-DLB Garcia v. Lane Bryant, Inc. et al, No. 1:2011cv01566 - Document 15 (E.D. Cal. 2011)

Court Description: ORDER GRANTING Defendant's Motion to Dismiss CSI from the complaint; ORDER DENYING Defendants' Motion to Dismiss or Strike Plaintiff's class allegations and willfulness allegations; ORDER GRANTING Defendants' Motion to Dismiss the Doe Defenants and Plaintiffs' section 204 allegations with leave to amend; ORDER DENYING Defendants' Motion to Dismiss Plaintiffs'Fourth Cause of Action; ORDER DENYING Defendants' Motion to Strike; re 10 Motion to Dismiss for Lack of Jurisdiction and 13 Motion to Dismiss, signed by District Judge Lawrence J. O'Neill on 10/28/2011. (Martin-Gill, S)

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-DLB Garcia v. Lane Bryant, Inc. et al Doc. 15 1 2 3 4 5 6 7 8 IN THE UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 12 13 ERNESTO GARCIA, individually, and on behalf of other members of the general public similarly situated, and as aggrieved employees pursuant to the Private Attorneys General Act (“PAGA”), 14 CASE NO. CV-F-11-1566- LJO ORDER ON DEFENDANTS’ MOTIONS TO DISMISS (Docs. 10, 13) Plaintiffs, vs. 15 16 17 LANE BRYANT, INC., a Pennsylvania corporation; CHARMING SHOPPES, INC., a Pennsylvania corporation, and DOES 1 through 10, inclusive 18 Defendants. / 19 20 INTRODUCTION 21 Defendants Lane Bryant, Inc. (“LBI”), Charming Shoppes, Inc. (“CSI”), and Does 1 through 101 22 seek to dismiss CSI from Plaintiffs’2 complaint for lack of personal jurisdiction. Defendants also seek 23 to dismiss Plaintiffs’ class and willfulness allegations, the Doe Defendants, and several of Plaintiffs’ 24 causes of action for failure to state a claim. Defendants further seek to strike Plaintiffs’ class and 25 willfulness allegations and Plaintiffs’ request for disgorgement. The motions are unopposed. This Court 26 1 27 LBI, CSI, and Does 1 through 10 will be referred to collectively as “Defendants.” 2 28 Plaintiffs’ are Ernesto Garcia (“Mr. Garcia”) and the proposed class members. Mr. Garcia and the proposed class members will be referred to collectively as “Plaintiffs.” 1 Dockets.Justia.com 1 considered Defendants’ motions on the record and VACATED the November 2, 2011 hearing or oral 2 argument, pursuant to this Court’s Local Rule 230(g). For the reasons discussed below, this Court 3 GRANTS Defendants’ motion to dismiss CSI from the complaint for lack of personal jurisdiction; 4 GRANTS in part and DENIES in part Defendants’ motion to dismiss for failure to state a claim; and 5 DENIES Defendants’ motion to strike. BACKGROUND3 6 7 In 2008, Plaintiff Ernesto Garcia (“Mr. Garcia”) began working for LBI, a women’s plus-size 8 specialty apparel retailer, as a non-exempt, hourly-paid store manager at LBI’s Merced, California retail 9 store. LBI is owned by CSI. (Lee Decl., ¶ 2). CSI is a retail apparel holding company incorporated and 10 headquartered in Pennsylvania. (Lee Decl., ¶ 2). CSI does not engage in any business operations. (Lee 11 Decl., ¶ 2). Rather, all business operations are conducted by its subsidiaries, including LBI. (Lee Decl., 12 ¶ 2). LBI employs non-exempt, hourly paid employees throughout the state of California. 13 Mr. Garcia and the other class members claim that CSI and LBI violated California law by failing 14 to pay overtime and minimum wage for all hours worked, provide employees with complete and accurate 15 wage statements, reimburse employees for all necessary business expenditures, and provide suitable 16 seating. They also claim that CSI and LBI failed to provide all meal and rest periods or compensation 17 in lieu thereof; and failed to pay all wages in a timely manner. 18 Mr. Garcia alleges that he and other class members were given an unrealistically large number 19 of tasks to perform during their scheduled work hours. These tasks included, but were not limited to, 20 pricing goods, rearranging store merchandise, setting up store displays, and dealing with customers. If 21 the tasks were not completed during the employees scheduled work hours, or if the employees worked 22 overtime to complete the tasks, they were reprimanded. Accordingly, Mr. Garcia and other class 23 members worked “off-the-clock” to complete their assigned tasks. In addition, Mr. Garcia had to work 24 25 26 27 28 3 The background facts are derived from the complaint; unless otherwise noted. This Court accepts these allegations as true for the Fed. R. Civ. P. 12(b)(6) motion. See Lazy Y. Ranch LTD v. Behrens, 546 F.3d 580, 588 (9th Cir. 2008). Several facts are derived from the declaration of John Lee, Vice President and Chief Accounting Officer for CSI. These facts were only considered by the Court for purposes of the Fed. R. Civ. P. 12(b)(2) motion to dismiss for lack of personal jurisdiction. See Data Disc, Inc. v. Systems Technology Assocs., Inc., 557 F.2d 1280, 1284 (9th Cir. 1977) (when deciding a motion to dismiss for lack of personal jurisdiction the allegations in a pleading may not be assumed true when they are contradicted by an affidavit). 