Cortes v. Victoria Secret Stores, LLC

Background

Elia Cortes filed a putative class action in Santa Clara County Superior Court against Victoria Secret Stores, LLC (VSS), L Brands, Inc., and two additional entities. The defendants removed the case to the Northern District of California under the federal removal statute and the Class Action Fairness Act.

Cortes alleged that the defendants failed to provide meal and rest periods, failed to pay hourly wages, failed to provide accurate wage statements, failed to pay all final wages on time, and engaged in unfair competition. He alleged that employees monitored walkie-talkies and responded to requests for help during meal and rest breaks, remained on-call during rest periods, and therefore continued working off the clock. He also alleged that employees were not paid for approximately five minutes spent undergoing a bag check after clocking out. Cortes further alleged problems involving scheduling breaks, understaffing, unpaid reporting time, and being sent home after reporting for a shift.

Earlier actions

The defendants relied primarily on two earlier cases. The Ochoa Action was filed in 2017 in state court and asserted claims concerning unpaid work time, overtime, meal and rest periods, wage statements, final wages, unfair business practices, and civil penalties. The Lee Action was filed in state court on May 28, 2019, removed to the Central District of California, and asserted California-law claims concerning unpaid wages, meal periods, rest periods, timely payment of wages, wage statements, and unfair competition. The Lee Action alleged that employees worked off the clock before and after scheduled shifts, were denied timely and uninterrupted breaks, and were not properly compensated for bonuses in overtime calculations. The Lee Action was stayed pending resolution of the Ochoa Action.

Motion and governing rule

VSS moved to dismiss Cortes’s case as duplicative of the Lee and Ochoa Actions or, alternatively, to stay the case. VSS invoked the first-to-file rule, the Colorado River doctrine, and the court’s inherent authority to manage its docket. Cortes opposed the motion, arguing that the Lee Action involved different issues and that the Ochoa Action would not resolve all of his claims.

The first-to-file rule allows a federal district court to stay, transfer, or dismiss a later-filed case when an earlier-filed case in another federal court involves substantially similar parties and issues. Courts consider the chronology of the lawsuits, the similarity of the parties, and the similarity of the issues.

Court’s analysis

The court found that the chronology factor was satisfied because the Lee Action was filed before the Cortes Action. It also found that the parties were substantially similar. Both cases involved a former nonexempt VSS employee seeking to represent current and former nonexempt VSS employees in California, and the proposed classes substantially overlapped. The presence of two additional defendants in the Cortes Action did not change the result because the rule does not require identical parties.

The court also found the issues substantially similar. Both cases asserted claims involving unpaid wages, meal periods, rest breaks, wage statements, final wages, and California Business and Professions Code section 17200. Both sought damages, attorney’s fees, and costs. Although Cortes argued that the Lee Action concerned only work before and after scheduled shifts, the court found that the Lee complaint also included allegations about monitoring walkie-talkies during rest periods. The court therefore found nearly identical issues concerning that conduct.

The court recognized that the Cortes Action included a separate bag-check issue not included in the Lee Action. It held that the first-to-file rule does not require identical issues and that an additional claim does not necessarily prevent application of the rule. The court concluded that the Lee and Cortes Actions were substantially similar despite the bag-check issue.

Disposition

The court stated that dismissal is appropriate in many first-to-file cases but exercised its discretion to stay this case because the bag-check claim was not likely to be resolved in the Lee Action. VSS’s motion to stay was granted. The case was stayed pending resolution of the Lee Action, and the clerk was directed to administratively close the file. Because the court resolved the motion under the first-to-file rule, it did not address VSS’s alternative grounds for dismissal or a stay.