Joseph Amey v. Cinemark USA Inc et al

Filing 123

ORDER DENYING LEAVE TO AMEND re 118 Statement. The parties shall file a Joint Statement on or before July 28, 2015 that addresses a proposed schedule for resolving the individual claims. Signed by Judge William H. Orrick on 07/09/2015. (jmdS, COURT STAFF) (Filed on 7/9/2015)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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JOSEPH AMEY, et al.,

Case No. 13-cv-05669-WHO

Plaintiffs,

ORDER DENYING LEAVE TO AMEND

v.

Re: Dkt. No. 118

CINEMARK USA INC, et al.,
Defendants.

United States District Court
Northern District of California

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Following my Order denying plaintiffs’ motion for class certification (Dkt. No. 115),

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plaintiffs move to file an amended complaint. They have failed to justify amendment of the

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complaint at this late stage of the proceedings and did not provide a complaint that would survive

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a motion to dismiss. The request to amend their pleadings is DENIED.

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BACKGROUND

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On May 13, 2015, I denied plaintiffs’ motion for class certification. Id. I found that

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plaintiffs had failed to establish the requirements of Rule 23 for their claims of missed meal and

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rest breaks, failure to provide reporting time pay, and uncompensated overtime. Id. at 12-21. In

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addition, I concluded that plaintiffs failed to exhaust their administrative remedies with respect to

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their claim for violations of section 226(a)(9) under PAGA because the notice letter that plaintiffs

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sent to defendants was inadequate. Id. at 25.

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I also dismissed the remainder of plaintiffs’ claims under PAGA. Id. at 27-29. I stated

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that allowing a representative action to proceed is inappropriate “when the evidence shows, as it

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does here, that numerous individualized determinations would be necessary to determine whether

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any class member has been injured by Cinemark’s conduct.” Id. at 27. I determined that “the

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‘aggrieved employees’ [under PAGA] are not defined with sufficient particularity to give

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Cinemark notice of the scope of the PAGA claim, and it would require too great a number of

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individualized assessments to determine the scope.” Id. at 29. I granted plaintiffs leave to request

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amendment of these non-wage statement claims in a supplemental brief, provided they

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demonstrated why amendment would not be futile or prejudicial to defendants. Id.

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Plaintiffs also sought to certify a class for violations of section 226 based upon incorrect

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wage statements. I dismissed the wage statement claims because they were derivative of the other

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labor code violations. Id. at 31. I rejected plaintiffs’ argument that the complaint pleaded a

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“direct” violation of section 226. Id. at 32. I concluded that “[t]o allow the plaintiffs, without

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amendment, to convert their derivative wage statement claim to a direct claim on a theory alleged

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nowhere in the complaint would be unfair to the defendants and improper as a matter of pleading.”

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Id. at 33. I allowed plaintiffs leave to file a request to amend this claim in a supplemental brief
“that addresses the standard of review for amending a class claim after certification has been

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United States District Court
Northern District of California

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denied, any argument concerning prejudice, and how discovery thus far would support an

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amended claim.” Id. In doing so, I noted that “[i]t is quite late in this case to allow amendment,

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and I am concerned about the prejudice to Cinemark if I allowed amendment, as well as the ability

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of plaintiffs to plead a plausible wage statement claim under section 226 given the type of mistake

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alleged.” Id.

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Plaintiffs filed their supplemental brief on June 2, 2015, and included a Proposed Amended
Complaint (“PAC”). Defendants filed a response on June 12, 2015.

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LEGAL STANDARD

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Defendants contend that plaintiffs “arguably should be required to meet the ‘good cause’

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standard” of Federal Rule of Civil Procedure 16, pointing to the fact that I set a briefing schedule

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for the motion on class certification. Oppo. 3 (Dkt. No. 120). Because I did not set a deadline for

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amending the complaint, plaintiffs urge me to apply the more liberal standards of Federal Rule of

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Civil Procedure 15.

