Willis v. Koning Associates et al, No. 5:2021cv00819 - Document 75 (N.D. Cal. 2023)
Court Description: ORDER GRANTING 57 DEFENDANTS' MOTION FOR SUMMARY JUDGMENT. Signed by Judge Beth Labson Freeman on 5/19/2023. (blflc2, COURT STAFF) (Filed on 5/19/2023)
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1 2 3 UNITED STATES DISTRICT COURT 4 NORTHERN DISTRICT OF CALIFORNIA 5 SAN JOSE DIVISION 6 7 TROY WILLIS, Plaintiff, 8 v. 9 10 KONING ASSOCIATES, et al., Defendants. 11 United States District Court Northern District of California Case No. 21-cv-00819-BLF ORDER GRANTING DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT [Re: ECF No. 57] 12 Plaintiff Troy Willis filed this employment case against Defendants Koning & Associates 13 14 (“K&A”) and Chris Koning (“Koning”), alleging violations of federal and state statutes. 15 Defendants moved for summary judgment. ECF No. 57 (“MSJ”); see also ECF No. 68 (“Reply”). 16 Plaintiff opposes. ECF No. 60 (“Opp.”). The Court held a hearing on this motion on May 11, 17 2023. See ECF No. 74. For the reasons explained below, the Court GRANTS Defendants’ 18 motion for summary judgment. 19 20 I. BACKGROUND Plaintiff Troy Willis is a former employee of Koning & Associates, where he worked as a 21 general insurance adjuster. He brought suit against Defendants, alleging that they failed to 22 compensate insurance adjusters for all the time they worked. ECF No. 1 (“Compl.”) ¶ 8. Willis 23 alleges that K&A compensated class members for hours billed to clients, not hours actually 24 worked, and that they improperly classified adjusters as exempt employees. Id. ¶¶ 19-20. He also 25 alleges that K&A failed to provide proper meal breaks or rest periods and that it failed to 26 reimburse class members for mileage. Id. ¶ 33. 27 As a claims adjuster, Plaintiff was classified as exempt. Declaration of Jason Stitt, ECF 28 No. 57-1 (“Stitt Decl.”), Ex. A (“Ingalls Dep.”) at 18:16-18:19. Plaintiff was paid a guaranteed 1 monthly base salary of $5,250. Stitt Decl., Ex. B (“Willis Dep.”) at 38:2-38:5. Plaintiff also 2 received additional compensation of all hours billed to clients that exceeded 150 hours per month 3 at a rate of $35 per hour. Id. at 38:2-38:20; Stitt Decl., Ex. C (“Koning Dep.”) at 15:23-16:3. 4 Even if Plaintiff’s billed hours did not exceed 150 hours, Plaintiff still received the $5,250 base 5 salary. Willis Dep. at 38:2-38:20; Koning Dep. at 47:10-47:18. Plaintiff was reimbursed $50 per month for cell phone reimbursement. Willis Dep. at 6 7 65:25-66:19. For mileage reimbursement, Plaintiff received a flat monthly stipend of $800 per 8 month plus reimbursement at the IRS rate for the mileage between his destination and Koning’s 9 nearest regional office. See Declaration of Corey Bennett, ECF No. 60-1 (“Bennett Decl.”), Ex. A 10 (“Willis Dep. 2”) at 38:20-24; Bennett Decl., Ex. B (“Koning Dep. 2”) at 27:5-17. Plaintiff brings nine claims: (1) failure to pay overtime compensation in violation of the United States District Court Northern District of California 11 12 Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201 et seq.; (2) failure to pay overtime wages in 13 violation of California Labor Code (“Labor Code”) §§ 510, 1194, 1198 and IWC Wage Order No. 14 4-2001, § 3; (3) failure to provide required meal periods in violation of Labor Code §§ 226.7, 512 15 and IWC Wage Order No. 4-2001, § 11; (4) failure to provide required rest periods in violation of 16 Labor Code § 226.7 and IWC Wage Order No. 4-2001, § 12; (5) failure to furnish accurate 17 itemized wage statements in violation of Labor Code § 226(a) and IWC Wage Order No. 4-2001, 18 § 7; (6) failure to pay all wages due to discharged and quitting employees in violation of Labor 19 Code §§ 201, 202, 203; (7) failure to indemnify employees for necessary expenditures incurred in 20 violation of Labor Code §§ 406, 2802; (8) unfair and unlawful business practices in violation of 21 California Business & Professions Code § 17200, et seq.; and (9) a representative action for civil 22 penalties under the California Private Attorneys General Act (“PAGA”), Labor Code §§ 2698- 23 2699.5. Compl. ¶¶ 34-75. Plaintiff sought to represent a class and a FLSA collective. Id. ¶¶ 27- 24 33. The Court denied the motion for class certification. See Willis v. Koning & Assocs., No. 21- 25 cv-00819, 