Ghazvini v. Pittsburg Wholesale Grocers, Inc. (dba PITCO Foods) et al
Filing
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ORDER by Magistrate Judge Jacqueline Scott Corley granting 10 Motion to Remand (ahm, COURT STAFF) (Filed on 11/17/2014)
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UNITED STATES DISTRICT COURT
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NORTHERN DISTRICT OF CALIFORNIA
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RAY GHAZVINI,
Case No. 3:14-cv-03761-JSC
Plaintiff,
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v.
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United States District Court
Northern District of California
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PITTSBURGH WHOLESALE GROCERS,
INC. et al.,
ORDER GRANTING MOTION TO
REMAND AND DENYING REQUEST
FOR ATTORNEY'S FEES
Re: Dkt. No. 10
Defendants.
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Plaintiff Ray Ghazvini (“Plaintiff”) sued his former employer—Defendant Pittsburgh
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Wholesale Grocers, Inc., dba PITCO FOODS 1, (“PITCO”) and Defendant Pacific Groservice,
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Inc., dba PITCO FOODS 1, (collectively, “Defendants”)—for various labor law violations in the
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Superior Court for the County of Alameda. Defendants subsequently removed the action to this
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Court alleging federal question jurisdiction. Now pending before the Court is Plaintiff’s motion to
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remand and request for attorney’s fees. (Dkt. No. 10.) After carefully considering the parties’
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submissions, and having had the benefit of oral argument on November 6, 2014, the Court
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concludes that the totality of the circumstances favors construing Plaintiff’s complaint as alleging
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only state law causes of action that do not raise a “substantial question” of federal law, and
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therefore GRANTS Plaintiff’s motion to remand. Nevertheless, because Defendants had an
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objectively reasonable basis for removal, the Court DENIES Plaintiff’s request for attorney’s fees.
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FACTUAL AND PROCEDURAL BACKGROUND
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Plaintiff was employed by PITCO from August 31, 1998 until his termination on January
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30, 2014. (Complaint ¶¶ 9–10.)
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On July 16, 2014, Plaintiff filed suit against Defendants in the Superior Court of
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California, County of Alameda (Case No. RG14733198), alleging that he was improperly
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classified as an exempt employee throughout his employment with PITCO and that he was not
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paid statutory overtime. (Id. ¶ 9.) Plaintiff’s complaint appears to assert the following four
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causes of action: (1) failure to pay all wages due (overtime and accrued paid time off) in violation
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of California Labor Code (“CLC”) §§ 227.3, 510, and 1194, Industrial Welfare Commission
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(“IWC”) Wage Order 4-2001, and the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 207; (2)
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waiting time penalties under CLC §§ 201 and 203; (3) improper wage statements in violation of
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CLC § 226(a); and (4) unlawful business practices under California Business and Professions
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Code §17200, et seq. (Id. ¶¶ 18–41.)
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Defendants subsequently removed the case to this Court on the basis of federal question
jurisdiction, asserting that removal was proper because Plaintiff’s first cause of action was brought
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United States District Court
Northern District of California
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in part under the FLSA. (Dkt. No. 1 at 4.) The first cause of action specifically alleges that:
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Plaintiff did not qualify for any exemption under California law.
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. . . PITCO failed and refused to pay Plaintiff compensation for paid
time off required by 29 USC § 207, California Labor Code §§ 227.3
and 1194, and IWC Wage Order 4-2001.
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. . . PITCO failed and refused to pay Plaintiff a total of $87,746.00
in overtime compensation required by the federal Fair Labor
Standards Act (“FLSA”), 29 USC § 207, California Labor Code §§
510 and 1194, and IWC Wage Order 4-2001.
(Id. ¶¶ 19–21.) The complaint caption characterizes the first cause of action as “FAILURE TO
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PAY ALL WAGES DUE, INCLUDING OVERTIME (FLSA 29 USC § 207, CAL. LABOR
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CODE §§ 510, 1194).” (Id. at 1).