2 1 “off-the-clock” to complete additional assignments which were not related to his retail store work. For 2 example, Mr. Garcia was the “Credit Captain” of his area, which involved coordinating with other stores 3 regarding their progress in signing up customers to Defendants’ credit card offers. 4 Mr. Garcia alleges that this routine “off-the-clock” work and his work as Credit Captain resulted 5 in unpaid overtime, failure to pay minimum wage, and inaccurate wage statements. Mr. Garcia explains 6 that some of the “off-the-clock” work he and other class members engaged in occurred before or after 7 the members’ eight hour shift and, thus, qualified for overtime pay. To the extent the time worked did 8 not qualify for overtime pay, Mr. Garcia alleges Defendants failed to pay minimum wage for these “off- 9 the-clock” hours. Mr. Garcia further alleges that these “off-the-clock” hours led to inaccurate wage 10 statements, because the total hours worked were not accurately captured. 11 In addition, Mr. Garcia alleges that he and other store managers were not reimbursed for 12 expenses. Mr. Garcia explains that he and other store managers were required to travel to company 13 meetings and required to help out at other stores in cities such as Fremont, Livermore, and Pleasanton. 14 Mr. Garcia alleges that he and other store managers were not reimbursed for their travel expenses. Mr. 15 Garcia also explains that he and other store managers were required to correspond daily with their 16 district managers and other store managers through their personal telephones. Mr. Garcia alleges that 17 he and other store managers were not reimbursed for these telephone expenses. 18 Finally, Mr. Garcia alleges that Defendants had a store policy that store employees could not sit 19 at any time while they were considered to be on the clock. Employees were not permitted to sit, even 20 when it would not interfere with the performance of their duties, nor were they provided with suitable 21 seating. Accordingly, Mr. Garcia and other class members were forced to stand throughout their shifts. 22 Plaintiffs’ Claims 23 Plaintiffs proceed on their California Class Action Complaint (“complaint”) which pursues a 24 collective action on behalf of all “non-exempt or hourly paid employees who worked for Defendants in 25 California, at any time from August 21, 2008 to the filing of this complaint until the date of 26 certification.” (Compl., p. 3). 27 The complaint also pursues a California class action for two subclasses: the “Penalties Subclass” 28 and the “Manager Unreimbursed Expenses Subclass.” (Compl., p. 3). The “Penalties Subclass” consists 3 1 of all “non-exempt or hourly paid employees who worked for Defendants in California, within one year 2 prior to the filing of this complaint until the date of certification.” (Compl., p. 3). The “Manager 3 Unreimbursed Expenses Subclass” consists of all “non-exempt or hourly paid store managers who 4 worked for Defendants in California, within four years prior to the filing of this complaint until the date 5 of certification who incurred business expenses as a result of working for Defendants.” (Compl., p. 3-4). 6 The complaint asserts the following causes of action: 7 1. 8 9 (First Cause of Action); 2. 10 11 3. Defendants failed to provide employees with complete and accurate wage statements, in violation of California Labor Code § 226(a) (Third Cause of Action); 4. 14 15 Defendants failed to pay minimum wage for all hours worked, in violation of California Labor Code §§ 1194, 1197, and 1197.1 (Second Cause of Action); 12 13 Defendants failed to pay overtime, in violation of California Labor Code §§ 510, 1198 Defendants failed to reimburse employees for all necessary business expenditures, in violation of California Labor Code §§ 2800 and 2802 (Fourth Cause of Action); 5. Defendants failed to provide suitable seating, in violation of California Labor Code 16 § 1198 and California Code of Regulations, Title 8, section 11070(14) (Fifth Cause of 17 Action); 18 6. The above violations, coupled with the fact that Defendants failed to provide all meal 19 and/or rest periods or compensation in lieu thereof and failed to timely pay all wages 20 owed, entitle Plaintiffs to recover civil penalties pursuant to California Labor Code 21 §§ 2698, et seq. (Sixth Cause of Action); and 22 7. The above violations subject Defendants to a claim under California’s Unfair 23 Competition Law (“UCL”), California Business and Professions Code sections 17200, 24 et seq. (Seventh Cause of Action). 25 Procedural History 26 Defendants removed the action to this Court on the basis of diversity jurisdiction. Defendants 27 then moved to dismiss CSI from the complaint for lack of personal jurisdiction, pursuant to Fed. R. Civ. 28 P. 12(b)(2); to dismiss Plaintiffs’ class and willfulness allegations, the Doe Defendants, and several of 4 1 Plaintiffs’ causes of action for failure to state a claim, pursuant to Fed. R. Civ. P. 12(b)(6); and to strike 2 Plaintiffs’ class and willfulness allegations and Plaintiffs’ request for disgorgement, pursuant to Fed. 3 R. Civ. P. 12(f). Plaintiffs failed to oppose the motions. The November 2, 2011 hearing or oral 4 argument was vacated, pursuant to this Court’s Local Rule 230(g). This Court has considered 5 Defendants’ arguments, the relevant law, and issues this order. 