McBain v. Behr Paint Corporation

Filing 27

ORDER by Judge Maria-Elena James granting in part and denying in part 14 Motion to Dismiss. Amended Pleadings due by 4/24/2017. (mejlc3, COURT STAFF) (Filed on 4/3/2017)

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1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 RYAN MCBAIN, Case No. 16-cv-07036-MEJ Plaintiff, 8 ORDER RE: MOTION TO DISMISS v. Re: Dkt. No. 14 9 10 BEHR PAINT CORPORATION, et al., Defendants. United States District Court Northern District of California 11 12 INTRODUCTION 13 Defendants Behr Paint Corporation (“Behr Paint”), Behr Process Corporation (“Behr 14 Process”), and Masco Corporation (“Masco”) (collectively, “Defendants”) filed a Motion to 15 Dismiss pursuant to Federal Rule of Civil Procedure (“Rule”) 12(b)(1) and (6). Mot., Dkt. No. 14. 16 Plaintiff Ryan McBain (“Plaintiff”) filed an Opposition (Dkt. No. 20) and Defendants filed a 17 Reply (Dkt. No. 22). The Court heard oral argument on March 23, 2017. Having considered the 18 parties’ positions, the relevant legal authority, and the record in this case, the Court GRANTS IN 19 PART Defendants’ Motion for the following reasons. 20 21 BACKGROUND Plaintiff alleges he has been employed by “Behr” as a field representative to stock and 22 maintain Behr products in specific Home Depot stores in California and to answer questions about 23 Behr products. Compl. ¶¶ 1, 7, 20, Dkt. No. 1. Plaintiff alleges Defendants regularly require 24 representatives (or “Reps”) to work overtime hours both inside Home Depot stores and outside of 25 stores. Id. ¶¶ 20-33. He alleges Defendants misclassified him and other Reps as exempt from 26 overtime requirements under the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201 et seq., and 27 the California Labor Code. Id. ¶¶ 1-7. He brings this FLSA Collective action on behalf of all 28 current and former Reps in California who were misclassified as exempt, are entitled to unpaid 1 wages for which they did not receive overtime compensation, and are entitled to liquidated 2 damages pursuant to the FLSA. Id. ¶ 4. He also asserts claims under the California Labor Code 3 and California’s Unfair Competition Law. Id. ¶¶ 5-6. Plaintiff alleges each Defendant is an 4 employer within the meaning of the FLSA and California law. Id. ¶¶ 8-9, 76-77, 89-90. LEGAL STANDARDS 5 6 A. Rule 8 7 Rule 8(a) requires that a complaint contain a “short and plain statement of the claim 8 showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). A complaint must therefore 9 provide a defendant with “fair notice” of the claims against it and the grounds for relief. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal quotations and citation omitted). 11 United States District Court Northern District of California 10 B. 12 Rule 12(b)(1) Federal district courts are courts of limited jurisdiction; “[t]hey possess only that power 13 authorized by Constitution and statute, which is not to be expanded by judicial decree.” Kokkonen 14 v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994) (citation omitted). Accordingly, “[i]t 15 is to be presumed that a cause lies outside this limited jurisdiction, and the burden of establishing 16 the contrary rests upon the party asserting jurisdiction.” Id.; Chandler v. State Farm Mut. Auto. 17 Ins. Co., 598 F.3d 1115, 1122 (9th Cir. 2010). 18 Federal Rule of Civil Procedure 12(b)(1) authorizes a party to move to dismiss a lawsuit 19 for lack of subject matter jurisdiction. A jurisdictional challenge may be facial or factual. Safe 20 Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004). Where the attack is facial, the 21 court determines whether the allegations contained in the complaint are sufficient on their face to 22 invoke federal jurisdiction, accepting all material allegations in the complaint as true and 23 construing them in favor of the party asserting jurisdiction. Warth v. Seldin, 422 U.S. 490, 501 24 (1975). Where the attack is factual, however, “the court need not presume the truthfulness of the 25 plaintiff’s allegations.” Safe Air for Everyone, 373 F.3d at 1039. In resolving a factual dispute as 26 to the existence of subject matter jurisdiction, a court may review extrinsic evidence beyond the 27 complaint without converting a motion to dismiss into one for summary judgment. Id.; McCarthy 28 v. United States, 850 F.2d 558, 560 (9th Cir. 1988) (holding that a court “may review any 2 1 evidence, such as affidavits and testimony, to resolve factual disputes concerning the existence of 2 jurisdiction”). 