Novoselac et al v. ISM Vuzem d.o.o. et al, No. 5:2021cv08654 - Document 51 (N.D. Cal. 2022)
Court Description: ORDER GRANTING 12 MOTION TO DISMISS COMPLAINT WITH LEAVE TO AMEND. Signed by Judge Beth Labson Freeman on 6/3/2022. (blflc1, COURT STAFF) (Filed on 6/3/2022)
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1 2 3 UNITED STATES DISTRICT COURT 4 NORTHERN DISTRICT OF CALIFORNIA 5 SAN JOSE DIVISION 6 7 STJEPAN NOVOSELAC, et al., Plaintiffs, 8 v. 9 10 ISM VUZEM D.O.O., et al., Defendants. 11 United States District Court Northern District of California Case No. 21-cv-08654-BLF ORDER GRANTING MOTION TO DISMISS COMPLAINT WITH LEAVE TO AMEND [Re: ECF 12] 12 13 14 15 Defendants Tesla, Inc. and Eisenmann Corporation (“Moving Parties”) seek dismissal of 16 the complaint under Federal Rule of Civil Procedure 12(b)(6). Plaintiffs’ counsel did not appear 17 when the case was called for hearing at 9:30 a.m. on May 19, 2022. After waiting until 9:45 a.m., 18 the Court stated its ruling on the record. The Court did not hear substantive argument. The 19 motion is GRANTED WITH LEAVE TO AMEND. 20 21 I. DISCUSSION Plaintiffs sue for wages and penalties allegedly owed to them for construction work they 22 performed at Tesla’s facility in Fremont, California between November 2014 and June 2016. 23 Compl. ¶ 17. As relevant here, they assert violations of California Labor Code provisions 24 governing minimum wages (Claim 3), overtime wages (Claim 4), rest breaks (Claim 5), and 25 waiting time penalties (Claim 7). Moving Parties argue that Plaintiffs have failed to state a claim 26 against them under Ashcroft v. Iqbal, 556 U.S. 662 (2009) and Bell Atl. Corp. v. Twombly, 550 27 U.S. 544 (2007), because the claims are time-barred, and Moving Parties were not Plaintiffs’ 28 employers. The Court addresses these arguments in reverse order. 1 A. 2 Plaintiffs allege that Tesla hired Eisenmann as the general contractor for the work in 3 question, that Eisenmann in turn hired Defendant ISM Vuzem d.o.o. as a subcontractor, and that 4 Plaintiffs were direct employees of ISM Vuzem d.o.o. Compl. ¶¶ 25, 48. Plaintiffs claim that 5 Moving Parties Tesla and Eisenmann are deemed to be their employers under California Labor 6 Code § 2750.5, because neither Eisenmann nor ISM Vuzem d.o.o. held a contractor’s license. Id. 7 ¶ 51. Section 2750.5 “operates to conclusively determine that a general contractor is the employer 8 of not only its unlicensed subcontractors but also those employed by the unlicensed 9 subcontractors.” Sanders Constr. Co. v. Cerda, 175 Cal. App. 4th 430, 434-35 (2009) (internal 10 United States District Court Northern District of California Status as Employers quotation marks and citation omitted). 11 Moving Parties seek dismissal of Plaintiffs’ claims on the basis that a non-party entity 12 called Vuzem USA Company held a contractor’s license during the relevant period. Moving 13 Parties ask the Court to take judicial notice of Vuzem USA Company’s license. It appears that 14 Moving Parties are asking the Court to make a factual determination that the licensed entity, 15 Vuzem USA Company, was Plaintiffs’ employer despite Plaintiffs’ allegation that an unlicensed 16 entity, ISM Vuzem d.o.o., was their employer. The Court cannot make that factual determination 17 in the context of a Rule 12(b)(6) motion. 18 B. Statutes of Limitations 19 Claims 3, 4, and 5 are subject to a three-year limitations period, and Claim 7 is subject to a 20 one-year limitations period. See Cal. Civ. Proc. Code §§ 338, 340. Plaintiffs allege that work at 21 the Tesla site was completed in “June of 2016.” Compl. ¶ 17. Construing that allegation in the 22 light most favorable to Plaintiffs, the work was completed on the last day of the month, June 30, 23 2016, and the applicable limitations periods began running on that date. Absent tolling, the one- 24 year limitations period expired on June 30, 2017, and the three-year limitations period expired on 25 June 30, 2019. Plaintiffs did not file this suit until August 3, 2021. 