2023 WL 2541327 (N.D. Cal. Mar. 15, 2023). Now before the Court is Defendant’s motion for summary judgment. See MSJ. 26 27 28 II. LEGAL STANDARD “A party is entitled to summary judgment if the ‘movant shows that there is no genuine 2 1 dispute as to any material fact and the movant is entitled to judgment as a matter of law.’” City of 2 Pomona v. SQM N. Am. Corp., 750 F.3d 1036, 1049 (9th Cir. 2014) (quoting Fed. R. Civ. P. 3 56(a)). “The moving party initially bears the burden of proving the absence of a genuine issue of 4 material fact.” In re Oracle Corp. Sec. Litig., 627 F.3d 376, 387 (9th Cir. 2010) (citing Celotex 5 Corp. v. Catrett, 477 U.S. 317, 323 (1986)). “Where the non-moving party bears the burden of 6 proof at trial, the moving party need only prove that there is an absence of evidence to support the 7 non-moving party's case.” Id. (citing Celotex, 477 U.S. at 325). “Where the moving party meets that burden, the burden then shifts to the non-moving United States District Court Northern District of California 8 9 party to designate specific facts demonstrating the existence of genuine issues for trial.” Oracle, 10 627 F.3d at 387 (citing Celotex, 477 U.S. at 324). “[T]he non-moving party must come forth with 11 evidence from which a jury could reasonably render a verdict in the non-moving party’s favor.” 12 Id. (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986)). “The court must view the 13 evidence in the light most favorable to the nonmovant and draw all reasonable inferences in the 14 nonmovant's favor.” City of Pomona, 750 F.3d at 1049 (citing Clicks Billiards Inc. v. Sixshooters 15 Inc., 251 F.3d 1252, 1257 (9th Cir. 2001)). “Where the record taken as a whole could not lead a 16 rational trier of fact to find for the nonmoving party, there is no genuine issue for trial.” Id. at 17 1049-50 (quoting Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 18 (1986)). 19 III. 20 21 ANALYSIS A. Salary Basis Test A foundational question in this case is whether Plaintiff is an exempt employee. “The Fair 22 Labor Standards Act of 1938 (FLSA) guarantees that covered employees receive overtime pay 23 when they work more than 40 hours a week.” Helix Energy Sols. Grp., Inc. v. Hewitt, 143 S. Ct. 24 677, 682 (2023). “But an employee is not covered, and so is not entitled to overtime 25 compensation, if he works ‘in a bona fide executive, administrative, or professional capacity,’ as 26 those ‘terms are defined’ by agency regulations.” Id. (quoting 29 U.S.C. § 213(a)(1)). Here, 27 Defendants assert that Plaintiff is exempt as an administrative employee. Under the regulations, 28 an administrative employee falls under the exemption if he, among other things, is “[c]ompensated 3 1 on a salary or fee basis pursuant to § 541.600 at a rate of not less than $684 per week.” 29 C.F.R. 2 § 541.200(a). 1 “Additional regulations elaborate on the salary-basis requirement.” Helix Energy, 3 143 S. Ct. at 682. “The main salary-basis provision, set out in two sentences of § 541.602(a), states: 4 An employee will be considered to be paid on a ‘salary basis’ ... if the employee regularly receives each pay period on a weekly, or less frequent basis, a predetermined amount constituting all or part of the employee's compensation, which amount is not subject to reduction because of variations in the quality or quantity of the work performed. Subject to [certain exceptions], an exempt employee must receive the full salary for any week in which the employee performs any work without regard to the number of days or hours worked.” 5 6 7 8 9 Helix Energy, 143 S. Ct. at 683 (quoting 29 C.F.R. § 541.602(a)). “The rule thus ensures that the 10 employee will get at least part of his compensation through a preset weekly (or less frequent) 11 United States District Court Northern District of California salary, not subject to reduction because of exactly how many days he worked.” Id. 12 An exempt employee can receive a minimum guaranteed salary, plus extra compensation, 13 and still satisfy the salary basis test. See 29 C.F.R. § 541.604. Federal regulation provides: 14 (a) An employer may provide an exempt employee with additional compensation without losing the exemption or violating the salary basis requirement, if the employment arrangement also includes a guarantee of at least the minimum