3 C. 4 Rule 12(b)(6) A court may dismiss a complaint under Rule 12(b)(6) when it does not contain enough facts to state a claim to relief that is plausible on its face. Twombly, 550 U.S. at 570. “A claim has 6 facial plausibility when the plaintiff pleads factual content that allows the court to draw the 7 reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 8 556 U.S. 662, 678 (2009). “The plausibility standard is not akin to a ‘probability requirement,’ 9 but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. (quoting 10 Twombly, 550 U.S. at 557). “While a complaint attacked by a Rule 12(b)(6) motion to dismiss 11 United States District Court Northern District of California 5 does not need detailed factual allegations, a plaintiff’s obligation to provide the ‘grounds’ of his 12 ‘entitle[ment] to relief’ requires more than labels and conclusions, and a formulaic recitation of the 13 elements of a cause of action will not do. Factual allegations must be enough to raise a right to 14 relief above the speculative level.” Twombly, 550 U.S. at 555 (internal citations and parentheticals 15 omitted); see also Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011) (“[A]llegations in a 16 complaint or counterclaim may not simply recite the elements of a cause of action, but must 17 contain sufficient allegations of underlying facts to give fair notice and to enable the opposing 18 party to defend itself effectively.”). The court must be able to “draw the reasonable inference that 19 the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 663. 20 In considering a motion to dismiss, a court must accept all of the plaintiff’s allegations as 21 true and construe them in the light most favorable to the plaintiff. Id. at 550; Erickson v. Pardus, 22 551 U.S. 89, 93-94 (2007); Vasquez v. Los Angeles Cty., 487 F.3d 1246, 1249 (9th Cir. 2007). In 23 addition, courts may consider documents attached to the complaint. Parks Sch. of Bus., Inc. v. 24 Symington, 51 F.3d 1480, 1484 (9th Cir. 1995) (citation omitted). 25 If a Rule 12(b)(6) motion is granted, the “court should grant leave to amend even if no 26 request to amend the pleading was made, unless it determines that the pleading could not possibly 27 be cured by the allegation of other facts.” Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000) (en 28 banc) (internal quotations and citations omitted). However, the Court may deny leave to amend 3 1 for a number of reasons, including “undue delay, bad faith or dilatory motive on the part of the 2 movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice 3 to the opposing party by virtue of allowance of the amendment, [and] futility of amendment.” 4 Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003) (citing Foman v. 5 Davis, 371 U.S. 178, 182 (1962)). DISCUSSION 6 Defendants acknowledge Plaintiff was employed by Behr Paint; that Masco is Behr Paint’s 7 8 parent company; and that Behr Process is an affiliate of Behr Paint. See Mot. at 1. Defendants 9 move to dismiss the Complaint for failure to state a claim against Masco and Behr Process because Plaintiff has insufficiently pleaded that these Defendants are his employers. Defendants 11 United States District Court Northern District of California 10 also move to dismiss Plaintiff’s state law claims for lack of subject matter jurisdiction on the 12 ground the Complaint does not demonstrate compliance with the Class Action Fairness Act of 13 2005 (“CAFA”), 28 U.S.C. § 1332(d). Finally, Defendants argue this Court cannot, or in the 14 alternative should not, exercise supplemental jurisdiction over Plaintiff’s state law claims because 15 they do not arise from the same nucleus of operative facts and the state law claims predominate 16 over the single federal claim. 