26 Plaintiffs allege that their wage claims were tolled during the pendency of a state court 27 action titled Lesnik v. ISM Vuzem USA, Inc., and a federal action titled Lesnik v. Eisenmann SE. 28 Compl. ¶ 22. Plaintiffs also allege that their wage claims against Moving Parties were tolled by 2 United States District Court Northern District of California 1 other defendants’ acknowledgement of debts to Plaintiffs. Id. ¶ 23. In their opposition (but not in 2 the complaint) Plaintiffs additionally assert that Eisenmann’s absence from the state of California 3 constitutes a basis for tolling. Only Plaintiffs’ allegations regarding the Lesnik cases merit 4 discussion. Plaintiffs have not cited authority suggesting that acknowledgement of a debt by other 5 defendants could toll the limitations periods with respect to Moving Parties, and the Court cannot 6 consider Plaintiffs’ assertion regarding Eisenmann’s absence, as it is not alleged in the complaint. 7 Turning to Plaintiffs’ allegations of tolling based on the Lesnik cases, this Court applies 8 California’s tolling rules to Plaintiffs’ wage and hour claims brought under California law. See 9 Emrich v. Touche Ross & Co., 846 F.2d 1190, 1199 (9th Cir. 1988) (“Where a district court 10 applies or borrows a state statute of limitations, it is also required to apply the state’s equitable 11 exceptions, to the extent these are consistent with federal law.”). Plaintiffs contend that tolling 12 exists under two tolling doctrines applied by California courts: (1) the federal tolling rule 13 articulated by American Pipe & Construction Co. v. Utah, 414 U.S. 538 (1974) and its progeny, 14 and (2) California’s equitable tolling rule. 15 16 1. American Pipe Tolling In American Pipe, the United States Supreme Court held that “the commencement of a 17 class action suspends the applicable statute of limitations as to all asserted members of the class 18 who would have been parties had the suit been permitted to continue as a class action.” American 19 Pipe, 414 U.S. at 554. “Once the statute of limitations has been tolled, it remains tolled for all 20 members of the putative class until class certification is denied.” Crown, Cork & Seal Co. v. 21 Parker, 462 U.S. 345, 354 (1983) (discussing American Pipe). “At that point, class members may 22 choose to file their own suits or to intervene as plaintiffs in the pending action.” Id. 23 The California Supreme Court considered the application of American Pipe tolling in Jolly 24 v. Eli Lilly & Co., 44 Cal. 3d 1103, 1121 (1988), identifying two major policy considerations 25 underlying the federal rule. The first consideration is the protection of the class action device. See 26 id. Absent protection from statutes of limitations, putative class members might file motions to 27 intervene or otherwise act in a way that would deprive “class actions of the efficiency and 28 economy of litigation which is a principal purpose of the procedure.” Id. (internal quotation marks 3 United States District Court Northern District of California 1 and citation omitted). The second consideration is the purposes of statutes of limitations – 2 “ensuring essential fairness to defendants and of barring a plaintiff who has slept on his rights.” 3 Id. (internal quotation marks and citation omitted). Those purposes are served where a class 4 action “notifies the defendants not only of the substantive claims being brought against them, but 5 also of the number and generic identities of the potential plaintiffs who may participate in the 6 judgment.” Id. While observing that some courts do not focus on notice to defendants when 7 applying the American Pipe rule, the Jolly court found the lack of such notice to be dispositive. 8 See id. at 1123-24. Where the prior class action could not have put the defendants on notice of the 9 subsequent personal injury claims asserted by Christine Jolly “within the statutory period of 10 limitations so that they might prepare their defense,” the Jolly court found the notice deficiency 11 “alone sufficient to deny plaintiff relief under American Pipe.” Id. at 1124. Although the 12 California Supreme Court found that American Pipe tolling was not warranted in Jolly, California 13 appellate courts have construed Jolly as adopting the American Pipe rule and have applied the rule 14 in other cases. See, e.g., Hildebrandt v. Staples the Off. Superstore, LLC, 58 Cal. App. 5th 128, 15 136 (2020). 