weekly-required amount paid on a salary basis. Thus, for example, an exempt employee guaranteed at least $684 each week paid on a salary basis may also receive additional compensation of a one percent commission on sales. An exempt employee also may receive a percentage of the sales or profits of the employer if the employment arrangement also includes a guarantee of at least $684 each week paid on a salary basis. Similarly, the exemption is not lost if an exempt employee who is guaranteed at least $684 each week paid on a salary basis also receives additional compensation based on hours worked for work beyond the normal workweek. Such additional compensation may be paid on any basis (e.g., flat sum, bonus payment, straight-time hourly amount, time and one-half or any other basis), and may include paid time off. 15 16 17 18 19 20 21 22 23 (b) An exempt employee's earnings may be computed on an hourly, a daily or a shift basis, without losing the exemption or violating the salary basis requirement, if the employment arrangement also includes a guarantee of at least the minimum weekly required amount paid on a salary basis regardless of the number of hours, days or shifts worked, and a reasonable relationship exists between the guaranteed 24 25 26 27 28 1 The regulation also requires that, to qualify for the administrative exemption, an employee must have certain types of job duties. 29 C.F.R. § 541.200(a). At the hearing, Plaintiff indicated that he does not dispute that he had those duties. The Court will therefore not address that issue. 4 amount and the amount actually earned. The reasonable relationship test will be met if the weekly guarantee is roughly equivalent to the employee's usual earnings at the assigned hourly, daily or shift rate for the employee's normal scheduled workweek. Thus, for example, an exempt employee guaranteed compensation of at least $725 for any week in which the employee performs any work, and who normally works four or five shifts each week, may be paid $210 per shift without violating the $684–per-week salary basis requirement. The reasonable relationship requirement applies only if the employee's pay is computed on an hourly, daily or shift basis. It does not apply, for example, to an exempt store manager paid a guaranteed salary per week that exceeds the current salary level who also receives a commission of one-half percent of all sales in the store or five percent of the store's profits, which in some weeks may total as much as, or even more than, the guaranteed salary. 1 2 3 4 5 6 7 8 Id. 9 As explained above, Willis was paid a guaranteed monthly base salary of $5,250. Willis 10 Dep. at 38:2-38:5. Plaintiff also received additional compensation of all hours billed to clients that 11 United States District Court Northern District of California exceeded 150 hours per month at a rate of $35 per hour. Id. at 38:2-38:20; Koning Dep. at 15:2312 16:3. Even if Plaintiff’s billed hours did not exceed 150 hours, he still received the $5,250 13 guaranteed salary. Willis Dep. at 38:2-38:20; Koning Dep. at 47:10-47:18. 14 Defendants argue that, under this compensation scheme, Willis was compensated on a 15 salary basis, and he was therefore properly classified as exempt. MSJ at 12-19. Defendants 16 specifically argue that this compensation scheme satisfies the salary basis test based on 29 C.F.R. 17 § 541.604(b), above. Id. at 15-16. Plaintiff argues that the salary basis test is not met. Opp. at 918 12. 19 Under the federal regulation, “[a]n employer may provide an exempt employee with 20 additional compensation without losing the exemption or violating the salary basis requirement, if 21 the employment arrangement also includes a guarantee of at least the minimum weekly-required 22 amount paid on a salary basis. . . . Similarly, the exemption is not lost if an exempt employee who 23 is guaranteed at least $684 each week paid on a salary basis also receives additional compensation 24 based on hours worked for work beyond the normal workweek. Such additional compensation 25 may be paid on any basis (e.g., flat sum, bonus payment, straight-time hourly amount, time and 26 one-half or any other basis), and may include paid time off.” 29 C.F.R. § 541.602(a). The Court 27 determines that Defendants’ payment scheme satisfies the salary basis test under this subsection. 