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)

Download PDF
1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT 8 9 10 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] 11 12 13 14 Case No.: 3:17-CV-0168-CAB-NLS Plaintiffs, Defendant. 15 16 17 This matter is before the Court on Defendant Heavenly Couture’s motion to dismiss 18 the First Amended Complaint (“FAC”) [Doc. No. 27] and motion for an order compelling 19 arbitration and/or immediately staying civil action [Doc. No. 28]. The motions have been 20 fully briefed and the Court deems them suitable for submission without oral argument. For 21 the reasons set forth below, the motion to dismiss the FAC is GRANTED without leave to 22 amend, and the motion to compel arbitration and/or stay civil action is deemed moot and 23 DENIED without prejudice. 24 FACTUAL BACKGROUND 25 Plaintiffs Carly Heck, Sara Lund, and Ally Ortanez (collectively “Plaintiffs”) bring 26 this collective action under the Fair Labor Standards Act, 29 U.S.C. § 201, et seq. 27 (“FLSA”). Plaintiffs were non-exempt, hourly, in-store employees of Defendant Heavenly 28 Couture, Inc., a California corporation which operates a chain of retail clothing stores. 1 3:17cv168-CAB-NLS 1 Plaintiffs allege Defendant forced Plaintiffs to work uncompensated regular and overtime 2 hours. Plaintiffs also allege Defendant failed to provide state-law-mandated meal and rest 3 breaks, and that Defendant attempted to conceal such conduct by failing to provide accurate 4 wage statements. Plaintiffs allege Defendant maintains a policy requiring employees to 5 work off the clock during breaks and meal periods, and that Defendant failed to compensate 6 Plaintiffs for overtime hours worked as required by FLSA and California law. 7 On October 11, 2016, Plaintiffs filed an action in the San Diego Superior Court, 8 alleging various state law wage and hour claims against Defendant for: (1) failure to pay 9 meal period premium pay; (2) failure to pay rest break premium pay; (3) failure to pay 10 overtime wages; (4) failure to pay regular wages; (5) waiting time penalties; (6)violations 11 of California’s Unfair Competition Law; and (7) failure to provide accurate wage 12 statements (the “state court action”). [Doc. No. 11-2, ¶2.] Defendant filed a motion to 13 compel arbitration in the state court action on January 13, 2017. [Doc. No. 11-2, ¶3.] Prior 14 to the hearing scheduled for February 10, 2017 on that motion, Plaintiffs dismissed the 15 state court action without prejudice [Doc. No. 11-2, ¶¶3-5] and subsequently filed this 16 action, which mirrored the state court action but added an additional cause of action under 17 the FLSA (the “federal court action”). [Doc. No. 1.] 18 On March 9, 2017, Defendant filed a motion to dismiss the original complaint in the 19 federal court action on the grounds that it failed to state a claim under the FLSA, and on 20 the grounds that the state law claims do not arise from the same common nucleus of 21 operative facts as Plaintiff’s sole federal claim. [See generally Doc. No. 10-1.]1 On June 22 16, 2017, this Court granted the motion to dismiss with leave to amend as to the FLSA 23 claim, and declined to exercise supplemental jurisdiction over Plaintiff’s state law claims. 24 [Doc. No. 22.] 25 On July 7, 2017, Plaintiffs filed the FAC with a single claim for an FLSA violation. 26 27 28 1 Defendant also filed a motion to compel arbitration, which was denied as moot. [Doc. No. 22.] 2 3:17cv168-CAB-NLS 1 [Doc. No. 23.] On July 25, 2017, Defendant filed a motion to dismiss the FAC [Doc. No. 2 27], and a motion to compel arbitration and/or immediately staying action [Doc. No. 28]. 3 On August 11, 2017, Plaintiffs filed oppositions to the motions. [Doc. Nos. 29, 30.] On 4 August 18, 2017, Defendant filed replies to the oppositions. [Doc. Nos. 32, 33.] 