DOUGLAS L. RAYES, District Judge.
Before the Court is Defendants Banner Pediatric Specialists, LLC, Banner Health Network, and Banner Medical Group's (collectively Banner) Partial Motion to Dismiss. (Doc. 12.) The motion is fully briefed, and neither party requested oral argument. For the reasons below, the motion is granted.
Plaintiff Emad Zaki is a physician specializing in pediatric nephrology. (Doc. 18, ¶ 16.) In 2010, Banner hired Zaki to provide pediatric nephrology care and on-call coverage. (Id., ¶ 25.) Pursuant to a Physician Employment Agreement (PEA), Zaki's on-call coverage obligation was not to exceed "fifty percent (50%) of [Banner's] coverage burden for the Physician's specialty." (Id., ¶ 27.) Banner assured Zaki that it would hire a second pediatric nephrologist so that Zaki would not be responsible for all on-call coverage for his specialty. (Id., ¶ 29.) In the event Zaki worked more than his contractual on-call coverage obligation, he was to receive ninety dollars per hour for such work. (Id., ¶ 31.) The PEA further provided that Zaki was entitled to twenty-eight days of paid time off (PTO) annually. (Id., ¶ 32.) Banner, however, did not hire another pediatric nephrologist during Zaki's tenure, which caused him to perform all on-call coverage responsibilities for his medical specialty and not use any PTO. (Id., ¶¶ 33-35.)
On June 3, 2014, Zaki took leave from Banner to care for his father in Egypt. (Id., ¶ 38.) While there, Zaki suffered a serious brain injury in a car accident. (Id., ¶ 39.) Due to his injury, Zaki was unable to obtain medical clearance to resume work at Banner. (Id., ¶ 40.) On December 29, 2014, Banner sent Zaki an email informing him that he would be terminated without cause, effective March 29, 2015. (Id., ¶ 41.)
Sometime in April 2015, after Zaki's effective termination date, several physicians employed by Banner received incentive payments under Banner's Physician Incentive Plan (PIP) for their performance in 2014. (Id., ¶ 43.) Zaki did not receive an incentive payment for his performance in 2014, despite his performance metric being equal to or better than many of the physicians who received incentive payments. (Id., ¶ 44.)
On October 26, 2015, Zaki filed a charge with the Equal Employment Opportunity Commission (EEOC) alleging various forms of discrimination during his tenure at Banner. (Id., ¶ 45.) He received notice of right to sue from the EEOC on May 20, 2016. (Id., ¶ 47.) On April 25, 2016, Zaki filed a complaint against Banner in Maricopa County Superior Court. (Id., ¶ 51.) Zaki voluntarily dismissed his state court complaint on June 14, 2016 and concurrently filed an identical lawsuit in this Court. (Id., ¶ 52.) On August 22, 2016, Banner filed a partial motion to dismiss, arguing that several of Zaki's claims are time-barred. (Doc. 12.)
The task when ruling on a motion to dismiss "is to evaluate whether the claims alleged [plausibly] can be asserted as a matter of law." See Adams v. Johnson, 355 F.3d 1179, 1183 (9th Cir. 2004); see also Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). When analyzing the sufficiency of a complaint, the well-pled factual allegations are taken as true and construed in the light most favorable to the plaintiff. Cousins v. Lockyer, 568 F.3d 1063, 1067 (9th Cir. 2009). Legal conclusions couched as factual allegations, however, are not entitled to the assumption of truth, Iqbal, 556 U.S. at 680, and therefore are insufficient to defeat a motion to dismiss for failure to state a claim, In re Cutera Sec. Litig., 610 F.3d 1103, 1108 (9th Cir. 2008).
Banner moves to dismiss as untimely Zaki's breach of contract and statutory unpaid wage claims, as well as those of his discrimination claims that are based on alleged adverse actions that occurred on or before June 3, 2014, the last day of Zaki's active employment.
In Count VI of the Amended Complaint, Zaki alleges that Banner breached the PEA by failing to: (1) compensate him for excess on-call coverage, (2) hire an additional physician specializing in pediatric nephrology, thereby causing him to be unable to use his accrued PTO, (3) compensate for his unused PTO, (4) pay his base salary during the ninety-day termination notice period, and (5) pay him a PIP incentive for 2014. (Doc. 18, ¶¶ 103-107.) Under Arizona law, breach of employment contract actions must be brought within one year of accrual. A.R.S. § 12-541(3). A breach of contract action generally accrues at the time the contract is breached. See Angus Med. Co. v. Digital Equip. Corp., 840 P.2d 1024, 1027 (Ariz. Ct. App. 1992). Under the discovery rule, however, "a plaintiff's cause of action does not accrue until the plaintiff knows or, in the exercise of reasonable diligence, should know the facts underlying the cause." Gust, Rosenfeld & Henderson v. Prudential Ins. Co., 898 P.2d 964, 966 (Ariz. 1995). Thus, Zaki's contract claims are timely only if they were brought within a year after he knew or reasonably should have known the underlying facts.
