Aguirre v. Albertson's, Inc.

• Decision Date: 03 August 2005
• Docket Number: 0003-03082; A118573.
• Citation: 201 Or. App. 31,117 P.3d 1012
• Parties: Tina M. AGUIRRE, Appellant, v. ALBERTSON'S, INC., a foreign corporation, Respondent.
• Court: Oregon Supreme Court

117 P.3d 1012

201 Or. App. 31

Tina M. AGUIRRE, Appellant, v. ALBERTSON'S, INC., a foreign corporation, Respondent.

0003-03082; A118573.

Court of Appeals of Oregon.

Argued and Submitted February 5, 2004.

Decided August 3, 2005.

Jacqueline L. Koch, Portland, argued the cause for appellant. With her on the briefs were Koch & Deering, J. Dana Pinney, and Bailey, Pinney & Associates, Vancouver, WA Richard R. Meneghello, Portland, argued the cause for respondent. With him on the brief was Fisher & Phillips LLP.

Before HASELTON, Presiding Judge, and LINDER and ORTEGA, Judges.

LINDER, J.

Plaintiff, who was employed by defendant Albertson's Inc. (Albertson's) until January 2000, brought this action in circuit court to recover alleged unpaid overtime and termination wages pursuant to Oregon's wage and hour laws and the federal Fair Labor Standards Act (FLSA).¹ Albertson's moved for summary judgment, arguing that plaintiff's claims are precluded by a prior federal judgment in a class action in which plaintiff was a member. The trial court agreed, granted summary judgment for Albertson's, and entered a judgment dismissing the action. Plaintiff appeals. As we explain, we conclude that the federal judgment does not have preclusive effect in this instance and that Albertson's, accordingly, was not entitled to summary judgment. We therefore reverse and remand.

I. BACKGROUND

Our analysis of the preclusion issue turns significantly on the actions that Albertson's took in its defense of this action while simultaneously defending against and eventually settling the prior federal action. We therefore describe in some detail the procedural events in both cases, which are important for their parallels.

After plaintiff's employment with Albertson's terminated, plaintiff filed this action in state court alleging three claims. Two of those claims—one based on state law and one based on federal law—were for failure to pay overtime wages. See ORS 653.261; 29 U.S.C. § 216(b). More specifically, those two claims alleged that Albertson's failed to pay plaintiff for so-called "off-the-clock" work—i.e., undocumented overtime work that an employer encourages or requires, but for which no wage or overtime wage is paid. Plaintiff's third claim was closely related to the first two, but was brought under state law only. It alleged that, by not including the wages for the off-the-clock work in plaintiff's final paycheck, Albertson's failed to timely pay plaintiff all wages that were due at her termination. See ORS 652.140.

Plaintiff served Albertson's with her complaint on March 31, 2000. About one month later, on May 1, 2000, Albertson's removed the case to the federal district court in Oregon, after which Albertson's filed its answer. In response to the removal to federal court, plaintiff voluntarily dismissed her federal (FLSA) claim with prejudice and moved the federal court to remand the case—i.e., the remaining state law claims—to state court. Albertson's did not object. The federal court signed the remand on June 12, 2000, and, two days later, entered a written order returning the case to state court. Within days, plaintiff filed an amended complaint in state court; Albertson's then filed an answer to that amended complaint. Discovery, which had begun while the case was pending in federal court, remained ongoing. The case did not proceed to trial, however. Rather, on June 27, 2000, the circuit court transferred the case to arbitration. As a result, the circuit court proceedings were suspended until the arbitration was completed.

Throughout that time period, and unbeknownst to plaintiff, a putative class action against Albertson's was pending in federal court in Idaho. When Albertson's undertook its defense of this action, it was simultaneously defending that Idaho federal action, which was the outgrowth of multiple actions brought against Albertson's in 1996 and 1997 that later were consolidated and transferred to the Idaho federal court pursuant to the rules for multidistrict litigation (the MDL action).² In its consolidated form, the MDL action was a representative one brought on behalf of Albertson's employees in 20 states, including Oregon. Significantly, it involved FLSA wage claims and state law wage claims for off-the-clock work that were essentially identical to the off-the-clock claims that plaintiff had brought in this action in state court.

