Pitts v. Terrible Herbst Inc.

• Decision Date: 09 August 2011
• Docket Number: No. 10–15965.,10–15965.
• Citation: 17 Wage & Hour Cas.2d (BNA) 1850,2011 Daily Journal D.A.R. 11955,653 F.3d 1081,80 Fed.R.Serv.3d 243,11 Cal. Daily Op. Serv. 10005
• Parties: Gareth PITTS, Plaintiff–Appellant,v.TERRIBLE HERBST, INC., Defendant–Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

653 F.3d 1081

80 Fed.R.Serv.3d 243

17 Wage & Hour Cas.2d (BNA) 1850

11 Cal. Daily Op. Serv. 10,005

2011 Daily Journal D.A.R. 11,955

Gareth PITTS, Plaintiff–Appellant,

v.TERRIBLE HERBST, INC., Defendant–Appellee.

No. 10–15965.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted June 15, 2011.Filed Aug. 9, 2011.

Leon Greenberg, Leon Greenberg Professional Corporation, Las Vegas, NV, for the plaintiff-appellant.Patrick H. Hicks, Wendy M. Krincek, and Wesley C. Shelton (argued), Littler Mendelson, P.C., Las Vegas, NV, for the defendant-appellee.Appeal from the United States District Court for the District of Nevada, Robert Clive Jones, Chief District Judge, Presiding. D.C. No. 2:09–cv–00940–RCJ–RJJ.Before: FERDINAND F. FERNANDEZ and JAY S. BYBEE, Circuit Judges, and JAMES K. SINGLETON, Senior District Judge.^*

OPINION

BYBEE, Circuit Judge:

We must decide, inter alia, whether a rejected offer of judgment for the full amount of a putative class representative's individual claim moots a class action complaint where the offer precedes the filing of a motion for class certification. We hold that it does not.

I

In April 2009, Gareth Pitts filed a class action complaint in Nevada state court against his employer, Terrible Herbst, Inc. (“Terrible”). The complaint alleged that Terrible failed to pay Pitts and other similarly-situated employees overtime and minimum wages and listed three causes of action: (1) a collective action under 29 U.S.C. § 216(b) for violations of the Fair Labor Standards Act (“FLSA”) (Count 1); (2) a class action for violations of Nevada labor laws (Count 2); and (3) a class action for breach of contract (Count 3). Terrible removed the case to federal court in May 2009.

In July 2009, the district court entered a scheduling order that called for all discovery to be concluded by January 2010. That same day, Pitts served Terrible with a request for production of documents, including “a list of the names and addresses of all of [its] employees who work or have worked in [its] retail locations ... on an hourly ... basis” and “[a]ll other records ... that show ... the hours worked by, [and] the wages paid to” these employees. After Terrible refused to comply with his discovery request, Pitts filed a motion to compel discovery. This motion, filed in October 2009, argued that “production of time records for all members of the putative class is highly relevant to whether class certification should be granted.”

In December 2009, a magistrate judge held a hearing on Pitts's motion to compel and indicated that he would rule on it after the end of the year. In January 2010, without a ruling and facing an impending discovery deadline, Pitts filed a motion to extend the discovery schedule, in which he again argued that “a properly developed record can[not] be presented to the Court on the class certification issue without all or some of [the requested] discovery.” In February 2010, the magistrate judge granted the motion and extended discovery until April 2010. The motion to compel remained unresolved.

In the meantime, Terrible made Pitts an offer of judgement pursuant to Federal Rule of Civil Procedure 68. Under the terms of this offer, which was dated October 26, 2009, Terrible agreed “to allow judgment to be taken against it in the total amount of $900.00, plus costs and a reasonable attorney's fee.” Although Pitts claimed only $88.00 in damages for himself, he refused Terrible's offer.

Because Terrible's offer fully compensated Pitts for his individual monetary claim, Terrible filed a motion to dismiss the action for lack of subject matter jurisdiction. Specifically, Terrible argued that its offer of judgment rendered the entire case moot. Following the Fifth Circuit's decision in Sandoz v. Cingular Wireless LLC, 553 F.3d 913 (5th Cir.2008), the district court, in March 2010, held that a Rule 68 offer of judgment does not moot a putative class action so long as the class representative can still file a timely motion for class certification. Nevertheless, the district court then held that Terrible's offer mooted the action because Pitts failed to timely seek class certification. The district court acknowledged that the magistrate judge had extended discovery until April 2010 and that he had not yet ruled on the motion to compel discovery. But the court nevertheless concluded that Pitts “pushed beyond the limits of timeliness in waiting for certification” and that Pitts's “failure to move for class certification before the initial deadline for discovery demonstrates untimeliness on his part.” The court then dismissed the entire action with prejudice for lack of subject matter jurisdiction, entered judgment in the defendant's favor, and ordered Terrible to pay $900 to Pitts and $3,500 to Pitts's attorney.