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Courts grant leave to amend under Rule 15 with “extreme liberality.” C.F. ex rel. Farnan

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v. Capistrano Unified Sch. Dist., 654 F.3d 975, 985 (9th Cir. 2011) (internal citations omitted). I

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look to several factors to determine whether leave to amend under Rule 15 is appropriate,

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including “[1] undue delay, bad faith or dilatory motive on the part of the movant, [2] repeated

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failure to cure deficiencies by amendments previously allowed, [3] undue prejudice to the
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opposing party by virtue of allowance of the amendment, [and] [4] futility of amendment.” Id. n.5

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(internal quotations omitted). “The district court’s discretion to deny leave to amend is particularly

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broad where plaintiff has previously amended the complaint.” Allen v. City of Beverly Hills, 911

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F.2d 367, 373 (9th Cir. 1990) (internal quotations omitted). Absent prejudice or a “strong

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showing” of any of these factors, called Foman factors, “there exists a presumption under Rule

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15(a) in favor of granting leave to amend.” Capistrano Unified, 654 F.3d at 985.

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I need not resolve whether Rule 15 or Rule 16 applies in this case. Even under the Rule
15 standard, plaintiffs fail to establish that leave to amend should be granted.

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United States District Court
Northern District of California

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DISCUSSION
I. PLAINTIFFS MAY NOT ADD A “DIRECT” CLAIM UNDER SECTION 226
Plaintiffs move to amend their complaint to include a “direct” violation of section 226,

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based upon the fact that defendants issued wage statements that listed the incorrect overtime rate.

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Mot. at 4 (Dkt. No 118). They seek only statutory damages. Id. Although they could have moved

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to include a “direct” section 226 claim at an earlier point, they do so now because my Order found

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that they failed to plead a “direct” claim under section 226 in their Complaint. Id.

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Several Foman factors impel me to deny plaintiffs’ motion. Although I did not set a

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deadline for amendment of the pleadings, plaintiffs had numerous chances to amend, and did

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amend twice. See Brown v. Cinemark, 13-cv-04030-WHO, Dkt. No. 1; Popov v. Countrywide

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Fin. Corp., No. CIV 09-2780 GEBEFBPS, 2009 WL 5206679, at *1 n.3 (E.D. Cal. Dec. 18, 2009)

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(“Although the earlier amendment occurred in state court, [a] district court takes the case as it

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finds it on removal and treats everything that occurred in the state court as if it had taken place in

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federal court.”) (internal quotations omitted). In addition, in the stipulated Order Consolidating

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Cases, plaintiffs were directed to “seek to file a consolidated complaint.” Dkt. No. 50. Plaintiffs

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never complied with request: the PAC is the first complaint that consolidates the causes of action

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of all three named plaintiffs.

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Next, plaintiffs have not alleviated my concerns that amendment would be futile. The

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PAC fails to cure deficiencies that I identified in the Order denying class certification, in which I

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directed that plaintiffs “attach a proposed amended complaint to their amended claim with
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sufficient detail to meet all of the requirements of a section 226 claim.” Order at 33.
To plead a claim for a violation of section 226, “a plaintiff must show: (1) a violation of §

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226(a); (2) the violation of § 226(a) was knowing and intentional; and (3) an injury suffered as a

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result of the violation of § 226(a).” Reinhardt v. Gemini Motor Transp., 879 F. Supp. 2d 1138,

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1141 (E.D. Cal. 2012). Plaintiffs have failed to plausibly allege the second and third elements of

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the claim.

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The PAC does not set forth any facts indicating that the defendants’ violations of section

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226 were knowing and intentional, as required by the second element. It cites only the language

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of the statute and states in a separate cause of action that “Defendant’s knowing conduct, as
alleged herein, constitutes an unlawful and/or fraudulent business practice.” PAC ¶ 62 (Dkt. No.

