Cortez v. United Natural Foods, Inc. et al, No. 5:2018cv04603 - Document 41 (N.D. Cal. 2019)

Court Description: ORDER DENYING 15 MOTION TO REMAND; GRANTING IN PART AND DENYING IN PART 11 MOTION TO DISMISS OR STRIKE. Signed by Judge Beth Labson Freeman on 2/27/2019. (blflc2S, COURT STAFF) (Filed on 2/27/2019)

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1 2 3 UNITED STATES DISTRICT COURT 4 NORTHERN DISTRICT OF CALIFORNIA 5 SAN JOSE DIVISION 6 7 RICHARD B. CORTEZ, Plaintiff, 8 v. 9 10 UNITED NATURAL FOODS, INC., et al., Defendants. 11 United States District Court Northern District of California Case No. 18-cv-04603-BLF ORDER DENYING MOTION TO REMAND; GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS OR STRIKE [Re: ECF 11, 15] 12 13 Plaintiff Richard Cortez brings this putative class action against his employers Defendants 14 15 United Natural Foods, Inc. and United Natural Foods West, Inc. for various California state law 16 wage and hour violations. Defendants removed the action to federal court under the Class Action 17 Fairness Act of 2005 (“CAFA”), 28 U.S.C. § 1332(d). Before the Court is Plaintiff’s motion to 18 remand (Remand Mot., ECF 15) and Defendants’ motion to dismiss the complaint for failure to 19 state a claim under Federal Rule of Civil Procedure 12(b)(6) and/or to strike under Rule 12(f) 20 (MTD, ECF 11). The Court held a hearing on the motions on December 20, 2018. Defendants 21 submitted evidence in support of their argument that the amount in controversy in the case exceeds 22 $5,000,000, as required by CAFA. At the hearing on the motion, the Court ordered Defendants to 23 submit new calculations based on the same underlying evidence Defendants had previously 24 submitted. Defendants submitted new calculations and supplemental briefing, which Plaintiff 25 opposed. For the reasons that follow, the Court DENIES Plaintiff’s motion to remand and GRANTS 26 27 IN PART AND DENIES IN PART Defendants’ motion to dismiss or strike. 28 /// I. 1 Plaintiff Richard Cortez worked as a delivery driver for Defendants United Natural Foods, 2 3 Inc. and United Natural Foods West, Inc. from June 2016 to August 2017. Compl. ¶ 5, ECF 1-1. 4 Plaintiff brings this action on behalf of two subclasses of individuals employed by Defendants in 5 California within the four year period preceding the filing of this action: (1) “[t]hose persons 6 employed by Defendants as delivery drivers”; and (2) “persons employed by Defendants to whom 7 Defendants issued wage statements.” Id. Plaintiff alleges that similarly situated drivers 8 experienced each of the problems discussed below. Plaintiff alleges that he was required to use personal cell phones for work, but that 9 United States District Court Northern District of California BACKGROUND1 10 Defendants did not begin reimbursing him until July 2017, when Defendants began providing 11 $20/month, though that amount did not sufficiently reimburse Plaintiff. Id. ¶ 7. Defendants also 12 routinely required Plaintiff to work longer than 5 hours without rest or meal breaks, stating “there 13 was no time for such break.” Id. ¶ 8. Plaintiff alleges Defendants should have known about this 14 failure to provide breaks because they were aware of the drivers’ delivery locations and schedules. 15 Id. Plaintiff never signed a meal period waiver. Id. Defendants did not pay Plaintiff an additional 16 hour of compensation for these missed breaks. Id. ¶ 9. Because they did not pay Plaintiff for 17 these missed breaks, Defendants failed to include any meal and rest break compensation on 18 Defendants’ wage statements. Id. For a portion of Plaintiff’s employment UNFI did not pay Plaintiff for all of his hours 19 20 worked or all of his overtime, though he routinely worked more than 8 hours a day and 40 hours a 21 week without additional compensation. Id. ¶ 10. Plaintiff also routinely received driver bonuses, 22 but this amount was not included in Plaintiff’s regular rate of pay, thus resulting in inaccurate 23 overtime rates. Id. Because of these failures, Defendants failed to provide accurate wage 24 statements to Plaintiff. Also, for all employees (not just delivery drivers), Defendants failed to 25 provide on the wage statements either the last four digits of the employees’ social security 26 numbers or their employee identification numbers. Id. 27 28 Plaintiff’s well-pled factual allegations are accepted as true for purposes of the motion to dismiss. See Reese v. BP Exploration (Alaska) Inc., 643 F.3d 681, 690 (9th Cir. 2011). 2 1 United States District Court Northern District of California 1 Based on these allegedly unlawful acts by Defendants, Plaintiff filed the instant Complaint 2 in Santa Clara County Superior Court on June 18, 2018, bringing the following seven causes of 3 action: (1) failure to indemnify employees for necessary expenses under Cal. Lab. Code § 2802; 4 (2) failure to provide rest and meal breaks in violation of Cal. Lab. Code §§ 226.7 and 512; (3) 5 failure to provide accurate, itemized wage statements in violation of Cal. Lab. Code § 226(a); (4) 6 failure to pay regular and overtime wages in violation of Cal. Lab. Code §§ 510, 558, 1194; (5) 7 failure to pay wages when due in violation of Cal. Lab. Code §§ 201, 202, 203, 204, 204b; (6) 8 unfair business practices under Cal. Bus. & Prof. Code § 17200, et seq., for these labor code 9 violations; and (7) a claim under the Private Attorneys General Act (“PAGA”), Cal. Lab. Code 10 § 2698 et seq. Plaintiff seeks various relief, including damages of $4,999,999.99, id. ¶ 11, and 11 reasonable attorneys’ fees, id. at 13. Defendants were served on June 28, 2018. Not. of Removal 12 (“Not.”) ¶ 5, ECF 1. 13 On July 30, 2018, Defendants removed the action to this Court, asserting that this Court 14 has diversity jurisdiction under the Class Action Fairness Act (“CAFA”) because “(i) diversity of 15 citizenship exists between at least one putative class member and one Defendant; (ii) the aggregate 16 number of putative class members in all proposed classes is 100 or greater; and (iii) the amount 17 placed in controversy by the Complaint exceeds, in the aggregate, $5 million, exclusive of interest 18 and costs. 28 U.S.C. §§ 1332(d)(2) & (d)(5)(B), 1453.” Id. ¶ 6. As to these requirements, 19 Defendants first alleged that United Natural Foods, Inc. (“UNFI”) is incorporated in Delaware 20 with a principal place of business in Rhode Island, while Plaintiff is a citizen of California, thus 21 satisfying the diversity of citizenship. Id. ¶¶ 8–10. Second, Defendants submitted a declaration by 22 Anne Mosher, National Payroll Services Manager of UNFI and its subsidiaries, averring that 23 Defendants employed approximately 653 delivery drivers in California during the relevant period 24 and at least 3,723 employees received wage statements during that period. Id. ¶¶ 12, 13; Mosher 25 Decl. ISO Not. ¶¶ 4, 6, ECF 2. Third, Defendants calculated that the amount in controversy is 26 ostensibly $5,000,000. Specifically, Defendants used the numbers provided by Ms. Mosher to 27 show that the amount in controversy for the wage statement and waiting time claims, as well as 28 the attorneys’ fees request, put more than $5,000,000 in controversy. See Not. ¶¶ 22–31. 3 1 II. MOTION TO REMAND A. 2 Legal Standard Removal is proper where the federal courts have original jurisdiction over an action 3 brought in state court. 28 U.S.C. § 1441(a). Pursuant to CAFA, federal courts have original 4 jurisdiction over state law actions where the matter in controversy exceeds the sum or value of 5 $5,000,000, exclusive of interest and costs, the number of members of all proposed plaintiff 6 classes in the aggregate is more than 100, and in this case, where any member of a class of 7 plaintiffs is a citizen of a State different from any defendant. 