Jacqueline Benjamin, et al.-v-B & H Education, Inc., et al

Filing 49

Order by Hon. Vince Chhabria granting in part and denying in part 27 Motion to Dismiss.(vclc2, COURT STAFF) (Filed on 8/4/2014)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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JACQUELINE BENJAMIN, et al.,

Case No. 13-cv-04993-VC

Plaintiffs,
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v.
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B & H EDUCATION, INC., et al.,
Defendants.

ORDER GRANTING IN PART AND
DENYING IN PART MOTION TO
DISMISS
Re: Docket No. 27

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United States District Court
Northern District of California

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The motion to dismiss the state law claims against B&H Education on the ground that

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California and Nevada wage and hour law can never be applied to students in cosmetology schools

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is denied without prejudice to raising the issue at the summary judgment stage. B&H Education

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concedes the Fair Labor Standard Act (FLSA) claims may go forward, and it has not identified

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any way in which it would be prejudiced if the state law claims are allowed to proceed on the

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same track. Furthermore, particularly with respect to the claims under California law, the issue is

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not ripe because the parties have not briefed the standard a federal court must apply in determining

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whether it is bound by a decision of a state intermediate court. The Court may invite the State to

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weigh in on whether Hutchison v. Clark, 67 Cal.App.2d 155 (1944) is good law, especially in light

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of Judge Gutierrez's recent opinion in Ford v. Yasuda, et al., Case No. 13-1961 (C.D. Cal. July 30,

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2014).

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The motion to dismiss the state law wage and hour claims against the individual

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defendants is granted. There is no basis for concluding the California Supreme Court did not

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mean what it said when it stated: "Reynolds properly holds that the IWC's definition of 'employer'

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does not impose liability on individual corporate agents acting within the scope of their agency."

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Martinez v. Combs, 49 Cal.4th 35, 66 (2010). The plaintiffs rely on a number of cases in which

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courts held that two separate companies could be considered "joint employers" under California

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law, but that question is very different from whether an agent of a single company can be

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individually liable for wage and hour violations by that company. Compare Carrillo, et al. v.

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Schneider Logistics Trans-Loading & Distrib., Inc., 2014 WL 183965, at *4-7 (C.D. Cal. Jan. 14,

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2014) (holding separate entities could be deemed joint employers), with Lazaro v. Lomarey Inc.,

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2012 WL 566340, at *7 (N.D. Cal. Feb. 21, 2012) (holding company's agent not liable where he

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controlled payment to the company's employees "in his capacity as an officer or agent"). The

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same is true of Nevada law – just as there is no individual liability for individual agents under

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statutory law because the statute does not include them within the definition of "employer," there

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is no individual liability for individual agents under the Nevada Constitution because it similarly
does not identify them as being subject to liability. See Nev. Rev. Stat. § 608; Nev. Const. Art. 15,

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United States District Court
Northern District of California

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§ 16(C); Boucher v. Shaw, 572 F.3d 1087, 1089-90 (9th Cir. 2009). Dismissal is with leave to

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amend but only to the extent the plaintiffs are capable of alleging in good faith that the individual

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defendants acted outside the scope of their agency.

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The motion to dismiss the California Unfair Competition Law claim against the individual

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defendants is also granted, because it is based on the wage and hour claims. Dismissal is with

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leave to amend.

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Finally, the motion to dismiss the FLSA claims against the individual defendants is granted

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as well. Although B&H Education points to no similar federal rule protecting individual agents of

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a company from liability for actions taken within the scope of their agency, it correctly notes that

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the complaint includes no allegations concerning the extent to which any individual defendant has

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operational control over significant aspects of B&H Education's day-to-day functions or the nature

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and structure of the alleged employment relationship between the students and the schools. The

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plaintiffs cite Boucher v. Shaw for the proposition that they have stated claims against the

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individual defendants, but the Boucher court relied on allegations that the individual defendants

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were "responsible for handling labor and employment matters" and "had responsibility for

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supervision and oversight of . . . cash management." 572 F.3d at 1091. In this case, the plaintiffs

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have not even alleged that much. Dismissal is with leave to amend.

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Notwithstanding the possibility that the plaintiffs will file an amended complaint and the
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defendants will file another motion to dismiss, the case management scheduling order entered July

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10, 2014 remains in effect, and discovery should proceed accordingly.

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IT IS SO ORDERED.

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Dated: August 4, 2014
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______________________________________
VINCE CHHABRIA
United States District Judge

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United States District Court
Northern District of California

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