Brum et al v. MarketSource, Inc. et al

Filing 15

ORDER GRANTING IN PART and DENYING IN PART defendants' 7 Motion to Dismiss signed by District Judge John A. Mendez on 6/16/17. Plaintiffs must file their second amended complaint within 20 days of the date of this Order. Defendants must file their responsive pleadings within 20 days thereafter. (Kastilahn, A)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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JENNIFER BRUM and MICHAEL
CAMERO, individually, and on
behalf of other members of
the general public similarly
situated,

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2:17-cv-241-JAM-EFB

ORDER GRANTING IN PART AND
DENYING IN PART DEFENDANTS’
MOTION TO DISMISS AND MOTION TO
STRIKE

Plaintiffs,

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No.

v.
MARKETSOURCE, INC. WHICH WILL
DO BUSINESS IN CALIFORNIA AS
MARYLAND MARKETSOURCE, INC.,
a Maryland corporation;
ALLEGIS GROUP, INC., a
Maryland corporation; and
DOES 1 through 10, inclusive,

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Defendants.

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Plaintiffs Jennifer Brum and Michael Camero (collectively,

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“Plaintiffs”) sued Defendants MarketSource, Inc. and Allegis

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Group, Inc. (collectively, “Defendants”) in state court for

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various wage and hour violations.

ECF No. 1-1.

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removed the case to federal court.

ECF No. 1.

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to dismiss and move to strike portions of Plaintiffs’ First

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Amended Complaint (“FAC”).

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No. 10. 1

ECF No. 7.

Defendants
Defendants move

Plaintiffs oppose.

ECF

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This motion was determined to be suitable for decision without
oral argument. E.D. Cal. L.R. 230(g). The hearing was
scheduled for May 2, 2017.
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I.

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FACTS

Defendants provide retail sales personnel to dozens of

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Target Mobile kiosks throughout California.

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worked as a “Wireless Team Lead” at several Target stores

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throughout Northern California.

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“Target Mobile Manager” at two Target stores in San Diego,

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California.

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FAC ¶ 3.

FAC ¶ 26.

Brum

Camero worked as a

FAC ¶ 4.

Plaintiffs allege Defendants violated overtime, meal, and
rest period laws and did not properly report wage statements.

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FAC at 13-19, 21-27.

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all new hires to take drug tests as a condition of employment

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without paying for the time and expense to travel to and from the

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drug testing facility and to take the test.

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Plaintiffs also contend Defendants required

FAC ¶ 29.

Plaintiffs seek to represent one class and one subclass, but

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have not yet filed a motion for class certification.

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21.

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FAC ¶¶ 20,

Defendants move to dismiss Plaintiffs’ FAC as a whole,

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arguing the allegations are insufficient under wage and hour

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pleading standards.

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Defendants move to strike (1) allegations regarding reimbursement

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for drug tests, (2) allegations that Defendants did not pay the

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correct premiums for missed meal and rest breaks, and

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(3) requests for injunctive relief.

Notice of Mot. at 1. In the alternative,

Id. at 1-5.

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II.

OPINION

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A.

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Plaintiffs ask the Court to take judicial notice of the

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Request for Judicial Notice

following documents:
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The Division of Labor Standards Enforcement

Enforcement Policies and Interpretations Manual (“DLSE Manual”);

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2.

DLSE opinion letter entitled: “Whether there is a

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Private Right of Action to Enforce Amounts Owed Under the Meal

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Period Provisions of the IWC Orders Under Labor Code section

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226.7;”

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3.

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2000;

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Assembly Bill No. 2509 as introduced on February 24,

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Assembly Bill No. 2509 as amended on August 25, 2000;

5.

The United States Department of Labor’s Fair Labor

and

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Standards Act (“FLSA”) Hours Worked Advisor, Employers’ Screen

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13, entitled: “Physical Exams, Fingerprinting and Drug Testing.”

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Pls.’ Req. for Judicial Notice (“RJN”) at 1, ECF No. 11.

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Defendants argue the Court should not take judicial notice
of numbers 1 and 5.

Defs.’ Obj. to RJN at 1-2, ECF No. 13.

As to number 1, the DLSE Manual, Defendants argue it is a

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“void regulation subject to no deference.”

Id. at 1.

Other

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district courts have taken judicial notice of the DLSE Manual.

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See e.g. Mitchell v. Medtronic, Inc., No. CV 13-6624-MWF(PLAX),

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2015 WL 12747824, at *2 (C.D. Cal. Feb. 13, 2015), aff'd, No.

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15-55888, 2017 WL 1056096 (9th Cir. Mar. 21, 2017).

