Villali v. Chep Services, LLC, et al., No. 1:2020cv01537 - Document 21 (E.D. Cal. 2022)
Court Description: ORDER GRANTING Defendants' 5 Motion to Dismiss, signed by District Judge Jennifer L. Thurston on 8/12/22. (Martin-Gill, S)
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1 S 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 11 12 13 14 15 16 17 MELVIN VILLALI, ) ) Plaintiff, ) ) v. ) ) CHEP SERVICES, LLC, formerly known as ) CHEP RECYCLED PALLET SOLUTIONS, ) LLC; KENNETH BARNER; and DOES 1 ) through 50, ) ) Defendants. ) ) Case No.: 1:20-cv-1537 JLT BAK (SAB) ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS (Doc. 5) 18 Melvin Villali asserts that he was employed by Chep Services, LLC, and his employment was 19 wrongfully terminated without an investigation. He seeks to hold Chep Services and Kenneth Barner 20 liable for the termination, failure to investigate, violations of California’s Unfair Competition Law, and 21 penalties under PAGA. In addition, Villali seeks to hold Chep liable for breaching an oral contract 22 related to his continued employment with the company. (See Doc. 1-1 at 5-18.) Defendants seek dismissal of claims pursuant to Rule 12(b)(6) of the Federal Rules of Civil 23 24 Procedure, asserting the allegations are insufficient to support Villali’s claims. (Doc. 5.) Villali 25 opposes the motion, asserting the facts alleged are sufficient. (Doc. 6.) The Court found the matter 26 suitable for decision without oral argument, and the motion remains under submission pursuant to 27 Local Rule 230(g). For the reasons set forth below, Defendants’ motion to dismiss is GRANTED. 28 /// 1 1 2 I. Background and Plaintiff’s Allegations Villali reports he was an at-will employee for Chep Services—formerly known as Chep 3 Recycled Pallet Solutions, LLC—from July 20, 2017 to August 2, 2019. (Doc. 1-1 at 8, ¶¶ 15; id. at 4 16, ¶ 49.) Villali asserts he worked as a site supervisor for Chep, which is a full-service pallet 5 manufacturing and sales company. (Id.) Villali alleges that defendant Kenneth Barner “serv[ed] as an 6 officer, agent, servant, and/or employee of Chep.” (Id. at 6, ¶ 2.) He also asserts “Barner was the 7 Southern District Manager of Chep.” (Id. at 7, ¶ 12.) 8 He alleges that he “suffered from severe knee pains while on the job,” but “reported to Barner 9 and Chep that … did not prevent him from doing his job.” (Doc. 1-1 at 10, ¶ 24.) Villali reports that 10 “[d]espite his assurances, Barner demanded that Villali show him his knees,” and Barner stated “that 11 must hurt” upon seeing a scar. (Id.) In addition, Villali asserts that a supervisor named Mark accused 12 him “of not doing his work, lying about his pallet totals, and made fun of his knee problems, calling 13 him a ‘cripple.’” (Id.) On October 19, 2017, Villali attended a meeting with the supervisor and 14 Barner, during which the supervisor said, “if he knew Villali was a ‘cripple,’ he would not have hired 15 him.” (Id., ¶ 25.) According to Villali, “Barner did nothing to help” after the meeting, and “Villali 16 was forced to complain to Chep’s Human Resources Department.” (Id.) 17 In addition, Villali asserts that while an employee of Chep, he was “[s]ubjected to verbal 18 abuse, yelling, the use of racial slurs and obscenities.” (Doc. 1-1 at 8, ¶ 15.) He alleges the incidents 19 “occurred in front of third parties,” which did not include the defendants. (Id.) Villali contends that in 20 early 2018, he “complained to Barner about the Dollar General Director Alex yelling at him, using 21 racial slurs and obscenities, and engaging in harassment of him in front of Dollar General and Chep 22 employees at the Dollar General warehouse.” (Id. at 9-10, ¶ 22.) 23 In August 2018, Villali learned that he had Valley Fever. (Doc. 1-1 at 10, ¶ 23.) Villali asserts 24 that after he was diagnosed, he “was directed by Barner and Chep to work the following Monday 25 despite the fact that he had a temperature of 100 degrees,” and he continued to have a fever for 26 approximately two weeks at work. (Id.) He alleges he “asked Barner and Chep for more time off,” but 27 he was told “there was no one else to cover his duties” and the request was denied. (Id.) Villali reports 28 his “heath problems with the Fever continued until June 2019, yet he was forced to continue to work 2 1 2 full time . . .” (Id.) In June 2019, Villali “filed a second complaint regarding use of obscenities and harassment by 3 a Dollar General maintenance manager in front of [him] and other employees.” (Doc. 1-1 at 8, ¶ 15.) 4 He contends “Chep and Barner did nothing,” but “Villali subsequently obtained a State of California 5 Disability Rehabilitation Order to address the obscenities and harassment” by the Dollar General 6 employees. (Id. at 10, ¶ 22; see also id. at 8, ¶ 15.) 7 In July 2019, “Barnier and his new boss, David Lee visited Villali to check on his progress.” 8 (Doc. 1-1 at 8, ¶ 18.) Villali asserts that “[h]e was told that his performance was consistent with 9 Chep’s expectations.” (Id. at 8-9.) He contends that about two weeks later, Barner visited Villali 10 again, “this time to check his folder and computer,” and Barner told Villali there were “no issues with 11 his performance, and …that Chep was happy with him.” (Id. at 9, ¶ 18.). 12 On August 1, 2019, “Barner returned and demanded that Villali surrender his cell phone.” 13 (Doc. 1-1 at 9, ¶ 19.) Villali asserts that Barner also “demanded that Villali accompany him to a 14 conference room where he was informed that a representative of Chep’s Human Resources 15 Department wished to speak to him.” (Id.) He alleges the HR “representative asked Villali various 16 questions regarding that he allegedly sent pornographic material to another employment,” and “Villali 17 vehemently denied the accusation.” (Id.) According to Villali, he “invited Barner and the HR 18 representative to inspect his cell phone,” and “[t]he HR representative promised Villali that he would 19 return [the] cell phone as soon as possible, so he could get back to work.” (Id.) Villali alleges the HR 20 representative also asked “if he had ever followed [another] Chep employee, Jonathan Banuelos[,] to 21 the restroom, ‘before today.’” (Id.) Villali asserts he responded that he “never followed any man to 22 the restroom,” and “pointed out that the office in which he worked and visited quite often was thirty 23 (30) feet from the restroom.” (Id.) 24 Villali asserts that, the following day, “Barner and Manual Rizo met with Villali and told him 25 that he was being terminated, notwithstanding the fact that he had never received any form of a 26 reprimand or ‘write up’ for any violation during his employment with Chep.” (Doc. 1-1 at 9, ¶ 20.) 