Case Name: Guadalupe Flores Elizarraraz v. S.J. Distributors Inc., et al.
Case No.: 18-CV-333810

This is a putative wage and hour class action by employees of defendant S.J. Distributors, Inc. Before the Court is defendant’s demurrer to the complaint on the ground that the action should be abated in favor of a related lawsuit, Zheng, et al. v. S.J. Distributors Inc. (Super. Ct. Santa Clara County, No. 16-CV-295717). Plaintiff opposes defendant’s demurrer.

I. Allegations of the Operative Complaint

Defendant is headquartered in Milpitas and engages in wholesale food sales and distribution throughout California. (Class Action Complaint, ¶ 4.) Plaintiff alleges that defendant has employed hundreds of individuals in positions that are nonexempt from the payment of minimum and overtime wages, but paid these individuals a set salary regardless of hours worked. (Id. at ¶¶ 5, 15.) He alleges that defendant also “shaved” hours and rounded punch times, did not provide legally compliant meal and rest periods, failed to provide accurate itemized wage statements, and failed to timely pay all wages due upon employees’ termination. (Id. at ¶ 6.) Plaintiff further alleges that defendant failed to reimburse employees for business expenses associated with maintaining “uniforms and equipment including … heavy coats, vests, and gloves necessary for entering cold storage freezers and handling products.” (Id. at ¶ 33.) Finally, defendant failed to release plaintiff’s personnel records upon request as required by the Labor Code. (Id. at ¶ 20.)

Plaintiff has been employed by defendant as a forklift operator from 2012 to the present, although he has been unable to return to his regular work assignment since suffering a workplace injury on August 19, 2016. (Class Action Complaint, ¶ 14.) On August 24, 2018, he filed this action on behalf of a putative class of non-exempt employees (including warehouse workers, workers, warehouse crew members, warehouse assistants, laborers, forklift drivers, drivers, helpers, and lumpers) employed by defendant in California since four years prior to the filing of the complaint. (Id. at ¶ 27.) The complaint asserts claims for (1) failure to pay wages owed; (2) failure to provide meal and rest periods; (3) failure to provide accurate itemized wage statements; (4) failure to reimburse business expenses; (5) failure to timely produce employment records under Labor Code sections 226, 432, and 1198.5; and (6) unfair business practices under the Unfair Competition Law (the “UCL”).

II. Evidentiary Issues

Defendant’s request for judicial notice of the complaint in Zheng is GRANTED. (Evid. Code, § 452, subd. (d).) Similarly, plaintiff’s request for judicial notice of the complaint in Zheng and of her memorandum of points and authorities supporting her motion to consolidate filed in that action is also GRANTED. The parties’ requests are granted as to the existence and contents of these documents only, and not as to the truth of any statements of fact they reflect. (See Sosinsky v. Grant (1992) 6 Cal.App.4th 1548, 1564-1568 [court cannot take judicial notice of the truth of hearsay statements or facts set forth even in otherwise judicially noticeable documents]; see also Bounds v. Superior Court (KMA Group) (2014) 229 Cal.App.4th 468, 477 [a motion challenging the pleadings “may not be turned into a contested evidentiary hearing through the guise of having the court take judicial notice of affidavits, declarations, depositions, and other such material which was filed on behalf of the adverse party and which purports to contradict the allegations and contentions of the plaintiff”], internal citations and quotations omitted .)

Defendant’s objections to evidence, which were filed with its reply papers, are OVERRULED. As an initial matter, the narrative format of defendant’s objections makes it difficult for the Court to determine exactly what material defendant is objecting to. For example, the objections appear to extend to the Court’s consideration of the complaint in Zheng, which is puzzling because that document is the subject of defendant’s own request for judicial notice and the basis for its demurrer. At any rate, the Court may take judicial notice of the existence and contents of court filings as stated above, and it may consider evidence regarding the parties’ compliance with meet and confer requirements, as discussed below.