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recognizes, however, that the DLSE Manual is not binding

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authority.

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14-3986 PA FFMX, 2015 WL 1540906, at *3 n.1 (C.D. Cal. Apr. 3,

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2015).

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SACV 12-0688 AG ANX, 2013 WL 4564496, at *3 (C.D. Cal. Aug. 16,

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2013) and takes judicial notice of the existence of the DLSE

The Court

See Klune v. Ashley Furniture Indus., Inc., No. CV

The Court therefore follows Burnham v. Ruan Transp., No.

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Manual but not the truth of the facts asserted within the

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manual.

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Defendants argue the Court should not take judicial notice

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of number 5 because “the printout constitutes an advisory

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opinion without any citation or legal analysis.”

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2.

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can take judicial notice of an unauthenticated printout of a

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webpage.

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notice of number 5.

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Defs.’ Obj. at

Plaintiffs do not provide any authority stating that a Court

The Court denies Plaintiffs’ request for judicial

Defendants do not object to Plaintiffs’ request for

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judicial notice of documents 2 through 4.

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and assembly bills are properly subject to judicial notice.

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Abdullah v. U.S. Sec. Assocs., Inc., 731 F.3d 952, 959 n.10 (9th

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Cir. 2013) (taking judicial notice of several DLSE opinion

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letters); Coleman v. Schwarzenegger, No. C01-1351 TEH, 2009 WL

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2407404, at *2 (E.D. Cal. Aug. 4, 2009) (taking judicial notice

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of an assembly bill).

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documents 2, 3, and 4.

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B.

DLSE opinion letters

The Court takes judicial notice of

Analysis
1.

Motion to Dismiss All Claims for Inadequate
Pleading

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Defendants argue “Plaintiffs have failed to satisfy the

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pleading standards for wage-hour claims set forth by the Ninth

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Circuit in Landers v. Quality Communications, Inc., 771 F.3d 638

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(9th Cir. 2014).”

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not comply with Landers because they do not “identify a single

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workday when they suffered a minimum wage, overtime, meal

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period, rest period, or expense reimbursement violation.”

Mot. at 1.

Defendants argue Plaintiffs do

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Id.

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In Landers, plaintiff contended he had not received proper

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minimum wage or overtime payments.

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He alleged various inadequacies in his employer’s overtime

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policies, “[n]otably absent from the allegations in Landers’s

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complaint, however, was any detail regarding a given workweek

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when Landers worked in excess of forty hours and was not paid

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overtime for that given workweek and/or was not paid minimum

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wages.”

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employee need not allege “with mathematical precision” the

Id. at 646.

Landers, 771 F.3d at 640.

The Ninth Circuit held that while an

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amount of overtime compensation owed, he must provide

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“sufficient detail about the length and frequency of [his]

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unpaid work to support a reasonable inference that [he] worked

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more than forty hours in a given week.”

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original) (quoting Nakahata v. N.Y.-Presbyterian Healthcare

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Sys., Inc., 723 F.3d 192, 201 (2d Cir. 2013)).

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“simply alleged that he was not paid for overtime hours, without

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providing details about the overtime hours worked, his

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allegations merely raised the possibility of undercompensation,

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which was not the same as plausibility.”

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Corp., No. C 16-05155 WHA, 2017 WL 386253, at *4 (N.D. Cal. Jan.

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26, 2017) (internal punctuation and citations omitted).

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Id. (alterations in

Because Landers

Daugherty v. SolarCity

Here, Plaintiffs state specific time periods when

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Defendants did not compensate them for certain activities, such

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as filling out surveys after they had already clocked out.

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FAC ¶ 61.

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15 minutes of off-the-clock work during meal breaks, three to

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four times per week.”

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of eight hours one to two times per week.”

See

The FAC states Camero had to “perform between 10 to

FAC ¶ 67.

Brum “worked shifts in excess

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Id.

In addition to

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these allegations, the FAC contains several more details about

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various wage and hour violations that the Court need not

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enumerate here.

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detail” regarding their claims and do not “merely recite the

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statutory language.”

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denies Defendants’ motion to dismiss the FAC in its entirety.

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2.

Unlike Landers, Plaintiffs provide “sufficient

See Landers, 771 F.3d at 644.

The Court

Motion to Strike References to Reimbursement for
Drug Testing

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Plaintiffs allege Defendants did not compensate them “for

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the time they spent traveling to and from drug testing clinics

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or for the time they spent undergoing drug testing.”

