Heck et al v. Heavenly Couture, Inc.

Filing 22

ORDER Re Motion to Dismiss and Motion to Compel Arbitration [Doc. Nos. 10 and 11 ]. Signed by Judge Cathy Ann Bencivengo on 6/16/2017. (jjg)

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UNITED STATES DISTRICT COURT

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SOUTHERN DISTRICT OF CALIFORNIA
CARLY HECK, an individual; SARA
LUND, an individual; and ALLY
ORTANEZ, an individual,

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Case No.: 3:17-CV-0168-CAB-NLS
ORDER RE MOTION TO DISMISS
AND MOTION TO COMPEL
ARBITRATION

Plaintiffs,
v.
HEAVENLY COUTURE, INC., a
California Corporation,

[Doc. Nos. 10 and 11]

Defendant.

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This matter is before the Court on Heavenly Couture’s motion to dismiss [Doc. No.

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10] and motion for an order compelling arbitration and/or immediately staying civil action

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[Doc. No. 11]. The motions have been fully briefed and the Court deems them suitable for

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submission without oral argument. For the reasons set forth below, the motion to dismiss

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is GRANTED with leave to amend as to the FLSA claim, and the motion to compel

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arbitration and/or stay civil action is deemed moot and DENIED without prejudice. The

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Court declines to exercise supplemental jurisdiction over, and dismisses without prejudice

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to filing in state court, Plaintiffs’ state law claims.

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FACTUAL BACKGROUND

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Plaintiffs Carly Heck, Sara Lund, and Ally Ortanez (collectively “Plaintiffs”) bring

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this hybrid collective action under the Fair Labor Standards Act, 29 U.S.C. § 201, et seq.

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(“FLSA”), and a class action, under Federal Rule of Civil Procedure (“FRCP”) Rule 23 for
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violations of California state law. Plaintiffs also bring a representative action for

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enforcement of California’s Private Attorneys General Act (“PAGA”). Plaintiffs were non-

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exempt, hourly, in-store employees of Defendant Heavenly Couture, Inc., a California

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corporation which operates a chain of retail clothing stores. Plaintiffs allege Defendant

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forced Plaintiffs to work uncompensated regular and overtime hours. Plaintiffs also allege

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Defendant failed to provide state-law-mandated meal and rest breaks, and that Defendant

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attempted to conceal such conduct by failing to provide accurate wage statements.

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Plaintiffs allege Defendant maintains a policy requiring employees to work off the clock

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during breaks and meal periods, and that Defendant failed to compensate Plaintiffs for

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overtime hours worked as required by FLSA and California law. Plaintiffs allege

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Defendant’s employment practices are in violation of the FLSA, the Code of Federal

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Regulations, the California Labor Code, the California Code of Regulations, California

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Industrial Wage Commission Wage Orders, and California’s Unfair Competition Law, Cal.

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Bus. & Prof. Code § 17200, et seq.

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Plaintiffs originally filed this action in the San Diego Superior Court on October 11,

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2016. Defendant filed a motion to compel arbitration in that action on January 13, 2017.

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[Doc. No. 11-2, ¶2.] Prior to the hearing scheduled for February 10, 2017 on that motion,

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the Plaintiffs dismissed their state court action without prejudice on January 31, 2017.

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[Doc. No. 11-2, ¶¶3-5.] Plaintiffs subsequently filed the current action in this Court on the

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same day with the additional cause of action under the FLSA.

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Defendant argues that the Plaintiffs’ cause of action under the FLSA should be

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dismissed because Plaintiffs “fail to allege any specific facts regarding which plaintiff

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supposedly worked off-the-clock, on what occasions and for how long.” [Doc. No. 10-1 at

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8.] Defendant also argues that the Court should decline to exercise supplemental

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jurisdiction over the Plaintiffs’ California state law claims. [Doc. No. 10-1 at 10.]

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Defendant argues that the Plaintiffs’ “state law claims and federal claim do not arise from

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a common nucleus of operative fact.” [Doc. No. 10-1 at 11.] Defendant alleges that the

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only connection between the Plaintiffs’ state law claims and federal claim is that both
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derive from the Plaintiffs’ employment relationship with the Defendant. Defendant also

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asserts that Plaintiffs’ state law claims substantially predominate over their federal claim.

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[Doc. No. 10-1 at 13.]

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LEGAL STANDARDS

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A. MOTION TO DISMISS

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To survive a motion to dismiss under Rule 12(b)(6), “a complaint must contain

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sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its

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face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v.