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Plaintiff’s motion to remand and request for attorney’s fees followed. (Dkt. No. 10.)
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LEGAL STANDARD
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“A motion to remand is the proper procedure for challenging removal.” Leo v. Alameda
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Cnty. Med. Ctr., No. C 06-03799 SI, 2006 WL 2669001, at *1 (N.D. Cal. Sept. 18, 2006). A
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district court must remand a removed action “if at any time before final judgment it appears that
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the district court lacks subject matter jurisdiction.” 28 U.S.C. § 1447(c). The Ninth Circuit
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“strictly construe[s] the removal statute against removal jurisdiction.” Gaus v. Miles, Inc., 980
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F.2d 564, 566 (9th Cir. 1992). “Th[is] ‘strong presumption’ against removal jurisdiction means
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that the defendant always has the burden of establishing that removal is proper.” Id.
The Court has original “federal question” jurisdiction over civil actions “arising under”
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federal law. 28 U.S.C. § 1331. Removal based on jurisdiction under section 1331 is governed by
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the “well-pleaded complaint rule.” Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987). Under
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the rule, “federal jurisdiction exists only when a federal question is presented on the face of the
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plaintiff’s properly pleaded complaint.” Id.
DISCUSSION
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Plaintiff’s motion for remand contends that removal was improper because the FSLA is not
an essential element of his complaint, and the complaint therefore does not present a federal issue
on its face. (Dkt. No. 10 at 3–4.) Defendant counters that Plaintiff’s first cause of action arises
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United States District Court
Northern District of California
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under federal law and includes more than just a “mere reference” to the FLSA. (Dkt. No. 12 at 3–
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5.) Thus, the Court must decide whether Plaintiff’s reference to the FLSA in the complaint—
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particularly in the first cause of action for failure to pay all wages due—gives rise to federal
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subject matter jurisdiction. Although it is a close question, given the strong presumption against
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removal, the totality of the circumstances weigh in favor of construing Plaintiff’s cause of action
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as one created solely by state law. Moreover, because the resolution of an FLSA violation is not
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an essential element of Plaintiff’s state law cause of action, there is no “substantial federal
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question,” and remand is proper.
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A.
Whether the Cause of Action “Arises Under” Federal Law
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To resolve whether removal was proper, the Court must determine whether Plaintiff’s first
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cause of action arises under federal law. A claim “arises under” federal law where a well-pleaded
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complaint establishes that either: (1) federal law creates the cause of action; or (2) the plaintiff’s
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right to relief necessarily depends on a resolution of a substantial question of federal law.
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Christianson v. Colt Indus. Operating Corp., 486 U.S. 800, 808–09 (1988); see also Virgin v.
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Cnty. of San Luis Obispo, 201 F.3d 1141, 1142–43 (9th Cir. 2000) (“A claim arises under federal
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law within § 1331 if it is apparent from the face of the complaint either that (1) a federal law
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creates the plaintiff’s cause of action; or (2) if a state law creates the cause of action, a federal law
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that creates a cause of action is a necessary element of the plaintiff's claim.”). “In addition, the
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plaintiff is the ‘master’ of her case, and if she can maintain her claims on both state and federal
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grounds, she may ignore the federal question, assert only state claims, and defeat removal.”
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Duncan v. Stuetzle, 76 F.3d 1480, 1485 (9th Cir. 1996).
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Here, the key determination is whether Plaintiff’s claim for “failure to pay all wages due,”
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on its face, is a cause of action created by state or federal law. There are two ways to construe
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Plaintiff’s unpaid wages claim: (1) the citation to the FLSA evidences a cause of action created by
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federal law; or (2) the FLSA is merely an incidental reference or theory of liability within a cause
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of action created by California law. For the reasons explained below, the Court construes
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Plaintiff’s claim as the latter.
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United States District Court
Northern District of California
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1.
