First-Filed Rule — Required Degree of Overlap between Actions —- Is Complete Identity of Parties Required? (Circuit Split) — Exceptions: “Improper Anticipatory Actions” and “Balance of Convenience and Interest of Justice”

Wyler-Wittenberg v. MetLife Home Loans, Inc., 2012 U.S. Dist. LEXIS 150865 (E.D.N.Y. Oct. 17, 2012):

The Plaintiff Patricia Wyler-Wittenberg ... commenced this putative collective and class action against MetLife Home Loans, a Division of MetLife Bank, N.A. ... and MetLife, Inc. ... seeking to recover both unpaid overtime and minimum wages. ***

I. BACKGROUND

*** MetLife is an "employer" as defined under the New York Labor Laws ("NYLL") and the Fair Labor Standards Act ("FLSA"). Wyler-Wittenberg was a loan officer employed by MetLife in its office located in Hauppauge, New York. The class which Wyler-Wittenberg seeks to represent is inclusive of other similarly situated MetLife loan officers and employees. ***

Wyler-Wittenberg alleges that she and other similarly situated loan officers were not paid a weekly guaranteed salary of at least $455.00. *** Consequently, the Plaintiff contends that MetLife failed to comply with legal minimum wage requirements. Instead, Wyler-Wittenberg maintains that MetLife engaged in illegal compensation practices in which it paid its loan officers an illegal "draw", consisting of a bi-weekly or monthly stream of income, which did not include overtime payment. (Id.) Wyler-Wittenberg alleges that MetLife required that she and other similarly situated loan officers arrive early and work late, routinely making officers work in excess of forty-hours a week without overtime compensation.... Wyler-Wittenberg asserts that MetLife acted in violation of the FLSA and the NYLL by failing to create and maintain accurate records to reflect the time that was worked by its loan officers. ***

This is the fourth putative collective and/or class action filed against MetLife, regarding its failure to lawfully compensate its loan officers. ***

A. The First Putative Collective and Class Action: Cerami v. MetLife

On March 2, 2011, plaintiff Robert Cerami..., a former MetLife loan officer, filed the first putative collective and nationwide class action against MetLife in the Superior Court of California.... On May 5, 2011, the case was removed to the United States District Court for the Central District of California.... Cerami seeks to represent a nationwide collective class of loan officers and other employees, whom he contends MetLife misclassified as exempt from the FLSA overtime requirements. In addition to the FLSA claims, Cerami asserts claims under California state law and maintains the case as a Rule 23 class action on behalf of the California--based loan officers within the collective class.... Cerami alleges that MetLife owes said plaintiffs unpaid wages and overtime compensation, and seeks to recover wages for the eight hours allegedly worked in excess of the forty--hour workweek. ***

B. The Second Putative Collective and Class Action: Miner v. MetLife

On March 11, 2011, plaintiff Barry Hollander..., a former loan officer of MetLife, filed the second putative collective and class action against MetLife in California state court, which was subsequently removed to the United States District Court for the Central District of California.... The claims asserted in Miner are virtually identical to those asserted in the Cerami action. In both matters, plaintiffs brought FLSA claims on behalf of a nationwide class of loan officers and California state law overtime claims on behalf of a class of MetLife loan officers and employees. The claims asserted in Miner are currently pending before the same federal judge to whom the Cerami action has been assigned, and the parties in Miner consented to partake in the ongoing mediation and settlement efforts in the Cerami action. For this reason, the claims set forth in Miner are referred to collectively as part of the discussion of the Cerami action. ***

[O]n or about July 20, 2012, a Joint Stipulation and Settlement Agreement, made and entered among the parties in the Cerami action, was filed with the court. *** The hearing on plaintiffs' motion for Rule 23 preliminary approval of settlement and FLSA approval of settlement is currently scheduled for October 22, 2012***.

C. The Third Putative Collective And Class Action: Swisher v. MetLife

On January 17, 2012, plaintiff Steve Swisher..., a former MetLife loan officer, filed the third putative collective and class action representative of a nationwide collective class of loan officers in the United States District Court for the District of Minnesota.... In the complaint, Swisher asserted that MetLife misclassified the relevant class of loan officers and employees, and acted in violation of the FLSA for its failure to pay federally mandated overtime wages....

