Andres Adame, et al. v. Comtrak Logistics, Inc. et al., No. 5:2015cv02232 - Document 31 (C.D. Cal. 2016)
Court Description: ORDER GRANTING PLAINTIFFS MOTION TO REMAND AND DENYING DEFENDANTS MOTION TO TRANSFER VENUE AS MOOT 12 , 13 , 15 . The request for fees and costs is DENIED. Case Remanded to San Bernardino County Superior Court, CIVDS 1511291 by Judge Dean D. Pregerson. ( MD JS-6. Case Terminated ) (lc). Modified on 4/8/2016 (lc).
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Andres Adame, et al. v. Comtrak Logistics, Inc. et al. Doc. 31 1 2 O 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 11 ANDRES ADAME et al, 12 Plaintiffs, 13 14 v. COMTRAK LOGISTICS, INC.,et al, 15 16 Defendants. ___________________________ ) ) ) ) ) ) ) ) ) ) ) Case No. EDCV 15-02232 DDP (KKx) ORDER GRANTING PLAINTIFFS’ MOTION TO REMAND AND DENYING DEFENDANTS’ MOTION TO TRANSFER VENUE AS MOOT [Dkt. Nos. 12, 13, 15] 17 Presently before the Court are (1) Defendants’ Motion to 18 19 Transfer Venue to Western District of Tennessee; and (2) 20 Plaintiffs’ Motion to Remand and Request Attorneys’ Fees. 21 Nos. 13, 15.) 22 Court adopts the following Order. 23 I. 24 (Dkt. After considering the parties’ submissions, the BACKGROUND This employment law case alleges that Defendants, who are 25 trucking companies and individuals who work for those companies, 26 violated several California employment laws by treating Plaintiff 27 truck drivers as independent contractors rather than employees. 28 (Notice of Removal, Dkt. No. 1, ¶¶ 1-3.) The case was originally Dockets.Justia.com 1 filed in the California Superior Court for San Bernardino County 2 and it alleges solely a Private Attorney General Act (“PAGA”) cause 3 of action for underlying California Labor Code violations. 4 1, Ex. A (Compl.).) 5 a notice of related case in both the state and federal courts, 6 citing Robles v. Comtrak Logs., Inc., No. 2:15-cv-02228-SHM-tmp 7 (W.D. Tenn.). 8 Defendants claim that there are the same Defendants in both cases 9 and the plaintiffs all allege the same Labor Code violations based 10 11 (Id. ¶ Defendants removed to federal court and filed (Notice of Removal, Dkt. No. 1, ¶ 6, Ex. D.) on misclassification. (Id.) Defendants allege in the Notice of Removal that three of the 12 individual Defendants named in the complaint are “sham” defendants 13 so that their California citizenship should not be considered for 14 determining subject matter jurisdiction. 15 claim that none of the five individuals are “employers” under the 16 applicable law, so they cannot be held liable for the violations of 17 the Labor Code alleged and their citizenship is not considered for 18 diversity of citizenship purposes. 19 (Id. ¶ 10.) Defendants (Id.) According to Defendants, Defendants David Yeager and Dan Burke 20 are residents of Illinois and are employed by Defendants in 21 Illinois. 22 and Ryan Kotaka are residents of California and are or were 23 employed by Hub Group Trucking, Inc., based in either Ontario or 24 Stockton, California. 25 (Id. ¶ 16.) Defendants Lorena Rodriguez, Johnny Moreno, (Id. ¶ 17.) For their part, Plaintiffs alleged Defendant Comtrack 26 Logistics, Inc., is a Delaware corporation with a principal place 27 of business in Illinois, but who maintains two terminals in 28 California, one in Stockton and one in Ontario. 2 (Compl. ¶ 76.) 1 Defendant Hub Group, Inc., is alleged by Plaintiffs to be a 2 Delaware corporation with a principal place of business in 3 Illinois, and to have acquired Comtrak Logistics in 2006. 4 77.) 5 Delaware corporation with a principal place of business in 6 Illinois,1 and is the same company as that formerly known as 7 “Comtrak Logistics, Inc.,” just with a new name since 2014. 8 78.) (Id. ¶ Defendant Hub Group Trucking, Inc., Plaintiffs allege, is a (Id. ¶ 9 Plaintiffs allege Defendant David Yeager is or was the CEO of 10 Hub Group, Inc., and Director of Hub Group Trucking, Inc., and was 11 “directly involved in the creation, negotiation and execution of 12 independent contractor agreements with Plaintiffs.” 