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Twombly, 550 U.S. 544, 570 (2007)). Thus, the Court “accept[s] factual allegations in the

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complaint as true and construe[s] the pleadings in the light most favorable to the

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nonmoving party.” Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031

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(9th Cir. 2008). On the other hand, the Court is “not bound to accept as true a legal

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conclusion couched as a factual allegation.” Iqbal, 556 U.S. at 678; see also Lee v. City of

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Los Angeles, 250 F.3d 668, 679 (9th Cir. 2001) (“Conclusory allegations of law are

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insufficient to defeat a motion to dismiss”). Nor is the Court “required to accept as true

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allegations that contradict exhibits attached to the Complaint or . . . allegations that are

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merely conclusory, unwarranted deductions of fact, or unreasonable inferences.” Daniels-

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Hall v. Nat’l Educ. Ass’n, 629 F.3d 992, 998 (9th Cir. 2010). “In sum, for a complaint to

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survive a [12(b)(6)] motion to dismiss, the non-conclusory factual content, and reasonable

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inferences from that content, must be plausibly suggestive of a claim entitling the plaintiff

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to relief.” Moss v. U.S. Secret Serv., 572 F.3d 962, 969 (9th Cir. 2009) (quotations omitted).

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B. SUPPLEMENTAL JURISDICTION

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28 U.S.C. Section 1367 provides in pertinent part that: “district courts shall have

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supplemental jurisdiction over all other claims that are so related to claims in the action

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within such original jurisdiction that they form part of the same case or controversy under

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Article III of the United States Constitution.” 28 U.S.C. § 1367(a). Even when claims are

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so related to claims within the original jurisdiction that they form part of the same case or

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controversy, federal district courts are not always required to entertain them. Thus, the
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statute expressly provides that district courts may decline to exercise supplemental

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jurisdiction under any of the following circumstances:

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(1) The claim raises a novel or complex issue of state law;
(2) The claim substantially predominates over the claim or claims over which the
court has original jurisdiction;
(3) The court has dismissed all claims over which it had original jurisdiction; or
(4) In exceptional circumstances, there are other compelling reasons for declining
jurisdiction.
28 U.S.C. § 1367(c).

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ANALYSIS

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A. MOTION TO DISMISS

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The Ninth Circuit’s decision in Landers v. Quality Communications, Inc., 771 F.3d

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638 (9th Cir. 2014), clarified the pleading requirements set forth in Iqbal and Twombly in

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the context of an FLSA unpaid overtime claim. In Landers, the plaintiff alleged that he

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was not paid minimum wage and was “subjected to a ‘piecework no overtime’ wage

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system, whereby he worked in excess of forty hours per week without being compensated

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for his overtime.” Landers, 771 F.3d at 640. The Ninth Circuit held that these allegations

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were inadequate, and that although “detailed factual allegations regarding the number of

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overtime hours worked are not required to state a plausible claim, . . . to survive a motion

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to dismiss, a plaintiff asserting a claim to overtime payments must allege that she worked

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more than forty hours in a given workweek without being compensated for the overtime

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hours worked during that workweek.” Id. at 644-45. To that end, the Ninth Circuit

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affirmed dismissal of the complaint, finding that “Landers’s allegations failed to provide

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sufficient detail about the length and frequency of his unpaid work to support a reasonable

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inference that he worked more than forty hours in a given week.” Id. at 646 (internal

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quotations and brackets omitted).

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Here, Plaintiffs’ allegations fail to provide sufficient detail regarding the length and

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frequency of unpaid work. Nor do Plaintiffs provide any detail regarding the alleged policy

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of Defendant requiring employees to work unpaid hours. Plaintiffs assert that “Defendant

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required Plaintiffs to work more than forty hours per week.” [Doc. No. 1 at 4.] Plaintiffs
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then assert that “Defendants did not adequately compensate Plaintiffs for overtime hours

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worked….” [Doc. No. 1 at 4.] These are merely legal conclusions which recite the elements

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of a FLSA violation. By these undetailed statements, Plaintiffs fail to meet the required

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burden under Landers. Plaintiffs’ argument that insisting on rights to take breaks resulted

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in disciplinary action bears no relation to their FLSA claim, because the FLSA does not

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require employers to provide breaks (that is a state law issue). Plaintiffs do allege that

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Plaintiff Heck was once disciplined for eating a yogurt on her lunch break instead of

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helping customers. But the complaint fails to state why this undescribed discipline violates

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federal law. While the FLSA does require a minimum wage to be paid during working

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hours, Plaintiffs do not allege in the “yogurt” incident that Plaintiff Heck was unpaid for

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hours worked.

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In their response to Defendant’s motion to dismiss, Plaintiffs assert that they have

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“pled details regarding Defendant’s corporate policy of requiring employees to falsify time

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records” in an effort to avoid paying for all hours worked by employees. [Doc. No. 18 at

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2.] This assertion is incorrect. In their complaint, Plaintiffs merely state that “Defendant’s

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policy was for its employees to clock out for their breaks but immediately return to the

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sales floor to continue working.” [Doc. No. 1 at 4.] The only other mention of a corporate

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policy by Defendant is a mere conclusion that Defendant had such a policy. [Doc. No. 1 at

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7.] These are not details, taken as true, from which the Court can reasonably infer that

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Defendant instituted a policy of not paying employees for working more than 40 hours in

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a week or failing to pay minimum wage for hours worked.