6 DISCUSSION 7 I. Motion to Dismiss for Lack of Personal Jurisdiction 8 Defendants contend that CSI should be dismissed from the complaint because CSI’s contacts 9 with California are insufficient for this Court to exercise personal jurisdiction over the company. This 10 Court agrees and GRANTS Defendants’ motion to dismiss CSI from Plaintiffs’ complaint. 11 Fed. R. Civ. P. 12(b)(2) empowers a defendant to challenge a complaint “for lack of personal 12 jurisdiction.” A district court’s determination whether to exercise personal jurisdiction is a question of 13 law. Rio Properties, Inc. v. Rio Int’l Interlink, 284 F.3d 1007, 1019 (9th Cir. 2002). Although the 14 defendant is the moving party on a Fed. R. Civ. P. 12(b)(2) motion to dismiss, “the plaintiff bears the 15 burden of establishing that jurisdiction.” Id. “Uncontroverted allegations in the complaint must be taken 16 as true.” CollegeSource, Inc. v. AcademyOne, Inc., 653 F.3d 1066, 1073 (9th Cir. 2011) (internal 17 citations omitted). Allegations in a pleading may not be assumed true however, when they are 18 contradicted by an affidavit. Data Disc, Inc. v. Systems Technology Assocs., Inc., 557 F.2d 1280, 1284 19 (9th Cir. 1977). 20 Two recognized bases exist for personal jurisdiction over nonresident defendants: (1) “general 21 jurisdiction” which arises when a defendant’s contacts with the forum state are so pervasive as to justify 22 the exercise of jurisdiction over the person in all matters; and (2) “specific” or “limited” jurisdiction 23 which arises out of the defendant’s contacts with the forum giving rise to the subject of the litigation. 24 See Helicopteros Nacionales de Colombia S.A. v. Hall, 466 U.S. 408, 414, 104 S.Ct. 1868 (1984). 25 Absent a traditional basis for jurisdiction (service within the state – physical presence, domicile or 26 consent), due process requires that the defendant have “certain minimum contacts with [the forum state] 27 such that the maintenance of the suit does not offend traditional notions of fair play and substantial 28 justice.” International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154 (1945) (internal 5 1 quotation marks and citations omitted). Defendants’ argue that this Court lacks both general and specific 2 jurisdiction over CSI. This Court considers Defendants’ arguments below. 3 A. General Jurisdiction 4 Defendants argue that there is no basis for the Court to exercise general jurisdiction over CSI 5 because CSI’s contacts with California are insufficient. Defendants point out that CSI has no operations 6 or employees in California and does not conduct any activities in California. (Jx Motion, p. 5). 7 Plaintiffs’ allege that Defendants “have sufficient minimum contacts in California . . . so as to render 8 the exercise of jurisdiction over them by the California courts consistent with traditional notions of fair 9 play and substantial justice.” (Compl., p. 1). The complaint further alleges that CSI is a Pennsylvania 10 corporation doing business in California. (Compl., p. 2). The complaint fails to explain the sufficiency 11 of CSI’s contacts in California. 12 Defendants have established that this Court lacks general personal jurisdiction over CSI. In 13 determining whether a company has sufficient minimum contacts with a state for purposes of 14 establishing general jurisdiction, courts consider whether the defendant: (1) makes sales, solicits or 15 engages in business in the state; (2) serves the state’s markets; (3) designates an agent for service of 16 process; (4) holds a license; or (5) is incorporated there. Bancroft & Masters, Inc. v. August Nat. Inc., 17 223 F.3d 1082, 1086 (9th Cir. 2000). According to the declaration of John Lee (“Mr. Lee”), CSI’s Vice 18 President and Chief Accounting Officer, CSI does not engage in any business activities in California. 19 (Lee Decl., ¶ 6). Mr. Lee’s declaration provides that CSI does not solicit California residents; 20 manufacture, purchase or sell goods in California; or advertise goods or services in California. (Lee 21 Decl., ¶ 6). CSI does not pay payroll or other taxes in California and has no employees in California. 22 (Lee Decl., ¶ 6). In addition, CSI does not have registered agents for service of process in California. 23 (Lee Decl., ¶ 5). Finally, CSI is incorporated and headquartered in Bensalem, Pennsylvania, and is not 24 registered to do business in California. (Lee Decl., ¶ 2, 5). 25 Mr. Lee’s declaration establishes that this Court lacks general jurisdiction over CSI. Plaintiffs 26 fail to contravene this evidence and fail to carry their burden to prove general personal jurisdiction over 27 CSI. See Data Disc, 557 F.2d at 1284 (the Court cannot assume the truth of allegations in a pleading 28 that is contradicted by a sworn affidavit). Accordingly, CSI’s contacts with California are insufficient 6 1 to establish general jurisdiction. See Bancroft & Masters, Inc., 223 F.3d at 1086. 