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Class Action Defense Cases—In re Morgan Stanley Overtime Pay: Over Defense Objection Judicial Panel On Multidistrict Litigation (MDL) Grants Motion To Centralize Class Action Litigation But Selects Southern District of California As Transferee Court

Judicial Panel Grants Unopposed Request for Pretrial Coordination Pursuant to 28 U.S.C. § 1407 but Agrees with Defense Attorneys and Non-Moving Plaintiffs that Class Actions Should be Centralized in Southern District of California

Six class action lawsuits were filed against Morgan Stanley in Connecticut, Illinois, New Jersey, New York and Texas federal courts alleging violations of the federal Fair Labor Standards Act (FLSA) by misclassifying certain employees as exempt from overtime pay and/or by assessing improper deductions against employee compensation. In re Morgan Stanley & Co., Inc., Overtime Pay Litig. (No. II), 471 F.Supp.2d 1353, 1353-54 (Jud.Pan.Mult.Lit. 2006). Pursuant to 28 U.S.C. § 1407, the Illinois and Texas plaintiffs moved the Judicial Panel on Multidistrict Litigation (MDL) to centralize the lawsuits for pretrial purposes in the Northern District of Illinois; defense attorneys and the remaining plaintiffs supported centralization but argued for transfer to the Southern District of California. Id. The agreed that the Southern District of California was an appropriate transferee court, in part because “[a]n earlier action against the Morgan defendants raising similar claims has just recently settled in that district.” Id., at 1354. “More significantly,” in the Panel’s view, “the Morgan defendants and the [Connecticut, new Jersey and New York plaintiffs] . . . state that they have reached a ‘global settlement’ under which a consolidated complaint would be filed in the California district, the matter would be related to the now-settled Southern District of California action, and Judge Roger T. Benitez, who presides over the Southern California action, would administer a settlement resolving the claims against the defendants on a nationwide basis.” Id. Thus transferring the actions to that district would not only place the litigation before a court “already familiar with the issues” but “may further enhance the prospects for a just and speedy resolution” of the various lawsuits. Id.

NOTE: This case provides another illustration of the fact that the Judicial Panel is not restricted in its selection of transferee forums. The Panel is free to select a forum where none of the actions is pending if it determines that forum to be the best choice.

Download PDF file of In re Morgan Stanley & Co., Inc., Overtime Pay (No. II) Transfer Order