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United States District Court
Northern District of California

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118-1). There is no allegation, let alone facts to support, the second element of the plaintiffs’

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cause of action. 1
In addition, plaintiffs did not adequately plead the third element of injury under section

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226(a). The PAC states that plaintiffs “could not promptly and easily determine from wage

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statements alone that they were paid correctly.” FAC ¶ 70. This does nothing more than recite the

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language of the statute, see CAL. LABOR CODE § 226(e)(2)(B), and does not sufficiently plead the

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element of injury. For example, in York v. Starbucks Corp., the court concluded:
Plaintiff would not be considered to have suffered an injury, within
the meaning of section 226(e), simply because she had to perform
basic math by adding the overtime and regular hours together,
ensure that her overtime rate of pay was correct, and speculate on
the possibility that she may have been underpaid. Instead, she would
have to show that the information on her wage statement was either
inaccurate or incomplete, i.e., it did not contain the hours worked or
the regular hourly rate.

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No. CV 08-07919 GAF PJWX, 2011 WL 4597489, at *4 (C.D. Cal. Aug. 5, 2011) (internal

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citations omitted); see also Price v. Starbucks Corp., 192 Cal. App. 4th 1136, 1142 (2011); Jaimez

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v. DAIOHS USA, Inc., 181 Cal. App. 4th 1286, 1306 (2010).

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Although these courts come to slightly different conclusions on the amount of information

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Plaintiffs also incorrectly state that the venue for this action is in Los Angeles County. PAC ¶
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that is necessary to plead an injury under section 226, they require that the plaintiff articulate some

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injury suffered other than the absence of information or a recitation of the statue. See, e.g.,

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Jaimez, 181 Cal. App. 4th at 1306 (“While there must be some injury in order to recover damages,

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a very modest showing will suffice”); Ortega v. J.B. Hunt Transp., Inc., 258 F.R.D. 361, 374

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(C.D. Cal. 2009) (“the types of injuries on which a Section 226 claim may be premised include the

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possibility of not being paid overtime, employee confusion over whether they received all wages

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owed them, difficulty and expense involved in reconstructing pay records, and forcing employees

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to make mathematical computations to analyze whether the wages paid in fact compensated them

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for all hours worked”) (internal quotations omitted); Yuckming Chiu v. Citrix Sys., Inc., No. SA
CV 11-1121 DOC, 2011 WL 6018278, at *6 (C.D. Cal. Nov. 23, 2011). Plaintiffs have not

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United States District Court
Northern District of California

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attempted to allege even the minimum requirements of “injury”: that they suffered confusion, had

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to complete mathematical calculations, or had to reconstruct time records. Therefore, they have

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not stated the third element of the section 226(a) claim.
That the proposed amended complaint (“PAC”) is deficient underscores other Foman

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factors as well. As discussed, it appears that amendment would be futile since plaintiffs have still

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failed to present a viable claim. But if granting leave to amend were not futile, it would result in

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undue delay caused entirely by plaintiffs. Because the PAC fails to state a claim, plaintiffs would

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need to file yet another amended complaint addressing the concerns in this Order. This case has

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been ongoing for over two years, has undergone discovery, and has proceeded to the class

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certification stage where certification was denied on all the plaintiffs’ pleaded claims. Plaintiffs’

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inability to plead their cause of action even after I directed them to do so with specific instructions

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after class certification was briefed and denied, see Order at 33, and after I warned them that no

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further continuances would be allowed,2 demonstrates undue delay in this case. See Dkt. No. 80;

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Mansfield v. Midland Funding, LLC, No. 09CV358 L WVG, 2011 WL 1212939, at *6 (S.D. Cal.

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Mar. 30, 2011) (finding undue delay in bringing motion to amend at the time of class

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certification).

