Jared Andresen et al v. International Paper Company et al
Filing
20
MINUTES (IN CHAMBERS) by Judge Christina A. Snyder: The Court GRANTS in part and DENIES in part Defendant's Motion to Dismiss 15 without prejudice. Plaintiffs may file an amended complaint addressing the deficiencies identified herein within 20 days of the date of this order. Failure to do so will result in the dismissal of their claim for failure to pay vested vacation wages, and all of plaintiff Bekiarian's claims, with prejudice. Court Reporter: Not Present. (gk)
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.
CV13-2079-CAS(AJWx)
Title
JARED ANDRESEN, ET AL. V. INTERNATIONAL PAPER
COMPANY, ET AL.
Present: The Honorable
Date
May 23, 2013
CHRISTINA A. SNYDER
Catherine Jeang
Deputy Clerk
Not present
Court Reporter / Recorder
N/A
Tape No.
Attorneys Present for Plaintiffs:
Attorneys Present for Defendants
Not present
Not present
Proceedings:
I.
(In Chambers:) DEFENDANT’S MOTION TO DISMISS (filed
May 6, 2013) [Dkt. No. 15]
INTRODUCTION
The Court finds this motion appropriate for decision without oral argument. Fed.
R. Civ. P. 78; Local Rule 7-15. Accordingly, the hearing date of June 3, 2013, is vacated,
and the matter is hereby taken under submission.
On February 13, 2013, plaintiffs Jared Andresen, Yeghia Bekiarian, and John
Duffy filed suit against defendants International Paper Company, d/b/a Container the
Americas (“IP”) and Does 1–50 in the Los Angeles County Superior Court. Defendant
IP removed the action to this Court on March 22, 2013. Dkt. No. 1. Plaintiffs are former
employees of defendant who allege that defendant has deprived them of severance pay,
vested vacation wages, and commissions they accrued during their employment.
Plaintiffs filed the operative First Amended Complaint (“FAC”) on April 22, 2013,
asserting claims for: (1) failure to pay vested vacation wages upon termination; (2) failure
to pay wages, including commissions earned and/or owed; (3) violation of California
waiting period penalties, Labor Code § 203; (4) violation of California unfair competition
law, Bus. & Prof. Code § 17200 et seq.; (5) violation of California record-keeping
provisions, Labor Code § 226; (6) breach of contract; and (7) breach of contract based on
promissory estoppel.
On May 6, 2013, defendant filed a motion to dismiss for failure to state a claim.
Dkt. No. 15. Plaintiffs opposed the motion on May 16, 2013, and defendant filed a reply
on May 20, 2013. After considering the parties’ arguments, the Court finds and
concludes as follows.
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.
CV13-2079-CAS(AJWx)
Title
JARED ANDRESEN, ET AL. V. INTERNATIONAL PAPER
COMPANY, ET AL.
II.
Date
May 23, 2013
BACKGROUND
Plaintiffs allege the following facts in support of their claims. All three plaintiffs
began their employment as full-time sales representatives with a company called Crocket
Containers. Plaintiff Andresen began his employment in or about 1977; plaintiff Duffy in
or about 1986; and plaintiff Bekiarian in or about 1972. FAC ¶¶ 7, 9–10. In 1990, a
company by the name of Temple-Inland acquired Crocket Containers. Id. ¶ 7. In 2012,
IP acquired Temple-Inland, at which time plaintiffs became employees of defendant. Id.
Plaintiffs Andresen and Duffy allege that they were wrongfully deprived of
commissions on sales they achieved in 2012 before their departure from IP. Plaintiff
Andresen was supposed to receive commissions related to sales with customer Grimway
Enterprises; Duffy was supposed to receive a commission on his sales to a number of
specific entities. Id. ¶¶ 11–14. Although both plaintiffs made sales to their respective
target companies while at IP, neither received their commissions despite numerous
complaints to management and human resources. Id. ¶ 17. Andresen alleges he is owed
approximately $22,000 in commissions; Duffy alleges that he is owed $8,000. Id. ¶ 16.