13 Defendant Dan Burke is alleged to have been Chief Intermodal 14 Officer for Hub Group, Inc., President of Hub Group Trucking, Inc., 15 and “directly involved in Comtrack’s efforts to settle wage and 16 hour claims with individual drivers, including attempted waivers of 17 rights to bring PAGA claims,” as well as involved in the 18 independent contractor agreements as was Yeager. 19 (Id. ¶ 79.) (Id. ¶ 80.) Defendant Lorena Majarro (aka Lorena Rodriguez) is alleged to 20 be Manager of Hub Group Trucking, Inc., and Comtrak Logistics, 21 Inc., and was alleged to be involved in both the independent 22 contractor agreements and the settlements. 23 Johnny Moreno was Operations Manager of Hub Group Trucking, Inc., 24 and Comtrak Logistics, Inc., and was also allegedly involved in 25 both the agreements and settlements. 26 Defendant Ryan Kotaka is alleged to be the Terminal Manager of Hub (Id. ¶ 81.) (Id. ¶ 82.) Defendant Lastly, 27 1 28 Defendants claim Hub Group Trucking’s principal places of business are Tennessee and Illinois. (Notice of Removal ¶ 15.) 3 1 Group Trucking, Inc., and Comtrak Logistics, Inc., and involved in 2 both the agreements and settlements. 3 (Id. ¶ 83.) Plaintiffs also claim that their PAGA claims are brought 4 against Defendants as individual persons, not just as employers, 5 under Labor Code section 558. 6 (Id. ¶¶ 201-202.) Plaintiffs are sixty-three individuals who worked for 7 Defendants. 8 independent contractors, and thus were denied benefits and 9 protections of the California Labor Code. 10 11 They all allege that they were misclassified as (Compl. ¶¶ 12-75.) They all claim to be citizens of California.2 (Id.) The complaint alleges that Defendants “willfully misclassified 12 Plaintiffs as independent contractors in violation of Labor Code 13 sections 226.8 and 2753; failed to properly pay Plaintiffs in 14 violation of Labor Code sections 204, 210, 221-223, 225.5, 558, 15 1182.12, 1194, and 117, as well as section 4 of Wage Order number 9 16 promulgated by the Industrial Welfare Commission (“IWC Wage Order 17 No. 9”); failed to pay for employment-related expenses in violation 18 of Labor Code section 2802 and IWC Wage Order No. 9 sections 8-9; 19 failed to provide proper meal and rest breaks in violation of Labor 20 Code sections 226.7, 512, and 516, and IWC Wage Order No. 9 21 sections 11-12; failed to provide proper wage statements by not 22 maintaining documentation of hours worked and wages earned, and 23 failing to pay the wages due in violation of Labor Code sections 24 1174 and 201-203, and IWC Wage Order No. 9 section 7. (Compl. ¶¶ 25 26 2 27 28 Defendants Plaintiff resides in alleged to reside in (Notice of Removal ¶ claim that their research shows all but one California. The out-of-state Plaintiff is Georgia, where no Defendant is a citizen. 13.) 4 1 2-10.) 2 2699. 3 Plaintiff seek penalties under PAGA, Labor Code section (Id. ¶ 10.) Plaintiffs allege that around August 2014, Defendants held 4 “mandatory meetings” with their California drivers where the 5 drivers were told that the company was converting the drivers from 6 independent contractors to employees. 7 allege that the drivers were not told the purpose of the meetings 8 in advance and were offered settlements, with prepared checks, on 9 the spot if they signed releases of claims like those alleged in (Id. ¶ 148.) Plaintiffs 10 this litigation. 11 paperwork to convert to employee status, the latter paperwork 12 required to maintain a work relationship with Defendants unless the 13 driver bought Defendants out of the lease on their truck. 14 149-50.) 15 pass certain tests and that if the trucks failed, it would require 16 a large sum of money to resolve. 17 that the discussion of the settlement was “materially misleading” 18 and that any release signed by any Plaintiff here — or any other 19 driver — is void and unenforceable. 20 (Id.) The settlements were offered alongside the (Id. ¶¶ Drivers were also allegedly told that the trucks had to (Id. ¶ 151.) Plaintiffs claim (Id. ¶¶ 152-53.) Plaintiffs claim to have exhausted administrative remedies by 21 providing written notice to the Labor and Workforce Development 22 Agency (“LWDA”) and Defendants of the alleged violations. (Id. ¶ 23 154.) 