28 U.S.C. § 1332(d). Typically, 8 courts strictly construe the removal statute against removal jurisdiction. E.g., Provicial Gov’t of 9 Marinduque v. Placer Dome, Inc., 582 F.3d 1083, 1087 (9th Cir. 2009); Luther v. Countrywide 10 Home Loans Servicing, LP, 533 F.3d 1031, 1034 (9th Cir. 2008). However, “no antiremoval 11 United States District Court Northern District of California presumption attends cases invoking CAFA, which Congress enacted to facilitate adjudication of 12 certain class actions in federal court.” Dart Cherokee Basin Operating Co., LLC v. Owens, 135 S. 13 Ct. 547, 554 (2014); see also Jordan v. Nationstar Mortg. LLC, 781 F.3d 1178, 1183 (9th Cir. 14 2015). 15 In seeking removal under CAFA, the defendant bears the burden of establishing federal 16 jurisdiction. See Ibarra v. Manheim Investments, Inc., 775 F.3d 1193, 1197 (9th Cir. 2015). The 17 defendant must prove by a preponderance of the evidence that the amount in controversy exceeds 18 the jurisdictional threshold. See Dart Cherokee, 135 S. Ct. at 553–54 (citing 28 U.S.C. § 19 20 21 1446(c)(2)(B)). A defendant can meet this burden in its notice of removal by including “only a plausible allegation that the amount in controversy exceeds the jurisdictional threshold.” Id. at 554. But “when the plaintiff contests, or the court questions, the defendant’s allegation,” the 22 defendant must submit evidence to establish the amount in controversy by a preponderance of the 23 evidence. Id. at 554 (citing 28 U.S.C. § 1446(c)(2)(B)); see Ibarra, 775 F.3d at 1195. The 24 plaintiff may submit evidence to the contrary. Ibarra, 775 F.3d at 1195 (citing Dart Cherokee, 25 26 27 135 S. Ct. at 554). “The parties may submit evidence outside the complaint, including affidavits or declarations, or other ‘summary-judgment-type evidence relevant to the amount in controversy at the time of removal.’” Id. at 1197 (quoting Singer v. State Farm Mut. Auto. Ins. Co., 116 F.3d 28 4 1 373, 377 (9th Cir. 1997)). “Under this system, a defendant cannot establish removal jurisdiction 2 by mere speculation and conjecture, with unreasonable assumptions.” Id. 3 B. 4 Defendants submitted their notice of removal with a supporting declaration and submitted 5 a supplemental declaration in support of their Opposition to Plaintiff’s remand motion. Plaintiff 6 objected to this evidence on myriad grounds. Plaintiff also argues that Defendants have not 7 established by a preponderance of the evidence that the case meets each of CAFA’s criterion. The 8 Court discusses each of these issues in turn. 9 10 United States District Court Northern District of California Discussion 1. Evidentiary Objections In his motion, Plaintiff objects to the evidence presented by Ms. Mosher in her declaration 11 in support of Defendants’ notice of removal (“Mosher removal declaration”) on several bases, 12 including “hearsay, lack of foundation and personal knowledge, speculation, and failure to 13 authenticate.” Remand Mot. at 29–30. He argues that Ms. Mosher failed to describe or attach the 14 payroll data on which she bases her conclusions, failed to establish that she has personal 15 knowledge of the information to which she attests, and did not explain how any such records 16 might satisfy the business-records hearsay objection. See id. at 10, 15, 19–22. He also argues that 17 Ms. Mosher’s declaration contains only generalizations and approximations, which are insufficient 18 to establish the amount in controversy. See id. at 10–11, 17–19. 19 Though Defendants oppose Plaintiff’s objections to the Mosher removal declaration, see 20 Remand Opp. at 8–9, ECF 23, they also submitted another declaration from Ms. Mosher in 21 support of their opposition with additional information and more precise data (“Mosher opposition 22 declaration”). See Mosher Decl. ISO Opp., ECF 24. In this declaration, Ms. Mosher attests that 23 she has been the National Payroll Services Manager for eight years and in that role is responsible 24 for managing and implementing payroll issues and changes, including managing the electronic 25 databases of Defendants’ payroll data. Id. ¶ 2. Using this payroll data, she “compiled and 26 reviewed summary reports of Defendants’ payroll data for all employees who worked in 27 California” for the relevant dates. Id. ¶ 3. She also describes in more detail than her removal 28 5 1 declaration the number of exempt and non-exempt employees who received wage statements. See 2 id. ¶¶ 3–7. 3 In reply, Plaintiff contends that the Mosher opposition declaration still does not present 4 competent evidence in support of Defendants’ contentions, arguing that Defendants still have a 5 hearsay issue and that Ms. Mosher’s evidence still relies on inappropriate generalizations and 6 approximations. Remand Reply at 11, ECF 27. United States District Court Northern District of California 7 The Court is satisfied that the Mosher opposition declaration presents admissible evidence 8 that the Court may consider in determining whether Defendants have sufficiently established the 9 amount in controversy. As Defendants’ National Payroll Services Manager for the past eight 10 years, Ms. Mosher has personal knowledge of how Defendants manage their payroll systems, and 11 she personally compiled and analyzed that data to create the summary reports submitted here. 12 Mosher Decl. ISO Opp. ¶¶ 1–2. Her description of the information presents a proper foundation 13 for the evidence and is not merely speculative. The Court is also satisfied that this information is 14 not inadmissible hearsay. Courts in this circuit routinely rely on this type of evidence in ruling on 15 motions to remand. See Lucas v. Michael Kors (USA), Inc., No. 18-CV-1608-MWF, 2018 WL 16 2146403, at *3 (C.D. Cal. May 9, 2018); Vasserman v. Henry Mayo Newhall Mem’l Hosp., 65 F. 17 Supp. 3d 932, 947–49 (C.D. Cal. 2014); see also Lewis v. Verizon Commc’ns, Inc., 627 F.3d 395, 18 397 (9th Cir. 2010). Finally, Ms. Mosher’s opposition declaration includes more specific, less 19 generalized information than her removal declaration. For example, she gives the precise number 20 of non-exempt employees to whom Defendants issued wage statements, and she gives the total 21 number of wage statements Defendants issued to exempt employees. See Mosher Decl. ISO Opp. 22 ¶¶ 4–7. These numbers are not mere generalizations or speculation that would prohibit the Court 23 from making a reasonable determination as to the amount in controversy. And to the extent these 24 numbers are objectionable as being mere generalizations, the Court finds that Ms. Mosher cures 25 these deficiencies in her third and final declaration (“Mosher supplemental declaration”), as 26 discussed below. 27 28 2. CAFA Jurisdictional Requirements To meet their burden of demonstrating that the Court has jurisdiction under CAFA, 6 1 Defendants must prove the following criteria by a preponderance of the evidence: (1) neither 2 defendant is a government entity; (2) the putative class contains at least 100 members; (3) at least 3 one plaintiff is diverse in citizenship from any defendant (i.e., minimal diversity); and (4) the 4 aggregate amount in controversy is greater than $5,000,000. See Ibarra, 775 F.3d at 1195 (citing 5 28 U.S.C. § 1332(d)). Plaintiff primarily disputes Defendants’ evidence and calculations 6 concerning the amount in controversy; however, Plaintiff also challenges Defendants’ proof on all 7 of the other elements, except minimal diversity, Mot. at 14, n.10.2 In his motion, Plaintiff states that Defendants fail to prove they are not governmental United States District Court Northern District of California 8 9 entities. See Remand Mot. at 15. However, Defendants submitted evidence in support of their 10 Opposition demonstrating that they are not governmental entities. See Mosher Decl. ISO Opp. 11 ¶ 2. Likewise, Plaintiff claims that Defendants fail to prove that the putative class contains 12 13 more than 100 members because Ms. Mosher’s removal declaration does not contain admissible 14 evidence. See Remand Mot. at 28–29. The Court has held that Ms. Mosher submits competent 15 evidence in her opposition declaration. Ms. Mosher attests that Defendants employed 3,723 non- 16 exempt employees in California during the relevant time period. See Mosher Decl. ISO Opp. ¶ 4. 