JOHN A. MENDEZ, District Judge.
This matter is before the Court on Plaintiff Mitch Davenport's ("Plaintiff") Motion to Remand (Doc. #10) and Defendant Wendy's International, Inc.'s ("Defendant") Motion to Dismiss ("Doc. #8) Plaintiff's First Amended Complaint ("FAC") (Doc. #1, Ex. B). Defendant opposed Plaintiff's motion (Doc. #13) and Plaintiff opposed Defendant's motion (Doc. #12). Plaintiff replied (Doc. #14), as did Defendant (Doc. #15). For the following reasons, Plaintiff's Motion to Remand is DENIED and Defendant's Motion to Dismiss is DENIED.
Plaintiff Davenport is former employee of Defendant Wendy's International, Inc. FAC ¶ 13. Defendant is engaged in the business of operating fast food restaurants throughout North America. FAC ¶ 8. Plaintiff worked for Defendant as a "salaried General Manager" until July 26, 2013, when he resigned from the company. FAC ¶ 13.
Plaintiff alleges that he and all other salaried General Managers employed by Defendant in California were "routinely required to work in excess of eight (8) hours a day and/or forty (40) hours per week without receiving overtime compensation." FAC ¶ 14. Plaintiff alleges that all General Managers were "expected and required to work five (5) ten (10) hour shifts per week and generally averaged fifty (50) or more hours per week." FAC ¶ 17. Plaintiff further alleges that salaried General Managers working for Defendant "consistently spend more than fifty percent (50%) of their working hours performing non-managerial tasks." FAC ¶ 25. Accordingly, Plaintiff alleges that he and all other salaried General Managers were "improperly misclassified . . . as exempt from California's overtime laws." FAC ¶ 49. Plaintiff alleges that Defendant "knew or should have known that the salaried General Managers did not qualify as exempt employees and purposely elected not to pay them for their overtime labor." FAC¶ 52.
According to Plaintiff, "[d]ue to chronic understaffing, tight restrictions on labor by [Defendant], and meeting [Defendant's] speed of service standards, Plaintiff rarely had time to take an uninterrupted, thirty (30) minute meal period, when working shifts in excess of five (5) hours in duration." FAC ¶ 42. Plaintiff further alleges that Defendant "failed to keep the records of hours worked by its salaried General Managers as required by California's Wage Orders." FAC ¶ 51.
Plaintiff purports to bring this action on behalf of two classes: (1) "All persons who, at any time during the four years preceding the filing of this Complaint up until the date of entry of judgment after trial, are or were employed at any of [Defendant's] corporately owned fast food restaurants in California as salaried General Managers;" and (2) "All persons who, at any time during the four years preceding the filing of this Complaint up until the date of entry of judgment after trial, are or were employed at any of [Defendant's] corporately owned fast food restaurants in California as salaried General Managers who did not receive an uninterrupted, off-duty thirty (30) minute meal period, for each day in which they worked in excess of five (5) hours." FAC ¶ 1.
On August 5, 2013, Plaintiff filed the original Complaint (Doc. #1, Ex. A) in Sacramento County Superior Court. On September 12, 2013, Plaintiff filed the First Amended Complaint ("FAC") (Doc. #1, Ex. B). On October 17, 2013, Defendant filed its first Notice of Removal. District Judge Burrell found that this removal was improper because the amount in controversy necessary for diversity jurisdiction under 28 U.S.C. § 1332(a) was lacking. On April 15, 2014, Defendant filed its second Notice of Removal (Doc. #1), removing the action to this Court pursuant to 28 U.S.C. § 1332(d), the Class Action Fairness Act of 2005 ("CAFA").
The FAC includes the following causes of action: (1) "Failure to Pay Overtime Wages" in violation of California Labor Code ("CLC") § 203, § 510, § 1194, and § 1198; (2) "Failure to Provide Meal Breaks" in violation of CLC § 226.7; (3) "Violation of California Labor § 226;" (4) "Violation of Business and Professions Code §§ 17200 and 17203;" and (5) "Violation of Labor Code § 2699(F) for Violations of Labor Code §§ 201-203, 226(A) 226.7, 510, 1194 and 1198 and Penalties pursuant to Labor Code § 2699(A) for violations of Labor Code § 226.3."