27 He alleges that Barner and Rizo “ignored [him] and escorted him from the building.” (Id.) According 28 to Villali, he “asked if he was being terminated because of his knee or any other reason,” and “Barner 3 1 assured him that he was not being terminated for any reason.” (Id.) He contends “Barner and Manuel 2 Rizo never provided Villali with any reason or explanation for his termination.” (Id. at 11, ¶ 24.) Villali alleges he was paid of $17.59 per hour and “[p]rior to his termination, his hourly wage 3 4 was approved to be raised to $20.00 per hour.” (Doc. 1-1 at 8, ¶¶ 16-17.) He reports the increase was 5 never received. (Id., ¶ 17.) Villali asserts that “Barner and Chep terminated his employment with 6 Chep because of his prior complaints against the subject Dollar General employees.” (Id. at 10, ¶ 22.) 7 Further, Villali contends “Barner and Chep also terminated his employment because of his medical 8 condition.” (Id. at 11, ¶ 25.) 9 On June 22, 2020, Villali filed a complaint against Chep and Barner in Kern County Superior 10 Court, Case No. BCV-20-101417. (Doc. 1-1 at 5.) Villali alleges: (1) wrongful termination in 11 violation of public policy, (2) breach of oral contract, (3) unlawful business practices, (4) failure to 12 conduct an investigation, and (5) a violation of California’s Private Attorney General Act. (Id. at 5, 13 12-17.) Defendants filed a Notice of Removal on October 29, 2020, thereby initiating the matter 14 before this Court. (Doc. 1) 15 On November 5, 2020, Defendants filed the motion to dismiss now pending before the Court. 16 (Doc. 5.) Villali filed his opposition to the motion on November 24, 2020 (Doc. 6), to which 17 Defendants filed a reply on December 1, 2020 (Doc. 6).1 18 II. Legal Standards for a Motion to Dismiss A Rule 12(b)(6) motion “tests the legal sufficiency of a claim.” Navarro v. Block, 250 F.3d 19 20 729, 732 (9th Cir. 2001). Dismissal of a claim under Rule 12(b)(6) is appropriate when “the complaint 21 lacks a cognizable legal theory or sufficient facts to support a cognizable legal theory.” Mendiondo v. 22 Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir. 2008). Thus, under Rule 12(b)(6), “review 23 is limited to the complaint alone.” Cervantes v. City of San Diego, 5 F.3d 1273, 1274 (9th Cir. 1993). 24 The Supreme Court held: “To survive a motion to dismiss, a complaint must contain sufficient 25 factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. 26 27 1 28 As the parties were informed on September 22, 2020, the Eastern District of California is in a state of judicial emergency, including while this motion was pending resolution, which caused a significant backlog of pending matters. (See Doc. 2-3.) The action was assigned to the undersigned in 2022. (See Doc. 16.) 4 1 Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). The 2 Court explained, A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. The plausibility standard is not akin to a “probability requirement,” but it asks for more than a sheer possibility that a defendant has acted unlawfully. Where a complaint pleads facts that are “merely consistent with” a defendant’s liability, it “stops short of the line between possibility and plausibility of ‘entitlement to relief.’” 3 4 5 6 7 Iqbal, 556 U.S. at 678 (internal citations omitted). 8 Allegations of a complaint must be accepted as true when the Court considers a motion to 9 dismiss. Hospital Bldg. Co. v. Rex Hospital Trustees, 425 U.S. 738, 740 (1976). A court must construe 10 the pleading in the light most favorable to the plaintiff and resolve all doubts in favor of the plaintiff. 11 Jenkins v. McKeithen, 395 U.S. 411, 421 (1969). However, legal conclusions need not be taken as true 12 when “cast in the form of factual allegations.” Ileto v. Glock, Inc., 349 F.3d 1191, 1200 (9th Cir. 2003). 13 “The issue is not whether a plaintiff will ultimately prevail, but whether the claimant is entitled 14 to offer evidence to support the claims. Indeed it may appear on the face of the pleadings that a 15 recovery is very remote and unlikely but that is not the test.” Scheuer v. Rhodes, 416 U.S. 232, 236 16 (1974). The Court “will dismiss any claim that, even when construed in the light most favorable to 17 plaintiff, fails to plead sufficiently all required elements of a cause of action.” Student Loan Marketing 18 Assoc. v. Hanes, 181 F.R.D. 629, 634 (S.D. Cal. 1998). To the extent that the pleadings can be cured 19 by the plaintiff alleging additional facts, leave to amend should be granted. Cook, Perkiss and Liehe, 20 Inc. v. Northern Cal. Collection Serv., Inc., 911 F.2d 242, 247 (9th Cir. 1990) (citations omitted). 21 III. 22 Discussion and Analysis Defendants seek dismissal of all claims, asserting “the Complaint fails to state a claim upon 23 which relief can be granted within the meaning of Fed. R. Civ. P. 12(b)(6).” (Doc. 5 at 2.) Villali 24 contends the facts alleged are sufficient to support his claims but seeks leave to amend if the Court 25 finds the motion should be granted. (See Doc. 6 at 3-5.) 