24 Now, Plaintiffs have filed a Motion to Remand the case to 25 California Superior Court, arguing that the Court lacks subject 26 matter jurisdiction because there is not complete diversity of 27 citizenship and Defendants have not shown that the amount in 28 controversy is met. (Dkt. No. 15, Mot. Remand.) 5 Defendants have 1 simultaneously filed a Motion to Transfer Venue to Western District 2 of Tennessee. 3 II. (Dkt. No. 13, Mot. Transfer.) LEGAL STANDARD 4 A. 5 A defendant may remove a case from state court to federal Motion to Remand 6 court if the case could have originally been filed in federal 7 court. 8 against removal and the defendant has the burden of establishing 9 that removal is proper by a preponderance of evidence. 28 U.S.C. § 1441(a). There is a “strong presumption” Gaus v. 10 Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992); Morrison v. Zangpo, 11 No. C-08-1945 EMC, 2008 WL 2948696, at *1 (N.D. Cal. July 28, 12 2008). 13 after receiving, “through service or otherwise, . . . a copy of the 14 initial pleading setting forth the claim for relief upon which such 15 action or proceeding is based.” 16 a “motion to remand the case on the basis of any defect other than 17 lack of subject matter jurisdiction must be made within 30 days 18 after the filing of the notice of removal under section 1446(a).” 19 28 U.S.C. § 1447(c). A defendant has thirty days in which to remove the case 28 U.S.C. § 1446(b)(1). Likewise, 20 B. 21 “For the convenience of parties and witnesses, in the interest Motion to Transfer Venue 22 of justice, a district court may transfer any civil action to any 23 other district or division where it might have been brought or to 24 any district or division to which all parties have consented.” 25 U.S.C. § 1404(a). 26 a motion to transfer venue under Section 1404(a). 27 Constr. Co. v. U.S. Dist. Court for W. Dist. Tex., 134 S. Ct. 568, 28 579 (2013). 28 A forum-selection clause is enforceable through Atl. Marine “[A] proper application of § 1404(a) requires that a 6 1 forum-selection clause be ‘given controlling weight in all but the 2 most exceptional cases.’” 3 Corp., 487 U.S. 22, 33 (1988)). 4 selection clause, the court’s analysis changes from a typical 5 motion to transfer venue in three ways: (1) the plaintiff’s choice 6 of forum is not considered; (2) the private interests or 7 inconvenience of the parties are not given any weight; and (3) the 8 transfer of venue does not entail the ususal rule that the original 9 venue’s choice-of-law rules will apply in the new venue. 10 Id. (quoting Stewart Org., Inc. v. Ricoh When there is a valid forum- Id. at 581-82. 11 12 III. DISCUSSION 13 A. 14 Plaintiffs argue this Court lacks subject matter jurisdiction 15 over the case because there is no diversity jurisdiction: at least 16 one defendant is a citizen of California, as are the plaintiffs and 17 the real party in interest, the state of California; further, the 18 amount in controversy is not satisfied. 19 Plaintiffs argue that the Court should not consider the citizenship 20 of the individual Plaintiffs because the real party in the action 21 is the state of California in a PAGA suit, and a state is not a 22 citizen for purposes of diversity jurisdiction. (Id. at 4-5 (citing 23 Urbino v. Orkin Servs. of Cal., Inc., 726 F.3d 1118, 1122-23 (9th 24 Cir. 2013).) 25 Motion to Remand (Mot. Remand at 3.) To the extent the Court does consider the individual 26 Plaintiffs, Plaintiffs argue there are nondiverse Defendants who 27 are not “sham” because they are subject to civil penalties under 28 PAGA for causing Labor Code violations. 7 (Id. at 6-7 (citing 1 Velasquez v. HMS Host USA, Inc., No. 2:12-cv-02312-MCE-CKD, 2012 WL 2 6049608 (E.D. Cal. Dec. 5, 2012); Ontiveros v. Zamora, No. CIV S- 3 08-567 LKK/DAD, 2009 WL 425962, at *6 (E.D. Cal. Feb. 20, 2009).) 4 Further, Plaintiffs argue that Defendants have not shown the 5 amount in controversy is met because Defendants cannot aggregate 6 the pro rata share of the individual Plaintiffs, who all expect as 7 damages less than $75,000, and cannot aggregate the share of one 8 individual Plaintiff with the share for the state. 