Hart v. Donostia LLC, 290 F. Supp. 3d 627

Background

Plaintiff Eric Hart, an assistant store manager (ASM) at a Jimmy John’s franchise, filed an FLSA collective action in the Western District of Texas alleging he and other ASMs at Defendant Donostia LLC’s stores were misclassified as exempt and owed overtime.
Hart is an opt-in plaintiff in a larger, earlier-filed nationwide collective action pending in the Northern District of Illinois (NDIL), which alleges joint-employer liability against Jimmy John’s corporate/franchisor entities.
Donostia is a New Mexico corporation that operates Jimmy John’s franchise stores in New Mexico and Texas and is not a defendant in the NDIL litigation.
Donostia moved to dismiss or transfer Hart’s suit under the federal first-to-file rule, arguing substantial overlap with the NDIL litigation.
The district court stayed and administratively closed the case pending resolution of an NDIL anti-suit injunction; the Seventh Circuit later reversed that injunction and the Western District of Texas reopened the case.
The Western District denied Donostia’s motion, finding insufficient overlap and, alternatively, compelling circumstances (convenience factors) favoring retention in the Western District of Texas.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the first-to-file rule requires dismissal or transfer to NDIL	Hart: his suit focuses on Donostia’s direct-employer liability for ASMs in TX/NM and is distinct from NDIL	Donostia: the cases substantially overlap because both concern ASMs’ unpaid overtime at Jimmy John’s and the plaintiff class in this suit is subsumed by NDIL putative class	Denied: court found differences in core issues and parties; overlap not substantial enough to invoke rule
Whether NDIL resolution would dispose of Hart’s direct-employer claim	Hart: NDIL joint-employer litigation does not resolve separate direct-employer claims against Donostia	Donostia: outcomes are related and could be duplicative	Held for Hart: FLSA allows multiple employers and separate liability; one case’s outcome is not necessarily dispositive of the other
Whether Donostia could be joined in NDIL such that transfer would promote efficiency	Hart: joining Donostia in NDIL is uncertain due to jurisdiction/venue; witnesses and events are local to TX/NM	Donostia: absence from NDIL is not dispositive; first-to-file can still apply when parties differ	Held for Hart: practical/jurisdictional barriers weigh against transfer; Kerotest warns against rigid application when joinder uncertain
Whether compelling circumstances or 28 U.S.C. § 1404(a) convenience factors counsel against applying first-to-file	Hart: convenience, witness/location, and local interest favor Western District of Texas	Donostia: convenience factors irrelevant to first-to-file analysis	Held for Hart: court may consider § 1404(a) factors as ‘‘compelling circumstances’’; convenience and public-interest factors favor Texas forum

Key Cases Cited

Kerotest Mfg. Co. v. C-O-Two Fire Equip. Co., 342 U.S. 180 (1952) (first-to-file rule should not be applied rigidly; lower courts have discretion)
Save Power Ltd. v. Syntek Fin. Corp., 121 F.3d 947 (5th Cir. 1997) (first-to-file rule grounded in comity and efficiency; complete identity of parties not required)
Cadle Co. v. Whataburger of Alice, Inc., 174 F.3d 599 (5th Cir. 1999) (describes operation of first-to-file rule and substantial-overlap inquiry)
In re Jimmy John’s Overtime Litig., 877 F.3d 756 (7th Cir. 2017) (reversed NDIL anti-suit injunction and observed franchisee suits are not duplicative)
In re Volkswagen of Am., Inc., 545 F.3d 304 (5th Cir. 2008) (lists private and public convenience factors under § 1404(a))
Donovan v. Grim Hotel Co., 747 F.2d 966 (5th Cir. 1984) (under FLSA, a person must qualify as an employer to be liable; multiple employers may be individually and jointly liable)