26 A. 27 Villali seeks to hold Barner and Chep liable for wrongful termination in violation of public 28 First Cause of Action: Wrongful Termination policy. (Doc. 1-1 at 12-13.) The authority of an employer to terminate at-will employees is broad, but 5 1 “can be limited by statute or considerations of public policy.” Ortiz v. Lopez, 688 F.Supp. 1072, 1078- 2 79 (E.D. Cal. 2010), citing Tameny v. Atlantic Richfield Co., 27 Cal.3d 167 (1980). “When an 3 employer’s discharge of an employee violates fundamental principles of public policy, the discharged 4 employee may maintain a tort action against the employer.” Id. 5 To state a claim for wrongful termination in violation of public policy, a plaintiff must allege: 6 “(1) an employer-employee relationship, (2) the employer terminated the plaintiff’s employment, (3) 7 the termination was substantially motivated by a violation of public policy, and (4) the discharge 8 caused the plaintiff harm.” Yau v. Santa Margarita Ford, Inc., 229 Cal. App. 4th 144, 154 (2014); see 9 also Bowman v. Adams & Assocs., 2022 WL 624882, at *6 (E.D. Cal. Mar. 2, 2022) (citing Yau in 10 identifying the elements of a claim for wrongful termination in violation of public policy). The public 11 policy implicated must be “(1) delineated in either constitutional or statutory provisions; (2) ‘public’ in 12 the sense that it ‘inures to the benefit of the public’ rather than serving merely the interests of the 13 individual; (3) well established at the time of discharge; and (4) substantial and fundamental.” Freund 14 v. Nycomed Amersham, 347 F.3d 752, 758 (9th Cir. 2003) (quoting City of Moorpark v. Super. Ct., 18 15 Cal. 4th 1143, 1159 (1998)). 16 Defendants argue Villali fails to state a claim for wrongful termination against Barner because 17 he did not “plead facts necessary to establish an employment relationship between [Villali] and 18 Barner.” (Doc 5 at 2.) Defendants acknowledge that Villali alleged “defendant Barner ‘meets the 19 definition of an ‘employer’ within the Government Code §§ 12926(d) and 12940(a), (h), (G)(4)(a) and 20 (k).’” (Id. at 9, citing Doc. 1-1 at 6, ¶ 2.) However, Defendants maintain Villali did not allege any 21 facts to support this conclusion, and such “[c]onclusory allegations are insufficient to state a cause of 22 action….” (Id., citing Ashcroft, 556 U.S. at 678-79.) Further, Defendants argue Villali’s “allegations 23 within his Complaint either do not support, or are inconsistent with, his assertion that defendant Barner 24 was his employer” because: 25 26 27 28 In paragraph 12 of his Complaint, Plaintiff refers to defendant Barner as “the Southern District Manager of Chep.” In paragraphs 15, 16 and 52 of his Complaint, Plaintiff alleges that he “was employed by Chep,” and he does not allege co-employment by Barner. In paragraph 22, Plaintiff alleges the defendants “terminated his employment with Chep.”[] In addition, within the section of his Complaint in which he purports to plead this cause of action for wrongful termination, Plaintiff alleges, “Chep’s response was to terminate [Villali].” (Complaint ¶31). Notably absent is an allegation that Barner terminated Plaintiff. 6 1 (Doc. 5 at 9-10, footnote omitted.) Thus, Defendants argue Villali fails to state a claim for wrongful 2 termination against Barner. (Id.) Defendants maintain “the claim is only cognizable” against Chep. 3 (Id. at 9, citing Williams v. Boston Scientific Corp., 2008 WL 2051021, at *2 (N.D. Cal. May 13, 4 2008) [“individuals cannot be sued for wrongful termination in violation of public policy under 5 California case law”].) 6 Villali does not directly address Defendants’ argument that the allegations in the complaint are 7 insufficient to support a conclusion that Barner was Villali’s employer. Instead, Villali asserts that he 8 “clearly alleges sufficient facts to constitute a cause of action … against Barner.” (Doc. 6 at 4.) 9 According to Villali, 10 11 12 13 Along with the considerable amount of material facts alleged in the “GENERAL,” “THE PARTIES,” “JURISDICTION & VENUE,” “FACTUAL PRESENTATION” AND “LEGAL ALLEGATIONS” sections of the Complaint (Pages 1 through 8) and the additional material facts alleged in the paragraphs in the subject causes of action against Barner, Plaintiff more than provides Barner with notice of his claims against him without question, addressing all factors, including who, what, when where, why and how in this matter. 14 (Id.) He also notes that in Paragraph 2 of the complaint, he alleges Barner “was an individual serving 15 as an officer, agent, servant, and/or employee of Chep. Barner meets the definition of an ‘employer’ 16 within the meaning of Government Code§§ 12926(d) and 12940(a), (h), (G) (4) (A) and (k) and was 17 subject to the provisions of the California Fair Employment and Housing Act, Government Code 18 §§12900, et. Seq., in that Chep regularly employed five or more persons.” (See Doc. 6 at 5, Doc. 1-1 19 at 6, ¶ 2.) 20 As noted above, a plaintiff must allege: “an employer-employee relationship” for a claim of 21 wrongful termination. Yau, 229 Cal. App. 4th at 154; Bowman, 2022 WL 624882 at *6. It is well- 22 established under California law that, because only an employer can discharge an employee, a plaintiff 23 may sue only an employer for wrongful termination. Weinbaum v. Goldfarb, Whitman & Cohen, 46 24 Cal. App. 4th 1310, 1315 (1996). Consequently, a supervisor cannot be held individually liable for 25 wrongful termination in violation of public policy. See Reno v. Baird, 18 Cal. 4th 640, 663 (1998); see 26 also Anderson v. Penninsula Fire Dist., 2014 WL 1400950 at *4 (E.D. Cal. Apr. 8, 2014) (dismissing 27 a claim for wrongful termination in violation of public policy to the extent it was raised against 28 individual defendants because the claim “lies only against [the] employer, … not against the 7 1 supervisor through whom the employer commits the tort”); Grigg v. Griffith Co., 2013 WL 5754986 at 2 *3 (E.D. Cal. Oct. 23, 2013) (dismissing a claim against the plaintiff’s supervisor for wrongful 3 termination in violation of public policy with prejudice); Joyce v. Walgreen Co., 2007 WL 2088461 at 4 *2 (E.D. Cal. July 17, 2007) (“claims of wrongful termination in violation of public policy must be 5 brought against an employer, as opposed to a manager or supervisor”). 