CAFA gives the district courts original jurisdiction in any civil action where: (1) "the matter in controversy exceeds the sum or value of $5,000,000, exclusive of interest and costs," (2) the number of putative class members is not less than 100 persons, and (3) "any member of a class of plaintiffs is a citizen of a State different from any defendant." 28 U.S.C. § 1332(d). Under CAFA, a removing defendant must prove that these elements are satisfied by the preponderance of the evidence.
In his Motion to Remand, Plaintiff argues that Defendant has "concede[d] that there were not 100 or more class members at the time the complaint and/or FAC were filed." Motion to Remand ("MTR") at 7. Plaintiff further argues that the removal was "premised on the incorrect assumption that CAFA diversity jurisdiction can be satisfied if, although lacking at the time of the filing of the Complaint or Amended Complaint, by virtue of the passage of time the number of class members grows to over 100." MTR at 7-8. Plaintiff maintains that, on a motion to remand, the Court's inquiry is limited to "whether the 100 person requirement necessary for CAFA jurisdiction existed at the time of the filing of Plaintiff's Complaint." MTR at 9.
Defendant responds with two arguments. First, it disputes Plaintiff's construction of the law, arguing that federal jurisdiction is determined at the time of removal, not the time of filing. Opp. at 5. In the alternative, Defendant maintains that "the putative class size has always exceeded 100 — even as of the date of initiation of the action." Opp. at 2.
Defendant has presented uncontested evidence that the CAFA class-size requirement was satisfied at the time the original complaint was filed. Martha Shannon, a "Legal Manager" for Defendant Wendy's, submitted a declaration stating that "the number of putative class members at the time this action was commenced . . . exceeded 100 persons." Shannon Declaration ¶ 5 (emphasis added). In making this conclusion, Ms. Shannon reviewed Defendant's HR databases, Oracle and People Soft. Shannon Declaration ¶ 5. Plaintiff presents no evidence to rebut this testimony, other than Defendant's own statements in the Notice of Removal. Reply at 1. The Shannon Declaration is sufficient to satisfy Defendant's burden.
Plaintiff's contention that Defendant "conceded" this point in its Notice of Removal is without merit. MTR at 7. First, Plaintiff cites no authority for its position that Defendant is bound by representations made in its Notice of Removal. Moreover, neither of Defendant's statements is a clear and definitive admission that the class size was insufficient at the time of filing. Defendant's statement that the "class size expands over time . . . as Defendant hires persons in this role" and that "[o]ne hundred or more persons now fit with Plaintiff's putative class description" is consistent with Defendant's current position. Notice of Removal ¶ 13. More problematic is Defendant's statement that "[s]ubsequent to the prior removal and the prior remand, this action became removable . . . because the class size now meets or exceeds 100 persons[.]" Notice of Removal ¶ 8. The clear implication of this statement is that, at the time of the prior removal and remand, the class size did not exceed 100 members. Nevertheless, this statement stops short of directly making that admission. Regardless, Plaintiff has not established that such an admission, even if made, would be binding on Defendant for purposes of a motion to remand. Moreover, prior to Plaintiff's motion to remand (filed on May 1, 2014), Defendant clearly communicated its current position to Plaintiff. In an April 30, 2014 letter to Plaintiff's counsel, Defendant's counsel unambiguously stated that "the number of class members at the time you commenced the action exceeded 100 persons[.]" Kemple Declaration, Ex. D (emphasis added). Accordingly, the Court finds that Defendant has not "conceded" that the number of class members at the time the action was commenced was less than 100 persons.
The Court does not consider Plaintiff's argument — made for the first time in its reply — that Defendant's removal was untimely. It is well-established that a party may not raise a new argument in its reply brief.
Defendant argues that each of Plaintiff's five causes of action must be dismissed because Plaintiff "offers no allegations of wrongful conduct concerning himself." Motion to Dismiss ("MTD") at 5 (emphasis removed). Defendant maintains that the "only allegations specific to Plaintiff Davenport are found in paragraphs 39 through 42 of the FAC[.]" MTD at 5. Plaintiff responds by listing the numerous allegations made with regard to "General Managers" employed by Defendant, and noting that that group included Plaintiff.
Plaintiff specifically alleges that he "was employed by Defendants as salaried General Manager in California[.]" FAC ¶ 39. Elsewhere in the FAC, Plaintiff alleges that "all of [Defendant's] California based salaried General Managers are and were classified as `exempt' from California's overtime laws[.]" FAC ¶ 17 (emphasis added). Plaintiff continues to refer to "General Managers" under the subheading "Factual Allegations" in the FAC, rarely referring to Plaintiff individually. FAC ¶¶ 16-31. However, given Plaintiff's characterization of himself as a salaried General Manager in California, and given the initial allegation that "all" General Managers were classified as exempt, each factual allegation made with regard to "General Managers" must be read to include Plaintiff. FAC ¶¶ 17, 39. Accordingly, Plaintiff has made sufficient factual allegations concerning himself, individually.