17 Thus, Defendants have provided sufficient proof that the putative class size is greater than 100 18 employees. As to the amount in controversy, Defendants submit evidence relating to Plaintiff’s wage 19 20 statement and waiting time claims, as well as to reasonable attorneys’ fees. Because the Court 21 holds that Defendants’ evidence demonstrates that the amount in controversy is greater than 22 $5,000,000 for the wage statement claim and attorneys’ fees, combined, the Court does not 23 address the waiting time claim. 24 a. Wage Statement Claim In their Notice of Removal, Defendants alleged that the wage statement claim alone (claim 25 26 27 28 2 Plaintiff is a California citizen, Compl. ¶ 2, and United Natural Foods, Inc. is incorporated in Delaware and maintains its principal place of business in Rhode Island, Kassab Decl. ISO Not. of Removal ¶¶ 3–4, ECF 3. 7 United States District Court Northern District of California 1 3) puts $5,004,000 in controversy. Not. ¶ 24. Defendants note that Labor Code § 226(e) would 2 allow each injured employee to recover “fifty dollars ($50) for the initial pay period in which a 3 violation occurs and one hundred dollars ($100) per employee for each violation in a subsequent 4 pay period, not to exceed an aggregate penalty of four thousand dollars ($4,000).” Id. ¶ 23 (citing 5 Cal. Labor Code § 226(e)). Plaintiff alleges that all of Defendants’ employees in California 6 received inaccurate wage statements without the correct identifying information. Compl. ¶¶ 1, 10. 7 According to Ms. Mosher, “approximately 1,251 non-exempt employees worked during each pay 8 period” and were “generally . . . paid on a weekly basis.” Mosher Decl. ISO Not. ¶ 5. As such, 9 Defendants calculate that there were 52 pay periods in the one-year limitations period for each of 10 these 1,251 employees. Defendants then multiplied 52 weeks times $100, to determine that each 11 employee would reach the $4,000 penalty cap. Finally, they multiplied $4,000 by 1,251 12 employees to achieve a $5,004,000 amount in controversy. Not. ¶ 24. 13 Plaintiff objected to these calculations based on evidentiary objections, as discussed above, 14 and because Defendants “base[d] their calculations on incorrect penalty amounts.” Mot. at 22. 15 Specifically, Defendants (1) assumed a 100% violation rate (i.e., that every wage statement failed 16 to include the identity information) and (2) used a $100 penalty rate (to achieve the $4,000 17 maximum) though courts have held that the $50 rate must be used for all pay periods before the 18 defendant has notice of the violation, after which the $100 rate can be used. Mot. at 23–24 (citing 19 Amaral v. Cintas Corp., 163 Cal. App. 4th 1157, 1207–09 (2008), Vasserman, 65 F. Supp. 3d 932, 20 and other cases). As to the $100 penalty rate, because Defendants did not allege that they were on 21 notice of the violations, Plaintiff argues the $50 rate is appropriate, which would put only 22 $3,252,600 in controversy for the 1,251 employees. See Mot. at 24. In fact, Plaintiff says, 23 Defendants did not aver that any single employee received more than one faulty statement, such 24 that Defendants can prove only that $50 is appropriate for each of the 1,251 employees, totaling a 25 mere $62,550. 26 In response, Defendants contend their use of a 100% violation rate stems from Plaintiff’s 27 allegation that every wage statement was deficient. Opp. at 10 (citing Not. ¶ 24, Compl. ¶ 29). 28 And they cite case law supporting the argument that the $100 violation rate applies in every period 8 United States District Court Northern District of California 1 after the first violation, regardless whether the defendant is on notice of the violation. Opp. at 11 2 (citing Garnett v. ADT LLC, 74 F. Supp. 3d 1332, 1335–36 (E.D. Cal. 2015); Lucas, 2018 WL 3 2146403, at *8). Also in support of their Opposition, Defendants submit Ms. Mosher’s opposition 4 declaration. In this declaration, Ms. Mosher avers that Defendants issued wage statements to 5 2,490 non-exempt California employees. Mosher Decl. ISO Opp. ¶ 6. Of these employees, 1,386 6 received 41 or more wage statements in the relevant period, which means they would reach the 7 $4,000 cap using a $100 penalty fee, resulting in a total of $5,544,000. Opp. at 12. Ms. Mosher 8 also compiles a list of employees who received fewer than 41 wage statements during this time, 9 listing how many wage statements each received and calculating that, using the $100-per-violation 10 rate, these employees would be entitled to $1,534,700 total. Mosher. Decl. ISO Opp., Ex. A, ECF 11 24-1. These two numbers total an amount in controversy of $7,078,700. Moreover, Ms. Mosher 12 avers that Defendants issued 10,994 wage statements to exempt employees during this time period, 13 paid on a bi-weekly basis to an average of 407 employees each period, resulting in total penalties 14 of $1,037,850. Opp. at 13. At the hearing on the motion, the Court indicated it was inclined to agree with Plaintiff that 15 16 the appropriate rate of penalties is $50 for all violations before the defendant is on notice of its 17 violations and $100 after the defendant is put on notice. As such, the Court instructed Defendants 18 to submit revised calculations for the wage statement claims using the appropriate penalty rate of 19 $50 per violation, because Defendant had not alleged that it was on notice of these violations. 20 Defendants submitted a third declaration from Ms. Mosher, in which she averred that 21 Defendants had issued 90,414 wage statements to both non-exempt and exempt employees in the 22 one-year period before removal.3 Mosher Suppl. Decl. ¶ 3 & Ex. A, ECF 36 (including table 23 setting forth number of wage statements issued per pay period). Using the $50 penalty rate, 24 Defendants calculated a $4,520,700 amount in controversy for the wage statement claim ($50 x 25 26 27 28 3 Defendants also included additional calculations related to the waiting time claim, despite this Court’s explicit instruction that it would not consider additional evidence or calculations on that claim. See Mot. Hearing Tr. at 42–44, ECF 38. The Court need not and does not address the waiting time claim or this new evidence. 9 1 90,414 wage statements4). 5 Def. Suppl. Br. at 2, ECF 35. Plaintiff objects to this supplemental declaration, and the evidence submitted in support United States District Court Northern District of California 2 3 thereof, arguing that Defendant has submitted new evidence, as opposed to new calculations. See 4 Pl. Suppl. Br. at 1–3, ECF 40. Plaintiff argues that Defendant’s evidence now relates to the total 5 number of wage statements, instead of being employee specific, in an attempt to circumvent the 6 $4,000 week cap. Id. In her opposition declaration, Ms. Mosher had organized the evidence with 7 respect to individual employees, showing the number of pay periods each employee had worked 8 (equating the number of pay periods with the number of wage statements). In that declaration, the 9 total number of pay periods (and in turn wage statements) was 15,899. By contrast, in her 10 supplemental declaration, she simply calculated the total number of wage statements, which was 11 90,414. The Court finds that Defendants have proven by a preponderance of the evidence that the 12 13 amount in controversy for this claim is at least $4,520,700. 