17 A. 18 Extrinsic Material In the Complaint, Plaintiff alleges Reps are paid by Behr Paint, but that their “performance 19 reviews, benefits documents, employee handbook, and documents relating to their annual 20 compensation list ‘Masco Coatings Group’ as their employer. The online employment application 21 submitted by Reps before their hire lists ‘Masco Architectural Coatings Group’ as the employer. 22 Monthly ‘commission’ invoices are sent by ‘Masco Architectural Group.’” Compl. ¶ 53. Plaintiff 23 also refers to the Behr Process website and Masco’s SEC 10-K filing. Id. ¶ 54 (website indicates 24 Masco acquired Behr Process in 1999, and 10-K filing indicates Masco owns a number of 25 companies, including Behr Process and Behr Paint). Although Plaintiff attaches two exhibits to 26 his Complaint (see Compl., Exs. A-B), these documents are not among them. Nonetheless, 27 Plaintiff relies upon them in his Opposition, arguing the Court may consider the documents 28 because they are “explicitly referenced” in the Complaint and “central” to his joint employer 4 1 allegations. Opp’n at 2, 9 (citing Branch v. Tunnell, 14 F.3d 449, 453 (9th Cir. 1994)). Plaintiff’s 2 listing of these generic categories of documents does not incorporate these documents by reference 3 into the Complaint: 4 5 6 7 8 9 A document is incorporated by reference “if the plaintiff refers extensively to the document or the document forms the basis of the plaintiff’s claim.” “The doctrine of incorporation by reference may apply, for example, when a plaintiff’s claim about insurance coverage is based on the contents of a coverage plan, or when a plaintiff’s claim about stock fraud is based on the contents of SEC filings.” Id. However, “the mere mention of the existence of a document is insufficient to incorporate the contents of a document.” Coleman-Anacleto v. Samsung Elecs. Am., Inc., 2017 WL 86033, at *5 (N.D. Cal. Jan. 10, 2017) (quoting United States v. Ritchie, 342 F. 3d 903, 908 (9th Cir. 2003) and Coto Settlement v. 11 United States District Court Northern District of California 10 Eisenberg, 593 F.3d 1031, 1038 (9th Cir. 2010)). Plaintiff does not reference these documents 12 extensively in the Complaint, nor do they form the basis of his claims. Plaintiff references the 13 documents in support of “other common factual allegations supporting the additional class and 14 PAGA claims” and to illustrate why he and other Reps are unsure about the identity of their 15 actual, legal employer. Compl. ¶¶ 53, 56; see also id. at ¶ 96, 102 (referencing employee 16 handbook). The Court also sustains Defendants’ hearsay objections; Plaintiff fails to lay a 17 foundation for his interpretation of the meaning of these documents, i.e., that they demonstrate 18 Masco and Behr Process were his employers. See Reply at 4 n.2. Under these circumstances, the 19 Court finds Plaintiff has not incorporated these documents by reference into his Complaint, and 20 the Court will not consider them on a motion to dismiss. 21 In addition, Plaintiff asks the Court to take judicial notice of (1) pages from the Behr 22 Process website, which counsel accessed on February 17, 2017; (2) Masco’s SEC Form 10-K; (3) 23 Richard Maus’ public LinkedIn page, wherein he lists himself as Vice President for Behr Process; 24 (4) a page of Masco Corp.’s website which identifies Richard Maus as being “from Behr Process”, 25 and the fact jobs listed on the Masco website “include[] the same positions available through Behr 26 Process[’] website for” sales representative positions; and (5) forms submitted by Defendants to 27 the California Secretary of State. Opp’n at 5-6, 8; Grimes Decl. ¶¶ 5-7, 12 & Exs. D-F, K, Dkt. 28 No. 20-2; Request for Judicial Notice, Dkt. No. 21. The Court grants Plaintiff’s request to take 5 1 judicial notice of the adjudicative facts contained in these documents, as they can be accurately 2 and readily determined from sources whose accuracy cannot be reasonably questioned. See Fed. 3 R. Evid. 201. Richard Maus, the Vice President of People Services for Behr Paint Corporation, submits a 4 5 declaration in support of Defendants’ Motion to Dismiss. Maus Decl., Dkt. No. 14-1. The Court 6 may consider the Maus Declaration when ruling on Defendants’ Rule 12(b)(1) Motion, but not on 7 their Rule 12(b)(6) Motion. See supra. Maus declares, based on personal knowledge, that there 8 are 51 individuals with the job positions Plaintiff identifies in the Complaint. Maus Decl. ¶ 7. 