Williamson v. General Dynamic

• Decision Date: 12 April 2000
• Docket Number: No. 98-55783,98-55783
• Citation: 208 F.3d 1144
• Parties: (9th Cir. 2000) PHILIP WILLIAMSON; ITZIK RIEF;RONDA KIRLIN; THOMAS PAINTER,Plaintiffs-Appellants, v. GENERAL DYNAMICS CORPORATION,OPINION Defendant-Appellee
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1144

208 F.3d 1144 (9th Cir. 2000)

PHILIP WILLIAMSON; ITZIK RIEF;RONDA KIRLIN; THOMAS PAINTER,Plaintiffs-Appellants, v. GENERAL DYNAMICS CORPORATION,OPINION Defendant-Appellee.

No. 98-55783

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

Argued and Submitted December 9, 1999

Filed April 12, 2000

[Copyrighted Material Omitted]

[Copyrighted Material Omitted] COUNSEL: Michael A. Conger, Monaghan and Conger, San Diego, California; Richard H. Benes, San Diego, California, for the plaintiffs-appellants.

Richard T. Franch, Jenner & Block, Chicago, Illinois, counsel for the defendant-appellee.

Appeal from the United States District Courtfor the Southern District of California

Before: Dorothy W. Nelson, Robert Boochever, and Thomas G. Nelson, Circuit Judges.

D.W. NELSON, Circuit Judge:

Phillip Williamson and three former General Dynamics ("GD") employees appeal the district court's order dismissing their lawsuit with prejudice. They claim that the district court erred because: (1) the Fair Labor Standards Act ("FLSA") does not preempt their common law fraud and misrepresentation claims; (2) they deserved an opportunity to amend their state claims in light of the preemption concerns; (3) California's three-year statute of limitations has not run; and (4) they have stated a valid claim for fraud under California law. We have jurisdiction under 28 U.S.C. S 1291, and we reverse and remand for further proceedings.

I. FACTUAL AND PROCEDURAL BACKGROUND

The appellants are former long-term employees of GD who were improperly classified as "salaried exempt " from California and federal overtime laws. On September 28, 1993, the appellants were entitled to join the settlement of a FLSAbased, class-action lawsuit concerning GD's failure to pay overtime wages, Sena v. General Dynamics Corp. In order to participate in the Sena settlement under the FLSA, the appellants were required to sign and return an opt-in form by November 15, 1993.

The appellants failed to join the Sena settlement because GD allegedly threatened to harm their jobs if they joined. Management told the employees that by joining the lawsuit they would be committing "career suicide," "cutting their balls off," and other similar statements. GD made representations that it would act in a "law abiding" way with regard to wages and that the appellants had "viable careers" with the company. As early as 1991, however, GD allegedly knew that it would have to sell or close the Convair Division where the appellants worked. Yet as late as April 1994, the GD executive in charge of the division wrote: "Let me once again make it clear that we have not been sold, [and] there has been no decision to shut down this plant. . . ." On July 1, 1994, GD announced it was closing the Convair Division.

The appellants' lawyers have filed the following lawsuits on behalf of other parties:

Argo

In April 1995, 101 GD employees who had not opted into Sena filed a state court lawsuit, Argo v. General Dynamics & Arthur Veitch, alleging state civil rights violations, tortious interference, and fraud. GD was unable to remove the case to federal court because the plaintiffs also had named GD's managers as co-defendants. On May 1, 1997, a jury awarded 97 employees compensatory damages of $1.77 million and punitive damages of $99 million. The state trial court denied GD's motion for a new trial and affirmed the jury's damages award. The case is on appeal. The appellants are not parties to that lawsuit.

Harman

In November 1995, GD employees filed a FLSA lawsuit in federal court attempting to recover unpaid overtime. Over 135 employees opted-into this lawsuit, Harman v. General Dynamics, including the four named appellants in this case. Harman sought back wages from 1992 to 1996 under FLSA, but not under a fraud theory. A proposed settlement in Harman was before the district court.

Adams

In March 1997, the Argo plaintiffs filed another lawsuit in state court, Adams v. General Dynamics. They alleged claims of wage and career fraud, but did not name GD managers as co-defendants. GD removed Adams to federal court on diversity grounds. The case was assigned to Judge Enright (the district judge in this case), who on June 26, 1997, stayed the case until Argo becomes final. The Adams plaintiffs abandoned their appeal to this court.

