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McKenzie Law Firm, P.A. v. Ruby Receptionists, Inc.

United States District Court, D. Oregon

April 25, 2019

MCKENZIE LAW FIRM, P.A., AND OLIVER LAW OFFICES, INC., on behalf of themselves and all others similarly situated, Plaintiffs,

          Keith S. Dubanevich and Cody Berne, Stoll Stoll Berne Lokting & Schlachter, pc, 209 SW Oak Street, Suite 500, Portland OR 97204. Of Attorneys for Plaintiffs.

          Andrew R. Escobar and Austin Rainwater, DLA Piper llp, 701 Fifth Avenue, Suite 6900, Seattle, WA 98104. Of Attorneys for Defendant.



         McKenzie Law Firm, P.A. (“McKenzie”) and Oliver Law Offices, Inc. (“Oliver”) bring this putative class action against Ruby Receptionists, Inc. (“Ruby”), alleging breach of contract, breach of the implied covenant of good faith and fair dealing, unjust enrichment, and money had and received. Ruby has moved to dismiss or stay this action, pending resolution of an earlier- filed putative class action in state court brought by a different plaintiff alleging substantially similar claims against Ruby. For the following reasons, Ruby's motion is DENIED.


         In Colorado River Water Conservation Dist. v. United States, 424 U.S. 800 (1976), the United States Supreme Court upheld the fundamental principle that absent exceptional circumstances, federal courts have a “virtually unflagging obligation” to exercise their jurisdiction concurrently with other courts. Id. at 817. Under an exception now known as the “Colorado River doctrine, ” there may be rare circumstances in which “a federal district court may decline to exercise or postpone the exercise of its jurisdiction when there are concurrent state and federal suits and when doing so would promote wise and sound judicial administration.” In re Galena Biopharma, Inc. Derivative Litig., 83 F.Supp.3d 1033, 1039 (D. Or. 2015) (citing Colorado River, 424 U.S. at 817). “Only in rare cases will ‘the presence of a concurrent state proceeding' permit the district court to dismiss a concurrent federal suit ‘for reasons of wise judicial administration'” R.R. Street & Co., Inc. v. Transp. Ins. Co., 656 F.3d 966, 977-78 (9th Cir. 2011) (quoting Colorado River, 424 U.S. at 818). The Supreme Court has carefully circumscribed the Colorado River doctrine, emphasizing that “[a]bdication of the obligation to decide cases can be justified” only in “exceptional circumstances.” Moses H. Cone Mem'l Hosp., v. Mercury Constr. Corp., 460 U.S. 1, 14 (1983) (quoting Colorado River, 424 U.S. at 813)).

         When parallel suits are filed in state and federal court, the Ninth Circuit has recognized the following eight factors to be considered in determining whether a stay or dismissal under Colorado River is appropriate:

(1) which court first assumed jurisdiction over any property at stake; (2) the inconvenience of the federal forum; (3) the desire to avoid piecemeal litigation; (4) the order in which the forums obtained jurisdiction; (5) whether federal law or state law provides the rule of decision on the merits; (6) whether the state court proceedings can adequately protect the rights of the federal litigants; (7) the desire to avoid forum shopping; and (8) whether the state court proceedings will resolve all issues before the federal court.

         R.R. St. & Co., 656 F.3d at 978-79.

         These factors are not a “mechanical checklist, ” and courts “examine them in ‘a pragmatic, flexible manner with a view to the realities of the case at hand.'” Seneca Ins. Co., Inc. v. Strange Land, Inc., 862 F.3d 835, 842 (9th Cir. 2017) (quoting Moses H. Cone, 460 U.S. at 16, 21). Courts must carefully balance these factors, “with the balance heavily weighted in favor of the exercise of jurisdiction.” Moses H. Cone, 460 U.S. at 16. “Any doubt as to whether a factor exists should be resolved against a stay, not in favor of one.” Travelers Indem. Co. v. Madonna, 914 F.2d 1364, 1369 (9th Cir. 1990).


         Ruby is a business based in Portland, Oregon that provides receptionist services to small businesses throughout North America. Many of its clients are small law firms and solo practitioners. Ruby's clients enter into contracts with Ruby to purchase receptionist services and are billed based on the quantity of “receptionist minutes” used or contracted for per month.

         In October of 2017, Shapiro Law Group (“Shapiro”), one of Ruby's law firm clients, filed a putative class action in Multnomah County Circuit Court in Oregon (“the State Court Action”). The putative class in that action consists of all of Ruby's clients nationwide for call answering and messaging services. Shapiro alleges that Ruby failed properly to disclose to its clients its practice of rounding up to the nearest increment of 30 seconds when calculating a “minute” billed to its clients and that Ruby also failed to disclose to its clients that Ruby includes in its client billings time that callers are placed on hold.

         In the State Court Action, Ruby moved to dismiss the First Amended Complaint under Rule 32 I of the Oregon Rules of Civil Procedure, which is a state court rule that may be unique to Oregon. That rule prohibits the maintenance of a class action for damages if all class members have been identified and notified that, upon request, the defendant will appropriately compensate each requesting class member for the harm suffered, the defendant actually compensates the requesting class members (or will do so within a reasonable time), and the defendant has ceased engaging in the allegedly wrongful conduct.[1] On September 27, 2018, the court in the State Court Action issued a letter ruling allowing Ruby to file an amended motion under Rule 32 I. The letter ruling also found that Shapiro had established a claim for damages for Defendant's rounding practices. On October 31, 2018, Ruby filed its amended motion under Rule 32 I, which is pending in the State Court Action. A class has not yet been certified in the State Court Action.

         On November 2, 2018, after the state court issued its letter ruling in the State Court Action on September 27, 2018, McKenzie and Oliver filed this putative class action lawsuit in federal court under the Class Action Fairness Act of 2005. See 28 U.S.C. ยง 1332(d)(2)(A). McKenzie and Oliver are or were clients of Ruby and allege that Ruby failed properly disclose how it bills clients for time spent handling incoming calls. Because the claims alleged by McKenzie and Oliver are substantially the same as the claims alleged by ...

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