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Class Action Defense Cases—In re Cintas: Judicial Panel On Multidistrict Litigation (MDL) Holds That Statutory Objective of Pretrial Centralization Under § 1407 Includes Actions Brought To Compel Arbitration

Judicial Panel on Multidistrict Litigation (MDL) Grants Motion To Centralize Litigation in Federal Fair Labor Standards Act (FLSA) Overtime Case for Pretrial Purposes Over Defense Objection

Current and former employees filed a “collective” action against Cintas Corp. in the Northern District of California alleging failure to pay overtime in violation of the federal Fair Labor Standards Act (FLSA) (the Veliz action) involving 2,000 plaintiffs. Cintas (as plaintiff) filed 70 actions against approximately 1800 of the Veliz plaintiffs to compel arbitration. The Veliz plaintiffs moved the Judicial Panel on Multidistrict Litigation (MDL) pursuant to 28 U.S.C. § 1407 to centralize the actions for pretrial purposes; the defense objected arguing, in part, that the lawsuits it had filed were not “civil actions” and were therefore outside the jurisdiction of the Panel. The Panel disagreed: “In order to effectuate the statutory objectives, transfer under Section 1407 should contemplate the broadest sweep of the term, ‘civil action.'” In re Cintas Corp. Overtime Pay Arbitration Litig., 444 F.Supp.2d 1353, 1355 (Jud.Pan.Mult.Lit. 2006). One reason the Panel ordered centralization was because courts in each of the 71 lawsuits would be required to interpret identical contractual arbitration clauses and determine whether to compel arbitration. Id. The Panel selected the Northern District of California as the appropriate transferee court “because i) the district is where the first filed and significantly more advanced action is pending before a judge already well versed in the issues presented by the litigation; and ii) all parties are in agreement that if the litigation is centralized, the California district should be selected as transferee forum.” Id.

Download PDF file of In re Cintas Transfer Order