Defendant argues that Plaintiff's first cause of action for failure to pay overtime wages must be dismissed because "not a single instance of overtime is factually alleged as to anyone." MTD at 5. Defendant also argues that Plaintiff has failed to state a claim because he did not allege that Defendant "suffered or permitted" unpaid overtime. MTD at 6. Plaintiff responds that "the law does not require specific instances. In other words the law does not require a Plaintiff to allege that on July 26, 2012 he worked 2.5 hours of overtime." Opp. at 7. Plaintiff further argues that he is not required to allege that Defendant suffered and permitted the violations, because "California law, unlike the FLSA, does not contain any language regarding `suffer and permit.'" Opp. at 7.
Plaintiff does not merely allege that Defendant improperly failed to pay General Managers for overtime work. Rather, Plaintiff makes the additional allegation that "all of [Defendant's] California based salaried General Managers are/were expected and required to work five (5) ten (10) hour shifts per week and generally averaged fifty (50) or more hours per week." FAC ¶ 17. This factual allegation distinguishes the present case from those cases relied upon by Defendant, in which plaintiffs made conclusory allegations that merely mimicked the statutory language.
Moreover, as a number of courts have previously held, the Court finds that "it cannot be the case that a plaintiff must plead specific instances of unpaid overtime before being allowed to proceed to discovery to access the employer's records."
Furthermore, Plaintiff is not required to allege that Defendant "suffered and permitted" the unpaid overtime violations. As noted in
Defendant argues that Plaintiff's second cause of action for failure to provide meal breaks must be dismissed because "Plaintiff's pleading is a classic instance of a formulaic recitation of the elements of a claim that does not state a claim." MTD at 8 (internal citations and emphasis omitted). Defendant also contends that Plaintiff is required to allege that Defendant expressly ordered him to skip meal breaks. MTD at 7. Plaintiff responds that his allegations regarding "chronic understaffing, tight restrictions placed on labor [and,] speed of service standards" lay sufficient factual background for his "failure to provide meal breaks" claim. Opp. at 11. Plaintiff also argues that, in light of a recent ruling by the California Supreme Court, he is only required to allege that Defendant had a policy of creating incentives to forgo legally protected meal breaks. Opp. at 11, n.6.
Plaintiff alleges that he "rarely had time to take an uninterrupted, thirty (30) minute meal period, when working shifts in excess of five (5) hours," primarily due to "chronic understaffing, tight restrictions placed on labor by Defendants, and meeting Defendants' speed of service standards." FAC ¶ 42. He further alleges that "extreme pressure" was placed on General Managers to meet the "corporately mandated speed of service standards" and that failure to meet these standards "frequently resulted in salaried General Managers receiving poor performance reviews, being unable to make bonuses, being demoted, reprimanded, and even terminated. FAC ¶ 24. As a result of this pressure and "chronic understaffing," Plaintiff alleges that he "rarely had time" to take mandatory meal breaks." FAC ¶ 42. These allegations provide sufficient factual details and distinguish the present case from those cases relied upon by Defendant.
Defendant's citation to
Defendant seeks dismissal of Plaintiff's third cause of action for failure to provide accurate wage statements on the grounds that Plaintiff has not sufficiently pled an injury resulting from Defendant's failure to provide accurate wage statements. Defendant contends that this claim includes only the "bare conclusion that [Plaintiff] was `injured' in some unstated way." MTD at 10. Plaintiff responds that, in light of a recent statutory amendment to the CLC, the threshold for establishing an injury under section 226(e) is very low. Opp. at 14.