9 B. 10 Employment Relationship Defendants argue that Behr Paint is the employer of record for all members of the potential United States District Court Northern District of California 11 class and collective, and that the allegations of the Complaint do not plead facts to show Behr 12 Process and Masco had an employment relationship with Plaintiff. See Mot. at 2-5. Accordingly, 13 Defendants argue the Complaint should be dismissed for failure to state a claim against Behr 14 Process and Masco. 15 1. Applicable Law 16 A defendant must be an “employer” of the plaintiff to be liable under the FLSA. Bonnette 17 v. Cal. Health & Welfare Agency, 704 F.2d 1465, 1470 (9th Cir. 1983), abrogated on other 18 grounds by Garcia v. San Antonio Metro. Transit Auth., 469 U.S. 528 (1985). “Two or more 19 employers may be ‘joint employers’ for the purposes of the FLSA. All joint employers are 20 individually responsible for compliance with the FLSA.” Johnson v. Serenity Transp., Inc., 2016 21 WL 270952, at *10 (N.D. Cal. Jan 22, 2016) (citations omitted). 22 A defendant is an employer for purposes of the FLSA if it “(1) had the power to hire and 23 fire the employees, (2) supervised and controlled employee work schedules or conditions of 24 employment, (3) determined the rate and method of payment, and (4) maintained employment 25 records.” Bonnette, 704 F.2d at 1470. In addition to pleading facts showing the applicability of 26 the Bonnette factors, a plaintiff seeking to hold multiple entities liable as joint employers must 27 plead specific facts that explain how the defendants are related and how the conduct underlying 28 the claims is attributable to each defendant. Johnson, 2016 WL 270952, at *11. “A court should 6 1 consider all [the Bonnette] factors which are ‘relevant to [the] particular situation’ in evaluating 2 the ‘economic reality’ of an alleged joint employment relationship under the FLSA.” Torres- 3 Lopez v. May, 111 F.3d 633, 639 (9th Cir. 1997). A plaintiff need only allege facts demonstrating 4 “some” of the Bonnette factors apply in order to survive a motion to dismiss. Johnson, 2016 WL 5 270952, at *11. 6 A defendant is an employer under California law if it (1) exercised control over a 7 plaintiff’s wages, hours, or working conditions; (2) suffered or permitted him to work; or (3) 8 engaged him, thereby creating a common law employment relationship. See Martinez v. Combs, 9 49 Cal. 3d. 35, 64 (2010). 2. 11 United States District Court Northern District of California 10 Allegations of the Complaint and Judicially Noticeable Facts Plaintiff alleges each Defendant is his employer under the FLSA and the California Labor 12 Code, but because various entities have been presented as his employer, he is “unsure of [his] 13 actual, legal employer.” Compl. ¶¶ 8-9, 56. He alleges Reps’ pay stubs list Behr Paint 14 Corporation, but that their “performance reviews, benefits documents, employee handbook, and 15 documents relating to their annual compensation list ‘Masco Coatings Group’ as their employer.” 16 Id. ¶ 53. He alleges the job applications Reps submitted list “Masco Architectural Coatings 17 Group” as the employer, and that their monthly commission invoices are sent by “Masco 18 Architectural Group.” Id. The Complaint alleges Behr’s website states Masco acquired Behr 19 Process in 1999, and that Masco’s SEC 10-K filing represents Masco owns Behr Process and Behr 20 Paint. Id. ¶ 54. One of the attachments to the Complaint shows Behr Process operates as a d/b/a 21 of “Masco Coatings Group.” See Compl. Ex. B at 2 (PAGA letter). 22 The judicially noticeable facts show that Behr Paint, Behr Process, and Masco hold 23 themselves out to be related companies, a fact Defendants do not dispute (see Mot. at 1). For 24 example, the 10-K form states that Masco owns both Behr Paint and Behr Process, and that 25 Defendants share directors, officers, and employees (including Maus). Masco’s website appears 26 to list job postings that are also available on Behr Process’ website and redirects users to a 27 website. See also Opp’n at 5 (Behr’s website contains a link that routes 28 users who click on “careers” to a site). 