14 Plaintiff has alleged that all wage statements issued by Defendants during this time period 15 failed to include the identifying information. See Compl. ¶¶ 1, 10 (“[F]or all its employees, UNFI 16 does not list either the last four digits of the social security number or an employee identification 17 number on Plaintiff’s and other employees’ wage statements . . . .”); Compl. ¶ 29 (“UNFI was also 18 aware that the employees’ last four digits of their social security numbers, or employee 19 identification numbers, do not appear on wage statements.”); Compl. ¶¶ 6, 26 –31 (bringing wage 20 statement claim on behalf of subclass B, which is defined as “[t]hose persons employed by 21 Defendants to whom Defendants issued wage statements”). “[R]emoving parties have been 22 permitted to base their calculations on a 100% violation rate when such assumptions are 23 ‘supported directly by, or reasonably inferred from, the allegations in the complaint.’” Ford v. 24 CEC Entm’t, Inc., No. 14-cv-01420-RS, 2014 WL 3377990, at *3 (N.D. Cal. July 10, 2014) 25 26 27 28 4 Using the $50 penalty rate, none of the employees would reach the $4,000 maximum penalty. ($50 x 52 weeks = $2,600). 5 Defendants also argue, based on Plaintiff’s cited authority, that the penalty rate should increase to $100 for the pay periods after Defendants received a Private Attorneys General Act Notice from Plaintiff. See Def. Suppl. Br. at 3. Because the Court finds the amount in controversy is met without requiring these increased calculations, it does not consider this argument. 10 1 (quoting Altamirano v. Shaw Industries, Inc., 13-cv-0939-EMC, 2013 WL 2950600, at *5–7 (N.D. 2 Cal. June 14, 2013)); cf. Ibarra, 775 F.3d at 1199 (holding 100% violation rate was not 3 appropriate where plaintiff did not allege “that [the defendant] universally, on each and every 4 shift, violates labor laws by not giving rest and meal breaks”). The allegations here directly 5 support Defendants’ use of a 100% violation rate, given that Plaintiff alleges that all employees 6 received defective statements. Defendants submit evidence showing that they issued 90,414 wage 7 statements to California employees during the relevant time. Assuming a $50 penalty for each 8 wage statement, the amount in controversy for this claim is at least $4,520,700.6 The Court is satisfied that Defendants submitted only new calculations, not new evidence, United States District Court Northern District of California 9 10 in response to the Court’s request for supplemental briefing. In the Mosher opposition 11 declaration, Ms. Mosher did not include 52 pay periods for every employee because employees 12 with 41 or more wage statements (i.e., pay periods) hit the $4,000 statutory limit. So Ms. Mosher 13 pooled those employees and assigned them all $4,000 penalties. By contrast, Defendants did not 14 need to concern themselves with the $4,000 cap in their new calculations because a $50 penalty 15 rate applied weekly for the whole one-year period (i.e., 52 pay periods) does not reach the $4,000 16 limit (52 periods x $50 = $2,600). As such, Ms. Mosher’s supplemental declaration necessarily 17 included additional pay periods for those employees whose penalties had previously been cut off 18 at 41 weeks. Thus, the discrepancy between the number of pay periods in the opposition 19 declaration and the supplemental declaration is fully consistent with the Court’s request that 20 Defendants recalculate the penalties using the lower rates. In sum, Defendants submit evidence that they issued 90,414 wage statements during the 21 22 statutory one-year limitations period, which, using a $50 penalty rate, totals an amount in 23 controversy of $4,520,700. Plaintiff did not submit any evidence to rebut Defendants’ evidence. 24 Cf. Garcia v. Wal-Mart Stores Inc., 207 F. Supp. 3d 1114, 1120 (C.D. Cal. 2016) (“A plaintiff is 25 26 27 28 6 While the Court indicated at the hearing on the motion that it was inclined to agree with Plaintiff that a defendant must be on notice of the violations in order for the $100 penalty to apply, the Court need not firmly decide the issue at this stage, because Defendants meet the amount in controversy requirement even assuming the lower penalty. The Court notes that this issue is disputed within the circuit. Compare, e.g., Garnett, 74 F. Supp. 3d at 1335–36 with Perez v. Winn Companies, Inc., 2014 U.S. Dist. LEXIS 158748, *17–*18 (E.D. Cal. Nov. 10, 2014). 11 1 required to come forward with contrary evidence only when the removing defendant has first 2 come forward with sufficient evidence to meet its initial burden.” (citation omitted)). b. Attorneys’ Fees 3 4 5 Plaintiff’s claim for reasonable attorneys’ fees added $1,500,408 to the amount in controversy. 6 Not. at 9–10. Defendants calculated this amount using the 25% Ninth Circuit benchmark rate for 7 attorney’s fees 8 United States District Court Northern District of California Defendants argued in their notice of removal, based on their original calculations, that Plaintiff opposed Defendants’ inclusion of this amount because it calculated the fees based 9 on projected fees for the case, as opposed to limiting the fee calculation to fees incurred prior to 10 removal. See Remand Mot. at 26–27. Moreover, Plaintiff argues that Defendants did not make a 11 showing beyond mere speculation as to what fees Plaintiff will incur. See id. at 27–28. And 12 finally, Plaintiff argued that, in any event, the total attorneys’ fees should be deducted from the 13 total amount in controversy, not added to it, because this is a common fund case in which any fee 14 award will be taken from the fund should the case settle. See id. at 28. 15 In their Opposition, Defendants point out that the Ninth Circuit has definitively held that 16 future estimated attorneys’ fees are properly included in determining the amount in controversy 17 under CAFA. See Fritsch v. Swift Transportation Co. of Ariz., LLC, 899 F.3d 785, 794 (9th Cir. 18 2018) (“[A] court must include future attorneys’ fees recoverable by statute or contract when 19 assessing whether the amount-in-controversy requirement is met.”). Defendants argue that the 20 25% Ninth Circuit benchmark is appropriate here for determining fees, and that the Court can rely 21 on its knowledge of customary rates and proper fees to calculate the fees here. See id. Moreover, 22 Defendants request the Court take judicial notice of previous awards Plaintiff’s counsel have 23 received in a similar wage and hour class action, which totaled $1,386,000. See Remand Opp. at 24 16; Def. Req for Judicial Not. (“RJN”), Ex. 1, ECF 25. 25 Plaintiff does not refute that Fritsch held that a court can consider future attorneys’ fees in 26 its calculations, but he argues that Defendants have not submitted summary-judgment type 27 evidence to support their use of the 25% benchmark, and also that Defendants’ request for judicial 28 notice is inappropriate because the Court cannot take judicial notice of the facts contained in a 12 1 2 In their supplemental briefing, Defendants use the penalties calculated in Ms. Mosher’s 3 supplemental declaration to find that a 25% attorneys’ fee rate would result in fees of $1,130,175, 4 thus resulting in a total amount in controversy of $5,650,875. See Def. Suppl. Br. at 3. Indeed, 5 Defendants demonstrate that even an 11% rate for fees would put the total over $5,000,000. Id. at 6 3 ($4,520,700 (wage statement penalties) x 0.11 = $497,277 (fees) + $4,520,700 = $5,017,977 7 (amount in controversy)). 