Pursuant to the "first-filed" rule, MetLife moved to dismiss, or alternatively, to stay or transfer the Swisher action to the Central District of California, the venue of the Cerami action. T*** Magistrate Judge Leung recommended that the court grant MetLife's motion to dismiss, stay or transfer in part, recommending that the Swisher action be transferred to the Central District of California where the Cerami action is pending. ***

Adopting that recommendation, on June 4, 2012, the district court transferred the Swisher action to the Central District of California***.

D. The Instant Action: Wyler-Wittenberg v. MetLife

***On April 5, 2012, MetLife filed the instant motion to dismiss, or alternatively, to stay or transfer this matter to the Central District of California where the Cerami and Swisher actions are pending.... MetLife first maintains that the Court should dismiss the instant action because the allegations in Wyler-Wittenberg's complaint are duplicative to those raised in the Cerami action and the Swisher action, two parallel cases that are currently pending before the same court. Thus, relying on the "first-filed" rule, MetLife urges the Court to dismiss the instant action to prevent concurrent litigation and preserve judicial resources. MetLife emphasizes that in a nationwide collective action, application of the "first-filed" rule to dismiss a matter is especially appropriate.

Alternatively, MetLife contends that the Court should retain its jurisdiction over the subsequently filed action, but grant a stay in this matter until the Cerami and Swisher actions are resolved in order to prevent relitigation of the same issues. Finally, with respect to MetLife's request that the instant action be transferred to the Central District of California, MetLife relies on 28 U.S.C. § 1404(a), the convenience transfer statute, observing that district courts maintain broad discretion to transfer a case to a venue that will promote fairness and judicial economy.

Wyler-Wittenberg opposes MetLife's motion on two grounds. She argues that: (1) the putative collective class should proceed in the forum in which the complaint was filed because Wyler-Wittenberg represents a distinct class asserting different claims than those raised in Cerami and Swisher; and (2) dismissal of the instant action would deprive Wyler-Wittenberg and a nationwide class of similarly situated loan officers of their substantive rights without a fair adjudication of the claims asserted in the complaint.

II. DISCUSSION

A. Application of the "First-filed" Rule

The resolution of this dispute requires an application of the "first-filed" rule. The "first-filed" rule is a well-settled legal doctrine, instructing that "where there are two [or more] competing lawsuits, the first suit should have priority, absent the showing of balance of convenience or special circumstances giving priority to the second." First City Nat. Bank and Trust Co. v. Simmons, 878 F.2d 76, 79 (2d Cir. 1989) (quotations and citations omitted); see also Taylor v. Rodriguez, 238 F.3d 188, 197 (2d Cir. 2001) ("In administering its docket, a district court may dismiss a second suit as duplicative of an earlier suit . . . .") (citations and quotations omitted); Curtis v. Citibank, N.A., 226 F.3d 133, 133 (2d Cir. 2000); Kahn v. Gen. Motors Corp., 889 F.2d 1078, 1081 (Fed. Cir. 1989); Motion Picture Lab. Technicians Local 780 v. McGregor & Werner, Inc., 804 F.2d 16, 19 (2d Cir. 1986); Fort Howard Paper Co. v. William D. Witter, Inc., 787 F.2d 784, 790 (2d Cir. 1986); Factors Etc., Inc. v. Pro Arts, Inc., 579 F.2d 215, 218 (2d Cir. 1978); Semmes Motors, Inc. v. Ford Motor Co., 429 F.2d 1197, 1202 (2d Cir. 1970); William Gluckin & Co. v. International Playtex Corp., 407 F.2d 177, 178 (2d Cir. 1969); Cali v. East Coast Aviation Services, Ltd., 178 F. Supp. 2d 276, 292 (E.D.N.Y. 2001); O'Hopp v. Contifinancial Corp., 88 F. Supp. 2d 31, 34 (E.D.N.Y. 2000); Spotless Enterprises Inc. v. The Accessory Corp., 415 F. Supp. 2d 203, 205 (E.D.N.Y. 2006) (observing vast circumstances in which federal courts have applied the "first-filed" rule).

