Avery v. TEKsystems, Inc.

Background

Bo Avery, Phoebe Rodgers, Kristy Camilleri, and Jill Unverferth worked as recruiters for TEKsystems in California. They alleged that TEKsystems violated California wage-and-hour laws and California’s Unfair Competition Law. Their seven claims concerned unpaid overtime, wages allegedly not paid on time after termination, inaccurate or untimely wage statements, meal breaks, rest breaks, unfair competition, and civil penalties under California’s Private Attorney General Act. They brought the claims for themselves and a proposed class of recruiters who work or worked for TEKsystems in California.

The plaintiffs initially opted into an earlier case filed in the Western District of Pennsylvania by TEKsystems recruiters. That case asserted federal overtime claims under the Fair Labor Standards Act and wage-law claims under the laws of Pennsylvania, Massachusetts, New York, and Washington. A total of 631 current and former TEKsystems recruiters opted into that case, including 69 who worked in California. The plaintiffs later opted out of that case and filed this action in California state court. TEKsystems removed the action to federal court.

First-to-file rule

TEKsystems argued that the earlier-filed Pennsylvania case required the court to dismiss, stay, or transfer this action. The first-to-file rule is a discretionary doctrine under which a court may decline to proceed with a later case when an earlier case in another district involves substantially similar parties and issues. The court agreed that the Pennsylvania case was filed first, but concluded that the parties and issues were not substantially similar.

The proposed California class included at least 482 recruiters. TEKsystems said that 66 of those recruiters had joined the Pennsylvania case, while the plaintiffs put the number at 63. The court described the resulting overlap as roughly 13 percent. Because approximately 87 percent of the proposed California class was not and would not be represented in the Pennsylvania case, the court found that the overlap was not significant enough to apply the first-to-file rule.

The court also found that the issues were distinct. The Pennsylvania case involved the Fair Labor Standards Act and the laws of Massachusetts, New York, and Washington. This action asserted claims solely under California law, so the two cases had no common causes of action. The court further explained that California’s exemption for overtime purposes was narrower than the federal exemption and had a different wage threshold. Therefore, the result in the Pennsylvania case would not resolve the exemption issue in this action or create issue preclusion, meaning a bar on relitigating an issue already decided.

The court concluded that applying the first-to-file rule would not promote efficiency. Instead, it would delay the plaintiffs’ ability to pursue their separate California case. The court therefore declined to apply the rule.

Motion to transfer

In the alternative, TEKsystems sought transfer to the Western District of Pennsylvania under 28 U.S.C. § 1404(a). That statute permits transfer for the convenience of the parties and witnesses and in the interest of justice when the case could have been brought in the proposed district. The court considered factors including the plaintiffs’ choice of forum, convenience for the parties and witnesses, access to evidence, familiarity with the governing law, possible consolidation, local interest, and court congestion.

The court found that these factors weighed against transfer. California was the case’s center of gravity because the plaintiffs resided there, worked there for TEKsystems, and asserted California-law claims. The court also found no local interest in the dispute in Pennsylvania and stated that Pennsylvania was not TEKsystems’ home district. Any efficiency gained from the related Pennsylvania litigation was outweighed by the plaintiffs’ choice of forum.

The court also found it unclear whether the Western District of Pennsylvania would have jurisdiction over the case. TEKsystems argued that it had consented to general jurisdiction in Pennsylvania by registering to do business there, but the court described that argument as uncertain because courts had disagreed about the constitutionality of Pennsylvania’s registration statute and the Supreme Court had granted review of the issue. The court stated that transferring the case could lead to later jurisdictional litigation, whereas there was no question that the Northern District of California was a valid venue.

Disposition

Judge Jacquelyn Scott Corley denied TEKsystems’ motion to dismiss, stay, or transfer the action. The court reset the initial case-management conference for October 13, 2022, and stated that the order resolved docket entry 21.