In addition, all three plaintiffs allegedly were afforded paid vacation days pursuant
to defendant IP and its acquired companies’ vacation policies. Id. ¶ 18. As a result of
these policies, plaintiffs acquired a substantial amount of vested vacation time for which
they seek payment. Based upon the vacation accrual policy set forth in IP’s employee
handbook, plaintiff Andresen accrued 2,671 hours of vested and unused vacation time;
Bekiarian accrued 5,680 hours of vested and unused vacation time; and Duffy accrued
2,836 hours of vested and unused vacation time. Id. ¶¶ 19–22. No plaintiff has received
compensation for their accrued vacation time, which they claim amounts to $300,000 for
Andresen and Duffy and $780,000 for Bekiarian. Id. ¶¶ 23–25.
III.
LEGAL STANDARD
A Rule 12(b)(6) motion tests the legal sufficiency of the claims asserted in a
complaint. “While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not
need detailed factual allegations, a plaintiff’s obligation to provide the ‘grounds’ of his
‘entitlement to relief’ requires more than labels and conclusions, and a formulaic
recitation of the elements of a cause of action will not do.” Bell Atlantic Corp. v.
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.
CV13-2079-CAS(AJWx)
Date
May 23, 2013
Title
JARED ANDRESEN, ET AL. V. INTERNATIONAL PAPER
COMPANY, ET AL.
Twombly, 550 U.S. 544, 555 (2007). “[F]actual allegations must be enough to raise a
right to relief above the speculative level.” Id.
In considering a motion pursuant to Rule 12(b)(6), a court must accept as true all
material allegations in the complaint, as well as all reasonable inferences to be drawn
from them. Pareto v. F.D.I.C., 139 F.3d 696, 699 (9th Cir. 1998). The complaint must be
read in the light most favorable to the nonmoving party. Sprewell v. Golden State
Warriors, 266 F.3d 979, 988 (9th Cir. 2001); Parks Sch. of Bus., Inc. v. Symington, 51
F.3d 1480, 1484 (9th Cir. 1995). However, “[i]n keeping with these principles a court
considering a motion to dismiss can choose to begin by identifying pleadings that,
because they are no more than conclusions, are not entitled to the assumption of truth.
While legal conclusions can provide the framework of a complaint, they must be
supported by factual allegations.” Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1950
(2009); Moss v. United States Secret Service, 572 F.3d 962, 969 (9th Cir. 2009) (“[F]or a
complaint to survive a motion to dismiss, the non-conclusory ‘factual content,’ and
reasonable inferences from that content, must be plausibly suggestive of a claim entitling
the plaintiff to relief.”) (citing Twombly and Iqbal); Sprewell, 266 F.3d at 988; W.
Mining Council v. Watt, 643 F.2d 618, 624 (9th Cir. 1981). Ultimately, “[d]etermining
whether a complaint states a plausible claim for relief will . . . be a context-specific task
that requires the reviewing court to draw on its judicial experience and common sense.”
Iqbal, 129 S.Ct. at 1950.
Furthermore, unless a court converts a Rule 12(b)(6) motion into a motion for
summary judgment, a court cannot consider material outside of the complaint (e.g., facts
presented in briefs, affidavits, or discovery materials). In re American Cont’l
Corp./Lincoln Sav. & Loan Sec. Litig., 102 F.3d 1524, 1537 (9th Cir. 1996), rev’d on
other grounds sub nom Lexecon, Inc. v. Milberg Weiss Bershad Hynes & Lerach, 523
U.S. 26 (1998). A court may, however, consider exhibits submitted with or alleged in the
complaint and matters that may be judicially noticed pursuant to Federal Rule of
Evidence 201. In re Silicon Graphics Inc. Sec. Litig., 183 F.3d 970, 986 (9th Cir. 1999);
Lee v. City of Los Angeles, 250 F.3d 668, 689 (9th Cir. 2001).