16 Plaintiffs allege tolling from September 25, 2015 through July 18, 2016 based on the state 17 court Lesnik case. Compl. ¶ 22. However, the only class claim asserted in the state court Lesnik 18 case was dismissed on June 22, 2016. See Pl.’s RJN Exh. 22. Plaintiffs cite no authority that 19 would support American Pipe tolling after dismissal of the class claim. Consequently, it does not 20 appear that the state court Lesnik case provides a basis for American Pipe tolling of the limitations 21 periods in this case, which began to run on June 30, 2016. 22 Plaintiffs allege that the federal Lesnik case gives rise to tolling from an undisclosed start 23 date “through August 25, 2020 and of not less than 30 days thereafter.” Compl. ¶ 22. The federal 24 Lesnik case was filed under seal as a qui tam action on March 7, 2016. See Lesnik at ECF 1, Case 25 No. 16-cv-01120. Class claims were not added until the second amended complaint was filed, 26 also under seal, on August 8, 2017. See id. at ECF 31. The second amended complaint was 27 unsealed on January 8, 2018 and served on Moving Parties on January 18, 2018. See id. at ECF 28 39, 63, 64. As discussed above, the California Supreme Court has identified two important 4 United States District Court Northern District of California 1 policies that must be served for American Pipe tolling to apply: protection of the class action 2 device by allowing putative class members to wait until after certification is denied to file 3 individual suits, and effectuating the purposes of statutes of limitations by requiring that a class 4 action gives defendants adequate notice of potential claims. See Jolly, 44 Cal. 3d at 1121-24. 5 Neither of these policies would be served by allowing tolling while the pleadings in the federal 6 Lesnik case were sealed, when neither Plaintiffs nor Moving Parties had notice of the putative 7 class claims. Accordingly, the Court finds that American Pipe tolling began, at the earliest, when 8 the Lesnik second amended complaint was unsealed on January 8, 2018. Moving Parties argue 9 that any American Pipe tolling began ten days later when they were served with the Lesnik action 10 on January 18, 2018. Because it makes no difference to the Court’s analysis, and for the sake of 11 simplicity, the Court assumes that any American Pipe tolling began on the date the second 12 amended complaint was unsealed on January 8, 2018. 13 By that date, the one-year limitations period applicable to Claim 7 already had expired 14 (June 30, 2016 to June 30, 2017). Therefore, Claim 7 appears to be time-barred. As to the three- 15 year limitations period applicable to Claims 3, 4, and 5, approximately 18 months of that period 16 ran prior to the commencement of any American Pipe tolling (June 30, 2016 to January 8, 2018). 17 Plaintiffs allege that tolling continued “through August 25, 2020 and of not less than 30 days 18 thereafter,” or through September 24, 2020. Compl. ¶ 22. August 25, 2020 is the date that all 19 wage and hour putative class claims were dismissed from the federal Lesnik case. See Lesnik at 20 ECF 512, Case No. 16-cv-01120. Plaintiffs offer no explanation for their allegation that tolling 21 continues thirty days beyond the dismissal date. 22 Moreover, all wage and hour putative class claims against Moving Parties were dismissed 23 with prejudice on March 20, 2019. See id. at ECF 361. The wage and hour claims that were 24 dismissed on August 25, 2020 were asserted against other defendants. Plaintiffs have offered no 25 authority that would support American Pipe tolling against Moving Parties after all wage and hour 26 class claims against them were dismissed with prejudice. Accordingly, it appears that any 27 American Pipe tolling ended on March 20, 2019, and the three-year limitations period resumed on 28 that date. As noted above, approximately 18 months of that period ran before any American Pipe 5 1 tolling commenced, leaving approximately 18 months of the limitations period remaining. 2 Plaintiffs thus had to file suit by approximately September 20, 2020 to be timely. Plaintiffs filed 3 this suit almost a year too late, on August 3, 2021. Claims 3, 4, and 5 appear to be time-barred. 