2 B. Specific Jurisdiction 3 Even if a nonresident defendant’s contacts with the forum state are not sufficiently “continuous 4 and systematic” for general jurisdiction, the nonresident defendant may be subject to jurisdiction on 5 claims related to its activities or contacts there. Whether limited jurisdiction lies “turns on an evaluation 6 of the nature and quality of the defendant’s contacts in relation to the cause of action.” Data Disc, 557 7 F.2d at 1287. A three-step evaluation of an out-of-state defendant’s contacts with the forum determines 8 whether limited jurisdiction exists: 9 1. The out-of-state defendant purposely directs its activities or consummated a transaction 10 with the forum or its resident; or performs an act by which the defendant purposefully 11 avails itself of the privilege of conducting activities in the forum to invoke the benefits 12 and protections of the forum’s laws; 13 2. Plaintiff’s claim arises out of or results from the defendant’s forum-related activities; and 14 3. The forum’s exercise of personal jurisdiction must be reasonable, that is, comports with 15 “fair play and substantial justice.” 16 Burger King Corp. v. Rudzewicz, 471 U.S. 462, 477-478, 105 S.Ct. 2174 (1985); Boschetto v. Hansing, 17 539 F.3d 1011, 1016 (9th Cir. 2008); see Haisten v. Grass Valley Medical Reimbursement Fund, Ltd., 18 784 F.2d 1392, 1397 (9th Cir. 1986); Raffaele v. Compagnie Generale Maritime, S.A., 707 F.2d 395, 19 397 (9th Cir. 1983). A plaintiff bears the burden on the first two prongs. Boschetto, 539 F.3d at 1016. 20 If a plaintiff establishes both prongs, the defendant must present a “compelling case” that the exercise 21 of jurisdiction would not be reasonable. Id. If the plaintiff fails at the first step, “the jurisdictional 22 inquiry ends and the case must be dismissed.” Id. 23 24 25 26 27 28 1. Purposeful Availment As to a defendant’s purposefully-directed activities, the Ninth Circuit Court of Appeals explained in Sinatra v. National Enquirer, Inc., 854 F.2d 1191, 1195 (9th Cir. 1988): Purposeful availment analysis examines whether the defendant’s contacts with the forum are attributable to his own actions or are solely the actions of the plaintiff. In order to have purposefully availed oneself of conducting activities in the forum, the defendant must have performed some type of affirmative conduct which allows or promotes the transaction of business with the forum state. 7 1 Defendants contend that CSI is an out-of-state corporation that does not directly conduct any 2 business in California. (Jx Motion, p. 6). Defendants point out that CSI has performed no “intentional 3 acts” and has not engaged affirmatively in any activities directed at California. Id. According to Mr. 4 Lee’s declaration, CSI is a retail apparel holding company that does not engage in any business 5 operations. (Lee Decl., ¶ 2). All business operations conducted within the CSI group of companies are 6 conducted and managed by its subsidiaries, including Lane Bryant, which is owned and operated by LBI. 7 (Lee Decl., ¶ 2). In addition, Mr. Lee explains, CSI has not sent paychecks, wage statements, or payroll 8 taxes into California. (Lee Decl., ¶ 6, 8). Mr. Lee’s sworn declaration establishes that CSI has not 9 purposefully availed itself of conducting activities in the forum. Plaintiffs fail to contravene this 10 evidence. See Data Disc, 557 F.2d at 1284 (the Court cannot assume the truth of allegations in a 11 pleading that is contradicted by a sworn affidavit). Accordingly, CSI has not purposefully availed itself 12 of conducting activities in the forum. See Sinatra, 854 F.2d at 1195. 13 2. Arising Out of Forum-Related Activities 14 Defendants argue that even if the first element to establish specific jurisdiction could be satisfied, 15 there is no nexus between Plaintiffs’ alleged wage and hour claims and any activity by CSI in California. 16 (Jx Motion, p. 6). Defendants point out that Plaintiffs’ claims arise out of the alleged manner in which 17 certain LBI policies and practices were established, implemented, and enforced at LBI stores in 18 California. (Jx Motion, p. 6). Defendants point out that LBI, and not CSI, is the entity that establishes, 19 implements, and enforces the policies and practices applicable to LBI employees. (Jx Motion, p. 6). 20 Plaintiffs’ complaint alleges that both LBI and CSI are responsible for the unpaid wages, failure to 21 reimburse business expenditures, non-compliant wage statements, failure to provide seating, and all 22 other wrongs related to the manner in which the LBI stores were run. 23 Allegations in the complaint must be taken as true, see CollegeSource, 653 F.3d at 1073, unless 24 they are contradicted by an affidavit, see Data Disc, 557 F.2d at 1284. The allegations in Plaintiffs’ 25 complaint relate to the payment of wages, the reimbursement of business expenditures, and the manner 26 in which the LBI stores were run. Mr. Lee’s sworn declaration provides that CSI was not involved in 27 the payment of wages nor involved in the preparation of wage statements and that CSI does not “exert 28 direct managerial control over the day-to-day operations of [LBI].” (Lee Decl., ¶ 7). Plaintiffs have 8 1 submitted nothing to contravene Mr. Lee’s sworn declaration. See Data Disc, 557 F.2d at 1284 (the 2 Court cannot assume the truth of allegations in a pleading that is contradicted by a sworn affidavit). 