6 Although Villali alleges that “Barner meets the definition of an ‘employer’” (Doc. 1-1 at 6, ¶ 2), 7 the facts alleged do not support this conclusion. The facts alleged support the conclusion that Barner 8 held a supervisor role, as Villali acknowledges Barner held the position of “the Southern District 9 Manager of Chep.” (Id. at 7, ¶ 12.) In addition, Villali clearly stated he “was employed by Chep,” and 10 “his employment with Chep” was terminated, thereby indicating the company was his sole employer. 11 (Id. at 8, ¶¶ 15, 16; id. at 10, ¶ 22.) Because there are no facts alleged supporting a conclusion that 12 Barner was Villali’s employer—and the claim may be stated only against his employer—Villali failed 13 to state a cognizable claim against Barner. See Anderson, 2014 WL 1400950 at *4; Joyce, 2007 WL 14 2088461 at *2. Accordingly, the motion to dismiss the first cause of action, to the extent it is stated 15 against Barner, is GRANTED. 16 B. Second Cause of Action: Breach of Oral Contract 17 Villali seeks to hold Chep liable for breach of an oral contract. (Doc. 1-1 at 13-14.) Under 18 California law, the elements for breach of oral contract are identical to those for breach of written 19 contract. See Francois & Co., LLC v. Nadeau, 334 F.R.D. 588, 597-98 (C.D. Cal. 2020). Thus, to 20 state a claim for breach of oral contract, a plaintiff must allege: “(1) the existence of a contract; (2) 21 performance by the plaintiff; (3) breach by the defendant; and (4) damage resulting from the breach.” 22 Alcalde v. NAC Real Estate Invs. & Assignments, Inc., 316 Fed. App’x 661, 662 (9th Cir. 2009) 23 (citation omitted); see also Haberbush v. Clark Oil Trading Co., 33 Fed. App’x 896, 898 (9th Cir. 24 2002) (identifying “agreement, consideration, performance by plaintiff, breach by defendant, and 25 damages” as elements to a breach of contract). 26 Defendants contend that Villali “fails to state a claim for breach of contract because his 27 allegations do not establish an actual breach of the purported contract.” (Doc. 5 at 10, citing Pellerin 28 v. Honeywell Intern., Inc., 877 F.Supp.2d 983, 990 (S.D. Cal. 2018).) Defendants note that “[t]he 8 1 substance of the contract alleged in paragraph 37 is that CHEP will continue to employ [Villali] if he 2 complies with CHEP’s rules.” (Id.) Defendants argue that Villali “does not allege an actual violation 3 of the contract terms identified in paragraph 37.” (Id.) Defendants note that Villali does not assert the 4 alleged contract required “proof of or an investigation into Plaintiff’s misconduct prior to termination 5 of Plaintiff’s employment.” (Id.) 6 Villali does not specifically address the sufficiency of his claim for breach of contract in his 7 opposition to the motion to dismiss. (See generally Doc. 6.) Nevertheless, Villali maintains that he 8 “clearly alleges sufficient facts to constitute a cause of action for all of his causes of action against 9 Chep ….” (Id. at 3.) 10 Notably, Villali does not allege more than he had an “at-will” agreement with Chep and alleges 11 very little information related to the alleged oral employment contract. (Doc. 1-1 at 15, ¶ 49.) Villali 12 asserts that he and Chep “orally agreed that he would continue to work for Chep and that he would and 13 did comply with Chep’s various rules and regulations” on July 20, 2017. (Id. at 14, ¶ 37.) In addition, 14 Villali contends “Chep breached the oral agreement by terminating Villali for allegedly sending porn to 15 another Chep employee without proof nor without an investigation.” (Id., ¶ 38.) However, Villali does 16 not allege additional terms of the oral contract he entered with Chep, such that the company agreed to 17 not terminate his employment without an investigation or good cause. Villali also does not identify the 18 relevant “rules and regulations” with which he complied, such that the Court may find he satisfied his 19 obligations under the contract. Without such allegations, Villali’s claim for a breach of contract is not 20 cognizable. See, e.g., Foley v. Interactive Data Corp., 47 Cal.3d 654, 675 n.20 (1988) (“Plaintiff 21 alleges defendant maintained written ‘Guidelines for Termination’ that required good cause for 22 discharge of an employee, and that plaintiff understood these guidelines applied to him. If he had 23 further alleged that the parties expressly agreed that these guidelines governed his employment, he 24 could state a cause of action for breach of an express oral contract. He has made no such allegation.”); 25 see also Salsgiver v. America OnLine, Inc., 147 F.Supp.2d 1022, 1028 (CD. Cal. 2000) (finding a claim 26 for breach of an employment contract failed where the plaintiff “made no allegation that Defendant 27 ever, either orally or in writing, explicitly stated that it would not terminate him except for cause”). 28 Therefore, Defendants’ motion to dismiss the second cause of action is GRANTED. 9 1 C. Third Cause of Action: Violation of Cal. Bus. & Prof. Code §§ 17200, et seq. 2 Villali seeks to hold both Barner and Chep liable for violating California’s Unfair Competition 3 Law, as set forth in Cal. Bus. & Prof. Code § 17200, et seq. (Doc. 1-1 at 14-15.) Under Section 17200, 4 unfair competition includes any “unlawful, unfair, or fraudulent business act or practice.” Cal. Bus. & 5 Prof. Code § 17200. Therefore, there are three prongs under which a claim may be established under 6 Section 17200. Daro v. Superior Court, 151 Cal.App.4th 1079, 1093 (2007) (“a business act or 7 practice need only meet one of the three criteria—unlawful, unfair, or fraudulent—to be considered 8 unfair competition”); see also Lozano v. AT&T Wireless Servs., 504 F.3d 718, 731 (9th Cir. 2007) 9 (“[e]ach prong … is a separate and distinct theory of liability”). Given the disjunctive nature of the 10 prongs, an action may be unfair even if it is not unlawful. Cel-Tech Communications., Inc. v. Los 11 Angeles Cellular Telephone Co., 20 Cal.4th 163, 181 (1999). In the complaint, Villali indicated the 12 cause of action was for “unlawful busines practices.” (Doc. 1-1 at 14.) His allegations also refer to 13 “unfair business practices” and he asserts the defendants “committed the acts alleged… maliciously, 14 fraudulently, and oppressively.” (Id. at 14-15, ¶¶ 43-46.) Thus, the Court addresses the sufficiency of 15 the pleadings for claims under the three prongs. 