Canela v. Costco Wholesale Corp., Case No. 13-cv-03598-BLF

• Decision Date: 15 June 2018
• Docket Number: Case No. 13-cv-03598-BLF
• Parties: LILIANA CANELA, , individually and on behalf of all others similarly situated, Plaintiff, v. COSTCO WHOLESALE CORPORATION, and DOES 1 through 10, inclusive, Defendants.
• Court: U.S. District Court — Northern District of California

LILIANA CANELA, , individually and on behalf of all others similarly situated, Plaintiff, v. COSTCO WHOLESALE CORPORATION, and DOES 1 through 10, inclusive, Defendants.

Case No. 13-cv-03598-BLF

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN JOSE DIVISION

June 15, 2018

ORDER GRANTING DEFENDANT'S MOTION FOR CERTIFICATION OF INTERLOCUTORY APPEAL; AND

ORDER GRANTING DEFENDANT'S REQUEST FOR STAY OF THE CASE

[Re: ECF 57]

Before the Court is Defendant Costco Wholesale Corporation's ("Costco") motion for certification of interlocutory appeal of the Court's Order Denying Defendant's Motion for Partial Summary Judgment ("Order," ECF 55) and motion for stay pending appeal. Mot., ECF 57. Plaintiff Liliana Canela opposes the motion. Opp'n, ECF 59. Pursuant to Civil Local Rule 7-1(b), the Court finds Costco's motion to be suitable for submission without oral argument and hereby VACATES the hearing scheduled for July 12, 2018. Having considered the briefing, as well as the governing law, the Court GRANTS Costco's motion for certification of interlocutory appeal. The Court DEFERS ruling on Costco's request for a stay pending an appeal so that the parties may submit a joint statement in light of this order.

I. LEGAL STANDARD

Generally, the United States Courts of Appeals have jurisdiction over appeals from "final decisions of the district courts." 28 U.S.C. § 1291. However, a district court may certify an order for interlocutory review where (1) there is a controlling question of law upon which (2) there is a substantial ground for difference of opinion, and (3) the immediate appeal of which will materially advance the ultimate termination of the litigation. 28 U.S.C. §1292(b); In re Cement Antitrust Litig., 673 F.2d 1020, 1026 (9th Cir. 1982). The purpose of § 1292(b) is to provide "immediate appeal of interlocutory orders deemed pivotal and debatable." Swint v. Chambers Cnty. Comm'n, 514 U.S. 35, 46 (1995). Section 1292(b) certifications should be "applied sparingly and only in exceptional cases." United States v. Woodbury, 263 F.2d 784, 788 n.11 (9th Cir. 1959).

II. DISCUSSION

Costco seeks to certify the Order for interlocutory review by the Ninth Circuit under 28 U.S.C. § 1292(b) based on the following questions:

1. Whether, absent class certification, a PAGA plaintiff in federal court has Article III standing to represent absent aggrieved employees (the "Article III standing issue").

2. Whether a PAGA plaintiff in federal court can represent absent aggrieved employees without qualifying for class certification under Rule 23 (the "Rule 23 certification issue").

Notice of Motion, ECF 57. Costco asserts that each question involves a controlling question of law as to which there is a substantial ground for difference of opinion and that an immediate appeal may materially advance the ultimate termination of the litigation. See generally Mot.

A. The Article III Standing Issue

i. Controlling Question of Law

Costco argues that whether Canela has standing to represent unnamed aggrieved employees under PAGA without class certification is a "controlling question of law." Mot. 5. Canela admits that this issue is a controlling question of law. Opp'n 2.

The Court agrees with the parties. In the Order, the Court recognized that the Article III standing issue raised by Costco is a purely legal question that does not depend on a material dispute of fact. Order 6. That issue is also "controlling" because a reversal on appeal would mean that Canela could pursue only her individual PAGA claim or that Canela cannot pursue her PAGA claim in federal court at all.¹ Therefore, Canela's PAGA claim would be materially affected bythe Ninth Circuit's resolution of the standing issue. In re Cement Antitrust, 673 F.2d at 1026 ("[A]ll that must be shown in order for a question [of law] to be 'controlling' is that resolution of the issue on appeal could materially affect the outcome of litigation in the district court."). The Court thus finds that the first requirement for § 1292(b) is satisfied.

ii. Substantial Ground for Difference of Opinion

Costco asserts that a substantial ground for difference of opinion exists as to the Article III standing issue because an "intra-district conflict has lasted for almost a decade." Mot. 7-8. Canela disagrees and argues that the Court relied on the California Supreme Court and Ninth Circuit's respective opinions in Iskanian v. CLS Transp. Los Angeles, LLC, 59 Cal. 4th 348 (Cal. 2014) and Sakkab v. Luxottica Retail N. Am., Inc., 803 F.3d 425 (9th Cir. 2015) to reach its conclusion. Opp'n 2.