The United States Supreme Court has acknowledged that application of the "first-filed" rule promotes "wise judicial administration, giving regard to conservation of judicial resources and comprehensive disposition of litigation . . . ." Kerotest Mfg. Co. v. C-O-Two Fire Equipment Co., 342 U.S. 180, 183, 72 S. Ct. 219, 221, 96 L. Ed. 200 (1952). The "first-filed" rule enables courts to prevent "duplicative litigation by adhering to the inherently fair concept that the party who commenced the first suit should generally be the party to attain its choice of venue." Ontel Products, Inc. v. Project Strategies Corp., 899 F. Supp. 1144, 1150 (S.D.N.Y. 1995). Proper application of the "first-filed" rule requires that the first and subsequently filed case(s) have either identical or substantially similar parties and claims. See Spotless Enters. Inc., 415 F. Supp. 2d at 205-06.

Importantly, application of the rule does not require identical parties in the cases, but merely requires "substantial overlap." Id.; see Intema Ltd. v. NTD Labs., Inc., 654 F. Supp. 2d 133, 141 (E.D.N.Y. 2009) (noting that the "first-filed" rule can be invoked where significant overlapping factual issues exist between the two pending cases); Mastercard Int'l Inc. and Mastercard Int'l, LLC, No. 03 Civ. 7157, 2004 WL 1368299, at *7-8, 2004 U.S. Dist. LEXIS 10906, at *23-24 (observing the presumption in favor of the forum in which the first action is filed where the record presents "sufficient overlapping factual and legal issues" between two cases); see also Save Power Ltd. v. Syntek Fin. Corp., 121 F.3d 947, 951 (5th Cir. 1997); Meeropol v. Nizer, 505 F.2d 232, 235 (2d Cir. 1974); Maclaren v. B-I-W Group, Inc., 329 F. Supp. 545 (S.D.N.Y. 1971). But see CRST Van Expedited, Inc. v. J.B. Hunt Transport, Inc., No. 04 Civ. 79, 2005 WL 741911, at *7, 2005 U.S. Dist. LEXIS 5558, at *16 (N.D. Iowa March 31, 2005) (recognizing the circuit split between the Sixth Circuit and the Second, Fourth, and Fifth Circuits, in that the Sixth Circuit requires that the subsequent action include "all of the same parties" in order for the court to invoke the "first-filed" rule).

Here, there is some degree of overlap that exists between the parties, claims, and the relief sought in each of the collective and class actions against MetLife. With regard to parties, MetLife is the same defendant-employer in each of the actions, but the seventy-five plaintiffs who opted-in as parties to the instant action are not the same plaintiffs as those in Cerami or Swisher. However, in the assessment of whether the "first-filed" rule is applicable, the Second Circuit plainly does not require the first-filed action and the subsequent action to consist of identical parties. Moreover, the Court recognizes vast similarities among the individual plaintiffs in each of the putative collective and class actions against MetLife. Each plaintiff was either a loan officer or employee with similar job titles who worked at MetLife during the relevant time period. This point was previously argued by MetLife in Swisher, and accepted by the court in its decision to transfer the case. See Swisher, No. 12 Civ. 00133, slip op. at 6-7 ("[a]s evident by their complaints, the named plaintiffs in [each] of these cases contemplated a nationwide collective class--thereby encompassing all other loan officers working for Defendants--for their FLSA claims.")

Thus, considering the similar positions held by the plaintiffs in each of these matters and the opt-in nature of a collective class, the Court concludes that plaintiffs in this action are similar enough to those in Cerami and Swisher to warrant application of the "first-filed" rule.

Furthermore, Wyler-Wittenberg alleges that the claims and relief asserted in the instant action are distinct from that in Cerami and Swisher. With regard to the claims asserted, all three actions involve FLSA claims for unpaid wages and overtime compensation against MetLife. The claims are also premised upon similar allegations, including that MetLife engaged in unlawful compensation policies and practice; misclassified its loan officers as exempt from the FLSA; and failed to keep accurate records of and lawfully compensate employees in accord with the applicable hourly rates under federal law. Thus, the claims and relief sought undoubtedly have significant overlap.

In addition, both Cerami and the instant action clearly assert labor law claims under state law. However, because the claims in Cerami involve California state law and the state claims in the instant action involve the NYLL, Wyler-Wittenberg maintains that these claims are distinct and the "first-filed" rule should not be applied. Moreover, Wyler-Wittenberg asserts that she "was in fact the first to file a Rule 23 claim for violations of the New York Labor Laws." ***

[T]he existence or absence of NYLL claims in Swisher does not affect the Court's finding that the claims in the instant action are sufficiently similar to those in Cerami and Swisher for the Court to apply the "first-filed" rule. *** Judge Leung ... addressed the impact that the possible inclusion of the NYLL claims might have on the case and his recommendation. In particular, Judge Leung decided that "the presence of New York state-law claims by some of the Plaintiffs in [Swisher] does not sufficiently distinguish it from the Cerami action" so as to preclude application of the "first-filed" rule.... This Court is wholly in agreement with that conclusion.