16 17 1. Claim against Barner As an initial matter, Defendants argue the claim against Barner fails because “[l]iability under 18 Business & Professions Code § 17200 et seq. … can apply only to a person or entity engaged in 19 business, and there are no factual allegations that would support the conclusion that Barner engaged in 20 business.” (Doc. 5 at 12.) In addition, Defendants contend Villali “fails to state a claim against Barner 21 under the UCL because this claim is entirely derivative of Plaintiff’s other claims, which all fail to state 22 a claim against Barner.” (Id. at 13 23 “Persons” who may be held liable under the UCL“include natural persons, corporations, firms, 24 partnerships, joint stock companies, associations and other organizations of persons.” Cal. Lab. Code 25 § 17201. A defendant’s liability under the UCL “must be based on his personal participation in the 26 unlawful practices and unbridled control over the practices that are found to violate section[] 17200 27 ….” Hasibullah Abdali v. Agiliti Surgical, Inc., 2020 WL 5642355 at *2 (E.D. Cal. Sept. 21, 2020) 28 (quoting Emery v. Visa Internat. Service Assoc., 95 Cal. App. 4th 952, 960 (2002) [emphasis added].) 10 1 Further, the California Supreme Court held that restitution is the only monetary remedy expressly 2 authorized by Section 17200. Korea Supply Co. v. Lockheed Martin Corp., 29 Cal. 4th 1134, 1145-46 3 (2003). As a result, “[t]he only possible Section 17200 remedy that plaintiff could seek is from his 4 employer, not his supervisor.” Mohammed v. American Airlines, Inc., 2019 WL 3577160 at *5 (N.D. 5 Cal. Aug. 6, 2019). 6 As discussed above, the allegations in the complaint support a conclusion that Barner was a 7 supervisory employee of Chep. Consequently, there is no monetary remedy Villali could seek from 8 Barner under Section 17200. See Mohammed, 2019 WL 3577160 at *5. Moreover, Villali fails to 9 allege facts that support a conclusion that Barner was “engaged in business”—such that he had 10 “unbridled control over the practices” of Chep—and could be held liable under Section 17200. See 11 Cal. Lab. Code § 17201; Hasibullah Abdali, 2020 WL 5642355 at *2. Therefore, Defendants’ motion 12 to dismiss the claim under Section 17200, as stated against Barner, is GRANTED. 13 14 2. Unlawful practices The business acts proscribed under the “unlawful” prong of Section 17200 includes “anything 15 that can properly be called a business practice and that at the same time is forbidden by law.” Farmers 16 Ins. Exch. v. Superior Court, 2 Cal. 4th 377, 383 (1992) (quoting Barquis v. Merchants Collection 17 Assoc., 7 Cal.3d 94, 113 (1972)). In essence, the UCL “borrows violations of other laws and treats 18 them as unlawful practices independently actionable under Section 17200.” Saunders v. Superior 19 Court, 27 Cal. App. 4th 832, 839 (1994) (internal quotation marks, citation omitted). 20 “To state a claim under the unlawful prong of the UCL, a plaintiff must plead: (1) a predicate 21 violation, and (2) an accompanying economic injury caused by the violation.” Aerojet Rocketdyne, 22 Inc. v. Global Aero., Inc., 2020 WL 3893395, at *6 (E.D. Cal. July 10, 2020) (citation omitted); see 23 also Berryman v. Merit Property Management, Inc., 152 Cal. App. 4th 1544, 1554 (2007) (“a violation 24 of another law is a predicate for stating a cause of action under the UCL’s unlawful prong”). Predicate 25 violations include “any practices forbidden by law, be it civil or criminal, federal, state, or municipal, 26 statutory, regulatory, or court-made.” Saunders, 27 Cal. App. 4th at 838-39. 27 Importantly, a plaintiff must allege facts to support any alleged predicate violations of state and 28 federal law. See Berryman v. Merit Property Management, Inc., 152 Cal. App. 4th 1544, 1554 (2007). 11 1 For example, if a plaintiff alleges facts sufficient to support claims of violations of the FLSA and 2 California Labor Code, the federal and state statues are proper predicate violations under the UCL. 3 See, e.g., Duarte v. Mzr Inc., 2010 WL 11586755, at *7 (N.D. Cal. July 8, 2010) (finding where the 4 plaintiff “allege[d] several violations of federal and state labor statutes, including the Fair Labor 5 Standards Act and California Labor Code …, [the statutory claims] may serve as predicate violations 6 under the ‘unlawful’ prong of the UCL”). Conversely, if a plaintiff fails to state a claim under the 7 “borrowed” law, it cannot support the UCL claim. Pellerin v. Honeywell Int’l, Inc., 877 F. Supp. 2d 8 983, 992 (S.D. Cal. 2012) (a claim under the UCL “must be dismissed if the plaintiff has not stated a 9 claim for the predicate acts upon which he bases the claim”). 10 Defendants contend the claim under the UCL fails because there are no allegations that 11 “Defendants obtained money or property unlawfully from Plaintiff.” (Doc. 5 at 12.) Indeed, to the 12 extent Villali seeks to state a claim under the “unlawful prong,” he did not identify the predicate 13 violations upon which the claim may be based in the complaint. (Doc. 1-1 at 14-15.) Villali merely 14 alleges the defendants acted “in violation of the California laws mentioned in the foregoing 15 paragraphs….” (Doc. 1-1 at 14, ¶ 44.) This bare assertion is insufficient, because a plaintiff alleging a 16 UCL claim “must state with reasonable particularity the facts supporting the statutory elements of the 17 violation.” Khoury v. Maly’s of California, Inc., 14 Cal.App.4th 612, 619 (1993). A plaintiff must 18 allege and identify some state, federal, or local law as the predicate violation for recovery. See, e.g., 19 Leonel v. American Airlines, Inc., 400 F.3d 702, 714-15 (9th Cir. 2005); People ex rel. Bill Lockyer v. 20 Fremont Life Ins. Co., 104 Cal. App. 4th 508, 128 Cal. Rptr. 2d 463 (2002). Thus, the Court declines 21 to speculate as to which claims—or provisions of law— Villali believes are predicate violations.2 22 Given the scarcity of the pleadings, Villali fails to support his claim for a violation of Section 17200 23 under the unlawful prong. 