5 6 ALLEGATIONS OF FAC Most of the allegations of the FAC mirror those of the original complaint in the 7 federal court action. In summary, Plaintiffs allege: Defendant unlawfully forced 8 Plaintiffs to work uncompensated regular and overtime hours, cheating Plaintiffs out of 9 premium pay for regular and overtime pay. [Doc. No. 23 at ¶4.] Additionally, Defendant 10 exploited Plaintiffs by failing to provide legally mandated meal and rest breaks. Id. 11 Defendant attempted to conceal its unlawful conduct by failing to provide accurate wage 12 statements. Id. Defendant failed to pay all wages when due. Id. 13 Defendant refused to give Plaintiffs proper meal breaks. Defendant’s uniform 14 policy was for its employees to clock out for their meal periods and return to the sales 15 floor to continue working. In other words, Defendant required Plaintiffs to work off the 16 clock and during legally-mandated meal periods. [Doc. No. 23 at ¶14.] 17 Defendant also required Plaintiffs to work more than eight hours in each day, 18 sometimes requiring that Plaintiffs work more than twelve hours in a day. Additionally, 19 Defendant required Plaintiffs to work more than forty hours per week. Defendant did not 20 adequately compensate Plaintiffs for overtime hours worked, as required under the 21 FLSA. [Doc. No. 23 at ¶15.] Defendant required Plaintiffs to work more than forty hours 22 per week. Id. 23 In addition, the FAC alleges as follows: 24 Defendant’s uniform policy required that Plaintiffs worked through their legally- 25 mandated meal breaks. Defendant also uniformly refused to compensate Plaintiffs for this 26 time worked. Instead, Plaintiffs were forced to clock out for a meal period, return to the 27 work floor, and help customers. Plaintiffs were not compensated for regular-pay work 28 time because they worked off the clock during their meal breaks. For example, if an 3 3:17cv168-CAB-NLS 1 employee was scheduled to work from 10:00 a.m. to 5:00 p.m., with a planned thirty- 2 minute meal break, the number of scheduled hours would be six and one half. However, 3 the employee would clock out for their meal break but return to work on the floor, thus 4 working through their scheduled thirty-minute break, and causing the number of hours 5 actually worked to become seven. Defendant never compensated Plaintiffs for these extra 6 periods of time worked. [Doc. No. 23 at ¶18.] 7 Additionally, Plaintiffs were sometimes not compensated for overtime hours 8 because the additional time worked—through their meal break—caused the number of 9 hours they worked to exceed eight hours in one day (and sometimes twelve hours in one 10 day). For example, if an employee was scheduled to work from 10:00 a.m. to 6:30 p.m., 11 with a thirty-minute meal period built in, the number of hours scheduled to be worked 12 would have been eight. However, because the employee is forced—by Defendant’s 13 explicit instruction and uniform policy—to work during the scheduled thirty-minute 14 break, the number of hours actually worked becomes eight and one half. Defendant failed 15 to ever pay for this extra half hour and never provided overtime pay for causing 16 Plaintiffs’ shifts to exceed eight hours of time worked. [Doc. No. 23 at ¶19.] 17 Defendant’s uniform policy included instructions directed at each employee— 18 including Plaintiffs—to falsify their time records in this fashion. In other words, 19 Defendant required and instructed Plaintiffs and similarly situated employees to falsify 20 their time records by clocking out for—but not actually taking—their meal breaks. [Doc. 21 No. 23 at ¶20.] 22 During every workweek in [each] period [that each Plaintiff was employed], 23 [Plaintiff] was required to follow Defendant’s uniform policies mandating that she: 24 a. Clock out for her legally-required meal period, but return to the floor to 25 continue working through the meal period—during every shift she 26 worked; 27 28 b. Ensure that her time records inaccurately reflected that she did in fact take her meal period—during every shift she worked; 4 3:17cv168-CAB-NLS 1 2 c. Work more than eight hours in a day without receiving the statutorily required overtime pay—at least once a week; and 3 d. Work more than twelve hours in a day without receiving the statutorily- 4 required overtime pay—less than once a week but more than once a 5 month.” [Doc. No. 23 at ¶¶21-26.] 