United States District Court, E.D. California
ORDER ON DEFENDANT'S MOTION TO TRANSFER TO THE SOUTHERN DISTRICT OF TEXAS
ANTHONY W. ISHII, Senior District Judge.
This case ("the Dewan matter") stems from an employment relationship between Plaintiff Matthew Dewan and Defendant M-I, L.L.C. ("M-I"), in which Dewan alleges he was misclassified as an exempt employee under the Fair Labor Standards Act ("FLSA"), 29 U.S.C. §§ 201-219, and now seeks to recover overtime pay as well as asserts violations of the Texas Labor Code. Dewan, a former drilling fluid specialist for M-I, filed the instant suit on December 14, 2014 in the Southern District of Texas as a putative class action, but failed to move for conditional certification, and it is now too late to do so. Sarmad Syed and Ashley Balfour ("the Syed Plaintiffs"), also former drilling fluid specialists for M-I alleging that they were improperly classified as exempt employees and not paid overtime under the FLSA and additionally alleging Rule 23 class action for wage and hour violations under the California Labor Code, had previously filed a collective action in the Eastern District of California on October 18, 2012 and moved for conditional nationwide certification on July 8, 2013. The Syed Plaintiffs subsequently filed in the Southern District of Texas a motion to intervene and transfer the later filed Dewan matter to this court. The District Judge in Texas granted the motion. Doc. 52. M-I has now filed a motion to transfer the Dewan matter back to the Southern District of Texas. Doc. 73. Dewan opposes. Doc. 75.
Order Granting Motion to Intervene and Transfer
The Magistrate Judge in the Southern District of Texas recommended that the court grant the Syed Plaintiff's motion to intervene and transfer. The Magistrate Judge reasoned that there was no dispute that the claims of both suits share some common questions of law and fact, and determined that Dewan should be transferred to the Eastern District of California pursuant to the "first-filed rule" in order to "avoid waste of duplication, to avoid rulings which may trench upon the authority of sister courts, and to avoid piecemeal resolution of issues that call for a uniform result." West Gulf Maritime Ass'n v. ILA Deep Sea Local 24, 751 F.2d 721, 729 (5th Cir. 1985). The Magistrate Judge found that transfer was preferable to outright dismissal because of substantial overlap between the allegations in the first-filed action and Dewan. The Magistrate Judge further found that while intervention of the Syed Plaintiffs, if viewed separately, might appear to delay adjudication of the original parties' rights, the fact that it was filed along with a motion to transfer to California where the first-filed action is pending means the intervention would not delay or prejudice the rights of the original parties. Doc. 47, 3. In response to M-I's contention that the facts and claims are not sufficiently similar, the Magistrate Judge disagreed and found-"based on the nature of Dewan's job and work responsibilities, the jobs and work responsibilities of the Syed Plaintiffs, and the nearly identical FLSA overtime claims and FLSA exemption issues-substantial overlap between the allegations and claims in this case and the allegations and claims in the Syed action." Id. at 4. Although the Syed Plaintiffs asserted some claims under California state law, while Dewan asserted only FLSA claims, the Magistrate Judge determined that the FLSA claims in both suits are the same and support transfer of the case. She rejected M-I's arguments that the Syed Plaintiffs delayed in seeking transfer and emphasized that M-I's filing of a motion for summary judgment one day after the Syed Plaintiffs filed their motion to intervene and transfer supports her finding that the Syed Plaintiffs did not purposely delay filing their motion.
M-I subsequently objected to virtually all of the Magistrate Judge's findings and recommendation, but the District Judge overruled the objections, affirmed the findings of the Magistrate Judge, and granted the motion to intervene and transfer the Dewan matter to the Eastern District of California. In granting the transfer the District Judge further found that "M-I Swaco has failed to show compelling circumstances that would warrant denial of the motion to intervene and transfer pursuant to the first-filed rule. There is no evidence that the Syed action was preemptive suit or an improper anticipatory filing; indeed it was filed approximately two months before the instant action. Nor has any bad faith or forum manipulation on their or Dewan's part been shown. Nor has the Syed Plaintiffs' delay in filing their motion been shown to be a calculated effort to manipulate the forum." Doc. 52, 26:2-10.