As this case wound its way from state court, to Oregon federal court, and back to state court again, key procedural events were taking place in the MDL action. By late March 2000, when plaintiff filed her complaint in this case, the Idaho federal court had not yet formally certified the class in the MDL action. But only two weeks later, on April 14, 2000, Albertson's and the named plaintiffs in the MDL action signed a proposed settlement agreement. Among other things, the settlement proposed to resolve not only the employees' FLSA-based claim for alleged off-the-clock work, but also any state-law-based claims that those employees might have for that same off-the-clock work. Also, the settlement agreement described which employees were in the potential class for purposes of both the FLSA and state law claims. The proposed class was comprehensive: it consisted of all current and former nonsupervisory employees who worked for defendant in any of several listed states—which included Oregon—during "the period of July 1, 1994 until preliminary approval of the Settlement by the District Court." On June 12, 2000, the Idaho federal court preliminarily approved the settlement agreement. Coincidentally, that preliminary approval occurred on the same day that the Oregon federal court, without objection by Albertson's, approved the remand in this case to state court.

Given those procedural events in the two cases, Albertson's knew, at least as early as when Albertson's removed this case to federal court in Oregon on May 1, 2000, that the MDL action potentially would include plaintiff in the class and could resolve her federal and state law off-the-clock claims alike. Even so, Albertson's did nothing to apprise plaintiff, the Oregon federal district court, or the Oregon circuit court that both actions were simultaneously pending and that plaintiff either was or potentially might be a party to both. Rather, without so much as alluding to the pending MDL action in Idaho, Albertson's removed this case to federal court in Oregon, filed its answer, permitted plaintiff to dismiss her federal claim, voiced no objection to the remand to state court, and then answered plaintiff's amended complaint. Likewise, Albertson's did nothing in the MDL action to notify the Idaho federal court or the MDL Panel overseeing it of the pendency or existence of this action brought individually by plaintiff.³

After the Idaho federal court preliminarily approved the settlement agreement, the MDL action advanced procedurally towards a final resolution. Notices were sent to all potential class members, informing them of their respective procedural rights and obligations relating to opting in or out of the MDL action. Of particular significance to the issues in this case, the "collective action" procedures of the FLSA applied to the federal wage claims, while the class action procedures of FRCP 23(b)(3) (Rule 23) applied to the state law claims.⁴ The class members' procedural rights and obligations therefore differed for the two categories of claims. Key among those differences was that putative class members had to affirmatively "opt in" to the FLSA class to join it, but they were automatically in the Rule 23 state law class unless they affirmatively "opted out." As a result, a potential class member who did nothing—that is, who neither opted in nor opted out—would be a party to the MDL action for purposes of the adjudication of his or her state but not federal law claims.⁵ Under the settlement agreement, the time period for exercising those respective opt-in, opt-out rights expired on August 18, 2000.

Meanwhile, plaintiff remained unaware of the MDL action. A notice of the MDL action was sent to her, but it was not addressed to her then-current address, and she did not receive it. Nor was she otherwise informed of the pending MDL action. By the August 18, 2000, deadline for opting in to the FLSA class or out of the Rule 23 class, plaintiff had done neither.⁶ Instead, she continued to litigate her two remaining state wage claims in this action in state court. On September 11, 2000, the Idaho federal court entered a final judgment approving and incorporating the settlement agreement that certified the FLSA and Rule 23 classes solely for purposes of settlement and resolved the state and federal off-the-clock claims of the class members.⁷ By then, as earlier noted, the circuit court proceedings in this action had been suspended, and this case was awaiting arbitration. That arbitration eventually was scheduled for April 4, 2001. Shortly before that date—almost seven months after the Idaho federal court issued its final judgment and after MDL class members could no longer avail themselves of the MDL claims process—Albertson's for the first time objected that plaintiff could not pursue her claims in this action because she was a party to the MDL action. Albertson's raised that objection by way of a motion to dismiss. In support of the motion, Albertson's argued that plaintiff was a party to the MDL action because she had not opted out of the Rule 23 class; that plaintiff was bound by the MDL judgment; that the MDL judgment resolved her state law claims; and that the MDL judgment had preclusive effect in this action.

The arbitrator denied Albertson's motion to dismiss. In a letter explaining the denial, the arbitrator observed that Albertson's apparently had complied with the Idaho federal court's order regarding notice to prospective class members, even though plaintiff did not actually receive the notice because it was...