6 Finally, [each Plaintiff] was explicitly instructed to follow the policies and 7 procedures listed in the preceding paragraphs, through the duration of her employment. 8 [Doc. No. 23 at ¶¶ 22, 24, 26.] 9 LEGAL STANDARD FOR MOTION TO DISMISS 10 To survive a motion to dismiss under Rule 12(b)(6), “a complaint must contain 11 sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its 12 face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. 13 Twombly, 550 U.S. 544, 570 (2007)). Thus, the Court “accept[s] factual allegations in the 14 complaint as true and construe[s] the pleadings in the light most favorable to the 15 nonmoving party.” Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 16 (9th Cir. 2008). On the other hand, the Court is “not bound to accept as true a legal 17 conclusion couched as a factual allegation.” Iqbal, 556 U.S. at 678; see also Lee v. City of 18 Los Angeles, 250 F.3d 668, 679 (9th Cir. 2001) (“Conclusory allegations of law are 19 insufficient to defeat a motion to dismiss”). Nor is the Court “required to accept as true 20 allegations that contradict exhibits attached to the Complaint or . . . allegations that are 21 merely conclusory, unwarranted deductions of fact, or unreasonable inferences.” Daniels- 22 Hall v. Nat’l Educ. Ass’n, 629 F.3d 992, 998 (9th Cir. 2010). “In sum, for a complaint to 23 survive a [12(b)(6)] motion to dismiss, the non-conclusory factual content, and reasonable 24 inferences from that content, must be plausibly suggestive of a claim entitling the plaintiff 25 to relief.” Moss v. U.S. Secret Serv., 572 F.3d 962, 969 (9th Cir. 2009) (quotations omitted). 26 Finally, “[l]eave to amend may . . . be denied for repeated failure to cure deficiencies by 27 previous amendment.” Abragninin v. AMVAC Chem. Corp, 545 F.3d 733, 742 (9th Cir. 28 2008)(citations omitted). 5 3:17cv168-CAB-NLS 1 ANALYSIS OF MOTION TO DISMISS 2 There are two issues with which the FLSA is concerned: (1) weekly overtime 3 compensation (29 U.S.C. §207(a)(1)) and (2) payment of federal minimum wage (29 4 U.S.C. §206(a)). 5 A. Weekly Overtime Pay. 6 The FLSA's overtime compensation provision entitles covered employees to time 7 and-a-half wages for hours worked in excess of 40 in a workweek. 29 U.S.C. §207(a)(1). 8 Accordingly, to state a claim the plaintiff must allege that she worked more than 40 hours 9 per workweek and did not receive the correct overtime pay for that week (or weeks). 10 The Ninth Circuit’s decision in Landers v. Quality Communications, Inc., 771 F.3d 11 638 (9th Cir. 2014), clarified the pleading requirements set forth in Iqbal and Twombly in 12 the context of an FLSA unpaid overtime claim. In Landers, the plaintiff alleged that he 13 was not paid minimum wage and was “subjected to a ‘piecework no overtime’ wage 14 system, whereby he worked in excess of forty hours per week without being compensated 15 for his overtime.” Landers, 771 F.3d at 640. The Ninth Circuit held that these allegations 16 were inadequate, and that although “detailed factual allegations regarding the number of 17 overtime hours worked are not required to state a plausible claim, . . . to survive a motion 18 to dismiss, a plaintiff asserting a claim to overtime payments must allege that she worked 19 more than forty hours in a given workweek without being compensated for the overtime 20 hours worked during that workweek.” Id. at 644-45. To that end, the Ninth Circuit 21 affirmed dismissal of the complaint, finding that “Landers’s allegations failed to provide 22 sufficient detail about the length and frequency of his unpaid work to support a reasonable 23 inference that he worked more than forty hours in a given week.” Id. at 646 (internal 24 quotations and brackets omitted). 