For all of these reasons, it is only under extraordinary circumstances that dismissal
is proper under Rule 12(b)(6). United States v. City of Redwood City, 640 F.2d 963, 966
(9th Cir. 1981).
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.
CV13-2079-CAS(AJWx)
Date
May 23, 2013
Title
JARED ANDRESEN, ET AL. V. INTERNATIONAL PAPER
COMPANY, ET AL.
As a general rule, leave to amend a complaint which has been dismissed should be
freely granted. Fed. R. Civ. P. 15(a). However, leave to amend may be denied when “the
court determines that the allegation of other facts consistent with the challenged pleading
could not possibly cure the deficiency.” Schreiber Distrib. Co. v. Serv-Well Furniture
Co., 806 F.2d 1393, 1401 (9th Cir. 1986); see Lopez v. Smith, 203 F.3d 1122, 1127 (9th
Cir. 2000).
IV.
ANALYSIS
A.
Plaintiffs’ Claims for Payment of Vested Vacation Wages
California Labor Code § 227.3 provides in relevant part that:
whenever a contract of employment or employer policy provides for paid
vacations, and an employee is terminated without having taken off his
vested vacation time, all vested vacation shall be paid to him as wages at
his final rate in accordance with such contract of employment or
employer policy respecting eligibility or time served; provided, however,
that an employment contract or employer policy shall not provide for
forfeiture of vested vacation time upon termination.
Id. This section “does not require than an employer provide its employees with any paid
vacation at all. . . .” Owen v. Macy’s, Inc., 175 Cal. App. 4th 462, 468 (2009). Instead,
once an employer chooses to provide their employees with vacation benefits, “certain
requirements must be met when the employment terminates.” Id. Under section 227.3,
the amount of vacation pay that an employee is entitled to be paid as wages is determined
by reference to the employer’s policy; vesting of this pay, however, is mandated by
statute. Suastez v. Plastic Dress–Up Co., 31 Cal. 3d 774, 783 (1982).
In addition, nothing in section 227.3 prevents an employer from adopting a “no
additional accrual policy,” which “prevent[s] additional vacation time from vesting after
a certain level has been reached.” Boothby v. Atlas Mech., Inc., 6 Cal. App. 4th 1595,
1602 (1992) (quotation omitted). Stated otherwise, once vacation time accrues, an
employer cannot deprive their employees of the accrued time. But an employer may
permissibly set a cap on the total amount of vacation time that its employees can accrue
without violating section 227.3. Id.
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.
CV13-2079-CAS(AJWx)
Date
May 23, 2013
Title
JARED ANDRESEN, ET AL. V. INTERNATIONAL PAPER
COMPANY, ET AL.
The Court finds that plaintiffs’ allegations are insufficient to state a claim, as
plaintiffs fail to allege the existence of any vacation policy under which they allegedly
accrued thousands of hours of vacation time for which IP would be liable. First,
plaintiffs’ allegation that they were “afforded paid vacation days pursuant to defendant IP
and its acquired companies’ vacation policies,” FAC ¶ 18, is insufficient to state a claim.
Plaintiffs fail to identify any policy that was in effect during their lengthy employment
tenure with Crockett Containers and Temple-Inland; merely alleging the existence of a
“policy” is not enough. Plaintiffs must plead the existence and terms of a policy entitling
them to the amount of accrued vacation time alleged in their complaint to proceed with
this claim. Only where an employment contract specifically provides for the accrual of
vacation time is an employee entitled to payment for vested vacation time at termination
under section 227.3. Owen, 175 Cal. App. 4th at 468. Second, plaintiffs must at a
minimum allege that any vacation time they accrued while at Crockett Containers or
Temple-Inland carried over during the respective acquisitions of these companies, such
that IP would have a duty to pay for this accrued time. Plaintiffs have not done so here.