Zaki's contract claims are time-barred because they accrued over a year before June 14, 2016, the date he filed this action. Several of the alleged breaches occurred sometime in 2014. First, the PEA required Banner to compensate Zaki for excess on-call coverage "within thirty (30) days of the end of each calendar quarter." (Doc. 18-1 at 18.) Zaki's last day of active employment was June 3, 2014. Thus, Zaki's claim that Banner failed to compensate him for excess on-call coverage accrued on July 30, 2014, the last date upon which Banner would have owed him compensation from excess on-call coverage. Similarly, Zaki's claim that Banner failed to provide relief from excess on-call coverage by hiring an additional specialist accrued, at the latest, on June 3, 2014. Given that Banner allegedly failed to provide relief from excess on-call coverage throughout Zaki's employment, Zaki certainly would have known that a cause of action existed by his last day of work. Finally, Zaki's claim that Banner failed to compensate him for unused PTO accrued, at the latest, by the end of 2014, the last year in which Zaki could have accrued PTO. The PEA provides that Zaki was entitled to twenty-eight days of PTO per year, and that unused PTO does not carry over from year to year. (Doc. 18-1 at 19.) Notably, the PEA does not state that Zaki would be compensated for unused PTO at the end of each year. If, however, it is Banner's practice to compensate employees for accrued but unused PTO, then Zaki's claim would have accrued by December 31, 2014, the last year in which Zaki actively worked for Banner. All of these claims were filed well beyond the one-year limitations period.
The remaining alleged breaches occurred sometime in April 2015. The PEA states, in relevant part, that "[u]pon notice of termination by [Banner] . . . [Banner] also may direct the Physician to cease Physician's duties under this Agreement if [Banner] continues to compensate Physician during the ninety (90) days . . . following such notice of termination." (Doc. 18-1 at 6.) The PEA also states that a physician's base salary is paid in bi-weekly installments. (Id. at 18.) Thus, Zaki's claim that Banner failed to pay him his base salary during the ninety-day termination notice period accrued no later than April 12, 2015, two weeks after his effective termination on March 29, 2015. Likewise, Zaki claims that Banner failed to pay his 2014 PIP incentive, but that breach occurred sometime in April 2015, when Banner paid PIP incentives to other physicians but not to Zaki. This lawsuit was filed more than a year later.
Zaki contends that his contract claims were timely on April 25, 2016, the date he filed his state court complaint. He argues that his unpaid on-call coverage and PTO claims accrued on April 5, 2016 because A.R.S. § 23-353(A), which requires an employer to pay wages due to a discharged employee within the earlier of seven days after termination or by the next regular pay period, is implicitly incorporated into the PEA under Arizona law.
First, Zaki's unpaid on-call coverage and PTO claims did not accrue on April 5, 2016. Zaki conflates his unpaid wages claim under Arizona's wage payment laws with his breach of contract claims. Although "[i]t has long been the rule in Arizona that a valid statute is automatically part of any contract affected by it, even if the statute is not specifically mentioned in the contract," Higginbottom v. State, 51 P.3d 972, 975 (Ariz. Ct. App. 2002), it does not follow that A.R.S. § 23-353(A) alters the accrual date of Zaki's contract claims. Moreover, Zaki's argument ignores A.R.S. § 23-351(C), which requires that "[e]ach employer shall, on each of the regular paydays, pay to the employees wages due the employees up to such date." As previously noted, the PEA required Banner to compensate Zaki for excess on-call coverage within thirty days of the end of each calendar quarter, meaning such payments were regular due, at the latest, on July 30, 2014. Similarly, assuming Banner compensates employees for accrued but unused PTO, payment for unused PTO would have been regularly due, at the latest, by December 31, 2014, the last year in which Zaki actively worked for Banner. Thus, even if Arizona's wage payments laws are implicitly incorporated into the PEA, Zaki's claims related to unpaid on-call coverage and PTO accrued well over a year before Zaki filed his state court complaint.
Second, assuming that Zaki's contract claims accrued in early April 2015, Zaki's state court complaint was filed more than one year later and beyond the expiration of the parties' tolling agreement. In relevant part, the tolling agreement states:
(Doc. 21 at 12 (emphasis added); Doc. 18, ¶ 50.)
Zaki argues that the agreement paused the running of the statute of limitations such that the time remaining on the limitations period when the agreement was entered into carries over when the agreement ends. (Doc. 20 at 3.) His interpretation, however, does not comport with the plain language of the agreement, which clearly states that claims which would have been timely if filed on or before March 28, 2016 would be considered timely if filed by April 22, 2016. Read as a whole, the tolling agreement gave Zaki only until April 22, 2016 to timely file his claims. Zaki did not file his state court complaint until April 25, 2016, three days late.