28 5 1 Plaintiff was guaranteed at least the minimum weekly-required amount paid on a salary basis: 2 $5,250/month. Willis Dep. at 38:2-38:20; Koning Dep. at 15:23-16:3. He does not dispute that he 3 always received the guaranteed amount. Willis Dep. at 38:2-38:20. The regulation states that the 4 exemption is not lost if the employee receives additional compensation that is “paid on any basis.” 5 29 C.F.R. § 541.602(a). Here, Willis received additional compensation based on the number of 6 hours billed for his work above 150 hours. The Court determines that, under the regulation, such 7 an additional payment does not mean that Willis loses the exemption. Because the payment scheme satisfies the test laid out in 29 C.F.R. § 541.604(a), the Court United States District Court Northern District of California 8 9 need not address whether it satisfies 29 C.F.R. § 541.604(b). That subparagraph “focuses on 10 workers whose compensation is ‘computed on an hourly, a daily or a shift basis,’ rather than a 11 weekly or less frequent one.” Helix Energy, 143 S. Ct. at 684. Because Plaintiff was paid a 12 monthly guaranteed salary, that subparagraph is not applicable. As Plaintiff points out, in 2013, the California Court of Appeals determined that Koning & 13 14 Associates improperly categorized employees as exempt. Negri v. Koning & Assocs., 216 Cal. 15 App. 4th 392 (2013). In that case, the question presented was “whether a compensation scheme 16 based solely upon the number of hours worked, with no guaranteed minimum, can be considered a 17 ‘salary’ within the meaning of the pertinent wage and hour laws.” Id. at 395. And the court 18 answered the question in the negative. Id. at 400. But, contrary to Plaintiff’s argument, 19 Defendants have made more than a “cosmetic change” to the compensation scheme since that 20 decision. See Opp. at 6. In the California Court of Appeals case, K&A “stipulated to the fact that 21 it ‘never paid [plaintiff] a guaranteed salary.’” Negri, 216 Cal. App. 4th at 400. Here, Plaintiff 22 agrees that he was guaranteed the $5,250 monthly salary. Willis Dep. at 38:2-38:20. Defendants 23 changed the compensation scheme to provide employees with a monthly guaranteed salary. The 24 new compensation scheme satisfies the salary basis test. Defendants’ employees are now properly 25 classified as exempt. The Court determines that Willis was properly classified as exempt. 26 27 28 B. Claims 1-4 Defendants argue that they are entitled to summary judgment on Claims 1-4 if the Court 6 1 determines that Willis was properly classified as an exempt employee. MSJ at 12-13, 19. Willis 2 does not contend otherwise. See Opp. Claim 1 is for failure to pay overtime compensation in violation of the FLSA, 29 U.S.C. § 3 4 201 et seq. Compl. ¶¶ 34-43. As stated above, exempt employees are not entitled to overtime 5 compensation under the FLSA. See 29 U.S.C. § 213. Because Plaintiff is properly classified as 6 exempt, Defendants are entitled to summary judgment on Claim 1. Claim 2 is for failure to pay overtime wages in violation of Labor Code §§ 510, 1194, 1198 United States District Court Northern District of California 7 8 and IWC Wage Order No. 4-2001, § 3; Claim 3 is for failure to provide required meal periods in 9 violation of Labor Code §§ 226.7, 512 and IWC Wage Order No. 4-2001, § 11; and Claim 4 is for 10 failure to provide required rest periods in violation of Labor Code § 226.7 and IWC Wage Order 11 No. 4-2001, § 12. Compl. ¶¶ 44-53. Plaintiff cites to Sections 3, 11, and 12 of IWC Wage Order 12 No. 4-2001, which do not apply to employees who are employed in administrative capacities and 13 meet certain identified requirements. 8 Cal. Code Regs. § 11040(1)(A). Defendants argue that 14 because Plaintiff is classified as an exempt administrative employee under federal law, he also is 15 for state law. MSJ at 12-13, 15. Plaintiff does not argue otherwise; he also applies the federal 16 salary basis test. See Opp. “California courts follow the federal salary basis test to a substantial 17 degree and look to the federal regulations implementing the Fair Labor Standards Act of 1938 (29 18 U.S.C. § 201 et seq.) (the FLSA) for guidance in interpreting the salary basis test.” Semprini v. 19 Wedbush Secs., Inc., 57 Cal. App. 5th 246, 252 (2020) (collecting cases). Because Plaintiff’s 20 payment scheme satisfies the federal salary basis test and Plaintiff does not dispute that he has 21 administrative job duties, Plaintiff is not entitled to overtime or meal or rest breaks under 22 California statute. Because Plaintiff is an exempt administrative employee, Defendants are 23 entitled to summary judgment on Claims 2, 3, and 4. Defendants’ motion for summary judgment on Claims 1-4 is GRANTED. 