8 9 United States District Court Northern District of California court order. See Remand Reply at 19. The Ninth Circuit in Fritsch provided guidance to district courts to determine future reasonable attorneys’ fees. The Ninth Circuit recognized that “district courts have developed 10 expertise in determining ‘the number of hours reasonably expended on the litigation multiplied by 11 a reasonable hourly rate’ when awarding attorneys’ fees under a statute or contract authorizing 12 recovery of ‘reasonable attorneys’ fees’ at the close of litigation.” Fritsch, 899 F.3d at 795 13 (quoting Hensley v. Eckerhart, 461 U.S. 424, 433 (1983)). In estimating future attorneys’ fees, the 14 court can rely on its “own knowledge of customary rates and [its] experience concerning 15 reasonable and proper fees.” Id. (quoting Ingram v. Oroudjian, 647 F.3d 925, 928 (9th Cir. 16 2011)). Moreover, while the Ninth Circuit refused to hold that a court must always use the 25% 17 rate of the final award to determine future attorneys’ fees, the Court did “not hold that a 18 percentage-based method is never relevant when estimating the amount of attorneys’ fees included 19 in the amount in controversy.” Id. at 796 & n.6. 20 The Court finds that the Defendants have sufficiently demonstrated that the amount in 21 controversy for future attorneys’ fees puts the total amount in controversy over $5,000,000. While 22 the Court acknowledges the 25% benchmark does not automatically apply in all cases, the 23 benchmark need only be adjusted “when special circumstances indicate that the percentage 24 recovery would be either too small or too large in light of the hours devoted to the case or other 25 relevant factors.” Six (6) Mexican Workers v. Ariz. Citrus Growers, 904 F.2d 1301, 1311 (9th Cir. 26 1990). Plaintiff does not raise any factors counseling against the application of the 25% 27 benchmark, nor does the record before the Court reflect that a departure from this benchmark is 28 warranted. In the Court’s experience, this appears to be a typical wage and hour class action to 13 United States District Court Northern District of California 1 which courts in this Circuit would likely apply the 25% benchmark rate. See Ramirez v. Benihana 2 Nat’l Corp., No. 18-CV-05575-MMC, 2019 WL 131843, at *2 (N.D. Cal. Jan. 8, 2019); Hughes v. 3 Fosdick, 106 F. Supp. 3d 1078, 1083 (N.D. Cal. 2015); Ramos v. Schenker, Inc., No. 5:18-CV- 4 01551-JLS, 2018 WL 5779978, at *3 (C.D. Cal. Nov. 1, 2018) (“‘[W]hen including attorneys’ 5 fees within the amount-in-controversy for jurisdictional purposes, courts in this circuit consistently 6 use the 25% benchmark rate,” especially in wage and hour class actions like this one where fee 7 awards at settlement typically require court approval.”’ (quoting Garcia v. Lifetime Brands, Inc., 8 2016 WL 81473, at *4 (C.D. Cal. Jan. 7, 2016)). Even were the 25% fee not reasonable, the Court 9 can certainly say that an 11% fee (all that is required for the amount in controversy to reach 10 $5,000,000) is an eminently reasonable projection of the potential fees, given the rate’s marked 11 downward departure from the 25% benchmark. A 25% fee here results in an award $1,130,175. The reasonableness of this award is 12 13 confirmed by the award of $1,386,000 Plaintiff’s counsel received in a separate wage and hour 14 action. See RJN, Ex. 1 (“Order granting Plaintiff’s motion for final approval of class,” Alcantar v. 15 Hobart Service, 11-cv-1600-PSG, Dkt. 317 (C.D. Cal. Aug. 13, 2018)).7 Moreover, though this 16 would be a common fund case should the case settle, the Court declines to hold it appropriate to 17 reduce the fees from the amount in controversy, as Plaintiff requests. The Ninth Circuit in Fritsch 18 made no distinction between common fund cases and non-common fund cases. Moreover, this 19 case ultimately might not settle, making a common fund settlement merely speculative. The Court holds, then, that Defendants have sufficiently proven that Plaintiff’s request for 20 21 reasonable attorneys’ fees puts an additional $1,130,175 in controversy ($4,520,700 x 0.25 = 22 $1,130,175). When this amount is added to the amount in controversy created by the wage 23 statement claim ($4,520,700), the total amount in controversy in this action totals $5,650,875, and 24 25 26 27 28 7 The Court takes judicial notice of this document because it is a matter of public record in which the facts are not subject to reasonable dispute. See Skilstaf, Inc. v. CVS Caremark Corp., 669 F.3d 1005, 1016 n.9 (9th Cir. 2012); cf. Ramirez, Alvarez v. Interstate Hotels, LLC, No. 2:18-cv-07684SJO, 2019 WL 77133, at *3 (C.D. Cal. Jan. 2, 2019) (considering plaintiff’s counsel’s past fees’ request in determining reasonable fees for amount in controversy); Rhinehart v. Genworth Life & Annuity Ins. Co., No. 1:18-cv-01391-LJO, 2019 WL 295770, at *7 (E.D. Cal. Jan. 23, 2019) (considering fees awarded in similar case in determining reasonable fees for amount in controversy). 14 1 thus satisfies the final CAFA requirement. For these reasons, Plaintiff’s motion to remand is DENIED. 2 3 4 5 United States District Court Northern District of California 6 III. MOTION TO DISMISS OR STRIKE A. Legal Standards 1. Motion to Dismiss “A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) for failure to state a 7 claim upon which relief can be granted ‘tests the legal sufficiency of a claim.’” Conservation 8 Force v. Salazar, 646 F.3d 1240, 1241–42 (9th Cir. 2011) (quoting Navarro v. Block, 250 F.3d 9 729, 732 (9th Cir. 2001)). When determining whether a claim has been stated, the Court accepts 10 as true all well-pled factual allegations and construes them in the light most favorable to the 11 plaintiff. Reese v. BP Exploration (Alaska) Inc., 643 F.3d 681, 690 (9th Cir. 2011). However, the 12 Court need not “accept as true allegations that contradict matters properly subject to judicial 13 notice” or “allegations that are merely conclusory, unwarranted deductions of fact, or 14 unreasonable inferences.” In re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008) 15 (internal quotation marks and citations omitted). While a complaint need not contain detailed 16 factual allegations, it “must contain sufficient factual matter, accepted as true, to ‘state a claim to 17 relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. 18 Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is facially plausible when it “allows the 19 court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. 20 On a motion to dismiss, the Court’s review is limited to the face of the complaint and matters 21 judicially noticeable. MGIC Indem. Corp. v. Weisman, 803 F.2d 500, 504 (9th Cir. 1986); N. Star 22 Int’l v. Ariz. Corp. Comm’n, 720 F.2d 578, 581 (9th Cir. 1983). 23 In deciding whether to grant leave to amend, the Court must consider the factors set forth 24 by the Supreme Court in Foman v. Davis, 371 U.S. 178 (1962), and discussed at length by the 25 Ninth Circuit in Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048 (9th Cir. 2009). A district 26 court ordinarily must grant leave to amend unless one or more of the Foman factors is present: (1) 27 undue delay, (2) bad faith or dilatory motive, (3) repeated failure to cure deficiencies by 28 amendment, (4) undue prejudice to the opposing party, or (5) futility of amendment. Eminence 15 1 Capital, 316 F.3d at 1052. “[I]t is the consideration of prejudice to the opposing party that carries 2 the greatest weight.” Id. However a strong showing with respect to one of the other factors may 3 warrant denial of leave to amend. Id. 4 United States District Court Northern District of California 5 2. Motion to Strike Federal Rule of Civil Procedure 12(f) permits a court to “strike from a pleading an 6 insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.” The 7 function of a motion made under this rule is “to avoid the expenditure of time and money that 8 must arise from litigating spurious issues by dispensing with those issues prior to trial.” 9 Whittlestone, Inc. v. Handi-Craft Co., 618 F.3d 970, 973 (9th Cir. 2010) (quoting Fantasy, Inc. v. 10 Fogerty, 984 F.2d 1524, 1527 (9th Cir. 1993), rev’d on other grounds by Fogerty v. Fantasy, Inc., 11 510 U.S. 517 (1994)) (internal quotation marks omitted). “While a Rule 12(f) motion provides the 12 means to excise improper materials from pleadings, such motions are generally disfavored because 13 the motions may be used as delaying tactics and because of the strong policy favoring resolution 14 on the merits.” Barnes v. AT & T Pension Ben. Plan-Nonbargained Program, 718 F. Supp. 2d 15 1167, 1170 (N.D. Cal. 2010). 