Federal Law Creates Cause of Action
“Most federal-question jurisdiction cases are those in which federal law creates a cause of
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action.” Wander v. Kaus, 304 F.3d 856, 858 (9th Cir. 2002). “The question whether a statute
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creates a cause of action, either expressly or by implication, is basically a matter of statutory
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construction.” Opera Plaza Residential Parcel Homeowners Ass’n v. Hoang, 376 F.3d 831, 834
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(9th Cir. 2004). An “FLSA cause of action raises a federal question, and the Court properly may
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exercise subject matter jurisdiction over [an] FLSA cause of action.” Hernandez v. Martinez, No.
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12-CV-06133-LHK, 2014 WL 3962647, at *3 (N.D. Cal. Aug. 13, 2014).
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“Both the federal [FLSA] and California law require that an employer pay overtime wages
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to employees unless those employees are classified as exempt employees under the applicable
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law.” Rhea v. General Atomics, 227 Cal. App. 4th 1560, 1566–67 (Cal. App. 4th Dist. 2014); see
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29 U.S.C. § 207; Cal. Lab. Code § 510. To enforce these overtime provisions, both the FLSA and
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the CLC create an express right of action. See 29 U.S.C. § 216(b) (“An action to recover the
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liability prescribed in [section 207] may be maintained against any employer . . . in any Federal or
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State court of competent jurisdiction.”); Cal. Lab. Code § 1194(a) (“Notwithstanding any
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agreement to work for a lesser wage, any employee receiving less than the legal minimum wage or
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the legal overtime compensation applicable to the employee is entitled to recover in a civil action
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the unpaid balance of the full amount of this minimum wage or overtime compensation.”). Thus,
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the federal and state law provisions that Plaintiff cites each allow a private right of action to
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redress an employer’s alleged failure to pay overtime. The question still remains, however,
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whether Plaintiff’s complaint—on its face—alleges a cause of action under the CLC, the FLSA, or
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both.
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According to Plaintiff, the complaint “charges Defendants with violating only state law
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and nothing more,” as the “main factual and legal allegations . . . allege violations of the
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California Labor Code.” (Dkt. No. 10 at 4.) Defendants counter that Plaintiff’s first cause of
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action charges them with violating section 207 of the FLSA, “a federal statute which expressly
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confers jurisdiction to a federal court.” (Dkt. No. 12 at 3–4.) They maintain that Plaintiff’s
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reference to the FLSA provided notice of an FLSA violation, “which is all that is required to state
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United States District Court
Northern District of California
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a separate claim.” (Id. at 5.)
Defendants cite Tan v. Dolby Laboratories., Inc., No. 05-03973 WHA, 2006 WL 463505
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(N.D. Cal. Feb. 24, 2006), in support of their argument. In Tan, a complaint filed in state court
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alleged that the defendants deprived the plaintiff of “her right to be free from sexual
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discrimination . . . as provided by Title VII of the Civil Rights Act of 1964, Section 701 et seq., . .
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. as well as California Government Code, §§ 12900, et seq.” The Tan defendants removed the
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action to federal court based on plaintiff’s reference to Title VII. Id. at *1. The plaintiff, on her
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motion to remand, maintained that the citation to Title VII did not allege a federal cause of action,
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but was “a mere reference to federal law provided as an illustration of public policy in support of
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plaintiff’s sexual discrimination claim.” Id. The court denied the motion, and held that the
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plaintiff’s “clear invocation of Title VII . . . . can only be construed as setting forth a cause of
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action under Title VII.” Id. at *2.
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While the complaint here bears a strong similarity to the one in Tan, that decision must
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also be reconciled with the Ninth Circuit’s holding in Easton v. Crossland Mortgage Corp., 114
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F.3d 979 (9th Cir. 1997). In Easton, the plaintiffs alleged sexual harassment in violation of Title
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VII of the Civil Rights Act of 1964, California Government Code § 12940, and the right of
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privacy under the California and federal constitutions. Id. at 981. The defendant removed the
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case to federal court based on the references to Title VII and the right of privacy, and the district
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court denied the plaintiff’s motion for remand. Id. The Ninth Circuit reversed, holding that “the
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mere reference of a federal statute in a pleading will not convert a state law claim into a federal
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cause of action if the federal statute is not a necessary element of the state law claim and no
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preemption exists.” Id. at 982. The Ninth Circuit noted that “the plaintiffs alleged state law
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claims which included incidental reference to a federal statute and the U.S. Constitution,” and that
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the “remedies sought were founded exclusively on state law.” Id. Moreover, “[a]ny lingering
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apprehension about the plaintiffs’ intentions was resolved by plaintiffs’ immediate actions
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clarifying their intent upon removal,” as they “adamantly eschewed relief based on federal law.”