25 In the original complaint in the federal court action, Plaintiffs’ allegations failed to 26 provide sufficient detail regarding the length and frequency of unpaid work. Plaintiffs 27 asserted that “Defendant required Plaintiffs to work more than forty hours per week.” [Doc. 28 No. 1 at ¶16.] Plaintiffs then asserted that “Defendants did not adequately compensate 6 3:17cv168-CAB-NLS 1 Plaintiffs for overtime hours worked….” Id. These are merely legal conclusions which 2 recite the elements of a FLSA violation but do not meet the required burden under Landers. 3 The FAC fails to cure the defects of the original complaint. Once again, Plaintiffs’ 4 allegations fail to provide sufficient detail regarding the length and frequency of unpaid 5 overtime work. Just as in the original complaint, Plaintiffs assert that “Defendant required 6 Plaintiffs to work more than forty hours per week.” [Doc. No. 1 at ¶16 and Doc. No. 23 at 7 ¶15.] Also remaining unchanged, Plaintiffs assert that “Defendants did not adequately 8 compensate Plaintiffs for overtime hours worked, as required under the FLSA.” Id. These 9 are merely legal conclusions which recite the elements of a FLSA violation. Landers, 771 10 F.3d at 644-45. 11 12 Plaintiffs have added some factual allegations in the FAC, including that Plaintiffs would: “c. [w]ork more than eight hours in a day without receiving the statutorily required 13 14 overtime pay—at least once a week; and 15 d. Work more than twelve hours in a day without receiving the statutorily-required 16 overtime pay—less than once a week but more than once a month.” [Doc. No. 23 at ¶¶21- 17 26.] 18 However, Plaintiffs fail to show how working over eight or twelve hours in a day 19 (once per week or once per month) caused them to work over forty hours in one week. For 20 example, there is no allegation that Plaintiffs worked five or more days per week, such that 21 working more than 8 hours in a day would cause them to exceed the weekly overtime. 22 While the additional allegations in the FAC may bolster Plaintiffs’ claims for daily 23 overtime, which is a state law issue, they do not state an FLSA claim with regard to weekly 24 overtime pay. 25 B. Minimum wage. 26 The FLSA's minimum wage provision entitles employees to a wage “not less than 27 $7.25 an hour.” 29 U.S.C. §206(a). To claim improper compensation under this provision, 28 the plaintiffs must allege that the wages received fell below this statutory minimum. 7 3:17cv168-CAB-NLS 1 However, the workweek as a whole, not each individual hour within the work week, 2 determines an employee's “wages” for purposes of determining FLSA violations. See 29 3 C.F.R. §§776.4(a), 778.104. Thus, an employer's failure to compensate an employee for 4 any particular hours worked does not necessarily violate the minimum wage provision of 5 the FLSA. See Dove v. Coupe, 759 F.2d 167, 171 (D.C. Cir. 1985). If the total wage paid 6 to an employee in any given workweek divided by the total hours worked that week equals 7 or exceeds the applicable minimum wage, there is no FLSA violation. Adair v. City of 8 Kirkland, 185 F.3d 1055, 1062 n. 6 (9th Cir. 1999)(“even though it is uncompensated, the 9 employees are still being paid a minimum wage when their salaries are averaged across 10 their actual time worked”); Balasanyan v. Nordstrom, Inc., 913 F.Supp.2d 1001, 1008 11 (S.D. Cal. 2012). See also Sullivan v. Riviera Holdings Corp., No. 2:14-cv-00165-APG- 12 VCF, 2014 WL 290303, at *1(D. Nev. May 29, 2015). To state a plausible minimum wage 13 claim under this rule, therefore, a complaint must allege that the plaintiff's weekly wages 14 fall below the statutory minimum. Id. 15 Here, there is no allegation whatsoever as to the amount of Plaintiffs’ weekly or 16 hourly wages. While Plaintiffs allege that some hours worked were unpaid, they do not 17 provide any allegations to demonstrate that, when the unpaid hours are averaged with the 18 paid hours in a given workweek, Plaintiffs are paid less than $7.25 per hour. As a result, 19 Plaintiffs fail to state an FLSA minimum wage violation. 