16 The decision to strike a portion of a party’s pleading is within the sound discretion of the 17 court. See Nurse v. United States, 226 F.3d 996, 1000 (9th Cir. 2000). If a claim or defense is 18 stricken, leave to amend should be freely given when doing so would not cause prejudice to the 19 opposing party. Wyshak v. City Nat. Bank, 607 F.2d 824, 826 (9th Cir. 1979) (per curiam). 20 B. 21 Defendants argue that all of the claims in Plaintiff’s Complaint are fatally deficient under Discussion 22 Twombly and Iqbal. MTD at 1. They also argue that the Court should strike certain portions of 23 the Complaint because the relief sought is not available under California law. Id. As discussed in 24 detail below, the Court GRANTS IN PART AND DENIES IN PART Defendants’ motion to 25 dismiss or, in the alternative, to strike. 26 27 28 1. Motion to Dismiss a. Failure to Indemnify (Claim 1) In his first cause of action, Plaintiff alleges that Defendants failed to indemnify him and 16 1 other drivers for their use of their personal cell phones to make and receive work related calls. 2 Compl. ¶¶ 17–21. That provision of the Labor Code provides, in relevant part, that “[a]n 3 employer shall indemnify his or her employee[s] for all necessary expenditures incurred by the 4 employee in direct consequence of the discharge of his or her duties.” Cal. Lab. Code § 2802(a). 5 “Section 2802 claims are sufficiently pled where the complaint identifies the particular expenses 6 that were not reimbursed and affirmatively alleges that the expenses were part of the plaintiff’s job 7 duties.” Tan v. GrubHub, Inc., 171 F. Supp. 3d 998, 1005 (N.D. Cal. 2016). Defendants argue that the Complaint fails to state a claim because Plaintiff does not United States District Court Northern District of California 8 9 adequately allege either that Defendants had a policy requiring that drivers use their personal cell 10 phones or that the drivers were not sufficiently reimbursed for use of their personal phones. See 11 MTD at 6–7. The Court holds that Plaintiff has sufficiently alleged a claim for failure to indemnify. 12 13 Specifically, the Complaint alleges that “[a]s a driver for UNFI, Plaintiff and other similarly 14 situated delivery drivers, were required to use their personal cell phones to make and receive 15 work-related calls both from other UNFI employees and from customers of UNFI.” Compl. ¶ 7. 16 This allegation is plausible, given that Plaintiff and members of the relevant class were delivery 17 drivers who might need to interact with customers to plan and complete their deliveries. 18 Moreover, the Complaint alleges that Defendants began reimbursing the drivers in July 2017 in a 19 monthly lump sum, suggesting that Defendants knew of and required the drivers to use their 20 personal phones.8 Id. Finally, the Complaint alleges that this amount “was not sufficient to 21 reimburse” the drivers “for the costs incurred to use their personal cell phones at work.” Id. Thus, 22 Plaintiff has alleged that Defendants knowingly required drivers to use their cell phones and failed 23 to reimburse them sufficiently for such use. Defendants’ motion to dismiss Plaintiff’s first cause of action is DENIED. 24 25 b. Failure to Provide Meal and Rest Periods (Claim 2) In his second cause of action, Plaintiff alleges that Defendants failed to provide meal and 26 27 28 8 Defendants’ evidentiary objections to this allegation, see MTD Reply at 3, are inappropriate at the motion to dismiss stage. 17 United States District Court Northern District of California 1 rest breaks under Labor Code sections 226.7 and 512. Compl. ¶¶ 22–25. California Labor Code § 2 226.7(b) provides that “[a]n employer shall not require an employee to work during a meal or rest 3 or recovery period mandated pursuant to an applicable statute, or applicable regulation, standard, 4 or order of the Industrial Welfare Commission, the Occupational Safety and Health Standards 5 Board, or the Division of Occupational Safety and Health.” Further, Labor Code § 226.7(c) 6 provides that “[i]f an employer fails to provide an employee a meal or rest or recovery period in 7 accordance with a state law . . . the employer shall pay the employee one additional hour of pay at 8 the employee’s regular rate of compensation for each workday that the meal or rest or recovery 9 period is not provided.” Under Labor Code § 512(a), “[a]n employer may not employ an 10 employee for a work period of more than five hours per day without providing the employee with 11 a meal period of not less than 30 minutes.” “The employer satisfies this obligation if it relieves its 12 employees of all duty, relinquishes control over their activities and permits them a reasonable 13 opportunity to take an uninterrupted 30-minute break, and does not impede or discourage them 14 from doing so.” Brinker Rest. Corp. v. Superior Court, 53 Cal. 4th 1004, 1040 (2012). Moreover, 15 “the employer is not obligated to police meal breaks and ensure no work thereafter is performed.” 16 Id. 17 Defendants argue that Plaintiff’s meal and rest break claim fails because the Complaint 18 “does not identify any specific instance when, or how, Plaintiff was not provided either a meal or 19 rest break” and does not “identify a common policy that could establish class-wide liability.” 20 MTD at 3; id. at 7–8. Plaintiff counters that he alleges that Defendants were aware that the 21 drivers’ schedules did not allow them time to take breaks and that Defendants instructed the 22 drivers that there was no such time. MTD Opp. at 14–17, ECF 22. Plaintiff specifically argues 23 that the Complaint “explicitly alleges that Cortez and the putative class members did not forgo 24 meal and rest breaks by choice; instead, UNFI prevented them from taking breaks.” Id. at 17. 25 The Court agrees with Defendants that the Complaint fails to plausibly allege a claim for 26 failure to provide meal and rest breaks. Plaintiff alleges that “UNFI routinely required Plaintiff, 27 and similarly situated drivers, to work shifts longer than 5 hours without providing them rest 28 breaks or meal breaks.” Compl. ¶ 8. To support this allegation, Plaintiff alleges that Defendants 18 1 “took no action to provide Plaintiff and similarly situated drivers with rest breaks or make rest 2 breaks available; rather, UNFI stated that there was no time for such break.” Id. He also alleges 3 that “UNFI also knew or should have known that its drivers worked through meal and rest periods, 4 because the delivery locations and schedules informed UNFI of their various timing requirements 5 on unloading goods.” Id. These allegations are insufficient to demonstrate that Defendants impeded the drivers from United States District Court Northern District of California 6 7 taking such breaks. Defendants’ failure to take affirmative action to supply meal and rest periods 8 is not an allegation that Defendants impeded the drivers’ opportunities to take such breaks 9 altogether or that Defendants had a policy of not providing such breaks.9 See Morales v. 10 Amazon.com, LLC, No. 2:17-CV-1981-ODW, 2018 WL 3636888, at *3 (C.D. Cal. July 30, 2018) 11 (“Simply alleging a failure to provide written notice [of break rights] is not enough to establish 12 employer liability.”). Likewise, the allegation that Defendants knew of the drivers’ delivery 13 locations and schedules and the related timing requirements is not an allegation that Defendants 14 required a delivery timeline that provided drivers no opportunity to take a break. Though 15 Defendants stated that “there was no time for such break,” Compl. ¶ 8, this allegation alone is not 16 plausible without supporting