Lau v. Wells Fargo & Company

Background

Thomas Lau formerly worked as a private mortgage banker for Wells Fargo. He alleged that Wells Fargo required him and similarly situated employees to work off the clock without paying all required minimum and overtime wages. His Second Amended Complaint asserted an FLSA collective action for private mortgage bankers in New York and sought certification under Federal Rule of Civil Procedure 23 for related New York labor-law claims.

Before Lau filed his complaint in the Northern District of California, Sandra Bruno had filed a substantially similar FLSA wage case against Wells Fargo Bank, N.A. in the Western District of Pennsylvania. The Pennsylvania court later conditionally certified a collective covering people who worked as home mortgage consultants, a category that included private mortgage bankers under the complaint in that case. The Pennsylvania court also granted equitable tolling of the limitations period during a specified period.

Motion and governing rule

The defendants moved under Federal Rules of Civil Procedure 12(b)(6) and 12(b)(3) to dismiss, or alternatively transfer, Lau’s FLSA collective claims under the first-to-file rule. They did not seek dismissal or transfer of Lau’s state-law claims or his individual FLSA claims.

The first-to-file rule generally gives priority to the substantially similar case filed first, unless the party seeking to proceed in the later-filed case shows that the balance of convenience or special circumstances favor the later case. The court explained that the rule can apply when the claims, parties, and requested relief are substantially similar, even if the issues are not identical.

Court’s analysis

The court held that the first-to-file rule applied to Lau’s FLSA collective claims. It found that the Pennsylvania action and Lau’s action involved substantially similar wage claims and represented the same people’s interests. Although Lau proposed a narrower collective limited to New York employees, the court found that this proposed group was included within the Pennsylvania collective.

The court rejected Lau’s argument that the first-to-file rule generally cannot apply to FLSA collective actions. It reasoned that applying the rule could prevent overlapping collectives, repeated certification proceedings, duplicative discovery, and inconsistent results. The court also noted that the defendants were not seeking to prevent Lau from pursuing his individual FLSA claims.

The court then considered whether the balance of convenience or special circumstances justified allowing Lau’s later-filed case to proceed. It found that Lau had originally chosen California rather than New York, which reduced the weight of his current forum choice. The court also found that proceeding in New York would risk duplicating the production of evidence already needed in Pennsylvania. The court treated the witness-subpoena issue as neutral because Lau had not shown that potential witnesses would refuse to appear. It further concluded that the convenience of New York members of the proposed collective did not outweigh the benefits of proceeding in one forum.

Disposition

The court determined that dismissal, rather than transfer, was appropriate because the Pennsylvania collective had already been certified and encompassed Lau’s proposed collective. The court found no risk of prejudice because Lau and other potential members could choose to opt in to the Pennsylvania action.

The court granted the defendants’ motion. It dismissed Count II of the Second Amended Complaint to the extent Lau brought it on behalf of a collective rather than individually. Lau’s state-law claims and individual FLSA claims may proceed. The court also directed the parties to continue discovery under its case-management and scheduling orders.