll the FLSA statute of limitations. Nonetheless, “[c]ourts 18 regularly grant equitable tolling in FLSA cases when litigation circumstances prevent 19 prompt distribution of judicial notice.” Ray v. Cal. Dep’t of Soc. Servs., No. CV 17-4239 20 PA (SKx), 2019 U.S. Dist. LEXIS 219606, at *19 (C.D. Cal. Dec. 11, 2019) (collecting 21 cases); see also Hughes v. S.A.W. Entm’t, Ltd., No. 16-cv-03371-LB, 2019 U.S. Dist. 22 LEXIS 143983, at *5 (N.D. Cal. Aug. 23, 2019) (“Where a court in its discretion stays an 23 FLSA case, it may equitably toll the statute of limitations for potential opt-in plaintiffs in 24 the interest of justice.”); Coppernoll v. Hamcor, Inc., No. C 16-05936 WHA, 2017 U.S. 25 Dist. LEXIS 64247, at *9 (N.D. Cal. Apr. 27, 2017) (“The clear weight of decisions on 26 the issue from courts in our circuit is in favor of prospectively tolling the statute of 27 limitations for putative class members as equity demands.”). Although Plaintiffs may be 28 ready and willing to seek conditional collective certification now, it would be most 1 || equitable and efficient to all parties—named and absent—for the Court to stay this matter 2 || pending resolution of the State Court Actions and equitably toll the FLSA claim for the 3 || duration of the stay. 4 In sum, with the putative collective members’ FLSA claims equitably tolled, all of 5 || the factors—possible damage, hardship or inequity, and the orderly course of justice— 6 || strongly weigh in favor of the Court exercising its discretion and granting a stay. 7 || Accordingly, the Court GRANTS Scripps’ motion on this basis. 8 IV. CONCLUSION 9 Based upon the foregoing, the Court GRANTS IN PART Defendants’ motion to 10 In particular, the Court DENIES Scripps’ motion to stay this case under Colorado 11 || River and instead GRANTS the motion and STAYS this case pursuant to Landis pending 12 |/resolution of the State Court Actions. Because the Court chooses to exercise its 13 discretion to stay this case at Scripps’ request, it also equitably tolls the FLSA statute of 14 || limitations for the putative collective members’ claims from the date of the filing of the 15 || Complaint through the date on which the stay 1s lifted. The Court DIRECTS the parties 16 file a joint status report within five (5) business days of the conclusion of the State 17 || Court Actions. 18 IT IS SO ORDERED. 19 || Dated: September 21, 2022 20 BMiidul Do _ /Nphlr 21 HON. MICHAEL M. ANELLO 22 United States District Judge 23 24 25 26 27 28