Notwithstanding their failure to allege the existence of a policy at the acquired
companies, plaintiffs appear to allege that IP’s current vacation policy determined the
amount of vacation time that plaintiffs accrued during their tenure at the acquired
companies. See FAC ¶¶ 29–31 (alleging that each plaintiff accrued thousands of hours of
vacation time “pursuant to [IP’s] policy” set forth “in the applicable employee
handbook”). This allegation is similarly insufficient to state a claim. According to
plaintiffs’ own allegations, IP’s vacation policy provides for the accrual of vacation time
only “after one year of employment” at IP. Id. ¶ 19. Because plaintiffs admit that they
were employed by IP for less than one year, id. ¶¶ 7–10, this policy is facially
inapplicable to them. In addition, plaintiffs allege no facts supporting their bare
allegation that they earned vacation time “pursuant to” IP’s current vacation policy for
the many years they were not employed at IP. For all of these reasons, plaintiffs’ claims
cannot withstand defendant’s motion to dismiss, as plaintiffs fail to allege the terms of a
policy entitling them to the accrued vacation time that they claim in this suit.
B.
Andresen and Duffy’s Claims for Payment of Commissions
Defendant moves to dismiss Andresen and Duffy’s claims for payment of
commissions owed pursuant to an alleged contract, contending that plaintiffs have failed
to identify “the most basic facts” in support of their claims. Without alleging what
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.
CV13-2079-CAS(AJWx)
Date
May 23, 2013
Title
JARED ANDRESEN, ET AL. V. INTERNATIONAL PAPER
COMPANY, ET AL.
specific policy and provision of that policy they are relying on, or whether the policy was
oral or written, defendant argues that plaintiffs do not state claims for relief.
Although plaintiffs’ claims are thinly pled, the Court finds that plaintiffs have
adequately alleged a claim for failure to pay them commissions. Each plaintiff alleges
that they were supposed to receive a particular rate of commissions for the sale of
products to a particular customer or customers, although plaintiffs do not identify a
specific contract that they are relying on. FAC ¶¶ 39–42. Andresen and Duffy further
allege that they made sales to these customers during their tenure at IP, and that the
customers have paid defendant the full contract prices for the products they contracted to
purchase. Id. ¶¶ 40, 42. However, defendant has allegedly failed to pay them the
commissions that they are owed, in the amount of $22,000 and $8,000, respectively. Id.
¶ 43. Because both plaintiffs have alleged the existence of a compensation policy
entitling them to the relief that they seek, including specific facts demonstrating the
policy’s purported applicability to plaintiffs, the Court finds that Duffy and Andresen
have stated a claim for relief. Accordingly, the Court denies defendant’s motion to
dismiss these claims.
C.
Andresen’s Claims for Breach of Contract and Promissory Estoppel
Defendant also moves to dismiss plaintiff Andresen’s claims for breach of contract
and promissory estoppel. To state a claim for breach of contract, plaintiff must allege (1)
the existence of a contract, (2) plaintiff’s performance or excuse for non-performance of
the contract, (3) defendant’s breach, and (4) resulting damage. Reichert v. General Ins.
Co. of America, 68 Cal. 2d 822, 830 (1968).
Andresen alleges that on May 17, 2012, Derek Bates, defendant’s human resources
manager, orally offered him a severance package in the sum of $57,765.70 in exchange
for Andresen’s resignation of his employment with IP. FAC ¶ 8. Bates then handwrote
the sum of $57,765.70 on a copy of IP’s “Enhanced Severance Pay Policy” and handed it
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.
CV13-2079-CAS(AJWx)
Date
May 23, 2013
Title
JARED ANDRESEN, ET AL. V. INTERNATIONAL PAPER
COMPANY, ET AL.
to Andresen.1 Id. ¶¶ 8, 67. Plaintiff accepted the offer on or about June 15, 2012, and
resigned from his employment. Id. Andresen has yet to receive any severance pay.
Defendant notes that the Enhanced Severance Pay Policy specifically provides that
where an employee voluntarily resigns prior to being terminated, he is not entitled to
severance pay. Dillinger Decl. Ex. A, ¶ 2. Because Andresen alleges that he “accepted
Defendant IP’s offer of severance and resigned his employment,” defendant argues that
Andresen’s allegations of entitlement to severance are directly contradicted by the terms
of the severance policy, and accordingly, he fails to state a claim.
Defendant’s contentions are unpersuasive. Andresen’s allegation is that Derek
Bates, human resources manager for IP, orally offered plaintiff a severance package in an
amount certain “in exchange for Andresen’s resignation of his employment with IP.”
FAC ¶ 67. Andresen allegedly performed his obligations under this purported oral
agreement by tendering his resignation on or about June 15, 2012, but defendant failed to
pay him the promised severance. Id. ¶ 68. Whatever the terms of the Enhanced
Severance Pay Policy may be, the Court finds that plaintiff has adequately stated a claim
for breach of an oral agreement separate and apart from the written severance policy.2
1
Defendant offers a copy of the “Enhanced Severance Pay Policy” with its motion
to dismiss, asserting that the Court may consider this document given that plaintiff
expressly references it in his complaint. See Decl. of Amy Gillinger Ex. A. The Court
agrees. A court may review documents outside of a plaintiff’s complaint where “the
plaintiff’s claim depends on the contents of a document, the defendant attaches the
document to its motion to dismiss, and the parties do not dispute the authenticity of the
document, even though the plaintiff does not explicitly allege the contents of that
document in the complaint.” Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005)
(citation omitted). In addition, although a court must accept as true all material
allegations in the complaint when considering a Rule 12(b)(6) motion, “a court need not .
. . accept as true allegations that contradict matters properly subject to judicial notice or
by exhibit.” Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001).
2
For similar reasons, the Court denies defendant’s motion to dismiss plaintiff’s
alternative claim for promissory estoppel, which relies on the same alleged factual
predicate, in addition to plaintiff’s alleged reliance on defendant’s oral representations in
choosing to resign his employment. See FAC ¶¶ 78–82.
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.
CV13-2079-CAS(AJWx)
Date
May 23, 2013
Title
JARED ANDRESEN, ET AL. V. INTERNATIONAL PAPER
COMPANY, ET AL.
Although the written policy provides for no severance pay where an employee terminates
their employment by resignation, plaintiff is alleging that he entered into a separate oral
contract supported by adequate consideration. Accordingly, defendant’s motion to
dismiss this claim is hereby denied.
D.
Derivative Claims
Plaintiffs’ remaining claims—for violation of California’s waiting period penalties,
unfair competition law, and record-keeping provisions—are derivative of their other
claims for relief addressed herein. The Court therefore denies defendant’s motion to
dismiss these claims as to plaintiffs Andresen and Duffy, who have adequately alleged
two potential claims. The Court grants defendant’s motion as to plaintiff Bekiarian, who
has yet to plead a viable claim for relief.
V.
CONCLUSION
In accordance with the foregoing, the Court GRANTS in part and DENIES in part
defendant’s motion to dismiss without prejudice. Plaintiffs may file an amended
complaint addressing the deficiencies identified herein within twenty (20) days of the
date of this order. Failure to do so will result in the dismissal of their claim for failure to
pay vested vacation wages, and all of plaintiff Bekiarian’s claims, with prejudice.3
IT IS SO ORDERED.
00
Initials of Preparer
:
00
CMJ
3
As a separate ground for denying defendant’s motion, plaintiffs contend that
defendant “failed to file a notice of motion.” This contention is plainly incorrect. See
Dkt. No. 15. Plaintiff also argues that defendant did not meet and confer in good faith
under Local Rule 7-3 before filing its motion; both parties submit and describe email
exchanges from counsel disputing this issue, among others. The Court admonishes
counsel for all parties that civility and strict compliance with the Local Rules is expected
of them. See Dkt. No. 5 (“Notice to Counsel”).
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