Landry's Inc. et al v. Brian Sandoval, et al

Filing 47

ORDER Granting 25 and 27 Motions to Dismiss. Second Amended Complaint deadline: 4/13/2016. Signed by Chief Judge Gloria M. Navarro on 3/31/16. (Copies have been distributed pursuant to the NEF - TR)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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LANDRY’S, INC., et al.,
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Plaintiffs,

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vs.

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BRIAN SANDOVAL, et al.,
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Defendants.

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Case No.: 2:15-cv-1160-GMN-PAL
ORDER

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Pending before the Court are two Motions to Dismiss, one filed by Defendants Governor

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Brian Sandoval (“Sandoval”) and Labor Commissioner Shannon Chambers (“Chambers”) and

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the other filed by Defendant Acting Insurance Commissioner Amy L. Parks (“Parks”) 1

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(collectively, “Defendants”). (ECF Nos. 25, 27). Plaintiffs Landry’s, Inc.; Bubba Gump

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Restaurants, Inc.; Claim Jumper Acquisition Company, LLC; Nevada Restaurant Services, Inc.

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d/b/a Dotty’s Gaming and Spirits; Nevada Restaurant Services, Inc. d/b/a Laughlin River

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Lodge; and Nevada Restaurant Services, Inc. d/b/a Hoover Dam Lodge (collectively,

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“Plaintiffs”) filed an Opposition to both Motions to Dismiss (ECF No. 38), and Defendants

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each filed a Reply (ECF No. 39, 40).

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I.

BACKGROUND
This case arises as a challenge to the Nevada Minimum Wage Amendment, Article 15,

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Section 16 of the Nevada Constitution (“Minimum Wage Amendment” or “Amendment”) and

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its related Regulations, Nevada Administrative Code Chapter 608.100–108 (the “Regulations”).

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(First Am. Compl. (“FAC”) ¶ 1, ECF No. 17). The Minimum Wage Amendment was a ballot

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initiative enacted after voter approval in two general elections, 2004 and 2006. (Id. ¶ 17–20).

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Parks’ Motion to Dismiss also joined and concurred with Sandoval and Chambers’ Motion to Dismiss.

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Plaintiffs’ FAC focuses on the following language from the Minimum Wage
Amendment:
The rate shall be five dollars and fifteen cents ($5.15) per hour worked, if the
employer provides health benefits as described herein, or six dollars and fifteen
cents ($6.15) per hour if the employer does not provide such benefits. Offering
health benefits within the meaning of this section shall consist of making health
insurance available to the employee for the employee and the employee's
dependents at a total cost to the employee for premiums of not more than 10
percent of the employee's gross taxable income from the employer.

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NEV. CONST. art. 15, § 16(A). From this Amendment, Plaintiffs allege that “Nevada’s Labor

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Commissioner began issuing regulations . . . found in NAC 608.100 through 608.108.” (FAC

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¶ 25). These Regulations include further specification regarding the health benefits that qualify

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under the Nevada Wage Amendment. (Id. ¶ 26–27). Plaintiffs also allege that the Labor

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Commissioner enforces the Amendment while relying on the “Nevada Division of Insurance to

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determine whether an insurance plan qualifies as an actual health insurance plan under . . . the

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Minimum Wage Amendment.” (Id. ¶ 28).

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On June 19, 2015, Plaintiffs filed their complaint in this Court, which they amended as a

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matter of course on July 15, 2015. (ECF Nos. 1, 17). Plaintiffs’ FAC alleged five causes of

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action: (1) Declaration that ERISA Preempts the Amendment and Regulations; (2) Declaration

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that the Amendment and Regulations Violate the U.S. Constitution’s Commerce Clause;

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(3) Declaration that the Governor’s Delegation of Authority to Promulgate the Regulations and

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Enforce the Regulations and Amendment Violates the United States and Nevada Constitutions;

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(4) Declaration that the Regulations are Unconstitutional because they Exceed the Labor

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Commissioner’s and the Insurance Commissioner’s Authority; and (5) Declaration that the

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Amendment and Regulations Violate Due Process Protected by the Fifth and Fourteenth

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Amendments to the U.S. Constitution and Nevada Constitution. (FAC ¶¶ 31–71, ECF No. 17).

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On July 30, 2015, and August 7, 2015, Defendants brought their respective Motions to Dismiss
under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). (ECF Nos. 25, 27).
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II.