3 Accordingly, Plaintiff has failed to establish specific jurisdiction over CSI. 4 5 For the reasons discussed above, this Court GRANTS defendants’ motion to dismiss CSI from Plaintiffs’ complaint for lack of personal jurisdiction. 6 II. Motion to Dismiss for Failure to State a Claim 7 Defendants contend that Plaintiffs’ class action allegations, the Doe defendants, Plaintiffs’ failure 8 to reimburse business expenditures allegation, two of Plaintiffs’ allegations under California’s Private 9 Attorneys General Act (“PAGA”), and Plaintiffs’ willfulness allegations should be dismissed for failure 10 to state a claim, pursuant to Fed. R. Civ. P. 12(b)(6). This Court GRANTS in part and DENIES in part 11 Defendants’ motion to dismiss. 12 A motion to dismiss pursuant to Fed R. Civ. P. 12(b)(6) is a challenge to the sufficiency of the 13 pleadings set forth in the complaint. A Fed. R. Civ. P. 12(b)(6) dismissal is proper where there is either 14 a “lack of a cognizable legal theory” or “the absence of sufficient facts alleged under a cognizable legal 15 theory.” Balisteri v. Pacifica Police Dept., 901 F.2d 696, 699 (9th Cir. 1990). In considering a motion 16 to dismiss for failure to state a claim, the court generally accepts as true the allegations of the complaint, 17 construes the pleading in the light most favorable to the party opposing the motion, and resolves all 18 doubts in the pleader's favor. Lazy Y. Ranch LTD v. Behrens, 546 F.3d 580, 588 (9th Cir. 2008). 19 To survive a motion to dismiss, the plaintiff must allege “enough facts to state a claim to relief 20 that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “A claim has facial 21 plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable 22 inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 129 S. Ct. 1937, 23 1949 (2009). “The plausibility standard is not akin to a ‘probability requirement,’ but it asks for more 24 than a sheer possibility that a defendant has acted unlawfully.” Id. (quoting Twombly, 550 U.S. at 556). 25 “Where a complaint pleads facts that are ‘merely consistent with’ a defendant’s liability, it ‘stops short 26 of the line between possibility and plausibility for entitlement to relief.’” Id. (quoting Twombly, 550 U.S. 27 at 557). 28 “While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual 9 1 allegations, a plaintiff’s obligation to provide the ‘grounds’ of his ‘entitlement to relief’ requires more 2 than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” 3 Twombly, 550 U.S. 544, 555 (2007) (internal citations omitted). Thus, “bare assertions...amount[ing] 4 to nothing more than a ‘formulaic recitation of the elements’...are not entitled to be assumed true.” 5 Iqbal, 129 S. Ct. at 1951. A court is “free to ignore legal conclusions, unsupported conclusions, 6 unwarranted inferences and sweeping legal conclusions cast in the form of factual allegations.” Farm 7 Credit Services v. American State Bank, 339 F.3d 764, 767 (8th Cir. 2003) (citation omitted). Moreover, 8 a court “will dismiss any claim that, even when construed in the light most favorable to plaintiff, fails 9 to plead sufficiently all required elements of a cause of action.” Student Loan Marketing Ass'n v. Hanes, 10 181 F.R.D. 629, 634 (S.D. Cal. 1998). In practice, “a complaint . . . must contain either direct or 11 inferential allegations respecting all the material elements necessary to sustain recovery under some 12 viable legal theory.” Twombly, 550 U.S. at 562 (quoting Car Carriers, Inc. v. Ford Motor Co., 745 F.2d 13 1101, 1106 (7th Cir. 1984)). 14 15 16 With these standards in mind, this Court turns to Defendants’ challenges to the allegations in Plaintiffs’ complaint. A. Class Action Allegations 17 Defendants contend that Plaintiffs’ class action allegations should be dismissed because their 18 allegations are insufficient factually and conclusory. (Mot., p. 3-9). Defendants contend that simply 19 alleging that Defendants failed to pay all non-exempt employees in California overtime pay and 20 minimum wage, failed to provide compliant wage statements and proper seating, and (under PAGA) 21 failed to pay meal period premiums and provide timely payment of wages are nothing more than vague 22 and conclusory legal conclusions that need not be entitled to the assumption of truth. (Mot., p. 8). 23 Defendants further argue that Plaintiffs have failed to plead facts to support the allegation that 24 Defendants’ purported “policy” or “practice” of failing to pay minimum and overtime wages, provide 25 wage statements, or provide suitable seating would have applied to all putative class members. (Mot., 26 p. 8). Defendants also point out that Plaintiffs have failed to allege that Mr. Garcia, a store manager, was 27 similarly situated to other non-managerial non-exempt employees throughout California. (Mot., p. 8). 