III. The Proceedings in Zheng

On May 27, 2016, plaintiffs Yi Zheng, Lei Liu, Di Wang, and Ran Xiong filed an earlier putative wage and hour class action against defendant. (Defendant’s Request for Judicial Notice, Ex. A.) The Zheng plaintiffs also allege that they were misclassified as exempt, were not provided with legally compliant meal and rest breaks, were not paid all wages due upon termination, and did not receive accurate itemized wage statements. (Id. at ¶¶ 16-19.) They further allege that defendant knowingly and intentionally failed to maintain records as required by California labor law. (Id. at ¶ 19.)

The Zheng plaintiffs seek to represent a putative class of current and former “warehouse employees engaged in packing and preparing orders to be shipped” and “drivers engaged in loading, unloading, performing mechanical work, and making deliveries” since four years prior to the filing of their complaint. (Defendant’s Request for Judicial Notice, Ex. A, ¶ 22.) They assert claims for (1) failure to pay overtime wages; (2) failure to provide meal periods; (3) failure to provide rest periods; (4) failure to furnish accurate wage statements; (5) failure to pay wages upon termination; (6) failure to maintain required records under Labor Code section 226 and 1174; and (7) unfair business practices under the UCL. The Zheng plaintiffs do not allege that defendant failed to reimburse them for business expenses.

According to plaintiff’s counsel, defendant declined to stipulate to the consolidation of this action with Zheng, which is proceeding in Department 5 of this Court. Plaintiff filed a motion to consolidate in that department, which the Court (Hon. Kuhnle) denied on February 4, 2019. The Court found that “[a]uthorizing consolidation at this point would result in duplication of efforts on discovery and likely a new Belaire-West notice,” and “could delay Zheng,” which was filed two years before the instant action. As reflected in the most recent case management statement in that case, the parties to Zheng have conducted written discovery, including the distribution of a Belaire-West notice. However, the class remains uncertified and there is no timeline for a motion for class certification. It appears that the parties in Zheng will attempt mediation in the near future.

IV. The Additional Related Proceedings in Gallardo

While not addressed by the parties, the Court has become aware of a third related lawsuit, Gallardo v. S.J Distributors, Inc. (Super. Ct. Los Angeles County, No. BC713760). The Gallardo plaintiff recently filed a motion for leave to intervene in Zheng, which has yet to be heard.

According to the Gallardo plaintiff, Gallardo has been stayed pending the resolution of Zheng. However, Gallardo asserts a claim under the Private Attorneys General Act (“PAGA”) that is not at issue in Zheng (or, for that matter, in this action). While the Zheng plaintiffs agreed to allow the Gallardo plaintiff to participate in their upcoming mediation with the defendant, defendant refused to agree to his participation. Meanwhile, defendant’s counsel stated in an email to plaintiff’s counsel in Gallardo that a settlement in Zheng would moot the Gallardo PAGA claim by destroying the plaintiff’s standing to pursue it. Consequently, the Gallardo plaintiff seeks to intervene in Zheng in order to achieve a resolution of his PAGA claim.

V. Meet and Confer

Returning to the matter at hand, plaintiff contends that defendant failed to satisfy the requirement to “meet and confer in person or by telephone” at least five days before its demurrer was due. (Code Civ. Proc., § 430.41, subd. (a).) According to plaintiff, defendant filed its demurrer without an in-person meeting or phone call, one business day after emailing plaintiff’s counsel to initiate the meet and confer process. Defendant responds that meet and confer did occur, although it does not address whether its efforts in this regard complied with section 430.41. Defendant contends that plaintiff’s “complaints are entirely pointless as the purported failure to sufficiently meet and confer is not grounds to overrule or sustain a demurrer.”