20 For example, in Adair, police officers alleged that they were not compensated for 21 ten-minute briefings held before their shifts started. Adair, 185 F.3d at 1058. “The district 22 court found that while the ten-minute briefings were compensable work time, attendance 23 at the briefings was compensated through the officers' salary. The court then found that the 24 City had complied with the FLSA. Because the salary, when averaged across the total 25 actual number of hours worked, still paid more per hour than the minimum wage, the court 26 found that the City complied with the FLSA's minimum wage requirements.” Id. at 1058– 27 59. When affirming the district court’s ruling, the Ninth Circuit stated that, “[t]he district 28 court properly rejected any minimum wage claim the officers might have brought by 8 3:17cv168-CAB-NLS 1 finding that their salary, when averaged across their total time worked, still paid them 2 above minimum wage.” Id. at 1063. 3 In Sullivan, claimants alleged an FLSA violation because the defendant “require[d] 4 them to work approximately 30 minutes off-the-clock per day to transport cash to and from 5 the ‘cashier's cage’ before and after their scheduled shifts.” Sullivan, 2014 WL 2960303, 6 at *1. Defendant’s motion to dismiss was granted because “the workweek as a whole, not 7 each individual hour within the work week, determines an employee's ‘wages’ for purposes 8 of determining FLSA violations.” Id. “The [plaintiffs’] First Claim for Relief, for ‘all hours 9 worked,’ misunderstands the FLSA. If their average weekly pay does not fall below $7.25 10 per hour, then the FLSA does not grant them a remedy for minimum wage violations. This 11 is so regardless of whether they were actually paid for each hour worked. The [plaintiffs] 12 have not pleaded sufficient facts for [the Court] to reasonably infer that their average hourly 13 pay for any given workweek fell below the statutory minimum; indeed, they do not even 14 plead their current hourly wage.” Id. at 2. 15 Here, Plaintiffs allege that they were not paid for meal periods [Doc. No. 23 at ¶14], 16 but they do not allege how much they were paid per hour or how many hours/days they 17 worked per week. Thus, similar to ten-minute briefings worked by the officers in Adair or 18 thirty-minute cash transport periods from Sullivan, Plaintiffs’ allegedly uncompensated 19 meal periods, without more, do not state a minimum wage violation. Plaintiffs have not 20 shown how working uncompensated periods during their workday resulted in them 21 receiving less than $7.25 per hour, on average, in a given workweek. There are simply no 22 facts pleaded to allow the Court to reasonably infer that Defendant failed to pay minimum 23 wage for all hours worked in a given workweek. Therefore, Plaintiffs fail to state a claim 24 for an FLSA minimum wage violation. 25 26 27 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. 28 9 3:17cv168-CAB-NLS 1 CONCLUSION 2 To state an FLSA overtime and/or minimum wage violation, Plaintiffs needed to 3 show—with factual allegations—that they worked greater than forty hours per week or 4 were not paid at least minimum wage for all hours worked in a week. This means 5 Plaintiffs have the burden of pleading how often they worked greater than forty hours per 6 week without overtime pay. Plaintiffs also have the burden of pleading how much they 7 were paid and whether—averaged across all hours worked per week—this salary dropped 8 below minimum wage. These factual allegations are simply absent from the FAC, 9 notwithstanding this Court’s clear directive in the previous order that such allegations 10 were needed. Given that this is Plaintiffs’ second attempt to state a claim under the 11 FLSA, as well as the suspicious procedural history of this case, further amendment would 12 be futile. 13 For the reasons set forth above, the motion to dismiss is GRANTED WITHOUT 14 LEAVE TO AMEND and the motion to compel arbitration is DENIED AS MOOT. 15 The Clerk of the Court shall CLOSE the case. 16 Dated: October 6, 2017 17 18 19 20 21 22 23 24 25 26 27 28 10 3:17cv168-CAB-NLS

Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.

Why Is My Information Online?