28 Defendants also argue that with regard to the purported store manager subclass, Plaintiffs fail to allege 10 1 how putative members of such a sub-class would be ascertained. (Mot., p. 8). 2 Although Defendants’ motion is unopposed, dismissal of Plaintiffs’ class allegations at this stage 3 of the proceeding is premature. Although class allegations may be “wholly insufficient . . . compliance 4 with Rule 23 is not to be tested by a motion to dismiss for failure to state a claim.” Gillibeau v. City of 5 Richmond, 417 F.2d 426, 432 (9th Cir. 1969); see also In re Wal-Mart Stores, Inc., 505 F.Supp.2d 609, 6 615 (N.D. Cal. 2007) (denying defendant’s Rule 12(b)(6) motion to dismiss and defendant’s Rule 12(f) 7 motion to strike the class allegations as premature because discovery had not yet commenced nor 8 arguments related to class certification made). Defendants must challenge Plaintiffs’ class allegations 9 through a motion under Fed. R. Civ. P. 23. See Vinole v. Countrywide Home Loans, Inc., 571 F.3d 935, 10 939 (9th Cir. 2009) (holding that Rule 23 does not preclude a defendant from bringing a preemptive 11 motion to deny certification); see also Kamm v. California, 509 F.2d 205 (9th Cir. 1975). Defendants 12 improperly seek to dismiss, pursuant to Fed. R. Civ. P. 12(b)(6), or strike, pursuant to Fed. R. Civ. P. 13 12(f), Plaintiffs’ class claims. Defendants’ arguments regarding the propriety of Plaintiffs’ class 14 allegations are premature. See Gillibeau, 417 F.2d at 432. Accordingly, this Court DENIES Defendant’s 15 motion to strike or dismiss the class allegations at this procedural stage. 16 B. Doe Defendants 17 Next, Defendants contend that Plaintiffs improperly named Doe Defendants and improperly 18 lumped LBI, CSI, and the Doe Defendants into a single entity, which renders his individual and class- 19 wide claims deficient on their face. (Mot., p. 10). Defendants point out that absent specific allegations 20 describing each Defendants’ specific role in the alleged violations, a plaintiff fails to state a claim against 21 any defendant. (Mot., p. 10). Accordingly, Defendants contend, the complaint alleges insufficiently 22 class claims against any specific defendant under Fed. R. Civ. P. 12(b)(6), and should be dismissed. 23 (Mot., p. 10). 24 “As a general rule, the use of ‘John Doe’ to identify a defendant is not favored.” Gillespie v. 25 Civiletti, 629 F.2d 637, 642 (9th Cir. 1980) (internal citations omitted). “However, situations arise . . 26 . where the identity of alleged defendants will not be known prior to the filing of a complaint. In such 27 circumstances, the plaintiff should be given an opportunity through discovery to identify the unknown 28 defendants, unless it is clear that discovery would not uncover the identities, or that the complaint would 11 1 be dismissed on other grounds.” Id. 2 Here, Plaintiffs have failed to state a claim for relief against the Doe Defendants because they 3 have failed to show how the Doe Defendants have participated in the alleged wage and hour, unpaid 4 business expenses, and seating wrongs. Plaintiffs have also failed to show how the Doe Defendants 5 participated in the alleged PAGA violations or how the Doe Defendants violated the UCL. Accordingly, 6 this Court GRANTS Defendants’ motion to dismiss the Doe Defendants from Plaintiff’s complaint with 7 leave to amend. 8 C. Failure to Reimburse Business Expenditures 9 Defendants contend that Plaintiffs’ Fourth Cause of Action for Defendants’ purported failure to 10 reimburse the business expenditures of the store manager subclass should be dismissed because the facts 11 set forth by Plaintiffs are insufficient to establish any plausible inference of liability. (Mot., p. 11). 12 Defendants point out that Plaintiffs fail to allege (i) whether all putative members of this proposed 13 subclass suffered the same harm; (ii) the extent of expenses at issue; (iii) whether Mr. Garcia or the other 14 subclass members ever submitted for reimbursement of these expenses and if so, what response they 15 received; (iv) who told Mr. Garcia or any other member of the subclass that they would not be 16 reimbursed for business-related expenses; or (v) to the extent a policy existed of not reimbursing 17 employees, what form this policy took and how it was transmitted to Mr. Garcia and the members of the 18 putative sub-class. (Mot., p. 11). 19 Defendants appear to hold Plaintiffs to the heightened pleading standard required under 20 California law. “Pleading requirements differ between federal law and California law. California law 21 requires that a complaint contain a statement of the facts constituting the cause of action.” See 22 Nagrampa v. MailCoups, Inc., 469 F.3d 1257, 1270, fn. 3 (9th Cir. 2006) (en banc) (internal quotation 23 marks and citations omitted). “Under federal law, the primary aim of the pleading requirements is to 24 give fair notice to the other party.” Id. Accordingly, under federal law a complaint need only “contain 25 sufficient allegations of underlying facts to give fair notice and to enable the opposing party to defend 26 itself effectively.” Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011). 27 Plaintiffs’ complaint contains sufficient factual allegations to survive a motion to dismiss. 28 Plaintiffs’ allege that Defendant violated California Labor Code §§ 2800 and 2802. (Compl., p. 15). 12 1 California Labor Code § 2800 requires an employer to “indemnify his employee for losses caused by the 2 employer’s want of ordinary care.” California Labor Code § 2802 requires an employer to “indemnify 3 his or her employee for all necessary expenditures or losses incurred by the employee in direct 4 consequence of the discharge of his or her duties, or of his or her obedience to the directions of the 5 employer.” Plaintiffs allege that Mr. Garcia and other store managers incurred necessary business- 6 related expenses and costs that were not reimbursed fully. Specifically, Plaintiffs allege that Mr. Garcia 7 and other store managers were required to travel to stores located in Fremont, Livermore, and Pleasanton 8 as part of their job duties and were not reimbursed for their travel expenses. The complaint also alleges 9 that Mr. Garcia and other store managers were required to correspond with their district managers daily 10 using their personal telephones and were not reimbursed for this expense. Because this Court accepts 11 as true Plaintiffs’ well-pleaded allegations that they were required to travel and use their personal 12 telephones as part of their job duties, and Defendant failed to reimburse them for these expenses, 13 Plaintiffs have stated “enough facts to state a claim to relief that is plausible on its face.” Twombly, 550 14 U.S. at 570. Accordingly, this Court DENIES Defendants’ motion to dismiss Plaintiffs’ Fourth Cause 15 of Action. 16 17 D. PAGA Penalties 1. Timing of Wage Payments 18 Defendants contend that Plaintiffs’ Sixth Cause of Action for PAGA penalties arising from 19 California Labor Code § 204 (“section 204”), regarding the timing of wage payments, should be 20 dismissed because the allegation is conclusory. (Mot., p. 11-12). Defendants point out that other than 21 reciting the legal requirements of section 204 and the conclusory statement that Defendants failed to pay 22 wages when due, Plaintiffs’ complaint is completely devoid of any facts that would allow LBI or CSI 23 to discern the basis for this claim. (Mot., p. 12). 24 “While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual 25 allegations, a plaintiff’s obligation to provide the ‘grounds’ of his ‘entitlement to relief’ requires more 26 than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” 27 Twombly, 550 U.S. at 555 (internal citations omitted). 28 Plaintiffs have failed to allege enough facts to state a claim for relief to the extent they assert a 13 1 claim for failure to pay wages in a timely manner. In Plaintiffs’ complaint, they summarize section 204 2 and then state: 3 4 5 6 7 8 9 During the relevant time period, Defendants failed to pay Plaintiff and other aggrieved employees all wages due to them within any time period specified by [section 204] including, but not limited to, overtime wages, minimum wages, meal and rest period premium wages, and unreimbursed expenses premiums. (Compl., p. 18). In the general allegations section of Plaintiffs’ complaint they allege that: Defendants knew or should have known that Plaintiff and class members were entitled to timely payment of wages during their employment. In violation of the California Labor Code, Plaintiff and class members did not receive payment of all wages, including, but not limited to, overtime wages, minimum wages, meal and rest period premium wages, and unreimbursed expenses. 10 11 (Compl., p. 8). As pointed out by Defendant, it is unclear whether Plaintiff is asserting that LBI’s 12 payroll timing is wrong or if this claim is merely derivative of the failure to pay overtime or minimum 13 wage allegations. Accordingly, this Court GRANTS Defendants’ motion to dismiss Plaintiffs’ section 14 204 allegations in their Sixth Cause of Action with leave to amend. 15 2. Meal Period Premiums 16 Defendants also contend that Plaintiffs’ Sixth Cause of Action for PAGA penalties arising from 17 California Labor Code §§ 226.7 and 512(a) (“section 226.7” and “section 512(a)”), regarding the alleged 18 failure to provide meal period premiums should be dismissed because the allegation is conclusory. 19 (Mot., p. 12-13). Defendants argue that the allegation “does no more than plead a speculative legal 20 conclusion, unsupported by any facts.” (Mot., p. 13). 