LEGAL STANDARD

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A. 12(b)(1)

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Rule 12(b)(1) of the Federal Rules of Civil Procedure permits motions to dismiss for

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lack of subject matter jurisdiction. Fed. R. Civ. P. 12(b)(1). When subject matter jurisdiction is

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challenged, the burden of proof is placed on the party asserting that jurisdiction exists. Scott v.

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Breeland, 792 F.2d 925, 927 (9th Cir. 1986) (holding that “[t]he party seeking to invoke the

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court’s jurisdiction bears the burden of establishing that jurisdiction exists”). Accordingly, the

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court will presume lack of subject matter jurisdiction until the plaintiff proves otherwise in

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response to the motion to dismiss. Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375,

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377 (1994).
A motion to dismiss under Rule 12(b)(1) may be construed in one of two ways.

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Thornhill Publ’g Co., Inc. v. Gen. Tel. & Elec. Corp., 594 F.2d 730, 733 (9th Cir. 1979). It

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may be described as ‘facial,’ meaning that it attacks the sufficiency of the allegations to support

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subject matter jurisdiction. Id. Alternatively, it may be described as ‘factual,’ meaning that it

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“attack[s] the existence of subject matter jurisdiction in fact.” Id.

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When, as here, a court considers a ‘facial’ attack made pursuant to Rule 12(b)(1), it must

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consider the allegations of the complaint to be true and construe them in the light most

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favorable to the plaintiff. Love v. United States, 915 F.2d 1242, 1245 (9th Cir. 1989).

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B. 12(b)(6)

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Dismissal is appropriate under Rule 12(b)(6) where a pleader fails to state a claim upon

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which relief can be granted. Fed. R. Civ. P. 12(b)(6); Bell Atl. Corp. v. Twombly, 550 U.S. 544,

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555 (2007). A pleading must give fair notice of a legally cognizable claim and the grounds on

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which it rests, and although a court must take all factual allegations as true, legal conclusions

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couched as a factual allegations are insufficient. Twombly, 550 U.S. at 555. Accordingly, Rule

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12(b)(6) “requires more than labels and conclusions, and a formulaic recitation of the elements
of a cause of action will not do.” Id.
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“To survive a motion to dismiss, a complaint must contain sufficient factual matter,

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accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556

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U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 555). “A claim has facial plausibility

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when the plaintiff pleads factual content that allows the court to draw the reasonable inference

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that the defendant is liable for the misconduct alleged.” Id. This standard “asks for more than a

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sheer possibility that a defendant has acted unlawfully.” Id.

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“Generally, a district court may not consider any material beyond the pleadings in ruling

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on a Rule 12(b)(6) motion.” Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d 1542,

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1555 n. 19 (9th Cir. 1990). “However, material which is properly submitted as part of the

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complaint may be considered.” Id. Similarly, “documents whose contents are alleged in a

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complaint and whose authenticity no party questions, but which are not physically attached to

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the pleading, may be considered in ruling on a Rule 12(b)(6) motion to dismiss” without

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converting the motion to dismiss into a motion for summary judgment. E.g., Branch v. Tunnell,

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14 F.3d 449, 454 (9th Cir. 1994) overruled on other grounds by Galbraith v. Cty. of Santa

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Clara, 307 F.3d 1119, 1123–24 (9th Cir. 2002). On a motion to dismiss, a court may also take

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judicial notice of “matters of public record.” Mack v. S. Bay Beer Distrib., 798 F.2d 1279, 1282

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(9th Cir. 1986). Otherwise, if a court considers materials outside of the pleadings, the motion

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to dismiss is converted into a motion for summary judgment. Fed. R. Civ. P. 12(d).

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If the court grants a motion to dismiss for failure to state a claim, leave to amend should

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be granted unless it is clear that the deficiencies of the complaint cannot be cured by

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amendment. DeSoto v. Yellow Freight Sys., Inc., 957 F.2d 655, 658 (9th Cir. 1992). Pursuant

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to Rule 15(a), the court should “freely” give leave to amend “when justice so requires,” and in

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the absence of a reason such as “undue delay, bad faith or dilatory motive on the part of the

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movant, repeated failure to cure deficiencies by amendments previously allowed, undue

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prejudice to the opposing party by virtue of allowance of the amendment, futility of the

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amendment, etc.” Foman v. Davis, 371 U.S. 178, 182 (1962).

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III.

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DISCUSSION
Defendants argue, inter alia, that Plaintiffs “lack standing because the complaint fails to

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allege an injury in fact.” (Sandoval & Chambers Mot. to Dismiss 7:27, ECF No. 25). The

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Court agrees.