Finally, assuming that all of Zaki's contract claims were timely filed in state court, Arizona's Savings Statute does not toll the statute of limitations in this case. The statute provides for automatic and discretionary relief depending on the manner in which the prior action was terminated. The statute provides, in relevant part:
A.R.S. § 12-504(A) (emphasis added). Zaki does not qualify for automatic relief under this section because his prior state court action was terminated by voluntary dismissal.
Nor does Zaki qualify for discretionary relief. A voluntarily dismissed action is eligible for such relief only where the dismissal was through a court order:
Id. (emphasis added). Because his prior state court action was terminated by voluntary dismissal without a court order, (Doc. 20-3), Zaki does not qualify for discretionary relief under this section. Id.; Ariz. R. Civ. P. 41(a)(1)(A).
Indeed, a close reading of the discretionary relief section of A.R.S. § 12-504(A) "contemplates that the party seeking to rely on the `savings statute' should request a period of time up to six months within which to file a new action at the time of dismissal [of] the prior action by the Court[.]" Bertrand v. Indus. Dev. Auth. of City of Chandler, No. Civ. 89-1087-PHX-RCB, 1990 WL 264525, at *3 (D. Ariz. Sept. 13, 1990) (emphasis added); see also In re Heparin Prod. Liab. Litig., 629 F. App'x 645, 647 (6th Cir. 2015) (affirming summary judgment on grounds that complaint was untimely and not saved by § 12-504(A) because plaintiffs did not seek leave of court before refiling). To obtain such relief at the time of dismissal necessarily requires an order from the court in the earlier action. Accordingly, the Savings Statute does not apply and Zaki's filing of his state court action does not toll the limitations period in this case.
In Count V of the Amended Complaint, Zaki alleges that he is entitled to recover treble the amount of unpaid wages due to him at the time of his effective termination pursuant to Arizona's wage payment laws. Statutory claims for unpaid wages must be brought within one year of accrual.
Zaki alleges in Counts II and III of the Amended Complaint that Banner discriminated against him on the basis of his national origin, gender, and age in violation of Title VII of the Civil rights Act of 1964 and the Age Discrimination in Employment Act (ADEA). Both Title VII and the ADEA require that aggrieved persons file a charge of discrimination with the EEOC within 300 days of the unlawful employment practice. Arizona ex rel. Horne v. Geo Group, Inc., 816 F.3d 1189, 1202 (9th Cir. 2016); Pejic v. Hughes Helicopters, Inc., 840 F.2d 667, 674-75 (9th Cir. 1988). "This circuit treats this notice requirement as a statute of limitations." Pejic, 840 F.2d at 675. Claims not filed with the EEOC within 300 days are time-barred. See Mulvihill v. Pac. Mar. Ass'n, 587 F. App'x 422, 423 (9th Cir. 2014).
Zaki alleges multiple instances of discrimination during his time with Banner, including: (1) being required to provide all of the on-call coverage for his specialty area, (2) not being fully compensated for the on-call coverage he provided, (3) being denied a Pediatric Chair position, (4) removal from various leadership roles, (5) exclusion from an advanced leadership program, and (6) Banner's refusal to agree to contractual terms that were as favorable to Zaki as the terms it agreed to with other physicians.
Zaki argues that the allegedly discriminatory and less favorable contract provisions remained in force until the date of his effective termination on March 29, 2015, and thus his charges were timely filed with the EEOC 211 days later. (Doc. 20 at 6.) He cites no authority, however, that an employment discrimination claim based on comparatively less favorable contractual provisions re-accrues every day the allegedly discriminatory contract is in place, nor is the Court aware of any. Rather, "[a]n employment discrimination claim accrues when the plaintiff knows of the allegedly unlawful employment decision." Opsahl v. Int'l Longshore & Warehouse Union, Local 21, 432 F. App'x 708, 709 (9th Cir. 2011). Even if Zaki was unaware that his contract was comparatively less favorable at time he entered into it, surely he should have been aware of any comparatively less favorable provisions by his last day of active employment, after roughly 3 years of working under those conditions. See Delaware State College v. Rick, 449 U.S. 250, 257 (1980) ("Mere continuity of employment, without more, is insufficient to prolong the life of a cause of action for employment discrimination.").
For the foregoing reasons, Zaki's claims for breach of contract and statutory unpaid wages are time-barred because they were filed over a year after accrual. Additionally, Zaki's Title VII and ADEA claims based on adverse actions during Zaki's active employment at Banner are time-barred because he did not file charges with the EEOC within 300 days of the allegedly unlawful employment practices. Accordingly,
1. Counts II and III of the Amended Complaint are dismissed to the extent they are based upon adverse actions that occurred on or before June 3, 2014, the last day of Zaki's active employment.
2. Counts V and VI of the Amended Complaint are dismissed.