9 (citing Lopez v. Ace Cash Express, Inc., No. LA CV11-07116 JAK (Id. at 8-10 10 (JCx), 2015 WL 1383535, at *3-5 (C.D. Cal. Mar. 24, 2015); Pulera 11 v. F & B, Inc., No. 2:08-cv-00275-MCE-DAD, 2008 WL 3863489, at *3 12 (E.D. Cal. Aug. 19, 2008).) 13 fees and costs of $10,000 for bringing their Motion, arguing that 14 Defendants’ removal was without legal basis in a private attorney 15 general action. 16 Lastly, Plaintiffs seek attorneys’ (Id. at 10-12.) Defendants respond that the state is not a party for the 17 purposes of diversity jurisdiction. 18 9 (citing Archila v. KFC U.S. Props., Inc., 420 F. App’x 667, 668- 19 69 (9th Cir. 2011)).) 20 brought under the federal False Claims Act, where the Supreme Court 21 has stated that the United States is not considered a party to the 22 action despite being a real party in interest and entitled to a 23 share in the award. 24 Plaintiffs’ cases and argue that there is no binding holding for 25 the proposition that the state is the party for purposes of 26 diversity citizenship and therefore destroys federal jurisdiction. 27 (Id. at 6-9.) (Dkt. No. 23, Opp’n at 1-2, 3- Defendants analogize to qui tam suits (Id. at 4-5.) 28 8 They further distinguish 1 Further, Defendants argue that the individual Defendants are 2 “sham” Defendants because PAGA claims are against an employer, 3 which does not include a corporate agent under California law. 4 (Id. at 2; 9-13 (citing Martinez v. Combs, 231 P.3d 259 (Cal. 5 2010)).) 6 section 558 is misplaced because Plaintiffs are still limited by 7 the definition of employer in PAGA suits as provided by Martinez. 8 (Id. at 11-12.) 9 are also insufficient to establish they caused the Labor Code Defendants claim that Plaintiffs’ reliance on Labor Code The allegations against the individual Defendants 10 violations in any case. 11 the Court should aggregate an individual Plaintiff’s 25% share of 12 potential penalties with LWDA’s 75% share, which would exceed 13 $75,000 and satisfy the amount in controversy requirement. 14 13-17 (citing Patel v. Nike Retail Servs., Inc., 58 F. Supp. 3d 15 1032 (N.D. Cal. 2014)).) 16 attorneys’ fees and costs should be denied because they had an 17 “objectively reasonable basis” for removal, which was not “clearly 18 foreclosed” by binding law, particularly because PAGA claims raise 19 complex issues. 20 21 1. (Id. at 13.) And Defendants claim that (Id. at Lastly, Defendants argue the request for (Id. at 2-3; 17-19.) Diversity Jurisdiction and Remand Standard Diversity jurisdiction requires complete diversity of the 22 parties’ citizenship and satisfaction of the amount in controversy 23 requirement, which is over $75,000. 24 diversity jurisdiction is an original basis of a federal court’s 25 jurisdiction, a defendant can remove a case to federal court if the 26 case satisfies the requirements of diversity jurisdiction. 27 U.S.C. § 1441(a). 28 removal statute against removal jurisdiction” and “[f]ederal 28 U.S.C. § 1332. Because See 28 However, federal courts “strictly construe the 9 1 jurisdiction must be rejected if there is any doubt as to the right 2 of removal in the first instance.” 3 564, 566 (9th Cir. 1992). 4 Gaus v. Miles, Inc., 980 F.2d Defendants here removed this case on the basis of diversity 5 jurisdiction. 6 citizenship because the three California-citizen Defendants are 7 “sham” defendants under California law. 8 the amount in controversy is satisfied because courts can consider 9 the total potential PAGA penalty for alleged violations of They claim that there is complete diversity of Further, they claim that 10 California’s Labor Code as to each individual plaintiff under Ninth 11 Circuit and district court cases. 12 grounds, relying on Urbino and other district court cases. Plaintiffs contest these two 13 14 15 2. The Urbino Decision The Ninth Circuit in Urbino was faced with the question of 16 “whether the penalties recoverable on behalf of all aggrieved 17 employees may be considered in their totality to clear the 18 jurisdictional hurdle” of $75,000 amount in controversy. 19 726 F.3d at 1122. 