In the same order that dismissed Counts 1 and 2 of the complaint for lack of subject matter jurisdiction (as we explain below, Count 3 had already been dismissed) the district court also dismissed Count 2 on alternative grounds. Specifically, the court concluded that a Federal Rule of Civil Procedure 23 class action alleging violations of state labor laws is incompatible with a collective action under the FLSA and held that when both actions are brought together, only the FLSA action may proceed. In its ruling, the district court acknowledged that Pitts sought to abandon his FLSA claims and pursue only his Rule 23 class action, but refused to allow him to do so. The court explained that Pitts failed to amend his complaint to reflect that he was waiving his FLSA claims and accused Pitts of forum shopping: “[S]o long as there is no FLSA claim, the jurisdictional anchor to this removed action is lost. It is then in the discretion of the Court under [28 U.S.C.] § 1367 whether it is appropriate to retain the ancillary jurisdiction it properly has over Plaintiff's state law claims, despite the fact that the federal claims are no longer in the suit.”

In prior orders, the district court also dismissed Count 3 of Pitts's complaint for two separate reasons. First, the district court concluded that Count 3 lacked definiteness because it failed to specify the hourly wage provided for by Pitts's alleged employment contract. However, because Pitts agreed to amend his complaint to specify the contractual hourly rate, the district court granted Pitts 15 days to amend. But Pitts never had a chance to do so because before the expiration of the 15 days, the district court dismissed Count 3 again, this time with prejudice. Specifically, the court construed the breach of contract claim as a claim for violation of Nevada Revised Statutes § 608.100 and dismissed it because only the Nevada Labor Commissioner may enforce this statute.

II

Pitts has timely appealed all dispositive rulings of the district court. This appeal raises five issues: (1) whether a rejected Rule 68 offer of judgment made before the filing of a motion for class certification moots a putative class representative's class action complaint; (2) whether Pitts was untimely in seeking class certification; (3) whether FLSA collective actions are incompatible with related Rule 23 state law class actions; (4) whether Nev.Rev.Stat. § 608.100 abrogates Nevada's common law breach of contract action; and (5) whether Pitts pled his breach of contract claim with sufficient specificity. We address each issue in turn.¹

A

We first address whether a Rule 68 offer of judgment for the full amount of a putative class representative's individual monetary claim moots that representative's class action complaint. We agree with the district court that the class action is not moot.

Article III of the Constitution limits the jurisdiction of the federal courts to “Cases” or “Controversies.” See U.S. Const. art. III, § 2, cl. 1. The doctrine of mootness, which is embedded in Article III's case or controversy requirement, requires that an actual, ongoing controversy exist at all stages of federal court proceedings. See Burke v. Barnes, 479 U.S. 361, 363, 107 S.Ct. 734, 93 L.Ed.2d 732 (1987). Whether “the dispute between the parties was very much alive when suit was filed ... cannot substitute for the actual case or controversy that an exercise of this [c]ourt's jurisdiction requires.” Honig v. Doe, 484 U.S. 305, 317, 108 S.Ct. 592, 98 L.Ed.2d 686 (1988). A case becomes moot “when the issues presented are no longer ‘live’ or the parties lack a legally cognizable interest in the outcome” of the litigation.Powell v. McCormack, 395 U.S. 486, 496, 89 S.Ct. 1944, 23 L.Ed.2d 491 (1969). In other words, if events subsequent to the filing of the case resolve the parties' dispute, we must dismiss the case as moot, see Stratman v. Leisnoi, Inc., 545 F.3d 1161, 1167 (9th Cir.2008); DHX, Inc. v. Allianz AGF MAT, Ltd., 425 F.3d 1169, 1174 (9th Cir.2005), because “[w]e do not have the constitutional authority to decide moot cases,” Foster v. Carson, 347 F.3d 742, 747 (9th Cir.2003) (citation and internal quotation marks omitted).

Although the Supreme Court has described mootness as a constitutional impediment to the exercise of Article III jurisdiction, the Court has applied the doctrine flexibly, particularly where the issues remain alive, even if “the plaintiff's personal stake in the outcome has become moot.” Matthew I. Hall, The Partially Prudential Doctrine of Mootness, 77 Geo. Wash. L.Rev. 562, 622 (2009). The distinction between issues that have become moot and parties whose interest in the issue may have become moot is especially visible in the context of class actions. For example, in Sosna v. Iowa, 419 U.S. 393, 95 S.Ct. 553, 42 L.Ed.2d 532 (1975), the Court considered whether an entire class action becomes moot when the class representative loses her personal stake in the outcome of the litigation after the district court certifies a class. There, the appellant filed a class action complaint challenging the constitutionality of Iowa's one-year durational residency...