24 3. Fraudulent practices 25 A “fraudulent” act is “one which is likely to deceive the public,” and “may be based on 26 misrepresentations … which are untrue, and also those which may be accurate on some level, but will 27 28 Notably, the Ninth Circuit determined “a common law violation such as breach of contract is insufficient” to support a claim under the unlawful prong. Shroyer v. New Cingular Wireless Servs., Inc., 622 F.3d 1035, 1044 (9th Cir. 2010). 2 12 1 nonetheless tend to mislead or deceive.” McKell, 142 Cal. App. 4th at 1474. Thus, the word 2 “fraudulent” under Section 17200 “does not refer to the common law tort of fraud,” Puentes v. Wells 3 Fargo Home Mortg., Inc., 160 Cal. App. 4th 638, 645 (2008), but still requires allegations that the 4 misrepresentation was directly related to injurious conduct, and that the claimant actually relied on the 5 alleged misrepresentation. In re Tobacco II Cases, 46 Cal.4th 298, 336-37 (2009). Further, claims 6 based upon the “fraudulent” prong are subject to the heightened pleading requirements of Rule 9(b) of 7 the Federal Rules of Civil Procedure. Kearns v. Ford Motor Co., 567 F.3d 1120, 1127 (9th Cir. 2009). 8 9 Although Villali asserts that “Chep and Barner commented the acts alleged…maliciously, fraudulently, and oppressively” (Doc. 1-1 at 15, ¶ 46), he does not identify any specific 10 misrepresentation made by the defendants, or assert he relied upon the misrepresentation. The 11 allegations fail to comply with Rule 8, let alone satisfy the heightened pleading requirements of Rule 9. 12 Because Villali fail to plead the circumstances surrounding the alleged fraud with particularity, the 13 UCL claim is not cognizable to the extent it is based upon the “fraudulent” acts prong. 14 15 4. Unfair practices Recently, courts observed that what constitutes “unfair” practices under the UCL is unsettled. 16 See, e.g., Doe v. CVS Pharm., Inc., 982 F.3d 1204, 1214-15 (9th Cir 2020) (identifying various tests 17 established to evaluate the prong); see also Obertman v. Electrolux Home Care Prods., 482 F. Supp 3d 18 1017, 1027 (E.D. Cal. 2020) (“[t]here is some confusion in the law over the applicable test for ‘unfair’ 19 conduct”); In re Zoom Video Communs. Privacy Litig., 535 F.Supp.3d, 1047 (N.D. Cal. 2021) (“the 20 proper definition of unfair conduct … is currently in flux among California courts” [internal quotation 21 marks omitted]). The Ninth Circuit observed there are currently three tests for unfair practices: 22 23 24 25 26 27 28 [C]ourts consider either: (1) whether the challenged conduct is “tethered to any underlying constitutional, statutory or regulatory provision, or that it threatens an incipient violation of an antitrust law, or violates the policy or spirit of an antitrust law,” Durell v. Sharp Healthcare, 183 Cal. App. 4th 1350, 1366, 108 Cal. Rptr. 3d 682 (2010)); (2) whether the practice is “immoral, unethical, oppressive, unscrupulous or substantially injurious to consumers,” Morgan v. AT&T Wireless Servs., Inc., 177 Cal. App. 4th 1235, 1254, 99 Cal. Rptr. 3d 768 (2009); or (3) whether the practice’s impact on the victim outweighs “the reasons, justifications and motives of the alleged wrongdoer.” Id. Doe, 982 F.3d at 1215. Nevertheless, the “traditional test for a consumer claim” is the second 13 1 identified, which this Court has consistently applied to evaluate claims for unfair practices. See 2 Obertman, 482 F. Supp. 3d at 1017. 3 Villali seems to rely upon the tests identified in Durrell and Morgan, asserting the conduct of 4 Defendants “violates the policy or spirit of [the] laws” and Defendants acted “intentionally, 5 oppressively, and maliciously toward Valli with a conscious disregard of his rights….” (See Doc. 1-1 6 at 14-15, ¶¶ 44-47.) However, Villali does not allege any facts to support the claim and seems to 7 simply paraphrase the tests identified by the courts. Compare with McKell v. Washington Mutual, 8 Inc., 142 Cal. App. 4th 1457, 1473 (2006) (“A business practice is unfair within the meaning of the 9 UCL if it violates established public policy or if it is immoral, unethical, oppressive or unscrupulous 10 and causes injury to consumers which outweighs its benefits”). Given the lack of factual allegations, 11 Plaintiffs fail to state a claim under this prong. See Teton Global Invs. LLC v. LC Inv. 2010, 2021 WL 12 5861565, at *3 (S.D. Cal. Aug. 11, 2021) (“specific facts must be pled to support a theory of an unfair 13 business practice”). 14 15 5. Remedies under UCL Defendants argue the cause of action also fails because “there is no allegation that Defendants 16 obtained money or property unlawfully from Plaintiff.” (Doc. 5 at 12.) Defendants observe that the 17 UCL “authorizes only equitable relief to remedy acts of unfair competition.” (Id., citing Korea Supply 18 Co., 29 Cal. 4th at 1145-46.) Defendants contend Villali cannot obtain the remedy of restitution 19 because “[t]he gravamen of his claims is that defendant [Chep] wrongfully terminated his employment 20 violation of California law,” and he “cannot identify any sums of money wrongfully taken.” (Id.) 21 Defendants conclude: “As Plaintiff has no remedy under the UCL because he does not plead facts that 22 could entitle him to restitution, he has failed to plead a cognizable claim.” (Id. at 13.) Villali does not 23 address Defendants’ arguments concerning restitution. (See generally Doc. 6 at 3-4.) 24 The California Supreme Court observed that because “[a] UCL action is equitable in nature; 25 damages cannot be recovered.” Korea Supply Co., 29 Cal.4th at 1143. “[R]emedies for individuals 26 under the UCL are restricted to injunctive relief and restitution.” Walker v. Geico Gen. Ins. Co., 558 27 F.3d 1025, 1027 (9th Cir. 2009) (quoting Buckland v. Threshold Enters. Ltd., 155 Cal. App. 4th 798, 28 817, (2007)); see also Cel-Tech Commc’ns, Inc., 20 Cal. 4th at 179. Injunctive relief is available if the 14 1 alleged wrongful conduct is ongoing or likely to recur. Nelson v. Pearson Ford Co., 186 Cal. App. 4th 2 983, 1015 (2010). On the other hand, a plaintiff may seek restitution if “the defendant is in possession 3 of money or property taken from [him or] her,” or money for which the plaintiff has an ownership 4 interest. Asghari v. Volkswagen Grp. of Am., Inc., 42 F. Supp. 3d 1306, 1324 (C.D. Cal. 2013). “The 5 object of restitution is to restore the status quo by returning to the plaintiff funds in which he or she 6 has an ownership interest.” Korea Supply Co., 29 Cal.4th at 1149. Failure to allege facts sufficient to 7 support either injunctive relief or restitution requires dismissal of a UCL claim. See Walker, 558 F.3d 8 at 1027. 