The Court disagrees with defendant’s apparent view that requiring a party to comply with the Code of Civil Procedure is “pointless.” Where, as here, a demurring party fails to comply with section 430.41, “[t]he court may continue the hearing on the demurrer and order the parties to meet and confer.” (Assem. Com. on Judiciary, Rep. on Sen. Bill No. 383 (2015-2016 Reg. Sess.), July 14, 2015, p. 3.) While the Court will exercise its discretion to hear defendant’s demurrer on its merits at this time, the parties shall be prepared to discuss the meet and confer process at the hearing on this matter.

VI. Legal Standards Governing Statutory Plea in Abatement and Rule of Exclusive Concurrent Jurisdiction

“The pendency of another earlier action growing out of the same transaction and between the same parties is a ground for abatement of the second action.” (Leadford v. Leadford (1992) 6 Cal.App.4th 571, 574.) A defendant may assert the pending action as a bar either by demurrer, or where fact issues must be resolved, by answer and subsequent motion pursuant to Code of Civil Procedure section 597. (Ibid.) In either case, if the court determines a pending action raises substantially the same issues between the same parties, it must enter the interlocutory judgment specified in Code of Civil Procedure section 597. (Ibid.) “In determining whether the causes of action are the same for purposes of pleas in abatement, the rule is that such a plea may be maintained only where a judgment in the first action would be a complete bar to the second action.” (Plant Insulation Co. v. Fibreboard Corp. (1990) 224 Cal.App.3d 781, 787-788.)

Related to the statutory plea in abatement is the rule of exclusive concurrent jurisdiction, which “has been interpreted and applied more expansively, and therefore may apply where the narrow grounds required for a statutory plea of abatement do not exist.” (Plant Insulation Co. v. Fibreboard Corp., supra, 224 Cal.App.3d at p. 788.) “Unlike the statutory plea of abatement, the rule of exclusive concurrent jurisdiction does not require absolute identity of parties, causes of action or remedies.” (Ibid.) “If the court exercising original jurisdiction has the power to bring before it all the necessary parties … [and] to litigate all the issues and grant all the relief to which any of the parties might be entitled under the pleadings,” the court should stay the second action pending resolution of the first. (Ibid.) Nevertheless, while complete identity between the parties and remedies sought is not required, “the issues in the two proceedings must be substantially the same and the individual suits must have the potential to result in conflicting judgments” for the rule to apply. (County of Siskiyou v. Superior Court (Environmental Law Foundation) (2013) 217 Cal.App.4th 83, 91.)

Under either doctrine, “[a]n order of abatement issues as a matter of right[,] not as a matter of discretion[,] where the conditions for its issuance exist.” (Lawyers Title Ins. Corp. v. Superior Court (Harrigfeld) (1984) 151 Cal.App.3d 455, 460.)

VII. Analysis

Both Zheng and the instant action are putative class actions in which class certification has not yet been granted or denied. The parties do not cite, and the Court is not aware of, any authority addressing a plea in abatement or the rule of exclusive concurrent jurisdiction under these circumstances.

However, since neither the Zheng plaintiff nor the plaintiff herein has sought or obtained authorization to represent other putative class members, the “absolute identity of parties” required to support a statutory plea in abatement is lacking in these cases. (See Plant Insulation Co. v. Fibreboard Corp., supra, 224 Cal.App.3d at p. 788.) Relatedly, “[i]n determining whether the causes of action are the same for purposes of pleas in abatement, the rule is that such a plea may be maintained only where a judgment in the first action would be a complete bar to the second action.” (Plant Insulation Co. v. Fibreboard Corp., supra, 224 Cal.App.3d at pp. 787-788.) Courts have held that pre-certification rulings in class actions do not have this effect on putative class members. (See Bridgeford v. Pacific Health Corp. (2012) 202 Cal.App.4th 1034, 1043 [order denying class certification does not have collateral estoppel effect; “if no class was certified by the court in the prior proceeding, the interests of absent putative class members were not represented”]; Bufil v. Dollar Financial Group, Inc. (2008) 162 Cal.App.4th 1193, 1204 [new class representative’s proposal of “a class that on its face attempts to correct flaws identified in [a prior putative class action] resulting in denial of certification” was not subject to issue preclusion]; but see Alvarez v. May Dept. Stores Co. (2006) 143 Cal.App.4th 1223 [order denying class certification does have collateral estoppel effect].) Consequently, at least before a class is certified in either case, the complete identity of parties and claims required to support a plea in abatement is not present here.