To state a claim under section 226(e) of the CLC, an employee must suffer injury as a result of the intentional failure by his employer to provide an accurate wage statement. However, "the injury requirement is minimal," as indicated by the 2013 statutory amendment to section 226(e), which clarifies that "[a]n employee is deemed to suffer injury . . . if the employee cannot promptly and easily determine from the wage statement alone . . . the amount of gross wages or net wages" due to the employee. Cal. Lab. Code § 226(e)(2);
As further discussed below, Plaintiff alleges that the Defendant "purposely" misclassified salaried General Manager employees as exempt, and therefore Plaintiff has sufficiently alleged that the failure to provide accurate wage statements was "knowing and intentional" under section 226(e). FAC ¶ 52;
Plaintiff's claim for "waiting time" penalties under CLC section 203 (FAC ¶ 52) must be dismissed, according to Defendant, as "Plaintiff offers no allegations concerning a waiting time penalty claim" and has failed to allege that the failure to pay wages was "willful." MTD at 10. Plaintiff responds that his allegation of "purposeful misclassification" is sufficient to support an award under section 203. Opp. at 16.
CLC section 203 provides that, "[i]f an employer willfully fails to pay . . . any wages of an employee who is discharged or who quits, the wages of the employee shall continue as a penalty from the due date thereof at the same rate until paid" for a maximum of 30 days. Cal. Lab. Code § 203. An allegation of "deliberately implement[ing] a . . . policy of not paying overtime" is sufficient to satisfy the "willful" requirement of section 203.
Plaintiff has alleged that Defendant "knew or should have known that the salaried General Managers did not qualify as exempt employees and purposely elected not to pay them for their overtime labor." FAC ¶ 52. Moreover, Plaintiff has alleged that his "employment with Wendy's as a salaried General Manager ended when he resigned from the company effective July 26, 2013." FAC ¶ 13. Accordingly, Plaintiff has sufficiently alleged both elements of a claim for waiting time penalties under CLC section 203.
Plaintiff's fourth and fifth causes of action are brought under the Unfair Competition Law ("UCL") and Private Attorney General Act ("PAGA"). These claims are derivative of his first three causes of action under the CLC. As Plaintiff has sufficiently stated a claim for at least one of these causes of action, he has also stated a claim under the UCL and PAGA.
Defendant argues that Plaintiff's PAGA claim is pled as a "representative" action, rather than a class action, and therefore runs afoul of Article III of the U.S. Constitution. MTD at 11. Plaintiff responds that his PAGA claim is indeed pled as a class action. Opp. at 19. In the alternative, Plaintiff argues that a "representative" PAGA action is not prohibited by Article III. Opp. at 20.
Paragraphs 1 and 32 of the FAC leave no doubt that the entire action is brought as a class action. FAC ¶¶ 1, 32. Each of these allegations refers to the action as a "class action" and makes no distinction between the first four causes of action and Plaintiff's fifth cause of action — the PAGA claim. FAC ¶¶ 1, 32. Plaintiff's reference to "aggrieved employees" rather than "class members" in the fifth cause of action does not change this. Under PAGA, an "aggrieved employee" is "any person who was employed by the alleged violator and against whom one or more of the alleged violations was committed." Cal. Lab. Code §2699. Under this definition, and the class definition included in the FAC, "aggrieved employees" and "class members" are one and the same. FAC ¶ 1. Every aggrieved employee is a class member and vice versa. This is consistent with Plaintiff's characterization of "aggrieved employees" as "he and other similarly situated members of the classes, [who] suffered the Labor code violations alleged herein[.]" FAC ¶ 28.
Given that the Court finds that Plaintiff's PAGA claim is being pursued as a class action, it need not reach Defendant's Article III argument.
Defendant urges the Court to strike Plaintiff's class allegations. MTD at 15. Defendant maintains that the Court may strike Plaintiff's class allegations, despite the fact that Plaintiff has not yet filed a motion to certify the proposed class, pursuant to Rule 23. MTD at 16. Plaintiff responds that Defendant's motion to strike is premature, as "Defendant has not yet filed an answer to the complaint, discovery has not yet commenced, and no motion for class certification has been filed." Opp. at 21.
As noted by Plaintiff, courts "routinely deny motions to strike class allegations as premature" when no answer has been filed, discovery has not commenced, and no motion for class certification has been filed. Opp. at 21;
Defendant cites a number of cases for the proposition that, "[w]here a plaintiff fails to properly plead the requirements of Rule 23, the class allegations should be stricken, and class discovery may not be commenced." MTD at 16. These cases are not persuasive.
Declining to address the class allegations is particularly appropriate here, given the strict limitations on the length of briefs filed in this Court. The issue of Rule 23 class certification is "better addressed through a fully-briefed class certification hearing," rather than tacked on to the end of an extensive motion to dismiss (as is done here).
For the reasons set forth above, the Court DENIES Plaintiff's Motion to Remand and DENIES Defendant's Motion to Dismiss: