Stephanie Stanley v. Distribution Alternatives, Inc et al

Filing 18

MINUTES (IN CHAMBERS) ORDER DENYING MOTION FOR REMAND AND GRANTING MOTION TO DISMISS by Judge Andrew J. Guilford: The Court DENIES the motion to remand. (Dkt. No. 9.) The Court GRANTS the motion to dismiss with leave to amend. (Dkt. No. 7.) The deadline for Stanley to file her amended complaint is January 12, 2017. (Refer to Order for further details.) (es)

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

EDCV 17-2173 AG (KKx)

Title

STEPHANIE STANLEY v. DISTRIBUTION ALTERNATIVES, INC. ET
AL.

Present: The
Honorable

Date

December 6, 2017

ANDREW J. GUILFORD

Lisa Bredahl
Deputy Clerk

Not Present
Court Reporter / Recorder

Tape No.

Attorneys Present for Plaintiffs:

Attorneys Present for Defendants:

None

None

Proceedings:

[IN CHAMBERS] ORDER DENYING MOTION FOR
REMAND AND GRANTING MOTION TO DISMISS

Plaintiff Stephanie Stanley asks the Court to send this putative class action wage and hour
lawsuit against Defendant Distribution Alternatives, Inc. (“DA”) back to San Bernardino
County Superior Court. Also, DA moves to dismiss Stanley’s complaint for failure to state a
claim or, alternatively, for a more definite statement of Stanley’s claims.
The Court DENIES the motion to remand. (Dkt. No. 9.) The Court GRANTS the motion
to dismiss with leave to amend. (Dkt. No. 7.)
1. MOTION TO REMAND
Stanley argues that the Court must remand this case to state court because DA hasn’t shown
that more than $5,000,000 is at stake.
1.1 Legal Standard
The Court can decide only those cases it has subject matter jurisdiction over. Indeed,
“[f]ederal courts are courts of limited jurisdiction,” and they possess “only that power
CIVIL MINUTES - GENERAL
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

EDCV 17-2173 AG (KKx)

Date

December 6, 2017

Title

STEPHANIE STANLEY v. DISTRIBUTION ALTERNATIVES, INC. ET
AL.

authorized by Constitution and statute.” Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S.
375, 377 (1994). The Constitution provides, in Article III, § 2, that “[t]he judicial Power [of
the United States] shall extend . . . to all Cases . . . arising under this Constitution, the Laws
of the United States . . . [or] between Citizens of different States.”
With the Class Action Fairness Act of 2005 (commonly called “CAFA” for short), Congress
authorized district courts to exercise jurisdiction over class actions where there are at least
100 class members, where any plaintiff is diverse in citizenship from any defendant, and
where the amount in controversy exceeds $5 million. See 28 U.S.C. § 1332(d). A “defendant’s
amount-in-controversy allegation should be accepted when not contested by the plaintiff or
questioned by the court.” Dart Cherokee Basin Operating Co., LLC v. Owens, 135 S. Ct. 547, 553
(2014). But when a plaintiff does challenge a defendant’s amount in controversy estimates,
the defendant bears the burden of establishing that the amount in controversy requirement is
met by a preponderance of the evidence. Id. at 553–54; Rodriguez v. AT & T Mobility Servs.
LLC, 728 F.3d 975, 977 (9th Cir. 2013).
1.2 Allegations in the Complaint
The parties seem to agree that the parties are sufficient in size and diversity. But the parties
dispute just what’s at stake in this case. Stanley’s complaint purports to allege only three
claims of relief: (1) untimely final wage payments under California Labor Code §§ 201 and
202; (2) unreimbursed business expenses under California Labor Code §§ 2800 and 2802; and
(3) claims under California’s Unfair Competition Law, California Business & Professions
Code § 17200 et seq. (Compl., Dkt. No. 1-2.) But the complaint also asserts more general
allegations that DA “engaged in a pattern and practice of wage abuse against their
employees.” (Compl., Dkt. No. 1-2 at 7.) And that DA failed to pay class members “accurate
overtime compensation for all hours worked,” failed to provide class members with “all
required rest and meal periods,” and failed to pay class members “at least minimum wages
for all hours worked.” (Compl., Dkt. No. 1-2 at 7–8.)
Despite these additional allegations, Stanley maintains that it asserts only the three claims
listed previously: untimely final wage payments, unreimbursed business expenses, and UCL
CIVIL MINUTES - GENERAL
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

EDCV 17-2173 AG (KKx)

Date

December 6, 2017

Title

STEPHANIE STANLEY v. DISTRIBUTION ALTERNATIVES, INC. ET
AL.

violations. Stanley says that the she pleads the other wage and hour violations to support her
claims under the UCL, which prohibits “unlawful, unfair, or fraudulent” business practices
and permits plaintiffs to “borrow” other statutory violations to show “unlawfulness.” See
Yanting Zhang v. Superior Court, 304 P.3d 163, 167 (Cal. 2013). Because the “plaintiff is the
master of the complaint,” the Court views the complaint from this perspective. Caterpillar,
Inc. v. Williams, 482 U.S. 386, 398–99 (1987).
1.3 Analysis of Amount in Controversy
As a general matter, Stanley argues that DA’s calculations aren’t based on competent
evidence. But DA relied on a declaration from its Chief Financial Officer who reviewed the
company’s employee records to determine the number of class employees and their average
hourly wage. (See Decl. of Leonard Thurmes, Dkt. No. 1-4.) To support removal, “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.’” See Ibarra v. Manheim Investments, Inc., 775 F.3d 1193, 1197 (9th Cir. 2015) (citing
Singer v. State Farm Mut. Auto. Ins. Co., 116 F.3d 373, 377 (9th Cir. 1997)). And a declarant
may “set out facts that would be admissible in evidence, and show that the affiant or
declarant is competent to testify on the matters stated.” Fed. R. Civ. P. 56(c)(4). DA’s
evidence doesn’t run afoul of these principles.
Furthermore, Stanley’s argument that DA’s calculations should have been limited to former
employees (referred to in the complaint as “Sublcass A” employees) is not convincing. Only
Plaintiff’s first claim (failure to pay timely wages upon termination) references Subclass A.
(Compl., Dkt. No. 1-2 at 10.) Both the second claim (unreimbursed business expenses) and
the third claim (UCL violations) refer generally to “class members” defined earlier in the
complaint as “[a]ll current and former employees.” (Id. at 4, 10–12.) While the general
allegations do reference “Subclass A” employees, these allegations include conflicting and
somewhat confusing descriptions. (See id. at 4–9.) More on that later.
Turning to the actual calculations, DA’s amount in controversy calculation concerning
Stanley’s UCL claim alone crosses the $5,000,000 threshold. DA says the UCL claim puts
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

EDCV 17-2173 AG (KKx)

Date

December 6, 2017

Title

STEPHANIE STANLEY v. DISTRIBUTION ALTERNATIVES, INC. ET
AL.

$5,801,159.70 at controversy. DA basis this figure on potential liability for Plaintiffs’
allegations concerning DA’s failure to pay overtime, failure to provide meal breaks, and
failure to provide rest breaks. Again, Stanley doesn’t assert these as freestanding claims, but
only as violations to support UCL violations under an “unlawful” conduct theory. While the
UCL is limited to restitutionary damages, “payment of wages unlawfully witheld from an
employee” is an appropriate UCL remedy. Cortez v. Purolator Air Filtration Prods. Co., 999 P.2d
706, 715 (Cal. 2000). For the at-controversy overtime wages, DA assumes that each of the
class members worked two hours of overtime each week during the class period, for a total
of $1,933,719.90 at stake for that claim. For the at-controversy meal and rest breaks, DA
assumes that each of the class members missed three meal breaks and three rest breaks each
week during the class period, for a total of $3,867,439.80 at stake for that claim.
Stanley argues that the assumed violation rates of two hours of overtime, three missed rest
breaks, and three missed meal breaks per week are unreasonable. But the complaint offers no
guidance as to the frequency of these violations, only that DA engaged in a “pattern and
practice” of wage and hour violations. (Compl., Dkt. No. 1-2 at 7.) Stanley asserts that the
Ninth Circuit’s holding in Ibarra deems DA’s violation rates unreasonable. (Mot. to Remand,
Dkt. No. 9 at 9–10.) The Ibarra court held that “pattern and practice” didn’t necessarily mean
the defendant violated wage and hour laws at each and every opportunity, each and every
shift. See Ibarra, 775 F.3d at 1198–98. In contrast, DA has not assumed a one hundred
percent violation rate. And what’s more, the allegations in the Ibarra plaintiff’s complaint
were more limited than those in Stanley’s. “Ibarra alleged that he worked overtime hours
without compensation on ‘multiple occasions during his employment,’ suggesting that [the
defendant’s] practices occurred several times but not on each and every shift.” See id. In
contrast, Stanley’s complaint provides almost no allegations concerning the frequency of the
alleged violations, and Stanley provides no competing evidence that would suggest lower
violation rates.
Accordingly, Plaintiff’s UCL calculations are appropriate. Because more than $5,000,000 is at
controversy in this case, and because there are more than 100 putative class members and
sufficient diversity, subject matter jurisdiction is appropriate.
CIVIL MINUTES - GENERAL
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

EDCV 17-2173 AG (KKx)

Date

December 6, 2017

Title

STEPHANIE STANLEY v. DISTRIBUTION ALTERNATIVES, INC. ET
AL.

2. MOTION TO DISMISS OR FOR A MORE DEFINITE STATEMENT
DA asks the Court to dismiss Stanley’s complaint (or for a more definite statement) for two
reasons. First, DA argues that Stanley failed to allege “at least one workweek in which she
allegedly incurred a violation.” (Mot. to Dismiss, Dkt. No. 7 at 2.) Second, DA argues that
Stanley’s UCL claim is “impermissibly vague” because “it is unclear from the allegations
which, if any, of the [underlying] claims are substantively asserted as a basis for relief under
[the UCL] rather than included as mere surplusage.” (Id.)
2.1 Legal Standard
A defendant may move to dismiss a complaint if it believes that the plaintiff has failed to
state a claim for relief. Fed. R. Civ. P. 12(b)(6). Federal Rule of Civil Procedure 8(a)(2)
requires only “a short and plaint statement of the claim showing that the pleader is entitled to
relief.” With that liberal pleading standard, the purpose of a motion under Rule 12(b)(6) is
“to test the formal sufficiency of the statement of the claim for relief.” 5B C. Wright & A.
Miller, Federal Practice and Procedure § 1356, p. 354 (3d ed. 2004). To survive a motion to
dismiss, a complaint must contain sufficient factual material to “state a claim to relief that is
plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is facially
plausible when “the plaintiff pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal,
556 U.S. 662, 678 (2009). In analyzing the complaint’s sufficiency, a court must “accept[] all
factual allegations in the complaint as true and constru[e] them in the light most favorable to
the nonmoving party.” Skilstaf, 669 F.3d at 1014. But the assumption of truth doesn’t apply
to legal conclusions. Iqbal, 556 U.S. at 678.
2.2 Analysis
For the purposes of stating a claim, the Court concludes that Stanley hasn’t satisfied her
burden under Federal Rule of Civil Procedure 8. Concerning Fair Labor Standards Act
claims, the Ninth Circuit has held that “[a]lthough . . . detailed factual allegations regarding
the number of overtime hours worked are not required to state a claim, we do not agree that
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

EDCV 17-2173 AG (KKx)

Date

December 6, 2017

Title

STEPHANIE STANLEY v. DISTRIBUTION ALTERNATIVES, INC. ET
AL.

conclusory allegations that merely recite the statutory language are adequate.” Landers v.
Quality Commc’ns, Inc., 771 F.3d 638, 644 (9th Cir. 2014), as amended (Jan. 26, 2015). A
plaintiff, however, “may establish a plausible claim by estimating the length of her average
workweek during the applicable period and the average rate at which she was paid, the
amount of overtime wages she believes she is owed, or any other facts that will permit the
court to find plausibility.” Id. at 645. Courts routinely apply this reasoning to California wage
and hour claims. See, e.g., Franke v. Anderson Merchandisers, LLC, No. 17-CV-3241 DSF
(AFMx), 2017 WL 3224656, at *7 (C.D. Cal. July 28, 2017).
Stanley’s complaint doesn’t comply with those standards because she fails to allege any facts
beyond conclusory allegations restating the relevant wage and hour standards. For example,
Stanley alleges that she and the other class members worked “over eight (8) hours in a day,
and/or forty (40) hours in a week” during their employment with DA, but that DA failed to
pay them for all overtime hours worked. (Compl., Dkt. No. 1-2 at 7, 9.) These allegations are
insufficient to support Stanley’s UCL claim that DA engaged in “unlawful” business
practices because they merely restate the underlying wage and hour law. See, e.g., Cal. Lab.
Code § 510. Same goes for Plaintiff’s meal and rest period allegations, her minimum wage
allegations, and her waiting time allegations. Also, Plaintiff’s allegation that DA failed to pay
Stanley and the other class members “for all necessary business-related expenses and costs”
also lacks sufficient facts. (See, Dkt. No. 1-2 at 9.) Put simply, Plaintiff hasn’t provided
enough factual information for any of her claims to comport with Federal Rule of Civil
Procedure 8, and they must be dismissed. At “a minium [Stanley] must allege at least one
workweek when [s]he worked in excess of forty hours and was not paid for the excess hour
in that workweek,” and provide similar factual allegations for her other claims. See Landers,
771 F.3d at 644.
So the Court dismisses Stanley’s claims. But the Court grants her leave to amend the
complaint, since perhaps she’ll be able to include additional factual information to support
her claims. See Knappenberger v. City of Phoenix, 566 F.3d 936, 942 (9th Cir. 2009). To be sure,
the standard announced in Landers is not onerous, as Stanley must only plead “sufficient
factual content ‘to state a claim for relief that is plausible on its face.’” Landers, 771 F.3d at
641 (quoting Twombly, 5501 U.S. at 570)). Indeed, the Landers court observed that an
CIVIL MINUTES - GENERAL
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

EDCV 17-2173 AG (KKx)

Date

December 6, 2017

Title

STEPHANIE STANLEY v. DISTRIBUTION ALTERNATIVES, INC. ET
AL.

“allegation that a plaintiff typically worked a forty-hour workweek, and worked
uncompensated extra hours during a particular forty-hour workweek would state a plausible
claim for relief.” Landers, 771 F.3d at 640.
Further, the Court notes that it’s difficult to determine which causes of action are supported
by which violations and how they relate to the various members of the putative class, as
discussed. The Court encourages Stanley to clarify these allegations if and when she amends
her complaint.
With this dismissal, the Court need not address DA’s request for a more definite statement.
3. DISPOSITION
The Court DENIES the motion to remand. (Dkt. No. 9.) The Court GRANTS the motion
to dismiss with leave to amend. (Dkt. No. 7.) The deadline for Stanley to file her amended
complaint is January 12, 2017.

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Initials of
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