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Plaintiffs allege Defendants sent Camero an email which stated

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“Congratulations again on your new position!” and instructed him

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to complete a mandatory drug screening.

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Defendants controlled scheduling the date and time of the drug

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test, selected the provider or facility to perform the test, and

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determined the scope of the test.

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that Defendants gave them “strict instructions to obtain drug

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tests as a condition of their employment,” and they took the

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tests “for the sole benefit of Defendants.”

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plead these facts in support of their second claim for unpaid

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minimum wages, seventh claim for unpaid business expenses, and

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eighth claim for unlawful business practices.

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119, 121, 122.

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Id.

Id.

FAC ¶ 73.

Plaintiffs state

Plaintiffs also state

Id.

Plaintiffs

FAC ¶¶ 73, 111,

Defendants argue an employer does not have to compensate

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prospective employees for drug tests they take as a condition of

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employment.

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Section 1194(a) requires employers to pay minimum wages to

Mot. at 5.

Defendants state that Labor Code

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“employees,” not prospective employees.

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Id.

Plaintiffs respond that whether they were employees when

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they took the drug tests is a “fact-dependent” inquiry.

Opp’n

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at 3.

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offered employment to Plaintiffs, and Plaintiffs accepted those

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offers.”

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Beyond the allegations stated above, Plaintiffs do not allege

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any facts to support their contention that Defendants offered

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and Plaintiffs accepted employment.

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Plaintiffs state that “the FAC alleges that Defendants

Id.

However, the FAC does not allege these facts.

The Court recognizes that whether an employer has offered

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and an employee has accepted a job is not necessarily

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dispositive in determining if an individual is an employee under

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the California Labor Code.

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motion to dismiss by relying on facts they have not alleged in

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their FAC.

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No. 08CV1521-L WVG, 2010 WL 3633109, at *8 (S.D. Cal. Sept. 13,

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2010) (“[W]hen ruling on a motion to dismiss, [the court] must

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disregard facts that are not alleged on the face of the

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complaint or contained in documents attached to the

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complaint.”).

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But, Plaintiffs cannot defeat a

See Karoun Dairies, Inc. v. Karoun Dairies, Inc.,

Because Plaintiffs’ argument relies on facts that they did

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not allege in the FAC, the Court grants Defendants’ motion to

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strike for this reason alone.

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Gunawan v. Howroyd-Wright Employment Agency, 997 F. Supp. 2d

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1058 (C.D. Cal. 2014) and Defendants other arguments at this

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time.

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grants Plaintiffs leave to amend.

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Employee Ass'n v. City of Hanford, No. 1:11-CV-00828 AWI, 2011

The Court need not address

Amendment does not appear futile here, so the Court

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See Hanford Exec. Mgmt.

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WL 5825691, at *11 (E.D. Cal. Nov. 17, 2011) (“[F]acts raised in

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opposition papers may not defeat a motion to dismiss, but may be

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considered by the court to determine whether dismissal should be

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with or without prejudice.”).

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3.

Motions to Strike Allegations of Miscalculation
of Meal and Rest Period Premiums

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Plaintiffs allege Defendants did not permit Plaintiffs to

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take their meal and rest breaks and did not pay them premiums

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for missed meal or rest breaks.

FAC ¶¶ 82, 83, 90, 91.

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Plaintiffs also allege that when Defendants did pay premiums for

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missed rest and meal periods, they did not pay Plaintiffs at the

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correct rate of pay because Defendants did not include

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“commissions, incentive pay, and/or nondiscretionary bonuses in

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the regular ray of pay.”

FAC ¶¶ 85, 91.

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California Labor Code Section 226.7 states:

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If an employer fails to provide an employee a meal or
rest or recovery period in accordance with a state
law, including, but not limited to, an applicable
statute or applicable regulation, standard, or order
of the Industrial Welfare Commission, the Occupational
Safety and Health Standards Board, or the Division of
Occupational Safety and Health, the employer shall pay
the employee one additional hour of pay at the
employee’s regular rate of compensation for each
workday that the meal or rest or recovery period is
not provided.

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Cal. Lab. Code § 226.7(c) (emphasis added).

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California Labor Code Section 510 states:

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Any work in excess of eight hours in one workday and
any work in excess of 40 hours in any one workweek and
the first eight hours worked on the seventh day of
work in any one workweek shall be compensated at the
rate of no less than one and one-half times the
regular rate of pay for an employee.

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By comparison,

Cal. Lab. Code § 510(a) (emphasis added).
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The “regular rate of pay” under Section 510 includes “all

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remuneration for employment paid to, or on behalf of, the

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employee.”

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(C.D. Cal. 2011).