9 Villali has not alleged facts to support any claim for injunctive relief under the UCL, as he is 10 not a current employee of Chep. See, e.g., Perez v. Leprino Foods Co., 2018 WL 1426561 at *6 (E.D. 11 Cal. Mar. 22, 2018) (dismissing a demand for injunctive relief because “it is well-settled that former 12 employees lack standing to seek injunctive relief to ensure their former employers compliance with the 13 California Labor Code”) (internal quotation omitted); Ahmed v. Western Refining Retail, LLC, 2021 14 WL 2548958 at *7 (C.D. Cal. May 13, 2021) (dismissing a request for injunctive relief under the UCL 15 because the plaintiff, a former employee, failed to establish a “personal need for prospective injunctive 16 relief”). Further, the facts alleged do not support a conclusion that Chep is possession of money or 17 property taken from Villali—or funds that Villali has an ownership interest in—based simply upon 18 wages not earned following the alleged wrongful termination. See Scott v. Gate Gourmet, Inc., 2021 19 (C.D. Cal. Feb. 22, 2021) (observing that “a claim for compensation for loss of future, as yet unearned, 20 wages is a claim for ‘monetary damages’ that is not recoverable under the UCL,” and dismissing the 21 UCL claim); see also Voris v. Lampert, 7 Cal. 5th 1141, 1154 n. 9 (2019). 22 Given the lack of allegations addressing the UCL claim, and Villali’s failure to allege facts 23 sufficient to support a conclusion that he is entitled to injunctive relief or restitution under the UCL, 24 Defendants’ motion to dismiss the third cause of action is GRANTED. 25 D. Fourth Cause of Action: Failure to Investigate 26 Villali seeks to hold Barner and Chep liable for “failure to investigate” in violation of Cal. Bus. 27 & Prof. Code § 7520. (Doc. 1-1 at 15.) Defendants contend this cause of action should be dismissed 28 because Section 7520 “does not authorize a private right of action for failure to investigate.” (Doc. 5 15 1 at 13-14.) Defendants contend Section 7520 “neither imposes a legal obligation on an employer or 2 other person to investigate certain matters nor authorizes a private right of action for an alleged failure 3 to investigate,” and the legal theory is not cognizable.” (Id. at 14.) Thus, Defendants contend the 4 claim should be dismissed without leave to amend. (Id.) 5 In the opposition to the motion to dismiss, Villali asserts that he “alleges sufficient facts to 6 constitute a cause of action for all his causes of action against Chep … except for his Fourth Cause of 7 Action for Failure to Conduct an Investigation which truly should be part of his other … causes of 8 action against Chep.” (Doc. 6 at 3.) Based upon the concession of Villali, the motion to dismiss the 9 fourth cause of action is GRANTED and the claim is dismissed without leave to amend. 10 E. Fifth Cause of Action: PAGA 11 Villali’s final cause of action, against both Barner and Chep, is for a violation of California’s 12 Private Attorney General Act, pursuant to Cal. Labor Code §§ 201, 202, 203, 226, 286, 288, 558, 13 558.1, 1174, 1174.5, 1193.6, 1194, 2802, 2698, et seq. (Doc. 1-1 at 16.) 14 California adopted PAGA to allow individual plaintiffs “to bring a civil action to collect civil 15 penalties for Labor Code violations previously only available in enforcement actions initiated by the 16 State’s labor law enforcement agencies.” Caliber Bodyworks, Inc. v. Superior Court, 134 Cal. App. 17 4th 365, 374 (2005); see also Cal. Lab. Code § 2699(a); Urbino v. Orkin Servs. of Cal., Inc., 726 F.3d 18 1118, 1121 (9th Cir. 2013). PAGA defines an “aggrieved employee” as “any person who was 19 employed by the alleged violator and against whom one or more of the alleged violations was 20 committed.” Cal. Lab. Code§ 2699(a). “Recovery of civil penalties under the act requires proof of a 21 Labor Code violation….” Arias v. Superior Court, 46 Cal.4th 969, 987 (2009) (citing Lab. Code, § 22 2699(a), (f)). 23 Defendants argue Villali fails to state a claim against Barner because a claim under PAGA 24 “can only be brought against Plaintiff’s employer.” (Doc. 5 at 14.) In addition, Defendant assert that 25 Villali’s PAGA claim fails—against both Defendants—because: 26 27 28 (1) he has not alleged that he satisfied the administrative requirement that he provide notice to the California Labor and Workforce Development Agency (“LWDA”) before filing this claim, and (2) he fails to plead that could establish that Defendants committed the underlying Labor Code violations referenced by Plaintiff. 16 1 (Id.) Again, Villali does not address the arguments raised by Defendants with any specificity. (See 2 generally Doc. 6 at 3-4.) 3 1. Administrative exhaustion 4 To claim PAGA penalties, a plaintiff must exhaust the administrative procedures set out in 5 Labor Code § 2699.3, which includes giving written notice to the California Labor and Workforce 6 Development Agency and the defendants. Caliber, 134 Cal. App. 4th at 375-76; Cal. Lab. Code § 7 2699.3(a)(1). The notice to the LWDA and the employer must identify the specific provisions of the 8 labor code alleged to have been violated, including the “facts and theories” of the claims. Cal. Lab. 9 Code § 2699.3(a); Archila v. KFC U.S. Properties, Inc., 420 Fed. App’x. 667 (9th Cir. 2011). After 10 the LWDA responds that it will not prosecute the action or fails to respond to the notice with sixty 11 days, a plaintiff may file suit. Id. § 2699.3(a)(2)(A). 