20 not lie because their claims cannot be aggregated” and there was 21 “no dispute that Urbino’s individual potential recovery would not 22 meet the $75,000 threshold.” 23 Urbino, The court held that “diversity jurisdiction does Id. The court’s reasoning rested on the “anti-aggregation” rule: 24 “multiple plaintiffs who assert separate and distinct claims are 25 precluded from aggregating them to satisfy the amount in 26 controversy requirement.” 27 & Co., 22 U.S. 39, 40 (1911)). 28 aggregation only occurs when the plaintiffs’ claims “are derived Id. (citing Troy Bank v. G.A. Whitehead In representative actions, 10 1 from rights that they hold in group status” such that “they have a 2 common and undivided interest.” 3 U.S. 332, 335 (1969); Eagle v. Am. Tel. & Tel. Co., 769 F.2d 541, 4 546 (9th Cir. 1985)) (internal quotations omitted). 5 is common and undivided when ‘neither [party] can enforce [the 6 claim] in the absence of the other.’” 7 U.S. at 41). Id. (quoting Snyder v. Harris, 394 “[A]n interest Id. (quoting Troy Bank, 222 8 Applying those principles to the PAGA case before it, the 9 court in Urbino found that aggrieved employees under PAGA have 10 other causes of action to vindicate their rights and rectify their 11 employer’s violations of California’s Labor Code, but “all of these 12 rights are held individually.” 13 injury” that can be “redressed without the involvement of other 14 employees.” 15 different aggrieved employees could not be aggregated. 16 Id. Id. Each employee has a “unique Therefore, the court found that the claims of the Id. The defendant argued that Urbino’s interest was not individual 17 but “the state’s collective interest in enforcing its labor laws 18 through PAGA.” 19 a case were aggregation was appropriate because there was a single 20 plaintiff aggregating multiple of his own claims against a single 21 defendant, which is allowed to satisfy the amount in controversy 22 requirement. 23 24 25 Id. Id. Thus, the defendant was arguing that this was The court responded: To the extent Plaintiff can — and does — assert anything but his individual interest, however, we are unpersuaded that such a suit, the primary benefit of which will inure to the state, satisfies the requirements of federal diversity jurisdiction. The state, as the real party in interest, is not a citizen for diversity purposes. 26 Id. at 1122-23 (citing Navarro Sav. Ass’n v. Lee, 446 U.S. 458, 461 27 (1980) (stating courts “must disregard nominal or formal parties 28 11 1 and rest jurisdiction only upon the citizenship of real parties to 2 the controversy”); Moor v. Cnty. of Alameda, 411 U.S. 693, 717 3 (1973) (explaining that “a State is not a ‘citizen’ for purposes of 4 the diversity jurisdiction”)). 5 courts lack subject matter jurisdiction over this quintessential 6 California dispute.” The court concluded that “federal Id. at 1123. 7 As the Ninth Circuit reiterated in a later case holding that 8 PAGA actions did not have original jurisdiction in federal courts 9 under the Class Action Fairness Act (“CAFA”), the court in Urbino 10 “held that potential PAGA penalties against an employer may not be 11 aggregated to meet the minimum amount in controversy requirement of 12 28 U.S.C. § 1332(a).” 13 1117, 1119 (9th Cir. 2014). 14 that under Urbino, what is considered for calculating the amount in 15 controversy is the individual plaintiff’s “portion of any recovery 16 (including fees).” 17 3. Baumann v. Chase Inv. Servs. Corp., 747 F.3d In Baumann, the Ninth Circuit noted Id. at 1120 n.1. Application of Urbino 18 All the parties admit here that the individual Plaintiffs 19 cannot aggregate their potential PAGA penalties for the purposes of 20 satisfying the amount in controversy. 21 the court can aggregate an individual Plaintiff’s share (his 25%) 22 with the share that goes to the state (the LWDA’s 75%). 23 to Defendants’ estimates, which were not disputed by Plaintiffs in 24 their Opposition, if all the alleged Labor Code violations occurred 25 on a weekly basis for the year-long PAGA period and there was a 26 willful misclassification as a result of pattern or practice, the 27 maximum total a Plaintiff could potentially receive would be 28 $183,050. The key dispute is whether According (Notice of Removal ¶¶ 43-45; Mot. Remand at 10; Opp’n at 12 1 17 n.12.) 