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Keshishzadeh v. Arthur J. Gallagher Service Co.

May 12, 2010

SCARLET KESHISHZADEH, AN INDIVIDUAL; ON BEHALF OF HERSELF, AND ON BEHALF OF ALL PERSONS SIMILARLY SITUATED, PLAINTIFFS,
v.
ARTHUR J. GALLAGHER SERVICE CO., A DELAWARE CORPORATION, DEFENDANTS.
JAMES CAREY, ON BEHALF OF HIMSELF AND ALL OTHERS SIMILARLY SITUATED, PLAINTIFFS,
v.
ARTHUR J. GALLAGHER AND COMPANY, A DELAWARE CORPORATION, AND GALLAGHER BASSETT SERVICES, INC., A DELAWARE CORPORATION, INCLUSIVE, DEFENDANTS.



The opinion of the court was delivered by: Honorable Larry Alan Burns United States District Judge

ORDER DENYING DEFENDANTS' MOTION TO STAY

On April 23, 2010, Defendants filed an ex parte request to stay this case, or, in the alternative, push back the deadline for their summary judgment motion. This request was filed approximately one week after the Court granted Plaintiffs' motion for class certification, and approximately ten days before Defendants' summary judgment motion was due.

The basis for Defendants' stay request is that the California Supreme Court has yet to issue a ruling in Harris v. Superior Court, 154 Cal.App.4th 164 (2007), which will have a lot to say about the critical issues in this case, particularly the contours of the "administrative exemption" from overtime requirements under the California Labor Code. The basis for their alternative request - for more time to file a summary judgment motion - is that the Court only recently certified the class, and discovery is not even complete.

II. Legal Standard

A district court has discretionary power to stay a case before it under Landis v. North American Co., 299 U.S. 248, 254 (1936). "[T]he power to stay proceedings is incidental to the power inherent in every court to control the disposition of the causes on its docket with economy of time and effort for itself, for counsel, and for litigants." Id. Landis established the following guidelines:

Where it is proposed that a pending proceeding be stayed, the competing interests which will be affected by the granting or refusal to grant a stay must be weighed. Among those competing interests are the possible damage which may result from the granting of a stay, the hardship or inequity which a party may suffer in being required to go forward, and the orderly course of justice measured in terms of the simplifying or complicating of issues, proof, and questions of law which could be expected to result from a stay.

Id. at 254. See also Keating v. Office of Thrift Supervision, 45 F.3d 322, 325 (9th Cir. 1995) (articulating similar considerations for decision whether to stay civil proceedings in light of parallel criminal proceedings); Blue Cross and Blue Shield of Alabama v. Unity Outpatient Surgery Ctr., 490 F.3d 718, 724 (district court must consider interests of the parties, the public, and the court). "Only in rare circumstances will a litigant in one cause be compelled to stand aside while a litigant in another settles the rule of law that will define the rights of both." Landis, 299 U.S. at 255. At the same time, the Ninth Circuit has explained that "[a] trial court may, with propriety, find it is efficient for its own docket and the fairest course for the parties to enter a stay of an action before it, pending resolution of independent proceedings which bear upon the case." Leyva v. Certified Grocers of California, Ltd., 593 F.2d 857 (9th Cir. 1979).

If there's a chance that a stay will "work damage" to the opposing party, the party requesting the stay "must make out a clear case of hardship or inequity in being required to go forward." Landis, 299 U.S. at 255. The greater the damage, the clearer the case must be. CMAX, Inc. v. Hall, 300 F.2d 265, 268 (9th Cir. 1962). If, for example, a plaintiff alleges no continuing harm, and a stay would merely delay the plaintiff's recovery of damages for a past harm, the "damage" of a stay may be minimal. Id.

The potential length of a stay is certainly relevant to the decision whether to grant it. See Richards v. Ernst & Young LLP, Case No. 08CV4988, 2010 WL 682314 at *4 (N.D. Cal. Feb. 24, 2010). Richards is a wage an hour case that raises the question whether, under California law, an employer need only "provide" meal and rest breaks to employees, or must also "ensure" that employees take them. That question is also before the California Supreme Court in Brinker Rest. Corp. v. Superior Court, 85 Cal. Rptr.3d 688 (2008), but the court in Richards refused to issue a stay and wait for a decision:

If it had a reasonable expectation that the California Supreme Court would decide the issue within a matter of months, this Court likely would stay the instant action pending that decision. However... while Brinker has been fully briefed, oral argument has not been set. Under these circumstances, it may be quite some time before the issue is decided.

Id.*fn1 Where related civil proceedings are the basis for a stay request, as here and as in Richards, "[a] stay should not be granted unless it appears likely the other proceedings will be concluded within a reasonable time in relation to the urgency of the claims presented to the court." Leyva v. Certified Grocers of California, Ltd., 593 F.2d 857, 863 (9th Cir. 1979).

Federal courts are bound by the decisions of a state's highest court when interpreting that state's law, Ariz. Elec. Power Coop., Inc. v. Berkeley, 59 F.3d 988, 991 (9th Cir. 1995), and, as cases like Minor show, it may make sense to stay a federal case, or certain claims at issue in a federal case, while awaiting a definitive ruling from a state court on a critical point of law. Stays are also an option when one party is involved in parallel cases that ought to be sequenced rather than proceed simultaneously. See, e.g., CMAX (upholding stay of civil case between freight companies while an administrative enforcement action was pending against plaintiff); Leyva (stay of unpaid wages claim under Fair Labor Standards Act may be appropriate while similar claim was in arbitration under a collective bargaining agreement).

III. Discussion

Plaintiffs claim they'll be prejudiced by a stay because the Defendants waited until late in the game to make the request. There's some merit to this. The California Supreme Court agreed to hear Harris on November 28, 2007. This case was filed over a year later, on January 28, 2009. Defendants could have moved for a stay then, but they didn't. Instead, they went forward with discovery and opposed Plaintiffs' motion for class ...


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