Unreported / Non-Citable
Background
Mark Steele worked as an insurance sales agent for Assurance IQ, a company affiliated with Prudential Financial, from July 2023 to April 2024. After Assurance laid off many of its California sales agents in late April 2024, Steele filed a putative class and California Private Attorneys General Act (“PAGA”) representative action in federal court in San Diego, alleging that Assurance and Prudential misclassified him and similarly situated agents as independent contractors instead of employees. He brought claims under the California Labor Code, the federal and California versions of the Worker Adjustment and Retraining Notification Act (which require advance notice of mass layoffs), and California’s Unfair Competition Law.
The defendants pointed to an earlier-filed state-court class action in Sacramento, Chung v. Assurance IQ, brought by a different former agent in 2023. The Chung case asserts substantially similar California Labor Code and PAGA claims based on the same independent-contractor misclassification theory and seeks to represent a broader California class that includes Steele as a member. Chung had been pending for over two years and, by January 2026, the parties had reached a proposed class-and-PAGA settlement, with preliminary-approval briefing imminent. The defendants asked the federal court to stay the federal action pending resolution of Chung. Steele opposed.
The Court’s Holding
The court granted the stay in part. It applied the framework from Landis v. North American Co., the long-standing Supreme Court decision recognizing a district court’s inherent authority to control its docket through discretionary stays. Under Ninth Circuit law, the court weighs three factors: the damage that may result from a stay, the hardship to the moving party if forced to go forward, and the orderly course of justice in terms of simplifying or complicating the issues.
All three factors favored a stay. The orderly-course-of-justice factor was decisive. The two cases share the same core misclassification theory and overlapping California-agent classes; the federal class is essentially a subset of the state-court class. The state case is far more advanced and is on the verge of preliminary settlement approval, which could resolve, narrow, or release the federal claims entirely. The court cited several California decisions staying parallel federal class actions in similar circumstances, on the theory that pressing forward with duplicative class discovery while a parallel settlement is pending would waste judicial and party resources.
The hardship factor also favored a stay because requiring the defendants to litigate two overlapping class actions at once would be an unnecessary burden, particularly where one is on the brink of settlement. The court rejected Steele’s argument that he would be prejudiced by delay. Citing recent California decisions, it explained that it is “hardly surprising or unfair” for a later-filed class to wait for an earlier-filed action involving substantially the same class and claims. Worries about lost evidence and faded memories without specific support are speculative.
To minimize prejudice, the court did not grant the open-ended stay defendants requested. Instead, it stayed the case until the earlier of (1) the state court’s grant or denial of preliminary approval in Chung, or (2) six months from the date of the order. The parties were ordered to file status reports.
Key Takeaways
- Federal courts have inherent Landis authority to stay overlapping wage-and-hour class actions pending resolution of an earlier-filed state-court action — particularly where a settlement is imminent and the federal class is a subset of the state class.
- The two cases need not be identical for a Landis stay; “substantially similar” issues are enough.
- Plaintiffs opposing a stay must back up arguments about prejudice with specific evidence. Generic concerns about delay, lost witnesses, or stale evidence will rarely defeat a stay where there is good reason to expect the parallel action to resolve key issues.
- Where granting an open-ended stay would prejudice the plaintiff, courts often craft a time-bound stay tied to a specific milestone in the parallel case (here, preliminary settlement approval).
Why It Matters
California’s wage-and-hour and PAGA bar is heavily populated, and overlapping class actions are common — especially in the gig and insurance-sales sectors where independent-contractor misclassification claims have become a staple. This decision follows a clear trend in California federal courts of staying later-filed class actions that duplicate earlier-filed ones, particularly when the earlier case has reached or is approaching settlement. For California employers facing serial class actions, the case is a useful template: identify the earlier-filed parallel action, document the class overlap, and seek a Landis stay rather than a full dismissal.
For California plaintiff-side counsel, the decision is also a reminder that being second-in-line in a parallel-class-action race carries real costs. Filing a class action that overlaps an earlier-filed case will often mean waiting on the sidelines until the first case resolves — and possibly being released by an approved settlement.