7 1 3. Application of Bonnette Factors to Behr Process and Masco 2 Accepting as true the well-pleaded allegations of the Complaint, the documents attached to 3 the Complaint, and the judicially noticeable facts, Plaintiff has adequately alleged (1) numerous 4 employment documents he received listed “Masco Coatings Group” as his employer, including 5 performance reviews, employee handbook and benefits documents; and (2) Behr Process is a d/b/a 6 for Masco Coatings Group. Plaintiff has sufficiently alleged Behr Process, as a d/b/a for Masco 7 Coatings Group, maintained employment records, including the records necessary to produce his 8 performance reviews and benefits documents. See Bonnette, 704 F.2d at 1470. Similarly, the 9 allegation that Plaintiff’s performance review listed Behr Process, as a d/b/a for Masco Coatings Group, as Plaintiff’s employer at this stage is sufficient to show Behr Process controlled his rate of 11 United States District Court Northern District of California 10 payment and had the power to terminate him. Plaintiff has not alleged facts sufficient to show that 12 Behr Process, whether under its own name or as a d/b/a for Masco Coatings Group, controlled his 13 work schedule or conditions. Cf. Opp’n at 2 (arguing each category of documents described in 14 Complaint “deal with the day-to-day control and supervision” of field representatives). The 15 Complaint states facts showing the existence of some of the Bonnette factors, and sufficiently 16 alleges Behr Process was Plaintiff’s employer under the FLSA and the California Labor Code. 17 The Court finds, however, that the Complaint does not allege facts showing the existence 18 of any of the Bonnette factors with respect to Masco. Plaintiff “suggests” Masco Coatings Group, 19 Masco Architectural Coatings Group, and Masco Architectural Group are subdivisions of Masco, 20 and that Masco is a parent company that controls Behr Process and Behr Paint. See Opp’n at 14- 21 15. But Plaintiff has not alleged any facts establishing anything more than a parent-subsidiary 22 corporate relationship between the Behr Defendants and Masco. This is insufficient to establish 23 joint employer status under the Bonnette factors or under California law. See Laird v. Capital 24 Cities/ABC, Inc., 68 Cal. App. 4th 727, 737-38 (1998) (“An employee who seeks to hold a parent 25 corporation liable for the acts or omissions of its subsidiary on the theory that the two corporate 26 entities constitute a single employer has a heavy burden to meet under both California and federal 27 law. Corporate entities are presumed to have separate existences, and the corporate form will be 28 disregarded only when the ends of justice require this result. In particular, there is a strong 8 1 presumption that a parent company is not the employer of its subsidiary’s employees.”). He also 2 has alleged no facts showing Masco, as opposed to Masco Coatings Group, had the power to hire 3 or fire him; controlled his work schedule or conditions; controlled his rate or method of payment; 4 or maintained his employment records. 5 4. Ostensible Agency 6 Plaintiff argues the fact Defendants used “Behr Process”, “Masco Coatings Group,” 7 “Masco Corp.,” “Masco Architectural Coatings Group,” and “Behr Paint” on a “wide array of the 8 documents that define the employment relationship at issue” establishes an ostensible agency 9 between Masco and the Behr Defendants. Opp’n at 16. This fact does not change the Court’s analysis. First, Plaintiff’s argument that the documents at issue “define the employment 11 United States District Court Northern District of California 10 relationship” is conclusory and lacks foundation. Second, that Plaintiff received documents 12 naming Masco Coatings Group and Masco Architectural Coatings Group is insufficient to 13 establish ostensible agency as to Masco Corp. Third, Plaintiff has not alleged facts sufficient to 14 plead an ostensible agent theory as to Masco. To plead ostensible agency, a plaintiff must show: 15 (1) the