4 5 Pipe tolling applies, the Court need not reach Moving Parties’ additional argument that American 6 Pipe tolling cannot arise where the underlying putative class claims are dismissed with prejudice. 7 Moving Parties have not cited a case supporting that proposition, and the Court declines to address 8 the issue absent adequate briefing. 9 United States District Court Northern District of California Having concluded that Claims 3, 4, 5, and 7 appear to be time-barred even if American 2. Equitable Tolling under California Law 10 As a separate basis for tolling, distinct from the American Pipe rule, Plaintiffs invoke 11 California’s equitable tolling rule. Under that state law rule, tolling applies “when an injured 12 person has several legal remedies and, reasonably and in good faith, pursues one.” Collier, 142 13 Cal. App. 3d at 923 (internal quotation marks, citation, and brackets omitted). The rule may be 14 applied where there is “(1) timely notice to the defendant in filing the first claim; (2) lack of 15 prejudice to defendant in gathering evidence to defend against the second claim; and, (3) good 16 faith and reasonable conduct by the plaintiff in filing the second claim.” Id. at 924. 17 As discussed above, the wage and hour class claim in the state court Lesnik case was 18 dismissed on June 22, 2016, before the statutes of limitations began to run in this case. See Pl.’s 19 RJN Exh. 22. Plaintiffs cite no authority that would support equitable tolling after the putative 20 class claim was dismissed. Consequently, it does not appear that the state court Lesnik case 21 provides a basis for equitable tolling under California law. 22 Not does it appear that Plaintiffs’ claims can be saved by state law equitable tolling based 23 on the federal Lesnik case. The first requirement for equitable tolling under California law is 24 “timely notice to the defendant in filing the first claim.” Collier, 142 Cal. App. 3d at 924. As 25 discussed above, Moving Parties received notice of the federal Lesnik action at the earliest on 26 January 8, 2018, when the second amended complaint was unsealed. Thus, like American Pipe 27 tolling, equitable tolling under California law commenced at the earliest on January 8, 2018. By 28 that time, the one-year limitations period applicable to Claim 7 had expired, and approximately 18 6 1 months of the three-year limitations period applicable to Claims 3, 4, and 5 had elapsed. Any 2 tolling as to Moving Parties necessarily ended when all wage and hour claims against Moving 3 Parties were dismissed with prejudice on March 20, 2019. Plaintiffs thus had to file suit by 4 approximately September 20, 2020, and they filed almost a year late, on August 3, 2021. Claims 5 3, 4, and 5 appear to be time-barred. 3. 6 It appears on the face of the complaint and from judicially noticeable filings in the Lesnik 7 United States District Court Northern District of California Conclusion 8 actions that Plaintiffs’ claims against Moving Parties are time-barred, even assuming that 9 American Pipe tolling and equitable tolling under California law apply in this case. The Court 10 will grant Moving Parties’ motion to dismiss on this basis. While Moving Parties urge the Court 11 to grant the motion without leave to amend, the Court finds that leave to amend is warranted under 12 the standard set forth in Foman v. Davis, 371 U.S. 178 (1962) and Eminence Capital, LLC v. 13 Aspeon, Inc., 316 F.3d 1048 (9th Cir. 2003). If they choose to amend, Plaintiffs must in essence 14 draw a road map explaining how tolling saves their otherwise time-barred claims against Moving 15 Parties. 16 17 II. ORDER (1) The motion to dismiss the complaint is GRANTED WITH LEAVE TO AMEND 18 on the basis that all claims against Moving Parties appear to be time-barred and 19 Plaintiffs have not alleged facts showing tolling of the applicable limitations 20 periods; 21 (2) Any amended complaint SHALL be filed by June 24, 2022. Leave to amend is 22 limited to facts relating to statute of limitations and tolling. Plaintiffs may not add 23 parties or claims without express leave of the Court. 24 (3) This order terminates ECF 12. 25 26 27 Dated: June 3, 2022 ______________________________________ BETH LABSON FREEMAN United States District Judge 28 7
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