allegations that Defendants did not provide the opportunity to take 17 such breaks, by using, for example, an overly tight delivery schedule. Cf. Morales, 2018 WL 18 3636888, at *3 (holding that allegations that employee felt “pressure” to work through breaks was 19 insufficient to allege a violation of meal and rest break claim). And Plaintiff includes no 20 allegations as to his own experiences from which the Court might infer a broader policy or 21 practice by Defendants. Moreover, Plaintiff’s failure to plead at least one occasion on which he was impeded from 22 23 taking a break likely runs afoul of the Ninth Circuit’s decision in Landers v. Quality 24 Communications, Inc., 771 F.3d 638, 646 (9th Cir. 2014), as amended (Jan. 26, 2015), as 25 26 27 28 9 Ambriz v. Coca Cola Co., No. 13-CV-03539-JST, 2013 WL 5947010, at *3 (N.D. Cal. Nov. 5, 2013), is not to the contrary. There, the plaintiff alleged the defendant “failed to provide him with a second meal period” and “had a policy or practice of not providing second meal periods.” Id. Here, Plaintiff does not allege that Defendants had such a policy or that they failed to offer the opportunity to take (i.e., did not “provide”) breaks. 19 1 discussed in more detail with respect to Plaintiff’s third claim. See, e.g., Guerrero v. Halliburton 2 Energy Servs., 2016 WL 6494296, *5–*6 (applying Landers to meal and rest break claim). 3 4 5 United States District Court Northern District of California 6 Because Plaintiff could cure these deficiencies with amendment, Defendants’ motion to dismiss Plaintiff’s second cause of action is GRANTED WITH LEAVE TO AMEND. c. Failure to Provide Accurate Written Wage Statements (Claim 3) In his third cause of action, Plaintiff alleges that Defendants failed to provide accurate, 7 itemized wage statements because the wage statements did not include (1) the drivers’ actual gross 8 or net wages or, for part of the class period, all hours worked; (2) the additional hour of 9 compensation required for missed rest and meal breaks; (3) the accurate regular rate of pay for 10 overtime compensation; and (4) for all employees, the social security number or employee 11 identification number for the employees. Compl. ¶¶ 26–31. 12 Cal. Labor Code § 226(a) requires that employers provide wage statements that accurately 13 itemize earnings, hours worked, applicable rates of pay, the name and address of the legal entity 14 that is the employer, and, among other information, “the name of the employee and only the last 15 four digits of his or her social security number or an employee identification number other than a 16 social security number.” To recover damages under Section 226, “an employee must suffer injury 17 as a result of a knowing and intentional failure by an employer to comply with the statute.” Price 18 v. Starbucks Corp., 192 Cal.App.4th 1136, 1142 (2011). The mere fact that the information was 19 missing from the wage statement is not a cognizable injury. See id. at 1142–43; accord Milligan 20 v. Am. Airlines, Inc., 577 Fed. App’x. 718, 719 (9th Cir. 2014); Johnson v. Serenity 21 Transportation, Inc., 141 F. Supp. 3d 974, 1004 (N.D. Cal. 2015). 22 As discussed with respect to claim two above and claim four below, the Court holds that 23 Plaintiff does not plausibly allege that Defendants failed to provide compensation for hours 24 worked, missed meal and rest breaks, or overtime. As to the social security number or employee 25 id claim, Plaintiff does not allege that he or the other drivers suffered any injury as a result of this 26 omission. Indeed, Plaintiff argues that he suffered injury only due to omissions related to the 27 alleged meal and rest break and overtime/regular pay claims. Because mere omission alone is not 28 sufficient, Plaintiff must amend to allege how this failure injured him and the other drivers. 20 1 2 3 4 GRANTED WITH LEAVE TO AMEND. d. Failure to Pay Hourly and Overtime Wages (Claim 4) In his fourth cause of action, Plaintiff alleges that Defendants failed to pay regular and 5 overtime wages under California Labor Code Sections 510, 558, and 1194 because Defendants 6 allegedly did not (1) pay the drivers for all regular and overtime hours worked; and (2) did not 7 include all remuneration—namely, the bonuses offered to drivers—when calculating the regular 8 rate of pay, which led to inaccurate overtime compensation. Compl. ¶¶ 32–34. 9 United States District Court Northern District of California For these reasons, Defendants’ motion to dismiss Plaintiff’s third cause of action is California Labor Code § 510(a) provides that “[e]ight hours of labor constitutes a day’s 10 work. Any work in excess of eight hours in one workday and any work in excess of 40 hours in 11 any one workweek and the first eight hours worked on the seventh day of work in any one 12 workweek shall be compensated at the rate of no less than one and one-half times the regular rate 13 of pay for an employee.” Under California Labor Code § 1194, “any employee receiving less than 14 the legal minimum wage or the legal overtime compensation applicable to the employee is entitled 15 to recover in a civil action the unpaid balance of the full amount of this minimum wage or 16 overtime compensation, including interest thereon, reasonable attorney’s fees, and costs of suit.” 17 See also Cal. Labor Code § 558 (setting forth civil penalties for violations of provisions regulating 18 hours and days of work). 19 In Landers v. Quality Commcations, Inc., the Ninth Circuit held that in order to state a 20 plausible claim for failure to pay overtime wages “at a minimum the plaintiff must allege at least 21 one workweek when he worked in excess of forty hours and was not paid for the excess hours in 22 that workweek, or was not paid minimum wages.” 771 F.3d 638, 646 (9th Cir. 2014), as 23 amended (Jan. 26, 2015). Though Landers concerned the Fair Labor Standards Act, this Court 24 and others have held that Landers’s requirements apply to California Labor Code violations. See 25 Bush v. Vaco Tech. Servs., LLC, No. 17-CV-05605-BLF, 2018 WL 2047807, at *8 & n.6 (N.D. 26 Cal. May 2, 2018) (citing Freeman v. Zillow, Inc., No. SA-CV-1401843, 2015 WL 5179511, at *4 27 (C.D. Cal. Mar. 19, 2015); Tan v. GrubHub, Inc., 171 F. Supp. 3d 998, 1006 (N.D. Cal. 2016)). 28 Under Landers, allegations that “plaintiffs ‘regularly’ or ‘regularly and consistently’ worked more 21 1 than 40 hours per week . . . fall short of the Twombly/Iqbal standard and are thus insufficient to 2 state a claim for denial of overtime compensation.” Perez v. Wells Fargo & Co., 75 F. Supp. 3d 3 1184, 1191 (N.D. Cal. 2014). United States District Court Northern District of California 4 Defendants argue that the Complaint does not comply with Landers’s requirements. See 5 MTD at 8–10. Defendants claim that Plaintiff “provides no facts about the timing, length, or 6 frequency of his allegedly unpaid hours worked,” or enough to details to plausibly allege that he 7 worked more than forty hours in a single work week. Id. at 9. As to Plaintiff’s claims that 8 Defendants did not properly calculate the regular rate of pay based on driver bonuses, Defendants 9 claim that Plaintiff does not provide enough information about these bonuses, such as whether 10 they were “nondiscretionary” or that “he earned a bonus during a period that he worked overtime 11 hours,” such that they would need to be included in any overtime calculation. Id. 12 Plaintiff argues that Defendants interpret Landers too narrowly and argues that he need not 13 allege “an exact calendar week or particular instance of denied overtime or minimum wage.” See 14 MTD Opp. at 18–20. Plaintiff interprets his own allegations as demonstrating that Defendants 15 “forced delivery drivers to skip mandatory meal and rest breaks, imposed schedules with timelines 16 such that breaks practically could not be taken, and failed to provide breaks, give rise to the 17 plausible inference that UNFI also discouraged delivery drivers from finishing outstanding tasks 18 off schedule and clocking overtime.” Id. at 19. 