2 25% share of that potential penalty, it would be $45,762.50, plus 3 fees, which Defendants argue would also raise the amount in 4 controversy to over $75,000. 5 have only asked for $10,000 in attorneys’ fees and costs in 6 bringing this motion, and it is unclear what are the fees and costs 7 accrued prior to the motion.3 8 9 If the Court only considers an individual plaintiff’s (See Opp’n at 17 n.12.) Plaintiffs There are conflicting district court cases, some of which are cited by Plaintiffs and Defendants in their briefing, as to whether 10 the state’s portion of potential PAGA penalties can be aggregated 11 with an individual plaintiff’s portion of the penalties. 12 grounded in the Urbino decision, the policies of PAGA, and the 13 question of whether a state’s interest, unlike those of other 14 individual plaintiffs, is a common and undivided interest with a 15 particular individual plaintiff for purposes of aggregating 16 penalties. 17 CV 11-07116 JAK (Jcx), 2015 WL 1383535 (C.D. Cal. Mar. 24, 2015) 18 (holding that the state’s 75% share is not aggregated); Willis v. 19 Xerox Bus. Servs., LLC, No. 1:13-cv-01353-LJO-JLT, 2013 WL 6053831, 20 at *8-9 (E.D. Cal. Nov. 15, 2013) (slip op.) (same), with, e.g., 21 Patel v. Nike Retail Servs., Inc., 58 F. Supp. 3d 1032 (N.D. Cal. 22 2014) (holding that the state’s 75% share can be aggregated with an 23 individual plaintiff for purposes of satisfying the amount in 24 controversy); Mitchell v. Grubhub Inc., No. CV 15-05465-BRO (Asx), All are Compare, e.g., Lopez v. Ace Cash Express, Inc., No. LA 25 3 26 27 28 As another point of uncertainty, the Ninth Circuit not determined whether all attorneys’ fees are aggregated as individual plaintiff, or whether the proper measure would be portion of the attorneys’ fees attributable to an individual plaintiff. See Mitchell v. Grubhub Inc., No. CV 15-5465-BRO 2015 WL 5096420 (C.D. Cal. Aug. 28, 2015) (slip op.). 13 has to an a (Asx), 1 2015 WL 5096420, at *5-6 (C.D. Cal. Aug. 28, 2015) (slip op.) 2 (same). 3 Thus, the law is unclear for determining the amount in 4 controversy in these PAGA cases as to the state’s share and an 5 aggrieved employee’s share. 6 Circuit in Urbino and the logic underlying the decision could point 7 in either direction, as amply demonstrated in the many conflicting 8 cases in the district courts of the Circuit. 9 line of cases to this Court is the line that did not aggregate the The question was not before the Ninth The more persuasive 10 state’s share with the aggrieved employee’s share. 11 on the language in Urbino disfavoring jurisdiction and stating that 12 the state is not considered for jurisdiction purposes, as well as 13 the PAGA statute itself which takes the total penalty award — not 14 an individual plaintiff’s share — and then allots 75% of the total 15 to the state and 25% to all aggrieved employees, not just an 16 individual representative plaintiff. 17 unclear, the Court finds that the presumption against diversity 18 jurisdiction also weighs in favor of remand. 19 20 4. This is based And, since the matter is Individual California Defendants There is a also a substantial question as to the allegedly 21 “sham” defendants that weighs in favor of remand on the basis of 22 lacking complete diversity of citizenship. 23 whether the three individual California Defendants can be liable 24 for the alleged offenses under California law. 25 That is, it is unclear In Martinez v. Combs, 49 Cal. 4th 35 (2010), the California 26 Supreme Court adopted the IWC’s definition of “employer” rather 27 than solely the common law description of employment relationships 28 in actions under section 1194 of the Labor Code. 14 Id. at 52, 62, 1 66. The court explained that the IWC defined an employer as “a 2 person who ‘employs or exercises control over the wages, hours, or 3 working conditions of any person.’” Id. at 59. 4 “To employ then, under the IWC’s definition, has three alternative 5 definitions. 