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Id. “Taking into account all of these circumstances, the district court should have granted the
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motion to remand and erred in failing to do so.” Id.
The Court finds the situation here more analogous to Easton than Tan. Unlike Tan,
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United States District Court
Northern District of California
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Plaintiff’s “clear invocation” of the FLSA does not mean that his claim can “only be construed as
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setting forth a cause of action under” federal law. Defendants contend that the plain language of
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the complaint suggests that Plaintiff seeks to pursue a FLSA claim as well as a claim under state
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law. Defendants note that Plaintiff (a) twice uses language that claims Defendants failed to act in
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a manner “required by” the FLSA (see Complaint ¶¶ 20–21); and (b) invokes FLSA section 207 in
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the complaint caption for the first cause of action, further evidencing an intent to bring a cause of
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action under federal law (see id. at 1). While this language suggests a federal claim, it must be
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weighed against competing factors present in the complaint.
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First, the entire basis for Plaintiff’s first cause of action (and the remaining derivative
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claims in the complaint) is the allegation that he was improperly classified as an exempt employee,
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when he “did not qualify for any exemption under California law.” (See id. ¶ 19.) Plaintiff does
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not include any discussion of exemptions under federal law. Plaintiff also references multiple
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sections of the CLC and an IWC Wage Order, compared to one section of the United States Code.
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(See id. ¶¶ 20–21.) Moreover, Plaintiff cites the section of the CLC that creates a private right of
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action for failure to pay overtime wages (section 1194), but does not cite the identical provision of
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the FLSA. (See id.) This omission supports an inference that Plaintiff intended to allege a cause
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of action solely under state law. Lastly, as in Easton, Plaintiff makes no reference to federal law
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in his prayer for relief and has “adamantly eschewed relief based on federal law” upon removal. 1
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See Easton, 114 F.3d at 981.
While it is a close call, given the Ninth Circuit’s “strong presumption” against removal and
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that the factors present in Easton are present here, the Court construes Plaintiff’s cause of action
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for “failure to pay all wages due” as a state law claim under the CLC and IWC Wage Order. The
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only remaining question, then, is whether this cause of action raises a substantial question of
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federal law.
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Substantial Question of Federal Law
When analyzing a cause of action brought under state law, a claim supported by alternative
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theories in the complaint may not form the basis for federal question jurisdiction unless federal
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United States District Court
Northern District of California
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law is essential to each of those theories. Christianson, 486 U.S. at 810; Duncan, 76 F.3d at 1486.
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“[T]he mere presence of a federal issue in a state cause of action does not automatically confer
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federal question jurisdiction.” Merrell Dow Pharms. Inc. v. Thompson, 478 U.S. 804, 813 (1986);
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see also Morales v. Prolease PEO, LLC, 2011 WL 6740329, at *3 (C.D. Cal. Dec. 22, 2011) (“A
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claim does not present a ‘substantial question’ of federal law merely because a federal question is
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an ‘ingredient’ of the cause of action.”). “[I]f a single state-law based theory of relief can be
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offered for each of the . . . causes of action in the complaint, then the exercise of removal
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jurisdiction was improper.” Duncan, 76 F.3d at 1486.
Plaintiff maintains that his complaint “simply alleges that because Defendants’ conduct
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runs afoul of the[] FLSA regulations, the same conduct constitutes violations of the CLC and the
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IWC Wage Orders.” (Dkt. No. 10 at 4.) Defendants claim that this argument is proof that
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“Plaintiff intends to make the question of whether or not Defendants violated the FLSA a central
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issue in this action.” (Dkt. No. 12 at 5.)