Williamson

On June 27, 1997 (the day after Judge Enright stayed Adams), GD employees filed a lawsuit in state court alleging fraud and misrepresentation (the "wage fraud" and "career fraud" claims) under California law. On August 7, 1997, GD removed the case to federal court on diversity grounds. Judge Enright, sua sponte, issued an order staying this case until Argo becomes final because of res judicata concerns. Both sides, however, objected to the stay because the plaintiffs in Williamson and Adams are not the same. On September 10, 1997, the district court lifted the stay.

On November 26, 1997, after briefing and hearings on the issue, the district court ordered the Williamson plaintiffs to plead their fraud claims with more particularity under Fed. R. Civ. P. 9(b). On December 24, 1997, the appellants filed their first amended complaint. The amended complaint makes two basic claims:

(1) Wage fraud -GD pledged to be "honest, trustworthy, and law abiding" with regard to paying correct overtime (because of a government contracts scandal), yet stopped paying overtime. The district court termed this claim, "wage fraud."

(2) Career fraud -GD represented that this was a "career job," that there would be business "all the way into the year 2000," and that as of April 1994 "we have not been sold, [and] there has been no decision to shut down this plant." Yet the appellants claim that documents introduced in Argo proved those statements to be false, that GD knew it was going to close the plant when it told its employees not to jeopardize their careers with GD by opting into the Sena lawsuit. The documents in Argo, however, are under a protective order, and GD refuses to release them for this case. Finally, the appellants argue that they did not discover the falsity of these statements until GD announced that it was closing the plant on July 1, 1994. The district court labeled this claim, "career fraud."

After the appellants amended their complaint, GD filed a motion to dismiss under Fed. R. Civ. P. 12(b)(6). On April 3, 1998, the district court granted the motion, finding that the fraud claims were: (1) too vague; (2) barred by California's three-year statute of limitations; and (3) preempted by the Fair Labor Standards Act ("FLSA"). The appellants timely appealed.

II. STANDARD OF REVIEW

We review the district court's decision regarding preemption de novo. See Niehaus v. Greyhound Lines, Inc., 173 F.3d 1207, 1211 (9th Cir. 1999).

We review a dismissal based on statutes of limitations de novo. See Ellis v. City of San Diego, 176 F.3d 1183, 1188 (9th Cir. 1999).

We review a dismissal for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6) de novo. See TwoRivers v. Lewis, 174 F.3d 987, 991 (9th Cir. 1999). A complaint should not be dismissed unless it appears beyond doubt that the plaintiff can prove no set of facts in support of the claim that would entitle it to relief. See Morley v. Walker, 175 F.3d 756, 759 (9th Cir. 1999). If support exists in the record, a dismissal may be affirmed on any proper ground, even if the district court did not reach the issue or relied on different grounds or reasoning. See Steckman v. Hart Brewing, Inc., 143 F.3d 1293, 1295 (9th Cir. 1998).

III. DISCUSSION

This case presents an issue of first impression in this Circuit -whether the FLSA preempts a common-law fraud claim. Given the lack of discussion of the wage fraud claims in the appellants' briefs or at oral argument, we find that the appellants have abandoned their wage fraud claims. See Collins v. City of San Diego, 841 F.2d 337, 339 (9th Cir. 1988) ("It is well established in this Circuit that claims which are not addressed in the appellant's brief are deemed abandoned."). Therefore, the remainder of this opinion only will address the appellants' career fraud claims. We believe that the appellants' career fraud claims are not preempted because the appellants were never subject to FLSA's anti-retaliation provision. We also find that the appellants' career fraud claims are not barred by the statute of limitations and are not too vague to state a claim. In light of our ruling on preemption, we will not address whether the district court erred in not allowing the appellants leave to amend their complaint.

A. Preemption

Article VI of the Constitution provides that the laws of the United States "shall be the supreme Law of the Land; . . . any Thing in the Constitution or laws of any state to the Contrary notwithstanding." U.S. Const. art. VI, cl.2. "Consideration of the issues arising under the Supremacy Clause `start[s] with the assumption that the historic police powers of the states [are] not to be superseded by . . . Federal Act unless that [is] the clear and manifest purpose of Congress.' " Cipollone v. Liggett Group, Inc., 505 U.S. 504, 516 (1992) (plurality) (quoting Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230 (1947)).

The Ninth Circuit has based its preemption analysis on the Supreme Court's three categories: (1) express preemption -"where Congress explicitly defines the extent to which its enactments preempt state law"; (2) field preemption -"where state law attempts to regulate conduct in a field that Congress intended the federal law exclusively to occupy"; and (3) conflict preemption -"where it is impossible to comply with both state and federal requirements, or where state law stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress." Industrial Truck Ass'n, Inc. v. Henry, 125 F.3d 1305, 1309 (9th Cir. 1997) (citing English v. General Elec Co., 496 U.S. 72, 7880 ...