6 hours or working conditions, or (b) to suffer or permit to work, or 7 (c) to engage, thereby creating a common law employment 8 relationship.” 9 Put another way: It means: (a) to exercise control over the wages, Id. at 64. The court acknowledged that its previous decision in Reynolds 10 v. Bement, 36 Cal. 4th 1075 (2005), applied the common law standard 11 of employment to a section 1194 case, but stated that Reynolds 12 “properly holds that the IWC’s definition of ‘employer’ does not 13 impose liability on individual corporate agents acting within the 14 scope of their agency.” 15 Reynolds, 36 Cal. 4th at 1086). 16 left open personal liability on the basis of a “joint employer” 17 theory by exercising control over working conditions, though not 18 finding it present in the facts presented in that case. 19 76. 20 Martinez, 49 Cal. 4th at 66 (citing But the court in Martinez also Id. at 75- Here, Plaintiffs argue both that the individual defendants are 21 joint employers and are persons who caused violations under Labor 22 Code section 558. 23 89).) 24 employer theory, it does allege against all three California 25 Defendants that they were personally and directly involved in the 26 independent contractor agreements and settlement attempts with 27 Plaintiffs that Plaintiffs allege violated California’s Labor Code. 28 Plaintiffs also allege these Defendants had some kind of (Mot. Remand at 6-7 (citing Compl. ¶¶ 81-83, 85- While the complaint is not very explicit about its joint 15 1 supervisory or managerial role in the terminals in which Plaintiffs 2 worked. 3 Further, claims under section 558 are available in a PAGA 4 action, and the section contemplates holding individuals liable: 5 “Any employer or other person acting on behalf of an employer who 6 violates, or causes to be violated, a section of this chapter or 7 any provision regulating hours and days of work in any order of the 8 Industrial Welfare Commission shall be subject to a civil penalty 9 as follows[.]” Cal. Labor Code § 558(a); see Sarmiento v. Wells 10 Fargo Bank, N.A., No. CV 15-01181-RGK (PLA), 2015 WL 1756833, at 11 *2-4 (C.D. Cal. Apr. 17, 2015); Velasquez v. HMS Host USA, Inc., 12 No. 2:12-cv-02312-MCE-CKD, 2012 WL 6049608, at *3-5 (E.D. Cal. Dec. 13 5, 2012). 14 There may be a question, raised by Defendants in their brief, 15 as to whether these three Defendants qualify as persons acting on 16 behalf of an employer who caused the violations, particularly if 17 they are not high-level employees or otherwise satisfy the 18 definition of “employer” from Martinez. 19 But that is a question resolved in Plaintiffs’ favor at this 20 pleading stage, and which again cuts against finding federal 21 jurisdiction here because these Defendants could be liable as 22 individuals under section 558 as well as if they are found to be 23 “joint employers.” (See Opp’n at 10-12.)4 Therefore, the Court does not find these 24 25 26 27 28 4 Defendants allege that Defendants Moreno and Kotaka were not addressed in the notice letter to the LWDA and thus they lacked notice of their potential liability. This would not resolve the diversity jurisdiction issue because there would still be one nondiverse Defendant, Rodriguez, who was addressed in the letter. 16 1 Defendants were fraudulently joined and remands on this independent 2 basis as well. 3 5. Costs on Remand 4 As established by the all the uncertainty in the law from the 5 amount in controversy to sham defendants, this is not a case where 6 Defendants’ removal was a dilatory tactic or plainly against 7 binding authority. 8 fees and costs is denied. Therefore, Plaintiffs’ request for attorneys’ 9 10 11 IV. CONCLUSION For all the above reasons, the Court GRANTS Plaintiffs’ Motion 12 to Remand. 13 Motion to Transfer Venue is DENIED as moot. 14 Motion to Dismiss (Dkt. No. 12) is VACATED as moot. 15 REMANDED. The request for fees and costs is DENIED. Defendants’ The later-noticed The case is 16 17 IT IS SO ORDERED. 18 Dated: April 7, 2016 19 DEAN D. PREGERSON United States District Judge 20 21 22 23 24 25 26 27 28 17
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