Moreno v. UtiliQuest, LLC

• Citation: 29 F.4th 567
• Decision Date: 18 March 2022
• Docket Number: No. 21-55313,21-55313
• Parties: Cesar Antonio MORENO, an individual, Plaintiff-Appellant, v. UTILIQUEST, LLC, a Georgia Limited Liability Company, Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

29 F.4th 567

Cesar Antonio MORENO, an individual, Plaintiff-Appellant,

v.UTILIQUEST, LLC, a Georgia Limited Liability Company, Defendant-Appellee.

No. 21-55313

United States Court of Appeals, Ninth Circuit.

Argued and Submitted January 12, 2022 Pasadena, California

Filed March 18, 2022

Joshua M. Mohrsaz (argued) and Edwin Pairavi, Pairavi Law, P.C., Los Angeles, California, for Plaintiff-Appellant.

Alex Meier (argued) and Jill A. Porcaro, Seyfarth Shaw LLP, Los Angeles, California, for Defendant-Appellee.

Before: A. WALLACE TASHIMA and MILAN D. SMITH, JR., Circuit Judges, and STEPHEN J. MURPHY, III,^* District Judge.

M. SMITH, Circuit Judge:

Plaintiff Cesar Moreno appeals the district court's dismissal of his lawsuit against his former employer, Defendant UtiliQuest. Moreno alleges that UtiliQuest promised him that if he convinced all of his fellow employees to "sign away" their union rights, they would each receive a ten percent raise. Once Moreno obtained signatures from his co-workers releasing their union rights, UtiliQuest gave him a ten percent raise. Moreno soon learned, however, that UtiliQuest did not give any other employees the promised raise. Moreno contends he was terminated after confronting his supervisors about UtiliQuest's breach of its promise.

Moreno brought various claims related to his termination, but the district court dismissed them because it found that they were preempted by the National Labor Relations Act (NLRA), 29 U.S.C. § 151 et seq. Moreno also appeals the dismissal of his wage and hour claims, but as his appeal was pending, the Superior Court of California entered judgment on a final settlement precluding these claims. We affirm the district court's dismissal of Moreno's complaint.

FACTUAL AND PROCEDURAL BACKGROUND

Moreno worked for UtiliQuest as a Field Technician from 2007 until 2018. At the time he was terminated, Moreno was a Lead Field Technician "responsible for supervising the work of field technicians" on job sites. Moreno alleges that in June 2017, UtiliQuest's management asked him to collect signatures from "all other employees" to "release their [union] rights" in exchange for a ten percent raise "in their hourly pay per year" for all who signed. Moreno and the other employees each signed "the union release" in June 2017. UtiliQuest gave Moreno a ten percent raise but did not give a raise to his fellow employees. On multiple occasions, Moreno complained to his managers about his co-workers not receiving the promised raises. He alleges that UtiliQuest retaliated against him because of his advocacy on behalf of the other employees. On February 13, 2018, Moreno contends that someone in Human Resources falsely accused him of taking money from other employees in exchange for providing them with overtime hours. On February 28, 2018, Moreno's manager fired him without explanation.

Moreno brought several state law claims related to his termination. Moreno also asserted wage and hour-related claims against UtiliQuest after his termination. He contends that UtiliQuest did not provide him with compensation for travel time between his home and the first and last job sites for the day. Moreno also alleges that the nature of his job responsibilities, together with UtiliQuest's policies, prevented him from taking an "uninterrupted 30 minute meal break."

The district court held that the NLRA preempted Moreno's termination claims and dismissed them. The district court also dismissed Moreno's wage and hour claims pursuant to Federal Rule of Civil Procedure 12(b)(6) because he failed to state a cause of action. Moreno appealed.

On January 10, 2022—two days before oral argument in our court—UtiliQuest informed us of a class action settlement in California Superior Court that was finalized on November 29, 2021. The California class consisted of UtiliQuest employees who, like Moreno, used company vehicles to commute to and from worksites. As part of the settlement, class members released their wage and hour claims. Because Moreno did not opt out of the California settlement, UtiliQuest argued that the wage and hour claims portion of Moreno's appeal was moot. We ordered, and have now received, supplemental briefing on this issue.

JURISDICTION AND STANDARD OF REVIEW

We have jurisdiction pursuant to 28 U.S.C. § 1291. We review de novo the district court's dismissal pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim. Okwu v. McKim , 682 F.3d 841, 844 (9th Cir. 2012) (citing AE ex rel. Hernandez v. County of Tulare , 666 F.3d 631, 636 (9th Cir. 2012) ). In reviewing a motion to dismiss, we accept as true all factual allegations in the complaint and draw all reasonable inferences in favor of the nonmoving party. Silvas v. E*Trade Mortg. Corp. , 514 F.3d 1001, 1003 (9th Cir. 2008).

ANALYSIS

I.