person dealing with an agent had a reasonable belief in the agent’s authority; (2) the belief 16 was generated by some act or neglect by the principal; and (3) the person relying on the agent’s 17 apparent authority was not negligent in that belief. Ochoa v. McDonald’s Corp., 133 F. Supp. 3d 18 1228, 1239-40 (N.D. Cal. 2015) (applying California law). Plaintiff argues Ochoa shows he can 19 demonstrate ostensible agency between Masco and the Behr Defendants. Opp’n at 16 (arguing the 20 Ochoa Court found a triable issue of fact as to ostensible agency “given the prevalence of the 21 McDonald[’s] name on the paystubs, orientation materials, products, and website.”) The Ochoa 22 Court found a triable issue existed because employees declared “they wear McDonald’s uniforms, 23 serve McDonald’s food in McDonald’s packaging, receive paystubs and orientation materials 24 marked with McDonald’s name and logo, and, with the exception of Ms. Rodriguez, applied for a 25 job through McDonald’s website.” Ochoa, 133 F. Supp. 3d at 1240. Plaintiff has not alleged 26 Reps wore Masco uniforms, received paystubs from Masco, sold Masco paint, or applied for their 27 positions through the Masco website. In fact, Plaintiff does not allege any dealings with Masco— 28 only with Behr Process, Behr Paint, Masco Coatings Group and Masco Architectural Coatings 9 1 Group. See Compl.; Opp’n at 5-9. Plaintiff has failed to plead facts supporting an ostensible 2 agency relationship involving Masco. 3 5. Summary 4 For the foregoing reasons, the Court grants the Motion to Dismiss for failure to state a 5 claim as to Masco and denies the Motion as to Behr Process. The Motion is denied with leave to 6 amend. 7 C. CAFA 8 Under CAFA, this Court may not exercise diversity jurisdiction unless the aggregate 9 number of class members exceeds 100. See 28 U.S.C. § 1332(d)(5)(B); see also Mackall v. Healthsource Global Staffing, Inc., 2016 WL 4579099, at *2 (N.D. Cal. Sept. 2, 2016) (CAFA 11 United States District Court Northern District of California 10 “gives federal courts original jurisdiction over class actions where there are at least 100 class 12 members, at least one plaintiff is diverse in citizenship from any defendant, and the amount in 13 controversy exceeds $5,000,000, exclusive of interest and costs”). Defendants move to dismiss 14 the Complaint because the putative class consists of fewer than one hundred people. See Mot. at 15 7-8; Maus Decl. ¶ 7. Plaintiff agrees, based on the Maus Declaration, that jurisdiction does not 16 appear to lie under CAFA. See Opp’n at 21 n.4. Accordingly, Defendants’ Motion to Dismiss the 17 Complaint on this ground is granted. 18 D. 19 Supplemental Jurisdiction Plaintiff’s FLSA claim is based on failure to pay overtime wages; this is also the basis of 20 one of his claims under the California Labor Code. See Compl. ¶¶ 75-87 (FLSA), 88-91 (Cal. 21 Labor Code). Plaintiff asserts four additional claims under the California Labor Code for failure 22 to provide meal periods and rest periods; failure to provide accurate itemized wage statements; 23 failure to pay all wages due upon termination; and failure to reimburse business expenses. See id., 24 ¶¶ 92-115. He also asserts a claim under California’s Unfair Competition Law (“UCL”), Cal. Bus. 25 & Prof. Code § 17200, based on “failing to pay for all hours worked, failing to pay overtime 26 wages, failing to provide mandated meal and rest periods, failing to timely pay all wages earned, 27 failing to furnish accurate itemized wage statements, failing to keep required payroll records, 28 failing to pay all wages upon termination, failing to pay all wages twice per month, and failing to 10 1 indemnify Reps for business expenses in violation of California law and/or the FLSA.” Compl. 2 ¶ 119. Defendants argue this Court lacks supplemental jurisdiction over Plaintiff’s state law 3 claims because they do not arise from the same nucleus of operative fact as his FLSA overtime 4 claim. See Mot. at 8-11 (citing Wong v. HSBC Mortg. Corp. (USA), 2009 WL 151014, at *1-2 5 (N.D. Cal. Jan. 21, 2009) and other cases). In the alternative, they argue the Court should decline 6 to exercise supplemental jurisdiction over Plaintiff’s eight state law claims because these 7 “substantially predominate” over the FLSA claim. Id. at 11-13. 