19 The Complaint alleges that, during part of Plaintiff’s employment, Plaintiff and other 20 drivers “routinely worked more than 8 hours a day and 40 hours a week and received no additional 21 compensation,” Compl. ¶ 10, and “Defendant required Plaintiff and other delivery drivers to work 22 in excess of 8 hours per day and 40 hours per week,” id. ¶ 32. As to bonuses, the Complaint 23 alleges only that “Plaintiff, and other similarly situated drivers, routinely received driver bonuses,” 24 which were not included in their regular rate of pay. Id. ¶ 32. 25 The Court agrees with Defendants that Plaintiff’s allegations do not plausibly allege a 26 claim for failure to pay hourly and overtime compensation. First, the allegations do not meet the 27 requirements under Landers—Plaintiff does not allege sufficient facts from which the Court could 28 infer that Plaintiff worked more than forty hours in a week for which he was not paid overtime. 22 United States District Court Northern District of California 1 Though Plaintiff need not list a specific date and times, Plaintiff provides no facts about his work 2 duties, his hours worked, or any other details relevant to the number of hours he worked at any 3 time or in any week, much less details concerning other drivers. Cf. Boon v. Canon Bus. Sols., 4 Inc., 592 F. App’x 631, 632 (9th Cir. 2015) (holding claim plausibly alleged where complaint 5 “identified tasks for which [plaintiff] was not paid and alleged that he regularly worked more than 6 eight hours in a day and forty hours in a week”). As with his second claim, Plaintiff’s allegation 7 that Defendants knew about the drivers’ delivery hours and schedules is not akin to alleging that 8 the drivers’ schedules required them to work over forty hours. Cf. Varsam v. Lab. Corp. of Am., 9 120 F. Supp. 3d 1173, 1178 (S.D. Cal. 2015) (holding claim was plausible where complaint 10 alleged that defendant “discouraged” class “from clocking overtime,” “failed to schedule a 11 sufficient number of [workers] for their locations,” and employees regularly worked off the clock 12 and were “required to not accurately record their time worked” (internal quotation marks 13 omitted)). An allegation that the drivers “routinely” worked such hours is not enough, on its own. 14 See Perez, 75 F. Supp. 3d at 1191. 15 Without allegations that Plaintiff and other drivers worked overtime, the failure to account 16 for bonuses in the regular rate of pay becomes superfluous. But even were it relevant, the bare 17 allegation that drivers received bonuses does not plausibly allege, without more, that such bonuses 18 must be included in the regular rate of pay. Plaintiff is required to allege additional facts from 19 which the Court can infer that the bonuses must be included in this calculation. 20 Because Plaintiff could possibly cure these deficiencies with amendment, Defendants’ 21 motion to dismiss Plaintiff’s fourth cause of action is GRANTED WITH LEAVE TO AMEND. 22 e. Failure to Timely Pay All Wages When Due (Claim 5) 23 In his fifth cause of action, Plaintiff alleges that Defendants failed to pay all wages when 24 due under California Labor Code Sections 201, 202, 203, 204, and 204b because Defendants 25 allegedly did not pay Plaintiff and the drivers for meal and rest breaks and overtime and regular 26 wages. Compl. ¶¶ 35–38. 27 28 This claim is derivative of Plaintiff’s second and fourth claims. Because the Court dismisses those claims, Defendants’ motion to dismiss Plaintiff’s fifth cause of action is 23 1 2 3 f. Unfair Competition (Claim 6) In his sixth cause of action, Plaintiff alleges that Defendants engaged in unlawful business 4 acts or practices under California’s Unfair Competition Law, Cal. Bus. & Prof. Code § 17200, 5 because of his five claims for California Labor Code violations. Compl. ¶¶ 39–43. Because the 6 Court holds that Plaintiff alleges a violation of Labor Code § 2802 for Defendants’ failure to 7 indemnify, Defendants’ motion to dismiss Plaintiff’s sixth cause of action is DENIED. 8 9 United States District Court Northern District of California GRANTED WITH LEAVE TO AMEND. g. Civil Penalties Under PAGA (Claim 7) In his seventh cause of action, Plaintiff seeks recovery of civil penalties for Defendants’ 10 Labor Code violations under California’s Private Attorneys General Act of 2004, Cal. Lab. Code § 11 2698. Because the Court holds that Plaintiff alleges a violation of Labor Code § 2802 for 12 Defendants’ failure to indemnify, Defendants’ motion to dismiss Plaintiff’s seventh cause of 13 action is DENIED. 14 15 2. Motion to Strike Defendants move to strike portions of Plaintiff’s Complaint, arguing that California law 16 does not support Plaintiff’s contentions that (1) the hour of compensation for missed meal and rest 17 breaks must be included in wage statements; (2) Labor Code Section 226.3 applies in cases where 18 an inaccurate wage statement is issued (as opposed to withheld entirely); (3) Section 204 and 204b 19 apply even though Plaintiff does not allege applicable wage-payment timing violations; (4) pre- 20 judgment interest on wage statement penalties is appropriate; and (5) treble damages are 21 appropriate for the Section 206 claim. See MTD at 12–14. 22 As stated on the record at the hearing on the motion, the Court declines to grant the motion 23 to strike on these issues at this stage. The Ninth Circuit in Whittlestone cautioned that courts 24 should not resolve “disputed and substantial factual or legal issues in deciding a motion to strike.” 25 618 F.3d at 973 (internal quotation marks and alterations omitted). Each of these questions is a 26 disputed legal issue, for which both sides cite supporting case authority. See MTD at 10, 12–14; 27 MTD Opp. at 21–23, 27–32. Likewise, Plaintiff must amend most of the relevant claims, and that 28 amendment may cure several of these issues, particularly given Defendants’ strong arguments on 24 1 several of these fronts. Moreover, the legal questions at issue here do not appear to be those that 2 might cause over-burdensome discovery and mar the litigation in such a way that deciding these 3 issues at this stage is necessary “to avoid the expenditure of time and money that must arise from 4 litigating spurious issues by dispensing with those issues prior to trial . . . .” Whittlestone, 618 5 F.3d at 973 (quoting Fogerty, 984 F.2d at 1527). Finally, the Court notes that the California 6 Supreme Court in its pending case Stewart v. San Luis Ambulance, Inc., No. S246255, may soon 7 resolve the first issue presented as to whether meal and rest break hours count as “wages” for 8 wage statement claims. For these reasons, the Court DENIES Defendants’ motion to strike. 9 10 United States District Court Northern District of California 11 IV. ORDER For the foregoing reasons, IT IS HEREBY ORDERED that: 12 (1) Plaintiff’s motion to remand is DENIED; 13 (2) Defendants’ motion to dismiss Plaintiff’s first, sixth, and seventh causes of action is DENIED; 14 15 (3) Defendants’ motion to dismiss Plaintiff’s second, third, fourth, and fifth causes of action is GRANTED WITH LEAVE TO AMEND; 16 17 (4) Defendants’ motion to strike is DENIED; and 18 (5) Unless otherwise stipulated, Plaintiff shall file a First Amended Complaint 19 on or before March 29, 2019. Failure to meet the deadline to file an 20 amended complaint or failure to cure the deficiencies identified in this 21 Order will result in dismissal of Plaintiff’s claims with prejudice. 22 23 IT IS SO ORDERED. 24 25 26 27 Dated: February 27, 2019 ______________________________________ BETH LABSON FREEMAN United States District Judge 28 25

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