A closer question is whether exclusive concurrent jurisdiction applies. “Unlike the statutory plea of abatement, the rule of exclusive concurrent jurisdiction does not require absolute identity of parties, causes of action or remedies.” (Plant Insulation Co. v. Fibreboard Corp., supra, 224 Cal.App.3d at p. 788.) Still, “the issues in the two proceedings must be substantially the same and the individual suits must have the potential to result in conflicting judgments” for the rule to apply. (County of Siskiyou v. Superior Court, supra, 217 Cal.App.4th at p. 91.) Here, while both cases allege overlapping wage and hour violations by the same defendant, this action herein asserts an additional violation for failure to reimburse business expenses. The issues presented by the two lawsuits are consequently distinct, and defendant does not show that Judge Kuhnle has the power to grant “all the relief” to which plaintiff and the putative class may be entitled under the pleadings in this action. (Plant Insulation Co. v. Fibreboard Corp., supra, 224 Cal.App.3d at p. 788.) Further, the Court expects that conflicting judgments can be avoided here, since the actions can be related and could be heard in the same court. Or, the Court can take other appropriate action to manage the case in an efficient and economic manner. Parallel class actions like these are routinely resolved in a global manner, or in a manner that excludes the claims pending in a parallel action, and the Court presumes such a resolution may be achieved here as well.

Notably, recent California and federal authority supports allowing parallel class actions to proceed in their early stages. In holding that the statute of limitations for class claims is not tolled during the pendency of an unsuccessful prior putative class action, the Supreme Court of the United States recently explained—in a virtually unanimous opinion—that

[w]ith class claims, … efficiency favors early assertion of competing class representative claims. If class treatment is appropriate, and all would-be representatives have come forward, the district court can select the best plaintiff with knowledge of the full array of potential class representatives and class counsel. And if the class mechanism is not a viable option for the claims, the decision denying certification will be made at the outset of the case, litigated once for all would-be class representatives.

(China Agritech, Inc. v. Resh (2018) 138 S.Ct. 1800, 1807.) The opinion went on to explain in even more detail that

a multiplicity of class-action filings is not necessarily “needless.” Indeed, multiple filings may aid a district court in determining, early on, whether class treatment is warranted, and if so, which of the contenders would be the best representative. … Multiple timely filings might not line up neatly; they could be filed in different districts, at different times—perhaps when briefing on class certification has already begun—or on behalf of only partially overlapping classes. But district courts have ample tools at their disposal to manage the suits, including the ability to stay, consolidate, or transfer proceedings. District courts are increasingly familiar with overseeing such complex cases, given the surge in multidistrict litigation. …

(China Agritech, Inc. v. Resh, supra, 138 S.Ct. at p. 1811, citations omitted.)

China Agritech’s holding was adopted by Fierro v. Landry’s Restaurant Inc. (2019) — Cal.Rptr.3d —-, 2019 WL 658710. Fierro explained that, similar to district court judges,

California trial court judges—who are charged with “acting in a fiduciary capacity as guardian of the rights of absentee class members”—are empowered with significant and wide-ranging options for managing class actions. Thus, if class treatment is appropriate, all potential class representatives will be able to come forward prior to the expiration of the applicable statute(s) of limitations, and the superior court can select the best class representative(s) and counsel, as well as the most efficient and economical way of resolving the class claims. …

[W]e are confident that trial courts will continue to be “ ‘flexib[le]’ ” and “ ‘procedurally innovative’ … in managing class actions” as directed by our Supreme Court. … [W]e believe that proper management of multiple class actions at an early stage—i.e., before the expiration of the limitation periods for the class claims—will not materially affect the overall efficiency and economy in litigating class actions. At a minimum, the parties, counsel, and the court will know exactly what is involved and how the class claims will be managed before the running of the statutes of limitations on the claims.