12 A court may dismiss PAGA causes of action for failure to exhaust the required administrative 13 remedies. See Gomez v. J. Jacobo Farm Labor Contr., 334 F.R.D. 234, 272 (E.D. Cal. 2019) (“district 14 courts in California have held that failure to exhaust administrative remedies under PAGA justifies 15 dismissing PAGA claims”); see also Varsam v. Laboratory Corp. of Am, 120 F. Supp. 3d 1173, 1183 16 (S.D. Cal. 2015) (dismissing PAGA claims for failure to exhaust administrative remedies); see also 17 Thomas v. Home Depot USA Inc., 527 F. Supp. 2d 1003, 1007 (N.D. Cal. 2007) (“Individuals who 18 bring claims under PAGA must comply with the administrative procedures set forth in Labor Code § 19 2699.3.”). To plead compliance with PAGA’s administrative exhaustion requirements, a plaintiff should 20 21 identify when he notified the LWDA about the alleged violations, (2) what, if any, response was 22 received from the LWDA, and (3) how long he waited prior to filing a civil action. Varsam, 120 F. 23 Supp. 3d at 1182-1183; see also Kemp v. Int’l Bus. Machines Corp., 2010 WL 4698490, at *3 (N.D. 24 Cal. Nov. 8, 2010)). Because Villali has not provided any of this information— either in his 25 complaint or the opposition to the motion to dismiss— and it is clear he failed to comply with the 26 administrative exhaustion requirements of PAGA. Accordingly, Defendants’ motion to dismiss the 27 PAGA claim is GRANTED. 28 /// 17 1 2. Remaining arguments 2 Because dismissal of the fifth cause of action for failure to exhaust administrative remedies is 3 appropriate, the Court declines to address Defendants’ remaining arguments related to the viability of 4 the PAGA claim against Barner and Chep. 5 IV. Remand to State Court Villali asserts that “if the Court finds that Plaintiff’s complaint sufficiently pleds (sic) at least 6 7 one cause of action against Barner, then this Court must transfer this case back to the Kern County 8 Superior Court for lack of federal diversity jurisdiction.” (Doc. 6 at 5, emphasis omitted.) According 9 to Villali, “Defendants are misleading this court in order to forum shop and require federal court action 10 in this case….” (Id.) Because Villali failed to allege facts sufficient to support any claim against 11 Barner, the Court will not address the issue of jurisdiction or remand the action to the state court.3 12 V. Leave to Amend Pursuant to Rule 15 of the Federal Rules of Civil Procedure, leave to amend “shall be freely 13 14 given when justice so requires,” bearing in mind “the underlying purpose of Rule 15 to facilitate 15 decisions on the merits, rather than on the pleadings or technicalities.” Lopez v. Smith, 203 F.3d 1122, 16 1127 (9th Cir. 2000) (en banc) (alterations, internal quotation marks omitted). When dismissing a 17 complaint for failure to state a claim, “a district court should grant leave to amend even if no request to 18 amend the pleading was made, unless it determines that the pleading could not possibly be cured by 19 the allegation of other facts.” Id. at 1130 (internal quotation marks omitted). Accordingly, leave to 20 amend generally shall be denied only if allowing amendment would unduly prejudice the opposing 21 party, cause undue delay, or be futile, or if the moving party has acted in bad faith. Leadsinger, Inc. v. 22 BMG Music Publishing, 512 F.3d 522, 532 (9th Cir. 2008). 23 Villali requests that if the motion to dismiss is granted, then he be granted leave to amend. 24 (Doc. 6 at 5.) Given the lack of factual allegations in the complaint, amendment would allow Villali 25 to clarify the terms of his alleged oral employment contract, the basis of his claims—and the remedy 26 available— under the UCL. On the other hand, Villali acknowledges his claim for failure to 27 28 Indeed, Villali did not file a motion to remand, though he now indirectly challenges Defendants’ prior assertion that Barner was fraudulently joined as a defendant. (See Doc. 1 at 4.) 3 18 1 investigate should not be an independent cause of action and leave to amend the claim will be denied. 2 In addition, it does not appear the deficiencies of the claims against Barner may be cured by the 3 pleading of additional facts. Similarly, given Villali’s failure to address the exhaustion issue related to 4 the PAGA claims in his opposition to the motion to dismiss, the Court finds leave to amend is not 5 appropriate for the fifth cause of action. Therefore, leave to amend will be limited to the claims as 6 stated against Chep. Villali will be given one opportunity to allege facts sufficient to support his 7 claims against Chep for breach of oral contract and the UCL. 8 V. 9 Conclusion and Order Based upon the foregoing, the Court ORDERS: 10 1. Defendants’ motion to dismiss (Doc. 5) is GRANTED. 11 2. The first cause of action for wrongful termination, to the extent it is stated against 12 Barner, is DISMISSED without leave to amend. 13 3. The second cause of action for breach of contract is DISMISSED with leave to amend. 14 4. The third cause of action for a violation of the Unfair Competition Law under Cal. Bus. 15 & Prof. Code § 17200 is DISMISSED without leave to amend as to defendant Barner, 16 and with leave to amend as to defendant Chep only. 17 5. 18 The fourth cause of action for failure to investigate is DISMISSED without leave to amend. 19 6. 20 The fifth cause of action under PAGA is DISMISSED without leave to amend for failure to exhaust the administrative procedures. 21 7. Defendant Barner is DISMISSED as a defendant in this action. 22 8. The Clerk of Court is directed to update the docket and terminate Kenneith Barner as a 23 defendant. 24 9. 25 Plaintiff SHALL file any First Amended Complaint within 45 days of the date of service of this order. 26 /// 27 /// 28 /// 19 1 If Plaintiff fails to file any amended complaint, the Complaint (Doc. 1-1) shall be deemed 2 the operative pleading, and the action will proceed on the first cause of action as stated 3 against defendant Chep only. 4 5 6 IT IS SO ORDERED. Dated: August 12, 2022 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 20
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