Next, Wyler-Wittenberg emphasizes that the complaint in the instant action is the only one that includes a claim and seeks relief for MetLife's alleged failure to pay minimum wages. However, given the extent of the overlap that exists between the parties and claims in each putative collective and class action, the Court finds that this point is ineffective to preclude application of the "first-filed" rule.... [T]he claims in both Cerami and Swisher are sufficiently broad enough to encompass minimum wage claims, and in any event are so markedly related to overtime claims that there remains a substantial overlap so as to warrant the application of the "first-filed" rule. Therefore, notwithstanding that the substance of the compensation claims and the relief sought by the parties differs to a slight degree, the Court finds that the duplicative nature of the totality of claims asserted and the relief sought warrants application of the "first-filed" rule in this matter.

Finally, the Plaintiff contends that MetLife's motion should be denied on the basis that the parties in the first-filed action, Cerami v. MetLife, have reached a settlement in principle, which would effectively moot the Defendants' motion. Certainly, a Joint Stipulation and Settlement Agreement has been filed with the United States District Court for the Central District of California, and it appears that the parties have reached a settlement. However, this Court, similar to Judge Leung in Swisher, is not persuaded by the Plaintiff's argument. It is necessary for the federal court to approve the fairness of any settlement in this regard, and thus settlement is ultimately a determination for the Court.

The Court does acknowledge that "special circumstances" might arise to justify its departure from the "first-filed" rule. For instance, courts have refused to apply the "first-filed" rule in "improper anticipatory actions," or alternatively, where the "balance of convenience and interest of justice" favors the forum in which the second suit was brought. Spotless Enters. Inc., 415 F. Supp. 2d at 207. "Improper anticipatory actions" include cases where the record suggests that forum-shopping motivated the filing of the suit and choice of venue. Id.; see also Fed. Ins. Co. v. May Dep't Stores Co., 808 F. Supp. 347, 350 (S.D.N.Y. 1992) (directing that a court's "[d]eparture from the first filed rule is warranted only after careful consideration of the particular circumstances of a given case taken as a whole").

The second exception to the "first-filed" applies where the balance of convenience and interest of justice favors the second action. See Adam v. Jacobs, 950 F.2d 89, 92 (2d Cir. 1991). "The factors to be considered in weighing the balance include: (1) the convenience of the witnesses, as well as the availability of process to compel their attendance if unwilling; (2) the location of relevant documents and ease of access to sources of proof; (3) the convenience and relative means of the parties; (4) the locus of the operative facts; (5) the forums' respective familiarity with the governing law; (6) the weight accorded to the plaintiff's choice of forum; (7) trial efficiency and the interests of justice; and (8) any other relevant factors special to the two cases." Rico Records Distributors, Inc. v. Ithier, 364 F. Supp. 2d 358, 361 (S.D.N.Y. 2005); Everest Capital Ltd. v. Everest Funds Mgmt., L.L.C., 178 F. Supp. 2d 459, 465 (S.D.N.Y. 2002).

The Court further finds that neither party has accused the other of forum shopping, nor raised any facts that would weigh in favor of a departure from the "first-filed" rule. There is no indication that applying the "first-filed" rule would inconvenience plaintiffs or witnesses, or otherwise impose a burden on plaintiffs in their ability to access and present evidence. With regard to choice of forum, the Court reiterates that the "first-filed" rule embodies the notion that the plaintiff who is first to commence litigation should have his or her choice of venue. Finally, the Court notes that application of the "first-filed" rule in this matter would serve its intended purpose in promoting the efficient resolution of duplicative litigation. Therefore, because Wyler-Wittenberg has failed to identify any special circumstances to justify a departure, the Court deems the "first-filed" rule applicable and proper under the facts of this case.

Editorial Note: Having reviewed more recent Sixth Circuit authority, I believe the Circuit split identified by this case is no longer accurate. There may be a Circuit split on this issue, but not due to the Sixth Circuit's position.

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