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While similar in certain regards, the FLSA and California labor laws operate under
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different standards. “Although California law on the issue is patterned to some extent on federal
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At oral argument Plaintiff admitted that it may have been a mistake to reference the FLSA, and
offered to amend his complaint to remove all references to federal law if it would clarify his intent
to pursue only state law claims.
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law, the FLSA explicitly permits greater employee protection under state law, allowing states to
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regulate overtime wages.” Rhea, 227 Cal. App. 4th at 1567 (internal citations and quotation marks
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omitted). For instance, “Section 203(g) of the FLSA defines ‘employ’ to include ‘suffer or permit
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to work’ which courts have interpreted to mean ‘with the knowledge of the employer.’”
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Washington v. Crab Addison, Inc., No. C 08–5551 PJH, 2010 WL 2528963, at *3 (N.D. Cal. June
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18, 2010). Thus, “a claim brought under FSLA § 207 may arguably require proof of some level of
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employer knowledge,” whereas “California Labor Code § 510 does not contain this statutory
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language and cannot be subjected to the same analysis.” Id. Similarly, wage orders issued by the
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IWC “do not incorporate the federal definition of employment.” Martinez v. Combs, 49 Cal. 4th
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35, 52 (Cal. 2010).
United States District Court
Northern District of California
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California courts have recognized that the FLSA can “provide useful guidance in applying
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state law.” Huntington Mem’l Hosp. v. Super. Ct., 131 Cal. App. 4th 893, 903 (Cal. App. 2d Dist.
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2005) (analyzing FLSA section 207 in state law unfair business practices claim for failure to pay
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overtime under Cal. Labor Code section 510). However, the two statutes that Plaintiff cites in his
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claim for failure to pay overtime—FLSA section 207 and CLC section 510—“cannot be subjected
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to the same analysis.” Washington, 2010 WL 2528963, at *3. Thus, while the finding of an FLSA
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violation may be instructive or helpful in proving a state law claim for failure to pay overtime, it is
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not an essential element of a cause of action brought under the CLC and IWC Wage Order.
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Plaintiff can maintain his cause of action relying solely on California law.
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Therefore, Plaintiff has offered “a single state-law based theory of relief . . . for each of the
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. . . causes of action in the complaint, [and] the exercise of removal jurisdiction was improper.”
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See Duncan, 76 F.3d at 1486. Based on the foregoing, the Court construes Plaintiff’s first cause of
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action as a claim created by state law that raises no substantial question of federal law, and
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therefore GRANTS Plaintiff’s motion to remand.
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B.
Attorney’s Fees
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A court remanding a case may “require payment of just costs and any actual expenses,
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including attorney fees, incurred as a result of the removal.” 28 U.S.C. § 1447(c). “Absent
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unusual circumstances, courts may award attorney’s fees under § 1447(c) only where the
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removing party lacked an objectively reasonable basis for seeking removal.” Martin v. Franklin
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Capital Corp., 546 U.S. 132, 141 (2005). “Conversely, when an objectively reasonable basis
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exists, fees should be denied.” Id.
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Contrary to Plaintiff’s assertion at oral argument, it was not “obvious” that his claim arose
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solely under state law. As stated above, the question was a close one, and removal would have
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been proper had the Court found Tan more persuasive than Easton. Given the presence of the
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FLSA in the complaint’s caption page (which Plaintiff conceded was his error) and first cause of
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action, Defendants had an objectively reasonable basis to seek removal on federal question
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grounds.
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The Court therefore DENIES Plaintiff’s request for attorney’s fees.
United States District Court
Northern District of California
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CONCLUSION
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For the reasons stated above, the Court GRANTS Plaintiff’s motion to remand and
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DENIES Plaintiff’s request for attorney’s fees.
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IT IS SO ORDERED.
Dated: November 17, 2014
______________________________________
JACQUELINE SCOTT CORLEY
United States Magistrate Judge
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