M-I now argues that the Syed Plaintiffs' statement of facts in support of a current collateral estoppel argument demonstrates that their prior motion to transfer the Dewan matter to the Eastern District of California was made in bad faith upon misrepresentations for the purposes of delay and forum shopping. M-I alleges that in the original motion to transfer the Syed Plaintiffs represented to the Southern District of Texas that there was complete overlap as to the FLSA claims and issues and that the Plaintiffs in Dewan were similarly situated to the Syed Plaintiffs. Now in this court though the Syed Plaintiffs have reversed course and cite the differences noted in M-I's opposition to the motion to transfer here. Further, the Syed Plaintiffs originally represented that they would seek to consolidate the matter, but now that the matter has been transferred they do not seek to do so. This all, M-I submits, demonstrates that the Syed Plaintiffs' prior representations to the Southern District of Texas were not true. Moreover, the District Judge in the Southern District of Texas accepted these representations and relied upon them in granting the motion to transfer.
M-I further argues that the Dewan matter has no relationship to California and the Southern District of Texas is the more convenient forum for the parties in Dewan. First, Dewan originally selected the Southern District of Texas as the preferred forum. Second, there is no connection or contact between Dewan and the Eastern District of California, but he did originally maintain and prosecute his claims against M-I under the FLSA and Texas law through the summary judgment stage in the Southern District of Texas. Third, while Dewan works primarily in Oklahoma, transportation between Oklahoma and Houston is fast and inexpensive. Additionally, M-I's headquarters is located in the Southern District of Texas in Houston. Four of M-Is witnesses are located in Houston and Houston is a far more convenient location for the remaining witnesses. Fourth, judges in the Eastern District of California have heavier caseloads than judges on the Southern District of Texas. Finally, California does not have a local interest in resolution of Dewan's FLSA claims. In supplemental briefings filed at the court's directions, M-I also notes that transferring the matter back to the Southern District of Texas would resolve the issue of whether the Fifth Circuit or Ninth Circuit jurisprudence should control in the Dewan matter and would restore the parties' expectations at the time the motion was filed.
M-I submits that Dewan's contention that M-I's motion is untimely and the Southern District of Texas' transfer order is the law of the case ignores that this court is the ultimate decision maker as to the appropriateness of transfer under the "first-to-file rule, " that a prior order under section 1404 can be reviewed, and that a motion to transfer under section 1404 can be brought at any time. Finally, Dewan's contention, that it is consistent to seek intervention and argue that collateral estoppel should not apply, ignores that Dewan did not only seek intervention, but also sought transfer allegedly for purposes of consolidation on a set of facts contrary to those now asserted with regard to collateral estoppel.
Dewan treats the Southern District of Texas' decision to transfer here as law of the case and M-I's current motion as a motion for reconsideration under Federal Rule of Civil Procedure 54(b). Accordingly, since M-I's argument for transfer back to the Southern District of Texas does not identify an intervening change in controlling law or any new evidence or identify how the prior order transferring the matter here is clearly erroneous or manifestly unjust, the court does not need to consider it.
Dewan also argues that venue is proper in the Eastern District of California and that there is nothing inconsistent about requesting transfer under the "first-to-file rule" but opposing consolidation. There is a distinction between finding that the Syed and Dewan matters share "common questions of law and fact" for purposes of justifying intervention and transfer to the first filed forum, versus finding an "identify of issues litigated on the merits" for purposes of using an individual FLSA judgment to collaterally estop a conditionally certified nationwide FLSA action. The test for permissive intervention under Federal Rule of Civil Procedure 24(b) is: (1) whether an independent ground for jurisdiction exists; (2) whether the motion to intervene is timely; and (3) whether there exists a claim or defense shared between the main action and the intervener's suit. See Kootenai Tribe of Idaho v. Veneman, 313 F.3d 1094, 1107-8 (9th Cir. 2002). Conversely, collateral estoppel requires that (1) the issue necessarily decided at the previous proceeding is identical to the one which is sought to be relitigated; (2) the first proceeding ended with a final judgment on the merits; and (3) the party against whom collateral estoppel is asserted was a party or in privity with a party at the first proceeding. Thus, while the Dewan and Syed matters may be related cases that the same court should hear for pragmatic reasons, that does not mean that Dewan's individual FLSA action will collateral estop a conditionally certified nationwide FLSA action.
Procedurally, Dewan argues that M-I's motion to transfer the case back to the Southern District of Texas is too late. The record reflects that the transfer order was filed on June 27, 2014 and the transfer papers were docketed in this court on July 23, 2014. Now nearing a year ...