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The closest that the Plaintiffs come to meeting their burden of pleading required

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under Landers is stating in their response that “sometimes” missed breaks resulted in

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Plaintiffs actually working “more than eight hours a day or forty in a week” for which

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they were not paid overtime. [Doc. No. 18 at 2 (emphasis added).] This is insufficient to

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state a claim. Did the Plaintiffs actually work more than forty hours in a week for which

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they were not paid the proper overtime pay required under FLSA? Or did they work more

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than eight hours a day for which they were not paid overtime pay (which is not required
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by FLSA)? The Court cannot answer these questions because the Plaintiffs assert that it

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was one of the two, but do not explicitly say which. More detail is necessary in order for

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Plaintiffs to meet their burden and state a claim. As required by the Ninth Circuit under

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Landers, “to survive a motion to dismiss, a plaintiff asserting a claim to overtime

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payments must allege that she worked more than forty hours in a given workweek

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without being compensated for the overtime hours worked during that workweek.” 771

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F.3d at 644-45.

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B. SUPPLEMENTAL JURISDICTION

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“While discretion to decline to exercise supplemental jurisdiction over state law

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claims is triggered by the presence of one of the conditions in § 1367(c), it is informed by

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the Gibbs1 values ‘of economy, convenience, fairness, and comity.’ ” Acri v. Varian

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Assocs., Inc., 114 F.3d 999, 1001 (9th Cir.1997) (en banc)(citations omitted). A district

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court need not “articulate why the circumstances of [the] case are exceptional” to dismiss

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state-law claims pursuant to 28 U.S.C. section 1367(c)(1)-(3). San Pedro Hotel Co., Inc. v.

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City of L.A., 159 F.3d 470, 478–79 (9th Cir.1998) (quoting Exec. Software, 24 F.3d 1545,

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1557 (9th Cir. 1994).

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The Court declines to exercise supplemental jurisdiction over, and dismisses

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without prejudice to being filed in state court, Plaintiffs’ state law claims according to 28

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U.S.C. Sections 1367(c)(3) and 1367(c)(2). First, the Court has dismissed all claims over

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which it has original jurisdiction—the FLSA claim. 28 U.S.C. §1367(c)(3). Moreover,

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even if Plaintiffs adequately amend their FLSA complaint to state a valid claim, the state

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law claims substantially predominate over the FLSA claim, which is the only claim over

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which this Court has original jurisdiction. 28 U.S.C. §1367(c)(2). The only facts that will

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be relevant to the Plaintiffs’ FLSA claim are whether they were not paid the required

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minimum wage for all hours worked, and whether they were not paid the required overtime

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United Mine Workers of Am. v. Gibbs, 383 U.S. 715 (1966).

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wage for any hours worked in excess of forty in a given week. The state law claims raise a

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multitude of questions and issues that are irrelevant, and at best tangentially related to the

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FLSA claim. For instance, the state law claims require determinations of whether adequate

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breaks were provided, whether overtime was paid for hours worked in excess of eight in

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any given day, whether accurate wage statements were provided by Defendant according

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to California law, and the resolution of a number of other factual and legal disputes which

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will need to be determined according to California state law. In fact, it seems to be the

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failure to provide the state-law-mandated breaks which are the crux of the Plaintiffs’

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complaint. The Plaintiffs state as much in their response. [Doc. No. 18 at 2 (stating “all the

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causes of action arise at least in part from Defendant’s meal and rest break policy.”).] The

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Court finds that this state law issue substantially predominates over the federal claim. The

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Court is not persuaded by Plaintiffs’ assertion that their state law claims derive from their

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FLSA claims, as Plaintiffs originally filed this action in state court without asserting the

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FLSA claim.

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CONCLUSION

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For the foregoing reasons, the motion to dismiss is GRANTED with leave to amend

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as to the FLSA claim. The Court DECLINES to exercise supplemental jurisdiction over,

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and dismisses without prejudice to filing in state court, the state law claims. As a result,

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the motion to compel arbitration is deemed moot and is DENIED without prejudice.

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Plaintiffs may file an Amended Complaint, containing only an FLSA claim, no later

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than July 7, 2017. If no Amended Complaint is filed by that date, the case shall be

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DISMISSED WITHOUT PREJUDICE AND WITHOUT FURTHER COURT

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ORDER.

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IT IS SO ORDERED.
Dated: June 16, 2017

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