IN RE FARMERS INS. EXCHANGE CLAIMS REPS.' OVERTIME PAY LITIG

ROBERT JONES, District Judge

This multidistrict overtime pay litigation ("MDL") is before the court on plaintiffs' motion (# 584) for a temporary restraining order and an order to show cause why an injunction should not issue. Specifically, plaintiffs seek an order enjoining a Minnesota state court judge, Judge Gary Larson, from ruling on defendant Farmers Insurance Exchange's ("FIE") motion for summary judgment filed in Milner v. Farmers Insurance Exchange, Case No. 01-015004, State of Minnesota, County of Hennepin, Fourth Judicial District. Plaintiffs also seek to enjoin the Minnesota court from conducting any further proceedings until 60 days after entry of final judgment in this MDL.

The Minnesota judge, Judge Gary Larson, graciously has postponed ruling in Milner until June 14, 2004, to allow this court time to resolve the pending motion.

On May 26, 2004, I held a hearing on plaintiffs' motion. After argument, I asked counsel to submit briefing on the potential use of Rule 52(c) of the Federal Rules of Civil Procedure to enter a partial judgment on the issue of liability, which I fully resolved under state and federal law following a three-week bench trial in September 2003. See In re: Farmers Insurance Exchange Claims Representatives' Overtime Pay Litigation, No. CV 33-1439 (Findings of Fact and Conclusions of Law, November 6, 2003 (# 532) and Amended Findings of Fact and Conclusions of Law, February 26, 2004) (# 569).

After considering the written submissions and arguments of counsel and for the reasons set forth below, I am not convinced that the requested injunction should issue and therefore deny plaintiffs' motion. I also conclude that Rule 52(c) does not provide an appropriate vehicle for entry of a partial judgment on the issue of liability at this time.

FACTUAL BACKGROUND

1. The MDL and the Minnesota State Class Action

The Milner case was commenced in Minnesota by a class of FIE claims representatives on October 3, 2001. On March 12, 2002, the Panel on Multidistrict Litigation transferred certain actions, including Milner, to this court for coordinated or consolidated pretrial proceedings, pursuant to 28 U.S.C. § 1407. On April 9, 2002, I granted a stipulated motion to remand Milner to state court.

On September 9, 2002, I conditionally certified plaintiffs' federal Fair Labor Standards Act ("FLSA") claims to proceed as a collective action. Several months later, on December 16, 2002, the Milner court certified a Minnesota class, defined as:

Current and former employees of Farmers Insurance Exchange ("FIE") who (a) are or have been at any time since October 3, 1998, employed as personal lines Claims Representatives, APD Claims Representatives, Senior Claims Representatives, Senior APD Claims Representatives, Special Claims Representatives, or Special APD Claims Representatives by a FIE office in Minnesota; (b) worked more than 38-3/4 hours in a workweek during this time period; (c) were classified by FIE as exempt from overtime pay requirements during this period and (d) have not commenced a separate lawsuit to recover unpaid wages or consent in writing to join the federal action is withdrawn by May 1, 2003.

See Milner Class's Memorandum in Opposition, pp. 2-3 (emphasis added).

The Milner plaintiffs moved to intervene (# 592) in this court for the purpose of opposing the pending motion. I granted the motion to intervene on May 20, 2004 (# 597).

On May 19, 2003, I certified seven state law opt-out classes in the MDL, including a Minnesota class defined as:

All personal lines Claims Representatives, Senior Claims Representatives, and/or Special Claims Representatives (job codes CL52, CL03, CL65, CLA6 and CLA7) employed by FIE in the state of Minnesota at any time since October 3, 1998, whom FIE did not compensate for work performed in excess of 48 hours per week.

Order and Findings Certifying State Law Classes Actions (# 438).

As stated in my findings and conclusions on liability, it appears that the Minnesota class members in this MDL number approximately 229. Some of those class members neither consented to join the FLSA collective action nor opted-out of the Milner class, and thus are members of both the MDL Minnesota class action and the Milner Minnesota class action. According to the parties, only 14 or so Milner class members are not also class members in the MDL Minnesota class. Thus, there is significant overlap in membership between the two state law class actions, although the claims asserted in both actions are not identical.

2. Current Status of Each Action

Following a bench trial, on November 6, 2003, I issued findings of fact and conclusions of law fully resolving the issue of FIE's liability, i.e., the issue of whether FIE properly classified claims representatives as exempt or non-exempt under the FLSA and the seven states' laws, including Minnesota law. Since issuance of my amended findings and conclusions in February 2004, and with the assistance of Special Master Justice Edwin Peterson, the parties have been working diligently on the damages issues, which will be concluded by December 31, 2004.

Meanwhile, in February 2004, FIE moved for summary judgment inMilner, seeking a ruling that "[b]ecause FIE salaried claims representatives perform work that is clearly `administrative' under Minn. Stat. § 177.23, Subd. 6, and because plaintiffs have no claim for overtime pay or unjust enrichment under these facts, the defendants are entitled to judgment as a matter of law." Defendants' Memorandum of Law in Support of Motion for Summary Judgment (Minnesota) (Exhibit E to Declaration of Jennifer Wagner), p. 1. It is Judge Larson's potential ruling on the motion for summary judgment that plaintiffs ask this court to enjoin.