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an employee’s regular rate of pay to pay overtime, the employer

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must include bonuses, commissions, or any other income not

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subject to an exception in that calculation.

Alonzo v. Maximus, Inc., 832 F. Supp. 2d 1122, 1130
Thus, when an employer calculates 1.5 times

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Plaintiffs argue the Court should interpret “regular rate

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of compensation” in Section 226.7 in the same way other courts

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have interpreted “regular rate of pay” in Section 510.

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6.

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synonymous with “regular rate of pay” and includes only an

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employee’s base pay rate, and no other forms of compensation.

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Mot. at 11.

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Opp’n at

Defendants contend “regular rate of compensation” is not

Federal district courts disagree, and the Ninth Circuit has

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not spoken on this specific issue.

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Healthcare Services, Inc., 2012 WL 12286522, at *1 (C.D. Cal.

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Jul. 26, 2012) held that “regular rate of compensation” means

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the same as “regular rate of pay.”

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at *4.

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Studley v. Alliance

Studley, 2012 WL 12286522,

The Studley court reasoned that

Because the compensation provided in Section 226.7(b)
“is not a penalty, but a form of ‘premium wage’ paid
to employees to compensate them for an adverse
condition they have encountered during their work
hours,” it “is akin to overtime pay, which is another
form of premium pay.” Naranjo v. Spectrum Sec.
Servs., Inc., 172 Cal. App. 4th 654, 666 (2009). This
statute uses the same language “regular rate” employed
for other premium pay rates, such as overtime.
Alliance has failed to present any authority or
persuasive argument for why, in the face of the plain
language of the statute, it ought to be interpreted
differently from other California Labor Code
provisions employing the same language. In light of
the use of this identical language, and the absence of
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any authority indicating that the phrase “regular
rate” ought to be used differently in Section 226.7
than in Section 510, the Court concludes that the
“regular rate of compensation” owed is the same as the
“regular rate of pay” as stated in Section 510 and
calculated according to the FLSA, and not the base
rate of pay.

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Id.
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Another district court, in contrast, held that “regular rate
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of pay” and “regular rate of compensation” are not synonymous.
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Wert v. Bancorp, 2015 WL 3617165, at *3 (S.D. Cal. Jun. 9, 2015).
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The Wert court reasoned that:
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In the absence of legal authority stating that
§ 226.7's “regular rate of compensation” language is
the same as § 510's “regular rate of pay” language,
this Court reiterates its previous determination that
the legislature's choice of different language is
meaningful, and that the relief under § 226.7 is not
necessarily or logically the same as the relief under
§ 510 insofar as the “regular rate” language is
involved.

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Id.

Wert also stated that “the Court does not find Studley’s

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reasoning persuasive and declines to follow it.”

Id. at *3 n.3.

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The Wert court relied on Bradescu v. Hillstone Rest. Grp., Inc.,
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No. SACV 13-1289-GW RZX, 2014 WL 5312546, at *8 (C.D. Cal. Sept.
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18, 2014), which held that no authority supports “the view that
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‘regular rate of compensation,’ for purposes of meal period
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compensation, is to be interpreted the same way as ‘regular rate
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of pay’ is for purposes of overtime compensation.”

Bradescu,

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2014 WL 5312546, at *8.

Bradescu emphasized that “the

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legislature’s choice of different language is meaningful.”

Id.

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Defendants argue the Court should reject Studley and rely on
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Wert and Bradescu.

Mot. at 12.

Defendants argue “no other court

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has relied on Studley” for its proposition that “regular rate of

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compensation” under Section 226.7 is the same as “regular rate of

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pay” under Section 510.

Mot. at 13.

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Plaintiffs argue the Court should follow Studley because

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other California cases use “regular rate of compensation” and

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“regular rate of pay” interchangeably.

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cite to Costco Wholesale Corp. v. Superior Court, 47 Cal. 4th

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725, at 729 (2009), where the California Supreme Court stated

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that “Labor Code section 510, subdivision(a) requires payment at

Opp’n at 7-9.

Plaintiffs

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. . . the regular rate of compensation . . .”

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4th at 729 n.1.

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Costco court, in describing Section 510, used “regular rate of

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compensation.”

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California Supreme Court considers the terms “regular rate of

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pay” and “regular rate of compensation to be synonymous.

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at 7-8.

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Costco, 47 Cal.

Section 510 uses “regular rate of pay,” but the

Id.

Plaintiffs argue this demonstrates that the

Opp’n

Plaintiffs cite two other cases where California appellate

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courts used “compensation” and “pay” interchangeably.