8 9 The relevant inquiry in determining whether causes of action “all arise out of the same nucleus of facts” is “not whether the claims involve some similar factual basis, but whether the state and federal claims are alternative theories of recovery for the same acts.” Wiley v. Trendwest 11 United States District Court Northern District of California 10 Resorts, Inc., 2005 WL 1030220, at *4 (N.D. Cal. May 3, 2005) (citing one of the opinions 12 Defendants cite in their Motion, Lyons v. Whisman, 45 F.3d 758, 761 (3d Cir. 1995) (“[W]hen the 13 same acts violate federal and state laws, the common nucleus of operative facts is obvious and 14 federal courts routinely exercise supplemental jurisdiction over the state law claims.”)). Some of 15 Plaintiff’s state law claims may be “so related” to the FLSA claim “that they form part of the same 16 case or controversy under Article III.” 28 U.S.C. § 1367(a). Specifically, Plaintiff’s state 17 overtime claim (the Second Cause of Action) and UCL claim (the Eighth Cause of Action)—to the 18 extent it is based on Defendants’ violation of the FLSA—are so related to his FLSA claim that 19 supplemental jurisdiction is appropriate. 20 Defendants argue supplemental jurisdiction does not exist over the state-law overtime 21 claims because, to determine whether Plaintiff and other Reps were misclassified under the outside 22 sales exemption, the fact finder will apply different tests for the FLSA and state law claims. See 23 Mot. at 9 (citing Wong, 2009 WL 151014, at *2 (“The federal test is qualitative in nature, focusing 24 on a determination of whether an employee’s primary duty is sales and whether such employee is 25 customarily and regularly engaged away from his employer’s place or places of business. By 26 contrast, California law differs substantially, because it employs a quantitative method focusing on 27 whether the employee spends more than half the number of hours worked engaged in outside 28 sales” (quoting Ramirez v. Yosemite Water Co., 20 Cal. 4th 785, 796 (1999)))). Plaintiff argues 11 1 the “slightly different” test is not as important as the underlying common issue that must be 2 decided similarly under federal or state law: whether he and other Reps were engaged in sales in 3 the first place. Opp’n at 19 (citing Campanelli v. The Hershey Co., 765 F. Supp. 2d 1185, 1189 4 n.10 (N.D. Cal. 2011)). The Court finds it may exercise supplemental jurisdiction over these two 5 state law claims because these are simply alternative theories of recovery for the same acts upon 6 which Plaintiff bases his FLSA claim. 7 But Plaintiff also alleges other acts by Defendants that violate only the California Labor Code, not the FLSA. Although Plaintiff argues almost all of these claims are derivative of the 9 core misclassification claim, a review of the Complaint demonstrates the state law claims are not 10 strictly derivative. For example, Plaintiff alleges Defendants fail to provide meal and rest periods, 11 United States District Court Northern District of California 8 and that Reps do not take such breaks “because of the amount of work they are assigned to 12 complete, and because of Behr’s lack of a policy” providing Reps with such breaks. Compl. ¶¶ 13 52, 92-103. Evaluating the merits of these two claims will require the Court to determine the 14 meaning of “provide” under the Labor Code, and the fact finder to evaluate a host of factual issues 15 and evidence not relevant to the FLSA or overtime claims. See Wong, 2009 WL 151014, at *2. 