The Court is persuaded by Costco's argument. While the Court relied on Iskanian and Sakkab to reach its conclusion, the Court recognized that the Ninth Circuit has not addressed the Article III standing issue. Order at 8. Moreover, courts within this circuit have split on whether a plaintiff has standing to pursue PAGA claims without satisfying Rule 23 requirements at least since 2009. Order 7-8 (collecting cases). Accordingly, the Court finds that the Article III standing issue presents a disputed and difficult question which the Ninth Circuit has not addressed. On this basis, the Court concludes that Costco has shown the existence of a substantial ground for difference of opinion as to the Article III standing issue. Couch v. Telescope Inc., 611 F.3d 629, 633 (9th Cir. 2010) (holding that a substantial ground for difference of opinion may be found where "the circuits are in dispute on the question and the court of appeals of the circuit has not spoken on the point, . . . or if novel and difficult questions of first impression are presented"); see also Wishnev v. Nw. Mut. Life Ins. Co., No. 15-CV-03797-EMC, 2016 WL 9223857, at *1 (N.D. Cal. Mar. 28, 2016) (finding that the second § 1292(b) requirement is met where the Ninth Circuit has not addressed the issue and there is a split of authority between the courts on a pure legal question).

iii. Material Advance of the Ultimate Termination of the Litigation

Costco contends that resolution of the Article III issue would materially advance the termination of this action because a reversal by the Ninth Circuit would dispose of "virtually all of this action, in terms of its magnitude." Mot. 5. Costco claims that if Canela lacks standing to represent unnamed aggrieved employees, "only her individual suit should remain." Id. Canela responds that Costco will have a right to appeal after the trial which is about three months away. Opp'n 3. Canela further argues that a reversal by the Ninth Circuit would not "terminate" this litigation because a "PAGA claim may not proceed on an individual basis" and this case would be remanded to state court. Id.

The Court finds that a successful interlocutory appeal on the Article III issue would materially advance the termination of this litigation. If Canela is limited to pursuing only her individual PAGA claim, as Costco contends, the trial would involve fewer disputed issues and it would be more likely that the parties would reach a settlement given Costco's willingness to settle this case under that circumstance. Tr. for Hearing on Mot. for Summary Judgment 38:10-12. Further, if Canela cannot assert an individual PAGA claim, Canela asserts that she would request remand to state court. Under these circumstances, the Court finds that the third § 1292(b) requirement is satisfied. Rollins v. Dignity Health, No. 13-CV-01450-TEH, 2014 WL 6693891, at *4 (N.D. Cal. Nov. 26, 2014) (holding that the increased certainty on disputed issues and the higher possibility of settlement would materially advance the termination of litigation); see also Securities and Exchange Commission v. Mercury Interactive, LLC, No. 07-cv-02822-JF, 2011 WL 1335733, at *3 (N.D. Cal. Apr. 7, 2011) ("A final resolution as the scope of the statute would have a significant effect on the trial of this action, and perhaps upon the parties' efforts to reach settlement.").

iv. Conclusion

Accordingly, Costco has satisfied its burden to show all three § 1292(b) requirements for certifying the Article III standing issue for an interlocutory appeal.

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B. The Rule 23 Certification Issue

i. Controlling Question of Law

Costco argues that whether Canela can represent absent aggrieved employees without qualifying for class certification under Rule 23 is a "controlling question of law." Mot. 8-9. Canela agrees. Opp'n 2.

In accordance with the parties' agreement, the Court finds that the second question raised by Costco is a controlling question of law. In the Order, the Court recognized that the Rule 23 certification issue is a purely legal question that does not depend on a material dispute of fact. Order 6. That issue is "controlling" because a reversal by the Ninth Circuit would materially affect Canela's PAGA claim because she has not obtained class certification and thus may not then pursue her representative PAGA claim in this case. In re Cement Antitrust, 673 F.2d at 1026 ("[A]ll that must be shown in order for a question [of law] to be 'controlling' is that resolution of the issue on appeal could materially affect the outcome of litigation in the district court.").

ii. Substantial Ground for Difference of Opinion

Costco asserts that a substantial ground for difference of opinion exists as to the Rule 23 certification issue because the California Supreme Court in Amalgamated Transit Union, Local 1756, AFL-CIO v. Superior Court, 46 Cal.4th 993, 1003 (2009) has characterized PAGA as a procedural statute and several courts within this circuit have required a PAGA plaintiff to obtain Rule 23 certification. Opp'n 9-10. Canela counters that recent district court cases have held that Rule 23 certification is not required. Canela further argues that the Court's Order addressed Shady Grove Orthopedic Assocs., P.A. v. Allstate Ins. Co., 559 U.S. 393, 406 (2010) which courts that have required Rule 23 certification relied on.

The Court is persuaded by Costco's argument that there is a...