Opp’n at

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8.

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which uses “regular rate of compensation” to refer to the rate

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paid for overtime.

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work performed in any workday in excess of 12 hours shall be

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compensated at double the employee’s regular rate of

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compensation.”) (emphasis added)).

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of compensation” in Section 751.8 is significant because that

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section pertains to overtime payments, as does Section 510, which

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uses “regular rate of pay.”

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with Cal. Lab. Code § 510.

Plaintiffs also cite California Labor Code Section 751.8,

Id. (citing Cal. Lab. Code § 751.8(b) (“All

The Labor Code’s use of “rate

Compare Cal. Lab. Code § 751.8(b)

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Having carefully considered the arguments presented by the

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parties, the Court finds Defendants’ arguments to be more

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persuasive.

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that while the California authorities upon which Plaintiffs rely

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appear to use “compensation” and “pay” interchangeably, they do

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not analyze the distinction between the two terms.

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Studley failed to address the difference in language between

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“regular rate of compensation” and “regular rate of pay.”

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Studley, 2012 WL 12286522 at *4.

Plaintiffs’ claims on this issue fail to recognize

Additionally,

See

The Court cannot ignore the

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distinction.

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one statute and deletes it from another, it must be presumed to

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have acted deliberately.” Ferguson v. Workers’ Comp. Appeals Bd.,

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33 Cal. App. 4th 1613, 1621 (1995); see also Keene Corp. v.

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United States, 508 U.S. 200, 208 (1993) (different terms in the

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same statute presumed “intentional[]” and “purposeful”).

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Court therefore agrees with Defendants and finds the

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legislature’s choice to use the word “compensation” instead of

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“pay” meaningful in the absence of authority to the contrary.

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Defendants’ motion to strike Plaintiffs’ allegations regarding

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miscalculation of meal and rest break premiums is granted without

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leave to amend.

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4.

“[I]f the legislature carefully employs a term in

The

Motion to Strike Requests for Injunctive Relief

In their FAC, Plaintiffs seek “a permanent injunction

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requiring Defendants to pay all outstanding wages due to

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Plaintiffs and class members.”

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“a permanent injunction requiring Defendants to pay all statutory

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benefits implemented by section 226.7 due to Plaintiffs and class

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members.”

FAC ¶ 124.

FAC ¶ 130.
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Plaintiffs also seek

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Defendants argue Plaintiffs lack standing to seek injunctive

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relief because they no longer work for Defendants.

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Plaintiffs respond that the limitation on injunctive relief for

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former employees “does not apply to cases, like this one, where

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plaintiffs only seek outstanding wages on behalf of current and

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former employees.”

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Plaintiffs’ argument regarding their ability to seek injunctive

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relief to require Defendants to pay outstanding unpaid wages.

Opp’n at 2.

Mot. at 14.

Defendants do not respond to

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Former employees do not have standing to “seek prospective

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injunctive relief on behalf of a putative class containing both

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former and current employees.”

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CV-02031-JD, 2015 WL 636373, at *3 (N.D. Cal. Feb. 13, 2015).

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Plaintiffs here do not have standing to enjoin future employment

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practices.

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1:16-CV-1300-LJO-JLT, 2017 WL 1255777, at *9 (E.D. Cal. Feb. 3,

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2017).

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Plaintiffs cannot seek recovery of unpaid wages for past

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violations.

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strike Plaintiffs’ references to injunctive relief.

Miranda v. Coach, Inc., No. 14-

See Guerrero v. Halliburton Energy Servs., Inc., No.

But Defendants provide no reason or legal authority why

The Court therefore denies Defendants’ motion to

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III.

ORDER

For the reasons set forth above, the Court GRANTS in part

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and DENIES in part Defendants’ motion to dismiss and strike

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portions of the FAC. The Court DENIES Defendants’ motion to

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dismiss the FAC in its entirety and Defendants’ motion to strike

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Plaintiffs’ allegations regarding injunctive relief. The Court

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GRANTS WITH LEAVE TO AMEND Defendants’ motion to strike

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Plaintiffs’ allegations regarding reimbursement for drug testing
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and GRANTS WITH PREJUDICE Defendants’ motion to strike

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Plaintiffs’ references in the FAC to the alleged failure to pay

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rest period premiums based upon the “regular rate of pay” as that

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term is used for purposes of paying overtime compensation.

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Plaintiffs must file their second amended complaint within twenty

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days of the date of this Order.

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responsive pleadings within twenty days thereafter.

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Defendants must file their

IT IS SO ORDERED.
Dated:

June 16, 2017

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