24 25 26 C. Claim 7 Claim 7 is for failure to indemnify employees for necessary expenditures incurred in 27 violation of Labor Code §§ 406, 2802. Compl. ¶¶ 63-65. Defendants argue that the Court should 28 grant summary judgment on the reimbursement claim. MSJ at 22-24. In the Complaint, Plaintiff 7 1 alleges that he was insufficiently reimbursed for his cell phone and mileage. See Compl. ¶¶ 33, 2 65. In Opposition, Plaintiff argues that he was insufficiently reimbursed for mileage expenses. 3 Opp. at 14-15. The Court will therefore focus on that category of expenses. 4 5 employee for all necessary expenditures or losses incurred by the employee in direct consequence 6 of the discharge of his or her duties.” Cal. Labor Code § 2802(a); see also IWC Wage Order No. 7 4-2001, § 9(B). The purpose is “to prevent employers from passing their operating expenses on to 8 their employees.” Gattuso v. Harte-Hanks Shoppers, Inc., 42 Cal. 4th 554, 562 (2007) (citation 9 omitted). 10 United States District Court Northern District of California Section 2802 of the Labor Code requires that “[a]n employer shall indemnify his or her As Plaintiff identifies, there are several permissible reimbursement methods for mileage. 11 See Opp. at 14-15. An employer may use the actual expense method, by which the employer 12 would “calculate the automobile expenses that the employee actually and necessarily incurred and 13 then to separately pay the employee that amount.” Gattuso, 42 Cal. 4th at 568. An employer may 14 use the mileage reimbursement method, by which the employee would record the number of miles 15 drivem to perform job duties and submit that information to the employer, “who then multiplies 16 the work-required miles driven by a predetermined amount that approximates the per-mile cost of 17 owning and operating an automobile.” Id. at 569. Or an employer can use the lump-sum method, 18 under which the employer pays a fixed amount. Id. at 570. This method is permissible “provided 19 that the amount paid is sufficient to provide full reimbursement for actual expenses necessarily 20 incurred.” Id. As noted by Plaintiff, an employee may challenge the amount of a lump-sum 21 payment as insufficient under Section 2802 “by comparing the payment with the amount that 22 would be payable under either the actual expense method or the mileage reimbursement method.” 23 Id. at 571. “If the comparison reveals that the lump sum is inadequate, the employer must make 24 up the difference.” Id. 25 As described above, Plaintiff received a monthly mileage stipend of $800 per month plus 26 per-mile reimbursement at the IRS rate, with mileage measured from the nearest Koning office to 27 his destination. Plaintiff argues that the reimbursement was inadequate because Defendants paid 28 for mileage based on distance from the nearest Koning office rather than actual mileage. Opp. at 8 1 14-15. But a lump-sum payment is permissible as long as “the amount paid is sufficient to 2 provide full reimbursement for actual expenses necessarily incurred.” Gattuso, 42 Cal. 4th at 570. 3 And Plaintiff has submitted no evidence indicating that the amount he received from Defendants 4 was inadequate to provide full reimbursement for his mileage expenses. There is no dispute of 5 material fact as to whether Plaintiff was reimbursed for mileage as required by law. Defendants’ motion for summary judgment as to Claim 7 is GRANTED. 6 7 D. Claim 5 is for failure to furnish accurate itemized wage statements in violation of Labor 8 9 10 Code § 226(a) and IWC Wage Order No. 4-2001, § 7. Compl. ¶¶ 54-57. Defendants argue they are entitled to summary judgment on this claim. MSJ at 21. Labor Code Section 226(a) requires that a wage statement include certain identified 11 United States District Court Northern District of California Claim 5 12 information. Cal. Labor Code § 226(a). Defendants argue that summary judgment is proper 13 because Plaintiff has not identified any information missing from his wage statement. MSJ at 21. 