Heck et al v. Heavenly Couture, Inc.

Filing 34

ORDER Re Motion to Dismiss First Amended Complaint and Motion to Compel Arbitration. Signed by Judge Cathy Ann Bencivengo on 10/6/2017. (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,
v.

ORDER RE MOTION TO DISMISS
FIRST AMENDED COMPLAINT
AND MOTION TO COMPEL
ARBITRATION

HEAVENLY COUTURE, INC., a
California Corporation,

[Doc. Nos. 27 and 28]

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Case No.: 3:17-CV-0168-CAB-NLS

Plaintiffs,

Defendant.

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This matter is before the Court on Defendant Heavenly Couture’s motion to dismiss

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the First Amended Complaint (“FAC”) [Doc. No. 27] and motion for an order compelling

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arbitration and/or immediately staying civil action [Doc. No. 28]. The motions have been

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fully briefed and the Court deems them suitable for submission without oral argument. For

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the reasons set forth below, the motion to dismiss the FAC is GRANTED without leave to

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amend, and the motion to compel arbitration and/or stay civil action is deemed moot and

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DENIED without prejudice.

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

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(“FLSA”). Plaintiffs were non-exempt, hourly, in-store employees of Defendant Heavenly

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Couture, Inc., a California corporation which operates a chain of retail clothing stores.
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Plaintiffs allege Defendant forced Plaintiffs to work uncompensated regular and overtime

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hours. Plaintiffs also allege Defendant failed to provide state-law-mandated meal and rest

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breaks, and that Defendant attempted to conceal such conduct by failing to provide accurate

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wage statements. Plaintiffs allege Defendant maintains a policy requiring employees to

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work off the clock during breaks and meal periods, and that Defendant failed to compensate

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

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On October 11, 2016, Plaintiffs filed an action in the San Diego Superior Court,

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alleging various state law wage and hour claims against Defendant for: (1) failure to pay

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meal period premium pay; (2) failure to pay rest break premium pay; (3) failure to pay

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overtime wages; (4) failure to pay regular wages; (5) waiting time penalties; (6)violations

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of California’s Unfair Competition Law; and (7) failure to provide accurate wage

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statements (the “state court action”). [Doc. No. 11-2, ¶2.] Defendant filed a motion to

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compel arbitration in the state court action on January 13, 2017. [Doc. No. 11-2, ¶3.] Prior

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to the hearing scheduled for February 10, 2017 on that motion, Plaintiffs dismissed the

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state court action without prejudice [Doc. No. 11-2, ¶¶3-5] and subsequently filed this

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action, which mirrored the state court action but added an additional cause of action under

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the FLSA (the “federal court action”). [Doc. No. 1.]

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On March 9, 2017, Defendant filed a motion to dismiss the original complaint in the

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federal court action on the grounds that it failed to state a claim under the FLSA, and on

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the grounds that the state law claims do not arise from the same common nucleus of

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operative facts as Plaintiff’s sole federal claim. [See generally Doc. No. 10-1.]1 On June

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16, 2017, this Court granted the motion to dismiss with leave to amend as to the FLSA

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claim, and declined to exercise supplemental jurisdiction over Plaintiff’s state law claims.

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[Doc. No. 22.]

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On July 7, 2017, Plaintiffs filed the FAC with a single claim for an FLSA violation.

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Defendant also filed a motion to compel arbitration, which was denied as moot. [Doc. No. 22.]

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[Doc. No. 23.] On July 25, 2017, Defendant filed a motion to dismiss the FAC [Doc. No.

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27], and a motion to compel arbitration and/or immediately staying action [Doc. No. 28].

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On August 11, 2017, Plaintiffs filed oppositions to the motions. [Doc. Nos. 29, 30.] On

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August 18, 2017, Defendant filed replies to the oppositions. [Doc. Nos. 32, 33.]

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ALLEGATIONS OF FAC
Most of the allegations of the FAC mirror those of the original complaint in the

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federal court action. In summary, Plaintiffs allege: Defendant unlawfully forced

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Plaintiffs to work uncompensated regular and overtime hours, cheating Plaintiffs out of

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premium pay for regular and overtime pay. [Doc. No. 23 at ¶4.] Additionally, Defendant

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exploited Plaintiffs by failing to provide legally mandated meal and rest breaks. Id.

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Defendant attempted to conceal its unlawful conduct by failing to provide accurate wage

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statements. Id. Defendant failed to pay all wages when due. Id.

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Defendant refused to give Plaintiffs proper meal breaks. Defendant’s uniform

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policy was for its employees to clock out for their meal periods and return to the sales

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floor to continue working. In other words, Defendant required Plaintiffs to work off the

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clock and during legally-mandated meal periods. [Doc. No. 23 at ¶14.]

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Defendant also required Plaintiffs to work more than eight hours in each day,

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sometimes requiring that Plaintiffs work more than twelve hours in a day. Additionally,

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Defendant required Plaintiffs to work more than forty hours per week. Defendant did not

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adequately compensate Plaintiffs for overtime hours worked, as required under the

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FLSA. [Doc. No. 23 at ¶15.] Defendant required Plaintiffs to work more than forty hours

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per week. Id.

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In addition, the FAC alleges as follows:

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Defendant’s uniform policy required that Plaintiffs worked through their legally-

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mandated meal breaks. Defendant also uniformly refused to compensate Plaintiffs for this

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time worked. Instead, Plaintiffs were forced to clock out for a meal period, return to the

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work floor, and help customers. Plaintiffs were not compensated for regular-pay work

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time because they worked off the clock during their meal breaks. For example, if an
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employee was scheduled to work from 10:00 a.m. to 5:00 p.m., with a planned thirty-

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minute meal break, the number of scheduled hours would be six and one half. However,

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the employee would clock out for their meal break but return to work on the floor, thus

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working through their scheduled thirty-minute break, and causing the number of hours

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actually worked to become seven. Defendant never compensated Plaintiffs for these extra

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periods of time worked. [Doc. No. 23 at ¶18.]

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Additionally, Plaintiffs were sometimes not compensated for overtime hours

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because the additional time worked—through their meal break—caused the number of

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hours they worked to exceed eight hours in one day (and sometimes twelve hours in one

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day). For example, if an employee was scheduled to work from 10:00 a.m. to 6:30 p.m.,

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with a thirty-minute meal period built in, the number of hours scheduled to be worked

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would have been eight. However, because the employee is forced—by Defendant’s

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explicit instruction and uniform policy—to work during the scheduled thirty-minute

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break, the number of hours actually worked becomes eight and one half. Defendant failed

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to ever pay for this extra half hour and never provided overtime pay for causing

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Plaintiffs’ shifts to exceed eight hours of time worked. [Doc. No. 23 at ¶19.]

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Defendant’s uniform policy included instructions directed at each employee—

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including Plaintiffs—to falsify their time records in this fashion. In other words,

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Defendant required and instructed Plaintiffs and similarly situated employees to falsify

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their time records by clocking out for—but not actually taking—their meal breaks. [Doc.

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No. 23 at ¶20.]

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During every workweek in [each] period [that each Plaintiff was employed],

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[Plaintiff] was required to follow Defendant’s uniform policies mandating that she:

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a. Clock out for her legally-required meal period, but return to the floor to

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continue working through the meal period—during every shift she

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worked;

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b. Ensure that her time records inaccurately reflected that she did in fact
take her meal period—during every shift she worked;
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c. Work more than eight hours in a day without receiving the statutorily
required overtime pay—at least once a week; and

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d. Work more than twelve hours in a day without receiving the statutorily-

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required overtime pay—less than once a week but more than once a

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month.” [Doc. No. 23 at ¶¶21-26.]

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Finally, [each Plaintiff] was explicitly instructed to follow the policies and

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procedures listed in the preceding paragraphs, through the duration of her employment.

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[Doc. No. 23 at ¶¶ 22, 24, 26.]

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LEGAL STANDARD FOR 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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Finally, “[l]eave to amend may . . . be denied for repeated failure to cure deficiencies by

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previous amendment.” Abragninin v. AMVAC Chem. Corp, 545 F.3d 733, 742 (9th Cir.

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2008)(citations omitted).
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ANALYSIS OF MOTION TO DISMISS

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There are two issues with which the FLSA is concerned: (1) weekly overtime

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compensation (29 U.S.C. §207(a)(1)) and (2) payment of federal minimum wage (29

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U.S.C. §206(a)).

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A. Weekly Overtime Pay.

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The FLSA's overtime compensation provision entitles covered employees to time

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and-a-half wages for hours worked in excess of 40 in a workweek. 29 U.S.C. §207(a)(1).

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Accordingly, to state a claim the plaintiff must allege that she worked more than 40 hours

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per workweek and did not receive the correct overtime pay for that week (or weeks).

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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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In the original complaint in the federal court action, Plaintiffs’ allegations failed to

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provide sufficient detail regarding the length and frequency of unpaid work. Plaintiffs

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asserted that “Defendant required Plaintiffs to work more than forty hours per week.” [Doc.

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No. 1 at ¶16.] Plaintiffs then asserted that “Defendants did not adequately compensate
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Plaintiffs for overtime hours worked….” Id. These are merely legal conclusions which

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recite the elements of a FLSA violation but do not meet the required burden under Landers.

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The FAC fails to cure the defects of the original complaint. Once again, Plaintiffs’

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allegations fail to provide sufficient detail regarding the length and frequency of unpaid

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overtime work. Just as in the original complaint, Plaintiffs assert that “Defendant required

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Plaintiffs to work more than forty hours per week.” [Doc. No. 1 at ¶16 and Doc. No. 23 at

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¶15.] Also remaining unchanged, Plaintiffs assert that “Defendants did not adequately

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compensate Plaintiffs for overtime hours worked, as required under the FLSA.” Id. These

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are merely legal conclusions which recite the elements of a FLSA violation. Landers, 771

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F.3d at 644-45.

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Plaintiffs have added some factual allegations in the FAC, including that Plaintiffs
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“c. [w]ork more than eight hours in a day without receiving the statutorily required

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overtime pay—at least once a week; and

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d. Work more than twelve hours in a day without receiving the statutorily-required

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overtime pay—less than once a week but more than once a month.” [Doc. No. 23 at ¶¶21-

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26.]

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However, Plaintiffs fail to show how working over eight or twelve hours in a day

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(once per week or once per month) caused them to work over forty hours in one week. For

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example, there is no allegation that Plaintiffs worked five or more days per week, such that

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working more than 8 hours in a day would cause them to exceed the weekly overtime.

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While the additional allegations in the FAC may bolster Plaintiffs’ claims for daily

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overtime, which is a state law issue, they do not state an FLSA claim with regard to weekly

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overtime pay.

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B. Minimum wage.

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The FLSA's minimum wage provision entitles employees to a wage “not less than

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$7.25 an hour.” 29 U.S.C. §206(a). To claim improper compensation under this provision,

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the plaintiffs must allege that the wages received fell below this statutory minimum.
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However, the workweek as a whole, not each individual hour within the work week,

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determines an employee's “wages” for purposes of determining FLSA violations. See 29

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C.F.R. §§776.4(a), 778.104. Thus, an employer's failure to compensate an employee for

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any particular hours worked does not necessarily violate the minimum wage provision of

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the FLSA. See Dove v. Coupe, 759 F.2d 167, 171 (D.C. Cir. 1985). If the total wage paid

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to an employee in any given workweek divided by the total hours worked that week equals

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or exceeds the applicable minimum wage, there is no FLSA violation. Adair v. City of

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Kirkland, 185 F.3d 1055, 1062 n. 6 (9th Cir. 1999)(“even though it is uncompensated, the

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employees are still being paid a minimum wage when their salaries are averaged across

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their actual time worked”); Balasanyan v. Nordstrom, Inc., 913 F.Supp.2d 1001, 1008

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(S.D. Cal. 2012). See also Sullivan v. Riviera Holdings Corp., No. 2:14-cv-00165-APG-

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VCF, 2014 WL 290303, at *1(D. Nev. May 29, 2015). To state a plausible minimum wage

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claim under this rule, therefore, a complaint must allege that the plaintiff's weekly wages

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fall below the statutory minimum. Id.

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Here, there is no allegation whatsoever as to the amount of Plaintiffs’ weekly or

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hourly wages. While Plaintiffs allege that some hours worked were unpaid, they do not

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provide any allegations to demonstrate that, when the unpaid hours are averaged with the

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paid hours in a given workweek, Plaintiffs are paid less than $7.25 per hour. As a result,

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Plaintiffs fail to state an FLSA minimum wage violation.

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For example, in Adair, police officers alleged that they were not compensated for

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ten-minute briefings held before their shifts started. Adair, 185 F.3d at 1058. “The district

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court found that while the ten-minute briefings were compensable work time, attendance

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at the briefings was compensated through the officers' salary. The court then found that the

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City had complied with the FLSA. Because the salary, when averaged across the total

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actual number of hours worked, still paid more per hour than the minimum wage, the court

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found that the City complied with the FLSA's minimum wage requirements.” Id. at 1058–

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59. When affirming the district court’s ruling, the Ninth Circuit stated that, “[t]he district

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court properly rejected any minimum wage claim the officers might have brought by
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finding that their salary, when averaged across their total time worked, still paid them

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above minimum wage.” Id. at 1063.

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In Sullivan, claimants alleged an FLSA violation because the defendant “require[d]

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them to work approximately 30 minutes off-the-clock per day to transport cash to and from

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the ‘cashier's cage’ before and after their scheduled shifts.” Sullivan, 2014 WL 2960303,

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at *1. Defendant’s motion to dismiss was granted because “the workweek as a whole, not

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each individual hour within the work week, determines an employee's ‘wages’ for purposes

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of determining FLSA violations.” Id. “The [plaintiffs’] First Claim for Relief, for ‘all hours

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worked,’ misunderstands the FLSA. If their average weekly pay does not fall below $7.25

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per hour, then the FLSA does not grant them a remedy for minimum wage violations. This

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is so regardless of whether they were actually paid for each hour worked. The [plaintiffs]

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have not pleaded sufficient facts for [the Court] to reasonably infer that their average hourly

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pay for any given workweek fell below the statutory minimum; indeed, they do not even

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plead their current hourly wage.” Id. at 2.

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Here, Plaintiffs allege that they were not paid for meal periods [Doc. No. 23 at ¶14],

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but they do not allege how much they were paid per hour or how many hours/days they

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worked per week. Thus, similar to ten-minute briefings worked by the officers in Adair or

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thirty-minute cash transport periods from Sullivan, Plaintiffs’ allegedly uncompensated

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meal periods, without more, do not state a minimum wage violation. Plaintiffs have not

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shown how working uncompensated periods during their workday resulted in them

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receiving less than $7.25 per hour, on average, in a given workweek. There are simply no

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facts pleaded to allow the Court to reasonably infer that Defendant failed to pay minimum

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wage for all hours worked in a given workweek. Therefore, Plaintiffs fail to state a claim

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for an FLSA minimum wage violation.

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MOTION TO COMPEL ARBITRATION
Given that the motion to dismiss is granted without leave to amend, the motion to
compel arbitration is denied as moot.

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CONCLUSION

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To state an FLSA overtime and/or minimum wage violation, Plaintiffs needed to

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show—with factual allegations—that they worked greater than forty hours per week or

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were not paid at least minimum wage for all hours worked in a week. This means

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Plaintiffs have the burden of pleading how often they worked greater than forty hours per

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week without overtime pay. Plaintiffs also have the burden of pleading how much they

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were paid and whether—averaged across all hours worked per week—this salary dropped

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below minimum wage. These factual allegations are simply absent from the FAC,

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notwithstanding this Court’s clear directive in the previous order that such allegations

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were needed. Given that this is Plaintiffs’ second attempt to state a claim under the

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FLSA, as well as the suspicious procedural history of this case, further amendment would

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be futile.

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For the reasons set forth above, the motion to dismiss is GRANTED WITHOUT

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LEAVE TO AMEND and the motion to compel arbitration is DENIED AS MOOT.

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The Clerk of the Court shall CLOSE the case.

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Dated: October 6, 2017

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