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Campanelli v. Image First Uniform Rental Service, Inc.

United States District Court, N.D. California

July 10, 2017

KYLE L. CAMPANELLI, Plaintiff,
v.
IMAGE FIRST HEALTHCARE LAUNDRY SPECIALISTS, INC., et al., Defendants.

          ORDER GRANTING MOTION TO STAY IN PART; DENYING MOTION FOR RELIEF FROM NON-DISPOSITIVE MAGISTRATE JUDGE'S ORDER RE: DKT. NOS. 75, 77

          PHYLLIS J. HAMILTON UNITED STATES DISTRICT JUDGE

         Defendants' motions to stay all class and collective action proceedings, and for relief from a non-dispositive magistrate judge's order, came on for hearing before this court on June 7, 2017. Plaintiff appeared through his counsel, Brian Malloy and David Feola. Defendants appeared through their counsel, Eric Meckley. Having read the papers filed by the parties and carefully considered their arguments and the relevant legal authority, and good cause appearing, the court hereby GRANTS the motion to stay in part and DENIES the motion for relief from the magistrate judge's order, for the following reasons.

         BACKGROUND

         A. Factual Allegations

         This is a putative class/collective action alleging violations of the Fair Labor Standards Act (“FLSA”) and California labor laws. Plaintiff Kyle Campanelli was employed by ImageFIRST of California as a delivery person from March 2014 to March 3, 2015. Dkt. 11, First Amended Complaint (“FAC”) ¶ 4, 33. The FAC named three ImageFIRST companies as defendants: (1) ImageFIRST Uniform Rental Service, Inc. (“IF Uniform”); (2) ImageFIRST Healthcare Laundry Specialists, Inc. (“IF Healthcare”); and (3) ImageFIRST of California, LLC (“IF California”). IF Uniform, as explained below, was subsequently dismissed for lack of personal jurisdiction. Dkt. 51.

         Plaintiff's primary job duty was to pick up soiled laundry from ImageFIRST customers and deliver it to a warehouse/laundry center, and to pick up clean laundry from the warehouse/laundry center and deliver it to ImageFIRST customers. FAC ¶ 33. Campanelli alleges that he worked over forty hours a week but was denied meals and rest periods, and was never paid overtime compensation. FAC ¶ 36.

         Campanelli seeks to represent all similarly situated delivery persons of any ImageFIRST entity nationwide (the “National Collective”) in a collective action for failure to pay overtime wages under FLSA. FAC ¶¶ 4, 37-41. Campanelli also seeks to represent a Rule 23 class of similarly situated delivery persons who were wrongly classified as exempt under California labor laws (the “California Class”). FAC ¶¶ 42-51.

         Plaintiff defines similarly situated employees as “past and present employees of ImageFIRST who engage/were engaged in the pick-up and delivery of ImageFIRST products to and from customers intrastate however that employment was denominated . . . and who were classified as exempt from Federal and state overtime laws.” FAC ¶ 7. Plaintiff alleges that ImageFIRST delivery persons should not be exempt as they perform substantial manual labor, are not directly related to management or business operations, and are not involved in the exercise of discretion and independent judgment with respect to matters of significance. FAC ¶¶ 16, 19. The national collective action relies on alleged violations of the FLSA; the California Class relies on alleged violations of a number of provisions in the California Labor Code and Business and Professions Code.

         B. Procedural History

         IF California and IF Healthcare answered the complaint, and IF California admitted to employing Campanelli. Dkt. 23, 25. IF Uniform, however, filed a motion to dismiss for lack of personal jurisdiction on February 2, 2016. Dkt. 22. Following a hearing, the court permitted jurisdictional discovery and ordered supplemental briefing with respect to the motion to dismiss. Dkt. 40. On June 7, 2016, plaintiff filed a motion to compel regarding the jurisdictional discovery. The court denied the motion to compel, Dkt. 47, and subsequently granted the motion to dismiss IF Uniform. Dkt. 51.

         Following the entry of a protective order, Dkt. 58, plaintiff sought discovery from the remaining two defendants. Defendants objected to plaintiff's first round of interrogatories and requests for production of documents, and plaintiff filed a motion to compel on March 7, 2017. Dkt. 60. The matter was referred to Magistrate Judge Sallie Kim. Dkt. 66, 67.

         On April 18, 2017, Judge Kim granted plaintiff's motion to compel in part. See Dkt. 72, 73. Specifically, Judge Kim overruled defendants' three objections to discovery: (1) that other ImageFIRST subsidiaries were the employers of the drivers that formed the putative class; (2) that the requests violated the Fourteenth Amendment rights of third parties (other ImageFIRST subsidiaries or franchisees); and (3) that class discovery was inappropriate because no class had yet been certified. Dkt. 72 at 1-3. However, Judge Kim found that some of defendants' objections based on “burden or vagueness” had merit. Id. at 2.

         C. The Instant Motions

         On May 2, 2017, defendants filed a motion to stay all class and collective action proceedings until the Supreme Court issues a decision in Epic Systems Corp. v. Lewis, No. 16-285 (“Epic”), and the cases consolidated with Epic, including the Ninth Circuit's decision in Morris v. Ernst & Young, LLP, 834 F.3d 975 (9th Cir. 2016) (“Morris”). Dkt. 77. In Epic, which is expected to be heard in the fall of 2017, the Supreme Court will address whether “an agreement that requires an employer and an employee to resolve employment-related disputes through individual arbitration, and waive class and collective proceedings, is enforceable under the Federal Arbitration Act, notwithstanding the provisions of the National Labor Relations Act.” See Petition for a Writ of Certiorari, Epic, 2016 WL 4611259 at i, cert. granted, 137 S.Ct. 809 (U.S. Jan. 13, 2017).

         The Ninth Circuit held in Morris that general collective action waivers are not enforceable as to employment-related disputes because the National Labor Relations Act (“NLRA”) “precludes contracts that foreclose the possibility of concerted work-related legal claims.” Morris, 834 F.3d at 990. Thus, “[a]n employer may not condition employment on the requirement that an employee sign” a concerted action waiver. Id. In Epic, the Supreme Court will a resolve a circuit split as to the enforceability of arbitration agreements/concerted action waivers in this context.

         Defendants filed a motion for relief from Magistrate Judge Kim's discovery orders on the same day as their motion to stay. Dkt. 77. Defendants assert a number of legal errors, which all relate to permitting discovery regarding employees of ImageFIRST entities who are not named defendants. On May 18, 2017, the court ordered the plaintiff to file a ...


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