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When I continued the schedule for briefing on class certification, I cautioned that “no additional
continuances will be granted absent a strong showing of good cause.” Dkt. No. 80 at 6.
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The same reasons also support a finding that defendants will be prejudiced by allowing

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amendment. Plaintiffs argue that they do not seek additional discovery prior to the expected

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motion for certification on this claim. Mot. 3. But I agree with defendants that they may need to

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“file a new Rule 12(b) motion, re-depose Plaintiffs, propound new written discovery, take new

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depositions of putative class members, [or] garner evidence to show they did not act ‘knowingly

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and intentionally.’” Oppo. 8 (Dkt. No. 120). Plaintiffs’ statement that the necessary discovery is

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complete is a one-sided assessment, and their argument that defendants will not suffer prejudice is

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misplaced. As defendants point out, the “direct” wage statement claim “focuses on whether the

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wage statements themselves satisfy section 226(a),” which was not the focus of prior discovery.
Oppo. 14. At the very least, discovery would need to be conducted regarding the actual wage

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United States District Court
Northern District of California

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statements themselves.
In arguing that they will suffer prejudice, defendants also assert that plaintiffs violated the

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parties’ prior stipulation and order. Oppo. 10. This directed plaintiffs to file a consolidated

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complaint that “shall be limited to the claims previously filed and which shall not seek to extend

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the statute of limitations beyond the limitations period currently applicable to the claims asserted

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in each case.” Dkt. No. 50 at 2. The stipulation also provided that plaintiffs would file no more

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than one motion for class certification, “excluding amended motions for class certification

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pursuant to a court order.” Id. Although defendants overstate the scope of the stipulation in

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arguing that plaintiffs violated its express terms, the stipulation does indicate that amendment will

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prejudice defendants, who relied on the representations that plaintiffs would file a consolidated

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complaint before moving for class certification and would not file more than one motion for class

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certification.3
For the reasons discussed, plaintiffs fail to satisfy even the liberal requirements of Rule 15.

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Because of (i) the prior amendments in this case, (ii) the deficiencies in the PAC, (iii) the late

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stage in the proceedings, and (iv) a strong showing of the Foman factors of undue delay and

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I do not reach the issue of whether plaintiffs’ new theory of a direct wage statement violation
relates back to the initial complaint, which asserted that derivative wage statement violations
occurred.
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United States District Court
Northern District of California

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prejudice to the defendants, I DENY plaintiffs’ motion for leave to amend.
II. PLAINTIFFS MAY NOT AMEND THEIR COMPLAINT TO INCLUDE ANY PAGA
CLAIMS
In the Order, I dismissed with prejudice the section 226(a)(9) claims because plaintiffs’
“notice letters did not give the LWDA or Cinemark any specific information regarding the
potential violations, such as the fact that Cinemark listed the same pay rate for both overtime pay
and regular pay.” Order at 25. In doing so, I rejected plaintiffs’ argument that they should be
permitted to cure their failure to provide adequate notice, because the purpose of the notice
requirement under PAGA is to provide information to both defendants and the LWDA. Id. (“[t]he
failure to properly notify the LWDA, and possibly prevent future litigation, cannot be remedied.”).
Even though I dismissed plaintiffs’ section 226(a)(9) PAGA claims with prejudice and did
not allow supplemental briefing on this issue, plaintiffs state that “Amey has now sent a more
detailed letter, thereby curing the insufficiency that the Court found,” and request leave to amend
to assert a PAGA claim based on section 226(a)(9). Mot. 1. This request is inappropriate, and for
the reasons discussed in the prior Order it is DENIED.
While I did permit the plaintiffs to request amendment of the other PAGA claims in their
supplemental brief, they have not done so. Because plaintiffs have not addressed my concerns
about manageability or demonstrated how they will identify aggrieved employees with adequate
specificity, I conclude that they may not amend their complaint to include the remaining PAGA
claims.
CONCLUSION
Plaintiffs’ request for leave to amend is DENIED. A Case Management Conference is set
for August 4, 2015 at 2:00 p.m. The parties shall file a Joint Statement on or before July 28, 2015
that addresses a proposed schedule for resolving the individual claims.
IT IS SO ORDERED.
Dated: July 9, 2015
______________________________________
WILLIAM H. ORRICK
United States District Judge
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