21 Plaintiffs have alleged enough facts to state a claim for relief. Plaintiffs allege that they were 22 required to work through meal and rest periods in order to complete their required tasks. (Compl., p. 23 19). They further allege that Defendants failed to provide all meal or rest periods or pay Mr. Garcia and 24 other aggrieved employees the full meal and rest period premium wages. (Compl., p. 19). Plaintiffs’ 25 explain that they were given an unrealistically large number of tasks to perform during their scheduled 26 work hours, but were reprimanded for not completing their tasks within their scheduled hours or if they 27 worked overtime. (Compl., p. 11-12). As a result, Plaintiffs worked during meal and rest breaks in 28 order to complete their assigned tasks during their scheduled hours. (Compl., p. 12). Plaintiffs’ 14 1 allegations are sufficiently detailed to give notice to Defendants of the nature of the claim against them 2 and to give them a fair opportunity to defend against it. See Starr, 652 F.3d at 1216. 3 4 5 Accordingly, this Court DENIES Defendants’ motion to dismiss Plaintiffs’ section 226.7 and 512(a) allegations in their Sixth Cause of Action. E. Willfulness Allegations 6 Defendants contend that this Court should dismiss Plaintiffs’ conclusory allegations of 7 “willfulness” throughout the complaint because: (1) Plaintiffs have failed to allege facts sufficient to 8 support the legal conclusion of willfulness and (2) Plaintiffs have failed to state a plausible claim that 9 defendant acted with any mental state reflecting willfulness. (Mot., p. 14). 10 In order to survive a Fed. R. Civ. P. 12(b)(6) motion to dismiss, an allegation must: (1) “contain 11 sufficient allegations of underlying facts to give fair notice and to enable the opposing party to defend 12 itself effectively” and (2) “the factual allegations that are taken as true must plausibly suggest an 13 entitlement to relief.” Starr, 652 F.3d at 1216. 14 Here, Plaintiffs’ allege that: 15 Defendants were advised by skilled lawyers and other professionals, employees and advisors knowledgeable about California labor and wage law, employment and personnel practices, and about the requirements of California law . . . (Compl., p. 7). 16 17 18 19 Defendants knew or should have known that they had a duty to compensate Plaintiff and class members, and that Defendants had the financial ability to pay such compensation, but willfully, knowingly and intentionally failed to do so . . . 20 (Compl., p. 8-9). Plaintiffs also allege that Defendants willfully failed to pay all overtime wages 21 (Compl., p. 12); willfully failed to provide employees with complete and accurate wage statements 22 (Compl., p. 13); and willfully failed to fully reimburse business expenditures (Compl., p. 15). 23 Plaintiffs’ allegations are both factually sufficient and, taken as true, plausibly suggest 24 entitlement to relief. Plaintiffs allege that Defendants were advised by skilled lawyers and other 25 professionals about labor and wage law, employment and personnel practices. Defendants knew that 26 they had a duty to compensate Plaintiff and class members but willfully failed to do so. These 27 allegations are sufficiently detailed to give notice to Defendants of the nature of Plaintiffs’ claims against 28 them and to give them a fair opportunity to defend against it. See Starr, 652 F.3d at 1216. If a business 15 1 entity is advised with regard to proper employment practices and then fails to pay all overtime wages, 2 provide complete and accurate wage statements, and fully reimburse business expenditures, there is 3 nothing to suggest that the entity’s actions were anything but willful. See id. Accordingly, this Court 4 DENIES Defendants’ motion to dismiss or strike the willfulness allegations in Plaintiffs’ complaint. 5 III. Motion to Strike Request for Disgorgement 6 Defendants seek to strike, pursuant to Fed. R. Civ. P. 12(f), Plaintiffs’ request for disgorgement 7 under California Business and Professions Code § 17200, et seq. (“UCL”) because disgorgement is not 8 available to a private litigant under the UCL. (Mot., p. 14). Fed. R. Civ. P. 12(f) “does not authorize 9 district courts to strike claims for damages on the ground that such claims are precluded as a matter of 10 law.” Whittlestone, Inc. v. Handi-Craft Co., 618 F.3d 974-75 (9th Cir. 2010). The proper vehicle for 11 disposing of such claims would be a motion to dismiss, pursuant to Fed. R. Civ. P. 12(b)(6), or a motion 12 for summary judgment, pursuant to Fed. R. Civ. P. 56. Id. at 974. Accordingly, this Court DENIES 13 Defendants’ motion to strike. 14 CONCLUSION AND ORDER 15 For the foregoing reasons, this Court: 16 1. GRANTS Defendants’ motion to dismiss CSI from the complaint; 17 2. DENIES Defendants’ motion to dismiss or strike Plaintiffs’ class allegations and 18 willfulness allegations; 19 3. 20 GRANTS Defendants’ motion to dismiss the Doe Defendants and Plaintiffs’ section 204 allegations in their Sixth Cause of Action with leave to amend; 21 4. 22 DENIES Defendants’ motion to dismiss Plaintiffs’ Fourth Cause of Action and Plaintiffs’ section 226.7 and 512(a) allegations in their Sixth Cause of Action; and 23 5. DENIES Defendants’ motion to strike Plaintiffs’ request for disgorgement. 24 25 26 27 IT IS SO ORDERED. Dated: b9ed48 October 28, 2011 /s/ Lawrence J. O'Neill UNITED STATES DISTRICT JUDGE 28 16

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