14 Plaintiff argues that the wage statements were inaccurate because they did not include payment for 15 working through meal and rest breaks and working off-the-clock and because he was inadequately 16 reimbursed for business expenses. Opp. at 15-16. The Court has determined that Defendants are 17 entitled to summary judgment on the meal and rest break, overtime, and reimbursement claims. 18 Therefore, Plaintiff cannot show that the wage statements were inaccurate on any of these bases. Defendants’ motion for summary judgment on Claim 5 is GRANTED. 19 20 21 E. Claim 6 Claim 6 is for failure to pay all wages due to discharged and quitting employees in 22 violation of Labor Code §§ 201, 202, 203. Compl. ¶¶ 58-62. Defendants argue that the Court 23 should grant them summary judgment on this claim. MSJ at 21-22. 24 Section 202(a) of the Labor Code provides that the wages of an employee who quits “shall 25 become due and payable not later than 72 hours thereafter.” Cal. Labor Code § 202(a). “The date 26 of mailing shall constitute the date of payment for purposes of the requirement to provide payment 27 within 72 hours of the notice of quitting.” Id. Defendants argue that summary judgment is proper 28 because they mailed Plaintiff his final paycheck within 48 hours of his resignation. MSJ at 21-22. 9 1 Plaintiff argues that he was not paid the full amount upon quitting “[b]ecause Defendants 2 misclassified Plaintiff and other adjusters as exempt, routinely denied compliant meal breaks in 3 violation of applicable wage orders, require Plaintiff to work off the clock, routinely failed to 4 compensate its employees with required premium payments, and routinely failed to pay proper 5 overtime compensation at the correct regular rate of pay.” Opp. at 16. The Court has determined that Plaintiff was properly classified as exempt. Therefore, the 6 7 Court decided that he was not entitled to overtime or meal or rest breaks and that he received 8 adequate reimbursement. Therefore, Plaintiff was not entitled to additional wages upon quitting 9 on any of these bases. Defendants’ motion for summary judgment on Claim 6 is GRANTED. 10 United States District Court Northern District of California 11 F. Claim 8 12 Claim 8 alleges unfair and unlawful business practices in violation of California Business 13 & Professions Code § 17200, et seq. Compl. ¶¶ 66-71. Defendants argue that they are entitled to 14 summary judgment on Claim 8 because they did not violate any law. MSJ at 24-25. 15 The Court agrees that the UCL claim here is derivative of the other claims. Because 16 Defendants are entitled to summary judgment on all of the underlying claims, Defendants are also 17 entitled to summary judgment on this claim. See Rosenberg v. Renal Advantage, Inc., No. 18 11cv2152-GPC(KSC), 2014 WL 1652580, at *12 (S.D. Cal. Apr. 24, 2014) (“Having granted 19 summary judgment to Defendants on Plaintiff’s claims that Plaintiff was improperly classified as 20 exempt from federal and state wage and hour laws, the Court accordingly GRANTS Defendant’s 21 motion for summary judgment on Plaintiff’s derivative UCL claim.”); Price v. Starbucks Corp., 22 192 Cal. App. 4th 1136, 1147 (2011) (“Because the underlying causes of action fail, the derivative 23 UCL . . . claim[] also fail[s].”). Defendants’ motion for summary judgment on Claim 8 is GRANTED. 24 25 26 G. Claim 9 Claim 9 is a representative action for civil penalties under the California Private Attorneys 27 General Act (“PAGA”), Labor Code §§ 2698-2699.5. Compl. ¶¶ 72-75. This is the only 28 remaining claim in the case. Because the state law PAGA claim is all that remains of Plaintiff's 10 1 suit, in the interest of judicial efficiency and fairness the Court declines to exercise supplemental 2 jurisdiction over the PAGA claim. 3 The Court has original jurisdiction “of all civil actions arising under the Constitution, laws, 4 or treaties of the United States.” 28 U.S.C. § 1331. The Court can properly exercise supplemental 5 jurisdiction “over all other claims that are so related to claims in the action within such original 6 jurisdiction that they form the same case or controversy under Article III of the United States 7 Constitution.” 