16 Plaintiff also alleges the wage statements Defendants provide are not accurate because the 17 employer and employer address are not complete and accurate, and because they fail to include the 18 actual hours worked, including overtime wages earned and all applicable hourly rates, etc. Id. ¶¶ 19 53, 58, 104-110. The accuracy of the employer’s name and address are not elements of Plaintiff’s 20 FLSA claims. Plaintiff alleges Defendants fail to reimburse Reps for reasonable business 21 expenses. Id. ¶¶ 59, 111-115. At oral argument, Plaintiff conceded the failure to reimburse claim 22 shares no common facts with the FLSA (or Labor Code) overtime claims. In addition to being 23 based on Defendants’ violation of the FLSA, Plaintiff’s UCL claim also is premised on 24 Defendants’ “unlawful, unfair, deceptive, and/or fraudulent business practices” that “include, 25 without limitation, failing to pay for all hours worked, failing to pay overtime wages, failing to 26 provide mandated meal and rest periods, failing to timely pay all wages earned, failing to furnish 27 accurate itemized wage statements, failing to keep required payroll records, failing to pay all 28 wages upon termination, failing to pay all wages twice per month, and failing to indemnify Reps 12 1 for business expenses in violation of California law and/or FLSA.” Id. ¶ 119. His California 2 Private Attorney General Act (“PAGA”) claim seeks to recover penalties for Defendants’ same 3 violations of the California Labor Code. Id. ¶ 125. 4 This is not a situation where Plaintiff’s state law claims “essentially replicate” his FLSA 5 claim. Compare Lindsay v. Gov’t Emps. Ins. Co., 448 F.3d 416, 424-25 (9th Cir. 2006) (state law 6 claims did not predominate over the FLSA claims because state law claims “essentially 7 replicate[d] the FLSA claims”), with Wiley, 2005 WL 1030220, at *5 (three causes of action 8 asserting numerous violations of California law at heart of commissions dispute predominated 9 over FLSA claim) and Wong, 2009 WL 151014, at *1-2 (declining to exercise supplemental jurisdiction where FLSA claim only required court to decide whether one of two specific FLSA 11 United States District Court Northern District of California 10 exemptions applied to plaintiff, whereas the ten state law claims raised “a far greater number of 12 issues, some of which are novel” under laws of three different states and defendants relied on “a 13 significantly greater number of exemptions” under those state laws). Plaintiff’s state law claims 14 would require the Court to evaluate many aspects of his employment with Defendants that are 15 unrelated to his overtime claims, and would implicate additional defenses that are not at issue with 16 the FLSA claim. 17 The Court declines to exercise supplemental jurisdiction over the non-overtime state law 18 claims because these claims would “substantially predominate[] over the” FLSA claim of which 19 this Court has original jurisdiction. See 28 U.S.C. § 1367(c)(2); see also Wong, 2009 WL 151014, 20 at *3 (if “state law claims remain joined with the [FLSA] claim herein, the federal tail will wag 21 what is in substance a state dog.” (internal quotations marks and citation omitted)). The Court 22 asked Plaintiff to state his position regarding the Court’s exercise of supplemental jurisdiction 23 over his Labor Code overtime claim if the Court declined to exercise supplemental jurisdiction 24 over the remainder of Plaintiff’s state law claims. Plaintiff asked the Court to exercise 25 supplemental jurisdiction over his overtime claim and his UCL claim, to the extent it is premised 26 on violations of the FLSA or Labor Code overtime claims. Dkt. No. 24. 27 28 CONCLUSION For the foregoing reasons, the Court GRANTS Defendants’ Motion to Dismiss for Failure 13 1 to State a Claim against Masco, with leave to amend, and DENIES the Motion as to Behr Process. 2 The Court also GRANTS the Motion to Dismiss for Lack of Subject Matter Jurisdiction based on 3 CAFA. Finally, the Court will exercise supplemental jurisdiction over the Second Cause of 4 Action (Labor Code overtime), and Eighth Cause of Action (UCL) to the extent it is under the 5 unlawful prong of the UCL based on a violation of the FLSA or overtime Labor Code claim, but 6 declines to exercise supplemental jurisdiction over Plaintiff’s remaining state law claims. 7 Plaintiff shall file any amended complaint no later than April 24, 2017. 8 9 IT IS SO ORDERED. 10 United States District Court Northern District of California 11 12 13 Dated: April 3, 2017 ______________________________________ MARIA-ELENA JAMES United States Magistrate Judge 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 14

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