(Fierro v. Landry’s Restaurant Inc., supra, at *10-11, citations omitted.)

In the Court’s view, these recent authorities—which specifically address the Court’s duties in managing class actions—are more relevant to its resolution of the demurrer before it than the older, factually inapposite authorities cited by defendant. (See People ex rel. Garamendi v. American Autoplan, Inc. (1993) 20 Cal.App.4th 760, 770 [“the rule of exclusive concurrent jurisdiction is a rule of policy and countervailing policies may make the rule inapplicable”].)

Finally, defendant requests a stay under Code of Civil Procedure section 597 as an “alternative” form of relief. However, as noted by plaintiff, section 597 provides that a stay is the relief to which a party would be entitled if the statutory plea in abatement or rule of exclusive concurrent jurisdiction applied. (See People ex rel. Garamendi v. American Autoplan, Inc., supra, 20 Cal.App.4th at p. 771 [“Where abatement is required, the second action should be stayed, not dismissed.”].) Accordingly, this section does not provide an alternative basis to sustain defendant’s demurrer.

VIII. Failure to File Notices of Related Cases and Case Management Issues

Rule 3.330 of the California Rules of Court requires that a party file and serve a notice of related case in each related action “[w]henever a party in a civil action knows or learns that [an] action or proceeding is related to another action or proceeding pending, dismissed, or disposed of by judgment in any state or federal court in California.” (Cal. Rules of Court, rule 3.330(b).) In his motion for leave to intervene, the Gallardo plaintiff notes that defendant did not file a notice of related case in Zheng in order to alert the plaintiffs and the Court in that matter to the pendency of the related Gallardo matter. Similarly, defendant has not filed notices of related cases in this action with regard to either Zheng or Gallardo.

The parties are hereby notified that the Court intends to relate this action to Zheng pursuant to rule 3.300. The Court invites all concerned to “confer informally with the parties and with the judges to whom each related case is assigned, to determine the feasibility and desirability of joint discovery orders and other informal or formal means of coordinating proceedings in the cases.” (See Cal. Rules of Court, rule 3.300(h)(2)(A).) For that purpose, further proceedings in this matter will remain temporarily stayed.

Counsel shall appear in person at the hearing on this matter to discuss relating this case with Zheng, and defendant’s counsel shall be prepared to explain why defendant did not alert the Court to the pendency of Gallardo. At the hearing, counsel shall also inform the Court of any additional related proceedings that they may know of. Counsel shall also be prepared to discuss with the Court whether participation by all plaintiffs in the mediation in Zheng would be in the interests of justice.

IX. Conclusion and Order

Defendant’s demurrer is OVERRULED, without prejudice to its renewal in the event that a class is certified in Zheng.

The Court relates this matter to Zheng under rule 3.300 of the California Rules of Court. Discovery in this matter will remain stayed pending further order by the Court, and any further filings by the parties in this action, with the exception of defendant’s answer, are also stayed. Defendant shall file its answer within 30 days of the filing of this order.

The parties shall meet and confer in an effort to agree upon a sequence of proceedings and a discovery plan in this action that, taking into consideration Zheng and Gallardo, will achieve a “sequence and timing of discovery for the convenience of parties and witnesses and in the interests of justice.” (Code Civ. Proc., § 2019.020, subd. (b).)

Counsel are to appear in person at the hearing on this matter to discuss the issues identified herein. Defendant is admonished to fully comply in the future with the Code of Civil Procedure, the Rules of Court, and all orders by this Court, including any duty to meet and confer.

The Court will prepare the order.