28 U.S.C. § 1367(a). The doctrine of supplemental jurisdiction “is a doctrine of 8 discretion, not of plaintiff's right.” United Mine Workers of Am. v. Gibbs, 383 U.S. 715, 726 9 (1966). 10 United States District Court Northern District of California 11 Section 1367(c) outlines when it is appropriate for a federal court to decline to exercise supplemental jurisdiction: 12 (1) the claim raises a novel or complex issue of State law, 13 (2) the claim substantially predominates over the claim or claims over which the district court has original jurisdiction, 14 15 16 17 (3) the district court has dismissed all claims over which it has original jurisdiction, or (4) in exceptional circumstances, there are other compelling reasons for declining jurisdiction. 28 U.S.C. § 1367(c). 18 This Court has a duty to exercise its discretion when “deciding whether to decline, or to 19 retain, supplemental jurisdiction over state law claims when any factor in subdivision (c) is 20 21 implicated.” Acri v. Varian Assocs., Inc., 114 F.3d 999, 1001 (9th Cir. 1997). Where subject matter jurisdiction is based on federal question, the Ninth Circuit has held that “[i]n the usual case 22 in which all federal-law claims are eliminated before trial, the balance of factors to be considered 23 under the pendent jurisdiction doctrine—judicial economy, convenience, fairness, and comity— 24 will point toward declining to exercise jurisdiction over the remaining state-law claims.” Sanford 25 v. MemberWorks, Inc., 625 F.3d 550, 561 (9th Cir. 2010) (quoting Carnegie-Mellon Univ. v. 26 Cohill, 484 U.S. 343, 350 n. 7 (1988)). Applying these factors to the instant case, this Court finds 27 it appropriate to decline supplemental jurisdiction over the remaining PAGA claim. 28 11 1 2 convenience. While both parties have invested resources into this litigation, this Court has not yet 3 considered the merits of the PAGA claim. Thus, exercising jurisdiction over the PAGA claim 4 would not serve judicial efficiency or economy. See Nevarez v. Costco Wholesale Corp., No. 5 2:19-cv-03454-SVW-SK, 2020 WL 1139810, at *2 (C.D. Cal. Mar. 9, 2020) (“The Court has not 6 considered a motion to dismiss or a motion for summary judgment and has not otherwise 7 examined the merits of the PAGA claims alleged here. Because continued adjudication of the 8 PAGA claims would not serve judicial efficiency or economy, the Court declines to exercise 9 supplemental jurisdiction after dismissal of each of the non-PAGA claims.”). These factors favor 10 11 United States District Court Northern District of California Declining supplemental jurisdiction would serve the interest of judicial economy and declining supplemental jurisdiction over the PAGA claim. Comity also weighs in favor of declining supplemental jurisdiction. PAGA is founded 12 solely in state law, and the primary responsibility for developing and applying state law rests with 13 the California courts. See generally Sakkab v. Luxottica Retail N. Am., Inc., 803 F.3d 425, 429-31 14 (9th Cir. 2015) (discussing history and purpose of PAGA); see also Rodriguez v. Emeritus Corp., 15 No. 2:18-cv-00341-KJM-CKD, 2018 WL 4214922, at *6 (E.D. Cal. Sept. 5, 2018) (declining to 16 exercise supplemental jurisdiction over PAGA claim once all other claims were dismissed). State 17 courts have an interest in adjudicating the PAGA claim, especially where most of the alleged acts 18 took place within California, and the parties are California residents or California businesses. This 19 factor also favors declining supplemental jurisdiction. 20 In light of these factors, the Court declines supplemental jurisdiction over the 21 remaining PAGA claim under 28 U.S.C § 1367(c)(3). The claim is DISMISSED WITHOUT 22 PREJDUICE to refiling in state court. 23 // 24 // 25 // 26 // 27 // 28 // 12 1 IV. ORDER For the foregoing reasons, IT IS HEREBY ORDERED that Defendants’ motion for 2 summary judgment is GRANTED. The Court DECLINES to exercise supplemental jurisdiction 3 over the remaining PAGA claim, which is DISMISSED WITHOUT PREJUDICE to refiling in 4 state court. 5 6 Dated: May 19, 2023 7 8 9 ______________________________________ BETH LABSON FREEMAN United States District Judge 10 United States District Court Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 13
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