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“[S]tanding is an essential and unchanging part of the case-or-controversy requirement

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of Article III.” Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992). As such, to survive a

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motion to dismiss, plaintiffs bear the burden of alleging sufficient facts to show the existence of

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each of three elements. Id.
First, the plaintiff must have suffered an injury in fact—an invasion of a legally
protected interest which is (a) concrete and particularized, and (b) actual or
imminent, not conjectural or hypothetical. Second, there must be a causal
connection between the injury and the conduct complained of—the injury has to
be fairly traceable to the challenged action of the defendant, and not the result of
the independent action of some third party not before the court. Third, it must be
likely, as opposed to merely speculative, that the injury will be redressed by a
favorable decision.
Id. at 560–61 (internal quotation marks and citations omitted). When analyzing a motion to
dismiss for lack of standing, courts must accept the allegations in the complaint as true and
construe the complaint in favor of the complaining party. Maya v. Centex Corp., 658 F.3d
1060, 1068 (9th Cir. 2011). Indeed, at the pleading stage, “general factual allegations of injury
resulting from the defendant’s conduct may suffice,” because on a motion to dismiss, courts
“presume that general allegations embrace those specific facts that are necessary to support the
claim.” Id. (citing Lujan, 504 U.S. at 561). While the Ninth Circuit in Maya differentiated
between the standard for dismissal due to standing compared with a 12(b)(6) dismissal under
the standards of Twombly and Iqbal, the Court nonetheless clarified: “This is not to say that [a]
plaintiff may rely on a bare legal conclusion to assert injury-in-fact.” Id.
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To qualify as an injury-in-fact, an alleged harm must be “concrete and particularized”

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and “actual or imminent, not conjectural or hypothetical.” Lujan, 504 U.S. at 560–61.

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Plaintiffs’ FAC lacks any such specified harm. Plaintiffs indicate that they were “sued for

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alleged violations” connected to the Minimum Wage Amendment. (FAC ¶ 11, ECF No. 17).

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Plaintiffs do not allege that any of these suits have reached a judgment against them, as the

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cases still appear to be pending in the courts. Plaintiffs further allege that “[a]s recently as

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April 2015, the Labor Commissioner has enforced the Minimum Wage Amendment and

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Regulations in a manner that violates federal and Nevada law.” (Id. ¶ 13).

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First, the lawsuits against Plaintiffs have not yet produced any judgment against them.

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Plaintiffs cite Babbitt v. United Farm Workers Nat’l Union, for the proposition that harm is

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imminent if there is a “realistic danger of sustaining a direct injury,” and that parties need not

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“await the consummation of threatened injury to obtain preventative relief.” 442 U.S. 289, 298

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(1979). However, in Babbitt, the Court also explained the sufficiency of that injury as

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“certainly impending.” Id. Babbitt centered upon a “credible threat of prosecution” under a

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criminal statute. Id. at 298–99. Here, Plaintiffs have not alleged any facts to indicate that their

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injury is “certainly impending.” Perhaps they will prevail in their current lawsuits regarding

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the generally alleged violations. Further, regarding the Labor Commissioner’s enforcement

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against Plaintiff, this conclusory allegation in their FAC also fails to provide more than a “bare

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legal conclusion.” See Maya, 658 F.3d at 1068. Accordingly, Plaintiffs do not allege sufficient

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facts to show the existence of injury-in-fact here, and the Court must grant Defendants’

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Motions to Dismiss.

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Federal Rule of Civil Procedure 15 instructs courts to “freely give leave [to amend]

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when justice so requires.” Fed. R. Civ. P. 15(a)(2). Here, the Court will dismiss without

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prejudice with leave to amend. Plaintiff shall file its second amended complaint by

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Wednesday, April 13, 2016. Failure to file a second amended complaint by this date shall

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result in the Court dismissing Plaintiffs’ claims with prejudice and closing the case.

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IV.

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CONCLUSION
IT IS HEREBY ORDERED that Defendants’ Motions to Dismiss (ECF Nos. 25, 27)

are GRANTED.
IT IS FURTHER ORDERED that Plaintiffs shall have until April 13, 2016, to file a
second amended complaint that demonstrates Plaintiffs’ standing to sue.
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DATED this _____ day of March, 2016.

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___________________________________
Gloria M. Navarro, Chief Judge
United States District Court

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