The NLRA does not contain express preemption provisions, but the Supreme Court held that "two categories of state action are implicitly preempted: (1) laws that regulate conduct that is either protected or prohibited by the NLRA ( Garmon preemption), and (2) laws that regulate in an area Congress intended to leave unregulated or ‘controlled by the free play of economic forces’ (Machinists preemption)." Interpipe Contracting, Inc. v. Becerra , 898 F.3d 879, 887 (9th Cir. 2018) (quoting Chamber of Com. of the U.S. v. Brown , 554 U.S. 60, 65, 128 S.Ct. 2408, 171 L.Ed.2d 264 (2008) ). UtiliQuest contends that Garmon preemption applies to Moreno's claims.

Sections 7 and 8 of the NLRA provide a private cause of action for claims "based on the conduct of labor organizations or their agents that constitute unfair labor practices."

Retail Prop. Tr. v. United Bhd. of Carpenters & Joiners of Am. , 768 F.3d 938, 950 (9th Cir. 2014). Specifically, NLRA Section 7 protects the right of employees "to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection." 29 U.S.C. § 157. Section 8 bars unfair labor practices by employers and labor organizations and also makes it illegal "for an employer to interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in section [7 of the NLRA]." Id. at § 158(a)–(b).

"When an activity is arguably subject to § 7 or § 8 of the Act, the States as well as the federal courts must defer to the exclusive competence of the National Labor Relations Board if the danger of state interference with national policy is to be averted." San Diego Bldg. Trades Council v. Garmon , 359 U.S. 236, 245, 79 S.Ct. 773, 3 L.Ed.2d 775 (1959). Garmon 's central concern "is the potential for conflict with federal policy." Retail Prop. Tr. , 768 F.3d at 952. The Supreme Court acknowledged that it is not always clear whether a particular activity is preempted, but "[e]ven when a court is unsure," it should leave the determination to the National Labor Relations Board (NLRB). Bassette v. Stone Container Corp. , 25 F.3d 757, 760 (9th Cir. 1994) (citing Garmon , 359 U.S. at 244–45, 79 S.Ct. 773 ).

Moreno brought several California state law claims relating to his termination: intentional misrepresentation (Count 7); fraud and deceit (Count 8); whistleblowing retaliation (Counts 9 & 10); and wrongful termination in violation of public policy (Count 11). In connection with Garmon preemption, "[i]t is not the label affixed to the cause of action under state law that controls the determination of the relationship between state and federal jurisdiction." United Ass'n of Journeymen & Apprentices v. Borden , 373 U.S. 690, 698, 83 S.Ct. 1423, 10 L.Ed.2d 638 (1963). In Borden the Supreme Court held that plaintiff's claims were preempted even though his complaint "sounded in contract as well as in tort" because the "facts as alleged in the complaint, and as found by the jury," could arguably support a finding that the conduct violated the NLRA. Id. at 694, 698, 83 S.Ct. 1423. As the district court correctly found here, all of Moreno's claims arguably implicate NLRA Sections 7 and 8 and are subject to Garmon preemption.

Moreno's intentional misrepresentation and fraud claims are both treated the same under California law. Compare Lazar v. Superior Court , 12 Cal.4th 631, 49 Cal.Rptr.2d 377, 909 P.2d 981, 984–85 (1996), with Tenet Healthsystem Desert v. Blue Cross of Cal. , 245 Cal.App.4th 821, 199 Cal. Rptr. 3d 901, 914–15 (2016). The elements of a fraud or intentional misrepresentation claim are: (1) misrepresentation, (2) knowledge of falsity, (3) intent to defraud or induce reliance, (4) justifiable reliance, and (5) damage. Lazar , 49 Cal.Rptr.2d 377, 909 P.2d at 984. Moreno's underlying theory for both counts is that UtiliQuest deceived him into convincing other employees to sign away their union rights for a ten percent raise. What Moreno alleges UtiliQuest did—offering employees a benefit to give up their union rights—is a textbook NLRA violation. See 29 U.S.C. §§ 157, 158(a)(1).

Moreno's fraud and misrepresentation claims deal not primarily with UtiliQuest's alleged illegal conduct, but rather with the fact that UtiliQuest deceived him. In determining whether there is potential for conflict with the NLRA, however, we cannot ignore the subject of UtiliQuest's alleged deception. The elements of misrepresentation and intent to defraud in the state law claims both touch on conduct clearly covered by the NLRA. For example, a jury would need to determine whether UtiliQuest made the misrepresentation, and such a finding would strongly suggest an NLRA Section 8 violation.

Holding that Moreno's fraud and misrepresentation claims are preempted reflects a logical extension of our holding in Milne Employees Ass'n v. Sun Carriers, Inc. , 960 F.2d 1401 (9th Cir. 1991). In Milne we considered whether the NLRA preempted a fraud claim. We concluded that because an employer's alleged misrepresentations did not implicate the...