I note also that in May 2004, David Miller, one of the members of the MDL Minnesota class, moved to intervene in Milner for the purpose of asking Judge Larson to refrain from ruling on FIE's motion for summary judgment. See Plaintiffs' Memorandum in Support of Motion for Temporary Restraining Order, p. 3 n. 1;see also Declaration of Jennifer Wagner, Exhibit G. I have not been informed of the present status of Miller's motion to intervene.

DISCUSSION

1. Authority to Issue the Requested Injunction

Under the All Writs Act, the court may "issue all writs necessary or appropriate in aid of [its] respective jurisdiction and agreeable to the usages and principles of law." 28 U.S.C. § 1651; see Hanlon v. Chrysler Corporation, 150 F.3d 1011, 1025 (9th Cir. 1998). That power is limited by the Anti-Injunction Act, which generally prohibits federal courts from interfering with proceedings in state courts, unless the circumstances fall within one of three express exceptions:

The * * * question is whether the circumstances of [the] case fall within one of the three exceptions to the Act — injunctions that: (1) Congress has expressly authorized; (2) are necessary in aid of the federal court's jurisdiction; or (3) are necessary to protect or effectuate the federal court's judgments.

Bennett v. Medtronic, Inc., 285 F.3d 801, 805 (9th Cir. 2002).

The Supreme Court has cautioned that the exceptions are to be narrowly construed and "`should not be enlarged by loose statutory construction.'" Bennett, 285 F.3d at 805 (quoting Atlantic Coast Line R.R. Co. v. Bhd. of Locomotive Eng'rs, 398 U.S. 281, 287 (1970)). "`Any doubts as to the propriety of a federal injunction against state court proceedings should be resolved in favor of permitting the state courts to proceed in an orderly fashion to finally determine the controversy.'"Bennett, 285 F.3d at 805 (quoting Atlantic Coast, 398 U.S. at 297). That an injunction may issue under the Anti-Injunction Act does not mean that it must; the decision whether to issue an injunction is committed to the court's discretion. Blalock Eddy Ranch v. MCI Telecommunications Corp., 982 F.2d 371, 375 (9th Cir. 1992).

Only the second exception to the Anti-Injunction Act, for injunctions "necessary in aid of [federal court] jurisdiction," 28 U.S.C. § 2283, is applicable here. That exception allows federal courts to enjoin state courts in cases where "some federal injunctive relief may be necessary to prevent a state court from so interfering with a federal court's consideration or disposition of a case as to seriously impair the federal court's flexibility and authority to decide that case," Atlantic Coast, 398 U.S. at 295, or where the state court proceeding threatens to "`render the exercise of the federal court's jurisdiction nugatory.'" Bennett, 285 F.3d at 806 (citation omitted).

I have carefully considered this matter and, assuming without deciding that the Anti-Injunction Act would permit an injunction under the circumstances presented here, I am not persuaded that an injunction is necessary to protect this court's jurisdiction or the integrity of the MDL proceedings. I have made my definitive rulings on FIE's liability, rulings I do not intend to revisit. The parties have been aware, since the early stages of the MDL, of the existence of parallel class actions, including the Milner case in Minnesota. Plaintiffs insisted on adding a Minnesota class action, among others, to the MDL, and after some opposition, FIE stipulated to certification of the MDL Minnesota class. Thus, the potential for conflicting rulings comes as no surprise to the court and should come as no surprise to the parties.

Moreover, plaintiffs' concern about what Judge Larson may or may not do on summary judgment is pure speculation. As theMilner plaintiff interveners point out in their memorandum in opposition to the pending motion, Judge Larson may well deny summary judgment given the highly fact-specific nature of the inquiry into any given employee's status as exempt or non-exempt for purposes of overtime pay. But even if Judge Larson grants FIE's motion, that decision, made without development of a complete record during trial, may or may not have the preclusive effect in this court that both plaintiffs and FIE seem to assume it will. Further, if Judge Larson denies FIE's motion, he may choose to defer his trial date until early 2005, after this MDL litigation is concluded.

In summary, at this point, the situation before me is one in which "[a]ny doubts as to the propriety of a federal injunction against state court proceedings should be resolved in favor of permitting the state courts to proceed in an orderly fashion to finally determine the controversy." Bennett, 285 F.3d at 805 (citation and internal quotations omitted). In my discretion, I conclude the requested injunction should not issue.

2. Judgment on Partial Findings Under Rule 52(c)

During the hearing on plaintiffs' motion, FIE suggested that any preclusion problem created by inconsistent rulings between the MDL and the Milner class action might be avoided by entry of a partial judgment on liability under Rule 52(c) of the Federal Rules of Civil Procedure. In relevant part, Rule 52(c) provides:

If during a trial without a jury a party has been fully heard on an issue and the court finds against the party on that issue, the court may enter judgment as a matter of law against that party with respect to a claim or defense that cannot under the controlling law be maintained or defeated without a favorable finding on that issue, or the court may decline to render any judgment until the close of all the evidence.

Fed.R.Civ.P. 52(c).

FIE filed its brief on this issue this morning and raises some interesting applications. However, I must reply to Judge Larson now and will not venture into unchartered legal areas on such short notice to interfere with another judge's scheduled actions.

CONCLUSION

Plaintiffs' motion (# 584) for a temporary restraining order and an order to show cause why an injunction should not issue is DENIED.